POGORZELSKA v KAZAS-ROGARIS

Family Provision Act 1982 (NSW) LEGISLATION CITED : Probate and Administration Act 1898, s 66 Supreme Court Rules, Part 55, rr 6-9

Baird v Logan - Middleton Estate [2008] NSWSC 1029 Bates v Messner (1967) 67 SR 187 Construction Forestry Mining Energy Union v BHP Steel (AIS) Pty Ltd [2001] FCA 1758 CASES CITED : Gibson v Buchanan [2004] NSWSC 957 Harmsworth v Harmsworth [1987] 3 All ER 816 Mavrideros v Mack (1998) 45 NSWLR 80 Sullivan v Craig; Estate of O'Sullivan [2008] NSWSC 1189

PARTIES : Nina Pogorzelska - Plaintiff Anne Kazas-Rogaris - Defendant

COUNSEL : Plaintiff in person Ms D Coulton/Mr D Currie - Defendant

SOLICITORS : Plaintiff self-represented Defendant self-represented

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2010/151317 NINA POGORZELSKA v ANNE KAZAS-ROGARIS JUDGMENT 1 HIS HONOUR: By summons filed on 17 June 2010 the plaintiff seeks an order that the appointment of Anne Kazas-Rogaris, the principal of KR Lawyers and Consultants Pty Ltd, as the executrix of the estate of the late Adam Pogorzelski, be revoked and that plaintiff be appointed in substitution. The ground stated is that Ms Kazas-Rogaris is not a suitable person to administer the estate on the grounds of misconduct. The late Adam Pogorzelski died on 9 May 2009. Probate was granted on 13 November 2009. The executrix is a practicing solicitor. 2 By his Will the deceased left all his net real and personal estate to the plaintiff absolutely. The assets of the estate according to the inventory attached to the Probate were as follows: INVENTORY OF PROPERTY Of the Estate of ADAM POGORZELSKI of Menai in the State of New South Wales, Deceased PROPERTY OWNED SOLELY BY THE DECEASED Description Estimated or known value Shares and motor vehicle Motor Vehicle being the Mercedes Benz and Shares held at the company AAP Investments (Aust) Pty Ltd CAN 120 083 070 $1,219,680.00 Machinery $200,000.00 Total $1,419,680.00

PROPERTY OWNED BY THE DECEASED AS TENANTS IN COMMON IN EQUAL SHARES Description Estimated or known value Total $ 0.00

PROPERTY OWNED BY THE DECEASED AS TENANTS IN COMMON IN UNEQUAL SHARES Description Estimated or known value Total $ 0.00

PROPERTY OWNED BY THE DECEASED AS JOINT TENANT WITH ANOTHER OR OTHERS Description Estimated or known value Real Estate Real Estate being the property with the folio identifier 53/774588 $670,000.00 Total $670,000.00

3 There is an allegation that the inventory, being based on an assessment by an auctioneer, grossly undervalues the machinery referred to but the plaintiff has produced no evidence to substantiate this claim. There is a live dispute as to whether the shares referred to are part of the estate or whether they belong to a superannuation fund and there is also an issue between the parties as to whether a hotel property at Eden is also part of the superannuation fund and not included in the estate. These disputes are not before me. 4 In addition to the proceeding before me there are two applications under the Family Provision Act 1982 (NSW) (Nos 2009/291361 and 2010/269987) in this Court. The parties to these proceedings are the plaintiff and the daughter of the deceased by a prior marriage, Magdalena Pogorzelska. I understand these matters are listed for hearing in February 2011. 5 In addition to the application for removal of the executrix the plaintiff also has lodged an application for alleged contempt against the executrix for failing to file affidavits in accordance with a timetable ordered and for failure to produce documents pursuant to a subpoena. 6 In the hearing, the applicant appeared in person and relied on three affidavits and tendered a number of documents. Substantial parts of the affidavits are inadmissible on their face or clearly irrelevant to the present issue of removal. They largely comprise a series of general allegations, submissions and conclusions. LEGAL PRINCIPLES 7 Under s 66 of the Probate and Administration Act 1898 the Court may on the application of any person interested in the estate revoke an administration already granted and upon default remove the administrator and appoint another administrator. The Court has an inherent jurisdiction to revoke a grant of probate: see Bates v Messner (1967) 67 SR 187; Mavrideros v Mack (1998) 45 NSWLR 80. A finding that a person is not a fit and proper person to perform the duties of an executrix is not to be made lightly. In Bates v Messner Asprey JA at 191-192 stated the relevant principles as follows: "…[T]he essential basis of the exercise of the court's inherent jurisdiction to revoke a grant of probate is … that the real object which the court must always keep in view is the due and proper administration of the estate in the interests of the parties beneficially entitled thereto on the part of the person to whom and by whose oath as to the faithful performance of his duties the court has been induced to entrust the office of executor. … I shall make no attempt to define all circumstances which may attract the exercise of the court's jurisdiction, but where circumstances clearly appear to have arisen after a grant of probate which impel to the court to the firm conclusion that the due and proper administration of an estate has either been put in jeopardy or has been prevented either by reason of acts or omissions on the part of the executor or by virtue of matters personal to him, for example mental infirmity, ill health, or by virtue of the proof of other matters which establish that the executor is not a fit and proper person to carry out the duties which he has sworn to the court that he will perform, the court may exercise its inherent jurisdiction to revoke the grant." 8 These principles were explained and applied by the Full Court in the Mavrideros case at 102; see also Baird v Logan - Middleton Estate [2008] NSWSC 1029 at [19] and Gibson v Buchanan [2004] NSWSC 957 at [20]; Sullivan v Craig; Estate of O'Sullivan [2008] NSWSC 1189 at [2]-[3]. THE ALLEGATIONS AND REASONING 9 In her Affidavits the plaintiff sets out a series of headings as to matters which she contends amount to misconduct sufficient to warrant revocation of the grant. I list below and consider the allegations made.

Acting for plaintiff in Family Provision proceedings 10 The executrix is a practising solicitor. In March 2009 she consulted Adam Pogorzelski about preparing a Will. She took instructions on 30 March 2009 and the plaintiff was present. The Will was drafted on 31 March 2009. The deceased passed away on 9 May 2009. The plaintiff had expressed concern about having minimal funds and was concerned that some action might be taken by Magdalena, the stepdaughter of the plaintiff. The executrix in her affidavit of 29 September 2009 details the steps she took after the execution of the Will and the grant of probate. She states that she made numerous inquiries and attempts to locate documents and information of the estate but had great difficulty doing so. She says that on 18 September 2009 she made an appointment with Mr Markovski who was then the deceased's accountant to obtain further documentation but this was not forthcoming. Subsequently, the accountant was changed. She requested the tax returns of the deceased's superannuation fund from Mr Markovski and he appeared to be very vague. The executrix filed the necessary documents for grant of probate. 11 On 13 November 2010 the executrix was requested by the plaintiff to file a summons under the Family Provision Act on behalf of the plaintiff and was requested to make inquiries with the Registry concerning the grant of probable. The executrix undertook this task but later on reflection formed the view that it was inappropriate for her to continue to act as the solicitor for the estate and also for the plaintiff. Accordingly, on 9 February 2010 the executrix entered consent orders to cease acting as the solicitor for the plaintiff because Ms Kazas-Rogaris did not want to jeopardise the plaintiff's claim. The plaintiff, according to the executrix, did not want her to resign for financial reasons. However she did resign because of the perceived conflict and another solicitor, Mr Rawak, took over the carriage of the Family Provision claim. 12 The plaintiff says that the executrix acted in the capacity of solicitor and executrix over a period of several months before she discovered she could not act and this caused the plaintiff to suffer loss and inconvenience. 13 Although it was inappropriate to file the summons and act as the solicitor for a claimant on the estate for the months in question I do not consider this amounts to relevant misconduct. The position was rectified within two months and the executrix in my view acted responsibly in this respect. There is presently no such conflict of interest.

Withholding of funds 14 On 20 November 2009 the plaintiff gave to the executrix a cheque in the sum of $164,393.80 drawn to the law firm KR Lawyers and Consultants Pty Ltd Trust Account. There is some conflict as to what was said when the cheque was handed over but I accept that there was some uncertainty as to whether it was part of the estate or an asset of the plaintiff which was mostly comprised of moneys from her mother, Tamara, which had been in a term deposit. The plaintiff alleges that on advice from the executrix that it was in the client's best interest to give her the moneys to hold on trust for the plaintiff, the plaintiff gave that money to the executrix in the form of a bank cheque. The cheque was treated as funds belonging to the estate and was banked in the National Australia Bank Trust Account of KR Lawyers and Consultants Pty Ltd. In the period between November and January 2010 deductions were made from the KR Lawyers and Consultants Trust Account for professional costs but not those of the executrix in relation to the grant of probate in the administration of the estate. The executrix has produced evidence of various invoices paid for from the estate moneys and these were handed to the plaintiff on 23 February 2010. The total amount of invoices paid for by and on behalf of the estate amounted to $15,696.74 leaving a residual amount of $148,697.06. 15 On 22 April 2010 the plaintiff lodged a complaint with the Law Society of New South Wales concerning the deduction and seeking to have the money returned. After discussions with the Law Society in which the executrix made it clear that although she thought it was estate money, she decided to pay the money back to the plaintiff from the trust account notwithstanding that she had received advice from Senior Counsel that she was justified in retaining the money until she had further documentation to make good the plaintiff's assertions. 16 The matter was investigated by the Law Society and on 22 September 2010 the Law Society notified the executrix that it would take no further action. 17 The executrix has provided invoices and documentation to verify payments made. Having regard to the evidence in the affidavits and documents I am satisfied there was no substance in the plaintiff's allegation that there was misconduct in relation to this matter. I am satisfied the executrix in all the circumstances acted in a reasonable and proper manner. NON-RESPONSE TO REQUESTS 18 The plaintiff asserts that the executrix did not respond to numerous requests to provide documents in relation to the funds of the estate. This claim in based on a letter of 9 June 2010 requesting tax invoices for costs. The evidence indicates that these details were provided and invoices are attached to the affidavit of the executrix of 8 November 2010. NON-INCLUSION OF EDEN HOTEL IN ESTATE 19 The plaintiff complains that the hotel in Eden which is worth in the order of $1.5 million was not included in the inventory of assets of the estate. 20 The evidence indicates that the hotel is not part of the estate but is an asset of the AAP Superannuation Fund, the beneficiaries of which were the deceased and his daughter Magdalena by a previous marriage. It also appears to be the position, although it is not clear at this point, that the shares in contest between the parties were assets of the superannuation fund and therefore arguably not part of the estate. FINANCIAL STATEMENTS - AAP SUPERANNUATION FUND 21 The complaint is that the financial statements for the fund were not signed and documents were not produced. A detailed draft statement was forwarded in relation to the assets but the executrix has been unable to locate a substantial number of documents and did not have access to complete information for preparation of final accounts. The lack of information is evidenced by the letter Moss Munro Hunt, Accountants, dated 24 September 2010, where they state that superannuation benefits do not fall within the control of the Will of the deceased and neither the wife nor any other party have any control or claim over the superannuation benefits of the deceased until the directors have made a determination on how they should be distributed. That letter refers to the lack of information available Mr Markovski to the previous accountant for Mr Pogorzelski, and the difficulty which the accountants have had in obtaining documentation and records in relation to the deceased from January 2008 onwards. The accountant's letter records an understanding that documentation relating to the fund was held by the deceased at his residence and was in the possession of the plaintiff but the plaintiff contends she does not have any such documentation. As a result of the lack of information regarding income, expenses, assets and liabilities of the fund the necessary returns for the fund for the years 2007-2010 are outstanding. 22 It therefore appears that the executrix has through no fault of her own been unable to obtain the necessary documents to produce to the plaintiff and this does not amount to any misconduct. FAILURE TO LODGE AFFIDAVIT IN TIME AND LATE LODGEMENT OF AFFIDAVIT 23 The evidence indicates that the executrix has had great difficulty in obtaining the relevant material as to the position of the estate and has made considerable efforts to obtain such information both personally and through the accountants. 24 In the light of this I do not consider the allegations relating to failure to lodge documents bear on the fitness to act of the executrix in performing the duties in relation to the estate or in any way amount to negligence, inefficiency or misconduct. EDEN HOTEL 25 The plaintiff alleges that the lessees of the hotel have not paid rent since November 2009 and that the executrix has caused confusion and "mess" in relation to this which prevented the plaintiff from obtaining rental and other money. The plaintiff also alleges that the executrix evicted the tenants and provided false information. 26 The executrix has explained her conduct in performing her duties as director of the trustee of the superannuation fund and provided relevant correspondence in support. In am satisfied that no misconduct or negligence has taken place on the evidence in relation to the hotel. 27 In summary, I am satisfied from the affidavits of the executrix that she has sufficiently explained her actions and that the allegations made as to her unfitness have not been made out and it has not been shown that there is any danger she cannot or will not administer the estate properly or that the assets will be put in jeopardy. This estate has been difficult to administer because of the lack of records and information and because of the claims surrounding the superannuation fund assets. The application to revoke her appointment as executrix should be dismissed with costs. It is quite clear because of claim under the Family Provision Act that it would not be appropriate to appoint the plaintiff as executrix in any circumstances. The question of a substituted executor does not arise. CONTEMPT 28 The plaintiff has filed a Notice of Motion on 2 September 2010 for contempt against the executrix. There is no statement of charge but the notice seeks orders as follows: "1. Failure of defendant to provide affidavit in accordance with direction on 10 August 2010 constitutes contempt of Court. 2. Failure of defendant to produce subpoenas issued on 3 August 2010 contempt of Court." 29 The claim that contempt has been committed suffers a number of important deficiencies. A charge of contempt is a serious matter. The contempt must be proven beyond reasonable doubt and particularised with precision: see Construction Forestry Mining Energy Union v BHP Steel (AIS) Pty Ltd [2001] FCA 1758 at [30]-[33]. If the statement of charge is inadequate an affidavit in support cannot be relied on to remedy the deficiency: Harmsworth v Harmsworth [1987] 3 All ER 816 at 819-821. A strict procedure is prescribed by the Supreme Court Rules (SCR), Part 55, rr 6-9, and this must be followed. This includes a requirement that the Statement of Charge or Motion must be served personally on the contemnor: r 9. 30 In this case the orders sought in the Notice of Motion are grossly deficient to justify a finding of contempt in that they do not state particulars of the orders or the precise acts of contempt alleged with the required specificity. For example, Order 2 does not specify which documents were not produced, nor do they allege that the documents were in the possession or control of the addressee at the relevant time, and Order 1 does not allege that the defendant was seeking to file any affidavits in response. The mere failure to provide an affidavit in relation to a direction to file an affidavit by a certain date on which a party seeks to rely will not of itself amount to contempt where the party decides not to file any affidavit in reply. It may be that the party subject to the direction considered it was not necessary to file any further affidavits in which case they may be prevented from later adducing such material at the discretion of the Court. 31 Again, failure to produce documents does not of itself amount to contempt without more. The non-production may be that the person the subject of a notice to produce or subpoena may not have documents under his or her possession or control with the result is there is no production of document. To establish to contempt it is relevant to establish that there were documents in existence which could have been produced but which were not produced. 32 In addition, the evidence does not satisfy me that the Notice of Motion was served personally. The plaintiff asserts from the bar table that there was personal service and that the Notice of Motion was left on the premises which the executrix occupied but there is no satisfactory evidence of this. 33 To sum up, I am not satisfied beyond reasonable doubt that there has been any contempt by the executrix in the matter and I therefore dismiss the Notice of Motion seeking orders in relation to contempt and direct that the plaintiff should pay the costs of the executrix of this motion. **********

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