Ritossa v Ritossa

Court of Appeal (NSW)|2023-02-09|Before: Bell CJ, Gleeson JA, White JA, Lindsay J

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Introduction

Mr Ivan Ritossa (the Applicant) and Mr Anthony Ritossa (the First Respondent) are the only children of the late Maria Ritossa (the Deceased), whose estate is the subject of an ongoing probate dispute.
The Deceased, who died on 30 April 2019, left three wills dated 27 March 2007, 26 February 2015 and 6 January 2018. The parties have made competing claims for grants of representation in relation to these wills.
The Deceased's principal asset comprised two adjoining, unencumbered parcels of freehold land at 44 and 44A Mons Avenue, Maroubra (the property). Since the Deceased's death, the property has been vacant and has been informally managed by the Applicant at a cost he subsequently proposes to seek to recoup from the estate.
The probate proceedings are listed for final hearing in the Equity Division between 26 April and 4 May 2023.
On 10 August 2022, Lindsay J (the primary judge) made orders pursuant to s 73 of the Probate and Administration Act 1898 (NSW) (the Act) and in the Court's inherent jurisdiction for the appointment of an interim administrator, or administrator pendente lite, to manage the Deceased's estate pending the determination of the probate proceedings: Estate Ritossa, Deceased [2022] NSWSC 1083 (primary judgment or PJ).
Ms Tamara Goodwin (the Second Respondent), who made a submitting appearance on the application for leave to appeal, was appointed administrator on certain terms until the determination of the probate proceedings, including any appeal. Those terms included a power to lease the property or to sell it, but this latter term was subject to obtaining the prior written consent of the Appellant and the First Respondent or with the leave of the Court.
The Applicant seeks leave to appeal from the orders appointing the Second Respondent as interim administrator of the Deceased's estate.
Leave is required because the appeal concerns an interlocutory judgment or order in proceedings in the Court: s 101(2)(e) Supreme Court Act 1970 (NSW).
The Applicant contends that leave should be granted to allow this Court to consider the nature of the power to appoint an interim administrator under s 73 of the Act, an issue that will only arise in an interlocutory context.

Factual and procedural context

The primary judge noted that Applicant and First Respondent have been engaged in "hotly and bitterly contested proceedings" concerning the Deceased's estate, and previously her person, in both Australia and Croatia, and that their relationship was toxic: PJ [14]. This characterisation was not challenged by the Applicant in either his summary of argument in this Court, the draft Notice of Appeal or in the course of argument.
On 24 December 2019, the Applicant filed a statement of claim seeking a grant of probate in respect of the 2018 will.
On 7 April 2020, the First Respondent filed a cross-claim seeking a grant of probate in respect of the 2015 will. He was subsequently granted leave to amend his cross-claim to include a claim in respect of the 2007 will.
On 3 November 2020, the First Respondent, through his solicitor, contacted the Applicant to enquire about the management of the property and requested that the parties jointly appoint an interim administrator: "to deal with the estate assets and liabilities during the course of the proceedings in considering the following: a. the length of time since the deceased's date of death; b. the length of time since the proceedings commenced; c. the delays in the parties attending a mediation and potential Supreme Court hearing; d. both of the parties reside outside Australia; and e. the Court's general practice is to appoint an administrator independent of both sides to deal with the estate assets."
On 24 December 2020, the Applicant, through his solicitor, opposed the appointment of an administrator on the basis that it would involve the estate incurring unnecessary expenses and would have the detrimental effect of diminishing the overall value of the estate. He also noted that the property was insured and being maintained at "minimal costs" to the estate, although these costs were not quantified. The insurance policy incepted on the same day as this correspondence.
In further correspondence on 7 April 2021, the Applicant confirmed that he did not consent to the appointment of an interim administrator. He also noted that the property had sustained flood damage and that he was overseeing the repairs, including some additional minor cosmetic repairs.
Since the death of his mother, the Applicant has assumed responsibility for the maintenance of the property which, in addition to taking out a policy of insurance on the property, involved appointing a caretaker, meeting various expenses associated with the maintenance of the property and effecting certain repairs.
The primary judge recorded at PJ [11] that the Applicant "claims personally to have spent $157,824 to date in maintenance of the property" as follows: "(a) Caretaker: $21,000; (b) Council rates: $12,450; (c) Gardening/pool maintenance: $26,623; (d) Insurance: $5,336; (e) Repairs and maintenance: $83,288; (f) Security: $4,188; (g) Telephone and Internet: $735; (h) Water rates: $3,604."
Returning to the chronological narrative, it was common ground that on 7 April 2021, following the Applicant's letter of the same date noted at [16] above, the First Respondent sought further information about the repairs which would be required as a result of the flood and stated that no work should occur on the property without his consent.
The evidentiary record before the primary judge does not disclose any response to this correspondence and, on 8 April 2021, the First Respondent filed a Notice of Motion seeking the appointment of an interim administrator.
The Notice of Motion was supported by an affidavit of 7 April 2021 of the First Respondent's solicitor who deposed to the fact that the Applicant had not provided any evidence as to the nature of the insurance that had been effected in relation to the property and that the First Respondent was not aware of the terms on which the caretaker had been hired. She also deposed to the fact that he had not given consent to a caretaker being hired and expressed the opinion that "it was unlikely that the parties will agree as to how the property should be sold or managed during the course of the proceedings". She repeated this opinion in an affidavit of 12 July 2022 as well as deposing to the fact that the First Respondent continued to be unaware of the terms of the caretaker's appointment and did not consent to the appointment or payment of the caretaker.
Although referred to in subsequent case management conferences, the Notice of Motion for the appointment of an interim administrator was not pressed until a directions hearing on 29 June 2022.
The primary judge heard argument on 3 August 2022, at the conclusion of which he noted that: "1. NOTE that, as presently advised, the Court is minded to appoint an interim administrator on terms that she be authorised to lease the principal asset of the estate, but not to sell it without the prior agreement of the parties or the leave of the Court, and on the basis that her entitlement to remuneration be deferred (subject to further orders of the Court) pending the determination of the proceedings, with an express charge over estate property as security for her remuneration. 2. NOTE that, before the defendant's notice of motion filed 8 April [2021] is determined, the parties are to take an opportunity to consider whether they can come to some form of arrangement that would forestall the necessity for the appointment of an interim administrator."
The primary judge adjourned the proceedings until 10 August 2022, thus giving the parties an opportunity to come to an alternative arrangement in relation to the management and maintenance of the estate pending the outcome of the litigation. That they were not able to do so was confirmatory of the nature of the relations between the brothers which the primary judge was to describe in his judgment, and which has been referred to at [11] above.
When the parties came before the primary judge again on 10 August 2022, the Applicant reiterated his opposition to the appointment of an administrator on the basis that the estate of the deceased, under his informal management, was "not in jeopardy": see PJ [18]-[19].
The Applicant's fastening on the notion of the estate being required to be "in jeopardy" appears to have derived from the decision of Williams J in Gooley v Gooley [2020] NSWSC 798 at [125]-[126] (Gooley) who relevantly observed: "[125] In my opinion, … [a search for] "necessity" or "sufficient reason" for the appointment of an administrator pendente lite is directed to a need for the Court to be satisfied that, in all the circumstances of the case, the assets of the deceased estate are in some jeopardy, and the appointment of an administrator pendente lite will remove, or at least reduce, that jeopardy. As the plaintiffs' submissions acknowledged, it is not necessary that the jeopardy arise from some misconduct on the part of a person dealing with or claiming to preserve the assets of the deceased estate. … [126] The object of an appointment of administrator pendente lite is to ensure that the deceased estate is managed and preserved for the benefit of those persons who may ultimately be found in the suit to be entitled to it. The administrator is required to act impartially as between the potential beneficiaries. Section 73 of the PA Act allows the Court to mould the powers of the administrator in a manner best designed to achieve that object in the specific circumstances of the case: Henderson v Executor Trustee Australia Ltd (2005) 93 SASR 337; [2005] SASC 477 at [44]-[45], [53] (Debelle J, Anderson J agreeing); Hempseed v Ward [2013] QSC 348 at [14] (McMeekin J)."

Section 73 of the Act

Section 73 of the Act provides that: "73 Administration pendente lite and receiver (1) The Court may - (a) pending any suit touching the validity of the will of any deceased person, or for obtaining, recalling, or revoking any probate or any grant of administration, or (b) during a contested right to administration, appoint an administrator of the personal estate and the same or any other person to be receiver of the real estate of any deceased person, with such full or limited powers and with or without a bond or sureties as the Court may think right. (2) The Court may make such orders for the remuneration of such administrator or receiver out of the personal and real estate of the deceased as it may think right."

The primary judgment

The primary judge gave judgment on 10 August 2022.
At PJ [20]-[21], his Honour observed that: "In my opinion the plaintiff's opposition to the appointment of an interim administrator is misconceived. Despite his failure to acknowledge the fact, the deceased's estate is, in his terms, "in jeopardy" because of his unilateral, unauthorised "management" of the estate, leaving its most significant asset unproductive and, he says, in such a state of disrepair as to be untenantable. This, despite his claim to have personally spent a substantial amount on maintenance of the property. The appointment of an interim administrator pending the determination of a contested probate suit (upon an exercise of the Court's inherent probate jurisdiction, traditionally effected by a grant of administration pendente lite or by reference to section 73 of the Probate and Administration Act 1898) is not made merely as a matter of routine or simply because a contested probate suit is pending. The Court must be satisfied that an order for the appointment of an interim administrator advances the due and proper administration of the estate and the interests of persons beneficially entitled to the estate."
After referring to Gooley, his Honour continued: "A court giving effect to the purposive nature of probate proceedings, and the particular object of the appointment of an interim administrator pending the determination of a probate suit, is not required, as a condition precedent to the appointment of an administrator, to make a formal finding that an estate is or would be "in jeopardy" absent the appointment of an administrator. Reference to an estate being "in some jeopardy" is a convenient way of giving practical expression to a perceived "necessity" or "sufficient reason" for engagement with the object of the appointment of an administrator. This requires an exercise of judgement in each case, not a formalistic search for "jeopardy", as the plaintiff in the present proceedings urged upon the Court. I do not understand Williams J to have suggested otherwise. With that explanation, I agree with her Honour's observations. They are consistent with, and reflect, the purposive nature of an exercise of probate jurisdiction, which is to carry out a deceased person's duly expressed testamentary intentions, and to see that beneficiaries entitled to a deceased estate get what is due to them, without delay: In the Goods of William Loveday [1900] P154 at 157; Bates v Messner (1967) 67 SR (NSW) 187 at 189 and 191-192."
The essence of the primary judge's reasoning, leading to the exercise of his discretion to appoint an interim administrator, is contained in PJ [25]-[29] which it is convenient to reproduce in its entirety: "By taking possession and control of estate property without any authority to do so, the plaintiff has intermeddled in the affairs of the deceased; more particularly, as he has done so without consultation with the defendant, knowing that there is a contest about which of the deceased's wills should be admitted to probate. The fact that the parties have been unable to agree upon an orderly interlocutory arrangement for administration of the estate is, in itself, indicative of an estate in jeopardy and in need of an independent administrator: somebody clothed with legal authority to administer the estate and able to do so with skill and impartiality, preserving the estate for those in due course found to be beneficially entitled to it. The plaintiff has left the property vacant since the death of the deceased, incurring expenses and eschewing opportunities for rental income. Although he claims to have expended a substantial amount on maintenance of the property, he contends that it is not in a fit state to be let out to a tenant without repairs likely to cost more than liquid funds presently available to the estate. He opposes any steps being taken towards the property being leased or sold. The plaintiff's management of the property has been informed, not altogether consistently, by self-interest. On the one hand, he expresses a desire to retain the property for himself and his children because of a sentimental attachment to it as a former family home. On the other hand, he contends that the property might best be valued, for the purpose of a prospective sale, as a "knock down and rebuild" opportunity. He would have the property remain unoccupied, under his exclusive management, without supervision, pending the final determination of the principal proceedings, the trial for which is eight months away. The prospect of a reserved judgment and an appeal cannot be excluded. Despite the possibility that, upon determination of the principal proceedings, the defendant may be found to have a beneficial interest in the estate, he seeks to pursue his own agenda without accountability. The plaintiff's intermeddling in the affairs of the estate, and his lack of insight in a failure to appreciate the need for an accountable interim administration regime pending the determination of the principal proceedings, ground a finding that administration of the estate cannot be left in his hands pending the determination of the proceedings, but should be placed in the hands of an independent administrator to whom the parties can make representations about how the property should best be dealt with".

Application for leave to appeal

The Applicant's Summary of Argument identifies the questions said to arise from the primary judgment as follows:

whether, as a matter of principle, the discretion to appoint an interim administrator ought to be exercised protectively (proposed Ground 1); and
whether the primary judge erred in the exercise of his discretion by giving primacy to the prospect of generating income from an estate asset (being the former home of the late Mrs Ritossa) and failing to consider or give weight to material matters including the impracticality of leasing the property, the liabilities associated with the costs and expense of an administration (which liabilities are to be met by a charge over the property) and the desire of potential beneficiaries of the estate to retain the family home (proposed Ground 5).

The application for leave was opposed on a number of grounds, but principally on the basis that no issue of principle arose and that the decision under challenge was interlocutory in nature involving a matter of practice and the exercise of a discretion by the primary judge.
The high hurdles attaching to an application for leave to appeal from a decision of this character are well known and have consistently been stated by this Court. Notwithstanding that, Sir Frederick Jordan's observations, in In the matter of the Will of F B Gilbert (dec) [1946] NSWStRp 24; (1946) 46 SR (NSW) 318 at 323, bear repeating: "... I am of opinion that ...there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal."
As Simpson JA and I said in PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48 at [5]-[6]: "Discretionary decisions, whether in the context of substantive or procedural relief, also engage the strictures against over-ready appellate interference and the correlative need for "added restraint" associated with House v R (1936) 55 CLR 499 with the consequence that a "heavy burden" lies on an applicant seeking leave to appeal from a discretionary judgment on a question of practice or procedure: see, for example, Oswal v Burrup Fertilisers Pty Ltd (recs and mgrs apptd) [2011] FCAFC 117 at [8] and [11]; see also Warragamba Winery Pty Ltd v State of New South Wales [2010] NSWCA 174 at [6] where the task of an applicant seeking leave to challenge such a decision was described as a "difficult" one; see also Cicek v The Estate of the Late Mark Solomon [2014] NSWCA 278 at [69]- [70]; Dank v Cronulla Sutherland District Rugby League Football Club Ltd [2014] NSWCA 288 at [73]- [75]; Treadtel International Pty Ltd v Cocco [2016] NSWCA 360; 117 ACSR 176 at [29]; Mei Zhang v Ye Cheng [2018] NSWCA 299 at [12]. Leave applications in this Court attract a general obligation on the applicant for leave to establish that there is an issue of principle, a question of public importance or a reasonably clear injustice going beyond something that is merely arguable: Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46]; BE Financial Pty Ltd v Das [2012] NSWCA 164 at [32]- [38]; Age Co Ltd v Liu (2013) 82 NSWLR 268; [2013] NSWCA 26 at [13]; Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 at [28]".

Consideration

In my view, the application for leave to appeal should be refused with costs. It does not meet the well-established criteria for the grant of leave to appeal. As explained below, there is no issue of principle to which the decision gives rise, and there is certainly no question of public importance or a reasonably clear injustice going beyond something that is merely arguable.
On this last issue, the appointment of an administrator, who had the benefit of a charge over the assets of the estate for her expenses, relieved the Applicant of the need to continue to incur expenses and the risk of later dispute as to his entitlement to be reimbursed for expenses from the estate. Further, he was protected in the sense that the property could not be sold without his consent or the approval of the Court: see [7] above. No substantive rights were affected by the appointment of an administrator and, to the extent that she would incur expenses in the conduct her office, it was not established (nor obvious) that they would be any greater than those that the Applicant had incurred as, in effect, executor de son tort.
The primary judge's discretionary decision to appoint the Second Respondent as administrator on terms was open to him and involved no relevant error of principle.
The power to appoint an interim administrator is constrained only by the requirement to advance the due and proper administration of the estate in the best interests of the ultimate beneficiaries.
Section 73 of the Act is expressed in broad terms and, as has regularly been said by the High Court and this Court, it is important not to "gloss" statutory provisions: see, for example, McKinnon v Secretary, Department of Treasury (2006) 228 CLR 423; [2006] HCA 45 at [61], citing Attorney-General's Department v Cockcroft (1986) 10 FCR 180 which rejected placing 'an unwarranted gloss upon the relatively plain words of the Act'; Purvis v New South Wales (2003) 217 CLR 92; [2003] HCA 62 at [89]; Fish v Solution 6 Holdings Limited (2006) 225 CLR 180; [2006] HCA 22 at [28], [107], [110] and [113]; Totaan v R [2022] NSWCCA 75 at [78].
This is especially so where powers conferred on a superior court are concerned: see Owners of Ship "Shin Kobe Maru" v Empire Shipping Company Inc (1994) 181 CLR 404 at 421; [1994] HCA 54 where it was said that "[i]t is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words"; see also FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268 at 283-284 and 290; [1988] HCA 13; Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 185, 202-203 and 205; [1992] HCA 28 (Knight). As Gaudron J observed in Knight at 205, the "necessity for the power to be exercised judicially tends in favour of the most liberal construction".
The primary judge was correct to emphasise the broad nature of the power to appoint an interim administrator, and to resist the notion urged upon him by the Applicant of the need to find some tangible evidence of "jeopardy" to the estate as a pre-condition to, or prerequisite of, appointment.
In this context, something should be said about Greenway v McKay (1911) 12 CLR 310 (Greenway) upon which the Applicant placed some reliance. To the extent that that decision is relevant (because it was not concerned with the interpretation of s 73 of the Act or any analogue to it as well as the fact that the case involved the appointment of an administrator ad litem as opposed to pendente lite), I do not read the High Court's decision in Greenway as endorsing any requirement for there to be a finding of "jeopardy" or potential jeopardy to the estate before an interim administrator may be appointed. In that case, whilst the judge at first instance had employed the language of "jeopardy", Griffith CJ, with whom Barton J agreed, described the inherent jurisdiction in more general terms, saying that it arises "from the necessity of the case": at 315. Perhaps even more significantly for present purposes, O'Connor J made the following observations at 320: "When the matter came before the learned Judge on the second occasion he seems to have taken the view that his jurisdiction to act under r. 15 was limited to cases in which the estate was in jeopardy, and the application must be for the protection of the assets of the estate. I see no ground under any circumstances for so limiting the jurisdiction".
"Jeopardy" to an estate may present the or a paradigm case for the appointment of an interim administrator but that concept should not be given the status of a or the criterion for the exercise of the discretion reposed in the Court to appoint an interim administrator, whether in its inherent jurisdiction or when exercising the power conferred by s 73 of the Act.
In the present case, the primary judge plainly formed the view that the relationship between the two brothers was such that necessity dictated that an independent person be invested with authority to manage the estate and its principal asset on an ongoing basis. That conclusion was open to his Honour and was confirmed by the brothers' inability to reach an agreement following the hearing on 3 August 2022 following his Honour's provisional views as to what should occur: see [23] above. The brothers' relationship, as described by the primary judge, was not such as to lend itself to any agreement as to what should happen to the estate pending resolution of the probate proceedings, including as to whether or not it should be sold, leased or simply maintained, and as to whether there should be a caretaker of the property: see [21] above.
Criticism was made of the primary judge's reference to the Applicant as having "intermeddled" in the estate. That description did not convey or entail any judgment that the Applicant had not acted bona fide in the steps he had taken to preserve the property. Indeed, an intermeddler may be well-intentioned: FC Hutley, 'The executor de son tort in the law of New South Wales' (1952) 25 Australian Law Journal 716 at 717. Rather, it was an accurate description of the Applicant's role as acting in effect as executor and administering the estate, pending a grant of probate, and thereby necessarily without authority: Moustach Pty Limited v Eddie Takchi [2015] NSWSC 2079 at [55]-[56]. In the present case, this was being done where there was a live contest as to competing wills and the determination of who the ultimate beneficiaries of the estate would be.
It is true, as Ms Morgan SC for the Applicant emphasised, that the application for the appointment of an interim administrator was not made until almost two years after the death of the Deceased, and that the application was not then pressed until the middle of 2022 but that fact was one of which the deeply experienced primary judge was well aware and no doubt took into account in the exercise of his discretion.
The critical point is that, when the primary judge came to exercise his discretion in August 2022 by appointing the Second Respondent as interim administrator, there was a real and crystallized dispute between the parties as to how the estate's principal asset should be dealt with. The Applicant had led third hand hearsay evidence that it could not be leased without spending $150,000ꟷ$200,000 on improvements to the property whereas the First Respondent's expert had said that the property could command a rental income of $1700 per month. It was not for his Honour, on an interlocutory application, to determine this disputed question, but its very existence illustrated why it had ceased to be appropriate, if it ever was, for one of the parties to have unilateral and exclusive control over decisions involving the estate's principal asset and its productivity in the sense of its capacity or potential to generate rental income pending the ultimate resolution of the case.
There was also the fact that, from at least April 2021, the parties were in dispute as to whether or not the property should have a caretaker, or a caretaker whose expenses should be paid from the estate: see [21] above. The First Respondent had not been consulted as to the appointment of a caretaker and, notwithstanding his opposition to a caretaker's appointment as communicated in April 2021, the Applicant evidently continued to employ a caretaker with the intention of ultimately claiming reimbursement of that expense from the estate.
One further point should be noted for completeness and to illustrate the good sense of the primary judge's decision (although it was not a matter his Honour relied upon in his judgment). The Applicant submitted that there was no need for the appointment of an administrator because the property was insured (and thereby the estate protected) by a policy of insurance which he had effected with NRMA. That policy was in evidence as an attachment to the affidavit of the Applicant's solicitor filed on 29 July 2022. It identifies the insured as the Applicant, but the Applicant arguably did not have, at the time the policy was effected, any current insurable interest in the property, and may only have such an interest if he is ultimately successful in propounding the 2018 will. This only serves to highlight that his actions had a measure of self-interest, as the primary judge found, and may well have left the estate in a measure of jeopardy, to use the term by refence to which the Applicant's case was formulated.
Insurance which the Court was informed has now been effected by the Second Respondent in her capacity as administrator, on the other hand, will not have this potentially problematic aspect as she is the authorised representative of the estate as the beneficial owner of the property and plainly has an insurable interest in the property.

Conclusion

For these reasons, the application for leave to appeal should be refused with costs.
GLEESON JA: I agree with Bell CJ.
WHITE JA: I agree with Bell CJ.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 February 2023

Supreme Court Act 1970(NSW)s 101(2)(e)

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