Rosenberg v Bloom

The Deceased

1. The Deceased was a Jewish widower, whose wife (Katherine) died in 2012, and had no children or immediate family members. He was born in Budapest, Hungary, emigrated to Australia in 1951, and died on 28 October 2020 at 97 years old.
2. On 28 September 2018, the New South Wales Civil and Administrative Tribunal made a financial management order in relation to the Deceased, appointing the NSW Trustee and Guardian as financial manager.

Mr Bloom and the Deceased

1. Mr Bloom first met the Deceased in or about January 2017 when he moved to Penkivil Street in Bondi, New South Wales. The Deceased resided at Unit 603, 56A-62 Penkivil Street, Bondi, New South Wales and the two would often engage in discussion when they occasionally met. They first met when the Deceased was in the company of his then carer, Terez Fulop, who previously lived in the same building as Mr Bloom on Carlisle Street, Tamarama.
2. In June 2018, after learning that Mr Bloom was also Jewish and a solicitor, the Deceased asked Mr Bloom to copy-type a former will of the Deceased and make some amendments to it. Mr Bloom agreed to assist the Deceased by doing so at various times over several months between June and November 2018.
3. Mr Bloom is the executor of the estate pursuant to a will made by the Deceased dated 8 November 2018 (2018 Will), the attestation of which Mr Bloom witnessed together with another person. The full circumstances of the preparation of the 2018 Will and the testamentary capacity of the Deceased when the 2018 Will was made are matters for evidence and submissions at the hearing of the substantive proceedings.
4. Probate of the 2018 Will was granted in common form on 28 January 2021. Mr Bloom appointed Peter Arnott of Arnotts Lawyers to act as legal adviser for the estate.
5. The former accountant of the Deceased, David Johnson of DWS Johnson + Co, was appointed by Mr Bloom to act as the accountant for the estate.
6. Mr Bloom has not charged any fees for acting as executor of the estate, although he has reserved his rights to do so at a future time.

The estate

1. At the time of his death in October 2020, the Deceased owned five properties located in Bondi (together the Properties) valued at about $8.44 million. Market appraisals of the value of the Properties carried out in April 2023 totalled $12.95 million. The Properties are as follows: 1. Unit 5, 7A Penkivil Street, Bondi, New South Wales - Folio Identifier 5/SP2897; 2. Unit 6, 43 Denham Street, Bondi, New South Wales - Folio identifier 6/SP48339; 3. Duplex at 1 & 2, 14 O'Donnell Street, North Bondi, New South Wales - Folio Identifier 126/11758 (O'Donnell Street property); 4. Unit 603, 56A-62 Penkivil Street, Bondi, New South Wales - Folio Identifier 21/SP60648 (56A Penkivil Street property); and 5. Unit 8, 3-5 Denham Street, Bondi, New South Wales - Folio Identifier 8/SP13837 (3-5 Denham Street property).
2. At the time of his death in 2020, the Deceased held $3.55 million on deposit in bank accounts held by the NSW Trustee and Guardian as the financial manager of the Deceased. The evidence at the time of the hearing revealed that the total amount of funds held by the estate in the trust account of Arnotts Lawyers was $2,186,108.95, with significant amounts having been paid to the Australian Taxation Office for income tax ($821,051.72), to Arnotts Lawyers for the legal costs and disbursements in the substantive proceedings ($400,088.56 ex GST), to Revenue NSW for land tax ($120,055.75) and to Arnotts Lawyers for the legal costs and disbursements for the grant of probate, administration of the estate, and a minor wills claim ($43,926.83 ex GST). The other expenses paid from the funds of the estate include funeral expenses, property expenses and accounting expenses.
3. By any measure, it is a significant estate.
4. All of the Properties, other than the 56A Penkivil Street property, are tenanted, managed by Express Realty Bondi Beach, and the estate receives rent from them (after the deduction of management fees and minor repair expenses).
5. The 56A Penkivil Street property is occupied by Ms Fulop. As at the date of the Deceased's death, Ms Fulop was a carer for the Deceased and lived at the 56A Penkivil Street property rent-free since November 2012, pursuant to a written agreement dated 28 November 2012 which was amended on 4 September 2017. Those amendments included each of the following (in which the Provider is the Deceased, the Occupant is Ms Fulop, and the Premises are the 56A Penkivil Street property): 1. The Parties agree that the Occupant can remain on the Premises until the Provider's day of death. 2. The Provider desires that the Occupant can remain on the Premises subject to any other agreement between the Provider and his Power of Attorney regarding the Premises. 3. The Occupant can remain in the Premises even after the Provider dies and/or subject to Probate. 4. The Provider permits the Occupant with the ability to inherit some of his Estate.
6. Under each of the 2018 Will and the June 2016 Codicil (defined below), Ms Fulop is the beneficiary of the 56A Penkivil Street property. No rent or other occupation fee has been charged by the estate to Ms Fulop for her occupation of the 56A Penkivil Street property. The evidence indicates that the market rent for the 56A Penkivil Street property would be about $1,520 per week.
7. Ms Fulop pays for the electricity used at the 56A Penkivil Street property. The Deceased's furniture, chattels and personal effects remain located at the 56A Penkivil Street property.
8. The insurance and other property expenses for the Properties, including land tax, rates and strata expenses, are borne by the estate.

The substantive proceedings

1. The substantive proceedings were commenced in May 2021 by Ms Rosenberg and involve a number of disputes relating to a succession of wills that were made by the Deceased. Those disputes are between people who were professionals, carers, and friends in the Deceased's life.
2. In the substantive proceedings, the plaintiff, Ms Rosenberg, is seeking specific performance of an alleged agreement entered into between her and the Deceased in about 2010, pursuant to which she alleges that the Deceased agreed to transfer to her the O'Donnell Street property and the 3-5 Denham Street property. In the alternative, Ms Rosenberg seeks revocation of the grant of probate to Mr Bloom of the 2018 Will and, in its place, a grant of administration on a will of the Deceased dated 24 April 2013 (April 2013 Will). In essence, Ms Rosenberg alleges that the Deceased promised each of the O'Donnell Street property and the 3-5 Denham Street property to her in exchange for her providing care for the Deceased.
3. There are three cross-claims that have been brought in the substantive proceedings. They can be summarised as follows: 1. The first cross-claim was filed by Mr Bloom seeking: 1. a revocation of the grant of probate made on 28 January 2021 in respect of the 2018 Will; and 2. a grant of probate on the 2018 Will in solemn form. 1. Mr Bloom therefore propounds the 2018 Will. 2. The second cross-claim was filed by Ms Albecz seeking: 1. the revocation of the grant of probate on the 2018 Will; 2. a declaration that the will dated 14 March 2014 of the Deceased (March 2014 Will) is the last will of the Deceased; and 3. a declaration that the March 2014 Will revoked the will dated 6 July 2013 of the Deceased (July 2013 Will). 1. In the alternative, Ms Albecz seeks: 1. a declaration that the July 2013 Will is the last will of the Deceased. 1. In the further alternative, Ms Albecz seeks a declaration that the will dated 8 July 2014 of the Deceased (July 2014 Will) was the last will of the Deceased but not the codicil dated 13 November 2014 (November 2014 Codicil) or the codicil dated 30 June 2016 (June 2016 Codicil). 2. Ms Albecz therefore propounds the March 2014 Will, alternatively the July 2013 Will, and further alternatively the July 2014 Will (without the November 2014 Codicil or the June 2016 Codicil). 3. The third cross-claim was filed by the third defendant/third cross-claimant, David Johnson (the former accountant of the Deceased and now accountant of the estate), seeking: 1. a revocation of the grant of probate of the 2018 Will; 2. a declaration that the July 2014 Will is the last will of the Deceased; 3. declarations that the November 2014 Codicil and the June 2016 Codicil are valid codicils to the July 2014 Will; and 4. a declaration that the effect of the July 2014 Will was to revoke the March 2014 Will. 1. Mr Johnson therefore propounds the July 2014 Will (with the November 2014 Codicil and the June 2016 Codicil).
4. The Deceased also made wills dated 15 September 2008, 24 February 2011, 20 January 2012, and 15 June 2012 before making the wills which are the subject of the disputes in the substantive proceedings.
5. As is evident, the Deceased was a prolific will maker, which means that the substantive proceedings are complex and require the resolution of numerous issues on each of the claims, particularly those focused on the testamentary capacity of the Deceased at each of the times he made the wills and codicils which are in dispute. All of those issues are matters for determination by the trial judge after the hearing of the substantive proceedings.
6. The substantive proceedings are heavily contested. It is very likely that all parties involved in the substantive proceedings will incur very significant costs.
7. At present, there is no hearing fixed for the determination of the substantive proceedings, although the pleadings are closed, and the lay and expert evidence is complete. Upon the determination of the motion, the substantive proceedings are ready to be heard.

SUBMISSIONS

1. Whilst the crux of the submissions are summarised below, I will provide further detail on those submissions throughout the course of the judgment.

Ms Albecz

1. At the heart of Ms Albecz's submissions is that Mr Bloom should not be entrusted with the management of the estate in the future by reason of his conduct and behaviour since the time he became executor of the estate. Should Mr Bloom remain as the executor of the estate, this may, Ms Albecz submits, jeopardise the preservation of the assets of the estate.
2. In support of her position, Ms Albecz made the following submissions: 1. Mr Bloom's conduct and evidence about his relationship with the Deceased and the services he provided to him in relation to the 2018 Will; the preparation of an enduring guardian and an occupancy agreement between the Deceased and Ms Fulop; and the manner in which he has administered the estate calls into question his veracity, credibility and fitness to currently administer the estate. 2. Contrary to cl 11(a) of the 2018 Will, Mr Bloom has used estate funds for his "personal" legal expenses in defending these proceedings, which are in excess of $500,000, without a court order or consent of the other parties and/or the residual beneficiaries. 3. Repayment of all of Mr Bloom's personal legal expenses into court and prohibition from using estate funds is necessary to preserve the assets of the estate and protect the beneficiaries of it. 4. There is a conflict of interest in the relationship between Mr Bloom and Mr Arnott. Mr Bloom is a former employee of Arnotts Lawyers. Mr Arnott is both Mr Bloom's solicitor on the record in the substantive proceedings and the person to whom Mr Bloom has delegated most (if not all) of his duties in respect of the administration of the estate. As such, Mr Arnott occupies a dual role as de facto administrator of the estate and Mr Bloom's personal legal advisor/representative in the substantive proceedings. 5. Mr Bloom does not have reasonable prospects of the court finding the 2018 Will valid and/or awarding costs in his favour if the court finds that he has not acted honestly and reasonably in the substantive proceedings. Mr Bloom's financial incapacity to repay his legal expenses deducted from the estate has the potential to prejudice the residual beneficiaries of the successful will. 6. Mr Bloom and the third defendant/third cross-claimant, Mr Johnson, have a common interest in the substantive proceedings. Mr Bloom employed Mr Johnson as the estate's accountant, and Mr Johnson has been paid by the estate for both his accounting services and for preparing evidence in respect of the substantive proceedings. Accordingly, Mr Johnson's opposition to the motion should be afforded no weight.
3. Regarding the issue of timing of the appointment of an administrator, Ms Albecz also submitted that the appointment of an administrator was necessary because the hearing of the substantive proceedings was unlikely to be held until late 2024/early 2025 and is estimated to span two to four weeks, with evidence from at least 24 witnesses on 41 affidavits filed (not including those in relation to the motion) and likely appeals. Taking all that into account, it was submitted by Ms Albecz that it would be one to two years before there is final resolution of the substantive proceedings.

Mr Bloom

1. Mr Bloom submitted that he has taken active steps in his administration of the estate and fulfilled his obligations to preserve the estate, manage the assets, collect income, and pay liabilities.
2. In support of his position, Mr Bloom made the following submissions: 1. Particular issues with Mr Bloom's management of the estate can be properly addressed by the residual beneficiaries seeking an account in due course, rather than the court interfering with the administration of the estate pending the finalisation of the substantive proceedings. 2. A special grant pendente lite is otiose, given an independent administrator will simply take over doing exactly what Mr Bloom is already doing, but will result in an extra layer of cost. 3. Mr Bloom is not beneficially entitled to any part of the estate under the 2018 Will or any other testamentary instrument. As such, he is a disinterested executor with the benefit of a grant and is entitled to have the legal costs of defending the grant incurred by him indemnified out of the estate. 4. Mr Bloom's costs do not constitute "personal" expenses in the sense submitted by Ms Albecz, as Mr Bloom's authority derives from the common form grant of probate on the 2018 Will, which remains operative unless and until revoked or renounced. 5. The risk that Mr Bloom could subsequently be personally liable for his costs if not successful in the substantive proceedings is remote and can be determined at the conclusion of them. 6. An ad litem grant is unnecessary as a separate representative would have no role to play in the substantive proceedings. Mr Bloom is authorised to represent and defend the 2018 Will by virtue of his occupation of the office of executor to whom probate on the 2018 Will has been granted. 7. Ms Albecz is not a beneficiary named in the 2018 Will. If a solemn form grant of probate is made in relation to the 2018 Will, she has no interest in the estate, and therefore no standing to challenge Mr Bloom's office as executor and no standing to seek an account of the estate.

LEGAL PRINCIPLES

1. The application in the motion is one that seeks the exercise of the court's powers pursuant to s 73 of the Probate and Administration Act 1898 (NSW) which is in the following terms: 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.
2. In the alternative, it is sought that I make the principal orders in the motion pursuant to my inherent jurisdiction to do so.
3. In Ritossa v Ritossa [2023] NSWCA 14, the Court of Appeal recently considered the exercise of the powers in s 73 of the Probate and Administration Act on appeal from the first instance decision of Lindsay J: Estate of Ritossa [2022] NSWSC 1083.
4. The facts in Estate of Ritossa were that the deceased was survived by her two sons, the plaintiff and the defendant in the proceedings, who had been engaged in bitterly contested litigation concerning the estate, resulting in the breakdown of their relationship. The dispute concerned two wills of the deceased, being, respectively, the subject of competing claims for a grant of probate by each of the plaintiff and the defendant, of which the testamentary capacity of the deceased was the central issue. The most significant assets of the estate were two adjoining parcels of land in Maroubra, which had been unoccupied since the death of the deceased. Without authority to do so, the plaintiff engaged in unilateral and unauthorised management of the estate without reference to the defendant, accruing maintenance costs in the amount of $157,824 which he had paid from his own funds.
5. On the application of the defendant, Lindsay J in Estate of Ritossa ordered that there be a special grant of administration of the deceased's estate, pursuant to s 73 of the Probate and Administration Act, to an independent administrator with limited powers, including the ability to lease and sell the Maroubra property, although the sale could only be with the consent of the parties or leave of the court. Lindsay J also ordered that the administrator was entitled to charge remuneration for her time, the payment of which was deferred pending determination of the proceedings and charged to the Maroubra property to secure payment.
6. Lindsay J reasoned at [22]-[24] that the exercise of the power in s 73 of the Probate and Administration Act did not require a formal finding that the estate is or would be in "jeopardy" absent the appointment of an administrator, but held that what was required was "necessity" or "sufficient reason" for that appointment. In doing so, Lindsay J made specific reference to the reasons of Williams J in Gooley v Gooley [2020] NSWSC 798 at [125]-[126] (dealt with in further detail below).
7. The plaintiff in Estate of Ritossa appealed the decision. In Ritossa, Bell CJ (with whom Gleeson and White JJA agreed) at [37] observed: 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.
8. Importantly for the determination of the motion, in Ritossa, Bell CJ at [39]-[42] set out the relevant principles to be followed in relation to s 73 of the Probate and Administration Act as follows: 39 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. 40 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]. 41 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". 42 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.
9. In Ritossa, Bell CJ at [43]-[44] referred to the judgment of the High Court of Australia in Greenway v McKay (1911) 12 CLR 310; [1911] HCA 25 as not endorsing any requirement that there be a finding of jeopardy or potential jeopardy to an estate before an interim administrator may be appointed, and said at [44]: "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.
10. In Gooley (decided before Estate of Ritossa and Ritossa), Williams J also considered the operation of s 73 of the Probate and Administration Act. As Ms Albecz placed importance on the decision in Gooley, it is necessary to set out considerable detail in relation to it.
11. As stated above, the judgment in Gooley was one on which Lindsay J relied for determining the principles to be applied at first instance in Estate of Ritossa. A degree of caution must be exercised in relation to the application of all aspects of Gooley given that it was decided several years before the Court of Appeal's guidance in Ritossa and contains reference to the need to be satisfied that the "assets of the estate are in some jeopardy" as part of the necessity or sufficient reason for the appointment (at [125]). It does, however, contain a useful exposition of the relevant principles and their history at [110]-[126].
12. The facts in Gooley involved two daughters of the deceased who had been named as his executors under a will made in 2014 and were beneficiaries of a share in a family company and any debt owed by that company to the deceased. The daughters became plaintiffs in the proceedings by applying for a grant of probate of that will in solemn form, but there had been no grant of probate on that will in common form. The defendant was the son of the deceased who contended that the deceased did not have testamentary capacity at the time that he made the will in 2014. The defendant contended that the last valid will that had been made by the deceased was in either February 2010 or June 2012, under which he was named as the sole executor and was the beneficiary of the share in the family company and any debt owed by that company to the deceased. The plaintiffs contended that if the deceased lacked testamentary capacity at the time that he made the will in 2014, he did have testamentary capacity in respect of wills made in September and November 2012, March and May 2013 and March 2014, each of which revoked the wills made before them. These were the respective claims in the probate proceedings, there being no will on which probate had been granted.
13. Claims for provision from the estate of the deceased were then made by two grandchildren of the deceased who had been born to another daughter of the deceased, who died a few months after the deceased. Those claims were made in separate family provision proceedings.
14. In this context, the deceased's son made an application in which he sought orders, including: 1. restraining the plaintiffs from using funds or assets of the estate to meet the costs incurred by the plaintiffs in the probate proceedings and the family provision proceedings; 2. requiring the plaintiffs to repay the estate all payments made from the estate to them or any professional adviser in relation to the probate proceedings, the family provision proceedings, and the administration of the estate; and 3. an order under s 73 of the Probate and Administration Act granting administration to an interim administrator of the estate.
15. The basis of the application under s 73 of the Probate and Administration Act was alleged misconduct of the plaintiffs, namely, using the assets of the estate for their own purposes to fund the legal costs in the probate proceedings and the family provision proceedings. Importantly, Williams J at [26] held that the plaintiffs were parties to the probate proceedings in their personal capacity, and not as executors of the estate, because the probate proceedings would resolve which will was valid and who were the executors of the estate.
16. The relevant test applied by Williams J at [125] was whether there was "necessity" or "sufficient reason" for the appointment of an interim administrator, whereby the assets of the deceased estate are in some jeopardy, and the appointment of an interim administrator would remove, or at least reduce, that jeopardy. The latter portion of that test was revised in Ritossa, eliminating the need for a formalistic search for "jeopardy".
17. At [139]-[140], Williams J found that the assets of the estate were in some jeopardy and the appointment of an administrator pendente lite to hold and preserve the assets of the estate pending the determination of the probate proceeding would remove the basis for further suspicion to develop concerning what future dealings the plaintiffs may undertake with the assets of the estate. On the way to doing so, Williams J at [128] rejected the submission made that the plaintiffs' use of estate funds to pay legal fees would involve no mischief, but also found that the evidence did not establish that the plaintiffs had in fact used estate funds for that purpose.
18. Central to the reasoning of Williams J about the use of estate funds are the following passages at [92]-[94] (footnotes omitted): 92 I have referred above to the plaintiffs having had no authority to pay their legal costs of the Probate Proceeding from Estate funds. That is because the validity of the 2014 Will under which the plaintiffs claim to derive authority as executors is in dispute in the Probate Proceeding. Unless and until that dispute is resolved in the plaintiffs' favour, it is uncertain whether the plaintiffs have the status and authority of executors of the Estate and they are not entitled to spend Estate funds on the assumption that they will be found to be the rightful executors in due course: Howling v Kristofferson, Supreme Court of New South Wales, Cohen J, 14 October 1992, unreported, BC9201556 at 14. 93 If the Court determines that the 2014 Will (or an earlier will naming the plaintiffs as executors) is valid, and if probate is granted to the plaintiffs, their spending of Estate funds before the grant of probate will be authorised retrospectively by reason of the real and personal estate of the deceased vesting in the executors with effect from the death of the deceased pursuant to s 44 of the PA Act. However, that retrospective authorisation will only apply to expenditure that could properly have been incurred by the executors of the Estate. In my opinion, it will not apply to the plaintiffs' legal costs of the Probate Proceeding. The plaintiffs are prosecuting the Probate Proceeding in their personal capacities, claiming to be recognised as the executors under the 2014 Will, which they contend is valid. Their subjective view that they are prosecuting the proceeding in their capacity as executors of the Estate is misconceived. Whether or not the plaintiffs' legal costs of the Probate Proceeding will ultimately be paid out of Estate funds depends not on whether the plaintiffs are named as executors under the will that is held to be valid, but on whether the Court in the exercise of its discretion under s 98 of the CPA makes an order that the plaintiffs' costs of the Probate Proceeding be paid out of the Estate. 94 The plaintiffs submitted that, if the ultimate outcome of the Probate Proceeding means that they are not the rightful executors of the Estate, then they will be liable to creditors and beneficiaries as executors de son tort in respect of any intermeddling with the assets of the Estate. That is correct. However, for the reasons explained immediately above, it does not follow that (as the plaintiffs' submissions implied) the plaintiffs are entitled to use Estate funds to pay their legal costs of the Probate Proceeding now on the basis that they will provide an account, or may be liable to creditors and beneficiaries, in due course.
19. At [148], Williams J stated that having not found on the balance of probabilities that the plaintiffs used estate funds to pay the legal costs, it was not strictly necessary to address the defendant's application for an interim "disgorgement order", but said that such an order would not have been made even if it had been found that the plaintiffs' legal costs of the probate proceeding had been paid out of estate funds. Williams J held at [151]-[152] that there was no power to make an interim order of that sort as an incident of the court's power to make costs orders at the conclusion of the probate proceedings under s 98 of the Civil Procedure Act 2005 (NSW).
20. Moving on from the decision in Gooley, whilst the court's discretion under s 73 of the Probate and Administration Act is wide, it should be borne in mind that this discretion should be exercised having regard to the practical utility in making such an order. This consideration was stated in Estate Kouvakas; Lucas v Konakas [2014] NSWSC 786, by Lindsay J at [292]: No grant is made, or revoked, as of right even if, in particular situations (such as where, on an application for a revocation order, it is established that the testator is alive or that a grant was obtained fraudulently), the Court's order might reasonably be thought to follow from facts proved. More particularly, the Court generally reserves a right to decline to make a revocation order if not satisfied that there is utility in making the order: Willis v Earl Beauchamp (1886) LR 11 PD 59 at 61, 62, 63, 64 and 65; In re Goode (1890) 11 NSWR (Equity) 281 at 285-286, 286-297 and 287-288; Stanley v Stanley [2000] NSWSC 1133 at [11] and [33]-[34]; Richardson v Rearden [2006] NSWSC 1252 at [19]-[21]; Tobin v Ezekiel [2012] NSWCA 285 at [5]-[9].
21. Further, when the circumstances fall short of justifying the appointment of an administrator pendente lite, the court may still fashion orders to deal with a practical problem in the administration of the estate such as regularising the manner in which rent is paid: Goodsall v Keen [2006] NSWSC 1143, Campbell J (as his Honour was then) at [8]-[11].
22. An executor who properly incurs costs and expenses on behalf of the estate is entitled to be reimbursed for them. In O'Brien v McCormick [2005] NSWSC 619, Campbell J (as his Honour was then) at [56] conveniently summarised the relevant principles: … It has been the law for a very long time that a trustee is entitled to be reimbursed out of the trust property in respect of all the charges and expenses properly incurred in the execution of the trust: Worrall v Harford (1802) 8 Ves Jun 4 at 8; 32 ER 250 at 252; In re Grimthorpe, deceased [1958] 1 WLR 381; Carver v Duncan (Inspector of Taxes); Bosanquet v Allen (Inspector of Taxes) [1983] 1 WLR 494 at 502. That principle also applies to executors. A corollary of that principle is that, if there is any challenge to the executor's accounts, executors can be disallowed indemnity from the estate for expenses not reasonably incurred: Field v Peckett (No 3) (1861) 29 Beav 576; 54 ER 751. In particular, an executor can be disallowed indemnity from the estate for the costs of an action which they improperly commenced or defended - and in this context "improperly" means in a way which was not reasonable and honest: Chambers v Smith (1846) 2 Coll 742; 63 ER 942; Smith v Chambers (1847) 2 Phillips 221; 41 ER 926; In Re Beddoe; Downes v Cottam [1893] 1 Ch 547 at 557, 562; Re England's Settlement Trusts; Dobb v England [1918] 1 Ch 24. …
23. Relevant to the motion is also the question of costs. It is the usual rule that costs follow the event, subject to a number of exceptions. One exception permits an executor to recover costs from the estate which is itself subject to two sub-exceptions. These were summarised in Drummond v Drummond [1999] NSWSC 923, by Austin J at [45] and [47]: 45 The first is the sub-exception for 'impropriety'. As Kekewich J made clear in Re Jones, cases of impropriety include an executor taking or defending proceedings in breach of trust, or conducting the proceedings in such a way that the Court, on a general view of the case, regards the executor's conduct as 'not honestly brought forward' ([1897] 2 Ch 190, 198). Additionally, recourse to the estate may be denied to an executor 'where the claim is of monstrous character, that is, one which no reasonable man could say ought to have been put forward' (at 198). In Re Weall the trustees allowed a solicitor to deduct fees which were not properly chargeable to the life tenant from the rental income of the estate. Kekewich J observed that while mistakes or errors in judgment would not disentitle the trustees to an indemnity, the beneficiaries were entitled to expect 'reasonable prudence' of the trustees (42 ChD at 678-9). … 47 Secondly, the rule which gives an executor the prima facie entitlement to be indemnified out of the estate for costs relates only the costs incurred in the administration and distribution of the estate. Such costs are to be distinguished from costs incurred by an executor in furtherance of a personal interest: Miller v Cameron (1936) 54 CLR at 578-9; Re Jones [1897] 2 Ch at 197-8; Plimsoll v Drake (No.2) (Supreme Court of Tasmania, Zeeman J, unreported, 8 June 1995). Executors who pursue personal interests in litigation are 'not fighting for the estate any more than if they were not executors at all': Skrimshire v Melbourne Benevolent Asylum (1894) 20 VLR 13, 18 pfer Madden CJ. An executor who prosecutes or defends proceedings in the capacity of, say, creditor or beneficiary of the estate rather than in the capacity as executor cannot expect to recoup the costs of litigation from the estate simply on the basis that he or she is also an executor. In Miller v Cameron Latham CJ took the view that a trustee who defended an action for his removal was thereby representing his own interests and not those of the trust estate. In Plimsoll v Drake Zeeman J reached a similar conclusion where a trustee unsuccessfully asserted the right to demand a release before distributing the trust estate to the beneficiaries.

CONSIDERATION

1. There are three primary issues to be determined on the motion: 1. whether to appoint an interim administrator; 2. whether to make an order preventing Mr Bloom from using estate funds for his legal expenses in the future; and 3. whether there should be repayment of estate funds already spent by Mr Bloom.
2. In relation to issue (3), at the hearing, Ms Albecz submitted that security (such as a bond) would be accepted in lieu of payment of the money into court.
3. It is not within the scope of the determination of the motion for me to consider the validity of the 2018 Will or any of the other various testamentary instruments of the Deceased. Those are properly matters to be determined after the hearing of the substantive proceedings. With this in mind, I do not consider that it is necessary for me to consider the submissions that go to the reasonable prospects of the court finding the 2018 Will valid or any consequences as to costs which might arise from the determination of the substantive proceedings.
4. At the hearing, I also indicated that in determining the motion, I would not make any findings regarding Mr Bloom's credit or alleged professional misconduct. As I have already stated, Ms Albecz rightly did not seek any findings regarding the credibility of Mr Bloom, accepting that any such findings are matters for the trial judge after the conclusion of the hearing in the substantive proceedings.

Appointment of interim administrator

1. Contrary to the submissions of Ms Albecz, the circumstances of this case can be distinguished from those in Ritossa.
2. Unlike the plaintiff in Ritossa, there is no evidence before me to suggest that Mr Bloom has incurred personal expenses in his management of the estate so as to require the court to relieve him of this financial burden or risk further dispute as to his entitlement to be reimbursed. Unlike the circumstances in Ritossa where there had been no grant of probate, there has been such a grant in the present case.
3. Mr Bloom's actions in taking up the position of executor on the grant of probate in common form of the 2018 Will, acting as executor pursuant to that grant, and filing a cross-claim in the substantive proceedings for probate in solemn form do not amount to him acting in his personal capacity, nor can it be inferred that his actions in defending his removal as executor under the 2018 Will transform the nature of the substantive proceedings as ones in which he is acting in a personal capacity. In my view, in defending the substantive proceedings, Mr Bloom is acting in proper administration of the estate.
4. As submitted by Mr Bloom, where there is a capacity challenge to a will which is the subject of a grant of probate in common form, it is appropriate (and for practical purposes, necessary) for the executor to whom the grant has been made to bring a cross-claim seeking a grant of probate in solemn form.
5. This was affirmed by Windeyer J in Kozak v Berwecki [2008] NSWSC 39 at [5]: The normal and, I consider, the proper course where claim for revocation is made is for the executor obtaining the disputed common form grant to seek, by cross-claim, probate of the disputed will in solemn form. Although I stated this at least twice during the trial, no such claim was made. While I do not consider I could require this to be done, such a course is obviously desirable to ensure through service of citations that all interested persons are bound.
6. The acceptance of this practice by the executor of a will on which probate has been granted in common form was recently confirmed by Henry J in The Estate of Alberto Magri (No 2) [2022] NSWSC 1779 at [49]: An executor has an absolute right to seek probate in solemn form and is entitled to seek such a grant despite the existence of a grant in common form. A grant of probate in solemn form is an appropriate course where there is an issue as to the validity of the will or where the executor believes that the grant may be opposed by a person with an interest: G E Dal Pont, Law of Succession (3rd ed, 2021, LexisNexis) (Law of Succession) at [11.31] and [11.33] citing Re Levy (deceased) [1953] VLR 652 at 658.
7. In my view, Mr Bloom's role in drafting the 2018 Will does not confer on him a personal interest in having that particular will upheld. Mr Bloom is not a beneficiary under the 2018 Will and, consequently, has no personal financial interest under it.
8. I note the observations of Latham CJ in Miller, namely, that a trustee who is asked to resign his office and refuses to do so is representing and supporting his own interests. However, in all of the circumstances, Mr Bloom is merely defending the proceedings which have been brought against him in his capacity as executor under the 2018 Will and bringing proceedings to obtain a grant of probate in solemn form of the 2018 Will as he has an absolute right to do.
9. This case is also different from the circumstances in Gooley, where there had been no grant of probate in favour of the plaintiffs. In that case, without such a grant, the plaintiffs were acting in the proceedings in their personal capacity. Here, Mr Bloom has a grant of probate in common form from this court which entitles him to deal with the estate assets, pay third parties with those assets, and defend the grant in the substantive proceedings. Mr Bloom's grant is good against the world and independent of the litigation amongst the parties until it is revoked or renounced, neither of which has occurred. He acts in the substantive proceedings in a representative capacity as executor on behalf of the estate to defend the 2018 Will.
10. Ms Albecz has also failed to explain how it is that the court would allow an administrator to be appointed when she is not seeking the revocation of the grant of probate appointing Mr Bloom as the executor (having expressly deleted that proposed order from the motion). The Deceased cannot have two personal legal representatives in place at the same time.
11. Ms Albecz's submits that Mr Bloom's conduct as executor has jeopardised and will continue to jeopardise the preservation of the assets of the estate in the future. She relies on the following submissions: 1. Mr Bloom has allowed his friend, Ms Fulop, to occupy the 56A Penkivil Street property rent-free when it has a market rental value of approximately $1,520 per week, costing the estate a minimum of $150,000 to date excluding any payment for utilities using estate funds. 2. Mr Bloom has accrued over $500,000 in personal legal expenses, all of which have been paid out of estate funds without a court order or the consent of the beneficiaries. 3. Mr Bloom has refused to stop using estate funds to pay for personal legal expenses, including in his opposition to the motion. 4. Mr Bloom has retained the services of Mr Johnson to perform accounting services for the estate. Mr Johnson has been paid for both his accounting services and for the preparation of evidence in these proceedings using estate funds. 5. Mr Bloom collaborated with Mr Johnson in relation to Mr Johnson's issuance of a Calderbank offer to the other parties, including Ms Albecz. 6. Mr Bloom did not disclose the matters in (4) and (5) to Ms Albecz until documents were produced by Mr Arnott under subpoena on 4 July 2023 and general access granted to the parties on 13 July 2023. 7. Mr Bloom has not been forthcoming with producing documents and providing information in relation to the motion. 8. Mr Bloom has delegated most (if not all) of his administration tasks as executor to Mr Arnott. 9. Mr Bloom appears to approve the payment of Mr Arnott's invoices, which lack detail as to the services performed by Mr Arnott, without questioning them. 10. Mr Bloom did not disclose the Deceased's shareholding in P & K Lichtmann Pty Ltd.
12. I will first address Ms Fulop's occupation of the 56A Penkivil Street property. I note that in allowing Ms Fulop to occupy the 56A Penkivil Street property rent-free, Mr Bloom is eschewing opportunities for rental income. Mr Bloom submits that such a loss is somewhat immaterial in the sense that Ms Fulop stands to gain a devise of the 56A Penkivil Street property under the 2018 Will (as well as the June 2016 Codicil). Mr Bloom also submits that Ms Fulop has lived at the 56A Penkivil Street property rent-free since November 2012 by agreement with the Deceased, and allowing her to continue to do so is simply continuing the status quo pending the finalisation of the substantive proceedings.
13. Whilst I do not accept that it is appropriate to proceed on the basis that Ms Fulop will very likely acquire the 56A Penkivil Street property, I am not satisfied that this in and of itself is sufficient reason to remove Mr Bloom as executor.
14. Ms Fulop occupied the 56A Penkivil Street property rent-free before the death of the Deceased, and she did so while acting as carer for the Deceased, pursuant to a written agreement with the Deceased dated 28 November 2012, which was amended on 4 September 2017. One of the amendments stated that Ms Fulop was permitted to remain at the 56A Penkivil Street property "even after the death of the [Deceased] and/or subject to Probate". So it was the clearly expressed desire of the Deceased that Ms Fulop live there rent-free even after his death.
15. In those circumstances, the nature of Mr Bloom's decision to allow Ms Fulop to live at the 56A Penkivil Street property rent-free takes on a very different complexion. Far from it being an alleged cosy relationship with a friend of Mr Bloom, permitting Ms Fulop to remain at the 56A Penkivil Street property rent-free pending the determination of the substantive proceedings (in which Ms Fulop may inherit the 56A Penkivil Street property) is not a decision by Mr Bloom in the administration of the estate which requires any disturbance. In my view, the circumstances do not even justify an order of the type made in Goodsall.
16. Turning to the involvement of Mr Arnott as the solicitor for the estate, I do not think that the relationship between Mr Arnott and Mr Bloom constitutes any conflict of interest for Mr Arnott. Whilst Mr Arnott stands to gain financially in charging for work performed, this reflects a professional interest (rather than a personal interest) in acting for his client, Mr Bloom, in Mr Bloom's role as executor of the estate. Mr Arnott is not in conflict when he acts on behalf of the estate on the instructions of Mr Bloom as executor and when he acts in the substantive proceedings on behalf of Mr Bloom as the executor. Neither Mr Arnott nor Mr Bloom are beneficiaries under the 2018 Will, so they have no personal interest in the outcome of the substantive proceedings.
17. The description by Mr Arnott in his evidence that Mr Bloom is not personally attending to the administration of the estate, that Mr Arnott is attending to the administration of the estate, and that Mr Arnott has complete control over all monies received into and paid out of the trust account of Arnotts Lawyers does not mean that Mr Bloom has ceded administration of the estate to Mr Arnott. Mr Arnott makes clear in his evidence that he undertakes his tasks "as solicitor for Yonah Bloom". The evidence is that Mr Bloom has approved all of the expenditure by the estate. It is clear that Mr Bloom is the client in his capacity as executor of the estate and Mr Arnott is acting as solicitor for Mr Bloom in that capacity.
18. Turning to the involvement of Mr Johnson as the accountant for the estate, that fact was disclosed in the affidavit of Mr Bloom affirmed 5 April 2022 at paragraph 13 and in the annexed trust statement of Arnotts Lawyers dated 4 April 2022 recording payments to Mr Johnson by the estate on 2 March 2021 (for "accountancy & tax agents fees") and 17 December 2021 (for "Taxation & Accounting fees"). Ms Albecz's submission that this fact was kept from her until July 2023 is not correct.
19. Ms Albecz complains that Mr Bloom collaborated with Mr Johnson in relation to the issuance of two Calderbank letters on 14 November 2022 by Mr Johnson's solicitors to the other parties, including Ms Albecz, and did not disclose that cooperation to Ms Albecz. I do not understand the nature of this complaint. Cooperation in modern litigation is to be encouraged, especially if it is to further the prospects of settlement of litigation. Parties who wish to cooperate in the issuing of a Calderbank letter can take that course if they perceive it to be in their interests. The fact that each Calderbank letter stated that Mr Johnson intended to rely on each letter in seeking an order for indemnity costs from one or more of Ms Rosenberg, Mr Bloom and Ms Albecz does not change the position. It was always a matter for Mr Johnson to choose against whom he wished to apply for such indemnity costs.
20. The accrual of legal and accounting expenses (concerning the involvement of Mr Arnott and Mr Johnson respectively) and any issues surrounding the cost of specific work performed are properly matters for the administration of the estate. It is open to the residuary beneficiaries to apply for the estate accounts to be passed once the issues in the substantive proceedings are determined. That will be the occasion for inquiry and challenge on the invoices rendered to the estate or payments made by the estate, whether they be on the basis of insufficient detail provided, insufficient inquiry by Mr Bloom, or some other ground.
21. Ms Albecz is not a beneficiary under the 2018 Will. She is not a beneficiary under the November 2014 Codicil or the June 2016 Codicil. She is a beneficiary in the July 2014 Will for a specific gift of real property and is also a beneficiary in the March 2014 Will. None of the beneficiaries under the 2018 Will, the June 2016 Codicil, the November 2014 Codicil, or the July 2014 Will take any issue with Mr Bloom's administration of the estate.
22. There is no further evidence to suggest that Mr Bloom has intermeddled in the affairs of the estate so as to threaten the preservation of the estate for those who are held to be beneficially entitled to it in due course. I also am not of the view that Mr Bloom's management of the estate has been informed by self-interest. Aside from the decision not to charge any rent to Ms Fulop for the occupation of the 56A Penkivil Street property (an issue which I have dealt with above), there is no indication how an independent administrator would have managed the estate any differently than Mr Bloom has done.
23. Finally, Ms Albecz complains that Mr Bloom did not disclose the Deceased's shareholding in P & K Lichtmann Pty Ltd in the inventory of the estate in applying for the grant of probate, where such shareholding has given rise to a significant tax liability of the estate from an in specie distribution of loan funds of $1,694,357 previously advanced by the Deceased. P & K Lichtmann Pty Ltd was voluntarily wound up in 2013 but the administration was not completed until June 2023. Ms Albecz says that Mr Bloom knew of the shareholding from at least March 2021 (if not earlier) and did not include it in the affidavit of additional assets he sent to this court on 29 March 2022 (which only referred to an additional account in the Deceased's name with National Australia Bank with a balance of $28,989.61) or in his affidavit affirmed 5 April 2022 in these proceedings.
24. But in evidence from Mr Bloom is an email dated 21 August 2023 from Mr Johnson to Mr Arnott in which he explains that the tax liability on the shareholding did not exist at the date of the death of the Deceased (28 October 2020) but only arose after the finalisation of the liquidation of P & K Lichtmann Pty Ltd and lodgement of the tax return of the estate. Accordingly, the material before me does not support a finding that Mr Bloom failed to disclose the tax liability of the estate. In any event, I do not understand how this matter might justify the appointment of an independent administrator to the estate. Whatever the position might be in relation to disclosure, the estate is subject to the tax liability arising from the shareholding and there is no sense in which it is alleged that the tax liability has arisen from some mismanagement of the estate by Mr Bloom.
25. Applying the test in Ritossa, I am not satisfied that there is some "necessity" or "sufficient reason" for the appointment of an interim administrator to the estate so as to advance the due and proper administration of the estate in the best interests of the ultimate beneficiaries.
26. I also do not consider that there would be any practical utility in making such an order in the sense described in Kouvakas. The substantive proceedings are ready to be heard, with the pleadings closed and the evidence complete. I cannot see what would be achieved by the appointment of an independent administrator other than the addition of an extra layer of professional charges on the estate.
27. In all of the circumstances, I do not think it necessary or appropriate for the court to make an appointment of an administrator pendente lite.

Use of estate funds

1. Both parties accepted that cl 11(a) of the 2018 Will does not make provision for the executor to pay fees to Mr Arnott.
2. Clause 11(a) is set out below: 11. IF my Trustee or any of them practice a profession of conduct a business, my Trustee: (a) is entitled to be paid all usual professional and other fees and charges made and incurred for work done (as Executor or Trustee or both) by that person or from his/her business on the same basis as if he/she were not one of my executors and Trustees but employed to act on his/her behalf
3. However, Mr Bloom submits that payment of fees or legal costs by an executor to a solicitor is incidental to the office of the executor and the grant of probate. Mr Bloom asserts that he is a disinterested executor with a grant of probate and he is entitled to have his legal costs of defending the grant, a duly incurred liability, indemnified out of the estate pursuant to that grant. Further, Mr Bloom says that should those held to be residuary beneficiaries seek to challenge the entitlement to pay those fees or question certain amounts, this can be actioned through the accounts process in due course.
4. I am satisfied that this case involves the ordinary application of the principles stated in O'Brien, that Mr Bloom as executor is entitled to be reimbursed out of the estate funds in respect of all charges and expenses properly incurred in that capacity. That is the basis on which Mr Bloom is entitled to pay the costs and disbursements of Mr Arnott in acting on behalf of the estate.
5. In submitting that Mr Bloom is involved in these proceedings in his personal capacity, Ms Albecz relied on Gooley, suggesting that it was somewhat analogous to the facts at hand and in turn had direct application.
6. As stated above, in Gooley, Williams J at [92]-[94] rejected the notion that the plaintiffs in that case had any authority to pay their legal costs of the contested probate proceedings from estate funds.
7. The primary difference between Gooley and the present proceedings is that the contest as to the validity of the will in question occurred prior to the grant of probate being made. As indicated above, in the present proceedings, probate of the 2018 Will was granted on 28 January 2021 (albeit in common form), conferring on Mr Bloom the requisite capacity and authority to act as executor. Until the substantive proceedings are resolved to the contrary, Mr Bloom is authorised to continue to act in his capacity as executor. Unlike the plaintiffs in Gooley, Mr Bloom's actions are not guided by the assumption that he will in time be named executor at some later date, but rather derives from the grant of probate made in respect of the 2018 Will in January 2021.
8. Ms Albecz submitted that the precise stage at which the contest as to the validity of a testamentary instrument occurs is immaterial. This submission is grounded in the reasoning that regardless of timing, any challenge to a testamentary instrument will inevitably threaten the authority of any executors named.
9. I reject that submission.
10. It is in fact material to these proceedings that Mr Bloom continues to act in the position in which he was appointed pursuant to a grant of probate in common form by this court.
11. Ms Albecz submitted that the present case fell within the principles stated in Rattigan v Hanly [2020] NSWSC 1722 by Hallen J at [62]-[65], whereby an executor under a grant of probate cannot pay their costs of defending hostile litigation with beneficiaries (as to the propriety of any action which the executor has or has not taken) out of the estate, reflecting the principle that an executor will not be able to rely upon the right of indemnity in respect of legal costs incurred in protecting only his, or her, personal interests.
12. In my view this submission is misconceived. The substantive proceedings in the present case are not ones in which the propriety of Mr Bloom's actions or omissions are under attack so as to make Mr Bloom's defence of them the protection of his personal interests. The substantive proceedings are ones in which different people are propounding the validity of different wills by way of claim and cross-claim. Mr Bloom as executor is entitled to defend the 2018 Will under which he has been appointed and on which he has received a grant of probate. In my view, Mr Bloom is properly incurring costs in the substantive proceedings as an incident of his administration of the estate and is entitled to be indemnified from the estate for them. I consider that the principles expounded in Rattigan on which Ms Albecz relies have absolutely no application to the present case.
13. Similarly, applying the test in Drummond, I am not satisfied that Mr Bloom has incurred costs in the administration and distribution of the estate in furtherance of any personal interest. Mr Bloom is defending these proceedings in his capacity as executor, representing the interests of the estate.

Repayment of estate funds already spent by Mr Bloom

1. Given my findings above, I consider that Mr Bloom is not obliged to repay any of the money that has been spent from the estate.

CONCLUSION

1. For the reasons stated above, I make the following orders: 1. Order that the amended notice of motion filed 16 May 2023 (motion) be dismissed. 2. Order that the second defendant/second cross-claimant pay the first defendant/first cross-claimant's costs of the motion.

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: 21 February 2024