The background to the present dispute, as drawn from the materials before me and from submissions on the present application, which included reference to various other judgments in relation to the ongoing probate dispute in relation to the deceased's will(s), may be outlined as follows. To the extent that any of the following is a disputed issue in the proceedings, I make no findings of fact here. I am simply endeavouring to put in context the applications now before me.
The deceased died on 13 June 2014 leaving five children, to whom I will refer, without intending any disrespect, by their first names (those being the two plaintiffs, Ivanna and Ivan (referred to as Matthew); the defendant, Simon; and two other children (Anton and Marijan)). Marijan and his mother (Jagoda) reside in Croatia. Ivanna's mother (Sanja Ferenc) has been appointed Ivanna's guardian for the purpose of these proceedings. There is reference in the submissions handed up by Counsel appearing for the plaintiffs on their earlier application before McDougall J for the appointment of the special administrators to the estate (see [21] below) to Marijan being autistic and to Anton suffering some form of mental illness.
The respondent, Statewide Office Furniture Pty Ltd (Statewide), now in administration, is a company that was established by the deceased in June 1970 and which carries on a furniture manufacturing business from premises leased to it by the deceased in Kingsgrove and other premises leased to it in Victoria and Queensland by the trustees of a superannuation fund in respect of which the estate claims a beneficial interest of approximately one-half (see points of claim filed in these proceedings at [2]; [8]). Since 1 May 2015, Statewide has been in arrears of its obligation to pay rent under the respective leases (points of claim at [11]).
Prior to December 2013, the deceased owned the majority of the shares in Statewide. The plaintiffs contend that, as at 1 May 2015, one of the main assets of the estate was a loan account debt owed by Statewide to the deceased's business (see points of claim at [3]; [7]).
On or about 3 December 2013, the deceased transferred all of his shares in Statewide to Simon (points of claim at [4]). From 28 April 2015 to 3 August 2017 Simon was a director of Statewide - he being the sole director for a period from 1 November 2016 to 2 August 2017 (see points of claim at [5]-[6]).
There are in existence a number of wills made or alleged to have been made by the deceased (two of which were dated in the weeks before his death), namely, a will dated 6 June 2014 (the June 2014 will); a will dated 23 May 2014 (the May 2014 will); and a will dated 4 November 2013 (the November 2013 will). For reasons that I will explain shortly, the only wills now in contention in the probate proceedings are the November 2013 and May 2014 wills (the former propounded by Simon, the latter by Ivanna and Matthew).
Under the November 2013 will, which appointed Simon as executor, there was to be established a trust which would not vest for twenty years after the deceased's death. The trust fund was to be held upon trust to pay income to the beneficiaries (Anton, Simon, Matthew and Ivanna) from time to time and, on the vesting day, to pay to them any undistributed income together with capital. In this will, the deceased declared that no provision had been made for Marijan or Jagoda because the deceased had made provision for them from his assets in Croatia and otherwise in his lifetime.
Under the May 2014 will, there was a similar trust arrangement as to income and capital (and a similar declaration as to the making of no provision for Marijan and Jagoda). This will appointed Anton as executor and nominated Anton, Matthew and Ivanna as beneficiaries. The will stated that Simon had been excluded "as he has taken from me over $4,000,000 since October 2013". Anton has renounced his appointment as executor under that will.
Thus, under the November 2013 will, the plaintiffs, together with Anton, have a 75% interest as beneficiaries in the trust fund to be established under the will but, under the May 2014 will, they are the only beneficiaries.
Proceedings were commenced in the probate list in 2014. Pending the determination of those proceedings, orders were made for the appointment of an interim administrator of the estate. On 29 October 2014, Lindsay J granted special letters of administration of the estate of the deceased to a solicitor, Ms Pamela Suttor, with limited powers up to and including 22 June 2015 or the earlier grant of probate or administration. On 21 April 2015, Lindsay J varied the orders made on 29 October 2014 to continue the grant of special letters of administration until further order or earlier grant of probate or administration.
On 1 May 2015, Robb J (with the consent both of the plaintiffs and of Simon) made orders restraining, relevantly, Simon up to and including 5pm on 22 June 2015 from disposing of or otherwise dealing with Statewide's assets, including moneys held in a Commonwealth Bank account, other than in the ordinary course of its business or for the purpose of making payments in respect of certain specified matters. On 19 June 2015, that order was extended until further order by Kunc J. I refer to this as the asset preservation order.
The probate proceedings were heard by Lindsay J between 13 and 17 February 2017. His Honour handed down judgment on 3 March 2017 (Stojic v Stojic [2017] NSWSC 168). His Honour was not comfortably satisfied that the deceased possessed the requisite capacity to make the June 2014 will, nor that he knew and approved of the contents of that will (see [89]). Those findings were not challenged on appeal - hence there is now no contention that this is a valid will. As to the May 2014 will, Lindsay J similarly was not satisfied that the deceased knew and approved of that will (see [101]). His Honour ordered that the November 2013 will be admitted to probate. A grant of probate was issued to Simon (being the executor appointed under the November 2013 will) on 6 April 2017. The effect of the orders made by Lindsay J was thus that the grant of special letters of administration made to Ms Suttor came to an end either on 3 March 2017 or on 6 April 2017 (and nothing turns on which is the correct date).
There was then a successful appeal from his Honour's decision (Stojic v Stojic [2018] NSWCA 28). On 28 February 2018, the Court of Appeal ordered that the proceedings be remitted to the Equity Division for a new trial. The effect of the orders made by the Court of Appeal, which included a revocation of the grant of probate to Simon, was that there was a period in which no person was appointed to act as legal personal representative of the deceased's estate. Also, it is relevant here to note that the Court of Appeal set aside the costs orders made by Lindsay J (including an order that Simon's costs of the probate proceedings be paid out of the estate on an indemnity basis) and ordered that the costs of the first instance proceedings await the outcome of the new trial and be within the discretion of the judge hearing the new trial.
The plaintiffs have claimed (and Simon has not repaid) the repayment of the costs paid to Simon in compliance with the now set aside costs order (an amount of approximately $88,000) citing Spindler v Balog (1959) 76 WN (NSW) 391 per Else-Mitchell J where his Honour, in an application to enforce an undertaking, noted that the authority of the Court to enforce its decrees and orders in a summary manner should be clearly recognised (see at 394).
The plaintiffs also contend that Simon is in contempt of the asset preservation order by having taken funds in the amount of $248,486.46 out of Statewide's account between 13 August 2015 and 30 December 2016 (see points of claim at [14]-[16]). They point in that regard to an affidavit affirmed by Simon in these proceedings on 2 February 2017 in which Simon admits taking the said amount in breach of the asset preservation order. The plaintiffs contend that further amounts were subsequently taken out of Statewide's funds ([18]-[21] of the points of claim) such that by 27 March 2018 the total amounts withdrawn in breach of the asset preservation order are said to have been $292,580.50 (see [22] points of claim). Simon's loan account with the company stands at in excess of $300,000.
Meanwhile, on or about 26 July 2017, Simon was arrested and charged with murder and firearms offences. He remains on remand and is presently incarcerated at Cessnock.
On 2 May 2018, Statewide (the estate's principal debtor) was placed into voluntary administration. At the time, the sole director of Statewide was a Mr Davies, who I understand to be Simon's step-father.
On 3 May 2018, Hallen J made orders appointing Ms Suttor as co-trustee of the Stojic Family Superannuation Fund, to collect the deceased's superannuation entitlements.
On 8 May 2018, McDougall J heard an application by the plaintiffs to be appointed as administrators pending the final hearing and determination of the probate proceedings. At the same time, Simon also made an application to be appointed as interim administrator. The plaintiffs opposed the Court entertaining Simon's claim on the basis that it was alleged Simon was in contempt of orders of the Court (i.e., the asset preservation order). McDougall J concluded (at [20]) that Simon's conduct (in breaching the asset preservation order, and thereby depleting the assets of Statewide by an amount of some $238,000 for his personal use) was very serious and held that, because Simon had not made any attempt to purge that breach and because it was directly connected with the matters in issue in these proceedings, Simon should not be heard to propound his own candidate to administer the estate pending a final hearing. His Honour (having considered the general principle, for which De Chatelain v Pontigny (1859) 164 ER 616 (which was cited with approval by Palmer J in Harris Estate - Gray v Hart [2010] NSWSC 55 at [10]) is often cited, that a party to the proceedings will not ordinarily be appointed as administrator unless all parties consent) ultimately made orders granting special letters of administration to Matthew and Ivanna with limited powers (Stojic v Stojic [2018] NSWSC 723). Those powers were subject to order 14 which was in the following terms:
14. The special administrators must not commence, join in or take any step in any of the curial proceedings contemplated in paragraphs 3, 7, 8, 9 and 12 without the prior advice or direction of the Court.
The curial proceedings to which order 14 refers are, in summary, proceedings relating to the position of the estate as creditor in respect of the voluntary administration of Statewide (see order 3 of the orders of McDougall J); family provision proceedings commenced by Marijan (order 6); proceedings between Simon and his estranged wife in the Family Court (see further below) (order 7); proceedings in Croatia or elsewhere in Europe for recognition of the grant and for representation of the estate and to investigate the affairs of the deceased in Europe for the purpose of evidence in the probate and/or family provision proceedings (order 8); proceedings in relation to claims available to the estate for recovery of assets received by Simon (order 9); and proceedings to recover repayment from Simon of the estate's funds used to pay his legal fees (order 12).
At [43], his Honour said:
The discretionary exercise required is a difficult one. On the particular facts of this case, it requires the Court to balance objects that are effectively irreconcilable. At the end of the day, I think that the better approach (or perhaps, the less evil of the two approaches that appear to exist) is to appoint the plaintiffs, but to consider very carefully both the powers they should have and the extent to which they should be able to exercise those powers without the advice or direction of the Court.
As adverted to above, not only are the probate proceedings still on foot (following the remittal of the matter to this division for a new trial) but also there are a number of claims brought under the Succession Act 2006 (NSW) for orders for family provision out of the estate of the deceased that cannot proceed pending the determination of the probate proceedings: namely, separate proceedings brought by each of Matthew (2015/60779) and Ivanna (2015/150539), in which the plaintiffs are seeking to advance the vesting date of the trust to be established under the will but not otherwise claiming further provision out of the estate; proceedings (2015/96897) commenced by Sanja Ferenc in which Sanja seeks a family provision order out of the estate; and proceedings commenced by Marijan (2015/166103) and by Anton (2015/174075) in which each seek provision, or further provision in the case of Anton, out of the estate.
There are also on foot Family Law proceedings now in the Family Court of Australia (SYC 5380/2014) between Simon and his estranged wife (Jolene Yolande Stojic). In those proceedings, orders have been made in effect restraining Simon from dealing with funds in certain bank accounts or in trust or other accounts held by his solicitors or former solicitors (see Exhibit D). An application has been foreshadowed by Simon for the release of some of those funds to meet legal expenses in defending the criminal proceedings against him. It is on that basis that the plaintiffs seek judicial advice that they would be justified in seeking to intervene in those proceedings on behalf of the estate. In effect, as I understand it, if the plaintiffs obtain orders for judgment against the defendant for recovery of the moneys claimed to be owing to the estate (prayers 1 and 4 of the amended notice of motion) then they will seek to garnishee the funds in the bank accounts the subject of the freezing orders made by the Family Court.
The urgency of the applications now brought by the plaintiffs is that the administration of Statewide is currently unfunded. A Deed of Company Arrangement (DOCA) has been proposed which the administrator (who is joined as a respondent to the amended notice of motion and separately represented in the present proceedings) recommends be executed. Failing acceptance of the DOCA, then the administrator will seek that the company be placed in liquidation. By letter dated 9 August 2018, the administrator's solicitors have advised the plaintiffs' lawyers that the continued trading of the company's business while under administration is unsustainable and that delay in relation to the proposed DOCA is increasing the sum payable by the estate into the Deed Fund (see Exhibit C).
In the Administrator's Response to Creditors dated 29 May 2018 a comparison is made as between the position of the creditors of Statewide under the DOCA and the position if the company is placed into liquidation. On the former scenario, unsecured creditors will recover 100 cents in the dollar (other than the estate which releases its claim other than if there are surplus deed funds); and, if the s 444GA(1)(b) application succeeds, the estate will have the potential benefit of the company's business. On the latter scenario it is not anticipated that unsecured creditors will recover their debts (and the estate will not have the benefit of any ongoing business).
Under the proposed DOCA, payment of the administrator's remuneration and expenses and employee superannuation entitlements is required within 7 days of the DOCA being signed (cl 12a-b); the rest of the company's debts (other than the estate claim), totalling $239,000, are payable in 6 month and 12 month intervals (cll 5 and 12).
The proposal for the special administrators to have power to borrow moneys and to encumber the Kingsgrove property is included in the event that this is required in order to fund the DOCA payments (in circumstances where Simon has not repaid the amounts he admits were disbursed in breach of the asset preservation order and has not reimbursed to the estate the costs received by him in satisfaction of the costs order that has now been set aside).
[2]
Submissions for Simon
On 2 August 2018, the solicitors on the record in these proceedings for Simon filed a notice of intention to file notice of ceasing to act within 14 days. They nevertheless remained on the record at the time of the hearing of the application for orders under paragraphs 2 and 3 of the amended notice of motion (and, as earlier noted, Simon was represented by Counsel and solicitors on that application).
As noted earlier, Simon opposed the orders sought in prayers 2 and 3 of the amended notice of motion. He did so on the following bases.
[3]
Application for grant of additional powers to special administrators of estate
For Simon it was submitted that the powers sought by the plaintiffs go beyond those which should be granted to interim administrators, referring in particular to the power to borrow and to encumber or charge the Kingsgrove property as security for any loan obtained in order to meet the estate's obligations under the DOCA.
In this regard, it was noted that those powers go beyond the powers permitted to the executors by whichever of the deceased's wills is ultimately admitted to probate in that neither the November 2013 will (propounded by Simon) nor the May 2014 will (propounded by the plaintiffs) gives the named executors the express power to borrow money, to offer estate assets as security, or to conduct a business.
It was further submitted that the various family provision claims are likely to require the realisation of the assets of the deceased's estate rather than the acquisition of additional assets by the deceased's estate (especially where, as noted above, the plaintiffs are seeking an acceleration of the vesting date for the testamentary trust). Simon argued that the plaintiffs' position in their respective family provision claims is inconsistent with the proposal that the deceased's estate acquire Simon's shares in Statewide to operate from the main asset in the deceased's estate (being the Kingsgrove property) and to encumber or charge such property as security for the loan required by the DOCA.
[4]
Application for judicial advice
As to the application for judicial advice, which it was noted would normally be supported by Counsel's advice, it was submitted for Simon that there are various matters that weigh against the making of an order to the effect that the special administrators would be justified in acting as contemplated by prayer 3(a)-(e) of the amended notice of motion.
In this regard, it was noted that the evidence of the causes of the company's difficulties (in the Administrator's Report to Creditors dated 29 May 2018 at [1.3]) goes beyond matters that may be attributed to Simon or to the history of family controversies and it was submitted that there is insufficient or no evidence that these difficulties would be likely to be resolved by the plaintiffs if the advice sought were to be given.
It was further noted that the DOCA requires that there be a stay of the payment of rent to the deceased's estate for an indefinite term (see cl 10) (thus depriving the estate of income) and that the power to borrow money, and encumber the most significant asset of the estate, would put that asset at risk.
Complaint was made as to the absence of evidence of the timeframe within which the plaintiffs propose to realise the company's assets for the benefit of all of the beneficiaries; and it was submitted that the evidence as to the future profitability of the company is limited to cash flow forecasts on assumptions that the company does not have to pay rent to the deceased's estate for the lease of the Kingsgrove property and that the company does not have to pay wages to the family members who work there. Hence doubt was cast on the future profitability of the company's business. (Reference was also made to the traditional role of an administrator pendente lite, see below, and to the pending family provision applications in this context.)
[5]
Determination
The role of an administrator pendente lite has been seen as analogous to that of a receiver (in that the administrator is the caretaker of the assets until the persons entitled to them are ascertained) (see Bevan v Houldsworth [1948] 1 All ER 271 (at 272); Henderson v Executor Trustee Australia Ltd [2005] SASC 477; 226 ALR 475 (Henderson)). In Henderson, Debelle J noted that the duty of such an administrator is to get in the assets of the estate and to manage and preserve them for the benefit of those found to be entitled (noting that where those beneficiaries disagree the Court will preserve the status quo) (see [42]-[44]; Anderson J agreeing at [130]), Debelle J there distinguishing (at [43]) the role of an administrator pendente lite (considered to be akin to that of a receiver) from the role of a receiver and manager.
It is consistent with such a role that the plaintiffs seek advice that they would be justified in taking steps to pursue the application for orders for the recovery of the moneys disbursed by Simon in his admitted breach of the asset preservation order and for restitution of the costs paid out to Simon or for Simon's benefit in compliance with Lindsay J's costs orders. The basis on which orders are sought against Simon for the payment of moneys was explained in some detail the course of argument before me but, as this is to be considered shortly when the balance of the amended notice of motion is heard by Brereton J, it is not appropriate that I comment further on those applications - save to note that there is certainly an arguable basis for the claims that are made.
It must be in the estate's interests to preserve the claim for recovery of the moneys disbursed by Simon in admitted breach of the asset preservation order (whether or not that breach amounted to a contempt of court) and to recover the moneys repayable following the setting aside of the costs orders in the first iteration of the probate proceedings. There is therefore an interest for the estate in seeking leave to intervene in the Family Court proceedings to preserve (or to seek to garnishee) that fund.
As to the matters raised by Simon in relation to the pending family provision applications, it is relevant to note that these are in effect in limbo pending determination of the remitted probate proceedings (and that there has been no date set for the hearing of those proceedings at this stage - affected no doubt by difficulties in the filing of evidence by Simon given his incarceration and financial position at the present time). The perceived inconsistency between the plaintiffs' claims for acceleration of the vesting date of the testamentary trust and the arrangements proposed under the DOCA is to my mind thus not to the point. Even if there is an inconsistency of the kind suggested (and I am not certain that there is), the hearing of the family provision claims is likely still to be a long way off and if the plaintiffs' position as claimants in those proceedings is affected by what they seek now to do as administrators of the estate then that is a matter about which they can hardly later complain. Nor does the existence of the other as yet undetermined family provision claims persuade me that it is not in the interests of the beneficiaries of the estate that the special administrators now seek to recover estate assets (including amounts that Simon accepts have been disbursed out of the funds of Statewide in breach of the asset preservation order).
The special administrators are faced with the need urgently to have a determination as to whether Simon's shares in the company can be transferred pursuant to s 444GA of the Corporations Act so as to permit the proposed DOCA to proceed. That application will be heard on 23 August 2018. As a practical matter, there will be no recovery by the estate of the debt owing to it by Statewide if the company is placed in liquidation. True it is that under the DOCA the estate's debt will be released (unless there are surplus deed funds) but in those circumstances the estate will have the potential to benefit from the return of the business to the control of the special administrators (from which Matthew gives evidence as to the proposed financial returns).
It was my view therefore that it was in the interests of the estate to grant the additional powers sought and to provide judicial advice to the effect that the special administrators would be justified in taking the steps outlined in prayer 3 of the amended notice of motion, including to enter into and give effect to the DOCA.
As to the concern raised by Counsel for Simon in respect of the breadth of the power contemplated in (g) of the Schedule attached to the amended notice of motion, Counsel for the plaintiffs confirmed that it is intended to encompass participation by the estate, by way of an application for intervention, in the Family Court proceedings so as to seek any direction or order necessary as to the release of sufficient funds from the accounts presently subject to the orders of the Family Court, to meet the orders that might be made against Simon on the estate's claim for moneys due by him to the estate or from him on his loan account to Statewide and interest thereon (in order to facilitate the execution of any judgment against him in favour of that company or the estate, with or without interest and/or costs). A notation to that effect was made at the time I made the orders sought by the plaintiffs.
[6]
Costs
I indicated that I would deal in any written reasons with the issue of costs. For Simon it was submitted that the course he had adopted had been to make submissions as contradictor in terms of the relief the plaintiffs had sought, in circumstances where it would have been necessary for the plaintiffs to make this application for was relief in any event and there was a proper basis for the making of the submissions. Thus it was submitted that Simon should have his costs out of the estate regardless of the outcome of this part of the motion.
The plaintiffs opposed this, submitting that in the circumstances it would be unjust for Simon to have his costs out of the estate and that he should bear his own costs.
[7]
Authorities
There is authority that the usual position is that a contradictor on a judicial advice application by a trustee will have his or her costs paid out of the trust fund. In Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653, Sheller JA (with whom Kirby P, as his Honour then was, and Meagher JA agreed) said (at 671):
It is I think well-established that, where the terms of a trust document in the context of events which have happened reasonably lead to [sic] a trustee to seek administrative advice from the Court as to its meaning and how it should be administered, all parties properly joined should have their appropriate costs out of the Fund.
More recently, in Young v Thomson (Trustee) (No 4) [2017] FCA 175, at [17], Farrell J said (at [17]):
In the ordinary course, a trustee is entitled to indemnity out of a fund for reasonable costs incurred in obtaining judicial advice as to the proper administration of the fund. I consider that the application made by Ms Thomson was properly made in relation to the proper administration of the bankrupt estate; that is consistent with the fact that I gave Ms Thomson the advice which she sought. Parties properly joined in that type of proceeding are also entitled to be paid their costs out of the fund, since they perform the function of contradictor … [emphasis added]
Farrell J referred to Re MF Global Australia Ltd (in liq) (No 2) [2012] NSWSC 1426. In that case, liquidators had sought directions from the Court as to how to proceed in relation to certain assets (being bank accounts) and advice in relation to a number of other issues including entitlements of clients of the company in liquidation and the availability of set-offs (see Re MF Global Australia Ltd (in liq) [2012] NSWSC 994). In relation to the costs of PHRS (which had represented the interests of unsecured creditors) Black J said (Re MF Global Australia Ltd (in liq) (No 2) at [27]):
I have noted above that I consider these proceedings are properly characterised as in the nature of an application by the Liquidators in respect of an administration of a trust. Where a trustee reasonably seeks advice from the Court as to the proper administration of a trust, the usual position is that all parties properly joined should have their appropriate costs out of the fund: Re Buckton; Buckton v Buckton above; Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653 at 671 per Sheller JA, with whom Kirby P and Meagher JA agreed. PHRS submits, and I accept, that its costs were incurred as a contradictor on matters that concerned the administration and distribution of the trust assets among beneficiaries. It was necessary that a representative of the unsecured creditors be a party to the proceedings and PHRS advanced submissions that were consistent with the interests of unsecured creditors, although those submissions were unsuccessful in several respects. [Emphasis added]
See also D Hayton, P Matthews and C Mitchell, Law of Trusts and Trustees (19th ed, 2016, LexisNexis) at [85.38]:
… [In] proceedings brought by trustees to have the guidance of the court as to the construction of the trust instrument or some other question arising in the course of administration … the costs of all parties, including the beneficiaries, were normally treated as incurred for the benefit of the trust and ordered to be paid out of the trust fund. [Emphasis added]
The rule is to be understood on the basis that, as the High Court has affirmed, an application for judicial advice, in addition to protecting the trustee from the possibility of personal liability for the costs of the litigation, also fulfils the function of protecting the interests of the trust: Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42. The plurality in that case (Gummow ACJ, Kirby, Hayne and Heydon JJ) said (at [71]-[72]):
… Obtaining judicial advice resolves doubt about whether it is proper for a trustee to incur the costs and expenses of prosecuting or defending litigation. No less importantly, however, resolving those doubts means that the interests of the trust will be protected; the interests of the trust will not be subordinated to the trustee's fear of personal liability for costs. [Omitting emphasis in original]
It is, therefore, not right to see a trustee's application for judicial advice about whether to sue or defend proceedings as directed only to the personal protection of the trustee. Proceedings for judicial advice have another and no less important purpose of protecting the interests of the trust.
[8]
Determination as to costs
The present application for judicial advice was an application relating to questions arising in the course of the administration of the deceased's estate. The making of such an application is consistent with the protection of the interests of the trust. I accept the submission made for Simon that there was a proper basis for the submissions that were made on his behalf on the present application.
That said, there was a very real sense in which the stance adopted by Simon may be said to have been adversarial (as opposed to no more than that of a contradictor). He has an obvious personal interest in the outcome of the applications, at least to the extent that part of what was sought relates to seeking power to intervene in the Family Court proceedings to argue against the release of funds to Simon which are the subject of the company's or the estate's claims; and to power to take steps to recover moneys from Simon. Moreover, there is an obvious incongruity between the making of costs orders in his favour out of the estate at a time when he has failed to repay to the estate the costs paid to him under the costs orders that were set aside by the Court of Appeal.
In those circumstances, and having regard to the authorities referred to above, I consider that the appropriate order in relation to Simon's costs of the applications before me is to order that his costs be payable out of the estate but be set-off against any amounts he is found liable to repay to the estate in relation to the costs paid to him under Lindsay J's orders (that being a matter which will be heard by Brereton J on 23 August 2018).
As to the plaintiffs' costs of the applications heard by me, these should be paid out of the estate on the indemnity basis. I note that where a trustee is party to proceedings (including judicial advice proceedings) "the normal rule is that he is entitled to costs, in so far as not recovered from or paid by another person, out of the trust fund" (see Law of Trusts and Trustees, [85.30]).
I will so order.
For the above reasons on 9 August 2018 I made the following orders:
Granting the plaintiffs additional powers as special administrators of the estate
(1) Order that Ivanna Ann-Marie Ferenc Stojic and Ivan Matthew Stojic, as special administrators of the estate of the late Ivan Stojic, be granted the additional powers set out in the Schedule hereto.
Schedule of Additional Powers
(a) To execute and enter into a Deed of Company Arrangement on behalf of the estate of the late Ivan Stojic (the Estate) substantially in accordance with the proposed Deed of Company Arrangement (the DOCA) approved by the creditors of Statewide Office Furniture Pty Ltd (Statewide).
(b) To accept a transfer of shares in Statewide, appoint a director or directors to that company, appoint a secretary or secretaries to that company.
(c) To each or either of them severally hold office as director and/or secretary of Statewide while the Company is subject to the DOCA and/or while they hold shares in the Company.
(d) To permit the business of Statewide to continue and to manage the operations of Statewide and its business, in accordance with the terms of the DOCA, and by law, and to make decisions in respect of the day to day operations of Statewide.
(e) To do all things necessary to give effect to the terms of the DOCA, and to assist the Deed Administrator perform his obligations under the DOCA.
(f) To bring an action or to authorise the Company, and/or its Administrator, or the Deed Administrator of the DOCA (as the case may be) to engage the estate's solicitors to bring application or action in the name of the Company and/or in the name of the Deed Administrator against the defendant therein:
(i) For leave of the Court pursuant to s 444GA of the Corporations Act 2001 (Cth) to be granted to the Deed Administrator to transfer the shareholding of the defendant herein in the Company to the plaintiffs as special administrators of the estate.
(ii) To recover any amount owing to the Company by the defendant upon his loan account with the Company, including but not limited to any amount taken by him from the Company in contravention of the orders of Robb J and Kunc J made in these proceedings.
(g) To participate on behalf of the Estate in the Family Court of Australia proceedings SYC 5380/2014 and in those proceedings to seek any direction or order necessary as to the release of sufficient funds from accounts BSB 032 151 Account 393151 BSB 032 151 and/or Account 393143 (which are presently subject to the orders of the Family Court of Australia), to meet the orders that may hereafter be made in favour of the estate and/or Statewide.
(h) To apply for, sign and accept a loan in the name of the estate, in an amount sufficient to pay the Deed Contributions under the terms of the DOCA, from time to time, as may be required.
(i) To encumber or charge the estate's real property located at 6-8 Garema Circuit, Kingsgrove as security for any loan obtained in order to meet the estate's obligations under the DOCA.
Judicial Advice
(1) Order and direct that the Plaintiffs as special administrators of the estate of the late Ivan Stojic would be justified in:
(a) Seeking an order against the Defendant in the terms of Paragraphs 4 and 5 of the amended notice of motion filed 7 August 2018.
(b) Assisting the said Company and its Administrator or Deed Administrator in proceedings to recover against the defendant herein the amount due from him to the Company upon his loan account, and interest thereon and costs of such proceedings, including by making available to the Company and/or its Administrator or Deed Administrator the services of the Estate's legal representatives for the purpose of such proceedings.
(c) Taking the necessary steps to recover by Court process from the defendant, by way of reimbursement to the Estate, any money debited from the estate's funds after 3 March 2017 for the payment of any of the defendant's legal costs.
(d) Intervening on behalf of the Estate in the Family Court of Australia proceedings SYC 5380/2014 to seek any direction or order necessary for the release of sufficient funds from accounts BSB 032 151 Account 393151 BSB 032 151 and/or Account 393143 (which are presently subject to the orders of the Family Court of Australia), to permit the repayment by the defendant herein of money due to the Estate, or from him on his loan account to Statewide Office Furniture Pty Ltd and interest thereon, or to facilitate the execution of any judgment against him in favour of that Company, or the Estate, for that money with or without interest and/or costs.
(e) Participating in proceedings involving a Deed Administrator or Statewide Office Furniture Pty Ltd for leave pursuant to s 444GA of the Corporations Act 2001 (Cth) to transfer the shares of the defendant herein to the plaintiffs herein in their capacity as special administrators of the said Estate, consenting to the grant of that relief and assisting the Deed Administrator in the conduct of such application.
To those orders I now add the following orders:
1. Order that the defendant's costs of the hearing of the application for orders sought under paragraphs 2 and 3 of the amended notice of motion filed 7 August 2018 be paid out of the estate of the deceased on the ordinary basis but be set-off against any moneys the defendant is found liable to repay to the estate of the deceased pursuant to the application by the plaintiffs for the relief sought under paragraph 4 of the said amended notice of motion.
2. Order that the plaintiffs' costs of the applications heard by me on 9 August 2018 be paid out of the estate on the indemnity basis.
[9]
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 August 2018
EQUITY - Special administrator - Grant of additional powers to plaintiffs as special administrators of deceased estate
Legislation Cited: Corporations Act 2001 (Cth), s 444GA(1)(b)
Succession Act 2006 (NSW)
Trustee Act 1925 (NSW), s 63
Cases Cited: Bevan v Houldsworth [1948] 1 All ER 271
De Chatelain v Pontigny (1859) 164 ER 616
Henderson v Executor Trustee Australia Ltd [2005] SASC 477; 226 ALR 475
Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653
Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42
Re MF Global Australia Ltd (in liq) [2012] NSWSC 994
Re MF Global Australia Ltd (in liq) (No 2) [2012] NSWSC
Spindler v Balog (1959) 76 WN (NSW) 391
Stojic v Stojic [2017] NSWSC 168
Stojic v Stojic [2018] NSWCA 28
Stojic v Stojic [2018] NSWSC 723
Young v Thomson (Trustee) (No 4) [2017] FCA 175
Texts Cited: D Hayton, P Matthews and C Mitchell, Law of Trusts and Trustees (19th ed, 2016, LexisNexis)
Category: Procedural and other rulings
Parties: Ivanna Ann-Marie Ferenc Stojic (First Plaintiff)
Ivan Matthew Stojic (Second Plaintiff)
Simon Slavko Stojic (Defendant)
Statewide Office Furniture Pty Ltd (Administrator Appointed) (Respondent)
Representation: Counsel:
Mr D Smallbone (Plaintiff)
Mr C Birtles (Defendant)