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[2025] NSWSC 1612
Supreme Court of NSW
2025-12-23
Parker J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Vlahos v Vlahos [2025] NSWSC 1612
Hearing dates: 5 September 2025
Date of orders: 23 December 2025
Decision date: 23 December 2025
Jurisdiction: Equity - Applications List
Before: Parker J
Decision: See [111]
Catchwords: COSTS — Party/Party — Payable out of a fund — Deceased estate – Where an executor sought indemnity costs out of the estate – Whether the executor acted unreasonably - UCPR r 42.20 – UCPR 42.25 – HELD the executor acted unreasonably and was therefore not entitled to indemnification out of the estate
Legislation Cited: Trustee Act 1925 s 59(1)
Cases Cited: Adam v Mullen (1976) 18 BPR 35, 773
Adams v Bank of New South Wales [1984] 1 NSWLR 285
Colin D Young Pty Ltd v Commercial and General Acceptance Ltd (Court of Appeal, 24 August 1982, unreported)
Drummond v Drummond [1999] NSWSC 923
Photios v Photios [2019] NSWCA 158
Pioneer Park v ANZ [2006] NSWSC 1176
Re Beddoe; Downes v Cottam [1893] 1 Ch 547
Re Katalinic [2020] NSWSC 805
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Texts Cited: G E Dal Pont, Law of Succession (3rd ed, 2021, LexisNexis)
Category: Costs
Parties: Nick Vlahos (Plaintiff)
Panagiota Vlahos (in her capacity as executor) (First Defendant)
Panagiota Vlahos (in her personal capacity) (Second Defendant)
Christina Vlahos (Third Defendant)
Michael Vlahos (Fourth Defendant)
Representation: Counsel:
A L Connelly (Plaintiff)
A Katsoulas (First and Second Defendants)
Solicitors:
Koutzoumis Lawyers (Plaintiff)
JDK Legal (First and Second Defendants)
File Number(s): 2024/191533
Publication restriction: Nil
These proceedings concern a deceased estate. The Court was asked by the plaintiff, a beneficiary of the estate, to make administration orders obliging the first defendant, the executor, to take immediate steps to sell a property belonging to the estate. Since the proceedings began, the property has been sold, and the plaintiff does not now wish to pursue his claim for administration orders any further. The only question which remains for decision is costs.
The estate in question is that of the late Georgia Vlahos, who died in February 2022. The principal asset of the estate was a house in Tudor Street Belmore which was the former matrimonial home (the deceased’s husband, Christos Vlahos, predeceased her).
The deceased was survived by two children: her daughter, Panagiota Vlahos (“Ms Vlahos”), and her son, Nick Vlahos (“Mr Vlahos”). Mr Vlahos is the plaintiff. Ms Vlahos is the first defendant. Mr Vlahos has two children, Christina and Michael. They are named as additional defendants, but have played no active part in the proceedings.
The deceased’s last will was made in December 2015. As already mentioned, Ms Vlahos was appointed as executor. The deceased’s bank accounts, jewellery and household contents were left to Ms Vlahos “after all funeral and testamentary expenses are paid”. A nominated parcel of shares and the deceased’s motor vehicles and NRMA membership were also left to Ms Vlahos. The Tudor Street property was divided equally between Mr Vlahos, Ms Vlahos, Christina and Michael. There was no disposition of residue, but it seems that the deceased had no other substantial assets.
The will was prepared by Ms Christine Manolakos, a solicitor in practice at Marrickville. Her firm was conducted through a company named CM Lawyers Pty Limited. The deceased’s previous will had been drawn up in 2008 by another firm.
Clause 6 of the will provided:
An essential condition of my giving [the former matrimonial property] to my son NICHOLAS VLAHOS and my grandchildren CHRISTINA VLAHOS AND MICHAEL VLAHOS is that my daughter PANGIOTA VLAHOS be allowed to remain in the said property for a period of twelve (12) months from the date of my death without my daughter paying any rent for the said twelve (12) month period. I DIRECT that all expenses relating to [the property] including council rates, insurance, water rates and general maintenance and repairs will be divided in four equal shares among my abovementioned beneficiaries. The reason for this arrangement is that my daughter PANAGIOTA VLAHOS has been the primary carer of myself and my sole carer. … In contrast, my son NICHOLAS VLAHOS has not cared for or provided me with any assistance during my difficult time, particularly after my husband has passed away and since my health issues have arisen which has restricted me to care for myself and live on my own.
I wish the firm CM LAWYERS PTY LTD to be employed by my executor as lawyers in connection with the execution of the provisions of this will and any codicil to it and all legal cost associated with the Probate shall be payable by my son NICHOLAS VLAHOS.
Following the deceased’s death in February 2022, little if anything appears to have been done about administering her estate. Ms Vlahos seems already to have been estranged from her brother at this point. There is a reference in the evidence to an apprehended violence order having been obtained by Ms Vlahos against his wife Gina, in September 2020, but which had expired before the death of the deceased.
On 3 March Mr Peter McBride, a solicitor acting for Mr Vlahos, made enquiry of a firm of solicitors named Anderson Lawyers at Burwood, stating that he acted for the “executor/s of the Estate” of the deceased and asking for a copy of her “original Will”. There was no response, and no response to Mr McBride’s follow-up in April.
Andersons’ involvement is not explained in the evidence. It seems that Mr Vlahos was aware of the 2008 will, and believed that it had been, or may have been, prepared by Andersons. At all events, after a further follow-up, Andersons replied on 12 July saying that they held “no instructions in this matter”. They stated that having made enquiries with Ms Vlahos, they understood that the deceased had made a further will after the one made in 2008.
Following this reply, Mr McBride wrote to Ms Vlahos:
We advise that we act for your brother, Nick Vlahos, who instructs us that … he has been unsuccessfully attempting to ascertain details of what progress has been made in relation to the administration of the Estate of your late mother.
[Mr McBride enclosed copies of his correspondence with Andersons.]
We would be pleased if you would advise as to whether or not you are aware of any intended Application for administration of your late mother’s Estate and if so, would you kindly provide details of what is proposed and if you have access to or know the whereabouts of what might be your late mother’s Will, would you kindly provide to us a copy of it, or details as to where we might obtain a copy.
We do give notice of the requirement that administration of the Estate be commenced in the Supreme Court of N.S.W. on or before six months from the date of death and that time period will shortly elapse and failing steps to do so, out our client will be left with no alternative but to apply to have himself appointed for the purposes of administration of the Estate.
We await hearing from you or your representative, as a matter of urgency.
The evidence does not reveal when (or even whether) Ms Vlahos replied to Mr McBride’s letter. At some point she retained Ms Manolakos to act for her. But no application for probate was forthcoming.
Nor does the evidence reveal when Mr Vlahos was first provided with a copy of his mother’s 2015 will. But when he became aware of its terms, he was suspicious. The criticisms made of him as a son in cl 6 of the will were, he claimed, untrue. Also the Vlahos parents had previously gifted another residential property, also in Tudor Street, to Ms Vlahos. According to Mr Vlahos, it had always been understood that, in order to equalise matters, he would receive the former matrimonial home when his parents had died. Mr Vlahos also noted that the will persistently referred to him as “Nicholas” Vlahos, when his actual registered birth name, and the name by which he is known, is “Nick”.
By September 2022 Mr Vlahos had retained a new solicitor, Mr Gary Koutzoumis, to act for him. On 29 September Mr Koutzoumis wrote to Ms Manolakos. His letter set out some “preliminary observations, pending further enquiry and investigation”. Mr Koutzoumis stated that Mr Vlahos believed that his mother had been a “prime target for manipulation” and had been “influenced” into changing her will in 2015.
Mr Koutzoumis foreshadowed the filing of a caveat “pending outcome of the enquiries with respect to the validity of the 2015 will”. He went on to make an extensive request for information about the circumstances in which Ms Manolakos had prepared that will. This included a series of interrogatories addressed to Ms Manolakos. He also sought an undertaking that Ms Vlahos would not deal with either of the Tudor Street properties or any other assets in the deceased’s estate until Mr Vlahos’ “claims are resolved/determined”.
It seems that there was no response from Ms Manolakos. About four weeks later, in late October 2022, Ms Vlahos retained her current solicitor, JDK Legal, in Ms Manolakos’ place. At JDK Legal the matter was handled by Mr Yan Lam and Mr Kim Stapleton.
On 24 November, Mr Lam wrote to Mr Koutzoumis responding to his letter of 29 September. He advised that, on his instructions, Ms Vlahos had purchased the other Tudor Street property, and had done so after that property had first been offered to Mr Vlahos, but had been declined by him. Ms Vlahos’ instructions were also that she was not in the room when the deceased was “preparing her will” with Ms Manolakos. Mr Lam stated that Mr Koutzoumis’ other interrogatories were matters for Ms Manolakos and not Ms Vlahos.
On 14 December Mr Koutzoumis responded by filing a caveat, on behalf of Mr Vlahos, against the grant of any probate for the deceased’s estate without prior notice. The caveat was to last for six months. In Mr Koutzoumis’ covering letter he called for evidence of the alleged purchase of the other Tudor Street property in “circa 1980-82”, noting that Ms Vlahos would then have been about 14 years old.
Further correspondence took place between the solicitors in late 2022 and early 2023. Mr Stapleton advised that Ms Vlahos intended to apply for probate of the 2015 will. On 13 February a notice to this effect was filed with the Court. But no actual application was made.
For his part, Mr Koutzoumis continued his complaints about the delay in the administration of the estate. He also raised another point, arguing that, having regard to the terms of cl 6 of the 2015 will, that Ms Vlahos should be paying rent for her continuing occupation of the former matrimonial home after February 2023, the first anniversary of the deceased’s death in February 2022.
By this stage, any challenge to the 2015 will on the part of Mr Vlahos appeared to have been abandoned, although the caveat remained in place. On 6 April, Mr Koutzoumis served on Mr Stapleton (but did not file) a notice from Mr Vlahos that he himself intended to apply for probate of the 2015 will.
Mr Vlahos’ caveat expired on 15 June. On 16 June Mr Koutzoumis filed an application for probate of the 2015 will, although it seems that this was not served. On 7 July Mr Stapleton filed Ms Vlahos’ own application for probate of the will. But the filing of an earlier application meant that Ms Vlahos’ application had to proceed as a contested one. The Court so advised Mr Stapleton in a requisition issued on 26 July.
While the competing probate applications languished, the correspondence between the parties continued for more than four months. It was marred by recriminations about the delays in selling the property and who was responsible for those delays. The parties agreed that Mr Vlahos’ application for probate should be withdrawn, leaving Ms Vlahos’ application to proceed. But they could not agree on a process for selling the property, and in particular what involvement Mr Vlahos should have.
A further complicating factor was that Ms Vlahos believed that there was an alternative to a sale at auction. The property was near the Canterbury Bankstown Bulldogs Rugby League Football Club. Interest had apparently been expressed on behalf of the Club in acquiring the property. It was thought that the Club, or a developer, might be prepared, as a private treaty purchaser, to pay a fuller price than would be available on the auction market.
On 18 October, Mr Koutzoumis wrote to Mr Stapleton with a proposal for finalising the administration. The main elements of the proposal were as follows.
Ms Vlahos was to proceed with her application for a grant of probate immediately.
Ms Vlahos was to engage a local real estate agent as selling agent for the property, with the sale to take place by auction (noting that it would be open for the Club or a developer to notify any potential interest to the selling agent).
Ms Vlahos was to be entitled to remain in occupation of the property up until a week prior to settlement. She was to bear the costs of any repairs and maintenance carried out on the property in the meantime. Mr Vlahos agreed to “waive his rights” to an occupation fee for the period from 10 February to 28 October 2023, but Ms Vlahos would pay an occupation fee of $300 per week up until one week before the scheduled date for settlement and $700 per week if she remained in occupation thereafter.
Mr Vlahos reserved his rights “in relation to any loss or damage caused by” Ms Vlahos’ alleged delay in administering the estate.
On 5 December, Mr Stapleton replied to Mr Koutzoumis’ proposal as follows:
“For our client to proceed immediately with her application for Probate, [we] will require your client to withdraw his application. The delay in having our client’s application for Probate granted has been solely the cause of your client. Once your client withdraws his application there should be no impediment to our client’s application proceeding to be granted.”
“Our client has appointed the Mint Group [a local agent whose principal was Mr Paul Errichiello] to sell the property. She has requested an estimate of the value of the property, and advice on marketing it and the timing of the auction. We expect to receive that advice in writing within the next few days, and will forward it to you immediately it is to hand.”
“Our client will be vacating the premises as soon as it is practicable. She does not agree to paying occupation rent in circumstances where your client has refused to contribute anything to the upkeep of the property as provided for in Clause 6 of the Will.”
“Please refer to our comments in relation to [(1)] above.”
On 13 December Mr Koutzoumis filed a notice of discontinuance of Mr Vlahos’ application for probate. Later that day he emailed Mr Stapleton:
A Notice of Discontinuance in relation to our client’s application for a grant of Probate has now been filed with the Court. ... In the circumstances, we expect your client to proceed with her application for Probate forthwith.
We note your previous comments with respect to the appointment of Mint Group to market the property for sale. Kindly forward the agent’s proposal as soon as possible.
As the balance of our respective responses to our various communications, some agreed, some not agreed, these will be matters for further discussions at the time of distribution.
Further to your correspondence of 16 January, we confirm that Probate has been granted. We enclose a copy of the grant of Probate, notice of which we received on return to our office on 8 January 2024.
Our client is currently dealing with the real estate agent, and we will keep you reprised [sic] of developments in due course.
Please be kind enough to confirm the status of your clients’ dealings with the Real Estate Agent.
In your letter to me dated 5 December … you confirmed that your client had appointed Mint Group to sell the property. You also confirmed that your client had requested an estimate of the value of the property, and advice on marketing it and the timing of the auction. You indicated that you expected to receive that advice in writing within the next few days, and that you would forward it to me immediately.
It is now 5 February 2024 and I have not received anything. It seems strange simply because, in my experience with Real Estate Agents, they would hound people and jump on the first opportunity to list a property for sale in recent time and not wait so long to do so. I don’t understand the delay.
In any event, what steps has your client taken to vacate the premises as soon as practicable since 5 December 2023?
Your urgent response is invited.
It is reasonable to conclude from your further lengthy silence that there have been no developments and that your client has done nothing to advance the sale of the property and the administration of the estate.
It is also reasonable to conclude from your client's persistent inaction, which follows upon her lengthy delay in obtaining probate of the late Mrs Vlahos' will, that your client has no regard for her obligations as the executor and prefers her own interest by continuing to live in the estate property rent-free to the interest of the other beneficiaries.
You will be aware that clause 5 of Mrs Vlahos' will devises the property at Tudor Street, Belmore in equal shares to your client, our client and our client's two children. The beneficiaries are entitled to call for their gifts to be transferred to them in specie.
In the expectation of a prompt sale of the property and division of the net proceeds, our client has accepted the sale of the property as an appropriate course for the distribution of the shares of the property. However, it has become apparent that your client does not intend to carry out a prompt sale.
If we do not receive written confirmation within 14 days that the property is on the market for the purposes of a sale (with vacant possession) by an auction that is to occur within a further 6 weeks, our client will call for the conveyance to him of his share of the property.
Our client reserves all his rights, including to bring proceedings against your client for breach of fiduciary duty and an administration suit.
A further two months passed without any response. On 23 May Mr Koutzoumis filed the originating summons in these proceedings on behalf of Mr Vlahos. The summons was supported by an affidavit from Mr Vlahos. It claimed:
an order under UCPR 54.3 that Ms Vlahos sell the property, or in the alternative, distribute shares of the property to the beneficiaries in specie;
in the event of an order for sale, directions requiring Mr Vlahos to enter into an agency agreement within 14 days and to sell the property by public auction by a date not later than 13 weeks after the date of the Court’s order;
an order that Ms Vlahos pay an occupation fee of $700 per week from 15 December 2023 onwards;
an order that Ms Vlahos furnish accounts of her administration of the estate within 28 days, and further accounts, following “distribution of the proceeds of sale”, within a further 28 days thereafter;
an order for costs against Ms Vlahos personally (without indemnification from the deceased’s estate) or alternatively an order that Mr Vlahos’ costs be paid out of the estate.
The directions for sale sought in the summons provided for the involvement of Mr Vlahos in the sale process. He was to propose three agents of whom Ms Vlahos would select one. Ms Vlahos was to consult with Mr Vlahos concerning the reserve price at the auction, although, if they could not agree, the reserve price was to be determined by the agent. Similarly, in the event that the property was passed in at the auction, it was to be offered at sale by a private treaty at a price agreed upon by Mr Vlahos, Ms Vlahos, Christina and Michael, but again in the event of disagreement the agent was to determine the price.
On 24 May, the day after service of the summons, Mr Stapleton wrote to acknowledge having received it. He continued:
We are instructed to inform you that the property was placed with an agent on or about 15 April, for sale by private treaty.
We are further instructed that negotiations on the property are well advanced and that our client is hopeful of achieving a sale.
The return date initially allocated for the summons was 24 June. It was agreed by the parties that the proceedings should be stood over to 22 July to accommodate an offer from the Club, whose board was said to be meeting on 28 June. No offer emerged on that date, but the negotiations between Mr Errichiello and the Club continued. The proceedings were stood over but the parties agreed on a timetable under which Ms Vlahos was to file her evidence in defence to the claim by 16 August.
On 5 August, Mr Stapleton wrote to Mr Koutzoumis with an offer to resolve Mr Vlahos’ proceedings. The letter began by canvassing the events since the grant of probate to Ms Vlahos on 15 December 2023. It referred to the appointment of Mr Errichiello as agent and negotiations with the Club. It stated that Ms Vlahos was confident that a further offer would be made by the Club “shortly” and that she wished to pursue negotiations with the Club prior to listing the property on the open market. The letter also stated that Ms Vlahos had been administering the estate since 15 December 2023 and was confident that the administration would be completed within 12 months from the grant of probate “in accordance with the usual ‘executor’s year’”.
The offer in the letter had the following main elements.
Ms Vlahos was to continue negotiations with the Club, and there was to be no contact between Mr Vlahos or his representatives and the Club, Mr Errichiello or any other interested purchasers, although Mr Vlahos would be provided with a copy of all offers received from the Club.
The end date for the negotiations was to be 15 October and if Ms Vlahos had not accepted an offer from the Club by that date she would instruct Mr Errichiello to list the property immediately; undertake any rectifications works recommended by the agent; and instruct the agent to list the property by public auction, to be held on a date advised by the agent but not later than 13 weeks after 15 October or the completion of any works recommended by the agent, whichever was later.
Prior to the auction Ms Vlahos was to consult Mr Vlahos about the proposed reserve price, including the provision of advice received from the agent. But the reserve price would be set by her in her sole discretion. If the property was passed in at auction, the offer for sale by private treaty had a price agreed by Ms Vlahos and Mr Vlahos. In the absence of agreement, the sale price was to be fixed by the agent.
Ms Vlahos was not be required to pay an occupation fee for her occupation of the property.
Mr Vlahos was to discontinue the proceedings on terms that the parties’ costs of the proceedings were to be paid out of the estate.
The offer was originally expressed to be open for acceptance until 4pm on 12 August, but following a request from Mr Koutzoumis for further information, on 14 August the information was provided and the offer was extended until 4pm on 21 August.
On 15 August, Mr Stapleton filed Ms Vlahos’ affidavit in defence to Mr Vlahos’ claim. She gave the former matrimonial home as her address. She began by deposing:
After Mrs Vlahos’ death, I took some time to grieve before seeking legal advice about the process of administering her estate. I understand that under the Will I was entitled to continue living in my family home at [the former matrimonial property] (the “Belmore Property”) for at least 12-months.
Ms Vlahos then referred to the letter from Mr McBride of 18 July 2022, and the enclosed correspondence with Andersons. She professed herself to be “shocked” that, less than three weeks after her mother’s death, her brother had instructed solicitors concerning the administration of the estate. She deposed that she did not wish to speak to her brother directly, given the former AVO against his wife. She retained Ms Manolakos “shortly” afterwards.
Ms Vlahos then set out at some length the events which took place between receipt of Mr Koutzoumis’ letter of 29 September 2022 and the grant of probate to her on 15 December 2023. She asserted that, as the course of events demonstrated, “the grant of probate had been materially delayed” by Mr Vlahos.
Ms Vlahos then turned to the steps taken by her to sell the former matrimonial home. She said that she began discussions with Mr Errichiello in “early December 2023”. She did not formally engage him at that time, as she wished to negotiate the sale privately, and to avoid the cost to the estate of commission.
Instead, Ms Vlahos instructed Mr Stapleton to approach the Club. He did so on 5 December. A site inspection took place in February last year, following which Mr Stapleton provided the Club with a draft contract at the club’s request.
Ms Vlahos then turned to Mr Koutzoumis’ letter of 15 March last year. She deposed:
It was my understanding that as executrix, I had a reasonable time to exhaust all avenues for the sale of the Belmore Property in order to achieve the highest price. I believed it was unreasonable for Nick Vlahos to request the Belmore Property be sold by auction within 6 weeks and less than 3 months since the grant of probate. Accordingly, I instructed my solicitors not to respond to Mr Koutzoumis and continued to negotiate with the Club.
I was also very cautious not to disclose the negotiations with the Club as I thought it could jeopardise the sale of the Belmore Property.
Ms Vlahos deposed that the Club made an offer of $1.8 million in late March. She turned this offer down, and on 15 April formally engaged Mr Errichiello. She deposed that she considered that it was necessary to obtain “professional assistance” as negotiations with the Club had “slowed”.
Ms Vlahos next referred to the commencement of her brother’s proceedings on 23 May. She professed herself “surprised” at his doing so when probate had been granted only in December 2023. She stated that it was her “understanding that 12 months was a reasonable period within which to administer an estate”.
On 17 June the club made a further offer to buy the matrimonial property for $1.85 million. Ms Vlahos turned this offer down too. On 27 June, the Club increased its offer to $2 million. This offer was also turned down by Ms Vlahos. On 9 July, Mr Errichiello advised the club that Ms Vlahos expected to receive an offer for the property of between $2.39 million and $2.895 million. As at the date of the affidavit (15 August), Ms Vlahos was waiting to hear from the Club as to whether it would increase its offer further.
Ms Vlahos then turned to her occupation of the former matrimonial home. She deposed that she still owned the other Tudor Street property (which was described, somewhat confusingly, as being located in Campsie rather than Belmore). That property was not leased out (and which, inferentially, she could have lived in it). Accordingly, she deposed that she did not “receive any financial benefit” from living at the former matrimonial property.
After complaining about her brother’s alleged failure to share the burden of caring for their mother, she deposed that she continued to live in the former matrimonial home because she believed that, if left vacant, it would be vandalised, or squatters might move in. Accordingly, she stated that it was for the benefit of the beneficiaries that she continue to live at the property until it was sold. She also professed herself to be concerned that if she were to pay an occupation fee, or lease the property to someone else then “land tax and capital gains tax would be payable upon the sale”.
Ms Vlahos ended by referring to the offer which had been made on her behalf by Mr Stapleton on 5 August. She referred to the extension, and stated that the offer remained open for her brother’s consideration.
The expiry date for Ms Vlahos’ offer came and went on 21 August without it being accepted. Then, on 29 August, Mr Errichiello issued a sales advice for the former matrimonial property. He advised that agreement had been reached for the Club to purchase it for $2.07 million. The deposit was to be 10% of the purchase price and the settlement period was to be four months.
What the sales advice did not say was that the agreement was actually only conditional. It was subject to a further inspection being carried out on the Club’s behalf. The inspection took place on 2 September. On 26 September the Club informed Mr Errichiello that it was no longer interested in purchasing the property. This was confirmed in early October.
Ms Vlahos then instructed Mr Errichiello to pursue the sale by way of auction. But he advised that owing to the state of the property it would be necessary to carry out repair and renovation work first. He formally confirmed his advice on 11 October.
On 15 October Mr Stapleton sent a second settlement offer to Mr Koutzoumis. The offer proceeded on the basis that the property should be offered for sale at auction. That would require rectification works first. Ms Vlahos offered to “endeavour to undertake” any such works. The property would be listed no later than 28 January, and the auction was to be held on 22 February.
Ms Vlahos offered to consult her brother about the proposed reserve price, but ultimately the fixing of the price was to be in her sole discretion. If the property was passed in at auction, it was to be offered for sale at private treaty at a price agreed upon by Ms Vlahos and her brother, but in the absence of agreement, the price was to be fixed by the agent.
Again, the offer was for the proceedings to be discontinued. Both Mr Vlahos and his children were to bear their own costs, and Ms Vlahos’ costs of the proceedings were to be paid from the estate on the indemnity basis.
The proceedings were listed for directions two days later, on 17 October. An application was made on behalf of Mr Vlahos that the plaintiff’s claim be referred to the Duty Judge for hearing, but ultimately that did not occur. Instead, the proceedings were stood over, presumably at Ms Vlahos’ request, to allow her to provide further evidence to assist the Court.
This resulted in a further affidavit from Ms Vlahos on 23 October. She provided an update on the steps taken towards the sale of the property since her previous affidavit. She professed herself “surprised and disappointed” that the Club had pulled out of the agreement to buy the property, especially given that an inspection had previously been carried out on its behalf. She referred to the advice that she had received from Mr Errichiello at her meeting with him which took place on 10 October. After referring to her further offer of 15 October, she deposed that she signed an exclusive agency agreement with Mr Errichiello on 22 October, which contained a formal marketing proposal.
Ms Vlahos also referred to the state of the Belmore property, referring to it as “very run down”. She deposed that she did not undertake repair works earlier because she believed the Club was happy to buy the property in its then condition. On 20 October she had a meeting with a builder who provided her with a proposed scope of works. On 23 October, the day of the affidavit, she gave him instructions to proceed.
Finally, Ms Vlahos reiterated that she continued to own the other Tudor Street property, and that she did not receive any financial benefit from living at the former matrimonial property. She deposed that she had begun clearing out the property and would have completely moved out by the time the repair works began (which was expected in late November or early December). There would accordingly be no problem with providing vacant possession.
Ms Vlahos’ offer of 15 October had been open for acceptance until 4pm on 23 October. It was not accepted. The property was eventually placed on the market on 31 January this year. The auction took place on 5 April. The property was sold for $1.98 million. The sale was completed on 14 July. While this occurred the proceedings effectively remained in abeyance.
By the time the sale completed, Mr Vlahos did not want to go on with the substantive claims for relief in the proceedings and only costs were in issue. The proceedings were referred to the Applications List and eventually came on for hearing before me on 6 September.
In written submissions filed in advance of the hearing on 5 September, counsel for Mr Vlahos contended that the summons should be dismissed; that each party bear their own costs of the proceedings; and that Ms Vlahos pay her own costs as executor personally without recourse to the estate. Counsel for Ms Vlahos presented a diametrically opposed view. His contention was that Ms Vlahos’ costs, on an indemnity basis, should be paid out of Mr Vlahos’ share of the estate. Although operating through the estate, this was equivalent to an indemnity costs order inter partes against Mr Vlahos.
The award of costs inter partes and the award of costs out of the estate give rise to different considerations. I will accordingly deal with them separately.
Counsel for Mr Vlahos relied upon the principles stated by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 concerning the incidence of costs in proceedings which, owing to later events, become unnecessary. Counsel submitted that these principles applied in the present case. The proceedings had eventually become redundant as a result of the sale of the property, which, in counsel’s submission, was what Mr Vlahos had been trying to achieve all along. On this basis, there should be no order as to costs.
In the course of argument on 6 September, it became clear that counsel for Mr Vlahos would be equally content to have the proceedings discontinued rather than dismissed. In this event, in counsel’s submission, the Lai Qin principles would be equally applicable.
Counsel for Ms Vlahos submitted, however, that the principles in Lai Qin have been somewhat qualified by subsequent changes to the Rules. UCPR r 42.20(1) now provides:
(1) If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed.
Rule 42.20(1) would be overstated if described as creating a presumption about the disposition of costs. It goes no further than to state the first point of consideration; there is no presumption which must be outweighed; what the rule says is what the order for costs is to be unless there is a discretionary decision to order otherwise. At the discretionary stage the matters to be considered are little altered [citing Fordyce v Fordham [2006] NSWCA 274 at [87]: “the matters referred to in the Lai Qin line of authority are plainly pertinent, although … not necessarily determinative”].
UCPR r 42.19(2), which deals with discontinuance, is in the same terms as r 42.20(1). I did not understand it to be disputed that the principles stated in Australiawide apply both to discontinuance and dismissal.
In his written submissions on the instant case, counsel for Ms Vlahos did not hold back. He argued (I have numbered the propositions for convenience; emphasis added):
This is a costs application by a residuary beneficiary who (1) actively obstructed the named executor from obtaining probate for over 14 months, (2) commenced frivolous proceedings seeking relief finalising the administration of an estate 4 months after the grant was received, (3) sought relief seeking an instrumental role in the administration of the estate not provided to residuary beneficiaries, and (4) maintained proceedings for 15 months having been on notice since the day after proceedings commenced that the asserted substratum of the dispute was in fact not in issue. The plaintiff now wishes to abandon the entirety of this litigation by way of consent dismissal and obtain the benefit of a costs order.
Mr Vlahos was not, in fact, seeking to “obtain the benefit of a costs order” in his favour in the proceedings. But in his oral submissions, counsel did not withdraw or qualify his criticisms. Counsel submitted that:
Mr Vlahos acted unreasonably in commencing the proceedings;
in the alternative, Mr Vlahos acted unreasonably in failing to discontinue the proceedings once, on the day after they were filed, he received Mr Stapleton’s email of 24 May; and
in the further alternative, Mr Vlahos acted unreasonably in failing to accept the offer put by Mr Stapleton in his letter of 5 August last year.
Counsel produced a detailed chronology in support of his submission that Mr Vlahos “actively obstructed” Ms Vlahos from obtaining probate for over 14 months (proposition (1) above: counsel was evidently referring to the period from 29 September 2022, when Mr Koutzoumis wrote to Ms Malonakos advising of Mr Vlahos’ suspicion about the 2015 will, up until the withdrawal of Mr Vlahos’ notice of intention to apply for probate of the 2015 will on 13 December 2023). Counsel described Mr Vlahos’ conduct (through Mr Koutzoumis) during this period as “unnecessary intermeddling”.
Counsel acknowledged that there had been no reply to Mr Koutzoumis’ correspondence of 5 February and 15 March before he filed Mr Vlahos’ originating summons on 23 May last year. When asked whether, in these circumstances, he could justify his submission that the commencement of proceedings had been unreasonable, counsel could only say that Mr Stapleton’s email of 17 January had advised that Ms Vlahos was “currently dealing” with the real estate agent. But counsel resolutely declined to withdraw the submission.
Counsel criticised the directions sought in the summons for providing Mr Vlahos with a say in the appointment of the agent, the fixing of the reserve price, and the fixing of the sale price should the property be passed in at the auction. Counsel submitted that Mr Vlahos was not entitled to such an “instrumental role” in the administration (proposition 3 above). Counsel also criticised the filing of the summons after only four months of the “executor’s year” had elapsed.
Counsel next pointed out that the day after the filing of the summons, Mr Koutzoumis was told by Mr Stapleton that the property had been placed with an agent “on or about 15 April” and that negotiations for the sale were “well advanced”. Those negotiations continued, to the knowledge of Mr Koutzoumis, through June, July and August. In the meantime, Ms Vlahos had been obliged to incur the cost of preparing her substantive affidavit of 15 August in response to Mr Vlahos’ claim.
Counsel also criticised Mr Vlahos’ failure to accept the offer of 5 August. Counsel submitted that the offer gave Mr Vlahos all he could reasonably have hoped for so far as the sale of the property was concerned. It required him to agree to Ms Vlahos not paying an occupation fee, but Mr Vlahos had clearly abandoned that claim. He also apparently did not wish to pursue his claim to an account.
Counsel acknowledged that the offer from the Club eventually fell through, but submitted that was not Ms Vlahos’ fault. Afterwards, Ms Vlahos proceeded to sell the property by auction and a sale was achieved. Counsel also submitted that the affidavits filed by Ms Vlahos in effect performed the function of updating Mr Vlahos. This was a reasonable course for an executor to adopt.
Counsel for Mr Vlahos urged me to reject these submissions. Counsel argued that Mr Vlahos’ conduct, both before and during the proceedings, had not been unreasonable. The administration had been characterised by delays which had not been adequately explained. Scepticism, and even suspicion, were justified.
Counsel did not contest the submission that Mr Vlahos had effectively abandoned his claim for payment of an occupation fee. But counsel indicated that Mr Vlahos was not giving up his entitlement to seek an account from Ms Vlahos of her stewardship of the estate at some point in future. He had only decided against doing so at this point.
The delay between September 2022 and December 2023 received quite a deal of emphasis in the parties’ evidence and submissions, especially from counsel for Ms Vlahos (see proposition (1) above). But in my opinion, it is of little significance in the resolution of the present costs dispute. The observation by Einstein J in Pioneer Park v ANZ [2006] NSWSC 1176 is in point. His Honour said at [12] (emphasis original):
The principled approach to dealing with costs requires the Court to focus upon and only upon, the conduct of the actual proceedings which have taken place. Conduct anterior to the commencement of the proceedings may be remediable if that conduct exposes a cause of action, in which event success on that cause of action is in general, the mode and the only mode, by which the innocent party receives redress from the Court.
If I am wrong in this view, I consider that counsel for Ms Vlahos was wrong to place all of the blame for the delay on Mr Vlahos. Four points stand out.
If the period up to the grant of probate is to be considered, the whole of that period should be considered. Ms Vlahos was plainly aware that her mother’s will had been changed in 2015. It is true that she had an entitlement under that will to live at the property for up to 12 months. But no longer. Her obligation was plainly to obtain probate, at the latest, in sufficient time to be able to sell or transfer the property immediately upon the expiry of that period.
Despite Mr Koutzoumis’ letter of 29 September 2022, it remained open for Ms Vlahos to apply for probate of the 2015 will. Nor did the filing of Mr Vlahos’ caveat, which did not take place until more than two months later, prevent her from proceeding with an application for probate. She could have applied to have the caveat removed, or simply proceeded on a contested basis: see Re Katalinic [2020] NSWSC 805 at [53]-[73], where Hallen J set out the relevant principles. This would have resulted in some additional initial cost to the estate, but if successful, the costs would have been recoverable from Mr Vlahos.
That remained so following the expiry of the caveat, and its replacement by Mr Vlahos’ rival application for probate. It remained open to Ms Vlahos to proceed on a contested basis, at Mr Vlahos’ risk as to costs.
It was of course sensible for Ms Vlahos to try to negotiate with Mr Vlahos to try to remove the obstacles he had placed on her obtaining probate. But that was not an indefinite excuse for failing to proceed with her application. Nor does she seem to have pursued the negotiations with Mr Vlahos with any great energy.
The evidence shows that, once probate was granted, both Ms Vlahos and Mr Vlahos were proceeding on the basis that the former matrimonial property would be sold and the proceeds distributed to the beneficiaries. It should be noted, however, that Mr Vlahos was not actually a residuary beneficiary as counsel for Ms Vlahos described him. He was, along with his sister and his children, a specific devisee of a share of the former matrimonial property (subject to an obligation to pay a share of the expenses in cl 6 of the will). Strictly speaking, Ms Vlahos’ obligation was to transfer the property to the four devisees, rather than to sell it, but a sale was obviously convenient if it could be arranged.
I turn now to the commencement of proceedings on 23 May last year. Of course, the “conduct of the actual proceedings” to which Einstein J referred does not begin on the day on which originating process is filed. Pre-litigation correspondence is relevant.
In the present case, the commencement of proceedings followed a period of more than three months during which Mr Koutzoumis’ correspondence was ignored. Ms Vlahos’ affidavit reveals that this was a deliberate decision on her part. She apparently thought that her brother had no right to press for sale when only six months had passed from the grant of probate.
It seems (and this was the submission made by her counsel) that Ms Vlahos took the view her “executor’s year” only started when probate was granted in December 2023. But that view was wrong. The executor’s year commences, not at the date of probate, but at the date of the testator’s death: G E Dal Pont, Law of Succession (3rd ed, 2021, LexisNexis) at [14.27]. And even if the year had not expired, that was not an excuse for Ms Vlahos to sit on her hands. Her duty was to sell the former matrimonial property to the best advantage of the beneficiaries as quickly as was reasonably possible. She had no justification for ignoring Mr Vlahos’ requests for her to do so.
In any event, when considering the reasonableness of Mr Vlahos’ actions in commencing proceedings it must be judged according to the information which he had. As a deliberate decision had been made not to respond to his correspondence, he had no means of knowing why Ms Vlahos was not taking any action.
It must be borne in mind that Ms Vlahos had, through Mr Stapleton, undertaken to keep Mr Vlahos apprised of her dealings with the agent and to provide him with a copy of the agent’s advice. We now know that no formal advice was obtained at that time. But Ms Vlahos did not tell her brother that. He was left in an information vacuum and his requests for information were being ignored. How else was he to vindicate his right to require due administration of his mother’s estate by his sister?
It is true that, in the usual course, Ms Vlahos had no obligation as executor to consult with Mr Vlahos on the identity of the agent to be retained, or the reserve price if the property went to auction, or the private treaty price if the property was passed in at auction. By the same token, there was nothing to prevent her from doing so. Whether the fact that the property constituted a specific devise rather than residue made any difference does not have to be considered. Clearly Mr Vlahos’ key demand was a timetable for a sale by auction as quickly as possible.
Mr Vlahos’ claim was far from being vexatious as counsel for Ms Vlahos claimed. The truth is that that Ms Vlahos brought the proceedings on herself by her unreasonable conduct as executor.
Next, I turn to the submission that Mr Vlahos, having legitimately commenced proceedings, should immediately have withdrawn them on being informed the following day that Mr Errichiello had previously been engaged to pursue negotiations with the Club. I reject the submission. There are, I think, at least two fundamental difficulties with it.
I do not think that from 24 May “the asserted substratum of the dispute was in fact not in issue” as counsel for Ms Vlahos claimed. Ms Vlahos had not accepted Mr Vlahos’ demand for an auction sale as quickly as possible. Rather, her position was that it should continue to be deferred while she negotiated with the Club.
Nor did Ms Vlahos tell Mr Vlahos that the proceedings were, or had become, unnecessary, and ask him to withdraw them. Instead, she sought to have the proceedings held over while the negotiations with the Club continued, providing updates for Mr Vlahos through affidavits from herself and her solicitors.
I now turn to Ms Vlahos’ offer of 5 August. As a preliminary point, I note that the offer, in its eventual form, did not expire until 4pm on 21 August. It is therefore wrong to suggest that Mr Vlahos’ supposed obduracy in refusing the offer resulted in Ms Vlahos incurring the cost of putting on her evidence in defence to Mr Vlahos’ claims. Ms Vlahos’ affidavit was filed on 15 August, well before the offer expired.
The offer was not a formal one under the Rules. It was therefore not enough for it to have proved more favourable to Mr Vlahos than the eventual outcome of the proceedings. It was necessary for counsel for Ms Vlahos to go further and to demonstrate that the rejection of the offer was unreasonable.
In my view, however, reliance on the offer fails at the first step. It was not an offer which offered to Mr Vlahos a compromise which was more favourable to him than the eventual outcome. Again there are at least two reasons for this.
Mr Vlahos’ principal claim was to have an auction sale happen as quickly as possible. That was resisted by Ms Vlahos. The offer did not involve any compromise on the issue. It merely proposed a continued deferral to allow Ms Vlahos to complete her negotiations with the Club.
As I have found, Mr Vlahos’ conduct in commencing the proceedings was justified, and Ms Vlahos’ conduct in provoking them was unreasonable. Mr Vlahos was therefore entitled to recover his costs. It is true that one of the terms of the offer was for those costs to be paid out of the estate. But if Ms Vlahos was in the wrong, or even only arguably in the wrong, it was not legitimate for her to buy off Mr Vlahos by putting the costs onto the beneficiaries.
The second point has a wider significance. In my view, as a general rule, an offer of compromise which deals with costs should, in general, be limited in its terms to the incidence of costs inter partes. They should not purport to deal with the incidence of costs on the estate if others, not party to the offer and perhaps even not party to the proceedings, have an interest in that question. The parties to the offer have no entitlement to agree this among themselves, and their agreement would not be enforced by the court anyway.
Leaving these points aside, I am far from convinced that Mr Vlahos’ refusal of the offer was unreasonable, having regard to the unanswered questions about Ms Vlahos’ conduct as executor (see below). But it is unnecessary to go into this question.
There is no need to examine the further course of the proceedings in any detail. Ms Vlahos’ position remained the same until her negotiations with the Club eventually failed in October. Thereafter there was no alternative to an auction sale, and few if any further costs would have been incurred while the proceedings stood in abeyance.
Once the auction had taken place and the property had been sold, it would be wrong to see Mr Vlahos’ abandonment of the proceedings as a capitulation. In the end, Ms Vlahos conducted the sale in her own way and in her own time, despite his efforts. His claim for relief was overtaken by events.
Nor do I think there is any great significance in Mr Vlahos’ abandonment of his claim to have Ms Vlahos pay an occupation fee for the period after February 2023. This was plainly subordinate to his claim for an immediate auction sale of the property. It would be quite understandable if Mr Vlahos had decided not to pursue it, even if justified, once his main claim had fallen away.
Counsel for Ms Vlahos did not, as I understood him, submit that Mr Vlahos had, by not pressing the account claim in his summons, given up his right to apply for Ms Vlahos to be required to account in future. That was understandable. And, given that an account, if ordered, will generally cover the whole administration, dismissal of the summons now would appear to have no real effect on Mr Vlahos’ right to challenge expenditure which has so far been incurred.
It should also be noted that the abandonment of Mr Vlahos’ claims concerning the administration of the estate does not exonerate Ms Vlahos from liability. Even if Mr Vlahos’ claims were dismissed, Christina and Michael would have standing as beneficiaries to invoke the Court’s administrative jurisdiction and seek compensation for Ms Vlahos’ failure to pay an occupation fee, for instance. They would require leave to advance such a claim on behalf of the estate, but if they were to obtain leave, and their claim succeeded, they could obtain full compensation for all the beneficiaries, including their father. The same applies for a claim to an account.
For these reasons, I reject Ms Vlahos’ claim that Mr Vlahos should pay her costs of the proceedings. In the absence of any claim for costs by Mr Vlahos, there will be no order as to the costs of the proceedings inter partes.
Both parties referred me to Drummond v Drummond [1999] NSWSC 923 at [41]-[49], where Austin J summarised the rules, which ultimately derive from Chancery practice, governing the entitlement of a trustee or executor to indemnity for costs incurred in legal proceedings. As counsel for Ms Vlahos pointed out, an executor is generally entitled to indemnity for such costs even if the executor’s conduct is found to have been mistaken, and the other party to the litigation is entitled to an order for costs (at [43]). On the other hand, as counsel for Mr Vlahos pointed out, the beneficiaries are entitled to expect “reasonable prudence” from a trustee, and there is no indemnity for expenses which could not properly have been incurred in the exercise of reasonable discretion (at [45]).
Somewhat surprisingly, neither counsel referred to Uniform Civil Procedure Rules 2005 r 42.25, which, it seems, applies to executors as well as trustees: Photios v Photios [2019] NSWCA 158 at [88]. That rule creates a prima facie entitlement to costs, except where the executor or trustee has incurred costs unreasonably or has acted in substance for their own benefit.
The Chancery rules are not specific to the costs incurred in legal proceedings. Under the Chancery rules, trustees are entitled to indemnity for all expenses properly incurred in the execution of the trust (see also Trustee Act 1925 s 59(1)), and an entitlement to costs incurred in litigation is only a particular instance of that: see Re Beddoe; Downes v Cottam [1893] 1 Ch 547 at 554-555 per Lindley LJ.
Usually, disputes about the entitlement of an executor for indemnity for expenses (or for compensation for loss allegedly caused to the estate) are determined in accounting proceedings at the end of the administration. This reflects the principle that, usually, “a party cannot, as it were, have little bits of accounts”: Hutley JA in Colin D Young Pty Ltd v Commercial and General Acceptance Ltd (Court of Appeal, 24 August 1982, unreported), quoted in Adams v Bank of New South Wales [1984] 1 NSWLR 285 at 295.
To make a specific order about indemnity for the costs of the proceedings, whether under the Chancery rules or UCPR r 42.25, would thus cut across the usual approach. It would not cover expenses (whether legal expenses or otherwise) which were not costs of the proceedings, and would leave disputes about indemnity for such expenditure still to be determined in any event. It would also run the risk that non-parties with an interest in the indemnity question would be deprived of the opportunity to be heard: cf Holland J in Adam v Mullen (1976) 18 BPR 35,773 at 35787
In the present case, on the evidence before the Court, Ms Vlahos’ conduct as executor is potentially open to criticism. At least six points stand out.
Ms Vlahos failed to apply for probate before December 2022, when there was no obstacle to doing so. Thereafter she failed to take steps to remove Mr Vlahos’ caveat or to proceed with an application on a contested basis.
After Ms Vlahos’ 12 month period of rent-free occupation under the will expired in February 2023, she made no attempt to obtain income from the property in the interests of the beneficiaries. Nor does she seem even to have sought professional advice on the question. Instead, she remained in occupation while declining to pay an occupation fee.
Once Ms Vlahos had obtained probate, in December 2023, she chose not to take the orthodox approach of seeking professional advice on the sale from a real estate agent. Instead, she tried to negotiate a private treaty purchase by the Club. Initially she used her solicitors for this purpose. Later she used a real estate agent, but without, apparently, formally retaining the agent or seeking his formal advice on the sale. That formal retainer and advice was not sought until after the negotiations with the Club had fallen through.
When the auction sale issue was raised by Mr Koutzoumis in correspondence, Ms Vlahos deliberately declined to respond, on grounds which were unjustified. By doing so, she provoked unnecessary litigation against herself as executor. She did offer to settle the litigation, but only on terms that would have thrown Mr Vlahos’ costs, as well as her own, onto the beneficiaries.
While Ms Vlahos may have tried to negotiate with the Club in the hope of achieving a better financial outcome for the estate, she failed to achieve that outcome. In the end, the property had to be sold at auction anyway. The result was a significant delay and, no doubt, increased costs for the beneficiaries.
One matter which should have been at the forefront of Ms Vlahos’ consideration was that she and her brother were not the only parties with interests in the estate. Half the property was to go to Christina and Michael. The evidence leaves the impression that Ms Vlahos treated the issues which arose in the administration as a contest between herself and her brother. Scant, if any, attention appears to have been given to the interests of Christina and Michael in probate being obtained and the property being sold as soon as reasonably possible.
It is true that Ms Vlahos addressed some of these points in her affidavits. I do not propose to make any findings on the explanations she offered. It is enough to say that the validity of some of those explanations appears contestable.
In saying this, I do not wish to encourage further dispute about the administration of the estate. But if there is to be such a dispute, the question of indemnity for the costs of these proceedings will likely be only a part of it. In my view it would be in the interests of all interested parties for any such dispute to take place at the end of the administration, if for no other reason than that it is likely to be clearer at that point how much money will be involved. A partial review through the lens of these proceedings will not solve anything.
When I put these views to the parties, they eventually agreed that I should not proceed to determine the question of Ms Vlahos’ indemnity for the costs of the proceedings at this point. Instead, I will make no order on that question, to the intent that it will be determined, if necessary, as part of any claim which may be made against Ms Vlahos as executor. In doing so, I will be “otherwise order[ing]” for the purposes of r 42.25.
For reasons I have given, it is uncertain what practical impact, by way of res judicata, or issue estoppel, would follow from the dismissal of the proceedings. In those circumstances, I think it better to grant leave to Mr Vlahos to discontinue the proceedings so that this further potential distraction does not arise.
The orders of the Court are:
grant leave to the plaintiff to discontinue the proceedings;
no order as to costs inter partes;
no order as to the defendant’s costs out of the estate, to the intent that this question will be determined, if necessary, as part of any claim which may be made against the first defendant as executor of the estate.
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[80] missing words
Various grammatical and typographical errors.
Cover page
Vlahos
Vlahos [2025] NSWSC 1612
(1997) 186 CLR 622