Supreme Court New South Wales Medium Neutral Citation: Stojic v Stojic [2018] NSWSC 723 Hearing dates: 08/05/2018 Date of orders: 08 May 2018 Decision date: 08 May 2018 Jurisdiction: Equity - Probate List Before: McDougall J Decision: Plaintiffs to be appointed as administrators pending hearing. Catchwords: WILLS AND ESTATES – disputed probate hearing – application for plaintiffs to be appointed as administrators of will pending hearing – consideration of principle in De Chatelain that a party to the proceedings will ordinarily not be appointed administrator – where any risk of conflict is more theoretical than real – where urgency surrounds the application – where no proper alternative other than plaintiffs – discretionary exercise tips in favour of appointing the plaintiffs – application granted. CONTEMPT – defendant in significant contempt of court orders – where no attempt made to purge the contempt – where the contempt relates directly to subject matter of proceedings – defendant can oppose relief sought by plaintiffs but cannot be heard to propound himself as candidate for administrator. Legislation Cited: Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Gray v Hart [2010] NSWSC 55 Griffin v Ackroyd [1925] P 38 De Chatelain v De Pontigny (1859) 164 ER 616 Stokes v McCourt [2013] NSWSC 1014 Category: Procedural and other rulings Parties: Ivanna Ann-Marie Ferenc Stojic (First Plaintiff) Ivan Mathew Stojic (Second Plaintiff) Simon Stojic (Defendant) Representation: Counsel: D Smallbone (Plaintiffs) R Wilson SC / C Birtles (Defendant) Solicitors: Prime Lawyers (Plaintiffs) Teece Hodgson & Ward (Defendant) File Number(s): 2014/315956 Judgment (EX TEMPORE – REVISED 17 MAY 2018) 1. HIS HONOUR: The plaintiffs, to whom I shall refer respectively as Ivanna and Matthew, and the defendant, Simon, are three of the children of the late Ivan Stojic (the deceased). He had two other children, Anton and Marijan. 2. The deceased made at least three wills. The last of those, purportedly made on 6 June 2014, can be disregarded. The penultimate will, dated 23 May 2014, and the preceding will, dated 4 November 2013, are in contest. 3. The 2013 will appointed Simon to be executor and nominated Anton, Simon, Matthew and Ivanna (in that order) as beneficiaries. It provided for the establishment of a trust which would not vest for twenty years after the death of the deceased. The trust fund was to be held upon trust to pay income to the beneficiaries from time to time, and on the vesting day, any undistributed income together with capital. The will declared that the deceased had made no provision for Marijan nor his then wife (the mother of Marijan, to whom I shall refer as Jagoda), because he had made provision for them from the assets in Croatia and otherwise in his lifetime. 4. The 2014 will (by which I mean the will made on 23 May 2014) appointed Anton to be executor and nominated Anton, Matthew and Ivanna as beneficiaries. It contained a similar trust arrangement (as to income and as to capital) and a similar statement of the reasons for making no provision for Marijan and Jagoda. However, that will stated that Simon had been excluded "as he has taken from me over $4,000,000 since October 2013". 5. There has already been one disputed probate application and a hearing in the Court of Appeal. As a result of the decision of the Court of Appeal, there has to be a further probate application in which there will be a contest between the 2013 will and the 2014 will. 6. The plaintiffs say, and it appears to be accepted, that Anton, by reason of some incapacity, felt incapable of accepting the appointment of executor and renounced his appointment under the 2014 will. The plaintiffs say that they are the obvious persons to prove that will, and that they should be granted letters of administration with that will annexed. 7. Alternatively, the plaintiffs say, if the court concludes that the 2014 will is invalid (the only issue being "knowledge and approval" of its contents), then they should be appointed as administrators with the will annexed to the 2013 will. They say that because they have the majority interest under that will (counting Anton with them, who is said to support their position), and, importantly, because Simon is not a fit and proper person to be appointed, that this would follow. 8. The deceased left what he no doubt thought was a substantial estate. The evidence of its value is a little hard to pin down. It included commercial real estate, said to be worth in excess of $5 million, a loan owing by Statewide Office Furniture Pty Limited (Statewide), a company at the time controlled by the deceased, of $1.4 million, and a superannuation death payment of $730,000. The superannuation benefit was to go in part to the deceased (so that on his death, it became part of his estate) and in part to Jagoda. The commercial real estate is occupied by Statewide. Its value is dependent on whatever sale price might be achieved. 9. One reason why it is difficult to assess the value of the estate is that there have been changes in the stated value of debt owing by Statewide to the deceased. Transactions which can in effect be vouched suggest that the amount has been reduced at various times to about $904,000. However, in the last accounts for Statewide (as at 30 June 2017), the amount is said to be about $788,000. 10. Further, in relation to the real estate said to be worth $5.3 million, there is the not unimportant consideration that if it is sold it will attract a liability for capital gains tax, said to be of the order of $900,000. Of course, that would not be a liability of the deceased but it would be a liability of the estate were the administrators (whoever they may be) to sell the property. 11. The matter has a most unfortunate history. I have hinted at part of that: an application for grant of probate, which succeeded, and an appeal, which also succeeded. In an attempt to protect the assets of the estate, an administrator was appointed pending the grant of final relief. That administrator was a well-known specialist solicitor, Ms Pamela Suttor. It is reasonable to assume that her administration of the estate was not made any easier by the obvious tension that appears to exist between the various members of the Stojic family. Nonetheless, on the account presented by the plaintiff, it does not appear that a great deal has been achieved, over the last four years or so, in return for the expenditure of about $227,000 in legal costs. 12. I should make it absolutely plain that I express no criticism whatsoever of Ms Suttor nor of the amount charged by her. I can readily understand that her work has been made difficult by the matters to which I have referred. I can also readily understand that the constant bickering that no doubt has occurred between members of the family has caused her to spend a huge amount of time which may have been spent elsewhere more profitably, and to seek the advice of counsel from time to time. The point is simply that for all that has been spent, the estate remains in a state of some chaos. 13. I should also point out that Ms Suttor was not represented in those proceedings. She was not a respondent to the application with which I am dealing today. She has had no opportunity to put her story before the court. Nothing that I have said should be taken as reflecting in any way upon her. 14. What I do have today is an application by the plaintiffs to be appointed as administrators pending the final hearing and decision of the applications for administration of one or other of the two wills to which I have referred. That application sought that the plaintiffs be appointed and that they have a number of powers, to which I shall return. 15. Simon also made an application. However, Mr Smallbone of Counsel, for the plaintiffs, submitted that I should not entertain Simon's claim. He put that submission because Simon, on the evidence, is in contempt of orders of the court and has been in contempt for the best part of three years. Nor is the contempt insignificant or "merely" procedural. Simon effectively controlled the affairs of Statewide for some time after the deceased died. The evidence shows that Robb J made an asset preservation order on 1 May 2015 which Kunc J continued on 19 June 2015. In defiance of that order, Simon took some $238,000 from Statewide for his personal use. He has admitted that he took that money from Statewide, and said that he intends or hopes to repay it. Since Statewide is an asset of the estate, it is clearly a matter directly relevant to the administration of the estate that Simon, in breach of this court's order, has depleted the assets of Statewide by the amount to which I have referred. 16. There has been much judicial discussion of the rule, or principle, that a person in contempt of court might not be heard; discussion of the range of the rule or principle; and discussion of the exceptions to it. Lindsay J canvassed the authorities (up to the date of his Honour's judgment) in Stokes v McCourt [1] at [16] to [51]. His Honour noted the tension in the authorities between the characterisation of the Court's approach as either a rule with exceptions or as a discretionary rule which varied in its application according to the particular circumstances of each case. 17. Lindsay J concluded at [50] that he did not need to choose between the varying statements of the rule because, whichever view was taken, the outcome would be the same. I respectfully adopt the same approach in this case. I agree entirely with his Honour's summary of the authorities as they then stood, so there is no point in my seeking to restate their effect. 18. What I do take from his Honour's judgment, and what does seem to me to be important, is that the rule or principle, however one might call it, is closely bound up with the case management provisions of the Civil Procedure Act 2005 (NSW). 19. Thus, the approach that the court takes to the application of the rule, whether in terms of considering the discretion or whether in terms of considering an applicable exception, needs to be pursued in the light of the overriding objective of the Civil Procedure Act to achieve the just, quick and cheap identification and resolution of the real issues in dispute. 20. I concluded that because Simon's conduct was very serious and because he had not attempted to purge it, and because it was directly connected with the matters in issue in these proceedings, he should not be heard to propound his own candidate to administer the estate pending a final hearing. 21. I note that Simon has been arrested and charged with very serious offences, including murder. He has been remanded in custody awaiting trial. That is a matter of history. It has no bearing on the question just discussed. 22. I should note that Mr Wilson of Senior Counsel, who appeared with Mr Birtles of Counsel for Simon, submitted that there had been no application to deal with Simon for contempt of court. That is correct. But in circumstances where Simon has been remanded in custody and is likely to stay there until his trial on the very serious charges to which I have referred proceeds to finality, it is unlikely that even a sentence of imprisonment on a charge of contempt would achieve a great deal to vindicate the authority of the court's orders. 23. Likewise, a fine is unlikely to do very much, if only because it is doubtful that Simon has the means to pay it. 24. Mr Wilson also submitted that the point had been available to be taken, but not been taken, in the earlier proceedings. That does not seem to me to matter. It has been taken now, and for the reasons I have given it ought not be ignored, having regard to its close relationship to the disputes at the heart of this litigation. 25. There are other reasons why, it seems to me, Simon would not be a suitable administrator pending hearing. Whilst I do not accept that the charges on which he is awaiting trial prove anything of themselves, the unfortunate consequence of his languishing in prison pending hearing is that his ability to administer the estate, even on an interim basis, would be difficult. 26. More seriously, it appears that Simon may well have used estate moneys to pay his legal costs without any authority to do so. Further, he does not appear to have acted whilst in control of Statewide to cause it to pay debts due to the estate; and he may well have embarked upon a course of action (causing Statewide to go into voluntary administration) designed at thwarting any claim the estate may have. The latter is no more than speculation but the other reasons do seem to me to be significant. 27. That rather lengthy recitation has been made necessary because, having regard to my ruling, the only candidates for appointment as administrators pending the final hearing are the plaintiffs. There is no application for Ms Suttor nor for any other independent legal practitioner to be appointed. 28. Thus, one must confront immediately the general proposition that the court will not ordinarily appoint, as an administrator pending hearing, a party to the proceedings, at least unless all parties consent. The case often cited for that proposition is De Chatelain v De Pontigny [2] . It has ongoing vitality as a general principle, as was pointed out by Palmer J in Gray v Hart [3] . However, as Mr Smallbone submitted, that well-known probate judge Horridge J said in Griffin v Ackroyd [4] at 39 that there was no absolute rule against appointing a party. Indeed, that there is no absolute rule appears from what Palmer J said in applying (on the facts before his Honour) the decision in De Chatelain. 29. On the face of things, there is much to commend the appointment of the plaintiffs as administrators. One reason for saying that is that it appears that the estate has assets in Croatia and is subject to claims (for family provision) by persons living in Croatia, namely, Marijan and perhaps Jagoda. The plaintiffs speak the Croatian language. They have contacts in Croatia. To the extent that it is necessary or desirable to pursue enquiries in Croatia they would be able to do so. 30. The deceased had instituted two pieces of litigation in Croatia. Each action has been stayed since his death. It does not appear that anything has been done to revive them. The plaintiffs, for the reasons I have just indicated, will be in a position to do so. It may be assumed in each case that the plaintiffs' familiarity with the Croatian language and with the customs of that sometimes fractious country would assist them in any work they may there undertake. 31. However, as Mr Wilson, pointed out, there are also very significant obstacles standing in the way of appointing the plaintiffs. The principal obstacle is that they themselves have family provision claims. However, they do not claim provision other than that made available by the will; what they claim is that the time for payment of that provision be accelerated. In short, they seek to advance the twenty-year vesting of the trusts of which they are the among beneficiaries (and are, in the case of either will). 32. Mr Wilson also submitted that it was apparent that the plaintiffs desired to prosecute claims against Simon. He submitted that this was an obstacle to their acting as administrators. I have to say that I do not quite see why this is so. If Simon owes the estate money, he should repay it. 33. The matter has some urgency because, as I have said, Statewide is undergoing voluntary administration. The first meeting of its creditors is to take place Monday next, 14 May 2018. 34. There is some reason to think that steps may be taken to advance a counterclaim or offset that the company says it has against any amount otherwise owing to the estate of the deceased. The possibility that there is such a cross-claim or setoff has not been flagged in any of the financial statements put in evidence. What those financial statements show, apart from the amount of the debt from time to time said to be owing to the deceased or his estate, is that Statewide claims as an asset an amount of about $1,023,000 for "building renovation - (Kingsgrove) at cost", less accumulated provision for depreciation. 35. The last iteration of the financial statements which includes that asset would appear to suggest that it is valued at the order of $460,000 net of depreciation. Since those financial statements are for the 2016 financial year, the amount is presumably less now. Regardless, the company's administrator has flagged an intention to take steps in relation to that debt. Whether there is any basis for that being done is dubious. The asset is said to be the value of improvements performed on the Kingsgrove land at Statewide's expense. If that is the case, then pursuant to the lease Statewide is entitled to remove the improvements. If it does not do so, that is its problem. If, on the contrary, the improvements were performed before the current lease was signed (and the evidence suggests that they were), there is nothing in the lease which would entitle Statewide to recover any amount in respect of the alleged value of those improvements as they presently stand. 36. Nonetheless, the threat is there and it needs to be dealt with. Someone needs to appear at the meeting, and to represent the estate's interests, and also (if the administration is brought to an end) to take charge of the affairs of Statewide. The plaintiffs have expressed a desire to do those things, and in my view it is appropriate that they do it. 37. It is not easy to see how much further the plaintiffs should go. Nor is it easy to see how the problem in relation to their own applications for provision out of the estate will be managed. Mr Smallbone submitted that it could be dealt by an order under UCPR r 7.6. That may be so; whether or not, as he also submitted, that is the usual practice in such matters, I do not know. However, the case is being managed by Hallen J as I understand it, and if there is to be a real problem, his Honour will be able to deal with it. Whether doing so would involve setting aside any orders in favour of the plaintiffs, for administration pending a grant, is a matter for his Honour to consider. 38. In circumstances where the plaintiffs' claim is not for more than they get, but, rather, for acceleration of what they are to get at some stage in the future, the conflict seems to me to be more theoretical than real. Having said that, I completely accept, as Mr Wilson submitted, that the plaintiffs could not be on both sides of the record, in relation to their claim. How that is to be averted is, as I have said, a matter that the list judge, or any other judge administering the proceedings, can deal with in due course. 39. The end result of these reasons is that, in my view, something has to be done to take in hand the administration of the estate. I think that there are a number of reasons why the plaintiffs are the appropriate people to do that. Thus, in principle, I think that this is a case outside the general rule expressed in De Chatelain. 40. On the other hand, as I have said, there may well be problems with the appointment of the plaintiffs. The best way to deal with that is to look very closely at the powers that they are given, and to impose requirements to seek advice before some of the powers are exercised. That seems to me to apply particularly in relation to the plaintiffs' expressed desire to undertake investigations and to prosecute the deceased's legal claims in Croatia. It also seems to me to apply at least to the extent to which the plaintiffs may take over control of, and act in respect of, the affairs of Statewide. 41. The balancing exercise is a difficult one. I am conscious, as Mr Wilson submitted, that the plaintiffs could have made it a lot less difficult by nominating some other independent expert in trust and estate law to act as administrator pending hearing. However, learning from the lessons of history (as we are advised to do), I am not satisfied that this would achieve anything substantial in terms of dealing with the immediate problems that require attention: problems in particular in respect of Statewide. The Statewide problems include not merely dealing with the administrator, but also moving to recover debts owing to it, and to see how (if at all) debts owing by it to the estate for rent and the like are to be paid. It is to be noted that whilst Ms Suttor was acting as an administrator, those debts were allowed to accumulate. Why that is so, I do not know, but it cannot be in the interests of the beneficiaries. 42. I should also note that Marijan, who as I have said has a claim for further provision out of the estate, appeared today by legal representatives and sought to intervene. Marijan sought to support the appointment of Ms Suttor. There was no formal application by him (or by his tutor) in that behalf. Accordingly, whilst I have taken into account all the objections expressed by Mr Wilson to the appointment of the plaintiffs, I have not taken into account the expressed desire of Marijan for Ms Suttor to be appointed. 43. 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. 44. For those reasons, I am prepared to make an order in terms of prayer 1 of the plaintiffs' notice of motion filed on 4 May 2018, but will defer doing so until the question of the extended powers has been debated with more specificity than has occurred hitherto. ********** Endnotes 1. [2013] NSWSC 1014. 2. (1859) 164 ER 616. 3. [2010] NSWSC 55. 4. [1925] P 38. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 May 2018