Katramados v Hasapis (No 3)

[2019] NSWSC 435

Supreme Court

New South Wales

Medium Neutral Citation:

Katramados v Hasapis (No 3) [2019] NSWSC 435

Hearing dates:

20 February 2019

Decision date:

18 April 2019

Jurisdiction:

Equity

Before:

Robb J

Decision:

See paragraphs 117-118

Catchwords:

COSTS — Payable out of a fund — Deceased estate — Relevant principles

 

SUCCESSION — Family provision and maintenance — Consideration of issues requiring determination before final orders can be made — Uncertainty regarding value of estate — Impact of Greek taxation law on value of Greek estate — Effect of new evidence concerning same after principal judgment already handed down — Case management

  SUCCESSION — Family provision and maintenance — Consideration of issues requiring determination before final orders can be made — Significance of costs orders for the terms of available family provision orders — Case management

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 98
Conveyancing Act 1919 (NSW), s 66G

Cases Cited:

Bell v Crewes [2011] NSWSC 1159
Katramados v Hasapis [2018] NSWSC 948
Katramados v Hasapis (No 2) [2018] NSWSC 1604

Category:

Costs

Parties:

Julia Katramados (plaintiff)
Despina Hasapis (first defendant)
Adriana Kalantzis (second defendant)
Maria Kalantzis (third defendant)
Vassilis Kalantzis (fourth defendant)

Representation:

Counsel:
A Hill (plaintiff)
N C T Bilinsky (third defendant)
D Williams (fourth defendant)

  Solicitors:
First Choice Family Lawyers (plaintiff)
Excused (first defendant)
Self-represented (second defendant)
Whittens & McKeough (third defendant)
Sharah & Associates (fourth defendant)

File Number(s):

2015/374480

Judgment

1. This is the third substantive judgment in these proceedings.

2. The first judgment was handed down on 22 June 2018 (the principal judgment): Katramados v Hasapis [2018] NSWSC 948.

3. The second judgment was published on 26 October 2018 (the second judgment): Katramados v Hasapis (No 2) [2018] NSWSC 1604.

4. In these reasons, I will largely assume that the reader has an understanding of the principal and second judgments. I will use the same terms to describe the parties and other matters as I have used in those judgments.

Background

5. In relation to the probate aspect of these proceedings, all interested parties agreed that the Court should revoke the grant of probate of the 2006 Will that it had made to Despina, and instead grant letters of administration with the December 2014 Will attached to a suitable person resident in this State.

6. In the principal judgment, I set out at par 289 what I considered to be the unusual features of the present case.

7. I noted that the value of the deceased's remaining assets in Greece were said to be worth $690,914.43. After being divided equally between Julia, Mary, Adriana and Billy in accordance with the Greek law of intestacy, I noted that this would give each of them $172,728.61. I noted the uncertainty as to the value of the property and the difficulties and delay that may be involved in realising it.

8. I adopted a value for the deceased's property in this State of $1,900,000.

9. In the balance of my reasons, I noted that, if Julia was given Adriana's and Billy's shares in the Greek estate, it would in principle be appropriate for the Court to make family provision orders by way of lump-sum legacies in the amounts of $700,000 and $750,000 to Adriana and Billy respectively.

10. However, on the assumption that the legal costs payable out of the estate were no more than $500,000 (for reasons explained at pars 278 to 286), and that Mary's interest would retain a value of $187,500 (see par 289(16)), the balance of the property in this State available for distribution would only be $1,212,500.

11. Plainly, that would not be enough to support family provision orders in favour of Adriana and Billy in the total amount of $1,450,000.

12. Not only was it impossible for the Court to make the family provision orders that were in principle justifiable, but the assessment depended on the remaining Greek property being reasonably readily realisable for the assumed amount of $690,914.43, the costs payable out of the estate being no more than $500,000, and, even then, the assessment did not allow for the further reduction of the value of the deceased's property in this State to account for the administrator's costs of selling the Campsie property or the costs of the administration.

13. These uncertainties were so great as to make it impossible for the Court to make final orders disposing of the proceedings upon the information then available. Accordingly, I published the principal judgment and made directions for the further conduct of the proceedings.

14. The Court was provided with further evidence and submissions, and a further hearing took place on 4 July 2018, that led to the publication of the second judgment.

15. As explained in pars 10 to 24 of the second judgment, the Court was told that, contrary to the information provided at the first hearing, Greek law did allow for the efficient realisation of the deceased's Greek intestate estate, provided all interested parties cooperated by giving their authority to an appropriate person to sell the assets. If so, that gave rise to the possibility that, if the Greek assets could be sold reasonably quickly, the Court could make family provision orders in these proceedings with actual knowledge of the realised value of the Greek assets, rather than having to rely upon the uncertain information that had been provided to the Court.

16. The Court was also told, however, that Julia did not want her share of the property in this State to be reduced on the basis that she would become entitled to Adriana's and Billy's shares in the value of the Greek estate. As expressed in the second judgment, Julia's lack of willingness to accept a greater interest in the Greek estate only heightened my concern about what it was truly worth.

17. The next issue to consider is the matter of the total amount of costs that must be paid out of the deceased's estate, which must be accommodated by any family provision orders that are made.

18. At par 40 of the second judgment, I explained how the total amount of the parties' costs appeared to be about $803,000, rather than the $500,000 assumed in the principal judgment.

19. As I explained in par 41, the result would be that Adriana and Billy would receive approximately $413,000 and $442,000 respectively, as the only legacies that could be funded out of the available estate, compared with the optimal legacies of $700,000 and $750,000 in accordance with the explanation given in the principal judgment.

20. As yet another example of how legal costs regularly consume the deceased's estate in family provision applications, I explained in par 41 of the second judgment that Adriana would be about $3,500 worse off than if these proceedings had not been commenced at all, and Billy would only be about $25,500 better off as a result of these proceedings. Even that result assumes that the Court is not required to make a costs order against Adriana and Billy for initially resisting the probate claim made by Julia.

21. At pars 48 to 81 of the second judgment, I discussed the amounts of the legal costs incurred by Julia, Despina, Adriana, Mary and Billy. Even then, there remained uncertainties, and it was necessary for the Court to make orders for the provision of further information.

Substantive orders made in the proceedings

22. Then, in the second judgment, I considered the orders that could be made immediately. Those orders included the orders necessary to implement Julia's success on her probate claim, and the making of appropriate orders for the judicial sale of the Campsie property, so that Julia could receive her half share entitlement and the balance could be held by the deceased's estate.

23. On 13 December 2018, after the parties had been given the opportunity to consider the draft orders that I proposed in the second judgment, the Court made a set of orders that partially disposed of these proceedings.

24. First, the Court made orders revoking the grant of probate that had been made to Despina on 30 March 2015, and instead by consent made an order that Mr Gordon A Salier AM be appointed administrator of the deceased's estate with the December 2014 Will annexed.

25. Secondly, again by consent, the Court made an order appointing Mr Salier as trustee for sale of the Campsie property pursuant to s 66G of the Conveyancing Act 1919 (NSW).

26. The Court made special orders as to how Mr Salier was to conduct the sale of the Campsie property as trustee for sale, and the sale of the Dulwich Hill property in the exercise of his power as the administrator of the deceased's estate.

27. The special orders were made because of the desire expressed by both Adriana and Billy to be able to retain the properties in which they had resided for many years.

28. In short, I ordered that Adriana and Billy should be treated as having shares in the deceased's estate worth $400,000 and $450,000 respectively. They would be entitled to apply those sums towards the purchase price for the Campsie property or the Dulwich Hill property, if they were successful at bidding at auctions for those properties. When the time came to settle the contracts for sale, Adriana and Billy would not be required to pay the amounts of $400,000 and $450,000, but they could apply their assumed share of the estate towards the purchase prices. Consequential orders were included to accommodate the possibility that the final shares in the estate of Adriana and Billy would be more or less than the assumed amounts. If less, then each would owe the estate the difference, payment of which would be secured by an equitable charge on the properties that Mr Salier could protect by caveat.

29. Those arrangements left outstanding the real value of the balance of the deceased's Greek estate, and what should be done in respect of all of the claims for costs made by the parties to the proceedings.

30. Further directions were made, and the Court again received further evidence and submissions, and another hearing took place on 20 February 2019.

New evidence concerning realisation of Greek estate

31. It will be convenient first to consider the nature and effect of the additional information provided to the Court concerning the realisation of the deceased's remaining Greek estate.

32. Following the hearing that led to the second judgment, the solicitor for Julia obtained additional advice from her lawyer in Greece, E Andron Law, which responded in a letter in fact written on 18 November 2018 to questions set out in a number of letters written by Julia’s solicitor.

33. The Greek lawyer noted that Mary does not wish to sell her interest in the deceased’s remaining Greek estate, with the consequence that in reality the properties cannot be realised, because nobody will buy the remaining three quarters’ interest in the properties. Under the law of Greece, there is no way to oblige Mary to agree to sell her interest in the properties.

34. The Greek lawyer also advised that Julia had paid only about 1,000.00 euros in tax, noting that, as the deceased’s widow, she had a tax-free limit of 400,000.00 euros. She also advised that the deceased’s children had a tax-free limit of 150,000.00 euros, so that they would owe inheritance tax.

35. The reasons behind the advice that each of the children would owe inheritance tax are not stated. As stated above, the apparent value of each of the deceased’s children’s share in the intestate Greek estate is $172,728.61. On the exchange rate used by Julia in her evidence before the primary hearing (set out in the table at par 57 of the principal judgment) the exchange rate of euros to the Australian dollar is about 1:1.51. On that basis, each of the children’s share in the Greek estate would have a value of roughly 114,331 euros, which appears to be less than the tax-free limit. The Court will have to proceed upon the basis that this issue is not yet explained by the evidence.

36. The Court has been given later information, in the form of a letter dated 14 January 2019 from Julia's solicitor to her lawyer in Greece. E Andron Law responded by letter dated 15 February 2019. The parties were content for the Court to receive evidence in this form.

37. The appropriate way to set out this evidence will be for the Court to repeat the questions (which will be underlined) and then set out the answers given by the Greek lawyer (there are some difficulties with the syntax in the response prepared in English by the Greek lawyer and I will set the response out verbatim):

1. If the other beneficiaries fail to pay the taxes on the land, what will happen to the land?

2. If it is not paid, will the government sell the land to recover the taxes?

3. If some of the beneficiaries pay the tax on some of the land, what will occur to the land on which the taxes have not been paid?

If some heir does not declare the inheritance to the tax Authorities, he is not forced to pay inheritance tax, but then he can neither sell nor lease the property.

If some heir has not declared the inheritance nothing will happen, until (unknown when) the Tax Authorities look into the case.

If the Tax Authorities find out about the properties or if the heir sometime declares the properties, the fine will be 2% for every month since 13 August 2015 until full payment.

Every heir had to make a land statement and pay the corresponding land taxes every year since 2015. The fine for not having paid this tax is the same, i.e. 2% per month.

If the Tax Authorities find out about the properties and impose a tax and fine to some heir for failing to declare, then they proceed to seizure of the property, i.e. seizure of the undivided share that belong to the specific heir, who had not declared and paid. After the seizure they may sale the share by auction, however the Greek tax Authorities usually do not proceed to an auction if they deal with undivided shares, because most probably no buyer will be interested. They just keep the confiscation of the share of the property, until sometime this heir decide to sell his share and then he is forced to pay every debt and fine, otherwise he cannot sell.

The beneficiaries, who have already paid their taxes, may theoretically sell their undivided shares but in practice nobody is interested to buy undivided and consequently useless shares.

4. Have you any suggestions to His Honour as to how he should resolve the question of the Deceased's Greek land now the beneficiaries are in dispute regarding that land?

The sale of the Greek properties is in practice impossible, if all the beneficiaries do not agree all to sell.

Two are the only possible solutions I may think to resolve the issue of Greek property:

a) As the Greek property consists of many separate pieces of land, after a valuation of each one, a consensual distribution may take place and every one heir takes his own separate property (100/100). Every heir may put his suggestions on this issue, as to how the pieces might be fairly distributed. To proceed to a consensual distribution all the property must have been declared by everyone to the tax Authorities and all taxes and fines must have been paid in advance from all heirs.

b) If a consensual distribution is not possible, the one and only remaining solution is a claim for distribution and sell by auction, but the costs are very high for the heir to undertake this process and it is not sure that a buyer will appear.

If nothing of the above happens, the Greek property will remain useless, as it is since the deceased's debt (December 2014).

For an auction to take place in our case, a claim for distribution between the heirs must be preceded, then the Judge with a first decision appoints a civil engineer to propose some ways to distribute the properties and, if the civil engineer with a detailed statement consider the distribution inevitable, then another hearing follows and the judge orders the auction of the properties. The duration of the whole procedure may take approximately 5 years. The expenses of such a claim until the auction will cost at least 30.000,00 euros (inclusive the civil engineer fees) and then an auction another 5.000,00 euros and there is no guarantee that there will appear a buyer in the auction. As you see, all this procedure is very expensive and all the costs have to be prepaid by the plaintiff/plaintiffs and afterwards only the auction expenses are returned. Moreover, if a buyer does not appear, all this ends in vain… (Emphasis in original)

…

38. As I have noted above, following the primary hearing, the principal judgment was decided on the basis that the deceased's remaining estate in Greece had a real value of $690,914.43, and that the only problem was that there was a likelihood of there being a delay in the value being realised. The second hearing, leading to the second judgment, took place upon the basis that, if the parties with interests in the remaining Greek estate cooperated, it could be realised relatively quickly by the appointment of a joint agent for the sale of the property.

39. The new evidence undermines the basis upon which the Court has been proceeding to date in trying to decide the family provision applications in these proceedings. The Greek properties cannot be realised without the agreement of Mary. There may be inheritance taxes accumulating on at least some of the parties’ shares in those properties, although the exact position is not known.

40. The Court was told by Julia’s counsel during the third hearing that Julia has paid her share of the relevant Greek taxes, although the only evidence of this is the assertion made by Julia’s Greek lawyer. The Court has no evidence about whether Mary has paid her share of the taxes, although it was told that Mary, for sentimental reasons, desires to retain her interest in the deceased's Greek estate.

41. I will assume, until proof is given to the contrary, that Adriana and Billy have not paid their shares of the Greek taxes. Given their other concerns about securing adequate accommodation, Adriana and Billy may not be able to pay any outstanding Greek taxes in relation to their shares in the deceased's Greek estate. As I have noted above, the position is unclear and the amount of any taxes that may be owed is not known.

42. To date, the parties have not, in any event, been able to cooperate in any useful way to resolve these proceedings. If Adriana's and Billy's shares in the Greek estate have been accumulating unpaid taxes with penalty interest at 2% per month since 13 August 2015, the notional value of their shares in the property may have been reduced significantly, even if the properties could be sold.

Effect of new evidence

43. The new evidence requires the Court to reach the following conclusions.

44. First, it would not be safe for the Court in these proceedings to attribute any value at all to the deceased's remaining Greek estate, unless and until that value has actually been realised.

45. Secondly, this Court is not in a position to proceed at all in relation to the Greek property without full evidence concerning the amount of the taxes that have accumulated in respect of each party's share of that property; which parties have not paid their taxes; and what they propose to do about it. For instance, if Adriana's and Billy's shares in the Greek estate have accumulated charges for substantial unpaid taxes; Adriana and Billy do not propose to pay those taxes; and consequently as a commercial matter the properties cannot be sold; then none of the other parties should be disadvantaged because of those circumstances. The same would equally be true if the other parties also had not paid the necessary taxes.

46. Thirdly, it is now plainly out of the question that the Court could make family provision orders in favour of Adriana and Billy out of the deceased's assets in this State, on the basis that it would be both fair and safe to expect Julia to accept, as a condition to the making of the family provision orders, the transfer by Adriana and Billy of their shares in the deceased's Greek estate to Julia. Those shares in the Greek estate will be of no value to Julia as long as Mary declines to consent to them being sold. Furthermore, Adriana’s and Billy’s shares could not be transferred to Julia without the outstanding taxes first being paid.

43. Fourthly, as I have explained above, the Court has already made orders to regulate the manner in which the Campsie property and the Dulwich Hill property may be sold, which assumed that there was a high likelihood that Adriana and Billy would at least be entitled to around $400,000 and $450,000 respectively from the estate of the deceased. It may now be unsafe for either Adriana or Billy to assume that they will have those respective sums available to apply towards the purchase of either property. If, as now appears, the Court may not be able to attribute any particular realisable value to the balance of the deceased’s Greek estate, the share of the estate that both Adriana and Billy ultimately receive may be significantly less than the amounts that were assumed in the second judgment. It is obviously unsatisfactory that the Court was permitted to make the orders that it did on the basis of unsound evidence as to the realisable value of the balance of the deceased’s Greek estate.

44. Finally, the revelation as to the apparent situation concerning the realisation of the deceased's remaining Greek estate prevents the Court from making any final orders in the family provision applications, without first being provided with definite information from each of the parties who have an interest in the remaining Greek estate as to exactly what their position is concerning the payment of Greek taxes and concerning their consent to the Greek property being sold. I appreciate that these proceedings may now be getting to the point where any increased costs cannot be justified in proportion to what the orders now available to be made by the Court may achieve, but the Court cannot ignore the issue given that, to date, it has proceeded upon the basis that the deceased's remaining Greek estate has a value of $690,914.43, compared with the assets in this State being worth $1,900,000.

The parties’ costs

49. It will now be appropriate to consider what can be done to resolve the outstanding costs claims made by the parties.

Julia’s costs

50. At pars 48 to 57 of the second judgment, I discussed a number of ambiguities in the evidence concerning the costs claimed by Julia. Julia has now provided evidence by means of an affidavit sworn on 9 February 2018 by a solicitor employed by Julia’s solicitor that the total costs incurred by Julia up to the end of 8 February 2018 were solicitors’ costs of $104,238.95, and disbursements including counsel’s fees of $137,411. The total is $241,648.95. The total of the fees payable to E Andron Law in Greece is not known, but I note that it is said in Julia’s solicitor’s 3 July 2018 affidavit that the Greek lawyer’s costs to that time were $34,263 in relation to the probate proceedings and $8,557 in relation to the family provision claims. The total payable to the Greek lawyer at that stage was $42,820.

51. This evidence did not respond to the request in par 55 of the second judgment that the Court be given evidence of the separate legal costs incurred by Julia in relation to the probate claim and the family provision claims. That request was made because of the possibility that the Court would make different costs orders in relation to the two actions. For example, the Court might order Adriana and Billy to pay Julia’s costs of the probate claim, or some of those costs. Even if the Court does not make that order, it might make costs orders in favour of Julia on the probate and family provision claims on different bases. It may be necessary for the Court to be able to estimate the effect of the costs orders in money terms, so that it can actually make any family provision orders that are appropriate.

52. Although Julia has not provided the Court with the division of costs between the probate claim and the defence of the family provision claims that I specifically requested, I note from par 56 of the second judgment that Julia asserted that her costs of the family provision claims was only $43,813 out of the total of $262,788.88 or $301,050.95. For the present I will have to accept that estimate, notwithstanding the doubts expressed in the second judgment as to the accuracy of the split in cost between the two claims.

53. The effect of the deceased’s December 2014 Will was to create an intestacy in respect of his property in this State. Under the laws of this State governing intestacy, Julia was the primary beneficiary. It was reasonable for Julia to seek the revocation of the grant of probate to Despina in respect of the 2006 Will, and also for her to seek a grant of administration to herself with the December 2014 Will attached. It is immaterial that the grant was actually made to Mr Salier as a resident of this State. Julia was, in essence, in the same position as a person who seeks to propound a Will in which that person is named as executor.

54. Consequently, Julia is entitled to an order that her costs of her probate claim be paid out of the estate of the deceased in this State on the indemnity basis. That will govern the basis upon which costs reasonably incurred by Julia will be allowed. The other parties would still be entitled to challenge the amount of costs claimed by Julia on an assessment, if they could establish that aspects of the costs should not to have been incurred.

55. In practical terms, Julia also acted as the de facto defender of the deceased’s December 2014 Will for the purposes of the family provision applications, at least to the extent of her personal interest in the estate. Julia did not occupy the same position as an administrator of the deceased’s estate would have occupied, as an administrator would have defended the application of this State’s intestacy laws for the benefit of all beneficiaries.

56. While the steps taken by Julia to defend Adriana’s and Billy’s family provision claims would also tend to benefit Mary, Mary has also participated in the proceedings to defend her own claim as she was entitled to do. In fact, as will be explained below in the context of considering the costs claimed by Mary, a dispute arose between Julia and Mary as to who should bear any family provision orders made in favour of Adriana and Billy. That dispute tends to demonstrate the fact that both Julia and Mary were acting in their own interests in defending the family provision claims.

57. Although it appears that Julia will not be successful in entirely defeating the family provision claims made by Adriana and Billy, she still should be treated as having had a sufficient measure of success to warrant her costs being paid out of the estate, because she succeeded in substantially limiting the claims that were made.

58. Consequently, an order should be made in favour of Julia that her costs of defending the family provision claims should be payable out of the estate of the deceased on the ordinary basis. Julia is not entitled to be treated in respect of her costs as if she had been an administrator of the deceased’s estate.

Despina’s costs

59. In the second judgment, at pars 58 to 71, I discussed the ambiguities in the evidence that the Court then had concerning the costs incurred by Despina.

60. Despina’s solicitor has since sworn an affidavit to clarify the outstanding costs questions. He has explained that the amount of $15,441.10 set out at item 1 in the table in par 62 of the second judgment has been paid by Despina for the original grant of probate to her by this Court of the 2006 Will. Despina claims an order for payment of those costs to her out of the estate of the deceased.

61. I am satisfied that Despina acted reasonably in propounding the deceased’s 2006 Will, as it was the only Will known to her and she was ignorant of the later holographic Wills made by the deceased in Greece. The amount of the costs claimed does not appear to be unreasonable. The estate should not have to bear the costs of an assessment in respect of the claim. Despina is entitled to an order that she be paid $15,441.10 out of the estate of the deceased.

62. Despina’s solicitor also explained that, although the costs in items 2 and 3 in the table in par 62 of the second judgment of $105,533.56 and $29,607.67 respectively were incurred jointly by Despina and Adriana, the costs have been paid fully by Adriana alone. I will therefore deal with these amounts when I consider Adriana’s costs.

63. The solicitor swore that Despina was not in a position to divide the two amounts of costs referred to in the preceding paragraph between costs incurred in relation to the probate claim and costs incurred in respect of Adriana’s family provision claim.

64. The only amount claimed by Despina for costs in respect of the present proceedings is the amount of $66,500 at item 4 in par 62 of the second judgment, plus an additional amount of $6,600. Despina’s total claim is for $88,541.10.

65. In his affidavit, Despina’s solicitor gave a justification for Despina being represented by counsel and solicitor throughout the hearing, being that there was some suggestion that Despina’s conduct as executor may have been criticised, and it was justified that she be represented to answer any criticism that emerged. The solicitor claimed that that was a responsible course for Despina to take, even though, as it happened, there was not a breath of criticism of Despina during the hearing.

66. Despina also provided further written submissions to the Court on the issue of the costs to which she should be entitled.

67. Despina’s primary position is that, as the executor of the deceased’s 2006 Will under a grant of probate by this Court, she is entitled to be indemnified for her costs out of the estate including for her representation throughout the hearing.

68. The problem with this submission is that Despina decided, before the commencement of the hearing, that it was not appropriate for her to contest Julia’s probate claim, and she in fact did not do so. As the executor under the earlier Will, Despina clearly had a right and duty to uphold that Will, and to undertake all reasonable inquiries to determine what her prospects of success were of defending the 2006 Will. But, when she was advised and accepted that Julia’s probate claim should no longer be contested, she should have advised Julia and the other parties that she had adopted that position and then submitted to the judgment of the Court, except as to costs.

69. There was no claim against Despina raised by the pleadings concerning her conduct as executor, and she had no personal interest in the family provision claims.

70. In her submissions, Despina conceded that it may have been appropriate, with the benefit of hindsight, for her to have filed a submitting appearance at an appropriate time. Nonetheless, she claimed to be entitled to be indemnified out of the estate in respect of all of her costs, or alternatively until the end of the third day of the hearing, when she said that it became “…apparent that the contest to the Probate Proceeding, effectively evaporated and became a non-issue…” (written submissions, page 3). It did not appear to me that Julia’s probate claim was contested during any part of the hearing. In any event, once Despina decided, on advice, that it was not appropriate for her to contest Julia’s probate claim, Despina ought to have submitted. It was a matter for the other parties, with a personal interest in the probate claim, to decide whether or not they would continue to contest it.

71. Despina is entitled to an order that she be paid her costs as executor under the 2006 Will out of the estate of the deceased on the indemnity basis insofar as those costs related to the defence of the 2006 Will, but only as to costs reasonably incurred up to the point that Despina was advised, or decided, that Julia’s probate claim should not be defended, or the time when Despina ought reasonably have decided not to defend the claim, and accordingly should have filed a submitting appearance except as to costs.

72. There is no evidence before the Court that would enable it to form a properly precise judgment concerning the costs for which Despina ought to be indemnified, or when she ought to have filed a submitting appearance.

73. They are matters that will need to be determined in an assessment of Despina’s costs, if they cannot be agreed.

74. I am prepared to accept that Despina was entitled to be represented on the first day of the hearing, so that she could ensure that no issues against her interests would be raised by any of the other parties. Had her legal representatives pursued that issue with the other parties, they would have been able to confirm that there was no need for there to be any representation for Despina for the balance of the hearing. An order should be made that Despina be paid her costs of the first day of the hearing out of the estate on the indemnity basis, but she should have no order as to costs for the balance of the hearing. I will make an exception for the costs incurred by Despina for the purpose of making submissions on the issue of costs. In this regard, Despina was really acting in her personal interests and should only have her costs out of the estate on the ordinary basis.

75. I will consider below a necessary qualification to the entitlement of the defendants to an order for their costs of exploring whether it was appropriate to resist Julia’s probate claim to be paid out of the estate.

Adriana’s costs

76. I dealt with Adriana’s costs at pars 72 to 75 of the second judgment. As Adriana has represented herself, difficulties have been experienced in determining what legal costs Adriana has paid. I deduced that Adriana may have become liable for legal costs of at least $76,713.25, because she had borrowed $70,176.95 from her mother to pay legal fees, and she had an unpaid debt for legal fees of $6,536.30. However, I noted that there was doubt about Adriana’s liability for the costs of $135,141.23 being items 2 and 3 of the table in par 62 of the second judgment.

77. Adriana provided written submissions to the Court dated 20 February 2019. I have read those submissions, but they do not concern the issues with which the Court now has to deal. They largely deal with issues of Greek law and how the relevant Greek courts have dealt with the various Wills made by the deceased. Insofar as the submissions suggest that this Court should have upheld the deceased’s 2006 Will, they ignore the fact that none of the defendants contested Julia’s probate claim at the hearing. The Court had no choice but to proceed upon the basis that the deceased’s December 2014 Will, which was recognised by the relevant Greek court, was the effective Will for a person such as the deceased who died domiciled in Greece.

78. I note that Adriana said, in the preamble to her written submissions provided to the Court on 26 October 2018, that her minimum expenditure on Australian lawyers’ fees was $135,141.23. That is the same amount as the total of items 2 and 3 in the table. I will accept that figure in lieu of the $70,176.95 that I had calculated in the second judgment. I do not know whether, in addition, Adriana remains liable for the $6,536.30 that she initially claimed she owed for unpaid legal fees. Adriana will be able to claim for this amount if it is in addition to the legal fees that she has already paid. In the absence of positive evidence, I will not assume that Adriana is liable for the additional amount.

79. It is possible, given the evidence of Despina’s solicitor, that some of the legal fees paid by Adriana related to the issue of whether Despina could contest Julia’s probate claim. As I have noted above, the solicitor was unable to distinguish between fees that related to the probate claim and fees that related to Adriana’s family provision claim. That is not unreasonable, as the $135,141.23 was paid to different firms of solicitors to the firm to which Despina’s present solicitor belongs.

80. As I have said above, Despina ought to be entitled to recover her legal fees of properly exploring whether she had a reasonable defence to Julia’s probate claim on an indemnity basis out of the estate. Although the evidence is not clear, there is a real possibility that, when Despina and Adriana jointly retained lawyers and incurred fees that were paid solely by Adriana, Adriana did in fact pay the fees, which if paid by Despina would have given rise to an entitlement to an indemnity. In my view, if it is the case that Adriana personally paid fees, instead of Despina, which if paid by Despina would have entitled her to an indemnity from the estate, then Adriana should be indemnified to that extent.

81. In par 116 of the second judgment, I considered the principles that apply in the special case where the deceased’s conduct has created such a doubt about his testamentary intentions as to justify interested parties undertaking some level of investigation as to the deceased’s true testamentary intentions as reflected in such testamentary instruments as he or she may have left.

82. I am satisfied that this is a case where the beneficiaries under the 2006 Will were justified in carrying out reasonable investigations to satisfy themselves about what instrument properly governed the disposition of the deceased’s estate. The deceased’s 2006 Will, which was the last Will made by the deceased that was found in this State, was consistent with promises made by the deceased to Adriana and Billy, as I found in the principal judgment. Furthermore, the various holographic Wills that were prepared by the deceased in Greece were unclear and questionable in their terms and effect, both when considered individually and as a series of testamentary instruments. The holographic Wills appear to have created an intentional intestacy in respect of much of the deceased’s estate. In my view, the deceased’s conduct created sufficient doubt about his true testamentary intentions to justify the beneficiaries under the 2006 Will undertaking an appropriate level of investigation concerning the Will that should be found to govern the disposition of the deceased’s estate.

83. I mention that issue at this point, because, while it is possible as I have observed that Adriana personally paid the costs of Despina’s investigation of this issue, there is no evidence as to what actually happened, and it is possible that Adriana paid for her own investigations as well as some part of Despina’s investigations.

84. I will return to consider what the appropriate costs order is in relation to the defence of Julia’s probate claim below.

85. In relation to Adriana’s family provision claim, I have found in the principal judgment that, in principle, Adriana is entitled to family provision orders that will increase the provision that she receives out of the deceased’s Australian estate. However, as explained, the Court could not safely determine what actual order should be made, because of uncertainties concerning the realisable value of the balance of the deceased’s Greek estate, and the obscurity of what the effect of the various costs orders would be to the extent that they were paid out of the estate.

86. The consequence has been that the amount of any legacy that should be ordered to be paid has remained uncertain, and the prospect of certainty has been receding rather than crystallising. It is now possible that my expectation that the Court would be able to make a significant family provision order in favour of Adriana will be thwarted because of my appreciation that the balance of the deceased’s Greek estate may not be able to be realised. Further, it is still unknown whether the costs payable out of the estate will prevent any significant family provision order being made in favour of Adriana.

87. Nonetheless, I have decided that, in principle, Adriana is entitled to have her costs of her family provision application paid out of the Australian estate of the deceased on the ordinary basis.

88. As I have said, Adriana is, in principle, entitled to additional provision out of the estate, as I have found in the principal judgment, and it is only doubts that have arisen out of the incorrect evidence provided by Julia at the original hearing about the realisable value of the Greek assets, as well as the possibility that costs payable to others will largely consume the estate, that may reduce the provision to which I would otherwise think Adriana is entitled.

Mary’s costs

89. As I noted in pars 76 to 78 of the second judgment, Mary’s costs are $158,259.46 on the indemnity basis, and $131,882.88 on the ordinary basis. All of those costs appear to have been incurred in defending the family provision claims by Adriana and Billy. Mary did not contest Julia’s probate claim.

90. Ordinarily, a beneficiary of an intestate estate in Mary’s position would not be entitled to her costs of defending family provision claims against the estate, if those claims were being properly defended by a person appointed as administrator under a grant of probate. Unfortunately, in the present case, there was no administrator as Despina, the executor, did not ultimately contest the probate claim, and remained neutral for the purposes of the family provision claims. Julia defended the family provision claims, but not from the perspective of an administrator, and only to protect her own position.

91. Consequently, Mary was justified in incurring reasonable legal costs in defending her entitlement to the deceased’s intestate estate. That would mean that, in principle, Mary is entitled to an order that her costs on the ordinary basis be paid out of the Australian estate. Mary was successful in defending her entitlement, subject to the extent that her entitlement will be reduced by the burden of costs, as will all other beneficiaries’ entitlements.

92. Although I have expressed doubts about the reasonableness of the quantum of the costs incurred by Mary, I agree with the submission of her counsel that the amount of the costs in respect of which Mary should be paid out of the estate of the deceased is a collateral issue so far as the Court is concerned, and should be left to the assessment process, if the other parties wish to contest her claim.

93. Mary made a special submission concerning the costs that she incurred, which I considered in a preliminary way in pars 87 to 91 of the second judgment. There I explained that, after the first day of the hearing, and at the beginning of the second day, counsel for Mary advised the Court that he had been instructed to withdraw from the hearing, with the leave of the Court, as Mary had been successful in securing from Adriana and Billy undertakings that, if they were successful in obtaining family provision orders from the Court, they would not seek to throw the consequences of those orders onto Mary’s share of the estate. Mary could therefore abide the outcome of the hearing.

94. In response to that announcement, Julia’s counsel stated in open court that, even if Adriana and Billy had bound themselves not to seek to throw any part of the family provision orders made in their favour upon Mary’s share in the estate, those undertakings did not bind Julia, and Julia would argue that, as Mary had not put her own financial circumstances in issue, the Court should infer that Mary did not need any provision out of the deceased’s estate, and make an order that Mary’s share in the estate should bear the whole of any increase in the provision that may be made in favour of Adriana and Billy.

95. Consequently, Mary’s position changed from having nothing to defend at the hearing to having to defend a claim by Julia that any family provision orders made in favour of Adriana and Billy should be paid wholly out of Mary’s share of the estate before any part of those orders was to be borne by Julia’s share. Julia’s stance also, therefore, gave Mary an interest in defending the family provision claims by Adriana and Billy. Instead of withdrawing, counsel and solicitor for Mary remained in court for the balance of the hearing, and participated properly in the manner that would be expected given the renewed interest that Mary then had.

96. As I explained at par 91 of the second judgment, I determined at par 264 of the principal judgment that any increase in the provision made in favour of Adriana and Billy should be borne rateably according to the relative shares of Julia and Mary in the estate of the deceased in this State.

97. The consequence is that Mary has incurred the costs of her counsel and solicitor remaining and participating in the hearing after the first day in circumstances where that has proved to be unnecessary. However, Julia was not entirely unsuccessful on the issue, as she succeeded in obtaining an order that the burden of any family provision order made in favour of Adriana and Billy should be borne rateably by the provisions ultimately made under the December 2014 Will, as varied by the Court’s orders, in favour of Mary and Julia. Furthermore, the need for the issue to be addressed was introduced into the proceedings by Adriana and Billy giving Mary the undertakings shortly before the commencement of the hearing. In the circumstances, I consider that it would not be fair to Julia to make a special costs order against her in relation to the consequences of Adriana and Billy having given the undertakings at that late stage.

98. The most appropriate and simple course is for the Court to allow both Mary and Julia their costs of dealing with the issue out of the estate of the deceased on the ordinary basis.

Billy’s costs

99. At par 79 to 81 of the second judgment, I explained that Billy’s solicitor had provided an affidavit that contained an estimate of Billy’s total costs of the proceedings on the ordinary basis as being $120,000. As I understand the submissions of Billy’s counsel, Billy submits that the Court should make a lump sum costs order under s 98 of the Civil Procedure Act 2005 (NSW) in Billy’s favour in the amount of $120,000, and the Court should make orders capping the costs of the other parties in the amounts specified in par 6 of the submissions dated 9 November 2018.

100. The Court does not have before it sufficient detail of Billy’s costs to enable it even to consider the appropriateness of making a lump sum costs order.

101. Furthermore, proper notice has not been given of the application for orders capping the costs payable to the other parties, and there has been no evidence or hearing to determine that application. It would not be proper, in the circumstances, for the Court to make the orders sought by Billy.

102. Notwithstanding the alarm felt by the Court concerning the amount of costs incurred by the parties in this case, the only practicable course is for the Court to leave it to the parties to challenge the other parties’ costs claims by assessments if they are so advised. The Court is plainly not the appropriate forum to resolve the costs issues, as that will only exacerbate the problem because the procedures of the Court are not as efficient in deciding costs disputes as assessments of costs.

103. Generally, Billy is in the same position as is Adriana in relation to the costs order to which he is, in principle, entitled. The evidence does not disclose whether Billy has contributed any costs to the exploration of whether Despina had a reasonable basis for contesting Julia’s probate claim.

Costs of investigating Julia’s probate claim

104. I accept the correctness of the principle stated by White J (as his Honour then was) in Bell v Crewes [2011] NSWSC 1159 at [65] that I have referred to at par 116 of the second judgment. That is to the effect that, where, as in the present case, the Court considers making an order that the losing parties’ costs of a probate claim be paid out of the estate, the Court must consider making an “…adjustment to ensure there were not excessive costs recovered by reason of the separate representation of persons who had the same interest…” In the present case, on the assumption that, in fact, Mary did not incur any costs in responding to Julia’s probate claim, each of Despina, Adriana and Billy had a proper interest in defending that claim until it became clear that the defence was not reasonable. However, the estate should only bear one set of costs as, otherwise, the cost burden on the estate would be unfair to Julia.

105. As considered above, in principle, as Despina was the executor under the 2006 Will, she should be entitled to her costs on this issue out of the estate on the indemnity basis. To the extent that Adriana (or Billy) paid the costs that Despina would otherwise have paid, they should be entitled to those costs also on the indemnity basis out of the estate, provided that there is no unreasonable double claiming. In theory, it is possible that Adriana and Billy could have incurred additional costs that were reasonable, and, provided those costs had not also been incurred by Despina, the additional costs would be payable out of the estate on the ordinary basis. It would be a matter for the costs assessor, or agreement between the parties, as to the appropriate amounts to be allowed.

Costs payable out of the estate

106. It is now possible to make a somewhat more reliable estimate of the total costs that will be payable out of the estate of the deceased than was previously possible. I have assumed, rather liberally, that costs on the ordinary basis will be 80% of the amount incurred.

Cost	Amount	Payable	Comment
Julia – probate	$197,835.95	$197,835.95	See footnote (1)
Julia – FPA	$43,813	$35,050.40	See footnote (2)
Greek lawyer	$42,820	$42,820	See footnote (3)
Despina	$15,441.10	$15,441.10	Probate
Despina	$88,541.10	$70,832.88	See footnote (4)
Adriana	$135,141.23	$108,112.98	See footnote (5)
Mary	$158,259.46	$131,882.88	See footnote (6)
Billy	Unknown	$120,000	See footnote (7)
Total	$721,976.19	See footnote (8)

1. This amount is derived by deducting the amount in the second row from Julia’s complete costs of $241,648.95, and is subject to reduction on assessment even if awarded on an indemnity basis.

2. This amount has been determined by accepting the earlier information supplied by Julia that she has only incurred costs of this amount in defending the family provision claims.

3. This amount is expected to increase with the Greek lawyer’s final account.

4. The Court is doubtful that this amount of costs could be sustained on an assessment.

5. Adriana’s proportional recovery may increase, to the extent that she paid for the costs of investigating Julia’s probate claim for which Despina will be entitled to an indemnity, subject to reduction on costs assessment.

6. The Court is doubtful that this amount of costs could be sustained on an assessment.

7. Subject to reduction on costs assessment.

8. This is the amount that matters. The total is subject to the uncertainties in the other amounts. The amount will be increased by any additional legal costs incurred by the parties that are recoverable. As a practical matter, allowance cannot be made at this stage for the administrator’s costs of selling the estate’s properties and administering the estate.   

Difficulties caused by the circumstances of the Greek estate

107. The estimate of the legal costs that will be borne by the Australian estate of the deceased, of about $725,000, would ordinarily be sufficient to enable the Court to decide what specific family provision orders ought to be made, were it not for the unresolved problem of the difficulty in realising the value of the deceased’s remaining estate in Greece.

108. As I have stated above, as matters stand, the Court could not reasonably or fairly implement the course proposed in the principal judgment whereby it would effectively give to Adriana and Billy part of the deceased’s Australian estate equal to the value of Adriana’s and Billy’s shares in the deceased’s remaining estate in Greece, on condition that they assigned their interests in that property to Julia.

109. If the Court is forced to proceed upon the assumption that the deceased’s remaining estate in Greece is charged with substantial and accumulating tax obligations, owed by at least Adriana and Billy, that the property is effectively unsaleable and unusable while that circumstance continues, and that Mary declines her consent to the sale in any case, then the Court may have to exclude the deceased’s remaining Greek assets as being of any practical value for the purpose of the family provision applications. That may entirely change the process of reasoning that is necessary and appropriate for the purpose of determining those applications. It may no longer be possible for the Court to make family provision orders that are worthwhile to Adriana and Billy in comparison to the amount of costs that they have expended, and both Adriana and Billy may be left to do what they can with their interests in the Greek properties.

110. The discovery that Mary may be able to nullify the value and usefulness of the deceased’s remaining Greek estate by withholding her consent to its sale is a significant change in the circumstances that were presented to the Court in the first hearing. That hearing was conducted on the assumption that the Greek estate was realisable. It now appears, if Julia’s Greek lawyer is correct, that Greek law does not have the equivalent of s 66G of the Conveyancing Act 1919 (NSW), which gives the Court a power to order that trustees be appointed to conduct the sale of jointly owned property, when the joint owners do not all consent to the sale. Had the Court known that Mary could achieve this result, it may have considered whether a larger proportion of any family provision orders that were made in favour of Adriana and Billy should be borne by Mary’s share of the deceased’s estate in this State. The Court may have taken the view that, if Mary chose to stultify the value of the Greek estate, her interest in the property in this State should bear a larger share of the family provision orders in return for Mary receiving Adriana’s and Billy’s shares in the Greek estate. That course would not, however, have helped Adriana and Billy, because of the undertakings they gave to Mary that they would not seek to throw any of the effect of the family provision orders in their favour onto Mary’s share of the deceased’s property in this State. It may be that, when Adriana and Billy gave their undertakings to Mary, they did not have this possible result in mind. This is merely one example of how the failure of the parties before the commencement of the hearing to lead evidence of the true nature and value of the deceased’s property in Greece has undermined the satisfactory determination of these proceedings.

111. The Court is in a difficult position because it unexpectedly received the latest advice from Julia’s Greek lawyer in circumstances where the other interested parties have not been able to make any proper response.

112. The Court does not wish to impose upon the parties any greater obligation than is necessary to incur further legal costs in this matter. However, if it is to resolve the proceedings on a proper basis, it will be necessary for the parties to provide additional information to the Court, or otherwise advise the Court that they will be content for the Court to make such orders as may seem proper in all of the circumstances without the benefit of that additional information.

113. I propose to ameliorate the difficulty with costs by accepting, in the first instance, additional information provided to my Associate by means of email communications. I will not relist the matter unless my consideration of any responses received causes me to form the view that it will be necessary to hear further from the parties in court.

114. The effect of the information recently received concerning the difficulty in realising the value of the deceased’s remaining Greek estate has caused me to reflect upon the reliability of the estimates of the value of the deceased’s properties in this State that were assumed in the principal judgment. The total value, which was based on appraisals, was $1,900,000. The family provision orders that the Court may now be able to make are very sensitive to the actual value of those properties that can be received when they are sold by the administrator. The difficulties in forecasting the ultimate value of the distributable estate of the deceased in this State that I have discussed in the judgments that I have published have caused me to form the view that this is not an appropriate matter in which the Court should make family provision orders in favour of Adriana and Billy expressed in terms of proportions of the ultimate estate that is realised, rather than in precise money sums. I am simply not confident enough that I can predict the outcome in a way that will make the result just.

115. Those considerations cause me to think that the Court should give all parties who have an interest in the matter the opportunity to inform the Court whether they wish for final orders determining these proceedings to be made on the basis of the information now known to the Court, or whether they would prefer for the Court to be advised of (1) the actual net values obtained by the administrator for the sale of the estate’s properties; and (2) the actual costs that deplete the estate’s value, including the costs of the administration of the estate.

116. The Court would not be bound by the preferences expressed by the parties, particularly as those preferences may not be consistent, but the Court would be able to take those preferences into account.

117. Because of the unusual nature of the problems faced by the Court in properly resolving this dispute, and the remaining uncertainties, I propose to follow the same course as in the second judgment, and set out below in draft form the orders that I now propose to make. The parties will be invited to respond within 14 days of the publication of these reasons by email to my Associate, in which they may make any succinct suggestions that they wish to concerning the appropriateness and the form of the proposed orders.

Proposed orders

118. The orders that I propose to make at this stage of the proceedings are:

1. Order that the plaintiff’s reasonable costs of her probate claim be paid out of the estate of the deceased on the indemnity basis.

2. Order that the plaintiff’s reasonable costs of defending the family provision claims made by the second and fourth defendants be paid out of the estate of the deceased on the ordinary basis.

3. Order that the first defendant’s costs of obtaining probate of the deceased’s 2006 Will be paid out of the estate of the deceased fixed at $15,441.10.

4. Order that the first defendant’s reasonable costs of investigating whether she had reasonable prospects of defending the plaintiff’s probate claim, up to the point when the first defendant knew, or ought reasonably to have known, that she did not have reasonable prospects of defending the plaintiff’s probate claim, be paid out of the estate of the deceased on the indemnity basis.

5. Order that the first defendant’s costs of the first day of the hearing be paid out of the estate of the deceased on the indemnity basis, but that the first defendant shall not be entitled to her costs for the balance of the proceedings, save in respect of her submissions as to the costs orders that should be made, as to which those costs should be paid out of the estate of the deceased on the ordinary basis.

6. Order that, to the extent that the second defendant or the fourth defendant, or either of them, paid the reasonable costs of investigating whether the first defendant had reasonable prospects of defending the plaintiff’s probate claim, instead of the first defendant paying those costs, the costs should be paid to the second defendant or the fourth defendant out of the estate of the deceased on the indemnity basis, subject to the proviso that the total amount paid out of the estate of the deceased for the costs of determining whether the first defendant had reasonable prospects of defending the plaintiff’s probate claim shall be no more in total than if only one defendant had investigated that issue.

7. Order that the second defendant’s reasonable costs of prosecuting her family provision claim be paid out of the estate of the deceased on the ordinary basis.

1. Order that the third defendant’s reasonable costs of defending the family provision claims made by the second and fourth defendants be paid out of the estate of the deceased on the ordinary basis.

2. Order that the fourth defendant’s reasonable costs of prosecuting his family provision claim be paid out of the estate of the deceased on the ordinary basis.

3. Grant liberty to all parties and to any costs assessor appointed to assess any of the costs orders made in these proceedings to apply to Robb J by arrangement with his Associate for the determination of any question considered expedient for the cost-efficient implementation of those costs orders.

4. Direct that any party who wishes to provide further information to the Court so as to enable the Court to make orders determining these proceedings do so within 14 days by succinct email sent to the Associate to Robb J to respond to the following questions:

1. If the party is entitled to an interest in the balance of the deceased’s Greek estate, will that party join with the other parties so interested in authorising the sale of the Greek estate?

2. Does the party, to the party’s knowledge, owe any taxes payable to any Greek tax authority in respect of any or all of the balance of the deceased’s Greek estate in which the party has an interest? If so, how much, at what rate is the tax accumulating, and what (if anything) does the party propose to do in order to free the party’s interest in the estate from the burden of Greek tax?

3. Does the party intend to require that any costs order/s made in favour of any other party be assessed, and if so which costs order/s?

4. Does the party prefer the Court to decide what orders should finally be made on the family provision applications by the second defendant and the fourth defendant on the basis of whatever information is now before the Court concerning the realisable value of the assets in the deceased’s estate, or would the party prefer the Court to defer finally determining the claims until the Court has evidence of (1) the actual realised net value of the deceased’s estate in this State following the sale of the relevant properties; and/or (2) the total amount paid out of the estate to satisfy costs orders in favour of the parties; and/or (3) the costs of the administrator in administering the estate?

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Decision last updated: 18 April 2019