Mitchell v Cauchi

[2025] NSWSC 294

Supreme Court

New South Wales

Medium Neutral Citation:

Mitchell v Cauchi [2025] NSWSC 294

Hearing dates:

On the papers.

Date of orders:

31 March 2025

Decision date:

31 March 2025

Jurisdiction:

Equity

Before:

Slattery J

Decision:

As applied to the bank accounts of the deceased, the expression “further assets” in the 2018 settlement should be construed as referring to only the marginal difference between the quantum of the debt stated in the inventory of property and the quantum of the debt discovered in those accounts after the 2018 settlement. No costs order made.

Catchwords:

SUCCESSION – Executors and administrators – Proceedings against executors and administrators – Application for removal – administrators of two estates in contest concerning the proper accounting between the two estates – earlier proceedings in relation to the accounting between the two estates were settled in 2018 upon terms including a formula that a percentage of “further assets” discovered after the settlement as belonging to one of the estates and not disclosed in the inventory of assets lodged with the probate of that estate, would be paid to the administrator of the other estate – issue arises as to how the terms of the formula for determining “further assets” should be interpreted – how the formula applies to the finding of more cash in a bank account – whether in calculating the payments to be made under the formula the assets declared in the probate inventory should be deducted before the percentage is applied.

Legislation Cited:

Uniform Civil Procedure Rules 2005 r 54.3(2)(a).

Cases Cited:

Cherry v Steele Park (2017) 96 NSWLR 548; [2017] NSWCA 295 at [72]

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35].

Kooee Communications Pty Limited v Primus Telecommunications Pty Ltd [2008] NSWCA 5 at [27]

Category:

Principal judgment

Parties:

Milo Mitchell (Plaintiff)
William Cauchi (Defendant)

Representation:

Counsel:
S K Hill (Plaintiff)
M Waters (Defendant)

Solicitors:
Mistry Fallahi (Plaintiff)
APlus Legal (Defendant)

File Number(s):

2024/169228

Publication restriction:

N/A

JUDGMENT

1. Each of the plaintiff, Mr Milo Mitchell, and the defendant, Mr William Cauchi, is the legal personal representative of an estate of a deceased person. Litigation between those two estates was settled and reflected in consent orders of this Court made on 12 September 2018 ("the September 2018 orders"). A dispute has now risen between these legal personal representatives about the proper final accounting between the two estates arising out of differing interpretations of a term in the September 2018 orders.

2. The plaintiff commenced the present proceedings in 2024 seeking relief against the defendant as administrator of one of these two estates. They have since been case managed in the probate list. After dealing with various land development issues, the Court isolated the present issue for determination under the mechanism provided for in Uniform Civil Procedure Rules 2005 (“UCPR”) r 54.3(2)(a). The question for determination arises in the administration of both these estates. These reasons resolve that question.

3. Ms S Hill of counsel appeared for the plaintiff instructed by APlus Legal and Ms M Waters instructed by MistryFallahi appeared for the defendant. Counsel set out argument in written submissions and requested the Court to deal with the question for determination in chambers.

Administration of the Estates of John Cauchi and Charles Cauchi

4. John Cauchi died on 12 August 1998. Charles Cauchi was appointed administrator of John Cauchi's estate in February 2000. Charles commenced to administer John's estate. Charles administered John’s estate for about 15 years until he too died on 7 July 2015. The Court will henceforth refer to the late John Cauchi and the late Charles Cauchi by their first names for convenience, without intending any disrespect to either of them or their families.

5. The defendant in these proceedings, William Cauchi, was appointed administrator of John's estate on 16 August 2016. The plaintiff in these proceedings, Milo Mitchell applied for and was granted probate as executor of Charles’ estate on 4 May 2016. Milo Mitchell’s application for probate included an inventory of property signed by him. In his role as administrator of John's estate, William Cauchi became dissatisfied with Charles' administration of John's estate.

6. In 2016, William Cauchi commenced proceedings as administrator of John's estate against Milo Mitchell (proceedings 2016/00307267), who was by then the executor of Charles’ estate, alleging maladministration of John’s estate by Charles (“the 2016 proceedings”). William Cauchi alleged in the 2016 proceedings that Charles had failed to account for monies paid to John's estate, misapplied funds paid to John and John’s wife during their lifetimes and breached various duties he owed, in administering John's estate including by failing to get in assets, preserve assets and insure assets.

7. The 2016 proceedings were mediated. Following the mediation, the 2016 proceedings resolved through the September 2018 consent orders, which required the payment of a lump sum of $650,000 by Charles’ estate to William Cauchi as administrator of John's estate. They also required Milo Mitchell as executor of Charles' estate to take further steps to ascertain whether there were further assets of Charles’ estate which had not been disclosed in the original inventory of property included in the grant of probate of Charles' estate to Milo Mitchell.

8. The parties now dispute the proper interpretation of clause 9(e) of the September 2018 consent orders. These orders are set out below in full (with Milo Mitchell being referred to as the defendant and William Cauchi being referred to as the plaintiff):

1. Order 4 made on 21 October 2016 is discharged forthwith.

2. Plaintiff is released from his undertaking as to damages given 21 October 2016.

3. Judgment for the Plaintiff in the sum of $650,000 (the "judgment Amount").

4. Defendant to pay the Judgment Amount within 28 days of the making of these orders.

5. Interest as for a legacy under the Probate and Administration Act 1898 to run on so much of the Judgment Amount that remains outstanding for more than 1 month after the making of these orders.

6. Statement of Claim otherwise dismissed.

7. Defendant's costs on the indemnity basis to be paid out of the estate of Charles Cauchi ("Charles").

8. Plaintiffs costs on the indemnity basis to be paid out of the estate of John Cauchi ("John").

9. The Court notes the agreements of the parties that in consideration of them consenting to the orders herein:

a. the Defendant will further investigate and will provide to the Plaintiff, controlled moneys account statements and all other trust and bank account statements to demonstrate how money standing to the credit of the deceased, Charles, as at his death was received and applied by the Defendant.

b. The Defendant will provide to the Plaintiff bank statements in respect of the assets of Tru-Life International Ply Ltd from 1 January 2015 to date.

c. The Defendant will identify the source of moneys paid to the estate of the deceased, Charles, in respect of any superannuation fund held for him.

d. The costs of the further administration of Charles' estate will be borne by Charles' estate.

e. In the event the further administration of Charles' estate discloses further assets belonging to Charles' estate, not disclosed in the Probate, the Defendant will pay to the Plaintiff 65% of those further assets without deduction for the further costs of administration.

f. The Plaintiff releases the Defendant from all claims which he may have against the Defendant or Charles in respect of any matter arising during the lifetime of Charles or in respect of the administration of the Charles' estate save for the implementation of these orders and the agreements noted in paragraphs 9a.-f.

g. The Defendant releases the Plaintiff, Joseph Cauchi, Mary Stonestreet, David Cauchi and/or Michael Cauchi (together "Charles' Siblings") from all claims which he may have against any or all of Charles' Siblings in respect of the administration and/or assets of John's and/or Kathenne's estate.

h. The judgment in paragraph 3 is against the defendant in his capacity as executor of Charles' estate.

i. Charles' estate will receive one-sixth of its entitlement to John's estate upon its due administration.

10. Directions hearing listed for 16 October 2018 be vacated.

9. The events since September 2018 relevant to the present dispute are few. At the time the September 2018 orders were negotiated, the parties, William Cauchi and Milo Mitchell were each aware of several primary uncontested facts about Charles' estate.

10. The first of these uncontested facts related to the inventory of property prepared in support of Milo Mitchell’s application for probate over Charles’ estate. The inventory of the property owned solely by the deceased included four bank deposits to the credit of Charles, and certain real estate in Malta. These assets appeared in two columns in the inventory of property. The first column was headed “description” and the second column was headed “estimated or known value”. It is to be inferred from this structure that the first column described the asset and the second column set out for the asset either its known value, or if it was not known, the applicant’s estimated value of the asset. The inventory of property was signed at the foot in the space provided, by Milo Mitchell, the applicant for probate, and witnessed by another person.

11. Set out below is what appears in the first column (before the colon) and in the second column (after the colon).

1. Money at Bank – UBank: $88,000.00.

2. Money at Bank – Bankwest: $7,751.91.

3. Money at Bank – Commonwealth Bank: $17.00.

4. Money at Bank – Bank of Queensland: $200.00.

5. John Street, Xewkija, Gozo, Malta: $200,000.00.

12. The inventory of property is a basis to infer that there was at the time of Milo Mitchell’s application for administration of Charles’ estate a bank deposit in the name of the deceased at UBank in an amount of $88,000.

13. Investigations made after the September 2018 orders, revealed that there were in fact three bank accounts with credit deposits at UBank in the deceased's name at the time of the September 2018 orders. These credit deposits were communicated by UBank to Milo Mitchell after the September 2018 orders. UBank described them in a letter dated 29 October 2018, as totalling $125,458.37 as follows:

1. uSaver account (590) with an available balance of $14.03;

2. uSaver account (341) with an available balance of $125,344.34; and

3. ultra UBank account (168) with an available balance of $100.

14. The UBank letter of 29 October 2018 records these amounts were "account information for all accounts held in the personal name of the late Charles Cauchi". The correspondence also confirmed that there were no other documents, securities, safe custody box, or assets held on behalf of Charles by UBank”. All this information was provided with account balances as at the date of Charles' death (but it appears calculated as inclusive of interest accrued thereafter up to 29 October 2018).

15. The parties do not dispute that UBank’s letter was sent to APlus Legal, the solicitors for Milo Mitchell, on 29 October 2018. Milo Mitchell was the logical recipient of such a letter as the administrator of Charles’ estate. The letter appeared to have resulted from Mr Mitchell’s enquiries pursuant to order 9(a) of the September 2018 orders.

16. The evidence does not explain why the $88,000 in the inventory of property for Charles’ estate was incorrect. Milo Mitchell, as the named executor in Charles’ will and the applicant for probate of his estate, was ultimately responsible for providing the information in the inventory property. His affidavit filed on the present application sworn 19 April 2024 throws little light upon how the sum of $88,000 was reached. But it is probable that as he was only an applicant for probate at the time that the inventory was being developed that he did not have complete authority to access information from UBank and was making his best estimate of the balance owed to the deceased on UBank accounts from sources available to him. The inventory of property standard form allows an estimate to be given.

17. Milo Mitchell’s affidavit explains (at paragraph 14) how he came to make further enquiries at UBank about the deposits in Charles’ name there. He deposes:

"On or about 11 September 2018, I discovered there that there were additional funds located by and disbursed from Charles’ estate which were not in the inventory of property located in the probate list"

18. Therefore, from about 3 October 2018, following his discovery that the inventory of property was inaccurate, Milo Mitchell explains that he caused his solicitors, APlus Legal, to contact various banks to determine whether Charles had any further deposits with those institutions. This led to the 29 October 2018 email from UBank.

19. Nor did the plaintiff or the defendant indicate through his counsel that he had any direct evidence of how the $88,000 was arrived at and put into the inventory of property with the application for probate of Charles’ estate. There is no evidence that the parties had looked at the UBank bank accounts before the application for probate for Charles’ estate was filed, such that either of them might have had notice that the $88,000 was wrong. Rather, it should be inferred that what Milo Mitchell said in the inventory of property was what he genuinely believed at the time was an accurate estimate of the value of the money at UBank of $88,000.

20. But that estimate has turned out to be wrong. The consequences of it being incorrect have played out as an incidental accounting question in these proceedings, which Milo Mitchell brought in 2024. Milo Mitchell sought a range of relief in these proceedings, including in relation to the development of certain land at Branxton, which is not relevant for present purposes.

The Parties’ submissions

21. The defendant, William Cauchi, filed written submissions on this issue first and the plaintiff, Milo Mitchell replied. The parties contended for different meanings of the words, in clause 9(e) of the September 2018 orders, "discloses further assets belonging to Charles’ estate, not disclosed in the probate" (emphasis added).

22. William Cauchi's contentions interpreted clause 9(e) to maximise the further return to John's estate. Milo Mitchell’s, contention to the contrary sought to minimise payments under clause 9(e) from Charles’ estate to John's estate.

23. William Cauchi’s submissions sought to emphasise the importance of the language chosen by the parties to record their bargain and the importance of attempting to give effect to that language without judicial rewriting: Kooee Communications Pty Limited v PrimusTelecommunicationsPty Ltd [2008] NSWCA 5 at [27] and Cherry v Steele Park (2017) 96 NSWLR 548; [2017] NSWCA 295 at [72]. William Cauchi submitted that in this case the words of order 9(e) are clear and unambiguous. He contended that the whole of the $125,458.37 in bank deposits at UBank were not disclosed in the probate and accordingly John's estate was entitled to 65% of the whole of the of the deposits declared in the UBank letter of 29 October 2018. William Cauchi contends that John’s estate is now entitled to the payment of 65% of $125,458.37, namely $81,547.94.

24. He submitted that order 9(e) does not include any words requiring any deduction or set-off for assets already set out in the inventory of property and order 9(e) should not be rewritten in a manner which includes any such words of modification.

25. In reply, Milo Mitchell took the opposite position. He contended that nothing is now due from Charles’ estate to John’s estate by reason of the change in the known balance of the UBank deposits after the September 2018 orders. He said he was engaged in the administration of Charles’ estate at the time of the September 2018 orders. His submissions emphasise that the September 2018 orders required various things to be done by way of taking "further steps" in that administration and that all that has now happened is that greater specificity has been added to the UBank account by recording more account details but the asset is essentially unchanged and nothing new has been disclosed warranting any further payments.

26. His argument was put in writing as follows:

10. It is not in dispute that at the time of the 2018 Orders, Mr Mitchell had engaged in the administration of Charles Cauchi’s estate. Mr Cauchi provides details of the grant of probate in his submissions.

11. In consideration of Mr Cauchi and Mr Mitchell entering into the 2018 Orders, Mr Mitchell was ordered to take further steps in the administration of Charles Cauchi’s estate in orders 9(a) to (d).

12. Should the further investigations (order 9(a)) and further administration (orders 9(d) and 9(e)) of the estate by Mr Mitchell disclose further assets (order 9(e)) not disclosed in the Probate then order 9(e) provides that Mr Mitchell is to [sic] Mr Cauchi 65% of those further assets.

13. The grant of probate refers to and discloses “Money at Bank – UBank $88,000” (the disclosed UBank Balance).

14. Further investigations by Mr Mitchell turned up money at U-Bank in the amount of $125,344.44 and $14.03. These amounts, discovered after further investigations are further to the disclosed UBank Balance in the grant of probate.

15. Following letters from U-Bank dated 29 October 2018 (identified in Source/Reference column in Annexure A) the spreadsheet adds specificity to the disclosed U-Bank Balance by recording account details.

16. Mr Mitchell says that the fact that accounts at UBank are now specified in Annexure A does not mean that the total amount of money held at U-Bank can be characterised as a further asset of which Mr Mitchell is obliged to pay 65% to Mr Cauchi.

17. At settlement of the Related Proceedings Mr Cauchi was aware of the disclosed UBank Balance and it formed part of the commercial agreement struck by Mr Mitchell and Mr Cauchi and documented in the 2018 Orders.

27. The reference to “Annexure A” in Milo Mitchell’s written submissions (paragraphs [15] and [16]) is to a spreadsheet used by the parties which compares the contents of the inventory of property with the later known information about the various accounts.

Consideration

28. In the Court’s view, neither Milo Mitchell's contentions that nothing is due to John’s estate, nor William Cauchi’s contentions that $81,547.94 is due, is persuasive. The correct analysis lies between these two positions.

29. The legal principles are not in issue. The September 2018 orders reflect a commercial agreement negotiated between the parties and its terms should be construed in accordance with established principle: Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35].

30. The text of the 2018 orders shows that both parties assumed that Milo Mitchell had commenced to administer Charles’ estate and was by those orders required to investigate its assets further in various respects. Order 9(a), (b), (c), (d) and (e) echo the objective that Milo Mitchell will "further investigate" and provide information about various matters in the administration of Charles’ estate. These include: "how money standing to the credit of the deceased Charles, as at his death was received and applied by the defendant" (9(a)); providing “bank statements in respect of the assets of Tru-Life International Pty Ltd” (9(b)); and identifying “the source of monies paid to the estate” of Charles in respect of any superannuation fund (9(c)). These various tasks were described in order 9(d) as the "further administration of Charles’ estate", the costs of which were to be borne entirely by Charles’ estate. Thus, by the time the reader of the September 2018 orders encounters order 9(e), the words "the further administration of Charles’ estate" can be taken to refer to these various additional steps of investigation and information discovery that Milo Mitchell would take in administering Charles’ estate.

28. Order 9(e) itself is directed to events that would happen during this “further administration” of Charles’ estate by Milo Mitchell contemplated by Order 9(a)-(d). Order 9(e) speaks to whether that further administration “discloses further assets” (emphasis added). The primary Macquarie dictionary meaning of disclose is “to cause to appear; allowed to be seen; make known; reveal” and its secondary meaning “to uncover; lay open to view”. All these primary meanings have potential relevance here. What is disclosed are called “further assets” in Order 9(e).

29. The drafting of Order 9(e) sought to qualify the meaning of “disclose”, because if something is caused to appear, allowed to be seen, made known, or revealed, it is important to describe the baseline of non-appearance, of being unseen, being unknown or being unrevealed, against which comparison is being made. This is to provide a standard against which disclosure is to be measured. The drafting sought to do that by qualifying the words “further assets” with the expression “not disclosed in the Probate”, thereby conveying that the “further assets” would be measured as changes from what was in the inventory of property.

30. If an asset does not appear, be seen, be known or revealed in the inventory of property but it first appears or is seen, known or revealed later during “the further administration of Charles estate”, then Order 9(e) operates to oblige the then defendant, Milo Mitchell, to pay to William Cauchi “65% of those further assets”. In the Court’s view, a “further asset” in Order 9(e) is a description of the marginal difference between an asset as described in the inventory of property and what has been proven to be the fact from the “further administration” of Charles’ estate.

31. Focus on how the asset in question is described in the inventory of property is critical for measuring what Order 9(e) treats as already appearing, being seen, known, or revealed to enable measuring “further assets”. The UBank bank deposit asset is described in the inventory of property as “Money at Bank – UBank” with an “estimated or known value” of “$88,000.00”. The estimated or known value of the asset is part of the total information revealed together with the information in the description of the asset in the inventory of property.

32. Those negotiating the commercial agreement represented by the September 2018 orders knew both the description and the estimate or known value of each asset in the inventory of property. Both the description and the value estimate can readily be said to have been information disclosed in the inventory of property in the ordinary sense of appearing, being seen, being known or being revealed. What is not disclosed in the inventory of property is what later becomes known or revealed as different information from the inventory of property, following on the investigation. This different information will qualify as Order 9(e) “further assets”. Here, that is the difference between the inventory of property baseline of a UBank deposit of $88,000.00 and the later revealed deposits of $125,458.37 as at the date of death of Charles Cauchi, namely $37,458.37. The amount payable on this account from Charles’ estate to John’s estate is therefore $24,347.94 (being 65% of $37,458.37).

33. Against this analysis neither party’s contention is persuasive. Milo Mitchell’s contention takes too narrow a view of what are Order 9(e) “further assets”, by focusing on only the description of the assets in the inventory of property and not including all the available information about the value of the asset. William Cauchi’s contention takes too broad a view of “further assets” by ignoring the important qualification to that term that excludes what is already disclosed in the inventory of property.

34. There may need to be adjustments for interest in calculating what is ultimately due from Charles’ estate to John’s estate based on these reasons. The parties also have other set offs in their accounting analysis of the financial obligations between these two estates before they reach a final figure as to what is due. For present purposes, it is sufficient for the Court to make a declaration as to the rights of the parties in relation to this accounting issue without undertaking a final calculation. The parties can do that themselves.

35. As neither side was ultimately successful on his contentions on this issue, the appropriate costs order is for each party to bear his own costs of this contest. Unless either side seeks a different costs order within 14 days that will be the result.

Conclusion and orders

39. The Court:

1. DECLARES that upon the true construction of Order 9(e) of the orders made on 12 September 2018 in proceedings 2016/00307267 and in the events which have happened, the plaintiff as executor of the estate of the late Charles Cauchi is liable to pay or account to the defendant William Cauchi as the administrator of the estate of the late John Cauchi, 65% of the difference between (a) the sum of $88,000 stated as the balance of the UBank account in the inventory of property filed for Milo Mitchell’s application for probate of the estate of Charles Cauchi and (b) the sums later found as the balance the accounts held for the credit of Charles Cauchi at UBank;

2. NOTES that subject to order (3) there will be no order as to costs to the intent that each party would bear his own costs of the contest leading to these orders;

3. ORDERS that any application by either party for a cost order in respect of the issues determined by this judgment must be made within 14 days; and

4. DIRECTS the parties to provide to the Court an update as to the progress of boundary adjustments and land sales of the subdivided Branxton land within 14 days.

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Decision last updated: 31 March 2025