Re Bogdanov; Atkins v Drummond

[2019] VSC 70

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY & PROBATE LIST

S ECI 2018 02722

IN THE MATTER of the estate of VICTOR BOGDANOV (deceased)

-and-

IN THE MATTER of an application pursuant to Order 54 of the Supreme Court (General Civil Procedure) Rules2015 and/or Section 28 of the Administration and Probate Act1958 and/or the Court’s inherent jurisdiction

ANASTASIA BOGDANOV ATKINS	Plaintiff
-and-
JOHN JOSEPH DRUMMOND and BASIL BOGDANOV (who are sued in their personal capacity and in their capacity as executors of the estate of VICTOR BOGDANOV, deceased)	Defendants

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	1 February 2019
DATE OF RULING:	18 February 2019
CASE MAY BE CITED AS:	Re Bogdanov; Atkins v Drummond & Anor
MEDIUM NEUTRAL CITATION:	[2019] VSC 70

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WILLS & ESTATES — Where plaintiffs and defendants are executors of estate of deceased —  Where first defendant a former solicitor and holds the records of the deceased’s estate — Where first defendant refused to provide an account in required form — First defendant ordered to file administration account of estate of deceased — Administration and Probate Act 1958, s 28.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr C R Northrop	Scammell Black Mileo
For the First named Defendant	In person
For the Second named Defendant	Mr N P Jones	Felton Farquhar & Co

HER HONOUR:

Introduction

1. Victor Bogdanov (‘the deceased’) died on 22 September 2015.  He was survived by his two adult children, plaintiff and the second defendant.

1. By his will dated 12 April 2011, the deceased appointed the plaintiff and the defendants as his executors and trustees.  The first defendant is a former solicitor who carried on practice under his former name, Joseph Lo Presti.  Probate of the deceased’s will was granted to the plaintiff and the defendants on 29 July 2016.

1. The deceased left his estate to the plaintiff and the second defendant in equal shares as tenants in common.  The value of the estate in the inventory of assets and liabilities filed with the probate application was $440.000.

Plaintiff’s application

1. By originating motion filed 12 December 2018, the plaintiff seeks, inter alia, that:

(a)   the defendants be restrained from making or receiving any distribution from the estate otherwise than in accordance with the deceased’s will;

(b)   the first defendant repay any amount paid to him from the estate as commission or other remuneration;

(c)    the first defendant file and serve a true and just account in Form 3-6AA of the Supreme Court (Administration and Probate) Rules2014 of the administration of the estate, verified by affidavit[1]; and

(d)  the defendants provide to the plaintiff all bank statements and other records relating to the funds of the estate.

[1]Supreme Court (Administration and Probate) Rules 2014, r 6.03.

Factual background

1. On 24 November 2017, the plaintiff’s solicitors wrote to the estate’s former solicitors, Felton Farquhar & Co. (‘Felton Farquhar’) requesting, inter alia, a trust statement of the estate.  Correspondence was exchanged between the plaintiff’s solicitor and Felton Farquhar until 20 March 2018.  On 11 March 2018, Felton Farquhar advised the plaintiff’s solicitor that it did not operate a trust account.

1. On 26 March 2018, the plaintiff’s solicitors were informed by solicitors, S Kourkoulis & Associates, that they were receiving instructions from the defendants.  Further correspondence with D Kourkoulis & Associates took place until 31 May 2018 when that firm informed the plaintiff’s solicitors that it no longer acted for ‘the executor.’  Contained in a letter dated 5 April 2018 from the firm was a statement said to be an administration statement prepared by the first defendant dated 5 April 2018.  That statement included the entry ‘John Drummond Trustee commission 3%’ in an amount of $16,200.  This entry was raised as an issue of concern, amongst others, by the plaintiff’s solicitors.

1. On 1 June 2018, the plaintiff’s solicitors wrote directly to the first defendant but received no information from him.

1. On 28 June 2018, the plaintiff’s solicitors wrote to the Registrar of Probates, seeking assistance for the filing of an administration account for the estate. By letters dated 13 July 2018, the Assistant Registrar of Probates requested each of the executors provide a true and just account within 30 days, verified by affidavit pursuant to r 6.03 of the Supreme Court (Administration and Probate) Rules 2014.  After a further exchange of correspondence,  no administration account was filed by the defendants.

1. Further correspondence took place between the plaintiff’s solicitors and the defendants regarding the provision of an administration account and bank statements from the estate, failing which proceedings would be commenced by the plaintiff.

1. By letter dated 23 November 2018 to the second defendant, the first defendant confirmed the second defendant’s instructions that the sum of $22,000 was to be paid to the second defendant only.  In his letter, the first defendant confirmed that his advice that the amount should be paid equally between the plaintiff and the second defendant.  He also stated that the $22,000 will be paid to the second defendant after 18 December 2018 unless he received a Court order to the contrary.

1. By letter dated 30 November 2018 to each defendant, the first plaintiff’s solicitors demanded that the defendants make no distribution and that proceedings would be issued.

Hearing of application

1. The application was listed for 1 February 2019.  On that day, the first defendant objected to the order for the filing an administration account on the grounds that the application was a fiction of the plaintiff’s solicitor and there was no evidence from the plaintiff.

1. The first defendant informed the Court that the estate has been distributed.  He stated that accounts were sent to the plaintiff’s solicitors on three occasions but were rejected as they did not comply with the Supreme Court (Administration and Probate) Rules2014.  The first defendant accepted that he had not filed the estate accounts in accordance with the Rules and he informed the Court that he refused to do so.

1. The first defendant also contended, that as the plaintiff is also trustee and executor, it should not be the first defendant’s sole responsibility to provide the accounting information and that it would not be possible for him to provide accounts on the present state of information.  His view was that the remaining trustees could do the accounts as they also had responsibilities.

1. In respect of the commission of $16,200 referred to in the statement dated 5 April 2018, the first defendant stated that payment of the commission was an agreement between the deceased and the second defendant.

1. The second defendant filed an affidavit sworn 31 January 2019 in which he deposed that the estate of the deceased ‘has now been fully distributed and there are no funds left in the estate’, that the sum of $22,000 was distributed equally between the plaintiff and him, that he did not have any bank statements in his possession and they are in the possession of the first defendant.

1. The plaintiff’s position was that the second defendant does not have the accounts as the administration of the estate has been undertaken by the first defendant and accordingly, the first defendant has the relevant records.  The accounts prepared by the first defendant described as a ‘statement of account’ are not in the prescribed form and they suggest that money from the estate has passed to the first defendant.  Further, in an email dated 19 September 2018 from the then solicitors for the first defendant, it was stated that they were informed by the first defendant that he would file accounts for the estate.

1. Orders were made in the proceeding, inter alia, that on or before 15 February 2019 the first defendant must file a true and just account in Form 3-6AA of the Supreme Court (Administration and Probate) Rules2014 of the administration of the estate, verified by affidavit.

1. At the hearing, the first defendant requested the Court to provide written reasons for making this order.

Reasons for decision

1. The concern of the first defendant that there is no affidavit filed by plaintiff is misconceived.  It is sufficient for the purposes of the application that the plaintiff’s solicitor filed the affidavit in support of the application as he acts on her behalf and the exhibited chain of correspondence occurred between him and the various firms acting from time to time for the first defendant.

1. The form of account provided by the first defendant to the plaintiff’s solicitor does not comply with the Rules.  It also raises concerns as to the administration of the estate.  The first defendant failed to comply with the notice from the Registrar of Probates to file the estate accounts in accordance with the Rules.  A personal representative of an estate must ensure that proper accounts and records are made in order to ensure the due and proper administration for the estate.  Such accounts verify what assets have been realised and what liabilities have been paid.  The account must contain full particulars of receipts and disbursements, all assets and liabilities and particulars of distribution of all assets.  The accounts provide proof that the estate has been administered properly in accordance with the terms of the will.

1. The plaintiff has followed the procedure set out in Rule 6.03 whereby the Registrar of Probates has required the first defendant to provide an account of the administration of the estate in the appropriate form.  The first defendant failed to provide the accounts to the Registrar.

1. In circumstances where the accounts have not filed been filed despite the many requests from the plaintiff’s solicitor and the Registrar’s notice as well as  the concerns as to the administration of the estate, the Court ordered that the accounts be provided by 15 February 2019 and the proceeding be listed for directions on 22 February 2019.

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