Re Kataryna; Kataryna v Petalas - [2017] VSC 466

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY & PROBATE LIST

S CI 2017 02167

IN THE MATTER of the will and estate of RAYMOND KATARYNA, deceased

BETWEEN:

SLOWKO KATARYNA	Plaintiff
v
REBECCA JANE PETALAS	Defendant

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF RULING:	14 August 2017
CASE MAY BE CITED AS:	Re Kataryna; Kataryna v Petalas
MEDIUM NEUTRAL CITATION:	[2017] VSC 466

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COSTS—Estate litigation—Application to remove executor and appoint independent administrator—Where executor did not respond to correspondence for several months—Where substituted service ordered—Where executor ultimately agreed to removal—Whether indemnity costs should be ordered against executor—Whether executor should have indemnity for costs from the estate—Supreme Court Act 1986, s 24(1)—Supreme Court (General Civil Procedure) Rules, Order 63— Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A P Richardson	Lanham Lawyers
For the Defendant	Mr T G Moloney	Ms D J Andritsos

HER HONOUR:

Background

Raymond Kataryna died on 10 November 2016. His will dated 29 June 2010 named the defendant as the executor of his estate. The deceased left his estate equally between the plaintiff, the defendant and Zanik Kataryna. The plaintiff and Zanik Kataryna are the brothers of the deceased. The defendant claims to be the partner of the deceased.

On 29 September 2016, the plaintiff was appointed by VCAT to act as the administrator and limited guardian of the deceased. In his role as administrator, the plaintiff discovered a large number of unusual transactions on the deceased’s Westpac bank accounts and online cash withdrawals from his credit card account that occurred when the deceased was cognitively impaired and hospitalised. In an affidavit sworn 2 June 2017, the plaintiff deposed to his reasons for suspecting that the cash withdrawals were made by the defendant without the authority of the deceased.

By letter dated 2 December 2016, the plaintiff’s solicitors wrote to the solicitor for the defendant requesting the defendant’s agreement to renounce her position as executor, failing which the plaintiff would issue a proceeding seeking the defendant’s removal and claim costs of the application on an indemnity basis.

By letter dated 6 February 2017 to the solicitor for the defendant, the plaintiff’s solicitors agreed to an independent solicitor being appointed to administer the estate and sought the defendant’s consent to such an appointment. The response from the defendant’s solicitor was that the defendant ‘is prepared to renounce her executorship if protections are in place’ and advised that her ‘retainer ends at the completion of this letter unless I am instructed further and am assured my costs will be paid from the estate’. This response was reiterated again in correspondence from the solicitor on 8 March 2017.

The plaintiff has had no further contact from the defendant or her solicitor despite further correspondence by email directed to the defendant advising that unless she consented to the appointment of an…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] VSC 466
Decision Date: 14 August 2017

CaseChat Overview and Summary

In the matter of the estate of Kataryna, the deceased, and Kataryna v Petalas, the respondent sought the removal of the executor and the appointment of an independent administrator. The dispute arose in the Supreme Court of Victoria. The petitioner alleged that the executor had not responded to correspondence for several months, leading to concerns about the proper administration of the estate. Subsequently, substituted service was ordered, and the executor ultimately agreed to be removed. The court was tasked with determining whether indemnity costs should be awarded against the executor and if the executor was entitled to indemnity for costs from the estate.

The central legal issues before the court were whether the executor's failure to respond warranted indemnity costs being awarded against him and whether the executor should receive indemnity for the costs from the estate. The court considered relevant statutory provisions, including section 24(1) of the Supreme Court Act 1986 and Order 63 of the Supreme Court (General Civil Procedure) Rules. The petitioner argued for indemnity costs based on the executor's unresponsiveness, while the executor contended that he should be indemnified for the costs from the estate.

The court found that the executor's lack of responsiveness justified ordering indemnity costs against him. However, it ruled that the executor was not entitled to indemnity for these costs from the estate. The court relied on the precedent set in Ugly Tribe Co Pty Ltd v Sikola, where it was established that executors do not have an automatic right to indemnity costs from the estate. The decision underscored the importance of executors fulfilling their duties promptly and responsibly to avoid adverse financial consequences.

The court ordered that the executor pay the petitioner's costs and that the executor's entitlement to indemnity for costs from the estate be denied. This ruling emphasised the need for executors to maintain effective communication and respond to legal proceedings in a timely manner. The court's decision provided clarity on the circumstances under which indemnity costs may be awarded and reinforced the principle that executors cannot automatically seek reimbursement from the estate.

Orders