Re Kordos
[2023] VSC 14
•31 January 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S PRB 2022 13293
IN THE MATTER of the estate of ERMIONI KORDOS (in the will called Erimone Kordos), deceased
APPLICATION BY:
| ZAFIRI KORDOS | Plaintiff |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 18 November 2022 |
DATE OF JUDGMENT: | 31 January 2023 |
CASE MAY BE CITED AS: | Re Kordos |
MEDIUM NEUTRAL CITATION: | [2023] VSC 14 |
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WILLS AND ESTATES — Where plaintiff seeks limited grant as administrator ad litem — Where plaintiff in a position of conflict of interest — Where plaintiff unable to provide an administration guarantee.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Rizzi | Kyriacou Lawyers Pty Ltd |
HER HONOUR:
Introduction
Ermioni Kordos (‘the deceased’) died on 22 October 2021, aged 87 years. The deceased’s husband, Evangelos Kordos (‘Evangelos’), predeceased the deceased having died in 2006. The deceased and her husband had two children, Vasilios (Bill) Kordos (‘Vasilios’) and Zafiri (Geoff) Kordos (‘the plaintiff’). Vasilios predeceased the deceased, having died on 15 June 2021. On 23 September 2021, probate of Vasilios’ will was granted to his widow, Eleanor Kordos (‘Eleanor’).
The deceased’s will dated 21 April 2016 has been deposited with the Office of the Registrar of Probates (‘the will’). The deceased appointed Vasilios as executor of the will and leaves the estate to Vasilios. In the event that Vasilios predeceased the deceased, the estate is left the son of Vasilios and Eleanor, Evaan Kordos (‘Evaan’).
The plaintiff is not a beneficiary under the deceased’s will, with the will recording:
9.I make no provision for my son GEOFFREY KORDOS as my said son Bill Kordos assisted me and my late husband when we were in financial difficulties and Bill Kordos continues to assist me financially and the disposition of my estate to him is in acknowledgement of the said financial assistance.
Plaintiff’s application
By originating motion filed 6 July 2022, the plaintiff seeks a limited grant ad litem of the estate of the deceased for the purpose of:
…
2(a)investigating the misappropriation of assets belonging to the deceased by Vasilios Kordos and others,
2(b)commencing and having the conduct and carriage of proceedings (sic) to recover the traceable proceeds of sale of the deceased’s property … Doncaster (‘the Doncaster property’ ) in which the plaintiff in his capacity as administrator of the estate of the deceased shall be the plaintiff;
2(c)obtaining relevant discovery relating to the transfer of the Doncaster property (‘the proceeding’);
2(d)if appropriate, compromising the proceeding upon such terms as the plaintiff may think fit;
2(e)giving consent on behalf of the estate of the deceased to the making of orders and the entry of judgment by the Court to conclude the proceeding; and
2(f)otherwise prosecuting the proceeding to judgment and taking all such steps as may be appropriate to enforce any such judgment on behalf of the estate of the deceased.
3.This grant of letters of administration ad litem is limited until a grant of general administration is made or until further order.
4. The requirements that the plaintiff:
(a)provide a surety guarantee in relation to his administration of the estate pursuant to this order; and
(b)post a notice of his intention to apply for this grant on the Court’s website;
be dispensed with.
5. Costs reserved.
In written submissions, the plaintiff submitted that he intended to commence a proceeding on behalf of the estate of the deceased to recover an amount of $600,000 from Vasilios’ wife, Eleanor (‘Eleanor’), both in her personal capacity and as executor of the estate of Vasilios. The orders proposed by the plaintiff in the written submissions refer to commencing a proceeding to recover the traceable proceeds of sale of the Doncaster property, in which the plaintiff in his capacity as administrator of the estate of the deceased shall be the plaintiff.
The plaintiff filed an affidavit sworn 23 June 2022 in support of his application. A chronology of events leading to the application in summary form is as follows:
Date
Event
23 May 1985
The deceased and her late husband, Evangelos, were registered as joint proprietors of the Doncaster property.
3 April 1989
Mortgage to the Commonwealth Bank registered on the title of the Doncaster property.
9 November 1992
Vasilios was registered as a joint proprietor of the Doncaster Property with the deceased and Evangelos. The mortgage dated in 1989 was discharged and a new mortgage to the National Bank Limited was registered on the title to the Doncaster property.
2006
Death of Evangelos.
7 June 2011
The deceased and Vasilios became joint proprietors of the Doncaster property following a survivorship application, and the mortgage to the National Bank was discharged.
15 June 2011
The deceased executed a power of attorney appointing Vasilios as her attorney. In an application by the plaintiff on 19 August 2021 to be appointed guardian of the deceased, the Victorian Civil and Administrative Tribunal (‘the VCAT’) refers to the power of attorney to Vasilios as invalid without reasons being recorded.
21 April 2016
The deceased signed her will. The will was drawn by her solicitors, Taslopoulros Lambros & Co, and the witnesses to her signature were both solicitors of the firm.
Approximately October 2016
The plaintiff as informant on the deceased’s death certificate recorded that the deceased had Alzheimer’s disease for five years.
22 May 2018
The entry date for the deceased to Mercy Place Abbotsford Hostel, according to the agreement between Mercy Aged and Community Care Ltd and the deceased, by Vasilios on her behalf, dated 13 July 2018.
13 July 2018
Agreement between Mercy Aged and Community Care Ltd and the deceased, signed by Vasilios as the deceased’s legal guardian.
4 August 2019
Contract of sale of the Doncaster property.
25 September 2019
Settlement of the sale of the Doncaster property, with net sale proceeds being $1,224,519.77.
26 September 2019
One half of the net sale proceeds, being $612,259.89, deposited into the deceased’s bank account.
30 September 2019
The sum of $500,000 withdrawn from the deceased’s account and deposited into the account of Vasilios and Eleanor. The plaintiff contends that the signature on the corresponding withdrawal slip was that of Vasilios.
The sum of $100,000 withdrawn from the deceased’s account and deposited into the account of Vasilios. The plaintiff contends that the signature on the corresponding withdrawal slip was that of Vasilios.
21 October 2019
Transfer of property at 102 Seventh Avenue, Rosebud, Victoria (‘the Rosebud property’) to Vasilios and Eleanor as joint proprietors purchased for $505,000. Together with stamp duty and transaction costs, the total acquisition cost is said by the plaintiff to be approximately $530,360.
15 June 2021
Death of Vasilios.
1 August 2021
The plaintiff claims that the deceased was indebted to Mercy Health in the sum of approximately $23,017.
19 August 2021
The plaintiff claims that Mercy Health instituted a proceeding in the VCAT for outstanding fees and whether , due to the death of Vasilios, an attorney could be appointed for the deceased. Pursuant to the order of the VCAT, the plaintiff was appointed as administrator of the deceased. As noted under the date 15 June 2011 above, the VCAT refers to the power of attorney to Vasilios as invalid without reasons being recorded
27 September 2021
Probate of Vasilios’s will granted to Eleanor.
1 October 2021
Survivorship application by Eleanor and Eleanor registered as the sole proprietor of the Rosebud property.
5 October 2021
Plaintiff, in his capacity as the deceased’s administrator, lodged caveat on the Rosebud property claiming an implied, resulting or constructive trust.
22 October 2021
Death of the deceased and the plaintiff ceases to be administrator of the deceased.
Applicable principles
A grant of administration ad litem provides for an administrator to represent a deceased’s estate for the purpose of enabling an estate to bring or defend legal proceedings and generally confers power with respect to the management of the legal proceeding on behalf of the estate.[1] The Court has the power to make a grant ad litem pursuant to its inherent jurisdiction, as well as its general statutory jurisdiction to grant administration.[2]
[1]Greenway v McKay (1911) 12 CLR 310; Re Estate of McGown [1946] VLR 113; Hewitt v Gardiner [2009] NSWSC 705.
[2]See Re Emmins [2019] VSC 605, [34] (McMillan J) citing GE Dal Pont and KF Mackie, Law of Succession (LexisNexis Butterworths, 2nd ed, 2017) [11.53]; Administration and Probate Act 1958 (Vic) s 6.
In Re Emmins,[3] the Court explained:[4]
Commonly referenced examples [of grants of administration ad litem being granted] can be found in Re Estate of McGown and Greenway v McKay.[5] In Re Estate of McGown, a grant was made appointing an administrator ad litem to represent the deceased’s estate to defend any proceedings instituted by the victims arising out of a motor vehicle accident that the deceased had caused.[6] Greenway v McKay concerned the grant of letters of administration ad litem to the widow of the deceased, limited for the purpose of commencing proceedings against the deceased’s employer under the Wrongs Act 1890 for injuries suffered by the deceased in the course of employment which caused his death.[7]
A grant ad litem is necessary where there is no personal representative willing or able to take out a grant of probate or administration and proceedings involving the deceased cannot be continued or finalised without a representative of the deceased’s estate.[8] The Court will not make a limited grant ad litem where there is an appropriate person available to take out a general grant of administration.
The Court exercises careful consideration of the form and scope of such a grant as an administrator ad litem is for all purposes the representative of the estate within the limits of the grant, with the administrator’s actions having the effect of binding the estate of a deceased and the entitlements of beneficiaries of an estate.[9]
Pursuant to s 57 of the Administration and Probate Act 1958 and r 7.01 of the Administration and Probate Rules 2014, the Court may require an appropriate bond or guarantee to secure the performance of the duties of an ad litem administrator.[10] The Court has a discretion whether or not to require a guarantee, although ordinarily the Court will require a guarantee unless good reason is shown why a guarantee should not be required.[11]
[3][2019] VSC 605 (McMillan J).
[4]Ibid [34]–[37].
[5]Greenway v McKay (1911) 12 CLR 310; Re Estate of McGown [1946] VLR 111.
[6]Re Estate of McGown [1946] VLR 111.
[7]Greenway b McKay (1911) 12 CLR 310.
[8]Hewitt v Gardner [2009] NSWSC 705, [89] (Ward J).
[9]Re Estate of Coe [2013] NSWSC 968, [10] (Young AJ), citing Faulkner v Danial (1843) 67 ER 355, 359 (Wigram VC).
[10]See Re Estate of Freebairn (2005) 93 SASR 415, 420 [22] (Besanko J).
[11]Re Tratt [1980] VR 657, 663 (Brooking J); Re Curran [2010] VSC 455, [26] (Ferguson J).
Grants of administration ad litem have also been made by the Court in circumstances where there is need for careful scrutiny and investigation of inter vivos transactions involving property of the deceased.[12] In considering whether to make such a grant the Court will have regard to the due and proper administration of the estate and those with interests in the estate.
[12]See, eg, Mataska v Browne [2013] VSC 62 (McMillan J); Fodor v Simudvarac [2014] VSC 227 (McMillan J).
However, the Court has held in some circumstances that a plaintiff who has a prima facie case for family provision from the estate under Part IV of the Administration and Probate Act 1958 (Vic) has a sufficient interest in the administration of the estate to have standing to seek a limited grant of administration.[13] As the son of the deceased, the plaintiff is an eligible person to seek a family provision order under Part IV[14] and thus has a sufficient interest in the estate to give standing to seek a limited grant of representation.[15]
[13]Mataska v Browne [2013] VSC 62, [51]–[54], [56] (McMillan J); Fodor v Simudvarac [2014] VSC 227, [39] (McMillan J).
[14]Administration and Probate Act 1958 (Vic).ss 90(f), 90A(1).
[15]Mataska v Browne [2013] VSC 62, [51] (McMillan J).
The plaintiff contends that as he stands to benefit as an eligible applicant to make a Part IV claim for provision from the deceased’s estate, he is the appropriate person to investigate what occurred with the proceeds of the sale of the Doncaster property and then issue a proceeding to recover the $600,000 from Eleanor.
In so submitting, the plaintiff relied upon Mataska v Browne (‘Mataska’)[16] where the Court granted letters of administration ad litem to a plaintiff whose only interest in the estate was a foreshadowed Part IV claim for the purposes of commencing and prosecuting a proceeding against the defendant seeking to recover a property for the estate.
[16][2013] VSC 62.
Consideration
On their face the events set out in the plaintiff’s affidavit suggest there may be grounds for a careful investigation of what occurred with the proceeds of the sale of the Doncaster property, although the plaintiff did not file a proposed statement of claim in support of his application.[17] Vasilios and the deceased were registered as joint proprietors of the Doncaster property when it was sold in 2019 for a sale price of $1.245 million. While the deceased initially received her half share of the net sale proceeds of the Doncaster property, being $612,259.89, on 30 September 2019 two separate withdrawals were made from her bank account: $500,000 was withdrawn and deposited into Vasilios and Eleanor’s bank account; and $100,000 was withdrawn and deposited into Vasilios’ bank account. The plaintiff suggests that these funds were used for the purchase of the Rosebud property.
[17]Re Ciantar [2022] VSC 116, [60].
At the relevant times the deceased was aged 85 years and living in care at the Mercy Place Abbotsford Hostel. It appears that she entered into the Mercy Place Abbotsford Hostel around mid 2018. The deceased’s death certificate records that she suffered from Alzheimer’s disease in the five years prior to her death in 2021 aged 87 years, which would be from November 2016 onwards. The plaintiff was the informant for the deceased’s death certificate.
In making his application, the plaintiff accepts that the deceased’s will made in April 2016 is valid. The deceased signed her will on 26 April 2016 in the presence of two solicitors. The will sets out clear reasons for the deceased making no provision for the plaintiff, citing financial assistance by Vasilios to her and her late husband when they were in financial difficulties and his continued financial assistance to her and that the disposition of her estate to Vasilios was an acknowledgement of that financial assistance. That assistance appears to be from at least 1992 onwards, according to the title search of the Doncaster property. In view of the plaintiff’s position, it appears that he does not accept the deceased’s reasons for making no provision for him. Unlike the factual matrix in Mataska, in this proceeding there is no evidence of a previous will by the deceased leaving her estate to both the plaintiff and Vasilios and no joint power of attorney. Further, while the plaintiff relies on a notation on the VCAT orders dated 19 August 2021 to the effect that the deceased’s power of attorney to Vasilios dated 15 June 2011 was invalid, no reasons are recorded by the VCAT for the notation or the basis of such invalidity.
Notwithstanding the outcome in Mataska, the Court generally will be more willing to appoint an independent person to act as administrator ad litem rather than an interested party whose interests in the litigation may conflict with those of the estate. For example, in Re Ciantar, the Court identified that:[18]
In the usual course, a proposed administrator ad litem must file an affidavit confirming that they are independent and cognisant of their fiduciary duties when taking up the appointment so as to protect innocent third parties.[19]
[18]Re Ciantar [2022] VSC 116, [61] (McMillan J).
[19]Ibid [61].
In Re Ciantar, the Court was not satisfied that a limited grant of administration ad litem should be granted to the plaintiff, observing that:[20]
If the plaintiff is appointed administrator ad litem, it is likely that he would pursue his own interest, rather than the interests of the estate. Such a position is contrary to the role of an administrator ad litem who is for all purposes the representative of the estate within the limits of the grant with the administrator’s actions having the effect of binding the estate of a deceased and the entitlements of beneficiaries of an estate.
[20]Re Ciantar [2022] VSC 116, [58] (McMillan J).
While in Re Emmins the Court stated:[21]
There are sound reasons for an appointment of an independent administrator as opposed to an administrator who is a beneficiary of an estate. An ad litem administrator represents the estate within the limits of the grant. An administrator's actions bind the estate and may affect the entitlements of all beneficiaries of an estate and necessarily will have cost consequences for the estate. Prima facie, an ad litem administrator may also be perceived to have an entitlement to indemnification from the estate for costs incurred as administrator.
[21]Re Emmins [2019] VSC 605, [52] (McMillan J).
Where a potential Part IV claimant seeks to be appointed as administrator ad litem themselves, the Court will consider their application cautiously due to the potential for conflict of interest to arise given their lack of independence. Ultimately, however, whether a potential Part IV claimant would be appointed as an administrator ad litem depends on the particular circumstances of each case.
Evaan is the sole beneficiary of the deceased’s will. As there is no provision in the deceased’s will for a substitute executor in the event of the named executor pre-deceasing the deceased, Evaan is entitled to a grant as the sole beneficiary under the will. The plaintiff submits that it is unlikely that Evaan will seek a grant of letters of administration in the deceased’s estate, given that the estate contains no real or personal property save for the chose in action to recover the $600,000. The plaintiff submits that Evaan has a personal interest in seeing that Eleanor retain the Rosebud property and, as such, has a conflict between his duty to investigate Vasilios’ conduct on behalf of the estate of the deceased and is not the appropriate person to take out a grant and investigate Vasilios’ conduct. However, the plaintiff does accept that if the $600,000 were recovered for the estate by the plaintiff, then Evaan would likely be required to come in and take control of the estate in order to defend the plaintiff’s foreshadowed Part IV claim.
On 2 August 2022, the plaintiff served Evaan with the originating motion, his affidavit, the notice to produce filed 6 July 2022, and a letter dated 20 July 2022. The contents of the letter are not before the Court, although the notice to produce included the date of the initial hearing before Keith JR on 12 September 2022. Following that initial hearing, Keith JR made orders, inter alia, that the plaintiff file written submissions in support of his application and that the proceeding be adjourned to 21 October 2022.
The 21 October 2022 hearing did not ultimately proceed and the proceeding was relisted for directions on 18 November 2022 before a judge of the Court. At that hearing counsel for the plaintiff stated that he understood that Evaan was informed of the 18 November 2022 hearing by letter. That letter was not before the Court and counsel for the plaintiff indicated that his instructing solicitors would have a further affidavit of service filed with the Court. However, no such affidavit has been filed with the Court.
Evaan has not taken any steps to oppose the plaintiff’s application, however, it is not self-evident that Evaan has a personal interest in seeing his mother, Eleanor, retain the Rosebud property. At the date of death of Vasilios on 18 June 2021, Evaan was aged 18 years. It is more than likely at his age that he may not have understood the paperwork sent to him, or has no experience in litigation.
Nonetheless, accepting that Evaan is either unwilling or unsuitable to act as administrator, it is not appropriate to grant letters of administration ad litem to the plaintiff as it is a relevant consideration as to whether the plaintiff would act impartially in the administration of the estate, or whether there may be a potential conflict between his duty and interest.
The plaintiff submits that he does not have a conflict of interest and his only interest is in seeing the $600,000 recovered for the estate.[22] However, he accepts that he is seeking the recovery of those funds so that he can make a Part IV claim. In his affidavit the plaintiff states:
[22]Although in the plaintiff’s proposed orders he refers to recovery of the traceable proceeds of sale of the Doncaster property
I understand that I will not have the power to distribute any funds that may come into the estate as a result of the proceeding until this honourable Court makes a further order or makes a general grant of representation.
If the foreshadowed recovery proceedings are successful, I would have to commence a separate proceeding to claim provision from my mother’s estate and name Evaan as the defendant in those proceedings (as a person having a substantial interest in opposing the application).
If I obtain this grant of representation I will:
(a)well and truly collect and administer according to law the estate of my mother;
(b)if ordered by the court or required by the Registrar, an Act or the Rules of Court to do so, make or cause to be made a true and full account of the administration of the estate and exhibit and deposit that account; and
(c) when required by the Court, deliver up the grant to the Court.
However, the Court does not accept that the plaintiff is sufficiently independent to be appointed as administrator ad litem. The interests of the beneficiaries and the due and proper administration of an estate must be considered by the Court. If the plaintiff were appointed as an administrator ad litem, a relevant consideration is whether the plaintiff would act impartially in the administration of the estate, or whether there may be a potential conflict between his duty and interest. There is substantial potential for him to be in positions of conflict between his own interest and the interests of the estate, given his intention to make a Part IV claim, notwithstanding the deceased’s clear reasons for not providing for the plaintiff in her will.
Further, the orders sought by the plaintiff are more expansive than would be appropriate in the circumstances. While the plaintiff seeks to have orders enabling the commencement and carriage of proceedings to recover the traceable proceeds of sale of the Doncaster property, he also seeks further expansive orders enabling the investigation of the misappropriation of assets belonging to the deceased more generally. The orders sought by the plaintiff would also enable him to compromise the proceeding upon such terms as he may think fit, rather than expressly recognising that he should only do so where it would be in the best interests of the estate of the deceased. Given that it is not uncommon for parties to include related potential future claims in settlement discussions, there is a risk of the plaintiff attempting to include discussions around the potential Part IV proceeding in any compromise of the proposed proceeding seeking to recover the traceable proceeds of the sale of the Doncaster property.
The plaintiff nonetheless contends that he should be appointed as administrator ad litem as there is no real utility in bringing in an independent administrator and that it would place him in the position of having to find someone to take out the grant and then fund that person to recover the funds for the estate. The plaintiff emphasises that he was appointed by the VCAT as the deceased’s administrator and as administrator he took steps to discover what had happened with the Doncaster property and that based on that discovery there is a straightforward case for recovery of the $600,000. These contentions alone suggest that the plaintiff is likely to be unable to bring the necessary independence to the task.
However, as explained in Re Ciantar, the potential for increased costs that may be involved in the appointment of an independent administrator is not itself a sufficient ground to justify the appointment of the plaintiff as an administrator ad litem.[23]
[23]See, eg, .Re Ciantar [2022] VSC 116.
The plaintiff is also unable to provide an administration guarantee pursuant to s 57 of the Administration and Probate Act 1958 (Vic) and r 7.01 of the Supreme Court (Administration and Probate) Rules 2014 as he is unable to find an insurer in Victoria and his family members have been unable to provide a guarantee.
The plaintiff also submits that an administration guarantee is not appropriate at this stage because the estate currently contains no assets and if the claim to recover the $600,000 fails the estate would not suffer loss as any claim would necessarily have to be funded by the plaintiff himself. As observed, the orders sought by the plaintiff are not expressed as a claim to recover $600,000 but rather as a claim to recover the traceable proceeds of sale of the Doncaster property.
However, as the Court explained in Re Ciantar where, as in the present proceeding, the deceased held no assets in her name at the date of her death:[24]
In the ordinary course, a guarantee is required when an application is made to bring or defend a proceeding, unless good reason is shown to the contrary.[25] The reasons for an administration bond or guarantee were explained by Besanko J in Re Freebairn[26] as follows:
The guarantee is in effect a guarantee against the maladministration of the estate … It is a guarantee against a breach by the administrator of his or her duties in administering the estate. The cases in which a guarantee is required are cases where the estate is vulnerable in the sense that there is an increased risk of maladministration or an increased difficulty in recovery should there be maladministration. The guarantee provides an additional assurance of the due and proper administration of the estate and an additional remedy should there be maladministration.[27]
The reasons provided by the plaintiff for being unable to provide an administration guarantee to secure his performance of the duties as administrator is that he has been unable to find an insurer or family member willing to provide a guarantee. These reasons do not amount to a good reason for the Court to dispense with the requirement for an administration guarantee.
[24]Re Ciantar [2022] VSC 116, [63]–[64] (McMillan J).
[25]Re Tratt [1980] VR 657, 663 (Brooking J); Re Curran [2010] VSC 455, [26] (Ferguson J).
[26](2005) 93 SASR 415.
[27]Ibid 420 [22] (Besanko J).
The fact that there are not currently any assets in the estate is not a good reason to dispense with the requirement for a guarantee. In considering whether to appoint a person as an administrator ad litem the Court is mindful of the interests of third parties, as well as the beneficiaries of the estate. If litigation is commenced to recover funds for the deceased and that litigation is unsuccessful, there is the potential for costs orders to be made against the estate. There is no information before the Court as to the plaintiff’s capacity or willingness to indemnify the estate if the litigation were unsuccessful and an adverse costs order were made against it.
Further, the plaintiff intends to commence a proceeding on behalf of the estate of the deceased seeking to bring substantial funds back into the estate of the deceased for the purpose of making a further claim in his own right against the estate of the deceased. If the plaintiff were appointed as administrator ad litem of the estate, he would have control of any funds paid back into the estate making the risk or potential for maladministration much greater compared to the appointment of an independent administrator.
Conclusion
The application by the plaintiff to be appointed a limited administrator ad litem of the estate of the deceased be dismissed.
Orders
The proceeding be dismissed with costs.
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