Re Steficar
[2024] VSC 560
•13 September 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S PRB 2020 22642
IN THE MATTER of the Will and Estate of Caterina Anne Steficar
- and –
IN THE MATTER of Section 65 of the Administration and Probate Act 1958
BETWEEN:
| ANTHONY PATRICK ABBRUZZESE | Applicant |
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JUDICIAL REGISTRAR: | McCann JR |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 3 September 2024 |
DATE OF JUDGMENT: | 13 September 2024 |
CASE MAY BE CITED AS: | Re Steficar |
MEDIUM NEUTRAL CITATION: | [2024] VSC 560 |
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EXECUTORS COMMISSION – Executor seeks commission at 2 per cent of the corpus of the estate less the legal fees in administration – Executor is not a beneficiary of the estate - Where responding beneficiaries object to a grant of commission – Where responding beneficiaries object to a grant of commission in the quantum sought – Where responding beneficiaries allege a lack of complexity and poor administration – Where the burden of administration is increased by litigation and poor relations – Where the amount sought is just and reasonable in the circumstances.
Administration and Probate Act 1958 s 65.
In the estate of Stone (deceased); Patterson v Halliday [2003] VSC 298; Re Buckingham [2016] VSC 757; 51 VR 453; Re Stuckey; Scholte v Stuckey [2021] VSC 67; Re White; Tweedie v Attorney General [2003] VSC 433; 7 VR 219; Szmulewicz v Recht [2010] VSC 447; Re Mountney [2017] VSC 364; Hawkins v Barkley Brown [2010] NSWSC 48; Richards v Richards [2015] VSC 335.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr N Baum | Maurice Blackburn |
| For the responding beneficiaries Anne-Marie Pauliuk, Samantha Pauliuk and Megan Pauliuk | Mr N Jones | Lewis and Weir |
| For the responding beneficiaries Anthony Charles Sterpin, Jolanda Sterpin and Alexander Sterpin | Ms C Symons | John Dimitropoulos |
TABLE OF CONTENTS
Introduction
Background - Chronology of events
The Applicant’s application for commission
The Grant of Commission
Quantum
The complexity of the administration
Duplication of tasks delegated to professionals
Failure to act impartially
Delay
Decision
JUDICIAL REGISTRAR:
Introduction
The applicant, Anthony Patrick Abbruzzese, is executor of the estate of his late sister, Caterina Anne Steficar (‘the deceased’). By summons filed 4 December 2023, he seeks a commission or a percentage of the estate for his pains and trouble in its administration.[1]
[1]Administration and Probate Act 1958 (Vic), s 65.
There are seven beneficiaries of the estate of the deceased; her three children, Bianca Anne Steficar, Anthony Sterpin and Anne-Marie Pauliuk, and seven grandchildren. The children of Bianca; James, Claudia, and Julian Fraser. The children of Anthony; Yolanda and Alexander Sterpin, and the children of Anne-Marie; Samantha and Megan Pauliuk.
The deceased died on 16 January 2020. Probate of her Will, dated 5 December 2019, was granted following settlement of caveat proceedings on 20 May 2021. That the applicant would seek a commission as assessed and agreed was included in the terms of that settlement.[2] Further notice of the applicant’s intention to seek a commission was included in correspondence to the beneficiaries from October 2021.
[2]Applicant, ‘Affidavit in Support of Application for Commission’ 4 December 2024, 35; Responding Beneficiary Anne-Marie Pauliuk, ‘Affidavit of Anne-Marie Pauliuk’ 24 May 2024, 157.
On 2 November 2023, the applicant’s lawyers wrote to all beneficiaries informing them that the executor was seeking commission in an amount equivalent to 2%. Bianca had previously consented on behalf of herself and her children. On 24 November 2023, James Fraser stated in a letter that he did not consent to the commission.
On 4 December 2023, the applicant filed a summons seeking a commission.
Anthony Sterpin and his children (‘the Sterpin beneficiaries’) and Anne-Marie Pauliuk and her children (‘the Pauliuk beneficiaries’) object to the grant of a commission. Only the Sterpin and Pauliuk beneficiaries played an active part in these proceedings.
The objectors asserted that an executor’s commission was not provided for in the Will, was not what their mother would have wanted, was not agreed to by them and was not warranted as the estate was straightforward. They were critical of various aspects of the administration of the estate and the records kept, arguing that, in consequence of all of these factors, there ought be no commission payable to the applicant or, in the alternative, that it ought to be a lower percentage figure.
For the reasons that follow I find that the applicant should be paid a commission in the amount sought.
Background - Chronology of events
Before turning to a consideration of the submissions made by the applicant and responding beneficiaries and the applicable principle, I will briefly outline the factual background. This is drawn from the affidavit material filed.
The deceased’s eldest children, Anthony Sterpin and Anne-Marie Pauliuk were born during her first marriage to Mr Mario Sterpin. Bianca Anne Steficar was the child of her second marriage.
On 5 December 2019, the deceased made her final Will. It made the following provision from the residuary estate:
(a)40% to her daughter Bianca Anne Steficar;
(b)10% to her son Anthony Sterpin;
(c)10% to her daughter Anne-Marie Pauliuk;
(d)7% to her grandson James Fraser;
(e)7% to her granddaughter Claudia Fraser;
(f)7% to her grandson Julian Fraser;
(g)4.75% to her granddaughter Yolanda Sterpin (also referred to as Jolanda Sterpin);
(h)4.75% to her grandson Alexander Sterpin;
(i)4.75% to Samantha Pauliuk; and
(j)4.75% to her granddaughter Megan Pauliuk.
The Will appointed her brother, the applicant, as executor. He applied for probate on 14 September 2020. The inventory attached itemised and valued the estate as follows:
(a)a property at 61 Kingston Drive, Dingley Village, valued in the inventory at $840,000, and sold by the applicant in August 2021 for $960,000;
(b)a property at 62 Caxton Street, Blairgowrie, valued in the inventory at $650,000, and sold by the applicant in August 2021 for $1,410,000;
(c)money held in accounts with the ANZ, BankWest and CBA totalling $718.735.90;
(d)a Toyota CH-R Koba 2 wheel-drive valued at $25,000, and sold by the applicant on 13 July 2021 for $28,000;
(e)shares held in a CommSec account valued at $1,286.41; and
(f)an ANZ credit card liability of $10,614.43.
There was a penultimate Will, dated 6 May 1986 (‘the penultimate Will’). The penultimate Will divided the estate between Anthony Sterpin, Anne-Marie Pauliuk and Bianca Anne Steficar in equal shares.
On 2 July 2020 Anthony Sterpin filed a caveat in respect of the 5 December 2019 Will. Following mediation, the parties entered terms of settlement that the residuary estate be divided as follows:
(a)26.5% (rather than 40%) to Bianca Anne Steficar;
(b)13% (rather than 10%) to Anthony Sterpin;
(c)20.5% (rather than 10%) to Anne-Marie Pauliuk;
(d)7% to her grandson James Fraser;
(e)7% to her granddaughter Claudia Fraser;
(f)7% to her grandson Julian Fraser;
(g)4.75% to her granddaughter Jolanda Sterpin;
(h)4.75% to her grandson Alexander Sterpin;
(i)4.75% to Samantha Pauliuk; and
(j)4.75% to her granddaughter Megan Pauliuk.
On 18 May 2021 the caveat was withdrawn and on 20 May 2021 probate was granted to the applicant.
Following the grant, the applicant attended to the administration of the estate. The details of the administration accounts are set out in the applicant’s affidavit of verification of administration account filed on 23 November 2023.
The proceeds of the sale of real estate well exceeded the valuations given in the inventory. Both properties sold in August 2021. The Blairgowrie property sold for $1,410,000 and the Dingley property for $960,000. Settlements occurred in late September 2021 and late October 2021, respectively. Interim distributions were made in April 2022 to all but two of the beneficiaries. Distributions to the two Sterpin children were made in March 2024 following the provision of their bank account details. The applicant has retained a balance of $198,967.40 on trust pending the outcome of his claim for a commission.
Notification to the parties of the applicant’s intention to seek a commission was provided in letters to the beneficiaries on 25 October 2021, 3 November 2021, and 15 December 2021. In each of these letters, the amount of commission sought was equivalent to 4% of the gross estate.
On 21 September 2022, lawyers for the applicant wrote to all beneficiaries informing them that the executor was seeking commission valued at 2.5% of the gross assets in the corpus account of the estate, less the value of the work that the executor delegated to his solicitors and charged to the estate.
On 27 October 2022, Bianca Anne Steficar consented to the allowance of commission sought on behalf of herself and her three children Julian, Claudia, and James Fraser
On 2 November 2023 the applicant sent his last letter in respect of the commission. In it, he sought 2% of the corpus of the estate less the legal fees in administration. This amounts to $50,149.29. On 4 December 2023 he filed a summons seeking this amount.
In her affidavit objecting to the commission sought, Anne-Marie is explicit about the fractured relations between herself and Anthony Sterpin with the applicant and Bianca stating ‘[u]nfortunately there was a falling out between [the executor] and [Bianca] with both my brother Anthony Sterpin and myself not long after [the deceased] passed’.[3]
[3]Responding Beneficiary Anne-Marie Pauliuk, ‘Affidavit of Anne-Marie Pauliuk’ 24 May 2024, 5 [12].
Annexed to this affidavit is correspondence about both the commission and the administration of the estate. In correspondence to lawyers for the applicant dated 1 September 2021, lawyers for Anne-Marie state ‘[t]he reality is that [Anne-Marie] does not trust the Executor as it would appear from the sale of the Blairgowrie property that he does not understand his fiduciary duties to the beneficiaries.’[4]
[4]Ibid 110.
The fractured relationship, the mistrust and suspicion are also apparent in the content and tone of much of the correspondence exchanged. The reasons for the fracture and the mistrust are not explained. I surmise it is, at least in part, because of the terms of the last Will of the deceased.
The Applicant’s application for commission
The applicant and the Pauliuk and Sterpin beneficiaries filed submissions in support of their positions on the question of the granting of a commission and the quantum. I have had regard to the oral submissions made at the hearing and the following documents filed:
(a)applicant’s submissions in support of application for commission dated 24 June 2024;
(b)Submissions on behalf of Anne-Marie Pauliuk, Samantha Pauliuk and Megan Pauliuk dated 20 June 2024;
(c)submissions in reply to oppose commission on behalf of Anne-Marie Pauliuk, Samantha Pauliuk and Megan Pauliuk dated 8 July 2024; and
(d)outline of submissions filed on behalf of interested beneficiaries Anthony Charles Sterpin, Jolanda Sterpin and Alexander Sterpin dated 9 July 2024.
The Grant of Commission
Section 65 of the Administration and Probate Act1958 (Vic) provides:
it shall be lawful for the Court to allow out of the assets of any deceased person to his executor ... such commission or percentage not exceeding Five per centum for his pains and trouble as is just and reasonable.
The language is a little old fashioned. It has been considered in a number of cases. ‘Pains’ is the ‘responsibility, anxiety, and worry’ connected to the role of executor and ‘trouble’ is the actual practical work of the administration.[5]
[5]In the estate of Stone (deceased); Patterson v Halliday [2003] VSC 298 (‘Patterson’); Re Buckingham [2016] VSC 757; 51 VR 453 (‘Re Buckingham’).
The general approach has been that, in the absence of evidence to the contrary, it will be presumed that there has been a proper administration of the estate, and the executor will be awarded a commission.[6]
[6]See Re Stuckey; Scholte v Stuckey [2021] VSC 67, [16].
Both the Pauliuk and the Sterpin beneficiaries relied upon excerpts from the reasons of McMillan J in the case of Re: Buckingham:
There is no automatic entitlement to executor’s commission. An executor is generally expected to act gratuitously and, in most cases, an executor will act gratuitously, especially where he or she is also a beneficiary under the will.
The exceptions to an executor acting gratuitously are where the will includes a clause entitling the executor to commission, the affected beneficiaries agree to the payment of commission or where an application is made to Court for commission pursuant to s 65 of the Administration and Probate Act 1958 (‘the Act’).
The applicant is not a beneficiary under the Will and there is no clause in the will entitling the executor to a commission. A clause in the schedule to the deed of settlement in May 2021 allowed for a commission to be paid as assessed and agreed. There has obviously been no agreement.
Both the Pauliuk and Sterpin beneficiaries submitted that there are a number of factors which ought to be considered by the Court as disentitling the applicant to any commission but which, in the event that I decided that the applicant should receive a commission, ought reduce the percentage that is allowed.
These factors can be summarised as follows:
(a)the estate administration was simple, consisting of two properties, a car, some shares, and cash at bank;
(b)there was litigation but this was resolved at a mediation that the applicant did not attend;
(c)the pains and troubles tasks enumerated in the applicant’s affidavit include a ‘large’ number of tasks that were attendances on solicitors and amount to duplication or the delegation of tasks;
(d)two of the recorded attendances in the applicant’s affidavit are meetings that included Bianca, demonstrating that the applicant was not acting impartially; and
(e)the delay in distribution and/or the failure to place the estate funds in an interest-bearing account between settlement in October 2021 and distribution in April 2022 was a failure to properly administer the estate.
In Re White; Tweedie v Attorney General, Kellam J held that if the Court is satisfied that there has been no impropriety or maladministration, ‘in a proper case’ as a matter of statutory construction ‘[s 65] grants [the Court] an unfettered discretion to allow such remuneration as is fair, just and reasonable in all of the circumstances of the case’.[7]
[7][2003] VSC 433; 7 VR 219, [52].
The matters raised by the Pauliuk and Sterpin beneficiaries are relevant to an assessment of the quantum of a commission, and I will consider them in this context below. They do not rise to the level of disentitling the applicant of any commission.
Quantum
Although s 65 provides that a commission for an executor should not exceed 5%, in practice, 3.5% of the corpus tends to be the top of the scale.[8]
[8]Szmulewicz v Recht [2010] VSC 447, [18]; Re Mountney [2017] VSC 364, [50].
In his correspondence with the beneficiaries requesting a commission, the applicant initially sought 4%. As already noted, the amount sought in the executors application is 2%.
In the exercise of its discretion, in the assessment of commission, the Court will consider “at least the following:
(a)the work and judgment involved in the realisation of assets and earning income,
(b)the extent of administrative activities,
(c)the responsibility generally,
(d)the amount of work done not reflected in financial terms,
(e)how long the estate was administered,
(f)the size of the estate and its capacity to pay,
(g)the work of a non-professional character not undertaken by the applicant and performed by professionals,
(h)executors’ pains and troubles relative to the result.”[9]; and
(i)the conflict experienced and litigation necessary in the administration of the estate.[10]
[9]In the estate of Stone (deceased); Patterson v Halliday [2003] VSC 298, [27].
[10]Hawkins v Barkley Brown [2010] NSWSC 48, [53]; Richards v Richards [2015] VSC 335, [30].
What is said on behalf of the Pauliuk and Sterpin beneficiaries as to quantum is a recitation of what was said on the issue of commission itself and are set out in paragraph 25 above.
The complexity of the administration
The applicant was responsible for the work involved and judgment exercised in the sale of two properties. One outside suburban Melbourne. He was responsible for doing so during COVID-19 restrictions and lockdowns; a time of considerable uncertainty and stress in the community. Although estate agents were engaged to conduct the campaigns in relation to both sales, it is apparent from correspondence that he was required to exercise judgment and prepare each property. He also attended to instructing his solicitors with updates on progress for the Pauliuk and Sterpin beneficiaries. These demands were part of his burden of work as executor.
The Pauliuk and Sterpin beneficiaries’ suspicion and mistrust of the applicant is articulated in the material filed with the court. This suspicion may derive from the falling out between them described by Anne-Marie in her affidavit or, as I have already surmised, just from the terms of the Will. The mistrust, occasionally manifested as hostility in communications in relation to the estate has, in my view, added to the complexity and burden of the executor’s task.
Duplication of tasks delegated to professionals
In a table at paragraph 30 of his affidavit, the applicant provides a log of executor activities undertaken by him on behalf of the estate. The Pauliuk and Sterpin beneficiaries question attendances on his solicitors in relation to activities undertaken by his solicitors.
During the hearing, counsel for Anne-Marie questioned the veracity of some of the entries contained in the log and asked where was the original source of the information for the entries. The table logging the activities was the sworn evidence of the applicant. No request or application was made by the objecting beneficiaries for original records, nor did counsel for either group of objectors seek to cross examine the applicant although he was present in Court. Additionally, I note that the table in the affidavit contained a level of detail that spoke to its veracity. Consequently, I accept its contents.
It is appropriate for an executor to consult with legal representatives in the administration of an estate; to provide them with instructions for tasks to be undertaken and to seek advice. There is nothing in the log of actions that appears on its face to be a duplication of effort.
Failure to act impartially
The allegation of impartiality made by the Sterpin beneficiaries was based on the record of two consultations between the applicant, his lawyers and Bianca ahead of the mediation. It was apparent from the correspondence that, for the duration of the administration of the estate, the Pauliuk and Sterpin beneficiaries had little or no trust in the executor which can likely be traced back to the falling out of the applicant and Bianca with the Sterpin and Pauliuk beneficiaries. It is difficult to conclude partiality from the bare evidence of the recorded attendance, which without more can be understood to be appropriate given the issues with the Will and the estate at the time. The executor convened with the beneficiary of the larger share of the estate ahead of a mediation which concluded with a redistribution of the estate that favoured the other beneficiaries.
Delay
The assets of the estate had been called in by late October 2021. Probate was granted in May 2021. The earliest that there could have been a distribution was November 2021. The majority of the estate was distributed by 26 April 2022.
The last distributions were not made until April 2024. These were to the children of Anthony Sterpin and were made once their bank details were provided to the applicant in March 2024. The lack of those bank details is understood to be the reason for the delay.
The balance of the estate to be distributed now stands at $198,967.40. It is held on trust until the determination of the commission application.
Management of the funds in the estate in the best interests of the beneficiaries would involve investment to earn income. The failure to do so does not, in my view, amount to poor administration, particularly in circumstances where the delays (November 2021 until April 2022, or November 2021 until March 2024) or their duration could not be anticipated.
Further to their submission that the quantum of the commission allowed to the applicant should be less than 2%, counsel for the Pauliuk beneficiaries submitted that it should be no more than 1%. There were no further submissions to assist the Court in assessing this figure. I note that this would amount to $30,466.86.
Decision
The composition of the deceased’s estate may have been straightforward. Its administration still required the dedication of time and effort by the executor; to the resolution of a claim brought against it, the sale of two properties (one outside Melbourne) and the regular reporting and communication with the beneficiaries in relation to progress. Reporting occurred fortnightly until settlement and distribution, via solicitors. The damaged and broken relations and mistrust between the parties increased the burden of the work for the executor.
The amount sought by the applicant, $50,149.29, expressed as 2% less the amount attributable to his legal representatives in administering the estate, is in fact a commission of 1.64%. I find that it is a just and reasonable amount in the circumstances.
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