Re Vasiliades; Pappas v Vasiliades
[2021] VSC 720
•5 November 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2020 00422
IN THE MATTER of the will and estate of AVGI DEMETRIOS VASILIADES, deceased
-and-
IN THE MATTER of s 34 of the Administration and Probate Act 1958 (Vic) and ss 48 and 51 of the Trustee Act 1958 (Vic)
| XENIA PAPPAS | Plaintiff |
| v | |
| SOCRATES VASILIADES | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 5 November 2021 |
CASE MAY BE CITED AS: | Re Vasiliades; Pappas v Vasiliades |
MEDIUM NEUTRAL CITATION: | [2021] VSC 720 |
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WILLS AND ESTATES — Removal of executor — Multiple grounds alleged for removal — Application dismissed — Administration and Probate Act 1958 (Vic) s 34(1)(a), (c); Trustee Act 1958 (Vic) s 48(1).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Biviano | Costanzo Lawyers Pty Ltd |
| For the Defendant | Ms A Kinda | SGM Legal |
HER HONOUR:
Introduction
Avgi Demetrios Vasiliades (‘the deceased’) died on 14 September 2019 leaving a will dated 27 November 2016 (‘the will’).
The deceased was survived by her four children: Xenia Pappas (‘the plaintiff’), Socrates Vasiliades (‘the defendant’), Maria Porter (‘Maria’) and Vasil Vasiliades (‘Vasil’). Both the defendant and Maria reside outside of Australia.
The will appoints the defendant as executor, with Maria appointed as the substitute executor. The residue of the estate is bequeathed to the deceased’s four children in equal shares absolutely. According to the inventory, the assets of the estate amount to approximately $690,000 comprising funds in a number of bank accounts and a nursing home accommodation bond.
On 29 June 2020 probate of the will was granted to the defendant.
Plaintiff’s application
The plaintiff seeks the removal of the defendant as executor and trustee of the estate of the deceased and the appointment of State Trustees Limited as administrator with the will annexed.
Maria supports the plaintiff’s application. If the application is successful, Maria does not wish to take out a grant as the substitute executor as she lives in the United Kingdom. As the plaintiff and defendant have many disputes, she considers that an independent administrator will avoid dissipation of the assets of the estate.
The defendant opposes the application. Vasil supports the defendant.
Background
Before the death of the deceased, both the plaintiff and the defendant assisted the deceased with her affairs pursuant to a joint financial and medical power of attorney dated 1 July 2012. The plaintiff deposes that notwithstanding the power of attorney, the deceased made her own decisions about the payment of expenses and her financial matters.
The plaintiff deposes that during the deceased’s lifetime, the plaintiff and the defendant had a number of disputes over the management of the deceased’s affairs, including a disagreement concerning a family property held by the plaintiff, Maria and Falconbridge Pty Ltd, a company in which the defendant and Vasil hold indirect interests. This dispute is now the subject of a proceeding in the Victorian Civil and Administrative Appeals Tribunal (‘the VCAT Falconbridge proceeding’).
On 17 October 2019, which was approximately one month after the deceased’s death, the solicitor for the plaintiff wrote to the solicitors for the defendant inviting the defendant to renounce probate due to the irretrievable breakdown of the family relationship between them and the disputes in the VCAT Falconbridge proceeding.
On 30 October 2019 the plaintiff lodged a caveat objecting to a grant of probate to the defendant.
Plaintiff’s initial application
On 29 January 2020 the plaintiff commenced this proceeding by filing an application seeking that the defendant be passed over as an executor of the will of the deceased and that letters of administration be granted to State Trustees Limited. Unusually the application was made pursuant to r 5.02 of the Supreme Court (Administration and Probate) Rules 2014 which provides for grants made in peculiar circumstances, rather than s 15 of the Administration and Probate Act 1958 (Vic).
In support of the passing over application, the plaintiff claims that the defendant:
(a) has remained outside Australia since August 2008;
(b) was subject to proceedings in the Federal Court of Australia commenced by the Commissioner of Taxation in relation to outstanding income tax where he was ordered to repay the Australian Tax Office in excess of $30,000,000;
(c) sought payment of the deceased’s nursing home accommodation bond from the deceased’s nursing home prior to probate being granted; and
(d) is involved in an ongoing dispute with the plaintiff and their siblings in relation to the deceased’s estate and other family assets.
Defendant’s reply
The defendant denied any impropriety and the assertion he is not capable or suitable to be appointed as executor, deposing specifically that:
(a) the orders for repayment of funds to the Australian Taxation Office were appealed with the matter fully and finally settled in March 2018;
(b) the estate includes a property at Lemesos, Zoopigi, Cyprus (‘the Cyprus property’) not included in the plaintiff’s account of the estate assets;
(c) his presence overseas would not hinder his administration of the estate as the assets in Australia are not of a nature that require his personal presence to oversee transactions;
(d) as he is a Cypriot, speaks the language and is currently located in Dubai, he is best suited to administer the Cyprus property; and
(e) in respect of the VCAT Falconbridge proceeding, he is not a director of the company and has no active role in the litigation.
The defendant also raised concerns in relation to the plaintiff’s conduct as the deceased’s attorney whereby certain expenditure was incurred which is now subject of a proceeding in the VCAT (‘the VCAT power of attorney proceeding’).
Plaintiff’s reply
In reply, the plaintiff raised further allegations in respect of the defendant, including:
(a) that the defendant and Vasil attempted to access the deceased’s funds for their own financial benefit;
(b) concerns that the defendant and Vasil will seek to retain estate funds themselves, rather than distribute them equally between the beneficiaries;
(c) the defendant has made attempts to sell the Cyprus property and retain those funds for his benefit;
(d) Falconbridge Pty Ltd has always been treated as the defendant’s company with the shares owned by his daughter; and
(e) the plaintiff has been subject to a number of abusive emails from the defendant and Vasil.
Defendant obtains a grant of probate
On 21 June 2020 the defendant applied for probate of the will of the deceased. By that time the plaintiff’s caveat had lapsed. Probate of the will was granted to the defendant on 29 June 2020.
The plaintiff asserts that the defendant improperly brought the application for a grant without disclosing the existence of the passing over application to the Registrar of Probates. The plaintiff submits this was an abuse of process and the defendant failed in his duty of candour on an ex parte application and the defendant has not properly explained why the proceeding was brought or why the Registrar was not informed of the passing over application.
Plaintiff’s amended application
On 17 August 2020 the plaintiff obtained orders granting her leave to file an amended originating motion and summons, amending the relief sought in this proceeding to seek orders that the defendant be removed as executor and trustee of the estate and the appointment of State Trustees Limited as administrator. Orders were also made for the filing of any further affidavits and submissions and for the application to be determined on the papers. The defendant undertook not to administer or deal with the deceased’s estate, without a further order of this Court or the determination of the proceeding.
Applicable principles
Pursuant to s 34 of the Administration and Probate Act 1958 (Vic), where an executor to whom probate has been granted remains out of Victoria for more than two years or is unfit to act or incapable of acting, the Court may order the removal of the executor and appoint some proper person or trustee company as administrator in place of the executor.[1]
[1]Administration and Probate Act 1958 (Vic) s 34(1)(a), (c).
Pursuant to s 48 of the Trustee Act 1958 (Vic),[2] the Court may make an order appointing a new trustee either in substitution for or in addition to any existing trustee whenever it is expedient to do so.
[2]Trustee Act 1958 (Vic) s 48(1).
An executor or trustee will not necessarily be removed where there is a conflict between duty and interest, but in some cases such conflict may be sufficient. Whether this is so depends on the facts of each case and is a determination to be made at the discretion of the Court after consideration of the interests of the beneficiaries, the security of estate property, the efficient and satisfactory execution of the trusts and a faithful and sound exercise of the powers held by an executor or trustee.[3] Ultimately each case depends on the facts of the matter and what is best for the welfare of the trust or estate as a whole.
[3]Miller v Cameron (1936) 54 CLR 572, 580–1 (Dixon J).
Consideration
The plaintiff relies on a wide range of matters in support of her application to remove the defendant as executor of the estate. More recently, she relies on the defendant bringing his application for a grant of probate without disclosing the existence of the passing over application to the Registrar of Probates, alleging an abuse of process, a failure by the defendant of his duty of candour and that the defendant did not properly explain why the proceeding was brought or why the Registrar was not informed of the passing over application. The plaintiff also relies on the fact that the defendant has remained outside of Australia since August 2008 and is allegedly unfit to act as he has a conflict of interest and his actions during the deceased’s lifetime which the plaintiff claims amount to misconduct.
The recent claim relied on by the plaintiff for the removal of the defendant is not substantiated and must be rejected. The defendant made it clear to the plaintiff that he would seek to obtain a grant of probate. On 20 April 2020 the defendant’s solicitor informed the plaintiff that he intended to apply for a grant of probate. In May 2020 the defendant informed the plaintiff that it was always his intention to apply for a grant of probate and defend the passing over application, notwithstanding that she had lodged a caveat objecting to the grant. By the time the application for the grant was filed, the caveat had lapsed and the Court informed the plaintiff that the grant was made as there was no extant caveat to prevent the grant being made.
The defendant notified the Court as to what had occurred and co-operated with the plaintiff in obtaining orders on 17 August 2020 for leave to be granted to the plaintiff to file an amended originating motion and summons. The defendant also gave an undertaking not to administer or deal with the deceased’s estate, subject to further order or determination of the proceeding. The defendant’s conduct in co-operating with the plaintiff and the Court to remedy the plaintiff’s position is to be commended.
The plaintiff relies on the defendant’s residence outside Australia to remove the defendant as executor of the estate. Section 34(1)(a) of Administration and Probate Act 1958 (Vic) provides that in order for residence outside of Victoria to be a basis for the removal of an executor, two years must have lapsed from the time at which probate was granted. The grant of probate to the defendant was made on 29 June 2020 and the two year period required under the Act has not yet expired. The plaintiff’s reliance on the absence of the defendant from Australia since August 2008 is not a proper basis to rely on for his removal as an executor.
The plaintiff also claims there is a substantial risk with the defendant’s residence outside Australia as he may seek to transfer the estate assets out of the jurisdiction for his own benefit, he will not be in the jurisdiction for any potential litigation against the estate and it would be difficult to enforce orders against the defendant given that he is a foreign resident.
The plaintiff alleges that the defendant attempted to access the deceased’s funds during her lifetime on three occasions to support her claim for removal of the defendant. On balance, the allegations made by the plaintiff are not supported by her evidence and they are not relevant to the removal application.
The plaintiff’s first allegation is that in 2015 the defendant contacted the plaintiff ‘for the purposes of transferring the sum of $30,000 to the deceased’s account and then withdrawn [sic] and paid to Vasil Vasiliades in cash. I refused such request’. The defendant denies that he ever made any such request at all and says that he does not ‘understand what this allegation is about’.11 The plaintiff responded by repeating the allegation. She failed to provide any particulars or evidence in support of the allegation.
The second allegation is that the defendant sought to gain access to the deceased’s nursing home accommodation bond. The plaintiff did not provide the relevant correspondence from the nursing home, Bluecross, but asserts:
on 1 November 2019 [my lawyer] received an email from Blue Cross confirming that they had received correspondence from the defendant, seeking the release of the accommodation bond to him.
The only correspondence from the defendant to Bluecross was in April 2019. The defendant provided the joint power of attorney for the deceased to Bluecross and stated:
Would you kindly note that upon my mothers [sic] death and security deposit will be released [sic] that I must jointly authorize [sic] where the funds should be released to.
The defendant exhibited all his correspondence with Bluecross providing evidence of his communications with them. Correspondence from Bluecross to the plaintiff’s lawyer in November 2019 disclosed that ‘Blue Cross has also received correspondence from Socrates Vasiliades in relation to the accommodation bond’. The plaintiff’s version of the defendant’s dealings with Bluecross in April 2019 is incorrect and despite receiving the correspondence, she did not withdraw her allegation.
The third allegation is that Maria was contacted in March 2019 ‘by relatives in Cyprus informing her that [their] brother Vasil … had asked for a property owned by the deceased to be sold and the proceeds sent to him’. It is apparent that this allegation does not involve the defendant. The defendant also stated that the allegation goes further than the informal translation of the relevant message apparently by Maria to the effect that Vasil had contacted someone ‘to ask if a property […] in the village is valuable because he wants to sell it […] to help his children’. The defendant’s position is that, assuming the report is correct and correctly translated, Vasil asked how much a property was worth and expressed interest in selling it — but did not ask for it ‘to be sold and the proceeds sent to him’.
The plaintiff also claims there is substantial conflict between the parties as a result of the VCAT Falconbridge proceeding. The defendant is a parent of a shareholder of one of the parties and the brother of the director of the company. He is not a party to the proceeding and has no personal interest in it. Further, the estate does not have an interest in the proceeding. The defendant also denied the plaintiff’s allegation that he once gave instructions in the proceeding. This ground is not a proper basis for the defendant’s removal as executor.
The plaintiff claims that the VCAT attorney proceeding is also a basis for removal of the defendant as the defendant is in a position of conflict. In the VCAT attorney proceeding, the defendant questions certain transactions in excess of $88,000 by the plaintiff as the deceased’s attorney and alleges that the plaintiff is in breach of her duty as attorney. The defendant first sought details of the expenditure of the deceased’s funds by the plaintiff during the deceased’s lifetime using the joint power of attorney in April 2017. The plaintiff has not answered the defendant’s enquiries. The plaintiff accepts that she has not provided the details. There is no actual conflict on the part of the defendant in acting as executor and simultaneously pursuing the VCAT attorney proceeding where the defendant alleges that the plaintiff breached her duty as attorney.
More recently, the plaintiff claims that the deceased did not want the defendant to know her financial position. This is surprising given that the deceased had signed a joint financial and medical power of attorney in favour of the defendant in addition to the plaintiff.
Conclusion
The matters raised by the plaintiff in support of her application to remove the defendant as executor, including allegations in respect of the defendant’s application for a grant of probate, do not provide any basis for his removal . The Court will not exercise its discretion to remove the defendant as executor and trustee of the estate and make an order appointing State Trustees in his place.
Orders
The Court will order that subject to any submissions as to costs, the proceeding be dismissed. If the parties are unable to reach agreement on the costs of the proceeding, short written submissions are to be filed within 14 days.
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