Robert Peter Gerarchi as Executor of the Estate of Peter Pasquale Gerarchi v Gerarchi [No 2]

[2025] WASC 190

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   ROBERT PETER GERARCHI as Executor of the Estate of PETER PASQUALE GERARCHI -v- GERARCHI [No 2] [2025] WASC 190

CORAM:   MASTER RUSSELL

HEARD:   13 JUNE 2024

DELIVERED          :   21 MAY 2025

FILE NO/S:   CIV 1268 of 2023

BETWEEN:   ROBERT PETER GERARCHI as Executor of the Estate of PETER PASQUALE GERARCHI

Plaintiff

AND

MARIA GRACE GERARCHI

First Defendant

PAUL GREGORY GERARCHI

Second Defendant

Catchwords:

Practice and procedure - Costs - Proceeding discontinued - No determination on the merits - Whether plaintiff executor acted unreasonably and should pay the costs of adjourned special appointment - Turns on own facts

Legislation:

Administration Act 1903 (WA) s 45, s 45(1)
Rules of the Supreme Court 1971 (WA) O 23 r 2(3), O 66 r 1, O 66 r 9(2)
Supreme Court Act 1935 (WA) s 37

Trustees Act 1962 (WA) s 89, s 89(1), s 92

Result:

The parties' costs of the proceeding, including those reserved on 4 May 2023 and the costs of and incidental to the special appointment on 15 June 2023, be paid from the estate of Peter Pasquale Gerarchi on a solicitor‑client basis

Category:    B

Representation:

Counsel:

Plaintiff	:	Mr S R Pack
First Defendant	:	No appearance
Second Defendant	:	Mr T M Clavey

Solicitors:

Plaintiff	:	Birman & Ride
First Defendant	:	No appearance
Second Defendant	:	Edwards Lockhart

Cases referred to in decision(s):

Hughes v St Barbara Ltd [2011] WASCA 234 (S)

Nobarani v Mariconte [No 2] [2018] HCA 49; (2018) 360 ALR 390

Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164

Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72

Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622

Robert Peter Gerarchi as Executor of the Estate of Peter Pasquale Gerarchi v Gerarchi [2023] WASC 242

Sons of Gwalia Ltd v Margaretic [2006] FCAFC 92; (2006) 232 ALR 119

Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388

MASTER RUSSELL:

Introduction

1. The plaintiff, Robert Peter Gerarchi, and the second defendant, Paul Gregory Gerarchi, are brothers.

2. The plaintiff is the executor of the estate of the parties' late father, Peter Pasquale Gerarchi (Deceased), who died on 13 December 2016.

3. The Deceased was survived by his wife, the first defendant, Maria Grace Gerarchi.

4. With no disrespect, given they each share the same surname, I will refer to the parties by their first names.

5. By his will, the Deceased created a life interest in favour of Maria in the property at 11 Lombardy Street, Woodlands (Property) and gave the residue of the estate (including the Property after Maria's death) to Robert and Paul.

6. Due to Maria's advanced years, and significant cognitive impairment due to dementia, she was no longer able to live at the Property and had moved into a nursing home leaving the Property vacant.

7. By originating summons filed on 20 March 2023, as amended on 6 June 2023 (Application), Robert (in his capacity as executor of the Deceased's estate)[1] applied pursuant to s 45 of the Administration Act 1903 (WA), s 89(1) and s 92 of the Trustees Act 1962 (WA) for:

   (a)a declaration that he was justified in selling the Property; and

   (b)a direction as to the distribution of the income derived from the net proceeds of the sale of the Property to Maria during her lifetime and, on her passing, distribution of the net proceeds of the sale pursuant to the terms of the Deceased's will.

   [1] In referring to Robert in the balance of these reasons, I do so in his capacity as executor of the Deceased's estate.

8. Paul opposed the Application. Orders were made at a directions hearing on 4 May 2023 programming the Application to a hearing.  Costs of the directions hearing were reserved.

9. The Application was heard by Master Sanderson at a special appointment on 15 June 2023 (Special Appointment). The Master delivered reasons for decision on 30 June 2023: Robert Peter Gerarchi as Executor of the Estate of Peter Pasquale Gerarchi v Gerarchi [2023] WASC 242.

10. Paul's primary opposition to the Application was that neither s 89(1) of the Trustees Act nor s 45(1) of the Administration Act allowed the court to make an order authorising the sale of a property where the beneficiary had a life interest, and the sale was not authorised under the terms of the trust.[2] 

    [2] Robert Peter Gerarchi as Executor of the Estate of Peter Pasquale Gerarchi v Gerarchi [2023] WASC 242 (Gerarchi v Gerarchi) [12].

11. It was submitted on Paul's behalf that, if the court was satisfied it could make an order of the kind sought, there was insufficient material before the court to determine whether a sale could be authorised. This included evidence concerning issues Paul had raised about other property that had been owned by Maria and transferred to Robert, Maria's assets, liabilities and future expenses, and about deterioration of the Property such that it was not able to be rented.[3]

    [3] Gerarchi v Gerarchi [12], [19] - [21].

12. The Master was satisfied that s 89(1) of the Trustees Act allows the court, in certain circumstances, to make an order allowing the sale of trust property over which a party holds a life interest. He was not satisfied that the evidence adduced was sufficient to allow him to form an opinion as to whether the Property ought to be sold. The Application was adjourned to provide Robert the opportunity to put on further evidence, and the costs of the Application were reserved to be determined when the Application was finally resolved.

13. A little over eight weeks later, on 29 August 2023, Maria passed away.  As such, her life tenancy of the Property terminated and the need for the orders sought in the Application fell away. The Property was sold in March 2024.[4]

    [4] Affidavit of Nigel Jerome Siegwart sworn 6 June 2025 [1], 'NJS1'.

14. On 28 March 2024, I made orders by consent that the plaintiff have leave to discontinue the proceeding, leaving the issue of costs to be determined.

15. The parties subsequently filed competing minutes of proposed orders as to costs and outlines of submissions in support of the orders sought. After hearing from the parties in relation to costs, I reserved my decision.

16. For the reasons that follow, I am not satisfied that this is a case in which the executor has acted unreasonably, and I have determined that Robert's costs and Paul's costs of the proceeding, including those reserved on 4 May 2023 and the costs of and incidental to the special appointment on 15 June 2023, should be paid from the Deceased's estate on a solicitor‑client basis.

Applicable principles as to costs

1. The principles to be applied in relation to costs are settled and were not in dispute.

2. Under s 37 of the Supreme Court Act 1935 (WA), the court has a wide discretion to award costs. The discretion is not unfettered and must be exercised judicially. Costs will usually follow the event so that generally the court will order that the successful party to any action or matter recover their costs, unless there is reason to depart from the ordinary course, such as a party having acted unreasonably in some way or causing unnecessary or unreasonable costs to be incurred.[5]

   [5] Rules of the Supreme Court 1971 (WA), O 66 r 1; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [21] ‑ [22], [134] and Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 [24] - [25]; Hughes v St Barbara Ltd [2011] WASCA 234 (S) [5] and Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388 [48] - [50].

3. In this case, the proceeding has been discontinued by consent, and the hearing of the balance of the Application was adjourned with no determination of its merits.

4. Order 23 rule 2(3) of the Rules of the Supreme Court 1971 (WA) (RSC) provides that the Court may order that an action be discontinued upon such terms as to costs as may be just. 

5. In Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin,[6] the High Court stated, in effect, that where there has been no hearing on the merits, if both parties acted reasonably in commencing and defending the proceeding and continued to be reasonable until the litigation settled or became futile, the proper exercise of the courts discretion will usually mean the court will make no order as to the costs of the proceeding.

   [6] Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, (Lai Qin) 624 - 625.

6. Each case must, of course, be considered on its own facts and circumstances.  There are cases in which a party has acted reasonably but in the circumstances of the case they were ordered to pay the other party's costs.

7. The general rule concerning executors is that costs properly and reasonably incurred by the executor in connection with the administration of the estate, including legal costs, are payable from the estate.[7]

   [7] Nobarani v Mariconte [No 2] [2018] HCA 49; (2018) 360 ALR 390 [2].

8. It is not in dispute that an executor may be indemnified out of the estate for liabilities properly incurred in the performance of their duties. Order 66 rule 9(2) RSC provides that where a person is or has been a party to proceedings in the capacity of a personal representative that party shall, unless the court orders otherwise, be entitled to the cost of the proceeding, insofar as they are not recovered from or paid for by any other person, out of the fund held by the personal representative.

9. In a dispute involving a trust or deceased estate, absent unreasonable conduct, the costs of the trustee, administrator or executor and of the parties may generally be treated as having been incurred for the benefit of the estate and be ordered to be paid out of the estate on a solicitor‑client basis.[8]

   [8] Sons of Gwalia Ltd (Subject to Deed of Company Arrangement) v Margaretic [2006] FCAFC 92; (2006) 232 ALR 119 [5] - [7], and the authorities referred to.

The parties' respective positions as to costs

1. It is not suggested that the proceeding as a whole was unreasonably or improperly brought. There is no dispute between the parties that the costs of the proceeding, including those reserved on 4 May 2023, be paid from the Deceased's estate on a solicitor‑client basis.

2. The dispute between the parties and the issue to be determined concerns the costs of and incidental to the Special Appointment.

3. I do not repeat the parties' submissions, they are set out in the written submissions filed be each of them, as supplemented in oral argument. What follows is a summary.

Robert's position

1. Robert submits that where, as in this case, there has been no determination on the merits, it is usually appropriate to make no order as to costs between the parties unless one party acted unreasonably or was almost certain to have failed if the matter had been tried.[9]

   [9] Lai Qin, 624 - 625.

2. He says, in effect, the reason for the discontinuance is that the life tenancy which necessitated the Application has come to an end through the supervening event of Maria's passing, and the appropriate order in the circumstances is no order as to costs as between the parties.

3. As to his costs in his capacity as executor, it is submitted that Robert acted reasonably in seeking the assistance of the court for orders allowing him to sell the Property. He relies on O 66 r 9(2) RSC and seeks an order that his costs be paid from the Deceased's estate on a solicitor‑client basis. He does not oppose an order that Paul's costs of the proceeding be paid from the Deceased's estate on a solicitor‑client basis.

4. In relation to the Special Appointment, it was submitted that the two live controversies between the parties were:

   1.Whether the court had the power to make an order of the kind sought, in circumstances where the will provided for a life interest and did not provide a power of sale.

   2.If the court did have power to make such an order, whether it was appropriate to exercise it in the way sought.  

5. There was also an issue as to whether there was sufficient evidence for the court to form an opinion as to whether the Property should be sold.

6. The Master determined that the Court had power under s 89(1) of the Trustees Act, to make an order for sale of trust property over which a party holds a life interest. Robert was successful to that extent.

7. It was submitted on behalf of Robert that some of the issues raised by Paul related to Robert's management of Maria's estate in his capacity as her guardian, as distinct from matters relating to the sale of the Property, in respect of which the directions were sought. Robert's lawyers took a narrower view of the evidence that would ultimately be required for the court to determine whether Robert would be justified in selling the Property. They submit it was not unreasonable to have taken the approach they did in circumstances where, as a necessary first step, there was a real and novel question as to the court's power to make the orders sought. If the court had resolved it did not have power, the costs of producing the further evidence would have been wasted.

8. In the circumstances, Robert submits there is no reason why his costs should not be paid from the Deceased's estate on a solicitor‑client basis.

Paul's position

1. Paul's position is that the hearing of the Application at the Special Appointment and the associated costs were wasted because Robert had failed to file adequate affidavit material. 

2. It is submitted that Robert was on notice of the questions raised by Paul before the commencement of the proceeding, which were relevant to Maria's financial standing and need, and to a determination of whether it was expedient and in her interests for the Property to be sold. No explanation has been provided by Robert as to why those questions were not addressed in his supporting affidavit and it was obvious that the evidence provided was insufficient. Paul says that Robert was granted an indulgence when given the opportunity to produce further evidence and did not take up that opportunity. 

3. It is submitted on Paul's behalf that Robert is responsible for the adjournment of the Application, and it not being determined prior to Maria's passing.  The substantive question raised by the Application has not been decided because Robert failed to provide sufficient evidence, despite having been given the opportunity to do so at the directions hearing on 4 May 2023, and following delivery of the reasons for decision on 30 June 2023.

4. Paul's position is that neither he nor the Deceased's estate should bear the costs of and incidental to the Special Appointment. He contends that Robert's conduct of the Application has caused wasted costs, which he says were not executor's costs properly or reasonably incurred, and Robert should be denied recovery of those costs.

5. Paul submits that the court should exercise its discretion to order that Robert pay Paul's costs of the Special Appointment and those incidental to it, to be taxed if not agreed. Further, Paul seeks an order that his costs of the proceeding that are not covered by such order be paid from the Deceased's estate on a solicitor‑client basis.

Determination

1. Paul's primary opposition to the Application was that neither s 89(1) of the Trustees Act nor s 45(1) of the Administration Act allowed the court to make an order authorising the sale of a property where the beneficiary had a life interest, and the sale was not authorised under the terms of the trust. 

2. It was submitted on his behalf that, if the court accepted that, the Application should be dismissed. If the court was satisfied it could make an order of the kind sought, Paul submitted there was insufficient material before the court to properly determine whether a sale could be authorised, and he agreed the Application should be adjourned for further evidence to be filed.[10]

   [10] Gerarchi v Gerarchi [12].

3. As referred to, the evidence Paul submitted should be before the court, and was not, related to questions he had raised about other property that had been owned by Maria, which had been transferred to Robert, Maria's financial position and needs, deterioration of the Property and why it was not able to be rented, amongst other matters.

4. Having regard to the Master's reasons, I accept the submissions made on behalf of Robert to the effect there was a real issue and novelty as to whether the court had power to make an order or give a direction of the kind sought, in the circumstances.

5. The Master stated in his reasons that there appears to be no decision in this State as to the proper interpretation of s 89(1) of the Trustees Act.[11] During the course of argument at the Special Appointment, the Master was only referred to one authority in which a similar issue had been raised.[12] That case concerned s 81 of the Trustees Act 1925 (NSW), which the Master referred to as the analogue of s 89 of the Trustees Act.  Having regard to the facts of that case, the Master did not find it to be of assistance.[13]

   [11] Gerarchi v Gerarchi [13].

   [12] Ellis v Ellis (2012) NSWSC 1414.

   [13] Gerarchi v Gerarchi [16].

6. Ultimately, the Master was satisfied that s 89(1) of the Trustees Act allows the court in certain circumstances to make an order for the sale of trust property over which a party holds a life interest. He stated that the court would be required to form an opinion and, in effect, that the same type of requirements would apply as for an application for judicial advice under the Trustees Act or the Administration Act.[14]

   [14] Gerarchi v Gerarchi [17].

7. The Master found that Robert (as the trustee) had formed the view it is expedient for the Property to be sold, there was nothing in the evidence to show he was not entitled to form that opinion, and the will did not contain a power of sale. He concluded that, in this case, the question to be asked and determined is whether the court is of the opinion the sale of the Property is expedient in the administration of the trust or in the best interests of the beneficiary, and does the trustee lack the power to effect sale?[15]

   [15] Gerarchi v Gerarchi [17].

8. The Master was satisfied without reference to the evidence that there was a lack of power, leaving the question of whether the sale of the Property is expedient in the administration of the trust or in the best interests of the beneficiary.[16] He was not satisfied that Robert had produced sufficient evidence to allow him to form an opinion that the Property ought to be sold, noting that was not to say the evidence was not available but was not presently before the court.[17]

   [16] Gerarchi v Gerarchi [18].

   [17] Gerarchi v Gerarchi [19] - [21].

9. The Application was adjourned to give Robert the opportunity to produce further evidence, and the costs reserved to be determined when the Application was finally resolved.[18]

   [18] Gerarchi v Gerarchi [22] - [23].

10. As things have transpired, the Application has not been finally resolved, and it has not been necessary for any further evidence to be filed or for there to be a determination of the remaining issue on the merits.

11. I am satisfied that Robert acted reasonably in commencing the proceeding. In his capacity as executor of the Deceased's estate, he sought orders and directions in relation to the Property, having formed the opinion that it was expedient for the Property to be sold.  The Master observed in his reasons that there was nothing in the evidence to show that Robert was not entitled to form that opinion.[19] He could not proceed to sell the Property otherwise.

    [19] Gerarchi v Gerarchi [17].

12. Although it was necessary to adjourn the Application for further evidence to be filed, in my view, the Special Appointment and the costs incidental to it were not wasted. The court resolved the question of whether it had power to give a direction as to whether the plaintiff could sell the property in the circumstances where Maria had a life interest and there was no power in the will to do so.

1. In the end, the Application had to be adjourned for further evidence to be filed to determine whether the direction sought should be made. However, the costs of preparing and producing that evidence and of responding to it were not ultimately incurred.

2. Even if Robert had produced the evidence in the eight weeks that elapsed before Maria's passing, it was ultimately not necessary for the Application to proceed. The Property then formed part of the residuary estate and has been sold.

3. Robert's conduct is not such, in my view, as to justify a departure from the usual course. The appropriate order is that his costs of the proceeding, including those reserved on 4 May 2023, and the costs of and incidental to the Special Appointment, be paid from the Deceased's estate on a solicitor‑client basis.

4. Robert does not oppose an order that Paul's costs of the proceeding be paid out of the estate on a solicitor‑client basis. I am satisfied that such an order is appropriate. Paul was a necessary party to the proceeding and his costs should be treated as having been incurred for the benefit of the estate and paid out of the estate on that basis.

5. In each case, the onus of establishing that the costs to be paid out of the estate are reasonable in amount and have been reasonably incurred rests with the party seeking payment.

Conclusion and orders

1. For these reasons, subject to any matters the parties seek to be heard on as to the final form of the orders, I will order that:

   1.The plaintiff's and the second defendant's costs of the proceeding, including those reserved on 4 May 2023 and the costs of and incidental to the special appointment on 15 June 2023, be paid from the estate of Peter Pasquale Gerarchi on a solicitor‑client basis.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

MM

Acting Associate to Master Russell

21 MAY 2025