Szabo v Balogh

[2007] VSC 232

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 6321 of 2007

STEPHEN SZABO	Plaintiff
v
VICTORIA BALOGH	Defendant

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JUDGE:	HABERSBERGER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	23 MAY 2007
DATE OF JUDGMENT:	23 MAY 2007
CASE MAY BE CITED AS:	SZABO v BALOGH
MEDIUM NEUTRAL CITATION:	[2007] VSC 232

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PROBATE – conflict between co-executors, plaintiff and defendant – defendant resident in property forming substantial part of estate – judgment for possession of that property previously obtained by plaintiff when he was sole executor – property sold at auction by plaintiff despite objections by defendant who was, by then, a co-executor – defendant refusing to sign transfer of land - declaration that defendant refused order to sign transfer of land –transfer of land be executed by the Prothonotary in the event

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr SGR Wilmoth	Theo Fleming & Associates
For the Defendant	In person, accompanied by Mr McClure with leave

HIS HONOUR:

1. By an originating motion filed on 11 May 2007, the plaintiff sought a declaration that execution by him as co-executor with the defendant of the estate of Maria Balogh, deceased, and as transferor of a transfer of land of the estate's property situated at 16 Joffre Street, Croydon, Victoria, being the whole of the land more particularly described in Certificate of Title Volume 07690 Folio 162, be valid and sufficient execution of the transfer of the property by the estate to a purchaser of the property.  The notice of motion sought, in paragraph 2, that the defendant be and is hereby directed to execute the transfer of land of the property;  and, in paragraph 3, alternatively, if the defendant failed or refused to comply with that order, an order that the transfer of land be executed by the Prothonotary of this court or his deputy.

1. The history of the matter is long and detailed and it has been very difficult to obtain a grasp of all the material.  However, I believe that I now have sufficient understanding of the history to proceed to decide this matter.

1. The late Maria Balogh had a son, Stephen Szabo, the plaintiff, and a daughter, Victoria Maria Balogh, the defendant.  As I understand it, they are half brother and sister.  The late Mrs Balogh died on 2 January 2004, leaving a will dated 18 February 1988.  In that will, she appointed her husband as her executor, but, if he did not survive her, then she appointed her son, Stephen Szabo, and her daughter, Victoria Maria Balogh, to be the executor and executrix and trustees of her will and estate.  The will then provided that the testatrix gave the whole of her estate to her trustee upon trust: 

(i)to convert the same into money by sale or otherwise with power nevertheless to postpone the sale and conversion of any part thereof and to retain any part of the estate in the state of investment in which it was at her death, no matter how wasting or hazardous the same may be without being responsible for loss; 

(ii)to pay thereout all my just debts, funeral and testamentary expenses, state probate and federal estate duties and any duties on any notional estate;

(iii)     to divide the residue equally between Mr Szabo and Ms Balogh. 

1. In 2005, Mr Szabo was granted probate, with leave reserved to Ms Balogh to come in as executrix. 

1. The estate substantially consisted of the property at Joffre Street, Croydon and Ms Balogh had been living in that property since the death of her mother.  By an originating motion dated 10 October 2006, Mr Szabo commenced proceedings seeking possession of the Joffre Street property in order that it be sold.  He filed an affidavit in support sworn on 22 September 2006.  Ms Balogh swore an affidavit in response to the application on 24 October 2006, in which she made complaint about Mr Szabo's conduct in obtaining probate in his own name, rather than jointly.  Notwithstanding that the originating motion named the return date as 27 October 2006, and that Ms Balogh had solicitors acting for her, there was no appearance for Ms Balogh by or for her on that day.  She informed me that she was not told by her solicitor that the matter was to proceed in court on that day.  In her absence, judgment was entered in favour of the plaintiff recovering possession of the property.

1. In November 2006, Ms Balogh, exercising the right reserved to her under the previous grant of probate, was appointed a co-executor of the estate of her late mother.  Despite the fact that she was aware of the judgment for possession, no step was taken to set aside the order for possession.  Nevertheless, Ms Balogh remained in the home.  According to the affidavit of Mr Theo Fleming sworn 9 May 2007 in this proceeding, the defendant's solicitor was notified of the obtaining of the judgment by a letter dated 31 October 2006 and there was a request that she vacate the Croydon property by 30 November 2006.  An authenticated copy of the order was forwarded to the defendant's solicitor by letter dated 22 November 2006 and it was stated that the plaintiff would seek a warrant for possession if the defendant failed to vacate the Croydon property by 30 November 2006.  Mr Fleming deposed that Ms Balogh had previously requested that Bell Real Estate be the selling agent of the Croydon property. On or about 24 November 2006, the plaintiff signed an exclusive sale authority for the sale of the Croydon property by auction with Bell Real Estate.  By that stage, Ms Balogh was, of course, a co-executor, and I will refer in due course to the position of a co-executor acting on his or her own account. 

1. A warrant for possession was issued on 11 December 2006, the defendant not having vacated the property.  There was then further correspondence from the defendant's solicitor in which it was said that she would vacate the property by 23 January 2007.  Correspondence between different firms of solicitors engaged by the defendant then ensued. But, by a letter dated 24 January 2007, Mr Fleming set out in some detail what he understood from his discussions with the defendant's solicitor was the agreed course of action, namely, that the defendant was to continue to reside in the property, she was to cooperate in the proposed sale of the property, that Bell Real Estate were to be the selling agent, the sale was to be by auction, and the property was to sell to the highest bidder on the day of the auction.  Both the plaintiff and the defendant were to sign the contract of sale but, should either one of them not do so, then the other could sign on the part of the defaulter.  The defendant was to vacate the property upon its sale, and there was to be a sum of $5,000 for each of the plaintiff and the defendant released from the deposit moneys paid by a purchaser to enable the defendant to pay for alternative accommodation, and on that basis, the plaintiff was to arrange for a stay of execution of the warrant for possession.  That letter concluded with a request that a copy be signed by the defendant and returned as an indication of her consent to the agreement that I have summarised above.  The letter was signed by Ms Balogh and returned to the plaintiff's solicitors. 

1. The date of auction was set for 10 March 2007 and, although she had signed an agent's authority in favour of Bell Real Estate, Ms Balogh subsequently wrote to Mr George Smith of Bell Real Estate by a letter dated 25 February 2007 saying that she was sacking them.  In some of the correspondence exhibited to Mr Fleming's affidavit there is quite a detailed description of the difficulties encountered by the agent in trying to show prospective purchasers through the property. The defendant exhibited a complete lack of cooperation and showed absolutely no willingness to sell the property.  What was said to me in argument today was that she did not want to proceed and that therefore, as a co-executor, she was entitled to cancel the sale.  Difficulties were also encountered with the defendant when the auction was held on 10 March.  Police officers attended.  According to Mr Fleming's affidavit, the auction proceeded some 40 minutes after its scheduled time of 11 a.m. and with the police still in attendance and standing very close to the defendant.  Mr Fleming said that, by that time, the reasonably large crowd had dispersed, leaving four people who partook in the bidding, together with a few onlookers.  The property was sold at the auction for the sum of $343,000.  The defendant refused to sign the contract of sale on that day and has subsequently refused to sign any transfer. 

1. In the hearing before me today, Ms Balogh indicated that she would have liked to purchase the property but that she was told by the police that she was not to say anything, and therefore she did not bid.  The defendant had had months since the judgment for possession was obtained against her to negotiate with her co-executor in an attempt to purchase the property from him.  As far as I am aware, there is no suggestion that anything along those lines took place.  Rather, as I have said, the course of action pursued was to be as obstructive and difficult as possible in having the property sold. 

1. As I understood it, one of the reasons given for cancelling the agent's authority was that the reserve price stated in the authority merely said "TBA", which everyone understood to mean "to be agreed" or "to be advised".  As required, the estate agent had given an estimate by way of stating a range which was said to be $330,000 to $360,000.  It will be noted that the price obtained at the auction fell within that range.  Ms Balogh told me from the Bar table, and therefore not backed up by any evidence, that the property was worth at least $420,000. 

1. Further negotiations then took place, with the warrant for possession being reactivated, and eventually, the defendant moved out of the property.  Settlement of the purchase was due to be completed on 8 May 2007, but the purchaser's solicitor had apparently advised that he would not recommend to his client that she settle the property without a transfer signed by both of the executors.  The purchaser's solicitor were provided by Mr Fleming with an advice from counsel regarding the validity of the signing of the transfer of land by one executor alone, but, no doubt out of an abundance of caution, the purchaser's position remained that she wanted a transfer signed by both co-executors. 

1. The position put on behalf of Ms Balogh was that, as a co-executor, she was entitled to cancel the agent's authority and not proceed with the sale and that, therefore, the sale should not be enforced.  Mr Wilmoth referred me to a statement in the Wills, Probate and Administration Service Act which makes it quite clear that personal representatives can act jointly or severally in administering the estate, and reference was made to the decision of the House of Lords in Attenborough v Solomon,[1] the decision of the Privy Council in Commissioner of Stamp Duties for Queensland v Livingston[2] and the decision of the High Court in Union Bank of Australia v Harrison Jones & Deverell Ltd.[3] 

   [1](1913) AC 76.

   [2](1964) 112 CLR 12, also reported at (1965) AC 694.

   [3](1910) 11 CLR 492.

1. The legal position which I have to accept under those authorities, that a co-executor can act severally (that is, on his or her own) does not explain how one deals with a situation such as this where you have conflict between the co-executors.  One looks again at the terms of the will. 

1. It was put on behalf of Ms Balogh that what the testatrix was intending was that her daughter should be able to live in the house as long as she chose.  Apparently, she had lived there for some considerable time before she had to leave.  I do not agree with that construction of the will.  It seems to me quite clear that the first direction or instruction given by the testatrix to her executors was that they were to convert her estate into money by sale.  Nevertheless, they could postpone the sale.  Then, when one looks at paragraph (iii), it is quite clear that what was to happen was that the property, having been converted into money, was to be divided equally between her son and her daughter.  Without some arrangement being reached between them for Ms Balogh to remain living in the home, her doing so would completely defeat Mr Szabo's entitlement and defeat the intention of the will, which was that the testatrix's son and daughter were to share equally the residue of the estate.  As I said previously, if Ms Balogh was in a financial position and wanted to buy out Mr Szabo's interest, she had had years since the death and months since he obtained probate in which to seek to obtain that result.  On the basis of those authorities, it seems to me that Mr Szabo was entitled to instruct the agents, initially with the agreement of his co-executor, and to continue with the sale, even though the co-executor had then changed her mind. 

1. Another matter raised on behalf of Ms Balogh was that the sale was at an under-value.  That is not a ground for interfering with the purchaser's right to have the sale completed.  If, indeed, there is any factual basis for that complaint, it may be that Ms Balogh may have some rights against Mr Szabo, but I am not advising her and I am not indicating one way or the other what the position might be.  I do note, however, that she did sign the authority on the basis of the agent's estimate of a figure between $330,000 and $360,000. 

1. It therefore seems to me that there is no reason for the sale not to proceed. The only reason settlement has not occurred is because Ms Balogh is refusing to sign the transfer. Section 22 of the Supreme Court Act1986 gives me the power to make an order, when a party refuses to comply with a judgment of the court for the signing of a document, to empower an officer of this court to sign in place of that person. 

1. The matter first came to my attention yesterday.  When sitting in the Practice Court, I was told about the urgent matter and was shown a copy of Whelan J's order of 27 October of last year.  After some discussion, it became clear that the matter was back before the Master today, and in order to be quite sure that nothing happened I stayed any further step until 4 o'clock today or until further order and arranged for the matter to be brought back before me this morning.  As I explained to Ms Balogh on the occasion yesterday, and I again referred to it this morning, it seems to me that this regrettable dispute between herself and her half-brother is simply resulting in her suffering financial consequences in terms of all of the legal costs that have been incurred, which almost certainly will mean that she will receive far less out of this sale than she would otherwise have been entitled to.  I repeat that if she had wished to commence proceedings with legitimate complaints against Mr Szabo's action, or sought to take steps to stop the sale proceeding, then she has had more than ample opportunity to do so, and I note, as I previously mentioned, that she has had a number of different solicitors acting for her, perhaps on and off rather than continually, throughout the period since October of last year.  

1. I had hoped that the matter might be resolved by agreement today, but, although I asked several times, I was never able to obtain an answer as to whether or not Ms Balogh would sign the transfer and I have proceeded therefore on the basis that she is continuing to refuse to sign the transfer.  In my opinion the plaintiff, Mr Szabo, is entitled to the relief that he seeks.

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