Vrantsidis v Milekovic
[2025] VSC 255
•14 May 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2021 04654
IN THE MATTER of the estate of STAVROS VRANTSIDIS, deceased
BETWEEN:
| FREDA VRANTSIDIS (also known as FRIDERIKI VRANTSIDIS) | Plaintiff |
| v | |
| CHRISOULA MILEKOVIC (who is sued in her capacity as Executor and Trustee of the Estate of STAVROS VRANTSIDIS, deceased) | Defendant |
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JUDGE: | Daly AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 4 July, 1 August 2024, further written submissions received on 1 August, 6 September, and 23 September 2024 |
DATE OF JUDGMENT: | 14 May 2025 |
CASE MAY BE CITED AS: | Vrantsidis v Milekovic |
MEDIUM NEUTRAL CITATION: | [2025] VSC 255 |
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PRACTICE AND PROCEDURE — Overarching obligations — Application by the defendant under s 29 of the Civil Procedure Act 2010 (Vic) regarding the conduct of the plaintiff and her solicitor — Alleged breach of the overarching obligation not to bring a claim without a proper basis and the overarching obligation not to mislead or deceive — Whether the plaintiff and her solicitor breached their overarching obligations to the Court by not exhibiting certain documents in the plaintiff’s affidavit filed in support of the originating motion, and by making allegedly false statements — Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5) (2014) 48 VR 1 referred to — Whether the plaintiff was justified in bringing her claims in this proceedings — Whether leave was required to bring the proceeding by way of originating motion pursuant to r 45.05(2)(b) of the Supreme Court General Civil Procedure Rules 2015 (Vic) — Plaintiff had reasonable grievances and was justified in bringing this proceeding, and there was no breach of any overarching obligations —Application dismissed.
ADMINISTRATION AND PROBATE — Application by beneficiary for removal of the executor of their late father’s estate — Administration and Probate Act 1958 (Vic), s 34 — Brito-Babapulle v Brito-Babapulle [2024] VSC 281 referred to — Significant delays in the administration of the estate primarily due to ongoing dispute between the plaintiff and defendant relating to the disposition of real property forming part of the estate — Where the defendant has not complied with terms of a settlement deed executed by the parties and has failed to finalise the estate — Defendant is disqualified from continuing to act as executor where she has failed to fulfil her executorial duties in a timely and responsible manner — Application granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms B Ridgeway of counsel | Elvin Lawyers |
| For the Defendant | In person | |
| For Other Party | Mr O Wolahan of counsel | K & L Gates |
HER HONOUR:
Introduction and background
These reasons concern a proceeding originally brought in December 2021 seeking the removal of the defendant, Ms Chrisoula Milekovic, as the executor of the estate of the late Stavros Vrantsidis (‘estate’), who died in late 2019. The defendant is a daughter of the deceased, and the plaintiff, Ms Freda Vrantsidis, is the defendant’s sister, and a co-beneficiary of the estate. The parties have been in dispute since early 2021 regarding the administration of the estate.
The originating motion filed on 9 December 2021 sought the removal of the defendant as the executor and her replacement by the plaintiff or some other person (‘removal application’). The originating motion also sought a direction that any new executor would be justified in immediately listing and advertising for sale by way of public auction the main asset of the estate, being a residential property in West Preston (‘property’) and deducting any capital gains tax (‘CGT’) payable on the sale of the property from the defendant’s share of the estate.
An application for leave to amend the originating motion was filed on 15 March 2024 (‘amendment application’). Following a hearing on 4 July 2024, on 1 August 2024, I granted the plaintiff leave to amend the originating motion to seek the following relief, the property having now been sold:
A direction pursuant to r 54.02(2)(c)(ii) of the Supreme Court (General Civil Procedure) Rules 2015, the … person appointed as the administrator of the estate by the Court, is justified in:
a)Refraining from seeking a Private Ruling from the Australian Tax Office in relation to capital gains tax payable on the sale of [the property];
(b)Instructing BNR Partners, or another suitably qualified accountant to apply for a tax file number and finalise the estate's tax returns;
(c)Administering the estate on the basis that the plaintiff and the defendant will each be liable for capital gains tax in relation to their respective half share of the proceeds of sale of the [property]; and
(d)Paying the plaintiff the balance of her entitlement to the estate within 7 days of receiving the final income tax assessment for the estate.
The property was sold after the parties entered into a deed of settlement dated 15 June 2022 (‘settlement deed’). The settlement deed provided, among other things, that:
By 31 July 2022, the Defendant will engage a licensed real estate agent and prepare and list the [property] for sale by public auction…and upon settlement of the sale of the [property], the proceeds of sale will be paid to the Madgwicks trust account and combined with all other funds held by the estate in Madgwicks trust account and will be applied as follows:
…
(e)the balance of any funds remaining will be divided as follows (‘residuary estate’):
(i) 50% to the Plaintiff (‘the Plaintiff’s Entitlement’); and
(ii) 50% to the Defendant (‘the Defendant’s Entitlement’).
...
Within 14 days of the sale of the [property], the Defendant shall instruct BNR Partners to prepare and submit a private ruling application to the ATO for the purposes of determining whether Capital Gains Tax is payable by the estate on the sale of the [property].
Within 30 days of settlement of the [property], the Defendant shall instruct BNR Partners to prepare and file the final tax return for the estate.
The balance of the Plaintiff’s entitlement as beneficiary shall be paid within 7 days of receipt by the Defendant of the final income tax assessment for the estate to the plaintiff’s solicitors.
The potential liability for CGT arises from the fact that the property was not sold within two years of the date of the death of the deceased (‘CGT grace period’).
Both parties were represented by solicitors when they entered into the settlement deed. The settlement of the sale of the property was completed on or around 21 September 2022. The net proceeds of sale, less $100,000 (which was retained in the trust account of the defendant’s former solicitors, Madgwicks, to meet any tax liabilities and other expenses (‘estate funds’)), were distributed equally between the plaintiff and the defendant in late 2022.
However, no private ruling has been applied for, and the amount due to the plaintiff from the estate funds has not been calculated and paid by the defendant. While it is not entirely clear from the evidence what is outstanding, the estate may have some liability to pay legal and accounting fees, and the defendant also claims that she is entitled to reimbursement from the estate on account of funds paid by her to the estate’s former solicitors (‘estate solicitors’) in 2021.
On 13 September 2023, following the receipt of tax advice from the estate’s accountants, the plaintiff made an offer to the defendant proposing that the following variations be made to the settlement deed:
That a private ruling is not sought from the ATO;
That any CGT liability be payable in the hands of each beneficiary as to their half share of the proceeds of the [property];
That BNR Partners be immediately instructed to prepare and file the final tax return for the estate; and
That within 7 days of a receipt of the final income tax assessment for the estate, the balance of our client's entitlement be paid to our trust account.
On 2 October 2023, the defendant, who was by then no longer represented by Madgwicks, issued a summons seeking the following relief against the plaintiff and her former solicitor, Ms Gabrielle McManus (together ‘respondents’):
1.Pursuant to Section 29 of the Civil Procedure Act 2010 for contravention of the following Overarching Obligations -
(a) No. 16 - Paramount Duty;
(b) No. 17 - To act honestly;
(c) No. 18 - Requirement of proper basis;
(d) No. 21 - Not to mislead or deceive.
2.That this Application be conducted via Affidavit otherwise I would be extremely disadvantaged.
3.That the Plaintiff and/or the Plaintiff's Solicitor pay for all legal costs in relation to these Court Proceedings against me and also this Application.
4.That the Plaintiff solely pay for any Capital Gains Tax in relation to the sale of the [property].
5.That I be compensated for the damage these proceedings have caused me and continue to cause me as Executor and personally.
6. That the Court Proceedings against me be dismissed.
7.All such further or other Orders as this Honourable Court considers just and equitable.
(‘section 29 application’).
Among other things, the issue of the s 29 application reinforced the plaintiff’s concern that the defendant would not comply with her outstanding obligations under the settlement deed, which in turn precipitated the amendment application (see paragraph 3 of these reasons). The plaintiff also pressed the removal application.
The defendant opposed the amendment application on the basis that the proposed amendment:
…serves to conceal that the Plaintiff relied on overarching obligations contraventions to commence this [proceeding] against me — that the Plaintiff has no proper basis for this [proceeding] against me.
The defendant further submitted that the amendment application should be refused because the administration of the estate cannot be finalised prior to the resolution of the following issues:
(a) her claims in the s 29 application, which could affect the amount ultimately due to the plaintiff from the estate;
(b) the need to obtain appropriate tax advice, because the tax advice provided to the estate was based upon the settlement deed, which was invalid; and
(c) a dispute between the defendant and her former solicitors, Madgwicks, regarding the accuracy of the trust account statements provided to her by Madgwicks (‘trust account issue’).[1]
[1]The evidence regarding the trust account issue is a little confusing, but I understand that the defendant contends that the estate solicitors had wrongfully characterised a payment to them by the defendant of approximately $26,000 as estate funds, rather than as the defendant’s personal funds, and that Madgwicks has, despite the defendant’s repeated requests, failed to investigate and/or rectify this error. Further, the defendant has criticised the estate solicitors for deducting their legal fees from the funds held by them on trust prior to their transfer to Madgwicks, but it is not clear from the materials whether the defendant contends that the estate is not liable to pay those fees.
The amendment application and the s 29 application were both returnable on 4 July 2024. One would ordinarily expect that the s 29 application would be heard and determined at the conclusion of the proceeding, bound up as it is with the substantive merits of the case and the question of costs. However, all parties were keen to proceed with the hearing of the s 29 application, with the defendant submitting that its outcome would materially affect the administration of the estate, given that she sought compensation for any CGT liability incurred by her in relation to the sale of the property.
However, during the course of considering the amendment application and the s 29 application, I formed the view that it was inappropriate to determine the s 29 application prior to the trial of the proceeding. On 30 July 2024, my associate wrote to the parties as follows:
Her Honour is in the process of considering her decision in relation to the plaintiff’s application to amend her originating motion and the defendant’s s 29 application (including the defendant’s application to dismiss the proceeding). Upon reviewing the parties’ evidence and submissions, and noting the relatively modest size of the balance of the estate, her Honour considers that it is in the interests of the parties and the administration of justice to postpone the determination of the defendant’s s 29 application and set the matter down for trial. A considerable amount of evidence has been filed regarding the administration of the estate, and the parties’ submissions make their positions abundantly clear. Regardless of how the plaintiff’s application to amend the originating motion is determined, the primary relief sought by the plaintiff in this proceeding remains the same, being the removal of the defendant as the executor of the estate. Her Honour is also concerned that there is a significant overlap between the issues raised in the s 29 application and the trial of the proceeding, such that determining the s 29 application beforehand may prejudice the trial of the proceeding.
On 1 August 2024, I made orders for the filing and service of further affidavits and submissions, and listed the proceeding for a further hearing on 24 October 2024. On 26 September 2024, the parties informed the Court that they did not require a further hearing.
Despite the modest balance of the estate funds and the relatively limited steps required to finalise the administration of the estate, the matters raised by the removal application and the s 29 application necessitated a detailed review of the entire course of the administration of the estate, as reflected in the length of these reasons. Further, there is a significant overlap between the issues raised in the removal application and those in the s 29 application, including issues concerning the defendant’s conduct as executor, the validity and propriety of the plaintiff’s claims in this proceeding, and the conduct of the respondents in this proceeding.
The plaintiff contended that the removal application should be granted because the defendant has indicated that she will not comply with her obligations under the settlement deed and finalise the estate until matters largely irrelevant to the administration of the estate have been dealt with. The estate remains unadministered more than five years after the death of the deceased.
The defendant asserted that her removal as executor is neither warranted nor justified, and maintains that she has acted in a manner consistent with her fiduciary duties and the best interests of the estate and the beneficiaries. She contended that the removal application is not founded on any substantive concerns regarding the proper administration of the estate, but is instead driven by personal animosity on the part of the plaintiff.
Accordingly, the issues in the proceeding are as follows:
(a) whether the defendant should be removed as the executor of the estate;
(b) if the defendant is to be removed as the executor of the estate, who should be appointed in her place;
(c) whether I should make the ancillary orders sought by the plaintiff in her amended originating motion;
(d) whether the s 29 application should be granted on the basis that the respondents misled the Court by making false statements and by failing to include certain documents (‘executor’s correspondence’) in the affidavit filed by the plaintiff in support of the originating motion (‘original affidavit’),[2] and whether the respondents breached their overarching obligations by commencing this proceeding without a proper basis.
[2]The executor’s correspondence includes mainly email correspondence between the defendant, the estate solicitors and the plaintiff (but not Ms McManus) in September and October 2021.
The s 29 application
Turning now to the s 29 application, s 29(1) of the Civil Procedure Act 2010 (Vic) (‘CPA’) provides as follows:
(1)If a court is satisfied that, on the balance of probabilities, a person has contravened any overarching obligation, the court may make any order it considers appropriate in the interests of justice including, but not limited to—
(a)an order that the person pay some or all of the legal costs or other costs or expenses of any person arising from the contravention of the overarching obligation;
(b)an order that the legal costs or other costs or expenses of any person be payable immediately and be enforceable immediately;
(c)an order that the person compensate any person for any financial loss or other loss which was materially contributed to by the contravention of the overarching obligation, including—
(i)an order for penalty interest in accordance with the penalty interest rate in respect of any delay in the payment of an amount claimed in the civil proceeding; or
(ii) an order for no interest or reduced interest;
(d)an order that the person take any steps specified in the order which are reasonably necessary to remedy any contravention of the overarching obligations by the person;
(e)an order that the person not be permitted to take specified steps in the civil proceeding;
(f)any other order that the court considers to be in the interests of any person who has been prejudicially affected by the contravention of the overarching obligations.
The s 29 application is based on two specific complaints against the respondents, and one more general complaint. The first specific complaint is that the respondents failed to disclose the executor’s correspondence in the original affidavit. The defendant claims that this non-disclosure was in breach of the overarching obligation to act honestly (s 17 of the CPA), and the overarching obligation not to mislead and deceive (s 21 of the CPA). The defendant contends that if the plaintiff had disclosed the executor’s correspondence when she commenced this proceeding, it would have been clear to the Court that the application to remove the defendant as executor had no proper basis and the plaintiff would not have been granted leave to bring her claims in the originating motion.[3] The second specific complaint is that the plaintiff’s statement to the effect that the defendant had failed to respond to some of Ms McManus’s correspondence was untrue.
[3]Rule 45.05(2)(b) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) provides that ‘[t]he Court may by order authorise the plaintiff to commence a proceeding by originating motion in Form 5C’. The defendant submitted that the Court must have considered the validity of the claims disclosed in the original affidavit prior to granting leave to the plaintiff to commence this proceeding. As explained later in these reasons, this submission is misconceived.
The defendant’s general complaint is that the respondents initiated this proceeding without any proper basis to do so (s 18 of the CPA), and as such, the proceeding should be dismissed, and the respondents should pay her costs of the proceeding to date, and reimburse her for any CGT liability incurred in connection with the sale of the property. The defendant also seeks unspecified compensation for the trauma and the adverse impact upon her health caused by this proceeding and the associated disputes.
The respondents oppose the s 29 application, asserting that the plaintiff was under no legal obligation to disclose the executor’s correspondence, given that this proceeding was not brought ex-parte and as such, the defendant’s allegations of procedural unfairness are misconceived. They deny that the original affidavit contained any false or misleading statements. The respondents contend that the defendant’s complaint regarding CGT liability is without merit, as any such liability arises as a direct consequence of the defendant’s actions as executor, including her alleged failure to administer the estate in a timely manner. The respondents further contend that the defendant’s claim for compensation on the grounds of distress and adverse health effects lacks a proper basis and should be dismissed.
The evidence
The following evidence was relied upon by the parties in relation to both the removal application and the s 29 application:
(a) the original affidavit, which was sworn by the plaintiff on 8 December 2021;
(b) an affidavit sworn by the defendant on 10 January 2022 (‘reply affidavit’);
(c) an affidavit sworn by the defendant on 27 September 2023 in support of the s 29 application;
(d) an affidavit sworn by Mr Christien Corns, the solicitor for Ms McManus, on 17 November 2023;
(e) affidavits sworn by the plaintiff on 14 February 2024 and 15 March 2024 in support of the amendment application, and the defendant’s affidavit in opposition to the amendment application sworn on 10 April 2024;
(f) an affidavit sworn by Ms McManus on 16 May 2024;
(g) an affidavit sworn by the defendant on 22 May 2024;
(h) an affidavit sworn by the plaintiff on 12 August 2024; and
(i) an affidavit sworn by the defendant on 26 August 2024.
On 13 August 2024 the defendant filed a Notice of a Constitutional Matter seeking that an Attorney-General intervene to require me to deliver my decision with respect to the s 29 application prior to the parties taking any further steps in the proceeding. Further, it appears from the court file that the defendant has applied to the Court of Appeal from the orders I made on 1 August 2024 allowing the amendment application and directing that the s 29 application be dealt with at the trial of the proceeding. However, no Attorney-General has given notice of any intention to intervene in this proceeding, and, as far as I am aware, the application for leave to appeal has not been heard or determined.
In the original affidavit, the plaintiff deposed as to the following matters:
(a) uncontroversial factual background matters regarding the terms of the will and assets of the estate;
(b) the negotiations between her and the defendant in 2020 and early 2021 regarding the defendant’s proposal that the defendant purchase the plaintiff’s share of the property (‘buy-out proposal’), and the plaintiff’s concerns that the defendant had made little progress in readying her own property (‘Doncaster East property’) for sale to enable her to fulfil her obligations under the buy-out proposal;
(c) she briefly contemplated that the property be transferred to the beneficiaries prior to the expiry of the CGT grace period;
(d) she deposed as follows:
On 23 March 2021, in the letter I wrote to the Defendant sent by email, I said, ‘I do not want to own dad’s house in any capacity. I made it clear that I wanted the property to be sold and we both get our share - 50/50’. I wrote that she had three choices:
(a) to get a bridging loan and buy me out within the two years;
(b)to leave the property in the estate and whatever happens in relation to Capital Gains happens;
(c)to vest the property in her name, but for her to sign a loan agreement acknowledging how much she owes me.
…
I remained concerned about the CGT ramifications of not selling the [property] within the two year period from our father’s death. I did not want to take on the responsibilities of being a co-owner of the [property], including the usual liabilities and outgoings associated with a property. I did not want to be a co-owner with the Defendant because I did not want to expose myself to future issues with her or to a future CGT liability.
Between 26 March 2021 and 16 April 2021, the Defendant and I sent email correspondence to each other, in which she maintained (amongst other things) that we had reached an agreement to put the [property] in both our names prior to the two years period expiring if she were unable to complete the renovations/sale of the Doncaster East Property in time. She did not acknowledge my request in my letter dated 23 March 2021 that the property be sold and that I did not want to become co-owner with her of the [p]roperty ...
(e) in about April 2021 she engaged Ms McManus to act on her behalf. Ms McManus corresponded with the estate solicitors urging that the property be sold. The estate solicitors responded by saying that the defendant had instructed them that the parties had made an agreement in May 2020 regarding the buy-out proposal and the administration of the estate (‘informal agreement’);
(f) on 30 June 2021, Ms McManus wrote to the estate solicitors, as follows:
We refer to the above matter and your letter dated 10 June 2021.
Despite two letters to your client providing her with the opportunity to progress this matter, your client appears unwilling to make any attempt to resolve the dispute.
Your client’s conduct gives rise to genuine concern as to her capacity to honestly manage the conflict that exists between her role as an Executor/Trustee of the Estate and her interest as a beneficiary given her interest in acquiring [the property].
We accordingly provide her with this last letter before filing an application for a direction that the property be sold and seeking her removal as Executor and seeking she pay our costs.
1. Legal and Fiduciary Obligations of Trustees
As Executor and Trustee, your client holds legal title to the Estate assets subject to the trusts established in Stavros’ last Will for the benefit of both herself and our client as the beneficiaries of the Estate.
Trustees owe fiduciary duties to the beneficiaries of a trust who hold the equitable title in those assets. Those fiduciary duties include:
a. the duty to act honestly and in good faith;
b.the duty to act with due care, skill and diligence in relation to the best interests of beneficiaries;
c. the duty not to profit from the trust; and
d. the duty to avoid conflicts of interests (the no-conflict rule).
At this stage, we submit that your client is in breach of at least three of the above duties.
2. Consent to acquire the property
The only means by which your client may acquire the property herself, is with·our client’s informed consent. To be absolutely clear, your client does not have our clients informed consent to any arrangement at this stage.
Our client has made a very clear offer to provide her informed consent to your client’s acquisition of the property on certain conditions, as stated in our letter dated 27 April 2021. To summarise, that offer allowed your client to purchase our client's share of the property for the agreed amount of $550,000 repayable upon the sale of [the Doncaster East property] or within 6 months of the agreement, whichever was the sooner.
Our client is very keen to resolve this matter and despite our advice, is agreeable to making further concessions to resolve this matter promptly.
Our client has instructed us to make the following final offer to your client:
1.Our client will allow your client to acquire our client's half share on an agreed value of $550,000 (the Payment) conditional upon:
a.Your client entering into a Loan Agreement in which our client will loan your client the amount of $550,000 to acquire her interest in the property (the Loan);
b.The Loan will be secured by mortgage against the property and is repayable within 14 days after settlement of the sale of your client's own property;
c.Your client be solely liable for any stamp duty, transfer costs, related disbursements and any capital gains tax in respect to the transfer and forever indemnify our client in respect to same;
d.The agreement be documented by way of a Deed of Family Arrangement drawn by this firm and the estate be liable for the costs of the Deed in the amount of $1750;
e.Your client be solely liable for the costs of Loan Agreement and Mortgage in the amount of $2400;
f.In the event that your client fails to make the Payment on the above terms, the Property be sold, and following costs of sale, the proceeds be split 50/50 with your client to be solely liable for any capital gains tax on the sale.
...
(g) the letter above (’30 June offer’) then went on to state that the offer was made in accordance with the principles in Calderbank v Calderbank,[4] and that if the defendant failed to accept the 30 June offer, and then refused to place the property on the market, the plaintiff would apply to the Court for directions that the property be sold. Further, if the defendant continued to assert that the parties had made an agreement in accordance with the informal agreement, the plaintiff would apply to the Court to remove the defendant as the executor of the estate;
[4](1975) 3 All ER 333.
(h) on 15 July 2021, the estate solicitors wrote to Ms McManus accepting ‘[the plaintiff’s] offer of a gift’;
(i) later that day, Ms McManus responded as follows:
We refer to your letter dated 15 July 2021 in which you state your client has agreed to our client's offer.
Please have your client make payment to our trust account in the amount of $2400 which will be applied to the cost of the Mortgage and the Loan Agreement.
...
Once payment is confirmed we will commence work on drafting the Deed of Arrangement and will arrange for the loan documentation to be drawn together with the mortgage.
We confirm that our client's offer was for a loan of $550,000 to be made to your client by our client. There is no gift component.
Please provide an update on the state of renovations on your client's property and when it will be ready for sale as this will inform our client as to a potential loan repayment date.
(j) despite a follow up email from Ms McManus to the defendant on 2 August 2021, no response was received from the estate solicitors until 31 August 2021, when the estate solicitors confirmed the defendant’s agreement to the terms of the 30 June offer, as well as a repayment term being on the earlier of the date of the sale of the Doncaster East property or one year from the date of the agreement, and confirmed that they had received cheques from the defendant for stamp duty and other fees associated with the proposed transfer of the property;[5] and
[5]This payment was the amount said by the defendant to have been wrongly characterised by the estate solicitors as funds of the estate (see fn 1).
(k) on 14 September 2021, a draft loan agreement (‘loan agreement’) and draft Deed of Family Arrangement (‘DFA’) were sent to the estate solicitors. The DFA provided, among other things, as follows:
That within 14 days of signing this Deed:
(a)Beneficiary 1[6] and Beneficiary 2[7] enter into a Loan Agreement in which Beneficiary 1 will loan Beneficiary 2 the amount of $550,000 on the terms contained in the draft Loan Agreement attached to this Deed (Loan Agreement).
(b)Beneficiary 2 will make Payment to the Estate and the Executor/Trustee will transfer to Beneficiary 2 the freehold title to the Property (Transfer). The Transfer will be made in satisfaction of Beneficiary 2's half share legacy in the residue of the Estate.
For clarity, the amount of $550,000 will be notionally advanced from Beneficiary 1 as a loan to Beneficiary 2 with which Beneficiary 2 will make Payment to the Estate;
(c)Beneficiary 1 will secure a first registered mortgage over the Property directly following the Transfer; and
(d)The Executor/Trustee will make a notional distribution of $550,000 to Beneficiary 1 in satisfaction of her half share legacy in the residue of the Estate.
[6]The plaintiff.
[7]The defendant.
The DFA also provided that, in the event of any default by the defendant under the loan agreement, the plaintiff could, at her discretion, require the sale of the property in order to discharge the amount owing to her under the loan agreement.
However, neither the loan agreement nor the DFA were executed by the defendant. Instead, what transpired (based upon what was deposed to in the original affidavit, noting the defendant’s submissions regarding the absence of any reference to the executor’s correspondence in the original affidavit) was as follows:
(a) on 4 October 2021, Ms McManus wrote to the estate solicitors, as follows:
Our client received an email from your client on 10 September 2021 stating that she had instructed your office to take all steps to finalise the matter within three weeks. The two year anniversary of the date of death of the deceased is coming up shortly on 31 October 2021, which is when the capital gains tax exemption on the sale of the property expires.
We would be grateful if you could please provide an update as to the progression of this matter as matter of urgency. Understandably, our client is very anxious to ensure that she bears no capital gains tax liability as a beneficiary of the estate on account of your client's delay and accordingly reserves all rights.
(b) on 14 October 2021, the defendant wrote to the plaintiff, as follows:
Just confirming that due to the delay caused by your Solicitor, on the 28th September I instructed the Estate Solicitor to transfer the Estate property to the two beneficiaries thereby ensuring that no party is liable for Capital Gains Tax from when the property was originally purchased in 1977.
(c) on 15 October 2021, the estate solicitors wrote to Ms McManus as follows:
We have received fresh instructions from our client that she will not proceed to purchase your client’s share of the property on a mortgage back arrangement.
Our client requires the property to be transferred into the beneficiaries’ names in accordance with the terms of the deceased’s Will.
As you are aware we have a tight deadline to take any action that the parties agree to, to avoid the imposition of capital gains tax on the estate.
We would be pleased to receive your advice as to whether your client will agree to this transfer taking place.
We look forward to hearing from you at an early date.
(d) on 19 October 2021, the plaintiff sent the defendant a lengthy email. The email commenced with the following statement:
I cannot believe that we are in this position. You should have told me the truth from the start, you had a legal and moral obligation to tell me, but you chose to hide pertinent facts from me. And even at this late stage you are still withholding information and expecting me to just blindly sign. I will not be forced to make a blind decision, and the law does not allow you to force a person to make a blind decision. So what you are asking your solicitor to do, that is transfer the property into our names without my approval or a court order, is not a real option.
(e) the plaintiff’s email then went on to outline and comment upon various options as to how to proceed, concluding as follows:
I suggest you read the letter my solicitor sends to your solicitor so you can make an informed decision. The letter will be sent midday today. To ensure there are no further delays by your solicitor I will send the copy she sends me to you as well. I will read her letter as well and make my final decision, but unlike you I cannot make an informed decision because I don't know what is happening.
So my choices are to relinquish my rights to Dad’s property; go to court to have you removed as executor and get the property sold and divided; or keep negotiating after the 31 October and you can sue me as you threatened.
Your choices are to sign the loan agreement and family deed that is already prepared and we can renegotiate the terms afterwards or you take me to court.
It seems to me that the loan agreement is the one option that gives us the breathing room we need to fix this situation. It is the one thing that gives me evidence that you are prepared to negotiate in good faith and more importantly that allows you to fulfil dad’s wishes.
The next move is yours. I really do strongly suggest you ring (don’t email) the estate solicitor and make an appointment to sign the documents. You have my word, in writing in this email, that we will renegotiate the loan arrangement to both our satisfaction.
(f) on 19 October 2021, Ms McManus sent the estate solicitors a letter refuting in some detail any allegations of delay on her part, and went on to state as follows:
Options
Our client is desirous of resolving this matter without litigation.
As she has reiterated constantly throughout the matter, she does not wish to receive the property in species as a beneficiary.
Your client cannot lawfully transfer the title to our client without her consent as transferee.
Accordingly, your client has two options:
1. to reach agreement with our client;
2. to make an application to court for directions.
We have advised our client that given your client’s conduct, the only reasonable option available to her is to make an application to Court. She has strong case, and is likely to obtain an order that your client be removed as executor, the house sold and that her costs be paid by your client. Nonetheless our client maintains that she is desirous of keeping the matter out of court to save expense, time and further emotional energy, not just for herself but also for your client.
Matters for your client
Our client has expressed a desire to be released from the ongoing trauma this matter is causing her and to disclaim her remaining interest in her father’s estate.
If she were to relinquish her rights, which is against our advice, your client would need to consider the possible consequences of retaining the property as her asset, and thereby likely to form part of her matrimonial property pool potentially available for division in any family law property matter. Furthermore, in the event your client obtains or hopes to obtain government support payments, she will need to consider the effect the property will have on her assets test and how the gifting rules will apply to her should she later wish to dispose of some or all of the property for less than market value.
We await your client's suggestion for expedient resolution of this matter.
(g) on 26 October 2021, the defendant sent the following email to the plaintiff and the estate solicitors:
On the 24th October at 14:45pm, I provided beneficiary Freda Vrantsidis with a copy of my email sent to you on the 22nd October at 9:00am and I have provided you with Freda's response dated 24th October at 16:38pm.
The Agreement, Family Arrangement and Loan Agreement are between the two beneficiaries. Please refer to my letter to you dated 28th September sent via Express Post. All parties have a copy of this.
The evident obsession with entwining my role as Executor with matters between the two beneficiaries - is shameful.
This matter started with what beneficiary Freda Vrantsidis - wants and does not want - and it appears that it will end - with what beneficiary Freda Vrantsidis - wants and does not want.
When you are served with legal documents against me, would you please provide me with copies immediately.
(h) on 26 October 2021, Ms McManus wrote to the estate solicitors, as follows:
We refer to your letter dated 15 October 2021, in particular your request for our client’s agreement for “the property to be transferred into the beneficiaries’ names in accordance with the terms of the deceased’s Will”.
With due respect, your reading of the Will is incorrect. The Will establishes a trust for sale and your client as executor is under the obligation to sell the property within a reasonable time and for a fair price.
We direct your attention to clause 4, in which it is expressly stated that the executor is “to sell call in and convert into money so much and such parts of my said estate as shall not consist of ready money”.
Whilst clause 5 empowers the trustee to postpone the sale, such postponement still attaches to the requirement to sell the property and distribute the proceeds to the beneficiaries listed in clause 4.
Accordingly, your client has no right to transfer the property in specie according to the terms of the Will.
Sale
We hereby request your client’s agreement within 7 days of this letter that she will immediately place the property on the market for sale. If notice of her agreement is not received by 5pm on Wednesday 3 November 2021 we will immediately thereafter make an application to the Supreme Court that your client be removed as executor, that the property be sold and that your client (in her personal capacity) pay our costs in this proceeding.
Noting that your client’s last minute retraction of her agreement to a settlement of this matter has resulted in our client being forced to foreshadow this action a few days before the expiry of the two-year capital gains tax exemption period, we ask for your response as a matter of urgency and no later than 5pm on 3 November 2021. Should litigation commence before the end of the two year exemption period, an application of the safe harbour rule referred to in our letter dated 19 October 2021 may arguably apply.
(i) the plaintiff deposed that no response to Ms McManus’ letters of 19 October 2021 and 26 October 2021 was received from the estate solicitors or the defendant,[8] and deposed as follows:
Throughout this matter, I have tried my best to accommodate the Defendant’s desire to retain the [property]. I delayed making this application earlier, because I hoped that the Defendant would respond firstly to my solicitor’s request for timelines for the sale of her Doncaster East Property as all that I initially wanted was certainty as to the terms of any agreement reached.
Based on the protracted negotiations between myself and the Defendant and through our solicitors, including the Defendant’s recent withdrawal of her agreement to purchasing my half interest in the [property], I believe I have exhausted all possible avenues of achieving agreement with her.
The [property] remains unsold and the two-year CGT grace period has now expired. The Estate remains largely unadministered despite my father dying more than two years ago and the Defendant being granted probate 21 months ago.
[8]The defendant says in the s 29 application that this evidence is false, referring to the executor’s correspondence.
The reply affidavit was prepared by the defendant personally. In the reply affidavit, the defendant deposed to the history of negotiations between herself and the plaintiff concerning the administration of the estate and the buy-out proposal, in summary, as follows:
(a) initially, the plaintiff and the defendant had agreed to sell the property, but following the onset of COVID-19 lockdowns both parties became concerned that property values would fall;
(b) a spreadsheet prepared by the plaintiff at around this time, and an email sent by the plaintiff to the defendant in March 2021 indicated that the plaintiff would accept $550,000 for her share of the property, and that the plaintiff was also prepared for the property to be transferred into their names as co-owners should the property not be sold within the CGT grace period;
(c) on 20 May 2020 the parties entered into the informal agreement, which included the following terms:
(a)[The plaintiff accepted] the sum of $550,000 for her share of the estate property based on the probate figure at $1,100.000 [sic].
(b)The Plaintiff also agreed that she will receive payment after renovating and from the sale of the Doncaster East property.[9]
[9]This is a reference to a property owned by the defendant, which the defendant intended to sell in order to fund the purchase of the plaintiff’s share of the property.
(c)The Plaintiff further agreed that in the event the Doncaster East property was not finished and sold before the second anniversary - the Plaintiff agreed to transfer the estate property into our names as co-owners.
(d)There was no time frame for payment due to the uncertainty covid presented and also the Plaintiff was prepared to wait for two years after the second anniversary for her share of the estate property as confirmed by Plaintiffs Spreadsheet marked “CM-6” herein.
(d) the parties further agreed that:
(a)[the defendant] would not claim Executor fees for administering the Estate or out-of-pocket expenses, for example, petrol costs driving to and from the Doncaster East property, for example, to maintain the gardens.
(b)The Estate would pay for removal of waste, utility bills, rates and home insurance whilst the property remained in the Estate and for legal costs associated with finalising the Estate.
(c)That if the Doncaster East property was not finished and sold within the second anniversary that we would transfer the estate property into our names as coowners, thereafter -
(i) That [the defendant] will live in the property.
(ii)That [the defendant] will pay utility expenses, rates and home insurance;
(iii)The property needs work therefore you cannot rent it out and for this reason the Plaintiff would not charge rent for her share of the property.
(iv) To discuss Capital Gains Tax if and when we needed to.
(e) subsequently, she opened two bank accounts in the name of the estate, and on 5 August 2020 made a partial distribution of the funds of the estate to the beneficiaries;
(f) in early 2021, she informed the plaintiff that it was likely that they would need to transfer the property to them both. She arranged for the removal of an asbestos-clad shed on the property and told the plaintiff that she would move into the property to expedite the renovations on the Doncaster East property in preparation for its sale;
(g) the plaintiff expressed no concerns about the informal agreement until after hearing a fleeting remark about the value of the property from a tradesperson, following which the plaintiff engaged Ms McManus to represent her;[10]
[10]I infer that the defendant is contending that the plaintiff only changed her mind about the buy-out proposal when she learnt that the value of the property may have been higher than she originally anticipated at the time she entered into the informal agreement.
(h) on 23 March 2021, the plaintiff sent her a lengthy email (see paragraph 26(d) of these reasons), which the defendant contended confirms the plaintiff’s agreement to the buy-out proposal;
(i) a series of further email exchanges took place between March 2021 and May 2021, following which there was correspondence between Ms McManus and the estate solicitors, culminating in the 30 June offer;
(j) in relation to these negotiations, the defendant deposed as follows:
In our 2020 agreement there were two options as to how the Estate would be finalised:
(a)If the Doncaster East property was finalised and sold before the second anniversary, the Plaintiff would be paid out and the estate property transferred into my name.
(b)If the Doncaster East property was not finalised and sold before the second anniversary, that the Plaintiff and I would transfer the estate property into our names as co-owners as confirmed by the Plaintiff in her long letter attached to her email dated 23rd March 2021 (Exhibit marked 'CM-9'. herein) wherein the Plaintiff stated that she-
“agreed to put things in our names if you could not settle the selling of your home and the estate within the two years.”
The 30th June 2021 offer provided a third option - a Loan Agreement.
I accepted this third option offer and -
(a)On the 16th July 2021, I organised a personal NAB Bank cheque dated 16th July 2021 payable to the Estate Solicitors Phillips and Wilkins in the sum of $2,400 for Loan Agreement.
(b)Also as part reimbursement to the Estate (for removal of asbestos shed on the estate property as agreed) on the 28th July 2021, I organised a personal NAB Bank Cheque in the sum of $1,750 for the Deed of Family Arrangement.
(k) the steps she took to finalise the estate in August 2021, including closing the estate’s bank accounts;
(l) she received the loan agreement and DFA from the estate solicitor on about 16 September 2021. She deposed as follows:
Looking at the paperwork, it is obvious that fresh terms and conditions were inserted without my knowledge and consent and I sought legal advice from the estate solicitor who confirmed that ‘there are some differences’.
There was no time for further negotiations —…
(m) on 28 September 2021, the defendant wrote to the estate solicitors, as follows:
The agreement between the two beneficiaries last year determined the outcome of the Estate property, how estate monies would be distributed and provided two options as to how the Estate would be finalised - leaving the only task remaining as Executor - to instruct the Estate Solicitor how and when to finalise the Estate. Any steps the beneficiaries have taken thereafter was, is and continues to be - between the two beneficiaries. I also wish to point out that a family arrangement is exactly that, a family arrangement - an arrangement between family members, in this case - between the two beneficiaries. Beneficiary Freda Vrantsidis provided a third option as to how to finalise the Estate via an offer this year. The core ingredients of the agreement between the two beneficiaries last year- did not change. We are approaching three months since this third option was offered however, to date, the Solicitor representing Beneficiary Freda Vrantsidis has failed to produce original paperwork pursuant to this third option thereby enabling the Estate to be finalised before the end of this week as planned. Taking all of the above into consideration, would you please take all necessary steps in order to finalise the Estate pursuant to the second option as fo1lows. Would you please transfer the Estate property to the two beneficiaries. Would you please inform Ms McManus of the above.
(n) she emailed a copy of the above letter to the plaintiff on 15 October 2021;
(o) the contents of the executor’s correspondence (see paragraphs 31 to 42 of these reasons);
(p) it was the plaintiff’s refusal to consent to the transfer of the property to the beneficiaries prior to the expiry of the CGT grace period which resulted in the estate not being finalised within the CGT grace period; and
(q) the defendant deposed as follows:
With the $65,014.58 that I received from my father's Estate - as per Exhibit "CM-8 herein - l purchased shares with this money and sold some of these shares in order to meet the requirements of our Agreement.
Expecting that the Estate would be finalised well before the second anniversary, on the 13th August 2021, 1 closed the Estate Bank Account that I was administering and sent balance estate monies to the Estate Solicitor to finalise the Estate.
As a result - with the sale of share money - from the 17th August 2021 to date - I am personally paying for the estate property expenses.
I have learnt the most hardest of ways that the Plaintiff- cannot be trusted.
The Plaintiff’s Spreadsheet marked "CM-6" herein and also the Plaintiffs long letter attached to her email dated 23rd March 2021 marked “CM-9”' herein - confirms that the Plaintiff - cannot be trusted.
The Plaintiff’s Affidavit sworn on the 8th December 2021 in these proceedings - confirms that the Plaintiff - cannot be trusted.
And now the Plaintiff asks this Honourable Court to disregard and to dismiss my father's wishes and remove me as Executor.
The Plaintiff has absolutely no regard whatsoever as to how the Estate has been affected or my role as Executor - let alone respect the wishes of our father - that I be the Executor of his Will - why then would the Plaintiff have any regard or concern for me as a sister.
The defendant exhibited the executor’s correspondence to the reply affidavit, which is described in the following paragraphs of these reasons.
On 10 September 2021, the defendant emailed the plaintiff, stating as follows:
Just letting you know that I have instructed the Estate Solicitor to proceed to take all steps necessary in order to finalise Dad’s Estate within the next three weeks.
On 14 October 2021, the defendant again emailed the plaintiff, asserting that the delays in finalising the estate were due to Ms McManus’ conduct, and confirming that she had instructed the estate solicitors to transfer the property to the plaintiff and the defendant as co-owners.
On 15 October 2021, the defendant sent the following email to the plaintiff:
I refer to my emails to you dated 10th September and 14th October.
Attached herein letter dated 28th September sent to the Estate Solicitor via Express Post and delivered on the 29th September.
The Executor decision to transfer the property to the two beneficiaries was made in order to - protect - all parties from being liable for Capital Gains Tax from when the property was originally purchased in 1977.
The above email attached a letter from the defendant to the estate solicitors dated 28 September 2021 (see paragraph 29(m) of these reasons).
On 16 October 2021, the plaintiff responded, copying in Ms McManus, as follows:
1)The delays were caused by you and your solicitor - the loan and deed were sent on the 14 Sept to your solicitor.
2)Letter dated 14. Oct from your solicitor advises he has received new instructions from you.
3) Dad’s wishes were to sell the property NOT put it in our names.
4)and capital gain in Dad's case is from date of death NOT date of purchase.
I have instructed my solicitor of my next step but she has asked me to think it over the weekend. So I suggest you make yourself available to your solicitor so that there are no further delays in him trying to contact you for further clarification or further instruction.
On 18 October 2021, the defendant emailed the estate solicitors, copying in the plaintiff, confirming her instructions to transfer the property to the beneficiaries:
It is not about what the beneficiaries want or do not want. There are ten working days before the end of the second anniversary. To ensure that the property does not remain in the Estate so that no party will be liable for the consequences. Please transfer the property to the two beneficiaries and finalise the Estate immediately. There is $4,141.77 in the Estate Account held in your Trust Account which should cover costs associated with finalising the Estate and I trust as my Solicitor that you will finalise the Estate immediately as instructed. Whatever the parties wish to do thereafter - is between the parties.
Later that day, the plaintiff emailed the estate solicitors, copying in the defendant and Ms McManus:
I have provided instructions to my solicitor to contact you today by phone and email in order to finalise the estate. But given my sister's email, I will respond to you directly. The property will go in my sister's name only (no loan agreement) and then after that it is up to her what she intends to do to honour my father’s wishes.
I advised her right from the start that I had no interest in owning that property and that I did not want to incur any costs associated with that property. I have no idea what my sister's intentions are in terms of selling her property own property in order to pay me out and I cannot sign my name under such ambiguous circumstances.
So please put that property in my sister's name. I give you authority to do so. If the only way I can do that is to relinquish my rights to that property, then I do so.
Please send me what papers need to be completed. I want this finalised ASAP.
Later again on 18 October 2021, the plaintiff wrote to the defendant, as follows:
I want you to take this serious [sic] - you cannot force me to become a joint owner and you cannot force the solicitor to force me to become a joint owner of that property. I have a right to withdraw my claim to that house, you cannot stop me doing that. I have instructed my solicitor to inform them that I have withdrawn my rights to the house.
You still have a chance to do the right thing - which currently is to put that property in your name for now. And as per your email, we can then work out the rest.
Please don’t be stubborn. The only person who will end up losing is you Chrisoula, so please talk to your solicitor and put that property in your name. Not doing so will only make this worse for you.
I will not put that property in our name. Please put the house in your name.
On 22 October 2021, the defendant provided the following instructions to the estate solicitors:[11]
[11]Neither the plaintiff nor Ms McManus were copied into this email, but this email was forwarded to the plaintiff by the defendant on 24 October 2021.
To ensure that the property does not remain in the Estate indefinitely - please:
(a) transfer the property to the two beneficiaries;
(b)distribute the remaining Estate Funds in the sum of $4.141.77 - held in your Trust Account on behalf of the Estate - as detailed in my above letter/authority to you dated 20th October;
(c) and finalise the Estate immediately.
There are now six working days before the second anniversary therefore please inform Ms McManus of the above immediately.
I have nothing more to add as Executor.
On 26 October 2021, the defendant sent the email to the estate solicitors reproduced at paragraph 28(g) of these reasons.
On 27 October 2021, the defendant sent a further email to the estate solicitors, copying in the plaintiff:
I refer to my email dated 22nd October sent at 9:00am and to my further email dated 26th October sent at 8:45am. All parties have copies.
Freda’s Solicitor had approximately one month to file a Court Application against the Executor decision. Please refer to my letter dated 28th September sent via Express Post and delivered on the 29th September.
Now there are three working days before the end of the second anniversary.
Finally, on 28 October 2021, the defendant sent the following email to the estate solicitors, copying in the plaintiff, referring to Ms McManus’ letter of 26 October 2021 (see paragraph 28(h) of these reasons):
As Executor, under the circumstances, please refer to the following:-
1. My letter dated 28th September 2021 sent via Express Post.
2. My email dated 18th October sent at 8:37am.
3. My email dated 22nd October sent at 9:00am.
All parties have copies of the above.
I believe I have made the right decision, taking into consideration that the alternative consequences as detailed in legal advice to me and the consequences as outlined in Ms McManus' recent letter dated 26th October.
As I have stated previously, it is not about what the beneficiaries want or do not want.
It is about what is best for the Estate - and ultimately the two beneficiaries -under the circumstances.
And that is, I believe, that the Estate be finalised before the second anniversary and this, under the circumstances, can only be achieved if the property is transferred to the two beneficiaries as per my above correspondence.
Mr MacKenzie, you have my authority dated 20th October sent via Express Post and delivered on the 21st October in order to transfer the property to the two beneficiaries and finalise the Estate. If you require a fresh Electronic version to transfer the property to the two beneficiaries, please send it to me immediately.
(Emphasis in original).
Following the issue of this proceeding on 9 December 2021, the proceeding was referred to mediation, which was held on 14 June 2022. The plaintiff was represented at the mediation by Ms McManus, and the defendant was represented by Madgwicks. Following the execution of the settlement deed, the proceeding was adjourned by agreement on a number of occasions to allow time for the parties to comply with their obligations under the settlement deed. The s 29 application was issued on 2 October 2023, and the amendment application was filed on 15 March 2024.
The defendant filed an affidavit in support of the s 29 application on 2 October 2023, deposing that the respondents’ breaches of the overarching obligations were evidenced by a comparison of the original affidavit and the reply affidavit. She deposed further as follows:
(a) the dispute between the parties in October 2021 was not about the acquisition of the property by the defendant, it was about how the estate should be finalised;
(b) the plaintiff wanted to transfer the property to the defendant alone, which the defendant refused to do; and
Disposition
Accordingly, the s 29 application will be dismissed, and the removal application will be granted. I will also grant the ancillary relief sought by the plaintiff in the amended originating motion, and hear further from the parties on the question of costs and the question of who should be appointed as the executor of the estate in place of the defendant.
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