Yazbek v Yazbek (No 2)

[2012] NSWSC 783

Supreme Court

New South Wales

Medium Neutral Citation:

Alan Yazbek v Ghosn Yazbek & Anor (No. 2) [2012] NSWSC 783

Hearing dates:

11 July 2012

Decision date:

11 July 2012

Jurisdiction:

Equity Division

Before:

Slattery J

Decision:

Grant of administration to defendants revoked. Grant of administration cum testamento annexo made to independent administrator. The plaintiff's and the defendants' costs of the proceedings paid out of the estate on the ordinary basis.

Catchwords:

SUCCESSION - wills, probate and administration - whether grant of administration to defendants upon intestacy should be revoked - whether independent administrators should be appointed - whether plaintiff and defendants should have their costs out of the estate and if so on what basis.

Legislation Cited:

Family Provision Act 1982 (NSW)
Succession Ac 2006 (NSW)
Uniform Civil Procedure Act 2005, s 26
Wills, Probate and Administration Act 1898 (NSW)

Cases Cited:

Alan Yazbek v Ghosn Yazbek & Anor [2012] NSWSC 594
Bourdales v Carroll, Estate of Diana Holebrook (2007) 1 ASTLR 202
In the Goods of Loveday [1900] P 154
O'Brien v McCormick [2005] NSWSC 619
Shorter v Hodges (1988) 14 NSWLR 698 Zang v Middleton [2011] NSWSC 881

Texts Cited:

G L Certoma, The Law of Succession in New South Wales, (Thomson Reuters (Professional) Australia, 4th edition, 2010), p 266 [14.90]

Category:

Consequential orders

Parties:

Plaintiff:- Alan Yazbek
First Defendant:- Ghosn Yazbek
Second Defendant:- Mouna Yazbek

Representation:

Counsel:

Plaintiff:- R. Bellamy
Defendants:- Dr C. Birch SC, B. Burke
Solicitors:

Plaintiff:- Geoffrey Adelstein, Diamond Conway
Defendants:- Malcolm John Cameron, Sparke Helmore Lawyers

File Number(s):

2011/ 240654

Publication restriction:

No

EX TEMPORE Judgment

1. This is my second judgment in these proceedings. My principal judgment was given on 1 June 2012: Alan Yazbek v Ghosn Yazbek & Anor [2012] NSWSC 594. Persons, matters and events are referred to in this judgment in the same way as they are in the principal judgment and both judgments should be read together.

Mediation

1. In the principal judgment, at paragraphs [148] to [152], I made certain observations about the desirability of mediation in this case. This morning neither counsel submits that the foreshadowed mediation order under the Uniform Civil Procedure Act 2005, s 26 should not be made.

1. The defendants' family provision Succession Act proceedings are not the only proceeding on foot among family members. But the Succession Act proceedings are, for the reasons explained in the principal judgment, a sufficient basis to order mediation. I will order a mediation of those issues.

1. As both counsel have suggested, it is open to parties who are not now before the Court in this litigation, to join in that ordered mediation, to see if all issues, even in related litigation, can be resolved. Once a mediator is engaged, it is highly desirable for mediation of the Succession Act proceedings to provide a platform for the parties to gather in and resolve their wider disputes.

1. So on this first issue, I will order, pursuant to s 26 of the Uniform Civil Procedure Act that the Succession Act family provision proceedings brought by Ghosn and Mouna Yazbek against the estate of the late Daniel Yazbek be mediated. For the reasons explained below, that mediation must take place before Wednesday 22 August 2012.

1. The questions remaining then are those stated in my principal judgment: (1) whether the letters of administration granted to the defendants on 7 April 2011 should be revoked; (2) if the defendants' letters of administration are revoked, to whom letters of administration cum testamento annexo should now be granted; and (3) issues of costs. The parties have provided written submissions to the Court in accordance with the Court's orders about these remaining questions and put oral submissions this morning.

The Other Litigation and Disputes about Estate Assets

1. The first two questions may be considered together, as they are interrelated. But before considering those questions, two matters of background should be recounted. One concerns the other litigation in which the parties are involved. The other is in relation to the valuation of the residue of the estate.

1. There are at least two other pieces of litigation among family members. The first is a family provision proceeding brought by the defendants under the Succession Act. These Succession Act proceedings have been placed on a temporary hold pending the resolution of these proceedings. The other litigation is in the Corporations List, and involves the companies and the shareholders of the companies that own each of the three restaurants. That litigation has reached the point that pleaded defences are either due or overdue.

1. The short contest in the Corporations List litigation is the following. A separate company owns the property and business at each of the three restaurant locations.

1. The two brothers, Alan and Matthew, have different contentions about the ultimate beneficial ownership of the restaurant businesses and properties. Alan says that they were operated as a group, although held through separate companies. Alan contends that the brothers, Daniel and Alan and Matthew, agreed that all the restaurants would be beneficially held in equal shares.

1. On the other hand, Matthew says that each restaurant property and business was owned by the individual who controlled the shareholding of the company that was the registered proprietor of that particular property. These issues are yet to be resolved in the Corporations List proceedings.

1. The late Daniel Yazbek was a shareholder, of course, in at least one of those three companies. Presently the defendants as the administrators of his estate are representing the estate's interests in those proceedings.

1. A third possible area of future litigation is in relation to the interpretation of Will.doc. Counsel have foreshadowed this a possibility. I agree it is a not unlikely possibility, given the circumstances in which Will.doc was drafted.

1. Thus, a forest of future litigation unfortunately, may bedevil the estate. And the estate will be represented in all such proceedings.

1. Another preliminary question is about the residue of the estate. There is contention between the parties as to the extent of the residue, not specifically disposed of by Will.doc.

1. The plaintiff estimates that residue at approximately $55,000. But the defendants say it could be considerably more. Given the range of differing valuations, there is some basis to accept that the defendants may be right.

1. The matter of valuation is further clouded. An equitable charge was made between Daniel Yazbek and the defendants on 31 August 2006. This charge supports the defendants lending the deceased $105,000 at about that time. This sum will be repayable by the deceased and would ordinarily first come out of residue. So it may be that residue is a sum of some hundreds of thousands of dollars. It may be that it has no value at all.

Revocation and a Fresh Grant of Administration

1. It seems to me that this is a case where I should consider the appointment of an administrator afresh, principally because the assumption behind the current grant of administration is that the deceased died intestate and that the two administrators, the defendants, represent the deceased's estate, as upon that intestacy. My judgment has shown that to be wrong. The record needs to be corrected by a grant of administration cum testamento annexo.

1. Of necessity that involves revoking the form of grant made to the defendants. So I should consider afresh under Wills, Probate and Administration Act, s 74 the question of the grant of administration. The parties accept that my discretion is at large under Wills, Probate and Administration Act, s 74. The guiding principles that apply to such a grant are clear. When the Court is considering whether to grant administration of an estate the basal rule is that the appointment must be one which advances the real object of administration, that is, the due and proper administration of the estate: In the Goods of Loveday [1900] P 154 at 156 and Bourdales v Carroll, Estate of Diana Holebrook (2007) 1 ASTLR 202 and [2007] NSWSC 1057.

1. The interest promoting the most speedy administration of the estate, often has priority among competitors for a grant. That of course here is the residuary beneficiaries, the defendants. The conventional order of priority in considering applicants for a grant of administration is the residuary beneficiaries, persons entitled to intestacy, general legatees and specific beneficiaries: G L Certoma, The Law of Succession in New South Wales, (Thomson Reuters (Professional) Australia, 4th edition, 2010), p 266 [14.90]. But in this case that common order is complicated by a number of other factors.

1. The competing views about administration are these. The defendants say that they should continue to be the administrators but in the form of fresh grant cum testamento annexo. The plaintiff, on the other hand, says that there should be an independent administrator and, if not an independent administrator, then himself.

1. In my view the primary choice is really between the defendants or an independent administrator. For the reasons explained below, any disadvantages that the defendants have in contrast with an independent administrator, are disadvantages which are shared with the plaintiff. If the defendants were not to be preferred over an independent administrator, the plaintiff equally should not be so preferred.

1. The plaintiff advance a number of arguments about why the defendants should not be appointed. Some of the plaintiff's arguments are unpersuasive but some of them are. I have ultimately reached the view that the plaintiff's arguments that the defendants should not be appointed support the conclusion that an independent administrator be appointed. But in the course of submissions the parties have identified an appropriate independent administrator. He is Mr Jeremy Glass, a well-known Sydney solicitor practising in the field of probate law. Subject to Mr Glass providing a consent and otherwise complying with the rules of Court and subject to the stay, which I propose in the execution of that order, he will be appointed as the administrator of the estate.

1. I turn now to the reasons for this result. First, there are the plainitff's unpersuasive reasons that can be dismissed. The plaintiff points to the age of the defendants. But there is no evidence that Mr Yazbek, aged 84, or Mrs Yazbek, aged 67, are incapable of discharging their duties.

1. The plaintiff points to the alleged irregularity in the defendants' existing appointment. He outlines the circumstances in which that occurred. The detail of this was left unresolved in the principal judgment. Some further evidence about the circumstances of this appointment have been advanced on this application. But I regard the question of that irregularity as a far less important relevant consideration than the existence of the various pieces of litigation I have described. It is not necessary in my view to resolve the question of whether or not there was an irregularity in the defendants' appointment. Even if an irregularity were demonstrated, it would not be one which, on its own, would persuade me not to now appoint the defendants as administrators. They did seem to be fully advised by lawyers at the time. But nor would the demonstration of an absence of such irregularity dissuade me from the view that I have reached. Therefore, it is not necessary to determine that question.

1. Another argument which the defendants raise is that the appointment of an independent person would incur extra costs. I am not persuaded that this is correct. The estate will need to be represented and take decisions and execute them through lawyers in the other litigation. Whether the estate is represented through Mr Glass or through the defendants, it seems to me, those costs will be much the same. Indeed, to the contrary, there may be some ultimate saving in costs at a more strategic level from the appointment of an independent administrator. Mr Glass's overall objectivity will undoubtedly assist in the efficient conduct of the litigation.

1. This leads to the arguments that the plaintiff advances against the defendants being appointed as administrators, that seem to me to be persuasive. Those arguments are these. Firstly, in the family provision litigation the normal rule would be that if the defendants are the administrators steps would need to be taken to appoint a contradictor to ensure that a non-interested party has carriage of the defence of such proceedings: O'Brien v McCormick [2005] NSWSC 619, [17] to [20] and [28]. To appoint the defendants now, where it is known they are already bringing these family provision proceedings, is only to add a complication which is avoidable.

1. Secondly, and most importantly, it has often been observed that where there are likely to be strongly competing contentions between members of the one family, it is often cheaper in the long run to have an independent person administer the estate: Bourdales v Carroll, Estate of Diana Holebrook (2007) 1 ASTLR 202 and [2007] NSWSC 1057.

1. The Court can immediately foresee the need for a representative of the estate to take a position in the Corporations List litigation, for or against various family members. Without the Court yet knowing much about this family dispute, it can still confidently be said it would be less efficient for parents to take these decisions than for an independent administrator to do so. If the parents are involved, dissatisfied parties may well generate further litigation, which in my view is less likely with an independent administrator. The same considerations apply to the possible litigation about the interpretation of Will.doc.

1. Finally, there is a question of timing. Counsel for the defendants suggest with some force that the making of orders to revoke the current grant of administration and the making of a fresh grant should be deferred for a short period to see if the mediation the Court is ordering may work to good effect.

1. There is much merit in this. It is worthwhile giving the parties an opportunity to see if they can resolve their differences. But I would not allow them more than 6 weeks to do that. That resolution may involve their agreeing upon a different administrator, in which case the Court's present orders could be varied by consent. If they cannot resolve their differences among themselves, direction will need to be given to the estate's interests in the Corporations List proceedings.

Costs

1. I now come to the final question of costs. The plaintiff seeks indemnity costs. The defendants seek that each party pay his or their own costs of these proceedings. Then follows a dispute about how costs, if they are to be awarded, should be borne.

1. In this case the conduct of the deceased has occasioned the litigation. This can be seen from my previous judgment. The guiding principles that therefore apply are well established. Where the testator has been the cause of probate litigation, the cost of unsuccessfully opposing a grant of probate as well as the costs of the successful party, may well be paid out of the estate: Shorter v Hodges (1988) 14 NSWLR 698 at 705 per Powell J, and Zang v Middleton [2011] NSWSC 881. That is just a guiding principle in the exercise of the Court's costs discretion. But it is one which, in my view, should be followed here. I will order that both the plaintiff's costs and the defendants' costs be paid out of the estate.

1. There would be unfairness to leave the plaintiff in the position for which the defendants contend: with the plaintiff bearing his own costs. I do not see why a successful plaintiff who has established Will.doc as the Will of the deceased should be left to bear his own costs, over his opposition to that course. Similarly, the defendants were entitled to oppose the propounding of Will.doc on the available materials. They took a reasonable position in opposing the plaintiff's claim. Their costs should come out of the estate.

1. The next issue is whether the plaintiff's costs should be determined on the ordinary basis or the indemnity basis. The plaintiff says they should be ordered on an indemnity basis, because he has undertaken a form of representative role on behalf of other persons. It is true that one result of the plaintiff's action is that persons other than he will benefit. On an intestacy the defendants would have taken the whole of the estate. But as a result of Will.doc being admitted to probate, much of the estate will go to various members of the family other than the defendants.

1. But the plaintiff's action was not one in a formal representative capacity, although it may indirectly benefit others. Nor was a Calderbank letter served here. Nor were there other circumstances arising here, which might otherwise establish a basis to award indemnity costs. Nor could it be said that any unreasonable conduct of the defendants in defending the litigation warrants an order for indemnity costs.

1. The last question is what part of the estate should bear the costs. Ordinarily defendants' costs would come out of residue. The defendants say that is unfair. They say they will ultimately pay out of their share of the estate both their own costs and the plaintiff's costs.

1. There is some merit in what the defendants say. But their contentions are undermined by the uncertainty of what is left in residue. It may well be that there is nothing, even before these costs are ordered to be paid. If there is something there, it looks as though it will not be sufficient. If it is not sufficient, the plaintiff's costs will be borne rateably out of estate property other than residue.

1. If that causes the plaintiffs to suffer a demonstrable loss of what might otherwise be available to them, that is a matter which can be litigated in their interests in the Succession Act proceedings, although I know very little as to the merits of those proceedings.

1. But fundamentally, it cannot be clearly demonstrated that the costs order, is one which will disadvantage the defendants. It cannot be demonstrated that they will obtain something out of residue which will now be lost. The August 2006 equitable charge shows that another $105,000 must be taken from residue in any event.

1. I see no reason to order the costs be borne rateably across all estate property, as distinct from what would follow from the accepted order if residue is insufficient to meet the costs orders. I will therefore order that the both the plaintiff's and defendants' costs be paid on the ordinary basis out of the estate.

Conclusions and Orders

1. Accordingly, the Court makes the following orders and directions:-

1.Order pursuant to s 26 of the Civil Procedure Act that the mediation of the Succession Act proceedings (2011/299188) brought by Ghosn and Mouna Yazbek against the estate of the late Daniel Yazbek take place before 22 August 2012.

2.Order that the grant of administration of the estate of the late Daniel Yazbek made to Ghosn and Mouna Yazbek on 7 April 2011 be revoked.

3.Order that, subject to his filing a consent to his appointment and subject to his otherwise complying with the applicable rules of Court, Mr Jeremy Glass be appointed administrator (c.t.a) of the estate of the late Daniel Yazbek.

4.Stay the operation of order 2 and 3 for a period of six weeks until Wednesday, 22 August 2012.

5.Order that both the plaintiff's and the defendants' costs of these proceedings be paid out of the estate on the ordinary basis.

6.Grant liberty to apply in respect of the implementation of these orders.

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Decision last updated: 12 July 2012