The Estate of the Late Akos Balazs Melegh (No. 2)

This is my second judgment in these proceedings. The Court gave its first judgment on 22 February 2016. This judgment should be read together with the Court’s first judgment, which provides both procedural and substantive background of the matters that have brought these proceedings before the Court: The Estate of the Late Akos Balazs Melegh [2016] NSWSC 249.

The Court's first judgment granted Letters of Administration of the intestate estate of the deceased, the late Akos Balazs Melegh to the third plaintiff in the proceedings, Katalin D'Arney (“the administrator”). It also approved the release under Succession Act 2006, s 95 of certain claims that had been settled as between Ms Brigitta Plosz and the estate.

Parties, matters, and events are referred to in this second judgment in the same way as they are in the first judgment. The first judgment sets out in detail the early steps that were taken in relation to the administration of the estate, and that chronology is not repeated here.

There are four applications before the Court today. The first is a motion dated 23 March 2016 brought by the former named executors of the estate, Gabor and Anthony Boskovitz (“Messrs Boskovitz”). They seek commission under Probate and Administration Act 1898, s 86(1) as persons formerly acting in the role of executors of the estate, for their time and trouble in its administration. But they never took out probate.

The second application before the Court is the administrator's application for costs of the motion to strike out the Statement of Claim which was filed in Court on 26 September 2014 by the named executors in the deceased’s wills, Messrs Boskovitz. The plaintiff says that this is an unresolved motion and that there ought be a costs order in respect of the costs that were incurred with respect to it.

The third application is the administrator's application for costs of a motion of 9 July 2014 brought by Messrs Boskovitz to strike out the Caveat lodged against the application for probate in proceedings number 2013/283135.

As it happens, it is convenient to deal with the third application before the second application, because it precedes the other in time.

The fourth application is the plaintiff's claim for costs of these proceedings. The executrix claims one-third, or such other proportion, of the costs of the proceedings as the Court thinks fit, on the grounds that the conduct of Messrs Boskovitz, when they were involved with the administration of this estate as executors de son tort, prolonged these proceedings and engaged in an unquestioning pursuit of an ill-founded application for probate.

Finally there is a matter before the Court which is not a contested application at all. The Court has been informed that Ms D'Arney, who was only appointed administrator on 22 February 2016, now desires not to continue as administrator. The Court will deal with that application after the others.

Before dealing with these motions, some supplementary history should be recorded. The deceased died suddenly and tragically in a motorcycle accident on 9 September 2013. He left assets in New South Wales, all moveable property, which have been the subject of the estate’s administration. The deceased was not married and had no children. His closest surviving relatives were his father and his sister, both still residents of his native land, Hungary.

The deceased's personal effects only had a value for probate purposes of less than about $35,000. But he was entitled to a death benefit under the Host PLUS Superannuation Fund of which he was a member, as an employee within the hospitality industry. The death benefit payable upon his death from that superannuation fund was a sum slightly in excess of $230,000.

The earlier contests in these proceedings centred around two instruments that were the subject of the applications for probate by Messrs Boskovitz. The first is an instrument of 25 May 2013 (sometimes referred to in these reasons as “the first Will”) and the second an instrument of 13 July 2013 (sometimes described as “the second Will”).

Shortly after the deceased's death on 9 September, and on or about 18 September Messrs Boskovitz claimed to Mr Kristofferson and Ms Katalin Borbely, as Ms D'Arney then was known, that a document bearing the date 25 May 2013 and the purported signature of the deceased was his final Will. The 25 May 2013 instrument was in the form of a printed form completed in handwriting which, on its face, appointed Mr Anthony Boskovitz and Mr Gabor Leslie Boskovitz as the deceased’s executors.

The 25 May 2013 instrument had apparently been witnessed by two persons in the presence of the deceased and of each other. It gave 75 per cent of the estate of the deceased to the second plaintiff Csilla Melegh and the other 25 per cent to one Michael Major, who has been described in these proceedings as an investment advisor to the deceased.

On 12 November 2013 Messrs Boskovitz filed a probate application as solicitor-executors seeking a grant of probate for the 25 May 2013 instrument. But the first probate application did not proceed, in circumstances and for reasons that Mr Gabor Boskovitz describes in his affidavit sworn on 6 May 2016 and which are detailed later in these reasons.

But on 20 December 2013 Messrs Boskovitz propounded a later instrument as the last Will of the deceased, one bearing date 13 July 2013 and which also purported to be signed by the deceased as his final Will.

This purported second Will differed from the 25 May instrument in a number of respects. It purported to appoint Messrs Boskovitz as executors, but together this time with one Ian Chipchase, another solicitor. The 13 July 2013 instrument declared too that it was the last Will of the deceased. It revoked all prior testamentary instruments and stated that it was witnessed by two persons in the presence of the deceased and of each other. But on this occasion the estate was given to the third defendant, Brigitta Plosz, who was described in the instrument as the deceased’s de facto partner.

In the Statement of Claim filed in these proceedings in August 2014, the plaintiff sets out in paragraphs 25, 26 and 27 a number of suspicious circumstances attending upon the 25 May 2013 and 13 July 2013 instruments. They are detailed and present in light of the subsequent handwriting expert evidence that the signature on both instruments was unlikely to be that of the deceased. Paragraphs 25, 26 and 27 provide as follows:

Not least among these suspicious circumstances is the fact that it is uncontested on all sides that the named executors, Messrs Boskovitz were unknown to the deceased at any time before his death. And the quick change between the two instruments was very odd so soon after an affidavit was sought from the attesting witnesses to the first Will. And in the first Will the deceased gave most of his property to family members, but in the second to someone who was described as a de facto partner, not mentioned in the first Will with all the family members being left out of the second Will.

Mr Gabor Boskovitz throws some light as to what was happening behind the scenes. He says that Mr Major and Ms Borbely attended his office in September 2013 and gave him what he describes as the 25 May 2013 instrument. He explains that Mr Major had been a client of his and that Ms Borbely was introduced to him for the first time as having been a flatmate of the deceased. This contact apparently came through Mr Major.

He took steps to go to the residence of Ms Plosz and the deceased to collect the deceased’s belongings. He made telephone calls to Csilla Melegh, the deceased's sister, and received instructions from her in Hungarian about the disposition of jewellery and about some other items of estate administration.

Mr Gabor Boskovitz deposes to having received an email on 18 September 2013 from Csilla Melegh. Among other things this email says:

Although Mr Boskovitz had apparently been named as one of the executors by the Will that was extant at that time, the 25 May instrument, it was clear from this email that the deceased's sister was keen to get an understanding about whether or not that Will was indeed authentic.

This together with the other circumstances identified in paragraphs 25, 26 and 27 of the Statement of Claim should have alerted Mr Boskovitz to the fact that complete and thorough inquiries should be made about the provenance, authenticity and execution of the Will. Relatives were concerned about the authenticity of the Will.

Mr Anthony Boskovitz attended at the residence of the deceased and collected assets. Mr Gabor Boskovitz and Mr Anthony Boskovitz took steps that executors normally would with the assistance of Mr Major to collect, gather assets and to sell them, to arrange for the cremation of the deceased and sending of his ashes to Hungary. But before a grant of probate they were acting as executors de son tort. Mr Anthony and Mr Gabor Boskovitz advertised their intention to apply for probate and filed a summons for probate in November 2013.

But shortly after filing the Summons for probate Mr Boskovitz received a requisition on 20 November from the Probate Registry of this Court to file an affidavit by one of the attesting witness as to the due execution of the Will.

Mr Boskovitz sent a letter on 21 November to each of the attesting witnesses of the first Will, seeking an affidavit from them as to due execution of the first Will by the deceased.

Neither of these letters was answered. Instead on 26 November 2013 Mr Boskovitz received advice from Messrs Stacks Goudkamp that they had in their possession another Will dated July 2013, indeed the 13 July 2013 instrument.

Messrs Boskovitz received the 13 July 2013 instrument on 5 December 2013 and on 19 December 2013 they re-advertised their intention to apply for probate of the new instrument.

Shortly thereafter, Mr Boskovitz received another requisition from the Court. It drew to his attention that a caveat had been lodged in the matter on 30 December 2013. The requisition of 10 April 2014 informed him of the Caveat and requested an affidavit by an attesting witness to the second Will.

There were said to be two attesting witnesses to the second Will. One was a Mr Ashley Rake. An affidavit was obtained from him. The other was Michael Major. Although Mr Major was known to Messrs Boskovitz, he did not provide an affidavit of attesting witness from him. Mr Boskovitz says that as a result of his receiving these documents which included an affidavit of Ms Plosz herself he believed the second Will was signed by the deceased.

This brought the matter into early 2014. Soon after the various motions already identified were filed.

This is sufficient general background to deal with the motions now before the Court. First, the Court will deal with the claim for commission. This is brought under the Boskovitzs’ Motion of 23 March this year.

Messrs Boskoviz make their claim for commission under Probate and Administration Act 1898, s 86(1), which provides:

The Court has considered the operation of s 86 on many occasions. The parties referred the Court to one of my own decisions in the matter of Hawkins v Barkley-Brown & Anor [2010] NSWSC 48 (at [33]), which made the following observations about the structure of s 86(1):

Section 86(1) permits the Court to allow out of the assets of the deceased a commission for the executors "pains and trouble as is just and reasonable". The percentage which is fixed should be related to the pains and trouble according to notions of what is just and reasonable. The decision whether or not to award commission is discretionary.

Messrs Boskovitz did occupy not inconsiderable time in collecting the deceased’s moveable property. Mr Anthony Boskovitzs' affidavit shows that the total of sales of the items collected was some $2,780. These funds were expended on funeral expenses of $2,149, the costs of returning the deceased's ashes to Hungary of $206 and other Court related fees of $459, totalling $2,814.40. Therefore a slight shortfall resulted in the amount of money available from the sales proceeds to meet these expenses.

Messrs Boskovitz put their claim for commission on the basis that they are solicitors and that they were able to charge their full fees as solicitors. They estimate that they undertook 45 hours of work at $350 an hour, plus GST, and that their fees for all they did would actually be of the order of $17,325. But they submit that a percentage for commission, which gave them about $5,000 plus GST would be just and fair on account of the work they have done.

But two fundamental issues arise before such a commission award could be given. The first is, do they meet the threshold requirements for commission under s 86? The second issue is even if they do so qualify, would the Court exercise its discretion in their favour.

As to the first issue, Messrs Boskovitz's claim for commission does not qualify under s 86. The Court has a discretion under s 86 to allow out of the assets of the deceased person to an executor, administrator or trustee for the time being "in the passing of accounts relating to the estate of the deceased person", relevant commission [emphasis added].

A threshold for the operation of s 86 is that accounts are "passed". That does not simply mean the production of some informal documents setting out an estate balance sheet and sending them onto an administrator. The filing and passing of accounts is a formal process required by the Court under Probate and Administration Act, s 85 and in accordance with the rules of Court.

Messrs Boskovitz have not passed accounts under s 85. Nor have they applied to pass accounts. They do not qualify for commission under s 86. For this reason it is not necessary for the Court to consider whether Messrs Boskovitz would otherwise have qualified for commission, as they were only executors de son tort.

But they have not conducted themselves in a way that would entitle them to commission for several reasons. Firstly as to the accounts themselves, there is no doubt that Mr Anthony Boskovitz set out in his affidavit of 17 February 2016 an explanation of what estate assets were sold and how estate monies were received and expended. But even that account was incomplete. It did not, for example, deal with the sum of $3,000 which Mr Major had advanced to the estate. He was pressing for repayment of this sum from Ms D'Arney. Mr Kristofferson on behalf of the estate had been seeking information about these funds for some time.

Ms D'Arney had no idea where that money was until the Court ordered the production of documents which revealed that it was in the trust account of Messrs Boskovitz. The Court has now been told the money will be repaid to Mr Major, which will relieve Ms D'Arney from pressure from Mr Major for its repayment. But Mr Anthony Boskovitz’s affidavit does not set out estate accounts in any conventional form. And the accounts were incomplete until the hearing on 6 May when the $3,000 was located.

In my view, this is not the conduct of executors who should be compensated for their pains and trouble. Their failure to provide full accounting information was not complete until 6 May, months after the appointment of Ms D'Arney on 22 February.

Another discretionary factor against the award of commission is the size of this estate and what has happened to deplete it. Whilst the Court is mindful that Messrs Boskovitz have done something to get in estate assets, the evolving financial position of this estate is one which can only be greatly disappointing to the father and sister of the deceased in Hungary who are entitled on intestacy. They must wonder how an estate worth $240,000 will, as a result of the various contests that have taken place in these proceedings, now only produce to them as beneficiaries, an amount between $50,000 and $70,000. This course of events is a source of considerable disquiet to the Court.

The size and depletion of the estate is not irrelevant to the exercise of the s 86 discretion. It is by no means the main reason why I deny commission but it is one of the factors the Court takes into account. Because of the rising costs of this estate, the Court has expressed its concern about that subject to the solicitor acting for Ms D'Arney, Mr Kristofferson. He has now undertaken not to charge any more fees to the estate beyond those that are already the subject of his costs affidavit, which, I may say in the circumstances is a laudable position to take. This will ensure something can be obtained from this estate for the deceased’s relations in Hungary.

Another reason against awarding a commission is that Messrs Boskovitz did not conduct the administration of this estate in a way that would justify the award of commission as is just and reasonable.

The reasons for this are best examined by reference to the other two motions. The reasons for making the orders on the other two motions demonstrate that Messrs Boskovitz did inappropriately and unreasonably pursue proceedings on behalf of the estate to strike out a caveat and then a Statement of Claim, instead of investigating what should have been obvious: that there were seriously questionable features of the two purported Wills.

The Boskovitzs’ 9 July motion was one to strike out the Caveat dated 30 June 2014 filed in the proceedings. On its face the Caveat raises a number of issues concerning the Will of 25 May 2013.

On 24 November 2014 Lindsay J reserved all questions of costs in these proceedings. His Honour by that order reserved costs on this motion and on the 26 September 2014 motion to which I will shortly come. I do not accept the submissions put on behalf of Messrs Boskovitz that Lindsay J did not reserve costs on these motions. Even if that were wrong, the cost of the motions have not been determined. They can be determined now.

The applicable law in this situation is that where a motion is undetermined and will not be resolved by contest before the Court, one or other party may apply for an order for costs. The Court has discretion to make a costs order either where defendants have consented to a grant of final relief, or if there is consensus as to the outcome of the proceedings. There is in this case consensus in the sense that no one wishes to pursue either of these unresolved motions and the Boskovitzs’ abandoned their application for probate.

The applicable law is as stated by Hill J in Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194; 116 ALR 523 (“Aust-Home”) and by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 (“Lai Qin”) at 264 – 265.

In Aust-Home Hill J said (at 201):

In Lai Qin McHugh J said (at 264-265):

In general summary, a costs order can be made in these circumstances if it can be determined that one or other party would certainly have succeeded in the proceedings, or if one or other party has acted unreasonably in pursuing or defending the proceedings. Without entering upon the question of what would have been the outcome of these motions had they been heard, the Court can say that it was unreasonable for either motion to be brought by Messrs Boskovitz.

This is so for several reasons. First, rather than seeking to strike out the Caveat by motion within 1 week of the Caveat being filed as they did, the appropriate course for these named executors was first to do some basic investigation of the serious claims made in the Caveat. Messrs Boskovitz say in their defence that they had an affidavit from one of the attesting witnesses. But for the reasons set out in the Caveat or elaborated in the Statement of Claim filed later, there still was every reason to investigate the claims in the Caveat.

Secondly, Csilla Melegh had raised very early the issue of the authenticity of the first Will. Thirdly, there were objective factors concerning the Will that made it suspicious, as these reasons have already indicated. Fourthly, the fact that when information was sought about the first Will, there was no response from the attesting witnesses, and the second Will dated only a few weeks later was suddenly produced, should have raised real suspicions and prompted further investigations. Finally, the Caveat itself sets out detailed reasons to question both instruments. Those and other grounds are recorded in paragraphs 25, 26 and 27 of the Statement of Claim set out above.

In my view, the appropriate course therefore is to award costs of this motion against Messrs Boskovitz and I so order. I further order that in light of their conduct identified here that they not be permitted to recover from the estate those costs in their role as executors.

The motion to strike out the Statement of Claim was filed on 26 September 2014, just over a month after the Statement of Claim was filed on 27 August 2014.

In my view, the same logic applies to the costs of this motion as applies to the motion to strike out the Caveat. The Lai Qin principles also apply. This motion is now not being proceeded with and there is consensus as to its outcome.

Any reading of paragraphs 25, 26 and 27 of the Statement of Claim should have caused persons in the position of Messrs Boskovitz to hesitate before seeking just to strike out the Statement of Claim. Instead some basic investigation as to whether any of those matters had substance was appropriate, before expending costs which would potentially reduce the quantum of the estate.

In relation to the costs of the strike out motions regarding the Caveat and the Statement of Claim, the Court’s reasons infer that Messrs Boskovitz should not be indemnified out of estate assets for these orders for costs against them. They must pay the estate's costs of those motions. They should not be entitled to be indemnified for that cost liability out of the estate.

The fourth application is the plaintiffs’ application for the costs of, or part of, the proceedings.

The administrator’s submissions for such an order for costs are set out in paragraph 27 of her submissions. The Court should not make such a costs order for several reasons. First, the Court does not know the relative proportion of the costs that have been incurred in the whole proceedings, as distinct from those incurred by the Boskovitzs.

Secondly, the Court has already made costs orders against Messrs Boskovitz in respect of the two motions they did not pursue. The Court is able to fix with some precision upon their conduct deserving of a costs order with respect to those motions. But that cannot be done with this general claim for costs.

Thirdly, it is difficult to apportion the costs of the proceedings that are referrable to the period of time when the Boskovitzs were involved as named executors up until November 2014, when they retired from that role.

Fourthly, even in that period it is very hard to determine to what extent, apart from the two motions that I have mentioned, Messrs Boskovitz prolonged the administration of the estate. They did not prolong the administration of the estate so far as the gathering of the deceased's effects and attending to his funeral and cremation expenses is concerned. I will not make the order sought.

The final matter to be dealt with is a Notice of Motion filed on 6 May 2016 in which Mr Kristofferson now seeks to be made the administrator of the estate.

Ms D'Arney has indicated to the Court that she wishes to cease to act as administrator of the estate. She was appointed on 23 March this year. She has now contacted Mr Kristofferson, the solicitor for the estate, the second plaintiff, and the attorney for the deceased’s father and sister. She has indicated to Mr Kristofferson that she has been pressed by Mr Major about the payment of moneys to him from the estate. She is concerned as a mother with a new baby about the pressures of having to deal with Mr Major and in dealing with the estate’s liabilities. She would prefer not to continue.

When she consented to becoming an administrator she did not reasonably expect that it would be as onerous as it has turned out to be for her as a volunteer in the role.

Extensive inquiries took place previously about who could be an administrator of the estate. Ms D'Arney came forward. But there is no-one else who could be made an administrator.

Mr Kristofferson puts himself forward to be appointed the administrator. Ordinarily the Court would not appoint a person such as a solicitor acting for the estate to be an administrator. There is an obvious conflict of interest between a person charging fees to the estate and then authorising the doing of work that will incur those fees.

But in the very unusual circumstances of this case, I propose for several reasons to make that appointment. First, Mr Kristofferson has undertaken to the Court not to charge further fees to the estate. Secondly, Mr Kristofferson knows a great deal about the administration of the estate. It is highly convenient for him to wind up an estate administration, which seems to me to be at least two-thirds complete. Thirdly, there is no-one else to take the appointment. Fourthly, the Court can review Mr Kristofferson's final work on behalf of the estate and will relist the matter in October of this year. When he is in a position to present final accounts and show what money is about to be, or has been, distributed to the beneficiaries in Hungary, final approvals to his fees can be given by the Court.

So for that reason I will make orders on Mr Kristofferson’s motion of 6 May 2016. And I note the undertaking of Mr Kristofferson given to the Court set out in paragraph (3) of that motion.

The Court therefore orders: