In the recent case of Caruana & Ors v Caruana [2013] VSC 643, the deceased was survived by his six adult children. The deceased’s last Will appointed the defendant son as the executor and trustee and left the residue of his estate equally to his six children.

The inventory of assets filed with the defendant’s application for grant of probate listed the deceased’s assets at $277,053.66, which included a loan of $170,000.00 owed by the defendant and his wife. The loan was made by way of contribution towards the purchase of the defendant and his wife’s matrimonial property in Narre Warren. The deceased was not registered on the title to the Narre Warren property and there was no documentation reflecting the loan agreement.

Prior to the grant of probate, the defendant informed his siblings that he would only repay the estate the sum of $50,500, being the amount of the loan less the claimed costs of attending to the deceased’s daily needs when he lived at the Narre Warren property till his death.

Subsequent to the grant of probate, 4 of the defendant’s siblings made an application to remove him as the executor. At the hearing for the plaintiffs’ application, the defendant consented to his resignation and sought an independent person be appointed. The Court ordered that the defendant be replaced with the experienced administrator proposed by the plaintiffs.

Further, the Court observed that:

  • the defendant had not repaid any part of the loan to the estate;
  • the amount of the loan is an issue in dispute and needs to be investigated and properly assessed;
  • the full amount of the loan should be paid to the administrator as the loan has always been acknowledged by the defendant; and
  • there were also some cash amounts that required further investigation and assessment.

The Court ordered that the defendant pay the full amount of $170,000 to the administrator and adjourned the hearing to allow counsel to prepare the appropriate orders.

The defendant subsequently informed the Court that he had transferred the sum of $50,500 to his solicitors but needed to borrow money to pay the balance of the loan. The Court was not satisfied with the defendant’s proposal for the repayment, but allowed further time in the orders so that the defendant could deal with the administrator concerning the repayment and the administrator could seek further directions from the Court if necessary.

The Court also determined that the defendant’s conduct caused unnecessary costs to what should have been a straightforward administration of a small estate. The defendant’s conduct takes the matter outside and beyond the usual circumstance where the costs would be ordered to be paid by the estate. This is a case where the defendant is the cause of the litigation and unreasonably so.

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