IN THE SUPREME COURT OF VICTORIA	Not Restricted	
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2022 03702

IN THE MATTER of the Estate of Robert Bozo Cvitkovic, deceased

BETWEEN:

MARIO ZELJKO CVITKOVIC	First Plaintiff	
		
CHERRY PEHAR	Second Plaintiff	
		
v  		
		
GEOFFREY JOHN DILLON (in his capacity as the Administrator pendente lite of the Estate of Robert Bozo Cvitkovic)	First Defendant	
		
DANICA CVITKOVIC	Second Defendant	

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JUDGE:	Moore J	
WHERE HELD:	Melbourne	
DATE OF HEARING:	23 November 2023	
DATE OF JUDGMENT:	29 November 2023 	
CASE MAY BE CITED AS:	Cvitkovic v Dillon 	
MEDIUM NEUTRAL CITATION:	[2023] VSC 701	
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WILLS AND ESTATES – Where plaintiff seeks orders for the removal of the first defendant as the administrator pendente lite of the estate – Identity of the new administrator pendente lite in dispute between the plaintiff and the second defendant – Where plaintiff seeks that the new administrator pendente lite be authorised to recover a debt of a trust - Henderson v Executor Trustee Australia Ltd (2005) 93 SASR 337.

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APPEARANCES:
	Counsel	Solicitors	
For the Plaintiffs	Mr A Dickenson	iWills Legal	
			
For the First Defendant	Ms U Stanisich	Corrs Chambers Westgarth	
			
For the Second Defendant	Ms C Sparke KC	Macpherson Kelley	

HIS HONOUR:
Background
1	Robert Bozo Cvitkovic died intestate in Croatia on 30 March 2016 at 79 years of age.  He was survived by two adult children, Mario Cvitkovic and Cherry Pehar, the plaintiffs in this proceeding, and by his wife, Danica Cvitkovic, who is the second defendant.
2	The marriage between the deceased and the second defendant took place in Croatia on 29 October 2015, some five months before the deceased’s death.  The plaintiffs dispute the validity of the marriage and, on 24 October 2016, the first plaintiff issued a proceeding in the Municipal Civil Court in Zagreb, Croatia seeking orders including the annulment of the marriage (the Croation proceeding).  The claims made in the Croatian proceeding have not yet been determined.
3	On 21 November 2016, the second defendant applied for a grant of administration on intestacy in the estate of the deceased.  The plaintiffs subsequently lodged grounds of objection disputing the validity of the deceased’s marriage to the second defendant and accordingly whether she has any interest in the estate.
4	The inventory of assets and liabilities filed by the second defendant with her application for a grant of administration on intestacy recorded that the net value of the deceased’s estate in Australia was $15,804,648.  As is presently relevant, the inventory included a property situated at unit 7, 10 St Andrews Street, Brighton (the Brighton property) valued at $1,290,000 and a beneficiary loan account in the Bozic Investment Trust (the Trust) valued at $12,952,186.36 (the Debt), being the largest asset listed in the inventory.
5	The trustee of the Trust is Bozic Investments Pty Ltd.  The named specified potential beneficiaries of the Trust are the deceased, his brother Ivan Baravicevic, his accountant, Heinz Mai, and his lawyer, Anthony Peter Forbes-Nicholson.  The general beneficiaries of the Trust include the spouse or de facto partner of any of the specified beneficiaries.  Notably, the plaintiffs are excluded beneficiaries.
6	The financial statements of the Trust for the 2016 financial year record assets of $15,435,886 comprised of cash and bank accounts, shareholdings in listed companies, and units in listed unit trusts.  The financial statements also record the beneficiary loan account owed by the Trust to the deceased in the amount of $13,136,153, and a sum of $263,129 owing to the estate.  The total assets of the Trust have since increased to $17,786,120 (as at 30 June 2022).
7	On 12 May 2017, the Court made orders by consent granting to the first defendant letters of administration pendente lite of the deceased’s estate (the 2017 orders).  The grant was  limited to the following purposes:
(a)	Exercising the power of a personal representative of the estate with respect to the appointment of a director of each of the companies;
(b)	Exercising the power of a personal representative of the estate with respect to the super fund save that the administrator was not authorised to approve the distribution of any death benefit or other distribution from the super fund;
(c)	Managing the deceased’s interest in the Brighton property subject to the written consent of Danica, Mario and Cherry;
(d)	Making an application to transfer the proprietorship of the Brighton property to himself as the administrator;
(e)	Making a lost title application of the Queensland property which the deceased holds on behalf of the Cvitkovic Endowment Trust. 
(f)	Obtaining legal, accounting, investment and other professional advice necessary for the proper administration of the estate pending the making of a general grant of representation;
(g)	Accessing and making copies of all files, documents and other information relating to the deceased’s affairs as he saw appropriate for the purpose of exercising the powers of the limited grant;
(h)	Opening bank accounts for or in the name of the estate of the deceased or any entity the deceased had an interest in for the purpose of exercising the powers of the limited grant;
(i)	Managing taxation affairs for the deceased and any entity the deceased had an interest in. 
8	By at least 2021, disputes had arisen between the plaintiffs and the first defendant about his administration of the deceased’s estate.  One of those disputes was whether the first defendant should have recovered the Debt and invested the funds for the benefit of the intestacy beneficiaries.  In summary, the plaintiffs complain that, because the first defendant has not called in the Debt, there has been no capital growth in the value of that large asset of the estate.  The first defendant considers that the 2017 orders do not empower him to recover the Debt and that, in any event, calling in the Debt would likely have resulted in the Trust being wound up.
Plaintiffs’ claims
9	It is in the above context that the plaintiffs issued this proceeding on 16 September 2022 seeking orders removing the first defendant as the administrator pendente lite of the deceased’s estate and appointing Perpetual Trustees Ltd (Perpetual) in his place.  They also sought an order pursuant to order 54 of the Supreme Court (General Civil Procedure) Rules 2015 that the new administrator be authorised to recover the Debt and to invest those funds on behalf of the estate pending the determination of the Croatian proceeding.
10	By an affidavit made on 3 May 2023, the first defendant consented to his removal as administrator pendente lite of the deceased’s estate.
11	Although the second defendant did not concede that the first defendant should be discharged as administrator pendente lite of the deceased’s estate, it is plainly appropriate that such an order be made.  The administrator pendente lite has consented to that occurring in an administration which has been enveloped in controversy and disputation,  and in circumstances where his removal has been sought by the plaintiffs who, depending upon the outcome of the Croation proceeding, are either the only intestacy beneficiaries of the deceased’s estate, or two of the three intestacy beneficiaries.
12	Two issues remain for determination:
(a)	the identity of the person to be appointed administrator pendente lite in place of the first defendant; and
(b)	whether the administrator pendente lite should be authorised to recover the debt.
Identity of the administrator pendente lite
13	Although the plaintiffs had originally proposed that Perpetual be appointed administrator pendente lite of the estate in place of the first defendant, at trial they proposed that a different professional trustee company, Australian Unity Trustees Ltd (Australian Unity), be appointed.  This was opposed by the second defendant who instead proposed that a solicitor, Mr Greg Russo, be appointed.  Mr Russo is a solicitor  with experience in the administration of complex deceased estates and who holds specialist qualifications in the area of wills and estates.
14	At the conclusion of the trial I informed the parties of my decision to appoint Mr Russo, rather than Australian Unity, as administrator pendente lite for the estate.  My decision is not based on any comparative assessment of the expertise of Mr Russo and Australian Unity and should not be taken in any way as reflecting adversely on the capability or professionalism of Australian Unity.  
15	There are two principal reasons why I have determined that Mr Russo, rather than Australian Unity, is more suitable to act as administrator pendente lite of the deceased’s estate.
16	First, senior counsel for the second defendant advanced a persuasive and uncontested analysis of the fees which could reasonably be excepted to be incurred in the event that Australian Unity was appointed administrator pendente lite, as compared to Mr Russo being appointed.  Although such analyses inevitably require various assumptions and involve a level of speculation as to the work which may be required to be undertaken by an administrator, the analysis advanced by the second defendant was cogent and persuasive.  It yielded a result that the fees charged by Australian Unity could potentially be three times greater than the fees charged by Mr Russo.  This analysis, together with the proposed use by Mr Russo of the Practitioner Remuneration Order as the basis for the calculation of his fees, as compared to the use of fixed or percentage fees as proposed by Australian Unity, satisfies me that the costs associated with the appointment of Mr Russo will likely be substantially less than the costs likely to be incurred in the event that Australian Unity was appointed.  As I have noted, there was no submission that there would be any difference in the quality of the services performed by Mr Russo and Australian Unity in the context of the deceased’s estate, or that the nature of the proposed appointment called for skills or expertise which Australian Unity was uniquely able to provide.
17	Secondly, the proposed appointment of Australian Unity is conditional upon the sale of the Brighton property to provide the funds for payment of the administrator’s fees and costs.  While it may ultimately emerge that assets of the estate may need to be sold  to fund the administration of the estate whoever is appointed administrator pendente lite, Mr Russo’s appointment was not conditional the sale of any assets of the estate.  It is also the case that the sale of the Brighton property may be potentially disadvantageous to the second defendant because, if the validity of the marriage is upheld in the Croatian proceeding, she may have a claim to the Brighton property pursuant to section 70P of the Administration and Probate Act 1958.  In that event, the sale of the Brighton property would therefore deprive her of the ability to pursue that claim and would further deprive her of the right to reside in the property in the event that she relocated to Melbourne.  
18	In his affidavit consenting to act as administrator pendente lite for the deceased’s estate, Mr Russo sought clarification about a number of matters:
(a)	Whether, if he was appointed administrator pendente lite, he is able to secure, at the estate’s expense, appropriate insurance coverage relating to his role as administrator pendente lite.  An order to this effect is reasonable and appropriate in aid of the purposes of Mr Russo’s appointment.
(b)	Whether he is authorised to recover the Debt from the Trust.  As explained below, Mr Russo is to be given such authorisation as administrator pendente lite of the deceased’s estate, with such authorisation capable of being exercised unconditionally and in accordance with law.
(c)	Whether he is authorised to recover the current unpaid present entitlements payable to the deceased’s estate and to Premier Crown Commercial Pty Ltd.  Mr Russo is authorised to recover the unpaid present entitlements payable to the deceased’s estate but it is not appropriate for Mr Russo to be granted, at this time, authorisation in relation to the unpaid entitlement payable to Premier Crown Commercial Pty Ltd as that matter was not the subject matter of this proceeding and has not been given any substantive consideration.
(d)	Whether he is authorised to investigate criticisms made by the plaintiffs regarding the first defendant and, depending on the results of such investigations, to take action, including issuing legal proceedings, against the first defendant.  Such authorisation will not be given. Any such enquiries and investigations are more appropriately undertaken by the person ultimately appointed administrator pursuant to a full grant.  In the event that any person seeks that the Court authorise such investigations by the administrator pendente lite, the appropriate application should be made to the Court. 
Authorisation to recover the Debt
19	The second defendant submitted that calling in the Debt would have ‘catastrophic’ consequences: the Trust would have to be wound up; capital gains tax liabilities would thereby be incurred; the Trust would lose the capacity to determine the timing of when and how to sell assets; and the second defendant would lose the opportunity to forgive part of the Debt, if she elected to do so, and to retain funds in the Trust.  It was also submitted that the reduction in the realised value of the Trust’s assets as a result of the capital gains tax liability would in turn diminish the capacity of the Trust to repay the Debt, thereby prejudicing the position of the deceased’s estate. 
20	Given these potentially very serious consequences, the second defendant submitted that the question of the recovery of the Debt should be left to the administrator who would eventually be appointed in the future pursuant to a full grant, rather than the administrator pendente lite.  An administrator with a full grant would be better able to make informed investment decisions concerning the management of the assets of the estate, including the Debt owed by the Trust.  This was particularly so given that the administration pendente lite could come to an end at any time.  With an uncertain temporal horizon, it was not feasible for the administrator pendente lite to make sound decisions in relation to the recovery of the Debt.
21	I make no findings in relation to the various adverse effects to which the second defendant referred, but observe that most of them are, at least in their immediate operation, claimed consequences for the Trust or the second defendant, as distinct from the deceased’s estate for which the administrator pendente lite is responsible.  In any event however, as senior counsel for the second defendant accepted, the above submissions fall away once it is acknowledged that the plaintiffs do not seek the Court’s approval for the administrator pendente lite to take steps to recover the Debt, merely for the administrator pendente lite to have the power to do so.  Under the orders proposed by the plaintiffs, it will be a matter for the new administrator pendente lite to consider whether or not to exercise the power and, if it is to be exercised, in what circumstances and by what means.  For present purposes then, the focus on the claimed ‘catastrophic’ consequences associated with calling in the Debt was misdirected.  
22	I do not accept the second defendant’s submission that the Court should not make the orders sought because they would place the new administrator pendente lite in the same position as the first defendant.  That is not correct; by granting the authorisation sought by the plaintiffs, the apparent uncertainty in the administrator pendente lite’s powers under the 2017 orders will be removed.  Whether or not the new administrator pendente lite will seek to exercise the power and, if so, in what circumstances, is not known. 
23	I also reject the more general submission advanced by the second defendant that, because the nature of an appointment pendente lite is for an interim period, it would not be appropriate to give the administrator so appointed power to call in the Debt. 
24	The principles relating to the appointment and role of an administrator pendente lite were considered in detail by Debelle J in Henderson v Executor Trustee Australia Ltd.  His Honour described an administrator pendente lite as being analogous to a receiver who is the ‘caretaker of the assets until the persons entitled to them are ascertained’.  Although there is no prescribed role for an administrator pendente lite because the role will vary according to the circumstances in which they are appointed and the purpose for which they are appointed, the duty of an administrator pendente lite is to get in the assets of the estate and manage and preserve them for the benefit of those found to be entitled to those assets.  
25	In this case the plaintiffs do not seek a direction that the administrator pendente lite take any particular action in relation to the assets of the deceased’s estate.  The issue concerns the anterior question of whether the administrator pendente lite should be given a power in relation to a particular asset within the estate.  This is a substantially more straightforward question in the circumstances of this case.  The administrator pendente lite should be given the power to call in the Debt because that power is consonant with the duty to get in and preserve the assets of the estate in circumstances where the Debt is the largest asset of the deceased’s estate and one which has not been called in by the estate in the seven years since the deceased’s death.  Whether the power should be exercised is a matter for the administrator pendente lite to consider.   
26	The parties are to submit a minute of proposed orders to give effect to these reasons for judgment. 
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