Equitable Set Off ? Not so fast.

Elias Dimitrakakis was born in Greece and emigrated to Australia in 1960; with his wife and their five young children following the next year. During his life, he and his wife accumulated significant assets, in both Australia and Greece. Elias and his wife returned to Greece in their later years, travelling back to Australia for periods.

Elias’s wife died in Australia in 2008. He returned to Greece with his son Vassilos around June 2010 and died there in December 2012.

In a Will (“the Will”) Elias made in May 2000 his daughter Georgia was named executrix of her father’s estate, obtaining a grant of probate of the Will in February 2015.

Georgia refused to distribute two parcels of real estate given to her brother Vassilos through the Will; submitting that the estate had suffered loss and damage of at least $3,949,000; as executrix Georgia has

 ‘chosen to delay transferring Vassilio’s share in properties to him, as I believe that he owes the estate approximately $1.3m which is well in excess of the values of the properties the Estate owes him’.

Georgia alleged that Vassilos appropriated money and property from their father either unconscionably or in breach of fiduciary duty.

Vassilios submits that the bank accounts in question were joint accounts and that the real estate transfers were gifts made by Elias in full possession of his faculties.

Georgia relied upon Cherry v Boultbee (1839) 4 My & Cr 442 and the equitable principle of set-off to justify her decision as executrix to retain the gifts of the two interests in real estate that were gifted by Elias to Vassilos; the remedies sought when applied to estate administration can be seen as mechanisms to ensure that a beneficiary who owes money to an estate does not receive more than his or her fair share.

Equity will allow a set-off where it would be unconscionable to allow one party to insist on its legal right without first accommodating the other’s countervailing legal right.

The rule in Cherry v Boultbee  is an illustration of a fundamental principle of equity that a person who seeks equity must do equity:

‘where a person entitled to participate in a fund is also bound to make a contribution in aid of that fund, they cannot be allowed so to participate unless and until they fulfilled their duty to contribute.’

If applied in this case Georgia’s refusal to distribute the gifts of real estate to Vassilos pending determination of the claim by the Estate against him will be affirmed

The Court considered that Cherry v Boultbee cannot apply in respect of a specific gift of property or chattels. Based on these cases, and the basis of the argument in this application only, the Court did not consider that Georgia was justified in withholding the gifts of real estate; ordering their transfer to Vassilos.

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