Section 34(1)(c) of the Administration and Probate Act 1958 (Vic) is a powerful tool in the hands of the Court, empowering it to discharge or remove an executor or administrator of an estate when it finds that person to be ‘unfit’ to act.
The principal authority on the operation of s 34(1)(c) in cases of removal for unfitness is the decision of Ashley J in Monty Financial Services v Delmo[1996] VicRp 7; [1996] 1 VR 65. Approved by the Court of Appeal in Fysh v Coote [2000] VSCA 150 [20] and Dimos v Skaftouros [2004] VSCA 141; (2004) 9 VR 584 [103]–[106]. His Honour emphasised at 73 that, although the Court should not lightly override the wishes of the testator in nominating a particular executor, the authorities construing s 34(1)(c):
“… have all involved instances of misconduct or neglect by the executor occurring after the grant of probate and before the removal application. Such misconduct or neglect typically took the form of undue delay in administering the estate, failures to correspond with beneficiaries, failures to render accounts, or unreasonable delay in distributing entitlements. Apart from Turner, the cases are uniform in holding that such conduct evidences unfitness. In my view, it cannot be accepted that a serious breach of duty by an executor does not render them unfit for office. Whether the breach arises from deliberate misconduct, negligence, or sheer incompetence is irrelevant—the impact or likely impact on the estate and beneficiaries is the same.”
Ashley J’s reasoning was later approved in Fysh v Coote[2000] VSCA 150, where Ormiston JA (with Batt and Chernov JJA concurring) adopted Dixon J’s statement in Miller v Cameron [1936] HCA 13; (1936) 54 CLR 572 at 580-581 concerning the removal of trustees, holding it equally applicable to executors: 54 CLR 572 at 580-581
The interests of the beneficiaries guide the Court’s decision to remove a trustee, the security of the trust property, and the proper and faithful administration of the trust. The Court weighs a range of factors to determine if the beneficiaries’ welfare necessitates removal. This discretion is broad, and the removal of a trustee should only occur when there are sufficient grounds for doing so.
Emmanuel Francis Aquilina (the deceased) left a Will dated March 29, 2000, appointing his second wife, Teresita Aquilina, and Mercader Barristers and Solicitors as executors. However, as Teresita predeceased him, the sole executor became Fe Mercader, principal of Mercader Barristers and Solicitors (the defendant), who was granted probate of the Will on January 14, 2025.
On July 23 2025, the deceased’s granddaughter, Ivy Evelyn Nemler-Aquilina (the plaintiff), a beneficiary under the Will, commenced proceedings seeking the defendant’s removal as executor and her own appointment as administrator with the Will annexed. On September 12, 2025, Moore J granted the application and made related orders, including the appointment of the plaintiff as administrator.
The Will and the Estate
Under the Will, the estate was divided equally between Teresita and three children of the deceased’s first marriage: David John Aquilina, Mark Robert Aquilina, and Mary Ann Aquilina. Two beneficiaries—Teresita and Mark—predeceased the testator. Mark left one child, the plaintiff. The Will provided that if a beneficiary predeceased the testator, their share would pass equally to their children. As a result, the equal beneficiaries are the plaintiff, David, and Mary Ann.
The only significant estate asset is the Property at 32 Grant Street, Clifton Hill, Victoria (the Property). The title was transferred to the defendant as executor on March 24, 2025, and sold on June 28, 2025, for $1,162,000.
Interlocutory Injunction
On July 23 2025, the plaintiff filed a summons seeking interlocutory orders restraining the defendant from disposing of or encumbering any asset of the estate and from acting further under a “settlement agreement” dated May 5 2025.
The settlement agreement is a deed dated May 5, 2025, between the defendant, as executor of the deceased’s estate, and Fe Lawa, as executor or administrator of Teresita’s estate. It recites that:
(a) The Property was the matrimonial home of the deceased and Teresita from their marriage in 1993, though registered solely in the deceased’s name;
(b) On May 16 2016, the deceased and Teresita entered into a binding financial agreement providing for equal division of their Property (the Financial Agreement);
(c) On May 21 2016, with the deceased’s consent, Teresita lodged a caveat over the Property to secure her 50% interest; and
(d) Fe Lawa, on behalf of Teresita’s estate, had retained solicitors to pursue a claim against the deceased’s estate for 50% of the Property.
That intention is confirmed in a letter dated April 4, 2025, from the solicitors for Teresita’s estate to the defendant, seeking to establish a resulting or constructive trust over the Property, alleging that the deceased’s estate held 50% of it on trust for Teresita’s estate. The asserted interest was said to arise from both the relationship between Teresita and the deceased and the terms of the Financial Agreement.
The settlement agreement, however, records that Teresita’s estate is entitled to 40% of the Property and the deceased’s estate to 60%. It provides that the Property is to be sold, with payment of 40% of the net proceeds to Teresita’s estate in full settlement of all claims.
The plaintiff succeeded in her interlocutory application. On July 25 2025, the Court ordered, relevantly, that:
- Restraining the defendant from disposing of, encumbering, or diminishing the value of estate assets (including through payment of legal costs) without the plaintiff’s prior written consent, which the plaintiff shall not unreasonably withhold.
- The defendant must file and serve an affidavit that exhibits the settlement agreement dated May 5 2025.
- Restraining the defendant from taking any step in furtherance of that settlement agreement without the plaintiff’s prior written consent, which the plaintiff shall not unreasonably withhold.
- The defendant must, within 30 days, pay the plaintiff’s costs of the summons filed July 24 2025, fixed at $8,335.20, personally and without indemnity from the estate.
On June 28 2025, the defendant received the purchaser’s deposit of $73,000 for the Property. The contract is scheduled for completion upon payment of $1,036,800, which is due by September 19, 2025. The plaintiff does not oppose completion of the sale, but has sworn that they lost confidence in the defendant’s ability to act in good faith and in the best interests of the estate and beneficiaries. The plaintiff, therefore, seeks the defendant’s removal before settlement. Moore J believes that loss of confidence is entirely justified: the defendant’s conduct warrants their removal as executor.
The Defendant is Unfit to Act as Executor
The evidence provides a compelling basis to conclude that the welfare of the beneficiaries is inconsistent with the defendant’s continuation as executor. Their conduct demonstrates misunderstanding, misapprehension, and disregard of essential executorial duties, resulting in serious failures in the administration of the estate.
One lamentable and wasteful feature of administration of the estate was a prolonged refusal—up until shortly before trial—to recognise the plaintiff as a beneficiary. The relevant chronology is as follows:
(a) In August 2024, shortly after the deceased’s death, the defendant requested copies of the plaintiff’s birth certificate and Mark’s death certificate to establish that she was Mark’s daughter. The plaintiff complied, and by August 20 2024, the defendant appeared to accept her status as beneficiary.
(b) However, on November 6 2024, following the involvement of solicitors, the defendant advised that further proof was required, demanding either DNA evidence or a court declaration confirming the plaintiff’s paternity.
(c) On January 29 2025, the plaintiff’s solicitors provided a driver’s licence, passport, and Mark’s death certificate (identifying her as his daughter). The next day, the defendant rejected those documents and reiterated her demand for DNA or a court declaration. On March 3, 2025, the plaintiff’s solicitors provided her birth certificate, which records Mark as her father. Around that time, the other beneficiaries confirmed acceptance of the plaintiff’s status.
(d) Nonetheless, on March 10 2025, the defendant continued to reject the birth certificate and persisted in requiring DNA evidence.
(e) This remained in dispute for months, until, shortly before trial, the defendant finally conceded in her submissions that the plaintiff was a beneficiary, without offering any explanation for the change in position.
The defendant’s handling of this issue was unreasonable and obstructive. The insistence on DNA testing, years after Mark’s death, was impractical, insensitive, and unnecessary. It was inconsistent with the dispassionate, efficient, and objective performance expected of an executor. The late reversal, coupled with the litigious tone of her correspondence, significantly increased estate costs and delayed administration.
An executor’s fundamental duty is to distribute the estate in accordance with the Will. They cannot alter the distribution without the consent of all adult beneficiaries or a court order.
Contrary to these principles, the defendant agreed with a third party that purported to reduce the estate by 40% without the beneficiary’s consent or court sanction. Two beneficiaries expressly objected. If the executor believed the settlement was in the beneficiaries’ interests, the proper course was to seek judicial advice—the executor made no such application. Further, the defendant failed to provide the beneficiaries with a copy of the settlement agreement until compelled by court order, illustrating a broader failure to respond appropriately to reasonable beneficiary requests.
The defendant justified the settlement on the basis that it resolved a claim by Teresita’s estate, grounded in a 2016 Financial Agreement. However, the validity of that agreement was highly doubtful:
- At the time the deceased executed it, the deceased was subject to VCAT administration and guardianship orders, raising serious questions about whether the deceased could lawfully sign it.
- The agreement also failed to comply with the Family Law Act 1975 (Cth) requirements for binding financial agreements, as the mandatory s 90G legal advice certificate was unsigned.
Despite these defects, the defendant did not obtain independent legal advice; instead, they relied on their own view. Given the obvious doubts, the consequences for beneficiaries, and their opposition, this was wholly inadequate and displayed indifference to their welfare. Even if the claim had been legitimate, the authority makes clear that executors cannot alter beneficial interests without the beneficiary’s consent.
Finally, the defendant remained in breach of a prior costs order, which required payment of the plaintiff’s legal costs associated with the interlocutory injunction. The executor’s impecuniosity is no excuse: executors are held to a high standard and must comply with court orders. The community and beneficiaries alike are entitled to expect executors to discharge all legal obligations properly.
Costs
At the close of the hearing, Moore J upheld the plaintiff’s application that the defendant pay the costs of the proceeding on an indemnity basis, with no right of indemnity from the deceased’s estate.
Except where otherwise provided by statute or rules, the Court has a broad discretion in awarding costs, including in matters involving estates and trusts Supreme Court Act 1986, s 24.The ordinary rule is that the successful party is entitled to its costs, which the unsuccessful party bears. Northern Territory v Sangare[2019] HCA 19; (2019) 265 CLR 164, 173 [25]. Nothing in the present case warrants any departure from that principle.
As to indemnity costs, the principles of the present application, Dixon J in Banksia Securities Ltd v Insurance House Pty Ltd (Costs) [2020] VSC 234
(a) Costs are ordinarily assessed on a standard basis unless circumstances justify departure.
(b) The discretion to order indemnity costs is unfettered but must be exercised judicially and not unreasonably: Bass Coast Shire Council v King [1997] 2 VR 5,
(c) Indemnity costs may be awarded where there is some “sufficient or unusual feature” or relevant delinquency justifying departure from the standard basis: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 233; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 89
(d) They may also be awarded where a party, properly advised, knew or ought to have known that it had no prospect of success but persisted. Murdaca v Maisano [2004] VSCA 123 [40], citing Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397; Macedon Ranges Shire Council v Thompson [2009] VSCA 209
The defendant’s numerous and serious failures in the discharge of the executorial obligations amount to significant delinquency. Justifying a departure from the standard basis and the making of an indemnity costs order. In reaching this conclusion, Moore J has also taken into account that the defendant is a solicitor, and that correspondence from the plaintiff’s solicitor before the proceeding made plain that persistence in giving effect to the settlement agreement would inevitably result in their removal as executor. Properly advised, the defendant should have appreciated this.
For essentially the same reasons, Moore J further determined that the estate should not indemnify the defendant for the costs of defending the proceeding. Ordinarily, an executor is entitled to such indemnity, even if unsuccessful, provided their conduct was not improper. Drummond v Drummond [1999] NSWSC 923. However, that right is subject to the “impropriety exception.” Lyons J in Hopkins v Edwards[2020] VSC 456 at 234 summarised the relevant principles as follows:
- Trustees are entitled to indemnity for costs and liabilities not improperly incurred;
- That entitlement is lost if circumstances establish impropriety.
- Whether a trustee improperly incurs costs depends on the scope of the trustee’s duties or powers.
- For litigation, the question is whether the trustee exercised the care and diligence of an ordinarily prudent person.
- Even in adversarial or personally interested litigation, the Court must assess whether the trustee properly incurred costs.
- Courts should be cautious before depriving a trustee of indemnity on the ground of impropriety.
Applying these principles, and for the following reasons
The evidence overwhelmingly showed that the executor compromised the beneficiary’s interests. The executor’s conduct demonstrated a fundamental misunderstanding and disregard of core executorial duties, resulting in serious failures in administering the estate.
The defendant’s failures in carrying out executorial duties were extensive and profound, amounting to clear delinquency in the administration of the estate, justifying the departure from the usual rule of assessing costs on a standard basis. In ordering indemnity costs, Moore J also considered the defendant’s position as a solicitor and the prior correspondence from the plaintiff’s solicitor. Properly advised, the defendant should have recognised that persisting with the settlement agreement made removal as executor inevitable.
Moore J was satisfied that the defendant failed to exercise the prudence and diligence expected of an executor; therefore, the litigation conduct amounted to costs improperly incurred, resulting in personal liability for the executor without indemnity from the estate.