Brehm v Brehm
[2019] VSC 840
•18 December 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S ECI 2019 01952
| MICHAEL ANTHONY BREHM | Plaintiff |
| v | |
| VICTOR STANLEY BREHM | Defendant |
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JUDGE: | MOORE J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 18 December 2019 |
CASE MAY BE CITED AS: | Brehm v Brehm |
MEDIUM NEUTRAL CITATION: | [2019] VSC 840 |
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COSTS — Estate litigation — Application to remove executor — Where co-executor did not respond to correspondence — Whether indemnity costs should be ordered against co-executor — Whether executor should have indemnity for costs from the estate — Re Kataryna; Kararyna v Petalas [2017] VSC 466.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | C McOmish | Hartwell Legal |
| Defendant appeared in person |
HIS HONOUR:
On 9 December 2019, I made orders granting Michael Brehm the final relief he sought in this proceeding. The orders made included an order pursuant to s 34(1)(c) of the Administration and Probate Act 1958 removing Victor Brehm as the executor and trustee of his father’s will and estate and an order pursuant to s 51 of the Trustee Act 1958 that his father’s assets and estate vest in Michael Brehm as continuing executor and trustee of the will and estate.
Michael now seeks an order that Victor personally pay his costs of and incidental to the proceeding, including any reserved costs, on an indemnity basis without indemnity from his father’s estate, to be taxed in default of agreement and paid from Victor’s share of the estate.
In support of Michael’s application for costs, counsel relied upon the following statement by McMillan J in Re Kataryna; Kataryna v Petalas which I respectfully adopt:[1]
The Court’s jurisdiction in relation to costs is conferred by s 24(1) of the Supreme Court Act 1986. The Court’s general discretion in relation to costs must be exercised judicially and in accordance with Order 63 of the Supreme Court (General Civil Procedure) Rules 2015.[2] The prima facie position in respect of costs litigation is for standard costs to be ordered by the Court. The usual order as to costs is that costs follow the event and a successful party is entitled to an award of costs in its favour.[3]
The Court’s discretionary power also allows the Court to makes an award for costs other than on the standard basis. The Court’s discretion to depart from the usual order for costs will only be exercised where a proceeding exhibits a special or unusual feature or special circumstances.[4] The types of circumstances that may warrant a special costs order are not closed.[5] Each proceeding must be considered on its own facts to ascertain whether those facts support the making of a special order for costs.
[1][2017] VSC 466, [11]–[12].
[2]Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3) [2012] VSC 399, [11] (Croft J).
[3]Oshlack v Richmond River Council (1998) 193 CLR 72, 97 (McHugh J).
[4]Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189; Lutar v Carley [2017] VSC 366, [21].
[5]Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [8] (Harper J).
Counsel for Michael submitted that a special order for costs providing for payment of costs on an indemnity basis was warranted for three principal reasons:
(a) Victor was warned in writing on two occasions before proceedings were commenced that an application for his removal would be made if he did not take certain actions in relation to the sale of the relevant estate property;
(b) Victor has been the cause of this proceeding being issued, having caused significant delay in the administration of the estate; and
(c) Victor has caused significant delay in the running of the trial.
Victor filed an affidavit dated 13 December 2019 entitled ‘Defendant’s submissions as to costs’. Despite its title, the affidavit largely does not engage with issues which bear upon the exercise of the discretion in relation to costs. Nor is it responsive to the submissions previously filed by Michael. The affidavit is largely an attempt to re-litigate issues in the proceeding relating to whether or not Victor should be removed as an executor of the estate.
Given that Michael succeeded in this proceeding, costs should follow the event and he should be entitled to an award of costs in his favour. Further, I consider that the circumstances of the case are sufficiently special or unusual to warrant an order that Victor pay Michael’s costs on an indemnity basis. That course is justified for the reasons which follow.
First and foremost, it is necessary to identify the reasons I determined that Victor should be removed as an executor of the estate. I summarised my reasons as follows:[6]
… Regrettably, however, the administration of the deceased’s estate has been beset by difficulties for which no good reason is apparent. Those difficulties have had the consequence that the administration of the estate has not been finalised even though probate was granted some 18 months ago.
For the reasons I have already explained, responsibility for these delays and the attendant conflict which has emerged between the brothers lies overwhelmingly at the feet of Victor. In short, Victor has demonstrated a gross failure to communicate with his co-executor about the administration of the estate, engaged in unreasonable conduct in the process of selling the property and consistently acted unilaterally in relation to the estate property, as if it was his alone. His conduct to date has, as counsel for Michael submitted, demonstrated a fundamental misunderstanding of his duty as an executor to which I have already referred.
This is not a case where there was scope for reasonable differences of opinion about whether grounds existed for Victor’s removal as an executor of the estate. Those grounds were overwhelming. They demonstrated a profound misapprehension by Victor about his function and duties as executor which resulted in him acting as if the estate’s real property was his own.
[6]Ex tempore reasons delivered on 9 December 2019.
Secondly, as counsel for Michael noted in her submissions, Victor was twice formally warned about the prospect of a removal application being brought. He nonetheless failed to avail himself of the opportunity to properly discharge his executorial duties. By failing to do so and in light of Victor’s unwillingness to properly communicate with his co-executor, Michael was left with no alternative but to bring an application for removal to address Victor’s misconceived approach to his duties as executor. Michael should not be out of pocket for having to take this necessary step because of his brother’s failings as executor.
Thirdly, I accept the submission that Victor’s conduct caused significant delay in the running of the trial.
(a) The Court’s time was unnecessarily occupied with evidentiary matters at the start of the trial. I was required to rule on Michael’s objection to Victor’s attempt to adduce a USB stick containing audio and audio-visual recordings into evidence. Despite an order that Victor file any affidavit material by 16 August 2019, the USB stick had not been filed with the Court and had been provided to Michael’s solicitors only the day before the trial.
(b) Victor also sought to call two witnesses in support of his case – Mr Heinz Weller and Ms Maggie Heath – but had not filed affidavits of the evidence that they proposed to give. Time had to be spent determining who Victor would call to give evidence and the evidence they would give. When Mr Weller and Ms Heath did give evidence, it was largely irrelevant to the issues in dispute.
(c) Victor’s objections to the tendering of evidence contained in Michael’s affidavits were without basis.
(d) Victor’s closing oral submissions repeated written submissions that had been filed with the Court. After Michael’s counsel had delivered closing oral submissions, Victor handed up a written document responding to the issues identified for determination. The Court had to adjourn so that Michael’s counsel could read and respond to this document.
All of these matters unnecessarily lengthened the trial. I reject Victor’s submissions which seek to attribute to Michael responsibility for the fact that the trial proceeded over two days when it was properly a matter which ought reasonably have been concluded within one day.
For these reasons, in exercising the Court’s discretion to award costs, I will order as follows:
(1)The defendant personally pay the plaintiff’s costs of and incidental to the proceeding, including any reserved costs, on an indemnity basis without indemnity from the estate of Victor von Brehm, to be taxed in default of agreement and paid from the defendant’s share of the estate of Victor von Brehm.
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