Brito-Babapulle v Brito-Babapulle (No 2)
[2024] VSC 488
•19 August 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2022 02419
IN THE MATTER of an Application under s 34(1)(b) and/or s 34(1)(c) of the Administration and Probate Act 1958, ss 41, 45, 48, 50 and 51 of the Trustee Act 1958 and Order 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 and the inherent jurisdiction of the Court
and
IN THE MATTER of the Will and Estate of MARY BEATRICE KAMALA BRITO-BABAPULLE, deceased
BETWEEN:
| ASHAN COLIN BERNARD BRITO-BABAPULLE (in his capacity as one of the executors of the estate of the late Mary Beatrice Kamala Brito-Babapulle, deceased and personally) | Plaintiff |
| v | |
| TANIA ASHANTI BRITO-BABAPULLE (in her capacity as one of the executors of the estate of the late Mary Beatrice Kamala Brito‑Babapulle, deceased) | Defendant |
---
JUDGE: | Gray J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 21, 22, 23 and 24 May 2024 |
DATE OF LAST SUBMISSIONS: | 5 July 2024 |
DATE OF JUDGMENT: | 19 August 2024 |
CASE MAY BE CITED AS: | Brito-Babapulle v Brito-Babapulle (No 2) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 488 |
---
COSTS — Following removal of executor from office — Costs follow the event — claim of indemnity costs partially allowed due to defendant’s conduct prolonging hearing — No issue of principle.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | R Shepherd | MST Lawyers |
| For the Defendant | The defendant was self-represented |
HIS HONOUR:
Introduction
I delivered my reasons for judgment and made substantive orders in this matter on 31 May and 3 June 2024.[1] Pursuant to directions, the parties filed affidavit material and written submissions on the question of costs. They agreed that I should determine the question of costs on the papers.
[1]Brito-Babapulle v Brito-Babapulle [2024] VSC 281.
I have now determined the question of costs. I have decided to order that the defendant (Ms Brito) pay the plaintiff’s costs of and incidental to the proceeding, with payment to be deducted from the defendant’s share of the residuary estate. I have decided that the plaintiff’s costs of the last three days of the trial are payable by the defendant on an indemnity basis, but otherwise the standard basis applies. To the extent that the plaintiff has legal costs of and incidental to the proceeding that are not met by this order, he is permitted to recover those costs from the estate. He previously indicated that he was not seeking to recover any of his costs from the estate, but he is entitled to do so if he so chooses.
The parties’ positions
The parties both filed affidavits drawing my attention to items of correspondence relating to various offers they made and to the issue of costs.
In his counsel’s submissions, the plaintiff sought his costs on an indemnity basis, or alternatively partly on the standard basis and partly on indemnity basis, or in any event at least on the standard basis. He sought an order that those costs be paid out of the defendant’s share of the estate of the deceased.
The plaintiff submitted that he is the successful party and the Court should not conclude that each party has had mixed success or, for any other reason, depart from the usual rule that costs follow the event.
The plaintiff made a number of submissions in relation to his claim for indemnity costs.
He pointed out that his solicitors had made it very clear that indemnity costs would be sought, in numerous letters before the proceeding was commenced, and in the originating motion itself.
He submitted that a special costs order can be imposed on a party for various reasons, including on a party whose actions cause a loss of time to the Court and the other party, and the making of baseless or irrelevant allegations of fraud.
He acknowledged that the courts are hesitant to impose a special costs order on a self‑represented litigant on the basis that they might not appreciate the weaknesses of their case. However, he pointed out that, at times including the first few months of the proceeding, the defendant had legal representation. This means there is a stronger basis for assuming she had access to advice about the weaknesses of her defence of the proceeding.
The plaintiff submitted that indemnity costs may be imposed on the basis that the defendant made accusations against the lawyers representing the plaintiff — allegations that I found to be entirely unfounded. He also pointed out that the defendant accused him of dishonesty in a letter before the commencement of the proceeding.
The plaintiff relied on a Calderbank letter that was served after hours on Friday 17 May 2024 (at 5:56pm), offering a compromise of the proceeding which the plaintiff submits was a reasonable one. However, the trial was due to start the following Tuesday, 21 May 2024, leaving only one business day for consideration of the offer. The letter stated that the offer would remain open only until 4:00pm on 20 May 2024.
The plaintiff’s submissions contain, as an alternative claim, a submission that part of the costs be payable on an indemnity basis and the remainder on the standard basis. It was submitted that I might take this approach if I considered that the defendant had had ‘some success’.
The trial was fixed on an estimate of one day, but ended up running for four days. The plaintiff submitted that the reasons the fixture was exceeded in this way were attributable to the defendant’s conduct. The defendant served various affidavits without leave within two or three weeks of the scheduled commencement of the trial, and conducted herself during the hearing in ways that prolonged the hearing.
The defendant, Ms Brito, filed submissions in response to the plaintiff’s application for a costs order. On my reading of Ms Brito’s submissions, she clearly opposed the making of any costs order on an indemnity basis. It is less clear whether she disputed an order being made against her for costs to be payable on the standard basis. The last sentence of the defendant’s submissions stated:
I as the defendant submit that costs be awarded on a standard basis at the discretion of the honourable Justice Gray’s discretion.
Out of an abundance of caution, I will assume that the defendant is not consenting to an order that she pay the plaintiff’s costs of the proceeding on a standard basis or at all.
Ms Brito pointed to various conclusions in my reasons for judgment that were in her favour, or at least not in the plaintiff’s favour. For example, she pointed to a finding that she was not the sole cause of delay in administration of her mother’s estate and that the plaintiff at times contributed to some of the delay. She also pointed out that I had found that, importantly, there had been a breakdown of the personal relationship between her and the plaintiff, and that had been the main cause of delay. In relation to the breakdown of their personal relationship, I said that some degree of responsibility probably rested on both the defendant and the plaintiff. She disagreed with the plaintiff’s submission that the Court should not conclude that each party has had mixed success; in other words, she claimed some success. She referred to some of the factors that I had identified as contributing to delay in the finalisation of the administration of the estate, in respect of which I found the plaintiff to have contributed by his conduct.
The defendant referred me to Vink v Tuckwell (No 3)[2] for the proposition that merely alleging fraud and failing to make out the allegation is not by itself sufficient to constitute special circumstances justifying an award of costs on an indemnity basis.
[2][2008] VSC 316, [93].
Like the plaintiff, the defendant also pointed out that the trial had been set down on an estimated duration not exceeding one day. She submitted in this regard:
I was aware of the costs involved however I was never given a cost estimate for a one day trial, let alone four. The four day trial is grossly disproportionate to the complexity of the issues in dispute and amount in dispute per Civil Procedure Act 2010 Section 24.
The defendant submitted that the time allowed for her to respond to the Calderbank letter was unreasonably short.
Analysis and conclusions
Has the plaintiff only had ‘mixed success’, justifying departure from the rule that costs follow the event?
The ordinary rule is that costs follow the event, unless there are circumstances justifying the departure.[3] The usual course is that such costs are ordered on the standard basis. Where there are multiple issues in a proceeding and the parties have had mixed success on them, it is open to the Court to make orders as to costs on an issues basis.[4]
[3]Oshlack v Richmond River Council (1998) 193 CLR 72, [67] (McHugh J); Northern Territory v Sangare (2019) 265 CLR 164, [25] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ); Chen & Ors v Chan &Ors [2009] VSCA 233, [10(1)].
[4]Chen & Ors v Chan & Ors [2009] VSCA 233, [10(3)].
I do not think that the plaintiff can only be said to have had mixed success, justifying an apportionment of his costs on an issues basis.
In my view the plaintiff was substantially successful. He set out to have the defendant removed as an executor and was successful in doing so. I was persuaded that no other course was reasonably open to him in order to ensure the completion of the administration of the estate. He amply proved his case.
The plaintiff commenced this proceeding by originating motion dated 27 June 2022. The originating motion contained, as an alternative form of relief, the very orders which I ultimately decided should be made in the proceeding. That is, the plaintiff offered, in the alternative, to be discharged from his office as an executor as a corollary to the removal of the defendant from her office as executor under s 34(1) of the Administration and Probate Act 1958, together with similar orders under s 48 of the Trustee Act 1958.
In other words, the plaintiff commenced the proceeding seeking the relief that I have ultimately granted.
There is no justification for depriving the plaintiff of the benefit of the usual outcome: the plaintiff is entitled to an order for his costs.
Should the costs order be met from the defendant’s portion of the residuary estate?
The defendant’s liability under the costs order should be met with money that would otherwise have been distributed from the estate to the defendant.[5] This will ensure that the burden of these costs does not fall on the other beneficiaries, and that the plaintiff receives the money due to him under the order.
[5]See, eg, Re Besanko (No 2) [2020] VSC 281, [19], [42]–[43].
I will order that the amount due under the costs order be paid from the defendant’s share of the estate of the deceased.
Should the plaintiff’s costs, or any part of them, be payable on an indemnity basis?
Costs will ordinarily be ordered on the standard basis, unless there are special circumstances justifying departure from the usual course and the imposition of a special costs order, such as an indemnity costs order.
The principles that guide the Court’s discretion whether or not to impose an indemnity costs order are well established, and were set out by Harper J in Ugly Tribe Co Pty Ltd v Sikola.[6] I respectfully adopt his Honour’s summary of the principles. As mentioned by the plaintiff, they include the principle that indemnity costs might be ordered where there has been ‘conduct which causes loss of time to the Court and to other parties’, as well as other principles.
[6][2001] VSC 189, [7]–[11].
On my reading of the plaintiff’s submissions, although he pointed out that costs may be ordered on an indemnity basis where a party’s conduct wastes time, and although he raised the possibility (as an alternative claim) that his costs may partly be ordered on an indemnity basis and partly on the standard basis, he did not necessarily and expressly connect those two propositions. In other words, the plaintiff’s submissions did not, precisely and expressly, make an alternative claim that part of his costs should be paid on an indemnity basis by reason of the defendant’s conduct prolonging the trial.
Nevertheless, I am satisfied that the defendant was adequately on notice of both key propositions underpinning the order I have decided to make. She knew that the plaintiff was seeking indemnity costs; and she knew that the plaintiff was contending that it was her conduct that prolonged the trial. She had a fair opportunity to respond to these propositions, and she took that opportunity by filing submissions resisting them. She cannot reasonably be thought to be taken by surprise by a ruling that allows the plaintiff only part of his costs on an indemnity basis, by reason of her conduct prolonging the trial.
The defendant’s response on the matter of the prolongation of the trial did not squarely engage with the plaintiff’s submission that her conduct was to blame. Her submission resists an indemnity costs order by reason of the duration of the trial being grossly disproportionate; but this is not persuasive, because it was mainly her conduct that caused it to be so.
This has led me to allow the claim for indemnity costs in respect of the last three days of the trial. I have otherwise decided to disallow the plaintiff’s claim for indemnity costs. I will now explain my reasons for these conclusions in more detail.
The question of whether to impose an indemnity costs order in respect of all the plaintiff’s costs of the proceeding is a finely balanced one.
Ordinarily, the Court will not lightly draw an inference that a self-represented litigant should have appreciated that their case was a weak one. However, as the plaintiff points out, the defendant was represented by a law firm for the first three months of the proceeding. I can therefore infer that she received advice about the risks of defending the proceeding, at least to some extent.
On that basis, perhaps she should have appreciated that she had generated a conflict between her interests and her duty as an executor by making claims against the estate for payment of debts claimed to have been incurred before the death of the deceased. Perhaps she should also have appreciated the difficulties arising from the ‘Swift Removals’ invoice.[7]
[7][2024] VSC 281, [161]–[162].
Also, as I found in my substantive judgment, the defendant had absolutely no basis for making accusations of wrongdoing against the lawyers representing the plaintiff.
Likewise, there was no basis for the accusation of dishonesty made against Mr Brito in correspondence prior to the commencement of the proceeding.
In other circumstances, such matters would weigh quite heavily in favour of an indemnity costs order, and they go close to doing so here.
Ultimately, however, I have decided against this.
The main reason why the proceeding had to be brought was, as I have found, the delay occasioned by the breakdown in the personal relationship between the plaintiff and the defendant. It was the traits of the defendant’s personality that I identified in my reasons for judgment that were the root cause that contributed most significantly to that breakdown. As I said in my reasons, the defendant:
(a) conducted her correspondence in ways that were manifestly oppressive of Mr Brito and his representatives;[8]
(b) had ways of communicating with others that caused the bulk of the delay;[9]
(c) was on many occasions during the trial unable to focus on relevant topics for more than a few minutes at a time, and became distracted by peripheral matters and perceived personal slights to the extent that she could not carry key matters through to a conclusion.[10]
[8][2024] VSC 281, [154].
[9][2024] VSC 281, [156].
[10][2024] VSC 281, [158].
These traits of the defendant led me to the conclusion that the root cause of most of the delay in the administration of the estate was the way Ms Brito conducted her correspondence and other communications as an executor and trustee, combined with an inability to filter unimportant issues from important ones.[11]
[11][2024] VSC 281, [159].
As the plaintiff rightly points out, I also concluded that Ms Brito did not understand her proper role, as shown by the two instances noted in my reasons in which she failed to appreciate the requirements of the role.[12]
[12][2024] VSC 281, [161]–[163].
It is likely that, from the outset, Ms Brito was unsuited to the role of executor. However, I do not think she had the ability to understand this. The choice to name her as one of the executors was not her own; it was a choice made by the deceased. Ms Brito appears to have felt a moral obligation to accept that choice and perform the role as best she could, and in doing so, to resist what she saw as unnecessary expenditure on disbursements for service providers, including legal fees. She regarded the involvement of lawyers in particular as an unnecessary financial burden on the estate. Ironically, this ended up contributing to various impasses in the administration of the estate and the need for her removal from office.
The question of whether to impose an indemnity costs order applying from the outset of the litigation is a finely balanced one. Ultimately I have decided not to do so, on the basis that it was Ms Brito’s personality traits that were the root cause of the situation.
As to the Calderbank letter dated 17 May 2024, I acknowledge that the plaintiff’s offer itself was a reasonable one. The letter recorded the plaintiff’s costs of the proceeding to 16 May 2024 as being $73,684.70. It also contained an itemisation of all of the assets of the estate. The letter noted an amount said to have been gifted by the defendant in respect of tax and accountants’ fees in the sum of about $15,450, and a further cheque for about $1,000 received from the defendant for expenses. The letter advanced an offer that in effect set those amounts off against the plaintiff’s legal costs, reducing the plaintiff’s costs sought in the offer to $57,225.72, or potentially a lesser amount if the defendant opted to have the plaintiff’s legal costs assessed or taxed:
You pay to my client the sum of $57,225.72 for his legal costs of the proceeding or such lesser amount for his legal costs of the proceeding as is assessed or taxed by the Court, such sum to be paid within 14 days of acceptance of the offer, without recourse to the estate.
The substance of the remaining terms of the offer were essentially that the balance of the estate would be divided equally between the four beneficiaries of the estate within 14 days after acceptance of the offer.
The plaintiff submits, rightly in my view, that the defendant has not achieved an outcome in this proceeding more advantageous than the offer that was set out in the letter. The amount represented by the order that the defendant pay the plaintiff’s costs, even if assessed purely on the standard basis, is likely to be substantially in excess of $57,225.72.
However, only one business day was allowed for the defendant to consider the offer. Especially in circumstances where the defendant was not represented, this was an unreasonably short period of time. I therefore have not given any weight to the Calderbank letter in exercising my discretion as to costs.
As I have already noted, the question of whether the defendant should be ordered to pay indemnity costs of the proceeding from its commencement is finely balanced. In my view, that fine balance is shifted at the point of Ms Brito’s conduct in serving voluminous affidavit material shortly before trial and without the leave of the Court, and by her conduct during the hearing. That conduct may also have ultimately derived from her personality traits, but she must bear responsibility for it in the form of paying indemnity costs for the wasted hearing time that resulted. The trial overran its fixture by a factor of four; expanding from one day to four. This was very largely attributable to chaos resulting from the defendant’s late filing of affidavit material in late April and early May 2024, together with her unresponsive, prolix and repetitive evidence under cross‑examination, and her unfocused and lengthy submissions. This conduct, in the immediate lead-up to the trial and during the trial, tips the balance in favour of an indemnity costs order. It constitutes special circumstances justifying an indemnity costs order for the time by which the hearing exceeded its original one-day estimate.
I will order that the plaintiff’s costs of the last three days of the trial are to be paid by the defendant on an indemnity basis.
Plaintiff’s entitlement to indemnity from the estate in respect of unrecovered costs
As I noted in my reasons for judgment,[13] both parties had indicated to me that they do not intend to seek any indemnity from the estate for their own costs of the proceeding.
[13][2024] VSC 281, [13(e)].
This is a moot question in respect of the defendant: to the extent that she has any costs of the proceeding, she must bear them herself.
Further, to the extent that I am ordering the defendant to pay the plaintiff’s costs, partly on an indemnity basis and partly on the standard basis, these costs must be borne by the defendant and not by the estate, in the sense that they will be recovered from her share of the residuary estate.
However, this will probably leave the plaintiff out of pocket to some extent. There will likely be a portion of his legal costs that is not recovered pursuant to the costs order I am making.
I do not hold the plaintiff to the indication of his intention not to seek indemnity from the estate for his own costs.
To the extent that the plaintiff has paid or has any outstanding liability to pay legal costs of and incidental to this proceeding, that are not recovered from the defendant’s share of the estate pursuant to my costs orders, the plaintiff is entitled to recover those unrecovered costs on an indemnity basis from the estate as a whole.
In my view, those unrecovered costs are expenses properly incurred by the plaintiff in the administration of the estate. They may therefore be claimed by him out of the estate before distribution of the residuary estate, if he so chooses. They will, in effect, be borne equally by all four residuary beneficiaries, in the sense that the amount otherwise distributable to each of them will be diminished by a one-quarter share of those costs.
0
8
8