Brown v R
[2020] VSC 60
•20 February 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2018 02313
IN THE MATTER of the Estate of NEIL MOIRA THOMAS, deceased
-and-
IN THE MATTER of an application pursuant to Rule 54.02 of the Supreme Court (General Civil Procedure) Rules 2015
| JOY ANDERSON | Plaintiff |
| v | |
| JEANETTE MARIE BROOKS (as executor and trustee of the will and estate of the late NEIL MOIRA THOMAS, deceased) | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 20 February 2020 |
CASE MAY BE CITED AS: | Re Thomas; Anderson v Brooks |
MEDIUM NEUTRAL CITATION: | [2020] VSC 60 |
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WILLS AND ESTATES — Application for production of estate accounts — Application to compel establishment of trust and remove trustee — Will provided for establishment of trust over deceased’s privately held shares — Plaintiff a beneficiary of the testamentary trust — Trust not established — Administration of estate ongoing —Whether executor’s delay justified — Whether delay detrimental to beneficiaries — Application refused — Indemnity costs awarded.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr V Ruta | Jack Bock Lawyers |
| For the Defendant | Mr D Sanders | Rigby Cooke Lawyers |
HER HONOUR:
Introduction
Neil Moira Thomas died on 17 April 2018. Probate of the deceased’s will dated 11 May 2015 was granted to the defendant on 23 August 2018. Leave was reserved to the other named executor, the deceased’s solicitor, to prove the will at any time.
The defendant was the financial advisor to the deceased, his late wife and their family from 1984 until January 2018. After January 2018 the plaintiff moved the deceased’s accounts with the defendant to Ord Minnett. The defendant contends that this occurred at a time when the deceased’s capacity was impaired.
The plaintiff was the partner of the deceased for some ten years before his death in 2018.
Insofar as is relevant to the present proceeding, the deceased’s will provided as follows:
(a)The defendant and the deceased’s solicitor were appointed as executors of the deceased’s estate, with the defendant having the prevailing discretion in the event of deadlock.
(b)Various specific gifts were made of monetary amounts between $20,000 and $1 million, a Mercedes motor car, land and chattels of the deceased. The will specified that the monetary gifts were to be funded first from cash, then from the sale of publically held shares, and then from the sale of privately held shares. The deceased’s privately held shares were shares in two companies, Mineral Holdings Australia Pty Ltd (‘Mineral Holdings’) and Tominex Pty Ltd (‘Tominex’), of which the deceased and the plaintiff were both directors at the time of death.
(c)A separate trust, to be known as the Thomas Anderson Trust No 2 (‘the trust’) was to be established to hold the deceased’s shares in Mineral Holdings and Tominex. The will provided that the trust was to be constituted on the following terms:
2.9My shares in [Mineral Holdings] and my shares in [Tominex] to be held as follows:
2.9.1 to establish a separate trust fund as follows:
2.9.1.1trustees: [the defendant] and [the plaintiff] (“my fund trustees”)
2.9.1.2 name of trust: the Thomas Anderson Trust Number 2
2.9.1.3vesting date: the tenth anniversary of the death of the survivor of myself and [the plaintiff]
2.9.1.4income beneficiaries: any hospital institution society organisation body or fund [which at the date of death was a charitable institution within the state of Victoria]
2.9.1.5capital beneficiary: my grandson... should he survive the vesting day and have attained or subsequently attain the age of 25 years but should he not so survive and attain that age then to Sally should she survive me and [my grandson] but should she not then to her executors to form part of her estate
2.9.1.6 until the vesting date I direct my fund trustees to distribute the income each financial year to [the plaintiff] during her lifetime and should she die before the vesting date then to any one or more of the income beneficiaries as they may in their absolute discretion think fit and if more than one then in such proportions as they choose in their absolute discretion
2.9.1.7upon the vesting date I direct my fund trustees to pay or transfer the capital and any undistributed income that may have been earned since the beginning of the financial year of the vesting date to the capital beneficiary
2.9.1.8I declare that upon my trustees transferring the trust fund to my fund trustees then my trustees are discharged from their duties as trustees under this Will in respect of the trust fund and will not be responsible to see to the application of the fund
…
2.9.2for the removal of doubt I declare that any potential capital gains tax on any of the shares at the date of my death will remain with the shares and become the liability of the transferee of the shares but the liability for any capital gains tax on any of those shares sold at my death will be the liability of my estate...
Should there not be sufficient funds available to pay the legacies in this Clause 2 then I charge the shares in [Mineral Holdings] with the amount required to make up the deficiency and I direct my Trustees to sell or mortgage sufficient shares to make up the deficiency and in the proportions that one parcel above bears to the other parcel.
Background
Shortly after probate was granted, the defendant commenced collecting the assets of the deceased’s estate. The defendant made several requests of the plaintiff for information and assistance, particularly with regard to transactions which were to the plaintiff’s benefit and potentially recoverable to the estate. The plaintiff was unresponsive to the defendant’s enquiries.
On 12 and 13 June 2018, the defendant and the deceased’s son were appointed as directors of Mineral Holdings and Tominex. The plaintiff was removed as a director of both companies.
On 1 November 2018, the plaintiff wrote to the defendant threatening to issue this proceeding. She demanded that the trust contemplated by clause 2.9 of the will immediately be established and that the defendant produce various documents to her. Several of the requested documents did not exist, were already in the possession of the plaintiff, or she had limited rights of access to them. The solicitor for the defendant responded to the plaintiff by email of the same day, seeking until 20 November 2018 to respond in detail to the plaintiff’s letter.
Notwithstanding the defendant’s request for time to respond, the plaintiff issued her originating motion on 15 November 2018. The plaintiff did not serve that document on the defendant until 26 November 2018. The originating motion sought the production of various documents concerning the affairs of Mineral Holdings and Tominex, details of any and all share trades carried out by the defendant since the death of the deceased, a full and proper accounting of the administration of the estate, such further orders as the Court considers appropriate including orders or directions in relation to the establishment of the trust, and costs on an indemnity basis.
On 20 November 2018, the defendant’s solicitor provided a detailed response to the plaintiff’s letter dated 1 November 2018. The letter attached an account of the administration to date and explained that the administration of the estate was in progress. With respect to the trust, the letter explained that as neither the family provision period nor the ‘executor’s year’ had expired, it was not yet clear whether the deceased’s shares in Mineral Holdings would be charged, or how that would impact on the creation or establishment of the trust. The letter stated that the trust would not be constituted until the relevant administration of the estate was completed, at which time the trust assets could be properly ascertained. The defendant’s letter also explained that the threatened proceeding was misconceived on various fronts, namely, that it would seek documents which did not exist or to which the plaintiff had limited rights of access, and that the plaintiff did not have a beneficial interest in the trust until such time as it was constituted. The response stated that the plaintiff would be given full access to all records when they came into existence and when she had the legal right to them.
Despite this response, the plaintiff served the originating motion on the defendant on 26 November 2018.
Procedural history
An affidavit of the defendant’s solicitor, Ms Rachel Grabovic, was filed on 5 February 2019. Ms Grabovic deposed that the defendant had provided the plaintiff with all documents which constituted records of the estate, but not documents relating to Mineral Holdings and Tominex as they were not estate records. Ms Grabovic stated that, in any event, the plaintiff would either already have copies of those documents by virtue of her directorship of the companies, or would have access to them once the trust was constituted. She also confirmed that the plaintiff had been provided with an account of the administration, as at 19 November 2018, on 20 November 2018.
On 8 February 2019, the Court made orders by consent that the parties attend a global mediation of all matters in dispute. The defendant also consented to providing the requested documents, insofar as they existed and were available, in two tranches on 1 March 2019 and 5 April 2019. The defendant consented to provide documents notwithstanding that the information had been provided or offered prior to service of the originating motion.
The mediation occurred on 18 April 2019 and was adjourned without any substantive resolution.
Following the mediation, various specific distributions were made out of the estate, including $800,000 of the plaintiff’s $1 million gift pursuant to clause 2.7.2 of the will, which was received on or about 1 May 2019. The defendant submitted that, at the time of the mediation, the final taxation position in relation to the estate was unclear, and what contingency should be withheld to finalise the administration of the estate remained uncertain. The defendant was therefore not in a position to pay the entirety of the legacies provided in the will at that point in time as she was unable to determine whether the estate had sufficient funds to do so, as well as discharge all taxes and other estate expenses. The affected beneficiaries were advised that the balance of the legacies would follow as soon as all taxes, including capital gains tax, had been determined and paid.
On 8 May 2019, the defendant’s solicitors sent a list of questions to the plaintiff, in order to identify all remaining queries relating to the administration of the estate. The plaintiff responded to the defendant’s list of questions by letter dated 22 May 2019. On 8 July 2019, the defendant’s solicitors advised that the plaintiff’s responses were unsatisfactory. In her affidavit filed 16 August 2019, the defendant deposed:
I am still yet to receive satisfactory answers from the Plaintiff to the List of Questions. As a consequence, there are a number of outstanding matters which require my investigation before I can wind up the estate, distribute the remaining assets, and establish the [trust]... This proceeding is also causing delay.
On 23 July 2019, the plaintiff obtained leave to amend her originating motion and orders were made for the filing of further affidavit evidence. The plaintiff’s amended originating motion was filed on 29 July 2019.
On 19 September 2019, a sum of $191,000 was distributed to the plaintiff, being the remainder of the legacy left to her under the will. The distribution was adjusted down by $9,000 arising from a suspicious transaction that occurred before the deceased’s death.
The proceeding returned before the Court for directions on 20 September 2019. The Court adjourned the proceeding for three weeks to allow the defendant to consider whether anticipated litigation against the plaintiff would be commenced by an application for a Beddoe order, and proceed in lock-step with this application. The defendant did not seek to proceed in lock-step with this application, and the estate will pursue the plaintiff separately with regard to those matters.
At the directions hearing, counsel for the plaintiff traversed several matters which were outside the relief sought in the amended originating motion but informed the Court that no further amendment was required or would be sought. Counsel for the plaintiff also informed the Court that his client would consent to the appointment of an independent trustee.
On 3 October 2019, the solicitors for the defendant wrote to the plaintiff in response to the offer made in Court on 20 September 2019 to appoint an independent trustee. The defendant researched suitable trustee companies, negotiated fees and proposed the appointment of either Equity Trustees Limited or Australian Unity Trustees. The letter sought an indication from the plaintiff as to which company she would prefer to appoint as trustee, offered to prepare a deed of retirement and appointment of trustee and to forward consent orders for dismissal of this proceeding. The plaintiff did not respond to the 3 October 2019 letter.
On 9 October 2019, the defendant’s solicitor wrote to the plaintiff’s solicitor confirming that neither Mineral Holdings nor Tominex paid a dividend for the 2017/18 financial year or the 2018/19 financial year.
At the further return of the proceeding on 11 October 2019, counsel for the plaintiff suggested to the Court that the matter had resolved by consent of the parties, which consent included matters such as the trust being declared constituted at the date of death. Notwithstanding counsel’s submission, it quickly became apparent that there was no consent, and a determination of the proceeding on the papers was ordered.
On 14 October 2019, the defendant’s solicitors wrote to the plaintiff seeking agreement to the execution of a deed which simultaneously constituted the trust and appointed Equity Trustees Limited as trustee. No response was received to that correspondence.
Relief sought in the plaintiff’s amended originating motion
The plaintiff’s amended originating motion filed 29 July 2019 sought substantially different relief from that claimed in her initiating originating motion.
Paragraph 1 sought that the defendant, as trustee of the estate of the deceased, produce for inspection by the plaintiff the following documents:[1]
[1]Underlined text indicates additions contained in the plaintiff’s amended originating motion.
(a) portfolio statements and quarterly reports held by the defendant in respect of all shares held in the names of Mineral Holdings and Tominex as at 30 June 2018, 30 September 2018, 30 June 2019 and 19 July 2019;
(b) true and correct copies of the signed accounts prepared for Mineral Holdings and Tominex as at 30 June 2016, 30 June 2017, 30 June 2018 and 30 June 2019;
(c) true and correct copies of tax returns prepared for Mineral Holdings and Tominex for the years 30 June 2016, 30 June 2017, 30 June 2018 and 30 June 2019;
(d) details of all share trades carried out by the defendant for and on behalf of Mineral Holdings and Tominex since the date of death of the deceased; and
(e) a full and proper accounting of the administration of the estate of the deceased.
Paragraph 2, which was added to the amended originating motion, sought orders:
(a) that the trust be established;
(b) that the sole trustee of the trust be the plaintiff and the defendant be removed as a trustee of the trust;
(c) that the defendant transfer the Mineral Holdings shares and Tominex shares to the plaintiff as trustee of the trust;
(d) that the defendant pay to the plaintiff all income of Mineral Holdings and Tominex since the date of death of the deceased;
(e) that the defendant pay to the plaintiff the sum of $200,000.00 plus interest; and
(f) that the defendant deliver to the plaintiff the paintings remaining in the estate.
Paragraphs 3 and 4 were unchanged from the initiating originating motion. Those paragraphs sought:
(a) such further or other relief as the Court thinks appropriate; and
(b) costs to be assessed in default of agreement on an indemnity basis.
The plaintiff’s position
By her submissions filed 25 October 2019, the plaintiff indicated that she no longer seeks the relief claimed in the entirety of paragraph 1, as she is satisfied with the information provided by the defendant, and the relief claimed in paragraphs 2(d) and (f). The plaintiff also did not refer to the relief claimed in paragraph 2(e) in her submissions, seemingly following the payments of $800,000 and $191,000 to her in April and September 2019. It is assumed that the plaintiff has abandoned this claim.
In respect of the remaining paragraphs of her amended originating motion, the plaintiff sought the following orders:
(a) pursuant clause 2.9 of the will, the trust is deemed to have been established on 23 August 2018;
(b) the plaintiff and defendant are removed as trustees of the trust;
(c) the trustee of the trust shall be Equity Trustees Limited; and
(d) the defendant transfer all of the shares held by the deceased to the trust.
In respect of paragraph 4, the plaintiff also sought an order that the defendant pay the costs of the proceeding.
The defendant’s position
In submissions filed on her behalf on 14 November 2019, the defendant submitted that an order of the Court is unnecessary in relation to the establishment of the trust, as she remains willing to do so at an appropriate time. It was submitted that this proceeding is the principal reason why the trust has not yet been established. Outstanding issues in the administration of the estate such as the question of taxation and the distribution of specific legacies have now been addressed. There is also no longer concern regarding the possible charging of the shares of Mineral Holdings.
The defendant contended that the plaintiff’s application for her removal as trustee is not supported by any proposition of law, nor is there any evidence to support removal. Further, and in any event, the Court cannot grant the substantive relief sought by the plaintiff as, pursuant to s 42(1)(c) of the Trustee Act 1958, the plaintiff cannot be appointed as sole trustee of the trust. She says that appointment as sole trustee would also place the plaintiff in a position of conflict, as the sole income beneficiary to dividend income, regarding investment decisions.
The defendant further opposed the declaration requested by the plaintiff, that the trust was constituted at the time of the grant of probate. The defendant submitted that there was nothing to support such contention as it was necessary to determine the impact that the proper administration of the estate would have on the Mineral Holdings and Tominex shares before constituting the trust.
The defendant was willing to concede to the appointment of Equity Trustees Limited as trustee of the trust, but did not otherwise consent to the relief sought by the plaintiff. Otherwise, the defendant deposed that she intends to work alongside the plaintiff as co-trustees of the trust, as intended in the deceased’s will.
Consideration
The plaintiff’s approach to this application has been a ‘moving feast’. Her initiating originating motion, filed 15 November 2018, principally sought the production of documents relating to the estate, Mineral Holdings and Tominex. All documents to which the plaintiff was entitled had already been provided to her, or would subsequently be provided to her. The plaintiff thereafter substantially amended her originating motion, seeking orders compelling the defendant to constitute the trust, transfer the estate’s shares in Mineral Holdings and Tominex to the trust, and removing the her as trustee. By her amended originating motion the plaintiff also sought the payment of all income from the deceased’s privately held shares, the payment of the remainder of her distribution under the will, and the delivery of certain paintings. Notwithstanding the relief sought in her amended originating motion, the defendant’s submissions filed 25 October 2019 sought the orders detailed at 29 above, which differ from the relief claimed in her originating motion. Despite now requesting substantially different relief, the plaintiff did not further amend her originating motion. The plaintiff’s claim now focuses upon the constitution of the trust and the removal of the defendant as trustee. At its highest, the plaintiff’s case is that the defendant has failed in her duties as executor and trustee by not constituting the trust in a timeframe that is suitable to the plaintiff, and therefore should be removed as trustee.
The duties owed by the executor of a deceased estate are well traversed in the authorities. The executor acts in a fiduciary capacity towards the estate and as such owes duties to not unduly profit from that position, or to place herself in a position of conflict between her personal interests and those of the estate.[2] The principal obligations of the executor are to get in the estate’s assets, pay liabilities, distribute the residue in accordance with the will, and produce accounts.[3]
[2]GE Dal Pont and KF Mackie, Law of Succession (LexisNexis Butterworths, 2nd ed, 2017) 423 [12.21].
[3]Ibid, 411–2 [12.1].
The circumstances in which the Court will remove a trustee are similarly well established. In Letterstedt v Broers, Lord Blackburn observed:
Story says, s. 1289, ‘But in cases of positive misconduct, Courts of Equity have no difficulty in interposing to remove trustees who have abused their trust; it is not indeed every mistake or neglect of duty, or inaccuracy of conduct of trustees, which will induce Courts of Equity to adopt such a course. But the acts or omissions must be such as to endanger the trust property or to shew a want of honesty, or a want of proper capacity to execute the duties, or a want of reasonable fidelity.’
…
In exercising so delicate a jurisdiction as that of removing trustees, their Lordships do not venture to lay down any general rule beyond the very broad principle above enunciated, that their main guide must be the welfare of the beneficiaries. Probably it is not possible to lay down any more definite rule in a matter so essentially dependent on details often of great nicety. But they proceed to look carefully into the circumstances of the case.[4]
[4](1884) 9 App Cas 371, 385–7.
That statement of principle was adopted by the High Court of Australia in Miller v Cameron.[5] In that case, Dixon J said:
The jurisdiction to remove a trustee is exercised with a view to the interests of the beneficiaries, to the security of the trust property and to an efficient and satisfactory execution of the trusts and a faithful and sound exercise of the powers conferred upon the trustee. In deciding to remove a trustee the Court forms a judgment based upon considerations, possibly large in number and varied in character, which combine to show that the welfare of the beneficiaries is opposed to his continued occupation of the office. Such a judgment must be largely discretionary. A trustee is not to be removed unless circumstances exist which afford ground upon which the jurisdiction may be exercised.[6]
[5](1936) 54 CLR 572.
[6]Ibid, 580–81.
In Manocchio v Wilson, Habersberger J recognised that ‘unreasonable delay in paying beneficiaries their entitlement’ may be a circumstance which constitutes unfitness to act as a trustee.[7] Although there is no strict rule of law, it has been said that the deceased’s estate should be administered within twelve months of death, referred to at common law as the ‘executor’s year’. In Grayburn v Clarkson, Page Wood LJ expressed the principle as follows:
[T]here is no fixed rule that conversion must take place by the end of the year, but that that is the prima facie rule, and that executors who do not convert by that time must shew some reason why they did not do so, and, where the question is distinctly and fairly raised upon the pleadings, there is an onus thrown on the executors to justify the delay.[8]
[7][2012] VSC 76, [38].
[8](1868) LR 3 Ch App 605, 606.
The executor’s year is reflected in the terms of s 49 of the Administration and Probate Act 1958, which provides that a personal representative is not bound to distribute the estate before the expiration of one year from the deceased’s death. The executor’s year is only an indication, and each case must turn upon its own facts by reference to whether delay in the administration of the estate had unduly impacted the welfare of the beneficiaries.
Also relevant is the period in which a potential claimant may bring an application pursuant to Part IV of the Administration and Probate Act 1958. Pursuant to s 99(1) of that Act, such an application must be made within six months of the date of the grant of probate. In Re Gough; Gough v Fletcher,[9] Zelling J of the South Australian Supreme Court referred with approval to the following observations of Vaisey J in Re Simson; Simson v National Provincial Bank Ltd:
I wish it to be made clear that in these cases it is the paramount duty of the executor to avoid embarrassing the court and to think once, twice and several times before allowing any part at all of the estate to be paid out to any beneficiary - whether a specific legatee or a residuary legatee or whoever it may be matters not - while any application under this Act is either pending or impending… I wish it to be distinctly understood… that where an application under the Inheritance (Family Provision) Act, 1938 is either pending or impending, that is to say, during the first six months after grant of representation, if it is a case in which there is any risk of such a thing happening, the executor distributes the estate at his risk. If beneficiaries come and pester him and say that they want their legacies and pressure is put on other beneficiaries to allow these anticipatory payments to be made, in my judgment it is the duty of the executor to resist any such pressure. I think it must be said that where the court has to deal with a matter under this Act the estate should be there intact. Of course, duties and debts, and that sort of thing, can be paid - there is no question about that - but no distribution to beneficiaries should be made while there is any possibility or expectation that an application under this Act will be made.[10]
[9](1973) 5 SASR 559.
[10][1950] Ch 38, 42–3, quoted in Re Gough (1973) 5 SASR 559, 566.
In this case, the limitation period for any claim under Part IV expired on 24 February 2019 without any notice of claim. The executor’s year ended on 18 April 2019, the day of the mediation.
There is no basis upon which the Court ought make the orders sought by the plaintiff in either her amended originating motion, or her submissions. Although the administration of the deceased’s estate has, so far, taken almost two years, the Court is satisfied that the delay was justified in order to allow the defendant to get in the assets of the estate, including the sale of the deceased’s publically held shares, ascertain the taxation and accounting position of the estate, and determine whether it would be necessary to charge the deceased’s Mineral Holdings shares in order to finance the specific bequests made in the will. The Court is not satisfied that the delay justifies an order compelling the defendant to constitute the trust, or an order removing her as trustee.
The plaintiff submitted that the defendant had obtained sufficient information to constitute the trust by the time of her 20 November 2018 letter. That letter was sent just three months after the grant of probate, well before the expiry of both the limitation period for Part IV clams and the executor’s year. The administration account forwarded to the plaintiff on 20 November 2018 recorded cash on hand of $153,330.69 plus $7,119.22 held in the defendant’s solicitors’ trust account. A further $1,288,142 in publically held shares was held by the defendant which, in accordance with the will, would need to be liquidated in order to fund cash legacies totalling $1,290,000. The sale of the deceased’s publically held shares would necessarily have taxation consequences, the specifics of which were not known to the defendant at that time. Pursuant to the charging clause in the will, if the sale of the deceased’s publically held shares was not sufficient to fund the cash legacies, any shortfall would be charged against the Mineral Holdings shares or be financed by sale of shares in Mineral Holdings and Tominex. As was stated in the deceased’s 20 November 2018 letter, ‘[i]t is not yet clear whether charging the MHA shares will be required. If it is required, any such charging is to be carried out during the administration of the estate, and not after the settlement of the Trust’.
Although the deceased’s Tominex shares were not subject to the charging clause, the deceased’s will directed that those shares, alongside the Mineral Holdings shares, should fund the payment of legacies in the event that those funds could not be derived from cash and the sale of publically held shares.
The defendant has now paid the monetary legacies left by the deceased to the beneficiaries. As observed, on 1 May 2019 the defendant paid 80 per cent of the $1 million legacy left to the plaintiff and explained that the taxation position of the estate was still unclear. The remainder of the bequest to the plaintiff was paid on 19 September 2019. The payment of the balance of the legacies to the beneficiaries indicates that, as at 19 September 2019, the taxation position had become clear. However, by that time this litigation was ongoing and was causing significant delay to the proper administration of the estate.
The plaintiff has not identified any detriment to her or any other beneficiary as a result of the delay in constituting the trust. She has received all other specific bequests made to her and has been assured by the defendant that neither Mineral Holdings nor Tominex has declared a dividend since the death of the deceased which would have been available to her as beneficiary of the trust.
In the circumstances, no order is necessary in relation to the trust. It appears that the parties are in agreement that an independent trustee ought be appointed when the trust is properly constituted. It is premature for the Court to make any order to that effect in circumstances where the trust has not yet been constituted.
Costs
Costs are at the discretion of the Court, unless otherwise provided by an Act or the Rules.[11] The usual order as to costs is that a successful party in litigation is entitled to an award of costs in its favour and the unsuccessful party bears the liability for the costs of the unsuccessful litigation.[12] The relevant ‘event’ is success in the action or on particular issues.[13] The central principle is to make an order that is fair and just between the parties in the circumstance of each case.[14]
[11]Supreme Court Act 1986 (Vic) s 24(1).
[12] Oshlack v Richmond River Council (1998) 193 CLR 72, 97 [67] (McHugh J).
[13]Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin(1997) 186 CLR 622, 624 (McHugh J); Seng Hpa v Walker [2017] VSC 320, [77] (McMillan J).
[14]Earnshaw v Loy (No 2)[1959] VR 252, 253 (Sholl J). See also GE Dal Pont, Law of Costs (LexisNexis Butterworths, 4th ed, 2018) 158–9 [6.15].
The prima facie position in respect of costs in litigation is for standard costs to be ordered by the Court, with the Court having the discretion to award costs other than on the standard basis.
Pursuant to r 63.28 of the Supreme Court (General Civil Procedure) Rules 2015 the Court has discretion to award costs other than on the standard basis. A special costs order will only be made where the proceeding exhibits a special or unusual feature or special circumstances. Each proceeding must be considered on its own facts and, specifically, whether those facts support the making of a special order for costs.
In her submissions the plaintiff sought ‘costs of the proceeding as each of the matters complained about could have easily been resolved by the Defendant.’ The plaintiff seems to have now abandoned the claim for indemnity costs.
Although the plaintiff has been successful in some aspects of her claim, this is not a matter where the she ought to be paid her costs. The proceeding has hindered the orderly administration of the estate. It was commenced well before the expiration of the TFM period, the executor’s year, and before the accounting of the estate and the related entities had been completed. The proceeding originally sought to compel production of material which was either produced on request, offered to be produced at appropriate times, or not in existence.
The unamended originating motion had only one significant benefit to either the plaintiff or the estate: the global mediation, which went well outside the scope of the originating motion.
The plaintiff has not been successful on any of the relief added in her amended originating motion. In those circumstances, she ought to pay the defendant’s costs. The remaining question is whether the plaintiff ought pay the defendant’s costs other than on a standard basis.
As observed, the plaintiff has on several occasions sought to interfere with the proper administration of the estate. Were it not for this proceeding it appears that the trust may well have been constituted in or around September 2019. It is not appropriate that the estate bear the costs consequences of this proceeding, which was entirely misconceived. The plaintiff ought pay the defendant’s costs on an indemnity basis.
Orders
The Court will make the following orders:
(a) The plaintiff’s originating motion, as amended on 29 July 2019, be dismissed.
(b) The plaintiff pay the defendant’s costs of and incidental to the proceeding on an indemnity basis, to be taxed in default of agreement.
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