Cassar v Cassar (Costs of preliminary questions)

[2024] VSC 537

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY AND PROBATE LIST

S ECI 2022 04625

SANDRA ANNE CASSAR (in her capacity as administrator and trustee of the estate of the late FRANCIS MICHAEL CASSAR)	Plaintiff/Defendant by Counterclaim
v
MICHAEL ANTHONY CASSAR	First Defendant/Plaintiff by Counterclaim
REGISTRAR OF TITLES	Second Defendant
SANDHURST TRUSTEES LIMITED (ACN 004 030 737)	Third Defendant

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JUDGE:	Gorton J
WHERE HELD:	Melbourne
DATE OF HEARING:	Following receipt of written cost submissions filed 29 August 2024 and 2 September 2024
DATE OF RULING:	5 September 2024
CASE MAY BE CITED AS:	Cassar v Cassar (Costs of preliminary questions)
MEDIUM NEUTRAL CITATION:	[2024] VSC 537

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WILLS AND ESTATES – COSTS – Where plaintiff in capacity as executor of estate has succeeded in having assets obtained via fraud returned to the estate – Whether standard basis or indemnity costs appropriate – Where obligation to return assets was irresistible – Where the plaintiff in her personal capacity participated in the fraud but the first defendant initiated that fraud – Appropriate to order indemnity costs, payable out of the first defendant’s share of the estate.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Rizzi with Mr B Harding	Watson Hughes Lawyers
For the First Defendant	Mr M Black	Kingsford Lawyers
For the Second Defendant	No appearance
For the Third Defendant	No appearance

HIS HONOUR:

1. On 26 August 2024, I published reasons in which I explained why, in my view, orders should be made returning assets in the name of Michael Cassar, the first defendant, to Sandra Cassar, the plaintiff, in her capacity as the administrator of the estate of her late husband, Francis ‘Frank’ Cassar.[1]  I will use first names for convenience but without intending any disrespect.  The parties have agreed on a form of orders that have that effect.  The parties have also agreed that costs should follow the event and that Michael should be ordered to pay Sandra’s costs.   Sandra, however, sought her costs on the indemnity basis and that there be certification for the retention of two counsel.    Michael submitted that costs should be taxed on the standard basis and that there should not be certification for the plaintiff’s retention of two counsel.  

   [1]Cassar v Cassar (Preliminary questions) [2024] VSC 502.

1. In most circumstances, costs follow the event[2] and are payable on the standard basis.[3] However, in my view, the obligation on Michael to return to the estate assets that he had obtained as a result of fraud initiated by him was irresistible and it was entirely unreasonable that he put the estate to the cost of this litigation.[4]  Ordinarily, this would lead to costs being ordered against Michael on the indemnity basis.  However,  Michael submitted that:

   [2]See eg Milne v Attorney-General (Tas) (1956) 95 CLR 460, 477 (Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ).

   [3]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.31.

   [4]See eg Neville’s Bus Service Pty Ltd v Pitcher Partners Consulting Pty Ltd (No 2) [2019] FCA 198, [15] (O’Callaghan J).

(a)   The relief sought could only be obtained by Court order, and so, regardless of the approach he took to defending it, the proceeding was necessary;

(b)  Although Michael presented arguments that were rejected, he conducted the litigation responsibly including by agreeing to facts that meant that the costs of the litigation were minimised; and, most significantly

(c)   Sandra, and her daughter Teresa, were intimately involved in the fraud and only sought to undo the transactions when it became clear that ‘their expectations were not going to be fulfilled’ and so ordering him to pay costs on the indemnity basis would ‘unfairly punish him’ as the ‘sole agent of the fraudulent design’ when that was not the case.

1. I accept that Michael acted responsibly by agreeing to facts and in that way reduced the costs of the litigation and that his arguments were presented concisely and efficiently.  That was to everyone’s benefit and reflects well on him.  That said, the fact remains that it was his conduct that initiated the fraud[5] and thus gave rise to the need for the litigation, and it was his resistance to the orders sought that required the litigation to be argued.  As noted above, the obligation on Michael to return assets to the estate that he had obtained as a result of fraud initiated by him was irresistible.  For those reasons, I remain of the view that Michael ought to pay the estate’s costs on the indemnity basis, notwithstanding that such an order in a sense protects Sandra and her daughter (as beneficiaries under an intestacy) from some of the financial consequences of their participation in, or failure to oppose, his fraudulent design. 

   [5]See Cassar v Cassar (Preliminary questions) [2024] VSC 502, [2], [21].

1. Sandra has also sought that the costs order provide that that the costs be paid ‘from [Michael’s] share of the estate’.  I am prepared to make an order to that effect. 

1. I note that on 9 August 2024, Sandra sent a Calderbank[6] offer to Michael in which she offered to bear her own costs if Michael agreed to orders equivalent to those she has now obtained.  Michael acted unreasonably by failing to accept this offer.  Had I not already decided that it was appropriate that Michael pay costs on the indemnity basis generally, I would have decided that he should pay indemnity costs from the date of that offer. 

   [6]Calderbank v Calderbank [1976] Fam 93.

1. I am also satisfied that a reasonable and prudent but not overcautious solicitor was entitled to engage two counsel in the circumstances of this case, particularly when costs are to be assessed on the indemnity basis.[7]  A lot was at stake and the circumstances were most unusual.  Hindsight is to be avoided. 

   [7]Cf Taseska v MSS Security Pty Ltd (Costs Ruling) [2016] VSC 433, [21]-[24] (J Forrest J).

1. However, I accept Michael’s submission that costs of two counsel to hear judgment should not be allowed.  Ordinarily, and this is no exception, it is sufficient to engage junior counsel to hear judgment.[8]

   [8]See, eg, Dwyer v National Trustees, Executors & Agency Co of Australasia Ltd (No 3) [1940] VLR 366, 373 (Lowe J).

1. I will grant the substantive relief in the form submitted by the parties, and also order that:

(a)   The plaintiff’s costs of and incidental to her summons filed 19 July 2024 (including the plaintiff’s costs of the preliminary question) be paid from the first defendant’s share of the estate of the late Francis Michael Cassar to be taxed in default of agreement on the indemnity basis, with certification for the retention of two counsel (save for the receipt of judgment); and

(b)  The plaintiff otherwise be indemnified for her costs of and incidental to her summons filed 19 July 2024 (including the plaintiff’s costs of the preliminary question) out of the estate of the late Francis Michael Cassar, with certification for the retention of two counsel (save for the receipt of judgment).

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