Cody v Cody (No 3)
[2016] VSC 499
•23 August 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S CI 2012 05489
| PATRICIA ADRIENNE CODY and PATRICK FRANCIS CODY (as executors of the estate of Pierce Thomas Cody, deceased) | Plaintiffs |
| v | |
| PIERCE PATRICK CODY (as executor of the estate of Pierce Thomas Cody, deceased) | Defendant |
---
JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers, plaintiffs' written submissions dated 20 June 2016 and defendant's written submissions dated 17 and 29 June 2016 |
DATE OF RULING: | 23 August 2016 |
CASE MAY BE CITED AS: | Cody & Anor v Cody (No 3) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 499 |
---
COSTS—Where parties are executors of deceased estate—Where proceeding compromised without hearing on merits—Where both parties achieved a result—Whether costs of proceeding be paid personally or from the estate—Trustee Act 1958, s 36(2)—Supreme Court (General Civil Procedure) Rules 2015, r 63.26— Re Beddoe [1893] 1 Ch 547— Nolan v Collie (2003) 7 VR 287
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr S P Newton | Wisewould Mahony |
| For the Defendant | Mr T P Warner | Strongman & Crouch |
HER HONOUR:
Background
The plaintiffs are two of the executors of the estate of Pierce Thomas Cody, deceased. The defendant is the third executor of the estate.
In 2012, the plaintiffs sought orders against the defendant that the executors of the estate take all steps to effect the sale of an estate asset, being an apartment in Falls Creek. Judgment in the proceeding was delivered on 5 June 2013.[1] Orders made 24 June 2013 provided for the apartment to be placed on the market for sale at the end of the 2014 ski season unless a majority of the six persons named in those orders agreed that the apartment be retained by the estate. The apartment was listed for sale in 2014. It was subsequently sold by contract of sale dated 8 April 2016, with settlement to be effected on 29 April 2016. Both the plaintiffs and the defendant signed the contract of sale as the executors of the deceased’s estate. The settlement date was subsequently extended to 20 May 2016 due to the defendant not signing the settlement documents.
[1]Cody v Cody [2013] VSC 274 (5 June 2013) (McMillan J).
The plaintiffs’ solicitors forwarded the settlement documents for signing by the defendant on 2 May 2016. The plaintiffs sought the execution and return of the settlement documents on several occasions without success and their attempts to serve the defendant were unsuccessful.
Plaintiffs’ application
On 18 May 2016, the plaintiffs wrote to the defendant informing him that they intended to seek orders from the Court on the basis that he had not signed and returned the documents to enable settlement to proceed. The plaintiffs’ affidavits in support were filed at the Registry with a notice to produce the file for hearing on 10 June 2016 in the Trusts, Equity and Probate List. The plaintiffs also sought an order for the defendant’s removal as an executor of the estate of the deceased.
On 8 June 2016 the defendant instructed solicitors to act on his behalf. His solicitors were served with the affidavits in support of the application around midday on 8 June 2016. On the day of the hearing on 10 June 2016, the defendant’s solicitors delivered the settlement documents signed by the defendant to the plaintiffs’ solicitors. The remaining order sought by the plaintiffs was the removal of the defendant as an executor of the estate, which the plaintiffs withdrew at the hearing. Nevertheless, the defendant sought to file affidavits in response to the application. The Court considered this to be inappropriate considering the withdrawal of the application and there being no need to determine any disputed facts. Orders were made for the filing of short written submissions on the remaining issue of the costs of the application.
The defendant contends that his attendance at court on 10 June 2016 only occurred because the plaintiffs sought an order that he be removed as an executor of the estate. The plaintiffs contend their application was because the defendant refused to carry out his duty as executor and an appearance was required, if for no other reason than for costs to be determined.
Costs orders sought by the parties
The plaintiffs seek an order that the defendant personally pay their costs of the application on an indemnity basis and that the defendant pay his own costs.
The defendant seeks an order that the plaintiffs personally pay his costs of the application, alternatively, if the defendant’s costs are not paid by the plaintiffs or an award of costs is made against him, he submits that he ought to be indemnified out of the estate because the plaintiffs abandoned the application to remove him as an executor, relying on r 63.26 the Supreme Court (General Civil Procedure) Rules 2015, s 36(2) of the Trustee Act 1958 or pursuant to clauses 12 or 13 of the schedule to the deceased’s will.
Applicable principles
The power of the Court to order costs under s 24 of the Supreme Court Act 1986 is exercised subject to and in accordance with Order 63 of Supreme Court (General Civil Procedure) Rules 2015. Rule 63.26 provides as follows:
Unless the Court otherwise orders, a party who sues or is sued as trustee or mortgagee shall be entitled to the costs of the proceeding out of the fund held by the trustee or out of the mortgaged property in so far as the costs are not paid by any other person.
Section 36(2) of the Trustee Act 1958 provides that:
A trustee may reimburse himself or pay or discharge out of the trust premises all expenses incurred in or about the execution of the trusts or powers.
In respect of their costs, trustees are entitled as of right to indemnity out of the trust for expenses properly incurred, that is, all costs except to the extent that they are of an unreasonable amount or have been unreasonably incurred. The concept of proper expenditure excludes conduct demonstrating want of prudence or diligence.[2] Expenses and liabilities that are improperly incurred, such as acting beyond power, in bad faith or exercising power ‘with an absence of care and diligence that a person of ordinary prudence should exercise’ are not caught by the right of indemnity and shall be borne by the trustee personally.[3]
[2]Turner v Hancock (1882) 20 Ch D 303, 305 (Jessel MR); Re Beddoe [1893] 1 Ch 547, 558 (Lindley LJ); Nolan v Collie (2003) 7 VR 287, 303–10 (Ormiston JA); Dimos v Skaftouros (2004) 9 VR 584, 617 (Dodds-Streeton AJA, referring to National Trustees Executors & Agency Company of Australasia Ltd v Barnes (1941) 64 CLR 268).
[3]Re O’Donogue [1998] 1 NZLR 116, 121 (Hammond J); Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) (2001) 188 ALR 566, 606 (Finkelstein J); Nolan v Collie (2003) 7 VR 287.
The power to order costs is usually exercised after a hearing on the merits and, as a general rule, the successful party is entitled to his or her costs. Success in the action or on particular issues is the factor that controls the exercise of the discretion in most cases. A successful party is prima facie entitled to a costs order.[4]
[4]Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622, 624 (McHugh J).
Where a proceeding is undetermined and has not been resolved by contest before a court in a hearing on the merits, the court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. The court has discretion to make costs orders either where a defendant has consented to a grant of final relief or if there is consensus as to the outcome of the proceedings. In certain circumstances, a costs order can be made if it can be determined that one or other party would certainly have succeeded in the proceeding, or if one or other party has acted unreasonably in pursuing or defending the proceeding.[5]
[5]Ibid.
Defendant’s submissions
The defendant submits that the whole of the proceeding was improperly instituted as once a judgment or authenticated order is entered into its records, the court retains no inherent jurisdiction or power to revive the matter absent any specific power.[6] Liberty to apply is not inherent in a judgment or order that is final in nature.[7]
[6]Bailey v Marinoff (1971) 125 CLR 529.
[7] Re McPherson; Willan v Union Trustee Co Aust Ltd [1909] VLR 103.
The defendant also relied on a deed of release entered into by the plaintiffs and the defendant on 5 May 2014 and contends it may have emerged that the plaintiffs’ application to remove him as an executor would have been barred by the deed if not disguised as an application to enforce the orders of 24 June 2013. The defendant says this caused unnecessary costs as he was required to instruct his solicitor and counsel to defend the removal application.
In explanation of his delay in signing the settlement documents for the sale of the apartment, the defendant submits that he stood willing to sign the documents for the sale of the property, subject only to reasonable requests for information or assurances.
Consideration
It is apparent that the primary purpose of the application was to obtain the defendant’s signature on the settlement documents to enable completion of the sale of the apartment as a matter of urgency. However, as well as that purpose, the orders sought included the removal of the defendant as an executor of the estate of the deceased. Ordinarily, such an application would be made by way of originating motion and summons supported by an affidavit. Directions would then be given for the defendant to file any affidavits in opposition to the removal application. Due to the short notice of the application and its subsequent withdrawal, the defendant was not able to file any affidavits in response to the removal application by the hearing date. As the application was then withdrawn, it was unnecessary for affidavits to be filed as there would no longer be a contested hearing.
The defendant’s submission as to jurisdiction is rejected in the circumstances of the orders made in the proceeding on 24 June 2013. Those orders did not include liberty to apply, however, neither was an order made dismissing the proceeding. In the absence of express reservation of liberty to apply, liberty to apply will be implied when the order is not of a final nature and also when there is necessarily something to be done irrespective of what appears on the face of the order.[8] Whether liberty to apply is expressly reserved or by implication, the effect is to permit persons having an interest under the order to apply to the court in respect of that interest in a summary way. It enables the court to deal with matters that arise in the course of working out that order but does not enable it to make what is substantially a different order.[9] Apart from the removal application, I consider the remaining orders sought by the plaintiffs involved the enforcement of the orders made on 24 June 2013, in particular the sale of the apartment.
[8]Riltang Pty Ltd v L Pty Ltd [2004] NSWSC 977 (25 October 2004) [45]–[47] (White J). See also Penrice v Williams (1883) 23 Ch D 353, 356–7 (Chitty J); Chandless-Chandless v Nicholson [1942] 2 KB 321; Re Porteous [1949] VLR 383, 385 (Herring CJ); Minter v Geraghty (1981) 38 ALR 68, 78–9 (Dunn J); Phillips v Walsh (1990) 20 NSWLR 206.
[9]Re Porteous [1949] VLR 383, 385 (Herring CJ); Dowdle v Hillier (1949) 66 WN (NSW) 155.
Whilst there has been no hearing on the merits and no findings on disputed facts or any unreasonable conduct on this application, both parties have achieved a result out of the application. From the plaintiffs’ perspective, they achieved the defendant’s signature on the settlement documents and, from the defendant’s perspective, he achieved the withdrawal of the application to remove him as an executor of the estate. Both sides instructed solicitors and counsel to reach this result. Both sides were acting as executors of the estate of the deceased and have incurred costs in that capacity. In these circumstances, it is appropriate that the costs of both the plaintiff and the defendant parties should be paid out of the estate of the deceased.
Accordingly, I order that the costs of the plaintiffs and the defendant be paid out of the estate to be taxed on the standard basis in default of agreement.
---
12
0