Drakakis v Makas
[2016] ACTSC 247
•26 August 2016
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Drakakis v Makas |
Citation: | [2016] ACTSC 247 |
Hearing Date: | Determined on written submissions |
DecisionDate: | 26 August 2016 |
Before: | Mossop AsJ |
Decision: | See [62] |
Catchwords: | COSTS – Proceedings involved an application for the making of a statutory will – Parties members of an extended family – Proceedings were discontinued following discovery of a valid will – Where testator had deliberately kept existence of will secret from the plaintiff – Where plaintiff had a substantial, albeit indirect, interest in the making of the proposed statutory will – Not appropriate to conduct hypothetical trial to assess strength of plaintiff’s application – Circumstances meant application was arguable until discovery of will – No order as to costs of the plaintiff COSTS – Public Trustee appointed to represent first defendant pursuant to s 24(1) of the Public Trustee and Guardian Act 1985 (ACT) – First defendant to pay costs of Public Trustee as between solicitor and client and in accordance with s 24(2) of the Public Trustee and Guardian Act 1985 (ACT) COSTS – Where second defendant not named in originating application – Only joined as party after commencement of proceedings on application of her solicitor – Strength of application not determinative of costs issue – While second defendant could have performed role of contradictor, she also had an interest in opposing application – No order as to costs of the second defendant |
Legislation Cited: | Court Procedures Rules 2006 (ACT), rr 259, 278 Guardianship and Management of Property Act 1991 (ACT), s 14 Wills Act 1968 (ACT), s 16A |
Cases Cited: | Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 |
Parties: | Chris Drakakis (Plaintiff) Grigoria Makas (First Defendant) Constance Terend (Second Defendant) |
Representation: | Solicitors TressCox Lawyers (Plaintiff) Snedden Hall & Gallop (Public Trustee and Guardian) KJB Law (Second Defendant) |
File Number: | SC 439 of 2015 |
MOSSOP AsJ:
Introduction
These proceedings involve an application for the making of a statutory will pursuant to s 16A of the Wills Act 1968 (ACT). That provision permits the Court to make a will for a person who does not have testamentary capacity. The proceedings were commenced by originating application dated 17 November 2015. They were discontinued by the plaintiff by leave of the Court granted on 9 February 2016. All questions of costs were reserved. The reason that they were discontinued was because it was discovered that the first defendant had made a later will of which the plaintiff had been unaware. This later will took away the basis for the plaintiff’s application.
Dramatis personae
The plaintiff is the guardian and manager of the first defendant. He was appointed to that position on 22 October 2013. The proceedings involve an extended family of Greek extraction. Some of the members of that extended family live in Australia, some in Greece.
The relationship between the various persons involved in the present proceedings is best understood by reference to their relationship with two brothers Peter Makas and Emmanuel Makas.
Peter Makas died in July 2005. He was married to the first defendant. The first defendant had six siblings. All of those siblings are now dead. Four of those siblings had children. It is only necessary to refer to one of those children, the second defendant who is the niece of the first defendant.
The other brother, Emmanuel Makas, died in March 2015. He was married to Panayiota Makas. They had one child, Irene Drakakis, who is married to the plaintiff, Chris Drakakis. The plaintiff is therefore the son in law of the brother of the first defendant’s husband.
Another Emmanuel Makas, who I will refer to as Manuel Makas, is the son of Nick Makas another brother of Peter and Emmanuel Makas. He is therefore the nephew of the first defendant. Nektaria Makas is his sister.
The second defendant, Constance Terend, is the daughter of one of the first defendant’s sisters. She is therefore the first defendant’s niece.
In the reasons which follow I will generally refer to the first defendant by her first name. I do so for convenience and without intending any disrespect to her.
Background
The proceedings were commenced by originating application dated 13 November 2015 filed 17 November 2015. The orders sought in that application were that:
(a)the Court grant leave to the plaintiff to apply for an order under s 16A of the Wills Act for a will to be made in the terms of the document annexed to the application;
(b)the will annexed to the application be approved;
(c)the matter be remitted to the Registrar to sign and seal the said will; and
(d)the plaintiff’s costs of the proceedings be paid out of the estate of the first defendant on an indemnity basis.
The grounds of the application were set out in the originating application as follows:
1. The Defendant Grigoria Makas is a person who has lost testamentary capacity.
2.The Defendant made her last will on 4 July 1990, the named beneficiaries having predeceased her.
3.In the circumstances that have occurred, in the event of her death the Defendants estate will pass as on intestacy, which the Plaintiff contends is contrary to the wishes of the Defendant.
4.The Plaintiff further contends that a statutory will (within the meaning of the provisions of Part 3A Wills Act, 1968) in the form and substance of the will filed with this application, is one which is, or is reasonably likely to be, one that would have been made by the defendant if she had testamentary capacity.
The will which was annexed appointed Irene Drakakis and Chris Drakakis (the plaintiff) as executors and trustees. It would have the effect that all of Grigoria’s interest and assets within the Petros Property Group, including “all of my commercial real estate properties together with all bank accounts and investments held by me [to] my niece Irene Drakakis”. The residue of her estate was to pay all debts and testamentary expenses and the balance would be held for five of her nieces, one of whom was the second defendant.
The Petros Property Group is the trading name of Grigoria Makas. The assets of the group comprise a number of commercial and other properties. The affidavit of the plaintiff filed in support of the originating application described the total value of the Petros Property Group as just over $26,055,000, generating a total rental revenue of $2.8 million per annum as at 2013. The liabilities are just short of $14 million. Therefore, the effect of the proposed will would be to give very substantial benefits to Irene Drakakis, the wife of the plaintiff.
At the time of, or shortly after, commencement of the proceedings, the plaintiff filed in support of the application:
(a)an affidavit of Irene Drakakis dated 16 November 2015;
(b)affidavits of the plaintiff dated 16 and 17 November 2015;
(c)an affidavit of Panayiota Makas (the wife of Emmanuel Makas) dated 16 November 2015;
(d)an affidavit of Guy Maloney, a solicitor employed by the solicitors for the plaintiff, dated 23 November 2015; and
(e)an affidavit of Ramila Varendran, consultant geriatrician, dated 3 December 2015.
At the time the proceedings were commenced an application in proceedings was also filed seeking that the proceedings be expedited.
The proceedings came before me on 27 November 2015. The plaintiff and the solicitor for Constance Terend appeared on that occasion. I made an order joining Constance Terend as the second defendant to the proceedings. I listed the proceedings for hearing on 22-24 February 2016 and made various directions. The second defendant filed a notice of intention to respond on 30 November 2015.
The later will was first disclosed to the plaintiff on 13 January 2016. I will describe the circumstances leading to the creation and discovery of the later will below.
The solicitor who held the will refused to produce it to the plaintiff. A subpoena, returnable on 8 February 2016, was issued on 20 January 2016 and required the solicitor to produce the will and various other documents.
On 27 January 2016 a request was made to have the proceedings relisted pursuant to a grant of liberty to apply. As a result of the request the proceedings were listed on 5 February 2016.
On 4 February 2016 the second defendant filed an application in proceeding seeking that the originating application be set aside because “there exists a more recent will of the First Defendant, made on 29 August 2008, under which no part of her estate will pass as on intestacy.”
On 5 February 2016 the solicitor who held a copy of Grigoria’s will dated 29 August 2008 (John Bradley of the firm Bradley Allen Love) appeared and made a claim for privilege in relation to certain documents which were subject to the subpoena. That was done because the solicitors considered themselves to be under an obligation to claim privilege on behalf of their former client in circumstances where she was unable to provide present instructions as to whether or not privilege should be claimed or waived. An affidavit of her solicitor was read relating to the circumstances surrounding the making of the will and the maintenance of its confidentiality in the period since then. As a consequence of that claim, the return of subpoena was adjourned to a date to be fixed. The potential for the plaintiff, as guardian and manager of Grigoria’s affairs, to waive privilege or confidentiality over the documents the subject of the claimed privilege was canvassed and a direction was made requiring the plaintiff to give notice of any such intention.
On 9 February 2016 the plaintiff was granted leave to discontinue the proceedings and questions of costs were reserved. I made an order for the representation of Grigoria by the Public Trustee pursuant to s 24 of the Public Trustee Act 1985 (ACT) for the purposes of the issue of costs. (I will continue to refer to the Public Trustee notwithstanding the change of name to Public Trustee and Guardian which took effect from 1 April 2016.)
On 25 February 2016 Grigoria was represented by the Public Trustee. I made directions relating to the filing and service of written submissions in relation to the costs of the proceedings.
Although the parties did not formally read the affidavits that had been filed in the proceedings, the submissions appeared to proceed on the basis that I should have regard to the affidavit evidence filed in order to determine the question of costs. In deciding this application on written submissions I have proceeded on that basis.
The circumstances surrounding the later will
The chronology surrounding the making and disclosure of the 2008 will is, as I understand it and for the purposes of this application, largely uncontroversial.
On 4 July 1990 Grigoria executed her 1990 will.
On 27 August 2008 Manuel Makas, Grigoria’s nephew and the son of the late Nick Makas, contacted Mr Bradley conveying to him Grigoria’s desire to make a new will. An appointment was arranged for Grigoria to see her general practitioner to confirm she had testamentary capacity. On 29 August 2008 there was a lengthy meeting with Mr Bradley during which instructions were taken and the will drafted. Manuel was present during that meeting which was cut short when Grigoria had to attend another engagement. Grigoria returned later that afternoon by herself to execute the will. She told Manuel that day that nobody should be told about the will.
Mr Bradley continued to have communications with Manuel. Mr Bradley inferred from the circumstances that Grigoria under no circumstances wanted her brother-in-law Emmanuel Makas or any of his family, including the plaintiff, to become aware of the existence or terms of the 2008 will. Manuel Makas appears to have been the conduit by which Grigoria conveyed instructions to Mr Bradley. Because of some concerns about the 2009 accounts for the Petros Property Group and the need to confirm his authority to deal with the accountant, Mr Bradley attended Grigoria’s house on 11 January 2010. During the meeting she signed the letter to the accountant to confirm that Mr Bradley continued to act for her. Their meeting was interrupted when Emanuel Makas’ wife Panayiota came to the door and was persistent in ringing the doorbell. It was clear to Mr Bradley that Grigoria was not happy about the persistence of her intending visitor. Upon Grigoria’s instructions Mr Bradley was told to escape into the garage so that he would not be seen and then exit the garage after a few minutes. He was unable to readily exit the garage and was required to climb, with his briefcase, over the neighbour’s fence in order to make his way back to his car undetected.
Mr Bradley did not have any direct contact with Grigoria after this.
A week later he received a deed poll executed by Grigoria stating that her brother-in-law (Emmanuel Makas) was in charge of her legal and financial affairs and had full power to appoint accountants and lawyers on her behalf.
Correspondence between Emanuel Makas and Manuel Makas clearly indicated that Emanuel perceived Manuel to be interfering in his family’s affairs.
On 1 February 2010 Mr Bradley received an email from Manuel which reported an adverse interaction between Emanuel and Grigoria. It recorded in relation to the execution of the deed poll:
She told me that [the plaintiff] had taken a document for her to sign and that she did so because she wanted to be left alone. The main priority is to make sure that they not only leave her alone but also don’t unearth her will. She told me that she will tell me more when she sees me next.
On 8 September 2010 Mr Bradley received a letter from Meyer Vandenberg on behalf of the plaintiff attaching an authority to release documents dated 26 August 2010 which extended to all “files, safe custody packets and other documents in your possession” relating to Grigoria Makas, Peter Makas and the Petros Property Group.
On 8 September 2010, the authority was conveyed to Manuel. Manuel spoke to Grigoria who told him that “under no circumstances” did she want Emmanuel and his family to get hold of the will. The next day Manuel told Mr Bradley that Grigoria “definitely wanted her will to stay with us and definitely not to hand over the will nor the doctor’s certificate”.
On 10 September 2010 Mr Bradley received a second direction signed by Grigoria directing him to give the will to her niece Nektaria. He complied with that direction on 10 September 2010 by handing it to her. Mr Bradley was informed that Nectaria Makas intended to place it in a packet at the law firm Snedden Hall and Gallop.
On 20 September 2010 Mr Bradley then responded to the letter from Meyer Vandenberg dated 7 September 2010 enclosing an original revocation of power of attorney and stating “this is the only document we are holding”.
On 11 April 2012 the plaintiff met with Mr Bradley at Mr Bradley’s office. There is a contest over the facts as to what occurred at that point. On the one hand, the affidavit of Guy Maloney dated 27 January 2016 includes the following:
We are further instructed that at 3pm on 11 April 2012, our client met with John Bradley at his office. At this meeting:
(a) our client produced his Power of Attorney to Mr Bradley;
(b) our client informed Mr Bradley of Grigoria’s health and shortened life expectancy and his need to ensure her affairs were in order;
(c) our client referred to the other documents produced by Mr Bradley in relation to Grigoria to that point and asked whether, other than those documents, there was any other material relevant to Grigoria’s estate that remained in his or his firm’s possession, and if so, that it should be sent to Meyer Vandenberg;
(d) Mr Bradley informed our client that there were no such documents;
(e) Our client asked Mr Bradley whether he had visited Grigoria or she had attended his office;
(f) Mr Bradley said he had not seen Grigoria since her husband Peter’s death in 2005.
On the other hand, in Mr Bradley’s letter dated 18 January 2016 he stated:
Neither I nor my firm has ever been asked by your client, you, or Meyer Vandenberg whether we prepared any Will for Grigoria after 4 July 1990 and neither I nor my firm has ever been asked whether we are aware of any Will subsequent to the will of Grigoria dated 4 July 1990.
It is not possible on the present application to resolve what was said by the plaintiff or Mr Bradley at this meeting.
Emmanuel Makas died in March 2015. The proceedings were commenced in November 2015.
Manuel Makas commenced proceedings in the ACT Civil and Administrative Tribunal on 23 December 2015 seeking to have Chris Drakakis removed as Grigoria’s guardian and financial manager. At that stage he was not aware of these proceedings. He first spoke to the second defendant’s solicitor on 11 January 2016 and was told about these proceedings.
On 13 January 2016 the solicitors for the second defendant wrote to the solicitors for the plaintiff identifying that Bradley Allen Love had disclosed that Grigoria’s solicitor, John Bradley, had prepared a will executed on 29 August 2008 and consequently, as matters stood, no part of Grigoria’s estate would pass by intestacy. Although the evidence does not say so expressly, I infer that this information came to the knowledge of the second defendant as a result of contact with Manuel Makas, who was aware of the will’s existence. Understandably, that revelation led to some correspondence between the parties, in particular the plaintiff pointing out the efforts that he had gone to to obtain documents from Bradley Allen Love in September 2010 and April 2012.
On 14 January 2016 Mr Bradley wrote to the plaintiff’s solicitors identifying that Bradley Allen Love was not in a position to provide the parties with a copy of the will or to produce the original will for inspection by the parties because the will was document with respect to which Mr Bradley was “under an ethical obligation to keep confidential” and Grigoria “unequivocally instructed me that I should not tell any other person about the contents of her will”. He did, however, disclose circumstances in which the will was explained to Grigoria and executed, as well as the steps taken to obtain a report from Grigoria’s general practitioner as to her capacity to make a will.
A subpoena was issued out of the Court on 20 January 2016 stated to be returnable on 8 February 2016.
On 22 January 2016 the original 2008 will was returned to Bradley Allan Love by Nectaria Makas.
Positions of the parties
In summary the position of the parties in relation to costs was as follows.
The plaintiff contended that the first defendant should pay his costs of the proceedings. That was essentially because Gregoria deliberately kept the 2008 will secret from the plaintiff until the death in 2015 of the sole remaining beneficiary under the 1990 will. The plaintiff submitted that this put him in a position where he felt compelled to commence these proceedings in good faith to restore what he understood to be her intentions. The party responsible for the plaintiff’s ignorance of the existence of the 2008 will and the anxiety which led to the commencement of proceedings was Gregoria. He took action to discover any will after 2008 and did not unnecessarily continue the proceedings after the 2008 will was discovered.
The position of the second defendant was that:
(a)so far as the costs of the second defendant were concerned:
(i)the plaintiff should pay the second defendant’s costs up until 13 January 2016 on a party and party basis and any difference between party and party and indemnity costs should be met from the first defendant’s assets;
(ii)the costs of the second defendant from 14 January 2016 should be paid by the plaintiff on an indemnity basis.
(b)so far as the costs of the first defendant represented by the Public Trustee were concerned, they should be paid from the assets of the first defendant on an indemnity basis.
The Public Trustee appointed to represent the interests of Gregoria sought an order that the Public Trustee’s costs and expenses together with a reasonable fee for the services of the Public Trustee be paid out of any estate fund or property of the plaintiff pursuant to s 44(2)(b) of the Public Trustee Act 1985, that there be no order as to costs in respect of the plaintiff’s costs of the proceedings and that the plaintiff pay the second defendant’s costs of the proceedings.
So far as the plaintiff’s costs are concerned, the Public Trustee submitted that the plaintiff should not recover his costs from the first defendant because:
(a)investigations made of Mr Bradley on 11 April 2012 were limited in their context and further investigation should have been undertaken;
(b)Manuel Makas had been involved in advising the first defendant for many years and should have been a person of whom enquiries were made;
(c)the plaintiff should have taken steps to appoint a litigation guardian under r 278 of the Court Procedures Rules 2006 (ACT) (CPR) for the first defendant.
(d)the plaintiff had a clear conflict of interest with the first defendant in his role as guardian and manager of her affairs;
(e)the plaintiff had a substantial entitlement to fees as a result of his role as guardian or manager and should not be entitled to claim costs from the first defendant’s assets simply as a consequence of ill-conceived Supreme Court proceedings.
The second defendant submitted that the plaintiff’s application was not successful and the Court should apply the general principle that costs follow the event. She contended that she fulfilled the role of a proper contradictor having regard to the fact that Grigoria was not represented by a litigation guardian. She pointed to the fact that the existence of the 2008 will was discovered by the investigations she undertook which avoided the need for a three-day trial. She also submitted that the plaintiff had not complied with the requirement of s 16B(2)(a) of the Wills Act 1968 to provide a written statement of the general nature of the application and the plaintiff’s reasons for making it. She further submitted that the plaintiff had chosen not to serve Manuel Makas, a person who had a legitimate interest in the application and who, if served, would have led to the disclosure of Grigoria’s 2008 will. Finally, she pointed to the correspondence dated 13 January 2016 which contended that the application was based on an incorrect premise and could not succeed.
The submissions made by the Public Trustee provoked submissions in reply from the plaintiff contending that if the Court was to take into account any allegations in the Public Trustee’s submissions concerning the plaintiff’s conduct as Grigoria’s guardian and financial manager then the plaintiff should have the opportunity to file further evidence on those issues. Further, the Public Trustee’s submissions as to the entitlement of the plaintiff to recover fees from his role as guardian and manager is distinct from his actual drawing of fees from the estate and there was no evidence of that amount. Further detailed submissions were made in reply to the submissions made by the second defendant and the public trustee.
The second defendant made submissions in reply contending that although there are various examples of statutory will applications having been brought by a person who acted as a guardian or attorney for the proposed testator, the present case was one in which there was a lack of admissible evidence as to Grigoria’s likely testamentary intentions.
Decision
The position in relation to the Public Trustee representing the first defendant is relatively straightforward. The Public Trustee was appointed to represent Grigoria’s interests by orders that I made on 9 February 2016. That was an order pursuant to s 24(1) of what is now the Public Trustee and Guardian Act 1985 (ACT). Where such an order is made s 24(2)(b) provides that:
the costs and expenses of the representation, as between solicitor and client, together with a reasonable fee for the services of the Public Trustee and Guardian, shall be paid to the Public Trustee and Guardian out of any estate, funds or property the subject matter of the proceedings, or otherwise as the court or the ACAT made direct.
In my view, the appropriate order is simply that the costs as between solicitor and client together with a reasonable fee for services of the Public Trustee and Guardian be paid by the first defendant. For reasons which I will explain below I do not consider it appropriate to make any other order in relation to the costs of the first defendant in the proceedings.
So far as the position of the plaintiff is concerned there are two points of greater significance in relation to the question of costs. First, the application was made in circumstances where there had been a concerted effort on the part of Grigoria to keep her testamentary intentions as expressed in her 2008 will secret from the plaintiff. The plaintiff’s efforts to discover any such testamentary intentions were frustrated by Grigoria’s direction to remove the will from Mr Bradley’s possession at the point where he was requested to provide documents to Meyer Vandenberg. Even if inquiries had been made of Manuel Makas, it is unlikely that prior to the commencement of the proceedings the existence of the 2008 will would have been disclosed to the plaintiff because of the instructions given by Grigoria to Manuel. However, had he been served with the proceedings, it is likely that the existence of the will would have been disclosed earlier.
Second, the pursuit by the plaintiff of the statutory will application was one in relation to which he had a substantial, but indirect, interest because under the proposed will the overwhelming beneficiary of the will would be his wife. That would be at the expense of the children of Grigoria’s siblings, including the second defendant.
It is not appropriate for the purposes of an application in relation to costs to conduct a mini-trial in order to work out the strength of the plaintiff’s case other than at the most general level. Nor is it appropriate to attempt to make findings on a contested question of fact, which would involve further evidence being filed and a possible necessity to permit cross-examination. For that reason, notwithstanding the submissions put by the second defendant, I do not consider it appropriate to attempt to make any finding about the strength of the plaintiff’s application other than to say that, in the absence of the 2008 will or the evidence about the circumstances in which it was brought into existence and kept secret, it was reasonably arguable. Similarly, I have not placed any weight on the submission by the Public Trustee that the plaintiff contravened his obligation under s 14 of the Guardianship and Management of Property Act 1991 (ACT) or in relation to the extent of fees drawn by him as guardian and manager.
In circumstances where the proceedings have come to an end because of an unanticipated turn of events and where the bringing of the proceedings cannot be characterised as being motivated by completely disinterested motives, in my view, the appropriate approach is that adopted in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622, namely, that there should be no costs order against the first defendant and in favour of the plaintiff.
So far as the second defendant is concerned, the originating application did not name the second defendant as a party to the proceedings. As discussed above (at [15]), the second defendant was only joined as a party to the proceedings on 27 November 2015 upon an application of her solicitor. While it was contemplated by draft short minutes provided to the Court on that day that the second defendant would, pursuant to r 259 of the CPR, be appointed to represent nine of the children of Gregoria’s siblings, seven of whom were resident in Greece, I did not make that order at that stage of the proceedings. I infer that the second defendant perceived that she had an interest in opposing the making of a statutory will which gave the vast benefit of Grigoria’s estate to Irene Drakakis and it was for that reason that she chose to participate in the proceedings. In doing so her conduct was reasonable. Although unknown to her at the time, there was a complete answer to the application in the form of the 2008 will which was discovered as a result of enquiries made by her solicitor. The existence of the document was promptly notified to the other side and, in order to crystallise the position prior to the anticipated hearing date, the application to set aside the originating application was put on. As I have indicated, I do not consider that on an application like this it is appropriate to attempt to reach any conclusion as to the merits of the application other than at the most broad brush level. While the second defendant has been put in the position of having to oppose the plaintiff’s proceedings in circumstances where they have been ultimately shown to be misconceived, in the unusual circumstances of this case, I do not consider that that alone provides a basis for the making of a costs order against the first plaintiff or the first defendant.
Had there been no representation of the other parties it would be necessary to make an order that the interests of Grigoria be represented by the Public Trustee. Although the representation of the second defendant would have performed the useful role of contradictor and ultimately lead to the disclosure of the existence of the later will, the second defendant was not solely there to represent Grigoria’s interests but, I infer, was also wanting to protect her own entitlement and the entitlements of other persons who would take on intestacy.
In the circumstances I consider the appropriate order is that there be no order as to costs of the second defendant.
Orders
The orders of the Court are:
1. The costs as between solicitor and client together with a reasonable fee for the services of the Public Trustee and Guardian be paid by the first defendant.
2. That any application to determine the reasonable fee for the purposes of order 1 or otherwise necessary to give effect to order 1 be made within 28 days.
3. There is otherwise no order as to costs of the proceedings.
| I certify that the preceding sixty-two [62] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Associate Justice Mossop. Associate: Date: 26 August 2016 |
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