EBG v KPZ
[2019] VSC 630
•19 September 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TESTATORS FAMILY MAINTENANCE LIST
S CI 2018 01319
IN THE MATTER of an application pursuant to Part IV of the Administration and Probate Act 1958
- and -
IN THE MATTER of the Estate of MGJ, deceased
BETWEEN:
| EBG (by her Administrator State Trustees Limited (ACN 064 593 148)) | Plaintiff |
| v | |
| KPZ (as executor of the Estate of MGJ, Deceased) | Defendant |
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JUDGE: | Derham AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 18 July 2019 and by written submissions |
DATE OF RULING: | 19 September 2019 |
CASE MAY BE CITED AS: | EBG v KPZ |
MEDIUM NEUTRAL CITATION: | [2019] VSC 630 |
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COSTS – Direction to administrator appointed under the Guardianship and Administration Act 1986 (Vic) by the Victorian Civil and Administrative Tribunal to withdraw a proceeding commenced in the Court on behalf of the represented person pursuant to Part IV of the Administration and Probate Act 1958 (Vic) – Proceeding in the Tribunal instigated by the defendant in the Part IV proceeding – Whether the costs of the defendant in this Court should be paid by the administrator – Whether the costs should be paid on an indemnity basis – Principles applicable to a claim that a non-party pay the costs of a proceeding – Burns Philp & Co Ltd v Bhagat [1993] 1 VR 203; Bischof v Adams [1992] 2 VR 198, 201 and Knight v FP Special Assets Ltd (1992) 174 CLR 178 referred to.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Rizzi | State Trustees Limited |
| For the Defendant | Mr L Wraith | Collins & Stephens |
| For State Trustees Limited | Mr S E Marantelli | State Trustees Limited |
TABLE OF CONTENTS
Note....................................................................................................................................................... 1
Introduction......................................................................................................................................... 1
The facts............................................................................................................................................... 3
The first VCAT decision............................................................................................................... 8
The second VCAT decision....................................................................................................... 10
The application to this Court.................................................................................................... 12
Submissions...................................................................................................................................... 15
Defendant’s submissions........................................................................................................... 15
STL’s submission........................................................................................................................ 19
Plaintiff’s submission................................................................................................................. 20
Costs against a non-party................................................................................................................ 21
Indemnity Costs............................................................................................................................... 24
Consideration.................................................................................................................................... 25
Conclusion......................................................................................................................................... 33
HIS HONOUR:
Note
The publication of these reasons employs pseudonyms for the names of the deceased and the parties, other than the administrator of the plaintiff, State Trustees Limited (STL). This been ordered because otherwise this ruling would identify or could lead to the identification of a party to a proceeding in the Victorian Civil and Administrative Tribunal (VCAT) under the Guardianship and Administration Act 1986 (Vic) (G&A Act) in contravention of clause 37(1) of Schedule 1 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic).
Introduction
These reasons concern a claim for costs made by the defendant against the administrator of the plaintiff, STL.
On 29 May 2019, the VCAT, ordered STL to seek the leave of this Court to withdraw the application made in this proceeding on behalf of the plaintiff pursuant to Part IV of the Administration and Probate Act 1958 (Vic) (Act) for further provision from the estate of the deceased (VCAT order). The VCAT order was made pursuant to s 55(4A) of the G&A Act.
In compliance with the VCAT order, the plaintiff applied by summons filed on 28 June 2019 for leave to withdraw her Part IV application. A part of the order made by the VCAT was that the plaintiff must produce to the Court on the application a copy of the order of the VCAT and the published reasons for the order. This was done by the affidavit of Lauren McBlane made on 25 June 2019.
By order made on 18 July 2019, the plaintiff was granted leave to discontinue her Part IV application. In the reasons for making that order it was noted that Counsel for the parties had agreed that the parties will discuss the appropriate costs to be ordered as between plaintiff and defendant (including quantification of those costs) with a view to submitting consent minutes of order to the Court. If that process was not successful, it was noted that the Court will determine the question of the costs on the papers after the filing and service of written submissions. These submissions were ordered to be completed by 29 August 2019. As it turned out, after an extension of time was granted, the last of the submissions was filed on 5 September 2019.
It was also noted in the order made on 18 July 2019 that it was agreed between the parties not to be necessary or appropriate for this Court to make any order other than as between the plaintiff and defendant (that is, no order would be made as to the costs as between the plaintiff personally and STL, which is a matter to be determined by the VCAT). That was because, by the VCAT order, STL was required to report to the tribunal within 14 days of the decision of this Court on the application for leave to withdraw the proceeding and to file and serve upon both the represented person and the defendant details of the legal costs paid or payable by the represented person in relation to the VCAT proceeding together with a submission as to who should be responsible for those costs.
In accordance with the agreement between Counsel referred to in my order of 18 July 2019, the solicitor for the defendant wrote to STL on 24 July 2019 setting out the costs that have been incurred by the defendant up to that point, calculated on a standard basis, and setting out an itemised statement of how that figure was calculated. No response was received to this letter (which was sent by email to the plaintiff’s solicitor). The defendant’s solicitor again wrote on 1 August 2019, noting that there had been no reply to the letter of 24 July and saying:
Disappointingly, you have yet again failed to engage with us in sensibly trying to resolve the issues in dispute between the parties. The writer rang your office this morning in a final attempt to engage with you in meaningful discussions. You are not available and have not returned our call. In the circumstances, we will now prepare submissions for the Court on the question of costs.
This elicited a response from the plaintiff’s solicitor on Friday 2 August 2019, by email, apologising for the delay and stating that he was still awaiting instructions regarding the costs and asking for clarification as to whether the defendant was seeking that STL pay the costs or that the represented person pay the costs. This elicited a response on Monday 5 August 2019 that the defendant will be seeking orders that STL pay the defendant’s costs on an indemnity basis at both the Supreme Court and at the VCAT.
The facts
The affidavit of the defendant’s solicitor, Mr Chris Mackay, made 17 July 2019 sets out in a summary way the facts relevant to the application that is before me for STL to pay the defendant’s costs of this proceeding on an indemnity basis. There are also affidavits of a senior personal financial consultant employed by STL, Lauren McBlane, to which I will refer.
The plaintiff and defendant are sisters. Their mother died on 13 April 2017 leaving a will dated 31 January 2017, probate of which was granted to the defendant on 14 July 2017. After minor bequests, the residuary estate of the deceased was divided as to two-thirds to the defendant and one third to the plaintiff. The residuary estate is worth about $650,000.
The plaintiff is a represented person whose affairs are managed by STL pursuant to an order made by the Guardianship Division of the VCAT on 12 October 2016. The plaintiff is now 50 years old, divorced and has two children aged about 20 and 17 who live in Queensland. In an affidavit in support of the Part IV application, Lauren McBlane set out background information regarding the financial and medical condition of the plaintiff, including that STL had obtained an assessment of needs report dated 2 May 2018 from an occupational therapist which made a number of recommendations regarding the plaintiff’s current and future needs and what services and aid she could be provided in order to improve the quality of her life. This indicated a range of expenditure to provide for the plaintiff’s needs, based on a projected life expectancy of 74 years, from about $375,000 to about $775,000.
On 24 January 2018, STL learnt from the defendant’s then lawyers, Ruffin Lawyers, of the death of the deceased, and presumably the grant of probate to the defendant. The 6 month limitation period for the commencement of a Part IV application had at that time expired. Acting promptly, on 25 January 2018, STL wrote to Ruffin Lawyers to inform them that STL was investigating whether or not a family provision claim should be made on behalf of the plaintiff and asked that no distribution of the estate take place until any such claim made by the plaintiff was resolved or until Ruffin Lawyers were notified that no claim would be made. On 29 January 2018, Ruffin Lawyers responded that they confirmed that the estate funds would not be distributed pending the resolution of a Part IV claim or until notified that no claim would be made.
Between 7 February and 11 April 2018, there was correspondence between STL and Ruffin Lawyers regarding the plaintiff’s foreshadowed application under Part IV of the Act. That correspondence included requests by STL for full particulars of the respective financial positions of each of the beneficiaries named in the will and information relating to any of the factors set out in s 91A of the Act that may be material in considering the question of the beneficiaries’ right and entitlement to benefit from the estate.
On 2 March 2018, Ruffin Lawyers responded with considerable detail, including an administration account. Amongst the detail were some significant facts including that:
(a) during October 2016, the defendant stopped operating her business as a natural therapist and moved to Victoria to provide the deceased with palliative care, which enabled the deceased to remain at home during her fight with cancer. The plaintiff, due to her mental health difficulties, was unable to assist in caring for the deceased;
(b) over the last ten years, the defendant’s employment had been regularly put on hold or reduced to assist with caring for the plaintiff and her two children. The defendant and her husband had the full-time care of the plaintiff’s two then minor children from 2007 until 2013. The defendant and her husband paid for all the children’s financial needs as the plaintiff was on Centrelink benefits and her husband would not assist. The defendant also paid for the plaintiff to travel to Queensland to visit the children and for the children to travel to Victoria to visit the plaintiff and the deceased on numerous occasions;
(c) the financial position of the defendant and her husband was modest and that following the death of the deceased, the defendant was solely responsible for preparing the deceased’s Phillip Island property for sale and keeping it well-maintained;
(d) the solicitor for the defendant had known the deceased and her two daughters since 2007 and had a good understanding of the deceased’s reasons for making greater provision for the defendant in her last will. These reasons included that throughout her life, the deceased provided the plaintiff with significant financial assistance and that the defendant and her husband had also assisted the plaintiff financially. Details of this assistance were set out, including that during 1996 the deceased contributed about $50,000 to the purchase of a house for the plaintiff and her then husband to live in, and later contributed a further $23,313 towards the discharge of a mortgage over the house, when the plaintiff’s marriage ended in 2007 the deceased assisted her with her family law proceedings, the deceased regularly paid for the plaintiff’s groceries, utilities and other general expenses, and in 2016 the deceased purchased a car for the plaintiff at a cost of $5,000;
(e) the defendant and her husband were joined in the family law parenting proceedings in Victoria and in Queensland following the end of the plaintiff‘s marriage and they sold their investment property to pay their legal costs of about $70,000 of those proceedings. The deceased contributed $25,000 towards the plaintiff’s legal costs;
(f) the Will of the deceased recorded the reasons for the unequal provision made for the plaintiff in the following way:
I declare that I have made greater gift to my daughter [the defendant] as I believe I have provided adequately for [the plaintiff] during my lifetime and that unequal gifts in my Will to some degree equalise what each of my daughters have and will receive from me.
(g) the plaintiff and defendant have a close sibling relationship and the defendant will continue to support and assistance the plaintiff throughout her life.
The correspondence between STL and the defendant in March and April 2018 also included a request for the defendant to agree to an extension of time for two months within which the plaintiff might commence an application under Part IV of the A&P Act, which extension was agreed to by the defendant. By 11 April 2018, the defendant was wishing to make a distribution to herself in order to complete the purchase of a property and declined any further extension.
Notwithstanding the material provided as to the circumstances of the defendant and without further notice, on 12 April 2018 STL commenced this proceeding on behalf of the plaintiff for further provision from the estate of the deceased pursuant to Part IV of the Act. At this point, the defendant’s representation changed to the current solicitors acting on her behalf as executor of the deceased’s estate.
The current solicitor took instructions from the defendant and on 19 July 2018 wrote to STL:
(a) informing STL’s solicitor that it was the defendant’s understanding that the plaintiff was not aware of the commencement of the proceeding and had not been contacted by STL in relation to it;
(b) asking, as a matter of urgency, that STL advise whether it had consulted with the plaintiff in respect of the proceedings and, if so, what was the nature of the discussion and, if not, why not;
(c) noting that the defendant and plaintiff had always enjoyed a close relationship and the defendant should not be required to keep the proceeding from her sister unless there was good reason to do so and, further, it was important to the defendant to understand what reasons STL had for keeping the proceeding from the knowledge of the plaintiff;
(d) noting that the solicitor was instructed that the defendant believes that if her sister were to be advised of the proceeding it would cause her considerable distress and she would not be in favour of it;
(e) stating that he was not convinced that the proceeding is in the best interests of the plaintiff and requested STL to advise why it maintained the proceeding to be in her best interests.
STL responded on 1 August 2018 by email but did not confirm or deny whether the plaintiff had been consulted in relation to the commencement of the proceeding. The substance of the email was that the expert assessment of the plaintiff’s needs showed she had significant financial need, that STL is obliged to act in the best interests of the plaintiff, the institution of the proceedings was proper and STL intended to prosecute the plaintiff’s claim with a view to securing the best possible outcome.
The defendant’s solicitor wrote again on 2 August 2018 seeking that STL clarify whether the plaintiff had been consulted in relation to the proceeding, pointing out that the email did not respond to that central question. The letter also contended that STL was obliged to consult with the plaintiff as far as possible in order to act in her best interest pursuant to the G&A Act. The letter also stated that:
(a) the STL email attached the expert assessment of the plaintiff’s needs, dated 2 May 2018, and that it was disappointing that it had not been provided to the defendant earlier;
(b) the defendant would need time to take instructions in relation to the report and sought an adjournment of the Part IV directions hearing for that purpose;
(c) as far the solicitor for the defendant was aware, STL took no steps to negotiate settlement before or since issuing the proceeding and that this was disappointing having regard to the modest size of the estate; and
(d) it was likely that the defendant would seek orders and directions from the VCAT as to the best interests of the plaintiff or, in the alternative, STL could seek those directions pursuant to s 55 of G&A Act.
The solicitor for the defendant received no reply to its letter of 2 August 2018. In consequence, on 20 August 2018, application was made to VCAT on behalf of the defendant. The application sought an assessment of the situation and directions under s 56 of the G&A Act, specifically in relation to the question of whether the continuation of the Part IV proceeding was in the best interest of the plaintiff.
The first VCAT decision
On 17 October 2018, Member Norman of the VCAT made orders directing STL to discontinue the proceeding. The reasons given for the order were published on 21 December 2018 and noted the following:
(a) STL initiated the Part IV claim after receiving Counsel’s advice as to the appropriateness and likelihood of success of the application;
(b) the plaintiff was financially supported by her mother all her adult life. The plaintiff and defendant are personally very close. They phone each other frequently, they holiday together and the plaintiff considers the defendant her best friend. The defendant continues to help the plaintiff financially;
(c) before initiating the Part IV application, STL sought the plaintiff’s opinion. The plaintiff made it clear to STL she did not agree with the commencement of the proceeding and she has maintained her opposition to STL’s action since its inception. In her evidence to the tribunal, she stated ‘they do not listen to me’;
(d) at the hearing, the plaintiff gave her evidence in a measured, considered and persuasive manner. She repeatedly stated she did not want the litigation commenced in her name to continue. She believed that the litigation would negatively affect her relationship with her sister, the defendant, who is her only adult relative and is very important to her. Furthermore, she wanted her mother’s wishes, as stated in the will, to be respected. The plaintiff was a compelling witness;
(e) the defendant was not making the application through any self-interest. The application was made after consultation with and the agreement of the plaintiff;
(f) that the application was unusual and that commonly an administrator would seek advice of the tribunal in a case where there was opposition to litigation proposed on behalf of the represented person which directly affects the represented person’s nearest relation and sister. There is no evidence that that advice was sought in this case; and
(g) the plaintiff impressed the Member of the tribunal with her views. She is intelligent, and although she acknowledged she had difficulty managing her money, that is quite a different issue to making decisions which affect her personal wellbeing. She does not have difficulty in identifying what matters to her personally. Her sister is her only next of kin. She has no other adult relative in the world. She needs and wants her sisters support. The tribunal accepted the litigation was having a negative effect on this relationship and the plaintiff had conveyed to the member her real distress at the commencement of the proceeding.
On 19 November 2018, before receipt of the written reasons of the Member for making the decision, STL made application for a re-hearing. On 27 February 2019, in an effort to avoid the re-hearing application and the continuation of this proceeding, the solicitor for the defendant wrote a series of three letters to STL:
(a) the first letter was an open letter which set out a detailed and considered argument in an attempt to persuade STL to withdraw its application for a rehearing and to discontinue the Part IV proceeding;
(b) the second letter, also an open letter, notified STL that in the event that the re-hearing affirms the original order, the defendant and the plaintiff would ask the VCAT to remove STL as administrator and to appoint the defendant in its stead. Reasons were given for that proposal;
(c) the third letter was marked ‘without prejudice save as to costs’. It is a Calderbank letter[1] and stated that both the plaintiff and the defendant would prefer to resolve the ongoing dispute without further hearing and additional costs being incurred and to that end, offered that the re-hearing be dismissed and the Part IV application be discontinued with no order as to costs. Reasons were given within the letter, and by reference to the first letter, why that offer was better than could be expected to be received should the matter proceed to a hearing. The offer foreshadowed an application for indemnity costs in the event that STL did not accept it. The terms of the offer could not have been expressed more clearly.
[1]Referring to Calderbank v Calderbank [1975] 3 WLR 586; see also Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435, 441–2, [23]–[26] (Hazeldene).
The second VCAT decision
STL did not respond to these letters. On 7 March 2019, the re-hearing application took place before Senior Member Hoysted of the VCAT. Evidence was heard and the decision was reserved. On 29 May 2019, the Senior Member made orders directing STL to seek the leave of the Supreme Court to withdraw the Part IV proceeding and in doing so to provide the Court with a copy of the order, and the published reasons for the order.
The reasons of the Senior Member give an account of the background, the submissions of the parties, the fact that the plaintiff gave evidence, including evidence in private to the Senior Member (an account of which is given in the reasons), set out the relevant provisions of the G&A Act and set out the reasons for the order requiring STL to withdraw the Part IV application, as follows (noting that the reference to EBG is a reference to the plaintiff, KPZ is a reference to the defendant and MGJ is a reference to the deceased):[2]
[2]EBG (Guardianship) [2019] VCAT 760.
51.According to STL’s written submission their lawyer rang EBG and “explained to her that she needs more money for the future and that she has rights to receive more money from [MGJ’s] estate”. Notwithstanding that this appeared to me to be a statement put to EBG rather than a consultation, EBG nonetheless told the STL lawyer that she did not want to ask for more from her mother’s estate. The represented person displayed an understanding that any gain she made would be at the expense of her sister and she expressed that she did not want that.
52.The STL representative apparently did not seek to explore why EBG had disagreed with the proposal. It appears that STL formed the view that the response of EBG was unreasonable because it rejected the possibility of an increase in the amount of money she would receive. STL was reassured that EBG’s wishes were unreasonable based on the opinion that she has a disability and needed an administrator. STL determined it was giving effect to EBG’s best interests to override her stated wishes.
53.Notwithstanding that STL gave EBG a very limited opportunity to consider the issue and express her wishes, she nonetheless gave a thoughtful response. In the course of a telephone call from an unknown person, EBG gathered her thoughts and formulated a response. She demonstrated an understanding that she had previously benefitted from the generosity of her mother and sister, that her sister had been financially disadvantaged by her support of EBG and her children, that her relationship with her sister was important, that she respected the rationale for and decision made by MGJ and that she did not want to be involved in legal proceedings against her sister. There could be no suggestion that KPZ had manipulated or influenced EBG’s response to STL.
54.I reject the submission that best financial interests automatically and always equals best interests.
55.It is reasonable for a person considering a TFM claim to consider factors beyond the possible financial benefit to self. It is, in my view, reasonable to consider the effect of such litigation on familial relationships and to decide not to make TFM claim even where legal advice indicates you will receive a bigger share of an estate.
56.I reject the submission that the original Member’s expression of best interests being financial and personal amounted to an error of law. I consider the Member to have said that in assessing best interests it is necessary to consider factors beyond financial matters and I agree with her interpretation.
57.In relation to section 49 of the Act, STL stated that a represented person’s “unreasonably held wishes do not override what is objectively in their best interests”. I do not disagree with that as a general statement but I was not convinced, in this matter, that STL did enough to form an opinion that EBG’s wishes were indeed unreasonable. Nor do I accept the proposition put by STL that if an action achieves a financial benefit then it is objectively in her best interests. I suggest that view is indeed a subjective opinion.
58.I do not agree with the statement made by STL that EBG “has a statutory right to obtain such provision (money) in the form of a viable Part IV claim”. I think EBG’s rights are more accurately described as a right, expressed in statute, to make a claim – not to an outcome.
59.I reject the assertion made by STL that a Part IV claim should be viewed in the same light as a viable personal injuries claim or a claim in respect of a debt.
60.I see the two examples as illustrating the right to recover a loss which has been caused by the actions of another person. In this matter, EBG and KPZ both received a gift which neither had a right to expect.
61.I also reject the view that “the further provision that [EBG] is entitled to is an asset which belongs to [EBG] and by pursuing the Part IV claim, STL is preserving and protecting the asset”. I accept that, as administrator, STL has a responsibility to preserve and protect EBG’s estate but I don’t accept that an entitlement to make a claim, even where the opinion is that such claim is viable, is an asset.
62.STL submitted that if it had not pursued a viable Part IV claim on behalf of EBG then it would have been in breach of its duty imposed by section 58B. In numerous matters where STL has been uncertain about the execution of its duties or where it has been challenged by a represented person or interested party, the administrator exercises its right to seek the advice of the Tribunal. In such matters, STL would typically lay out the information for the Tribunal and present its consideration of the options and may even make a recommendation. The ability to seek advice is discretionary but it is a prudent course of action to take where a represented person’s wishes are at odds with what the administrator subjectively considers to be in their best interests.
63.For these reasons, I agree with the original Member that STL was wrong not to have considered EBG’s wishes about the TFM claim. I vary her order only insofar as I require STL to seek the leave of the Supreme Court to withdraw the TFM claim. I make this order cognizant of my obligations, expressed in section 4 of the Act which compels the administrator and the Tribunal, that “every function, power, authority, discretion, jurisdiction and duty conferred or imposed by [the] Act” be exercised or performed so that:
(a)the means which is the least restrictive of [EBG’s] freedom of decision and action as is possible…is adopted; and
(b) the best interests of [EBG] are promoted; and
(c) the wishes of [EBG] are wherever possible given effect to.
(citations omitted)
The application to this Court
On 24 June 2019, the solicitor for the defendant wrote to STL by letter marked ‘without prejudice save as to costs’. The letter referred to the decision of the Senior Member of 29 May 2019, the earlier decision of the Member made on 17 October 2018, the existing Part IV application and noted that the VCAT order required STL forthwith to seek the leave of the Court to withdraw the Part IV application. The Part IV proceeding was listed for further directions on 23 July 2019. The letter noted that the defendant’s solicitor had heard nothing from STL in relation to the matter since the decision was handed down and asked STL to advise how they intended to deal with the VCAT proceedings and the Part IV proceedings in light of the VCAT decision. The letter went on to note:
(a) that the defendant’s concerns regarding the commencement of the Part IV proceeding by STL had earlier been raised and the suggestion made that STL seek the approval of the VCAT for taking that course;
(b) that STL simply failed to respond to questions concerning consultation between STL and the plaintiff and declined to seek the approval from the VCAT for the issue of the Part IV proceeding;
(c) these matters resulted in the VCAT application made on behalf of the defendant;
(d) the letters dated 27 February 2019 were an attempt to resolve the issues in dispute between the defendant and STL and it was noted that STL simply failed to respond to those letters and instead proceeded with the unsuccessful application for a re-hearing of the earlier application, at considerable expense to the parties;
(e) the application to give effect to the VCAT orders should be made promptly;
(f) that STL should agree to pay the defendant’s costs of both the VCAT proceedings and the Part IV proceeding and invited STL to agree to the quantum of those costs, which was set out in an attachment to the letter;
(g) that STL should reimburse the defendant for her travel and accommodation costs for attending the hearing at the VCAT on 7 March 2019, for the expenses of the plaintiff in attending the VCAT hearings on 17 October 2018 and 7 March 2019, and to reimburse the plaintiff for any amounts taken from her funds in respect of STL’s fees (including legal costs drawn in relation to STL’s costs of the VCAT proceedings and the Part IV proceeding);
(h) that if the matters could not be agreed, then the defendant would seek orders in relation to the above matters, including orders for costs on an indemnity basis in both the Supreme Court and in the VCAT and, for that purpose, to refer to the previous correspondence.
The response from STL was a letter dated 28 June 2019 serving on the defendant’s solicitor a summons and an affidavit of Lauren McBlane in support. The summons was an application by the plaintiff to be granted leave to withdraw her application for further provision from the estate of the deceased. The affidavit in support set out the background to the matter and noted:
13.STL has made this application for leave to withdraw as it is obliged to follow the orders of the Tribunal due to the operation of Section 55(4) of the G&A Act.
14.However, STL do not consider that it is in the best interests of [the plaintiff] to withdraw this proceeding without her receiving further provision from the estate the deceased for her current and future expenses and needs, as assessed by Georgia McIntyre in her expert report dated 2 May 2018...
After the orders made by me on 18 July 2019 on the plaintiff’s application, Lauren McBlane has sworn a further affidavit (made on 4 September 2019) in which she refers to paragraph 14 of her earlier affidavit referred to above and states:
Upon reflection, I realised that what I deposed to in paragraph 14 was inappropriate. No disrespect to the Court or offence to the defendant was intended. I apologise to both and seek the indulgence of this honourable Court to withdraw the contents of paragraph 14 in its entirety.
Submissions
Defendant’s submissions
The defendant submitted that STL should pay the costs of the defendant on an indemnity basis, with the question of the payment of the plaintiff’s own costs (as between the plaintiff and STL) to be determined by the VCAT. In summary this position was justified by the following matters:
(a) STL should have contacted the plaintiff to obtain her detailed instructions in relation to the matter. Its failure to do so is unexplained. The plaintiff’s subsequent participation in the VCAT proceedings demonstrates that had STL appropriately communicated with her it would have learned that she strongly opposed the making of any claim against her mother’s estate, she had cogent reasons for that position and her capacity was demonstrably such that those views ought to be accorded significant weight.[3]
[3]EBG (Guardianship) [2018] VCAT 2064, [12], [17]-[18]; EBG (Guardianship) [2019] VCAT 760, [40]–[43],[51]–[53], [63].
(b) Had STL made those inquiries and thus received that information, it should not have commenced proceedings. If STL had a bona fide doubt as to whether it was appropriate to commence proceedings against the plaintiff’s wishes it should have made an application to the VCAT pursuant to s 55 of the G&A Act.
(c) STL’s failure to appropriately seek directions, even when prompted to do so by the defendant’s solicitor, remains unexplained. Had such direction been sought, approval to litigate in the plaintiff’s name would not have been given, and all associated costs avoided.
(d) The conduct of STL reveals numerous failings. There is no evidence –
(i) that between January and April 2018 STL made proper enquiries to establish whether there were grounds to issue proceedings other than a brief, unsatisfactory and inadequate telephone call to the plaintiff on 11 April 2018 the substance of which appears to be that the plaintiff was told that a claim would be made irrespective of her objections;
(ii) that any attempt was made by STL to obtain detailed instructions after proceedings were commenced;
(iii) of any contemporaneous enquiry about, or assessment of, her capacity to have input into a decision relating to the matter;
(iv)that STL consulted with the plaintiff as required by the G&A Act at all; and
(v) that STL briefed Counsel to provide formal advice regarding the merits of bringing the claim having regard to all the known background facts and in the face of the plaintiff’s objections.
(e) Having had over two months to properly investigate the claim, the making of one cursory phone call to the plaintiff the day before the proceeding was issued fell well short of conduct necessary to establish a proper basis for bringing a proceeding against the plaintiff’s wishes against her sister relating to her mother’s modest estate.
(f) STL compounded the cost consequences of its actions by the following:
(i) if STL had not properly investigated the potential claim, but time was of the essence, it could have issued and served the originating motion and held off issuing a summons for directions until proper enquiries had been made and/or it had sought approval from the VCAT to proceed. That would have protected the plaintiff’s position and avoided unnecessary costs. Instead, STL issued a summons, and triggered procedural steps leading to unnecessary costs.
(ii) having caused a summons to issue STL ignored the suggestion of the defendant that STL apply to the VCAT for approval.[4]
[4]See letter of Collins and Stephens dated 2 August 2018, appearing as CM-4 to the affidavit of Chris Mackay dated 7 July 2019.
(iii) STL then refused the defendant’s request to adjourn the directions hearing whilst the defendant initiated the advice proceeding in the VCAT, irresponsibly adding to the defendant's costs.
(iv)following the VCAT hearing on 17 October 2018, STL was directed to discontinue this proceeding. The reasons for decision made clear that the plaintiff was capable of expressing her views and had cogent reasons for refusing to support a claim on her mother’s estate. She was described as ‘a compelling witness’ by the Member. STL applied for a review of that decision but did not seek instructions from the plaintiff or consult with her. A fiduciary who seeks to review a decision in an advice proceeding does so at their own risk.[5]
[5]Australian Incentive Plan Pty Ltd v Attorney General for Victoria (No 2) [2012] VSCA 251, [14] (Nettle JA); JHS (Guardianship) [2017] VCAT 1126, [11].
(v) the VCAT review conducted on 7 March 2019 and the reasons of 29 May 2019 affirmed the decision to direct STL to withdraw this proceeding. The reasons reinforce the conclusion that had STL made proper enquiries it would have learned that the plaintiff had cogent reasons for opposing a claim against her mother’s estate.
(vi)following the determination of the review application, rather than STL simply making the application for leave to withdraw, STL attempted to put in issue the merits of both the VCAT determinations by paragraph 14 of the McBlane affidavit. By seeking to subvert an unchallenged order of the VCAT, without appealing the decision, STL, as a professional administrator, has engaged in conduct which, if not contemptuous, is something close to it. Its approach increased the work required in preparation for the most recent directions hearing, which hearing should have been (and ultimately was) limited to STL obtaining leave to withdraw.
(g) The Civil Procedure Act2010 (Vic) (CPA) imposes strict obligations on all persons involved in litigation to have a proper basis for making a claim, to take steps to resolve or determine a dispute, to co-operate in the conduct of proceedings, to use reasonable endeavours to resolve a dispute and to ensure costs are reasonable.
(h) There is no suggestion that the claim ever had merit. The reasons for the unequal treatment of the sisters were known to and accepted as proper by the plaintiff and were readily ascertainable by STL (if it had made proper enquiries). In all the circumstances the terms of the will were consistent with the considered testamentary wishes of a wise and just mother.
(i) The case was commenced and continued in the absence of evidence to support the claim being made, let alone against the express wishes of the plaintiff, without the VCAT or Court approval. Requests to seek such approval and avoid an unnecessary appearance were ignored. Remarkably, STL sought to continue the fight even after the second VCAT determination by inviting this Court to refuse to approve the withdrawal of the proceeding. The failings in the conduct of STL justify an order being made on an indemnity basis.
(j) STL can be made liable for costs incurred by a defendant in proceedings commenced by STL in the name of a represented person: State Trustees Ltd v Christodoulou.[6] This Court makes orders against legal practitioners who have been responsible for costs to litigants.[7] This estate is modest. Any costs which are borne by the estate will significantly impact upon the distribution that each sister will receive. STL’s conduct is responsible for all the costs incurred in relation to this matter. STL is more able to absorb the financial impact of the costs than either sister, and ought be ordered to pay costs on an indemnity basis.
[6][2010] VSCA 86.
[7]See, eg, Brown v Guss (No 2) [2015] VSC 57.
The defendant noted that the question of what is to occur as between STL and the plaintiff with respect to her own costs is a matter to be determined by the VCAT.
STL’s submission
STL characterises the basis on which the defendant seeks STL pay her costs on an indemnity basis as arising from an improper exercise of discretion in the performance of a statutory power. Given the facts of this case and taking into account an important policy consideration, STL submitted that the Court should be wary of acceding to such an application; that such an order may deter STL from commencing Part IV (and other) claims in the future. The defendant needs to satisfy a high threshold. It has failed to do so.
STL’s submissions then address the appointment of STL as administrator after the deceased and the defendant resigned as attorneys, the medical evidence as to the capacity of the plaintiff, substance of the matters before the VCAT and, surprisingly, seems to question the reasoning of the Senior Member and his conclusion:
Had the plaintiff recognized her need but said, “I don’t care about that, my relationship with [the defendant] is more important to me,” the Tribunal would have been more entitled to reach its conclusion. That, however, is not what the plaintiff said. The plaintiff’s reasoning supports STL’s decision. She did not know what was in her best interests.[8]
Because the strength of the Part IV was so strong, the argument that STL should have applied pursuant to section 55 of the Act for directions is irrelevant. In any event, section 55 is permissive, not mandatory. Prior to commencing the Part IV, STL obtained the advice of an employee lawyer with experience in estate-related litigation. (In paragraph 6 of the first Reasons, Member Norman said that STL had received counsel’s advice. This is not the case if by it the Member meant the advice of independent Counsel).[9]
[8]STL’s Written Submissions, 5 September 2019, [4].
[9]Ibid, [9].
STL submitted that although the defendant brought the application under section 56 of the G&A Act, the VCAT acted on its own initiative, and pursuant to section 55(4)(A) on 29 May 2019, when it directed STL to seek leave of the Supreme Court to withdraw the Part IV claim. This, it was submitted, attracts the protection of sub-section (5) so that STL cannot be held liable for the defendant’s costs of the Part IV proceeding. Section 55(5) of the G&A Act provides:
An action does not lie against an administrator on account of an act or thing done or omitted by the administrator under any order or on the advice of the Tribunal made or given under this section unless in representing the facts to the Tribunal the administrator has been guilty of fraud, wilful concealment or misrepresentation.
Further, Member Norman found in her reasons that: ‘[t]he administrator has proceeded appropriately and in the best financial interests of the represented person’ and recommended that STL’s costs of the Part IV proceeding be paid out of the Estate.
STL submitted that:
(a) between 12 April 2018 (filing of the Part IV application) and 21 December 2018 (first VCAT Decision reasons) STL was acting in what it thought was the plaintiff’s best interests, ignoring – as it was entitled – the urgings of the defendant and her solicitors;
(b) between December 2018 and 29 May 2019 (second VCAT Decision) it was exercising a statutory right to a rehearing, again in what it believed to be the plaintiff’s best interests.
STL therefore submitted that the defendant’s application should be dismissed (with costs).
Plaintiff’s submission
The plaintiff made separate submissions. It is unclear whether they were made on the instructions of STL or the plaintiff personally. Having regard to the content of the submission, and the fact that the plaintiff as the represented person has been firmly on the side of the defendant throughout the proceedings in the VCAT, it is likely that the instructions were given by STL.
The plaintiff submitted that her costs, calculated on the standard basis, should be paid out of the estate of the deceased because:
(a) the Part IV proceeding was meritorious and sustainable as a matter of fact and law.
(b) the plaintiff was not personally responsible for bringing the Part IV proceeding.
(c) it would be unjust if the plaintiff were to bear the costs personally as a result of the discontinuance of this proceeding.
(d) if the Court made no order as to the plaintiff’s costs, she would, unless the VCAT intervened, have to bear her own costs.
(e) it is unclear what the VCAT will decide with respect to the plaintiff’s costs as between her and STL. It is noted that Member Norman recommended that the costs expended by STL in bringing the plaintiff’s claim ought to be paid from the estate of the deceased.
(f) the safer course of action and the course that fits within the overall justice of this case, is for the plaintiff’s costs of this proceeding to be paid from the estate of the deceased on a standard basis.
(g) the case law as to costs in Part IV proceedings supports the award of costs out of the estate in this case.[10]
[10]McDonald v O’Connor (No 2) [2019] NSWSC 344.
Costs against a non-party
Unless otherwise expressly provided by any Act or by the Rules, the costs of and incidental to all matters in the Court are in the discretion of the Court, and the Court has full power to determine by whom and to what extent the costs are to be paid.[11] This power is not restricted to costs between parties, but is wide enough to authorise the Court to order that a person not a party pay the costs of a party.[12]
[11]Supreme Court Act 1986 (Vic) s 24(1).
[12]Burns Philp & Co Ltd v Bhagat [1993] 1 VR 203, 210–23; Bischof v Adams [1992] 2 VR 198, 201, 205; Knight v FP Special Assets Ltd (1992) 174 CLR 178.
The discretion regarding costs has been described as absolute, unconfined or unfettered, although that discretion must be exercised judicially, that is, not by reference to irrelevant or extraneous considerations, but upon facts connected with or leading up to the litigation,[13] and in accordance with the general principles and practices pertaining to the law of costs.[14] There is a settled practice (sometimes called a general rule) that in the absence of good reason to the contrary a successful litigant should receive his or her costs.[15] It is not, however, a legal rule devised to control the exercise of the discretion.[16] Where the general rule applies it generally has the result that the successful party should be entitled to the whole of its costs.[17]
[13]Latoudis v Casey (1990) 170 CLR 534, 537; Oshlack v Richmond River Council (1998) 193 CLR 72, 86 (Oshlack).
[14]Oasis Hotel Ltd v Zurich Insurance Co (1981) 24 DLR (3d) 455, 462; Knight v FP Special Assets Ltd (1992) 174 CLR 178, 192 (Mason CJ and Deane J).
[15]Ritter v Godfrey [1920] 2 KB 47, 52; Donald Campbell &Co Ltd v Pollak [1927] AC 732, 809; Milne v Attorney-General for the State of Tasmania (1956) 95 CLR 460, 477.
[16]Oshlack (1998) 193 CLR 72, 86, [35].
[17]Lollis v Loulatzis (No 2) [2008] VSC 35, [26].
There are two overarching factors that the Court should take into account in order to determine whether the discretion to award costs against a non-party should be exercised:
(a) the connection between the non-party and the proceedings; and
(b) the causal connection between the non-party and the costs that have been incurred and are sought to be recovered.[18]
[18]Bischof v Adams [1992] 2 VR 198, 204–5.
In relation to the connection between the non-party and the proceedings:
(a) it is not practicable to lay down a set of parameters in advance for there may be cases where the interests of justice support an order for costs even though the connection is slender;[19]
[19]Ibid 204.
(b) the connection must be real and direct and it must be material to the issue of costs;[20]
(c) the mere fact that a person may benefit from the litigation will not, without more, suffice;[21] and
(d) there may be cases where the connection is significant but not material to the issue of costs.[22]
[20]Ibid 205.
[21]Ibid.
[22]Ibid.
It would invariably be unjust to make an order against a non-party without affording that person a proper hearing.[23]
[23]Ibid.
Also s 29 of the CPA empowers the Court, if satisfied on the balance of probabilities, that a person has contravened any overarching obligation, to may make an order that the person pay some or all of the legal costs or other expenses of any person arising from the contravention of the overarching obligation.[24] By s 30(2) of the CPA such an application must be made prior to the finalisation of the civil proceeding to which the application relates (excluding any period for appeals). Section 30(3) of the CPA then provides that for the purposes of subsection (2), if an order, including an order in respect of costs, is made after the date of finalisation of the civil proceeding to which the application relates, the date of making of the last of the orders is taken to be the date of finalisation of that proceeding. In this case, the orders as to costs the subject of these reasons will be the last orders made in this proceeding within the meaning of s 30(3) of the CPA so that the date of finalisation will be the date of the making of orders as to costs.
[24]Yara Australia Pty Ltd v Oswal (2013) 41 VR 302, [16]–[20].
STL is a person to whom the overarching obligations apply. Section 10 of the CPA provides that the overarching obligations apply to any legal practitioner or other representative acting for or on behalf of a party (s 10(1)(b)) and any person who provides financial assistance or other assistance to any party in so far as that person exercises any direct control, indirect control or any influence over the conduct of the civil proceeding or of a party in respect of that civil proceeding (s 10(1)(d)). In my view, STL is an other representative of the plaintiff within the meaning of s 10(1)(b) and a person who provides other assistance to the plaintiff in exercising direct control over the conduct of the proceeding within the meaning of s 10(1)(d) of the CPA.
Indemnity Costs
The exercise of the discretion to award costs over and above the ordinary is exceptional, being reserved for cases where the losing party has engaged in unmeritorious, or deliberate or high-minded or other improper conduct such as to warrant the Court showing its disapproval and at the same time preventing the successful party being left out-of-pocket.[25]
[25]Australian Guarantee Corp Ltd v De Jager [1984] VR 483, 502; PCRZ Investments Pty Ltd v National Golf Holdings Ltd [2002] VSCA 24; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397, 401.
In Hazeldene,[26] this Court said in relation to Calderbank offers that the critical question was whether the rejection of the offer was unreasonable in the circumstances. Deciding whether conduct is unreasonable involves matters of judgment and impression. The Court in Hazeldene held that, when considering whether the rejection of a Calderbank offer was unreasonable, a court should ordinarily have regard at least to the following matters:
[26](2005) 13 VR 435, 441–2, [23]–[26].
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree’s prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed; and
(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.
Consideration
STL brings this proceeding in the name of the plaintiff pursuant to the power given by s 58B(2)(l) of the G&A Act. That section gives specific power to an administrator appointed under that Act to ‘bring and defend actions and other legal proceedings in the name of the represented person’. This provision avoids the difficulty of finding a litigation guardian prepared to act on behalf of the represented person. STL has control of the proceeding pursuant to the duties and powers conferred by s 58B. Thus, STL’s connection to the proceeding is real and direct and material to the issue of costs. Moreover, there is an immediate causal connection between STL and the costs that have been incurred and are sought to be recovered by the defendant.
The history of this matter, as related above, reveals that STL has failed to respond to correspondence from the defendant either at all, or within a reasonable time, and has failed to engage with the defendant in relation to the particular matters raised regarding its decision to commence the Part IV proceeding:
(a) the first occasion upon which STL failed to engage with the defendant’s lawyers was in respect of the detailed material provided by Ruffin Lawyers in their letter on 2 March 2018. I have set out above (at [14]) some of the material set out in the letter of that date which, in my view, ought to have been given serious consideration by STL before commencing any proceeding. There is no indication in the evidence that the information was considered nor that there was any response to it.
(b) the second occasion on which STL failed properly to respond was in relation to the current solicitor’s letter sent on 19 July 2018 (referred to above at paragraph [17]). In particular, there was no response to the very pertinent question whether STL had consulted with the plaintiff in respect of the commencement of the proceeding.
(c) the third occasion upon which STL failed properly to respond to the defendant’s solicitor was in relation to its letter of 2 August 2018 (referred to above at paragraph [19]). It will be recalled, that central to the matters raised in that letter was the proposition that STL was obliged to consult with the plaintiff, as far as possible, in order to act in her best interests pursuant to the G&A Act. In light of the threat made by the defendant in that letter that it would seek orders and directions from the VCAT as to the best interests of the plaintiff if STL did not do so, it is quite remarkable, in my view, that STL did not respond at all.
(d) the fourth occasion upon which STL failed to engage with the defendant’s solicitors was in relation to the rehearing application after the first VCAT decision. The defendant’s solicitor’s letter of 27 February 2019 addressed the three grounds upon which the rehearing application was made by STL, namely –
(vii) that the decision was not in the best interests of the represented person;
(viii) that the VCAT did not apply the correct test in assessing the best interest of the represented person; and
(ix) STL was unable to comply with the direction of the VCAT to discontinue the TFM claim in the Supreme Court.
The defendant’s solicitor’s letter went on to systematically undermine, if not destroy, each argument raised by STL. No explanation is given in any material put before the Court why STL did not respond to the three letters of 27 February 2019.
The judgment of the VCAT in the second VCAT decision comprehensively established the merit of the arguments advanced on behalf of the defendant in the first letter of 27 February 2019. It is neither necessary nor appropriate to repeat the matters the VCAT took into account in arriving at its decision. Suffice it to say that at the centre are the following propositions:
(a) STL did not properly consult with the represented person before commencing the proceeding;
(b) had it done so, it would have had to consider her expressed wishes which were rational and important to any decision to commence a Part IV proceeding;
(c) that STL ought to have been uncertain as to whether or not it should commence the Part IV proceeding and in that circumstance should have made application to the VCAT to seek advice as to whether the proceeding should be commenced.
In substance, I agree with the submissions advanced by the defendant in support of the application that STL pay the defendant’s costs of this proceeding. The failure on the part of STL properly to consult with the plaintiff is a matter of fundamental importance in this case. The evidence shows that what the plaintiff told the officer of STL who called her on 11 April 2018 was simply discounted or ignored. Subsequent events show that STL disagreed with the plaintiff and took the position that it knew better than her (and the VCAT) as to what was in her best interests. The facts that were set out in the letter from Ruffin Lawyers of 2 March 2018 ought to have given pause to STL in relation to the merit of the claim. STL appeared to have been focused on need alone. But the other factors identified in s 91A of the Act are particularly relevant in this case, including:
(a) evidence of the deceased’s reasons for making the dispositions in the deceased’s will: in this case, the deceased declared that she had made a greater gift to the defendant as she believed that she had provided adequately for the plaintiff during her lifetime and that the unequal gifts in the will to some degree equalised what each of her daughter have and will receive from her;
(b) the nature of the relationship between the deceased and the plaintiff: in this case, the deceased had both cared for and provided significantly for the plaintiff during her lifetime;
(c) any obligations or responsibilities of the deceased to the eligible person, any other eligible person and the beneficiaries of the estate: in this case, the balancing between the interests of the two sisters that was achieved by the deceased’s will reflected contributions made by the deceased to the plaintiff and by the defendant to the plaintiff during the deceased’s lifetime;
(d) the size and nature of the estate: in this case, it is a modest estate and specific direction was given by the will (in a precatory way) that State Trustees apply the gift she made by her will to the plaintiff to obtain secure accommodation for her at a particular nursing home at Cowes. This was in fact done by the defendant;
(e) the financial resources and earning capacity of both the eligible person, any other eligible person and any beneficiary of the estate: although the evidence of the financial position of the plaintiff was that she was in need of further provision, the other evidence advanced on behalf of the defendant showed that the defendant was also needy and had made significant contribution not just to the estate but to the plaintiff and the plaintiff’s children and that provision was to her financial detriment;
(f) any contribution (not for adequate consideration) of the eligible person to the building up of the estate or the welfare of the deceased or the deceased’s family: there was no evidence to suggest that the plaintiff was in any way responsible for building up the estate or contributing to the welfare of the deceased. Quite to the contrary;
(g) any benefits previously given by the deceased to the plaintiff or to any beneficiary: as I have said, the will records, and the material provided by the defendant shows, that significant benefits were previously given by the deceased to the plaintiff and, moreover, by the defendant to the plaintiff; and
(h) the effects a family provision order would have on the amounts received from the deceased’s estate by other beneficiaries: clearly were there to be greater provision for the plaintiff there would be a lesser provision for the defendant who in all the circumstances was also particularly deserving.
STL’s failure to seek directions from the VCAT has never been properly explained. The defendant’s solicitor raised the issue in its letter of 2 August 2018 and it has never been responded to appropriately. In its submissions before me, STL continued to submit that the strength of the Part IV claim was so strong, the argument that STL should have applied pursuant to section 55 of the G&A Act for directions is irrelevant. It is now clear that STL did not seek independent Counsel’s advice before commencing the proceeding.[27]
[27]See above at paragraph [31].
It is clear, however, that time was of the essence in relation to the commencement of any proceeding on behalf of the plaintiff. STL had sought and was granted an extension of time by the former lawyers acting on behalf of the defendant, but that time was due to expire, apparently, on 13 April 2018. Given that the evidence before the VCAT was that it was only on 11 April 2018 that an officer of STL spoke to the plaintiff regarding the commencement of the proceeding, it seems likely that the refusal, on 11 April 2018, of the solicitor for the defendant to agree to a further extension of time within which to commence the proceeding likely precipitated the issue of the originating motion on 12 April 2018.
The defendant rightly submitted, however, that there was no reason to press on with that proceeding if there were matters to be investigated by STL as to the merit of the claim. Particularly if there were proper consideration to be given to the views of the plaintiff as to whether or not she wished such a claim to be made. Rather than seeking to have the proceeding put on hold, whether by agreement or with the agreement of the Judge or Judicial Registrar in charge of the TFM List, STL pressed on with the procedural steps giving rise to the incurring of unnecessary costs.
After the first VCAT decision, in the course of which the plaintiff made her desires and wishes quite clear to the VCAT and to STL, there is no evidence of consideration being given by STL to whether it should consult with the plaintiff before making application for a rehearing.
Despite the latest affidavit from Lauren McBlane seeking to withdraw paragraph 14 of her affidavit sworn 25 June 2019, that paragraph truly shows, and in my view continues to show, that STL does not accept the decision of the VCAT that required it to withdraw the Part IV application. This is made clear by the submissions made on behalf of STL in relation to costs. I have referred above (paragraphs [31]) to some short excerpts from the written submissions filed on behalf of STL which reveal, in my view, a continuing desire on the part of STL to question the reasoning of the Senior Member and his conclusion, whilst not seeking leave to appeal that decision.
This approach by STL is entirely without merit and should never have been adopted otherwise than by way of an application for leave to appeal the decision of Senior Member Hoysted.
The submission of the STL that it is protected by s 55(5) of the G&A Act is misconceived. That section provides that an action does not lie against an administrator on account of an act or thing done or omitted by the administrator under any order or on the advice of the VCAT made or given under s 55 unless in representing the facts to the VCAT the administrator has been guilty of fraud, wilful concealment or misrepresentation. Section 55 authorises the administrator to apply for the advice of the VCAT ‘upon any matter relating to the scope of the administration order or the exercise of any power by the administrator under the administration order’. It is under this section that the defendant has always contended STL should have proceeded either before commencing the proceeding, or if there was insufficient time within which to do so beforehand, to put the proceeding on hold whilst such and application was made.
The fact that Senior Member Hoysted exercised the power given by s 55(4A) of the G&A Act (which provides that the VCAT ‘may on its own initiative direct, or give an advisory opinion to, an administrator concerning any matter’) does not bring STL within the terms of the protective provision in s 55(5) because what it has done has not been done or omitted to be done under any order or on the advice of the VCAT made or given under s 55, save for the application to withdraw the proceeding. In any event, an application for the costs of this proceeding is not an action brought against the administrator within the meaning of the provision.
I have mentioned above (paragraph 22[c]) that before the hearing leading to the second VCAT decision the defendant gave to STL a Calderbank letter. In the defendant’s submissions in this Court, there is no express reliance upon that letter. However, the letter’s scope was not limited to the re-hearing application in the VCAT. It included an offer that the TFM claim be discontinued with no order as to costs. It was made in accordance with the principals enunciated in the decision in Calderbank v Calderbank. The defendant has pressed on with its arguments in relation to costs in this proceeding notwithstanding a very reasonable and sensible offer made by that Calderbank letter.
The history of the conduct of STL to which I have referred demonstrates, in my view, that STL has failed:
(a) to cooperate with the defendant in connection with the conduct of that proceeding in contravention of s 20 of the CPA;
(b) to use reasonable endeavours to resolve the dispute by agreement with the defendant in contravention of s 22 of the CPA;
(c) to use reasonable endeavours to ensure that legal and other costs incurred in connection with the civil proceeding are reasonable and proportionate to the complexity or importance of the issues in dispute and the amount in dispute, in contravention of s 24 of the CPA. In this Court there was an unnecessary directions hearing on 21 August 2018, and three consent adjournments after that before the application to discontinue was made. Further, in my view the steps taken by STL in the VCAT involve legal costs being incurred in connection with this civil proceeding. There is very good reason to conclude that STL should have sought the advice and direction of the VCAT either before commencing the proceeding (had it made proper inquiries of the plaintiff much earlier than 11 April 2018) or shortly after commencing the proceeding, as the defendant suggested.
In relation to the contention by the defendant that STL was also in breach of the obligation imposed by s 18 of the CPA (not to make any claim that does not, on the factual and legal material available at the time of making the claim have a proper basis), it is not appropriate on a costs application of this kind to come to a firm conclusion. That is because:
(a) I am satisfied that for other reasons that STL ought to pay the defendant’s costs; and
(b) although the facts I have emphasised militate against there being a proper basis despite the plaintiff’s evident need, in this area of the law reasonable minds may differ as to that assessment.
In my view, it is clear that STL should pay the defendant’s costs of this proceeding and should do so on an indemnity basis. It has acted in a high handed manner in this Court in seeking to justify its actions both in this Court and before the VCAT. The Calderbank letter is clear and convincing and there is no answer to it.
In relation to the plaintiff’s costs of the proceeding so far, I can see no valid reason why, in the circumstances set out above, that she should be required to pay any costs personally. The plaintiff was not responsible for bringing the Part IV proceeding and it would, as the plaintiff submitted, be unjust if the plaintiff were to bear the costs personally as a result of the discontinuance of this proceeding.
However, there is no valid reason why the estate of the deceased should bear any of her costs. That will reduce both the plaintiff’s entitlement under the Will of the deceased as well as that of the defendant. There is no warrant for the estate to bear any of those costs.
It will be recalled that the VCAT order made by Senior Member Hoysted requires STL to report to the tribunal on the application for leave to withdraw the proceeding and to file and serve upon both the represented person and the defendant details of the legal costs paid or payable by the represented person in relation to this proceeding together with a submission as to who should be responsible for those costs. I consider that because of this order, it is not appropriate to make any order as to the plaintiff’s legal costs of the proceeding. As between the plaintiff and STL, that matter clearly falls within the jurisdiction of the VCAT.
The submission by the plaintiff that the plaintiff‘s costs should be paid out of the estate of the deceased is for these reasons rejected.
Conclusion
STL will be ordered to pay the defendant’s costs of this proceeding on an indemnity basis.
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