Estate CA Cirillo, deceased (No. 2)

[2015] NSWSC 486

Supreme Court

New South Wales

Medium Neutral Citation:

Estate CA Cirillo, deceased (No. 2) [2015] NSWSC 486

Hearing dates:

23 April 2015

Date of orders:

30 April 2015

Decision date:

30 April 2015

Jurisdiction:

Equity Division - Probate List

Before:

Lindsay J

Decision:

1. DECLARE that, on the proper construction of orders 27-30 (inclusive) of the orders made on 26 August 2014 in the proceedings respectively numbered 2012/351568, 2013/102237, 2013/269684 and 2014/175570, the respective costs of the parties, including all costs associated with any ongoing administration of the estate of the late Caterina Assunta Cirillo, are capped at the amounts specified in those orders.

2. DECLARE that no party (and no solicitor acting for a party) to those proceedings has an entitlement to charge against the estate of the late Caterina Assunta Cirillo costs other than those identified in orders 27-30 of 26 August 2014 as having been capped.

3. ORDER that the respondents pay the applicants’ costs of their respective motions.

4. RESERVE liberty to apply for consequential relief.

Catchwords:

PROCEDURE – Judgments and Orders – Costs – Maximum Costs – Consent Orders – Construction – Ongoing estate administration costs – Costs capped by settlement agreement.

Legislation Cited:

Civil Procedure Act 2005 NSW, section 73
Succession Act 2006 NSW

Cases Cited:

Cirillo v Cirillo; Estate CA Cirillo, deceased [2013] NSWSC1797

Texts Cited:

-

Category:

Consequential orders (other than Costs)

Parties:

Applicant: Maria Wakeling
Applicant: Antonio (Anthony) Cirillo
Respondent: Pasquale (Peter) Cirillo

Representation:

Counsel:
Applicant (Maria): L Goodchild
Applicant (Anthony): R Jefferis
Respondents (Peter and Solicitors) : V Bedrossian

Solicitors:
Applicant (Maria): Hozack Clisdell
Applicant (Anthony): Slater & Gordon
Respondents: Hunt and Hunt

File Number(s):

2013/00102237; 2013/00269684

Publication restriction:

-

Judgment

1. The late Caterina Assunta Cirillo(“the deceased”) died on 5 April 2012, leaving a Will dated 24 October 2005 and six adult children embroiled in disputes about her estate notable for the disproportionate costs incurred in litigating them.

2. Having settled proceedings in which they were embroiled, they fell into a further dispute about the proper construction of the orders made to give effect to their settlement agreement. This judgment aims to determine that dispute.

3. With sad irony, but an element of consistency, the post-settlement dispute relates to an entitlement to charge costs against the estate of the deceased.

4. The deceased’s Will ostensibly made equal provision for five of the deceased’s six children, leaving one of the six (an estranged daughter, Maria) without any testamentary provision.

5. The executors named in the Will (sons of the deceased, Pasquale and Domenico, respectively known as “Peter” and “Mick”) had an unhappy relationship that adversely affected the course of administration of the estate and costs incurred referable to its administration: Cirillo v Cirillo; Estate CA Cirillo, deceased [2013] NSWSC 1797 (5 December 2013).

6. Two of the six children (Maria and a son, Antonio, known as “Anthony” or “Tony”) applied to the Court for family provision relief under chapter 3 of the Succession Act 2006 NSW.

7. On 26 August 2014 three of the four sets of proceedings involving the siblings came on for hearing before me. They comprised:

1. Maria’s family provision claim (case number 2013/102237);

2. Anthony’s family provision claim (case number 2013/269684); and

3. proceedings relating to caveats lodged against the title to estate land, and recovery of possession of estate land from Anthony (case number 2014/175570).

8. The fourth set of proceedings (case number 2012/351568) related to the contest between the deceased’s executors (Peter and Mick), largely about the nature and value of estate property, causing a grant of probate of the deceased’s Will to them to be delayed until 14 January 2014. No substantive claims for relief had been made in these, Probate proceedings requiring active consideration on 26 August 2014, but the proceedings were listed on that date for such, if any, further consideration required.

9. At the commencement of the hearing on 26 August 2014, I drew attention to the disproportionate amount of costs claimed against the estate, and notional estate, of the deceased. Specifically, I drew to attention submissions of Peter’s then counsel to the effect that, if all parties were allowed their claimed costs, then the fund over which the parties were fighting was of the order of about $20,000. Peter’s counsel responded with a suggestion that, taking into account a prospective tax liability as well as the parties’ claims to costs, the deceased’s estate could be insolvent.

10. The parties sought, and were given, an opportunity to progress their ongoing settlement discussions before embarking on what had been estimated to be a final hearing of four days’ duration.

11. Within a relatively short time they returned to court with an announcement that they had “reached an agreement in principle subject to working out the mechanics of it all”. At their request, the proceedings were stood down to enable documentation to be prepared.

12. Later in the day they returned to court with “draft orders”, embodying a settlement agreement, the terms of which were agreed by the four siblings active in the proceedings: Maria, Anthony, Peter and Mick.

13. Those terms were engrossed by me in a document entitled “Short Minutes of Orders”, settled by me with the benefit of input from the legal representatives of the active parties.

14. Those parties, jointly and severally, joined in an application to the Court for the orders set out in the Short Minutes to be made to give effect to their agreement. That application was granted.

15. The orders made by reference to the Short Minutes related to all four proceedings involving the deceased’s estate, not merely the three listed for hearing. That is to say, the Probate proceedings (case number 2012/351568) were the subject of the settlement as well as the Family Provision proceedings (the cases numbered 2013/102237 and 2013/269684) and the caveat dispute (case number 2014/175570).

16. The parties took the opportunity of the family settlement to include Maria as a beneficiary in the deceased’s Will and to specify, in percentage terms, the share of each of the deceased’s six children in the estate. Provision was made for Anthony to receive 22% of the estate; for each of Peter and Mick to receive 19%; and for the deceased’s three daughters (including Maria) each to receive 13.33%.

17. After detailing steps to be taken in the realisation of estate property (including the withdrawal of caveats on estate land) the orders made by the Court to give effect to the parties’ settlement were to the following effect:

“VI.   ALL PROCEEDINGS (Case Nos. 2012/351568, 2013/00102237, 2013/00269684 and 2014/00175570)

27.   ORDER that the costs of [Peter] be paid out of the estate or notional estate of the deceased, assessed on the indemnity basis, but be capped at $150,000 plus GST (ie, no more than $165,000).

28.   ORDER that the costs of [Mick] be paid out of the estate or notional estate of the deceased, assessed on the indemnity basis, but be capped at $80,000 plus GST.

29.   ORDER that the costs of [Maria] be paid out of the estate or notional estate of the deceased, assessed on the indemnity basis, but be capped at $80,000 plus GST.

30.   ORDER that the costs of [Anthony] be paid out of the estate or notional estate of the deceased, assessed on the indemnity basis, but be capped at $94,000 plus GST.”

18. Orders 27-30 are in substantially the same terms as the draft orders initially proposed by the parties, save that the draft orders (under the heading “Costs”) referred to the parties’ respective “legal costs” rather than their “costs”. Nobody contends that anything turns on the difference in terminology.

19. In the months following 26 August 2014 the executors (or at least Peter), and their respective legal advisers, formed the view that the costs orders made on 26 August 2014 did not, or may not, constrain them in charging the estate for work done on the executors’ account in administration of the deceased’s estate after 26 August 2014.

20. On or about 12 September 2014 Peter’s solicitors submitted a Costs Agreement to Peter and (through Mick’s independent solicitors) Mick for execution. Peter signed the document on about 15 October 2014. Mick did so on about 28 October 2014.

21. Estate assets having been realised, and paid into a controlled moneys account held by the solicitors retained by the executors jointly, those solicitors (with the active support of Peter) propose to pay from estate funds before distribution to the deceased’s siblings costs charged by the solicitors to the executors for work done post 26 August 2014.

22. Maria and Anthony (who were not privy to the Costs Agreement executed in favour of Peter’s solicitors in October 2014) complain that this proposed course of action is contrary to the terms of the settlement effected, and the orders of the Court made, on 26 August 2014.

23. On 23 February 2015 Anthony filed a notice of motion in his Family Provision proceedings, and on 25 February 2015 Maria filed a notice of motion in her Family Provision proceedings, designed to have the Court determine this dispute. On 31 March 2015 I ordered that the two notices of motion be heard together, with directions designed to allow the motions to be determined (with the benefit of written submissions) in a comparatively summary way. Procedurally, that can be done by reference to the Court’s powers under the Civil Procedure Act 2005 NSW, section 73. The parties are agreed about that much at least.

24. The parties actively engaged in the present controversy are Maria and Anthony (as applicants on their respective motions) and Peter and the firm of solicitors who have consistently acted for him, Hunt & Hunt (as respondents to the motions).

25. None of the deceased’s other children has taken an active role in the determination of the motions. That said, upon inquiry by the Court, Mick’s solicitors (on notice to legal representatives of Anthony, Maria and Peter) formally advised the Court that Mick supports the applicants’ stance that the costs orders made on 26 August 2014 were “all inclusive and final”.

26. Affidavits were read on both sides of the motions. The applicants took no objection to the respondents’ affidavits. The respondents took minimal objections (which objections I uphold) to the applicants’ affidavits. No deponent was cross-examined. The parties were given, but declined to take up, an opportunity to make oral submissions supplementing their written submissions.

27. In my opinion, upon the proper construction of the costs orders made on 26 August 2014 (giving effect to the parties’ agreement underlying the orders made), the “capping” of each party’s costs was intended to operate as a maximum limit on the parties’ respective entitlements to have charged upon the estate or notional estate of the deceased any personal liability they might have incurred, or might incur, in finalising administration of the estate of the deceased. The costs orders were made in the context of the “Probate proceedings”, not merely the Family Provision and caveat proceedings listed for hearing on 26 August 2014. They were made in the context of acute concerns, overtly expressed by myself as the presiding judge and by the legal representatives of the parties, about the available pool of assets being subsumed in the parties’ disproportionate costs. The whole point of “capping” the parties’ respective costs was to preserve some semblance of a distribution from the estate. The costs orders were made in culmination of a set of orders designed to allow administration of the deceased’s estate to be finalised. The orders provided expressly for some work to be done by receivers and managers to be remunerated. They made no similar provision for general legal work, post settlement, to be a charge on the estate.

28. In my opinion, the applicants are entitled to a declaration (and, if need be, consequential relief) of the nature of that they claim.

29. Accordingly, I make the following declarations:

1. DECLARE that, on the proper construction of orders 27-30 (inclusive) of the orders made on 26 August 2014 in the proceedings respectively numbered 2012/351568, 2013/102237, 2013/269684 and 2014/175570, the respective costs of the parties, including all costs associated with any ongoing administration of the estate of the late Caterina Assunta Cirillo, are capped at the amounts specified in those orders.

2. DECLARE that no party (and no solicitor acting for a party) to those proceedings has an entitlement to charge against the estate of the late Caterina Assunta Cirillo costs other than those identified in orders 27-30 of 26 August 2014 as having been capped.

30. Having received an assurance from counsel retained for the respondents on the hearing of the motions that the respondents will act upon the Court’s declarations as to the true construction of the subject orders, without any need for consequential relief, I make no consequential orders. If any consequential relief is necessary, liberty is reserved for an application for it to be made.

31. The parties having had an opportunity to be heard as the costs of the motions, and having agreed that costs should follow the event, I ORDER that the respondents pay the applicants’ costs of their respective motions.

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Decision last updated: 30 April 2015