Hartnett and Hartnett v Taylor (Costs)
[2014] VSC 501
•13 October 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2013 01979
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 BARBARA ELLEN deceased
BETWEEN
| TEENA LEANNE HARTNETT | First Plaintiff |
| And | |
| CYNTHIA DENISE HARTNETT | Second Plaintiff |
| And | |
| DOROTHY PAULINE TAYLOR & ORS (in accordance with the attached schedule) (who are sued in their capacity as the Executrixes of the Will and the Trustees of the Estate of Barbara Ellen deceased and the Second Defendant is also used in her personal capacity) | Defendants |
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JUDGE: | SIFRIS J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | Written submissions filed by the parties |
DATE OF JUDGMENT: | 13 October 2014 |
CASE MAY BE CITED AS: | Hartnett & Hartnett v Taylor & Ors (Costs) |
MEDIUM NEUTRAL CITATION: | [2014] VSC 501 |
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COSTS – Plaintiff successful in claim under Part IV of the Administration and Probate Act 1958 – Entitled to indemnity costs because of conduct of defendants as executrixes.
COSTS – Separate representation – Unnecessary for the second defendant to be separately represented – No order for costs in favour of the second defendant.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N Jones | Enterprise Law |
| For the Defendants | Mr R N J Young | Waters Lawyers |
| For the Second Defendant, separately represented | Mr W F Gillies | Frank Giummarra |
HIS HONOUR:
In this proceeding, judgment was delivered on 12 September 2014.[1] I found that each of Teena and Cynthia should have been left one-third each of the net Estate (aside from a motor vehicle) of their mother, the late Barbara Ellen.
[1]Hartnett & Hartnett v Taylor & Ors [2014] VSC 427.
I indicated in the published reasons that I would hear from the parties as to the form of the orders and costs. The parties have each filed written submissions.
There is no dispute as to the form of the orders and that the costs of the defendants (as executrixes) should be paid from the Estate on an indemnity basis. The dispute is whether the plaintiffs should recover their costs on the standard basis (as submitted by the defendants) or on an indemnity basis (as submitted by the plaintiffs). A further dispute relates to whether the second defendant, separately represented, should recover her costs, and if so, on what basis. A related matter is whether the second defendant should pay the costs of her unsuccessful application to be joined as a plaintiff for the purpose of making her own claim under Part IV of the Administration and Probate Act 1958.
In my opinion the plaintiffs should recover their costs on an indemnity basis. I do not consider, as submitted by the defendants, that in the circumstances of this case the ordinary rule should apply and that the plaintiffs should only recover their costs on the standard basis.
The gravamen of the defendants’ submission was that the case was far from clear and that the executrixes were obliged to give effect to and endeavour to uphold the Will. There was clearly an argument and they were entitled to and indeed obliged to run it. The fact that the argument failed was not, it was submitted, relevant. Accordingly there was nothing in the conduct of the executrixes that compelled a higher order of costs.
The plaintiffs submitted that an order for indemnity costs was warranted because of the conduct of the defendants. It was submitted that in relation to the only real issue of estrangement, the defendants did not have any genuine grounds or evidence to contend that the plaintiffs were responsible for the estrangement with the consequence that they were not entitled to any part of the Estate. It was contended that the evidence was at all times clear that the estrangement was a direct result of the deceased’s alcohol dependency, a fact that should not have been denied by the defendants given the overwhelming uncontradicted evidence to the contrary.
In Re Bull, deceased (No 2)[2] Byrne J said:
The fact is that, in an application under Part IV, orders for costs very often depart from the ordinary rule applicable in civil litigation. Defendant trustees are normally entitled to an indemnity in any event from the assets which they seek to protect. Even plaintiffs tend to be treated differently. If successful they will often have their costs out of the estate on a solicitor and client basis.
[2][2006] VSC 226 [3]. (Citations omitted.)
In my opinion, and substantially for the reasons given by the plaintiffs, and in the exercise of my discretion taking into account all of the facts and circumstances, this is such a case where the plaintiffs should have their costs out of the Estate on an indemnity basis.
The defendants denied that the deceased was alcohol dependent at the time of the estrangement and in fact sought to blame the estrangement for her becoming alcohol dependent. There was never any factual basis for this position. In fact, the evidence was to the contrary.
It was clear from the evidence of Dr McClellan that ’the deceased had an alcohol dependency issue since 2003’. Dr McClellan was the defendants’ witness. Accordingly, in defending the case the defendants could have made inquiries of Dr McClellan but appear to have failed to do so. In particular, in the letter from Dr McClellan obtained by the defendants[3] it was stated, inter alia, that:
I was the general practitioner of Barbara Ellen for over ten years until her death in 2012. During this time I treated her for among other things depression and alcohol dependence.
[3]Exhibit KPW4 to the affidavit of Kathleen Walker sworn on 19 September 2013.
Despite having obtained this evidence from Dr McClellan the three defendants in their evidence continued to deny her alcohol dependency until after the estrangement with the second plaintiff.
It is in my view clear that the defendants’ evidence and contentions in relation to the deceased’s alcohol consumption and the estrangement from the plaintiffs were made in wilful disregard of known facts and were allegations which ought never have been made. This provides a sufficient basis for an order for indemnity costs notwithstanding that the defendants are not personally liable for such costs.
Kathleen Walker should bear her own costs incurred separately as a defendant.
In Family Provision in Australia,[4] it is stated that:
[4]By John K de Groot and Bruce N Nickel (LexisNexis Butterworth, 2007) 198 [6.7]. (Citations omitted.)
The approach of the courts is that separate representation is permitted in special circumstances but, as a general rule, it is “unwelcome”. There are only two special circumstances which have been recognised by the courts:
1.where the executors, who are themselves beneficiaries under the will, wish to apply; and
2.where very substantial benefits are conferred on beneficiaries. A third possibility is where there is a conflict of interest between beneficiaries.
…
A beneficiary who elects to be separately represented where there are no special circumstances runs the risk of not being allowed his or her costs out of the estate.
In relation to the first ground set out above, once Kathleen Walker’s application to be joined as a plaintiff was refused there was no longer a basis for her to be separately represented.
Further, the only reason why it was necessary for the application for joinder to be made at the hearing was because there had been substantial delay in the application for joinder being made. The summons was only filed on 10 July 2014.
If Kathleen Walker had made her application earlier it could have been heard as a separate interlocutory application. If it had been refused there would have been no need for her lawyers to appear at the hearing by reason of her being an applicant.
In relation to the second ground set out above, the benefits conferred on Kathleen Walker as a beneficiary were not sufficient to warrant her being separately represented having regard to the size of the Estate and the nature of the dispositions in the Will.
The Estate is a modest estate. The defendants argued against the plaintiffs’ applications and sought to uphold the deceased’s Will. As such it was appropriate that the task of upholding the Will be left to the defendants. It was not necessary for Kathleen Walker to additionally seek to do so.
As to the third ground set out above, it is submitted that there was no submission made by Counsel for Kathleen Walker or the Estate that there was a conflict of interest between beneficiaries which required separate representation. It was in the interest of all beneficiaries for the defendants to uphold the Will. Kathleen Walker was not in a special or different position in that regard.
Accordingly, I consider that Kathleen Walker should bear her own costs for her separate representation. Further, in the exercise of my discretion I do not consider that she should pay the costs of the plaintiffs or the defendants of her joinder application. It did not take much time and in the scheme of things these costs were minimal and the beneficiaries of these orders are in any event indemnified out of the Estate. No further costs orders are warranted or appropriate.
The orders of the Court are as follows:
1. Proper provision be made for the plaintiffs out of the Estate of Barbara Ellen deceased by way of each receiving an amount equivalent to one third of the net value of the Estate (other than the vehicle) after all Estate debts, Estate administration costs including costs associated with the sale of the property at 5 Tilbury Court, Cranbourne in the State of Victoria and the costs of and incidental to this proceeding as ordered hereunder have been paid out of the Estate of the deceased.
2. The plaintiffs’ costs of this proceeding be paid out of the Estate of the deceased, such costs to be taxed on an indemnity basis by the Costs Court in default of agreement.
3. The costs of the defendants of the proceeding in their capacity as executrixes of the Will and the trustees of the Estate of the deceased be paid out of the Estate of the deceased such costs to be taxed on an indemnity basis by the Costs Court in default of agreement.
4. The second defendant bear her own costs of the proceeding.
5. A certified copy of this order shall be attached to the Grant of Probate and for that purpose the Court shall retain in its custody such Grant of Probate until such copy order is attached.
SCHEDULE OF PARTIES
TEENA LEANNE HARTNETT
First Plaintiff
CYNTHIA DENISE HARTNETT
Second Plaintiff
and
DOROTHY PAULINE TAYLOR
First Defendant
KATHLEEN PEARL WALKER
Second Defendant
NICOLE WATSON SPRY
Third Defendant
0