Johnson v Krishnan - estate of the late Parvati Krishnan

[2009] NSWSC 1284

CITATION:	Johnson v Krishnan - estate of the late Parvati Krishnan [2009] NSWSC 1284
HEARING DATE(S):	13 November 2009
JUDGMENT DATE :	13 November 2009
JURISDICTION:	Equity
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	13 November 2009
DECISION:	1. Give leave to the plaintiff to discontinue the proceedings; 2. Subject to earlier costs orders, and subject to order 4 below, order that as between the plaintiff and the defendant, there be no order as to costs of the proceedings with the intent that each party bear her and his own costs of the proceedings; 3. direct that the plaintiff be entitled to have her costs of the proceedings paid out of the estate on the trustee basis, to the extent she is not indemnified for those coasts in the estate of Eric Madavan Krishnan; 4. order that the defendant pay the plaintiff’s costs of and incidental to the present application.
CATCHWORDS:	PROCEDURE – costs - plaintiff seeks leave to discontinue proceedings with certain costs orders – defendant consents to discontinuance but seeks further order that costs be paid by plaintiff out of the estate on the trustee basis - consideration of r 42.19 of Uniform Civil Procedure Rules as to starting position on costs where notice of discontinuance filed – not an ordinary case of discontinuance as plaintiff has obtained relief sought – not accepted that there was no necessity for court proceedings - orders made as sought by plaintiff
CATEGORY:	Principal judgment
CASES CITED:	Johnson v Krishnan [2008] NSWSC 665 Australiawide Airlines Ltd t/as Regional Express v Aspirion Pty Ltd [2006] NSWCA 365 Fordyce v Fordham [2006] NSWCA 274; 67 NSWLR 497
PARTIES:	Plaintiff: Regina Johnson Defendant: Vincent Surend Krishnan
FILE NUMBER(S):	SC 102506/06
COUNSEL:	Plaintiff: M P Cleary Defendant: P O'Brien (Sol'r)
SOLICITORS:	Plaintiff: Les Keady Legal Defendant: Harris & Company

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Friday, 13 November 2009

102506/06 Regina Johnson v Vincent Surend Krishnan – estate of the late Parvati Krishnan

JUDGMENT

1 HIS HONOUR: The background to those proceedings is recounted by Palmer J in Johnson v Krishnan [2008] NSWSC 665. To recapitulate, the plaintiff was appointed by her mother, Parvati Krishnan, as Parvati Krishnan's executrix under a will dated 26 November 1993. Parvati Krishnan died on 4 July 2003. Probate of the 1993 will was given to the plaintiff on 20 May 2005.

2 Parvati Krishnan had a number of children. One of them, Eric Krishnan, died on 22 February 2001, domiciled in Canada. On 10 May 2001, the Supreme Court of British Columbia granted letters of administration of his estate to Parvati Krishnan.

3 As Palmer J recorded in his reasons of 30 June 2008, the defendant claimed that Parvati Krishnan had made a second will dated 25 January 2002 under which he was appointed executor.

4 The plaintiff's solicitors required the defendant to commence proceedings for revocation of the grant of probate of the 1993 will and for him to prove the 2002 will. The summons in these proceedings was filed on 21 February 2006. It sought, amongst other orders, orders that the defendant bring proceedings for probate of the 2002 will and revocation of the grant of probate in favour of the plaintiff. It sought certain orders in default if the defendant defaulted in complying with the earlier order. It also sought an order that an account be taken of the dealings and transactions of the defendant in relation to the estate of both Eric Krishnan and Parvati Krishnan. It sought an order that the defendant pay to the plaintiff, as executrix of the estate of Parvati Krishnan, the amount found to be due on the taking of such accounts, with interest. At the time the summons was filed, the plaintiff had not obtained a grant of letters of administration in Canada of the estate of Eric Krishnan.

5 As Palmer J recounted, in due course the defendant filed a cross-claim in these proceedings seeking probate of the 2002 will and revocation of probate of the 1993 will.

6 For the reasons his Honour outlined, the defendant, in 2008, sought leave to discontinue those proceedings. That arose because the person who would have obtained a greater benefit under the 2002 will than under the 1993 will, another brother, made it clear that he disclaimed that gift in any event.

7 His Honour found that the defendant and his solicitors had acted reasonably in prosecuting the cross-claim until 6 May 2008, at which time the defendant's solicitors received confirmation from that beneficiary of his instructions.

8 The remaining dispute between the parties at that time related to costs. His Honour found that there should be a departure from the usual costs orders on discontinuance of the proceedings. Although the published reasons for judgment refer to his Honour having recorded that the costs of both parties of the "suit" be paid out of the estate on the trustee basis, the formal order was that each party's "costs" be paid out of the estate on the trustee basis. Hence, the argument before me proceeded on the basis that the costs order of 30 June 2008 dealt with the costs of the cross-claim.

9 On 30 June 2008, Palmer J also made orders regarding an account. These orders were made by consent, or at least without opposition. His Honour ordered that within 28 days the defendant serve on the plaintiff an affidavit disclosing, to his best knowledge and belief, as regards each of the estates of Eric Krishan and Parvati Krishnan, whether in Australia or Canada or elsewhere, what were, inter alia, the assets and liabilities of the estates immediately before the death of the deceased, how such assets had been disposed of by any person since death, and whether any liabilities had been discharged since death and as to the present value of the assets and liabilities of the estate. The orders were more detailed, and it is unnecessary to set out that detail in these reasons. The orders required that, amongst other things, the affidavit include, as annexures or exhibits, copies of all financial statements or other documents relied on as verifying the matters deposed to.

10 In substance, this order was the order for account sought in paragraph 1(d) of the summons, save that it did not include an order requiring the defendant to pay to the plaintiff an amount found to be due on the taking of accounts.

11 Information of the kind described in the order was provided in correspondence from the defendant's solicitor on 28 July 2008. No complaint was made at that time that the information was not disclosed by way of affidavit. The note of the defendant's solicitor at the time the order was made was that his Honour had simply directed that within 28 days the defendant provide to the plaintiff's solicitor the information in terms of the short minutes of order. That information was provided, although further correspondence ensued between the solicitors in relation to the absence of a statement of accounts and as to certain matters of detail.

12 On 13 November 2008, the plaintiff was granted letters of administration de bonis non of all of the estate which devolved to Parvati Krishnan as administrator of the estate of Eric Krishnan. That order was made by the Supreme Court of British Columbia.

13 There followed correspondence between the solicitors. The letter of 28 July 2008, from the defendant's solicitor, had disclosed that the defendant held two accounts which contained moneys held by him in trust for Eric Krishnan's estate. These accounts contained about $8,000 in Canadian dollars and $18,000 Australian.

14 On 6 May 2009 the plaintiff's solicitors wrote to the defendant's solicitors enclosing a copy of the grant of the letters of administration of the estate of Eric Krishnan to the plaintiff, and advising that the plaintiff instructed them to direct the defendant to pay the funds of the estate presently held or controlled by him to her as administrator of Eric Krishnan's estate. That demand was repeated on 18 May 2009.

15 On 22 May 2009 the defendant's solicitor required provision of a certified copy of the order of 13 November 2008 from the Supreme Court of British Columbia, and written authority from the plaintiff in her capacity as administratrix of Eric Krishnan's estate authorising payment to be forwarded to the plaintiff's firm. Those documents were in due course provided, and on 24 July 2009 the moneys were duly transferred.

16 As a result of this the plaintiff does not seek to further prosecute the proceedings. All of the matters to which the relief sought in the summons was directed have been resolved. The defendant has made a claim for probate of the 2002 will, but has withdrawn that claim. An account by the defendant of his dealings with the assets of the estates of both Eric Krishnan and Parvati Krishnan has been provided, and he has accounted for the funds which he held for the estate of Eric Krishnan.

17 The plaintiff now seeks leave to discontinue the proceedings. The defendant was willing to consent to the plaintiff's discontinuing the proceedings, but not on the basis as to costs sought by the plaintiff.

18 The plaintiff seeks orders that as between her and the defendant there be no order as to costs, with the intent that each party bear her and his own costs. She also seeks an order that her costs of the proceedings be paid out of the estate on the trustee basis, to the extent she is not indemnified for those costs from the estate of Eric Krishnan.

19 The defendant contends that there should be a further order that his costs be paid by the plaintiff out of the estate on the trustee basis. The argument for the defendant focused upon the starting position under r 42.19 of the Uniform Civil Procedure Rules. That rule provides that unless the Court orders otherwise, the plaintiff must pay such of the defendant's costs, as at the date on which the notice of discontinuance is filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued.

20 However, the defendant, through his solicitor, Mr O'Brien, at least implicitly accepted that there should be a departure from that starting point, as he made it clear that he was not seeking an order that the plaintiff be personally liable for his costs, if there were not sufficient assets of the estate of Parvati Krishnan from which the plaintiff would be indemnified.

21 Subject to that matter, Mr O'Brien submitted that to displace the operation of r 42.19, the plaintiff needed to demonstrate that the defendant had so conducted himself prior to the proceedings as to leave the plaintiff to hold the reasonable belief that the litigation was necessary in order for her to enforce her rights. In this respect he referred in particular to the Court of Appeal judgment in Australiawide Airlines Ltd t/as Regional Express v Aspirion Pty Ltd [2006] NSWCA 365 per Basten JA at [65].

22 In Fordyce v Fordham [2006] NSWCA 274; 67 NSWLR 497, McColl JA, with whom Beazley JA agreed, observed (at [84]):

“ It is apparent from this review of authority that the UCPR 42.19 and 42.20 default orders do not create a presumption that the opponents ought pay the cost of the Equity Division proceedings. They are a relevant, but not determinative, consideration. Other relevant considerations were, as the primary judge concluded, usefully gathered in Lai Qin and Australian Security Commission v Aust-Home Investments Ltd & Ors (1993) 44 FCR 194, notwithstanding, as the discussion below reveals, that they were decided in a different statutory context. "

23 Similarly, in Australiawide Airlines v Aspirion, Bryson JA, with whom McColl JA agreed, said (at [53]) that it is to overstate matters to describe r 42.20(1) as creating a presumption about the disposition of costs and that the rule goes no further than to state the first point for consideration. His Honour went on to say that what the rule says is what the order for costs is to be, unless there is a discretionary decision to order otherwise.

24 In the circumstances of that case, Basten JA said (at [64]) that the mere fact that the plaintiff was justified in commencing proceedings, or that the parties acted reasonably in commencing and defending proceedings, would not necessarily warrant interference with the “statutory order”.

25 His Honour said (at [65]) that:

" In order to avoid the statutory order, it was necessary for the plaintiff to show more than justification, in the sense that it commenced proceedings in the exercise of a statutory right available to it. It would have needed to show some additional factor, such as that conduct of the defendant led it to the reasonable belief that litigation would be necessary to enforce its right to payment in a timely fashion or that winding up the defendant was an appropriate means of obtaining payment. ... "

26 His Honour was there describing the type of additional factor which in the circumstances of that case the plaintiff needed to show for the Court to depart from the starting point under r 42.20. I do not understand his Honour to be saying that in all cases in which a contrary order is sought under r 42.19 or 42.20 it is incumbent on a plaintiff to show that the defendant's conduct led it to the reasonable belief that litigation would be necessary to enforce its rights. The exercise of the discretion under the rule is not to be so confined by the identification of factors in one case relevant to the exercise or non-exercise of the discretion under the rule in that particular case.

27 In the present case the real question is whether the costs the defendant has incurred in these proceedings which are not already the subject of the order of Palmer J of 30 June 2008 should be paid out of the estate. The fact that the application arises on an application for discontinuance under r 42.19 is merely incidental. This is not the usual case of a plaintiff’s discontinuing proceedings before they are resolved. As I have said, the plaintiff has obtained, albeit through various interlocutory steps, the relief sought. Nonetheless, the submissions for the defendant focused on the reasonableness of the plaintiff's conduct.

28 It was submitted for the defendant that the commencement of proceedings was premature both for the relief sought to require the defendant to bring proceedings for the 2002 will, and for the relief seeking an account. I was referred to correspondence between the solicitors in 2005 which was said to make good that submission. In support of that submission the defendant also tendered the plaintiff's affidavit of 10 February 2006.

29 There is no issue that after, and perhaps before, Parvati Krishnan's death, the defendant was dealing with Eric Krishnan's estate. In her February 2006 affidavit the plaintiff deposed to having asked the defendant in late 2004 and early March 2005 what was happening with that estate. She deposed that the defendant said:

" ... You deal with mum's accounts in Sydney and I have got a solicitor dealing with the estate in Vancouver. "

30 She deposed that the defendant later said:

“ You do what you have to do with Mum's accounts in Sydney. I am the administrator in Canada and if anyone in the family wants to know anything about Vancouver, tell them to ask me. It is going to take time. I am not responsible for the Courts. It could take 5 to 7 years. ”

31 On 17 March 2005 the plaintiff sent an email to the defendant seeking clarification of the defendant's position, asking whether he had gained letters of administration in Vancouver.

32 On 8 July 2005 the solicitors then acting for the defendant wrote to the solicitors then acting for the plaintiff advising of the 2002 will. They advised that the principal assets of Eric Krishnan's estate were two apartments in Vancouver.

33 On 3 August 2005 the plaintiff's solicitors responded and in the course of a long letter asked a number of questions about the 2002 will and the circumstances in which it came to be found in Vancouver. They also asked for a detailed report about the assets in the estate of Eric, the liabilities of that estate, its income and into what account the income was paid and certain other matters.

34 On 9 September 2005, the plaintiff's solicitors wrote to the defendant's solicitors stating that their client's instructions were that the 2002 will was not genuine and stating that if the defendant proposed propounding the stated will, he should commence proceedings in the New South Wales Supreme Court within one month. They said that if the defendant were to contend that the 2002 will was valid, the document would need to be examined by a forensic document examiner.

35 On 6 October 2005, the defendant's solicitors responded to the questions in relation to the 2002 will. They also responded to questions concerning the assets of Eric Krishnan's estate. In answer to the question "What the assets in the estate of their brother Eric are?", the solicitors replied "We are instructed that all the beneficiaries are very well aware that the assets of the estate are the 2 apartments in Burnaby and Coquitlam, BC being of the combined value of approximately $210,000 Canadian at current market prices." They also disclosed that the combined monthly rental income from the apartments, after payment of expenses, were being deposited into an account opened by the defendant, they said, under instruction from the deceased, and that the current balance of the account was $2,143.58 Canadian. The later information and affidavit, provided by the defendant pursuant to the orders of 30 June 2008, show that this was an incomplete statement of the assets in the estate of Eric Krishnan. It did not refer to a term deposit or to a motor vehicle, at least.

36 In my view there is no substance to the submission that the plaintiff acted prematurely in bringing the proceedings. The question of which will should be admitted to probate, and who should be responsible for the administration of both estates, was a question which needed prompt resolution. Parvati Krishnan died in July 2003, so by the time of this correspondence, about two years had elapsed.

37 The suggestion that there was a later will and, hence, a different person entitled to probate of Parvati Krishnan's estate, needed prompt resolution. There is no reason to think that matter would have been resolved without proceedings having been commenced. The history of the proceedings, including the history recounted by Palmer J in his reasons of 30 June 2008, points to the contrary.

38 Nor was it right to say that the plaintiff should have assumed that the defendant would provide a full and accurate account of Eric Krishnan's estate in the absence of an order to do so. An account was not provided in the letter to which Mr O'Brien referred, being the letter of 6 October 2005. I do not see anywhere where the defendant proffered full accounting, otherwise than by his consent or non-opposition to the orders of 30 June 2008.

39 It was also submitted for the defendant that the plaintiff needed to show that she had acted reasonably at all times up to the point of discontinuance. It was submitted that after the account provided in the letter of the defendant's solicitor of 28 July 2008, the plaintiff did not act reasonably in continuing the proceedings. No suggestion was made by the defendant at that time that the proceedings should then have been brought to an end by the making of consent orders or the discontinuance of the proceedings. The orders had not, in fact, been complied with, although I accept that the defendant's solicitor may have thought they had been complied with. They had not been complied with because an affidavit had not been filed. As I observed earlier, no point about that was made at the time by the plaintiff.

40 Of more significance is that the accounting, in the sense of the handing over of the funds shown to be due, was not obtained until 24 July 2009. It was only then that the proceedings had fulfilled their purpose. From that point I infer the parties were unable to agree on questions of costs. I infer that because the proceedings were listed before the Registrar for directions on 18 August 2009. That was the first mention of the proceedings after the payment was made. On that day the matter was listed before me as a special fixture to hear the present argument.

41 For these reasons I reject the defendant's submission that a contrary order should be made under r 42.19 because of matters relevant to the plaintiff's conduct. Although it was not put on this basis, I also need to consider whether, nonetheless, I should make the order sought by the defendant that he have his costs out of Parvati Krishnan's estate of these proceedings, irrespective of whether or not the order could be justified by alleged fault attributed to the plaintiff. For this purpose the focus is on costs incurred after 30 June 2008. The reason for that is because the costs which were incurred prior to that date by the defendant, so far as they are recoverable on an assessment, would, I infer, at least very substantially be referable to his cross-claim. An order for payment of his costs out of the estate in that respect has already been made.

42 I do not consider that the estate of Parvati Krishnan should be burdened with costs incurred by the defendant in complying with the orders for an account or in connection with the litigation after 30 June 2008.

43 Prima facie, if the defendant were entitled to an indemnity from anyone in respect of such costs, the indemnity should come from the estate of Eric Madavan Krishnan. That estate is being administered in British Columbia, albeit that these proceedings have been brought for the purposes of obtaining an account. It is for this reason that the plaintiff's entitlement to indemnity for her costs from the estate of Parvati Krishnan applies only to the extent she is not indemnified for such costs from the estate of Eric Krishnan. It is just that she have such an indemnity because it was by reason of her appointment as executrix of Parvati Krishnan's estate, and her acceptance of that appointment, when Parvati Krishnan was the administrator or Eric Krishnan's estate, that she incurred expense.

44 Further, it seems to me that as a person who has inter-meddled with the estate of Eric Krishnan (and I do not use that term in a derogatory sense) the defendant was, in any event, bound to provide the administrator of Eric Krishnan's estate with an account of his dealings with the estate.

45 I would accept, as the submissions for the defendant imply, that the defendant ought to have been prepared to provide the detail which was ultimately provided without the necessity for court proceedings. But for the reasons I have given, I do not accept there was no necessity for court proceedings.

46 For these reasons I do not think it just that the estate of Parvati Krishnan should be further burdened by an order for costs in favour of the defendant.

47 I make the following orders:

1. I give leave to the plaintiff to discontinue the proceedings.

2. Subject to earlier costs orders, and subject to order 4 below, I order that as between the plaintiff and the defendant, there be no order as to costs of the proceedings with the intent that each party bear her and his own costs of the proceedings.
3. I direct that the plaintiff be entitled to have her costs of the proceedings paid out of the estate on the trustee basis, to the extent she is not indemnified for those costs from the estate of Eric Madavan Krishnan.

48 I will make order 4 after dealing with the costs of the present application.

49 Mr O'Brien, why should your client not pay the costs of the plaintiff of the present application?

50 O'BRIEN: I make no submissions, your Honour.

HIS HONOUR:

4. I order that the defendant pay the plaintiff's costs of and incidental to the present application.

51 The exhibits may be returned after 28 days.

******