Laird v Laird (No 2)
[2022] VSC 121
•15 March 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2020 02591
S ECI 2020 02406
S ECI 2020 03773
| BETWEEN: | |
| ELLEN DOUGLAS LAIRD (by Suzanne Lyttleton her administrator) | Plaintiff |
| v | |
| NEALE DOUGLAS LAIRD | First defendant |
| -and- | |
| STUART GRAEME LAIRD | Second defendant |
---
JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 15 March 2022 |
CASE MAY BE CITED AS: | Laird v Laird & Anor (No 2) |
MEDIUM NEUTRAL CITATION: | [2022] VSC 121 |
---
COSTS — Where defendants resisted sale of property by plaintiff until commencement of trial — Where interim orders to vacate property agreed at trial — Where defendants unsuccessful in separate claims of constructive trusts over property — Where equitable lien claim by first defendant remains to be determined — Where appointment of administrator of plaintiff lapsed during the proceeding — Where allegations made against administrator in personal capacity — Costs orders made in finalised claims and procedural orders made for extant claims.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Bardoel & Adams in S ECI 2020 02591 and S ECI 2020 03773 K&L Gates in S ECI 2020 02406 | |
| For the First defendant | Mr S Hay QC and Ms R Grayson Morison | MST Lawyers |
| For the Second defendant | Mr D Connors | Mepstead Lawyers |
| For Mr L Vallance (as administrator of the estate of Ellen Douglas Laird, deceased) | Mr J Smith | Hicks Oakley Chessell Williams |
| For the non-parties | Mr R Wells | Davies Collison Cave |
HER HONOUR:
Introduction
On 18 June 2021 judgment was delivered in three proceedings[1] cited as Laird v Laird[2]. This ruling provides reasons for the orders to be made in each proceeding, including as to costs.
[1]S ECI 2020 02591, S ECI 2020 02406 and S ECI 2020 03773.
[2][2021] VSC 352 (‘Laird v Laird’).
Procedural history
On 8 May 2018, by order of the Victorian Civil and Administrative Tribunal (‘VCAT’), Ms Suzanne Lyttleton was appointed as Mrs Ellen Laird’s administrator. At that time Ellen was aged 91 years and lived on the family farming property at Rowallan Avenue, Harkaway (‘Harkaway’), with a team of carers providing 24 hour care, seven days a week. Ellen’s wish was to remain in her home at Harkaway until her death.
In due course, it became apparent to Ms Lyttleton that Ellen’s funds were running short and needed to be supplemented if Ellen was to remain in her home. Ms Lyttleton attempted to raise the requisite funds against Harkaway but met with obstruction from two of Ellen’s sons, Neale and Stuart.
In 2019, Neale lodged caveats on the two titles comprising Harkaway, claiming that Ellen held the property on constructive trust for him. Ms Lyttleton commenced a proceeding which resulted in Neale executing a removal of the caveats, in exchange for certain undertakings. In 2020, Ms Lyttleton attempted to obtain a reverse mortgage secured against Harkaway, however, Neale, as long term occupant of the property, would not sign the necessary documents.
In 2020, Ms Lyttleton took steps to subdivide Harkaway so that part could be sold but Ellen’s home retained. Stuart objected to this proposal and the relevant council did not approve the subdivision.
On 29 May 2020, Neale commenced a claim against Ellen seeking a declaration of a constructive trust over Harkaway (‘Neale’s proceeding’).[3] In his statement of claim, Neale also made a claim for ‘monetary payments’ and alleged breaches of trust by Ms Lyttleton as constructive trustee.
[3]S ECI 2020 02406.
By originating motion filed 17 June 2020, Ms Lyttleton sought possession of Harkaway pursuant to the summary procedure in Order 53 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) (‘the Order 53 proceeding’).[4]
[4]S ECI 2020 02591.
On 23 September 2020, Stuart commenced a claim against Ellen seeking a declaration of a constructive trust over half of Harkaway (‘Stuart’s proceeding’).[5]
[5]S ECI 2020 03773.
The trial of all three proceedings was scheduled to commence on 25 November 2020. The day before the trial, Neale and Stuart conceded that Harkaway had to be sold in order to fund Ellen’s care arrangements.[6] On 27 November 2020, interim orders (‘the Interim Orders’) were made to that effect and provided, inter alia, that by 18 December 2020 Neale was to vacate the main house at Harkaway.
[6]Neale’s concession was made in his counsel’s written submissions. Stuart’s concession was made in discussions between counsel shortly before trial.
Ellen died on 25 December 2020. As a consequence of her death, Ms Lyttleton’s appointment as administrator lapsed.[7]
[7]Guardianship and Administration Act 2019 (Vic) s 54.
Neale and Stuart subsequently sought that the Interim Orders be varied or vacated. Neale also applied for leave to reopen his proceeding and adduce further evidence. On 3 May 2021, the Court made orders by consent granting such leave. The three proceedings were listed for hearing on 18 May 2021.
With Ellen’s death, an additional issue arose concerning who should administer her estate. By her last will, Ellen appointed Neale and Stuart as executors and trustees of her estate. Neale and Stuart conceded that in light of the three proceedings they would be in a position of conflict.
The judgment in Laird v Laird[8] was delivered on 18 June 2021 in relation to the constructive trust claims made by Neale and Stuart. The judgment highlighted the generality and limited nature of any representations made in relation to the future ownership of Harkaway and concluded that it was not reasonable for Neale and Stuart to rely on any such representations. In addition, to recognise the constructive trusts claimed by Neale and Stuart over Harkaway would go beyond what was required for conscientious conduct.
[8]Laird v Laird (n 2).
By email dated 14 July 2021, the Court sought written submissions from Ms Lyttleton, Neale and Stuart as to the appropriate form of orders to be made in the proceedings, including as to costs.
On or about 16 September 2021, pursuant to a separate application, Mr Lachlan Vallance was appointed as the administrator of Ellen’s deceased estate. Mr Vallance also provided submissions as to the appropriate form of orders to be made in the proceedings.
Neale’s submissions
Order 53 proceeding
Neale submits the application in the Order 53 proceeding has no real utility given the relief sought was against the beneficiaries of the specific devise of Harkaway under Ellen’s will, who are also the named executors, further noting that Ms Lyttleton’s appointment as administrator has lapsed.
The judgment concluded that neither Stuart nor Neale had established their respective claims for a constructive trust, but did not determine the availability or otherwise of the summary relief sought under Order 53 of the Rules, which was not granted by the judgment or by any order of the Court. Accordingly, dismissal of the Order 53 proceeding is appropriate, subject to a further order that the Interim Orders no longer have effect.
Neale submits it is appropriate in all of the circumstances that each party bear their own costs given that the real issue in dispute concerned the claims in his proceeding and Stuart’s proceeding.
Neale’s proceeding
Neale submits that his alternative case was that he had an equitable lien against Harkaway. Although noting that the judgment records that the Court determined at the hearing that his claim to an equitable lien would be heard later and separately,[9] Neale asserts that any further such hearing and determination related solely to quantification of his claim.
[9]Ibid [13] (McMillan J).
Neale submits that the factual findings in the judgment establish that he has an equitable lien over Harkaway which should be recognised in the orders to be made by the Court by way of an equitable lien declaration. The extant issue, being the quantification of the equitable lien claim, should be referred to an associate justice for hearing and determination.
Given that his proceeding has not been finally determined, Neale submits that costs should be costs in the cause, pending the quantification of the equitable lien claim.
Stuart’s proceeding
Stuart was wholly unsuccessful in his claim which sought, in essence, a declaration that Harkaway was held on constructive trust for him as to one half.
Although Neale is not a party to Stuart’s proceeding, he submits that the usual order as to costs ought be made in respect of Stuart’s proceeding; that is, Stuart should pay the costs of the defendant (Ellen, by her administrator Ms Lyttleton) of the proceeding on a standard basis to be taxed in default of agreement.
Ms Lyttleton’s submissions
Submissions were received from the solicitors for Ms Lyttleton — both in her capacity as Ellen’s administrator up until her death and in her personal capacity — as to the appropriate form of order to be made in Neale’s proceeding and on the question of costs. Ms Lyttleton did not make submissions in respect of the Order 53 proceeding or Stuart’s proceeding as her appointment ceased on Ellen’s death.
Costs
Ms Lyttleton submits that she is the successful party in Neale’s proceeding, with any purported equitable lien claim by Neale being properly made against the estate’s current administrator. As such, her costs of and incidental to the proceeding should be paid by Neale.
Ms Lyttleton made four offers to Neale to discontinue his proceeding on the basis that each party would bear their own costs:
(a) on 3 July 2020, at the outset of the proceeding;
(b) on 2 February 2021, at which point Ms Lyttleton’s appointment as administrator of Ellen’s estate had ceased;
(c) on 29 June 2021, subsequent to the delivery of the judgment; and
(d) on 16 September 2021, prior to making submissions on the form of orders to be made.
The offer dated 3 July 2020, made at the outset of the proceeding, asserted that the statement of claim was misconceived and lacked a proper basis, and invited Neale to discontinue the proceeding against Ms Lyttleton on that basis.
Ms Lyttleton submits that Neale’s rejection of that offer was unreasonable in circumstances where it put Neale on notice of the defects in his claims in some detail, including in respect of the allegations seeking relief against Ms Lyttleton personally.
Neale’s rejection of the three offers made subsequent to Ellen’s death was unreasonable in circumstances where he was on notice of the implications of her death for the future conduct of his proceeding.
In light of the foregoing, Ms Lyttleton submits her costs of and incidental to the proceeding should be paid by Neale on an indemnity basis.
Equitable lien declaration
Ms Lyttleton submits that the judgment does not make findings on which the Court can make the equitable lien declaration sought by Neale in his submissions. It instead contemplates the separate hearing and determination of the purported equitable lien claim, noting that evidence to be relied upon by Ms Lyttleton as administrator was held over to that claim.
In any event, the pleaded case in the statement of claim does not disclose any purported equitable lien claim, which would allow the Court to make the equitable lien declaration in Neale’s proceeding.
In addition, it is not open for Neale to pursue the purported equitable lien claim in his proceeding absent the estate’s current administrator, Mr Vallance, replacing Ms Lyttleton as the proper defendant.
Further orders
Ms Lyttleton submits that Neale acknowledges that her administration lapsed on Ellen’s death, however, he seeks orders in his proceeding enabling him to persist with claims against her when those claims are properly made against the current administrator of the estate. The substance of Neale’s claim in his proceeding was and is properly made against Ellen’s estate.
Ms Lyttleton also submits that the judgment disposed of any claims in Neale’s proceeding seeking relief against her personally because those claims were premised on her holding estate property on constructive trust for the benefit of Neale.
Accordingly, Ms Lyttleton proposes that the estate’s current administrator be substituted for her as the defendant in Neale’s proceeding.
Mr Vallance’s submissions
Order 53 proceeding
Mr Vallance, as the administrator of Ellen’s deceased estate, proposes that he be substituted as the plaintiff in this proceeding.
Mr Vallance submits that from the outset, but certainly by June 2020, it should have been apparent to any sensible person that Harkaway had to be sold to provide for Ellen’s care and accommodation. Neale and Stuart nevertheless refused to vacate the property, with ‘the most callous disregard for their mother’s welfare’.
Neale’s statement of claim seeking the declaration of a constructive trust over Harkaway was telling. He sought an order for the transfer of the property to him, subject to ‘an undertaking by [Neale] that he will meet the cost of his mother’s care and living expenses for the remainder of her life’. He appears to have understood that any claim which he might have had was secondary to Ellen’s rights. Mr Vallance submits that Ms Lyttleton had no choice but to commence the proceeding.
It was not until the eve of trial that Neale and Stuart finally conceded that Harkaway would have to be sold to provide for Ellen’s care and accommodation. This concession should have been made at the outset and no adequate explanation has been given for the delay.
In obtaining the Interim Orders, Ellen by her then administrator secured the relief sought by her at the outset. Accordingly, she is entitled to an order for costs.
Mr Vallance submits that it reflects poorly upon Neale and Stuart that the Order 53 proceeding had to be initiated by Ms Lyttleton in the first place. Once it was initiated, given the circumstances, their resistance to it was inexplicable. In the circumstances, Neale and Stuart should pay Ms Lyttleton’s costs of the Order 53 proceeding on an indemnity basis.
The Interim Orders
Mr Vallance resists Neale’s submission that the Interim Orders be vacated, which he presumes is made so that Neale can re-occupy the residence at Harkaway. Mr Vallance as administrator has duties to administer Ellen’s estate and is entitled to the benefit of the Interim Orders while he does so. This is important as it remains unclear what will become of Harkaway. If the property is to be transferred to Neale and Stuart at the conclusion of the administration, the orders in the Order 53 proceeding could be vacated at that stage. For the time being, Mr Vallance simply seeks a further order allowing liberty to apply.
Neale’s proceeding
The sole issue in Neale’s proceeding before the Court at trial was whether Ellen held Harkaway on a constructive trust for Neale. That claim failed comprehensively for the reasons set out in the judgment, such that Neale is now left to press his claim for monetary payments secured by an equitable lien.
In relation to Neale’s equitable lien claim, Mr Vallance submits that the statement of claim does not seek an order that any sum payable be secured by an equitable charge or lien over Harkaway. Insofar as Neale made a claim for an equitable charge or lien, it was articulated for the first time on the day before trial commenced in submissions.
Mr Vallance notes that, from the outset, Ms Lyttleton proposed to sell Harkaway and address Neale’s claim for monetary payments — subject to proof, quantification and any set-offs for benefits Neale may have gained. That being the case, Neale could have abandoned his constructive trust claim and simply pursued repayment of the amount said to have been expended by him on the property. In circumstances where the current market value of Harkaway was now in the vicinity of $6.5–$7.5 million, however, Neale elected instead to pursue his constructive trust claim over Harkaway in its entirety.
Costs should follow the event in this proceeding, with Mr Vallance further adopting Ms Lyttleton’s submissions that costs ought be assessed on an indemnity basis from the date of the various offers made by her. If that submission is rejected, costs should be assessed on a standard basis.
Equitable lien declaration
There should be no order for or declaration of an equitable lien at this stage, Mr Vallance submits, noting that the question was not before the Court at trial, it remains unclear whether the proof, quantification and set-off process would yield a net sum in Neale’s favour and any net sum in Neale’s favour would only be payable in the event that Harkaway was sold.
Further orders
Further pleadings are required before the monetary payments claim can be listed for hearing. Appropriate orders would require Neale to file an amended statement of claim including particulars of the monetary claims and the estate’s administrator to file a defence, including particulars of any set-off or due allowances.
Stuart’s proceeding
Stuart was wholly unsuccessful in his constructive trust claim and costs should follow the event. Stuart did not have an alternative claim so no further orders are required aside from an order dismissing the proceeding.
Neale’s reply submissions
Neale submits that Mr Vallance, in his capacity as administrator of Ellen’s estate, should be added as a party to Neale’s proceeding given he is the legal personal representative of the estate and the legal owner of Harkaway.
He also submits that Ms Lyttleton, in her capacity as administrator for Ellen, should remain a party to his proceeding, highlighting that there are claims made against her personally that he may choose to press if he successfully appeals the judgment and it is determined that Harkaway is held on constructive trust for him.
Neale submits that it is inappropriate to award indemnity costs against him in either his proceeding or the Order 53 proceeding. He submits that if costs are to be awarded, the usual costs order ought be made in these proceedings in respect of the estate’s costs, as well as Ms Lyttleton’s costs.
For the reasons set out in his previous submissions, Neale maintains that the equitable lien should be recognised now and his claim referred to an associate justice for quantification. He submits there is no good reason not to do so. Neale concedes that particulars of the equitable lien claim should be provided, however, he submits it is unnecessary to amend the pleadings or file and serve a separate proceeding as the claim has always been part of his case, as the current administrator of Ellen’s estate knows.
Neale submits that the Interim Orders should be vacated to allow him to reside at Harkaway and access his personal items there, highlighting that the orders were expressly interim in nature and were made in the Order 53 proceeding which must now be dismissed.
Consideration
Order 53 proceeding
The usual order as to costs is that a successful party to litigation is entitled to a costs award in his or her favour, and an unsuccessful party bears the liability for costs of the unsuccessful litigation.[10] Costs may be allowed on a standard or indemnity basis; however, the usual basis is standard.[11]
[10]Oshlack v Richmond River Council (1998) 193 CLR 72, 97 [67] (McHugh J).
[11]Supreme Court (General Civil Procedure) Rules rr 63.28, 63.31.
An order for indemnity costs might be made where unusual features or special circumstances are present. In Colgate-Palmolive Co v Cussons Pty Ltd (‘Colgate-Palmolive’),[12] Sheppard J set out some categories of circumstances which may warrant a special costs order:
[T]he making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud; evidence of particular misconduct that causes loss of time to the Court and to other parties; the fact that the proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; an imprudent refusal of an offer to compromise and an award of costs on an indemnity basis against a contemnor.[13]
[12](1993) 46 FCR 225.
[13]Ibid 233–4 (Sheppard J)(citations omitted).
In Ugly Tribe Co Pty Ltd v Sikola,[14] Harper J observed that the categories of circumstances for an award of indemnity costs are not closed.[15]
[14][2001] VSC 189.
[15]Ibid [7]–[8] (Harper J).
Neale’s submission that the availability of the summary relief sought by Ms Lyttleton under Order 53 of the Rules was not determined by the judgment or by any order of the Court is incorrect. The Interim Orders were orders for possession of the main house at Harkaway and provided for the sale of the property. In particular, Neale was ordered to remove all of his livestock, possessions, plant and equipment from the property 30 days prior to completion of any sale, while Stuart was ordered to vacate the property and remove all of his possessions, plant and equipment from the property 30 days prior to completion of any sale.
The application was brought and the Interim Orders made with a great degree of urgency, due to the pressing need to fund Ellen’s care. The Interim Orders paved the way for Ms Lyttleton to conduct an orderly sale of Harkaway and fund Ellen’s care, which is what she sought at the outset. Ms Lyttleton was the successful party in the proceeding and is entitled to an order for costs in her favour.
At the time the Order 53 proceeding was initiated, Ellen was 93 years old and living at Harkaway. She had suffered physical and mental decline such that she required the assistance of a team of carers providing 24 hour care, seven days a week. It was her wish that she remain at the family home and said to be the wish of her family that she remain at Harkaway receiving home care.
A report from Ms Lyttleton filed in support of her application to bring the Order 53 proceeding indicated that the estate then had access to approximately $190,000 in liquid funds and had liabilities in the sum of $50,000. This was against the cost of Ellen’s home care of $40,000 per month. Even if Ellen had been placed in respite care, the estate would have run out of funds in a matter of months. It should have been obvious to any reasonable person that funds were urgently needed for Ellen’s care.
Ms Lyttleton made several attempts to use Harkaway to raise much needed funds, however, each of her attempts was obstructed by Neale or Stuart. In particular, and as mentioned above, in 2019 Neale lodged caveats over the titles comprising Harkaway claiming an interest in the form of a constructive trust, and in 2020 he refused to sign an acknowledgment form for a reverse mortgage. In 2020, Stuart lodged an objection with the council against Ms Lyttleton’s application to amend the planning permit for the subdivision of the property.
By obstructing Ms Lyttleton’s attempts to raise funds, Neale and Stuart acted in complete disregard of their mother’s situation and wishes. Ms Lyttleton was left with no alternative but to seek possession of Harkaway pursuant to the summary procedure contemplated by Order 53 of the Rules. Had Neale and Stuart made their concessions earlier, the application to the Court would not have been necessary.
The conduct of Neale and Stuart falls within the scope of the circumstances described in Colgate-Palmolive and warrants a special costs order in favour of Ms Lyttleton. The Court will order that Neale and Stuart pay her costs of the Order 53 proceeding on an indemnity basis.
Interim Orders
In determining the orders to be made in the Order 53 proceeding, consideration needs to be given to the extant Interim Orders which provide, inter alia, for Neale to vacate the main house at Harkaway.
Neale submits that it is appropriate to dismiss the Order 53 proceeding. He submits that the Interim Orders were only interim in nature and should be vacated to allow him to access his personal items at Harkaway and to reside there. Neale submits that the Interim Orders should not be given a life beyond the Order 53 proceeding.
Mr Vallance resists Neale’s position. He is required to administer Ellen’s estate and it is not yet clear what will become of Harkaway. Mr Vallance highlights that Harkaway is the sole asset of significant value in Ellen’s estate and may need to be sold to meet estate liabilities. If Harkaway is not required to be sold, Ellen’s will contemplates a devise of ‘my property known as Harkaway Farm Rowallan Avenue, Harkaway in the state of Victoria being the whole of the land more particularly described in Certificate of Title Volume 8059 Folio 541’ to Neale and Stuart. However, those title particulars do not correspond with the two real property titles held in the estate (Volume 11652 Folio 720 and Volume 11876 Folio 860). Both came into existence after Ellen’s will was made in 2006; one was created by a subdivision and the other to describe land acquired by adverse possession. It seems likely that the administrator will need to commence an application for construction of the will to determine whether the devise to Neale and Stuart is effective or has been adeemed.
The Court accepts that the administrator may need to sell Harkaway to meet the liabilities of Ellen’s estate. At trial, Neale agreed that Harkaway was worth $5 million but the estate was cash insolvent. Since the trial, further legal costs will have been incurred by the estate in the first instance. In addition, if foreshadowed Part IV of the Administration and Probate Act 1958 (Vic) claims are made by Ellen’s children the estate will incur further costs. Overall, it is highly likely that the administrator of Ellen’s estate will be required to sell Harkaway and vacant possession of the house at Harkaway will be needed to undertake the administration of that part of Ellen’s estate.
Given that Mr Vallance may need to sell or raise funds against Harkaway to pay estate liabilities and that Neale as an occupant previously obstructed attempts to do so, vacant possession of the house at Harkaway is needed to conduct an orderly administration of the estate.
Further, it is noted that before the hearing in May 2021 there were concerns raised by other siblings in response to Neale’s attempt to vacate or vary the Interim Orders that it would not be safe for them to attend Harkaway while Neale is living there. These concerns add weight to not vacating the Interim Orders.
The Interim Orders made in the Order 53 proceeding will not be dismissed, however, liberty to apply will be granted to the parties.
Neale’s proceeding
The proceeding to date has dealt with Neale’s claim of a constructive trust over Harkaway. Neale was wholly unsuccessful in that claim. In the ordinary course, Ms Lyttleton as the successful party is entitled to her costs of and incidental to the proceeding.
Neale’s proposal that costs should be costs in the cause in respect of his proceeding, pending the quantification of his equitable lien claim, is rejected. This is particularly the case as Neale’s claim for an equitable lien has yet to be pleaded and the appropriate defendant is the estate’s administrator.
From the outset of his proceeding, Ms Lyttleton highlighted to Neale that his statement of claim was misconceived and lacked a proper basis, and invited him to discontinue proceedings. Meanwhile, Ms Lyttleton did not object to recognising his expenditures on Harkaway, subject to proof and quantification and any set-offs for benefits gained. Despite this, Neale continued to pursue his constructive trust claim over Harkaway in its entirety, presumably since if successful this would have delivered him a property with a market value of $6.5–$7.5 million, compared to the lesser value of the monetary payments he claims. Given that Ellen’s will contemplates a devise of Harkaway to both Neale and Stuart, presumably Neale continued with his constructive trust claim after Ellen’s death so that he does not have to share in the property equally with Stuart.
Each of Ms Lyttleton’s offers to settle the proceeding amount to Calderbank offers that were unreasonably rejected by Neale. The two offers made by Ms Lyttleton subsequent to the delivery of the judgment on the basis that each party bear their own costs were particularly generous given that Neale was unsuccessful in his constructive trust claim and his equitable lien claim was not disputed. Neale acted unreasonably in rejecting them.
Neale’s submission that the fact he was self-represented at the time he filed the statement of claim should weigh against the making of an indemnity costs order against him is disingenuous. All of Ms Lyttleton’s offers were drawn in a manner and style that could be readily understood by a self-represented litigant. Even though self-represented, Neale demonstrated a degree of sophistication in the initial conduct of his claim, with his statement of claim showing a grasp of legal concepts and terms and, as noted in the judgment, he is clearly capable of obtaining legal advice when he seeks it.[16] From around November 2020 Neale has had the benefit of a solicitor and counsel and, in respect of the final three offers, would have been in a position to seek their advice.
[16]Laird v Laird (n 2) [196] (McMillan J).
Neale argues that no real steps have been taken in the claim against Ms Lyttleton personally and that, correspondingly, it cannot be said that he would have avoided the inherent risks, delays and uncertainties of litigation had he accepted her ‘walk-away’ offers. The Court rejects this proposition. The relief sought against Ms Lyttleton personally was predicated on her being a constructive trustee. Given that she did not object to Neale’s monetary claim — subject to proof — the proceeding was arguably unnecessary and now causes delays in the administration of the estate.
In light of Neale’s unreasonable rejections of Ms Lyttleton’s offers, the Court is satisfied that Ms Lyttleton is entitled to her costs of and incidental to the proceeding assessed on an indemnity basis.[17]
[17]Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, 440 [19] (Warren CJ, Maxwell P and Harper AJA).
Equitable lien claim
Neale’s equitable lien claim was to be heard and determined separately from his constructive trust claim. The judgment relevantly states that ‘the claim to an equitable lien would be heard separately from that of the constructive trust’.[18]
[18]Laird v Laird (n 2) [13] (McMillan J).
However, Neale claims that the factual findings in the judgment establish that he has an equitable lien over Harkaway and submits that this should be recognised in the Court’s order now. In particular, Neale says the judgment establishes that:
(a) there was actual indebtedness to Neale, with the Court accepting that Neale ‘contributed funds toward Harkaway and provided loans to his parents … as well as performed unpaid labour’, which claim ‘may be in the vicinity of $1 million’[19] and that Ellen ‘may have reasonably assumed that [Neale’s] contributions were associated with the ledger, which was to be repaid’;[20] and
(b) the indebtedness was encouraged by Ellen and his father Keith — who owned Harkaway jointly — asking him to keep a record of costs expended and promising to ‘pay him back’[21] from in or around 1991,[22] or assuming that Neale would be repaid.[23]
[19]Ibid [201] (McMillan J).
[20]Ibid [208], [213] (McMillan J).
[21]Ibid [189] (McMillan J).
[22]Ibid [71] (McMillan J).
[23]Ibid [208], [213] (McMillan J).
In his proposed form of order Neale specifically seeks a declaration that he ‘has an equitable lien over [Harkaway] as at the year 1991’.
The findings in the judgment do not support the making of the equitable lien declaration sought by Neale. The Court accepts that from 2003 Neale contributed funds toward Harkaway and provided loans to his parents rather than investing in his own property, as well as performing unpaid labour.[24] However, this falls short of a positive finding as to the existence of an equitable lien over the estate property. Similarly, in postponing the claim for contributions claimed by way of equitable lien there was not a positive finding as to the existence of an equitable lien.
[24]Ibid [201] (McMillan J).
Contrary to Neale’s submission, an examination of his pleaded case in the statement of claim does not disclose any purported equitable lien claim. Rather, it itemises a number of monetary payments sought from the estate, for instance, an amount in settlement of the loan funds and accrued interest provided by Neale to his parents.
Neale concedes that it is appropriate to provide particulars of the equitable lien claim but says that it is unnecessary to amend the pleadings or file and serve a separate proceeding as the claim has always been part of his case. He says that filing and serving an amended statement of claim is not in the interests of ensuring that costs are reasonable and proportionate.
Although Ms Lyttleton from the outset has been aware of Neale’s claim for expenditures at Harkaway, every pleading must comply with the pleading rules, including a statement of all material facts and the relief or remedy claimed.[25] It is clear on examination of the statement of claim that it does not disclose the claim to relief of an equitable lien. It would also be premature to make an equitable lien declaration in circumstances where it was agreed by the parties that Ms Lyttleton should hold over evidence to the hearing of the equitable lien claim.[26] In addition, the current administrator of the estate, Mr Vallance, ought to have an opportunity to be heard on the extent of any equitable lien held by Neale against Harkaway. At this juncture of the proceeding it is not appropriate to make orders for the equitable lien claim to be heard and determined by an associate justice.
[25]Supreme Court (General Civil Procedure) Rules r 13.02(1)(a), (c).
[26]Laird v Laird (n 2) [25] (McMillan J).
The Court will order that Neale file an amended statement of claim, including particulars of his monetary claims, so that the administrator of Ellen’s estate knows the case he has to meet and the relief sought by Neale. This will assist in ensuring that costs are reasonable and proportionate. Orders will also be made for the estate’s administrator to file a defence and counterclaim, including particulars of any set-off or due allowances.
Personal allegations against Ms Lyttleton
The claims in Neale’s proceeding that seek relief against Ms Lyttleton personally were premised on Ms Lyttleton holding the estate property on constructive trust for the benefit of Neale. These claims are disposed of in the judgment. Sub-paragraph 66(l) of Neale’s statement of claim states:
[Ms Lyttleton] is a constructive trustee and in this capacity is personally liable for any losses incurred by [Neale] as a result of decisions made by [Ms Lyttleton] which resile from or are inconsistent with the Representations made by [Neale’s] parents, on which [Neale] has relied to his detriment, and which gave rise to the constructive trust.
At sub-para (m), Neale sets out the various ways in which he says Ms Lyttleton has made decisions which resile from the representations made by his parents, including by seeking to sell Harkaway.
At sub-paras (n) and (o), Neale states that because Harkaway and other assets are held on constructive trust for him, VCAT acted outside its jurisdiction in conferring powers on Ms Lyttleton to encumber, deal with or otherwise make decisions concerning those assets, and the VCAT orders are a nullity. He says that consequently Ms Lyttleton is not protected from personal liability.
It is clear from Neale’s statement of claim that the personal allegations made by him against Ms Lyttleton are premised on her holding Harkaway on constructive trust for Neale. The judgment was clear in finding that no such constructive trust exists and, accordingly, Ms Lyttleton cannot be liable for breaches of trust as constructive trustee.
Neale in his reply submissions submits that if he appeals the judgment and is successful on appeal, he is entitled to consider whether he will press his claim against Ms Lyttleton personally for the breaches of trust he alleges against her in his statement of claim. He submits that it is premature to remove Ms Lyttleton as a party to Neale’s proceeding. This submission highlights Neale’s tendency to complicate proceedings and is misguided. Given that Neale’s claim of a constructive trust has been determined, it is now appropriate to dismiss the claims against Ms Lyttleton as constructive trustee.
Stuart’s proceeding
No submissions on costs were received from Stuart. Mr Vallance, as administrator for the estate, seeks orders in Stuart’s proceeding that costs follow the event and costs be assessed on a standard basis.
Orders will be made that Stuart pay Ms Lyttleton’s costs of and incidental to the proceeding assessed on a standard basis, to be taxed in default of agreement.
Substitution of Ms Lyttleton in Neale’s proceedings
In submissions received on behalf of Ms Lyttleton in Neale’s proceeding, it is emphasised that from Ellen’s death on 25 December 2020 Ms Lyttleton’s appointment as administrator ceased. As a result, Ms Lyttleton no longer has any control over the administration of the estate, no standing to make submissions on behalf of the estate or otherwise defend any claims made in Neale’s proceeding against Ellen’s estate.
Further, Ms Lyttleton submits that she has ceased to be a proper or necessary party in Neale’s proceeding, at least insofar as claims were made by Neale against Ellen’s estate and in a proceeding where Ellen’s estate now by the estate’s current administrator was not a party.
In respect of Neale’s proceeding she submits that unless the estate’s administrator is substituted for her as the defendant, then the proceeding will be incompetent, including in respect of any appeal from the judgment pursued by Neale.
In reality, Neale and Stuart’s claims were properly made against the estate (by its then administrator Ms Lyttleton). From the date of Ellen’s death, Ms Lyttleton ceased to be the proper and necessary party to the constructive trust claims and Neale’s equitable lien claim. From the date of his appointment, Mr Vallance has been the proper and necessary defendant to these claims.
Given that the judgment disposed of Neale’s claim against Ms Lyttleton personally, she is no longer a proper or necessary party to Neale’s proceeding. Stuart made no personal claim against Ms Lyttleton. Mr Vallance should be substituted as the administrator of the estate under r 9.09(2) of the Rules in Neale’s proceeding and Stuart’s proceeding.
Given that the Order 53 proceeding is not to be dismissed with the parties given liberty to apply, Mr Vallance will be substituted in this proceeding also. Mr Vallance agrees that he be substituted as the plaintiff.
Orders
S ECI 2020 02591
In proceeding S ECI 2020 02591 the Court orders that:
(a) Pursuant to r 9.09(2) of the Supreme Court (General Civil Procedure) Rules 2015, Mr Lachlan James Vallance as administrator of the estate of Ellen Douglas Laird, deceased, be substituted as the plaintiff to the proceeding and the heading of the proceeding be amended accordingly;
(b) The requirement for the plaintiff to serve a copy of this order on every party to the proceeding and on every party who ceases to be a party or becomes a party as plaintiff by virtue of the order pursuant to r 9.09(3)(a) be dispensed with. For the avoidance of doubt, any requirement that the plaintiff file and serve an amended originating process also be dispensed with;
(c) The first and second defendants pay the costs of Ms Suzanne Lyttleton and Mr Lachlan James Vallance of and incidental to the proceeding on an indemnity basis, to be taxed in default of agreement; and
(d) Liberty to apply.
S ECI 2020 02406
In proceeding S ECI 2020 02406 the Court orders that:
(a) The plaintiff’s claim of a constructive trust over the whole of the property at Harkaway Farm, 2–30 Rowallan Avenue, Harkaway in the State of Victoria, being the land more particularly described in Certificates of Title Volume 11652 Folio 720 and Volume 11876 Folio 860 be dismissed;
(b) The plaintiff’s claims against Ms Suzanne Lyttleton in her capacity as administrator of the estate of Ellen Douglas Laird and against Ms Suzanne Lyttleton personally be dismissed;
(c) Pursuant to r 9.09(2) of the Supreme Court (General Civil Procedure) Rules 2015, Mr Lachlan James Vallance as administrator of the estate of Ellen Douglas Laird, deceased, be substituted as the defendant to the proceeding and the heading of the proceeding be amended accordingly;
(d) The plaintiff pay the costs of Ms Suzanne Lyttleton and Mr Lachlan James Vallance of and incidental to the proceeding assessed on an indemnity basis, to be taxed in default of agreement;
(e) The requirement for the defendant to serve a copy of this order and the originating process in this proceeding on the person becoming the defendant under r 9.09(3)(b) be dispensed with;
(f) By 29 March 2022, the plaintiff file and serve an amended statement of claim articulating his monetary claim against the estate of Ellen Douglas Laird, deceased;
(g) By 12 April 2022, the defendant file and serve an amended defence; and
(h) The proceeding be listed for further directions on 13 May 2022.
S ECI 2020 03773
In proceeding S ECI 2020 03773 the Court orders that:
(a) The plaintiff’s claim of a constructive trust over half of the property at Harkaway Farm, 2–30 Rowallan Avenue, Harkaway in the State of Victoria, being the land more particularly described in Certificates of Title Volume 11652 Folio 720 and Volume 11876 Folio 860 be dismissed;
(b) Pursuant to r 9.09(2) of the Supreme Court (General Civil Procedure) Rules 2015, Mr Lachlan James Vallance as administrator of the estate of Ellen Douglas Laird, deceased, be substituted as the defendant to the proceeding and the heading of the proceeding be amended accordingly;
(c) The requirement for the defendant to serve a copy of this order and the originating process in this proceeding on the person becoming the defendant under r 9.09(3)(b) be dispensed with;
(d) The plaintiff pay the pay the costs of Ms Suzanne Lyttleton and Mr Lachlan James Vallance of and incidental to the proceeding assessed on the standard basis, to be taxed in default of agreement; and
(e) Otherwise the proceeding be dismissed.
---
5
0