Melba Support Services Inc v Bell [No 2]

[2014] VSC 446

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROBATE LIST

S CI 2014 03825

IN THE MATTER of the will and estate of ALICE HALL, deceased

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IN THE MATTER of s 2 of the Charities Act 1978

MELBA SUPPORT SERVICES INC	Plaintiff
v
DIANNE BELL	First Defendant
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DAVID BARRETT JONES and HOWARD ANDREW JONES (who are sued as trustees of the estate of ALICE HALL, deceased)	Second and Third Defendants

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	Written submissions filed 9 September 2014
DATE OF JUDGMENT:	16 September 2014
CASE MAY BE CITED AS:	Melba Support Services Inc v Bell [No 2]
MEDIUM NEUTRAL CITATION:	[2014] VSC 446

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Costs — Unsuccessful applicant for cy-près order seeking costs — Application refused — No point of principle — Supreme Court (General Civil Procedure) Rules 2005, r 63.21

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	No appearance	Beaumont Lawyers
For the First Defendant	No appearance
For the Second and Third Defendants	No appearance

HER HONOUR:

1. In this matter, the plaintiff sought orders that the funds remaining in the estate of Alice Hall (‘the deceased’), being $38,186.07 held by the second and third defendants as trustees, be distributed to the plaintiff by way of an order in the nature of cy-près.

1. On 9 September 2014, I refused that application, holding that an order that the estate be distributed cy-près was not available, and that the deceased did not evince a general charitable intention.[1]  I ordered that the proceeding be otherwise dismissed, directed the plaintiff’s solicitor to provide a draft form of order, and directed that any application or submissions in relation to the costs of the proceeding be dealt with on the papers.

   [1]Melba Support Services Inc v Bell [2014] VSC 425 (16 September 2014) [69].

1. That day, the plaintiff filed written submissions seeking its costs of and incidental to the proceeding.  The plaintiff’s costs of and incidental to this proceeding are $12,353.20.  The plaintiff submitted that it was entitled to those costs in the absence of a good reason to the contrary, relying on the following authorities.

1. Rule 63.21 of the Supreme Court (General Civil Procedure) Rules 2005 provides:

The costs of an inquiry to ascertain the person entitled to any legacy, money, share or other property shall be paid out of the property, unless the Court orders otherwise.

1. Dal Pont’s Law of Costs, referring to this rule, provides:

Costs of inquiries to ascertain the person entitled to a legacy, money or share are payable out of that legacy, money or share unless the Court orders otherwise.  In otherwise ordering, the Court’s chief inquiry is to the testator’s intention.[2]

[2]G E Dal Pont, Law of Costs (LexisNexis Butterworths, 2009).

1. For that proposition, Dal Pont cites Re Vincent,[3] where Parker J gave effect to a testator’s wishes that costs of an inquiry to establish eligibility should come out his residuary estate.  I note that in that case, Parker J ordered otherwise, declining to orders the costs out of the legacy the subject of the inquiry.

   [3][1909] 1 Ch 810, 814.

1. For the following reasons to the contrary, I refuse the plaintiff’s application.

1. First, the relevant rule refers to inquiries undertaken to ascertain ‘the person entitled’ to the gift.  An application for an order in the nature of cy-près, however, is not an inquiry to ascertain who is presently entitled to a gift.  Rather, such an order is only available where no person is entitled to the gift, that gift having failed, and the Court is able to exercise an extraordinary jurisdiction to enable the gift to be distributed to a charity rather than fall by way of an intestacy, or bona vacantia. By the very nature of an application for cy-près, the plaintiff seeks to establish that there is no person entitled to the gift. In this case, the plaintiff was invited to make submissions as to whether it was entitled to the gift as a matter of the proper construction of the will, rather than by way of cy-près, and declined to do so. In my view, r 63.21 does not apply to applications for an order by way of cy-près.

1. Secondly, although the plaintiff referred to the passage in Dal Pont where it was said that the ‘chief inquiry’ in ordering otherwise was the testatrix’s intention, no submissions were made to support the notion that the testatrix evinced an intention that the costs of any inquiry were to be borne by the gift.  The gift in this case is of the residuary estate.  In circumstances where the defendant has unsuccessfully sought to receive the benefit of that gift, and where the will provided for what was to happen if the gift were to fail, I cannot see how the testatrix evinced an intention that the gift should be reduced by the unsuccessful plaintiff’s costs.

1. Finally, although Dal Pont states that the ‘chief inquiry’ is the testatrix’s intention, I can see nothing in the words of the rule that limit what may be relevant to the Court’s discretion to order otherwise.  I consider the amount expended in the ‘inquiry’, and whether that amount is proportionate to the right to be established, a relevant consideration as to whether the Court should order otherwise.  The plaintiff’s costs, being $12,353.20, amount to nearly a third of the $38,186.07 remaining in the estate.  That amount is excessive, especially in circumstances where the estate is so small.  Accordingly, I am disposed to order otherwise, and dismiss the plaintiff’s application for costs.

1. In this matter, I order:

1.The second and third defendants as trustees of the estate of Alice Hall deceased be authorised to distribute the gift of the undistributed income and capital under c l4(b) of the deceased’s will dated 14 October 1981 to the estate of Rex James Bell, or the beneficiaries thereof.

2.        The plaintiff bear its own costs of and incidental to the proceeding.

3.        The proceeding be otherwise dismissed.

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