Re Cassar (No 2)
[2022] VSC 398
•15 July 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S PRB 2012 00877
IN THE MATTER of the Estate of FRANCIS MICHAEL CASSAR, deceased
| MICHAEL ANTHONY CASSAR | Plaintiff |
| v | |
| SANDRA ANNE CASSAR | Defendant |
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JUDGE: | Moore J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 13 May 2022 and written submissions filed on 20, 23, 27 and 30 May 2022 |
DATE OF JUDGMENT: | 15 July 2022 |
CASE MAY BE CITED AS: | Re Cassar (No 2) |
MEDIUM NEUTRAL CITATION: | [2022] VSC 398 |
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PRACTICE AND PROCEDURE – Costs – Application for indemnity costs – Special circumstances that justify award of indemnity costs – Plaintiff ought to have apprehended his defence unlikely to succeed – Plaintiff instrumental in forgery of the will of the deceased – Plaintiff sought to advance own self-interest as sole beneficiary of the deceased's estate – Plaintiff acted dishonestly – Indemnity costs awarded – Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189; Rees v Rees (No 2) [2016] VSC 579.
JUDGMENTS AND ORDERS – Consequential orders following judgment – Declaratory relief appropriate in circumstances of conspiracy to forge a will – Whether appropriate to make vesting order of real property and company shares in new legal personal representative – Defendant sought declaration transfers of land and transfer of shares executed by plaintiff void as procured by fraud – Plaintiff not given opportunity to raise defences – Inappropriate to grant relief sought – s 31 of the Administration and Probate Act 1958 – s 44(1) of the Transfer of Land Act 1958 – Civil Procedure Act 2010 (Vic) – Phillips v Walsh [1990] 20 NSWLR 206; Sino Iron Pty Ltd v Mineralogy Pty Ltd (No 3) [2015] WASC 272.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N J Baum | KHQ Lawyers |
| For the Defendant | Mr J Rizzi | Watson Hughes Lawyers |
HIS HONOUR:
In my reasons for judgment delivered in this proceeding on 18 March 2022, [1] I found that the deceased, Frank Cassar, did not know and approve the contents of a will dated 29 September 2009 purportedly made by him for which probate was granted to his son, Michael Cassar, on 3 February 2012. I also found that the will was a forgery produced after Frank’s death. I made an order revoking the grant of probate made to Michael in respect of the will. I also ordered that, subject to the requirements of the Registrar of Probates, administration upon the intestacy of Frank be granted to Sandra Cassar.[2]
[1]Re Cassar [2022] VSC 126 (‘Re Cassar (No 1)’). In these further reasons for judgment I use the abbreviations as defined in my earlier reasons for judgment. In order to avoid confusion and without intending any disrespect, in these reasons for judgment I have continued to generally refer to parties and witnesses by their first names.
[2]In proceeding S PRB 2019 10845.
These reasons for judgment concern the issue of costs and the making of consequential relief. In support of their respective submissions, Michael relied on an affidavit made by him on 13 May 2022 and Sandra relied on an affidavit dated 3 May 2022 made by her solicitor, Nicholas Hughes.
Costs
A threshold issue of importance on the issue of costs was whether or not Michael knew that the will was forged. Although I did not make an express finding to that effect in my earlier reasons for judgment as it was unnecessary to do so, that finding is implicit in my reasons for judgment. I deal with this issue later in these reasons. On that basis, counsel for Michael did not oppose an order that Michael pay his own costs of and incidental to the summons for revocation, without indemnity from Frank’s estate. The Court will so order.
The remaining controversy is in relation to Sandra’s costs. Counsel for Michael submitted that because he, Sandra and Teresa all participated in the circumstances which led to the litigation, the estate should not bear any of the parties’ costs and that Sandra should bear her own costs.
Counsel for Sandra accepted that she should bear her own costs, without indemnity from Frank’s estate, up until 29 July 2019, being the date when her summons for revocation was served on Michael. The issues for determination are accordingly whether Michael should be required to pay Sandra’s costs after that date and, if so, whether they should be paid on an indemnity basis.
The proposition that Sandra should bear her own costs because she was one of the persons who caused those costs to be incurred in participating in what, in substance, was a conspiracy to produce a forged will is sound in relation to the costs associated with the filing of the summons for revocation and the supporting affidavits filed in respect of that application. However, the application of that analysis is not self-evident in relation to the circumstances which subsisted thereafter. Those circumstances were fundamentally a consequence of Michael’s decision to mount a comprehensive factual and legal challenge to the application for revocation. It is apparent from the findings in my earlier reasons for judgment that Michael adopted that course because he considered that, as the sole beneficiary under the will, it was not in his self-interest for probate to be revoked. Accordingly, I agree with Sandra’s submissions that, in relation to the period after the summons for revocation was served, the usual order as to costs should apply and Sandra should be entitled to an order for Michael to bear her costs of the litigation. It is then necessary to consider whether those costs should be on a standard or indemnity basis.
As stated by McMillan J in Rees v Rees (No 2):[3]
A special costs order will only be made where the proceeding exhibits a special or unusual feature or special circumstances. Each proceeding must be considered on its own facts to ascertain whether those facts support the making of a special order for costs.
[3][2016] VSC 579, [6].
Some of the categories of special circumstances which may warrant an award of costs on an indemnity basis, which categories are not closed, are the following referred to by Harper J in Ugly Tribe Co Pty Ltd v Sikola:[4]
[4][2001] VSC 189, [7], omitting citations.
(i)The making of an allegation, known to be false, that the opposite party is guilty of fraud: … .
(ii)The making of an irrelevant allegation of fraud: … .
(iii)Conduct which causes loss of time to the Court and to other parties: …
(iv)The commencement or continuation of proceedings for an ulterior motive: … .
(v)Conduct which amounts to a contempt of court: … .
(vi)The commencement or continuation of proceedings in wilful disregard of known facts or clearly established law: … .
(vii)The failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial: … .
There are four particular unusual features or special circumstances evident in this proceeding which warrant the making of a special costs order.
First, it ought reasonably to have been apparent to Michael that his prospects of proving that Frank knew and approved the contents of the will were poor. As explained in my earlier reasons for judgment, there were numerous circumstances which attended the will which, separate to the allegation of forgery, excited a suspicion that the deceased did not know and approve of the contents of the will.[5] After one of the attesting witnesses to the will, Michael Senior, recanted from the contents of his original affidavit in which he deposed to having witnessed Frank sign the will, which occurred only five weeks after the summons for revocation was filed, Michael ought to have apprehended that his defence of the revocation application was unlikely to succeed.
[5]Re Cassar (No. 1) (n 1), [168] – [179].
Secondly, although the forgery was effected by Teresa and arranged by Sandra, it was the product of a scheme instigated and orchestrated by Michael. It was Michael who told Sandra that she had ‘better organise something’ when it became apparent that Frank did not have a will; it was Michael who suggested that Teresa forge Frank’s signature on the will which Sandra had produced; and it was Michael who pressured Teresa to sign the will.
Thirdly, as I have already explained, it is apparent that in defending the application for revocation, Michael sought to advance his own self-interest as the sole beneficiary of Frank’s estate under the will.
Fourthly, Michael resisted the application for revocation by acting dishonestly in attempting to manipulate Michael Senior into providing evidence to be relied on by Michael in his attempt to establish the validity of the will.[6]
[6]Re Cassar (No. 1) (n 1), [281], [298].
In addition to the above matters, a matter of lesser significance is the fact that, on 12 February 2021, some two months before the trial of the proceeding, Sandra’s solicitors warned Michael’s solicitor that his defence of the application was bound to fail.
For the above reasons, Sandra is entitled to an order that, from and including 30 July 2019, her costs of and incidental to the summons of revocation, including any reserved costs, be paid by Michael on an indemnity basis from Michael’s share of Frank’s estate, with such costs to be taxed in default of agreement.
Order for accounts
Sandra sought an order that Michael file and serve an account of his administration of Frank’s estate. Michael did not object to an order requiring him to file an account, but sought that any such order provide him with a period of three months to do so. He also submitted that the Court should order that the costs of and incidental to the preparation of the account be paid from the estate on an indemnity basis.
I will order that the account be filed and served within two months. Taking into account the various matters raised by counsel for Michael in his submissions, I consider this to be a reasonable time in light of the fact that Michael has been on notice that he would be required to file an account since late April 2022 and has not objected to that course.
Michael’s solicitor has estimated that the costs of preparing an account will be $25,000. In the circumstances of this case, including Michael’s evidence that he does not have the funds to pay his solicitor or accountant to prepare an account, and that he cannot prepare such an account without the assistance of a solicitor, it is appropriate to order that the costs of and incidental to the preparation of the accounts be paid from the estate on an indemnity basis up to no more than $25,000 to be taxed in default of agreement, with any costs exceeding $25,000 to be paid by Michael personally.
Delivery up
Sandra sought an order that Michael deliver up to her all documents and records in his possession, custody or control relating to the assets and affairs of Frank, his estate and Grandview.
Counsel for Michael did not oppose an order for delivery up of documents and records relating to the assets and affairs of Frank and the estate. However, he submitted that the Court should not order the delivery up of documents until a date after any date by when he is ordered to file an account. It was also submitted that the Court should not make an order in respect of the assets and affairs of Grandview or the Trust.
As to the first objection raised on behalf of Michael, that issue is sufficiently accommodated by the acknowledgment by counsel for Sandra that Michael be permitted to retain digital copies of the documents he requires to prepare an account. I otherwise accept the submissions on behalf of Sandra that she should be provided with the relevant documents as soon as possible in order that she can proceed with administering the estate.
I accept, for the reasons advanced on behalf of Michael, that it is not appropriate for orders to be made in this proceeding which require Michael to deliver up documents and records related to the assets and affairs of Grandview or the Trust. Grandview is not a party to this proceeding. Upon any transfer of the shares in Grandview to Frank’s estate, the estate may then have rights to seek documents and records in its capacity as a shareholder. Similarly, in relation to the Trust, there has been no application for Michael to be removed as trustee of the Trust and Michael is not a party to this proceeding in that capacity.
Declaratory relief that the will is a forgery
Sandra sought that the Court make a declaration in the following terms:
The Will of the late Francis Michael Cassar, dated 29 September 2009 is a forgery produced after the death of the late Francis Michael Cassar and it is therefore invalid.
Counsel for Michael opposed the making of a declaration in these terms.
Counsel for Sandra submitted that the declaration was sought for the convenience of Land Victoria, the Australian Taxation Office, Revenue Victoria and the Australian Securities and Investments Commission so that they may readily understand why the Court has made various consequential orders.
In my view, the unusual circumstances of this case warrant the Court exercising its inherent jurisdiction to grant declaratory relief. First, a formal pronouncement by the Court that the will is a forgery is appropriate given the intended solemnity of testamentary instruments and the fact that, in the facts of this case, that essential quality has been disregarded and debased. Secondly and relatedly, a declaration has utility because Frank’s estate was comprised of numerous real properties and probate of the will was granted in 2012, with the administration of the estate apparently substantially completed by 4 December 2015. As is demonstrated by the following section of these reasons for judgment, it is readily foreseeable that the judgment of the Court and the revocation of probate may be conducive of complexity in relation to the assets of Frank’s estate. In those circumstances, I accept that a formal declaration will likely aid the parties and various regulatory and government agencies in giving effect to the judgment of the Court.
The various matters raised on behalf of the plaintiff do not warrant a different result. The fact that there was no application for declaratory relief does not preclude the Court from exercising its inherent jurisdiction to grant declaratory relief in the circumstances of a particular case. Next, contrary to the plaintiff’s submissions, it is a mischaracterisation of the Court’s findings to submit that the conclusion that the will was a forgery was made ‘in the alternative’. In the relevant paragraph of the reasons for judgment,[7] I explained why it was appropriate to determine the central issue at trial: whether the grant of probate should be revoked because the will was a forgery. I stated that it was appropriate to determine this issue ‘in the event that I am wrong in concluding that Frank did not know and approve of the contents of the will’.[8] Contrary to the plaintiff’s submissions, my finding that the will was a forgery was not ‘only subject to that proviso’. The finding was in no way provisional or conditional. The relevant paragraph of my reasons for judgment and the words relied upon by the plaintiff merely indicate the reason I proceeded to deal with whether the will was a forgery. I also reject the plaintiff’s submissions that there is any particular confusion or uncertainty which attaches to the words ‘is therefore invalid’ in the proposed declaration.
[7]Re Cassar (No. 1) (n 1) [198].
[8]Ibid.
I will make a declaration in the terms sought by Sandra.
Declaratory relief and other orders sought by Sandra in relation to real property and Grandview
The administration of Frank’s estate is complete, having been substantially completed by 4 December 2015. Three real properties which were property of the estate were transferred into Michael’s name in his personal capacity on 13 September 2012;[9] a property at 176 Barkly Street, Fitzroy was transferred from the estate into Michael’s name in his personal capacity on 15 August 2014; and the remaining real property of the estate at 64 Kerr Street[10] was transferred into Michael’s name in his personal capacity on 4 December 2015. All of the above properties, except 176 Barkly Street, Fitzroy, are subject to registered mortgages.
[9]58 Kerr Street, Fitzroy; 62 Kerr Street, Fitzroy; and 55-57 Argyle Street, Fitzroy.
[10]This property is also known as 385 – 393 Fitzroy Street, Fitzroy.
On 18 June 2019, Michael entered into a contract of sale for the property at 176 Barkly Street, which sale settled on 15 October 2019. The net proceeds of sale, being an amount of $1,323,394.48, were paid into the trust account of Michael’s former solicitors, Stenta Legal.
The remaining property of the estate, being two shares in Grandview, were transferred into Michael’s name in his personal capacity on 18 June 2019.
Sandra correctly submitted that it is implicit in my earlier reasons for judgment and the Court’s acceptance of the evidence she and Teresa gave at trial that Michael knew that the will was a forgery and was involved in creating it.[11] On that basis, she submitted that the abovementioned transfers of estate property to Michael in his personal capacity were void and of no effect by operation of s 44(1) of the Transfer of Land Act 1958 which states:
Any folio of the Register or amendment to the Register procured or made by fraud shall be void as against any person defrauded or sought to be defrauded thereby and no party or privy to the fraud shall take any benefit therefrom.
[11]See further [11] above.
Sandra submitted that, because Michael was ‘party or privy to the fraud’, by operation of s 44(1), the amendments to the Register of Land made by the various transfers of land executed by Michael as executor of the estate are void. Any title to the estate properties Michael may have received is said to be defeasible because the transfers were procured by fraud.
In order to restore the real properties to the estate, Sandra accordingly seeks that the Court make:
(a) declarations that Michael’s registration on the various titles as the legal personal representative of the estate of the deceased were void as they were procured by fraud;
(b) declarations that the relevant transfers of land from Michael as the legal personal representative of the estate to himself as the beneficiary named in the will were void as they were procured by fraud; and
(c) orders requiring Michael to sign and lodge any instrument, including a transfer of land, to transfer the registered proprietorship in the various estate properties to Sandra in her capacity as the legal personal representative of Frank’s estate.
Sandra likewise sought that the Court:
(a) declare that the transfer of Frank’s shares in Grandview to Michael was void and is set aside; and
(b) order that Michael sign and lodge any instrument, including a transfer of shares, to transfer the registered proprietorship of those shares to Sandra in her capacity as legal personal representative of Frank’s estate.
Michael opposed the Court making declarations and orders as set out in the previous two paragraphs. He submitted that such relief was beyond the scope of the supplementary orders that may be made consequential upon the judgment of the Court delivered on 18 March 2022. Reliance was placed on the judgment of Chaney J in Sino Iron Pty Ltd v Mineralogy Pty Ltd (No 3) for the proposition that, while a court may, in certain circumstances, make supplementary orders following a trial and final hearing which extend beyond the scope of the relief sought trial, the scope of such orders is limited.[12] Reference was also made to Phillips v Walsh[13] which relevantly concerned exceptions to the general principle that, when proceedings have been disposed of by final order which has been entered, the proceedings are at an end and cannot be revived. In dealing with one of the exceptions to this principle, McClelland J stated that it does not ‘extend to an application made for the purpose of giving substantive relief not sought in the statement of claim which is substantially different to that given by the final order’.[14]
[12][2015] WASC 272, [25]-[32].
[13][1990] 20 NSWLR 206.
[14]Ibid, 210.
Michael submitted that, when the Court revoked the grant of probate by order on 18 March 2022, Sandra thereby secured the final relief which she had sought in her summons for revocation. The orders and declarations now sought are beyond the supplemental orders that may be made following a trial, pursuant to liberty to apply or otherwise. Michael argued that there was no trial on the issue of whether the transfers of real property which Sandra now seeks to be declared void, were in fact void, and there was no trial on whether mandatory injunctive relief should be ordered requiring Michael to sign and lodge documents transferring property to Sandra. It was submitted that, had Sandra sought such relief in this proceeding (or in separate proceedings heard together with this proceeding), Michael would have sought to rely on possible defences, including under s 31 of the Administration and Probate Act 1958, as well as counter-restitution defences.
Section 31 of the Administration and Probate Act 1958 provides that:
Protection of persons acting on probate or administration
(1)Every person making or permitting to be made any payment or disposition in good faith under a representation shall be indemnified and protected in so doing, notwithstanding any defect or circumstance whatsoever affecting the validity of the representation.
(2)Where a representation is revoked, all payments and dispositions made in good faith to a personal representative under the representation before the revocation thereof shall be a valid discharge to the person making the same; and the personal representative who acted under the revoked representation may retain and reimburse himself in respect of any payments or dispositions made by him which the person to whom representation is afterwards granted might have properly made.
In the context of these foreshadowed defences, it was submitted on behalf of Michael that he would have led detailed evidence about the substantial payments he made from his own property for the benefit of Frank’s estate. Because this relief was not sought until the last moment, these issues had not been crystallised in the course of the proceeding and Michael had been denied the opportunity to seek to establish these defences.
Michael submitted that the appropriate procedure was for Sandra to seek to vindicate any equitable claims the estate may have for recovery of property by bringing proceedings by writ, in which case Michael will then have the opportunity to plead and prove the defences referred to above. This approach was said to accord with the ordinary procedure in the Court concerning the distribution of property out of an estate; a claim for recovery of property would ordinarily be a separate proceeding and does not arise automatically by reason of the revocation of a grant.
It is correct, as was submitted on behalf of Sandra, that in her summons for revocation she sought, in addition to an order revoking the grant of probate made to Michael on 3 February 2012, ‘such further or other orders or directions’ as the Court ‘considers appropriate’. Consideration of what orders or directions might appropriately be made by the Court after judgment in a proceeding is delivered is critically informed by what issues were determined in the proceeding.
In this proceeding, no issue was raised at trial about what, if any, orders and declarations might be made in relation to the property which had been transferred by Michael in his capacity as the legal personal representative of the estate to himself as the beneficiary named in the will. The trial was confined to whether or not the grant of probate should be revoked.
In circumstances where Michael knew that the will was a forgery and had a central role in its creation, it is unclear how he might successfully invoke s 31 of the Administration and Probate Act1958, given its application to payments and dispositions made in good faith. It is, however, unnecessary to consider that question further given that, as was submitted on Michael’s behalf, there may be other defences he would wish to advance in resisting the relief now sought by Sandra referred to above and which was first proposed in her written submissions dated 23 May 2022. There is evidence before the Court that Michael sold real estate from his personal estate to meet debts of Frank’s estate and that approximately $400,000 of the proceeds of these sales were used to reduce the debt of the estate. Further, Michael has also deposed that he may have a capital gains tax liability of approximately $400,000 in relation to the sale of the property at 176 Barkly Street referred to in [29] above.
Michael is entitled to be heard in relation to these and any other defences he may have before consideration is given to making orders and declarations of the type sought by Sandra referred to in [33] and [34] above. He has not yet had any such opportunity given the understandably confined nature of the claim made in this proceeding, which in turn framed the issues determined at trial. As was submitted on behalf of Michael, in the event that the parties cannot resolve their differences by agreement, it will be open to Sandra in her capacity as the legal personal representative of Frank’s estate to issue proceedings against Michael for the recovery of property which will provide an opportunity for Michael to advance any defences he may have. Although the prospect of further litigation in relation to Frank’s estate is regrettable, it is a scenario which must be countenanced given the requirements of procedural fairness and the confined nature of the relief sought in this proceeding. Consideration of the overarching purpose expressed in the Civil Procedure Act 2010 does not lead to a different result.
The Court will accordingly not grant the relief sought by Sandra referred to in [33] and [34] above.
For substantially the same reasons, it is premature to make the vesting orders sought by Sandra in relation to the properties at 58 Kerr Street, 62 Kerr Street, 64 Kerr Street and 55-57 Argyle Street. However, in relation to the net proceeds of sale of 176 Barkly Street held by Stenta Legal, I will order that, pursuant to s 51 of the Trustee Act 1958, the estate funds held in the trust account of Stenta Legal vest in Sandra in her capacity as administrator of Frank’s estate.
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