Re Ciantar (No 2)
[2022] VSC 267
•27 May 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S PRB 2020 33195
IN THE MATTER of the estate of CARMEL MARY CIANTAR, deceased
BETWEEN:
| ANTHONY JOSEPH CIANTAR | Plaintiff |
| v | |
| AIMEE LAUREN CIANTAR | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 27 May 2022 |
CASE MAY BE CITED AS: | Re Ciantar (No 2) |
MEDIUM NEUTRAL CITATION: | [2022] VSC 267 |
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COSTS – Where defendant successful – Whether parties should bear their own costs – Whether Court should depart from principle that costs follow the event – No conduct found to displace ordinary principle that costs follow the event – Plaintiff to bear costs of both parties – Supreme Court Act 1986 (Vic) s 24 – Supreme Court (General Civil Procedure) Rules 2015 ord 63 – Oshlack v Richmond River Council (1998) 193 CLR 72.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Rizzi | KHQ Lawyers |
| For the Defendant | Mr DW Laidlaw | Stenta Legal |
HER HONOUR:
Introduction
On 9 March 2022, the Court delivered reasons and made orders dismissing an application made by the plaintiff on 15 December 2020 for appointment as administrator ad litem of the deceased’s estate.[1]
[1]Re Ciantar [2022] VSC 116.
The plaintiff has filed an appeal in respect of the judgment. As the parties have been unable to reach agreement on costs, or regarding a stay of costs pending the outcome of the appeal, it is necessary for the Court to provide short reasons on costs in relation to the proceeding.
Both parties filed submissions on costs, pursuant to orders made by this Court on 9 March 2022. The plaintiff submitted that the parties should bear their own costs, whereas the defendant submitted that costs should follow the event. Neither party refers to costs being indemnified by the estate, presumably because there are no funds in the estate with which to satisfy such an order.
Relevant background
Plaintiff’s application in the substantive proceeding
The plaintiff is the son and only child of the deceased, Carmel Mary Ciantar, who died on 24 June 2019. The defendant is his daughter, and the deceased’s granddaughter. There are two other grandchildren.
The plaintiff was unsuccessful in his application for a limited appointment as administrator ad litem of the deceased’s estate. If successful, he had intended to pursue an investigation into the inter vivos transfer of the deceased’s home at 117 Harold Street, Middle Park (‘Middle Park property’) to the defendant and, if necessary, have the transfer set aside, so that the property could be included as an asset in the estate.
The inter vivos transfer of the deceased’s home resulted in the property being listed in the joint names of the deceased and the defendant. In September 2015, the deceased and the defendant were registered as joint proprietors of the property, although the plaintiff submitted that the transfer took place with no consideration and the transfer of land did not specify the manner of holding.
In addition to his application for limited appointment as administrator ad litem, the plaintiff sought orders for discovery to assist with determining whether the estate had a possible cause of action against the defendant. He referred to equitable undue influence, unconscionable conduct, and lack of capacity as possible causes of action.[2] The orders sought were summarised at para 8 of the substantive decision.[3]
[2]The plaintiff subsequently raised two other possible causes of action: that the defendant, as financial attorney, had a fiduciary relationship with the deceased when the transfer was signed, and therefore profited from her position by accepting the transfer; and that the gift of the Middle Park property might not have been completed in equity, prior to the deceased’s loss of capacity: at para [17].
[3]These differ in some respects from those outlined in the consent order referred to in the plaintiff’s submissions on costs (at para [11]). The orders referred to in the substantive decision, at para [8], sought the following: (a) access to documents and other materials held by the deceased’s lawyers in relation to transfer of the Middle Park property; (b) access to medical reports and other materials regarding the deceased’s capacity at or before the transfer of the Middle Park property; (c) if appropriate, orders compromising the proceeding upon terms thought fit by the plaintiff; (d) consent of the estate to the making of orders and entry of judgment; (e) prosecution of the proceeding to judgment and enforcement of judgment on behalf of the estate; and (f) removal of the requirement that the plaintiff provide an administration guarantee.
The plaintiff was unable to provide an administration guarantee to support his application for limited appointment as administrator ad litem.
In late 2020, the defendant sold the Middle Park property for $5,900,000, and subsequently purchased two properties: one in Hoppers Crossing ($1,670,000); the other in Port Melbourne ($520,000). The plaintiff agreed to the sale and purchase transactions, in exchange for caveats being placed on the titles of the purchased properties, and the balance of the sale proceedings ($2,700,000) being deposited into an interest-bearing account in the joint names of the plaintiff and defendant until resolution of any proceedings.
The deceased’s last will
The deceased made her last will on 2 April 2014, approximately two months after signing the transfer of land, which divested the estate of the Middle Park property on her death. The deceased’s last will appointed the defendant as executor of her estate.
Under the deceased’s penultimate will dated 16 September 1997, the plaintiff was the sole beneficiary, with a gift over to his three children.
On the deceased’s death in June 2014, the defendant became the surviving proprietor of the Middle Park property. In December 2019, she was registered as the sole proprietor.
The will provided that:
(a) the defendant be appointed as executor;
(b) a right of residence in the Middle Park property be provided to the deceased’s partner, John Windsor Milne; and
(c) sixty percent of the deceased’s residuary estate to the defendant, with the remaining 40 percent going to the plaintiff.
Given that the estate contained no assets at the time of the deceased’s death, it was not necessary for the defendant, as executor, to obtain a grant of probate in respect of the deceased’s will.
Orders made in the substantive proceeding
The plaintiff’s application in the substantive proceeding was wholly unsuccessful, as the Court was not satisfied that a grant of administration ad litem should be made to the plaintiff.
The Court rejected the plaintiff’s submissions, stating at the outset that he had misunderstood the role of an administrator ad litem, which it described as follows:
A grant ad litem provides for an administrator to represent a deceased’s estate for the purpose of enabling an estate to bring or defend legal proceedings and generally confers powers with respect to the management of the legal proceeding on behalf of an estate.[4]
Such a grant will usually be made where there is no personal representative willing or able to take out a grant of probate or administration and where a proceeding involving the deceased cannot be continued or finalised without a representative of the deceased’s estate.[5] An order for a limited grant ad litem will not be made where there is an appropriate person available to take out a general grant of administration.
[4]Greenway v McKay (1911) 12 CLR 310; Re McGown [1947] VLR 113; Hewitt v Gardner [2009] 3 ASTLR 407 (‘Hewitt’).
[5]Hewitt (n 4) [89] (Ward J).
The Court stated that the plaintiff had no personal right to request that the inter vivos transfer be set aside and that, if there were proper grounds to set aside the transfer, then any application to do so would be conducted in a separate proceeding as a chose in action held by the estate.
The Court then referred to the limited circumstances in which a beneficiary might pursue a claim that would ordinarily vest in the executors; specifically, when the executor was unable or unwilling to do so, and if the action was meritorious. In this instance, the defendant (as executor) acknowledged that her position was one of conflict. She provided evidence in the form of affidavit, which addressed the property transfer and the making of the deceased’s last will, to support her contention that the plaintiff’s application had failed to meet the threshold required to merit investigation. The defendant also consented to orders proposing wide-ranging discovery, which the Court ultimately declined to make, on the basis that the question to be determined concerned the plaintiff’s application for appointment as administrator ad litem.
The Court found that, if appointed administrator ad litem, the plaintiff would be likely to pursue his own interests, having dismissed those of the other two beneficiaries (the defendant and the deceased’s partner), rather than the interests of the estate. This would be contrary to the role of such an administrator. Further, the plaintiff’s submission that he would obtain advice from alternative counsel was rejected as failing to provide the necessary level of independence required by the Court.
Finally, the plaintiff’s application was rejected for failure to provide an administration guarantee, pursuant to s 57 of the Administration and Probate Act 1958 (Vic), and r 7.01 of the Supreme Court (Administration and Probate Rules) 2014 (Vic); the guarantee being required to secure the administrator’s performance in an application bringing or defending a proceeding, ‘unless good reason is shown to the contrary’. The Court was not satisfied by the plaintiff’s submission that he was unable to provide a guarantee because he had been unable to find an insurer or family member willing to provide one, and stated that those reasons ‘[did] not amount to a good reason for the Court to dispense with the requirement for an administration guarantee’.
On 9 March 2022, the Court ordered that:
(a) Pursuant to r 9.07 of the Supreme Court (General Civil Procedure) Rules 2015, Aimee Lauren Ciantar be added as the defendant to the proceeding;
(b) The plaintiff’s application for appointment as administrator ad litem of the estate of Carmel Mary Ciantar, deceased, be dismissed; and
(c) If the parties are unable to agree on costs, written submissions as to the costs of the plaintiff’s application for appointment as administrator ad litem be filed and served by 30 March 2022 and thereafter determined on the papers.
Submissions on costs
Plaintiff’s submissions
In his written submissions on costs filed 1 April 2022, the plaintiff relies upon an outline of the procedural history that unfolded in the substantive proceeding;[6] a summary of which follows:
[6]The procedural history contained in the plaintiff’s submissions contained a number of date errors. These have been corrected in the summary provided here.
(a) On 2 March 2021, the Court ordered the plaintiff to file a confidential memorandum of advice from counsel on the merits of the proposed cause of action against Aimee Ciantar and the plaintiff’s standing in relation to a limited grant ad litem, as well as an outline of the proposed statement of claim.
(b) On 16 March 2021, the plaintiff filed the memorandum and an outline of the proposed statement of claim.
(c) On 23 March 2021, Aimee Ciantar, who was not yet a defendant, filed a summons seeking orders, inter alia, adding her as a defendant and dismissing the plaintiff’s application. In the alternative, if the Court was minded to make the grant, she requested that it was made to an independent person, and limited to the question of whether to institute proceedings.
(d) On 25 March 2021, prior to the return date for directions listed the following day, the plaintiff provided written submissions and a consent order signed by both parties. The consent order sought, inter alia:
(i) discovery of the defendant’s solicitor’s files (formerly the deceased’s solicitor) relating to transfer of the Middle Park property, the deceased’s power of attorney made in January 2014, and the will dated 2 April 2014;
(ii) discovery of the deceased’s former solicitor’s files relating to her penultimate will dated 16 September 1997, as well as any subsequent contact with the deceased or the defendant;
(iii) authorisation for both parties to obtain medical reports, records, and documents relating to the deceased’s capacity from 1 January 2010 to 31 December 2016;
(iv) provision for filing and service of further affidavits on which the parties intended to rely; and
(v) for the matter to be fixed for hearing.
(e) The deceased’s former solicitors had indicated their preparedness to make discovery of the relevant files upon receipt of the proper authority to do so.
(f) On 26 March 2021, the Court declined to make the orders outlined above, but indicated that it would consider the proposed orders and respond in due course.
(g) The matter was listed for hearing on 7 May 2021, in response to an email from the plaintiff’s solicitor on 26 April 2021.
(h) Following the hearing, written submissions were filed by the plaintiff and defendant on 2 June 2021 and 15 June 2021 respectively.
(i) The Court refused the plaintiff’s application on 9 March 2022; the orders of which are reproduced earlier in this decision.
The plaintiff submits that the procedural history outlined above demonstrates that he acted in accordance with Court directions regarding the filing of further material; namely, the memorandum of advice from counsel, the proposed statement of claim, and written submissions.
Further, the plaintiff submits that ‘[a]t all times throughout this proceeding’, he has been ‘mindful of his obligations under the Civil Procedure Act 2010’, including the obligation to ensure that costs are ‘reasonable and proportionate’ to the complexity and importance of the issues and amounts in dispute.
Finally, the plaintiff submits that he commenced the application because the issues arising out of the property transfer ‘were sufficiently suspicious to warrant investigation’. Although his application proved unsuccessful, the plaintiff states that he ‘was and is’ the only person interested in investigating the transfer of the deceased’s Middle Park property, and maintains that a proper investigation was warranted.
The plaintiff submits that the ‘proper procedure’ for conducting such an investigation involved seeking a grant of letters of administration ad litem to provide him with standing to obtain discovery, investigate and, if necessary, commence proceedings to recover the property on behalf of the estate. As his application was unsuccessful, the plaintiff submits that it is now unlikely that the events leading to the defendant’s receipt of a $5.9 million benefit from the deceased will be properly investigated.
On the basis of these submissions, the plaintiff submits that an appropriate costs order would be for the parties to bear their own costs of the proceeding, and that the above circumstances provide ‘sufficient reasons for the Court to depart from the ordinary principle that costs follow the event’.
Defendant’s submissions
In the substantive proceeding, the defendant submitted, inter alia, that the concerns raised by the plaintiff were based entirely upon suspicion, and did not meet the threshold required to merit careful investigation by an administrator ad litem in support of the due and proper administration of the estate. In addition to the affidavits provided by the defendant concerning the deceased’s intentions, she was also prepared to consent to orders providing the proposed discovery sought by the plaintiff, being confident that there were no documents supporting any of the potential claims seeking to impugn the property transfer.
In the event that the plaintiff was unsuccessful in the substantive application, the defendant sought the costs of her summons.
In her written submissions filed 30 March 2022, the defendant submits that the issue of costs is at the discretion of the Court, unless otherwise provided by any Act or the Rules.[7] The defendant also submits that, ‘in the absence of good reason to the contrary’, the ordinary principle is that costs follow the event, with the successful party being entitled to their costs.[8]
[7]Citing the Supreme Court Act 1986 (Vic) s 24.
[8]Citing Latoudis v Casey (1990) 170 CLR 534, 543, 566–8 (McHugh J) (‘Latoudis’); Re Minister for Immigration & Ethnic Affairs (Cth); Ex parte Lai Qin (1997) 186 CLR 622 (‘Re Minister for Immigration & Ethnic Affairs (Cth)’); Milne v Attorney-General (Tas) (1956) 95 CLR 460, 477 (Dixon CJ, McTiernan, Williams, Fullager and Taylor JJ) (‘Milne’); Donald Campbell & Co Ltd v Pollak [1927] AC 732, 809 (Viscount Cave LC); Ritter v Godfrey [1920] 2 KB 47.
The defendant submits that her request to be joined as a defendant to the substantive proceeding presents no controversy. This is reflected in the orders made by the Court on 9 March 2022, which joined the defendant to the proceeding, and then dismissed the plaintiff’s application.
In opposing the plaintiff’s application, the defendant has incurred costs from the earliest stages of the proceeding. The defendant submits that there is no suggestion of her having conducted the litigation ‘in any manner that could be said to displace the ordinary principles’.
The defendant submits that the plaintiff failed to persuade the Court of the appropriateness of appointing him as administrator ad litem, nor did he to satisfy the Court on ‘multiple issues’ affecting the Court’s discretion to appoint him as such. In this respect, the defendant submits that the plaintiff has been ‘wholly unsuccessful’ in the proceeding, which constitutes the ‘relevant event’.
On the basis of these submissions, the defendant submits that it would be fair and appropriate for costs to follow the event, and requests an order that the plaintiff pay the defendant’s costs of the proceeding on a standard basis.
Applicable principles
Costs are at the discretion of the Court, unless otherwise provided by any Act or the Rules.[9] That discretion must be exercised judicially, in accordance with established principle.[10]
[9]Supreme Court Act 1986 (Vic) s 24.
[10]Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3) [2012] VSC 399, [11] (Croft J).
It is usual for costs to follow the event in favour of the successful party to litigation, with the unsuccessful party liable for the costs of the litigation.[11] In Oshlack v Richmond River Council,[12] McHugh J described this principle as follows:
The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did.[13]
[11]Oshlack v Richmond River Council (1998) 193 CLR 72, 97 [67] (McHugh J) (‘Oshlack’).
[12]See generally Oshlack (n 11).
[13]Ibid 97 [67] (McHugh J) (footnote omitted).
The discretionary power associated with this principle was referred to by McHugh J in the High Court decision of Re Minister for Immigration & Ethnic Affairs (Cth); Ex parte Lai Qin:[14]
In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs.[15] Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order.[16]
[14]Re Minister for Immigration & Ethnic Affairs (Cth) (n 8) 624 (McHugh J).
[15]See generally Latoudis (n 8).
[16]Ibid 543, 566–8 (McHugh J).
In an earlier High Court decision, Latoudis v Casey,[17] in which his Honour delivered a separate judgment, he outlined the rationale underlying the principle, stating:
An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connexion with the litigation: Kelly v Noumenon Pty Ltd.[18] The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings. It may, and usually will, be made even though the action has failed through no fault of the unsuccessful party.[19]
[17]See generally Latoudis (n 8).
[18](1988) 47 SASR 182, 184 (King CJ).
[19]Latoudis (n 8) 566–7 (McHugh J); see also, 543 (Mason CJ).
Departure from this rule has been described,[20] variously, as ‘extremely rare’,[21] justified by ‘special circumstances’,[22] or for ‘good reason’.[23] Dal Pont refers to these remarks ‘as a judicial expression of the notion that a costs order that does not follow the event does not represent the usual exercise of the costs discretion, and so there must be something out of the ordinary in the circumstances of the case to justify it’.[24]
[20]See GE Dal Pont, Law of Costs (LexisNexis, 5th ed, 2021) [8.26].
[21]Austen v Ansett Transport Industries (Operations) Pty Ltd [1993] FCA 403, [58] (Burchett J).
[22]Ritter v Godfrey (n 8) 52 (Lord Sterndale MR).
[23]Berry v British Transport Commission [1962] 1 QB 306, 338 (Danckwerts LJ).
[24]Dal Pont (n 20).
As for when the discretion might be exercised against a successful defendant — which is how one might characterise the plaintiff’s request in the current proceeding — the High Court stated in Milne v Attorney-General (Tas)[25] that: ‘It is a general rule that a wholly successful defendant should receive his costs unless good reason is shown to the contrary’.[26]
[25]See generally Milne (n 8).
[26]Ibid 477 (Dixon CJ, McTiernan, Williams, Fullager and Taylor JJ).
The argument by a losing party that it has behaved reasonably in commencing and conducting the litigation is not sufficient, in and of itself, to justify depriving a successful party of its costs.[27] Dal Pont makes the point that, where departure from the usual costs order is being considered, ‘the focus is ordinarily on the successful party’s conduct’;[28] also stating that, ‘[n]or is it appropriate to make no order as to costs simply because both sides are innocent of wrongdoing’.[29]
[27]Dal Pont (n 20) [8.38], citing on this point: Metsikas v Quirk [2010] NSWSC 756, [7] (Brereton J); Ritchie v Styles (No 2) [2011] TASSC 60, [16] (Holt AsJ); Bitzer Australia Pty Ltd v Japp [2014] FCA 1040, [42] (Katzmann J) (referring to fulfilling relevant civil procedure obligations); GJ v AS (No 4) [2017] ACTCA 7, [104] (Refshauge, Rangiah JJ and Walmsley AJ).
[28]Dal Pont (n 20) [8.38].
[29]Ibid, citing on this point: Levy v Watt (No 2) [2012] VSC 580, [10] (Habersberger J).
In the Victorian Court of Appeal decision of MA & J Tripodi Pty Ltd v Swan Hill Chemicals Pty Ltd,[30] the Court stated that:
[T]here are no fixed rules as to the appropriate costs order in that [referring to the case before them] or any other situation. Ultimately, the court must be guided by what the justice of the case requires.[31]
[30][2019] VSCA 46 (‘Tripodi’).
[31]Ibid [154] (Kyrou, Kaye and Emerton JJA).
The prima facie position is for the Court to award costs in litigation on a standard basis, although the Court has discretion to award costs on a non-standard basis if justified.[32]
[32]See Supreme Court (General Civil Procedure) Rules 2015 r 63.28; Re Papaioannou; Papaioannou v Kronemann (No 2) [2020] VSC 257, [36] (McMillan J).
Consideration
The plaintiff is asking the Court to depart from the ordinary principle that costs follow the event, and instead order that the parties bear their own costs. He does not point to any conduct on the part of the defendant that would merit such an order. Rather, the plaintiff focuses on his own conduct in adhering to Court directions and his obligations under the Civil Procedure Act 2010 (Vic); and claims that the Middle Park property transfer was ‘sufficiently suspicious’ to warrant investigation, and that he followed proper procedure in applying for a grant to pursue it.
The defendant, on the other hand, submits that her conduct in the litigation has not displaced the ordinary principle as to costs and, in fact, supports the making of an order that the plaintiff pay her costs. The defendant submits that the plaintiff’s concerns are based on suspicion and fail to meet the threshold required to merit any investigation; a point that she has supported with the provision of relevant affidavits, as well as her readiness to consent to the plaintiff’s proposed orders for discovery.
The defendant has not conducted herself in such a way as to displace the ordinary principle. Given that the plaintiff has been wholly unsuccessful, and irrespective of whether his actions were reasonable in complying with Court directions and adhering to his costs obligations under the Civil Procedure Act, it would be fair and appropriate for costs to follow the event in this proceeding. There is nothing out of the ordinary regarding the circumstances in this case to justify ordering otherwise. Therefore, it is just and reasonable for the costs incurred by the defendant to be reimbursed by the party who caused her to incur the liability.
Orders
The Court will make the following orders:
(a) The plaintiff pay the defendant’s costs of and incidental to the proceeding on a standard basis to be taxed in default of agreement; and
(b) The plaintiff bear his own costs of and incidental to the proceeding personally.
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