Re Connock (No 2)

[2021] VSC 122

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY AND PROBATE LIST

S ECI 2019 04583

BARBARA FAYE CONNOCK	Plaintiff
v
RICHARD ANTHONY CONNOCK (in his capacity as executor of the estate of Dr Richard Hugh Shephard Connock)	Defendant

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JUDGE:	Moore J
WHERE HELD:	Melbourne
DATE OF HEARING:	4 March 2021
DATE OF RULING:	17 March 2021
CASE MAY BE CITED AS:	Re Connock (No 2)
MEDIUM NEUTRAL CITATION:	[2021] VSC 122

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COSTS – Estate litigation – Application for the removal of defendant executor – Application unsuccessful – Where the substantive issue in dispute was whether the Court should exercise discretion to remove the executor – Where executor successfully defended the application – Where there is no good reason to depart from usual order as to costs – Costs follow the event – Supreme Court Act 1986, s 24 – Supreme Court (General Civil Procedure) Rules 2015, O 63 – Northern Territory v Sangare (2019) 265 CLR 164, followed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	M D Tehan	Hall & Wilcox
For the Defendant	C Gunson SC with L Hogan	John Keating & Associates

HIS HONOUR:

1. I delivered judgment in this proceeding on 18 February 2021, dismissing an application brought by the plaintiff, Faye, to remove the defendant, Richard, as executor of the estate of Dr Richard Hugh Shephard Connock.[1] This ruling concerns the question of the costs of the proceeding. In these reasons, I use the abbreviations as defined in my reasons for judgment dated 18 February 2021.

   [1]Re Connock [2021] VSC 64.

Background

1. Faye’s unsuccessful application centred on Richard’s position of conflict. As executor, Richard has a duty to give effect to the terms of the will of the deceased. However, Richard, in his capacity as executor, has brought an estoppel proceeding against Faye, seeking a declaration that Faye holds certain proprietary interests bequeathed by the will on trust for her own benefit and maintenance during the course of her lifetime, but, on her death, for the benefit equally of the deceased’s children. These declarations would be contrary to the terms of the will, which makes no provision for any property or assets to revert to the deceased’s children after Faye’s death. Richard stands to personally benefit from these declarations.

1. I held that, although Richard is in a position of conflict, the welfare of the beneficiaries of the estate did not warrant his removal as executor.

The parties’ positions on costs

1. Faye submits that the parties should bear their own costs of the proceeding. In the event that the Court is not minded to make such an order, Faye submits that she should pay 50% of Richard’s costs on a standard basis.

1. Richard submits that costs should follow the event, and Faye should pay his costs of the proceeding.

Legal principles

1. The Court’s jurisdiction in relation to costs is conferred by s 24(1) of the Supreme Court Act 1986. The Court’s discretion in relation to costs is to be exercised judicially and in accordance with Order 63 of the Supreme Court (General Civil Procedure) Rules 2015.

1. Recently, in Northern Territory v Sangare, the High Court stated that:

A guiding principle by reference to which the discretion is to be exercised — indeed, “one of the most, if not the most, important” principle — is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party. The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome.[2]

[2](2019) 256 CLR 164, 173 [25] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ).

Faye’s submissions

1. The primary basis for Faye’s position that the parties should bear their own costs was Richard’s failure to concede that there was a conflict between his duties as executor and his interest in the outcome of the estoppel proceeding, in circumstances where I found that the conflict was clear. It was submitted that the existence of a conflict was ‘a critical matter’ and ‘the subject of a significant amount of evidence, court time and submissions (both written and oral)’.

1. Faye submitted that, in the event that the Court is not minded to make an order that the parties bear their own costs, the Court should only order that she pay 50% of Richard’s costs. It was said that this would reflect the mixed success that Richard enjoyed on the issues that were the subject of the application, given that the application ‘divided along two issues: whether there was a conflict, and whether the Court’s discretion should be exercised in favour of removal’.

Consideration

1. Although the issue of whether there was a conflict between duty and interest was critical, and Richard did not concede that he was in a position of conflict, I reject Faye’s suggestion that this issue was the subject of significant evidence and submissions. The substantive issue in this proceeding was whether I should exercise my discretion to remove the executor. For this reason, I also reject Faye’s submission that Richard enjoyed only ‘mixed success’.

1. It is plain that Richard was wholly successful and Faye was unsuccessful in this proceeding. As McMillan J observed in Molnar v Butas (No 4), the usual costs principles apply to an application for the removal of an executor by a beneficiary.[3] There is no feature of this proceeding that warrants a departure from the principle that costs follow the event.

   [3][2018] VSC 165, [14].

1. Further, I accept Richard’s submission that making no order as to his costs, or ordering that Faye only pay 50% of his costs, would be unjust in the circumstances. Presumably, Richard would be entitled to an indemnification from the estate for his expenses, meaning that his costs of the proceeding would, at least partially, be borne by the residuary beneficiaries. They should not have to bear the costs of successfully defending Faye’s application, particularly in circumstances where they explicitly supported Richard in this proceeding.

1. I will order that Faye pay Richard’s costs of the proceeding on a standard basis, including the costs of Richard’s senior counsel certified at $660 per hour and $6,600 per day (GST inclusive), to be taxed if not agreed. The nature and complexity of the issues raised in the proceeding warranted the engagement of senior counsel; the certified fees are significantly less than scale.

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