Re Estates of Chapman; Chapman v Chapman
[2022] VSC 368
•29 June 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TESTATORS FAMILY MAINTENANCE LIST
S ECI 2021 01938
IN THE MATTER of Part IV of the Administration and Probate Act 1958(Vic)
-and-
IN THE MATTER of the will and estate of ELAINE MARGARET CHAPMAN, deceased
| DANIEL CHAPMAN (who brings this proceeding by his administrator, State Trustees Limited) | Plaintiff |
| v | |
| BRENDAN ANTHONY CHAPMAN (who is sued as the executor of the will and estate of Elaine Margaret Chapman, deceased) | Defendant |
-AND-
S ECI 2021 01956
IN THE MATTER of Part IV of the Administration and Probate Act 1958(Vic)
-and-
IN THE MATTER of the will and estate of JAMES JOSEPH CHAPMAN, deceased
| DANIEL CHAPMAN (who brings this proceeding by his administrator, State Trustees Limited) | Plaintiff |
| v | |
| BRENDAN ANTHONY CHAPMAN (who is sued as the executor of the will and estate of Elaine Margaret Chapman, deceased) | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 29 June 2022 |
CASE MAY BE CITED AS: | Re Estates of Chapman; Chapman v Chapman |
MEDIUM NEUTRAL CITATION: | [2022] VSC 368 |
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FAMILY PROVISION – Where plaintiff under a disability – Where plaintiff, by his administrator, seeks further provision from estates of parents – Where proceedings compromised – Whether compromise should be approved – Whether administrator or Senior Master should manage settlement sum – Administration and Probate Act 1958 (Vic), ss 91, 99 – Guardianship and Administration Act 2019 (Vic), s 179 – Diver v Diver (2007) 16 VR 318 – Blackburn v Pearl Foods Pty Ltd [2008] VSC 334.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | State Trustees Limited | |
| For the Defendant | Mahons with Yuncken & Yuncken |
HER HONOUR:
Introduction
Elaine Margaret Chapman died on 22 April 2020 (‘Elaine’). Her husband, James Joseph Chapman, died on 7 May 2020 (‘James’). Elaine and James were survived by their three adult children: Daniel Chapman (‘Daniel’), Brendan Anthony Chapman (‘Brendan’) and Mark Chapman (‘Mark’).
Daniel is a person under a legal disability and State Trustees Limited (‘STL’) acts as his administrator by order of the Victorian Civil and Administrative Tribunal (‘VCAT’), most recently dated 30 August 2021. Daniel is aged 53 years, is single and has no children.
The parents’ wills
By her will dated 27 November 2007, Elaine appointed Brendan as her executor and trustee. By his will dated 6 June 2018, James appointed Brendan as his executor and trustee.
As James failed to survive Elaine by 30 days, Elaine’s will provided that her estate be divided equally into three separate trusts to be established on the terms set out in her will. Each child is the ‘designated person’ and ‘appointor’ of a trust, save that STL is the appointor of the trust of which Daniel is the ‘designated person.’ By the will, the appointor has the power to replace the trustee. The beneficiaries of each trust are the designated person, the designated person’s children and remoter descendants, the spouses of such beneficiaries, the siblings of the designated person and the siblings’ descendants. The trustee of each trust has a discretionary power to advance capital and income. The trusts vest in 80 years minus 91 days from the death of Elaine or an earlier date decided by the trustee, with the consent of the appointor.
As Elaine predeceased James, James’ will has a similar effect, dividing the estate, after distribution of personal chattels to the three children, into three trusts, one for each of the children. However, the beneficiaries of the trusts created by James’ will do not include siblings or siblings’ descendants. Daniel, unless he has a spouse or children , is the sole beneficiary of the trust created for him by James’ will. Further, Brendan is the appointor of Daniel’s trust, as well as the initial trustee due to his appointment as executor. The vesting date is 75 years from the date of James’ death or such earlier date as specified by the trustee.
Assets of the estates
On 9 November 2020 probate of each will was granted to Brendan. According to the inventories of assets and liabilities, Elaine’s estate was valued at $351,341.80 and James’ estate at $919,628.11.
The assets of the two estates have been called in and, as at 15 February 2022, Brendan’s solicitors hold an amount of $855,855.75 on trust for James’ estate and $271,784.25 on trust for Elaine’s estate.
Daniel, Brendan and Mark have each received an interim distribution of $30,000. The distribution of this amount as between the estates is not specified, although it appears that Elaine’s estate has borne the bulk of the distribution.
Plaintiff’s Part IV Proceedings
On 7 June 2021 Daniel, by his administrator STL, issued proceedings against both estates seeking further provision pursuant to Part IV of the Administration and Probate Act 1958 (Vic) (‘the Act’).
Proposed compromise
By terms of settlement dated 24 February 2022 (‘the terms’) between Daniel (by his administrator, STL), Brendan and Mark, the claims by Daniel in the proceedings were compromised, subject to the approval of the Court, on the basis that Daniel, in effect, would receive personally the same amount that was left to him via the trusts under his parents’ wills, to be paid to STL as his administrator (‘the compromise’).
The terms specify each of the parties’ legal costs and how they are to be borne across the estates as follows:
·costs of $40,000 for Brendan, with $19,516.22 paid from Elaine’s estate and $20,483.78 paid from James’ estate;
·costs of $10,000 for Mark, with the whole amount paid from Elaine’s estate;
·costs of $29,750 for Daniel, with the whole amount paid from Elaine’s estate; and
·costs of $4,500 for the mediator’s fee, with the amount paid as to 50 per cent from each estate.
Other unidentified estate expenses are listed as $4,200 in Elaine’s estate and $9,200 in James’ estate.
On the basis of these amounts, the compromise provides Daniel with approximately $358,080, or one third of the combined estates of $1,074,240, personally, rather than being held in the trusts created by his parents’ wills.
Application for approval of compromise
By summonses filed 31 March 2022 in the proceedings, Daniel, by his administrator STL, seeks approval of the proposed compromise of his claims for further provision against both estates, pursuant to Order 15 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (’the Rules’).
The application is supported by an affidavit of Raquel Esther Aviles affirmed 29 March 2022, which exhibits an opinion of counsel dated 22 March 2022. This affidavit crossreferences Ms Aviles’ affidavits affirmed 19 October 2021 and 1 February 2022 and the exhibits to those affidavits.
General principles
In considering an approval of a compromise, the role of the Court is protective, ensuring that the compromise is for the benefit of the person under a disability.[1] In the usual course, it is relevant to consider whether there is a likelihood of a better outcome at trial.[2] This is achieved without the need for any significant investigation of the evidence.[3] Ultimately, the role of the Court is to exercise its independent judgment on the question of whether the proposed compromise should be approved,[4] in line with the applicable principles. As the Court is not standing in the shoes of the legal practitioners for the moving party, it does not have full knowledge of the dispute and the evidence is undeveloped and untested.[5] In that regard, the Court relies on the legal practitioners for the moving party to discharge their duty of providing a comprehensive advice, including the structure of any proposed compromise.
[1]Elderfield v Transport Accident Commission [2010] VSC 116, [16]-[17] (Robson J), citing Gillespie v Alperstein [1964] VR 749, 751 (Gillard J) and Fisher v Marin [2008] NSWSC 1357, [29] (Rothman J).
[2]Rockman v IPR Nominees Pty Ltd (No 2) [2018] VSC 270, [64] (McMillan J).
[3]Smith v Whittaker & Ors [2016] VSC 287, [37(h)] (Derham AsJ), citing Bartlett v Coomber [2008] NSWCA 100, [72] (Hodgson JA); Morrison v Abbott [2012] NSWSC 320, [82] (Hallen AsJ).
[4]Re Simcocks [2019] VSC 62, [17] (McMillan J), citing Fairhurst (bht NSW Trustee and Guardian) v Fairhurst[2012] NSWSC 388, [37] (Hallen AsJ).
[5]Smith v Whittaker & Ors (n 3) [37(h)].
Consideration
Both of Daniel’s proceedings were issued out of time by approximately one month. The defendant agreed to an extension of time for the proceedings. In considering the approval of the compromise, the fact that the plaintiff was only out of time for a period of about one month and that the parties consent to the resolution of the proceedings, it is appropriate that the time for Daniel to issue the proceedings be extended.
Counsel’s opinion provides a well reasoned consideration of the basis for the Court to approve the compromise. In substance, the compromise is for Daniel to receive personally the same amount of provision that was left for him in trusts under his parents’ wills.
Counsel considers that the form of the provision for Daniel under his parents’ wills is ‘inappropriate’ for two main reasons. First, the trustees of the trusts would have an ‘absolute discretion’ and Daniel would have to go ‘cap in hand’ for funds, and the decisions made by the trustees would be ‘effectively unreviewable’. Secondly, counsel’s view is that in ‘every decision’ the trustees would need to have ‘regard for the remainder interests, as well as Daniel’, as if such ‘remainder interests’ do have some capacity to review trustee’s decisions.
The trusts created by the parents’ wills cannot be considered as standard form family discretionary trusts with an open-ended and large class of discretionary objects. Daniel is the only current beneficiary of the trust created for him by James’ will.[6] As any exercise of discretion must be undertaken in good faith, upon real and genuine consideration and in accordance with the purposes for which the discretion was conferred,[7] if it were considered that an exercise of discretion did not benefit Daniel, either by immediate distribution or proper accumulation for his future needs, it is difficult to see how any trustee could resist a ‘review’ of such a decision. While Daniel is not the sole beneficiary of the trust created for him by Elaine’s will, as his two siblings and their descendants are included, the role of STL as appointor provides a powerful moderation to the unfettered discretion of the trustee to distribution among this larger class of beneficiaries. Indeed, STL could appoint itself a trustee in the event that there are concerns as to the exercise of discretion.[8]
[6]STL provided evidence that Daniel is single, but was silent as to whether he has children.
[7]Karger v Paul [1984] VR 161 (McGarvie J).
[8]Trustee Act 1958 (Vic) s 41(1).
Further, there is no ‘remainder interest’ in either of the trusts, in the sense of a fixed right to capital on termination. The potential objects might take on vesting in some 75 or 80 years, if the trusts have not vested or terminated from lack of funds beforehand. However, in such circumstances, there is no obligation on the trustees to consider such potential objects on vesting in any current decision taken in the administration of the trusts, other than a decision as to whether to vest early. If the trustees were to consider early vesting, then Elaine’s will requires the consent of STL as the appointor, and Daniel is presently the only possible beneficiary on vesting of the trust created for him by James’ will. Unlike a trust conferring a mere life interest where a trustee must protect the interests of capital beneficiaries or remainder interests as well as any income beneficiary or life tenant, the current trusts under the parents’ wills require consideration of only the current beneficiaries regarding any distributions and in respect to all decisions in the administration of the trusts.
It is likely that there are independent reasons why the form of the provision under the parents’ wills may not provide adequately for Daniel’s maintenance and support. It may be administratively burdensome and incur additional costs to hold the relatively small sums in two trusts for him when compared to him receiving the funds absolutely, where they can also be pooled with his personal funds. Counsel describes this split as ‘inefficient’. On the other hand, there may be flexibility, taxation or other advantages or protective benefits[9] where funds are held for Daniel by a trustee, which would be lost by removing the trust structure from the one third of the estates that passes to him by his parents’ wills. As Daniel’s administrator, STL is well placed to discuss the financial benefits and disadvantages of retaining or removing the trust structure created by the parents’ wills. As to the form of provision sought by Daniel’s legal practitioners, they must be satisfied as to its suitability, taking into account Daniel’s financial position prior to entering the compromise. In reliance on Daniel’s practitioners in this regard, and although it is largely missing from the material in support, the Court will approve the payment of one third of the estates to Daniel personally, according to the general principles and upon it reaching satisfaction that the jurisdiction to make an order under Part IV of the Act is enlivened.[10].
Future management of the funds
[9]See, for example, Richard v AXA Trustees Ltd [2000] VSC 341 (Eames J), particularly [32], [35], [36].
[10]Smith v Whittaker & Ors (n 3) [37(g)], citing Morrison v Abbott [2012] NSWSC 320, [76]–[77] (Hallen AsJ), in turn citing Hore v Perpetual Trustee Co Ltd (Supreme Court of New South Wales, Windeyer J, 8 June 1995) 11-12 and Schaechtele v Schaechtele[2008] WASC 148, [18] (Le Miere J).
An approval of compromise requires some consideration of the future administration of funds or assets to be held for a person under disability. Often, aspects of the compromise, such as provision of a residence, protective trusts or special disability trusts are relevant to quantum. Where provision to be ordered is not liable to dissipation or is targeted to the needs of the plaintiff, the Court may confidently approve provision that might otherwise risk being insufficient.
Different considerations arise where a proposed compromise provides for a payment of money, transfer of assets or continued administration within an estate. Here, what is proposed is payment of a sum of money to Daniel, in lieu of retaining his rights as a beneficiary of trusts over the same assets. In all cases where there will be payment of money to an adult person under a legal disability, that money must be paid into Court and, unless the Court otherwise orders, be paid out to an administrator, if any. In addition to the power to grant or withhold approval of a compromise, the Court is not limited to making the exact orders sought by the parties and it also has the discretion to order that the money remain in Court and not be paid out to the administrator of the plaintiff.[11]
[11]Guardianship and Administration Act 2019 (Vic) s 179(3)(b); Diver v Diver (2007) 16 VR 318, 326 [37]-[38] (Hargrave J).
In respect to the future management of the funds to be paid to Daniel by the compromise, if approved, counsel states:
In my opinion, this is not a situation where the settlement sum should be paid and held in the Court Fund, as under the ‘general rule’[12] the money should be paid out to STL in its capacity as Daniel’s administrator. STL is well credentialed and already under the appropriate duties. Further, it is in Daniel’s best financial interests that the whole of his financial affairs can be confidently and transparently managed in accordance with the Guardianship and Administration Act 1986 by a single entity and not subject to the uncertainties that would attend the administrator going ‘cap in hand’ to Funds In Court in the future. This is analogous to the basis of the claim for further provision from the estates and similar reasoning must apply when considering Daniel’s best interests.
[12]Counsel’s footnote in the original states: ’See Diver v Diver (2007) 16 VR 318; [2007] VSC 146 at [58]-[59]; s 179(3) Guardianship and Administration Act 2019.’
Although the Senior Master is not bound by the Guardianship and Administration Act 2019 (Vic),[13] all funds paid into Court are managed confidently and transparently. The Senior Master is assisted by an administrative division of the Court, being the Funds in Court office (‘the FIC’), which provides legal, investment and beneficiary services and administrative support to the Senior Master and the beneficiaries of the FIC.[14] It is incorrect and inappropriate to describe an application by or for a beneficiary of the Court for release of funds held for that beneficiary as going ‘cap in hand’ to the FIC. Such a description suggests submissiveness or powerlessness on the part of an applicant. It is completely inapt to describe such interactions between the staff of the FIC and any of the beneficiaries of the Court in this manner. Nor is it accurate to compare the position of a mere discretionary object of a family discretionary trust to a beneficiary of the Court, who has an individual amount of funds administered for their sole benefit by the Senior Master.
[13]The Senior Master’s powers are set out in the Supreme Court Act 1986 (Vic), among other legislative and subordinate instruments, as well as arising in the inherent jurisdiction of the Court. See also Re Erdogan’s Application; Erdogan v Ekici [2012] VSC 256, [29]–[35] (Dixon J).
[14]See the FIC website at:
In approvals of compromises involving deceased estates, generally the Court will order that funds be paid out to an administrator, if one has been appointed.[15] However, where the circumstances of a particular case justify it, the Court may, in the exercise of its discretion, depart from this general rule.[16] Each case will depend on its own facts, and the key consideration is what is in the best interests of the person under a disability.[17]
[15]Diver v Diver (n 11), 330 [51].
[16]Ibid.
[17]Ibid.
In Diver v Diver (‘Diver’),[18] Hargrave J upheld an appeal from an approval of compromise of a Part IV claim by a Master who had ordered that certain estate funds be retained in Court, rather than paid out to the administrator of the plaintiff, which was a trustee company. While the appeal was successful, the discretion of the Court to depart from the general rule created by s 179 of the Guardianship and Administration Act was confirmed,[19] that is, the discretion must be exercised according to the facts and circumstances of each case.[20] His Honour set out a number of matters as a ‘guide’ for future cases when considering whether or not to apply the general rule:
(1)The court should consider the credentials of the administrator. Where the administrator is a person who is of dubious character, or lacks the experience to manage a fund of the size involved, there may be good reasons to make a contrary order under s 66(3)(b) of the [Guardianship and Administration Act 1986 (Vic)]. However, where the administrator is a respectable professional administrator, as in this case, and there is no evidence of partiality or risk of mismanagement, the court should ordinarily decline to make any contrary order departing from the general rule specified by Parliament.
(2)As part of considering the credentials of the administrator, the court should consider whether the administrator is likely to manage the funds in a prudent and efficient way which is designed to produce the best return consistent with avoiding undue risks. I do not think that it is necessary, or an efficient use of court time, for there to be a detailed examination in every case of the likely returns which will result from investment by the administrator on the one hand and the Senior Master on the other. Provided that the administrator is sufficiently credentialed, and the court is satisfied that the administrator is likely to act prudently and efficiently, the court should ordinarily decline to depart from the general rule.
(3)The fact that an administrator will charge, with the approval of the tribunal, fees and commissions which are higher than those which would be charged by the Senior Master’s (Funds In Court) Office in administering the settlement fund is not to be given too much weight. Parliament has chosen to permit administrators, in particular professional administrators, to be appointed and charge fees approved by the tribunal. Unless there is something exceptional about the amount of fees approved by the tribunal, it is not for the court exercising a discretion under s 66(3) of the [Guardianship and Administration Act 1986 (Vic)] to question the decision of the tribunal on that issue. However, the amount of fees charged, and the effect which this may have on the financial returns, including capital appreciation, may be a relevant factor in those cases where the credentials of the administrator are in doubt.
(4)The mere fact that the administrator will charge fees and commissions is not, by itself, sufficient to justify a finding that there is a conflict of interest between the interests of the administrator and the interests of the disabled person. This is recognised by s 47A of the [Guardianship and Administration Act 1986 (Vic)].
(5)The court should consider the wishes of the disabled person and his or her carers and relatives. Their views will be of particular weight where, as here, a special relationship has developed between the plaintiff’s mother, and principal carer, and representatives of the administrator.[21]
[18](2007) 16 VR 318.
[19]I note that Diver involved analysis of the predecessor to s 179 of the Guardianship and Administration Act 2019 (Vic), being s 66 of the Guardianship and Administration Act 1986 (Vic). The sections are analogous.
[20]Diver v Diver (n 11), 331 [59]. See also Blackburn v Pearl Foods Pty Ltd [2008] VSC 334, [27] (Hargrave J).
[21]Ibid, 331-332 [59].
Consideration of relevant guidelines as to payment of funds
Credentials
The credentials and experience of the proposed fund manager are relevant when choosing between a person of ‘dubious character’ or a person lacking experience with management of a fund of the size involved on the one hand, and a ‘respectable professional administrator’ on the other hand. STL’s position, namely that it is ‘well credentialed’ to administer Daniel’s inheritance, is not a significant point when the alternative is the Court. Both STL and the Court have a depth of experience in managing funds on behalf of others. It is unlikely that either STL or the Court would act with partiality, mismanage funds or invest funds poorly.
Commissions, fees and charges
In Diver, Hargrave J did not consider the fact that a professional administrator might charge higher fees than those incurred during the administration of funds by the Court to be of great weight or high relevance. However, in Blackburn v Pearl Foods Pty Ltd (‘Blackburn’),[22] Hargrave J dismissed another appeal by an administrator against an order made by a Master retaining funds in Court following approval of compromise. The key point in Blackburn was the burden of future administration costs. Blackburn involved a personal injuries claim, not a deceased estate. The cost of administration of personal injuries compensation for a person who has lost capacity to administer their own financial affairs as a result of negligence is compensable.[23] This concept is best explained by a reference recounted by the High Court in Gray v Richards:[24]
The primary judge explained the logic of the appellant's claim by reference to the following illustration:
“[I]f the cost of managing a damages award of $10m over the relevant term were, for example, $2m (20 per cent of the corpus), the total verdict would be $12m, to be received today and managed over time. A plaintiff under incapacity would have no better ability to manage the additional $2m than the initial $10m. It follows that the award of a component for fund management would itself give rise to future management expenses in the order of $400,000 (assuming fees charged on that amount at the same rate of 20 per cent). The additional $400,000 in turn would cost a further $80,000 to manage, which would cost a further $16,000, and so on.”
[22][2008] VSC 334.
[23]Willett v Futcher (2005) 221 CLR 627; Gray v Richards (2014) 253 CLR 660.
[24](2014) 253 CLR 660, 669 (French CJ, Hayne, Bell, Gageler and Keane JJ).
In Blackburn, as it was anticipated that the personal injuries sum would be administered by the Court, no component for fund administration was included in the settlement sum. In these circumstances, the potential impact on the plaintiff of the cost of administration by the administrator was a ‘powerful’ discretionary consideration for the dismissal of the administrator’s appeal and for the retention of the compromise sum in Court.[25] Hargrave J re-emphasised that each case depends on its facts, and the matters to be considered include but are not limited to the matters in the guidelines set out in Diver.[26] His Honour confirmed that while there must be something about the circumstances of a particular case to justify the Court, in the exercise of its discretion, departing from the general rule to pay funds out to administrators, special or exceptional circumstances do not need to be shown.[27]
[25]Blackburn v Pearl Foods Pty Ltd (n 20), [19].
[26]Ibid, [27].
[27]Ibid, [11].
Funds received from a deceased estate do not include ‘compensation’ nor any additional quantum for the cost of administration. The lack of any component of administration costs in the settlement in Blackburn was described by Hargrave J as the ‘decisive discretionary factor’.[28] STL has exhibited the VCAT order appointing it as administrator, which sets out its current commission. STL has not filed any information that provides a clear comparison of its other fees and charges, as well as its commissions, against the potential cost of administration by the FIC. Nonetheless, it is clear that if the cost to Daniel of STL’s administration of his inheritance is higher than he would incur as a beneficiary of the Court, it will have an adverse financial impact on the quantum of his settlement funds. Given the absence of relevant information, the Court is unable to consider Daniel’s best interests in this regard.
Wishes
[28]Ibid, [24].
There is no evidence of Daniel’s wishes, or of any ‘special relationship’[29] between him, any of his family or carers and STL. The interactions and services Daniel will receive from the FIC may be comparable to the services and human support STL can provide to Daniel.
Conclusion regarding future administration
[29]Diver v Diver (n 11), 332 [59](5), 333 [63].
While counsel is critical of the FIC, no evidence was provided to support any relative benefit to Daniel in STL administering the provision he will recieve from his parents’ estates. Yet it must have been the position that STL considered Daniel’s best interests in his future financial management prior to resolving his claim, taking into account the likely costs of administration, returns, best structure and available options. In the absence of a proper and appropriate consideration from STL to support payment of Daniel’s inheritance to STL, the Court will err on the side of caution such that the funds be held in Court. To do otherwise would risk Daniel’s inheritance being eroded by possibly higher administration costs compared with those which will arise from his funds being held in Court.
If STL elects, it may apply for an order for payment out of Court, on production of evidence that establishes Daniel would be financially or personally better served by his funds being administered by STL as administrator. However, the costs of such an application ought be borne by STL.
In any event, STL may make a future application to the Senior Master on proper evidence for a partial payment out, for example, for a contribution to Daniel’s superannuation if it is established to be in his best interests, or for any other worthwhile purpose. Day-to-day payments can be made from the Court to STL for Daniel or directly to a service provider.
On the other hand, payment out to the administrator pursuant to s 179(3) of the Guardianship and Administration Act is ‘once and for all’. The flexibility of an order for retention of funds in Court over time, with capacity to adapt to Daniel’s future circumstances, is an additional discretionary factor in favour of rejecting STL’s application at this time.
It is also noted that STL receives pension payments for Daniel, holds capital investments for him in its common funds and has control of his modest superannuation account. Daniel also has significant entitlements under the National Disability Insurance Scheme, although the evidence does not reveal who administers these funds for him. There appears to be no reason why the inheritance he will receive from his parents’ estates as a result of the compromise cannot be well managed in conjunction with these other agencies by the Senior Master.
Costs and expenses of the proceedings
As observed above, the expenses listed as $4,200 in Elaine’s estate and $9,200 in James’ estate require identification.
Daniel’s costs are just under $30,000, although his costs affidavit gave an estimate of $25,000.
However, in the affidavit concerning the financial position of the estates, Brendan’s legal fees, including administration costs, were expected to total $53,400. This is broken down as $40,000 in legal fees for the Part IV proceedings which includes the mediator’s fee, $9,200 in administration costs in James’ estate and $4,200 in Elaine’s estate. In the compromise, Brendan’s legal fees are stated as $40,000 plus the $4,500 for the mediator’s fee.
Mark also incurred $10,000 in costs. If Mark were separately represented, Brendan’s legal representatives may struggle to justify Brendan’s costs out of the estate, as once all beneficiaries are separately represented, Brendan can only be acting in his own interests in the litigation.
These amounts result in a grand total of nearly $85,000 for legal costs. This amount is on the higher side considering all that has happened is that Daniel’s ‘share’ of the estates will now be held for him by the Senior Master, instead of on trust. There was no real complexity in the litigation and although it involved two estates, there should have been significant savings to the concurrent procedural listings, evidence filings, mediations and applications for approval of the two claims. Essentially Daniel and his siblings leave the litigation with what they arrived with, save that Daniel’s decision-maker has changed, and yet their parents’ estates are substantially reduced, to the financial disadvantage of each of them.
In these circumstances, the Court is concerned that the quantum of the costs payable by Daniel and his siblings may not be reasonable and proportionate to the issues and amount in dispute. The practitioners are to forward details of their costs and provide reasons as to why the costs are said to be reasonable and proportionate in the circumstances. The Court would also be assisted to have copies of relevant costs agreements, costs disclosures and counsel’s fee slips. In the event that the Court is not satisfied with the responses from the practitioners, the costs may be referred to the Costs Court, pursuant to r 63.65 of the Rules.
Orders
The Court orders as follows:
(a) In the event that STL seeks to establish that the plaintiff would be financially or personally better served by his funds being transferred to STL as administrator, STL is to file any affidavits on which it seeks to rely by 29 July 2022.
(b) The compromise be approved, save that the provision for the plaintiff be paid to the Senior Master and held in Court for the plaintiff’s benefit, subject to further order.
(c) The costs of the proceedings be reserved.
(d) On or before 29 July 2022, the practitioners file details of their costs of the proceedings and any submissions they seek to rely upon as to whether the costs are reasonable and proportionate in the circumstances.
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