Re Kuppert; Vella v Mattingley
[2019] VSC 68
•21 February 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S CI 2017 03463
IN THE MATTER of the will and estate of INGRID JUTTA KUPPERT, deceased
-and-
IN THE MATTER of s 34 of the Administration and Probate Act 1958 (Vic)
-and-
IN THE MATTER of ss 48 and 51 of the Trustee Act 1958 (Vic)
| JANETTE ISABEL VELLA and THOMAS JOHN WILLIAM TARRANT | Plaintiffs |
| v | |
| GRAHAM JOHN MATTINGLEY (by his litigation guardian BEVERLEY ANNE MATTINGLEY) | First Defendant |
| -and- | |
| ERICA HORSFIELD | Second Defendant |
---
JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 21 February 2019 |
CASE MAY BE CITED AS: | Re Kuppert; Vella & Anor v Mattingley & Anor |
MEDIUM NEUTRAL CITATION: | [2019] VSC 68 |
---
COSTS — Application to remove executor and trustee of estate of deceased — Whether costs reasonable and proportionate to issues in dispute — Costs fixed by the Court — Supreme Court Act 1986, s 24 — Civil Procedure Act 2010 —Supreme Court (General Civil Procedure Rules) 2015.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mahons with Yuncken & Yuncken Lawyers | |
| For the Defendants | Hunt McCullough Kollias & Co |
HER HONOUR:
Introduction
Ingrid Jutta Kuppert died on 17 August 2015. Probate of her will dated 5 August 1998 was granted to the first defendant on 29 January 2016.
In or around December 2016 or January 2017, but definitely by April 2017, the first defendant lost capacity.
By originating motion filed 28 August 2017, the plaintiffs sought the removal of the first plaintiff as executor and trustee of the estate of the deceased and other sundry orders. No relief was sought against the second defendant, who is the solicitor for the first defendant. The plaintiffs are the beneficiaries under the deceased’s will.
The plaintiffs’ removal application exhibited numerous deficiencies from its inception. Further queries and deficiencies arose thereafter such that the Court was unable to make orders removing the first defendant until 10 September 2018 when orders were also made appointing the plaintiffs as the administrators and trustees of the estate of the deceased in substitution for the first defendant and reserved the costs.
The Court required the parties to forward the quantum of the costs claimed for costs claimed from the estate of the deceased. In total, the combined amount for costs to be paid from the estate was $40,996.91 as follows:
(a) the plaintiffs claimed the amount of $19,250 (including GST), comprising professional fees of $4,511.21, disbursements of $1,946.48, GST of $493.12 and counsel’s fees of $12,299.97; and
(b) the first defendant claimed the amount of $31,782.66 (excluding GST), comprising $17,428 in legal fees, $14,300 in counsel’s fees, $54.66 in filing fees and GST.
On 11 December 2018, the Court made the following orders in respect of the costs of the proceeding:
(a) the costs of the plaintiffs of and incidental to the proceeding be fixed in the sum of $5,000 and be paid or retained from the estate of the deceased;
(b) the costs of the first defendant of and incidental to the proceeding be fixed in the sum of $2,000 and be paid or retained from the estate of the deceased;
(c) No order as to the costs of the second defendant
The parties were informed that, if required, written reasons would be provided to the parties. The defendants requested written reasons.
Background
The numerous deficiencies in the plaintiffs’ removal application meant that appearances were required by the parties on the first return date of the application on 22 September 2017. At that hearing, the deficiencies were raised with counsel for the parties. By email dated 2 November 2017 from the Court, the parties were reminded that no steps had been taken to remedy the deficiencies and reminded the parties of the issues to be addressed in respect of the application including:
(a) evidence that the first defendant had lost capacity;
(b) affidavits from the plaintiffs providing the usual undertakings pursuant to the Administration and Probate Act 1958;
(c) the appointment of a litigation guardian for the first defendant;
(d) supporting documentation as to why the second defendant had been added as a party when no relief was sought against her in the proceeding;
(e) providing a copy of the entire will of the deceased, as only one page had been exhibited to the affidavit of the first defendant;
(f) information on the position as to costs of the proceeding.
As no substantive responses had been received from the parties, follow up emails were sent by the Court to the parties on 30 November 2017 and 15 December 2017. On 18 December 2017, the solicitors for the plaintiffs provided an explanation for the delay, stating that the first defendant was being reassessed, ‘notwithstanding that all parties are in agreement the first defendant no longer has testamentary capacity’. On receipt of this information, the Court assumed the reference to ‘testamentary’ capacity was a typographical error, as it was the capacity of the first defendant to perform his duties as an executor and trustee that was in issue, not his testamentary capacity. Despite apparent agreement concerning the first defendant’s lack of capacity, the second defendant responded to the Court on 19 December 2017 that the proceeding should be dismissed. Such a submission was unsustainable in circumstances where the executor and trustee to be removed no longer had capacity.
On 21 December 2017, an affidavit of Dr Carmel Peavey, consultant psychiatrist, affirmed 22 November 2017 was filed by the plaintiffs. Dr Peavey’s report dated 11 April 2017 appeared to support a contention that the first plaintiff had not had capacity since at least March 2017. This report, as foreshadowed by the plaintiffs in their email dated 18 December 2017, was not satisfactory to establish the first defendant’s lack of capacity. The plaintiffs also filed affidavits of the required undertakings and an affidavit exhibiting a complete copy of the deceased’s will. As the issues of the capacity of the first defendant and the requirement for a litigation guardian remained outstanding, the proceeding was listed for directions on the Court's own motion on 9 February 2018.
On 7 February 2018, the second defendant’s firm filed notices of appearance on behalf of the first and second defendants. The second defendant also filed an affidavit sworn 6 February 2018, seeking to be appointed the first defendant’s litigation guardian, foreshadowing an application for executor’s commission, and outlining her role in the proceeding. The Court directed the second defendant to the requirements of Order 15 of the Supreme Court (General Civil Procedure) Rules 2015, as in the circumstances, she was not an appropriate person to be appointed the first defendant’s litigation guardian, and the proposed summons did not comply with the requirements of Order 15.
It was clear from the second defendant’s affidavit that the second defendant was aware the first defendant had lost capacity at some point prior to the commencement of plaintiffs’ application for removal filed on 29 August 2017. Despite this, the second defendant deposed that the first defendant had completed all executorial duties between 29 January 2016 and December 2017, the latter date being some months after the first defendant lost capacity. In addition, the second defendant’s purported appointment as trustee of the estate of the deceased in substitution for the first defendant pursuant to a ‘deed of retirement and appointment’ exhibited to her affidavit was not, prima facie, legally effective, whether under s 41 of the Trustee Act 1958 or otherwise, particularly as there is no power of appointment under the will.
At the hearing on 9 February 2018, the parties informed the Court that they agreed the first defendant lacked capacity, that a final medical would be provided, and the plaintiffs had filed affidavits giving the necessary undertakings. The parties were again informed by the Court that the first defendant required a litigation guardian. This appearance was wholly unnecessary, had the parties addressed the issues first raised by the Court at the hearing on 22 September 2017. The necessary documentation to appoint the first defendant’s attorney as his litigation guardian was subsequently filed by the second defendant on 13 February 2018.
Given the procedurally irregular and deficient manner in which the proceeding was conducted by the parties, the Court required them, amongst other things, to address the issue of wasted costs. Responses were received by the defendants and plaintiffs respectively on 27 and 28 February 2018.
On 1 March 2018, the final report addressing the first defendant’s capacity was filed by the second defendant, who deposed that the executor suffered a stroke and was admitted to the West Aged Psychiatric Inpatient Unit on 9 March 2017. The second defendant exhibited both the report of Dr Peavey dated 11 April 2017, and a report of Dr DKL Lyall dated 16 February 2018, who was described as the first defendant’s current treating doctor. By email dated 26 March 2018, the Court again raised the issue of wasted costs with the parties, informing the parties that only reasonable and proportionate costs would be allowed by the Court.
On 28 May 2018, the parties provided the Court with consent orders. The consent orders were ambiguous in several respects and failed to include the quantum of costs being allowed from the estate. In response to a request for the terms of settlement to be forwarded to the Court, on 4 June 2018 the parties responded that the consent orders embodied the ‘terms of settlement’. The deficiencies in the consent orders necessitated further correspondence to the parties seeking clarification of the settlement.
As stated, it was not until 10 September 2018 when final orders were made appointing the plaintiffs as the administrators and trustees of the estate of the deceased in substitution for the first defendant.
Consideration
The overarching purpose of the Civil Procedure Act 2010 (‘the CPA’) in relation to a civil proceeding is to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute. Pursuant to s 24 of the CPA, practitioners and parties must ensure that the costs of the proceeding are reasonable and proportionate. As stated in Yara Australia Pty Ltd v Oswal:
Section 24 adopts a flexible test. There is plainly no costs matrix or formula that can be applied in determining whether the parties have met their obligations. Rather, the court must weigh the legal costs expended against the complexity and importance of the issues and the amount in dispute, in order to determine whether the parties used reasonable endeavours to ensure those costs were proportionate.[1]
[1] (2013) 41 VR 302, 307 [13].
An application for the removal of an executor and trustee on the ground of lack of capacity is usually a straightforward application that is ordinarily capable of being considered and finalised on the papers. The documentation filed for the plaintiffs’ application was deficient in respect of many substantive issues and meant that appearances were required on 22 September 2017 and 9 February 2018. The February appearance was necessitated by the failure of the parties to remedy the deficiencies first raised by the court on 22 September 2017, and subsequently raised again in writing to the parties on 3 November 2017, 30 November 2017 and 15 December 2017 when no substantive response had been received.
Notwithstanding the deficiencies in the plaintiff’s application, the documents filed in the proceeding and the correspondence forwarded to the Court demonstrated that a significant cause for the quantum of the claimed costs and the delays was attributable to the second defendant, who at all relevant times, represented the first defendant. This conduct included the second defendant’s delays in conceding that the first defendant no longer had capacity, providing medical evidence as to the capacity of the first defendant and in filing documents to enable the appointment of a litigation guardian for the first defendant. Additional costs and delay were also caused by the second defendant initially filing an affidavit proposing herself as litigation guardian, and raising issues that were irrelevant to the proceeding, such as executor’s commission. These delays and issues necessitated an unnecessary appearance, resulted in the filing of unnecessary documents, and incurred unnecessary costs.
The quantum of costs made in the orders on 11 December 2018 were the costs assessed as reasonable and proportionate for the application for removal of an executor and trustee of an estate being done properly and dealt with on the papers.
---
0
0
0