Re Lapan; McMurray v Lapan (No 3)
[2018] VSC 321
•14 June 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S CI 2017 04217
| IN THE MATTER of the estate of NILA LAPAN, deceased |
| -and- |
| IN THE MATTER of an application pursuant to Order 53 of the Supreme Court (General Civil Procedure) Rules 2015 for recovery of land |
| -and- |
| IN THE MATTER of an application pursuant to rule 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 for directions in relation to the administration of the estate |
| LUCY (LUDMILA) MCMURRAY (as executor of the estate of the late NILA LAPAN, deceased) | Plaintiff |
| v | |
| STEFAN LAPAN | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 14 June 2018 |
CASE MAY BE CITED AS: | Re Lapan; McMurray v Lapan (No 3) |
MEDIUM NEUTRAL CITATION: | [2018] VSC 321 |
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COSTS — Where administration proceeding issued against defendant naming his litigation guardian in a separate proceeding — Where litigation guardian not appointed and did not consent to act in administration proceeding — Whether costs claimed by litigation guardian are reasonable and proportionate — Costs allowed in part.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms A Bartfeld | White & Mason Lawyers |
| Defendant in person | Not applicable | |
| For Richard John Kent | Mr J K Arthur | Aughtersons Lawyers |
HER HONOUR:
Introduction
The plaintiff is the administrator of the estate of Nila Lapan, who died on 9 October 2013 (‘the deceased’). The deceased is survived by her adult children, the plaintiff (‘Ms McMurray’) and the defendant (‘Mr Lapan’).
This proceeding (‘the administration proceeding’) was commenced by Ms McMurray as a result of Mr Lapan’s non-compliance with terms of settlement signed by the parties in a related proceeding where an application was made by Mr Lapan for a grant of probate of the deceased’s last will (‘the probate proceeding’).[1] In the probate proceeding, Mr Lapan was represented by his litigation guardian, Mr Richard Kent. The Court approved the compromise of the probate proceeding on 23 May 2017.[2]
[1]Proceeding number S PRB 2014 13730.
[2]The probate proceeding was resolved when the parties signed terms of settlement on 14 October 2016. Probate of the deceased’s penultimate will was subsequently granted to Ms McMurray on 26 July 2017.
The administration proceeding was served on Mr Kent’s solicitors, Aughtersons, on 20 October 2017. On 26 October 2017, Aughtersons wrote to Ms McMurray’s solicitors advising that the administration proceeding was irregular and improperly constituted because it named Mr Kent as Mr Lapan’s litigation guardian. This was when Ms McMurray was first informed that Mr Kent no longer acted as the litigation guardian for Mr Lapan. By letter dated 17 November 2017, Ms McMurray’s solicitors advised Aughtersons that the administration proceeding would be amended, including the remedy for relief, to remove any references to Mr Kent and noted that Mr Kent agreed to attend Court on 8 December 2017 as a friend of the Court. On 8 December 2017, leave was granted to Ms McMurray to amend her originating motion. On 20 December 2017, Ms McMurray filed an amended originating motion whereby the heading to the proceeding was amended by deleting the words ‘(by his litigation guardian Richard John Kent)’ after the name of Mr Lapan and by deleting the order seeking costs against the litigation guardian.
On 28 February 2018, an order was made in the administration proceeding that Mr Lapan personally pay the litigation guardian’s costs and the litigation guardian’s legal costs incurred as a result of Mr Lapan’s non-compliance with the terms of settlement, such sum to be adjusted against his entitlement from the deceased’s estate.[3]
[3] Re Lapan: McMurray v Lapan [2018] VSC 104 (7 March 2018).
On 12 April 2018, the Court published reasons for ruling in respect of various applications for costs incurred as a result of Mr Lapan’s non-compliance with the terms of settlement, including an application made by Mr Kent seeking that Ms McMurray pay his costs on an indemnity basis. In rejecting the latter application, the Court stated:
… Mr Kent’s conduct was such that it was reasonable for Ms McMurray and her solicitors to assume that Mr Kent maintained his consent to act as Mr Lapan’s litigation guardian in the context of estate matters. Mr Kent took no steps to alter that perception. As soon as Ms McMurray was made aware that Mr Kent had not consented to an appointment as Mr Lapan’s litigation guardian in the administration proceeding, she agreed to amend the administration proceeding. In such circumstances, it is unreasonable for Ms McMurray to pay the claimed costs of Mr Kent.
Mr Kent’s solicitors should have notified Ms McMurray’s solicitors that he would consent to the amendment of the title of the administration proceeding. Instead, Mr Kent retained counsel to appear to seek the costs estimated in excess of $3,000 from Ms McMurray. It was unreasonable for Mr Kent to retain counsel in the circumstances and, in any event, the estimated amount is unreasonable.[4]
As the Court determined that Mr Kent’s estimated costs were unreasonable, he was required to provide details of his costs incurred as Mr Lapan’s litigation guardian since the date of approval of the compromise.
[4]Re Lapan: McMurray v Lapan (No 2) [2018] VSC 173 (12 April 2018) [25]-[26].
Mr Kent’s claim for his costs
Mr Kent claims costs totalling the sum of $10,829.15 for acting as Mr Lapan’s litigation guardian for the period following the approval of the compromise, detailed as follows:
(a) professional fees for the period 1 June 2017 to 17 January 2018 of $5,529.15 (incl GST) for work undertaken by Aughtersons that include perusing correspondence and other documentation, drafting correspondence and court documents and telephone attendances; and
(b) disbursements amounting to $5,300 (incl GST) being counsel’s fees for advice concerning the administration proceeding.
Counsel’s first account is dated 1 November 2017 for $2,000 for work done between 23 October 2017 and 26 October 2017. The description of the work is ‘Brief to advise, confer & draw letter’. That work has been itemised as including counsel’s telephone conferences with his instructing solicitor, reading, advising and preparing a draft letter.
Counsel’s second account is dated 8 December 2017 for $3,300 for work done between 23 November 2017 and 8 December 2017. The description of the work is ‘Brief to Counsel to appear, settle letters and Affidavit and draw outline’. The work has been itemised as including counsel’s telephone conference with his instructing solicitor, settling letters and an affidavit, reading, drawing submissions and draft orders and appearing at Court.
Mr Kent submits that he was justified in seeking counsel’s advice as he was named in the administration proceeding as Mr Lapan’s litigation guardian when he had not been appointed as such and also as Ms McMurray sought costs against him personally.
Consideration
The Court determined that the correspondence and the actions taken by Mr Kent and Aughtersons after the approval of the compromise on 23 May 2017 were consistent with Mr Kent continuing to act as Mr Lapan’s litigation guardian and that Mr Lapan did not object to Mr Kent’s continued involvement in the estate matters. The Court concluded that it was reasonable for Ms McMurray and her solicitors to assume that Mr Kent maintained his consent to act as Mr Lapan’s litigation guardian in the context of estate matters.
By letter dated 17 November 2017, Ms McMurray’s solicitors sought details of Mr Kent’s costs thrown away in the sum of $2,798 as claimed by Aughtersons. Aughtersons forwarded tax invoices detailing their professional costs of $798.00 (incl GST) and counsel’s fees of $2,000. Aughtersons’ professional costs comprised perusing Ms McMurray’s affidavit and exhibits on 23 October 2017, a telephone discussion with counsel and then with Mr Kent, both on 24 October 2017, and ‘perusing draft letter from counsel, various emails, minor amendments, emails to other side’ on 26 October 2017.
In the description of the professional fees of $5,529.15 now claimed by Aughtersons for the period 23 October 2017 to 13 November 2017, the work undertaken by Aughtersons is costed at $294 (excl GST). Mr Kent is a partner in the law firm, Mackinnon Jacobs Lawyers. Aughtersons acted for him in his role as Mr Lapan’s litigation guardian. Both Mr Kent and Aughtersons should have consulted the relevant rule to ascertain the appropriate course in the circumstances. It is not a complex point and is within the capability of an experienced lawyer. Once Aughtersons were notified that the proceeding would be rectified to remove any references to Mr Kent, there was no need for any further costs to be incurred in respect of the issue.
In terms of Mr Kent’s costs, it is appropriate to allow the costs of perusing Ms McMurray’s affidavit and exhibits and the reasonable communications between Aughtersons and Ms McMurray’s solicitors. It was unnecessary to retain counsel for advice or to instruct counsel to draw and settle letters in the circumstances.
In addition to the claimed costs of $294 (excl GST) incurred in respect of the issue in the period from 23 October 2017 to 13 November 2017, it is appropriate to allow an additional $462 (excl GST) in professional costs for the work that should have been undertaken by Aughtersons, instead of counsel, in consulting the relevant rules with respect to considering Mr Kent’s position before receipt of the letter dated 17 November 2017.[5]
[5]Based on the hourly rate in the costs agreement between Mr Kent and Aughtersons.
The professional fees of $5,529.15 also includes costs for the period 1 June 2017 to 11 October 2017. The description of the items within that time frame seem to be referrable to the costs associated with Mr Kent’s role as litigation guardian in relation to the terms of settlement and, subject to any objection to the quantum of those costs, appear to be costs payable from Mr Lapan’s share of the estate.
Orders
In respect of Mr Kent’s costs claimed in the amount of $10,829.15, the Court orders:
(a) Mr Kent’s costs thrown away in the administration proceeding of $756 (plus GST) be paid out of Mr Lapan’s share of the estate;
(b) Mr Kent’s costs for the period 1 June 2017 to 11 October 2017, subject to any objection to the quantum of those costs, be paid out of Mr Lapan’s share of the estate; and
(c) Mr Kent’s costs for the period 28 November 2017 to 17 January 2018 be disallowed.
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