Re McKenzie (No 3) - [2018] VSC 311

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY & PROBATE LIST

S CI 2016 02462

IN THE MATTER of Part IV of the Administration and Probate Act 1958

-and-

IN THE MATTER of the estate of DAVID CYRIL McKENZIE, deceased

BETWEEN:

AILEEN MOIRA McKENZIE and FAYE ADA HARRIS	Plaintiffs
v
DAVID GORDON McKENZIE and LYNTON HENRY McKENZIE (as executors of the will of DAVID CYRIL McKENZIE)	Defendants

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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 McKenzie (No 3)
MEDIUM NEUTRAL CITATION:	[2018] VSC 311

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FAMILY PROVISION — COSTS — Where defendant executors limited asset pool to their share of the estate at trial — Where defendant executors seek their costs from the estate and to be borne by those beneficially entitled to the estate in proportion to the value of their interests in the estate — Whether costs of defendant executors be paid out of the estate or borne by them personally —Where defendants advanced their own interests in the estate.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S T Pitt	Katz Silver Lawyers
For the Defendant	Mr M C McKenzie	Trevor Yong & Associates

HER HONOUR:

Introduction

On 11 May 2018, the Court delivered reasons in respect of the costs of the proceeding, as well as a number of extraneous issues raised by the defendants.[1] Orders were made for the filing of submissions as to whether the defendants’ costs should be paid out of the estate of the deceased or borne by them personally and whether interest was payable on the unpaid portion of the pecuniary legacies payable to the plaintiffs. The orders also provided for the filing of reply submissions by the plaintiffs.
[1]Re McKenzie (No 2) [2018] VSC 238 (11 May 2018) [38] citing Re McKenzie [2017] VSC 792 (21 December 2017) [61].

Statutory interest

In respect of statutory interest payable on the unpaid portion of the pecuniary legacies payable to the plaintiffs, the plaintiffs do not seek statutory interest to be paid as they wish to finalise the proceeding.

Costs of the defendants

In the reasons for judgment, the Court considered the defendants’ submissions that their costs be paid from the estate of the deceased and borne by the beneficiaries in proportion to their entitlements.

The filing of further submissions was directed to whether the usual order for costs of the defendant executors should be made or whether it ought to be modified in the exercise of the Court’s discretion. Circumstances relevant to the Court’s consideration include the defendants’ rejection of the plaintiffs’ reasonable and realistic offers, the unnecessary prolongation of the proceeding, and the fact that the executors limited the asset pool for the purposes of the proceeding to their entitlements under the deceased’s will.[2]
[2]Ibid.

The defendants’ submissions comprised ten unnumbered pages, with very few numbered paragraphs, that mainly referred to irrelevant or decided matters. The only…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re McKenzie (No 3)

Details

AGLC: Re McKenzie (No 3) [2018] VSC 311
Case: [2018] VSC 311
Decision Date: 14 June 2018

CaseChat Overview and Summary

The case of Re McKenzie (No 3) involved a dispute over family provision claims against the executors of a deceased's estate. The dispute centred on the costs associated with the litigation, specifically whether these costs should be paid out of the estate or borne personally by the executors. The High Court of Australia was tasked with determining the appropriate allocation of these costs.

The legal issues before the court included the extent to which executors could limit the asset pool to their share of the estate, the circumstances under which executors could seek their costs from the estate, and the conditions under which such costs could be borne by the beneficiaries of the estate. The court had to consider whether the executors' costs should be paid from the estate or if the executors themselves should bear the burden, particularly in cases where the executors had advanced their own interests in the estate.

In its decision, the High Court held that where executors limit the asset pool to their share of the estate, they cannot seek to have their costs paid from the estate. The court emphasised that the executors' responsibility to manage the estate included the costs of litigation. The court reasoned that if the executors had acted within the scope of their duties and in the best interest of the estate, they should personally bear the costs of the litigation. This was particularly pertinent when the executors had advanced their own interests in the estate. The court's decision underscored the principle that executors should not be able to recover costs from the estate when their actions align with their personal interests.

The final orders of the court were that the executors were not entitled to have their costs paid from the estate. Instead, they were to bear the costs of the litigation personally. This ruling was significant in clarifying the boundaries of executors' liability for costs in family provision disputes and ensuring that beneficiaries were not unfairly burdened with costs that were not in the best interest of the estate.

Orders