Re Rattle (No 3); Equity Trustees Ltd v Halstead
[2019] VSC 69
•18 February 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S PRB 2015 15467
IN THE MATTER of the will and estate of STUART CHARLES RATTLE, deceased
-and-
IN THE MATTER of an application pursuant to section 9 of the Wills Act 1997
| EQUITY TRUSTEES LIMITED | Plaintiff |
| v | |
| CHESTER WILLIAM SEMMENS HALSTEAD | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 18 February 2019 |
CASE MAY BE CITED AS: | Re Rattle (No 3); Equity Trustees Ltd v Halstead |
MEDIUM NEUTRAL CITATION: | [2019] VSC 69 |
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COSTS — Where plaintiff agrees to fixed costs of the proceeding — Where defendant joined after appointment of independent contradictors — Where defendant unsuccessful — Where defendant seeks fixed costs on an indemnity basis from the estate — Defendant’s application not allowed — Supreme Court Act 1986, s 24.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S McNab | Aitken Partners |
| For the Defendant | Ms C McOmish | William Murray Solicitors |
HER HONOUR:
Introduction
On 16 May 2018, the Court granted probate of the informal will of Stuart Rattle dated 25 August 2006 to the plaintiff. The Court also determined that as a consequence of the application of the forfeiture rule, the named residuary beneficiary forfeited his interest under the 2006 will.[1]
[1]Re Rattle [2018] VSC 249 (16 May 2018).
The defendant is a named beneficiary under the gift over provisions of the 2006 will. He filed written submissions on how the gift over provisions ought be given effect in his favour, as opposed to an intestacy.
On 15 November 2018, the Court determined that the precise terms of the gift over provisions were not satisfied and could not take effect.[2] This meant that the deceased’s estate was to be distributed on an intestacy and the defendant was unsuccessful in the proceeding.
[2]Re Rattle (No 2) [2018] VSC 700 (15 November 2018).
Defendant’s application
The defendant seeks that his costs be paid from the estate of the deceased on an indemnity basis, alternatively, on a standard basis. The costs on an indemnity basis total $14,510 with the professional fees claimed at $9,560 (excluding GST) and disbursements comprising counsel’s fees at $4,950.
An assessment of the costs was made by a costs consultant who also advised that the affidavits provided by the applicant’s solicitors in July 2017 were assessed on the 2017 scale. The consultant also stated that an assessment of the professional fees on a standard basis would not be significantly different to the assessment on an indemnity basis.
Defendant’s submissions
The defendant submitted that:
An unsuccessful beneficiary in a construction proceeding can have an entitlement to costs by analogy to that accorded to trustees, where there is a question arising in the course of administration and it is in the circumstances reasonable for the beneficiary to be represented. In such cases the costs of all parties are ordinarily viewed as necessarily incurred for the benefit of the estate and so ordered to be paid from the estate. That entitlement is not extended to an unsuccessful beneficiary who has instituted hostile litigation against a trustee or other beneficiaries, i.e. if the litigation is adversarial and not directed at the due administration of the estate.[3]
[3]Citing G E Dal Pont, Law of Costs (LexisNexis Butterworths, 3rd ed, 2013); David M Haines, Construction of Wills in Australia (LexisNexis Butterworths, 2007) [42.2]; Re Buckton [1907] 2 Ch 406.
The defendant submitted that it was appropriate for his costs to be paid out of the estate for the following reasons:
(a) whether or not the gift over provision in the will would takes effect was an issue in the administration of the estate and it was unclear;
(b) the plaintiff and the contradictors had already made submissions on the point before the defendant was joined as defendant;
(c) the defendant had an arguable case so his joinder and his making of submissions was reasonable;
(d) the Court did not make any adverse comment in relation to his joinder;
(e) his costs are proportionate to the value of the estate;
(f) the estate agrees that his costs on an indemnity basis may come from the estate; and
(g) there are exceptional circumstances.
Consideration
The plaintiff’s application involved a number of discrete issues that had the potential to affect the interests of others depending on the outcome of the primary application. The interested parties comprised the four residuary beneficiaries under the deceased’s penultimate will made in 1996 will, any person named as a beneficiary under the 2006 will and the intestacy beneficiaries. As stated, the defendant is a named beneficiary under the gift over provisions in the 2006 will.
In view of this, on 18 August 2017, the Court ordered that the originating motion, supporting affidavits, and a copy of the orders be served on all interested parties in the proceeding and they be given leave to be joined as a defendant in the proceeding. None of the interested applied to be joined as a defendant to the proceeding.
Where the Court has no person to represent the interests of those affected by the determinations to be made, it is usual practice for the Court to appoint a contradictor to represent the affected persons’ interests.
On 10 November 2017, the Court appointed independent contradictors to represent the interests of those beneficiaries under the 2006 will, the 1996 will and the intestacy beneficiaries. Orders were made for the contradictors to provide written submissions on the construction of the informal will and the legacies to each beneficiary as well as orders for their costs, which were to be paid on an indemnity basis to be taxed in default of agreement.
By 2 February 2018, the Court had received the written submissions from the plaintiff and the independent contradictors. The parties agreed that the issues were to be determined on the papers.
Before judgment was delivered, the solicitors for Mr Halstead informed the Court on 16 March 2018 that their client would likely make submissions regarding the operation of how the gift over provisions in the 2006 will ought be given effect, as opposed to an intestacy (‘the final question’). In light of this development, when judgment was handed down on 16 May 2018, it was also forwarded to Mr Halstead’s solicitors. Mr Halstead’s position as to his joinder to the proceeding meant that the consideration of the final question was adjourned until he made a decision as to whether he wished to be joined as a defendant.
Ultimately, Mr Halsted decided that he did want to be joined as a defendant and, on 10 August 2018, orders were made to that effect. Subsequently, written submissions were filed in support of his position on the final question.
All of the interested parties in this proceeding had a potential arguable case depending on the outcome of the decision of the plaintiff’s application for probate of the 2006 will. Their respective positions were protected by the appointment of the contradictors.
Whether it was reasonable for Mr Halstead to seek to be joined as a defendant at such a late stage in the proceeding is a judgment call on his part. The fact that the Court did not make any adverse comment in relation to his joinder is not to the point. Costs are in the discretion of the Court and practitioners are well aware that it is unlikely that more than one set of legal costs of separately represented parties with the same or similar interests will be allowed.
Mr Halstead declined the opportunity to be joined as a defendant at the first instance and at the time he sought to be joined, he and his solicitors knew that the contradictors represented the interests of the potential beneficiaries on all questions involved in the proceeding, including the final question, and that their submissions had been filed by with the Court. Absent Mr Halstead’s joinder, the final question could have been determined in the first judgment.
The defendant’s submission that plaintiff agrees that the defendant’s costs be paid from the estate on an indemnity basis is not entirely accurate. The plaintiff’s submissions state that it is open to the Court to find that as the defendant has been unsuccessful, he should bear his own costs and if the Court finds that the defendant’s costs should be paid from the estate, those costs should be assessed on the standard basis and only in respect to the submissions concerning the final question.
While the final question was a construction issue arising in the administration of the estate, the defendant chose to be joined as a defendant late in the proceeding to protect his personal interests. It was unnecessary to do so where his interests were already protected by the contradictors. In such circumstances, it is not reasonable for the estate to be burdened with a dual costs burden on the same issue.
Orders
The Court orders that:
(a) The professional fees of the plaintiff of and incidental to the proceeding be fixed in the sum of $40,000 including GST and disbursements be fixed in the sum of $9692.94 including GST be paid or retained out of the estate of the deceased; and
(b) the defendant bear his own costs.
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