Re Saric; Saric v Vukasovic (No 2)
[2018] VSC 254
•17 May 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S CI 2017 00261
IN THE MATTER of Part IV of the Administration and Probate Act 1958 (Vic)
-and-
IN THE MATTER of the Will and Estate of DANKA SARIC deceased
| GRGO SARIC | Plaintiff |
| v | |
| TANJA VUKASOVIC (who is sued as the executrix of the will of the abovenamed deceased) | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 11 April 2018 |
DATE OF RULING: | 17 May 2018 |
CASE MAY BE CITED AS: | Re Saric; Saric v Vukasovic (No 2) |
MEDIUM NEUTRAL CITATION: | [2018] VSC 254 |
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COSTS — Family provision claim by plaintiff — Where plaintiff awarded provision not more favourable than defendant’s offer of compromise — Supreme Court (General Civil Procedure) Rules 2015, r 26.08(3),
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APPEARANCES: | Counsel | Solicitors |
| Plaintiff in person | ||
| For the Defendant | Mr R Boaden | Dominic Tesoriero & Co |
HER HONOUR:
Introduction
On 14 December 2017, judgment was delivered in the plaintiff’s claim for provision from the estate of his late wife. Provision was ordered for the plaintiff from the estate by way of an extended life interest in the deceased’s half share of Unit 3, 64 Ford Street, Ivanhoe.
An unresolved issue at trial was the amount that should be attributable to the funeral and burial expenses for the deceased. The parties were required to make further enquiries as to the proper amounts that should be allowed for those expenses and also to attempt to reach agreement on the costs of the proceeding.
The parties were unable to reach agreement on the outstanding issues. Written submissions were filed and the proceeding was listed for hearing on these issues. Shortly before the hearing, the plaintiff terminated the retainer of his solicitors and counsel. At the hearing on 11 April 2018, the plaintiff appeared in person.
He did not address the Court on the outstanding issues and generally expressed his disagreement with the outcome of the trial. On the morning prior to the hearing, the plaintiff’s former solicitors informed the Court that written submissions on behalf of the plaintiff had been prepared by counsel before their retainers were terminated and forwarded the submissions for the assistance of the Court. Those written submissions stated that the plaintiff does not dispute the proposed costs orders in respect of the defendant’s costs.
The remaining issues concern the plaintiff’s claim for reimbursement of funeral and burial expenses and the costs of the plaintiff.
Plaintiff’s claim for reimbursement of funeral and burial expenses
The plaintiff claimed reimbursement of the sum of $21,445. This amount was the total of $16,445 said to be paid by him to the Greater Metropolitan Cemeteries Trust and $5,000 paid to Le Pine Funerals.
The defendant accepts that the plaintiff paid these two amounts but claims the amount should be reduced to the sum of $5,229.01 for the following reasons:
(a) the sum of $3,293.15 that was reimbursed to the plaintiff by the Keilor Cemetery; and
(b) the sum of $12,922.84 being the total of six cash withdrawals made by the plaintiff from the estate’s line of credit with the Bank of Melbourne.[1]
[1]8 October 2014: cash withdrawal – $100.00; 9 October 2014: cheque number 20 – $1,022.84; 8 March 2016: cash withdrawal – $4,300.00; 23 August 2016: cash withdrawal – $4,000.00; 21 September 2016: cash withdrawal –$1,500.00; 29 May 2017: cash withdrawal – $2,000.00.
In his written submissions, the plaintiff conceded that the quantum of the funeral expenses should be reduced by the sum of $3,293.15 but did not accept that the cash withdrawals amounting to $12,922.84 should be taken in to account. This was on the basis that there was no evidence to support the cash withdrawals, those withdrawals were not put to the plaintiff at trial and the amounts cannot now be claimed.
At trial, the plaintiff’s financial circumstances were unclear and remained unexplained. He was evasive and non-responsive and, overall, did not present as a credible witness. In respect of the funeral expenses, the plaintiff was primarily the reason for further enquiries needing to be made so that the correct amounts to be reimbursed to the plaintiff could be determined.
After the trial, the solicitors for the parties exchanged the details relevant to any reimbursements to be made to the plaintiff, however, agreement could not be reached on the issue. There is no reason for the Court to doubt the veracity of the details of the withdrawals as provided by the defendant. The plaintiff has had ample opportunity to address the issue and has not provided any explanation that suggests he did not withdraw the amounts from the estate accounts.
The Court will order that the plaintiff is entitled to be reimbursed the sum of $5,229.01 for the funeral expenses for the deceased.
As the estate has no cash funds, the payment of the reimbursement to the plaintiff will be stayed until the estate receives sufficient funds from the sale of the 68 Ford Street, Ivanhoe.
Costs of the plaintiff
The plaintiff seeks an order that his costs of the proceeding be taxed on the standard basis and, although not explicitly stated, those costs be paid out of the estate.
The defendant seeks an order that the plaintiff be entitled to his costs up to and including 13 September 2017, assessed on the standard basis, from the estate and otherwise the plaintiff pay his own costs. In seeking this order, the defendant relies on an offer of compromise dated 29 August 2017 made in accordance with Order 26 of the Supreme Court (General Civil Procedure) Rules 2015. The offer provided for the estate to be administered as follows:
(a)the Plaintiff and the Defendant join in selling the property at 68 Ford Street Ivanhoe, (being the land and premises described in Certificate of Title Volume 9771 folio 257), “68 Ford Street”, which is owned as to a half share by the Plaintiff and the other half share in [sic] an asset of the estate of the Deceased.
(b)The net proceeds of sale of the Plaintiff’s and the Estate’s interests in 68 Ford Street to be distributed
(i) as to 50% to the Plaintiff;
(ii)as to 50% to Tanja Vukasovic, Marija Saric and Andrija Saric, as tenants in common in equal shares.
(c)The half share in the property at Unit 3, 64 Ford Street, (being the land and premises described in Certificate of Title Volume 9828 folio 761), “3/64 Ford Street”, which is an asset of the estate of the Deceased, be transferred to the Plaintiff for his own use and benefit absolutely.
(d)The mortgage debt secured over 3/64 Ford Street be paid by the parties, namely
(i)the Plaintiff as to one half of the mortgage debt plus one half of the withdrawals made from the mortgage debt post 1 June 2014 (the date of the death of the Deceased); and
(ii)the remainder paid in equal shares by Tanja Vukasovic, Marija Saric and Andrija Saric personally.
(e)The Plaintiff receive payment of the sum of $100,000 (without interest) by way of pecuniary legacy from the estate of the Deceased.
(f) There be no order as to the costs of the proceeding.
Rule 26.08(3) provides that where an offer of compromise is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains a judgment on the claim that is not more favourable to the plaintiff than the terms of the offer, then unless the Court otherwise orders:
(a) the plaintiff shall be entitled to an order against the defendant for the plaintiff's costs in respect of the claim before 11.00 am on the second business day after the offer was served, taxed on the ordinarily applicable basis; and
(b) the defendant shall be entitled to an order against the plaintiff for the defendant's costs in respect of the claim thereafter taxed on the ordinarily applicable basis.
There is little by way of authority that specifically outlines how the Court must approach the task of determining whether the judgment is more favourable in accordance with r 26.08. There is some authority that the Court must look at the time when the relevant offer was made and ascertain what, if any, decision as to costs would have been made and what form the costs would have taken.[2] The Court must exercise caution in departing from the prima face rule and only do so in cases that warrant such a departure, invariably expressed in terms such as ‘compelling and exceptional circumstances’, ‘for proper reasons which, in general, only arise in an exceptional case’ and ‘special circumstances’.[3]
[2]Metricon Homes Pty Ltd v Sawyer [2013] VSC 518 (27 September 2013); Hopkins v Hopkins [2015] VSC 50 (2 March 2015).
[3]IFTC Broking Services Ltd v Commissioner of Taxation (2010) 268 ALR 1, 4 [9]; Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) (2004) 212 ALR 281, 284–5 [16]–[18]; Simply Irresistible Pty Ltd v Couper [2011] VSC 33 (17 February 2011); Nakos v Serdaris [2016] VSC 179 (27 April 2016) [18].
In persuading the Court to exercise its discretion to depart from the ordinary consequences of the r 26.08,[4] the party seeking to displace the prima facie rule bears the onus.[5] The Court must be mindful of the fact that a plaintiff who rejects an offer of compromise must be assumed to have taken into account any risks and vicissitudes that may ensue.[6]
[4]Victoria v McIver (2005) 11 VR 458, 468 [31]; Simply Irresistible Pty Ltd v Couper [2011] VSC 33 (17 February 2011); Nakos v Serdaris [2016] VSC 179 (27 April 2016) [17]–[18]; Stevens v Spotless Management Services Pty Ltd(No 2) [2016] VSCA 311 (12 December 2016) [26].
[5]Simonovski v Bendigo Bank Ltd [2003] VSC 139 (2 May 2003) [17]; Shellharbour City Council v Johnson (No 2) (2006) 67 NSWLR 308, 314 [19]; Yarra Valley Dairy Pty Ltd v Lemnos Foods Pty Ltd (No 2) [2011] FCA 283 (25 March 2011) [8]–[9].
[6]See Page v Incorporated Nominal Defendant [1981] VR 170, 173–4; Hultquist v Universal Pattern and Precision Engineering Co Ltd [1960] 2 QB 467, 480–1 (Sellers LJ).
The plaintiff made a number of submissions in his written submissions.
First, he submits that the offer was not sufficiently precise. The plaintiff does not state what was not sufficiently precise in the offer. Having regard to the terms of the offer, they are clear and able to be understood. At the time of the offer and throughout the trial, the plaintiff was represented by his solicitors and counsel who were able to explain the offer to him.
Secondly, he submits that the time for acceptance of the offer of compromise was after the conclusion of the trial and that this was too late for it to be accepted properly. It is not clear what is meant by the statement that the offer was ‘too late for it to be accepted properly’.
The trial concluded on 4 September 2017 with judgment reserved. As stated, the plaintiff was represented at trial by counsel and remained represented until shortly before this hearing. The time for acceptance of the offer expired on 13 September 2017, giving the plaintiff nine days within which he could have accepted the offer. An offer of compromise may be made at any time before judgment. With the trial having concluded, the plaintiff and his advisers were in a good position to assess the offer and there was more than adequate time to do so.
Thirdly, he submits that the offer was deficient as it required the plaintiff and the defendant to join in selling the property at 68 Ford Street and such an order is beyond the ambit of the Court. As with the earlier submissions, it is not clear what is meant by this submission.
In this proceeding there are two estate properties and each are held as tenants in common in equal shares with the plaintiff. With the estate having no cash assets, it is clear that one or other of the deceased’s share in the properties would be sold. A party to litigation may make an offer that provides a resolution for all issues, including provision for the plaintiff. Further, pursuant to s 96 of the Administration and Probate Act 1958, the Court is invested with a wide discretion when formulating orders for provision and is able to mould the orders to suit the circumstances of the case and where the character of the case may influence the way that the order is made.[7]
[7]Re Gray, deceased (1959) 76 WN (NSW) 415.
Fourthly, the plaintiff submits that no offer was made for the costs of the proceeding.
Rule 26.02(4) provides that offers of compromise may be either inclusive of costs or state that costs are in addition to the offer.[8] The defendant’s offer includes that there be no order as to the costs of the proceeding or, in other words, each side would bear their own costs. Accordingly, it is incorrect to say that no offer was made in respect of the costs of the proceeding.
[8]Supreme Court (Chapter I Offers of Compromise Amendments) Rules 2013 commencing on 1 September 2013.
Finally, he submits that there was no offer for reimbursement of the funeral expenses. This submission is misconceived. The funeral expenses were an issue in the administration of the estate, rather than in the provision for the plaintiff. The issue of reimbursement of the funeral expenses was unclear at trial, primarily due to the plaintiff’s failure to produce the evidence to satisfy the Court exactly what amount should be reimbursed to him.
The central question regarding the dispute as to the costs rests on the determination as to whether the judgment was more favourable than the offer. Having regard to the judgment,[9] the plaintiff did not obtain orders that were more beneficial to him than were offered by the defendant.
[9]Re Saric; Saric v Vukasovic [2017] VSC 759 (14 December 2017) [87].
Pursuant to r 26,08(3)(a), the plaintiff is entitled to his costs before 11.00 am on 31 August 2017, that being the second business day after the offer was served on the plaintiff on 29 August 2017, to be paid from the estate of the deceased on the standard basis. Thereafter, the defendant is entitled to her costs from 11.00 am on 31 August 2017 from the plaintiff on the standard basis. Such orders would result in the plaintiff bearing, inter alia, his own costs of trial and the defendant’s costs of trial without indemnity from the estate of the deceased, and are different from the orders proposed by the defendant.
The defendant’s proposal, that the costs of the plaintiff of and incidental to the proceeding up to and including 13 September 2017 be taxed on the standard basis and be paid out of the estate and otherwise the plaintiff bear his own costs, if accepted, would be an exercise of the Court’s discretion to ‘otherwise order’. There are no special, compelling or exceptional circumstances that warrant the Court exercising its discretion to order otherwise than as provided for by r 26.08(3) with respect to the plaintiff’s costs.
In the proceeding, the plaintiff was represented by solicitors and counsel, including at trial and until shortly prior to this hearing. The plaintiff’s legal representatives were able to explain the offer, and the consequences of not accepting the offer, to him. The offer was clearly expressed to be an offer made under Order 26 and was clear and precise in its terms. While the offer was served shortly before the trial commencing on 4 September 2017, it remained open for nine days after the trial concluded, giving the plaintiff adequate time in which to assess the offer. The offer was more favourable than the judgment the plaintiff received at trial — had the plaintiff accepted the offer, he would have gained legal title to Unit 3 absolutely, rather than a life interest and he would have received the benefit of a lump sum payment of $100,000.
As discussed above, the operation of the costs consequences in r 26.08 would also result in the plaintiff bearing the costs of the defendant from 11.00 am on 31 August 2017, including the defendant’s costs of trial. This would operate harshly on the plaintiff by requiring him to bear his own costs of trial and as well as the defendant’s costs of trial. Considering this consequence, the fact that the deceased did not make any provision for the plaintiff in her will despite having a moral duty to do so, and the agreement by the parties prior to this hearing that the costs of the defendant should be borne by the estate, there is sufficient basis to otherwise order than provided by r 26.08. Accordingly, I will order that the costs of the defendant of and incidental to the proceeding be paid out of the estate of the deceased on the trustee basis.
One further issue
The plaintiff raised a further issue in respect of the costs after 14 September 2017 that is not related to the offer of compromise.
He submits that the defendant should pay the costs after 14 September 2017 because the plaintiff issued a summons as a result of ‘the defendant’s failure to comply with the mortgage obligations at Ford Street’. The plaintiff maintains that he was unaware that the tenant of Unit 3 had, prior to the trial, given notice of intention to vacate.
This was incorrect. This information was communicated to both the plaintiff and the defendant on 23 August 2017. The fact that Unit 3 was untenanted was addressed at trial. The defendant did not agree to Unit 3 being re-let and the plaintiff wanted it re-let. It was the plaintiff’s decision to issue a summons on 30 October 2017, after the trial, seeking directions to the effect that the estate agree to Unit 3 being re-let. This was unnecessary. Accordingly, the plaintiff is to pay the defendant’s costs of this summons and bear his own costs.
Orders
The Court orders that:
(a) the plaintiff be reimbursed the sum of $5,229.01 for the funeral expenses for the deceased to be paid from the estate of the deceased, such payment to be stayed until the estate receives sufficient funds from the sale of 68 Ford Street, Ivanhoe;
(b) the costs of the plaintiff of and incidental to the proceeding before 11.00 am on 31 August 2017 be paid on the standard basis from the estate of the deceased, to be taxed in default of agreement, such payment to be stayed until the estate receives sufficient funds from the sale of 68 Ford Street, Ivanhoe;
(c) otherwise the plaintiff bear his own costs of and incidental to the proceeding without being indemnified from the estate of the deceased;
(d) the plaintiff pay the costs of the defendant of and incidental to the summons filed 30 October 2017 on the trustee basis, to be taxed in default of agreement;
(e) otherwise the costs of the defendant of and incidental to the proceeding be paid on the trustee basis from estate of the deceased, to be taxed in default of agreement, such payment to be stayed until the estate receives sufficient funds from the sale of 68 Ford Street, Ivanhoe.
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