Re Stefani; La Leggia v Roccisano
[2020] VSC 529
•24 August 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S ECI 2019 02867
IN THE MATTER OF the will and estate of SALVATRICE STEFANI
BETWEEN:
| VINCENZA ADRIANA LA LEGGIA | Plaintiff |
| -v- | |
| VINCENT MARIO ROCCISANO | First defendant |
| -and- | |
| ANTONINO SPADA | Second defendant |
| -and- | |
| ANTONELLA SPADA | Third defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 24 August 2020 |
CASE MAY BE CITED AS: | Re Stefani; La Leggia v Roccisano & Ors |
MEDIUM NEUTRAL CITATION: | [2020] VSC 529 |
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PRACTICE & PROCEDURE — Application to strike out originating motion — Where plaintiff’s claims have no common question of law or fact and claims do not arise out of same transactions — Supreme Court (General Civil Procedure) Rules 2015 (Vic) rr 9.02, 23.02(c)–(d).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr H Kirimof | SMR Legal Pty Ltd |
| For the First Defendant | Hughes Legal | |
| For the Second Defendant | Ms S Cherry | Goodman Group Lawyers |
| For the Third Defendant | Mr J Smith | Slater and Gordon Lawyers |
HER HONOUR:
Introduction
Salvatrice Stefani died on 26 April 2017. She was survived by her three children: the plaintiff, and the second and third defendants.
Probate of the deceased’s will dated 27 June 2012 was granted to the first defendant on 27 June 2017. The first defendant was the deceased’s solicitor and prepared her will.
Plaintiff’s application
The plaintiff commenced this proceeding in the County Court by originating motion filed 21 December 2017.
On 15 March 2019, the plaintiff filed an amended originating motion seeking:
(a) pursuant to s 34 of the Administration and Probate Act 1958 (‘the Act’), an order removing the first defendant as executor of the estate of the deceased (‘the removal application’);
(b) a declaration that the estate be distributed in accordance with a settlement agreement dated 15 March 2017 exhibited to the plaintiff’s affidavit sworn 19 December 2017; and
(c) further and in the alternative to (b), a declaration that the plaintiff and the second and third defendants are liable to share the proceeds of the estate’s distributions to them in accordance with the heads of agreement exhibited to the plaintiff’s affidavit sworn 19 December 2017 (together with (b) ‘the declaratory relief’).[1]
[1]The plaintiff initially sought additional relief including a declaration that there was no ademption in respect of the sale of property of the deceased known as ‘the Mews’, that the beneficiaries of the estate would have the same interest in the estate had the sale not occurred and further provision from the deceased’s estate, pursuant to Part IV of the Administration and Probate Act 1958. Subsequently, this relief was abandoned by the plaintiff.
The plaintiff alleges that, having acted for the second and third defendants prior to the deceased’s death, the first defendant is in a position of conflict as the executor as there were irregularities in the second and third defendants’ administration of the deceased’s affairs. Although the originating motion does not itself seek the appointment of an administrator, in her written submissions the plaintiff sought the appointment of an independent administrator to investigate these alleged irregularities.
The settlement agreement and the heads of agreement referred to in the originating motion are the same document (‘the agreement’) made on 15 March 2017. The agreement was reached between the plaintiff and the second and third defendants during a hearing before the Victorian Civil and Administrative Tribunal (‘the VCAT’) and relates to their respective contingent interests under the deceased’s estate.
On 5 June 2019, pursuant to s 21 of the Courts (Case Transfer) Act 1991, the proceeding was transferred to the Supreme Court, as the plaintiff sought removal of the first defendant.[2]
[2]Orders were made on the basis that the Supreme Court of Victoria has exclusive jurisdiction in respect of the removal of a personal representative of an estate.
On 11 October 2019, the proceeding was listed for directions in the Trusts, Equity and Probate List. On that occasion, the third defendant made an oral application that the plaintiff’s application be struck out insofar as it related to the third defendant. The second defendant joined with this application. The second and third defendants sought orders that the proceeding be struck out insofar as it relates to them and costs. The application was opposed by the plaintiff.
Orders were made for filing of written submissions with the application to be determined on the papers.
Background
According to the plaintiff, the deceased’s health began to decline from 2010 to 2011. On 13 December 2010, the deceased executed an enduring power of attorney for financial matters in favour of the second and third defendants.
The deceased’s will dated 27 June 2012 was prepared by the first defendant, who was then her solicitor. The will provides, inter alia:
(a) the deceased’s property situated at and known as 7 The Mews, Ardeer (‘the Mews’) was to be sold, with the net proceeds of sale divided into two equal shares. From each share, a number of cash bequests are made to specific grandchildren, following which the plaintiff and the second defendant were entitled to the residue of one of the half shares each;
(b) the deceased’s property situated at and known as 20 Allard Court, Keilor Downs (‘Allard Court’) was devised to the third defendant absolutely; and
(c) the residue of the deceased’s estate was to be shared between the second and third defendants.
The plaintiff alleges that in February 2016, the second defendant requested that she sell her interest in the Mews under the deceased’s will to him. The second defendant made that request notwithstanding that the Mews was owned by the deceased, who was still alive at that time. The second defendant explained that he intended to sell a half share of that property to his wife.[3]
[3]The Mews was subsequently sold in April 2017 by the administrator of the deceased appointed by the VCAT.
On 18 April 2016, the plaintiff made an application to the VCAT seeking orders revoking the deceased’s enduring power of attorney and raising various allegations, including that the second defendant was dealing improperly with the deceased’s assets.
On 18 May 2016, the VCAT ordered that the second and third defendants provide a full accounting of the deceased’s financial affairs.
On 22 September 2016, the enduring power of attorney was revoked and State Trustees Ltd was appointed as administrator of the deceased.
On 20 October 2016, the second and third defendants applied to the VCAT for a rehearing of the appointment of State Trustees Ltd as administrator.
On 15 March 2017, the VCAT member converted the rehearing application into a conciliation conference in an effort to resolve the dispute between the parties. At this conference, the agreement was reached between the plaintiff, the second and third defendants, which resolved the rehearing application. Orders were also made by the VCAT appointing the plaintiff’s daughter as administrator of the deceased in place of State Trustees Ltd. The agreement provided that after the death of the deceased: Allard Court would be transferred to the third defendant; the various cash bequests to the grandchildren under the will would be undisturbed; $8,000 would be paid to the third defendant; and the residue of the estate would be equally divided between the plaintiff and the second defendant.
Submissions
Third defendant’s submissions
The third defendant seeks that the amended originating motion be struck out against her for non-compliance with r 9.02 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’), and that the amended originating motion may prejudice, embarrass or delay the fair trial of the proceeding or is otherwise an abuse of the process of the Court, pursuant to r 23.02(c) or r 23.02(d) of the Rules.
The third defendant submitted that the removal claim ought not have been joined with the claim for declaratory relief, because it is a statutory claim for removal of an executor by reason of an asserted conflict. By contrast, the claim for declaratory relief relates to contractual obligations as between beneficiaries. There is no common question of law or fact that would arise, nor do all rights to relief claimed in the proceeding arise out of the same transaction or series of transactions.
While the Court could allow the two claims to proceed together, the third defendant submitted that it should not do so for a number of reasons:
(a) First, it makes no sense to conflate the issues arising from an application to remove an executor with those relating to an arrangement between beneficiaries.
(b) Secondly, it is more logical to resolve the removal application, after which the parties may revisit any issues between them with the assistance of either the executor or an independent administrator.
(c) Thirdly, while the Court has jurisdiction to grant declaratory relief in relation to contractual rights and obligations, in this instance such relief would be pointless for the very reason that it would not bind the executor. The plaintiff seeks a declaration that the estate be distributed in accordance with the agreement but in submissions acknowledges that even if the declarations were made, they would not bind the executor who will remain free to distribute in accordance with the will.
(d) Fourthly, the quantum in dispute under the claim for declaratory relief appears to be modest and the cost proportionality has not been adhered to by the plaintiff. In a position statement filed with the County Court, the third defendant quantified the sum payable to the plaintiff under the will as being $155,000 and under the agreement $198,862. While this modest dispute has the hallmarks of a Magistrates’ Court claim, it has been elevated to the Supreme Court and is entangled with the removal application.
(e) Fifthly, almost two years after the commencement of the litigation, the plaintiff informed the Court that the plaintiff’s affidavit is not the only affidavit that she intends to file in support of the amended originating motion if the matter proceeds to a final hearing.
Second defendant’s submissions
The second defendant adopted the third defendant’s submissions. In addition, the second defendant submitted that the plaintiff’s claim as against him is fundamentally flawed as both the removal application and the claim for declaratory relief were brought by way of originating motion. The removal application may be brought by originating motion pursuant to s 34 of the Act, however it seeks relief against only the first defendant. In relation to the declaratory relief, if such a claim is to be brought at all, the second and third defendants say that they are entitled to know what is pleaded against them. To the extent that the declaratory relief relates to orders for enforcement of the agreement, the claim is misconceived as it attempts to enforce the terms of a controversial document that purports to distribute the deceased’s property during her lifetime without her knowledge, approval and contrary to the provisions of her will.
Further, the proceeding was commenced in December 2017 and the plaintiff has been afforded and availed herself of one opportunity to amend the claim yet has not dealt with the central problems voiced by both defendants from almost the inception of the proceeding, with the costs now grossly disproportionate to the quantum in dispute.
The second defendant also noted that the plaintiff has stated she would be content if the second and third defendants consent to any declaration without actively defending the proceeding. The second defendant submitted that, given the scandalous nature of the material filed to date, this is not tenable if the matter proceeds.
Plaintiff’s submissions
The plaintiff acknowledges that the orders sought pursuant to s 34 of the Administration and Probate Act 1958 are directed at the first defendant and are not relied upon to advance the declaratory relief in relation to the agreement.
The basis for seeking removal of the first defendant is that the first defendant is in a position of conflict in that he was formerly the solicitor for the second and third defendants and is now executor of the estate. The plaintiff alleges misappropriation of the deceased’s assets by the second and third defendants when they managed the deceased’s finances and the appointment of an independent administrator is required to investigate and appraise any potential claims by the estate.
The plaintiff submitted she has a cause of action for the declaratory relief in contract against the second and third defendants as parties to the agreement. The enforcement of the agreement is important to the plaintiff as, if the estate does ultimately allege the second and third defendant misappropriated funds and pursues them, without the declaratory relief the enforceability of the settlement and the fruits of such relief, if any, would go back to the second and third defendants as the beneficiaries under the deceased’s will.
To her knowledge, the scenario by which beneficiaries agree amongst themselves to a certain distribution, prior to the deceased’s death, while unusual, should be enforced. The plaintiff says that there is no clear reason why such an agreement is unenforceable. The declaratory relief is not intended to bind the executor but to achieve an outcome that recognises the enforceability of the agreement.
The plaintiff submitted that the Supreme Court has the inherent power to make the declaratory relief and may do so without granting consequential relief. She also submitted that the remedy of a declaration is available to ascertain the enforceability of a contract and the rights and obligations of the parties to a contract. Further, the declarations sought are not in relation to a hypothetical question, but pertain to an extant estate.
In support of the contention that the second and third defendants are proper parties to the proceeding and that the declaratory relief is appropriate, the plaintiff submitted:
(a) she has a sufficient interest in the matter to seek the declaratory relief as she is a party to the agreement. As the second and third defendants are also parties to the agreement and have an interest, they are proper parties to the proceeding;
(b) whether or not the second and third defendants choose to defend the proceeding is not the point. The plaintiff would be content to see the defendants consent to any declaratory relief the Court makes without incurring the costs of their active participation;
(c) a proper contradictor is required where declaratory relief is sought. As parties to the agreement, the second and third defendants are clearly proper contradictors; and
(d) the declaratory relief will only bind persons who are parties to the proceeding. The plaintiff must cause the second and third defendants to be parties if that relief is to have any utility. If the declaratory relief does not bind the second and third defendants, the plaintiff could not subsequently enforce the agreement against them.
The plaintiff noted that r 4.06 of the Rules provides that a proceeding may be commenced by originating motion where it is unlikely there will be any substantial dispute of fact and, for that reason, it is appropriate that there be no pleadings or discovery. The plaintiff submitted that nothing has demonstrated there will be a substantial dispute of fact and that pleadings or discovery would serve no useful purpose in the proceeding. If the plaintiff had brought a breach of contract claim, then a writ and pleadings would be appropriate.
Consideration
Rule 9.02 of the Rules provides:
Two or more persons may be joined as plaintiffs or defendants in any proceeding—
(a) where—
(i)if separate proceedings were brought by or against each of them, some common questions of law or fact would arise in all the proceedings; and
(ii) all rights to relief claimed in the proceeding (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions; or
(b) where the Court, before or after the joinder, gives leave to do so.
An application made pursuant to s 34 of the Act falls within the exclusive jurisdiction of the Supreme Court. Accordingly, the plaintiff’s application for the removal of an executor and the appointment of an independent administrator of a deceased estate should have commenced in the Supreme Court.
The basis for the removal of the first defendant is that, as executor of the estate, he is in a position of conflict of interest as he acted on behalf of the second and third defendants prior to the deceased’s death. Not every conflict justifies removal, but in some cases it may be sufficient. Each case depends on the facts and it is a matter of what is best for the welfare of the beneficiaries of an estate as a whole.[4] The application for removal raises discrete issues and involves only the first defendant.
[4]See, eg, Manocchio v Wilson [2012] VSC 76, [38] (Habersberger J).
The plaintiff’s claim for declaratory relief arises from the agreement between the plaintiff and the second and third defendants. The claim will involve factual disputes concerning, for example, whether there was a valid agreement between the parties. The plaintiff seeks no relief against the first defendant under this claim, and his involvement will have no bearing on the resolution of the aforementioned factual disputes. The enforceability or otherwise of the agreement raises no common questions of law or fact and the respective relief claimed against the first defendant on the one hand and the second and third defendant on the other hand arise out of different facts and causes of action. Where claims are contested, such as the claim for declaratory relief in this proceeding, they are usually brought by a separate writ proceeding where the claims are pleaded and the usual interlocutory steps taken, such as discovery, and witnesses usually give viva voce evidence at trial, rather than file affidavits.
The declaratory relief also seeks to bind the second and third defendants to a particular distribution of the estate which is different to the provisions of the deceased’s will. There is force in the third defendant’s submission that the removal application should be the first issue decided, as any declaratory relief would not bind the executor, if he is not removed, or an independent administrator, if the first defendant is removed. In that scenario, either would be free to distribute the estate in accordance with the deceased’s will. The approach adopted by the plaintiff in seeking orders in the removal application against the first defendant and separate declaratory relief against the second and third defendants without any connection clearly demarcates the separate issues involved and weighs against the Court allowing the claims to continue in the proceeding.
Further, there is an issue as to the costs incurred this far. The proceeding has been on foot since December 2017 and the plaintiff indicated that she will file further affidavits. Depending on whether distribution is made under the will or under the agreement, the monetary amount payable to the plaintiff is in the range from $155,000 to $198,862. Whether the costs in the proceeding are reasonable and proportionate to the amounts in dispute will be an issue for the parties and the Court.
The Court is satisfied that there are no common questions of law or fact that will arise in the separate claims and the relief sought in the proceeding does not arise out of the same transactions or series of transactions. Furthermore, the use of an originating motion as a vehicle for bringing the claims for the declaratory relief is inappropriate where it is evident that those claims will involve disputed facts. Accordingly, the proceeding against the defendants should not remain in its current form. If the claim for the declaratory relief is not struck out, there will be either prejudice to the defendants or the proceeding is otherwise an abuse of the process of the Court, pursuant to rr 23.02(c) or (d) of the Rules.
Orders
The Court orders that:
(a) pursuant to rr 23.02(c) or (d) of the Supreme Court (General Civil Procedure) Rules 2015, paragraphs 2 and 2A of the plaintiff’s amended originating motion filed 13 March 2020 be struck out;
(b) pursuant to r 9.06 of the Supreme Court (General Civil Procedure) Rules 2015, the second and third defendants be removed as parties to this proceeding;
(c) the plaintiff file and serve a further amended originating motion on or before 4.00pm on 7 September 2020.
Within 14 days the parties are to submit proposed minutes of these orders, including any further orders required for the trial of the removal application, including a proposed estimate of the trial and the availability of the plaintiff and the first defendant for a trial in October or November 2020.
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