Re Veerpold; Richards v Hughes - [2016] VSC 513

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY & PROBATE LIST

S CI 2016 01548

JOHN RICHARDS	Plaintiff
v
KEITH THOMAS BAGOT HUGHES and PETER DONALD MCKERRELL (both personally and as executors of the will of Jadwiga Veerpold, deceased)	Defendants

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	22 July 2016
DATE OF JUDGMENT:	30 August 2016
CASE MAY BE CITED AS:	Re Veerpold; Richards v Hughes & Anor
MEDIUM NEUTRAL CITATION:	[2016] VSC 513

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COSTS — Whether executors should be indemnified for their costs out of the estate — Whether defendants acted with prudence, care and diligence — Whether circumstances justify special costs order — Skaftouros v Dimos [2002] VSC 198 — Administration and Probate Act 1958, s 28

CALDERBANK OFFER — Rejection of defendants’ offer to settle proceeding — Whether rejection was unreasonable in the circumstances — Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R R Boaden	Lawson Hughes Peter Walsh
For the Defendants	Mr J K Arthur	Lennox Lawyers

HER HONOUR:

Plaintiff’s application

By originating motion and summons filed 28 April 2016, the plaintiff seeks:

(a) an order that the defendants file and serve on the solicitors for the plaintiff and the Registrar of Probates a true and just account of their administration of the estate of the deceased;[1]

(b) a declaration that the defendants are not entitled to any executors’ commission; and

(c) an order that the defendants pay the plaintiff’s costs of the proceeding on an indemnity basis without being indemnified for those costs out of the estate.

[1]Pursuant to s 28 of the Administration and Probate Act 1958 and r 6.03 of the Supreme Court (Administration and Probate) Rules 2014.

By the time of the hearing, the plaintiff had received the administration account for the estate and had withdrawn his application for the declaration regarding executors’ commission. He seeks his costs of the proceeding against the defendants. The defendants oppose such orders, having originally sought orders that the plaintiff pay their costs and otherwise that the costs be paid out of the estate, and then, at the hearing, that the costs of the proceeding be paid out of the estate.

Background

The deceased died on 15 August 2014, leaving a will dated 17 March 2014. The deceased was survived by her two adult children: her daughter and the plaintiff. The deceased’s will made no provision for her daughter. Her will provided for a life interest to the plaintiff in a property in Blackburn, with the remainder interest to two friends, and the residue of the estate to the plaintiff. The plaintiff surrendered his life interest in the Blackburn property and the property has now been transferred to the remaindermen. As a result, the plaintiff is the sole beneficiary of the estate.

The deceased’s will was prepared by the first defendant, who practices as a solicitor under…

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.

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Details

Case: [2016] VSC 513
Decision Date: 30 August 2016

CaseChat Overview and Summary

The case involved the executors of the estate of a deceased individual, who were contesting the costs incurred by the defendants. The defendants, in turn, argued that they should be indemnified for these costs from the estate. The dispute was heard in the Supreme Court of Victoria. The primary legal issue before the court was whether the executors had acted with the required degree of prudence, care, and diligence in managing the estate and whether the circumstances warranted a special costs order. The court also considered whether the rejection of a Calderbank offer made by the defendants was unreasonable, and whether this factored into the costs determination.

The court examined the relevant statutory provisions, including section 28 of the Administration and Probate Act 1958, which sets out the criteria for indemnity of costs. The court also reviewed the principles established in Skaftouros v Dimos, which provide guidance on when special costs orders may be granted. Additionally, the court assessed the rejection of the Calderbank offer against the principles outlined in Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority, which address the reasonableness of rejecting settlement offers. The court found that the executors had generally acted with the requisite degree of care and diligence, and that the rejection of the Calderbank offer was not unreasonable given the circumstances. Therefore, the court ruled that the defendants were not entitled to be indemnified for their costs from the estate.

In its judgment, the court noted that the executors had acted responsibly in managing the estate, and that the defendants had not demonstrated any special circumstances that would warrant a special costs order. The court also held that the rejection of the Calderbank offer was not unreasonable, as it was made after the defendants had become aware of new evidence that significantly altered the nature of the proceedings. As such, the court dismissed the defendants' claim for indemnity of costs. The final orders of the court reflected this decision, with the executors not being required to indemnify the defendants for their costs.

Orders