Re Wissa; Wissa v Wissa
[2021] VSC 565
•10 September 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2020 02975
IN THE MATTER of the estate of the late IBRAHIM WISSA, deceased
- and –
IN THE MATTER of an application under r 54.02(2)(ii) of the Supreme Court (General Civil Procedure) Rules 2015
BETWEEN:
| SHERIEN WISSA | Plaintiff |
| v | |
| SHERIEF WISSA (in his capacity as executor of the will and estate of the late IBRAHIM WISSA, deceased) | Defendant |
---
JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 10 September 2021 |
CASE MAY BE CITED AS: | Re Wissa; Wissa v Wissa |
MEDIUM NEUTRAL CITATION: | [2021] VSC 565 |
---
COSTS — Where plaintiff and defendant are beneficiaries of estate — Where plaintiff sought information from executor regarding estate — Where executor declined to communicate with beneficiary — Plaintiff commenced proceeding against executor — Application resolved by production of information at first directions — Where executor sought to include other issues in proceeding —Defendant’s application refused — Parties unable to agree on costs — No point of principle — ASTA Developments (Aust) Pty Ltd v Amasya Enterprises Pty Ltd [2016] VSCA 186.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S Pitt | Zervos Lawyers |
| For the Defendant | Ms E Konstantinou | Jones van Otterdyk Lawyers |
HER HONOUR:
Introduction
Ibrahim Wissa died on 20 February 2018. The deceased was survived by his adult children, Sherien Wissa (‘the plaintiff’) and Sherief Wissa (‘the defendant’).
By his will dated 22 December 2017, the plaintiff and defendant were named as executors and are the beneficiaries of the estate in equal shares.
Since the death of the deceased and during 2019 the solicitors for the parties exchanged numerous letters concerning issues arising in the estate, including the assets and liabilities of the estate.
The deceased’s estate comprised a property at 9 St Shenouda Court, Hallam (‘the property’) which was subject to a mortgage with Australia and New Zealand Banking Group Limited (‘ANZ bank’) which secured a debt of the deceased’s company, Top Tours and Travel Pty Ltd (‘Top Tours’). Subsequently, the ANZ bank sold the property as mortgagee in possession and discharged the mortgage.
Background
On 13 November 2019 the defendant issued a proceeding seeking orders that the plaintiff be passed over as an executor on the basis of an asserted conflict of interest.[1] The parties reached agreement making it unnecessary for the asserted conflict of interest to be determined by the Court. On 14 February 2020, by consent, the plaintiff was passed over as executor of the will and leave was granted to the defendant to apply for a grant of probate as sole executor. The parties were unable to agree on the costs and orders were made for the filing of costs submissions.
[1]Proceeding S ECI 2019 05144.
On 17 March 2020, probate was granted to the defendant.
On 18 May 2020 orders were made in the passing over proceeding for the costs of and incidental to the proceeding to be paid out of the estate on a trustee basis, to be taxed in default of agreement.
The defendant lodged a caveat over the Hallam property asserting an interest as beneficiary under the deceased’s will. On 25 May 2020 the defendant applied to the Registrar of Titles for the removal of the caveat. On 26 May 2020 the Registrar served a notice on the plaintiff that required the caveat to be abandoned or supported by application to the Court or VCAT, failing which it would lapse on 14 July 2020.
By letter dated 12 June 2020 to the defendant’s solicitor, the plaintiff’s solicitor noted that the defendant had failed to keep the plaintiff informed as to the distribution of the estate and requested an update as to progress, specifically in relation to the sale of the Hallam property. He advised that his own enquiries as to progress in the administration showed that a grant had been made, that the defendant was now registered on the title of the Hallam property and the property had been placed on the market. In respect of the plaintiff’s caveat on the title of the property he advised that the plaintiff considered she had an interest as a beneficiary in the property pursuant to the deceased’s will.
On 15 June 2020 the defendant opened an estate account with the Commonwealth Bank for the sale proceeds of the Hallam property on settlement. The defendant’s solicitor did not inform the plaintiff’s solicitor that the defendant had opened an estate account.
By letter dated 24 June 2020, the defendant’s solicitor responded to the plaintiff’s solicitor’s letter of 12 June 2020 informing him ‘we do not propose to enter into further time and cost wasting correspondence … our client will continue to administer the estate … in the usual course’.
On 1 July 2020, the plaintiff’s solicitor again wrote to the defendant’s solicitor seeking an urgent update as to the date of the settlement of the Hallam property, the expected net proceeds, the account details for the settlement proceeds and the defendant’s intentions as to distribution of the proceeds of sale. The letter reminded the defendant’s solicitor that they have a duty to provide his client, a beneficiary of the estate, with information in relation to the assets of the estate, when requested.
No response was received by the plaintiff’s solicitor to his letter dated 1 July 2020.
By letter dated 8 July 2020 to the solicitors for the ANZ bank, the defendant’s solicitor enquired, inter alia, when the settlement of the sale of the Hallam property would take place.
On 10 July 2020, the solicitors for the ANZ bank wrote to the plaintiff’s solicitor advising, inter alia, that settlement of the Hallam property was due to take place on 24 July 2020. It was from this letter that the plaintiff learned of the sale of the Hallam property. Other than this letter, the plaintiff did not receive any update as to the administration of the estate of the deceased.
By letter dated 15 July 2020 to the defendant’s solicitor, the ANZ bank advised that settlement of the sale of the Hallam property was anticipated for 24 July 2020 and that following settlement, the bank would advise the solicitors whether there was a surplus from the sale.
On 16 July 2020 the plaintiff filed this proceeding seeking orders for the defendant to deposit the net proceeds of the sale of the property into Court immediately upon their receipt.
By letter dated 17 July 2020 to the defendant, Andrew Firth of Rushmore Group confirmed that he was engaged on behalf of the estate on 18 June 2020 to value Top Tours and undertake other additional forensic accounting services in relation to the company. Neither the plaintiff nor her solicitor were informed of Mr Firth’s engagement until they received a letter dated 1 September 2020 from the defendant’s solicitor which attached a report by Mr Firth.
On 20 July 2020, the parties agreed to adjourn the proceeding for the purpose of discussions concerning the distribution of the estate.
On 5 August 2020 the parties sought an adjournment to convene a without prejudice meeting regarding the remaining issues in relation to the distribution of the estate. The meeting did not take place.
By letter dated 1 September 2020 to the plaintiff’s solicitor, the defendant’s solicitor advised that on 21 August 2020 the net proceeds from the sale of the Hallam property in the amount of $152,924 were paid into the estate’s bank account and after costs and expenses to date, there was approximately $112,000 in the account. The letter also referred to a valuation of the Top Tours business and enclosed Mr Firth’s report for the period after the deceased’s death, being the period in which the plaintiff was in effective control of Top Tours. The defendant’s solicitor sought an accounting from the plaintiff of all transactions referred to in the report within 28 days and, if the plaintiff did not do so, he proposed seeking further orders as to how the distribution of the estate was to be effected. The defendant’s solicitor proposed that he seek leave in this proceeding that the plaintiff provide an accounting and answers regarding the issues in the report instead of issuing a further originating motion.
On 4 September 2020, the defendant’s proposal to include the further issues within this proceeding was made and refused and the proceeding was dismissed, save for the issue of costs. The parties were unable to agree on the costs.
Orders sought by the parties
The plaintiff seeks orders that her costs of and incidental to the proceeding be paid out of the estate on the standard basis, to be taxed in default of agreement, and the defendant bear his own costs of the proceeding, without reimbursement from the estate.
The defendant seeks orders that the plaintiff personally pay the defendant’s costs of the proceeding on the standard basis, to be taxed in default of agreement and the plaintiff bear her own costs.
Applicable principles
Ordinarily, for reasons of fairness and policy, costs ‘follow the event’ such that a successful party is awarded costs in their favour.[2] The relevant ‘event’ is success in the action or on particular issues.[3]
[2]Oshlack v Richmond River Council (1998) 193 CLR 72, 97 (McHugh J).
[3]Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622, 624–5 (McHugh J).
The applicable principles in circumstances where the court is deprived of a hearing on the merits were considered by the Court of Appeal in ASTA Developments (Aust) Pty Ltd v Amasya Enterprises Pty Ltd[4] as follows:
[4][2016] VSCA 186 (‘ASTA Developments’).
In Australian Securities Commission v Aust-Home Investments Ltd,[5] Hill J summarised the following principles concerning the exercise of a court’s discretion to order costs where the parties to a proceeding no longer wish to continue:[6]
[5](1993) 44 FCR 194.
[6]Ibid 201 (Hill J) (citations omitted).
(i) Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order.
(ii) It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial …
(iii) In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them.
(iv) In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation.
(v) Where the proceedings terminate after interlocutory relief has been granted, the Court may take into account the fact that interlocutory relief has been granted.[7]
[7]ASTA Developments (n 4) [25] (Whelan and Ferguson JJA).
Accordingly, in determining the costs in this proceeding, it is appropriate to consider the conduct of the defendant prior to the commencement of a proceeding, whether his conduct may have precipitated the litigation, whether the plaintiff acted reasonably in commencing the proceeding and, to the extent the defendant defended the proceeding, whether he acted reasonably in doing so.
Consideration
The plaintiff and the defendant are the only beneficiaries of the estate. The only substantive asset of the estate was the Hallam property. The net proceeds in the estate after the sale of the Hallam property by the ANZ bank were $152,924. Since then, the defendant’s solicitor deducted $40,000 for their costs, leaving a balance of $112,000 in the estate account.
After the passing over orders were made on 14 February 2020, the plaintiff’s solicitor first wrote to the defendant’s solicitor on 12 June 2020 asking for an update as to the progress of the sale of the Hallam property. The defendant’s solicitor’s response on 24 June 2020 sought to block any further enquiries, calling such requests ‘time and costs wasting correspondence’. Despite this response, the plaintiff’s solicitor again wrote to the defendant’s solicitor on 1 July 2020. No response was received from the defendant’s solicitor. It was later on 10 July 2020 that the ANZ bank informed the plaintiff’s solicitor that settlement of the sale of the Hallam property was due to take place on 24 July 2020.
With settlement of the sale anticipated for 24 July 2020 and no knowledge of where the sale proceeds would be deposited, it is understandable that the plaintiff issued the proceeding on 16 July 2020 seeking specific orders that the net proceeds of sale of the Hallam property be paid into Court upon their receipt. The plaintiff had no knowledge of an estate bank account despite the multiple inquiries made by her solicitor. There was no justifiable reason for not informing the plaintiff that the estate bank account had been opened on 15 June 2020. Had the plaintiff known this, the plaintiff would not have commenced the proceeding. The defendant’s conduct caused the plaintiff to issue the proceeding to ensure that the sale proceeds would be held on behalf of the estate. In the circumstances of the failure to inform the plaintiff that an estate account had been opened, it was reasonable for the plaintiff to commence the proceeding.
It was not until the first directions hearing on 20 July 2020 that the plaintiff was informed that the defendant had opened an estate bank account on 15 June 2020. This information should have and could have been provided to the plaintiff’s solicitor in response to their initial letter seeking an update on the progress of the sale of the Hallam property. The conduct of the defendant and his solicitors in not informing the plaintiff and her solicitors of the existence of the estate bank account prior to the commencement of the proceeding was inexplicable. No rational explanation for that failure has been provided either at the time the estate bank account was opened or in the letter dated 24 June 2020. Had the plaintiff been told that the estate bank account had been opened on 15 June 2020 it would not have been necessary for the plaintiff to commence the proceeding.
It was unnecessary for the defendant to defend the proceeding as the bank account had been opened and when the plaintiff was told this at the directions hearing on 20 July 2020, there was nothing further to be determined, save for costs. What did occur after this, however, was further discussions with the parties adjourning the proceeding, initially to 10 August 2020, and subsequently to 24 August 2020, on the basis that the parties would meet on a without prejudice basis to resolve the parties’ differences concerning the remaining issues regarding the distribution of the estate.
Despite the plaintiff’s willingness to attend a without prejudice meeting, it did not occur. Instead, the defendant’s solicitor sent the letter dated 1 September 2020 which informed the plaintiff’s solicitor for the first time that costs and expenses of $40,000 had been paid from the sale proceeds and enclosed Mr Firth’s report. Neither the plaintiff nor her solicitor had seen the report before receipt of the letter. It comprises 36 pages, a large number of attachments and transactions and seeks an ‘accounting to the estate’ from the plaintiff within 28 days, failing which the defendant would seek further orders in the plaintiff’s proceeding as to the distribution of the estate. As stated, the defendant’s application was refused.
The defendant’s conduct after 20 July 2020 prolonged the proceeding unnecessarily and caused further costs. The defendant and his solicitors should have known that the issues raised in the Firth report could not be resolved at short notice or be included in the plaintiff’s proceeding. It was an inefficient and inappropriate proposal that was not reasonable and caused further costs to be incurred by the plaintiff.
Conclusion
The conduct of the defendant prior to the commencement of a proceeding caused and precipitated the plaintiff to commence the proceeding. In the circumstances of the defendant’s conduct, the plaintiff acted reasonably in commencing the proceeding. It was unnecessary for the defendant to defend the proceeding and his conduct after the commencement of the proceeding in raising new issues not then known to the plaintiff and seeking to ventilate those issues somehow through the plaintiff’s proceeding was not reasonable.
In the circumstances, the plaintiff is entitled to her costs of and incidental to the proceeding which she seeks be paid out of the estate of the deceased.
Orders
The Court orders that:
(a) the plaintiff’s costs of and incidental to the proceeding be paid out of the estate on the standard basis, to be taxed in default of agreement; and
(b) the defendant bear his own costs of and incidental to the proceeding, without reimbursement from the estate.
---
0
4
0