Re Wright; Wright v Ausfund Legal Pty Ltd
[2018] VSC 279
•29 May 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S CI 2018 00007
| STEVEN WILLIAM WRIGHT (in his capacity as executor of the estate of DAWN LORRAINE WRIGHT, deceased) | Plaintiff |
| v | |
| AUSFUND LEGAL PTY LTD (ACN 007 164 570) trading as DELLIOS WEST & CO | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 29 May 2018 |
CASE MAY BE CITED AS: | Re Wright; Wright v Ausfund Legal Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2018] VSC 279 |
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COSTS – Where plaintiff successful – Costs follow the event – Whether indemnity costs appropriate – No point of principle.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms S Marshall | Anthonys Solicitors |
| For the Defendant | Dellios West & Co |
HER HONOUR:
Introduction
Dawn Lorraine Wright died on 16 February 2015 (‘the deceased’). She was survived by her three children, Steven William Wright (‘the plaintiff’), David Matthew Wright (‘Mr Wright’) and Michelle Ann Nicholson (‘Ms Nicholson’).
By her will dated 5 April 2013, the deceased named her two sons as the executors and trustees of her estate. The draft inventory of assets and liabilities prepared by the plaintiff values the real estate at $210,000 and the personal estate at $137,513. The deceased’s will was drawn by the defendant, and the original will was retained by it for safe keeping.
The executors have been estranged for a lengthy period and this has meant they have been unable to agree on many estate matters, including obtaining a grant of probate. As a result, in April 2017, Ms Nicholson issued a proceeding, pursuant to s 15 of the Administration and Probate Act 1958, seeking orders for delivery up of the original will to the Court (‘the related proceeding’).[1] On 16 June 2017, orders were made in the related proceeding that Mr Wright deliver up or do all things necessary to cause the defendant in this proceeding to deliver up the original will to the Registrar of Probates. This did not occur. The plaintiff now seeks to obtain a grant, with leave reserved to Mr Wright, however, the defendant would not release the original will unless certain conditions were met by the plaintiff.
[1]Proceeding number S CI 2017 01541.
Plaintiff’s application
By originating motion filed 2 January 2018, the plaintiff seeks orders that the defendant deliver up the deceased’s original will to the Registrar of Probates, that the plaintiff’s costs be paid on an indemnity basis and the defendant pay its own costs, without indemnity from the estate of the deceased. The application was supported by an affidavit sworn by the plaintiff on 21 December 2017 (‘the plaintiff’s affidavit’).
At the hearing on 2 March 2018, Mr Dellios appeared for the defendant. By email the previous day, the defendant informed the Court that the deceased’s original will had been delivered to the Registrar of Probates.
The plaintiff seeks his costs of the proceeding, on an indemnity basis, in the amount of $15,813.30 on the basis of delay and the defendant’s failure to produce the original will until the day before the hearing.
Mr Dellios opposed the plaintiff’s application for costs, but was unable to address the Court in a meaningful manner on the day. As a consequence, directions were made for the parties to provide short submissions of no more than four pages, with the submissions to be confined to the evidence before the Court.
Mr Dellios provided written submissions and also sought leave to file an affidavit sworn by him on 11 April 2018. He considered his affidavit was necessary as the plaintiff’s affidavit selectively quoted from the correspondence thereby having ‘a tendency’ to distort the facts. Mr Dellios’ affidavit exhibits correspondence over the period from 2 February 2016 to 17 February 2018. In addition to dealing with the production of the original will from Mr Wright, the correspondence also details Mr Wright’s other issues with the plaintiff.
Factual background
The plaintiff’s affidavit summarises relevant correspondence exhibiting his attempts to obtain the original will, beginning 3 June 2015 up to the commencement of this proceeding. This includes a letter dated 15 June 2015 from the defendant to the plaintiff’s solicitors wherein the defendant stated ‘we will provide the will if we have authority from both executors or a Court order’.
The plaintiff’s affidavit also refers to the related proceeding where Ms Nicholson sought orders that the plaintiff and Mr Wright, as the named executors of the deceased’s will, obtain a grant of probate of the will of the deceased. In the related proceeding, the defendant represented Mr Wright until 25 May 2107, filing a notice of ceasing to act the day before the first hearing. This caused the application to be adjourned to 16 June 2017. On the return date, the plaintiff, (being the first defendant in the related proceeding) appeared at the hearing. Mr Wright did not appear. Orders were made that on or before 21 June 2017, Mr Wright deliver up or do all things necessary to cause Dellios West & Co (who was not a party to the proceeding) to deliver up the deceased’s original will to the Registrar of Probates.
In June 2017, the plaintiff filed an application for a grant of probate of the deceased’s will and attached a copy of the deceased’s will to his application. The copy will was attached as the plaintiff did not have the original will but expected that it would be delivered to the Registrar of Probates, by reason of the orders made in the related proceeding. Notwithstanding those orders, neither Mr Wright nor the defendant would release the original will to the plaintiff or the Registrar of Probates. By letter dated 8 June 2017, the Registrar of Probates requested that the plaintiff file and exhibit the original will of the deceased.
Mr Dellios’ affidavit refers to other correspondence, starting with his letter dated 2 February 2016 which sets out Mr Wright’s conditions for the release of the original will to the plaintiff to enable the plaintiff to apply for a grant of probate, with leave reserved to Mr Wright. One of those conditions was that the estate pay Mr Wright’s costs in relation to the matter. Mr Dellios deposes that the plaintiff agreed to pay the defendant’s costs of acting for Mr Wright out of the estate of the deceased. By letter dated 4 February 2016, the plaintiff agreed to pay the costs, provided they were reasonable and subject to independent assessment by the Law Institute Costing Service.
Since the exchange of those letters, correspondence from 4 March 2016 to 23 May 2017 sets out the many issues that Mr Wright raised over the identity and value of the assets of the estate. During this period, the plaintiff’s solicitors repeatedly requested the release of the original will and a response regarding whether the application for a grant would be joint or with leave reserved to Mr Wright. In a letter dated 8 September 2016, Mr Wright sought a further condition regarding distribution of the estate before he would release the original will, made further requests for information about the assets of the estate on the basis that a joint application could be made, sought inspection of the deceased’s property and personal items, and disputed most of the plaintiff’s valuations of the assets.
After orders were made in the related proceeding on 16 June 2017, the plaintiff’s solicitors wrote to the defendant on 4 July 2017 inquiring, amongst other matters, as to whether the defendant, if it still acted for Mr Wright, or Mr Wright consented to the release of the deceased’s original will to the plaintiff’s solicitors or the Registrar of Probates. The letter informed the defendant that if it did not consent, the plaintiff would issue a proceeding against the defendant and warned of the costs consequences.
By letter dated 5 July 2017, the defendant responded that the existing order did not authorise it to release the will without Mr Wright’s authority and that it no longer acted for him.
By letter dated 13 December 2017, the plaintiff’s solicitor noted that the defendant was refusing to release the deceased’s original will until Mr Wright’s legal fees were paid by the plaintiff. The plaintiff’s solicitors noted that the payment of those fees had nothing to do with the release of the will for the purpose of obtaining a grant of probate, and that the refusal was causing delay and unnecessary legal costs.
By letter dated 16 February 2018 to the plaintiff’s solicitors, the defendant advised that Mr Wright, as one of the executors, was entitled to obtain his own representation and that the costs incurred in doing so are ‘costs which he is rightly entitled to have paid out of the estate’. The defendant considered it appropriate that the plaintiff agree to Mr Wright’s costs being paid out of the estate before any distribution was made in the estate and suggested that, in order to avoid the costs of attending the hearing on 2 March 2018, the plaintiff provide a written undertaking to pay the defendant’s accounts amounting to $22,574.84 (having sent the accounts previously on 14 December 2017) and, in return, the defendant undertook to deliver the original will to the plaintiff’s solicitors.
Defendant’s submissions
The defendant submits that Mr Wright, as an executor, had the ability to bind the estate and, when he retained the defendant to act for him on 15 January 2016, the defendant became entitled to hold the will. It submits there is a distinction between a solicitor’s custody of a deceased’s will on behalf of the testator and custody under the retainer of a living person, citing Brennan J in Hawkins v Clayton:
It follows that a solicitor who has custody of a deceased testator’s will does not hold it under any retainer he may have had from the testator and his custody under any retainer from a living person is subject to his obligation to bring it into the registry when ordered to do so.[2]
[2](1988) 164 CLR 539.
The defendant accepts that it insisted on the plaintiff undertaking to pay its costs prior to releasing the original will. In insisting on payment of its costs, the defendant relies on the plaintiff’s agreement for the defendant’s costs to be paid out of the estate in the letter dated 4 February 2016. After this agreement, the defendant continued to act for Mr Wright and costs were incurred. In light of the agreement, the defendant submits that the plaintiff should be estopped from taking any action in contradiction to the agreement.
Alternatively, when the related proceeding was before the Court, the plaintiff should have brought the letter dated 15 June 2015 that stated the defendant would ‘provide the will if we have authority from both executors or a Court order’, to the attention of the Court and an order should have been sought for the defendant to produce the will at that time. Alternatively, as such an order was not made, it could also have been sought pursuant to liberty to apply in the related proceeding and there is no explanation why this was not done. Given the number of times the plaintiff’s solicitors advised that they had instructions to apply to the Court, the costs of this proceeding would have been around $1,500 had the plaintiff made an application pursuant to liberty to apply, rather than the costs now claimed.
The defendant submits that, if it is ordered to pay the plaintiff’s costs, those costs should be fixed in an amount of $4,000 as it is a reasonable sum for such a simple application. It further submits that, if the defendant is ordered to pay any costs to the plaintiff, the defendant should be given leave to off-set those costs against the costs the plaintiff has agreed to pay the defendant.
Alternatively, the defendant submits that the plaintiff’s bill of costs dated 4 April 2018 in the amount of $15,813.30 is excessive and is contradictory when compared to the quantum of $8,053.30 set out in the plaintiff’s solicitors’ letter dated 27 February 2018. All that should be allowed for the plaintiff’s costs is the summons, a short affidavit sworn by the plaintiff’s solicitor and a modest fee for junior counsel for the hearing and those costs should be taxed in any event.
Applicable principles
Costs are at the discretion of the Court, unless as otherwise provided by an Act or the Rules.[3] The prima facie position in respect of costs in litigation is for standard costs to be ordered by the Court, with the Court having the discretion to award costs other than on the standard basis. The usual order as to costs is that costs follow the event and a successful party is entitled to an award of costs in its favour.[4] The relevant ‘event’ is success in the action or on particular issues.[5] The unsuccessful party bears the liability for the costs of the unsuccessful litigation.[6] The central principle is to make an order that is fair and just between the parties in the circumstances of each case.[7]
[3]Supreme Court Act 1986 (Vic) s 24.
[4]Oshlack v Richmond River Council (1998) 193 CLR 72, 97 (McHugh J).
[5]Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin(1997) 186 CLR 622, 624 (McHugh J); Seng Hpa v Walker [2017] VSC 320 (8 June 2017) [77]-[81].
[6]Oshlack v Richmond River Council (1998) 193 CLR 72, 97 (McHugh J).
[7]Earnshaw v Loy (No 2)[1959] VR 252, 253; see G E Dal Pont, Law on Costs (Lexis Nexis, 3rd ed, 2013) [6.15].
A special costs order will only be made where the proceeding exhibits a special or unusual feature or special circumstances. The authorities concerning the principles to be applied when a court, in the proper exercise of its discretion, may depart from the making the usual order for costs on a standard basis are well known and conveniently set out in cases such as Colgate-Palmolive Co v Cussons Pty Ltd,[8] Ugly Tribe Co Pty Ltd v Sikola[9] and Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3).[10] The categories of circumstances that warrant a special costs order are not closed and each proceeding must be considered on its own facts to ascertain whether those facts support the making of a special order for costs.
[8] (1993) 46 FCR 225.
[9][2001] VSC 189 (14 June 2001).
[10][2012] VSC 399 (14 September 2012).
Consideration
The defendant’s reliance on the quoted passage in Hawkins v Clayton is misplaced as it did not act for Mr Wright from 25 May 2017 onwards. In any event, the defendant’s custody of the original will where there is a retainer is subject to the obligation to deliver up the will to the Registrar of Probates. As Mr Wright had many disputes with the plaintiff, the sensible course would have been for the defendant to advise Mr Wright that it was in the best interests of Mr Wright and the plaintiff for the original will to be delivered to the Registrar of Probates rather than using it as a bargaining chip in the disputes.
The defendant’s insistence on an undertaking from the plaintiff to pay its costs prior to releasing the original will based on the plaintiff’s agreement in February 2016 misconstrues what was agreed between the plaintiff and Mr Wright. The agreement concerned Mr Wright’s costs in his capacity as an executor of the estate, and not in his personal capacity. An executor or trustee is entitled to indemnity from the estate for expenses and liabilities properly incurred in carrying out the trust, that is, all costs except to the extent that they are of an unreasonable amount or have been unreasonably incurred. The concept of proper expenditure excludes conduct that demonstrates want of prudence or diligence and are to be borne personally.[11]
[11]Nolan v Collie (2003) 7 VR 287, 303–10 (Ormiston JA); Dimos v Skaftouros (2004) 9 VR 584, 617 (Dodds-Streeton AJA) as cited in National Trustees Executors & Agency Company of Australasia Ltd v Barnes (1941) 64 CLR 268, 279 (Williams J); Re O’Donogue [1998] 1 NZLR 116, 121 (Hammond J); Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq)(2001) 188 ALR 566, 606.
An overview of the correspondence shows that many of the disputes that Mr Wright had with the plaintiff were personal and, with no agreement being reached in respect of those disputes, Mr Wright would not release the original will to the plaintiff. In this manner, Mr Wright and the defendant used the custody of the original will as a bargaining chip thereby causing the estate not to be administered at all. The plaintiff’s agreement is expressed as being subject to Mr Wright’s costs being reasonable and independently assessed by the Law Institute Costing Service. An assessment of Mr Wright’s costs is necessary to determine whether they are personal costs or executor’s costs and are reasonable. In the circumstances, the defendant’s demand for the plaintiff to provide an undertaking to pay its costs before releasing the will was unreasonable.
The defendant’s submission that any costs ordered to be paid by the defendant should be off-set against the costs the plaintiff has agreed to pay the defendant also misconstrues the agreement. The agreement concerns the costs of Mr Wright as an executor of the estate. This application concerns the defendant’s refusal to deliver up the original will to the plaintiff or the Registrar of Probates. There is no basis for the costs of the application being considered as an estate expense that is reasonably incurred.
The defendant’s alternative submission that the application should have been made in the related proceeding cannot be sustained. The defendant was not a party to that proceeding and orders could not be made against the defendant at the hearing or pursuant to liberty to apply. The orders made in the related proceeding reflect those circumstances, namely, that Mr Wright deliver up or do all things necessary to cause Dellios West & Co to deliver up the deceased’s will to the Registrar of Probates.
The plaintiff seeks his costs on an indemnity basis. The plaintiff’s affidavit sets out the defendant’s refusal to deliver the original will to either the plaintiff’s solicitors or the Registrar of Probates over a long period of time. Overall, the evidence establishes that, over that period, both Mr Wright and the defendant were unwilling to co-operate in delivering the original will to the plaintiff so that he could seek a grant of probate, with leave reserved to Mr Wright. The disputes between the executors did not justify withholding the original will and the defendant was not justified in withholding the original will by insisting on an undertaking that its costs be paid. The defendant was given a number of warnings by the plaintiff’s solicitors as to the costs consequences of its failure to deliver the original will to either the plaintiff’s solicitors or the Registrar of Probates. The defendant has caused unnecessary delay and unnecessary costs to be incurred by withholding the original will without justification. In the circumstances, an order for indemnity costs is warranted.
The defendant queried the quantum of costs claimed by the plaintiff on the basis of the discrepancy between the amounts claimed in the bill of costs dated 4 April 2018 and the amount set out in the letter dated 27 February 2018. The difference is easily understood by reference to the documents – the bill of costs details the costs for the period 4 July 2017 to 2 March 2018, whereas the letter sets out professional fees and disbursements within a discrete timeframe as at 27 February 2018 and does not profess to be an itemised bill.
The Court accepts the plaintiff’s submission that a taxation of costs is likely to involve further protracted litigation. In order to avoid further litigation, the Court will provide two weeks for the parties to agree on the quantum of the costs, and failing agreement, the plaintiff’s costs are to be determined by the Law Institute Costing Service.
Orders
The Court will make the following orders:
(a) the defendant pay the plaintiff’s costs of and incidental to the proceeding on an indemnity basis, to be assessed by the Law Institute Costing Service in default of agreement; and
(b) no order as to the defendant’s costs.
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