Santin v Sfameni (No 2)
[2020] VSC 326
•3 June 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2019 03031
IN THE MATTER of the Will and Estate of EMILIO SANTIN, deceased
| CARLO SANTIN | First Plaintiff |
| - and - | |
| BRUNO SANTIN | Second Plaintiff |
| v | |
| ROSANNA SFAMENI | Defendant |
| (as executor and trustee of the Estate of Emilio Santin, deceased) | |
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JUDGE: | MOORE J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 3 June 2020 |
CASE MAY BE CITED AS: | Santin v Sfameni (No 2) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 326 |
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COSTS – Estate litigation – Whether costs should follow the event – Where plaintiffs sought removal of defendant as executor and equitable relief – Where defendant belatedly consented to removal as executor – Where plaintiffs discontinued claim for equitable relief – Where plaintiffs successfully resisted defendant’s application to restrain plaintiffs’ solicitor from acting – Costs follow the event except as to costs incurred for discontinued claim – Supreme Court Act 1986, s 24 – Oshlack v Richmond River Council (1998) 193 CLR 72, applied.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | J Smith | John Whelan Commercial Lawyer |
| For the Defendant | C R Northrop | Goldsmiths Lawyers |
HIS HONOUR:
In this proceeding, the plaintiffs sought the removal of the defendant as the executor and trustee of the estate of Emilio Santin, as well as declarations and remedies regarding alleged breaches by the defendant of her duties as executor. A number of applications were also heard in this proceeding. Ultimately, the defendant was removed as executor and replaced with an independent administrator. This judgment concerns the question of costs of the proceeding and related applications.
Background
The plaintiffs commenced this proceeding on 5 July 2019. They sought the removal of the defendant as executor and trustee of the estate and the appointment of themselves or an independent person as executor and trustee instead. The plaintiffs also sought the following orders:
11.A declaration that the Defendant caused loss to the estate of the deceased by failing to:
(a)refinance the loan secured by mortgage over the Estate property situated at 2 Ormond Road, Ascot Vale (the Property);
(b)let the Property;
(c)account for the items identified in paragraph 10 of the First Plaintiff’s affidavit sworn 5 June 2019.
12.A declaration that the Defendant and her husband Salvatore Sfameni be prohibited from recovering interest pursuant to the mortgage over the Property at a rate above the reasonably obtainable market rate from the date of the deceased’s death.
13.The Defendant pay equitable compensation to the Estate in relation to each of the matters identified in the previous paragraph.
The proceeding came before me for directions on 23 August 2019. The plaintiffs suggested that the proceeding could be heard ‘in a broken down process’, with the removal application first and the application for declarations and equitable compensation afterwards, if the plaintiffs were appointed as executors. I declined to take that course of action. The plaintiffs accepted that, if they were to continue to seek both the removal of the defendant as executor and the other relief sought, they would need to properly articulate their claims. To that end, the plaintiffs filed a statement of contentions on 6 September 2019.
The defendant filed a summons on 25 September 2019, seeking to restrain the plaintiffs’ solicitor from continuing to act. The defendant alleged that the plaintiffs’ solicitor had represented the deceased against the defendant and her husband regarding disputes over the mortgage mentioned in order 12, set out above at [2]. The defendant also submitted that the plaintiffs’ solicitor was likely to be a material witness in relation to contested issues in this proceeding. For these reasons, it was said that the Court should restrain the plaintiffs’ solicitor from acting to protect the due administration of justice, or because there was a real and sensible possibility that the plaintiffs’ solicitor would have a conflict of duty between his former and current clients.
The defendant’s summons was listed for hearing on 31 January 2020.
On 30 January 2020, the plaintiffs filed a summons seeking leave to amend their originating motion to delete the claims for declarations and equitable compensation.
On 31 January 2020, I heard both the defendant’s and the plaintiffs’ applications. The defendant did not object to the plaintiffs’ application, and I granted the plaintiffs leave to amend their originating motion in the manner they proposed. The defendant pressed her application to restrain the plaintiffs’ solicitor.
On 7 February 2020, I dismissed the defendant’s application.[1]
[1]See Santin v Sfameni [2020] VSC 26.
On 14 February 2020, the defendant confirmed that she would consent to her removal as executor. It was foreshadowed that the question of costs of the proceeding would be referred for my consideration. On 17 March 2020, I ordered that the question of costs of the applications be determined on the papers after the final orders in the proceeding were made and together with any application by the parties for costs of the proceeding.
After an independent administrator was agreed upon by the parties, McMillan J made final orders in the proceeding on 6 April 2020, including that the defendant be removed as executor and replaced with an independent administrator. The parties filed submissions in relation to the costs of the proceeding on 22 April 2020.
The plaintiffs seek an order that the defendant personally pay the costs of and incidental to the proceeding, including the defendant’s summons filed 25 September 2019 and the plaintiffs’ summons filed 30 January 2020, on a standard basis without right of indemnity from the estate.
The defendant primarily contends that there should be no order as to the costs of the proceeding or the applications.
Submissions
The plaintiffs’ submissions
The plaintiffs relied on the principle that costs should follow the event. They submitted that they were the successful party in this proceeding, given that the defendant consented to her removal as executor. In support of this position, it was noted that the defendant had been on notice that her position was ‘hopelessly compromised’ since April 2018 and could have consented to her removal as executor at any time, but she only did so after her application had been dismissed.
The plaintiffs rejected any suggestion that, had the declarations and equitable compensation not been pursued, the defendant would probably have agreed to her removal as executor. The plaintiffs said that they had made it clear at the first directions hearing that the independent administrator would be left to pursue any other relief if the defendant agreed to her removal. They submitted that the defendant repeatedly rejected the proposition that there was a proper basis for her removal at the first directions hearing, continued to reject her removal as executor at all relevant times until February 2020, and pressed her application to restrain the plaintiffs’ solicitor even after the Court had granted leave to allow the originating motion to be amended. The plaintiffs appeared to imply that the defendant had failed to meet her obligations under the Civil Procedure Act 2010 by resisting the application for her removal, particularly regarding the narrowing of issues in dispute and ensuring that costs are reasonable and proportionate to the complexity and importance of the issues in dispute.
The plaintiffs submitted that, if the Court was not minded to make one overarching costs order in the proceeding, costs should follow the event of the dismissal of the defendant’s summons. The plaintiffs noted the exceptional nature of the jurisdiction to restrain a lawyer from acting, and that, if a party were unsuccessful in invoking that jurisdiction, they ‘should be accountable for the costs consequences’. They submitted that one of the defendant’s grounds for the application was misconceived. It also could not be said, according to the plaintiffs, that the other ground would have succeeded but for the amendment of the originating motion.
The defendant’s submissions
The defendant submitted that the issue of costs ‘should be considered holistically and the costs left to lie where they fall’. There was no adjudication of the merits of the plaintiffs’ claim and, therefore, there was no ‘event’ in which costs could follow. The defendant submitted that the plaintiffs’ amendment of their originating motion indicated the failure of part of their claim. The defendant also submitted that it could not be assumed that the plaintiffs’ application for removal would have succeeded had it been determined on its merits; the plaintiffs’ evidence had not been tested and would have been challenged. The defendant also claimed that the significant delay in making the application would have been a factor militating against making an order for removal.
In addition, the defendant said that the plaintiffs acted unreasonably in seeking the removal of the executor, as well as seeking declarations and equitable compensation, in the same proceeding. The defendant claimed that, had the plaintiffs amended their originating motion after the first directions hearing in the manner in which they did in January 2020, it was unlikely that statements of contention would have been prepared and unlikely that the defendant would have applied to restrain the plaintiffs’ solicitor from acting. The defendant made the application as a consequence of the plaintiffs’ decision to continue to press their case for declarations and equitable compensation. Counsel for the defendant rejected the proposition that the defendant did not meet her obligations under the Civil Procedure Act 2010. To the contrary, the defendant says that her consent to her removal as executor in February 2020 has saved the parties and the Court from ‘significant expense and delay’.
The defendant submitted that, if the Court was minded to make an order specifically in respect of the costs of her unsuccessful application, the Court should not do so. The defendant submitted that her application could not be considered in isolation from the manner in which the plaintiffs had formulated their claims. It was said that it was unreasonable for the plaintiffs to seek declarations and equitable relief in a removal application, and unreasonable to persist with these claims after the first directions hearing.
The defendant also submitted that, if costs were ordered against her, the order should not include the plaintiffs’ costs caused by the inclusion of the abandoned compensation claim, the plaintiffs should pay all of the defendant’s costs flowing from the inclusion of the compensation claim, and the plaintiffs should pay the defendant’s costs of the plaintiffs’ summons filed 30 January 2020. Any costs order should be paid out of the estate.
Consideration
The Court’s jurisdiction in relation to costs is conferred by s 24(1) of the Supreme Court Act 1986. The Court’s general discretion in relation to costs must be exercised judicially and in accordance with Order 63 of the Supreme Court (General Civil Procedure) Rules2015.
In Oshlack v Richmond River Council,[2] McHugh J discussed the meaning of the expression, the ‘usual order as to costs’. His Honour observed that it:[3]
… embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation
[2](1998) 193 CLR 72.
[3]Ibid 97 [67].
The plaintiffs have been overwhelmingly successful in this proceeding. Subject to one matter, the usual order as to costs should be made.
Despite the inclusion of claims for declaratory relief and equitable compensation, the plaintiffs made clear from the first directions hearing in this matter that the primary focus of the proceeding was their application for the defendant’s removal as executor. They have succeeded in that application after the defendant confirmed that she would consent to her removal of 14 February 2020. Although the removal claim was never the subject of determination, the material relied upon by the plaintiffs presented a compelling case for her removal as executor. On the face of that material, it is unsurprising that the defendant consented to her removal. What is surprising is the belated stage at which she consented to that course. The defendant only consented to her removal as executor after her summons to restrain the plaintiffs’ solicitor from acting was dismissed.
Once leave was given to the plaintiffs to abandon their claims for declaratory relief and equitable compensation – about which no submissions were made on behalf of the defendant including in relation to costs – the plaintiffs’ prospects of succeeding in that claim were, I consider, very strong. Despite this, the defendant pressed her application to restrain the plaintiffs’ solicitor.
Given the above matters, subject to what follows, the plaintiffs have established a good case for why, in the exercise of my discretion, the defendants should pay the plaintiffs’ costs without indemnity from the estate and why the defendants should also pay their own costs without indemnity from the estate.
It is the case, however, that the conduct of the proceeding was unduly complicated by the approach adopted by the plaintiffs to their claim for declaratory relief and equitable compensation. Having brought that claim in the context of the removal application, they proceeded to file a statement of contentions on 6 September 2019 which included those claims. As has been noted, on the day before the hearing of the defendant’s application to restrain the plaintiffs’ solicitor from acting, the plaintiffs sought to abandon those claims. In those circumstances, I do not consider that it would be appropriate, in the exercise of my discretion, to require the defendant to pay the plaintiffs’ costs of the proceeding insofar as they relate to the claims referred to in paragraph [2] above. Further, it is appropriate that the plaintiffs pay the defendant’s costs in respect of those claims without indemnity from the estate.
The Court will accordingly order that the defendant personally pay, on a standard basis without right of indemnity from the estate, the costs of and incidental to the proceeding (including the defendant’s summons filed 25 September 2019), but excluding the costs of the plaintiffs’ summons filed 30 January 2020 and the costs incurred in relation to the plaintiffs’ claims set out in paragraphs 11–13 of the plaintiffs’ originating motion dated 5 July 2019.
The Court will also order that the plaintiffs personally pay, on a standard basis without right of indemnity from the estate, the costs of and incidental to the plaintiffs’ summons filed 30 January 2020 and the costs incurred in relation to the claims made in paragraphs 11–13 of the originating motion filed on 5 July 2019.
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