Sherwell v Young
[2017] VSC 115
•17 March 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S CI 2016 03533
| CHERYL ANN SHERWELL | Plaintiff |
| v | |
| GREGORY JAMES YOUNG | First Defendant |
| -and- | |
| VICKI ANN YOUNG | Second Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 17 March 2017 |
CASE MAY BE CITED AS: | Sherwell v Young |
MEDIUM NEUTRAL CITATION: | [2017] VSC 115 |
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COSTS — Where proceeding not resolved by contest — Where plaintiff seeks costs to be paid personally by defendants — Where defendants seek each party bear their own costs —Whether defendants acted unreasonably — Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Duggan | Vines Lawyers |
| For the Defendants | Mr R Wells | Ristevski Lawyers |
HER HONOUR:
Background
Mary May Young died on 15 November 2015, aged 81 years. The plaintiff and the first defendant are two of her five children. The second defendant is the wife of the first defendant.
The deceased left a will dated 30 March 2015 where she appointed the plaintiff and the first defendant as the executors of her estate. The defendants alleged that the deceased left an informal will constituted by her will instructions given to her solicitors, Ristevski Lawyers, on or about 1 October 2015 which appointed the first defendant as the sole executor of the estate. The first defendant did not make an application to seek to propound the will instructions as an informal will of the deceased.
The plaintiff held significant concerns about certain inter vivos transactions between the defendants and the deceased in favour of the defendants concerning the deceased’s real property and shares in the months before her death. As a result of these concerns, on 16 August 2016, the plaintiff issued this proceeding seeking an interim grant of administration ad litem for the estate of the deceased for the purpose of the estate commencing a proceeding against the defendants.
Until 7 November 2016, the first defendant contended that he intended to propound the deceased’s will instructions as her informal will, pursuant to s 9 of the Wills Act 1997. He took this position notwithstanding the plaintiff’s concerns over the inter vivos transactions between the defendants and the deceased.
At the third directions hearing on 11 November 2016, orders were made that the plaintiff and the first defendant appoint an independent third person, to be agreed by them, to make application for a grant of letters of administration with the deceased’s will dated 30 March 2015 annexed and to thereafter administer the estate of the deceased, and in default of such agreement within 30 days of the order, an independent person be appointed by the Court. This meant that the Court made no adjudication of the plaintiff’s foreshadowed claim in respect of the inter vivos transactions. The costs of the parties were to be resolved by the Court on the basis of written submissions.
Costs orders sought by the parties
The plaintiff seeks an order that the defendants personally pay the costs of the proceeding, assessed on the standard basis, with the defendants having no right of indemnity from the estate of the deceased.
The defendants seek an order that each party bear their own costs.
Consideration
Where a proceeding is undetermined and will not be resolved by contest before the Court, the Court has discretion to make costs orders either where a defendant has consented to a grant of final relief or if there is consensus as to the outcome of the proceedings. In certain circumstances, a costs order can be made if it can be determined that one or other party would certainly have succeeded in the proceedings, or if one or other party has acted unreasonably in pursuing or defending the proceedings.[1] Where a proceeding is not resolved by the Court, the issue of the costs of the parties is determined primarily by whether one or other party has acted unreasonably in pursuing or defending the proceeding.
Did the plaintiff act reasonably?
[1]Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622, 624–5 (McHugh J).
The defendants contended that the purpose of the proceeding was so that the plaintiff could commence proceedings on behalf of the estate against them and it did not relate to and was not necessary for the purpose of enabling the plaintiff to contest any application by the first defendant to propound the will instructions as the deceased’s informal will.
In my view, these submissions misconstrue the proceeding. The plaintiff commenced the proceeding seeking to be appointed administrator ad litem of the estate for the purpose of pursuing the issue of the inter vivos transactions made by the deceased to the defendants in the months before her death. At the same time, this would also cause the first defendant to act on his claims concerning the informal will of the deceased as he had not made any such application.
The validity of the executed will was conceded by the defendants at the third directions hearing. With the appointment of an administrator, the issue of the inter vivos transactions could be investigated by an independent person and whether those foreshadowed claims were to proceed would be determined by that person.
The jurisdiction of the Court to pass over an executor named in a will is summarised in Re Crane.[2] A named executor can be passed over if the due and proper administration of the estate requires it.[3]
[2]Re Crane (2005) 93 SASR 198, 203–4 (Besanko J).
[3]Ibid [24].
Prima facie, the transactions between the deceased and the first defendant warrant careful investigation. In this regard, the first defendant’s failure over a period of approximately nine months to apply for a grant of either the will or the will instructions becomes relevant in determining the reasonableness of the plaintiff’s actions in commencing her proceeding.
In my view, it was reasonable for plaintiff to commence the proceeding for the due and proper administration of the estate, which involves the ascertainment of the assets and liabilities of the estate. Until the proceeding was commenced, the first defendant had not taken any steps in that regard. There was an obvious conflict of interest on his part in being an executor of the estate and had he remained an executor of the estate, it was likely that the issue of the inter vivos transactions would not have been investigated or pursued by him.
Did the defendants act reasonably?
The first defendant deposed that the reason why he had not made an application for probate since the death of the deceased was because a caveat was lodged with the Registrar of Probates. The defendants’ submissions as to costs clarify that this caveat was lodged by the plaintiff against a grant of probate of the will instructions as an informal will of the deceased, but not the date on which this occurred.
As a beneficiary under both the last will and the will instructions, the plaintiff had standing to lodge such a caveat.[4] The caveat did not prevent the first defendant from making an application to propound the will instructions as an informal will. The first defendant has failed to provide a reasonable explanation for the delay of approximately nine months in pursuing that application.
[4]In the Will of Finn (dec'd) [1916] VLR 165; Re Seymour [1934] VLR 136; Wood v McLean (2010) 31 VR 12; Van Wyk v Albon [2011] VSC 120 (24 March 2011).
The defendants submitted that on receiving advice from counsel and in light of decisions of the court between late August and late October 2016, they decided that the will instructions should not be propounded as the deceased’s informal will. Despite referring to ‘decisions’, they referred only to one decision delivered on 24 August 2016.[5] The defendants submitted that they acted in a timely manner on receipt of advice from counsel and in light of new case law.
[5]Re Hancock; Rennie v The Whippet Association of Victoria [2016] VSC 496 (24 August 2016).
The decision referred to by the defendants applied established legal principles for propounding an informal document as an informal will and does not apply any new principle in this area of the law.
The defendants were represented by counsel since the first directions hearing on 9 September 2016 and presumably retained counsel at some point prior to this date. The defendants failed to address why they did not seek the advice of counsel in a timely manner in the nine months before the plaintiff commenced the proceeding, when the first defendant maintained his position as to the deceased’s will instructions.
The defendants failed to address the delay of about two and a half months between the decision referred to being handed down and their change of position.
I am satisfied that the defendants failed to act reasonably leading up to and defending the proceeding.
Was one party almost certain to succeed if the matter had been determined?
The plaintiff submitted that she has been vindicated in issuing the proceeding.
The defendants submitted the plaintiff did not seek the appointment of an independent person to administer the estate and that the defendants did not resist such an outcome or seek to argue against the making of such an order.
The defendants’ submission is correct in part, however, the plaintiff has been substantially successful in relation to the key question of the propounding of the deceased’s will. She has always maintained the deceased’s executed will was her last will. The defendants rejected this position until the week of the third directions hearing in the proceeding.
Whilst it is accurate that the plaintiff was not successful in having herself appointed administrator ad litem, the order to appoint an independent person to make application for a grant of letters of administration with the will annexed resolves the position of conflict of the first defendant and it advances the due and proper administration of the estate.
Orders
I will make the following orders:
(a) the defendants pay the plaintiff’s costs of and incidental to this proceeding personally, assessed on the standard basis, to be taxed in default of agreement;
(b) the defendants bear their own costs of and incidental to this proceeding personally, without being indemnified for those costs out of the estate; and
(c) the proceeding be otherwise dismissed.
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