The Estate of Bourke

[2024] NSWSC 280

Supreme Court

New South Wales

Medium Neutral Citation:

The Estate of Bourke [2024] NSWSC 280

Hearing dates:

2 February 2024, 1 March 2024

Date of orders:

22 March 2024

Decision date:

22 March 2024

Jurisdiction:

Equity - Probate List

Before:

Slattery J

Decision:

There will be no order for the costs of the plaintiff’s notice of motion filed on 23 January 2024 and the plaintiff will not be entitled to be indemnified out of the estate for his costs of the motion.

Catchwords:

COSTS – party/party – exercise of costs discretion – contested probate suit – plaintiff is the executor of an estate – final orders made by consent in September 2023 – plaintiff’s notice of motion of January 2024 sought to vary the final orders – plaintiff’s January 2024 motion is resolved by agreement except as to the costs of the motion – the Court foreshadows the making of orders that the contest about the costs of the motion be capped at a maximum of $5,000 – which party should bear the costs of motion – application of Lai Qin principles – whether one party was almost certain to have succeeded, if the matter had been fully tried – whether one party has conducted itself unreasonably – whether the plaintiff should be entitled to indemnify himself out of the estate for his costs of the contest and any liability for costs he bears.

Legislation Cited:

Uniform Civil Procedure Rules 2005, rr 31.46, 36.15, 36.16, 36.17

Civil Procedure Act 2005, s 98(4)(c)

Cases Cited:

Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194

Dixon v Dixon (No. 2) [2022] NSWSC 944

Re Minister for Immigration and Ethnic Affairs v Lai Qin (1997) 186 CLR 622

Category:

Consequential orders

Parties:

Plaintiff: Paul Martin Bourke
Defendant: Stephanie Frances Bourke

Representation:

Counsel:
Plaintiff: I Hoskinson
Defendant: C. Birtles

Solicitors:
Plaintiff: Igor Kazagrandi, BMA House Lawyers
Defendant: Caroline Zoe Sims, Teece Hodgson & Ward Lawyers

File Number(s):

2023/96919

Publication restriction:

No

JUDGMENT

1. The plaintiff, Paul Bourke, and the defendant, Stephanie Bourke, are brother and sister. They are the children of the late Dr Helen Jessie Bourke, a scholar and art collector, who died leaving an estate of approximately $2 million. Despite their mother’s testamentary largesse, they have asked the Court to resolve the disputed costs of a Notice of Motion filed in January 2024. The Court was told these were about $15,000. Following the precepts of Civil Procedure Act 2005, s 60 to keep the costs of the parties in arguing about the costs of the Motion proportionate to the subject matter in dispute the Court noted that it might limit the successful party’s cost recovery on the Motion to no more than $5,000.

2. Ms I. Hoskinson of counsel, instructed by Mr Igor Kazagrandi, of BMA House Lawyers, appeared for the plaintiff/applicant on the Motion. Mr C. Birtles of counsel, instructed by Caroline Zoe Sims of Teece Hodgson & Ward Lawyers, appeared for the defendant.

3. This judgment resolves an issue that commonly arises in proceedings. The January 2024 Motion filed by Paul Bourke, has been dismissed by agreement. He no longer seeks to press for any relief against his sister. But the parties cannot agree upon who shall pay the costs of the Motion. Each party seeks costs against the other. Other consequential issues arise.

4. The principle that governs what costs order should be made in this situation are stated in Re Minister for Immigration and Ethnic Affairs v Lai Qin (1997) 186 CLR 622 (“Lai Qin”), at 625, per McHugh J. The applicable principle may be shortly stated as follows by reference to the judgment of McHugh J:

“[I]f it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.”

5. McHugh J also stated in Lai Qin (at 625) that “in some cases a judge may feel confident that, although both parties have acted reasonably one party was almost certain to have succeeded if the matter had been fully tried” and even though both parties have behaved reasonably in the conduct of litigation, cost orders have been made in favour of the party who would have been successful. But as McHugh J observed (at 625) “such cases are likely to be rare”.

6. The authorities are clear that the Court cannot try a hypothetical action between the parties on such an application: Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 (“Aust-Home Investments”), at 201. Therefore, the Court’s account of the relevant facts below is as concise as it can be on such an application.

Paul Bourke, Stephanie Bourke and the Estate of their Mother

7. The deceased, Dr Bourke, died in May 2022. She had lived in South Melbourne for twenty years between 2000 and 2020. Paul Bourke says he arranged extensive income care for her after she suffered a stroke in 2015. He was appointed as her enduring power of attorney and enduring guardian and financial manager until June 2021 when the NSW Civil and Administrative Tribunal (NCAT) appointed Stephanie Bourke to these roles. Prior to the NCAT decision, Paul Bourke had maintained Dr Bourke’s Victorian house. After the NCAT decision Stephanie Bourke took control of the Melbourne property. Paul Bourke says the effect of the NCAT order and the changing of the locks to Dr Bourke’s house was that he was denied access and unable to take an inventory of chattels in the house. He says that he also had other property of his own in the house.

8. Paul Bourke’s Statement of Claim filed in April 2023 sought a grant of probate to him in solemn form, as the named executor, of Dr Bourke’s will dated 6 November 2013 and a codicil of 21 December 2017.

9. In her Defence filed 27 June 2023, Stephanie Bourke alleged that Paul Bourke was in a position of conflict of interest as executor because of (a) claims that the estate had against him, (b) that he was not a fit and proper person to carry out the duties of an executor of Dr Bourke’s will and (c) that there was a history of past conflict between the siblings which was likely to impact upon the orderly administration of the deceased’s estate.

10. Stephanie Bourke cross claimed in June 2023 seeking orders that letters of administration with the will and codicil annexed be granted to an independent administrator, Ms Tamara Goodwin. The basis of her Cross Claim (and the source of the alleged conflict of interest) was that Paul Bourke, in breach of his fiduciary duties as Dr Bourke’s enduring power of attorney, had used Dr Bourke’s funds to meet his own expenses between April 2015 and December 2020. Paul Bourke denied these allegations in his Defence to the Cross Claim and maintained a case that the expenses that he had incurred were for the benefit of the deceased.

11. The proceedings were resolved in detailed orders made by Lindsay J on 22 September 2023 (“the September 2023 orders”). The essential features of those orders were the following.

12. The Court noted that the assets of Dr Bourke’s estate consisted of approximately $1,690,242.57 in Macquarie Bank Limited, a potential claim by the estate against Paul Bourke of $94,266.43 for breach of fiduciary duty, household chattels and personal effects and approximately $246,544.08 in an ANZ Bank account. The Court noted that a special grant of administration ad colligenda bona had been made to the plaintiff in Victoria to allow the collection and disposal of assets the deceased’s movable assets in Victoria. Stephanie Bourke’s caveat was withdrawn. Probate of the will and the codicil were granted to Paul Bourke.

13. The parties then agreed upon certain specific steps to be taken in the administration of the estate. Paul Bourke was to make an interim distribution of $900,000 to himself and to the defendant. These were provided for in clause 5(a)(i) and (ii) as follows:

“5(a)   Within 7 days of the issue of a grant of probate to him:

i.   the Plaintiff is to make an interim distribution of the sum of $900,000 to the Defendant;

ii.   the Plaintiff is to make an interim distribution of the sum of $900,000 to himself;”

14. Various other legacies were to be paid, an accountant to be retained in respect of the estate’s tax affairs and various tax liabilities met, provision was made for greater transparency in the future administration of the estate. And Paul Bourke was directed to complete the administration “as soon as practicable”. An agreement was noted that Paul would not claim the executor’s commission.

15. The parties agreed in relation to the division of certain household contents and chattels contained within the storage shed in Victoria as follows.

“7.   Note the agreement of the parties in relation to division of the household contents and chattels contained within the storage shed in Victoria, after 21 days and within 42 days of the issue of the grant of probate to the Plaintiff:

a.

   The Defendant is to receive/collect the following items:

i.

   the sheet music stand (not included in the inventory);

ii.

   the dressing table;

iii.

   the small lift-top writing desk/bureau with leather surface

("Mozart desk");
iv.

   the table with drawers in the front entrance;

v.

   the green buttoned back library chair.

b.   The Plaintiff receives the remaining household contents and

chattels contained within the storage shed in Victoria for retention, sale, disposal or distribution as he in his discretion chooses, and instruct the Defendant to end the storage contract;

c.   Upon receipt of instructions to end the storage contract, the Defendant will contact the storage provider within 1 working day to end the contract;

d.   The total costs of storage, upon being provided with the receipt, are to be reimbursed to the Defendant from the Estate Account as an estate expense.

8.   Note the parties agree to mutually release each other from all claims which either of them have against the other, arising from or relating to the estate and administration of the estate, other than in respect of the implementation and enforcement of the rights and entitlements provided under these orders.”

16. Apart from mutual releases (with a carve out for implementation and enforcement of rights arising under the September 2023 orders), an agreement to bear their own costs. Despite the clear intent of these orders to wrap up all issues between the parties, further disputes arose in their implementation.

17. On 22 December 2023, funds of $1,699,288.39 were paid into the trust account of Paul Bourke’s solicitor, Mr Kazagrandi. Paul Bourke then had the funds to comply with the September 2023 order to take a step in the administration of the estate (Order 5(a)(i)) to pay the $900,000 to Stephanie Bourke.

18. The same day the funds were paid into the trust account of BMA House Lawyers, Ms Sims of Teece, Hodgson & Ward emailed Mr Kazagrandi enquiring about matters concerning opening an account of the ANZ Banking Group Limited and then dealing with the following matters:

“*   my client understands from your email that a revision to order Sa is required as funds have not been received from either KCL law or from ANZ bank. Please confirm this understanding is correct;

*   my client understands that the most recent tax return has been completed with a nil balance, and that the Invoice from the accountant for completing said return Is approximately $200. Other possible legitimate estate administration expenses are unclear In circumstances where the estate, aside from personal effects, Is all In cash. If your client has a need to revise the orders/limit or reduce the Interim distribution, our client must insist upon the same being particularised, including via provision of primary documentary evidence to support the same;

*   settlement of estate liabilities, and payment of legacies and the Interim distribution Is the first priority, In accordance with the orders;

…

*   our instructions are that your client has already had an inventory of the personal effects In storage. It Is unclear why he requires location and contact details and advice on access at this stage, when this Is the one aspect of the orders that has not been adversely affected by the Christmas break and it Is unclear what relevance this Information (unlike the Inventory} has to your clients travel plans.”

19. Although the course of the preceding correspondence is obscure Ms Sims email of 22 December 2023 makes clear that she was aware that Mr Paul Bourke was seeking an inventory of the personal effects in storage. But it also makes clear that she was aware that he was asking for the “location and contact details and advice on access” to the storage facility in Victoria. It is very difficult to understand why there was no co-operation at this point on the part of Ms Sims in obtaining the storage information and providing it sooner rather than later. Under the September 2023 orders Mr Paul Bourke was entitled to receive “the remaining household contents and chattels contained within the storage shed in Victoria for retention sale disposal or distribution” and then to “instruct the defendant to end the storage contract”.

20. It must have been obvious upon a moment’s reflection that what Mr Paul Bourke needed to play his part in the implementation of order 7 was either an inventory or access to the storage facility. Otherwise, how was he to “receive the remaining household contents and chattels”? Acting as a responsible executor he either had to work from a documentary inventory and organise it remotely through the inventory, or he had to get into the facility and work out what was there for himself as the executor. Clause 7’s drafting did not really foresee this problem clearly, but it does seem to assume in part that Stephanie Bourke would remain in control of the that facility.

21. Regrettably what followed was a lack of the kind of cooperation the Court expects from legal practitioners and their clients in this jurisdiction. The Court expects better than what followed here in the Court is not going to reward either side with costs as a result. The Court hopes that this kind of client stand-off comes to an end in the probate jurisdiction and that lawyers start telling their own clients that they must cooperate and be reasonable so that final orders can be implemented smoothly.

22. Paul Bourke did not comply with Order 5(a)(i). This is partly explained by the ongoing dispute about Dr Bourke’s personal effects and chattels in storage in Victoria, the subject of Order 7. Paul Bourke’s lawyers, BMA House Lawyers wrote to Messrs Teece Hodgson & Ward, the solicitors for Stephanie Bourke, on 12 January 2024 as follows:

“The executor was disappointed at your client's response to our reasonable request to receive an inventory and details of the location of storage of the deceased's possessions. Your client has signalled that she will not cooperate with the proper accounting and distribution of her late mother's possessions, notwithstanding that she identified, and our client agreed in the settlement to her keeping several pieces of Dr Bourke's antique furniture.

To be clear, our client did not receive from his sister an inventory of items preserved in the sale of the deceased's house and put into storage, despite having requested this inventory through KCL Law on 19 January 2023 and despite Australian Unity, which he appointed as an independent administrator, again requesting this information from your client on 15 March 2023. Neither KCL Law, nor Australian Unity did receive an inventory from your client.

If such an inventory exists, as it should, please send it to me.

Our client has the legal authority by which to administer Dr Bourke's estate in its entirety, which you would know to be the case. This is not to mention the obvious fact that he is also a beneficiary of the estate and has every right to receive items owned by the deceased, in particular items promised to him by his mother. There is also the issue of our client's possessions, stored in the deceased's house, which he requested be preserved and which, naturally, he would like returned to him.

As requested in my email of 21 December 2023, please provide to me an inventory of the deceased's possessions placed in storage, which any reputable storage company provides for the purpose of insurance and the location of these items, by 19 January 2024.

If there is no satisfactory response received to this letter by 19 January 2024, we are instructed to make an application to the NSW Supreme Court [under Order 12) for an interim distribution of funds to your client which will be significantly less than the amount she is entitled to under the deceased's Will.

We are also instructed that the balance of what is owed to your client will not be paid out until this issue is resolved. Our client does not rule out seeking recovery of any unnecessary costs caused by your client.

Our client is not seeking further conflict with your client. He does not wish to make an application to the NSW Supreme Court regarding the matter of his mother's possessions, to implement what was agreed to in the settlement.”

23. The essential complaint in this letter was that Stephanie Bourke should provide the inventory of property of the deceased’s personal effects and chattels. This was not expressly required by the regime for the future administration of the estate which had been agreed and recorded in the 22 September 2023 orders and notations. The structure of the orders was that Stephanie Bourke was entitled to certain specific items and Paul Bourke was entitled to “the remaining household contents and chattels contained within the storage shed in Victoria”.

24. As indicated earlier, the September 2023 orders did not provide for how they would be fully implemented but if access to the premises was not given, some such requirement was obvious and so the executor could do his job. The Court relies upon the parties’ duty to co-operate in litigation to fill in the gaps in such circumstances. The problem here is that a willingness to co-operate was absent and BMA House Lawyers seem to assume, wrongly, that the storage facility would produce an inventory.

25. This led to further correspondence between the parties. Teece, Hodgson & Ward wrote back on 18 January 2024 in the following terms:

“It also threatens to invoke the coercive powers of the court in short order, as a means of obtaining information that your client does not require at this time. This approach is concerning. We respectfully remind you of your professional obligations, noting that the proposed action does not appear to be reasonably justified, proportionate, or appropriate, where the inventory of property sworn by your client did not include these items, from which it is appropriate to infer they have no significant commercial or resale value. The letter also includes language to describe our client that is objectively offensive and inappropriate.

The letter states that your client would not have been able to attend at an ANZ Bank as proposed. It is unclear what would have prevented this, as your email of 18 December 2023 attached a copy of the Grant which had been received by you.

We note that the Grant was issued more than a month ago, on 14 December 2023. We also note that your client does not appear to have taken steps to comply with the orders issued by the Court since receiving the Grant.

It would appear that in the circumstances it is in fact your client who would be at risk of an adverse costs order in the event that he pursues his foreshadowed application, given his apparent substantial inaction since the Grant.

As indicated above, we are obtaining instructions regarding your latest correspondence. In the meantime we look forward to receiving a substantive update regarding the progress of the administration by return, and refer you to the decision of Parker Jin Olsen v James [2020] NSWSC 1015, which clearly states that any attempt to withhold a distribution to which a beneficiary is entitled (in this case, $900,000 to our client in conformity with the orders made by Lindsay J) is improper and is a continuing breach of trust.”

26. This letter was hardly helpful either. It did not directly respond to the request for an inventory, by pointing out for example that one had not been produced by the storage facility and that Stephanie Bourke had not. It did not offer to help by offering access to the storage facility, which might have been a good idea. Rather it indulged disappointing in counter polemics because the last BMA House Lawyers letter accused the defendant of “immaturity and poor judgement”, which that BMA House Lawyers letter should not have done.

27. Mr Kazagrandi of BMA House Lawyers responded by email on 19 January 2024. After dealing with the issue of the funds at the ANZ Bank he continued as follows:

“In relation to the information on the list of personalty, which has been repeatedly requested from your client, we are instructed to convey the executor's concern and regret that to date your client has not provided information on the location of the storage facilty (stet), save the comprehensive list of all such. items which were removed from the family home before the sale of the family home. Such items, apart from estate chattels, included our client's personal possessions.

You would agree that the executor cannot meaningfully carry out his duties set out in Orders 7 (a) and 7 (b) without such information.

You have asserted that no items of personalty were included in the probate Inventory of Property. The executor was unable to list the items of personalty in the draft Inventory of Property as our client had had no opportunity to have inspected and valued these items at the time of filing the probate application. Our client is keen to do it now. The executor reiterates that these items are very valuable, not necessarily in monetary terms.

Please provide the information regarding the items of personal property which are supposed to be in storage, including access details.

In any event, consistent with Order 5 {g), the executor advises that he is going to make an application to the Court [under Order 12] to seek ancillary orders, particularly to vary Oder 5 (a) - as he has been unable to comply due to the reasons set out above.

In any event, consistent with Order 5 {g), the executor advises that he is going to make an application to the Court [under Order 12] to seek ancillary orders, particularly to vary Oder 5 (a) - as he has been unable to comply due to the reasons set out above.”

28. This was the last correspondence between the parties before the Motion was filed on 23 January 2024. It clearly asked for the whereabouts of the storage facility. Unfortunately though BMA House Lawyers, it did not wait for an answer before precipitating the 23 January 2024 motion.

29. Paul Bourke filed the Motion seeking orders varying the September 2023 orders by reducing the Order 5(a)(i) and (ii) interim distributions to $600,000 for each sibling and eliminating the requirement to distribute 7 days after the grant of probate and substituting “as soon as practicable”. Prayer 2 of the January 2024 Motion sought a new Order 7(b) as follows:

“The Defendant is to provide an account in respect of all items of personal property (‘household contents and chattels’) contained within the storage shed in Victoria following the sale of the deceased property at [address not published] in the State of Victoria, and an account of funds received from the sale of the Deceased’s vehicle while the Defendant acted as Financial Manager of the deceased.”

30. The Motion was dismissed by consent on 2 February 2024. Apart from the Court’s orders regulating preparation for the current costs argument, the Court made the following orders on 2 February 2024:

“1.   Note the agreement of the parties:

(a)   The Plaintiff/Applicant will pay to the Defendant/Respondent the interim distribution of $900,000 pursuant to order 5(a) made on 22 September 2023 by 4pm on 5 February 2024.

(b)   The Defendant/Respondent will not file an application for orders holding the Plaintiff/Applicant in contempt for default in compliance with order 5(a) made on 22 September 2023 provided that payment of the interim distribution is made in accordance with paragraph (a) above.

(c)   The Defendant/Respondent has today provided the Plaintiff/Applicant with information he requested regarding access to the storage shed in Victoria.

(d)   The Defendant/Respondent will co-operate with the Plaintiff/Applicant to the extent reasonably necessary to permit him to obtain access to the storage shed in Victoria without further delay.

2.   Order that the Notice of Motion filed 24 January 2024 be dismissed.”

31. Counsel for Paul Bourke, Ms Hoskinson, submitted that both the variations in order 1(a) and (b) were necessary to implement the agreement reflected in the September 2023 orders and that he should have his costs on an indemnity basis. Counsel for Stephanie Bouke, Mr Birtles, submitted that the Motion was without merit, was bound to fail, and that she should have her costs.

Consideration

32. The Court finds neither submission persuasive.

33. First, Mr Birtles submits, there was no basis for Paul Bourke to move the Court for Order 1 in the Notice of Motion. The application was not brought within any of the provisions of Uniform Civil Procedure Rules 2005 (“UCPR”), rr 36.15, 36.16 nor 36.17. The orders of Lindsay J were not made irregularly or against good faith. Both sides were represented when the orders were made. There was no error in the form of the orders in recording the parties’ agreement. But on the other hand, order 7 could not be implemented without additional orders or cooperation between the parties. If cooperation was not forthcoming a motion would have been necessary and allowed by clause 8 which had a carveout for implementation of the orders.

34. Second, Mr Birtles submits that Paul Bourke did not provide any explanation as to why the Court’s orders were not complied with as soon as he was put in funds. These were not interlocutory orders. They were final orders, and he submits they should have been carried out as soon as the defendant was able to do so. Yes, the payment of the $900,000 should not have been used as leverage to implement the other orders but the motion was put on early once the impasse was reached during the vacation and Paul Bourke cannot be criticised the timing of the motion.

35. Mr Birtles on behalf of Stephanie Bourke argues that there was no basis to make prayer 2 of the Motion as giving an inventory of household contents was not contemplated by the 22 September 2023 orders which were otherwise contained by mutual releases. The merits of that argument depend upon whether an inventory, or access to the facility, could be seen as part of or “in respect of the implementation and enforcement of the rights and entitlements provided under these orders”. In the Court’s view they clearly can.

36. The other part of prayer 2 of the January 2024 motion was to account for the proceeds of sale of a motor vehicle. Nothing in the September 2023 orders required any accounting for the proceeds of sale of a motor vehicle. The motor vehicle is not mentioned in the September 2023 orders. If it had been overlooked, it could be raised in a motion such as this as an implementation issue. But nothing really turns on this.

37. Paul Bourke’s final complaint was that Stephanie Bourke had not provided him with the address and contact details to enable him to attend the storage shed in Victoria. There is a sound basis for this complaint. The address of the storage facility was eventually provided by Teece, Hodgson & Ward to BMA House Lawyers, on 30 January 2024 after the Motion was filed. It should have been provided long before that. Its non-provision was an aggravating factor in the correspondence between the parties. Additional information was provided at the prompting of the Court at the directions hearing on 2 February 2024. But this complaint would not justify the filing of the January 2024 Motion. But curiously no orders concerning this matter were sought in the Motion.

38. Paul Bourke did not obtain the relief he sought on the Motion. The Court cannot conclude in this case that either party would have succeeded on the motion. In the courts opinion both sides have behaved unreasonably by not cooperating with one another to give effect to the September 2023 order. Therefore within the principles of Lai Qin and Aust-Home Investments the Court will allow costs to lie with a fall and each party will bear his or her own costs of the motion.

39. One final issue remains: whether Paul Bourke, as executor of the estate, should have an indemnity from the residuary estate for his costs of the January 2024 motion. He bears the legal onus of satisfying the Court that the expense in question was reasonably and properly incurred: Dixon v Dixon (No. 2) [2022] NSWSC 944 at [77]. The problem in his seeking recovery of these costs from the estate is that he should have clearly set out what was wrong with clause 7 of the September to 2023 orders by way of any inventory or access to the facility, included that whole claim clearly in his motion, paused before filing the motion, and not engaged in polemics against his sibling. Had he done these things he would have a reasonable argument for recovery of his costs out of the estate. The court will not reward conduct such as this with costs orders.

Conclusion and Orders

40. The plaintiff and the defendant have each failed in their claims for costs on the January 2024 Motion. The Court will therefore make the following orders and notations:

1. Note that there will be no order as to costs of the plaintiff’s Notice of Motion filed on 24 January 2024 to the intent that each party will bear his and her own costs of the motion.

2. Order that the plaintiff will not be indemnified out of the estate in respect of his costs of the motion.

**********

Decision last updated: 22 March 2024