Vadarlis v Ballanbrae Pastoral Coy Pty Ltd
[2019] VSC 808
•7 December 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2019 03836
| ERIC VADARLIS | Plaintiff |
| v | |
| BALLANBRAE PASTORAL COY PTY LTD (ACN 005 490 737) (in its own capacity and as trustee of the Kayes Family Trust) | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 6 December 2019 |
DATE OF RULING: | 7 December 2019 |
CASE MAY BE CITED AS: | Vadarlis v Ballanbrae Pastoral Coy Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2019] VSC 808 |
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PRACTICE AND PROCEDURE — Where trial of two related proceedings listed for trial — Where party in third proceeding sought relief in a further proceeding but continually failed to disclose cause of action — Where plaintiff in third proceeding sought to amend claim immediately before trial date of the two related proceedings — Where leave granted to plaintiff in third proceeding to file amended claim immediately before trial date of two related proceedings — Where plaintiff in third proceeding sought adjournment of the trial of the two related proceedings and that the three proceedings be heard and determined at the same time — Where application made late — Where there is prejudice to opposing parties in the two related proceedings if trial is adjourned —Where no risk of inconsistent findings as the three proceedings to be heard by same Judge — Application to adjourn the trial of the two related proceedings refused — Supreme Court (General Civil Procedure) Rules 2015 (Vic) rr 9.12, 49.03.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr PG Cawthorn QC and Mr DJ Briggs | Tasiopoulos Lambros & Co |
| For the Defendant | Mr JL Smith | Sladen Legal |
HER HONOUR:
Introduction
Christopher Robin Franklin Kayes died on 12 September 2015. Probate of the deceased’s will dated 15 August 1997 was granted to Eric Vadarlis on 4 April 2016. Mr Vadarlis is an Australian lawyer practising under the business name of Vadarlis & Associates. The residuary beneficiaries of the deceased’s estate are the deceased’s five adult children.
At the date of his death, the deceased owned shares in Ballanbrae Pastoral Coy Pty Ltd (‘Ballanbrae’), which is the trustee of the Kayes Family Trust. The Kayes Family Trust is a discretionary trust. The beneficiaries are discretionary objects of the Kayes Family Trust. The shares in Ballanbrae were an asset in the estate of the deceased. Between 13 September 2015 to 24 July 2019, Mr Vadarlis was the sole director of Ballanbrae in his capacity as the executor of the estate of the deceased.
Procedural background
In a separate proceeding commenced by the beneficiaries by originating motion filed 17 May 2019 (‘the beneficiaries’ proceeding’),[1] the beneficiaries seek, inter alia, the following:
[1]Proceeding S ECI 2019 02236.
(a) a declaration that Mr Vadarlis, in his capacity as executor and trustee of the estate of the deceased, breached his fiduciary duty to the estate by entering into a costs agreement and terms and conditions of retainer dated 15 September 2015 with himself trading as Vadarlis & Associates and by paying estate funds to himself trading as Vadarlis & Associates pursuant to the costs agreement;
(b) a declaration that Ballanbrae, in its capacity as trustee of the Kayes Family Trust, breached its fiduciary duty to the beneficiaries of the trust by entering into the costs agreement with its director, Mr Vadarlis, and paying trust funds to Mr Vadarlis trading as Vadarlis & Associates pursuant to the costs agreement;
(c) a declaration that Mr Vadarlis, in his capacity as director of Ballanbrae, was knowingly involved in and knowingly benefited from Ballanbrae’s breach of its fiduciary obligations to the beneficiaries of the trust;
(d) orders that Mr Vadarlis be removed as executor and trustee of the estate of the deceased and that the plaintiffs or some proper person be appointed in his place;
(e) that the costs agreement be set aside and sums paid from the estate and trust to Mr Vadarlis on account of legal costs be repaid to the estate and the Kayes Family Trust.
The beneficiaries also alleged that Mr Vadarlis has claimed to be entitled to trustee’s commission. By orders made 21 June 2019 in the beneficiaries’ proceeding, Mr Vadarlis was to make any claim for trustee commission, pursuant to s 77 of the Trustee Act 1958, by 24 July 2019.
Prior to the directions hearing on 8 August 2019, the Court was informed that, since the hearing on 21 June 2019, an administration account for the estate and the Kayes Family Trust had been filed, the shares in Ballanbrae had been transferred to the beneficiaries and that Mr Vadarlis had issued a summons on 24 July 2019 in the probate proceeding seeking commission, pursuant to s 65 of the Administration and Probate Act 1958 and s 77 of the Trustee Act 1958, in relation to both the estate and the Kayes Family Trust.
An application for trustee commission pursuant to s 77 of the Trustee Act 1958 cannot be pursued in the probate proceeding. Consequently, consent orders were made in the beneficiaries’ proceeding extending the time within which Mr Vadarlis could commence a proceeding for trustee commission to 19 August 2019.
Mr Vadarlis did not issue his proceeding until 23 August 2019 when he filed an originating motion. By summons filed 29 August 2019, he sought remuneration for his services as sole director of Ballanbrae between 13 September 2015 to 24 July 2019 for his services to Ballanbrae as disclosed in its books of record of account or those of the Kayes Family Trust or such other amount as in all the circumstances was appropriate or reasonable.
On the return of the directions hearing on 6 September 2019, the defendant sought orders that Mr Vadarlis’ originating motion be struck out with costs, pursuant to r 23.02(a) of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’), on the ground that it did not disclose a cause of action. The substantive relief claimed by Mr Vadarlis was not trustee commission, pursuant to s 77 of the Trustee Act 1958, and he was not at any time a trustee of the Kayes Family Trust.
On 6 September 2019, the beneficiaries’ proceeding was set down for trial with the probate proceeding on an estimate of two days. It was noted in ‘Other Matters’ that the beneficiaries’ proceeding was related to the probate proceeding and this proceeding.
In respect of the application to strike out the proceeding, orders were made for the filing of written submissions. In response to the defendant’s submissions, Mr Vadarlis notified the Court that, in order to avoid further costs and delay, he would seek that the proceeding continue as if it had been commenced by writ, pursuant to r 4.07 of the Rules, and attached a proposed statement of claim, which relied on the following grounds:
(a) The work carried out by him as a director of Ballanbrae was inextricably linked to his work as executor of the estate of the deceased and, other than for the technical issue of him not being the trustee of Ballanbrae, but rather a director, all work done by him in respect of the Kayes Family Trust was as a result of him being the executor of the estate of the deceased. Accordingly, in those circumstances, he is entitled to be treated consistently in respect of the work carried out in respect of the estate and the Kayes Family Trust.
(b) Alternatively, he was entitled to reasonable remuneration for the work carried out by him as a director of Ballanbrae on the basis of a conventional quantum meruit claim.
On 25 October 2019, the Court ordered that, pursuant to r 23.02(a) of the Rules, the plaintiff’s originating motion be struck out and within 14 days the plaintiff file and serve an amended claim. Short written reasons were provided to the parties and they were informed that, if required, written reasons would be provided. Written reasons were required by Mr Vadarlis and were provided on 31 October 2019.
On 21 November 2019, the Court considered a proposed amended statement of claim by Mr Vadarlis. Orders were made that the summons be dismissed and that any further document to be relied upon by Mr Vadarlis be filed by 28 November 2019.
This proceeding was next listed for directions on 6 December 2019. On that day, orders were agreed that: pursuant to r 4.07 of the Rules, the originating motion continue as if commenced by writ; the beneficiaries be added as the second to sixth defendants to the proceeding; leave be granted to file and serve the statement of claim substantially in the form produced to the Court; a defence and reply be filed; there be discovery; and there be directions hearing after 21 February 2020.
Mr Vadarlis also proposed that this proceeding be set down for trial on a date convenient to the Court after 6 March 2020 to be heard together with the executor’s commission claim in the probate proceeding and the beneficiaries’ claim on an estimate of five to six days. The beneficiaries and Ballanbrae opposed the proposal to adjourn the trial of the executor’s commission claim and the beneficiaries’ claim.
At the end of the submissions made by the parties, the Court informed the parties that further consideration would be given to the submissions and that the Court would inform them of its decision as soon as possible given that the trial is listed for hearing on 11 December 2019.
By email in the morning on the next day, the parties were informed that the trial of the beneficiaries’ proceeding and the executor’s commission claim would proceed on 11 December 2019. The short reasons included that the trial of these two proceedings had been listed since orders were made on 6 September 2019 and they were ready for trial. While the Court accepted that the beneficiaries’ proceeding touched on issues concerning this proceeding, it did so to a limited degree. The risk of inconsistent findings as submitted by counsel for Mr Vadarlis would not occur as the same judge would hear and determine all proceedings. Otherwise, in respect of Mr Vadarlis’ claim in this proceeding, the orders as agreed between the parties would be made by the Court.
By return, Mr Vadarlis sought reasons for the decision.
Reasons for decision
On 6 September 2019, the trial of the beneficiaries’ proceeding and the executor’s commission proceeding were listed for 11 December 2019 on an estimate of two days. At the date that these two proceedings were listed for trial, this proceeding was in its first iteration. It was subsequently struck out on the basis that it did not disclose a cause of action and leave was given to Mr Vadarlis to file an amended claim. The current iteration of Mr Vadarlis’ claim for trustee commission represents his fifth attempt to formulate his claim.
At the directions hearing on 6 September 2019, the Court noted the possibility of the trials’ being heard together, but only if the originating motion were not struck out. The originating motion was struck out, and Mr Vadarlis thereafter required three further attempts to properly articulate his claim such that it identifies a cause of action. The parties therefore should not have anticipated that the trials would be heard together.
The first time there was any suggestion made to the Court that the trial date should be vacated was in Mr Vadarlis’ written submissions dated 5 December 2019 for the directions hearing on 6 December 2019. This flowed from Mr Vadarlis’ oral application under r 9.12 of the Rules for the three trials to be heard together and the fact that this proceeding would not be ready for trial on 11 December 2019. The principal submissions made by Mr Vadarlis was that, as there are common questions that arise in each of the three proceedings, there will be a risk of inconsistent findings. In addition, he submitted that there would be a substantial duplication of costs to the parties and an increased burden on the resources of the Court if the trial date was not vacated.
As stated in Court at the directions hearing, the same judge will hear and determine the three proceedings and, on that basis, there would be no risk of inconsistent findings. While the beneficiaries’ proceeding touches on issues concerning this proceeding, for the purposes of r 9.12(1) of the Rules, it does so to a limited degree.
Mr Vadarlis’ written submissions also stated that the orders made to date anticipated that the proceedings would be heard together and that the significant disputes of fact in the beneficiaries’ proceeding were such that it should proceed by way of pleadings. The reasons given for this submission were that pleadings would allow the Court to appreciate the issues that will arise and that, because this proceeding is by way of pleadings, the beneficiaries’ proceeding should also be by way of pleadings.
It is difficult to conclude that the orders made to date anticipated that the three proceedings would be heard together, as this proceeding was not in a form that enabled a trial date to be given until 6 December 2019. The beneficiaries’ proceeding was issued on 17 May 2019 in a specialist list that routinely deals with such causes of action. The originating motion clearly articulates the issues before the Court and the Court is well able to appreciate the issues in the beneficiaries’ proceeding. No objection was taken by Mr Vadarlis to the form of the proceeding until his application to adjourn the trial date of the executor’s commission claim and the beneficiaries’ claim.
Mr Vadarlis also submitted that there was no prejudice to the beneficiaries in adjourning the three proceedings to a later date on the basis that it is Mr Vadarlis who seeks payment from the estate and the Kayes Family Trust. The Court rejected this submission. It failed to address the fact that the beneficiaries sought repayment of substantial funds from Mr Vadarlis, the need for finalisation of what can only be described as a lengthy administration, and the fact that the beneficiaries have been preparing for the trial to be heard on 11 December 2019 and have made the necessary arrangements to travel to Melbourne for the trial. In addition, the fees for the trial to commence on the listed date have been paid by the beneficiaries.
Accordingly, the Court refused Mr Vadarlis’ oral application to have the three trials heard together and to adjourn the trial date of the executor’s commission claim and the beneficiaries’ claim.
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