Visevic v Kashian

[2017] NSWSC 578

Supreme Court

New South Wales

Medium Neutral Citation:	Visevic v Kashian [2017] NSWSC 578
Hearing dates:	On the papers
Decision date:	12 May 2017
Before:	Stevenson J
Decision:	Advice given as set out at [60]
Catchwords:	TRUSTS AND TRUSTEES – JUDICIAL ADVICE – whether plaintiff as executor of will would be justified in consenting to defendants withdrawing from proceedings on basis of there being no order as to costs
Legislation Cited:	Succession Act 2006 (NSW) Trustee Act 1925 (NSW)
Cases Cited:	One.Tel Limited v Commissioner of Taxation (2000) 101 FCR 548; FCA 270 Re Minster for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Category:	Procedural and other rulings
Parties:	Vera Visevic (Plaintiff/Applicant) Kegan Kashian (First Defendant) Vicki Kashian (Second Defendant)
Representation:	Counsel: M K Condon SC (Plaintiff/Applicant)   Solicitors: Mills Oakley Lawyers (Plaintiff/Applicant)
File Number(s):	SC 2016/284137

Judgment

1. The plaintiff, Ms Vera Visevic, a solicitor and partner of Mills Oakley Lawyers, is named as executor in a will of Mr Alexander McDougall made on 10 March 2014. By the will, Mr McDougall left his estate (valued at some $5 million) to five charities. Mr McDougall died on 31 January 2016.

2. In the circumstances that I describe below, on 22 September 2016, Ms Visevic commenced these proceedings seeking a grant of probate in respect of the 2014 will against the defendants, Mr Kegan and Mrs Vicki Kashian.

3. Ms Visevic was obliged to take this step because Mr and Mrs Kashian, on 9 March 2016 and again on 6 September 2016, lodged a caveat requiring that no grant of probate should be made “unless we are given the opportunity to be heard on the question of whether a declaration as to the Court’s satisfaction under s 8 of the Succession Act 2006 (NSW) [(“the Act”)] should be made in respect of a document made by the deceased” (being a draft will that Ms Visevic arranged to have prepared on 22 January 2016, in the circumstances to which I refer below).

4. On 19 December 2016, Mr and Mrs Kashian, through their solicitor, offered (on a “without prejudice except as to costs” basis) to “withdraw from the proceedings and lift the caveat on the basis that each party bears their own costs of the proceedings to date”.

5. On 23 December 2016, Ms Visevic was appointed executor of Mr McDougall’s estate pendent lite.

6. Now, by notice of motion filed on 13 April 2017, Ms Visevic seeks advice, pursuant to s 63 of the Trustee Act 1925 (NSW) that she would be justified in accepting the offer referred to in [4].

Decision

7. I am prepared to give Ms Visevic the advice she seeks.

Mr and Mrs Kashian

8. Mr and Mrs Kashian were friends, evidently close friends, of Mr McDougall.

9. Ms Visevic met Mr Kashian in 2008 at a social event. Mr Kashian was then the chief financial officer of the Uniting Church in NSW. Through Mr Kashian, Ms Visevic later did some legal work for the Uniting Church in the period 2008 to 2010.

10. Ms Visevic met Mrs Kashian through Mr Kashian. Their contact was entirely social.

11. Since 2010, Ms Visevic has seen Mr and Mrs Kashian socially, but infrequently.

12. Ms Visevic acted for Mr Kashian on a conveyancing matter. Her firm, Mills Oakley Lawyers, acted for him in an employment dispute.

13. Mr and Mrs Kashian introduced Ms Visevic to Mr McDougall. Mr McDougall retained Ms Visevic to prepare his March 2014 will. As I have mentioned, he named her as his executor.

January 2016

14. On 22 January 2016, Mr Kashian telephoned Ms Visevic and said that Mr McDougall had been admitted to hospital. He said:

“I’m sorry to do this to you but [Mr McDougall] has told me that he wants to leave us the house in his will. Can you come to the hospital now?”

15. The house to which Mr and Mrs Kashian referred was a property in Russell Lea, then worth something in the order of $2 million.

16. Ms Visevic arranged for her partner at Mills Oakley, Ms Lisa-Marie McKechnie, to “amend the will”.

17. Ms Visevic then travelled to the hospital. When she arrived, Mrs Kashian said:

“[Mr McDougall] has told me he wanted to leave us $10,000 which he has in the house. He now says he wants to leave us the house instead.”

18. Ms Visevic took instructions from Mr McDougall. Mr McDougall confirmed he did wish to change his will and said that:

“…I want to leave the house to [Mr and Mrs Kashian] because of the many years of care they’ve given me.”

19. Ms Visevic and Mr McDougall had this exchange:

“[Ms Visevic]:   ‘[Mr McDougall], you know you don’t have to leave [Mr and Mrs Kashian] the house. There are other options. Your house is approximately one third of your estate. It is a huge gift, you can leave them a legacy which is a financial payment. There are other ways you can thank them for the help they have provided to you’.

[Mr McDougall]:   ‘I am clear, I want them to be given the house. I know what portion of the estate it is and I just want them to have it’.”

20. In an affidavit sworn on 19 September 2016, Ms Visevic said:

“During the course of this conversation which took approximately half an hour [Mr McDougall] was not speaking fluently. It appeared to me he was struggling to form clear thoughts and articulate those thoughts directly. His manner and style of speech was slow and sluggish.

At times I had to listen very carefully to discern what he was saying. I was concerned during the course of the conversation as to whether [Mr McDougall] had testamentary capacity given the fragile state of his health. I was concerned that the fragile state of his health may have affected the clarity of his thoughts and therefore his capacity to form fully considered views about how his estate was to be distributed.

By the end of the conversation I felt I had sufficiently clear instructions to re-draft [Mr McDougall’s] will. His understanding of the assets he owned and the general precision of his instructions led me to be believe he was capable of providing instructions and had testamentary capacity.

I immediately left the room. I had a couple of conversations with [Ms McKechnie] and arranged her to send by facsimile the draft will she had prepared to the hospital, incorporating [Mr McDougall’s] instructions. [Ms McKechnie] made changes I dictated to her by telephone.”

21. However, shortly thereafter, Ms Visevic spoke to the geriatric specialist who was attending on Mr McDougall, Dr Emily Deck. Dr Deck expressed, in strong terms, her opinion that Mr McDougall did not have testamentary capacity.

22. Dr Deck said:

“I am the summer resident here at the hospital and I am treating Mr McDougall. I just had a conversation with the registrar, Doctor Lauren Chong about whether or not Mr McDougall has testamentary capacity and whether he can make any valid changes to his will. Whilst I know you are his lawyer and it is a legal matter, we hold firm views on this. We are not of the opinion Mr McDougall has testamentary capacity. This is substantially because of fluctuating oxygen and carbon dioxide levels within [Mr McDougall’s] lung and blood stream. This makes [Mr McDougall] very drowsy and impacts upon his ability to function with full mental capacity. Mr McDougall has been extremely unwell over the last couple of days and in fact we had profound concerns he would not survive last night. The oxygen machine is doing his breathing. If we turn the machine off, [Mr McDougall] will die. I spoke with Mr McDougall this morning and explained to him the severity of his medical condition. I am of the view that he did not fully comprehend the implications of the information and advice I gave him. [Mr McDougall] is improving but he will need to show consistency for a period of at least 24-28 hours before I would be able to give you any indication about any return of testamentary capacity. In his current state of health it is my clinical view that he cannot make an informed and valid decision to alter and change his will. He does not have mental capacity to understand and sign a new will.”

23. Ms Visevic told both Mrs Kashian that Mr McDougall “can’t change his will today” because “he has no testamentary capacity”. Mrs Kashian asked Ms Visevic to call Mr Kashian. She did so, and said that Mr McDougall’s “doctors say he has no testamentary capacity. That means he can’t change his will”.

24. Understandably, Ms Visevic concluded that she should take no further steps to have Mr McDougall change his will.

25. In any event, Ms Visevic noticed some errors and omissions from the draft. She did not show it to Mr McDougall.

26. Ms Visevic again visited Mr McDougall in hospital on 24 January 2016. She was not able to see either of Doctors Deck and/or Chong. She did not raise with Mr McDougall the question of his will.

27. On 28 January 2016, Mr Kashian telephoned Ms Visevic and said:

“The doctors are very surprised by the nature of [Mr McDougall’s] recovery. He’s going really well. He wants to know when you are going to come and visit him. He is talking about leaving us money in his will.”

28. Ms Visevic said to Mr Kashian “I thought [Mr McDougall] wanted to leave you the house”. Mr Kashian replied:

“He said a couple of things but that was the last thing he said.”

29. Ms Visevic asked Mr Kashian to tell Mr McDougall that she would come to hospital to see him on Sunday 31 January 2016. However, Mr McDougall died early on the Sunday morning.

Events thereafter

30. On 9 March 2016, Mr and Mrs Kashian lodged the caveat to which I have referred.

31. On 17 March 2016, Ms Visevic’s partner, Mr Ward, wrote to the solicitors for Mr and Mrs Kashian (Mr Kemp) stating that:

1. the only time Ms Visevic took instructions from Mr McDougall about a further will was at the meeting of 22 January 2016;

2. Mr McDougall’s geriatric specialist had then told Ms Visevic that, in her view, Mr McDougall did not then have testamentary capacity;

3. the draft will prepared by Ms McKechnie was produced in anticipation of there being discussions with Mr McDougall;

4. the document did not in any event fully reflect the instructions Mr McDougall had given Ms Visevic;

5. Mr McDougall was never shown the draft; and

6. in any event “Mr McDougall had apparently had subsequent discussions with your clients in which he expressed different intentions” from those recorded in Ms McKechnie’s draft.

32. Mr Ward concluded:

“In light of the Caveat lodged by your clients, our client must commence those proceedings by way of Statement of Claim, naming your clients as defendants. If your clients oppose that grant, or seek Probate of some other will under section 8 of the Succession Act, they are at risk of costs in the proceedings.”

33. Correspondence was thereafter exchanged between Mr Ward and Mr Kemp.

34. The caveat was not removed (indeed, a further caveat was lodged on 6 September 2016), thus necessitating the commencement of these proceedings.

35. On 24 November 2016, Mr Kemp wrote to Mr Ward:

“We are in the process of providing advice and seeking instructions from our clients with respect to two matters:

a) the viability of a claim in the current proceedings that the draft Will might be held to be the valid will pursuant to s.8 of the Succession Act 2006;

b) the prospect of bringing proceedings for damages for professional negligence against Ms Visevic and your firm for failure to exercise due care and skill in carrying out the testator’s instructions as to the drafting and execution of a new will.

At this point, to assist in advising our clients, we enquire as to whether you suggest that our clients are obliged to pursue the claim in (a) above, in order to mitigate any loss they may suffer and claim in the proceedings referred to in (b) above.”

36. Ultimately, and without waiting for a response to that letter, on 19 December 2016, Mr Kemp made the ‘walk away’ offer referred to at [4].

37. Mr Ward replied on 22 December 2016 saying that the “offer is in principle accepted” but “given the particular position our client is in, we propose seeking judicial advice in relation to accepting the offer”.

38. Evidently, the reference to “the particular position our client is in” was a reference to the possibility of a professional negligence claim, foreshadowed in the letter of 24 November 2016 (see [35] above).

39. In that regard, on 29 March 2017, Mr Kemp, when confirming that the offer of 19 December 2016 remained open for acceptance, said:

“We confirm however that this does not affect in any way the separate claim in professional negligence against your firm and Ms Visevic of your firm, referred to in our letters dated 3 March 2017 and 21 March 2017”.

40. The letters of 3 and 21 March 2017 referred to are not in evidence before me, but evidently make a claim of the kind foreshadowed in the letter of 24 November 2016 (at [35] above).

41. The caveat lodged on 6 September 2016 has now lapsed. There is thus, now, no impediment to an order for probate being made in respect of Mr McDougall’s will of 10 March 2014.

The costs incurred

42. Thus far, the estate has incurred costs in the order of approximately $95,000, of which some $60,000 is likely to be recoverable from Mr and Mrs Kashian were an order for costs to be made against them on the party/party basis at this stage.

Opinion of Parker SC

43. Ms Visevic sought the advice of Parker SC (as his Honour then was) as to the course she should take about the 19 December 2016 offer.

44. Parker SC gave a written advice dated 7 March 2017.

45. The terms of that advice are confidential.

Consideration

46. Were Ms Visevic not to accept Mr and Mrs Kashian’s offer of 19 December 2016, Mr and Mrs Kashian may continue to defend the proceedings and seek to establish that the 22 January 2016 document is an informal will for the purposes of s 8 of the Act.

47. That does appear unlikely (given that their second caveat has now lapsed), but it remains a possibility.

48. In that event, were the s 8 question to be determined on the basis of the evidence adduced thus far (that of Ms Visevic), it appears to be unlikely to succeed. But Mr and Mrs Kashian may adduce further evidence, which may place a different complexion on matters.

49. Alternatively, Mr and Mrs Kashian may simply withdraw.

50. In that event, the question would arise as to what prospects Ms Visevic would then have of obtaining an order that Mr and Mrs Kashian pay the estate’s costs of the proceedings.

51. Where there is no hearing of a case on its merits, the Court will not usually make any order for costs as there is often difficulty in "discerning a clear reason why one party, rather than the other, should bear the costs": One.Tel Limited v Commissioner of Taxation (2000) 101 FCR 548; FCA 270 at [6] (Burchett J).

52. The Court will not hear a case which has become moot merely to determine the question of costs.

53. However, if one of the parties has acted so unreasonably as to warrant a costs order against that party, or unless (even if those parties have acted reasonably), one was almost certain to have succeeded, a costs order may be made (Re Minster for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622).

54. In my opinion, it is by no means certain what decision a judge would make about the costs of these proceedings, were Mr and Mrs Kashian simply to withdraw.

55. Acceptance of the 19 December 2016 offer will have the effect that the estate, and thus the five charities named as beneficiaries under the will, must bear the costs incurred in the proceedings to date.

56. However, it will also have the effect, for all practical purposes, of putting an end to the proceedings and thus the risk of Mr and Mrs Kashian’s argument under s 8 of the Act succeeding and Mr and Mrs Kashian obtaining a costs order against the estate.

57. It will also avoid the incurring of further irrecoverable costs. Such irrecoverable costs will be incurred even if Mr and Mrs Kashian simply withdraw, and even if a costs order is made against them. There is no evidence before me of the likelihood of recovery of any costs ordered against Mr and Mrs Kashian.

58. Overall, I am satisfied I should give Ms Visevic the advice she seeks.

59. The fact that Ms Visevic has sought this advice makes clear that she is not motivated to accept the 19 December 2016 offer by any extraneous consideration associated with the threats of a “separate claim in professional negligence” foreshadowed in Mr Kemp’s correspondence.

Order

60. Pursuant to s 63 of the Trustee Act, I advise the plaintiff that she would be justified in compromising these proceedings on the basis that the defendants withdraw their opposition to the grant of probate in respect of the will of the late Alexander McDougall dated 10 March 2014, and on the basis that there be no order against the defendants as to the costs of the proceedings.

61. I grant liberty to the plaintiff to apply as to the precise form of the order referred to in [60].

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Decision last updated: 12 May 2017