Judgment
1HIS HONOUR : On 24 August 2011 I made the following orders in these proceedings:
- Within 14 days the defendant pay the plaintiff a legacy of $300,000 provided for by clause 5.1 of the will of the late Barry Ian Chick who died on 9 December 2007 together with interest in the sum of $47,609.59 and further interest of $47.26 for each day from and including 25 August 2011 up to and including the date of payment.
- The claims for relief in the statement of claim be otherwise dismissed. Order that the cross-claim be dismissed.
- The defendant pay the plaintiff's costs on the ordinary basis.
- Pursuant to s 98(4)(c) of the Civil Procedure Act, instead of being assessed, those costs be specified in the sum of $20,000.
- Within 14 days the defendant pay the said sum of $20,000 to the plaintiff.
- Direct that the defendant is entitled to be indemnified out of the estate of Barry Ian Chick in respect of the costs to be paid to the plaintiff and that the burden of the legacy and the order for costs be borne by the beneficiaries under clauses 5.4, 6 and 7 of the will in the proportions to which they are entitled to the estate.
- The defendant's costs of the proceedings be paid and be borne in the same way as the plaintiff's costs out of the estate on the indemnity basis, but without prejudice to the claims made by the plaintiffs in proceedings 2010/258874 against the defendant or to the remaining claims of the plaintiffs in proceedings 2009/288951 against the defendant that have been ordered to be tried separately.
2These are my reasons for those orders.
3The deceased died on 9 December 2007. Probate was granted on 5 March 2009. The summons in proceedings 2009/288951 by Jennifer Brown and Ian Chick was filed on 26 May 2009. Mrs Fitzpatrick's statement of claim was filed on 28 October 2009. She sought judgment for $300,000 and interest pursuant to s 100 of the Civil Procedure Act 2005 and an order that the Abbotsford property be sold. Alternatively, she sought an order for a payment of the legacy of $300,000 with interest.
4The Abbotsford property was sold by the executor in 2010. As noted in my reasons in Brown v Grosfeld; Fitzpatrick v Grosfeld [2011] NSWSC 796, Mrs Fitzpatrick's claim for judgment for $300,000 as a debt owed by the deceased was not pressed. There was no opposition by any party to the order for payment of the legacy.
5All parties have agreed that interest is payable on the legacy commencing from a year after the deceased's death, that is, from 10 December 2008. Initially there was disagreement as to how interest should be calculated. Interest is payable pursuant to s 84A of the Probate and Administration Act 1898. That section was amended by the Succession Amendment (Intestacy) Act 2009 with effect from 1 March 2010. Prior to the amendment the rate of interest on legacies was six per cent per annum. Following the amendment the rate of interest payable is two per cent above the cash rate published by the Reserve Bank of Australia before 1 January in the calendar year in which interest begins to accrue.
6Initially it was submitted for Mrs Fitzpatrick that interest should be payable on the legacy at the rate of 8.75 per cent from 10 December 2008. This was two per cent above the cash rate published by the Reserve Bank of Australia before 1 January 2008. However, this contention was not pressed. Mr Hunter, who appeared for Mrs Fitzpatrick, accepted that s 84A affected substantive rights and did not operate retrospectively. Thus interest was payable at six per cent per annum from 10 December 2008 up to and including 28 February 2010 (the day before the amending section took effect). Thereafter interest was payable at the rate of 5.75 per cent per annum, being two per cent above the cash rate of 3.75 per cent published in December 2009. That rate of interest was not reset at the beginning of 2011. The amount of interest provided for in order 1 was determined accordingly.
7The defendant (executor) submitted that Mrs Fitzpatrick had acted precipitantly in instituting the proceedings. In a letter of 30 September 2009 the executor's solicitor, Ms Anthony, contended that the plaintiff's only right against the estate was to the legacy and there was no dispute about payment of the legacy, except insofar as it might have been affected by an order for provision in favour of Ian Chick and Jennifer Brown. Ms Anthony contended that the proceedings were brought without due cause, but put the estate to the expense of a suit involving the proper construction of the agreement between the deceased and Mrs Fitzpatrick. In the result Mrs Fitzpatrick only sought payment of her legacy.
8I do not consider that it was unreasonable for Mrs Fitzpatrick to have instituted the proceedings even though only her claim to a legacy was pressed. That claim was successful. There was always very little prospect that any order for provision would interfere with the claim for the legacy, but almost two years had passed since the deceased's death.
9The claim ought to have been resolved by agreement between the executor and Ian Chick and Jennifer Brown. I deal with this matter further when addressing the question on whom the burden of the costs order in favour of the plaintiff should ultimately fall. In the course of attempted negotiations of all of the issues in the proceedings, the parties were agreed that the legacy to Mrs Fitzpatrick should be paid. No-one took any concrete step to resolve it.
10Mrs Fitzpatrick is not entitled to her costs on the indemnity basis. Neither the executor nor any represented beneficiary conducted himself or herself improperly in the litigation so as to justify an indemnity costs order. Her total costs on the indemnity basis were said to be $37,603.82. This included the cost of preparing an affidavit read by the executor in the Family Provision Act 1982 proceedings. The solicitor for Mrs Fitzpatrick advised that his client would accept a gross sum for costs of $20,000 if the court were minded to make an order for payment of costs on the ordinary basis. The executor and the represented beneficiaries agreed that it was sensible to make an order for costs in a fixed sum, and were agreed that $20,000 was an appropriate sum so to fix.
11The plaintiff's costs of $20,000 should be paid by the executor out of the estate. A further question is whether an order should be made as to which of the residuary beneficiaries (that is, the deceased's four children and the grandchildren) should bear the burden of those costs, or whether all should bear the burden in proportion. The same issue arises in respect of the executor's costs of defending Mrs Fitzpatrick's claim.
12The executor is entitled to his costs on the indemnity basis of defending the claim. But there is to be an inquiry into the executor's administration of the estate including his conduct of the litigation in the proceedings brought by Murray Chick and Kimberley Runia and in the claim made by Jennifer Brown and Ian Chick under s 86A of the Probate & Administration Act in which they seek to moderate the executor's charges. The executor's entitlement to indemnity costs is to be without prejudice to those claims.
13On 27 April 2010 the solicitors for Jennifer Brown and Ian Chick served an offer of compromise on the executor. At that time, both Mrs Fitzpatrick's claim and the Family Provision Act claim were listed for hearing before Macready AsJ on 27 May 2010. All parties requested his Honour to vacate the hearing to allow the parties' continued negotiations.
14On 10 June 2010 the solicitors for the executor prepared and circulated a draft settlement deed. It provided for the executor and the adult beneficiaries to agree to the payment of a legacy with interest and costs to Mrs Fitzpatrick. It also provided for Claudia Chick on behalf of the minor beneficiaries to release the executor in respect of that payment. The deed included a release of all claims by Mrs Fitzpatrick against the estate. It was expressed to be conditional on approval being given under s 31 of the Family Provision Act .
15The solicitor for Mrs Fitzpatrick requested some amendments to the deed. He said that the deed should not take the form of release and should not be subject to approval under s 31. The solicitors for Jennifer Brown and Ian Chick were not averse to orders being made in favour of Mrs Fitzpatrick in her proceedings. On 6 August 2010 they prepared proposed short minutes of order for a consideration by the other parties that provided for the plaintiff to receive her legacy with interest and costs. The executor insisted upon a deed of release being executed that would bind all beneficiaries and that would be approved under s 31 of the Family Provision Act . On 3 November 2010 the solicitor for Mrs Fitzpatrick wrote to the solicitors for Jennifer Brown and Ian Chick and to the solicitor then representing Murray Chick and Kimberley Runia urging their clients to sign the proposed deed of release. The deed was not executed by any party.
16On 9 November 2010 the solicitors for Jennifer Brown and Ian Chick made a detailed settlement offer to the executor and to Murray Chick and Kimberley Runia in relation to the proceedings and other matters. It contained ten separate points. There was agreement between Jennifer Brown and Ian Chick and Murray Chick and Kimberley Runia in relation to Mrs Fitzpatrick's proceedings. However, the executor did not receive a response from Murray Chick and Kimberley Runia, nor from Claudia Chick, who was representing the minor beneficiaries in the negotiations.
17There matters rested. All parties were agreed on the substance of the issues concerning Mrs Fitzpatrick, but no-one took any step to resolve them. The obvious course was either that the executor confirm with the solicitors for Murray Chick and Kimberley Runia that they consented to the orders for payment of the legacy interest and costs and then to have agreed upon consent orders with Mrs Fitzpatrick. Alternatively, if there were a justifiable concern about obtaining a release, the executor could have sought judicial advice that he was justified in settling Mrs Fitzpatrick's proceedings on those terms.
18The executor did not take either course. But none of the beneficiaries suggested that he should do so. At the hearing on costs no submissions were made as to whether the executor was justified in pressing for the provision of deeds of release. The dealings with Mrs Fitzpatrick's claim may be a part, albeit a small part, of the pending proceedings that challenge the executor's fees and charges. Without pre-empting any decision that may be made in relation to those claims, I am of the view that the materials referred to in the course of the arguments on costs do not warrant a departure from the usual provision that the costs of Mrs Fitzpatrick's proceedings be paid out of the estate.
19Nor is there a sufficient reason to order that some of the residuary beneficiaries be exempt from the burden of the costs order. It was open to any of the beneficiaries to press the executor to seek judicial advice to resolve Mrs Fitzpatrick's claim. Jennifer Brown and Ian Chick contend that the burden of costs of those proceedings should not fall on them as they are in need of provision. Their share of the sums involved is small ($2,000 each). In any event, such costs burdens are the hazard of litigation to which they should have a proportion of exposure with the other beneficiaries, unless there is sufficient reason to treat them separately. There is not. It is for these reasons that I made the orders set out above.
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Decision last updated: 28 November 2011