Grimmond v Simmons

Background and procedural history

1. The first defendant is the named executor under the Will. The deceased's three children, namely the plaintiff, the first defendant, and another son, David Grimmond, are the beneficiaries under the Will who are entitled to share equally in the whole of the deceased's estate.
2. It is common ground that, without obtaining a grant of probate or letters of administration, the first defendant sought to administer the deceased's estate. She retrieved the principal asset, being the refund of an accommodation bond valued at $235,431.70, and paid the deceased's funeral account in the sum of $11,205.70.
3. On or about 12 April 2018, the first defendant distributed one-third of the estate funds to herself and to David Grimmond. At that time, the first defendant requested the plaintiff to sign a deed of release and indemnity in respect of any claims the plaintiff might have against the first defendant before releasing to him his one-third share of the deceased's estate. This was in the context where allegations had been raised in correspondence about the first defendant's alleged use of the deceased's Power of Attorney.
4. On 27 August 2019, the plaintiff commenced these proceedings by statement of claim seeking orders for the deceased's original will to be brought into court by the first defendant and/or second defendant (a solicitor), letters of administration to be granted to the plaintiff pursuant to s 75 of the Probate and Administration Act 1898 (NSW), and costs.
5. Prior to commencing the proceedings, the plaintiff, by his lawyers, had made demands on the first defendant to produce the original Will and to pay to the plaintiff his entitlement to his share of the deceased's estate and threatened legal proceedings if that did not occur. Despite the demands, payment was not made nor was the original Will produced.
6. According to his evidence, the plaintiff commenced the proceedings as he was concerned there may have been improvident transactions during the course of the first defendant's management of the deceased's affairs. He wished to be granted administration of the deceased's estate to enable the transactions to be investigated and establish whether there was any possibility of recovering assets, including from the first defendant, that ought to be brought into the estate and administered in accordance with the Will.
7. On 28 August 2019, the plaintiff's lawyers sent a copy of the statement of claim to the first defendant at her Bigpond email address and to Maloney Anderson Legal (Maloney), the lawyers who the first defendant had previously indicated were her legal representatives.
8. On 20 September 2019, the lawyers for the second defendant, Walsh and Associates (Walsh), produced the original Will to the Supreme Court Registry. Walsh has previously advised the plaintiff that they were instructed on behalf of both defendants to send the plaintiff a cheque for his entitlement under the deceased's estate and produce the original Will on condition that a notice of discontinuance was filed.
9. On 24 September 2019, correspondence passed between the plaintiff's lawyers and the first defendant (at her Bigpond email address) in which the plaintiff asked whether the first defendant would consent to an order that letters of administration with the Will annexed be granted to the plaintiff subject to an argument on the question of costs. The offer was not accepted and the first defendant indicated that she had been in contact with Maloney regarding how to proceed. Pausing here, no notice of appearance had, by that date, been filed on behalf of the first defendant.
10. On 30 September 2019, there was a directions hearing at which there was no appearance on behalf of the first defendant.
11. By email dated 10 October 2019, the plaintiff's lawyers sent an email to the first defendant (at her Bigpond email address) and Maloney advising that the matter had been stood over for further directions on 18 November 2019 and the plaintiff was required to serve the first defendant with a notice of proceedings. The email asked whether Maloney had instructions to accept service of the statement of claim and, in the absence of such instructions, asked for the first defendant's current residential address so that personal service may be effected upon her. The plaintiff's lawyers' email also stated that a notice of motion seeking an order for substitute of service would be filed if a response was not received by 17 October 2019.
12. On 8 November 2019, the plaintiff filed a notice of motion seeking orders for deemed or substituted service of the statement of claim on the first defendant. By notice of requisition on the same day, the Court notified the plaintiff that the orders sought in the 8 November 2019 motion would not be made and that further evidence was required if substituted service orders were to be pursued.
13. On 9 and 14 January 2020, the plaintiff's lawyers and the first defendant exchanged emails regarding the estate monies owed to the plaintiff in which the first defendant (using her Bigpond email address) advised that her previous solicitor, Walsh, should be contacted to make arrangements for payment. It is common ground that the plaintiff was paid his one-third entitlement to the deceased's estate the following month.
14. On 12 March 2020, the plaintiff's lawyers sent an email to the first defendant (at her Bigpond email address) attaching orders made by Lindsay J on 24 February 2020. Those orders noted that, at the time, the plaintiff was considering whether to press his application for a grant of administration for the purpose of conducting an investigation into whether property of the deceased was misapplied during her lifetime and listed the proceedings for further consideration or directions on 6 April 2020.
15. There was no response to that email. According to her evidence, by March 2020, the first defendant had changed internet service providers and she no longer had access to her Bigpond email address. The evidence also indicates that the plaintiff's lawyers did not receive a non-delivery notification for the 12 March 2020 email, or to subsequent emails sent to the first defendant (at her Bigpond email address) regarding the proceedings in September and October 2020.
16. Over the period from May to July 2020, the plaintiff filed three further notices of motion as follows: 1. a notice of motion filed on 8 May 2020 seeking orders that the plaintiff be granted letters of administration as administrator to examine improvident transactions occurring during the life of the deceased and to enable him to recover assets of the estate, and for deemed or substituted service of the statement of claim; 2. a notice of motion filed on 18 June 2020 seeking orders for substituted service of the statement of claim on the defendant; and 3. an amended notice of motion filed on 10 July 2020 which sought, in addition to orders for substituted service, an extension of time to 31 July 2020 for which the statement of claim is valid for service pursuant to r 6.2(4)(a) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).
17. On 8 October 2020, the Equity Registrar made orders for substituted service of the amended statement of claim on the first defendant at her Bigpond email address. On 9 October 2020, the plaintiff's lawyers sent the statement of claim to the first defendant in accordance with those orders although, as noted above, the first defendant's evidence is that she was not able to access that email address at that time.
18. A directions hearing scheduled for 26 October 2020 was adjourned until 16 November 2020.
19. On 27 October 2020, the plaintiff's lawyers sent an email to the first defendant (at her Bigpond email address), copied to Maloney, advising of the adjournment and requesting that she contact the plaintiff's lawyers if she would prefer an independent third party to be appointed as administrator of the deceased's estate rather than the plaintiff.
20. On 16 November 2020, the first defendant appeared at the directions hearing and advised that Maloney would be representing her. On that occasion, the Court noted that the plaintiff's lawyers was to contact the first defendant's lawyers to seek agreement on the appointment of an independent administrator to administer the deceased's estate, which was done on 23 November 2020.
21. On 6 April 2021, the Court made orders by consent which resolved the plaintiff's claim for letters of administration. The consent orders, which had been signed on 23 February 2021, provide for the appointment of an independent administrator to the deceased's estate who is to be indemnified by the plaintiff in circumstances where the estate is presently without funds.
22. Unfortunately, no agreement was reached between the plaintiff and the first defendant as to the costs of the proceedings.
23. By his notice of motion filed on 14 April 2021, the plaintiff seeks an order that the first defendant pay his costs of the proceedings or, alternatively, that she pay the costs of his 14 April notice of motion and the notices of motions filed on 8 November 2019, 8 May 2020 and 18 June 2020 and the amended notice of motion filed on 10 July 2020 seeking various orders, but in particular an order for substituted service and extension of time to serve the amended statement of claim.
24. According to the evidence of Mr Crane, up until 8 April 2021, the plaintiff's costs, including disbursements, counsel's fees and GST, are recorded as $37,749.00 on an ordinary basis.

Consideration and determination

1. The principles applicable to the making of an order for costs are well established. The starting point is that the award of costs is a matter within the Court's discretion: Civil Procedure Act 2005 (NSW) (CPA), s 98(1)(a). While the Court's discretion is broad, it must be exercised judicially and consistently with the overriding mandate provided for in ss 56-60 of the CPA.
2. The usual rule is that costs follow the event unless it appears that some other order should be made as to part or all of the costs: UCPR, r 42.1.
3. The parties accept that the Court's discretion a case such as this, where there has been no contested hearing on the merits and the parties have consented to the grant of relief, is informed by the principles from Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624-5 (McHugh J); [1997] HCA 6. Those principles recognise that while a successful party is prima facie entitled to a costs order, where, as here, there has been no hearing on the merits, the Court is "necessarily deprived of the factor that usually determines whether or how it will make a costs order". In such a case, the Court should not try a hypothetical action between the parties to determine who would have had success for the purposes of determining who should pay costs although, in some cases, the Court may be in a position to identify that one party was almost certain to have succeeded if the matter had been fully tried. Further, in some circumstances, the Court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.
4. In proceedings which have settled without a hearing on the merits and where it appears that both parties have acted reasonably in commencing, defending and conducting the proceedings until the time the matter has settled, the proper exercise of the Court's discretion will usually mean that it will make no order as to the costs of the proceedings: Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 at [2] (Basten JA), [30] (Payne JA, Meagher JA agreeing).
5. The plaintiff submits that the Court should exercise its discretion and make an order for costs in his favour even though there has been no contested hearing for three reasons.
6. First, the plaintiff contends that he has had a substantial victory and the first defendant a substantial loss as the consent orders gave the plaintiff the orders he sought in the proceedings with the only difference that an independent administrator was appointed rather than the plaintiff himself.
7. Second, the plaintiff submits that the first defendant's conduct in these proceedings has been unreasonable. He points to the fact that the first defendant was aware of the proceedings, failed to respond to emails and did not file a notice of appearance at an early stage. He submits that the defendant's conduct caused delay and unnecessary costs being incurred, including in relation to the multiple notices of motion seeking orders for substituted service.
8. Third, and assuming the Court finds that both parties have acted reasonably in the proceedings, the plaintiff submits that he was almost certain to have had a victory if the matter had proceeded to a contested hearing as an administrator would have been appointed to the deceased's estate.
9. The first defendant takes issue with these submissions and contends that, as the matter was compromised without a hearing of the merits of the plaintiff's claims, the proper order is that each party should bear their own costs of the proceedings.
10. The first defendant submits that, in circumstances where no defence or evidence has been filed by her in the proceedings, it is not possible for the Court to conclude that the plaintiff would have succeeded with his claim to be appointed as administrator. The first defendant notes that the plaintiff would have had to establish that it was appropriate to pass over the defendant as the named executor, it was appropriate to appoint the plaintiff as administrator of the deceased's estate and that the deceased died leaving assets in New South Wales.
11. The first defendant referred to authorities which suggest that, in considering whether an executor may be passed over, the primary concern of the Court is to ensure that the estate will be efficiently and properly administered: Callaway v Callaway; The Estate of Aileen Margaret Callaway [2019] NSWSC 1275 (Callaway) at [10]. She submits that it would have been open to the Court to find that the appropriate course was to grant probate to her in circumstances where it was common ground that she had administered the deceased's estate in accordance with the Will and it would have achieved the most efficient administration of the estate. She submits that the plaintiff's allegations of a course of dealing between her and the deceased in relation to the exercise of her powers under the Power of Attorney would not be dealt with in the administration and that appointing the plaintiff as administrator would have had little to no utility and likely led to further conflict, which would not be in the interests of the estate and its orderly administration.
12. The first defendant also submits that she has not acted unreasonably in the conduct of the proceedings. She points to the early offer, on 11 September 2019, to deliver the original Will into court and her consent to the appointment of an independent administrator after she was served with the statement of claim on the first occasion she came before the Court on 16 November 2020. She submits that the extent of her contribution to the proceedings has been to appear on that occasion and then consent in principle to the resolution of the matter. She also submits that she is not responsible for the legal costs incurred by the plaintiff of almost $40,000 in pursuit of his appointment, and subsequently the independent administrator's appointment, in respect of an estate whose assets are not alleged to exceed $1,000 and where most of the costs were incurred before substituted service orders were made on 8 October 2020.
13. As the principles referred to at [32]-[33] make clear, it is not for this Court to determine the outcome of the plaintiff's application for his appointment as administrator of the deceased's estate based on a consideration of the merits of his claim by, for example, assessing the evidence filed by him in relation to the claimed improvident transactions. Suffice to say that it was common ground at the hearing that it was not unreasonable for the plaintiff to have commenced these proceedings. There was clearly a dispute between the plaintiff and the first defendant regarding the first defendant's administration of the deceased's estate which, despite the pre-litigation demands made by the plaintiff, had not been resolved.
14. I accept that it might be said that the plaintiff has had some success in this case. The original Will was produced to the Court on the first defendant's instructions in accordance with the relief sought in prayer 1 of the statement of claim, and an administrator, other than the first defendant, has been appointed to the deceased's estate.
15. That said, the consent relief is in different terms to that sought by the plaintiff in his statement of claim and order 1 of his notice of motion filed on 8 May 2020. Given the relationship which the plaintiff had with the first defendant and the claims which were being advanced by him, the observations of Hallen J in Nicol v Nicole; Estate of Peter Nicole [2020] NSWSC 419 at [24]-[25] seem apt in this case. It is probable that the Court would have taken the view that the appointment of the plaintiff as administrator would likely have led to further conflict, might have resulted in increased costs to the parties and negatively impacted the orderly administration of the deceased's estate: Callaway at [56]. I do, however, accept that this factor is of less relevance given the lack of funds in the estate and its near-completed administration.
16. In that context, I do not consider that it could be said that the plaintiff had a substantial victory, that his concerns about the behaviour of the first defendant in her purported administration of the estate have been vindicated by the consent orders, or that it was almost certain he would have had success if his claim to be appointed as administrator had been determined on its merits at a contested hearing. Rather, the consent orders could be characterised as reflecting an acceptance by the first defendant that there was no utility in incurring the costs of defending proceedings in circumstances where the deceased's estate had been almost fully distributed and the first defendant would not be at risk in respect of the administrator's costs.
17. I accept that the first defendant's conduct during the course of these proceedings has been somewhat unhelpful. Even accepting that she was unable to access her Bigpond email address from at least April 2020, there were emails that went unanswered and she failed to file a notice of appearance. The first defendant was clearly on notice of the proceedings and indicated to the plaintiff's lawyers, as early as September 2019, that she had been in contact with Maloney in relation to the dispute. Despite this, neither she nor Maloney responded to the plaintiff's lawyers' email of 10 October 2019 in which reasonable requests were made in respect of service of the proceedings. A response to that request might have avoided the need for the plaintiff's application for deemed or substituted service orders and some of the costs associated with that application.
18. In these circumstances, I do not accept the first defendant's submissions to the effect that she acted entirely reasonably throughout the course of the proceeding. Nevertheless, it is true that she consented to the appointment of an independent administrator after she came before the Court and had been served with the statement of claim in accordance with the substituted service orders. I am also not persuaded that the first defendant's unreasonable conduct was the cause of all of the costs associated with the multiple notices of motion and extensive evidence filed by the plaintiff in support of those applications.
19. Having balanced the outcomes in these proceedings and the conduct of the parties, in my view, it is not in the interests of justice to make an order that the plaintiff recover his costs of the proceedings. I have come to that view primarily for the reason that the plaintiff's primary claim in these proceedings has been overtaken by the parties' consent to an order appointing an independent third party at a cost to the plaintiff, along the lines suggested by the Court. In that context, I do not consider that the consent orders represent a capitulation by the first defendant as an "unsuccessful party" or that the plaintiff was certain to succeed on his claim to be granted letters of administration in place of the first defendant. It seems that the more likely outcome on a contested hearing would have been orders of the nature that were ultimately agreed although, without considering the merits further, it is not possible to say so with any certainty.
20. Further, while the first defendant could have been more constructive and helpful by responding to emails sent in late 2019, overall, I do not consider that her conduct was sufficiently unreasonable to warrant the detriment of a costs order against her.
21. Accordingly, the plaintiff's application for a costs order is refused. In my view, the appropriate order is that there be no order as to the costs of the proceedings with the intent that each party pay their own costs, including the costs of the plaintiff's 14 April 2021 notice of motion and the costs of the hearing on 21 June 2021.
22. For these reasons, the Court makes the following orders: 1. The Plaintiff's Notice of Motion filed on 14 April 2021 be dismissed with no order as to costs. 2. No order as to costs of the proceedings, with the intent that each party is to bear their own costs.

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