Plaintiffs v First Defendant

2 The deceased's will appointed the plaintiffs and the first defendant as the executors of her will and estate.

3 The assets of the estate comprise the deceased's property in Bentleigh, which is encumbered by a $14,000 reverse mortgage, and personal property valued at $55,000. In addition, there are certain chattels described by the first defendant as various pieces of furniture, some jewellery, crockery, cheque books and cash, which are the subject of an ongoing dispute between the first defendant and the plaintiffs.

4 The dispute over the chattels commenced after the deceased's funeral when various family members cleared out the deceased's home in order to prepare the property for sale. The first defendant alleged that the chattels, the value of which is also disputed, were removed from the deceased's property and have not been accounted for by the plaintiffs. The plaintiffs disagree with the first defendant. The plaintiffs sought co-operation with the first defendant in applying for probate, however, the first defendant refused to co-operate until the plaintiffs accounted to her for the chattels.

5 The plaintiffs also asked the second defendant to produce the original will and foreshadowed an application pursuant to s 15 of the Administration and Probate Act 1958 ('the Act'). At all times, the first defendant continued to instruct the second defendant not to apply for a grant of probate of the deceased's will. In the circumstances, the second defendant would not produce the will to either party until the dispute was resolved.

6 As the dispute remained unresolved, the plaintiffs obtained the consent of State Trustees Limited ('STL') to act as administrator of the estate in lieu of the named executors. By originating motion filed 9 November 2018, the plaintiffs sought orders that the defendants show cause why they should not bring the deceased's will in Court and why letters of administration with the will annexed should not be granted to STL in lieu of the named executors under the will, pursuant to s 15 of the Act.

7 On 23 November 2018 the second defendant produced the will to the Court. No orders were made in respect of the relief seeking to appoint STL as an independent administrator of the estate.

8 The parties were unable to agree on the costs of the proceeding.

9 The plaintiffs seek an order that the first defendant pay the costs of the plaintiffs and the second defendant personally, on the standard basis, without indemnity from the estate of the deceased.

(a) an order either that the plaintiffs pay their own costs, alternatively, their costs be paid from the estate of the deceased, save for the costs in seeking the appointment of STL, which the plaintiffs should pay, alternatively, the estate;

(b) an order that the costs of the defendants be paid from the estate of the deceased.

11 The second defendant seeks the same costs order as the plaintiffs, save for the costs in seeking the appointment of STL, which the plaintiffs should pay, alternatively, the estate.

12 The jurisdiction of the Court as to costs is conferred by s 24(1) of the Supreme Court Act 1986. This general discretion must be exercised in accordance with Order 63 of the Supreme Court (General Civil Procedure) Rules 2015.[1] The prima facie position in respect of costs in litigation is for standard costs to be ordered by the Court, with the Court having the discretion to award costs other than on the standard basis.

13 The 'usual order as to costs' is that 'costs follow the event' and a successful party in litigation is entitled to an award of costs in its favour.[2] The relevant 'event' is success in the action or on particular issues.[3] The unsuccessful party bears the liability for the costs of the unsuccessful litigation. The central principle is to make an order that is fair and just between the parties in the circumstance of each case.[4]

14 The unresolved chattel disputes between the plaintiffs and the first defendant meant that probate had still not been granted more than a year after the deceased's death. The deceased's estate is relatively straightforward. A grant of probate is necessary for the deceased's real property to be sold so that any outstanding debts, including the reverse mortgage, can be paid out and the estate administered in a timely manner.

15 The first defendant's position that the estate should not be distributed until the plaintiffs accounted for the missing chattels has held up the administration for more than a year. Where executors are unwilling or unable to proceed to take out a grant within the prescribed time of a testator's death, an application may be made by a person with standing to bring the will into court, pursuant to s 15 of the Act. It was necessary for the plaintiffs to make the application to break the deadlock between the plaintiffs and the first defendant. With the level of acrimony over the dispute, it was reasonable for the plaintiffs to obtain the agreement of STL to take on the role of administrator in the circumstances.

16 Both defendants submitted that the plaintiffs should pay the costs of seeking the appointment of STL on the basis that it was a 'passing over' application without proper material to support the application and no application was made.

17 At the hearing, the Court encouraged the first defendant to consider the plaintiffs' proposal for the appointment of STL in view of the disputes since December 2017. While plaintiffs sought the appointment of STL, it was explained that if the parties agreed to the appointment of STL as an independent administrator, the application would need to be made by STL in a separate proceeding with supporting evidence.[5] In the circumstances of the ongoing stalemate between the plaintiffs and the first defendant, the plaintiffs' proposal was reasonable. The impasse between the plaintiffs and the first defendant had a better chance of resolving with an independent administrator, as opposed to the plaintiffs and the first defendant remaining as executors. This would enable the administration of the estate to be finalised and be in the interests of all beneficiaries of the estate.

18 The plaintiffs have been successful in the proceeding against the first defendant and their costs should be paid by the first defendant.

19 The plaintiffs seek those costs be paid by the estate without indemnity from the estate of the deceased. Although the plaintiffs and the first defendant are the named executors under the deceased's will and the first defendant attempted to characterise the disputes as an estate matter, the disputes have all the hallmarks of a personal nature. Both the plaintiffs and the first defendant are beneficiaries of the estate, together with two other siblings. An order that that the first defendant be allowed indemnity for the costs from the estate would deplete the assets of the estate and reduce the entitlements of all beneficiaries. Where the position taken by the first defendant was unreasonable and the disputes were more personal in nature, it is not appropriate for her to be indemnified from the estate.

20 The second defendant was a necessary party to the proceeding as he held the original will. He acted on the instructions of the first defendant. Those instructions conflicted with the plaintiffs' instructions. In those circumstances, the second defendant was truly an innocent and unwilling party to the proceeding. The first defendant should pay the costs of the second defendant personally without indemnity from the estate.

(a) the first defendant pay the costs of the plaintiffs and the second defendant of and incidental to the proceeding, on the standard basis, to be taxed in default of agreement, without indemnity from the estate of the deceased;

(b) the first defendant bear her own costs of and incidental to the proceeding personally, without indemnity from the estate of the deceased.

[1] Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3) [2012] VSC 399 (14 September 2012) [11] (Croft J); see also Coombes v Ward (No 2) [2002] VSC 84 (27 March 2002).

[2] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 97 (McHugh J).

[3] Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, 624-5 (McHugh J) ('Lai Qin').

[4] Earnshaw v Loy (No 2) [1959] VicRp 44; [1959] VR 252, 253_;_ see G E Dal Pont, Law on Costs (LexisNexis Butterworths, 4th ed, 2018) [6.15].

[5] Re Petta (2005) 11 VR 210, [11]-[12] (Byrne J).