Sutcliffe v Harper (No 2)

Texts Cited: N/A

Category: Costs

Parties: Mark Raymond Sutcliffe (Plaintiff)
Lisa Michelle Harper (Defendant)

Representation: Counsel:
Mr A F Stevens (Plaintiff)
Ms L Harper (Litigant in Person)
Solicitors:
T. H. Walker (Plaintiff)

File Number(s): 2023/344242

Publication restriction: N/A

Judgment

1. These reasons concern the costs of these proceedings and the Plaintiff’s claim for a notional estate order to facilitate payment of any order made in his favour out the notional estate of the deceased. Following a short hearing on 28 March 2025, I made the orders set out at [39] below on the basis that I would publish reasons as soon as possible. These are those reasons.

2. The plaintiff in these proceedings is the son of the late Bernice Sutcliffe, who died on 22 February 2023 at the age of 78 years (the deceased). The defendant is the deceased’s daughter and the executor of her estate.

3. The deceased made her last will on 3 April 2015.

4. The deceased, the defendant and her husband owned a property at Kenthurst as joint tenants. The deceased’s interest in that property passed to the defendant and her husband as the surviving joint tenants, and therefore did not form part of the deceased’s estate.

5. The deceased issued death benefit nominations to her two superannuation fund trustees, BT Panorama and UniSuper. Those trustees paid the deceased’s superannuation funds to the plaintiff and to the defendant in accordance with those nominations. The defendant received a payment of $127,685 on 14 August 2023 and a further payment of $32,001 on 9 October 2023 from BT Panorama, totalling $159,686 and representing approximately 55 per cent of the deceased’s total superannuation benefits with BT Panorama. The plaintiff received from BT Panorama a gross sum of $130,652, which was reduced to $111,058 after deduction of tax, on 5 October 2023. This represented approximately 45 per cent of the deceased’s total superannuation benefits with BT Panorama. UniSuper determined that the total death benefit payable was $42,324. That benefit was paid to the defendant and the plaintiff in equal shares of $21,162 on or about 2 November 2023.

6. The plaintiff commenced these proceedings on 30 October 2023 claiming:

7. an order that provision be made for his maintenance, education or advancement in life pursuant to s 59 of the Succession Act 2006 (NSW) out of the deceased’s estate;

8. an order designating as notional estate such of the Kenthurst property as necessary to satisfy the provision and costs ordered;

9. an order designating as notional estate such of the deceased’s BT Panorama superannuation funds as necessary to satisfy the provision and costs ordered; and

10. an order designating as notional estate such of the deceased’s UniSuper superannuation funds as necessary to satisfy the provision and costs ordered.

11. The value of the deceased’s estate as at the date of her death was $359,493 (excluding any notional estate).

12. Probate was granted on 23 August 2024 due to questions concerning the validity of the will. Almost immediately thereafter, the defendant began paying distributions to beneficiaries of specific legacies for which the deceased had provided in her will.

13. At the time of the hearing of these proceedings on 4 and 5 February 2025, the residue of the estate comprised $171,426 in cash held in the estate bank account after payment of those specific legacies and payment of legal costs totalling $41,758 incurred by the defendant. The defendant had not incurred any further legal costs after terminating the retainer of the solicitor on the record on or about 19 June 2024. The defendant gave evidence at the hearing that she had retained approximately $120,000 of the deceased’s superannuation monies paid to her, and that those monies were held in a bank account that she keeps for investment funds, being a Macquarie Bank cash management account with account number ending in #760.

14. The deceased’s last will provided for the residue of her estate to be paid to the plaintiff (as to 40 per cent) and to the defendant (as to 60 per cent).

15. By the commencement of the hearing on 4 February 2025, the plaintiff had quantified his claim as a claim for provision in the amount of $300,000 to be paid as a lump sum out of the residue of the estate, in lieu of the 40 per cent share of the residue left to him under the will and in addition to the superannuation monies that he had already received. The plaintiff sought a notional estate order in respect of the superannuation monies to the extent that the residue of the estate was insufficient to pay any provision ordered in his favour together with any costs order made in his favour. The plaintiff had withdrawn his claim for a notional estate order in respect of the Kenthurst property by the filing of his Amended Summons on 28 May 2024. An application made by the plaintiff on 19 December 2024 to further amend his pleadings to re-introduce a claim for a notional estate order in respect of the Kenthurst property had been dismissed.

16. The defendant, who appeared in person, opposed any order for provision in the plaintiff’s favour.

17. On 18 February 2025, I gave judgment in favour of the plaintiff and made an order pursuant to s 59 of the Succession Act 2006 (NSW) that provision be made of the deceased’s estate for the proper maintenance, education and advancement in life of the plaintiff by payment of the whole of the residue of the estate to the plaintiff in a lump sum, in lieu of the 40 per cent of the residue provided for in the deceased’s will dated 3 April 2015: Sutcliffe v Harper [2025] NSWSC 54.

18. As the amount of the provision was equivalent to the amount of the residue of the deceased’s estate ($171,426), and as the parties wished to be heard separately in relation to costs, there was no occasion for the making of any notional estate order at that time: Succession Act, s 88.

19. I reserved for further consideration all questions of costs, including whether a notional estate order should be made in respect of any property of the defendant, being one of the recipients of the deceased’s superannuation funds held with BT Panorama Superannuation and UniSuper, in order that the estate is sufficient for the making of any costs order in these proceedings.

20. The costs hearing was deferred until 28 March 2025 at the defendant’s request.

21. The plaintiff contends that the appropriate exercise of the costs discretion under s 98 of the Civil Procedure Act 2005 (NSW) and s 99 of the Succession Act is that costs should follow the event. Accordingly, the plaintiff as the successful party in the proceedings, seeks an order that his costs of the proceedings be paid out of the estate on the ordinary basis. The plaintiff’s costs now amount to approximately $115,000, including the costs of the present application. In order to facilitate payment of any costs order made in his favour, the plaintiff seeks an order designating as notional estate of the deceased the defendant’s bank account referred to at [9] above.

22. The defendant opposes any costs order in favour of the plaintiff. The defendant has filed an affidavit sworn on 14 March 2025 setting out the substance of the reasons for taking that position. Much of that affidavit is argumentative, cavils with the Court’s findings in the principal judgment about the deceased’s testamentary wishes at the end of her life, makes unfounded complaints about the conduct of the plaintiff’s counsel during the hearing on 4 and 5 February 2025, and repeats allegations that the plaintiff and his solicitor have threatened her and engaged in extortion. I explained why those allegations are baseless in the principal judgment at [155]-[158].

23. Relevantly for the purpose of the plaintiff’s application for a costs order and notional estate order, the defendant’s affidavit sets out her contentions that:

24. the defendant is in fact the successful party in these proceedings;

25. the plaintiff would have been better off accepting an offer that the defendant made to him on 8 June 2023 before he had commenced these proceedings and commenced incurring legal costs;

26. the deceased’s superannuation funds do not form part of her estate and should not be used to pay the plaintiff’s legal fees; and

27. the plaintiff caused all of the legal fees to be incurred and he should therefore be responsible for paying them “without further penalising the defendant who has done everything in her power to do the right thing” by endeavouring to “honour the deceased’s wishes” and to minimise costs to the estate.

28. In addition to the offer made on 8 June 2023, the defendant’s affidavit refers in passing to having offered to the plaintiff the defendant’s “own share” at the time probate was granted in August 2024. However, there is no evidence of any formal or written offer of this kind made at about that time and, as I understand the evidence, the defendant and the plaintiff were not speaking to one another at that time. Indeed, the defendant was even refusing to respond to correspondence from the plaintiff’s solicitors, as I have referred to in the principal judgment at [156].

29. Contrary to the defendant’s submissions, the plaintiff is the successful party in these proceedings as a result of the Court having made the order for provision in his favour. The quantum of that order is greater than the defendant’s offer made on 8 June 2023, being the defendant’s most generous offer of which there is any evidence before the Court. As the plaintiff submitted, the Court would ordinarily exercise its discretion in relation to costs by making an order to compensate the plaintiff for the legal costs that he has incurred to achieve that result over the opposition of the defendant: see, for example, Smith v Smith (No. 2) [2011] NSWSC 1105 at [55]; Hinderry v Hinderry (No. 2) [2016] NSWSC 1577 at [51] and [55]; Meres v Meres (No. 2) [2017] NSWSC 523 at [35]-[38]; Benz v Armstrong (No. 2) [2022] NSWSC 668 at [26]-[27]. In my opinion, subject to two qualifications, there is no reason to deprive the plaintiff of compensation for his costs in the present case. Contrary to the defendant’s submissions, a costs order in the plaintiff’s favour is about compensating the plaintiff and not about penalising the defendant. I have some concern about the proportionality of the $115,000 quantum of the costs that the plaintiff has apparently incurred compared with the small size of the estate. I stated that concern in the course of expressing a preliminary view about costs and notional estate orders in the principal judgment at [161]. Subject to two exclusions, the costs order will be for the plaintiff’s costs to be paid out of the estate on the ordinary basis, in such amount as may be agreed or assessed. Neither party has taken up my suggestion made during the hearing that this might be an appropriate case for a gross sum costs order, and no evidence has been adduced that would enable me to fix an amount for the plaintiff’s costs in a fair and principled manner. The question whether or to what extent the plaintiff’s costs totalling $115,000 have been properly and reasonably incurred, and whether they are reasonable in amount, will therefore be a matter for the costs assessor who will be apprised of the material necessary to interrogate those issues. It may be that a material portion of the plaintiff’s costs are attributable to the defendant’s attitude to the proceedings as a “threat” to her and her family rather than as a statutory claim for provision to be determined in accordance with the law, and the defendant’s refusal to respond to a single communication from the plaintiff’s solicitors as referred to in the principal judgment at [153]-[158].

30. The qualifications and exclusions to which I have referred above are that the costs order in the plaintiff’s favour will not extend to:

31. his costs of the claim in the Summons filed on 30 October 2023 for a notional estate order in respect of the Kenthurst property; and

32. the costs of his notice of motion filed on 19 December 2024. That notice of motion sought a range of relief, including leave to amend to re-introduce the claim for a notional estate order in respect of the Kenthurst property, freezing orders, and leave to issue various subpoenas on short notice. The motion was dismissed save in relation some of the subpoenas, and the application for short service of those subpoenas could have been avoided if the plaintiff’s legal representatives had acted to issue them in a timely way.

33. I now turn to the question whether the defendant’s account referred to at [9] above should be designated as notional estate of the deceased. Absent such an order, the estate will have no funds to meet the costs order in favour of the plaintiff.

34. As the plaintiff submitted, the deceased’s omissions to exercise her powers [1] to replace the non-lapsing nomination made on about 11 February 2019 in respect of her BT Panorama superannuation funds and her preferred beneficiary nomination made on about 27 June 2006 in respect of her UniSuper superannuation funds, with a nomination in favour of the deceased’s legal personal representative so that the funds would form part of her estate following her death, were “relevant property transactions” within the meaning of s 75(1) and s 76(2)(a) of the Succession Act. Those omissions resulted in the superannuation benefits being held by the plaintiff (as to 45 per cent of the BT Panorma funds and 50 per cent of the UniSuper funds) and the defendant (as to 55 per cent of the BT Panorma funds and 50 per cent of the UniSuper funds) rather than by the deceased’s estate, without the plaintiff and the defendant having given any consideration for those benefits. By reason of s 77(2) of the Succession Act, those relevant property transactions are taken to have been entered into immediately before, and to take effect on, the death of the deceased. I accept the plaintiff’s submission that, subject to ss 83 and ss 87-90 of the Succession Act, the Court therefore has power under ss 78 and 80 to make an order designating as notional estate of the deceased any property of the plaintiff or the defendants, as recipients of the BT Panorama and UniSuper superannuation benefits, for the purpose of an order that the whole or part of the plaintiff’s costs of the proceedings be paid from the notional estate of the deceased. The property designated need not be the superannuation benefits that were the subject of the relevant property transactions, or even the traceable proceeds of those benefits: Benz v Armstrong [2022] NSWSC 534 at [168]-[176].

35. Section 83 of the Succession Act relevantly provides that the Court must not make an order under s 80 unless it is satisfied that the relevant property transaction directly or indirectly disadvantaged the estate of the deceased or disadvantaged the plaintiff as a claimant for family provision. I am satisfied that the relevant property transactions did disadvantage both the deceased’s estate and the plaintiff by reducing the value of the residue of the deceased’s estate out of which the provision ordered in favour of the plaintiff in the principal judgment, together with his costs of his successful family provision claim, could be paid.

36. Section 87 of the Succession Act provides:

“The Court must not make a notional estate order unless it has considered the following—

(a) the importance of not interfering with reasonable expectations in relation to property,

(b) the substantial justice and merits involved in making or refusing to make the order,

(c) any other matter it con siders relevant in the circumstances.”

27. At the hearing on 4 and 5 February 2025, the plaintiff gave evidence that he initially objected to the superannuation benefits being paid to himself and to the defendant at a time when he was contemplating commencing these family provision proceedings, but that he ultimately decided that those payments should proceed based on legal advice that he received at the time: principal judgment at [12]. That caused me to express a preliminary view that a notional estate order directed against property of the defendant by reason of her receipt of the superannuation funds paid to her would arguably interfere with the defendant’s reasonable expectations concerning those monies. However, the plaintiff’s submissions in support of this application for the notional estate order have persuaded me to the contrary.

28. As the plaintiff submitted, the contemporaneous correspondence between the solicitors for the plaintiff and the defendant before and after the payment of the superannuation benefits, and correspondence between the defendant and her solicitor after her receipt of those monies, demonstrates that there was every reason for the defendant to expect at the time the superannuation monies were paid to her, and subsequently, that this would be the basis of an application by the plaintiff for a notional estate order for the purpose of his family provision claim and the costs of the claim. I refer to:

29. the without prejudice offer conveyed by the plaintiff’s solicitors to the defendant’s solicitors by letter dated 27 June 2023 to compromise the plaintiff’s claim on terms which included that the deceased’s superannuation monies, which had not yet been paid out by the trustees of the two superannuation funds, be designated notional estate of the deceased, and that the plaintiff receive 100 per cent of that notional estate in addition to 100 per cent of the residue of the estate;

30. the open letter from the plaintiff’s solicitors to the defendant’s solicitors dated 28 June 2023 stating that it was the plaintiff’s position that the superannuation benefits formed part of the notional estate of the deceased and was part of the plaintiff’s family provision claim, and seeking the defendant’s undertaking not to dispose of any superannuation benefits that may be paid to her by the superannuation trustees pending finalisation of the plaintiff’s claim;

31. the order sought in prayers 3 and 4 of the Summons filed by the plaintiff on 30 October 2023 seeking notional estate orders in respect of the deceased’s superannuation benefits;

32. the defendant’s email to her solicitor dated 20 March 2024 in which the defendant referred to her understanding that “I am not supposed to be using mum’s superannuation money”; and

33. the Amended Summons filed by the plaintiff on 28 May 2024, which removed his claim for a notional estate order in respect of the Kenthurst property but maintained his claim for notional estate orders in respect of the BT Panorama and UniSuper funds.

34. In the principal judgment, I expressed a preliminary view at [170] that, by reason of the plaintiff’s agreement to the superannuation trustees paying the superannuation benefits to himself and to the defendant, it would be contrary to the substantial justice and merits of the case to now make a notional estate order in respect of property of the defendant only on the basis that she received a portion of those benefits, while the plaintiff retains the portion that was paid to him.

35. Having reviewed the correspondence identified in the plaintiff’s further submissions and referred to at [28] above, I accept that the plaintiff did not agree to the payment of those superannuation benefits to himself and to the defendant. Rather, the plaintiff did not object to the superannuation trustees complying with the deceased’s nominations, whilst making it clear to the defendant that he regarded the superannuation monies as notional estate of the deceased and that they would form part of the subject of the family provision claim that he was then foreshadowing. Prayers 3 and 4 of the Summons filed by the plaintiff on 30 October 2023 and the Amended Summons filed on 28 May 2024 claiming notional estate orders in respect of the superannuation benefits are entirely consistent with the plaintiff’s correspondence with the defendant prior to the commencement of the proceedings and prior to the payment of the superannuation benefits. Contrary to my earlier preliminary view, the making of the notional estate order now sought would not be contrary to any previous agreement or position of the plaintiff.

36. Moreover, I accept the plaintiff’s submission that the substantial justice and merits favour making a notional estate order against property of the defendant only, notwithstanding that the plaintiff also received part of the superannuation monies. As the plaintiff submitted, the object of the order for provision is the plaintiff’s education, maintenance and advancement in life, the plaintiff is entitled to an order for his costs of his successful claim for provision for all of the reasons explained above, and the object of that costs order is to compensate the plaintiff. It would be contrary to those objects for the costs of these proceedings to be paid out of property of the plaintiff designated as notional estate merely because the plaintiff had also received some of the superannuation monies. That is all the more so in circumstances where the amount of the provision ordered in favour of the plaintiff was determined having regard to the fact that he had received those superannuation monies. As the plaintiff submitted, he was put to the cost of prosecuting his claim because the defendant stridently asserted that the deceased’s last will represented her testamentary wishes at the end of her life. The Court has rejected the defendant’s evidence to that effect: see principal judgment at [96]-[152]. In those circumstances, it would be unjust for the plaintiff to be deprived of compensation for his costs of prosecuting his family provision claim merely so as to allow the defendant to retain the superannuation benefits paid to her.

37. I do not consider that there are any matters other than those referred to at [27]-[31] that require consideration under s 87(1)(c).

38. Section 88 of the Succession Act provides that the Court must not make a notional estate order unless it is satisfied of one of three things, the second of which is that the deceased’s estate is insufficient for the making of the family provision order, or any order as to costs, which the Court considers should be made. As discussed earlier in these reasons, the order for provision made on 18 February 2025 has exhausted the residue of the estate. For the reasons that I have already explained, I consider that an order should be made for the plaintiff’s costs to be paid out of the deceased’s estate, subject to the two exceptions referred to at [22] above. I am satisfied that the deceased’s estate is insufficient for the making of that order: Succession Act, s 88(b).

39. Section 89 of the Succession Act provides:

“(1) In determining what property should be designated as notional estate of a deceased person, the Court must have regard to the following—

(a) the value and nature of any property—

(i) the subject of a relevant property transaction, or

(ii) the subject of a distribution from the estate of the deceased person or from the estate of a deceased transferee, or

(iii) held by the legal representative of the estate of any deceased transferee in his or her capacity as legal representative of the estate of the deceased transferee,

(b) the value and nature of any consideration given in a relevant property transaction,

(c) any changes in the value of property of the same nature as the property referred to in paragraph (a), or the consideration referred to in paragraph (b), in the time since the relevant property transaction was entered into, the distribution was made, the property became held by the legal representative of the estate of the deceased transferee or the consideration was given,

(d) whether property of the same nature as the property referred to in paragraph (a), or the consideration referred to in paragraph (b), could have been used to obtain income in the time since the relevant property transaction was entered into, the distribution was made, the property became held by the legal representative of the estate of the deceased transferee or the consideration was given,

(e) any other matter it considers relevant in the circumstances.

(2) The Court must not designate as notional estate property that exceeds that necessary, in the Court’s opinion, to allow the provision that should be made, or, if the Court makes an order that costs be paid from the notional estate under section 99, to allow costs to be paid as ordered, or both.

(3) If, as a result of a relevant property transaction or of a distribution from the estate of a deceased person or from the estate of a deceased transferee, property becomes held by a person as a trustee only, the Court must not designate as notional estate any property held by the person other than the property held by the person as a trustee as a consequence of any such relevant property transaction or distribution.”

35. Having considered all of the matters in s 89(1) and (2), and noting that s 89(3) is not relevant as there is no suggestion that the deceased’s superannuation monies paid to the defendant were held by the defendant as trustee for another person, I am of the opinion that it is the funds standing to the credit of the defendant’s account into which those superannuation monies were paid, that should be designated as notional estate of the deceased. Section 89(2) is satisfied by framing the terms of the notional estate order as limited to the amount of funds standing to the credit of that account that corresponds with the amount that is to be paid to the plaintiff to satisfy the order that is to be made for his costs of these proceedings. That amount may be the subject of agreement between the parties. If there is no agreement, that amount may be determined by the costs assessment process, as I have mentioned earlier in these reasons. Whether the amount is determined by agreement or assessment, it will be less than the amount of the deceased’s superannuation benefits paid to the defendant based on the plaintiff’s evidence that his total costs are $115,000: principal judgment at [12].

36. Section 90 of the Succession Act applies in specified circumstances and is not applicable to the present case.

37. There is one further matter that I must mention briefly. The defendant’s affidavit sworn on 14 March 2025 states:

“As the Executor of the estate who bore all of the emotional abuse and responsibilities for the case I claim $1 in compensation.”

38. There is no evidence of any “emotional abuse” other than the baseless allegations dismissed in the principal judgment and repeated in the defendant’s 14 March 2025 affidavit. The terms of the deceased’s last will do not provide for the defendant to be remunerated for discharging her role as executor. The defendant has not availed herself of the opportunity to apply to the Court to pass the accounts of the estate and, in doing so, to award a commission or percentage of the estate for the defendant’s pains and trouble as executor: Probate and Administration Act 1898 (NSW), s 86.

39. For all of the foregoing reasons, I made the following orders on 28 March 2025:

40. Order that the plaintiff’s costs of these proceedings, excluding the costs of the claim for relief in prayer 2 of the Summons filed on 30 October 2023 and excluding the costs of and incidental to the plaintiff’s notice of motion filed on 19 December 2024, but including the costs of and incidental to the hearing on 28 March 2025, are to be paid out of the notional estate of the late Bernice Sutcliffe (the deceased) on the ordinary basis in such amount as may be agreed or assessed.

41. Order that the funds standing to the credit of the defendant’s Macquarie Bank account number XXXXXX760, up to the amount of the plaintiff’s costs of these proceedings that is agreed or assessed as payable by the defendant in accordance with order (1) above, is designated as notional estate of the late Bernice Sutcliffe.

42. Order pursuant to s 7 of the Court Suppression and Non-publication Orders Act 2010 (NSW) on the grounds of s 8(1)(a) and s 8(1)(e) of that Act that, for a period of 30 years from the date of this order, the account number of the bank account referred to in order 2 is not to be disclosed to any person other than:

(a) the parties to these proceedings and their legal representatives; and (b) any public official for the purpose of enforcing order 1; (c) the financial institution with which the account is held for the purpose of enforcing order 1; and (d) any disclosure made by the defendant.

4. Order 3 applies throughout the Commonwealth of Australia.
5. Grant liberty to both parties to apply in the event of any issues arising out of the enforcement of the orders made on 18 February 2025 or the orders made on 28 March 2025.

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Endnote

Superannuation Industry (Supervision) Act 1993 (Cth), s 59(1A); Superannuation Industry (Supervision) Regulation 1994 (Cth), r 6.17A; Trust Deed for Asgard Independence Plan – Division 2, Schedule 2 – Panorama Super Plan, clause 10 (Exhibit 4); UniSuper Consolidated Trust Deed, clause 44A (Exhibit 4).