Wilson v Porada; The Estate of Peter Wolfgang Porada, late of Pericoe

Judgment (6 paragraphs)

[1]

Judgment

This is the Court's third judgment in these proceedings. This judgment should be read with the Court's first judgment (Wilson v Porada; Estate of Peter Wolfgang Porada late of Pericoe [2017] NSWSC 818) and its second judgment (Wilson v Porada; Estate of Peter Wolfgang Porada late of Pericoe (No. 2) [2017] NSWSC 1362). Events matters and persons are referred to in this judgment in the same way as they are in each of the previous two judgments.
The Court found in its first judgment that in the competing claims for administration of the estate, the plaintiff, Ms Wilson failed to establish that she was a de facto partner of the deceased, Peter Porada, for a period of two years prior to his death. As a result she failed in her claim to a grant of administration of the deceased's estate. Instead the Court granted administration of the estate to the deceased's brother, Manfred Porada (who will be referred to in these reasons as "the administrator", as he was appointed to that role on 7 September 2017).
The plaintiff had relatively modest success in the related family provision proceedings. She had a legacy awarded in her favour of $75,000 from what was a small estate of approximately $350,000. To that estate can be added the deceased's $411,000 interest in the Superannuation Fund which could have potentially been designated as notional estate.
In the Court's second judgment, the Court dealt with issues of costs and other matters. The Court capped the plaintiff's costs at $100,000. The Court sought to minimise the possibility of issues arising on the later distribution of the estate before the legacy of $75,000 was paid out the plaintiff. The Court also sought to ensure that adequate notice was given to Ms Karen Gray of the payment of monies to the plaintiff. The payment out to Ms Gray had become an important part of the logic underpinning the award which the Court made to the plaintiff. In the result, when the second judgment was given on 9 October 2017, the Court made the following orders: 1. Note that for the purposes of these orders the expression "the proceedings" means all four proceedings numbered 2015/155275; 2015/242796; 2016/106321; 2016/124110 that were heard together on 3,4,5 and 6 April 2017, and the expression "the administrator" refers to Manfred Robert Porada who was appointed administrator of the estate of the late Peter Wolfgang Porada on 7 September 2017. 2. Order that prior to the parties taking any steps to satisfy the order for a legacy made on 7 September 2017 or any orders for costs included in the present orders, out of any part of the Mercer Super Trust - South East Fibre Exports Superannuation Plan Fund No GL 21378/21593 ("the Superannuation Fund"), on the basis that it is notional estate under Succession Act, notice must again be given by the administrator to the other claimants to the Superannuation Fund ("the potential competing claimants") of the Court's principal judgment and of these reasons. 3. Subject to all the potential competing claimants to the Superannuation Fund expressly indicating to the Court that they do not contest the making of these orders, order that the costs of the administrator in relation to the conduct of these proceedings be paid out of the estate, and if required, the notional estate on the indemnity basis. 4. Subject to all the potential competing claimants to the Superannuation Fund expressly indicating to the Court they do not contest the making of these orders, order that Ms Wilson's legacy of $75,000 and her costs of the proceedings be paid out of the estate, and if required, the notional estate on the ordinary basis but further subject to order five hereof. 5. Order that Ms Wilson's costs of the proceedings be capped in the sum of $100,000. 6. Order that the administrator may pay the legacy of $75,000 to the solicitors for Ms Wilson seven days after writing to Ms Karen Gray (or her solicitors) informing her (or them) that the payment of the said legacy is shortly to be made. 7. Grant liberty to apply in relation to the administrator reporting to the Court that the competing claimants do not wish to contest these orders and in relation to the implementation of these orders.

Issues arising since 9 October 2017

Achieving compliance with orders (3) and (4) of the orders made on 9 October 2017 has taken longer than either party, and indeed the Court itself, expected. Ms Esther Colson, the solicitor for the estate has deposed a detailed affidavit explaining the course of events since 9 October 2017.
At the time of the second judgment the Court had not designated the deceased's interest in the Superannuation Fund as notional estate. Although this is more fully explained in the second judgment, it was thought at that time unnecessary to proceed to designate the deceased's interest in the Superannuation Fund as notional estate, if the trustee of the fund was going to pay the deceased's interest in the Superannuation Fund to the estate in any event. By 9 October 2017 the trustee of the Superannuation Fund had not made a determination that the deceased's superannuation benefits either in whole or in part should be paid to the administrator of the estate (second judgment, at [58] - [59]).
Between 9 October 2017 and 15 November 2017 the estate sought information from the Superannuation Fund as to when a decision would be made about payments to the estate. Indeed Ms Colson had done this on several occasions before 9 October 2017. On 15 November 2017 the trustee of the Superannuation Fund resolved to pay the whole of the deceased's interest in the fund to the estate. The same day Ms Colson sought instructions as to whether or not the Latter children were prepared to indicate they were not going to challenge the decision of the trustee.
But the funds were not paid to the estate for another six weeks. In the meantime the plaintiff filed a motion on 12 December 2017 seeking payment of the legacy. This motion was heard on 14 December 2017 and adjourned part-heard until 8 February 2018.
After further correspondence with the trustee the funds were ultimately paid to the estate on 21 December 2017. The same day Ms Colson reiterated in correspondence to the solicitors for the Latter children that they "have now had many months to raise an objection in accordance with his Honours orders" to the release of funds to the plaintiff and sought a response as a matter of urgency that day. They indeed had many months: as the Court's orders, seeking their indication whether they wished to intervene in the proceedings, had been served on them as early as March 2017, just before the hearing. The Latter children's solicitors sought more time and eventually they communicated to Ms Colson on 1 February 2018 that they did not wish to challenge the trustee's decision to pay the deceased's interest in the Superannuation Fund to the estate.
Mr Brian (Ross) Ferguson has not yet clearly indicated that he is not going to challenge the trustee's decision to pay the deceased's interest in the Superannuation Fund to the estate. But he has been given every opportunity over a period of 10 months to intervene in these proceedings to pursue his own interests and has not chosen to do so.
Ms Colson first wrote to him on 20 March 2017 pointing out that he was one of the nominated beneficiaries under the now-expired nomination by the deceased as to the disposition of his interest in the Superannuation Fund. The letter enclosed the Court's orders of 13 March 2017, directing that he be notified, and alerting him to the possibility that he may wish to contest any trustee's decision about that matter and sought his "urgent attention" to the issue. He did not at any stage thereafter seek to intervene in the proceedings.
After the trustee's decision of 15 November 2017 to pay the funds to the estate, on 28 November 2017 Mr Ferguson was again reminded in writing of his right to intervene and he was requested to indicate that he did not contest the making of these orders. In response he did not indicate he would not contest the orders. But he did not indicate that he would. All that he said was that he would "hold on the decision for the requested relinquishment of contest" until after the Latter children had made a decision.
The money was paid to the estate on 21 December 2017. Ms Colson sent another reminder email to him on 21 December 2017 after the payment of the funds to the estate. In response Mr Ferguson telephoned Ms Colson and gave assistance to her in attempting to contact the Latter children. But he did not indicate in any way that he wished to object to the trustee's decision in his own separate interests. If anything his communications are to be construed as only expressing concern for the interests of the Latter children. If Mr Ferguson had wished to intervene in these proceedings he has been given a reasonable opportunity to do so.
The Court is satisfied that the Latter children and Mr Ferguson have either given an indication they do not wish to challenge the trustee's decision or been given sufficient notice of the Court's intention that that they have had a reasonable opportunity to intervene, such that the estate can now be distributed without further notice to them.

Varying the Costs Capping Orders

An inherent disadvantage of making cost capping orders upon the costs of one party but not the other, as has occurred here, is that any incidental delay to the finalisation of the proceedings after the making of those orders is potentially likely to affect the party whose costs have been capped, more adversely than the party whose costs are been left uncapped. In my view that is happening in this case and needs to be rectified.
The plaintiff has been successful and has obtained an order for costs but those costs have been capped for the reasons given in the second judgment. The costs capping order that was made represented a significant discount on the costs that the plaintiff had claimed. She should not, in my view, continue to have her benefits under the judgment eroded by having additional legal expenses forced upon her to enable her to receive her legacy before she and her solicitors can close their files.
But the estate argues: that the plaintiff launched a motion prematurely and has put the estate to unreasonable costs; and that the estate has conducted itself with appropriate diligence in seeking to have the trustee of the Superannuation Fund make a decision and has then acted on that decision.
It can be accepted that the estate has conducted itself reasonably in seeking to have the trustee make a decision about the payment of the deceased's interest in the Superannuation Fund to the estate. But it is also not unreasonable of the plaintiff to have brought the matter back to Court when she did. Without either side being to blame in incurring additional costs, the conduct of these proceedings has become more complicated and more expensive after 9 October 2017 than had been anticipated at that time. That has occasioned additional costs to the estate, which it will have to bear. But it has also occasioned additional costs to the plaintiff. In my view, unless some adjustment is made to the presently applicable costs cap, the plaintiff will be forced to bear those additional costs disproportionately.
For that reason the Court has decided that, in the events which have occurred, it will lift the cap on her costs a little to account for the events of the last three months.
By what amount should the costs cap be lifted? In the course of argument during the morning, the court directed the plaintiff to prepare and serve on the estate memoranda of solicitor's and counsel's fees for the plaintiff's costs incurred since 9 October 2017 and up to today, 2 February 2018.
This was done. The solicitors for the plaintiff submitted a memorandum of costs of $8,261 rounded down to $6,000 (Exhibit SA). Ms Clarke submitted a memorandum of her fees of $1,155 (Exhibit SB). The estate submitted that these amounts are excessive and should not be allowed.
Any adjustment to the costs cap is to ensure that the costs cap does not itself become a source of injustice. The plaintiff's legal fees are not obviously excessive although they have not been fully explained within the time that was available before they were produced. It is to be acknowledged that they have not been the subject of assessment. Moreover, the costs cap imposed, even with a minor upwards adjustment is still well below the total fees claimed by the plaintiff's solicitors and counsel. In the circumstances some upward adjustment is warranted, although not the full amount the plaintiff claims.
In my judgment the cap should be lifted by $5,000 and the Court will so order.

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Judgment (6 paragraphs)

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