Woodward v Woodward & Anor

The Proceedings

1. The procedural history that has brought the matter to this point is complicated. The proceedings were commenced by Statement of Claim filed 5 June 2014 by a solicitor, Mr Evan Gowran, on instructions from Stephen, the named executor in the deceased's will. The proceedings sought against the first and second defendants an order that an account be taken of moneys received and disbursed by the first defendant as the financial manager of the deceased between 19 September 2011 and 19 July 2013, when Ethel Woodward died. The accounting is sought to be conducted on the wilful default basis. To obtain such an order the plaintiff will need to establish a number of identifiable instances of wilful default justifying the Court making an order for the payment of money to Ethel's estate: Juul v Northey [2010] NSWCA 211.
2. The case against the third defendant has been settled and need not be further mentioned. The case against the first and second defendants is, broadly summarised, that the plaintiff, Stephen, seeks against Tyrone an account for Tyrone's conduct of his duties as financial manager appointed under the Guardianship Act 1987, s 23M. It is alleged that between 19 September 2011 and April 2012 Tyrone withdrew from Ethel's bank accounts $203,670.00 in cash which is now unaccounted for and which may not have been spent for Ethel's benefit. The case also alleges between 28 September 2011 and 2 December 2011 that a sum of $49,000.00 was applied by cheque or bank transfer to objects such as lawyers, finance companies, veterinary surgeons and other persons, who had no obvious association with Ethel. If these allegations are made out the plaintiff may establish a right to an account and get orders against Tyrone for the payment of that money to the estate. On the other hand, it may be demonstrated that these moneys were actually used for the benefit of the deceased. There may indeed be other defences, such as that the withdrawals were not made. These are all matters for the future. I cannot decide any of them now.
3. The relief sought against Tyrone's wife Sharon is predicated upon the Court making a further finding that Sharon has received estate funds knowing that Tyrone has applied them in breach of his trustee's duties as Ethel's financial manager.
4. The application for an adjournment is based on the following facts: Mr Hill says his solicitor, Mr Stephen Churches, of Armstrongs Solicitors yesterday first filed a notice of appearance on behalf of the first and second defendants. It is on the strength of these recent instructions and the lack of any steps having been taken for the defendants that Mr Hill appears today and applies for the adjournment.
5. The procedural history of this case is odd to say the least. There were solicitors previously acting on the record for the first and second defendants, Messrs Burke & Meade, but they filed a notice of ceasing to act in August 2014 shortly before the matter was set down for trial at the listing hearing. New solicitors, Messrs Bilbie Dan, then took steps on behalf of the first and second defendants in relation to the proceedings. The plaintiffs apparently took the these steps to mean that Messrs Bilbie Dan were acting for the first and second defendants in the proceedings. I will not go into the correspondence in detail. There may be a contest about this issue between Messrs Bilbie Dan and the first and second defendants. Subject to what Messrs Bilbie Dan wish to submit, I would observe that a review of the correspondence gives the plaintiff some grounds to contend that he reasonably assumed that Messrs Bilbie Dan were acting for the first and second defendants, notwithstanding the fact that Messrs Bilbie Dan had not formally filed a notice of appearance on their behalf in accordance with the Uniform Civil Procedure Rules ("UCPR").
6. But on 12 February 2015 Messrs Bilbie Dan first said to the solicitors for Stephen they were no longer acting in this matter. Had they filed a notice of appearance Bielby Dan would not have been able to file a notice of ceasing to act so close to today's hearing, as they would have required the Court's leave to do so under Uniform Civil Procedure Rules, r 7.29. Because Messrs Bilbie Dan did not file a notice of appearance, formal leave to withdraw was probably not strictly necessary. But the real question is whether in substance they represented the first two defendants in the proceedings by acting and continuing to act notwithstanding the lack of formal notice of an appearance, such that they should now be treated as if they had filed such a notice.
7. Review of the correspondence now raises the question whether or not an order should be made against Messrs Bilbie Dan that they personally pay any costs orders made in favour of the plaintiff on the adjournment. I do propose to make some costs orders in favour of the plaintiff on the adjournment. But the precise form of these orders wait until Bilbie Dan has had an opportunity to be heard. Messrs Bilbie Dan will be given an opportunity to contest whether or not they should bear the costs order themselves. I will direct Armstrongs Solicitors to serve a copy of my reasons on Messrs Bilbie Dan, so that they are apprised of this issue.
8. The reason the adjournment must take place is the allegation of wilful default which, as I said, is very serious. Notwithstanding the rather chaotic history of this case, the defendants must still be given an opportunity to defend themselves with proper representation. Given the seriousness of the allegations against them the best thing the Court can now do is to: (1) compensate the plaintiffs for the costs thrown away by the adjournment; and (2) to put the proceedings on a firm forward track. The directions I am about to make will serve both those ends. They should bring the proceedings as efficiently as possible to an end, give fairness to the defendants so that they are properly represented, and allow the plaintiff fairness so that he receives some costs to compensate for the fact that an adjournment has been granted to the defendants.

Placing the Litigation on a Proper Footing

1. But there are a series of issues with this litigation, which must now be fixed, so that next time it comes to Court it will be ready. Indeed once the steps set out below are taken the parties may be able to settle parts of the proceedings. Here are the issues.
2. (1) Representation of the Estate. Firstly, Mr Hill has taken the point that the plaintiff, Stephen, does not yet have a grant of Probate in his favour as the executor of the estate. Ms Winfield has conceded that Stephen has neither applied for nor obtained Probate of Ethel's last will. In those circumstances how Stephen could have instructed Mr Gowran to commence these proceedings is something of a mystery. Without a grant of Probate he does not have the authority to commence the proceedings. I will not decide the question who should bear the burden of the costs incurred so far without proper authority between the commencement of these proceedings and the present time. However, the position must be regularised rapidly. I will make an order under the Uniform Civil Procedure Rules, r 7.10.1(a) appointing Stephen temporarily to represent Ethel's estate for the purposes of the proceedings. Stephen consents to the making of such an order. But that order will be on terms that Stephen must: (1) within seven days of today file an application for Probate of Ethel's estate; and, (2) must expeditiously pursue that application until Probate is granted.
3. (2) The Adjournment Application. None of what has happened today is the fault of either Stephen or his solicitors, although perhaps enquiries could have been made earlier about the lack of filing of the notice of appearance by Messrs Bilbie Dan. When one looks at the correspondence one can understand why those enquiries were probably not made. The defendants are seeking an indulgence of the Court for an opportunity to be allowed to defend this case and the vacation of this hearing date. They should pay the costs of that. Whether or not those costs should be paid on the indemnity basis I will not determine until I hear from Messrs Bilbie Dan. However, whilst reserving the question of the assessment of costs, I will order the first and second defendants to pay the plaintiff's costs thrown away by today's adjournment.
4. The parties should not be distracted by any unnecessary applications to assess those costs. The parties should instead focus on the fact that adjourning legal proceedings costs money. I have decided to require, as a condition of the adjournment, that the defendants pay into Court a sum of money with the intention that at a future hearing that sum will provide a fund from which the plaintiff's costs thrown away can be paid. That way there need not be any unnecessary argument about the plaintiff recovering the costs of today. It should also act as a discipline upon the defendants to ensure that they retain solicitors and counsel in a regular fashion to assist the resolution of the real questions in dispute in these proceedings.
5. The plaintiff has sought some $13,660.00 to be paid into Court for their costs thrown away by the adjournment. They estimate that amount on the following basis: solicitors' costs of preparation and attendance today ($7,100.00); Stephen's accommodation and travel ($400.00); counsel's preparation and appearance fees ($6,160.00). Mr Hill says these amounts are excessive. I have a broad discretion as to what I should do in this case. I have decided that I will require the defendants to pay into Court the sum of $10,000.00 on account of the legal fees that the plaintiffs have incurred that will be wasted by the adjournment. Mr Hill wishes to have the opportunity to persuade the Court that even less than this should be paid to the defendants. I am not sure such an argument could succeed unless it took place in the context of someone demanding from the plaintiffs the actual amount of $13,660. What I will most probably do is assess the costs thrown away under Civil Procedure Act 2005 (NSW), s 98(4), which allows the Court to make a gross sum costs order in respect of the proceedings. No-one then has to worry about the costs of assessment of these costs. I am content on the next occasion to do that based upon my knowledge of the costs of litigation.
6. (3) Messrs Bilbie Dan. Messrs Bilbie Dan may have to face an order for costs against them personally. I have pre-determined nothing about that in their absence, other than that the material raises a question that such an order is open. The appropriate course now is to direct that a copy of these reasons be given to them. Armstrongs Solicitors, the current solicitors for the first and second defendants should do that. I will direct Armstrongs Solicitors to provide to Messrs Bilbie Dan Solicitors a copy of these reasons to Messrs Bilbie Dan. The first and second defendants and the plaintiff should appear at a later hearing so that Messrs Bilbie Dan can show cause as to why they should not bear the whole or some part of the costs thrown away by reason of today's adjournment.
7. (4) Further Directions. The proceedings must also be brought closer to resolution. The way to do that, it seems to me now, is to direct the defendants to file a Defence, produce documents, and file affidavits. To that end the Court will make directions for the defendants to file affidavits and the categories of documents as set out in Schedule A to the below orders.
8. (5) Mediation. The parties to these proceedings have not mediated their differences. That is not surprising given that the first and second defendants have not as yet filed a Defence. But the directions made above will not should both discipline the parties to be ready for a hearing, and throw considerable light on the first and second defendants' actual dealings with the deceased's monies whilst the first defendant Steven was her financial manager under the Guardianship Act. Illuminating those dealings should improve the parties' mutual understanding of the facts sufficiently to provide a platform for mediation.
9. There is probably less than $300,000 in issue in the proceedings. It is desirable for a mediation to be attempted early, before the parties' legal costs become as significant to settlement as is the amount in issue. I will therefore make an order under Civil Procedure Act 2005, s 26 for the mediation of these proceedings. A Court annexed mediation is appropriate.

Conclusion

1. Accordingly, his Honour makes the following orders:
2. Appoint the plaintiff Stephen James Woodward under Uniform Civil Procedure Rules, r 7.10(1)(b) to represent the estate of the late Ethel Marie Woodward, who died on 19 July 2013 ("the deceased") in these proceedings.
3. Direct the plaintiff to file an application for probate of the deceased's estate by 4pm on Thursday, 26 February 2015
4. Direct the plaintiff to proceed with all due expedition to achieve a grant of probate in the deceased's estate as soon as is practicable.
5. Vacate the hearing date today and adjourn the proceedings for mention before the Registrar in Equity at 9am on Friday, 17 April 2015.
6. Order the first and second defendants pay by Wednesday, 11 March 2015, the sum of $10,000 on account of the plaintiff's costs thrown away by today's adjournment into Court, or with the consent of the plaintiff's solicitors into the defendant's solicitor's trust account, to be held pending disposal pursuant to the Court's orders.
7. Direct Messrs Armstrongs Solicitors to provide to Bilbie Dan Solicitors a copy of these reasons and these orders by 5.00pm on 20 February 2015.
8. Appoint 9.30am on 4 March 2015 as the date for hearing of Messrs Bilbie Dan Solicitors to show cause as to why they should not personally bear the whole or some part of the plaintiff's costs thrown away by reason of today's adjournment.
9. Direct the defendants to file a Defence to the Statement of Claim by 4pm on 6 March 2015.
10. Direct the defendants to file any affidavits they wish to file in reply to the affidavit of Stephen James Woodward of 26 May 2014 by 4pm on 13 March 2015.
11. Direct the defendants to produce the documents described in Schedule A to these orders by 4pm on 6 March 2015.
12. Direct that the parties approach the Registrar in Equity to appoint a Court annexed mediation in these proceedings to take place before 17 April 2015. Schedule A Schedule "A" to the Orders made on 19 February 2015 CATEGORIES OF DOCUMENTS For the period from 19th September 2011 to 19th July 2013 ("the period"), the first and second defendants must produce documents in categories 1 to 5 below:
13. Copy of any receipts for payments made by cash withdrawn, cheque or transfer from the Newcastle Permanent Building Society account no. 862036103 during the period.
14. Copy any correspondence in relation to any payments made by cash withdrawn, cheque or transfer from the Newcastle Permanent Building Society account no. 862036103 during the period. Note: the payments during the period referred to in 1 and 2 include but are not limited to: (a) Cash withdrawals: (b) Periodical debits to Vero Insurance during the period (c ) Transfers to other accounts: Trans date $ Wdl Description 28.9.2011 2,692.07 983105 - Automotive Financial Serv 28.9.2011 1,831.15 983106- Geoffrey MendelsonLawyers 28.9.2011 760.00 983107 - Capital Finance-Woodward 4.10.2011 5,600.00 982463 - Tyrone Woodward 22.10.2011 2,421.00 845794- New Look Shed City 2.11.2011 18,560.00 985283- Luke Rigby 10.11.2011 1,990.00 984447- Brunker Road Vet 2.12.2011 8,000.00 845382- Luke Rigby

3. Copies of any correspondence between First Defendant and/or the Deceased and Newcastle Permanent Building Society including the issue of any credit card, debit card or ATM card allowing withdrawal or transactions on the Deceased's Newcastle Permanent Building Society account no. 862036103 during the period.
4. Copies of mortgage statements for the property at 15 Wallsend Road, West Wallsend in respect of the period.
5. Copies of all bank account statements and credit card statements for the First and Second Defendants either jointly or severally or for either defendant with any other person showing transactions during the period. Notation: "Document" includes documents held in electronic form including emails and text messages. Please provide a hard copy or copy in Microsoft Word format.

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