New South Wales Supreme Court CITATION : Roy v Roy [2004] NSWSC 463 HEARING DATE(S) : 20 May 2004 JUDGMENT DATE : 20 May 2004 JURISDICTION: Equity JUDGMENT OF : Campbell J DECISION : Costs of both executors of dispute concerning who should represent estate to be paid from estate. Order for compulsory mediation not made at this stage of proceedings. CATCHWORDS : SUCCESSION - FAMILY PROVISION AND MAINTENANCE - practice - two executors with different views about approach to take to plaintiff's claim - who should represent estate for purpose of dealing with plaintiff's claim - whether costs of that dispute should be paid from estate - order for compulsory mediation of dispute sought - case at early stage of preparation - whether appropriate for order to be made Family Provisions Act 1982 LEGISLATION CITED : Supreme Court Act 1970 Supreme Court Rules 1970 CASES CITED : Singer v Berghouse (1994) 181 CLR 201 Christina Leonie Roy - Plaintiff PARTIES : Travis Roy - Estate of Roderick Gordon Roy - First Defendant Ian Frederick Stanwell - Second Defendant FILE NUMBER(S) : SC 3989/03 J Needham - Plaintiff COUNSEL : M A Bradford - First Defendant J Wilson SC - Second Defendant Teece Hodgson & Ward - Plaintiff SOLICITORS : Musgrave Peach - First Defendant Leonard S Hattersley - Second Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY JUDGE LIST CAMPBELL J THURSDAY 20 MAY 2004 3989/03 CHRISTINA LEONIE ROY v TRAVIS ROY – ESTATE OF RODERICK GORDON ROY & ANOR JUDGMENT – Ex Tempore 1 HIS HONOUR: Today there were two notices of motion before the Court relating to the affairs of the estate of the late Roderick Gordon Roy. He died in June of 2002. A Family Provision Act 1982 claim has been brought by his widow, by proceedings which she began on 25 July 2003. The marriage between the plaintiff and the deceased was a second one for both of them. Each had children from a prior marriage. As well, the deceased had two children from a de facto relationship. In his will, the deceased endeavoured to make provision for the various people associated with different segments of his life, including, as well as the plaintiff and some of his children, children which the plaintiff had from her earlier marriage. 2 The deceased appointed three executors. He appointed his widow, his son Travis, and an old friend, Mr Stanwell. One of the disputes which was before me today was a dispute between Mr Stanwell and Travis about which of them should have the conduct of the defence of the plaintiff's claim. That dispute was compromised this morning, by an agreement that orders be made which will give the conduct of the defence to Travis, on certain conditions which I will go into in a little more detail later. 3 There has been an agreement between the parties that Mr Stanwell should have his costs of that notice of motion on an indemnity basis from the estate. There remains a question for decision about whether Travis should also have his costs of that motion from the estate, and if so on what basis. 4 The second matter which is before me today is a notice of motion brought by Travis, wherein he seeks an order under section 110K of the Supreme Court Act 1970 that the proceedings be referred to mediation. 5 Notwithstanding that the proceedings were begun on 25 July 2003, they are little advanced in preparation. The plaintiff has filed an extensive affidavit in chief. Notwithstanding orders that an affidavit in accordance with Part 77, rule 59 Supreme Court Rules 1970 should have been filed, the defendants to the proceedings have not yet filed one. The defendants have filed no affidavits which go to the merits of the plaintiff's claim. Nor have they filed any affidavits which set out the financial position of various of the beneficiaries under the will. There has, it seems, been a service of notices in accordance with Form 89B Supreme Court Rules on the various children and stepchildren of the deceased, on his first wife, and on his previous de facto partner. I gather that those notices have produced a nil return. 6 The basis upon which Mr Bradford, for Travis Roy, submits that the matter should be referred to mediation is that the applicant has, through the correspondence which has passed between the solicitors so far, demonstrated that he takes the plaintiff's claim seriously, that offers have been made to settle it, and that his three brothers support mediation. He suggests there would be a significant saving in costs if mediation were to be ordered. He accepts that before mediation could actually occur it will be necessary for there to be some further preparation, so that an appropriate factual base for the mediation is available. He accepts that it would be necessary for a Rule 59 affidavit to be served, and that it would be necessary for there to be affidavits setting out the financial position of the other beneficiaries under the will, so that the exercise involved in carrying out the second stage of the tests laid down in Singer v Berghouse (1994) 181 CLR 201 can be carried through, to work out the quantum of any entitlement which the plaintiff might establish that she has. 7 One of the circumstance which has led to a dispute between Mr Travis Roy and Mr Stanwell about who should be the representative of the proceedings arises from the fact that Mr Stanwell, who had a position as a director of one company, and possibly more than one company, in which the deceased was interested, had declined to provide to Mr Travis Roy financial information which bore upon the position of the estate. There were some documents which he did not supply, like the will in the period immediately after the deceased's death, concerning which there was absolutely no doubt that Mr Travis Roy had an entitlement. There has not been enough evidence before me to work out whether the refusal to supply other documentation which bore upon the affairs of the estate was, or was not, justifiable. That is because it would be necessary to examine whether the particular documents in question were ones which an executor would be entitled to, as opposed to ones which a mere company shareholder would be entitled to, to decide whether refusal to provide any particular document was justifiable, and that exercise has not been gone into before me. 8 The fact that there has been this sort of non provision of information, however, has led to Mr Travis Roy being in the situation where he is particularly poorly informed at the moment, concerning the affairs of the estate. There are some transactions, involving money going into and out of estate accounts, which he wishes to investigate further. Of course, those investigations might result in information which bears upon the size of the estate, and which needs to be included in a Rule 59 affidavit, or they might lead nowhere. 9 Ms Needham, for the plaintiff, says that the plaintiff is not yet in a position to decide whether this case is suitable for mediation. She says that that information will be known only when it is clear what is in the estate, and what are the financial circumstances of all the beneficiaries. She submits that, because it is common ground that that information will need to be known before there can be a mediation, there would be comparatively little cost saving involved in ordering a mediation. The saving in costs which would result from a mediation would amount, she submits, to not needing to prepare various affidavits updating the financial circumstances of the people whose circumstances need to be considered, and in not making the sort of investigations which might be needed for cross-examination. While it is not possible at this stage of preparation of the case to form a firm view about the likely hearing time, it is unlikely that the case would take more than two days if it went to trial, and it might possibly be over in one day. 10 A mediation would involve expenditure of lawyers fees for half a day or thereabouts, plus the time for preparation. If the mediation were unsuccessful these fees would be wasted. 11 A particular problem concerning the holding of a mediation in this case arises from the fact that the deceased's step children are beneficiaries under his will of fractional interests in the residue. If there were to be a mediation, a question would arise of where the burden of any order ought fall. In particular, there would be a question of whether, if an order were to be made, it should fall on the children of the deceased, or on the children of the plaintiff, or partly one and partly the other in some proportions. 12 There has been one offer made so far by the defendant, which, when it was worked out, would have resulted in the plaintiff receiving less than her entitlement under the will. It may have been that the making of that offer was a mistake, because it was not known what the amount of a superannuation payment was which the plaintiff had received from a company with which the deceased was connected. As well, that offer is one which provided for the burden of provision for the plaintiff to be borne in a fashion which was detrimental to the interests of the plaintiff's children. 13 In all these circumstances, it seems to me that it is premature to order mediation at this stage. There is still a fair amount of work which needs to be done to get to the stage where all the evidentiary base for a mediation is available. In coming to this view I am by no means saying that the case is one which is intrinsically not suited for mediation. All I am saying is I am not prepared to exercise a discretion at this stage to require it to be mediated. 14 I should also say that, while mediation has proved a very useful way of assisting parties to resolve disputes particularly in the family provision jurisdiction in this court, there is nothing to stop the time honoured method, of lawyers talking to each other, being used to settle such disputes. 15 For those reasons, I am not prepared to order mediation at this stage. 16 I turn to the question of whether the second defendant ought receive, out of the estate, the costs of the dispute over who should represent the estate for the purpose of the family provision proceedings. 17 On 10 February 2004 the solicitor for Mr Stanwell wrote to the solicitors instructed by Mr Travis Roy saying that he would, in effect, step aside from the defence of the Family Provision Act proceedings if three conditions were met, namely: "1. That he shall be entitled to be fully indemnified with respect to all and any legal costs and fees incurred by him as trustee in relation to or arising out of his position as a trustee defendant in the subject proceedings; 2. That he will be fully appraised and consulted with respect to the actions of the trustee defendants in their conduct of the defence of the claims brought by Christina Roy and with respect to any matter which may relate to the compromise or settlement of those claims; and 3. Upon the Family Provision Act proceedings having been resolved whether by way of compromise, settlement, mediation or court order Travis will revert to the position as being but one of three executors/trustees under the Will of his late father and the trustees will then act as such towards the final administration and distribution of the estate." 18 Today, an agreement has been reached that Mr Stanwell will step aside on the following terms: "a) Travis Roy will keep Ian Frederick Stanwell informed of decisions made by him and steps taken in the defence of the proceedings no. 3989 of 2003; b) Travis Roy will have the full co-operation of the estate's accountant, Bernard Croft, in relation to the provision of documents relating to the administration of the estate including the deceased's share-holdings in the companies, Coblyn and Coblyn Nominees and information in any other form relating to that estate and to those shares. c) Ian Stanwell will forthwith provide to Travis Roy, and authorise Mr Croft to provide, all documents in their possession or control in relation to the administration of the estate and in relation to those shares." 19 It is submitted, by the plaintiff, that prima facie there should be only one set of costs out of the estate, and that it was unreasonable for Mr Travis Roy not to have accepted the conditions on which Mr Stanwell offered to step aside on 10 February 2004. 20 While it is true enough that ordinarily there should be only one set of costs out of an estate for executors, that is not an invariable rule. In the present case the situation which has arisen of difference of opinion between Mr Stanwell and Mr Travis Roy is in part something which has emerged from the structure of the deceased's will. It is common enough for problems which have emerged from the structure of a deceased's will to be ordered to be paid for from an estate. 21 It seems to me that there are some significant differences between the terms on which Mr Stanwell offered to step down on 10 February 2004, and those which were agreed today. The first of his conditions of 10 February 2004 does not feature at all in the terms which were agreed today. The second of his terms of 10 February has been watered down, in that the word "fully" does not qualify "appraised" and he has no ongoing entitlement to consultation. The third condition of his offer of 10 February 2004 has in substance been accepted, and is regarded as implicit in the orders which have been made. The promise which he gave in paragraph B of the terms agreed today, concerning access to information, is one which so far as the correspondence shows, was offered for the first time today. That promise is one which I regard as a significant one. 22 Further, Mr Stanwell was of the view that the plaintiff's claim should be (at least in broad terms) consented to, while Travis and his brothers wished to oppose it. When it is Travis and his brothers who stand to lose most if the Plaintiff's claim succeeds, Travis was, it seems to me, a more appropriate person to defend the claim. If anyone should have been at risk of not having their costs of the dispute over who should represent the estate paid from the estate, it was Mr Stanwell. The plaintiff should not be able to consent to Mr Stanwell getting his costs from the estate, and then invoke the "only one set of costs" principle to deny Travis the costs of this dispute – particularly when it is a dispute which Travis won. 23 In these circumstances, it is my view that, in broad terms, the first defendant should have his costs of the dispute over who will represent the estate, from the estate itself. 24 There is one matter of detail which needs to be examined concerning that question of costs. It arises from the facts that these proceedings were listed before the Court on 30 April 2004, and were adjourned on that day. The reason, in substance, why they were adjourned on that day was that the first defendant was not then in a position to argue the substance of the notice of motion concerning mediation. There had been some correspondence between the solicitors for the two executors which had led to the first defendant being of the view that nothing of substance would happen at court on 30 April 2004. However, the solicitors for the plaintiff had written to the solicitors for the first defendant on 22 April, saying that the plaintiff would be seeking to have the notice of motion heard on 30 April 2004. The solicitors for the first defendant wrote to the solicitors for the plaintiff on 27 April saying that they would on 30 April be seeking a hearing date for both motions to be set; on 28 April 2004 the solicitors for the plaintiff wrote to them saying that they saw no reason to prevent the hearing of the motion concerning mediation proceeding on 30 April 2004. 25 The two motions are, it seems to me, ones which were intertwined. When evidence was filed, it was evidence which went partly to one motion and partly to the other. When Hamilton J heard the matter on 30 April he took the view that it was not practical to segregate out one motion from the other. The same was also my initial impression, when I endeavoured to deal with the costs of the motion concerning who would represent the estate at the outset of the hearing, and I soon came to the view that before dealing with that topic I ought hear all the evidence. 26 In those circumstances, the costs of the adjournment on 30 April ought be part of the general costs to which the first defendant is entitled. I make orders in accordance with the short minutes of order which I initial, date today's date and shall place with the papers. 27 The notice of motion on which an order for mediation was sought is an amended notice of motion filed 30 April 2004. It was only paragraph 1 of that notice of motion which was pressed. I dismiss the claim for the order in paragraph 1 of the amended notice of motion dated 30 April 2004. (Ms Needham sought costs of the notice of motion). (Mr Bradford sought an order that the defendant's costs incurred in connection with the notice of motion be met out of the estate). 28 I order the plaintiff's costs to be paid by the defendant with the defendant to have those costs from the estate and the defendant's costs of the motion may also be paid from the estate. ********** Last Modified: 05/31/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.