Supreme Court New South Wales Medium Neutral Citation: The Estate of Arthur Michael Falco; Falco v Lambert (No 4) [2015] NSWSC 1377 Hearing dates: 17 September 2015 Date of orders: 18 September 2015 Decision date: 18 September 2015 Jurisdiction: Equity - Probate List Before: Kunc J Decision: See paragraph [11] Catchwords: COSTS – Case management directions – No issues of principle Cases Cited: Barnes v Addy (1874) LR 9 Ch App 244 Falco & Ors v Lambert & Ors (No 3) [2014] NSWSC 1343 Category: Costs Parties: Joseph Peter Falco, Tanya Maree Falco, Mark James Falco (Plaintiffs) Peter John Lambert (First Defendant) Peter Kenneth White (Second Defendant) Representation: Counsel: Mr A.J. Bulley (Plaintiff) Mr C.F. Hodgson (First Defendant) Mr M. Gorrick (Second Defendant) Ms E.A. Cohen (Mr Michael Falco) Solicitors: Glasson, Gemmell & McGill (Plaintiffs) Armstrong Legal (First Defendant) Teece Hodgson & Ward (Second Defendant) File Number(s): 2010/26928 Publication restriction: No Judgment Summary 1. The Court delivered its judgment in relation to two notices of motion on 14 September 2015:, Falco & Ors v Lambert & Ors (No 3) [2014] NSWSC 1343 (the "Judgment'). Defined terms in the Judgment have the same meaning in these reasons. 2. The parties were given an opportunity to consider the Judgment. A further hearing was held on 17 September 2015 about orders required to give effect to the Judgment, including as to costs. On that occasion, in addition to those who had appeared in relation to the argument which gave rise to the Judgment, the Court was assisted by the appearance of Ms E.A. Cohen of Counsel, representing the interests of Mr Michael Falco. While not a party to these proceedings, Mr Michael Falco has a real interest as one of the four adult beneficiaries under the Will. 3. It is unnecessary to set out all the argument and particular reasons which give rise to the final orders that appear below. However, for the sake of good order it is desirable that the Court should record four matters. 4. First, a reader of the Judgment would note (Judgment paragraph [6]) that the Court had expressed its conclusion as being to vary the amount which the Senior Deputy Registrar ordered Mr Lambert to refund to the Estate by increasing that amount to $29,371 plus GST. The final order which the Court will make requires a refund of $7,468.01 (inclusive of GST). The reason for this is that not all of Mr White's accounts that were moderated by the Senior Deputy Registrar had in fact been paid by the Estate. The parties (correctly) accepted that the amount of any refund should be confined to those amounts which had in fact been paid out of the Estate to Mr White but had subsequently been disallowed on moderation. 5. The legal representatives for the Plaintiffs and Mr Lambert agreed the actual amount which had been paid and now was to be refunded was $7,468.01 (inclusive of GST). The Court notes that Mr White's counsel indicated that his client did not wish to be heard as to that calculation. The Court's final orders reflect the figure agreed between the Plaintiffs and Mr Lambert. 6. Second, the refund order contemplates the possibility of the obligation to refund being satisfied by some means other than an actual payment from Mr Lambert to the Estate. This possibility arises because the Court was informed from the Bar table by Mr Lambert's counsel that various credits and set offs which it was hoped the parties would agree were correct could have the result that no actual payment would have to be made. The final orders have been fashioned to cater for that possibility. However, the Court emphasises that such a resolution will only be possible with the agreement of all interested parties. If that agreement cannot be reached within the 28 days limited by the order which the Court will make, then Mr Lambert will have to comply with the order by making an actual payment to the Estate. 7. Third, the parties have (if I may say so, with respect) sensibly agreed that the proceedings should be the subject of a mediation. The final orders reflect the consensus of the parties that the mediation should occur as soon as possible after the Plaintiffs file a further amended statement of claim against Mr White (either by consent or with leave). That will occur if the Plaintiffs decide that they wish to continue to prosecute a claim against him. The parties' consensus extended to a recognition that, while not a party to the proceedings, Mr Michael Falco would be a necessary party at any mediation. Furthermore, the parties accepted that in addition to the various matters raised in the proceedings, an additional matter for mediation could be Mr Lambert's personal liability to Mr White in respect of those fees in relation to the Estate which Mr Lambert incurred but that were disallowed on moderation. 8. Fourth, and related to the immediately preceding point, the Court acceded to the submission put on behalf of Mr White that any further amended pleading should give proper particulars – to the extent the Plaintiffs are able to provide them – of any amount which the Plaintiffs allege they are entitled to recover from Mr White. That is an important piece of information for the purposes of any mediation. 9. In addition, the Plaintiffs' quantification of (or inability to quantify) any claim against Mr White may also be significant in determining whether or not leave should be granted for the filing of a further amended statement of claim in the absence of consent. While readily acknowledging that it is a matter for the Plaintiffs and not expressing any final view, on the material which the Court has seen it is difficult to see what will be left in any Barnes v Addy claim (Barnes v Addy (1874) LR 9 Ch App 244) which the Plaintiffs might wish to bring. That is because the Estate will have been made whole by the refund which Mr Lambert will be ordered to make. Insofar as disallowed amounts had never in fact been paid to Mr White, then he received nothing which could be the subject of such a claim. 10. In making these observations the Court has not overlooked that the Plaintiffs may wish to replead their more general breach of duty claim (Judgment paragraphs [191]-[192]). Irrespective of how the Plaintiffs may wish to frame their case against Mr White, the Court is satisfied for these reasons that they should, to the extent they are able, give particulars of the amount of damages they claim. 11. The Court's orders to give effect to the Judgment are: 1. As to the Plaintiffs' notice of motion filed on 3 September 2014: (a) Set aside the "orders re costs" in paragraph 6 of Senior Deputy Registrar Studdert's decision dated 15 July 2014 and replace with: Order that Peter John Lambert as executor of the Estate of Arthur Michael Falco (the "Estate") refund $7,468.01 inclusive of GST to the Estate within 28 days and file and serve an affidavit verifying the payment or other satisfaction of that refund obligation within 14 days after the payment or satisfaction. (b) The Plaintiffs pay the First and Second Defendants' costs of the motion. (c) The First Defendant's costs of the motion be paid out of the Estate on the indemnity basis, including his costs thrown away by reason of the vacation of the hearing on 16 December 2014. (d) In the first instance, the costs referred to in order 1(c) above be borne equally by the shares of the Estate to which the Plaintiffs are entitled. 2. As to the Second Defendant's amended notice of motion filed on 15 August 2014: (a) Strike out paragraphs 2A, 9G to 9R (inclusive) and the words "in circumstances where the will of the deceased did not contain a charging clause" wheresoever appearing in the amended statement of claim. (b) On or before 16 October 2015 the Plaintiffs provide a draft further amended statement of claim (the "Draft") to the Defendants including particulars of the quantum claimed against the Second Defendant to the extent the Plaintiffs are able to provide them. (c) On or before 30 October 2015 the Defendants inform the Plaintiffs whether they consent to or oppose the filing of the Draft. (d) If the Defendants consent to the filing of the Draft then leave is granted to the Plaintiffs to file the Draft with the consent of the Defendants endorsed thereon upon terms that the Plaintiffs pay the Defendants' costs thrown away by reason of the amendments. (e) The proceedings as against the Second Defendant be stayed on and from the date upon which the Draft or any other further amended statement of claim is filed until the final determination of: (i) the Plaintiffs' claim for the revocation of the grant of probate to the First Defendant; and (ii) the First Defendant's Summons for Order Passing Accounts and for Commission filed on 1 March 2013, or further order. (f) The Plaintiffs pay the First and Second Defendants' costs of the motion. (g) The First Defendant's costs of the motion be paid out of the Estate on the indemnity basis, including his costs thrown away by reason of the vacation of the hearing on 16 December 2014. (h) In the first instance, the costs referred to in order 2(g) above be borne equally by the shares of the Estate to which the Plaintiffs are entitled. (i) There be liberty to any party to apply, in the first instance to Kunc J, in relation to Order 2(e) and to the Defendants to apply for any further order as to costs should the Plaintiffs elect not to re-plead their claim against the Second Defendant. 4. As to the parties' costs of the Second Defendant's notice of motion filed on 13 February 2014: (a) The Plaintiffs' and First Defendant's costs of that motion be costs in the cause. (b) The First Defendant's costs of the motion be paid out of the estate of the Estate on the indemnity basis. (c) In the first instance, the costs referred to in order 3(b) above be borne equally by the shares of the Estate to which the Plaintiffs are entitled. (d) The Second Defendant's costs of that motion are to be the Second Defendant's costs in the cause. 4. Noting that the costs of the Honourable Mr W. Windeyer and of room hire for a mediation are to be paid out of the Estate in the first instance, the proceedings are referred to mediation before the Honourable Mr W. Windeyer, such mediation to have been completed on or before 27 November 2015. 5. The proceedings be listed for further directions and any argument about leave to file the Draft before Kunc J on 5 November 2015 at 9.30am. 6. The proceedings be listed for further directions in the Registrar's List on 14 December 2015. Amendments 18 September 2015 - Decision on front page - paragraph [10] changed to [11] 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. Decision last updated: 18 September 2015