HANS PETER HANSEN AS EXECUTOR OF THE ESTATE OF SEBASTIANA ABRUGIATO

DAVID MACDONALD JOHNSTON AS EXECUTOR OF THE ESTATE OF SEBASTIANA ABRUGIATO

FRANKNELLY NOMINEES PTY LTD AS TRUSTEE FOR THE F & S ABRUGIATO FAMILY TRUST

FRANKNELLY NOMINEES PTY LTD AS TRUSTEE FOR THE ROMA FUND OF THE F & S ABRUGIATO FAMILY TRUST

MATTER : The Estate of SEBASTIANA ABRUGIATO late of 6 Hillside Road, East Fremantle in the State of Western Australia deceased Probate No 3287/08

BETWEEN : HANS PETER HANSEN AS EXECUTOR AND TRUSTEE OF THE ESTATE OF SEBASTIANA ABRUGIATO

DAVID MACDONALD JOHNSTON AS EXECUTOR AND TRUSTEE OF SEBASTIANA ABRUGIATO

ROBERTO ABRUGIATO AS TRUSTEE FOR THE ROBERTO ABRUGIATO FUND OF THE F & S ABRUGIATO FAMILY TRUST

LUCIANA SANTACATERINA AS TRUSTEE FOR THE LUCIANA SANTACATERINA FUND OF THE F & S ABRUGIATO FAMILY TRUST

FRANKNELLY NOMINEES PTY LTD AS TRUSTEE FOR THE ROMA FUND OF THE F & S ABRUGIATO FAMILY TRUST

Practice and procedure - Costs - Whether costs of preliminary issues should be paid out of an estate - Whether preliminary issues concerned the administration of the estate - Whether the preliminary issues involved hostile litigation between beneficiaries - Whether the executors of the estate should pay the costs of the successful parties - Whether the executors should be indemnified for their costs of the proceedings - Whether executors acted unreasonably - Whether a special costs order should be made - No new principles

Rules of the Supreme Court 1971 (WA), O 66 r 9(2)

Second and fourth defendants in CIV 1001 of 2011 ordered to pay the plaintiffs' costs

First defendants in CIV 1001 of 2011 entitled to be indemnified out of the estate for one-third of their costs

1 The first and second plaintiffs in CIV 1001 of 2011 (Dr Abrugiato and Ms Santacaterina) and the second defendants (Ms Keutzer, Ms Murray and Ms Abrugiato) are the children of the late Frank and Sebastiana Abrugiato. Mr Abrugiato died in 2000; Mrs Abrugiato died in June 2008.

2 Mr and Mrs Abrugiato operated a restaurant business through the F & S Abrugiato Family Trust (the Family Trust), the trustee of which was Franknelly Nominees Pty Ltd (Franknelly). Mr and Mrs Abrugiato were also the directors of, and shareholders in, Abrugiato Pty Ltd (Abrugiato).

3 Mrs Abrugiato, Franknelly, Abruzzi Pty Ltd and Ortana Pty Ltd entered into a deed, 'The F & S Abrugiato Family Trust Deed of Appointment of Separate Trustees' (the Deed of Separation), on 13 June 2007. The effect of the deed was to split the trust fund of the Family Trust into separate funds - the Roberto Abrugiato Fund, the Luciana Santacaterina Fund and the Roma Fund. Trustees were appointed to each fund - Abruzzi as trustee of the Roberto Abrugiato Fund; Ortana as the trustee of the Luciana Santacaterina Fund and Franknelly as trustee of the Roma Fund. As the name of the funds implied, the Roberto Abrugiato Fund was established for the benefit of Dr Abrugiato and the Luciana Santacaterina Fund for the benefit of Ms Santacaterina. The Roma Fund was established for the benefit of Ms Keutzer, Ms Murray and Ms Abrugiato.

4 The Deed of Separation also made provision for the payment of liabilities owed by the Family Trust. The liabilities were allocated between the three funds. The allocation was contained in a schedule to the deed. According to the schedule, the Roma Fund was liable for debts owed by Franknelly, as trustee of the Family Trust, to Mr and Mrs Abrugiato and Abrugiato.

5 Disputes arose between her children following the death of Mrs Abrugiato. Those disputes concerned, among other things, the effect of that part of the Deed of Separation that apparently allocated to the Roma Fund the liabilities of Franknelly to Mr and Mrs Abrugiato and Abrugiato. Ms Keutzer, Ms Murray and Ms Abrugiato contended that Mrs Abrugiato had intended that the liabilities of the Franknelly would be distributed equally between her children so that the Roberto Abrugiato Fund and the Luciana Santacaterina Fund would each be responsible for onefifth of the liabilities of Franknelly, with the balance to be carried by the Roma Fund. Dr Abrugiato and Ms Santacaterina contended that the deed took effect - and was intended to take effect - according to what they alleged was its plain meaning; that is, that the Roma Fund was to be solely responsible for the liabilities of Franknelly.

6 Dr Abrugiato and Ms Santacaterina commenced CIV 1001 of 2011 on 4 January 2011. The executors (the Executors) of Mrs Abrugiato's estate (the Estate) commenced CIV 1032 of 2011 one week later. The proceedings were consolidated and directions made requiring the parties to file statements of facts, issues and contentions. A list of issues to be determined in the consolidated proceedings was settled. Many, but not all of those issues, were tried as preliminary issues: Abrugiato v Hans Peter Hansen as Executor of the Estate of Sebastiano Abrugiato [2012] WASC 362. Franknelly was directed to file a statement of claim pleading the facts on which it alleged that the Deed of Separation should be rectified if the deed was construed in the way contended for by Dr Abrugiato and Ms Santacaterina.

7 Two questions remained following publication of the reasons in Abrugiato v Hansen:

(a) what orders for costs should be made in the proceedings to date;

(b) whether the remaining issues between the parties should be tried or whether the determination of those issues should be deferred until an appeal from the findings in Abrugiato v Hansen has been decided.

8 Those questions are considered and determined in these reasons.

9 It is necessary to briefly note at the outset some matters concerning the disputes between the children of Mr and Mrs Abrugiato that provide context for each of the questions to be determined.

10 The preliminary issues that were determined in Abrugiato v Hansen were annexed to the reasons. They were broadly divided into four categories:

(a) The Deed of Separation - the proper construction of the deed (preliminary issues 10 and 11); a claim for rectification of the deed (preliminary issue 1); and allegations of a fraud on a power (preliminary issue 9) and an estoppel (preliminary issue 12).

(b) The dividend declarations - the validity of resolutions purportedly made by Mrs Abrugiato as governing director of Abrugiato declaring dividends to be paid by Abrugiato (preliminary issues 2 to 6).

(c) Franknelly's right of indemnity - the right of Franknelly to be indemnified out of the trust fund comprising the Family Trust for liabilities that it had incurred as trustee (preliminary issue 8). That issue raised questions concerning the meaning and effect of the trust deed creating the Family Trust and the Deed of Separation.

(d) The effect of letters signed by Mrs Abrugiato contemporaneously with a resolution that she purportedly made as governing director of Abrugiato on 4 April 2008 (preliminary issue 7). That issue was tied to the dividend declaration issue.

11 The issues concerning the Deed of Separation were litigated on pleadings - a statement of claim by Franknelly and a defence by Dr Abrugiato and Ms Santacaterina. The Executors also initially pleaded to Franknelly's statement of claim. The remaining issues were litigated by reference to the statements of facts, issues and contentions filed and served by the parties.

12 The Executors were directors of a company that carried on business as accountants under the name 'RSM Bird Cameron' (Bird Cameron). Bird Cameron had for some time provided accounting services to Mr and Mrs Abrugiato and Franknelly.

13 Bird Cameron provided advice about succession planning to Mrs Abrugiato in 2007. The advice was, among other things, contained in a document described as a succession plan. The object and terms of the plan were explained in Abrugiato v Hansen at [32] and following.

14 Mr and Mrs Abrugiato had acquired a number of properties. Abrugiato, Franknelly, as trustee of the Family Trust, and Abrugiato held the various properties: see Abrugiato v Hansen [26] and following. The succession plan contained recommendations on how the properties might be divided between Mrs Abrugiato's children. Broadly, two steps were involved in formulating that part of the succession plan:

(a) allocating the various properties among Mrs Abrugiato's children so as to achieve a measure of equality;

(b) identifying how the allocated properties were to be transferred to each child.

15 The second step was governed by who held the property concerned. Consequently:

(a) properties held by Mrs Abrugiato were to be devised by her will;

(b) Mrs Abrugiato's shareholding in Abrugiato was to be bequeathed by her will (Abrugiato was the owner of the premises from which Mr and Mrs Abrugiato had conducted their restaurant business);

(c) beneficial interests in the properties held by Franknelly were to be transferred to three trusts to be created out of the trust fund comprising the Family Trust.

16 The Deed of Separation was made to give effect to the third step required to implement the succession plan. As has been noted, three trust funds were created and properties were allocated to each fund. All but one of the properties were allocated to the Roma Fund (together with cash held by the Family Trust). Mrs Abrugiato devised other properties to Dr Abrugiato and Ms Santacaterina by her will.

17 Bird Cameron instructed Mr Graeme Young of counsel to prepare the Deed of Separation. Consequently, it advised on and prepared the succession plan and the Deed of Separation. It also arranged for Mrs Abrugiato to make a will that was to give effect to the succession plan.

18 It was plain from the evidence that Bird Cameron took responsibility for implementing all aspects of the succession plan. Accordingly, Bird Cameron assumed various roles in connection with the management of Mrs Abrugiato's affairs - accountant and financial advisor, including the accountant for Franknelly and the Family Trust (it also prepared accounts for each of the trusts created by the Deed of Separation following Mrs Abrugiato's death); the advisor on her succession plans; the 'manager' of those plans and the executors of her estate. Those roles reflected specialist services offered by Bird Cameron to clients; for example, it had a section specialising in succession planning and estate management. However, the Executors were not trustees of any of the trusts created by the Deed of Separation. In my view, confusion between the various roles assumed by Bird Cameron caused the Executors to pursue, at times, issues that were relevant to the administration of the Family Trust and the trusts created by the Deed of Separation but which were not material to the Estate.

19 The terms of Mrs Abrugiato's will are summarised in Abrugiato v Hansen at [91] [92]. Mrs Abrugiato bequeathed her shares in Abrugiato equally among her children and her shares in Franknelly to Ms Keutzer, Ms Murray and Ms Abrugiato.

20 Consequently, Ms Keutzer, Ms Murray and Ms Abrugiato were given control of Franknelly. Franknelly appeared in the proceedings by the same solicitors and counsel as Ms Keutzer, Ms Murray and Ms Abrugiato and it joined in their case. I will refer to Ms Keutzer, Ms Murray, Ms Abrugiato and Franknelly collectively as the defendants.

21 The dividend payment plan formed part of the succession plan; it was described in Abrugiato v Hansen at [92] and following. The purpose of the plan was to eliminate 'retained earnings' in the accounts of Abrugiato and the liability of Franknelly to Abrugiato. The proposal was that Abrugiato would declare dividends that would be paid to Mrs Abrugiato (by accounting entries); Mrs Abrugiato would gift the amounts received 'into the Family Trust' and Franknelly would use those amounts to discharge its liabilities to Abrugiato.

22 Steps were taken to implement the dividend payment plan, including by Mrs Abrugiato as governing director of Abrugiato purportedly passing resolutions declaring dividends. She also signed letters purportedly gifting amounts received as dividends to the trustees of the Roberto Abrugiato Fund, the Luciana Santacaterina Fund and the Roma Fund. As has been noted, the preliminary issues included issues concerning the validity of the resolutions purportedly made by Mrs Abrugiato and the effect of the letters.

The questions to be determined on the costs of the preliminary issues

23 The parties raised the following questions concerning the costs of the preliminary issues:

(a) should the defendants be personally liable for the costs of Dr Abrugiato and Ms Santacaterina or should the costs of all parties be borne by the Estate;

(b) should the Executors pay all or a portion of the costs of Dr Abrugiato and Ms Santacaterina;

(c) were the Executors entitled to indemnified for their costs by the Estate;

(e) should costs orders in respect of particular items in the Legal Practitioners (Supreme Court) (Contentious Business) Determination (the Costs Determination) be allowed and should Dr Abrugiato and Ms Santacaterina be entitled to all costs that were reserved.

24 The following affidavits were received in the application: the affidavits of Jessie Ann Earl made on 12 and 13 November 2012 (read on behalf of Dr Abrugiato and Ms Santacaterina) and the affidavits of Andrew Don Marshall and Anthony John Goldfinch, each made on 12 December 2012 (read for the Executors). In addition, reference was made in argument to various annexures to an affidavit made by one of the Executors, Mr Hansen, on 10 January 2011 (see at ts 595 599) and the defendants filed and served an affidavit made by Aranaea Mary Ayres on 12 December 2012. That affidavit was not formally read at the hearing but it was referred to in the defendants' written submissions. I have considered those submissions with the benefit of having read the various paragraphs in Ms Ayres' affidavit to which they refer.

25 Much of the evidence comprised correspondence exchanged between the parties and their solicitors prior to and during the proceedings. It is not necessary (or possible) to summarise the effect of that correspondence.

26 The parties' submissions on the appropriate costs orders for the determination of the preliminary issues were extensive. The following is a brief summary of the effect of the parties' submissions.

27 Dr Abrugiato and Ms Santacaterina contended that the ordinary rule that costs follow the event applied so that the defendants should be personally liable to pay their costs of the preliminary issues. They further contended that the Executors should bear their own costs without recourse to the assets of the Estate as:

(a) the Executors' originating summons was an attempt to have determined questions that did not concern the Estate;

(b) the Executors did not seek judicial advice in their originating summons and they did not seek that advice prior to or during the proceedings;

(c) the Executors' involvement in the litigation was unreasonable as:

(i) they were not concerned with the preliminary issues in their capacity as executors of the Estate;

(ii) they had ignored their obligation to remain neutral and had conflated their role as executors with their position as the former advisors to Mrs Abrugiato and members of Bird Cameron.

28 The defendants accepted that they should bear the costs of the fraud on a power issue but that:

(a) the Estate should bear the costs of the remaining preliminary issues;

(b) alternatively, the Executors should bear the costs of the remaining preliminary issues without recourse to the assets of the Estate;

(c) alternatively, the costs of the rectification and indemnity issues should be apportioned equally between the Executors and the defendants, with the Executors not being entitled to recover their contribution to those costs from the Estate.

29 Some of the defendants' submissions in support of those propositions are reproduced below. It followed from their submissions regarding the costs of Dr Abrugiato and Ms Santacaterina that the defendants considered that the Executors should bear their own costs of the proceedings without recourse to the assets of the Estate.

(a) They were entitled under O 66 r 9(2) of the Rules of the Supreme Court 1971 (WA) to have their costs paid out of the Estate unless they acted unreasonably or, in substance, for their own benefit. They cited a number of authorities to the effect that trustees and executors should not be deprived of an indemnity in respect of their costs unless they had misconducted themselves. Authorities such as In re Chennell; Jones v Chennell [1878] 8 Ch D 492 emphasised that it was only in extraordinary cases that trustees and executors would be deprived of their expenses.

(b) The Executors had sought advice on how they should administer 'a complicated estate with competing claims by different groups of beneficiaries'. The issues identified in their originating summons required resolution.

(c) The Executors had filed a statement of facts, issues and contentions as they were concerned that the dividend declaration issue would not be contested in circumstances where the dividends were, indirectly, the only remaining asset of the estate.

(d) The Executors were forced to file a defence to Franknelly's statement of claim under threat of a default judgment.

(e) It was suggested by the court that the Executors be represented at the trial.

(f) A Beddoe application (In re Beddoe [1893] 1 Ch 547) is a protective mechanism. The Executors were not to be deprived of their costs merely because they did not make such an application.

Should the costs of the preliminary issues should be borne by the Estate?

31 The defendants submitted that the Estate should bear the costs of the preliminary issues on the following grounds (defendant's submissions dated 12 December 2012):

1. If the Court finds that it was proper for the executors to seek directions in respect of the issues the subject of the executors' originating summons or any of them, the executors having instigated and maintained them, and the defendants having become a necessary party to them, the estate ought bear the costs of those issues. The Court having found that the dividend issue affected the estate, the [executors/estate?] ought bear all parties' costs on that issue.
2. If the Court is satisfied it was proper for the executors to agitate the rectification or indemnity issues, the estate ought to bear the costs of those issues, both the defendants and plaintiffs being necessary parties to those issues.

32 It is necessary to explain what issues were raised by Dr Abrugiato and Ms Santacaterina and the Executors in their respective proceedings to better understand those submissions.

33 Dr Abrugiato and Ms Santacaterina commenced their proceedings by a writ of summons containing a statement of claim. Among other things, the statement of claim:

(a) alleged that as at 9 June 2000, Franknelly as trustee of the Family Trust had incurred a liability or was indebted to Mr and Mrs Abrugiato in an amount of $67,836 (referred to in the statement of claim as the F & S Debt);

(b) further alleged that as at 30 June 2006, Franknelly as trustee of the Family Trust had incurred a liability or was indebted to Abrugiato in an amount of $1,917,546 (referred to in the statement of claim as the Abrugiato Debt);

(c) pleaded various terms of the Deed of Separation and alleged that by reason of the terms of the deed:

(i) with effect from 1 July 2007, Franknelly, as trustee of the Roma Fund, remained liable to pay the F & S Debt and the Abrugiato Debt;

(ii) if and to the extent that it was entitled to be indemnified for payment of the F & S Debt and the Abrugiato Debt, Franknelly was only entitled to be indemnified out of the assets that comprised the Roma Fund;

(d) alleged that resolutions made by Mrs Abrugiato as governing director of Abrugiato declaring dividends to herself were invalid and of no effect.

34 The Executors commenced their proceedings before the defendants had served any defence to the allegations and claims made by Dr Abrugiato and Ms Santacaterina. The summons stated that it had been issued by the Executors in their capacity as executors and trustees of the Estate pursuant to s 92 of the Trustees Act 1962 (WA) and O 58 r 2 and r 10 RSC and 'the equitable jurisdiction of the Supreme Court'.

35 The Executors did not seek judicial advice on whether they ought to defend the proceedings commenced by Dr Abrugiato or Ms Santacaterina or whether they should, themselves, commence proceedings in relation to any of the disputes of which they were aware between the children of Mrs Abrugiato that might affect the administration of the Estate. Rather, the originating summons sought to have certain questions determined:

(a) whether the Executors, as the personal representatives of Mrs Abrugiato, were the appointors and guardians of the trusts created by the Deed of Separation;

(b) whether the trustee of the Roma Fund was liable for all of the liabilities of the Family Trust on a proper construction of the Deed of Separation or whether those liabilities were apportioned as between the trustees of the Roberto Abrugiato Fund, the Luciana Santacaterina Fund and the Roma Fund;

(c) whether the Executors should appoint trustees to the Roberto Abrugiato Fund, the Luciana Santacaterina Fund and the Roma Fund for the purpose of entering into a deed of rectification of the Deed of Separation if it was found that the deed, properly construed, provided that the trustee of the Roma Fund was liable for all of the liabilities of the Family Trust and it was further found that the Executors, as the personal representatives of Mrs Abrugiato, were the appointors and guardians of each of the trusts created by the Deed of Separation;

(d) whether the Deed of Separation on its true construction prevented Franknelly as trustee of the Family Trust from claiming a right of indemnity against the assets of the Roberto Abrugiato Fund and the Luciana Santacaterina Fund in respect of the liabilities of the Family Trust incurred before the Deed of Separation was made;

(e) if the answer to the previous question was 'no', could the Executors take an assignment from Franknelly of its right to be indemnified and if so, should the Executors take such an assignment and if so, should they then apply to the court for a sale of the assets of the Roberto Abrugiato Fund and the Luciana Santacaterina Fund for the purpose of discharging the liabilities of the Family Trust to the Estate;

(f) which persons, if any, should the Executors issue proceedings against to recover money due to the Estate from the Family Trust;

(g) if the persons referred to in the previous question were not the present trustees of the Roberto Abrugiato Fund, the Luciana Santacaterina Fund and the Roma Fund, should the Executors take an assignment of those persons' rights of indemnity against the assets of the relevant funds and if so, should the Executors then apply to the court for a sale of the assets of the funds for the purpose of discharging the liabilities of the Family Trust to the Estate.

36 Not all of those questions were ultimately incorporated into the preliminary issues to be determined in the consolidated proceedings. In particular, there was no issue concerning whether the Executors, as the personal representatives of Mrs Abrugiato, were the guardians and appointors of any of the trusts created by the Deed of Separation or related questions concerning whether the Executors should appoint trustees to those trusts for the purpose of entering into a deed of rectification. It should also be noted that the only debt owed by Franknelly to the Estate was the F & S Debt.

37 The principles relevant to the defendants' submissions reproduced above and to the parties' submissions generally on the Executors' position may be briefly stated:

(a) Section 37(1) of the Supreme Court Act 1935 (WA) provides that the court or a judge has full power to determine by whom and out of what estate, fund or property and to what extent costs are to be paid. Order 66 r 4(1) of the Rules of the Supreme Court provides that:

Where property is the subject of any action or matter, or where any question arising therein will affect any right or claim to property, the Court may make an order that the costs of any party may be recovered out of the property with or without recourse against any other party: Provided that no such order shall be made unless the Court is satisfied that the party seeking the order had a genuine interest to protect, or that it was reasonable in the circumstances that he should appear.

(b) The judgment of Kekewich J in Re Buckton [1907] 2 Ch 406 is inevitably cited as identifying the principles upon which costs are awarded in cases involving trustees and executors. Re Buckton divided the possible cases into three categories:

(i) Where the applicants are trustees who have asked the court to construe the trust instrument or to have some question decided in the course of the administration of the trust. The costs of all parties are regarded as having been necessarily incurred for the benefit of the trust and are ordered to be paid out of the trust fund.

(ii) Where the application is made by some of the beneficiaries and the trustees are made defendants but it is apparent that the application was made because of a difficulty in construing the trust instrument or with the administration of the trust so that the trustees would have been justified in making the application. Again, the costs of all parties are regarded as having been necessarily incurred for the benefit of the trust.

(iii) Where a beneficiary makes a claim that is adverse to another beneficiary so that the application is in the nature of hostile litigation. The ordinary rule that costs follow the event is applied. However, the trustee's costs may be paid out of the trust fund rather than by the unsuccessful party in some instances.

(c) In BE Australia WD Pty Ltd (subject to a Deed of Company Arrangement) v Sutton [2011] NSWCA 414; (2011) 285 ALR 532; (2011) , Campbell JA stated [213]:

The form of the proceedings, as inter partes litigation, is not decisive of how the costs of that litigation should be dealt with. Courts exercising equity jurisdiction encounter a variety of situations where a fund is being administered subject to the control of the court, and a question arises about the proper manner in which that fund should be administered. Such a situation can arise concerning administration of deceased estates, concerning administration of trusts, concerning company liquidations, concerning administration of the estates of incapable people, and concerning DOCAs. In those situations, whether the costs of the court deciding the question that has arisen should be treated as costs of administration of the fund is significantly influenced by whether the proceedings are in substance adversarial ones. While where the costs should fall in litigation is always a matter of discretion, very commonly costs are paid from the fund for nonadversarial proceedings, and by the loser for adversarial proceedings ...

(d) The first category of cases identified in Re Buckton was expanded by Lightman J in Alsop Wilkinson (A firm) v Neary [1996] 1 WLR 1220, 1223; [1995] 1 All ER 431, 434, to include every dispute as to the trusts upon which the trustees hold the subject matter of the settlement: Sons of Gwalia Ltd v Margaretic [2006] FCAFC 92; (2006) 232 ALR 119 [5], cited with approval by Murphy JA in Scaffidi v Montevento Holdings Pty Ltd [2011] WASCA 146 (S) [35].

(e) In Sons of Gwalia, Finkelstein J observed [6] that when a dispute as to the trusts upon which the trustee holds the subject matter of the settlement has arisen because there is a difference between beneficiaries over the construction of the trust instrument or their respective rights in the trust estate, the duty of the trustee as trustee for all beneficiaries is to treat the beneficiaries impartially and remain neutral. Consequently, unless the trust instrument provides otherwise, the trustee should bring the dispute into court for resolution but they are not entitled to favour one party over another by advocating a party's cause in the proceeding. To do otherwise would be a breach of the trustee's duty to deal impartially with all beneficiaries and to protect their interests.

(f) Finkelstein J further noted in Sons of Gwalia that in the first category of cases identified in Re Buckton, as expanded by Lightman J in Alsop Wilkinson, the costs of all parties are treated as necessarily incurred for the benefit of the estate and are ordered to be paid out of the fund either on a solicitor and client or indemnity basis. One exception to that rule, however, is where the trustees breached their duty to act impartially, even if the breach was technical in nature, done in good faith and caused no harm. At best, the trustees would then be entitled to the costs incurred in submitting to the court's direction (which may include the costs of a defence, discovery and an appearance).

(g) In the third category of case identified in Re Buckton, the trustees may be entitled to their costs out of the estate to the extent that they were not recovered from the successful party and they sought to defend the claim for the benefit of the trust.

(h) The rule that ordinarily an executor is entitled to be indemnified out of the estate for costs relates only to costs incurred in the administration and distribution of the estate. Such costs are to be distinguished from the costs incurred by an executor in furthering a personal interest: Drummond v Drummond [1999] NSWSC 923 [47] (Austin J).

38 Several points can be made about the Executors' position in light of those principles:

(a) The Executors had an interest in the issue of whether dividends had been validly declared and paid by Abrugiato to Mrs Abrugiato and the associated question of whether the gifts purportedly made by Mrs Abrugiato of the amounts received were effective. However, that issue was separate to issues concerning the meaning and effect of the Deed of Separation and the related issues - rectification, fraud on a power, estoppel and the liability to indemnify Franknelly. Further, the issues concerning the dividend declarations had already been raised in the proceedings commenced by Dr Abrugiato and Ms Santacaterina.

(b) The Executors were not trustees of the Family Trust or any of the funds created by the Deed of Separation. They had no interest in the meaning and effect of the Deed of Separation except to the extent that it impacted on the administration of the Estate.

(c) The only provision of the Deed of Separation that was relevant to the Estate as the preliminary issues were formualted was the term of the schedule that purported to allocate the liability for the F & S Debt to the Roma Fund. The Executors had an interest in knowing the entity or entities that were responsible for payment of that debt. They, therefore, had an interest in the construction of the Deed of Separation to that limited extend.

(d) The proper construction of the Deed of Separation and the related issues concerning the deed were significant for the amounts that Dr Abrugiato, Ms Santacaterina, Ms Keutzer, Ms Murray and Ms Abrugiato would each acquire through the trusts created by the deed and Mrs Abrugiato's will. The Executors knew before Dr Abrugiato and Ms Santacaterina commenced their action that there were disputes over the meaning and effect of the Deed of Separation and that the claims made by Dr Abrugiato and Ms Santacaterina were, and were perceived to be, adverse to the interests of Ms Keutzer, Ms Murray and Ms Abrugiato. They must have known that Ms Keutzer, Ms Murray and Ms Abrugiato would contest the allegations made by Dr Abrugiato and Ms Santacaterina on grounds that included the assertion that the Deed of Separation did not give effect to the intention of Mrs Abrugiato if it was to be construed in the way for which Dr Abrugiato and Ms Santacaterina contended. That was apparent from correspondence from the defendants' solicitors to Bird Cameron in late 2008 (see annexure 'H' to Mr Hansen's affidavit of 10 January 2011 which is referred to later in the reasons). The Executors must have known that the proceedings commenced by Dr Abrugiato and Ms Santacaterina involved hostile litigation.

(e) Although the Executors had a limited interest in the outcome of any dispute over the meaning and effect of the Deed of Separation, they had no interest in the dispute - and any associated issue - being determined in a particular way. They were in the position, and had the duties of impartiality, described by Finkelstein J in Sons of Gwalia with one exception - there was no need for them to bring the dispute into court for resolution as Dr Abrugiato and Ms Santacaterina had already taken that step.

(f) The questions posed by the Executors in their originating summons included questions about whether they were, as Mrs Abrugiato's personal representatives, the appointors and guardians of the trusts created by the Deed of Separation. On its face, that would appear to be an issue concerning the Estate. However, it was apparent from the remaining questions posed in the summons and from all of the correspondence and events prior to the proceedings being commenced that the Executors posed for determination questions concerning their possible position as appointors and guardians as a prelude to questions concerning rectification of the Deed of Separation and Franknelly's right of indemnity. This was an example of where (put benignly) the Executors apparently confused their role as executors of the Estate with what they perceived to be necessary to give effect to their understanding of Mrs Abrugiato's intentions in relation to the Deed of Separation - a subjective understanding that was apparently derived by the Executors, not in their capacity as executors, but as directors of Bird Cameron and which concerned an instrument that took effect during Mrs Abrugiato's lifetime. It is telling that the Executors sought to have determined the question of whether they could, as executors of the Estate, acquire the right of Franknelly, as trustee of the Family Trust, to be indemnified so as to sell the assets of the Roberto Abrugiato Fund and the Luciana Santacaterina Fund, funds created by the Deed of Separation, in order to satisfy the right of indemnity. The Executors appear to have thought that it was their role to implement the succession plan (according to their understanding of the plan) rather than to administer the Estate according to the relatively straightforward provisions of Mrs Abrugiato's will.

(g) The Executors, as executors of the Estate, had no interest in raising the question of whether the Deed of Separation should be rectified. They were not trustees of any trust created or affected by the deed. As has been noted, the provisions of the deed took effect during Mrs Abrugiato's lifetime. It was for Franknelly or any of the other trustees appointed by the deed or for one or more of the beneficiaries of the Family Trust to allege that the deed failed in some way to give effect to Mrs Abrugiato's intentions.

(h) The Executors, as executors of the Estate, also had no interest in any question concerning Franknelly's right of indemnity.

(i) In any event, questions concerning the meaning and effect of the Deed of Separation and the Franknelly's right of indemnity had been raised by the proceedings commenced by Dr Abrugiato and Ms Santacaterina. It was not necessary for the Executors to commence proceedings to have those matters resolved.

39 Those points were largely recognised by the Executors in their submission on the costs of the preliminary issues. They submitted that (Outline of First Defendant's Submissions in Reply to Second, Fourth and Fifth Defendants' Submissions, par 7):

The only issue of concern to the Executors was the dividend issue. That is why they got an order excusing them from defending it. The rectification issue was an issue between the Plaintiffs and the Defendants. The Defendants were, in effect, the plaintiffs in the rectification claim and filed a Statement of Claim ...

40 However, that submission did not reflect the position that was adopted by the Executors throughout the proceedings. In addition to the questions that they posed for determination, the Executors filed and served a statement of facts and contentions, dated 26 May 2011, in which they contended that:

(a) the Deed of Separation should be rectified if the liabilities of Franknelly were to be discharged from the Roma Fund on a proper construction of the deed;

(b) the parties to the Deed of Separation were estopped from denying that the liabilities of Franknelly were to be apportioned between the Roberto Abrugiato Fund, the Luciana Santacaterina Fund and the Roma Fund;

(c) the Deed of Separation should be declared void and of no effect as a fraud on a power as Franknelly had contended;

(d) the dividend declarations were validly made by Mrs Abrugiato, alternatively, the resolutions were subsequently ratified, or in the further alternative, the resolutions should be validated under s 1322(4) of the Corporations Act.

41 The Executors also filed a defence to Franknelly's statement of claim. The statement of claim pleaded the construction of the Deed of Separation for which Franknelly contended (along with the other defendants) and claimed, in the alternative, rectification of the deed or a declaration that the deed was of no effect as the making of the deed constituted a fraud on the power of appointment conferred on Mrs Abrugiato by the trust deed for the Family Trust. The Executors did not plead to the allegations made by Franknelly about the proper construction of the Deed of Separation but they positively alleged that the deed ought to have been rectified if it did not have the meaning and effect contended for by Franknelly.

Conclusion on the defendants' primary submission

42 It was obvious that the issues concerning the Deed of Separation involved disputed claims between Mrs Abrugiato's children. That was immediately apparent from the allegations made and relief sought by Dr Abrugiato and Ms Santacaterina in the action that they had commenced and the effect that the competing constructions of the deed had on the position of each of Mrs Abrugiato's children. The defendants sought to emphasise that the Executors had pursued the question of rectification in their originating summons and the defence that they had filed to Franknelly's statement of claim. However, it was clear that the disputed issues concerning the Deed of Separation involved competing claims and hostile litigation and that the Executors had (or ought to have had) no interest in the outcome of the various disputes over the meaning and effect of the Deed of Separation.

43 The fact that the issues concerning the Deed of Separation involved proceedings that were truly adversarial between Dr Abrugiato and Ms Santacaterina on the one hand and the defendants on the other hand was apparent from the inception of the proceedings. It was for that reason that I directed that Franknelly file a statement of claim pleading those facts on which it alleged that the deed ought to be rectified if it was not construed in the way for which it and the other defendants contended. The hostile nature of the proceedings must have been apparent to the defendants from the outset given the events and correspondence preceding their commencement (and see the next section of the reasons). The fact that the Executors may have misconceived their role in the proceedings does not, in my view, alter the true nature of the proceedings or relieve the defendants, as the parties who failed in the litigation, from a liability to pay the costs of Dr Abrugiato and Ms Santacaterina.

44 The defendants contended in the alternative (submissions dated 12 December 2012):

1. If the Court finds that it was not proper for the executors to seek directions in respect of the rectification issue and the indemnity issue, the only conclusion reasonably open from the affidavits of Mr Hansen ... is that the executors (who were appointed by the Chairman of Bird Cameron ...) were seeking to agitate the rectification issue and indemnity issue to avoid the potential adverse consequences that might be suffered by the executors for failing to achieve what was deposed to and believed by Mr Hansen to have been Mrs Abrugiato's intentions that the beneficiary entitlements be divided equally among her 5 children and which the Deed failed to do. In that case, the costs of the preliminary issues ought to be borne by the executors, however the executors ought not be entitled to be indemnified by the estate in respect of those costs.

45 In my view, there were two difficulties with that submission. First, the Executors and Bird Cameron assumed multiple roles in advising Mrs Abrugiato on her financial affairs and succession plans, in implementing those plans and in acting as her personal representatives. As has already been suggested, it may be readily inferred that the Executors failed to distinguish between those roles prior to and during the proceedings. Their primary concern appeared to be with implementing the succession plan according to their understanding of that plan. Consequently, the questions that they sought to have determined largely concerned the Family Trust and the Deed of Separation, notwithstanding that the deed took effect during Mrs Abrugiato's lifetime and the Executors were not trustees of the Family Trust or any of the trusts created by the deed. However, the assertion that the Executors were motivated to 'agitate the rectification issue and indemnity issue to avoid ... potential adverse consequences' for themselves and Bird Cameron was not an issue that was directly raised in the proceedings. That was effectively accepted by the defendants. They conceded that there was insufficient evidence to sustain a finding that the Executors' participation in the proceedings was actuated by some personal motive (ts 618 619).

46 Second, the submission again ignores the role that was actually played by the defendants in litigating the issues concerning the Deed of Separation and the related indemnity issue and who had a proper interest in the determination of those issues. The submission suggested that the defendants were merely parties to issues that were primarily of concern to the Executors. That was not the reality of the litigation - as to the issues that were litigated and the manner in which they were contested during the proceedings.

47 The defendants recognised well prior to when proceedings were commenced that the Deed of Separation apparently provided that the Roma Fund was responsible for the liabilities of Franknelly. They considered that this was the result of a 'drafting error' and that the deed did not 'correctly reflect the estate plan'. They wrote to Bird Cameron suggesting a way in which the liabilities of Franknelly could be discharged without the deed being rectified. The letter asserted that the trustees of each of the funds created by the Deed of Separation were equally liable for the debts of Franknelly and that the surrounding circumstances showed a 'clear intention as to the responsibility for those liabilities': letter from Jackson McDonald to Bird Cameron dated 24 December 2008 (annexure 'H' to the affidavit of Hans Peter Hansen, sworn 10 January 2011). The letter concluded:

As the family's accountant and the architect of the succession plan, we trust that the figures you prepare will reflect the correct intention of the plan. These can be based on the documentation already in place without the need for any further deeds, whether rectification or otherwise. If those figures are challenged by either [Dr Abrugiato or Ms Santacaterina] as a result of a claimed error or ambiguity in the documentation prepared on your instructions, then our client will expect you to resolve the issues.

48 It is to be noted that the letter did not refer to the Executors or the Estate but rather, to Bird Cameron as the family accountants and architect of the succession plan. The proposal contained in the letter from Jackson McDonald was not adopted. Consequently, issues concerning the meaning and effect of the Deed of Separation remained unresolved.

49 The correspondence illustrated that the defendants recognised that the issues concerning the Deed of Separation involved a dispute between themselves and Dr Abrugiato and Ms Santacaterina. The defendants had, from a time well prior to when proceedings were commenced, adopted a position that was antagonistic to the interests of Dr Abrugiato and Ms Santacaterina. They understood that there were competing claims and must have understood that the ensuing litigation was hostile. The correspondence also indicated that the defendants were looking to Bird Cameron rather than the Executors to remedy what they regarded as being problems with the drafting of the Deed of Separation. There was no reason to think that the defendants had a different understanding during the proceedings to that suggested by their earlier correspondence.

50 I have concluded that costs should follow the event so that the defendants should pay the costs of Dr Abrugiato and Ms Santacaterina subject to the qualifications that are explained in the reasons that follow. The event was the determination of competing claims between Dr Abrugiato and Ms Santacaterina and the defendants.

51 As previously noted, the dividend declaration issue was relevant to the administration of the Estate. However, the task of allocating the costs of the issue is complicated by the fact that the Executors and the defendants contested the allegations made by Dr Abrugiato and Ms Santacaterina and the relief that they sought until shortly prior to the trial. The defendants only amended their statement of facts, issues and contentions in September 2011 to state that they neither consented to nor opposed the declarations sought by Dr Abrugiato and Ms Santacaterina on the issue. As a consequence, preliminary issues three to five were not determined. The primary issue considered in the trial was whether Dr Abrugiato and Ms Santacaterina were entitled to declarations that the dividend declaration and payment resolutions were invalid in circumstances where it might be contended that there was no proper contradictor: see Abrugiato v Hansen [236] and following. That was an issue that I raised at the completion of the trial and which was the subject of supplementary written submissions from Dr Abrugiato and Ms Santacaterina.

52 I have concluded that the costs incurred by Dr Abrugiato and Ms Santacaterina in preparing their supplementary submissions should be borne by the Estate. It was an issue that ultimately concerned the administration of the Estate. No other separate costs order should be made in relation to the issue as the evidence at trial concerning the issue was also relevant to other issues and the defendants contested the issue until shortly prior to the commencement of the trial.

53 The Executors contended that they had a right to be indemnified for their costs out of the Estate provided that they were not guilty of misconduct. Order 66 r 9(2) RSC does not refer to misconduct. Rather, the court may 'otherwise order' where a personal representative has acted unreasonably or, in substance, for his own benefit rather than for the benefit of the fund. In my view, adopting and applying some of the language used in the authorities referred to by the Executors - references to fraud, impropriety and 'monstrous' claims as disentitling conduct - would add a gloss to the wording of the rule.

54 I have concluded that the Executors failed to act reasonably in relation to aspects of the proceedings. The reasons for that conclusion have already been identified but in summary:

(a) It was unnecessary for the Executors to present for determination in separate proceedings questions that had already been raised in the action commenced by Dr Abrugiato and Ms Santacaterina. As I have explained, there were some questions posed by the Executors that were seemingly relevant to the Estate. However, those questions were apparently only preliminary to the Executors' view that the Deed of Separation ought to be rectified and that they should be permitted to intervene in the administration of the Family Trust and the trusts created by the Deed of Separation by taking an assignment of Franknelly's right of indemnity.

(b) The Executors recognised in their costs submissions that there were competing claims between Mrs Abrugiato's children. However, the Executors adopted a position that was not impartial for some time until shortly prior to the trial - they positively advanced contentions and allegations that were favourable to the defendants and inimical to the interests of Dr Abrugiato and Ms Santacaterina.

(c) The Executors concerned themselves with issues that were not relevant to the Estate. The Executors sought to intervene in relation to the Family Trust and the Deed of Separation seemingly because they confused their role as executors with the role that they and Bird Cameron had played in the preparation and implementation of the succession plan and the deed.

(d) The Executors only belatedly realised their limited interest in the determination of the preliminary issues.

55 However, I do not consider that the Executors' participation in the proceedings can be characterised as unreasonable in every respect. The Executors were joined as defendants to the proceedings commenced by Dr Abrugiato and Ms Santacaterina. Although the Deed of Separation and the trusts created by the deed were separate matters to the administration of the Estate according to the terms of Mrs Abrugiato's will, they formed part of a package created by the succession plan. There were, at least, indirect but apparent connections between the administration of the Family Trust, the trusts created by the Deed of Separation and the Estate. So, for example, the dividend declaration issue was a matter that concerned the administration of the Estate. Accordingly, it was appropriate for the Executors to have participated in the interlocutory proceedings prior to trial on a limited basis and for their solicitor (who appeared as counsel) to have attended parts of the trial. As Finkelstein J noted in Sons of Gwalia, trustees may be entitled to the costs of submitting to the court's direction even though they have breached their duty of impartially or, in my view, where they have otherwise acted unreasonably.

56 I consider that it would be too difficult to divide the work undertaken by the solicitors for the Executors between what was reasonable and what was unreasonable on an item by item basis. I have concluded that the Executors should be entitled to recover one-third of their costs from the Estate, with the balance to be borne by them personally. I have reached that conclusion having regard to the matters to which I have referred above and to the conduct of the proceedings as a whole including matters such as the need for the Executors to give discovery.

Correspondence exchanged prior to the commencement of proceedings

57 Dr Abrugiato and Ms Santacaterina corresponded with the Executors during 2010 on matters that ultimately became the subject of the preliminary issues: see the correspondence attached to Mr Hansen's affidavits of 10 January 2011, pages 134 174; and 14 February 2011, pages 34 50. They claim an order that the Executors pay the costs of so much of that correspondence as the taxing officer considered was reasonably and necessarily undertaken prior to the commencement of the proceedings. Presumably, the claim is made under item 17 of the Costs Determination.

58 I have reviewed the correspondence annexed to Mr Hansen's affidavits. Some of the correspondence dealt, at least in part, with matters that were, in my view, relevant to the administration of the Estate - for example, the dividend declaration issues. The correspondence also dealt with other matters that were not relevant to the Estate - in particular, issues concerning the Deed of Separation. Further, the correspondence did not clearly distinguish between the Executors as executors of the Estate and as members of Bird Cameron.

59 The Executors should not personally bear the costs of correspondence that is included by the taxing office in item 17 but which concerned, wholly or in part, the administration of the Estate. I consider from my review of the attachments to Mr Hansen's affidavits that the cost of any 'item 17 correspondence' should be paid as to 50% out of the Estate and as to 50% by the Executors personally. That will operate as a further qualification to the primary order that the defendants are liable for the costs of Dr Abrugiato and Ms Santacaterina.

60 Dr Abrugiato and Ms Santacaterina sought an order that they be paid all reserved costs. The defendants opposed Dr Abrugiato and Ms Santacaterina being paid the costs of subpoenas that had been issued to the husbands of Ms Murray and Ms Keutzer. The subpoenas were set aside prior to the trial with the costs of the subpoenas reserved.

61 The subpoenas were set aside in light of matters stated in correspondence to the Principal Registrar from Mr Murray and Mr Keutzer (attachments 'AMA 4' and 'AMA 5' to Ms Ayres' affidavit). The matters stated by Mr Keutzer in his letter regarding service were disputed by Dr Abrugiato and Ms Santacaterina at the time (affidavit of Jessie Ann Earl, 22 August 2011). However, Ms Earl's affidavit was not referred to at the hearing on costs.

62 I have concluded that the costs order made in favour of Dr Abrugiato and Ms Santacaterina should include any reserved costs other than the costs of the subpoenas served on Mr Murray and Mr Keutzer. There should be no order as to the costs of the subpoenas, including the costs of the subpoenas being set aside.

Costs of obtaining discovery and inspection from the Executors

63 There was a dispute between Dr Abrugiato and Ms Santacaterina and the Executors over discovery and inspection of files relating to administration of the Estate. Dr Abrugiato and Ms Santacaterina claimed the costs of obtaining discovery and inspection of the files. The Executors contended that no costs order should be made as the issue was not finally determined but rather, was resolved through a pragmatic compromise struck in a directions hearing. Although I expressed a preliminary view that Dr Abrugiato and Ms Santacaterina were entitled to further discovery (see the transcript of the hearing held on 17 August 2011), I accept the Executors' submission that no order should be made having regard to how the issue was resolved.

64 Dr Abrugiato and Ms Santacaterina sought an order that the Executors personally pay the costs of a statement that was responsive to the Executors' statement of facts, issues and contentions. The effect of the Executors' statement of 26 May 2011 was summarised earlier in the reasons. It was reasonable for Dr Abrugiato and Ms Santacaterina to file and serve a responsive statement having regard to the matters alleged by the Executors.

65 The Executors' statement dealt with issues concerning the Deed of Separation and the declaration of dividends by Abrugiato. Accordingly, the statement dealt with some issues that were relevant to the Estate. The costs of the responsive statement should be paid by the Executors with the Executors having the right to recover one-third of those costs from the Estate.

66 There will be no special costs order for the costs of preparing the responsive statement. I have accepted that a special costs order should be made for the costs of preparing the defence filed and served by Dr Abrugiato and Ms Santacaterina to Franknelly's statement of claim. The responsive statement covered similar matters. The costs of preparing the responsive statement are to be taxed by analogy to the costs of preparing a reply and defence to counterclaim.

67 Dr Abrugiato and Ms Santacaterina seek a special costs order in respect of following items of the Costs Determination: (1)(a) (writ of summons); (1)(c) (statement of claim); (3)(b) (defence); (7)(b) (giving discovery); (17) (getting up); and (20)(a), (c), (e) and (f) (counsel's fees).

68 They rely on the affidavit of Ms Earl made on 13 November 2012 in support of the application for a special costs order.

69 The defendants opposed special costs orders being made on the grounds that the amounts allowed by the Costs Determination were not inadequate and, further, the issues involved were not unusually difficult or complex or important in the sense required by s 280(2) of the Legal Profession Act 2008 (WA).

70 I have previously summarised my understanding of the principles relevant to an application for a special costs order in Highway Hauliers Pty Ltd v Maxwell [2012] WASC 53 (S) and Como v Helmers [2011] WASC 179 (S). What was stated in those judgments was no more than a summary of the principles identified by the Chief Justice in Heartlink Pty Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S). See also Pourzand v Telstra Corporation Ltd [2012] WASC 210 (S2) and Red Hill Iron Pty Ltd v API Management Pty Ltd [2012] WASC 323 (S).

71 I do not consider that the preliminary issues involved matters of unusual difficulty. However, I accept that the multiplicity of issues that required determination meant that the case was complex within the meaning and for the purpose of s 280(2) of the Legal Profession Act. The multiplicity and complexity of the issues was one reason why I directed that the parties file statements of facts, issues and contentions rather than the usual form of pleadings.

72 The Costs Determination makes no express provision for the cost of preparing a statement of facts, issues and contentions. The statement is obviously analogous to a statement of claim. I accept that it is fairly arguable that the taxing officer might properly allow costs for the preparation of the statements of facts, issues and contentions for Dr Abrugiato and Ms Santacaterina at an amount greater than the amount allowed by item 1(c) of the scale. I further accept that this is because the multiplicity and complexity of the issues canvassed in the statement.

73 I further accept that, having regard to the complexity of the issues, it is fairly arguable that the taxing officer might assess costs in an amount greater than that allowed for the following items in the Costs Determination:

(a) the defence filed and served by Dr Abrugiato and Ms Santacaterina to the statement of claim of Franknelly;

74 I have also reached the same conclusion for the writ of summons in CIV 1001 of 2011. The writ contained a statement of claim. It was not through any deficiency in the pleading that I decided at the strategic conference held in the consolidated proceedings that the preliminary issues should be tried on statements of facts, issues and contentions.

75 I would allow the costs of a senior and junior practitioner attending the strategic conference and the costs of obtaining the trial transcript.

(a) I accept that it is fairly arguable that the costs of the first day of trial and preparation, including submissions (item 20(a) of the Costs Determination) may be inadequate for Mr Tottle having regard to the multiplicity and complexity of the issues to be determined;

(b) I accept that an allowance should be made for second counsel appearing at the trial. However, I also accept that some adjustment should be made for the amount allowed for a solicitor to also attend the trial given the role played by second counsel at the trial. I would only allow two-thirds of the taxed costs for a solicitor attending the trial to be recovered from the defendants.

(c) I do not consider that the amount allowed for items 20(c), (e) and (f) are arguably inadequate given that an allowance is to be made for second counsel.

77 An order will be made lifting the limits on the relevant Cost Determination items to reflect the conclusions stated above. The fact that the maximum limit for the relevant item has been lifted will not bind the taxing officer. It will be a matter for the taxing officer to determine what should be allowed as a reasonable amount for each item, including those items for which the limit has been lifted.

78 Dr Abrugiato and Ms Santacaterina identified two issues that remain to be determined in the consolidated proceedings:

(a) whether the Executors should be removed as the executors of the estate of Mrs Abrugiato; and

(b) whether an account of the costs and expenses of the estate should be ordered.

79 The defendants have advised that they do not intend to take any further part in the consolidated proceedings (apart from prosecuting their appeal from the decision in Abrugiato v Hansen). They made no submissions on the future conduct of the proceedings.

80 The Executors submitted that there was no utility in determining the question of whether they should removed as the administration of the Estate was all but finalised. According to the Executors, the only outstanding matters were the distribution of the proceeds of sale of a particular property and the recovery of a tax refund for tax paid on certain dividends.

81 Dr Abrugiato and Ms Santacaterina made two submissions in response to that contention. First, the contention raised matters that went to the court's discretion to remove the Executors if grounds for their removal were established. Second, Dr Abrugiato and Ms Santacaterina intended to contest the extent to which the Executors were entitled to remuneration if they succeeded in establishing that there were grounds for their removal.

82 The statement of claim in CIV 1001 of 2011 alleged that the Executors had breached their duties by reason of the following matters:

(a) they had prepared draft estate distribution schedules that did not properly record the liabilities of the trusts created by the Deed of Settlement and by failing or refusing to amend the schedule;

(b) they had failed or refused to seek directions from the court about whether the debts recorded in the distribution schedules against the Roberto Abrugiato Fund and the Luciana Santacaterina Fund were, in fact, assets of the estate in circumstances where there was an apparent conflict between the estate distribution schedules and the terms of the Deed of Separation;

(c) the Executors had stated to Dr Abrugiato and Ms Santacaterina at a meeting held on 30 January 2009 that the Deed of Separation contained a mistake and did not reflect the true intentions of Mrs Abrugiato; and

(d) the Executors had requested that Dr Abrugiato and Ms Santacaterina enter into a deed of rectification to correct that alleged mistake.

83 It was also alleged that the Executors placed themselves in a position of conflict as their duties as Executors of the Estate conflicted with the duties of Bird Cameron to act in the best interests of Franknelly as trustee of the Roma Fund and because they owed a duty to act in the best interests of Bird Cameron by ensuring that it was not exposed to liability for any alleged mistake in the preparation of the Deed of Separation and the implementation of the succession plan.

84 Those matters were not canvassed during the hearing of the preliminary issues. The Executors did not suggest that there was any connection between the remaining issues that Dr Abrugiato and Ms Santacaterina seek to have determined and the findings under appeal. In my view, Dr Abrugiato and Ms Santacaterina are entitled to litigate to a final determination the remaining issues that they have raised. There is utility in having those issues resolved. Their resolution should not be deferred until the appeal has been decided.