First Plaintiff v Second Plaintiff

2 The 18 paragraphs of relief or remedies related to the will and codicil of Joyce Olga Evans, deceased. Probate of the will and codicil was granted to the first plaintiff and the ninth defendant on 26 September 2019. The will and codicil contained specifications in respect of the Evans Family Trust (the 'family trust'). The second plaintiff, R.J.A Nominees Pty Ltd, is the trustee of the family trust. As at the date of her death, the deceased was the appointor of the family trust, as well as a director and the sole shareholder of R.J.A Nominees Pty Ltd.

3 Part of the relief sought by the originating motion included directions and orders relating to the plaintiffs' powers to pay and receive executors' and trustees' commission.[1] The parties filed significant affidavit material addressing these issues, however, at trial this relief was not ultimately pressed by the plaintiffs. Some of the 18 paragraphs of relief were considered together, and others fell away. Ultimately, the Court considered only eight issues.

4 On 12 January 2023 reasons for judgment were delivered in this proceeding ('Reasons').[2]

5 The ninth defendant did not participate in the trial due to ill health. Otherwise, the remaining defendants participated in the proceeding. The Court concluded that while the plaintiffs' application for the removal/discharge of the ninth defendant as executor was justified, the plaintiffs' judicial advice application concerning a proposed deed of settlement and the construction and validity of certain clauses of the will was unnecessary.

6 The participating parties were unable to agree on the costs of the proceeding and written submissions were filed.

7 Save for an allowance referable to the discharge of the ninth defendant, the Court has determined that the costs incurred in the proceeding were not properly incurred in the administration of the estate and, accordingly, the plaintiffs are not entitled to an indemnity out of the assets of the estate or the family trust for those costs and the costs of the first to eighth defendants for which the Court has determined the plaintiffs are liable.

8 The plaintiffs seek orders that their costs of and incidental to the originating motion in the amount of $159,801.00 be paid out of either the estate or the family trust, as the case may be. If the defendants seek orders that costs be paid out of the estate of the deceased, the first plaintiff does not oppose such an order.

9 The first and second defendants seek orders as to their costs of $187,134.80 as follows:

(a) the first plaintiff be allowed an amount of costs out of the estate for the removal/discharge application of the ninth defendant as executor of the estate, calculated on the basis that such application could have been determined on the papers;

(b) the plaintiffs bear their own costs without a right of indemnity out of the estate or the family trust;

(c) the first plaintiff personally pay the costs of the defendants, alternatively, that the costs of the defendants be paid out of the estate.

10 The costs of the third and sixth defendants are $40,454.12 and the costs of the fourth and fifth defendants are $41,589.50. In substance, these four defendants seek the same orders as the first and second defendants.

11 The seventh defendant's costs are $40,677.85. The seventh defendant submits it should not bear its own costs and that they should be paid out of the estate, at the first instance. If the Court determines in favour of the other defendants, it does not oppose the submission that the plaintiffs should bear the defendants' costs and is neutral as to how the plaintiffs should be paid.

12 The eighth defendant's costs are $45,039.00. The eighth defendant seeks orders that her costs be paid out of the estate, alternatively, should the Court consider that the executor be personally liable for the costs of the eighth defendant, then she leaves the matter to the discretion of the Court.

13 The Court has broad discretionary powers in determining the costs of a proceeding, with such discretion to be exercised judicially and in accordance with recognised principles.[3] The prima facie position in respect of costs in litigation is for standard costs to be ordered by the Court, with the Court having the discretion to award costs other than on the standard basis. Costs usually follow the event and a successful party is entitled to an award of costs in its favour.[4] The relevant 'event' is success on a discrete set of issues or in the action.[5] The liability for the costs of the litigation is borne by the unsuccessful party.[6] The central principle is to make an order that is fair and just between the parties in the circumstances of each case.[7]

14 The principles concerning a trustee's right to indemnity out of the trust for expenses properly incurred, including litigation expenses, are settled and well known. In two recent decisions,[8] this Court summarised those principles in the following terms. Executors and trustees are ordinarily entitled as of right, at common law and pursuant to statute, to indemnity out of the trust or estate for properly incurred expenses. Costs that are of an unreasonable amount or which have been unreasonably incurred are not properly incurred expenses. Expenses and liabilities improperly incurred, such as acting in bad faith, beyond power, or exercising power 'with an absence of care and diligence that a person of ordinary prudence should exercise' are not caught by the right of indemnity and shall be borne by the trustee personally.[9]

15 In Hopkins v Edwards,[10] Lyons J reviewed English and Victorian Court of Appeal authorities relating to the right to indemnity, including Re Beddoe,[11] Nolan v Collie,[12] and Di Benedetto v Kilton Grange Pty Ltd.[13] His Honour summarised the following relevant principles:

(1) the trustee is entitled to indemnity for costs, expenses and liabilities which are not shown to have been improperly incurred;

(2) this right of indemnity belongs to the trustee subject to circumstances being present which suffice to deny the right;

(3) the question of whether a cost, expense or liability was not improperly incurred depends on the duty upon, or power in, the trustee which resulted in incurring the cost;

(4) in the case of the costs of litigation or liabilities incurred in litigation, the relevant duty is likely to be whether in incurring the cost or liability the trustee failed to exercise the care and diligence that a person of ordinary prudence would exercise;

(5) even in proceedings involving a trustee which are adversarial in nature or where the trustee's personal interests are at stake, the court must consider whether the costs incurred by the trustee were not improperly incurred in the sense set out in (3) and (4) above; and

(6) a court must be cautious before concluding such costs, expenses or liabilities were improperly incurred as to deprive a trustee or his or her right of indemnity.[14]

16 Citing the Full Court of the Federal Court in Adsett v Belrouis,[15] Lyons J also concluded:

.. [W]here to draw the line between proper and improper 'is to be determined on the facts of the particular case and in the exercise of judgment' ...

... [W]hether the resources applied to the litigation were 'extravagant' would be relevant to whether the costs were properly incurred ... As noted above, in the context of litigation, the duty relating to incurring legal costs is that the trustee exercise the care and diligence that a person of ordinary prudence would exercise. In my view, this involves questions of extravagance or proportionality of those costs to the issues in dispute and the trust fund, given that 'the law asks what a reasonably prudent and careful person would have done in like circumstances'.[16]

[F]or the purpose of determining whether the trustee's own costs of the proceeding were not improperly incurred ... it is relevant whether the costs were extravagant or disproportionate (having regard to the trust fund and the issues in dispute) in assessing whether the trustee failed to exercise the care and diligence that a person of ordinary prudence would exercise...[17]

17 In Wales v Wales,[18] the Victorian Court of Appeal spoke of a trustee's right to indemnity in respect of a proceeding seeking advice:

In general, a trustee is justified in seeking advice and directions from the Court, and will be indemnified out of the trust fund for his or her costs incurred in doing so. That is confirmed by statute, rules of court, and authority.[19] However, the right of indemnity is confined to expenses properly incurred. That means that a trustee is not indemnified for expenses incurred when acting beyond power, in bad faith or without the care and diligence of a person of ordinary prudence.[20] Similarly, a trustee is not indemnified where a liability is incurred as a result of conduct on the part of the trustee in breach of his or her duty to execute the trust with reasonable diligence and care.[21] However, the standard of care is that 'which might be expected of a trustee as objectively but not over-zealously enforced'.[22] What is 'proper' or 'improper' for this purpose is to be answered by reference to the duty with which the trustee was required to comply or the power the trustee was intending to exercise.[23]

In deciding this question, the onus rests on the party seeking to deny the right to indemnity to show that the costs were improperly incurred.[24]

18 The Court of Appeal stated that a proceeding by a trustee under r 54.02 of the Rules

is not ordinary adversarial litigation. It is commenced so that the trustee can be sure that the course proposed to be taken is a proper one. Far from being necessary for the trustee to exhaust all other avenues before commencing a proceeding, it is very often appropriate to approach the Court in cases of doubt rather than expend trust money in ways which might later prove to have been inappropriate ... Approaching the Court in this way is calculated to avoid later incurring unnecessary costs. A trustee can ordinarily expect to be indemnified for its costs in doing so.[25]

19 However, that it is 'very often appropriate' for a trustee or executor to seek judicial advice does not mean that judicial advice should be sought 'as of course' by executors or trustees before the exercise of their powers. In Davidson v Cameron,[26] Jackson J noted that '[m]any decisions that must be made by a trustee or executor are not of such difficulty as to warrant and do not justify the expense to the estate of an application for judicial advice'.[27]

20 The ability to have recourse to the Court for directions and advice does not replace the trustee's duty to consider the relevant issue for himself or herself. In Re Application of NSW Trustee and Guardian,[28] Kunc J explained:

In applying to the court for judicial advice, the trustee is not abrogating or delegating its obligation to apply its own judgment in deciding whether to do (or not do) something in execution of the trust. The trustee must actively and honestly bring its mind to bear on any particular problem confronting it. Where necessary, it is entitled to do so with the benefit of such legal or other advice (for example, accounting, actuarial or valuation) as the trustee thinks appropriate. The trustee should then determine a course of action subject, again if it thinks appropriate, to obtaining judicial advice about a course of action. While I express no concluded view ... in my opinion there is much to be said for the proposition that a trustee has failed in its duty if it does no more than identify a problem as difficult and then approach the court without having formed its own view as to how it will resolve the problem.[29]

21 Trustees have been denied their costs where they have unnecessarily applied to the Court,[30] made applications that had little or no merit,[31] made applications for advice where the legal position was clear,[32] litigated unreasonably,[33] or incurred unnecessary expenses in litigation.[34]

Submissions as to removal of the ninth defendant

22 In the originating motion, the removal of the ninth defendant as executor and trustee of the estate of the deceased, appointment of the first plaintiff as sole executor and trustee of the estate and an order for the vesting of the estate in the first plaintiff comprised four questions. In the Reasons, these four questions comprised Question 1. Given the poor health of the ninth defendant, the appropriate order was his discharge, rather than his removal. Orders were made for the ninth defendant to be discharged as executor and trustee and it was unnecessary to appoint the first plaintiff as executor and trustee, as he was the remaining executor and trustee.

23 All parties accept the application was necessary, however, the first to sixth defendants contend it could have been determined on the papers in circumstances where there was no opposition to the ninth defendant's removal. The removal application related only to the estate of the deceased. The first plaintiff has not identified any reason why this timely and cost-efficient course was not adopted.

24 The Court accepts the first to sixth defendants' submission that the first plaintiff is entitled to payment of his costs out of the estate, such costs to be calculated on the basis of the application for discharge of the ninth defendant being unopposed and determined on the papers.

25 The Court made findings that the plaintiffs had a duty to compromise claims, that by seeking judicial advice the plaintiffs had acted contrary to their duties, and that the justification provided by the plaintiffs as to the necessity of the advice sought, namely, that they had been provided with insufficient supporting material to assess the first and second defendants' claims for further provision, was made without a proper basis.[35] The plaintiffs assert their acknowledgement of these findings but, nevertheless, make a number of submissions maintaining the appropriateness of their application for judicial advice in respect of the proposed deed which, in large part, repeats their submissions made and rejected at trial.

26 In summary, those submissions are to the effect that the plaintiffs, having a duty to both compromise claims and uphold the will, were in doubt as to whether to agree with the proposed deed and were entitled to, and justified in, seeking advice given the low jurisdictional bar to seek relief in judicial advice applications.[36] The plaintiffs also identify clause 2 of the proposed deed, which foreshadowed the seeking of an order for approval of compromise pursuant to r 54.02(2)(c)(i) of the Rules, as being 'critical' in support of the appropriateness of their application for judicial advice pursuant to r 54.02(2)(a) of the Rules, alleging they were following the wishes of the beneficiaries.

27 In respect of the second plaintiff and the family trust, the plaintiffs repeat their submissions made at trial, that is, it was appropriate for the second plaintiff to seek advice about entering into the proposed deed where it was being directed by the beneficiaries to exercise a discretion to vest the family trust in circumstances where further beneficiaries might yet be born.

28 The plaintiffs emphasise that the Court made orders and directions sought by them, including that the plaintiffs were justified in entering into the proposed deed, or a deed of similar effect. The plaintiffs also identify Questions 7 and 8 as questions upon which the Court gave advice without suggesting it should not have been sought.

29 In respect of the judicial advice sought as to the construction of certain clauses of the will, the plaintiffs note that they and the first to sixth defendants conceded such advice was unnecessary following the Court's indication that the plaintiffs would likely be directed to be justified in entering into the proposed deed. Rather, it was the seventh and eighth defendants who maintained that the validity and proper construction of those clauses would remain a relevant consideration. The Court concluded that, contrary to the seventh and eighth defendants' submissions, it did not need to determine the validity of those clauses upon the plaintiffs entering into the proposed deed.

30 The plaintiffs' primary position in this respect is that the seventh and eighth defendants' costs should be paid from the estate, alternatively, they say that the seventh and eighth defendants have been wholly unsuccessful in the position they adopted and therefore should bear their own costs of the proceeding. Further, the plaintiffs contend that if there were any wasted costs, such costs were caused by the unnecessary 'complex matters' raised by the seventh and eighth defendants.

31 In respect of their costs amounting to $159,801.00 the plaintiffs submit that the work undertaken was proportionate and not excessive. If any costs were wasted in the proceedings, the plaintiffs say it was as a result of the first to sixth defendants firstly duplicating the plaintiffs' material in the court book and, secondly, raising extraneous matters that were not relied upon by them at the hearing but which required a response by the plaintiffs due to the serious nature of the allegations. This latter matter related to the first plaintiff's claim for executor's commission.

32 In an estate valued at approximately $8 million, the plaintiffs submit their costs were not disproportionate in circumstances where the 'matter involved considerable complexity, both legally and factually'.

33 The plaintiffs submit that the general rule is that the first plaintiff's costs be paid from the estate and the second plaintiff's costs be paid from the family trust and, absent a finding of fact that the plaintiffs acted unreasonably or in bad faith, it would be unjust for the first plaintiff to be ordered to personally pay the defendants' costs of the proceeding in the circumstances detailed above.

34 The plaintiffs also point to release and indemnity clauses of the proposed deed to submit that it would be inconsistent for the first plaintiff to be ordered to pay the costs of the defendants.

35 All parties, including the plaintiffs, accepted that the approval of the Court was not required to enter into the proposed deed and, in any event, what the plaintiffs pursued was an application for advice, rather than for approval, as was foreshadowed by the deed. The plaintiffs' main justification for bringing the application, that is, an apparent lack of supporting material enabling them to assess the appropriateness of the proposed deed, was rejected by the Court on both an evidentiary basis and a relevance basis.

36 Three of the eight issues to be considered by the Court[37] fell away by reason of the Court's conclusion that the plaintiffs were justified in entering into the proposed deed - a declaration that the Court considered the plaintiffs did not need to seek. The defendants point to the Court's findings that the application was wholly unnecessary and contrary to the plaintiffs' duties and their overarching obligations[38] to submit that the plaintiffs ought bear their own costs and the defendants' costs incurred by reason of the application without a right of indemnity.

37 In respect of Questions 7 and 8, upon which the Court did give advice, the defendants submit that such application was equally unnecessary. In respect of Question 7, namely, whether the executors were justified in spending up to $50,000 in performing their duties under cl 11 of the will, the defendants contend that they had insufficient evidence from the plaintiffs to consider their position until three weeks prior to the hearing, at which point there was no opposition from the defendants. Had the plaintiffs provided sufficient evidence about the costs likely to be incurred in carrying out the terms of cl 11 prior to making the application, the issue could have been resolved by consent without the need for an application to Court.

38 Similarly in respect of Question 8, namely, whether the executors were justified in treating references to the 'family income fund' in the will as references to the residuary estate of the deceased, the defendants submit there was no opposition to this construction issue which had not been raised prior to the application being made. There being no debate as to the meaning of the term, the issue could have been resolved by consent without the need for an application to Court.

39 The defendants reject the plaintiffs' contention that they were to blame for unnecessary costs relating to the claim for executor's commission. The application brought by the plaintiffs sought directions and orders in relation to executor's commission. In response, the first and second defendants filed an extensive affidavit relating to the conduct of the plaintiffs which was said to be relevant to such a claim. Subsequent to the filing of that affidavit, the plaintiffs abandoned the commission claim. The costs therefore of that affidavit were properly incurred and the material it contained only became irrelevant once the plaintiffs no longer pressed their claim for commission.

40 Ultimately, save for the removal/discharge of the executor, the plaintiffs' application was unnecessary and misconceived. The plaintiffs have acted in a manner which is deleterious to the interests of the beneficiaries of the estate, rather than adopting a pragmatic approach to the proposed settlement consistently with their duties. In the circumstances the defendants, whose interests as beneficiaries ought be protected by the executors, should not have their interests affected by having the plaintiffs' costs and their own costs paid out of the estate.

41 The first to sixth defendants also note that, pursuant to the proposed deed, they will bear the burden of costs paid out of the estate for other parties, such as the seventh and eighth defendants.

42 The seventh defendant submits that it should not bear its own costs of the proceeding, with its costs being paid from the estate. Alternatively, the seventh defendant adopts the submissions of the other defendants and submits its costs should be paid by the plaintiffs personally without indemnity from the estate.

43 The seventh defendant submits that the proceeding was commenced at the instigation of the plaintiffs and was held by the Court to be largely unnecessary.

44 In respect of cl 8 of the will, the seventh defendant contends that it was the position of the plaintiffs up until the hearing that it was necessary for the Court to interpret cl 8. The seventh defendant made submissions on the issue which were reasonably open and which were made to assist the Court in arriving at the true position. The plaintiffs' submission to the effect that the seventh defendant complicated matters unnecessarily overstates the issue and should not be accepted. The Court's judgment adverts to the ambiguity of the clause and its interaction with the proposed deed, while ultimately concluding that the proposed deed supersedes the clauses of the will. In proceedings under Order 54 where parties have made submissions to assist the Court, they should not be considered 'wholly unsuccessful' as in ordinary adversarial litigation.

45 The seventh defendant notes that pursuant to the proposed deed, its entitlement in the estate is substantially compromised and fixed at $350,000. It says that an order for the payment of its costs should preserve and not diminish its entitlement, which was agreed by the parties. An order that the seventh defendant bear its own costs would be a punitive costs order not justified by the Court's findings.

46 A compelling factor in favour of an order for payment of its costs is cl 3.1(d) of the proposed deed, which contemplates payment of the costs of the defendants as beneficiaries from the estate.

47 It is useful to revisit briefly the outcome of the plaintiffs' application pursuant to which the Court considered eight questions.

48 The Court made no criticism of the substance of the first plaintiff's application in respect of Question 1, that is, the removal or discharge of the ninth defendant as executor of the estate. As noted in these reasons, however, the Court and the parties would have been better served by this unopposed application being determined on the papers.

49 The Court determined that the plaintiffs were justified in entering into the proposed deed (Questions 2 and 3), but indicated that the application was unnecessary and contrary to both their duties as trustees and executors of the estate to compromise reasonable claims and their overarching obligations to use reasonable endeavours to resolve the dispute. Questions 4, 5 and 6 were unnecessary to consider in light of the conclusion reached in respect of Questions 2 and 3, which application the Court considered unnecessary.

50 It is correct that the seventh and eighth defendants pursued Question 6 while the plaintiffs and the first to sixth defendants conceded it was no longer relevant. That being said, there was nothing in the conduct of the seventh and eighth defendants in so doing that justifies what would be a punitive order that they bear their own costs of the proceeding.

51 The plaintiffs identify Questions 7 and 8 as questions upon which the Court gave advice without saying that advice should not have been sought. While this is strictly correct, it cannot seriously be said that these issues were of sufficient complexity to warrant the application of the Court's attention and resources to their resolution. This is particularly so where it appears the agreement of the first to sixth defendants may have been forthcoming had the topics been raised with them prior to the hearing.

52 The fact that the plaintiffs obtained directions as sought and received some limited advice without attendant criticism does not serve to change the character of the whole application from one which was unjustified and unnecessary to one which was properly pursued. Apart from Question 1, only Questions 7 and 8 stood apart from the issue of the proposed deed, and the Court's consideration of those topics was brief.

It is well established that an application which seeks the Court's approval of a compromise is unnecessary and unwarranted in circumstances where all beneficiaries are sui juris and consent to the proposed compromise, as is the case in the present circumstances. The plaintiff's application for judicial advice, which is couched in different terms to an application for approval of a compromise and yet seeks substantially the same ends, is equally unnecessary.[39]

[T]heir application for such a direction is not only wholly unnecessary, but also contrary to their duties as executors and trustees of the estate of the deceased to compromise reasonable claims and their overarching obligation to use reasonable endeavours to resolve the dispute.[40]

54 Here, the plaintiffs respectively had a duty as executor of the estate of the deceased and as trustee of the family trust to compromise reasonable claims made against the estate. Faced with the circumstances in this proceeding, that is, all affected beneficiaries were sui juris, legally represented and consented to the proposed deed, and no commercial or other benefit to upholding the will was identified, the decision to commence litigation was a decision that the Court considers must have been taken without the care and diligence of a person of ordinary prudence, and in apparent disregard or indifference to the position and interests of the beneficiaries. This was not a complex decision justifying an application for judicial advice and the attendant costs.

55 There was no proper reason for the proceeding where the beneficiaries were all sui juris and the applicable principles were very clear to all involved. The plaintiffs' conduct in commencing the proceeding and in incurring significant costs in those circumstances demonstrates a want of prudence and diligence.

56 The question of whether the costs of the application for advice were properly incurred in the administration of the estate cannot be answered affirmatively in light of a conclusion that the application was unnecessary and unjustified, and contrary to the plaintiffs' duties to compromise reasonable claims and use reasonable endeavours to resolve disputes. Accepting there has been no allegation of bad faith, malice, dishonesty or acting in want of power, nevertheless, in this case, the Court cannot condone as 'proper' an application for judicial advice that was wholly unnecessary and productive of significant costs for a large number of parties.

57 Further, the plaintiffs' submissions on costs paid lip service only to the Court's findings as to the necessity or otherwise of their application. The plaintiffs asserted that extraneous material filed by the first and second defendants was not relied upon at the hearing resulting in wasted costs. This submission risks being disingenuous when it appears that the plaintiffs did not press their claim for commission following the filing of this material by the defendants, that is, it only lost its relevance following the plaintiffs abandoning the claim. Further, unless the claim for executor's commission was agreed, it could not in any event have been determined in this proceeding.[41]

58 Similarly, the plaintiffs contend that the seventh and eighth defendants were causative of wasted costs by raising complex matters such that they could be ordered to bear their own costs. As submitted by the seventh defendant, this seriously overstates the matter. Further, as submitted by the first and second defendants, evidence to support Question 7 was provided by the plaintiffs only three weeks before the hearing. Until then, there was insufficient evidence to consider their position. Had sufficient evidence been provided before making the application, the issue could have been resolved by consent without the need for an application to Court. In relation to Question 8, the first and second defendants note that the plaintiffs did not raise this issue before making the application to Court. Had the issue been raised before the application was made, it could have been resolved by consent without the need for an application to Court as there was no debate as to the meaning of the relevant term or opposition from the defendants.

59 The quantum of the plaintiffs' costs are a matter of concern. Those costs include $42,000 for senior counsel's fees and $85,000 for junior counsel and paralegal fees. By way of contrast, the first and second defendants retained experienced junior counsel whose fees were $20,000. The plaintiffs seek to justify the quantum of their costs first by reference to the conduct of the defendants, but also by claiming that it is 'not disproportionate to an estate with a valuation of approximately [$8 million] in circumstances where the matter involved considerable complexity, both legally and factually'. In reality, the issues were remarkably devoid of either factual or legal dispute. In the circumstances, it is difficult to accept such a submission and it should not have been made by the plaintiffs. The attempt to rely on the significant size of the estate to dwarf the costs incurred does not, on its own, serve to make those costs proper.

60 In Re Beddoe,[42] the English Court of Appeal spoke of a trustee's right of indemnity out of the assets of the estate for costs properly incurred in the administration of the estate. Lindley LJ stated:

[A] trustee is entitled as of right to full indemnity out of his trust estate against all his costs, charges, and expenses properly incurred: such an indemnity is the price paid by cestuis que trust for the gratuitous and onerous services of trustees; and in all cases of doubt, costs incurred by a trustee ought to be borne by the trust estate and not by him personally. The words 'properly incurred' in the ordinary form of order are equivalent to 'not improperly incurred'.[43]

61 Bowen LJ considered that 'properly' in this context meant 'reasonably as well as honestly incurred':[44]

While I agree that trustees ought not be visited with personal loss on account of mere errors in judgment which fall short of negligence or unreasonableness, it is on the other hand essential to recollect that mere bona fides is not the test, and that it is not answer in the mouth of a trustee who has embarked in idle litigation to say that he honestly believed what his solicitor told him, if his solicitor has been wrong-headed and perverse. Costs, charges and expenses which in fact have been unreasonably incurred, do not assume in the eye of the law the character of reasonableness simply because the solicitor is the person who was in fault. No more disastrous or delusive doctrine could be invented in a Court of Equity than the dangerous idea that a trustee himself might recover over from his own cestuis que trust costs which his own solicitor has unreasonably and perversely incurred merely because he had acted as his solicitor told him.[45]

62 In regard to costs incurred in commencing or defending a proceeding involving the estate, his Lordship referred to a trustee's ability, in the interest of the trust, to seek judicial advice as an 'inexpensive method' by which to avoid 'wasteful litigation' and the incurring of unnecessary and improper costs.[46]

63 This proceeding is a peculiarity as instead of saving costs by seeking judicial advice, the parties' combined costs of the application amount to $514,696.27.

64 The Court accepts the defendants' submission that the plaintiffs ought bear their own costs of the application without a right of indemnity, save for an amount referable to the application to discharge the ninth defendant.

65 Further, an order that the first to sixth defendants' costs be paid by the estate is, self-evidently, an order that those defendants bear their own costs. In the circumstances detailed above, such an order is not appropriate. Accordingly, the Court accepts the first to sixth defendants' submissions that the plaintiffs should bear the costs of the first to sixth defendants incurred by reason of the application without a right of indemnity from the estate of the deceased or the family trust, as the case may be.

66 The Court accepts that an order that the seventh and eighth defendants pay their own costs is a punitive order that is not warranted in the circumstances of this proceeding. Further, the costs orders in the proposed deed that the seventh and eighth defendants' costs be paid out of the estate of the deceased places the burden of those costs on the first to sixth defendants. Such orders are no longer appropriate as a result of this proceeding. In the circumstances, the plaintiffs should bear the costs of the seventh and eighth defendants incurred by reason of the application without a right of indemnity from the estate of the deceased or the family trust, as the case may be.

(a) The costs of the first plaintiff for the application for discharge of the ninth defendant as executor and trustee of the estate of the deceased be paid out of the estate of the deceased, such costs to be assessed on the standard basis and on the basis that the application could have been determined on the papers, to be taxed in default of agreement;

(b) Otherwise the plaintiffs bear their own costs of and incidental to the proceeding, without any right of indemnity out of the estate of the deceased or the Evans Family Trust, as the case may be;

(c) The plaintiffs pay the costs of the first to eighth defendants of and incidental to the proceeding, assessed on the standard basis, and taxed in default of agreement, without any right of indemnity out of the estate of the deceased or the Evans Family Trust, as the case may be;

(d) Otherwise the proceeding be dismissed.

[1] Subparagraphs (n), (o) and (p) of the plaintiffs' prayer for relief.

[2] Re Evans [2023] VSC 4 (McMillan J) ('Reasons'). This judgment assumes familiarity with the Reasons and adopts defined terms used in the Reasons.

[3] Supreme Court Act 1986 (Vic) s 24(1). See also Order 63 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), which informs the exercise of the Court's power and discretion as to costs.

[4] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 97 (McHugh J) ('Oshlack').

[5] Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, 624-5 (McHugh J); Seng Hpa v Walker [2017] VSC 320, [77]-[81] (McMillan J).

[6] Oshlack [1998] HCA 11; (1998) 193 CLR 72.

[7] Earnshaw v Loy (No 2) [1959] VicRp 44; [1959] VR 252, 253 (Sholl J); See GE Dal Pont, Law on Costs (Lexis Nexis, 3rd ed, 2013) [6.15].

[8] Re Zaprdusky [2022] VSC 348 (McMillan J); Re Sir Colin and Lady MacKenzie Trust (No 2) [2020] VSC 335 (McMillan J).

[9] See, eg, GE Dal Pont, Equity and Trusts in Australia (Lawbook Co, 7th ed, 2018) 682 [23.135]; Re O'Donoghue [1998] 1 NZLR 116, 121 (Hammond J); Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) [2001] FCA 1628; (2001) 188 ALR 566, 606-7 [148]-[152] (Finkelstein J); Nolan v Collie [2003] VSCA 39; (2003) 7 VR 287, 307-8 [52]-[53] (Ormiston JA with whom Batt and Vincent JJA agreed) ('Nolan'); Turner v Hancock [1882] UKLawRpCh 79; (1882) 20 Ch D 303, 305; Re Beddoe [1892] UKLawRpCh 180; [1893] 1 Ch 547, 558; Dimos v Skaftouros [2004] VSCA 141.

[10] [2020] VSC 456 (Lyons J) ('Hopkins').

[11] [1892] UKLawRpCh 180; [1893] 1 Ch 547.

[12] [2003] VSCA 39; (2003) 7 VR 287.

[13] [2017] VSCA 119 (Ferguson and McLeish JJA, Cameron AJA).

[14] Hopkins [2020] VSC 456, [234] (Lyons J).

[15] [1992] FCA 368; (1992) 37 FCR 201 (Northrop, Wilcox and Cooper JJ).

[16] J D Heydon and M Leeming, Jacob's Law of Trusts in Australia (LexisNexis Butterworths, 7th ed, 2006) 386 [1718].

[17] Hopkins [2020] VSC 456, [241]-[242], [250] (Lyons J).

[18] [2015] VSCA 345 (Kyrou and McLeish JJA, Ginnane AJA) ('Wales').

[19] Trustee Act 1958 s 36(2); Supreme Court (General Civil Procedure) Rules 2015 r 63.26; Australian Incentive Plan Pty Ltd v A-G (Vic) (No 2) [2012] VSCA 251, [8].

[20] Nolan [2003] VSCA 39; (2003) 7 VR 287, 308 [53].

[21] RWG Management Ltd v Commissioner for Corporate Affairs [1985] VicRp 42; [1985] VR 385, 396.

[22] Nolan [2003] VSCA 39; (2003) 7 VR 287, 308 [53].

[24] Wales [2015] VSCA 345, [41]-[42] citing Nolan [2003] VSCA 39; (2003) 7 VR 287, 306 [50].

[26] [2016] 2 Qd R 340 (Jackson J).

[29] Ibid [25]. See also Plan B Trustees Ltd v Parker (2013) 11 ASTLR 242, [48] (Edelman J).

[30] Trimble v Kirkland [1913] NSWStRp 27; (1913) 13 SR (NSW) 417.

[31] Re Roberts (1983) 20 NTR 13.

[32] Re O'Donoghue [1998] 1 NZLR 116.

[33] Dixon v Williams (1875) 13 SCR Eq 7; Re Hewitt (dec'd) (Unreported, High Court of New Zealand, Fisher J, 19 May 1998).

[34] Read v Chown (1929) 46 WN (NSW) 154; Re Price [1935] NSWStRp 49; (1935) 35 SR (NSW) 444.

[36] Citing Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66.

[41] Supreme Court (Administration and Probate) Rules 2014 (Vic) ord 10.

[42] [1892] UKLawRpCh 180; [1893] 1 Ch 547.