Gray v Guardian Trust Australia

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

114938/99 ROLLO VENTRY WAKEFIELD GRAY V GUARDIAN TRUST AUSTRALIA LTD & ANOR JUDGMENT 1 HIS HONOUR: This is a judgment on costs, delivered in consequence of reasons for judgment published on 18 December 2002. The case relates to the estate of Lillian Gray, who died on 21 January 1999 leaving her estate to her sons Ventry Gray (the plaintiff and first cross-defendant) and Robert Gray (the second defendant and second cross-defendant) in equal shares and appointing the first defendant ("Guardian") as executor and trustee. For convenience and without intending to convey familiarity, I shall refer to Ventry and Robert Gray as "Ventry" and "Robert". 2 The statement of claim in the proceeding was filed on 5 October 1999. At that time the relief sought was, essentially, an order for revocation of the grant of probate to Guardian. By a cross-claim filed on 5 June 2001, Guardian sought declaratory relief to establish that Robert owed the estate certain sums specified in the schedule to the cross-claim. 3 By the time of the hearing in August 2002, the statement of claim had been amended to become the second amended statement of claim ("SASC") and the cross-claim had become the amended cross-claim ("ACC"). By the SASC, Ventry claimed that at the time of her death, his mother was the owner of two dress rings and $1,000, and at that time Robert was indebted to his mother in the sum of NZD5,000, and that Guardian proposed to administer the estate without taking those three assets into account. Ventry claimed a declaration that the assets of the estate to be administered by Guardian included those three assets, and consequential orders. The claim for revocation of the grant of probate to Guardian had been removed. In fact, that claim was withdrawn when the amended statement of claim was filed on 27 March 2002. Robert was joined as second defendant to the proceeding on that day. 4 By the amended cross-claim, Guardian sought a declaration that Robert was obliged to account to the estate for the monies referred to in the schedule. The schedule listed advances and payments of NZD156,732.72, NZD10,000, $2,000, $10,000 and $7,025. 5 I decided that Ventry succeeded in the SASC with respect to the sum of NZD5,000 but not the sum of $1,000, and it was not necessary for me to make any decision about the two dress rings, for reasons I shall explain. I held that Guardian succeeded on the ACC with respect to NZD156,732.72 plus interest at Schedule J rates, $10,000 plus interest at Schedule J rates after Mrs Gray's death, and $2,000 plus interest at Schedule J rates after Mrs Gray's death. I held that the cross-claim failed with respect to the sums of NZD10,000 and $7,025. 6 It is now necessary to deal with the costs of the proceeding and the costs of the cross-claim. As the argument has developed, the following issues are to be determined: 1. Which party should pay the costs of the proceeding so far as it raised the issue whether the grant of probate to Guardian should be revoked - that is, costs from 5 October 1999 to 5 June 2001 (when the cross-claim was filed)? 2. Which party should pay the costs of the proceeding from 5 June 2001 to 27 March 2002 (when the amended statement of claim was filed and Robert was joined as second defendant)? 3. Which party should pay the costs of the proceeding from 27 March 2002 to 21 February 2003 (when final orders were made, except as to costs)? 4. Which party should pay the costs of the cross-claim? 5. Which party should pay the costs of the argument with respect to costs heard on 29 July 2003? 7 In response to a question from me, the parties conceded that it was appropriate for the Court to deal with all questions of costs of the proceeding (including the cross-claim) and also Guardian's claim to be indemnified for any costs from the assets of the estate. The parties did not agree that I should deal with any aspect of Guardian's right of recourse to the estate for the costs of administration other than costs in respect of the proceeding and cross-claim. 8 There is no disagreement as to the basic principles concerning costs. Counsel for Ventry referred to what he described as the "overarching principle", which he took from the judgment of McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72 at 97. Although his Honour's judgment was a dissenting judgment, his statement of legal principles accurately reflects the law. His Honour said: "The expression 'the usual order as to costs' embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation." 9 Where executors or other personal representatives are involved, there are additional matters to consider. When confronted by beneficiaries who are urging them sue, personal representatives are in a difficult position. If they take proceedings, they may be held personally liable for costs if they are considered to have acted unreasonably; and if they do not, they may be held personally liable for having failed to pursue a good claim of the estate: JHG Sunnucks, JGR Martyn and N Caddick, Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (Sweet & Maxwell, 2000), paragraph [60-10]. The Court will assists the personal representatives, upon application, to overcome their difficulty by giving advice and direction, thereby removing the risk that the Court may exercise its discretion to refuse recovery of costs out of the estate, provided that they followed the Court's directions: RS Geddes, CJ Rowland and P Studdert, Wills, Probate and Administration Law in New South Wales (LBC, 1996), paragraph [92.10]. The form of advice and direction given by the Court is commonly referred to as a Re Beddoe order (Re Beddoe [1893] 1Ch 547). Additionally if, in the circumstances, a personal representative is under a duty to litigate, the Court may give him or her and indemnity out of the assets of the estate for the costs of the litigation: Re Dallaway [1982] 1 WLR 756. 10 In the present case there was no application for a Re Beddoe order or an order for indemnity out of the estate's assets, prior to the commencement of the cross-claim. But it must be borne in mind that the prospect of making either of those applications was a matter for consideration by Guardian when it received Ventry's claims relating to Mrs Gray's payments to Robert. Here the litigation under consideration prior to commencement of the cross-claim was against a person interested in the estate, namely Robert. Williams, Mortimer and Sunnucks say this about such cases: "These cases raise special difficulties. If the claimant in the claim against the estate or trust fund is himself one of the beneficiaries, and the dispute is in the nature of a family dispute, then if all the beneficiaries are ascertained and of full age so that they can make up their own minds as to whether the claim should be resisted or not, it will usually be ordered that the beneficiaries be joined as defendants and left to fight the claim, if they so wish, at their own expense, rather than that the claim be fought at the expense of the fund or estate . " 11 Presumably the same would apply in a case where the estate is asserting a claim against one of the beneficiaries at the instigation of another. In the present case no order was made to leave the beneficiaries, Ventry and Robert, to fight the claim in the absence of Guardian, although both Ventry and Robert were joined as defendants to the cross-claim and at the hearing they were the principal protagonists. The proposition in Williams, Mortimer and Sunnucks expresses the usual case. Here, there were good reasons for Guardian to remain represented during the hearing, given in particular the personal antagonism between Ventry and Robert and the need for the Court to be given relatively impartial assistance on some difficult issues of law. Costs of proceeding, 5 October 1999 to 5 June 2001 12 During this period Ventry was the plaintiff and the sole defendant was Guardian. There was no cross-claim. The action was primarily for revocation of the grant of probate. By 5 June 2001, upon the commencement of the cross-claim, Ventry had decided to withdraw his claim for revocation of the grant of probate, and to change the course of the proceeding. In those circumstances McHugh J's observations are germane. The issue is not whether to punish any party, but whether the circumstances were sufficient to justify Ventry's commencement and subsequent maintenance of the proceeding, and whether the conduct of Guardian should disentitle it from any recovery of costs. The submissions by Ventry and Guardian 13 Ventry contends that his costs for this period should be paid by Guardian, with no right of reimbursement from the estate. He contends that Guardian is a remunerated professional which is required to demonstrate a high standard of professionalism in executing its roles as executor and trustee (citing ASC v AS Nominees Limited (1995) 18 ACSR 459 at 470-1 per Finn J, and Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642 at 643 per Rolfe J). He says that he was compelled to commence the present proceeding for revocation of the grant of probate because there was no other effective avenue of redress, when Guardian appeared to refuse to pursue the estate's claims against Robert. 14 Ventry says that when, on 5 June 2001, Guardian filed its cross-claim raising issues which he had persistently sought to have litigated from February 1999, he decided to discontinue his claim for revocation of the grant of probate. Although Guardian wrote to Robert on 5 November 1999, it did not inform Ventry of that letter and therefore Ventry continued the claim for revocation of probate until after the filing of the cross-claim. According to Ventry's contention, his costs in the period from 5 October 1999 to 5 November 1999 were attributable to Guardian's unreasonable refusal to take action in respect of his claim to recover the payments to Robert, and were attributable in the period from 5 November 1999 to 5 June 2001 to Guardian's unreasonable failure to inform him that it had written to Robert on 5 November 1999 with the intention thereafter of diligently pursuing the matter. Ventry makes no claim against Robert in respect of costs for this period. 15 Ventry's complaints relate to allegations of delay, allegations of failure by Guardian to respond to his requests for information, and a claim that in these circumstances, it was reasonable for him to infer that Guardian refused to seek to recover the payments to Robert. 16 Guardian contends, as its principal submission, that its costs in respect of this period should be recoverable on a full indemnity basis out of the assets of the estate. In the alternative, it submits that its costs for this period should be paid by Ventry. It supports these submissions by referring in detail to its correspondence with Ventry and others during the period from February 1999 until October 2000. 17 Guardian contends that the allegations of delay, failure to supply information, and inferred refusal to prosecute Ventry's claims against Robert, must be seen in the context revealed by that correspondence. Guardian says the correspondence shows that in the period from February to April 1999 a multitude of disputes emerged between Ventry and Robert about many of the assets of the estate, and in the period from April to November 1999 there were recriminations between Ventry and Robert. According to counsel for Guardian, Ventry corresponded with Guardian in a "high-handed manner" during that period, and "aggressively" at all times. 18 Guardian says that there was no delay in the period from February 1999 to October 2000, but if there was, the delay was excusable and did not justify Ventry's commencement and prosecution of a proceeding for revocation of the grant of probate. Guardian also says that Ventry took action for revocation of the grant of probate for the ulterior motive of advancing the estate's claims for recovery of loans from Robert, and that it would have been more appropriate for Ventry personally to commence a proceeding for that purpose, or for him to commence an administration suit under Part 68 of the Rules of the Supreme Court, or for Guardian to take a recovery proceeding in New Zealand after receiving an indemnity for costs from Ventry. It was improper, according to Guardian, for Ventry to attempt to push it into litigation which might have been pointless, in light of these alternatives. 19 These competing submissions were developed in lengthy argument, by recourse to voluminous correspondence. It is appropriate to consider the correspondence and the submissions by subdividing the period from Mrs Gray's death to the commencement of the cross-claim into the following phases: January to April 1999; May to November 1999; November 1999 to October 2000; and October 2000 to June 2001. First phase: January to April 1999 20 Mrs Gray died in January 1999. The correspondence between Ventry and Guardian, and Guardian's dealings with both brothers, began in February 1999, even before probate was granted on 8 March 1999. 21 From the outset, Ventry robustly asserted his claims to assets in the executor's hands. The correspondence shows that during this period, the brothers argued about a great variety of matters. Guardian thought it necessary to change the locks on the deceased's home in Balgowlah when Ventry claimed that most of the chattels there were his, asserting that it had a duty to do so to protect the estate's assets. He said he had lent his mother three amounts totalling about $3000, which she acknowledged by signing "loan agreements", copies of which he supplied. There were disagreements between the brothers as to who should take particular items such as a microwave oven, and even some coffee mugs and an oven dish. Ventry raised contentions which were not ultimately pursued in litigation, for example his claims relating to alleged loans to Mrs Winton and Robert's son Stefan. Guardian informed Ventry on 15 April 1999 that it was making inquiries about various matters including the alleged loans to Robert. 22 The picture that emerges is of beneficiaries in deep personal conflict, prepared to pursue disagreements even with respect to assets of trivial value. There were firm, meticulous and uncompromising demands by Ventry, that Guardian pursue investigations on many fronts, and also demands by him for a great deal of information. 23 I accept that a beneficiary who is a barrister is entitled to use his legal skills to advance his own interests, and is not legally required to be deferential or even polite to the executor (compare, as to the position of a solicitor for a beneficiary, Mavrideros v Mack (1998) 45 NSWLR 80). I also accept that a beneficiary is legally entitled to assert claims in respect of assets in the executor's hands, even where the value of the asset is trivial, and that the executor may sometimes be obliged to pursue inquiries even if his remuneration for recovery of the asset would be disproportionate to the costs and effort involved. I do not accept that there was any impropriety in Ventry's correspondence during this period, and therefore I would not use expressions like "high-handed" and "aggressive" to describe it. 24 However, in my view it was reasonable for Guardian, faced with a barrage of correspondence descending into minutiae, and evidence of deep personal animosity and a multitude of disputes between the brothers, to proceed cautiously and avoid consuming the estate's assets unnecessarily by engaging in lengthy correspondence. Although, by April 1999, Ventry had asked some questions that Guardian had not satisfactorily answered, its administration of the estate during this phase was not unreasonable or such as to justify a claim for revocation of the grant of probate. 25 I should mention one letter in particular, because Guardian made a serious allegation in respect of it. On 9 February 1999 Ventry wrote to Guardian asserting a claim to "sole beneficial ownership" of Mrs Gray's dwelling in Balgowlah. Guardian submits that Ventry's claim to beneficial ownership of the Balgowlah property was manifestly false to his knowledge, having regard to his failure to establish beneficial entitlement in proceedings before Waddell J in 1989 (referred to in my reasons the judgment dated 18 December 2002, especially at paragraph [40]). Ventry's response was to say, correctly, that the Court reserved to him a qualified right to claim an interest in the property less than an absolute trust, and left open the possibility that he might claim a remainder interest subject to a life interest in his mother. In those circumstances I agree with Ventry that there was nothing knowingly false about his claim in the letter of 9 February 1999. On the other hand, his letter did not disclose anything like the full circumstances of the claim or its history. Second phase: May to November 1999 26 During this period, the edge to Ventry's correspondence became harder. For example, in his letter dated 20 July 1999 he complained that his earlier letters had not received adequate replies and said, "had the executor been a solicitor, this would be a case where a complaint to the Law Society would be appropriate." There were recriminations between the brothers - as to the distribution of the contents of the Balgowlah house, and the amounts and nature of money provided to Mrs Gray during her lifetime by both sons. 27 Ventry made many demands for information. Guardian made a substantial reply, by its letter dated 7 June 1999, in which Mr Johnstone on behalf of Guardian remarked that there was no documentary evidence establishing loans to Robert, and he proposed to interview both Ventry and Robert and to complete Guardian's investigations. Ventry contended that this reply was inadequate. On 8 June he wrote to Guardian asking for further information, including information as to the steps taken to pursue the loans to Robert. Guardian made various inquiries (and could not be said to have stood idly by, in dereliction of its duties), including inquiries from Mrs Winton and even from the funeral parlour with respect to Mrs Gray's rings, but it was in an unenviable position. It was under pressure from Ventry to supply detailed information on virtually every step it had taken in the administration of the estate, but it was aware of the intense dispute between the brothers. 28 In her letter to Ventry dated 2 July 1999, Annalisa Gray on behalf of Guardian said that the only practical method of resolving the various issues raised by Ventry would be to have a meeting. But Ventry persisted with the strategy of writing detailed requests for information, such as his seven-page letter dated 20 July 2003, in which (inter alia) he urged that inquiries be made of Mrs Gray's solicitor, Mr Hattersley. 29 On 2 September Mr O'Bryen on behalf of Guardian wrote to Ventry, saying that Guardian had received information from Mr Hattersley, and proposing to defer "a substantial response" to the matters raised by Ventry until Guardian had reviewed that material. In my opinion, Guardian was in a position, as from its receipt of the Hattersley documents no later than 2 September 1999, to make an assessment whether to claim repayment from Robert of the money he received upon the sale of the Dorchester apartment. 30 Counsel for Guardian submitted that Ventry had three pieces of information that he did not place in Guardian's hands: his evidence of his discussions with Mrs Gray; information about New Zealand gift duty law; and a detailed account of his conversations with Robert on the subject. But Ventry's alleged omission to provide this information to Guardian was effectively answered by him in his evidence. He explained that his conversations with his mother were too vague to have any legal significance; that Guardian is a New Zealand-based trustee company that might reasonably be presumed to be aware of New Zealand gift duty law; and that he provided a summary account of his conversations with his brother to an officer of Guardian on 19 February 1999. 31 On 9 September Ventry replied to Mr O'Bryen's letter, saying that the letter was no response to, and did not answer the questions raised in, Ventry's letters of 19 February, 5 March, 22 March, 27 April, 8 June, 22 June, 6 July, 9 July and 20 July 1999. Ventry demanded that the executor provide to him within 7 days a detailed indication of the steps to be taken to deal with all the issues raised in the earlier correspondence or an indication of why those issues would not be pursued. However, a substantial part of the letter spoke of matters other than the payments to Robert, and the demand for information was merely a general statement incorporating by reference the earlier demands he had made, some of which had been superseded by the arrival of the Hattersley papers. Guardian was entitled to take the view that it would be reasonable to afford it time to assess the estate's rights in light of the Hattersley documents. 32 That was the state of the correspondence when Ventry commenced the present proceeding, seeking revocation of the grant of probate, on 5 October 1999. Ventry gave evidence that as of 5 October 1999 he believed that the information received from Mr Hattersley had not caused Guardian to take positive action to investigate the payments to Robert, and that the only way he could have proper investigations made was to have the grant of probate revoked, and to have a grant of administration made to an administrator who would pursue inquiries. He took into account what he regarded as Guardian's consistent failure to answer his inquiries and its refusal to give him access to the administration file, and he believed that Guardian was not acting candidly and impartially in the administration of the estate. 33 The question is whether, in all the circumstances, Ventry was justified in commencing a proceeding for revocation of the grant of probate on 5 October 1999. The answer partly depends on the view to be taken about Ventry's demands for information. It also depends upon whether Guardian's conduct was open to criticism in any other respect. A beneficiary's right to information and access to documents 34 I received submissions from the parties concerning a beneficiary's right of access to information of the kinds frequently requested by Ventry throughout all four phases. A beneficiary has a right to see "trust documents", but trustees exercising discretionary powers are not required to provide their reasons. The tension between these two principles was recognised by the English Court Appeal in Re Londonderry's Settlement [1965] Ch 918. 35 In that case and for a time subsequently, the courts endeavoured to reconcile the two principles by adopting a restrictive definition of "trust documents", which depended in part on whether the beneficiaries of the trust had a proprietary interest in the document in question. A definition of "trust documents" was offered by Salmon LJ in the Londonderry case (at 938), but as courts and commentators subsequently pointed out, his Lordship's definition contained an element of circularity: see, for example, Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405, and 413 per Kirby P; RE Megarry, Note, (1964) 80 LQR 475. The appeal to the notion of proprietary interest only served to confuse the issue: Spellson v George (1987) 11 NSWLR 300, at 315-6 per Powell J; Re Simersall (1992) 108 ALR 375, at 381 per Gummow J; Global Custodians Ltd v Mesh [1999] NSWSC 64 (25 June 1999), at [50-[52] per Young J. But the result in the Londonderry case, denying beneficiaries access to such documents as minutes of the trustees' meetings, disclosure of which would amount to disclosure of their reasons for exercising discretionary power, was clearly correct. 36 In the Hartigan Nominees case the Court of Appeal of New South Wales declined to direct trustees to produce a memorandum in which the settlor expressed his desires concerning the trust. In Hagan v Waterhouse (1991) 34 NSWLR 308 the Court allowed beneficiaries to examine the partnership accounts of the trustees, but in Rouse v IOOF Australia Trustees Ltd (unreported, Supreme Court of South Australia, Williams J, 17 December 1998) a beneficiary was refused access to information concerning litigation upon which the trustee was engaged, where the trustee wished to maintain confidentiality with respect to the course of the litigation. 37 The beneficiary's right of access to documents in the hands of the trustee seems to be strongest where the subject matter is financial information about the administration of the trust. In Simersall Gummow J said (at 589) that the trustee has an obligation to "keep proper accounts and to allow inspection of them by the cestui que trust", and that the trust accounts sought in the case before him were indubitably trust documents. In the Global Custodians case Young J took the view that access to the accounting records of the trust (as opposed to the accounts themselves) seemed to fall within the category of "trust documents". 38 In Schmidt v Rosewood Trust Pty Ltd IOM [2003] UK PC 26 (27 March 2003), where a person claiming to be a beneficiary sought access to the accounts of the trust, alleging a possible breach of trust, the Privy Council said (at paragraph [51]) that the correct approach was to regard the right to seek disclosure of trust documents as one aspect of the court's inherent jurisdiction to supervise, and if necessary to intervene in, the administration of trusts. Their Lordships rejected the idea that a beneficiary has a right to disclosure of everything that might plausibly be described as a trust document, and said that the court may have to balance competing interests of different beneficiaries, the trustees themselves, and third parties, especially where issues such as personal or commercial confidentiality are involved (at paragraph [61]). 39 It seems to me that Ventry's demands for information and access to documents in this case, culminating in his letter of 20 July 1999, went beyond what could properly be regarded as his legal entitlement. Some of the information he sought related to Guardian's file documents reflecting its deliberations and the advice it obtained, which could not properly be regarded as trust documents. To a degree, moreover, his demands were not simply for access to documents, but they were demands for explanation as to what Guardian had done, was doing, and proposed to do about various matters. Even if (contrary to my view) he was entitled to answers to every question he raised, his demands exceeded the permissible volume and frequency of a beneficiary's demands for information. HAJ Ford and WA Lee, Principles of the Law of Trusts (Lawbook Co, Online), paragraph [9270], quote from section 813 of the American Uniform Trust Code (2000), which obliges trustees to keep qualified beneficiaries "reasonably informed", and they observe that the Code gives good guidance to trustees. In my opinion the word "reasonably" imports a limitation that must also exist in Australian law, for the principal task of a trustee or legal personal representative is to administer the trust estate for the benefit of the beneficiaries as a whole, rather than to respond to voluminous and lengthy queries from a particular beneficiary. 40 It is unnecessary for me, when dealing only with the question of costs, to determine point by point which of Ventry's demands for information and access to documents reflected his entitlement as a beneficiary and which did not. At the hearing counsel for Ventry did not claim that his client was entitled to everything demanded in the letters, and counsel for Guardian did not maintain that Ventry had no entitlement at all or that he had received everything to which he was entitled. It is enough for present purposes to hold, and I do hold, that many of Ventry's demands were unwarranted, although there were some demands for information to which he was entitled as a beneficiary, which had not been fully met by the time he commenced the proceeding on 5 October 1999. Other aspects of the conduct of Guardian and Ventry 41 In my judgment Guardian did not unreasonably delay the administration of the estate up to 2 September, when it acknowledged having received the Hattersley papers. As I have said, it made some responses to Ventry's demands and conducted various inquiries, including inquiries of Mr Hattersley. 42 Guardian's letter of 2 September promised a "substantial response" after the Hattersley material had been reviewed, but no such response materialised at any stage. However, given that the material was substantial and complex, and having regard to the context provided by the dispute between the brothers and Ventry's correspondence, Guardian's failure to provide the "substantial response" before 5 October when Ventry commenced the proceeding was not unreasonable delay, and it was not unreasonable of Guardian to have made no response thereafter, having regard to the commencement of litigation against it. 43 In my view no unreasonable delay has been established merely by virtue of the facts that the Hattersley papers were received prior to 2 September and Guardian's long letter to Robert, making claims based on that material, was written on 5 November. In the second half of 1999, the position with respect to the payments to Robert cannot have been as clear as it became at the final hearing. It would have been appropriate for Guardian to take some care in the preparation of its letter to Robert, having regard to the contentious circumstances and the climate created by Ventry's correspondence. 44 It is of particular significance Ventry did not warn Guardian that he intended to commence the proceeding, and therefore Guardian did not have the chance to respond by summarising, to the required extent, its administration of the estate and, in particular, what it was doing and proposing to do with respect to recovery of the payments to Robert. In that sense, his action in commencing the proceeding was premature and even peremptory. It was also peremptory to commence the proceeding, given that according to Ventry's evidence, a substantial objective was to cause Guardian to take steps for recovery of the payments to Robert, in circumstances where Guardian had promised a substantial response after it had reviewed the Hattersley papers. 45 The conclusion that it was premature to commence the proceeding in October 1999 is reinforced by the simple facts that probate had been granted only about seven months earlier, and Mrs Gray had died only a little over eight months earlier. In my opinion, the fact that there were some legitimate demands for information that had been unanswered for some time is not an adequate answer to the submission that the commencement of the proceeding was premature, given the state of the correspondence at the time. 46 In his written submissions counsel for Guardian referred to the "executor's year", referring to the obligation said to be borne by an executor to realise estate assets, pay debts and expenses and distribute the estate within the year after the grant of probate. Counsel noted that the principle has a long history, although it may have a limited application in New South Wales after cases such as Williams v Stephens (Supreme Court of New South Wales, Young J, unreported, 24 March 1986). Counsel said that whatever the jurisdictional position, the executor in practice is given a year in which to complete his duties. In my opinion the reference to the executor's year is not helpful in the present circumstances. The question is whether, for the purpose of making an appropriate costs order, it was reasonable for Ventry to commence the proceeding when he did. The fact that it happened to be within the executor's year is not significant, as such, but it is significant that in all the circumstances to which I have referred the commencement of the proceeding was premature and even peremptory. 47 I agree with Guardian's contention that Ventry could have taken other kinds of proceedings in his own name to achieve his objective of ensuring that the payments by Mrs Gray to Robert were properly investigated. He could have indemnified Guardian to take proceedings for recovery of loans in New Zealand. This prospect was explored in December 1999 and in early 2000, when Guardian eventually imposed some conditions which, I assume, were not acceptable to Ventry. This was well after the commencement of the present proceeding. Ventry could have commenced an administration suit under Part 68 of the Supreme Court Rules. The authority of Ramage v Waclaw (1988) 12 NSWLR 84 indicates that he could have sued as a beneficiary to recover the payments as assets of the estate. 48 Each of these possibilities would have been more directly related to the principal pecuniary objective of which Ventry gave evidence, and would have been less polarising. The existence of these possibilities casts doubt upon the reasonableness of Ventry's belief that it was necessary for him to commence a proceeding for revocation of the grant of probate. Conclusion as to Ventry's commencement of the proceeding 49 My conclusion is that Ventry was not justified in commencing the proceeding for revocation of the grant of probate on 5 October 1999, and therefore his costs of doing so should not be recoverable from Guardian. My conclusion implies that Ventry should be ordered to pay Guardian's costs in respect of the commencement and maintenance of the proceeding in the second phase. Third and fourth phases: November 1999 to October 2000, and October 2000 to June 2001 50 I turn to the third and fourth phases, including the question whether Guardian should be required to pay Ventry's costs of continuing the proceeding after 5 November 1999, when it wrote its long letter to Robert with respect to the payments. 51 Guardian did not inform Ventry that it had written its letter to Robert, or that it intended to pursue the question of the payments to Robert in any way, up to 15 May 2001 when it filed a notice of motion seeking leave to file a cross-claim. On 8 November 1999 Guardian wrote to Ventry referring him to their previous correspondence in relation to the estate and advising him that they were continuing with their investigations of the numerous matters he had raised. I agree with counsel for Ventry that this was a very uninformative letter. 52 Ventry gave evidence that until 15 May 2001 he believed that Guardian would not take positive action to investigate or pursue the payments, and that the only way he could have the loans investigated was by prosecuting the proceeding. He said the when he became aware of Guardian's intention to raise the issue of the payments to Robert, he recognised that he had achieved one of the principal objectives and, in pecuniary terms, the primary objective of instituting the proceeding. He said that if he had been aware on 5 October 1999 that Guardian intended to write to Robert in the terms of its letter of 5 November 1999 he would not have instituted the proceeding at all; and if Guardian had informed him on or after 5 November 1999 that it had written to Robert in terms of its letter of that day he would have sought an order staying the proceeding (so long as Guardian pursued the issue of the payments to Robert with reasonable diligence). His evidence was that he became aware of Guardian's letter to Robert dated 5 November 1999 only when he inspected documents in the proceeding after the institution of Guardian's cross-claim. 53 It is not clear from the evidence when Guardian formed its intention to commence the cross-claim. I am unable to conclude that its intention was formed substantially earlier than May 2001. Counsel for Ventry drew attention to the lack of any evidence from officers of Guardian to explain Guardian's conduct. But it is possible for me to reach a conclusion that is adequate for the present purpose from the correspondence and Ventry's evidence. 54 In the period between November 1999 to October 2000 Guardian wrote to Ventry on two occasions - on 8 November 1999 regarding the 'missing' jewellery and cash, and on 11 February 2000 regarding the sale of the Balgowlah property and the removal of chattels from the property. Ventry wrote to Guardian twice, once on 22 February 2000 in response to Guardian's letter dated 11 February 2000, referring only to the matters raised in that letter, and once on 8 May 200 regarding arrangements for access to the Balgowlah property. On 2 May 2000 Mallesons Stephen Jaques, solicitors for Guardian, wrote to Teece Hodgson & Ward, solicitors for Ventry, regarding proposed litigation in New Zealand to recover various payments as loans from the estate. Mallesons Stephen Jacques wrote again to Teece Hodgson & Ward on 15 June 2000, enclosing a notice of intended distribution of estate and, relevantly, requesting that Ventry provide a proof of evidence setting out the conversations between Ventry and Robert which may have related to the alleged debts owed by Robert to the estate. Mallesons said that their client (Guardian) would give the matter further consideration although its present expectation was that it would instruct solicitors in New Zealand to commence proceedings. Mallesons also required an indemnity from Ventry for the proposed litigation in New Zealand. Teece Hodgson & Ward responded on 25 July 2000, providing a draft witness statement and draft indemnity from Ventry. At this time Guardian had not made a final decision to commence a cross-claim in the existing proceedings to recover the alleged debt, but rather was considering whether to institute proceedings in New Zealand. 55 On 11 October 2000 Mr Willmott of counsel advised Guardian that it would be appropriate for Mrs Gray's payments to Robert to be pursued by Guardian seeking declaratory relief to the effect that Robert would be obliged, consistently with the rule in Cherry v Boultbee (1839) 4 My & Cr 442 [41 ER 171], to account to the estate for outstanding debts before any distribution were to be made to him. Counsel drew attention to some uncertainty as to whether the rule in Cherry v Boultbee would apply in this way in the case of a statute-barred debt, and whether interest would be recoverable. 56 There are letters from Ventry to Guardian making various demands in the period from Mr Willmott's advice until June 2001, which were no doubt distracting for Guardian's officers. There is no complete explanation for the fact that Guardian did not act on the advice by applying for leave to bring the cross-claim until 15 May 2001, but it appears that mediation was attempted in March 2001. Further, as I have said, Mr Willmott's advice noted some legal issues which it would have been reasonable to explore more fully before commencing litigation. 57 In my opinion there was nothing in the period from October 2000 to June 2001 to disentitle Guardian to an order for costs. My conclusion in respect of the third and fourth phases is that it was reasonable for Guardian to proceed during the period from November 1999 to May 2001 without communicating to Ventry its correspondence with Robert or its intention to commence a cross-claim. 58 It must be remembered that during this period Guardian was under attack from Ventry both in correspondence and by virtue of the proceeding. The attack was not confined to the question of recovery of the payments to Robert. There were many allegations in the correspondence, including some that were not pursued in the cross-claim and the final hearing. Assessing the correspondence, my view is that a reasonable person in the position of Guardian would not have concluded, during the period from November 1999 to May 2001, that disclosure of the terms of Guardian's letter to Robert of 5 November 1999 would have affected Ventry's intention to prosecute the proceeding. 59 Given these findings, the appropriate order for costs is that Ventry should pay Guardian's costs of the proceeding in the period from November 1999 to 5 June 2001 when the cross-claim was filed. Costs of proceeding, 5 June 2001 to 27 March 2002 60 Robert did not become a party to the proceeding until 27 March 2002. At the costs hearing, counsel for Ventry and Guardian conceded that there was no basis for the Court to make any order against Robert with respect to costs incurred before 27 March 2002. 61 Ventry contended that Guardian should pay his costs of the proceeding for the period from 5 June 2001 to 27 March 2002, with no right of indemnity from the estate but without prejudice to any claim to recover such costs from Robert. This was on the basis that the proceeding was substantially successful, Guardian was the sole defendant during that period, and costs should follow the event. 62 On 25 May 2001 Ventry made an affidavit in which he said that Guardian's action in seeking leave to file a cross-claim to have the payments to Robert brought into account had met one of his principal objectives (and in pecuniary terms, the primary objective) in taking the proceeding. But he did not amend the statement of claim until 27 March 2002. I can find no correspondence to explain his delay in amending the statement of claim, but Guardian was put on notice that he believed his primary objective had been satisfied, as from about 25 May 2001. 63 I agree that, since the proceeding was substantially successful (for reasons explained below), it is appropriate to order Guardian to pay Ventry's costs for this period. However, in my view Guardian was acting reasonably in its role as a litigant in the proceeding during this period. It was reasonable for it to defend the claim to relief in the proceeding, which remained claim for revocation of probate, and for it to pursue its cross-claim. There is consequently no proper basis for denying it indemnity from the estate in respect of its own costs as a defendant in the proceeding and in respect of Ventry's costs during this period. 64 I shall therefore order Guardian to pay Ventry's costs of the proceeding in respect of the period from 5 June 2001 to 27 March 2002, and I shall order that Guardian be indemnified out of the assets of the estate in respect of its obligation to pay Ventry's costs under this order and in respect of its own cost as reasonably incurred during this period. I realise that the practical effect of this these orders may well be that Ventry will recover only approximately half of the costs ordered to be paid by Guardian, because payment of those costs will deplete the estate in which he has a half share. Costs of proceeding, 27 March 2002 to 21 February 2003 65 Ventry made three claims in the second amended cross-claim. He succeeded in his claim for NZD5,000 plus interest at Schedule J rates after Mr Gray's death. He did not succeed with respect to his claim for $1,000. 66 He also claimed in respect of two dress rings. The position with respect to the dress rings is that on 5 March 1999 Ventry wrote to Guardian saying that Mrs Gray had taken several valuable rings with her to New Zealand, and suggesting that inquiry be made with the funeral director. Further correspondence includes Ventry's letters to Guardian dated 27 April, 20 July, 9 September and 8 November 1999. Guardian's inquiries of the funeral director did not locate the rings and Ventry continued to press for their recovery. 67 On 22 March 2001 Robert's solicitor wrote to Ventry's solicitor saying that Mrs Gray gave the rings to Robert in hospital shortly before she died, asking that they be given to Robert's children. 68 On 13 September 2001 Robert wrote to Guardian saying that he was prepared to return the rings to it if required. However, the letter did not say that Robert made no claim to the rings. The rings were not the subject of any claim in the original statement of claim, which was for revocation of the grant of probate and the taking of accounts, nor any claim in the cross-claim at any stage, but a specific claim in respect of the rings was introduced in the amended statement of claim filed on 27 March 2002, and the claim remained in the SASC. 69 Counsel for Ventry opened at the hearing in a manner which implied that he and his client believed there was still a live issue about the ownership of the rings. 70 Early in the hearing, there was a debate as to whether Ventry could read evidence (an affidavit by Mr Hattersley) as against Robert. Counsel for Robert submitted that as the SASC made no claim for relief against his client, no evidence was admissible against him in the proceeding. After hearing argument, I held that Ventry's evidence was admissible against Robert. I gave oral reasons for my decision, saying that although there was no express pleading with respect to (inter alia) the custody and control of the dress rings, the pleading claimed a declaration that the assets of the estate to be administered by Guardian included the dress rings and the other two items claimed. I said that, to the extent that Robert had custody and control of any of those assets, he had an interest with respect to the making of that declaratory order. His interest was such, in my view, that any proceeding seeking this kind of relief would have been improperly constituted unless he had been joined as a defendant. I concluded that, although no relief was sought against Robert in so many words, the making of orders along the lines sought in the pleading would have such an effect on Robert's interests that was appropriate for Ventry to read evidence so as to make a case against Robert for orders of the kind that were sought. 71 It would have been relevant for counsel for Robert to say, during the course of argument on this point, that his client in fact made no claim in respect of the dress rings, but he did not do so. 72 Subsequently counsel for Ventry called on a notice to produce the rings, and counsel for Robert produce the rings, saying "I make no admission they are the ones described". That response suggested, and arguably confirmed, that there was still an issue with respect to the rings on the first day of the hearing. Later in the day, Robert gave supplementary evidence in chief to the effect that the two rings he had produced to the Court were on his mother's finger when she died. 73 In the early part of the second day of the hearing, counsel for Ventry proceeded on the assumption that there was still an issue about the rings, and made submissions to refute any claim to a donatio mortis causa. It was only towards the end of the second day that counsel for Robert drew attention to the letter of 13 September 2001, and rhetorically asked why the rings were a subject of the pleading before the Court. That submission implied that Robert had abandoned any claim to an interest in the rings. But in my opinion he had not abandoned any such claim on 13 September 2001, merely by offering to deliver up possession of the rings to the executor. 74 Towards the end of submissions, I observed that there would be no point in my making of order in relation to the rings, saying that there had never been an issue about them, but counsel for Guardian corrected me, submitting that there had been no admission by Robert that the rings were properly assets of the estate. One of the orders that I made on 21 February 2003, pursuant to my reasons for judgment delivered on 18 December 2002, was an order that the two dress rings were assets of the estate and were to be released into the custody of Guardian to be dealt with according to law. 75 In all these circumstances, it seems to me plain that the issue whether Robert had any interest in the two dress rings was an issue alive for determination until the second day of the hearing, and it was an issue determined by my final orders. It is therefore correct to say that Ventry as plaintiff succeeded at the hearing with respect to the dress rings. 76 That being so, Ventry was substantially successful on the SASC at the hearing, as against Robert. As they were the principal protagonists, Robert should be ordered to pay Ventry's costs of the proceeding as from 27 March 2002, when he was joined as second defendant. 77 Counsel for Robert submitted that I should not make an order for costs against him in respect of the proceeding (as opposed to the cross-claim) because he was not a necessary party to the proceeding, as no relief was sought against him. This repeats, in substance, the argument he made at the hearing, as the ground for a submission that I should not permit Ventry to adduce evidence against him. I rejected the contention on the first day of the hearing, and it suffices for me to adopt the reasons that I delivered on that occasion. 78 I have held that Guardian should be ordered to pay Ventry's costs of the proceeding for the period from 5 June 2001 to 27 March 2002, but that Guardian is entitled to be indemnified from the assets of the estate in respect of its own costs as defendant and in respect of Ventry's costs during that period. The same conclusion should follow in respect of the period from 27 March 2002 to the date of my orders on 21 February 2003, although in that period Guardian's liability will be concurrent with the liability of Ventry. Ventry was substantially successful in the proceeding, in which Guardian was a defendant, but Guardian was acting reasonably in its role as a litigant and did not in substance contest Ventry's claims, once the pleading was amended to abandon the claim for revocation of the grant of probate, therefore Guardian is entitled to be indemnified out of the estate's assets. 79 At the costs hearing, counsel for Ventry sought an order that Robert pay Ventry's costs of bringing a witness, Mr Campbell, from New Zealand for cross-examination. For the purposes of resolution of that issue, Robert agreed that he gave notice requiring the attendance of Mr Campbell for cross-examination, and retracted that requirement on the day before the hearing, by which time Mr Campbell was already in Sydney. It is unnecessary for me to deal separately with this point, since I have decided that Robert should be ordered to pay Ventry's costs of the proceeding in the period from 27 March 2002 to 21 February 2003, a period which includes the principal hearing days of 13 and 14 August 2002. Costs of cross-claim 80 There were five amounts claimed in the amended cross-claim. The cross-claim was successful in respect of three of them, namely NZD156,732.72 plus interest, $10,000 plus interest and $2,000 plus interest. The cross-claim failed with respect to two amounts, namely NZD10,000 and $7,025. However, by far the greatest part of the case related to the claim for NZD156,732.72 plus interest. In terms of the way the final hearing was conducted, the cross-claim was almost completely successful. 81 Counsel for Robert conceded that on ordinary principles, it was appropriate that a costs order be made against his client. He contended, however, that because the cross-claim was not wholly successful, there should be an apportionment and reduction of the recoverable amount, and he suggested that the order against Robert be limited to 90% of the successful party's costs. I disagree with this submission. In my opinion the cross-claim was so substantially successful, and so little of the documentary, affidavit and oral evidence related to the unsuccessful claims, that the successful party should be entitled to recover the whole of his or its costs from Robert. 82 The submissions made on behalf of Robert resisted the proposition that the costs order against him should be on an indemnity basis. I agree that there is no case for an order that Robert pay indemnity costs. However, it emerges that there was no claim for indemnity costs against Robert. Counsel for Guardian made it clear that his submission was that the order for costs against Robert be on the ordinary party and party basis, but that the Court should also order that Guardian be entitled to be indemnified out of the assets of the estate for any costs actually and reasonably incurred but not recoverable or recovered from Robert. 83 Subject to the so-called "one set of costs" rule which I shall consider next, I agree that Guardian should be entitled to be indemnified in this way out of the assets of the estate. It was reasonable for Guardian, as executor of Mrs Gray's estate, to take action to establish that the amounts enumerated in the cross-claim were owing by Robert to the estate and therefore deductible from his interest in the estate under the ruling Cherry v Boultbee. For the reasons given in paragraphs [108]-[110] of my judgment delivered on 18 December 2002, it was appropriate for Guardian to raise the issue as an issue of deduction from Robert's entitlement in probate proceedings, rather than to sue in debt. This is because the rule in Cherry v Boultbee applies to statute-barred New Zealand debts which may not be may not have been directly recoverable in an action in debt under New Zealand law. 84 Counsel for Robert submitted that the initiation of the cross-claim was unnecessary and that the appropriate course was for Guardian to deduct the amounts claimed against Robert from his share upon distribution of the net assets of the estate, leaving it to Robert to commence a proceeding if he disagreed with the outcome. But there was clearly a contest between Ventry and Robert as to whether Robert had any obligation to repay the amounts which were the subject of the cross-claim, by the time the cross-claim was commenced. It was prudent for Guardian to take action to have the estate's entitlement against Robert determined by the Court, and the cross-claim was, in my view, an appropriate method of having the matter resolved, given that the present proceeding was already on foot. 85 Counsel for Robert submitted that the only party with standing to bring the cross-claim was Guardian, notwithstanding that Ventry in effect conducted himself as a co-claimant in the cross-claim. He contended that Guardian and Ventry were, in effect, acting in the same interest, and that being so, Robert should be liable for a single set of costs, and not for the costs of both Ventry and Guardian. 86 The "single set of costs" rule was applied in Read v Chown (1929) 46 WN(NSW) 154, and in Glen v The Union Trustee Company of Australia Limited (1936) 54 CLR 463. Properly understood, the rule relates to recovery of costs out of trust property or an estate, rather than recovery against a party in litigation. In Read v Chown property was held in trust for a life tenant, the remaindermen being the life tenant's present unborn children, but in the event of his death without issue the property was to be divided among certain charitable bodies. Two of those charitable bodies appeared as defendants in proceedings with respect to repairs to the subject property. The charities appeared in the same interest, and the Court took the view that it was unnecessary to have any more than one of them appear to represent the interests of the takers of the remainder in default of issue. Harvey CJ in Eq appears to have accepted that the defendants' costs would be recoverable out of the trust estate, but he held that only one set of costs should be charged to the estate. In Glen v The Union Trustee Company the same rule was applied where both the assignor and the assignees of an encumbered beneficial interest appeared as defendants, Rich, Dixon and McTiernan JJ observing (at 4) that one set of costs should be given to the beneficiary and his encumbrancers. 87 Where the issue is whether a party to proceedings should be ordered to pay the costs of two or more other parties, the matter falls within the Court's broad discretion as to costs, and the only guiding principle is, as Harvey CJ in Eq remarked in Read v Chown (at 4) that "the Court must do what is reasonable under the circumstances." At the final hearing the principal protagonists with respect to the subject matter of the cross-claim were Ventry and Robert, with Guardian seeking to protect the estate by supporting Ventry. The victory on the cross-claim was in substance Ventry's victory. In my opinion it is appropriate to order Robert to pay Ventry's costs of the cross-claim even though Ventry was formally a cross-defendant rather than the cross-claimant. The fact that he might have taken proceedings equivalent to the cross-claim in his capacity as beneficiary (Ramage v Waclaw, above) is beside the point, since in substance he was a claimant. 88 It was reasonable for Guardian to bring the cross-claim and to prosecute it. It was not necessary for Guardian to make only a submitting appearance at the hearing and to leave it to Ventry alone to have the running of the cross-claim. It was, after all, Guardian's cross-claim and Guardian's role as executor was to recover assets for the estate (or more precisely, to establish its entitlement to reduce Robert's distribution by reference to the estate's claims against him). In my view Guardian behaved reasonably in taking the approach that it did to the final hearing. 89 Nevertheless, although the "one set of costs" rule does not strictly apply, it seems to me unfair as a discretionary matter that Robert should be required to bear the whole of Guardian's costs as well as the whole Ventry's costs. In my opinion the best solution is to make no order that Robert pay Guardian's costs of the cross-claim, but to order that Guardian be indemnified out of the assets of the estate for all costs of the cross-claim reasonably incurred. The practical effect of doing so, given that Ventry and Robert are beneficiaries in equal shares, is that Guardian's costs of the cross-claim will be borne by them equally out of their distributions. Costs with respect to the costs argument 90 Each of the parties has had mixed success with respect to costs. The most significant conclusion, in terms of the amount of time and evidence devoted to the issue at the costs hearing, is that Ventry should pay Guardian's costs with respect to the proceeding up to 5 June 2001. 91 The issues raised by the cross-claim were by far the largest issues, in terms of time, evidence and value, at the subsidy hearing. Robert admitted to liability for 90% of the costs of the cross-claim, and I found him liable for 100%, but he has had success in resisting to costs orders on the cross-claim, although indirectly he will bear half of Guardian's costs of the cross-claim because Guardian is entitled to be indemnified out of the estate in which Robert has a half interest. 92 Robert and Guardian have been held to be liable to pay Ventry's costs of the proceeding, but in Robert's case only as from 27 March 2002, and in Guardian's case as from 5 June 2001. Although Ventry succeeded on this point, it was as I have said, a much more minor point than the others in terms of hearing time and evidence. 93 I think the appropriate causes to order Ventry to pay a proportion of Guardian's costs of the costs hearing that will reflect Guardian's success on the major issue as well as Ventry's success on the minor issue. To minimise further disputation, I have quantified the recoverable portion of Guardian's costs of the overall costs hearing as 80%. Ventry succeeded in obtaining an order for costs on the cross-claim against Robert, but for amount not very different from the amount that Robert was prepared to concede. I have decided that there should be no order for the costs of the costs hearing as regards the cross-claim. Ventry's limited success with respect to the costs of the proceeding should be reflected in a costs order, which I shall also quantify in an endeavour to minimise further disputation. I shall order Robert and Guardian to pay 10% of Ventry's costs of the costs hearing, allowing Guardian to be indemnified out of the assets of the estate in respect of its liability under this order. Conclusions 94 In his written submissions, Ventry asked the Court to record that neither his submissions concerning costs nor the Court's determination of costs issues in respect of the matters litigated to date constitutes any admission by Ventry, or any determination by the Court, admissible for any purpose in relation to Guardian's accounting as executor of Mrs Gray's will. That, as I understand it, was the basis upon which the costs hearing proceeded. As I have said, this judgment does not deal with any aspect of Guardian's right of recourse to the estate for costs of administration other than costs in respect of this litigation. I assume nothing more formal is needed than for me to agree with these propositions at this stage in my reasons for judgment. 95 I shall make the following orders with respect to costs and Guardian's right of indemnity out of the assets of the estate, subject to costs orders already made: (1) Plaintiff to pay First Defendant's costs of the proceeding up to 5 June 2001; (2) First Defendant to pay Plaintiff's costs of the proceeding from 6 June 2001 to 27 March 2002; (3) First and Second Defendants to pay Plaintiff's costs of the proceeding from 28 March 2002; (4) Second Cross-Defendant to pay First Cross-Defendant's costs of the cross-claim, with no order as to the costs of the Cross-Claimant; (5) Plaintiff to pay 80% of First Defendant's costs of the hearing with respect to costs, and First and Second Defendants to pay 10% of Plaintiff's costs of that hearing, with no other order for costs in respect of that hearing; (6) Declare that the First Defendant/First Cross-Defendant is entitled to be indemnified out of the assets of the estate of the late Lillian Gray in respect of its costs of the proceeding and the cross-claim, including costs ordered to be paid by it to another party.

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