Solicitors for respondent: Murdoch Clarke Cosgrove and Drake

ZEEMAN J The previous history of these proceedings appears from the reasons for judgment which I published in connection with the disposition of the question raised by the cross-application (A28/1995 - available on SCALE). It is unlikely that any further orders will be sought on either the application or the cross-application and I have now been asked to deal with the question of costs. The applicants seek an order for costs against the respondent and have submitted that he is not entitled to be indemnified out of the estate in respect of those costs or his own costs. The respondent has resisted the making of such an order and has submitted that all costs should be paid out of the estate.

2. The primary submission made by the respondent is that I do not have jurisdiction to make the order sought by the applicants. For that submission he relied on the Rules of the Supreme Court, O80, r1(2). He submitted that the effect of that subrule is that he is entitled to be indemnified in respect of the costs of the application out of the estate and that I may not order otherwise.

"1 - (1) Subject to the provisions of the Act and these

rules, the costs of and incidental to all proceedings in the

Court, including the administration of estates and trusts,

shall be in the discretion of the Court or judge.

(2) Nothing contained in this rule shall deprive an executor,

administrator, trustee, or mortgagee, who has not

unreasonably instituted or carried on or resisted any

proceedings, of any right to costs out of a particular estate

or fund to which he would be entitled according to the rules

heretofore acted upon in the Court in its equity

jurisdiction."

4. The saving provision contained in O80, r1(2) is one which preserves inter alia the right of an administrator, executor or trustee to be indemnified in respect of the costs, charges and expenses properly incurred by him as an incident of the performance of his duties as such (see National Trustees Executors and Agency Co of Australasia Ltd v Barnes [1941] HCA 3; (1941) 64 CLR 268 per Williams J at 279). That rule rests in contract (Cotterell v Stratton (1872) LR 8 Ch 295 at 302; Turner v Hancock (1882) 20 Ch D 303 at 304-305).

5. The ambit of the rule was explained by Kekewich J in Re Jones; Christmas v Jones (1897) 2 Ch 190 at 197-198, in the following terms:

"A man who fulfils the difficult duties of an administrator,

executor or trustee is, in common sense and common justice,

entitled to be recouped to the very last penny everything

that he has expended properly - that is to say, without

impropriety - in his character of administrator, executor or

trustee; and the question I have to consider is whether the

costs which are here claimed by the administrator have been

incurred by him without impropriety in that character. Mr

Jenkins says the administrator has made a claim against the

estate which he is unable to support: that he claims as an

outsider, and that if he were an outsider he would have come

in as an ordinary creditor, and as regards these costs he

ought to fail and to pay the costs with which otherwise the

estate will be saddled. But if the costs are not those of an

outsider, but are costs incident to the performance of his

duty as administrator, then an entirely different rule

obtains, and I have only to consider whether he has incurred

these costs properly, that is, without impropriety. What is

the meaning of that? Of course, if an action is brought for

the purpose of making the executor or administrator liable

for breach of trust, and he has been found guilty of a breach

of trust, and costs have been incurred in resisting the

action, it is only right that, when those costs have been

ascertained, the executor or administrator should pay them as

part of the penalty for the breach of trust. Again, if an

executor brings in claims strictly in his character of

executor, which the Court can see from the evidence,

documentary or arising out of cross-examination, or

otherwise, or by a sort of intuitive process, or by a general

view of the case, are not honestly brought forward, then the

Court, notwithstanding the general rule, may fairly deprive

the executor of his costs; and, if he is convicted of

dishonesty, may, I have no doubt, order the executor to pay

the costs so incurred. And again, apart from dishonesty, the

Court may, in my opinion, visit the executor with costs, or

deprive him of his costs, where the claim is of a monstrous

character, that is, one which no reasonable man could say

ought to have been put forward. Even though the executor may

have believed it, and a solicitor may have prepared the case

and counsel may have argued it; in such a case the Court has

quite sufficient power to deprive the executor of his costs,

or even to make him pay the costs he has occasioned to the

estate. But subject to these limitations there is no doubt

that the general rule prevails, and that, even though an

executor makes a mistake, even though he endeavours to charge

against the estate items which the law does not allow him to

charge, or where the endeavour to prove them has been

defeated with costs, still he may have his costs if they have

been incurred without impropriety or fraud, or if they do not

partake of that monstrosity to which I have alluded."

6. As was acknowledged in Barnes and Jones, the rule which prima facie entitles a trustee to his costs only relates to matters which may properly be described as concerning an incident of the administration. So long as the relevant matter involves the administration, a trustee is entitled to his costs even though he may be acting in accordance with a view which is mistaken. Similarly, the prima facie entitlement of an administrator or executor to costs only relates to those costs which concern the performance of his duties as such. Such costs must be distinguished from those incurred by an administrator, executor or trustee in furtherance of his personal interests. There is no entitlement to such costs. They are to be dealt with in accordance with the general principles which concern the award of costs inter partes.

7. The proposition that a personal representative or trustee is not entitled as a matter of right to costs out of the estate in the case of an application which merely seeks to obtain a personal benefit has been recognised in many cases. Examples of the circumstances in which it has been held that costs of an applicant should not be paid out of the estate are where an executor applies for commission by way of a separate application (In the Will of Cameron; McIndoe v Were [1918] VicLawRp 51; (1918) VLR 346) and where a trustee seeks to retire in circumstances where he has accepted the trusts and then seeks to be relieved of the trusteeship out of caprice (In re Medway's Will (1897) 14 WN (NSW) 29). Executors who unsuccessfully pursue a purely selfish interest and thereby are "not fighting for the estate any more than if they were not executors at all" must bear the costs thereof in the same way as any other litigant (Skrimshire v Melbourne Benevolent Asylum [1894] VicLawRp 6; (1894) 20 VLR 13, per Madden CJ at 18). When it is remembered that the general rule relating to the costs of trustees rests in contract it becomes immediately obvious why the law will not imply a term that a trust estate necessarily should bear the costs of an application made by a trustee in furtherance of his purely personal interests.

8. Reference should be made to the judgment of Latham CJ in Miller v Cameron [1936] HCA 13; (1936) 54 CLR 572 which concerned a successful application that a trustee be removed. His Honour considered the question of whether the trustee might be ordered to pay the costs of the application in the absence of misconduct having been established. In dealing with that question, he said at 578-579:

"By the judgment of the Supreme Court of Tasmania the

defendant is ordered to pay the costs of the action. It is

urged on his behalf that in the absence of evidence of

misconduct of the trustee such an order cannot be made.

Certainly, as a rule, a trustee is allowed his costs out of

the trust estate if his conduct has been honest, even though

it may have been mistaken. In the ordinary case a trustee

brings or contests legal proceedings on behalf of the trust

and not on his own behalf. He is often a necessary party to

proceedings where he ought to be present even though he may

do no more than submit to the judgment of the Court. In such

a case the trustee receives his costs. The position is

admittedly different in a case of misconduct. In this case

there has, however, been no misconduct in the management of

the trust estate.

In this case the trustee was asked to resign his office by

every person interested in the execution of the trust. In my

opinion his refusal to resign in all the circumstances of the

case has resulted in legal proceedings which ought to have

been avoided. The defendant would have acted wisely and

properly in resigning as soon as he was asked. In defending

this action and in prosecuting this appeal the defendant has

been representing and supporting his own interests and not

those of the trust estate. He has failed to show that his

interests coincide with the interests of the trust estate.

In such a case I consider it quite proper that he should pay

the plaintiffs' costs of the action and of the appeal to this

Court."

9. Whilst by the present application and cross-application a variety of matters was raised, essentially each of those matters concerned the question as to whether the respondent was entitled to a release in the form sought by him before he finally distributed the trust estate to the beneficiaries. The stance taken by the respondent, namely that he would not make such distribution unless and until he was provided with such a release, was one taken by him solely so that he might obtain for his personal benefit the protection which might be afforded by such release. In seeking to obtain such a release, the respondent could not be said to have been representing or supporting the interests of the trust estate. Such a release would be of no benefit to the estate and would be contrary to the interests of the beneficiaries. For these reasons I conclude that O80, r1(2) has no application to the present case and I am to determine the question of costs as a matter of general discretion.

10. The respondent's argument that he was entitled to a release failed. Prima facie the costs should follow the event. Nevertheless the respondent argued that some other order should be made. He submitted that the history of the discussions between the parties concerning the execution of a release prior to the filing of the application provides a basis for not applying the general rule. I do not accept that submission. At all times the respondent maintained the position that he was entitled to a release to which he was not entitled. It seems that at one stage the applicants offered to execute a release in modified form but that they later resiled from that. It may be assumed that in making such an offer they were acting, at least to some extent, out of a sense of frustration in not being able to receive their entitlements because of the demands made by the respondent. The making of that offer and some degree of tardiness in responding to some of the correspondence from the respondent provides no basis for depriving the applicants of their costs. There is no other basis for doing so. The present proceedings were instituted by the applicants with a view to having the respondent perform his legal duty, being a duty which he had declined to perform until he was given a release to which he was not entitled. The proceedings were necessary because the respondent sought to acquire that personal advantage. Having failed to obtain it and the proceedings having vindicated the position taken by the applicants, the respondent should pay the applicants' costs.

11. It would be quite inequitable if the respondent were to receive an indemnity out of the estate in respect of his costs. Those costs would be borne by the residuary estate. Each of the applicants takes one-quarter of the residuary estate. They have quite rightly resisted the claim by the respondent to be entitled to the personal benefit of a release and it would be wrong to effectively throw upon them the burden of the costs of the proceedings in which they have vindicated their position by affording the respondent the benefit of such an indemnity.

12. I order that the respondent pay the applicants' costs. The respondent is not entitled to any indemnity out of the estate in respect of those costs or his own costs. If the applicants seek a declaration to this effect, I will hear them. Alternatively, the respondent may be prepared to give a sufficient undertaking to this end.