Supreme Court of WA|2010-06-21|Before: Mr J, Heenan J

The application of David Douglas Roland Lilburne for a grant of double probate of the will of Geoffrey Douglas Roland Lilburne (dec), and any application by any defendant joined in the proceedings seeking to revoke the leave granted to David Douglas Roland Lilburne on 5 October 2006 and for orders permanently or temporarily passing over David Douglas Roland Lilburne as executor, proceed on pleadings and be heard and determined as in an action.

Proceedings PRO 3817 of 2006; PRO 2222 of 2009 and CIV 2693 of 2009 be consolidated and be carried on as one matter.
PRO 3817 of 2006 be the leading matter.

The plaintiff David Douglas Roland Lilburne file and serve a statement of claim within 14 days.
The defendants each file and serve any defence and counterclaim within 14 days thereafter.
The plaintiff file and serve any replies and defences to counterclaims within 14 days thereafter.

The cause should be subject to the supervision of the Honourable Justice EM Heenan or, in his absence, any other judge or registrar of this court.

75 In addition I consider special directions should be made on the originating summons under s 92 of the Trustees Act in CIV 2693 of 2009 and in that regard I order that:

pursuant to s 92 of the Trustees Act it is directed, subject to order 2 hereunder, that the plaintiff Leo Tsaknis would be justified in opposing the application of the first defendant for a grant of double probate of the will of Geoffrey Douglas Roland Lilburne (dec) ('the main proceedings') and in seeking revocation of the leave reserved by order of this court made on 5 October 2006 to the first defendant to apply for probate of the deceased's will;
the approval given by order 1 is to extend up to, but not beyond, the point at which the main proceedings are ready to be entered for trial. The plaintiff have liberty to make a further application for directions that the plaintiff is justified in continuing to oppose the first defendant's application the subject of the main proceedings and to continue to seek revocation of the leave reserved by order of this court granted on 5 October 2006 to the first defendant to apply for probate of the deceased's will at or before that point;
the parties file any written submissions on costs by 30 April 2010 and any answering submissions on costs on or before 7 May 2010;
the time in which any party who has a right of appeal then these orders may appeal be extended to 21 days from the publication of written reasons for these decisions;
each party have liberty to apply.

76 Since 22 April 2010 written submissions have been filed by the parties in CIV 2693 of 2009 relating to the costs of the application under s 92 of the Trustees Act. Such submissions have been received from the executor and trustee Mr Tsaknis, from the first defendant Mr David Lilburne and from the plaintiff in reply.

77 There may also be some costs arising in the two probate applications PRO 3817 of 2006 and PRO 2222 of 2009 both for and because of the orders for consolidation and the directions relating to the trial of a cause over whether or not there should be a double grant in favour of Mr David Lilburne and whether or not his leave to apply for a double grant should be revoked. Neither of the two probate applications was finally disposed of and the orders which were made were, essentially, procedural calling for the programming and eventual determination of the issues arising. Accordingly, I consider that, in relation to the two probate proceedings the orders should be that, in each case, the costs of all parties be reserved.

78 In relation to CIV 2693 of 2009, the application for directions under s 92 of the Trustees Act, the submissions disclose that the parties are at issue whether or not Mr David Lilburne should be awarded his costs on a solicitor-client basis at this stage. Mr Tsaknis, by his counsel, submits that his costs as executor and trustee and the costs of the second and third defendants of and incidental to the application should all be paid out of the estate on a solicitor and client basis.

79 Counsel for the first defendant Mr David Lilburne submits that each party's taxed costs should be paid out of the estate on a solicitor-client basis and be taxed with notice of each taxation to be given to the other parties and to Mrs Anne Marie Tsaknis (as the other residuary beneficiary) and to Mrs Lilburne, the widow of the deceased. Although Mrs Lilburne has now been joined in the consolidated proceedings because she may be interested in the question of whether or not there should be a grant of double probate in favour of her son, Mr David Lilburne, she is not a residuary beneficiary and it is obvious that the net value of the estate, including the unadministered estate, is more than enough to ensure that her right of residence in the estate's half-share of the family home at Nedlands and the conditional, substitute provisions for her in the will, are not likely to be disturbed or prejudiced in any way by the resolution of the remaining controversies in this litigation. Mrs Lilburne did not seek to appear or be heard on any of the applications which have been dealt with on these occasions and, therefore, I do not see that it is necessary for her to be given notice of any of the taxations of costs arising from the orders which I made on 22 April 2010 or will make as a result of these submissions on costs. Mrs Anne Marie Tsaknis, however, is in a different position because, as one of the residuary beneficiaries, any costs paid out of the estate as a result of these proceedings will have the effect of depleting, to some extent, the value of the residuary estate.

80 The real controversy in relation to these costs is that counsel for Mr Tsaknis submits that Mr David Lilburne should not be entitled to any costs from the estate either on an indemnity basis or at all and that, rather, his costs should be reserved or held over to be determined after the determination of the cause ordered to be tried in the consolidated proceedings, namely whether or not he should have a grant of double probate or whether his leave to apply for a double grant should be revoked. By contrast, counsel for Mr David Lilburne submits that he is entitled to have his costs of these proceedings paid on a solicitor-client basis out of the estate immediately.

81 Section 97 of Trustees Act provides that the court may order such costs to be paid out of the assets or income of the trust estate. No question has been raised over whether or not these costs should be paid out of the corpus or from the income of the trust estate but nothing turns on this because, clearly, the costs will come out of the residuary estate and all the residuary beneficiaries are equally entitled to share in the residuary estate and the income of the estate which, so far as I can tell, will only come from the residuary estate.

82 That an applicant executor trustee seeking directions under s 92 of the Trustees Act should have his costs to be taxed paid out of the estate and on an indemnity basis is well-established by authority. Indeed, that is directed by the Rules of the Supreme Court O 66 r 9(2) unless the applicant trustee has acted unreasonably or, if a trustee or personal representative, has in substance acted for his own benefit rather than for the benefit of the fund. Cases expressing and applying that principle include Re Beddoe; Downes v Cottam [1893] 1 Ch 547, 558; McDonald v Horn [1995] 1 All ER 961; [1995] ICR, 685, 970; and the Macedonian Orthodox Community Church case (supra) [71].

83 Counsel for Mr David Lilburne submits that his client was a necessary party to be joined on the application for directions and that it was necessary for him to appear before the court on the application - s 92(2) with the result that having appeared and been represented on the application he became bound by the direction given: Re Grose (dec) [1949] SASR 55 [60] (Mayo J). He further submits that, as I have earlier acknowledged, when the court exercises its jurisdiction to give directions pursuant to s 92 the court is engaged in determining what ought to be done in the best interests of the trust estate and not in determining the rights of adversarial parties: Marley v Mutual Security Merchant Bank & Trust Co Ltd (201) (PC). So, by analogy with the position in proceedings taken for due administration of an estate, counsel for Mr David Lilburne submits that the costs of all parties properly and necessarily before the court should be met out of the estate: Elders Trustee & Executor Co Ltd v Eastor [1963] WAR 36 [40] (Hale J). Furthermore, there is authority for the approach that when an application to a court is made by a trustee for directions the costs of the parties other than the executor or trustee are normally ordered to be paid out of the trust estate: McDonald v Horn (970); Re Buckton [1907] 2 Ch 406, 414; Marley v Mutual Security Merchant Bank & Trust Co Ltd (supra) (210); and Campbell v Glasgow [1919] HCA 57; (1919) 27 CLR 31.

84 Generally speaking, counsel for Mr Tsaknis accepts the proposition that the costs of the beneficiary on an application brought by a trustee for directions, where reasonably and properly incurred, may ordinarily be viewed as necessarily incurred for the benefit of the trust estate and so be ordered to be paid out of the trust estate.

85 However, in the present case the counsel for Mr Tsaknis submits that this application under s 92, and the orders made are not of a nature that will lead to, and have not led to, the determination of any substantive rights but, rather, are a part of the necessary response by the existing executor and trustee to what is, in effect, a hostile claim by Mr David Lilburne to obtain a grant of double probate - the effect of which would be to jeopardise the administration of the estate. Because of that, counsel for the applicant has submitted that situation is more analogous to that of an adverse claim by beneficiary against a trustee in which case costs should ordinarily follow the event: Re Buckton (supra) (415); McDonald v Horn (supra) (970 - 971). The applicant's submissions are to the effect that the first defendant's conduct should be regarded as being directed towards the advancement of his private interests rather than the interests of the estate as a whole and its due administration and the events which have led to Mr David Lilburne applying for double probate arise directly from: his failure to assist in the due administration of the estate; to disclose the existence of estate assets; to provide information about the state of indebtedness of himself and his wife to Rampard; and his dissatisfaction at the refusal of the trustee to respond to invitations to participate in what have been characterised as tax evasion arrangements - all of which reflect adversely upon his suitability to be a joint executor and trustee.

86 Accordingly, the applicant submits that Mr David Lilburne's claim for costs should be adjourned and the question of those costs reserved until further order and, preferably, until after there has been a final determination of the cause over whether or not Mr David Lilburne should receive a double grant. In so far as Mr David Lilburne's submissions advance the proposition that he was, as a beneficiary, a proper party to be joined and be heard on the application for directions under s 92 of the Trustees Act, counsel for Mr Tsaknis does not in any way contest those propositions but submits that they do not in any way conclude the question of his entitlement to costs. The reason why Mr Tsaknis brought the application for directions under s 92 in the first place was, so it was submitted and cannot be doubted, because Mr David Lilburne brought his application for a double grant in circumstances which the trustee considered himself obliged to oppose the application and seek directions of the court enabling him to do so. In short, the submissions on behalf of Mr Tsaknis advance the proposition that the whole question of costs for Mr David Lilburne should be seen as depending upon whether or not he is now entitled to a grant of double probate because, if not, there would have been no necessity for the application for directions under s 92 at all.

87 I acknowledge that there is some plausibility in these submissions on behalf of the existing executor and trustee but, inevitably, they are infused by the sentiment that, because of the alleged circumstances, Mr David Lilburne should not have applied at all for a grant of double probate of his father's will. No findings in relation to that matter have yet been made and a cause to determine the allegations advancing that contention remains to be heard so at this point there can be no acceptance that those allegations have been, or will be, established.

88 That leaves the question of whether or not the question of Mr David Lilburne's costs should be postponed until after the eventual disposition of the cause which I have ordered to be tried. However, in applying for a grant of double probate as he has done Mr David Lilburne has done nothing more than he was expressly granted leave to do by this court in the grant of probate in common form made on 5 October 2006. If, in exercising that undoubted right Mr David Lilburne has been met by objections that, because of his alleged conduct, he is no longer suitable to be so appointed, the question of his suitability and entitlement for appointment will be determined in proceedings designed for that purpose - as I have ordered. When those proceedings are determined issues of costs will, no doubt, arise. They will need to be decided in the exercise of the discretion of the judge determining the cause according to established principles and in the light of the outcome of that cause. At this stage, however, Mr David Lilburne is exercising a right to apply for double probate, granted to him by the court, and whether his motives be good or ill, and whether the application be eventually successful or not, the mere initiation of proceedings pursuant to that right has led to the need for Mr Tsaknis to seek directions of the court. That application for directions has led, inevitably and necessarily, to Mr David Lilburne being joined, appearing and being heard on the application.

89 Accordingly, I am satisfied that the ordinary principles apply and that he should have his costs on a solicitor-client basis taxed and paid out of the estate notwithstanding that the determination of the costs of the eventual determination of the cause ordered to be tried may involve other considerations. It is not to be forgotten that he was named by his father in the will as a co-executor and trustee and has been granted leave to apply when probate was first granted so that there is, therefore, no ground for suggesting that his application for a double grant is baseless or without any prima facie entitlement. That it has given rise to the contentious issues which I have examined means that significant and important questions have arisen in the course of the administration of the estate necessitating the application made by the existing trustee under s 92 and in respect of which, at least at this stage, there is no reason to depart from the conventional principles that all beneficiaries properly and necessarily appearing on the application for directions should have their costs out of the estate.

90 In the circumstances, therefore, I consider that the orders for costs which should be made are as follows:

Costs of all parties to probate applications PRO 3817 of 2006 and PRO 2222 of 2009, up to and including the orders of 22 April 2009 be reserved.
Originating summons CIV 2693 of 2009:

(a) the costs of the applicant executor and trustee and of each of the beneficiaries being the first, second and third defendants, including all reserved costs, if any, be taxed on a solicitor-client basis and be paid out of the estate of the deceased;

(b) notice of the taxations be given to each of the plaintiff, first, second and third defendants and to the remaining residuary beneficiary Mrs Anne Marie Tsaknis and each of those persons be at liberty to appear and be heard on each of the taxations.

Supreme Court Ordinance 1861

Court of Judicature (Consolidation) Act 1925

TSAKNIS as Executor and Trustee of the Estate of GEOFFREY DOUGLAS ROLAND LILBURNE (DEC) -v- LILBURNE [2010] WASC 152 (21 June 2010)

Campbell v Glasgow [1919] HCA 57; (1919) 27 CLR 31

Elders Trustee & Executor Co Ltd v Eastor [1963] WAR 36

Elovalis v Elovalis [2008] WASCA 141

Estate of Rogers v Rogers [2009] WASC 358

In re Atkinson (dec) [1971] VicRp 73; [1971] VR 612

In re Hunter (dec) v Hunter [1932] NZLR 911; [1932] CLR 317

Leitch v Dore [2005] QSC 069; [2005] 2 Qd R 168

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

Re Estate of Crossland [2001] WASC 21

Re Finn [1942] VicLawRp 27; [1942] VLR 125; [1947] ALR 167

Re Grose (dec) [1949] SASR 55

Re Saunders Nominees Pty Ltd; Ex parte Saunders Nominees Pty Ltd [2007] WASC 152

Uniting Church in Australia Property Trust (NSW) v Millane [2002] NSWSC 1070

Weinstock v Beck [2007] NSWSC 193; (2007) 1 ASTLR 156

Wheatley v Edgar [2003] WASC 118

TSAKNIS as Executor and Trustee of the Estate of GEOFFREY DOUGLAS ROLAND LILBURNE (DEC) -v- LILBURNE [2010] WASC 152 (21 June 2010)

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TSAKNIS as Executor and Trustee of the Estate of GEOFFREY DOUGLAS ROLAND LILBURNE (DEC) -v- LILBURNE [2010] WASC 152 (21 June 2010)