Wilson v Knight Knight v Wilson

Supreme Court of NSW|2009-03-31|Before: Mr P, Powell JA, Sheller JA

CITATION : Wilson v Knight Knight v Wilson [2009] NSWSC 230

CATCHWORDS : Family Provision. Application by widow who was left a life estate. Discussion as to whether life estate appropriate. Held not appropriate and plaintiff to receive whole estate.

FILE NUMBER(S) : SC 5179/08 ; 5180/08; 5181/08; 5440/08

COUNSEL : Mr P Walsh for Wilsons Mr P O'Loughlin for Knight

SOLICITORS : PJ Wood & Associates for Wilsons Warren McKeon & Dickson for Knight

1 - THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

5179/08 CHRISTINA WILSON v JOHN FREDERICK KNIGHT IN HIS CAPACITY AS EXECUTOR OF THE ESTATE OF THE LATE RONALD JAMES WILSON

5180/08 MELANIE WILSON v JOHN FREDERICK KNIGHT IN HIS CAPACITY AS EXECUTOR OF THE ESTATE OF THE LATE RONALD JAMES WILSON

5181/08 PABLO WILSON v JOHN FREDERICK KNIGHT IN HIS CAPACITY AS EXECUTOR OF THE ESTATE OF THE LATE RONALD JAMES WILSON

1 HIS HONOUR: This is the hearing of three applications under the Family Provision Act in respect of the estate of the late Ronald James Wilson who died on 18 November 2004 and an application in possession proceedings brought by the executor. All proceedings have been heard together with the evidence in one being evidence in the other. 2 I will, first of all, deal with the Family Provision Act proceedings. The plaintiffs in the three Family Provision Act applications are the deceased's widow and his two stepchildren. The last will of the deceased 3 The last will of the deceased was made on 15 December 1987 and by his will the deceased left the whole of his estate to his executor to hold on trust for his wife, Christina Wilson, for her lifetime or until she shall re-marries of the to and upon her death or re-marriage "to such of my children who shall survive me and attain the age of 18 years and if more than one, then equally…." The will further provided that "should no child of mine survive me…" then the residue is to go to the sister of the deceased's wife, Teresta Camacho who resides in the Philippines. Assets in the Estate 4 The only remaining asset in the estate is the deceased home at Kyeemah having a value of about $640,000. Cash in the estate of $33,344.95 has been used for payment of the trustee's legal costs. There are a further $83,000 in costs which have been incurred and I will come to these later. Family History 5 As I have mentioned, the deceased was survived by his wife Christina Wilson and her two children, Melanie Wilson and Pablo Wilson. These children are not the natural children of the deceased and were born prior to the deceased having married Christina Wilson. 6 Christina Wilson was born in September 1955 and married the deceased on 27 February 1982. Melanie Wilson was born in September 1975 and Pablo Wilson was born in July 1977. Since the time of the deceased marriage with Christina Wilson she has lived at the Kyeemagh property and continues to do so. Pablo Wilson, although married, also lives there. 7 The deceased will, as I mentioned, was made on 15 December 1987 and he died on 18 November 2004. Time for making an application expired on 18 May 2006. The three proceedings were not commenced until the filing of summonses on 14 October 2008. Extension of Time 8 The application is out of time and so it is necessary for the Court to consider section 16 of the Family Provision Act which allows an application to be made notwithstanding it is out of time. There are a number of cases which referred to the principles to be applied in an application for extension of time. 9 In De Winter v Johnstone, a decision of the Court of Appeal on 23 August 1995, Powell JA referred to this matter and in particular the fact that nowadays the application for extension of time is invariably dealt with at the time of the application for substantive relief. He said at page 23: "In such a case, so it seems to me, no extension of time ought to be granted unless it be established (inter alia) that the application for an extension of time would, in the event of that extension being granted, be entitled to an order for substantive relief." 10 Sheller JA considered that it was only necessary to show that the application was not bound to fail. Cole JA seems to have adopted the parties' approach of looking at the strength of the plaintiff's case. 11 In this case there is no prejudice or unconscionable conduct. The evidence in the matter was concentrated on the explanation for the delay of nearly some two years. 12 The extensive correspondence over the years started with a question as to a proper interpretation of the will and whether the deceased's two stepchildren would fit within the expression used by the deceased "my children". 13 The will gives no clue will so we can resort to the "armchair principle" to consider the circumstances by which the testator was surrounded to assist in determining his intention. See Boyes v Cook (1880) 14 ChD 53 at 56. For an Australian example in the current situation see In re the will of Ahchay (1997) 6 Tas R 369. Although more modern views have been expressed about the meaning of "child" in Harris v Ashdown (1985) 3 NSWLR 193 at 200 I will assume that the usual meaning of "child" is a one of consanguinity. 14 The deceased had no children and could not have any. When he married, the children of the plaintiff were four and six years old. They became part of his household and lived with him in Australia with the plaintiff. They were brought up as his children and not stepchildren. He was intimately involved in their parenting and later with their own children. They called him "dad". 15 In the circumstances, without having to go into the contentious area of what might have been said when he made his will and instructions given, it is plain that he was intending to mean his stepchildren in the use of his expression "my children". Given my decision in this matter, it is not necessary for me to make formal orders in this respect but I just refer to this matter. 16 The correspondence went through a torturous course. This included: (a) By June of 2005 the solicitor for the estate suggesting a deed of Family Arrangement would solve the problem. That plainly was needed, and needed the consent of Teresita Camacho. (b) By May of 2006 discussions of arrangements to get Teresita Camacho's address in the Philippines and her consenting to the deed. (c) In September of 2006 there was the supply of a draft deed. (d) On 9 November of 2006 it was eventually translated. (e) Attempts were made to get a signature in April 2007 and a signature was obtained without any proper or informed consent. 17 By May 2007 another problem surfaced. There was non-payment of rates, land taxes and water rates. By August of 2007 Teresita Camacho had refused her consent. There thus continued a history of non-payment of outgoings until late 2008. Eventually the executor started proceedings for possession on 20 May 2008 and they were the subject of a judgment on 29 October 2008 by Malpass AsJ . He made an order for possession but did not deal with the issue of the writ for possession as proceedings under the Family Provision Act had started two weeks before his judgment. 18 The substantial part of the delay was caused by the solicitors attempting to solve the proceedings amicably. By the time that course had failed the time had well and truly expired for the commencement of proceedings. Although the latter delay was probably contributed to by the difficulty in getting instructions and payment of outgoings, that is not a long period. It seems the plaintiff's situation, particularly including the fact she had substantial debts on credit cards and for travelling back to the Philippines, may have been some explanation as to why rates and the like were not paid over that period. In the circumstances, I propose to extend time. 19 In applications under the Family Provision Act the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two stage approach that a Court must take. At page 209 it said the following:- "The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty. The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors."

The plaintiff's situation in life 20 The plaintiff is single, aged 53 and has one child living with her who is not dependent. She works as a housekeeper earning $1,000 net per fortnight. This just covers her outgoings. She has a car worth $2,000 and furniture worth the same amount and superannuation of $20,000. Her total assets are $24,000. She does, however, have credit card and personal loans totalling a liability of $65,000. 21 The deceased worked until 1998, and the plaintiff worked during the marriage. The evidence shows it was a happy and loving marriage and it fulfilled the deceased's wish to have children. The plaintiff did not contribute to the assets in the estate. 22 Both children do not wish to advance their claims unless their mother's claim does not succeed. Her claim is that she should be left a fee simple of the home in lieu of a life estate. 23 The default remainderman, Teresita Camacho, does not put forward any evidence of her financial circumstances or her relationship with her sister and the deceased. The Court can assume that this claimant does not wish to put forward these matters for consideration by the court when the court is arriving at its decision. 24 The question of what is an appropriate provision and whether a life estate should be awarded to persons in the situation of either a widow or a long standing de facto partner has been dealt with in a number of cases. 25 In the 1970s and 1980s there were a number of decisions of single judges of this Court where they have held that a life interest with particular attributes was appropriate. (See, for instance, Crisp v Burns Philp Trustee Co Ltd, Holland J 18 December 1979; Banks v Hourigan, Waddell CJ in Eq, 2 March 1989; Cameron v Hills, Needham J, 26 October 1989.) This perhaps is reflected in matters mentioned by the High Court in White v Barron (1979-1980) 144 CLR 431 where at p444 Mason J said: "A capital provision should only be awarded to a widow when it appears that this is the fairest means of securing the proper maintenance. However, the provision of a large capital sum for a widow who is not young may, in the event of her early death, result in a substantial benefit to her relatives, contrary to the wishes of the testator, when a benefit of another kind would have afforded an adequate safeguard to her personally, without leaving her in a position in which she could benefit her relatives from the proceedings of the legacy. As has been pointed out in Elliott v Elliott that statement was made in an evidentiary context where the provision was made at the expense of the children of a previous marriage who had some claim on the testamentary bounty of the deceased." 26 A change in the High Court's attitude to the provision for widows, no doubt in response to changes in community expectations, is illustrated by the fact that in this case it disapproved of observations made in Worladge v Doddridge (1957) 97 CLR 1 but as a general rule an order for provision in favour of a widow should be confined to widowhood. Stephen J, who was one of the majority in White v Barron at pp 438-440, went to some lengths to point out that the jurisdiction was one which should not be unduly confined by judge-made rules of purportedly general application. By the late 1980s the Judges in this Division were taking a slightly different view. For instance, in Court v Hunt 14 September 1987, unreported, Young J said: " Old age is a growing problem in our community and judges who sit in Family Provision Act applications get experience, as well as their own experience in the community, as to what happens when people reach the age when they can no longer look after themselves and one Judges the evidence in these sorts of proceedings against that background knowledge." 27 His Honour then went on to talk about the assumptions one could make about the fact that frequently people, once they pass 55, had to change their accommodation and locate themselves either in retirement villages or nursing homes which have different requirements for capital contribution. 28 After talking about the evidence necessary, His Honour went on to say: "In many cases these days a life estate will not be sufficient because it does not cover the situation of the plaintiff moving from her own home to retirement village to nursing home to hospital. Sometimes it is possible for a Court to alter a life estate to a more flexible non-capital provision, such as was done by Holland J in Crisp v Burns Philp Trustee Co Ltd , 18 December 1979, unreported, but noted in Mason & Handler Probate Service at page 13206. Other times the proper provision is for a fee simple gift, realising that this property will be sold and will be turned over into the appropriate property to maintain the widow for the rest of her life. Care also has to be given by those administering the plaintiff's property to ensure that there is sufficient income being raised after tax that will provide for maintenance levies and the other payments that have had to be made by the widow." 29 More recently the Court of Approval of a number of occasions has referred to this problem. In Golosky & Anor v Golosky, 5 October 1993, unreported, the Court summarised the proper provision for widows (and thus the plaintiff in these proceedings) in the following terms: "In testing the Master's decision it is appropriate to keep in mind the principles which govern the approach which he was obliged to take to the widow's application under the Act. Relevantly, these included: (a) Proper respect must be paid for the rights of testamentary disposition which is the fundamental premise upon which the provisions of the Act are based. That premise required the Court out of respect for the continuing right of testamentary disposition, to limit its disturbance of the testator's will to that which is necessary to achieve the purposes of the Act, and not more. See The Pontifical Society for the Propogation of the Faith and St Charles Seminary, Perth v Scales (1962) 107 CLR 9, 19; White v Barron and Anor, above, 458; Hunter, above, 576; (b) The jurisdiction is not the correction and hurt feelings sense of role of the competing claimants upon the estate of the testator. The Court is diligently to respond to the application the person who was a member of the testator's household and to consider whether, as claimed, the provision made by the will is inadequate for that person is proper maintenance and advancement in life. See Heyward v Fisher, Court of Appeal, unreported, 26 April 1985; (1985) NSWJB 81. (c) Consideration of other cases must be conducted with circumspection because of the inescapable detail of the factual circumstances of each case. It is the detail that the answer to the proper application of the Act is to be discovered. No hard and fast rules can be adopted. Nevertheless, it had been said that in the absence of special circumstances, it will normally be the duty of a testator to ensure that a spouse (or spouse equivalent) is provided with a place to live and appropriate to that which he or she has become accustomed to. To the extent that the assets available to the deceased will permit such a course, it is normally appropriate that the spouse (or spouse equivalent) should be provided, as well, with a fund to meet unforeseen contingencies; see Luciano (above) 69-70; (d) A mere right of residence will usually be an unsatisfactory method of providing tourist bosses accommodation to fulfil the foregoing normal pre-supposition. This is because a spouse may be compelled by sickness, the huge, urgent supervening necessity or otherwise, with good reason, to leave the residence. The spouse provided and will then be left with out the kind of protection which is normally expected will be provided by a testator who is both wines and just. See Moore v Moore , Court of Appeal, unreported, 16 May 1984, per Hutley JA; (e) considering what is some "proper" and by inference what is "improper" is a provision in a will, it is appropriate to take into account all of the circumstances of the case including such matters as the nature and quality of the relationship between the testator and the claimant; the character and conduct of the claimant; the present and reasonably anticipated future needs of the claimant; the size and nature of the state and of any relevant dispositions which may have reduced the estate available for distribution according to the will; the nature and relative strengths of the competing claims of testamentary recognition; and any contributions of the claimant to the property or to the welfare of the deceased. See Re Fulop Deceased (1987) NSWLR 679 (SC); Churton v Christian and Ors (1988) 13 NSWLR 241 (CA), 252."

30 In talking of the need to provide a house and a sum for contingencies that President is clearly referring to passages in Luciano v Rosenblum and other cases. As was pointed out by the Court of Appeal in Elliott v Elliott, unreported, 24 April 1986, such a type of provision that only applies where it can be said there has been a long and happy marriage and a widow has helped build up the estate of the deceased. 31 In Permanent Trustee v Fraser (1995) 36 NSWLR 24 at 47 Sheller JA had the following to say: "Once it is accepted that adequate provision for her proper maintenance and advancement in life required secure accommodation for life as well as a capital sum to meet exigencies, this need is not met by giving her only a life interest in the home unit. Commonly people in the community need to move from their own home into a unit in a retirement village and then into nursing accommodation and then into total care accommodation. See Young J in Christie v Christie. That need can be met if the respondent is given the home unit absolutely. She then has a greater flexibility as well as greater security." 32 In Salmon v Blackford, 18 February 1997, the Court of Appeal was dealing with the case where the trial Judge had given a fee simple to the deceased widow. Sheller JA said: "The principal point according to Mr Gibb was that his Honour failed to take into account that by reason of the widow's advanced years and the probability that her adopted son would be the natural object of her bounty, the effect of the order made was likely to be that the adopted son, whom the deceased had no intention to benefit, would be the beneficiary of half of the estate. I have great difficulty in seeing how a submission of this sort has any weight in the circumstances of this case. The matter that this Court must consider is whether the order that his Honour made was in such terms that one could only come to the conclusion that in some way his discretion must have miscarried. It is well established that proper provision is not to be measured solely by the need for maintenance. It should, in the case of this respondent and in the circumstances of this case, free her mind from any reasonable fear of any insufficiency as her age increases and her health and strength fails. I may say in this regard that her life expectancy, according to the tables, was something over 11 years at the time of the hearing. If one comes to the conclusion that for her proper maintenance and order such as the present is appropriate, it seems to me to matter not at all that she has an adopted son of an earlier marriage and that he may be the ultimate beneficiary of her bounty." 33 This seems to indicate a different approach to that referred to by the High Court in White v Barron. 34 Recently in Hertzberg & Anor v Hertzberg [2003] NSWCA 311 McColl JA referred with approval to Golosky v Golosky and said [34]-[35]: "34.…section 9 (2) of the Family Provision Act directs the Court to consider the issues of jurisdiction and the exercise of discretion at the time of the proceedings, not the time of the will, and in this case the deed, were made. In reaching his decision the Acting Master took into account community expectations. He referred to Young J's observations in Blackford v Salmon , unreported, 27 July 1994, in which his Honour said: 'It seems to that for a widow of a 30 year marriage who has lived in the house for some time and who continues to wish to live there, the expectation in the community would be that a wise and just testator would have left her the house in fee simple.' 35. His Honour's judgement recognized the community expectation that a testator should make provision for a widow to ensure that she can lead an independent and dignified life. That prospect is diminished when the widow does not have the benefit of the fee simple, but rather, a right of occupation of her home with a provision for expenses associated with that right being left in the hands of the executors." 35 In the same case at [45] Einsten J said: "45. Security of accommodation and security generally, in terms of having an income sufficient to enable the applicant to live in a reasonable degree of comfort and free from financial worries are matters of high significance where an applicant is of advanced age. Powell J in the two decisions to which the Acting Master referred has had occasion to flag the signal significance of these matters: '(W)here, after all the appropriate interest have been taken into account, it is possible to do so, a widow in the position of the Plaintiff ought to be put in a position where she is mistress of her own life, and in which, for the remainder of her life, she is not be halted to executors, or trustees and, still less, to remaindermen. Langtry v Campbell (Supreme Court of New South Wales, unreported, 7 March 1991)] 'I take the view -- which view, I believe, is supported by authorities -- that, in a case such as this, where the marriage of a deceased and his widow has been long and harmonious, where the widow has loyally supported her husband, and assisted him to build up, and maintain, his estate, the duty which the deceased owes to his widow can be no less than, to the extent which his assets permit him to achieve that result; first, to ensure that his widow be securely in her home for the rest of her life, and that if, either, that need arises, or, the whim strikes her, she have the capacity to change her home; second, that she have available to her in an income sufficient to enable her to live in a reasonable degree of comfort, and free from any financial worries; and third, that she have available to her a fund to which she might resort in order to provide herself with such modest luxuries as she might choose, and which would provide her with a hedge against any unforeseen contingency or disaster that life might bring." [ Elliott v Elliott , (Supreme Court of New South Wales, unreported 18 May 1984) at 11]'" 36 In my view, having regard to the length of the marriage, the lack of competing claims, and the age of the plaintiff, it is appropriate that the plaintiff receives a fee simple, and in fact the whole estate. The orders I make in the three matters are:

In lieu of the provision for the plaintiff in the will of the deceased that she received the whole of the estate of the deceased absolutely. 2. I dismiss proceedings 5180/08 and 5181/08. 3. I make no order as to the costs of the plaintiff in these and proceedings 5180/08 or 5181/08. 37 There is outstanding a notice of motion filed on 14 October 2008 in which the following order is sought:

"3. An order in relation to the plaintiffs claimed legal costs in his capacity as executor of the Estate of the late Ronald James Wilson that:

(i) Within fourteen days the plaintiff make available for inspection by the defendant the files of his solicitor together with any costs agreement between the plaintiff and his solicitor;

(ii) Within a further twenty-one days the defendant notify the plaintiff in writing of her or objections, if any, to the claimed legal costs;

(iii) Order that an account be taken between the plaintiff and the defendant as to any items of the claimed legal costs to which the defendant shall have served written objection;

(iv) For the purpose of taking such accounts, such person as the parties may agree, or in default of agreement, as the court may appoint, be appointed as referee;

(v) For the purpose of taking account the referee shall:

(a) Allow the plaintiff his legal costs, charges and expenses and other outgoings of a full indemnity basis, such basis not to be less favourable than that allowed by Rule 42.25 of the Uniform Civil Procedure Rules;

(c) Direct that the plaintiff's serve his response to the defendant's objections within such time as the referee shall allow;

(d) Direct that within such further time as the referee shall allow the plaintiff and the defendant file and serve their written submissions;

(e) Direct that the referee reports to the Court his findings by such time as the Court shall determine." 38 There have been tendered the various bills of the solicitor incurred by the Trustee and in summary form the amount of costs incurred are the following: Grant of Probate (scale fee) $4,888.40 Administration of estate, administering the life estate, advice on solvency / ending life estate, negotiating settlement, drafting Deed of Family Arrangement etc $28,915.70 Possession proceedings to 21 Oct 08 $24,741.20 FPA proceedings - costs from 21 Oct 08 onwards (including mediation) $24,378.20 Disbursements for all tasks, include obtaining grant (excl Counsel) $8,150.67 Counsel's fees (incl GST) of the FPA and possession proceedings $21,656.00 Sale fees $988.24 Interest $2,500.00 Total $116,218.41

39 As mentioned these have been paid as to the extent of $33,344.95. Some of the costs were incurred in the proceedings and some of the costs have been incurred in non-contentious business such as the administration of an estate. 40 The submission of the plaintiff is that the costs seem to be very large and they seek orders in the terms that were used by Santow J in the case of Pangas v Permanent Trustee Australia [2000] NSWSC 140. I will put to one side the Probate costs which are apparently scale costs. 41 So far as the non-contentious business is concerned, the trustee's rights are set out in section 59 (4) of the Trustee Act 1925. This section was dealt with in Gatsios Holdings Pty Limited v Kritharas Holdings (in Liquidation) [2002] NSWCA 29 by Spigelman CJ in these terms: "9. Section 59 (4) of the Trustee Act 1925 provides:

'A trustee may reimburse himself or herself, or pay or discharged out of the trust property all expenses incurred in or about execution of the trustee's trusts or powers.'

The relevant enquiry pursuant to this statutory provision is whether or not expenses incurred do in fact answer the description of having been so incurred 'in or about execution of the trustees trusts or powers'. Reference to 'proper' or 'reasonable' expenses must now be understood in this statutory context. The statutory provision itself must be understood in the light of the pre-existing law, which it did not purport to change.

As Sir George Jessel MR said in In Re Chennell (1878) 8 Ch 492 at 502 (quoted in this context in Jacobs Law of Trusts in Australia , 6th Ed. (1997) par [2104]:

'It is… a violent exercise of the Court's discretion to deprive a trustee of these charges and expenses.'

In this appeal, as before Hamilton J, of the Appellant relied on the summary of American law in Scott on Trusts vol 3A, 4th ed. (1988) where in pars [244] and [245] the learned authors state the rule of the propositions in terms of a trustee may recover expenses 'properly incurred' but may not recover expenses 'not properly incurred'. (A couplet probably derived from In Re Beddoe at 558).

With respect to the issue of liability in tort, which I have said is the analogy that was used in the submissions in the present case, Scott on Trusts refers to Benett v Wyndham and Raybould as authority for the proposition stated in par [247] as follows:

'A trustee who has incurred a liability in tort to a third person is entitled to indemnity out of the trust estate if the liability was incurred in the proper administration of the trust and the trustee was not personally at fault in incurring it.'

Reference in this passage to the 'proper administration of the trust' begs the relevant question. The issue is what is 'proper'. The proposition that the trustee was not 'personally at fault' is stated too widely.

It is clear that the right of indemnity cannot be availed of if the expense was incurred by conduct outside the scope of the trust or in excess of the powers conferred by the trust. The same result should ensue when a trustee incurs expenses as a result of conduct in breach of a duty which the trustee owed to the trust, including the duty to execute the trust with reasonable diligence and care. (See e.g. Ecclesiastical Commissioners v Pinney [1900] 2 Ch 736 at 742-743.) It was in this way that Brooking J explained the passages in Benett v Wyndham and Re Raybould on which the Appellant relies. (see RWG Management Limited at 396.)

To similar effect is the observation of Lord Selborne LC with respect to the contractual right of indemnity of a mortgagee or trustee:

'These rights, resting substantially upon contract, can only be lost or curtailed by such inequitable conduct on the part of the mortgagee or trustee as may amount to a violation or culpable neglect of his duty under the contract.' ( Corretell v Stratton 91872) 8 Ch 295 at 302.)

This passage was quoted with approval by Griffiths CJ, then Chief Justice of Queensland, in Corrigan v Farrelly (1897) QLJ 105 at 111-112, in a context where a challenge was made to the right of an executor to recover costs and expenses arising from his failure to prove a will in solemn form. His Honour applied the test in the following terms at 112:

'The only question, therefore, is whether the executor's conduct in this case has been such as to amount to a violation or culpable neglect of their duty.'

I find this general approach more helpful than the use of conclusion in terminology of whether or not conduct was 'proper' or 'reasonable' as if it were a test." 42 MeagherJA also rejected that the activity in respect of which indemnity is sought must be reasonable or proper. The President expressed no view on this matter. 43 The non-contentious business leading up to the commencement of the Family Provision Act and possession proceedings Is a sum of $28,000. There is nothing in the executor's conduct in this area that I would describe as a "violation or culpable neglect of his duty." On the contrary, he was motivated by an attempt to avoid costs of litigation and patience before the need for sale became plainly apparent. 44 In respect of the items of contentious business, the power to award court costs is section 98 (6) (a) of the Civil Procedure Act and the Uniform Civil Procedure rule 42.25. The latter has a provision to allow a refusal to award costs if the trustee has acted unreasonably or to his own benefit. There is no suggestion of the latter in this case. 45 In In re Drummond [1999] NSWSC 923 Austin J. discussed the principles to apply to the proceedings of these rules in the Supreme Court Act in these terms: "Under section 76 of the Supreme Court Act 1970, costs are generally in the discretion of the Court. However, the discretion must be exercised judicially and the ordinary rule is that costs follow the event, except where it appears to the Court that some other order should be made: Supreme Court Rules, Pt 52A r 11. An order that the costs of an unsuccessful party in litigation concerning a trust or the estate of the deceased person be paid out of the trust fund or estate operates as an exception to the general rule: Williams, Mortimer and Sunnucks on Executors, Administration and Probate , p437. In Miller v Cameron (1936) 54 CLR 572, 578 Latham CJ explained that '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 Re Weall; Andrews v Weall (1889) 42 ChD 674, 677 Kekewich J spoke of the 'tenderness which the Court is anxious to exhibit towards trustees honestly exercising discretion in discharge of their duties, often difficult and and still more often thankless.' In Re Jones; Christmas v Jones [1897] 2 Ch 190, 197 the same judge said that '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 an administrator, executor or trustee…' Thus it is normally the case that an executor who commences or defends an action in the capacity of executor is entitled to be indemnified out of the estate for the costs incurred in doing so, even if the litigation is unsuccessful, the executor's conduct is found to have been mistaken, and the other party in the litigation is held to be entitled to an order for costs. 44. This exception to the normal rule that costs follow the event, which permits an executor to recover costs from the estate, is itself subject to some exceptions, as is plain from Latham CJ's reference to honest conduct and Kekewich J's reference to impropriety." 46 There is no impropriety in this case. It was necessary for the defendant to commence the possession proceedings because by the time they started the funds in the estate had been exhausted and the plaintiff in these proceedings was simply not paying the outgoings. In those circumstances, the Trustee had no alternative and he was successful in the proceedings in obtaining an order for possession. 47 In the Family Provision Act proceedings the executor conducted them economically and in accordance with his duty to defend the will. It was not a very small estate where the executor might be criticised for not settling them before coming to Court. 48 Although the total of all the costs is large, when one looks at the individual items a different picture emerges. The Bills of Costs have been tendered and they include a very detailed listing of individual items which go to make up the charges. There seemed to be no proper basis, in accordance with the authorities, for the orders sought by the defendant in the possession proceedings in the motion 14 October 2008. I dismiss the motion. 49 In each of the Family Provision Act proceedings I order that the defendants costs on an indemnity basis be paid or retained out of the estate of the deceased. I order in the possession proceedings the defendant pay the plaintiff's costs, including the motion of 14 October 2008. The plaintiff to the extent he does not recover these is entitled to be indemnified from the estate. 50 This leaves the question of the issue of the writ of possession. The plaintiff asks that it issue forthwith, which is not surprising as the defendant in the possession proceedings has done nothing to see whether she can borrow funds to meet those expenses in case she was ordered to meet them. 51 To give her some time to do so, I direct that the writ of possession issue forthwith but that it lie in the office for two months before execution. 52 I order the exhibits be returned.

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At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (40 paragraphs)

Cases Cited (12)