WLD Practice Holdings Pty Ltd, in respect of the WLD Practice Holdings Trust v Sara Stockham and Anor

Plaintiff's submissions

1. The Plaintiff seeks that the Defendants pay the Plaintiff's costs of the proceedings to date, including the Plaintiff's costs of the Defendants' Stay Motion, on the indemnity basis, and that those costs be payable forthwith.
2. The Plaintiff submits that the starting point is that a trustee has a right of indemnity for all costs incurred in the administration of the trust (In re Grimthorpe [1958] Ch 615 at 623; Miller v Cameron (1936) 54 CLR 572 at 578; Bovaird v Frost [2009] NSWSC 917 at [43]; Trustee Act 1925 (NSW) s 59(4)), and that where a trustee succeeds in an application for judicial advice, the usual costs order is that the trustee is to be indemnified out of the trust estate (Re Morrison-Conway; Estate of the Late Judith Christine Walsh [2018] NSWSC 685 at [75]; Re Italiano [2020] NSWSC 405 at [20]).
3. However, the Plaintiff submits that the practical effect of the usual cost order in this case would be to visit costs liability on Oorang (and Dr Williams behind it), rather than Sarstock (and Dr Stockham behind it), contrary to Network Ten Pty Ltd v TX Australia Pty Ltd (No 2) [2019] NSWCA 51 at [19].
4. The Plaintiff submits that indemnity costs are appropriate on the further basis that the Defendants' decision to be joined and contest the trustee's application has substantially increased costs and prolonged the proceeding.
5. The Plaintiff referred me to Justice Ward's decision in Murray v McOnie (No 2) [2019] NSWSC 392. In that case, her Honour ordered indemnity costs against a beneficiary who was joined to proceedings in which an executor sought judicial advice in relation to a will, having found that the case involved "some relevant delinquency on the part of the unsuccessful party" (see her Honour's judgment at [9], citing Oshlack v Richmond River Council (1998) 193 CLR 72 at [89]-[90]). The Plaintiff submits that the Defendants have "wilfully thrown up obstacles to the resolution of these proceedings in an attempt to obstruct the valuation" and engaged in acts of "relevant delinquency". Numerous aspects of the Defendant's conduct are relied upon to support that finding.
6. The Plaintiff also submits that my conclusion that the Trustee Company would be justified in engaging an alternative valuer is in the same terms as the offer it repeatedly made to the Defendants over the past year. The Plaintiff also submits that the Defendants have continually refused to engage with this point.
7. Finally, the Plaintiff submits that the costs ought to be paid forthwith because it appears that the Defendants wish to prolong the proceedings further, having recently filed a Cross-Summons/Cross-Claim on 28 April 2020.

Defendants' submissions

1. The Defendants submit that the most just and appropriate outcome is that all parties bear their own costs of the proceedings to date.
2. The Defendants point to the Plaintiff's qualified success in relation to questions three and four (3(c) and 3(d) of the Amended Summons) and submit that it vindicates the Defendants' opposition to the Court answering those questions at this stage in the proceedings. The Defendants further submit that the issues raised by those questions were the true issues in the proceeding, questions one and two being merely "procedural" or "mechanical". The Plaintiff disputes this and submits that questions one and two were the "real substantive questions."
3. The Defendants submit that for the purposes of s 98 of the Civil Procedure Act there have been multiple "events" from which costs should "follow".
4. The Defendants also submit that expedition was sought ex parte and, while they questioned how urgent the proceedings were, they did not seek to vacate the expedition hearing. The Plaintiff disputes this. The Plaintiff submits that the motion seeking expedition and the Summons was served on the Defendants prior to the first directions hearing, at which the Defendants appeared. The Plaintiff further submits that the Defendants actively opposed an expeditious timetable and put on evidence to dispute the issue of urgency.
5. The Defendants further submit that the Plaintiff's interests would have been sufficiently safeguarded by representation by one counsel.
6. In response to the Plaintiff's submissions, the Defendants submit that no action the Defendants have taken would make it "just" for an order for indemnity costs to be made. The Defendants submit that there is no basis for saying that they have "wilfully thrown up obstacles". On the contrary, the Defendants submit that they merely raised "reasonably arguable contra proposition[s]".
7. The Defendants also submit that the Plaintiff's submissions acknowledge that these proceedings were in truth brought for the benefit of Oorang and Scott Williams, not for the benefit of the Plaintiff as trustee, and that the Plaintiff is not correct in saying that it obtained precisely the relief it sought. The Plaintiff disputes this and submits that the Court answered the Plaintiff's questions in the way the Plaintiff consistently and expressly invited it to.
8. In relation to the timing of when costs ought to be paid and the Plaintiff's submission on that point, the Defendants contend that the Cross Summons raises issues which will inevitably arise in the valuation of the units in the WLD Practice Holdings Unit Trust and was filed to bring those issues to the fore before any action is taken which might later be found to be ineffectual. The Plaintiff submits that this says nothing against the proposition that costs ought to be paid forthwith.

Consideration

1. The respective orders are at the extreme ends of the spectrum as it were, reflective of the hard fought way in which the proceedings have been conducted to date.
2. As a rule, whenever a Trustee approaches a court for judicial advice, the Trustee would usually have the costs paid out of the trust estate on an indemnity basis. However, as always costs in any case are a matter entirely for the discretion of the Court. In many cases, the application for judicial advice is conducted on an ex parte basis. In other cases, interested parties are heard or in some cases as here the Defendants are joined to the proceedings on application. Having been joined, it is fair to say that the Defendants in this case vigorously sought to contest every order sought by the Plaintiff. Making no material concessions, they sought initially to stay the proceedings and made it abundantly clear that there were numerous arguments they would wish to advance. Those arguments are recorded at some length in each of the previous judgements.
3. It seems to me that each set of proceedings must be viewed separately from the point of view of costs.
4. The Defendants accept as they must that the Plaintiff was successful in the first matter. I rejected the Defendants' application for a stay and their opposition to the Court giving judicial advice. The Defendants as parties actively participated in the litigation and I see no reason why they should be treated any differently to any other unsuccessful litigant. On that basis alone they should pay the costs. They sought to advance unsurprisingly their own commercial interests. While it is true that the forensic strategy has had the effect of delaying or for a time deferring the valuation process, I am unable to find that they were guilty of the requisite delinquency. Although, in my opinion, their view of the relevant agreement or their rights more generally in the circumstances was wholly wrong on balance, I am unable to find that their conduct was so unreasonable as to attract an award of indemnity costs. However, by reason of their decision to actively contest each of the issues upon which they were unsuccessful they should bear the costs themselves, but on an ordinary basis.
5. As to the judicial advice matter, the Defendants again opposed the advice sought. The Defendants point of course to what they say is the rather qualified success of the Plaintiffs in answer to questions 3(c) and 3(d) of the Amended Summons. That said, they made no real concessions and indeed the Plaintiff's success in the answers to questions 3(a) and 3(b) was to achieve what they had reasonably offered the Defendants prior to the start of the litigation. The Defendants again, however, vigorously contested all matters. In the circumstances, I am of the view that having lost on the principal argument as I see it as to whether a valuation process could be invoked they should again pay the costs personally. But again mere truculence will not of itself amount to relevant delinquency. I am not persuaded that they have acted so unreasonably as to attract an order for indemnity costs. They should pay the costs on an ordinary basis.
6. The timing of when costs are to be paid is again a matter for the Court's discretion. I am of the view the Defendants should pay the costs forthwith. The issues so far determined are discrete and threshold, and this litigation, as the Defendants have indicated, is far from over. It seems to me appropriate to resolve these issues including costs now. I would therefore order that the costs of both proceedings be paid forthwith.

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