Blatchford v Laine

[2018] WASC 207

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   IAN TORRINGTON BLATCHFORD as administrator of the estate of the late Voitto Tapio Laine -v- TAPIO HARRY LAINE & ORS

CORAM:   VAUGHAN J

HEARD                   :26 JUNE 2018

SUPPLEMENTARY SUBMISSIONS FILED ON 29 JUNE AND 2 JULY 2018

DELIVERED          :  13 JULY 2018

FILE NO/S:   CIV 3029 of 2017

BETWEEN:   IAN TORRINGTON BLATCHFORD

Plaintiff

AND

TAPIO HARRY LAINE

First Defendant

KIMMO PATRICK LAINE

Second Defendant

LIAM PETER LAINE

Third Defendant

INGA-JENELLE LAINE

Fourth Defendant

LISA MARGARET LAINE

Fifth Defendant

KRISTINA ELLIOTT

Sixth Defendant

Catchwords:

Estate law - Application for directions under Trustees Act 1962 (WA) s 92 - Whether administrator justified in defending claim affecting trust assets - Whether administrator justified in prosecuting 'conditional counterclaim'

Result:

Direction given that the applicant is justified in defending the claim made in action CIV 1309 of 2016 and investigating whether to begin and proceed with a counterclaim in action CIV 1309 of 2016

Legislation:

Administration Act 1903 (WA), s 43(1)(a)
Family Provision Act 1972 (WA)
Trustees Act 1962 (WA), s 92, s 95

Category:    B

Representation:

Counsel:

Plaintiff	:	P R MacMillan
First Defendant	:	L A Tsaknis
Second Defendant	:	C H Thompson
Third Defendant	:	C H Thompson
Fourth Defendant	:	C V Eastwood
Fifth Defendant	:	No appearance
Sixth Defendant	:	No appearance

Solicitors:

Plaintiff	:	Pacer Legal
First Defendant	:	Dwyer Durack
Second Defendant	:	Nielsen & Co
Third Defendant	:	Nielsen & Co
Fourth Defendant	:	Eastwood Law
Fifth Defendant	:	Cullen Macleod Lawyers
Sixth Defendant	:	Cullen Macleod Lawyers

Case(s) referred to in decision(s):

Abrugiato v Hansen as executor of the estate of Abrugiato [No 2] [2013] WASC 119; (2013) 10 ASTLR 535

Alsop Wilkinson v Neary [1996] 1 WLR 1220

Application of Macedonian Orthodox Community Church St Petka Inc [No 2] [2005] NSWSC 558; (2005) 63 NSWLR 441

Australia and New Zealand Banking Group Ltd v National Mutual Life Nominees Ltd [1977] HCA 42; (1977) 137 CLR 252

Carr v Larussa [2016] WASC 13

Dalrymple v Melville (1932) 32 SR (NSW) 593

Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483

In re Dallaway (Dec) [1982] 1 WLR 756

In re Evans [1986] 1 WLR 101

Laine v Laine [2016] WASC 401

Lathwell v Lathwell [2008] WASCA 256 (S)

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

Plan B Trustees Ltd v Parker [No 2] [2013] WASC 216; (2013) 11 ASTLR 242

Re A George Bond & Co Ltd (1932) SR (NSW) 301

Re Addstone Pty Ltd (1997) 25 ACSR 357

Re Atkinson (Dec) [1971] VR 612

Re Estate of Anastasios Keriacules Challis (Dec) [2010] WASC 333

Re Lemon Tree Passage and Districts RSL and Citizens Club Co-operative Ltd (1987) 11 ACLR 796

Re Woodings [2017] WASC 322; (2017) 125 ACSR 200

Read v Bowesco Pty Ltd [2013] WASC 240

Rowan v Roche [2005] WASCA 6

Rumball v Mortimore [2000] WASC 126

Samuels v State of Western Australia [2005] WASCA 193; (2005) 30 WAR 473

Sharp v Anderson (1994) 6 BPR 97,510

Sons of Gwalia Ltd v Margaretic [2006] FCAFC 92; (2006) 232 ALR 119

Tsaknis v Lilburne [2010] WASC 152

Varma v Varma [2010] NSWSC 786

Vickers v Australian Securities and Investments Commission [2011] FCA 1028; (2011) 196 FCR 479

Westpoint Management Ltd (in Liq) (Receivers & Managers Appointed) v Sunjet Pty Ltd [2006] WASC 313

Wheatley v Bower [2001] WASCA 293

Wood (As Co‑Executor and Trustee of the Will of the Deceased) v Wood (No 4) [2014] WASC 393; (2014) 13 ASTLR 544

VAUGHAN J:

1. Introduction

1. The plaintiff, Ian Torrington Blatchford, is administrator of the estate of Voitto Tapio Lane. Mr Voitto Laine died on 26 May 2014. Mr Blatchford brings an application for directions under s 92 of the Trustees Act1962 (WA).

2. The directions as sought are as to three questions:

   (1)Is Mr Blatchford, in his capacity as administrator, justified in defending a claim made by Voitto Laine's son, Tapio Harry Laine (the first defendant in these proceedings), in Supreme Court of Western Australia action CIV 1309 of 2016?

   (2)Is Mr Blatchford, in his capacity as administrator, justified in commencing and prosecuting what is described as a 'conditional counterclaim' against Mr Tapio Laine in action CIV 1309 of 2016?

   (3)Is Mr Blatchford, in his capacity as administrator, justified in maintaining a particular firm, Pacer Legal, as his solicitors in action CIV 1309 of 2016?  (I observe that Pacer Legal act for Mr Blatchford in these proceedings.)

3. Mr Tapio Laine appeared by counsel to oppose the directions.  Certain beneficiaries of the estate of Mr Voitto Laine, who are also parties to action CIV 1309 of 2016, also appeared by counsel at the hearing of Mr Blatchford's application.  I will identify them and their particular involvement in action CIV 1309 of 2016 shortly.  Those beneficiaries support positive directions in answer to the first and second questions.

4. I consider that it is appropriate to give directions in relation to the first and second questions.  But I do not consider it to be appropriate to give directions in the terms as sought by Mr Blatchford.  The key point of difference between Mr Blatchford and the supporting beneficiaries, on the one hand, and Mr Tapio Lane, on the other, is whether Mr Blatchford should be taking an active or neutral role in action CIV 1309 of 2016.  For the reasons I will develop the directions I intend to provide to Mr Blatchford will address that issue and the defence of action CIV 1309 of 2016, but will only provide preliminary advice as to the prosecution of the conditional counterclaim.

5. I do not consider it appropriate to give directions in relation to the third question.  For the reasons I will develop, that question, were it ever a proper subject for directions, is no longer a contentious issue for Mr Blatchford as administrator.  That being the case, directions are unnecessary.

1. Background facts

1. With the exception of Mr Blatchford, the parties to the proceedings are the children of the late Mr Voitto Laine.  With one exception they bear his surname.  To avoid confusion, from this point I will generally refer to them by their Christian name.  I mean no disrespect by doing so.  The same approach was adopted by most counsel in their written submissions.

2. The late Mr Voitto Laine was survived by six children from two marriages.  His children from the first marriage were Tapio (the first defendant), Kristina Elliott (the sixth defendant) and Lisa Laine (the fifth defendant).  Kristina and Lisa were served with Mr Blatchford's application but gave notice that they intended to abide the court's decision.  The children from the second marriage were Kimmo Laine (the second defendant), Liam Laine (the third defendant) and Inga-Jenelle Laine (the fourth defendant - who I will refer to as 'Jenelle').  Kimmo and Liam appeared by the same counsel at the hearing of the application.  Jenelle was separately represented.

3. Mr Voitto Laine left a large estate.  The papers relied on in the application refer to five different statements of assets and liabilities.  The most recent statement of assets and liabilities values the estate's net assets as at the time of Mr Laine's death in an amount of some $8.656 million.  As at 8 June 2017 the net value of the estate was estimated by Mr Blatchford to be in the order of $7.703 million.

4. The estate includes:

   ·a fishing vessel known as the 'Kilaine II' ‑ valued at $100,000; and

   ·concession licences described as 'Western Rock Lobster concession attached to WCLL 1436 - 870 A zone units and 383 B zone units (87 pots)' - valued at $6.09 million. 

5. The concession licences are also referred to in the papers as 'Managed Fishery Licence (MFL) 1436' and its attached entitlements ‑ comprising 67 pots.  There are an additional 20 pots that were acquired by Mr Voitto Laine in 2009 and are also attached to MFL 1436.

6. Mr Blatchford's investigations support a conclusion that since the death of Mr Voitto Laine all income from the 87 pots have been paid to a partnership between Tapio and his wife.  The suggestion is that the pots have been leased.  In any case no income has been received for the benefit of the deceased estate.  This apparent diversion of income from the estate is the intended subject of the proposed 'conditional counterclaim'.

7. The papers do not allow me to draw any conclusion as to the likely amount of the income that would have been derived from MFL 1436 following Mr Voitto Laine's death in May 2014.  Counsel for Mr Blatchford informed me in the course of submissions that the dollar value of the conditional counterclaim was unknown and had not been calculated.[1]

   [1] ts 16, 18. 

8. Probate of Voitto Laine's will dated 28 October 1997 and codicil dated 5 November 1997 was granted to Lisa, as executrix, on 10 December 2014.  Lisa retained Pacer Legal to act on her behalf as executrix.  For reasons which are not presently relevant the grant of probate was revoked and, on 15 June 2017, letters of administration with the will and codicil annexed were granted to Mr Blatchford.  Mr Blatchford has continued to retain Pacer Legal.

9. By cl 8.1 of his will Mr Voitto Laine made some specific requests.  This included Tapio (or at his option a discretionary trust controlled by him) receiving a boat, the 'Pekka-Laine', and '67 A & B Zone' rock lobster concession licences (also known as pots) (cl. 8.1(c)).  The gift of the Pekka-Laine failed as it had been transferred by Mr Voitto Laine pursuant to a property settlement consequent on his second divorce.  By the codicil to the will, cl 9 of the will was amended to add a new cl 9.3 whereby the residue of the estate is divided equally among the six children to the exclusion of Tapio.  The will also forgave any debt owed to Mr Voitto Laine by any of his children (cl 8.1(a)).

10. Broadly speaking, the effect of Voitto Laine's will is to make provision for the six children as follows:

    (1)to Tapio - the 67 pots;

    (2)to Lisa - a property in Geraldton and a 1/5^th share of the residue of the estate;

    (3)to Kristina - a different Geraldton property and a 1/5^th share of the residue of the estate; and

    (4)to Kimmo, Liam and Jenelle - each receive a 1/5^th share of the residue of the estate.

11. Counsel for Mr Blatchford summarised the effect of the will as providing for the beneficiaries to receive in the order of:

    (1)Tapio - $3.994 million;

    (2)Lisa - $1.232 million;

    (3)Kristina - $1.157 million; and

    (4)Kimmo, Liam and Jenelle - $0.757 million each.

12. This totals $8.654 million, ie more than the June 2017 estimated net value of the estate and slightly less than the value of the net assets as at the date of death.  Accordingly, these figures probably overstate the likely entitlements based on current values.  There was, however, no real dispute that these figures gave a broad indication of the relative proportions that the beneficiaries might expect to receive under the will of the late Mr Voitto Laine. 

13. Mr Blatchford's evidence valued the residue of the estate at some $3,012,279.90 comprising cash ($152,828.90), debts due by a related trust ($101,451), 20 of the 87 pots ($1.4 million), real property ($1.255 million), the 'Kilaine II' ($100,000) and various miscellaneous items ($3,000).  As will be seen, the 20 pots and the 'Kilaine II' are the subject of Tapio's claim in action CIV 1309 of 2016.  If those items are excluded from the estate the value of the residue of the estate is some $1,512,279.90.

14. A raft of litigation has bedevilled the affairs of the estate.

15. Action CIV 1763 of 2015 concerns proceedings under the Family Provision Act1972 (WA). In those proceedings each of Jenelle, Kimmo and Liam seek a greater share of their father's estate. Kimmo and Liam expressly suggest that the increased share they seek come out of Tapio's share of the estate.

16. For his part, Tapio has commenced action CIV 1309 of 2016.  It is in respect of this litigation that Mr Blatchford seeks directions.

17. The parties to action CIV 1309 of 2016 are Tapio (as plaintiff), Mr Blatchford (the first defendant), Kimmo and Liam (as second and third defendants) and Jenelle (as fourth defendant).  To date Mr Blatchford has not taken an active role in the litigation.  But each of Kimmo, Liam and Jenelle have actively defended the litigation.  Moreover, they have stated an intention to continue to actively participate and defend the litigation and to do so irrespective of whether Mr Blatchford commences to actively participate and defend the litigation.

18. Kristina and Lisa are aware of action CIV 1309 of 2016 but have stated, through a solicitor, that they do not wish to take part in the litigation.  They are not parties to action CIV 1309 of 2016.

19. In action CIV 1309 of 2016 Tapio claims an entitlement to what may be described as 'the fishing assets'.  These are the vessel 'Kilaine II' and the concession licences now associated with the 87 pots.

20. It can immediately be seen that action CIV 1309 of 2016 has a strategic significance beyond the bare claim made in the proceedings.  The will of the late Mr Voitto Laine already gifts to Tapio the bulk of the fishing assets; it provides for him, or a discretionary trust controlled by him, to receive 67 of the 87 pots.  So on its face action CIV 1309 of 2016 would only secure Tapio the additional 20 pots (as apparently valued at $1.4 million) and the vessel 'Kilaine II' (as apparently valued at $100,000).

21. The additional strategic significance of the claim in action CIV 1309 of 2016 is that, if successful, Tapio removes all of the fishing assets as assets of the estate of the late Mr Voitto Laine.  That outcome is likely to have implications for the Family Provision Act1972 (WA) proceedings in action CIV 1763 of 2015. Taking the fishing assets outside the deceased estate would radically reduce the value of the estate. If the value of the estate is reduced it may become more difficult for Jenelle, Kimmo and Liam to overcome the jurisdictional threshold. And, in any case, any successful claim would not see Jenelle, Kimmo and Liam obtaining an increased share of the estate out of the fishing assets to the disadvantage of Tapio.

22. In that sense action CIV 1309 of 2016 may be seen as a defensive measure by Tapio in response to the Family Provision Act1972 (WA) proceedings.

23. The Family Provision Act1972 (WA) proceedings in action CIV 1763 of 2015 are presently in abeyance pending the outcome of action CIV 1309 of 2016.

24. Action CIV 1309 of 2016 has not yet proceeded very far.  In mid‑2016 a defendant's summary judgment application was made.  The application was unsuccessful but Master Sanderson ordered that the statement of claim be struck out with liberty to re-plead.[2]  A strike out application against part of the ensuing substituted statement of claim was unsuccessful.  The current statement of claim in action CIV 1309 of 2016 is dated 15 February 2017.  No substantive defences have been filed and on 22 March 2017 the court ordered that the time limited to file a defence be extended until further order.  Discovery has not been ordered or provided.

    [2] Laine v Laine [2016] WASC 401.

25. The statement of claim in action CIV 1309 of 2016 advances separate claims by Tapio as to: (1) the vessel 'Kilaine II' and 67 pots attached to MFL 1436; and (2) a further 20 pots attached to MFL 1436.

26. The claim to the fishing assets comprised in the 'Kilaine II' and the 67 pots is put in five alternate ways:

    (1)First, on the basis that there was a February or March 2008 oral agreement that the late Mr Voitto Laine give Tapio the 'Kilaine II', MFL 1436 and 67 pots attached to MFL 1436 whereby, due to performance, Mr Voitto Laine held those fishing assets on trust for Tapio (statement of claim, pars 2 ‑ 4).

    (2)Second, on the basis that the late Mr Voitto Laine held those fishing assets on express trust for Tapio pursuant to an oral declaration of trust manifest in the February or March 2008 oral agreement (statement of claim, pars 5 ‑ 7).

    (3)Third, on the basis that the late Mr Voitto Laine held those fishing assets on trust for Tapio pursuant to a common intention constructive trust (statement of claim, par 8).

    (4)Fourth, on the basis that there was an alleged representation by Mr Voitto Laine, which Tapio says he relied on to his detriment, by reason of which the late Mr Voitto Laine and Mr Blatchford are in equity estopped from denying that Tapio is the legal and equitable owner of the fishing assets; and Mr Blatchford is required to transfer the fishing assets to Tapio (statement of claim, pars 9 ‑ 16).

    (5)Fifth, as an alternative to the estoppel claim, on the basis that it is unconscionable for the deceased and Mr Blatchford to resile from an expectation that, by the will of the late Mr Voitto Laine, those fishing assets would be bequeathed to Tapio; and equity thus requires the will to be read as bequeathing the fishing assets to Tapio (statement of claim, pars 17 ‑ 24).

27. As to the additional 20 pots now attached to MFL 1436, Tapio claims that the late Mr Voitto Laine purchased those additional 20 pots for him, Tapio, by way of loan; and the unpaid balance of that loan was forgiven by cl 8.1(a) of Voitto Laine's will (statement of claim, pars 25 ‑ 30).  Accordingly, it is said that Mr Blatchford, as administrator of the late Mr Voitto Laine's estate, holds title to the additional 20 pots on trust for Tapio.

28. Different views have been expressed as to whether Mr Blatchford should actively participate and defend action CIV 1309 of 2016 on behalf of the estate of the late Mr Voitto Laine.

29. Tapio, though his solicitors, has stated in a letter dated 3 July 2017:

    In the present circumstances, where all the beneficiaries hostile to the plaintiff's claims are legally represented and are taking an active role in the proceedings …, the involvement of the Administrator is neither necessary nor appropriate.  The active involvement of the Administrator would serve only to increase the complexity and cost of the proceedings and to unnecessarily put the plaintiff at risk of multiple costs.  The appropriate course is for the Administrator to leave the continued conduct of the proceedings to the other defendants.  If the Administrator is in any doubt as to that course (which he ought not be) he can seek orders that the other defendants continue to have carriage of the defence of the plaintiff's claims and agree to abide by any order of the Court, save as to costs.

30. Kimmo, Liam and Jenelle take an opposite view.

31. At a hearing in action CIV 1309 of 2016 on 19 July 2017 the solicitor for Jenelle stated:

    … it is trite law, in my respectful submission, that the executor … does defend the estate and is the party that's properly placed to make the decision as to how to do so.

32. In correspondence dated 25 August 2017 the solicitor for Kimmo and Liam stated:

    ... Mr Blatchford has a clear duty [to] act in the best interests of the residuary beneficiaries, to defend the estate and assist the court in coming to the correct conclusion as to the assets of the estate ...

    … it is not appropriate in our view for Mr Blatchford … to abide in these proceedings particularly in light of the fact that all of the relief sought is against the administrator, not the beneficiaries of the estate ...

    [Mr Blatchford] is the only party who can and should act as a proper contradictor in CIV 1309 of 2016 and he cannot therefore abide.

33. Tapio, Kimmo, Liam and Jenelle have appeared by counsel at the hearing of Mr Blatchford's application for directions.  The submissions made, while having added sophistication, essentially echo the statements of position evinced by the parties' solicitors in July and August of 2017.

34. Mr Blatchford originally suggested that he would take no active role in action CIV 1309 of 2016 and would abide the determination of the court.  Now, however, in the context of the directions application Mr Blatchford deposes that, subject to the advice obtained in these proceedings, he intends to defend action CIV 1309 of 2016.

1. At the hearing of the application counsel for Tapio sought to make something of this change of position.

2. I do not accept that anything of consequence arises. While Mr Blatchford is now expressing a different view as to what he considers to be appropriate it is, undoubtedly, a view formed following the taking of advice and reflection as to what course ought to be taken. Importantly, it is expressed as being a view conditional on the obtaining of directions. As will be seen, it is entirely appropriate for an administrator in the position of Mr Blatchford, faced with diametrically opposed views by beneficiaries, to seek judicial advice in the form of directions under s 92 of the Trustees Act 1962 (WA).

3. Mr Blatchford has received a costs estimate from Pacer Legal as to the expected costs of defending action CIV 1309 of 2016 and proceeding with a counterclaim.  The estimate is prepared assuming a five day trial and the engagement of counsel.  The estimate provides for expected costs of $159,400.  That figure excludes GST.  So the actual estimate is more in the order of $175,000.  This excludes time costs which might be charged by Mr Blatchford.

4. However, the estimated costs of preparing a defence and counterclaim, considering a reply and defence to counterclaim, and dealing with discovery is a more modest $19,800 calculated as:

Defence and Counterclaim	Prepare and file Defence and Counterclaim ·   Counsel fee (20 hours) ·   Instructing solicitor (10 hour)	$11,000.00 $3,500.00
Reply and Defence	Consider Reply and Defence to Counterclaim (2 hours for each of Counsel and Instructing Solicitor)	$1,800.00
Discovery	Prepare affidavit of discovery, review and consider discovered documents (10 hours, instructing solicitor)	$3,500.00

1. The papers relied on by Mr Blatchford include some 15 affidavits totalling 1,258 pages.  There is, however, no draft defence to Tapio's action.  Nor is there any draft of the 'conditional counterclaim' that Mr Blatchford would seek to prosecute against Tapio in action CIV 1309 of 2016.  Finally, although programming orders were made which permitted Mr Blatchford to file any confidential opinion, no such opinion has been received by the court.

2. A separate matter arose as to Pacer Legal's representation of Mr Blatchford.  By an email dated 29 June 2017 the solicitor for Kimmo and Liam asserted that it wold be inappropriate for Pacer Legal to act as Mr Blatchford's solicitor.  It was said that Pacer Legal had a conflict as it had been acting for Lisa in her capacity as executrix and her conduct had been 'called into question'.  Kimmo's and Liam's solicitor objected to Pacer Legal continuing to act for Mr Blatchford as administrator.  At the hearing in action CIV 1309 of 2016 on 19 July 2017 the solicitor for Kimmo and Liam suggested that an application would be made to 'conflict out Pacer Legal if they don't agree to go'.

3. The allegation of conflict was repeated in a letter dated 3 August 2017.

4. However, the allegation of conflict is no longer maintained.  Mr Blatchford's application for directions sought to address the issue.  Question 1(c) in the originating summons asked whether Mr Blatchford is justified in retaining Pacer Legal as his solicitors in action CIV 1309 of 2016.  However, the written submissions filed for Kimmo and Liam, as signed by their counsel, state that the question is no longer in issue.  That was confirmed in the course of oral submissions.  Accordingly, no party contends that Mr Blatchford should be retaining alternate solicitors to Pacer Legal.

1. Applicable principles on an application for directions by a trustee

1. Section 92 of the Trustees Act 1962 (WA) provides:

   92.Directions, trustee may ask Court for

   (1)Any trustee may apply to the Court for directions concerning any property subject to a trust, or respecting the management or administration of that property, or respecting the exercise of any power or discretion vested in the trustee.

   (2)Every application made under this section shall be served upon, and the hearing thereof may be attended by, all persons interested in the application or such of them as the Court thinks expedient.

2. Orders concerning whether legal proceedings are, or are not, justified are within the court's jurisdiction under s 92 of the Trustees Act1962 (WA) Plan B Trustees Ltd [No 2] [2013] WASC 216.[3]

   [3] Plan B Trustees Ltd v Parker [No 2] [2013] WASC 216; (2013) 11 ASTLR 242 [7] (Plan B).

3. A trustee acting under the court's direction obtains the protection afforded by s 95(1) of the Act. He or she is:

   deemed, so far as regards his own responsibility, to have discharged his duty as trustee in the subject-matter of the direction, notwithstanding that the order giving the direction is subsequently invalidated, overruled, set aside or otherwise rendered of no effect, or varied.

4. However, by s 95(2), there is an exception where the trustee is guilty of any fraud or wilful misrepresentation in obtaining the direction.

5. Section 92 applies to an administrator such as Mr Blatchford by reason of the definitions of 'trust', 'trustees' and 'personal representative' in s 6 of the Trustees Act 1962 (WA).[4]

   [4] Re Estate of Anastasios Keriacules Challis (dec) [2010] WASC 333 [17] (Re Challis); Wood (As Co‑Executor and Trustee of the Will of the Deceased) v Wood [No 4] [2014] WASC 393; (2014) 13 ASTLR 544 [4] (Wood [No 4]).

6. I accept that Tapio, Kimmo, Liam and Jenelle are all persons who are interested in the application for the purpose of s 92(2). Accordingly, it was appropriate that they be served with the proceedings and that they be heard on the application. They have been joined as defendants. Strictly speaking, however, they are not 'parties' in the usual sense. Rather they are 'permitted to be heard and allowed to participate in the proceeding, to some extent'.[5]

   [5] Wood [No 4] [103(h)].

7. The applicable principles on an application for directions under s 92 have been the subject of consideration in numerous cases in this court. Most recent decisions draw from the exposition of the relevant principles by Allanson J in Re Challis,[6] Edelman J in Plan B Trustees Ltd v Parker [No 2][7] and Kenneth Martin J in Wood [No 4].[8]  In turn, those decisions consider and apply in a Western Australian context the observations of the plurality in the Macedonian Church case.[9]

   [6] Re Challis [17] - [18], [30].

   [7] Plan B [7], [37] - [53].

   [8] Wood [No 4] [98] - [135].

   [9] 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 [55] - [76], [162] (Macedonian Church).

8. I do not consider it necessary to repeat the passages I have referred to from Re Challis, Plan B and Wood [No 4].  I will, however, re-state some of the key principles that arise on an application for directions as to the position a trustee should take in relation to litigation.  Before doing so it is worthwhile to first repeat the observations of Gillard J in Re Atkinson (Dec) (as were adopted by Allanson J in Re Challis):

   Where an executor or trustee is in doubt as to the course of action it should adopt, it is always entitled to take the opinion of the court as to what it should do.  If in doubt as to whether or not it should take legal proceedings, then it is entitled to apply to the court for directions on the matter … In cases of real doubt, the proper course for a personal representative or trustee to adopt is to seek the court's decision as to whether or not action should be brought, otherwise the representative or trustee might find itself paying the costs of any proceedings which a court might subsequently say were not 'properly incurred' …[10] (citations omitted)

   [10] Re Atkinson (Dec) [1971] VR 612, 615.

9. In accordance with those principles this was an appropriate instance for Mr Blatchford, as an administrator, to seek directions under s 92 of the Trustees Act 1962 (WA). The legal representatives for Tapio, on one hand, and Kimmo, Liam and Jenelle, on the other, have expressed different views as to the position Mr Blatchford should adopt in action CIV 1309 of 2016. Mr Blatchford faces the real prospect of criticism - or more - if he unilaterally accepts one party's view over the other party's view.

10. Otherwise, in the context of an application for directions as to the position a trustee should take in relation to litigation, the relevant principles may be summarised as follows:

    (1)There is a 'jurisdictional bar' under s 92(1). However, that is simply that the applicant must point to a question respecting the management or administration of trust property or a question respecting the interpretation of a trust instrument.[11]  The jurisdiction is enlivened when the question raised for directions is whether the trustee is justified in prosecuting or defending a particular claim.[12]

    (2)The court has a discretion as to whether to provide a direction under s 92(1). Advice does not have to be provided.[13]

    (3)The key question is to determine whether, on the material available, it would be proper for the trustee to prosecute or defend the proceedings.[14]  That in turn involves two issues. First, whether the legal issues are properly arguable.  Second, whether there are sufficient prospects of success to warrant the trustee in proceeding with the litigation.[15] These enquiries necessitate 'sufficient investigation' of the underlying issues.[16]

    (4)The judicial advice proceedings are not to be treated as a trial of the issues that are to be agitated in the principal proceedings.[17]  The process is meant to be a summary one.[18]

    (5)The court is not bound to investigate the evidence and make a finding as to whether the proposed proceedings would be successful.  The question is whether the litigation is justified.[19]  The court is not finally resolving the merits of the underlying proceedings.[20]

    (6)Relevant overlapping considerations include: (a) the prospects of success; (b) the means of the other party to satisfy any judgment; (c) the potential for the litigation to deplete the trust estate; (d) the likely adverse costs if the litigation is unsuccessful and whether those costs are likely to be proportionate; (e) the likely irrecoverable costs; and (f) the nature of the case and issues raised and what will be gained if the trustee succeeds in the action.[21]

    [11] Wood [No 4] [103(b)].

    [12] Wood [No 4] [103(b)].

    [13] Wood [No 4] [103(c)].

    [14] Macedonian Church [74].

    [15] Macedonian Church [162].

    [16] Wood [No 4] [134] - [135] (see also [181]).

    [17] Macedonian Church [74].

    [18] Macedonian Church [61] - [63]; Wood [No 4] [13], [103(e)], [181].

    [19] Re Challis [30].

    [20] Wood [No 4] [134].

    [21] Plan B [37]. See also Macedonian Church [162] and Re Challis [30].

11. It is important to emphasise that examination of the trustee's likely prospects in the litigation at an 'exhaustive level' is neither necessary nor appropriate.[22]  The assessment is made at a 'preliminary level'.[23]  The court's role is not to try the issues themselves.  The court's function is limited to being satisfied that the material before it is sufficient to determine the general range of the prospects of success; and determining whether it is appropriate to pursue the proceedings having regard to the prospects of success, the benefits of the litigation and the resources available.[24]  But there must be sufficient information before the court for it to be satisfied that the proposed action would be for the benefit of the beneficiaries as a whole and otherwise would be prudent to pursue.[25]

    [22] Application of Macedonian Orthodox Community Church St Petka Inc [No 2] [2005] NSWSC 558; (2005) 63 NSWLR 441 [67] - [69].

    [23] Tsaknis v Lilburne [2010] WASC 152 [42].

    [24] Re Addstone Pty Ltd (1997) 25 ACSR 357, 371. See also Re Atkinson (Dec) (615 - 616).

    [25] Re Challis [30].

12. The authorities differ on the necessity for the applicant for directions to obtain and provide to the court a legal opinion on the prospects of success.

13. The traditional view is expressed by Young J in Re Lemon Tree Passage and Districts RSL and Citizens Club Co-operative Ltd.[26]  There in the analogous circumstance of an application by a liquidator for directions his Honour stated:

    On the material … it would seem to me that the liquidator has, against someone, an arguable case, so that the matter is certainly not in the class of fruitless cases that the liquidator should be advised not to take.  That being so, the question is whether the chances of success and the expense involved make it a worthwhile course for the liquidator to pursue the litigation.

    There is insufficient material before the court to enable this question to be answered, despite the metre high pile of material.  Although the court has, I believe, an obligation to answer the liquidator's questions, those representing the liquidator have an obligation to place before the court the necessary materials for the court to be able to fulfil its function.  In cases of this nature, it is not of great assistance to supply the judge with the evidence that the liquidator has unless it can be set out within a small compass. What is required is that the court have material to enable it to assess: (1) the reasonable chances of the liquidator succeeding; (2) the estimated cost of the litigation; and (3) how the litigation is to be funded in the first instance.  The first requirement will usually be satisfied by the court being given an opinion from senior counsel, or at least very experienced counsel who has reviewed the evidentiary material and who has researched the legal points involved, and who can give some indication as to the prospects of success. [27]  (emphasis added)

    [26] Re Lemon Tree Passage and Districts RSL and Citizens Club Co-operative Ltd (1987) 11 ACLR 796.

    [27] Re Lemon Tree Passage and Districts RSL and Citizens Club Co-operative Ltd (799).

14. More recently, however, in both Plan B[28] and Wood [No 4][29] Edelman J and Kenneth Martin J respectively expressed doubts as to the practice of the court in assessing the prospects of success of a proposed action by reference to advice from counsel.  Edelman J suggested that the 'better view today' may be that it should not be the practice of courts to assess the prospects of success of an action by reference to such an 'expert opinion' from senior counsel.[30]  As a consequence some judicial advice applications have proceeded without the applicant having received counsel's advice on the merits of a proposed claim or defence.[31]

    [28] Plan B[42] - [45].

    [29] Wood [No 4] [123] - [124], [126].

    [30] Plan B[42].

    [31] See eg Carr v Larussa [2016] WASC 13 [64] - [66].

15. In other cases the provision of counsel's advice to the court is a course which has been adopted without remark.[32]

    [32] See eg Westpoint Management Ltd (in Liq) (Receivers & Managers Appointed) v Sunjet Pty Ltd [2006] WASC 313 [28].

16. I accept that the court cannot abdicate to counsel the task of determining whether a proposed claim or defence has sufficient prospects of success to justify a trustee in proceeding with proposed litigation.  But that does not mean that counsel's advice has become supernumerary in the context of an application for judicial advice.  Where, as here, the directions sought are couched in terms that the applicant is 'justified' in defending and taking proceedings, the obtaining of counsel's advice is almost always necessary to demonstrate that the applicant has taken reasonable steps before approaching the court.

17. This was recognised by Edelman J in Plan B.  His Honour stated:

    A court will usually be reluctant to exercise discretion in favour of sanctioning, as justified, a course of action by a trustee unless the trustee has taken reasonable steps necessary to form its own opinion on the subject.  Where the direction sought is that legal action is justified then it will generally be necessary for the trustee to obtain a legal opinion before approaching the Court.  This is because the trustee should have taken reasonable steps to form its own opinion on the subject about directions which are sought before approaching the Court for directions.  Legal action should never be commenced unless the trustee is satisfied that it is properly arguable.[33]  (footnotes omitted)

    [33] Plan B [48].

18. The receipt of counsel's advice, on a confidential basis that maintains the client-legal privilege such advice attracts, is appropriate on that basis.  Privilege may be maintained by adopting the process outlined in Vickers v Australian Securities and Investments Commission.[34]  Relevantly: (1) the opinion cannot be provided to the court by adduction of evidence; and (2) the opinion is provided to the court only after the court indicates that doing so is necessary before it can be in a proper position to give the judicial advice sought.

    [34] Vickers v Australian Securities and Investments Commission [2011] FCA 1028; (2011) 196 FCR 479 [48].

19. I accept that there will be cases where counsel's opinion is unnecessary.  An example is provided by Read v Bowesco Pty Ltd.[35]  There the judicial officer who heard the application for directions had earlier heard the applicant's defendant's summary judgment application in the substantive litigation.  It was said that, while leave to defend was given against the applicant, it was a case where the application 'just failed'.  In those circumstances counsel's opinion was not necessary as the nature of the issues was fully developed on the summary judgment application and a 'further opinion by counsel could not usefully advance the position'.[36]

    [35] Read v Bowesco Pty Ltd[2013] WASC 240.

    [36] Read v Bowesco Pty Ltd [16].

20. A trustee who obtains a direction from the court to the effect that he or she would be acting properly and justifiably in commencing or defending litigation obtains significant protection.  Before making application for directions it is expected that, among other things, the trustee will take reasonable steps to identify whether, and give proper consideration to whether, he or she has reasonable prospects of succeeding in the proposed litigation; and that the likely benefits to be obtained by the litigation exceed its likely costs - weighing in that mix the risk of loss and its attendant costs.  Accordingly, in the normal case it will be necessary for the trustee to obtain a legal opinion - preferably from counsel - before approaching the court for directions.  The opinion should address the prospects of success and merits of the proposed litigation.  If that course is not undertaken the reason for choosing not to follow the usual course should be explained.

21. The fact that an opinion has been obtained will ordinarily be recorded in the trustee's affidavit in support of the application for directions.  The trustee may also inform the court that the opinion will be provided to the court on a confidential basis, preserving client‑legal privilege, if the court considers that doing so is necessary to ensure that it is in a proper position to give the judicial advice as sought.  Reception of the opinion on that basis then becomes a matter for the court.

22. As will be seen, in the present case the absence of counsel's opinion affected the appropriate direction to be given as to whether the administrator was justified in commencing and prosecuting the 'conditional counterclaim'.  I am not satisfied that reasonable steps have been taken, and all necessary consideration has been given, to commencing and prosecuting the 'conditional counterclaim'.  The issues that I identify as to the 'conditional counterclaim' would in all likelihood have been addressed - or at least considered - well before the hearing had an appropriate opinion been obtained for the purpose of the directions application.

1. Disposition

1. The direction sought as to the proposed continued engagement of Pacer Legal

1. It is convenient to first address the last question raised on Mr Blatchford's application, namely, whether Mr Blatchford, in his capacity as administrator, is justified in maintaining Pacer Legal as his solicitors in action CIV 1309 of 2016.

1. Kimmo and Liam no longer contend that Pacer Legal are in a position of actual or apparent conflict of interest. As the matter has ceased to be contentious I will, in the exercise of my discretion, decline to provide any directions on the subject under s 92 of the Trustees Act1962 (WA).

2. An application for judicial advice is appropriate where the question involves a legal judgment.  But a question is seldom a suitable subject for directions where it primarily involves a commercial decision.  Even in those cases the court may be more prepared to assist an applicant for directions where he or she is threatened by an interested party who takes a contrary view as to the action the trustee should take.[37]  But that is no longer the situation that confronts Mr Blatchford.

   [37] Re Addstone Pty Ltd (362), (363), (373) (where a liquidator proposed, over objection, to discontinue litigation already commenced).

3. Kimmo and Liam, by their counsel, have said that Mr Blatchford's continued retainer of Pacer Legal is no longer in issue.  The continued retainer of Pacer Legal is now a purely commercial decision for Mr Blatchford.  On that basis I decline to provide the direction sought that Mr Blatchford is justified in maintaining Pacer Legal as his solicitors in action CIV 1309 of 2016.

1. Proposed directions as to participation in action CIV 1309 of 2016

1. Two distinct matters were raised as to the directions sought concerning Mr Blatchford's future participation in action CIV 1309 of 2016.  The first was whether Mr Blatchford, as administrator, should take a neutral position in the litigation on the basis that it was hostile litigation between the beneficiaries under the will of the late Voitto Laine.  The implicit suggestion was that Mr Blatchford might be advised to simply abide the decision of the court.

2. Assuming, however, that there was a proper basis on which Mr Blatchford should actively participate rather than remain neutral, it became necessary to consider whether there was a proper basis on which to defend or to defend and counterclaim.  As will be seen it is necessary to consider the justification provided for counterclaiming separately from the justification provided for the defence of the claim in action CIV 1309 of 2016.

Should Mr Blatchford be taking an active or neutral role in action CIV 1309 of 2016?

1. Counsel for Tapio developed a submission that action CIV 1309 of 2016 was hostile litigation between the beneficiaries under the will of the late Voitto Laine in which Mr Blatchford, as administrator, should take a neutral position.  In doing so counsel referred to a number of authorities that addressed the duties of a trustee in a trust dispute and the costs implications of the trustee participating in a trust dispute.[38]

   [38] Reference was primarily made to Alsop Wilkinson v Neary [1996] 1 WLR 1220, 1225; Sons of Gwalia Ltd v Margaretic [2006] FCAFC 92; (2006) 232 ALR 119 [6]; Abrugiato v Hansen as executor of the estate of Abrugiato [No 2] [2013] WASC 119; (2013) 10 ASTLR 535 [37].

2. I acknowledge those authorities.  In particular, where a dispute arises as to the trusts on which a trustee holds trust property because there is a difference between the beneficiaries in their capacity as such:

   ·the duty of the trustee as trustee for all beneficiaries is to treat the beneficiaries impartially and to remain neutral; and

   ·unless the trust instrument provides otherwise the trustee should bring the dispute into court for determination but should not favour one party over the other by advocating a party's cause in the proceedings.[39]

   [39] Alsop Wilkinson v Neary (1225); Sons of Gwalia Ltd v Margaretic [6]; Abrugiato v Hansen as executor of the estate of Abrugiato [No 2] [37(e)].

3. Failure to act in this way may have adverse costs consequences for the trustee.  Where the dispute is in the nature of hostile litigation because one beneficiary makes a claim adverse to another beneficiary the ordinary rule that costs follow the event is applied; however, if the trustee defends properly (ie impartially and remaining neutral or otherwise to the benefit of the estate) he or she will be entitled to costs out of the estate to the extent the costs are not recovered from the other party.[40]  Inferentially the trustee may not be able to recoup his or her costs out of the estate - at least in part - where the trustee acts unreasonably or not impartially.[41]

   [40] Sons of Gwalia Ltd v Margaretic [9]; Abrugiato v Hansen as executor of the estate of Abrugiato [No 2] [37(b)(iii)], [37(g)].

   [41] An outcome acknowledged in Alsop Wilkinson v Neary (1225.D - G).

4. However, as counsel for Tapio acknowledged in oral submissions, the authorities he relied on, and the relevant statements of principle referred to, were in the context of the beneficiaries claiming with respect to the same trust and in relation to their rights and interests as beneficiaries in that trust.[42]

   [42] ts 43.

5. Counsel for Tapio contended that this was of no moment for the statements of principle he relied on.  In counsel's submission it was of no account that Tapio, in contending that Mr Blatchford held the fishing assets on trust for him, was positing a different trust.[43]  It was enough that Tapio was indisputably a beneficiary under the will and there was a dispute between him and the other beneficiaries as to the fishing assets - those being the subject matter of both trusts (the trust under the will and the putative trust the subject of Tapio's claim).[44]

   [43] ts 43.

   [44] ts 43.

6. I reject that submission.  As I read the authorities relied on by Tapio, and the principles enunciated in them, the duty of impartiality and neutrality, and its consequential costs implications, arise in a trust dispute as to differences between beneficiaries over the construction of a trust instrument or the beneficiaries' respective rights in the trust estate in their capacities as beneficiaries.[45]  They do not apply where a person who is a beneficiary advances a claim in a capacity other than his or her capacity as a beneficiary of the trust.

   [45] Alsop Wilkinson v Neary (1225); Sons of Gwalia Ltd v Margaretic [6]; Abrugiato v Hansen as executor of the estate of Abrugiato [No 2] [37(e)].

7. The basis for the duty of impartiality and neutrality is that the trustee is the trustee for all the beneficiaries as regards their rights and interests in relation to the trust.  As trustee, subject to the trusts arising for the benefit of all the beneficiaries, the trustee should not favour one beneficiary at the expense of another.  But the rationale for the duty does not apply where a person, although otherwise a beneficiary, makes a claim against the property the subject of the trust that is not dependant on his or her rights and interests as a beneficiary.  In that circumstance the trustee is not in any acute danger of acting in breach of trust by misconstruing the respective rights and interests of competing beneficiaries as to the trust estate.  In defending the trusts to which he or she is subject the trustee is not acting partially but rather is acting in accordance with his or her duty as trustee.

8. The qualification that the duties relied on by counsel for Tapio apply only where the beneficiary brings a claim qua beneficiary is consistent with what was said by Lightman J in Alsop Wilkinson v Neary.  In that case there was reference to a so-called 'third-party dispute', namely a dispute with persons, otherwise than in the capacity of beneficiaries, in respect of rights and liabilities assumed by the trustee as such in the course of administration of the trust (for example, in contract or tort).[46]  Lightman J explained:

   Trustees (express and constructive) are entitled to an indemnity against all costs, expenses and liabilities properly incurred in administering the trust and have a lien on the trust assets to secure such indemnity.  Trustees have a duty to protect and preserve the trust estate for the benefit of the beneficiaries and accordingly to represent the trust in a third party dispute.  Accordingly their right to an indemnity and lien extends in the case of a third party dispute to the costs of proceedings properly brought or defended for the benefit of the trust estate.[47]

   [46] Alsop Wilkinson v Neary (1224).

   [47] Alsop Wilkinson v Neary (1224).

9. In considering Tapio's contention that action CIV 1309 of 2016 is hostile litigation between beneficiaries it will be necessary, in due course, to assess whether Tapio brings his claim in his capacity as a beneficiary under the will.  If not, and the litigation is properly characterised as a third-party dispute, it would be consistent with Alsop Wilkinson v Neary for Mr Blatchford to actively participate and defend the claim rather than remain neutral.

10. The other beneficiaries who participated in the hearing did not accept Tapio's contention that Mr Blatchford should take a neutral position in action CIV 1309 of 2016 and leave the defence of the claim to Kimmo, Liam and Jenelle.

11. Counsel for Jenelle cited In re Evans[48] as authority for general propositions in absolute terms that: (1) the relevant legal personal representative is the proper defender of the deceased estate; and (2) an administrator or executor as the legal personal representative should take proper steps to protect the testator's estate against adverse claims.

    [48] In re Evans [1986] 1 WLR 101, 105 (counsel referring to par F on page 105).

12. In re Evans is not unqualified authority for either proposition.  First, in the passage relied on by the fourth defendant Nourse LJ was recounting one of three general points made by Sir Robert Megarry VC in Inre Dallaway (Dec).[49]  The third point made by the Vice-Chancellor was that it was always necessary to examine whether the particular circumstances of the case made any difference to the general rule.  Second, as will be seen, the outcome of In re Evans is inconsistent with the proposition that it is always for the legal personal representative to defend at the expense of the deceased estate.

    [49] In re Dallaway (Dec) [1982] 1 WLR 756.

13. The true significance of In re Evans is found in the following passage (as was approved by the plurality in the Macedonian Church case):[50]

    First and foremost, every application of this kind depends on its own facts and is essentially a matter for the discretion of the master or judge who hears it.[51]

    [50] Macedonian Church [52].

    [51] In re Evans (106).

14. Accordingly, it is the circumstances of this particular application that matter.  It may be helpful to consider how a like question was answered in other cases.  But how other courts determined a like question on the particular facts of that case is not decisive in the instant case.  That point is illustrated by comparing the United Kingdom decisions of Inre Dallaway (Dec) and In re Evans.

15. Inre Dallaway (Dec) concerned a deceased estate in which the deceased left his estate equally among his 10 brothers and sisters.  The main asset of the estate was a farm.  One of the brothers and his wife had lived with the deceased at the farm.  They claimed that before his death the deceased had orally agreed to leave them the entire estate and issued a writ against the executor, a bank, to enforce that claim.  The other beneficiaries wanted the claim to be resisted; if the claim succeeded they would be left with nothing.  The executor sought directions as to whether it should continue to defend the action and bring a counterclaim for possession.

16. The claimants did not oppose an order on the directions summons that would authorise the executor to carry on the litigation.  But it was pointed out that if the claimants succeeded the effect of the executor being able to indemnify itself out of the deceased estate would be that the whole of the costs would be borne by the claimants.  It was said that this was unjust and that, so far as the other nine beneficiaries sought that the executor resist the claim, they should be made responsible for the costs as 'in substance' what the claim involved was 'hostile litigation' between the claimants and the nine brothers and sisters.[52]  This insistence that the executor should only be able to look to the other beneficiaries to recoup defence costs was later modified.  It was said that the executor should obtain suitable indemnities from the nine brothers and sisters and otherwise be entitled to costs out of the estate only to the extent that the costs could not be recovered from the nine brothers and sisters.

    [52] In re Dallaway (Dec) (758 - 759).

17. Sir Robert Megarry VC noted that the history of the claim was such that it had to be scrutinised with considerable care.[53]  The Vice‑Chancellor then reasoned as follows:

    (1)It was axiomatic that, acting with proper prudence, executors should take proper steps to protect their testator's estate against adverse claims.[54]

    (2)This causes difficulties when the claim is as to the whole of the estate: if the claim succeeds there is nothing out of which the executor can indemnify itself for the costs of the defence.  However, in the analogous situation of a trustee the court has a discretion to allow the trustee to take its costs out of the funds before handing it over to the successful litigant.  A trustee who has acted properly will usually be allowed its costs.  There was no reason to distinguish between trustees and executors so far as this practice was concerned.[55]

    (3)It was necessary to consider the general rule and then examine whether any difference was made by the particular circumstances of the case.[56]

    (4)If the claim was made by someone who was not a beneficiary, then, assuming the claim was one that ought to be resisted, the court would give the executor the requisite authority to defend and allow the executor to take its costs out of the fund even if the claim succeeded.  No question of requiring the beneficiaries to defend, or to provide indemnities, would arise.[57]

    (5)There was no material difference where the claimants were also beneficiaries under the will.  The existence of their putative beneficial interest under the will (one, I interpose, the claimants necessarily did not accept other than in the circumstance that their claim was dismissed) had no relevant bearing on their status as litigants in relation to the executor's costs.[58]

    (6)The claimants' proposal that the other nine beneficiaries provide indemnities had grave practical difficulties.[59]

    [53] In re Dallaway (Dec) (759).

    [54] In re Dallaway (Dec) (759).

    [55] In re Dallaway (Dec) (759 - 760). In Western Australia similar principles are expressly recognised in O 66 r 9(2) of the Rules of the Supreme Court 1971 (WA).

    [56] In re Dallaway (Dec) (760). 

    [57] In re Dallaway (Dec) (760).

    [58] In re Dallaway (Dec) (760 - 761).

    [59] In re Dallaway (Dec) (761).

18. There were three other matters that appeared to influence Sir Robert Megarry VC.  First, the Vice-Chancellor appeared to have serious reservations about the prospects of the claimants' success in the action.[60]  Second, and not unconnected with the first matter, the Vice-Chancellor noted the potential injustice in the possibility that the absence of satisfactory indemnities may result in abandonment of resistance to the claim.  It was questioned whether 'it would be right to allow the claimants to triumph … in this way, despite the need to test the claimants' assertions?'[61]  Third, the Vice-Chancellor referred to the need to bear in mind the importance of affording full and proper protection for costs and other expenses of trustees and personal representatives who act properly.[62]

    [60] In re Dallaway (Dec) (759).

    [61] In re Dallaway (Dec) (761).

    [62] In re Dallaway (Dec) (761).

19. In the result a direction was given that the executor continue to defend and bring a counterclaim.  The direction was given on terms that, subject to any order of the trial judge, the executor was to be indemnified out of the estate for costs even if the defence and counterclaim were unsuccessful.  The proviso was inserted against the contingency that material may emerge which made it unreasonable for the executor to continue to defend or counterclaim.[63]

    [63] In re Dallaway (Dec) (761 - 762).

20. The facts in In re Evans were very similar to those in In re Dallaway (Dec).  A person died intestate.  His surviving six nephews and nieces were entitled to share equally in the estate, which consisted of a farm, two houses and a small amount of cash.  One nephew and his wife had worked on the farm for many years; he had lived in one of the properties his whole life.  The nephew and his wife claimed to be beneficially entitled to the whole estate based on promises and assurances made to them by the deceased during his lifetime.  Proceedings were commenced against the administrator of the deceased's estate (another of the deceased's nephews and a beneficiary of the estate).  The administrator sought leave to defend the action and to counterclaim together with an order that he be indemnified against all costs out of the estate.

21. Initially the originating summons came before a Master.  The claimant nephew gave an undertaking that he would add the other nephews and nieces as defendants to the substantive action.  On that basis the Master declined to give the administrator the directions sought.  The Master characterised the substantive dispute as a 'family squabble by one beneficiary against the rest'[64] and was of the view that the proposed undertaking was the best method of resolving the problem.  It avoided the potential circumstance that the administrator's costs would come out of what would have been established to be the claimants' property if the claimant nephew won.  An appeal to a deputy judge was successful, the deputy judge following and applying In re Dallaway (Dec).

    [64] In re Evans (104).

22. A further appeal saw the issue before the Court of Appeal.  Nourse LJ, with whom the other members of the court agreed, gave close consideration to the facts and the decision in In re Dallaway (Dec).[65]  The affinity between the facts in the case before the court and those in In re Dallaway (Dec) were noted - including the very real risk that if the claimants succeeded but the executor's / administrator's costs were to be taken out of the estate the relevant farms would have to be sold to meet them.[66]  That was later described as a 'powerful' injustice argument.[67]

    [65] In re Evans (105 - 106).

    [66] In re Evans (106).

    [67] In re Evans (107).

23. Nourse LJ then made three important points to counter the appearance that there was little or no distinction between the facts in the case before his Lordship and the facts in In re Dallaway (Dec).[68]  First was the statement already referred to at par 88 above: each application of this kind depends on its specific facts and the exercise of a discretion.  Second, In re Dallaway (Dec) was a case in which the Vice-Chancellor had serious reservations about the prospects of the claimants succeeding in their action.  Third, the indemnity proposal in In re Dallaway (Dec) was clearly unworkable.  By contrast the proposal that the remaining nephews and nieces be joined as defendants was one to which Nourse LJ could see no real objection.  On the basis of those three grounds it was concluded that In re Dallaway (Dec) was distinguishable.

    [68] In re Evans (106 - 107).

24. Having recounted the claimants' injustice argument, namely that it would be unjust if they succeeded in the substantive action only to find that the farm and the house had to be sold to meet the unsuccessful party's costs of the action while the other beneficiaries risked nothing and lost nothing, Nourse LJ concluded:[69]

    It seems that the master, who was very experienced in these matters, regarded that as a powerful argument.  I am entirely of the same opinion.  In my view, in a case where the beneficiaries are all adult and sui juris and can make up their own minds as to whether the claim should be resisted or not, there must be countervailing considerations of some weight before it is right for the action to be pursued or defended at the cost of the estate.  I would not wish to curtail the discretion of the court in any future case but, as already indicated, those considerations might include the merits of the action.  I emphasise that these remarks are directed only to cases where all the beneficiaries are adult and sui juris.  The position might be entirely different if, for example, one of the beneficiaries was under age.

    We have not so far considered the evidence as to the merits of the action.  It is possible, although it seems unlikely, that it may be so strongly against the chances of the plaintiffs' success as to satisfy us that the order which was made by the deputy judge was correct.  If it does not go that far, I am of the opinion that his order cannot be sustained. (emphasis added)

    [69] In re Evans (107).

1. Ultimately the appeal was allowed and the matter was referred back to the Master.

2. Accordingly, In re Evans is not authority for the absolute propositions advanced on behalf of Jenelle.  What occurred in In re Evans on its remittal to the Master is unknown.  But Nourse LJ's reasons stand against any general propositions that the relevant legal personal representative is always the proper defender of the deceased estate and he or she should always take proper steps to protect the testator's estate against adverse claims (applying the estate's assets to do so).  Rather, in considering whether the legal personal representative is justified in defending a claim and recouping his or her costs out of the estate, consideration must be given to all the relevant facts and circumstances.  There will be instances where it is not right for a particular action to be defended at the cost of the estate.

3. Counsel for Jenelle also referred to authorities in the context of claims under the Family Provision Act 1972 (WA). It was said that in Rowan v Roche[70] Murray J had observed that an executor actively participated in the application and appeal 'as was proper' given his role as executor.  That statement provides no support for the general propositions as advanced by counsel for Jenelle.  The statement was made in the context of, and is explained by, the limited matters raised by the executor including the form of the order made.[71]

   [70] Rowan v Roche [2005] WASCA 6 [11].

   [71] Rowan v Roche [20].

4. In a Family Provision Act 1972 (WA) claim, where necessarily there is an attempt to alter the provisions of the will, the duty of the executor as the defender of the will is to participate in those proceedings. But the executor's duty is to participate so as to place before the court all evidence which will have any bearing on issues which arise during the proceedings.[72]

   [72] Lathwell v Lathwell [2008] WASCA 256 (S) [9].

5. The circumstance that a legal personal representative is charged at law to defend the will in this limited sense in the context of a claim under the Family Provision Act 1972 (WA) does not equate to a general proposition that an executor or administrator must actively defend all hostile litigation between beneficiaries which will impact on the available assets of the deceased estate.

6. Counsel for Kimmo and Liam did not contend that there was some applicable principle of law that had the invariable result that the legal personal representative must defend or must abide in the event of hostile litigation between beneficiaries.  It will be evident from what I have stated thus far that counsel was correct in not contending for some absolute obligation on the part of Mr Blatchford as the legal personal representative of the deceased estate.  Rather, counsel for Kimmo and Liam focused on a number of practical matters which, in counsel's submission, justified Mr Blatchford actively defending action CIV 1309 of 2016.

7. Effectively five matters were referred to by counsel for Kimmo and Liam.  First, that the administrator had the resources to investigate and defend action CIV 1309 of 2016 (including the ability to obtain all necessary documents); and the residuary beneficiaries were not in the same position to properly defend the claim.  Second, counsel pointed out that when action CIV 1309 of 2016 was commenced the sole nominated defendant was Lisa as then executrix.  Who, counsel enquired rhetorically, did Tapio think was the logical contradictor to the claim if not the legal personal representative of the late Mr Voitto Laine?  Third, that Mr Blatchford as administrator was the proper party with authority to compromise the claim.  Fourth, that while Kimmo, Liam and Jenelle were defending the claim, Lisa and Kristina were not.  However, all five residuary beneficiaries would be affected by the outcome.  Mr Blatchford as administrator was thus a necessary contradictor to act on behalf of the residuary beneficiaries as a whole.

8. Finally, and importantly, counsel for Kimmo and Liam observed that this was not a case where the costs of defending the claim would be at the expense of Tapio.  The costs - own and any adverse costs - will impact on the residue of the deceased estate rather than the assets the subject of Tapio's claim (if the claim succeeds) or Tapio's specific legacy under the will (if the claim fails).  And three of the five residuary beneficiaries support Mr Blatchford actively defending the claim in action CIV 1309 of 2016 at the expense of the residue, the other two beneficiaries not seeking to be heard on the question.

9. In written submissions counsel for Mr Blatchford referred me to Inre Dallaway (Dec) and In re Evans.  Otherwise counsel did not address the circumstance that action CIV 1309 of 2016 might be seen as hostile litigation between the beneficiaries under the will of the late Voitto Laine in which Mr Blatchford, as administrator, should take a neutral position.  Counsel for Mr Blatchford was correct to do so.  This was the issue that divided Tapio, on the one hand, and Kimmo, Liam and Jenelle, on the other, and in respect of which each had made assertions as to the position Mr Blatchford should be taking.  It was appropriate that counsel for the competing parties address the contentious issue and that Mr Blatchford, through his counsel, simply ensure that the relevant authorities were brought to the attention of the court.

10. Having reviewed the parties' submissions and the authorities, I turn to consider whether Mr Blatchford, as administrator, should take a neutral position in action CIV 1309 of 2016 on the basis that it is hostile litigation between the beneficiaries under the will of the late Voitto Laine.

11. The initial consideration is whether Tapio brings the claim in his capacity as a beneficiary under the will; and, if not, whether the litigation is properly characterised as a third-party dispute.

12. Tapio does not claim in action CIV 1309 of 2016 in his capacity as a beneficiary under the will of the late Voitto Laine.  Counsel for Tapio conceded as much in the course of oral submissions.[73]  Tapio makes the claim in action CIV 1309 of 2016, both in substance and in form, as a third-party stranger to the trusts established under the will and in pursuance of a claim that is incompatible with the gifts that are provided for under the will.  As counsel for Tapio noted in the course of his oral submissions, Tapio is a beneficiary under the will.  But that is only of moment if Tapio 'fail[s] in everything' in action CIV 1309 of 2016.[74]  Action CIV 1309 of 2016 is not properly characterised as being hostile litigation between beneficiaries over the construction of a trust instrument or the beneficiaries' respective rights in the trust estate qua beneficiaries.  It is litigation that arises and must be determined before any distribution of the fishing assets under the will (irrespective of whether the entitlements are varied as a result of the Family Provision Act1972 (WA) claim).

    [73] ts 42.

    [74] ts 42.

13. Tapio's action is litigation adverse to the interests of all the residuary beneficiaries under the will.  Prima facie Mr Blatchford, as administrator, is the proper party to represent all the residuary beneficiaries under the will and ought to contradict the claim advanced in action CIV 1309 of 2016.  It is part of his duty as administrator to protect the estate and the interests of the beneficiaries in it.[75]  Ordinarily, subject to satisfying himself that there is a proper basis to do so, Mr Blatchford ought to protect the deceased estate, and the residuary beneficiaries' interests, as against the claim of Tapio as a stranger to the trust.[76]

    [75] Dalrymple v Melville (1932) 32 SR (NSW) 593, 603.

    [76] Cf Australia and New Zealand Banking Group Ltd v National Mutual Life Nominees Ltd [1977] HCA 42; (1977) 137 CLR 252, 264 - 265.

14. In my opinion the prima facie position is not affected by the circumstance that Kimmo, Liam and Jenelle have also sought to be joined and propose to actively defend action CIV 1309 of 2016.  In this regard the practical matters mentioned by counsel for Kimmo and Liam have considerable force.  In particular: (1) in terms of access to documents and funding Mr Blatchford is in a better position to defend the claim; (2) Mr Blatchford has the ability to compromise the claim; that is not the case for Kimmo, Liam or Jenelle; and (3) Mr Blatchford would contradict for the benefit of the residuary beneficiaries as a whole - including Lisa and Kristina who have not been joined to and are not defending action CIV 1309 of 2016.

15. Counsel for Tapio suggested that Tapio might be prejudiced if Mr Blatchford was to actively defend.  I accept that in determining whether Mr Blatchford would be justified in actively defending there should be consideration as to the risk of prejudice and detriment to all parties.  Three categories of potential prejudice were mentioned.  First, that Tapio might become exposed to multiple sets of costs.  Second, that with additional active defendants came a risk of complication of the proceedings.  Third, that there was an ongoing risk that by actively defending action CIV 1309 of 2016 Mr Blatchford might be placed in a position of actual or apparent conflict of duty in relation to the Family Provision Act1972 (WA) claim.

16. The first two categories of potential prejudice will undoubtedly be addressed appropriately by the case manager in action CIV 1309 of 2016 if the prejudice in fact materialises.  For example, the trial judge may order that there only be one set of costs if the defences of Kimmo, Liam and Jenelle add nothing to that of Mr Blatchford.  As to the possibility of conflict in relation to the Family Provision Act1972 (WA) claim, I assess the risk of prejudice as low having regard to the settled role of the legal personal representative in such a claim (as discussed as pars 102 to 103 above). Moreover, if a conflict emerges it could be addressed appropriately at the time.

17. Counsel for Tapio did not make any submission to the effect that, in determining whether Mr Blatchford was justified in actively defending action CIV 1309 of 2016, consideration should be given to the fact that much of the subject matter of the action was gifted to Tapio under the will of the late Voitto Laine.  That is the case with 67 of the 87 pots.  It is only the vessel 'Kilaine II' and the further 20 pots attached to MFL 1436 that fall within the residue of the estate.  In dollar terms, based on Mr Blatchford's most recent figures, of the $6.19 million at issue in action CIV 1309 of 2016 some $4.69 million is gifted to Tapio in any event.

1. The circumstance that the will already provides for Tapio to receive 67 of the 87 pots does not weigh heavily in assessing whether Mr Blatchford is justified in defending action CIV 1309 of 2016.  The $1.5 million attributable to the residuary estate in relation to the remainder of the fishing assets is alone sufficient to justify Mr Blatchford defending to protect the residuary beneficiaries' interests as against Tapio's claim.  And the pendency of the Family Provision Act1972 (WA) claim provides added significance to ensuring that the estate is protected. One of the principal obligations of a legal personal representative is to collect and get in the assets of the deceased so that they may be administered according to law.[77]

   [77] Administration Act 1903 (WA) s 43(1)(a).

2. There is one further matter to mention.  For the reasons given above I have concluded that action CIV 1309 of 2016 is not hostile litigation between the beneficiaries under the will of the late Voitto Laine qua beneficiaries in which Mr Blatchford, as administrator, should take a neutral position.  Also important is the fact that, unlike in both Inre Dallaway (Dec) and In re Evans, the defence of Tapio's claim will not be at Tapio's expense.  Tapio does not make a claim to the whole of the estate of the late Mr Voitto Laine.  If Tapio is successful in his claim the costs of Mr Blatchford's defence, including any adverse costs, will reduce the residue of the estate and the distribution to the residuary beneficiaries.  Accordingly, Kimmo, Liam and Jenelle (and also Lisa and Kristina) are at risk if Mr Blatchford defends Tapio's claim.  Despite that, three of the five residuary beneficiaries support Mr Blatchford actively participating in the defence of the claim.

3. In my view this is a relevant matter to take into account in determining whether Mr Blatchford, as legal personal representative, is justified in actively defending the claim as opposed to abiding the outcome and leaving the defence to Kimmo, Liam and Jenelle.  Even if the present dispute is seen, as in In re Evans, as a family dispute, there is still a fair balance as to risk on both sides.  Indeed, having regard to the matters raised by counsel for Kimmo and Liam, which I accept to be relevant, participation by Mr Blatchford is justified so as to ensure an equality of arms.

4. Accordingly, I do not accept Tapio's contention that Mr Blatchford ought to take a neutral position in action CIV 1309 of 2016; Mr Blatchford will not be in breach of his duty as administrator - in particular his duty of impartiality and neutrality as concerns a trust dispute between beneficiaries qua beneficiaries - in defending Tapio's claim.  To the contrary, for the reasons I have given, Tapio brings a third-party claim and there is a proper basis on which Mr Blatchford should actively participate in the litigation, thereby protecting and preserving the trust estate for the benefit of the beneficiaries, rather than simply abiding the decision of the court. 

5. It remains necessary to consider whether there is a proper basis on which to defend or to defend and counterclaim.  I turn now to those questions.

Should Mr Blatchford defend the claim in action CIV 1309 of 2016?

1. I am satisfied that Mr Blatchford is justified in defending the claim made in action CIV 1309 of 2016.

2. In the present application the matter of primary importance to the exercise of my discretion is an assessment of Mr Blatchford's prospects of success in defending the claim made in action CIV 1309 of 2016.  A liquidator is not to pursue proceedings unless it is believed that the prosecution of them has a reasonable chance of success and will serve some useful purpose, ie the proceedings will be beneficial to the winding up. [78]  A liquidator should not make unsustainable contentions.[79]  And a liquidator should never commence legal action unless satisfied that it is properly arguable, ie it has reasonable prospects of success.[80]  No lesser standards are expected of an executor or administrator who, like a liquidator, acts in a representative capacity.  Indeed, as noted in Plan B, legal action should never be embarked on unless a trustee is satisfied that it is properly arguable.[81]

   [78] Re A George Bond & Co Ltd (1932) SR (NSW) 301, 307 - 308.

   [79] A Keay, McPherson's Law of Company Liquidation (2018) [8.1120].

   [80] Re Woodings [2017] WASC 322; (2017) 125 ACSR 200 [50].

   [81] Plan B [48].

3. 'Reasonable prospects' does not mean 'better than even' or '50% plus 1'.  That is 'more likely than not' rather than reasonable prospects.  Reasonable prospects sufficient to justify the defence of Tapio's claim will exist where there is a real, rational and logical prospect of succeeding.[82]  Conversely, if it is irrational, fanciful or absurd to envisage a defence succeeding, the defence of Tapio's claim is not something that Mr Blatchford ought reasonably to undertake.

   [82] That being the meaning attributed to the expression 'reasonable prospects' in the context of leave to appeal in criminal matters.  See Samuels v State of Western Australia [2005] WASCA 193; (2005) 30 WAR 473 [56].

4. I am satisfied that Mr Blatchford has reasonable prospects of successfully defending Tapio's claim.

5. It is, however, inappropriate that I develop at length my reasons for being satisfied that Mr Blatchford has reasonable prospects of successfully defending Tapio's claim.  There are three reasons why this is the case.

6. First, in the course of his oral submissions counsel for Tapio candidly accepted that there was an 'arguable defence'.  While it was said that strength was another matter (although not a matter of significant consequence for the present application) it was accepted that there would be no basis for an application for summary judgment on Tapio's part.[83]  Second, there must eventually be a trial of the issues in action CIV 1309 of 2016.  That will occur before another judge.  It is inappropriate that I offer a view as to the way in which the issues are likely to be resolved and why.  Third, as I have mentioned previously, the authorities are uniform in emphasising that the process I am to undertake is a summary one at a preliminary level rather than trying the issues.  I should only undertake sufficient investigation of the underlying issues to satisfy myself that the proposed defence has reasonable prospects and is otherwise justified.

   [83] ts 38.

7. I outlined the five bases on which Tapio grounds his claim to the fishing assets comprised in the 'Kilaine II' and the 67 pots in par 31 above.  The first three all depend on the court accepting that the late Mr Voitto Laine made an oral statement agreeing to give the fishing assets to Tapio, or alternatively, declaring that he held those assets on trust for Tapio.

8. As counsel for Mr Blatchford submitted, the court will carefully scrutinise claims against an estate in circumstances where the only person who can contest the issue is deceased; recognition of the fallibility of human memory is also important where a question arises as to the alleged oral terms of a contract (or, I would add, an alleged declaration of trust).[84]  The court will also show a natural caution before finding an intention to create legal relations in a family situation[85] and natural scepticism about whether statements of future testamentary intention within a family setting are intended to have a contractual significance.[86]  It is also the case that, as counsel for Mr Blatchford submitted,[87] Tapio's pleaded case is not in strict conformity with what is said by Tapio in his affidavit sworn in opposition to the defendant summary judgment application in action CIV 1309 of 2016.  The affidavit suggests a transfer under the late Voitto Laine's will rather than agreement to transfer with immediate effect. 

   [84] Varma v Varma [2010] NSWSC 786 [418] - [426].

   [85] Varma v Varma [423].

   [86] Sharp v Anderson (1994) 6 BPR 97,510, 7.

   [87] ts 11.

9. In the circumstances it is neither irrational, nor fanciful nor absurd to envisage a defence succeeding.  Tapio may be unable to establish his pleaded case on the balance of probabilities.

10. The fourth and fifth grounds are estoppel claims.  Both are based on an alleged representation that the will of the late Voitto Laine would transfer the fishing assets to Tapio.  Again, this is dependent on acceptance of an alleged oral statement on the part of the late Voitto Laine.  The earlier observations as to there being an arguable defence to the first three grounds based on difficulties in Tapio making good his pleaded case apply equally to the fourth and fifth grounds.  Also, Tapio has the difficulty that the will does in fact provide for a transfer of the fishing assets other than the vessel 'Kilaine II'.  The 67 pots will be transferred under the will subject to the outcome of the Family Provision Act 1972 (WA) claim. It is in any case arguable that estoppel claims of this type may be defeated by a Family Provision Act 1972 (WA) claim.[88]

    [88] Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483 [34] - [35].

11. Tapio's claim to the additional 20 pots arises from a subsequent alleged conversation.  But it nevertheless requires that Tapio establish an oral agreement, intended to have contractual effect, on the balance of probabilities.  There is an arguable defence in the same way that there is an arguable defence as to ground one of the claim to the other fishing assets.

1. Otherwise, in terms of the factors mentioned in Plan B: (1) Tapio's means to satisfy a judgment is not a material consideration.  However, given Tapio's entitlement under the will of the late Voitto Laine he should be able to meet any costs awarded against him; (2) the litigation is unlikely to deplete the deceased estate, but the estate will be depleted unless the defence of the litigation is successful; (3) having regard to Pacer Legal's costs estimate, the likely costs, adverse costs and irrecoverable costs are proportionate to the amount in issue; and (4) the outcome of the claim is of profound importance to the eventual administration of the deceased estate.

2. For these reasons I will make a direction that Mr Blatchford is justified in defending the claim made in action CIV 1309 of 2016.

Should Mr Blatchford commence and prosecute a 'conditional counterclaim' in CIV 1309 of 2016?

1. There is a lack of clarity in the papers as to precisely what is meant by Mr Blatchford in seeking a direction that he is justified in commencing and prosecuting a 'conditional counterclaim'.  The suggestion appears to be that the counterclaim would be dependent for its success on Tapio failing in his claims in action CIV 1309 of 2016.  In those circumstances, so far as Tapio (or perhaps a partnership comprised of Tapio and his wife) has benefitted from income derived from the fishing assets since the death of the late Mr Voitto Laine, the suggestion is that there might be a counterclaim seeking an account as to that income.

2. The lack of clarity as to precisely what is proposed by the 'conditional counterclaim' is exposed by my mention that the counterclaim may be commenced against Tapio or perhaps a partnership comprised of Tapio and his wife.  The amended originating summons seeks the direction in terms of a counterclaim solely as against Tapio.  But Mr Blatchford's affidavit sworn 24 April 2018 refers to a partnership between 'TH & JM Laine' trading as TH & JM Fishing Co leasing at least part of the fishing assets to various persons from time to time.  So too Mr Blatchford's written submissions refer to income from the 87 pots having been paid to the 'Partnership'.[89]  To the extent that a partnership received the income it would ordinarily be expected that the firm or all the partners in the partnership would be joined to any counterclaim.  Yet Mr Blatchford's counsel never clarified, either in his written submissions or orally, what was intended in this regard.

   [89] Mr Blatchford's written submissions dated 24 April 2018 par 31.

3. As I have previously mentioned:

   ·During the hearing of the application counsel for Mr Blatchford informed me that the dollar value of the 'conditional counterclaim' was unknown and had not been calculated.

   ·There was no draft of the 'conditional counterclaim' that Mr Blatchford would seek to commence and prosecute in action CIV 1309 of 2016.

4. There is a further problem with the proposed 'conditional counterclaim'.  In his written submissions counsel for Mr Blatchford contended that pending distribution net income derived from the 87 pots would be an estate asset;[90] but it was also said that, so far as Tapio received a specific legacy as to the 67 pots, Tapio would be entitled to the transfer of those assets together with any income accruing from them from the date of the death of Mr Voitto Laine.[91]  Authorities were cited in support of the latter proposition.[92]  On the face of those submissions the proposition was that Tapio might have to account for income earned (as to 87 pots) - and this would be the subject of the proposed 'conditional counterclaim' - but then would in any event be entitled to the income as earned from 67 pots.

   [90] Mr Blatchford's written submissions dated 24 April 2018 par 177.

   [91] Mr Blatchford's written submissions dated 24 April 2018 par 176.

   [92] Mr Blatchford's written submissions dated 24 April 2018 par 85.

5. Prima facie litigation with the object of requiring an account for certain income that would then be returned to the accounting party - at least to the extent of 67/87^ths - was an oddity.  Obvious questions arose as to the efficiency and likely benefit to the deceased estate of such litigation.  That was all the more so when the dollar value of the conditional counterclaim was unknown and had not been calculated.

6. In the course of oral addresses I raised this apparent incongruity with counsel for Mr Blatchford.[93]  In answer to the question as to what was the point of having Tapio account for income that was going to be his in any event it was said that it may not be his depending on the outcome of the Family Provision Act 1972 (WA) claim.[94]  Similar submissions were made by counsel for Kimmo and Liam.[95]  But those submissions accepted that action CIV 1309 of 2016 would be heard and determined before the Family Provision Act 1972 (WA) claim.[96]  That raised the question of whether, in considering entitlement to income (at least from the 67 pots), the trial judge in action CIV 1309 of 2016 could look at what might happen in the Family Provision Act 1972 (WA) claim.

   [93] ts 18 - 19.

   [94] ts 19.

   [95] ts 20 - 21.

   [96] ts 19, 20.

7. Initially counsel for Mr Blatchford stated that the trial judge in action CIV 1309 of 2016 would not look at what might happen in the Family Provision Act 1972 (WA) claim.[97]  (I am not accepting that this is the case.  I am simply recording the position as advanced by counsel in the course of argument.)  I then asked on what basis there would be a conditional counterclaim as to 67 of the 87 pots (referring to the income derived from the pots).[98]  Counsel for Mr Blatchford informed me that he could not take that any further.[99]

   [97] ts 19.

   [98] ts 19.

   [99] ts 19.

8. The matter was discussed again in the course of counsel for Mr Blatchford's reply.  In relation to the proposed counterclaim I suggested that it appeared to me, at least provisionally, that Mr Blatchford as administrator had not taken the issue into account to date.[100]  In answer to the question '[i]s that a fair understanding of where we got to in terms of your submissions?' the reply was:

   I think that's probably right.[101]

   [100] ts 52 - 53.

   [101] ts 53.

9. In the circumstances I am unable to make a direction pursuant to s 92 of the Trustees Act 1962 (WA) that Mr Blatchford, as administrator, is justified in commencing and prosecuting a 'conditional counterclaim' (whatever that might be) against Tapio in action CIV 1309 of 2016. On the materials I am not in a position to determine whether the proposed proceedings are justified. The materials are insufficient for me to be satisfied that the proposed counterclaim would be for the benefit of the beneficiaries as a whole and prudent to pursue.

10. The lack of any concrete information as to the likely quantum of the 'conditional counterclaim' is alone fatal to the application.  It is not possible to be satisfied that the likely benefits of the proposed counterclaim outweigh its likely costs where the value of the conditional counterclaim is unknown and has not been calculated.  But apart from that, the written submissions of Mr Blatchford, coupled with the interchange I have recorded, mean that I am not satisfied that reasonable steps have been taken, and all necessary consideration has been given, to commencing and prosecuting a counterclaim.  That too means that I am unable to make a direction that Mr Blatchford, as administrator, is justified in commencing and prosecuting the 'conditional counterclaim'.

11. It may be that there is a complete answer to the apparent incongruity as to Mr Blatchford as administrator proceeding against Tapio to recover income to which he, Tapio, is prima facie entitled on distribution under the will of the late Voitto Laine.  The material matter for present purposes is that neither Mr Blatchford nor his legal advisers have fully considered the issue.  The issue has not been taken into account in forming a view that, subject to directions, it would be - in Mr Blatchford's view - appropriate to proceed with the 'conditional counterclaim'.

12. It is not for the court to identify whether there is a solution to the issue; it is for Mr Blatchford and his legal advisers.  The question for the court is whether on the materials Mr Blatchford is justified in beginning and proceeding with the proposed counterclaim.  The omission to take the issue into account, and resolve it satisfactorily, belies a conclusion that Mr Blatchford is justified in beginning and proceeding with the 'conditional counterclaim'.

13. I accept that the apparent subject matter of the proposed 'conditional counterclaim' is something Mr Blatchford should continue to investigate.  I am prepared to direct that he is justified in doing so.  And if, on full investigation and the obtaining of advice, Mr Blatchford is satisfied that commencing and proceeding with a counterclaim is in the interests of the deceased estate, he may then renew his application for directions that he is justified in beginning and proceeding with the 'conditional counterclaim'.

14. I should record that counsel for Tapio made a submission, based on observations in Re Atkinson (dec), that one or more of the residuary beneficiaries would have standing to bring the conditional counterclaim on behalf of the deceased estate.  Counsel further submitted that the counterclaim should be brought, if at all, by one or more of Kimmo, Liam or Jenelle, and Mr Blatchford as administrator should not take an active role in prosecuting the counterclaim.

15. It may be that this submission will no longer be maintained having regard to my conclusion that there is a proper basis on which Mr Blatchford may actively participate in defending action CIV 1309 of 2016 and is justified in doing so. That is a matter for Tapio. Whether or not that is the case, I do not intend to rule on the submission at this juncture. In my view the submission is best considered in the context of a formulated draft counterclaim rather than a vacuum. Accordingly, consideration of the contention will be deferred pending any renewed application for directions under s 92 of the Trustees Act 1962 (WA) as to whether Mr Blatchford is justified in beginning and prosecuting a counterclaim.

1. Costs

1. At the conclusion of the hearing I made orders providing for the parties to file short submissions setting out the costs orders contended for.  The orders permitted the parties to provide a schedule of the costs incurred and sought.  The intention was that, where appropriate, I would fix the amounts to be awarded by way of costs.

2. Mr Blatchford sought an order that his costs be paid from the deceased estate on an indemnity basis.  All parties who participated in the hearing accepted that Mr Blatchford was entitled to such an order.  This is not a case where Mr Blatchford has acted unreasonably or for his own benefit rather than for the benefit of the estate.  Accordingly, it is appropriate that Mr Blatchford recover his costs out of the estate.[102]  However, he should do so on a 'solicitor and client' basis rather than an 'indemnity' basis.[103]  So far as counsel for Tapio noted that in Tsaknis v Lilburne E M Heenan J referred to the trustee being entitled to indemnity costs[104] I observe that his Honour's actual order was in terms of costs on a solicitor and client basis.[105]  The onus of establishing that the costs sought are in a reasonable amount and have been reasonably incurred should remain with Mr Blatchford.

   [102] Rules of the Supreme Court 1971 (WA) O 66 r 9(2).

   [103] See Civil Procedure [66.1.15].  There continues to be a conceptual difference between costs on a solicitor and client basis and costs on an indemnity basis: Wheatley v Bower [2001] WASCA 293 [106]. However, depending on the circumstances, in Western Australia there is not a great deal of difference between indemnity costs and costs taxed on a solicitor and client basis: Rumball v Mortimore [2000] WASC 126 [33].

   [104] Tsaknis v Lilburne [82].

   [105] Tsaknis v Lilburne [90(2)(a)].

3. Mr Blatchford sought an order that I fix his costs in the amount of $121,165.48.  This represented $66,316.98 as incurred with his solicitors and $54,848.50 incurred with his counsel.

4. I am not prepared to fix Mr Blatchford's costs in that amount.  This application was by originating summons.  The relevant item under the Legal Profession (Supreme Court) (Contentious Business) Determination2016 (WA) is item 11. The maximum allowance for item 11, assuming a 1 day hearing and engaging counsel other than senior counsel, is $36,080. The hearing in the present case proceeded entirely on affidavit and was slightly over 3 hours in length. Prima facie a claim that is more than three times the maximum allowance under the relevant costs determination is a claim that is excessive.

5. The costs determination does not limit my power to determine in this particular case the amount of costs to be allowed.[106] But as a matter of discretion I am not presently prepared to fix an amount in excess of the maximum allowance in the costs determination without, in terms of s 280(2) of the Legal Profession Act 2008 (WA), being persuaded that the costs allowable in respect of this matter under the costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter. No submission to this effect has yet been received. If Mr Blatchford wishes to make an application based on s 280(2) I will consider and determine that application. In the absence of such an application I will order that Mr Blatchford's costs of the application are to be paid from the estate of the late Mr Voitto Laine, those costs to be taxed on a solicitor and client basis (with notice of the taxation to be provided to the other parties).

   [106] Legal Profession Act 2008 (WA) s 280(3).

6. In the events that have happened, namely, my willingness to give Mr Blatchford a direction that he is justified in defending action CIV 1309 of 2016, Tapio sought an order that his costs be paid from the estate.  Kimmo and Liam, and also Jenelle, sought that Tapio pay their costs of the application.  In the alternative Jenelle sought that her costs be paid out of the estate.

7. It would be appropriate to order that Tapio pay the costs of the other beneficiaries if Tapio's opposition to Mr Blatchford's application had been unreasonable or calculated solely to advance his personal interests.  I do not consider that to be the case.  The opposition based on Tapio's contention that Mr Blatchford should take a neutral position as action CIV 1309 was hostile litigation between beneficiaries did not raise an idle point.  It raised a question of what ought to be done in the best interests of the deceased estate.  As to the defence of action CIV 1309 of 2016, counsel for Tapio readily accepted, against Tapio's personal interests, that the defence was arguable.  And on the 'conditional counterclaim' I have effectively accepted Tapio's contention that the direction sought should not be made as the intended counterclaim is not yet sufficiently developed.

8. Tapio was joined as a necessary party to the directions application.  He acted as contradictor raising matters that were proper and reasonable for consideration by the court.  In that sense the costs were reasonably and properly incurred.  The costs were also necessarily incurred for the benefit of the deceased estate.  It is appropriate, in these circumstances, that Tapio's costs are to be paid out of the estate on a solicitor and client basis.[107]

   [107] Tsaknis v Lilburne [83] - [84], [89].

9. I appreciate that this will disadvantage Kimmo, Liam and Jenelle; the award of costs in favour of Tapio will reduce the residue of the estate.  But in my opinion there is no reason to depart from the conventional principle that all beneficiaries properly and necessarily appearing on the application for directions ought to obtain their costs out of the estate.  I should immediately state that this principle also applies to the benefit of Kimmo, Liam and Jenelle.  They too are entitled to have their costs paid out of the estate on a solicitor and client basis.

10. Tapio sought an order fixing his costs at $45,000.  It was said that this was approximately 85% of the actual costs incurred in the amount of $52,404.54.

11. The $45,000 sought by Tapio exceeds the maximum allowance under item 11. As with Mr Blatchford I am not prepared to fix Tapio's costs in that amount. Prima facie the amount sought is excessive in circumstances where Tapio filed no affidavit evidence and the matter proceeded by way of legal argument on evidence which was not in dispute. If Tapio wishes to make an application based on s 280(2) I will consider and determine that application. Otherwise I will order that Tapio's costs of the application are to be paid from the estate of the late Mr Voitto Laine, those costs to be taxed on a solicitor and client basis (with notice of the taxation to be provided to the other parties).

12. On the basis that they were successful in obtaining a costs order against Tapio, Kimmo and Liam sought party and party costs of $13,068.   Their schedule mentioned that the total of party and party costs incurred was $14,959.50.  It was also said that there was some further $9,671.70 in solicitor and client costs, part of which had been incurred in resolving the conflict issue.  As the conflict issue fell away there should be no costs allowed as to that aspect of the matter.

13. An allowance of $16,000 on a solicitor and client basis appears reasonable having regard to the bulk of the materials the legal representatives had to consider and the helpful and succinct submissions that were made by counsel for Kimmo and Liam.

14. Jenelle did not ask me to fix any amount as to her costs.  No schedule of the costs sought or incurred was provided.  It was instead said that insofar as the hearing was a final hearing of the originating summons it was appropriate to prepare a bill of costs for provisional assessment rather than fixing the costs.  I will make orders for Jenelle to have her costs from the estate and for those costs to be taxed on a solicitor and client basis (with notice of the taxation to be provided to the other parties).  But I should record that those costs should not include, and no amount should be allowed for, preparation of the bill of costs or attending on taxation.  Those costs could have been avoided had Jenelle taken the same practical approach as Kimmo and Liam.  In the circumstances it cannot be said that the preparation of a bill of costs and attending on taxation will be costs reasonably incurred.

1. Conclusion

1. Subject to hearing from counsel as to the precise form of the orders I will order that:

   (1)Pursuant to s 92 of the Trustees Act 1962 (WA) it is directed that Mr Blatchford, in his capacity as administrator of the will of the late Voitto Laine, is justified in defending the claim made by Tapio Harry Laine in Supreme Court of Western Australia action CIV 1309 of 2016.

   (2)Pursuant to s 92 of the Trustees Act 1962 (WA) it is directed that Mr Blatchford, in his capacity as administrator of the will of the late Voitto Laine, is justified in investigating whether to begin and proceed with a counterclaim against Tapio Harry Laine (or any partnership in which he is a partner) in Supreme Court of Western Australia action CIV 1309 of 2016, by:

   (a)taking steps to identify the amount that may be claimed by him on behalf of the estate of the late Mr Voitto Laine in such a counterclaim;

   (b)obtaining advice from counsel as to the prospects of success and merits of such a counterclaim; and

   (c)preparing or causing to be prepared a draft of the proposed counterclaim.

   (3)Mr Blatchford has liberty to renew his application for directions under s 92 of the Trustees Act 1962 (WA) as to whether he is justified in beginning and proceeding with a counterclaim against Tapio Harry Laine (or any partnership in which he is a partner) in Supreme Court of Western Australia action CIV 1309 of 2016.

   (4)Kimmo and Liam's costs of the application are fixed in the amount of $16,000 and are to be paid forthwith out of the assets of the estate of the late Mr Voitto Laine.

   (5)Jenelle's costs of the application are to be taxed on a solicitor and client basis (with notice of the taxation to be provided to the other parties) and are to be paid forthwith out of the assets of the estate of the late Mr Voitto Laine.

1. I will hear from counsel for Mr Blatchford and Tapio whether their clients wish to make an application under s 280(2) of the Legal Profession Act 2008 (WA). If not, I will order that Mr Blatchford's and Tapio's costs of the application are to be paid from the estate of the late Mr Voitto Laine, those costs to be taxed on a solicitor and client basis (with notice of the taxation to be provided to the other parties).

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

CC
ASSOCIATE TO JUSTICE VAUGHAN

13 JULY 2018