Cumming v Sands
[2001] NSWSC 599
•18 July 2001
CITATION: Cumming v Sands [2001] NSWSC 599 CURRENT JURISDICTION: Equity FILE NUMBER(S): SC 5003/98 HEARING DATE(S): 6 July 2001 JUDGMENT DATE:
18 July 2001PARTIES :
Delys Louise Cumming (P)
Margaret Lesley Sands (D1 & XC)
Peter Elliott Brand (D2 & 2XD)
Robert Bruce Gordon (D2 & 3XD)JUDGMENT OF: Hamilton J
COUNSEL : J M Atkin (P)
S Hughes (D1)
No representation (D2, 2XD & 3XD)SOLICITORS: Walters (P)
Heidtman & Co (D1)
Submitting appearance (D2, 2XD & 3XD)
CATCHWORDS: PROCEDURE [565] - Costs - General rule - Costs out of a fund - When costs allowed out of fund - Benefit of estate - Defendant defending proceedings for own benefit rather than benefit of estate. LEGISLATION CITED: Supreme Court Rules 1970 Part 52A r 42 CASES CITED: Brown v McEncroe (1890) 11 NSWR Eq 143
Cumming v Sands [2001] NSWSC 2
Cumming v Sands [2001] NSWSC 507
Drummond v Drummond [1999] NSWSC 921
Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (1993) 438 - 440DECISION: Executor ought not have her own costs of the proceedings out of the estate.
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
HAMILTON J
WEDNESDAY, 18 JULY 2001
5003/98 DELYS LOUISE CUMMING v MARGARET LESLIE SANDS & ORS
JUDGMENT
1 In this matter I have already delivered two judgments: Cumming v Sands [2001] NSWSC 2 (“my first judgment”) and Cumming v Sands [2001] NSWSC 507 (“my second judgment”). The matter has been back before me for debate concerning the short minutes.
2 In my second judgment [12] I determined that the first defendant should be ordered to pay out of her personal funds the plaintiff’s costs of the proceedings on the basis that the case had been conducted in reality by the first defendant in her own personal interest. I did not deal with the separate but related question of whether the first defendant was entitled to recoup her own costs of these proceedings out of her mother’s estate. Mr Atkin, of counsel for the plaintiff, has pointed out that as a trustee she would be entitled to do so, unless it is otherwise ordered, under the provisions of the Part 52A r 42 of the Supreme Court Rules 1970 (“the SCR”) which are as follows:
“Trustee or mortgagee
(2) The Court may otherwise order pursuant to subrule (1) only where:(1) Where a person is or has been a party to any proceedings in the capacity of trustee or mortgagee, he shall, unless the Court otherwise orders, be entitled to the costs of the proceedings out of the fund held by the trustee or out of the mortgaged property, as the case may be, in so far as the costs are not paid by any other person.
(a) the trustee or mortgagee has acted unreasonably; or
(b) in the case of a trustee, he has in substance acted for his own benefit rather than for the benefit of the fund.”
Mr Atkin has asked that I otherwise order. Mr Steven Hughes, of counsel for the first defendant, has asked that I rule that the first defendant should be entitled to recoup herself from that fund. He acknowledges my ruling in [12] of my second judgment, but says that it does not flow from that decision that she should not have her own costs out of the estate. He refers me to the decision of Austin J in Drummond v Drummond [1999] NSWSC 921 and relies on [49] as establishing that a trustee may have her costs ordered out of the estate albeit ordered to pay the opposing party’s costs out of her own funds. He says that this may be done where, in the case of will trusts, the litigation has been caused by the conduct of the testator or another beneficiary. The conduct he refers to is the conduct of the late Dr Brand in not communicating to the first defendant, his sister, the arrangements he had made with the plaintiff concerning the property and persisting in this silence even when he knew he was dying.
3 I do not need to determine whether there may be circumstances in which a trustee may have his or her costs out of the fund although ordered to pay the opponent’s costs on the basis that the trustee was in reality defending a private interest. Mr Hughes’ argument is vitiated by a number of problems. First, Drummond v Drummond supra, does not support the proposition that there may be differential orders in respect of a trustee’s costs liability. It is merely a discussion in relation to that case of the principle that an unsuccessful party in a probate suit may have costs out of the estate when the contest is caused by conduct of the testator. A classic example is the case cited by Austin J, being the decision of Owen CJ in Eq in Brown v McEncroe (1890) 11 NSWR Eq 143. The principle is well established and may apply also where the relevant conduct is that of a principal beneficiary: see Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (1993) 438 - 440. Here it is the mother’s estate that is relevant and the only conduct that is (or could be) relied on, is the conduct of the late Dr Brand as co-executor and co-beneficiary of that estate in not informing Mrs Sands of the arrangement with Miss Cumming concerning the property. But there are two defects in this argument. The first is that, as I have found, the lack of communication arose as much from Mrs Sands as from Dr Brand: it is not that he set out to be secretive in face of her inquiries, it is just as much, if not more, that she chose to make no inquiry for 20 years as to what was occurring because she trusted him and left all dealings concerning the tenancy to him. The second is that it is not true that he did nothing during his last illness to clarify the situation. He signed an acknowledgment that Miss Cumming had expended $38,000 on the property (the discrepancy with the $51,000 claimed being explained by the fact that the acknowledgment did not on its face cover the whole of the expenditure, but only that in a specified period). This acknowledgment was brought to Mrs Sands’ attention, but she rejected it on various grounds, including that it was typed, not hand written, and that it was on an old letterhead, although there was no doubt as to the genuineness of the signature. She had taken legal advice, but the content of that advice is not revealed in the evidence to which I have been referred. The above matters which I had taken into account in coming to the decision embodied in my first judgment and my second judgment also demonstrate that there is no ground for any different decision in relation to the first defendant’s own costs. I have already decided that the first defendant essentially defended the proceedings in her own interest and not in those of her mother’s estate. The result, so far as the matters at present in contest is concerned, is that she should not be entitled to her own costs of the proceedings out of her mother’s estate and that the plaintiff is entitled to an order under Part 52A r 42.
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