Foord v Brock

[2005] NSWCA 156

CITATION:	FOORD v. BROCK & ORS [2005] NSWCA 156
HEARING DATE(S):	05 & 06/05/2005
JUDGMENT DATE:	31 August 2005
JUDGMENT OF:	Giles JA at 1; Bryson JA at 2-85; Brownie AJA at 86
DECISION:	Order: 1. Appeal allowed with costs; 2. Set aside Orders 1, 2, 3 and 4 made by Master McLaughlin on 2 December 2003; 3. In lieu thereof order; (a) the remuneration and the costs of Kevin Richard Shirlaw including legal costs be paid or retained by him out of the assets of the testatrix; (b) the plaintiffs cross-defendants are to pay the defendant cross-claimant's costs of the proceedings in the Equity Division; 4. The respondents if otherwise qualified are to have a certificate under the Suitors' Fund Act 1951.

CATCHWORDS:	COSTS - Probate proceedings - appeal from Master's orders on costs of Probate proceedings and remuneration and expenses of Administrator (professional Liquidator) appointed by consent of parties to resolve dispute about entitlement to Probate - Consideration of powers of the Court to make orders as to Administrator's remuneration - Master's orders set aside and discretion exercised again by Court of Appeal - majority decision on re-exercise.
LEGISLATION CITED:	Criminal Justice Act 1988 (U.K) , s.77 Legal Profession Act 1987 Supreme Court Act 1970, s.76(1) and (2) Supreme Court Act 1981 (U.K), s.51 Wills Probate and Administration Act 1898. s.75(1)
CASES CITED:	Commissioner for Railways v Small (1938) 38 SR NSW 564 In Re Andrew [1999] 1WLR 1236 In Re Skinner, Cooper v Skinner [1904] 1 Ch 289 (Farwell J) NSW Commissioner of Police v Tuxford (2002 NSWCA 139) Shirlaw v Taylor (1991) 31 FCR 222 Springett v Dashwood (1860) 2 Gifford 521, 66ER 218
PARTIES:	Bronwyn Foord - Appellant Adrian Brock and Jennifer Brock Roslyn Donohoe - Respondents
FILE NUMBER(S):	CA 41264/2003
COUNSEL:	J. Whittle SC and J. O'Connor - Appellant S.C. Lindsay SC - Respondents
SOLICITORS:	Kenneally & Co Lawyers, Oatlands - Appellant The Argyle Partnership - Respondents

LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	SC 107681/2001
LOWER COURT JUDICIAL OFFICER:	Master McLaughlin

CA 41264/2003

GILES JA
BRYSON JA
BROWNIE AJA

Wednesday, 31 August 2005

BRONWYN FOORD v. ADRIAN BROCK & ORS

Judgment

1 GILES JA: I have had the advantage of reading the reasons of Bryson JA in draft. Save as to the order now to be made as to the administration costs, I agree with them; I also agree with the additional observations of Brownie AJA. I agree with what Brownie AJA has said concerning the administration costs, and with the orders proposed by his Honour.

2 BRYSON JA: Mrs Joyce Isabel Holyhead late of Blakehurst New South Wales died on 26 December 1999 aged eighty-four years. Her husband Mr Norman William Holyhead predeceased her. By her last will dated 22 March 1994 Mrs Holyhead appointed her three daughters, Mrs Rosalyn Joy Donohoo, Mrs Bronwyn Sue Foord, Mrs Jennifer Robin Brock and Mrs Brock’s husband Mr Adrian Gerald Brock as executors and trustees of her will, and (with a disposition of income for her husband, which did not take effect) gave her property to these trustees upon trust to divide the capital among her daughters. The will conferred no benefit on Mr Brock. The appointed executors and trustees are the parties to this litigation. Mrs Foord, defendant in the Probate proceedings, is now the appellant, and Mrs Donohoo, Mrs Brock and Mr Brock, plaintiffs in the Probate proceedings, are now the respondents.

3 The appellant appeals (by leave granted on 4 June 2004) against orders made by Master McLaughlin on 2 December 2003 ([2003] NSWSC 1125) on two Notices of Motion: one filed by the appellant on 10 February 2003 and a cross-motion filed by the respondents on 1 August 2003, each side seeking orders for costs against the other.

4 All the affidavits which the parties prepared for the purpose of the proceedings were put in evidence before the Master but there was no trial of the issues and there was no resolution of the matters (of which there is a significant number) on which there are conflicts in affidavit evidence. It would not have been appropriate for the Master to embark on a trial of the issues and proceedings for the purpose only of determining costs; and the parties did not ask him to do so.

5 After reviewing contentions put forward by both parties, the Master made the following orders:

1. The Defendant pay the costs of the Plaintiffs of the proceedings after 29 November 2001, such costs to be on the indemnity basis.

2. The Defendant pay the remuneration and the costs of Kevin Richard Shirlaw, including any legal costs as administrator of the estate of the late Joyce Isabel Holyhead.

3. The Defendant pay the costs of the Plaintiffs of the Notice of Motion filed by the Plaintiffs on 1 August 2003.

4. The Notice of Motion filed by the Defendant on 10 February 2003 be dismissed.

6 At one time it was contended in the appeal that the orders for costs were beyond the Master’s powers, the principal ground being that the order in the Probate proceedings referring the question of costs to the Master related only to the first Notice of Motion and not to the cross-motion. This contention was abandoned during the hearing of the appeal. It was further contended that Order 2 of the Master’s orders which related to the remuneration and the costs to the administrator was beyond the powers of the Court (and this contention did not relate only to powers of Masters).

7 There may be different considerations relating to different parts of the moneys ordered to be paid by the Master’s Order 2. The remuneration of Mr Shirlaw, administrator of the estate, could at least in concept be divided (although it has not been divided) into remuneration for administration of the estate in the ordinary course, and remuneration for preparation of reports on estate affairs, including legal costs.

8 By 24 May 2004 Mr Shirlaw’s remuneration amounted to $90,613.43 (with GST) and his legal costs amounted to $27,835.92 (plus GST); there may have been some increase since then. We were told that the total costs and expenses payable under the Master’s orders have been estimated at $278,400.00; but the figures have not been finally established.

9 The principal asset in the deceased’s estate was all the shares in Holyhead Pty Ltd, which was no longer active at the time of her death. The company’s principal asset according to its own records was cash at bank, which at 25 March 2002 was $269,651. The company was the registered proprietor of the house at 49A Kyle Parade, Blakehurst, New South Wales, which was the deceased’s home for many years. At various points parties to this litigation asserted, and all acted on the basis that the company held the house on behalf of the deceased in some way; although it does not appear in what way that was, the end result has never been disputed.

10 The deceased owned a number of accounts at banks and two deposit accounts, one styled “Holyhead Family Trust” (which was later renamed as “Brock Family Trust (AG)”), and the other “Brock, Holyhead Pty Ltd”, with Deloitte Touche Tohmatsu (referred to as Deloittes), the accountancy firm of which Mr Brock is a partner. She also owned some shares of small value. There is no provision in the will authorising the continuance of existing forms of investment, or otherwise dealing with management of estate affairs (apart from provisions which did not take effect). In principle administration of the deceased’s estate should not have been difficult; the main tasks were to sell the house, collect the bank accounts and deposits, and wind-up the affairs of Holyhead Pty Ltd, which involved the need to obtain assessments of land tax. In fact however the difficulties have been great. The history of estate administration and of the litigation in the large volume of affidavits in evidence before the Master is festooned with narrations of relatively small matters, incidental accusations, pejorations and colour. Where it falls to the Court to decide questions of costs for proceedings which were not carried to adjudication, it is not appropriate to hold a trial of the facts and issues and come to conclusions on the merits in the way which would be appropriate if final orders were required; and the parties did not ask the Court to do this. I will however give an account of the events when disposing of issues in the appeal. My account of the events may disregard a number of matters which parties regard as important; I am observing the limitation that contested facts need not be pursued to findings resolving the contest; and the appeal was not conducted in a way which would have made that possible.

11 A grant of Administration of the deceased’s estate was not obtained until on 22 April 2002. Before Administration was granted there were a number of events in which estate assets were not dealt with in proper ways. Mr Shirlaw reported his investigations into the deposit account styled Brock Family Trust (AG) in his report of 3 October 2002 (Blue 2/366). The deceased placed an initial deposit of $54,402 on short-term deposit with Deloittes in mid-1997, and this amount was transferred to Brock Family Trust (AG) in May 1998. During the deceased’s lifetime funds apparently under the control of Mr Brock belonging to members of the Brock family and not to the deceased passed in and out of this account from time to time and there were five occasions, listed in a table by Mr Shirlaw (Blue 2/366), when the total funds in the account were less than the deceased’s entitlement for varying periods, the maximum duration of deficit being thirty-eight days. Counsel for the appellant put these dealings forward as a matter of complaint, but in the absence of evidence that the deceased did not authorise her money to be dealt with in this way there is no reason to treat the conduct of the account as unsatisfactory.

12 After the deceased’s death Brock Family Trust (AG) continued to exist. The account continued to contain and be the vehicle for dealings with funds other than funds of the deceased and her estate. Mr Shirlaw’s report identifies periods when there were deficits in the account so that there was not sufficient money in it to meet all estate claims; if the estate claims were to be paid in full out of the account the estate would have had to establish some priority over other claims. It seems that there were sufficient funds in the account to repay the initial deposit of $54,402, not necessarily the accrued interest, at all times, but the estate was not fully protected in the sense that if there had been competition with other claims the estate might have been entitled only to a rateable part of the fund or to a balance after satisfaction of other claims.

13 A drawing of $20,000 from the account on 2 February 2001, not for estate purposes, produced a situation where there was a deficit of $8,273 between the amount in the account and all claims on it. Parts of this deficit continued for 67 days. It was reduced to $7,373 on 25 February 2001 when interest was credited, and increased to $9,145 on 30 March 2001 when $1,397, not for estate purposes, was debited. Then the deficit ended on 10 April 2001 when $190,000 to which Mrs Brock was entitled was deposited in the account; and Mr Shirlaw’s report seems to show or assume that the drawings which caused the deficit were chargeable against that deposit. In the course of his administration Mr Shirlaw collected $74,473 from Brock Family Trust (AG) being the initial deposit of $54,402 with accrued interest.

14 In retrospect I am unable to attribute much importance to the deficits, which were not large in relation to the size of the estate and were overcome in about two months in a flow of transactions including a large credit; there should never have been any deficit, but there is no reason to think that there was any intended misapplication of funds. From the time the deficit was eliminated there was no loss for which Mr Brock could be called on to account or to pay compensation. However the estate asset was not dealt with in the correct manner, for several reasons. A deposit of money at interest with a firm of which Mr Brock was a partner was an unsuitable investment in which to keep estate assets. As Probate was not obtained with reasonable promptness no one had lawful authority to deal with the Brock Family Trust (AG) or see to the protection of the interests of the estate. The deposit account was not brought under the control of the four executors but remained under the control of Mr Brock alone. The funds were not invested in a way which was clearly identified or earmarked as an estate asset. The estate asset was mixed with funds held with other interests, with the result that, in theory, although there was no adverse outcome, it was not clearly identifiable and free from risks of shared losses. Mr Shirlaw was able to sort out what had happened and establish entitlements, but until he did so there were no records establishing clearly what the entitlements were.

15 Notwithstanding that there was no loss and that in retrospect the dealings with the Brock Family Trust (AG) and the deficits in it have no adverse effects, the shortcomings I have set out are important parts of the circumstances in which to decide whether it was reasonable that the appellant should have been dissatisfied with Mr Brock’s dealings with the deposit account and with his explanations, and should have brought a Cross-claim for the accounts to be taken, and should have obtained a result in which, in effect, accounts were taken. There were many other irregularities in the dealings with Holyhead Pty Ltd and with other estate affairs; I will not tabulate them all.

16 There were irregularities in the first distribution of estate assets, which was completed in June 2000 from the proceeds of sale of the house; $645,000 was distributed, $215,000 to each beneficiary. The vendor in the sale was Holyhead Pty Ltd. Mr Brock and Mr Foord, husband of the appellant, were directors of Holyhead Pty Ltd at the time of the deceased’s death and were in a position to control its affairs. By 22 June 2000 the company obtained assessments of land tax which it was necessary to pay in order to sell the house, completed the sale and collected the proceeds. Mr Foord complained in his affidavit that he was not appropriately involved in decisions leading to the sale. If that happened the sale was markedly irregular. It should have been possible to resolve whether or not Mr Foord was involved by reference to company documents particularly directors’ minutes, and as resolution in that manner was not attempted I infer that the sale too was irregular. Irregularities of these kinds have their own importance, but it has not been claimed that the house was not sold for the right price or that the proceeds did not reach the right hands.

17 Although Mr Brock and Mr Foord were the directors of Holyhead Pty Ltd, the deceased was the only shareholder; until there was a grant of Probate no one else could become shareholder, and before there was a new shareholder no one was in a position to give the company a direction on behalf of the estate about payment of any money due to the estate. The house was sold by Holyhead Pty Ltd, but the proceeds were treated as if the beneficiaries under the will were entitled to the proceeds as estate assets, not as assets of the company. As reported by Mr Shirlaw (Blue 2/359), this distribution came to be treated as a distribution of reserves, that is of capital, by the company for taxation purposes. It has never been clearly resolved whether the house was beneficially owned by the company or by the deceased; whichever is correct, the distribution was carried out in a way which was irregular in many details, although with a fair result in terms of the interests of those ultimately entitled.

18 The second distribution of $600,000 was made in April 2001; $200,000 to each beneficiary, from moneys held on deposit by Holyhead Pty Ltd. This too was later treated for taxation purposes as a return of capital. Again it was irregular in detail but fair in result. Mr Shirlaw made further distributions from the resources which came under his control.

19 The deposit of $190,000 into Brock Family Trust (AG) on 10 April 2001 was part of a distribution. Its source was the other short-term deposit account with Deloittes called Brock, Holyhead Pty Ltd. That account appears to have been an asset of Holyhead Pty Ltd, and the transfer was given the description “10/4/01 TSF EX Holyhead to Brock $190,000.” The transfer was accounted for in the books of Holyhead Pty Ltd as “Advance liquidation distribution” to Mrs Brock as a beneficiary of the estate.

20 There was no misapplication in Mr Brock’s dealings with the distribution of estate assets, in the sense that the resources eventually went to the people ultimately entitled and in a position to complain, but there was marked disregard of regularity and legality, and this supports a conclusion that it was reasonable for the appellant to require investigation and accounting by some expert person other than Mr Brock. To adapt the proverb, it was reasonable to deal with the smoke even though there later proved to have been no fire.

21 In addition to distributions of estate assets Mr Brock took practical control of steps to obtain Probate of the deceased’s will; he did this with the concurrence of other executors including the appellant. Mr Brock deputed conduct of the application to the Court for a grant of Probate, which was essentially simple, to Mr Ronald Cardwell, a senior manager in the Corporate Recovery Division of Deloittes. Mr Cardwell once worked in a law office, and he completed Solicitors Admission Board examinations many years ago. He was not and is not a practising solicitor or a holder of a practising certificate and events have shown that management of a Probate application was beyond his ability. It is also clear that a Probate application is not something which Mr Brock was able to manage himself.

22 Mr Cardwell’s evidence shows that he started making notes and preparations for a Probate application in January 2000, and he obtained standard form documents from Penfolds Stationers. Mr Cardwell also attended to matters relating to the auction and sale of the house, and assessment and payment of land tax. It is also Mr Cardwell’s evidence that he had an application for Probate ready in March 2000 and sent to the Probate Registry on 15 April 2000, accompanied by his own cheque for the filing fee and other documents, including a Summons for Probate, an Affidavit of Attesting Witness, a Notice of Application and an Affidavit of Executor. It is also his evidence that he sent an advertisement notifying the intended Probate application by mail to the Sydney Morning Herald before the posting of the application; there is no indication that the advertisement was ever published.

23 Until August 2000 Mr Cardwell heard nothing from the Probate Registry, and had some inquiries made; the inquiries were extended but the end result given by Mr Cardwell’s evidence is that he established that the application and documents had never been filed; and some of them were returned to him, it would seem in mid-March 2001. The documents which Mr Cardwell said were returned to him were the first page of the Summons for Probate, the original will and the Death Certificate; it is his evidence that he did not get back, and he did not produce in evidence the Affidavit of Attesting Witness (nor did he say who that witness was), the Notice of Application and the Affidavit of Executor; he further said that his cheque (the butt for which did not have the amount of the filing fee filled in) was not returned to him.

24 There could not have been a regular application for Probate in the year 2000 as the appellant did not take any part in such an application, by swearing an affidavit, by signing a Summons or in any other way. By March 2001 nothing had been achieved; and nothing could have been achieved without an affidavit or affidavits of the three executrices, and without their signatures on the Summons. Their signatures were necessary given that there was no solicitor and that the executrices were plaintiffs in person.

25 Another application for Probate was prepared in April 2001; Mr Cardwell published an advertisement in the Sydney Morning Herald on 10 April 2001; but the advertisement notified only an application to be made by Mr Brock, not by the other three executrices. Mr Cardwell prepared a fresh Summons and lodged it on 22 May 2001. The Summons according to its terms sought a grant of Probate to Mrs Donohoo, Mrs Brock and the appellant but not to Mr Brock, although he was named as a plaintiff. Mr Cardwell produced in evidence the affidavit of Mr Brock sworn on 7 May 2001 (Blue 2/462) as the Affidavit of Executor; the other executrices were not named as deponents to this affidavit although the signatures of Mrs Brock and Mrs Donohoo appeared on it. The affidavit showed the gross value of the estate at $763,111.57, which cannot be right. The affidavit did not refer to the house as property owned solely by the deceased, did not attribute enough value to the shares in Holyhead Pty Ltd to include the value of the house, and did not mention liability for land tax. The application was not supported by any affidavit of the appellant. It was supported by an affidavit of Mr R.W. Monahan, solicitor as attesting witness, sworn on 17 May 2001, which seems to suggest that Mr Monahan did not make an Affidavit of Attesting Witness for the application in 2000.

26 Upon receiving the application for Probate on 22 May 2001, the Probate Registry raised these requisitions on the same day:

1. Comply with [Pt 78] Rule 11 re Delay

2. File an Affidavit of Executor sworn by the other executors

3. File a Summons for Probate signed by all executors.

27 Mr Cardwell did not comply with these requisitions and uplifted the Summons from the Probate Registry. On 20 June 2001, Mr Cardwell, apparently seeking to overcome requisitions, asked the appellant to sign a blank form of Summons, which had been signed by Mrs Donohoo and Mrs Brock, but contained no details of what was to appear in the spaces to be filled in the form; the appellant declined to sign. Mr Cardwell also sought to have the appellant sign, apparently as a deponent, the Affidavit of Executor which Mr Brock had sworn on 7 May 2001; there could have been no point in her doing so, she was not willing to do so, and the gross value of the estate was inaccurate.

28 Evidence shows that there were communications between Mr and Mrs Foord and Mr Brock and enquiries about progress of the Probate application and distributions of estate assets from time to time during the year 2000. The communications became more frequent in the first half of 2002. Mr Brock circulated information in a “Note to co-executors” on 28 March 2001. There were some further communications and there were two distributions in April 2001. In May 2001 communications and the tone of complaint became more intense. Mr Foord’s message to Mr Brock of 11 May 2001 (Blue 2/446) made requests for copies of documents which were altogether reasonable, and were not complied with. Mr Brock’s message of 18 May 2001 (Blue 2/448) said, among other things, “It was hoped that probate would have been issued today.” It is not possible to see how this could have been correct, as the Summons was not filed until 22 May 2001.

29 Mr Brock sent a Fax message to the appellant, Mrs Donohoo and Mrs Brock on 22 June 2001 setting out what he saw as an overview of the processes of Probate application and estate distributions (Blue 2/525-526). The message showed a number of steps which were still to take place to obtain the grant of Probate and to liquidate Holyhead Pty Ltd, including preparation of analyses of net assets, movements and distributions thereof, which (it would seem to follow) were not then available.

30 Mr Foord met Mr Brock on 23 June 2001 when estate affairs were discussed. Mr and Mrs Foord met Mr Cardwell on 27 June 2001. On 29 June 2001 Mr Foord, writing on behalf of the appellant and himself, wrote a letter (Blue 2/471) in moderate but clear terms to Mr Brock about “…the situation regarding Probate and the current state of affairs as the rift and consternation within the family is of paramount importance to us.” The letter referred to strains in family relationships and said:

It appears to us that many unanswered questions and irreconcilable explanations remain.

31 Concerns were expressed in this letter relating to the appellant’s being asked by Mr Caldwell to sign a blank form of Summons and to sign Mr Brock’s Affidavit of Executor which contained an inaccurate gross value of estate assets, rather than “…[making] a joint submission” by all executors. The letter also referred to the absence of an Affidavit of Delay. The letter showed that the Foords had made enquiries at the Probate Registry and had been told that full disclosure of all property and assets should be made. The letter referred to the Foords’ meeting with Mr Cardwell on 27 June 2001 and said that Mr Cardwell sent them a new Summons for Probate which they regarded as not complying with what was indicated at the Probate Registry. The letter stated that the appellant was not prepared to sign some documents which were submitted for her signature; and returned them. In the concluding statement the letter said:

For our part we have lost all confidence and respect in the handling of this matter to date and find the whole process to be now flawed and lacking credibility.

and called for the estate to be put in the hands of an impartial trustee.

32 Mr Brock approached the Argyle Partnership, Lawyers, and that firm wrote on 16 July 2001 (Blue 2/473) to all four executors with a proposal that the firm provide legal services and act for all four to obtain a Grant of Probate and to complete administration. The appellant did not agree that the Argyle Partnership should act for her, and informed them of this by letter.

33 Mr and Mrs Foord wrote a letter of considerable length on 24 July 2001 to Mr Brock (Blue 2/475-476) setting out a long history of complaints and dissatisfaction about the conduct of the estate and complaining:

…thus far you have not provided any formal statements or accounts to us as to the value of the assets or other information as to what has happened…

They went on to make a lengthy call for information about events in estate affairs, and to repeat their views that it was appropriate that an independent trustee be appointed to administer the estate, that they did not regard the proposal communicated through the Argyle Partnership as appropriate and that “we obviously reserve our right to approach the Court to appoint an independent Trustee or to make other Application in relation to the Estate as we see fit so to do.”

34 Mr Brock, Mrs Brock and Mrs Donohoo replied by letter dated 1 August 2001 (Blue 2/480) dealing with complaints and enquiries, and forwarded the letter by courier accompanied by a box of papers. The letter indicated that additional information would be provided. It was followed by a longer letter dated 14 August 2001 with fuller explanations (Blue 2/483-485) stating that Mr Brock, Mrs Brock and Mrs Donohoo had instructed the Argyle Partnership to begin drafting documents to obtain a grant of Probate. Again the letter of 14 August 2001 was accompanied by a box of documents. Mr Foord inspected the documents; his affidavit shows that they consisted primarily of various bank statements from different banks for Holyhead Pty Ltd and the deceased, company tax returns, documents from Deloittes relating to money invested with Deloittes and other documents; these documents are not in the nature of an account of dealings with estate assets.

35 Mr Bobbin, Solicitor of the Argyle Partnership wrote again and telephoned the appellant to establish whether he had her instructions and the appellant confirmed that she declined to give instructions in a telephone conversation on 30 August 2001. Correspondence between Keneally & Co, Lawyers acting for the appellant and the Argyle Partnership opened on 10 September 2001 with a letter dealing with complaints and concerns in detail and indicating that the appellant intended to make application herself for Letters of Administration. (However she has never done so.)

36 On 12 September 2001 the Argyle Partnership acting for the respondents filed a Summons for Probate (Red 2) in which the respondents claimed Probate themselves, and did not name the appellant (who of course had not renounced Probate) either as a plaintiff or as a defendant. This was modified by their further Summons filed on 8 October 2001 (Red 3) which asked that leave be reserved to the appellant to come in and prove the will. The attempt to obtain a grant without the appellant was not non-contentious business because correspondence showed that the appellant disputed such a grant, and proceeding by Summons in Common Form was not appropriate. The appellant filed a caveat against the grant on 11 October 2001, the respondents moved to set aside the caveat and the Court made directions for pleadings. It was appropriate for the appellant to resist the Summons, by filing a caveat or in some other way. The Statement of Claim filed by the respondents on 20 December 2001 did not propose reservation of leave for the appellant to come in and apply for Probate, nor did it allege that she had renounced Probate; it only dealt with the appellant’s position by referring to her having filed a caveat.

37 The appellant filed her Defence and Cross-claim on 28 February 2002 (Red 14). A draft had earlier been provided, and there had been exchanges of comments and observations on its contents and effect. The appellant’s Defence relied on her Cross-claim, a formless ramble through her grievances unworthy of James Joyce’s “Ulysses” only in its lack of scatology, leading to a claim for an account of dealings by Mr and Mrs Brock with estate property, an order for payment of any balance found due to the estate, an enquiry as to property lost, misappropriated or used, and appointment of a trustee company or other fit and proper trustee as administrator of the estate. The Cross-claim also included a number of ancillary and related claims. The appellant also served a Notice to Produce requiring the respondents to produce documents relevant to the account of events in estate affairs. The appellant did not claim Probate for herself, and resisted its grant to the respondents.

38 Applications for directions, and other applications including a Notice of Motion to set aside the appellant’s Notice to Produce, came before the Equity Division several times. Each party, and also Mr Cardwell, produced affidavits which were filed by and before the filing of the Statement of Claim, and there were further affidavits from both sides in February and March 2002. Mr Brock’s affidavit of 1 February 2002 (Blue 1/170-195) gave explanations of events and dealings in the deceased’s affairs over some years in her lifetime, and also of events in estate affairs, including circumstances of overdrawing from the Brock Family Trust (AG). He produced a mass of documents, 367 pages, as Exhibit AGB1 to this affidavit. Affidavits on behalf of the appellant gave evidence at a number of places of statements attributed to Mr and Mrs Foord which impugned the conduct of Mr Brock in various ways, principally to the effect that there was misdealing with funds and that there were delays associated with obtaining time to replace funds.

39 On 25 March 2002 the Equity Division ordered to the effect that subject to their consent Letters of Administration with the will annexed were to be granted to Mr Shirlaw and Mr J.P. Smith. The respondents’ Defence to the appellant’s Cross-claim, filed on 26 March 2002 but serving to explain the Consent Orders made the previous day, consented to several alternative forms of orders including a grant of administration to a trustee company or some other fit and proper person. By further order made by consent on 22 April 2002 the order of the Equity Division was varied so as to remove Mr Smith. By the time Mr Shirlaw was appointed the parties had had full opportunities to make their positions known.

40 The appointment of Mr Shirlaw as administrator was not an appointment for a limited or temporary purpose, such as an appointment for the purpose of conducting legal proceedings, or an appointment for the purpose of protecting the estate during an interim period pending further determination. As is usual with grants of administration, the grant was intended to continue for an indefinite period during which Mr Shirlaw was to carry out and complete the administration and distribution of the estate assets, as in substance he did. That grant disposed of parts of the litigation, but not of all of it, as the appellant’s Cross-claim for accounts remained unresolved.

41 In some way which was not clearly recorded and was not expressed in any order of the Court, but which obviously happened, the parties arranged for Mr Shirlaw to investigate estate affairs and report on them; he did this and the terms of his report show that he regarded it as his duty to do so: there is no reason to think that it was not his duty to do so. Whether or not the parties made such an arrangement, it is the usual and expected course for an administrator of an estate to report on what he has done, by producing accounts which could be passed if they were not accepted, and in the circumstances in which Mr Shirlaw was appointed there was a need for a report giving a fuller explanation than estate accounts would usually give. He investigated and reported comprehensively on estate affairs, including the facts and circumstances which underlay the Cross-claim for accounts. Mr Shirlaw’s report exposed the facts relating to those complaints and resolved them, conclusively according to the terms of the report and conclusively in effect, because the Court has not been asked by any party to adjudicate on the remaining claims in the Cross-claim or to take or settle accounts, or to impose any liability arising out of them. The conduct of all parties in seeking general orders for costs of the litigation recognises that the litigation including the Cross-claim has been disposed of, in substance if not in form, by Mr Shirlaw’s report.

42 At the conclusion of Mr Shirlaw’s investigations and report it seems clear that there never was any serious misdealing with estate assets. However there were shortcomings. What were most significantly lacking were prompt well-directed action and clear explanations before and when suspicions arose. Legality was not observed in the conduct of estate affairs, and there were marked irregularities and actions without lawful authority, although the end results were not seriously different from what they should have been if legality and regularity had been observed.

43 Although most issues in the claim and Cross-claim were disposed of, the issue of remuneration and costs to Mr Shirlaw remained outstanding. The order of the Equity Division on 22 April 2002 contains the following note of an agreement among the parties:

The Court notes that:

3. Kevin Shirlaw, as Administrator of the estate, be remunerated in accordance with rates set by the Insolvency Practitioners Association of Australia and such fees are to be paid out of the estate.

4. The reasonable fees of Mr Shirlaw’s solicitors Coudert Brothers are to be paid out of the estate.

44 Note 3 establishes that Mr Shirlaw as administrator was to be entitled to remuneration and that his entitlement was based on the consent of the parties. If there had been no such arrangement Mr Shirlaw would have had to depend on obtaining a discretionary order of the Court allowing him commission, and a person like Mr Shirlaw who undertakes administration as part of professional practice would be unlikely to proceed on that basis. When the agreement recorded in note 3 is considered in its factual matrix, most particularly the series of orders of which it forms part, it is in my opinion plain that its purpose and effect were to establish the manner in which Mr Shirlaw was authorised to obtain remuneration, and that it was not intended to establish the ultimate incidence of the burden of his remuneration and costs upon the parties who consented to the order; that ultimate burden was not dealt with.

45 An administrator has an entitlement under the general law to be indemnified out of the estate for his expenses of administration, and note 4 in the order of 22 April 2002 should be understood as dealing with part of that entitlement. Mr Shirlaw’s entitlement had been and could be expected to be met by his retaining remuneration and expenses out of estate assets. Unless the Court makes an order for costs such as the Master’s Order 2, Mr Shirlaw’s remuneration and expenses will fall equally on each beneficiary’s share in the estate.

46 On behalf of the respondents it was contended:

The respondents consented to the appointment [of the administrator] on the basis that, should [Mr Brock] not be found liable to account for any Estate monies, the costs of the Administrator would be borne by [Mrs Foord].

However, no agreement between the parties to this effect has been established.

47 Senior Counsel for the appellant contended that the parties’ agreement in note 3 of the order of 22 April 2002 meant that there would be no room for costs orders such as the Master’s Order 2 to adjust the rights among the beneficiaries relating to Mr Shirlaw’s remuneration. Counsel referred to Shirlaw v Taylor (1991) 31 FCR 222 in which it was decided that a provisional liquidator appointed by the Court had an equitable lien for expenses and remuneration over assets under his administration analogous to that held by a Court-appointed receiver. In my opinion Mr Shirlaw’s position is not close either to that of a provisional liquidator or to that of a Court-appointed receiver. Mr Shirlaw’s entitlement to recourse to estate assets is clearly established by agreement of the parties and did not depend on general principles. Whether his entitlement would be limited to that recourse does not require consideration. I see no ground for an implication that the agreement in note 3 of the order of 22 April 2002 leaves no room for adjustment, under a costs order or otherwise, of rights among beneficiaries relating to remuneration which Mr Shirlaw is entitled to obtain out of estate assets in the agreed way.

48 Senior Counsel for the appellant further contended that it is beyond the Court’s power to make orders in relation to the remuneration of Mr Shirlaw. To resolve the question of the Court’s powers it is sufficient in my opinion to have regard to the statutory power to order costs in s.76 of the Supreme Court Act 1970 (NSW). Subsections (1) and (2) of s.76 are as follows:

(1) Subject to this Act and the rules and subject to any other Act:
(a) costs shall be in the discretion of the Court,
(b) the Court shall have full power to determine by whom and to what extent costs are to be paid, and
(c) the Court may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on an indemnity basis.

(2) In subsection (1) the expression "costs" includes:
(a) costs of or incidental to proceedings in the Court, including the administration of estates and trusts,
(b) in the case of an appeal to the Court, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal, and
(c) in the case of proceedings transferred to or removed into the Court, the costs of or incidental to the whole proceedings, both before and after the transfer or removal.

Section 76 should be read with the definition of inclusion of “costs” in s.19(1):

Costs includes fees, charges, disbursements, expenses and remuneration.

49 In s.76(2)(a), “the administration of estates and trusts” does not, of course, refer to all administrations of estates and trusts; in its ordinary and natural meaning subs.(2)(a) refers to administration of estates and trusts which are proceedings in the Court, and to administration of estates and trusts which are incidental to proceedings in the Court. There are many administrations of estates and trusts which are in some way connected with orders of the Court, but do not fall within subs.(2)(a): for example, in the usual case grant of Letters of Administration is followed by administration of the estate of the deceased, but it would not be the correct application of s.76(2)(a) to say that the administration of the estate is incidental to the grant of Letters of Administration; a similar example can be given where a new trustee is appointed by order of the Court.

50 Senior Counsel for the appellant referred to the decision of the Court of Appeal of England and Wales in Re Andrews [1999] 1 WLR 1236. In that case a receiver was appointed by the Court over money seized from a person charged with criminal offences, and over other assets including assets of companies associated with the person charged. The appointment of the receiver related to a restraint order under s.77 of the Criminal Justice Act 1988 (U.K) which the prosecutor sought against the accused person. The costs of the receivership were paid by the receiver out of the assets. The accused person was acquitted, and he applied in the restraint order proceedings for an order that the prosecutor pay the expenses of the receiver. The Court of Appeal held that the expenses of the receivership were not costs of and incidental to the proceedings for the restraint order and were not within the Court’s discretionary jurisdiction to award costs under s.51 of the Supreme Court Act 1981 (U.K).

51 Section 51 of the Supreme Court Act 1981 (U.K) did not take the same form as s.76 of the Supreme Court Act 1970 (NSW) although some significant expressions are found in both provisions. Central to the relevant parts of s.51 are these words: “(1) … The costs of and incidental to all proceedings in - … (b) the High Court; … shall be in the discretion of the court.” Rules of the Supreme Court 1965 (U.K) Order 62 r.1(4) included provision to the effect that “references to costs … in relation to proceedings … include references to costs of or incidental to those proceedings.” The English legislation did not include a passage corresponding to s.76(2)(a), or any reference to administration of estates and trusts.

52 Re Andrews contains extensive consideration of the circumstances of the litigation, the appointment of the receiver and conduct of the receivership; no undertaking as to damages was obtained from the prosecutor on the application for appointment of a receiver. Ward LJ, who regarded the result as intrinsically unfair, appears to have upheld the submission that the costs of the receivership were not costs “of and incidental to [the proceedings]” but were management costs requiring independent treatment; see 1245 and 1246. Aldous LJ reached a similar conclusion and said at 1248 “[The receiver’s] charges are expenses of the receivership and are therefore not recoverable by a successful party in the proceedings in which a receiver has been appointed.”

53 In Re Andrews the legislation applied is significantly different to s.76, and the case does not present any question whether costs of administration of estates and trusts were costs of or incidental to proceedings in the Court. The facts on which the Court of Appeal of England and Wales decided that the receiver’s remuneration was not incidental to proceedings in the Court are quite unlike the facts in the present case, and dissatisfaction was expressed by Ward LJ and Aldous LJ with the outcome. I respectfully say that I do not find any assistance in Re Andrews.

54 Ordinarily the administration of an estate under Letters of Administration with the will annexed by a professional person, who accepted administration in resolution of a conflict among the executors under the will, would not be correctly spoken of as incidental to proceedings in the Court being the application for Probate or administration, and would not fall within s.76(2)(a). However circumstances may make an administration incidental to proceedings. This would be particularly clear if there were an order that the administration of an estate or trust be conducted under the directions of the Court; and there may be other circumstances which produce the same result. The facts and circumstances attending Mr Shirlaw’s appointment and his report would not, I think, often be encountered. Estate affairs were mismanaged before the grant of Letters of Administration, and co-operation among the appointed executors could not be achieved. There was a practical need for the introduction of an independent professional person not only to resolve the dispute about entitlement to executorship but also to establish what the assets were and whether they had been dealt with properly. Appointing Mr Shirlaw and obtaining his investigation and report were steps in which all the parties joined towards obtaining a resolution of the Cross-claim for accounts; there was a reasonable basis for that part of the Cross-claim, and in practical terms it has been resolved by Mr Shirlaw’s report.

55 Senior Counsel for the appellant contended that the reference in s.76 is only to estates and trusts which are administered under the direction of the Court. In my opinion the terms and the purpose of s.76 do not support that limitation. Counsel referred to provisions of the Legal Profession Act 1987 dealing with costs; but I do not find these of assistance for the meaning and application of s.76. I do not accept that in s.76 “costs” refers only to remuneration of and to expenses incurred by legal representatives of parties. The definition in s.19(1) of the Supreme Court Act 1970 demonstrates that this is not so.

56 This Court is to decide by applying the meaning of the words in s.76(2)(a), which itself is essentially a matter of fact, to the facts relevant to the incidentality of Mr Shirlaw’s charges to the proceedings; that is, to the question whether costs of administration of the estate, or of any other attendance, are costs of or incidental to proceedings in the Court. As often with decisions about the application of legislation to particular facts the result is to be discerned and cannot be fully expounded. In my opinion it should be concluded that Mr Shirlaw’s remuneration and expenses for his administration and report are costs incidental to the proceedings in Probate, being the respondents’ Summons and Statement of Claim, and the appellant’s Cross-claim for accounts. The administration of estate assets and the investigation and report into the events of estate affairs cannot well be severed: each was done in the course of doing the other and there is no clear basis for allocating remuneration between them. In these circumstances Mr Shirlaw’s administration of the estate and also his investigations and reports are expenses of or incidental to the proceedings, and Order 2 of the Master was within the powers of the Court under s.76.

57 In his judgment at para 3 (Red 56), the learned Master said:

The proceedings were precipitated by the lodgement by Bronwyn Sue Foord of a caveat against the grant of probate of the will of the Deceased dated 22 March 1994.

With respect, this is not accurate. Disregarding the ineffectual things which according to Mr Cardwell’s evidence he attempted to do in the year 2000 and the Summons which was filed in May 2001 and uplifted in June 2001, a fair statement of the commencement of the proceedings is that the respondents filed a Summons for Probate on 12 September 2001. The Master’s incorrect view of the precipitation of the proceedings set his considerations on an unfortunate course.

58 The Master gave a summary of the bases for the claims for costs orders and orders relating to Mr Shirlaw’s remuneration. On one hand the respondents submitted that the necessity for Mr Shirlaw’s appointment arose from the refusal of the appellant to join in the application for Probate, and that if she had joined it would not have been necessary for Mr Shirlaw to be appointed. The respondents contended that the administrator’s report constituted an exoneration of Mr Brock, that there was no loss to the estate and no evidence of misappropriation. In summary, the respondents contended that the appointment of Mr Shirlaw at the instance of the appellant came at the price of the appellant’s being liable for costs of the respondents and the remuneration of the administrator. On the other hand the appellant submitted that if Mr Brock had not mixed his own family funds with those of the deceased there would have been no need for the institution of proceedings or the appointment of Mr Shirlaw, that the respondents were not successful in the proceedings and that she was, and that the respondents should pay her costs on the indemnity basis. It was her basic submission that her position was vindicated by the appointment of Mr Shirlaw.

59 The learned Master gave a further recital of the effect of the submissions before him. He said (Red 63) as follows:

31. The complaints of the Defendant concerning the information communicated to her by the Plaintiffs, in particular by the First Plaintiff, and concerning the alleged mixing of funds of the First Plaintiff with those of the Deceased and, subsequently, of the estate may at the outset have had some substance. Further, the Defendant may have had a genuine grievance arising from a lack of appropriate communication by the First Plaintiff concerning the estate and the progress of the application for Probate.
32.. However, those original complaints and grievance, even if legitimate, appears to have been subsequently inflated into an attempt on the part of the Defendant to conduct a suit for general administration of the estate, and to embark upon a general investigation not only of the financial dealings of the Deceased in the latter part of her lifetime but also of the personal affairs of the First and Second Plaintiffs. For that purpose, the Defendant served, inter alia, a notice to produce (dated 6 November 2001) addressed to the Plaintiffs and a subpoena for production addressed to the firm of accountants of which the Plaintiff was at all material times a member and of which he remains a member.

60 The learned Master’s reasons appear to have given much weight to the extent of calls for documents in the Notice to Produce filed by the appellant. The litigation relating to the claim for Probate and the appellant’s caveat were sent far off in the wrong direction, in a way which could only be expected to generate antagonism, by the Notice to Produce dated 6 November 2001 (Blue 4/1169) delivered on behalf of the appellant to the respondents. At that time there were no pleadings, and so far as I can see there was no discernible issue on which production of documents under a Notice to Produce, enforceable as a subpoena, could reasonably have been called for. The Notice to Produce was drafted in a way which paid no regard whatsoever to the requirements of Pt.23 r.2(1) and (2) of the Supreme Court Rules 1970 which are as follows:

Notice to produce for inspection
23.2 Notice to produce for inspection

2. A party (party A) may by notice served on another party (party B) require party B to produce for the inspection of party A:

3. any document (other than a privileged document) referred to in any originating process, pleading, affidavit or witness statement filed or served by party B,

(b) any other specific document (other than a privileged document) clearly identified in the notice, relevant to a fact in issue.
(2) The maximum number of documents which party A may require party B to produce in reliance on subrule (1) (b), whether by one or more notices, is 50.

61 Well known limitations on the use which may be made of subpoenas appear from many decisions of the Court; significantly in Commissioner for Railways v Small (1938) 38 SR NSW 564, and a recent example in NSW Commissioner of Police v Tuxford [2002] NSWCA 139. In a similar way a Notice to Produce to another party should not be used oppressively; in proceedings conducted with pleadings where discovery and inspection are available there can be little use for a Notice to Produce except for production of documents which have been identified earlier in the proceedings.

62 The appellant’s Notice to Produce is remarkable in its ambitious breadth, and called in substance for all documents relating to the estate from the date of death and all documents relating to the affairs of the deceased and of Holyhead Pty Ltd from 1 July 1996 onwards. It also called for all financial records of Mr and Mrs Brock from 1 July 1996 onwards; and other documents. The restriction under Pt 23 r.2(1) and (2) to documents referred to in (relevant) affidavits and other specific documents, and the restriction to fifty documents were entirely disregarded. Production and inspection of documents should have been left to be dealt with by ordinary processes when issues had been defined. The calls for production seem to have been limited only by the limits of imagination of the person drafting the Notice, and lend themselves immediately to the interpretation that they were put together with the object of putting the recipients to a great deal of unnecessary trouble and creating distraction from the real business of the litigation. Nothing could be clearer and I think few things can be better known than that subpoenas and similar process are not to be used as substitutes for discovery, and are not to be used for mere fishing investigations, to cast about for information on a wider basis than discovery allows. I find it surprising and reprehensible that legal professional persons were involved in such a document.

63 On behalf of the appellant it was contended to the effect that the Master erred in taking into consideration whether there was some underlying shortcoming in the conduct of the appellant which led to the appointment of Mr Shirlaw. It was further contended that where the Court has decided to make a grant of administration it is not open to any party or to anyone else to contend that the grant should not have been made. Counsel suggested that this result follows from the nature of the grant as a judgment in rem. In my opinion this is not conclusive against taking into consideration, on a discretionary order as to costs, whether some conduct of a party which led to the grant is an adverse consideration. In my view the grant of administration was not doubted or reconsidered by the Master when addressing questions of costs.

64 Legal history suggests that it is necessary to find some statutory authorisation for a grant of administration. In the present case the grant of administration has its foundation in s.75(1) of the Wills, Probate and Administration Act 1898. It is also important to bear in mind that administration was granted with the consent of all executors. Their consent to and application for the grant show that as executors they had neglected or refused to prove the will, and that it was just that the Court should grant administration to Mr Shirlaw. The circumstances of the grant do not preclude consideration of whether there was some underlying shortcoming in the conduct of the appellant which led to the appointment of Mr Shirlaw. In my opinion the grant of administration does not preclude consideration of the conduct of parties when considering questions of costs.

65 In my opinion the findings expressed in paras 31 and 32 of the Master’s judgment failed to recognise the strength and underlying substance of complaints and sources of dissatisfaction on the part of the appellant about Mr Brock’s conduct of estate affairs. The appellant in my judgment did not have merely some passing concerns which have been dissipated; by the time the appellant lodged her caveat on 11 October 2001 more than twenty months had passed with estate affairs effectively in the hands of Mr Brock, and there had been many irregularities which justified her sense of grievance.

66 With extended delays came the emergence of suspicion, vigilance and dissatisfaction with Mr Brock’s explanations. No solicitor was retained to make the application for Probate and Mr Cardwell was, judging by the results, operating well beyond his ability. No Summons for Probate was effectively filed in the year 2000. No advertisement notifying an application was published. There was no attendance at the Probate Registry to file documents and pay a fee, and the cheque which Mr Cardwell’s evidence shows was posted was not presented. No relevant document was signed by the appellant although, as the application was to take the form of an application in person, there was a need for all executors to sign the Summons and make supporting affidavits, or join in making one affidavit. So far as appears the affidavit of Mr Monahan who attested the will was not obtained until 17 May 2001. When Mr Cardwell filed documents in 2001 he immediately encountered requisitions from the Probate Registry which he did not deal with properly. He asked the appellant to sign documents in their blank form, and asked her to endorse an affidavit made earlier by Mr Brock, although she was not a party to the affidavit according to its own terms. The inventory of assets in the affidavit which Mr Cardwell prepared and Mr Brock swore to was inaccurate.

67 The Master did not treat appropriately the implications of the course of events and of the respondents’ application to obtain Probate without the appellant. The Master appears to me to have given disproportionate weight to the extent of the calls for documents in the Notice to Produce and in a subpoena to Deloittes (and these were indeed outrageous) and to the breadth of the matters referred to in the Cross-claim. These very considerable short-comings on the part of the appellant appear to have outweighed the Master’s perception of circumstances which made it objectively reasonable for the appellant to resist control of the estate passing to the respondents and made it reasonable for her to seek accounts enquiries and other remedies.

68 Later passages in the judgment show that the Master regarded Mr Shirlaw’s administration and reports as having disposed of the appellant’s grievances and fully administered the estate. The Master said at para 44 of his judgment: “in the event the first plaintiff [Mr Brock] was exonerated from any suggestion of impropriety or misappropriation of assets of the deceased.” This finding is correct, and it is relevant to the exercise of discretion and an important consideration, but it is a wholly retrospective view unavailable to the appellant until Mr Shirlaw reported, and the Master’s conclusion leads me to the view that he gave excessive weight to this circumstance. Further the learned Master’s finding does not show that the appellant did not act reasonably in resisting the respondents’ control of estate assets and in seeking the interposition of some such person as Mr Shirlaw. On the whole I see the course of the proceedings and the outcome as having justified the appellant’s resistance and Cross-claim. As results of what the appellant did the respondents did not press for grant to themselves only, and Mr Shirlaw was brought in, investigated the estate affairs and explained everything. Mr Shirlaw went about things in a completely different way to the way estate affairs had proceeded under the influence of Mr Brock, and this was an enormous improvement.

69 The learned Master said in his judgment: (Red 68):

42 It must have been appreciated by the Defendant that unless and until there were a grant of Probate or of administration of the will of the Deceased, firstly, the administration of the estate would be stultified; secondly, there could not be any distribution of the assets in accordance with the terms of the will; and, thirdly, the provisions of clause 5, which expressly contemplated the possibility of any disagreement between the trustees, could not be brought into operation.

Clause 5 of the will provides: “… I direct that in the event of any disagreement between my trustees the decision of the majority of my said daughters shall prevail.” There has been no decision under this provision.

70 In my view the findings expressed in para 42 of the Master’s judgement are erroneous. It was not the conduct of the appellant which produced these adverse results; administration of the estate was misdirected and stultified under the control of Mr Brock, the application for Probate was completely mishandled, and there were distributions in irregular circumstances. Paragraph 42 expresses a wrong view of the appellant’s position.

71 The Master also said (Red 68 at para 44):

However, whether or not the Defendant was justified in making the original allegations, or in seeking an opportunity to ventilate those allegations, her concerns could not have been appropriately met by conduct on her part which, in effect, stultified the administration of the estate, and made necessary the institution of the present proceedings by the Plaintiffs, and, ultimately, the appointment of Mr Shirlaw as administrator.

With respect I do not think that these observations are well related to the matter under decision. The causes of the appellant’s dissatisfaction made it quite reasonable for her to seek administration of the estate by someone other than the appointed executors. There were inappropriate dealings with estate assets, and incompetent management of assets worth large amounts. Her opposition to a grant of Probate to the three other executors excluding herself is not shown to be unreasonable by its retrospectively being known that Mr Brock had not misappropriated anything.

72 At this point and elsewhere in the judgment the Master does not appear to have appreciated that the respondents applied for Probate in terms which recognised the appellant’s entitlement to executorship only (at the highest) by reserving leave to prove, and that the appellant could not do otherwise than oppose a grant which did not recognise her entitlement in any real way and passed control away from her. The Master referred to opportunities which the appellant had of joining in a grant of Probate and leaving disagreements to be resolved by a majority as provided by clause 5 of the will, and alternatively to renounce Probate. In effect the Master gave weight to the appellant’s opportunity to vacate the field and leave affairs in other hands. This would have left the appellant and the other persons interested in the estate without the investigations and explanations of Mr Shirlaw, and the controversies which Mr Shirlaw’s report quelled would still be in existence.

73 The Master’s findings return at several points to adverse observations on the appellant’s having maintained allegations of impropriety and misconduct, which the Master said were found by Mr Shirlaw to be without substance. It was not correct in my view to find that the allegations were found to be without substance; indeed some of them were confirmed, but were shown ultimately to have been of little importance. In all practicality there does not appear to me to have been any prospect of resolution of the claim and Cross-claim between the appellant and the respondents except by the report of Mr Shirlaw.

74 The Master referred to a letter of 29 November 2001 from the respondents’ solicitors to the appellant’s solicitors proposing resolution and a way forward. The learned Master said (Red 70):

50 It has already been recorded that the present application of the Plaintiff seeks in the alternative an order that the Defendant pay the costs of the Plaintiff and an order that the Defendant pay the costs of the Plaintiff from 29 November 2001 until the determination of the present application. The significance of the date 29 November 2001 is that on that date the solicitors for the Plaintiff sent to the solicitors for the Defendant a letter which clearly and concisely set forth the position of the Plaintiffs; responded to any suggestions of impropriety on the part of the First Plaintiff (which ultimately became the subject of the reports of the Administrator, exonerating the First Plaintiff); addressed the matter of delay in the administration of the estate; and proposed a course for the future conduct of the administration of the estate (“The Way Forward”).

51 Despite that letter of 29 November 2001, the Defendant maintained her stand, and the appointment of the administrator thus became inevitable. That appointment, as I have already observed, required the administrator to conduct an investigation into the conduct of the First Plaintiff which was the subject of the complaint of the Defendant, and that investigation totally exonerated the First Plaintiff.

The Master’s finding in subsequent paras 54 to 55 shows that the Master regarded the appellant’s maintaining her stand after receiving the letter as delinquency or unreasonable conduct relevant to an award of indemnity costs. The appellant’s not having accepted this proposal formed a significant part of the basis on which the Master decided to award indemnity costs against her.

75 The letter of 29 November 2001 contained many observations which retrospectively can be seen to have been reasonable, but it also proposed some things which it would have been reasonable to reject. It proposed a way forward in which both sides would have agreed to a “grant of double probate.” It proposed an alternative way in which the parties would have agreed to probate to the executrices only with leave to Mr Brock to apply, with limits on his making an application, and with appointment of an independent accountant “nominated by the President of the Institute of Chartered Accountants” to review the estate. The accountant was to “undertake such examination as [the parties] considered appropriate” and the report of the independent accountant was to be binding on all parties. There are other elements of the proposal. The letter did not propose in a clear way what the accountant was to do or what matters he or she was to decide; the accountant was to be nominated by the President of the Institute of which Mr Brock is a member, and the proposal that the accountant’s report was to be binding on all parties was, in my view, plainly not a proposal which it was unreasonable for the appellant to decline.

76 The Master said (Red 72):

57. Whilst there may at the time have been grounds for the attitude and stand taken by the Plaintiff before she received the letter of 29 November 2001, I consider the maintenance by her of that attitude and stand thereafter was without justification. Her conduct after the date of that letter in refusing to join in the application for Probate (thereby making necessary the appointment of the administrator and delaying the administration of what was essentially a very simple estate) and in persisting in her cross-claim, were such as should in my conclusion attract an order for indemnity costs against her.

In saying this the Master took an altogether wrong view of the effect of the letter of 29 November 2001 and of the significance of the appellant’s response to it.

77 In my opinion the Master’s decision on costs should be set aside and the Court of Appeal should decide questions of costs again.

78 The respondents’ essential position, which the Master upheld, is to the effect that there was no need for the appointment of Mr Shirlaw otherwise than as a vehicle for the investigation of the appellant’s allegations, and that administration of the estate was substantially complete at the time of the appointment of Mr Shirlaw and could have been completed without the appointment but for the appellant’s insistence that an administrator be appointed and that he conduct an investigation in aid of her claim for accounts to be taken. The respondents’ position involves an assumption or implied assertion that if acting reasonably the appellant should have accepted the explanations which Mr Brock put forward in his affidavit dated 1 February 2002 of his dealings with estate assets, and that the retrospective view of Mr Shirlaw’s report shows that this was the reasonable position.

79 When regard is paid to the manner in which estate affairs had been conducted under Mr Brock’s control and to the responses made to requests for information by the appellant, the retrospective view is not a fair view from which to test the reasonableness of the appellant’s conduct. What was reasonably required when detailed enquiries began to be made in June 2001 was a set of accounts, not a series of letters and boxes of documents; and provision of a set of accounts should not have been something which Mr Brock found difficult. As time passed the appellant found increasing grounds for dissatisfaction, some of them retrospectively proved to be slight, some of them on the verge of the fantastic, but some of them meriting investigation and response in detail, a task which should not have been difficult, bearing in mind that it is an ordinary obligation of an executor and of a trustee to have accounts, and that informality in the manner in which Mr Brock was acting would not furnish an excuse from compliance with that ordinary obligation.

80 The orders claimed in the Notice of Appeal include an order that the respondents pay the appellant’s costs of the proceedings in the Equity Division assessed on the indemnity basis. In support of this claim it was contended to the effect that a person in the position of Mr Brock as an executor de son tort would readily be ordered to produce and pass accounts of his dealings, that the Court would have power to make orders relating to the costs of taking the accounts as part of proceedings in the Court. It was further contended that, having regard to the matters appearing in Mr Shirlaw’s report, Mr Brock should be ordered to pay the costs relating to taking accounts or, in this case, obtaining Mr Shirlaw’s report. Counsel referred to Springett v Dashwood (1860) 2 Gifford 521, 66 ER 218. The decision of Stuart VC in that case illustrates that there is power to order the costs of accounts, although in that case the trustee recovered his costs out of the estate, for reasons stated by Stuart VC at 521, 522. Counsel also referred to In Re Skinner, Cooper v Skinner [1904] 1 Ch 289 (Farwell J) where defaulting trustees were ordered to pay costs.

81 The letter of 24 July 2001 written by the appellant and her husband to Mr Brock made a number of reasonable demands for information and for documents. Whether or not all aspects of the positions taken by the appellant during the conduct of the litigation leading to Mr Shirlaw’s appointment were reasonable, it is objectively clear now that reasonable grounds existed for her to seek and sue for accounts. In my opinion the positions taken by the appellant overall, although not justified in detail in all respects, produced beneficial results for the persons interested in the estate by introducing Mr Shirlaw and obtaining his investigation and report. Without investigation by an independent administrator like Mr Shirlaw, the appointed executors could not be expected ever to have established the position so fully and clearly, given their state of conflict.

82 Important aspects of the appellant’s conduct, allegations and behaviour were excessive and unjustified, but the basic position is that her suspicions and resistance were brought into being by the manner in which Mr Brock conducted estate affairs, and by the other beneficiaries’ adhering to Mr Brock. There was no dishonesty and Mr Brock might have muddled through sooner or later if left to his own devices; but there can be no blame attached to the appellant for not waiting for that to happen. Given the manner in which estate affairs had been conducted by Mr Brock, there were good grounds for the appellant to wish estate affairs to be placed in other hands than Mr Brock’s. Although she maintained her position in ways which were excessive and antagonistic, when exercising its discretion as to costs the Court should not be distracted from the good grounds she had by excess in her response. A clear and defensible analysis of the outcome in which one side won and the other side lost is not available. In retrospect the litigation is a family tragedy and a huge waste of money and effort: but this should not dominate consideration of the exercise of discretion as to costs.

83 The ordinary consequence of the appellant’s having succeeded (and in my opinion she has in substance succeeded) in her Defence and Cross-claim in the Probate proceedings would be that she should recover a general order for the costs of those proceedings, unless for some sound discretionary reason the Court decided to depart from the ordinary course: see SCR Pt 52A r 11. In my opinion the appellant should obtain an order that the Respondents pay her costs in the Probate proceedings, but there should be several important qualifications because of aspects of her conduct of the proceedings which were excessive to what needed to be done for her to attain justice, and because some parts of the legal work which would otherwise be included in her costs were carried out in ways which it would not be just to require others to pay money for. The Defence and Cross-claim document itself, on which I earlier made some adverse observations, was prolix and inflammatory, almost impossible to understand and a difficulty for understanding what was alleged rather than an aid to understanding. It cast a wide net for purportedly relevant facts and events and imposed difficulty on the respondents by so doing. The Notice to Produce was unjustified in its breadth and complexity and was delivered at a time when no Notice to Produce was appropriate as no issues had been defined; it was a crude abuse of the Court’s procedures. The appellant delivered a subpoena to Deloittes which had similar shortcomings to those of the Notice to Produce, and the appellant should not be entitled to include any costs or expenses relating to the Deloittes subpoena in the costs she recovers from other parties.

84 The appellant obtained advantages from the arrangement and orders under which, much as she had claimed, the administration of the estate was put under the control of Mr Shirlaw as administrator. The alternative was to leave the estate to be administered by Mr Brock and the beneficiaries as the will provided but in substance by Mr Brock, who had no right to remuneration under the will but could conceivably have asked the Court to award him commission. As Mr Shirlaw performed his duties in a far better way than they would otherwise have been performed and the appellant shared in the advantages of his work it does not seem appropriate to treat his remuneration or so much of it as may fall on the appellant as properly the subject of an order requiring other beneficiaries to pay her share of it. The appellant contributed, to some degree, to the emergence of conflict and to the scale and the combative nature of the litigation. Others bore blame, but she too was not blameless. The result which will follow if the Court makes no intervention, namely that she will bear one third of Mr Shirlaw’s remuneration payable out of the estate assets generally, is a just outcome, in my opinion.

85 In my opinion the Court of Appeal should order:

1. Appeal allowed with costs.
2. Set aside Orders 1, 2, 3 and 4 made by Master McLaughlin on 2 December 2003.
3. In lieu thereof order:
(a) The remuneration and the costs of Kevin Richard Shirlaw including legal costs be paid or retained by him out of the assets of the testatrix;
(b) The defendant cross-claimant is to pay the costs of the plaintiffs cross-defendants of and incidental to the Notice to Produce of 6 November 2001;
(c) Save as aforesaid, order that the plaintiffs cross-defendants are to pay the defendant cross-claimant’s costs of the proceedings in the Equity Division, except that the defendant cross-claimant is not to recover costs or expenses of:
(i) Notice to Produce directed to the plaintiffs or any of them;
(ii) Subpoena to Deloittes;
(iii) Defence and Cross-claim document filed on 28 February 2002;
(iv) Notices of Motion to set aside Notice to Produce or
Subpoenas.
4. Order that the respondents pay the appellant’s costs of the Notices of Motion filed by the appellant on 10 February 2003 and of the Notice of Motion filed by the respondents on 1 August 2003.

86 BROWNIE AJA: I have had the advantage of reading, in draft form, the reasons for judgment of Bryson JA. For the reasons he expresses, I agree that in the particular circumstances of this case “the administration costs”, consisting of the remuneration of Mr Shirlaw and the expenses incurred by him, were appropriately within the jurisdiction of the Court, when the Court exercised its discretion to make an order for costs in relation to the Probate proceedings.

87 As the regrettable family dispute developed, in the way described by his Honour, it became appropriate, in order to resolve the dispute, to appoint Mr Shirlaw as administrator, and to enquire and report, and the parties recognised this. From the perspective of the appellant, knowing what she knew at the time, it was reasonable for her to resist the ineptly and inappropriately handled Probate application, to seek the appointment of an independent administrator, and to seek an inquiry by some independent person into what had by then happened, and the learned Master was in appealable error in his appreciation of the facts, in the way set out in his Honour’s reasons for judgment.

88 She was therefore in the position of having generally succeeded in the litigation, and being prima facie entitled to recover her costs. However, for the reasons set out by Bryson JA, she over-reacted to the undoubted provocations to which she was exposed and did so in a way that means that she should pay any costs incurred by reason of her excessive reactions.

89 Whilst I respectfully agree with almost all that his Honour has written, I have come to a different view concerning the administration costs. In my judgment, these costs should be treated as part of the general costs of the litigation, to be paid for by the respondents rather than being payable out of the estate (meaning that appellant would pay one third of them). If Mr Brock had done what he undertook to do, the administration costs would not have been incurred. Further, it is unlikely that MR Brock would have claimed commission, and nay commission that might have been awarded would have been relatively modest. Whilst the appellant was not without blame in relation to the general course of the conduct of the litigation, the need for the appointment of Mr Shirlaw, and the need for the incurring of the administration costs arose generally from the conduct of the respondents, and not from the conduct of the appellant.

90 It is necessary for this Court to exercise afresh the discretion as to costs. I consider that the appellant should generally recover her costs, but not any costs that were incurred as the result of the excesses on her behalf. The case seems to me to be one where the Court ought to strive to bring the litigation to an end, and if it is possible to do so, consistently with the requirements of doing justice, to make some order that will obviate the need for the parties to have their respective costs assessed, and then set off, procedures likely to take a good many months, and to cost a great deal of money.

91 As I understand it, the administration costs were about $130,000, and the respondents’ court costs about $160,000. In the absence of information to the contrary, I assume that the appellant’s costs are approximately the same. Recognising all too well that the approach that I suggest represents attacking the problem with a blunt axe, but endeavouring to save the parties from significant further legal costs, I propose what might be described as a form of set off: the administration costs be paid out of the estate, the respondents pay the costs of the appellant in the proceedings generally, and on appeal, and the respondents have a certificate under the Suitors’ Fund Act 1951, if otherwise qualified.

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