Harrison v Cox (No. 2)

In the matter of Harrison v Cox (No. 2), the court was tasked with determining the issue of costs in relation to a family provision application and a challenge to the validity of a will. The case involved Renee Josephine Harrison, the daughter of the deceased Raymond Paunovic, who sought to challenge the validity of her father's will and to obtain family provision. The respondents, Stephen Paul Cox and Sharon Maree Turner, were named as executors and trustees in the will and were also beneficiaries. They transferred the principal estate asset, a house, to themselves personally, in breach of their duties as executors and trustees.

The legal issues before the court were whether Ms Harrison should have her costs on an indemnity basis from the estate, whether Mr Cox and Ms Turner should personally reimburse the estate of those costs, and whether Mr Cox and Ms Turner should lose their right of indemnity against the estate. The court found that Ms Harrison's application was reasonably made and that she should be indemnified from the estate for her costs. The court also found that Mr Cox and Ms Turner should lose their right of indemnity from the estate both for their costs of the proceedings and the costs ordered against them on 7 November 2024. The court held that the respondents should pay Ms Harrison's costs of the application by reimbursing the estate, as the application was necessary because, in breach of trust, the primary asset of the estate was transferred to Mr Cox and Ms Turner personally.

The court's reasoning was that Mr Cox and Ms Turner, in their submission, explained that they acted on legal advice and always acted bona fide. However, the court found that they were in serious breach of their obligations as trustees and executors of the estate. They did not accept the open offer to resign as executors and trustees and facilitate the appointment of Ms Prudence Poole. The application for their removal was resisted by them. The court held that the application for their removal as trustees and executors ought not to have been resisted, and the costs of the respondents were not reasonably incurred in the execution of the trust. Those costs could easily have been avoided by adopting the course offered in the open correspondence.

The orders of the court were that Ms Harrison's costs of the proceeding (save as to the costs that are recovered by the applicant from the second and third respondents that are the subject of the order of Davis J made on 7 November 2024) be paid by the estate of the late Raymond Paunovic as assessed on the indemnity basis; that the respondents not be indemnified or reimbursed from the estate for their costs of the proceeding or the costs that are the subject of the order of Davis J made on 7 November 2024; and that the second respondent and third respondent reimburse the estate in an amount commensurate to the applicant's costs of the proceeding (save as to the costs that are the subject of the order of Davis J made on 7 November 2024) as assessed on the standard basis, but that payment be made from the second and third respondents' share of the residue with liberty to apply to the Estate in the event that the costs exceed the sum to which the respondents are entitled under the Estate.