Lewis v Lewis (No 2)

[2021] NSWCA 259

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Lewis v Lewis (No 2) [2021] NSWCA 259

Hearing dates:

On the papers

Decision date:

26 October 2021

Before:

Meagher JA, Leeming JA, Payne JA

Decision:

1.  Order that Peter’s costs of the appeal and cross-appeal be paid out of the estate of the late Pamela Lewis, on terms that upon payment the Administrator of the estate shall be subrogated to Peter’s entitlement under order 3 made on 6 August 2021.

2.  Order that Peter’s costs of the notice of motion filed on 20 August 2021 be included in Peter’s costs of the appeal.

Catchwords:

COSTS – supplementary order concerning costs – successful respondent sought further order entitling his costs in successful defence of appeal to be paid out of estate with administrator subrogated to respondent’s costs order – orders corresponded to form of orders made by trial judge which were unchallenged by appeal or cross-appeal – orders made

Legislation Cited:

Uniform Civil Procedure Rules, r 36.16

Cases Cited:

Lewis v Lewis (No 2) [2020] NSWSC 1519

Lewis v Lewis [2021] NSWCA 168

Category:

Costs

Parties:

David Grant Lewis (Appellant; Cross-respondent)
Peter Howarth Lewis (First Respondent; Cross-appellant)
Jeremy Neil Glass (Second Respondent, submitting)

Representation:

Counsel:
R Wilson SC (Appellant; Cross-respondent)
LJ Ellison SC (First Respondent; Cross-appellant)

Solicitors:
Walker & White (Appellant; Cross-respondent)
L Rundle & Co Solicitors (First Respondent; Cross-appellant)

File Number(s):

2020/00317667

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Equity – Probate List

Citation:

[2020] NSWSC 1306

Date of Decision:

25 September 2020

Before:

Parker J

File Number(s):

2017/130576

Judgment

1. THE COURT: On 6 August 2021, this Court gave judgment in Lewis v Lewis [2021] NSWCA 168 and made three orders:

“1. Appeal dismissed.

2. Cross-appeal dismissed.

3. The appellant David Lewis to pay the costs of the first respondent Peter Lewis of the appeal and cross-appeal.”

2. By notice of motion filed on 20 August 2021, Peter seeks a further order as to costs, namely:

“order that the first respondent’s solicitor-client costs of the proceedings be paid out of the estate of the late Pamela Lewis, on terms that upon payment the Administrator of the estate shall be subrogated to the first respondent’s entitlement under order 3 and the payment charged against the appellant’s entitlement as a beneficiary of the estate of the late Pamela Lewis.”

3. David opposes that order, although it is accepted that the application was made within the time specified by UCPR r 36.16. The parties have exchanged written submissions in accordance with a timetable directed by the Registrar, and have not sought for there to be an oral hearing. The second respondent has continued to take an inactive role in the appeal.

The parties’ submissions

4. In support of the application, Peter points to a comparable order made by the primary judge on 29 October 2020 in Lewis v Lewis (No 2) [2020] NSWSC 1519. His Honour had ordered that David pay 80% of Peter’s costs and then made an order similar to that which is now sought, namely:

“(7) Order that:

(a) 80% of the defendant’s solicitor-client costs of the proceedings (apart from those costs solely referable to the cross-claim and costs the subject of any interlocutory costs order); and

(b) the defendant’s solicitor-client costs the subject of any interlocutory costs order in the defendant’s favour,

be paid out of the estate of the late Pamela Lewis, on terms that upon payment the Administrator of the estate shall be subrogated to the defendant’s entitlement under order 6(b) and under any interlocutory costs orders in the defendant’s favour.”

5. In support of those orders, his Honour provided the following reasons:

“34 In these circumstances I see Peter’s role in the litigation as analogous to that of a trustee defending a trust against a claim by a third party. It is well established that in such circumstances a trustee who successfully defends the claim will usually be entitled to an order that his or her costs be paid on a solicitor-client basis out of the assets of the trust. That is so even if in defending the interests of the trust the trustee is also defending his own personal interests: National Trustees Executors & Agency Co of Australasia Ltd v Barnes (1941) 64 CLR 268 at 279.

35   In my view this principle fits the present circumstances. In resisting David’s claim, Peter has acted to the advantage of the residuary beneficiaries. He was only partially successful but to the extent of that success I think he should have an order for his costs out of the estate.

36   I have already decided that Peter should have the benefit of a costs order against David for 80% of his costs, which will be assessed on the ordinary basis. But as I have found that Peter’s actions have been for the benefit of the estate, I see no reason why he should have to wait for assessment and enforcement to recover the moneys which he has outlaid.

37   I therefore propose to make an order that Peter’s costs be paid out of the estate now. Upon payment the estate will be subrogated to his rights under his costs order against David. This will leave any gap between solicitor-client costs and recoverable party-party costs, and any delay resulting from the assessment and enforcement of the costs order against David, on the residuary beneficiaries. That is as it should be.

38   This order will, of course, be confined to the 80% of Peter's defence costs which are the subject of the order against David. And for the reasons I have already given, there would be no justification for awarding Peter any of the costs of his cross-claim out of the estate.”

6. David opposes the orders sought. David notes that in his written submissions opposing the appeal, Peter had sought different orders concerning costs. In particular, Peter had sought an order that the appeal be dismissed with costs calculated on the indemnity basis, and that those costs “in the first instance to be charged on the appellant’s entitlement under the estate of the deceased” and a further order that “to the extent the costs of the respondents are not satisfied by order 3, the respondents’ costs on the indemnity basis are to be paid out of the estate of the deceased”.

7. David observes that this Court’s orders are different from and inconsistent with what was sought in Peter’s earlier submissions and contends that r 36.16 of the UCPR is not intended to permit a party to re-agitate a submission on costs which has been rejected by the Court of Appeal.

8. David further submits that r 36.16 does not permit a party to advance a different costs order in circumstances where the original costs order sought has been rejected.

9. Finally, David submits, but without any elaboration, that the costs order made by the Court of Appeal is the correct order, such that Peter’s notice of motion should be dismissed with costs.

10. In his submissions in reply, Peter contends that the Court of Appeal’s judgment did not deal with the submissions as to costs which were sought to mirror those made by the primary judge, and that there is nothing in UCPR r 36.16 preventing what is said to be a very limited re-agitation of the consequential order with regard to costs.

Consideration

11. The parties did not address the costs of the appeal or cross-appeal, either in their written submissions supplied in advance of the appeal, or in their addresses on 22 June 2021, save only for the fact that, as David observes, Peter sought an order for indemnity costs and the charging order in his written submissions. The submissions did not articulate a basis for any such order.

12. This Court’s judgment of 6 August 2021 rejected Peter’s submission that he was entitled to party-party costs on an indemnity basis. That is implicit in the fact that parts of David’s submissions found success (notably, the matter put in issue by Peter whether the 2014 will and 2015 codicils had been read to Pamela: see at [83]-[90]).

13. Properly, Peter does not seek by this motion to re-agitate his claim for party-party costs on an indemnity basis. To do so would be inconsistent with what has already been decided, and there is no basis to think that one of the limited exceptions which permit that to occur was available here.

14. Order 3 made on 6 August 2021 only concerned the party-party costs of the active parties, David and Peter. The order sought by Peter concerns where he may look to recover his own solicitor-client costs. It is fairly described as supplementary upon the order already made.

15. The order sought by Peter’s motion is justified by the same reasoning given by the primary judge in relation to the 80% entitlement to costs there ordered which is reproduced above. David had sought by ground 11 to challenge other aspects of that exercise of discretion, which this Court rejected. He did not however seek to challenge the appropriateness of an order that Peter’s costs be paid out of the estate immediately, with the party-party costs being deducted from David’s entitlement under the will, and with the difference being borne by the residuary beneficiaries.

16. There is one qualification to the foregoing. The orders sought by Peter’s motion include an order that, if and when the Administrator pays Peter’s solicitor-client costs out of the estate, then in addition to his being subrogated to Peter’s entitlement to costs under order 3, “the payment [shall be] charged against the appellant’s entitlement as a beneficiary of the estate of the late Pamela Lewis”. That goes beyond the terms of the orders made in Lewis v Lewis (No 2) [2020] NSWSC 1519. It also may potentially give rise to a dispute as to its operation, insofar as the reference to “charge” might be understood as creating a proprietary interest. The order made by Parker J provides that when the administrator of the deceased estate pays Peter’s solicitor-client costs, he stands in Peter’s shoes and can enforce Peter’s entitlement to a costs order against David. The intent is that he will be able to satisfy that entitlement by setting off against David's entitlement under the will. It may be that the order sought in Peter’s motion was not intended to achieve any different result, but even so it is preferable that its terms mirror those of the corresponding order made at first instance. Just as David did not challenge the order that Peter be entitled to 80% of his solicitor-client costs from the estate, with the estate being subrogated to Peter’s entitlement, so too Peter did not in his cross-appeal challenge the form of that order.

17. Accordingly, the appropriate order in those circumstances is one which mirrors the orders made by the primary judge, namely:

Order that Peter’s costs of the appeal and cross-appeal be paid out of the estate of the late Pamela Lewis, on terms that upon payment the Administrator of the estate shall be subrogated to Peter’s entitlement under order 3 made on 6 August 2021.

18. The result is that Peter has been substantially successful in obtaining the orders sought on his motion, and the costs of the motion should follow the event. There is no reason for those costs to be treated any differently from Peter’s costs of the appeal.

19. The Court therefore makes the following orders:

1. Order that Peter’s costs of the appeal and cross-appeal be paid out of the estate of the late Pamela Lewis, on terms that upon payment the Administrator of the estate shall be subrogated to Peter’s entitlement under order 3 made on 6 August 2021.

2. Order that Peter’s costs of the notice of motion filed on 20 August 2021 be included in Peter’s costs of the appeal.

ADDENDUM 5 noveMBER 2021

Following communications dated 3 and 4 November 2021 from Peter and David advising that the parties were in dispute as to the effect of the orders, it is confirmed that the reference to "Peter's costs of the appeal and cross-appeal" was intended as a reference to Peter's solicitor-client costs of the appeal and cross-appeal, with order 2 being read similarly. For the avoidance of doubt, the Court makes the following further order:

"The reference to "Peter's costs" in the orders made on 26 October 2021 is a reference to Peter's solicitor-client costs".

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Amendments

05 November 2021 - Addendum added

Decision last updated: 05 November 2021