Longworth v Allen - [2005] SASC 469

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
LONGWORTH v ALLEN
Judgment of The Honourable Justice Anderson
14 December 2005
SUCCESSION - EXECUTORS AND ADMINISTRATORS - PROCEEDINGS AGAINST EXECUTORS AND ADMINISTRATORS
Plaintiff and defendant are sisters and beneficiaries under the will of their deceased brother – defendant is the executor and trustee of the will – the plaintiff’s son and two children of the defendant are also beneficiaries – long-running dispute between the plaintiff and defendant unrelated to the will – plaintiff made repeated requests for information about the administration of the estate – defendant’s solicitors asserted that a trustee was not obliged to report to beneficiaries during the administration of the estate – defendant followed this advice and failed to provide any information - distributed the estate but not the plaintiff’s share –distribution included the plaintiff’s infant son with the defendant acting as his trustee – defendant required the plaintiff to sign a release as a condition of her share of the estate – plaintiff alleged breaches of trustee’s duties by the defendant – whether proper to request a release from plaintiff – whether defendant required to distribute plaintiff’s share of estate – whether defendant entitled to be indemnified for her costs from the estate in defending the action – Held: defendant breached her duties as trustee in failing to respond to reasonable requests from the plaintiff as to progress reports on the administration of the estate – defendant required to distribute plaintiff’s share of the estate – defendant removed as trustee of the plaintiff’s son’s portion of the estate – defendant not entitled to be indemnified for costs out of the estate – defendant to pay her own costs – defendant to pay the plaintiff’s costs to be taxed – plaintiff's costs to be paid on a solicitor/client basis from 2 November 2005 - plaintiff's claim upheld.
Trustee Act 1936 s36, s84B; Trustee Regulations 1996, referred to.
Plimsoll v Drake (No 2) (Unreported, Supreme Court of Tasmania, Zeeman J, 1 August 1995), discussed.
Skaftouros v Dimos [2002] VSC 198; Re Beddoe; Downes v Cottam [1893] 1 Ch 547; National Trustees Executors and Agency Company of Australasia Ltd v Barnes [1941] 64 CLR 268; Re Jones; Christmas v Jones [1897] 2 Ch 190; Rouse v IOOF Australia Trustees Ltd (No 3) [1999] SASC 208; Morris v McEwin & Anor [2005] SASC 284, considered.

LONGWORTH v ALLEN
[2005] SASC 469
Civil
ANDERSON J
INTRODUCTION

The plaintiff and defendant are sisters. This matter involves a long and bitter dispute between them. Prior to the death of their brother they had not been on speaking terms for many years. The dispute involves the administration of the estate of their late brother, Robert Anthony Quinn.
By his last will and testament, Mr Quinn appointed the defendant to be the sole executrix and trustee of his estate. The beneficiaries under the will were the defendant and her two children, Rachel and Simon, together with the plaintiff and her child, Sebastian. The whole of the estate was left to the plaintiff, the defendant, and the three children in equal shares. The will was executed on 25 October 2001, and Mr Quinn died on 11 November 2001. At the time of distribution Sebastian was aged nine and Rachel also appears to have been a minor, at least at that time.
Mr Quinn, at the time of his death, had two dogs which, following his death, proved to be a major area of disagreement between the plaintiff and the defendant. It probably was the catalyst for what was to follow.
BACKGROUND
Both the plaintiff and defendant were half sisters of the deceased. The plaintiff and her son, Sebastian, were concerned with the welfare of the dogs following the death of the deceased. The defendant sought to dispose of the dogs by giving them to a Mrs Zimmerman who, after Mr Quinn’s death, produced a note signed by Mr Quinn but not witnessed, which authorised Mrs Zimmerman to “do what I have instructed her to do in regards to my three dogs”. I understand from discussions with counsel that one of those dogs had died by the time the dispute arose, and it was suggested that another, Vicki, was to be put down following Mr Quinn’s death.
Immediately following the death of Mr Quinn, the dogs were cared for by a family, the Bakers, but Mrs Zimmerman, with the approval of the defendant, took the matter into her own hands, called the police, and attempted to register the dogs in her name with the local council. The Bakers, however, handed the dogs to the plaintiff who then took them to New South Wales. The dogs remained with the plaintiff, and one of them, Vicki – an Australian Sheepdog – is still in their possession. The other dog went missing some time after it went to New South Wales and has never been found.
On 22 November, 11 days after Mr Quinn’s death, and after the plaintiff returned to New South Wales, solicitors engaged by the plaintiff wrote to the defendant in relation to the dogs. They alleged that the note produced by Mrs Zimmerman was of no legal effect. It was suggested that the dogs formed part of the assets of the deceased’s estate. A suggestion was made as to how the dogs should be valued and how the matter should be resolved. It was pointed out that the plaintiff had expended some $678 in getting the dogs from Whyalla to New South Wales. The plaintiff pointed out that she was happy to have both dogs and that she would pay a proportion of their value.
Following that letter, the plaintiff wrote herself to solicitors, Hume Taylor & Co, who were acting in connection with the estate on the instructions of the defendant. Again, the letter related to the dogs. The plaintiff wrote again to Hume Taylor & Co in January 2002 when she had received no reply. This letter reiterated the plaintiff’s belief that the dogs should be regarded as assets of the estate.
Hume Taylor & Co responded to the plaintiff by letter dated 23 January 2002. They advised that they were no longer acting and that new solicitors had been engaged, but that those solicitors in turn were no longer acting and that further solicitors, Hills Solicitors, had been engaged by the defendant and that the correspondence had been forwarded to them. The plaintiff wrote to Hills Solicitors on 24 October 2002. This was the first correspondence which related to any aspects other than the question of whether the dogs should be part of the estate. She asked whether probate had been applied for, and if so, when, and if not, why not. She also requested information about the assets and liabilities of the estate and whether any distributions had taken place.
THE DEFENDANT’S ACTIONS AS EXECUTOR AND TRUSTEE
By this time, that is, October 2002, the defendant in her capacity as executor had sold two vehicles, a Suzuki and a Nissan Utility for a total of $1,000 and some household effects for $400. In addition, a contract for the sale of the deceased’s house had been signed at the latest within a few months of his death.
On 19 July 2002 the defendant had sworn an affidavit in relation to the statement of assets and liabilities with the executor’s oath. It is to be noted that the personal estate included the two dogs. Probate of the will and administration of the estate was granted to the defendant by the Supreme Court on 7 August 2002. The only testamentary document relied on was the will, and in particular there was no mention of the note relating to the dogs. Registration papers still had not been transferred in relation to the dogs.
In her letter of 24 October 2002 to Hills Solicitors, as I have indicated, the plaintiff, acting on her own behalf, as one of the five equal beneficiaries, and as the mother of Sebastian who was also a beneficiary, asked whether probate had been applied for and further information as to whether probate had been granted. She also asked about distribution generally and directed further questions to determining the position of the estate with regard to assets and liabilities and any expenditure incurred by the estate during the previous year. On the face of it these were simple and reasonable requests from a beneficiary at that stage, some 11 ½ months after Mr Quinn had died.
Solicitors engaged by the plaintiff, Messrs Hallam & Littlewood, then wrote to the solicitors for the defendant on 19 December 2002 pointing out that over a year had transpired since the date of the deceased’s death and that their client, the plaintiff, had not been given any information regarding the assets or administration of the estate. They indicated that they would have to commence proceedings in the Supreme Court in South Australia for special administration of the estate unless there was a satisfactory response within 21 days. In particular they asked that the defendant’s solicitors recommend to the defendant the merits of keeping the beneficiaries informed of the progress of the estate.
There follows in response what I regard as quite an extraordinary letter. The letter is written by Hills Solicitors, signed by one of their partners, and is dated 20 December 2002. The solicitors indicate that it is their policy to recommend to executors that they provide a detailed report to beneficiaries at the conclusion of administration, but not during the course of the administration, and that because of that advice, the letter from the plaintiff’s solicitors was “ill-conceived, inappropriate and unnecessary”. In my view, that was a most unfortunate response. It was most unwise in the climate which existed, and it was clearly incorrect. The letter went on to state:
Executors are not accountable to beneficiaries in the course of administration, but prudently provide advice on completion … In that context, your view of the merit of keeping beneficiaries informed is not one which we hold.
This letter, in my view, sets the scene for the continuing dispute which was already festering as a result of the defendant’s lack of cooperation in transferring the registration of the dogs.
The letter continues in the same vein and concludes:
In the context of some other issues between our client and Mrs Longworth, it will come as no surprise that there is not an open line of communication ... Please don’t waste anybody’s money with Court applications and accept what we have told you now for the third time.
On 4 February 2003 the plaintiff’s solicitors requested production of records pursuant to s 84B of the Trustee Act 1936. By their response of 11 February 2003 the defendant’s solicitors refused to provide that information, indicating it would only be provided on the completion of the administration. The solicitors included in that response:
If this response, consistent with all our advice, is unacceptable to your client, and your client elects to waste her money in legal proceedings, that is a matter entirely for her… Our client is not in a position to report regarding administration of the Estate until administration is complete.
That last assertion is of course factually incorrect. The defendant was in a position to answer the plaintiff’s queries had she so chosen.
Then on 25 February 2003 the defendant’s solicitors wrote to the plaintiff’s solicitors enclosing a statement of account, a draft distribution statement, and a vendor’s settlement statement relating to the sale of the house. It also enclosed a release for execution by the plaintiff. The solicitors advised that they would proceed with the distribution to beneficiaries other than the plaintiff by 3 March 2003, and gave the plaintiff three working days in which to respond. I set out the terms of the release which the defendant required from the plaintiff:
I, BERNADETTE LONGWORTH, acknowledge having received a statement of account … In consideration of the receipt of the sum of $33,974.98, I hereby release and forever quit claim against Ann Allan in her capacity as Executor and Trustee of the Estate … I acknowledge receipt of the bequest … in full, final and absolute satisfaction of any right or rights accrued or accruing to me as a Beneficiary … and acknowledge … that I release the Trustee absolutely from the discharge of her responsibilities as Trustee…
On 3 March 2003, without any response from the plaintiff, the defendant distributed the shares in the estate to herself, her two children, and to herself as trustee for the plaintiff’s child, Sebastian. She did not distribute any share to the plaintiff.
This was a deliberately provocative move and could only be designed to annoy and frustrate the plaintiff especially by the defendant’s control of Sebastian’s share of the estate without any details of the investment. The defendant was out to make the plaintiff wait until the defendant was ready.
It was immediately apparent to the plaintiff from the draft distribution statement that there were mistakes and omissions in the information which had been provided. The plaintiff therefore made inquiry through her solicitors on 5 March 2003 regarding the sale of some Telstra shares and a question of a tax refund for the year 2002. The letter from the plaintiff’s solicitors also raised questions about the whereabouts of a funeral condolence book and various photograph albums and photographs, and raised again the question of the dogs. It also – significantly, in my opinion – asked a question as to what was proposed for the investment of Sebastian’s share held in trust by the defendant.
On 1 April the defendant’s solicitors acknowledged the omissions in the previous information provided by them regarding the Telstra shares and the final tax return. The letter did not give any satisfactory answer regarding the dogs, and merely advised that the defendant was taking professional advice regarding an investment strategy in relation to the moneys held in trust for Sebastian. It reiterated that it required the release before anything would be distributed to the plaintiff.
This attitude was described by Mr Cox, counsel for the plaintiff, as high-handed. I agree with his description. There was absolutely no reason as a matter of commonsense and cooperation why the defendant could not have provided the information requested, and why the defendant should not have included the plaintiff in the initial distribution. One wonders at the motivation for the defendant’s actions. Mr Cox suggested that it was out of spite. He may be right, but as I go on to say later, the defendant’s solicitor’s legal advice, in my opinion, was quite wrong regardless of what the commonsense position was. The defendant can draw no comfort from attempting to rely on that bad advice, in my view.
On 23 April 2003 the plaintiff’s solicitors wrote to the defendant’s solicitors seeking a copy of the inventory of assets and details of liabilities as submitted for probate together with a copy of the itemised funeral account. They also indicated that the plaintiff would not sign the release, and that she was under no legal obligation to do so. The reply to this was on 29 April when the defendant’s solicitors indicated that the release was a requirement because of the threat of proceedings. They also indicated, somewhat oddly in my opinion, that they had not received instructions on the other matters. These were very simple matters on which to obtain instructions.
A further letter of 12 May 2003 advised that the proceeds from the sale of the shares and the tax refund amounted to $3,888.53. The letter indicated that in relation to the photographs and the funeral book of condolences, the plaintiff would not receive those as the defendant intended taking them to their mother in Ireland. The letter also indicated, “We are instructed to take no further action in relation to the issue of the dog”. In other words, there was to be no transfer papers signed. The letter also advised that Sebastian’s share of the estate had been invested for 12 months on fixed deposit, but no details were given. The defendant’s solicitors again requested that the plaintiff sign and return the release.
Then on 5 June 2003 the defendant’s solicitors wrote to the plaintiff’s solicitors advising that they had been instructed to close their file, and that the payment of the bequest to the plaintiff was dependent on her signing the release. They advised that the moneys owing to the plaintiff were held in a controlled money account.
The plaintiff indicated through her solicitors on 10 June 2003 that she had no objection to the photographs and personal effects being given to her mother provided that she could obtain copies before they were given away. The solicitors for the plaintiff then advised by letter of 23 June that the plaintiff would sign a receipt as distinct from a release, and enclosed a document which they indicated the plaintiff would sign.
By letter of 2 July 2003 the defendant’s solicitors advised that they required a release and would not accept the receipt. They said this was because of the threat of legal proceedings and indicated, “In the event of legal proceedings, our client would rely on the undistributed Estate in the first instance to meet the costs of proceedings”. The letter further stated, “We are instructed not to enter into further correspondence other than the exchange of the Release for the proceeds of the controlled money account”.
On 26 August 2003 the defendant’s solicitors wrote to the plaintiff’s solicitors enclosing details of the current balance of the controlled money account and including details of interest. Once again, the release was requested as a condition of the plaintiff receiving her bequest.
On 1 September 2003 the plaintiff’s solicitors wrote to the defendant’s solicitors asking them to obtain instructions on the following matters:-
1.Would your client consent to the dog being registered in the name of Sebastian Longworth (if so, kindly have her sign the enclosed authority).
2.Our clients are willing to attend at your office for the purpose of photocopying the photographs if your client is prepared to deliver them to you.
3.Would you kindly supply a full and final accounting in relation to collection and distribution of the assets including the Telstra and OneSteel shares and any tax liability that may exist.
It is apparent from the defendant’s affidavit that following this letter, her instructions to her solicitors were that they should not reply to that letter. As a result, a letter was written by the Adelaide agents of the plaintiff’s solicitors to the defendant’s solicitors advising that a summons and statement of claim had been prepared. Quite surprisingly, a response from the defendant’s solicitors of 5 February 2004 included the following:
[I]t would be more appropriate if your client requires something further, that we be told what it is and we will get some instructions… In our view it is entirely inappropriate for proceedings to be brought in any Court in circumstances where a party has firstly failed to detail their concerns or the issues giving rise to the proceedings.
On 16 February 2004 the plaintiff’s solicitors wrote again to the defendant’s solicitors enclosing copies of previous correspondence which were self-explanatory as to what was being requested. The letter reiterated the items which concerned the plaintiff as:
1A list of assets and liabilities submitted for probate purposes.
2The issue of the registration of the dog.
3The question of photographs and the funeral condolence book.
In addition, the plaintiff raised for the first time a request that the defendant be removed as trustee, and concerns regarding the costs alleged to be coming out of her undistributed share of the estate and that of her son.

The reply to this letter by the defendant’s solicitors was on 18 February 2004. I regard the statements made in this letter as disingenuous. It alleges that the financial issues were all answered in earlier correspondence, and then the letter goes on to state:
With the greatest of respect, we do not believe that issues regarding the dog, photographs or funeral book are matters in respect of which the Court could, would or should ever countenance consideration, let alone the making of an order.
We find the reference to an “untenable situation” as particularly interesting.
Your client is threatening expensive Supreme Court proceedings over a dog, some photographs and a condolence book. It is precisely because of the attitude of your client that there is any issue at all.
As I say, in view of the history which I have related in the correspondence to this point, I regard the suggestions made in that letter as disingenuous.
The plaintiff’s solicitors reiterated their requests on 23 February 2004. On 14 April 2004 the defendant’s solicitors advised that most of the photographs in the defendant’s possession had been stolen some seven months earlier. This letter offered a “global resolution”, namely, to provide a copy of the condolence book to the plaintiff, to sign and transfer the ownership of the dog, maintained the refusal to resign the trusteeship, and with all of those matters conditional upon the plaintiff signing the release which had been forwarded some considerable time ago. In other words, nothing had changed.
THE PROCEEDINGS
The statement of claim was filed by the plaintiff on 17 June 2004. The orders sought by the plaintiff include:
1.The Defendant release to the Plaintiff without deduction of any sort the funds placed in the “Controlled Money Trust Account” at the “Greater Building Society Limited” together with all interest accrued thereon
2.The Defendant repay to the estate or any undistributed part thereof, as applicable, all monies charged as legal costs or disbursements since 3 March 2003 that relate to the dispute between the Plaintiff and the Defendant including these proceedings
3.The Defendant execute a transfer of ownership of the deceased’s remaining dog in favour of the Plaintiff
4.The Defendant make available to the Plaintiff for copying, at the Plaintiff’s expense, all remaining photographs that previously belonged to the deceased
5.The Defendant distribute the remaining undistributed estate in accordance with the deceased’s will without deduction for any legal costs or disbursements that relate to the dispute between the Plaintiff and the Defendant including these proceedings
6.The Defendant furnish and verify final accounts in respect of the deceased’s will
7.The Defendant be removed as trustee of the fund established for the benefit of Sebastian Longworth and that the Plaintiff be appointed as trustee in her place
8.The Defendant pay the Plaintiff’s costs and the Defendant’s own costs of this action personally and without entitlement to any indemnity, reimbursement or recoupment from the estate or the trust fund established for the benefit of Sebastian Longworth.
On 1 December 2004 a Master ordered the defendant to provide an affidavit with a statement of account and a statement concerning investments on behalf of the plaintiff and the plaintiff’s son. These were filed on 2 February 2005. It is to be noted that the accounts included an apparent liability for $5,940 for legal costs and disbursements described as “Loan advance in respect of legal costs”.
In June of 2005 on the exchange of lists of documents ordered as part of these proceedings, the plaintiff was able to inspect for the first time the funeral condolence book, the remaining photographs, the probate documents, and the documents comprising the trustee’s records pursuant to s 84B(2).
The statement of claim, after pleading the background matters, alleges that the defendant is in breach of her obligations as administrator and trustee for four nominated reasons. One specific allegation is that the defendant is in breach of her duty to render proper accounts to the plaintiff, and another is that she is in breach of her obligations as a trustee pursuant to s 84B(2) of the Trustee Act.
The defendant’s counsel, Mr Fragos, submitted that the plaintiff’s action must fail because the details of the specific ways in which the defendant had allegedly breached her duty were not pleaded.
This matter was always to be heard on the basis of the affidavit evidence filed by both parties. The affidavit of the plaintiff contains the information, even though perhaps not it its entirety, of the specific matters alleged against the defendant as amounting to the various breaches. The correspondence attached to the affidavit, and indeed the correspondence attached to the affidavit of the defendant, sets out all of the factual basis upon which this dispute is centred.
I reject the defendant’s submission that the plaintiff’s claim should fail because of a lack of specifics in the pleadings. All the specifics were well known to both parties, as I have indicated, through the extensive volume of correspondence attached to the respective affidavits. In my view, no-one could have been in any doubt as to what was being alleged respectively by both parties. Moreover the defendant was unable to point to any prejudice or disadvantage she suffered as a result of the pleadings not being as specific as the defendant maintained they should have been. I deal further with the topic of evidence and the type of evidence relied on shortly in these reasons.
That then is the unfortunate history by which the matter came on for trial. It is necessary to refer to some parts of the evidence given in this court. Both the affidavit of the plaintiff and the affidavit of the defendant were tendered by consent as part of their evidence-in-chief and they were both cross-examined on their affidavits and testimony in court.
EVIDENCE GIVEN
In her affidavit, the plaintiff highlights the matters in respect of which she was seeking information as including real estate, monies in deposit in financial institutions, shares in listed companies, furniture, a motor vehicle, and an entitlement to an income tax refund, the two dogs, and photographs.
She also deposes to the fact that on 9 December 2002 she instructed Hallam & Littlewood Solicitors to act on her behalf, and the following day she was present in their office when a telephone call was made to the defendant’s solicitors to obtain information on the progress of the estate. That was followed up on 18 December 2002 by a further telephone conversation to check on progress. On neither occasion did the solicitors for the defendant provide the solicitors for the plaintiff with any information.
In relation to the release, the plaintiff says in her affidavit that at the time she was asked to sign that release, to the best of her knowledge there were still assets in the estate to be realised. These included the Telstra and OneSteel shares, and the taxation liability or refund for the 2002 tax year. None of those assets were referred to in the release.
She indicates that she was not provided with the inventory of assets and liabilities as submitted for probate, nor details of Sebastian’s trust money and investment, nor details of the costs alleged to have been realised from her entitlement in the estate, nor photographs or copies thereof, and the issue of the dog remain unresolved.
It was in those circumstances and for those reasons that the plaintiff sought to replace the defendant as trustee of her son’s entitlement.
In the affidavit filed by the defendant, she confirms that having sighted the note made by her brother to Mrs Zimmerman, and after she obtained legal advice, she gave the dogs to Mrs Zimmerman. She also says that she asked others in the family including the plaintiff whether they wished to take and care for the dogs. She said that no-one expressed any interest. That seems quite surprising in view of the actions taken by the plaintiff immediately following the death of her brother, but no questions were directed to either the plaintiff or the defendant in cross-examination on that topic.
In her affidavit, the defendant refers to some correspondence and then says:
At the time of each of the letters there was no meaningful information which could genuinely be provided to any beneficiary regarding administration except that we had applied for, obtained a Grant of Probate and arranged for collection of the assets.
In my view, that is quite an extraordinary statement because that is exactly the information that the plaintiff was seeking. She confirmed that it was her view, following receipt of the letter from the plaintiff’s solicitors, that it was, “both proper and prudent to complete administration of the estate and then report”.
In relation to the release, she said it was required in light of the threats of legal proceedings made by the plaintiff, and that she wanted some assurance that she could be protected from any dispute or argument once administration was complete. Once again, that appears to me to beg the question of the reasonableness of her not providing information which was requested by the plaintiff.
She confirms in her affidavit that the Telstra shares, the OneSteel shares, and the details from the tax return had been overlooked.
Somewhat disingenuously, in my opinion, the defendant deposes as follows:
In relation to photographs and the condolence book, I was both surprised and disappointed that these were now being raised as an issue and didn’t want to get involved in an argument about such things.
She said later that she didn’t regard the photograph issue as one meriting a response, and then repeats again that she didn’t regard the issues of the condolence book or the photographs as genuine matters of substance.
She says in her affidavit that all relevant financial information was supplied on 25 February 2003 and 12 May 2003, and had the defendant been called upon to do so, the information could have been collated and put into an updated form, but no request was made. Once again, in view of the background I have earlier related, I regard this response as disingenuous.
Finally, in her affidavit the defendant says:
I have acted at all times in good faith simply to respect my brother’s wishes. I have not sought to bring or maintain conflict with the Plaintiff, and to the extent possible, believe that prior to the filing of these proceedings I have taken steps, or offered steps, to fairly and properly resolve concerns raised by the Plaintiff. Notwithstanding those efforts the Plaintiff filed these proceedings.
From the comments I have already made, it will be apparent that, in my view, the defendant did not act in good faith simply to respect her brother’s wishes. I do not accept that she has sought to avoid conflict with the plaintiff, and I do not consider that she has offered steps to fairly and properly resolve concerns raised by the plaintiff for the reasons I have already indicated.
DUTIES OF A TRUSTEE
The plaintiff complains of a litany of defaults made by the defendant in her capacity as an executor and a trustee. The plaintiff asserts that the defendant, as the trustee and therefore a fiduciary, had certain duties to keep the beneficiaries informed concerning the administration of the estate. Those duties included keeping proper accounts and responding to inquiries made from time to time by the beneficiaries. See Meagher and Gummow, Jacobs Law of Trusts in Australia (6^th ed, 1997) at 430 in which the authors state that:
Not only must trustees keep proper accounts, but they must also be ready to render accounts where required by the beneficiaries or by persons authorised by the beneficiaries. Failure to render accounts when requested to do so will make the trustees liable to pay the cost of proceedings instituted to obtain them … In addition to keeping and furnishing accounts, trustees must, when asked to do so, give beneficiaries full information as to the amount of the trust property and as to its investments even if the beneficiary’s interest is only contingent. (footnotes omitted)
The plaintiff also referred to the decision of Mandie J in Skaftouros v Dimos [2002] VSC 198 where his Honour said at [14]:
An executor, like a trustee, should provide a prompt and proper response to reasonable inquiries and requests for information by beneficiaries. Even onerous, unreasonable or antagonistic inquires or requests should, at least in the first instance, receive some appropriate response or acknowledgment. (footnotes omitted)
The plaintiff gave instances of defaults by the defendant. Amongst others, the plaintiff nominated the defendant’s failure to inform the plaintiff that she had received a grant of probate. Likewise, the defendant failed to inform the plaintiff that she had executed a contract to sell the deceased’s house. She also failed to inform the plaintiff that the estate had received some $167,000 from the deceased’s superannuation benefits. She had also disposed of some chattels including two motor vehicles. She had not advised the plaintiff of these transactions.
The plaintiff refers to s 84B of the Trustee Act 1936. Section 84B(1) states:
A trustee shall keep such records relating to his administration of the trust property as may be prescribed.
The records which must be kept by the trustee are set out in the Trustee Regulations 1996 paragraph 6. It requires a comprehensive method of record keeping.
Section 84B(2) requires a trustee at the request of a beneficiary under the trust to:
produce the records kept by the trustee in pursuance of this section for inspection and permit the Public Trustee, the other trustee or the beneficiary (as the case may be) to examine and make copies of those records.
In addition to the various requests for information made by the plaintiff’s solicitors there are also two letters in which specific reference is made to s 84B of the Trustee Act. On 4 February 2003 the plaintiff’s solicitors wrote to the solicitors for the defendant and stated that “our client requires production of the records of the trust pursuant to Section 84B of the Trustee Act 1936.” Again, just over a year later on 23 February 2004 the plaintiff’s solicitors wrote that their client “further requests an opportunity to inspect the trustee’s books of accounts in accordance with her right pursuant to Section 84B(ii) (sic) of the Trustee Act 1936.”
In argument Mr Fragos contended that the information provided by the defendant on 25 February 2003, which included draft distribution statements and statements of account, constituted adequate compliance with the obligations of s 84B(2). Mr Cox, in his reply, submitted that what is meant by records, in the context of the Trustee Regulations and the general law in relation to accounts, goes far beyond what was provided to the plaintiff. In my view the defendant’s responses to these requests were not sufficient to comply with the requirements of s 84B(2). Therefore I find the defendant in breach of that section.
In that context, the letter written by the solicitors for the defendant on 20 December 2002, to which I have already referred, is particularly instructive. That was the letter in which the solicitors stated that they had given advice to the defendant to the effect that executors were not accountable to beneficiaries in the course of administration, and that the plaintiff’s view of the merit of keeping beneficiaries informed is not one which they held. As I have indicated, that seemed to set the scene for the position in which the parties now find themselves.
The next most important aspect of the defendant’s conduct is her requirement that the plaintiff sign a general release as a condition precedent to her receiving her share of the estate. The conduct of the defendant through her solicitors in requiring this release again leaves a lot to be desired in my opinion.
From that point on, the plaintiff was in a position where she could not receive her share of the estate unless she gave in to the defendant’s demands. The defendant’s demands were unreasonable because they would have absolved the defendant from any past breaches of her duties as trustee, and would have required the plaintiff to forego her existing claims, and moreover, absolved the defendant from her responsibilities in answering questions regarding the administration of the estate from one of the beneficiaries.
It was, as put in argument by Mr Cox, a high-handed approach. It again is a relevant factor in the important history of this matter to illustrate how, in my view, the defendant held the plaintiff to ransom.
FINDINGS
Having regard to the evidence before me, I make the following findings:
1.The defendant’s attitude regarding the dogs was the cause of immediate animosity following the death of Mr Quinn.
2.The plaintiff reacted promptly, perhaps over-enthusiastically, by engaging solicitors within a short time following the death of Mr Quinn.
3.The defendant did not provide relevant information to her sister in a timely fashion or at all regarding the details which were available of the administration of the estate.
4.The defendant was in breach of her obligations as an executor and trustee of Mr Quinn’s estate in failing to provide relevant information which she had at her disposal.
5.The defendant was also in breach of her obligations under s 84B(2) of the Trustee Act to produce trustee’s records and allow examination and copying of those records.
6.The defendant’s solicitors acted belligerently and wrongly in advising the defendant not to provide the information until the completion of the administration.
7.The defendant had no proper basis to distribute the estate in part and to withhold the plaintiff’s share of the estate.
8.The defendant wrongly attempted to force the plaintiff to sign a release as a condition precedent of her obtaining her share of the estate.
9.The plaintiff had no other option, in my view, because of the defendant’s conduct, than to initiate and to continue the legal proceedings to obtain her rightful entitlement.
REMOVAL OF DEFENDANT AS TRUSTEE
The plaintiff seeks the removal of the defendant as trustee of the fund established for the benefit of the plaintiff’s son Sebastian, and that the plaintiff be appointed as trustee in her place. Under s 36 of the Trustee Act a judge of the Supreme Court may remove a trustee and appoint a new trustee on application from, amongst others, a beneficiary of the trust, if satisfied that the order is desirable “in the interests the persons … who are to benefit from the trust” or “to advance the purposes of the trust”. Sub-section (1b) provides that there “is no need for the Court to find any fault or inadequacy on the part of the existing trustees before making an order under this section”. Indeed, apart from the breaches of trust already outlined, there is no allegation of any wrongdoing on the part of the defendant.
Sebastian Longworth is now 12 years old, and so his inheritance will need to be held on trust for him for a further six years. It was agreed in evidence that the defendant does not know, or have any contact, with Sebastian. In light of the unhappy relationship between the plaintiff and the defendant, I am satisfied that it will be of benefit to Sebastian that the defendant does not remain as trustee in relation to his portion of the estate. The defendant had indicated that she would be willing to voluntarily stand down as trustee in favour of the Public Trustee of New South Wales, however, there are disadvantages to this option in terms of the fees charged for that service. I do not consider that, because of the fees involved, it is appropriate to appoint the Public Trustee. I find that subject only to the provision of some further information that the plaintiff should be appointed trustee.
COSTS

As became apparent during argument from both counsel, the task for this court is to decide the rights and wrongs of the parties essentially for the purpose of awarding costs. Costs are a major issue for both parties.
The defendant contends that she is entitled to costs and should be indemnified for any costs incurred out of the estate. The plaintiff on the other hand contends that the she should have all her costs because of the conduct of the defendant, and that the defendant should not be indemnified from the estate, and should have to bear her own costs.
The general rule is that a trustee is entitled to be indemnified in relation to the trustee’s legal costs when the trustee is either required to initiate action or to defend an action relating to the trustee’s duties as trustee. See Re Beddoe; Downes v Cottam [1893] 1 Ch 547, and National Trustees Executors and Agency Company of Australasia Ltd v Barnes [1941] 64 CLR 268 at 277.
The question of whether costs have been properly incurred by the trustee is a matter of fact in each case. In this case, for the reasons which I have indicated, the trustee has been successfully sued by the beneficiary, and therefore the question arises as to whether the trustee’s costs should come out of the estate.
In Re Jones; Christmas v Jones [1897] 2 Ch 190 Kekewich J dealt with different circumstances in which a trustee was not able to justify the incurring of costs.
The judgment of Kekewich J was summarised by Lander J in Rouse v IOOF Australia Trustees Ltd (No3) [1999] SASC 208 at [41] where his Honour said:
In Inre Jones; Christmas v Jones [1897] 2 Ch 190 Kekewich J indicated circumstances where a trustee could not establish that the trustee’s costs were properly incurred. First if a trustee is found liable for a breach of trust and the trustee has incurred costs in resisting the claim against the trustee the trustee is not entitled to recourse to the trust funds to indemnify the trustee in respect of those costs. Secondly if a trustee brings a claim which ex facie on the evidence and documents could not honestly be brought forward then the trustee is not entitled to recourse to the trust funds. Thirdly if the trustee is motivated by dishonesty then, of course, the trustee is not entitled to indemnity in respect of the trustee’s funds. Kekewich J then identified a fourth category which he described as a ‘claim... of a monstrous character’ which he defined as; “one which no reasonable man could say ought to have been put forward”. In those circumstances the trustee should not be entitled to indemnity for the trustee’s costs; “even though the executor may have believed it, and a solicitor may have prepared the case and counsel may have argued it; in such a case the Court has quite sufficient power to deprive the executor of his costs, or even to make him pay the costs he has occasioned to the estate”.
His Honour also summarised the judgment of Lindley LJ at [42]:
In In Re: Beddoe; Downes v Cottam … Lindley LJ said that having regard to the small cost which a trustee would incur in obtaining the opinion of a judge of the Chancery Division as to whether an action should be brought or defended a trustee who brings or defends an action without such an opinion must show that the costs were properly incurred … Lindley LJ held that the fact that a trustee had relied upon the advice of counsel was a matter to be taken into account in determining whether costs had been properly incurred but that the opinion of counsel was not of itself determinative of the matter. In that same case Bowen LJ held that a trustee, who embarked on litigation on the advice of a solicitor even if the trustee honestly believed the solicitor’s advice, was not necessarily entitled to be indemnified in respect of the trustee’s costs. If the solicitor has been wrong headed and perverse then in those circumstances the trustee is to be deprived of the trustee’s costs.
I would also agree with the following statements from the reasons of Lander J as follows at [43] - [45]:
I think I should approach this matter in the following way. A trustee, even if unsuccessful, may be entitled to recourse to the trust funds to indemnify the trustee in respect of litigation upon which the trustee has embarked or defended. Where the trustee has embarked upon litigation and has been unsuccessful then it is upon the trustee to establish that the costs which have been incurred were properly incurred or not improperly incurred.
In circumstances where the trustee has been guilty of a breach of trust or has acted negligently, dishonestly or monstrously then the trustee may not be entitled to indemnity from the trust funds in relation to the costs incurred because the trustee would not have properly incurred costs.
A trustee is not entitled to merely say that the trustee has acted upon the trustee’s solicitor’s advice or the advice of counsel if that advice is wrong headed and perverse.
In this matter I have already found that the defendant was in breach of her obligations as trustee at common law, as well as pursuant to s 84B(2) of the Trustee Act. In these circumstances I find that the defendant is not entitled to any indemnity out of the estate for her costs. I do not consider that the advice given by the defendant’s solicitors provides any excuse.
Mr Cox argued that the plaintiff should receive her costs on an indemnity basis. The reason for this was essentially the conduct of the defendant in her unreasonable failure to carry out her duties, and her attitude generally as conveyed by solicitors, all of which, it was suggested, was done purely out of spite. Whether it was done purely out of spite, I am unable to say but there were certainly sufficient unwarranted and provocative comments, contained in the correspondence which I have set out which meant, in my view, that if the plaintiff was to insist on her rights and receive her entitlement from the estate, she had no option but to proceed in the way she did.
However, the conduct of the plaintiff is not without blame. Although provoked by the actions of the defendant in the very early stages regarding the care and control of the dogs, she certainly acted very quickly by engaging solicitors and causing the defendant to go into defensive mode. Likewise, her conduct in taking some of the photographs and not disclosing that fact was probably unfortunate. It is possible that had the plaintiff not initiated legal demands in relation to the dogs at the very early stage which she did that things may have settled down, but that is mere speculation. What I can say, however, is that it certainly did not improve things, and is at least in part, an explanation for the conduct of the defendant which followed.
Zeeman J in Plimsoll v Drake (No 2) (Unreported, Supreme Court of Tasmania, 1 August 1995), was dealing with the question of costs in a matter which also involved determining the question of whether a trustee was entitled to a release from beneficiaries. His Honour set out large passages from the judgment of Kekewich J to which I have already referred. His Honour then said:
Executors who unsuccessfully pursue a purely selfish interest and thereby are “not fighting for the estate any more than if they were not executors at all” must bear the costs thereof in the same way as any other litigant (Skrimshire v Melbourne Benevolent Asylum (1894) 20 VLR 13 per Madden CJ at 18).
In the case before Zeeman J, as in the case here, there had been no misconduct in the management of the trust estate. The trustee in that case had been asked to resign his office, and it was held that the refusal of the trustee to resign in the circumstances of that case had actually resulted in the legal proceedings. The trustee had, in defending the action, been representing and supporting his own interests and not those of the trust estate. The trustee had argued that he was entitled to a release, and that argument failed. Zeeman J said:
At all times the respondent maintained the position that he was entitled to a release to which he was not entitled. It seems that at one stage the applicants offered to execute a release in modified form but that they later resiled from that. It may be assumed that in making such an offer they were acting, at least to some extent, out of a sense of frustration in not being able to receive their entitlements because of the demands made by the respondent. The making of that offer and some degree of tardiness in responding to some of the correspondence from the respondent provides no basis for depriving the applicants of their costs.
His Honour went on to say:
The present proceedings were instituted by the applicants with a view to having the respondent perform his legal duty, being a duty which he had declined to perform until he was given a release to which he was not entitled. The proceedings were necessary because the respondent sought to acquire that personal advantage. Having failed to obtain it and the proceedings having vindicated the position taken by the applicants, the respondent should pay the applicants’ costs.
Those comments from his Honour are pertinent to the findings which I have made in this matter and I consider that the same result should follow.
In my view, an appropriate order in relation to costs in this matter, subject to hearing counsel finally on the question of costs, would be as follows:-
1.The defendant should pay the plaintiff’s costs of the action to be taxed.
2.The defendant should pay her own costs of the action.
3.The defendant is not entitled to any indemnity out of the estate in respect of this dispute.
In relation to the final orders to be made, I will hear counsel.
FINAL ORDERS
After I published my reasons in this matter on 14 December 2005 I heard an argument relating to costs.
In my reasons I had indicated my preliminary views on costs. I was then informed by counsel that there had been some attempts to settle this matter, and that various offers had been made. It was accepted by this court in Morris v McEwen & Anor [2005] SASC 284 that Calderbank offers can be relevant to the Judge’s discretion as to costs. I was referred to a letter of 9 May 2005 written by the solicitors for the plaintiff to the solicitors for the defendant. In that letter, after summarising what the solicitors regarded as the key issues in the matter, an offer was made which was expressed to be a “global” offer. The offer was as follows:
(a)The defendant sign a transfer of ownership of the remaining dog.
(b)The plaintiff is to receive a copy of the condolence book.
(c)The plaintiff be entitled to copy any photographs in the possession of the defendant which belonged to her brother.
(d)The defendant to relinquish her trusteeship to the Public Trustee of New South Wales.
(e)The plaintiff will pay her own costs of the proceedings.
(f)The plaintiff is to receive the proceeds of the controlled money account without deduction.
(g)The undistributed estate held by the defendant in trust be applied to estate costs and any shortfall be met from your client’s personal funds.
(h)The plaintiff will sign a release.
The letter concluded by asking for a response and advised that if the matter could not be compromised then a hearing date for trial would be sought on 17 May 2005.
I was informed that that offer was rejected orally on 16 May 2005, and a counter offer was made by the defendant and then the following day, namely, 17 May 2005, the plaintiff rejected the defendant’s oral counter offer. The solicitors for the plaintiff then wrote to the solicitors for the defendant confirming that as a result, the offer as expressed in the earlier letter of 9 May 2005 was withdrawn and that the matter should proceed to hearing.
The solicitors for the defendant then wrote to the solicitors for the plaintiff on 25 May 2005. I received this correspondence as Exhibit D8 subject to my rejecting it should I regard it as irrelevant. Having considered the whole of the circumstances in which the settlement negotiations were taking place, I think it is relevant. The offer by the defendant expressed in that letter is as follows:
1.The defendant sign a transfer of ownership of the remaining dog to Bernadette Longworth.
2.The defendant provide Bernadette Longworth with a copy of the condolence book.
3.The defendant provide Bernadette Longworth with a copy of any photographs in the executor’s possession which belong to her late brother, and Bernadette Longworth provide the executor a copy of all photographs of the late Robert Quinn in her possession.
4.The defendant will resign as trustee and appoint the Public Trustee of New South Wales as trustee in her stead.
5.The plaintiff pay her own costs of the proceedings.
6.The plaintiff receive the proceeds of the controlled money account held on her behalf.
7.The undistributed estate held Hills Solicitors be applied to the estate’s costs and any shortfall be met from the personal funds of the defendant.
8.Bernadette Longworth execute a deed of release on terms reasonably required by the executor to give effect to the settlement.
9.The proceedings in the Supreme Court of South Australia be dismissed.
10.The defendant’s solicitors certify inspection of evidence relating to the theft of, inter alia, photographs of the deceased.
That offer was expressed to be open and capable of acceptance until 12 noon on Tuesday 31 May 2005. It was not accepted.
The matter was then set for trial on 21 November 2005. On 2 November 2005 the solicitors for the plaintiff again wrote to the solicitors for the defendant offering to compromise the matter. This letter reiterated the offer made in the earlier correspondence of 9 May 2005. The offer was specifically made open until 5 p.m. Monday 7 November 2005.
On 7 November 2005 the solicitors for the defendant wrote to the solicitors for the plaintiff canvassing again some of the issues between the parties. In response to the offer made by the plaintiff, the defendant requested a contribution from the plaintiff of $15,000 towards the costs of the proceedings. It was expressed in these terms:
Our client requests a contribution from your client towards the costs of the proceedings in the order of $15,000 which would be applied in addition to the undistributed estate, towards the estate’s costs.
Subject to that counter offer on the question of costs, the defendant was prepared to otherwise agree to the terms proposed. This offer was expressed to be open until 5 p.m. on Wednesday 9 November 2005. It was not accepted, and the matter proceeded to trial.
I will not go through the long history of the earlier correspondence which passed between the parties as set out in my reasons. It is apparent to me that although both parties seemed, in this latest series of correspondence, to be attempting to finalise the matter, the sticking point was – and it seems still is – the question of costs. Further, it is accepted that at no point did either party make a formal offer pursuant to the Supreme Court Rules.
Having regard to the whole history of this matter, and in particular the Calderbank letters, it is my view that the offer originally made by the plaintiff in May 2005 is consistent with the spirit and intent of rule 40 and, as it transpires, if accepted by the defendant, would have resulted in a less satisfactory result for the plaintiff than what she has obtained as a result of my decision. In particular, the plaintiff was offering to pay her own costs of the proceedings. In view of the background of the matter, this was a most realistic and reasonable approach in my view. This offer, however, because of the response from the defendant, was withdrawn. It had originally been an offer which was expressed to remain open until 17 May when a hearing date would be sought. It was, however, only open for eight days. That is an important consideration to take into account in determining whether regard should be had to a Calderbank letter when determining the question of costs. In my view, it would not be appropriate in the circumstances to allow the plaintiff to have solicitor / client costs from the date of that offer because of the limited time it was made available.
As the matter neared trial, the plaintiff made yet another attempt to finalise the matter by reiterating that earlier offer of 9 May 2005. This was rejected by the defendant in the defendant’s attempt to obtain a substantial contribution towards her costs. In my opinion, at that stage the defendant’s response was unreasonable, and from my reasons, it is apparent that I do not believe that the defendant was justified in seeking any contribution towards her costs.
It is therefore my view that the offer made by the plaintiff on 2 November 2005, even though it was expressed to remain open only until 7 November 2005, was nevertheless a genuine and sensible attempt to resolve the matter, at a very late stage, and again with the plaintiff prepared to bear her own costs. If accepted, it would have saved the costs of the final preparation for and the running of the trial including the costs of both parties coming from interstate for the trial. In the circumstances therefore, and in the exercise of my discretion, it is my view that justice would be done in relation to the question of costs if an order were made that the plaintiff is entitled to have her costs taxed from 2 November 2005 on a solicitor / client basis. I say this because, even though the time was limited, it was yet another reasonable attempt by the plaintiff to settle the matter.
In regard to the affidavit of Ann Patricia Allen dated 14 December 2005, I have relied only on the information contained in the paragraphs in which she deposes to the age of her two children, namely, paragraphs 15 and 16. The remainder I find to be irrelevant. I have not marked the affidavit as an exhibit but it will be placed on the court file.
As a result therefore, paragraph 90 of my reasons published on 14 December 2005 should be amended.
In all other respects, the order as to costs remains the same.
I therefore make the following orders:-
1.The defendant forthwith release to the plaintiff, without any deduction, her share in the estate which is presently held in the Controlled Money Account at the Greater Building Society Limited together with the accrued interest thereon.
2.The defendant forthwith forgive the loan described in the Statement of Account annexed to the affidavit of Ann Patricia Allan sworn 18 January 2005 as “Ann Allan – Loan Advance in respect of legal costs” and repay to the estate or any undistributed part thereof, all monies charged as legal costs or disbursements since 3 March 2003 that relate to the dispute between the plaintiff and defendant including these proceedings.
3.The defendant forthwith execute a transfer of ownership of the deceased’s dog Vicki in favour of the plaintiff.
4.The defendant make available for copying, at the plaintiff’s expense, all remaining photographs that previously belonged to the deceased.
5.The defendant forthwith furnish and verify final accounts in respect of the deceased’s estate.
6.The defendant forthwith distribute the balance of the undistributed estate in accordance with the deceased’s will without deduction for any legal costs or disbursements that relate to the dispute between the plaintiff and the defendant including these proceedings.
7.Pursuant to s 36 of the Trustee Act 1936 the defendant be removed as trustee of the fund established for the benefit of Sebastian Longworth and the plaintiff be appointed as trustee in her place.
8.The defendant pay the plaintiff’s costs of the action to be taxed, and on a solicitor /client basis from 2/11/05
9.The defendant pay her own costs of the action.
10.The defendant is not entitled to any indemnity for her costs out of the estate in respect of this dispute.
11.Liberty to apply.