Lowe v Sze Tu as Administrator of the Estate of the late Fung Chun Chow; Lowe v Pascoe as Administrator of the Estate of the late Kut Sze Tu

The appeal concerned proceedings initiated by the appellants, the Lowes, who claimed the existence of a partnership and sought entitlements from the estate of a deceased partner, Fung Chun Chow, who had allegedly misappropriated funds. Other parties had commenced separate proceedings seeking distributions from constructive trusts declared over estate funds. An inquiry was ordered to determine the monies the appellants were entitled to from the estate. The central dispute on appeal was whether a costs order made by the primary judge was inconsistent with earlier Court of Appeal costs orders and whether those earlier orders insulated the costs order in favour of the appellants from subsequent alteration or diminution through the inquiry.

The court was required to determine two primary legal issues. First, whether the primary judge erred in failing to determine, or constructively denying, the appellants' contention that other members of the partnership were liable to contribute to their costs of proceedings. This involved considering whether such a substantive contribution claim had been raised and if it was determinable by the primary judge as part of the consideration of costs. Second, the court had to consider whether costs incurred by the appellants were within the meaning of section 24(1)(2)(a) of the *Partnership Act 1892* (NSW) as costs incurred in the ordinary and proper conduct of the business of the partnership, or otherwise gave rise to a relevant equity grounding a right of contribution.

The Court of Appeal allowed the appeal in part. It varied the primary judge's orders to provide that a specific costs order made by the Court of Appeal in earlier proceedings, totalling $486,623, was payable from the Net Proceeds Trust in priority to all other distributions, subject to certain provisos. The court also declared that interest was payable on this amount from 4 December 2018. For clarity, the court stipulated that any payment of this costs order was not intended to have priority over any entitlement of the Administrator pursuant to a right of indemnity for reasonably and properly incurred costs. The FC Chow respondents were ordered to pay 50% of the Lowes’ costs of the appeal.