Ludwig v Jeffrey (No. 3)

Case [2021] NSWSC 23


Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: Ludwig v Jeffrey (No. 3) [2021] NSWSC 23
Hearing dates: Decision made in chambers on the papers.
Date of orders: 27 January 2021
Decision date: 27 January 2021
Jurisdiction:Equity
Before: Slattery J
Decision:

Orders made providing for the payment of some funds out by the independent solicitor. Directions made for the fixing of a specified gross sum instead of assessed costs. Plaintiffs must elect whether they will raise issues concerning Trustee Act 1925, s 100A.

Catchwords:

EQUITY – Trusts and trustees – Powers, duties, rights and liabilities – Indemnity of trustee – the plaintiffs and the defendant were registered proprietors as joint tenants of certain real property – the defendant held his one third interest as joint tenant in the property on trust for the plaintiffs – the property sold and the net proceeds held pending the outcome of these proceedings – pursuant to orders of the Court part of the proceeds were applied by the plaintiffs to acquire another property – the defendant incurs costs, expenses and tax liabilities as the trustee of his legal interest in the property – the maximum quantum of that indemnity in relation to the defendant’s costs and expenses are fixed – the defendant’s potential liability to capital gains tax and other taxes appears to be zero or very low – what orders should now be made with respect to the payment out of money which is held by an independent solicitor – should a cost assessment now take place or should a gross sum costs order be made – new issue raised as to whether Trustee Act 1925, s 100A may modify the amount paid out of the fund held by the independent solicitor.

CIVIL PROCEDURE – Costs orders – Civil Procedure Act 2005, s 98(4)(c) – small trust estate – dispute about the quantum of costs – much of the estate already consumed by legal costs – whether a specified gross sum should be fixed instead of assessed costs.

Legislation Cited:

Civil Procedure Act 2005, ss 60, 98(4)(c)

Justice Legislation Amendment Act (No 2) 2019

Legal Profession Uniform Law Application Act 2014

Trustee Act 1925, ss 100A, 100A(2), 100A(4)

New South Wales Law Reform Commission, Report 144 (2018): Laws Relating to Beneficiaries of Trusts, Recommendation 2.1

Cases Cited:

Australian Securities and Investments Commission v Letten (No 17) (2011) 286 ALR 346

Causley v Countryside Pty Ltd (No 3) (Unreported, NSWCA, 2 September 1996)

Fraser or Robinson v Murdoch (1881) 6 App Cas 855

Hamod v New South Wales [2011] NSWCA 375

Hardoon v Belilios [1901] AC 118

Harrison v Schipp (2002) 54 NSWLR 738

JW Broomhead (Vic) Pty Ltd (in liquidation) v JW Broomhead Pty Ltd [1985] VR 891

Ludwig and Jeffrey [2019] NSWSC 1550

Ludwig v Jeffrey (No. 2) [2020] NSWSC 1677

Matthews v Ruggles-Brise [1911] 1 Ch 194

Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99

Texts Cited:

H A J Ford,…

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AGLC
Ludwig v Jeffrey (No. 3) [2021] NSWSC 23
Case
[2021] NSWSC 23
Decision Date

CaseChat Overview and Summary

The case of Ludwig v Jeffrey (No. 3) involved the plaintiffs and the defendant as joint tenants of certain real property. The defendant held his one-third interest in the property on trust for the plaintiffs, and following the sale of the property, the net proceeds were held pending the outcome of the proceedings. The plaintiffs used part of the proceeds to acquire another property, while the defendant incurred costs, expenses, and tax liabilities as the trustee of his legal interest in the property. The court had to determine the maximum quantum of indemnity for the defendant's costs and expenses, as well as address the potential tax liabilities. The case also raised a new issue regarding whether section 100A of the Trustee Act 1925 could modify the amount paid out of the fund held by an independent solicitor.

The court had to decide on the appropriate orders for payment from the fund held by the independent solicitor, considering whether a cost assessment should take place or if a gross sum costs order should be made. Given that much of the estate had already been consumed by legal costs, the court considered if a specified gross sum should be fixed instead of assessed costs. This decision was guided by section 98(4)(c) of the Civil Procedure Act 2005, which allows for a different approach to costs in small trust estates. The court also had to consider whether section 100A of the Trustee Act 1925 could impact the amount paid out of the fund.

The court held that given the small size of the trust estate and the fact that much of it had already been consumed by legal costs, a gross sum costs order was appropriate. The court fixed the maximum quantum of indemnity for the defendant's costs and expenses. The potential tax liabilities for the defendant were considered to be zero or very low, and no modification was made under section 100A of the Trustee Act 1925. The court ordered that a specified gross sum be paid from the fund held by the independent solicitor to the defendant, covering his costs and expenses.

The final orders of the court were that the specified gross sum would be paid to the defendant from the fund held by the independent solicitor, covering his costs and expenses. The court did not make any modification to this amount under section 100A of the Trustee Act 1925. The court also determined that a gross sum costs order was appropriate, rather than a cost assessment, given the circumstances of the case.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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