O'Rourke v the Perpetual Trustees (No 2)
[1987] TASSC 49
•8 September 1987
TASSC A45/1987
CITATION: O'Rourke & Ors v The Perpetual Trustees & Ors (No 2) [1987] TASSC 49; A45/1997
PARTIES: O'ROURKE & ORS
v
THE PERPETUAL TRUSTEES & ORS (NO 2)
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 2091/1985
DELIVERED ON: 8 September 1987
DELIVERED AT:
HEARING DATE:
JUDGMENT OF: Underwood J
CATCHWORDS:
REPRESENTATION:
Counsel:
Plaintiffs:
Defendant:
Solicitors:
Plaintiffs:
Defendant:
Judgment Number: TASSC A45/1987
Number of paragraphs: 17
Serial No A45/1987
File No 2091/1985
O'ROURKE & ORS v THE PERPETUAL TRUSTEES & ORS (NO 2)
REASONS FOR JUDGMENT UNDERWOOD J
8 September 1987
The plaintiffs were named as executors in the Will of the deceased dated the 20 May 1974. They instituted proceedings for a decree of probate of the Will in solemn form. The action was defended. On the 6 August 1987, the court pronounced for the force and validity of this will. The action was brought because the deceased executed two documents after making the will, which gave rise to a real question of whether or not the will had been revoked. In the circumstances of the case it would have been imprudent for the executors to have applied for probate in common form and thereafter proceeded to administer the estate.
The parties to the action now make an application by consent, for various orders for costs. The first of the orders sought is:
"An order that the costs of the plaintiffs of and incidental to this action (including all applications made by summonses for directions and by interlocutory application) be taxed on an indemnity basis and paid out of the estate excluding the amount, if any, by which the costs of work done by Messrs O'Rourke and Blow exceed the costs of the work that would have been done by that firm if that firm had acted only for the second named and third named plaintiffs."
Having regard to the provision of O80 r12 of the Rules of Court it seems that the words in parenthesis were inserted out of an abundance of caution.
One of the executors is a solicitor and a partner in the legal firm of Messrs O'Rourke and Blow. The will contained no charging clause. The ordinary rule in the absence of such a clause is that a solicitor who is an executor or trustee is not entitled to claim more than out of pockets for acting in either capacity. See Williams, Mortimor and Sunnucks, Executors, Administrators and Probate 16th ed 47 seq. The reason for the rule is well stated in In re Barber, Burgess v Vinicome (1887) 34 Ch D 77 at 81:
"That principle is based upon this consideration, that the Court of Equity will not allow a man to place himself in a position in which his interest and duty are in conflict. If it were not the rule, a trust estate might be heavily burdened by reason of business being done by a trustee or executor employing himself as a commission agent for the estate. The difficulty would be in saying in each particular case that the business was not required to be done."
However, this rule does not apply where the solicitor acts in a contentious probate application for himself and his co–executors. See Cradock v Piper (1850) 17 Sim 41. The exception to the general rule, stated in Cradock v Piper (supra), was referred to in In re Corsellis, Lauton v Elwes (1887) 34 Ch D 675 by Cotton LJ at 681:
"From the rule I have stated one exception was established by Cradock v Piper – that is to say, where there is work done in a suit not on behalf of the trustee, who is a solicitor, alone, but on behalf of himself and a co–trustee, the rule will not prevent the solicitor or his firm from receiving the usual costs, if the costs of appearing for and acting for the two have not increased the expense; that is to say, if the trustee himself has not added to the expense which would have been incurred if he or his firm had appeared only for his co–trustee ... but the exception in Cradock v Piper is limited expressly to the costs incurred in respect of business done in an action or a suit and it may be an anomaly that that exception should apply to such a case, and should not apply to business done out of court by the solicitor for himself as trustee and his co–trustee."
The same view of the effect of the exception to the general rule as stated in Cradock v Piper (supra) was expressed in In re Barber (supra).
As the institution and the conduct of the proceedings were, on the facts of this case, a necessary and proper incident to the discharge of the executors' duty, it is proper that their costs should be paid out of the estate. It is also proper that such costs include the usual costs of the legal firm of which the solicitor/executor is a member except insofar as those costs have been increased by reason of the firm acting for that solicitor/executor.
The remaining matter to consider is the basis upon which those costs should be taxed.
Section 12(2) of the Supreme Court Civil Procedure Act 1932 provides:
"Subject as provided in subsection (1) the costs of all proceedings whatsoever in the court, including the administration of estates and trusts, shall be in the discretion of the court or judge, and the court or judge shall have full power and authority to determine by whom or out of what estate, fund, or property, and to what extent such costs are to be paid."
Order 80 r1(1) of the Rules of Court gives the court or judge a general discretion with respect to the question of costs. Subrule (2) provides:
"Nothing contained in this rule shall deprive an executor, administrator, trustee, or mortgagee who has not unreasonably instituted or carried on or resisted any proceedings, of any right to costs out of a particular estate or fund to which he would be entitled according to the rules heretofore acted upon in the court in its equity jurisdiction."
In Equity, the practice of the court was to entitle an executor as of right, to be recouped everything properly expended as executor; per Cotton LJ, Re Knight's Will (1884) 26 Ch D 82 at 90. In In re Beddoe. Downes v Cottam [1893] 1 Ch D 550 Lindley LJ said at 558:
"I entirely agree that a trustee is entitled as of right to full indemnity out of his trust estate against all his costs, charges, and expenses properly incurred: such an indemnity is the price paid by cestuis que trust for the gratuitous and onerous services of trustee; and in all cases of doubt, in costs incurred by a trustee ought to be borne by the trust estate and not by him personally. The words 'properly incurred' in the ordinary form of order are equivalent to 'not properly incurred'".
The same principle was applied to an administrator in a probate action in In re Jones Christmas v Jones [1897] 2 Ch D 190 at 197 where Kekewich J said:
"A man who fulfils the difficult duties of an administrator, executor or trustee is, in common sense and common justice, entitled to be recouped to the very last penny everything that he has expended properly – that is to say, without impropriety – in his character of administrator, executor or trustee."
This principle was discussed in Grimthorpe's (Baron) Will Trusts [1958] 1 All ER 765 where Danckwerts, J said at 769:
"It is a commonplace that trustees, who take the onerous and sometimes dangerous duty of being trustees, are not expected to do any of the work at their own expense; they are entitled to be indemnified against the costs and expenses which they incur in the course of their office; that necessarily means that such costs and expenses are properly incurred and not improperly incurred."
The matter was crystalised in a practice direction reported at [1953] 2 All ER 1159 which provided:
"In cases in which trustees are parties in their capacity as such and in which it is appropriate that they should be indemnified as to their proper costs and expenses of proceedings, the order as to the costs of the trustees should direct taxation of their 'costs and expenses of and incident to this action (application) (matter)' without the addition of words 'as between solicitor and client'. On such a direction all costs and expenses properly incurred by the trustees will be allowed by the taxing master."
The principle is now expressed in the English Rules of Court, O62, r31 and the practice direction was cancelled by practice direction [1987] 1 All ER 879.
In the present case I am satisfied that the executors are entitled to have their costs taxed in accordance with the terms of the 1953 English Practice Direction. I accordingly order that the plaintiffs' costs and expenses of and incident to this action (including all applications made by summonses for directions and by interlocutory applications) excluding the amount, if any, by which the costs of the work done by the plaintiff Bryan Francis O'Rourke or his firm exceed the costs of the work that would have been done by that firm if that firm had acted only for the second and third named plaintiffs and paid out of the estate.
I will also make the other orders with respect to costs, sought in the consent memorandum handed up.
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