Parker v Australian Executor Trustees Limited (No 2) - [2016] SASC 115

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
PARKER & ORS v AUSTRALIAN EXECUTOR TRUSTEES LIMITED (No 2)
[2016] SASC 115
Judgment of The Honourable Justice Lovell
2 August 2016
PROCEDURE - COSTS
The defendant opposed the order of costs on a solicitor/client basis following judgment for family provision in favour of the plaintiffs - whether "standard order" should apply in South Australia.
Held: Court is to apply the usual discretion when considering costs but that the practice of making a "standard order" is to be given weight when exercising the discretion. Plaintiffs to have costs on a solicitor/client basis.
Whitington v Whitington (No 2) [2009] SASC 178, applied.
Pizimolas v Pizimolas & Zannis (No 2) [2010] SASC 209, discussed.

PARKER & ORS v AUSTRALIAN EXECUTOR TRUSTEES LIMITED (No 2)
[2016] SASC 115
Civil
LOVELL J.
Overview

On 1 June 2016 I handed down judgment in favour of the plaintiffs in this matter. On that day the defendant opposed the “standard order” as to costs and sought to make written submissions in support of their position. I allowed the application of the defendant to make written submissions and for the plaintiffs to reply accordingly. Mr Ower sought leave to file further submissions; leave was not opposed.
Background
The defendant, as executor of the estate, sought advice and direction from Stanley J and on 24 December 2015 his Honour made a direction that the defendant was justified in defending the proceedings. The defendant was also entitled to indemnify itself from the estate for its legal and other expenses.
It should be noted that the executor in this case had a direct financial interest in the outcome of the proceedings as the testator left the majority of the estate to the defendant to administer for which it would charge a fee. The fee charged was related to the amount of the fund to be administered. Such an arrangement is of course perfectly proper but as executor the defendant had an interest in the outcome.
Law
Whilst acknowledging the practice of a “standard order” namely that successful claimants have their costs paid out of the residual estate on a solicitor/client basis Mr Ower, counsel for the defendant, submitted there was no basis or rationale for this practice. He argued that I should order the costs of the plaintiffs be paid out of the residuary estate on a party/party basis. The plaintiffs submitted that the practice of awarding costs from the estate on a solicitor/client basis should not be disturbed and indeed followed in this case.
The issue of whether there should be a “standard order” in relation to the question of costs has not been considered by the Full Court in South Australia.
The defendant particularly relied on Kourakis J (as he then was) in Pizimolas v Pizimolas & Zannis (No 2)[1] where his Honour said:[2]
I order that the defendants have theirs costs paid from the estate. I am informed that such costs are often ordered on a solicitor/client basis. I…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] SASC 115
Decision Date: 2 August 2016

CaseChat Overview and Summary

In Parker v Australian Executor Trustees Limited (No 2), the defendant, acting as executor of the estate, opposed the standard order as to costs in proceedings that had been in favour of the plaintiffs. The executor argued for costs to be awarded on a party/party basis rather than the customary solicitor/client basis. The dispute arose in the context of a family provision claim, with the executor having a financial interest in the outcome of the proceedings due to the fee arrangement based on the amount of the estate. The plaintiffs sought to uphold the standard order, which had been followed in previous cases, while the executor challenged the appropriateness of this practice.

The primary legal issue before the court was whether the standard order for costs in estate proceedings should be maintained, where successful claimants have their costs paid out of the residual estate on a solicitor/client basis, or whether it should be altered to a party/party basis. This issue was significant as it could affect the financial outcomes of future estate proceedings and the incentives for executors to settle claims. The court considered arguments from both sides, including the reliance on a previous decision by Kourakis J in Pizimolas v Pizimolas & Zannis (No 2) and the subsequent practice direction issued by the court.

The court ultimately upheld the standard order for costs, affirming that the practice of awarding costs from the estate on a solicitor/client basis should not be disturbed. The reasoning was that this practice better promoted the prudent settlement of family provision claims. The court found no compelling rationale to deviate from the established practice, despite the executor's argument for a party/party basis. The decision was based on the principle that maintaining the standard order served the interests of justice and the efficient administration of estates.

The final orders were that the plaintiffs were entitled to have their costs paid from the residuary estate on a solicitor/client basis, in accordance with the standard order. This decision reinforced the continuity of the established practice in South Australian estate litigation concerning the allocation of costs in family provision claims.

Orders

Orders of the court

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Background

Background to the litigation

On 1 June 2016 I handed down judgment in favour of the plaintiffs in this matter. On that day the defendant opposed the “standard order” as to costs and sought to make written submissions in support of their position. I allowed the application of the defendant to make written submissions and for the plaintiffs to reply accordingly. Mr Ower sought leave to file further submissions; leave was not opposed.Background The defendant, as executor of the estate, sought advice and direction from Stanley J and on 24 December 2015 his Honour made a direction that the defendant was justified in defending the proceedings. The defendant was also entitled to indemnify itself from the estate for its legal and other expenses. It should be noted that the executor in this case had a direct financial interest in the outcome of the proceedings as the testator left the majority of the estate to the defendant to administer for which it would charge a fee. The fee charged was related to the amount of the fund to be administered. Such an arrangement is of course perfectly proper but as executor the defendant had an interest in the outcome.Law Whilst acknowledging the practice of a “standard order” namely that successful claimants have their costs paid out of the residual estate on a solicitor/client basis Mr Ower, counsel for the defendant, submitted there was no basis or rationale for this practice. He argued that I should order the costs of the plaintiffs be paid out of the residuary estate on a party/party basis. The plaintiffs submitted that the practice of awarding costs from the estate on a solicitor/client basis should not be disturbed and indeed followed in this case. The issue of whether there should be a “standard order” in relation to the question of costs has not been considered by the Full Court in South Australia. The defendant particularly relied on Kourakis J (as he then was) in Pizimolas v Pizimolas & Zannis (No 2)[1] where his Honour said:[2]I order that the defendants have theirs costs paid from the estate. I am informed that such costs are often ordered on a solicitor/client basis. I am not persuaded that it is appropriate to so order. A practice direction has been issued on the award of costs in estate matters.[His Honour then cited Practice Direction 8.1]In my view, it better promotes the prudent settlement of family provision claims to limit the awards of costs of beneficiaries and claimants made out of the estate to party/party costs.[1] [2010] SASC 209.[2] [2010] SASC 209 [16]-[17]. The defendant quite properly acknowledged that since that decision other judges of this Court appear to have followed the “standard order” approach. The defendant submitted that there was no rational basis for the “standard order” and that I should follow the approach of Kourakis J. There is, it was submitted no reasoned or principled basis for any other order. The plaintiffs submit that in the circumstances the “standard order” is appropriate in this case.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

LOVELL J

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Ratio Decidendi

Legal Principle Established

Established by: LOVELL J

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