Public Trustee v Taylor (No 2)

Case [2020] SASC 213

SUPREME COURT OF SOUTH AUSTRALIA

(Testamentary Causes Jurisdiction: Application)

PUBLIC TRUSTEE v TAYLOR & ORS (No 2)

[2020] SASC 213

Judgment of The Honourable Justice Stanley

3 November 2020

SUCCESSION - ADMINISTRATION OF ESTATE - DISTRIBUTION - MATTERS RELATING TO BENEFICIARIES - PRESUMPTION OF DEATH AND SURVIVORSHIP

SUCCESSION - PROBATE AND LETTERS OF ADMINISTRATION - COSTS - GENERAL PRINCIPLES

SUCCESSION - PROBATE AND LETTERS OF ADMINISTRATION - COSTS - WHERE LITIGATION CAUSED BY TESTATOR, EXECUTOR OR INTERESTED PERSONS - GENERALLY

The Public Trustee brought an application pursuant to s 69 of the Administration and Probate Act 1919 (SA) (the Act) seeking advice and direction regarding the disposition of jointly owned assets of Sigrid Karla Todt and Karl Heinz Todt following their deaths on 20 September 2015. Mr and Mrs Todt died commorientes.

The advice and direction sought had the effect of distributing the joint assets of the estates on an intestacy. The first respondent (the executor and sole beneficiary under Mr Todt’s wills) and the second respondent (the sole beneficiary under Mrs Todt’s will and her next-of-kin) opposed these orders, while the third and fourth respondents (Mr Todt’s next-of-kin) supported the advice and direction. The Court gave the advice and direction as sought.

The third and fourth respondents now seek orders that the first and second respondents pay their costs on an indemnity basis. The first respondent opposes this order, and seeks its costs to be paid out of the share of the joint assets attributable to Mr Todt.  The second respondent concedes he is liable but on a party/party basis.  Further guidance is sought with respect to an earlier costs order made in favour of the first respondent.

Held:

1.  The first respondent was acting in respect of this application in an adversarial manner.  He is not entitled to have his costs met from the joint assets and he is jointly liable with the second respondent for the costs of the third and fourth respondents.

2.  The first and second respondents are to pay the third and fourth respondents’ costs of the application for advice and direction, to be agreed or taxed on a party/party basis.

3.  The first respondent is entitled to his costs in respect of the administration of the estate of Mr Todt up to and including 5 March 2019 in the sum of $20,000, including counsel fees.

Administration and Probate Act 1919 (SA) s 69, referred to.
Fielder v Burgess [2014] SASC 98; In the Estate of Istvan Molnar (No. 2) [2016] SASC 159; Roche v Roche & Anor (No 2) [2017] SASC 75; Craker v Craker & Ors (No 3) [2019] SASC 13; Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, discussed.
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 ; J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No. 2) (1993) 46 IR 301, considered.

PUBLIC TRUSTEE v TAYLOR & ORS…

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Public Trustee v Taylor (No 2) [2020] SASC 213
Case
[2020] SASC 213
Decision Date

CaseChat Overview and Summary

The case of Public Trustee v Taylor (No 2) involved the Public Trustee as the first respondent, the second respondent, and the third and fourth respondents. The dispute centered on the administration of an estate, specifically the distribution of assets and the associated costs. The matter was heard in the Supreme Court of New South Wales. The primary legal issues revolved around the presumption of death, survivorship, and the allocation of costs related to the estate's administration. The court was tasked with determining whether the first respondent, acting as a beneficiary, was entitled to have his costs met from the estate or if he should be jointly liable for the costs of the third and fourth respondents.

The court considered the nature of the first respondent's involvement in the proceedings, finding that he was acting in his own interest rather than to assist the court. Despite the unsuccessful outcome of the first respondent's application, the court determined that he was not entitled to have his costs met from the estate. Instead, the first and second respondents were held jointly liable for the costs of the third and fourth respondents. The court rejected the notion of awarding costs on an indemnity basis, opting instead for the usual order of payment on a party/party basis. This decision was based on the principle that costs should follow the event unless there were good reasons to depart from this approach.

In conclusion, the court ordered that the first and second respondents would pay the third and fourth respondents’ costs of the application for advice and direction on a party/party basis. Additionally, the first respondent was entitled to his costs in respect of the estate administration up to and including 5 March 2019, totaling $20,000, including counsel fees, to be paid from the deceased's share of the joint assets. This decision underscores the court's adherence to established principles in allocating costs in estate litigation, emphasizing the importance of the role played by each party in the proceedings.

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

In the particular circumstances of this case I am prepared to follow the approach for which the third and fourth respondents contend in relation to the costs order made on 5 March 2019. Having regard to the size of the joint assets and the costs which a taxation would incur and having regard to the evidence of the costs incurred, I would fix the costs of the first respondent up to and including that date. Adopting a broad axe approach I would order that the first respondent is entitled to costs of $20,000, including Mr Crocker’s counsel fees, to be paid from Mr Todt’s share of the joint assets.Conclusion I would order:(1)the first and second respondents are to pay the third and fourth respondents’ costs of the application for advice and direction, to be agreed or taxed on a party/party basis; and(2)the first respondent is entitled to his costs in respect of the administration of the estate of Mr Todt up to and including 5 March 2019 in the sum of $20,000, including counsel fees.

Ratio Decidendi

Legal Principle Established

The statements of principle found in these authorities reflect the third and fourth categories in Re Buckton.[11][11] [1907] 2 Ch 406 at 414-415.Consideration In my view, the first respondent was acting in respect of this application in an adversarial manner. He was pursuing his own interest in the disposition of the joint assets by propounding a distribution in accordance with the wills of the deceased. The first respondent sought to cloak himself in the raiment of a contradictor. That attempt cannot conceal the self-interested nature of the part he played in the proceedings. In that regard, I am satisfied he was acting in his own interests rather than to assist the Court. That is not to be critical of the first respondent but rather to recognise the true role he played in the determination of the application. It was not as executor but as a beneficiary. The first respondent’s case on their application for advice and direction was unsuccessful. In accordance with the principles I have set out above, he is not entitled to have his costs met from the joint assets and he is jointly liable with the second respondent for the costs of the third and fourth respondents. However, while I am satisfied that the first and second respondents should pay the costs of the third and fourth respondents, I do not accept the submission of the third and fourth respondents that they should do so on an indemnity basis. Notwithstanding my conclusion rejecting the submissions put by the first and second respondents as being contrary to well-established principle, I consider that in the circumstances where the Court approaches the question of costs on the basis that they should follow the event, the appropriate basis for the award of costs is the usual order that costs should be paid on a party/party basis. To that extent, I accept the submission of the second respondent. While the Court has a discretion to depart from awarding costs on that basis, including awarding costs on an indemnity basis, the usual order is that where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on a party/party basis. The Court should only depart from that approach where good reason exists to do so, i.e. where the justice of the case so requires. The guiding principle is whether the particular facts and circumstances of the case warrant the making of an order for payment of costs other than on a party/party basis.[12] Those circumstances include where proceedings are commenced or continued in wilful disregard of clearly established law.[13] However, as pointed out in Colgate‑Palmolive Co v Cussons Pty Ltd by Sheppard J:[14]It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.[12] Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536 at [24], (1993) 46 FCR 225 at 233.[13] Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202, (1988) 81 ALR 397; J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No. 2) [1993] FCA 70, (1993) 46 IR 301; Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536 at [24], (1993) 46 FCR 225 at 233.[14] [1993] FCA 536 at [24], (1993) 46 FCR 225 at 234.