Wood (As Co-Executor and Trustee of the Will of the Deceased) v Wood [No 5]
[2015] WASC 28
•28 JANUARY 2015
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: WOOD (AS CO-EXECUTOR AND TRUSTEE OF THE WILL OF THE DECEASED) -v- WOOD [No 5] [2015] WASC 28
CORAM: KENNETH MARTIN J
HEARD: 11 DECEMBER 2014 AND BY WRITTEN SUBMISSIONS OF 19 & 23 DECEMBER 2014
DELIVERED : 28 JANUARY 2015
FILE NO/S: CIV 1786 of 2014
MATTER :Section 92 of the Trustees Act 1962 (WA)
The Will and Estate of Jennifer Ballantyne (Dec)
BETWEEN: FIONA MELANIE WOOD (AS CO-EXECUTOR AND TRUSTEE OF THE WILL OF THE DECEASED)
First Plaintiff
MORGAN HOWARD SOLOMON (AS CO-EXECUTOR AND TRUSTEE OF THE WILL OF THE DECEASED)
Second PlaintiffAND
FIONA MELANIE WOOD
First DefendantKURT RUDOLF BAUR
Second DefendantROBERT CHARLES SCOTT
Third DefendantCATHERINE ANNE HARRIES
Fourth DefendantLISA HANNAN
Fifth DefendantSHIRLEY FLETCHER
Sixth DefendantJANICE DOREEN MORRIS
Seventh DefendantSTEPHEN ALAN TAYLOR
Eighth DefendantSIMONE MARGARET BARR VARNER
Ninth DefendantONDIT PTY LTD
Tenth DefendantTHE FIONA WOOD FOUNDATION
Eleventh DefendantBENJAMIN SCOTT RUSSEL HANNAN
Twelfth DefendantALICE YAOLI HARRIES
Thirteenth DefendantGRACE CATHERINE HARRIES
Fourteenth DefendantSARAH JAYNE FLETCHER
Fifteenth DefendantSAMANTHA JENNIFER BALLANTYNE
Sixteenth DefendantMICHELLE ANNE MATTHEWS
Seventeenth DefendantSUZANNE GRACE MORGAN
Eighteenth DefendantJOHANNA PICHLER
Nineteenth DefendantKLEMENS PICHLER
Twentieth DefendantBETTY BALLANTYNE
Twenty-first Defendant
Catchwords:
Executors and trustees - Dispositive declarations and orders following advice application by executors - Costs issues - Turns on own facts
Legislation:
Nil
Result:
Declarations and costs orders issued
Category: B
Representation:
Counsel:
First Plaintiff : Mr L A Tsaknis
Second Plaintiff : Mr L A Tsaknis
First Defendant : No appearance
Second Defendant : Mr M L Bennett & Mr M P Bruce
Third Defendant : Mr S Macdonald
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : No appearance
Ninth Defendant : No appearance
Tenth Defendant : No appearance
Eleventh Defendant : No appearance
Twelfth Defendant : No appearance
Thirteenth Defendant : No appearance
Fourteenth Defendant : No appearance
Fifteenth Defendant : No appearance
Sixteenth Defendant : No appearance
Seventeenth Defendant : Mr S Macdonald
Eighteenth Defendant : No appearance
Nineteenth Defendant : No appearance
Twentieth Defendant : No appearance
Twenty-first Defendant : No appearance
Solicitors:
First Plaintiff : Bowen Buchbinder Vilensky & Dwyer Durack Lawyers
Second Plaintiff : Bowen Buchbinder Vilensky & Dwyer Durack Lawyers
First Defendant : No appearance
Second Defendant : Bennett + Co
Third Defendant : Macdonald Rudder
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : No appearance
Ninth Defendant : No appearance
Tenth Defendant : No appearance
Eleventh Defendant : No appearance
Twelfth Defendant : No appearance
Thirteenth Defendant : No appearance
Fourteenth Defendant : No appearance
Fifteenth Defendant : No appearance
Sixteenth Defendant : No appearance
Seventeenth Defendant : Macdonald Rudder
Eighteenth Defendant : No appearance
Nineteenth Defendant : No appearance
Twentieth Defendant : No appearance
Twenty-first Defendant : No appearance
Case(s) referred to in judgment(s):
Tsaknis as Executor and Trustee of the Estate of Geoffrey Douglas Roland Lilburne (dec) v Lilburne [2010] WASC 152
Wood (as Co-Executor and Trustee of the Will of the Deceased) v Wood [No 3] [2014] WASC 388
Wood (as Co-Executor and Trustee of the Will of the Deceased) v Wood [No 4] [2014] WASC 393
KENNETH MARTIN J: In the aftermath of the published reasons in Wood (as Co-Executor and Trustee of the Will of the Deceased) v Wood [No 4] [2014] WASC 393, I am resolving the issues of dispositive orders and costs arising out of the application made by the plaintiff executors pursuant to s 92 of the Trustees Act 1962 (WA) under their amended originating summons, filed 4 August 2014.
Essentially, I am dealing with the rival minutes of orders as submitted by the plaintiffs (see revised minute of 10 December 2014), as against the proposed orders under the second defendant's (Mr Baur's) ultimate minute of proposed orders of 8 December 2014. The advocated position of Mr Baur as regards appropriate directions and costs orders is supported by the third and seventeenth defendants.
There is only a minor level of disagreement between the parties about the appropriate dispositive orders by way of reflecting the Court's advice. But there is heavy disputation concerning the question of the parties' legal costs surrounding that application.
For the executors' part, their draft minute accepts that the second, third and seventeenth defendants' costs (as active participants in the executors' advice application) should have their reasonable legal costs paid out of the estate on a taxed basis - but without regard to the upper limits of any relevant costs determination scale.
Concerning their own costs of the application for the Court's advice, the executors ask for orders that these costs be fully met by the estate, effectively on a solicitor/client basis.
Contradicting the executors' position as regards appropriate costs orders, Mr Baur, Mr Scott and Ms Matthews all contend for orders that:
(a)their legal costs be met not by the estate, but by the executors personally and then on an indemnity basis; and
(b)as regards the plaintiffs', ie, executors' costs, these participants contend for orders of the Court by which such legal costs as the executors have incurred (save for the filing fee associated with the originating summons) should be borne by the plaintiffs personally, not by the estate.
Needless to say, what is proposed by Mr Baur, Mr Scott and Ms Matthews as regards the executors' costs would be most exceptional costs orders. Nevertheless, they do not shirk from submitting that exceptional costs orders as regards the executors are fully appropriate in this case.
That costs outcome as regards the executors' costs is clearly contrary to the normal recoupment orders for the legal costs incurred by personal representatives and trustees both generally and as stated as the prima facie position under Rules of the Supreme Court (WA) O 66 r 9(2). Nevertheless, the participating defendants say that in the very exceptional circumstances of the present application the highly unreasonable conduct of the executors requires a sanction of the Court, fully justifying a departure from the normal position.
There were also some minor issues arising concerning the rather ill-fated privilege claim I dealt with in distinct reasons: see Wood (as Co-Executor and Trustee of the Will of the Deceased) v Wood [No 3] [2014] WASC 388. In that narrow arena, the issue of costs has been consensually resolved, on a basis, accepted by Second Skin Pty Ltd, as reflected under par 11 of Mr Baur's minute, that:
Second Skin Pty Ltd pay the second defendant's costs of and incidental to the privilege claim to be fixed in the amount of $3,500 and to be paid within seven days of the date of this order.
As regards Mr Scott's costs in respect of that same aborted privilege claim, Second Skin Pty Ltd did not oppose an order in terms that it 'pay the third defendant's (ie, Mr Scott's) costs of its (withdrawn) claim for privilege in the email from Morgan Solomon to Shirley Fletcher of 2 May 2014, to be taxed if not agreed'.
Given the consensus about that area, I issued orders in those terms during the course of the hearing on 11 December 2014. Solicitors for Second Skin Pty Ltd had notified my Associate by email on 10 December 2014 that orders in such terms could be made uncontroversially against Second Skin Pty Ltd and that Second Skin Pty Ltd accordingly sought leave not to appear at the hearing in that event (which I granted).
Directions
I turn then to the major residual issues between the parties, dealing first with what are the more uncontentious orders and directions. Essentially, by reference to Mr Baur's marked-up minute of proposed directions and orders, I would now direct in the following terms:
The Court directs:
1.In respect of question 1 posed by the originating summons, the Court declines to give a direction whether the plaintiffs are justified in defending the application brought against them by the second defendant in Supreme Court action CIV 1412 of 2014.
2.In respect of question 2 posed by the originating summons, the Court declines to give a direction at this time upon whether the plaintiffs are justified in not transferring the shares in Ondit Pty Ltd in specie to Kurt Rudolf Baur, as provided for in the will of the deceased.
3.In respect of question 3 posed by the originating summons, the Court declines to give a direction at this time upon whether the plaintiffs are justified in immediately transferring the shares in Ondit Pty Ltd in specie to Kurt Rudolf Baur, as provided for in the will of the deceased.
4.Subject to the Court's directions the plaintiffs have liberty to apply for amended or further advice in respect of questions 2 and 3, as indicated under par 85 of the court's reasons in Wood v Wood [No 4]. [Note: I prefer this formulation over that postulated under par 8 of Mr Baur's rival minute.]
5.Question 5 posed by the originating summons, concerning whether the plaintiffs are justified in defending the application for summary judgment filed by Robert Charles Scott in Supreme Court action CIV 1492 of 2014, is answered 'No'.
6.Question 6 posed by the originating summons, namely, in the event that the application for summary judgment filed by Robert Charles Scott in Supreme Court action CIV 1492 of 2014 is dismissed, then concerning whether the plaintiffs are justified in defending the claim by Robert Charles Scott in that action that he is the beneficial owner of one of the two shares in Second Skin Pty Ltd (ACN 009350467), is answered 'No'.
7.Further, the plaintiffs are justified in resigning as directors of Ondit Pty Ltd. [Note: There was agreement between the parties on 11 December 2014 as to this further direction 7 being appropriate. In fact, I was told that the executors had already resigned as directors of Ondit Pty Ltd now, in any event. In my view, this further direction is appropriate and within the scope of the relief as was sought on the amended originating summons, which at par 7 requested relief from the court on the basis of 'such further orders or other directions as this honourable court deems fit'.]
Directions in terms of pars 1 - 7 above are essentially now uncontroversial. Accordingly, they shall issue forthwith, upon the publication of these reasons.
Proposed direction 8
There is a greater level of controversy over a further direction sought by the participating defendants, reflected by Mr Baur's minute in these terms:
The plaintiffs are justified in resigning as executors of the Estate of the late Jennifer Ballantyne.
Unlike direction 7 above, which is essentially agreed, proposed direction 8 was opposed by the executors. In the first place, I would assess it as open to the Court to provide such advice, if otherwise appropriate, given the miscellaneous claims for relief in the originating summons, which were used to support direction 7.
Mr Tsaknis pointed out (correctly) on behalf of the executors that it was not open to these executors to simply just resign their offices - the current executor plaintiffs, as I mention in the primary reasons, having been granted probate by earlier orders of this court - in respect of the relevant will and codicil of the late Ms Ballantyne.
However, an objection as to the form of the proposed direction 8 can be addressed by its reworking in terms such that the plaintiffs are declared to be justified in forthwith seeking leave to resign and being replaced by fresh executors, as regards their current offices as executors of the estate of the late Jennifer Ballantyne.
Nevertheless, as I understand it, that direction, even in those revised terms, is substantively opposed by the executors, or at least appeared to be when the matter was before me on 11 December 2014. There is here a more than ample basis to render such a direction as further advice, given the Court's equitable function being engaged and the scope of the miscellaneous relief applied for under the originating summons.
Given my primary reasons, in my view, the further direction, as to the current executors being declared to be justified in departing and being replaced, is appropriate and should issue.
Of course, my issuing of such a direction does not oblige the executors to follow that course. It simply declares that they would be acting properly in taking that course.
My abiding substantive concerns about the positions of the current executors are essentially summarised, commencing at [178] of my primary reasons in respect of question 1 and I do not need to repeat those observations again. Accordingly, a further direction 8 should issue, in terms as broadly foreshadowed above.
At [113] of those primary reasons, I had also said 'It troubles me greatly that the Ballantyne estate might ultimately be asked to bear the expense of a largely wasted tree felling exercise'.
Legal costs: Mr Baur, Mr Scott and Ms Matthews
In terms of substantive costs orders upon the rival minutes (and by some degree of evolution) the orders as proposed by the executors in respect of the costs of defendant participants by par 8 of their minute were, ultimately, in these terms:
And the court orders that:
The estate do pay the second defendant's, third defendant's and the seventeenth defendant's costs of and relating to the originating summons, including reserved costs, to be taxed without regard to the upper limits of the relevant scale.
By contrast (with some amending adjustments, by its par 9) the minute submitted by Mr Baur, supported by Mr Scott and Ms Matthews, reads in terms:
The plaintiffs pay the second defendant's, the third defendant's and the seventeenth defendant's costs of and incidental to responding to the originating summons, including reserved costs, save to the extent to which such costs are of an unreasonable amount or have been unreasonably incurred.
As seen, all parties accept the defendant participants should receive an allowance for their legal costs surrounding their proper participation in the advice application.
The executors suggest the defendants only receive their costs on a taxed basis - albeit without regard to upper limits of any relevant scale.
On the other hand, the defendant participants essentially seek the full recovery of their costs on a solicitor-client basis and from the executors personally, rather than from the estate - in which they are, of course, all beneficiaries to some extent.
In my view, essentially, for broadly the same reasons as were expressed by EM Heenan J in Tsaknis as Executor and Trustee of the Estate of Geoffrey Douglas Roland Lilburne (dec) v Lilburne [2010] WASC 152 at [83] and [90] (particularly see his Honour's order 2(a)), the present defendant participants should receive their costs, to be taxed out on a solicitor‑client basis and then paid out of the estate of Ms Ballantyne. In short, I am not satisfied here, against the submissions of Mr Baur, Mr Scott and Ms Matthews, that it is appropriate that the plaintiffs personally should bear those legal costs.
I am also guided to that result by the unique equitable antecedents of an advice application process, as discussed in my primary reasons, and particularly therein the status of participating persons who are not in a strict sense parties to the application. Here their participation in the application was proper, indeed, helpful. But it should be the estate of Ms Ballantyne that bears those legal costs, and on a solicitor‑client basis, rather than the executors personally. Accordingly, there should be an order (a) in the terms essentially proposed by Mr Baur, but slightly amended to refer to the payment being made by Ms Ballantyne's estate - rather than by the plaintiff executors personally.
Accordingly, directions 1 - 8 and costs order 9 as set out below should now issue upon the publication of these reasons.
That completed exercise leaves only for its outstanding resolution the heavily contentious question of the executors' costs of the advice application. This was an issue of some discrete difficulty and, after the argument, I permitted the parties to file further evidentiary materials and written submissions. Accordingly, as per order 10 below, I will deal with that last remaining dispositive costs order in separate reasons to be published in due course.
For now, the following directions and orders will issue.
The Court declares:
1.In respect of question 1 posed by the originating summons, the Court declines to give a direction whether the plaintiffs are justified in defending the application brought against them by the second defendant in Supreme Court action CIV 1412 of 2014.
2.In respect of question 2 posed by the originating summons, the Court declines to give a direction at this time upon whether the plaintiffs are justified in not transferring the shares in Ondit Pty Ltd in specie to Kurt Rudolf Baur, as provided for in the will of the deceased.
3.In respect of question 3 posed by the originating summons, the Court declines to give a direction at this time upon whether the plaintiffs are justified in immediately transferring the shares in Ondit Pty Ltd in specie to Kurt Rudolf Baur, as provided for in the will of the deceased.
4.Subject to the Court's directions the plaintiffs have liberty to apply for amended or further advice in respect of questions 2 and 3, as indicated under par 85 of the court's reasons in Wood v Wood [No 4].
5.Question 5 posed by the originating summons, concerning whether the plaintiffs are justified in defending the application for summary judgment filed by Robert Charles Scott in Supreme Court action CIV 1492 of 2014, is answered 'No'.
6.Question 6 posed by the originating summons, namely, in the event that the application for summary judgment filed by Robert Charles Scott in Supreme Court action CIV 1492 of 2014 is dismissed, then concerning whether the plaintiffs are justified in defending the claim by Robert Charles Scott in that action that he is the beneficial owner of one of the two shares in Second Skin Pty Ltd (ACN 009350467), is answered 'No'.
7.Further, the plaintiffs are justified in resigning as directors of Ondit Pty Ltd.
8.The plaintiffs are justified in forthwith seeking leave to resign their offices as executors of the estate of Ms Ballantyne on the basis of their being replaced by new independent executors approved by the Court.
And the Court orders:
9.The estate pay the second defendant's, the third defendant's and the seventeenth defendant's costs of and incidental to responding to the originating summons, including reserved costs, save to the extent to which such costs are of an unreasonable amount or have been unreasonably incurred.
10.The question of the executors' costs of the advice application remains reserved, to be dealt with in separate reasons.
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