New South Wales Supreme Court CITATION : HILL v COPELAND [1999] NSWSC 632 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 1757/97 HEARING DATE(S) : 3 and 4 June 1999 JUDGMENT DATE : 28 June 1999 PARTIES : GAIL CHRISTINE HILL v MELVYN COPELAND & MICHELLE KAY VRANDICH JUDGMENT OF : Master Macready at 1 Ms L.V. Stapleton for the plaintiff COUNSEL : Mr L. Ellison for the 1st defendant Mr J. Dupree for the 2nd defendant Marsdens for the plaintiff SOLICITORS : Teece, Hodgson & Ward for the 1st defendant L.C. Muriniti & Associates for the 2nd defendant CATCHWORDS : Practice. Plaintiff seeks to discontinue at commencement of proceedings and have second defendant pay her costs. Claim based upon an alleged deliberate ambush of the plaintiff by the 2nd defendant. Consideration of the proper approach to such an application. Held not appropriate to determine merits and not possible to determine whether the proceedings properly commenced. Plaintiff ordered to pay 2nd defendant's costs from the time the plaintiff could properly assess the 2nd defendant's position. DECISION : Paragraph 42 - 21 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION MASTER MACREADY Monday, 28 June 1999 1757/97 GAIL CHRISTINE HILL v MELVYN COPELAND & MICHELLE KAY VRANDICH JUDGMENT 1 MASTER MACREADY: This matter was listed before me for hearing on 3, 4, 7 and 8 June 1999. When the matter was called on for hearing on 3 June 1999 the plaintiff made an application for leave to discontinue the proceedings. In addition the plaintiff sought as terms of the leave to discontinue orders that the second defendant pay the plaintiff's and the first defendant's costs on an indemnity basis. It was made clear during the course of the application for leave to discontinue that the making of the orders as sought by the plaintiff was not a condition precedent to her desire to discontinue. The second defendant seeks orders that the plaintiff pay her costs and the first defendant, the Executor of the estate of the deceased seeks an order that his costs be payable out of the estate of the deceased on an indemnity basis. Alternatively, the first defendant seeks that the plaintiff pays his costs. 2 The proceedings are brought by the plaintiff who is a daughter of the deceased and the first defendant is the Executor of the will. The first defendant was a friend of the deceased having known him for some years through work and other associations. The second defendant is the other daughter of the deceased. The deceased died on 20 September 1995 and under his will of 12 October 1993 he gave his daughter, the second defendant, his property at 115 Woodland Street, Balgowlah. He made some minor specific legacies of some personal property and a legacy of $50,000 to be paid out of a specific account to the plaintiff. At the date of his death that account had no money in it and, accordingly, the gift to the plaintiff failed. When the deceased died the property at 115 Woodland Street, Balgowlah was valued for probate at $330,000. The parties are agreed that its present value is $460,000. There was a quantity of furniture, watches and jewellery most of which was subject to specific bequests valued at $16,150. Other monies in bank accounts amounted to a little over $7,000, there was a car for $13,100 which also passed to the second defendant under the will. It can be seen that the estate was substantially comprised of the property at Woodland Street, Balgowlah which passed to the second defendant. 3 The deceased was born in 1923 and his wife Fay Duncan was born on 15 October 1928. They married on 9 November 1946 and from all accounts their marriage was not a happy one. By 1972 there were proceedings between them for divorce and ultimately in 1976 proceedings were heard and a decree nisi pronounced on the grounds that the marriage had broken down irretrievably. The previous years before that were difficult ones for the children. It is clear that the break up of the marriage had a severe impact, not only upon the deceased and his wife, but also on the children. The deceased's wife is still alive but she makes no claim in these proceedings. 4 The plaintiff's claim for costs against the second defendant is based upon the proposition that the plaintiff had a reasonable case for provision when she commenced the proceedings given her effective total omission from the will. She knew her sister's situation and believed that there was some prospect for an order being made in her favour. Evidence emerged shortly before the matter was due for hearing, that the second defendant not only had the property transferred to her but that she had some years before mortgaged it in order to support borrowings by an acquaintance who was running a fashion business. Those borrowings were increased with the consent of the second defendant and the term extended to September 1999. It was also disclosed in the affidavit of 24 May 1999 that recently the borrower's business had failed, she was having difficulty meeting the interest payments and would not be able to pay back the loan for some time. Hence the property in the second defendant's name was effectively worth considerably less than its agreed value of $460,000 because of the loan outstanding of $230,000. The plaintiff submits that there was a deliberate withholding of this information such that the plaintiff was ambushed at the last minute and was hence forced, on a consideration of that material and the costs of her being involved to that date, to seek leave to discontinue. 5 In order to evaluate this claim it is necessary once again to go into some history following the death of the deceased and following the commencement of proceedings. 6 As I have mentioned the deceased died on 20 September 1995 and probate was granted 22 March 1996. A month earlier on 22 January 1996 the solicitors for the plaintiff had written to the solicitors for the Executor indicating that they had instructions to make a claim under the Act and sought some information in the hope that the matter could be finalised without resort to litigation. By 21 March 1996 the plaintiff's solicitors were supplied by the 1st defendant's solicitors with copies of the application for probate giving details of the estate. On 26 April 1996 the plaintiff's solicitors wrote seeking confirmation that there would be no distribution of assets to the beneficiaries and in particular that the real estate be not transferred to any other person other than the Executor pending the clarification of the plaintiff's future claim. That letter was forwarded to the Executor probably on or before 2 May 1996. It is thus perfectly clear that the Executor, the 1st defendant, knew of the request not to transfer the property to the beneficiary. The usual notice of claims was published on 6 April 1996 and required particulars of claims to be given within one month. Clearly this was done in this case. On 12 June the 1st defendant's solicitors indicated that they had still not received instructions from the Executor but indicated that they had themselves received no instructions to transfer the property. 7 On 30 July 1996 the solicitors for the 1st defendant wrote to the plaintiff's solicitor and advised that their instructions had been terminated as from that date. The Executor on his own initiative had signed a transmission application on 24 July 1996 whereby the property was transferred to the 2nd defendant. Apart from communications between solicitors there were discussions between the plaintiff and the 2nd defendant during 1995. According to the plaintiff the 2nd defendant initially denied knowing about the gift to her, this being in December 1995. At the start of July 1996 there was a further conversation when the plaintiff sought to discuss the matter with the 2nd defendant to avoid legal action. The 2nd defendant hung up the phone. On 11 August 1996 there were further calls in which the 2nd defendant refused to discuss the matter and again on 22 August 1996 when the 2nd defendant told the plaintiff not to ring her again. 8 Given the termination of instructions the plaintiff's solicitor wrote direct to the Executor on 14 August 1996 again requiring that there be no distribution and seeking confirmation from him. The Executor in correspondence claimed he had discharge his final duties as Executor two days before he received that letter and enclosed a copy of the letter which he wrote to the plaintiff on 15 August 1996. In that letter he sent a watch which under the will was given to the plaintiff's son, Duncan, and advised that the property at Woodland Street had been transferred to the 2nd defendant some week earlier. He also took the opportunity of enclosing a letter from the deceased and a statutory declaration from someone who may well be a witness indicating the deceased's strong desire that the plaintiff have nothing out of the estate. The plaintiff's solicitors wrote to the Executor challenging him on this matter to which the Executor replied that he had discharged his duties to the late Mr Duncan's wishes "to the letter". 9 On 21 September 1996 the second defendant mortgaged the property for a loan of $190,000. Her signature to that mortgage was witnessed by the solicitor who has acted for her in these proceedings, Mr Muriniti. On 21 January 1997 she increased the amount of the mortgage from $190,000 to $230,000 and on 23 October 1998 the term was extended to 30 September 1999. 10 The plaintiff knew, of course, that her sister was residing in the property and in August she became aware of he transfer of the property to her. There was no suggestion that the plaintiff's solicitors had any knowledge of the mortgaging of the property by the 2nd defendant until April 1999. 11 No application was made by the plaintiff to restrain any dealings with the land by the 2nd defendant no doubt because there was nothing that she knew which would indicate the likelihood of disposal or encumbering. The plaintiff commenced her proceedings on 19 March 1997, naming the 1st defendant as the only defendant and sought an order for provision under s7. That day was the last day or the last day but one for commencing the proceedings. The affidavit of the Executor of 3 June 1999 was served at about that time and that plainly set out that there had been a distribution of the estate. That prompted the plaintiff's solicitors to file an amended Summons on 25 June 1997 adding the 2nd defendant as a defendant seeking an order that the premises at Woodland Street be designated as notional estate. No doubt this should have been done when the proceedings were first commenced. There was a further amended Summons filed on 11 September 1998 in which the plaintiff, as a matter of precaution also sought an order under s16(2) extending time so far as it related to the application against the 2nd defendant. The plaintiff certainly did not concede that it needed that order and it seems somewhat doubtful whether she would need such an order. However, that amendment was merely made by way of precaution. 12 One thus has a situation where the property had been mortgaged without the knowledge of the plaintiff or her solicitor. Later I will deal with the question of whether it may have been prudent before commencing proceedings to have searched the title to the property at that stage. 13 However, the 2nd defendant did become a party to the proceedings in June 1997 and the progress of the proceedings thereafter is something which the plaintiff relies upon as indicating the an intention on the part of the 2nd defendant to deceive the plaintiff about the 2nd defendant's financial situation. To put it bluntly, the 2nd defendant was on numerous occasions in breach of orders to file her evidence. Eventually her evidence only became available during early 1999. 14 I turn to some more of the history. The first order for the 2nd defendant to file and serve her affidavit was made on 4 December 1997 on an occasion when she did not attend the directions hearing of which she had notice. She was directed to file and serve her affidavits by 19 December 1997. She failed to do. The subsequent history is set out in a brief fashion in my judgment of 5 March 1999 in this matter. That judgment was given on an application by the 2nd defendant for leave to file three affidavits because by that stage although a year or more had passed she had not filed any evidence in the case and the Registrar had ordered that she could not file any further affidavits without the leave of the Court. I will not repeat that history as this is set out in that judgment. In the result I allowed three affidavits which were then suggested by the 2nd defendant as necessary for her case to be filed and made other appropriate interlocutory orders. The matter had in fact been listed for hearing on 20 April and there were other appearances before me for directions before that date. One was 16 April in which I gave directions and gave leave to the defendant to serve some further affidavits and made other directions. 15 On 20 April the hearing date was vacated and I fixed 3, 4 and 8 June for the hearing and 21 May for directions. I also made an order in terms of the usual directions in these matters requiring the affidavits as to costs to be served by 19 May 1999. On 21 May 1999 I made orders for the plaintiff to file affidavits in reply by 27 May 1999 which was the date for return of subpoenas and fixed an additional day for the hearing. It was on 21 May 1999 that the first mention was made in court by the 2nd defendant of the fact that the 2nd defendant's property had been mortgaged. An affidavit setting this out was sworn by the 2nd defendant on 24 May 1999. The solicitor for the plaintiff subpoenaed the mortgagee and inspected the appropriate files on 28 May 1999 to verify the information that the plaintiff had provided in her affidavit. However, the fact that the property was mortgaged became apparent to the plaintiff a few days after 12 April 1999. She had received a copy of a valuation of the property from Mr Fawcett, a valuer, to which was annexed a title search showing the mortgage. Her solicitor had also received that valuation but had not noticed the mortgage. The plaintiff was concerned and raised the matter with her solicitor who then discussed it with counsel. I will come back to what significance was attached to the mortgage by the solicitor and the then counsel for the plaintiff. 16 One other matter of note in the preparation of the case was the service of a offer of compromise on 27 April. In that offer the 2nd defendant offered to compromise on the basis that the 2nd defendant pay the plaintiff $50,000 with the plaintiff and the 2nd defendant paying their own costs. It did not address the costs of the 1st defendant. 17 Above I have referred to affidavits as to costs. These are normally required in these matters both for the benefit of the clients and for the Court. Frequently the Court has to take into account the effect of costs on the distributable estate. In the present matter the affidavits as to costs disclose the following position. 18 As at 19 May 1999 the plaintiff's solicitor's costs amounted to $21,000 with disbursements at $1,114. Counsel's fees to that date amounted to $9,110 and the plaintiff's costs for the hearing thereafter were as to solicitor's $5,500 to $7,000 based on a three day hearing with counsel's fees of a similar amount. This totals $42,224 to $45,224. At the time of service of the offer of compromise the plaintiff was liable for her own costs in an amount of about $31,224.. 19 The 1st defendant's costs for solicitors were $16,211.85 to date plus $328.97 disbursements and counsel's fees of $4,550. Solicitor's fees of $6,000 were estimated for a three day hearing and counsel's fees of $7,000 were estimated for that hearing. This totals $34,090.82. At the time of service of the offer of compromise the 1st defendant's costs were in the order of $21,090.82. 20 In contrast the estimate for the 2nd defendant was a sum of $100,000 inclusive of counsel's fees and disbursements to the conclusion of the proceedings. The 2nd defendant had signed a costs' agreement in April 1997 in which the total costs were estimated at $30,000. In March 1999 that estimate was increased to $50,000, in April 1999 the estimate was increased to $60,000 with costs to the conclusion of the hearing estimated at $100,000. Without commenting on the appropriateness of these charges one thing that is apparent is the 2nd defendant's costs were almost double that of the plaintiff's a fact which she or her advisers would not have been able to anticipate. 21 I turn to the question of proper principles to be used in considering the plaintiff's application. There are a number of cases which suggest that in the ordinary case the plaintiff can not usually apply to discontinue on terms that an order for costs be made against the defendant. See Mulcahey v Wilkinson (1887) 9 ALT 22, Lambton & Co v Parkinson (1887) 35 WLR 545 and Denman Homes Pty Ltd v Madnara Needham J 14 September 183. 22 More recent cases suggest that in exceptional cases a costs' order may be made against a defendant. An example of this was Garwolin Nominees Pty Limited v Statewide Building Society (1984) VR 469. In that case the plaintiff had obtained practical success before the hearing because the defendant has given up possession which was sought by the plaintiff. A similar more general approach was adopted in Telstra Corporation v Australian Telecommunications Authority Supreme Court of Victoria Hayne J 10 June 1994 unreported. However, in that case His Honour did not make an order that the defendant pay the plaintiff's costs. When dealing with a claim for dismissal of a cross claim which was not sought to be pursued and which could not be discontinued as the hearing had commenced, His Honour, McLelland J, as he then was in Ritz Hotel v Charles of the Ritz 12 IPR 75 at 77 took the view that such decisions should not be confined and should be made in a manner best calculated to achieve justice as between the parties in the circumstances of the particular case before the court. 23 The plaintiff's case that she have costs against the 2nd defendant has as one of its basic assumptions that the plaintiff had a good case which ultimately became one which could not be pursued once the 2nd defendant's true financial position became apparent. This raises fairly squarely the question of the extent to which in an application such as the present, one should consider the strengths of a party's case. Frequently when parties settle a case, apart from costs, the court is called upon to determine what order as to costs should be applied. 24 The principles normally applied in these circumstances were summarised by Mr Justice Hill in Australian Securities Commission v Aust-Home Investments Limited 34 F.C.R. 194. At page 201 His Honour summarised the cases in the following way:- "(1) Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order: Stratford and the SEQEB case. (2) It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial: Stratford. This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue. (3) In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them (SEQEB). (4) In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation: cf Sunday Times Newspaper Co Ltd v McIntosh (1933) 33 SR ( NSW) 371. (5) Where the proceedings terminate after interlocutory relief has been granted, the Court may take into account the fact that interlocutory relief has been granted: cf Re Asiatic Electric Co Pty Ltd [1973] 1 NSWLR 603 at 606, a case which, however, depended upon the specific working of the statute under consideration." 25 Recently some of these principles have been approved by McHugh J in Re Minister for Immigration & Ethnic Affairs; Ex parte QIN 71 ALJR 533. His Honour noted that the court when it does not determine a matter is deprived of the factor that usually determines whether or how it will make a costs order, namely, the result. He then went on to say:- "In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent Council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans. Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare." 26 As is clearly indicated by these excerpts it is inappropriate for the court to determine the case on the merits or to determine the outcome of a hypothetical trial. However, the court can take the preliminary step of determining whether the plaintiff acted reasonably in commencing the proceedings. 27 His Honour Mr Justice McHugh refers to a decision of Pincus J in South East Queensland Electricity Board v Australian Telecommunications Commission and comments that a Judge may in some cases feel confident that although the parties acted reasonably one party was almost certain to have succeeded if the matter had been fully tried. 28 In the present case certainly one could not come to such a conclusion. Leaving aside questions of the 2nd defendant's financial situation, this matter was replete with claims of conduct disentitling and accordingly it would have been impossible without trying the action to determine whether the plaintiff might have succeeded even putting to one side the second defendant's financial situation. 29 It seems to me that all I can do in considering the plaintiff's request is to see whether the proceedings were commenced reasonably. Even this decision has to be made on a somewhat limited basis. 30 So far as concerns the commencement of proceedings the salient facts are as I have set out earlier. There are only two claimants, the plaintiff and the 2nd defendant and the property was left to the 2nd defendant. The plaintiff's financial situation at the time of the commencement was somewhat different from her situation as it developed later. The plaintiff's situation as disclosed in her affidavit showed that she had separated from her husband in 1995. She and her husband had occupied a property at Carrabubula which was owned by a company. That company effectively was the company of her parents-in-law and the plaintiff did not consider that the shares which she held were effectively hers. The plaintiff and her husband at the commencement of the proceedings still carried on a partnership for taxation purposes which arose from the operations on the property. The plaintiff was a part-time teacher receiving a fortnightly wage of some $715. The assets in the partnership included stock, an investment house in Tamworth and also a unit at Penrith. The plaintiff also had an interest in a home which was occupied by her mother and she regarded it as belonging to her mother who used it as her place of residence. The plaintiff had four children of a young age at school. In contrast, by the time the proceedings were commenced the plaintiff knew that the second defendant had separated from her husband, she had three young children, was living on a pension and received the whole of the property of the deceased. 31 The plaintiff also knew having regard to the letters from the Executor that there was likely to be a contest about her entitlement. She knew she had been excluded and that her father had expressed reasons to others as to why he had not left her any further provision. 32 Because these allegations of conduct disentitling have not been fully investigated it is impossible for me at this stage to determine whether or not the plaintiff reasonably commenced the proceedings. She knew that she was in a difficult position. She was in the throws of separation and ultimately divorce from her husband and she had little assets that were not tied up with her husband. She had the care of her children. Her sister also was separated with three children and was living on a supporting parent's pension in the house of the deceased where she had been looking after him. 33 Without real knowledge of the facts behind the questions of conduct disentitling, it is almost impossible to form a conclusion as to whether or not the proceedings were commenced reasonably. In effect a court would have to try the plaintiff's perception of what she understood might be the conduct disentitling and whether she believed she would succeed on that issue. 34 The other matters that have to be considered on the plaintiff's application are, of course, her suggestion that she was ambushed by deliberate actions on the part of the 2nd defendant. 35 What stands out about the course of the history of the matter is that the 2nd defendant mortgaged the property immediately after it was transferred to her in 1996. She knew of the plaintiff's concerns about the will and that the distribution was unfair at that time. The delays by the 2nd defendant in putting on her evidence from July 1997 until early in 1999 are inexcusable. I say this notwithstanding that on some occasions the plaintiff had to file additional evidence as her situation changed. The only matters which arise really are whether or not the plaintiff might have prudently searched prior to commencing proceedings to find out the existence of the mortgage. The plaintiff knew the property had been transferred to her sister but she certainly did not know of the mortgage. In the ordinary course, given the 2nd defendant's situation, it would probably be somewhat extraordinary for the plaintiff or her solicitors to have anticipated that the 2nd defendant would take the course of gratuitously mortgaging a property for no benefit to herself. It was a very foolish thing to do. 36 It is, however, apparent from the chronology that I have recounted that the plaintiff's solicitor became aware shortly after 12 April 1999 of the existence of the mortgage and discussed it with his client. The advice at that stage from counsel apparently indicated that this was more a matter of credit. To my mind given the situation of the parties, this is somewhat extraordinary. The Court can only designate property as notional estate in order to satisfy an order. The mortgaging of the property which could have been fully investigated within ten days or so after this knowledge came to light should have substantially changed the plaintiff's outlook in respect of her case. Clearly the defendant's situation had changed for the worse, no doubt, because of her own foolishness. She had as many responsibilities, if not more than the plaintiff, so far as educating young children was concerned. In my view a proper assessment towards the end of April would have indicated to the plaintiff the wisdom of not proceeding further with her claim. The offer that was made on 27 April 1999 certainly was one which would have allowed the plaintiff to escape the litigation at minimal cost. Even though the offer did not include an amount for the defendant's costs at most the plaintiff would have been out of pocket by several thousand dollars and she may have been able to negotiate some better arrangement of that. Given the importance of the matter I can see no justification for the plaintiff not having accepted the offer as she had adequate opportunities to determine at that stage that it would be extremely foolish to proceed with the proceedings. 37 In summary, therefore, one has a situation where the plaintiff has commenced the proceedings in circumstances where it is not possible, given the nature of the present state of the proceedings, for me to determine whether she was reasonable in commencing the proceedings. The proceedings also reached a point towards the end of April 1999 when on any view of the matter the plaintiff should have ceased and accepted an offer which would have enabled her to escape with little cost consequences. 38 There remains the fact that no steps were taken by the 2nd defendant to make plain her financial situation. I can only conclude that keeping the knowledge of its poor state from the plaintiff was a deliberate course of action on her part. 39 As between the plaintiff and the 2nd defendant the only conclusion available is that the plaintiff should not have her costs as against the 2nd defendant. So far as the 2nd defendant is concerned, she only became a party in July 1997. Her actions in failing to file her evidence in a timely way meant that the plaintiff had no way in a practical sense of assessing her case because of the lack of information on the 2nd defendant's real financial position. I have concluded that the plaintiff ought to have known this by the end of April 1999 and accordingly I see no reason why the 2nd defendant should recover costs against the plaintiff prior to that date. From 30 April 1999 I am satisfied that it is appropriate that the plaintiff should pay the 2nd defendant's costs from that date. 40 So far as the 1st defendant is concerned, there are some difficulties. The 1st defendant seeks an order that his costs be paid out of the estate or, alternatively, paid by the plaintiff. I have earlier recounted the evidence that shows the steps the Executor took with regard to the deliberate distribution of the estate with notice of the plaintiff's claim. 41 Recently, in a case of D'Albora v D'Albora 21 May 1999 I set out at length a number of cases dealing with the personal liability of an Executor where he distributes with notice of a possible claim prior to the 18 months within which an application under the Family Provison Act can be made. The Executor says that he did not know that the correspondence would prevent him from distributing the assets. However, that lack of knowledge is no excuse. The situation is that the Executor distributed the property improperly when he had notice of a possible claim. That distribution permitted the 2nd defendant to take the steps which she did in mortgaging the property. It was submitted by the 1st defendant that unless I found that it was because of the mortgaging of the property that the plaintiff's claim was bound to fail that he should not be penalised for this early distribution. Be that as it may, the Executor's action certainly compounded the difficulties which the plaintiff had and in these circumstances I can see no justification for allowing the Executor his costs against the plaintiff. In my view the Executor is entitled to indemnity costs out of the estate. In practical terms that means that he would have to look to the 2nd defendant, to whom he has distributed the estate, for recovery of those costs. That is a matter between them. 42 Accordingly, the orders that I make are as follows:- 1. I give leave to the plaintiff to discontinue the proceedings on terms:- (a) That no further proceedings be brought by the plaintiff based upon the cause of action propounded in the present proceedings. (b) That the plaintiff pay the 2nd defendant's costs on and from 30 April 1999 on a party and party basis. 2. The 1st defendant's costs on an indemnity basis may be paid or retained out of the estate of the deceased. ********** Last Modified: DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.