Crawford v McIntosh [2004] NSWSC 180

New South Wales Supreme Court

CITATION : Crawford v McIntosh [2004] NSWSC 180 HEARING DATE(S) : 16 March 2004 JUDGMENT DATE : 16 March 2004 JURISDICTION: Equity JUDGMENT OF : Campbell J DECISION : Defendant to pay costs of plaintiff

CATCHWORDS : PROCEDURE - costs - litigation concerning everything except costs settled - adversary litigation concerning administration of estate - whether appropriate to make no order as to costs - whether appropriate to make order for indemnity costs - SUCCESSION - EXECUTORS AND ADMINISTRATORS - administration - residuary estate, which includes certain land, to be divided equally between two people - estate without funds - whether power exists, or can be obtained, for executors to obtain development consent for the land LEGISLATION CITED : Conveyancing Act 1919 Trustee Act 1925 CASES CITED : Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 Murdocca v Murdocca (No.2) [2002] NSWSC 505 PARTIES : Janine Elizabeth Crawford - Plaintiff Lachlan Charles McIntosh - Defendant FILE NUMBER(S) : SC 1715/03 COUNSEL : M Evans - Plaintiff S M Littlemore QC - Defendant SOLICITORS : McCabe Terrill - Plaintiff Malcolm Johns & Company - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

CAMPBELL J

TUESDAY 16 MARCH 2004

1715/03 JANINE ELIZABETH CRAWFORD v LACHLAN CHARLES McINTOSH JUDGMENT – Ex Tempore 1 HIS HONOUR: This is a proceeding where the plaintiff and the defendant are brother and sister. The litigation relates to some land known as 39 Cabbage Tree Road, Bayview. That land is vacant land which adjoins the Bayview Golf Club. It has come to be vested in the plaintiff and the defendant as executors of the estate of their late mother. It is vested in them as joint tenants. The land forms part of the residue of their mother's estate. The relevant provisions of the will provide that the residue is given equally (in the event in which it happened) to the plaintiff and the defendant. 2 The plaintiff's application is one which was made on 5 March 2003. It sought the appointment of a Mr Struthers and Mr Jones as trustees for sale of the Bayview land to be held by them upon statutory trust for sale under s 66G of the Conveyancing Act. 3 The evidence shows that there had been attempts prior to the commencement of the proceedings to reach agreement between the plaintiff and the defendant about what should be done with the land. They each put proposals that the other should buy the land, but nothing came of those proposals. As well, in November 2002 the solicitors for the plaintiff suggested that the property be sold, but that was not agreed to. 4 By a letter before action, on 8 January 2003, the solicitors for the plaintiff said that unless a proposal to realise the property was made within a short space of time the plaintiff would need to seek appointment of trustees under s 66G. 5 The defendant filed a cross-claim. In it he sought an order that the plaintiff take no steps to sell the land without having first taken all reasonable steps to obtain from the Pittwater Council a development consent which would enable the land to be used for a championship 25 metre short course training pool facility and associated residences. He also sought an order that if Pittwater Council declined to grant that development consent, then sale should be further postponed until such appeal to the Land and Environment Court against the refusal of consent as expert advice suggested was appropriate had been taken. 6 The litigation has now settled, on a basis whereby the parties agree that Mr Struthers be appointed a trustee for sale under s 66G, that the cross-claim be dismissed, and that the costs of the claim and cross-claim be reserved. The matter comes before me today for the purpose of dealing with those reserved costs. 7 The submissions of Mr Evans, counsel for the plaintiff, are to the effect that the obligation of the plaintiff and the defendant - whether as executors or trustees does not matter - was to sell the land, so that its proceeds could be divided in accordance with the residuary clause of the will. That submission is correct. However, there is a power in trustees under s 27B of the Trustee Act 1925 to postpone sale if it seems appropriate, and as well there is power under s 81 of the Trustee Act for trustees to seek to obtain from the Court approval for any advantageous dealing. The will in the present case did not in its terms confer upon the trustees the powers to engage in the kind of development activities which would be involved in the making of orders under the cross-claim. However, the cross-claim can be seen as being in substance an application under s 81. I accept that it would be necessary for the Court to actually confer such power on the executors, if they were to proceed with the development application foreshadowed by the cross-claim, but that is well capable of being encompassed by the orders sought in the cross-claim. 8 The fact of the matter is that the defendant has simply abandoned the proposal that the land be developed in the manner outlined in the cross-claim. The evidence before me does not say why. However, I am entitled to treat that abandonment as an indication of a view on the part of the defendant of the prospects of success of the cross-claim. 9 It is well established, in litigation concerning deceased estates, that Courts can make orders for costs requiring the costs of disputation to be paid out of the estate, or can make orders requiring one party or the other to pay the costs of the other. The principles are set out in Murdocca v Murdocca (No 2) [2002] NSWSC 505. In essence, if the litigation is in substance adversary to litigation, it is common for the Court to make orders that one party pay the costs of the other, whereas if the litigation is in the nature of a joint approach to the Court to clarify an uncertainty, then the costs can be ordered out of the estate. The litigation in the present case is litigation which fits into the category of adversary litigation. 10 Mr Evans seeks an order for costs not only on the ordinary basis, but also on the basis of indemnity costs. He relies on the statement of principle of Shepherd J in Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 at 257, where his Honour lists various circumstances which can justify the ordering of indemnity costs. In particular, the circumstance which Mr Evans relied upon was that it is open to the Court to award indemnity costs in circumstances where the case was defended in wilful disregard of known facts or clearly established law. 11 It is clear that the estate did not have funds to enable the development proposal foreshadowed by the cross-claim to be carried through. The evidence disclosed no proposal on the part of the defendant about how the costs of carrying through that development proposal might be financed. However, it is always possible for trustees to raise money for an appropriate venture, and if they do not have power under the trust instrument, they can get it from the court in an application under s 81. I do not regard the absence of funds in the estate as something which means that the litigation of the cross-claim and opposition to the summons was something embarked on in wilful disregard of known facts. 12 Mr Evans also relies upon the other limb of Shepherd J's statement of principle, submitting that the application was one brought in wilful disregard of clearly established law. The "clearly established law" to which he refers is the obligation arising under the will for the estate assets to be sold and divided. 13 Given the existence of the power to postpone sale, and the existence of the Court's power under s 81 to give power for an advantageous dealing, I do not regard the bringing of the cross-claim as something which is shown to have been carried out in wilful disregard of clearly established law. For these reasons, I would not make an order for costs on an indemnity basis. 14 Mr Littlemore of Queens Counsel, for the defendant, submits that I ought make no order as to costs, because an invitation to enter into what amounts to a mini trial of the case is impractical. I do not accept that submission. It frequently happens that litigation is compromised on the basis that the parties agree on everything except costs. In those circumstances, the Court has no alternative but to form a view about who should pay the costs, on the basis of whatever material is put in front of it. It could not be the case that a person could oppose relief for a long time, compel the person seeking that relief to incur costs, then capitulate, and necessarily and always avoid an order for costs. 15 Mr Littlemore QC also submits that to make any order for costs could subvert the settlement which has been made. I do not accept that submission. The settlement which has been made is one which specifically reserved to the Court power to decide what costs, if any, should be ordered. 16 For the reasons which I have earlier given, namely that this was in substance adversary litigation, it is appropriate to order the defendant to pay the costs of the plaintiff, on the ordinary basis. I so order. 17 The exhibits may be returned. **********