New South Wales Supreme Court CITATION : Upton v Downie [2007] NSWSC 1281 HEARING DATE(S) : 02/11/07 JUDGMENT OF : Gzell J EX TEMPORE JUDGMENT DATE : 2 November 2007 DECISION : Plaintiff ordered to bear his own cost. Defendant ordered to bear his own cost with no recourse to the estate. CATCHWORDS : PROCEDURE - Costs - Plaintiff successful in revocation of probate to defendant but failed in two of five issues raised to support application - Whether costs should follow the event - Defendant maintained that he was owed a debt by the estate and he would admit the liability - Based on conversation with deceased that she would transfer a 50% interest in property to him when he paid 50% of purchase price which he did not - Whether impropriety - Whether defendant should have no recourse to the estate for his costs - Whether litigation caused by deceased LEGISLATION CITED : Upton v Downie [2007] NSWSC 1095 Upton v Downie [2007] NSWSC 1095 Miller v Cameron (1936) 54 CLR 572 CASES CITED : In re Jones. Christmas v Jones [1897] 2 Ch 190 Mavrideros v Mack (1998) 45 NSWLR 80 Brown v McEnroe (1890) 11 LR (NSW) Eq 134 PARTIES : John Neville Upton - Plaintiff Robert James Downie - Defendant FILE NUMBER(S) : SC 2695/07 COUNSEL : Mr M Lawson - Plaintiff Mr J Donohoe - Defendant SOLICITORS : J B Stevenson & Co Solicitors - Plaintiff Lenehan & Co Solicitors - Defendant - 4 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J FRIDAY 2 NOVEMBER 2007 2695/07 JOHN NEVILLE UPTON v ROBERT JAMES DOWNIE (No 2) EX TEMPORE JUDGMENT 1 The parties have produced draft orders to give effect to my reasons for judgment in this matter (Upton v Downie [2007] NSWSC 1095). The plaintiff proposes that Danny Kenneth Simpson, a solicitor, be the person to whom letters of administration with the will annexed be granted. The defendant submits that the administration should be granted to the Public Trustee. 2 Mr Simpson proposes to charge no fees for executorial duties. He says. "I will not charge for work relating to my role as administrator of an estate. I will charge only for the legal work that I or my firm completes in litigated matters." 3 The Public Trustee charges an initial fee. In addition, if the person within the office of the Public Trustee who is the administrator decides that a response to litigation, or the institution of litigation is necessary, either an in-house solicitor or a solicitor in private practice is retained. 4 In this case applications under the Family Provision Act 1982 have been filed. 5 In my view, the interests of the estate are best served by the appointment of Mr Simpson and I propose to take that course. 6 So far as costs orders are concerned, the normal rule is that costs follow the event. The plaintiff has succeeded in his claim that the grant of probate to the defendant be revoked. But of the five issues raised in support of the application, the plaintiff failed on two and, in my view, the appropriate course is for each party to pay his own costs. 7 As an exception to the normal rule that costs follow the event, an executor or trustee is usually allowed his costs out of the estate if his conduct has been honest, even though it may have been mistaken (Miller v Cameron (1936) 54 CLR 572 at 578). 8 There is an exception if the trustee fails to act with propriety (In re Jones. Christmas v Jones [1897] 2 Ch 190 at 197-198). In that case, Kekewich J gave as examples of impropriety an unsuccessful defence by an executor or trustee of a claim for breach of trust; an executor making a claim, as executor, that the court can see from the evidence, or by an intuitive process, or by a general view of the case, is not honestly brought forward; and the bringing of a claim that no reasonable person would have done, what his Lordship described as a monstrous claim. 9 In my view, the defendant's determination, as executor, to admit his claim as a debt due by the estate can, from the evidence be seen, arguably, not honestly to have been brought forward for the purpose of the exception. 10 In Miller the trustee was asked by the beneficiaries to resign but refused. Latham CJ at 579 concluded that in defending the action he was representing and supporting his own interests and not those of the trust estate. It was appropriate that he pay the costs of the action and of the appeal to the High Court. When apprised of the opposition by the beneficiaries to his continued executorship, the defendant could have resigned to save the estate the expense of this litigation. 11 In Mavrideros v Mack (1998) 45 NSWLR 80, probate was revoked for the inexcusable delay of the executor to administer the estate. The Court of Appeal, at 109 ordered the defendant to pay the costs of the action and of the appeal without recourse to the estate. In my view, such an approach to lack of recourse against the estate is appropriate in this case. 12 There is another basis upon which an executor or trustee may be indemnified out of the estate for his costs of litigation where the litigation has been caused by the conduct of the deceased (Brown v McEnroe (1890) 11 LR (NSW) Eq 134). 13 It was submitted that the conflict of interest of the defendant accepting his debt as an estate liability is attributable to the deceased. I reject that submission. As I found in my judgment at [54], there is no reason to suppose that the deceased was aware of the potential conflict. The conversation attributed to her had nothing to do with a loan. I decline to make an order that the defendant be entitled to the payment of his costs out of the estate. 14 I make orders in terms of paragraphs 1 to 7 of the minutes of order proffered by the plaintiff, initialled by me, dated by me and placed with the papers. 15 I order the plaintiff to bear his own costs. I order the defendant to bear his own costs without recourse to the estate of the deceased. ********** 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. 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