Davidson v Cameron & Ors [2016] QSC 77

SUPREME COURT OF QUEENSLAND CITATION: Davidson v Cameron & Ors [2016] QSC 77 PARTIES: PETER WILLIAM DAVIDSON as Executor and Trustee of the Will of JOHN FRANCIS JONES, deceased (applicant) v SUSAN PATRICIA CAMERON (first respondent) AND JACK BRADFORD as Personal Representative of ALMA BERNICE PERKINS, deceased (second respondent) AND DOROTHY ANNE STEVENS (third respondent) AND KATHLEEN MIDDLETON (fourth respondent) FILE NO: BS5096/15 DIVISION: Trial Division PROCEEDING: Application DELIVERED ON: 8 April 2016 DELIVERED AT: Brisbane HEARING DATE: 24 June 2015, written submissions received 23 December 2015 and 4 January 2016 JUDGE: Jackson J ORDERS: The order of the court is: 1. The third respondent’s costs of the application for declarations and directions as to the will of the testator be assessed on the indemnity basis and paid from any assets of the estate. 2. The applicant’s costs of the application for declarations and directions as to the trust of the hotel -- 1 of 5 -- 2 be assessed on the indemnity basis and be paid from the assets of the trust. CATCHWORDS: SUCCESSION – PERSONAL REPRESENTATIVES – OTHER MATTERS – where the applicant sought directions as to the construction and administration of the will – where that application was in some respects appropriate and in other respects unnecessary – whether the applicant executor was entitled to costs – whether the third respondent was entitled to costs from the estate EQUITY – TRUSTS AND TRUSTEES – POWERS, DUTIES, RIGHTS AND LIABILITIES OF TRUSTEES – INDEMNITY, LIEN AND REIMBURSEMENT – LEGAL COSTS AND COMMISSION ENTITLEMENT – where the applicant also sought directions as to the construction and administration of the trust of a hotel – where that application was in some respects appropriate and in other respects unnecessary – whether the applicant trustee was entitled to costs from the assets of the trust of the hotel Davidson v Cameron [2015] QSC 294, cited COUNSEL: Written submission by the applicant in person Written submission the first respondent No appearance by the second or fourth respondent Written submission for the third respondent No submission by the Attorney-General SOLICITORS: Applicant in person Tudhope Lawyers for the first respondent No appearance by the second or fourth respondent Gall, Standfield & Smith Solicitors for the third respondent Crown law for the Attorney-General [1] JACKSON J: On 29 October 2015, I decided the principal questions raised by the application. Orders were subsequently made to give effect to the reasons. The remaining question is that of costs. [2] None of the first, second or fourth respondents or the Attorney-General applies for any order for costs and neither the applicant nor the third respondent applies for any order for costs against them. [3] By his written submission the applicant applies for an order that his costs as trustee of the hotel be paid from the assets of the trust of the hotel, but specifically from the share of the third respondent of the income produced by the hotel. In effect that would be an order that she pay his costs. He opposes any order that the third respondent’s costs of the application be paid from the assets of the trust of the hotel. [4] By her written submission, the third respondent applies for an order that her costs be assessed on the indemnity basis and be paid from the estate (not the assets of the trust of the hotel). -- 2 of 5 -- 3 Separate parts of the application under the will and the trust of the hotel [5] As the reasons in Davidson v Cameron1 show, there were two parts of the originating application filed by the applicant. First, as executor, he sought declarations as to the construction of the will and directions as to the administration of the will. That part of the application was in some respects appropriate and in other respects unnecessary. [6] In any event, there is a real question as to whether there are any assets under the will available to meet any order for costs. [7] The second part of the application related to declarations as to the construction of and directions sought as trustee of the trust of the hotel. That part of the application was also in some respects appropriate and in other respects unnecessary. [8] However, the consequence of the fact that the applicant as executor of the will and as trustee of the trust of the hotel assented to the trust of the hotel long ago is that the assets of the trust are not available to meet any of the costs of the part of the application made as executor of the will. The applicant’s submissions on costs failed to recognise that distinction, just as the applicant’s submissions on the hearing of the originating application failed to do. Executor’s application [9] To the extent that the application was made by the applicant as executor for declarations and directions as to the administration of the will, and the costs were properly and reasonably incurred expenses, the applicant is entitled to an order that the costs of the application be assessed and paid out of the estate. There is no general distinction in principle to be drawn between the nature of the right of indemnity of a personal representative and a trustee in the present context. The difference lies in the assets that may be available to the applicant as executor on the one hand or as trustee on the other to reimburse proper and reasonably incurred expenses. [10] Dal Pont, Law of Costs,2 says: “… if ‘the testator and his draftsman have drawn up a document of such a character that no one could … be quite sure of its meaning’, the costs of all parties in establishing its meaning and effect come out of the estate.. The reason for this is that the costs are costs of administration. The court may need to apportion costs in this respect where only some of the costs of the suit are attributable to the issue of construction.” (footnotes omitted) [11] Some aspects of the part of the application relating to the will in the present case reflect that description. But others do not. For example, the applicant made a mistake about the validity of the testator’s Vanuatu will and recoverability of any assets there under the will. Other parts of the application were unnecessary in my view, such as the declarations sought as to the residuary estate passing bona vacantia to the Crown when it did not appear there were any assets left that would fall in to the residuary estate. On the other hand, the question whether the applicant as executor should further pursue some of the possible debts owed to the estate was properly raised. 1 [2015] QSC 294. 2 Dal Pont, Law of Costs, 3rd ed, 2013, LexisNexis Butterworths, at p 281 [10.21]. -- 3 of 5 -- 4 [12] As to the third respondent, she was joined properly as a party to the application for the determination of the question whether the costs of the administration of the estate are payable from the assets of the trust of the hotel. That was a question raised in the administration of both the will and the trust. She successfully opposed the direction sought by the applicant on the question. [13] The third respondent did not have any other interest in relation to the questions raised by the applicant as to the administration of the will. [14] The third respondent applies for an order that her costs be paid from the estate. She does not apply for an order that those costs be paid from the assets of the trust of the hotel. However, only a part of her costs will relate to the estate issues. [15] If there are no assets in the estate available to meet the orders for costs applied for then the exercise may be pointless, but the applicant and the third respondent are entitled to appropriate orders against the possibility that further assets are discovered. [16] However, the applicant did not apply for such an order for costs of that part of the application relating to the will, as opposed to the trust of the hotel. Trustee’s application [17] To the extent that the application was properly made as trustee for declarations and directions as to the administration of the trust of the hotel, and the costs were properly and reasonably incurred, the applicant is also entitled to an order that the costs be assessed and paid from the assets of the trust. [18] A trustee who has “properly, that is prudently, reasonably and honestly, litigated for the protection of the trust property, whether successfully or unsuccessfully, is entitled to recover from the trust property all costs incurred, as are all parties properly joined.”3 However, a trustee may be deprived of costs if the main purpose of the proceedings was to adjust a mistake by the trustee or the trustee brought unnecessary proceedings. [19] Some aspects of the part of the application made as to the trust of the hotel were unnecessary in my view. But the question whether the first respondent had a lease or licence under the hotel trust was appropriate, as were the questions as to whether to keep a sinking fund, whether the trustee should be at liberty to enter into a lease of the hotel and whether a fair and reasonable contribution entailed payment of a market rental. [20] As to the third respondent’s costs of that part of the application relating to the administration of the trust of the hotel, the third respondent was properly joined as a respondent to the application and did not contradict the applicant’s position on any question of substance. [21] Dal Pont, Law of Costs,4 says: “Where beneficiaries are represented on an application brought by a trustee for directions of the court as to the construction of the trust 3 Ford and Lee, The Law of Trusts, 3rd ed, [17-280]. 4 Dal Pont, Law of Costs, 3rd ed, 2013, LexisNexis Butterworths, at p 285 [10.15]. -- 4 of 5 -- 5 deed or some question arising in the course of administration, and it is in the circumstances reasonable for the beneficiaries to be represented, the costs of all parties are ordinarily viewed as necessarily incurred for the benefit of the trust, and so ordered to be paid out of the fund.” [22] In my view, the third respondent would ordinarily be entitled to an order that her costs of the part of the application relating to the administration of the trust of the hotel be assessed and paid from the estate. But she did not apply for such an order. Conclusions [23] In the result, it seems to me that the appropriate orders are as follows: 1. The third respondent’s costs of the application for declarations and directions as to the will of the testator be assessed and paid from any assets of the estate. 2. The applicant’s costs of the application for declarations and directions as to the trust of the hotel be assessed and paid from the assets of the trust. -- 5 of 5 --