Trustee Ordered to Pay Beneficiaries Sums Owing Plus Interest

The Court ordered the trustee to pay the beneficiaries the sums calculated as owing, plus interest at the Schedule J rate, from the time the trustee exercised its discretion to make a distribution. The decision was based on the Supreme Court Act 1970 (NSW) s 94 and relevant case law.

Reported Decision : 52 NSWLR 254

New South Wales Supreme Court

CITATION : [NAME] v [NAME] (No.2) [2000] NSWSC 943 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 1150/91 HEARING DATE(S) : 8 September 2000 JUDGMENT DATE : 9 October 2000

[NAME] & [NAME] (P) PARTIES : [COMPANY] (D1) [NAME] (D2) [NAME] (D3) JUDGMENT OF : Austin J

COUNSEL : [redacted] J De Meyrick (D) [NAME] (P) SOLICITORS : [redacted] [COMPANY] (D2-D3) CATCHWORDS : COSTS - costs of re-hearing where [NAME] succeeded at first hearing, [NAME] succeeded on appeal and [NAME] succeeded at re-hearing - meaning of 'costs of the re-hearing' - whether costs order at first hearing was extinguished when Court of Appeal ordered that the matter be remitted for re-hearing - basis for [NAME]' recovery of interest LEGISLATION CITED : Supreme Court Act 1970 (NSW) s 94 Amalgamated Television Services v Marsden [1999] NSWCA 313 Hagan v Waterhouse (1991) 34 NSWLR 308 [COMPANY] v [NAME] (No 2) [1969] 3 All ER 1122 CASES CITED : John Pfeiffer Pty Ltd v Rogerson (2000) 74 ALJR 1109 Monaco v Arnedo Pty Ltd (1994) 13 WAR 522 Stewart v McKinley (1885) 11 VLR 802 [COMPANY] v [NAME] [2000) NSWCA 209 [NAME] v [NAME] (No 2) [1968] VR 533

DECISION : Orders for determination of separate questions, answering of separate questions, and judgments for [NAME]; [NAME] to pay interest; [NAME] to pay [NAME]' costs of first hearing, appeal and re-hearing, subject to certain allowances.

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

AUSTIN J

MONDAY 9 OCTOBER 2000

1150/91 . [NAME] & ANOR V [COMPANY] & 2 ORS (NO.2)

JUDGMENT

1 HIS HONOUR: On 21 July 2000 I handed down reasons for judgment in which I gave my answers to a number of questions that had been formulated by the parties for separate determination. All that remains me to do is to make orders giving effect to my reasons for judgment, and to deal with the questions of interest and costs. However, when these matters were argued before me on 8 September, questions were raised about the form of the orders, and whether interest should be ordered and if so, whether the order should be qualified. It also became evident that the question of costs was not straightforward in several respects.

Background 2 As I said in my reasons for judgment, the proceedings have a tangled history. The first substantial hearing was before [NAME], who delivered his reasons for judgment on 13 April 1994. He found for [NAME], holding that the first defendant had committed breaches of trust, and he directed an inquiry before the Master. Master Macready dealt with various aspects of the inquiry in reasons for judgment delivered on 1 February and 22 March 1996. The matter then returned to [NAME]. In his further reasons for judgment delivered on 4 September 1996, [NAME] found that [NAME] were entitled, as beneficiaries of the [NAME], to be paid the sums awarded by the Master. His Honour found that it was too late for [NAME] to raise the question whether the trustee had ever exercised its discretion. [NAME] appealed to the Court of Appeal, who handed down their reasons for judgment on 27 March 1997. [ADDRESS] found that the trial before [NAME] had miscarried, principally because [NAME] had in fact taken the point in the first hearing that the trustee had not exercised its discretion to make a distribution, and his Honour had not properly considered it. 3 The case was re-heard before me on 10, 11 and 12 August 1999. In order to permit the Court to concentrate on the matters truly in dispute between the parties, and to avoid the need to re-determine matters that were no longer in dispute, the parties formulated a set of questions for separate determination during the course of the hearing, and gave undertakings contingent on the answers to those questions. Although I did not make any order under Part 31 of the Supreme Court Rules at the hearing, for the reasons given at paragraph 113 of my reasons for judgment of 21 July 2000, I decided that it would be useful to make an order for the determination of the separate questions, having regard to the undertakings given by the parties. On the basis that I would make an order under Part 31, I set out the answers to the separate questions at paragraph 116 of my reasons for judgment.

Form of orders 4 The first matter of contention between the parties relates to the form of orders to give effect to my reasons for judgment of 21 July 2000. [NAME] submit that I should simply order the first defendant, as trustee of the [NAME], to pay the [NAME] the sums which have been calculated as owing, namely $57,099 to the first plaintiff and $26,741 to the [NAME]. [NAME] submit that my orders should include an order pursuant to Part 31 Rule 1 (a) that the agreed separate questions be decided separately, an order answering the separate questions, and orders entering judgment for the [NAME] respectively for those two sums. 5 I agree with [NAME]. It is necessary for me to make an order under Part 31 for the determination of the separate questions agreed by the parties, because that is the basis upon which my reasons for judgment of 21 July 2000 proceeded. Once I make the order for determination of separate questions, I must answer them by an appropriate order. [NAME] have undertaken to the Court that if questions 2 and 10.1 are answered 'Yes', as they are, they will consent to judgment for the first plaintiff in the sum of $57,099 and for the [NAME] in the sum of $26,741. That being so, there will be separate orders that judgment be entered for the first plaintiff and for the [NAME] in those respective amounts (plus, in each case, interest calculated in the manner explained below), against [NAME].

Interest 6 Interest was claimed in the Further Amended Summons filed on 19 May 1994, when relief in respect of the [NAME] was first sought. [NAME] dealt with the question of interest in his reasons judgment of 13 April 1994, remarking that [NAME]' claim to money under the superannuation plan looked like a money claim but in reality it was a claim to have a trust properly administered. He referred to 'awkward questions as to interest because interest against the trustee is worked out on a different principle to interest under Schedule J to the Court rules'. In his judgment of 4 September 1996 his Honour referred to his earlier observation to the effect that the action was to administer a trust rather than to recover money, but he then said: 'However, the way it has been contested, the Court rate should be applied; cf Hagan v Waterhouse (1991) 34 NSWLR 308, 393'. In that case Kearney J held that the rate of interest to be paid by an errant trustee was to be a commercial rate and should not be fixed as the 'trustee' rate obtainable from investment in government stock. 7 [NAME] evidently took the view that the simplest way of determining an appropriate commercial rate was to use Schedule J, which is the rate payable on a judgment debt under s 95 of the Supreme Court Act and Rule 40.7 (2). Schedule J adopts different percentage rates for different periods, to reflect fluctuations in interest rates over time. Although his Honour's orders are not before me, it appears that [NAME] awarded interest to [NAME] at the Schedule J rates from the end of February 1991, when in his view 'the money should have been paid', to the date of the orders in 1996. 8 I have decided, for reasons given below, that [NAME]'s order with respect to costs was extinguished by the orders subsequently made by the Court of Appeal. Equally those orders extinguished his Honour's orders with respect to the capital sums and interest payable to [NAME], leaving me with a discretion to make orders for the entry of judgment in favour of each plaintiff for a capital sum and (if I think it appropriate) interest. 9 [NAME] have undertaken to the Court that if questions 2 and 10.1 are answered 'Yes', as they are, they will consent to judgment in favour of the [NAME] for $57,099 and $26,741 respectively, together with interest on each judgment sum at such rates and during such periods as are agreed between the parties, or in default of agreement, as are determined by the Court. Those undertakings are inconsistent with the submission by [NAME] that there be no order as to interest. In my opinion the undertakings mean, in light of my conclusions on the separate questions and the absence of any agreement between the parties, that [NAME] consent to judgment for interest at the rate and for the period to be set by me. 10 In light of the principles enunciated in [NAME] v [NAME], it is appropriate to make an order for payment of interest by the first defendant as trustee. Interest should begin to accrue from the time when the trustee exercised its discretion to make a distribution to each plaintiff. According to my reasons for judgment of 21 July 2000, that occurred on 28 February 1991. I agree with [NAME] that the most appropriate rate of interest is the Schedule J rate, which takes into account interest rate fluctuations during the period from 1991 to date. 11 The purpose and effect of the undertakings given by [NAME] was that in the event that I reached a view on the substantive questions that triggered the undertakings, [NAME] would become jointly and severally liable for the judgment amounts (both capital and interest) found by me to be appropriate. That being so, the order for payment of interest should extend to [NAME] by virtue of the undertakings. 12 [NAME] submit that any order as to interest should be qualified in two ways. First, they seek to reduce the amount of interest payable by deducting $11,500 ($5,750 for each plaintiff) from the judgment amounts. Indeed, they invite the Court to make an order that the [NAME], 'by their company [COMPANY] pay to [COMPANY] an amount of $11,500 pursuant to the undertaking given during the course of these proceedings, that such sum would be allowed if the Court were to find in their favour as to the amounts claimed'. 13 [COMPANY] held 10% of the shares in [COMPANY], and was wholly owned by [NAME] at all relevant times. The present proceedings were initially proceedings by [COMPANY] for the winding up of [COMPANY], essentially on the just and equitable ground. [NAME] claimed that $115,000 had been wrongly removed from the [NAME]. After the proceedings were commenced in 1991, there were some negotiations between the parties. At the hearing on 8 September 2000 counsel for [NAME] conceded that certain negotiations in 1991 were without prejudice, but as I understand it, that concession did not extend to the negotiations for the sale of [NAME]'s shares in [NAME]. In March 1991 [NAME] offered to purchase [NAME]'s shares in [NAME] at fair market value. The offer was accepted and a valuation was prepared. [NAME]'s shares were valued at $59,500 and that amount was eventually paid to it in consideration of transfer of the shares. 14 The valuation was made on the assumption that [NAME]' claim for the return of the $115,000 to the fund would be unsuccessful. The [NAME] stated that if the claim succeeded then the fair value of [NAME]'s 10% interest in [NAME] would be only $48,000. [NAME]' solicitor wrote to be [NAME]' solicitor on 9 October 1991 saying: 'From the valuation if our clients are successful in the legal proceedings referred to by [the [NAME]] the value of the shares would be decreased and any award in that case our clients would be adjusted in accordance with the valuation [sic]. If the legal proceedings are not successful the value would remain unchanged.' 15 [NAME]' solicitor subsequently confirmed the position in a letter to [NAME]' solicitor dated 23 September 1996, as follows: 'We also note that [NAME] [COMPANY] agreed that, should it be shown that $115,000 was not an asset of [COMPANY] (as has in fact occurred in the litigation) it would reimburse $11,500 to [COMPANY] in respect of that companies [sic] acquisition of [NAME]'s shares in [COMPANY]. As we have pointed out several times during the course of this litigation that agreement to reimburse binds [NAME].' 16 [NAME] point out that [COMPANY] has long since ceased to be a party to the proceedings, and there is no claim by [NAME] for recovery of the $11,500 in the proceedings as presently constituted. Further, [NAME] assert (and this was not contradicted by [NAME]) that no demand or refusal to pay that amount has been proved. [NAME] therefore submit that the Court cannot order [NAME] 'by their company' to pay the amount of $11,500 to [COMPANY]. I agree, and therefore I shall not reduce [NAME]' verdicts on that account. 17 However, I have some sympathy with [NAME]' position to the extent that it relates to interest on the judgment amounts. It appears from the evidence that [NAME] was at the relevant times owned and controlled by [NAME], and it made a promise to refund the $11,500 in circumstances which have now come to pass. In my opinion it would be unjust to allow [NAME] to recover interest on the full judgment amounts in these circumstances. I shall therefore order that interest under Schedule J be calculated on the amount of each judgment debt after deducting, in each case, the sum of $5,750. 18 Secondly, [NAME] say that no interest should be payable on the judgment debts during the period between 10 April and 8 November 1995 and the period between 28 August 1997 and 22 May 1998. The significance of the former period is that the matter was fixed for hearing before the Master on 10 and 11 April 1995 but those hearing dates were vacated on the application of [NAME]. After two more interlocutory hearings before the Registrar and a hearing before [NAME] on 17 July 1995, the matter was restored to the Master's call-over list on 27 September 1995 and was ultimately heard by Master Macready at a hearing commencing on 8 November 1995. 19 While there was a delay from April to November 1995 initiated by an application made by [NAME], I cannot on the evidence before me conclude that the plaintiff deliberately prolonged the proceedings during that period or was otherwise at fault. [NAME]' evidence, not relevantly contradicted by [NAME], is that [NAME] found it necessary to apply to vacate the hearing dates because [NAME] filed new affidavit evidence by an actuary on 28 March 1995 and there was insufficient time for [NAME] to respond to that evidence before 10 April 1995. Consequently there is no basis for suspending the accrual of interest during that period. 20 I turn to the [NAME] period, from 28 August 1997 to 22 May 1998. After the Court of Appeal ordered that the matter be reheard, there was a delay until July 1997, about which there is no complaint by [NAME]. On 31 July 1997 the Registrar gave directions for the filing of pleadings and affidavits. [NAME] filed their statement of claim on 28 August 1997, six days late. Nothing can turn on that small delay. [NAME]' affidavits were due on 3 October 1997, but they sought further time to put on their evidence, and obtained an extension to 14 December 1997. Thereafter there was a delay by [NAME] until 11 March 1998, when [NAME] applied by two notices of motion to have the proceedings struck out for want of prosecution. Then [NAME]' solicitor indicated by letter that [NAME] would rely on affidavits already filed, whereupon [NAME] countered with a request (found by the Master to be reasonable) for [NAME] to identify those parts of the affidavits upon which they would rely at the rehearing. 21 That was the state of affairs when the applications to dismiss the proceedings came before Master Macready on 22 May 1998. The Master dismissed the applications but he directed [NAME] to notify [NAME] of the parts of the affidavits already filed upon which they would rely at the rehearing. He ordered [NAME] to pay [NAME]' costs of the motions, with a deduction for the costs which would normally be reasonably attributable to one day's mention for directions. He observed that the delay from December to March came about because a solicitor then (but no longer) employed by the plaintiff's solicitor took no proper steps to advance the matter and comply with the Courts directions during that period. When the plaintiff's solicitor became aware of what had not been done by his employed solicitor, he immediately took steps to rectify the matter and he apologised to the Court for the delay. Nevertheless it would be unfair, in my opinion, to require [NAME] to pay interest on the judgment amounts in respect of the period from 14 December 1997 to 22 May 1998. I shall exclude that period from the calculation of interest. 22 In summary, I shall make orders that [NAME] pay interest to the first plaintiff on $51,349 (the judgment debt of $57,099 less half of the sum of $11,500) and to the [NAME] on $20,991 (the judgment debt of $26,741 less the other half of the sum of $11,500). Interest will be calculated for the period of 28 February 1991 to the date of judgment, except for the period from 14 December 1997 to 22 May 1998 inclusive. In order to avoid any further delay and disputation in this unhappy case, I have calculated the amount of interest to be paid assuming judgment is entered on 18 October 2000. Attached to these reasons for judgment is a schedule setting out my calculation. The amount for which judgment will be entered for the first plaintiff is $111,074.69 ($57,099 plus interest of $53,975.69). The amount for which judgment will be entered for the [NAME] is $48,806.15 ($26,741 plus interest of $22,065.15).

Cost of the rehearing 23 As I noted in paragraph 8 of my reasons for judgment of 21 July 2000, although the Court of Appeal remitted to the entire proceedings for rehearing, [NAME] were interested in contesting only the question of proper construction of the trust instrument. I found for [NAME] and against [NAME] on the primary issue. In my opinion costs should follow the event, and therefore I shall order that [NAME] must pay [NAME]' costs of the rehearing. 24 Counsel for [NAME] submitted that only the first defendant ([COMPANY] as trustee) should be ordered to pay the costs of the rehearing. I disagree. The rehearing was contested by all [NAME] and by virtue of the undertakings given to the Court, all [NAME] have become jointly and severally liable to meet the judgment in favour of [NAME]. Additionally, the effect of the order sought by [NAME] would be that [NAME]' prospect of recovery of costs would be limited to the assets of the [NAME], the only remaining assets of which (after [NAME] have been paid) belong effectively to [NAME]. They have been the directors of [COMPANY] at all relevant times and although the company's interest as trustee was separately represented, they appear to have been the active contradictors of [NAME]' position. It is true that [NAME] was joined only as a necessary party to the proceedings, and that she was not shown to be actively responsible for any wrongful conduct. On the other hand, she was a director of [COMPANY] at the relevant times and there was evidence that she actively participated in meetings of directors (see paragraph 106 of my reasons for judgment of 21 July 2000). 25 In these circumstances the correct order is that the plaintiff's costs of the rehearing be paid by [NAME].

Cost of the appeal (and incidental applications) 26 [NAME] submitted that their costs of the appeal, and their costs of the applications to extend the time to file a notice of appeal, and for leave to appeal, should be paid by [NAME]. As they pointed out, the appeal was brought by them and was successful, and was resisted by [NAME]. 27 There is a simple answer to this submission. The costs of the appeal and incidental applications were expressly dealt with by orders of the Court of Appeal. 28 Care needs to be taken in recording exactly what the Court of Appeal ordered. The judgment has not been reported. The typed reasons for judgment contain a summary sheet as well as the reasons of their Honours. In the summary sheet, the following appears: 'ORDERS 1. Extend the time in which to file a notice of appeal from the decision of [NAME] dated 13 April 1994 to 27 March 1997.

2. Grant leave to appeal from the decision of [NAME] dated 4 September 1996.

3. Appeals allowed.

4. Order that the matter be remitted for hearing.

5. Order that the costs of the notices of motion for the leave to appeal and extension of time to appeal be costs in the rehearing.' 29 If the orders in fact made were in those terms, they would deal with the costs of the notices of motion for leave and extension of time, but not the costs of the appeal. [ADDRESS]'s records are to the same effect. 30 However, at the end of her judgment Beazley JA said: 'The orders which I propose in the matter are:

1. Extend the time in which to file a notice of appeal from the decision of [NAME] dated 13 April 1994 to 27 March 1997.

3. Appeals allowed.

4. Order that the matter be remitted for rehearing.

5. Order that the costs of the notices of motion for leave to appeal and extension of time to appeal and the appeals be costs in the rehearing.' (emphasis supplied) 31 Powell JA expressly agreed with the orders proposed by Beazley JA, and [NAME] agreed with both judgments. 32 I infer that the Court of Appeal made orders dealing with the costs of the appeals as well as the costs of the notices of motion for leave to appeal and extension of time, but an error was made in transcribing the orders in the Court's records. [ADDRESS]'s orders were that the costs of the appeals and the notices of motion be costs in the rehearing.

What does it mean to order that the costs of the appeal be 'costs in the rehearing'? 33 [NAME] drew my attention to a passage in the judgment of Lord Denning MR in [COMPANY] v [NAME] (No 2) [1969] 3 All ER 1122, at 1123. There his Lordship said: 'There is no definition in any law book of the words 'costs in the cause'. But every pupil on his first day in chambers is told what it means. 'Costs in the cause' means that the costs of those interlocutory proceedings are to be awarded according to the final award of costs in the action. If the plaintiff wins and get an order for his costs, he gets those interlocutory costs as part of his costs of the action against the defendant. Vice versa, if the defendant wins and get an order for his costs, he gets those interlocutory costs as part of his costs of the action against the plaintiff.'

See also Halsbury's Laws of England , 4th ed, vol 37, para 712. 34 [NAME] submit that, mutatis mutandis, 'costs in the rehearing' means that the costs of the appeal are to be awarded according to the award of costs of the rehearing. The consequence is that since [NAME] are entitled to their costs of the rehearing, they are also entitled to the costs of the appeal, by force of the Court of Appeal's order. I agree. By ordering that the costs of the appeal be costs in the rehearing, the Court of Appeal was, in effect, making the costs of the appeal depend on the outcome of the tribunal of fact's investigation of the merits of the point that had led to success in the appeal. My conclusion after the rehearing was that the point did not have merit and that there should be judgment for [NAME], with costs. [ADDRESS] of Appeal's order means, given my conclusion, that [NAME] must pay [NAME]' costs of the appeal as well as [NAME]' costs of the rehearing. [ADDRESS] of Appeal's order has not left me with any discretion as to the costs of the appeal. However, if there were any discretion for me to exercise, I would order that [NAME]' costs of the appeal, like their costs of the rehearing, should be paid by [NAME]. [NAME] decided in favour of [NAME] in 1996. [NAME] were able to forestall the implementation of his Honour's decision because they had raised a point that his Honour had not considered. But the point proved to be one of no substance. It is fair that they should pay the costs of the entire episode that they initiated by their appeal. 36 I shall order that [NAME] pay [NAME]' costs of the appeal, including the costs of the application for extension of time to appeal, and for leave to appeal.

Costs of the initial hearing 37 On 4 September 1996 [NAME] ordered that there should be a verdict for each plaintiff for a specified amount, calculated to include an interest factor, and he ordered that [NAME] pay the costs of the proceedings. He referred to Master Macready the question whether the costs order should be on other than the ordinary basis. On 25 September 1996 Master Macready rejected an application by [NAME] for costs to be assessed on an indemnity basis. Consequently the order was for [NAME] to pay [NAME]' costs on the ordinary party/party basis. 38 [NAME] submit that [NAME]'s order remains in effect and covers all aspects of costs save for the dispute about the point concerning whether the trustee exercised its discretion. [NAME] contend that although [NAME]'s order was an interlocutory order (so characterised by the Court of Appeal), it was an interlocutory order of the kind described by the Court of Appeal in Amalgamated Television Services v Marsden [1999] NSWCA 313, at para 38. That is, it was an order of a substantial nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. [ADDRESS] is not justified in revisiting an order of this kind unless there is a material change of circumstances. Therefore, say [NAME]'s order as to costs should be taken as determining all matters other than 'the point'. 39 I disagree with this submission. In my view, for reasons I shall set out, the Court of Appeal's judgment and orders in this case had the effect of extinguishing all of the orders of [NAME], including the order as to costs. Either their Honours left the question of costs of the first hearing to my discretion, as the judge in the rehearing, or those costs (like the costs of the appeal) are costs of the rehearing. Since I would exercise any relevant discretion in favour of [NAME], who are entitled to the costs of the rehearing, the outcome is the same whichever alternative is correct. [ADDRESS] of Appeal made orders that the appeals be allowed and that the matter be remitted for rehearing, and dealt with the costs of the appeal and incidental applications. It did not expressly deal with the question of costs of the first hearing. The question is whether the Court of Appeal's orders dealt with the costs of the first hearing by implication. 41 I have consulted the 'Redrawn Notice of Appeal' which is in the Court of Appeal's file, but it sheds no light on the question, except to show that the appellants sought an order for costs. In my opinion an order allowing an appeal does not itself imply that any of the particular orders sought in the notice of appeal has been made. Nor, in my view, could the Court of Appeal's order with respect to costs of the appeal be taken to imply an equivalent order with respect to the costs of the first hearing, if it were considered in isolation from the other orders and the reasoning of the Court. 42 It is arguable that an order that the matter be remitted for rehearing itself implies vacation of all of the orders of the trial judge. Section 51 of the Supreme Court Act 1970 (NSW) appears to use the word 'remit' as the corollary of the word 'remove'. The word 'remit' is defined in [NAME]'s Australian Legal Dictionary (1997) to mean (relevantly) 'the return of a case to a lower court from a higher one'. Section 51 and the dictionary definition suggest that the word 'remit' has a wide [NAME] meeting. An order by an appeal court to 'remit' a case to a judge may mean only that the judge is to continue the hearing of a case already commenced. When the order is that the case be 'remitted for rehearing', the whole proceedings are returned to the court of first instance but a new hearing is to be undertaken. In the latter case, but not the former, the substantive orders of the trial judge must have been impliedly vacated by the order of the appeal court if there is no express order, since the can be no rehearing of a matter already determined by orders. Arguably, therefore, an order which is appurtenant to the substantive orders (the order for costs) is also extinguished. 43 In neither case, however, does the order to 'remit' the matter inherently dispose of the costs incurred at first instance up to that time. If an order to remit for rehearing necessarily extinguishes the orders of the trial judge, it would be pointless for appeal courts to deal expressly with those orders, as they commonly do: see, for example, John Pfeiffer Pty Ltd v Rogerson (2000) 74 ALJR 1109; [COMPANY] v [NAME] [2000) NSWCA 209. 44 Therefore the order that the matter be remitted for rehearing is, with respect, ambiguous when considered in isolation. If there were no indications in the judgment of the Court of Appeal in this case, the position may have been that I should decline to make any order about the costs of the first hearing at this stage, leaving it to the parties to approach the Court of Appeal for clarification of their orders. However, I believe there is a sufficient indication of their Honours' intention in the judgment to resolve the ambiguity sufficiently to permit me to deal with the question without subjecting the parties to the additional cost of further argument before the Court of Appeal. 45 Having dealt with the question of extension of time for filing a Notice of Grounds of Appeal, Beazley JA said: 'That does not finally dispose of the matter as orders have been entered following the [NAME] judgment. In my opinion, leave to appeal from that decision ought to be granted and the entire matter remitted to the Equity Division for rehearing.' 46 [NAME] agreed and did not add to this part of her Honour's judgment. 47 The orders that had been entered included an order for costs. This passage in the judgment indicates, to my mind, that the intention of the Court was to leave the 'entire matter', including the question of costs of the first hearing, to me for determination. It follows that the Honours intended to extinguish [NAME]'s costs order. [ADDRESS] of Appeal's reasoning means that either I have a discretion to award the costs of the first hearing to either party, or those costs should abide my decision on the costs of the rehearing. I shall proceed on the basis that I have a discretion in the matter, noting that if the costs of the first hearing are to abide the rehearing, the outcome will be the same in the present circumstances. As the judge presiding at the re-hearing, I have jurisdiction under s 76 of the Supreme Court Act to deal at my discretion with the costs of the initial hearing, in the absence of a contrary direction from the Court of Appeal: [NAME] v [NAME] (No 2) [1968] VR 533. 48 It has been said that where a court of appeal orders a new trial, the costs of the first trial should as a [NAME] rule be made to abide the event of the [NAME]. That proposition appears in [NAME]' Supreme Court Practice: Victoria, 2nd ed, para 65.1.12. The authors rely on Stewart v McKinley (1885) 11 VLR 802, 809; see also Monaco v Arnedo Pty Ltd (1994) 13 WAR 522. In that case the [ADDRESS] of the Supreme Court of Victoria contemplated that there may be special circumstances providing a reason for departure from the [NAME] rule. In one of the cases before the [ADDRESS], a new trial was ordered because of the wrongful reception of evidence. The appellant had objected to the evidence at the trial, but the respondent had pressed it. It was held that the respondent should pay the appellant's costs of the first trial, notwithstanding the [NAME] rule. 49 In the present case [NAME], in a reserved judgment in 1996 after the case had returned to him from the Master, held that it was not open to [NAME] to raise the point whether the trustee had validly exercised its discretion, on the ground that the point had been raised too late and the case had been conducted before the Master on a different basis. In fact, the point had been raised before his Honour when the matter first came before him, some two years earlier, and so His Honour's reasons for judgment were based on a false premise. It would have been open to [NAME] to correct the misimpression when his Honour handed down his reasons for judgment, but there is nothing to suggest that they attempted to do so. Indeed, [NAME]' submission to [NAME] was the one he accepted, namely that the point was raised too late and the proceedings before the Master had been conducted on a basis that precluded [NAME] from raising the issue. 50 In the Court of Appeal, [NAME]/respondents conceded that the point had in fact been raised at the first hearing before [NAME]. The appeal was allowed and a rehearing was ordered on the basis of that concession (see p 10 of Beazley JA's reasons for judgment). 51 It might appear to be arguable, in those circumstances, that the [NAME] rule should not be followed, since an earlier concession by [NAME] might have avoided the necessity for an appeal. However, I am not able to reach that conclusion on the evidence before me. I have no evidence that [NAME] invited [NAME] to make any such concession, nor any evidence as to the circumstances which led [NAME] to make the concession that they eventually made in the Court of Appeal. All I have are the bare facts that: · having made submissions to [NAME] on the basis that the point was not raised at the first hearing, [NAME] conceded at the appeal that the point had in fact been raised; and · the Court of Appeal did not regard [NAME]' conduct as sufficient to justify an order that they pay the costs of the appeal, whatever the outcome of the rehearing. 52 I take into account the facts that after two hearings, [NAME] found 'on the merits' in favour of [NAME], and that the subject matter of the appeal, and its determination by the Court of Appeal, related to a technical point of construction of the trust instrument - a point which, in the event, I eventually found to have no substance. In the circumstances I believe I should follow the [NAME] rule, to the extent that I have a discretion in the matter. 53 I shall therefore order that [NAME]' costs of the initial hearing (including both hearings before [NAME], the hearings before Master Macready and all other interlocutory applications, but subject to the exceptions noted below) be paid by [NAME].

Miscellaneous exceptions 54 [NAME] contend that even if the [NAME] costs of the proceedings are awarded against them, certain exceptions should be made. First, they draw attention to the numerous amendments to the summons in the proceedings, which were the subject of trenchant criticism by Powell JA in the Court of Appeal. They say that [NAME] should not be ordered to pay [NAME]' costs of the originating summons filed on 17 January 1991, an amendment made on 4 June 1991, a further amendment of 18 March 1994, yet another amendment on 19 May 1994, and all costs relating to those amendments. It is true that the proceedings were poorly organised and the relief claimed in the summons, in its various manifestations, traversed such a wide area that is hard to believe only one set of proceedings was involved (see the brief summary at paragraph 1 of my reasons for judgment of 21 July 2000). Nevertheless, the various amendments were made in accordance with the rules and procedures of this Court and led to a substantial hearing in which relief was granted to [NAME]. I reject the submission that the costs order in favour of [NAME] should be qualified by reference to the history of amendments. 55 [NAME] submit that the costs of [COMPANY], which was initially a plaintiff, should not be allowed since no relief was granted in its favour. In my opinion it would be artificial to segregate the costs of [NAME] from [NAME]' costs and I see no proper basis for doing so. Nor do I see any adequate basis for an order excluding the costs of the [NAME] prior to the filing of the Further Amending Summons on 18 March 1994. The fact that she was not a party until that amendment is limitation enough. 56 [NAME] submit that the order for costs in favour of [NAME] should exclude [NAME]' application to vacate the hearing date set down before the Master for 10 and 11 April 1995, and other costs until 8 November 1995, when the Master heard the matter. I have already rejected the contention that interest should not be allowed to accrue during this period, and I reject the argument as to costs for the same reason. While the evidence indicates that the April hearing date was vacated on the application of [NAME], there is evidence that [NAME] found it necessary to make the application because of the late filing by [NAME] of an actuary's affidavit and report, and therefore there is no basis for my attributing fault to [NAME]. 57 Finally, [NAME] submit that the costs order in favour of [NAME] should exclude costs incurred during the period from 28 August 1997 (when the statement of claim was filed pursuant to the Registrar's directions) to 22 May 1998 (when the Master dealt with [NAME]' applications to strike out the proceedings for want of prosecution). I have held that, since there was a delay from 14 December 1997 to 22 May 1998 caused by the failure of a solicitor employed by the plaintiff's solicitor to advance the matter, interest should not accrue during that period. However, in his reasons for judgment of 22 May 1998 Master Macready observed that no particular form of prejudice had been identified flowing from the delay, and the complaint seemed to him to be merely about the passing of time. That is enough to suspend the accrual of interest, but not, in my view, sufficient to make an exception from the [NAME] costs order. 58 In summary, I do not accept that any of the above matters is a basis for an exception to my orders that [NAME] pay [NAME]' costs. 59 [NAME] submit that I should order [NAME] to pay their costs of defending the application to vacate the hearing before the Master which had been set down for 10 and 11 April 1995, the subsequent mentions before the Registrar on 13, 20 and 24 April 1995, the hearing before [NAME] on 17 July 1995 at which [NAME] sought orders for the taking of accounts, and the call-over before the Master on 27 September 1995. The Master reserved costs in respect of the application to vacate the hearing date. As I have already indicated, there is no sufficient basis for me, at this stage, to make any exception from my [NAME] costs order to deal with that application, let alone to order [NAME] to pay [NAME]' costs of the application. The subsequent applications between April and November 1995 would not have occurred but for the vacation of the April hearing dates, but that is not enough to justify my ordering [NAME] to pay [NAME]' costs of those applications. 60 During the period from 14 December 1997 to 22 May 1998 there were three mentions before the Registrar (12 February, 19 March and 2 April). [NAME] submit that I should order [NAME] to pay their costs of those mentions, because they occurred during the period of delay. But I have already held that there is no basis for making an exception from my [NAME] costs order in favour of [NAME] for costs incurred during the period of delay, in the absence of evidence of prejudice, and for the same reason I shall not order [NAME] to pay [NAME]' costs of those mentions. 61 On 22 May 1998 Master Macready heard the applications by [NAME] to dismiss the proceedings for want of prosecution. The Master ordered [NAME] to pay [NAME]' costs of those motions, with a deduction for the costs which would normally be reasonably attributable to one day's mention for directions. In my opinion that order should stand, for the reasons advanced by the Master in his ex tempore judgment of that day. The [NAME] matter dealt with by the Master on 22 May 1998 was an application by [NAME] to strike out the defences. The application succeeded but for reasons which he gave, the Master made no order as to costs of the motion. In my opinion be Court should not take any different attitude to the costs of that application now. 62 The proceedings came before the Registrar on 28 September 1998. The Registrar directed [NAME] to file and serve affidavits in reply by 2 October 1998, and ordered them to pay [NAME]' costs of the day. Once again, I see no reason for interfering with the Registrar's order as to costs. 63 In summary, I shall qualify my [NAME] orders for costs in favour of [NAME] by confirming the costs orders of the Master on 22 May 1998 and the Registrar on 28 September 1998 that [NAME] pay [NAME]' costs of the matters specified by their orders. 64 On various other occasions costs were reserved. In my opinion the costs of those occasions should be governed by my [NAME] orders for costs in favour of [NAME].

Costs of the hearing as to costs and orders 65 [NAME] have applied for costs of the hearing on 8 September 2000 and previous mentions. Since their contentions as to costs have been successful to a large extent, they are entitled to an order for costs. However, they opposed any reduction in interest to reflect the debt of $11,500 owed by [COMPANY], their company, and to reflect the delay from 14 December 1997 to 22 May 1998, and they contended that I should reverse the costs orders made by the Master on 22 May 1998 and the Registrar on 28 September 1998. They were unsuccessful to that extent. In my opinion they were unreasonable to seek interest notwithstanding the [NAME] debt. I have therefore decided to reduce the costs recoverable by 20%. 66 I shall order [NAME] to pay 80% of [NAME]' costs with respect to the hearing on 8 September 2000 and the mentions on 11 August and 5 September 2000, to and also the preparation of short minutes of orders to reflect these reasons.

[NAME] 67 At the hearing on 8 September 2000 [NAME] foreshadowed that if the costs of the proceedings were awarded to [NAME], they would make an application under the [NAME] Act 1951 (NSW). This is a case where [NAME] were successful in their appeal, with the result that a point not properly considered at the first hearing was the subject of determination of the hearing, the point was decided against them and so they have failed in the proceedings will have to pay costs and interest. The circumstances do not fall within any of ss 6, 6A and 6B, but the Director-[NAME] is a discretion authorise a payment under s 6C. Given the success of the appeal, the fact that the point raised for determination was difficult in fact and law and certainly arguable, and therefore that it was reasonable for [NAME] to raise it, my view is that this may be a proper matter for the favourable exercise of the Director-[NAME]'s discretion. [NAME] may therefore think it appropriate to make an application to the Director-[NAME] under s 6C.

Conclusions 68 I shall make orders for the determination of the separate questions agreed by the parties, and for answering those questions. I shall order that judgment be entered for the [NAME], against all [NAME], for $57,099 and $26,741 respectively, plus interest calculated, after deducting $5,750 from each amount, in accordance with Schedule J except for the period beginning on 15 December 1997 and ending on 22 May 1998. The final figures are $111,074.69 and $48,806.15, as at 18 October 2000. 69 I shall order that [NAME] pay [NAME]' costs of the proceedings, including the costs of the initial hearings before [NAME] and the Master, the appeal, and the rehearing, and all interlocutory applications except those dealt with by the Master's orders of 22 May 1998 and the Registrar's orders of 28 September 1998. I shall order that [NAME] pay [NAME] 80% of their costs of the mentions on 11 August 2000 and 5 September 2000, and the hearing on 8 September 2000, and the preparation of draft short minutes of orders to reflect these reasons. 70 I shall direct [NAME] to serve on [NAME] draft short minutes of orders reflecting these reasons on or before 5pm on Friday 13 October 2000, providing a copy of the draft to [NAME]. If I accept the draft and [NAME] do not communicate any written objection to [NAME] before 5pm on Tuesday 17 October 2000, I shall make the orders in chambers on Wednesday 18 October 2000. I intend to adopt this procedure so that the costs of a further mention can be avoided unless there is a substantial contention to be resolved. * * * * * * * * *

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