Wills and Estates: 23 March 2019
In this case before the Supreme Court of Victoria, the executors of a deceased estate sought judicial advice on whether to participate in an application for leave to appeal and (if leave were to be granted) the appeal pursuant to r. 54.02 of the Supreme Court Rules.
The persons who had lodged the appeal were two beneficiaries of the estate. The effect of the decision of the Court of Appeal would significantly change the effect of the Will, would affect all of the beneficiaries of the estate and would also effect a Part IV proceeding involving the same parties.
The Court found that it was desirable for the executors to defend the appeal due to their great deal of relevant knowledge and the fact that there would be no other effective contradictor.
The only precondition to the exercise of the Court's power under rule 54.02 is that the applicant must be able to point to the existence of a question in respect of the administration of the trust property or a point of interpretation of the trust instrument.
Whether or not to engage in litigation (i.e. defending an appeal) was found to be an appropriate question.
There are no limitations on the factors in which the Court may take into account when exercising its discretion under r. 54.02, just so long as the factors are relevant.
The Judge in his case commented that the intent of the rule is to enable the Court to assist in the administration of trusts by making practical and proportional orders well short of a general administration order. The High Court described the advice given by the Court as private and personal advice, exceptional to the Court's ordinary function of deciding disputes.
It is evident from this judgment that an important role of a s. 54.02 application is to protect the interests of the trust by ensuring that it is appropriate for the trustee to be incurring costs by initiating, prosecuting and defending litigation as well as to protect trustees, personally, in respect of the cost ramifications of being involved in litigation.
The Court determined that it was appropriate for the Plaintiffs in this case to defend the application for leave to appeal and, if leave were to be granted, the appeal itself with no conditions attached to the direction. The Plaintiffs costs of the application were ordered to be paid out of the estate.