Alan John Hyland as executor of the estate of the Late John Walter Popham Luscombe v Laura Healey

EX TEMPORE Judgment 1HIS HONOUR: I delivered judgment in these proceedings on 15 October 2013 (Alan John Hyland as Executor of the Estate of the Late John Walter Popham Luscombe v Laura Healey [2013] NSWSC 1513) (the "principal judgment"). The proceedings are now before me for the making of final orders, including as to costs. Terms defined in the principal judgment have the same meaning in these reasons. 2Three of the orders that I propose to make are uncontroversial. 3First, there can be no doubt following from the principal judgment that the cross-claim should be dismissed. 4Second, while the plaintiff's summons prays for a declaration in relation to the July Will, Mr Willmott SC, appearing with Mr McGrath for Mr Hyland, correctly does not press for that declaration in the events which have happened. That is not to say that there was anything improper or inappropriate about seeking the declaration in the summons at the time it was filed. I dealt with the reasons as to why this is so in paragraph [9] of the principal judgment. As the declaration is no longer sought, it becomes uncontroversial that as a formal matter the summons should be dismissed. 5The third uncontroversial matter relates to the plaintiff's costs of the proceedings. Mr Bell of Counsel for Ms Healey, again correctly, does not resist Mr Hyland having his costs of the proceedings, including the costs thrown away by reason of previous adjournments in this matter, to be paid from the estate on the indemnity basis. 6In saying this, I should note that there were two previous adjournments of hearing dates fixed for these proceedings. In both cases the costs in relation to those adjournments were reserved. Neither party suggests, nor do I think they sensibly could, that the costs in relation to those adjournments should go in any different way from the costs of the proceedings generally. 7This brings me to the matter of controversy, namely what is to happen in relation to the costs of Ms Healey, including any liability she may have to pay Mr Hyland's costs. 8The starting point of the analysis must be the usual principle, made clear in r 42.1 of the Uniform Civil Procedure Rules 2005, that costs are to follow the event, unless it appears to the Court that some other order should be made as to the whole or any part of the costs. In considering whether the usual rule should apply, it is also necessary for me to consider whether what have been referred to in argument as the probate exceptions are engaged. 9There is considerable attraction in this case to make an order that costs follow the event. It had many features of adversary litigation. Ms Healey did appear to be asserting the October Document as an assertion of her personal rights with the considerable interest at stake of obtaining virtually all of Mr Luscombe's estate if the October Document were to be admitted to probate. 10Against that, however, is the fact that there was no suggestion that Ms Healey was present at the time the October Document was executed or had any role in its creation or encouraging its contents. That consideration, taken together with the nature of the proceedings as a contest between the July Will, which had been admitted to probate, and the October Document as being sought to be admitted to probate does mean that the usual rule ought not necessarily apply. I should therefore deal with costs by reference to the probate exceptions or principles. 11Those principles are conveniently set out in the oft cited judgment of Powell J (as his Honour then was) in Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698 at 709: Costs are, of course, in the discretion of the Court, but that discretion, being a judicial, and not an unfettered one, must be exercised in accordance with the established principle. The general principle to be applied in adversary litigation is that costs follow the event, those costs being taxed on a party and party basis. However, over the years, a number of exceptions to this general rule have come to be recognised. In the field of probate litigation, two such exceptions have come to be recognised, they being: 1. where the testator has, or those interested in residue have been the cause of the litigation, costs of unsuccessfully opposing probate may be ordered to be paid out of the estate; 2. if the circumstances led reasonably to an investigation in regard to the document propounded, costs may be left to be borne by those who respectively incurred them. 12The debate between the parties before me, having passed beyond consideration of the usual rule, was whether this case fell within the first principle ("testator's fault") or the second principle ("reasonable investigation"). It was submitted for Ms Healey that the case fell within the first of these, while Mr Hyland submitted that it fell within the second. 13I was referred by Mr Bell to some recent consideration of the principles, including the decision of Hallen AsJ (as his Honour then was) in Re Will of Jane (No. 2) [2011] NSWSC 883. In that case, his Honour referred to a statement in Miller's Probate Practice which referred to the two questions of whether there were reasonable grounds for the litigation and whether the litigation was conducted bona fide. 14Two things need to be observed about his Honour's decision. First, and most importantly, the case before his Honour concerned an unsuccessful application for a statutory will. His Honour refers in his reasons (at [17]) to the fact that there was no NSW authority of which he was aware that dealt with costs in the context of an unsuccessful application for a statutory will. 15His Honour's reasons, therefore, proceeded to find appropriate analogies both from general principles, such as that referred to in Miller's Probate Practice and what his Honour described (at [22]) as the analogy of the authorities relating to costs in probate suits. In the case before him, Hallen AsJ ultimately adopted what I would describe, with no disrespect, as a blending of those two sources to arrive at a result, in that case, that costs should follow the event. 16The importance of this for present purposes is that I do not regard Re Will of Jane as authority for how the probate principles should be interpreted or applied in an orthodox probate case, which I take this to be. Those principles do not incorporate the questions raised in Millers Probate Practice. 17Second, I am bound by the law in this area as expounded by the Court of Appeal. Mr Bell referred me to the decision of the Court of Appeal in Perpetual Trustee Co Ltd v Baker BC9904032 NSWCA 16 July 1999, which referred to a statement by Santow J in The Estate of Moyle: Moyle v Moyle (18 June 1988) (unreported) that there could be a degree of overlap between the two probate exceptions. 18However, it is significant in my view that their Honours' discussion of that possible overlap concluded at [14] with this observation: So it has been said that where the conduct and habits and mode of life of a testator have given ground for questioning his testamentary capacity the costs of the unsuccessful party should be paid out of the estate, as distinct from being left to be borne by that party. 19This discloses an important aspect of the overlap which, if it exists in other cases, I do not consider to be relevant in this case. The cases which I refer to as "overlap cases" seem to have been confined to cases of testamentary capacity. This is not a testamentary capacity case. Apart from such cases the scope for overlap is less obvious. 20Furthermore, the discussion of the relevant principles in Perpetual Trustee Co Ltd v Baker must be considered further by reference to what was said in the Court of Appeal in Shorten v Shorten (No 2) [2003] NSWCA 60 at [20]: [20] These and other cases provide support for the proposition in Moyle and Baker (adopting the remarks of Santow J in Moyle) that the two exceptional categories stated in Hodges tend to overlap. But the categories are not coterminous. They remain conceptually distinct, although the court's ultimate discretion as to costs may resulting an opponent's costs being met by the estate in situations such as mentioned in the previous paragraph. 21The state of the law in this area after both Baker and Shorten was considered in some detail by White J in Gray v Hart; Estate of Harris (No 2) [2012] NSWSC 1562. I respectfully adopt his Honour's summary of the position, in paragraphs [3] to [19], culminating in what his Honour described(at [16]) as "[restoring] the course of appellate authority to the principles that were previously well established." His Honour said (at [19]): However, it appears to me, consistently with the rationale of the principles in Mitchell v Gard, that where the categories do overlap, if the testator is properly seen as the cause of the litigation, the usual order is that costs be paid out of the estate. It is where the testator is not the cause of the litigation, but investigation is reasonably called for, that there is usually no order as to the unsuccessful party's costs. Of course if there is no reasonable cause for investigation, that is, if the unsuccessful party has not acted reasonably, then he or she will pay the costs. 22Therefore, the current state of the law requires me to consider whether the present case is a testator's fault case or a reasonable investigation case. 23In support of his argument that this was a testator's fault case, Mr Bell drew attention to my findings at paragraph [94] of the principal judgment that Mr Luscombe wrote his name "Herbert Luscombe" on the October Document. He also invited me to take into account, as I did in the principal judgment, evidence that Mr Luscombe was too astute to be duped into writing his name on something he did not want to sign. He also submitted that Ms Healey could not be said to be in any way responsible for the October Document, there being no suggestion she was present when it was executed or that she had any role in its preparation. 24It was also submitted that Mr Luscombe led some aspects of his life in a secretive way, not least his relationship with Ms Healey. This secretiveness was advanced as a further reason why this case should be categorised as a testator's fault case. 25Dealing with this last mentioned reason first, I am not persuaded by it. The secretiveness of his relationship, as I found it to be, with Ms Healey, is not a matter which is sufficiently connected to the fact of the October Document itself so as to bring this matter within the category of a testator's fault case. 26As for his primary submissions, Mr Bell's argument reached its high point in the submission that if Mr Luscombe had not written his name on the October Document the proceedings would, in all probability, have not been commenced nor defended nor the cross-claim prosecuted. 27The difficulty with this submission may be illustrated by comparing it with the testamentary capacity cases. In testamentary capacity cases, at least those of which I am aware, it is usually not part of the case as to whether or not the testator's signature was actually applied to what would otherwise be the testator's will. Putting it another way, in those cases it is accepted that the testator signed the document sought to be admitted to probate as his will and the real question is whether he had testamentary capacity. 28This present case falls into a different category. That is because of what I referred to in paragraph [98] of my principal judgment: The evidence does not permit me to make any finding about whether he wrote his name on the piece of paper before or after the other words making up the October Document were added to the piece of paper. However, the suspicion which I have is based upon Ms Novotny's evidence to which I have referred in paragraph [95] above, the complete absence of any example of Mr Luscombe ever signing his name (as opposed to merely writing it out) as "Herbert Luscombe" and the fact that only three months earlier he executed the July Will and general power of attorney with what I have found to be his usual signature". 29In circumstances where I am unable to make any finding about whether Mr Luscombe wrote his name on the piece of paper before or after the other words making up the October Document were added to the piece of paper, I am unable to accept Ms Healey's submission that this case is one which falls within the testator's fault category. 30In other words, taking into account all of the suspicious circumstances which I referred to in the principal judgment, I cannot now be satisfied that Mr Luscombe, when he wrote his name on the piece of paper that became the October Document, did so when the rest of the words constituting what would otherwise be a will, were on the piece of paper or not. If the rest of the words were there when he wrote his name on the piece of paper, then I would be satisfied this was a testator's fault case. However, in the absence of being able to be so satisfied, the circumstances (including that lack of satisfaction) bring this case clearly within the reasonable investigation category. 31Accordingly, I propose to make no order as to Ms Healey's costs of the proceedings, including any costs thrown away by reason of the earlier adjournments in the matter. 32The orders of the Court are as follows: (1)Summons dismissed. (2)Cross-claim dismissed. (3)Plaintiff's costs of the proceedings, including any costs thrown away by reason of the earlier adjournments, to be paid from the Estate on the indemnity basis. (4)Direct that the subpoenaed material and the exhibits be returned forthwith, the latter to be held by the parties or their solicitors in accordance with paragraph 28 of Practice Note SC Gen 18. (5)Grant liberty to the plaintiff to apply on five days' notice by email to my Associate in relation to the caveat lodged by the defendant over the property at 26-34 Kings Road, Moss Vale. 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 February 2016