On 12 August 2016, I delivered the primary judgment in these proceedings: Colegrove v Dullaghan [2016] NSWSC 1105.
This judgment concerns the costs order that should be made in the proceedings. The parties both requested that I give them an opportunity to make written submissions on costs. Ms Colegrove delivered written submissions dated 18 August 2016, and Ms Dullaghan delivered written submissions on the same date.
Ms Colegrove's position was that each party should be ordered to pay their own costs up to 14 April 2016, and Ms Dullaghan should pay Ms Colegrove's costs after 14 April 2016 on an indemnity basis. Ms Colegrove delivered a Calderbank offer to Ms Dullaghan on 14 April 2016.
Ms Dullaghan submitted that Ms Colegrove, as administrator of Mr Paskalis' estate with the will annexed, should be ordered to pay her costs out of the estate on an indemnity basis.
The relevant facts are set out in detail in my primary judgment. Ms Colegrove sought an order that a will executed by the deceased, Mr Peter Paskalis, on 16 July 2010, is a valid will within the meaning of s 8 of the Succession Act 2006 (NSW), even though it had only been witnessed by one witness.
The facts of the case were somewhat unusual. The will was written out by hand by Ms Colegrove, who was the sole beneficiary. It was dictated by Ms Colegrove's partner, Mr Woods, who was a practising solicitor. This occurred in Mr Paskalis' presence. Mr Woods was the only witness to the execution of the will by Mr Paskalis. There were practical reasons, which are set out in the primary judgment, as to why it was not convenient at the time for a second witness to be found.
Ms Dullaghan was Mr Paskalis' sister. She and her two children, who were Mr Paskalis' nephews, were natural objects of his bounty.
The proceedings were commenced by Ms Colegrove on 28 September 2015. On that date, affidavits by Ms Colegrove and Mr Woods were filed, and were served with the summons.
An independent witness, Mr Zis Anastas, swore an affidavit in support of Ms Colegrove's case on 2 February 2016. Another independent witness, Mr Jason Cross, also did so on 14 April 2016. Both witnesses gave evidence of statements made to them by Mr Paskalis that he had left his entire estate to Ms Colegrove.
Mr Woods served a Calderbank offer on Ms Dullaghan's solicitors on 14 April 2016. The letter relied heavily on the two affidavits by the independent witnesses. In substance, the effect of the offer was that a grant of letters of administration would be made in favour of Ms Colegrove with the 2010 will annexed, the parties would pay their own costs, and in the event that the trustees of a named superannuation fund determined to pay 100% of Mr Paskalis' entitlement to Ms Colegrove, she would pay the sum of $10,000 to Ms Dullaghan.
Ms Dullaghan relied upon the principle stated by Powell J (as his Honour then was) in Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698 at 709; as confirmed by the Court of Appeal in Shorten v Shorten (No 2) [2003] NSWCA 60 at [15]. First, Ms Dullaghan submitted that Mr Paskalis had been the cause of the litigation, so that the costs of Ms Dullaghan in unsuccessfully opposing probate should be ordered to be paid out of the estate. That submission was primarily based upon the fact that Mr Paskalis, though reasonably close to Ms Dullaghan, had not advised her as to his testamentary intentions. Furthermore, Mr Woods had advised Mr Paskalis on a number of occasions that he should attend upon a solicitor to have his will properly executed, but Mr Paskalis did not do so before his death. Secondly, Ms Dullaghan submitted that the circumstances lead reasonably to an investigation in regard to the 2010 will. Ms Dullaghan also relied upon statements by Hallen AsJ (as his Honour than was) in Re Will of Jane (No 2) [2011] NSWSC 883 at [24]; and White J in Gray v Hart; Estate of Harris (No 2) [2012] NSWSC 1562 at [26] and [27].
Ms Colegrove acknowledged the principles underlying these submissions; although she pointed out that White J in Gray v Hart at [10] referred to the oft quoted dictum of Sir J P Wilde in Mitchell v Gard (1863) 3 Sw & Tr 275 at 279:
It is of high public importance that doubtful wills should not pass easily into proof by reason of the cost of opposing them. It is of equal importance that parties should not be tempted into a fruitless litigation by knowledge that their costs will be defrayed by others.
I have mentioned above that the facts of this matter are somewhat unusual. As I explained in some detail in the principal judgment, Mr Paskalis formed a friendship and a bond with Ms Colegrove that was exceptionally strong, and arguably stronger than the bond that may exist between many reasonably close siblings. Ms Dullaghan was not reasonably in a position to appreciate the nature and strength of that bond. Mr Paskalis apparently did not inform Ms Dullaghan of his testamentary intentions, and even if he had reason not to bestow any of his bounty on Ms Dullaghan, it would not have been unreasonable for her to think that he may have made some provision for his nephews, as he had no children of his own. Furthermore, the will was dictated by Mr Woods, containing terms favouring his partner, Ms Colegrove, and Ms Colegrove handwrote the will. Although practical reasons were put forward to explain the circumstances in which the will was made, the fact remains that the only witness to these events was Mr Woods.
In my view, it was reasonable for Ms Dullaghan, at least initially, to contest the application made by Ms Colegrove, given that Ms Dullaghan was the beneficiary under the prior will executed by Mr Paskalis.
However, the position changed, in my view, when Ms Colegrove caused the affidavits of Mr Anastas and Mr Cross to be served on Ms Dullaghan.
Those witnesses were independent of Ms Colegrove and Mr Woods, and the evidence they gave was very telling of Mr Paskalis' genuine intention to leave his estate to Ms Colegrove. Once that evidence was served on Ms Dullaghan, she had to face the forensic reality that she would most likely fail in her opposition to Ms Colegrove's claim, unless she was able to discredit the evidence of all of the witnesses given in support of that claim.
For reasons that are explained in more detail in my principal judgment, notwithstanding that Ms Dullaghan continued her opposition to Ms Colegrove's application, she was ultimately unable at the hearing to put anything before the court that was likely to justify the court in not accepting the evidence given by Ms Colegrove and her witnesses. Her counsel could do no more than to put it to Ms Colegrove and Mr Woods that the accounts they gave of the execution of the 2010 will by Mr Paskalis were not true. Counsel did not challenge the evidence given by Mr Anastas and Mr Cross at all.
In my view, the circumstances in which Mr Paskalis executed the 2010 will were so unusual that it was reasonable for Ms Dullaghan to contest the application and to put Ms Colegrove to proof, on the principle in Re Hodges and Shorten v Shorten (No 2) up to 14 April 2016. However, the position changed when Ms Dullaghan had not only the evidence of Ms Colegrove and Mr Woods, but also the evidence of both Mr Anastas and Mr Cross. As the subsequent course of the proceedings, particularly at the hearing, has showed, from 14 April 2016, Ms Dullaghan has taken her chances in ordinary adversarial litigation, in the face of evidence that was likely to lead to the failure of her case; as has occurred. Following receipt of the evidence of the independent witnesses, Ms Dullaghan has been unable to make a real contest of the proceedings.
Accordingly, in my view, Ms Dullaghan should be ordered to pay Ms Colegrove's costs of the proceedings from 14 April 2016.
I reject Ms Colegrove's submission that Ms Dullaghan should be ordered to pay those costs on the indemnity basis. I do not consider the Calderbank offer to be effective. First, I do not consider that the Calderbank offer was a genuine offer of compromise in the circumstances. Notwithstanding the ultimate effectiveness of the evidence of the independent witnesses, I do not accept that the strength of Ms Colegrove's case (given the unusual features of the case) justified Ms Colegrove in making a 'walk away' offer to Ms Dullaghan: see for example Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344. Secondly, there is no evidence before the court that would enable it in a rational way to attribute any value to the offer that $10,000 would be paid to Ms Dullaghan, if the trustees of the superannuation fund made a determination in favour of Ms Colegrove.
I therefore make the following additional orders in these proceedings:
1. Order that the defendant's costs of the proceedings and the cross claim up to 14 April 2016 be paid by the plaintiff out of the estate of the late Mr Peter Paskalis.
2. Order that the plaintiff's costs of the proceedings and the cross claim after 14 April 2016 be paid by the defendant on the ordinary basis.
3. Order that the exhibits and all documents produced on subpoena or notice to produce may be returned forthwith in accordance with the Rules.
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Decision last updated: 08 September 2016