CRAIG -v- CRAIG [2015] WASC 109 (27 March 2015)

3 On 21 August 2014 the plaintiff filed in this court an originating summons seeking an extension of time to file the originating summons and an order that adequate provision be made out of the deceased's estate for the plaintiff pursuant to s 6 of the Act. That application was made slightly more than five weeks after the six month period provided for in s 7(2)(a) of the Act.

4 On 8 October 2014 the originating summons was amended to delete the claim for relief under s 6 of the Act. I understand that this was to enable the application for leave to file out of time to be separately heard. If leave to file out of time is granted, then it will be necessary for the plaintiff to file fresh proceedings seeking provision under s 6 of the Act. Such leave, if granted, will necessarily extend beyond the date of the decision to grant leave. However, for practical purposes, the period of delay in bringing proceedings under the Act was the period of just over five weeks between 15 July 2014 and 21 August 2014.

5 I note that the originating summons is expressed to seek an extension of time under O 3 r 5 of the Rules of the Supreme Court 1971 (WA) (Rules). However, in my view the power to give leave to file out of time is conferred by s 7(2)(b) of the Act, rather than the Rules.

6 The following critical facts were established by affidavits filed in these proceedings and are not contentious.

7 The plaintiff and deceased were married on 18 December 1994, and maintained a committed relationship until the death of the deceased almost 19 years later. The plaintiff and defendant married relatively late in their lives when they were 71 and 76 years old respectively. Each of the plaintiff and defendant had three adult children from a previous marriage, all of whom survived the deceased's death.

8 Two days prior to their marriage, the plaintiff and deceased signed a 'Mutual Statement of Prenuptial Intent' in contemplation of their marriage, which stated:

The parties agree that the assets of each party should remain the assets of that party for the benefit of their family and that neither party intends to claim against the assets of the other party in the event of the dissolution of the marriage or in the event of the death of either party.

The parties declare that it is their intention and desire that during their marriage each party shall be completely independent of the other as regards the enjoyment and disposal of all assets whether owned by them at the commencement of the marriage or coming to them or either of them during the marriage.

9 It is evident from the plaintiff's affidavit that this intention was reflected in the plaintiff's and deceased's approach to their married life. The plaintiff says that, when the deceased was alive, he would pay for the couple's normal household expenses, including rates and taxes, electricity, water and food. However, the deceased would pay only for himself when the couple went on holidays, requiring the plaintiff to pay for her expenses including airfares and accommodation. Whenever they went out for meals, the deceased required that the plaintiff pay for herself and any of her family who joined them.

10 The plaintiff cared for, and provided support for, the deceased throughout their marriage, including nursing him during his time of illhealth, or postoperative recovery, and during the time of the decline in the deceased's health in the last few years of his life.

11 The plaintiff understands that, during the final years of his life, the deceased made substantial gifts, including $5 million to three educational institutions and unknown amounts to other organisations. The plaintiff also understands that the deceased gave substantial gifts to each of his children, in amounts which are not stated. The plaintiff did not receive gifts in cash at all from the deceased or any related entity at any stage.

12 At the time of the deceased's death, the plaintiff and deceased resided in a property at Crawley owned by the deceased.

13 The deceased made his last Will on 9 August 2012. He appointed his son, the first defendant, to be the executor and trustee of his Will. He requested the first defendant to use his position of control of a family trust to distribute $10,000 to each of his grandchildren when they attain 21 years of age.

14 Clause 4 of the Will gave the deceased's interest in the Crawley property to the first defendant upon trust. The terms of the trust required the first defendant to permit the plaintiff to reside on the Crawley property free of rent or charge but subject to her maintaining the property in good condition, paying outgoings and keeping the property insured.

15 The plaintiff's entitlement to occupy the Crawley property was to cease on the earlier of the plaintiff's death, remarriage, entry into a de facto relationship or vacating the property or ceasing to use it as her principal place of residence. The day on which the first of these events occurs is referred to in the Will as the 'Termination Date'.

16 During the plaintiff's occupation of the Crawley property the first defendant was given power to retain the property or, subject to subclauses 4(d), (e) and (f), sell the property. Subclause 4(d) required the first defendant to act on the written request of the plaintiff as regards the sale of the property. Subclause 4(e) provided that:

(e) in the event of sale of the Property during [the plaintiff's] occupation of the Property, a sum equivalent to ONE HALF (½) of the net sale proceeds (after deduction of all selling costs), being referred to herein as THE S.R.C. FUND, shall be held by my Trustee as follows:

(i) the funds may be used for the acquisition of a replacement trust property in the Perth metropolitan area (with the power to sell the replacement trust property and acquire successive properties including nursing home entry) with the property to be purchased in the sole name of my estate, to be wholly owned by my estate and to be held on the same terms as set out in 4(a) and (b) of this my Will;

(ii) the funds may be invested with the income to be paid to [the plaintiff] until the Termination Date;

(iii) in the event that any replacement properties cost less than THE S.R.C. FUND, the surplus will be invested with the income paid to [the plaintiff]; and

(iv) in accordance with subclause (e), [the plaintiff] shall not be entitled to direct my Trustees in regard to investment of proceeds.

17 Subclause 4(f) required the remainder of the net sale proceeds from the Crawley property to become part of the deceased's trust estate for distribution in accordance with cl 5 of the Will.

18 Subclause 4(g) provides that, on the Termination Date, the Crawley property or any property purchased in substitution thereof and the capital and undistributed income of the SRC Fund will form part of the deceased's trust estate for distribution in accordance with cl 5 of the Will.

19 Subclause 4(h) entitled the plaintiff to the use of furniture in the Crawley property, which is to be distributed among the deceased's children on the Termination Date.

20 Subsequent provisions of the Will provide for trusts for the benefit of the deceased's children and grandchildren.

21 The first defendant assessed the deceased's estate as having a net value of $1,871,993 at the date of his death. The Crawley property is the principal asset of the deceased's estate. The Crawley property was assessed as having a value of $1,850,000.

22 The plaintiff described her assets, liabilities, income and expenses in an affidavit sworn on 25 July 2014. An affidavit sworn by the plaintiff's solicitor indicates that the plaintiff's affidavit also reflects the plaintiff's financial position as at the date of the deceased's death.

23 The plaintiff estimated the total value of her assets as $2,644,000. Her principal assets comprise a property in Fremantle which is valued at $685,000 and which generates rental income, a property in Dunsborough which is valued at $1,250,000 and which does not generate rental income, shares valued at $575,000 and cash of about $100,000. Her liabilities are $21,000, of which $18,000 is attributable to expenses relating to the Crawley property.

24 The plaintiff's monthly income, derived from the Fremantle property, income from shares and interest, is $4,000. Her total monthly expenses are approximately $12,000. Significant items of expenditure include $1,600 per month for food and other household consumables, $1,500 per month associated with expenses of the Crawley property, $3,500 per month for a personal carer and $2,000 per month in legal expenses.

25 The plaintiff says that her health has deteriorated since the death of the deceased, and she requires relocation to an aged care facility. She adduces evidence that a room at a proposed facility requires an upfront deposit of approximately $680,000 $1,000,000 in addition to daily care fees of up to $160 per day.

26 On 9 September 2013 the plaintiff's former lawyers wrote to the first defendant indicating that the plaintiff intended to make a claim under the Act and requesting a copy of the Rule 9B Statement of Assets and Liabilities. This followed discussions between the plaintiff's and deceased's children as to concerns which the former had about the deceased's Will shortly after the deceased's funeral in July 2013.

27 Discussions between the children and their legal representatives continued at least until 23 December 2013.

28 On 23 January 2014 the first defendant's former solicitors wrote to the plaintiff's former solicitors notifying them of the grant of probate of the deceased's Will. On 4 February 2014 the first defendant wrote to the plaintiff's children informing them of the grant of probate.

29 In around February 2014 the plaintiff changed her solicitors. Transfer of the former solicitor's file to the plaintiff's current solicitors was completed on or around 21 February 2014. The transferred file included the advice dated 23 January 2014 as to the grant of probate.

30 The plaintiff's current solicitors undertook various inquiries between January and July 2014, but only conducted a search of the Probate Office file on 18 July 2014. The plaintiff's current solicitor has deposed that while pursuing other inquiries and coping with his other workload, the plaintiff's solicitors 'inadvertently got distracted from commencing' the plaintiff's action.

31 Some attempts were made in affidavits and written submissions filed by the plaintiff to attribute the delay in commencing proceedings to the failure by the first defendant to provide a statement of the assets of the estate, the change of solicitors, the fact that the letter of 23 February 2014 did not advise of the date of the grant, time spent in negotiations, various inquiries made by the plaintiff's solicitors and other matters.

32 However, in my view the simple reason for the delay in commencing these proceedings was the failure of the plaintiff's current solicitors to take reasonable care to adequately pursue their client's interests. The current solicitors should have been aware from a perusal of the former solicitor's file that probate had been granted. The letter of 23 February 2014 was on that file, and indicated that probate had been granted. While the letter did not say when probate had been granted, it was obvious that it had been granted by 23 February 2014 and time was running. The plaintiff's current solicitors 'inadvertently got distracted' by other matters. However, they should have appreciated the importance of beginning proceedings within six months of the grant of probate, and advised the plaintiff accordingly. There was nothing to stop the plaintiff's solicitors from doing so. In oral submissions counsel for the plaintiff properly conceded this to be the case.

Principles governing the grant of leave to file out of time

33 The leading decision as to the principles governing the grant of leave to file out of time is Clayton v Aust.[1] In that case,[2] Malcolm CJ, with whom Rowland and Franklyn JJ agreed, referred with apparent approval to six nonexhaustive considerations, which Megarry VC had identified in Re Salmon (dec),[3] as informing the exercise of discretion under s 4 of the Family Provision Act 1966 (UK) (which was similar to s 6 of the Act):

1. The discretion is unfettered. No restrictions or requirements of any kind are laid down in the Act. The discretion is to be exercised judicially and in accordance with what is just and proper.
2. The onus lies on the plaintiff to establish sufficient grounds for taking the case out of the general rule, and depriving those who are protected by it of its benefits. The time limit is a substantive provision laid down in the Act itself, and is not a mere procedural time limit imposed by the rules of court which will be treated with the indulgence appropriate to procedural rules. The burden on the applicant is thus no triviality. The applicant must make out a substantial case for it being just and proper for the court to exercise its statutory discretion to extend the time.
3. It is material to consider how promptly and in what circumstances the applicant seeks the permission of the court after the time limit has expired. The whole of the circumstances must be looked at including the reasons for delay and the promptitude with which the applicant gave warning to the defendants of the proposed application.
4. It is material whether or not negotiations have been commenced within the time limit; for if they have, and time has run out while they are proceeding, this is likely to encourage the court to extend the time. Negotiations commenced after the time limit might also aid the applicant, at any rate if the defendants have not taken the point that time has expired.
5. It is relevant to consider whether or not the estate had been distributed before a claim under the Act had been made or notified. For most people, there is a real difference between the bird in the hand and the bird in the bush. In addition, of course, the beneficiaries are more likely to have changed their position in reliance on the benefaction if they have actually received it than if it lies merely in prospect.
6. It is relevant to consider whether a refusal to extend the time would leave the claimant without redress against anybody.

34 Malcom CJ saw the strength of the applicant's case as being relevant under the second principle identified above. The factor which Malcolm CJ saw as relevant was 'has the applicant got an arguable case on the merits?'.

35 In Clayton the master had concluded that the case of the appellant was 'weak on the merits or barely arguable'. This conclusion was reached on the basis that a conflict of evidence on affidavits was likely to be resolved against the appellant in that case. The master was found to have erred in adopting this approach in a situation where the evidence in the competing affidavits had not been tested by cross-examination, and in approaching the matter on the basis that the appellant's case was weak or barely arguable.[4]

36 The significance of default by solicitors in bringing an application under the Act was considered by the court in Grigoriou v Nitsos.[5] In that case Ipp J, with whom White and Steytler JJ concurred, observed that:

In my opinion, where delay in making an application in terms of s 7(1) is due to the conduct of an applicant's solicitors, the 'justice of the case' requires all the relevant circumstances to be examined to determine the extent to which the solicitors' fault is to be attributed to the applicant. It should not automatically follow that the solicitors' neglect will be visited upon the applicant: after all, that might not meet the justice of the case. This underlies the approach in Brown v Holt [1961] VicRp 69; [1961] VR 435 and Re Traeger deceased [1948] SAStRp 25; [1948] SASR 248, both being cases involving a failure by solicitors to give timeous notice of applications under legislation similar to the Inheritance (Family and Dependants Provision) Act. In both cases the reasonableness of the conduct of the applicant, as well as that of the applicant's solicitors, was regarded as relevant. See also Bourke v Kecskes [1967] VicRp 117; [1967] VR 894 (which was an application for the dismissal of an action for want of prosecution), where Lush J examined the question whether 'it is fair to place on the facts the interpretation that the plaintiff was passively accepting a situation which he ought to have realised was wrong' (because of unreasonable delay on the part of his solicitor).

37 Subject to the applicant demonstrating an arguable case, I would be prepared to grant leave to file out of time in the present case. The delay has been modest, and the plaintiff and her legal representatives have been actively dealing with the case since shortly after the deceased's death even if the activity of the solicitors was misdirected from January to July 2014. The delay does not prejudice the first defendant or the beneficiaries under the Will. The estate has not been distributed, and its principal asset cannot be realised while the plaintiff exercises her right to reside in the Crawley property. The defendants were notified of the plaintiff's intention to make an application under the Act at an early stage. There is no evidence that any of the beneficiaries changed their position because the plaintiff did not make an application in time. There is no evidence that the plaintiff acquiesced in the delay of her solicitors. While she may have a claim against her current solicitors in negligence, her damages in such a case would be the loss of a chance of succeeding in her application under the Act.[6]

38 Having regard to all of those matters, in my view it would be in the interests of justice to give the plaintiff leave to file out of time if she has an arguable case for the grant of final relief. However, if she does not have such a case, it would not be in the interests of justice to grant leave to commence proceedings which are doomed to fail and likely to deplete the financial resources of the parties and the estate.

39 I turn then to consider whether the material relied on by the plaintiff demonstrates an arguable case for the grant of relief under the Act.

40 The present case is not once, such as Clayton, where the prospects of success may turn on the resolution of conflicting evidence. In this case the critical facts are uncontentious. These facts concern the financial position of the estate and the plaintiff at the date of the deceased's death, and the nature of the relationship between the plaintiff and the deceased.

41 I do not have any evidence as to the financial position of the deceased's adult children. For the purposes of dealing with this application I will assume, in the plaintiff's favour, that gifts made by the deceased during his lifetime, and their own financial resources, make adequate provision for their proper maintenance, support, education and advancement in life.

42 The critical question is whether, considered at the date of the deceased's death, the Will arguably failed to make adequate provision from the deceased's estate for the proper maintenance, support, education or advancement in life of the plaintiff, for the purposes of s 6(1) of the Act.

43 I recently considered the principles governing the application of s 6 of the Act to a widowed spouse of advancing years in Waddingham v Burke.[7] I adopt that statement of the relevant principles without repeating them in these reasons.

44 As I noted in Waddingham, the question of whether a Will makes adequate provision for the plaintiff's proper maintenance etc is a question of fact, to be resolved by reference to the evidence and all of the circumstances of the case at hand. While some comfort may be found in previous cases if the answer accords with what has been referred to as a 'broad general rule' in cases of a kind analogous to the case at hand, the answer to the question of fact is not dictated by previous authority.

45 In the present case there are three matters which, in combination, count conclusively against a finding that the deceased's Will fails to make adequate provision for the plaintiff's proper maintenance etc.

46 First, the plaintiff's own financial resources are sufficient to provide for the lifestyle which she contemplates, which in her advanced years involves necessary relocation to an aged care facility.

47 If the plaintiff were to sell her Dunsborough property she would have sufficient funds to pay a $1 million deposit to the provider of an aged care facility. The sale of that property would not affect the plaintiff's current income stream, as her evidence is that her income is wholly derived from other sources. There is no evidence that the plaintiff would require the use of the Dunsborough property in the future. She would still expect a surplus of funds which could be used to discharge her current liabilities, meet unforseen contingencies and fund the difference between her income of $4,000 per month (or $48,000 per annum) and the upper range of aged care facility fees of $160 per day (or $58,000 per annum).

48 To any extent that the plaintiff were required to otherwise draw on her capital, it seems clear that her assets would be sufficient to meet her needs. At 91 years of age, and with assets exceeding $2.6 million, the plaintiff has the financial resources to meet her own needs for the rest of her life.

49 In these circumstances, the determination of an application under the Act would have no substantial impact on the plaintiff's planned lifestyle. The practical effect of the determination of an application under the Act would only concern the value of the estate which the plaintiff will leave the beneficiaries of her Will after maintaining that lifestyle.

50 Secondly, the plaintiff has not made any significant contribution or sacrifice in the building up of the deceased's estate. The history of the plaintiff's relationship with the deceased is not one of a financially dependent wife who cared for the children and supported her husband while he amassed his fortune. The plaintiff and deceased married late in life when the burdens of caring for their children had passed and each had already amassed a considerable fortune. There is no evidence of the plaintiff making financial sacrifices for the deceased. On the plaintiff's evidence, each of the plaintiff and deceased provided support for the other in a manner that would be expected of a married couple. The plaintiff provided care for the deceased at times of illhealth. She was, no doubt, a loving and supportive wife to the deceased during 19 years of marriage. However, the plaintiff's position is different to that contemplated by Powell J in Luciano v Rosenblum[8] when formulating his 'broad general rule' that a deceased husband should ensure that his widow is secure in the matrimonial home with an income sufficient to permit her to live in the style to which she is accustomed with a fund for unforeseen contingencies. The comments of Young CJ in Eq in Marshall v Carruthers,[9] which I quoted in Waddingham,[10] are apposite here.

51 Thirdly, the plaintiff and deceased maintained throughout their married life a financial independence from each other which is unusual for a married couple. Their initial intention to maintain their assets for the benefit of their separate families was stated in their 'Mutual Statement of Prenuptial Intent' and, on the plaintiff's evidence, the financial independence proposed by that prenuptial statement was maintained throughout their relationship. It is true that the prenuptial statement cannot oust the jurisdiction of this court under the Act.[11] However, the statement and the conduct of the plaintiff and deceased provide evidence of a relationship in which each of the parties broadly maintained financial independence from the other, and sought to preserve their assets for the benefit of their children. That agreed basis of the relationship, in which neither party to the marriage assumed any financial responsibility or obligation to the other, is evidence which informs the value judgment as to what is 'adequate' provision for the plaintiff's 'proper' maintenance. While not controlling, the prenuptial statement and the actions of the parties to the marriage broadly consistent with that statement, can be taken into account for the purpose of making that value judgment.[12]

52 The plaintiff points to the decisions in Milillo and Robb v Hunter[13] as authority for the proposition that 'a life interest, as provided to the plaintiff in the Will, has been held not to be proper provision for a widow'.

53 In Milillo,[14] Young CJ in Eq observed that in an 'ordinary case' in the 21st century 'it is insufficient for a man to leave his widow with a life estate only in the matrimonial home' and at the very least 'he must make provision for the executors to sell the home and, as the widow ages, provide suitable accommodation'. However, that proposition was applied only to an 'ordinary case' and in Milillo a life estate was held to be sufficient to provide for the widow's maintenance in the particular circumstances of that case, which were not ordinary.

54 In Robb Master Macready reviewed a number of cases in which provision for a life estate to a widow was, or was not, held to be adequate to make proper provision for the purposes of family provision legislation. In the circumstances of that case a life estate was found to be inadequate, but the circumstances in Robb were radically different to those of the present case.

55 I do not think that either Milillo or Robb purport to lay down a general rule as to the adequacy of a life estate to make proper provision for the maintenance etc of a widow. Nor would it have been appropriate in those cases for the courts to have done so. As Stephen J recognised in White v Barron,[15] family provision legislation leaves little room for the formulation of general rules to govern the future exercise of curial discretion.

56 I do note that the plaintiff's monthly income of $4,000 is significantly less than her expenses of approximately $12,000. However, the plaintiff would not need to incur the vast majority of those expenses if she were to sell the Dunsborough property, cease to be responsible for expenses associated with the Crawley property and move into an aged care facility.

57 If, as may have been contemplated at the deceased's death, the plaintiff is to continue to reside in the Crawley property for a significant time, then she may have to draw down on her capital to meet her monthly expenses. However, the plaintiff's capital of approximately $2.6 million is sufficient to enable that to occur without compromising her ability to eventually move to assisted aged care accommodation.

58 In any event, as the Crawley property is the only substantial asset of the deceased's estate, if the plaintiff were to remain living in that residence the disparity between her current income and expenses would remain even if the deceased's Will were modified to give all of his estate to the plaintiff. The change in the deceased's Will proposed by the plaintiff - which is to give her either half the net proceeds of the sale of the Crawley property outright or to give her an amount equal to her aged care facility bond - would have no impact on the disparity between the plaintiff's income and expenditure while she continued to reside in the Crawley property.

Provision for the plaintiff made by the deceased's Will

59 The Will provides for the plaintiff to be secure in the matrimonial residence for as long as she wishes to live there.

60 The plaintiff's counsel submitted that cl 4 of the Will would enable the first defendant to sell the Crawley property at any time, even where the plaintiff wished to continue to reside in the property. Subclause 4(a) directs the first defendant to hold the Crawley property on trust to permit the plaintiff to have the right to reside in the residence on the property. The first defendant could not exercise his powers as trustee inconsistently with that direction. Further, subclause 4(d) compels the first defendant to act on the written request of the plaintiff 'in regard to the sale of the Property'. On the plain terms of this clause, the plaintiff is not confined to directing the sale of the Crawley property. A direction that the Crawley property not be sold would equally be a request 'in regard to the sale of the Property' for the purpose of subclause 4(d) of the Will. The defendants accept this to be the case, and I do not consider a contrary construction to be reasonably arguable.

61 The deceased's Will also enables the plaintiff to require the sale of the Crawley property. The first defendant is then required to deal with half of the net sale proceeds in accordance with subclause 4(e) of the Will. Counsel for the plaintiff submitted that subclause 4(e) was discretionary, and that on sale of the Crawley property the first defendant was not required to do any of the things referred to in cl 4(e)(i) (iv) of the Will. In my view that submission is clearly inconsistent with the chapeau to subclause 4(e), which requires that half the net sale proceeds of the Crawley property 'shall be held by my Trustee as follows'. The defendants properly accept that the first defendant will be required to deal with the SRC Fund in one or more of the ways provided for by cl 4(e)(i) (iv) and is not authorised to deal with the funds in some other manner prior to the Termination Date. I do not regard the contrary position to be reasonably arguable. That is, the Will provides for half of the net proceeds of the sale of the Crawley property to contribute towards the plaintiff's new accommodation or to be invested for her benefit.

62 All parties accept that the deceased's Will would enable the sale proceeds from the Crawley property to be applied either to a deposit for an aged care facility, or invested and the income applied for the plaintiff's benefit while she resides in the aged care facility and does not remarry or enter into a de facto relationship.

63 It is true that the benefits which the plaintiff receives under the Will are contingent upon her not remarrying, entering into a de facto relationship or ceasing to reside in the Crawley property or a replacement residence. Provisions for contingency of this kind may in some circumstances deprive an otherwise adequate bequest of being characterised as adequate provision for the proper maintenance etc of a widow.[16] However, in this case that contingency must be considered in the context where the plaintiff has the capacity to fund her entry into an aged care facility using her own resources.

64 When account is taken of the above matters, for which the facts are uncontested, and assuming unproven matters, such as the financial position of the deceased's children, to be in the plaintiff's favour, it seems to me that the plaintiff does not have an arguable case. Given the nature and history of the relationship, the age, financial resources and future plans of the plaintiff and the size of the deceased's estate, it cannot be reasonably said that the bequest of a life estate in the Crawley property on the terms contained in the Will fails to make adequate provision for the plaintiff's proper maintenance etc.

65 In the present case, the success or failure of the plaintiff's application will have no practical impact on the standard of the plaintiff's maintenance etc. Whether she succeeds or fails, she will be able to continue to live in the Crawley property for so long as she is willing and able and, when age requires it, move to an aged care facility. The practical impact of success or failure will not be on the plaintiff's standard of living but the extent to which she will be required to deplete the capital of her estate to continue living in the style to which she has become accustomed subject to the demands of old age. It is not arguable that, in all of the present circumstances and having regard to the totality of the plaintiff's relationship with the deceased, the deceased's Will fails to make adequate provision for the proper maintenance, support, education or advancement in life of the plaintiff.

66 Therefore, I am not satisfied that the justice of this case requires that the plaintiff have leave to file an application under the Act out of time. On the facts asserted by the plaintiff, or assumed in her favour, she does not have an arguable case. To grant leave to the plaintiff would, therefore, serve no purpose other than to diminish the estate of the plaintiff and the deceased through legal expenses associated with an application which is ultimately futile.

67 For these reasons I would order that the plaintiff's application for leave to file out of time be dismissed.

CITATION : CRAIG -v- CRAIG [2015] WASC 109 (S)

LESLIE BOYD CRAIG as Executor of the Estate of JOHN BOYD CRAIG

LESLIE BOYD CRAIG as Trustee for the BOYD CRAIG TESTAMENTARY TRUST

KATE HERRING SHACKLOCK as Beneficiary of the Estate of JOHN BOYD CRAIG

LESLIE BOYD CRAIG & KATE HERRING SHACKLOCK as Trustees for the FRANCES BEATRICE STONE TESTAMENTARY TRUST

1 On 24 March 2015 I dismissed the plaintiff's application for leave to file an application under the Family Provision Act 1972 (WA) (Act) out of time.[17] The critical factor in the exercise of my discretion to grant or refuse leave was my conclusion that, on the facts asserted by the plaintiff or assumed in her favour, she did not have an arguable case for the grant of relief under the Act.

2 The parties have advanced different submissions as to the appropriate costs orders in relation to the plaintiff's application for leave to file out of time.

3 The plaintiff contends that the appropriate orders are that there be no order as to the costs of the plaintiff or second, third and fourth defendants, and that the estate pay the first defendant's costs of the application to be taxed on a trustee basis. Alternatively, the plaintiff submits that she should pay the first defendant's costs of the application on a party/party basis, and that the balance of the first defendant's costs on a trustee basis be paid out of the estate.

4 The first defendant, as executor of the deceased's Will, submits that his costs should be paid on an indemnity basis and should be paid by the plaintiff and not out of the estate.

5 The second, third and fourth defendants seek an order that the plaintiff pay their costs of the application on an indemnity basis, or alternatively a party/party basis. The second, third and fourth defendants do not seek an order, in the alternative, that their costs be paid by the estate. This is presumably because, as the second, third and fourth defendants note in their submissions, they are the residuary beneficiaries under the Will, so such a costs order would be tantamount to an order requiring them to pay their own costs.

6 All parties therefore accept that the first defendant should have his costs of the application taxed on an indemnity basis. No party contends that the second, third and fourth defendants' costs should be paid out of the estate. All parties accept that the plaintiff should bear her own costs of the application. I agree that, in the circumstances, those outcomes reflect an appropriate exercise of my discretion as to costs.

7 The questions in issue between the parties are therefore whether the plaintiff should pay the defendants' costs of the application and, if so, whether those cost should be paid on a party/party or an indemnity basis.

8 My discretion as to the costs of the application is conferred by s 14(6) of the Act, which provides that the court may make 'such order as to the costs of any proceeding under this Act as it deems just'. In my view the present application for leave to file out of time under s 7(2)(b) of the Act is a 'proceeding under this Act' for the purposes of s 14(6) of the Act.

9 The approach taken by courts to the exercise of the discretion under s 14(6) of the Act was subject to comprehensive discussion by EM Heenan J in Daniels v Hall [No 2].[18] I agree with what his Honour said in that case. Ultimately, as his Honour observed, while observations and dicta in other cases are helpful and pertinent, it must never be forgotten that the court is exercising a broad and general discretion, which must have regard to the circumstances of each particular case and not be limited, controlled or circumscribed by any general rule or practice.[19]

10 As the discussion in Daniels demonstrates, the usual practice that, in civil litigation, costs should follow the event is not invariably applicable to proceedings under the Act, although in appropriate cases it is applied. Whether it is appropriate to order an unsuccessful applicant to pay the whole or part of the costs incurred by an executor or beneficiary in the proceedings will depend on all the circumstances of the case. In Daniels, cases in which the costs discretion was exercised were discussed, and EM Heenan J identified some potential considerations that may affect the exercise of the court's discretion.

Factors favouring an award of costs against the plaintiff

11 In the circumstances of the present case there are a number of factors that lead me to the view that the plaintiff should pay at least some portion of the defendants' costs of the application.

12 First, it is significant that I found that the plaintiff did not have an arguable case. Properly advised, the plaintiff should have appreciated that her proposed application under the Act had no reasonable prospect of success.

13 Secondly, the plaintiff is a person of considerable personal wealth, described in my primary reasons, who has the capacity to meet a costs order.

14 Thirdly, it is relevant that the plaintiff sought the indulgence of the court in obtaining an extension of time in which to file an application. The second, third and fourth defendants referred me to the decision of Lansdowne AsJ in Erlich v Fleiszig.[20] In that case her Honour expressed the view, in relation to Victorian family provision legislation, that there was no warrant for departing from the approach taken in general civil litigation on an unsuccessful application for an extension of time as opposed to an unsuccessful application. I do not agree that the general principles to which EM Heenan J referred in Daniels are inapplicable to an application for leave to file out of time. The application for leave is still made under the Act, and the costs discretion being exercised remains that under s 14(6) of the Act. In that context I do not think the exercise of the costs discretion conferred by s 14(6) of the Act in relation to an application under s 7(2)(b) of the Act is to be equated with the exercise of the court's discretion to award costs on an application for extension of time in ordinary civil litigation. However, it remains a relevant, although not controlling, consideration that the plaintiff has sought an indulgence in circumstances where she failed to comply with the time limits prescribed by the Act.

Factors counting against requiring the plaintiff to pay the whole of the defendants' costs

15 There are also some factors in the present case that count against the exercise of my discretion to order that the plaintiff pay the whole of the defendants' costs.

16 First, the plaintiff was successful on the issue of whether leave should be granted if she had an arguable case. That was a point of debate in the proceedings on which the defendants were unsuccessful.

17 Secondly, there was considerable duplication in the arguments by lawyers representing the first defendant, on the one hand, and the second, third and fourth defendants, on the other hand. In cases where the executor confines his or her argument to putting all relevant evidence before the court, it may be appropriate for the beneficiaries to be separately represented and actively oppose the application. However, in this case the first defendant went beyond merely placing evidence before the court, and actively opposed the grant of leave. In practical terms there was no significant difference between the submissions advanced on behalf of the first defendant and those advanced on behalf of the second, third and fourth defendants. In my view, in the circumstances of this case, the plaintiff should not be left with the burden of paying the costs of two sets of solicitors and counsel advancing the same position. Of course, the same person, Leslie Boyd Craig, is the first defendant, the second defendant and one of the fourth defendants. While the second, third and fourth defendants had a direct interest in the proceedings, they could have left it to the first defendant to defend the application when it was clear at all times that he intended to do so. Alternatively, the first defendant might have limited his role to placing evidence about the estate before the court, and leaving it to the legal representatives of the other defendants to defend the application. When these choices were open to the defendants and not adopted by them, the plaintiff should not be required to pay two sets of legal costs where the argument presented by the two sets of lawyers was essentially the same.

18 Thirdly, it appears from correspondence, exchanged before proceedings were commenced, that the second, third and fourth defendants expressed the view that the terms of the Will might not enable the funds from the Will trust to be used to secure entry into a retirement village facility. It is true that the plaintiff's former solicitors agreed with this view for 'the purposes of negotiation'. However, the position was advanced by the second, third and fourth defendants, and they did not resile from the position until the hearing of this matter. The second, third and fourth defendants were prepared to negotiate an outcome which would enable funds to be used for that purpose, however a negotiating condition was that the plaintiff would be required to surrender at least some control of her choice of a retirement facility. In my view it was not reasonable for those defendants to require the plaintiff to surrender her autonomy in the choice of her future living arrangements. The correspondence indicates that concern about this issue, which I determined was unfounded, was a motivating factor for the making of the application. That those defendants contributed to the plaintiff being concerned about that matter, and identified an unreasonable condition for resolving the concern, is a factor counting against an award of costs in favour of those defendants.

19 Having regard to all of the above matters, in my view the appropriate orders are the alternative order proposed by the plaintiff, namely:

1. The plaintiff pay the first defendant's costs of the application as between party and party.
2. The costs of the first defendant be taxed on a trustee basis and, to the extent that those costs exceed the costs borne and paid by the plaintiff as between party and party, be paid out of the estate.[21]

20 Those orders will burden the plaintiff with paying the complete costs of one party defending the application, on a party/party basis, and see the balance of the costs of the application borne by the estate or the residual beneficiaries of the estate (those two alternatives having the same practical effect). In my view those are the just costs orders in all the circumstances of this case.

[1] Clayton v Aust (1993) 9 WAR 364.

[3] Re Salmon (dec) [1981] Ch 170, 175.

[5] Grigoriou v Nitsos [1999] WASCA 42 [17].

[7] Waddingham v Burke [2015] WASC 65 [56] [78].

[8] Luciano v Rosenblum (1985) 2 NSWLR 65, 69 70.

[9] Marshall v Carruthers [2002] NSWCA 47 [72] [74].

[11] Lieberman v Morris [1944] HCA 13; (1944) 69 CLR 69.

[12] See Milillo v Konnecke [2008] NSWSC 1069 [52], [77] [78] and de Groot and Nickel Family Provision in Australia (4th ed) page 44 and cases there cited.

[13] Robb v Hunter [2003] NSWSC 946.

[15] White v Barron [1980] HCA 14; (1980) 144 CLR 431, 440 441.

[16] The decision in White rejected the existence of a general rule that provision for a widow should be confined to 'widowhood'.

[17] Craig v Craig [2015] WASC 109.

[18] Daniels v Hall [No 2] [2014] WASC 272.

[20] Erlich v Fleiszig (No 2) [2013] VSC 288.

[21] This was the form of order made in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191. The reference to 'trustee' attracts O 66 r 9(2) of the Rules of the Supreme Court 1971 (WA), which provides for a trustee to be indemnified for costs out of the fund held by the trustee insofar as they are not recovered from or paid by any other person.