Daulizio v Trust Company of Australia & Ors [2005] VSCA 215

Court of Appeal (Vic)|2005-09-01|Before: CHERNOV and NETTLE, JJ.A. and HOLLINGWORTH, A.J.A.

Administration and Probate - Costs - Suspicious circumstances - Will prepared by person obtaining large legacy - Probate proceeding - Will proved in solemn form - Person who prepared will substantially successful in proceeding - Whether successful party to be denied costs of proceeding - Whether unsuccessful parties' costs of proceeding to be paid out of successful party's legacy or out of residue.

1 I agree for the reasons given by Nettle, J.A. that the appeal should be dismissed. As his Honour has explained, the appellant has failed to establish that the learned primary judge made an error of principle such as to vitiate his discretion on the question of costs. That the costs order may be properly viewed as being harsh does not constitute relevant error.

2 This is an appeal against an order made in a probate proceeding that the unsuccessful parties' costs of the proceeding be paid out of the successful party's share of the estate.

The judgment below.

3 The facts as found by the trial judge were that Edith Grizelda Gastineau Tennent ("Miss Tennent") died on 24 February 2001 leaving net assets to the value of approximately $2 million and two wills: the first dated 5 June 1995 and the second dated 2 September 2000. The will dated 5 June 1995 provided that almost all of the estate should be held on trust for a range of charities. The will dated 2 September 2000 provided that a legacy of $450,000 should go to the appellant and a legacy of $400,000 should go to Mrs Elizabeth Fensham ("Mrs Fensham") (who was Miss Tennent's first cousin once removed) and that only the balance should go to the charities.

4 Trust Company of Australia Limited ("Trust Company") instituted the probate proceeding as the executor named in both wills to have determined the question of which of the two wills should be admitted to probate. By order made on 22 November 2001 Trust Company was given leave to prove the will dated 2 September 2000 in solemn form, or alternatively to prove the will dated 5 June 1995 and, in accordance with that order, notices of the proceeding were sent to a number of persons. Three of those who were served entered appearances and were

ultimately joined as parties to the proceeding: the appellant, Mrs Fensham and the Victorian Attorney-General (representing a number of charities named as residuary beneficiaries in both wills). The appellant and Mrs Fensham shouldered the burden of propounding the will dated 2 September 2000 and Trust Company and the Attorney-General contended that the court should grant probate of the earlier will.

5 The trial of the proceeding lasted for nine days and in a reserved judgment the judge held in favour of Ms Daulizio and Mrs Fensham. His Honour made an order granting Trust Company probate of the will dated 2 September 2000 but, after a further contested hearing, the judge made orders for costs against the appellant's legacy. His Honour found that the appellant had created highly suspicious circumstances which gave rise to the litigation, by obtaining instructions and preparing a will under which she received a substantial and prima facie very remarkable benefit, without the involvement of an independent solicitor. On that basis his Honour held that the case was one for application of the principle enunciated by Isaacs J in Nock v Austin in terms that: "...where a party having created suspicion in relation to a will under which he benefits is under the burden of clearing away that suspicion, then, as justice requires him to do so in the presence of any person interested should the suspicion be justified, he must, though eventually successful, ordinarily pay the costs of the person whose presence he has made necessary so far as his benefit extends."[1] In the result the judge refused the appellant an order that her costs of the proceeding be paid out of the residuary estate and ordered that the costs and expenses of Trust Company and of the other parties should be taxed on a solicitor and client basis and paid in the first instance out of the appellant's legacy[2] and then, if the legacy were insufficient, out of the residue of the estate.

Points not taken below.

6 There are a large number of grounds of appeal and the appellant has also filed more than 40 pages of written submissions and cited a large number of authorities in support of the submissions. We commented in the course of argument on the length of the submissions and the appellant's failure to comply with Practice Note CA 1 of 1996.[3] Several of the grounds of appeal and submissions are also based on propositions of law which were not advanced below and others run counter to concessions that were made below. In my opinion those that fall into that category should be rejected. The principles which govern an appeal against an order as to costs are clear. They proceed from the recognition that a trial judge has considerable latitude and individuality of choice in the formulation of orders for the payment of costs of the proceeding.[4] In order for a party successfully to impugn an order as to costs, he or she must demonstrate that the judge erred in principle or took into account considerations which were irrelevant or left out of account considerations which were relevant or gave improper weight to some factors at the expense of others or too little weight to some factors relative to others or otherwise that the order was just so obviously unreasonable that the judge's discretion must have miscarried. A court of appeal must keep a tight rein on interference with costs orders, and consequently, it has been said, it is extraordinarily difficult to show that a court of first instance has erred in its power to award costs.[5] Consistently with that approach, I am not disposed to entertain arguments that the trial judge's discretion miscarried by failing to consider matters that were not brought to his attention or by acting on the basis of concessions which are now sought to be withdrawn.

Factors said to have been given undue weight.

7 The appellant's principal contention is that the judge erred in law by giving undue weight to the fact that there was no independent solicitor to advise the testatrix and that the witnesses to the execution of the will were what the judge described as inexperienced and strangers to the testatrix. That submission is based upon passages of the judge's reasons on the substantive issue as well as his Honour's reasons on costs.

8 On the substantive issue, his Honour said about the absence of an independent solicitor the following:

"I am satisfied that Miss Tennent's sudden illness did cause a 'crisis' which resulted in Ms Daulizio preparing and obtaining execution of the will without the intervention of a solicitor. I am satisfied that Ms Daulizio had an adequate opportunity to urgently obtain a solicitor (and should have done so). Her failure to obtain a solicitor is consistent with panic and lack of thought, and also consistent with a desire to prevent independent advice or outside 'interference'. I am unable to conclude what her motivation, conscious or unconscious, probably was, but I am satisfied that, although her conduct can be criticised, it did not lead to the making of a will which was contrary to the intentions of Miss Tennent, or the contents of which were not known and approved by Miss Tennent. As already indicated, I accept the evidence of Ms Daulizio as to the receipt of Miss Tennent's instructions for the will and the evidence of Mr Ryan and Ms Box as to Miss Tennent's conscious and willing participation in the process which took place on 2 September 2000."

9 In the reasons for judgment on costs, his Honour added:

"...I consider that the essence of the matter is that it was the conduct of Ms Daulizio, in obtaining instructions and preparing a will under which she received a substantial and prima facie very remarkable benefit, and doing so in circumstances where no independent solicitor was involved to check the instructions or the will, that created the highly suspicious circumstances which gave rise to this litigation. The suspicious circumstances were such that it was reasonable for Trust Company to obtain an order that the will be proved in solemn form, and it was eminently reasonable for each of the parties who did appear to be represented in this litigation.

...

... I would add that [Ms Daulizio] was, as a result of her previous employment, somewhat experienced in relation to wills, and should have known better and, I think, did know better than to prepare and obtain a will under which she obtained such a large benefit without any intervention by an independent solicitor. It is true that Mr Ryan and Ms Box were independent, but they were very inexperienced and did not know Miss Tennent."[6]

10 Counsel for the appellant referred to Wintle v Nye,[7] Nock v Austin,[8] Worth v Clasohm;[9] In the Estate of Fuld (No ) [10] and Ramcoomarsingh v The Administrator General [11] as demonstrating, they said, that it has never been the law that suspicious circumstances can only be dispelled by the involvement of an independent solicitor. In counsel's submission the highest the authorities go is the statement of the Privy Council in Ramcoomarsingh[12] that it would have been wise for the appellant in that case to have arranged for or firmly encouraged the obtaining of independent legal advice. As it was, the Privy Council held that the trial judge had placed too much emphasis on the absence of an independent solicitor and that the appellant was entitled to costs even though he had created suspicious circumstances by not arranging for independent advice. Further, counsel submitted, if there be any requirement to ensure the involvement of an independent solicitor, it applies only where the party responsible for creating suspicious circumstances is himself or herself a solicitor.

11 I do not accept either submission. The judge did not hold that it was necessary for there to be an independent solicitor in order to dispel suspicious circumstances. To the contrary, his Honour found for the appellant on the principal issue despite the absence of an independent solicitor. Nor is there anything in the cases to which counsel referred which stands as authority for the proposition that it is only ever desirable to involve an independent solicitor where the party responsible for creation of suspicious circumstances is himself or herself a solicitor. Plainly, that is not the case. Each case turns on its own facts and one can well imagine other situations in which the absence of an independent solicitor would make the circumstances very suspicious and unable to be dispelled. Further, as the judgment demonstrates, Ms Daulizio's training and association with the deceased was such that in every relevant respect she stood in relation to the deceased as a solicitor would have done, and in cross examination she admitted that she knew that it was important to involve an independent solicitor. It follows in my opinion that the judge was entitled to regard her failure to involve an independent solicitor as the most significant single factor relevant to the costs of the proceeding.

12 The point about the attesting witnesses is also unconvincing. The witnesses were in fact the appellant's employer, Mr Ryan, and one of the appellant's fellow employees, Ms Box. They were present for no better reason than that the appellant had requested Mr Ryan to come and witness the execution of the will. Neither of them had any experience in witnessing the execution of a will in circumstances which were likely to be questioned, and neither of them had had the slightest association with the testatrix. Indeed, although the judge did not say so, it seems probable that their involvement added significantly to the suspiciousness of the circumstances. The point that the judge was making, however, was that because of the witnesses' inexperience and lack of knowledge of the testatrix, their involvement did little if anything to ameliorate the absence of an independent solicitor. With respect, his Honour was right.

Factors said to have been given no weight.

13 Counsel for the appellant next contended that the judge erred by failing to give any consideration or weight to Trust Company's conduct of the litigation in seeking actively to admit to probate the first will to the exclusion of the second; the consequent burden thrown on the appellant, in effect, of seeking to propound the second will; and the contribution to the suspicious circumstances of the testatrix herself by failing to involve a solicitor at an earlier stage and insisting that the appellant draw the second will.

14 In my opinion the first aspect of that contention is foreclosed by the appellant's concession before the judge that the appellant had by her conduct created the suspicious circumstances and that Trust Company was entitled to have its solicitor client costs paid out of the estate. Counsel for the appellant argued to the contrary that it is one thing to concede that Trust Company's costs should come out of the estate, meaning thereby the residuary estate, and quite another to concede that the costs should come out of the appellant's specific bequest. But that strikes me as illogical. Trust Company was only entitled to have its costs out of the estate if it so acted in the conduct of the litigation as to be entitled to be indemnified for its costs. It follows that the concession that Trust Company was entitled to have its costs out of the estate was a concession that Trust Company had acted decorously. That flies in the face of the contention now sought to be advanced that Trust Company so misbehaved in the conduct of the litigation that it is not entitled to have its costs. And even if that were not so, the appellant did not contend before the judge that Trust Company's conduct of the litigation was improper or otherwise such as to disentitle it from an order for costs out of the estate.

15 In any event, the judge found, and the finding is not contested, that the suspicious circumstances made it reasonable for Trust Company to obtain an order that the will be proved in solemn form. Consequently, Trust Company had the right and duty to prove the second will and alternatively the first will in solemn form.[13] As appears from an affidavit sworn on 8 March 2002 by Trust Company's solicitor, Ms Robyn Frances Parsons, which was before the judge below, Trust Company attempted to obtain evidence from the attesting witnesses, Mr Ryan and Ms Box, and from the appellant, and yet, despite written requests for assistance, none of them responded before filing affidavits on 18 June 2002 through their own solicitor. As propounder of the two alternative wills, Trust Company was under a duty to call all relevant evidence relating to the execution of the second will and the suspicious circumstances surrounding its execution, and to test the evidence by cross examination. Trust Company opened the case on the basis that it intended to do just that, and, except for the fact that the affidavits filed on behalf of the appellant were read by counsel for the appellant (seemingly as a matter of tacit arrangement between counsel), that is what Trust Company did. All witnesses called were witnesses of the court and liable to be cross examined by all parties. There was therefore no forensic disadvantage to the appellant in the fact that the affidavits filed on behalf of the appellant were read by her counsel. It was only at the conclusion of the evidence, and in light of it, that Trust Company adopted the stance that the second will should be ruled invalid. None of that appears to me to have been inconsistent with Trust Company's duty to assist the court in the vigilant and jealous scrutiny of the righteousness of the transaction.

16 The point about the burden imposed on the appellant as the de facto propounder of the second will really goes the same way. The appellant was not bound to do anything in the probate proceeding other than give evidence when called. She chose to adopt an active role in support of the will under which she stood to gain. Presumably her contribution to the litigation assisted in persuading the judge as to the efficacy of the second will and, if so, her efforts were of benefit to Mrs Fensham as well as to herself and in ensuring that Miss Tennent's intentions were carried out. But that is to say no more in effect than that the appellant was successful in the litigation; and of itself that does not make inappropriate an order that the costs of the other parties be paid out of the appellant's legacy. I accept that the likely extent of the costs and the degree to which the appellant's legacy would be depleted after payment of those costs was relevant to the exercise of discretion. But the suggestion that the judge did not give it any consideration as such is untenable. As a very experienced trial judge, his Honour was undoubtedly aware of the likely costs of a nine day trial and their potential to exhaust the appellant's legacy, and his Honour's order (that if the legacy not be sufficient to fund the costs, the balance be paid out of residue) puts beyond doubt that his Honour had just that possibility in mind. It is another question whether the judge gave the possibility sufficient weight in the exercise of discretion. But I shall deal with that later.

17 Finally, on this aspect of the matter, the suggestion that the judge did not give any consideration or weight to Miss Tennent's contribution to the suspicious circumstances is met by the judge's express finding that the conduct of the appellant in obtaining instructions and preparing a will under which she received a substantial and prima facie remarkable benefit, and doing so in circumstances where no independent solicitor was involved to check the instructions or the will, created the highly suspicious circumstance which gave rise to the litigation. That finding was evidently made on the basis of all of the evidence considered in the principal proceeding, including evidence as to the deceased's recalcitrance to involve anyone other than the appellant in the drawing and execution of the second will. The short point is therefore that, despite the deceased's attitude, there was found to be opportunity for the appellant to have involved an independent solicitor and, if that had been done, as the appellant conceded she knew it should have been done, there would not have been a problem.

18 To that may be added that the judge rejected the appellant's evidence that she had after execution of the second will attempted to persuade the deceased to re-execute the will in front of an independent solicitor. As his Honour put it,:

"I view with some scepticism the evidence of Ms Daulizio that, after Miss Tennent's discharge from the Austin Hospital, she endeavoured to persuade Miss Tennent to re-execute her will, and I note her failure to leave Miss Tennent a copy of the will. It is certainly possible that Ms Daulizio did not wish to afford Miss Tennent an easy opportunity to change her mind, or to take the risk that someone else might persuade her to change her will....."[14]

Factors said to have been given insufficient weight.

19 The appellant next contends that the judge erred by giving insufficient weight to the following considerations:

20

(i) Miss Tennent's real intentions of testamentary disposition;

(ii) the effect that the costs order, as made, could impact upon those intentions;

(iii) the appellant, as a friend, gratuitously assisted Miss Tennent;

(iv) the public service aspect/public good aspect of the appellant's conduct, and the investigation into that conduct which resulted in the wishes of the testatrix being achieved;

(v) the additional expense caused by Trust Company's picking and choosing the earlier will as its preferred will for probate;

(vi) the excess of court time, and costs incurred, arising out of Trust Company's attack on the appellant - amounting to a quasi undue influence issue masquerading under the cloak of "knowledge and approval";

(vii) that if Trust Company had approached its executorial duty by putting forward each will impartially, significant court time and costs would have been rendered unnecessary;

(viii) the costs incurred by Mrs Fensham and the Attorney after electing to participate in the lengthy trial, and the extent of that participation, given that Trust Company had a duty to attend to their interests;

(ix) there was no real need for Mrs Fensham and the Attorney to be separately represented;

(x) that in attacking the last will as it did, the Trust Company acted very much in the position as a caveator;

(xi) the costs incurred by the Attorney in active support of the partisan attack on the last will was akin to that of a caveator;

(xii) the effect of each of the matters referred to above upon:

•

giving effect to the deceased's express intentions;

•

the overall considerable expense of the trial;

•

the burden imposed on the appellant (and Mrs Fensham) in giving effect to the testatrix's intention,

each of which required the court to consider each of the above factors to arrive at a costs order expressed in an equitable and fair manner which accorded with the express intention of the testatrix in the exercise by her of her right to dispose of her own property as she saw fit;

(xiii) the overall concept of "fairness" in the context of the will and intention of Miss Tennent, and the need, in that context, to pronounce upon the question of costs;

(xiv) the existence or non-existence of "misconduct" and "blame" and the proportionality of those factors to the consequences of the condemnation in costs;

(xv) the extent that the Trust Company attack on the last will conflicted with its obligations to represent Mrs Fensham resulting in costs incurred by Mrs Fensham.

21 The majority of those points may be dealt with briefly. Points (v), (vi), (vii), (x) and (xv) are simply different ways of asserting the proposition already rejected that Trust Company by its conduct of and incidental to the proceeding disqualified itself from a favourable order as to costs. As I have said, I regard that proposition as met by the concession made below that Trust Company should have its costs on a solicitor and client basis out of the estate. Points (viii), (ix) and (xi) are foreclosed in similar fashion by a concession made by the appellant below that Mrs Fensham and the Attorney should have their costs out of the estate. Counsel for the appellant sought to withdraw the concession in relation to the costs incurred by the Attorney General on behalf of the charities. But I do not think they should be permitted to do so. It is tolerably clear that the charities warranted separate representation. Until the conclusion of the evidence it could not be predicted with any certainty what attitude Trust Company would take with respect to the second will. Until then the charities had an active and legitimate interest in seeking to establish that the second will was invalid, and it is unrealistic to suppose that they could or should have withdrawn at that point.

22 Points (i), (ii), (iii), (iv), (xii), (xiii) and (xiv) fall into a different category in that they were not the subject of any concession made below. But they too suffer from the vice of being simply different ways of saying the same thing: in this case that the judge erred in putting the costs burden of the proceeding on the appellant rather than on the charities as the residuary beneficiaries. Apart from that, it is hard to see that they take the matter much further. Obviously, a costs order of the kind in question takes away from the benefit of the appellant's legacy, and on any analysis it is regrettable that the appellant's legacy should go on costs. Presumably, it is the last thing that Miss Tennent would have wished. But to repeat a point already made, it is not a sufficient reason to impeach a costs order against a party responsible for suspicious circumstances that the order will reduce and may even annihilate the benefit of the legacy left to that party; and the need to make such an order assumes that the will is upheld. So much is recognised in the judgment of Sir Samuel Evans in Mitchell v Gard.[15] To adopt and adapt what his Lordship said, litigation of the kind in question costs money, which someone has to pay and, unless the party responsible for the litigation is ordered to meet the costs of it, other beneficiaries will have their shares depleted and other parties who are not beneficiaries will be out of pocket through no fault of their own.

23 I accept that from the appellant's perspective the order may seem harsh. It may also be that some other judges would have taken a more lenient approach. After all, it might be said, the appellant bore the burden of relatively intense litigation, and to some extent her position was vindicated. The order had the effect of depriving her of her success. But it is one thing to conclude that other judges may have taken a different approach and it is another to be persuaded that the judge below committed an appealable error in the exercise of discretion. I am not persuaded that his Honour did. As I have said, the appellant admitted in cross examination that she acted in a way which she knew would be viewed with suspicion. As the judge found, it was open to her to ameliorate that suspicion by involving an independent solicitor. It was moreover probable that she chose not to do so in order to limit Miss Tennent's sources of advice and support.[16] And generally speaking it is just and equitable that the party who has knowingly caused the costs of litigation to be incurred should pay for that litigation rather than that burden of its cost be cast on parties who have done no wrong. Seen in that context I do not consider that it is unfair and I am not persuaded that it is unduly harsh that the appellant should be ordered to pay.

24 Counsel for the appellant contended that the judge erred in the circumstances of this case in categorising events as giving rise to a "high degree of suspicion", and in characterising the legacy as "remarkable", despite the intimate social relationship which had arisen and continued between the appellant and Miss Tennent at the time of execution of the will. I do not accept that either.

25 What the judge said in fact was that:

"...What is remarkable and unusual in the circumstances, I think, is the size of the legacy to Ms Daulizio, a person who was not related to Miss Tennent and with whom Miss Tennent had developed a friendship over a period of not more than about five years, and a close and supporting friendship over a period of about two years. The size of the gift and the circumstances of the preparation and execution of the will give rise to a high degree of suspicion and call for the most cautious and careful examination of the evidence (an examination of the kind referred to in the authorities). In the end, however, the case must be determined on the balance of probabilities, but I have also approached it as requiring the kind of satisfaction referred to in Briginshaw v Briginshaw."[17]

In my opinion that was right.

26 Given that the estate was worth in total approximately $2 million, so that the legacy left to the appellant was nearly one quarter of the estate, and that the will was executed in a hospital to which Miss Tennent had been taken following some form of cardiac arrest or cerebral episode, with only the appellant's work colleagues called in to act as witnesses to the execution of the will, and (as the evidence showed) in such a way as to lead them to prepare a written statement of what had occurred in case of future litigation, the size of the gift was remarkable and on any analysis the circumstances of the execution did give rise to a high degree of suspicion calling for the most cautious and careful examination. Presumably, that is why counsel for the appellant did not dispute before the judge that the appellant had by her conduct created the suspicious circumstances which led to the litigation.[18]

Nock v Austin.

27 The appellant's final contention was that the judge erred in applying the decisions in Nock v Austin[19] and In the Estate of Osment.[20] In the appellant's submission, Nock was either wrongly decided or distinguishable, and Isaacs, J's statement was obiter, and Osment was based on a rule of court which does not apply in Victoria. That submission is not persuasive.

28 In his reasons as to costs made on 10 October 2003 the judge said:

"6. ...Counsel for Ms Daulizio did not dispute what Isaacs J considered in Nock v Austin[21] would ordinarily be the case, when he said:

'...that where a party having created suspicion in relation to a will under which he benefits is under the burden of clearing away that suspicion, then, as justice requires him to do so in the presence of any person interested should the suspicion be justified, he must, though eventually successful, ordinarily pay the costs of the person whose presence he has made necessary so far as his benefit extends.'

7. Nock v Austin is illustrative of circumstances in which it was considered that the court costs of investigating the testator's knowledge and approval of the contents of the will should be borne by those beneficiaries whose conduct was largely responsible for the creation of the suspicious circumstances which led to such investigation. In that case the successful propounders of the will were substantial beneficiaries who had also prepared the will. Barton and Gavan-Duffy JJ said[22] that the circumstances led reasonably to an investigation in regard to the will and that those interested in the residue (the propounders) had been in large measure the cause of the litigation. They said that one of the executors (a solicitor) should not have prepared a will which gave him a large share in the estate, and the other executor (who had obtained instructions) had acted somewhat indiscreetly in not asking the testator to let him take the instructions to some uninterested solicitor. They said that these matters constituted suspicious facts deserving consideration not only on the merits, but on the question of costs.

8. I have referred above to Isaacs J's statement of the ordinary rule which applied in such circumstances, in support of which reference was made by him to In the estate of Osment[23]. In that case, the court ordered, having regard to the suspicious circumstances created by the executors, that the costs of all parties should come out of that portion of the estate (namely, specific legacies) given to the executors as beneficiaries under the will.

13. In my opinion, this is a classic case for the application of the principle stated by Isaacs J in Nock v Austin. Ms Daulizio, having created great suspicion in relation to a will under which she substantially benefited, was under the burden of clearing away that suspicion, and was obliged to do so in the presence of the other interested parties. I would add that she was, as a result of her previous employment, somewhat experienced in relation to wills, and should have known better and, I think, did know better than to prepare and obtain a will under which she obtained such a large benefit without any intervention by an independent solicitor. It is true that Mr Ryan and Ms Box were independent, but they were very inexperienced and did not know Miss Tennent."

I see no error in that.

29 Like the judge I consider that Nock stands as a statement of general principle that where a putative beneficiary is responsible for suspicious circumstances necessitating litigation, the costs of the litigation may be ordered to be paid out of that part of the estate in which the party is interested, even if he or she is successful in the litigation. I agree that Isaacs, J.'s statement was obiter - indeed Isaacs, J. expressly disclaimed an intention to determine how the principle ought apply to the facts of the case[24] - but as I see it the principle was also expressed in the joint judgment of Barton and Gavan Duffy, JJ., as an essential step in their Honours' reasoning, as follows:

"Albeit that we agree with the learned Judge upon the merits, we are of opinion that his order may properly be varied as to costs. We not only think that the circumstances led reasonably to an investigation in regard to the propounded document, but we think that those interested in the residue have been in large measure the cause of the litigation. Mr. Morgan should not have prepared a will which gave him a large share in the estate, and Mr. Austin has acted somewhat indiscreetly in not asking the testator to let him take the instructions to some uninterested solicitor. These were suspicious facts deserving consideration not only on the merits but on the question of costs. And they deserve the more consideration in the latter aspect when it is recollected that provision much less than the plaintiffs might have expected was to their knowledge being made for the widow and son, provision which in its slenderness, at least in the case of the widow, they can scarcely have considered to be adequately explained by any facts they have brought forward.

We are therefore of opinion that the defendant should have the costs below out of the residue."[25]

30 I add that the idea appears to go back at least to the statement of Sir J.P. Wilde in Mitchell v Gard [26] that:

"These questions of costs are addressed to discretion of the Court. It is hardly in the nature of discretion that its exercise should be adjusted by exact rule. No positive regulation could be established that would bear the strain put upon it by the justice or hardship of particular instances. But, where all is not possible, some thing may yet be done. By acknowledged method and general classification, the suitor may in some measure be enabled to estimate the prospect before him, and foresee the penalties under which he launches into litigation. To this extent it is the duty of the Court, so far as my be, to assist him.

The basis of all rule on this subject should rest upon the degree of blame to be imputed to the respective parties; and the question, who shall bear the costs? will be answered with this other question , whose fault was it that they were incurred? If the fault lies at the door of the testator, his testamentary papers being surrounded with confusion or uncertainty in law or fact, it is just that the costs of ascertaining his will should be defrayed by his estate.

If the party supporting the will has such an interest under it that the costs, if thrown upon the estate will fall upon him and he by his improper conduct has induced a litigation which the Court consider reasonable, it is not unjust that the estate should bear the costs of the litigation which his conduct has caused.[27]

31 Counsel for the appellant argued that the principle is limited in application to cases where the party responsible for suspicious circumstances is a residuary legatee.[28] They placed reliance on the fact that the rule in Mitchell v Gard was ultimately stated only in the limited terms that where the cause of litigation takes its origin in "those interested in the residue" the costs may properly be paid out of "the estate". They submitted that there is only one reported case, In the Estate of Osment[29] (which it was said turned on a specific rule of court not applicable in Victoria), in which the principle has been applied to a specific legatee. Counsel argued further that the confined application of the rule (scil. to residuary estate) is made plain in the statement of Sir Gorell Barnes, P. in Spiers v English.[30] It was moreover significant, they said, that the High Court did not refer to Osment or Nock in either of Middlebrook v Middlebrook [31] or Worth v Clasohm [32] and that in the latter case the court did not order the plaintiff to bear the burden of the costs of the litigation. In counsel's submission any extension of the Mitchell v Gard principle to a specific legatee would thus represent an unprecedented and unwarranted development in the law relating to costs in probate actions and it would put this court out of step with the law in the United Kingdom and in other parts of the Commonwealth.

32 Despite the apparent force of the argument, I think that it breaks down at a number of levels. To begin with, I do not consider that there is any significance in the fact that Osment and Nock were not mentioned in Middlebrook v Middlebrook or Worth v Clasohm. Middlebrook v Middlebrook was concerned with a will which had been drawn by an independent solicitor and about which the only suspicious circumstance was that the testator was so far advanced in illness that he may have lacked testamentary capacity despite appearing to the solicitor to be well enough. The question was whether the unsuccessful caveator should bear the costs of the litigation. Dixon, C.J. referred to the second proposition expressed in Spiers v English as to when such costs may be left to lie where they fall.[33] There was no occasion to refer to Osment or Nock. Worth v Clasohm on the other hand was concerned with whether there was evidence to overcome suspicious circumstances, not with costs, and in any event the plaintiff was a residuary legatee. As it happened the plaintiff had arranged for an independent solicitor to advise the testatrix and it was that, perhaps more than most of the other considerations to which attention was directed, which overcame the suspicions.

33 In the second place, I consider that Osment is an important precedent and it is not to be distinguished on the basis of having been decided under a rule of court not applicable in this jurisdiction. The facts in Osment were that a solicitor had taken instructions for a will when only he and the testator were present and which provided for the solicitor to receive a specific legacy of [sterling]1,000 and for his clerk to receive a specific legacy of [sterling]200. After referring to the principle in Mitchell v Gard, Sir Samuel Evans, P. made an order that the costs of the parties opposing the grant of probate should come out of the portion of the estate which was devised to the solicitor. It is true that R.S.C. Order 65 rule 14D conferred an express power to order that the costs of all parties should come out of the legacies bequeathed to persons whose conduct had been the real cause of the investigation, and it may be noted that Sir Samuel Evans was referred to the rule in the course of argument. But the rule did not provide in express terms that costs could be ordered to be paid out of a specific legacy - simply that a judge might direct out of what potion or portions of an estate the costs were to be paid - and consequently the rule did not authorise any payment out of a specific legacy that did not accord with principle. I take the decision accordingly to be one which was based in principle. Granted that there is no rule in Victoria in terms the same as R.S.C. Order 65 rule 14D, I do not doubt that s. 24(1) of the Supreme Court Act 1986 and Rule 63.02 of the Supreme Court (General Civil Procedure) Rules 1996 confer a power at least a wide as R.S.C. Order 65 rule 14D. It follows in my opinion that a judge of the Supreme Court of Victoria has as at least as much power to make an order for payment of costs out of a specific legacy as was exercised in Osment.

34 In the third place, I am unable to see any reason in logic or common sense to confine the power to a party who happens to be a residuary legatee. The underlying principle stated in Mitchell v Gard is that if a party supporting the will has such an interest under it that the costs, if thrown upon the estate, will fall upon him, and he by improper conduct has induced a litigation which the court considers reasonable, it is not unjust that the burden of the costs should be thrown on that part of the estate. As it happened in Mitchell v Gard the share of the estate in which the plaintiff was interested was the residuary estate, and hence the ultimate statement of the rule to which I have already referred. But it is difficult to suppose that the costs would not have been ordered out of a specific bequest if that had been the nature of the successful party's interest in the estate.

35 Finally, although it may be that Osment is the only reported decision in which an order has been made against a specific bequest, it is fair to assume that most times in most cases in which the question arises the party who has created the suspicious circumstances necessitating the litigation will be someone who has drawn or otherwise procured a will providing that he or she should be the largest and therefore residuary beneficiary. It is significant I think that counsel for the appellant was unable to point to any case in which an application for an order for costs to be paid out of a specific bequest has been refused. It is also noteworthy that in Osment, as in this case, the size of the specific bequest was such as significantly to deplete the residuary estate.

Conclusion.

36 For the reasons given, I would dismiss the appeal.

37 I agree that the appeal should be dismissed, for the reasons given by Nettle, J.A.

[1] [1918] HCA 73; (1918) 25 C.L.R. 519 at 529.

[2] Excluding the $50,000 of the legacy to be held on trust for Ms. Byers.

[3] [1996] VicRp 15; [1996] 1 V.R. 249 at [10] and [11].

[4] Russo v Russo [1953] VicLawRp 12; [1953] V.L.R. 57 at 62.

[5] Transport Accident Commission v O'Reilly [1998] VSCA 106; [1999] 2 V.R. 436 at 457 [46], per Ormiston, J.A.

[6] Emphasis added.

[7] [1959] 1 W.L.R. 284.

[8] [1918] HCA 73; (1918) 25 C.L.R. 519.

[9] [1952] HCA 67; (1952) 86 C.L.R. 439.

[10] [1968] P. 675.

[11] [2002] All E.R. (D) 259 (Dec); [2002] UKPC 67.

[12] [2002] UKPC 67 at [29].

[13] In re Levy, deceased [1953] VicLawRp 87; [1953] V.L.R. 652 at 657, per Sholl, J.; McCredie, Wills, Probate and Administration of the Estates of Deceased Persons, 2nd Ed. at 74.

[14] Judgment at [176].

[15] (1863) 3 Sw & Tr 75 at 76-78; 164 E.R. 1280 at 1281.

[16] Judgment at [174].

[17] Judgment at [173].

[18] Reasons for judgment as to costs, at [12].

[19] [1918] HCA 73; (1918) 25 C.L.R. 519.

[20] [1914] P.219.

[21] [1918] HCA 73; (1918) 25 C.L.R. 519 at 529.

[22] [1918] HCA 73; (1918) 25 C.L.R. 519 at 525.

[23] [1914] P. 129.

[24] [1918] HCA 73; (1918) 25 C.L.R. 519 at 530.

[25] [1918] HCA 73; (1918) 25 C.L.R. 519 at 525 emphasis added; see also Re Herbert Brothers, deceased [1990] NTSC 26; (1990) 101 F.L.R. 279 at 311 and 315, per Kearney, J.

[26] (1863) 3 Sw & Tr. 75 at 76-77; 164 E.R. 1280 at 1281.

[27] My emphasis.

[28] Indeed counsel for the appellant submitted that it should be confined to cases where the party responsible for creating the suspicious circumstances prepared the will, was named as executor and was a residuary legatee.

[29] [1914] P. 129.

[30] [1907] P. 122 at 123.

[31] (1962) 36 A.L.J.R. 216.

[32] [1952] HCA 67; (1952) 86 C.L.R. 439.

[33] (1962) 36 A.L.J.R. 216 at 217.

At a glance

Court

Decision date

Before

Source

Judgment (27 paragraphs)

Parties