Dickman v Holley; Estate of Simpson

Judgment 1HIS HONOUR: In these proceedings the first issue is whether I should make an order pursuant to s 100 of the Civil Procedure Act 2005 for the payment of interest on the sum of $732,133.76 that the first defendant is to be ordered to pay to the plaintiff. 2The claim for the repayment of the sum realised on the sale of the estate assets was introduced by a very late amendment. Interest is sought under s 100 as from 22 July 2010, being the date of commencement of the probate proceedings. The amendment was made at the beginning of the trial. 3I accept that consequent upon the amendment the proceedings were proceedings for the recovery of money within the meaning of s 100, although, of course, the proceedings were also proceedings for the revocation of the grant of probate. 4I accept there is jurisdiction under s 100 to order the payment of interest and that prima facie interest should be ordered so as to provide an appropriate compensation to the plaintiff who has been out of the funds to which he is entitled as the beneficiary under the will that is to be admitted to probate. Although the claim for the recovery of money was added late, it was always implicit in the plaintiff's claim that if his claim for revocation was successful, a claim would be made for the recovery of the estate. 5In my view, it is proper to exercise the discretion under s 100 to award interest, noting that the interest is only claimed from the time the proceedings were instituted. 6The other issue concerns the costs of the two proceedings. Pursuant to r 42.1, prima facie costs follow the event. That would mean that the plaintiff should pay the defendant's costs of the equity proceedings and should obtain his costs of the probate proceedings. However, it is well-established that special rules apply in relation to probate suits. 7It was submitted for the defendant that the costs of the probate proceedings of the defendant should be paid out of the estate because the deceased was the cause of the litigation. Counsel for the defendant submitted that because it was found that at the time Mrs Simpson made her will on 14 September she lacked testamentary capacity, she should be seen as the cause of the probate proceedings. I do not accept that submission for the reasons in Gray v Hart; Estate of Harris (No 2) [2012] NSWSC 1562 at [12]-[17]. 8However, I am satisfied that the other exception to the rule that costs follow the event applies and that the circumstances in which the last purported will of the deceased were obtained called for judicial enquiry such that, prima facie, there should be no order as to costs of either party. 9I think that the defendant was justified in opposing the claim for revocation, at least in the sense that the defendant was bound, as he did, to put before the Court those matters which the Court needed to know in order to make an assessment as to whether the will of which probate was granted was the will of a knowing and capable testator. 10Rule 42.25 provides: "...a person who is or has been a party to any proceedings in the capacity of trustee or mortgagee is entitled to be paid his or her costs in the proceedings, in so far as they are not paid by any other person, out of the fund held by the trustee or out of the mortgaged property, as the case may be." 11In this case, Mr Holley's costs have been paid by another person. They have been paid by the Salvation Army Property Trust, which was the beneficiary under the will admitted to probate. That grant is to be revoked. Neither r 42.25 nor the rationale underlying it applies in these circumstances so as to entitle the executor to retain the costs incurred in the probate proceedings out of the fund which is to be repaid. 12The question of costs may also be affected by offers of compromise sent to the defendant's solicitors on 27 April 2012. By the offers of compromise, the plaintiff offered to compromise both the probate and equity proceedings on the basis that the defendant pay the plaintiff the sum of $100,000 and both proceedings be otherwise dismissed. It is accepted that the offer of compromise in respect of any one proceeding was not capable of being accepted in isolation. It was submitted for the defendant that such offers of compromise were not in accordance with the Rules because the Rules do not permit an offer of compromise of multiple or separate proceedings to be made in the one offer document. 13I am not satisfied that that submission is correct, but it is unnecessary to express a concluded view about that question. If the offers were in accordance with the Rules, then, unless the Court otherwise orders, the plaintiff would be entitled to have his costs assessed on the ordinary basis up to the time the offers were made and thereafter on the indemnity basis. It is settled that offers of compromise can be used in probate proceedings. 14Nonetheless, in many cases the starting point in the probate proceedings will be different than in other litigation. In the ordinary run of litigation, a successful party would be entitled to his costs on the ordinary basis and the effect of the offer of compromise, if unaccepted and judgment no less favourable is obtained, is that the plaintiff obtains costs on the indemnity basis. 15Here, the starting position is different. It is that there should be no order as to the costs of the probate proceedings. 16Moreover, so far as the equity proceedings are concerned, the plaintiff did not better his position than as set out in the offer of compromise. In my view an "otherwise" order should be made if, which I assume, the offers of compromise complied with the Rules. 17The reason for that view is, again, the need for the Court to have investigated whether the will, of which probate was granted, did represent the will of a knowing and capable testator. If it did not, as I have found was the position, then the Court owed it to the deceased to revoke the grant. But the defendants were justified in defending the suit so that the Court would have the necessary material on which to make that determination. 18For these reasons, I conclude that there should be no order as to the costs of the probate proceedings with the intention that each party bear his own costs. I reject the defendant's contention that he is entitled to retain his costs from the funds to be remitted to the plaintiff. 19Insofar as the equity proceedings are concerned, the defendant is entitled to his costs of those proceedings. However, they were very much an adjunct to the probate claim. Although properly brought in separate proceedings and although the proceedings were not consolidated, there was only one real controversy. 20The defendant's solicitor has provided a statement of the costs incurred by the Salvation Army (NSW) Property Trust in both proceedings and has split the costs described on the solicitor and client between the two proceedings, essentially on an equal basis. That would not be the appropriate basis on which to assess the defendant's costs of the equity proceedings. 21In my view, the appropriate order for the equity proceedings is that the plaintiff pay the defendant's costs of those proceedings insofar as the costs incurred were additional to those which would in any event have been incurred in defending the probate proceedings. 22The suggestion was made in the course of argument that if I came to that view, I might specify the percentage of the overall costs incurred by the defendant which would be subject to such an order. However, there was no agreement between the parties as to what an appropriate percentage should be and the percentage suggested by counsel for the defendant was substantially more than my impression. I do not think I have sufficient materials on which to make such a judgment. I say that because I apprehend that many of the costs would have been incurred in investigation and preparatory steps about which I have little information. 23For these reasons, subject to any suggestions counsel may have as to the appropriate form of order, I will make the following orders: