Fradgley v Pocklington

**[1] The reasons for judgment in which I dismissed the plaintiff's claim were published on 10 August 2011: Fradgley v Pocklington [2011] QSC 227 (the reasons). On that day the proceeding was adjourned to a date to be fixed for submissions on the terms of additional orders and the question of costs. The date that was fixed was 2 September 2011, but after the plaintiff had received the affidavit of the defendant's solicitor filed by leave on that day and the defendant's written submissions in which the defendant claimed an order that the plaintiff pay the defendant's costs of the proceeding and not have recourse to the estate of Miss Drake for his own costs, the proceeding was adjourned further at the plaintiff's request. Although 6 October 2011 was set for the further hearing on costs, the plaintiff filed his affidavit (the plaintiff's affidavit) and written submissions on 4 October 2011, the defendant delivered further written submissions in response on 5 October 2011, and the parties agreed that, subject to what I required, a further hearing was not necessary. I will therefore deal with the outstanding issues taking into account the further affidavits and written submissions.

[2] By letter dated 16 April 2008, the defendant's solicitors put the plaintiff on notice that the defendant had concerns about the terms of the 2007 will and the testamentary capacity of Miss Drake. The plaintiff then requested a report from Dr Wright in respect of Miss Drake's testamentary capacity. Dr Wright sent a letter to the plaintiff (received by the plaintiff's firm on 10 June 2008) in which he answered the plaintiff's questions about his treatment and observations of Miss Drake including the nature and consequences of the stroke suffered by Miss Drake in August 2007, that he last saw Miss Drake on 28 November 2007 before she signed the 2007 will, and that it was his opinion that Miss Drake would not have had the mental capacity to amend her will after she suffered the stroke in August 2007. Dr Wright added "Although she had some improvements from her initial impairments, she still retained deficits in understanding written and spoken word that would impair her mental capacity."

[3] In their letter dated 11 July 2008 the defendant's solicitors suggested to the plaintiff's firm that the plaintiff make enquiries and/or obtain statements from Ms Sanger, Ms Ritchie and Dr Wright.

[4] The plaintiff's solicitors wrote to Dr Wright on 24 September 2008 informing him of the relevant passage from Banks v Goodfellow (1870) LR 5 QB 549, 565 and summarising the requirements for testamentary capacity and asked him to reconsider his opinion about Miss Drake. In response, Dr Wright confirmed his report of 6 June 2008. The defendant's solicitors obtained a report from Dr Wright dated 21 June 2009 that was in similar terms to the report of 6 June 2008.

[5] The application for probate in common form was filed on behalf of the plaintiff on 2 March 2009. This proceeding was commenced on 8 May 2009. On 22 May 2009 an address for service was filed on behalf of Ms Short in this proceeding.

[6] The defendant's solicitors sent a letter to the plaintiff's solicitor dated 23 July 2009 about disclosure in this proceeding and stated that copies of Dr Wright's report dated 21 June 2009 and Dr Adams' report dated 26 June 2009 were enclosed. (It is stated in the plaintiff's affidavit that those reports were not attached to that letter, but the existence of them was at least notified to the plaintiff at that time.)

[7] The plaintiff notified the solicitors for Ms Short on 8 July 2009 that as Ms Short's interests and the plaintiff's interest as executor (in upholding the 2007 will) were aligned, there was no need for Ms Short to remain separately represented. The plaintiff's solicitors suggested mediation to Ms Short as an alternative to going to trial. Ms Short changed solicitors and eventually her new solicitors advised the plaintiff's solicitors on 13 April 2010 that she was happy for the matter to proceed to mediation. An unsuccessful mediation involving the plaintiff, the defendant and Ms Short was held on 21 July 2010.

[8] The defendant's solicitors' letter to the plaintiff's solicitors dated 24 August 2010 forwarded an offer to settle, but the following observations were made in the letter:**

"Since proceedings were commenced, we have provided you with medical evidence which unequivocally shows that the testatrix could not have had testamentary capacity at the time the 2007 will was made. Your firm ought to have known about the testatrix's medical conditions at the time the will was made, and sought medical advice from the testatrix's treating doctors as to her capacity. Apparently those inquiries were never made by your firm, and you chose instead to rely on the perfunctory assessment made on the telephone by: your Mr. Fradgely. We note also that Mr. Fradgely apparently left the preparation and execution of the will to non-professional staff members of your firm.

There can be no issue now that the overwhelming medical evidence was beyond your knowledge. Even if there was sufficient doubt to warrant proceedings being instituted to prove the will, there is no justification now in continuing those proceedings in light of the medical evidence. If your client insists on proceeding to trial and is unsuccessful, then our client will resist any attempt to claim those costs from the estate."

**[9] The defendant's offer to settle dated 24 August 2010 was on the basis that the court propound the 1999 will, the plaintiff renounce his executorship and the defendant become the sole executor, the estate pay Ms Short the sum of $100,000 inclusive of her costs in full satisfaction of all claims she may have against the estate, the estate pay the plaintiff's costs fixed at $30,000 and the defendant pay her own costs.

[10] That offer was not accepted by the plaintiff. At that stage the plaintiff had incurred legal costs in relation to the proceeding (excluding GST) of $50,000 with disbursements in excess of $4,000 (excluding GST) and with Counsel's fees yet to be invoiced. The plaintiff also understood that Ms Short was not prepared to settle for a payment of $100,000 from the estate.

[11] The plaintiff made an offer to settle on 20 September 2010 on terms that the court propound the 2007 will, the bequest to Ms Short be reduced to $185,000, the plaintiff's costs of the proceeding be paid from the estate on an indemnity basis, there be no order as to costs of Ms Short, and the defendant pay her own costs. That offer was not accepted by the defendant.

[12] At the trial of the proceeding Ms Short was not separately represented, but was called as a witness by the plaintiff. Although not referred to in the plaintiff's affidavit, the plaintiff's submissions note that the plaintiff did not obtain an indemnity from Ms Short.

[13] The plaintiff's affidavit recited in paragraph 2 his belief that he was justified in seeking to have the 2007 will proved "because of a duty to fulfil the testamentary wishes of the testator" and that he believed that was not unreasonable in the circumstances. The plaintiff states that he "reasonably held the belief that the testator had the necessary capacity" to make the 2007 will. Paragraph 4 of the plaintiff's affidavit expands on the basis for the plaintiff's belief about the testamentary capacity of Miss Drake:**

"My belief was founded on a number of features in this case, when considered with the medical evidence namely:

(a) the fact that this testator was a client of my firm who had made her previous will with my firm and that she had wanted to update her will;

(c) my discussions with Mr Potts, solicitor and a long-time colleague of mine, and his knowledge about the testator and his knowledge of competency and capacity issues based on his own professional dealings with clients in his area of legal expertise;

(d) the observations, evidence and experience of my probate clerk, Ms Boyd;

(e) the evidence of the deceased's friend and beneficiary Ms Short;

(f) the evidence of the witness, Ms Whiers who was one of my secretarial staff; and

(g) that it would not have assisted the Court in determining the issue if another medical practitioner, who did not know the deceased, had been asked to report on this issue."

**[14] In relation to the suggestion made by the defendant's solicitor that the plaintiff should hand over the file to an independent solicitor because of a perceived conflict of interest, in paragraph 11 of the plaintiff's affidavit the plaintiff sets out his reasons for having his firm continue to act for him in the proceeding which were that the costs of transferring the matter to another firm would have led to substantially higher overall costs for the estate and that at all times the plaintiff had acted on the advice of counsel in all matters relating to the various issues that faced him as executor of the estate of Miss Drake.

[15] The defendant relies on the findings made at [57] and [58] of the reasons.

[16] The defendant submits that defects in the will making process can deprive an executor of costs. The defendant submits that, even if the plaintiff did not actually know of Miss Drake's incapacity, he ought to have known, and, even if he did not know at the time of the execution of the will, he was informed of the problems before he sought probate.

[17] The defendant relies on the approach taken in Edwards v Caldwell [2007] QSC 48 in identifying when the executors under the will that was conceded to be invalid had the information that should have enabled them to reach that conclusion themselves which resulted in those executors being ordered to pay the costs of the parties that opposed the proof of the invalid will without reimbursement from the deceased's estate. That approach was endorsed by the Court of Appeal in Edwards v Caldwell [2007] QCA 285, except that a different finding was made as to the timing of when the relevant executor knew or should have known that the executors were bound to fail in propounding the invalid will. In reliance on this approach, the defendant submits that the plaintiff should be deprived of his costs from the estate and be liable personally to pay the defendant's costs of the proceeding. The defendant submits that the 2007 will was "recklessly prepared" by the plaintiff and that it was reckless for the plaintiff to persist "against all medical evidence and in the absence of any properly informed opinion from any of the lawyers or para-legals called as witnesses by the plaintiff" in seeking to prove the 2007 will.

[18] The plaintiff submits that, as the executor under the 2007 will, he had a duty to propound the 2007 will and the issue on the question of costs is whether he acted reasonably in seeking to prove the 2007 will. It is submitted that the reasonableness of the plaintiff's conduct in endeavouring to prove the will has to be considered in the light of what was known to the plaintiff and not the findings of fact that were made at the conclusion of all the evidence in the proceeding.

[19] The plaintiff relies on the information that he had been provided by another solicitor Mr Potts that he believed Miss Drake was competent, although she had recently suffered a couple of mini-strokes and did have some residual problems, what he gleaned from his telephone call with Miss Drake on 30 November 2007 and that he sent his experienced law clerk Mrs Boyd to take the instructions for the new will from Miss Drake and to attend to the execution of the will.

[20] It was also relevant to the plaintiff's decision to propound the 2007 will that he had the observations and involvement of Ms Short available to him and attendance notes outlining the behaviour of Miss Drake at the nursing home which suggested she was interacting with the staff, other residents and her surroundings.

[21] The plaintiff seeks an order that his costs of the proceeding assessed on an indemnity basis are paid from the estate.

The approach to costs in contested probate proceedings

[22] Under r 681 of the Uniform Civil Procedure Rules 1999 (UCPR), costs of a proceeding are in the discretion of the court, but follow the event, unless the court otherwise orders. Although that remains the starting point for determining the appropriate costs order in this proceeding, r 681 does not preclude the application of the practice that has developed in relation to the costs of contested probate proceedings: Re Hodges: Shorter v Hodges (1988) 14 NSWLR 698, 709. A summary of the propositions that may be taken from the many authorities in this area was set out by Santow J in Pates v Craig & Anor; Estate of Cole deceased (NSWSC, 5 September 1995, unreported) where one of the exceptions to the general rule that costs follow the event was described that "if an executor is led into litigation by the fact that the testator gave every appearance of being able to manage his or her affairs, the executor is entitled to his or her costs out of the estate even if the executor fails." Santow J noted, however, that "because it is for the executor to come within the exception to the rule of costs following the event, the onus must lie on the executor so to demonstrate that."

The circumstances surrounding the making of the will

[23] As the plaintiff was the solicitor responsible for the preparation of the 2007 will, his role in the making of that will may be considered in relation to the issue of the costs of the proceeding: Brown v Sandhurst Trustees Ltd (No 2) [2009] VSC 406 at [18] and [23].

[24] The issue that had to be determined in this proceeding was whether Miss Drake had testamentary capacity when she gave instructions for, or signed, the 2007 will. The costs of the proceedings have to be determined by reference to the evidence that emerged during the proceeding that was directed to the issue of testamentary capacity, and the additional affidavits that were filed after the reasons were published for the purpose of supporting the submissions on costs. There is a flavour in the costs' submissions made on behalf of the defendant that the plaintiff's handling of the making of the 2007 will fell short of the standard of care expected of a reasonably competent solicitor who practises in the area of the making of wills. The difficulty I have with those submissions is that any issue of negligence against the plaintiff at the suit of the defendant as the sole beneficiary under the 1999 will was not raised on the pleadings and therefore not formally ventilated at the hearing of this proceeding. The examination of the plaintiff's role in the preparation and execution of the 2007 will has to be considered, therefore, in the context that he was acting on and taking instructions from Miss Drake.

[25] A peripheral matter that is relied on in the defendant's written submissions is not relevant in determining the costs of the proceeding. Although at [31] of the reasons I accepted the defendant's evidence that after Miss Drake's August stroke she telephoned Mrs Boyd to advise her that she intended to use the enduring power of attorney that the plaintiff's firm had prepared for Miss Drake and that Mrs Boyd was not interested in that advice, I also noted that was presumably as the defendant was not seeking any action from the plaintiff's firm at that time. There was no obligation on the plaintiff's firm to keep a record of that information in the absence of any relevant current file: Legal Services Commissioner v Ford [2008] LPT 12 at p 8.

[26] The plaintiff's written submissions do not address the plaintiff's responsibility for his staff who attended at the nursing home on Miss Drake to obtain the instructions for the 2007 will and the execution of that will. With hindsight, Mrs Boyd's reports to the plaintiff could not give the comfort that the plaintiff drew from them at the time and during the proceeding, when Mrs Boyd did not fully appreciate what testamentary capacity involves. In addition, the plaintiff knew that Mrs Boyd was not taking instructions for a "simple" will. She was taking instructions from Miss Drake that had the effect of depriving her only child of a significant proportion of her estate.

[27] The plaintiff did have the comfort, however, of the telephone conversation he had himself with Miss Drake to confirm that she did want to change her will to benefit Ms Short, as had been foreshadowed to the plaintiff by Mr Potts who also unwittingly misled the plaintiff about Miss Drake's recent medical history (at [57] of the reasons). It was not unreasonable for the plaintiff at the time to act on the opinion of a colleague who was well known to him who was a friend of Miss Drake and expressed his opinion of her competency on the basis of his personal contact with Miss Drake.

[28] There was a dilemma facing the plaintiff when he received instructions directly from Miss Drake that she wished to change her will. It is the dilemma that is faced by any solicitor whose elderly client who resides in a nursing home seeks to make a new will. It is not practical or appropriate for the solicitor to undertake all the inquiries that are made for the purpose of proof of a will in solemn form. The solicitor may be excused from acting on the client's instructions, if it is patently clear that the client does not have testamentary capacity. If the solicitor is satisfied that the client is capable of giving instructions, even if the circumstances are such that there may be a doubt as to testamentary capacity, the solicitor must act on the client's instructions to make the will. Although there are authorities that suggest that it would be prudent for a solicitor to obtain supporting medical opinion before making a new will for an elderly client where there is a doubt about testamentary capacity, the solicitor is constrained by the client's instructions: Public Trustee v Till [2001] 2 NZLR 508 at [19], [25]-[28].

[29] Although there were shortcomings in the plaintiff's approach to the taking of instructions from Miss Drake initiated by the misinformation that he was given about her medical condition and the plaintiff was obviously not aware that Mrs Boyd did not have a complete understanding of the concept of testamentary capacity, the plaintiff through his telephone contact with Miss Drake and the report to him from Mrs Boyd of her attendance to obtain instructions from Miss Drake was given unequivocal instructions from Miss Drake that she wished to change her will to benefit Ms Short and did not wish the defendant to know that she was changing her will (at [41] to [43] and [47] of the reasons). The plaintiff gave the appearance of having the capacity to give the instructions that she did for the 2007 will. The plaintiff was in the position that he had to make the 2007 will. I am satisfied that the plaintiff has shown that his role in the making of the 2007 will does not preclude his seeking to bring himself within the exception to the general rule about costs following the event.

[30] The defendant is critical of the attitude taken by the plaintiff in seeking to prove the 2007 will in the light of Dr Wright's evidence. The existence of medical evidence, however, that does not support the existence of testamentary capacity, does not itself decide the outcome of a proceeding to prove a will in solemn form. That is illustrated by Middlebrook v Middlebrook (1962) 36 ALJR 216 where the evidence of the solicitor who took the instructions for the making of a will two days before the deceased's death from stomach cancer was preferred to the general evidence of the medical staff who had been providing medical and nursing care to the deceased at the time he made the will. Medical evidence usually has to be considered in conjunction with all evidence relevant to the testamentary capacity of the testator. It is not necessarily decisive of the issue.

[31] Ultimately the decision as to the testamentary capacity of Miss Drake was decided after a contested hearing before me in which the evidence that was adduced that assisted in the determination of the issue depended on rigorous cross-examination of the relevant witnesses. I accept that it was not unreasonable for the plaintiff not to accede to the invalidity of the 2007 will on the basis of Dr Wright's report.

[32] An issue does arise, however, in the conduct of the proceeding on behalf of the plaintiff in view of the size of the estate and the consideration where costs were ultimately likely to fall. Whether it was the 2007 will or the 1999 will that was proved to be the last valid will of Miss Drake, it was from the residuary estate that would pass to the defendant that any costs to be paid from the estate would be paid. It was therefore an important factor for the plaintiff to take into account that he was effectively seeking his costs in pursuing the proceeding from the defendant, whether the defendant was successful in opposing the validity of the 2007 will or not.

[33] Even though the plaintiff was propounding the 2007 will, the opposing interests were those of the defendant and Ms Short. The offer to settle by the defendant was on much more favourable terms to Ms Short than the outcome of the proceeding. Even though the defendant had limited her offer on the plaintiff's costs to the sum of $30,000 which was about half of the total costs that he had incurred to that stage of the proceeding, the overall offer made by the defendant must be viewed as a genuine offer to reach a compromise of the proceeding. There was little in the nature of compromise evident in the offer made in response by the plaintiff.

[34] There is something not right about litigation that is conducted in such a way that one party (the defendant) is the only party who is at risk of bearing all the costs of the litigation if the plaintiff's costs are indemnified by the estate. It had to be apparent to the plaintiff when Ms Short was clearly not interested in entertaining the defendant's offer to compromise, that the point had come in the litigation for steps to be taken, so it was not only the defendant who was at risk for the costs of the proceeding.

[35] There were alternative courses open to the plaintiff after the defendant's offer to settle was not accepted. The plaintiff could have sought an indemnity for costs from Ms Short as the only party who stood to benefit by the proof of the 2007 will or could have taken no further active role in the proceeding, leaving it to the defendant's true protagonist (Ms Short) to prosecute the proof of the 2007 will. The course undertaken by the plaintiff to the point in time at which the defendant's offer to settle lapsed was not unreasonable, can be attributed to the conduct of Miss Drake herself that resulted in her making the 2007 will, and supports the plaintiff's costs on an indemnity basis being paid from the estate to that point in time.

[36] I consider that it is not appropriate that the plaintiff continue to have an indemnity for his costs from the estate after the time passed for the acceptance of the defendant's offer to settle. I am satisfied, however, that the plaintiff by continuing his role as the independent executor propounding the 2007 will does not require him to pay the defendant's costs from that date, but the plaintiff should bear his own costs from that date.

[37] The defendant did not seek an order for costs in her favour from the estate, as any payment of her costs from the estate is effectively the defendant bearing her own costs.

[38] As the plaintiff advertised the notice of intention to apply for the grant of the 2007 will, as required by r 599 of the UCPR, it is unnecessary for there to be further advertising in relation to the application for a common form grant in respect of the 1999 will.

[39] The parties have agreed that even though the plaintiff and another solicitor Mr Geoffrey Smith were named as executors with the defendant of the 1999 will, the plaintiff and Mr Smith will renounce, so that the defendant will be the sole executor of the 1999 will.

[40] Because the issue of costs of the proceeding was not an easy question to address in the circumstances, I have no difficulty in giving the parties leave to appeal that costs order pursuant to s 253 of the Supreme Court Act 1995, if it turns out that either party wishes to appeal only against the costs order.

1. The court pronounces against the force and validity of the will of the late Michel Isobel Rose Drake dated 6 December 2007.

2. Subject to the formal requirements of the Registrar, but dispensing with the need for advertising the notice of intention to apply for the grant, a grant of probate for the will of the late Michel Isobel Rose Drake dated 1 June 1999 be made to the defendant solely in common form of law.

3. The plaintiff's costs of the proceeding to and including 8 September 2010 be assessed on the indemnity basis and paid from the estate, but otherwise the plaintiff not have recourse to the estate for his costs of the proceeding.

4. Pursuant to s 253 of the Supreme Court Act 1995, leave to appeal the order for costs made in this proceeding is given to each party, if required.