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[2011] QSC 177
Supreme Court of Queensland
2011-06-22
Applegarth J
Original judgment source is linked above.
PROCEDURE - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT - COSTS OUT OF A FUND - WHEN COSTS ALLOWED OUT OF FUND - LITIGATION CAUSED BY TESTATOR, EXECUTOR OR BENEFICIARY - EXECUTION OR REVOCATION OF WILL - CAVEATORS - where deceased dictated will in hospital - where first plaintiff propounded an earlier will under which he stood to receive larger share of estate - where dispute over testamentary capacity - where medical staff who took instructions for the later will were examined before Registrar - where expert appointed by the Court reviewed medical records and other evidence and delivered opinion as to testamentary capacity - where evidence strongly pointed to the deceased having testamentary capacity - where formal offer made to the plaintiffs after evidence taken before Registrar - where Calderbank offer was made shortly after receipt of report of Court-appointed expert - where plaintiffs continued to dispute will and obtained leave to adduce competing expert opinion at trial - where plaintiffs unsuccessful at trial - whether plaintiffs should be ordered to pay costs of final phase of proceedings
Bool v Bool [1941] St R Qd 26 cited
Re Devoy [1944] St R Qd 1 cited
Dore (as executor of the will of W H B Chenhall, dec'd) [2006] QSC 140 cited
Fick v Groves (No 2) [2010] QSC 182 cited
Re Fogarty; Kovacs v Fogarty (No 2) [2007] ACTSC 40 followed
Frizzo v Frizzo [2011] QSC 107 cited
Harrison v Petersen [2000] QSC 415 cited
Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698 cited
Kostik v Chaplin [2007] EWHC 2909 (Ch) cited
Mitchell v Gard (1863) 164 ER 1280 applied
Re Plant [1926] P 139 cited
Shine v Neville [1997] QSC 168 (Queensland Supreme Court, 1070/1995, 12 September 1997) cited
Spiers v English [1907] P 122 cited
Twist v Tye [1902] P 92 cited
Underwood v Underwood [2009] QSC 107 cited
Williamson v Spelleken [1977] Qd R 152 cited
J I Otto for the second, third and fourth defendants
Murphy Schmidt for the second, third and fourth defendants
[1] After publication of my reasons and proposed orders on 12 May 2011[1] the parties were directed to confer and submit draft minutes of order. The parties were able to agree on most of those orders and on 27 May 2011 I made, inter alia, the following orders:
"1. the court pronounces for the force and validity of the Will of Lydia Iolanda Elvira Frizzo, deceased, made on 28 January 2006, a copy of which is Exhibit 5 in this proceeding (2006 Will);
The parties were unable to agree on orders as to costs. Directions were made for written submissions and these have been provided. The provisional view on costs that I expressed at paragraph 171 of my judgment was made without the benefit of submissions on costs and the additional evidence that I have now received in relation to costs. Accordingly, I put aside that provisional view so as to address the substantial submissions that have been made. The principal issues in relation to costs relate to the costs of the latter phase of the proceedings. One issue is whether the plaintiffs should pay some or all of the defendants' costs of that phase. Another issue is whether the plaintiffs should have some or all of their costs of that phase paid out of the estate.
The second, third and fourth defendants' submissions
[2] The second, third and fourth defendants submit that the following costs orders should be made:
"(a) the parties' costs of the proceeding up to and including 28 July 2009 (including the costs of the caveators in proceedings BS 3970 and 4680 of 2008 and BS 2651 of 2009) be assessed on the indemnity basis and paid out of the estate;
(b) the costs of the second, third and fourth defendants of the proceeding from and including 29 July 2009 up to and including 20 August 2009, or at the latest, 29 April 2010, be assessed on the standard basis and paid by the plaintiffs;
(c) the costs of the second, third and fourth defendants of the proceeding from and including 21 August 2009, or at the latest, 30 April 2010, be assessed on the indemnity basis and paid by the plaintiffs;
(d) save to the extent that the costs of the second, third and fourth defendants are ordered to be paid by the plaintiffs pursuant to subparagraphs (b) and (c), and are actually recovered from the plaintiffs, their costs be assessed on the indemnity basis and paid out of the estate."
[3] The second, third and fourth defendants rely upon the fact that they have successfully propounded the 2006 Will, and rely on the proposition that a beneficiary who propounds a will and establishes it fulfils the role of an executor and is entitled to have his or her costs assessed on the indemnity basis paid out of the residuary estate.[2] They submit that to the extent that their costs are not ordered to be paid by, and are actually recovered from, another party, there ought to be an order that their costs be assessed on the indemnity basis and paid out of the estate. Such an order is necessary because, a grant of Letters of Administration having been made to Mr Klatt, the second, third and fourth defendants would not otherwise be able to recoup their costs from the estate.
[4] Next, the second, third and fourth defendants rely upon the fact that the plaintiffs were wholly unsuccessful in opposing the admission of the 2006 Will to probate, which gives rise to the question of whether costs should follow the event or whether the plaintiffs attract one of the established exceptions to that rule. The second, third and fourth defendants submit that it is useful to treat the proceedings as having three distinct phases. The first phase of the proceedings arose after the defendants lodged caveats in May 2008. In answer to them, the plaintiffs filed a claim and statement of claim in June 2008 which propounded the 2003 Will. During this first phase, the parties and their advisers were not aware of the 2006 Will because the testatrix had not informed them of it. I accept the submission that the appropriate order as to costs of this first phase is that the costs of all parties ought to be assessed on the indemnity basis and paid out of the estate. The first phase ended with the discovery of the 2006 Will after the first defendant's solicitor made a freedom of information request to the Nambour General Hospital. After that will was discovered in early 2009, Shane Frizzo filed a caveat on 11 March 2009 and the parties made inquiries in relation to the circumstances under which it came to be made. The hospital's file was subpoenaed and consent orders were made on 27 May 2009 for Dr Scolaro,
Dr Millar and Nurses Madden, Bundgaard and Quinlan to be examined before a Registrar. This examination took place on 28 July 2009. The evidence of these witnesses was independent and reliable and was not challenged at trial. Along with the contents of the hospital file, the evidence of these witnesses pointed towards the conclusions that I reached concerning the circumstances under which the will came to be made, the mental state of the testatrix at the time she made it and her medical course following her admission to hospital, including the duration of episodes of agitated delirium.
[5] The second, third and fourth defendants submit that, although it was reasonable for all the parties to make the inquiries that they made up to 28 July 2009, this date should mark the end of the second phase of the proceedings. It was submitted that the continued opposition of the plaintiffs to the admission of the 2006 Will after the examination of these witnesses became unjustifiable.
[6] Alternatively, they submit that the continued opposition of the plaintiffs to the admission of the 2006 Will became unjustifiable upon the parties' receipt of
Dr Byrne's report of 17 March 2010. Dr Byrne was appointed as the single joint medical expert on the application of the plaintiffs. His medical opinion was that Mrs Frizzo had the capacity to make a will on the morning of 28 January 2006.
[7] The second, third and fourth defendants submit that whilst the application of the relevant principles permits an order that the costs of all parties in the second phase of the proceedings be assessed on an indemnity basis, different considerations apply to the third and final phase of the proceedings, whether that third phase commenced on 28 July 2009 following the examination of witnesses or after the receipt of
Dr Byrne's report of 17 March 2010. They submit that, from the beginning of the third phase, the proceedings took "a distinctly partisan turn" with the plaintiffs persisting in their opposition to the admission of the 2006 Will, and an application by the plaintiffs for leave to rely upon the evidence of Dr Hecker.
[8] The second, third and fourth defendants rely, as does the first defendant, upon the contents of a letter written by one of the plaintiffs, Mr Taylor, on 30 March 2010. This letter indicates that the decision to oppose the grant of probate in relation to the 2006 Will was a decision made by Shane Frizzo, and not by Mr Taylor, and conveys a recognition by Mr Taylor that if he continued to oppose the admission to probate of the 2006 Will he would be exposed to a costs order against him. The defendants submit that the letter carries with it the implication that Mr Taylor realised that continued opposition to the 2006 Will was unjustifiable, and that such opposition was undertaken for Shane Frizzo's own purposes. The letter relevantly states:
"... in relation to the 2006 Will Mr Shane Frizzo is a party to the matter in his own right, that is he opposes the grant of probate in relation to the 2006 Will.
There is a concern with the plaintiffs that in the event that the 2006 Will is upheld there could be a costs order made against the plaintiffs.
The decision to contest the 2006 Will is a decision made by Mr Shane Frizzo. The co-executor has no personal interest in the matter. It would be inappropriate for a costs order to be made against the
co-executor in those circumstances since effectively the 2006 Will action is a claim by the remaining siblings that the 2006 Will be proved and a defence by Shane Frizzo in effect that it should not be so proved.
It seems to us the difficulty could be met in two ways. The first is for all of the defendants to indicate that they would not seek a personal costs order against the writer.... The second way would be for the writer to be removed as a plaintiff and Mr Shane Frizzo in his personal capacity to be instituted as a plaintiff pursuant to Rule 69 of the UCPR. That will require consent of the Court.
We would be happy with written assurances from all of [sic] parties through their Solicitors that they would not seek a personal costs order against Mr Alan Taylor and that any costs order would be against Mr Shane Frizzo (which on the current figures can be met from his share of the estate whatever the result of the case). If that is not acceptable to all of the defendants then we foreshadow an application to the Court to remove Mr Alan Taylor and Mr Shane Frizzo as executors as plaintiffs and to substitute Mr Shane Frizzo in his personal capacity."
The other parties were not prepared to give the written assurances that Mr Taylor sought, and he made no application to remove himself and Shane Frizzo as plaintiffs in their capacity as executors and to substitute Shane Frizzo in his personal capacity.
[9] In persisting with their opposition to the 2006 Will, the plaintiffs placed great reliance upon the evidence of Dr Hecker. However, as I have found, the two factual foundations for her opinion were not established, she gave inadequate weight to the evidence of Dr Scolaro, Dr Millar and Nurse Madden, and she was reluctant to make appropriate concessions under cross-examination.
[10] The plaintiffs' case largely depended upon a preference for Dr Hecker's evidence over that of Dr Byrne, proof of the factual foundations upon which Dr Hecker's opinion rested, and giving little weight to evidence that did not support the plaintiffs' contention, including the independent and reliable evidence of
Dr Scolaro, Dr Millar, Nurse Madden and Ms Marshall. The plaintiffs' solicitor, Mr Taylor, described Dr Hecker as their "star" witness. This appears in his letter to Dr Hecker of 20 September 2010 which stated, among other things:
"In a view to preparing you for the cross-examination which will take place, we feel it would be sensible to have a meeting with you prior to your going to Court at which meeting we can go through the entries and get an idea of things that you will say about them. We cannot, of course, tell you what you should say but we can talk to you about what you will say. This will assist us in preparing the case and will probably assist you in clarifying in your own mind things that will come up during the Trial. This also gives the opportunity for Shane to meet you prior to the Trial. You are the 'star' witness!" (emphasis added)
[11] The second, third and fourth defendants also rely upon the fact that the plaintiffs' prosecution of the proceedings in their latter phase relied upon the evidence of Shane Frizzo, which I found to be unreliable in material respects. I found that a critical paragraph of his affidavit about his mother's condition after she was admitted to hospital was inaccurate and "deliberately overstated".
[12] The second, third and fourth defendants also rely upon the fact that, in addition to the issue of testamentary capacity, the plaintiffs opposed other issues, namely the "lost will" issue and the revocation issue, and the defendants were put to the expense of addressing these issues, whereas the plaintiffs did not even address them in their closing submissions.
[13] Finally, the second, third and fourth defendants rely upon a Calderbank offer made by them. A formal offer to settle was made by the first defendant.
[14] In February 2009 the first defendant proposed a resolution based upon a grant in respect of the 2006 Will. On 5 August 2009 the first defendant made a formal offer to settle on the basis that the 2006 Will would be admitted to probate in solemn form and the costs of all of the parties were to be paid out of the estate on an indemnity basis. On 11 August 2009 the second, third and fourth defendants indicated that they had no objection to that offer. However, it was not accepted by the plaintiffs.
[15] On 15 April 2010 the second, third and fourth defendants sent to the plaintiffs and the first defendant a letter that was marked "without prejudice save as to costs" and was expressed to be "a Calderbank offer". It:
(a) referred to the preliminary examination of Dr Scolaro, Dr Millar and Nurses Madden, Bundgaard and Quinlan, and suggested that their evidence led "inexorably" to the conclusion that Mrs Frizzo had testamentary capacity when she made the 2006 Will;
(b) referred to the conclusion of Dr Byrne in his report of 17 March 2010;
(c) suggested that it had become unreasonable and inappropriate for the plaintiffs to continue to contend that the 2006 Will was invalid by reason of
(d) dealt with other defences that were then pleaded by the plaintiffs, namely that the 2006 Will was not a testamentary document and had not been made in accordance with the formal requirements of the Succession Act, and dealt with the "lost will" and revocation issues;
(e) suggested that "continued opposition to the admission to probate of the
2006 Will is unreasonable and inappropriate. It has been unreasonable and inappropriate ever since the examination on 28 July 2009. But if there was ever any doubt about that, it has been put to rest by Dr Byrne's report";
(f) invited the plaintiffs and first defendant to withdraw their opposition to the admission to probate of the 2006 Will on the basis that the second, third and fourth defendants would:
(i) not seek any costs against them, and would agree to all parties' costs of the proceeding up to that date being paid out of the estate on the indemnity basis;
(ii) pay an additional $75,000 to Shane Frizzo and $25,000 to Derek Frizzo from their respective shares of the estate once sufficient distributions had been made to them;
(h) indicated that, if the offer was refused, the second, third and fourth defendants, if successful at the trial of the preliminary questions, would seek orders condemning the plaintiffs in costs, including seeking costs on the indemnity basis.
[16] The second, third and fourth defendants rely on the principles in relation to Calderbank offers summarised in Fick v Groves (No 2)[3], and note that their Calderbank offer was made after the independent and reliable evidence of
Dr Scolaro, Dr Millar and Nurse Madden was available, and after Dr Byrne had provided his report. They rely upon the fact that it was made before the parties were put to the significant expense of preparing affidavit evidence and otherwise preparing for trial. The other parties were said to have been in a position to assess the merits of the offer in the light of the aforesaid evidence and of Dr Byrne's independent opinion. The second, third and fourth defendants submit that the compromise offer was a generous one in that it freed the other parties of any risk of an adverse costs order and offered them costs out of the estate on an indemnity basis. In addition, it gave Shane Frizzo $75,000 and the first defendant $25,000 more than they would obtain under the provisions of the 2006 Will.
[17] The first defendant's solicitor indicated that he was minded to accept the offer but that his acceptance was necessarily conditional on the plaintiffs also accepting it. The plaintiffs did not respond to the offer.
[18] The first defendant submits that the appropriate order in respect of costs is that:
(a) The parties' costs of the proceedings up to and including 5 August 2009 (including the costs of related proceedings) be assessed on the indemnity basis and paid out of the estate;
(b) The costs of the first defendant from and including [sic] 5 August 2009 be paid by the plaintiffs on an indemnity basis.
Alternatively to (b), he submits that the first defendant's costs from and including
15 April 2010 be paid by the plaintiffs on an indemnity basis. The date
5 August 2009 is the date of the first defendant's offer after the medical witnesses had given evidence on 28 July 2009, whereas 15 April 2010 is the date of the Calderbank offer made by the second to fourth defendants.
[19] The first defendant accepts the general principles relied upon in the submissions of the second to fourth defendants, and further accepts that the proceeding should be analysed as involving different phases. There are minor differences between the defendant parties about the date when the second phase is said to have ended. The first defendant places particular reliance upon the offer to settle which was made after the medical evidence was given on oath. He also relies upon the offer to settle made on 15 April 2010 by the other defendants. He submits that there was no reasonable basis for the plaintiffs not to accept that offer, and that each rejection of the offers would warrant an indemnity costs order of its own accord.
[20] The first defendant also relies upon Mr Taylor's letter of 31 March 2010, and
Mr Taylor's letter to Dr Hecker that described her as a "star witness". The first defendant does not rely upon these letters as indicating any improper conduct by
Mr Taylor as a solicitor. Instead, they are relied upon in the same respects as the second, third and fourth defendants rely upon them, namely as a recognition of the significance of Dr Byrne's report to the justifiability of continued opposition by the executors to a grant of probate in relation to the 2006 Will (as distinct from Shane Frizzo's personal interest as a beneficiary in continuing to contest that will), and a recognition of the plaintiffs' dependence upon the evidence of Dr Hecker in order to succeed at trial.
[21] The plaintiffs submit that the costs of and incidental to the proceeding should be paid out of the estate. They submit that the deceased's mental condition required vigilant scrutiny and that they acted reasonably in opposing a grant of probate in respect of the 2006 Will during all phases of the proceedings. The fact that
Dr Hecker's opinion was rejected and that of Dr Byrne preferred is said not to outweigh the other considerations that favour the plaintiffs' costs argument. The evidence of Shane Frizzo that was rejected was said not to have taken up any significant separate time at the trial.
[22] The plaintiffs also rely upon the defendants' position in relation to Mrs Frizzo's capacity to make the 2003 Will.
[23] The plaintiffs concede that their rejection of offers to settle, including the Calderbank offer, is a relevant consideration, but they submit that the Calderbank offer was not a generous one and that their rejection of the offers to settle should not outweigh other considerations. In particular they submit that it was not unreasonable for the plaintiffs to require the Court to give vigilant scrutiny to the 2006 Will, rather than consent to an order in terms of the Calderbank offer.
[24] In response to the first defendant's submissions, the plaintiffs point to the first defendant's persistence in pleading that Mrs Frizzo lacked testamentary capacity to make either the 2003 Will or the 2006 Will. The plaintiffs submit that the first defendant's focus on offers to settle overlooks the critical question of whether it was "not unreasonable to put the matter of capacity before the Court for its determination", and also overlooks important factual matters such as the recorded conduct and behaviour of the testatrix in the critical period leading up to
28 January 2006, the expert opinion of Dr Hecker, and the fact that the circumstances under which the will came to be made justified vigilant scrutiny.
[25] The written submissions of the second, third and fourth defendants helpfully summarise the general principles in relation to costs in probate proceedings. The other parties do not contest these principles and I set out the written submissions of the second, third and fourth defendants in this regard in the following three paragraphs.
[26] The usual rule that costs follow the event is applicable to probate proceedings. "The notion, sometimes entertained, that the costs of unsuccessful parties will generally be ordered out of the estate in a probate action, is wrong."[4] However, due to the general nature of the court's probate jurisdiction, a number of exceptions to the usual rule have been developed. As Sir J. P. Wilde (as Lord Penzance then was) said in Mitchell v Gard:[5]
"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?"
Costs ultimately remain in the discretion of the Court.[6]
[27] Two established exceptions to the usual rule are as follows:[7]
(a) Where the testatrix has been the effective cause of the litigation, such as where the state of her testamentary papers, or her habits and mode of life, or where her own statements have brought about the litigation, the costs of unsuccessful parties may be ordered to be paid out of the estate.
(b) Where the circumstances are such as to afford reasonable grounds for opposing the will, the unsuccessful party, though not usually granted his costs out of the estate, will not be condemned in costs. The reason for this exception was explained by Sir J. P. Wilde in Mitchell v Gard:[8]
"It is the function of this court to investigate the execution of a will and the capacity of the maker, and having done so, to ascertain and declare what is the will of the testator. If fair circumstances of doubt or suspicion arise to obscure this question, a judicial inquiry is in a manner forced upon it. Those who are instrumental in bringing about and subserving this inquiry are not wholly in the wrong, even if they do not succeed. And so it comes that this court has been in the practice on such occasions of deviating from the common rule in other Courts, and of relieving the losing party from costs, if chargeable with no other blame than that of having failed in a suit which was justified by good and sufficient grounds for doubt."
Conversely, where a will is opposed without proper inquiry into the facts or without reasonable grounds so as to make the opposition unjustifiable, there is no reason to depart from the usual rule that costs ought to follow the event.[9]
[28] In the exercise of its costs discretion, the Court ought to keep in mind that:[10]
"It is of high public importance that doubtful wills should not pass easily into proof by reason of the cost of opposing them. It is of equal importance that parties should not be tempted into a fruitless litigation by the knowledge that their costs will be defrayed by others. These opposite reasons appear to have alternately swayed the decisions to be found in the books. It is the desire of the Court to keep both in view, while yielding to neither, and it is in this spirit that the above rules have recommended themselves for adoption."
[29] The plaintiffs' submissions examine the application of these principles in particular cases involving facts that are said to have some resemblance to the facts of this case, whilst accepting that the facts in probate litigation may be idiosyncratic.
Re Devoy[11] involved various circumstances which were found to give the unsuccessful defendant a basis for forming a reasonable and honest belief that there were good grounds for impeaching a will. That case involves an application of established principle.
[30] In judging the reasonableness of the course followed by a party, regard must be had to what was known by the party at the time of its conduct - for example, in initiating proceedings - not the findings of fact ultimately made at the conclusion of all of the evidence.[12]
[31] The plaintiffs cite Bool v Bool[13] as providing some support for their view that, where the case is one in which costs should not follow the event, the preferable course is for the costs to be ordered out of the estate rather than merely relieving the unsuccessful party of the liability to pay costs. However, as the written submissions of the second, third and fourth defendants explain, Bool v Bool turned on its own facts which involved issues of fraud and undue influence.
[32] Williamson v Spelleken[14] involved an appeal against an exercise of discretion ordering that the costs of both parties be paid out of the estate. The case reviews the authorities, and its facts do not particularly illuminate how the discretion to order costs should be exercised in this case.
[33] Dore (as executor of the will of W H B Chenhall, dec'd)[15] turned on its own facts, including the imprudence and incompetence of the executor, a party's "irrational antipathy" to the executor, and the stance taken by administrators in the face of evidence that convincingly established testamentary capacity. The administrators continued to resist the conclusion of testamentary capacity "on the flimsiest of grounds".[16] An order was made for the costs of all parties to be assessed on an indemnity basis and paid out of the estate.
"The deceased's mental condition and conduct created considerable uncertainty and all parties acted reasonably in pursuing their respective courses of action."
This authority, like others, involves the application of settled principle.
[35] I find it unnecessary to refer to additional authorities, including the authorities relied upon by the first defendant, which include family provision cases. I accept the plaintiffs' submission that awarding costs in solemn form proceedings involves considerations different to those in family provision cases. My resolution of the costs issues in this case, however, is not much assisted by comparisons with the facts of other solemn form cases that bear some resemblance to the present case, let alone family provision cases. The resolution of the costs issues involves the application of settled principles about which the parties are not in dispute. Doubtful wills should not pass easily into proof by reason of the cost of opposing them. Equally, parties should not be tempted into fruitless litigation by the knowledge that their costs will be defrayed by others. An unsuccessful party who has reasonable grounds for opposing a will should not be condemned in costs.
[36] As Powell J (as his Honour then was) said in Re Hodges; Shorter v Hodges:[19]
"The general principle to be applied in adversary litigation is that costs follow the event, those costs being taxed on a party and party basis. However, over the years, a number of exceptions to this general rule have come to be recognised. In the field of probate litigation, two such exceptions have come to be recognised, they being:
[37] One should not start with the general proposition that the costs of probate litigation should be borne by the estate. I respectfully adopt the statement of Connolly J in
Re Fogarty; Kovacs v Fogarty (No 2):[20]
"It seems to me that it is wrong to take from these statements of the law the proposition that the general outcome in probate litigation is that costs are borne by the estate. Such an outcome would potentially encourage ill conceived litigation by parties with ill will towards another interested in the estate, who could litigate sure in the knowledge that, even if they were unsuccessful, the other party would have a smaller estate once costs were paid."
[38] The approach of Connolly J does not represent a modern trend. In 1926 Scrutton LJ said:
"I should be reluctant to do anything to create the idea that unsuccessful litigants might get their costs out of the estate, without making a very strong case on facts. The lure of 'costs out of the estate' is responsible for much unnecessary litigation."[21]
[39] It would be wrong to start with the proposition that all parties' costs should be paid out of the estate, or that they should be paid out of the estate unless it is demonstrated that an unsuccessful party's conduct was shown to be unreasonable. The general rule remains that costs should follow the event. However, the exercise of discretion in relation to costs should recognise the importance of scrutinising doubtful wills before they are admitted to probate, and not condemning, by way of an order for costs, an unsuccessful party who has acted reasonably in opposing the admission of a will to probate.
[40] I accept that the application of relevant principles makes it appropriate to consider the litigation by reference to its various phases, and that it is appropriate that the costs of all of the parties be assessed on an indemnity basis and paid out of the estate at least during the early phases. In that regard I accept the submissions of the second, third and fourth defendants concerning the reasons for this. The substantial issue then becomes whether the unsuccessful plaintiffs should pay some or all of the defendants' costs of the latter phase of the proceeding and, if so, on what basis; or whether the defendants should have some or all of their costs paid out of the estate and, if so, on what basis. A related issue is the date by reference to which the putative "latter phase" is found to commence. In that regard, there is much to be said for the proposition that the circumstances under which the 2006 Will came to be signed had been the subject of vigilant scrutiny by the time the oral examination of relevant witnesses occurred and the hospital records were available. However, I consider a more appropriate date is 30 March 2010. By this time Dr Byrne's report of 17 March 2010 was available to the parties, and they had been able to assess its implications. Mr Taylor's letter of 30 March 2010 is illuminating in that regard. It involves an implicit recognition that further opposition to the admission of the
2006 Will to probate exposed the executors to an adverse costs order, and that the decision to continue to contest the 2006 Will was a decision of Shane Frizzo undertaken in the pursuit of his personal interests. Despite this recognition, and a foreshadowed application by Mr Taylor to be removed as a plaintiff and for Shane Frizzo in his personal capacity to be instituted as a plaintiff, no such application was made.
[41] After this time the plaintiffs' opposition to the 2006 Will took on the character of inter partes litigation between beneficiaries, and Shane Frizzo's personal interest in its outcome got the better of him. This is apparent in his affidavit concerning his mother's mental state after her admission to hospital. This evidence was not confined to her mental state in the few days after her admission. It purported to describe her condition after that date and, as I have found, involved deliberate overstatement. Mr Frizzo's critical evidence, as contained in the affidavit served in his evidence in chief, was that at all times after her admission to hospital Mrs Frizzo "exhibited all the signs of someone who had completely lost her mental faculties and was simply existing pending her death". His oral evidence that his mother's situation involved "[v]ery limited communication" does not remove the deliberate overstatement contained in his affidavit. It is not particularly to the point, as the plaintiffs submit on costs, that Shane Frizzo's evidence did not take up any significant separate time. The relevant point is that Shane Frizzo deliberately overstated and misrepresented his mother's condition in his sworn evidence in chief, and his deliberately overstated evidence, if accepted, favoured his personal interest.
[42] The decision to engage Dr Hecker to provide a report was undertaken in order to advance the plaintiffs' case and to detract from the expert evidence of Dr Byrne. The plaintiffs had initially applied for Dr Byrne to be appointed by the Court as the single joint expert. As it transpired, his report did not support the plaintiffs' case. For the reasons that I gave in my judgment, however, Dr Hecker's ultimate opinion was not well-founded. She also gave inadequate weight to the evidence of independent and reliable witnesses, and was not prepared to make appropriate concessions under cross-examination. Her opinions were based upon assumptions that were not reflected in the evidence of lay witnesses (including the evidence of Shane Frizzo and Ms Marshall concerning Mrs Frizzo's mental state prior to the accident), and discounted evidence that did not support the plaintiffs' case.
Dr Hecker did not make the kind of concessions that would be expected of an independent witness. The fact that the plaintiffs' case found support in Dr Hecker's evidence did not make it reasonable for the plaintiffs to continue with their opposition in the face of other evidence, including Dr Byrne's evidence.
[43] I accept the plaintiffs' submission that Mrs Frizzo's mental condition at the time she gave instructions for the 2006 Will, and her mental and physical condition in the days that preceded its execution, warranted vigilant scrutiny. Those circumstances were scrutinised with the examination and cross-examination of independent witnesses before the Registrar, and by Dr Byrne, the expert appointed by the Court on the plaintiff's application, who carefully reviewed hospital and other records. Of course, it was not Dr Byrne but the Court that was required carefully to consider this evidence and to reach a conclusion about testamentary capacity. However, by the time Dr Byrne provided his report, the mental condition of
Mrs Frizzo at the time she dictated the 2006 Will was the subject of sworn evidence by independent and reliable witnesses, and the fact that she had not exhibited symptoms of quiet delirium was also supported by entries in the medical records for 27 and 28 January 2006 prior to her operation. The implications of the evidence given by independent witnesses before the Registrar, and of Dr Byrne's report, were reflected in Mr Taylor's letter of 30 March 2010. Unless there was additional evidence produced by the plaintiffs, their prospects of successfully opposing the admission to probate of the 2006 Will were not good. Hence the evidence of
Shane Frizzo, which I rejected, assumed importance. If it was rejected, then
Dr Hecker became the plaintiffs' critical or "star" witness, to quote Mr Taylor's letter to her.
[44] Dr Byrne responded to supplementary questions put to him by the parties' legal representatives, but his responses did not materially alter what was likely to flow from acceptance of his opinion, along with acceptance of the evidence of the medical witnesses who observed Mrs Frizzo at the time she gave the will, and of
Ms Marshall, who gave evidence concerning Mrs Frizzo's mental condition prior to the accident (being evidence that did not accord with Dr Hecker's conclusion about Mrs Frizzo's state of dementia).
[45] Dr Byrne's report of 17 March 2010 noted that he did not have evidence that
Mrs Frizzo knew the nature and extent of her property and assets. The parties did not pursue this issue with Dr Byrne by way of evidence concerning her state of knowledge in 2003 or later. The issue of Mrs Frizzo's knowledge of the nature and extent of the property that she owned did not feature as a significant issue at the trial, and the plaintiffs did not make any specific submissions in relation to it, either orally or in writing. There was evidence relating to her knowledge of the specific property dealt with in the 2003 Will, and of her dealings with other members of the family and solicitors in relation to the administration of her husband's estate. No submission was made to the effect that Mrs Frizzo did not appreciate that she owned land worth many millions of dollars, and there was evidence that in a meeting with Mr Taylor in December 2005 she knew that she had half a million dollars in cash. This may explain why the issue concerning the nature and extent of the property owned by her did not assume significance in the parties' submissions at trial. The plaintiffs now submit that Dr Byrne's report left open a significant issue relevant to capacity. However, it was not an issue that he was asked to address in supplementary reports, and it did not feature as a significant issue at the trial. Accordingly, the fact that Dr Byrne's report did not address this aspect does not alter the point of substance, namely that by late March 2010 the plaintiffs faced cogent independent evidence given on oath, and Dr Byrne's report, all of which pointed to the conclusion that Mrs Frizzo had testamentary capacity at the time she made the 2006 Will.
[46] The plaintiffs submit that regard should be had to the defendants' challenge to the 2003 Will as relevant to the reasonableness or otherwise of the plaintiffs' conduct in continuing to challenge the 2006 Will in the final phase of the present proceedings. Mrs Frizzo's capacity to make the 2003 Will was not tried. It is possible that
Mrs Frizzo did not have testamentary capacity to make the 2003 Will, but had testamentary capacity to make the kind of simple will that she made in
January 2006. I note that the plaintiffs' Senior Counsel conceded that if she had made a will before her injury on the morning of 20 January 2006, in essentially the same terms as the 2006 Will, then there would have been no issue of testamentary capacity. The 2003 Will was more complicated, and a determination of
Mrs Frizzo's capacity to make it would have involved, among other things, a consideration of the influence which Shane Frizzo exerted upon her to make it, her knowledge of the value of the specific property dealt with by it, and her knowledge of the value of the residue that was given to Shane Frizzo. I was not required to make any assessment of Mrs Frizzo's testamentary capacity to make the 2003 Will, and I do not make any for the purpose of deciding issues of costs. The relevant point for present purposes is that the stances taken by the defendants in relation to the 2003 Will did not necessarily involve a concession that Mrs Frizzo lacked testamentary capacity to make the 2006 Will. It was open to the second, third and fourth defendants to adopt the position that Mrs Frizzo lacked testamentary capacity to make the 2003 Will, but had testamentary capacity to make the simple will that she made in January 2006. The plaintiffs could not reasonably have derived a concession by the second, third and fourth defendants of the reasonableness of opposing the 2006 Will from those defendants' opposition to the 2003 Will. The issue of testamentary capacity in relation to the 2006 Will fell to be determined by reference to the nature of that will, the circumstances surrounding the making of it, and evidence concerning Mrs Frizzo's mental condition in the days, weeks and months that preceded the making of it.
[47] I turn to consider the Calderbank offer made by the second, third and fourth defendants, and the formal offer made by the first defendant. The formal offer was prompted by the evidence given before the Registrar on 28 July 2009. The Calderbank offer was made after Dr Byrne's report became available to the parties and they had an opportunity to consider its implications.
[48] Acceptance of either of these offers would not have automatically resulted in probate being granted in respect of the 2006 Will. However, in the light of the evidence, it is unlikely that the Court would not have admitted the 2006 Will to probate if the parties had agreed to such an order. There is no explanation as to why a Calderbank offer was made by the second, third and fourth defendants, rather than an offer under the Uniform Civil Procedure Rules. Still, the making of the Calderbank offer is relevant to the question of costs. The Calderbank offer gave a detailed explanation as to why it had become unreasonable and inappropriate for the plaintiffs to continue to contend that Mrs Frizzo lacked testamentary capacity to make the 2006 Will. The plaintiffs submit that the offer in relation to costs had some complexity, that the offer to pay an additional amount of $75,000 to
Shane Frizzo was not particularly generous, and that to qualify as a proper offer to settle there should have been a "substantial benefit" in the offer. The amount of $75,000 was only a very small fraction of the value of the estate. Of course, the Calderbank offer included a term that the second, third and fourth defendants would not seek any order for costs against the plaintiffs and would agree that all parties' costs of the proceeding up to that date be paid out of the estate. Together with the sum of $75,000 this was an offer of some value in circumstances in which an objective assessment of the plaintiffs' prospects would have indicated that they had significant exposure to an order for costs being made against them. After all,
Mr Taylor recognised this risk in his letter of 30 March 2010.
[49] Even so, the offer may not have been particularly tempting to Shane Frizzo in his capacity as a beneficiary, as distinct from his capacity as a co-executor. While he and his co-executor were being offered costs protection and the payment of their costs out of the estate, and he was being offered an additional $75,000, acceptance of the offer shut off the prospect of a much greater benefit.
[50] In not accepting the Calderbank offer made by the second, third and fourth defendants, and in not accepting the formal offer made by the first defendant many months earlier, Shane Frizzo must be taken to have made a decision about his chances of success and the monetary value to him of opposing the 2006 Will and succeeding on the 2003 Will. Mr Taylor as a co-plaintiff was not prepared to dissociate himself from Shane Frizzo's decision, and he continued as co-plaintiff, conscious of the plaintiffs' exposure to an adverse costs order.
[51] Shane Frizzo and his co-plaintiff were prepared to take their forensic chances in opposing the 2006 Will in the face of the evidence given on oath in July 2009, of
Dr Byrne's report of March 2010, and of a reasonable and well-reasoned offer of compromise dated 15 April 2010. Having taken their chances in those circumstances, the issue is whether the defendants should be required to contribute to the plaintiffs' costs of continuing to prosecute the proceedings in the form of an order that all or some of the plaintiffs' costs of the final stage of the proceedings be paid out of the estate. A related issue is whether the unsuccessful plaintiffs should be required to pay the other parties' costs after the offer was made.
[52] I take into account that the first defendant in his pleadings adopted a different stance to that of the other defendants in respect of the 2006 Will. However, in the light of the evidence given before the Registrar, the first defendant offered to settle on the basis that the 2006 Will be admitted to probate. In practical terms this produced for him a result similar to the result that would arise if neither the 2003 Will nor the 2006 Will were admitted to probate. At the trial, the first defendant's legal representatives successfully argued in favour of a finding of testamentary capacity in respect of the 2006 Will, being arguments supported by the independent evidence that was given before the Registrar a week before the first defendant's formal offer of 5 August 2009.
[53] There is much to be said, notwithstanding the importance that doubtful wills should not pass easily into proof, for the proposition that a formal offer to settle of the kind made by the first defendant should influence the discretion as to costs in a case such as this, and that the Court should not encourage parties such as the plaintiffs to litigate to trial a weak case. Although, as between the plaintiffs and the first defendant, it would be open to make an order that the plaintiffs pay the first defendant's costs on an indemnity basis after 5 August 2009 (the date of the first defendant's offer), I consider a more appropriate order for costs is one that requires the plaintiffs to pay all defendants' costs from and including 30 April 2010. This was a fortnight after the Calderbank offer made by the second, third and fourth defendants, which detailed why it was unreasonable for the plaintiffs to contend that the 2006 Will was invalid by reason of Mrs Frizzo's testamentary incapacity. This was six weeks after Dr Byrne's report was completed. Mr Taylor clearly had appreciated the implications of that report for the plaintiffs' prospects of opposing probate being granted for the 2006 Will. By 30 March 2010, and certainly by
30 April 2010, the plaintiffs as executors under the 2003 Will, acting reasonably, should have realised that independent evidence did not support their case but strongly pointed to Mrs Frizzo having testamentary capacity to make the 2006 Will. Instead, Shane Frizzo made the decision to continue the proceedings, and Mr Taylor did not take steps to have himself removed as a plaintiff.
[54] The conduct of the proceedings after March 2010 did develop, as the second, third and fourth defendants submit, a distinctly partisan character as, in substance, a contest between potential beneficiaries. The plaintiffs took their forensic chances in the face of independent and reliable evidence from medical witnesses and
Ms Marshall on questions of fact, and of the independent expert opinion of
Dr Byrne. The plaintiffs enlisted the support of Dr Hecker; however, her evidence did not command acceptance. To assist his case, Shane Frizzo swore affidavit evidence which gave a misleading account of his mother's mental condition at all times after her admission to hospital. As acknowledged by their counsel at the start of his oral submissions, the case that the plaintiffs prosecuted to trial faced a will which appeared on its face to be a rational and fair disposition of Mrs Frizzo's estate for the reason given by Mrs Frizzo to Dr Scolaro. However, if the plaintiffs succeeded in their opposition to the 2006 Will, and if the plaintiffs were able to admit the 2003 Will to probate, then Shane Frizzo stood to gain a large financial advantage.
[55] It is true that a careful examination of the circumstances under which Mrs Frizzo made the 2006 Will was warranted. However, those circumstances had been closely examined by the cross-examination of important witnesses in July 2009, and in
Dr Byrne's comprehensive independent report in March 2010. The plaintiffs chose to continue to litigate, notwithstanding this evidence and the reasonable offer to settle made in the Calderbank letter of 15 April 2010. This is not a case like
Shine v Neville in which parties acted reasonably in pursuing their interests at all stages of the litigation. I am not persuaded that the plaintiffs acted reasonably in pursuing the proceedings during their final phase.
[56] The issue of costs should not be decided simply on the basis of the findings of fact ultimately made. Consideration should be given to the evidence as it stood during the course of the proceedings. I have done so, and have concluded that the evidence as it stood by April 2010, if not earlier, strongly pointed to a conclusion that
Mrs Frizzo had testamentary capacity. Whilst it is important that doubtful wills should not pass easily into proof by reason of the costs of opposing them, it is equally important that parties should not continue litigation and reject reasonable offers of settlement in the expectation that they will not be ordered to pay costs if they are unsuccessful. To make an order that the plaintiffs be paid out of the estate in respect of the costs of the final phase of the litigation, or to make an order that simply provided for the defendants to have their costs of the final stage of the proceedings paid out of the estate, would not give adequate recognition to the policy of encouraging resolution of doubtful claims.
[57] The second, third and defendants having made a reasonable offer to settle on
15 April 2010, being a settlement which the first defendant was prepared to accept if the plaintiffs did, the most appropriate order for costs is one that will require the plaintiffs to pay the other parties' costs from 30 April 2010. The costs should be paid by the plaintiffs after that date on an indemnity basis because of the plaintiffs' imprudent refusal of an offer to compromise, being an offer which explained why it was unreasonable for the plaintiffs to continue to challenge the validity of the 2006 Will. That offer of compromise would have given the plaintiffs a better result than they achieved by judgment. They would not have been exposed to orders for costs, and the parties would not have been put to the substantial expense of preparing for trial and running the trial.
29 April 2010 (including the costs of the caveators in Proceedings BS 3970 and 4680 of 2008 and BS 2651 of 2009) be assessed on the indemnity basis and paid out of the estate of Lydia Iolanda Elvira Frizzo;
[59] The plaintiffs submit that I should provide for the deduction of the costs that they have been ordered to pay from the entitlement of the paying party out of the estate, and reference is made to the family provision case of Underwood v Underwood.[22] This course is said to have attractions in avoiding the further costs which might flow from the collecting party seeking to enforce this costs order. I am not persuaded to make such an order. The administration of the estate should take its course, and I have no reason to suppose that its prompt and due administration will not result in payment to Shane Frizzo of a substantial amount, from which he can meet the costs order which I have made against him and his co-plaintiff. It will be for the parties to resolve the assessment of costs and arrangements for the payment of the costs that I have ordered, if possible. If they cannot reach agreement then the parties should be at liberty to enforce the costs orders that I have made.
[1] Frizzo v Frizzo [2011] QSC 107.
[2] John Ross Martyn and Nicholas Caddick (eds), Williams, Mortimer and Sunnucks on Executors, Administrators and Probate, 19th ed. (London: Sweet and Maxwell, 2008), 485, [40-10]; J. I. Winegarten, R. D'Costa and T. Synak, Tristram and Coote's Probate Practice, 30th ed. (London: LexisNexis Butterworths, 2006), 873, [40.07].
[3] [2010] QSC 182 at [31]- [32].
[4] John Ross Martyn and Nicholas Caddick (eds), Williams, Mortimer and Sunnucks on Executors, Administrators and Probate, 19th ed. (London: Sweet and Maxwell, 2008), 479, [40-01].
[5] (1863) 164 ER 1280 at 1281.
[6] Uniform Civil Procedure Rules 1999, r 681(1).
[7] Mitchell v Gard (1863) 164 ER 1280 at 1281; Twist v Tye [1902] P 92 at 93-94; Spiers v English [1907] P 122 at 123. See also John Ross Martyn and Nicholas Caddick (eds), Williams, Mortimer and Sunnucks on Executors, Administrators and Probate, 19th ed. (London: Sweet and Maxwell, 2008), 480-483, [40-04] and [40-06]; and G. E. Dal Pont_, Law of Costs_, 2nd ed. (Chatswood: LexisNexis Butterworths, 2009), 288, [10.17].
[8] (1863) 164 ER 1280 at 1281.
[9] G. E. Dal Pont_, Law of Costs_, 2nd ed. (Chatswood: LexisNexis Butterworths, 2009), 287, [10.17].
[10] Mitchell v Gard (1863) 164 ER 1280 at 1281-1282.
[12] Harrison v Petersen [2000] QSC 415 at [10].
[15] [2006] QSC 140; upheld on appeal [2006] QCA 494.
[16] [2006] QSC 140 at [69].
[17] [1997] QSC 168 (Queensland Supreme Court, 1070/1995, 12 September 1997).
[18] Ibid at page 20 of the unreported judgment.
[19] (1988) 14 NSWLR 698 at 709.
[20] [2007] ACTSC 40 at [6]; see also Kostik v Chaplin [2007] EWHC 2909 (Ch), especially at [6] and [21].
[21] Re Plant [1926] P 139 at 152 (emphasis added).
Frizzo & Anor
Frizzo & Ors
(1988) 14 NSWLR 698