These proceedings are the hearing together of both family provision and testamentary capacity claims in relation to the estate of the late William George Phillips, known as Bill. Contrary to the position advanced by James, the Court determined that Bill lacked testamentary capacity by its judgment delivered on 22 March 2017: Glenda Phillips v James Phillips; John Matthew Phillips by his Tutor NSW Trustee & Guardian v James Phillips [2017] NSWSC 280 (the "First Judgment"). This meant that there was an intestacy.
Defined terms in the First Judgment have the same meaning in these reasons, which should be read with the First Judgment. The First Judgment explains why, notwithstanding that all issues were to be heard together, the Court first dealt with the question of testamentary capacity in what the parties referred to as the "probate proceedings" (strictly being the proceedings brought by Glenda, Lesley and Robert, No 2015/26517). In these reasons, a reference to Glenda includes Lesley and Robert.
This judgment resolves the parties' costs of the probate proceedings. The parties were agreed that, insofar as the Court awarded costs, the Court should make gross sum costs orders to bring certainty to the size of the estate that would be available for distribution when the Court comes to hear argument about the remaining family provision claims on 19 May 2017.
While James did not consent, he ultimately did not wish to be heard against John receiving his (John's) costs of the probate proceedings out of the estate on the ordinary basis. John should receive those costs assessed on the ordinary basis as $16,000 up to and including 3 April 2017. His costs incurred in the probate proceedings thereafter will have to be dealt with separately.
The real costs contest was between Glenda and James. James submitted that Glenda's costs of the probate proceedings should be paid out of the estate on the ordinary basis and that, notwithstanding he had lost on the issue of Bill's testamentary capacity, he (James) should have his costs of those proceedings paid out of the estate on the indemnity basis. Glenda submitted that James should not have his costs out of the estate at all and that he should pay Glenda's costs of the probate proceedings on the indemnity basis out of his own resources (including any share of the estate to which he might be entitled).
The Court has concluded in the exercise of its discretion that the just order in the circumstances of this case is - with one exception - as was submitted by Glenda. The one exception is that her costs should be paid by James on the ordinary basis up to and including 30 April 2016 and only thereafter on the indemnity basis.
Before turning to the main area of dispute, I will briefly record some procedural matters and the Court's reasons in relation to John's costs.
The appearances on the costs argument were identical to those at the hearing: Mr A P Cheshire of Senior Council appeared for Glenda, Ms K E Burke of Counsel appeared for John, and Mr K Morrissey of Counsel appeared for James.
[2]
An adjournment application
At the outset of the costs hearing, Mr Morrissey applied for an adjournment of the Court's determination of costs until after the further mediation which the Court has ordered had taken place. He submitted that the submissions that had been filed in relation to costs fairly set out the various options and that the prospects for a successful mediation would be enhanced if the question of costs was left "in play". He submitted that an argument and judgment on costs risked "poisoning the well".
Both Mr Cheshire and Ms Burke resisted the adjournment application and the Court did not allow it. The reason why the Court did not adjourn the costs application was that the just, quick and cheap resolution of the balance of the proceedings would be enhanced if as much certainty as possible could be brought to the question of the size of the estate which remained after costs. There were two aspects to this:
1. I was informed from the Bar table that one of the difficulties with earlier mediations in these proceedings was that the possibility of at least three different outcomes depending upon which will (if any) was admitted to probate or whether there was an intestacy, had raised complications that had made settlement difficult. That observation accords both with common sense and the Court's own experience. The parties' submissions as to costs raised further permutations which, I was satisfied, would again complicate any settlement discussions and reduce the prospects of a successful outcome if they remained "in play".
2. Resolving the costs question would also give certainty as to which of the plaintiffs still intended to press their family provision claim after the First Judgment. John has said he is maintaining his claim. I was informed by Mr Cheshire that the current intention of Glenda and Lesley was not to maintain their claims. However, Robert's position was still unclear because it depended, at least in part, on whether James would be permitted to recover his costs out of the estate.
[3]
John's costs
John sought his costs of the probate proceedings - calculated up to and including 3 April 2017 on the ordinary basis - of $16,000 (inclusive of GST). There was a further calculation for future costs and disbursements in relation to the probate proceedings - again on the ordinary basis - of $5,000 (inclusive of GST).
Mr Morrissey, on behalf of James, originally objected to John's application for costs on the basis that John was not a party to the probate proceedings. That submission was strictly correct. However, the Court and the parties had agreed that the probate and the family provision proceedings would be heard together and that is what occurred. Mr Morrissey ultimately came to the position that, while his client did not consent, he did not wish to be heard further against the order sought by John.
I accept Ms Burke's submission that John "had no choice but to be involved as a periphery with respect to the probate proceedings". Both Ms Burke and her instructing solicitor tailored their involvement in the hearing to keep costs to a minimum while ensuring that John's interests were protected. In the way in which the case ultimately ran, the Court is satisfied that, while technically not a party, John's involvement in matters which on one view might be said to relate to the probate proceedings only, and to opposing the declarations sought by James, was both necessary and appropriate.
There was no dispute about the amount of costs sought by John. John is entitled to his costs of the probate proceedings out of the estate on the ordinary basis. The Court assesses these up to and including 3 April 2017 as $16,000 (inclusive of GST). However, I do not think it appropriate to make an order in relation to costs yet to be incurred. John is entitled to his costs of the costs hearing, the mediation, and any further formal steps to resolve the probate proceedings on the ordinary basis. To the extent these cannot be agreed between the parties or resolved as part of any mediation, I will deal with quantifying those costs (to the extent they have been incurred) when orders are made giving effect to this judgment or at the outset of the hearing reserved for submissions in relation to the family provision proceedings.
[4]
Legal principles
There was no dispute between the parties as to the applicable principles.
I gratefully adopt the summary set out in the judgment of Hallen AsJ (as his Honour then was) in Petrovski v Nasev; The Estate of Janakievska (No 2) [2011] NSWSC 1474:
"4. The Civil Procedure Act 2005, s 98(1), provides that subject to the rules of Court, and that, or any other, Act, costs are in the discretion of the Court. The discretion is broad but not unconfined. It is a judicial discretion to be exercised on a principled basis.
5. The Uniform Civil Procedure Rules 2005 ("UCPR"), r 42.1, provides that costs should follow the event, unless it appears to the Court that some other order should be made as to the whole, or any part, of the costs. UCPR r 42.20(1) provides that if the court makes an order for the dismissal of proceedings, then, unless the court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed.
6. In Re Green [1969] WAR 67, Wolff CJ pointed out (at 83) that the general rule prescribed by the Rules, also applies in probate suits: Twist v Tye (1902) P 92; Spiers v English (1907) P 122; Middlebrook v Middlebrook (1962) 36 ALJR 216 at 217; Nicholson v Knaggs [No 3 - Severance And Costs] [2009] VSC 328 at [38].
7. The effect of these two rules, in this case, is that the Defendant must pay the Plaintiffs' costs unless the court otherwise orders, and the court can only order otherwise if there is a discretionary decision to depart from what the rules provide: Australiawide Airlines Limited t/as Regional Express v Aspirion Pty Limited [2006] NSWCA 365 at [10]. In other words, the rules reflect the general proposition that an award of costs is discretionary, but, generally, the discretion is exercised in favour of the successful party: Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 at [25].
8. In probate suits there are considerations that more readily affect the application of the Civil Procedure Act and the UCPR than in most other forms of litigation. These considerations act as guides to the exercise of discretion, but they are not inflexible.
9. Before turning to the considerations, two principles that are of importance in litigation of this type should also be referred to. The first is that "parties should not be tempted into a fruitless litigation by the knowledge that their costs will be defrayed by others", and the other is that "doubtful wills should not pass easily into proof by reason of the cost of opposing them": Mitchell v Gard (1863) 3 Sw & Tr 275 at 279; 164 ER 1280 at 1281-1282.
10. Any suggestion that there is a general rule that costs in Probate proceedings are borne out of the estate should be immediately rejected. As long ago as 1926, it was said, in Re Plant [1926] P 139, at 152:
"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."
11. In relation to the question of costs, Powell J (as his Honour then was), in Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698, recorded the principles generally to be applied when determining how, in Probate proceedings, the Court's discretion as to costs may be exercised.
12. At pp 709-710, he said:
"... 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:
1. Where the testator has, or those interested in residue have, been the cause of the litigation, the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate;
2. If the circumstances led reasonably to an investigation in regard to the document propounded, the costs may be left to be borne by those who respectively incurred them...
To these exceptions to the general principle should, perhaps, be added the principle that, although a legal personal representative may be entitled to recover from a party to litigation costs only on a party/party basis, he, as a fiduciary, retains the right to an indemnity from the estate, and, thus, may have recourse to the estate for any difference between his costs on a trustee basis and the costs recovered from a party."
13. This passage was approved by the Court of Appeal in Shorten v Shorten (No 2) [2003] NSWCA 60 at [15]. However, it is clear that neither of the guidelines set out in the passage is exhaustive or prescriptive.
14. In the first of the guidelines referred to, although the word "fault" is sometimes used, it does not necessarily mean moral fault or culpability. Rather, the touchstone is whether it was the deceased's conduct which had led to his, or her, will "being surrounded with confusion or uncertainty in law or fact": Kostic v Chaplin [2007] EWHC 2909; [2007] All ER (D) 119.
15. In respect of the second exception, Dixon J, in Middlebrook v Middlebrook, in the course of determining a challenge to a will founded upon lack of testamentary capacity, observed:
"It is only as a result of investigation that the reasons for finding affirmatively in favour of the testator's testamentary capacity distinctly appear. In these circumstances the proper course is to apply the principle enunciated by Sir Gorrell Barnes P that 'if the circumstances lead reasonably to an investigation of the matter then the costs may be left to be borne by those who have incurred them.' Spiers v English [1907] P 122 at p 123."
16. Whether this case falls within one, or both, of the two exceptions to the normal rule, the relevant time to consider the Defendant's position is the date of institution of the proceedings, although it must also be relevant to have regard to any knowledge or reasonable belief gained subsequently: Clay v Karlson [2001] WASC 141 at [160].
17. It is also useful to take account of what Powell J had said, in In the Estate of Gertrude Martha Elizabeth Hacke, Public Trustee v Wilson (NSWSC, 13 November 1985, unreported):
"Although the authorities in which an unsuccessful defendant has been allowed his costs out of the estate have involved a variety of factual situations, they appear to embrace such situations as the following: -
1. The state of the testamentary papers has been such as to leave it doubtful whether an earlier will was revoked by a later (Limas v Goodban (1865) LR 1 P & D 57; Jenner v Finch (1879) LR 5 PD 106) or whether an apparently executed will was intended to be testamentary (Thorncroft v Clarke (1862) 2 Sw & Tr 479);
2. The conduct, habits and mode of life of the testator have given the defendant reasonable grounds for questioning the testator's capacity (Davies v Gregory (1873) LR 3 P & D 28; Roe v Nix (1893) P 55;
3. The actions of the testator have given the defendant reasonable grounds for believing that the will was a forgery (Orton v Smith (1873) LR 3 P & D 23);
4. The actions and statements of the testator immediately before, and subsequent to, the making of the will have given the defendant reasonable grounds for believing that the execution of the will had been induced by undue influence (Cousins v Tubb (1891) 65 LT (NS) 716; Shortman v Shortman (1892) LT (NSW) 717)."
18. Finally, Campbell J (as his Honour then was) in Re Estate of the late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311 said:
"32 ... in the case law concerning probate litigation, it can safely be said that a consistent theme in the cases is that the principles concerning costs which are applied to a person who seeks probate (whether successfully or not) are not the same as the principles which apply to the costs of a person who opposes probate (whether successfully or not). In probate litigation, it is not only who succeeds in the litigation which matters - which is the only factor operating in the "costs follow the event" rule. As well, the role which a particular party has played in litigation, whether as plaintiff or defendant, is relevant. Further, facts about the knowledge available to parties, and the reasonableness of their conduct in conducting the litigation, can be taken into account."
19. Ultimately, in the light of all of the circumstances of the particular case, I must decide which costs order better achieves justice between the parties."
Importantly for the resolution of the present applications, I also respectfully adopt what fell from Santow J (as his Honour then was) in Pates v Craig (Estate of the late Joyce Jean Cole) (Supreme Court (NSW), Santow J, 5 September 1995, unrep) at 5-6 (emphasis added):
"6. 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. Thus it is said that in probate the executor's title as executor is itself "generally in doubt and if he takes the risk of propounding the will, he would be wise to obtain an indemnity from persons beneficially interested, if he is not so interested himself"; Williams, Mortimer and Sunnucks, supra, at 402. Here of course the executor in question was interested herself as, if the will were successfully propounded, she would be the sole beneficiary. However that simply means that the risk, of necessity, falls upon the executor so far as the costs are concerned unless within the exception. Thus an executor is prima facie justified in propounding the will, but is not bound to do so, and if an executor must or ought to have known that he is propounding a document that could not be supported, he will be condemned in costs; see earlier authorities cited and Williams, Mortimer and Sunnucks at 412. Nor is it necessary that a positive finding be made that, for example, the executor has acted improperly, such as by the exercise of undue influence. Rather, it is because executors typically have ample opportunity of observing the behaviour of the testator, in propounding the will, they will be condemned in costs if they are unsuccessful; see Williams, Mortimer and Sunnucks at 413 and the authorities there cited."
Finally, insofar as Glenda submits that her costs should be paid on the indemnity basis, the Court notes the summary of the principles or guidelines in the judgment of Sheppard J in Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801 at [24]:
"5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v. Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v. Hutchinson (1987) 10 NSWLR 525, Maitland Hospital v. Fisher (No. 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal), Crisp v. Keng (Supreme Court of New South Wales, 27 September 1993, unreported, Court of Appeal) and an award of costs on an indemnity basis against a contemnor (e.g. Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis."
[5]
The parties' submissions
Mr Cheshire's fundamental submission was that James had had ample opportunity to observe Bill at all relevant times, including when he made the 2008 Will and the 2006 Will. Having lost the proceedings, it was for James to bring himself within the exception to the rule that costs follow the event. Commencing with his own knowledge of Bill, James had no reasonable basis to defend the probate proceedings by reason of the following matters:
1. James would have been well aware of Bill's condition since he lived with him and provided assistance to him. In particular, James attended with Bill upon Dr Lee and discussed matters with him; attended with Bill upon Dr Abu-Arab and provided prompting; and took Bill to medical appointments.
2. James attended upon Mr Bricknell with Bill, in particular in relation to the two wills and also in exploring the making of an application for a statutory will for Eileen.
3. James elected not to give evidence surrounding the circumstances of the drafting or execution of the 2006 and 2008 Wills, which the Court has concluded would not have assisted him.
4. James swore affidavits in Bill's District Court proceedings and the protective proceedings attesting to Bill's incapacity, including mental problems.
5. James relied in those previous proceedings upon expert reports from Dr Lee, Dr Abu-Arab and Ms Staples, all of which Glenda relied upon in the probate proceedings.
6. James did not in these proceedings challenge any of the evidence contained in the reports he relied upon in the District Court and protective proceedings (although in considering this submission the Court has not overlooked that those reports were directed to Bill's capacity to manage his financial affairs rather than testamentary capacity).
7. Glenda's affidavit of 7 May 2015 annexed James' affidavit from the protective proceedings, the affidavit of Dr Lee, and the affidavit and the earlier report of Dr Abu-Arab, in respect of which James raised no objection and made no comment.
8. In the course of these proceedings, Glenda served further reports from Dr Lee, Dr Abu-Arab and Ms Staples, and a report from Dr Scholem in relation to which James made only a limited response and it was never suggested to those experts that their opinions that Bill lacked testamentary capacity were incorrect.
9. James did not serve any expert evidence supportive of capacity or indeed any at all.
10. Mr Bricknell had no recollection and no documents to assist him in relation to the 2006 Will and no independent recollection in relation to the 2008 Will.
11. James had available to him Mr Bricknell's file in relation to the 2008 Will, including the note of the telephone conversation with Dr Scholem that the latter was of the view that Bill did not have testamentary capacity.
12. The equivocal nature of the Certificate was self-evident and it was apparent that there had been no follow up with Dr Lee at the time of the 2008 Will to clarify his opinion.
13. Ms Rizk gave no evidence relating to the 2006 Will and her affidavit evidence in relation to the 2008 Will could not on its own have established that Bill had testamentary capacity. Further, it would not have extended beyond James' own knowledge, even before considering the potential impact of her ongoing relationship with James and the fact that her focus was on issues of care rather than capacity.
14. Glenda served evidence from Ms Grgurevic, which was the subject of only limited challenge by James.
15. James gave evidence that was inconsistent with the affidavits he had sworn in the earlier District Court proceedings and the protective proceedings, and evidence that was false and deliberately so.
Mr Morrissey, on behalf of James, accepted that this was not a case where it could be said that Bill had been the cause of the litigation. He submitted that it was an example of a case of "reasonable investigation" and that James had reasonable grounds to maintain his opposition to Glenda's claim, including:
1. The plaintiffs were aware of the contents of the 2008 Will. When James obtained a grant of probate in common form the plaintiffs did not signal any intention to challenge the grant, nor did they lodge a caveat against the making of the grant.
2. Both wills were regular on their face and disposed of the whole estate.
3. Both wills had been prepared by Mr Bricknell, a solicitor with many years' experience, who swore an affidavit that he was satisfied that Bill had testamentary capacity at the relevant times.
4. In seeking to uphold the 2008 Will, James was acting in accordance with the clearly expressed wishes of his father to make provision for John, in particular with the security of having access to accommodation at the family home.
5. The plaintiffs served no evidence of Bill's testamentary capacity in relation to either will until several months after the proceedings had been commenced.
6. James gave evidence of a number of things he did with Bill from which it could be inferred that James had formed the view that Bill had the capacity to make a will.
[6]
Resolution - costs generally
The starting point must be that costs follow the event. This suggests that James should be ordered to pay Glenda's costs of the probate proceedings.
James bears the onus to satisfy the Court that, contrary to the position stated in the preceding paragraph, James' conduct of the proceedings comes within one of the exceptions to what might be called the usual rule. Essentially for the reasons, and by reference to the matters, advanced by Mr Cheshire (set out in paragraph [19] above) the Court concludes that, at the outset of the probate proceedings, James ought to have known that neither of the wills could be supported and that he did not have a reasonable basis to contest Glenda's claims that Bill lacked testamentary capacity in relation to both wills. After the service of Glenda's medical evidence, the Court is satisfied that James must have known that to be the case, which has the further costs ramifications set out in paragraph [28] below.
There can be no doubt that James saw a great deal of Bill at all relevant times. Above all else, he took him to see Mr Bricknell to make both wills. He also took Bill to see Dr Lee in connection with obtaining the Certificate. However, James has failed to demonstrate that such proximity, or any other matter, reasonably justified him in defending Glenda's proceedings.
Although I have accepted in general terms the various matters relied upon by Mr Cheshire (see paragraph [19] above), it is appropriate that I record the matters which have most heavily weighed in the conclusion I have reached:
1. As at the start of Glenda's proceedings James had in his possession all of the evidence - including his own - from both the District Court and protective proceedings. While it is true that evidence was not specifically directed to the question of testamentary capacity, on any dispassionate reading it should have raised a very real doubt about that issue.
2. In circumstances where James had propounded evidence both in the District Court and the protective proceedings that Bill lacked capacity to manage his financial affairs, James made no attempt to adduce medical evidence in support of his case. He did not even put his counsel in a position to be able to suggest to the medical witnesses called by Glenda that their opinions about Bill's testamentary capacity were wrong.
3. Insofar as the Certificate is concerned, I am not satisfied that even in its own terms it provided a reasonable basis upon which James could suggest that Bill had testamentary capacity to make the 2008 Will. In any event, reliance on the Certificate became untenable after receipt of Dr Lee's explanation in relation to the Certificate (see paragraph [75] of the First Judgment).
4. Diligent examination of Mr Bricknell's file in relation to the 2008 Will would have disclosed that Ms Rooke had been advised by Dr Scholem that, in Dr Scholem's view, Bill did not have testamentary capacity. In many cases, the contemporaneous file notes of a solicitor who prepared a will astute to questions of testamentary capacity, together with any independent recollections of that solicitor, may provide a reasonable basis to demonstrate that an unsuccessful executor should not have to pay costs. This is not such a case.
5. Mr Bricknell's affidavit evidence does not assist James to demonstrate that he (James) had a reasonable basis to defend the proceedings. Any dispassionate consideration of Mr Bricknell's evidence in relation to the 2008 Will would have concluded that it was nothing more than a reconstruction from the documents. That same observation applied with even greater force in relation to Mr Bricknell's evidence about the 2006 Will because there was not even a file to which Mr Bricknell could refer.
6. James' evidence about Bill's condition was, at best, highly generalised. I accepted in the First Judgment (see paragraphs [126]-[127] of the First Judgment), Mr Cheshire's submission that James' failure to give his own, direct evidence concerning his father's capacity at the time Bill made both wills was a highly significant matter. The Court has inferred that any evidence James could have given on that point would not have assisted him. In those circumstances, the Court cannot draw an inference favourable to James about Bill's capacity by reference to evidence adduced by James (his own or anyone else's) about Bill's capacity at various times. Therefore there are no primary facts, or inferences from such facts, to support a submission that, based upon his own observations, James could reasonably contend that Bill had testamentary capacity at the time he made either of the wills.
7. Moreover, for the reasons set out in paragraphs [116]-[127] of the First Judgment, I do not accept James as a reliable witness generally.
8. In addition to the preceding point, James took a highly adversarial position in the litigation. His approach to the evidence, and the litigation generally, was to maintain assertively his entitlement under both wills. His role as a combatant eclipsed that of executor. I do not accept Mr Morrissey's attempt to claim the moral high ground on behalf of James by suggesting that James was motivated to uphold the wills in John's interest to maintain the possibility of visiting the family home. The overarching scheme of both wills was clearly to the effect that James would inherit the family home absolutely, provided he made certain payments within two years. On any view, James was the major beneficiary strenuously defending his entitlement.
9. For the reasons set out in paragraphs [114]-[115] of the First Judgment, Ms Rizk's evidence does not provide a sufficient foundation for James to be able to maintain that he had reasonable grounds to defend Glenda's claim.
10. The Court's conclusion is fortified by, but not dependent upon, James' failure to obtain judicial advice as to whether or not he should have defended Glenda's proceedings. That course would have been open to him: Chick v Grosfeld (No. 4) [2013] NSWSC 509 per White J (as his Honour then was).
11. Resolution - indemnity costs?
The Court has concluded that James has failed to bring himself within any exception to the principle that costs should follow the event. Therefore, he should pay Glenda's costs of the probate proceedings. However, it does not automatically follow that he should be ordered to do so on the indemnity basis. This involves a separate exercise of discretion because the usual position is that costs are payable on the ordinary basis. The Court's conclusion that, at the outset of the probate proceedings, James ought to have known that neither of the wills could be supported and that he did not have a reasonable basis to contest Glenda's claims, does not - for the purposes of exercising the discretion to order costs on the indemnity basis - necessarily mean he acted unreasonably, although it comes very close. In my view, the key point of distinction in this case was that James was the defendant, not a plaintiff who had chosen to bring the proceedings. He was entitled to see the evidence upon which Glenda would rely, in particular the medical evidence.
The parties accepted that the Court should proceed on the basis that evidence was received on or shortly after the date it bears: Dr Scholem's report of 17 March 2016, Dr Lee's letter explaining the Certificate dated 15 February 2016, Ms Staples' report dated 7 April 2016, and Dr Abu-Arab's report dated 6 March 2016.
For present purposes the Court disregards Mr Staples' report because, while she expressed "considerable doubt as to Mr Phillips' capacity to make a will", she declined to offer a definitive view. However, Dr Lee's explanation of the Certificate should have made it clear (as it did to Mr Bricknell in cross-examination: see First Judgment at paragraph [76]) that the Certificate could not be relied upon at all to demonstrate that Bill had testamentary capacity. Furthermore, Dr Scholem's and Dr Abu-Arab's reports were firm in relation to the opinions they held concerning Bill's lack of capacity to make the respective wills.
In my opinion, for the purposes of the discretion in relation to indemnity costs, those medical reports made James' continued prosecution of his defence unreasonable in the requisite sense. Putting it another way, upon receipt of that evidence, the Court finds that James must have known that the two wills could not be supported. No reasonable basis was available to justify the continued defence of the proceedings. The Court is fortified in that conclusion by two matters. First, no responsive medical evidence was filed by James challenging the experts' conclusions. Second, James himself did not put on any evidence specifically directed to his own observations relevant to Bill's capacity at the particular times that the two wills were made (or evidence attempting to explain why he (James) could not do so).
Having regard to the dates on which the medical reports were received, and allowing a reasonable time for their significance to have been appreciated and forensic decisions to be made arising from those reports, the Court concludes that James' defence of Glenda's proceedings was unreasonable after 30 April 2016. James should therefore pay Glenda's costs of the probate proceedings on the indemnity basis on and from 1 May 2016.
Consistently with the overall conclusions I have reached and the reasons for those conclusions, I am also satisfied that the justice of the case as between the parties has the following consequences:
1. James is not entitled to any of his costs out of the estate. Insofar as he has received costs from the estate referable to the probate proceedings (as opposed to his defence of the family provision proceedings in his then capacity as executor), he must repay them to the estate.
2. James' share of the estate should be applied to meet his liability to Glenda for the costs of the probate proceedings. Insofar as James' share is insufficient to meet that liability, then Glenda is entitled to be indemnified for the balance from the estate.
[7]
Orders
I will give the parties an opportunity to bring in short minutes of order to reflect these reasons. If the parties are able to agree the amounts, the Court is prepared to make gross sum costs orders up to and including the date those orders are made. I note, without criticism, that the evidence as to their costs which the parties filed does not allow me in this judgment to determine the division between the ordinary and indemnity basis to give effect to the conclusion in paragraph [29] above.
[8]
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Decision last updated: 13 April 2017