Hill v Hill & Cat Protection Society of Victoria [2001] VSC 135

2. On 29 March 2001 I acceded to the application of Norena Suzanne Hill ("the daughter") that I should authorise the making of a statutory will pursuant to s. 21 of the Wills Act 1997. The parties have now returned to present argument as to costs. I have had regard to the matters put to me in oral argument on 11 April 2001 and to the written submissions filed on behalf of the plaintiff on 24 April 2001, on behalf of the firstnamed defendant on 27 April 2001, on behalf of the secondnamed defendant on 1 May 2001 and those of the plaintiff in reply filed on 7 May 2001. As counsel have observed, there is no guidance as to costs to be had from the Wills Act 1997. I approach the question, therefore, on the basis that I should exercise my discretion in accordance with established principle, deriving such guidance as I can from analogous applications.

5. In substance, the effect of the statutory will which I authorised is that, instead of the estate of Rhona Hill passing as to one half to the daughter and one half to the Cat Protection Society of Victoria, the whole of her estate will pass to the daughter.

8. Mrs Hill's property is modest. It presently comprises a home unit at 4/12 Mitford Street, St Kilda which may be worth $221,000 and which produces income of $939.09 per month rental. She has about $750 in cash. She receives also a pension of $399 per fortnight, although this may be about to be reduced. Her income is therefore about $1,300 per month from which her nursing home fees and allowance consume about $1,100 per month.

11. When the application was brought on 20 December 2000, the only party was the plaintiff, the daughter. By order of Beach J made on 4 January 2001 at which Mrs Hill and the Society were represented, these two persons were added as defendants. Mrs Hill's affairs are under the control of State Trustees Ltd as administrator pursuant to the Guardianship and Administration Act 1986 and State Trustees filed an appearance on her behalf as a publicly represented person. It filed affidavits in opposition to the application and appeared by counsel at the trial on her behalf to oppose the making of the orders sought. The Society, too, filed affidavits in opposition and appeared by its solicitor at the trial resisting the orders sought by the plaintiff.

14. The issue as to costs before me came down to the claimed entitlement of the Society to have its costs from the fund representing the assets of Mrs Hill, notwithstanding that it was an unsuccessful party in this proceeding. The daughter's position was that each party should bear its own costs but that, if the Society obtained an order for costs, she, too, should have hers from the fund.

17. The position of State Trustees was that no order for costs should be made. This would, of course, have the consequence that Mrs Hill's costs would be paid from her own assets, the fund presently administered by State Trustees. In equity cases concerning trust estates and deceased estates, it is customary for the trustee or executor to have its costs and expenses paid or retained from the trust assets or the estate. On the other hand, the entitlement to costs of other parties, whom I refer to as the contending parties, and the measure of these costs will depend upon their success and whether it was reasonable for them to make or resist the claim to the trust or the estate.

20. Accordingly, counsel for the daughter pressed upon me the line of authority applicable to testamentary capacity cases. In such cases, the ordinary rule is that costs of the contending parties will follow the event unless the challenge to the will has been occasioned by the conduct of the deceased or where the unsuccessful party has been led into the litigation by a bona fide belief in their case[1]. I do not think these authorities are apposite to a case such as the present where the misfortune of Mrs Hill is that she is incapable of making a will to give effect to her intention as I have found it. There is no estate to which the contending parties assert an entitlement under some will or other instrument. There is no public interest in the present application as there is in the true testamentary capacity case where the court must be concerned that the devolution of assets take place in accordance with a will properly made. Mrs Hill is not to be criticised for having failed to make a will after 1996. For the same reason, I put to one side those cases which deal with the costs of contending parties in a case where the terms of the will or a trust deed may be uncertain.

23. A closer analogy is to be found in the application for provision under Part 4 of the Administration and Probate Act 1958, if I may say so, without any disrespect to Mrs Hill who is, of course, still alive. In such a case the general rule is that, as between the contending parties, a successful applicant will have its costs on a solicitor and client basis out of the estate. So too, the unsuccessful defendant may have its costs on the same basis when it is reasonable for it to have resisted the claim. In Re De Feu[2] Sholl J ordered that each of the successful plaintiff and unsuccessful defendant should bear their own costs where the plaintiff's circumstances were moderate and where the defendant, as beneficiary, in any event received a benefit under the will. But even these cases are not truly analogous because, in a case such as the present, the will-maker is still alive and entitled, so long as she lives, to enjoy her assets undiminished by the burden of paying the costs of those whose claims anticipate her demise.

26. Another and, to my mind, more apposite approach is for the ordinary rule applicable for contentious litigation to apply: costs follow the event. In such a case as the present, the contending parties, on the one hand, are seeking a benefit, and on the other are protecting their expected benefit from the estate in due course. Neither is seeking to enforce or to protect a presently existing right to a fund so that the equity rule does not apply. The present plaintiff, unlike a plaintiff in a Part 4 application, asserts no moral or other claim upon the bounty of the will-maker; she seeks to establish and to give effect to the inferred intention of her mother. If she is successful, her costs in due course may be recouped from the estate which she may inherit. The beneficiary, for its part, defends the expectation of a testamentary benefit. If successful, it too may recover its costs from this benefit if and when it is received. In each case, however, there is no certainty that the successful party will enjoy this benefit; the 1996 will, like the statutory will, may be revoked or changed by a further statutory will or by the will-maker herself, upon regaining testamentary capacity[3].

29. I am mindful of the fact that the Society is a party who has been brought into the litigation at the behest of the plaintiff as a person having "a genuine interest in the matter"[4]. The Society asserts an expectancy as a beneficiary under a valid will which could not otherwise be revoked or changed so long as the will-maker lacks capacity. Furthermore, its presence in the litigation ensures that the court has the benefit of the evidence and argument of the party whose interests under the existing will compete with the plaintiff's claim. In Re HMF[5] Goulding J observed that it was desirable that such persons be joined for this purpose in an application under the comparable English legislation. It would be a matter of regret if they were dissuaded from providing this assistance for fear that they might be obliged to do so at their own expense. On the other hand, in many cases it will be a desire to preserve its expectancy that provides such a beneficiary with the incentive to incur legal costs for that purpose, if it be advised to do so.

32. It is convenient at this point to note that the practice in such applications in the Court of Protection in England is that, subject to the general overriding discretion of the court, the normal order is that the costs of successful applicants and those of other interested parties properly before the court are taxed and paid out of the estate of the will-maker on a common fund basis[6]. The local equivalent of such a basis is a solicitor and client basis[7]. This practice may be affected by the fact that the assets of a patient under the Mental Health Act 1983 (UK) are subject to the control of the court[8]. I mention, too, that in the only New Zealand case which I have discovered[9] there is a hint that, at first instance, an order for costs was made otherwise than on the basis of costs following the event. On the other hand, in the only Victorian case to which I have been referred, Gillard J ordered that each contending party bear its own costs[10].

35. In the light of these considerations, it is necessary that I bring to bear, on the question of the Society's costs application, my discretion to meet the justice of this case. I start from the proposition that, as an unsuccessful party, the Society ought not obtain its costs. Accepting that, in an application such as the present, this rule may yield to special circumstances, I have regard also to the modest size of the assets of the will-maker who is, of course, in no way responsible for this claim. Such enjoyment of life which she now has by reason of these assets should not lightly be interfered with. I have regard, too, to the fact that her only substantial asset is a piece of real estate which will have to be sold if the costs of the contending parties are to be paid from the estate. In such an event the financial position of the will-maker may indeed be precarious. Furthermore, if the statutory will is proved in due course, the burden of the costs of the Society will then fall upon the daughter as sole beneficiary. I have regard to the fact that the Society played a minor role in the proceeding. Apart from filing material in opposition, it was content to adopt the case presented on behalf of State Trustees. In saying this, I offer no criticism of the Society or its legal representatives. There was, as I indicated at the outset of the trial, no need for it to duplicate the work ably done on behalf of State Trustees. These parties, as it appeared to me, had a common interest in opposing the application and on the same basis. I have no regard to the fact that the Society is a charity, as put on its behalf, nor to the fact that it has ample financial resources, as put on behalf of the daughter.

38. There is, in this case, no suggestion that the Society, as an unsuccessful party, should pay the costs of any other party. The value to the Court of its being a party to this proceeding, which I have already mentioned, may provide a reason for rejecting such a submission, if made. It does not, however, in this case cause me to make an order that any other party should pay its costs. To my mind, the justice of the case requires that the Society bear its own costs.

41. Accordingly, I will make no orders for costs of any party.

[1] Middlebrook v Middlebrook (1962) 36 ALJR 216 at 217, per Dixon CJ, applying In re Keane [1909] VicLawRp 40; [1909] VLR 231 at 232, per Hodges J.

[2] [1964] VicRp 54; [1964] VR 420 at 428-9.

[3] Wills Act 1997 s. 24.

[4] Wills Act 1997 s. 29(e).

[5] [1976] Ch 33.

[6] Re CEFD [1963] 1 All ER 685, followed in In Re D (J) [1982] Ch 237 at 255-6, per Megarry V-C.

[7] Layzell v British Portland Cement Manufacturers Ltd [1961] 1 All ER 244 at 245, per Paull J. As to this, see, generally, Re National Safety Council of Australia Victorian Division (in liquidation) (No.2) [1992] VicRp 34; [1992] 1 VR 485 at 499-504, per JD Phillips J.

[9] Re Manzoni (a protected person); Kirwan v Public Trustee [1995] 2 NZLR 498 at 507.

[10] Monger v Taylor [2000] VSC 304.