Jvancich v Kennedy [2004] NSWCA 397 | Case summary

The costs of the proceedings before the Master 4 The appellant accepted that the respondent should receive costs of the proceedings before the Master out of the notional estate. That is the normal course, since a successful applicant establishes that the deceased failed to make the provision which should have been made. The appellant faintly submitted that the costs should be limited to $35,000 in accordance with the observations by Young CJ in Eq in Moore v Moore [2004] NSWSC 587 at [43] - [47], commencing: "43 As it does not matter about the quantum of the costs in this particular matter, I should make some general observations about costs in Family Provision Act applications. I think the position has now been reached where judges will not allow more than $35,000 in costs to any party in this type of case unless there is some special justification." 5 His Honour's observations were expressly obiter. They were no doubt prompted by concern at the disproportion sometimes encountered between the costs incurred and the provision ordered in Family Provision applications. Disproportion is also encountered outside Family Provision Act applications, although it may be of particular import given the nature of such proceedings. 6 It has not been the practice in Australia for the Court to fix the amount of costs. Even if the Court were to do so, I respectfully do not think that a general ceiling can be stated, even one subject to exception where there is "special justification". Reasonableness of costs will always fall to be considered at the time of assessment. It may or may not be appropriate, in a particular case, for the Court to address a fixed or maximum amount in the costs order it makes, although normally the Court will not be in a position to know whether or not costs to or in excess of that amount were reasonably incurred. In the present case, other than by reference to the observation of Young CJ in Eq and to the modesty of the legacy ultimately obtained by the respondent, the appellant did not suggest why it might be appropriate to limit the costs; nor are we in a position to limit the costs in an informed manner. In my opinion, a ceiling should not be imposed by the order now made. Proportionality will be a matter for the assessor so far as it may properly be taken into account.

The costs of the proceedings on appeal 7 The appellant submitted that the appeal "was adversary litigation and the normal rule ought to apply that costs follow the event": that is, that the respondent should pay the costs of the appeal. She did not favour us with any authority. 8 The respondent submitted that in a successful appeal the costs of both parties were generally ordered to be paid out of the estate, and that although in rare cases the respondent was ordered to pay costs there was no reason in this case to depart from the general rule. She referred to Hunter v Hunter (1987) 8 NSWLR 573; Churton v Christian (1988) 12 Fam LR 386; Singer v Berghouse (1993) 114 ALR 521 at 522; and de Groot and Nickel, Family Provision in Australia and New Zealand, 1993, para 902.4. 9 In Hunter v Hunter the appellant failed at first instance and received a legacy of $60,000 on appeal. An order was made that the parties' costs of the appeal be paid out of the estate, but without any discussion in the reasons. In Churton v Christian the appellant successfully appealed against orders in favour of two of the respondents and improved her position and that of the third respondent. An order was made for the payment of all costs out of the estate, again without any discussion in the reasons. 10 In Singer v Berghouse Gaudron J refused an application for security for the costs of the appeal. Her Honour said at 522 - "6. Family provision cases stand apart from cases in which costs follow the event. Leaving aside cases under the Act which, in s.33 , makes special provision in that regard, costs in family provision cases generally depend on the overall justice of the case. It is not uncommon, in the case of unsuccessful applications, for no order to be made as to costs, particularly if it would have a detrimental effect on the applicant's financial position. And there may even be circumstances in which it is appropriate for an unsuccessful party to have his or her costs paid out of the estate." 11 This was not directed to appeals. Security for costs presupposed failure of the appeal. The "overall justice of the case" is not remote from costs following the event. I do not think this case is of great assistance. 12 De Groot and Nickel para 902.4(a) states (footnotes have been inserted in the text) - " (a) Successful appeals In the case of a successful appeal the usual order is for costs of both parties to be paid out of the estate, [ Coates v NTE&A (1956) 95 CLR 494; Re Hall [1959] SR NSW 219; Bowcock v Bowcock (1969) 90 WN (Pt 1) NW 721; H utchinson v Elders Trustee Co (1982) 8 Fam LR 267; Hunter v Hunter (1987) 8 NSWLR 573; Churton v Christian (1988) 12 Fam LR 386] sometimes on a solicitor and client basis [ Dehnert v Perpetual Executors (1954) 91 CLR 177; Goodman v Windeyer (1980) 54 ALJR 470]. On rare occasions the respondent will be ordered to pay the appellant's costs [See for example Hughes v NTE&A (1979) 143 CLR 134; (1979) 53 ALJR 249]. The basis is not clear but it seems that this will happen where the respondent is perceived not to have acted properly - for example, by giving untruthful evidence [ Cooper v Dungan (1976) 50 ALJR 539] or by failing to adduce evidence which that party was duty bound to adduce [ Dijkhuijs v Barclay (1988) 13 NSWLR 639]. An order that the parties bear their own costs may also be made where the estate is small [ Re Salathiel [1971] QWN 18]." 13 The circumstances of the appeals varied. Hunter v Hunter and Churton v Christian have been mentioned. In none of the other cases in the first two of the footnotes was there discussion in the reasons of the order for costs. In Dehnert v The Perpetual Executors and Trustees Association of Australia Ltd (1954) 91 CLR 177 it was said (at 191) that the parties "must, of course, have their costs here as well as below out of the estate of the testator": as well, the Attorney-General representing beneficiary charities and appearing separately from the executor received his costs of the appeal out of the estate. In Hughes v National Trustees, Executors and Agency Co of Australasia Ltd (1979) 143 CLR 134 the appellant failed at first instance and received the net residuary estate on his appeal to the High Court. There was no discussion in the reasons of the order that the respondent pay the appellant's costs in the Full Court and in the High Court, but it was also ordered that such of those costs as were not recouped from the equivalent of the Suitors' Fund be paid to the respondent out of the estate. The respondent was not a beneficiary, and the result was much the same as an order for costs out of the estate. In Cooper v Dungan (1976) 50 ALJR 539, in which the appellants obtained a significant reduction in the amount awarded to the respondent, the report only notes "Appeal allowed with costs", and in Dijkhuijs v Barclay (1988) 13 NSWLR 639 the appellant in effect obtained a new trial, only Mahoney JA proposed an order that the respondent pay the appellant's costs, and there was no discussion. In re Salathiel (1971) QWN 18 the order that the parties bear their own costs at first instance and on appeal was meant to reflect the respondent receiving her costs at first instance and paying the appellant's costs on appeal, see at 42. 14 The learned authors also summarise the position in New Zealand. It has been mixed. It is said of successful appeals that '[i]n recent years the tendency has been for the court to fix the costs of the parties to the appeal and order that they be paid out of the estate". 15 There is thus support for the respondent's submissions. Other cases provide further support. In Golosky v Golosky (CA, 5 October 1993, unreported) the appellant succeeded in reducing the provision for the respondent. The respondent's costs were paid out of the estate, Kirby P referring to that as "the practice of the court concerning the costs of a spouse in such cases". I do not see why respondent spouses are in a special position. In Barnaby v Berry [2001] NSWCA 454 the appellant failed at first instance but received an enlarged legacy on appeal, and the Court ordered that all costs be paid out of the estate: counsel described this as "the usual order for costs". In Barns v Barns (2003) 214 CLR 169, on more complex issues than normal the appellant failed at first instance and on intermediate appeal and upon her success all costs were paid out of the estate. Again, there was no discussion. Sometimes, however, costs have followed the event, for example Blackmore v Allen [2000] NSWCA 162; Marshall v Carruthers [2002] NSWCA 86. 16 Some assistance may be gained from the disposition of appellate costs in probate proceedings. In Perpetual Trustee v Baker [1999] NSWCA 244 an appeal on testamentary capacity succeeded, Brownie AJA and I said (at [12] - [15]) - "12 The parties were agreed that, regardless of the outcome of the appeal, Bennett AJ's order that the costs of the trial should be paid out of the estate of the deceased should stand. They were also agreed that an unsuccessful appeal could bring an order that the appellant pay the respondent's costs. They disagreed over costs in the event of a successful appeal. The appellant said that, in the normal exercise of the discretion as to costs, the costs would follow the event, so that the respondent should pay the appellant's costs (but have a certificate under the Suitors Fund Act ). The respondent acknowledged that the normal exercise of the discretion would have that result, but said that the particular circumstances called for an order that the costs of the appeal be paid out of the estate of the deceased. Direct authority as to costs of an appeal in a situation such as the present could not be found. 13 Costs are in the discretion of the Court, and the established principle on which the discretion as to costs will normally be exercised is that costs follow the event. In probate litigation, in particular, however, exceptions have been recognised, one being that where the testator has been the cause of the litigation the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate, and another being that if the circumstances led reasonably to an investigation concerning the testator's will the costs may be left to be borne by those who incurred them (see for example in the estate of Hodges: Shorter v Hodges (1988) 14 NSWLR 698 at 709). 14 The two exceptions tend to overlap. As was said by Santow J in In the estate of Moyle: Moyle v Moyle (18 June 1988, unreported), if a testator is by his mental frailty and other circumstances in a position where the circumstances reasonably call for investigation of the validity of the will "in one sense the testator, though usually with no sense of blameworthy fault, has by his or her conduct caused the litigation to occur". A party reasonably but unsuccessfully propounding or challenging the will, and so bringing about the necessary investigation, should no more have to bear his own costs than pay the costs of the other party. So it has been said that where the conduct and habits and mode of life of a testator have given ground for questioning his testamentary capacity the costs of the unsuccessful party should be paid out of the estate, as distinct from being left to be borne by that party ( Davies v Gregory (1873) 3 P & D 28; Roe v Nix (1893) P 55; In the will of Millar (1908) VLR 682), and the costs of both sides in testamentary capacity cases have often been allowed out of the estate (In the will of Severs (1887) 13 VLR 572; Phillips v Dundas (Smith J, VSC 4 December 1995, unreported); Redroff v Miegoch (Santow J, NSWSC, 22 April 1996, unreported); re Ryan: Williams v Ryan (1998) VSC, 109; In the will of Ryan: Williams v Ryan (Byrne J, VSC, 23 October 1998, unreported); cf Middlebrook v Middlebrook (1963) 26 ALJR 216 where Dixon CJ and McTiernan, Taylor and Owen JJ ordered that the parties bear their own costs but Menzies J would have ordered that the costs be paid out of the estate). 15 We consider that the approach in these cases extends to the costs of unsuccessfully seeking to uphold a grant of probate on appeal, at least where the result at first instance was not obviously erroneous. In the present case the respondent was a necessary contradictor, and can hardly be said to have acted unreasonably when possessed of a judicially sanctioned grant. In the circumstances of the present case, we consider that a proper exercise of discretion is that the costs of the appeal should be paid out of the estate of the deceased, in the case of the appellant on a trustee basis." 17 Cole AJA thought, however, that "there is no reason why the usual rule should not apply in respect of costs of the appeal, with the unsuccessful party bearing those costs" (at [43]). 18 These observations were considered in this Court in Shorten v Shorten (No 2) [2003] NSWCA 60, with particular reference to the distinction between the testator being the cause of the litigation and the circumstances reasonably leading to an investigation. There was no occasion to pass upon the extension of the approach in the cases to the costs of unsuccessfully seeking to uphold a grant of probate on appeal. 19 It should be emphasised that costs are discretionary, and the order depends on the particular circumstances. In my opinion, however, in like manner the approach at first instance in Family Provision applications extends to the costs of unsuccessfully seeking to uphold an order for provision on appeal. 20 In the present case, I do not think the respondent acted unreasonably in seeking to uphold the Master's order. The appeal was part of working out the provision the deceased should have made. In my opinion, her costs of the appeal should be paid out of the notional estate. 21 I propose the orders -

Jvancich v Kennedy

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