Nicholson & Ors v Knaggs & Ors

2 The costs are likely to be substantial. As I said in the Judgment:[2]

The trial of this action extended over 34 sitting days from 27 October through to 17 December 2008. 38 witnesses were called. There were 3,250 pages of transcript and over 5,000 pages of documents. Early in the trial I gave the parties another chance to resolve their differences. I ordered a second mediation. In spite of this opportunity, the parties could not reach agreement.

3 The issue of severance arises by reason of my finding in the Judgment that:[3]

I am satisfied that Denise Knaggs exerted undue influence over Betty Dyke. She acted with the express or tacit approval of her husband, Tim Knaggs, to secure his inclusion as a joint beneficiary of a one third share of the residuary estate under the 1999 Will. In this regard, Betty Dyke's will was overborne and I am satisfied that had she been free from the influence, she would not have executed the 1999 Will with the inclusion of Tim Knaggs as a beneficiary.

4 I dealt with the question of severance in the Judgment. I did so subject to any further submissions which the parties may wish to advance on any orders which should be made. Although the issue of severance was raised on the second day of the hearing of the trial during the opening delivered by senior counsel for the Defendants, in which it was expressly submitted that it was open to the Court to sever part of a will which was the subject of a finding of undue influence from other parts of the will which were not, the issue of possible severance of a gift of the residue in either the 2001 Will or the 1999 Will was not raised during final submissions made by counsel. The Plaintiffs submitted before me in this hearing that they did not have an opportunity to respond to any argument as to possible severance. They submitted further that, prior to making final orders in this matter, the Court should permit the Plaintiffs to make submissions as to why severance of the gift of the residue in the 1999 Will, in the form indicated in paragraph 704 of the Reasons for Judgment or at all, should not occur. I acceded to that request, and on the resumption of the hearing of the matter as to the orders which should be made following the delivery of the Judgment, I heard further argument on the question of severance.

5 For completeness, I repeat what I said earlier in the Judgment on the subject:[4]

1. Consequent upon my findings that undue influence was exercised on Betty Dyke in relation to the 1999 Will, a question arises whether a Court, having found that only a discrete provision or bequest in a testamentary instrument has been included as a result of improper conduct, may sever the compromised provision or bequest, and admit the remainder of the will to probate. I could find no case precisely on point which could be considered as binding authority.
2. In the interests of achieving finality in this litigation, I should determine this matter now.
3. The learned authors of Halsbury's Laws of Australia put the matter straightforwardly enough. They state:

If the whole of the will is affected by undue influence, the will is invalid, but if only part of the will is affected, that part may be severed and the rest of the will admitted to probate.[5]

1. An early Victorian authority is cited in support of this proposition.[6] In the case of Re Nickson (dec'd)[7] A'Beckett J had cause to consider a will made in August 1915. In a will drawn by her long-time solicitor, Mr Kemp, Mrs Nickson left the bulk of the residue of her estate to him. It appears that Mrs Nickson had become somewhat infatuated with Mr Kemp. The Court said in obiter that, even if there had been no evidence of coercion and control over the mind of Mrs Nickson, if it had been found that Mr Kemp had failed to fulfil his obligations, the Court "should strike the gift to Mr Kemp out of the will", and admit the remainder to probate.
2. In the 1847 decision of the House of Lords in Allen v M'Pherson[8] the majority (Lords Lyndhurst, Brougham and Campbell) agreed that the Ecclesiastical Court had the power to "admit a part of an instrument to probate, and refuse it as to the rest".[9] As Lord Campbell put the matter:

[T]he distinction attempted to be drawn between the powers of the Court ... over a will and a part of a will, or over a codicil and a part of a codicil, cannot be supported.

... it is quite clear that the Ecclesiastical Court had jurisdiction to refuse probate of that part of the codicil which affects the appellant, because giving credit to the facts stated, that part of the codicil was not the will of the testator; he was imposed upon; and that part of the codicil ought to have been refused.[10]

1. Thereafter, the House of Lords entrenched the position. In Fulton v Andrews,[11] in an appeal from the Court of Probate (as the Ecclesiastical Court had by then become), an order was made remitting a previously granted probate back to that Court with directions that the grant be remade, less the residuary clause. Then in Wintle v Nye[12] it confirmed the legitimacy of a Court taking a blue pencil to a testamentary instrument in order to prevent a fraudulently procured bequest being admitted to probate along with the balance of a will.
2. Rhodes v Rhodes[13] was a decision of the Privy Council on appeal from the Supreme Court of New Zealand decided in 1882. In his judgment Lord Blackburn made a clear (in obiter) that in cases where an instrument has been sufficiently proven as comprising a testator's will, "but that from fraud ... the instrument ... also contained something that was not his will, this latter part is to be rejected".[14]
3. The issue in Rhodes was complicated by the fact that the rejection of the words not representing the true will of the testator in that case would have caused the sense of those that remained to be markedly altered. Lord Blackburn resolved the question in the following way:

A much more difficult question arises where the rejection of words alters the sense of those which remain. For even though the Court is convinced that the words were improperly introduced, so that if the instrument was inter vivos they would reform the instrument and order one in different words to be executed, it cannot make the dead man execute an new instrument; and there seems much difficulty in treating the will after its sense is thus altered as [validly executed according to law, given] the signature at the end of the will required ... [by law] having been attached to what bore quite a different meaning.[15]

1. In Australia, Kitto J considered the position in Osborne v Smith.[16] It was declared to be "undoubted law" that a Court of Probate may:

[I]n an appropriate case, grant probate ... in respect of a portion only of a document which has been executed as a will, omitting other portions as having formed no part of that to which the execution of the document really applied, as for example, where by fraud or mistake there has been included in the instrument words which in truth were not part of the testator's will.

1. Further, Kitto J in Osborne[17] cited Lord Blackburn's warning in Rhodes v Rhodes against omitting words from a testamentary instrument where the result would be to alter the sense of those which remained, observing[18] that:[19]

[A] Probate Court may [not] omit from the probate a word or words which appear in a will, where the omission will cause other words of the will to produce a result different from that which was within the knowledge and approval of the testator.

1. In Re Fenwick (decd)[20] Menhennitt J[21] cited Osborne v Smith, Fulton v Andrew, Rhodes v Rhodes and the earlier Victorian decision of Re: Hemburrow,[22] as authority for the proposition that:

In an appropriate case, probate may be granted in respect of proportion only of a document executed as a will, omitting other portions where, for example, by fraud, mistake or inadvertence there has been included in the instrument words which in truth were not part of the will of the testator. [Emphasis added]

1. Shortly thereafter, the New Zealand Court of Appeal in Tanner v Public Trustee[23] regarded it[24] as uncontroversial that a Court is permitted to grant probate of a will, but at the same time disallow, or effectively sever, particular benefactions on the ground of the "unrighteousness of those transactions". As Turner P observed:[25]

[T]he righteousness of [a] transaction, ... may be relevant only to a consideration of the validity of the particular benefactions whose righteousness is under suspicion; and in the present case therefore the unrighteousness of the transaction is not properly to be accepted as a decisive reason for refusing probate of the whole will. [Emphasis in original]

1. Testamentary undue influence falls squarely within the examples of fraudulent conduct cited by Menhennitt J in Re Fenwick (decd). As Lord Campbell confirmed more than 150 years ago in Allen v M'Pherson,[26] it is quite clear that a Court exercising probate jurisdiction has power to refuse probate of only that part of a testamentary instrument which has been brought about because of an improper imposition upon a testator or testatrix which does not truly represent his or her will.
2. I am satisfied that the words "and TIMOTHY PETER KNAGGS, farmer, both" and "or the survivor of them living at my death" contained in clause 5.1 of the 1999 Will, should be excised and not admitted to probate. Additionally, it follows as a matter of mechanics that the word "friends" appearing in clause 5.1 should be amended to the word "friend" by deleting the letter "s".
3. I am satisfied that these amendments will not cause other words of the will to produce a result different from that which was intended by the testatrix. The severance of the bequest to Tim Knaggs is "self-contained".[27]
4. The effect of the amendments to the 1999 Will is that Denise Knaggs will take a one third portion of the residuary estate in her own right and not jointly with her husband Tim Knaggs, who will no longer be a beneficiary. By this means the instrument will be restored to reflect the true will of Betty Dyke.

6 The Plaintiffs submitted that, it was not appropriate for the Court to make an order for the severance of words from the joint gift to Tim and Denise Knaggs. It was submitted that:

(1) Once it is determined that a will has been procured by undue influence and that the undue influence is exercised in respect of a gift of the residue, the entire gift is affected by that undue influence, resulting in the failure of the entire gift of the residue. It was also submitted, in effect, that if the entire gift of the residue should fail, the 1999 Will should not be admitted to probate, and that the 1985 Will should be admitted.

(2) Alternatively, it was submitted that the joint gift of the residue to the Knaggs should fail. It was submitted that, Denise Knaggs should not profit from her own wrongdoing in being complicit in the undue influence exercised on the testatrix in respect of the gift of the residue to her husband, and as a matter of discretion, the entire gift of one third of the residue to the Knaggs found in sub-clause 5.1 of the 1999 Will should be severed from the 1999 Will.

The Bequest to the Knaggs in the 1999 Will as Executed

7 The 1999 Will, by clause 5, made provision for the distribution of Betty Dyke's residuary estate. Sub-clause 5.1 provided:

My executors will divide the balance of my estate into one or more equal parts, sections, portions, and segments and will hold on trust and distribute such parts, sections, portions, and segments as follows:

5.1 One part jointly to my friends DENISE ANNE KNAGGS, farmer, and TIMOTHY PETER KNAGGS, farmer, both of 330 Craigie Road, Mount Martha, Victoria, 3934, or the survivor of them living at my death;

8 The bequests to Robert and Sandra Allen and to Dianne and Gary Smith were provided for in sub-clauses 5.2 and 5.3 respectively and were to the same effect.

9 Clauses 5.4 and 5.5 then provided a saving provision enabling the children (or the children of the surviving children) of the named beneficiaries to take the share of their parents in the event that both parents did not survive to attain a vested interest in the residuary estate.

10 Thus, according to the 1999 Will as executed, sub-clause 5.1 created a joint tenancy between Denise Knaggs and Tim Knaggs in relation to a one third share of the residuary estate. As such, each had an ownership interest in the whole of the one third share of the residuary estate upon attaining a vested interest in that property. In Wright v Gibbons [28] Latham CJ provided a classic exposition of a joint tenancy when he said:[29]

The interests of each joint tenant in the land held are always the same in respect of possession, interest, title and time. No distinction can be drawn between the interest of any one tenant and that of any other tenant. If one joint tenant dies his interest is extinguished. He falls out, and the interest of the surviving joint tenant or joint tenants is correspondingly enlarged.

11 Although much of the authority on the concept of joint tenancy is derived from real property law, joint tenancies in respect of personal property enjoy the same principal attributes. Joint tenancy as a form of co-ownership has two distinguishing features. The first is the right of survivorship. As stated by the New South Wales Law Reform Commission in its Unilateral Severance of a Joint Tenancy Report No 73 (1994):[30]

The right of survivorship (or jus accrescendi) is the most significant incident of a joint tenancy. When one joint tenant dies the whole of the estate remains with the surviving tenant(s). The survivor is not regarded as succeeding to the deceased joint tenant's interest, as the survivor acquired that interest at the time of transfer. The effect of the death is simply to free the property from the control of one of its owners. The interest of a joint tenant in the subject property cannot be bequeathed or disposed of by will. As long as co-owners remain joint tenants this right of survivorship cannot be defeated.

12 The second feature is the concept referred to by Latham CJ, now commonly described as the "four unities" of a joint tenancy. In the work Land Law,[31] the learned author Peter Butt describes the concept in the following terms:

So close is the relationships between joint tenants, that to create a joint tenancy requires the presence of the four unifying characteristics - the so-called "four unities". They are the unities of title, interest, possession and time.

13 However, even though a joint tenant has strictly nothing to convey because the co-joint tenant already owns the whole property,[32] a joint tenant may alienate his interest by transfer to another. As Rich J observed in Wright:[33]

The ownership by two or more persons of real property with the requisites of unity of possession, interest, title and time confers on each such person a share or right severable and capable of alienation.

Latham CJ in the same case[34] explained the mechanism in these terms:

If there are three joint tenants, A, B and C, and one joint tenant A transfers his interest to another joint tenant B, the result is that A then has no interest in the land, B becomes a tenant in common as to one-third interest in the land, and remains a joint tenant with C as to a two-thirds interest. If subsequently B transfers to A the interest which he still has as a joint tenant (A then having become a stranger to the title, his interest having passed to B), there is a further and complete severance. A becomes a tenant in common as to one-third interest with B and C, the transfer working a severance of the joint tenancy between B and C in the two-thirds interest in the land. The final result is that A, B and C become tenants in common, each having a one-third interest.

14 It follows that if there were two joint tenants, X and Y, and one joint tenant X elects to divest himself of his interest and transfers it to the other joint tenant Y, the result is that X loses his interest in the property and Y takes the property absolutely, free of the interest of X.

15 By the 1999 Will executed by Betty Dyke, according to its text, a defeasible interest was gifted to Tim Knaggs. In the event that his interest did not vest by operation of law, his wife Denise Knaggs would take her interest in one third of the residuary estate absolutely, free of the joint tenancy. The gift to Tim Knaggs would fail by operation of law if, for example he was to pre-decease the testatrix. It would also fail if he abandoned or relinquished his interest by transfer to his wife. In both cases, he would simply fall out, and the interest of the surviving joint tenant, Denise Knaggs, would be correspondingly enlarged. However, her interest would not be enlarged in physical terms, because she would already own the whole one third interest of the residuary estate. Her interest would only be "enlarged" in the sense that it would now be relieved of the joint tenancy interest of her husband and she would take the interest absolutely.

16 If the gift to Tim Knaggs was to fail by severance of his interest from sub-clause 5.1 of the 1999 Will, a not dissimilar position would be achieved. Again by operation of law, his joint interest would drop out and the interest of his wife would be correspondingly enlarged in the manner I have described.

Whether Severance Should Be Ordered in this Case

17 In the course of the Judgment[35] and argument before me, Osborne v Smith[36] was referred to. I set out the full passage of Kitto J relied upon, with which the other members of the High Court, Menzies and Windeyer JJ, agreed:

It is undoubted law that a court of probate has jurisdiction, in an appropriate case, to grant probate, or administration c.t.a. in respect of a portion only of a document which has been executed as a will, omitting other portions as having formed no part of that to which the execution of the document really applied, as, for example, where by fraud or mistake there has been included in the instrument words which in truth were not part of the testator's will: Rhodes v Rhodes (1882) 7 App Cas 192, at p198: "In that case you may strike out the passage, because he did not know it was there or intend that it should be, and therefore it was not his will in any sense of the word": Morrell v Morrell (1882) 7 PD 68, at p70 . In Rhodes v Rhodes (1882) 7 App Cas 192, however, Lord Blackburn, for the Privy Council, expressed doubt as to whether words could be rejected under this principle where the result would be to alter the sense of those which remained. "For", he said, "even though the Court is convinced that the words were improperly introduced, so that if the instrument was inter vivos they would reform the instrument and order one in different words to be executed, it cannot make the dead man execute a new instrument; and there seems much difficulty in treating the will after its sense is thus altered as valid within the 9th section of the 7 Will. 4 & 1 Vict. c. 26, the signature at the end of the will required by that enactment having been attached to what bore quite a different meaning". That the doubt thus expressed was well-founded the Court of Appeal held in a considered judgment in the case of In re Horrocks; Taylor v Kershaw (1939) P 198. The will there under consideration contained a gift for objects described as "charitable or benevolent". Evidence was given that the word "or" was inserted by a mistake on the part of the typist to whom the solicitor dictated the will, the solicitor having used the word "and". In order to save the gift from the invalidity which would result from the use of "or", the Probate Court was asked to strike that word out. The Court of Appeal considered that the alleged mistake had not been established by the evidence, but went on to hold that even if it had been established the case would not have fallen within the jurisdiction to exclude from the probate a portion of a document which otherwise was proved as a will. The reason was that "charitable", with its full meaning, was the choice of the testatrix herself; the word "benevolent", with its full meaning, was the choice of the draftsman to whom she had committed the task of drafting the will and by whose choice of the word she was in the circumstances bound; and the word "or" could not be deleted without making the words "charitable" and "benevolent" qualify one another so that neither would then carry its full meaning. The fact that the actual intention of the testatrix would thereby be effectuated was not regarded as justifying a step which would produce this result. The principle which was applied - and whether it was applied correctly or not is not to the point - was expressed in the words: "the cases in which the Court has decreed probate with the omission of words, phrases or clauses have all been cases where the matter omitted was, so to speak, self-contained and its omission did not alter the sense of what remained": (1939) P 189, at p219.

This proposition has recently been accepted by this Court in Ebert v The Union Trustee Company of Australia Ltd [1960] HCA 50; (1960) 104 CLR 346, at p351 and is fully borne out by the authorities. Only a few of them need be mentioned. The cases of In re Duane [1862] EngR 957; (1862) 2 Sw & Tr 590; (164 ER 1127) and Fulton v Andrew (1875) LR 7 HL 448 provide clear illustrations of the kind of case in which a clause may be omitted from probate without altering the sense of what is left. In each, it was a residuary gift which was omitted. In Morrell v Morrell (1882) 7 PD 68, a single word was omitted, but again every remaining word had precisely the sense it had before the omission, so that the will with the word omitted was exactly what the testator had believed he was signing. The case of Goods of Schott (1901) P 190 is similar.

The case of In the Goods of Boehm (1891) P 247 must be treated with some reservation. There it was proved that a mistake had occurred in a clause giving a pecuniary legacy. The testator had intended one person to be named as the legatee, and by a mistake the draftsman had substituted the name of another. The testator was led to execute the will in the belief that the correct name appeared. The decision was that the will should be admitted to probate with the name omitted. Of course the name of the intended legatee could not be inserted in the blank thus created. The learned judge perceived that by omitting the erroneous name he was creating an ambiguous situation. A court of construction might infer, on consideration of the will as a whole, that in the blank the name of the intended legatee should be understood, or it might hold that the clause was meaningless. Nevertheless his Lordship decided to omit the word. He said: "If a person by fraud obtained the substitution of his name for that of another in a will it would be strange if his name could not be struck out, although the rest of the clause in which it occurred became thereby meaningless. It may be that in the present case the effect of striking out the name in question will be, on the construction of the will, as it will then read, to carry out the testator's intentions completely. It is not for me to decide that. But even if to strike out a name inserted in error and leave a blank have not the effect of giving full effect to the testator's wishes, I do not see why we should not, so far as we can, though we may not completely, carry out his intentions" (1891) P, at p251.

In In re Horrocks; Taylor v Kershaw (1939) P 198, at pp219, 220 the Court of Appeal evidently felt some difficulty about In the Goods of Boehm (1891) p247. Sir Wilfred Greene MR, who delivered the judgment, mentioned that it was a case in which all parties consented to the application, and that the learned judge had not conceived himself to be doing something which altered the sense of what remained. Making no reference to the ambiguity that had been created, and treating the striking out of the name as if it had certainly deprived the clause of effect, his Lordship pointed to fundamental principle by saying: "it is one thing to strike out a word which leaves what is left devoid of ascertainable content and therefore inoperative; it is quite another thing to strike out a word when by doing so the meaning of what is left is qualified or cut down". It would seem to be the logical consequence of the application of this principle that the decision in In the Goods of Boehm (1891) P 247 was correct if, but only if, the will contained no residuary clause; and as to that, the reports of the case in the Law Reports, the Law Journal, the Law Times and the Times Law Reports are all silent. But both on principle and on the authority of the remark of Sir Wilfred Greene above referred to, it seems clear that the case cannot be regarded as meaning that the Probate Court may omit from the probate a word or words which appear in a will, where the omission will cause other words of the will to produce a result different from that which was within the knowledge and approval of the testator.

The point is crucial in the present case. The findings in the earlier suit by which the appellant is bound make it necessary that the case should be decided on the footing that the deceased did not know and approve of the clause which actually appears in the will in reference to the Home of Peace. But for the same reason the case must be decided on the footing that the deceased did not know and approve of a bequest to the appellant of the entire estate undiminished by a gift of 100 pounds or 200 pounds to the Home of Peace. Here lies the difficulty which is inherent in the proceedings and stands in the appellant's way whatever may be thought about the question of due execution. As has been pointed out, if the existing clause in favour of the Home of Peace were to be struck out, the gift to the appellant would necessarily have an effect different both from that which it has on the face of the instrument and from that which the deceased intended it to have. It would stand as a gift of the entire estate without qualification. While refusing recognition to one provision which the deceased did not know and approve, the Court would be turning another, which she knew and approved subject to a qualification, into one which, being unqualified, she did not know and approve. That, plainly, would be to go beyond the jurisdiction of the Probate Court.

18 In my opinion, the interest of Tim Knaggs in the residuary estate provided by clause 5.1 of the 1999 Will as executed is self-contained and the omission of this interest will not alter the meaning of what remains in any material respect.

19 Nothing beyond sub-clause 5.1 will be effected by a severance order.

20 As to what remains of sub-clause 5.1, as a joint tenant of the one third portion of the residue, prior to any severance, Denise Knaggs had an entitlement to the whole of that portion. Following severance she would continue to have an entitlement to the whole of that portion, subject to the joint tenancy.

21 If the interest of Tim Knaggs as a joint tenant was to end as a matter of law, for example if this was to occur if he pre-deceased the testatrix or if he surrendered his interest to his wife Denise Knaggs, his interest would pass to and be merged with that of his wife, who would then take her interest absolutely, free of the joint tenancy. Striking out his interest by severance, in law, would have the same consequence. Tim Knaggs would simply fall out, and the surviving joint tenant Denise Knaggs, being relieved of her husband's joint tenancy interest, would take her interest absolutely. It matters not whether this is brought about in law by the early death of Tim Knaggs, or by any other lawful means, such as a valid surrender of his joint tenancy interest or by severance.

22 I am satisfied that the omission of Tim Knaggs from sub-clause 5.1 will not cause other words of the 1999 Will to produce a result different to that which was properly within the knowledge of and validly approved by the testatrix, Betty Dyke. Indeed, the severance would achieve what the testatrix intended and validly approved. The undue influence which I have found did not operate to taint the balance of the 1999 Will. The only effect of the undue influence was to secure the inclusion of Tim Knaggs as a joint beneficiary under sub-clause 5.1.

23 As to the intention of the testatrix, I found in the Judgment that to undertake the severance of the gift to Tim Knaggs in sub-clause 5.1 of the 1999 Will would "reflect the true will of Betty Dyke"[37]. In this respect it should be noted that an earlier iteration of clause 5.1 contained in a draft of the 1999 Will, which had been drawn prior to 16 September 1999 and immediately preceded the version which became the executed will, when she was subjected to the undue influence, was in the following form:

My executors will divide the balance of my estate into one or more equal parts, sections, portions, and segments and will hold on trust and distribute such parts, sections, portions, and segments as follows:

5.1 One part to my friend DENISE ANNE KNAGGS, of 330 Craigie Road, Mount Martha, Victoria, 3934, farmer;

24 Given that Betty Dyke acted under undue influence in respect of sub-clause 5.1 when she executed her 1999 Will, in executing the will in that form, she did not in law approve of that part of her will. Although I have found that Betty Dyke did have knowledge of and approve the 1999 Will, the undue influence, as I have found it, was such as to prevent the approval of the testatrix from having its normal legal effect. In particular, given that the inclusion of Tim Knaggs as a joint beneficiary of a one third share of the residuary estate under the 1999 Will was achieved by the undue influence exercised over Betty Dyke and that Betty Dyke's will was overborne in that respect, the inclusion of Tim Knaggs as a beneficiary was not the subject of the full and free approval of the testatrix. In truth, the impugned text of sub-clause 5.1 was not part of the will of the testatrix.

25 The Plaintiffs submitted that the entire residuary gift in the 1999 Will should fail by reason of the undue influence which I have found, and as a consequence the 1999 Will should not be admitted to probate, but rather the 1985 Will should be admitted in its place.

26 I can see no justification for taking this course. To do so would be quite contrary to the intentions of the testatrix as I have found them to be and contrary to the validly approved balance of the 1999 Will, which ought to be admitted to probate, with the deletion of the offending part of sub-clause 5.1.

Whether the Joint Gift of the Residue to the Knaggs Should Fail

27 The Plaintiffs further submitted that Denise Knagg's interest would be increased so that "she will take a one third portion of the residuary estate in her own right and not jointly with her husband" and thereby the entitlement of Denise Knaggs under the 1999 Will would be enhanced. It was said that in these circumstances the Court should not exercise its discretion to sever the provisions of the Will by deleting the entitlement of Tim Knaggs, "in circumstances where she was one of the principal perpetrators of the undue influence," because to do so would enable Denise Knaggs to profit from her wrongdoing, which equity should not countenance.

28 However, the matter must be considered in the light of the intentions of the testatrix in the making of the 1999 Will as I have found them to be. In the exercise of the discretion, I should give considerable weight to arriving at an outcome which properly reflects the intentions of the testatrix. In my opinion, these considerations outweigh the contention that Denise Knaggs will profit from her wrongdoing by the proposed order for severance. Had she exercised no undue influence on Betty Dyke, or had no part in the exercise of any such undue influence, Denise Knaggs would have benefited from taking one third of the residuary estate in any event.

29 It follows that the gift to Denise and Tim Knaggs in sub-clause 5.1 of the 1999 Will should not fail in its entirety. The order for severance should be confined to the gift to Tim Knaggs.

30 Having heard and considered arguments from the Plaintiffs on the issue of severance, I am reinforced in my conclusion that this is an appropriate case for an order for severance to the effect described in the Judgment as follows:[38]

I am satisfied that the words "and TIMOTHY PETER KNAGGS, farmer, both" and "or the survivor of them living at my death" contained in clause 5.1 of the 1999 Will, should be excised and not admitted to probate. Additionally, it follows as a matter of mechanics that the word "friends" appearing in clause 5.1 should be amended to the word "friend" by deleting the letter "s".

31 Determining where the costs of the proceeding should fall is not without difficulty. Navigating a just path through the cross currents of competing claims, interests and principles is not a straightforward exercise.

32 There were six plaintiff parties. These included three natural person plaintiffs: Julie Ann Nicholson (First Plaintiff), John Bailey (Second Plaintiff) and Judith Bailey (Second Plaintiff). There were also three plaintiffs who were charities (the "Charity Plaintiffs"): Deaf Children Australia (Fourth Plaintiff); Animal Welfare League of Victoria (trading as the Lort Smith Animal Hospital) (Fifth Plaintiff) and Blue Cross Animals Society (Sixth Plaintiff).

33 In monetary terms, the Plaintiffs had divergent interests in pursuing the litigation. The relief sought by all Plaintiffs was set out in their summons dated 29 August 2005. Together they sought revocation of the grant of probate made to the executors on 11 October 2004 of the 2001 Will and grant of probate of the 1985 Will. The grant of this relief was also dependent upon the 1999 Will being not admitted to probate. The Plaintiffs, however, approached the case from quite different perspectives.

34 As to the natural person Plaintiffs, Betty Dyke's niece Julie Nicholson, was not to receive anything under the 1985 Will, she was left $10,000 under the 1999 Will, and was struck out of the 2001 Will.[39] Betty Dyke's close friends John and Judith Bailey were to be given $30,000 under the 1985 Will, $60,000 under then 1999 Will and $20,000 under the 2001 Will.[40] Consequently, in seeking to move for the grant of probate of the 1985 Will, rather than the 1999 Will, in monetary terms Julie Nicholson would have lost her bequest of $10,000 and the Baileys would have lost $30,000 of their bequest. I find that the natural person Plaintiffs were motivated to commence and press the litigation in order to ensure that the true intentions of Betty Dyke, as they believed them to be, were reflected in the will ultimately to be admitted to probate. This was their objective in the proceeding.

35 On the other hand, the Charity Plaintiffs, who had all been cut out of the 1999 Will and the 2001 Will, stood to gain a total of $100,000 between them in specific bequests if the 1985 Will was to be reinstated.[41] Further, and significantly, the Charity Plaintiffs also stood to gain from the trustee exercising its discretion in their favour in the exercise of its power to confer the residuary estate on charities associated with animal welfare and deaf welfare. Thus the Plaintiff Charities had a direct financial interest in the 1985 Will being admitted to probate.

36 There were seven defendant parties. These were: Brian Charles Kollias (now deceased, a former executor of the 2001 Will) (First Defendant), Timothy Peter Knaggs (Second Defendant), Gary Wayne Smith (Third Defendant), Robert Lawrence Allen in the Wills called Robert Lawrence Allen (Fourth Defendant), Denise Anne Knaggs (Fifth Defendant), Diane Jeanette Smith (Sixth Defendant) and Sandra Ann Allen (Seventh Defendant).

37 In accordance with my findings in the Judgment, the Knaggs had considerable involvement in the preparation of the various testamentary instruments under challenge in the proceeding. In contrast, the other Defendants had no material involvement. The Knaggs, too, had considerably greater involvement in managing the affairs of Betty Dyke and tending to her everyday needs, compared with the other Defendants. The Knaggs were therefore in a position to exercise significant influence upon her, to an extent that was markedly more profound than that which could be exercised by the other Defendants.

38 Generally the costs of the successful party are paid by the unsuccessful party.[42] The prima facie rule as to costs, namely that costs follow the event, also applies in probate suits.[43]

39 On the assumption that the usual approach is to be applied, it was submitted by the Defendants in the present case that the "success" of the Plaintiffs amounted to no more than a "pyrrhic victory", and as such, they should be regarded for the purposes of a costs determination as having been unsuccessful in the litigation, and consequently should be ordered to pay the costs of the Defendants.

40 However, even though the Charity Plaintiffs did not succeed in restoring the 1985 Will, which would have secured for them financial gain, the natural person Plaintiffs did succeed in restoring the 1999 Will to reflect the true intentions of the testatrix, which was consistent with their objective. With the setting aside of the 2001 Will, they succeeded in restoring the 1999 Will to reflect the intentions of Betty Dyke, as I have found them to be, with sub-clause 5.1 being severed to delete the joint interest of Tim Knaggs in one third of the residuary estate.

41 Further, the outcome of the proceeding was not without practical consequences of some significance for the estate. The 2001 Will and the December 2000 Codicil are to be set aside on grounds of lack of testamentary capacity and want of approval on the part of the testatrix. In accordance with my findings in the Judgment,[44] this will result in specific monetary legacies totalling $140,000 being restored to be administered pursuant to the 1999 Will and the residuary estate, as it was formerly provided for in the 2001 Will, being correspondingly reduced. Further, analysed in monetary terms from the Plaintiffs' perspective, the natural person Plaintiffs have achieved an outcome which will earn them a relatively modest financial gain. Out of the restored sum of $140,000, $50,000 will become available to the natural person Plaintiffs[45] when the 1999 Will is admitted to probate in place of the 1985 Will.

42 Accordingly, although the Plaintiffs did not win the case in the sense of achieving what they formally contended for, namely having the 1985 Will admitted to probate, it could not be said that they entirely failed.

43 However in probate cases, there are well recognised exceptions to the general rule that costs follow the event. The exceptions are:

(a) first, 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;[46]

(b) second, where the circumstances lead reasonably to an investigation concerning the testator's will, costs may be left to be borne by those who have incurred them, even if they fail to sustain the issue which they raise;[47] and

(c) third, where a putative beneficiary , by improper conduct, is responsible for suspicious circumstances necessitating litigation, the costs of the litigation may be ordered to be paid out of that part of the estate in which the party is interested, even if he or she is successful in the litigation.[48]

44 An example of the application of the first exception is to be found in the judgment of Sir J.P. Wilde said in Mitchell v Gard:[49]

If the fault lies at the door of the testator, his testamentary papers being surrounded with confusion or uncertainty in law or fact, it is just that the costs of ascertaining his will should be defrayed by his estate.

45 With regard to the second exception, Dixon J, in Middlebrook v Middlebrook[50] in the course of considering 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. the "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. I think that the order appealed from should be varied accordingly.

46 As to the third exception, the Court of Appeal in Daulizio v Trust Company of Australia & Ors[51] approved the statement of Isaacs J in Nock v Austin as to the approach which would ordinarily apply in these circumstances.[52] Nettle JA, with whom the other members of the Court of Appeal agreed,[53] cited the analysis of the trial judge in Daulizio, with which he could see no error.[54] This was as follows:

... Counsel for Ms Daulizio did not dispute what Isaacs J considered in Nock v Austin would ordinarily be the case, when he said:

"... that where a party having created suspicion in relation to a will under which he benefits is under the burden of clearing away that suspicion, then, as justice requires him to do so in the presence of any person interested should the suspicion be justified, he must, though eventually successful, ordinarily pay the costs of the person whose presence he has made necessary so far as his benefit extends".

Nock v Austin is illustrative of circumstances in which it was considered that the court costs of investigating the testator's knowledge and approval of the contents of the will should be borne by those beneficiaries whose conduct was largely responsible for the creation of the suspicious circumstances which led to such investigation. In that case the successful propounders of the will were substantial beneficiaries who had also prepared the will. Barton and Gavan-Duffy JJ said that the circumstances led reasonably to an investigation in regard to the will and that those interested in the residue (the propounders) had been in large measure the cause of the litigation. They said that one of the executors (a solicitor) should not have prepared a will which gave him a large share in the estate, and the other executor (who had obtained instructions) had acted somewhat indiscreetly in not asking the testator to let him take the instructions to some uninterested solicitor. They said that these matters constituted suspicious facts deserving consideration not only on the merits, but on the question of costs.

I have referred above to Isaacs J's statement of the ordinary rule which applied in such circumstances, in support of which reference was made by him to In the estate of Osment. In that case, the court ordered, having regard to the suspicious circumstances created by the executors, that the costs of all parties should come out of that portion of the estate (namely, specific legacies) given to the executors as beneficiaries under the will.

... In my opinion, this is a classic case for the application of the principle stated by Isaacs J in Nock v Austin. Ms Daulizio, having created great suspicion in relation to a will under which she substantially benefited, was under the burden of clearing away that suspicion, and was obliged to do so in the presence of the other interested parties. I would add that she was, as a result of her previous employment, somewhat experienced in relation to wills, and should have known better and, I think, did know better than to prepare and obtain a will under which she obtained such a large benefit without any intervention by an independent solicitor. It is true that Mr Ryan and Ms Box were independent, but they were very inexperienced and did not know Miss Tennent. [Footnotes omitted]

I consider that Nock stands as a statement of general principle that where a putative beneficiary is responsible for suspicious circumstances necessitating litigation, the costs of the litigation may be ordered to be paid out of that part of the estate in which the party is interested, even if he or she is successful in the litigation.

48 The application of the principles reflected in the recognised exceptions to the general rule, may nevertheless be tempered by the particular circumstances of the case, in particular the degree of blame to be imputed to the testator and the respective parties in incurring the costs of the litigation. These matters may be taken into account when the discretion of the Court is exercised. Sir J.P. Wilde said in Mitchell v Gard:[55]

These questions of costs are addressed to discretion of the Court. It is hardly in the nature of discretion that its exercise should be adjusted by exact rule. No positive regulation could be established that would bear the strain put upon it by the justice or hardship of particular instances. But, where all is not possible, some thing may yet be done. By acknowledged method and general classification, the suitor may in some measure be enabled to estimate the prospect before him, and foresee the penalties under which he launches into litigation. To this extent it is the duty of the Court, so far as may be, to assist him.

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? ...

49 This is not a case in which the testatrix, in any relevant and direct sense, was the cause of the litigation. Betty Dyke sought professional assistance in drawing up her wills, and no difficulty was occasioned by locating them or determining their content or construction. The first exception does not apply.

50 In my opinion, there were, however, circumstances which led reasonably to an investigation concerning the 1999 Will, the 2001 Will and the two codicils.

51 The Particulars of Undue Influence delivered by the Plaintiffs dated 19 December 2005, some three and a half months after the proceeding commenced, pointed to a number of factors which would lead to the conclusion that the Defendants were in a position to exercise undue influence over the testatrix at the time when she made her wills, however, no specific conduct of any of the Defendants was alleged which had this effect. Rather general circumstances were relied upon.

52 The Particulars of Undue Influence broadly alleged that Betty Dyke was elderly and frail, and depended heavily in her later years on the Defendants, particularly on Denise and Tim Knaggs, to provide her daily necessities, to manage her farm and care for her animals. She also became increasingly dependent on Tim Knaggs to manage her financial affairs. This in turn exposed her wills to suspicion that they had been procured by the undue influence of the Defendants, who were presented with the opportunity for its exercise.

53 The marked change between the 1985 Will and the 1999 and 2001 Wills gave rise to considerable suspicion, and was also referred to in the Particulars of Undue Influence. Although I found that, with one exception relating to the joint gift of one third of the residue to Tim Knaggs, the 1999 Will did reflect the true intentions of the testatrix, the dramatic alteration of the bequest of the residue to charities specified in the 1985 Will, to the position adopted in the 1999 Will and thereafter when the whole of the residue was to be gifted to Betty Dyke's neighbours, the Defendants, was a legitimate source of suspicion, particularly given the very large size of the residuary estate.

54 The suspicion was compounded by Betty Dyke's decision to gift to the Defendants the proceeds of the sale of a substantial sub-divided portion of her farm. This took place in 2000, with the proceeds being distributed to the Defendants in early 2001, some six months prior to her death.[56] Each family group of Defendants were gifted $413,320 from the proceeds.[57] There was evidence that Betty Dyke had said to members of her family that the Defendants were "pressuring her" to sell her land and that "they're trying to make me sell my land" and that "the neighbours [Defendants] had said to her that they had not been adequately paid" and that "the neighbours [Defendants] had suggested to her that she should sell part of her land so that they would be paid more for the help they were giving her".[58] I found that although Betty Dyke may have uttered statements such as these from time to time, there was no evidence that the Defendants in fact pressured Betty Dyke to sell the portion of her land in the way she may have suggested.[59] Nevertheless, statements such as this coming from the testatrix, coupled with the very large gifts involved, to the very persons who were to benefit so substantially under her wills, were bound to have given rise to suspicion surrounding the making of her wills and codicils, which was undertaken at about the same time. The land sale and distribution of the proceeds was also a matter referred to in the Particulars of Undue Influence

55 There was also a considerable body of evidence adduced from the natural person Plaintiffs and a number of other lay witnesses as to the mental incapacity of Betty Dyke between 1999 and 2001.[60] Expert medical evidence adduced by the Plaintiffs was to the same effect. The Plaintiffs were in possession of such evidence at about the time when they commenced the proceeding. Dr Lloyd, an expert aged care medical practitioner, swore an affidavit for the Plaintiffs on 5 September 2005. He concluded:

1. It in my opinion is highly improbable that ms Dyke would not have been showing signs of significant cognitive impairment from at least 1997 and possibly as early as 1995.
2. I have considerable doubt that Ms Dyke had testamentary capacity in 2001.
3. I also doubt that Ms Dyke had testamentary capacity in 1999.

56 I determined as to Betty Dyke's cognitive capacity:[61]

(a) By mid-1999 Ms Dyke was suffering from cognitive impairment characteristic of the pre-dementia stage of Alzheimer's disease described by Professor Peisah. This remained her condition in March of 2000;

(b) The very mild cognitive impairment characteristic of this stage of the disease contributed to Betty Dyke's dependence on her care givers, in particular Denise Knaggs and those who were in a position of authority in her life, and rendered her susceptible to their influence. In this context I accept Professor Peisah's view that although any debilitating mental or physical illness resulting in dependence on a caregiver may facilitate the subversion of the testator's free will, dementia in particular increases susceptibility to undue influence;

(c) By late 2000 and early 2001, Ms Dyke's condition had progressed to the stage of mild dementia as described by Professor Peisah;

(d) By early 2002 her condition had advanced to the moderate dementia stage; and

(e) By mid-2002 she was suffering from severe dementia as diagnosed by Dr Nyagam at the Frankston Hospital shortly after her admission.

57 I further concluded that the testatrix did not have the requisite testamentary capacity at the time when she made her 2001 Will in January 2001, although she did have the necessary capacity when she made her 1999 Will in September 1999. As I found in the Judgment, the testatrix did not have the necessary capacity when she executed the December 2000 Codicil and the 2001 Will. In relation to the issue of lack of testamentary capacity, suspicion arose from a number of factors, all considered in the context of the testatrix being elderly and physically frail: the unexplained appointment of Mr Kollias as an additional executor;[62] the unexplained and significant reduction to the monetary gifts in the 2001 Will;[63] the inadequacies of the solicitor's record evidencing testamentary capacity;[64] the failure of the solicitor to obtain a medical certificate;[65] and the failure of the solicitor to conduct an appropriately detailed interview.[66] As to the assistance provided by Denise and Tim Knaggs in the provision of information with respect to the preparation of the December 2000 Codicil and the 2001 Will,[67] although those persons were involved in this process, and it did give rise to a ground of suspicion as to Ms Dyke's testamentary capacity, the information they provided was at the request of Ms Dyke's solicitor, Mr Kollias. In response to this request they provided to him the full names and addresses of the executors Gary Smith and Robert Allen to assist in the preparation of the December 2000 Codicil and later the 2001 Will. The information they provided to Mr Kollias was of a formal nature. It did not relate to any disposition under the will. Their conduct in this respect could not be considered as in any way improper.

58 As to her knowledge and approval of the 1999 Will and the March 2000 Codicil, I found that the circumstances surrounding her execution of those instruments raised a suspicion that Betty Dyke did not do so with the requisite knowledge and approval.[68] I found that Ms Dyke was a person of very limited education, having left school at the end of eighth grade and had no experience of legal or business affairs beyond what was necessary to manage her small farming enterprise. I further found that she self-medicated with the drug Serepax, which may have produced confusion as a side effect, particularly if taken in variable dosages. I concluded that at least these matters in combination called for an enquiry as to whether Betty Dyke had the necessary knowledge and gave the necessary approval to the terms of her 1999 Will and the March 2000 Codicil.

59 In relation to the suspicion which I found as to whether the December 2000 Codicil and the 2001 Will were executed by the testatrix with her necessary knowledge and approval, it was the deficient procedures adopted by Ms Dyke's solicitors, coupled with the age of the testatrix, which gave rise to the well founded suspicion, as I found it to be, as to whether Betty Dyke had adequate knowledge of and gave her approval to the testamentary instruments before signing them.[69]

60 The second exception is therefore clearly enlivened, and if applied in full, would result in the costs of the Plaintiffs and the Defendants being left to be borne by those who have incurred them, even if the Plaintiffs in part have failed to sustain the issues which they raised in relation to the 1999 Will.

61 Subject to what follows, I propose to order that the costs of the proceeding be left to be borne by those who have incurred them.

62 As to an order that each party is to bear its own costs of a proceeding, the observations made by Kirby P (as he then was) in Huntsman Chemical Co Aust Ltd v International Pools Australia Pty Ltd[70] are instructive. In considering the effect of the usual order in favour of a successful litigant for costs to be paid on a party and party basis, his Honour said:

The fact that a party and party costs order leaves some burden of costs upon a successful party may seem unjust. But in highly developed legal systems of the world it is not unknown to have a general regime whereby each party to litigation bears its own costs. This, for example, is the ordinary position in courts in the United States of America. It was, as Mahoney JA has explained, the original position of the common law of England. The ordinary rule in this court (as in most courts of Australia) is that a successful party usually secures no more than an order that its costs should be paid on a party and party basis. See Milosevic v Government Insurance Office of New South Wales.[71] Doubtless behind these rules lies a social judgment that dispute resolution in the courts is expensive but, to ensure access to the courts, full indemnity costs are not ordinarily ordered. Some costs are borne even by successful parties as an incident to the curial arrangements which we accept as generally just.

63 I find that the conduct of the Smiths and the Allens did not give rise to any suspicion which ought reasonably to have prompted the litigation.

64 The high water mark of the allegation directed at the Smiths was the involvement of Gary Smith in introducing Betty Dyke to his solicitor, Mr Lumb, on 28 March 2000 for the purposes of the preparation and execution of the March 2000 Codicil and driving her to an appointment with Mr Lumb in Melbourne.[72] It should be noted that the March 2000 Codicil did not have the effect of altering any bequest in the 1999 Will. It merely substituted the male members of the three family groups of Defendants as executors in place of Ms Dyke's accountant and solicitor and made one other inconsequential amendment. I found that neither Gary nor Diane Smith exercised any undue influence over Betty Dyke at the time when she gave instructions for and executed the March 2000 Codicil.[73] I further found that the Smiths did not exert any undue influence over Betty Dyke at any other time when she gave instructions for and executed the other testamentary instruments which are under challenge in this litigation.[74]

65 In relation to the Allens, I noted in the Judgment that at the close of the trial the Plaintiffs abandoned any allegation that Sandra or Robert Allen had engaged in any conduct which amounted to undue influence in respect of any of the wills or codicils in contention. In my opinion there was no evidence to substantiate such a claim.[75]

66 However, the third exception calls for consideration in the light of the conduct of the Knaggs. The question is, were they in part responsible for suspicious circumstances necessitating or perpetuating the litigation? If so, should the costs of the litigation, or part of those costs, be ordered to be paid out of that part of the estate in which they have an interest?

67 The Knaggs were closely involved in the preparation of the 1999 Will. This came to light in the course of the litigation. It was particularised in large part in the Amended Particulars of Undue Influence delivered by the Plaintiffs dated 21 September 2007.[76] By this time discovery had been completed, and an affidavit prepared by Ms Dyke's former solicitor Mr Moffatt sworn 6 April 2006 had come into the possession of the Plaintiffs. This made reference to various attendances of Denise Knaggs in the course of Ms Dyke giving instructions for her 1999 Will.

68 My findings in the Judgment in large part reflected the thrust of the allegations made by the Plaintiffs in their Amended Particulars of Undue Influence.[77] In particular I found that: the conduct of Tim Knaggs in making the telephone call to Betty Dyke's solicitor on 25 August 1999, in which he sought to advance his personal preference for the disposition of Betty Dyke's land, evidenced his willingness and desire to influence the will making process. This coincided with his own aspirations in disregard of the wishes of the testatrix, Ms Dyke, and was "inappropriate and improper"[78]; Tim Knaggs added his own handwritten notations to a document which was intended to be given to Betty Dyke's solicitor as instructions for her 1999 Will, and that these notations were made without the knowledge, authority or approval of Betty Dyke;[79] Denise Knaggs remained present in the consultation between Betty Dyke and her solicitor on 1 September 1999, during which she handed over her handwritten instructions for Betty Dyke's will, including Tim Knagg's written additions. Denise Knaggs remained in the consultation until she was asked to leave;[80] on 16 September 1999 Denise Knaggs telephoned the office of Betty Dyke's solicitor and requested the inclusion of her husband Tim Knaggs and Sandra Allen as joint beneficiaries along with their married partners of a one third share of the residuary estate under the 1999 Will. There was no satisfactory evidence demonstrating that the decision to add Tim Knaggs as a beneficiary was the product of Betty Dyke's own free and independent will [81], indeed, I found that her intentions were to the contrary; and then on 20 September 1999, Denise Knaggs brought Betty Dyke to her solicitor's office for the signing of the completed 1999 Will.[82]

69 The exercise of undue influence, by Denise and Tim Knaggs, as I have found, did have the effect of overbearing the will of the testatrix in relation to the gift of a joint interest to Tim Knaggs of one third of the residuary estate found in sub-clause 5.1 of the 1999 Will.

70 The conduct of Denise and Tim Knaggs in relation to the preparation of the 1999 Will was improper and gave rise to suspicious circumstances. Although it did not induce the commencement of the litigation, because the nature and extent of their involvement was only revealed during the course of the litigation, their conduct did play a part in sustaining the continuance of the litigation.

71 The Knaggs were subjected to a sustained attack during the trial, both in cross-examination and in submissions, as to their involvement in the preparation of the 1999 Will. The issue of the alleged undue influence exercised by the Knaggs in respect of the 1999 Will occupied approximately seven days at trial, including opening and closing addresses.

72 In making the order as to costs which directly affects Tim Knaggs, I take into account that as a consequence of the finding of undue influence which I have made, this will result in his interest being severed from the 1999 Will. Given that much of the impugned conduct of the Knaggs was jointly undertaken, an award of costs against both Denise Knaggs and Tim Knaggs on the basis I propose, would be an appropriate reflection of the degree of involvement of both of the Knaggs parties in perpetuating the litigation.

73 In the exercise of the Court's discretion, I propose to order that the Fifth Defendant (Denise Knaggs) pay from the amended bequest in sub-clause 5.1 of the 1999 Will, and the Second Defendant (Timothy Knaggs) be ordered to pay personally, the Plaintiffs' costs of their instructing solicitor and senior and junior counsel for seven days of the trial. Further, it appears to me that the conduct of the Knaggs which I have described warrants the making of an order for payment of these costs other than on a party and party basis.[83] The conduct in question was highly irregular and not only put at risk the testamentary freedom of the testatrix in the making of the 1999 Will as a whole, in one respect as I have found, it did result in undue influence being exercised over her. I will order the costs to be paid on an indemnity basis.

74 There were two other elements of the conduct of Denise Knaggs which should be visited with costs. The first was the destruction of her diaries shortly before the proceedings commenced, and the second was her lack of candour with respect to her sighting a document which necessitated her recall and further cross-examination.

75 In the Judgment, I made adverse findings against Denise Knaggs in relation to the destruction of her diary, which was a document that I found would have been valuable as an evidentiary tool in the proceeding.[84] She appreciated the forensic value of her diary.[85] She was conscious at the time when she destroyed her diary that further court proceedings were either likely or possible in relation to Betty Dyke's wills;[86] and that if such proceedings were commenced, she appreciated that the contents of her diary had the potential to be relevant evidence and could be produced by court process for examination. I found this to be at least one of the reasons which operated on her mind when she determined to destroy her diary.[87]

76 The examination of this issue at trial, both in cross-examination and in submissions, occupied approximately two days of court time.

77 In the exercise of the Court's discretion, I propose to further order that the Fifth Defendant (Denise Knaggs) pay from the amended bequest in sub-clause 5.1 of the 1999 Will the Plaintiffs' costs of their instructing solicitor and senior and junior counsel for two days of the trial. Further, the conduct of Denise Knaggs in relation to the destruction of her diary warrants the making of an order for payment of these costs other than on a party and party basis.[88] The conduct in question was calculated to destroy relevant evidence which should have been before the Court. I will order the costs to be paid on an indemnity basis.

Lack of Candour Necessitating Recall of Witness

78 I found that Denise Knaggs was not telling the truth when she denied previously seeing, at the relevant time, a letter dated 17 August 1999 from Ms Dyke's solicitor, Mr Moffatt, to his client the testatrix about her instructions for a new will.[89]

79 Another copy of the letter was discovered during the trial which contained handwritten notations of Denise Knaggs. This necessitated her recall for further cross-examination. The letter dated 17 August 1999 with handwritten notations was put to Denise Knaggs. I repeat the findings I made in the Judgment:[90]

This document was discovered in the course of the trial on the file of a solicitor, Mr Lumb, who was called as a witness in the case. Denise Knaggs was recalled on 4 December 2008. She was shown the typed letter with the handwriting on it, but repeated her earlier claim that she had never before seen the letter until she was shown a copy of Mr Moffatt's affidavit in 2006. Upon being referred to the handwriting on the letter she at first denied it was hers. After being pressed on the matter at some length and upon being shown another document which she had previously conceded was in her handwriting, Denise Knaggs finally conceded that the writing on the typed letter was hers and that it was done when instructions were being given to Mr Moffatt for the will at a time well prior to 2006.

80 In the exercise of the Court's discretion, I propose to further order that the Fifth Defendant (Denise Knaggs) pay from the amended bequest in sub-clause 5.1 of the 1999 Will the Plaintiffs' costs of their solicitor and senior and junior counsel for one half day of the trial. Further, the conduct of Denise Knaggs in relation to her approach to the letter of 17 August 1999 warrants the making of an order for payment of these costs other than on a party and party basis.[91] The conduct in question was an attempt to maintain a mistruth. I will order the costs to be paid on an indemnity basis.

Allegations of Undue Influence Maintained by the Plaintiffs

81 At the close of the trial the Plaintiffs abandoned any allegation that Sandra or Robert Allen had engaged in any conduct which amounted to undue influence in respect of any of the wills or codicils in contention. I found that there was no evidence to substantiate such a claim.[92]

82 However, the Plaintiffs persisted in their claims alleging undue influence exercised by the Smiths. As to these allegations, I found that the Smiths did not exert any undue influence over Betty Dyke at any time when she gave instructions for and executed the testamentary instruments which were under challenge in this litigation.[93]

83 In Reginald Alfred Becker v Public Trustee of New South Wales,[94] Nicholas J considered a claim of undue influence which had been pressed at the trial to its conclusion, but was ultimately rejected by his Honour sitting as the trial Judge. The plaintiff was the executor of the will of a testatrix. His application was for the grant of probate of the will. This was opposed by the second defendant (the Royal Flying Doctor Service) and the third defendant (the Salvation Army) (who in the judgment were together referred to as "the charities"). The charities opposed the grant of probate to the conclusion of the trial on the grounds of want of approval of the will, and a combined allegation of fraud and undue influence. There was significant overlap between the contested grounds. The undue influence was said to have been exercised when the volition and judgment of the testatrix was overborne by a fraudulently based appeal made by an acquaintance to the effect that she would be left homeless if she was not left the house of the testatrix. The trial judge found against the charities on all grounds, concluding in relation to the undue influence claim that the allegation "was without evidence to support it".[95]

84 Nicholas J considered the question of costs in separate judgment.[96] His Honour referred to principles often applied in such cases:[97]

Ordinarily, failure to establish an allegation of undue influence or fraud will be followed by condemnation in costs. In Re Cutcliffe's Estate [1959] P 6 Hodson LJ said (p21):

"... The discretion of the court is always there, and the rules on which that discretion is exercised are there for the assistance of those who have to advise litigants before they embark on litigation, so that they may have some idea of the risks they run as to costs. It must surely be obvious to anyone who has studied the history of litigation in the Probate Division, notwithstanding the exceptions which are to be found in the books, that where pleas of undue influence and pleas of fraud are made, the probability, at any rate, if they are unsuccessfully made, is that the people who make such charges and fail will be condemned in the costs not only of that charge but of the whole action".

It follows that the unsuccessful allegation of undue influence or fraud may result in the loser being required to pay the costs of the whole of the proceedings even if it be shown that there were reasons warranting the contemporaneous investigation of due execution, knowledge and approval, and of testamentary capacity (Bardon, Re v Florence; Shekelton v Bardon; Estate Ruah Jeanette Bardon [Unreported, NSWSC, 15 December 1983] per Holland J p4_)_.

85 Nevertheless, Nicholas J also noted authority for the proposition that an unsuccessful party may be relieved of paying costs if there were reasonable grounds for contesting the case on these issues. In Mitchell v Gard[98] it was said:

... if there be sufficient and reasonable ground, looking to the knowledge and means of knowledge of the opposing party, to question either the execution of the will or the capacity of the testator, or to put forward a charge of undue influence or fraud, the losing party may properly be relieved from the costs of his successful opponent.

86 If the approach in Mitchell v Gard is adopted, determination of the question would turn on the reasonableness of a party's conduct in raising and maintaining a claim of undue influence, having regard to the standard of proof to be met in making out such a claim. I found that the civil standard is to be met in making out this allegation, having regard to Briginshaw v Briginshaw,[99] requiring the reasonable satisfaction of the court given the nature and consequence of the fact or facts to be proved.[100]

87 In Becker Nicholas J observed that an essential component of the undue influence alleged was the fraudulent conduct of the perpetrator. His Honour further concluded that the charities failed to demonstrate that there were reasonable grounds for contesting the will on the ground of undue influence in these circumstances.[101]

88 The case presented by the Plaintiffs, although it involved no allegation of fraud, failed to prove the allegation of undue influence against the Allens or the Smiths. The evidence did provide a basis for alleging that, because Betty Dyke was completely or substantially dependent upon the Defendants for her everyday necessities of life, the opportunity presented itself for the Smiths and the Allens to exercise undue influence upon her in relation to the 1999 Will and the 2001 Will and the two codicils. As to the March 2000 Codicil, it was alleged that on the date when the Codicil was executed the testatrix was taken by Gary Smith and driven to the offices of Nevett Ford Solicitors, whose offices were in Melbourne, who were the solicitors of Gary Smith and not the Ms Dyke's solicitors for the purpose of executing the said Codicil. Again, this evidence pointed to a circumstance where the opportunity to exercise undue influence presented itself.

89 I was invited to draw an inference form these matters, when considered in the context of the significant change from Betty Dyke's 1985 Will to the position in the 1999 Will and the 2001 Will, pursuant to which the Allens and the Smiths benefitted so substantially, in the further context of them having already enjoyed the substantial benefit of the inter vivos gifts derived from the land disposition, that undue influence was proven. However, as I said in the Judgment, 'suspicion is not proof', and the Plaintiffs failed on the issue.

90 The Plaintiffs, in pressing their undue influence allegations against the Allens and the Smiths raised discrete issues against them of a serious kind. The conduct of the trial called for careful consideration as to whether this was a justifiable. In these days of extensive court delays and high legal costs parties should consider carefully what matters they will put in issue in their litigation. The Plaintiffs, no doubt pinned their hopes on establishing the allegations through cross examination. They failed in their endeavour, but assumed risk in costs in embarking on the exercise.

91 However, I am not satisfied that this is a case where the Plaintiffs' conduct in pressing the unsuccessful allegation of undue influence against the Allens and the Smiths should be visited with an award of costs against them for the whole of the trial. It is appropriately dealt with on an issue basis, taking into account the relatively short amount of time occupied at the trial by the allegations.

92 Although the Plaintiffs pressed the allegation against Allens until its abandonment late in the trial, the time occupied at the trial by the allegation was not more than one day. Being an allegation of serious misconduct directed to the Allens, it is appropriate that the costs order should be made on an indemnity basis.

93 I will order that the Plaintiffs pay the Allens the costs of their instructing solicitor and senior and two junior counsel for one day of the trial on an indemnity basis.

94 The Plaintiffs persisted in their claim that Gary and Diane Smith had engaged in undue influence to the end of the trial. I found that the high water mark of such an allegation was the involvement of Gary Smith in introducing Betty Dyke to his solicitor, Mr Lumb, on 28 March 2000 for the purposes of the preparation and execution of the March 2000 Codicil and driving her to the appointment in Melbourne after collecting the necessary documents from Mr Moffatt's office en route.[102] I found that neither Gary nor Diane Smith exercised any undue influence over Betty Dyke at the time when she gave instructions for and executed the March 2000 Codicil.[103]

95 In the light of the evidence as it stood at the close of the Defendants' case, it was not appropriate to have persisted to judgment in the claim of undue influence directed to the Smiths. In relation to Dianne Smith, there was absolutely no basis to infer that she had exercised any undue influence, and in relation to Gary Smith, the factual foundation from which I was invited to draw such an inference was demonstrably weak.

96 The conduct of the Plaintiffs in pressing their case of undue influence against the Smiths to judgment, and not abandoning it as they did in relation to the Allens, was unmeritorious and is deserving of an appropriate sanction in costs. It is appropriate that the Plaintiffs should suffer a costs order which approximates the time spent on the issue at trial. The time occupied at the trial by the allegation, including final addresses, was not more than two days. Being an allegation of serious misconduct directed to the Smiths, it is appropriate that the costs order should be made on an indemnity basis.

97 I will order that the Plaintiffs pay the Smiths the costs of their instructing solicitor and senior and both junior counsel for two days of the trial on an indemnity basis.

98 The Defendants made an offer to the Plaintiffs to settle the proceeding by letter dated 18 August 2008. This was repeated by letter dated 3 October 2008. The offers were said to be made in accordance with the principles established in Calderbank v Calderbank.[104] The Defendants' offers were rejected by the Plaintiffs.

99 Earlier, by letter dated 28 April 2008, the Plaintiffs had made a Calderbank offer to the Defendants to settle on the basis of payment $3 million, which was to be administered in accordance with the 1985 Will, plus one third of the Plaintiffs' costs to be paid on a solicitor/client basis.

100 The Defendants' Calderbank letters were in the following form:

We have reviewed the material to be relied upon by all parties. It is our opinion that your clients' action will fail. The evidence proposed by your clients does not establish that Ms Dyke lacked testamentary capacity when making her last two wills or the codicils to her second last will.

Further, there is nothing in the material which establishes that when she made her last two wills or the codicils to her second last will Ms Dyke was subject to any undue or improper influence.

It is also clear from the medical evidence and the various experts' reports that Ms Dyke was capable of understanding the true nature and extent of her estate when she made her last two wills and the codicils to her second last will and was able to comprehend the nature and content and effect of the wills she made.

Further, and in the alternative, it cannot be seriously doubted, having regard to the circumstances surrounding the making of the 1999 will ("the Moffat will") Ms Dyke did have the necessary testamentary capacity to make that will, that she acted without any or any undue or improper influence from any person and the validity of that will cannot be successfully contested. In so concluding we are mindful of the considerable care and attention that Mr Moffat pain in taking instructions from Ms Dyke when preparing her will, the various conferences he had with her to ensure she knew and understood the nature and effect of the will, the size of her estate and the other calls which may be made upon her estate. He was also conscious of the need to ensure, and was satisfied that, Ms Dyke had the mental capacity to make such a will. Further, he took positive steps to satisfy himself that that Will was made freely, voluntarily and was not the product of any undue influence.

The conduct of Mr Moffat in preparing the Moffat will was exemplary and undoubtedly his evidence and conduct will enable to the Court to be satisfied that the Moffat will, at least, was a valid will and, if nothing else, probate should be granted in relation to that will.

Further, however, the Court will be invited to draw and will be able to draw the conclusion that having regard to the relatively small alterations to bequest made in her last will compared to the Moffat will, Ms Dyke was will aware of what she was doing when she made her last will and that probate was properly granted.

Come what may, it is our opinion that as either the last will or the Moffat will will be granted probate, your clients will have no financial gain from pursuing the action undertaken by them.

Never the less, we are instructed to offer to pay to your clients the sum of $100,000 in full satisfaction of any claim any of your clients may make in relation to the acts facts matters and circumstances referred to in the above proceeding, inclusive of costs, upon the basis that the application made by your clients be dismissed. Alternatively, upon the basis that probate of the Moffat will be granted.

This offer is open for acceptance with 14 days of today.

This offer is made in accordance with the principles established in Calderbank v Calderbank [1975] 3 All ER 333; [1975] Fam 93 at 106. In the event the Court does not make any Order more favourable to your clients than that proposed above we will use this letter on the question of costs. In that regard we advise that our clients shall be seeking costs of the proceedings on a party/party basis up to the date of expiration of this offer and thereafter on an indemnity basis until the hearing and determination of the proceeding.

We also advise that our clients will be seeking to recover the costs from each of your clients jointly and severally. As result any one or other of your clients will be responsible for the whole of our clients' costs of the proceeding should the other Plaintiffs not pay or contribute to the payment of costs awarded against them.

101 In Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2)[105] the Court of Appeal[106] set out the principles applicable to a consideration of Calderbank offers. I set out below the relevant passages from the judgment in full:[107]

Calderbank offers and the award of indemnity costs

Calderbank letters and the consequences that flow from them have been considered by the Trial Division of this Court in a number of cases: see M T Associates Pty Ltd v Aqua-Max Pty Ltd & Anor (No.3); Clarke v ABC; Pearson v Williams; Nolan v Nolan; and Aljade & MKIC v OCBC.

One of the seminal contributions to the law on indemnity costs was the judgment of Sheppard J in Colgate Palmolive Company v Cussons Pty Ltd. Amongst the circumstances listed by his Honour as having been thought to warrant the exercise of the discretion to award indemnity costs was -

"an imprudent refusal of an offer to compromise".

So widely has this been accepted that the proposition has been advanced that a Calderbank offer gives rise to a presumption that the party rejecting the offer should pay the offeror's costs on an indemnity basis if the offeree receives a less favourable result.

In Aljade and MKIC v OCBC, however, Redlich J rejected the notion of any such presumption, holding that the weight of authority -

"strongly points to an approach that involves no preconceptions about when the rejection of a Calderbank offer should lead to the making of a special costs order. It will do so where it is concluded that the rejection of the offer was unreasonable".

We respectfully agree with his Honour's conclusion. We note, as did his Honour, that the notion of such a presumption has been decisively rejected by the New South Wales Court of Appeal (most recently in Brymount Pty Ltd v Cummins (No.2)), by the Federal Court and by the Queensland Court of Appeal.

The correct approach, in our view, is to treat the rejection of a Calderbank offer as a matter to which the Court should have regard when considering whether to order indemnity costs. As Gyles JA stated in SMEC Testing Services Pty Ltd v Campbelltown City Council -

"In the end the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rules as to costs ..."

Encouraging settlement

In Grbavac v Hart, Hayne JA cited with approval what the New South Wales Court of Appeal had said in Maitland Hospital v Fisher (No.2) about the policy rationale underlying the availability of special orders for costs where offers of compromise are rejected. Like his Honour, we think that what was there said is equally relevant to the exercise of the costs discretion where a Calderbank offer has been made. The policy objectives were said to be:

"(1) To encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants which amount to a realistic assessment of the plaintiff's real claim which can be placed before its opponent without risk that its 'bottom line' will be revealed to the court;

(2) To save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary, having regard to an earlier (and, as found, reasonable) offer of compromise made by a plaintiff to a defendant; and

(3) To indemnify the plaintiff who has made the offer of compromise, later found to have been reasonable, against the costs thereafter incurred. This is deemed appropriate because, from the time of the rejection or deemed rejection of the compromise offer, notionally the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise. In such circumstances that party should ordinarily bear the costs of litigation."

At the same time, as Redlich J said in Aljade, there are other competing objectives of equal importance.

"Potential litigants should not be discouraged from bringing their disputes to the Courts. It is such considerations which underlie the general rule that an order for special costs should only be made in special circumstances."

The test of unreasonable rejection

In our view, these competing considerations can be sufficiently accommodated by applying a test of (un)reasonableness. The critical question is whether the rejection of the offer was unreasonable in the circumstances. We see no justification for a more stringent test such as "manifestly" or "plainly" unreasonable.

Of course, deciding whether conduct is "reasonable" or "unreasonable" will always involve matters of judgment and impression. These are questions about which different judges might properly arrive at different conclusions. As Gleeson CJ said recently, "unreasonableness is a protean concept". But a test of reasonableness is, we think, entirely appropriate to the exercise of a discretion such as this.

Factors relevant to assessing reasonableness

The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:

(a) the stage of the proceeding at which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(c) the extent of the compromise offered;

(d) the offeree's prospects of success, assessed as at the date of the offer;

(e) the clarity with which the terms of the offer were expressed;

(f) whether the offer foreshadowed an application for an indemnity costs in the event of the offeree's rejecting it.

[Footnotes omitted]

102 I have concluded that the rejection of the Defendants' offer by the Plaintiffs was not unreasonable in the circumstances. In doing so, I have taken into account each of the factors relevant to assessing the reasonableness of the Calderbank offer referred to in Hazeldene's Chicken Farm. However, there were three factors in this case which warrant analysis.

103 The first was that there were clearly suspicious circumstances surrounding the execution of the 2001 Will and the 1999 Will. These were well appreciated by the Plaintiffs at the time of them receiving the Defendants' Calderbank offers. In the letter in which they made their own offer to the Defendants on 28 April 2008, the Plaintiffs said:

As to the 2001 Will:

There is strong lay evidence (including that of Dr Nyagam) to indicate that from at least 1997 the Deceased was in a confused mental state and was unable to manage basic intellectual processes. Accordingly the Plaintiffs' contend that the Deceased lacked the necessary testamentary capacity to execute the 2001 Will.

As to the 1999 Will:

The Plaintiffs consider, that on the basis of the Affidavit of Ian Moffatt sworn 6 April 2006 and the Exhibits thereto, there is sufficient evidence to show a large amount of undue influence by both Tim and Denise Knaggs, in the giving of instructions to draw the 1999 Will. There is also much other evidence which shows that the Deceased was not in control of her own affairs at the relevant times. The circumstances in which the Will was drafted and signed are suspicious.

104 The Plaintiffs were also in possession of the affidavit sworn by Dr Lloyd dated 5 September 2005 to which I have already referred, in which he expressed the opinion that he had considerable doubt as to the testamentary capacity of Ms Dyke in 2001 and doubt as to her capacity in 1999.

105 In my opinion, the possession of this evidence by the Plaintiffs was such as to reasonably warrant the rejection of the Defendants' offer and to proceed to have the Court scrutinize the circumstances surrounding the making of the two later wills before admitting either one of them to probate, or in the alternative making an order admitting the 1985 Will to probate.

106 Second, the offer made by the Defendants assumed the validity of the 1999 Will and proceeded on the assumption that it was immune from challenge. The offer totally rejected the notion that there was any undue influence exercised in the making of the will, a position ultimately shown to be incorrect.

107 Third, if the Calderbank offers are assessed in monetary terms, it is relevant that the offer of $100,000 was expressed to be "inclusive of costs". The proceeding had commenced by the issue of the Plaintiffs' summons dated 29 August 2005. The case was hard fought with the hearing of numerous interlocutory applications. The first Calderbank offer was made on 18 August 2008. By then, the costs of the Plaintiffs could have been expected to approach, if not well exceed the $100,000 offered. Further, Julie Nicholson was to have received $10,000 under the 1999 Will, and was struck out of the 2001 Will.[108] John and Judith Bailey were to be given $60,000 under then 1999 Will and $20,000 under the 2001 Will.[109] On this basis, the natural person Plaintiffs would have received a total of an additional $50,000 had the 1999 will been admitted to probate in place of the 2001 Will. On this analysis, when the costs of the proceedings to that point are taken into account to achieve the result of having the 1999 Will admitted to probate, as was offered by the Defendants in their Calderbank letters, it is highly likely that the sum of $100,000 was considerably less than adequate to compensate the Plaintiffs, given the sums they were entitled to under the 1999 Will and given the costs they had incurred, after the proceeding had been on foot for three years. For this reason too, rejection of the Calderbank offers, in my opinion was reasonable.

108 For these reasons the service of the Calderbank offers upon the Plaintiffs should not result in an adverse order of costs being ordered against them.

Order Revoking the Grant of Probate of the Will made on 12 January 2001

109 I propose to make an order revoking of the grant of probate made to the executors on 11 October 2004 of the will of the deceased made on 12 January 2001.

Order that the Will of the deceased made 20 September 1999 should be Admitted to Probate, Subject to Severance

110 I propose to make an order granting probate to the National Trustees Executors & Agency Company of Australia Limited of the will of the deceased made on 20 September 1999, subject to sub-clause 5.1 thereof being amended by deleting the words "and TIM PETER KNAGGS, farmer, both" and "or the survivor of them living at my death" and by deleting the letter "s" from the word "friends" where it appears in sub-clause 5.1.

1. Subject to what follows, with the intent that each party shall bear their own costs of the proceeding, there be no orders as to costs.
2. In respect of their part in perpetuating the litigation, the Fifth Defendant (Denise Knaggs) is ordered to pay from the amended bequest in sub-clause 5.1 of the 1999 Will, and the Second Defendant (Timothy Knaggs) is ordered to pay personally, the Plaintiffs' costs of their instructing solicitor and senior and junior counsel for seven days of the trial, such costs to be paid on an indemnity basis.
3. In respect of the destruction of diary issue, the Fifth Defendant (Denise Knaggs) is ordered to pay from the amended bequest in sub-clause 5.1 of the 1999 Will the Plaintiffs' further costs of their instructing solicitor and junior and senior counsel for two days of the trial, such costs to be paid on an indemnity basis.
4. In respect of her conduct at the trial necessitating her recall to give evidence, the Fifth Defendant (Denise Knaggs) is ordered to pay from the amended bequest in sub-clause 5.1 of the 1999 Will the Plaintiffs' further costs of their instructing solicitor and senior and junior counsel for one half day of the trial, such costs to be paid on an indemnity basis.
5. In respect of their allegation of undue influence against the Allens, it is ordered that the Plaintiffs pay to the Fourth and Seventh Defendants (the Allens) the costs of their instructing solicitor and their senior and two junior counsel for one day of the trial on an indemnity basis.
6. In respect of their allegation of undue influence against the Smiths, it is ordered that the Plaintiffs pay to the Third and Sixth Defendants (the Smiths) the costs of their instructing solicitor and their senior and two junior counsel for two days of the trial on an indemnity basis.

113 If the parties are not able to agree on the form of the order or on any other necessary orders which should be made, I will hear them further.

[1] [2009] VSC 64.

[2] [2009] VSC 64, [28].

[5] 1996 loose-leaf service, vol 24 at [395 - 210] Emphasis added.

[6] See too: Allen v M'Pherson (1847) 1 HLC 191; 9 ER 727; Rhodes v Rhodes [1882] LR 7 App Cas 192.

[7] [1916] VicLawRp 35; [1916] VLR 274 at 282.

[8] (1847) 1 HLC 191; 9 ER 727.

[9] Allen v M'Pherson (1847) 1 HLC 191 at 210; 9 ER 727 at 736, per Lord Lyndhurst. This was despite both the Lord Chancellor (Lord Cottenham) and Lord Langdale each doubting the capacity of the Ecclesiastical Court to grant only a limited part of a testamentary instrument to probate and finding that a resulting trust relationship did arise (1847) 1 HL Cas 191 at 215 - 221; 9 ER 727 at 738 - 739 per Lord Chancellor and 1 HL Cas 191 at 229; 9 ER 727 at 744 per Lord Langdale.

[10] (1847) 1 HL Cas 191 at 233; 9 ER 727 at 745, per Lord Campbell (Emphasis added).

[11] (1875) LR 7 HL 448 at 476.

[12] [1959] 1 WLR 284.

[13] Rhodes v Rhodes [1882] LR 7 App Cas 192.

[14] Rhodes v Rhodes [1882] LR 7 App Cas 192 at 198

[16] [1960] HCA 89; (1960) 105 CLR 153 at 159.

[17] Osborne v Smith [1960] HCA 89; (1960) 105 CLR 153 at 162.

[19] In his consideration of the ratio of In the Goods of Boehm [1891] at 247.

[20] [1972] VicRp 75; [1972] VR 646.

[21] Re Fenwick (decd) [1972] VicRp 75; [1972] VR 646 at 651.

[22] [1969] VicRp 98; [1969] VR 764.

[23] [1973] 1 NZLR 68.

[24] Tanner v Public Trustee [1973] 1 NZLR 68 at 90.

[25] Tanner v Public Trustee [1973] 1 NZLR 68 at 91.

[26] (1847) 1 HLC 191; 9 ER 727.

[27] Osborne v Smith [1960] HCA 89; (1960) 105 CLR 153 at 160 per Kitto J, quoting from In Re: Horrocks; Taylor v Kershaw (1939) 198 at 219.

[28] Wright v Gibbons (1949) CLR 313 at 330.

[30] Cited in Sackville & Neave, Property law, Cases and Materials, 6th Ed. (1999) p 563.

[31] Peter Butt, Land Law Fourth Edition, Law Book Company 2001, p 201 [1405].

[32] Cf. the observations of Lord Nicholls in Burton v Camden London Borough Council [2000] UKHL 8; [2000] 2 AC 399 at 404, where His Lordship described this formulation as "esoteric" and "remote from the realities of life". Nevertheless, it remains a valid analysis of the law. See: ibid at 409-410 per Lord Millett.

[36] [1960] HCA 89; (1960) 105 CLR 153 at 161 - 162.

[41] $30,000 to Blue Cross; $50,000 to Lort Smith Hospital; and $20,000 to the Victorian School for Deaf Children.

[42] Ritter v Godfrey [1920] 2 KB 47; Hughes v Western Australian Cricket Association (Inc) [1986] FCA 382; (1986) ATPR 40-748.

[43] See Twist v. Tye, [1902] P. 92; Spiers v. English, [1907] P. 122; Middlebrook v Middlebrook (1962) 36 ALJR 216, 217 per Dixon CJ; Re Green [1969] WAR 67, 83.

[45] $40,000 to the Baileys and $10,000 to Julie Nicholson.

[46] See: Middlebrook v Middlebrook (1962) 36 ALJR 216, 217 per Dixon CJ; Re Green [1969] WAR 67; In the Estate of Hodges: Shorter v Hodges (1988) 14 NSWLR 698 at 709; Perpetual Trustee v Baker (1999) NSWCA 244 [at 13 - 14]; Shorten v Shorten (No 2) [2003] NSWCA 60; Re Estate Late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311; Becker v Public Trustee of New South Wales [2006] NSWSC 1146 per Nicholas J [at 12].

[47] See: Middlebrook v Middlebrook (1962) 36 ALJR 216, 217 per Dixon CJ; Re Green [1969] WAR 67; In the Estate of Hodges: Shorter v Hodges (1988) 14 NSWLR 698 at 709; Perpetual Trustee v Baker (1999) NSWCA 244 [at 13 - 14]; Shorten v Shorten (No 2) [2003] NSWCA 60; Re Estate Late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311; Becker v Public Trustee of New South Wales [2006] NSWSC 1146 per Nicholas J [at 12].

[48] In the estate of Osment [1914] P 129; Nock v Austin [1918] HCA 73; (1918) 25 CLR 519, per Isaacs J at 529; Daulizio v Trust Company of Australia & Ors [2005] VSCA 215, per Nettle JA at [27 - 30].

[49] (1863) 3 Sw & Tr. 75 at 76-77; 164 E.R. 1280 at 1281.

[50] 36 ALJR 216 at 217.

[51] [2005] VSCA 215.

[52] [1918] HCA 73; (1918) 25 C.L.R. 519 at 529.

[54] Further, in Daulizio, the Court of Appeal did not confine the approach of Isaacs J in Nock v Austin to a party who happens to be a residuary legatee [ibid at 31 - 35].

[55] (1863) 3 Sw & Tr. 75 at 76-77; 164 E.R. 1280 at 1281.

[70] (1995) ATPR 41-403 at 40,445.

[71] (1993) 31 NSWLR 323 (CA) at 333.

[76] Amended Particulars of Undue Influence delivered by the Plaintiffs dated 21 September 2007, paragraph 1 (h) i - iv.

[77] Judgment (at 490 - 492; 508 - 534; 540 and 543].

[83] Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited; Cussons Pty Limited v Colgate-Palmolive Company and Colgate-Palmolive Pty Limited [1993] FCA 536; (1993) 46 FCR 225, per Sheppard J [at 24].

[88] Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited; Cussons Pty Limited v Colgate-Palmolive Company and Colgate-Palmolive Pty Limited [1993] FCA 536; (1993) 46 FCR 225, per Sheppard J [at 24].

[91] Colgate-Palmolive Company and Colgate-Palmolive Pty Limited v Cussons Pty Limited; Cussons Pty Limited v Colgate-Palmolive Company and Colgate-Palmolive Pty Limited [1993] FCA 536; (1993) 46 FCR 225, per Sheppard J [at 24].

[94] [2006] NSWSC 743.

[96] Reginald Alfred Becker v Public Trustee of New South Wales [2006] NSWSC 1146.

[99] [1938] HCA 34; (1938) 60 CLR 336 per Dixon, J at 362.

[104] [1975] 3 All ER 333.

[105] [2005] VSCA 298 (13 December 2005).

[106] Warren, C.J., Maxwell, P., and Harper, A.J.A.