Peek v Wheatley (No 2)

Texts Cited: N/A

Category: Costs

Parties: Ronald William Peek (Plaintiff/Cross-defendant)
Anthony Wheatley (Defendant/Cross-claimant)

Representation: Counsel:
S Chapple SC / H Morrison (Plaintiff/Cross-defendant)
L Ellison SC / KM Francis (Defendant/Cross-claimant)
Solicitors:
Hunt and Hunt Lawyers (Plaintiff/Cross-defendant)
Nicholas Angelos & Co Solicitors (Defendant/Cross-claimant)

File Number(s): 2023/00160738

Publication restriction: Nil

JUDGMENT

1. On 30 May 2025 I gave judgment in this matter and ordered that the defendant pay the plaintiff’s costs on the ordinary basis as agreed or assessed: Peek v Wheatley [2025] NSWSC 554 (Judgment). I granted leave to each party to approach my associate if a different order as to costs was sought. The defendant exercised that liberty and seeks an order that his costs are paid from the deceased’s estate (the Estate) on the ordinary basis or, in the event that the Court is not prepared to make that order, that he not be ordered to pay the plaintiff’s costs, and the plaintiff bear his own costs.

2. In the Judgment, I concluded that an informal document found in the ‘Notes’ application on the deceased’s iPhone (the Note) should not be admitted to probate as an informal will under s 8 of the Succession Act 2006 (NSW) because I was not satisfied that the deceased intended the Note, without more on his part, to have present operation as his will.

3. The defendant was a friend of the deceased and would be the principal beneficiary of his estate if the Note was admitted to probate. The plaintiff is the brother of the deceased who takes the entire estate of the deceased under an intestacy as a consequence of the Judgment.

Relevant principles

4. The court has a discretion to determine by whom, to whom and to what extent costs are to be paid, although in the exercise of this discretion, the usual order is that costs will follow the event unless it appears to the court that some other order should be made: Civil Procedure Act 2005 (NSW) (CPA), s 98(1); Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.1.

5. An order for costs is compensatory not punitive, being for the purpose of indemnifying the successful party for the expense of the litigation, and the usual order ‘embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour’: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67] (McHugh J).

6. In Re Estate of Hodges (Deceased); Shorter v Hodges (1988) 14 NSWLR 698 at 709 Powell J referred to the two ‘exceptions’ to the general principle that in adversary litigation costs follow the event which have come to be recognised in probate litigation, being:

‘1. where the testator has, or those interested in residue have, been the cause of the litigation, the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate;

2. if the circumstances led reasonably to an investigation in regard to the document propounded, the costs may be left to be borne by those who respectively incurred them: see, eg, Mitchell and Mitchell v Gard and Kingwell (1863) 3 Sw & Tr 278; 164 ER 1280; Orton v Smith (1873) LR 3 P & D 23; Wilson v Bassil [1903] P 239; Spiers v English [1907] P 122; Kenny v Wilson; In the Estate of Holtam; Gillett v Rogers (1913) 108 LT 732.’

7. These two categories are commonly referred to as ‘exceptions’: see Perpetual Trustee Company Limited v Baker [1999] NSWCA 244 at [13]; Shorten v Shorten (No 2) [2003] NSWCA 60 at [15]; Kemp v Findlay [2025] NSWCA 46 at [221]. What is meant by this is that they are circumstances in which the Court may exercise the discretion under UCPR r 42.1 to make an order other than that costs follow the event and are not a fetter on that discretion: Etherton v Mitchelmore [2024] NSWSC 170 at [69]; Estate of Mimi Milka Jaksic (Berger) (Costs) [2025] NSWSC 332 at [19]. As Dixon CJ put it in Middlebrook v Middlebrook (1962) 36 ALJR 216 at 217:

No doubt in probate suits the prima facie rule is that, as in other litigation, costs follow the event. But in probate suits there are considerations which more readily affect the application of this rule than in most other forms of litigation.

8. In order for either exception to apply, it is necessary that the pursuit of the litigation by the unsuccessful party was, in all the circumstances, reasonable. This determination is to be made objectively in the circumstances which preceded the hearing in Court (Etherton at [74]), but also having regard to any knowledge or reasonable belief gained subsequently (Petrovski v Nasev; Estate of Janakievska (No 2) [2011] NSWSC 1474 at [16]). In this regard, it would be relevant to consider whether any settlement offers have been made in connection with the litigation, but I note that none were made in the present case. It is also necessary to bear in mind that the exceptions do not permit a party to engage in fruitless litigation in the expectation that their costs will be defrayed out of the estate.

9. It is recognised that the two categories covered by the exceptions overlap. In Baker Giles JA and Brownie AJA said at [14]:

‘The two exceptions tend to overlap. As was said by Santow J in In the estate of Moyle: Moyle v Moyle (18 June 1988, unreported), if a testator is by his mental frailty and other circumstances in a position where the circumstances reasonably call for investigation of the validity of the will "in one sense the testator, though usually with no sense of blameworthy fault, has by his or her conduct caused the litigation to occur". A party reasonably but unsuccessfully propounding or challenging the will, and so bringing about the necessary investigation, should no more have to bear his own costs than pay the costs of the other party. So it has been said that where the conduct and habits and mode of life of a testator have given ground for questioning his testamentary capacity the costs of the unsuccessful party should be paid out of the estate, as distinct from being left to be borne by that party …’

10. Nevertheless, the two categories are not coterminous (Shorten at [20]) and hence in circumstances where there is potential overlap between the two categories, if the testator is properly seen as the cause of the litigation and the unsuccessful party has acted reasonably in pursuing the litigation, then the usual order is that costs be paid out of the estate: Gray v Hart; Estate of Harris (No 2) [2012] NSWSC 1562 at [19].

11. As is apparent from the passage from Baker set out above, to conclude that the deceased is the cause of the litigation does not involve ascribing blameworthy fault to the deceased. Rather, what it refers to is whether it is the deceased's own conduct which has led to his testamentary papers being surrounded with confusion or uncertainty in law or fact: Mitchell v Gard (1863) 3 Sw & Tr 275 at 277-278; 164 ER 1280. As White J put it in Gray at [27], *‘*a broad approach has been taken as to whether the deceased by his or her modes of life, or irrational actions, or other dealings with relatives, or failures towards relatives, has caused the litigation to occur’.

12. It has been accepted in a number of cases involving an informal document created by the deceased that the deceased may be properly treated as causing the litigation due to failure to complete the requisite formalities for a valid will: eg Public Trustee v New South Wales Cancer Council [2002] NSWSC 220 at [55]; Bannister v Perpetual Trustee Co Ltd [2008] NSWSC 1283 at [29]-[30]; Bell v Crewes [2011] NSWSC 1159; (2011) 5 ASTLR 298 at [61]-[70]; Etherton at [73]; Kemp at [225]. However, even if the deceased is regarded as causing the litigation, it is still necessary to consider whether the conduct of the litigation was reasonable and all the other relevant circumstances in exercising the costs discretion, as illustrated by Etherton at [79]-[90] and Estate of Moran*;* Teasal v Hooke (No 2) [2015] NSWSC 88 (Estate of Moran (No 2)) at [10]-[12].

13. Underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the Court considers to be the responsibility of each party for the incurring of costs: Chandrasekaran v Western Sydney Local Health District (T/A Westmead Hospital) (No 2) [2024] NSWCA 21 at [12]; Commonwealth v Gretton [2008] NSWCA 117 at [121] per Hodgson JA (Mason P agreeing at [1] and Beazley JA agreeing at [91]).

Submissions of the parties

14. The defendant submitted in summary that:

15. The first exception applied so that the defendant’s costs should be borne by the deceased’s estate, or if that submission was not accepted, the second exception applied so that, at the very least, the defendant should not be responsible for the plaintiff’s costs.

16. The deceased was responsible for the litigation because despite ample opportunity, regular agitation, and a personal relationship with his solicitor, the deceased failed to attend to the formalities of making a will in keeping with the requirements of s 6 of the Succession Act. In circumstances where the deceased failed to make a formal will, but left behind an informal document (the Note) which the court accepted as a testamentary document (Judgment at [122], [123]), the deceased left his testamentary affairs in a sufficiently unclear state to lead unavoidably to the need for the parties to seek clarity by way of judicial process.

17. It is also relevant that the defendant who was named as executor under the Note, believed that it was the final testamentary document of the deceased. As the named executor, he had a duty to propound the Note and in doing so he acted reasonably given that the deceased had on numerous occasions singled out the defendant as the intended executor of his estate, a matter affirmed in the Note. The defendant played the role of contradictor putting the plaintiff to proof.

18. The plaintiff submitted that the costs of the proceeding should follow the event, for essentially the following reasons:

19. The two ‘exceptions’ to the usual order as to costs not true exceptions but particular discretionary considerations that might apply in a given case.

20. The proceedings could not fairly be described as being the fault of the testator. The Note was located on the deceased personal mobile phone. He did not send it to anyone. The position might have been different if he had told the defendant or Mr Dawson about the existence of the document. However, it was the defendant and Mr Dawson who went looking for, and found, what the Court ultimately held was a draft document. The draft was typed onto the deceased’s private phone and he did not tell anyone about it or send it to anyone. He is not at fault, nor did he cause the litigation by doing that.

21. As for the second exception, the actual investigation was in the hands of the defendant and his lawyer who took custody of the iPhone, spoke to and obtained evidence from a number of the deceased’s friends and associates and they (as the material witnesses) had the benefit of their own knowledge as to the circumstances in which the will was found and the relevant context (including the deceased’s knowledge of the formal requirements to make a will as frequently urged upon him by Mr Dawson).

22. None of that evidence rose high enough to establish that the deceased intended Note to operate as his will. As early as the point at which the defendant’s affidavits had been prepared, which was before the commencement of the proceedings, the defendant had all the material necessary to make an assessment of whether the deceased intended the Note to operate as a will.

23. Critically the defendant bore the onus at all times of establishing that the Note was the deceased’s valid will and could not be properly regarded as a disinterested executor. He had no obligation to propound the Note and, based on the material within his control and knowledge, it was not reasonable for him to do so (or at least not reasonable to do so on the basis that he would be entitled to his costs from the estate if unsuccessful in the proceedings).

24. The matter proceeded by way of pleadings as adversarial litigation and steps taken in the litigation by the plaintiff, who was an outsider to the events involved in the discovery of the will, including issuing a subpoena for the deceased’s phone records and obtaining a single expert report as to the meta data on the phone, called attention to the inadequacy of the investigation that had, to that point, been conducted by the defendant. Indeed, the investigation conducted by the defendant was flawed and inadequate and deprived the Court of what may have been material context. These deficiencies were uncovered by the plaintiff in the context of adversarial, interest driven litigation.

25. None of the ‘exceptions’ should be held to apply to this case, but even if they do apply, there are other discretionary considerations that the Court should take into account to conclude that costs should follow the event. Firstly, the defendant was the primary beneficiary of the informal document and it was in his interest to propound it and he did so through adversarial, interest driven litigation. Secondly, the relevant affidavit evidence was largely prepared, and entirely in the hands of, the defendant, before the proceedings had been commenced. Thirdly, the submission that the defendant acted, at least, as a contradictor has no force because, as the deceased died intestate, there is no relevant contradictor and, in fact, the plaintiff was the contradictor to the defendant’s claim that the deceased died testate.

26. In reply, the defendant submitted in summary:

27. For the purposes of the first exception, the relevant question is whether the litigation is caused by the conduct of the testator and not whether the testator was ‘at fault’, referring to Brown v McEnroe (1890) 11 NSWR Eq 134 at 145 (‘where the litigation is caused by the conduct of the testator, the estate must bear all the costs of both parties’). The deceased can be said to have caused the litigation because he could have, but did not, take action to formalise his testamentary affairs despite the urgings from his solicitor to do so.

28. Further, given that the Note contained the deceased’s testamentary intentions and nominated the defendant as executor in line with his statements to multiple witnesses, it reasonably required investigation and justified the conduct of litigation by the defendant to propound the Note, irrespective of whether the defendant’s role was truly that of a contradictor.

29. While it is accepted that the defendant was not a ‘disinterested executor’, it is relevant that the defendant is not the only person named as a beneficiary in the Note and in propounding the Note the defendant was advancing the interests of the other beneficiaries as well as his own.

Consideration

17. Applying the principles set out earlier, I consider that the appropriate order is that the defendant’s costs, on the ordinary basis, be paid out of the Estate and that the plaintiff’s costs, on the indemnity basis, be paid out of the Estate.

18. First, the plaintiff did not dispute that the Note was created by the deceased and recorded his testamentary intentions, and the only issue was whether the Note satisfied the third requirement under s 8 of the Succession Act, being whether the deceased intended the Note, without more, to have immediate legal effect: Judgment [7], [122]-[123], [167]. The resolution of that issue was not straightforward. The evidence disclosed that the deceased had discussions with his solicitor, Mr Dawson, regarding the need to make a will and had indicated an intention to give instructions to Mr Dawson about his will shortly before his death but, despite having every opportunity to do so, did not: Judgment [25]-[28]. In those circumstances it can be said, without assigning any blame to the deceased, that his conduct led to his testamentary papers being surrounded with confusion and that he was the cause of the litigation.

19. Secondly, it was reasonable for the defendant through the litigation to seek to establish that the Note satisfied the third requirement under s 8, particularly given the size of the Estate and that the defendant was advancing the interests not only of himself but also of the other persons who would benefit if the Note was a valid will. While there were deficiencies in the way in which the defendant’s case was conducted, as noted in the plaintiff’s submissions referred to above, that does not make the conduct of the litigation itself unreasonable.

20. Thirdly, addressing the matters raised by the plaintiff summarised at [15(7)] above, while the litigation was adversarial in nature, this simply reflected the fact that the defendant bore the onus of establishing that the Note satisfied the third requirement in s 8, and the defendant’s conduct of the litigation could not be regarded as ‘strident’ or otherwise out of the ordinary for cases of this kind: cf Estate of Moran; Teasel v Hooke [2014] NSWSC 1839 at [80]; Estate of Moran (No 2) at [10]. In the circumstances I do not regard the fact that the affidavit evidence was largely prepared before the proceedings commenced or that the defendant was not truly a contradictor as material, one way or the other.

21. Fourthly, in all circumstances and in particular the first matter referred to above, I consider that the payment of the defendant’s costs out of the Estate represents what is fair having regard to the responsibility of the parties for the incurring of costs.

22. Accordingly, I will make the following orders:

23. Vacate Order 4 of the Orders made on 30 May 2025 by Richmond J.

24. The plaintiff’s costs on the indemnity basis be paid out of the Estate.

25. The defendant’s costs on the ordinary basis, as agreed or assessed, be paid out of the Estate.

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Amendments

23 September 2025

Made changes to parties' representation