Plaintiff v Applicant

2 In response, the plaintiff filed a summons seeking dismissal of the revocation application and, in the event that the revocation application was not dismissed, security for costs from the applicant, pursuant to r 62.02(1)(a) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) ('the Rules').

3 On 15 February 2023, reasons were delivered and orders made dismissing the applicant's summons ('the reasons').[1] As a result of the dismissal of the applicant's summons, it was unnecessary to determine the plaintiff's summons.

4 The parties were unable to reach agreement on the costs of the proceeding. Both filed written submissions, with costs to be determined on the papers.

5 The applicant seeks there be no orders as to costs, alternatively, submits that costs should follow the event. If the latter order is made, the applicant seeks that the costs be assessed on the standard basis.

6 The applicant submits there was no finding that the revocation application had no real prospects of success but, rather, that a prima facie case had not been established. Nor was there a finding that the applicant's particulars were made without a proper basis or otherwise contained allegations that should never have been made, as might warrant a special costs order.

7 In this regard, the applicant refers to the plaintiff's concession in her written submissions that 'there might possibly, for the sake of argument on this application, be said to be sufficient material to establish (barely) a prima facie case in the sense referred to by the Court of Appeal in Gardiner v Hughes.'[2] The applicant submits this was a fair concession, in circumstances where there was at least a degree of tension between the medical issues raised in the applicant's particulars and affidavits and the matters deposed by the plaintiff and by John Velos, the solicitor who took instructions for the 2019 will, as to his assessment of the deceased's testamentary capacity and knowledge and approval of the contents of the 2019 will.

8 In this regard, the applicant notes that her particulars included reference to the Registrar of Probates requiring further information as to the deceased's testamentary capacity from the plaintiff on two occasions, in light of the fact that the deceased's death certificate recorded 'Dementia 3 Years' as the cause of death, a period encompassing the time at which the 2019 will was drawn. In the applicant's submission, these circumstances reasonably called for some degree of investigation and there should thus be no order as to costs. This is said to be further so in circumstances where the application for revocation was determined solely on the basis of the particulars and the affidavits filed in the proceeding, without the cost and delay associated with a full trial.

9 The applicant refers to the decision of Re Munro[3] in regard to the two established exceptions to the usual principle that costs follow the event in contested probate proceedings. She submits that, were the Court to consider that neither of those exceptions were enlivened, or alternatively deem the discretionary factors discussed at [63]-[66] of the reasons to weigh in favour of costs being ordered against the applicant, there is no conduct by her that warrants the making of an order for indemnity costs. Rather, if the Court is to conclude that the litigation was adversarial in nature and not justified (which the applicant denies was the case), it is submitted that this conclusion may support the making of an order for standard costs .[4]

10 The plaintiff seeks an order that the applicant pay the plaintiff's costs of and incidental to the revocation application, with the costs to be assessed on an indemnity basis, alternatively, on the standard basis.

11 The plaintiff submits that although the revocation application concerned an estate and was against the executor of an estate, the application involved the bringing of a hostile claim against the plaintiff. In this type of case, she submits, costs are treated in the same way as in ordinary litigation, that is, they follow the event.[5] The revocation application was not a claim for the resolution of an issue arising in the administration of an estate and which necessarily had to be determined by the Court.

12 The plaintiff submits that the costs ought be awarded on an indemnity basis, relying on the following matters:

(a) the Court's finding that the applicant had previously acquiesced in the grant of probate of the 2019 will and, by commencing the revocation application, was conducting two extant proceedings that were in conflict with each other;[6]

(b) the fact that the applicant waited until after the failed mediation of a Part IV proceeding she had issued[7] before commencing the revocation application, a matter which it is said may suggest an ulterior motive, designed to cause avoidable prejudice and delay to the plaintiff;

(c) the Court's findings that the applicant made unwarranted peremptory challenges against the plaintiff seemingly without a proper basis, thereby causing prejudice and delay to the plaintiff;[8] and

(d) the Court's ultimate finding that the applicant had not established a prima facie case.[9]

13 Costs are in the Court's discretion, unless otherwise provided by an act or the Rules.[10] The 'usual order as to costs' is that a successful party in litigation is entitled to an award of costs in its favour and the unsuccessful party bears liability for the costs of the unsuccessful litigation; that is, costs follow the event.[11] The Court's discretion must be exercised through the prism of modern civil procedure reforms, which stress the quick, cheap and efficient resolution of the real issues in dispute.[12]

14 Although the prima facie rule in probate litigation is that costs follow the event,[13] costs will usually be paid out of the estate if the litigation has been caused or contributed to by the way in which a testator made his or her testamentary intentions known, or alternatively by the conduct of the residuary beneficiaries.[14] Where the testator is not the cause of the litigation, but circumstances exist that reasonably call for an investigation, there is either no order as to the unsuccessful party's costs or costs are paid out of the estate.[15] For reasonable grounds calling for an investigation to exist, it must be established that when a proceeding was commenced, all proper steps were taken to inform the challenger as to the facts of the case and, having done so, the challenger has been led reasonably to the bona fide belief that there were good grounds for impeaching a will.[16] If there is no reasonable cause for investigation, that is, if the unsuccessful party has not acted reasonably, then costs will usually follow the event.[17]

15 The usual rules relating to probate litigation are founded on the public interest in ensuring, on the one hand, that doubtful wills are not lightly admitted to proof by reason of the cost of opposing them and, on the other, reflecting the importance of parties not entering into 'fruitless litigation' on the basis that their costs will be paid by others.[18] In recent times, this traditional approach has been questioned on the basis of a countervailing public interest in ensuring that litigation is not encouraged, particularly if it is adversarial litigation between disunited families battling for their perceived true inheritance, together with concerns frequently expressed on the proportionality of costs in litigation.[19] If the litigation is adversarial, it is common for the Court to apply the usual rule as to costs and order that the unsuccessful party pay the other party's costs.[20] This means that it can no longer be assumed that costs in probate litigation will be allowed either wholly or partly out of the estate.

16 Costs assessed on the standard basis are all costs reasonably incurred and of a reasonable amount.[21] Costs assessed on an indemnity basis are all costs, except insofar as they are of an unreasonable amount or have been unreasonably incurred.[22]

17 The prima facie position in respect of costs in litigation is for standard costs to be ordered by the Court. A special costs order will only be made where the proceeding exhibits a special or unusual feature or special circumstances.[23] Each proceeding must be considered on its own facts and, specifically, whether those facts support the making of a special order for costs. In Ugly Tribe Co Pty Ltd v Sikola, Harper J identified the following circumstances as warranting a special costs order, noting that the categories of circumstances are not closed:[24]

(a) the making of an allegation, known to be false, that the opposite party is guilty of fraud;

(b) the making of an irrelevant allegation of fraud;

(c) conduct which causes loss of time to the Court and to other parties;

(d) the commencement or continuation of proceedings for an ulterior motive;

(e) conduct which amounts to a contempt of court;

(f) the commencement or continuation of proceedings in wilful disregard of known facts or clearly established law; and

(g) the failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial.

18 The applicant's first position is that there be no orders as to costs on the basis there was no finding that the revocation application had no real prospects of success but, rather, a finding that a prima facie case had not been established. The basis for the applicant's position is that the circumstances called for some degree of investigation, and that the application was determined without the costs and delay associated with a full hearing. This position misunderstands the nature of the revocation procedure.[25] It is not, as submitted by the applicant, a procedure that calls for a determination of whether an applicant has any real prospects of success. Rather, the issue is whether the applicant is able to establish a prima facie case and whether there are any relevant discretionary considerations to be taken into account. As the applicant was unsuccessful in this application, in the ordinary course, costs follow the event, unless the applicant establishes otherwise. In that regard, the applicant must show that circumstances existed that reasonably called for an investigation, such that there should be either no order as to costs or costs be paid out of the estate.

19 The applicant's submission that there was, at least, a degree of tension between the medical issues raised in the particulars and affidavits compared with the plaintiff's evidence and Mr Velos' assessment of the deceased's testamentary capacity and knowledge and approval was not established by the applicant. In substance, there were no circumstances that reasonably called for an investigation of the 2019 will. The requisitions from the Registrar of Probates regarding the deceased's testamentary capacity were satisfied by the affidavits filed in the probate proceeding, and the grant of probate of the 2019 will was made to the plaintiff, with the acquiescence of the applicant. These issues were determined before the revocation application was filed, and there were no circumstances that reasonably called for an investigation. On the contrary, it appears that the motivation for the revocation application was the failed mediation of the applicant's Part IV proceeding.

20 In view of the applicant's conduct, it may be inferred that the revocation application was commenced and continued in circumstances where, properly advised, the applicant should have known that she had no chance of success. In those circumstances, it may be presumed that she commenced and continued the application for some ulterior motive or in some wilful disregard of the known facts or of clearly established law. Such a presumption is not a pre-requisite to the power of the Court to award indemnity costs. To enliven the discretion to award indemnity costs it is sufficient that, for whatever reason, the applicant persisted with what should have been seen as a hopeless case. Such conduct warrants an award of indemnity costs in the plaintiff's favour.

21 The applicant has failed to establish that circumstances existed that reasonably called for an investigation. In truth, the application was adversarial and hostile litigation between family members, and costs should follow the event. Further, the applicant's proceeding falls within the categories of circumstances that warrant an order that the applicant pay the plaintiff's costs on an indemnity basis.

(a) the applicant pay the plaintiff's costs of and incidental to the proceeding, on an indemnity basis, to be taxed in default of agreement; and

(b) the applicant bear her own costs of and incidental to the proceeding personally.

[1] Re Papavasiliou; Theofanous v Aizen [2023] VSC 43 ('Reasons').

[2] Referring to Gardiner v Hughes (No 2) [2019] VSCA 198.

[3] [2019] VSC 243, [4]-[8] (Derham AsJ).

[4] Referring to Re Veall [2016] VSC 232, [28]-[29], [32] (McMillan J).

[5] Citing Mantovani v Vanta Pty Ltd (No 3) [2022] VSC 357, [29] (McMillan J).

[10] Supreme Court Act 1986 (Vic) s 24(1).

[11] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 97 [67] (McHugh J).

[12] Civil Procedure Act 2010 (Vic) s 7(1); GE Dal Pont, Law of Costs (LexisNexis Australia, 4th ed, 2018) 159 [6.15].

[13] See Twist v Tye [1901] UKLawRpPro 53; [1902] P 92; Spiers v English [1907] UKLawRpPro 3; [1907] P 122; Middlebrook v Middlebrook (1962) 36 ALJR 216, 217 (Dixon CJ); Re Green [1969] WAR 67, 83 (Wolff CJ).

[14] Hall v Carney (No 2) [2012] SASCFC 105, [8]-[12] (Gray J). See also Becker v Public Trustee of New South Wales [2006] NSWSC 1146, [12]-[15] (Nicholas J); Murdocca v Murdocca (No 2) [2002] NSWSC 505.

[16] Davies v Gregory (1873) 3 P & D 28, 33 (Sir J Hannan).

[17] Gray v Hart (No 2) [2012] NSWSC 1562, [19] (White J); Spiers v English (n 13); Re Cutcliffe's Estate [1959] P 6; In the will of Millar [1908] ArgusLawRp 120; [1908] VLR 682.

1. [18] Mitchell v Gard (1863) 3 Sw & Tr 275, 279 (Sir J P Wilde); Shorten v Shorten (No 2) [2003] NSWCA 60, [15] (Mason P, Meagher and Sheller JJA agreeing).
2. [19] Fielder v Burgess [2014] SASC 98, [58], [65] (Kourakis CJ); Shovelar v Lane [2011] EWCA Civ 802; [2012] 1 WLR 637, 652 [44] (Ward LJ, Arden and Moore-Bick LJJ agreeing).
3. [20] Re Buckton [1907] UKLawRpCh 98; [1907] 2 Ch 406, 414-5 (Kekewich J); Murdocca v Murdocca (No 2) (n 14) [76]-[77] (Campbell J); Steel v Ifrah (No 2) [2013] VSC 167, [5] (Dixon J); Warton v Yeo [2015] NSWCA 115, [78]-[79] (Ward JA, Basten and Emmett JJA agreeing).

[21] Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.30.

[23] Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225, 230 (Sheppard J), quoting Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, 400-1 (Woodward J).

[24] Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7]-[8] (Harper J) (citations omitted).