Plaintiff v Defendant

2 The trial of the proceeding was held over 13 days in July and August 2013 before Ginnane J who determined that the deceased did have testamentary capacity around the time of the execution of the December 2010 will but that he did not know and approve of its contents. [1] The plaintiffs in that proceeding appealed the decision. On 29 May 2015, the Court of Appeal handed down its judgment concluding that the deceased lacked testamentary capacity in 10 December 2010 and did not know and approve the contents of the December 2010 will.[2]

3 Shortly after judgment, in an open letter dated 9 June 2015 to the plaintiff's solicitors, the defendant's solicitor, Mr Mark Albert Maier, sought to discuss the next application to be made for a grant of representation of the estate, referring to the deceased's wills dated 9 September 2010 ('the September 2010 will'), the original of which was missing, and 28 October 2009 ('the 2009 will').[3] He noted that under both wills the defendant took a one third share of the residuary estate and informed the plaintiff's solicitors that the defendant had filed a caveat with the Registrar of Probates as she required input on the next application, setting out the various grounds she would rely upon in objecting to a grant of representation to the plaintiff. He proposed that the next grant of representation be made to an independent person. He noted that the September 2010 will was very proximate in time to the December 2010 will where it had been found that the testator did not have testamentary capacity. He noted that there could be no doubt as to the deceased's capacity in 2009. He also noted that the costs of the trial in the earlier proceeding would result in the net value of the estate being reduced by a sum well in excess of $1 million and the appeal costs orders would result in many hundreds of dollars having to be paid by the plaintiff and the defendant.

4 In his affidavit sworn 29 February 2016, Mr Maier exhibits his continuing correspondence with the solicitor for the defendant and Ms Lodder setting out his attempts to narrow the issues in the proceeding from an early stage. Such attempts included seeking agreement of the plaintiff to the appointment of an independent administrator before he made his application for a grant, noting that there were significant doubts as to the testamentary capacity or knowledge and approval of the deceased as at 9 September 2010 given its proximity to the December 2010 will. He also noted that even if there were no doubts as to the testamentary capacity of the deceased, there were evidentiary difficulties in propounding the copy September 2010 will as to whether the presumption of revocation could be rebutted or not.

5 Despite this correspondence, there was no resolution or narrowing of the issues between the plaintiff and the defendant.

6 On 28 September 2015, the plaintiff filed his application for a grant of probate of a copy of the September 2010 will, alternatively, the deceased's 2009 will, with leave reserved to Ms Lodder, the other executor named in the wills, to come in and prove the same. In the inventory of assets and liabilities filed with the application, the estate was described as having assets of $290,514 plus other assets in the possession of unknown persons that were removed from the deceased's home after September 2012, being a motor vehicle valued at $12,000, trophies and personal items valued at $10,000, and moneys amounting to $4,762,533 as well as a claim on capital not yet ascertained due from a trust. The liabilities amounted to $1,309,787 of which approximately $1,056,500 were claimed for legal costs.

7 The defendant objected to the plaintiff's applications on the following grounds:

(a) in respect of the copy September 2010 will, the presumption of revocation is applicable, an issue raised by the defendant's solicitors since at least 2 July 2013, which meant that the deceased died intestate; and

(b) in the event that the presumption of revocation is not applicable and probate of the copy September 2010 will, alternatively, the 2009 will is granted, the plaintiff is not a fit and proper person to administer the deceased's estate and should be passed over as the executor. Detailed grounds were relied upon by the defendant, including a conflict of interest in relation to costs orders made in an earlier proceeding concerning the plaintiff's application for a grant of probate of the deceased's December 2010 will, the manner in which those proceedings were conducted by the plaintiff and the inability of the plaintiff to deal with the defendant impartially.

8 On 29 September 2015, the Registrar of Probates forwarded preliminary requisitions concerning the application made in respect of the copy September 2010 will as follows:

... evidence has been filed attempting to establish that the original [September 2010] will was not found in the deceased's papers or held by his associates. Little evidence, if any, has been filed to identify who in fact held the will. Did the solicitor who prepared the will release it to the deceased and if so what evidence is there to rebut the presumption that the deceased himself may have destroyed it.

I note that if the original will was in fact destroyed by the deceased (and not misplaced) that fact alone would not revive the earlier will dated 28 October 2009.

Please file medical evidence on oath to establish the testamentary capacity of the testator at the time the will was executed.

What persons would share in the estate of the deceased were he to die intestate.

9 The plaintiff's solicitor filed an affidavit sworn 23 October 2015 purporting to deal with these preliminary requisitions and also addressed many other matters extraneous to the matters to be addressed. In substance, the affidavit had a voluminous set of exhibits and the solicitor deposed to many irrelevant matters, made submissions and gave her opinion, all of which was not conducive to answering the preliminary requisitions.

10 The parties appeared at the first directions hearing on 13 November 2015 and Mrs Lodder was also in attendance. Counsel for the plaintiff informed the Court that his client was considering the defendant's proposal for the appointment of an independent administrator in place of the plaintiff. The directions hearing was adjourned to 20 November 2015.

11 In the orders made on 20 November 2015, it was noted in 'Other Matters' that in the event of the Court subsequently determining that one or other of the copy September 2010 will or the 2009 will was valid and unrevoked at the date of the deceased's death or that the deceased died intestate, the plaintiff would not seek a grant of probate or administration but would consent to a grant of letters of administration to Mr David Hughes, solicitor, or another suitable independent administrator. The defendant consented to a grant of letters of administration in those circumstances. Orders were then made granting letters of administration pendent lite to Mr Hughes and the directions hearing was adjourned to 5 February 2016.

12 The plaintiff contends that despite his consent to Mr Hughes as an independent administrator of the estate, he was not relieved from answering the Registrar's requisitions and his solicitor did further work in that regard by filing a further affidavit sworn 3 February 2016. This affidavit also had a voluminous set of exhibits and the solicitor deposed to many irrelevant matters, made submissions and gave her opinions. On the issue of the deceased's testamentary capacity, the solicitor deposed that the plaintiff would seek to rely on the evidence given by a Dr Rose in the trial and the findings made by the Court of Appeal on this issue. On the issue of the rebuttal of the presumption of revocation, the solicitor deposed that she had received no further information from persons who might possibly still have custody of the deceased's papers. Otherwise the solicitor deposed to the further directions that were sought by the plaintiff at the directions hearing on 5 February 2016. Her proposed directions were for further affidavits to be filed and that they be confined to issues of the deceased's testamentary capacity at the relevant times and the presumption of revocation.

13 On 5 February 2016, the Court was informed that the plaintiff no longer wished to propound the copy September 2010 will, that the plaintiff and the defendant agreed to propound the 2009 will and, if a grant were made, Mr Hughes should be appointed administrator with the 2009 will annexed. Counsel for the plaintiff said that the plaintiff's view was that he could not responsibly propound the copy September 2010 will based on the reasons and findings of the Court of Appeal and the other matters referred to in his solicitor's affidavit sworn 3 February 2016. He also said the conscience of the Court may be satisfied that it was not the true will of a free and capable testator. Counsel for the defendant did not take issue with that submission. Ms Lodder was present in Court. Orders were made referring the application for a grant of the 2009 will to the Registrar of Probates and, if the application were made, for the appointment of Mr Hughes as administrator of the estate with the 2009 will annexed.

14 Both the plaintiff and the defendant sought that their costs of the proceeding be paid out of the estate on a standard basis, taxed in default of agreement. Ms Lodder expressed her concern as to the costs being paid from the estate. The Court made orders that the parties and Ms Lodder file short written submissions as to the costs of the proceeding.

15 The plaintiff seeks that his costs of the proceeding be paid out of the estate, assessed on a standard basis. His costs have been calculated at $38,336.14 being professional costs at $19,094.20, counsel's fees at $17,700 and other disbursements at $1,541.94.

16 The plaintiff submits his costs be paid out of the estate as his application comes within the parameters of the probate costs rules[4] in that:

(a) an application to the Court is required for probate to be granted;

(b) the plaintiff has been successful in obtaining the defendant's withdrawal of her caveat by making all possible concessions as early as possible, saving time and costs in responding to the defendant's grounds of objection, notwithstanding the seriousness of her allegations made against the plaintiff;

(c) the requisitions of the Registrar of Probates required an inquiry into the testamentary capacity of the deceased in September 2010 and the possible whereabouts of the September 2010 will were caused by the testator and therefore fall within the exceptions referred to in the probate costs rules.

17 The defendant also seeks that her costs be paid out of the estate, assessed on a standard basis. Her costs have been calculated at $44,800 being professional costs at $38,263.90 and disbursements at $8,773.20.[5]

18 The defendant relies on the correspondence between her solicitors, the plaintiff's solicitors and Ms Lodder as exhibited to the affidavit by Mr Maier setting out the defendant's attempts to narrow the issues in the proceeding from an early stage and resolve the issues between them, including an agreement to the appointment of an independent administrator. The defendant says that it was only at the directions hearing on 13 November 2015 that the plaintiff first accepted that there had to be an independent administrator.

19 The defendant does not express a view as to whether the plaintiff should be paid his costs out of the estate but says that if they are, his costs should be reduced for the following reasons:

(a) the affidavits of the solicitor for the plaintiff sworn 23 October 2015 and 3 February 2016 respectively are replete with inadmissible evidence, submissions and opinions; and

(b) from an early stage the defendant made substantial efforts to get the plaintiff to agree to the appointment of an independent administrator, attempted to reach a global settlement or, if not, reach agreement as to the last valid will of the deceased and raised many evidentiary matters concerning the plaintiff's application; and

(c) the estate ought not pay for the plaintiff's unreasonable attitude in the conduct of the proceeding and its ultimate outcome.

20 Ms Lodder objects to the 'enormous legal costs' of the plaintiff and the defendant being paid out of the estate on the basis of the substantial costs already incurred in the earlier proceeding, the consequent diminution of her share of the estate, the excessive costs now claimed by the parties, the duplication of documentation sent to her, her parlous financial position and the fact that the deceased died in October 2011 and his estate remained unfinalised.

21 Section 24(1) of the Supreme Court Act 1986 provides that costs are in the discretion of the Court. This discretion must be exercised in accordance with established principle.

22 The general rule applied is that costs should follow the event unless there is adequate reason for a contrary order. Although the prima facie rule is that costs follow the event,[6] where the litigation concerns probate, the costs are usually paid out of the estate where it has been caused, or contributed to, by the way in which a testator made his or her testamentary intentions known or, alternatively, by those interested in the residue or where circumstances reasonably call for an investigation.[7] Where the testator is not the cause of the litigation, but an investigation is reasonably called for, there is either no order as to the unsuccessful party's costs or costs are paid out of the estate. For there to be reasonable grounds for an investigation, it must be established that when proceedings were 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 was good ground for impeaching a will.[8] If there is no reasonable cause for investigation, that is, if the unsuccessful party has not acted reasonably, then he or she will pay the costs.[9]

23 The usual rules relating to probate litigation are founded on the public interest in ensuring that doubtful wills are not lightly admitted to proof by reason of the cost of opposing them and the importance of parties entering into 'fruitless litigation' on the basis that their costs will be paid by others.[10] In recent times, this traditional approach has been questioned on the basis of a counterveiling public interest of the need to ensure that litigation not be encouraged, particularly where the litigation is, in truth, adversarial litigation between disunited family members battling for their perceived true inheritance, together with the concerns now more frequently expressed for the proportionality of costs in litigation.[11] Where 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.

24 The costs claimed by the plaintiff and the defendant must be considered against the background of the proceeding seeking to propound the December 2010 will. As a result of the evidence and findings in that proceeding, the plaintiff had the benefit of many facts and circumstances concerning the validity of the copy September 2010 will and the 2009 will. This was conceded by the plaintiff's counsel on 5 February at the directions hearing when agreement was reached on the deceased's last valid will. The Facts and circumstances were set out in detail much earlier by the letter from the defendant's solicitor dated 9 June 2015 to the plaintiff's solicitor. The points raised by the defendant's solicitor from the findings of the earlier proceeding were cogent and convincing: the September 2010 will was very proximate in time to the December 2010 will where the Court found that the testator did not have testamentary capacity; there could be no doubt as to the deceased's capacity in 2009 and the costs of the trial in the earlier proceeding would result in the net value of the estate being reduced by a sum well in excess of $1 million and the appeal costs orders would result in many hundreds of dollars having to be paid by the plaintiff and the defendant.

25 Subsequent correspondence highlighted the significant grounds relied on by the defendant seeking to pass over the plaintiff as the executor of the estate, the presumption of revocation of the September 2010 will and that the plaintiff, Ms Lodder and the defendant were to receive the residue of the deceased's estate under either will that the plaintiff was seeking to propound in this proceeding.

26 Despite these matters being pointed out to the plaintiff's solicitors within two weeks of the decision by the Court of Appeal and then being followed up by further correspondence from the defendant's solicitor, the plaintiff persisted in issuing his application to propound the copy September 2010 will, alternatively, the 2009 will, rather than accede to the defendant's proposal of the appointment of an independent administrator with the 2009 will annexed.

27 It is not obvious why the plaintiff would contend that he has been successful in obtaining the defendant's withdrawal of caveat by making all possible concessions as early as possible. The plaintiff ought to have made concessions after receipt of the letter dated 9 June 2015 from the defendant's solicitor, thereby saving the costs of this proceeding being contested at all. This would have saved any inquiry concerning the preliminary requisitions from the Registrar of Probates arising from the plaintiff's application to propound the copy September 2010 will concerning the testamentary capacity of the deceased in September 2010 and the whereabouts of the original September 2010 will. After the findings by the Court of Appeal, the plaintiff was well placed to appreciate the difficulties in attempting to propound the copy September 2010 will. The preliminary requisitions from the Registrar of Probates highlighted the tangible problems in seeking to propound the copy September 2010 will. Notwithstanding those problems, the plaintiff pressed on by filing two voluminous affidavits sworn by his solicitor that contained irrelevant material, submissions and opinions that did little to answer the requisitions. The plaintiff was well placed to accept the proposal from the defendant's solicitor to propound the 2009 will as he could appreciate that the deceased had testamentary capacity in 2009.

28 In these circumstances, it cannot be said that the preliminary requisitions were caused by the deceased or that there were reasonable grounds for an investigation. The defendant's solicitors letter dated 9 June 2015 set out a solution for the finalisation of the administration of the estate of the deceased. When this was not accepted by the plaintiff, it was reasonable for the defendant to challenge the plaintiff's application to propound the wills. In the circumstances of the deceased's dispositions made under the September 2010 will and the 2009 will, there was no need for an investigation nor was it necessary to have any enquiry at the expense of the estate.

29 An examination of the circumstances of this proceeding establishes that, in reality, the plaintiff has been the cause of this litigation. This proceeding is adversarial litigation by the plaintiff against the defendant, albeit, under the guise of the probate process. He has issued the proceeding knowing the costs of the earlier proceeding were extraordinarily high which, in turn, would ultimately impact on the amounts to be paid to the beneficiaries of the deceased's estate. The plaintiff maintained his opposition to the defendant's proposal for the appointment of an independent administrator as late as 3 February 2016, as evidenced by the proposed directions sought by him in his solicitor's affidavit sworn 3 February 2016, directions that sought the filing of affidavits directed towards a trial of the proceeding.

30 The defendant has been successful in this proceeding in seeking the appointment of an independent administrator, a view expressed with good reasons being articulated before the proceeding was issued. In the case of the defendant, she has been reasonable and proactive in attempting to resolve the issues in this proceeding from an early juncture and was justified in maintaining her objections to the plaintiff's application. She is entitled to a costs order in her favour.

31 The plaintiff has an expectation that the costs of this proceeding should be paid out of the estate. Such expectation provides little incentive for him to make appropriate decisions in respect of the litigation and the associated costs. This expectation appears to be irrespective of his unreasonable stance as to the defendant's solution for the finalisation of the administration of the estate. The amount now claimed by the plaintiff is out of proportion to the issues in dispute. If these costs were reviewed, the amount claimed for the two affidavits filed by his solicitor in purported compliance with the Registrar's preliminary requisitions would, in all likelihood, be substantially reduced on taxation. However, it remains the case that had the plaintiff acted reasonably by accepting the defendant's initial proposal for the appointment of an independent administrator, these costs and most of the other costs now sought by the plaintiff to be paid from the ever decreasing estate would not have been incurred at all.

32 This proceeding does not fall within the classes of case where the costs should be paid out of the estate. It was not caused by the deceased and there were no reasonable grounds for the plaintiff to cause an investigation of the wills, particularly the copy September 2010 will. This litigation was adversarial in nature against the defendant in circumstances where the litigation was not justified. There should be no departure from the general cost rule that the plaintiff should pay the defendant's costs personally.

33 I will order that the plaintiff personally pay the defendant's costs, to be taxed on a standard basis in default of agreement. There will be no order as to the plaintiff's costs of the proceeding and he is not entitled to his costs being paid out of the estate.

[1] Veall & Anor v Veall [2014] VSC 38 (19 February 2014) (Ginnane J).

[2] Veall v Veall [2015] VSCA 60 (16 April 2015) (Santamaria, Beach and Kyrou JJA).

[3] Affidavit of Mark Albert Maier sworn 29 February 2016, exhibit 'MAM-2'.

[4] Relying on Giarrusso v Veca and Michielin [2015] VSCA 214 (21 August 2015) [46]-[47] referring to Perpetual Trustee v Baker [1999] NSWCA 244 (16 July 1999).

[5] This amount excludes items 291 to 299 that are for the taxation of the bill of costs.

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

1. [7] Hall v Carney (No 2) [2012] SASCFC 105 (17 September 2012) [8]-[12] (Gray J). See also Reginald Alfred Becker v Public Trustee of New South Wales [2006] NSWSC 1146 (2 November 2006) [12]-[15]; Murdocca v Murdocca (No 2) [2002] NSWSC 505 (25 June 2002).

[8] Davies v Gregory (1873) LR 3 P & D 28 (Sir James Hannen).

[9] Gray v Hart [No 2] [2012] NSWSC 1562 (11 December 2012) [19] (White J); Spiers v English [1907] P 122; Re Cutliffe's Estate [1959] P 6; In the Will of Millar [1908] VicLawRp 95; [1908] VLR 682.

1. [10] Mitchell v Gard (1863) 3 Sw & Tr 275, 279 (Sir J P Wilde); Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698, 709; Shorten v Shorten [No 2] [2003] NSWCA 60 (9 April 2003) [15].

[11] Fielder v Burgess [2014] SASC 98 (7 August 2014)[58], [65] (Kourakis CJ); Shovelar v Lane [2011] EWCA Civ 802[44] (Ward LJ, with whom Arden and Moore-Bick LJJ agreed); Re Buckton; Buckton v Buckton [1907] 2 Ch 406, 414; Murdocca v Murdocca (No 2) [2002] NSWSC 505 (25 June 2002); Steel v Ifrah (No 2) [2013] VSC 167 (30 April 2013); Warton v Yeo [2015] NSWCA 115 (7 May 2015) .