Plaintiff v MARIA KARAKOSTA

2 In proceeding S PRB 2024 16926 (Kliment's proceeding), Kliment sought probate of a much earlier will, dated 20 December 1989 (1989 will), and this was opposed by Maria as caveator on the ground the 1989 will was attended by suspicious circumstances.

3 I stayed Kliment's proceeding pending determination of Kirche's proceeding, but on the basis that if Kliment's proceeding later continued, evidence in Kirche's proceeding would be treated as evidence in Kliment's proceeding. In light of my grant of probate of the 2023 will, there is now no prospect that Kliment's proceeding can succeed.

4 What order should I make to bring Kliment's proceeding to an end, and what orders should I make on the question of costs of both proceedings?

5 Following my determination of Kirche's proceeding, I invited submissions and affidavits from Kliment, Kirche and Maria on the question of costs of Kirche's proceeding, and on the question of the disposition of Kliment's proceeding, including costs. I received the following affidavits, which I have received into evidence and taken into account:

(a) the affidavit of Mr Timothy Giasoumi sworn 22 July 2025; and

(b) the affidavit of Mr Kliment Karakostov affirmed 28 July 2025.

6 Both Kirche and Maria relied on a Calderbank letter signed by both of their solicitors, to Kliment on 8 May 2025. The relevant terms of the offer in the letter were that Kliment release the estate from all claims in return for a sum of $60,000 each being paid to Kliment and each of the four other beneficiaries of the 1989 will (who appear to be the siblings of Kliment), totalling $300,000, out of the deceased's estate. The offer remained open for acceptance until 5:00pm on 22 May 2025, at which point it lapsed. Kliment did not accept the offer.

7 Kirche seeks an order that Kliment pay Kirche's costs of Kirche's proceeding on the standard basis up to and including 8 May 2025, and on an indemnity costs basis from 9 May 2025. Kirche further seeks that these costs include Kirche's 'costs of being represented by counsel and instructing solicitor at the trial of [Kliment's proceeding]'. I note, however, that there was no trial of Kliment's proceeding.

8 Kirche also generally supports the orders sought by Maria in Kliment's proceeding.

In S. PRB 2023 26482 -

1. That the 2nd Defendant (Kliment) pay the Plaintiff's costs of that proceeding, on a standard costs basis up to and including 8 May 2025 and on a from 9 May 2025, on an indemnity costs basis.

(There being no order as to the 1st Defendant's (Maria's) costs - Such costs are more appropriately dealt with by Orders being made in Proc. S PRB 2024 16926).

In Proc. S PRB 2024 16926 -

1. The proceeding is dismissed.

2. That the Plaintiff (Kliment Karakostov) pay the 1st Defendants (Maria's) costs of the proceeding, on a standard costs basis up to and including 8 May 2025 and on a[nd] from 9 May 2025, on an indemnity costs basis.

3. The costs payable pursuant to paragraph 2 hereof, shall include the 1st Defendant's costs of being represented by counsel and instructing solicitor on at the trial of Proc. S PRB 2023 26482 on 8 and 9 July 2025 and including appearances at the pre-trial directions hearings held on 10 June 2025 and 3 July 2025 and including the costs of preparation of the written costs submissions filed 24 July 2025.

10 Maria seeks order 3 in Kliment's proceeding above on the basis that, when I stayed Kliment's proceeding, I ordered that evidence in Kirche's proceeding would be evidence in Kliment's proceeding (if it continued), and Maria was therefore compelled to appear and conduct some cross-examination during the trial of Kirche's proceeding.[1]

11 Kliment seeks to have all legal costs associated with this proceeding paid out of the estate of Mr George Karakostov on an indemnity basis, with an indemnity costs order to be made in favour of Kliment. He does so on the basis that it was reasonable in all the circumstances for Kliment to put the 2023 will 'in issue', and this is shown by the fact that it 'required further investigation by the Court as a result of the circumstances in which Mr George Karakostov made the (2023 Will) whilst in palliative care at Caritas Christi Hospice'.

12 In Veall & Anor v Veall (No. 2) [2014] VSC 99, [4], Ginnane J summarised the relevant principles for determining costs in probate cases (citations omitted):

Prima facie costs follow the event. However, there are three exceptions to the general rule in a contested probate case. They 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;

(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;

(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.

13 In my view, further to the second exception, the discretion of the Court might also extend to allowing a party's costs to be recovered from the estate if that party raised a matter that led reasonably to an investigation concerning the will (even though ultimately the party was unsuccessful). However, in Re Maddock; Bailey v Maddock (No 2) [2023] VSC 2, [44], McMillan J said that 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, and that it cannot be assumed that costs will be allowed from the estate.

14 Ordinarily, where the court has not adjudicated the merits of a proceeding, the appropriate order will be no order as to costs: eg, Diakou v Rouse [2019] VSCA 199, [50] (Kyrou, McLeish and Emerton JJA). In certain exceptional circumstances it may be appropriate to depart from that approach, such as where the conduct of one party was so unreasonable as to warrant that outcome: eg, Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 (McHugh J).

15 The usual rule in civil litigation is that costs follow the event. None of the exceptions to the usual rule apply here.

16 Clearly, Kirche has been successful in Kirche's proceeding, and Kliment is the unsuccessful party.

(a) the basis on which Kirche should receive his costs from Kliment; and

(b) whether Kliment should receive any indemnity from the estate and the extent of any such indemnity,

I am satisfied that the usual rule should apply, and Kliment should bear Kirche's costs of and incidental to Kirche's proceeding on at least the standard basis.

18 The position of Maria is more complicated. Maria was a party to Kirche's proceeding because she filed a caveat objecting to a grant of probate to Kirche. She subsequently reached a settlement with Kirche and thereafter supported the grant of probate of the 2023 will to Kirche. I infer that this change of position occurred in about early May, shortly before the joint Calderbank letter sent to Kliment on behalf of Kirche and Maria on 8 May 2025.

19 I am satisfied that the offer in the letter sent from Kirche and Maria's representatives to Kliment on 8 May 2025 constituted a genuine offer on behalf of both Kirche and Maria to Kliment to compromise both Kirche's proceeding and Kliment's proceeding, and that it met the requirements described in Calderbank v Calderbank.[2]

20 The offer was reasonable, was made a reasonable time before trial, its basis was explained, it proposed a true compromise, a reasonable time was allowed for Kliment to consider it, and it foreshadowed an indemnity costs application. The terms of the offer were far more favourable to Kliment than the result he has achieved at the conclusion of Kirche's and Kliment's proceedings. Further, that outcome was clearly foreseeable at the time of Kliment's failure to accept the offer. Kliment's objection to the 2023 will was extremely weak. It was unsupported by any probative evidence. Mr Kocovski's affidavit of due execution, filed on 26 September 2023, strongly suggested that George had testamentary capacity at the time he made the 2023 will. While material prepared by Dr Gamboni in support of the 2023 will was not reliable, it was clear by the time of Kirche's submissions filed on 7 May 2025 that he did not rely on Dr Gamboni's evidence. The terms of the offer constituted a real compromise. The 2023 will was overwhelmingly likely to be granted probate, and it made no provision for Kliment or his siblings to receive any interest in the estate. Kirche deposed that at the deceased's date of death, the gross value of the assets of the estate was estimated to be $4,140,147.13. The sum of $300,000 was not an insignificant proportion of this estate, and was a generous offer considering the strength of Kirche's claim and the extreme weakness of Kliment's objection.

21 In short, Kliment's failure to accept the offer was manifestly unreasonable. I therefore give Kliment's failure to accept the offer significant weight in:

(a) deciding whether Kirche should be granted a special costs order over and above the usual order that Kliment pay his costs of the proceeding on a standard basis;

(b) deciding whether Maria, notwithstanding that she was a defendant in Kirche's proceeding, should be compensated for her costs after the effective refusal of the offer in the form of a costs order against Kliment; and

(c) the basis on which any costs order in favour of Maria should be made, and whether that should be the standard basis or an indemnity basis.

22 Kirche and Maria submitted that the effect of the Calderbank offer should date from the time the offer was made, 8 May 2025. I do not accept this submission. That is the date the offer was made, whereas the relevant time I should be concerned with is when it became unreasonable for Kliment not to accept it. I will take the Calderbank offer and Kliment's failure to accept it into account with effect from a reasonable time after the offer was made. I will treat the date on which the offer closed, 22 May 2025, as the effective date for this purpose. I am satisfied that Kliment's failure to accept the offer by 22 May 2025 was unreasonable in the circumstances.

23 I am satisfied that Kliment should pay Kirche's costs of and incidental to Kirche's proceeding (including for attendances in common with Kliment's proceeding) up to and including 22 May 2025 on the standard basis, and on an indemnity basis on and from 23 May 2025.

24 Although Maria sought her costs of and incidental to Kirche's proceeding against Kliment via an order to be made in Kliment's proceeding, I find this difficult to follow and decline to adopt that approach. In substance, Maria was seeking an order against Kliment covering her costs in Kirche's proceeding. I will now address that question, and do so directly. Should Maria receive any order against Kliment for her costs of and incidental to Kirche's proceeding?

25 Unusually, notwithstanding that Maria was a defendant in Kirche's proceeding, I am satisfied that it is in the interests of justice that she be compensated for her costs of and incidental to Kirche's proceeding after the time she settled with Kirche and was attempting (jointly with Kirche) to bring Kirche's proceeding to an efficient and just end, without incurring the costs of a trial. In short, I am satisfied that she should have the benefit of an order that Kliment pay Maria's costs of and incidental to Kirche's proceeding incurred on and from 23 May 2025, the day after the deadline for acceptance of the offer in the joint Calderbank letter.

26 I am not satisfied that Maria should recover her costs of and incidental to Kirche's proceeding from Kliment prior to that date.

27 The key question is whether she should receive her costs (on and after 23 May) on an indemnity basis or on the standard basis. I have decided that the most appropriate exercise of my discretion is that Kliment pay Maria's costs on and from 22 May 2025 on an indemnity basis. Such was Kliment's unreasonableness in failing to accept the offer that Maria should be compensated on that basis.

28 Kliment is not entitled to any order for recovery of any of his costs from the estate.

29 I have had regard to Kliment's written submissions filed on 28 July 2025 in Kirche's proceeding. In support of his proposed order that his costs be paid out of George Karakostov's estate, Kliment submitted that the circumstances of the 2023 will required investigation, referring to, inter alia, the fact that the 2023 will was a radical departure from the 1989 will, the circumstances of Dr Gamboni's involvement, and other matters relating to the procedural history of the proceedings.

30 I do not accept these submissions. I accept Kirche and Maria's submissions that Kliment was all along unlikely to succeed in challenging the validity of the 2023 will based on his grounds of objection.

31 It should have been obvious from the affidavit of Mr Kocovski sworn 5 September 2023 and filed by Kirche in support of his application for a grant of probate of the 2023 will that Kliment's objection to probate had poor prospects of success from the outset.

32 Kliment's objections rested heavily on the role of Dr Gamboni and the absence of any attestation of George having testamentary capacity from a medical practitioner. However, in light of Mr Kocovski's affidavit and the 2023 will itself, it should have been reasonably clear to Kliment that the deficiencies in Dr Gamboni's material did not establish real doubt about George having testamentary capacity.

33 The other bases on which Kliment sought to impugn or cast doubt on George's testamentary capacity were slender and weak at best. As explained in my primary reasons for judgment, the witnesses called by Kliment to explain various entries in clinical progress notes relating to George in March and April 2025, did not establish any reason for doubting George's testamentary capacity.

34 The legitimately held misgivings Kliment had concerning the material generated by Dr Gamboni are insufficient to justify a costs outcome in his favour or a departure from the usual rule that the unsuccessful party should pay the successful party's costs. As already noted, the affidavit of due execution of Mr Kocovski is particularly significant in this regard. Mr Kocovski's affidavit of due execution was sworn on 5 September 2023 and filed on 26 September 2023. It was filed prior to Kliment filing his caveat.

35 Further, I am concerned about Kliment's conduct relating to Kirche's proceeding. Mr Kocovski gave evidence, supported by a statutory declaration tendered at trial, that on 25 October 2023, Kliment attended his domestic residence and made various remarks to him, seeking to have Mr Kocovski withdraw the affidavit that he had sworn or otherwise alter his evidence. I accept Mr Kocovski's evidence that this incident occurred exactly as described by Mr Kocovski. Mr Kocovski's evidence was clear, and struck me as completely honest and candid. Kliment did not give evidence in Kirche's proceeding. I accept Mr Kocovski as a witness of truth without qualification. Kliment's behaviour in attending Mr Kocovski's residence and seeking to have him withdraw his affidavit and change his evidence is most concerning. It alone would lead me to refuse to order any recovery against the estate by Kliment. Further, it leads me to infer that Kliment was conscious that Mr Kocovski's evidence was a barrier to the success of Kliment's caveat. Yet, in spite of this, Kliment persisted in his objection to the grant of probate in Kirche's proceeding. This was unreasonable and does not justify recovery from the estate.

36 In all the circumstances of the case, there is no basis for allowing Kliment's costs to be met by the estate. As I noted in my primary reasons for judgment, the evidence did not establish any doubt or suspicion as to the legitimacy of the 2023 will; and there was no evidence giving rise to any doubt as to capacity and no suspicious circumstances.

37 Each of Kliment, Maria and Kirche agree that Kliment's proceeding should be dismissed. I am satisfied that this order should be made.

Costs of and incidental to Kliment's proceeding

38 Only Kliment and Maria were parties to Kliment's proceeding.

39 To the extent that Kirche had attendances that were common to both proceedings, they are incidental to Kirche's proceeding and are covered by my costs orders in that proceeding. I have already noted the reference in Kirche's submissions to his costs of the 'trial' in Kliment's proceeding (referred to in paragraph 7 above), and explained that I will not make an order about any such costs. I do not understand Kirche to be otherwise seeking costs solely relating to Kliment's proceeding, and as he was not a party he would not be entitled to such costs in any event.

40 As to Kliment's and Maria's costs of Kliment's proceeding, my conclusions are as follows.

41 As noted above, the ordinary approach where a proceeding is not adjudicated on the merits is that the courts make no order as to costs. The courts do not try such a proceeding hypothetically in order to reach a conclusion on costs.

42 To some extent, each of Maria and Kliment invited the Court to attempt to form a view about the merits of Kliment's proceeding on the issue of costs.

43 For example, Maria relied on the fact that an expert witness she retained, John Ganas, had opined to the effect that the 1989 will was not signed by George, and that Kliment had not filed responding expert evidence; and Kliment submitted that Maria engaged in unreasonable conduct, including making unfounded allegations that the 1989 will was not an original version that were later disproved by an independent document examiner, and non-compliance with Court orders. Kliment further submitted that Maria did not include forgery in her grounds of objections, and that the expert Mr Ganas appeared to form a different conclusion on the basis of same evidence that had been previously provided to him by Kliment. Kliment also referred to settlement offers he issued to Kirche and Maria, which were rejected.

44 I decline to engage in trying a hypothetical contest of the issues in order to determine the question of costs.

45 This is not a case where a party discontinued a proceeding. The basis on which Kliment's proceeding is to be dismissed is that it has become otiose. There has been no adjudication of the merits of that proceeding. In those circumstances, I have decided that I will not make any costs order.

46 One notable feature that arguably placed Maria's costs application outside the usual run of such cases was that Kliment's failure in opposing probate of the 2023 will was (as I have found) reasonably foreseeable, and that this in turn means that it was probably unreasonable for him to seek probate of the 1989 will.

47 However, Maria's caveat raised discrete issues about alleged suspicious circumstances (and the evidence she filed suggested forgery). The same reasoning about Kliment's proceeding being foreseeably futile probably applies with equal force to Maria's caveat.

48 Maria submitted that although she was no longer contesting any evidence in Kirche's proceeding, she remained a party to it, and because any evidence given in the trial of Kirche's proceeding would be evidence in the trial of Kliment's proceeding which she was actively contesting, it was necessary and appropriate for her to be represented during the trial. She submitted that her costs of being represented at the trial of Kirche's proceeding were costs properly incurred by her in respect of her ongoing opposition to Kliment's application for probate of the 1989 will.

49 As already noted, Maria is entitled to her costs in Kirche's proceeding, including appearances at hearings and preparation for submissions. Those costs are to be covered by the costs order I will make in Kirche's proceeding, not via orders made in Kliment's proceeding. I do not consider it appropriate to award these costs in Kliment's proceeding.

50 As to Kliment's application for an order indemnifying his costs of and incidental to Kliment's proceeding from the estate, I decline to make any such order. It was foreseeable that Kliment's proceeding would be futile, for the reasons already explained. If only for that reason, an order for recovery of his costs from the estate would be inappropriate.

51 For the reasons above, I will make the following orders in Kirche's proceeding:

1. Kliment must pay Kirche's costs of and incidental to the proceeding, including any costs incurred for attendances that were relevant to both this proceeding and Kliment's proceeding, on the standard basis until 22 May 2025, and thereafter on an indemnity basis.
2. Kliment must pay Maria's costs of and incidental to the proceeding on an indemnity basis on and from 23 May 2025, and otherwise there is no order as to Maria's costs.
3. There is no order as to Kliment's costs.

52 I will dismiss Kliment's proceeding with no order as to costs.

[1] As I make clear later in these reasons, I have decided to allow Maria the benefit of an order against Kliment for the attendances and costs mentioned in her proposed order 3, but to treat them as her costs of and incidental to Kirche's proceeding, to be addressed in an order I will make in Kirche's proceeding.

[2] [1975] 3 All ER 333; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (2005) 13 VR 435, 441 [23] (Warren CJ, Maxwell P and Harper AJA).