Plaintiffs v Defendants

1 This proceeding concerned an application by the plaintiffs, pursuant to s 9 of the Wills Act 1997 ('the Act'), for a grant of probate of an unexecuted draft will. The draft will was said to have been approved by the deceased, who died on 8 March 2013, in a telephone conversation with the first plaintiff on 1 March 2013 ('the informal document'). Alternatively, the plaintiffs sought a grant of the deceased's will dated 26 June 2012 ('the June 2012 will'). The plaintiffs are named as executors in both the June 2012 will and the informal document.

2 The first defendant was a beneficiary under the June 2012 will, but not under the informal document, and the second defendant was a beneficiary under the informal document, but not under the June 2012 will.

3 On 1 June 2015, judgment was delivered in this proceeding.[1] The Court was not satisfied that the deceased intended the informal document to be his last will and the application for a grant of probate of the informal document was refused. The Court made an order that, subject to any further requirements of the Registrar of Probates, probate of the deceased's will dated 26 June 2012 be granted to the plaintiffs.

4 I informed the parties that I would hear them as to the costs of the application and that in respect of the costs:

... the parties should take into consideration the concerns expressed in this judgment regarding the quality of the affidavit evidence filed in the proceeding and the overarching obligation of the parties, as contained in s 24 of the Civil Procedure Act 2010, to ensure that the costs of the proceeding are reasonable and proportionate.[2]

5 I also informed the plaintiffs that I wished to hear them on a further matter arising from the proceeding, as follows:

... the Court was informed of a settlement with [the first defendant]. Considering the plaintiffs are currently administering the estate of the deceased under the limited ad colligenda bona grant made on 11 April 2014, I wish to understand the basis of and the power of the plaintiffs to enter into the settlement with [the first defendant].[3]

6 The plaintiffs filed undated and unsigned written submissions on the costs in June 2015. The first defendant informed the Court that she 'maintains a neutral stance' on the costs. The second defendant informed the Court that it adopted the submissions filed on behalf of the plaintiff.

(a) as trustees they are ordinarily entitled by the nature of their office and their duties to a full indemnity out of the estate for all costs, charges and expenses properly incurred in the litigation;[4] and

(b) it was both reasonable and responsible for the trustees to bring the application for a grant of probate on the alternative basis. It was a real issue for determination in the administration of the estate. That being the case, the costs of the contradicting defendants, who were possible beneficiaries, should also come out of the estate, relying on Re Buckton; Buckton v Buckton.[5]

8 The plaintiffs sought orders that the costs of the plaintiffs be costs in the administration of the estate and the costs of the defendants be paid out of the estate.

9 In any determination as to whether a grant should be made of an informal will, the Court must be satisfied of the circumstances prescribed by s 9 of the Act.

10 The costs of such an application are likely to be ordered to be paid out of the estate of the deceased as, generally, the Court applies the usual rules as to costs in probate proceedings. The authorities concerning the costs in the administration of an estate are conveniently set out in Hall v Carney (No 2).[6] The position is that where probate litigation has been caused, or contributed to, by the way in which a testator made his or her testamentary intentions known, costs would usually be ordered to be paid out of the estate.

11 The classes of case identified in Re Buckton, the decision referred to by the plaintiffs, was recently considered by the New South Wales Court of Appeal in Warton v Yeo[7] by Ward JA as follows:

There are circumstances in which the costs of litigation concerning the administration of estates should be borne by the parties personally (In re Buckton; Buckton v Buckton). Three classes of case can be identified. In the first, the applicants are trustees of a will who ask the court to construe the will for their guidance, in order to ascertain the interests of the beneficiaries. In the second class, the application is made not by the trustees (who are respondents) but by some of the beneficiaries because, for whatever reason, that course has been deemed more convenient. In the third class of case, the application is made by a beneficiary who makes a claim adverse to other beneficiaries, and as such, the proceedings are properly characterised as adversary litigation. In the first two classes of case, the costs of all parties are borne by the estate; in the third class, the costs are borne by the parties themselves.

If litigation seeking to construe a will falls within the first or second class of case, then the court is in substance carrying out the same task (with respect to costs) as it would have carried out had it been administering the estate itself. On the other hand, if such litigation falls into the third class of case, the court is concerned only with who, out of the parties before it, should pay the costs of any other of the parties before it (that is, it applies the usual rule as to costs), and does not need to be concerned about indemnification from the estate.[8]

12 In respect of trustees' costs, trustees are entitled as of right to indemnity out of the trust for expenses properly incurred. In Dimos v Skaftouros, Dodds-Streeton AJA referred to the decision of the High Court in National Trustees Executors & Agency Company of Australasia Ltd v Barnes and affirmed that a trustee is entitled to indemnity out of the trust for all proper expenses.[9] In other words, a trustee is entitled to all costs except to the extent that they are of an unreasonable amount or have been unreasonably incurred.

13 In addition to these principles, there are now the overarching obligations applicable to litigants contained in the Civil Procedure Act 2010 to consider, in particular, the overarching obligation to ensure that the costs of the proceeding are reasonable and proportionate. As stated in Yara Australia Pty Ltd & Ors v Oswal:[10]

Section 24 adopts a flexible test. There is plainly no costs matrix or formula that can be applied in determining whether the parties have met their obligations. Rather, the court must weigh the legal costs expended against the complexity and importance of the issues and the amount in dispute, in order to determine whether the parties used reasonable endeavours to ensure those costs were proportionate.

Each party and their solicitor and counsel have an obligation to comply with the overarching obligation. Whether any of them have breached that overarching obligation is to be determined by an objective evaluation of their conduct having regard to the issues and the amount in dispute in the proceeding. The legal practitioners' duty is non-delegable. The obligation will override their duty to their client where the discharge of that duty would be inconsistent with the overarching obligation. The legal practitioner will not be relieved of this overarching responsibility because of the instructions of their client.

Legal practitioners, whether solicitor or counsel, involved in the preparation of pleadings, affidavits or other materials that are to be used in the proceeding or who provide advice as to such matters, have individual responsibilities to comply with the overarching obligation. Both solicitor and counsel also have an overarching responsibility with respect to the extent and level of their client's representation. Each must ensure that, having regard to the issues, the extent and level of representation proposed is reasonable and proportionate. Advice or instructions given or received by legal practitioners, and instructions given by the client may inform but will not be determinative of the question whether, viewed objectively, there has been a breach of the obligation.[11]

14 The position taken by the plaintiffs as the named executors under both the June 2012 will and the informal document was that they should take a neutral stance, although they would provide relevant evidence and submissions to assist the Court. In submitting that their role was to be neutral, the plaintiffs rely on Re Buckton.

15 Although Re Buckton is relevant to the question of costs concerning questions arising from a testator's will, Kekewich J in Re Buckton did not state that the stance of the trustees in that matter should be neutral. In my view, the situation facing the plaintiffs in this proceeding required them to be impartial however their role still required them to provide the evidence necessary for the Court to determine whether the informal document, alternatively, the June 2012 will, was capable of being propounded. In fact, at trial, the plaintiffs position that there was adequate evidence to support a grant of probate of the informal document.

16 The plaintiffs submitted that where two competing wills are put to the Court, the onus of proving testamentary capacity rests upon the relevant contradicting beneficiary and it was not for the trustees under the competing wills to take one side where there is an adequate contradictor. Testamentary capacity was one of many issues to be determined by the Court in this proceeding. The law requires a testator be of sound disposing mind when the instructions for the will are given and when the will is executed. The onus of proving that the informal document was the informal will of the deceased lies on the party propounding it. This onus means the burden of establishing the issue. It continues during the whole of the case and must be determined on the balance of the whole of the evidence.[12] As the persons seeking to propound the informal document, the plaintiffs must establish the requisite elements on the balance of probabilities, with the evidence to be evaluated in accordance with the Briginshaw principles.[13]

17 Similarly, the onus of proving testamentary capacity where there is an informal document lies on the party seeking to convince the Court that the deceased intended the informal document to constitute his or her will, with the evidence to be evaluated in accordance with the Briginshaw principles.[14] As explained in [10] of the reasons for judgment:

In this proceeding, the plaintiffs seek to propound the informal document as the deceased's informal will on the basis that it satisfies the requirements of s 9 of the Act. In the absence of a duly executed will, there is no presumption of capacity in the relevant sense and the onus of proving capacity in relation to the informal document rests with the plaintiffs.

There is no issue that the June 2012 will was executed in accordance with s 7 of the Act. Evidence of due execution of a will gives rise to a presumption that the will should be admitted to probate and that gives rise to a presumption of testamentary capacity and knowledge and approval of the will by a testator. [15]

18 When the plaintiffs made application to propound the informal document, the Registrar of Probates sought a report on the deceased's testamentary capacity, that is, on the evidence before him, the Registar was not satisfied that the informal document was the last testamentary document of a free and capable testator. In response, the plaintiffs filed the affidavit of Dr Varma. I determined that no weight should be given to Dr Varma's opinion evidence as he failed to address the legal test for testamentary capacity and he did not provide any factual basis for his conclusion, apart from stating that he saw the deceased on 28 February 2013.[16]

19 The first plaintiff, a solicitor, also filed an affidavit expressing his view on the testamentary capacity of the deceased. I determined that his evidence carried little weight for a number of reasons, including that he failed to explain the reasons for his view and he failed to address the legal test for testamentary capacity.[17]

20 The plaintiffs also submitted that once the plaintiffs had placed their 'neutral material' before the Court, it was up to the defendants as contradictors to interview the deponents so as to augment their evidence or to require any witness be present for cross-examination at trial, if they felt the need.

21 In their roles as the applicants in this proceeding, the plaintiffs were not placing 'neutral material' before the Court. Their role was to file relevant and admissible evidence in support of the two applications made by them: the first for a grant of administration of the informal document and, in the alternative, a grant of probate of the June 2012 will. It was then the role of the contradictors to file responding relevant and admissible evidence in support of their positions. Both defendants filed affidavits setting out their positions. The first defendant's submissions addressed the issue of testamentary capacity, it being her position that the informal document ought not be admitted to proof. The first defendant did not appear at the trial for reasons that were addressed in the judgment.[18]

22 In response to the Court's findings on the evidence of testamentary capacity filed by the plaintiffs, in their written submissions seeking their costs from the estate, the plaintiffs' submitted that their limited powers as administrators under order 2 of the limited ad colligenda bona grant made on 11 April 2014 meant they had no access to the deceased's medical records, noting certain provisions of the Health Records Act 2001, but did not develop this submission.[19]

23 I have considered the provisions of the Health Records Act 2001 referred to in the plaintiffs' submissions. Section 3 of that Act defines 'legal representative' to include a person holding office in Victoria as administrator of the estate of a deceased person and defines 'health information' as including information or an opinion about the 'physical, mental or psychological health at any time of an individual'. These definitions would include an administrator under a limited grant. Sections 25, 85 and 95 of that Act do not appear to preclude an administrator of a deceased person from accessing the health information of a deceased person.

24 In his affidavit, Dr Varma deposed that the deceased had been under his psychiatric care for many years. The deceased's psychologist, Ms Isobel Moreland, also swore an affidavit in relation to the deceased's health. The plaintiffs could have sought all relevant information concerning the medical health of the deceased from these individuals.

25 If the provisions of the Health Records Act 2001 were truly the reason for the plaintiffs not accessing the deceased's medical and health records, the plaintiffs could have made an application to the Court seeking an order enabling them to do so. These types of orders are routinely made in probate proceedings, a matter that legal practitioners who are familiar with such proceedings would be aware.

26 In response to the concerns of the Court concerning the quality of the affidavit evidence in the proceeding, the plaintiffs submitted that the affidavits of Ms Talbot and Ms Ridgewell were very brief and the information and narrative provided by these witnesses was mainly in their exhibits that had been prepared by persons other than the solicitors for the plaintiffs.

27 It is correct that the affidavits were brief, however, both affidavits exhibited lengthy statements of little forensic value to the Court. I concluded that:

Although nine affidavits in total were filed in the proceeding, the evidence contained in the affidavits comprised, in part, conclusions and opinions without any underlying facts set out by the relevant deponent which ultimately affect the weight the Court can place on that evidence.[20]

28 It is not justifiable for the plaintiffs to claim indemnity costs from the estate for affidavits that have been found to be of little forensic value by relying on a submission that the exhibits had been prepared by persons other than the solicitors for the plaintiffs. This is particularly so where the plaintiffs are both legal practitioners who rely on the proposition that their role 'was to be neutral, but to place relevant material before the Court'. A proper consideration of the statements and the other affidavits filed would have eliminated irrelevant and inadmissible material.

29 Also in respect of the Court's concerns as to the affidavit evidence, the plaintiffs referred to the Court's criticism of the first plaintiff's evidence, especially at [109] and [131] of the judgment, which referred to the fact, amongst other matters, that the first plaintiff did not produce any file notes of his two conversations with the deceased. The plaintiffs submitted that, in fact, they discovered a file note of the first plaintiff's conversation with the deceased on 26 February 2013.

30 In his affidavit sworn 28 July 2014, the first plaintiff referred to his telephone conversations with the deceased but did not exhibit any files notes of the conversations.[21]

31 This submission does not, in fact, relate to the costs of the proceeding but seeks to be a justification after the event of the evidence relied on by the plaintiffs. The Court is not aware whether a file note was discovered or not. The facts before the Court were that there were no file notes of the first plaintiff concerning any telephone conversations with the deceased in evidence before the Court. Indeed, the submissions of the first defendant specifically referred to the fact that no file notes of the two conversations were produced in discovery in the proceeding.

32 The final issue to be addressed relates to a settlement by the plaintiffs with the first defendant. In the reasons for judgment, the Court referred to the position of the first defendant contending that the informal document should not be admitted to probate however, at trial, she did not appear as a result of a settlement being reached with the plaintiffs[22] and noted that, during the trial, the Court was informed that the plaintiffs had reached a settlement with the first defendant, which included a potential Part IV claim by her against the estate of the deceased.[23]

33 The first defendant, who was the contradictor of the informal document, informed the Court that she would no longer actively put a position on the application on the Friday before the trial was to commence on the following Monday. The second defendant supported the application for a grant of the informal document.

34 Specifically, on Friday 17 April 2015, counsel said:

Counsel for the first defendant:

... what the parties have done is mediated the issues about transfers that were potentially to occur. About potential Part IV claims and about distribution of the estate between themselves because they've got together and done that. They did that yesterday and because of that position, the first defendant in no longer going to actively put a position in relation ... to which will would be probated and leave that for your Honour's decision. [24]

Her Honour:

So your client was objecting to the informal will being propounded and she 's now done a deal as it were.

Counsel: Yes.[25]

35 During the trial on 20 April 2015, the further exchange occurred:

Her Honour:

... as I understand from the appearance on [17 April], some arrangements have been made with [the first defendant] in relation to the estate.

Counsel for the second defendant:

Well, there was a potential claim to recover the moneys during her lifetime. There was also the potential Part IV. [26]

36 In response to the Court's request to understand the basis of and the power of the plaintiffs to enter into the settlement with either or both of the defendants when the plaintiffs are currently administering the estate of the deceased under a limited ad colligenda bona grant, the plaintiffs stated in their written submissions:

... there was no prior resolution of the matter that was before the Court in this proceeding. Mention was made at a directions hearing on 17 April 2015 of a resolution as between potential beneficiaries.

37 This response is not responsive to the Court's request and has not satisfied the Court's concerns. The matter that was before the Court is the application for a grant of administration of the informal document, in the alternative, a grant of probate of the June 2012 will.

38 The matters that have been set out in these reasons concern a settlement of some sort with the first defendant and as between 'potential beneficiaries'. As stated, the Court remains concerned that these matters could be beyond the limited powers of the plaintiffs and requires them to be addressed to the satisfaction of the Court.

39 In relation to the costs of the parties of the proceeding, the parties were specifically requested to address the concerns expressed by the Court in the judgment and to address the reasonableness and proportionality of the costs of the proceeding. The Court is no better informed on these aspects of the costs after considering the plaintiffs' written submissions.

40 Accordingly, I order that by 31 July 2015, the parties file affidavits setting out the details of their respective professional costs and disbursements in respect of this proceeding, including the basis of their charges.

41 In relation to the settlement or settlements reached with either of the defendants and of the 'resolution as between potential beneficiaries', I order that by 5 August 2015, the plaintiffs file an affidavit setting out the basis of these statements and exhibiting any document concerning these matters.

42 I will adjourn the further hearing of this proceeding to 14 August 2015.

[1] Robinson v Jones [2015] VSC 222.

[3] Ibid [138]. The terms of the limited grant at [5].

[4] Re National Safety Council (No. 2) [1992] 1 VR 485, 503; Rule 63.26 of the Supreme Court (General Civil Procedure) Rules 2005.

[5] Re Buckton; Buckton v Buckton ('Re Buckton') [1907] 2 Ch 406, 414.

[6] [2012] SASCFC 105 (17 September 2012), [8]-[12] (Gray J); see also Fielder v Burgess [2014] SASC 98 (7 August 2014); Murdocca v Murdocca (No 2) [2002] NSWSC 505 (25 June 2002).

[7] [2015] NSWCA 115 (7 May 2015) (Basten and Ward JJA, Emmett JA) 7 May 2015.

[8] Ibid. [78]-[79](Ward JA). (citations omitted)

[9] Dimos v Skaftouros [2004] VSCA 141 (20 August 2004), [164]-[165] (Dodds-Streeton AJA).

[10] [2013] VSCA 337 (27 November 2013), [13] (Redlich and Priest JJA and Macaulay AJA).

[12] Bailey v Baiely [1924] HCA 21; (1924) 34 CLR 558, 570-572 (Isaacs J).

[19] Relying on Health Records Act 2001, ss 25, 85 and 95 and the definitions of 'health information' and 'legal representative' in s 3 of the Act.

[21] Affidavit of James William Robinson sworn 28 July 2014, paragraph 11.