POWER -v- SMART [2018] WASC 168 (13 June 2018)

Plaintiffs' application for costs order against the defendants dismissed

Defendants' application for costs to be paid out of the estate dismissed

Calderbank v Calderbank [1976] Fam Law 93; [1975] 3 All ER 333

Clay v Karlson [2001] WASC 141

Harvey Industries Group Pty Ltd v Jones [No 2] [2017] WADC 160

Hornsby v Hornsby [No 3] [2015] WASC 159

Mitchell v Gard (1863) 3 Sw & Tr 275; (1863) 164 ER 1280

Oreski v Ikac [2007] WASC 195(S)

Oreski v Ikac [2008] WASCA 220

Paraskov v Paraskos [2002] WASC 109

Power v Smart [1976] Fam Law 93; [2018] WASC 168

Prichard v Prichard [2015] WASC 170(S)

Re Cutcliffe's Estate [1959] P 6; [1958] 3 All ER 642

Re Green (dec'd) [1969] WAR 67

Saunders v The Public Trustee [2015] WASCA 203(S)

Veall v Veall [2015] VSCA 60; (2015) 46 VR 123

Vincent v Close [2014] WASC 5(S)

1. In this action the plaintiffs, who are the executors of a will executed by Ms Irene Jean Okle (the deceased) on 23 September 2011 (the Will), sought from the court an order pronouncing the force and validity of the Will in solemn form. The defendants challenged the Will on the grounds of lack of testamentary capacity, lack of knowledge and approval of the contents of the Will, and undue influence. The defendants alleged that the undue influence was exerted by the first plaintiff.
2. On 13 June 2018 I delivered my judgment: Power v Smart[1] (the Judgment). I upheld the validity of the Will. On delivering the Judgment I made orders in the following terms:
   1. The court pronounces for the force and validity of the last will of the late Irene Jean Okle made 23 September 2011 (the Will) (named therein Irene Okle) in solemn form of law.
   2. The Probate Registrar issue a grant of probate of the Will in solemn form of law in favour of the plaintiffs, the executors appointed by the Will.
   3. The plaintiffs' costs of and relating to this action including all reserved costs be paid out of the estate of the deceased on an indemnity basis and further that such costs are to include all costs except so far as they are of an unreasonable amount or have been unreasonably incurred so that subject to the above exceptions the plaintiffs will be completely indemnified by the estate for their costs.
   4. The costs as between the plaintiffs and the defendants be reserved.
   5. The defendants have 14 days to file any affidavits and submissions in relation to the costs of the action.
   6. The plaintiffs have 7 days to file any affidavits and submissions in response.
   7. The issue of costs as between the plaintiffs and the defendants be determined on the papers.
3. The plaintiffs and the defendants have filed their submissions and affidavits on the issue of costs in accordance with my above orders. It is therefore now necessary for me to deal with the question of costs.

1. In relation to the costs as between themselves and the defendants, the plaintiffs seek an order in the following terms:

The defendants do pay the plaintiffs' costs of the action, including the submissions and the affidavit relied upon by the plaintiff relating to the question of costs after trial, on a party and party basis to 27 January 2017 and thereafter on an indemnity basis and further that the indemnity costs are to include all costs except so far as they are of an unreasonable amount or have been unreasonably incurred so that subject to the above exceptions the plaintiffs will be completely indemnified by the defendants for their costs.

1. The defendants seek orders as follows:
   1. There be no order for costs against the defendants.
   2. The party and party costs of the defendants to be taxed unless otherwise agreed and paid out of the estate of the deceased.

1. Annexed to the affidavits filed by the parties are copies of the correspondence exchanged between their respective solicitors during the period April 2016 through to shortly before the trial in January 2018. It is not necessary to refer in detail to all of these communications. However, given the submissions made by the parties, to which I will refer in due course, it is necessary to refer at this point to some of the correspondence and other relevant events.
2. I note in this context that it was not until some around August 2017 that the defendants' solicitors commenced to act for both defendants. Initially they acted only for the first named defendant, Ms Susan Smart (Susan). The second named defendant, Ms Ainslie Perkusich (Ainslie), was not actually joined as a defendant to the action until 26 October 2017.
3. On 15 April 2016 Susan's solicitors sent a letter to the plaintiffs' then solicitors, Haynes Legal (Haynes), bearing that date. In their letter Susan's solicitors expressed the view that the Will was invalid due to the deceased 'lacking testamentary capacity and/or being unduly influenced'. They identified a number of matters which they asserted supported their view. They noted the plaintiffs' previously expressed preference to avoid having to make an application to the Supreme Court in order to remove the caveat that had been lodged against the estate by Susan and stated that in light of this Susan was 'willing to consider any and all information provided to her in relation to the preparation and execution of the Will'. They stated that 'therefore in an attempt to avoid litigation' they would appreciate being provided with a number of documents which they identified. They also requested that they be provided with a 'detailed overview of the circumstances in which the Will was prepared'. They stated that upon receipt of the requested documents and information they intended to propose a without prejudice discussion between all relevant parties to the estate in an attempt to reach a suitable compromise.
4. On 18 May 2016 Haynes sent a letter to Susan's solicitors bearing that date in response to Susan's solicitors' letter dated 15 April 2016. In their letter Haynes responded to the matters put forward by Susan's solicitors in support of their assertions that the deceased lacked testamentary capacity and/or was unduly influenced. They provided Susan's solicitors with some of the information and documents that they had requested.
5. On 1 June 2016 Susan's solicitors sent a letter to Haynes bearing that date. In their letter Susan's solicitors noted that 'no medical evidence has been provided in relation to the deceased's testamentary capacity on or about 15 July 2011, being the date upon which the deceased provided instructions to Mr Haynes to prepare the Will'. They further noted that 'testamentary capacity is generally to be determined at the date when instructions are given and not the date of execution'. They commented on some of the information that had been provided to them by Haynes and repeated their previously expressed view that the deceased lacked testamentary capacity. They proposed an informal conference 'in an attempt to commence settlement discussions' in relation to both the caveat that Susan had lodged against the deceased's estate and Susan's previously foreshadowed claim for adequate provision under the Family Provision Act 1972 (WA) (the FPA) in the event that the Will was held to be valid.
6. On 22 September 2016 the plaintiffs commenced the action against Susan.
7. On 20 January 2017 Susan's solicitors sent a letter to Haynes bearing that date. In their letter they noted that Haynes intended to cease acting in the action but stated that they were writing their letter 'by way of further without prejudice conferral and in an attempt to settle the [a]ction'. They stated that Susan contested the validity of the Will on the basis that the deceased was 'unduly influenced ... and/or ... lacked testamentary capacity at the time ... and/or ... did not know and approve of the contents of the [Will] and did not know what she was doing and its effect'. They stated that Susan's Defence and Counterclaim (which had been filed on 8 November 2016) adequately particularised the factual basis supporting the grounds on which Susan contested the validity of the Will. They stated that if the action resulted in probate being granted to the plaintiffs, they had instructions to institute proceedings pursuant to the FPA seeking orders for adequate provision. They then stated that Susan was prepared to make a 'without prejudice' offer to settle the proceedings on terms which they specified.
8. On 27 January 2017 the plaintiffs' current solicitors (who had by this time commenced acting for the plaintiff in place of Haynes) sent a letter bearing that date in which they responded to the letter from Susan's solicitors dated 20 January 2017. In their letter they took issue with Susan's solicitors' assertions in previous correspondence that the deceased had been diagnosed with dementia. They then continued as follows:

The lawyer who prepared the will is satisfied that the testator had capacity and understood and approved of the contents of her last will. On 06 September 2011 the testator's general medical practitioner stated that the testator appreciated the effects of will making and seemed to have a clear understanding of the extent of her estate. He was of the opinion that the testator was 'of sound mind'.

The suggestion of undue influence, as pleaded in the defence, is, in our view, not compelling and we do not propose to address it in this letter. The claim may be stronger if the plaintiffs and/or the grandchildren were bequeathed the estate. But they were not.

1. A little later in their letter the plaintiffs' solicitors expressed the view that any claim under the FPA could not be brought by Susan until a grant of probate had been made and that they did not, given the number of infant beneficiaries, consider it feasible to 'do an overall settlement' until a grant of probate when all potential claimants would have the opportunity to bring a claim. Towards the end of their letter they said the following:

If the [Will] is proved in solemn form, the defendant faces an adverse costs order and will likely bear her own costs. The medical evidence that we have seen does not strongly support the claim that the testator lacked capacity or had no knowledge of the will when it was made in September 2011. And in our view the medical evidence including Dr Rudolf Bohmer's contemporaneous assessment of the testator as set out in his letter to Haynes Legal dated 06 September 2011, plus Mr Haynes' observations when the will was made, will more likely than not, see the [Will] proved in solemn form.

The plaintiffs hereby offer, if the defendant withdraws her defence and counterclaim, that the plaintiffs will not seek costs against her in this action (that is the estate bear its own costs). The benefit of this offer is that the prospective [FPA] claim of the defendant and her sister can then be brought (assuming the 2011 will is then proved on an undefended basis) without the estate first being substantially diminished by the costs in the present action if it goes to trial.

This offer is expressed as a Calderbank offer following the principles of Calderbank v Calderbank [1975] 3 All ER 333 and is open for acceptance for 28 days from the date of this letter.

1. On 15 February 2017 Susan's solicitors sent a letter to the plaintiffs' solicitors bearing that date in which they confirmed their instructions to reject the plaintiffs' 'Calderbank offer' made in the letter dated 27 January 2017. They repeated their previously expressed view that an informal conference should take place in an attempt to settle the litigation. They expressed the view that an unwillingness by the plaintiffs to both attend and attempt to organise an informal conference was unreasonable.
2. Later on 15 February 2017 the plaintiffs' solicitors sent a responsive letter to Susan's solicitors bearing that date in which they stated, in effect, that they had sought instructions and that unless they advised otherwise Susan's solicitors should assume that the plaintiffs' position was that consideration of FPA claims was premature unless and until there was a grant of probate.
3. On 21 August 2017 Susan's solicitors, who were by this time also acting for Ainslie, sent a letter to the plaintiffs' solicitors bearing that date. In their letter they advised that Ainslie had instructed them to join her as a defendant to the action. They stated that they intended to act on these instructions in due course. They referred to the expert report of psychiatrist Dr Nick De Felice dated 1 August 2017 which they had provided to the plaintiffs' solicitors earlier that day. They stated that Dr De Felice's report was provided in support of the defences pleaded in the Defence and Counterclaim. They expressed the view that Dr De Felice's report would carry 'significant weight at trial on the pleaded issues of lack of testamentary capacity, lack of knowledge and approval of the Will and the likely impact of any proven undue influence on the execution by the deceased of the ... Will'. They stated that nevertheless it remained in the interest of all parties to make reasonable compromises to secure a settlement of the action. They stated that Susan and Ainslie were prepared to make, on a 'without prejudice' basis, an offer to settle the action on terms which they set out. They stated that the settlement offer was open for acceptance for a period of 28 days and was made in accordance with O 24A of the Rules of the Supreme Court 1971 (WA) (RSC) and the principles enunciated in Calderbank v Calderbank.[2]
4. I pause here to note that although Ainslie was not actually joined as a defendant in the action until 26 October 2017, I will from this point on for convenience refer to her and Susan as 'the defendants'.
5. On 22 August 2017 the plaintiffs' solicitors sent a letter to the defendants' solicitors bearing that date asking the defendants' solicitors to identify various documents that had been referred to by Dr De Felice in his report dated 1 August 2017.
6. On 23 August 2017 the plaintiffs' solicitors sent a letter to the defendants' solicitors bearing that date in which they expressed the view that the 28 day period in which to accept the defendants' recently made Calderbank offer was unreasonable given that the plaintiffs had to digest Dr De Felice's report, seek and receive instructions to engage an expert, engage an expert and then receive and consider the expert's report. They stated that after the plaintiffs had obtained their own psychiatric report they would respond to the defendants' offer.
7. Also on 23 August 2017 the plaintiffs' solicitors sent to the defendants' solicitors by email the witness statement of Mr Paul Haynes dated 19 July 2017, the witness statement of Ms Alyson Haynes dated 27 July 2017, the witness statement of Ms Natasha Haynes dated 7 August 2017, the witness statement of the first plaintiff dated 31 July 2017 and the witness statement of Dr Rudolf Bohmer dated 4 August 2017.
8. On 24 August 2017 the defendants' solicitors sent a letter to the plaintiffs' solicitors bearing that date in response to the plaintiffs' solicitors' letter dated 22 August 2017. Although they dealt with one of the requests made by the plaintiffs' solicitors in relation to Dr De Felice's report, in respect to the remaining requests for identification of various documents referred to by Dr De Felice in his report they stated that 'these are matters that ought to be raised in crossexamination to Dr De Felice and it is not appropriate for us to answer these on his behalf'.
9. Later on 24 August 2017 the plaintiffs' solicitors sent a letter to the defendants' solicitors bearing that date in response to the defendants' solicitors' letter sent earlier that day. In their letter they referred to an order made by Chaney J on 29 June 2017 which required that the report of any expert witness 'shall identify the facts and other material' upon which the expert's opinion was based. They expressed the view that the defendants' solicitors' refusal to answer their queries regarding Dr De Felice's report dated 1 August 2017 was contrary to the order made by Chaney J. They stated that the descriptions of the documents by Dr De Felice in his report were not specific enough for them to be able to identify the documents. They stated that they 'trusted' that an application to the court would not be necessary 'given how easily' the issue could be resolved by the defendants' solicitors.
10. On 6 September 2017 the plaintiffs' solicitors sent a letter to the defendants' solicitors bearing that date in which they said, among other things, the following:

We refer to the report of Dr De Felice dated 01 August 2017, supplied to us on 21 August 2017.

1. Relevantly, Dr De Felice concludes that, in his opinion:

(a) the documentation does not show that the deceased considered the relative merits of all those who might lay claim to her estate; and

(b) the deceased did not have the cognitive capacity to weigh up the relevant claims to her estate (by her children and grandchildren), or the relative claims of those claimants, more so given the alleged complexity of the [Will].

1. Dr De Felice formed these views without considering the file notes of Mr Haynes on 15 July 2011 and 22 September 2011, or the witness statements of Dr Bohmer and [the first plaintiff]. You have had access to the file notes since 04 August 2017 and the witness statements since 24 August 2017. Unless Dr De Felice changes his view, the plaintiff will have to obtain her own expert evidence on the matter. ...
2. So that costs might not be wasted may we respectfully request that you disclose the file notes and witness statements provided to you a month ago to Dr De Felice and ask him if they change his view in any way.

1. If you decide to disclose the said file notes and witness statements to Dr De Felice we would defer briefing an expert until Dr De Felice's response thereto is known (subject to there being an extension of time for the plaintiff to provide a copy of any experts' report that the plaintiff intends to rely upon at trial). Please let us know without delay and in any event by no later than 4.00 pm 08 September 2017 whether you will provide the information to Dr De Felice and seek his revised opinion.

It goes without saying that if it turns out at the trial that these file notes and witness statements were essential or prudent for the defendant's expert to consider in order to provide a considered opinion, it may have cost implications at trial.

1. Later on 6 September 2017 the defendants' solicitors sent a responsive letter to the plaintiffs' solicitors bearing that date in which they advised the plaintiffs' solicitors that they did not consider that the matters referred to by them in their letter of that date required Dr De Felice to prepare a revised report. They stated that they would not be requesting Dr De Felice to prepare a revised report.
2. Later again on 6 September 2017 the plaintiffs' solicitors sent a further letter to the defendants' solicitors bearing that date. In their letter they notified the defendants' solicitors that they may at a later stage seek to rely upon the 'communications of 5 September 2017', which was presumably intended to be a reference to the 'communications of 6 September 2017', on the question of costs, 'particularly if it becomes apparent that Dr De Felice's conclusions had no regard to the material referred to in our letter (the G.P and lawyer's witness statements and the lawyer's notes) but should have'.
3. The plaintiffs' solicitors reference in their above mentioned letter dated 6 September 2017 to the 'lawyer's notes' was a reference to the handwritten notes and typed file notes made by Mr Haynes of his meetings with the deceased on 15 July 2011 (the day on which he took instructions from the deceased) and 22 September 2011 (the day on which he took the deceased through the terms of the Will).
4. On 26 October 2017 Chaney J, on the application of the plaintiffs, ordered the defendants to 'forthwith disclose to Dr De Felice the witness statements sought to be relied upon by the plaintiffs and the documents referred to therein'. His Honour also ordered that the defendants provide the plaintiffs with any further report prepared by Dr De Felice by 23 November 2017.
5. On 8 December 2017, by which time the plaintiffs' solicitors had provided to the defendants' solicitors a copy of an expert report they had obtained from psychiatrist Dr Olivia Lee dated 19 September 2017, the plaintiffs' solicitors sent a letter to the defendants' solicitors bearing that date. In their letter they stated that given that expert evidence had now been disclosed the plaintiffs considered it appropriate to review the strength of the action and to address the issue of whether it could be resolved so as to avoid further substantial legal costs. They then set out what in their view were the strengths of the plaintiffs' case and the weaknesses of the defendants' case. In the course of doing so they expressed the view that the defendants had alleged undue influence against the first plaintiff without any evidence to support the allegation. They expressed the further view that the plea of undue influence was enough by itself to justify a costs order against the defendants in the event that the Will was proved. A little later in their letter they stated:
   1. It is possible that a court might find that until 23 August 2017, by which time you had the file notes and witness statement of Mr Haynes, and the statement of [the first plaintiff], that the defendants were justified in requiring the executors prove the will in solemn form (although in our view the defendants have gone way beyond that position). But after that time the defendants, properly advised, should have, in our view, appreciated the futility of their position. If you are of the view we are or might have it wrong on the costs issue should the defendants fail, please give us your reasons.
6. The plaintiffs' solicitors then concluded their letter by making what they expressed to be a Calderbank offer, namely that if the defendants withdrew the Defence and Counterclaim and took no further part in the action and the Will was proved in solemn form, the plaintiffs would not seek costs against the defendants in either the action or the counterclaim, and the plaintiffs as executors would consent to an order that the deceased's estate pay to the defendants an amount (which was specified) as a contribution towards the defendants' costs of the action.
7. On 15 January 2018 the defendants' solicitors sent a letter to the plaintiffs' solicitors bearing that date in response to the letter from the plaintiffs' solicitors dated 8 December 2017. In their letter they advised that the Calderbank offer made by the plaintiffs was rejected by the defendants, and that they (that is, the defendants' solicitors) regarded the offer as 'extremely unreasonable'. They advised that the defendants were on an entirely 'without prejudice basis' prepared to settle the action on terms more favourable to the plaintiffs than the terms of the offer made by the defendants as set out in their letter dated 21 August 2017. They then set out the terms of the defendants' settlement offer, which they expressed to be a Calderbank offer and to be open for 28 days.
8. Having set out the terms of the defendants' settlement offer, the defendants' solicitors stated that the offer had been made 'in regard to matters' which in their view 'adversely impacted on the chances of [the plaintiffs] being successful' in the action. They then proceeded to set out in some detail the matters which they considered did adversely impact on the plaintiffs' likelihood of success in the action. In the course of doing so they stated that the plaintiffs' solicitors' earlier assertion that the defendants had alleged undue influence against the first plaintiff without any evidence to support it was 'ill advised and ... rejected'.
9. On 30 January 2018 the plaintiffs' solicitors sent a letter to the defendants' solicitors bearing that date. In their letter they expressed the view that no further analysis of the merits was called for given that the defendants did not accept the prima facie case outlined in their letter dated 8 December 2017. They expressed the view that the prudent and costs sensible course was for the defendants to drop their defence in the action and allow the plaintiffs to proceed on an unopposed basis without conditions. They stated that the way would then be open for the defendants to bring a FPA claim after the grant of probate if they wished to do so. They stated that if the defendants wished to accept the plaintiffs' offer of 8 December 2017 they could advise of this and the plaintiffs' solicitors would take instructions.

1. It is trite law that the court has a wide discretion in determining by whom the costs of an action should be borne: Supreme Court Act 1935 (WA), s 37. Some guidance on the exercise of the discretion is provided by the statement in O 66 r 1 of the RSC that costs generally follow the event.
2. The general rule that costs follow the event applies in probate actions. However, in probate actions the courts have recognised two categories of cases in which the general rule may be departed from. The two categories are as follows:
   1. Where the testator or a residual beneficiary is the cause of the litigation; and
   2. Where there are sufficient and reasonable grounds to propound or challenge the purported will.
3. In cases falling within the first category the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate. In cases falling within the second category the costs may be left to be borne by those who incurred them.[3] The two categories of cases in which the general rule may be departed from are a reflection of the public interest that doubtful wills should not pass easily into proof because of the cost of opposing them.
4. Although the discretion to award costs must be exercised judicially, the classes of case in which the judicial discretion may appropriately be exercised to make a costs order which departs from the general rule should not be regarded as closed. In every case it is necessary to have regard to all the circumstances.[4]
5. As to the relevance to the issue of costs of a party in a probate action unsuccessfully alleging undue influence, in Re Cutcliffe's Estate[5] Hodson LJ (with whom Omerod LJ agreed), said the following:

It seems to me a strong thing, and a thing to which I should be slow to listen, to maintain that people whose evidence has been found ... to have been wholly false and who have lost their case ... should be heard to say that an order for costs should be made wholly or in part in their favour because the court normally exercises its discretion in these cases along certain lines and in accordance with certain principles ... In the Probate Division, notwithstanding exceptions to be found in the books, the probability is that people who unsuccessfully make pleas of undue influence and of fraud will be condemned in the costs not only of that charge but of the whole action.

The evidence in this case was the evidence of...the first defendant and his wife, and it was directed not only to the question of want of knowledge and approval but also to the question of undue influence. A great deal of evidence was directed to both these matters. It was not one of those cases where the defendants merely put the plaintiff to proof that the testator knew and approved of the contents of the will. They took on themselves the task of proving, if they could, that not only was that onus not discharged, but the will itself was brought into existence by the undue influence of the plaintiff. That they wholly failed to do. Having failed, and having failed because they were disbelieved, it seems to me almost inevitable that an order for costs would be made against them. I think that the order was rightly made and that this appeal should be dismissed.

1. Similarly, in Veall v Veall[6] Santamaria JA (with whom Beach and Kyrou JJA agreed) said:

By pleading want of knowledge and approval alone, the person challenging the will puts the burden of proof on those who propound the will, without assuming the difficult task of proving undue influence. Moreover, even if those propounding the will succeed in satisfying the court as to knowledge and approval they will not necessarily be given costs against their opponents, whereas if undue influence is unsuccessfully pleaded, those who do so only rarely escape having to pay the costs.

1. Nonetheless, it is not the position that in every case in which a party fails to prove an allegation of undue influence they will be required to pay the costs of the opposing party.[7] Indeed, in some circumstances the party that alleges undue influence may not be required to pay the costs of the opposing party even if the allegation is tenuous or weak. It will all depend on the particular circumstances of the case. Thus in Hornsby v Hornsby [No 3][8] the defendant challenged wills made by the testator, his mother. In doing so he advanced a case of lack of testamentary capacity and undue influence upon the testator by the testator's accountant who took instructions for, and arranged the preparation and execution of, both wills. The allegation of undue influence was strongly pursued against the accountant by lengthy crossexamination at trial. The plaintiff sought an order that the defendant pay the costs of the action and for the costs to be taxed on an indemnity basis. The plaintiff's principal basis for seeking this order was that the defendant had unreasonably opposed proof of the last of the wills and did so without proper enquiry into the facts and without reasonable grounds. However, the plaintiff also contended in support of the application for costs that the defendant had unsuccessfully made an allegation of undue influence. In refusing the plaintiff's application and deciding that there should be no order against the defendant requiring him to pay costs E M Heenan J made the following statements:[9]
   1. The defendant refers to the exceptions to the event rule recognised in Middlebrook v Middlebrook, Re Green deceased, and also in Clay v Karlson [2001] WASC 141 [147] and submits that he had reasonably been led into this litigation by a bona fide belief in his case and has therefore felt that it was desirable to enquire into the testamentary dispositions of his mother and as a consequence should be relieved of his burden as to costs to the extent that there should be no order that pay the plaintiff's costs.
   2. As to the plaintiff's submissions that the defendant, having an advanced an unsuccessful claim for undue influence, should be ordered to pay the costs associated with that claim, the defendant submits that an unsuccessful claim of undue influence is not of itself a basis for excluding the party making the allegation from the second exception Re Herbert (1990) 101 FLR 279, 303, 311 313 applying Mitchell v Gard (1863) 164 ER 1280, 1281.
   3. I accept that there were circumstances in the present case which called for a vigilant examination of circumstances leading to Mrs Hornsby making and executing her wills of 29 May 1996 and of 1 December 2008 and that the validity of either will could not be presumed simply from evidence of due execution and of apparent capacity by the testatrix. The reasons for that conclusion have been set out extensively in the reasons for judgment in the case itself. Consequently, I consider that there were grounds which warranted the plaintiff being required to prove her mother's last will in solemn form and that the defendant was justified in requiring strict proof of his mother's testamentary capacity, due execution and to examine the circumstances which led to the execution of the wills of 1996 and 2008.
   4. From the defendant's point of view, of course, it was not sufficient merely to challenge the will of December 2008 because he was seeking, by his counterclaim, to propound the will of 1988 which had the most favourable dispositions to him. Hence, he needed to prove that the 1996 will was invalid and therefore had not revoked the will which he was propounding.
   5. Had the defendant simply required strict proof of the 2008 will and in doing so availed himself of the opportunity to raise issues of lack of testamentary capacity or even undue influence or unconscionability having regard to the circumstances under which that will was made and the contemporaneity of the inter vivos dispositions I would have had little hesitation in concluding that there were grounds for him to require that degree of scrutiny without being liable in costs should that last will be proved.
   6. The real issue, so it seems, is whether the defendant's challenge to the 1996 will, on similar but not identical grounds and his counterclaim propounding the 1988 will made before the controversies between himself and his mother and the litigation in 1994 over the Lakeview farm constituted 'a bridge too far'.
   7. ... The case for undue influence or unconscionable conduct by the accountant was weak arising from little more than a perceived lack of sympathy entertained by the defendant against the role of the advising accountant,..., arising from protracted negotiations and disputes about the financial provisions made by [the deceased] to [the defendant] in relation to his decision to acquire a farm at Denmark and to disengage from his involvement in Quinns Farm.

1. I consider that, in some respects, the challenges by the defendant to his mother's wills of 1996 and 2008 were, so far as they alleged undue influence, unconscionable conduct and to the extent that they did, as I am satisfied they did despite the defendant's submissions, challenge the deceased's mental and cognitive capacities, went considerably beyond any evidence adduced, whether in chief or by cross-examination, to support them. Those challenges did expand and extend both the preparation for and the conduct of the trial.
2. However, it is difficult and somewhat artificial to attempt to dissect the preparation for and the conduct of this trial into separate issues each with their finite limits in order to attempt some apportionment of the costs or to identify some particular issue or issues upon which the defendant should be liable for costs. Difficult and artificial while it would be to attempt to categorise any such subdivisions, the complexity would inevitably become compounded if, by doing so, it became necessary to tax costs and apportion claims for costs as a result of some such categorisation. Rather, I consider that it is more realistic and a better recognition of the true contest between the parties to acknowledge that, for reasons which were given in the decision itself, this was a case where full scrutiny of the will or wills being propounded by the plaintiff for probate was not only justifiable but necessary.
3. That conclusion will not allow this case to be fitted neatly into any of the categories identified in Re Green as being the types of cases where the general rule that costs should follow the event may be departed from. Rather it shows that those categories are indeed neither exhaustive nor rigidly prescriptive and that every case must be examined according to its own circumstances.

1. I must confess to reservations as to whether or not the challenge to the 1996 will and the counterclaim propounding the 1988 will were justifiable on objective standards from the standpoint of a reasonably well informed and advised litigant in possession of the facts known at the date of the commencement of these proceedings. However, this appears to be a matter upon which there is scope for reasonable differences of opinion and I do not think that it would be proper, in the exercise of a discretion such as this, to reach a conclusion with substantially adverse consequences on an issue so finely balanced. It is better, I consider, to treat this as an occasion when a substantial challenge to the deceased's 2008 will was justifiable and, once that is acknowledged, to realise that the challenge would inevitably bring with it a scrutiny of earlier wills ...
2. I do not consider that a trial limited to the validity of the 2008 will would have avoided...examinations of earlier wills made by the deceased. So a search for savings in time and effort if this trial had been confined to issues dealing with the 2008 will alone would be unlikely to return much in the way of economy.
3. In the circumstances, therefore, I consider that there should be no order against the defendant requiring him to pay costs of the proceedings, except for such interlocutory orders for costs which have already been made. Should any party wish to pursue the matter, where costs of interlocutory applications have been reserved, in the absence of agreement, there can be liberty to apply.
4. As to the principles relating to indemnity costs, I refer to, without repeating, my statements of the relevant principles in Harvey Industries Group Pty Ltd v Jones [No 2].[10]

1. The principal submissions made on behalf of the plaintiffs in support of the application for the costs order that they seek can be summarised as follows:
   1. By the time that the plaintiffs made their first Calderbank offer in the letter from their solicitors to the defendants' solicitors dated 22 January 2017 the defendants knew or ought to have known that:

(1) an independent lawyer, Mr Haynes, who had taken instructions for and prepared the Will, had no doubt about the deceased's capacity;

(2) they had made allegations which were false or for which they had no evidence, one of which was the allegation of undue influence and the second of which was an allegation that the first plaintiff knew Mr Haynes before arranging for him to meet with the deceased so that he could take instructions for the preparation of the Will; and

(3) without evidence to impugn the testimony of Mr Haynes their defence was 'doomed to fail'.

1. By 23 August 2017 the defendants had all of the plaintiffs' witness statements, save for the report of the psychiatrist Dr Olivia Lee dated 19 September 2017, as well as discovered documents including the file notes of Mr Haynes. In the absence of any evidence to impugn the testimony of Mr Haynes, 'any reasonable defendant, properly advised, should at this point have realised that their defence was doomed to fail'.
2. In the letter from the plaintiffs' solicitors to the defendants' solicitors dated 8 December 2017 the plaintiffs 'laid out' their entire case to be made at trial and made a further Calderbank offer which was rejected;
3. The defendants refused to give any of the plaintiffs' evidence to Dr De Felice until ordered to do so by Chaney J on 26 October 2017 and consequently forced the plaintiffs to engage their own expert;
4. The defendants failed to request Dr De Felice for his opinion as to the deceased's testamentary capacity as at 15 July 2011, the day Mr Haynes took instructions from the deceased, despite being aware, as is apparent from their solicitors' letter to the plaintiffs' solicitors dated 1 June 2016, that where instructions for a will are taken before the will is signed, the date the instructions are given is an important date. Under crossexamination Dr De Felice 'openly conceded that [the deceased] had testamentary capacity on 15 July 2011'. Properly briefed Dr De Felice 'would no doubt have made this concession and saved the expense of a trial and much of the getting up for trial';
5. The defendants rejected the plaintiffs' request that they identify some of the documents referred to by Dr De Felice in his report dated 1 August 2017;
6. At trial the defendants sought to 'impugn the professional integrity of Dr Lee and the professional competence of Mr Haynes'; and
7. In their written closing submissions the defendants alleged, without any evidence, and without notice to Mr Haynes, that Mr Haynes had acted 'fraudulently'.
8. The defendants, for their part, do not suggest that this is a case which falls within the first of the above identified categories of cases in which the general rule related to costs may be departed from. Rather, they submit that this is a case falling within the second category, that is, a case in which there were sufficient and reasonable grounds for them to challenge the Will. They identify the circumstances which they assert justify this conclusion.
9. The defendants further submit that the fact that they unsuccessfully alleged undue influence does not of itself provide a basis for concluding that the case does not fall within the second category of cases in which the general rule may be departed from. They argue that they have brought themselves within the second category because there was a direct and expressly pleaded strong link between the allegations of lack of testamentary capacity and lack of knowledge and approval on the one hand, and undue influence on the other. They submit that the evidence relied upon by them to prove undue influence was 'inextricably linked' to the evidence supporting the defences of lack of testamentary capacity and absence of knowledge and approval. They submit that the evidence adduced at trial was no different to the evidence that would have been adduced if the allegation of undue influence had not been pleaded.
10. I note that the defendants' assertion that they are entitled to their costs being paid out of the deceased's estate despite the fact that they are not contending that the present case falls within the first category of cases in which the general rule may be departed from is founded on a reference made by E M Heenan J in Hornsby v Hornsby [No 3][11] (without any express adoption thereof) to a statement made by the authors of Law of Succession (Lexis Nexis Butterworths) (2013)[12] to the effect that if a party can bring themselves within the second category either no order as to costs will be made, or costs will be allowed, either wholly or partly, out of the estate. As is apparent from my above statement of the relevant legal principles, I am not persuaded that this statement accurately reflects the current state of the law in this jurisdiction.

Were there reasonable grounds for challenging the Will?

1. I do not accept the plaintiffs' submission that the defendants should, by 22 January 2017 or any later date, have realised that their defence, at least in so far as it was based on allegations of lack of testamentary capacity and lack of knowledge and approval, was 'doomed to fail'. Rather, and as I think is apparent from the Judgment, I am satisfied that the defendants did, despite having been provided with the plaintiffs' evidence including the witness statement and file notes of Mr Haynes, have sufficient and reasonable grounds to challenge the Will on the grounds of lack of testamentary capacity and lack of knowledge and approval. To put it another way, I am satisfied that there were circumstances in the case which called for a vigilant examination of the circumstances leading to the deceased making and executing the Will: Hornsby v Hornsby [No 3].[13] In my view the relevant circumstances included the following:
   1. The deceased's very advanced age, frailty and very significant health difficulties (including almost total blindness and a severe hearing impairment) at the time that she gave instructions for, and executed, the Will;
   2. In or around 2007 and 2008 the deceased held intense unfounded beliefs that Susan and Susan's daughter, Ms Meagan Smart (Meagan), had been stealing from her;[14]
   3. From 2006 the deceased on occasions exhibited unusual and/or aggressive behaviour towards Susan and Meagan;[15]
   4. From 2007 onwards the deceased suffered from a mild cognitive impairment;[16]
   5. From 2008 onwards the deceased exhibited confusion and worsening problems with her memory;[17]
   6. From 2010 the deceased suffered from dementia;[18]
   7. In April 2011 the deceased, during an occupational therapy assessment, exhibited some confusion in relation to the number of her grandchildren and great grandchildren;[19]
   8. The Will excluded two generations of family members (children and grandchildren);
   9. A period of a little over three months passed between the deceased giving her instructions for the Will on 15 July 2011 and her execution of the Will on 23 September 2011;
   10. When the deceased saw her general practitioner Dr Bohmer on 6 September 2011 (that is, during the period between giving instructions for the Will and executing the Will) for the purpose of undergoing an assessment of her testamentary capacity, she told Dr Bohmer that she wanted to leave her entire estate to her great granddaughter Bethany, which statement was inconsistent with the instructions that she gave to Mr Haynes and her confirmation of those instructions at the time that she executed the Will;[20] and
   11. Prior to the trial of the action the defendants had obtained four reports from Dr De Felice dated 1 August 2017, 13 November 2017, 23 November 2017 and 1 December 2017 which, when read together, provided support for their contentions that the deceased lacked testamentary capacity at the time of giving instructions for, and executing, the Will.
2. Although the above circumstances did not, for the reasons that I set out in the Judgment, ultimately cause me to conclude that the deceased did not have testamentary capacity or did not know and approve of the contents of the Will, the circumstances were such, in my view, as to make it reasonable for the defendants to challenge the Will on these grounds.
3. I hold a different view, however, so far as the undue influence allegation is concerned. The allegation as pleaded was in essence based on the age and infirmity of the deceased, the first plaintiff's relationship with the deceased, the first plaintiff's role in facilitating the deceased meeting with Mr Haynes on 15 July 2011, the role that the first plaintiff played during the deceased's meeting with Mr Haynes on 15 July 2011, and the fact that the first plaintiff's children would benefit under the Will. However, in my opinion the defendants should have appreciated, at least from the time that they were provided with the first plaintiff's witness statement and the witness statements and file notes of Mr Haynes, that the allegation of undue influence, that is, the allegation that the deceased's mind was overborne by undue pressure or coercion exerted by the first plaintiff, was extremely weak if not untenable. My reasons for holding this opinion are apparent from [700] [711] of the Judgment. I do not accept the submission made by the defendants that there was a direct and strong link, pleaded or otherwise, between the alleged lack of testamentary capacity and lack of knowledge and approval on the one hand, and the allegation that the deceased's mind was overborne by undue pressure or coercion exerted by the first plaintiff on the other. In short, I do not consider that there were sufficient and reasonable grounds for the defendants to challenge the validity of the Will on the ground of undue influence.
4. I accept the submission made by the defendants that the evidence adduced at trial was no different to the evidence that would have been adduced if the allegation of undue influence had not been pleaded. However, this in my view just serves to demonstrate the lack of any real evidentiary foundation for the allegation of undue influence.

1. Putting to one side for the moment the defendants' conduct in pursuing the undue influence allegation, there were, in my view, some troubling aspects about the way in which the defendants, through their legal representatives, conducted themselves during the course of the litigation and at trial.
2. First, the defendants' conduct in refusing to identify for the plaintiffs some of the documents referred to by Dr De Felice in his first report dated 1 August 2017 was entirely unreasonable.
3. Second, the defendants' conduct in refusing to comply with the plaintiffs' request for the plaintiffs' evidence, and in particular the witness statement and file notes of Mr Haynes, to be provided to Dr De Felice, and to effectively require the plaintiffs to seek an order from the court compelling the defendants to disclose these materials to Dr De Felice, was also totally unreasonable. Although I do not accept the assertion made by the plaintiffs that it was this refusal that made it necessary for them to seek their own expert report from Dr Lee - in my view this would have been necessary in any event in light of the contents of Dr De Felice's report dated 13 November 2017 which he prepared after having been provided with the plaintiffs' evidence - there was simply no good reason for the defendants to have adopted the position that they did.
4. I note further in this context that it is the position, as the plaintiffs assert, that the defendants did not, in requesting Dr De Felice to prepare the first of his reports, ask him to consider the issue of the deceased's testamentary capacity as at 15 July 2011, the day on which the deceased first gave her instructions to Mr Haynes. Nonetheless, I do not accept the submission made by the plaintiffs that if Dr De Felice had been 'properly briefed' he would have conceded prior to trial that the deceased did have testamentary capacity as at 15 July 2011 with the result that there would have been no need for a trial. I do not accept this submission because the fact is that after he had been 'properly briefed' Dr De Felice expressed the view, in his second report dated 13 November 2017, that 'he could not conclude from the documentation provided that [the deceased] had testamentary capacity when she gave instructions and executed [the Will]' (emphasis added). In any event, I do not think that it is correct to say, as the plaintiffs do, that Dr De Felice ultimately 'openly conceded' at trial that the deceased had testamentary capacity as at 15 July 2011. The extent of Dr De Felice's concessions as to the deceased's testamentary capacity as at 15 July 2011 are set out in the Judgment.[21]
5. The third aspect of the defendants' conduct which is in my view concerning is that the defendants did in their written closing submissions in substance allege against Mr Haynes that he had fraudulently created part or all of the file notes of his attendances on the deceased, and had deliberately given false evidence about his dealings with the deceased and his assessment of her testamentary capacity.[22] No allegations to this effect were put to Mr Haynes during crossexamination so he was never given the opportunity to respond to them. In my view there was simply no basis in the evidence adduced at trial for such serious allegations to have been made against Mr Haynes by way of closing submissions.
6. As I have pointed out, another of the complaints made by the plaintiffs about the defendants' conduct in this case is that they maintained the allegation that the first plaintiff knew Mr Haynes before she made contact with him to arrange for him to meet with the deceased for the purpose of taking instructions and preparing the Will. It is true that the defendants did plead this allegation.[23] However, the allegation was not maintained at trial. In fact the defendants' counsel expressly disavowed the allegation during the plaintiffs' counsel's opening address.[24] Therefore, I do not consider that this is a matter of significance in determining the question of costs.

1. As I have already indicated the plaintiffs submit, in essence, that the defendants' failure to make out their grounds for objecting to the validity of the Will, the defendants' maintenance of the undue influence allegation, and the defendants' other conduct to which I have just referred, warrants the conclusion not only that the general rule as to costs should apply, but also that from 27 January 2017 the defendants should be ordered to pay their costs on an indemnity basis.
2. Consistently with the cases to which I have referred, I do not overlook the significance of the defendants taking to trial the undue influence allegation when there were not, in my view, on the available evidence sufficient and reasonable grounds for them to do so. Nor do I overlook the significance of the other aspects of the defendants' conduct which I have found to be unreasonable. However, when I weigh these factors against my finding that the defendants did have sufficient and reasonable grounds for objecting to the validity of the Will on the grounds of lack of testamentary capacity and lack of knowledge and approval, and that the case was one which called for a substantial and vigilant examination of the circumstances leading to the deceased making and executing the Will, I consider that it would be an unduly harsh outcome to require the defendants, in the exercise of my discretion, to pay all of the plaintiffs' costs of the action even solely on a party and party basis. This is particularly so, in my view, given the conduct of the defendants in attempting to settle the action and the fact that despite my findings against the defendants on the case they advanced, I took a generally favourable view of the honesty and reliability of the evidence given by them and the other nonexpert witness called by them, Meagan.
3. Further, I do not consider that this is a case in which it is appropriate to order that the defendants pay the costs of the plaintiffs on the issue of undue influence alone. The allegation of undue influence made against the first plaintiff did not significantly alter the way in which the litigation was conducted, or lengthen the course of the litigation, or add to the evidence that needed to be adduced by either party, or alter the way in which either party presented its case at trial, or alter to any significant extent the nature of the crossexamination that the first plaintiff was subjected to. In short, and not dissimilarly to the situation that existed in Hornsby v Hornsby [No 3] it would, given the way the case was run, in my view be artificial to make an order requiring the defendants to pay the plaintiffs' costs of meeting the undue influence allegation.
4. For the reasons I have stated, I decline to make an order in the terms sought by the plaintiffs or an order that the defendants pay the plaintiffs' costs of the action on a party and party basis.
5. That leaves the question whether the defendants should be able to recover their costs from the deceased's estate. The fact that the defendants do not contend that they have brought themselves within the first of the categories of cases in which the general rule as to costs may be departed from is, on my statement of the applicable legal principles, of itself a sufficient basis for refusing their request for their costs to be paid out of the estate. However, even if contrary to my understanding of the applicable law it is open to the court, in the exercise of its discretion, to order that the costs of an unsuccessful party in a case which falls within the second category of cases are to be paid out of the estate, I do not consider that this is a case in which any such discretion should be exercised in the defendants' favour. In my opinion the defendants' conduct in unsuccessfully pursuing the undue influence allegation and in engaging in the other unreasonable conduct to which I have referred, compels the conclusion that this is not a case in which the defendants should be permitted to recover their costs from the estate. I therefore decline to order that the defendants' costs be paid from the deceased's estate.

1. For the reasons I have given, and subject to hearing from the parties, I would make orders as follows:
   1. There be no order for costs against the defendants; and
   2. The defendants bear their own costs of the action.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Power v Smart [1976] Fam Law 93; [2018] WASC 168.

[2] Calderbank v Calderbank [1976] Fam Law 93; [1975] 3 All ER 333.

[3] See generally Mitchell v Gard (1863) 3 Sw & Tr 275, 277; (1863) 164 ER 1280, 1281; Re Green (dec'd) [1969] WAR 67, 83; Clay v Karlson [2001] WASC 141 [147] - [158]; Paraskov v Paraskos [2002] WASC 109 [66] - [67]; Oreski v Ikac [2007] WASC 195(S) [2]; Oreski v Ikac [2008] WASCA 220 [68]; Vincent v Close [2014] WASC 5(S) [3]; Prichard v Prichard [2015] WASC 170(S) [4] [5]; Saunders v The Public Trustee [2015] WASCA 203 (S) [6].

[4] Saunders v The Public Trustee [9].

[5] Re Cutcliffe's Estate [1959] P 6; [1958] 3 All ER 642, 648 649.

[6] Veall v Veall [2015] VSCA 60; (2015) 46 VR 123 [166] footnote 67.

[7] Re Herbert Brothers (1990) 101 FLR 279, 313 317.

[8] Hornsby v Hornsby [No 3] [2015] WASC 159.

[9] Hornsby v Hornsby [No 3] [22] [28], [31] [32], [36] [38].

[10] Harvey Industries Group Pty Ltd v Jones [No 2] [2017] WADC 160 [15] [22].

[11] Hornsby v Hornsby [No 3] [19].

[12] Law of Succession (Lexis Nexis Butterworths) (2013) [23.5].

[13] Hornsby v Hornsby [No 3] [24].

[21] Judgment [585], [588] [589] and [648].

[23] Defence and Counterclaim, [4(a)(ii)(2)].