Re Estate Late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311 | Case summary

118153/01 ESTATE OF THE LATE HAZEL RUBY GROUNDS; CLARENCE PAGE & ANOR v NOEL PHILLIP SEDAWIE & ANOR JUDGMENT 1 HIS HONOUR: This decision relates to the costs of a probate action where the parties have agreed upon all the orders which ought be made, other than costs. The orders upon which they had agreed are ones which seemed appropriate to me in the light of the evidence, and I have already made those orders. The Testatrix's Wills and Beneficiaries 2 The testatrix is a lady who never married or had children, and lived alone (though in the last few years of living alone with assistance from community carers) up to the time she was admitted to a nursing home in December 1999. She died on 30 July 2001, aged 92. It is now known that she executed Wills in 1985, 1991, 1995, March 1997, December 1997, October 1999, and December 1999. 3 The plaintiffs are husband and wife, and were named as executors in the December 1999 Will. The female plaintiff is a cousin of the testatrix. At nearly all relevant times they lived in Sydney, although they moved to Bateau Bay at some stage between 1997 and December 1999. Apart from a sister who was incapable and in an institution, the only relatives of the testatrix who were beneficiaries of her estate under any of her Wills and lived in Sydney, were a first cousin, Robert Cafiero, and his wife. 4 From around 1974 the male plaintiff saw the testatrix about once a week, and assisted her with various tasks she needed to have done, from house maintenance to financial management, to dealing with everyday practical problems of life like needing to go to the doctor. The other beneficiaries under the various Wills lived in Melbourne, and the testatrix did not see them, or the Cafieros, as frequently as she saw the plaintiffs. 5 In 1997 there was a falling out between the male plaintiff and the testatrix, and they did not see each other for a couple of years, but in 1999 there was a rapprochement between them, and the plaintiff resumed making visits to her. In March 2000 the Guardianship Tribunal appointed the Public Guardian to make decisions concerning her health care, and the Protective Commissioner to manage her financial affairs. Course of These Proceedings 6 In November 2001 the plaintiffs took out a summons seeking a Grant of Probate of the December 1999 Will. Unbeknown to the plaintiffs, a caveat had been lodged, but not served on the plaintiffs, in consequence of which the Registrar raised a requisition. This led to the plaintiffs filing a Statement of Claim in February 2002 propounding the December 1999 Will. The Defence to that Statement of Claim alleged lack of capacity, and lack of knowledge or approval. The defendants filed a Cross-Claim in April 2002, propounding the December 1997 Will. 7 In the course of 2002 and early 2003 various affidavits were made and filed, going to the issues which were thus defined. Various of them dealt with matters of family history, and the attitude which the deceased expressed from time to time concerning various family members. As well, some of the affidavits gave observations of the various deponents concerning the behaviour of the testatrix, and the opinion the deponent formed about the testatrix's capacity. These affidavits were:

13 The 1991 Will came to the attention of the plaintiffs' solicitors for the first time in May 2004. After the 1991 Will came to the attention of the plaintiffs' solicitors, they amended the Statement of Claim further, to propound in the alternative the 1995 Will and the 1991 Will. 14 The Further Amended Statement of Claim was filed in June 2004. No fresh Defence was filed to it, so the issues on the pleadings thereby raised remained ones of capacity, and knowledge and approval, concerning the 1995 Will. 15 The solicitors for the defendants instructed Dr Williams, psychiatrist, to provide a report on the testatrix's capacity. Dr Williams' reports of 12 June 2004 and 24 July 2004 were verified by him by affidavit made 9 August 2004, which was filed on 17 August 2004. In summary, Dr Williams considered it possible that at the time of execution of the 1995 Will the testatrix had various attributes which were indicative of a lack of capacity, but could not say that it was more likely than not that she had those attributes. However, Dr Williams raised a doubt about whether the testatrix knew and approved the 1995 Will, because of her great dependence upon the male plaintiff at that time, and the fact that the male plaintiff drove her to the solicitors where that Will was executed and then drove her to see her doctor. Terms of Relevant Wills 16 Only two of the testatrix's Wills have provisions which bear upon the dispute about how the costs of the litigation should be borne. 17 The 1995 Will is one which appointed the male plaintiff as executor, gave legacies totalling $65,000 to various members of the testatrix's family, and the residue to the male plaintiff. 18 The 1991 Will appointed the male plaintiff as executor, left legacies totalling $25,000 to nieces, left the testatrix's house to the male plaintiff, and the residue to a nephew of the testatrix. Assets of Testatrix's Estate 19 The testatrix's estate was estimated in November 2001 to have a net value of just over $940,000. The most significant asset in it was the testatrix's house, then estimated to have a value of $580,000. These estimates are ones made at the time of the Summons first being filed, and so would have been only approximate even then. Further, the ultimate division of the testatrix's assets might possibly be affected by the order for costs made in these proceedings. Even so, they give a rough idea of the distributable estate, and how the house accounts for a sizeable proportion of its total value. Agreement on Orders to be Made 20 By May 2005 the then parties to the litigation had agreed in principle that the appropriate orders to be made were ones which, in substance, resulted in a grant of probate of the 1991 Will. However, at that time not all of the persons whose interests were affected by the orders proposed to be made were either parties to the litigation, or persons who had been served with citations concerning it. 21 By 17 October 2005 some additional citations had been served, and the attitude of the people served to the orders agreed upon between the plaintiffs and the defendants had been ascertained. The result was that there was a complete consensus about the making of grant of the 1991 Will. It is orders to that effect which have been now made in the proceedings. The Submissions 22 Mr Armfield appeared for the plaintiffs. Mr Willmott SC appeared for the defendants. 23 Mr Armfield submitted that the costs of the litigation should all be paid from the testatrix's estate. Mr Armfield submits that until the report of Dr Bennett was obtained, all the parties were proceeding in a reasonable way in regarding the contest as one between the December 1997 and the December 1999 Wills. Further, the male plaintiff was acting reasonably thereafter, in seeking to propound the 1995 Will. It was Dr Williams' report which caused the male plaintiff to reconsider the propounding of the 1995 Will. 24 Mr Willmott SC submits that the usual rule in litigation is that costs should follow the event, and that, while there are certain recognised exceptions to that principle concerning probate litigation, the present case is not within any of them. 25 Mr Willmott SC submits that there was no adequate explanation of why the 1991 Will had not been forthcoming at an earlier time. Mr Armfield submits that no further explanation is called for concerning the 1991 Will. It is known that the 1991 Will was drawn in the office of Mr Henke, solicitor, while the 1995 will was drawn in the office of a different solicitor, Mr Khoury. Neither the plaintiffs nor the defendants appear to have known about the 1991 Will until around the time it came to light. I say now that I do not conclude that there was the type of failure to enquire about it earlier, on the part of any party, which should affect a costs order. 26 As well, Mr Willmott SC submits that the plaintiffs have delayed in seeking a grant of the 1991 Will, and that is a separate reason for there being no costs order. Mr Armfield submits that this is not a case of delay, because the report of Dr Bennett could not have been obtained without the lay evidence provided by the various affidavits which were filed before the date of her report, and the various subpoenaed records. Given that the whole matter was proceeding at a fairly leisurely pace, there was no undue delay in the plaintiffs deciding whether to accept Dr Bennett's opinion, and, once they had decided to accept it, amending the Statement of Claim. Further, it is not as though the passing of several months caused prejudice to any party. I accept Mr Armfield's submission on this topic. 27 Mr Willmott SC points out that the report of Dr Williams raised a doubt about the testatrix's knowledge and approval of the 1995 Will on the basis of the kind of relationship which the male plaintiff had with the testatrix, and the incidents in which the male plaintiff was involved on the day of execution of that Will. He says that these matters are ones which are likely to have been known to the male plaintiff, relate to his own conduct, and have led to him, belatedly, deciding not to press on with propounding the 1995 Will. Mr Armfield says that the male plaintiff does not accept that there is anything untoward about his own conduct concerning the 1995 Will, which should affect a costs order. 28 Mr Willmott SC points out that, if the costs are ordered to be paid from the estate, that will mean they come from the residue, no part of which goes to the plaintiff. Thus, the plaintiffs will have been able to conduct this litigation without expense to themselves. To that, Mr Armfield submits that which of the beneficiaries will end up bearing a costs order is not an appropriate matter to take into account. Decision 29 The usual principle which is applied if litigation settles concerning all matters but costs, is that if both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled, the Court makes no order as to costs: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622. However, special considerations apply in probate actions, where there is a practical necessity for someone to be appointed to administer the assets of a deceased person, and a practical need to know who has an entitlement to receive those assets. 30 In the present case, I have been taken in some detail to the evidence which was filed. Both parties took me to the leading cases concerning costs in probate litigation, In the Estate of Hodges; Shorter v Hodges (1988) 14 NSWLR 698 at 709, Perpetual Trustee v Baker [1999] NSWCA 244 at [13]-[14] and Shorten v Shorten (No 2) [2003] NSWCA 60. The focus of the passages in those cases to which I was taken was the costs order that a court should make concerning a person who had unsuccessfully opposed the making of a grant of probate. Broadly, those cases recognised that, concerning such an unsuccessful party, there was an exception to the rule that costs follow the event in that where the testator had been the cause of the litigation the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate, and if the circumstances led reasonably to an investigation concerning the testator's will, costs may be left to be borne by those who incurred them. The Court of Appeal has recognised that there is an overlap between those two exceptions. If a case for decision falls within that area of overlap, one of the exceptions suggests that the appropriate order concerning costs should be different to the order which is suggested by the other exception. In that area of overlap, the principles which are recognised by the two exceptions are insufficient to produce a result. It is a matter for the trial judge, in light of the circumstances of the particular case before him or her, to decide which costs order better achieves justice. 31 In the present case, a significant area of contest concerned what order for costs should be made in favour of the plaintiff. The plaintiff is not a party who has unsuccessfully opposed an order for probate, so the exceptions which are recognised in In the Estate of Hodges; Shorter v Hodges (1988) 14 NSWLR 698 and the two Court of Appeal cases simply have no application to that problem. 32 Without needing to expound in detail the way in which this has happened in the caselaw concerning probate litigation, it can safely be said that a consistent theme in the cases is that the principles concerning costs which are applied to a person who seeks probate (whether successfully or not) are not the same as the principles which apply to the costs of a person who opposes probate (whether successfully or not). In probate litigation, it is not only who succeeds in the litigation which matters - which is the only factor operating in the "costs follow the event" rule. As well, the role which a particular party has played in litigation, whether as plaintiff or defendant, is relevant. Further, facts about the knowledge available to parties, and the reasonableness of their conduct in conducting the litigation, can be taken into account. 33 Both parties to the litigation were acting reasonably in taking the stances they respectively took in the litigation up to the time of Dr Bennett's report becoming known to them. The affidavit evidence concerning the testatrix's capacity in 1999 went both ways. Even though, following Dr Bennett's report, both parties ceased to press for probate of either the 1997 Will or 1999 Will, the reasonableness of their conduct in conducting the litigation, and the fact that the efforts put into proving the 1997 and 1999 Wills ultimately proved fruitless because of matters relating to the testatrix's own condition which the parties could not reasonably be expected to have realised, it is appropriate to order those costs of both parties to come out of the estate. 34 Even though there was some delay between the making of Dr Bennett's report, and the filing of the Amended Statement of Claim, the reasons for that delay have not been explored in the evidence. I see no reason to have costs incurred during that period of time disposed of in any way other than by having the costs of both parties out of the estate. 35 There is a principle whereby an executor who proves a will in solemn form is usually entitled to costs out of the estate: Headington v Holloway (1830) 3 Hag Ecc 280 at 282-283; 162 ER 1158 at 1159. That principle itself favours the costs of the plaintiff, in the period up to the filing of the Amended Statement of Claim, being paid from the estate. 36 That principle also bears upon the costs order relating to the period after the filing of the Amended Statement Claim. In that period, the plaintiff has propounded two Wills in the alternative, and has obtained a grant concerning one of them. I see no reason why that circumstance should, in this case, where the substance of the inquiry has been into the progress of the testatrix's mental decline over the years, prevent the usual rule that an executor is entitled to his costs from the estate from applying. 37 Mr Armfield's proposition that which of the beneficiaries will end up bearing a costs order is not an appropriate matter to take into account is too widely stated. Costs have been ordered to be paid out of the legacies of those parties who were the real cause of litigation: In the Estate of Osment; Child v Osment [1914] P 129, or out of the shares of residue given to unsuccessful parties: Harrington v Butt [1905] P 3 n. 38 However, the male plaintiff is not an unsuccessful party. In the present case, it is not established that the male plaintiff engaged in any wrongful behaviour so far as the obtaining of the testatrix's 1995 Will is concerned. It cannot be said that, when a question was raised about the propriety of his behaviour concerning that Will, the raising of that question was the cause of the litigation being brought - rather, the raising of that question was the cause of the litigation coming to an end. However, it is not established that he should have known that his own role concerning the 1995 Will was such that he should never have sought probate of it. 39 The issuing of citations after Dr Williams' report was obtained was a necessary cost of properly constituting the suit, and to that extent also the estate should bear the costs. 40 The appropriate order is that the costs of both parties be paid from the estate. Order

Re Estate Late Hazel Ruby Grounds; Page v Sedawie

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