Re Veca [2015] VSC 74 (6 March 2015)

2 The caveator now seeks her costs of $14,700 to be paid from the estate. The estate says it will pay part of those costs so long as they are reasonable and proportionate.

3 I have concluded that there is no special feature in this case that would warrant a departure from the general rule that costs follow the event and have refused the caveator's application for her costs to be paid out of the estate.

4 Vincenza Veca ('the deceased') died on 22 March 2014 leaving a will dated 31 March 2011. At the date of her death, the deceased was aged 83 years and, according to her death certificate, was survived by her four adult children, Antonino aged 61 years, Rosalba aged 59 years, Joseph and Silvio both aged 43 years.

5 By her will the deceased appointed her daughter-in-law, Anna Maria Veca, and her granddaughter, Luisa Michielin, the executors and trustees of her estate ('the executors').

6 The deceased's estate was valued by the executors at $994, 260.06. Of that amount, the sum of $800,000 represents the value of the deceased's property known as 347 Moreland Road Coburg ('the property').

(a) the property in four equal shares to be held on trust in the following shares - two shares for Antonino, one share for Silvio and the remaining share for Joseph;

(b) her jewellery to her granddaughters, Luisa Michielin, Nadia De Natali and Belinda Veca;

(c) her furniture in the bedroom to Rosalba and her remaining personal chattels to Antonino;

(d) legacies of $20,000 to each of Silvio, Joseph and Rosalba; and

8 On 14 May 2014, Rosalba met with her solicitor, Ms Michel Margolit. At that meeting, Rosalba provided Ms Margolit with bundles of documents, including an earlier will dated 6 February 2008 (in which the deceased left her assets equally to her children) and other documents concerning matters that resulted in the appointment of State Trustees as administrator for the deceased on 1 December 2010. State Trustees continued as administrator of the deceased until her death.[1]

9 On 16 May 2014, Rosalba's solicitors filed a caveat in respect of any application for a grant of probate of the deceased's will at the Probate Registry of the Supreme Court.

10 On 19 May 2014, Ms Margolit wrote to the solicitors for the estate informing them that Rosalba 'is currently considering her rights to contesting your clients' application for probate and, furthermore, in relation to a Part IV claim pursuant to the Administration and Probate Act 1958'. The solicitors sought copies of all of the deceased's wills, advice as to when an application for a grant of probate would be filed, noted the decision of the VCAT made on 29 May 2012 and requested the solicitors to confirm that 'as you are now aware of a potential claim against the estate, the estate will not be distributed until 6 months has expired from the date that probate had been granted on the will'.

11 On 26 September 2014, the executors filed an originating motion seeking a grant of probate of the will of the deceased. On 30 September 2014, the Registrar of Probates raised requisitions in respect of the application for the grant, requesting the solicitors for the estate inform him when the affairs of the deceased came under the control of State Trustees. By letter dated 7 October 2014, the solicitors for the estate advised the Registrar that State Trustees had been appointed as administrator for deceased on 21 February 2011.[2] The Registrar of Probates responded on 9 October 2014 requesting the solicitors for the estate to file medical evidence on oath to establish the testamentary capacity of the deceased at the time the will was executed by her.

12 On 14 October 2014, the solicitors for Rosalba sent a trainee solicitor to the Probate Registry. The trainee photocopied the probate file, including the Registrar's requisition dated 9 October 2014 and an affidavit of Mr Massimilliano Aiello, an accredited interpreter in the Italian language, sworn on 31 March 2011 and filed on 26 September 2014. In his affidavit, Mr Aiello sets out the details of his two meetings with the deceased: the first when she gave instructions for her will to her solicitors and the second when she signed her will on 31 March 2011. He deposed clearly and unequivocally that on the first occasion, the deceased understood the questions put to her, provided answers to them, detailed her assets and her family circumstances and she communicated her wishes and instructions for her will to her solicitor. On the second occasion, he deposed that the deceased seemed 'to fully understand' the terms of her will, its nature and effect, she confirmed the will was in accordance with her wishes and that she approved its contents.

13 On 17 October 2014, Ms Margolit, Rosalba and her husband attended a conference with counsel and, after that conference, counsel drew grounds of objection to the grant of probate. The grounds of objection were filed on 27 October 2014 by Rosalba's solicitor and set out the following grounds:

(a) the deceased lacked testamentary capacity during the period shortly before and at the time of the execution of the will;

(b) the deceased did not know and approve the contents of the will; and

(c) the deceased acted under the undue influence of Antonino, who takes a benefit under the will.

14 On 5 November 2014, the solicitors for the estate filed an affidavit of Dr Roger Chau sworn 29 October 2014 in which Dr Chau deposed as to the deceased's capacity to make her will. He deposed that the deceased was referred to him by her treating doctor in early March 2011 for a cognitive assessment, with particular references to whether the deceased could make a new will. He assessed the deceased, concluding that the deceased's cognitive ability was sufficient to give her adequate testamentary capacity to make a new will, and he forwarded his report dated 15 March 2011 to the treating doctor.

15 On 14 November 2014, a directions hearing for discovery, the filing of affidavits and for the further conduct of the probate proceeding was adjourned by consent to 28 November 2014 for the purpose of the exchange of documents between the estate and Rosalba by way of informal discovery.

16 Thereafter, counsel for the estate provided counsel for Rosalba with Dr Chau's affidavit. Ms Margolit deposed that she and counsel had not been aware of Dr Chau's affidavit until that time: it was not on the probate file when the trainee solicitor attended the Registry on 14 October 2014 and no notice of the affidavit was given to her by the estate's solicitors.[3] Ms Margolit deposed that after becoming aware of the affidavit and, pursuant to the advice of counsel, she advised Rosalba and obtained instructions from her to withdraw the caveat.

17 On the return date for directions on 28 November 2014, the parties informed the Court that the caveat would be withdrawn that day but there remained an issue concerning Rosalba's costs of the proceeding.[4] Counsel informed the Court there was an informal agreement that the estate would pay the reasonable costs of Rosalba, but there was a dispute as to the quantum of those costs. Counsel for Rosalba informed the Court the claimed costs were $14,700. The Court adjourned the proceeding to 5 December 2014 with a further order that the solicitors for Rosalba provide an outline of their costs and the work done on behalf of Rosalba by the return date.

18 By letter dated 5 December 2014 to the Court, Ms Margolit provided details of the work done on behalf of Rosalba, as well as attaching a costs assessment of $17,347.19 from Mr Joseph Mazzeo, a costs lawyer. Mr Mazzeo assessed professional costs at $12,661.89 and disbursements at $4,685.30. Ms Margolit stated in her letter that she sought the sum of $14,700 for her costs and disbursements and not seek the full amount of $17,347.19 as assessed by Mr Mazzeo.

19 On 19 December 2014, probate of the will of the deceased was granted to the executors.

20 As a broad principle, costs in civil litigation are in the discretion of the court and there are no inflexible rules.[5] Costs generally follow the event, that is, the unsuccessful party pays the successful party for the latter's costs. In probate litigation, not all proceedings come within this general rule. This is because there are considerations that arise out of public interest in enabling the court to answer and declare what is the true will of a testator. Certain exceptions to the general principle are made and these exceptions are described in the cases as the 'probate costs rules'.[6] These exceptions to the general rule apply where there are reasonable grounds to require the person propounding a doubtful will to make their case before a judge in a contested hearing.

21 Counsel for Rosalba agreed that Rosalba's application for her costs to be paid out of the estate ought not be considered by reference to the probate costs rules. Counsel then referred to a page from the Wills and Probate subscription service[7] that set out a summary of two cases that were said to be relevant to costs where wills were challenged on the grounds of testamentary incapacity or undue influence, although counsel accepted that their relevance was minimal: one case was settled three days into the trial and the other ended when the caveat was withdrawn on the eve of the trial.[8]

22 Counsel submitted that initially there were sufficient grounds to lodge a caveat on behalf of Rosalba but when the estate produced Dr Chau's affidavit as to the deceased's testamentary capacity after the first directions hearing, her position as caveator was reviewed and the caveat was withdrawn. Counsel for Rosalba described Dr Chau's evidence as to testamentary capacity as 'overwhelming'.

23 In her affidavit, Ms Margolit refers to her first consultation with Rosalba and her husband on 14 May 2014 when she viewed a bundle of documents handed to her by Rosalba.[9] Ms Margolit set out what she considered to be relevant information from those documents. From her description, the documents appear to relate primarily to the appointment of State Trustees as administrator of the deceased and are directed to matters other than testamentary capacity, knowledge and approval and undue influence. Thereafter, Ms Margolit refers to part of a statement by Rosalba that was prepared by a lawyer in her firm when Rosalba attended on her on 5 September 2014. That statement refers to statements of a general nature made by the deceased to Rosalba at a particular time concerning Antonino, statements that, in my view, would not support the grounds of objection. Ms Margolit then refers to attending a conference with counsel on 17 October 2014 with Rosalba and her husband. She sets out a file note of instructions given by Rosalba and her husband which again would not support the grounds of objection. It was after this conference that the grounds of objection were drawn and then filed in the proceeding.

24 The nature of the grounds of the grounds of objection filed by Rosalba are such that they are required to be determined by applying the principles expressed in Briginshaw v Briginshaw[10] as that standard is applied under s 140(2) of the Evidence Act 2008. They are allegations that should not be made lightly. In particular, to assert that a will was procured by undue influence is a serious claim of an equitable species of fraud, an essential component of which is an allegation of fraudulent conduct. To conclude that the information (putting to one side whether or not it is admissible in a caveat proceeding), in the preceding paragraph provided a proper basis to lodge the caveat objecting to a grant of probate on the three grounds alleged is, in my view, misconceived.

25 The fact that Rosalba only withdrew her caveat after Dr Chau's 'overwhelming' evidence as to capacity is also misconceived. It assumes that there was no other salient evidence as to the deceased's capacity before the receiving Dr Chau's affidavit. In my view, there were two significant events preceding the filing of her grounds of objection that should have placed Rosalba's advisers on notice that capacity was not a strong ground to rely on in a challenge to the deceased's will. First, by 14 October 2014, Ms Margolit had a copy of the then probate file and she knew there was a recent requisition from the Registrar to the estate's solicitors as to the testamentary capacity of the deceased. Second, she had a copy of the affidavit of Mr Aiello setting out the circumstances of the deceased giving instructions for her will and when the deceased signed her will. Although Mr Aiello is not a medical practitioner, he is an accredited interpreter and, in his affidavit, he provides compelling evidence as to the deceased's knowledge and approval of her will, as well as her capacity to comprehend what she was doing on both occasions.

26 In light of these matters, Ms Margolit should have either waited until the Registrar's requisition was answered by the estate before filing the grounds of objection or she should have made enquiries of the estate's solicitors as to when the requisition would be answered. In the event, the requisition was answered relatively promptly by the filing on 5 November 2014 of the affidavit of Dr Chau sworn 29 October 2014.

27 A further factor relevant to the determination of Rosalba's application for costs relates to the first letter sent by Ms Margolit to the estate's solicitors three days after filing the caveat. In that letter, Ms Margolit informed the estate's solicitors that Rosalba:

is currently considering her rights to contesting your clients' application for probate and, furthermore, in relation to a Part IV claim pursuant to the Administration and Probate Act 1958...

28 These are foreshadowed challenges to the deceased's will in the alternative, viz., Rosalba would contest the application for a grant of probate and, if unsuccessful, would issue a Part IV claim. Challenges under the Part IV legislation are also determined applying the principles in expressed in Briginshaw v Briginshaw. At the date of the letter, Rosalba had filed the caveat in the Probate Registry. To my mind, such an approach threatens the estate with a potentially costly exercise and is designed to persuade the estate to compromise against the background of the threatened actions. More often than not, these types of claims involve bitter disputes between family members with a claimant seeking to advance claims of sometimes doubtful validity to the deceased's estate for their private benefit, whether financially or emotionally, with scant regard to the costs to be incurred in the challenge or the claim.

29 From the factual matters already referred to, it is not apparent that Ms Margolit had a proper basis for making the assertions made in this first letter. Legal practitioners must always bear in mind their duty to the Court and their overarching obligations under the Civil Procedure Act 2010.[11] Their task is to advise their clients, not merely to act as the client's mouthpiece.

30 Although the estate's position on the question of Rosalba's costs was that they would pay a proportion of them so long as they were reasonable and proportionate, I do not accept that estate funds of the order of $10,000 (as suggested by counsel for the estate) should be allowed on the costs of a challenge that has now been withdrawn in these circumstances.

31 I should add that although no application was made by the estate for Rosalba to pay its costs of the proceeding, had the estate done so, I would have considered such an application favourably in the circumstances.

32 I order that the caveator's application for her costs to be paid out of the estate of the deceased be refused and that she pay the estate's costs of her application for costs, including any reserved costs.

[1] Affidavit of Michel Margolit sworn 24 February 2015, [3]-[4]. The executors advised the Registrar of Probates that the appointment of State Trustees was on 21 February 2011.

[2] This date is not the same date as that provided by Rosalba in her instructions to her solicitor. The correct date of the appointment of State Trustees as administrator of the deceased appears to be that sent to the Registrar of Probate, viz, 21 February 2011.

[3] Although Ms Margolit in her affidavit sworn 24 February 2014 at [10] referred to the defendant's solicitors, she must mean the estate's solicitors. She also describes herself incorrectly in her affidavit as being the solicitor for the plaintiff.

[4] A notice of withdrawal of caveat was filed 28 November 2014.

[5] Supreme Court Act 1986, s 24(1); Supreme Court (General Civil Procedure) Rules 2005, r 63.23_._

[6] See, eg, Ponder v Burmeister [1910] SALawRp 4; [1909] SALR 62, [99] - [113] (Way CJ) The manner in which the discretion of the court is guided on costs in probate cases was set out by his Honour in this case. See also, Hall v Carney & Ors (No 2) [2012] SASFC 105, (Gray J); Shovelar v Lane [2012] 1 WLR 637, (Ward LJ); Fielder v Burgess [2014] SASC 98, (Kourakis CJ).

[7] Lexis Nexis Butterworths, Wills Probate and Administration Service (Vic), vol. 1, (at Service 57) [28, 150] - [28,155].

[8] O'Donoghue v Mussett [2008] VSC 63 (Pagone J); Re Young: Purcell v Acciarito [2008] VSC 96 (Byrne J).

[9] Affidavit of Michel Margolit sworn 24 February 2015, [2] - [4].

[10] [1938] HCA 34; (1938) 60 CLR 336.

[11] Civil Procedure Act 2010, Parts 2.2 and 2.3. Rosalba, as a litigant, is also subject to those same obligations: Civil Procedure Act 2010, s 10.