Telfer v Telfer

Judgment 1MEAGHER JA: By a notice of motion filed on 10 September 2013 the applicant (Neil Telfer) sought a stay under Uniform Civil Procedure Rules, r 51.44 of certain orders made by Slattery J on 14 June 2013: see Neil Ronald Telfer as Executor for the Estate of the late Lyall Telfer v Carolyn Telfer (No 2) [2013] NSWSC 823 at [33]. Those orders were made in proceedings in which the applicant sought a grant of probate in solemn form of the will and codicil of his brother Lyall Telfer, who died on 14 May 2011: Neil Ronald Telfer as Executor for the Estate of the late Lyall Telfer v Carolyn Telfer [2013] NSWSC 412. By a summons filed on 10 September 2013 the applicant seeks leave to appeal from the judgment and orders in those proceedings. 2On 30 September 2013, after hearing argument in support of that application, I made the following orders: "(1) Order that the administration of the Estate to the extent of the making of any payments or distributions to creditors of the estate be stayed until the disposition of the application for leave to appeal and, if leave is granted, the disposition of the appeal. (2) Order that the applicant's motion filed on 10 September 2013 otherwise be dismissed. (3) Order that the costs of that application be costs in the application for leave to appeal and appeal." 3My reasons for making those orders were as follows. 4Lyall Telfer's will was dated 21 June 2010 and the codicil was dated 17 February 2011. The first respondent, Carolyn Telfer, was Lyall Telfer's second wife. In the probate proceeding she admitted the validity of the will (under which she was entitled to the deceased's house at Northmead and the residue of his estate) and denied the validity of the codicil (by which the bequest of that house was deleted and under which she and Mark Telfer were each entitled to one-half of the residue of the estate which included that house). Mark Telfer is the deceased's son by his first marriage. 5The applicant's case before the primary judge was that the codicil was executed by his brother on 17 February 2011 in the presence of the applicant and his wife, Sandra Telfer. At that time Lyall Telfer was a patient at the Westmead Hospital in Sydney. The first respondent maintained that the signature on that codicil was not her husband's and that at the time he purportedly signed that document he lacked testamentary capacity. 6The primary judge held that the signature was not genuine and that the account of the drafting and execution of the codicil given by the applicant and his wife should not be accepted. He made no findings as to the deceased's testamentary capacity. 7The orders which the primary judge made on 14 June 2013 included: "2. The plaintiff (Neil Ronald Telfer) not be entitled to proceed to take probate over the Will of Lyall Vincent Telfer dated 21 June 2010. ... 4. The President of the Law Society to nominate a person suitable to act as the administrator of the estate of Lyall Vincent Telfer. 5. Excluding existing costs orders, the plaintiff (Neil Ronald Telfer) pay the defendant's costs of the proceedings as a whole (including her amended cross claim) on an indemnity basis. 6. The costs referred to in Order 5 are to be paid personally by the plaintiff without any indemnity out of the estate of Lyall Vincent Telfer." 8In his second judgment, delivered on 21 June 2013, the primary judge dismissed the first respondent's application for a specified gross sum costs order instead of the order that her costs be paid as assessed on an indemnity basis. 9It is common ground that the deceased's estate is insolvent so that on any view his residuary estate has no value. The only substantial asset of the estate is the house at Northmead, which at the time of the testator's death had been sold to his son, Mark, for $500,000 under a contract for sale dated 31 March 2011. That contract had not been completed at the time of Lyall Telfer's death and still has not been completed. The liabilities of the estate exceed $600,000 and include an amount of approximately $430,000 due to Carolyn Telfer in respect of a loan made to her husband in June 2010. She claims that this loan is secured by an equitable mortgage or charge over that property. That claim is not conceded and appears to be contested: [2013] NSWSC 412 at [9]. 10Thus, the position is that there is no residuary estate able to be distributed either to Carolyn Telfer or, if the appeal is upheld and probate granted in respect of the will and codicil, equally between her and Mark Telfer. The matters of substance in issue in the proposed appeal are really the costs of the underlying proceedings and the vindication of the applicant's position with respect to the propounding of the codicil executed by the deceased. 11In rejecting the codicil, the primary judge made findings adverse to the credit of the applicant and his wife and rejected their evidence of what happened over the period between 15 and 17 February 2011. That evidence was of the preparation of a first version of the codicil on the evening of 15 February 2011, the signing and subsequent rejection of that first version by the deceased on the following day and the preparation of the second and final version which was then said to have been signed by the deceased on the morning of 17 February 2011. The evidence of the applicant and his wife was that each of these versions of the codicil was created using a personal computer at the deceased's house at Northmead. The primary judge rejected this version of events and the evidence that the applicant and his wife had seen the deceased in hospital on the morning of 16 February when it was said that he had executed the first version of the codicil. 12An applicant for a stay of a judgment or order pending the determination of an appeal must demonstrate an appropriate case to warrant the exercise of the discretion. The mere filing of the appeal, or an application for leave to appeal, will not, of itself, demonstrate such a case. Usually it is demonstrated by showing that there are arguable grounds of appeal and that there is a significant risk that if money is paid it will be unable to be recovered if the appeal succeeds or that unless a stay is granted the appeal will be rendered nugatory: see Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694-695; Adeels Palace Pty Ltd v Moubarak [2009] NSWCA 130 at [2]. 13In support of his application for leave to appeal, the applicant seeks to adduce further evidence under s 75A(7) of the Supreme Court Act 1970. That evidence includes an analysis of the hard disk of the personal computer in the deceased's home as well as a printed copy of what is said to be the first version of the codicil. That analysis, which was undertaken after the trial, suggests that a file named "CODICIL Lyall Vincent Telfer.doc" was created or opened on an external USB device attached to the computer at 9.10am on 16 February 2011. To that extent it supports, but may not be wholly consistent with, some of the evidence given by the applicant and his wife. 14Because this further evidence is as to matters that occurred before the final hearing, this Court could not receive it unless there are "special grounds" for doing so: s 75A(8), (9). The considerations relevant to whether such grounds exist include whether the evidence could have been obtained with reasonable diligence for use at the trial and whether there is a high degree of probability that there would have been a different result at trial if the evidence had been available. 15The applicant accepts that by the time of the trial he had possession of the computer hard disk. He says that no analysis of it had been undertaken before that time (and was not undertaken before the conclusion of the hearing) because at an earlier time, when the first respondent had possession of that hard disk, her solicitors had written to his solicitors advising that they held the original hard disk and that "as yet there is no evidence of any document such as the codicil in question having been created on that computer". Although there was no evidence before me from the solicitor acting for the applicant at that time, it was said from the bar table that the applicant's solicitor understood this letter as indicating that an unspecified examination of the hard disk had found no reference to any codicil having been created using it. It is now suggested that may not have been so. 16The applicant also accepts that at the time of the trial he had a printed copy of the first version of the codicil. It was said from the bar table that the reason that document had not been tendered before the primary judge was because the applicant had not told his solicitor of its existence. No evidence was led or explanation given as to why that had not occurred. 17As this Court observed in Alexander v Cambridge Credit at 695, there is not much opportunity on an application such as this to consider in any detail the arguments which the applicant seeks to make on appeal. However, what may be said in this case is that the appeal involves a challenge to credit based findings of fact and that the application to adduce further evidence may confront difficulties when addressing each of the considerations referred to above; although it is not necessary that these considerations be present in every case: see, for example, Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64. On their face the applicant's prospects on appeal are by no means compelling. 18The applicant seeks a stay of the administration of the deceased's estate and a stay of the order for costs made by the primary judge. He says that if the administration of the estate, at least to the extent of making any payments or distributions to creditors, is not stayed his appeal may be rendered nugatory because if the appeal is successful he will seek an order for payment of his costs out of the estate and in priority to payment of other creditors. In response Carolyn Telfer says that her advance to the deceased is secured by an equitable mortgage or charge over the Northmead property as evidenced by a deed of loan dated 26 July 2010. I have recorded earlier that the applicant contests the existence of that security. 19The applicant also submits that the execution of the order for payment of the first respondent's costs should be stayed. In his affidavit he says that "if I am obliged to pay the costs that have been ordered in favour of Carolyn Telfer, I will not be financially able to prosecute my application for leave to appeal or my appeal". In argument his counsel also submitted that he may not recover those costs once paid, if the appeal is successful. 20The applicant is aged 77 and he and his wife are retired. They own a house in the Australian Capital Territory as joint tenants. The evidence indicates that the value of their equity in that property is approximately $600,000. That equity is calculated after taking into account a recent mortgage of $150,000, the proceeds of which were used to pay costs and disbursements due to his solicitors for acting in the proceedings. It would appear that an amount of $80,000 remains outstanding to those solicitors. The applicant says that the further costs of his application for leave to appeal and appeal are estimated at approximately $85,000. 21The costs initially claimed by the first respondent were about $165,000. Her evidence was that she had paid in excess of $150,000 in legal costs and it was stated from the bar table that the total of the amount claimed had been paid. The evidence also indicated that the first respondent has, excluding her entitlement to repayment of the loan owed by the estate, net assets of approximately $65,000 and an income sufficient to meet her ordinary and recurrent living expenses. That being the position, if the costs order is satisfied (by payment of the amount claimed or a lesser amount of $110,000 which the first respondent has indicated she is prepared to accept) the first respondent would remain able to repay the moneys paid, in the event that she was required to do so, out of the amount which she eventually will receive from the estate in payment of the debt due to her. 22During the course of argument I raised with counsel for the applicant whether, as a condition of the grant of a stay of execution of the costs order, his client would undertake to pay interest on the outstanding costs in the event that the appeal is unsuccessful and provide some form of security for the repayment of those costs. The applicant was prepared to give such an undertaking in relation to the payment of interest but was not prepared to offer any security for those costs. 23In these circumstances I made an order staying the administration of the estate to the extent of the making of any payments or distributions to creditors of the estate until the disposition of the application for leave to appeal or appeal in the event that leave is granted. The making of that order will have two consequences. First, no distributions will be made from the estate to creditors, whether secured or unsecured. That will protect the applicant's position in the event that the appeal is successful and a costs order is made entitling him to be indemnified out of the estate and satisfaction of that order has priority over the payment of other debts of the insolvent estate. Secondly, it will ensure that the first respondent's asset, being the debt due from the estate, whether secured or unsecured, is not repaid. At the same time it will enable an administrator of the insolvent estate to proceed to the stage where all that remains is for a distribution to be made to its creditors. 24The applicant has sufficient equity in the jointly owned property to fund the payment of the first respondent's costs, and his estimated further costs of the appeal. If the satisfaction of the order for payment of the first respondent's costs would place the applicant in a position where he may not be able to fund his own costs of the appeal, I would not regard that as a factor justifying the grant of a stay of that order. The purpose of a stay of execution is not to enable the applicant to prosecute an appeal in circumstances where he will or may not be able to pay the other party's costs of the trial and appeal if the latter is unsuccessful.