The Estate of Stanislaw Budniak; NSW Trustee & Guardian v Budniak No 2

Determination

In Luxmore Pty Ltd v Hydedale Pty Ltd [2008] VSCA 212; (2008) 20 VR 481, Maxwell P and Kellam JA said, at [12]: "In the ordinary case, it is both appropriate and desirable that a costs question be decided at the conclusion of argument. Rarely will it be necessary for a judge to give detailed reasons for decision adverting to every matter debated in argument. This court will assume, as should the parties, that every matter addressed in argument on costs has been considered. This court will set its face against any proposition which would require judges disposing of questions of costs to give elaborate reasons."
In relation to the first issue for determination, namely, whether the NSW Trustee & Guardian should receive the costs of the Probate proceedings calculated on the indemnity basis, there being no issue that it is entitled to those costs calculated on the ordinary basis, I am not satisfied that such an order should be made. Taking into account the whole of the evidence in the case and all its circumstances, some of which I have mentioned above, but remembering also my findings of fact in the substantive proceedings, and also the submissions (including the service of the Offer of Compromise), the justice of the case does not warrant such an order. In my view, there is nothing in the particular facts and circumstances of the case that warrant the making of an order for costs other than on the ordinary basis.
In this regard, it cannot be suggested that Robert's conduct of the Probate proceedings justifies such an order. His solicitor's letter to the NSW Trustee & Guardian set out, in some detail, the reasons why he was opposing a grant. Although that letter was sent at a time when investigations were incomplete, the broad thrust of the defence, and the reasons therefor, were identified.
Also, the NSW Trustee & Guardian should have been aware that in the event it was unsuccessful, costs out of the estate were not guaranteed. There can be no doubt it was given fair warning that in the event probate in solemn form of the 2007 Will was not granted, Robert would not only be opposing obtaining an order for costs, but he would also seek an order that it should pay his costs of the proceedings calculated on the indemnity basis.
Any suggestion that there is a general rule that costs in Probate proceedings are borne out of the estate should be rejected. As long ago as 1926, it was said, in Re Plant [1926] P 139, at 152: "I should be reluctant to do anything to create the idea that unsuccessful litigants might get their costs out of the estate, without making a very strong case on facts. The lure of 'costs out of the estate' is responsible for much unnecessary litigation."
Whilst the NSW Trustee & Guardian may have considered that s 33 of the NSW Trustee & Guardian Act would protect it from an adverse order for costs and would entitle it to obtain costs, and assuming that view was justified, there was no certainty that an order for indemnity costs in its favour would be made.
To the extent that there is a difference between the costs calculated on the indemnity basis and those costs calculated on the ordinary basis, in accordance with the principle identified in Rennie v Massie, referred to above, the NSW Trustee & Guardian should have sought an indemnity from Tomasz and Benjamin, as the persons whose interests it was seeking to protect by propounding the 2007 Will.
The NSW Trustee & Guardian did not make any submission to the effect that in the event that it did not obtain its costs calculated on the indemnity basis out of the estate, that the difference between those costs and the costs that it did recover out of the estate, should be borne out of the share of the estate passing to Tomasz under the 1994 document.
I shall leave it to the solicitor for the NSW Trustee & Guardian and Tomasz's solicitors to determine whether any difference in the costs of the NSW Trustee & Guardian of the Probate proceedings should be borne out of the share of the deceased's estate passing to Tomasz. I do not propose to make such an order since there was no application to do so.
In my view, there is no special or unusual feature in the case justifying the Court exercising its discretion to order the costs of the NSW Trustee & Guardian of the Probate proceedings to be calculated on the indemnity basis. Nor does the justice of the case warrant the court exercising its discretion in that way.
In relation to the costs of the family provision proceedings, and in dealing with the second issue, namely, whether the NSW Trustee & Guardian should receive any costs of the family provision proceedings and, if so, on what basis should those costs be calculated, I am of the view that the NSW Trustee & Guardian should receive those costs, such costs to be calculated on the indemnity basis. After all, the NSW Trustee & Guardian was representing the deceased's estate in the family provision proceedings. It was the proper contradictor, in all the circumstances, with knowledge of the facts and circumstances relating to the defence of those proceedings. In addition, it took all of the steps usually taken by the administrator in such proceedings.
By way of example, it filed and served evidence by Tomasz, and by Nathalie, in opposition to the claim for a family provision order by each of the other children of the deceased, including Robert. It read each of his, and her affidavits, as part of the proceedings, and required each to be present for cross-examination. Furthermore, it was able to demonstrate, by relevant cross-examination, that there had been a failure to disclose, fully and accurately, the financial circumstances of each of the Plaintiffs in the family provision proceedings, which failure was only remedied during the course of the hearing. It did so, having investigated the circumstances of each of the Plaintiffs.
There is no suggestion that the NSW Trustee & Guardian acted unreasonably, or that it acted for its own benefit, rather than for the benefit of the beneficiaries named in the 2007 Will, in its defence of the proceedings commenced by the Plaintiffs.
Ultimately, I do not know whether the two different orders will result in any difference in the quantum of the costs of the NSW Trustee & Guardian. No doubt, if agreement is unable to be reached, it will be necessary to incur further costs and expense in having its costs, in respect of each matter, assessed.
In relation to the costs of the family provision proceedings of each of the other Plaintiffs, even though those proceedings are to be dismissed, in my view, most of the affidavit evidence filed by each Plaintiff was read in the Probate proceedings. Whilst some time was taken during the hearing cross-examining each of the Plaintiffs and his or her spouse or partner, I am satisfied that the justice of the case requires that the affidavits read in the family provision proceedings should be regarded as part of Robert's costs of the Probate proceedings.
One would think that it would be difficult, if not impossible, to have an assessment carried out upon the basis that parts of the affidavits that bear upon the financial and material circumstances of each should be excluded from the costs in the Probate proceedings.
In any event, it is to be remembered that the children of the deceased, other than Tomasz, are entitled to four-fifths of the deceased's residuary estate. Thus, indirectly, they will be bearing four-fifths of all of the costs of the proceedings.
In relation to Robert's costs of the Probate proceedings, I note that the parties have agreed that those costs, calculated on the indemnity basis, should be paid out of the deceased's estate. The only issue is whether those costs should be assessed.
Bearing in mind that the Defendant's/Cross-Claimant's estimated costs and disbursements of the proceedings (which included the costs of the Plaintiffs in the family provision proceedings), including senior and junior counsel's fees, calculated on the indemnity basis, calculated until the completion of the hearing, was about $650,000 (inclusive of GST and upon the basis of a seven day hearing of both matters), I am of the view that those costs are so high as to warrant them being assessed, unless all of the beneficiaries agree, in writing, that the costs and disbursements need not be assessed, or unless some other agreement as to the quantum of those costs is reached.
In the Probate proceedings, the Court: (a) Declares that the document dated 25 June 1994 ("the 1994 Will") in the English language (Exhibit 1) is an informal testamentary document of the late Stanislaw Budniak ("the deceased") within the meaning of section 8 of the Succession Act 2006 (NSW). (b) Orders that Probate of the 1994 Will in solemn form be granted to Robert Budniak, the executor named therein. (c) Orders that further compliance with Part 78, rule 2 of the Supreme Court Rules 1970 (NSW) as to service of notices on affected persons be dispensed with. (d) Orders that the proceedings be referred to the senior deputy Registrar in Probate to complete the grant. (e) Orders that within 21 days of the grant of Probate, that the Plaintiff deliver to the executor, Robert Budniak, such estate assets and documents referable thereto as may be held by the Plaintiff. (f) Orders that the Amended Statement of Claim and the Further Amended Cross-Claim are otherwise dismissed. (g) Orders that the costs of the Plaintiff/Cross-Defendant, calculated on the ordinary basis, of the Probate proceedings, be paid out of the estate of the deceased. (h) Orders that the Defendant's/Cross-Claimant's costs, calculated on the indemnity basis, of the Probate proceedings, be paid out of the estate of the deceased. (i) Orders that the Defendant's/Cross-Claimant's costs of the Probate proceedings, and of the family provision proceedings, be assessed, unless all of the beneficiaries named in the 1994 Will agree, in writing, that those costs and disbursements need not be formally assessed. (j) Notes the undertaking to the Court given by the Defendant/Cross-Claimant not to reduce the assets of the deceased's estate to less than $300,000 pending payment of any costs of the Probate proceedings and the family provision proceedings, ordered to be paid to the NSW Trustee & Guardian.
In the family provision proceedings, the Court: (a) Orders that the Summons be dismissed. (b) Orders, subject to the order for assessment referred to in the Probate proceedings, that the costs of the Plaintiffs, calculated on the indemnity basis, are to form part of the costs and disbursements of the Defendant/Cross-Claimant in the Probate proceedings and that they are to be paid out of the estate of the deceased. (d) Orders that the costs of the Defendant, the NSW Trustee & Guardian, calculated on the indemnity basis, of the family provision proceedings, be paid out of the estate of the deceased.

At a glance

Court

Decision date

Before

Source

Judgment (8 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (22)

Cited By (2)