Tobin v Ezekiel; Estate of Lily Ezekiel

Judgment 1HIS HONOUR: It will be recalled that, in the substantive proceedings, the plaintiffs sought revocation of a grant of probate on grounds of want of testamentary capacity, undue influence, and absence of knowledge and approval of the content of the will. The plaintiffs also sought provision out of the deceased's estate pursuant to (NSW) Family Provision Act 1982, s 7. On 1 March this year I ordered that the proceedings be dismissed and made directions in order to permit the question of costs, which the parties wished to address subsequently, to be argued [ Tobin v Ezekiel; Estate of Lily Ezekiel [2011] NSWSC 81]. 2The first question for resolution today is the preservation of the position in relation to the (former) estate assets, pending the hearing of the plaintiffs' appeal. It is uncontentious that some form of preservation is appropriate in order that the plaintiffs' appeal not be rendered futile by alienation or encumbrance of the assets before the appeal is heard. 3Evidence placed before the Court on the present application suggests that the property located at Beach Road Bondi Beach - being the only significant asset - is now worth about $2.5 million. It is difficult to see that the plaintiffs, if successful in their appeal, could obtain more than half of that (although a costs order in their favour - including one that costs come out of the estate, or distributed estate - might have that consequence). 4The defendants are content to submit to an order that they not alienate or encumber the Beach Road property to an extent of more than $1.1 million except upon having given appropriate notice to the plaintiffs' solicitors, which would afford the plaintiffs an opportunity to make a further application to the Court. Although some argument has been advanced to the effect that it is better to decide the question now once and for all, pending the appeal, rather than to leave it open to further argument in the future, I am, on that question, of the contrary view. A situation such as the present is liable to fluctuate. The needs of the parties may vary and, consequently, the balance of convenience may, from time to time, shift, depending on the proximity of the hearing of the appeal, the parties' respective financial positions and needs, and the strengths and weaknesses that may or may not emerge as submissions in connection with the appeal develop. In such circumstances, it is preferable to adopt the more flexible approach that the matter can be more closely revisited, pending the hearing of the appeal, if circumstances so require. 5On the other hand, I think, as Mr Gormly for the plaintiffs has submitted and as was not seriously opposed by the defendants, in the context of this case the formality, force and status of an order of the Court, as opposed to an undertaking, is appropriate. 6I will therefore, upon the plaintiffs' by their counsel giving to the Court the usual undertaking as to damages, and further undertaking that they will not, without having given the defendants' solicitors 28 days notice of their intention so to do, alienate or further encumber, in the case of the plaintiff Evelyn, her interest in her Dover Heights home, and in the case of Clara, her Randwick home - any such notice to specify the nature and quantum of, and parties to, the proposed dealing - order that the defendants be restrained from, by themselves, their servants, or agents, alienating or encumbering to the extent that it secures more than $1.1 million, the property situate at and known as XX Beach Road Bondi Beach, except upon having given 28 days written notice of their intention so to do to the plaintiffs' solicitors, any such notice to specify the nature and quantum of, and parties to, the proposed dealing. I reserve liberty to the parties to apply, by arrangement with my Associate, to vary this order, or in the event of any notice of the type referred to in the above order being given. 7The remaining question is that of costs. The prima facie position under (NSW) Civil Procedure Act 2005, s98(1)(a), is that costs are in the discretion of the Court, and under (NSW) Uniform Civil Procedure Rules 2005, r 42.1, that costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs. It is, however, recognised that in probate litigation there are a number of exceptions to this general rule, two in particular being that (1) where the testator or those interested in residue have been the cause of the litigation, the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate; and (2) if the circumstances led reasonably to an investigation in regard to the document propounded, the costs may be left to be borne by those who respectively incurred them [ Re Estate of Paul Francis Hodges Deceased; Shorter v Hodges (1988) 14 NSWLR 698, 709]. 8In this case, it is submitted for the plaintiffs that there is reason to depart from the ordinary position - that they should pay the defendants' costs - essentially because the defendants' conduct of the proceedings created reasonable cause for investigation, and considerably complicated the proceedings. They point to a lack of cooperation by the defendants - in particular, the giving of a far from full and frank disclosure of their financial circumstances in connection with the family provision claim; the provision of untruthful and variable accounts of the circumstances that led to and culminated in the making of the subject will; and the circumstance that evidence that was critical in the proceedings - including the evidence of Mr Musrie, one of the attesting witnesses, and that of Rabbi Chriqui -emerged only very late in the proceedings. On the other hand, the defendants contend that the cost of the proceedings to them was very considerably aggravated by the manner - in which the plaintiffs prosecuted the proceedings in which respect they draw attention to observations made at an earlier stage, in a procedural judgment, by Palmer J in Tobin v Ezekiel - Ezekiel Estate [2008] NSWSC 1108. 9Various attempts were made to identify specific parts of the proceedings in respect of which it was suggested that different consequences as to costs might flow. While, ultimately, I do take these various arguments into account, it is most undesirable to make costs orders expressed in terms of specific issues, leaving to a costs assessor the unenviable task of deciding whether a particular item in a bill does or does not relate to a particular issue, and if it relates to more than one issue, how to apportion it. Such orders considerably exacerbate the already complex and protracted process of assessment. So, ultimately, it is preferable to reach an overall view as to what is a just and proper costs order, albeit bearing in mind sometimes the respective success or otherwise of the parties on specific issues, or the extent to which the conduct of one or other parties has increased the costs overall. 10I do not think it is reasonable to segregate, or possible in this case, to visit on the plaintiffs, the costs of the undue influence claim. In the way the case was conducted, those costs were largely intertwined with those on the issue of knowledge and approval. For that reason, I do not think it necessarily follows, to the extent that it ordinarily might, that the costs of an unsuccessful allegation of undue influence must be borne by the unsuccessful plaintiffs. 11It is inescapable that in this case the question of undue influence and that of knowledge and approval were intertwined with the credit of the defendants, and specifically with the circumstance that they gave what I found to be untruthful accounts of the circumstances that culminated in the making of the will. The significance of those untruthful accounts in that context, and the reasonableness of raising the question of undue influence, is, I think, best illustrated by reference to paragraphs [93]-[95] of the substantive judgment of 1 March 2011, where I considered the competing hypotheses that might explain Lily's 1997 will. In ultimately deciding that the less sinister explanation was the preferable one, I nevertheless acknowledged that it had the deficiency of insufficiently explaining the defendants' unwillingness to tell the truth about their role in the making of the will. 12In my view, the sons' untruthful accounts were fundamental to the initiation and ongoing prosecution of the undue influence issue. A party who puts an untruthful account of such a critical matter before the Court cannot legitimately complain if the other party then goes to very considerable lengths to demonstrate its untruthfulness, as was done here. In those circumstances, it seems to me that the defendants bear a very considerable degree of responsibility for the costs of the undue influence claim. However, I do not think the same applies in respect of the testamentary capacity claim, which did not have marks of considerable strength. 13So far as the family provision claim is concerned, the critical issue in that aspect of the proceedings was the defendant's financial position. Their failure to make a full and frank disclosure of their position legitimately triggered an extensive inquiry on the part of the plaintiffs to establish what that position was. Again, I do not think that defendants who do not make a full and frank disclosure can legitimately complain if the plaintiffs thereupon undertake extensive inquiries to establish what the true position is. 14In the judgment to which I have referred, Palmer J made some observations, in particular at [32], as to becoming concerned as to whether the parties' solicitors were "over-servicing" and directed that various affidavits be filed on that question. In this case, the estate - or more accurately the potential estate, it having been distributed long before trial - was worth about $1.8 million, and seems now to have increased to $2.5 million. On the evidence that was before Palmer J, and on the estimates that have been given to the Court today, it seems likely that total costs incurred by the parties in this litigation exceed a million dollars. While this is, of course, unfortunate, it is sometimes the consequence of parties resorting to their rights and being put to proof of issues and requiring proof of issues. The court may mould costs orders having regard to the consideration of their proportionality to what is at stake in the proceedings. 15It is easy for Judges to be critical of the incurring of costs, without fully appreciating the underlying family dynamics of disputes of the present kind. It is as well to bear in mind that those who are critical of legal costs are often also the first to criticise inadequate diligence on the part of lawyers. I can see nothing in this case to support any allegation of "over-servicing" in the sense in which Palmer J used the term. There has no doubt been a diligent and determined investigation of the facts, in circumstances where there was reason for the plaintiffs to investigate and then necessity, at least in some respects, for the defendants to respond. 16There are some respects in which I think the defendants have incurred costs to which they have not themselves contributed. There would, regardless of their conduct, have been a testamentary capacity case and family provision case. The parties did not disagree with my provisional view that - taking into account the passage of time since the judgment of Young CJ in Eq (as his Honour was then) in Moore v Moore [2004] NSWSC 587 - a two-day family provision case, at present, might incur costs on one side in the order of about $75,000. It needs to be borne in mind that there would also have been testamentary capacity issues, which involved some medical evidence as well. 17There is force also in the defendant's submission that costs were exacerbated by some of the evidence served but ultimately not pressed or rejected, and the preparation of objections by the defendants thereto. Although the defendants estimate these costs at $30,000, I must say that that amount strikes me as being somewhat on the high side. But I do take into account that aspect of the case in the order which I will ultimately make. 18On the other hand, I do not accept that any special consequence should attend the costs of issuing subpoenas which, for the reasons I have touched on above, seems to me a course reasonably undertaken by the plaintiffs, given the defendants' unsatisfactory disclosure of their financial position. Ultimately, there is also force in the proposition that it was the plaintiffs who chose to bring the matter to Court and had control over the vigour with which the litigation was pursued, while the defendants, having been brought to Court, were less in a position to exercise any such control. 19Although one course that crossed my mind was simply making no orders as to costs on the basis that the defendants had materially contributed to cause for suspicion, it seems to me that that would insufficiently acknowledge that there were some costs in the proceedings to which their conduct of the proceedings did not contribute, and that ultimately it was the plaintiffs and not they who had control over the decision as to whether there should and to what extent there should be litigation. The unsuccessful plaintiffs must pay some of the successful defendants' costs. 20That said, it seems to me that the costs of the defendants are entitled to represent but a relatively small portion of the actual total costs of the proceedings. Having regard to considerations of proportionality, bearing in mind the agreed figure of $75,000 as the approximate costs on one side of a two-day family provision claim, and making some additional allowance for the costs associated with the plaintiffs' evidence that was rejected and the testamentary capacity issue, it seems to me that the justice of the case is met by an order that the plaintiffs should pay the defendants' costs, fixed in the sum of $100,000. I so order.