Weisbord v Rodny

Orders sought by the plaintiffs

1. In their written submissions, the plaintiffs sought the following costs orders: (a) the Executor's scale costs of obtaining a Grant of Probate be paid out of the Estate of the deceased; (b) the Plaintiffs' and Defendant's costs of the proceedings be paid from the Estate of the deceased on a party/party basis as agreed, or if not agreed, as assessed until 20 September 2017. Thereafter, the Defendant pay the Plaintiffs' costs on an indemnity basis; (c) an interim costs order from the residue of the Estate of the deceased in the sum of $450,000 (or as otherwise ordered) in part payment of the Plaintiffs' legal costs.
2. Order (b) sought by the plaintiffs was based upon a Calderbank offer dated 13 September 2017.

Orders sought by Laurence

1. In his written submissions, Laurence sought the following costs orders: (a) The Executor's scale costs of obtaining a Grant of Probate be paid out of the estate of the deceased. (b) Sixty percent (60%) of the Plaintiffs' costs on the party/party basis be paid out of the estate of the deceased. (c) The Defendant's costs on the party/party basis be paid out of the estate of the deceased.

A preliminary matter

1. As a preliminary matter, I note that the Court was informed that Laurence has already caused his costs of the proceedings to be paid from the estate of the deceased, save in respect of the costs of the proposed appeal. It is likely that those costs have been paid on the indemnity basis. If an order is now made by the Court that Laurence's costs be paid on the ordinary basis, there will need to be an accounting. Furthermore, given that the original grant of probate was made on 15 January 2016, it is likely that Laurence has entered into a number of transactions in the belief that he was authorised to do so as the executor of the deceased under the probated will.
2. The parties have not asked the Court to make any orders dealing with the effect of the actions taken by Laurence since probate was granted to him. A number of protections are available to a person in Laurence's position after the Court revokes a grant of probate: see generally GE Dal Pont and KF Mackie, Law of Succession (2nd ed, 2017, LexisNexis Butterworths Australia) at [11.108]-[11.112]. It is a matter for the parties whether they wish the Court to deal with this matter. I will grant the parties leave to relist the proceedings, if that is what they wish to do. That may be something that can be deferred until the Court of Appeal has decided Laurence's appeal.
3. The reason why I raise this issue is that the 2008 will appointed both Laurence and Jeannette as executors, and, if order 5 made on 11 February 2019 stands, probate will be granted to them jointly. Given the difficulties in the relationship between Laurence and Jeannette, there may be dissension if any questions concerning Laurence's actions as sole executor, and any accounting in respect of the legal fees already paid out of the estate, are left to be resolved between Laurence, acting on his own account, and Laurence and Jeannette acting jointly as executors on the other.
4. On the basis that I assume that the first order sought by the plaintiffs and Laurence, concerning the payment of the scale costs of obtaining a grant of probate out of the estate of the deceased, relates to the new grant, and is agreed by the parties, I will make an order in those terms, subject to my Associate receiving confirmation from the parties by email that my assumption concerning the purpose of the order is correct.

Leave to the parties to tender additional evidence

1. At the hearing on 27 March 2019, a question arose concerning whether it was appropriate for the Court to make an interim costs order in favour of the plaintiffs, or whether alternatively the Court should order that an interim distribution be made in the same amount sought in the plaintiffs' order (c). A further question concerned the cash resources of the deceased's estate, and the estate's capacity to make an immediate payment to the plaintiffs of $450,000, given other obligations that the estate might have.
2. I made orders as follows: 1. Order the plaintiffs to serve and deliver to the Associate to Robb J any affidavit evidence in support of their claim for either an interim order for payment of costs or an interim distribution from the estate within seven days. 2. Order the defendant to serve and deliver to the Associate to Robb J any affidavit in response within a further seven days.
3. In accordance with order 1, the Court has received an affidavit affirmed by the plaintiffs' solicitor on 3 April 2019 that sets out the plaintiffs' financial circumstances. The Court also received draft short minutes of order of the same date, which slightly revised the original orders as sought, and included alternative orders for payment of $450,000 by way of interim costs order (subject to an undertaking by Jeannette that she would repay the amount if Laurence's appeal to the Court of Appeal is successful), or an order for the payment of an interim distribution of $450,000.
4. Laurence has resisted any payment at all being made to the plaintiffs. His solicitor swore an affidavit on 9 April 2019 in which he gives evidence of reasons why no payment should be made to the plaintiffs at this time. I will deal with this evidence below.
5. After the plaintiffs received Laurence's solicitor's 9 April 2019 affidavit, they applied for leave to rely upon a further affidavit of their solicitor affirmed on 11 April 2019 that responded to the evidence in the 9 April 2019 affidavit.
6. That prompted Laurence in turn to request that, if the Court received the 11 April 2019, it also receive a further affidavit of Laurence sworn on 16 April 2019.
7. I will deal with these affidavits below, when I come to the issue to which they relate.
8. I note that par 6 of the new draft short minutes of order delivered by the plaintiffs provided for order 7 made on 11 February 2019 to be stayed, pending a determination of the appeal. I do not see how that order is necessary, as order 9 made on 11 February 2019 stayed all of the orders in pars 1 to 8, thus including order 7.

Change in stance adopted by Laurence

1. In par 11 of the affidavit sworn on 9 April 2019, the solicitor advised the Court that Laurence now makes the following submissions concerning the original orders proposed by the plaintiffs: (a) The orders (if any) should only be made in the probate proceedings and should deal only with costs incurred in those proceedings. (b) Proposed order 1 is superfluous. Mr Rodny has already been paid his costs in respect of the grant made in his favour in respect of the 1997 Will. Any other grant (and consequent scale costs) should await the decision of the Court of Appeal. (c) Regarding proposed orders 2 and 3 (with regard to the costs of the party(ies)) Mr Rodny relies on the written submissions, especially with regard to the consequence of the (redacted) Calderbank offer and submits these matters should be dealt with following the decision of the Court of Appeal. (d) An interim costs order (and any consequent payment) should not be made. Costs should await the decision of the Court of Appeal and any order by that court. Inevitably, if the appeal succeeds, cost orders will be made which may be inconsistent with those proffered by the plaintiffs. (e) An interim distribution order should also not be made in favour of the plaintiffs, pending the decision of the Court of Appeal. Neither Joel Weisbord nor Alexander Weisbord receive any cash under either the 1997 Will or the 2008 Will. If the appeal is successful, then Jeannette Weisbord receives no cash under the 1997 Will either.
2. I was more than surprised when I realised that Laurence's solicitor's affidavit proposed that the Court would depart from the course proposed by the parties at the 27 March 2019 hearing, and approach the making of orders in a completely different way.
3. As it happens, the draft of these reasons had been completed up to the point when it became necessary for the Court to deal with order (c), as sought by the plaintiffs, before I considered Laurence's solicitor's affidavit. Consistently with order 2 set out above at par 19, that affidavit should only have dealt with the subject of the plaintiffs' claim for one or other interim order for the payment of $450,000.
4. The suggestion made by Laurence that the Court should now approach the making of orders in a manner that is inconsistent with the orders that he contended on 27 March 2019 should be made, and which were supported by submissions made orally and in writing by his senior counsel, has not been authorised by the Court. Laurence has not made any proper application for leave to change the course that he took at the hearing, and the plaintiffs have not been given an opportunity to respond.
5. While there may have been some sense in the parties deferring the whole question of costs until after such time as the Court of Appeal has determined the appeal, that was not the course taken by the parties. As matters stand, the Court has reserved its judgment following the hearing, albeit that it agreed to accept some further evidence, and gave appropriate leave to the parties for that purpose.
6. In the circumstances, the proper course for the Court to take is to determine the issues on the basis presented by the parties on 27 March 2019, though having regard to the additional evidence that the parties were given leave to tender.
7. I foreshadow, however, that the conclusion that I reach below concerning Laurence's application for an order reducing the plaintiffs' entitlement to their costs by 40% may accord with Laurence's recent suggestion that at least some of the cost issues be deferred.

Appropriate orders for the parties' costs

1. I will now consider the contentious issue of the costs orders that should be made in these proceedings.

Parties' agreed starting position

1. First, the parties are agreed that the starting position should be that the costs of the plaintiffs on the one hand, and Laurence on the other, should be paid out of the estate on the ordinary basis. This, in my view, is a clear case where the need for the probate proceedings has arisen because the deceased, unfortunately and probably without real fault on her part, failed to leave the evidence of her testamentary intentions in good order, which justified the parties in undertaking and defending the probate proceedings. This is a case where "the circumstances led reasonably to an investigation concerning the testator's will": see, for example, Trustee for the Salvation Army (NSW) Property Trust v Becker [2007] NSWCA 136 (Becker) at [125].
2. Laurence did not submit that, for the purposes of the costs order that should be made, the plaintiffs' family provision claims should be treated separately and not as part of the overall costs of the proceedings.
3. Laurence did submit that it would have been more reasonable and efficient for the plaintiffs to have lodged a caveat in respect of Laurence's probate application, so that the probate claim could have been dealt with separately and before any significant costs were incurred in the preparation of the family provision claims. Laurence noted that, in any event, the family provision claims were commenced first, and some months out of time, before the probate claim was commenced.
4. However, as follows from the costs orders for which Laurence contends, he does not ask for an order that distinguishes between the costs of the probate and family provision claims and denies the plaintiffs the costs of the latter. In fact, during oral argument, Laurence's senior counsel explicitly accepted that the effect of an order made by the Court at an earlier time that all of the proceedings be heard together was that there should be a single costs order.

Effect of plaintiffs' Calderbank offer

1. In these circumstances, two questions arise. The first, raised by the plaintiffs, is whether the Court should treat the 13 September 2017 Calderbank offer as being effective, and if so, whether it should order Laurence to pay personally the plaintiffs' costs on the indemnity basis from 21 September 2017.
2. The second issue, raised by Laurence, is whether the amount of the costs that the plaintiffs should be ordered to be paid out of the estate should be limited to 60% of those costs. As was made clear at the hearing on 27 March 2019, the order sought by Laurence does not involve the plaintiffs receiving 60% of their total costs, but 60% of their costs of the proceedings as agreed or determined on an assessment.
3. I will first consider the issue of whether the order to be made concerning Laurence's costs should be influenced by the fact that he did not accept the Calderbank offer made on behalf of the plaintiffs on 13 September 2017.
4. I will now set out the relevant parts of the offer made on behalf of the plaintiffs. It will first be necessary, however, to explain why the amounts contained in the offer have been redacted.
5. As explained above, the final orders that have been made have been stayed because Laurence is pursuing an appeal against those orders. One of the orders made dismissed the plaintiffs' family provision claims, but only on the ground that those claims were alternative to the probate claim, and did not need to be determined as the probate claim had succeeded. As I explained at [538]-[540] of the principal judgment, I did not think that it was convenient or feasible to decide and give reasons as to what orders should be made on the family provision claims, against the possibility that in due course my orders in the probate claim may be set aside. If they are set aside, then the family provision claims will be revived. However, it could well happen that it emerges from any reasons given by the Court of Appeal that the deceased had a range of different testamentary intentions. The different testamentary intentions may make a material difference to the determination of the family provision claims. Consequently, I did not deal with the family provision claims.
6. Paragraph 5 of the plaintiffs' written submissions on costs made it clear that the plaintiffs redacted the amounts in the Calderbank offer as the plaintiffs did "…not wish to risk or increase the possibility of Robb J being disqualified from dealing with the family provisions claims of the Plaintiffs in the event the Defendant is successful on his proposed Appeal." It must be accepted that conventional thinking would have it that the trial judge should not be informed of amounts that plaintiffs have stated in settlement negotiations that they would be prepared to accept, before the trial judge is required to determine the claims.
7. The relevant parts of the Calderbank offer are: …I am therefore instructed by my clients to offer to settle each of the matters under the following terms: 1) In the matter of Joel Weisbord v Laurence Rodny - family provisions claim (2015/324966); Joel to receive $[redacted]. 2) In the matter of Alexander Weisbord v Laurence Rodny - family provisions claim (2015/324977); Alexander to receive $[redacted]. 3) In the matter of Jeannette Weisbord v Laurence Rodny - family provisions claim (2015/324982); Jeannette to receive $[redacted]. 4) In the matter of Jeannette Weisbord & Ors v Laurence Rodny - probate matter (2016/225246); a. Karly Marks and Jordana Michael to receive $[redacted] each; b. $[Redacted] to cover the cost of group family counselling sessions for any parties that wish to attend; c. All individuals and entities to be released from any and all debts to the estate; d. Jeannette to receive entire contents of 77 Balfour Rd, Rose Bay in addition to the real property devised to her under the probated Will; e. All individuals to receive their specific bequests as set out in the probated Will. 5) Plaintiffs' legal costs to be paid as agreed or assessed in each of the abovementioned matters. …
8. Although the redaction of the amounts prevents the Court from knowing the true effect of the Calderbank offer, it can at least be said that the plaintiffs would receive the substance of their benefits under a settlement following an acceptance of the offer by Laurence in their family provision proceedings and not in the probate proceedings. I would infer that the cost of group family counselling sessions, the value of any debts released, and the contents of the residence would not be substantial in relative terms. The Calderbank offer does not disclose the amounts that would be payable to Jeannette's daughters in settlement of the probate claim, but that would not strictly be a benefit for any of the plaintiffs. It is sufficient for present purposes to repeat that, broadly, the plaintiffs would receive the benefit of any compromise through the settlement of their family provision claims rather than the probate claim.
9. The decision of the Court of Appeal in Becker is sufficient authority to require this Court to proceed upon the basis that a Calderbank offer may have the ordinary effect of such offers in probate proceedings.
10. It must be remembered, however, that this case is concerned with a Calderbank offer, and not an offer of compromise made under Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 20.26. Consequently, UCPR r 42.14 does not have the effect that the plaintiffs are entitled to their costs on the indemnity basis from the date that the offer was made unless the Court orders otherwise. The plaintiffs must prove that, in all of the circumstances, Laurence's refusal to accept the Calderbank offer makes it just that he be ordered to pay their costs from the date of the offer on the indemnity basis: see Leichhardt Municipal Council v Green [2004] NSWCA 341 at [18]-[20]. A significant factor is whether Laurence acted unreasonably in rejecting the offer, so unnecessarily prolonging the proceedings: see Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801.
11. A number of special features of this case must be taken into consideration.
12. First, is the fact explained above that the plaintiffs have redacted the amounts that they offered to accept in the Calderbank offer. The plaintiffs submitted that the Court should proceed upon the basis that it was obvious, even if the precise amounts were not disclosed, that the plaintiffs had offered to accept amounts that are substantially less than they will enjoy under the 2008 will. Laurence countered by submitting that the Court should not act on the Calderbank offer unless all of its terms were disclosed, particularly the amounts that the plaintiffs agreed to accept. Laurence did not concede that those amounts were substantially less than the plaintiffs will receive under the 2008 will. Laurence submitted that the Court could only act upon the Calderbank offer after the completion of all of the proceedings, at which time the amounts could be disclosed to the Court.
13. The plaintiffs pressed on with their application, notwithstanding observations by the Court that it might not be able to give full effect to the Calderbank offer without the amounts being disclosed.
14. It would probably be reasonable for the Court to infer in all of the circumstances that the plaintiffs likely offered to accept substantially less than they will receive as a result of the Court's orders, at least for the purpose of establishing that the plaintiffs have in fact done better than they offered to accept.
15. However, the Court has no basis for judging the magnitude of the improvement in their circumstances that the plaintiffs have achieved over what they would have received if Laurence had accepted the Calderbank offer. That is an important consideration, because, if the issue is whether Laurence unreasonably rejected the Calderbank offer, it would be necessary for the Court to know what the magnitude of the difference was.
16. It is my view that a Court should generally not act upon a Calderbank offer unless the circumstances permit the party relying upon it to fully disclose its terms to the Court. If there were no other reason for the Court to decline to give effect to the Calderbank offer, the Court would have had to defer dealing with the costs of the proceedings until such time as the plaintiffs could disclose to the Court the redacted parts of the Calderbank offer. That time would either be after Laurence's appeal has been dismissed, in which event the Court will not be required to decide the family provision applications, or if the appeal succeeds, after the family provision applications have been determined.
17. In this case, however, it is feasible for the Court to proceed to determine the issue, because there are other reasons why I do not accept the plaintiffs' submission that the Calderbank offer was effective.
18. One reason is that there are four proceedings before the Court; the probate claim to which all of the plaintiffs are parties, and three separate family provision applications by each of the plaintiffs. The Calderbank offer was not a global offer, although Laurence was only given the option of accepting it or rejecting it. Numbered paragraphs 1 to 3 consisted of separate offers by each of the plaintiffs to accept a particular unidentified sum in settlement of each plaintiff's family provision claim. Numbered paragraph 4 offered terms for settling the probate claim.
19. As to the family provision claims, the Court cannot at this stage know whether the plaintiffs agreed to accept less than the Court would give them by way of further family provision, if the Court had decided those claims. As explained above, those claims have been dismissed, but only as a result of the plaintiffs having succeeded on the probate claim. The Court cannot judge whether Laurence reasonably rejected those offers.
20. I do not criticise the plaintiffs for making a single offer to settle all four proceedings, as it was a sensible course, but it introduced difficulties in treating the offers as being an effective single Calderbank offer. It may be the case that, overall, the plaintiffs have achieved a better result than if Laurence had accepted the Calderbank offer, but it is not really feasible to judge whether he was unreasonable in rejecting the offers. That may be a ground for deferring a consideration of the effectiveness of the Calderbank offer, but it is the plaintiffs who asked the Court to deal with costs now, including on the basis of that offer.
21. This problem is linked to the second reason why I consider that the Calderbank offer is ineffective, which arises out of the fact that, until Mr John Lloyd, who was the solicitor who apparently acted for the deceased in the preparation of the 2008 will, gave evidence on subpoena at the hearing, the only evidence concerning the circumstances of the 2008 will that had emanated from Mr Lloyd was a letter that he wrote to Jeannette on 9 December 2014, in which Mr Lloyd said that he had forwarded a draft will to the deceased but she did not contact him to sign the will. Mr Lloyd said in this letter (see principal judgment at [199]): "…and accordingly, her Will that she made with Norbert Lipton dated the 11th December, 1977 is the applicable Will."
22. While this evidence was not conclusive, it must strongly have influenced the attitude of all of the parties to the prospects of success of the plaintiffs' probate claim.
23. It is not a merely speculative conclusion that the state of the evidence must have influenced the terms of numbered paragraph 4 of the Calderbank offer, which, as I have noted, appears to reflect a substantial level of success by Laurence in resisting the probate claim.
24. The evidence ultimately given by Mr Lloyd at the hearing is the subject of much of the reasons for judgment. The circumstances in which Mr Lloyd gave his evidence were quite extraordinary, and I am satisfied that no one, including Laurence, could reasonably have anticipated the nature and effect of the evidence that Mr Lloyd would give, including by means of the production of his file and other documents from his office, that were not available to the parties until they were produced on subpoena during the course of the hearing.
25. The result is that, although the plaintiffs may, in a global sense, have achieved a result significantly better than they offered to accept in their Calderbank offer, the expectations that it would have been reasonable for the parties to hold, at the time of the Calderbank offer, have been turned on their head. The advent of Mr Lloyd's evidence was fundamentally significant to the outcome of the probate claim, and there has been no resolution yet at all of the family provision claims.
26. It is true, as the plaintiffs submit, that some time before the Calderbank offer was made, Laurence had the plaintiffs' evidence, including the evidence of Mr Price, which was ultimately found to have considerable significance in the determination of the probate claim. However, it is extremely likely that Mr Price's evidence would have had a different complexion if the evidence unexpectedly given by Mr Lloyd had not been given.
27. I also consider that it is of some significance that Laurence was defending the deceased's 1997 will, which was the last will of the deceased that she had duly executed, and which was retained in safekeeping by the solicitor who prepared it for her. Laurence acted in a conventional way on the basis of proper legal advice in seeking, as executor, to defend the last properly executed will of the deceased. In the particular circumstances of this case, I do not think that it is appropriate to treat Laurence as entirely a litigant in his own interests, just because the defence of the 1997 will would have benefited him if successful.
28. The plaintiffs relied upon the decision of Kunc J in Phillips v Phillips (No 3) [2017] NSWSC 409, where his Honour found that the defendant executor had not established that he was reasonably justified in defending the proceedings: see [23]. Consequently, it was appropriate that costs follow the event and that the defendant executor be ordered to pay the plaintiff's costs without recourse to the estate. However, reliance on this case by the plaintiffs is inconsistent with their acceptance, in their proposed order (b), that Laurence's costs of the proceedings be paid out of the estate up to 20 September 2017. The only case that is properly available to the plaintiffs is that, from 21 September 2017, Laurence should have to pay the plaintiffs' costs personally on the indemnity basis because he declined to accept the Calderbank offer.
29. I therefore reject the plaintiffs' submission that Laurence should be ordered to pay the plaintiffs' costs personally from 21 September 2017.
30. In summary, it is premature for the plaintiffs to seek to rely upon the Calderbank offer because they have declined, for good reason, to provide an unredacted copy to the Court. However, I have concluded that the Calderbank offer is not effective for the purposes of determining the costs of the plaintiffs' successful probate claim. First, the offer dealt with the three family provision claims and the one probate claim at the one time, in a manner consistent with the plaintiffs succeeding on the family provision claims and achieving more limited success on the probate claim. That precludes the Court from finding that it was unreasonable for Laurence to reject the Calderbank offer. Secondly, and more significantly, as a matter of substance it was reasonable for Laurence to reject the offer, given his unavoidable ignorance of the evidence that Mr Lloyd would ultimately give, and his then knowledge concerning the deceased's testamentary arrangements. It was also reasonable for him to defend the 1997 will. It is possible that, if the Court ultimately has to determine the family provision claims, the plaintiffs will be entitled to rely upon the Calderbank offer if they succeed on those claims. I say nothing about that possibility in these reasons.

Claim for reduction in plaintiffs' costs

1. The next issue is whether the Court should order that the plaintiffs are only entitled to be paid 60% of their assessed or agreed costs on the ordinary basis out of the estate.
2. I stand by the observations that I made in the primary judgment at [311] to [330], about what I considered to be the egregious waste of legal costs in the way that these proceedings were prepared on behalf of the plaintiffs. There was a substantial amount of evidence that could not conceivably have been relevant to the probate claim, and is likely only to be distantly relevant to the family provision claims.
3. The plaintiffs' solicitor gave evidence that the plaintiffs' legal costs currently amount to $1,444,171.40 (inclusive of GST). In the circumstances, that appears to be an excessive amount of legal costs.
4. It was submitted at par 23 of the plaintiffs' written submissions on costs that "…the evidence surrounding the family dynamics (which often includes mistrust and animosity between the parties, as in this case) is often difficult to fully contain. The task was made more difficult in the present proceedings due to the significant health issues of the Plaintiffs, both medical and psychological…"
5. If parties to proceedings are unable because of their attitudes, or their medical and psychological circumstances, to contain their mistrust and animosity towards the other parties in a manner that enables them to confine their evidence to what is reasonably relevant, then their lawyers must do it for them. It is no excuse for lawyers to be party to the unnecessary burdening of the other parties and the judicial process that their clients are incapable of restraining themselves.
6. I do not consider that this response is an acceptable excuse for the plaintiffs' conduct.
7. One way or another, the costs that the plaintiffs are permitted to recover out of the estate of the deceased should be limited to the costs of the evidence that it was reasonable for the plaintiffs to prepare. It must be remembered that, to a considerable degree, Laurence was forced to follow suit, so that the plaintiffs are also responsible for a considerable body of unnecessary evidence that was prepared in Laurence's case. Laurence's solicitor has given evidence that the estate has paid legal costs in respect of these proceedings totalling around $706,724 (inclusive of GST). For the avoidance of doubt, I accept that Laurence was justified in preparing the evidence in response, even though it ultimately proved to be unnecessary, and he was not obliged to take the risk that his prospects of success would suffer because he would fail in having the irrelevant evidence prepared in the plaintiffs' case rejected.
8. The question is: what in the present case is the proper way for the Court to deal with this issue?
9. I entirely understand Laurence's desire for this issue to be resolved by the trial judge adopting a broad brush approach and making a percentage judgment, based upon his experience of the evidence and the hearing, as to the part of their costs for which the plaintiffs should be deprived by reason of their conduct.
10. Laurence relied upon the recent decision of Leeming JA, sitting as a trial judge, in Nadilo v Souris (No 2) [2019] NSWSC 246 (Nadilo), in which his Honour ordered the defendant to pay 75% of the plaintiffs' costs of the proceedings, other than the costs of the application for orders, assessed on the ordinary basis up to and including the date of an offer of compromise, and on the indemnity basis thereafter.
11. That case was different to the present, because, as appears at [29] to [31], the plaintiff wholly failed on her contract claim, which was misconceived in principle, and "should never have been brought". His Honour observed that the costs incurred by the plaintiffs included some costs wholly attributable to the case on which they succeeded, some costs solely attributable to a cause of action which should never have been commenced or maintained, and some costs that were attributable to both. His Honour was satisfied that these circumstances warranted a departure from the ordinary rule that costs follow the event.
12. At [32], following Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [18] to [19], Leeming JA decided that it was appropriate to make a costs order on a broad brush approach, in order to spare both parties additional costs. His Honour held that the defendant should be ordered to pay 75% of the plaintiffs' costs of the proceedings, rather than 50% as the defendant had contended.
13. Although I am sympathetic to Laurence's position, I consider that the present case raises a different problem than Leeming JA was required to address in Nadilo. It may be that the difference is really no more than one of degree, but it is easier for the Court to make a broad brush percentage reduction in the costs to which a party is entitled where the party has wholly failed in a distinct part of the claim, which should not have been brought because it was doomed to failure, than where the real question is how much the party's costs should be reduced by because of the preparation of unnecessary evidence by that party.
14. In the latter case, the Court will, perhaps, be able to identify affidavits that on their face appear to be irrelevant, documents that have been included in the court book that are similarly irrelevant, and also may have actually experienced the waste of hearing time dealing with objections to irrelevant evidence. The Court will have a comparable experience dealing with evidence led by the other party prompted by the first party's irrelevant evidence. However, an attempt in these circumstances to determine a single percentage reduction, based upon a broad brush assessment, is likely in truth to be an irrational exercise, because the Court cannot with any reasonable accuracy make an intuitive judgment of the proportional relationship between the irrelevant material and the whole of the material.
15. The difficulty in the present case is compounded, if the plaintiffs' costs are assumed to be $1,444,171.40 (ignoring for the moment the likelihood that this amount will be reduced on an assessment). A reduction of 40% would be an amount of about $580,000. It is not appropriate in the circumstances of this case for the Court to deal with such a significant amount of money in a broad brush way, given that I do not feel confident that any such assessment could be sufficiently accurate.
16. Another difficulty arises because the Court has not yet been required to decide the family provision claims, although it may never be required to do so. As I have not had to consider all of the evidence for the purpose of actually determining the family provision claims, I have to accept that my preliminary assessment that much of the plaintiffs' evidence is not in reality relevant to the family provision claims may require adjustment if I am ever required to determine those claims.
17. Finally, I am concerned with the possibility that the course proposed by Laurence may inadvertently impose a form of double jeopardy on the plaintiffs. As I have explained above, the order proposed by Laurence would have the effect that the Court would make a costs order in favour of the plaintiffs that limits the costs to which they are entitled out of the estate to 60% of the costs to which they would be entitled on an assessment of their costs on the ordinary basis. In the assessment process, it would be open to Laurence to claim that a great many aspects of the legal work done for the plaintiffs was unnecessary. Even though the assessment will take place on a different basis to the way this Court would approach a broad brush judgment as to the proportion by which the plaintiffs' costs should be reduced, the costs assessor would have no way of knowing in any precise way how the Court had already reduced the plaintiffs' costs entitlement. That is because the very adoption of the broad brush approach is inconsistent with the creation of any record identifying with specificity the basis of the reduction that is inherent in the Court's determination. There is thus real scope for the costs assessor to rule out aspects of the plaintiffs' costs claim which have effectively already been denied by the Court.
18. That risk may have also existed with the costs order made by Leeming JA in Nadilo, but I venture to say that the risk was considerably attenuated by the fact that his Honour made his ruling in respect of a particular subject matter, being the plaintiff's contract claim in that case.
19. The result is that I am not prepared at this stage to adopt the broad brush approach proposed by Laurence, even though I am satisfied that, by some proper process, an adjustment should be made to the amount of the plaintiffs' costs payable out of the deceased's estate, to ensure that the plaintiffs only recover the costs that were reasonably incurred.
20. Given the complexity of the issue, it may be necessary for Laurence, if he wishes to pursue the matter in Court, rather than as part of a costs assessment, to make a formal application under s 98(4)(c) of the Civil Procedure Act 2005 (NSW) that the plaintiffs' costs be determined on the basis of a specified gross sum. That course may not be attractive to Laurence, as it would require him to undertake considerable analysis of the material relevant to these proceedings. However, that exercise may be necessary, if Laurence wishes to obtain an order from the Court limiting the plaintiffs' recovery of costs, because it should not be left to the Court to do the work without the assistance and involvement of the parties.
21. I will not now make a ruling on Laurence's application that the plaintiffs' costs be reduced by 40%. That matter will be left open. Laurence will have leave to revive it. He may well think it preferable to defer the issue until after his appeal has been determined, and, if necessary, until after the plaintiffs' family provision claims have also been determined.

Application for interim payment

1. As I have recorded above, the plaintiffs initially asked for an order that they be paid out of the estate of the deceased an amount of $450,000 on account of the costs payable to them under the order for costs in their favour that will be made following the publication of these reasons for judgment.
2. Following a suggestion that I made at the hearing on 27 March 2019 that a preferable course may be for the Court to make an order for the interim distribution of Jeannette's entitlement under the 2008 will, as Jeannette will be entitled to receive at least the amount requested under both that will and the 1997 will, the plaintiffs submitted to the Court draft short minutes of order that included an order that they be paid $450,000 "…by way of an interim distribution from the residue of the estate of the deceased pursuant to s 84 of the Probate and Administration Act 1898 (NSW) [(Probate Act)] and/or s 62 of the Succession Act 2006 (NSW) [(Succession Act)] and/or Part 54 rule 3(4)(b) of the Uniform Civil Procedure Rules 2005 (NSW)."
3. Although it initially appeared to me that the preferable course might be for an interim distribution of the estate to be made, rather than for a partial payment of the plaintiffs' costs to be made out of the estate, I do not now propose to consider that possibility. I had anticipated that the plaintiffs would provide submissions to support their entitlement to the alternative order sought, but all they have done is to provide draft short minutes of order containing the alternative order that I have referred to above. There may be impediments to the Court making the orders sought, including in respect of the interim distribution being made to all of the plaintiffs, when only Jeannette is assured of receiving a distribution greater than $450,000, whichever of the two wills is ultimately admitted to probate.
4. Furthermore, when one looks at the powers referred to in the draft order, it is not immediately apparent that they authorise the order sought. Under s 84 of the Probate Act, the Court may order an executor who has neglected or refused to execute a conveyance of land, or pay or hand over a legacy or residuary bequest, to the person entitled thereto, to do so. It is not clear that Laurence has relevantly neglected or refused to do what he is required to do, and, in any event, Jeannette and Laurence will both be executors if a grant of probate of the 2008 will is made to them. At present, the issue of who is or are the executors of the deceased's estate is not settled by any final grant.
5. Section 62 of the Succession Act empowers the Court to make an interim family provision order before it has fully considered the application for a final order, but, in the present case, the Court has dismissed the plaintiffs' applications for such orders.
6. Finally, rule 54.3(4)(b) of the UCPR permits proceedings to be brought for directing any act to be done in the administration of an estate that the Court could order to be done if the estate were being administered under the direction of the Court. It is not clear why this is a suitable power under which to make the order sought by the plaintiffs.
7. Consequently, in my view, it is not appropriate for the Court to explore itself the question of whether it has power to make the alternative order, and whether that order should be made, in the absence of submissions on that subject from the parties.
8. The question therefore remains whether the Court can and should make an order in favour of the plaintiffs that $450,000 be paid to them out of the estate on account of the costs order that will be made in their favour.
9. The plaintiffs rely upon s 86 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act), which has the effect that the power of the Court in s 98(3) of the Civil Procedure Act to make an order as to costs at any stage of the proceedings, enables the Court to make the order on such terms and conditions as it thinks fit. As a result of these reasons for judgment, the Court will make an order that the plaintiffs' reasonable costs of the proceedings be paid on the ordinary basis out of the estate of the deceased. That order will subsist unless and until it is set aside on appeal. Section 86 of the Civil Procedure Act empowers the Court to make such order for interim payments as the Court thinks just at any stage of the proceedings. The real question is whether the Court should exercise these powers to order that an amount of costs in the sum of $450,000 be paid now, before the quantum of the plaintiffs' entitlement to costs has been assessed or agreed, in circumstances where the costs order may be set aside following the appeal, and where it has not yet been decided whether the plaintiffs are entitled to an amount of at least $450,000 in respect of their family provision claims.
10. The plaintiffs relied upon the decision of Palmer J in Galstian v Galstaun (bht M. Chater) [2010] NSWSC 1214 (Galstian). In that case, his Honour dismissed an application by a plaintiff in a probate suit, who propounded an informal will under s 8 of the Succession Act, requesting that an order be made for an interim payment of his costs out of the estate, because otherwise he had insufficient funds to prosecute his claim. Palmer J did not positively decide, as a matter of principle, that such an order could be made, but he noted, at [17]-[21], that in matrimonial cases, including de facto relationship cases when they were decided in this Court, the courts had made orders for interim payments of costs to an impecunious party to the relationship to enable that party to continue to fund the proceedings. Such orders were made on the basis that the party was most likely ultimately to receive a share of the mutual assets of the relationship that was greater than the amount of the interim costs that were paid, so that the party's obligation to repay the amount of the interim costs could be met out of that party's share of the mutual assets.
11. The plaintiff failed in his application, because if he failed in his probate claim, he would not be entitled to any share in the estate of the deceased, so there would be no fund that would necessarily be sufficient to meet the plaintiff's obligation to repay to the estate the amount of the costs paid to the plaintiff on an interim basis, which he would have no entitlement to retain.
12. Palmer J also considered, but rejected, the possibility that the Court could properly have ordered that the amount needed for the plaintiff's costs be paid out of the estate on the basis that the plaintiff gave security over his property for repayment of the amount if he failed in the proceedings. It is not necessary to consider this aspect of the judgment.
13. His Honour appears to have been open to the possibility that the Court had power to make an interim order for costs out of the estate of the deceased in a probate case, provided that it was sufficiently clear that in any event the claimant would receive out of the estate an amount at least equal to the amount of the interim costs, so that there would be a fund to repay those costs to the estate, if the claimant failed. However, it would go too far to say that Palmer J expressed a positive view that the Court has the power to make such an order, or that it should do so in an appropriate case.
14. The circumstances of the present case are quite different to those considered by Palmer J in Galstian.
15. First, it is clear that Jeannette, but not the other plaintiffs, will be entitled to a share of the deceased's estate that is substantially greater in value than $450,000, whichever of the contending wills is ultimately admitted to probate on a final basis.
16. Secondly, Jeannette has proffered to the Court an undertaking that, if Laurence's appeal to the Court of Appeal is successful, and the plaintiffs are ordered to pay Laurence's costs of the proceedings to date, Jeannette will repay to the estate the amount received under the interim costs order, and will otherwise permit Laurence to secure such repayment by way of mortgage, charge or caveat over Jeannette's property at an address in North Bondi. That charge will provide ample security to the estate, and any order for interim costs to be paid to the plaintiffs should be made on the basis of that undertaking.
17. Thirdly, Jeannette is entitled under both contending wills to a valuable residential property in Rose Bay, which could also provide adequate security to the estate if the property was not required to be transferred to Jeannette unless and until any obligation on the plaintiffs' part to repay any interim amount of costs had been satisfied.
18. Fourthly, in this case the plaintiffs will have the benefit of a final costs order in their favour to be met out of the estate, which will remain effective unless it is set aside by the Court of Appeal. It is probable that the amount of the costs to which the plaintiffs are entitled will exceed $450,000, even after a process of assessment and the determination by the Court of any application by Laurence to make a percentage reduction to the plaintiffs' entitlement to costs.
19. Fifthly, the evidence satisfies me that the plaintiffs will find it difficult, if not impossible, to fund the legal costs of the appeal out of the liquid assets available to them, so that it would be necessary for Jeannette to sell property unless the plaintiffs' legal advisors agree to continue to wait for their fees.
20. Sixthly, the evidence is that Laurence has already been paid his costs of the proceedings, totalling about $706,724 (inclusive of GST), out of the estate. It has not been suggested that the making of that payment was unreasonable, as Laurence is the executor under the 1997 will. However, he will only be entitled to his costs out of the estate on the ordinary basis, and it is reasonable to think that he has already received more than that amount.
21. Fair and equal treatment as between the plaintiffs (really Jeannette on behalf of the plaintiffs) and Laurence would justify an order that an appropriate amount be paid to the plaintiffs for their costs out of the estate, particularly to avoid the risk that the plaintiffs will be unable effectively to fund the legal costs of the appeal without Jeannette selling property to which she is entitled.
22. By his affidavit dated 9 April 2019, Laurence's solicitor has given evidence that, as of late March to early April 2019, the estate had cash of $631,663.24.
23. The solicitor's affidavit sworn on 9 April 2019 identifies costs that will be required to be paid out of the estate to meet the estate's need to preserve assets and to meet ongoing revenue and insurance obligations. The expenditure needs include about $50,000 to restore the roof on one of the estate's properties, a payment of land tax in the order of $45,000 within the next 12 months, and payments of rates and insurance premiums of about $9,000 and $11,000. The total of these amounts is about $115,000. If $450,000 of the available cash was paid to the plaintiffs, that would leave about $181,000. Laurence takes the view, which I consider is not unreasonable, that the amount of cash remaining would not leave a prudent buffer to enable him to meet known as well as unforeseen obligations to maintain the estate.
24. The subject matter of the affidavits of the plaintiffs' solicitor and Laurence, of 11 and 16 April 2019 respectively, that the respective parties seek leave for the Court to receive, is whether Laurence has not adequately acknowledged the net amounts of rent that the estate can expect to receive from one of the properties in Rose Bay and another property in Lakemba. I have taken those affidavits into account. It seems likely that the estate will receive a significant amount of additional income from rent, although the evidence is not sufficient in the absence of a contest between the parties for the Court to make a reliable assessment of the net amount of income that the estate will receive after allowing for costs and income tax.
25. Although the plaintiffs have asked for an amount of $450,000, they have not provided evidence to explain the need for that precise amount.
26. I have decided that the Court does have power to make an order, in the circumstances of this case, that an interim amount be paid out of the estate in satisfaction of the costs order that will be made in favour of the plaintiffs. That order may be made, as it treats the costs order as effective until set aside, and it will be made on terms that adequately protect the estate, if it is ultimately determined that the plaintiffs are not entitled to costs out of the estate equal to the amount that will be paid.
27. However, in the absence of an explanation as to why the amount of $450,000 is required, and to guard against the possibility that the plaintiffs may not be able to justify costs in that amount on an assessment, or following any order the Court may make limiting their entitlement to costs, and in order to ensure that the cash resources of the estate are not excessively depleted, I have concluded that the appropriate amount that should be paid out of the estate to the plaintiffs on an interim basis for their costs should be limited to $300,000.

Conclusion

1. I am not confident that the parties will be able to agree short minutes of order to give effect to these reasons for judgment. If they can, appropriate orders should be sent to my Associate. The parties have leave to contact my Associate to relist the proceedings to determine what orders should be made, and to make any necessary further case management orders. If the proceedings are to be relisted, the parties should submit proposed draft short minutes of order to my Associate before the date of the hearing.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 June 2019