Arthur Rowland Veall &Alexis Jane Roche Veall v Kim Louise Veall
[2015] VSCA 122
•29 May 2015
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2014 0055
| ARTHUR ROWLAND VEALL & ALEXIS JANE ROCHE VEALL | Appellants |
| v | |
| KIM LOUISE VEALL | Respondent |
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| JUDGES: | SANTAMARIA, BEACH and KYROU JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | Written submissions |
| DATE OF JUDGMENT: | 29 May 2015 |
| MEDIUM NEUTRAL CITATION: | [2015] VSCA 122 |
| JUDGMENT APPEALED FROM: | Veall & Anor v Veall [2014] VSC 38 (Ginnane J) |
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COSTS – Unsuccessful application for probate of will – Appeal from trial division dismissed – Appellants’ costs of the trial division proceeding paid out of the estate – Costs of the trial not disturbed – Whether appellants entitled to costs of appeal to be paid from the estate – Effect of costs order on beneficiary of estate not party to the proceeding.
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| APPEARANCES: | Counsel | Solicitors |
| No appearances. The Court considered the written submissions filed by the parties. | ||
SANTAMARIA JA:
BEACH JA:
On 19 February 2014, a judge in the trial division delivered a judgment in which he dismissed an application by the appellants that the will of Arthur Keith Veall dated 10 December 2011 be admitted to probate (‘the December will’).[1] On 30 April 2014, he delivered his reasons with respect to the costs of the proceedings and made final orders.[2]
[1]Veall & Anor v Veall [2014] VSC 38 (‘Principal judgment’).
[2]Veall & Anor v Veall (No. 2) [2014] VSC 99 (‘Costs judgment’).
At trial, the respondent had contended that the testator lacked testamentary capacity and that he did not know and approve the contents of the December will. In the event, the judge accepted that the testator had testamentary capacity, but held that he did not know and approve the contents of the will.
When he dismissed the proceeding, the trial judge made the following orders:
1.The plaintiffs’ application for probate of the will of Arthur Keith Veall deceased dated 10 December 2011 is dismissed.
2.The plaintiffs pay the defendant’s costs, on a standard basis, of the hearing and determination on 24, 25, 26 and 29 July 2013 of the claim by the plaintiffs that particular documents were privileged.
3.Subject to order 4, the plaintiffs’ costs of the proceeding be paid out of the estate of Arthur Keith Veall on an indemnity basis provided that the ascertainment of such costs and the provision for their payment be deferred until a representative of the estate of Arthur Keith Veall deceased is appointed.
4. Order 3 shall not apply to:
(a)The costs that the plaintiffs have been ordered to pay by this order or any other order in this proceeding, whether to the defendant or any other person;
(b)The plaintiffs’ own costs of hearings in respect of which the plaintiffs have been ordered to pay another party’s or person’s costs including the plaintiffs’ costs of and incidental to the adjournment on 22 July 2013 and the costs of 24, 25, 26 and 29 July 2013 of the claim by the plaintiffs that particular documents were privileged.
5.The plaintiffs’ costs to which order 4 applies are to be borne by the plaintiffs.
6.Subject to order 7, the defendant’s costs of the proceeding be taxed in default of agreement on a solicitor and client basis up to 31 March 2013 and on a standard basis thereafter and be paid out of the estate of Arthur Keith Veall provided that the ascertainment of such costs and the provision for their payment be deferred until a representative of the estate of Arthur Keith Veall is appointed.
7.Any costs which the plaintiffs have been ordered to pay to the defendant, pursuant to this order or any other order in this proceeding and which the defendant has recovered from the plaintiffs are excluded from order 6.
8.All previous orders for costs made in this proceeding stand and are unaffected by this order.
9.Liberty for both parties to apply for any directions or orders necessary to implement or give effect to orders 3 and 6.
The appellants appealed the ruling on knowledge and approval and the respondent filed a notice of contention in which she said that the judge had erred in finding that the testator had testamentary capacity.
By reasons delivered on 16 April 2015,[3] this Court upheld the notice of contention and held that the judge had erred in his finding of testamentary capacity and upheld his ruling on knowledge and approval. As a result, this Court dismissed an appeal from the judge’s decision. When it published its reasons, the Court invited the parties to make submissions with respect to the costs of the proceeding after they had had an opportunity to read the reasons.
[3]Veall v Veall [2015] VSCA 60.
In the event, the following submissions were filed:
(a) Appellants’ submissions dated 23 April 2015;
(b) Respondent’s submissions dated 23 April 2015;
(c) Appellants’ reply submissions dated 30 April 2015;
(d) Respondent’s reply submissions dated May 2015.
On 23 April 2015, Ms Denise Lodder, a beneficiary of the estate of the testator, sent a letter dated 22 April 2015, to the Court contending that no order for costs should be made that would have the effect that the costs of the proceeding, including the costs of the appeal, should be borne by the estate. The Court has not taken into account the contents of that letter. The Court provided the letter to the parties and asked them whether they had any objection to the Court’s receiving submissions from Ms Lodder. Neither party raised any objection. On 8 May 2015, the Court contacted Ms Lodder and invited her to make a submission on the question how the costs of any part of the proceeding should be borne. In doing so, the Court provided her with the written submissions described in the previous paragraph. In the event, no submissions were received from Ms Lodder.
The costs judgment was informed by the success of the appellants on the issue of testamentary capacity and the success of the respondent on the issue of knowledge and approval. Although the respondent did not seek leave to appeal the costs judgment, her success on the notice of contention effectively enlivens the question of the costs of the trial.
The contentions of the parties
The appellants contended that the orders made in the costs judgment ought to be maintained and that the costs of the appeal be dealt with accordingly as follows:
(a)the appellants (as respondents to the Notice of Contention) be entitled to a certificate of indemnity in respect of their costs of the appeal;
(b)the appellants’ costs of the appeal be otherwise paid from the estate on an indemnity basis;
(c)the respondent’s costs of the appeal be paid from the estate on a standard basis.
The appellants referred to the two grounds of objection: (1) that the testator lacked testamentary capacity and (2) that the testator did not know and approve the contents of his will. So far as the costs of the trial were concerned, the appellants said they were entitled to seek probate of the will and had acted reasonably in doing so. The trial judge had found that the testator had a motive to make a new will and that the December will had been prepared by solicitors. It had been executed when the appellants were not present. The trial judge had also found that the testator’s tendency to sign whatever documents were put in front of him had contributed to the litigation and that he was, in that sense, the cause of the litigation. There was no allegation of undue influence. So far as the appeal was concerned, the appellants said they could not be criticised in relying upon the findings of the trial judge with respect to testamentary capacity in opposing the notice of contention. They said that this Court’s dismissal of their appeal on the objection that the testator did not know and approve the contents of his will was a finding that was closely connected with the first ground of objection about testamentary capacity. At trial it was the first ground of objection that was the principal issue between the parties and neither party developed any detailed submissions in relation to the second ground.
For her part, the respondent said that the reasons of this Court supported a conclusion that the appellants’ conduct did disentitle them to costs of the estate and that Rowland’s role (the first appellant) was critical in causing his father to make the December will to increase his share in the estate notwithstanding his reasons to be concerned about his father’s capacity. To that end, she said that the following orders should be made with respect to costs:
(1) The appeal is dismissed.
(2)Paragraphs 3 to 7 of the orders of the Learned Trial Judge made 30 April 2014 be set aside.
(3)That the Appellants personally pay the Respondent’s costs of and incidental to the proceeding, including any reserved costs, to be taxed on a solicitor and client basis up to 31 March 2013 and on a standard basis thereafter.
(4)That the Appellants personally pay the Respondent’s costs of and incidental to the appeal on the standard basis.
(5)The Respondent may recoup the costs to which she is entitled from the First Appellant’s entitlements in the deceased estate to the extent that those entitlements are sufficient to cover her costs.
(6) The Appellants pay their own costs of the proceeding and the appeal.
The respondent pointed to various findings made by this Court to support her contention that the appellants were aware of factors that cast doubt upon the testator’s capacity. She said:
They did not encourage or take any steps to cause his capacity to be the subject of professional assessment at the time of the will being made. To the contrary, for the purpose of advancing what they perceived to be their interest in encouraging the Family Court proceedings Rowland procured an opinion from Keith’s general practitioner that Keith was both physically and mentally declining. They participated in encouraging and facilitating making the new will in that knowledge for the purpose of obtaining a greater share of Keith’s estate. They formed a view that they had the prospect of establishing Keith’s capacity and securing the increased share of the residuary estate and propounded the will in those circumstances. There is no reason why costs should not follow the event.
She referred to Twist v Tye.[4]
[4][1902] P 92, 97–98.
In reply, the appellants first addressed the question of the costs of the trial. They pointed to the evidence given at trial by independent witnesses who considered that the testator was competent when he executed the December will. Notwithstanding that the finding of the trial judge was reversed on appeal, there was, they say, a substantial body of evidence that supported the view that the testator did have testamentary capacity. They distinguished Twist v Tye where the ‘mistaken view taken by the plaintiffs’ in that case was confirmed by jury verdict after only ‘a very few minutes deliberation’. They say it would be most unfair for them to have been expected to form a view contrary to the independent evidence about the testator’s capacity given what they knew and in the absence of contradicting evidence led at trial. As for the costs of the appeal, the reasons of the trial judge in the costs judgment should also be applied to the costs of the appeal, subject to certification for indemnity under the Appeal Costs Act 1998.
In her reply, the respondent distinguished executors who reasonably but unsuccessfully seek to uphold a finding that a will is valid from those who challenge a finding that a will was invalid out of self-interest. In the latter case, there was no reason ‘in principle or in authority for costs not to follow the event’. Further, the principle that trustees and executors are generally entitled to their costs of any application to the court as part of their general right of indemnity have no application. As the December will was invalid, the appellants are not and never have been trustees or executors. Further, the position of Ms Lodder needed to be considered. Acceptance of the appellants’ submissions that the total cost of the litigation both at trial and on appeal should be borne by the estate would mean that one third of the costs would, in part, be borne by her.
Analysis
In our opinion, the orders made with respect to the costs of the trial should not be disturbed. The appellants, as plaintiffs, were entitled to seek probate and acted reasonably in doing so. In contending that the appellants should pay the costs of the trial, the respondent has pointed to all the steps taken by Rowland to have his father execute a new will despite his knowledge of his father’s infirmities. It is true that Rowland, when he was taking the steps necessary to have his father execute the December will, was aware of his infirmities. However, he believed that his father’s wish that his estate be divided equally between his three natural children may not be achieved and that, given his father’s advanced age and dependency, it was appropriate for him to take the initiative in remedying that situation. No doubt, that belief was motivated, in part, by self-interest. There was no allegation of undue influence. Rowland had taken legal advice and each of those who gave him advice gave evidence that, in their opinion, the testator was competent. Ultimately, their evidence did not prove to be decisive when the whole of the evidence was taken into account.
However, the appellants should pay the costs of the respondent of the appeal and should not be entitled to an indemnity from the estate for those costs or their own costs of the appeal. In our opinion, they had already had the benefit of a considered ruling from this Court and, if they wished to impeach it (as was their right), they should bear the risk of doing so.
Further, in the principal judgment, other wills of the testator were in evidence. Under each of those wills, Ms Lodder is a beneficiary of the estate of her father, as is the respondent. Presumably, one or other of those wills will be admitted to probate. It is unfair that Ms Lodder (and the respondent, for that matter) should be expected to bear any more of the costs of the appellants’ determination to have the December will admitted to probate.
At the hearing of the appeal, the appellants said that their main contention was that the trial judge had erred in finding that there were suspicious circumstances attending the execution of the will. The finding of the trial judge was based squarely upon the evidence. In the event, that finding has not only been affirmed, it has been strengthened.
It is true that, at trial, the parties treated the evidence as a whole as relating to both grounds of objection. However, the notice of objection always addressed both issues as did the respondent’s opening. We do not accept the contention that the issues of testamentary capacity and knowledge and approval were so closely connected such as to have justified the appeal. ‘Testamentary capacity’ and ‘knowledge and approval’ are distinct bases for the objection to a grant of probate. Certainly, where there is no capacity, the question of knowledge and approval does not need to be addressed; moreover, a finding of lack of capacity would carry with it an implied finding of lack of knowledge and approval. However, it is possible to postulate that, though a testator has testamentary capacity, suspicious circumstances attended the execution of the will sought to be admitted to probate. In such a case, the determination of testamentary capacity becomes irrelevant. The onus is upon those propounding the will affirmatively to establish that the testator knew and approved the contents of the will. Before the trial judge, the appellants failed to discharge that onus. On the hearing of the appeal, they contended that there were no such suspicious circumstances so the question of onus did not really arise. On that matter, they were completely unsuccessful on the appeal. The principal judgment gives the reasons for that conclusion.
Part 2 of the Appeal Costs Act 1998
It is true that the judge’s ruling on testamentary capacity has been overturned. That circumstance underpins the appellants’ claim that they should be granted an indemnity in respect of their costs pursuant to Part 2 of the Appeal Costs Act 1998. Part 2 of that Act confers power upon a court to grant an indemnity certificate in respect of costs if an appeal against a decision from the trial division to this Court succeeds. In the present case, the appeal has failed. The appellants do not identify any basis upon which they might be entitled to such a certificate. Were this Court to have power to grant such a certificate, we would not do so. The ruling by the trial judge was that the will not be admitted to probate. In the event, his order has been upheld. This case is not relevantly analogous to those cases in which a respondent should be indemnified by reason of an appeal being successful.
Orders
The following orders should be made:
(1)The order made by the Court of Appeal on 16 April 2015 is vacated.
(2) The appeal is dismissed.
(3)The appellants personally pay the respondent’s costs of and incidental to the appeal on the standard basis.
(4)The respondent may recoup the costs to which she is entitled pursuant to paragraph 3 of this order from the first appellant’s entitlements in the deceased estate of Arthur Keith Veall to the extent that those entitlements are sufficient to cover her costs.
(5)The appellants pay their own costs of the appeal.
KYROU JA:
I have had the benefit of reading the judgment of Santamaria and Beach JJA in draft. I agree with them, for the reasons they give, that the costs orders made by the trial judge should not be disturbed.
As for the costs of the appeal, the rationale for the order that the appellants’ costs of the trial be paid out of the deceased’s estate on an indemnity basis is equally applicable to the appellants’ costs of the appeal.
The issues of the deceased’s testamentary capacity and his knowledge and approval of the contents of the December will were at all relevant times very closely aligned and depended on broadly the same evidence. The overlap between the two issues was so extensive that it was reasonable to expect that they would be resolved in the same manner.
The appellants acted reasonably in seeking probate for the December will and in contending at trial that the deceased had testamentary capacity and knew and approved the contents of the will. When the trial judge found that the deceased did not know and approve the contents of the will even though he possessed testamentary capacity, it was reasonable for the appellants to test the correctness of that finding by appealing to this Court. Although the appeal has failed, the fact that this Court gave identical answers to the issues of testamentary capacity and knowledge and approval of the will vindicates the appellants’ apprehension that the trial judge’s opposite findings on those issues bespoke error.
In the special circumstances of this case, I would order that all parties’ costs of the appeal be paid out of the deceased’s estate on an indemnity basis.
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