Bisdee v Smith (No 2)

[2005] TASSC 76

[2005] TASSC 76

CITATION:              Bisdee v Smith (No 2) [2005] TASSC 76

PARTIES:  BISDEE, Susan Jillian
  v
  SMITH, Shane Allan

SMITH, Andrew Charles
SMITH, Matthew

TITLE OF COURT:  SUPREME COURT OF TASMANIA
JURISDICTION:  ORIGINAL
FILE NO/S:  225/2003

M12/2004

DELIVERED ON:  11 August 2005
DELIVERED AT:  Hobart
HEARING DATE:  25 July 2005
JUDGMENT OF:  Blow J

CATCHWORDS:

Succession – Wills, probate and administration – Probate and letters of administration – Costs – Where litigation not caused by testator – Reasonableness – Unsuccessful opposition – Probate action and application for order that section invalidating gift to spouse of witness does not apply – Continuation of opposition becoming unreasonable.

Mitchell v Gard (1863) 3 Sw & Tr 275; 164 ER 1280; Spiers v English [1907] P 122, referred to.
Aust Dig Succession [138]

REPRESENTATION:

Counsel:
             Plaintiff/Applicant:  T J Williams
             Defendants/Respondents:              M E O'Farrell
Solicitors:
             Plaintiff/Applicant:  Gunson Williams
             Defendants/Respondents:              Simmons Wolfhagen

Judgment  Number:  [2005] TASSC 76
Number of paragraphs:  15

Serial No 76/2005
File Nos 225/2003

M12/2004

SUSAN JILLIAN BISDEE v SHANE ALLAN SMITH,
ANDREW CHARLES SMITH MATTHEW SMITH (NO 2)

REASONS FOR JUDGMENT  BLOW J

11 August 2005

1. Two applications for costs have been made to me in relation to a probate action and an application under the Wills Act 1992, s46(1).  Both proceedings related to the will of the mother of the plaintiff/applicant.  The testator left the whole of her estate to the plaintiff, but one of the attesting witnesses was the plaintiff's husband.  On 17 December last I made an order that probate of the will be granted to the plaintiff, and a declaration that the Wills Act, s44, which would have invalidated the gift to the plaintiff, did not apply in relation to her in respect of the will: Bisdee v Smith [2004] TASSC 152. The unsuccessful defendants/respondents have applied for orders that their costs of both proceedings be paid out of the estate. The successful plaintiff/applicant opposes that course, and has applied for orders that the defendants/respondents pay her costs of both proceedings.

1. This Court's power to award costs is conferred by the Supreme Court Civil Procedure Act 1932, s12, which includes the following:

"(1)     Subject to the provisions of this Act and the Rules of Court, and to the express provisions of any special statute which is not expressly or impliedly repealed by this Act, the Court and every judge thereof, whether sitting in court or in chambers, shall have jurisdiction to award costs in all causes and matters whatsoever (including proceedings for, or on, or in connection with an order of review under the Judicial Review Act 2000 or a writ of habeas corpus and causes and matters dismissed for want of jurisdiction) instituted in the Court or brought before the Court or a judge thereof by or against any party or person, including the Attorney-General and any body politic.

(2)     Subject as provided in subsection (1) the costs of all proceedings whatsoever in the Court, including the administration of estates and trusts, shall be in the discretion of the Court or judge, and the Court or judge shall have full power and authority to determine by whom or out of what estate, fund, or property, and to what extent such costs are to be paid."

1. Although s12 does not impose any fetter on the exercise of the Court's discretion as to costs, there are well established principles that should ordinarily be adhered to in the determination of costs applications in this Court's probate jurisdiction: Hoare v Johnson (1998) 8 Tas R 76. These principles were explained by Sir James Wilde in Mitchell v Gard (1863) 3 Sw & Tr 275; 164 ER 1280 as follows, at 277 - 278; 1281:

"The basis of all rule on this subject should rest upon the degree of blame to be imputed to the respective parties ; and the question, who shall bear the costs ? will be answered with this other question, whose fault was it that they were incurred ? If the fault lies at the door of the testator, his testamentary papers being surrounded with confusion or uncertainty in law or fact, it is just that the costs of ascertaining his will should be defrayed by his estate.

If the party supporting the will has such an interest under it that the costs, if thrown upon the estate, will fall upon him, and he by his improper conduct has induced a litigation which the Court considers reasonable, it is not unjust that the estate should bear the costs of the litigation which his conduct has caused.

But if the testator be not in fault, and those benefited by the will not to blame, to whom is the litigation to be attributed ? In the litigation entertained by other Courts, this question is in general easily solved by the presumption that the losing party must needs be in the wrong, and, if in the wrong, the cause of a needless contest. But other considerations arise in this Court. It is the function of this Court to investigate the execution of a will and the capacity of the maker, and having done so, to ascertain and declare what is the will of the testator. If fair circumstances of doubt or suspicion arise to obscure this question, a judicial inquiry is in a manner forced upon it. Those who are instrumental in bringing about and subserving this inquiry are not wholly in the wrong, even if they do not succeed. And so it comes that this Court has been in the practice on such occasions of deviating from the common rule in other Courts, and of relieving the losing party from costs, if chargeable with no other blame than that of having failed in a suit which was justified by good and sufficient grounds for doubt."

1. In Spiers v English [1907] P 122 at 123, Sir Gorell Barnes P said the following:

"In deciding questions of costs one has to go back to the principles which govern cases of this kind. One of those principles is that if a person who makes a will or persons who are interested in the residue have been really the cause of the litigation a case is made out for costs to come out of the estate. Another principle is that, if the circumstances lead reasonably to an investigation of the matter, then the costs may be left to be borne by those who have incurred them. If it were not for the application of those principles, which, if not exhaustive, are the two great principles upon which the Court acts, costs would now, according to the rule, follow the event as a matter of course. Those principles allow good cause to be shewn why costs should not follow the event.  Therefore, in each case where an application is made, the Court has to consider whether the facts warrant either of those principles being brought into operation."

1. It is worth noting that the Supreme Court Rules 2000, r738, protects a party opposing a will against an order for costs in certain circumstances. Under r738(1), a defendant in a probate action may give notice to the plaintiff that he or she merely requires the will to be proved in solemn form of law, and intends only to cross-examine the witnesses produced in support of the will. A defendant who gives notice under r738(1) may not adduce evidence in opposition to the will, and, by virtue of r783(3)(b), is not liable to pay the costs of the other side "unless the Court is of opinion that there was no reasonable ground for opposing the will." In this case, the defendants gave notice under r738(1), but changed their minds, and adduced evidence in opposition to the will.

1. The cases that I have referred to were decided long before the enactment of any legislation that provided for the validation of gifts under inappropriately witnessed wills.  However the sorts of circumstances that lead to applications under s46, and to such applications being opposed, are the same sorts of circumstances that lead to probate actions being instituted and opposed.  I therefore think it appropriate that the Court's discretionary powers as to costs should be exercised in s46 cases in accordance with the principles that are applied in probate actions.  Mr O'Farrell submitted on behalf of the defendants that a s46 application, like an application for an extension of time, involves seeking an indulgence from the Court, and that the costs of such an application should therefore ordinarily be borne by the applicant.  I disagree.  There may be some cases in which a s46 application would have been unnecessary if the applicant had been better informed or more alert at some past time, but there will be many where the need for the application is in no way attributable to the conduct or inertia of the applicant.  I think it is therefore more appropriate to treat a s46 application, for costs purposes, in the same way as any other contentious proceeding in the probate jurisdiction.

1. The defendants contend that their defence of the probate action and their opposition to the s46 application were reasonable in the circumstances, and made necessary by the conduct of the plaintiff and/or the testator, and that their costs should therefore be paid out of the estate.  They contend that there was sufficient uncertainty surrounding the execution of the will by the testator for the course that they took to be regarded as reasonable.  The plaintiff contends that this is a case where costs should follow the event.

1. I do not think it can be said that this litigation was caused by any fault on the part of the testator or the plaintiff.  The substantial cause of the litigation was that the solicitor who drew the will, having visited the testator at home for the purpose, overlooked the fact that the plaintiff's husband was an inappropriate person to witness the will, and arranged for him to do so, rather than going out and recruiting a different witness.  It is therefore necessary to consider the appropriateness or otherwise of the defendants' opposition to the proceedings. 

1. In the early stages of the litigation, I think the defendants had good reason to contend that the will had been made in suspicious circumstances.  The defendants are the children of the plaintiff's deceased brother.  He died long ago.  The defendants and the plaintiff are apparently not close.  A few hours after the testator made her will, the plaintiff and her husband were driving her from Hobart to their home in the country when the testator had a stroke, and had to be admitted to hospital.  The defendants' mother visited her there three days later.  The testator was visibly upset, told her that the plaintiff and her husband had taken everything, and told her that a man was there as well.  Following that conversation, the first defendant went to see the testator in hospital.  She was upset.  She told him that "They told me I had to sign something"; that a strange man had visited her; that "they" had taken everything; that it was her home unit, not "theirs"; and that he had to stop "them", but not to make the plaintiff's husband angry again.  The testator said what she did only because her mind had been affected by the stroke.  She died about seven months later.  It seems that the defendants and their mother did not ever ask the plaintiff or her husband about the statements made by the testator during the two hospital visits.  Following her death, the first defendant asked the solicitor who prepared and witnessed the will to provide him with a copy of it, but the solicitor told him that that was up to "the trustee", and he did not receive a copy.  He lodged a caveat.  The plaintiff commenced the probate action, but her solicitors were very slow in serving her affidavit of testamentary scripts.  It was not until it was served that the defendants learned that the will, having been executed on the day of the testator's stroke, was witnessed by the plaintiff's husband.  To make matters more suspicious, the solicitor who had written out the will, and who had joined the plaintiff's husband in witnessing it, was not the testator's usual solicitor.  Not surprisingly, the defendants defended the probate action.

1. The plaintiff contends that any suspicion on the part of the defendants should have been dispelled as a result of the provision of information to them concerning the medical condition of the testator and the circumstances surrounding the execution of her will.  In December 2002 the plaintiff's then solicitors sent the defendants' solicitors copies of medical reports signed by the testator's general practitioner and a specialist geriatrician.  The general practitioner said that the testator "was likely to have been capable of making an informed decision regarding her will" as at the date it was signed.  The geriatrician said that she "would have been of testamentary capacity" on that day.  In early February 2004, an order for trial on affidavit having been made, the plaintiff's solicitors filed and served comprehensive affidavits sworn by the plaintiff, her husband, and the solicitor who prepared the will, each describing how the will came to be made, and how it came to be witnessed by the plaintiff's husband and the solicitor.  In June 2004 the plaintiff's solicitors filed and served two affidavits sworn by friends of the testator containing evidence of her mental capacity at the relevant time.

1. The probate action and the s46 application were heard together.  The general practitioner's letter was tendered by consent at the hearing.  The plaintiff, her husband, and the solicitor were all cross-examined, but no allegation of fraud, duress or undue influence was put to any of them.  The only real issue in the probate action was whether the testator knew and approved of the contents of her will.  The plaintiff was put to proof in relation to that issue.  She and her witnesses were cross-examined in relation to that issue.  Because of the requirements of s46, she also bore the onus of proving that the gift to her was not the result of fraud, duress or the exercise of undue influence.  She was put to proof as to those matters, and succeeded.

1. In my view it was reasonable for the defendants to lodge the caveat in 2002, so as to make it necessary for the plaintiff to commence a probate action.  In my view it was reasonable for them to file and serve a defence in that action, although the defence contained some baseless allegations of impropriety.  I think it was reasonable for them not to make any concessions before the service of the affidavits of the plaintiff, her husband, and the solicitor.  Until that time I think that the circumstances led reasonably to an investigation of the matter.  But once the defendants and their solicitors had had an opportunity to digest those affidavits and the medical information, and to consider their position, I think that the defendants were wrong to continue to defend the proceedings.  A hearing of the s46 application would have been necessary in any event, but it would have been a much briefer and cheaper hearing without the defendants' opposition.

1. There was a directions hearing before the Master on 4 May 2004 at which orders were made for the s46 application to proceed to trial as a defended matter.  I think a different view should be taken as to the costs of the proceedings as from that date.  In relation to the work done prior to that date, I think that the costs should "be left to be borne by those who have incurred them" in accordance with Spiers v English (supra).  But in relation to the costs incurred on and after that day, I think it is just that the defendants should pay a substantial proportion of the plaintiff's costs.  As from that day, it cannot be said that the defendants, in the words of Sir James Wilde in Mitchell v Gard (supra), were "chargeable with no other blame than that of having failed in a suit which was justified by good and sufficient grounds for doubt".  I think the defendants should pay 75 per cent of the plaintiff's costs of both proceedings on and after that day.

1. In the probate action, I order that the defendants pay 75 per cent of the costs incurred by the plaintiff on and after 4 May 2004.

1. In application M12/2004, I order that the respondents pay 75 per cent of the costs incurred by the applicant on and after 4 May 2004.