Brown v Guss (No 2)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
PROBATE LIST

S PRB 2010 11896

IN THE MATTER of the will of NERIDAH McINNES BROWN, deceased

BETWEEN:

SIMON LEONARD McINNES BROWN	Plaintiff
v
ANTONY DAVID GUSS	Defendant

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	3 October 2014
DATE OF JUDGMENT:	8 April 2015
CASE MAY BE CITED AS:	Brown v Guss (No 2)
MEDIUM NEUTRAL CITATION:	[2015] VSC 57

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PRACTICE AND PROCEDURE — Costs of successful plaintiff in proceeding where defendant alleged lack of testamentary capacity, knowledge and approval and undue influence — Application by plaintiff that his costs be paid by the defendant and the defendant’s solicitor — Whether costs to be paid on a standard basis or an indemnity basis

PRACTICE AND PROCEDURE — Application by plaintiff to set aside consent costs order made during the proceeding — Misconception by plaintiff that defendant ready for trial — Misconception created by defendant — Whether costs order should be set aside

LEGAL PRACTITIONERS — Overarching obligations under ss 17, 18 and 21 of Civil Procedure Act 2010 — Whether breached by solicitor for losing party — Discretionary considerations under s 29 of Civil Procedure Act 2010

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Newton	Higgins Hearn
For the Defendant	Mr R Phillips	Dinley Lawyers
For the Non-party Joseph Guss	Mr D Klempfner	DLA Piper

Introduction

Plaintiff’s application to set aside costs orders made 23 May 2013

Consideration

The plaintiff’s application for costs of the proceeding

The plaintiff’s application for costs against the defendant

The plaintiff’s submissions
The defendant’s submissions

Consideration of costs orders sought against defendant

Should the defendant pay costs on an indemnity basis?

The plaintiff’s submissions for costs of the proceeding against the non-party Joseph Guss

The submissions of the non-party Joseph Guss

Absence of coherent and logical legal basis
Special considerations that apply when a non-party costs order is sought against a party’s legal practitioner
Not supported by the Court’s findings of fact as set out in the reasons for decision
Serious allegations against Joseph Guss of criminal conduct that are not appropriate for summary determination

Applicable principles

Consideration of costs orders sought against the non-party Joseph Guss

The role of Joseph Guss in the proceeding
Allegations of collusion on the part of Joseph Guss in respect of the evidence of the Guss family witnesses
No claim made for costs against Guss family witnesses
No waiver of legal professional privilege by the defendant
Claim made in an attempt to access Joseph Guss’ professional indemnity insurance
Plaintiff’s inability to enforce costs orders against the defendant or that Joseph Guss might benefit from the litigation
Conflict of interest and duty on the part of Joseph Guss in acting as the defendant’s solicitor

Has there been a contravention by Joseph Guss of ss 17, 18 or 21 of the CP Act?

Discretion to impose sanctions for contravening the overarching obligations

HER HONOUR:

Introduction

This proceeding concerned the validity of three wills of Neridah McInnes Brown, deceased. Judgment in this proceeding was delivered on 2 June 2014.[1] These reasons assume a knowledge of the judgment and references and abbreviations used in the judgment.
[1]Brown v Guss [2014] VSC 251 (2 June 2014) (‘Judgment’).

The deceased died leaving three wills that were the subject of the proceeding: the April 2010 will, the January 2010 will and the 2007 will. The last will of the deceased, the April 2010 will, was challenged by the defendant on the grounds that the deceased lacked testamentary capacity, that she did not know and approve of the will and that the will was procured by the undue influence of the plaintiff. He also alleged that the deceased’s 2007 will was procured by the undue influence of the plaintiff. The plaintiff denied these allegations and contended, in the alternative, that the last valid will of the deceased was her 2007 will. The defendant objected to the application for a grant of the 2007 will on the grounds that the last valid will of the deceased was a later will, namely, the January 2010 will. The plaintiff contended that the January 2010 will was not the genuine will of the deceased and was produced as a result of the undue influence of the defendant.

At trial, the applications were heard together, with the validity of the April 2010 will to be determined first. If none of the grounds of objection were made out, the April 2010 will would be the last valid will of the deceased.

The plaintiff was successful in upholding the April 2010 will.

The plaintiff is the son of the deceased and the defendant’s uncle. The defendant is one of the grandchildren of the deceased. Joseph Guss, a non-party, is the son-in-law of the deceased, the solicitor and father of the defendant and the brother-in-law of the plaintiff.

At the end of the trial, the plaintiff sought an order that a costs order made against him on 23 May 2013 be set aside. Affidavits were filed by the parties in respect of this application. I determined that I would reserve my decision on the application until after the determination of issues concerning the validity of the wills of the deceased.

The plaintiff also seeks costs of the proceeding against the defendant and the defendant’s solicitor in the proceeding, Joseph Guss.

For the reasons set out, I have determined that:

(a)the costs order made on 23 May 2013 be set aside and those costs be costs in the proceeding; and
(b)each of the defendant and Joseph Guss pay the plaintiff’s costs of the proceeding on an indemnity basis, to be taxed in default of agreement.

I will turn first with the plaintiff’s application to set aside the 23 May 2013 costs order. I will then consider the plaintiff’s application for the costs of the proceeding sought against both the defendant and Joseph Guss.

Plaintiff’s application to set aside costs orders made 23 May 2013

The plaintiff sought the costs order made against him on 23 May 2013 be set aside because the reason he agreed to it was that he was under the misconception that the defendant was ready for the trial, fixed for 29 May 2013, to proceed.

In support of the application, Ms Helen Hatzis, the plaintiff’s solicitor, deposed in her affidavit sworn 18 October 2013 that the defendant represented to the Court on 23 May 2103 that he was ready to proceed to trial on 29 May, save that two further affidavits were in the process of being finalised and he foreshadowed those affidavits would be served by his solicitor within the following few days.[2]
[2]Being the affidavits of Mr Hugh Northam and Marilla Guss.

Of the two further affidavits, only one, the affidavit of Mr Northam, was served within the following few days, on 24 May 2013.

On 3 June 2013, the trial was fixed for 21 October 2013 on an estimate of 8 to 10 days.

On 29 July 2013, the defendant sought extensive further discovery and despite a response from Ms Hatzis, his solicitor issued a summons seeking further discovery of a substantial number of categories with costs of the application to be costs in the cause. The process of further discovery and inspection was concluded by 14 October 2013.

The defendant subsequently filed and served further affidavits in the proceeding, including:

(a)an affidavit of Marilla Guss sworn 3 August 2013;
(b)two affidavits of Joseph Guss sworn 26 August 2013 with 15 exhibits collectively;
(c)an affidavit of Pauline Anne Torrance sworn 3 September 2013;
(d)an affidavit of Evelyn Fields sworn 9 October 2013 with exhibits;
(e)an affidavit of Joanne Guss sworn 15 October 2013;
(f)an affidavit of Joseph Guss sworn 16 October 2013; and,
(g)an unsworn affidavit of the defendant.

In making application to set aside the costs order, the plaintiff submitted that given the voluminous nature of the affidavit material filed and served by the defendant since that date 23 May 2013, as well as the application for further extensive discovery, it is clear that the defendant was not in a position to proceed to trial on 29 May 2013.

The plaintiff’s application was opposed by the defendant. In his affidavit sworn 6 November 2013, Joseph Guss denied that the position of the defendant was misrepresented at the hearing on 23 May 2013 and he further deposed:

(a)counsel for the defendant stated to the Court on 23 May 2013 that the defendant was ready to proceed, save that two further affidavits were in the process of being finalised, that of Marilla Guss and one other;
(b)his view was that Pauline Torrance may have to be subpoenaed to give her evidence;
(c)the affidavit of Mr Northam was sworn before 23 May and served on the solicitors for the plaintiff that day;
(d)the affidavits of Marilla Guss and Pauline Torrance were sworn on 3 August and 3 September 2013, respectively, and no injustice was suffered by the plaintiff as a result;
(e)he had been seeking further discovery from the plaintiff relatively early in the proceeding which had at all times been refused by him. His view was that, owing to the adjourned hearing date and after consultation with counsel, rather than subpoena the documents or rely on notices to produce, an application for further discovery should be made;
(f)of the two affidavits sworn by him on 26 August 2013, one dealt with the Dalby property and the other with general matters exhibiting title searches and company searches relevant to the trial. He said those documents could have been subpoenaed or obtained by a notice to produce, but they were exhibited to his affidavit because of the adjourned trial date. He acknowledged that some of the searches had been obtained after 23 May 2013;
(g)the solicitors for the plaintiff served affidavits of Carol Brown sworn 30 September 2013, Nicholas Brown sworn 1 October 2013, and the plaintiff sworn 2 October 2013 under cover of a letter dated 2 October 2013, together with a supplementary affidavit of documents by the plaintiff;
(h)the reply affidavits of Joanne Guss sworn 15 October 2013, Joseph Guss sworn 16 October 2013 and the unsworn affidavit of the defendant were served on 16 October 2013;
(i)in view of the late service of the plaintiff’s supplementary affidavit of documents and the time taken for the inspection, the affidavits referred to could not have been completed earlier.

Joseph Guss also contended that the adjournment of the trial gave him the opportunity to locate and consider the evidence that could be given by an expert, in this case, Evelyn Field, whose affidavit was sworn on 9 October 2013.

Consideration

From the matters deposed to by Joseph Guss, it is clear that on 23 May 2013 the defendant was not in a position to proceed with the trial. He served a substantial number of affidavits after this date. In his affidavit, Joseph Guss does not refer to any subpoenas or notices to produce having been filed prior to 23 May 2013. There are no references to this being done prior to the original trial date. No mention was made on 23 May 2013 that the further affidavits now relied upon were to be filed and served, apart from the two abovementioned affidavits. Although Joseph Guss refers to the affidavits filed after 23 May 2013 being reply affidavits, they are affidavits that also deal with matters of proof in support of the case put by the defendant; for example, the affidavits of Joanne Guss and Evelyn Field (although at trial, the latter affidavit was ruled inadmissible).

The defendant also made application for discovery after 23 May 2013 and that process was not concluded until much later in the year. No application was made before 23 May 2013 and, at no stage, did he inform the Court or the solicitors for the plaintiff that he intended making an application for extensive discovery.

Based on these facts, it is clear that the plaintiff’s agreement on 23 May 2013 to pay the defendant’s costs was made under the misconception on his part that the defendant was in a position to proceed with the trial. As a result, the costs order made on 23 May 2013 will be set aside and those costs will be costs in the proceeding.

The plaintiff’s application for costs of the proceeding

By summons filed 15 August 2014, the plaintiff sought:

(a)an order that the defendant and Joseph Guss pay the plaintiff’s costs of and incidental to the proceeding on an indemnity basis;
(b)pursuant to s 29 of the Civil Procedure Act 2010 (‘the CP Act’) an order that the defendant and Joseph Guss pay the plaintiff’s costs of and incidental to the proceeding on an indemnity basis, or on such other basis as the Court deems appropriate; and
(c)such other orders as the Court deems appropriate.

In support of the application, the plaintiff relied on an affidavit sworn by Ms Hatzis in which she deposed as follows:

(a)The plaintiff relies on the findings in the judgment and, in particular, the findings as to the credibility of the evidence of Joseph Guss. The plaintiff also relies on the nature of his involvement in the proceeding, both as a solicitor and as the defendant’s father as well as the fact that the defendant is apparently insolvent.
(b)Although the plaintiff also seeks an order for costs against the defendant on the basis that he has been the unsuccessful litigant, Ms Hatzis believes the defendant is a person who has no assets and that any order against him will remain unsatisfied. Her belief is based on the fact that on 4 March 2014 the Deputy Commissioner of Taxation filed a petition seeking a sequestration order against the defendant. A copy of the extract from the National Personal Insolvency Index notes that a sequestration order was made in respect of the defendant on 4 March 2014 noting that the defendant is an undischarged bankrupt and that ‘the date of the act of bankruptcy is 1 November 2013’. Ms Hatzis produced orders made in the bankruptcy proceeding that record the defendant made an application to review the order on 11 March 2014. The sequestration order was stayed pending the application to review. On the hearing of the application for review, Joseph Guss appeared for the defendant. On 25 July 2014, the application for review was dismissed.
(c)On the National Personal Insolvency Index, the defendant’s address is shown as 6 Cloverdale Road Glen Iris. The title search of that property shows that the owner is the defendant’s wife, Joanne Guss, she having been the registered proprietor of the property since 3 November 1997.
(d)Searches in all states and territories in Australia revealed that the defendant is not registered as the proprietor of any real estate in Australia.
(e)ASIC searches revealed the defendant is not currently a director of any corporations and has no current shareholdings. He is recorded as having been a director of nineteen companies, all of which are now recorded as having been deregistered, as well as three companies recorded as ‘under external administration and/or controller appointed’.
(f)The defendant is also noted in the ASIC searches as having been a disqualified director from 27 September 2005 until 27 September 2010.

Directions in respect of the plaintiff’s costs application were made on 29 August 2014, including the filing of affidavits and submissions by both the defendant and Joseph Guss.

Neither the defendant nor Joseph Guss filed any affidavits before the costs application was heard on 3 October 2014, relying only on written submissions. The trustees in bankruptcy of the defendant were aware of the application and did not appear. At the hearing on costs, the bankrupt defendant was represented by different counsel and solicitors than those representing him at trial.

At the hearing on 3 October 2014, the plaintiff tendered a Certificate of Appointment of Trustee signed by the Official Receiver, certified as correct at its date of issue, being 6 March 2014. The Certificate states that the defendant became bankrupt as of 4 March 2014 and that trustees were appointed on 4 March 2014 for the sequestrated estate of the defendant. By letter dated 12 September 2014 to Ms Hatzis, the trustees confirmed their appointment as the defendant’s trustees in bankruptcy.

In support of its application for costs, the plaintiff also relied on the fact that Joseph Guss was both a witness for the defendant, as well as his solicitor, and that he had sworn two substantive affidavits on behalf of the defendant. In that context, the plaintiff tendered a letter dated 19 September 2013 from his solicitors to Joseph Guss in which the plaintiff’s solicitor informed him that his attendance would be required at the trial for cross examination. The letter also stated:

Clearly you are a material witness for the defendant yet [you] presumably intend to continue to represent the defendant and instruct your counsel at the trial listed for 21 October 2013. You are put on notice that I intend to call for the removal of all witnesses from the courtroom during the testimony of all other witnesses. I further intend to request that the judge admonish all witnesses not to discuss their evidence with other witnesses until the conclusion of the trial.

In response, Joseph Guss said:

In respect of the last paragraph thereof, with respect, it is not a matter ‘that I intend to call for the removal of all witnesses …’. You may of course make a submission to the judge in this respect but it will be the judge’s decision in this regard that applies after also hearing from counsel for the defendant, as will any direction he may make in respect to your foreshadowed submission contained in the last sentence of your letter.

The plaintiff’s application for costs against the defendant
The plaintiff’s submissions

The general rule in probate cases is that costs follow the event, but there are two exceptions. First, when the caveator has been led by the circumstances to an honest belief that there was a ground for impeaching the will and, secondly, when the deceased or those interested in a substantial benefit under the will have been the cause of the litigation.[3] Neither of these exceptions apply here.
[3]Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698, 709; Nock v Austin (1918) 25 CLR 519, 55.

It was submitted that this was not a case where there was some genuine bona fide dispute. Rather, it was a case where it was found, in effect, that there was an attempt by the defendant to claim falsely that the April 2010 will was not valid and the earlier January 2010 will was valid. There is no basis to suggest that the proceeding was a case where there were reasonable grounds to contest the April 2010 will or that somehow the proceeding was brought about by the fault of the deceased.

In those circumstances, the case does not fall within the exceptions to the general rule and, on that basis, the defendant should have costs awarded against him.

The plaintiff submitted that, as the unsuccessful litigant, the defendant should be ordered to pay the plaintiff’s costs of and incidental to the proceeding on an indemnity basis because:

(a)of the manner in which the proceeding was pursued by the defendant;
(b)his evidence was rejected; and
(c)the Court found, on a number of occasions, that his evidence was not credible.

The plaintiff referred the Court to the definition of ‘credible’ as being ‘capable of being believed, worthy of belief or confidence and trustworthy’.[4] It was submitted therefore that ‘not credible’ means ‘not capable of being believed, not worthy of belief or confidence and not trustworthy’ which , in turn, translated to ‘false’. Thus, it was submitted it is clear from the judgment that the evidence given by the defendant, and that of his other family witnesses whose evidence was found to be not credible, was false.

The defendant’s submissions

[4]Angus Stevenson (ed), Oxford English Dictionary (3 ed) (Oxford University Press, 2010).

The defendant submitted that the costs principles that apply where testamentary capacity or knowledge and approval are in issue are first, that orders for costs are discretionary, but, as a general rule, in probate cases, costs follow the event.

However there are exceptions where the costs of both the successful and unsuccessful parties might be paid from the estate or the costs might be left to be borne by those who incurred them. This is usually where:

(a)the litigation is brought about by the conduct or ‘fault’ of the testator. In this circumstance, it may be appropriate to order that all parties costs be paid out of the estate;
(b)it is, broadly speaking, ‘reasonable’ for the unsuccessful party to have brought or to have defended the litigation, for example, because the unsuccessful party had a reasonable and bona fide belief that the testator had or lacked testamentary capacity (as the case may be) or because, in the case of a propounder, the testator gave every appearance of being able to manage his or her affairs. In this situation, it may be appropriate to order each party bear their own costs.[5]

[5]Brown v Sandhurst Trustees Ltd (No 2) [2009] VSC 406 (4 June 2009) [3]–[12] (Mandie J). See also Nicholson v Knaggs (No 3) [2009] VSC 328 (12 August 2009) [43] (Vickery J); Zivojin v Babic (No 2) [2013] VSC 113 (20 February 2013); Steel v Ifrah (No 2) [2013] VSC 167 (30 April 2013); Veall v Veall (No 2) [2014] VSC 99 (30 April 2014).

It was submitted the two exceptions tend to overlap[6] and that the exceptions, like the general rule, provide ‘a starting point for analysis and then the Court is able to exercise its discretion as to costs in order to do justice between the parties.’[7]
[6]Perpetual Trustee Company v Baker [1999] NSWCA 244 (16 July 1999) [13]–[14].
[7]Oreski v Ikac [2007] WASC 195 (30 August 2007) [13](Barker J).

The defendant submitted that, leaving aside the issue of undue influence, it is clear from the judgment that there were two grounds upon which the Court had to have an enquiry into the validity of the April 2010 will; that of the testamentary capacity of the deceased and her knowledge and approval of the will.

On the ground of the testamentary capacity of the deceased, the defendant submitted there were issues raised by the defendant about the deceased’s capacity as follows:

(a) Mr Northam, the solicitor who drafted the January 2010 will, had concerns about the deceased’s testamentary capacity in late January 2010 that he suggested she be examined on this point;[8]
[8]Judgment, [165], [167].

(b) there was sufficient doubt as to the deceased’s testamentary capacity to warrant the Court having to be satisfied that the deceased did have capacity on or about 1 April 2010;[9]

(c)the ACAT assessment of 26 March 2010 did note that the deceased had occasional short term memory problems;[10]
(d)the Court considered that it had to be careful in assessing capacity where the testator was elderly, frail, had mobility problems and had some short term memory problems;[11]
(e)the Court was concerned with Ms McKenna’s conclusion that the deceased could not recall the precise extent of her assets;[12] and
(f)the Court essentially required, given the ‘doubt/concern’ as to capacity that had arisen, that it be satisfied and this required the evidence to be given and tested in Court. This involved hearing the relevant witnesses and, having regard to their evidence, having the requisite degree of comfort that the deceased had the necessary capacity to make her will.

[9]Ibid, [329]–[330].

[10]Ibid, [333].

[11]Ibid, [348], [351].

[12]Ibid, [354].

The defendant contended that these matters meant there was sufficient doubt as to the deceased’s testamentary capacity to warrant the Court having to be satisfied that she did have capacity on or about the date of her last will, which was an issue that was always going to have be to investigated.

On the ground of the knowledge and approval of the deceased, the defendant submitted:

(a)that the Court found that the involvement of the plaintiff and his son in the facts and circumstances leading up to the making and execution of the April 2010 will was sufficient to give rise to a suspicion of foul play;[13] and
(b)given that a suspicion arose, the onus was on the plaintiff to satisfy the conscience of the Court that the deceased did know and approve of the contents of the April 2010 will. The Court’s conscience could only be satisfied by a consideration of the totality of the evidence.

[13]Ibid, [376].

On the ground of undue influence, the defendant submitted that where there has been an unsuccessful plea of undue influence in a probate case, there is often a significant overlap on the facts between the contested grounds. The defendant referred to the following principles said to be applicable in undue influence cases:[14]

(a)a party to a probate case who alleges undue influence and fails on that issue will ordinarily be condemned in costs of that issue and, possibly, of the whole proceeding;[15]
(b)if there were reasonable grounds to contest the will on the basis of lack of testamentary capacity or lack of knowledge and approval, looking to the knowledge and means of knowledge of the opposing party, the losing party may be relieved from the costs of his successful opponent: Mitchell v Gard;[16] and
(c)if the approach in Mitchell v Gard is adopted, determination of the question would turn on the reasonableness of a party’s conduct in raising and maintaining a claim of undue influence, having regard to the standard of proof to be met in making out such a claim.

[14]Relying on Nicholson v Knaggs (No 3) [2009] VSC 328 (27 February 2009) [84]–[86] (Vickery J) referring to the decision of Nicholas J in Reginald Alfred Becker v Public Trustee of New South Wales& Ors [2006] NSWSC 743 (25 July 2006) where his Honour set out the relevant principles.

[15]Re Cutliffe’s Estate [1959] P 6.

[16](1863) 3 Sw & Tr 275; (1863) 164 ER 1280.

It was submitted that the reality of probate litigation is such that it is only after a consideration of the totality of the evidence that the Court can reach its conclusion on the matter. Here, evidence of undue influence and knowledge and approval was overlapping.

For these reasons, notwithstanding the defendant did not succeed on his challenge based on undue influence, he did not act unreasonably in challenging the validity of the April 2010 will on the grounds of testamentary capacity and knowledge and approval.

The defendant submitted that the costs orders should be:

(a)the plaintiff’s costs of and incidental to this proceeding, including any reserved costs, be had and retained out of the deceased’s estate;
(b)the defendant’s costs of and incidental to this proceeding on the issue of whether the deceased had testamentary capacity as at the date of the April 2010 will and knew and approved of the contents of its contents be taxed on the standard basis in default of agreement and paid out of the deceased’s estate; and
(c)otherwise, there be no order as to the defendant’s costs of and incidental to this proceeding.

Alternatively, the costs ought to be apportioned pursuant to r 63.04 of the Supreme Court (General Civil Procedure) Rules 2005 having regard to the issues with the appropriate costs order being:

(a)the defendant pay one-third of the plaintiff’s costs of and incidental to this proceeding to be taxed on the standard basis in default of agreement;
(b)the plaintiff’s costs of and incidental to this proceeding, including any reserved costs, not recovered pursuant to sub-paragraph (a), be had and retained out of the deceased’s estate; and
(c)there be no order otherwise as to the defendant’s costs of and incidental to this proceeding.

As to the basis on which any costs order made against the defendant is made, the defendant submitted that the basis should be the standard basis, with no grounds to order indemnity costs.[17] This was because there were issues that required investigation by the Court and there was no express finding that the defendant gave false evidence. In respect of each matter within the judgment that had to be determined, findings as to facts and which witnesses were credible, or not, were made. The defendant submitted that there has been no finding that any evidence by the defendant or any of his witnesses was deliberately false or that the defendant or any of his witnesses colluded with each other to give false evidence.
[17]Counsel for the defendant referred to LexisNexis Butterworths, Civil Procedure Victoria, Volume 1 (at Service 285) I 63.02.200; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 (14 June 2001) (‘Ugly Tribe’).

On the basis of the preceding submissions, the defendant submitted that what the Court did was to assess the evidence with the result that the evidence of the plaintiff and his witnesses was preferred over that of the defendant and his witnesses. This was, therefore, not a basis for the making of a costs order on an indemnity basis.

Consideration of costs orders sought against defendant

Although in his particulars the defendant alleged that the 2007 will was procured by the undue influence of the plaintiff, no evidence was produced in the many affidavits filed by the defendant on this point. At trial, the defendant did not challenge the 2007 will on the ground of undue influence. I was satisfied that the 2007 will was made without any undue influence on the part of the plaintiff. With both the April 2010 will and the January 2010 will under challenge, the 2007 will was, without doubt, the last valid will of the deceased. The defendant’s remaining objection to a grant of probate of the 2007 will was on the basis there was a later will, being the January 2010 will.

Probate litigation is interest litigation. The procedure for lodging a caveat is available only to persons having an interest in the matter, either by reason of being interested under the will being propounded or interested in the estate if the will is found to be invalid.[18] It relies on parties who assert their interest to bring matters before the Court, and equally, where there are no interested parties, it allows the process of granting representation and administering a deceased estate to happen expediently and efficiently.
[18]Re Finn [1942] VLR 125; Re Seymour [1934] VLR 136; Poulos v Pellicer [2004] NSWSC 504 (11 June 2004) (Windeyer J).

The defendant’s asserted interest in the proceeding to challenge both the 2007 will and the April 2010 will arose as a result of the January 2010 will being propounded by him with his claim that the January 2010 will was the last valid will of the deceased. The January 2010 will distributed the estate of the deceased in a substantially different and a more favourable manner to the defendant and his sister compared to the April 2010 will and the 2007 will. Thus, the strength of the challenges made by the defendant and his standing to make the challenges rested solely with his claim that the January 2010 will was the last valid will of the deceased. On that issue, the defendant failed. I determined that the January 2010 will was the product of the defendant’s undue influence. The consequence of this determination means there were no grounds for the defendant to challenge the 2007 will or the April 2010 will. The defendant cannot stand before this Court and argue that an investigation was necessary when the only reason an investigation was instigated was because he chose to assert his rights under the January 2010 will, a document procured by his undue influence of the deceased and a document that she did not wish to be her will.

Had an unrelated third party, with no knowledge of the defendant’s undue influence, been tasked with administering the deceased’s estate and been in possession of both the January 2010 will and the April 2010 will, then it may possibly have been said that an investigation was necessary and quite proper. But I fail to see how the defendant’s decision to press his investigation, in full knowledge of his own conduct, can be relied upon as a ground for casting the costs of the investigation upon the estate of the deceased.

Although the probate costs rule has a long lineage,[19] and is rooted in an inquisitorial exercise where the Court has to be satisfied of the validity of a will before it could be admitted to probate, the defendant’s challenge to the January 2010 will was not about the need for the plaintiff to allay suspicions that arose as a matter of law nor was it a proceeding where it was necessary for it to be brought, particularly where the 2007 will was not challenged by the defendant.
[19]See Hall v Carney & Ors (No 2) [2012] SASFC 105 (17 September 2012) [8]–[12] (Gray J); Shovelar v Lane [2012] 1 WLR 637, [44]-[45] (Ward LJ); Fielder v Burgess [2014] SASC 98 (7 August 2014) [58] (Kourakis CJ).

The nature of the defendant’s challenge to the April 2010 will was adversarial rather than inquisitorial. It was an exercise advanced by the defendant relying on a claim to the deceased’s bounty based on a document that was the product of his own undue influence. He used the proceeding against the plaintiff to ventilate long held grievances and complaints concerning the plaintiff and the plaintiff’s son. He did this for his own financial benefit and that of his sister. There was not sufficient doubt or concern as to the issues relied on by the defendant such that they required investigation by way of evidence to be given and tested in court. In reality, it was unnecessary for there to been a proceeding challenging the April 2010 will at all.

The six points relied upon by the defendant about the deceased’s capacity cannot be viewed as any real analysis of the defendant’s case alleging lack of testamentary capacity or knowledge and approval. A complete analysis of the reasons for judgment lays to rest any suggestion that there was a serious issue about the deceased’s testamentary capacity and her knowledge and approval of the April 2010 will, nor was there such doubt about these issues as to warrant an investigation. For the defendant to choose a few paragraphs from the reasons for decision and then assert that, as a result of those paragraphs, this meant that the evidence was required to be given and tested in court is not a reasoned or reasonable approach to the issues in the proceeding.

First, I do not accept that Mr Northam had concerns about the deceased’s capacity in late January 2010 and that he suggested that the deceased be examined on this point. In late January 2010 Mr Northam had spoken to his partner who made suggestions as to the division of the residue of the deceased’s estate. That partner also suggested that a geriatrician or psychiatrist’s report on the deceased’s testamentary capacity should be obtained.[20] The partner’s concern as to the deceased’s capacity arose because he thought ‘it would be prudent’ to test the deceased for her capacity ‘in case there was a challenge to her amended will’.[21] Mr Northam’s file note did not state any other the reason his partner suggested this. By that stage, the January 2010 will had been executed, although Mr Northam was not informed of this by the defendant. In addition, Mr Northam’s letter to the deceased informing her that he was withdrawing from acting for her, did not mention any issue of capacity but cited as a reason for his withdrawal as her solicitor that there may be ‘a perception of conflict on my part’.[22]
[20]Judgement, [164].
[21]Ibid, [167].
[22]Ibid, [408].

Secondly, the defendant relies on the observations of the solicitor, Ms McKenna, of the deceased in their initial meeting, as well as her decision to seek an independent assessment of the deceased’s capacity as raising sufficient doubt as to the deceased’s capacity to warrant the Court having to be satisfied that the deceased had capacity on or about 1 April 2010.[23] I do not accept that these matters raise sufficient doubt because, as set out in the reasons for decision,[24] Ms McKenna carefully assessed the deceased throughout that meeting and the instances of memory loss referred to by her are not sufficient to conclude a lack of capacity on the part of the deceased.
[23]Ibid, [329]–[330].
[24]Ibid, [364]

Thirdly, while the ACAT assessment noted that the deceased had occasional short term memory problems, again as stated in the reasons, such instances do not mean a lack of testamentary capacity.

Fourthly, the defendant relied on the reasons for judgment where it noted the condition of the deceased as elderly and frail, notwithstanding the fact that the plaintiff had the benefit of a presumption of testamentary capacity.[25] These paragraphs are no more than a statement of the applicable principles in capacity cases. To the extent that there is a reference to the deceased’s loss of memory as to her correct age and the exact date of her daughter’s death, as stated in the reasons, these two factors are not sufficient to establish a lack of capacity.
[25]Ibid, [348], [[351].

Fifthly, the defendant relied on Ms McKenna’s conclusion that the deceased could not recall the precise extent of her assets. Following on from that conclusion, the reasons for judgment conclude why that concern was alleviated in the relevant circumstances.[26] Again, this is not a sufficient ground to support the submission that the evidence needed to be given and tested in court.
[26]Ibid, [355]–[356].

Finally, the defendant contended as a general conclusion that given the concern or doubt as to the capacity of the deceased, this required the evidence to be given and tested in court. For the reasons already stated, there is no substance in this point. Although it was found that the deceased did have capacity, any concern or doubt could have been put to rest by the defendant conceding that the last will of the deceased was the 2007 will.

Turning next to the matters relied on by the defendant for the issue of the deceased’s knowledge and approval, it was contended that given there was a suspicion of foul play, the issue could only be satisfied by a consideration of the totality of the evidence. Although the authorities concerning knowledge and approval provide for the ‘suspicious circumstances rule’, in this case, the affidavit evidence allayed any suspicion of a lack of knowledge and approval on the part of the deceased.

The issue did not require a ‘consideration of the totality of the evidence’, as the defendant contended, whatever that phrase might mean in the context of this proceeding. As stated in the reasons for judgment, ‘the suspicious circumstances rule is not an opportunity to litigate an allegation of fraud by another means or on flimsy or incomplete evidence’.[27] In this case, this is exactly what the defendant has done.
[27]Ibid, [375].

On the undue influence ground, the defendant contended that there is often a significant overlap on the facts between the contested grounds and that, in this case, evidence of undue influence and knowledge and approval was overlapping. This point was not supported by any analysis of the reasons in the judgment and, in any case, such an analysis does not support the submission.

Further, facts about the knowledge available to the parties, and the reasonableness of their conduct in conducting the litigation, can be taken into account. A relevant factor to be taken in to account is ‘the role which a particular party has played in litigation, whether as plaintiff or defendant’.[28] As stated, there were no credible grounds for the defendant to challenge the April 2010 will in the circumstances where the defendant asserted his rights under a document that was the product of his own undue influence.
[28]Re Estate Late Hazel Ruby Grounds: Page v Sedawie [2005] NSWSC 1311 (16 December 2005) [32] (Campbell J).

In considering the costs of these proceedings, it is relevant that an essential component of any allegation of undue influence is fraudulent conduct, a serious allegation of an equitable species of fraud. The defendant’s case was about the many, general and diverse matters raised in the defendant’s particulars of objection making serious allegations against the plaintiff. They were wide-ranging, containing specific and general allegations, some of which were not intelligible and embraced a lengthy timeframe, commencing from 1991 onwards and, more specifically, from 2005 until 1 April 2010. The many matters raised in the particulars became the vehicle for the defendant to conduct a lengthy and repetitive cross-examination of the plaintiff over four days.

The defendant’s allegations of undue influence against the plaintiff were serious allegations and include:

(a) that the plaintiff knew the deceased apparently made an agreement with her daughter, Sandra Guss, the mother of the defendant, shortly before her death in September 2005 to leave half of her estate to the defendant and her sister yet he unduly influenced the deceased not to do so;

(b) that the plaintiff and his son had engaged in improper and dishonest dealings with the Hawthorn property;

(c) that the plaintiff and his son forced the deceased in her lifetime to transfer the Dalby property in Queensland into a testamentary trust; and

(d) that over a period of decades, the plaintiff had bullied and influenced the deceased in relation to her financial affairs, culminating in him bullying her into making her April 2010 will.

As stated in the reasons for decision, many of these matters, if true, could have formed a basis for legal intervention to protect the deceased during her lifetime, yet no intervention by the defendant occurred notwithstanding that he had ready access to legal advice from his father. Instead, the defendant chose to raise these very many and serious allegations against the plaintiff after the deceased’s death, rather than in her lifetime when she could have been called to give evidence.

As a species of fraudulent conduct, allegations of undue influence should not be made lightly. Allegations of a lack of capacity and knowledge and approval also should not be made lightly. Because of the nature of the claims made by the defendant, these issues fell to be determined applying the principles expressed in Briginshaw v Briginshaw,[29] as that standard is applied under s 140(2) of the Evidence Act2008.
[29](1938) 60 CLR 336.

The cases concerning the costs of an unsuccessful party in probate cases recognise there can be an overlap between the two exceptions to the rule that in probate cases costs ordinarily follow the event.^[30] The defendant’s challenges to the April 2010 will on the grounds of undue influence and knowledge and approval do not overlap.
[30]Ponder v Burmeister [1909] SALR 62, 99–113. Way CJ set out over a century ago the manner in which the discretion of the Court is guided on costs in probate cases.

In this proceeding, the reasons for decision demonstrate that the deceased has not been the cause of the litigation nor do the circumstances lead reasonably to an investigation concerning the deceased’s April 2010 will. This proceeding was not brought about by the fault of the deceased. The fact remains that there were no reasonable grounds at all to contest the April 2010 will or the 2007 will. In my view, the usual costs rules should apply and the defendant should pay the plaintiff’s costs of and incidental to the proceeding.

Should the defendant pay costs on an indemnity basis?

Although the usual order for costs to the successful party is assessed on a party-party or standard basis, the Court has a discretion to make a special costs order in special circumstances.[31]
[31]Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5) [2014] VSC 400 (15 December 2014) [47]–[48] (15 December 2014) (Dixon J) (‘Dura No 5’); Australian Electoral Commission v Towney (No 2) (1994) 54 FCR 383; [1994] FCA 1166 (22 June 1994).

In Ugly Tribe,[32] the decision relied on by the defendant, Harper J identified the following circumstances as warranting a special costs order, noting that the categories of circumstances are not closed:
[32]Ugly Tribe, [7]–[8] (Harper J). See also Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3) [2012] VSC 399 (14 September 2012). The decision at first instance was affirmed by the appellate decision on the issue of special costs: Sunland Waterfront (BVI) Ltd & Anor v Prudentia Investments Pty Ltd & Ors [2013] VSCA 237 (6 September 2013) [538]–[551].

(a)the making of an allegation, known to be false, that the opposite party is guilty of fraud;[33]
(b)the making of an irrelevant allegation of fraud;[34]
(c)conduct which causes loss of time to the Court and to other parties; [35]
(d)the commencement or continuation of proceedings for an ulterior motive;[36]
(e)conduct which amounts to a contempt of court;[37]
(f)the commencement or continuation of proceedings in wilful disregard of known facts or clearly established law;[38] and
(g)the failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial.[39]

[33]Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; [1988] FCA 202 (17 June 1988).

[34]Thors v Weekes (1989) 92 ALR 131; [1989] FCA 540 (21 December 1989).

[35] Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 3 (15 January 1991).

[36]Ragata Developments Pty Ltd v Westpac Banking Corp [1993] FCA 72 (5 March 1993).

[37] EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59.

[38]J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA) Branch (No 2) (1993) 46 IR 301; [1993] FCA 42 (19 February 1993).

[39] National Australia Bank v Petit-Breuilh (No 2) [1990] VSC 395 (18 October 1990).

Of the challenges to the April 2010 will made by the defendant, the following conclusions were made:

(a)The 2005 testamentary intentions of the deceased. The evidence of the witnesses relied on by the defendant was contradictory, unreliable and did not establish the allegation. I was satisfied the deceased did not make the alleged agreement with Sandra Guss in the three months preceding her death on 15 September 2005;
(b)The alleged improper and dishonest dealings with the Hawthorn property. The evidence given by the Guss witnesses was not credible. The allegations were serious allegations of fraud, concerning matters that they said they knew about over a period from 2003 to early 2010. They could give no satisfactory reason why they could not have acted on alleged suspicions while the deceased was alive. I was not satisfied that the deceased’s interest in the Hawthorn property was somehow swindled from her by the plaintiff;
(c)The allegations concerning the transfer of the Dalby property. I was satisfied that the deceased understood and was aware of what she was doing when she transferred the Dalby property, that she was not forced to transfer the property nor was she forced to remove the caveat over the property;
(d)The allegations of bullying, influencing and coercing the deceased by the plaintiff. The defendant bore the onus of proof to show the April 2010 will was made under the undue influence of the plaintiff. As stated, the allegations of undue influence were wide-ranging, diverse and, in some instances, nonsensical. The defendant failed to satisfy the onus on all of these allegations.

From December 2009, it was clear that the defendant and his sister were ‘working towards shoring up what they perceived as their entitlement under the deceased’s will’ and that the defendant ‘was keen to get something in place that would secure their positions’.[40] On the evening of 27 January 2010, a discussion between the defendant and the plaintiff became heated when the defendant realised that he could not ‘do a deal’ on the deceased’s will.[41] In that discussion, the defendant made no mention of the January 2010 will signed just the day before. Also, he failed to mention the January 2010 will when he and his sister lodged a caveat over the Dalby property in February 2010. Then, in March 2010, the defendant said to the deceased, ‘it doesn’t matter what you put in your will, Nan. My dad’s a solicitor and we’ll appeal against it and he always wins’.[42] I found that the meeting where the defendant said these words to the deceased was part of his strategy ‘to change the deceased’s will or do a deal’.[43]
[40]Judgement, [223].
[41]Ibid, [224].
[42]Ibid, [300].
[43]Ibid, [306].

Finally, with the making and execution of the January 2010 will being the product of the undue influence of the defendant on the deceased, it bore all of the hallmarks of the defendant wanting a document in place so that he had a negotiating tool, a tool that he only revealed to the plaintiff after the plaintiff made application for a grant of the 2007 will, in the alternative, to seeking a grant of the April 2010 will.

In the circumstances of the many adverse findings made against the defendant and the serious allegations made against the plaintiff, the defendant’s proceeding is one that fits within the first four categories noted by Harper J in Ugly Tribe and, as such, warrants a special costs order on an indemnity basis as against the defendant.

The plaintiff’s submissions for costs of the proceeding against the non-party Joseph Guss

In seeking orders that Joseph Guss should pay the plaintiff’s costs of the proceeding on an indemnity basis, or such other basis as the Court deems appropriate, the plaintiff relies upon:

(a)the findings in the reasons for judgment, including the findings as to the credibility of Joseph Guss;
(b)the nature of the involvement of Joseph Guss in the proceeding as a solicitor and the defendant’s father and as a witness in the proceeding;
(c)the defendant’s apparent lack of means and the likelihood that any costs order against him would not be satisfied;
(d)the fact that Joseph Guss stood to obtain a gain or benefit for himself from the litigation, in the sense that he was endeavouring to receive the benefit of ensuring that his own children, for whom he felt a financial responsibility to provide, received substantial financial benefit from the deceased’s estate, thereby alleviating his own inability to make that provision himself;^[44] and
(e)the fact that the person against whom an order is sought (or a person in whose interests he acts) is a person who stands to benefit from the litigation which is a factor that has been regarded as relevant to an application for costs against a non-party.[45]

[44]As articulated by him in the last paragraph of his letter to the deceased dated 1 March 2010; see reasons for judgment, [286], [287].

[45]See, eg, Knight v. FP Special Assets Ltd (1991) 174 CLR 178.

The plaintiff submitted that the existence of the defendant’s financial circumstances has always been treated by the courts as providing a basis, subject to other relevant circumstances, for a determination that a non-party be ordered to pay costs.[46]
[46]See, eg, Knight v. FP Special Assets Ltd (1992) 174 CLR 178, 192–3; Flinn v. Flinn [1999] 3 VR 712.

Counsel for the plaintiff referred to Yara Australia Pty Ltd v Oswal where the Court of Appeal considered the operation of the provisions of the CP Act, in particular s 29, stating as follows:

… In our view, the enactment of s 29 together with s 28(2) imbues the Court with broad disciplinary powers that may be reflected in the costs orders that are made. The Court is given a powerful mechanism to exert greater control over the conduct of parties and their legal representatives, and thus over the process of civil litigation and the use of its own limited resources.
The Act does not merely reaffirm the existing inherent powers of the court but provides a powerful indication of the will of the Parliament about the values sought to be achieved by the way in which cases are managed in the courts and the balances that have to be struck.[47]

[47][2013] VSCA 337 (27 November 2013) [21]–[22].

Counsel also referred to Hudspeth and Scholastic Cleaning and Consultancy Services (No 4), where Dixon J considered s 29 of the CP Act concluding, amongst other matters, that the jurisdiction of the Court under s 29 of the CP Act has both compensatory and punitive elements where there is a finding of a contravention of an obligation.[48]
[48][2013] VSC 14 (4 February 2013) [5]; Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd (Ruling No 8) VSC 567 (20 November 2014) (‘Hudspeth No 8’) [102];Yara Australia Pty Ltd v Oswal [2013] VSCA 337 (27 November 2013) [24].

The plaintiff submitted the evidence in this proceeding established that Joseph Guss, the solicitor for the defendant, to whom the overarching obligations apply in relation to this proceeding, has breached ss 17, 18 and 21 of the CP Act for the reasons now set out.

The defendant and his witnesses, most of whom are members of the Guss family, gave evidence in opposition to the application for a grant of probate of the deceased’s April 2010 will and in support of a grant of probate of her January 2010 will. The evidence of each of the Guss family members was along the same lines, in broad terms, alleging that:

(a)the deceased had agreed with Sandra Guss to leave her one-half of her residuary estate;
(b)for many years Simon Brown had bullied and stood over the deceased, controlled her affairs, forced her to sign documents, improperly deprived her of her full entitlement to receive a share of the proceeds of the Hawthorn property where she had lived, and had wrongfully obtained a transfer of the Dalby property to a trust controlled by him and forced her to make the April 2010 will; and
(c)the deceased had freely and voluntarily made her January 2010 will and that was her final valid will.

The evidence that was led in this regard was rejected on all issues. There was nothing in the judgment to suggest that the evidence was rejected because of mistake, misunderstanding or error on the part of the relevant witness. The clear inference is that the evidence of these witnesses was rejected because it was deliberately false.

Given these circumstances, counsel for the plaintiff submitted that the inevitable conclusion is that the Guss family witnesses have colluded together with a view to misleading the court into a finding that the last valid will of the deceased was the January 2010 will and the findings of the Court lead inevitably to the inference that the Court has found that Joseph Guss was involved in this collusion.

Counsel submitted that the Court’s findings show that Joseph Guss involved himself in this collusive conduct designed to shore up the position of his son and daughter in relation to the deceased’s will making, in particular:

(a)he attended upon the deceased at her home on 1 March 2010 and produced two letters written by him that contained self-serving and false statements, in particular, in relation to the existence of an agreement between the deceased and Sandra Guss, with the intention of using them in support of the January 2010 will that favoured his two children, the defendant and Marilla Guss; and
(b)he gave instructions for the lodging of a caveat by the defendant and Marilla Guss over the Dalby property when there was no justification whatsoever for that to occur. This fact led to the Queensland Supreme Court summarily refusing an adjournment application by the defendant and Marilla Guss, to order removal of the caveat and to order that the solicitor who lodged the caveat pay the costs.[49]

[49]Judgment, [202], [218].

Counsel for the plaintiff also submitted that Joseph Guss gave false evidence, in particular, on the following matters:

(a) about the existence of the alleged agreement between the deceased and Sandra Guss;[50]
[50]Transcript pages, 570–572; 589 and following.

(b) the deceased’s alleged acknowledgement of that agreement on the occasion when he visited her and presented the two letters to her;[51]

(c) the deceased’s alleged complaints that she had been deprived of her rights in relation to the Hawthorn property;[52] and

(d) the deceased’s alleged assertions that she did not want the caveat proceeding to go ahead.[53]

[51]Transcript pages, 576–7.

[52]Transcript pages, 568–9.

[53]Transcript pages, 581–2.

In these circumstances, the findings of the Court have the inevitable implication that Joseph Guss’ evidence was false and that he was himself involved in the collusion with the other members of the Guss family designed ultimately to convince the Court that the deceased’s last valid will was the January 2010 will.

Counsel submitted that, on their own, these circumstances might involve merely misconduct by Joseph Guss as a witness, rather than as a person to whom the overarching obligations apply but he has, however, used his position as a solicitor to facilitate the attempted carrying out of the enterprise in question and has done this by:

(a)filing the particulars of the grounds of undue influence on 16 February 2011 which was after the date that the CP Act had come into effect. The particulars contain allegations that Joseph Guss must have known were false, given that his evidence at trial in relation to these matters was rejected (for instance, paragraphs 9, 23 (e), (f), (g), (h) of the particulars);
(b)filing affidavits which contained evidence which he must have known was false, including affidavits sworn by him; and
(c)acting as solicitor on behalf of the defendant in circumstances where there was a clear conflict of interest, including after the conflict and potential difficulties it might cause at trial had been pointed out to him by the solicitors for the plaintiff. This was not a mere technical breach or error of judgment by Joseph Guss. Given the background circumstances referred to above, the inevitable inference is that Joseph Guss refused to stand down because to do so would have compromised his control over the presentation of the case, which was fundamentally a false case, before the Court.

In these circumstances, Joseph Guss was not merely an untruthful witness. He was part of the group of family members who actively colluded for the ultimate purpose of misleading the Court. His role in that group included using his position as a solicitor to attempt to bring the collusive enterprise to fruition. He was the person who enabled the whole scheme to be put before the Court.

These factors on their own mean that Joseph Guss should be required to pay the plaintiff’s costs of and incidental to the proceeding on an indemnity basis, but counsel submitted there is a further feature of his conduct as the defendant’s solicitor that supports the making of an order for costs against him. The further feature is that the affidavits filed by Joseph Guss were not merely untruthful but contained a great deal of clearly inadmissible evidence and it was inevitable that the Court would not permit reliance on them. However, that did not mean that the plaintiff’s legal advisers were not put to a great deal of unnecessary effort in their preparation of the plaintiff’s case given the need to read and deal with the affidavits.

Similarly, the ‘prolix, general, disordered and repetitive’[54] particulars of the grounds of undue influence was a further matter calculated to lengthen the trial and make the preparation of the proceeding more complex, which is a clear contravention of the CP Act and offends its objectives that aim to change litigation culture in general.[55]
[54]Judgment, [13].
[55]Hudspeth No 8, [190].

In addition, throughout the trial, Joseph Guss remained in court and, save when giving evidence, instructed counsel for the defendant. The manner in which the case was conducted, in particular, the lengthy and repetitive cross-examination of the plaintiff’s witnesses, especially that of the plaintiff, was no doubt influenced by the active presence of Joseph Guss.

The submissions of the non-party Joseph Guss

Before the plaintiff’s costs application was heard, Joseph Guss had the opportunity to consider the plaintiff’s submissions and he was given the opportunity to file any affidavits upon which he wished to rely in opposing the application. He did not file any affidavits in opposition to the application relying on detailed submissions of a legal nature.

Counsel for Joseph Guss submitted that to make the orders sought by the plaintiff against Joseph Guss, the Court must be satisfied of two matters:

(a)first, that the statutory pre-requisite to the exercise of the jurisdiction to make such an order had been satisfied; that is, that Joseph Guss breached an overarching obligation; and
(b)secondly, if the Court is satisfied that he has breached an overarching obligation, that the Court ought to exercise its discretion to make a costs order against him pursuant to s 29(1)(a) of the CP Act.

Counsel submitted that notwithstanding the wide discretion conferred by s 29(1)(a) of the CP Act, the discretion is not unfettered such that the Court can make whatever order it chooses.

Counsel submitted that the plaintiff’s application must be dismissed with costs because:

(a)the seriousness of the allegations made against Joseph Guss make it inappropriate to rule summarily on them;
(b)the reasons for judgment do not support the plaintiff’s contentions in regard to Joseph Guss and his purported breaches of his overarching obligations;
(c)the legal principles that guide the consideration for an application for costs against a legal practitioner militate against any order for costs being made against Joseph Guss; and
(d)the plaintiff’s application relies on disparate principles which are not relevant to an application under s 29(1)(a) of the CP Act.

Counsel for Joseph Guss opposed the plaintiff’s application for costs to be ordered against him for the following reasons:

(a)it lacks a coherent and logical legal basis;
(b)it ignores the special considerations that apply when a non-party costs order is sought against a party’s legal practitioner;
(c)it is not supported by the Court’s findings of fact as set out in the reasons for decision; and
(d)it makes serious allegations against Joseph Guss of criminal conduct that are not appropriate for summary determination on a costs application.

For each point relied upon, counsel for Joseph Guss set out detailed submissions, a summary of which is now set out.

Absence of coherent and logical legal basis

Counsel for Joseph Guss submitted that the plaintiff’s application lacks a coherent legal basis because:

(a)of the plaintiff’s reliance on common law principles applicable to costs orders against a non-party in circumstances where the application is founded solely on s 29(1)(a) of the CP Act; and
(b)the targeting of Joseph Guss as the sole non-party against whom a costs order is sought.

On the first point, it was submitted that an essential pre-condition to the operation of s 29(1)(a) of the CP Act is a finding that there has been a breach of an overarching obligation. Issues relating to the plaintiff’s likely inability to enforce any costs orders against the defendant or the potential for Joseph Guss to benefit from the litigation are irrelevant to the determination of this pre-condition.

On the second point, counsel submitted that although the plaintiff sought to impugn the veracity and good faith of the Guss family who gave evidence, notwithstanding the serious allegations of misconduct made against them, the plaintiff makes no application against them. Logic suggests that the assertion of collusion amongst the Guss family members who gave evidence necessitates a costs application against them as well. Logic also suggests that any purported collusion between witnesses requires the costs application against Joseph Guss to be made pursuant to common law principles rather than s 29(1)(a) of the CP Act. As a result, counsel submitted that, in reality, the plaintiff’s application against Joseph Guss alone is simply an attempt to access his professional indemnity insurer.

Special considerations that apply when a non-party costs order is sought against a party’s legal practitioner

The connection between the application against Joseph Guss and his role as the solicitor for the defendant, as submitted by the plaintiff, was tenuous.

The plaintiff seeks to exploit the role of Joseph Guss as the defendant’s solicitor as a side wind so as to benefit from the broader jurisdiction under the CP Act for a costs order against him.

The special principles applicable to costs applications against a legal practitioner need to be considered as they reflect public policy considerations. The common law principles for costs against a non-party under the inherent jurisdiction of the Court or under r 63.23 of the Supreme Court (General Civil Procedure) Rules 2005 remain relevant to the exercise of the Court’s discretion whether or not to make a costs order against a legal practitioner. Counsel relied on the principles affirmed in Re Fanning (No 2).[56] He also relied on two further principles:

(a)where a legal practitioner’s ability to rebut the complaint is hampered by the duty of confidentiality to the client, he or she should be given the benefit of the doubt;[57] and
(b)the role of counsel must be recognised and the retention and reliance on counsel was a significant matter to be taken into account in determining whether there was a breach of duty on the part of the solicitor. [58]

[56][2014] VSC 370 (23 May 2014) [7].

[57]Orchard v South Eastern Electricity Board [1987] QB 565, 572; Ridehalgh v Horsefield [1994] Ch 205, 229.

[58] White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 158 ALR 169, 242.

With those principles in mind, counsel for Joseph Guss submitted the following:

(a) the defendant has not waived his legal professional privilege and Joseph Guss is therefore hampered in the evidence that he can put before the Court by way of opposition to the application;

(b) notwithstanding the Court’s rejection of the defendant’s case, the Court cannot conclude that the defendant’s case was brought improperly or for an ulterior purpose. The case was far from hopeless and there were numerous factual controversies that required the Court’s determination;

(c) the plaintiff overstates the role of Joseph Guss in the preparation and presentation of the case and ignores the involvement of competent counsel at both the interlocutory and trial stages of the proceeding. The plaintiff’s criticisms of the particulars of grounds of undue influence fall flat as he has not established that Joseph Guss drafted these documents. The plaintiff ignores both the integrity and independent forensic judgment of counsel when he submits that ‘the manner in which the case was conducted … was no doubt influenced by the active presence of Joseph Guss opposite counsel’; and

(d) whether or not Joseph Guss has a conflict of interest in acting as a solicitor in a case in which he was to be a witness is not to the point. The plaintiff did not make any application to restrain Joseph Guss from acting. Having failed to do so, the plaintiff cannot now complain about his continued role as the solicitor for the defendant. In any event, the suggestion that Joseph Guss refused to relinquish his role as the defendant’s solicitor as it ‘would have compromised his control over the presentation of the case’ is farfetched and not supported by the evidence. Given the role of counsel in the preparation and presentation of the case, the Court cannot reach any conclusion as to how the case may have been presented had alternative solicitors been retained by the defendant.

Not supported by the Court’s findings of fact as set out in the reasons for decision

Counsel for Joseph Guss submitted that the plaintiff relied on inference and speculation in his submissions that witnesses for the defendant gave deliberatively false evidence, that they colluded in doing so and Joseph Guss used his position as a solicitor to carry out the attempted enterprise.

The plaintiff’s costs submissions extend the Court’s conclusions beyond that which is warranted from the reasons and the fact that the Court has preferred one party’s case over the other is nothing more than a reflection that in adversarial litigation, one party will be successful and the other will not.

It was wrong for the plaintiff to suggest that the Court’s preference for one party’s evidence over the other means that the losing party’s evidence was ‘false’, ‘deliberately false’ or adduced as part of a ‘collusion’ to ‘mislead the Court’. The Court did not express any conclusion that any witness had given ‘deliberately false’ or even just ‘false’ evidence and it was wrong to suggest that these conclusions could be drawn by inference from the outcome of the proceeding.

The error in the plaintiff’s contentions is all the more egregious when one considers the seriousness of the allegations relied upon by the plaintiff to support its application against Joseph Guss.

Serious allegations against Joseph Guss of criminal conduct that are not appropriate for summary determination

The plaintiff makes serious allegations of criminal conduct and professional misconduct against Joseph Guss and asserts that he ‘was part of the group of family members who actively colluded for the ultimate purpose of misleading the Court’. Counsel for Joseph Guss said this was tantamount to an allegation that Joseph Guss either conspired to pervert the course of justice or attempted to pervert the course of justice.

Similarly, the assertion that Joseph Guss ‘filed affidavit material which contained evidence which he must have known was false, including affidavits he swore himself’ is nothing less than an allegation that he perjured himself. The Court has not made any such findings in its reasons for judgment nor has it made any recommendation that this conduct be subject to investigation by either police, prosecutorial or regulatory bodies. The plaintiff therefore seeks costs against Joseph Guss for alleged breaches of his overarching obligations in circumstances where he seeks to justify the application by reference to serious allegations of misconduct which find no basis in the Court’s reasons for decision upon the determination of the trial.

The Court could only uphold the plaintiff’s allegations of serious misconduct against Joseph Guss after a full trial of the allegations rather than on a summary application. The Court’s summary process for determining a non-party costs application is therefore incompatible with the seriousness of the allegations relied on by the plaintiff.

If the Court were to determine that it be appropriate to entertain the plaintiff’s contentions of misconduct on hearing the costs application against Joseph Guss, the seriousness of the allegations means that the Court must consider the evidence in support of the application in a manner that satisfies the approach taken by Dixon J (as he then was) in Briginshaw v Briginshaw.[59] The Court can only make a finding against Joseph Guss that he deliberately lied or engaged in collusive conduct if satisfied on the balance of probabilities while being ‘conscious of, and recognising, the significance of those findings’.[60] In this case, the Court cannot be so satisfied.
[59](1938) 60 CLR 336.
[60]UTSA Pty Ltd (in liq) v Ultra Tune Australia Pty Ltd [2004] VSC 105 (6 April 2004) [52]; White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 158 ALR 169, 199.

Applicable principles

In civil litigation, it is for the Court to determine the issues in dispute between the parties and then determine the question of costs. Ordinarily, the Court does not permit parties to raise issues that may be relevant to costs at the trial of the substantive issues. The trial of this proceeding was heard over ten days where a substantial body of evidence was given and where the parties and witnesses on each side gave vive voce evidence and were cross-examined extensively. After this process, the parties made detailed submissions on the evidence and the legal principles. The Court then made the findings in respect of the issues in the proceeding.

The usual procedure when an application for costs order against a legal practitioner is sought is for the application to be made after the hearing. An application for costs made against a non-party is permitted to rely on evidence given and facts found in the proceeding.[61] Procedural fairness dictates that where an order for costs is sought against a professional person, notice of the allegations made against him or her is given to that person and he or she is given an opportunity to file material in response and be heard before any orders are made.
[61]Dura No 5, [7] referring to Flinn v Flinn [1999] 3 VR 712, [139]–[143] (25 August 1999) (Brooking, Charles and Batt JJ.A).

In Hudspeth No 8 Dixon J set out the statutory scheme of the CP Act in detail.[62] The CP Act sets out the procedure to be adopted when considering whether the provisions of the CP Act have been contravened. A court may on its own motion invite submissions as to why there should not be a finding that the CP Act has been contravened at the conclusion of delivering reasons for judgment. Alternatively, a party may also make an application under the CP Act after reasons for judgment have been delivered. Such a motion or application must be made before the finalisation of the civil proceeding to which the application relates. It is then for the trial judge to deal with the issue and provide reasons for finding whether or not there has been a breach of the CP Act and whether the finding affects the orders for costs in the proceeding.[63]
[62]Hudspeth No 8, [27]–[33].
[63]CP Act, ss 30, 31; YaraAustralia Pty Ltd v Oswal [2013] VSCA 337 (27 November 2013) [27]; Hudspeth No 8 [245]. See also Apollo 169 Management Pty Ltd v Pinefield Nominees Pty Ltd (No. 2) [2010] VSC 475 (22 October 2010) [23]–[28], [51] (per Emerton J) for the similar procedure under the r 63.23 of the Supreme Court (General Civil Procedure) Rules 2005.

The procedure relied upon by the plaintiff in making his application for costs is the procedure prescribed by the CP Act.^[64] After a trial of a proceeding, the trial judge is seized of the issues and would usually be the appropriate person to the deal with any costs applications, whether against a party or a non-party.[65]
[64]Yara Australia Pty Ltd v Oswal [2013] VSCA 337 (27 November 2013) [27]. See also UTSA Pty Ltd (in liq) v Ultra Tune Australia Pty Ltd [2004] VSC 105 (6 April 2004) [48] referring to Harley v McDonald [2001] 2 AC 678, [50].
[65]Yara Australia Pty Ltd v Oswal [2013] VSCA 337 (27 November 2013) [27]; UTSA Pty Ltd (in liq) v Ultra Tune Australia Pty Ltd [2004] VSC 105 (6 April 2004) [48] referring to Harley v McDonald [2001] 2 AC 678, [50].

The Court must then approach the task of determining whether the relevant provisions of the CP Act were contravened by Joseph Guss bearing in mind that it must be satisfied on the balance of probabilities and being conscious of the seriousness and gravity of the findings.[66] In assessing the evidence supporting a contravention of the CP Act for the purposes of making a costs order as sought by the plaintiff, care must be taken to guard against the effect of hindsight with the concentration on what was known to the relevant party’s legal adviser at the time the allegation was responded to or made.[67] As stated by Beach J (as he then was) in Norman South Pty Ltd v da Silva (No 2):

It is always easy to say with hindsight that a legal practitioner should have taken more steps to determine whether his or her instructions were correct. That said, in circumstances where fraud is alleged by one’s client, a legal practitioner is required to take particular care.[68]

[66]Dura No 5, [108]; UTSA Pty Ltd (in liq) v Ultra Tune Australia Pty Ltd [2004] VSC 105 (6 April 2004) [52] (Habersberger J), referring to White Industries (1998) 156 ALR 169, 199.

[67]UTSAPty Ltd (in liq) v Ultra Tune Australia Pty Ltd [2004] VSC 105 (6 April 2004) [74]; Norman South Pty Ltd & Anor v da Silva (No 2) [2012] VSC 622 (17 December 2012) [19] (Beach J, as he then was).

[68][2012] VSC 622 (17 December 2012) [19].

Traditionally courts are reluctant to make costs orders against legal practitioners.[69] In White Industries (Qld) Pty Ltd v Flower and Hart (a firm), Goldberg J stated that a serious dereliction of duty, gross negligence or serious misconduct on the part of a practitioner must be established on the balance of probabilities, in accordance with the Briginshaw principles, before an order for costs will be made against a legal practitioner:

This analysis of the cases makes it clear that the jurisdiction to order costs against an unsuccessful party’s solicitors is enlivened when they have unreasonably initiated or continued an action when it had no or substantially no prospects of success but such unreasonableness must relate to reasons unconnected with success in the litigation or to an otherwise ulterior purpose or to a serious dereliction of duty or serious misconduct in promoting the cause of and the proper administration of justice. Further, the cases establish the proposition that it is a relevant serious dereliction of duty or misconduct not to give reasonable or proper attention to the relevant law and facts in circumstances where if such attention had been given it would have been apparent that there were no worthwhile prospects of success. [70]

[69]See examples set out in Hudspeth No 8, [249].

[70][1998] FCA 806; (1998) 156 ALR 169, 239 (Goldberg J).

These principles have now been qualified by the changes to the language in r 63.23 of the Supreme Court (General Civil Procedure) Rules 2005. For example, the words ‘failure to act with reasonable competence and expedition’ in r 63.23 do not require findings of gross negligence — all that is needed is to make out a case of negligence in a professional negligence claim.[71] As well, the provisions of the CP Act make a significant impact on the obligations of legal practitioners.
[71]Apollo 169 Management Pty Ltd v Pinefield Nominees Pty Ltd [2010] VSC 475 (22 October 2010) [26]–[30] (Emerton J).

Under the CP Act, a party is required to conduct a proceeding in a manner that is consistent with the overarching principles set out and a party’s legal practitioner must take into account his or her overarching obligations and assist the client to comply with the duties. Section 29 of the CP Act provides the Court with broader and more flexible powers than under s 24 of the Supreme Court Act 1986 and r 63.23 of the Supreme Court (General Civil Procedure) Rules 2005 or the inherent jurisdiction of the court.[72] Ultimately, however, considerations applied under those latter provisions will also assist and inform the exercise of the jurisdiction under the CP Act.
[72]Yara Australia Pty Ltd v Oswal [2013] VSCA 337 (27 November 2013) [18].

The relevant sections of the CP Act[73] relied upon by the plaintiff provide:
[73]On 1 January 2011, the relevant provisions of the CP Act commenced operation. The defendant filed his statement of grounds of objection against a grant of probate of the April 2010 will on 14 October 2010 and filed particulars of his grounds of undue influence on 16 February 2011. Pursuant to the relevant transitional provisions of the CP Act, the overarching obligations apply to the proceeding. On 13 November 2012, the defendant filed an application for letters of administration with the January 2010 will annexed.

Conflict of interest and duty on the part of Joseph Guss in acting as the defendant’s solicitor

[90] Knight v FP Special Assets Ltd (1992) 174 CLR 178, 192–3; Flinn v. Flinn [1999] 3 VR 712.

In response to the plaintiff’s submission that Joseph Guss was in a conflict of interest in acting for the defendant as well as being a witness on substantive matters in the proceeding, Joseph Guss contended that because the plaintiff did not make an application to restrain him from acting as the solicitor for the defendant, the plaintiff cannot complain now about his continued role as the solicitor for the defendant.

In my view, this submission misses the point. The solicitors for the plaintiff quite properly raised the issue with Joseph Guss, stating that he was a material witness for the defendant, yet he continued to act on his behalf. It is not the responsibility of the lawyers to incur further costs in an application to remove a solicitor when they have already done him the service of bringing a potential conflict to his attention. It is the responsibility of Joseph Guss to ensure that he is not in a position of conflict, either actual or perceived, where his professional independence can be called in to question.

To contend that the plaintiff should have sought to restrain Joseph Guss from acting as the defendant’s solicitor, in my view, abrogates not only the responsibility of Joseph Guss, but also his duty to the court. In Hudspeth No 8, Dixon J referred extensively to the duties owed to the court by lawyers.[91] He referred to the important article ‘Lawyers' Duties to the Court’ written in 1998 by Ipp J (as he then was) where his Honour classified the four broad categories of lawyers’ duties as:

… the general duty of disclosure owed to the court, the general duty not to abuse the court process, the general duty not to corrupt the administration of justice, and the general duty to conduct cases efficiently and expeditiously. The author sourced the first three of these general duties as derived from the public interest that dishonest, obstructive or inefficient practices not distort the administration of justice. The final duty reflected current community attitudes and standards.[92]

[91][2014] VSC 567 (20 November 2014) [161]–[175].

[92]Ibid, [162] referring to the article by Ipp J ‘Lawyers Duties to the Court’ (1998) 114 Law Quarterly Review 63. See also, Martin CJ ‘Between the devil and the deep blue sea: Conflict between the duty to the client and the duty to the court’ (2011) 35 Australian Bar Review 252.

In his article, Ipp J wrote of the ‘lawyer as a witness’ in the following terms:

It is undesirable for a lawyer to appear as a witness in the same case as he is instructing solicitor (and, a fortiori, counsel). Similarly, it is undesirable that, when an affidavit has been filed by a lawyer in support of an application by a client, the lawyer appear as solicitor or counsel. The reason for this is that the lawyer would be in a position of apparent conflict between the duty to advance the interests of the client and the duty to the court to give impartial evidence…
Where a lawyer is guilty of a conflict of interest in representing a client he will have committed a breach of duty. That duty is usually expressed as a fiduciary obligation arising out of the relationship between solicitor and client. But there is a similar duty owed by a lawyer to the court (as well as an ethical duty). The duty to the court arises from the court’s concern that it should have the assistance of independent legal representation for the litigating parties. The integrity of the adversarial system is dependent on lawyers acting with perfect good faith, untainted by divided loyalties of any kind. This is central to the preservation of public confidence in the administration of justice. [93]

[93](1998) 114 Law Quarterly Review 63, 92– 93 (footnotes omitted).

Similarly, recently in Barrak Corporation Pty Ltd v The Kara Group of Companies Pty Ltd, the Court of Appeal in New South Wales said:

It is necessary to emphasise the risk posed to the administration of justice … by solicitors remaining on the record when they are, or may be, witnesses in proceedings. This risk is heightened when they have a personal interest in the outcome of the litigation beyond recovery of their fees. Courts rely on legal practitioners to discharge their duties to remain objective and professional in the preparation and presentation of proceedings. Such duties are susceptible to compromise where a practitioner is also a witness and even more so when he or she has a financial interest in the outcome: see, for example, the observations made by Brereton J in Mitchell v Burell.[94]

[94][2014] NSWCA 395 (19 November 2014) [47] (Adamson JA with Barrett and Sackville JJA agreeing).

In Mitchell v Burell, although Brereton J did not accept that a solicitor being a material witness of itself necessarily justified restraining a solicitor from continuing to act, he said:

… the line is crossed only when the solicitor has a personal stake in the outcome of the proceedings or in their conduct, beyond the recovery of proper fees for acting, albeit that the relevant stake may not necessarily be financial, but involves the personal or reputational interest of the solicitor, as will be the case if his or her conduct and integrity come under attack and review in the proceedings. The presence of such circumstances will be a strong indication that the interests of justice — which in this field involve clients being represented by independent and objective lawyers unfettered by concerns about their own interests – require the lawyer to be restrained from continuing to act.
The point is illustrated, in Windeyer J's judgment in Scallan (at [10]), by his Honour’s reference to the difference between the case where the (mere) interest of a solicitor is one that arises simply in supporting the success of his or her client (for example, in connection with advice about discovery or the commencement or continuation or abandonment of proceedings), and the case where the solicitor has an interest in the result of an action "additional to his interest in doing his best for a client to have success in an action".[95]

[95][2008] NSWSC 772 (26 June 2008) [20].

The observations made by Ipp J and Brereton J are pertinent to the position of Joseph Guss. As the solicitor for the defendant, Joseph Guss must act in ‘perfect good faith, untainted by divided loyalties of any kind’. Joseph Guss has filed a substantive document for the defendant that seeks to propound a document that is the product of undue influence of the defendant. In considering the factual and legal material that formed the basis of the claim, he has not acted with the independence required of a solicitor. He also has an interest in the result ‘additional to his interest in doing his best’ for the defendant to have success in the proceeding. He has acted for the defendant seeking to pursue the financial interests of his two children and has given extensive evidence on substantive matters. These matters are relevant to his conduct, his involvement as a witness in the proceeding, his reputational interest and his independence in advising the defendant as his solicitor.

Has there been a contravention by Joseph Guss of ss 17, 18 or 21 of the CP Act?

Turning first to the provisions of s 18 of the CP Act, whether there has been a contravention of s 18 of the CP Act is to be determined when a claim is made or responded to by the legal practitioner. This requires an assessment of whether the claim or response was frivolous, vexatious, an abuse of process or had a proper basis on the factual and legal material available to the person making the claim or response. The later obligation is discharged if the person discharging the obligations can demonstrate a reasonable belief based on the factual and legal material at that relevant time.

There are two claims to consider on this application. The first is the defendant’s challenge to the April 2010 will made on 16 February 2011, that being the date of the filing of the particulars of undue influence and the first substantive document filed by him in the proceeding challenging the April 2010 will. The second is the defendant’s objection to the plaintiff’s application made on 7 November 2012 to propound the 2007 will in the alternative. The defendant objected to that grant on the grounds of there being a later will, being the January 2010 will. Shortly after, the defendant made application on 13 November 2012 for letters of administration with the January 2010 will annexed. By this application, the defendant sought to propound the January 2010 will as the last valid will of the deceased.

In respect of both claims, the question to be determined is whether Joseph Guss at the relevant time had contravened s 18 of the CP Act.

As the solicitor for the defendant, Joseph Guss was responsible for taking instructions from the defendant in respect of the two claims. The factual bases of both claims were, at the relevant time, primarily within his knowledge and that of the defendant.

Dealing first with the defendant’s challenges to the April 2010 will:

(a) in respect of the undue influence claims for the April 2010 will, that the factual basis of the claims was in the knowledge of the defendant and Joseph Guss is demonstrated by their extensive evidence given on these allegations in the trial;

(b) in respect of the defendant’s allegations that the deceased lacked testamentary capacity and did not know and approve of her April 2010 will, the defendant only ever made allegations. He did not set out any factual or legal basis for these two claims in his particulars of grounds and, at trial, no evidence was led by the defendant of these grounds;

(c) in respect of the challenge to the 2007 will, although the defendant alleged in his particulars that it was procured by the undue influence of the plaintiff, the defendant only ever made the allegation. At trial, the defendant did not challenge the 2007 will.

The second claim is the defendant’s allegation of there being a later will to the 2007 will (being the January 2010 will) and the defendant’s application for letters of administration with the January 2010 will annexed. In acting as the solicitor for the defendant, Joseph Guss was required to determine whether there was a proper basis for the propounding of the January 2010 will. As stated earlier, a proper basis for the propounding of the January 2010 will was pivotal to the claims overall because the defendant’s interest to challenge the April 2010 will only arises with the existence of the January 2010 will. It is this will that distributes the residuary estate of the deceased in a substantially different manner from all other wills of the deceased, including the April 2010 will and the 2007 will, with the defendant and his sister receiving one third of the residue of the deceased’s estate compared to relatively small legacies under the other wills.

The evidence of the facts and circumstances of the creation and execution of the January 2010 will was primarily the evidence of the defendant. The defendant was present at the initial meeting with Mr Northam and the deceased, with the defendant being an active participant at the meeting. After the initial meeting, he held conversations with Mr Northam concerning the will. The defendant, together with Joanna Guss, the defendant’s wife, and Mrs Torrance, an employee at the deceased’s nursing home, were present when the deceased signed the will in quite extraordinary circumstances.[96] Mr Northam was not present at the signing of the January 2010 will and did not know of its existence until the trial. The day after the execution of the January 2010 will, the defendant handwrote a letter to Mr Northam for the deceased to sign and then sent the letter . The letter changed the shares of the residue of the estate because the defendant thought it would be fairer to have Sandra Guss’ share divided fifty-fifty rather than into thirds, as was the case in the January 2010 will.[97] All of these facts and circumstances were available to Joseph Guss at the relevant times.
[96]Judgment, 412–414.
[97]Judgment, 153.

In my view, a solicitor assessing these facts and circumstances at the relevant times in November 2012 and assessing them with the independence required of a legal practitioner, would swiftly form the view that the factual and legal material available to him did not provide him with a proper basis for propounding the January 2010 will.

Without a proper basis to propound the January 2010 will, any challenge to the April 2010 will or the 2007 will could not be maintained as all other wills of the deceased left the residue of the estate to the plaintiff. In proceeding with the propounding of the January 2010 will when there was not a proper basis for doing so, Joseph Guss has contravened s 18(d) of the CP Act.

It is relevant to the consideration of the challenges made to the April 2010 will and the 2007 will that the defendant’s particulars of claim filed in February 2011 did not include any reference to the January 2010 will. When challenging the 2007 will in February 2011, the usual procedure would be for the challenger to state which will is the last valid will of the deceased. As matters stood in February 2011, with both the April 2010 will and the 2007 under challenge, and without any knowledge of the January 2010 will, the search for the last valid will of the deceased would have gone back to her wills before 2007, all of which left the residue of the deceased’s estate to the plaintiff. In my view, in the particulars filed in February 2011, Joseph Guss should have included a ground that the defendant relied upon the January 2010 will as being the last valid will of the deceased. Instead, the existence of the January 2010 will was not revealed until some twenty months later when the defendant objected to the plaintiff’s application made in the alternative to propound the 2007 will.

That Joseph Guss waited until November 2012 before the defendant’s position was made known to the plaintiff reflected the strategy employed by the defendant and Joseph Guss to use the January 2010 will, a document that was the product of the undue influence of the defendant on the deceased, as a negotiating tool against the plaintiff. Conduct of this nature runs contrary to the objectives of the CP Act.

To make the challenges to the April 2010 will and the 2007 will in February 2011 without disclosing the defendant’s reliance on the January 2010 will and then to wait until November 2012 to reveal the fact of the defendant’s reliance on it, without there being a proper basis to do so, in my view, is an abuse of process by Joseph Guss and is a contravention of s 18(c) of the CP Act.

In respect of the overarching obligation not to engage in conduct which is misleading or deceptive or likely to mislead or deceive contained in s 21 of the CP Act, it is unnecessary for the Court to find that Joseph Guss knowingly did so for a contravention to have occurred. In my view, whether Joseph Guss intended to or not, by his actions set out in the preceding paragraphs, the result is that he did mislead or deceive the Court, thereby contravening s 21 of the CP Act.

In respect of the overarching obligation to act honestly at all times in relation to a civil proceeding contained in s 17 of the CP Act, to find a contravention of the overarching obligation, the Court must find that Joseph Guss possessed a particular state of mind to not act honestly. Whilst I rejected the evidence of the Guss witnesses and I found that Joseph Guss did not apply the independence require of a solicitor in this case, I am mindful of the fact that the investigation into the deceased’s wills concerned the satisfaction of the burdens of proof for the various claims. Bearing in mind the applicable standard of proof required under the CP Act, I do not make a finding that he possessed that particular state of mind and do not make a finding that he contravened s 17 of the CP Act.

Discretion to impose sanctions for contravening the overarching obligations

As I have determined that Joseph Guss has contravened ss 18(c) and (d) as well as s 21 of the CP Act, the jurisdiction to impose sanctions for those contraventions is enlivened.

In Hudspeth No 8, Dixon J stated that the two stages in the exercise of the discretion to impose sanctions: should any order be made and, if so, what order should be made?[98] He then described the discretion to impose sanctions for contravening the overarching obligations as broad, stating:
[98]Hudspeth No 8, [255]

The jurisdiction to impose sanctions for contravening overarching obligations is broadly exercised in three ways. Any contravention of the overarching obligations may be taken into account by a court, first, exercising any power in relation to a civil proceeding and, second, in exercising its discretion as to costs. Third, s 29, which is set out above, empowers the court with a wide discretion to make any order it considers appropriate in the interests of justice.
Counsel contended, and I agree, that even if the discretion is enlivened by a finding that on the balance of probabilities, a person has contravened an overarching obligation, the court is not required if in a proper exercise of its discretion the course is not warranted, to make any order or any of the particular orders specified in s 29 of the Civil Procedure Act. There are two stages in the exercise of the discretion. Should any order be made and, if so, what order should be made?
The court’s jurisdiction to make orders, being undefined in terms, is as broad, wide and deep as the statutory context and the particular circumstances demand. I commence with the caveat noted by LJ in Gardner v Jay:
... when a tribunal is invested by Act of Parliament or by Rules with a discretion, without any indication in the Act or Rules of the grounds upon which the discretion is to be exercised, it is a mistake to lay down any rules with a view of indicating the particular grooves in which the discretion should run, for if the Act or the Rules did not fetter the discretion of the Judge why should the Court do so?

The statutory framework in which it sits primarily conditions the discretion. Section 8 is important as it expressly emphasises the question: will the making of an order under s 29 of the Civil Procedure Act give effect to the overarching purpose? Section 9(1) then sets out the objects that may further the overarching purpose in making an order and s 9(2) sets out the matters to which the court may have regard, although s 9(3) provides that the statutory list is not an exclusive list. The court may, in my view, take account of any matter that arises out of the circumstances of the application, whether that is arising out of the proceeding, or is a matter personal to the person who is subject to the overarching obligation.
The particular types of order identified by s 29 are:
(a)costs orders — s 29(1)(a) & (b);
(b)compensation orders — s 29(1)(c);
(c)directive orders that persons take, or not take, specified steps in a proceeding — s 29(1)(d) and (e);
(d)orders ‘in the interests of’ prejudicially affected persons — s 29(1)(f).[99]

[99]Hudspeth No 8, [254]–[258] (citations omitted).

The consequence of the findings that the proceedings challenging the April 2010 will should not have been brought and maintained against the plaintiff, and that Joseph Guss has contravened the CP Act as outlined in these reasons, inform the court that such circumstances warrant that an order be made under s 29 of the CP Act.

As to what order should be made, the plaintiff contends that Joseph Guss should pay the costs of the proceeding assessed on an indemnity basis. In my view, it is of significance that the claims made against the plaintiff are allegations of fraud, that Joseph Guss has placed himself in a position of conflict of interest and duty and that the defendant is now a bankrupt. These are matters that the court is entitled to take into account in the exercise of its discretion.

Although the plaintiff was ultimately successful on all issues, he faced serious allegations said to have occurred over a long period of time, initially set out in the affidavits and, ultimately, in the public arena. The trial agitated longstanding family grievances held by the Guss family over ten days. At the trial, Joseph Guss was present in court and instructed counsel for the defendant, save when he gave his own evidence. Litigation involving wills often concerns family issues and, by its nature, is stressful for any party. That stress involves emotion and anxiety and, inevitably, concern over the possible diminution of the assets of the estate. The litigation and the conduct of Joseph Guss in the litigation has caused the plaintiff to incur significant costs in defending the allegations made against him.[100]
[100]There were three proceedings in all heard at trial.

In my view, the fact that it was unnecessary for there to have been a proceeding challenging the April 2010 at all and the fact that the three proceedings should never have been commenced warrants a costs order being made against Joseph Guss for the payment of the plaintiff’s costs of the proceedings. Because the allegations made against the plaintiff are serious allegations of fraud and because Joseph Guss has been found to have contravened the aforesaid overarching obligations of the CP Act, those costs should be assessed on an indemnity basis, in default of agreement.

Orders

Accordingly, I will make orders:

(a)the costs order made on 23 May 2013 be set aside and those costs be costs in the proceeding; and
(b)each of the defendant and Joseph Guss pay the plaintiff’s costs of the proceeding on an indemnity basis, to be taxed in default of agreement.

I will hear the parties as to the appropriate form of orders.

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[2015] VSC 57

8 April 2015