Cekan v Magiera (No 2)

[2023] SASCA 144

SUPREME COURT OF SOUTH AUSTRALIA

(Court of Appeal: Civil)

CEKAN v MAGIERA & ANOR (No 2)

[2023] SASCA 144

Judgment of the Court of Appeal  

(The Honourable President Livesey, the Honourable Justice Doyle and the Honourable Justice Bleby)

22 December 2023

SUCCESSION - PROBATE AND LETTERS OF ADMINISTRATION - COSTS

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL RULE: COSTS FOLLOW EVENT - PARTIAL SUCCESS

The appellant appealed against a decision of a single judge of this Court, dismissing an application to revoke a grant of probate in solemn form. The will, dated 28 September 2016 (‘the 2016 will’) appoints the respondents as executors. It directs them to hold the deceased’s estate on trust in two equal parts for the Polish Church Incorporated and the Voice of the Martyrs Australia Ltd.

A further will dated 20 April 2018 (‘the 2018 will’) appoints the appellant as sole executor, and instructs that $25,000 be bequeathed to each of the Polish Church Incorporated and the Voice of the Martyrs Australia Ltd and that the respondent be the sole residual beneficiary of the estate.

On 23 November 2023 this Court set aside the orders of the primary judge and ordered that the grant of probate in solemn form of the 2016 will be revoked.

The parties now seek competing orders for costs.

The appellant seeks orders that the respondents pay the appellant’s cost of the appeal on a standard costs basis without recourse to the estate.

The respondents seeks orders that the appellant pay the respondent’s costs of the proceedings before the primary judge and the Court of Appeal until 15 September 2023 on an indemnity basis without recourse to the estate.

Held (by the Court):

1.The appellant’s costs of the appeal are to be paid out of the estate on the standard costs basis.

2.The respondent’s costs of the appeal are to be paid out of the estate on an indemnity costs basis.

3.This Court and the parties are required to conduct litigation in accordance with the rules of the Court. The costs orders that were made in favour of the respondents on 8 September 2023 must be met by the appellant without recourse to the estate.

4.The costs of the proceedings before the primary judge are reserved until the final resolution of the matter.

Probate Rules 2015 (SA) r 51(4); Uniform Civil Rules 2020 (SA) rr 1.5, 3.1, 3.1(1)(i), 3.1(1)(k), 3.2(2), 3.2(3), 3.2(3)(b), 146.1, 211.4, 218.13(1), 218.13(3), referred to.
Cekan v Magiera & Anor [2023] SASCA 124; Hegarty v Keogh [2021] SASCA 46; Magiera & Anor v Cekan [2023] SASC 20; Mitchell v Gard (1863) 3 Sw & Tr 275; Moloney v Hayward & Ors (No 2) [2023] SASC 36; Nobarani v Mariconte (No 2) [2018] HCA 49; Re Herbert Brothers Deceased (1990) 101 FLR 279; Roche v Roche (No 2) [2017] SASC 75; Thomas v Nash (No 2) [2010] SASC 171, considered.

CEKAN v MAGIERA & ANOR (No 2)
[2023] SASCA 144

Court of Appeal – Civil: Livesey P, Doyle and Bleby JJA

1. THE COURT:          On 23 November 2023, this Court allowed the appellant’s appeal against a decision of a judge of this Court.[1] The primary judge had dismissed an application to revoke a grant of probate in solemn form of a will dated 28 September 2016 (‘the 2016 will’).[2] On the appeal, this Court set aside the orders of the primary judge and ordered that the grant of probate in solemn form of the 2016 will be revoked. It also set aside the costs orders made by the primary judge.

   [1]     Cekan v Magiera & Anor [2023] SASCA 124.

   [2]     Magiera & Anor v Cekan [2023] SASC 20.

   The costs applications

2. The appellant and the respondents have now made competing costs applications. The appellant seeks costs orders as follows:

   1.1The Respondents pay the Appellant’s costs of the appeal on a standard costs basis and that the Respondents pay those costs without any recourse to the estate of the deceased.

   1.2In the alternative to the above, an order that the Appellant have his costs of the appeal out of the estate of the deceased on a standard costs basis and that the Respondents bear their own costs without recourse to the estate of the deceased.

   1.3That the costs of the proceedings before [the primary judge] be reserved until the final resolution of the matter.

3. By contrast, the respondents seek costs orders as follows:

   1.1The Appellant pay the Respondents’ costs of the proceedings before [the primary judge] and the Court of Appeal until 15 September 2023, on an indemnity basis without recourse to the estate, because the only matter upon which the Appellant was successful in the Court of Appeal was first raised in its written submissions dated 15 September 2023;

   1.2The Appellant pay 80% of the Respondents’ costs in the Court of Appeal from 15 September 2023 onwards, on an indemnity basis without recourse to the estate, because on a broad axe approach the Appellant was unsuccessful in 80% of the arguments it raised in the Court of Appeal.

4. The history of the matter is set out in the previous judgment of this Court. The 2016 will appoints the respondents as executors and directs them to hold the deceased’s estate on trust in two equal parts for the Polish Christian Church Incorporated and the Voice of the Martyrs Australia Ltd. A further will dated 20 April 2018 (‘the 2018 will’) appoints the appellant as sole executor. It instructs that $25,000 be bequeathed to each of the Polish Christian Church Incorporated and the Voice of the Martyrs Australia Ltd, and that the respondent be the sole residual beneficiary of the estate. The respondents dispute that the deceased had capacity at the time of executing the 2018 will.

5. The history is complex and need not be rehearsed in any detail here. In 2021, the respondents lodged a caveat preventing a grant of probate of the 2018 will. In July 2022, they obtained a grant of probate in solemn form of the 2016 will. The dispute on the appellant’s application to revoke that grant revolved primarily around whether the appellant had had notice of the application to prove the 2016 will. This Court held, on appeal, that the judge had not erred in finding that the appellant had had an opportunity to be heard on that application. The appellant also failed in his complaint that the judge had treated the fact of effective substituted service of the application for a grant in solemn form as decisive of the exercise of the discretion to revoke the grant.

6. However, this Court held that the judge had erred in his exercise of the discretion whether to revoke the grant of probate. On a re-exercise of the discretion, the Court ordered that the grant of probate be revoked.

7. Costs remain in the discretion of the Court. The general rule is that costs follow the event and are awarded on the standard party/party basis. Generally understood exceptions to the application of the general rule were identified in Mitchell v Gard.[3] Relevantly, the second of these is that:[4]

   … if there be sufficient and reasonable ground, looking to the knowledge and means of knowledge of the opposing party, to question either the execution of the will or the capacity of the testator, or to put forward a charge of undue influence or fraud, the losing party may properly be relieved from the costs of his successful opponent.

   [3] (1863) 3 Sw & Tr 275.

   [4]     Mitchell v Gard (1863) 3 Sw & Tr 275 at 278.

8. In Roche v Roche (No 2),[5] Kourakis CJ addressed the application of this exception in the contemporary context:[6]

   The underlying rationale for departing from the ordinary rule in some testamentary capacity cases remains.  The risk that an aged, infirm or vulnerable testator will be manipulated in private, and away from independent scrutiny, to execute a testamentary document has subsisted through the ages.  However, its relative importance as a costs consideration has been diminished by contemporary social conditions and professional practices. … Nonetheless, invoking this Court’s testamentary jurisdiction may sometimes be sufficiently warranted to depart from the ordinary rule … Cases in which a testator, suffering a material cognitive impairment has made a Will, particularly one which departs from previous testamentary dispositions, whilst under the close care of a potential beneficiary or beneficiaries, with no or very little independent evidence of capacity, are examples.

   A person will not be penalised for invoking this Court’s supervisory jurisdiction in probate when the circumstances call for an investigation into the validity of a testamentary document.  However, a person who challenges a testamentary disposition will risk an adverse costs order for persisting in an unmeritorious action after the discovery of evidential material which largely dispels any reasonable concerns.  If a party ignores the weight of that evidential material and prosecutes an ultimately unmeritorious case to trial, the usual order that costs follow the event will be made.  Exceptions from the ordinary order will not be made to allow beneficiaries a forum in which to air family disputes with impunity.

   [5] [2017] SASC 75.

   [6]     Roche v Roche (No 2) [2017] SASC 75 at [17]-[18]. See also Moloney v Hayward & Ors (No 2) [2023] SASC 36 at [58] (McMillan AJ).

9. The potential difficulty with assessing whether this exception should be applied in the present case is that while this is a case that falls squarely in the testamentary causes jurisdiction of the Court, the subject matter of the litigation has to date been not whether the appellant’s case for propounding the 2018 will is meritorious, but rather, whether it should be heard, notwithstanding the history of the matter. This Court expressly did not pronounce upon the merits of the appellant’s case, other than to observe, in the course of its reasons:[7]

   The evidence adduced by the applicant in support of the validity of the 2018 will is hardly overwhelming. By the same token, it has probative value. Dr Ng’s admittedly short letter is dated one month before the 2018 will was signed in April. Dr Nair did not see the deceased until September 2018, and then again in November 2018. Having said that, the referral, based on concerns, was made in July. Moreover, an interpreter was present at both of those assessments.

   [7] [2023] SASCA 124 at [100].

10. Rather, as the appellant observed, this Court determined to revoke the grant of probate in the re-exercise of the discretion, on the basis that there were special circumstances within the meaning of r 51(4) of the Probate Rules 2015 (SA). The actual merits of the contest over the validity of the 2018 will are yet to be tested. That will likely require further evidence about the testamentary capacity of the deceased at the time of making the 2018 will.

11. The respondents’ arguments in support of the orders it sought were directed elsewhere. By way of summary, they argued:

    ·the appellant only succeeded on one ground of appeal, which had not been articulated until Revision One of the Appeal Grounds;

    ·the appellant addressed the successful ground in only one paragraph of his written submissions, which were filed on 15 September 2023;

    ·the main question before the primary judge had been whether the grant of probate should be revoked on the ground that the appellant did not have actual notice of the application;

    ·there was no detailed evidence before the primary judge supporting the validity of the 2018 will;

    ·the appellant therefore ought not be entitled to any order for costs before 15 September 2023, when the issue was squarely raised;

    ·the respondents appear only as executors; they have no personal interest in the outcome;

    ·the respondents have acted properly as executors. If the respondents are ordered to pay any costs, they should be indemnified out of the estate.

12. While it is correct to say that the main issue raised before the primary judge was the question of notice, the appellant’s argument that there was a prima facie case for the validity of the 2018 will was also in issue. Ultimately, the question whether the grant of probate in solemn form should be revoked was required to be determined in the exercise of the Court’s discretion. That there was a prima facie case for the validity of the 2018 will was always relevant to that discretion. The respondent’s attempt to parse the issues at trial, and then on appeal, for the purpose of the exercise of the discretion to award costs, is unconvincing.

13. The fact that the appellant was successful on appeal on only one issue of several argued is a relevant consideration. However, whether the appellant had an arguable case on the merits was an important consideration in the exercise of the discretion, just as were the reasons for him not having appeared at the application to prove the 2016 will. When it came to the exercise of the discretion, it was necessary to weigh each of these, together with other matters. It is not possible to say that the question of the prima facie case for the 2018 will was a single issue that could be hived off separately from all the others. It remained necessary for this Court, in the re-exercise of the discretion, to consider and weigh all relevant matters, including the circumstances of the appellant not having appeared.[8]

    [8] [2023] SASCA 124 at [105]-[116].

14. There is no reason, on this appeal, why costs should not follow the event. The question is then whether the respondents should be entitled to have recourse to the estate in order to satisfy that obligation. Here, the respondents rely primarily on their role only as executors, having no beneficial interest in the estate themselves. However, they are closely associated with the Polish Christian Church Incorporated, one of the two beneficiaries under the 2016 will. In this regard, the appellant relied on the following passage in Williams, Mortimer and Sunnucks – Executors, Administrators and Probate,[9] which was cited by McMillan AJ in Moloney v Hayward & Ors (No 2):[10]

    An executor is prima facie justified in propounding a will, but he is not bound to do so.  The fact that he is a bare executor is no ground for his not being condemned in costs.  If an executor must or ought to have known that he was propounding a document that could not be supported he will be condemned in costs.  An executor’s right to costs will be lost or curtailed by inequitable conduct amounting to a violation or culpable neglect of his duty.

    [9]     JR Martyn and N Caddick (eds), Williams, Mortimer and Sunnucks – Executors, Administration and Probate (Sweet & Maxwell, 20^th ed, 2013) 555-556 [39–09].

    [10] [2023] SASC 36 at [44].

15. As identified above, however, this litigation is not presently at a stage where it is possible for this Court, on appeal, to say that one or other will should not have been propounded. It is necessary to do broad justice between the parties, without letting the question of costs drift too far in this increasingly drawn-out litigation. As this Court noted in its judgment on the appeal, the respondents should not be criticised for seeking to prove the 2016 will in solemn form, in the circumstances with which it was faced.[11] However, the substantive justice of the appellant’s case, and therefore the respondents’ case in opposition to the appellant’s propounding of the 2018 will, is yet to be determined.

    [11]   Cekan v Magiera [2023] SASCA 124 at [123]-[125].

16. In the circumstances of this case, it would cause an injustice if the respondents were not able to have recourse to the estate in order to satisfy the costs order in favour of the appellants that should be made on the appeal.[12] We therefore order that the appellant’s costs of the appeal be paid out of the estate, on a standard costs basis.

    [12]   See generally, Nobarani v Mariconte (No 2) [2018] HCA 49 at [2]-[3].

17. As to the respondents’ costs of the appeal, it is necessary that those costs also be addressed finally, now. As we have observed, the substantive merits of the respondents’ position have not yet been determined. The respondents were unsuccessful on the appeal. They are not beneficiaries but have a close association with one of the beneficiaries. On balance, and given the uncertainties surrounding the progress of this litigation, it is appropriate that the respondents’ costs of the appeal be met out of the estate. The usual costs order in favour of executors is on the footing of an indemnity.[13] We order that the respondents have their costs of the appeal paid out of the estate, on an indemnity basis.

    [13]   See, for example, Re Herbert Brothers Deceased (1990) 101 FLR 279 at 304-308 (Kearney J, with whom Gallop and Martin JJ agreed); Thomas v Nash (No 2) [2010] SASC 171, [8]-[9] (Doyle CJ).

18. Different considerations apply to the costs of the application to revoke the grant of probate. The merits of the substantive positions of the parties are yet to be determined. Both the appellant and the respondents have drawn their positions, based on their respective views as to which will should be admitted to probate. The appropriate costs order will be informed by the ultimate result, on the assumption that there is to be a trial. All parties are on notice of the costs risk to them personally, should they be unsuccessful. The costs of the application to revoke the grant should be considered as part of that final determination. We order that the costs of the proceedings before the primary judge be reserved until the final resolution of this matter.

    Administrators pendente lite

19. The respondents submitted that there should also be an order appointing them as administrators pendente lite, pending finalisation of the proceedings. The appellant opposes that. In circumstances where an appointment to that effect now appears to be contentious, the appropriate course is that any application be made and listed before a master within the principal proceedings.

    Final costs issue

20. There is a final costs issue to be addressed. It relates to the appellant’s persistent failure to comply with the directions made by this Court at the callover on 5 May 2023, the respondents’ application to dismiss the appeal and the need for the respondents to prepare the appeal books.  Although costs orders were made in favour of the respondents on 8 September 2023, it is appropriate to provide reasons for those orders      and to make it clear that the appellant must meet those costs without recourse to the estate.

21. When this matter was initially called over on 5 May 2023, the appellant was not legally represented and foreshadowed that he expected to obtain new legal representation.  He had filed his appeal out of time.  The respondents sought a hearing as soon as the Court could accommodate the matter.  At that stage, the earliest hearing date was 8 September 2023.  Orders were made for the filing of materials by the parties.  The parties were given liberty to apply.

22. On 16 August 2023, the parties were advised by the Court that the appellant had failed to comply with the order for the filing of the core appeal book by 4 August 2023.  

23. On 22 August 2023, pursuant to rr 146.1 and 211.4 of the Uniform Civil Rules 2020 (SA) (‘the Rules’), the respondents applied to dismiss the appeal due to:[14]

    1.the appellant’s ‘serious or persistent’ breaches of the orders made by this Court on 5 May 2023; and

    2.the appellant having manifested an ‘inability or unwillingness’ to prosecute his appeal. 

    [14]   The respondents could have made an application under r 218.13(1) of the Uniform Civil Rules 2020 (SA), but they made no reference to that rule. Cf, dismissal under r 218.13(3), as it then stood, Hegarty v Keogh [2021] SASCA 46.

1. In addition to the appellant’s failure file the appeal books, the respondents relied on the appellant’s failure to provide an outline and list of authorities by 18 August 2023.

2. The parties were told that the application would be called on at the callover held on 25 August 2023.  The respondents notified the appellant by registered post about that hearing date. 

3. The appellant failed to attend, without explanation, on 25 August 2023 and the respondents pressed for orders to be made.  The application was adjourned to a hearing on 30 August 2023 and notice was given to the appellant, warning him that if he did not appear orders may be made in his absence in accordance with the respondents’ application.

4. The appellant appeared at the hearing of the respondents’ application on 30 August 2023.  He said that he had obtained legal representation, but no detail was given. So as to ensure that the matter could proceed, the respondents were directed to prepare and file the necessary appeal books.  That was done.

5. By 8 September 2023 the appellant had retained lawyers and filed material in support of an adjournment application.  That was heard by this Court on 8 September and the matter was adjourned to a hearing on 21 September 2023 and orders were made for the filing of supplementary material.  The Court ordered that the appellant pay the respondents’ costs of the application on 22 August 2023 and of preparing the appeal book on a solicitor-client basis, and the respondents’ costs thrown away as a result of the adjournment and of the hearing on 8 September 2023 on a standard basis.

6. This Court and the parties are required to conduct litigation in accordance with the rules of court.  The object of the Rules is to facilitate the just, efficient, timely, cost effective and proportionate resolution or determination of the issues in proceedings.[15]  The parties must, in addition, meet the overarching obligations which are specified by r 3.1 of the Rules and which include the obligation to comply with the rules and orders made by the Court, r 3.1(1)(i).  Parties are also obliged to use reasonable endeavours to act promptly and minimise delay, r 3.1(1)(k).  In the event of a breach of these obligations, the court is empowered to make such order as it thinks fit in the interests of justice, r 3.2(2).  The examples given by r 3.2(3) include the making of orders to pay costs, r 3.2(3)(b). 

   [15]   Uniform Civil Rules 2020 (SA) r 1.5.

7. When a matter is set down for hearing before the Court of Appeal, it may be accepted that any failure to comply with the timetable set during the callover risks prejudicing the proper and expeditious conduct of the appeal. That is what happened in this case.  There was merit in the respondents’ application to dismiss and orders were not made only because of the belated appearance by the appellant.  And, although the appellant ultimately succeeded, the respondents were put to unnecessary time and costs associated with the need to set two dates for the hearing of this appeal.  That burden on the respondents was reflected in the orders made by this Court on 8 September 2023.  The appellant must pay those costs without recourse to the estate.

   Conclusion

8. The Court orders as follows:

   1.The appellant’s costs of the appeal are to be paid out of the estate on the standard costs basis.

   2.The respondents’ costs of the appeal are to be paid out of the estate on an indemnity costs basis.

   3.The appellant must meet the orders for costs made by this Court on 8 September 2023 without recourse to the estate.

   4.The costs of the proceedings before the primary judge are reserved until the final resolution of this matter.