Chant v Curcuruto (No 2)

[2021] NSWSC 882

Supreme Court

New South Wales

Medium Neutral Citation:

Chant v Curcuruto; Chant v Curcuruto (No 2) [2021] NSWSC 882

Hearing dates:

7 July 2021

Date of orders:

21 July 2021

Decision date:

21 July 2021

Jurisdiction:

Equity

Before:

Hallen J

Decision:

The Court in each proceeding:

(a) Orders that the Plaintiffs pay the Defendants’ costs, calculated on the ordinary basis.

(b) Orders that the Defendants’ costs, calculated on the indemnity basis, be paid, or retained, as the case may be, out of the estate.

(c) Orders that any difference between costs calculated on the ordinary basis recovered from the Plaintiffs, and the costs, calculated on the indemnity basis, of the Defendants be paid out of the estate.

(d) Makes no order as to the Plaintiffs’ costs, to the intent that they are to bear their own costs.

(e) Orders that the Court Books be returned.

Catchwords:

COSTS — Two contested Probate proceedings involving different will-makers (husband and wife) heard consecutively with the evidence in one being evidence in the other – Probate sought in respect of the last Will of the two different will-makers – Plaintiffs unsuccessful in propounding each of the Wills – Defendants succeeded in propounding the penultimate Will of each will-maker - Only outstanding issue for determination is whether the Plaintiffs’ costs of each proceeding should be paid out of the estate of each will-maker or whether they should pay the Defendants’ costs, calculated on the ordinary basis of the proceedings – Otherwise agreed that Defendants’ costs, calculated on the indemnity basis, be paid out of the estate of each will-maker

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Brown v Guss (No 2) [2015] VSC 57

Chant v Curcuruto; Chant v Curcuruto [2021] NSWSC 751

Davies v Gregory (1873) LR 3 P&D 28

In Re Green [1969] WAR 67

In the Estate of Moyle: Moyle v Moyle (Supreme Court (NSW), Santow J, 18 June 1988, unrep)

Kostic v Chaplin [2007] EWHC 2909 (Ch)

Middlebrook v Middlebrook (1962) 36 ALJR 216

Mitchell v Gard (1863) 3 Sw & Tr 275; 164 ER 1280

Myers v Elman [1940] AC 282; [1939] 4 All ER 484

Nicholson v Knaggs [No 3 - Severance And Costs] [2009] VSC 328

Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17

Pates v Craig (Estate of the late Joyce Jean Cole) (Supreme Court (NSW), Santow J, 5 September 1995, unrep)

Perpetual Trustee Company Ltd v Baker [1999] NSWCA 244

Re Plant [1926] P 139

Spiers v English [1907] P 122

Starr v Miller; Starr v Miller (No 2) [2021] NSWSC 685

Sydney Markets Credit Services Co-operative Ltd v Taylor (No. 3) [2015] NSWSC 1236

Tombling v Universal Bulb Company [1951] 2 TLR 289

Tsaousis v Tsaousis (a minor, by his litigation guardian Tsaousis) [2019] VSC 511

Twist v Tye (1902) P 92

Texts Cited:

G E Dal Pont, Law of Costs (4th ed, 2018, LexisNexis Butterworths)

Miller, Probate Practice (Maxwell: 1900 Ed.)

Category:

Costs

Parties:

2018/117875 – The Estate of Kenneth Charles Shepherd
Brian Foster (aka Karen) Chant (first Plaintiff)
Jeffrey Lee (second Plaintiff)
Stephen Paul Curcuruto (first Defendant)
Catherine Clare Curcuruto (second Defendant)

2018/122543 – The Estate of Irene Gladys Shepherd
Brian Foster (aka Karen) Chant (first Plaintiff)
Jeffrey Lee (second Plaintiff)
Stephen Paul Curcuruto (first Defendant)
Catherine Clare Curcuruto (second Defendant)

Representation:

Counsel:
T J Morahan (Plaintiffs)
C Harris SC and Mr C Birtles (Defendants)

Solicitors:
Mason Parkes Layers (Plaintiffs)
Teece Hodgson & Ward Solicitors (Defendants)

File Number(s):

2018/117875; 2018/122543

Judgment

Introduction

1. HIS HONOUR: This is my judgment determining the appropriate order for costs arising out of the trial of two Probate proceedings, heard consecutively, in which I delivered reasons for judgment on 25 June 2021, which bear the medium neutral citation Chant v Curcuruto; Chant v Curcuruto [2021] NSWSC 751 (“the principal judgment”). Events and people are referred to in these reasons in the same way as they were in the principal judgment. For further background, the reader is referred to the principal judgment.

2. At the request of the parties, I did not deal with the costs of the proceedings in the principal judgment. However, the position that each party would, ultimately, adopt, on the question of costs, was made clear on the second day of the hearing: principal judgment at [166] – [168].

3. At the time I published the principal judgment, I stood both proceedings over for the hearing on costs, allowing some time for discussions to take place between the parties, in the hope that they might reach an agreement. Unsurprisingly, no agreement was reached by them. Hopefully, these reasons for the costs orders proposed to be made, will completely dispose of the two proceedings.

4. In summary, in the principal judgment, I concluded that:

1. Ken did not have testamentary capacity when he made the 2017 Will;

2. Irene did not have testamentary capacity when she made the 2017 Will;

3. Ken did not know and approve the contents of the 2017 Will;

4. Irene did not know and approve the contents of the 2017 Will; and

5. In light of the above conclusions, it was not necessary to decide if the conduct of either Karen or Jeffrey, gave rise to the application of the doctrine of suspicious circumstances. (There was no dispute that there were suspicious circumstances to be considered.)

5. In Ken’s proceedings 2018/117875, the Court made the following orders:

“(1) Orders that the Will dated 27 March 2017 but executed on 1 April 2017 of Kenneth Charles Shepherd is not his last valid Will.

(2) Orders that the whole of the Plaintiffs’ further amended Statement of Claim filed on 1 June 2020 be dismissed.

(3) Orders that the Will dated 21 May 2015 of Kenneth Charles Shepherd be admitted to probate.

(4) Orders that Probate in solemn form of the Will dated 21 May 2015 of Kenneth Charles Shepherd be granted to the Defendants, Stephen Paul Curcuruto and Catherine Clare Curcuruto, the instituted executors named in that Will.

(5) Orders that the matter be remitted to the Senior Deputy Registrar in Probate to complete the grant.

(6) Orders that the matter of the costs of the proceedings be listed for hearing at the time these reasons are published.”

6. In Irene’s proceedings 2018/122543, the Court made the following orders:

“(1) Orders that the Will dated 27 March 2017 but executed on 1 April 2017 of Irene Gladys Shepherd is not her last valid Will.

(2) Orders that the whole of the further amended Statement of Claim filed on 1 June 2020 be dismissed.

(3) Orders that the Will dated 21 May 2015 of Irene Gladys Shepherd be admitted to probate.

(4) Orders that Probate in solemn form of the Will dated 21 May 2015 of Irene Gladys Shepherd be granted to the Defendants, Stephen Paul Curcuruto and Catherine Clare Curcuruto, the instituted executors named in that Will.

(5) Orders that the matter be remitted to the Senior Deputy Registrar in Probate to complete the grant.

(6) Orders that the matter of the costs of the proceedings be listed for hearing at the time these reasons are published.”

7. It follows that in each proceeding the Plaintiffs were wholly unsuccessful in establishing the validity of Ken’s 2017 Will and the validity of Irene’s 2017 Will.

8. At the hearing of the costs application, Karen and Jeffrey sought an order that their costs, calculated on the ordinary basis, be paid out of the estate of each of Ken and Irene, and an order that Steve and Cathie’s costs, calculated on the indemnity basis, of the proceedings, be paid out of the estate of each of Ken and of Irene. (They accepted, therefore, that it was proper for Steve and Cathie to have challenged the validity of each of the 2017 Wills.)

9. Steve and Cathie, bearing in mind that they had succeeded in both proceedings, sought an order that Karen and Jeffrey pay Steve and Cathie’s costs, calculated on the ordinary basis; and an order that the Defendants’ costs otherwise, calculated on the indemnity basis, be paid out of the estate of the deceased, in both proceedings. In broad summary, they submitted that Karen and Jeffrey had commenced and pursued, unreasonably, the litigation to its very end, with the result that the estate of each of Ken and Irene has been diminished in value because of the costs of the proceedings that had been incurred.

10. Senior counsel for Steve and Cathie submitted that the Court should make no order as to Karen and Jeffrey’s costs, in both proceedings, to the intent that they should pay their own costs.

11. It can be seen from the above, that the sole issue to be determined relates to Karen and Jeffrey’s costs in each proceeding.

12. Neither party submitted as an alternative to the extreme position adopted, respectively, that Karen and Jeffrey should be ordered to bear their own costs of the proceedings and that Steve and Cathie’s costs, calculated on the indemnity basis, should be paid out of the estate of each of Ken and Irene.

13. Neither party read any evidence in support of their application for costs at the hearing. Counsel for each of the parties was, or were, content to refer to the principal reasons for judgment and the findings made. Somewhat surprisingly, one might think, no documents, being an Offer of Compromise, or correspondence containing a Calderbank offer, were tendered. Nor was any evidence given which would enable a gross sum costs order to be made.

14. The positions of the parties are diametrically opposed. The amounts at stake, whilst not disclosed to the Court, must be considerable, bearing in mind the duration of the proceedings and the hearing. Therefore, I decided to reserve my judgment and publish detailed reasons.

Submissions

15. Counsel for each party provided written submissions and made oral submissions at the costs hearing. I am most grateful to all of them for those submissions, which have enabled me to deal with the costs issue promptly.

16. Counsel for Karen and Jeffrey submitted that they had a fiduciary duty, as executors named in the 2017 Wills, to propound the last Will of each of Ken and Irene. Furthermore, even if the 2017 Wills had not been propounded by them, the Court would still have been required to conduct an inquiry into the validity of each of those Wills.

17. They also submitted that the following factors should lead the Court to make the orders sought by them:

1. Each of Ken and Irene executed about 20 Wills over the last 25 years of his and her life respectively, significantly changing beneficiaries from the previous one, reflecting the falling in to, and falling out of, favour of Ken and Irene, from time to time (principal judgment at [156]);

2. None of the parties had been named as a beneficiary in the 2014 (pre-penultimate) Will of Ken or Irene;

3. The familial relationship between Karen and Jeffrey and Ken and Irene was relevant. Karen was the younger brother of Irene and both had lived and vacationed with Ken and Irene over many years (principal judgment at [348], [379]). Besides a minor gift to Ken’s nephew in Wills created prior to 2002, Karen was the only family member to appear in either of Ken’s or Irene’s Wills;

4. The 2017 Will of each of Ken and Irene had been prepared at the request of Ken and Irene, directly to Ms Blackadder, who had initially attended upon them at Harbison Care for the purpose of dealing with his and her Powers of Attorney and Appointment of Enduring Guardian;

5. Irene and Ken had raised suspicions about the Defendants to Ms Blackadder, to Mr and Mrs King, to Karen and Jeffrey, to Steve and Cathie themselves, and to medical practitioners: principal judgment at [243], [340], [402], [491], [623];

6. Irene was unable to be examined by Dr Barnett, due to her distrust of medical practitioners and her generally unco-operative nature: principal judgment at [71]; Tcpt, 17 February 2021, p 738(17-39). Thus, the Court was required to consider the evidence of a number of lay witnesses, who were cross-examined, in order to determine whether Irene had testamentary capacity;

7. Irene, was described as the “controlling and outspoken personality” (principal judgment at [70]), who dictated to Ken her wishes, with which he abided as the “dutiful husband” because of his “mild and timid” personality (principal judgment at [69]);

8. Ken and Irene were childless and there were no natural claimants on the bounty of either of them, which, so it was said, gave rise to “an environment of contest and suspicion for the Shepherd’s affection”; and

9. Irene and Ken were “in effect, physically and socially isolated in their later years” living at Southdowns. This made them vulnerable and created an environment which “fuelled suspicions into the Curcurutos’ [sic] motives”.

18. Counsel for Karen and Jeffrey relied upon the decision in Perpetual Trustee Company Ltd v Baker [1999] NSWCA 244, in submitting that:

“The appropriate approach in the present case resonates most forcefully with the observations of the Court of Appeal in Perpetual Trustee Company Ltd v Baker: the ‘conduct and habits and mode of life’ of the deceased gave ‘ground for questioning his [and her] testamentary capacity’ in respect of the several wills executed by the Shepherds over the final years of their lives. Ken began exhibiting signs of dementia from 2015 (principal judgment at [614]), but throughout life quietly and dutifully deferred to Irene, following her whims and wishes. Irene’s forceful and opinionated personality drove the Shepherds to make broad sweeping and regular changes to their testamentary intentions, often removing a group of unrelated beneficiaries in favour of an entirely different group of beneficiaries. This behaviour fuelled speculation about their testamentary intentions and, wittingly or otherwise, invited controversy about disposition of their wealth. They were, in a sense, both the cause of the litigation and the reason why an extended investigation of their testamentary arrangements was necessary. On one basis or another, all parties should have their costs of the proceedings paid out of the Shepherds’ estate.

19. Counsel for Karen and Jeffrey noted that it could not be said that their actions had unduly extended the hearing of the matter or affected the orderly conduct of the matter.

20. He summarised his arguments as follows:

“The point of all this is that it was appropriate for the Plaintiffs to propound the 2017 wills and to participate in the inquiry over the validity of those wills, on the basis of testamentary capacity. They conceded at the earliest stage that there were some suspicious circumstances that needed the Court’s surveillance.

The justice of this case indicates that all costs be paid out of the estate of the deceaseds.”

21. In his oral submissions, counsel for Karen and Jeffrey made the point that there was no evidence that the solicitor, Ms Blackadder, at the time of taking instructions for the Power of Attorney and the wills, was acting as anything other than the solicitor for Ken and Irene: Tcpt, 7 July 2021, p 02(19-22). Particularly, there was no evidence that Karen and Jeffrey had given instructions for the contents of the 2017 Will, and as he had submitted at the hearing, that any involvement of Karen and Jeffrey “was purely logistical”: Tcpt, 7 July 2021, p 02(40-44).

22. Ultimately, counsel for Karen and Jeffrey submitted (Tcpt, 7 July 2021, p 03(10 -11)):

“The point with Priscilla Blackadder is that any deficiencies in Priscilla Blackadder's conduct should not be visited upon these present plaintiffs.”

23. Counsel for Karen and Jeffrey submitted that based on the evidence of Ms Blackadder and Mrs and Mr King, there was “fairly strong” evidence of the capacity of each of Ken and Irene at the beginning of the case: Tcpt, 7 July 2021, p 06(39-42), p 07(05-14).

24. He further submitted that there were no obvious reasons to doubt the motives, or truthfulness, of the evidence given by either Mrs King or Mr King. He added that “a legal practitioner is not to be the judge of credibility of witnesses or the validity of an argument (Tombling v Universal Bulb Company [1951] 2 TLR 289)” and that “[i]f the solicitor decides to believe their client, criticism cannot be made of that (Myers v Elman [1940] AC 282; [1939] 4 All ER 484)”.

25. Counsel for the Defendants put the case of Steve and Cathie quite simply:

“The 2017 Wills should never have been brought into existence. The Plaintiffs must have known of the issues concerning Ken and Irene’s testamentary capacity: by provision of Dr Barnett’s February 2017 opinions, if not from their own observations; both before the 2017 Wills were signed and during the course of the proceedings: Cooke v Watson (1902) 2 SR (NSW) 36 at 47; Brown v Sandhurst Trustees Ltd (No 2) [2009] VSC 406 at [23] – [26].

It also cannot be said that the circumstances led reasonably to an investigation of the matter – because the Plaintiffs did not take all proper steps to investigate the facts of the case before there were contested proceedings (Starr v Miller; Starr v Miller (No 2) [2021] NSWSC 685 at [69] – [71], citing Davies v Gregory (1873) LR 3 P&D 28 at 33 and Re Tsaousis [2019] VSC 511).

The Plaintiffs were the cause of this litigation – on notice of the opinions of Dr Barnett, the Plaintiffs not only decided not to obtain a second medical opinion, but instead proceeded to arrange execution of the new Wills (of which they were the sole beneficiaries) personally. The Plaintiffs’ conduct in causing the 2017 Wills to come into existence is relevant: Dawson v Peters (No 2) [2007] NSWSC 1421 at [11] – [12].

The Plaintiffs’ forensic decisions – failure to call relevant witnesses and failure to tender relevant documents (or produce them until late in the hearing, if at all), are also relevant. The Plaintiffs’ were not conducting a “reasonable investigation” of the validity of the 2017 Wills – the reality of the contest (Starr v Miller at [75]) was that these were adversarial proceedings conducted for the Plaintiffs’ material financial advantage. Costs should follow the event.”

26. They also pointed to a number of the Court’s findings in the principal judgment:

“There were a number of ‘red flags’ pointing to a challenge to Ken and Irene’s testamentary capacity: principal judgment at [440]; [750].

Firstly, Ken’s 2017 Will was very different to his 2015 Will and Irene’s 2017 Will was very different to her 2015 Will (principal judgment at [155]); Karen had been a beneficiary in Wills made between 1992 and November 2007 but was not thereafter a beneficiary of any of the Wills until the 2017 Will (principal judgment at [157]); In none of the historic Wills was Jeffrey named as an executor or beneficiary (principal judgment at [158]).

Secondly, Ken and Irene had been advised for many years by their family solicitor David Cummins, who had made all of the previous Wills, but the preparation of new Wills was now being sought by a new solicitor with no previous involvement with, or knowledge of, Ken and Irene.

Thirdly, the 2017 Wills were prepared by Ms Blackadder, who had very limited experience in the drafting of Wills and the assessment of testamentary capacity. There was no explanation as to why Ms Boustani, the principal of the firm of solicitors with extensive Probate experience, did not attend on Ken and Irene (principal judgment at [108]) instead of Ms Blackadder.

Fourthly, and in particular, on 22 March 2017 Ms Blackadder received from the Defendants’ previous solicitors copies of the February 2017 reports of the geriatrician Dr John Barnett which concluded that Irene ‘… has significant cognitive impairment…’ and ‘… she has dementia, which is moderate to severe in degree…’ and Ken ‘has a mixed Alzheimer’s and Vascular dementia. He has obviously deteriorated very much since I saw him last year. He is totally lacking in insight and has no capacity to make any legal decision’ (principal judgment at [408]).

There was no evidence from any expert disputing the opinions expressed by Dr Barnett as Ken and Irene’s treating geriatrician (principal judgment at [112]), whose evidence the Court accepted (principal judgment at [260]). This was notwithstanding that the Plaintiffs had been advised of the importance of such evidence if it could be obtained.

Thus, Ms Blackadder had contacted the Plaintiffs in relation to a draft response to the Defendants’ solicitors (principal judgment at [409]). Karen said in cross examination that she was not involved in asking Ms Blackadder to seek independent medical assessments of Ken and Irene and it would have been Jeffrey who dealt with that, but Jeffrey said that he could not remember if he gave instructions to Ms Blackadder for an independent assessment (principal judgment at [411]). Mr McIntosh in cross examination made it clear that the option of obtaining a new geriatric opinion for Ken and Irene was communicated to the Plaintiffs and the Plaintiffs decided not to proceed with the medical assessment (Tcpt, 9 February 2021, p 396(47) – p 397(09)).

The Plaintiffs encouraged Ken and Irene’s unrealistic belief that they would be able to return to Southdowns (principal judgment at [340]).

Karen, or more probably Jeffrey, assumed responsibility for arranging for the 2017 Wills to be executed after 31 March 2017, and in circumstances where they knew of Dr Barnett’s opinions as to Ken and Irene’s mental capacities, and had seen the Teece Hodgson and Ward letter of 29 March 2017 to Emprise Legal giving notice that the defendants proposed to take action in NCAT to challenge Ken and Irene’s mental capacity to sign documents which had legal effect (principal judgment at [370]).

Jeffrey’s evidence was treated with caution (principal judgment at [346]) and there were aspects that were hard to accept (principal judgment at [348]-[349]; [366]; [373]-[374]; [381]-[382]);

Witnesses which (sic) would have expected to have been called by the Plaintiffs, Evanna Kamal and Betty Boustani, were not called by them (principal judgment at [73] – [110]);

A number of documents were not produced by the solicitors acting for the Plaintiffs. No file notes were produced:

i.   Of the conference between Ms Blackadder, Ms Kamal, the Plaintiffs, and Mr and Mrs King on 20 March 2017 (principal judgement at [115]);

ii.   Of the conference between Ms Blackadder, Ms Kamal, Ken, Irene and the Plaintiffs on 27 March 2017 (principal judgment at [114]);

iii.   Of telephone calls between Ms Blackadder and the Plaintiffs (principal judgment at [118]);

The Plaintiffs made and persevered with serious accusations of financial impropriety and dishonesty against the defendants in relation to Ken and Irene’s finances until the commencement of the hearing when all such allegations were withdrawn. These claims were completely unjustified (principal judgment at [317]; [318]; [363] (sic)).” [The reference should be to [362]].

27. At the hearing, counsel for Steve and Cathie highlighted the relevance of the allegations of dishonesty made against Steve and Cathie, which was to be supported by evidence from Ms Boustani, whose affidavit was not read on the first day of the hearing: Tcpt, 7 July 2021, p 05(25-30). This was a relevant matter because in the principal judgment the Court found there was not one skerrick of evidence to support any allegations against the Steve and Cathie: principal judgment at [318].

28. Counsel for Steve and Cathie did not specifically submit that Karen and Jeffrey had acknowledged that there were suspicious circumstances (a matter mentioned in Karen and Jeffrey’s counsel’s submissions), with the consequence that they would have known that the onus was on them, as the Plaintiffs, to satisfy the conscience of the Court that each of Ken and Irene did know and approve of the contents of his and her 2017 Will respectively.

29. Counsel for Karen and Jeffrey, in reply, submitted that regardless of any evidence of Ms Boustani that might have been given, there was no actual pleading of dishonesty against Steve and Cathie: Tcpt, 7 July 2021, p 10(41-43), p 10(48-49).

30. However, as was pointed out in arguendo, evidence of dishonesty would have been relevant to the question of the allegations being made by Ken or Irene and whether the assertions said to have been made by them against Steve and Cathie were justified. In fact, this had been raised with counsel on the first day of the hearing: Tcpt, 2 February 2021, p 36(15 –16).

31. Referring to Sydney Markets Credit Services Co-operative Ltd v Taylor (No. 3) [2015] NSWSC 1236, counsel for Steve and Cathie finally submitted (Tcpt, 7 July 2021, p 05(50)-06(15)):

“So the reality of the ‘contest’, as Justice Slattery referred to it, is as follows:

The plaintiffs knew there had been diagnoses of dementia, they had actually seen expert medical assessments to that effect and they knew that there was doubt about the ability of the Shepherds to enter into any sort of legal documentation. They encouraged the Shepherds to think badly of the Curcurutos and they were the moving parties in having Ms Blackadder draft the wills and they then arranged for the wills to be signed and they did that on the face of the NCAT proceedings which had been commenced challenging the mental capacities of the Shepherds, and they also did that, of course, in circumstances where they had a very significant financial interest in having new wills prepared because they were to be the sole beneficiaries of those wills in circumstances where they were not beneficiaries of the previous wills.

So, your Honour, the proceedings were very much a common example of partisan litigation. There is no reason why any exception should apply to the usual order for costs following the event.”

The Law

32. I have recently dealt with how costs in contested Probate proceedings are to be borne in Starr v Miller; Starr v Miller (No 2) [2021] NSWSC 685. Because of the recency of that decision, I shall not repeat what I wrote in that case. What follows, therefore, is merely by way of summary, emphasis and elaboration:

1. One aspect of the award of costs is a recognition that a party has been put to expense, often significant expense, which, taking account of the merits, as ultimately found following the hearing of the action, might otherwise have been avoided. That consideration does not infuse the award of costs with any sense of penalty or punishment, but simply recognizes the compensatory nature of an award of costs in context and according to principle: Norbis v Norbis (1986) 161 CLR 513 at 519; [1986] HCA 17 (Mason and Deane JJ, with whom Brennan J generally agreed).

2. In Probate proceedings and otherwise, the Court starts by treating the success or failure of the relevant party as being the starting point in consideration of the question of costs. Ordinarily, the successful party may reasonably expect to receive their, her, or his, costs, whether that outcome be described as costs following the “event” or otherwise. However, the question of costs is always within the Court’s unfettered discretion, which must be exercised judicially and by reference only to considerations relevant to its exercise and upon facts connected with, or leading up to, the litigation: In Re Green [1969] WAR 67 at 83 (Wolff CJ); Twist v Tye (1902) P 92; Spiers v English [1907] P 122; Middlebrook v Middlebrook (1962) 36 ALJR 216 at 217; Nicholson v Knaggs [No 3 - Severance And Costs] [2009] VSC 328 at [38].

3. In Probate suits, there are considerations that more readily affect the application of the Civil Procedure Act2005 (NSW) and the Uniform Civil Procedure Rules 2005 (NSW) than in most other forms of litigation. These considerations act as guides to the exercise of discretion, but they are not inflexible. The role which a particular party has played in litigation, whether as plaintiff or defendant, is relevant. Further, facts about the knowledge available to parties and the reasonableness of their conduct in conducting the litigation can be taken into account.

4. In Probate suits, there are certain exceptions to the general rule, where “adequate reason” is shown leading to an order that the costs of both the successful and the unsuccessful parties, might be paid from the estate, or an order that the costs might be left to be borne by those who incurred them. One exception is where the litigation is caused by the will-maker because his or her, conduct, habits, and mode of life, gave rise to a contest about the disputed will. (Although the older cases speak in terms of “fault” or “blame” that “did not necessarily mean moral fault or culpability, but rather that the touchstone should be whether it was the testator’s own conduct which had led to his will ‘being surrounded with confusion or uncertainty in law or fact’”: Kostic v Chaplin [2007] EWHC 2909 (Ch) at [9]. Perhaps, the question to be determined, in each case, is whether the will-maker by reason of his or her conduct is to be considered the cause of the litigation which has occurred, concerning the validity of his or her Will: Davies v Gregory (1873) LR 3 P&D 28 (Sir James Hannen).)

Another exception is where, broadly speaking, it was “reasonable” for the unsuccessful party to have brought or to have defended the proceedings, for example, because the unsuccessful party had a reasonable and bona fide belief that the will-maker had, or did not have, testamentary capacity (as the case may be), or because in the case of the propounder of the disputed Will (or Wills), the will-maker gave every appearance of having capacity. The two exceptions tend to overlap: Perpetual Trustee Company v Baker at [13]–[14].

5. The onus is on the party asserting that one, or other, of the two probate exceptions should apply: Pates v Craig (Estate of the late Joyce Jean Cole) (Supreme Court (NSW), Santow J, 5 September 1995, unrep) at 5–6.

6. The exceptions, like the general rule, provide a starting point for analysis. Neither is exhaustive or prescriptive. The Court then considers whether it should exercise its discretion as to costs in order to do justice between the parties: Brown v Guss (No 2) [2015] VSC 57 at [36] (McMillan J).

7. Any costs order should reflect the way in which the proceedings were conducted and dealt with, or as was noted by Slattery J in Sydney Markets Credit Services Co-operative Ltd v Taylor (No. 3) at [32], “The costs order should reflect the reality of the contest”. In that regard, the Court may take into account facts about the knowledge available to the parties and the reasonableness of their conduct in conducting the litigation: Perpetual Trustee v Baker at [14] (Giles JA and Brownie AJA) citing In the Estate of Moyle: Moyle v Moyle (Supreme Court (NSW), Santow J, 18 June 1988, unrep).

It is relevant to consider whether the Plaintiffs, knowing what they did about the circumstances in which the 2017 Wills were prepared and executed, should have proceeded to propound the Wills and continue the litigation: Tsaousis v Tsaousis (a minor, by his litigation guardian Tsaousis) [2019] VSC 511 at [35] (McMillan J).

8. The principle enunciated by Sir Gorrell Barnes P that “if the circumstances lead reasonably to an investigation of the matter, then the costs may be left to be borne by those who have incurred them” should be remembered: Spiers v English [1907] P 122 at 123; Middlebrook v Middlebrook at [217]. However, the party bringing or defending the proceedings must have taken all proper steps to inform themselves about the facts of the case.

9. As was written over a century ago in Miller’s Probate Practice (Maxwell: 1900 Ed.), at 438-439:

“Two questions are to be considered with reference to an application for costs of the unsuccessful party: (1) Was there reasonable ground for litigation? (2) Was it conducted bona fide? Where both these questions can be answered in the affirmative it is the usual practice of the Court, without having regard to the amount or the ownership of the property, to order the general costs to be paid out of the personal estate.”

10. Whilst doubtful wills should not pass easily into proof by reason of the cost of opposing them, parties should not be tempted into fruitless litigation by the knowledge that their costs will be defrayed by others: Mitchell v Gard (1863) 3 Sw & Tr 275 at 279; 164 ER 1280 at 1281-1282.

11. Any suggestion that there is a general rule that costs in probate proceedings are borne out of the estate should be immediately rejected. About 95 years ago, it was written in Re Plant [1926] P 139, at 152:

“I should be reluctant to do anything to create the idea that unsuccessful litigants might get their costs out of the estate, without making a very strong case on facts. The lure of ‘costs out of the estate’ is responsible for much unnecessary litigation.”

12. Ultimately the orders for costs must be adapted to the justice of the particular case. If, for example, it is made to appear that when propounding a will the executor must have known that she, or he, was attempting to obtain the sanction of the Court to a document which could not be supported, she, or he, ought to be condemned in the costs. It would be quite unjust to hold otherwise.

Determination

33. There are competing features in the proceedings to be borne in mind. The conduct of Karen and Jeffrey at the time of the instructions for, and the execution of, each of the two 2017 Wills must be taken into account in deciding the appropriate order for costs. Then, I must consider the reasonableness and the propriety of their conduct in commencing the proceedings, and then subsequently in seeking to propound, and maintain proceedings to establish the validity of each of Ken’s 2017 Will and Irene’s 2017 Will.

34. It is correct to submit that in these proceedings Karen and Jeffrey were seeking to propound the last Will in time of each of Ken and Irene, each of which was duly executed, and which apparently, was a valid document. Generally, if the last will of a will-maker is not to be admitted to probate, but an earlier one is, the last will has to be pronounced against and the earlier will (if there is one) pronounced for in solemn form or (if there is no earlier will) an intestacy declared.

35. The view that each of the 2017 Wills was a valid one was supported by the subsequent evidence given by Ms Blackadder, the solicitor who prepared each of the Wills. The evidence of Mrs and Mr King also appeared to support the validity of each of the Wills.

36. In relation to Ms Blackadder, it must have been clear that she had very limited experience in the drafting of Wills and the assessment of testamentary capacity, however, Karen and Jeffrey would not have been able to judge whether the evidence of each of those witnesses, at a hearing, would be accepted.

37. I must consider the facts that would have been known, or available, to Karen and Jeffrey going to the circumstances of the making of each of the 2017 Wills before the proceedings were commenced. They knew:

1. The age of each of Ken and Irene;

2. Ken had sustained a fall the previous year and the sequelae of that fall had been observed by them in late 2016: principal judgment at [381];

3. Irene had also suffered a fall and had broken her leg shortly prior to them seeing her on 20 March 2017: principal judgment at [144], [301], [352];

4. Each of Ken and Irene was in a nursing home at the time of their first visit in 2017: principal judgment at [115];

5. On 21 February 2017, Mrs King called Mr Cummins and was told that Ken and Irene had been “deemed unfit to make decisions” and the Guardianship had “kicked in”: principal judgment at [460];

6. They had been informed in writing, in early March 2017, that Ken and Irene had each been diagnosed with dementia: principal judgment at [144];

7. Each of Ken and Irene had been referred for a medical assessment about his, and her, capacity: principal judgment at [411]-[412];

8. By 22 March 2017, there had been a formal diagnosis of the mental state of each of Ken and Irene, which diagnosis was to the effect that each did not have capacity: principal judgment at [408]-[409]. (As stated, the formal diagnosis had not considered his, and her, testamentary capacity);

9. Ms Blackadder had received a copy of two medical reports from a treating geriatrician and had provided a copy to Karen and Jeffrey. There is no suggestion that she ever contacted either Ken or Irene about the contents of that email to obtain instructions from either of them: principal judgment at [409];

10. Karen and Jeffrey must have known, after receiving a copy of the medical reports by Dr Barnett on 22 March 2017, that Ms Blackadder did not inform Ken or Irene, about the contents of either report: principal judgment at [409];

11. There was then an opportunity to have each of Ken and Irene examined by another medical practitioner, for the purpose of assessing his, and her, testamentary capacity, respectively: principal judgment at [412]. Karen and Jeffrey decided to not proceed with any examination and assessment of both Ken and Irene by an independent medical expert and, instead, they proceeded to arrange execution of the wills themselves: Tcpt, 9 February 2021, p 396(47) – p 397(12);

12. It was Jeffrey who told Ms Blackadder and Ms Kamal not to return to Harbison Care because Ken and Irene had concerns about them: principal judgment at [365]-[367]. There was no direct contact between Ken and Irene and Ms Blackadder or Ms Kamal regarding the signing and execution of the Wills;

13. Jeffrey told Ms Kamal that Ken and Irene were ready to sign the 2017 Wills – despite the fact that there was still a question about how a part of the estate of each was to be distributed: principal judgment at [422], [640]. (To submit that this was irrelevant because it related only to a small part of each estate should not be accepted);

14. Jeffrey sought advice from Ms Kamal on how Ken and Irene were to execute the Wills and who was able to sign as an attesting witness: principal judgment at [330], [367];

15. Karen and Jeffrey attended upon Ken and Irene for the purpose of having each of the two Wills signed: principal judgment at [331]-[335]; and

16. They were the only two substitute beneficiaries named in each of the 2017 Wills and they had the most to gain by propounding the 2017 Wills.

38. Karen and Jeffrey had co-existing interests as executors and as the sole beneficiaries in each of the 2017 Wills. The proceedings had all the hallmarks of contentious, adversarial, proceedings, in which they sought to advance their claims in their own interests. To all intents and purposes, as between them and Steve and Cathie, it was hostile litigation.

39. The proceedings were commenced in April 2018, a little over one year after each of the 2017 Wills was executed. There was no evidence of what, if any, investigations were carried out by, or on behalf of Karen and Jeffrey in that period. However, shortly after each of the Wills was made, there were proceedings in the NSW Civil and Administrative Tribunal (Guardianship Division) (NCAT). On 1 May 2017, NCAT made financial management orders in respect of Ken and Irene, in which the affairs of each were committed to the management of the NSW Trustee and Guardian as the Tribunal found that each was incapable of managing his and her financial affairs, respectively: principal judgment at [151]. On 6 June 2017, NCAT made guardianship orders in respect of each of Ken and Irene: principal judgment at [152].

40. It was in July 2017 that Karen and Jeffrey returned to Thailand: principal judgment at [345].

41. In relation to events that followed the commencement of the case several matters are relevant:

1. In the principal judgment, I dealt with the failure by Karen and Jeffrey to call a number of witnesses and produce a number of documents: principal judgment at [73-122]. The three witnesses, were Ms Kamal, Ms Baird, the second attesting witness, and Dr Wijeratne, a report from whom was served, but on which reliance was not placed;

2. Subsequent evidence was relied upon by Steve and Cathie from Dr Barnett, in which he dealt specifically with the testamentary capacity of Ken and of Irene. Still no medical evidence in response was relied upon by Karen and Jeffrey, and as stated, Dr Wijeratne, who produced a report dated 29 November 2019, which was only filed on 30 March 2020, was not called;

1. I have earlier referred to the decision made by Karen and Jeffrey to not read the affidavit of Ms Boustani. Although the legal representatives of Steve and Cathie were informed of the decision on the first day of the hearing, it would have been highly unlikely that the decision was made at that time: Tcpt, 7 July 2021, p 05(25-30). If it was made then, the lateness of the decision, bearing in mind its significance, does not assist Karen and Jeffrey;

2. It was relatively soon after each of the 2017 Wills were made that some event occurred which soured the relationship of Karen and Jeffrey with Ken and Irene. Karen and Jeffrey stopped visiting Ken and Irene in late April 2017 and they returned to Thailand in July 2017: principal judgment at [341]-[342]; and

3. Karen and Jeffrey must have also been advised, once it was accepted that there were suspicious circumstances, that the case was one which called for a vigilant examination of the circumstances leading to Ken and Irene making and executing the 2017 Wills.

42. Initially, even if there were some justification for them to investigate the assertions of dishonesty and the other criticisms made by Ken and/or Irene against Steve and Cathie, for Karen and Jeffrey, unequivocally, to accept those serious allegations, without more, demonstrates a risk they were prepared to take in regards to the costs of propounding each of the Wills made. Particularly, in light of Ken’s and Irene’s age, frailty, physical health issues, and the medical evidence provided to them before the Wills were even prepared, that confirmed what they had been told about each of Ken and Irene suffering dementia.

43. I have, of course, borne in mind that each of the 2017 Wills was signed by Ken and by Irene respectively and that the signature of each on the 2017 Will was duly attested. However, by the time each Will came to be propounded, it made provision for only Karen and Jeffrey and only they would benefit by successfully propounding each 2017 Will. They, or at least Jeffrey, had participated in the events leading to the execution of each Will. Their conduct did nothing to dispel the doubts about the capacity of each of Ken and Irene. I am not satisfied that their actions were caused by the conduct of Ken and Irene in creating uncertainty and confusion as to his, and her, testamentary intentions so as to instil in Karen and Jeffrey a bona fide belief that they had been left the whole of each estate.

44. Whilst each of the 2017 Wills could not be suppressed or ignored, and they must have been made known to the Court, with its ruling upon validity obtained, Karen and Jeffrey, as persons whose interests were affected, had the choice whether, and how vigorously, they would participate in the process of establishing the validity of each of them, in circumstances where there was no dispute about the validity of each of the 2015 Wills. Karen and Jeffrey commenced, vigorously participated in, and persisted with, the proceedings to establish the validity of each of the 2017 Wills to the very end. By shortly after the commencement of the hearing, if not well before, they would have been acutely aware of the risks as to costs that were being taken.

45. Looking at the whole of the evidence in the case and all of the circumstances, some of which I have mentioned above, but also remembering my findings of fact in the principal judgment, the case appears to me to be one that was conducted by Karen and Jeffrey in order to receive the whole estate of Ken and of Irene. As a matter of reality and substance, they were seeking to establish themselves as the sole beneficiaries of the estate of Ken and of Irene. For the reasons I have stated, I decline to make an order in the terms sought by Karen and Jeffrey.

46. Steve and Cathie successfully defended the two cases brought by Karen and Jeffrey. They also succeeded on their Cross-Claim in each proceeding (about which there was no relevant dispute once the issue of the validity of each of the 2017 Wills was determined).

47. I note, also, that neither party gave any evidence of attempts to resolve the proceedings.

48. In my view, the contest in each proceeding does not fall within the principles that would justify the payment of Karen and Jeffrey’s costs out of the estate of Ken or the estate of Irene. To the contrary, the proceeding, in respect of the 2017 Will of each of Ken and Irene, bring it within the principle of costs following the event. The Plaintiffs should pay the Defendants’ costs, calculated on the ordinary basis, of each proceeding.

49. Even though there were two proceedings, there should only be one set of costs. Steve and Cathie should receive their costs, calculated on the indemnity basis. It is in my view, appropriate that the costs of Steve and Cathie, to the extent that they are not recovered from the Plaintiffs, be shared equally, between the estate of Ken and the estate of Irene.

50. The Court in each proceeding:

1. Orders that the Plaintiffs pay the Defendants’ costs, calculated on the ordinary basis.

2. Orders that the Defendants’ costs, calculated on the indemnity basis, be paid, or retained, as the case may be, out of the estate.

3. Orders that any difference between costs calculated on the ordinary basis recovered from the Plaintiffs, and the costs, calculated on the indemnity basis, of the Defendants be paid out of the estate.

4. Makes no order as to the Plaintiffs’ costs, to the intent that they are to bear their own costs.

5. Orders that the Court Books be returned.

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