Clines v Johnston and Anor (No. 2)
[2008] NSWSC 742
•19 June 2008
CITATION: Clines v Johnston and Anor (No. 2) [2008] NSWSC 742 HEARING DATE(S): 19 June 2008 JUDGMENT OF: Jagot AJ EX TEMPORE JUDGMENT DATE: 19 June 2008 CATCHWORDS: COSTS - costs in probate litigation - whether unsuccessful defendants' costs should be paid out of the estate - defendants' costs to lie where they fall CATEGORY: Consequential orders CASES CITED: Dawson v Peters (No 2) [2007] NSWSC 1421
Shorter v Hodges [1988] 14 NSWLR 698PARTIES: Peter James Andrew Clines (Plaintiff)
Dorothy Emma Johnston (First Defendant)
Neil Johnston (Second Defendant)FILE NUMBER(S): SC 4395 of 2007 COUNSEL: Mr M S Willmott SC (Plaintiff)
Mr D M Flaherty (Defendants)SOLICITORS: Owen Hodge Lawyers (Plaintiff)
Hinde & Ginges Solicitors (Defendants)
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
Jagot AJ
19 June 2008
4395 of 2007 PETER JAMES ANDREW CLINES v DOROTHY JOHNSTON & ANOR (NO. 2)
JUDGMENT
1 HER HONOUR: The only issue remaining in these proceedings is that of costs. Otherwise the orders that should be made consequential on my principal reasons dated 6 June 2008 (Clines v Johnston and Anor [2008] NSWSC 524) have been agreed.
2 The plaintiff, who was successful in the proceedings, submits that there should be an order that the plaintiff’s costs on an indemnity basis be paid out of the estate, but otherwise there should be no order as to costs.
3 The defendants agree with the first part of that order, namely, that the plaintiff should have his costs paid out of the estate on the indemnity basis, but submit that the defendants costs on a party-party basis should also be paid out of the estate.
4 The plaintiff supports his position by reference to the decision in the Shorter v Hodges [1988] 14 NSWLR 698 at 709, namely, that probate litigation involves two recognised exceptions to the general principle of costs following the event:
1. Where the testator has, or those interested in the residue have, been the cause of the litigation, the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate;
2. If the circumstances led reasonably to an investigation in regard to the document propounded, the costs may be left to be borne by those who respectively incurred them.
5 The plaintiff submits that the facts of this case fall within the second category. Accordingly, the defendants’ costs should lie where they fall. While the plaintiff accepts that there had to be a contradictor to the plaintiff’s actions, the plaintiff points out that two circumstances at least should have put the defendants on notice about the further testamentary instrument: the notation on the will packet and the evidence which Mrs Johnston gave in cross examination that she had been told on a number of occasions about the further testamentary instrument. However, according to the plaintiff, the defendants elected to deal with this matter in an adversarial manner and accordingly took the risk that costs would lie where they fall.
6 The defendants, for their part, submit that the two categories referred to in Shorter v Hodges are not exclusive or prescriptive and have been said to overlap. In particular they refer to the observation of Bryson J in Dawson v Peters (No 2) [2007] NSWSC 1421 at [7[ to the effect that the principles formulated are not prescriptive and the exercise of judicial discretion upon the facts and circumstances of each case is very far from having been reduced to simple application of the principles.
7 According to the defendants they acted reasonably in defending the proceedings in circumstances where the only evidence of the terms of the further testamentary instrument was that of the plaintiff who stood to gain the benefit under that instrument. Further, in one sense at least, this case could be described as falling within the overlap category because the deceased had engaged a servant, namely her solicitor, who failed to safeguard her testamentary document from loss or destruction or to provide her with a copy. Accordingly, the defendants say that they should have their costs on a party/party basis paid out of the deceased’s estate.
8 I accept the plaintiff’s submissions. It seems to me that this is a case where the circumstances reasonably caused investigation but it cannot really be said in any way that the deceased was the cause of the litigation. The defendants elected to fully defend the proceedings, that is by positively asserting that there was no further testamentary instrument in the circumstances that the plaintiff’s submissions have identified (that there was a fairly clear notation on the will packet about that further testamentary instrument and, indeed, one of the defendants had been informed well before the deceased’s death of the existence and in fact the terms of that instrument). In those circumstances it seems to me that this is a case where the defendants’ costs should lie where they fall and should not come out of the estate of the deceased.
9 For the reasons I am satisfied that the proposed order (7) in the draft orders filed by the plaintiff (order the plaintiff’s costs on the indemnity basis be paid out of the estate of the deceased otherwise make no order as to costs) should be made. That means that I am going to make declarations and orders in accordance with paragraphs (1) to (7) of the orders which I now initial subject to an amendment to paragraph (3) which I have noted and initialled on the document, namely, the deletion of the words “the said Margaret McDowell” in line two and their replacement by the words “another person”. Otherwise I make those declarations and orders.
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