Coppola v Nobile (No 3)

[2012] SASC 145

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

COPPOLA & ANOR v NOBILE & ANOR (NO 3)

[2012] SASC 145

Judgment of The Honourable Justice Stanley

27 August 2012

SUCCESSION - WILLS, PROBATE AND ADMINISTRATION - PROBATE AND LETTERS OF ADMINISTRATION - COSTS - GENERAL PRINCIPLES

Plaintiffs sought order pronouncing force and validity of will executed in 1992 - alternatively, sought order pronouncing force and validity of will executed in 1972 - first defendant opposed making of both orders - the Court made an order pronouncing force and validity of the 1972 will - parties seek order for costs.

Held:  Costs set off against each other and apportioned between the parties.

Supreme Court Civil Rules 2006 (SA) r 266, referred to.
Ponder v Burmeister [1909] SASR 62; Public Trustee v Hall [1937] SASR 252, applied.
Thomas & Anor v Nash (No 2) (2010) 107 SASR 338; Re Herbert Brothers (Deceased) (1990) 101 FLR 279; Estate of Plant (Deceased) [1926] P 139; Coppola & Anor v Nobile & Anor [2012] SASC 129, considered.

COPPOLA & ANOR v NOBILE & ANOR (NO 3)
[2012] SASC 145

Civil

STANLEY J:

Introduction

1. In this matter the plaintiffs sought an order pronouncing the force and validity of the will executed by the deceased testatrix on 2 June 1992.  In the alternative, they sought an order pronouncing the force and validity of the will executed by the deceased testatrix on 18 April 1972.

2. The first defendant opposed the making of both orders sought by the plaintiffs.  The second defendant put the plaintiffs to proof in relation to the 1992 will but otherwise admitted that if the 1992 will was not admitted to probate, then a grant of probate in solemn form should be made in respect of the 1972 will. 

3. The Court made an order pronouncing the force and validity of the will executed by the testatrix on 18 April 1972.  It was not satisfied that the 1992 will was validly made.

4. The Court was not prepared to pronounce in favour of the force and validity of the 1992 will because it was not satisfied that the deceased knew and approved of the terms of the will. 

5. Each of the parties now seek an order for costs. 

   Relevant legal principles

6. In Ponder v Burmeister[1] Way CJ discussed the principles applicable to determining the appropriate costs order in a probate matter.  They are:

   ·The general rule is that costs follow the event;

   ·Departure from the general rule is to be the exception, occurring only when there is adequate reason for such an order;

   ·Costs should be awarded from the estate where the testator’s conduct has been the cause of the litigation;

   ·There should be no order as to costs where the parties who failed in the litigation were reasonably led into the litigation by a bona fide belief in their case.  They must have acted in good faith and must have had reasonable ground for disputing or upholding the will.  This award should be made even though the testator and the beneficiaries under the will were not to blame for the litigation;

   ·In determining the question of costs, the Court must view the facts from the position in which they were presented to the parties who failed in the litigation.

   [1]    Ponder & Anor v Burmeister & Ors [1909] SASR 62.

7. In Public Trustee v Hall[2] Angus Parsons J identified the principles by reference to the decision of Way CJ in Ponder v Burmeister as follows:[3]

   The rules relating to costs have been classified as follows:

   1.If the litigation results through the fault of the testator or those interested in the residue the costs may properly be paid out of the estate.

   2.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. Unless the circumstances of the case bring it within one of the foregoing exceptions, the general rule that costs follow the event ought to prevail.

   [2] [1937] SASR 252.

   [3] [1937] SASR 252 at 253.

8. This passage from the judgment of Angas Parsons J in Public Trustee v Hall[4] was cited with approval by Doyle CJ in Thomas & Anor v Nash (No 2).[5]The Chief Justice said further:

   The principles that I am to apply in deciding the application by the plaintiffs for costs are well established. In Middlebrook v Middlebrook (1962) 108 CLR 666 (note); 36 ALJR 216 at 217, Dixon CJ said:

   No doubt in probate suits the prima facie rule is that, as in other litigation, costs follow the event. But in probate suits there are considerations which more readily affect the application of this rule than in most other forms of litigation. See Re Keane, [1909] VLR 231, at p 239. An examination by Hood J of the more important English cases decided up to the date of his judgment will be found in Re Millar, [1908] VLR 682. There are in the present case circumstances which would naturally lead the caveator to think that an investigation of the validity of his father’s last will was justified. If this case were judged on its general circumstances only, I think that adequate reasons would be seen for entertaining some doubt as to the validity of the will. It is only as a result of investigation that the reasons for finding affirmatively in favour of the testator’s testamentary capacity distinctly appear. In these circumstances the proper course is to apply 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”.

   The decision of Sir Gorrell Barnes in Spiers v English [1907] P 122 has often been referred to as providing sound guidance. He said (at 123):

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

   [4] [1937] SASR 252 at 253.

   [5] (2010) 107 SASR 338 at 340.

9. Accordingly, the approach to be taken to an award of costs in a probate matter is to commence with a consideration of whether the claim of a particular party to costs falls within one of the established exceptions to the principle that costs follow the event.  Once those matters have been determined, there is still a discretion reposed in the Court in relation to the question of costs.  The party’s conduct of its case may be a matter relevant to the exercise of that discretion but that exercise only occurs after it has first been determined whether or not the case falls within one of the well established exceptions to the approach that costs should follow the event.[6]

   [6]    Re Herbert Brothers (Deceased) (1990) 101 FLR 279 at 305 – 307.

   Consideration

10. I commence with consideration of the position of the plaintiffs, the executors of the deceased’s estate under the 1992 will.  The position of Mr Scragg, as the second plaintiff, creates some difficulties.

11. A personal representative who proves a will in solemn form of his own motion or because parties interested have put him to proof of the will, ordinarily, is entitled to costs out of the estate.  All of the expenses of and incidental to proving a will are a charge on the estate and the personal representative has a right to take them without an order of the court.[7]  An executor may be entitled to his fees arising from a challenge to capacity from the estate if the executor is prima facie justified in propounding the will.  Where an executor must have known that he is attempting to obtain a grant to a document which cannot be supported, he should be liable in costs.[8] 

    [7]    Estate of Plant (Deceased) [1926] P 139 per Lord Hanworth MR at 146 – 147.

    [8]    Ponder & Anor v Burmeister & Ors [1909] SASR 62 per Way CJ at 109.

12. In this matter, notwithstanding the criticisms of Mr Scragg, I am satisfied that there is nothing in his conduct which would warrant an order for costs against him personally.  On the other hand, he is entitled to an order in respect of the costs related to the 1972 will.  However, the effect of the orders I propose to make in relation to the first plaintiff in relation to costs would be defeated if I was to make an order that Mr Scragg is entitled to costs out of the estate as the executor.  In the circumstances I propose to adopt the approach urged on me by Mr Ower, counsel for the second defendant, and to treat Severina as the moving party. 

13. In this litigation there were two “events”:  the validity of the 1992 will and the validity of the 1972 will.

14. The defendants were successful on the validity of the 1992 will.  The plaintiffs and the second defendant were successful on the issue of the validity of the 1972 will.

15. None of the recognised exceptions apply to the second defendant.  In these circumstances the second defendant is entitled to her costs.  That leaves for decision the matter of who should pay her costs and the entitlement of the plaintiffs and the first defendant to costs. 

16. In this matter the Court found that there were circumstances of suspicion so that the presumption of knowledge and approval did not arise in the case of either the 1992 will or the 1972 will.  Notwithstanding the presumption being displaced in relation to the 1972 will, the Court was nonetheless satisfied that, on the evidence, the deceased knew and approved the terms of the 1972 will.  Accordingly, the Court pronounced for the force and validity of that will.

17. Nonetheless, in my view, the circumstances of suspicion that arose justified the first defendant requiring the plaintiffs to discharge the burden of proving due execution, testamentary capacity, knowledge and approval in relation to the 1972 will.   Obviously, given the Court’s finding, the first defendant was justified in requiring the plaintiffs to discharge the burden of proving those same matters in relation to the 1992 will.  While the first defendant did not make out the plea of undue influence in relation to the 1992 will, I am satisfied that the circumstances provided them with reasonable grounds for disputing the 1992 will on that basis.  The Court was required to assess the evidence presented and to reach a conclusion.  A trial was necessary. 

18. Further, I am satisfied that the litigation in relation to the 1992 will resulted from the fault of Severina Coppola.  In particular from the stance adopted by her that her mother consciously chose to exclude her daughter, Grazia Nobile, from her bounty because of threats made to her and her late husband by Domenic Nobile, in which Grazia was complicit.  For the reasons explained in the earlier judgment,[9] I have not accepted this evidence.  The terms of clause 6 of the 1992 will justified the first defendant in challenging its validity.  As I have found, the content of clause 6 did not reflect the true situation.  I found that Severina provided the instructions to Mr Scragg for the 1992 will, including, in particular, clause 6.  The first defendant, knowing the explanation proffered in clause 6 to be untrue, had a reasonable ground for disputing the 1992 will.  Severina’s conduct was a cause of the litigation in respect of that will. 

    [9]    Coppola & Anor v Nobile & Anor [2012] SASC 129.

19. Of course, the first defendant succeeded on the issue of the validity of the 1992 will.  The issue is the question of costs in relation to the 1972 will in respect of which her challenge failed. 

20. Mr Cameron, counsel for the first defendant, submitted that much of the evidence in relation to each will was intertwined.  I accept this submission.  Notwithstanding the failure of the first defendant’s challenge to the validity of the 1972 will, I am also satisfied that she had reasonable grounds for challenging its validity.  Unlike the position in relation to the 1992 will, however, the litigation in relation to the 1972 will was not the fault of Severina.  On the contrary, she was successful in propounding this will.  In these circumstances, I am satisfied that there should be no order as to costs in respect of the 1972 will made against the first defendant and Severina should recover her costs from the estate.

21. Accordingly, I find that in respect of the 1992 will, Severina should pay the costs of Grazia and Concetina.  Ordinarily, the court will only allow one order as to costs.  However, there was a sufficient divergence of interest between the defendants to justify an award of costs in favour of each of them.[10]  Further, Severina should not be permitted to indemnify herself from the estate in respect of the 1992 will.  I find that in respect of the 1972 will, Severina and Concetina are entitled to their costs out of the estate on an indemnity basis.

    [10]   Martyn et al, Williams, Mortimer and Sunnucks: Executors, Administrators and Probate (19^th ed., 2008) para [40-12].

22. The costs of the administrator pendente lite should be paid out of the estate on an indemnity basis. 

23. On 22 March 2012 I granted an application by the first defendant seeking orders restraining the second plaintiff from continuing to act in the within action.  I reserved the question of costs of that application.  While I did not grant the application restraining other members of Mr Scragg’s firm from acting in the matter, I am satisfied that in the circumstances the plaintiffs should pay the first defendant’s costs of that application. 

24. The defendants have sought orders that the plaintiffs pay the costs thrown away by the adjournment caused by the late discovery of the second plaintiff’s file.  The adjournment was the sole responsibility of the plaintiffs.  In the circumstances, I am satisfied that it is appropriate Severina meets the costs thrown away by the adjournment. 

25. The second defendant has submitted that in these circumstances, the various costs orders should be set off against each other in order to avoid the resulting complexities on a taxation.  She submitted that everything should be done to resolve the dispute between the families as quickly as possible.  This submission makes good sense.

26. 6SCR 266 empowers the Court to set off costs orders against countervailing liabilities. I adopt the approach urged on the Court by the second defendant. Necessarily, in this case, this approach requires the Court to swing a broad axe. The evidence in relation to each will cannot be discretely segregated.

    Conclusion

27. In considering the general justice of the case, I make the following orders:

    1.The first plaintiff pay one-third of the first defendant’s costs in the action. 

    2.The first plaintiff pay two-thirds of the second defendant’s costs of the action. 

    3.The estate pay one-third of the second defendant’s costs of the action. 

    4.The plaintiffs are not permitted to indemnify themselves out of the estate for the costs of the action.

    5.The estate pay the costs of the administrator pendente lite on an indemnity basis.