Dawson v Peters (No 2)

[2007] NSWSC 1421

CITATION:	DAWSON v PETERS & 3 ORS (No. 2) [2007] NSWSC 1421
HEARING DATE(S):	04/12/2007
JUDGMENT DATE :	7 December 2007
JURISDICTION:	EQUITY
JUDGMENT OF:	Bryson AJ at 1
DECISION:	Order that the costs of the first and second defendants be paid out of the estate of the testator.
CATCHWORDS:	COSTS - probate litigation [2007] NSWSC 1329 - contest between different defendants on whether informal document should be admitted to probate as codicil to formal will - successful defendants claimed order for costs against unsuccessful defendant - costs of successful defendants out of estate, unsuccessful defendant left to pay own costs.
LEGISLATION CITED:	Civil Procedure Act 2005 s 98
CASES CITED:	Dawson v Peters [2007] NSWSC 1329 In Re Hodges, Shorter v Hodges (1988) 14 NSW LR 698 Shorten v Shorten (No 2) [2003] NSWCA 60
PARTIES:	Frederick Brian Dawson - Plaintiff Joan Marie Peters and Gwen Cameron - First and Second Defendants Narelle Godbee - Third Defendant
FILE NUMBER(S):	SC 102918/2006
COUNSEL:	R. Reitano - 1st & 2nd Dft M. Lawson - 3rd Dft
SOLICITORS:	Bradfield Mills - 1st & 2nd Defendants Atkinson Vinden Heazlewoods - 3rd Dft

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
PROBATE LIST

BRYSON AJ

7 December 2007

& 3 ORS (NO.2)
THE ESTATE OF WILFRED NICHOLLS

JUDGMENT

1 BRYSON AJ: These reasons deal with costs in Dawson v Peters [2007] NSWSC 1329, and should be read with the findings I then made. When I gave judgment on 26 November 2007 I made an order for Mr Dawson the plaintiff to be paid his costs out of the estate. On 4 December I heard argument by counsel for the defendants on orders for costs relating to the first and second defendants, and to the third defendant.

2 Civil Procedure Act 2005 s 98 gives the Court full power to determine costs questions but subject to Rules of Court. UCPR 42.1 provides:

Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other orders should be made as to the whole or any part of the costs.

3 This rule makes an order that costs follow the event the ordinary course, unless displaced by a discretionary decision.

4 Mr Dawson the executor of the formal will applied in common form for probate of the formal will and also applied for a declaratory order establishing that the informal document constituted an amendment to the formal will, meaning in effect that it should be admitted to probate as a codicil. He did not apply for probate of the informal document; he only applied for a declaratory order; this claim was dismissed and in effect the declaratory order was refused. Persons who expressed interest in upholding the informal document or in establishing that it was invalid were joined as defendants, and the contest at the hearing was between defendants appointed to represent these groups. According to the formal record no defendant made a claim so it is difficult to apply a rule that costs follow the event; but the substance is clear, that the third defendant Mrs Godbee maintained that the informal document was valid, and she failed, while the first and second defendants Mrs Peters and Mrs Cameron maintained that it was invalid and succeeded.

5 For a long time considerations special to probate litigation have been regarded when deciding costs of litigation relating to disputed wills, and the Civil Procedure Act 2005 and UCPR 42.1 have not altered the significance of the considerations earlier brought to bear on discretionary decisions.

6 A statement of the approach taken in probate was made In Re Hodges, Shorter v Hodges (1988) 14 NSW LR 698 at 709 by Powell J.

Costs are, of course, in the discretion of the court, but that discretion, being a judicial, and not an unfettered, one must be exercised in accordance with established principle.
The general principle to be applied in adversary litigation is that costs follow the event, those costs being taxed on a party and party basis. However, over the years, a number of exceptions to this general rule have come to be recognised. In the field of probate litigation, two such exceptions have come to be recognised, they being:

1. where the testator has, or those interested in 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: eg, Mitchell and Mitchell v Gard and Kingwell (1863) 3 Sw & Tr 278; 164 ER 1280; Orton v Smith (1873) LR 3 P & D 23; Wilson v Bassil [1903] P 239; Spiers v English [1907] P 122; Kenny v Wilson; In the Estate of Holtam; Gillett v Rogers (1913) 108 LT 732.

To these exceptions to the general principle should, perhaps, be added the principle that, although a legal personal representative may be entitled to recover from a party to litigation costs only on a party and party basis, he, as a fiduciary, retains the right to an indemnity from the estate, and, thus, may have recourse to the estate for any difference between his costs on a trustee basis and the costs recovered from a party.

7 The operation of the general principle and the exception has been considered a number of times since; in the Court of Appeal in Shorten v Shorten (No 2) [2003] NSWCA 60. The extensive review of authority at paras 14-26 by Mason P shows to my mind that the operation in probate litigation of the general principle and the exceptions formulated by Powell J in Re Hodges is 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 principle and the exceptions. The terms of the exceptions and their tendency to overlap show that they are not prescriptive.

8 On the facts found in my judgment there is room for consideration of both the exceptions stated by Powell J. The testator has been the cause of the litigation in the sense that he signed his name to the informal document in circumstances which called for close examination of its validity. As my findings show, I was not satisfied that he understood what it was. The second exception is under consideration as the circumstances clearly led to need for investigation. No clear result appears from considering these exceptions according to their terms.

9 Counsel for the first and second defendants contended that the appropriate order was that the third defendant should pay the first and second defendants’ costs; the basis for this was that in view of the third defendant's interest in upholding the informal document, it was simple inter-partes litigation, the first and second defendants had won and the third defendant had lost.

10 I do not see this case as simple inter-partes litigation. The testator did sign the document, its terms are apparently testamentary, the interests of persons other than these three defendants are affected by it and no-one but the Court could decide for or against a document which is apparently testamentary, or should decide to disregard it. Documents like that cannot be suppressed or ignored; they must be made known to the Court and its ruling obtained. Persons whose interests are apparently affected have the choice whether and how vigorously they will participate in the process; they do not have the choice whether the Court will decide the outcome. Mr Dawson had no choice but to ask the Court for a declaration; there was already an established controversy among persons apparently interested; the persons expressing interest in the controversy were joined as parties; these defendants took an active part but another did not.

11 As findings in my judgment show, Mrs Godbee's conduct in the events leading up to the testator signing the document was unsatisfactory in several ways and there were important parts of her evidence which I was not able to believe. As I earlier stated, I considered whether she should recover her costs out of the estate; and I now regard that as inappropriate because of the way she participated in the events leading to the creation of the informal document, and because of her lack of success at the hearing. The third defendant can point, in support of her recovering costs out of the estate, to the participation of the testator in the events and circumstances which brought the informal document into existence, and to her own position in which, in the interests of her daughter Montanna as well as of herself, and in the absence of any other party who made a positive case in favour of the informal document, it was for her to advocate a decision favouring the informal document so as to enable the court to decide after each side of the question had been put in a full and clear way.

12 However, I have decided that she should not recover costs out of the estate because of inappropriate aspects of her participation in the events leading up to the testator’s signing the informal document, and in her preparation of it. She disregarded his repeated requests to see his solicitor. She did not involve anyone at all, medical or lay, interested or uninterested, friend or stranger, close to her or otherwise, in the events; with the result that not only are there no attesting witnesses, there were no witnesses of any kind. Her evidence was not reliable. Other conduct of hers, in withdrawing money from a bank, deprives any provision in the informal document for persons other than herself of real significance. These considerations have led me to decide that she should not recover an order for costs. In my judgment she should be left to pay her own costs of the proceedings.

13 I do not think that it is appropriate that Mrs Godbee should be ordered to pay the first and second defendant's costs of the proceedings. They took an important and successful part in establishing whether or not an apparently testamentary document should be admitted to probate, and their costs are an expense which the estate should bear.

14 There was some discussion before me on whether the first and second defendants, who had different solicitors but the same counsel, should recover the costs of representation by separate solicitors. Their interests are identical, and for the purpose of my costs order I cannot see why they should get the costs of being represented by more than one solicitor. No doubt the costs assessor can attend to this in detail.

15 My order is:

Order that the costs of the first and second defendants be paid out of the estate of the testator.

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