Drivas v Jakopovic (No. 2)

[2019] NSWSC 376

Supreme Court

New South Wales

Medium Neutral Citation:	Drivas v Jakopovic (No. 2) [2019] NSWSC 376
Hearing dates:	4 April 2019
Date of orders:	04 April 2019
Decision date:	04 April 2019
Jurisdiction:	Equity
Before:	Parker J
Decision:	No order as to the costs of the proceedings.
Catchwords:	COSTS – Party/Party — Exceptions to general rule that costs follow the event – contested probate litigation – whether the deceased the cause of the litigation – whether prosecution of proceedings reasonable – no order as to costs.
Legislation Cited:	Nil.
Cases Cited:	Banks v Goodfellow (1870) LR 5 QB 549 Carr v Homersham (2018) 97 NSWLR 328; [2018] NSWCA 65 Drivas v Jakopovic [2018] NSWSC 1803 Middlebrook v Middlebrook (1962) 36 ALJR 216 Re Estate of Hodges (1988) 14 NSWLR 698 Shorten v Shorten (No 2) [2003] NSWCA 60
Category:	Costs
Parties:	Anita Drivas (Plaintiff) Boris Jakopovic (Defendant)
Representation:	Counsel: J Brown (Plaintiff) R Tregenza (Defendant)   Solicitors: Sydney Law Practice Pty Ltd (Plaintiff) Webb Law (Defendant)
File Number(s):	2016/108097
Publication restriction:	Nil

Judgment – EX TEMPORE

Revised and reissued 8 April 2019

1. I am now required to deal with the question of costs, following the delivery of my judgment in this matter in November 2018: Drivas v Jakopovic [2018] NSWSC 1803. The reasons I will give concerning costs assume familiarity with that judgment.

2. Counsel for the successful defendant, Boris, sought orders that Boris' costs be paid on an indemnity basis out of the estate and that the unsuccessful plaintiff, Anita, indemnify Boris against those costs on a party‑party basis for the period after the service of Mr Taylor's affidavit on 24 March 2017. Counsel for Anita submitted that her costs should be paid out of the estate; or alternatively, there should be no order as to costs.

3. There is no need in this case to make an order for payment of Boris' costs out of the estate. Boris is the sole beneficiary and thus to the extent that costs fall on him, they will in effect come out of the estate in any event. The real question is whether Anita should be required to pay Boris' costs after the service of Mr Taylor's affidavit in March 2017.

4. Among the cases to which I was referred was Shorten v Shorten (No 2) [2003] NSWCA 60. That case confirms the existence in contested probate litigation of exceptions to the general rule that costs follow the event. The two exceptions were stated in Shorten v Shorten (by citation from the earlier judgment of Powell J in Re Estate of Hodges (1988) 14 NSWLR 698 at 709) as 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.

5. Mason P, who gave the leading judgment, observed that the categories may overlap, but that the categories were not "coterminous" and remained "conceptually distinct".

6. It is easier for an unsuccessful litigant to bring himself or herself within the second class of case than the first. All that is required in the second class of case is that the circumstances led reasonably to an investigation. But in such a case, the unsuccessful party will still be left to bear his or her own costs. In order to come within the first category, and receive the benefit of a costs order, the unsuccessful party needs to show that the testator or those interested in the residue have been the "cause" of the litigation.

7. As Mason P acknowledged in Shorten v Shorten, there are cases where the testator left his or her testamentary papers "in confusion" or his or her conduct in the form of irrational actions giving rise to reasonable doubts about testamentary capacity, was sufficient to make the testator the "cause of the litigation" in the relevant cases: see at [19] to [20]. But it is equally clear from the decision that there are cases in which the circumstances gave rise to reasonable questions about the testator’s capacity but where the Court treated the case as within the second category and only declined to award costs against the unsuccessful party. Examples of this are the High Court decision in Middlebrook v Middlebrook (1962) 36 ALJR 216, the decision of Powell J in The Estate of Hodges and Shorten v Shorten itself.

8. I approach this case on the basis that even if I am satisfied that Anita has a reasonable basis for questioning the will, it would not necessarily entitle her to an order for costs.

9. Counsel for Boris submitted, in effect, that after the evidence of Mr Taylor was served, Anita's further pursuit of the proceedings was not reasonable. Counsel also submitted, correctly, that my acceptance of Mr Taylor's evidence was an important factor in deciding to uphold the will but there are countervailing considerations.

10. Although I accepted Mr Taylor's evidence, it was evidence only of Mr Taylor's general practice. I found that sufficient to infer, having regard to other factors in the evidence, that the deceased had had testamentary capacity at the relevant time. But as counsel for Anita pointed out, there was no direct evidence from Mr Taylor of the circumstances in which the will was prepared; that was why it was necessary to rely on inference.

11. The circumstances which the Court had to investigate covered the whole of the period from April 2007 through to September 2007. As I observed in my judgment, neither Boris nor Anita was in a position to give direct evidence about the course of events, and the deceased's mental state, the critical period leading up to the deceased’s involuntary admission to SWIAA Gardens. The person best placed to have done so, apart from the deceased herself, would have been the deceased's daughter Branka but she predeceased her mother.

12. I was therefore left to rely on such inferences as could be gleaned from the documentary record and from second-hand evidence, to the extent that it could be considered reliable. Neither party's evidence on this aspect of the case was entirely satisfactory. There may have been a degree of exaggeration and inaccuracy in Boris's evidence: see Drivas v Jakopovic [2018] NSWSC 1803 at [97]-[102]. On the other hand, I thought there were some surprising omissions from Anita's evidence (at [94]) and she also did not lead evidence from the solicitor, Ms Vukmirica, who was responsible for the preparation of the May will (at [55]-[58]).

13. Counsel for Anita pointed to the expert opinion evidence and in particular to the opinion expressed by the expert retained on Boris' behalf to the effect that at relevant times, the deceased lacked testamentary capacity, in that she did not satisfy the third requirement in Banks v Goodfellow. Counsel emphasised that this evidence had been received without objection, although ultimately I thought it was of insufficient weight to resist a finding that the deceased had testamentary capacity (at [205]). In my view, this submission has some weight in evaluating the reasonableness of Anita's conduct of the proceedings.

14. Overall, I consider this to have been a close case. My ultimate decision also relied extensively on the Court of Appeal judgment in Carr v Homersham, which was not handed down until after judgment was reserved in these proceedings.

15. I do not think it was unreasonable for Anita to continue the litigation after Mr Taylor's affidavit was served. That affidavit was clearly of some weight in support of Boris’ case, but it was far from putting the case beyond doubt. On the other hand, I do not think that the Court should go so far as to award Anita her costs out of the estate. I do not see the circumstances as having amounted to an invitation to Anita to continue the litigation. Anita presented a case focused on achieving the right financial outcome from her point of view, and that case failed. In my view, the proper result is that Anita should bear her own costs.

16. Accordingly, the Court's order is that there be no order as to the costs of the proceedings. This order will not affect any interlocutory costs orders which have been made.

**********

Decision last updated: 08 April 2019