Green v Ellul (No 2) - [2018] SASCFC 105

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
GREEN & ANOR v ELLUL & ORS (No 2)
[2018] SASCFC 105
Judgment of The Full Court
(The Honourable Chief Justice Kourakis, The Honourable Justice Stanley and The Honourable Justice Lovell)
15 October 2018
SUCCESSION - FAMILY PROVISION - APPEALS
SUCCESSION - FAMILY PROVISION - PROCEDURE - ORDERS AND OTHER PROCEDURAL MATTERS - COSTS
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE
Application for the costs of an appeal to the Full Court and the hearing and determination of a preliminary point before a master of this Court.
The appeal arose from a claim made for the benefit of the Inheritance (Family Provision) Act 1972 (SA) (the Act). The parties asked the master to determine whether the summons seeking relief pursuant to the Act, in the absence of express words seeking an extension of time, constituted an application for an extension of time within which to bring the application for the benefit of the Act. The master found that the summons did constitute an application for an extension of time.
The Full Court allowed the appeal from the decision of the master. The Full Court held that the summons did not constitute an application for an extension of time for making an application for the benefit of the Act.
The appellant executors now seek an order that the respondents pay the costs of the appeal to the Full Court and the costs of the hearing of the preliminary argument before the master.
Held (by the Court):
1. The costs discretion should not be exercised so as to discourage the bringing of meritorious claims.
2. In the absence of a determination that the respondents’ claims are unmeritorious, the principled exercise of the Court’s unfettered discretion as to costs should be exercised against making an award that the respondents pay the appellants’ costs of the appeal and the hearing before the master.
3. The exercise of the discretion as to costs not to order the unsuccessful plaintiff pay the successful defendant’s costs is not precluded because the applicants for the benefit of the Act failed at a jurisdictional threshold.
4. The application for an order that the respondents pay the appellants their costs of and incidental to the appeal and the hearing before the master is dismissed.
5. The appellants are entitled to payment of their costs of the appeal and the hearing before the master from the estate on a solicitor/client basis.
Inheritance (Family Provision) Act 1972 (SA) s 8, s 9; Administration and Probate Act 1958 (Vic), referred to.
Doedens & Ors v Owen (No 2) [2018] SASC 23; Pizimolas v Pizimolas & Zannis (No 2) [2010] SASC 209; Bowyer v Wood (2007) 99 SASR 190, discussed.

GREEN & ANOR v ELLUL & ORS (No 2)
[2018] SASCFC 105
Full Court: Kourakis CJ, Stanley and Lovell JJ
THE COURT:
Introduction

This is an application for the costs of an appeal to the Full Court and the hearing and determination of a preliminary point before a master of this Court.
The appeal arose from a claim made for the benefit of the Inheritance (Family Provision) Act 1972 (SA) (the Act). The appellants are the executors of the deceased person’s estate. The respondents brought claims for the benefit of the Act. The parties asked the master to determine certain questions as a preliminary issue. At issue was whether the respondents had made an application for an extension of time within which to seek the benefit of the Act. The questions related to the issue of whether the summons seeking relief pursuant to the Act, in the absence of express words seeking an extension of time, constituted an application for an extension of time within which to bring the application for the benefit of the Act.
The Full Court allowed the appeal from the decision of the master. The Full Court held that the summons did not constitute an application for an extension of time for making an application for the benefit of the Act.
The outcome of the appeal will probably result in the disposition of the proceedings.
The summons was issued within six months of the grant of probate, but served on the executors one day after the expiry of that period. An application for the benefit of the Act is deemed to be made on the day when the summons by which it is instituted is served on the administrator of the estate.[1] Pursuant to s 8 of the Act, an application shall not be heard by the Court at the instance of a person claiming the benefit of the Act unless the application is made within six months from the date of the grant of probate. While the Court may grant an extension of time upon such conditions as the Court thinks fit, and whether or not the time for making an application has expired, any distribution of any part of the estate made before the application for extension of time shall not be disturbed by reason of that application or any order made thereon.[2]
[1] Section 8(6).
[2] Section 8(5).
After the service of the summons on the executors, they distributed almost the entire estate to the named beneficiaries. Only $5,023.46 remains to be distributed.
The effect of the Full Court’s judgment on appeal is that the distribution of the vast majority of the estate cannot be disturbed by the application pursuant to the Act.
Submissions as to costs
The appellant executors now seek an order that the respondents pay the costs of the appeal to the Full Court and the costs of the hearing of the preliminary argument before the master. The appellants submit that the Court should award costs in accordance with the usual practice that costs follow the event.
The respondents resist the application for costs on the basis that the practice of the Court in relation to applications under the Act is not to make an award of costs against a party to the proceedings. Further, the respondents submit that the appellants sought to take advantage of the failure to serve the proceedings within time by distributing most of the assets of the estate.
Relevant principles
Pursuant to s 9(8) of the Act, the Court is empowered to make such order as to the costs of any proceedings under the Act as it considers just.
In Doedens & Ors v Owen (No 2),[3] Nicholson J held that s 9(8) confers a discretion in respect of costs that is no more confined than the general costs discretion and may, in some respects, be broader. Further, like the general costs discretion, it covers proceedings at large; that is, it is not restricted to proceedings that have been finalised following a trial on the merits.[4]
[3] [2018] SASC 23.
[4] [2018] SASC 23 at [12].
Nicholson J further observed that, as a general proposition, costs will follow the event and applicants who are successful following a trial will be entitled to receive their costs out of the estate.[5]
[5] [2018] SASC 23 at [13].
In Pizimolas v Pizimolas & Zannis (No 2),[6] Kourakis J (as he then was) discussed the approach to costs in family provision claims in the following terms:[7]
[6] [2010] SASC 209.
[7] [2010] SASC 209 at [6]-[7].
The ordinary rule as to costs is more easily displaced in family provision claims. In my view that approach reflects conflicting public interest considerations. On the one hand unmeritorious litigation which dissipates the estate should not be encouraged. On the other hand the purpose of family provision legislation is to charge the estates of testators who have made inadequate provision with such an amount as is necessary for the support of their dependents; that public policy objectives may not be achieved in practice if meritorious claimants are discouraged from making a claim by the ordinary rule as to costs. In Bowyer v Woods, Debelle J considered the exercise of the costs discretion in family provision claims, saying:
[66] The reported decisions contain little discussion of the principles to be applied. In most instances the report simply notes the order as to costs. There is a substantial number of decisions in which no costs order was made in the case of an unsuccessful application: re Maslin [1908] VLR 641; re Chapman [1918] St R Qd 226; re Roberts [1919] VLR 125; re Kennedy [1920] VLR 513; re Richardson [1920] SALR 24; re McCreedy [1938] St R Qd 293; re Milanovic [1973] Qd R 205; Dobell v Van Damme [1982] VR 425. In Fox v Burvill (1955) 92 CLR 334 at 341, the High Court ordered that, in the particular circumstances of that case, the costs of the unsuccessful applicant who was also the appellant (she was the divorced widow of the testator) be paid out of the estate. In Krause v Sinclair at 78, Tadgell J ordered that an unsuccessful applicant should not have the benefit of an order for costs but at the same time she would not be ordered to pay costs. The executor’s costs were paid out of the estate. In Singer v Berghouse at 214, the majority noted that there is nothing in the Act which precludes an order for costs against an unsuccessful applicant. While that is unquestionably correct, their Honours were not discussing the ordinary rule nor did they question that in some circumstances an unsuccessful applicant might recover costs out of the estate. In exercising its discretion not to order costs against an unsuccessful applicant, the court will also consider the effect of an order for costs upon the applicant’s financial position: re De Feu (deceased) [1964] VR 420 at 428.
[67] In some instances the question whether an unsuccessful applicant will be liable for costs will depend on the reasonableness of the application. In re Testator’s Family Maintenance Acts (1916) 12 Tas LR 11 at 13 Ewing J held that in view of the fact that the applicant was ‘within his rights in coming to the Court there should not be an order for costs’ except as to the costs of two parties which were paid out of the estate. The decision was affirmed on appeal. In the case of a reasonable application based on a moral claim or obligation, the unsuccessful applicant may even obtain an order for costs in his favour out of the estate. Re Bodman [1972] Qd R 281 is an instance. In that case, a number of applicants succeeded but one failed. Hoare J ordered that both the successful applicants and the unsuccessful applicant be paid their costs out of the residuary estate of the deceased. He said:
As to costs I order that the costs of each applicant, including reserved costs, be taxed as between solicitor and client and be paid out of the residuary estate of the testator. So far as concerns the applicant George Albert Bodman, although his application failed, in the particular circumstances of this case especially having regard to the strong moral obligation of the deceased towards him, I order that his costs, including reserved costs, be taxed as between solicitor and client and paid out of the residuary estate of the deceased.
In re Klease (1972) QWN 44 Hoare J ordered that unsuccessful applicants should have paid their costs out of the estate because ‘there was this moral obligation in their favour and the applicants could not be said to be unreasonable’.
In my view, the principles which govern the award of costs where the validity of a will is contested have some application to family provision claims by way of analogy. Those principles were summarised by Angas Parsons J in Public Trustee v Hall:
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.
[Footnotes omitted.]
Consideration
At issue is whether the unsuccessful respondents to the appeal should pay the appellants the costs of the appeal and of the hearing before the master. There is no claim by the respondents that they are entitled to payment of their costs out of the estate.
At the outset, we reject the submission that the appellants are not entitled to an order for costs on the basis that they sought to take advantage of the respondents’ solicitor’s error in serving the application for the benefit of the Act within time, or seek an extension of time in that summons. We accept that, in distributing the estate in those circumstances, when they did, the appellants in their capacity as executors, were acting in accordance with their duties owed to the beneficiaries of the estate.
In this case, the Court has not considered, and it appears is unlikely to consider, the merits of the respondents’ claim to the benefit of the Act. Their claims founder in limine because of the failure of their solicitor to serve the summons within the limitation period or seek an extension of time in that summons. Accordingly, it cannot be determined whether their claims were meritorious. Nonetheless, the mere possibility that their claims were meritorious invokes the public policy objective identified in Pizimolas that the costs discretion should not be exercised so as to discourage the bringing of meritorious claims. In the absence of a determination that the respondents’ claims are unmeritorious, we consider that the principled exercise of the Court’s unfettered discretion as to costs should be exercised against making an award that the respondents pay the appellants’ costs of the appeal and the hearing before the master.
We are reinforced in this view by two considerations. First, that the course adopted of having the issue of the extension of time dealt with on a preliminary basis was agreed by the parties. Almost certainly the adoption of this course has eliminated the need for a trial. This results in a substantial saving to the estate and its beneficiaries. Second, because there has been no determination of the application on its merits, it may be that the respondents have been left without adequate provision. It scarcely would seem fair to burden them with an award of costs in those circumstances.
Finally, we note that the basis upon which we intend to exercise the discretion as to costs is consistent with the approach taken in Krause v Sinclair,[8] where Tadgell J dismissed a claim for provision for the proper maintenance and support out of the estate of the plaintiff’s former husband pursuant to the provisions of the Administration and Probate Act 1958 (Vic) (the Administration and Probate Act). The basis of the plaintiff’s claim was that she was the “widow” of the deceased, in accordance with the extended definition in the Administration and Probate Act. That definition includes any former wife of the deceased who was, at the date of his death, in receipt of or entitled to receive payments of alimony or maintenance, whether pursuant to any order of a court or otherwise. The deceased made no provision in his will for the applicant. Tadgell J dismissed the application on the ground that the applicant did not fall within the extended definition. Accordingly, there was no decision on the merits of her claim that she had not been left with proper maintenance and support out of her former husband’s estate. In those circumstances, Tadgell J decided that the right thing to do in the exercise of the discretion as to costs was to order that the applicant not have her costs paid from the estate, but that she not be ordered to pay any and that the respondent’s costs be paid by the estate. That approach was approved in Bowyer v Wood,[9] and applied in Pizimolas. It can be seen that in Krause, as in this case, the applicants for the benefit of the Act failed at a jurisdictional threshold. Tadgell J did not consider that precluded the exercise of the discretion as to costs not to order the unsuccessful plaintiff pay the successful defendant’s costs.
[8] [1983] Vic Rp 7, [1983] 1 VR 73.
[9] [2007] SASC 327 at [66], (2007) 99 SASR 190 at 209.
That is the approach we intend to follow in this case.
We would dismiss the application that the respondents pay the appellants’ costs of the appeal and the hearing before the master. We would order that the appellants are entitled to payment of their costs of the appeal and the hearing before the master from the estate. They are entitled to recover their costs on a solicitor/client basis.
Conclusion
We dismiss the application for an order that the respondents pay the appellants their costs of and incidental to the appeal and the hearing before the master. We would order that the appellants have their costs of and incidental to the appeal and the hearing before the master, paid by the estate on a solicitor/client basis.