SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
GREEN & ANOR v ELLUL & ORS (No 3)
[2019] SASCFC 23
Judgment of The Full Court
(The Honourable Chief Justice Kourakis, The Honourable Justice Stanley and The Honourable Justice Lovell)
8 March 2019
SUCCESSION - FAMILY PROVISION - PROCEDURE - ORDERS AND OTHER PROCEDURAL MATTERS - COSTS
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE
PROCEDURE - COSTS - INTERLOCUTORY PROCEEDINGS
Interlocutory application to vacate orders made by the Full Court, but not yet sealed, in relation to the costs of an appeal to the Full Court from the judgment of a master of the Supreme Court and the costs of the hearing before the master.
The appeal arose from a claim made for the benefit of the Inheritance (Family Provision) Act 1972 (SA) (the Act). The Full Court allowed the appeal from the decision of the master. The appellant then sought 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 Full Court refused the appellants’ application and ordered 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.
Held (by the Court):
1. The appellants were not denied procedural fairness in the making of the costs orders (at [39]).
2. The Court would only vacate the order made if it was satisfied it was wrong or that it was made on the basis of some error of principle. The Court was not satisfied that either was established. It was open to the Court in the exercise of its unfettered discretion to make the costs order it did (at [43]-[44]).
3. The exercise of the Court’s discretion, either to relieve an unsuccessful applicant from the burden of an order for costs or to award costs in favour of an unsuccessful applicant, does not depend upon the Court being satisfied as to the merits of the applicant’s claim (at [45]).
4. Application refused (at [49]).
Inheritance (Family Provision) Act 1972 (SA) s 7, s 8, s 9; Supreme Court Act 1935 (SA) s 40; Supreme Court Civil Rules 2006 (SA) r 263, referred to.
Copping v ANZ McCaughan Limited (1985) 63 SASR 523; Roche v Roche & Anor (No. 2) [2017] SASC 75; Smith v New South Wales Bar Association (1992) 176 CLR 256, applied.
Autodesk Inc & Anor v Dyason & Ors [No. 2] (1992-1993) 176 CLR 300; Bowyer v Wood (2007) SASR 190; Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (No. 2) [2013] HCA 44; Doedens & Ors v Owen (No. 2) [2018] SASC 23; Green & Anor v Ellul & Ors (No. 2) [2018] SASCFC 105; Krause v Sinclair & Anor [1983] VR 73; McAdam v Robertson (1998-1999) 73 SASR 360, discussed.
Pizimolas v Pizimolas & Zannis (No. 2) [2010] SASC 209
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- Green v Ellul (No 3) [2019] SASCFC 23
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- [2019] SASCFC 23
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CaseChat Overview and Summary
The primary legal issue before the Full Court was whether the unsuccessful respondents should be ordered to pay the appellants' costs of the appeal and the earlier hearing before the Master. This required the Court to consider the exercise of its discretion regarding costs in family provision claims, particularly when claims founder on a jurisdictional threshold rather than on their merits. The Court was asked to determine if the general rule that costs follow the event should apply, or if specific principles applicable to family provision claims warranted a departure.
The Court reasoned that while the respondents' claims failed due to a procedural error by their solicitor, the merits of their claims had not been determined. Applying the principles established in cases such as *Pizimolas v Pizimolas & Zannis (No 2)* and *Krause v Sinclair*, the Court acknowledged the public policy objective of not discouraging meritorious claims in family provision matters. The Court noted that the preliminary resolution of the jurisdictional issue had saved the estate significant costs. Given the absence of a determination on the merits and the potential for the respondents to have been left without adequate provision, the Court concluded that it would be unfair to burden them with an award of costs against them.
Consequently, the Full Court dismissed the interlocutory application and ordered that the parties be heard as to costs. This approach aligned with precedents where unsuccessful applicants in family provision claims, who failed at a jurisdictional threshold, were not ordered to pay the successful party's costs, and in some instances, their own costs were paid out of the estate.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
In making those orders the Court reasoned as follows:[1][1] Green & Anor v Ellul & Ors (No. 2) [2018] SASCFC 105 at [10]-[19]. 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), 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.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.In Pizimolas v Pizimolas & Zannis (No 2), Kourakis J (as he then was) discussed the approach to costs in family provision claims in the following terms: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; re Chapman; re Roberts; re Kennedy; re Richardson; re McCreedy; re Milanovic; Dobell v Van Damme. In Fox v Burvill, 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, 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).[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) 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 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 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.]ConsiderationAt 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, 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, 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. That is the approach we intend to follow in this case. [Citations omitted.]The current application