In the Estate of Edna Ann Levy
[2018] ACTSC 150
•29 May 2018
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | In the Estate of Edna Ann Levy |
Citation: | [2018] ACTSC 150 |
Hearing Date: | 3 May 2018 |
DecisionDate: | 29 May 2018 |
Before: | McWilliam AsJ |
Decision: | 1. The costs of the parties are to be paid out of the estate of the late Edna Ann Levy, on a solicitor client basis. |
Catchwords: | COSTS – probate jurisdiction – proceedings between competing executors – where proceedings settled save as to costs – whether proceedings unreasonably commenced |
Legislation Cited: | Administration and Probate Act 1929 (ACT) s 25 Court Procedure Rules 2006 (ACT) rr 1700, 1732 |
Cases Cited: | Donnolley v Clarke [2008] NSWSC 522; 1 ASTLR 216 Elders Trustee & Executor Co Ltd v Eastor [1963] WAR 36 Yazbek v Yazbek (No 2) [2012] NSWSC 783 |
Parties: | Bronwen Ann Levy (Applicant in PRO 1003 of 2017) Wendy Priscilla Levy (First Applicant in PRO 87 of 2018) Ronald Michael David Levy (Second Applicant in PRO 87 of 2018) Timothy Robert Levy (Third Applicant in PRO 87 of 2018) |
Representation: | Counsel Mr J Larkings (Applicant in PRO 1003 of 2017) Self-represented (Second Applicant in PRO 87 of 2018) Self-represented (Third Applicant in PRO 87 of 2018) |
| Solicitors Snedden Hall and Gallop (Applicant in PRO 1003 of 2017) Self-represented (Second Applicant in PRO 87 of 2018) Self-represented (Third Applicant in PRO 87 of 2018) | |
File Numbers: | PRO 1003 of 2017; PRO 87 of 2018 |
The parties in each of these two proceedings are four siblings who are attempting to attend to the affairs of their late mother, Edna Ann Levy (the deceased) following her death in the Australian Capital Territory in 15 December 2016.
The deceased left property within the Territory with an estimated value exceeding $1 million. The deceased had also previously made a Will on 12 December 1977 (Will) appointing her children as her joint executors. As the deceased’s husband had predeceased her, the effect of the Will is that her estate is to be divided between the four children in equal shares. Those four children are Bronwen Levy, Ronald Levy, Wendy Levy and Timothy Levy. I will refer to them here by their Christian names for ease of reading but without intending any disrespect.
On 1 December 2017, Bronwen commenced proceedings applying for a grant of probate in her name only.
On 12 January 2018, Ronald, Wendy and Timothy jointly applied for probate, with leave reserved to Bronwen to apply to be joined.
On 27 April 2018, Bronwen amended her application to seek that she be granted probate, but with leave reserved to her other siblings to jointly or individually apply to be joined as co-executors to the probate. That was a somewhat curious amendment, as Bronwen was already on notice that such an application had been made. However, it appears to have precipitated the parties reaching an agreement, being that probate should be granted to Bronwen, Ronald and Timothy, with leave reserved to Wendy to join as a co-executor (because she is now overseas for the next 12 months), and on 3 May 2018 an order was made by consent to that effect.
The only outstanding issue for determination is costs.
Applicable principles
Personal representatives of the estate are considered trustees, and are entitled to their costs paid out of the estate on a solicitor client basis unless the Court orders otherwise, pursuant to r 1732, and the definition of trustee in r 1700, of the Court Procedure Rules 2006 (ACT) (Rules).
The circumstances where a Court might otherwise order are discretionary. In probate matters, there is a guiding principle that unless a party has been vexatious or lacking in good faith, costs are usually allowed to all parties out of the trust fund: Elders Trustee & Executor Co Ltd v Eastor [1963] WAR 36; Re Buckton [1907] 2 Ch 406 at 414-415.
In Kovacs v Fogarty (No 2) [2007] ACTSC 40 (Kovacs), Connolly J stated at [5]:
The law in relation to costs in estate claims
It seems to me that the law in relation to costs in estate claims is well set out by the remarks of Powell J in Re Estate of Hodges, Shorter v Hodges (1988) 14 NSWLR 698 at 709 where his Honour said:
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 the 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.
His Honour was there dealing with a dispute that proceeded to a fully contested (and acrimonious) hearing. Connolly J went on to state at [6] that there was no general outcome in probate litigation that costs are borne by the estate and ultimately departed from the principles on the basis that on the facts of the case before his Honour, such an order would have been unjust.
However, the above principle was similarly stated by White J in Donnolley v Clarke [2008] NSWSC 522; 1 ASTLR 216 at [38], to which I recently made reference in In the Estate of Rummer [2017] ACTSC 277; 12 ACTLR 258 at [130]. The legal representatives for Bronwen have also drawn the Court’s attention to Jurkiewicz v Jurkiewicz [2013] ACTSC 89; 9 ASTLR 80 (Jurkiewicz) at [27] and to Yazbek v Yazbek (No 2) [2012] NSWSC 783. In Jurkiewicz, the successful applicant received costs out of the estate and the unsuccessful party paid his own costs. In Yazbek, the costs of all the parties were paid out of the estate.
These cases are in the context of costs orders being made after fully contested hearings. They provide limited assistance in the present case, because the parties have settled their differences and there has been no contested hearing. In such circumstances, the seminal authority is Re Minister for Immigration & Ethnic Affairs (Cth); Ex Parte Lai Qin (1997) 186 CLR 622 (Lai Qin), where McHugh J said at 624-625 (citations omitted, emphasis added):
In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in The South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare.
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.
Competing submissions of the parties
Bronwen’s position is that her costs should be paid out of the estate on a solicitor client basis. There is no basis to assert that she has been vexatious or lacking in good faith in commencing the application for probate. Bronwen simply commenced the proceedings alone because, having left it up to her brother Ronald, a qualified lawyer, to make the necessary application for the grant of probate on behalf of all of them, almost a year had passed and that had not been done, and she had then been unable to have her siblings agree (for whatever reason) to jointly instruct her legal representatives to apply for the grant.
All of the children are named as executors, and each has a prima facie right to a grant of probate. However, the Court has jurisdiction to pass over a named executor due to the delay in anyone making an application for administration: In the Estate of Keith Chandler Crane [2005] SASC 379; 93 SASR 198 (Crane) referred to in Jurkiewicz at [19]. Section 25 of the Administration and Probate Act 1929 (ACT) (the Act) applies where a named executor fails to prove the will or renounce probate within six months of the testator’s death. The Court then is given a discretion, on application, to make an order for administration of the estate, and any other orders it considers appropriate in such circumstances. Here, where there had been a delay of well over six months, Bronwen contends that her actions in commencing the proceedings were reasonable.
Ronald, Timothy and Wendy took the view that Bronwen’s actions were unreasonable. They did not consider that a lawyer was required for the task of applying for the grant of probate, and they had been proceeding on a previous indication from Bronwen that their proposed timetable for applying for a grant of probate was acceptable, due to their other commitments. Nevertheless, once Bronwen had engaged legal representation, they were in the process of requesting a bill of costs for the fees and expenses incurred by Bronwen before an application for the grant of probate was filed, prior to making a decision whether they would join in instructing the same legal representatives. The Court was taken to a lengthy history of email correspondence over the course of the year since the deceased’s death, first between the siblings and then letters sent by email between Ronald and Bronwen’s legal representatives. It was submitted that in the weeks leading up to the application being filed, there were a number of letters sent by Ronald on behalf of himself, Timothy and Wendy that went unanswered. Had their requests for information been met, the entire proceedings could have been avoided.
Consideration
No one was suggesting that the conduct of Ronald, Timothy or Wendy was unreasonable. They had no animosity towards Bronwen, but there was a clear concern not to pay legal fees they considered to be unnecessary. The difficulty is that time was passing while the parties dithered around, and it is plainly in the interests of the administration of the estate that probate be granted to someone competent in a timely fashion. As Besanko J stated in Crane at [40], albeit not in the consideration of a costs dispute, the Court must always keep in view the due and proper administration of the estate and the interests of the parties beneficially entitled.
Bronwen’s course in applying for a grant of probate was consistent with that guiding principle. The fact that she did not choose to continue to engage in correspondence with her siblings before commencing proceedings (regardless of whether the issue might have been able to be resolved) does not mean that the commencement of proceedings was itself unreasonable.
Due to the discretion provided under s 25 of the Act which was plainly enlivened, nor is this a case where the Court is in a position to say that one party is almost certain to have succeeded. Even if that were the case, because all parties were personal legal representatives nominated by the deceased person, the principles set out above were likely to have applied.
In my view, the interaction between the principle in Lai Qin, the principles that would have applied after a fully contested hearing as articulated in Kovacs, and r 1732 of the Rules all lead to the one conclusion, being that the parties ought receive their costs on a solicitor client basis out of the estate.
Orders
The Court orders as follows:
1. The costs of the parties are to be paid out of the estate of the late Edna Ann Levy, on a solicitor client basis.
| I certify that the preceding twenty [20] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Associate Justice McWilliam. Associate: Date: |
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