KOCINI v KAMBANAROS (No 2)

[2022] SASC 50

Supreme Court of South Australia

(Civil)

KOCINI v KAMBANAROS (No 2)

[2022] SASC 50

Judgment of Judge Dart a Master of the Supreme Court

SUCCESSION - FAMILY PROVISION - PROCEDURE - ORDERS AND OTHER PROCEDURAL MATTERS - COSTS

Claim of the applicant dismissed - applicant says there should be no order as to costs - respondent says costs should follow the event - costs in probate matters different to civil matters - need to deal with the justice of the situation.

Held:  Applicant to pay the respondent's cost of action fixed in the amount of $50,000.

Inheritance (Family Provision) Act 1972 (SA); Supreme Court Act 1935 (SA) s 40; Wills Act 1936 (SA) s 12, referred to.
Fielder v Burgess [2014] SASC 98; Oshlack v Richmond River Council (1998) 193 CLR 72; Ponder & Anor v Burmeister & Ors [1909] SALR 62; Singer v Berghouse [1993] HCA 35, considered.

KOCINI v KAMBANAROS (No 2)
[2022] SASC 50

1. This matter was a claim made pursuant to the Inheritance (Family Provision) Act 1995 (“IFP Act”).  The applicant failed to establish that she had been left without adequate provision.  The claim was dismissed.[1]  These reasons deal with the question of costs. 

   [1] 18 March 2022, [2022] SASC 25.

2. The position of the applicant is that there should be no order as to costs.  The respondent says that costs should follow the event on the standard costs basis.

   The history of costs in probate actions

3. The courts’ power to award costs is found in the Supreme Court Act 1935 in the following section:

   40—Power of court with regard to costs

   (1)Subject to the express provisions of this Act, and to the rules of court, and to the express provisions of any other Act whenever passed, the costs of and incidental to all proceedings in the court, including the administration of estates and trusts, shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and to what extent such costs are to be paid.

4. The section provides the Court with a broad discretion to award costs in litigation conducted in the Court.  Like all such discretions, it is to be exercised judicially and in the interests of justice.

5. Costs in probate matters have long been dealt with differently to costs in ordinary civil litigation.  That may be because, historically, probate matters were dealt with by the ecclesiastical courts which adopted an inquisitorial approach to resolving matters in dispute. 

6. There are many cases dealing with the question of costs in probate matters.  In Ponder & Anor v Burmeister & Ors the position was put as follows by Way CJ:[2]

   The methods in which the costs are generally dealt with in those two classes of cases were stated by the same learned judge in a somewhat earlier case:— “In deciding the question of costs the Court of Probate has usually followed two rules of practice—first, that if “the testator by his conduct has been the cause of the litigation the costs should come out of the estate; secondly, if the facts show that neither the testator nor any of the persons interested under the will were to blame, but at the same time the parties disputing it” (the same would be the case as to parties upholding it) “had reasonable ground for doing so, and acted throughout in good faith, there should be no order as to costs, but each side should be left to pay their own?” Browning v. Mostyn, 66 L.J. Prob. At 37-8.

   [2] [1909] SALR 62 at p 100.

7. This can be contrasted with the normal approach adopted in relation to civil litigation.  The position is probably most succinctly set out in the judgment of McHugh J in Oshlack v Richmond River Council where his Honour said: [3]

   The expression the “usual order as to costs” embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour.  The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant.  Costs are not awarded to punish an unsuccessful party.  The primary purpose of an award of costs is to indemnify the successful party.[4]  If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did.  As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.

   [3] (1998) 193 CLR 72 at [67].

   [4]    Latoudis (1990) 170 CLR 534 at 543, per Mason CJ; at 562-563, per Toohey J; at 566-567, per McHugh J; Cachia v Hanes (1994) 179 CLR 403 at 410, per Mason CJ, Brennan, Deane, Dawson and McHugh JJ.

8. Clearly these two approaches do not always sit comfortably together.  A claim under the IFP Act is a claim in relation to a deceased estate.  It is commenced in the civil division of the Court.  At the time of Ponder, the legislation did not exist in South Australia.  Nonetheless, for a long period of time the Court had a practice of allowing most parties to have costs out the deceased estate or, at the very least, not ordering an unsuccessful applicant to pay costs.  That approach has come under question in the last decade or so.

9. In Fielder v Burgess[5] the Chief Justice was considering an application, under s 12 of the Wills Act 1936, to admit an informal will to probate.  His Honour took the opportunity to make some comments about the general approach to costs in probate matters.  He referred to some authority and said:[6]

   In my view, the legal policy underlying the decision of the Court of Appeal is applicable to probate cases beyond mutual wills claims of the kind considered in Shovelar v Lane.[7]   It is not obvious to me why a testator’s fault in the making of a will should result in a loss to the successful beneficiary in litigation over the estate.  True it is there is a public element to the resolution of disputes over estates.  It is for that reason that the probate costs rule is generally framed in terms of applying when there are reasonable grounds to require the person propounding a doubtful will or contending for a particular construction of an ambiguous provision to make out their case before a judge in a contested hearing. 

   However, the bottom line is that the disputes are between private parties advancing competing claims to the testator’s bounty for their private financial benefit.  Of even greater contemporary significance is the effect of the old probate costs rule on parties to litigation of this kind.  The probability of the payment of the costs of all parties out of the estate irrespective of the result gives the parties little incentive to make appropriate decisions as reasonable self-funded litigants about their prospects of success, and the proportionality of the expense incurred in bringing or defending proceedings.

   The position here is that the dispute was between private parties advancing competing claims to the testator’s bounty for their private financial benefit.  It should be recognised that the making of no order as to costs shifts the financial burden of the litigation from one party to another.

   [5] [2014] SASC 98.

   [6]    Fielder v Burgess [2014] SASC 98 at [61]-[62].

   [7] [2012] 1 WLR 637.

10. The approach to costs in family provision matters has been commented on by the High Court.  In Singer v Berghouse, Gaudron J stated as follows:[8]

    Family provision cases stand apart from cases in which costs follow the event. Leaving aside cases under the Act which, in s.33, makes special provision in that regard, costs in family provision cases generally depend on the overall justice of the case. It is not uncommon, in the case of unsuccessful applications, for no order to be made as to costs, particularly if it would have a detrimental effect on the applicant's financial position.[9] And there may even be circumstances in which it is appropriate for an unsuccessful party to have his or her costs paid out of the estate.[10]

    [8] [1993] HCA 35 at [6].

    [9]    See Dickey, Family Provision After Death, (1992), pp 184-185; as to the position in the United Kingdom, see Ross Martyn, Family Provision: Law and Practice, (1985), pp 77-78).

    [10] Dickey, ibid. Note that it is said by Ross Martyn, at p 78, that, in the United Kingdom, an unsuccessful applicant "will be very lucky indeed if he gets his costs out of the estate".

11. It is necessary to resolve the conflicting positions as to costs in this type of matter.  On the one hand, the Court has to recognise that often people bringing these type of claims are poorly-off and have been dealt with inappropriately in a will.  The Court should not adopt an approach to costs that creates a barrier to the commencement and prosecution of legitimate claims. 

12. On the other hand, the Court must also have regard to the fact that a party who brings an unsuccessful claim has put a respondent to significant legal expense.  It is generally undesirable in such circumstances that an applicant can walk away without meeting any of the costs of the respondent.

13. The respondent says his actual legal costs are approximately $125,000.  That seems quite a lot for this type of claim.  There were no doubt some additional expenses caused in this matter by the need to deal with and value the assets in Greece.  The amount would be reduced, in any event, if costs were taxed on the standard cost basis. 

14. The justice of the case requires the applicant to make some contribution towards the respondent’s costs.  The applicant is comfortably off financially and pursued the claim for her private financial benefit.  She is not an impoverished applicant.  I order that the applicant pay the sum of $50,000 toward the costs of the respondent in this matter.