Lorena Zupicic v Angela La Camera Paino as Trustee for the Estate of the Late Mario Novick

[2018] NSWSC 1117

Supreme Court

New South Wales

Medium Neutral Citation:	Lorena Zupicic v Angela La Camera Paino as Trustee for the Estate of the Late Mario Novick [2018] NSWSC 1117
Hearing dates:	21 June 2018
Decision date:	20 July 2018
Jurisdiction:	Equity - Technology and Construction List
Before:	Sackar J
Decision:	See paras [55]-[59]
Catchwords:	COSTS – appropriate principles and considerations – exceptions to general rule that costs follow the event – whether estate should bear costs of the defendant – whether executor and trustee should have costs borne from the estate – where defendant played adversarial role in litigation
Legislation Cited:	Civil Procedure Act 2005 (NSW) Probate and Administration Act 1898 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Ashton v Pratt (No 2) [2012] NSWSC 3 Ashton v Pratt (No 2) [2015] NSWCA 134 Drummond v Drummond [1999] NSWSC 923 Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Irinej Dobrijevic (No 3) [2017] NSWCA 109 James v Douglas [2016] NSWCA 178 Nowell v Palmer (1993) 32 NSWLR 574 Perpetual Trustee v Baker [1999] NSWCA 244 Priestley v Priestley (No 2) [2017] NSWCA 212 Re the Estate of Hodges (1988) 14 NSWLR 698 Warton v Yeo [2015] NSWCA 115
Texts Cited:	Alexander Learmonth et al (eds), Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (Thomson Reuters, 21st ed, 2018)
Category:	Costs
Parties:	Lorena Zupicic (Plaintiff) Angela La Camera Paino (as executor of the deceased estate of Mario Novick)
Representation:	Counsel: D Palmer (Plaintiff) A Maroya (Defendant)   Solicitors: Bundock Law (Plaintiff) Photios Vouroudis & Co (Defendant)
File Number(s):	2018/50935
Publication restriction:	n/a

Judgment

Background facts

1. I gave judgment in this matter in favour of the Plaintiff on 18 May 2018.

2. On 21 June 2018 I made a declaration that the Defendant holds the property at Unit 7/10 Barncleuth Square Potts Point NSW on trust for the Plaintiff and made further orders relating to the sale and mechanics for proceeds of the sale of the property in favour of the Plaintiff. However I stayed the operation of these orders until 5:00pm 20 July 2018.

3. The Defendant made submissions on costs in writing on 21 June 2018 as did the Plaintiff on 2 July 2018.

4. I will not rehearse in detail the background facts to this case as they are recited in my principal judgment (at [4]-[66]).

5. However I will note that on 6 June 2014 the deceased Mr Novick (whose estate was the subject of these proceedings) made a will appointing the Defendant as sole executor and beneficiary of his estate. It was drafted by Rhodes Associates solicitors. Jeremy Charles George Rhodes and Angela La Camera Paino were the executors and trustees of this will (Exhibit P3, 49-52) (principal judgment [33]).

6. On or about 24 August 2014, Mr Novick made a further will which provided, subject to any testamentary, estate or succession duties or otherwise, that the entirety of his estate would go to the Defendant. This will provided for Eidan Havas and Deborah Searle as executors (Exhibit P3, 53-56) (principal judgment [33]).

7. On 25 May 2017, Mr Novick made a further will providing the entirety of his estate to the Defendant. In this will, the Defendant was also listed as executor and trustee (Exhibit P3, 86-8). This will was prepared with the assistance of Mr Vouroudis (who did not give evidence) who made a file note on 25 May 2017 at 11:00am (Exhibit P3, 57-61) of his meeting with Mr Novick, the Defendant and Ms Maria Sanfilippo. It appears the will was executed on this date (principal judgment [52]-[53]).

8. On 18 July 2017 Mr Novick died (principal judgment [61]).

9. On 4 October 2017 probate of the 2017 will was granted (Exhibit P3, 85) (principal judgment [63]).

10. On 24 October 2017 the Defendant signed a transmission application applying to be registered as proprietor of the estate of Mr Novick (Exhibit P3, 110).

11. On 16 February 2018 the Defendant entered into a contract for the sale of the Potts Point apartment for consideration of $660,000 (Exhibit P3, 4) (principal judgment [65]).

Legal principles

Legislation

12. The Court has a wide discretion as to costs as per section 98(1) of the Civil Procedure Act 2005 (NSW):

98 Courts powers as to costs

(1) Subject to rules of court and to this or any other Act:

(a) costs are in the discretion of the court, and

(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

13. The ordinary rule is that costs follow the event: rule 42.1 Uniform Civil Procedure Rules 2005 (NSW) (UCPR).

14. In the context of the costs of a trustee rule 42.25 UCPR provides:

42.25 COSTS OF TRUSTEE OR MORTGAGEE

(1) Subject to subrule (2), a person who is or has been a party to any proceedings in the capacity of trustee or mortgagee is entitled to be paid his or her costs in the proceedings, in so far as they are not paid by any other person, out of the fund held by the trustee or out of the mortgaged property, as the case may be.

(2) The court may order that the person's costs not be so paid if:

(a) the trustee or mortgagee has acted unreasonably, or

(b) in the case of a trustee, the trustee has in substance acted for his or her own benefit rather than for the benefit of the fund.

The “probate exception”

15. In the context of probate litigation there is a recognised exception to the ordinary rule as to costs, namely that where the testator has been the “cause” of the litigation the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate.

16. In Perpetual Trustee v Baker [1999] NSWCA 244 Giles JA and Brownie AJA, in the context of litigation concerning whether the deceased had testamentary capacity when she made her last will, said at [13]-[15]:

Costs are in the discretion of the Court, and the established principle on which the discretion as to costs will normally be exercised is that costs follow the event. In probate litigation, in particular, however, exceptions have been recognised, one being that where the testator has been the cause of the litigation the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate, and another being that if the circumstances led reasonably to an investigation concerning the testator’s will the costs may be left to be borne by those who incurred them (see for example in the estate of Hodges: Shorter v Hodges (1988) 14 NSWLR 698 at 709).

…

So it has been said that where the conduct and habits and mode of life of a testator have given ground for questioning his testamentary capacity the costs of the unsuccessful party should be paid out of the estate, as distinct from being left to be borne by that party (Davies v Gregory (1873) 3 P & D 28; Roe v Nix (1893) P 55; In the will of Millar (1908) VLR 682), and the costs of both sides in testamentary capacity cases have often been allowed out of the estate (In the will of Severs (1887) 13 VLR 572; Phillips v Dundas (Smith J, VSC 4 December 1995, unreported); Redroff v Miegoch (Santow J, NSWSC, 22 April 1996, unreported); re Ryan: Williams v Ryan (1998) VSC, 109; In the will of Ryan: Williams v Ryan (Byrne J, VSC, 23 October 1998, unreported); cf Middlebrook v Middlebrook (1963) 26 ALJR 216 where Dixon CJ and McTiernan, Taylor and Owen JJ ordered that the parties bear their own costs but Menzies J would have ordered that the costs be paid out of the estate).

We consider that the approach in these cases extends to the costs of unsuccessfully seeking to uphold a grant of probate on appeal, at least where the result at first instance was not obviously erroneous. In the present case the respondent was a necessary contradictor, and can hardly be said to have acted unreasonably when possessed of a judicially sanctioned grant. In the circumstances of the present case, we consider that a proper exercise of discretion is that the costs of the appeal should be paid out of the estate of the deceased, in the case of the appellant on a trustee basis.

17. Likewise Powell J in Re the Estate of Hodges (1988) 14 NSWLR 698 at 709 formulated the probate exception to the rule that costs follow the event as “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”.

18. In Ashton v Pratt (No 2) [2015] NSWCA 134 the Court of Appeal considered the primary judgment of Brereton J in Ashton v Pratt (No 2) [2012] NSWSC 3. The primary judgment of Brereton J considered whether certain promises made by a deceased to the plaintiff amounted to an enforceable contract or equitable estoppel. Brereton J found the claim in contract and estoppel failed.

19. In the Court of Appeal in Ashton v Pratt (No 2) [2015] NSWCA 134 Bathurst CJ (with McColl and Meagher JJA agreeing) observed (at [16]-[17]):

The fourth matter was that the litigation was brought about by the promise made by the late Mr Pratt and thus, it was appropriate that his estate should bear the costs. The children submitted that an analogy could be drawn between the principle in probate litigation that, if the testator has caused the problem, his or her estate should bear the costs, and cases which have stated that where a party reasonably, but unsuccessfully, raises an issue relating to the affairs of a testator calling for investigation, that party should not have to bear the costs of the other party: Perpetual Trustee Co Ltd v Baker [1999] NSWCA 244 at [13]-[14]; Kostka v The Ukrainian Council of NSW Incorporated [2013] NSWSC 222 at [72].

I do not think that this principle has any application in the present case. This case concerned a promise made by Mr Pratt, during his lifetime, which the Court held was not intended to create legal relations. If the principle is extended, it would seemingly apply to many cases which involved a promise which, for some reason, was unenforceable. Second, it ignores the fact that not only was the enforceability of the promise in issue, but the question of whether any obligations arising from the promise had been released by the appellant was also in issue. This matter was decided adversely to the appellant and the children. Third, as I have already indicated, the Court determined that no intention to create the trust could be inferred from the conversations or the surrounding circumstances. The cross-appeal depended upon such a trust being inferred.

20. In James v Douglas [2016] NSWCA 178 Meagher JA (with Leeming and Simpson JJA agreeing) said at [69]-[71] (emphasis added):

The appellants submit that the “probate exception” ought to have been applied in relation to the recovery of their costs because in substance the “testator was the cause of the litigation”. It is said that the primary judge acknowledged that the drafting of the will was defective, so as to give rise to a dispute about its construction. The testator was indirectly responsible for the defective drafting and to that extent should be regarded as having been the cause of the litigation.

This submission does not sufficiently address the basis upon which the primary judge declined to apply that principle by analogy, having found, correctly in my view, that the exception did not apply in its terms. The litigation which might reasonably have followed from the will’s drafting was quite different from the litigation which ultimately ensued. That litigation was defensive so far as the plaintiffs were concerned and directed to the exercise of a power which was plainly questionable, and which was accompanied by claims for rectification. It was also accompanied by a substantial body of evidence which, as was conceded, was substantially “irrelevant and should never have been committed to paper”: Costs Judgment [12].

That reasoning of the primary judge discloses no error. As the decisions referred to earlier make clear, in a case such as the present one, the question for the Court requires that the substance of the proceeding and the way in which it was conducted be considered.

The appellants also contend that the primary judge erred in treating the case as one involving, as a matter of substance, adversarial proceedings. In support of that contention, four matters are referred to. First, it is said Mr James was not a beneficiary of the CPT. Secondly, it is said that he as the Appointor, as distinct from a trustee, could not bring an application for advice under s 63 of the Trustee Act 1925 (NSW). Thirdly, it is said that if Mr James had commenced a construction suit for declaratory relief that suit would have raised the same issues as were ultimately argued “and that the same costs would have been occasioned”. This argument does not take account of the circumstances which led to the respondents having to commence proceedings to establish that neither had been validly removed as a trustee. From the outset, the proceedings were adversarial. They were not limited to the question of construction either in the relief sought, which extended to rectification, or in the evidence which was relied upon.

21. Likewise in Priestley v Priestley (No 2) [2017] NSWCA 212 McColl and Macfarlan JJA and Emmett AJA unanimously said (at [12]):

In the ordinary course, the Court is to order that costs follow the event unless it appears to the Court that some other order should be made. As Beverley submitted, exceptions to that rule have been recognised in probate proceedings. One exception applies where “someone opposes a suit for grant of probate and, the opposition being well-founded by reason of some act or omission of (or ‘fault’ attributable to) the testator, has an order for costs in their favour accordingly.” Where this probate exception applies, the party seeking, reasonably albeit unsuccessfully, to propound or challenge a will does not have to bear his or her own costs, nor those of the other party. Rather, they are borne by the estate. However, here, as in Douglas v James, there was no contested suit for probate, nor any challenge to the validity of Gordon’s will, hence the probate exception does not apply in terms. Rather, as Beverley’s submissions recognised, Duncan’s proceedings were adversarial in nature. There is no reason, in our view, to make an order other than that referred to in UCPR r 42.1.

22. Alexander Learmonth et al (eds), Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (Thomson Reuters, 21st ed, 2018) observed in an United Kingdom context at [33-01] and [33-05] (citations omitted):

Costs in probate actions are at the discretion of the court. It is the general rule in probate actions, as in other actions, that costs follow the event. The notion, sometimes entertained, that the costs of unsuccessful parties will generally be ordered out of the estate in a probate action, is wrong. A large part of this chapter is taken up by a consideration of the exceptions to the rule that costs follow the event.

…

In the exercise of its discretion on the question of costs, the court must take into account all of the circumstances, including:

(a) the conduct of all the parties, including conduct before, as well as during the proceedings and whether it was reasonable for allegations or issues to be raised or pursued, the manner in which allegations or issues were pursued and whether a claim has been exaggerated;

(b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and

(c) any payment into court or admissible offer to settle made by a party which is drawn to the court’s attention and which is not an offer to which costs consequences under CPR Pt 36 apply.

…

Where the litigation has been caused by the conduct of the testator

Where the state of the testator’s testamentary papers, the habits and mode of life or (doubtfully) where the testator’s own statements have brought about the litigation, costs of unsuccessful parties may be ordered out of the estate. The touchstone is whether it was the testator’s own conduct that led to his will “being surrounded with confusion or uncertainty in law or fact” … The modern trend, however, is for there to be careful scrutiny of any case in which this exception is said to apply, and to narrow, rather than extend the circumstances in which it will be held to be engaged.

23. I also note the Plaintiffs make reference to Nowell v Palmer (1993) 32 NSWLR 574 at 581-2 wherein Mahoney JA (with Meagher and Handley JJA agreeing) said:

Mr Anderson, in his submission, had in mind, I think, the attitude which the courts have traditionally taken to the costs of legal personal representatives in defending proceedings brought against an estate. If the legal personal representative acts in accordance with proper principles, she will be safeguarded as to costs; in an appropriate case, her costs and/or the costs which she is ordered to pay in an unsuccessful defence of the estate may be ordered to be paid out of the estate …

However, in the present case, the appellant, in defending the proceeding, was not acting as, or merely as, the executrix of the estate. She was, in a real sense, defending her own interests. She was the sole beneficiary of the estate. In addition, she had purported to distribute the estate to herself and, to an extent, the proceeding brought against her was a proceeding by way of tracing the assets in the estate to which the respondent was entitled and to secure an accounting in respect of them … I do not think that in these circumstances the principle to which I have referred should apply. The proceeding was essentially a defence by the appellant of her own interests.

Trustees indemnified out of estate

24. In the context of trustee’s seeking to be indemnified out of the estate Austin J observed in Drummond v Drummond [1999] NSWSC 923 (Drummond v Drummond) at [43]-[47]:

In Miller v Cameron (1936) 54 CLR 572, 578, Latham CJ explained that ‘as a rule, a trustee is allowed his costs out of the trust estate if his conduct has been honest, even though it may have been mistaken.’

…

This exception to the normal rule that costs follow the event, which permits an executor to recover costs from the estate, is itself subject to some exceptions, as is plain from Latham CJ’s reference to honest conduct and Kekewich J’s reference to impropriety. There are two ‘sub-exceptions’ which are arguably relevant to the present case.

The first is the sub-exception for ‘impropriety’. As Kekewich J made clear in Re Jones, cases of impropriety include an executor taking or defending proceedings in breach of trust, or conducting the proceedings in such a way that the Court, on a general view of the case, regards the executor’s conduct as ‘not honestly brought forward’ ([1897] 2 Ch 190, 198). Additionally, recourse to the estate may be denied to an executor ‘where the claim is of monstrous character, that is, one which no reasonable man could say ought to have been put forward’ (at 198). In Re Weall the trustees allowed a solicitor to deduct fees which were not properly chargeable to the life tenant from the rental income of the estate. Kekewich J observed that while mistakes or errors in judgment would not disentitle the trustees to an indemnity, the beneficiaries were entitled to expect ‘reasonable prudence’ of the trustees (42 ChD at 678-9).

…

Secondly, the rule which gives an executor the prima facie entitlement to be indemnified out of the estate for costs relates only the costs incurred in the administration and distribution of the estate. Such costs are to be distinguished from costs incurred by an executor in furtherance of a personal interest: Miller v Cameron (1936) 54 CLR at 578-9; Re Jones [1897] 2 Ch at 197-8; Plimsoll v Drake (No.2) (Supreme Court of Tasmania, Zeeman J, unreported, 8 June 1995). Executors who pursue personal interests in litigation are ‘not fighting for the estate any more than if they were not executors at all’: Skrimshire v Melbourne Benevolent Asylum (1894) 20 VLR 13, 18 per Madden CJ. An executor who prosecutes or defends proceedings in the capacity of, say, creditor or beneficiary of the estate rather than in the capacity as executor cannot expect to recoup the costs of litigation from the estate simply on the basis that he or she is also an executor. In Miller v Cameron Latham CJ took the view that a trustee who defended an action for his removal was thereby representing his own interests and not those of the trust estate. In Plimsoll v Drake Zeeman J reached a similar conclusion where a trustee unsuccessfully asserted the right to demand a release before distributing the trust estate to the beneficiaries.

25. In Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Bishop Irinej Dobrijevic(No 3) [2017] NSWCA 109 (Free Serbian Church) Payne JA (with Ward and Gleeson JJA agreeing) said at [14]:

It was accepted that this exception to the usual rule that costs follow the event is itself subject to some exceptions. These include impropriety, such as when a trustee takes or defends proceedings in breach of trust, or conducting the proceedings in such a way that the Court, on a general view of the case, regards the trustee’s conduct as “not honestly brought forward” or “where the claim is of monstrous character, that is, one which no reasonable man could say ought to have been forwarded” and where costs are incurred by a trustee in furtherance of a personal interest: Drummond v Drummond [1999] NSWSC 923 at [43]-[47] per Austin J.

26. See also Warton v Yeo [2015] NSWCA 115 which concerned, inter alia, consideration whether a trustee acted unreasonably in adopting an adversarial stance in incurring costs in litigation.

Parties’ submissions

Plaintiff

27. The Plaintiff submits that the ordinary rule as to costs should apply to the circumstances of this case and that she should be awarded costs (Submissions [1]-[5]).

28. However, these costs should not be paid out of the estate of the deceased because this case was not probate litigation to which the “probate exception” should apply in its strict sense or by analogy. The Plaintiff’s claim was in equity and did not run together with a probate suit, and accordingly the “probate exception” should be distinguished from the circumstances of this case (Submissions [6]-[11]). Further the Plaintiff submits it was the “fault” of the Defendant not the deceased testator at the centre of the litigation (Submissions in Reply [1]-[11]).

29. Likewise the Plaintiff submits the Defendant acted entirely in her own interests in the litigation, and did not act as an uninterested executor or trustee party. In this circumstance the Plaintiff submits, with reference to Nowell v Palmer (1993) 32 NSWLR 574 and UCPR r 42.25(2)(b), that the Defendant cannot be indemnified out of funds of the deceased’s estate (Submissions [12]-[14]; [21]-[23]).

30. Furthermore the Plaintiff submits the Defendant prematurely distributed the deceased’s assets and lost any protection against personal liability claims under section 92 of the Probate and Administration Act 1898 (NSW) and is at peril regarding her personal liability for costs (Submissions [15]-[20]).

31. The Plaintiff criticises the conduct of the Defendant in her dealings with the deceased’s estate and in litigation, suggesting these discretionary factors should further suggest that the Defendant should not be entitled to indemnify her costs from the deceased’s estate (Submissions [24]-[28]).

Defendant

32. The Defendant’s submissions on costs are in comparison more precisely confined to two alternative submissions.

33. The Defendant’s primary submission, with reference to the applicable legal principles, is that her costs should be borne by the estate. This is because, as in probate litigation, the litigation before this Court was brought by reason of the testator’s conduct. The Defendant herself was a third party to the estoppel sought by the Plaintiff, and in substance the litigation concerned the ‘fault of the testator’ of the deceased Mr Novick in making representations to the Plaintiff. The Defendant was the beneficiary of a validly-made will and its executor and trustee (Submissions [1]-[9]).

34. The Defendant therefore submits the circumstances of this case fall within the rubric of the ‘fault of the testator’ and which operates to displace the ordinary rule that costs follow the event. The Defendant also criticises the Plaintiff’s general approach to relief as failing to take regard for the severe impact the orders sought would have upon the Defendant (Submissions [11]).

35. The Defendant’s secondary, alternative, submission is that the parties should each bear their own costs of the proceedings (Submissions [3]).

Consideration

36. The ordinary rule as to costs is that costs follow the event and I am not satisfied in the circumstances of this case that there should be a departure from this rule.

37. In particular I am not satisfied that the Defendant should be able to seek that the parties’ costs be borne by the estate of the deceased on the basis that it was the “fault” of Mr Novick as testator that originated the proceedings. This is because the Defendant’s submission does not adequately account for all the circumstances of the case that should reasonably guide my discretion as to costs.

38. It is correct as I observed in my principal judgment (at [406]) that Mr Novick was at the centre of the litigation. It is also correct that the primary relief sought by the Plaintiff was focused on the conduct of Mr Novick, who I found made various promises to the Plaintiff to the effect that he would leave his estate to her and should not be allowed to avoid his lawful obligations as a result of those promises (principal judgment [492]-[496]). To this extent at a basic level the litigation centred on the fault of Mr Novick.

39. However the conduct and substance of the litigation concerned further important circumstances which suggest against the Defendant’s submission that Mr Novick’s estate should bear the costs of the parties.

40. First, whilst the Defendant was a third party to the estoppel raised by the Defendant and was executor and trustee to a validly-made will, her role in the proceedings was adversarial in nature. The Defendant’s role in the litigation went far beyond merely that of a third party defending the integrity of Mr Novick’s will.

41. For example, the Defendant submitted that Mr Novick did not make the alleged representations or promises to the Plaintiff (principal judgment [93]) and denied in cross-examination that she had ever seen the Plaintiff clean Mr Novick’s unit, wash his clothes or do any errands for him (principal judgment [380]). The Defendant also criticised the Plaintiff’s evidence as unacceptably vague as to any reliance or detriment of the Plaintiff as a result of Mr Novick’s promises (principal judgment [94]-[95]).

42. In this sense the Defendant generally attempted to deny or reject the Plaintiff’s account of events and deny or reject the Plaintiff’s account of the amount of time she undertook to care for Mr Novick. These were key elements of the Plaintiff’s case.

43. I found that the Defendant was a wholly unreliable historian and was driven on most if not all occasions by self-interest and on occasions told deliberate untruths (principal judgment [440]). Therefore in my view it is clear the Defendant played more than a third-party role in the litigation. Her evidence and role in the proceedings was wholly adversarial in nature that challenged in many instances the Plaintiff’s account of events.

44. Secondly, in my view the Defendant acted entirely in her own interest in the litigation as sole beneficiary of Mr Novick’s estate. Whilst it is true that she had an interest in wishing to uphold the validity of Mr Novick’s will, she was in substance acting for her own benefit as opposed to the benefit of the estate.

45. As I noted with concern in the principal judgment in my view the Defendant indeed has already had the benefit in part of Mr Novick’s estate. This is because while Mr Novick was alive I was satisfied the Defendant played a major role in him taking out a loan in 2015 for $213,000 secured by his property, to which Mr Novick himself got very little if any benefit. I was satisfied many withdrawals from that loan went to the likely benefit of the Defendant (principal judgment [453]-[466]).

46. Thirdly, the litigation before me concerned issues quite distinct from the cases referred to by the Defendant in the outline of submissions on costs, which centred primarily on probate litigation and principals concerning the ‘fault’ of testators in that context.

47. The litigation before me concerned primarily the Plaintiff’s case in equitable estoppel and secondly an alternative claim in breach of contract (principal judgment [85]-[88]). Furthermore, the issues ventilated at trial extended to broader issues concerning the relationship between Mr Novick and the Defendant (principal judgment [445]-[452]), the Defendant’s conduct concerning Mr Novick’s money (principal judgment [453]-[466]) and the Defendant’s control over Mr Novick (principal judgment [467]-[471]).

48. Whilst these issues were in some sense peripheral to the relief sought by the Plaintiff in my view they highlight how this litigation was quite distinct from those cases and principles relating to the “probate exception” referred to by the Defendant. The Plaintiff did not seek to challenge the validity of Mr Novick’s will and the litigation was not concerned with probate, which was indeed granted on 4 October 2017 (Exhibit P3, 85) (principal judgment [63]).

49. Fourthly, it is important to consider the context surrounding the litigation in assessing whether there should be a departure from the ordinary rule as to costs.

50. This context includes my finding that the Defendant developed a strategy to drive a wedge between Mr Novick and his family and friends and actively attempted to procure three wills in her favour (principal judgment [444]).

51. This also includes my finding that the Defendant was the beneficiary of large amounts of money procured from a loan taken out of Mr Novick’s estate for $213,000. I was satisfied many of the withdrawals of Mr Novick’s account for this mortgage went on the entertainment and other expenses of the Defendant (principal judgment [460]). The Defendant has in this sense already benefited from the estate of Mr Novick.

52. I also found the Defendant had more than an input at the very least in the production and content of a letter drafted by Mr Novick of 18 November 2015 which was clearly slanted to give an adverse picture of the Plaintiff (principal judgment [428]). I was also satisfied the Defendant encouraged Mr Novick to harbour and express negative views of the Plaintiff for her own ends (principal judgment [428]).

53. I also note my findings that the Defendant never discouraged Mr Novick’s comments that demonstrated his infatuation with her and in my view her active encouragement of his sense of gratitude towards her (principal judgment [445]-[452]).

54. These contextual factors reinforce in my view the fact that the Defendant was not a third-party to the proceedings and indeed played an active and adversarial role in the litigation. These factors also reinforce in my view the distinct nature of this litigation as opposed to probate proceedings or proceedings where a trustee seeks to administer a trust wherein they may seek to be indemnified for their costs from the estate.

Conclusion

55. However I am not satisfied that this case is necessarily one where the Defendant has defended proceedings in a manner appropriately characterised as constituting “impropriety”, for example by defending proceedings in breach of trust or not honestly bringing forward or making a claim of a “monstrous character” as quoted in Drummond v Drummond (at [45]) or Free Serbian Church (at [14]).

56. I also acknowledge that as executor and trustee the Defendant has an interest in upholding the validity of the wills and the disposition of Mr Novick’s estate in accordance with these wills.

57. Nevertheless, in the exercise of my discretion and with the above considerations (particularly [37]-[43]; [50]-[54] of this judgment) in mind I am not satisfied that the circumstances of this case warrant a departure from the ordinary rule that costs follow the event. I am further of the view that neither parties’ costs should be borne by the estate.

58. I would therefore order the Defendant to personally pay the Plaintiff’s costs on an ordinary basis.

59. I would invite the parties to provide short minutes of order to reflect these reasons as soon as is practicable.

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Decision last updated: 20 July 2018