Judgment of the Honourable Auxiliary Justice McMillan
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL RULE: COSTS FOLLOW EVENT - GENERAL PRINCIPLES AND EXERCISE OF DISCRETION
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS - INFORMAL OFFERS AND CALDERBANK LETTERS - GENERALLY
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - INDEMNITY COSTS
COSTS – DEPARTING FROM THE GENERAL RULE – INDEMNITY COSTS – CONDUCT OF PARTIES – CONSIDERATION OF EFFECT OF CALDERBANK LETTER – ORDER FOR COSTS
By orders made and reasons delivered on 29 July 2022 (‘the reasons’), an application by Eugene Joseph Moloney (‘the applicant’) seeking probate of a will of Eugene Patrick Moloney (‘the deceased’) dated 15 February 2018 (‘the 2018 will’) was dismissed.[1]
The deceased died on 7 April 2018. The applicant is one of six of the deceased’s children, and his only son. The first to fourth respondents are the deceased’s remaining four living children.[2] The fifth to eighth respondents are the deceased’s four grandchildren.
[2] The deceased’s sixth child, Helen Christine Boylan, predeceased the deceased.
In the reasons, the Court determined that the deceased did not have testamentary capacity when he gave instructions for the 2018 will on 18 August 2017 or when he signed the 2018 will on 15 February 2018.[3]…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
Continue reading Moloney v Hayward (No 2)
Sign in free to access the full text
Details
AGLC
Moloney v Hayward (No 2) [2023] SASC 36
Case
[2023] SASC 36
Decision Date
CaseChat Overview and Summary
Moloney v Hayward (No 2) is a case before the Supreme Court of South Australia, concerning a dispute over the validity of a will and the associated costs. The first to fourth respondents challenge the applicant’s actions in initiating and pursuing his application for a grant of probate of the 2018 will and his refusal of the Calderbank offer. They argue that the applicant's conduct justifies an order for indemnity costs, while the applicant contends that he has done nothing to warrant such an order. The central legal issue is whether the applicant’s refusal of a late-stage Calderbank offer and his conduct throughout the proceedings justify an order for indemnity costs under the Uniform Civil Rules.
The court examined the principles surrounding indemnity costs, focusing on whether the applicant’s actions were taken in wilful disregard of known facts or clearly established law. The court found that while the Calderbank offer was genuine and made late in the proceedings, the applicant did not act unreasonably in rejecting it. The court emphasized the importance of balancing the need to deter frivolous litigation with the right of parties to pursue legitimate claims, even if they are ultimately unsuccessful. Given the timing and circumstances of the offer, the court concluded that the applicant's decision to reject the offer was not unreasonable.
As a result, the court determined that the first to fourth respondents are entitled to an order of costs in their favour, but the applicant will not be ordered to pay these costs on an indemnity basis. The court also addressed the issue of the applicant’s right to indemnity from the deceased’s estate, concluding that the applicant had no such right and that any funds improperly taken should be returned to the estate. The court found that the Uniform Civil Rules apply to the proceedings, and that the application of these rules does not alter the outcome regarding the costs order.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
The parties also disagree as to the basis upon which those costs should be ordered. The first to fourth respondents submit that the applicant’s conduct in initiating and pursuing his application for a grant of probate of the 2018 will, and his refusal of the Calderbank offer, justify an order for indemnity costs. Conversely, the applicant submits that he has done nothing to warrant the making of such an order in the circumstances of this proceeding. Commencing or continuing litigation in ‘wilful disregard of the known facts’ Both parties referred to the principles expressed by Sheppard J in Colgate as follows: [I]t is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion [to award costs other than on a standard basis]. I instance … the fact that the proceedings were commenced or continued for some ulterior motive … or in wilful disregard of known facts or clearly established law …[105][105] Colgate (n 8) 233. The relevance and applicability of any scenario contemplated by Sheppard J in Colgate is expressly disclaimed by the applicant; whereas the first to fourth respondents rely, in the first place, on an allegation of ‘wilful disregard’ specifically. For present purposes, it is appropriate to limit consideration to whether such allegation arises on the facts of the proceeding, although noting that the circumstances where an order for indemnity costs may be justified are not closed.[106] [106] Ibid 233 (Sheppard J), quoting Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 187. In this regard, Professor Dal Pont summarises the position as follows:[107] A special costs order may ensue where it appears to the court ‘that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success’, in which case the action ‘must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law’. Despite this ‘presumption’, it is not a prerequisite to a special costs order that a collateral purpose or a species of fraud be established. It is sufficient to enliven the discretion that, for whatever reason, a litigant, whether as plaintiff or defendant, persists in what on proper consideration should be seen to be a hopeless case. As explained by B W Ambrose J in Re SCA Properties Pty Ltd (in liq): In some cases it is appropriate to make an order for indemnity costs to make it known that the court will not readily accept that its time and the successful litigant’s money can be wasted on totally frivolous and thoroughly unjustified proceeding (sic). If it appears it is not for the bona fide purpose of protecting and enforcing a legal right but to achieve an ulterior or extraneous purpose that in itself is justification for the making of an indemnity order.…Yet the mere fact that a case is found to lack merit cannot be a basis for a special costs order, for in litigation that comes to a concluded hearing, the claim of at least one of the parties will be found lacking in merit. Even a resounding defeat does not necessarily brand the claim as sufficiently hopeless to justify a special costs order. It is likewise an incident of the adversary system that a party or witness may not be believed, and were indemnity costs available as a matter of course because of this, there would be a de facto shift in the ‘normal’ basis of taxing costs. …The court inquires into whether the case is patently hopeless as opposed to marginal or difficult. However, it cannot be assumed that the distinction between the two is always easy to draw … the court aims to strike a balance so as not to dissuade litigants from pursuing a tenuous but material claim … [i]n striking this balance, judges are wary of hindsight, it being noted that ‘[i]t is easy with hindsight to make an observation that an action has no chance of success, after the matter has been fully argued’. It follows that courts are not, outside of ‘pathological cases’, overly inclined to conclude that a case or defence was patently hopeless in this context. [107] Dal Pont (n 36) [16.55]–[16.56], [16.58] (emphasis in original) (citations omitted).
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ultimately, the Calderbank offer was made late in the proceeding and in very close proximity to the commencement of the trial. It is not in doubt that the Calderbank offer represented a genuine offer to settle the proceeding without the need for trial, in accordance with the parties’ obligations under the UCR. Further, decisions of previous courts have emphasised that offers made late in a proceeding, including just before trial, may sometimes be more likely to be considered reasonable because both parties are more or less fully aware of the strengths and weaknesses of their cases.[137] However, the observations made above militate against such a conclusion and, on balance, the Court cannot conclude that the applicant acted unreasonably in all of the circumstances in rejecting the Calderbank offer. [137] See, eg, Evans v Braddock (No 2) [2015] NSWSC 518, [60] (Hallen J); contrast, eg, Cook v Flaherty (n 54) [11] (Livesey J); Selmore v Bull (2005) 34 Fam LR 488, 497–8 [54] (Mason P, Tobias JA and Brownie AJA agreeing). Conclusion The first to fourth respondents are entitled to an order of costs in their favour, however, the applicant cannot be said to have acted in wilful disregard of fact or law, or to have imprudently refused the Calderbank offer in all of the circumstances. Accordingly, the Court will not order the applicant to pay the first to fourth respondents’ costs on an indemnity basis. Right of indemnity As indicated above, the first to fourth respondents deny any right of indemnity claimed or taken advantage of by the applicant out of the estate of the deceased. The applicant’s submissions are silent as to this issue. It is not known whether the applicant has already indemnified himself from the deceased’s estate or whether he intends to do so. Neither party appears to have put on concrete evidence in respect of this issue, either in the substantive proceeding or on the issue of costs. The first to fourth respondents’ costs submissions advert to an amount of $120,000 purportedly transferred out of the deceased’s account following his death, but in substance the issue is not taken any further.[138] [138] The Calderbank offer appears to attach an extract from the bank statement for the deceased’s personal account for transactions in April 2018 as evidence of this $120,000 transfer; however, that extract has not been provided to the Court. Having regard to the separate orders made passing over the applicant as executor of the 2012 will[139] and noting the dearth of evidence tendered as to the applicant’s contemplated or actual indemnification out of the deceased’s estate for costs incurred in this litigation, on one view, it appears speculative to require the Court to rule definitively on the question. [139] Heyward v Moloney (n 11). For present purposes, the issue may be simply stated and resolved as follows:(a)the starting principle is that an executor or trustee is entitled as of right to an indemnity out of the trust or estate for expenses properly incurred, that is, all costs except those that are of an unreasonable amount or have been unreasonably incurred;[140] (b)the applicant was named as an executor of the 2018 will; but the Court has now pronounced against the validity of that will. The applicant was also named as executor of the 2012 will, but has now been passed over, pursuant to orders made by this Court; (c)a person has no right of indemnity, either at general law or under the Trustee Act, until formally appointed executor or trustee in relation to the particular estate or trust at issue;[141] (d)the applicant’s costs submissions are silent as to any right of recourse out of the deceased’s estate for his costs in the litigation. On one view, it may be inferred that this is because the applicant accepts no such right exists (with both parties therefore left, on the applicant’s preferred construction, to bear their own costs). The applicant would have, at any rate, been on notice of this issue upon receipt of the respondent’s costs submissions; yet he did not respond to or otherwise agitate the issue in his supplementary costs submissions; and(e)the applicant has not, therefore, at any time had any right of indemnity out of the deceased’s estate for his costs and, to the extent he has already indemnified himself for such costs, those funds have been paid out improperly and must be returned forthwith to the estate of the deceased. Final issues[140] GE Dal Pont, Equity and Trusts in Australia (Thomson Reuters, 6th ed, 2015) 710–1 [23.135]. [141] See, eg, Trustee Act 1936 (SA) s 35(2); Martyn and Caddick (n 43) 555 [39–09]. Experts’ costs
Ratio Decidendi
Legal Principle Established
For present purposes and in light of all the issues contemplated by the parties, it is sufficient to refer to the commentary in Williams, Mortimer and Sunnucks – Executors, Administrators and Probate as follows:[43] [43] JR Martyn and N Caddick (eds), Williams, Mortimer and Sunnucks – Executors, Administration and Probate (Sweet & Maxwell, 20th ed, 2013) 555–6 [39–09] (citations omitted). See also R D’Costa, P Teverson and T Synak, Tristram and Coote’s Probate Practice (LexisNexis, 31st ed, 2015) 900–1 [40.07]–[40.09]; GE Dal Pont, Law of Executors and Administrators (LexisNexis, 2022) 336–9 [15.20]–[15.27]; Re Estate of Plant (Deceased); Wild v Plant [1926] P 139. A person claiming to be executor in a probate action is in a different position from an established executor applying to the court in administration proceedings. In the latter case he is almost invariably entitled to his costs on an indemnity basis. In probate his title as executor is itself generally in doubt. … An executor who successfully proves a will in solemn form is, as a rule, entitled to his costs out of the estate. Subject to any order of the court he has a right to take them out of the estate as costs of obtaining probate.…Where an executor is partially successful he may be given his costs if he has not acted unreasonably. But where the residuary gift to an executrix was held to have been procured by her undue influence, but the rest of the will was upheld, she was condemned in the costs, save those of proving in solemn form. … An executor is prima facie justified in propounding a will, but he is not bound to do so. The fact that he is a bare executor is no ground for his not being condemned in costs. If an executor must or ought to have known that he was propounding a document that could not be supported he will be condemned in costs. An executor’s right to costs will be lost or curtailed by inequitable conduct amounting to a violation or culpable neglect of his duty.…An executor who has failed to prove a will has no contractual or quasi-contractual right to costs out of the estate.ConsiderationApplication of the UCR Both parties appear to assume the application of the UCR to the present proceeding. However, there is a preliminary question as to whether the UCR apply to the whole of the proceeding. Rule 1.4 of the UCR relevantly provides as follows:[44] [44] (Emphasis in original).1.4―Transition(1)Unless the Court otherwise orders―(a) these Rules apply to―(i)a proceeding commenced; and (ii)a step in a proceeding taken, on or after the commencement date;[45] and(b) the Previous Rules[46] continue to govern a step in a proceeding taken before the commencement date.[45] Being 18 May 2020. [46] Defined in r 2.1 of the UCR to mean (in the context of this Court) the Supreme Court Civil Rules 2006 (SA); the Supreme Court Civil Supplementary Rules 2014 (SA); the Supreme Court Fast Track Rules Adoption Rules 2014 (SA); and the Supreme Court Fast Track Supplementary Rules Adoption Rules 2014 (SA).