Moloney v Hayward (No 2)

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
MOLONEY v HAYWARD & ORS (No 2)
[2023] SASC 36
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
Supreme Court Act 1935 (SA) s 40; Uniform Civil Rules 2020 (SA) rr 1.4, 2.1, 194.6; Supreme Court Civil Rules 2006 (SA); Trustee Act 1936 (SA) s 35(2), referred to.
Phantom Precision Engineering Pty Ltd v Luscombe (No 2) [2021] SASC 103; Treffers v Phung [2021] SASC 38; Viscariello v Legal Practitioners Disciplinary Tribunal (No 2) [2021] SASCFC 29; Holt v Bunney (No 2) [2020] SASCFC 120; Hall v Carney (No 2) [2012] SASCFC 105; Roche v Roche (No 2) [2017] SASC 75; Tschirn v Australian Executor Trustees Ltd [2016] SASC 149; Barbon v Tessari (No 2) [2015] VSC 597; Nicholson v Knaggs (No 3 – Severance and Costs) [2009] VSC 328; Brown v Sandhurst Trustees Ltd (No 2) [2009] VSC 406; Morris v McEwen (2005) 92 SASR 281; Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435; Re Estate Late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311; Perpetual Trustee Co Ltd v Baker [1999] NSWCA 244; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Calderbank v Calderbank [1976] Fam 93; Middlebrook v Middlebrook (1962) 36 ALJR 216; Parker v Felgate (1883) 8 PD 171; Boughton v Knight (1873) LR 3 PD 64; Mitchell v Gard (1863) 3 Sw & Tr 275; 164 ER 1280, considered.

MOLONEY v HAYWARD & ORS (No 2)
[2023] SASC 36
Civil
McMILLAN AJ.
Introduction

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]
[1] Moloney v Hayward [2022] SASC 79 (‘reasons’).
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] It also found that the deceased did not know and approve of the contents of the 2018 will,[4] and that the 2018 will was the product of undue influence by the applicant on the deceased.[5] The parties thus agreed that the respondents would seek rectification of an earlier will made by the deceased on 10 September 2012 (‘the 2012 will’) so that it included an option allowing the applicant to purchase family farming land (known as ‘Brewers’) for market value and that the 2012 will, as rectified, be admitted to probate.
[3] Reasons [301], [315].
[4] Ibid [329].
[5] Ibid [398].
The parties were unable to agree on the costs of the proceeding. On 9 September 2022, the solicitors for the first to fourth respondents forwarded written submissions dated 9 September 2022; draft minutes of order as to costs and an affidavit of Peter James Jackson dated 9 September 2022 (‘the Jackson affidavit’).
The Jackson affidavit exhibited a letter to the solicitors for the applicant dated 20 August 2021 that contained a without prejudice offer made to the applicant, in accordance with the principles in Calderbank v Calderbank (‘Calderbank’)[6] (‘the Calderbank offer’). The Calderbank offer relevantly provided as follows:
[6] [1976] Fam 93 (‘Calderbank’).
Our clients are confident in achieving a successful outcome at trial. In a last attempt to reach a resolution in this matter prior to trial, we are instructed by our clients to make an offer to resolve the action. To that end, we are instructed to make the following offer:
1.The 2012 Will be admitted to Probate as the last true Will of the deceased with the Estate is to be (sic) distributed in accordance with the 2012 Will save that:
1.1 The applicant be able to purchase the farming land known as “Brewers” at Market Value which is to be assessed by a Licenced Valuer nominated by the Deceased’s Trustee as at the date of acceptance of this offer and the sum is to be paid to the deceased’s estate within 90 days of the acceptance of the offer;
1.2 The Applicant receive an additional $500,000.00 payment from the residue of the estate;
2.The Respondents will make no claim for the $120,000.00 transferred from the deceased’s account … to [the deceased’s farming partnership account] … following his death.
This offer is non-negotiable and our clients are not interested in entering any further negotiations.
Our clients’ offer remains open for acceptance until 4pm on 27 August 2021 after which time it will be withdrawn.
This letter is written without prejudice save as to costs and we rely on the principles enunciated in [Calderbank].
On 13 September 2022, the Court confirmed receipt of the respondents’ costs submissions and supporting documents, and sought confirmation as to whether any submissions had been filed by the applicant.
Later that day, the solicitors for the applicant emailed the following documents:
(a)written submissions filed 9 September 2022; and
(b)undated supplementary written submissions.
The covering email from the solicitors for the applicant enclosing those documents relevantly stated:
I attach a copy of our Submissions filed on Friday afternoon pursuant to Her Honour’s orders and served at that time.
Upon receiving the Respondent’s [Costs] Submissions at approximately 5.30 p.m. on Friday [9 September 2022] we noted that they had filed evidence in relation to and relying upon a pre-trial [Calderbank] offer. As noted in our Submissions filed on Friday we had received no notice of that.
We have prepared a Supplementary Submission in response to that evidence filed and the Submissions made by the Respondents in relation to that evidence and seek leave of the Court for those Submissions to be received.
The solicitors for the first to fourth respondents also emailed the Court confirming that their clients consented to the Court having access to the applicant’s supplementary costs submissions.
First to fourth respondents’ orders as to costs
The first to fourth respondents seek the following orders:
1.The applicant pay the first to fourth respondents’ costs of the proceedings, such costs to be taxed or agreed on an indemnity basis (as defined in r 191.1 of the [Uniform Civil Rules 2020 (SA)]).
2.The applicant bear his own costs of and incidental to the proceedings personally, without recourse from the estate of the deceased, and reimburse the estate in respect of any payment of estate funds for same.
3.There be no order as to the costs of the fifth to eighth respondents.
Applicant’s orders as to costs
The applicant seeks the following orders:
The applicant and the first to fourth respondents bear their own costs of and incidental to the proceedings.
There be no order as to the costs of the fifth to eighth respondents.
First to fourth respondents’ submissions
Costs follow the event
The first to fourth respondents submit that the general rule that costs follow the event should apply as the first to fourth respondents have been ‘wholly successful’ in the litigation inasmuch as:
(a)the applicant failed to propound successfully the 2018 will;
(b)the first to fourth respondents successfully defended the applicant’s action on the grounds of lack of testamentary capacity, lack of knowledge and approval and undue influence; and
(c)the first to fourth respondents successfully cross-claimed in propounding the 2012 will and seeking rectification of it in relation to the applicant’s option to purchase Brewers.
The first to fourth respondents submit that there is no basis to apply the relevant exceptions to the general rule that costs follow the event in probate litigation. Those exceptions were identified with reference to the English decision of Mitchell v Gard,[7] namely, where the testator’s own conduct led to their will being surrounded with confusion or uncertainty in law or fact, or where the circumstances surrounding the creation of the will afforded reasonable grounds for investigation by the Court.
[7] (1863) 3 Sw & Tr 275; 164 ER 1280.
In regard to those exceptions, the first to fourth respondents submit that there was no doubt the applicant knew of the deceased’s age, physical frailty and general mental state. There was no finding by the Court that the applicant knew the deceased lacked testamentary capacity however he knew, or ought to have known on the found facts, that there was at least a risk of this. The applicant also knew of his relationship with the deceased and its potential for influence, and of the deceased’s desire to maintain the Moloney family farm. On a ‘but for’ basis, the creation of the 2018 will was due to the applicant’s conduct. The applicant knew or ought to have known that this was improper, in the sense that it did not reflect the deceased’s previously expressed testamentary intentions. The applicant also knew that his conduct in pressuring the deceased caused the 2018 will to be made, and indeed, this was the applicant’s very purpose. In those circumstances, the litigation could not be said to have been the deceased’s fault, or due to his conduct, but was rather caused by the applicant. Further, it could not be said in this context that there was any reasonable basis for investigation of the 2018 will by the applicant. There is, therefore, no basis to apply the relevant exceptions referred to above.
Indemnity costs
Referring to the decision of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (‘Colgate’),[8] the first to fourth respondents submit that there were factors in the proceeding justifying a departure from the general rule that costs follow the event, and warranting an award of indemnity costs against the applicant.
[8] (1993) 46 FCR 225 (‘Colgate’).
Specifically, the first to fourth respondents submit that the applicant commenced and continued the litigation in ‘wilful disregard of the known facts’,[9] inasmuch as he knew of certain matters relating to the deceased; knew what he himself had done in relation to procuring the making of the 2018 will; knew or ought to have known that this amounted to undue pressure on the deceased to make the 2018 will; but nevertheless commenced the litigation and propounded the 2018 will in wilful disregard of all of these matters. The first to fourth respondents submit that the applicant’s improper conduct caused them to unnecessarily incur significant legal costs, and justifies an order for indemnity costs.[10]
[9] Citing ibid 232–5 (Sheppard J).
[10] Relying on Nicholson v Knaggs (No 3 – Severance and Costs) [2009] VSC 328.
The first to fourth respondents further rely on the applicant’s ‘imprudent refusal’ of the Calderbank offer. It is submitted that the Calderbank offer represented a significant compromise, in that it granted the applicant a further $500,000 over and above his entitlements under the 2012 will; more than covered his costs in the proceeding to the date of making the offer; and offered to forego any claim to a further sum of $120,000 that the applicant may have been required to repay to the estate. The first to fourth respondents thus rely on the Calderbank offer as a basis for an award of indemnity costs and in support of the conclusion that the applicant’s continuation of the proceeding was improper.
Denial of indemnity and reimbursement
The first to fourth respondents also request that the Court now determine whether the applicant has any right to an indemnity out of the deceased’s residuary estate for the costs of the litigation.
In the first to fourth respondents’ submission, the applicant is not the executor of the deceased’s estate, and instead was only named as an executor in the 2012 will. Thus, they submit that he had no right to an indemnity under either general law or s 35(2) of the Trustee Act 1936 (SA) (‘the Trustee Act’) until probate of the 2012 will was granted. Further, the first to fourth respondents had subsequently commenced separate proceedings seeking orders that the applicant be passed over as one of the executors of the 2012 will and that an independent administrator be appointed. If those orders were ultimately made, the applicant would have no right of indemnity. Such orders have now been made.[11]
[11] See Heyward v Moloney [2022] SASC 128. The applicant did not ultimately oppose the making of such orders, except in relation to the manner in which the administrator’s remuneration was proposed to be borne.
The first to fourth respondents request that the Court conclusively determine the question, and also make an order denying the applicant any indemnity for costs and causing him to repay any such costs to the estate, if he has already indemnified himself therefrom.
Costs of the fifth to eighth respondents
On the basis that the fifth to eighth respondents took no role in the substantive proceeding, it is submitted that they should bear their own costs.
Applicant’s submissions
The applicant invokes the two general exceptions to the ordinary rule that costs follow the event in probate litigation, namely, where the testator has been the ‘cause’ of the litigation and where the circumstances lead reasonably to an investigation concerning the will.[12] The applicant submits that the Court should apply the second such exception in this case, and accordingly each of the parties should bear their own costs.
[12] Citing, amongst others, Perpetual Trustee Co Ltd v Baker [1999] NSWCA 244 (‘Perpetual Trustee v Baker’); Roche v Roche (No 2) [2017] SASC 75; Brown v Sandhurst Trustees Ltd (No 2) [2009] VSC 406 (‘Brown v Sandhurst’).
The applicant submits that he did not invoke the Court’s jurisdiction or proceed to trial unreasonably.[13] Rather, each of the grounds on which the first to fourth respondents challenged his application for probate of the 2018 will was arguable either way, and it could not be suggested that the applicant did not have a genuine belief that the 2018 will was valid. The applicant particularised submissions in relation to all three of the grounds successfully raised by the first to fourth respondents in the substantive proceeding, that is, testamentary capacity, knowledge and approval, and undue influence.
[13] Cf Roche v Roche (n 12) and Brown v Sandhurst (n 12).
As to capacity, the applicant submits that:
(a)the deceased gave the outward appearance of being able to manage his own affairs. Notwithstanding the Court’s ultimate finding as to capacity and evidence of his deteriorating health, there was a body of lay evidence from numerous witnesses to the effect that they did not have any concerns about the deceased’s mind, and that the deceased appeared to the world as a rational and strong-willed person in control of his faculties;
(b)the first to fourth respondents did not produce any expert evidence concerning lack of capacity until the second report of Dr Jane Lonie (‘Dr Lonie’) dated 1 February 2021. Dr Lonie’s first report dated 2 December 2019 was only directed to the question of the deceased’s vulnerability to undue influence. Dr Lonie’s evidence was found to have ‘significant difficulties and inadequacies as a result of the deceased’s medical records being inaccurate’ and to not reflect ‘the deceased’s cognitive, functional and behavioural status at the times of giving instructions and executing the 2018 will’;[14]
(c)the expert report prepared on behalf of the first to fourth respondents by Dr Tuly Rosenfeld (‘Dr Rosenfeld’) was not filed until 18 August 2021 – less than two weeks before trial – and suffered from the same deficiencies as identified above with respect to Dr Lonie’s evidence;
(d)the applicant was reasonably entitled to treat the first to fourth respondents’ expert reports as unpersuasive, even without contrary expert evidence;
(e)the applicant obtained an expert report from the deceased’s general practitioner, Dr Georgina Moore (‘Dr Moore’), dated 13 March 2021, which observed no evidence of significant cognitive decline; opined that the deceased had testamentary capacity; and maintained those views after considering Dr Rosenfeld’s report. The Court accepted Dr Moore’s view that the medical records that Dr Lonie had relied upon did not accurately reflect the deceased’s cognitive, functional and behavioural status at the relevant times, and observed that Dr Moore’s evidence was supported by each lay witness. Although the Court did not ultimately place significant weight on Dr Moore’s evidence, noting that her attendances on the deceased were limited in time and frequency,[15] it was not unreasonable for the applicant to treat Dr Moore’s evidence and opinion as reliable; and
(f)the applicant also obtained two expert reports from Dr Jane Hecker (‘Dr Hecker’) dated 7 July 2021 and 30 August 2021. While these were found to have suffered from the same deficiencies as identified with respect to the reports authored by Dr Lonie and Dr Rosenfeld,[16] it was not unreasonable for the applicant to have taken Dr Hecker’s reports into account in deciding to proceed to trial.
[14] Reasons [269].
[15] Ibid.
[16] Ibid.
As to knowledge and approval, the applicant submits:
(a)at trial, the applicant relied on the rule in Parker v Felgate[17] to the effect that the deceased was capable of understanding, and in fact understood in February 2018, that he was engaged in executing a will for which he had previously given instructions to his solicitor;
(b)the Court ultimately found that reliance on this rule was misplaced. That was because the applicant’s submissions were premised on the basis that the deceased had testamentary capacity in August 2017 when he gave instructions for the 2018 will; whereas the Court ultimately held that the deceased lacked capacity (or the applicant had not established capacity) on that date; but
(c)the Court did not make any findings as to whether the applicant would have established the requisite elements of knowledge and approval, in the event it found that the deceased did have capacity when giving instructions in August 2017. In the absence of such finding, the applicant submits that the Court should not find he acted unreasonably in asserting the deceased knew and approved of the contents of the 2018 will. Further, if the applicant did not act unreasonably in proceeding to trial on the question of capacity, then it is said to be difficult to see how he could be found to have acted unreasonably in then proceeding to trial on the question of knowledge and approval.
[17] (1883) 8 PD 171.
As to undue influence, the applicant submits:
(a)there is a critical distinction between permissible and impermissible influence. Further, influence need not be intentionally exercised in order to give rise to a finding that the free and independent will of a testator was overborne;
(b)the Court found that the 2018 will was the product of undue influence; that the applicant’s involvement established he was ‘far from disinterested in the deceased’s testamentary dispositions’;[18] and that it could be inferred that ‘the deceased would not have given the instructions for, or signed, the 2018 will if the applicant had not pressured him regarding the viability of the Moloney farm being at risk over the years’;[19]
(c)no finding was made to the effect that the applicant consciously applied illegitimate pressure on the deceased;
(d)of itself, there could be nothing sinister in the applicant discussing the future of the farm with the deceased, or how it was to be disposed of in the deceased’s will. No finding was made to the effect that it was wrong of the applicant to have engaged in any such discussions;
(e)while the applicant was not privy to discussions between the deceased and the first to fourth respondents about the future of the farm, it could also have been expected that the first to fourth respondents would have discussed the disposition of Brewers with the deceased. Indeed, there was evidence that the second respondent had arranged for her husband to visit the deceased after learning that the applicant might be given an option to purchase Brewers for $1.5 million rather than at market value; and
(f)in this context, given the claimed difficulty of drawing a line between mere (permissible) and undue (impermissible) influence, and given the absence of any finding of conscious wrongdoing by the applicant by the Court, it was not unreasonable for the applicant to defend the first to fourth respondents’ allegations of undue influence.
[18] Reasons [395].
[19] Ibid [397].

In circumstances where the applicant was named executor of the 2018 will, he submits that he had an obligation to propound that will. It was therefore not unreasonable for him to have invoked the Court’s jurisdiction and proceeded to trial where questions of the 2018 will’s validity required investigation, and where the applicant had a reasonable and bona fide belief the deceased had testamentary capacity. This was not, it was said, a case where the applicant had persisted in an unmeritorious action after discovery of evidentiary material showing it was unreasonable to proceed to trial on issues upon which the first to fourth respondents ultimately succeeded.
Basis of assessment of any costs awarded
If the orders sought by the applicant are ultimately made, then the applicant submits that there is no requirement to consider the basis of assessment of costs awarded. However, if some or all of the first to fourth respondents’ costs were ordered to be paid by the applicant, then the applicant submits costs should only be paid on the standard basis.
The applicant notes the starting position pursuant to the Uniform Civil Rules 2020 (SA) (‘UCR’) that costs be ordered on the standard basis, and submits that the principles governing awards of indemnity costs and the circumstances in which they might be made have no application in the present case. In this regard, the applicant variously submits that, at least at the time of preparing his initial costs submissions, no party had put on evidence about pre-trial offers or sought orders to permit the filing and exchange of evidence in support of or opposing such a contention; there was no misconduct by the applicant in the conduct of the case; the case was not unreasonably prolonged by anything he did in the litigation; and there was no finding he had at any time acted dishonestly or otherwise than in good faith, or that any of his evidence was knowingly false or not honestly given. It is submitted that the Court’s ultimate findings in this respect were ‘fairly typical in nature’ and not so out of the ordinary as to warrant the making of an indemnity costs order.
Further, the applicant submits that it would not be fair or reasonable to order him to pay all of the first to fourth respondents’ costs, whether on a standard or indemnity basis, in circumstances where the expert evidence adduced by the first to fourth respondents was of little assistance to the Court, which fact should have also been obvious to the first to fourth respondents. Accordingly, even if the Court ultimately were to find it appropriate to order the applicant to pay the first to fourth respondents’ costs, such costs should exclude the costs of and incidental to the engagement of the first to fourth respondents’ various experts, and order that the remaining costs be paid on a standard basis only.
Applicant’s supplementary costs submissions
As stated above, upon receipt of the respondents’ costs submissions and the Jackson affidavit exhibiting the Calderbank offer, the applicant sought and obtained leave to file supplementary costs submissions.[20]
[20] It should be noted that with the exception of the Jackson affidavit, which exhibited the Calderbank offer, neither party filed any evidence or sought orders for the filing of evidence on the issue of costs, both parties apparently being content to refer to and rely upon the evidence given at trial and the findings of the Court in the reasons in support of their respective costs submissions.
The applicant submits that, in considering the effect of any settlement offer on the question of costs, the key issue for the Court is whether the unsuccessful party has acted unreasonably. In this regard, the applicant contends that he did not act imprudently in rejecting the Calderbank offer, for the following reasons:
(a)it was not imprudent for the applicant to proceed to trial in the face of the Calderbank offer, given the evidence detailed in the applicant’s costs submissions and set out above which, it is said, supported admission of the 2018 will to probate;
(b)the Calderbank offer was not a valid informal offer under the established authorities in South Australia which, unlike other jurisdictions, gives limited scope to the issuance of offers made in accordance with the principles set down in Calderbank, given the strong interest which the Court has in preserving the formal regime governed by the UCR;[21]
(c)The Calderbank offer involved purchasing Brewers at market value in late 2021, albeit with an effective discount of $500,000; but the Court had no evidence about the market value of Brewers in late 2021. Thus, the Court could not compare the position in which the applicant would have been if he had accepted the offer with the position he is in now, noting that:
(i)     the latest valuation of Brewers provided to the Court was dated 1 May 2019;
(ii)    if the value of Brewers had continued to increase since the deceased’s death, then acceptance of the Calderbank offer could have resulted in a windfall gain for the first to fourth respondents over and above the entitlements they were seeking under the 2012 will (assuming it was to be rectified on the terms proposed by them in their cross-claim), and a corresponding detriment to the applicant when compared to his entitlement under the 2012 will, as rectified;
(iii)   this is because the terms of rectification sought at trial, and since granted, contemplated that the applicant would have the option to purchase Brewers at market value as at the date of the deceased’s death; and
(iv)   the applicant thus did not act unreasonably or imprudently in rejecting the offer to purchase Brewers at its 2021 market value, in circumstances where the first to fourth respondents were seeking rectification of the 2012 will on terms that provided for an option to purchase the property at market value as at April 2018.
[21] Citing Morris v McEwen (2005) 92 SASR 281.
Accordingly, the applicant submits that there is no evidentiary basis for the first to fourth respondents’ claim that the applicant would be better off if he had accepted the Calderbank offer; or that he acted imprudently in rejecting it. Even if the Court were to find that the offer was imprudently refused, that could not justify any award of indemnity costs for any period before the commencement of trial ten days later.
Further, if the applicant did not act imprudently in rejecting the Calderbank offer, then such rejection could not render the applicant’s conduct in proceeding to trial improper or unreasonable, particularly when the first to fourth respondents had emphasised that the offer was ‘non-negotiable and [we] are not interested in entering any further negotiations’.
Applicable principles
General costs principles
Section 40 of the Supreme Court Act 1935 (SA) (‘the Supreme Court Act’) sets out the Court’s broad costs discretion. The provision applies with equal force in the exercise of the Court’s probate jurisdiction:[22]
[22] See, eg, Brown v Scout Association of Australia, South Australia Branch Inc [2022] SASCA 104, [84] (Livesey P, Doyle and Bleby JJA), discussing Roche v Roche (n 12) [5]–[18] (Kourakis CJ); see also Estate of Colin William Brown (Deceased) (No 2) [2021] SASC 129, [8] (Stanley J) (‘Re Brown’); Chronis v Karan (No 2) [2021] SASC 101, [16]–[17] (Parker J).
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.
The usual order as to costs is that a successful party in litigation is entitled to an award of costs in its favour, with the unsuccessful party bearing liability for those costs; that is, costs follow the event.[23] The Court may, however, depart from the general rule where good reason exists to do so.[24]
[23] See, eg, Oshlack v Richmond River Council (1998) 193 CLR 72, 97 [67] (McHugh J) (‘Oshlack’); and see Uniform Civil Rules 2020 (SA) r 194.5(2) (‘UCR’).
[24] See, eg, Dallimore v Return to Work Corporation of South Australia (No 2) [2021] SASCFC 8, [12] (Peek and Stanley JJ and David AJ).
Unless otherwise ordered by the Court, the UCR also apply to a proceeding commenced or a step in a proceeding taken on or after the commencement date of the UCR (being 18 May 2020).[25] The UCR empower the Court to make an award of costs at any stage and on various bases, including, inter alia, on an indemnity basis.[26] Rule 194.6 sets out the discretionary factors to which the Court may have regard in making an order as to costs, as follows:[27]
[25] UCR, r 1.4(1)(a).
[26] UCR, r 194.3(1)(a).
[27] In Ironwill v Allbut (No 2) [2021] SADC 24, [37], Judge Burnett expressed the view that ‘rules 194.6(2)(d) and (e) [of the UCR] make it explicit that informal offers of settlement can be taken into account’ when exercising the discretion as to costs (emphasis added).
194.6―Discretionary factors
(1)In exercising its discretion as to costs, the Court may have regard to any factors it considers relevant.
(2)For example, the Court may have regard to the following factors―
(a)     any misconduct or unreasonable conduct of a party in connection with a proceeding;
…
(d)     the making or not making of an offer by a party to resolve the proceeding;
(e)     the non-acceptance by a party of an offer made by another party to resolve the proceeding;
…
(h)     whether costs awarded are to be met by a person or out of a fund.
In Holt v Bunney (No 2),[28] the Full Court clarified the interaction between the UCR and previous rules under s 40 of the Supreme Court Act, and said:
I do not understand the fundamental position following the introduction of the [UCR] to be any different from that existing under previous rules of court; when the Rules are read in conjunction with subsection 40(1) of the [Supreme Court Act], there has been conferred on courts and judges an unfettered discretion as to costs. Of course, the discretion must be exercised judicially by not relying on irrelevant considerations and by having regard to all relevant considerations, including those discretionary considerations identified in subrule 194.6(2).[29]
[28] [2020] SASCFC 120.
[29] Ibid [9] (Kourakis CJ, Nicholson and Hughes JJ) (citations omitted).
Calderbank offers
Division 2 of Part 2 to Chapter 11 of the UCR sets out the principles applicable to ‘formal offers’.[30] The Calderbank offer in this proceeding was not a rules-based, formal offer to which the UCR apply[31] principally because the Calderbank offer was not made in the prescribed ‘Form 121 Formal Offer’ (‘Form 121’). The Calderbank offer was also made on 20 August 2021, which is well after the UCR came into force. In Treffers v Phung, Nicholson J said:[32]
[30] Defined in the UCR, r 132.4.
[31] Note that this Court has previously accepted that r 132.11 of the UCR effectively reflects the costs principle referred to in Calderbank (n 6): see Roberts v Roberts (No 2) [2021] SASC 91, [19] (Blue J) (‘Roberts’).
[32] [2021] SASC 38, [8]–[9] (emphasis in original), discussing the previous civil rules applicable.
The offer made by [the plaintiff] was not a rules based offer. The principles applicable to the issue of whether or not to make a special order for costs based on the failure to accept an informal offer were summarised by Blue J in Essential Beauty Franchising (WA) Pty Ltd v Pilton Holdings Pty Ltd (No 2).[33]
[33] (2014) 120 SASR 433, 445 [56].
In assessing whether to make a costs order other than the usual order by reason of the rejection or non-acceptance of an informal offer, the following principles are established by the authorities cited above and other authorities.
1.    The mere fact that it was open to the offeror to file a formal offer under the Rules is not in itself a reason to discount reliance upon rejection or non-acceptance of an informal offer as a reason to make an order departing from the general rule that costs on a party and party basis follow the event (a special costs order).
2.    While non-acceptance or rejection of an informal offer can be a relevant factor to take into account, it is not the only relevant factor and all relevant factors should be considered in deciding whether to make a special costs order.
3.    In assessing whether the offeree had a reasonable time to assess whether to accept the offer, it is necessary to take into account all the circumstances, including the stage the action has reached, the information available to the offeree, previous negotiations between the parties, legal representation of the offeree, the nature of the issues in the action and whether there was a response by the offeree to the offer.
4.    In deciding whether to make a special costs order, it is relevant to compare the form and substance of the informal offer with the form and substance required of a formal offer under the Rules.
5.    The mere fact that an offer is expressed to remain open for less than 14 days, or for less than the period required of a formal offer under the Rules, is not in itself fatal to an application for a special costs order founded on non-acceptance of the informal offer.
In Nominal Defendant v Dighton (No 2),[34] the Full Court referred to six relevant criteria as follows.
First, what stage the proceedings were at when the offer was received. Secondly, the time allowed to consider the offer. Thirdly, the extent of the compromise offer. Fourthly, the prospects of success from the date of the offer. Fifthly, the clarity in which the terms were expressed and finally, whether the offer foreshadowed indemnity costs in the event the offeree rejected it. We agree that there [sic] are the appropriate criteria to consider.
[34] [2012] SASCFC 97, [8] (Sulan, Anderson and David JJ) (‘Nominal Defendant’).
In Morris v McEwen,[35] White J (with whom Debelle J agreed) also said (discussing the previous rules of court):
[A] court may have regard to a Calderbank letter even though an offer in accordance with the Rules of Court could have been lodged … there are some limitations on the circumstances in which it will be appropriate to attach any weight to a Calderbank letter. … in order for effect to be given to a Calderbank letter, it should be framed in terms which are consistent with the spirit and intent of r 40. In particular, for effect to be given to a Calderbank letter where an offer in accordance with the Rules of Court could have been lodged, the Calderbank letter should not impose more onerous obligations on the recipient than would an offer filed in accordance with the rules. The procedure specified in the rules for the lodgement of an offer is to be understood as an expression of what the court regards as a reasonable approach. To the extent that a defendant departs from that regime, it runs the risk that the court will regard the manner or content of its offer as being unreasonable and, therefore, as not warranting any alteration of the usual position as to costs.
In considering whether to give a Calderbank letter the same effect as an offer lodged pursuant to r 40, a number of matters will be relevant. These will include: whether or not an offer could have been lodged pursuant to r 40; any difficulties associated with the framing of an appropriate offer; any difficulties occurring because of the involvement of other parties in the litigation; the proximity of the trial at the time when the offer was made and the time available to the plaintiff in which to consider the offer; the commitments to which the plaintiff may be subject at that time; and the extent to which, if at all, the circumstances of the offer, or its terms and conditions, differ from the circumstances, or terms and conditions, of an offer lodged in accordance with r 40. This is not intended to be an exhaustive list of the matters which may be relevant.[36]
[35] (2005) 92 SASR 281. See also, eg, BHP Billiton Ltd v Parker (2012) 113 SASR 206, 264 [263] (Doyle CJ and White J).
[36] Ibid 300–1 [74]–[75]. See also, eg, GE Dal Pont, Law of Costs (LexisNexis Australia, 4^th ed, 2018) 423–5 [13.68]–[13.69].
Consequently, at least in South Australia, a party’s failure to file a formal offer in compliance with the UCR will not necessarily preclude them from relying on the principles applicable to Calderbank offers generally; but such offer may not necessarily be given the same weight in the exercise of the Court’s discretion as to costs when compared with a rules-complying offer.[37]
[37] Turtur AO v Connor [2021] SADC 151, [42]–[43] (Judge Schammer).
The rejection of a Calderbank offer is nevertheless a matter to which the Court should have regard in weighing a party’s application for indemnity costs. In Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (‘Hazeldene’s)[38] – and as subsequently accepted in this State[39] – the Victorian Court of Appeal described the ’critical question’ in this regard as being whether a party’s rejection of the offer was reasonable in all of the circumstances.[40] The Court noted the following non-exhaustive criteria as relevant to the enquiry of whether the rejection of a Calderbank offer was unreasonable:
(a)the stage of the proceeding at which the offer was received;
(b)the time allowed to the offeree to consider the offer;
(c)the extent of the compromise offered;
(d)the offeree’s prospects of success, assessed as at the date of the offer;
(e)the clarity with which the terms of the offer were expressed; [and]
(f)whether the offer foreshadowed an application for an indemnity costs in the event of the offeree’s rejecting it.[41]
[38] (2005) 13 VR 435 (‘Hazeldene’s’).
[39] See, eg, Nominal Defendant (n 34) [8] (Sulan, Anderson and David JJ).
[40] Hazeldene’s (n 38) 441 [23] (Warren CJ, Maxwell P and Harper AJA).
[41] Ibid 442 [25] (Warren CJ, Maxwell P and Harper AJA).
In respect of applications for indemnity costs upon non-acceptance of Calderbank offers, Lovell J also recently noted the following:
The onus rests with … the party seeking indemnity costs to prove why the rejection of the Calderbank offer was unreasonable. The Court should be careful not to assess whether the rejection of a Calderbank offer was reasonable through the prism of hindsight. The reasonableness of the refusal must be considered by reference to the situation at the time the offer was made, not solely by reference to the ultimate outcome of the proceedings. More broadly, failure to accept a Calderbank offer does not create a presumption in favour of the offeror to an indemnity costs order, even where the offeror ultimately obtains a better result. A Calderbank offer is a factor to be taken into account as part of the totality of relevant considerations when exercising the Court’s discretion to award indemnity costs.[42]
[42] Phantom Precision Engineering Pty Ltd v Luscombe (No 2) [2021] SASC 103, [22] (emphasis in original) (citations omitted) (‘Phantom Precision’).
Indemnity for costs out of an estate
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, 20^th 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, 31^st 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.
Consideration
Application 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).
The terms ‘step’ and ‘proceeding’ are relevantly defined in r 2.1 of the UCR as follows:
2.1―Definitions
(1)In these Rules, unless the contrary intention appears―
…
proceeding means a proceeding other than an excluded proceeding,[47] and includes―
(a)     a cross claim as well as a claim;
(b)     an originating application;
(c)     a proceeding seeking review of an administrative decision notwithstanding that it may be called an ‘appeal’ by a statute; and
(d)     where the context requires―an appellate proceeding;
…
step in a proceeding or appellate proceeding includes a document filed, process is sued, action taken or order made in the proceeding;
[47] An ‘excluded proceeding’ is defined in r 2.1 of the UCR to include certain criminal and intervention order matters (only).
A summary of key procedural events in the present proceeding includes:
(a)on 6 November 2018, the applicant’s probate application was filed;
(b)on 24 December 2018, the first to fourth respondents’ counter-claim was filed;
(c)on 14 May 2019, mediation took place and was unsuccessful;
(d)on 5 March 2020, the first to fourth respondents’ second defence and cross-action was filed;
(d)on 18 May 2020, the UCR commenced operation;
(e)on 29 June 2020, the applicant became severely ill with throat cancer, and the proceeding was delayed accordingly;
(f)on 20 August 2021, the Calderbank offer was made;
(g)on 30 August 2021, the trial commenced; and
(h)on 9 September 2021, the trial concluded.
From this brief chronology, it can be seen that substantive procedural steps in the proceeding took place both before and after the commencement of the UCR.
In Viscariello v Legal Practitioners Disciplinary Tribunal (No 2) (‘Viscariello’), the Full Court considered a proceeding which spanned both the UCR and the previous rules (being, principally, the Supreme Court Civil Rules 2006 (SA) (‘SCR’)), and relevantly stated:[48]
A preliminary question arises as to whether the [UCR] or the [SCR] govern the application. The UCR came into operation on 18 May 2020. The whole of the proceedings before the Primary Judge and most of the proceedings before this Court occurred prior to that date. Four events relating to the proceedings have occurred since that date. They are: the portion of the hearing that occurred on 22 May 2020 after the proceedings were called back on to address a question of the further evidence that was sought to be admitted; the delivery of the decision on 12 March 2021; the making of written costs submissions by the parties; and (yet to occur), the delivery of this costs decision.
Rule 1.4(1) of the UCR provides that the UCR apply to ‘a step in a proceeding taken on or after the commencement date’, namely 18 May 2020. The decisions of Cheshire v Jennings (No 3)[49] and Holt v Bunney[50] have touched on what constitutes a step in a proceeding but there has been no comprehensive discussion of the provision. That can occur on another day. It is sufficient to say that none of the four events described above constitute steps in the proceeding that would have any material effect on the costs orders. All of the relevant steps occurred prior to the commencement of the UCR and by virtue of rule 1.4(1), are not governed by the UCR. It is therefore appropriate to determine the parties’ entitlement to costs by reference to the SCR. This is not inconsistent with the parties’ approach.
[48] [2021] SASCFC 29, [7]–[8] (Lovell and Hughes JJ and Tilmouth AJ) (original citations included).
[49] [2021] SASCFC 21, [12]–[17] (Peek, Doyle and Livesey JJ).
[50] [2020] SASCFC 120, [6]–[7] (Nicholson J).
This proceeding is different to Viscariello. As indicated in the above extract, there has been limited judicial consideration in this State to date of what constitutes a ‘step in a proceeding’ for the purposes of the UCR. The District Court has, however, previously held that pre-trial offers formally made under the previous civil rules answer that description.[51] This Court has also held that the hearing of a substantive appeal constitutes a ‘step in a proceeding’ for the purposes of the UCR.[52]
[51] McEntee v SJ Berry Pty Ltd [2021] SADC 122, [16]–[17] (Judge O’Sullivan).
[52] Viscariello v Legal Profession Conduct Commissioner (No 2) [2021] SASCFC 35, [6] (Tilmouth AJ, Lovell and Hughes JJ agreeing).
Applying this logic and noting the above chronology, prima facie, the SCR applied to this proceeding up until 18 May 2020 when the UCR commenced operation. The subsequent making of the Calderbank offer and the hearing of the trial, however, constitute ‘steps in the proceeding’ which occurred after that date and thus attract the operation of the UCR.
Notwithstanding these conclusions, it is not clear that anything of substance turns upon the result for present purposes. Excepting, perhaps, the matters of rules-complying Calderbank offers referred to above and the relevant scales of costs applicable,[53] the base costs provisions of the SCR and UCR otherwise remain largely similar,[54] at least inasmuch as the Court retains its discretion to award costs on any basis it considers appropriate, subject to the general rule that costs follow the event.
[53] Part 2 of Schedule 6 of the UCR contains the Higher Courts costs scale applicable to work done on and from the commencement date (18 May 2020); whereas the Higher Courts costs scale in respect of work done prior to that date is contained in the Supreme Court Civil Supplementary Rules 2014 (SA): see UCR, r 192.1.
[54] As has been suggested in, eg, Cook v Flaherty (No 2) [2021] SASC 83, [8] (Livesey J).
In any case, the terms of r 1.4 of the UCR appear to contemplate that the Court may exercise its discretion to ‘otherwise order’, namely, modify the default application of the UCR vis-à-vis previous rules of court. In Cheshire v Jennings (No 3), the Full Court exercised this discretion in circumstances where such an approach would be consistent with the bases upon which the appellants had commenced the proceeding and the way in which the parties had conducted that proceeding generally.[55] A similar approach should be employed in this proceeding, recalling that both parties’ submissions appear to assume the application of the UCR to the present proceeding in its totality.
[55] [2021] SASCFC 21, [17] (Peek, Doyle and Livesey JJ).
Accordingly, in the present circumstances, the Court will exercise this discretion to otherwise order that the UCR apply to the whole proceeding.
Starting position
Subject to the issues outlined above, there appears to be no major dispute between the parties regarding the base principles applicable in this proceeding, namely, the Court’s unfettered discretion as to costs, exercised subject to the provisions of the Supreme Court Act and, at least now, the UCR. The general rule is that costs follow the event, and the usual practice is for costs to be awarded on the standard basis, although the Court may deviate from that practice. The two well-known exceptions to the general rule in probate matters are those identified by Sir JP Wilde in Mitchell v Gard, as set out above. The onus is on the party propounding those exceptions to make them out satisfactorily.[56] However, it has been observed that in recent years the two exceptions are applied with increasing rarity.[57]
[56] Pates v Craig (Supreme Court of New South Wales, Santow J, 5 September 1995) 5–6, as recently applied in Chant v Curcuruto (No 2) [2021] NSWSC 882, [32(e)] (Hallen J).
[57] Chronis v Karan (n 22) [9] (Parker J). See also Roche v Roche (n 12) [14]–[18] (Kourakis CJ) and the cases there cited.
Exceptions to the general rule
The parties disagree as to the availability of the second exception identified in Mitchell v Gard, namely, where the circumstances surrounding the creation of the will afforded reasonable grounds for investigation by the Court. The operation of both exceptions in the circumstances is denied by the first to fourth respondents, whereas the second exception is relied upon by the applicant in submitting that the general rule as to costs should not apply.
In Roche v Roche (No 2), a case cited in both parties’ costs submissions, Kourakis CJ analysed the second exception and concluded:[58]
The underlying rationale for departing from the ordinary rule [that costs follow the event] in some testamentary capacity cases remains. The risk that an aged, infirm or vulnerable testator will be manipulated in private, and away from independent scrutiny, to execute a testamentary document has subsisted through the ages. However, its relative importance as a costs consideration has been diminished by contemporary social conditions and professional practices. … Nonetheless, invoking this Court’s testamentary jurisdiction may sometimes be sufficiently warranted to depart from the ordinary rule … Cases in which a testator, suffering a material cognitive impairment has made a Will, particularly one which departs from previous testamentary dispositions, whilst under the close care of a potential beneficiary or beneficiaries, with no or very little independent evidence of capacity, are examples.
A person will not be penalised for invoking this Court’s supervisory jurisdiction in probate when the circumstances call for an investigation into the validity of a testamentary document. However, a person who challenges a testamentary disposition will risk an adverse costs order for persisting in an unmeritorious action after the discovery of evidential material which largely dispels any reasonable concerns. If a party ignores the weight of that evidential material and prosecutes an ultimately unmeritorious case to trial, the usual order that costs follow the event will be made. Exceptions from the ordinary order will not be made to allow beneficiaries a forum in which to air family disputes with impunity.
[58] Roche v Roche (n 12) [17]–[18]. See also Brown v Sandhurst (n 12) which was referred to in the applicant’s costs submissions and is discussed below; Brown v Guss (No 2) [2015] VSC 57, [35] (McMillan J).
The applicant’s costs submissions appear to misunderstand the scope and operation of the second exception, at least as it has been expressed by Kourakis CJ above. While the applicant correctly identifies that the second exception applies where circumstances lead reasonably to an investigation concerning a will, his submissions appear to be predicated upon the opposite scenario, namely, that prior to judgment there was nothing factually to impugn the applicant’s belief that the 2018 will should validly be propounded; before suggesting in summary that ‘questions of the validity of the 2018 will required investigation’. This submission is somewhat confusing.
The applicant relevantly submits:
This is not a case, like Roche[59] or Brown,[60] where the Applicant invoked the jurisdiction of the Court, or proceeded to trial unreasonably. Each of the grounds on which the Respondent’s (sic) challenge to the application was arguable either way (sic), and it cannot be suggested that the Applicant did not have a bona fide belief that the 2018 Will which he sought to propound, as a named executor, was valid.[61]
[59] Referring to Roche v Roche (n 12).
[60] Referring to Brown v Sandhurst (n 12).
[61] (Emphasis added).
Against this, the relevant exception as articulated by Sir JP Wilde in Mitchell v Gard reads as follows:
[T]he Court deduces the following two rules for its future guidance … secondly, if there be sufficient and reasonable ground, looking to the knowledge and means 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.[62]
[62] Mitchell v Gard (n 7) 278 (emphasis added). In that case, Sir JP Wilde considered a situation where the plaintiffs had unsuccessfully opposed a will.
The decision of the High Court in Middlebrook v Middlebrook,[63] which applied the exceptions articulated in Mitchell v Gard,[64] confirms this understanding of the rule, which focuses on the knowledge and means of knowledge of the opposing party, that is, the party opposing the grant of probate of the will (in this proceeding, the first to fourth respondents), rather than the propounder (being the applicant).[65] This controversy is also adverted to in the respondents’ costs submissions, albeit with the suggestion that the issue does not need to be determined now.
[63] (1962) 36 ALJR 216.
[64] Albeit without citing that case specifically.
[65] See also Public Trustee v Hall [1937] SASR 252, 253–4 (Angas Parsons J).
In this regard, the Court notes the applicant’s reliance on the Victorian decision of Brown v Sandhurst Trustees Ltd (No 2) (‘Brown v Sandhurst’),[66] where the second exception was expressed more broadly, that is, in terms more favourable to the applicant and more immediately amenable to him taking advantage of it in this proceeding. However, this is not the forum to apply that decision for what would be the first time in this state, particularly having regard to the Chief Justice’s recent and comprehensive articulation of principle above.[67]
[66] Brown v Sandhurst (n 12) [3] (Mandie J).
[67] For the sake of completeness, however, in the New South Wales decision of Perpetual Trustee v Baker (n 12), Giles JA and Brownie AJA (at [14]) did appear to contemplate an expression of the exception in the broader terms later articulated by Mandie J in Brown v Sandhurst (n 12).
Further, as submitted by the first to fourth respondents, to the extent that such a controversy exists, this is neither the time, place nor case to attempt to resolve it. Out of an abundance of caution, and in case the above assessment of the applicant’s submissions and relevant case law is wrong, the applicant’s claim that the second exception validly applies in this proceeding will be considered. In doing so, it becomes clear that, recalling the findings made in the substantive proceeding, the applicant cannot validly avail himself of that exception now for several reasons.
First, the applicant submits that, as a named executor of the 2018 will, he had a prima facie obligation to propound it, with a view to administering the deceased’s estate in accordance with the terms of the 2018 will. However, while an executor is prima facie justified in propounding a will, they are not bound to do so. Further, if an executor must or ought to have known that they were propounding a document that could not be supported, then they will be condemned in costs accordingly, the rationale being that they will usually have ample opportunity to observe the testator’s behaviour prior to death.[68]
[68] LexisNexis Australia, Wills Probate & Administration Victoria (online at 19 January 2023) [19,129]; and see, eg, Boughton v Knight (1873) LR 3 PD 64, 77 (Sir J Hannen) (‘Boughton v Knight’); Chant v Curcuruto (n 56) [32(l)] (Hallen J). See also Martyn and Caddick (n 43) 555 [39–09], citing Rennie v Massie (1866) LR 1 PD 118, 119 (Sir JP Wilde).
In that regard, the applicant made detailed submissions as to capacity, knowledge and approval and undue influence in support of the broader claim that he initiated and pursued the proceeding reasonably and had a genuine belief the 2018 will was valid. It may be said that a party reasonably, but unsuccessfully, propounding a will and thus bringing about the necessary investigation leading to its dismissal should not be made liable to bear its own or others’ costs.[69] The applicant’s submissions, as framed around the decisions in Brown v Sandhurst and Perpetual Trustee Co Ltd v Baker[70] and as discussed above, therefore invite the Court’s consideration as to whether it was reasonable for him to propound the 2018 will and/or defend the first to fourth respondents’ claims against it.
[69] Perpetual Trustee v Baker (n 12) [14] (Giles JA and Brownie AJA). It is perhaps telling, however, that the examples cited by their Honours in this regard include circumstances where the ‘conduct and habits and mode of life’ of a testator have given ground for questioning his or her testamentary capacity, which seems somewhat removed from the facts of the present case (at least, as the applicant pleads it).
[70] Brown v Sandhurst (n 12); Perpetual Trustee v Baker (n 12).
However, these submissions amount to little more than a selective attempt to re-colour the complexion of the Court’s findings in the proceeding and should not be accepted for the following reasons.
As to capacity:
(a)the applicant submits that, ‘[n]otwithstanding the ultimate finding as to capacity, and evidence of deteriorating health,’ the deceased gave the outward appearance of being able to manage his own affairs. The applicant’s apparently siloed consideration of the deceased’s capacity on this point appears strange, considering that he later explicitly invokes the Court’s ultimate findings in support of submissions concerning the expert evidence on capacity, as addressed below, as well as his cognate submissions on knowledge and approval and undue influence;
(b)in any case, the Court would be slow to accept this submission. On any view of the evidence, the deceased was an elderly and infirm man who had been hospitalised and placed into permanent residential care from 2013 onwards, which was well before the 2018 will was purportedly made. Indeed, the first to fourth respondents submitted at trial that the deceased’s level of cognitive impairment was such that he was not able to weigh up particular decisions for any of his wills from 2013 onwards.[71] Ultimately, it was unnecessary to pronounce on that submission in the reasons and it was, of course, contested by the applicant. In this context, however, the broadness of the applicant’s submission above may at the very least be queried. As the first to fourth respondents acknowledge, there was no positive finding by the Court that the applicant knew the deceased lacked testamentary capacity; yet in the Court’s view, it is also unnecessary for such finding to have been concretely drawn at trial, at least for the purposes of the present enquiry.[72] The deceased’s frailty from 2013 onwards would surely have been clear to the applicant as he visited the deceased frequently to discuss, inter alia, will-making matters.[73] For example, on the ‘general and uncontroversial’[74] facts pertaining to the deceased’s health as the Court found, there was evidence that tasks such as paying bills had been taken over by the deceased’s wife and daughter from at least 2013;[75] and that, following a fall, the deceased suffered a further decline in health in 2016 and 2017.[76] In the substantive proceeding, the Court could not be satisfied that the deceased had testamentary capacity when he purportedly gave instructions for the 2018 will on 18 August 2017, or when he signed it on 15 February 2018. The applicant’s headline submission that ‘the [deceased] gave the outward appearance of being able to manage his … affairs’ is not time-bound. This makes it more difficult for the Court to assess the appropriateness of this submission and in view of the matters detailed above, it is not accepted;
(c)relatedly, the applicant submits that ‘a body of lay evidence’ supported his contention that no concerns were held about the deceased’s state of mind, and that he ‘appeared to the world as a rational (and strong willed) person in control of his faculties’. This submission is also not accepted. At the outset of the reasons, the Court stressed the limited utility of much of the lay evidence given at trial.[77] The applicant specifically refers to the evidence of ‘a solicitor’, being a reference to Paul Ignatius Boylan (‘Paul’), and the deceased’s general practitioner, Dr Moore, whose evidence was presented as expert opinion rather than lay evidence, in support of his contention that no concerns were held about the deceased’s testamentary capacity. At trial, however, the Court found numerous issues with Paul’s evidence and general approach to will making with the deceased;[78] and Dr Moore’s evidence, whilst preferred on some counts to that of other experts, was itself the product of attendances on the deceased that were ‘limited in time and frequency’.[79] The Court ultimately expressed caution as to the probative weight of the expert evidence in the proceeding generally.[80] The applicant also cites, in footnotes, passages from the reasons setting out evidence that he gave in support of this contention at trial. However, the Court generally took a critical view of the applicant’s evidence, at least as it pertained to matters of capacity, variously describing it as ‘variable’,[81] ‘inconsistent’[82] and ‘conflicting’.[83] Further, if, as the applicant suggests, it is relevant to look to the lay evidence in support of his contentions on capacity, then the most significant witness other than the applicant factoring into the conclusions on that topic at trial was Paul’s daughter, Brigid Mary Boylan, whom the Court considered was ‘not an impressive witness’.[84] The applicant’s submissions also appear to ignore the contrary body of lay evidence marshalled by the first to fourth respondents at trial; and
(d)despite the Court’s general findings as to the expert evidence tendered at trial, the remainder of the applicant’s submissions on capacity are nevertheless predicated upon that expert evidence and the Court’s ultimate pronouncements upon it. It is unnecessary to descend into a detailed examination of each submission concerning each expert’s relevant report. It is sufficient to note the following points:
(i)     the first to fourth respondents’ expert evidence as to capacity comprised reports of Dr Lonie and Dr Rosenfeld filed in 2021. The applicant’s submissions, however, seem to confuse the enquiry by claiming that the applicant was entitled to treat those reports as unpersuasive at the time, even absent contrary expert evidence, based on findings ultimately made much later at trial. This approach is incorrect, and is also inconsistent with the applicant’s approach discussed at sub-paragraph [68(a)] above. Further, the applicant obtained his own expert evidence from Dr Moore and Dr Hecker in 2021, which found to the contrary on issues of capacity. From early 2021 – if not earlier, considering the date on which the first to fourth respondents’ cross-claim was filed – the applicant was clearly on notice that at least a contest as to capacity was on the cards;
(ii)    the Court must largely focus on whether, in all the circumstances, it was reasonable for the applicant to pursue admission to probate of the 2018 will, given the state of the evidence as to the deceased’s capacity known to him up to the time the proceeding was first instituted on 6 November 2018, or at least by the time of trial. At the very least, in the immediate lead-up to trial, the applicant had in his possession substantially all of the expert evidence marshalled by both sides. Some of that evidence went specifically to the question of testamentary capacity, and raised a clear contest about that issue;[85] and
(iii)   in those circumstances, and to paraphrase the decision of Sir J Hannen in Boughton v Knight,[86] the Court is not convinced that the applicant can be said to have been honestly led into the litigation by the fact that the deceased seemed, to all outward appearances, to be capable of managing his own affairs as is claimed. The veracity of such a submission appears to be exaggerated, considering the factual matters taking place well before the deceased’s death and the applicant’s own involvement in them, and the Court’s related findings at trial. In the Court’s view, the ‘reasonableness’ of the applicant pursuing the admission of the 2018 will to probate needs to be judged in light of all the evidence as to the deceased’s capacity known to him up to that time. By the time of trial, the applicant, his solicitors and expert witnesses had comprehensively investigated the position; and it must have been apparent that the evidence known to exist at that time was, at the very least, contested in terms of obtaining the relief sought, at least as concerns the deceased’s capacity.[87] The complexion of the matter is, in truth, much less one of reasonably propounding (an investigation into) a testamentary document, and rather one of propounding competing interpretations of the deceased’s capacity and testamentary intentions in normal, adversarial litigation.
[71] Reasons [285].
[72] See, eg, the approach in Barbon v Tessari (No 2) [2015] VSC 597, [19] (McMillan J).
[73] Indeed, the applicant himself described the deceased in September 2013 as frail: see reasons [55]. The applicant generally saw the deceased two to three times a week at the Eldercare Village in Maitland, where the deceased resided until his death in 2018, and where (on the applicant’s evidence) the deceased spoke about his will ‘quite regularly’: reasons [58], [149]; see also [326] (‘[the applicant’s] involvement and presence in the deceased’s will making process was constant’), [395].
[74] Reasons [51].
[75] Ibid [52]. It is also understood that a power of attorney was executed in favour of the applicant in 2013, granting the applicant permission to manage the deceased’s financial affairs from this point onwards.
[76] Ibid [114], [177].
[77] Ibid [10]–[12].
[78] See, eg, ibid [128], [145], [290] (in respect of the deceased purportedly giving instructions for the 2018 will), [314] (in respect of the deceased purportedly signing the 2018 will).
[79] Ibid [269].
[80] Ibid [269]–[270], recalling that – as the Court found – Dr Moore attended on the deceased every four to six weeks whilst he was a resident of the Eldercare Village in Maitland: ibid [58].
[81] Ibid [290], [311].
[82] Ibid [290].
[83] Ibid [311]. See also, more generally, ibid [299], [327], [372], [395].
[84] Ibid [187].
[85] See, eg, Glenda Phillips v James Phillips; John Matthew Phillips by his Tutor NSW Trustee and Guardian v James Phillips (No 3) [2017] NSWSC 409, [24(1)] (Kunc J) (‘Glenda Phillips’).
[86] Boughton v Knight (n 68) 79–80. See also Twist v Tye [1902] P 92, 97–8 (Gorell Barnes J).
[87] Paraphrasing Stanley J in Re Brown (n 22) [13].

As to knowledge and approval:
(a)the applicant made a singular speculative submission that can be discharged quickly. The thrust of this submission is that because the Court did not determine whether the applicant would have satisfactorily made out knowledge and approval (if the Court had not made the findings it did as to capacity in the reasons), it should not follow that the applicant acted unreasonably in asserting that the deceased knew and approved of the contents of the 2018 will. Two responses may be made to that submission:
(i) first, as the applicant acknowledges in his submissions on costs, the case on knowledge and approval rose and fell with the case on capacity. That is true of both the substantive proceeding and, now, the question of costs. The applicant submits that it would be ‘difficult’ to see how he could be said to have acted unreasonably in proceeding to trial on the question of knowledge and approval if he did not act unreasonably in proceeding to trial on the question of capacity. Based on the conclusions reached above, this submission cannot stand. What the applicant’s submission seemingly amounts to is an invitation for the Court to make further or supplementary findings of fact ancillary to its reasons in the substantive proceeding. This is not the appropriate forum for so doing; and
(ii) secondly, the applicant’s submissions on knowledge and approval unduly simplify how the matter was resolved at trial. Reliance on the rule in Parker v Felgate was unsuccessfully argued by the applicant in the alternative at trial;[88] and determined after the Court had already found that the evidence failed to establish to the requisite standard, and in light of the ‘multiple’ suspicious circumstances present, that the deceased knew and approved of the 2018 will.[89] Unlike the Court’s findings on capacity, its conclusions with respect to knowledge and approval were not limited to 18 August 2017 when the deceased purportedly gave instructions for the 2018 will or 15 February 2018 when he executed it. In that context, the applicant’s submission that:
[T]he Court did not make any findings as to whether the [a]pplicant would have established the requisite elements of knowledge and approval in the event that it had been found that the testator had capacity when he gave instructions in August 2017[,]
seems to over simplify the matter. The Court acknowledged it was not, strictly speaking, bound to make any findings concerning knowledge and approval in circumstances where capacity had already been determined against the applicant; but went on to do so because the issue of knowledge and approval was before the Court.[90] The applicant’s submissions on this point are premised on an inaccurate reading of the reasons and are not accepted.
[88] Reasons [330].
[89] Ibid [325], [329].
[90] Ibid [321].
As to undue influence:
(a)the applicant’s costs submissions rely upon a section of the reasons where the decision of Vickery J in Nicholson v Knaggs was discussed,[91] in aid of the overarching claim that:
[91] Ibid [345]–[347].
(i)     given the (claimed) difficulty of drawing a line between ‘mere (permissible) … and “undue” (impermissible) influence’; and
(ii)    given also that the Court made no finding of conscious wrongdoing by the applicant;
it was not unreasonable for the applicant to defend the allegations of undue influence against him by the first to fourth respondents;
(b)it should, of course, be stated at the outset that there is nothing prima facie wrong in defending a claim brought against one party by another; but it must also be remembered that the purpose of the present enquiry is whether the applicant can bring himself within the second Mitchell v Gard exception, without which the general rule as to costs will apply in the ordinary course of adversarial (probate) litigation between two opposing parties;
(c)on the broader articulation of that exception expressed by Mandie J in Brown v Sandhurst – upon which the applicant’s costs submissions evidently rely (as discussed above) – the relevant enquiry is therefore whether it was ‘reasonable’ for the applicant to have brought the probate application and/or defended the litigation to the conclusion of trial because he had a ‘reasonable and bona fide belief’ that the deceased was not labouring under undue (i.e. impermissible) influence; and
(d)once the relevant enquiry is thus appropriately focused and distilled, the following comments may be made in response to the applicant’s submissions on this point:
(i)     the submission is unduly selective, inasmuch as it glosses over much of the factual matrix which led to the Court’s ultimate conclusions on the question of undue influence. As the first to fourth respondents submit, the applicant must have known what he had done in terms of the deceased’s testamentary wishes changing from those expressed in the 2012 will. Indeed, the Court found that the applicant was constantly involved in the deceased’s will-making from 2013 onwards; and that the deceased’s wills and evidence of his testamentary intentions from that period showed a stark contrast between the deceased’s position when the applicant was present and when he was not.[92] Such factors point against the ‘reasonable and bona fide belief’ claimed by the applicant to bring him within the second Mitchell v Gard exception, and more readily give this proceeding the complexion of ordinary, adversarial litigation with each party propounding its own favoured interpretation of circumstances and testamentary documents, to which the general rule as to costs will ordinarily apply;[93]
(ii)    the applicant appears to lean heavily on the fact that the Court’s ultimate conclusions as to undue influence were, at least on one view, somewhat finely balanced. However, at the outset of its reasons on the topic, the Court noted that the degree or nature of pressure necessary to invalidate a will depends on an individual testator’s vulnerability[94] (recalling the conclusions of the deceased’s increased vulnerability from 2013, which was further exacerbated in 2016–17). It may also be relevant to note that, in contrast to its findings on capacity and knowledge and approval, where the Court held there was ‘insufficient evidence’ to rule in favour of the applicant, its findings on undue influence were expressed in comparatively stronger terms (‘Court satisfied’);[95]
(iii)   relatedly, the applicant relies on the fact that no finding was made by the Court that the applicant consciously applied illegitimate pressure to the deceased; but as Vickery J seemed to advert to in Nicholson v Knaggs,[96] such a finding may be difficult to make anyway in circumstances where the evidence may be general and/or circumstantial only (as in this case), albeit tested to the Briginshaw[97] standard; and
(iv)   the applicant’s varied submissions focusing on what the second respondent might have done are speculative, not based on findings ultimately made by the Court, and not relevant to the enquiry presently at hand.
[92] Ibid [326], [384].
[93] See, eg, Barbon v Tessari (n 72) [19]–[20] (McMillan J).
[94] Reasons [340].
[95] Refer to the judgment headnote.
[96] Nicholson v Knaggs (n 10) [51], [70].
[97] Briginshaw v Briginshaw (1938) 60 CLR 336.
The Court’s ultimate determinations were therefore clear: the deceased did not have capacity when he gave instructions for or signed the 2018 will;[98] the deceased did not know and approve of the contents of the 2018 will;[99] and the 2018 will was a product of the applicant’s undue influence upon the deceased.[100] An analysis of the reasons thus shows many of the applicant’s submissions to be without basis. The applicant’s submissions do little more than to quote a few selective paragraphs of the reasons, without regard for the final conclusions in support of which they were made.[101]
[98] Reasons [301], [315].
[99] Ibid [329].
[100] Ibid [398].
[101] See, eg, Brown v Guss (n 58) [54] (McMillan J).
In any case, since the parties rely upon the exceptions as articulated in Mitchell v Gard, it is relevant to note that Sir JP Wilde also observed that any application of those exceptions should, in any case, be tempered by the particular circumstances of the case including, inter alia, the degree of blame to be imputed to the respective parties in incurring the costs of the litigation. Further, in more recent times it has been submitted that the exceptions, as with the general rule as to costs, provide a starting point for analysis only, with neither exception being exhaustive or prescriptive.[102]
[102] Ibid [36] (McMillan J), as approved in Chant v Curcuruto (n 56) [32(f)] (Hallen J).
Having regard to all of this, the comments of Kourakis CJ regarding the second exception that ‘[a] person will not be penalised … when the circumstances call for an investigation into the validity of a testamentary document’[103] are inapposite here. This proceeding was essentially self-interested litigation, initiated and pursued by the applicant in circumstances where the 2018 will afforded the applicant much better provision than the 2012 will. The applicant also contributed to the circumstances ultimately giving rise to the litigation, and propounded a will that was found to be a product of his own undue influence, in order to attempt to secure a preferential testamentary disposition for himself. He ought not now be rewarded by avoiding the operation of the general rule as to costs.[104] Costs should follow the event accordingly.
[103] Roche v Roche (n 12) [18].
[104] See, eg, Brown v Guss (n 58) [50] (McMillan J); Daulizio v Trust Co of Australia [2005] VSCA 215, [23] (Nettle JA, Chernov JA and Hollingworth AJA agreeing).
Basis of costs award
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).
In addition, the following observations are relevant:
(a)an allegation of ‘wilful disregard’ must be distinguished from circumstances in which a party merely persists with an uncertain case that ultimately turns out to fail;[108]
(b)where a proceeding has been confined to a basis that is tenable in law, but the factual substratum for that claim is weak and ultimately not made out, the Court has refused to draw a finding of ‘wilful disregard’, even in circumstances where the Court was otherwise satisfied that the trial was unduly prolonged and an informal offer was ‘imprudently’ refused (as to which, see further below);[109]
(c)although Sheppard J’s articulation of principle in Colgate is, in terms, referable to the commencement or continuation of proceedings, indemnity costs may be ordered generally in a case involving ‘some relevant delinquency’ on the part of the unsuccessful party;[110]
(d)in those circumstances, some conduct that has previously been accepted as justifying an award of indemnity costs includes: failing to comply with rules or directions of court; bringing a proceeding well out of time; bringing a proceeding unsupported by evidence; and not preparing or arguing that proceeding in any way helpful to the court;[111] and
(e)in the context of wills: if it ought reasonably to have been apparent to the propounder of a will that their prospects of proving the testator knew and approved of the contents of a will were poor – and in defending an application for revocation, the propounder sought to advance their own self-interest as a beneficiary under the will – then those factors may warrant the making of a special costs order.[112]
[108] See, eg, Hamod v New South Wales (2002) 188 ALR 659, 665 [20] (Gray J, Carr and Goldberg JJ agreeing).
[109] McLean v DID Piling Pty Ltd (No 2) [2014] SASC 135, [24], [25] (Nicholson J).
[110] Oshlack (n 23) 89 [44] (Gaudron and Gummow JJ).
[111] See De Alwis v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 77, [7]–[8] (Tamberlin, RD Nicholson and Emmett JJ) – albeit not explicitly invoking the language of ‘wilful disregard’. This list of factors is, of course, not stated to be exhaustive in this regard, and is specific to the circumstances of the particular case only.
[112] Re Cassar (No 2) [2022] VSC 398, [10], [12] (Moore J). See also Barbon v Tessari (n 72) [19]–[20] (McMillan J).
Having regard to all of these matters, the question of whether or not to make an order for indemnity costs is finely balanced. However, on the question of ‘wilful disregard’, the Court is ultimately minded not to accede to the first to fourth respondents’ submissions on this point for the reasons now set out.
The first to fourth respondents placed significant weight on the decision of Nicholson v Knaggs in aid of their submissions. This invites consideration of the factual circumstances found in that case vis-à-vis this proceeding.
In Nicholson v Knaggs, there was a greater range and level of severity of circumstances than in this proceeding. Those circumstances included, inter alia: the addition of handwritten annotations to a document intended to be given to the deceased’s solicitor as instructions for her will without the deceased’s knowledge, authority or approval; calling the deceased’s solicitor directly and requesting certain parties be included as beneficiaries under the will; and, later, destroying relevant evidence.[113] The magnitude and gravity of the findings in Nicholson v Knaggs are somewhat higher than in this proceeding.
[113] Nicholson v Knaggs (n 10) [68], [75]–[77] (Vickery J).
In substance, this proceeding was largely a contest between the evidence of lay witnesses; with the expert evidence not greatly assisting the Court in its final determinations.[114] Further, the conflicting expert reports did not – at least prior to trial and before their differences had been adjudged by the Court – make the applicant’s continuation of the proceeding unreasonable in the relevant sense.[115] The reports did advert to a contest on the evidence, upon which the applicant ultimately, and unsuccessfully, took his chances in ordinary adversarial litigation.[116]
[114] See, eg, the approach in Groom v Earthmoving Contractors Association of SA Inc (No 2) [2001] SASC 241, [33] (Gray J); and see also Sambucco v Registrar of Births, Deaths and Marriages (Costs) [2021] VSC 193, [23]–[24] (Quigley J).
[115] Compare Glenda Phillips (n 85) [28] (Kunc J).
[116] See, eg, Colegrove v Dullaghan (No 2) [2016] NSWSC 1236, [18] (Robb J).
The Court’s dissatisfaction with the applicant’s evidence in the substantive proceeding was critical, but does not justify an award of indemnity costs.[117] Further, even if a party ought to have known at the outset of a probate proceeding that a purported will could not be supported and the propounder did not have a reasonable basis to contest an opposing party’s claims, that will not necessarily be sufficient to justify an indemnity costs order, ‘although it comes very close’.[118]
[117] See, eg, the approach in DKL v LYK (No 2) [2019] SASC 160, [30]–[33] (Doyle J).
[118] Glenda Phillips (n 85) [25] (Kunc J).
In any case, such a finding was not made by the Court in the substantive proceeding. The only relevant finding made against the applicant was that, on balance, the 2018 will was a product of his undue influence upon the deceased.
That alone, combined with general criticism of witness evidence, is not sufficient to rise to the level of ‘wilful disregard’ as described and understood in the case law and commentary. In cases where indemnity costs have been awarded, the cases rather show that there is some additional or more grievous element warranting such an award. Such an element is absent from this proceeding.

Accordingly, this proceeding does not fall within the range of circumstances warranting an award of indemnity costs. The defendant persisted in pursuing a case that represented self-interested and adversarial litigation, however, this was not done in ‘wilful disregard of known facts’.
‘Imprudent refusal’ of Calderbank offer
The first to fourth respondents also seek indemnity costs on the basis of the applicant’s allegedly ‘imprudent refusal’ of the Calderbank offer, being another circumstance articulated by Sheppard J in Colgate.[119]
[119] Colgate (n 8) 233.
Where Calderbank offers are relied upon in support of a claim for indemnity costs, the principles set out in Hazeldene’s are relevant.[120] In Hazeldene’s, the Victorian Court of Appeal explicitly rejected the notion that an ‘imprudent’ refusal of an offer of compromise gives rise to an automatic presumption that the rejecting offeree should pay the offeror’s costs on an indemnity basis if the offeree ultimately receives a less favourable result. The rejection of the offer is, rather, merely a factor to which the Court should have regard when considering whether to order indemnity costs.[121]
[120] Briggs v Mantz (No 2) [2014] VSC 487, [27] (McMillan J); Roberts v Roberts (n 31) [21] (Blue J).
[121] Hazeldene’s (n 38) 440–1 [18]–[20] (Warren CJ, Maxwell P and Harper AJA). Similar sentiments have been expressed in South Australian courts: see, eg, Davies & Nicol as Joint & Several Liquidators of Harris Scarfe Ltd v Chicago Boot Co Pty Ltd (No 2) [2011] SASC 197, [29] (Sulan J); Phantom Precision (n 42) [22] (Lovell J).
This is particularly so where an offer does not avail itself of a formal process for offer-making under the relevant rules of the Court. In this regard, the Calderbank offer was not in the form prescribed by the UCR. Although not fatal to its consideration, it has been observed that should a party wish to obtain an indemnity costs order against another, it should, prima facie, follow any relevant procedure set out by the applicable court rules.[122] Failure to do so will be relevant to the exercise of the Court’s discretion in considering whether to ultimately award costs other than on the standard basis.[123]
[122] Dal Pont (n 36) [13.73].
[123] See, eg, Duke Group Ltd (in liq) v Pilmer [1998] SASC 6699, 16 (Mullighan J); compare Pastina Pty Ltd v Hosanna Excelsis One Universal Church Inc (No 2) [2020] SADC 64, [56] (Judge Burnett).
The authorities referred to above also emphasise that when deciding whether to make an order for costs other than on a standard basis, it is relevant to compare the form and substance of an informal offer against an offer complying with the relevant rules.[124] In that regard, the Calderbank offer in substance addresses most of the essential requirements prescribed by Form 121. The two principal exceptions to that conclusion are:
(a)the failure to specify whether the offer type is a ‘judgment offer’ or a ‘contract offer’. This is a matter expressly mandated by Form 121 with reference to r 132.4(1) of the UCR;[125] and
(b)the lack of terms in the Calderbank offer with respect to the question of costs specifically.
[124] See, principally, Essential Beauty Franchising (WA) Pty Ltd v Pilton Holdings Pty Ltd (2014) 120 SASR 433, 445 [56] (Blue J), cited in Treffers v Phung (n 32) [8]–[9] (Nicholson J).
[125] Being the part of the UCR dealing with ‘formal offers’ specifically.
While such matters may militate against a conclusion that the Calderbank offer was, in substance, a rules-complying offer, they are not determinative in this case.
The onus therefore rests with the first to fourth respondents as the parties seeking indemnity costs to establish why the rejection of the Calderbank offer was unreasonable. The reasonableness of the refusal must be considered by reference to the situation at the time the offer was made, not solely by reference to the ultimate outcome of the proceeding.
Applying these principles and turning to the reasonableness of the offer and its rejection, the stage in the proceeding at which it was made and the prospects of success at that time,[126] the Calderbank offer was dated 20 August 2021, ten days before the commencement of the trial on 30 August 2021. Beyond the parties’ respective costs submissions, which do not definitively address the point, there is no evidence now before the Court of any clarification of, rejection of or response to the Calderbank offer by the applicant at the time.[127]
[126] Hazeldene’s (n 38) 442 [25] (Warren CJ, Maxwell P and Harper AJA).
[127] See, eg, Barbon v Tessari (n 72) [35] (McMillan J).
The Calderbank offer did not explicitly foreshadow that indemnity costs would be sought if the applicant rejected it. It was also expressed to be open for acceptance for seven days, which is, in any case, shorter than the 14 day period required by the UCR for a ‘formal offer’ to be a ‘relevant offer’. Notwithstanding, given the late point in the proceeding at which the Calderbank offer was made, it is likely that a seven day period would have been sufficient time for the applicant to consider whether or not to accept it.
Potentially militating against such a conclusion is the fact that the medical expert evidence was not finalised on the applicant’s side until the first day of the trial on 30 August 2021.[128]
[128] See, eg, Chronis v Karan (n 22) [14], [22] (Parker J).
The Calderbank offer did not clearly explain the strength of the offer made, or how the relevant amounts and values offered had been arrived at by the first to fourth respondents.[129] In this regard, the observations in Hazeldene’s are to be noted, whereby the Court rejected any requirement to set down with specificity an offeror’s rationale for the scope and content of their offer.[130]
[129] See, eg, Ironwill v Allbut (n 27) [45] (Judge Burnett).
[130] Hazeldene’s (n 38) 442 [26]–[27] (Warren CJ, Maxwell P and Harper AJA).
Nevertheless, there appears to be some force in the applicant’s submissions with respect to the price for which Brewers was to be ultimately acquired by him under the Calderbank offer as against the 2012 will, as rectified.
The evidence in the proceeding was that in the period 2007 to 2019, the value of Brewers was generally and steadily increasing as follows:
(a)as at 1 July 2009: $1.25 million;[131]
(b)as at 23 January 2015: $2.8 million;[132]
(d)as at 15 February 2018: $3.925 million;[133] and
(e)as at 1 May 2019: $4.075 million.[134]
[131] Reasons [42].
[132] Ibid [86], [388].
[133] Ibid [5], [20], [313].
[134] Ibid [20].
Under the 2012 will, as rectified, the applicant may purchase Brewers at market value as at the date of the deceased’s death in 2018, being approximately $3.925 million.
Under the Calderbank offer, however, the applicant would have had to purchase Brewers at its market value assessed as at the date of acceptance of the offer in 2021, being approximately $4 million or potentially more.
If the 2018 will had ultimately been admitted to probate (the issue not yet having been conclusively litigated at the time the Calderbank offer was made), then the applicant would have only had to pay $2 million for Brewers.[135]
[135] Ibid [5].
As the applicant submits, the Court is necessarily operating in an evidentiary vacuum on this issue because there is no positive evidence before it of the market value of Brewers as at the date of the Calderbank offer, beyond the generally increasing trend evidenced in the earlier valuations obtained by the parties and supplied in the proceeding.
However, the Court must assess whether the applicant’s non-acceptance of the Calderbank offer was, in all of the circumstances, unreasonable, or ‘imprudent’, on the state of the evidence as it existed at the relevant time.
In this regard, it is noted that even if the applicant had purchased Brewers with the ‘effective discount’ of an additional $500,000 contained in the Calderbank offer, which would have been partially offset by the payment of the applicant’s legal and other costs incurred in the proceeding to date,[136] the applicant potentially may still have had to pay much more for Brewers when compared to his entitlement under the 2012 will or the 2018 will.
[136] Noting that the Calderbank offer was otherwise silent with respect to that issue specifically.
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, 6^th 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
The applicant made brief submissions to the effect that it would not be ‘fair or reasonable’ for him to be ordered to pay the first to fourth respondents’ costs of and incidental to the engagement of their experts, Dr Lonie and Dr Rosenfeld, because of the limited assistance the Court ultimately derived from their expert reports; which ‘should have been obvious to the [r]espondents’.
The applicant submits that Dr Lonie’s first report was ‘unnecessary’. Such a finding was not made by the Court. In fact, it was the receipt of this report that precipitated the first to fourth respondents filing their second defence and cross‑action on 5 March 2020.[142] These documents introduced the claim that there was doubt as to the deceased’s capacity when giving instructions for and executing the 2018 will,[143] upon which the first to fourth respondents were successful.
[142] Reasons [242].
[143] Ibid.
The applicant also criticises Dr Lonie’s second report and Dr Rosenfeld’s report as variously being ‘repetitive’ documents based on ‘flimsy foundations’ that did not represent the deceased’s actual state of physical and mental health at the relevant times. These submissions are a subjective assessment of the evidence that goes beyond the findings made in the proceeding.
The applicant’s submissions on this point are rejected. There will be no allowance or deduction in the costs to be paid by the applicant for expenses incurred by the first to fourth respondents in engaging their experts and procuring their expert evidence at trial.
Orders
The Court orders:
1.The applicant pay the costs of the first to fourth respondents of and incidental to the proceeding, assessed on the standard basis, in default of agreement;
2.The applicant bear his own costs of and incidental to the proceeding personally, without indemnity from the estate of the deceased, and repay any costs to the estate of the deceased insofar as he has indemnified himself therefrom for costs referable to the proceeding;
3.The fifth to eighth respondents bear their own costs; and
4.Otherwise the proceeding be dismissed.

[2023] SASC 36

17 March 2023