Morley v Dunbar - [2018] SASC 21

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
MORLEY v DUNBAR & ORS
[2018] SASC 21
Judgment of Judge Bochner a Master of the Supreme Court
6 March 2018
PROCEDURE - COSTS
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - PARTIES
Application for costs of joinder of fifth defendant.
Supreme Court (Civil) Rules 2006 Rule 205, referred to.
In re Kuhl [1933] SASR 394; Nestor v Wolochy (2011) 277 LSJS 444, considered.

MORLEY v DUNBAR & ORS
[2018] SASC 21

The plaintiff seeks a grant of probate in solemn form of a will made on 30 May 2013 (the 2013 will). The deceased died on 20 May 2016, and the plaintiff is the sole executor named in the will. He is the son of the deceased. The deceased was survived by a daughter, the first defendant, and was predeceased by another son. The second to fourth defendants are the children of her late son. The fifth defendant is the widow of the deceased’s late son and the mother of the second to fourth defendants.
The plaintiff deposes that, as far as he is aware, during the course of her lifetime, the deceased made 5 wills. Under the penultimate will, made on 10 October 2007 (the 2007 will), fourteen beneficiaries were named. Under the 2013 will, eight beneficiaries were named.[1]
[1] FDN 3 at [8] and [9].
Under the 2007 will, the deceased left half of her residual estate to the fifth defendant. The residuary consisted of, amongst other things, a property which the fifth defendant says is worth around $500,000. Under the 2013, the deceased left the property to the plaintiff and left a legacy of $30,000 to the fifth defendant.[2] Thus, the provision for the fifth defendant changed substantially as between the 2007 will and the 2013 will. The fifth defendant has indicated that she will seek orders pronouncing for the force and validity of the 2007 will.
[2] FDN 8 at [4] – [6].
When the plaintiff first issued proceedings, only the first four defendants were named as parties. This was on the basis that they are the people who would be entitled to share in the estate in the event of an intestacy. The beneficiaries under the 2007, who were not named in the 2013 will, or whose entitlement changed between the two wills were not named as defendants, unless they were also entitled to take on an intestacy. Thus, when proceedings were first issued, the fifth defendant was not named as a party.
Prior to the issue of proceedings, there had been contact between the plaintiff and the fifth defendant. I understand that an informal settlement conference was held on 9 October 2016, which the fifth defendant attended. I do not know if all of the beneficiaries under the 2007 will attended or were invited to attend this conference. The plaintiff’s solicitor has deposed that between late 2016 and mid 2017 a number of letters were written to the fifth defendant’s solicitor to which no response was received. On 24 August 2017, after proceedings were issued, the plaintiff’s solicitor wrote to the fifth defendant, advised here that proceedings had been issued, and advised her of her “right” to be joined as a defendant. The letter stated:
We have not joined you as a defendant to the action as we believe this would unnecessarily increase the estate’s legal costs and complicate proceedings. Further, the amount of the legacy left to you in the relevant Will/s does not warrant your formal involvement in the proceedings from a commercial point of view.
You are entitled to be joined as a defendant to the action.
We encourage you to seek your own legal advice about this decision.[3]
[3] Exhibit SCM8 to FDN 6.
The plaintiff’s solicitor deposes that she did not receive a response to that letter.[4]
[4] FDN 6 at [18].
On 6 October 2017, the plaintiff filed an application for default judgment, as there had been no contact from any of the defendants since the filing and service of the proceedings, saving for the filing of notices of appearance (the default judgment application). This application was listed for hearing on 7 December 2017.
On 4 December 2017, the fifth defendant filed an application to be joined as a defendant (the joinder application).
At the directions hearing on 7 December 2017, the fifth defendant was joined as a defendant by consent. Orders were also made for the filing of a second statement of claim (to take into account the joinder of the fifth defendant) and of defences. As a result, the default judgment application was rendered otiose.
The plaintiff now seeks his costs in relation to the default judgment application and no order as to costs on the joinder application. The fifth defendant, on the other hand submits that there should be no order as to costs in relation to the default judgment application and that she should have her costs in relation to the joinder application.
The submissions of the plaintiff
In relation to the default judgment application, the plaintiff’s argument is short and straightforward. The plaintiff submits that she was entitled to apply for default judgment, as no defences had been filed by the defendants. Save for the filing of a notice of acting and address for service, there was no contact from the first to fourth defendants, either personally or through their solicitor. In those circumstances, it was appropriate to bring the application.
At first glance, the plaintiff’s position in relation to the joinder application is also short and straightforward. It is the plaintiff’s position that the fifth defendant did not need to file this application. The plaintiff had clearly indicated to the fifth defendant that she could be joined if she wished, and all she had to do was contact the plaintiff for this to occur. The failure of the fifth defendant (either personally or through her solicitor) to contact the plaintiff’s solicitor led her to file this application. Thus there should be no order as to costs.
The plaintiff’s submissions were based on the premise that the fifth defendant was not a person who must be joined as a defendant.
This premise has arisen from the plaintiff’s construction of Rule 205 of the Supreme Court (Civil) Rules 2006, which relevantly provides:
(1)     A probate action is—
(a)     an action for a grant of probate of the will of a deceased person in solemn form; or
(b)     an action to set aside a grant of probate in common form; or
(c)     a contentious action for the grant of letters of administration of the estate (with or without the will annexed) of a deceased person; or
(d)     an action to set aside the grant of letters of administration of the estate (with or without the will annexed) of a deceased person.
(2)A defendant to a probate action is a person (other than the plaintiff) whose interests are or may be adversely affected—
(a)     under an instrument that is, or may be, the last will of the deceased person; or
(b)     on intestacy.
…
(8)If there is uncertainty as to whether a person’s interests may be adversely affected by a probate action—
(a)     the Court may direct that such person be served with notice of the proceedings in such manner as the Court directs; and
(b)     the Court may direct that a person served with notice of the proceedings under subparagraph (a) be bound by any judgment in the action.
It is the plaintiff’s contention that the correct interpretation of 6R205(2) and (8), taken together, is that, despite the wording of subrule (2), it is not mandatory to join as a defendant in the first instance all persons whose interests “are or may be adversely affected under an instrument that is, or may be, the last will of the deceased person”. Rather, in accordance with subrule (8), such persons may be notified of the claim, and then seek joinder if they wish to participate in the proceedings. This interpretation is in accordance with modern day notions of efficiency and good administration of justice, in that unnecessary expense and delay caused by joining parties who may not wish to take part in the proceedings, are avoided. Mr Ross-Smith on behalf of the plaintiff put it this way in submissions:
MR ROSS-SMITH:     If it pleases your Honour and that sentiment is reflected in the letter that went to Ms Morley and that is it announces that it's not in the interests of the plaintiff or good administration of the estate or any party who might be interested, to join persons who do not want to speak to the claim. So the claim is notified to a party and we accept that Ms Morley might have been interested and we say that to her in the letter, joinder will occur if you require it. So the court announces this to the profession from time to time and ought to, and the profession ought to listen and that is the profession needs to be alert to not incurring expense, perhaps more so than any other practice area in estates which is unnecessary.
So if parties are joined and troubled to come to the court to respond to their joinder and what is established later on is they are not interested, and if there is communication to them at the time that the proceedings were issued acknowledging that they have a right to be joined if they are interested, is good conduct by practitioners. Then a party says nothing having received that communication and so isn't a party, others are, action is taken against them because they have responded to the suit, then that ought to be recognised as good, efficient and cost-effective conduct by a practitioner -
HER HONOUR:      Yes.
MR ROSS-SMITH:     - rather than 'I can see the possibility there is 103 people out there might be parties, but rather than make 103 people defendants I'll communicate with them and see whether they are interested to be involved. If they say they are, they will be joined'.
The position of the fifth defendant
The position of the fifth defendant is also straightforward. It is that the plaintiff is not entitled to costs on the default judgment application, because the action was not properly constituted in that it did not name all required parties. In addition, the orders sought by the plaintiff could not have been made because the original will was not available and affidavits of due execution had not been filed. I do not address the latter of these arguments; even if this was the case,[5] these are matters that are easily remedied.
[5] The position of the plaintiff was that the original will and affidavits of due execution were available.
In relation to the joinder application, the fifth defendant’s position is that she should have the costs of that application because the plaintiff failed to name as a defendant the person most affected by the orders sought by him (that is, the fifth defendant). As the plaintiff failed to name the appropriate defendants in the action, the fifth defendant should have the costs of the application required to remedy this.
Indeed, the fifth defendant says that there is no satisfactory explanation for why she was not joined in the first instance. There is no uncertainty as to whether her interests would be affected by the orders sought by the plaintiff; in the circumstances, there is no justification for not joining her from the outset.
As to the construction of 6R205, the fifth defendant takes a different view to that of the plaintiff. She says that 6R205 provides no discretion as to who should be joined as a defendant in a probate action. Mr Edmonds-Wilson on her behalf made the following submission:
The rule itself doesn't give a discretion as to who is named as a defendant if they are adversely affected by the order sought in the proceedings. The wriggle room in the rule, if I can describe it as such, I'm talking about rule 205, occurs only under sub-rule (8) of rule 205. There are a number of masters' decisions on this point. Rule 205(8) is invoked if there is uncertainty as to whether a person's interests may be adversely affected. So if you don't know one way or the other then the common-sense procedure is then invoked for coming along to the court, saying to the court 'Well, these people haven't been named as defendants in the proceedings. There is uncertainty whether their interests are going to be adversely affected' and in that event you come along to the court, you seek an order under rule 205(8) directing the service on such person of notice of the proceedings in such manner as the court directs.
In fact, Mr Edmonds-Wilson’s position was that all of the beneficiaries of the 2007 should have been joined as defendants at the outset.
Consideration
I note (without criticism) that neither party referred me to any authority dealing with the interpretation of Rule 205. Indeed there is little authority on the point.
The procedure to be followed in an action for a grant of probate in solemn form, prior to the introduction of the current rules, was described by Napier J in In re Kuhl,[6] where he said:
The provisions of secs 27 and 28 of the Administration and Probate Act 1919 (cf. 61-63 of Court of Probate Act 1857) may be summarized by saying that in proceedings for proof in solemn form, the persons having or pretending interest in any real estate that may be affected, shall, unless the Court otherwise directs, as the next-of-kin, and may be permitted to become parties or intervene; provided that it is unnecessary to cite any such person where the Court is not satisfied that any real estate is in dispute, or, if the Court thinks fit, to proceed without citing them. But the probate decree or order is not to affect the interest in real estate of any person, who has not been cited, or made party to the proceedings, unless he derives title under or through a party or person cited.
The distinction observed in the Statue between a party and a person cited is continued under the modern practice of an action commenced by writ of summons. “By the practice of the Probate Court, inherited from the Prerogative Court, an executor” seeking probate in solemn form “had the power of citing persons interested in the litigation as next-of-kin or legatees, to see proceedings… This did not make the persons so cited parties to the suit, either as plaintiffs or defendants, but it gave them the opportunity of appearing and taking part in the proceedings” (per Sir J Hannen P. in Kennaway v. Kennaway, (1876) 1 P.D. 148, at p. 149). This particular practice has not been altered by the Judicature Act and rules (ibid.)
[6] [1933] SASR 394.
The procedure prior to the introduction of the current rules was for the executor to issue proceedings, and to cite the next of kin and others interested in the estate. It was then a matter for those cited to respond to the citation by seeking to be joined as parties. If a person was cited, but did not respond, then he or she would be bound by any decree made. If a decree were made in the absence of an interested person and it later transpired that he or she had not been apprised of the action, he or she would not be bound by it.
At first glance, it seems that the current rules change this procedure. Prima facie, 6R205(2) requires all persons whose interests are or may be adversely affected (emphasis added) by a document that may be or is the last will of a deceased, to be joined as a defendant. Such a person would no longer need to “opt in” to the action, as in under the old procedure involving the issue of citations; they are a party to the proceeding unless they “opt out”. The question is whether this is to be read down as a result of 6R205(8), which allows the Court to direct that a person be served with a notice of the proceeding “if there is uncertainty as to whether a person’s interest may be adversely affected by a probate action”.
I note that in Nestor v Wolochy,[7] (which was not referred to by counsel) Judge Lunn was prepared to read 6R205(2) down. That may have been desirable in that case (although the alternative procedure his Honour proposed would also have achieved the appropriate outcome).
[7] (2011) 277 LSJS 444.
With respect, I do not think that it is necessary to read the rule down. Rule 205(2) means what it says.
Rule 205(8) also means what it says. If there is doubt as to who should be joined, an application may be made and the Court can give directions.
In my view, there is no tension between them; they apply to different circumstances. Subrule 2 applies where there is no doubt that a person’s interest are or may be affected. Subrule 8 only comes into play where there is doubt or uncertainty as to that fact and is an addition to subrule (2) not a restriction on it. It must also be noted that 6R205(8) provides that the court may give directions in a case where there is uncertainty; it does not empower a plaintiff to choose whether to join someone or not, as the plaintiff has done here.
In the case before me, I am of the view that the beneficiaries under the 2007 will are persons whose interests clearly may be affected by the orders sought by the plaintiff. To state the obvious, if the 2013 will is found to be valid, then their interests will be affected. If the 2013 will is found to be invalid, then their interests will not be affected. Thus, they fall squarely within subrule (2).
In the absence of any challenge to the validity of the 2007 will, the beneficiaries of the three wills made prior to 2007 are persons in relation to whom there is uncertainty as to whether their interests would be affected by the orders sought by the plaintiff. They fall squarely within subrule (8).
In my view, the beneficiaries of the 2007 will must, pursuant to 6R205(2), be joined as defendants to this action, and should have been parties from its commencement. The beneficiaries of the three earlier wills are persons who would fall within subrule 8, and should be served with notice of the proceedings, if so directed by the Court. This is because their interests would only be affected if not only the 2013 will but also the 2007 will were found to be invalid, and it appears, at this early stage, that there is no suggestion of any invalidity in relation to the 2007 will.
What does this mean for present purposes? It means that these proceedings were not properly constituted at the time they were issued as not all parties who should have been named as defendants were so named. The plaintiff has sought to adopt a procedure akin to the citation procedure of old, in circumstances where that is no longer contemplated by the Rules.
In the circumstances, I am of the view that the plaintiff is not entitled to costs on the default judgment application, as this is not an order that the Court would have made given that not all necessary parties were joined.
What of the fifth defendant’s application for costs on the joinder application? In my view, each party should bear their own costs of this application. The failure of the fifth defendant (or indeed any of the defendants) to respond in any way to the correspondence from the plaintiff, or service of the proceedings, has to a large extent, caused or compounded the problems with this claim. If any of the defendants had contacted the plaintiff after the service of proceedings to discuss the question of appropriate (and required) parties to the matter, it is likely that neither the default judgment application, nor the joinder application would have been filed.
I make the following order:
1Each party is to bear their own costs in relation to FDN 5 and FDN 7.
The parties may wish to consider the consequences of this decision for the mediation listed for 6 April 2018.