O'Dea v McInerney (No 2)

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
In the Estate of O'DEA (DECEASED)
O’DEA v MCINERNEY & ORS (No 2)
[2024] SASC 143
Judgment of the Honourable Justice McIntyre
SUCCESSION - MAKING OF A WILL - TESTAMENTARY CAPACITY - GENERALLY
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL RULE: COSTS FOLLOW EVENT - GENERAL PRINCIPLES AND EXERCISE OF DISCRETION
Judgment was delivered in this matter on 22 August 2024 determining that the 15 February 2018 will of Ms Shirley Margaret O’Dea should be admitted to probate. The applicant’s costs were ordered by consent to be paid on an indemnity basis from the estate. The respondents’ costs were contentious.
The second and third respondents, who successfully argued for the admission of the February 2018 will, sought that the first respondent be ordered to pay their costs on the basis that the first respondent had unsuccessfully propounded the later wills. The second and third respondents submitted that any portion of their costs not recovered from the first respondent be paid out of the estate on an indemnity basis.
The first respondent, by contrast, argued either that all parties’ costs should be met from the estate or, failing that, that each party should bear their own costs.
HELD:
1.The first respondent is to bear his own costs and disbursements of the proceedings.
2.The second and third respondents’ costs and disbursements are to be paid from the estate on an indemnity basis.

Wills Act 1936 (SA) s 8, referred to.
Roche v Roche & Anor (No 2) [2017] SASC 75; Mitchell v Gard (1863) 3 SW & Tr 275; O’Dea v McInerney & Ors [2024] SASC 110, considered.

In the Estate of O'DEA (DECEASED)
O’DEA v MCINERNEY & ORS (No 2)
[2024] SASC 143
Civil: Application

The applicant, Peter Frances O’Dea, applied to this Court to determine which, if any, of four wills of his relation, Ms Shirley Margaret O’Dea should be admitted to probate. The applicant was the executor named in each will. On 22 August 2024, I handed down a judgment ordering that the will dated 15 February 2018 be admitted to probate.[1]
[1] O’Dea v McInerney & Ors [2024] SASC 110 (‘O’Dea No. 1’).
Orders were made by consent that the applicant’s costs and disbursements of this action are to be paid on an indemnity basis from the estate of the deceased. The costs applications by the respondents are contentious.
The first respondent argues that his costs should be paid out of the estate or alternatively that each party should bear their own costs. The second and third respondents contend that the first respondent should pay their costs and should otherwise bear his own costs of the proceedings. The second and third respondents further contend that part of the costs to be paid by the first respondent ought to be ordered on an indemnity basis.
For the reasons that I now deliver I propose to make the following orders:
·The first respondent is to bear his own costs and disbursements of the proceedings.
·The second and third respondents are to have their costs and disbursements of the proceedings on an indemnity basis to be paid out of the estate.
Relevant principles
The principles to be applied when determining an application for costs in probate proceedings were summarised by Kourakis CJ in Roche v Roche & Anor (No 2).[2] As set out in that judgment, costs are in the discretion of the Court. The discretion is unfettered and must be exercised judicially. As a general rule, a successful litigant is entitled to an order that costs follow the event. There are however two well recognised exceptions to the general rule in probate matters. Those were first identified in Mitchell v Gard where Sir J.P. Wilde observed:[3]
… It is the function of this Court to investigate the execution of a will and the capacity of the maker, and having done so, to ascertain and declare what is the will of the testator. If fair circumstances of doubt or suspicion arise to obscure this question, a judicial inquiry is in a manner forced upon it. Those who are instrumental in bringing about and subserving this inquiry are not wholly in the wrong, even if they do not succeed.
… the Court deduces the two following rules for its future guidance: first, if the cause of litigation takes its origin in the fault of the testator or those interested in the residue, the cost may properly be paid out of the estate; secondly, if there be sufficient and reasonable ground, looking to the knowledge and means of knowledge 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.
[2] [2017] SASC 75 at [5]-[18] (‘Roche’).
[3] Ibid at [6] – [7].
In other words, the first consideration is whether the testator has been the “cause” of the litigation in the relevant sense and the second consideration is whether the circumstances lead reasonably to an investigation concerning the will. Chief Justice Kourakis commented in Roche that the emphasis upon the testator’s conduct is puzzling in the context of costs where the more usual focus is upon the conduct of the litigants. Chief Justice Kourakis analysed the rationale for the different approach to costs in probate matters and noted that the modern trend is for the probate exceptions to be invoked “sparingly” concluding:[4]
The underlying rationale for departing from the ordinary rule 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. The expansion of public aged residential care has reduced the physical isolation of the aged. Medical care by general practitioners is readily available and the degree of specialist intervention and referrals for pathological testing is more extensive. Aged persons are not as confined and are more socially active than they once were. Record keeping by professionals is more detailed and their notes more readily accessible. Audio-visual records are more common. Nonetheless, invoking this Court’s testamentary jurisdiction may sometimes be sufficiently warranted to depart from the ordinary rule even if the challenge to testamentary competence ultimately fails. 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.
[4] Ibid at [17].
Second and Third respondents’ positions
The second and third respondents’ positions are broadly similar. The second respondent seeks various orders in the alternative as follows:
·First, that the first respondent pay the second respondent’s costs on a standard basis until 14 days after the service of a formal offer on 12 April 2023 and on an indemnity basis thereafter with any costs incurred by the second respondent not recovered from the first respondent to be paid out of the estate of the deceased on an indemnity basis; or
·Second, that the first respondent pay its costs on a standard basis until 29 September 2023, the date of the expiration of the second respondent’s informal Calderbank offer and on an indemnity basis thereafter, or
·Third, that the first respondent pay the second respondent’s costs on a standard basis.
The second respondent further seeks orders that the first respondent bears his own costs of the proceedings.
The second respondent relies on two offers that it made in an attempt to resolve these proceedings in relation to its claim for indemnity costs. The first is a formal offer filed on 6 April 2023[5] and the second is an informal Calderbank offer made on 22 September 2023. Both offers are exhibited to an affidavit filed by the second respondent’s solicitor, Shadan Azadeh Doyle, dated 19 September 2024.[6]
[5] FDN 95.
[6] FDN 248.
The third respondent supports the general position adopted by the second respondent. He seeks orders that the first respondent pay his costs on the standard costs basis for the period up to and including 29 September 2023, and thereafter on an indemnity basis following the expiration of the second respondent’s Calderbank offer. The third respondent accepted the second respondent’s Calderbank offer and says that the first respondent’s refusal to do so justifies indemnity costs being awarded against him. The third respondent further seeks that any costs incurred by him and not recovered from the first respondent, be paid out of the estate of the deceased on an indemnity basis. The third respondent further contends that the first respondent should bear his own costs of the proceedings and not have recourse to the estate of the deceased in relation to his costs.
The applicant was the formal propounder of the wills but took a neutral position. The second and third respondent therefore contend that the first respondent, who propounded the January 2019 will or alternatively the December 2018 will under which he stood to benefit substantially, was in that sense the applicant in the proceeding or the “true protagonist”.[7] The second and third respondents contend that as the first respondent was unsuccessful the general rule should apply, and costs should follow the event. In other words, that the first respondent should pay the second and third respondents’ costs of the proceedings and otherwise bear his own costs.
[7] FDN 257 at [10] and [14].
The second and third respondents say that neither of the two exceptions set out in Mitchell v Gard[8] apply. It is said the second exception has no application as it only applies in circumstances where a party has unsuccessfully opposed the admission of a will to probate, but where the Court has found that there was an appropriate basis to do so. This is not the case here. The first respondent did not unsuccessfully oppose the will but rather unsuccessfully propounded a will.
[8] (1863) 3 SW & Tr 275.
The second and third respondents say that the first exception does not arise because the first respondent sought to propound the January 2019 and December 2018 wills in an unmeritorious manner and from a position of self interest in circumstances where his conduct contributed to the making of the wills and gave rise to the litigation. Both the second and third respondents made a number of criticisms of the first respondent’s conduct in the proceedings with references to the judgment.[9] It is said that, considered from an objective and reasonable basis, the first respondent ought to have known that the wills he propounded could not be supported. The second and third respondents say further that the first respondent was not a disinterested litigant in these proceedings. He stood to gain a very significant commercial advantage if either of the last two wills were admitted to probate. It is said that this motivation and self-interest explains, but does not justify, the findings made as to the quality of his evidence. It is said that the first respondent knew the true circumstances in connection with the preparation of the last two will documents of Ms O’Dea and the instructions given by her. It is said that despite this knowledge he sought unsuccessfully to provide evidence and propound a case which he must have known was unreliable.
[9] FDN 254 at [26] – [28] and [29] – [31]; FDN 257 at [22] – [44].
The first respondent’s position
The first respondent, on the other hand, resists these applications and contends that all parties’ costs should be paid out of the estate or alternatively that each party bear the costs of the proceedings.
In making those submissions the first respondent relies upon the fact that he was joined to the action by the applicant and that the executor did no more than raise “concerns” as to testamentary capacity, knowledge, and approval. At no time did the applicant or indeed the other respondents allege that this case was one of undue inference, coercion, or fraud. The first respondent accepts that it was reasonable for the second and third respondents to propound the earlier two wills but says that it was equally reasonable for him to propound the latter two wills based on all the evidence and for him to rely upon the presumptions relating to knowledge and approval and testamentary capacity.
The first respondent says that if, contrary to his primary position he is ordered to pay the costs of the second and third respondents, it was inappropriate for both to be separately represented given that they were both propounding the same will. I reject this contention. It was appropriate for these parties to be separately represented in the proceedings on the basis that their interests did not entirely align. In any event, the second respondent had that primary carriage of what I will describe as the joint interests of the second and third respondents. The third respondent restricted his involvement to matters related to the bequest of land to him. The manner in which the case was conducted did not result in unnecessary time spent or duplication of costs.
The first respondent says that the first consideration in Mitchell v Gard applies and is made out. Ms O’Dea changed her last two wills both of which were duly executed in accordance with section 8 of the Wills Act 1936 (SA) (“the Act”).[10] It is therefore contended that in the circumstances of the case, Ms O’Dea caused, in the relevant sense, the litigation. In relation to the second exception, the first respondent says that the executor considered it necessary that there be an investigation and that each of the parties who were joined acted reasonably in seeking to establish their respective cases. The second consideration was made out.
[10] O’Dea No. 1 at [356].
The first respondent did not invoke the jurisdiction of the Court. He did not bring a cross claim but was joined as a respondent by the applicant. The first respondent says that he was in a different position to the unsuccessful party in the Roche decision. He did not proceed to trial unreasonably. He had a bona fide belief that either the January 2019 will, or December 2018 will were valid wills and had a reasonable and bona fide belief that Ms O’Dea had testamentary capacity and was able to manage her affairs for the reasons set out in his written submissions.[11] It is said that therefore it was not unreasonable for him to proceed to trial on the basis that the question of validity of wills required investigation on the applicant’s case. Further it is contended that this was not a case where the first respondent persisted in an unmeritorious action after the discovery of evidential material which showed it was unreasonable to proceed to trial on any issues on which the second and third respondents were ultimately successful.
[11] FDN 256 at [28] – [29].
Discussion
This matter was unusual in that it was not a situation of a will being challenged. Rather it was a situation of competing wills. The executor was in a difficult position. He had located four wills each of which apparently complied with the Act, had been prepared by a solicitor and bore the signature of Ms O’Dea and two witnesses. On the other hand, the executor was aware of a number of factors which gave rise to a doubt as to Ms O’Dea’s testamentary capacity.[12] As I found, it was entirely appropriate that the executor invoke the supervisory jurisdiction of the Court. Having issued these proceedings, the executor joined the three respondents as parties. Each proceeded, not surprisingly, to propound the wills that benefitted themselves. The executor took a neutral position.
[12] O’Dea No. 1 at [10] – [11].
As Kourakis CJ observed in Roche:[13]
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.
[13] Roche at [18].
The circumstances called for an investigation. The applicant set that in train. The first respondent did not initiate these proceedings nor was he challenging a testamentary disposition. The position of the second and third respondent is founded upon the first respondent’s involvement in the making of the December 2018 and January 2019 wills and his conduct of the proceedings.
The second respondent’s written submissions contend as follows: [14]
29.The First Respondent would have been aware that the January 2019 and December 2018 wills could not be supported, before the litigation was even commenced, as they were not rational on their face and given his own significant involvement in the active preparation and execution of the wills, such that he should be “condemned in costs … the rationale being that [he] will … have [had] ample opportunity to observe the testator’s behaviour prior to death”.
30. Further, there were otherwise a number of additional matters known to the First Respondent, at least after the discovery of evidentiary material, that indicated the wills could not be supported:
a.     the summary of factors referred to by the primary judge as rebutting testamentary capacity at [359] of the Judgment (see also [365] of the Judgment regarding the differential diagnosis of the experts making “little difference to an assessment of Shirley O’Dea’s testamentary capacity”, insofar as the First Respondent may seek to rely on A/Prof Rosenfeld’s opinion to justify his conduct);
b.     that there was no evidence supporting any proper assessment of testamentary capacity by the solicitor, Gregory Anderson33 (the First Respondent would have been aware of this, including because of his attendance at the meeting on 6 December 2018);
c.     the fact that that December 2018 will was marked “draft” yet executed by the deceased, strongly supporting the proposition that she did not have capacity (the First Respondent being aware of this, having arranged for that “draft” will to be executed).
31. Despite all of the above, the First Respondent persisted with the unmeritorious propounding of the January 2019 and December 2018 wills. He did so at his peril – and “ought not be rewarded by avoiding the operation of the general rule as to costs”.
32. The position of the First Respondent is similar to that of the unsuccessful propounding parties in Roche v Roche and Moloney. In both of those cases, the unsuccessful propounding party was ordered to pay the successful parties’ costs. A similar outcome should follow here.
[14] FDN 254 at [29] – [32].
The third respondent makes similar submissions[15] and contends that the first respondent’s insistence on pursuing the latter two wills despite clear evidence of Ms O’Dea’s cognitive decline created unnecessary legal costs.
[15] FDN 257 at [22] – [28].

The first respondent was an unsatisfactory witness, and I was moreover concerned about aspects of his conduct in relation to the two wills that he propounded. However, it was never put, nor did I find, that he engaged in undue influence, coercion, or fraud. I reject the contention that his involvement in the making of the wills precluded him from propounding those wills in circumstances where he was joined to the proceedings. Once the proceedings were instituted by the executor, the issues for determination were not straightforward. The question is at what point, if any, could it be said that the first respondent was unreasonable to persist with his argument in favour of the two wills he propounded.
The primary finding was that the two wills propounded by the first respondent were duly executed but not rational. There were further findings that the presumptions of testamentary capacity and knowledge and approval had been rebutted and that the first respondent had not discharged the burden of proving testamentary capacity nor had he produced affirmative evidence of knowledge and approval.
The first respondent’s case was not without merit despite these findings. Determination of the issues in dispute required consideration of documents and the evidence of numerous witnesses both lay and expert. The matter was further complicated by the unhelpful conduct of Ms O’Dea’s solicitor, Mr Anderson. The first respondent relied upon Mr Anderson’s evidence which was later found to be unreliable for reasons set out in the judgment.[16]
[16] For example, see O’Dea No. 1 at [233].
The second respondent made observations about the evidence and highlighted issues with the evidence of Mr Anderson in a letter from its solicitors to the other parties dated 22 September 2023 that accompanied the Calderbank offer (“the Calderbank letter”). The Calderbank letter was sent after the parties had filed all of the lay evidence and the primary reports of the expert medical witnesses. Referring to the medical evidence, the Calderbank letter stated, inter alia, as follows: [17]
On a review of the evidence, it is clear that the presumption and testamentary capacity is displaced, such that the first respondent will need to prove positively at trial that when the deceased allegedly executed the will on 25 January 2019 or the will on 26 December 2018 she was of “sound disposing mind” and had testamentary capacity, in order to propound either will.
Similarly, based on the evidence of the parties, clear suspicious circumstances arise such that the presumption of knowledge and approval will be displaced at trial. They are a significant change to a long held testamentary intention. Irrespective of your client’s explanation, he admits his significant involvement in the creation of the will resulting in him being the primary beneficiary.
The burden of proof will lie on your client to affirmatively prove that the deceased had capacity and that she knew and approved the contents of the wills.
[17] FDN 246; Exhibit SAD-8.
The findings following the trial were in line with the matters set out in the Calderbank letter. I accept the submissions that the first respondent must have known that his evidence about the frequency of telephone calls before his meeting with Ms O’Dea in June 2018 was incorrect and that his evidence concerning what he had been told by Ms O’Dea about given land to the Lanes was false and that he knew this. There are other aspects of his evidence that were unsatisfactory leading to my conclusion that I would not accept his evidence unless independently corroborated. Notwithstanding these matters, I do not consider that it was unreasonable for the first respondent to maintain his position after the Calderbank letter. Whilst there were certainly hurdles for the first respondent to overcome it cannot be said that there was no prospect of success. The medical evidence was contentious and lay witnesses other than the first respondent genuinely considered that Ms O’Dea was able to manage her affairs.
The primary findings in relation to the first respondent’s involvement with Mr Anderson’s preparation of the document that formed the basis of the wills dated 26 December 2018 and 25 January 2019 established his close involvement. Some of the matters upon which Mr Anderson was found to be unreliable, for example Mr Anderson’s affidavit evidence about seeing Ms O’Dea on her own on 6 December 2018, were matters that the first respondent had independent knowledge of and ought to have known were incorrect. It is however plain from those same findings that the first respondent was not involved in every interaction between Mr Anderson and Ms O’Dea. For example, he was not present at the appointment on 23 August 2018, nor was he present when Mr Anderson delivered the will to Ms O’Dea on 20 December 2018. Accordingly, Mr Anderson’s affidavit evidence concerning his assessment of Ms O’Dea’s testamentary capacity and knowledge of the wills at various stages included occasions where the first respondent was not present. It was not unreasonable of him to rely upon Mr Anderson’s evidence in circumstances where he was not present. Whilst the first respondent must have known that Ms O’Dea did not read the documents she signed on 26 December 2018 and on 25 January 2019, he was not to know that she had not previously read the document with Mr Anderson. Mr Anderson had the obligation to explain the document to her and his affidavit material indicated that he had discharged that obligation.
In all of the circumstances I am not persuaded that it is appropriate to order that the first respondent pay the costs of the second respondent or the third respondent. But on the other hand, I do not consider that it is appropriate in all of the circumstances that the first respondent have his costs paid from the estate. It is my view that the most appropriate course of action is for him to bear his own costs and for the second and third respondents to have their costs paid from the estate on an indemnity basis.

[2024] SASC 143

11 December 2024