Oreski v Ikac
[2007] WASC 195 (S)
ORESKI -v- IKAC [2007] WASC 195 (S)
| Link to Appeal : | [2008] WASCA 220 [2008] WASCA 220 |
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WASC 195 (S) | |
| Case No: | CIV:2048/2005 | 15-16 AUGUST 2007 | |
| Coram: | BARKER J | 30/08/07 | |
| 5/10/07 | |||
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Defendants' costs to be taxed to be paid out of estate of deceased Plaintiff to bear own costs of action | ||
| B | |||
| PDF Version |
| Parties: | MARTA ORESKI MARIJA IKAC BERNARD IKAC VLADIMIR IKAC |
Catchwords: | Costs Wills Probate Action for proof in solemn form of informal will General rule as to costs Exceptions in probate proceedings Unsuccessful plaintiff to bear own costs |
Legislation: | Rules of the Supreme Court 1971 (WA), O 66 r 1 Supreme Court Act 1935 (WA), s 37 Wills Act 1970 (WA), s 8 |
Case References: | Argo v Whittaker [2007] WASC 131 Becker v Public Trustee of New South Wales [2006] NSWSC 1146 Briginshaw v Briginshaw (1938) 60 CLR 336 Burnside v Mulgrew; Re Estate of Grabrovaz [2007] NSWSC 550 Clay v Karlson [2001] WASC 141 Mitchell v Gard (1863) 164 ER 1280 Nock v Austin (1918) 25 CLR 519 Oreski v Ikac [2007] WASC 195 Paraskov v Paraskos [2002] WASC 109 Perpetual Trustee Co Ltd v Baker [1999] NSWCA 244 Public Trustee v Whitworth [2007] WASC 170 Re Cutcliffe's Estate; Le Duc v Veness [1959] P 6 Re Estate of Grounds; Page v Sedawie [2005] NSWSC 1311 Re Green (dec'd); Lloyd v Green [1969] WAR 67 Re Herbert Brothers (dec'd) (1990) 101 FLR 279 Reichelt v Reichelt [2007] WASC 79 Roebuck v Smoje [2001] WASC 95 Shorten v Shorten [2001] NSWSC 363 Szabo v Battye (No 2) [2006] NSWSC 1392 Twist v Tye [1902] P 92 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 5 OCTOBER 2007 FILE NO/S : CIV 2048 of 2005 BETWEEN : MARTA ORESKI
- Plaintiff
AND
MARIJA IKAC
First Defendant
BERNARD IKAC
Second Defendant
VLADIMIR IKAC
Third Defendant
Catchwords:
Costs - Wills - Probate - Action for proof in solemn form of informal will - General rule as to costs - Exceptions in probate proceedings - Unsuccessful plaintiff to bear own costs
(Page 2)
Legislation:
Rules of the Supreme Court 1971 (WA), O 66 r 1
Supreme Court Act 1935 (WA), s 37
Wills Act 1970 (WA), s 8
Result:
Defendants' costs to be taxed to be paid out of estate of deceased
Plaintiff to bear own costs of action
Category: B
Representation:
Counsel:
Plaintiff : Mr D L Jones
First Defendant : Mr D M Bruns
Second Defendant : Mr D M Bruns
Third Defendant : Mr D M Bruns
Solicitors:
Plaintiff : Banaszak Legal
First Defendant : Hoffmans
Second Defendant : Hoffmans
Third Defendant : Hoffmans
Case(s) referred to in judgment(s):
Argo v Whittaker [2007] WASC 131
Becker v Public Trustee of New South Wales [2006] NSWSC 1146
Briginshaw v Briginshaw (1938) 60 CLR 336
Burnside v Mulgrew; Re Estate of Grabrovaz [2007] NSWSC 550
Clay v Karlson [2001] WASC 141
Mitchell v Gard (1863) 164 ER 1280
Nock v Austin (1918) 25 CLR 519
Oreski v Ikac [2007] WASC 195
Paraskov v Paraskos [2002] WASC 109
(Page 3)
Perpetual Trustee Co Ltd v Baker [1999] NSWCA 244
Public Trustee v Whitworth [2007] WASC 170
Re Cutcliffe's Estate; Le Duc v Veness [1959] P 6
Re Estate of Grounds; Page v Sedawie [2005] NSWSC 1311
Re Green (dec'd); Lloyd v Green [1969] WAR 67
Re Herbert Brothers (dec'd) (1990) 101 FLR 279
Reichelt v Reichelt [2007] WASC 79
Roebuck v Smoje [2001] WASC 95
Shorten v Shorten [2001] NSWSC 363
Szabo v Battye (No 2) [2006] NSWSC 1392
Twist v Tye [1902] P 92
(Page 4)
- BARKER J:
Summary of Court's decision on costs
1 The plaintiff sought proof in solemn form of a document purporting to be the will of Jimmy Hudson (the deceased). The Court was not satisfied that the deceased intended the 'will' document to constitute the will of the deceased: Oreski v Ikac[2007] WASC 195. The plaintiff then made a claim for her costs to be paid out of the deceased's estate.
2 The general rule that costs follow the event also prevails in probate matters, unless the unsuccessful party can establish one of two exceptions:
1. Where the testator or a residual beneficiary is the cause of the litigation, the costs of all parties may be paid out of the estate.
2. Where it is reasonable to propound or challenge the purported will, the losing party may be relieved of the burden of costs.
3 Having regard to the particular circumstances of this case, the Court ordered that the defendants were entitled to have their costs to be taxed paid out of the estate of the deceased, but that the plaintiff should bear her own costs of the action.
Costs issue
4 The plaintiff sought proof in solemn form of a document purporting to be the will of Jimmy Hudson (the deceased). The Court was not satisfied that the deceased intended the 'will' document to constitute the will of the deceased: Oreski v Ikac. The plaintiff then made a claim for her costs as well as those of the defendants to be paid out of the deceased's estate. The defendants submitted the proper approach in a case such as this is that costs should follow the event and so the plaintiff personally should be ordered to pay the defendants' costs to be taxed.
Discretion as to costs general rule and exceptions in probate matters
5 The Court has a general discretion as to costs: s 37, Supreme Court Act 1935 (WA). Some guidance on the exercise of this discretion is provided by the statement in O 66 r 1 of the Rules of the Supreme Court 1971 (WA) that costs generally follow the event.
6 However, courts have long recognised the special considerations surrounding probate matters. To this end, Sir JP Wilde noted in Mitchell v Gard (1863) 164 ER 1280, 1281 - 1282:
It is of high public importance that doubtful wills should not pass easily into proof by reason of the cost of opposing them. It is of equal
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- importance that parties should not be tempted into a fruitless litigation by the knowledge that their costs will be defrayed by others.
7 As well as setting out these public policy considerations, which remain apposite today, the court stated the two exceptions to the rule that costs follow the event in probate matters, 1281:
[F]irst, if the cause of litigation takes its origin in the fault of the testator or those interested in the residue, the costs 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.
8 These principles have been approved and applied in Western Australia: see for example Re Green (dec'd); Lloyd v Green [1969] WAR 67, 83; Roebuck v Smoje [2001] WASC 95 [29]; and Paraskov v Paraskos[2002] WASC 109 [67].
9 The first exception 'Was the testator or a residual beneficiary at fault?' grew out of the recognition of the need for certainty. The early development of this exception related to testators who left multiple contradictory wills and thus caused the need for an application to the court for certainty. The 'fault' of the testator has now been more closely defined as including situations where the conduct, habits and mode of life of the testator give grounds to question the purported will: Perpetual Trustee Co Ltd v Baker [1999] NSWCA 244 [14].
10 As to the second exception 'Did the circumstances reasonably lead to an investigation of the "will" document?' where the circumstances in which the purported will was created or came to light reasonably lead to the unsuccessful party propounding or challenging the purported will, that is, causing the court to investigate the purported will, costs may be left where they are incurred: Shorten v Shorten[2001] NSWSC 363 [8]; Szabo v Battye (No 2)[2006] NSWSC 1392 [11]; and Argo v Whittaker[2007] WASC 131 [30].
11 It is clear that exceptional circumstances do not need to be established before the court can apply one of the exceptions, rather than the general rule: Re Herbert Brothers (dec'd)(1990) 101 FLR 279, 304 - 305 (Kearney J). Rather, an unsuccessful propounder or challenger of a will need only establish an 'adequate reason for an order of a different character': Twist v Tye [1902] P 92, 94; approved in Clay v Karlson[2001] WASC 141 [158].
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12 The first question for the court is therefore whether there is an 'adequate reason', given the facts and the unsuccessful party's knowledge of them, to depart from the general rule that costs follow the event: Twist v Tye, 94.
13 Due to the subjectivity of the test, no clear rules seem to have evolved from the many cases on point. Further, the large degree of overlap between the two exceptions has complicated the question. The most that can be said is that the exceptions, just like the general rule, provide a starting point for analysis and then the court is able to exercise its discretion as to costs in order to do justice between the parties.
Was the testator or a residual beneficiary at fault?
14 In the seminal case of Mitchell v Gard, a solicitor who drafted the will of the testator was also a residual beneficiary and received the bulk of the estate. The court noted that the misconduct of the solicitor in drafting a will of which he was the primary beneficiary gave the next of kin a reasonable ground for challenging the will. Although the solicitor was able to prove the will was that of the testator and was not the product of undue influence, the court awarded the challengers their costs out of the estate.
15 Nock v Austin (1918) 25 CLR 519 also involved a beneficiary solicitor who was involved in the drafting of the will in question. Here, although the solicitor succeeded in establishing that the will was that of the testator and not marred by undue influence, the solicitor had to pay the other parties' costs out of his share of the estate.
16 In Re Herbert Brothers, the court dealt with two wills made by two brothers, each of whom left their significant property to their personal adviser. The personal adviser had been closely involved in the preparation of both wills, though he had suggested to the brothers that they not involve him in the process. The court found that the personal adviser had dispelled the extremely suspicious circumstances, but ordered that the costs of both parties be paid out of the estate.
17 Intriguingly, in Re Cutcliffe's Estate; Le Duc v Veness [1959] P 6, it was found that the testator had misled the unsuccessful parties and inspired false hopes as to his testamentary intentions. The court declined to apply the exception, holding that such conduct did not make the litigation the 'fault' of the testator. Instead, the court followed the general rule.
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18 In Perpetual Trustee vBaker, the testatrix was 94 years old when she made a sixth and final will which left her estate to a charity and made no provision for her only relatives, who she wrongly believed were misusing money she provided to them. The court found that it was reasonable to investigate the testator's testamentary capacity at the time of making the final will in the light of her circumstances, and so ordered that the costs of both parties be paid out of the estate. This case highlights the overlap between this exception and the 'reasonable grounds for investigation' exception.
19 In Roebuck v Smoje, the testator made a second will while aged and infirm, in slightly suspicious circumstances, and did not make proper arrangements for its safekeeping: [47] [49]. In that situation, Hasluck J found that the defendants were justified in doubting whether the will was properly executed and in litigating the matter. The court ordered that, even though the defendants 'lost', the proper order for costs included an order that the costs of the defendants be paid out of the estate.
20 Similarly, in Reichelt v Reichelt [2007] WASC 79, Hasluck J awarded both parties their costs from the estate in circumstances which raised doubts about the testator's testamentary capacity and where the defendant beneficiaries under the previous will did not contest the application.
21 Further, in Public Trustee v Whitworth [2007] WASC 170, the court was presented with two informal wills. The defendants did not contest the hearing, but submitted to the court's decision. In that situation, where the confusion was effectively created by the testator, all parties obtained their costs from the estate.
Circumstances of this case
22 There are no grounds to establish 'fault' on the part of a residual beneficiary, or that such a person was the cause of the litigation.
23 Likewise, it cannot be concluded on the evidence that the deceased's habits or mode of life caused the litigation. The claimed discovery of the will document in the motor vehicle of the deceased by the plaintiff's son, David Oreski, was the primary basis of the plaintiff's claim that the document was intended by the deceased to be his will and have testamentary effect. For the reasons given in the main judgment, I am not satisfied that that is so. I did not, however, make any express findings as to who prepared or caused the preparation or typing of the document so found. But I was not satisfied that the deceased had done so. Nor did I
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- make any express findings concerning the claim of David Oreski that he did indeed find the 'will' document in the deceased's motor vehicle. In light of the competing factual circumstances set out in the main judgment I was simply not satisfied that the 'will' document presented to the Court was that of the deceased or that he intended it to have testamentary effect.
24 These circumstances suggest that it was at least reasonable for the plaintiff to commence proceedings to clarify the status of the document that her son David said that he had found in the deceased's motor vehicle. Again, I made no findings, especially given the lack of evidence on the point, to the effect that the plaintiff did not believe that her son David found the 'will' document in the deceased's motor vehicle or the plaintiff did not believe the document to be the deceased's or that he intended it to be his will.
25 In my view, however, there was a point prior to the action going to trial when the plaintiff should have considered whether the action could properly be maintained. This was when her solicitors obtained advice from an expert witness that the typewriter that David Oreski had positively told the solicitors had been used by the deceased to type the 'will' document, was not the typewriter on which the document had been typed.
26 At that point, the only evidence the plaintiff could rely on in propounding the validity of the informal 'will' document, was David Oreski's claim that he had found the document in the deceased's motor vehicle. In the light of the expert witness's advice, the provenance of the 'will' document must have been seriously in doubt.
27 The issue of testamentary capacity was not directly raised at trial, though the defendants put the plaintiff to proof on this issue, as on all other aspects concerning the 'will' document. Although Mr Vinko Shain, the deceased's accountant and friend, stated that the deceased made references to a mysterious 'Boss' and international business deals, it is not clear whether the deceased actually believed that he was working for such a figure, or whether he mentioned the 'Boss' to inflate the importance of his business activities. Certainly the latter fits in with the acknowledged secretive behaviour of the deceased. In any event, it cannot be said that the question of the deceased's testamentary capacity caused the litigation.
28 The only conduct of the deceased which could support a claim that he had in fact made a will are the ambiguous statements he made to Mr Shain and the plaintiff, in the context of those persons specifically
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- inquiring about his will: Oreski v Ikac [66], [72]. Although the conversation with Mr Shain occurred before the date of the 'will' document and the deceased apparently told Mr Shain that he would prepare a will, there is nothing other than the 'will' document to indicate that he followed through on that intention.
29 Even if these ambiguous statements can be construed as suggesting the deceased had drafted a will, Re Cutcliffe's Estate suggests that such conduct cannot cause litigation, without more. The 'will' document should not be seen as 'more' given its questionable provenance.
30 In these circumstances I am not satisfied that it can properly be said that the first exception to the general rule on costs should apply. That then leaves the second exception to which I have already begun to give some consideration, as to whether the circumstances reasonably led to an investigation of the status of the 'will' document.
31 In Szabo v Battye, the plaintiff's case was not frivolous and the plaintiff's conduct of the matter did not unduly lengthen the case, so costs were left to lie where they were incurred, save that the successful defendants were awarded indemnity costs out of the estate.
32 Shorten v Shorten raised the problem of testamentary capacity. The trial judge acknowledged that at the beginning of the case, there were doubts about the testator's testamentary capacity, and rather reluctantly made no costs order against the unsuccessful party. This decision was upheld on appeal.
33 Argo v Whittaker addressed the will of an elderly lady whose testamentary capacity was called into question by the defendants. By the time the matter reached trial, the parties had reached agreement and the action proceeded undefended. In that situation, Johnson J ordered that the successful plaintiff take her costs from the estate and that the defendants bear their own costs.
34 In Burnside v Mulgrew; Re Estate of Grabrovaz [2007] NSWSC 550 an elderly lady was befriended by the defendant in the last few months of her life. A purported executed will leaving the testatrix's property to the defendant was discovered after the testatrix's death, but one of the attesting witnesses denied that the purported will had been duly executed. The court was not satisfied that the signature was that of the testatrix. Though the court doubted the provenance of the purported will and the veracity of the defendant's evidence, the court did not find that the defendant positively knew that the purported will was a forgery, and
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- therefore declined to award costs against the defendant. Rather, the successful plaintiff's costs were paid out of the estate on an indemnity basis and the defendant had to bear her own costs.
35 In Becker v Public Trustee of New South Wales [2006] NSWSC 1146 Nicholas J held that 'reasonableness' of the relevant party's conduct involves consideration of what is needed to discharge the onus of proving the claim according to the Briginshaw v Briginshaw(1938) 60 CLR 336 standard: [16].
36 In Re Estate of Grounds;Page v Sedawie [2005] NSWSC 1311, the testatrix made seven wills between 1985 and 1999, and died in 2001 aged 92. After exchanging affidavits, including expert evidence regarding testamentary capacity, the parties involved agreed that the 1991 will should be proved, on the basis that she did not have testamentary capacity at the time of the other wills. The court ordered that the costs of both parties be paid from the estate, as it was reasonable to maintain the litigation to the stage they did; namely, until such time as it became clear that she did not have testamentary capacity from 1997 on.
37 The question in this case is whether the plaintiff was justified in commencing and maintaining at all relevant times the action propounding the validity of the 'will' document. As noted above, I consider it was reasonable for the plaintiff to have commenced proceedings to clarify the status of the document her son David claimed to have found in the deceased's motor vehicle. I find this was so even though there was no signature to lend an air of authority to the 'will' document and even though the plaintiff had or should have had knowledge to hand from her sons suggesting that the deceased was unlikely himself to have typed the document as he lacked the typing ability and familiarity with technical legal language.
38 The plaintiff, through her son David who was the person dealing with the plaintiff's solicitors, plainly became aware that it would or might be important to explain how the 'will' document came to be prepared or typed. It was at this point that the plaintiff's son David delivered a typewriter to the office of the plaintiff's solicitors and positively advised the solicitors that that typewriter had been used by the deceased to type the 'will' document. On the evidence before the Court there were no 'ifs or buts' about this. David Oreski informed the solicitors that the typewriter was the typewriter in question. The plaintiff's solicitors put that precise proposition to the defendant's solicitors in early 2006 and asked the defendants to agree the fact.
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39 The plaintiff's action thereafter proceeded on the important basis that the plaintiff could now establish that the 'will' document was prepared on a particular typewriter that the deceased had access to and used himself. In fact the plaintiff led no such evidence at the trial and this information only came to light through cross-examination of the plaintiff's witnesses. At least from the time of the receipt of the expert report stating that the typewriter provided by David Oreski was not that used to type the 'will' document whenever that was the plaintiff possessed as much knowledge as the Court about the relevance of the typewriter to the case that is, none. A principal plank in the plaintiff's case fell away. In my view, in light of that expert advice, whatever the perceived strengths of the plaintiff's case were to her or her son David prior thereto, after that event it was wholly unreasonable for the plaintiff to continue to litigate the matter.
40 The situation here cannot be compared to cases where the unsuccessful parties 'saw the error of their ways' and settled the matter. Rather, the plaintiff was not justified in maintaining the action from this point on.
41 In these circumstances, the question is whether the plaintiff should be ordered to pay the costs of the proceedings, or simply be relieved from the burden of paying the defendant's costs, so that she bears her own costs, with the defendants being entitled to take their taxed costs from the estate.
42 Twist v Tye is the major case governing the application of the general rule. Here, three executors and residuary legatees acted in their professional capacities for an elderly lady for some years before her death. During this time, they had ample opportunity to observe her circumstances and condition, and knew that they were acting for her as she required their assistance. While they were acting for her, she executed a will. The will was then challenged on the grounds that she did not have testamentary capacity and did not know and approve of the contents of the will. The executors supported the will unsuccessfully. The court denied them their costs from the estate and ordered that costs follow the event, making a number of firm statements on the executors' participation in the action, 96, 98:
[T]hey really were in a position to know, or practically ought to have known, the true position of affairs as disclosed in the course of this inquiry; and that, having that knowledge, they propounded the will with the great risk of being defeated in view of all the circumstances of the case…
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- [It] cannot be contended that they were led into the belief that this old lady was capable of managing her own affairs and of making these wills. The truth is, as I said before, they took a view and acted upon it; and when it came to a fight between themselves, on the one side, and the persons interested under an intestacy, on the other side, they stood to win one way and to lose the other. I see, therefore, nothing to warrant a departure from the ordinary rule.
43 Throughout the hearing in Clay v Karlson, the unsuccessful plaintiff maintained that he was merely putting the defendants to proof of the will. Justice RobertsSmith found that he was, in effect, conducting an attack on the grounds of undue influence: [182]. Given this subterfuge and the plaintiff's conduct of the hearing, RobertsSmith J ordered that costs should follow the event.
44 A less dramatic situation was that found in Paraskov v Paraskos. The court determined that it was initially reasonable to require the will to be proved, but for the defendant to persist with the challenge to the will after seeing the witness statements of the plaintiff was unreasonable. In this case, costs followed the event.
45 The present circumstances of the plaintiff are in my view a little different from those in Twist v Tye and Clay v Karlson. As noted above, the Court has not made any express findings concerning the plaintiff's state of knowledge in this case. Rather, what the Court has found is that it was reasonable for the plaintiff to commence the proceedings to clarify the testamentary status of the document her son David claims he found in the deceased's motor vehicle. However, there was a point at which the plaintiff was not justified in maintaining the proceedings. This was when the plaintiff's solicitors obtained expert advice that the typewriter David Oreski said had been used by the deceased to type the document was not in fact the typewriter. At that point the only evidence to support the plaintiff's case was the claim of her son David that he had found the document in the motor vehicle. In my view, at that point, the plaintiff's claim to say the least was tenuous. I do not think it was reasonable for the investigation as to the status of the document to continue at that point.
46 In all of the circumstances, I do not consider that this is a case where neither of the exceptions to the general rule as to costs should apply. Rather, I think that it was reasonable, for a period prior to the trial, for the plaintiff to cause the investigation to be made. However, I do not think it should have been maintained beyond the point that the expert advice was received. In all of these circumstances I consider the second exception should apply, to the extent that the plaintiff should not have her costs of
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- the proceedings paid out of the estate of the deceased, but should bear her own costs.
47 The defendants, of course, are entitled to an order that their costs be paid out of the estate, as they were successful in defending their position.
Conclusion and order
48 For these reasons, the appropriate order as to costs in relation to this action, in my view, is that the defendants are entitled to have their costs to be taxed paid out of the estate, but that the plaintiff should bear her own costs.
49 The Court then orders as to costs:
1. The costs of the defendants are to be taxed and paid out of the estate of the deceased.
2. The plaintiff is to bear her own costs of the action.
The parties may now proceed to extract formal costs orders in these terms.
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