Petith v New South Wales Trustee and Guardian; Bone v New South Wales Trustee and Guardian (No 2)

[2024] NSWSC 1662

Supreme Court

New South Wales

Medium Neutral Citation:

Petith v New South Wales Trustee and Guardian; Bone v New South Wales Trustee and Guardian (No 2) [2024] NSWSC 1662

Hearing dates:

On the papers, last submissions received 17 December 2024

Date of orders:

20 December 2024

Decision date:

20 December 2024

Jurisdiction:

Equity - Succession & Probate List - Probate

Before:

Pike J

Decision:

See [36] and [37]

Catchwords:

COSTS – determination of final orders – where each party has had some measure of success – no question of principle

Legislation Cited:

NSW Trustee and Guardian Act 2009 (NSW) s 33(1)

Uniform Civil Procedure Rules 2005 (NSW) r 42.1

Cases Cited:

Petith v New South Wales Trustee and Guardian; Bone v New South Wales Trustee and Guardian [2024] NSWSC 1503

Re Estate of Hodges; Shorter v Hodges (1988) 14 NSWLR 698

Reginald Alfred Becker v Public Trustee of New South Wales [2006] NSWSC 1146

Szabo v Battye(No 2) [2006] NSWSC 1392

Telstra Corp Ltd v AAPT Ltd [1999] NSWSC 853

Zang v Middleton [2011] NSWSC 881

Texts Cited:

Nil

Category:

Costs

Parties:

In proceedings 2021/00364938:
Paul Petith (Plaintiff)
New South Wales Trustee & Guardian (First Defendant)
Steven Rundle Bone (Second Defendant)

In proceedings 2022/00118624:
Steven Rundle Bone (Plaintiff)
New South Wales Trustee & Guardian (Defendant)

Representation:

Counsel:
In proceedings 2021/00364938
A Fernon SC with A Bulley (Plaintiff)
C Birtles (First Defendant)
S Chapple SC with H Morrison (Second Defendant)

In proceedings 2022/00118624
S Chapple SC with H Morrison (Plaintiff)
C Birtles (Defendant)

Solicitors:
In proceedings 2021/00364938
Shakenovsky & Associates (Plaintiff)
Keypoint Law (First Defendant)
Glass Goodwin Solicitors (Second Defendant)

In proceedings 2022/00118624
Glass Goodwin Solicitors (Plaintiff)
Keypoint Law (Defendant)

File Number(s):

2021/00364938 and 2022/00118624

Publication restriction:

Nil

JUDGMENT

1. On 28 November 2024, I delivered judgment in these proceedings: Petith v New South Wales Trustee and Guardian; Bone v New South Wales Trustee and Guardian [2024] NSWSC 1503 (Principal Judgment). This judgment assumes familiarity with and uses the same defined terms as appears in the Principal Judgment.

2. I determined that Gail did not have testamentary capacity at the time of making the 2021 Will, and as such, a copy of the 2019 Will should be admitted to probate. I also determined that Mr Bone’s claim for further provision out of Gail’s estate should be dismissed.

3. I directed the parties to agree a form of final orders to give effect to my reasons, including as to costs, and failing agreement, provide any proposed orders and submissions to my chambers, such that any remaining issues would be determined on the papers.

4. Perhaps not unsurprisingly, given the history of the matter, the parties were not able to agree a form of final orders, including as to costs, in the Probate Proceedings. Mr Bone and the NSWTAG agreed orders in the Provision Proceedings.

5. The issues that remained for my determination in the Probate Proceedings were:

1. The form of final orders; and

2. Costs.

6. These reasons resolve those two issues.

Overview of the parties’ positions

Mr Petith

7. Mr Petith sought various declarations in relation to the 2021 Will, including that, as at 20 April 2021, Gail lacked testamentary capacity and lacked knowledge and approval of the contents of the 2021 Will. Mr Petith also sought a declaration that the 2021 Will is not the last Will and Testament of Gail.

8. These declarations were sought on the basis that a vast majority of the evidence and hearing time in these proceedings concerned the circumstances surrounding the execution of the 2021 Will and whether it should be admitted to probate.

9. Mr Petith, through his counsel, contended that, as the Court was not satisfied that Gail had capacity as at 20 April 2021 (at [387] of the Principal Judgment), was far from satisfied that Gail knew and understood the contents of the 2021 Will (at [393] of the Principal Judgment), and determined that the 2021 Will should not be admitted to probate, the declarations sought should be made.

10. In relation to costs, Mr Petith seeks an order that his costs, calculated on the party/party basis, be paid out of Gail’s estate.

11. In support of this, Mr Petith contended, through his counsel, that he enjoyed substantial success in the relief which he sought in relation to the 2021 Will, and as such, there is no basis upon which the Court should exercise its broad discretion to order that Mr Petith receive less than 100% of his costs, assessed on a party/party basis, to be paid out of Gail’s estate.

12. Mr Petith sought his costs in relation to the other relief sought in his amended statement of claim, namely that the 2014 Will be admitted to Probate and the declarations sought in relation to the 2018 Will, the Codicil and the 2019 Will, on the basis that the evidence, particularly the expert reports of Professor Watson and Gail’s ongoing health concerns, gave rise to reasonable doubts of Gail’s testamentary capacity.

13. Mr Petith also contended that there should be no order as to the costs of Mr Bone, with the intent that he bears his own costs, as Mr Bone was wholly unsuccessful in seeking that the 2021 Will be admitted to probate.

Mr Bone

14. In circumstances where the 2019 Will, propounded by Mr Bone, was admitted to probate, Mr Bone seeks orders that his costs, calculated on the ordinary basis, be paid out of the estate.

15. To support this order, Mr Bone relies on the fact that he was wholly successful in defending Mr Petith’s claims of undue influence in relation to all the testamentary instruments and that, despite Mr Petith’s success in relation to the 2021 Will on the grounds of testamentary capacity and knowledge and approval, Mr Bone was successful in having the 2019 Will, a testamentary instrument he propounded in the alternative, admitted to probate.

16. Mr Bone contended that, in light of his substantial success, although it would be possible to make a separate costs order by reference to the proceedings, the more appropriate outcome would be a single costs order in respect of the whole claim.

17. In relation to Mr Petith’s costs, Mr Bone, through his counsel, submitted that Mr Petith’s costs should be moderated, such that he can only recover 80% of his costs from the estate. This submission was made on two bases:

1. Although the circumstances surrounding the execution of the 2021 Will and 2019 Will reasonably called for investigation, especially considering Mr Lakos’ death, the challenge of the Codicil and 2018 Will was against the weight of the evidence; and

2. The Wills were sought to be impugned on the basis of undue influence and these claims against the 2018 Will and the Codicil were abandoned in closing submissions, while the claims against the 2019 Will and 2021 Will were unsuccessful. Further, these claims were unsupported and Mr Petith’s recovery of costs should be reduced to account for this serious and unsuccessful allegation of undue influence.

NSWTAG

18. The NSWTAG submitted that declarations concerning testamentary capacity or knowledge and approval, such as those sought by Mr Petith, are unnecessary in circumstances where a solemn form grant of probate will be ordered in relation to a copy of the 2019 Will. I accept this submission.

19. In relation to costs in the Probate Proceedings, the NSWTAG contends that its costs should be paid out of Gail’s estate on the indemnity basis, given its success on the primary case, the admission of the 2019 Will to probate, advanced at the hearing. The NSWTAG relies on its statutory entitlement to costs in support of this order: s 33(1) of the NSW Trustee and Guardian Act 2009 (NSW).

20. The NSWTAG submits that Mr Bone’s party/party costs and 80% of Mr Petith’s party/party costs, as agreed or assessed, should be paid out of Gail’s estate.

21. In support of this order, the NSWTAG also submitted that Mr Bone and Mr Petith propounded the will which was the most financially favourable to them, being the 2021 Will and the 2014 Will, respectively. Whilst there were reasonable grounds to challenge the 2021 Will, Mr Petith’s claims against and Mr Bone’s propounding of each of the other Wills delayed the preparation of the matter, as it resulted in the need for additional lay witness and expert evidence, and lengthened the duration of the hearing. The discount to Mr Petith’s costs is reflective of this additional time.

22. Against this, and Mr Bone’s similar submission, Mr Petith contends that the expert reports of Professor Watson, which suggested cognitive impairment from years of alcohol abuse and its consequences, formed a reasonable basis to challenge the 2019 Will, the Codicil, and the 2018 Will, which gave rise to claims of undue influence and questions surrounding testamentary capacity.

23. In relation to costs in the Provision Proceedings, the NSWTAG seeks an order that there be no order as to Mr Bone’s costs, to the intent that he bear his own costs of the Provision Proceedings, and that the NSWTAG’s costs be paid of Gail’s estate on the indemnity basis. Mr Bone does not oppose these orders.

Relevant principles as to costs

24. The principles relevant to the determination of costs were not in dispute.

25. The starting point is that costs follow the event: r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).

26. This rule equally applies and costs are ordered in favour of the successful party on a party/party basis in contested probate litigation: see Szabo v Battye (No 2) [2006] NSWSC 1392 at [4]-[7] and Zang v Middleton [2011] NSWSC 881 at [46].

27. However, Powell J in Re Estate of Hodges; Shorter v Hodges (1988) 14 NSWLR 698 (Re Estate of Hodges) at 709, noted that a number of exceptions to this general rule have been recognised, and identified two such exceptions as being:

1. where the testator has, or those interested in residue have, been the cause of the litigation, the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate;

2. if the circumstances led reasonably to an investigation in regard to the document propounded, the costs may be left to be borne by those who respectively incurred them: see, eg, Mitchell and Mitchell v Gard andKingwell (1863) 3 Sw & Tr 278; 164 ER 1280; Orton v Smith (1873) LR 3 P & D 23; Wilson v Bassil [1903] P 239; Spiers v English [1907] P 122; Kenny v Wilson; In the Estate of Holtam; Gillett v Rogers (1913) 108 LT 732.

28. As to undue influence, Nicholas J in Reginald Alfred Becker v Public Trustee of New South Wales [2006] NSWSC 1146 at [13] noted similar exceptions to the general principle above, stating:

[13]…Ordinarily, failure to establish an allegation of undue influence or fraud will be followed by condemnation in costs. In Re Cutcliffe’s Estate [1959] P 6 Hodson LJ said (p 21):

… The discretion of the court is always there, and the rules on which that discretion is exercised are there for the assistance of those who have to advise litigants before they embark on litigation, so that they may have some idea of the risks they run as to costs. It must surely be obvious to anyone who has studied the history of litigation in the Probate Division, notwithstanding the exceptions which are to be found in the books, that where pleas of undue influence and pleas of fraud are made, the probability, at any rate, if they are unsuccessfully made, is that the people who make such charges and fail will be condemned in the costs not only of that charge but of the whole action.

29. Further, at [15], Nicholas J noted that “an unsuccessful defendant may be relieved of paying costs if there were reasonable grounds for contesting the case on these issues”. It is not necessary for me to determine whether reasonable grounds existed in this case, where neither the NSWTAG nor Mr Bone seek an order that Mr Petith pay the portion of their costs in relation to undue influence, but instead seek a reduction of Mr Petith’s costs recoverable.

Determination

Final Orders

30. The principal dispute concerned whether the further declarations sought by Mr Petith should be made. I do not see the utility in making these declarations when the findings that the declarations seek to highlight were made clear in the Principal Judgment. The effective order is to admit a copy of the 2019 Will to probate: Telstra Corp Ltd v AAPT Ltd [1999] NSWSC 853 at [57].

Costs

31. Mr Bone and Mr Petith propounded, principally, the will which was most financially beneficial to them, and propounded each of the other Wills in the alternative. Neither has been successful in their principal case. In order to determine which of Gail’s wills should be admitted to probate it was necessary to have an understanding of Gail’s cognition, and its decline, over a period of time.

32. Neither Mr Bone or Mr Petith behaved unreasonably in advancing their positions or the manner in which the proceedings were conducted.

33. Mr Petith’s position in relation to the earlier wills was supported by the evidence of Professor Watson. The allegations of undue influence advanced by Mr Petith did not involve any significant factual issues beyond those relevant to the case of testamentary capacity.

34. Mr Bone’s position in relation to the 2021 Will was supported by the fact that the will was prepared by an experienced solicitor, Mr Lakos, who unfortunately passed away before the hearing.

35. In all of the circumstances the appropriate order as to the costs of Mr Petith and Mr Bone in the Probate Proceedings is that each should be paid out of the estate on the party/party basis.

Orders

36. In proceedings 2021/00364937, the Court orders that:

1. Probate in Solemn Form of a copy of the Will dated 13 December 2019 of the late Gail Margaret Thelen (“the deceased”), limited until the original or more authentic copy be proved, be granted to NSW Trustee & Guardian, substitute executor named in the Will.

2. That the proceedings be referred to the Registrar to complete the Grant.

3. The Second Further Amended Statement of Claim filed 9 December 2022 be dismissed.

4. The Amended First Cross-Claim filed 9 December 2022 otherwise be dismissed.

5. The Further Amended Second Cross-Claim filed 22 December 2022 otherwise be dismissed.

6. The costs of NSW Trustee and Guardian be paid out of the estate of the deceased on the indemnity basis.

7. The costs of Mr Bone, calculated on the party/party basis, be paid out of the estate of the deceased.

8. The costs of Mr Petith, calculated on the party/party basis, be paid out of the estate of the deceased.

37. In proceedings 2022/00118624, the Court orders that:

1. The Summons filed 26 April 2022 be dismissed.

2. There be no order as to the Plaintiff’s costs to the intent he bear his own costs of the proceedings.

3. The costs of the Defendant be paid out of the estate of the late Gail Margaret Thelen on the indemnity basis.

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Decision last updated: 20 December 2024