Photios v Photios

[2019] NSWCA 158

Court of Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

Photios v Photios [2019] NSWCA 158

Hearing dates:

28 May 2019

Date of orders:

27 June 2019

Decision date:

27 June 2019

Before:

Bell P at [1]
Gleeson JA at [99]
Leeming JA at [100]

Decision:

1.   Allow the appeal.

 

2.   Grant leave to amend the amended statement of cross-claim in the form of the proposed further amended statement of cross-claim that was the subject of the notice of motion before Rees J, subject to the following conditions:

 

a.   the Appellant pay the Respondent’s costs thrown away by the amendments;

 

b.   to the extent that the Respondent needs to reinterview any of the witnesses from whom a witness statement or affidavit has already been obtained and filed, the Appellant pay the Respondent’s costs of that exercise and the preparation of any further evidence consequent upon it;

 

c.   the Appellant consent to any application for expedition of the hearing of the trial

 

d.   the Appellant give to the Court and to the Respondent the undertakings in the form appended to these reasons; and

 

e.   the Appellant consent to any further mediation sought by the Respondent, whether before or after the Respondent has filed her evidence in response to the allegations contained in the further amended statement of cross-claim and the evidence of Dr Wijeratne.

 3.   Direct that the parties file submissions within 5 business days of these orders in relation to whether or not the Appellant should be required to pay the mediator’s costs of any further mediation as a condition of leave to amend.

Catchwords:

CIVIL PROCEDURE – refusal to allow amendment to challenge testamentary capacity on basis that amendment, if allowed, was doomed to fail – whether primary judge erred in concluding that claim was doomed to fail notwithstanding a finding that there was an arguable case of lack of testamentary capacity established – whether finding that proposed claim was doomed to fail was a discretionary decision or a finding of abuse of process – significance of unique public interest character of probate proceedings – meaning of “acquiescence” – absence of any real prejudice – appropriate conditions to be imposed on amendment

  SUCCESSION – grant of probate in common form in respect of a will – application to amend cross-claim to challenge grant on basis of lack of testamentary capacity – no caveat lodged – application to amend made at a time when case ready to be allocated a hearing date – relevant considerations – importance to be placed on ascertainment of true intention of the testator – significance of unique public interest character of probate proceedings – reasonably arguable case that testator lacked testamentary capacity at relevant time – whether application, if granted, doomed to fail – whether challenge to testamentary capacity was an abuse of process in the circumstances – consideration of In re Goode (1890) 11 LR(NSW) (Eq) 281

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 56
Trustee Act 1925 (NSW), ss 5, 93(3)
Uniform Civil Procedure Rules 2005 (NSW),
rr 14.18(2), 42.25

Cases Cited:

Adsett v Berlouis (1992) 37 FCR 201
Banks v Goodfellow (1870) LR 5 QB 549
Boivard v Frost [2009] NSWSC 917
Bramston v Morris (Supreme Court (NSW), Powell J, 20 August 1993, unrep)
Byrnes v Kendall (2011) 243 CLR 253; [2011] HCA 26
Carr v Homersham (2018) 97 NSWLR 328; [2018] NSWCA 65
Dickman v Holley; Estate of Simpson [2013] NSWSC 18
Drummond v Drummond [1999] NSWSC 923
Estate Cockell; Cole v Paisley [2016] NSWSC 349
Estate Kouvakas; Lucas v Konakas [2014] NSWSC 786
In re Flynn [1982] 1 WLR 310
In re Goode (1890) 11 LR(NSW) (Eq) 281
Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11
Middlebrook v Middlebrook (1963) 26 ALJR 216
Mohan v Broughton [1900] P 56
Moyle v Moyle (Supreme Court (NSW), Santow J, 9 April 1998, unrep)
Murakami v Wiryadi [2010] NSWCA 7; 268 ALR 377
Neilson v Public Trustee (Supreme Court (NSW), 8 May 1992, unrep)
Nowell v Palmer (1993) 32 NSWLR 574
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197; [1988] HCA 32
Orr v Ford (1989) 167 CLR 316; [1989] HCA 4
Perpetual Trustee Co v Baker [1999] NSWCA 244
Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457; [1981] HCA 7
Poletti v Jones [2015] NSWCA 107
PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48
Priestley v Priestley (No 2) [2017] NSWCA 212
Rasheed v Rasheed (1999) 73 SASR 346; [1999] SASC 88
Re Beddoe; Downes v Cottam [1893] 1 Ch 547
Re Coghlan (deceased); Briscoe v Broughton [1948] 2 All ER 68; [1948] 5 WLUK 38
Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491; [2002] HCA 10
Shorten v Shorten (No 2) [2003] NSWCA 60
Suvaal v Cessnock City Council [2003] HCA 41; 200 ALR 1
Tobin v Ezekiel (2012) 83 NSWLR 757; [2012] NSWCA 285
Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; [1990] HCA 55

Texts Cited:

JD Heydon, MJ Leeming, PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2014, LexisNexis Butterworths)

Category:

Principal judgment

Parties:

David Peter Photios (Appellant)

  Lana Clarice Photios (in her capacity as Executor of the Estate of Henry Basil Photios) (Respondent)

Representation:

Counsel:
G Sirtes SC, M Sneddon (Appellant)
DH Murr SC, JA Trebeck (Respondent)

  Solicitors:   
Bartier Perry (Appellant)
Beswick Lynch (Respondent)

File Number(s):

2018/318902

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Equity Division

Citation:

[2018] NSWSC 1414

Date of Decision:

20 September 2018

Before:

Rees J

File Number(s):

2016/268776

HEADNOTE

[This headnote is not to be read as part of the judgment]

Henry Basil Photios (the Deceased) died having made a number of wills. The Appellant, Mr David Photios, was the son of the Deceased and the Respondent, Mrs Lana Photios (Mrs Photios), was the second wife of the Deceased and the step-mother of the Appellant. A grant of probate in common form was made in October 2016 in respect of the Deceased’s “2012 Will”. Shortly thereafter, the Appellant filed a cross-claim seeking a declaration that the Deceased’s estate held the Deceased’s one-third interest in a property on trust for him. In April 2018, by a proposed further amended statement of cross-claim, the Appellant sought an order that the grant of probate be revoked and that a grant of probate in solemn form of the Deceased’s “2010 Will” be made. Relevantly, the 2010 Will gave the Deceased’s one-third interest in the property to the Appellant, while under the 2012 Will that interest formed part of the residuary estate to which Mrs Photios was the sole beneficiary.

The proposed further amended statement of cross-claim sought to allege that the 2010 Will was the Deceased’s last valid will and testament and that, as at the time of his executing the 2012 Will, the Deceased lacked testamentary capacity. The Appellant relied upon a medical report expressing an opinion to that effect. The report was based on a review of medical records of the Deceased subpoenaed during the course of the proceedings.

The primary judge accepted that the report indicated that there was a prima facie case that the Deceased lacked testamentary capacity when he executed the 2012 Will but that he had the requisite capacity at the time of executing the 2010 Will. The primary judge held, however, that notwithstanding that prima facie case the Court should refuse to revoke the grant of probate in common form because the Appellant was aware of the “facts, matters and circumstances” upon which he sought to base his claim of lack of testamentary capacity and had acquiesced in the grant of probate of the 2012 Will, made no attempt to have it revoked, prosecuted proceedings on the basis that it was the relevant will and now “for apparently tactical reasons, ... [sought] to agitate an issue of which he [had] been apprised for more than five years”. Whilst accepting that undertakings proffered by the Appellant could cure certain prejudice that might be occasioned by a revocation of the grant of probate, the primary judge held that in light of the added cost and time associated with allowing the application she would refuse leave to amend as she considered the additional claims were “bound to fail”.

The issues on appeal were:

1.   whether, having accepted that the Appellant had a prima facie case of lack of testamentary capacity, the primary judge erred in refusing leave and:

a.   holding that the proposed amendment was bound to fail;

b.   seeking to determine contested facts in an interlocutory application; and

c.   finding that the Appellant wished to agitate the issue for “apparently tactical reasons”; and

2.   whether the primary judge erred in finding that the Appellant was prevented from filing the proposed further amended statement of cross-claim by reason of “acquiescence”.

The Court (Bell P, Gleeson and Leeming JJA agreeing) held, allowing the appeal:

1. Where evidence exists to support an arguable case, an application to revoke a grant of probate in common form should only be refused where its prosecution would amount to an abuse of process: [40], [42]-[52].

2. It was not open to her Honour to make a finding that the amendment, if granted, would be bound to fail: [74].

3. The primary judge erred in characterising the Appellant as having sat on the “facts, matters and circumstances” upon which the claim concerning testamentary capacity was based for “more than five years”. The records of the Appellant’s early concerns went to contractual, not testamentary, capacity and it was not unreasonable, without access to relevant medical records and not being medically qualified, to defer making allegations as to testamentary capacity until an expert opinion had been obtained based on the medical records: [55]-[63].

4. The delay in making the application to amend was regrettable but not egregious. The primary judge erred insofar as her statement that the Appellant was seeking to agitate the issue for “apparently tactical reasons” was intended to convey that the application was deliberately late and designed to delay the resolution of the proceedings. If this was what was intended, it needed to have been put to the Appellant and was not warranted merely by the Appellant’s counsel accepting that the amendment was “add[ing] another string to [the Appellant’s] bow”: [64]-[71].

5. The prejudice in added costs was unlikely to impact anyone other than the Appellant in circumstances where the contest was in truth between the Appellant and Mrs Photios and, by virtue of her position as executor, Mrs Photios was likely to be protected whether she won or lost: [73].

6. Re-exercising the discretion, with reference to the prima facie evidence of a lack of testamentary capacity, the public interest in giving effect to the competent wishes and intentions of the Deceased and case management considerations, leave to amend ought to be granted, subject to certain conditions: [76]-[83].

7. No question having been raised about the propriety of her conduct in her role as executor, Mrs Photios should be entitled to an indemnity out of the estate for her own costs and the costs she is obliged to pay the Appellant on account of his success in the appeal: [86]-[93].

JUDGMENT

1. BELL P:

Introduction

2. This is an appeal brought by way of leave from a decision of Rees J to refuse the Appellant, Mr David Peter Photios, leave to amend his amended statement of cross-claim in proceedings which had been commenced in the Equity Division on 7 September 2016 on behalf of his father, Henry Basil Photios (the Deceased). The Deceased died some ten days after the commencement of proceedings and a grant of probate in common form was made on 26 October 2016 in respect of the Deceased’s will of 11 December 2012 (the 2012 Will).

3. The proceedings were continued by the Respondent, Mrs Lana Clarice Photios (Mrs Photios), in her capacity as executor of the Deceased’s estate.

4. Mrs Photios was the second wife of the Deceased and the step-mother of the Appellant. She had been married to the Deceased for some 36 years at the time of his death on 17 September 2016.

5. Shortly after the grant of probate, the Appellant filed a cross-claim seeking a declaration that the estate held the Deceased’s one-third interest in a property at Druitt Street, Sydney (the Druitt Street Property) on trust for him. It was from the Druitt Street Property that the family business, Photios Bros Pty Ltd (Photios Bros), in which the Appellant had worked for many years with his late father, operated.

6. By a proposed further amended statement of cross-claim, the Appellant sought an order that the grant of probate be revoked and that a grant of probate in solemn form of the Deceased’s will dated 12 August 2010 (the 2010 Will) be granted to him.

7. What underlies the litigation is the fact that, in the 2010 Will, the Deceased’s one-third share in the Druitt Street Property was left to the Appellant whereas the 2012 Will removed this bequest and the one-third share was to form part of the residuary estate of which Mrs Photios was the sole beneficiary. The value of that one-third share was $1,350,000, the Druitt Street Property having been sold for $4,050,000 in December 2016. The Court assumes that the proceeds of sale representing the one-third share have been placed in an interest bearing bank account.

The application to amend

8. The proposed further amended statement of cross-claim sought to allege that the 2010 Will was the Deceased’s last valid will and testament and that the Deceased did not have testamentary capacity at the time of execution of the 2012 Will such that the 2016 grant of probate in common form ought to be revoked. It was also sought to be alleged, in the alternative, that the 2012 Will was “ineffectual” by reason of the Deceased being unable, as at the date of its execution, to know and approve the contents of his will. Particulars given of this allegation included that it was “subject to suspicious circumstances, going to knowledge and approval, by reason of it being wholly inconsistent with various … [enumerated] preceding wills and [a preceding] codicil”.

9. In support of his application further to amend the amended statement of cross-claim, the Appellant read and relied upon an affidavit of Dr Chanaka Wijeratne (Dr Wijeratne) who expressed the opinion that, whilst as at December 2012, the Deceased was capable of understanding the nature and effect of making a will, he did not otherwise meet the criteria in Banks v Goodfellow (1870) LR 5 QB 549 and, as such, lacked testamentary capacity at that time. In Banks v Goodfellow, Cockburn CJ (at 565), in a passage most recently cited in this Court in Carr v Homersham (2018) 97 NSWLR 328; [2018] NSWCA 65, said that:

“It is essential to the exercise of such a power that a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties – that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.”

10. Dr Wijeratne’s opinion was based on his review of some three lever-arch folders of medical records of the Deceased which had been largely, if not entirely, subpoenaed by the Appellant between February and March 2018.

11. On the hearing of the application to amend, the Appellant made clear that he would not be seeking to file or rely on any further evidence in chief in addition to that before the Court on the motion in the event that leave to amend were granted.

12. The primary judge accepted that Dr Wijeratne’s report indicated that there was a prima facie case that the Deceased did not have testamentary capacity when he executed the 2012 Will but that he did have requisite capacity at the time of the execution of the 2010 Will. As such, her Honour concluded (at [89]) that the Appellant had a reasonably arguable case that the Deceased lacked capacity to make the 2012 Will and that the 2010 Will should stand as the Deceased’s last will and testament. Her Honour also noted (at [88]) that there was prima facie evidence before the Court that pointed in the other direction.

13. Notwithstanding this conclusion, her Honour dismissed the application for leave to amend the amended statement of cross-claim. The terms and basis upon which she did so are critical to this appeal. Her Honour’s conclusion was expressed at [105]-[108] as follows:

“105   Adopting the language of Powell J in Bramston v Morris, notwithstanding a prima facie case of lack of testamentary capacity, other matters dictate that, in the exercise of its discretion, the Court should refuse to revoke the common form grant, those matters being that, despite the fact that at all material times [the Appellant] was aware of the facts, matters and circumstances upon which he now seeks to base a claim of lack of testamentary capacity, he stood by and acquiesced in the grant of probate in common form of the 2012 Will, made no attempt until recently to have it revoked and, on the contrary, prosecuted these proceedings upon the basis that the 2012 Will was the relevant Will.

106   At a late stage in these proceedings, for apparently tactical reasons, [the Appellant] now seeks to agitate an issue of which he has been apprised for more than five years.

107   The prejudice caused in relation to the distributions made under Henry’s 2012 Will, and any claim which [Mrs Photios] may wish to make under the Succession Act 2006, can be largely cured by the undertakings which [the Appellant] has proffered at my request. But the prejudice extends beyond this. Introducing this issue in the proceedings at a time when evidence is otherwise complete will add significantly to the cost of the proceedings and the time before the proceedings are finally determined. These costs will further deplete the remaining Estate.

108   As such, I refuse leave to further amend the Cross Claim as I consider the additional claims are bound to fail, whether prosecuted in the Probate Division or in these proceedings.” (Emphasis added)

Her Honour’s reference to the Probate Division is to be understood as a reference to the Probate List within the Equity Division of the Court.

14. In order fully to understand the primary judge’s conclusion, it is necessary to consider in a little more detail the judgment at first instance.

The judgment at first instance

15. Her Honour set out the factual background to the proceedings which it is not necessary to reproduce in full for the purposes of this appeal but the following salient points can be noted:

1. the family business had been conducted by the Deceased, his own father and his brother Con at the Druitt Street Property for many years;

2. the Appellant worked with his father, the Deceased, for many years in the family business;

3. Following his death in 2012, Con’s interests in both the business and the Druitt Street Property passed to the Appellant and the Deceased;

4. the Appellant became sole director of the family company in 2007;

5. the 2010 Will was the thirteenth will the Deceased had made since 1998;

6. in April 2011, the Deceased was admitted to Macquarie University Hospital where a craniotomy was performed;

7. in March and April 2012, the Deceased was again admitted to hospital following an acute stroke, became wheelchair bound and was diagnosed with vascular dementia;

8. following that hospital stay, the Deceased was discharged to a residential aged care facility;

9. in June 2012, the Deceased was admitted to Royal North Shore Hospital after a fall, was prescribed various anti-depressants and was re-admitted following behavioural disturbances with medical records suggesting that he was experiencing hallucinations (apparently attributable to the anti-depressants);

1. immediately prior to execution of the 2012 Will, the Deceased’s solicitor obtained an opinion from the Deceased’s GP to the effect that he had mental capacity to understand the nature and effect of a will;

2. various second-hand communications from December 2012 and for about a year thereafter attributed to the Appellant questions and doubts including “serious doubts” about the Deceased’s mental capacity;

3. in December 2013, the Appellant applied to New South Wales Civil and Administrative Tribunal (NCAT) for guardianship and financial management orders in respect of the Deceased. Only the latter of these was granted; and

4. in declining to make a guardianship order NCAT held:

“Particularly in view of the reports from Dr Ogle, the Tribunal was clear that [the Deceased] does have a significant cognitive impairment and physical disabilities that lead to considerable support needs. Dr Ogle’s assessment of [the Deceased’s] capacity to make decisions was mainly focused on financial issues. The Tribunal did not form a clear view about whether [the Deceased] lacks capacity to make important life decisions and is partially incapable of managing his person since, in any event, it would not have been satisfied that it should make a guardianship order”.

16. Following her recitation of the factual background, the primary judge set out the history of the proceedings which were commenced on 7 September 2016 (10 days before the death of the Deceased) by way of a summons filed by a financial manager who had been appointed as tutor for the Deceased by NCAT on 13 August 2014 and a superannuation fund in which the Deceased had a half share and which itself owned a separate one-third share of the Druitt Street Property (the remaining one-third share being owned by the Appellant).

17. By that summons, an order was sought against the current Appellant for a judicial sale of the Druitt Street Property. Her Honour described the course of litigation to August 2017 as follows:

“45   On 7 October 2016, the Summons returned before Darke J. [The Appellant] was represented. The Court noted that [the Deceased] had died and that [Mrs Photios] would be lodging an application for probate of [the Deceased’s] Will made on 11 December 2012 shortly. [The Appellant] was directed to file any Cross Claim by 28 October 2016.

46   On 26 October 2016 a grant of probate was made in respect of [the Deceased’s] Will of 11 December 2012. The grant was in common form. In accordance with the Will, [Mrs Photios] was appointed executor. [The Appellant] did not lodge a caveat against a grant of probate.

47   On 28 October 2016, [the Appellant] filed a Cross Claim seeking a declaration that the Estate held [the Deceased’s] one-third interest in the Druitt Street [P]roperty on trust for [the Appellant]”.

Interpolating here, in its original form, the cross-claim was founded solely on an argument based on promissory estoppel, the promises relevantly being that from in or about 1988 until late 2012, the Deceased represented to the Appellant on many occasions that he would devise his one-third interest in the Druitt Street Property to the Appellant in return for, inter alia, the Appellant’s efforts and conduct in working in and managing the Photios Bros business conducted out of the Druitt Street Property and in which the Deceased had a continuing interest.

18. Returning to the litigation chronology, her Honour continued:

“48   On 4 November 2016, the matter came before Darke J again. [The Appellant] was represented. His Honour noted that probate of [the Deceased’s] Will of 11 December 2012 had been granted to [Mrs Photios]. The parties agreed to proceed to sell the Druitt Street [P]roperty, with a reserve set of $3 million. The proceeds of sale were to be paid to the parties forthwith, save for the Estate’s one-third share which [Mrs Photios] agreed not to distribute without giving 21 days’ notice.

…

50   On 8 December 2016, the Druitt Street [P]roperty was sold at auction for $4,050,000, with completion to take place in March 2017.

51   In February 2017, directions were made for the service of evidence in respect of the Cross Claim. By August 2017, the evidence had been filed. The matter was referred to mediation, which was unsuccessful.”

19. Between November 2017 and early February 2018, there were a number of interlocutory applications made in relation to the distribution of relevant portions of the proceeds of sale of the Druitt Street Property, the payment of legal fees and the regularisation of the operation of the superannuation fund’s bank accounts. In the course of these various applications, the parties ultimately reached an agreement for the partial distribution of the estate by Mrs Photios and for the payment of past legal costs. Consent orders to that effect were made on 2 February 2018 by Ward CJ in Eq.

20. The primary judge noted (at [58]) a submission made on behalf of Mrs Photios that, by consenting to the payment of legacies under the 2012 Will, the Appellant made an election not to apply for probate of the 2010 Will. Her Honour observed that the consent orders made on February 2018 were consistent only with an acceptance by the Appellant that the 2012 Will was valid and noted that there was no suggestion by the Appellant’s counsel in any of the interlocutory hearings which led to those consent orders that the Deceased lacked testamentary capacity to make the 2012 Will.

21. Although in making the consent orders referred to in [19] above the Court noted that the Appellant’s consent to the distributions contemplated by the orders was “without admission”, at that stage the Appellant’s only claim was one based upon promissory estoppel; there was no pleaded issue as to want of testamentary capacity at that point in time.

22. The primary judge also noted at [60] of her judgment that both the original cross-claim and amended statement of cross-claim (which had been filed in February 2018 to add a claim in contract based upon the same promises relied upon to sustain the promissory estoppel claim) assumed that the Deceased had capacity until he died. Her Honour referred to para 11 in both iterations of the cross-claim which pleaded that:

“From the date the Promises were made until his death or, alternatively until he lost mental capacity, the [D]eceased was aware that the [Appellant] was relying on the Promises and acting to his detriment in reliance on the Promises”. (Emphasis added)

Interpolating again, the alternative plea contained in this paragraph to which emphasis has been added does not appear to support the primary judge’s statement that the cross-claim and amended statement of cross-claim assumed that the Deceased had capacity until he died.

23. By 11 April 2018, when the matter was listed for directions for the allocation of a hearing date, some 19 affidavits had been filed by or on behalf of Mrs Photios and the Appellant in the substantive proceedings. On that occasion, the Appellant’s counsel informed the Court that he wished further to amend the amended statement of cross-claim to contest the validity of the 2012 Will on the basis of lack of testamentary capacity.

24. Her Honour set the context for her consideration of the application for leave further to amend the cross-claim by reviewing the principles relevant to the revocation of a grant of probate. She did so by reference to the decisions in Bramston v Morris (Supreme Court (NSW), Powell J, 20 August 1993, unrep); Dickman v Holley; Estate of Simpson [2013] NSWSC 18 (Dickman); Estate Kouvakas; Lucas v Konakas [2014] NSWSC 786 (Kouvakas) and Estate Cockell; Cole v Paisley [2016] NSWSC 349. Her Honour noted that any revocation of the grant of probate was discretionary, with the discretion to be exercised by reference to “all the circumstances of the case”, citing Bramston v Morris and Kouvakas.

25. The primary judge (at [83]) noted, by way of summary, that in deciding whether to revoke a grant of probate, the Court may consider “amongst other things”:

“(a)   whether there is a reasonably arguable case in respect of the testator’s testamentary capacity at the relevant times,

(b)   whether there has been delay, and any explanation for it,

(c)   whether the applicant has acquiesced in the grant already made,

(d)   whether the delay has occasioned prejudice such that it would be inequitable to pursue the claim, such as the loss of evidence;

(e)   whether there is utility in revoking the grant, and

(f)   whether, having regard to the procedural history of the matter and the purposive character of the probate jurisdiction, it is consistent with the due and proper administration of the estate and the due administration of justice.”

26. In terms of these considerations, it has already been noted (at [12] above) that the primary judge accepted, by reference to Dr Wijeratne’s report, that the Appellant had a reasonably arguable case that the Deceased lacked capacity to make the 2012 Will and that the 2010 Will should stand as the last will. Her Honour then moved to consideration of the topics of delay, acquiescence, prejudice and case management.

27. As to delay, the primary judge rejected an explanation which had been put on behalf of the Appellant to the effect that it was only as a result of an affidavit filed by the estate’s solicitor in September 2017 that he was prompted to explore the matter of his late father’s testamentary capacity. In rejecting that explanation, her Honour said (at [90]) that:

“[The Appellant] faintly suggested that it was an affidavit filed by Mr Lynch, sworn on 6 September 2017, which prompted [the Appellant] to explore his concerns as to his father’s testamentary capacity, issuing 17 subpoenas to hospitals, treating doctors, [the Deceased’s] nursing home and the like. To the extent that [the Appellant] thereby sought to explain his delay, I do not accept the explanation.”

28. At [93], the primary judge acknowledged that the absence of explanation for the delay “tells against granting leave to amend to revoke a grant of probate” but went on to note that “features beyond mere delay are usually needed to bar revocation of a grant”. As shall be seen below, that observation was entirely correct.

29. On the topic of acquiescence, her Honour simply noted that in October 2016 (the date of the grant of probate in common form), the Appellant acquiesced in the grant of probate of the 2012 Will, did not lodge any caveat at the time of the application for the grant of probate and conducted the proceedings up until April 2018 on the premise that that 2012 Will was valid. This aspect of her Honour’s judgment appears to be based in part at least upon [60] of the judgment which has been referred to at [22] above and which may be slightly problematic for the reason there stated.

30. On the topic of prejudice, her Honour noted (at [95]) that three items of prejudice were relied upon by Mrs Photios.

31. The first two items − the loss of an ability to bring a family provision application which was out of time and a potential exposure to liability for the partial administration of the estate by the payment of certain pecuniary legacies − were accommodated or neutralised by undertakings proffered by the Appellant. The undertakings continue to be proffered for the purposes of this appeal and are set out in Appendix A to these reasons.

32. The third item of prejudice was said to be the additional “stress and strain” which would be occasioned by the protraction of the litigation in the event that leave to amend were granted. It was put, properly and correctly, that, if leave to amend were granted, the length of hearing would be extended and the ultimate resolution of the dispute delayed. Against this, her Honour noted that Mrs Photios was “in good health and working part-time” and concluded in respect of this item of prejudice (at [98]) that the stress and expense of the litigation was a burden on both Mrs Photios and the Appellant. She described the consideration as “real but not decisive”.

33. Under the heading “Case Management Considerations”, her Honour held (at [103]-[104]) that:

“If leave to amend is granted, the final determination of the Cross Claim will be delayed. The parties will need to prepare further evidence. The Court cannot allocate a hearing date until the scope of the further evidence is known, and thus the time required to hear the matter. As the hearing will require more hearing days, the parties may have to wait longer for a hearing to be allocated to them. The parties will incur additional costs in the preparation of further evidence and participation in a longer trial.

Against this, if leave is refused to amend the Cross Claim for case management considerations alone, [the Appellant] would be entitled to commence separate proceedings in the Probate Division to revoke the grant of probate and prove the earlier Will. This would itself potentially delay these proceedings, indeed, such probate proceedings might need to be determined before these proceedings. The position is different, I think, if leave to amend is refused on the basis that an application to revoke the grant of probate is doomed to fail.” (Emphasis added)

34. It will be recalled that in [108] of her reasons, reproduced at [13] above, the primary judge refused leave on the basis that the additional claims sought to be introduced by the amendment were “bound to fail”.

Grounds of appeal

35. The first ground of appeal was to the effect that, having accepted that the Appellant had a prima facie case of lack of testamentary capacity, the primary judge erred in refusing leave to file the further amended statement of cross-claim and:

1. holding that the proposed amendment was bound to fail;

2. seeking to enter into the arena of determining contested facts and evidence in the context of an interlocutory application despite there being no cross-examination, including (at [90]) making an adverse finding against the Appellant; and

3. finding “[a]t a late stage in these proceedings, for apparently tactical reasons, [the Appellant] now seeks to agitate an issue of which he has been apprised for more than five years.”

This last subparagraph is a reference to [106] of the judgment, reproduced at [13] above.

36. It was also put that the primary judge erred in finding that the Appellant was prevented from filing the proposed further amended statement of cross-claim “by reason of acquiescence” and that the primary judge’s brief holding on acquiescence was “devoid of any or any adequate reasoning process”.

Consideration

37. As senior counsel for Mrs Photios observed, two discretions were in play in the application before the primary judge. First, of course, the discretion whether or not to grant leave to amend. That is a discretion to be exercised in respect of a matter of “practice and procedure” which would ordinarily attract the familiar injunction against over-ready appellate intervention associated with decisions such as Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457; [1981] HCA 7; see also PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48.

38. But the second discretion in play in the proceedings before the primary judge was the discretion that her Honour held attaches to a decision to revoke a grant of probate in common form. As [105] of the primary judge’s reasons (reproduced at [13] above) made plain, her Honour engaged in a notional exercise of this discretion as a step towards her ultimate conclusion that the case for revocation of the grant of probate in common form based on the Deceased’s alleged lack of testamentary capacity as at 2012 was “bound to fail”. This takes the case out of the ordinary and no doubt was at least part of the reason why leave to appeal was granted on 22 February 2019 by Leeming and Brereton JJA.

39. Given that the proposed amendment, if granted, would on her Honour’s own analysis of the authorities have called for the exercise of a discretionary judgment (see [24]-[25] above), the primary judge’s decision that the proposed amendment was futile as it was bound or doomed to fail necessarily entailed the finding that no judge, acting reasonably, could have reached the conclusion that the grant of probate in common form in respect of the 2012 Will should be revoked. That is a very large conclusion which, with the greatest respect to the primary judge, I do not consider can be sustained especially in view of her Honour’s finding that there was a reasonably arguable case based on Dr Wijeratne’s evidence that there was a relevant lack of testamentary capacity.

40. As shall be seen, where such evidence exists to support an arguable case, an application to revoke a grant of probate in common form will only be bound or doomed to fail where the prosecution of that application amounts to an abuse of process. A finding of abuse of process is exceptional, not lightly to be made and entails more than simply the weighing of discretionary considerations. As Spigelman CJ observed in Murakami v Wiryadi [2010] NSWCA 7; 268 ALR 377 at [33] “the word ‘discretion’ is often adopted in circumstances where the word ‘judgment’ would be more appropriate”. To the extent that the primary judge’s notional decision that the application to revoke the grant would be bound to fail did involve an exercise of discretion as opposed to an evaluative judgment that to permit its prosecution would be an abuse of process, that exercise was, with respect, infected by the errors identified in the notice of appeal and considered at [55]ff below, following a discussion of relevant authorities.

Relevant authorities

41. To assess the correctness of the primary judge’s conclusion that the Appellant’s proposed amended claim based upon lack of testamentary capacity was bound to fail, it is necessary to consider the principles and authorities applicable to such an analysis in the context of an application to revoke a grant of probate in common form, bearing in mind that such a grant is inherently revocable by a probate court: Tobin v Ezekiel (2012) 83 NSWLR 757; [2012] NSWCA 285 at [8].

42. Where, as her Honour found, a party has a reasonably arguable case, such a party will ordinarily only be prevented from bringing it if to do so would amount to an abuse of process. This is so both as a matter of general law and in the context of authorities relating to the revocation of a grant of probate in common form.

43. In the context of the general law, Sir Gerard Brennan referred to the duty of courts as being to exercise jurisdiction which is “regularly invoked unless the invocation of the jurisdiction is oppressive, vexatious or otherwise an abuse of process”: Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 at 238; [1988] HCA 32 (Oceanic Sun). In the same case, Deane J spoke of the prima facie right of a claimant to insist upon the exercise of competent jurisdiction, regularly invoked, with this prima facie right not to be “lightly displaced or denied”: at 243; see also at 265 per Gaudron J. All three judges held that proceedings should only be prevented from being heard in the Supreme Court of New South Wales where they were vexatious or oppressive or amounted to an abuse of process.

44. The description of when proceedings will be vexatious or oppressive given by Deane J in Oceanic Sun has been adopted in later decisions of the High Court where those terms have been equated with abuse of process: see, for example, Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; [1990] HCA 55; Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491; [2002] HCA 10. Deane J relevantly said (at 247) that “‘oppressive’ should, in this context, be understood as meaning seriously and unfairly burdensome, prejudicial or damaging while ‘vexatious’ should be understood as meaning productive of serious and unjustified trouble and harassment.” It was perhaps no coincidence that in Orr v Ford (1989) 167 CLR 316 at 341; [1989] HCA 4 (Orr v Ford), Deane J used the language of “serious and unfair prejudice” as that which was necessary to constitute “gross laches”. Earlier in his reasons (at 338), he had noted that the chameleon-like expression “acquiescence” was sometimes used in this sense.

41. In the context of authorities relating to the revocation of a grant of probate in common form, in Bramston v Morris,Powell J (as he then was) having held that, unlike the present case, there was insufficient evidence even to sustain a prima facie case of lack of testamentary capacity, said that:

“[E]ven if I had been of a contrary view, the matters to which I refer below, in my view would dictate that, as a matter of discretion, the Court should refuse to revoke the common form grant, those matters being: a. despite the fact that, at all material times, both Mrs Naple and Mr Naple would have been aware of the facts matters and circumstances upon which they were later to seek to base a claim of lack of testamentary capacity in May 1985, they sought to have propounded as valid the Will said to have been made in May 1986; b. when, for some reason, that application was abandoned, no attempt was made by Mrs Naple, or on her behalf, to oppose the making of the common form grant despite the fact that Mrs Naple and Mr Naple were clearly aware that it was the Plaintiffs' intention to obtain a grant in respect of the May 1985 Will, c. despite the making of the common form grant, no attempt was then made by, or on behalf of, Mrs. Naple to have it revoked, on the contrary, as I have already recorded, the proceedings under the FP Act were commenced, and prosecuted, upon the basis that, because of the terms of the May 1985 Will, of which the Defendants to those proceedings had obtained Probate, Mrs Naple had been left without adequate provision for her maintenance education and advancement in life. d. not only were those proceedings compromised on the terms which I have recorded above, but Mrs Naple and her children received the fruits of that compromise, albeit that so much of the compromise as was received by Mrs Naple appears since to have been dissipated, but whether by Mrs Naple or Mr Naple I am unable to say; e. the attempt, now, to have the common form grant revoked notwithstanding these matters, in my view, constitutes an abuse of process.” (Emphasis added)

46. Justice Powell’s express use of the language of “abuse of process” is instructive, in my opinion. He used similar terminology in his decision in Neilson v Public Trustee (Supreme Court (NSW), 8 May 1992, unrep). In Re Coghlan (deceased); Briscoe v Broughton [1948] 2 All ER 68; [1948] 5 WLUK 38, the English Court of Appeal also used the language of vexation and abuse of process to assess whether an arguable claim to revoke a grant of letters of administration issued more than 54 years earlier should nevertheless be struck out in limine. It was not. Delivering the leading judgment, Tucker LJ said (at 73) that the jurisdiction to dismiss in limine was one to be exercised sparingly and “then only in exceptional and clear cases”. See also Mohan v Broughton [1900] P 56 at 58; In re Flynn [1982] 1 WLR 310.

47. Rasheed v Rasheed (1999) 73 SASR 346; [1999] SASC 88 is a decision of the Full Court of the Supreme Court of South Australia in which a valuable survey of the authorities was undertaken by Duggan J. His Honour concluded (at [63]) that:

“It follows from these authorities that the court has power to dismiss an action for revocation of probate if the pursuit of the application would amount to an abuse of the process of the court. The authorities suggest that mere delay is insufficient, but that a case for abuse of process may be made out if the delay exists in conjunction with other circumstances which make it unjust for the case to proceed. It must also be acknowledged that summary dismissal is exceptional and care must be taken before granting such an application.”

48. The high bar which the test of abuse of process sets accords with the decision of the majority of the Full Court of the Supreme Court of New South Wales in In re Goode (1890) 11 LR(NSW) (Eq) 281 to which Powell J in Bramston v Morris and Duggan J in Rasheed v Rasheed referred. In In re Goode, Innes J, with whom Stephen J agreed, held at 287-288:

"If there had been no affidavits on behalf of the executors, I, for one, would have been prepared to say that the lapse of time, even though unexplained, would not have been sufficient to bar the applicants' right to have the will proved in solemn form. In my opinion, the cases show that lapse of time, short of thirty years, is in itself no bar, but that it may be a bar, taken in conjunction with other circumstances, and that the onus lies upon the persons who oppose the application of shewing that there are such other circumstances. The applicants in this case knew that probate had been granted in common form, and have lain by for some nine years, and if these were the only facts before us, I do not think that the Court could refuse the application or even call upon the applicants to explain their delay".

49. His Honour held that affidavits that had been filed by the executors set out facts which required the applicants to explain their delay, but that subsequent affidavits filed provided a satisfactory or at least a sufficient answer. The lapse of time in In re Goode between the grant of probate and the application to revoke it was nine years. At first instance, Manning J had said that “lapse of time per se [was] no bar” but refused the application on the basis that it would be “unjust to the persons, who have for ten years had the benefit of the will to allow the matter to be opened up”. The concern, then, was potential third-party prejudice, but even the existence of such prejudice did not appear to loom large on appeal. Justice Innes’ judgment is significant also insofar as it suggests that “lying by” in the knowledge of a grant of probate without more will not be disqualifying.

50. In the course of argument, Mr Sirtes SC, who appeared for the Appellant, submitted that there should be particular reluctance to prevent a challenge to a grant of probate in common form by reason of what Lindsay J had described in Kouvakas at [115] as the “unique public interest character of probate proceedings and the subject matter of those proceedings, including the Court's concern to give effect to the testamentary intentions of deceased persons and to protect the interests of persons not present before the Court.” Lindsay J returned to this point at [304]-[306]:

“304   It would be a vain effort, and an imprudent one, to endeavour, by emphatic statements, to constrain the Court's discretionary power to revoke a grant. There is, in the administration of justice generally and in the administration of estates, a need for principled flexibility in decision-making.

305   The best that can be done is, perhaps, to recognise that: (a) all decisions about the revocation of grants should be made with the purpose served by the probate jurisdiction in mind; and (b) insofar as judicial decision-making may be assisted by reference to precedents, patterns of decision-making may, from time to time, be found in earlier cases.

306   On a search for such patterns there are some constants. Chief amongst these are respect for the autonomy of the person whose estate falls for consideration, and the necessity to maintain the integrity of the Court's processes.”

51. The decision of In re Goode which countenanced the revisiting of the grant of probate so long after the initial grant may be seen as consistent with this approach and, in particular, respect for the autonomy of the Deceased.

52. Whilst every case necessarily will turn on its own facts, and one cannot simply compare the passages of time before an initial grant and subsequent application for revocation in the case law, the decision in In re Goode arguably holds particular precedential value in this Court, it being a decision of its predecessor, the Full Court of the Supreme Court of New South Wales. That having been said, the procedural context in which In re Goode was decided pre-dated the introduction of s 56 of the Civil Procedure Act2005 (NSW) and more contemporary notions of case management which may bear upon an analysis of abuse of process.

53. Before leaving a consideration of the authorities, it is necessary to consider briefly the concept of acquiescence, this being one of the discretionary considerations identified as relevant by the primary judge. “Acquiescence” is an elusive and somewhat problematic legal term as Deane J’s detailed consideration of it in Orr v Ford at 337-342 illustrates. It has been used in many ways, and is often invoked without a clear identification of the way in which it is being used in a particular case. The current authors of Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2014, LexisNexis Butterworths) have removed it from the heading to Chapter 38 of their text which was formerly styled “Laches and Acquiescence”, noting (at [38-015]) that it is a term that “adds little besides confusion” and has been subject to “considerable criticism”.

54. In Byrnes v Kendall (2011) 243 CLR 253; [2011] HCA 26, Gummow and Hayne JJ said (at [79]) that acquiescence was “best understood as requiring calculated (that is, deliberate and informed) inaction by [the appellant] or standing by, which encouraged [the respondent] reasonably to believe that [the respondent’s] omissions were accepted or not opposed by [the appellant]”. Their Honours noted that this was an evidentiary question. It being an evidentiary question, its aptness to be decided on a summary basis may be doubted.

Analysis

55. Critical to the primary judge’s conclusion that the claim for revocation of the grant in common form was bound to fail was her finding that “at all material times [the Appellant] was aware of the facts, matters and circumstances upon which he now seeks to base a claim of lack of testamentary capacity” (see [105] of the judgment, set out at [13] above) and that the Appellant “now seeks to agitate an issue of which he has been apprised for more than five years”: see judgment at [106], also set out at [13] above. The reference to an awareness of “facts, matters and circumstances” appears to be an echo of the same phrase used by Powell J in Bramston v Morris in the passage extracted at [44] above.

56. The two findings referred to above were closely connected to the primary judge’s rejection of the Appellant’s evidence at [90] of the judgment, reproduced at [27] above. In the course of written and oral submissions, counsel for the Appellant made a strong and, in my opinion, justified attack upon the conclusion that the Appellant at “all material times” was aware of the “facts, matters and circumstances upon which he now seeks to base a claim of lack of testamentary capacity”.

57. It is true that the Appellant did, at various times prior to his late father’s death in September 2016, have concerns about his father’s capacity and general well-being. Thus, for example, as has been seen, it was the Appellant who, in the course of 2014, brought an application before NCAT to have a financial manager appointed to take responsibility for his father’s financial affairs. In that application, the Appellant also sought guardianship orders pursuant to the Guardianship Act1987 (NSW). As has been noted, the former but not the latter application succeeded.

58. The only date or approximate time period to which the Appellant’s belief as to his father’s mental capacity was relevant was the time at and immediately preceding the making of the 2012 Will. This temporal consideration invites attention to the evidence before the primary judge as to the Appellant’s knowledge and belief about his late father’s mental state at about that time.

59. That evidence was limited to a letter written on behalf of the Appellant’s then lawyers to his father’s lawyers on 13 February 2013 in which the following was said:

“In your letter you state that you act for our client’s father, [the Deceased] and explain that your client intends to transfer his one third undivided share in the Property to [Mrs Photios] and therefore requires the Certificate of Title for the Property.

We are instructed that our client has concerns that your client does not have capacity and is therefore not competent to sign a transfer in relation to his share of the Property. Please provide any medical evidence that confirms your client’s capacity.”

60. The Appellant is not medically qualified and there are no other qualifications that would have enabled or entitled him to make a reliable assessment, at about the time of the making of the 2012 Will, as to whether his father lacked testamentary capacity or failed to meet the Banks v Goodfellow criteria, notwithstanding the “concerns” recorded in the letter of 13 February 2013. Those concerns, it might be noted, were not as to testamentary capacity but as to contractual capacity. They may not always be equivalent concepts.

61. Senior counsel for the Appellant drew a distinction between the “untutored” lay opinion or belief or suspicion which his client may have had in late 2012 as to his father’s testamentary capacity, on the one hand, and the psychiatric opinion expressed by Dr Wijeratne in his 2018 expert report, on the other hand. Further, it is beyond argument that the Appellant did not have access to any of the three volumes of medical records from various hospitals, nursing homes and care facilities upon which Dr Wijeratne based his opinion, they only having become available to the Appellant as the result of the issue of subpoenas in the course of the proceedings.

62. It is true that the Appellant could have sought to subpoena material of the kind that informed and underpinned Dr Wijeratne’s expert report prior to February and March 2018 when the relevant subpoenas were issued. The proceedings, it will be recalled, had been commenced in September 2016.

63. The primary judge’s finding, adverse to the Appellant, as to his “knowledge” of issues concerning his father’s testamentary capacity extended back, however, to well prior to the commencement of proceedings: thus, her Honour said that he was “apprised [of it] for more than five years” at [106] of the judgment. Bearing in mind that the statement of cross-claim required not only certification by the Appellant’s solicitor and verification by the Appellant as to the existence of reasonable grounds for the making of the allegations, it was not unreasonable, in my opinion, for the Appellant to defer the making of the allegations as to his father’s lack of testamentary capacity until such time as he had medical support for those allegations. This is not to say that they should not have been made earlier (and, correspondingly, the forensic process of issuing subpoenas also could and should have occurred far earlier than it did). It is to accept, however, that characterising the Appellant as having effectively sat upon the “facts, matters and circumstances” upon which the claim for lack of testamentary capacity was based for “more than five years” was not correct.

64. The delay between the commencement of proceedings and the foreshadowing of the proposed amendment was some 19 months. None of the cases to which the Court was taken and in which a revocation of a grant was refused entailed a delay of such a short period. Indeed, in many cases where the application was permitted to proceed and was heard, the period of time was far greater. The nine-year period in In re Goode has already been noted. That having been said, it is also necessary to have regard to the consequences of the delay in the context of the particular case. There may be cases where even a relatively short delay may have serious or material consequences.

65. The delay in making the application to amend was regrettable but not, in my opinion, egregious. Further, for reasons already given, I do not think that any delay should be measured from 2012/2013 or even from the commencement of the proceedings. Nor do I consider that it was clear that any delay on the part of the Appellant was deliberate and informed cf Byrnes v Kendall at [54] above. The amendment was founded on documents that could only have been obtained through the issuing of subpoenas. Further, the Appellant was not cross-examined or challenged in respect of his evidence that it was the filing of the affidavit of the solicitor for Mrs Photios that prompted his decision to pursue the question of his father’s testamentary capacity. It was unusual for the primary judge to have rejected this evidence (as she did at [90] of the judgment) without the Appellant having been challenged upon it, especially when the consequence of that rejection appeared to contribute to the decision not to allow a reasonably arguable case to be advanced.

66. In Dickman, although White J (as his Honour then was) did not consider Mr Dickman’s explanation for the four-year delay as satisfactory (see at [145]), in circumstances where no material evidence had been lost, his Honour did not consider that the delay made it inequitable for Mr Dickman to pursue his claim. His Honour’s focus was on the existence or otherwise of any prejudice that would be occasioned either to the executor or to the Salvation Army (NSW) Property Trust that had been the recipient of a distribution under the challenged will. Justice White’s reference to there being no loss of material evidence resonates with the potential significance of that consideration in the case of the High Court’s consideration of laches and acquiescence in Orr v Ford at 329-331.

67. I will consider the question of prejudice in the circumstances of the present case at [73] below.

68. It is also necessary to make reference to her Honour’s statement at [106] of the judgment that “[a]t the late stage in these proceedings, for apparently tactical reasons, [the Appellant] now seeks to agitate an issue of which he has been apprised for more than five years.” (Emphasis added). This statement was criticised in the notice of appeal (see [35] above).

69. It may be inferred from the context in which this observation appears in the judgment, namely as part of the reasoning process towards the conclusion that the proceedings were bound or doomed to fail, that her Honour’s use of the expression “for apparently tactical reasons”conveyed a measure of judicial disapprobation. If the primary judge was intending by this reference to suggest that the introduction of the proposed amendments was deliberately late and designed to delay the resolution of the proceedings, two points should be made.

70. First, such a suggestion should have been put to the Appellant or the Appellant’s solicitor, both of whom swore affidavits in support of the amendment application: Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11 at [67]-[73].

71. Secondly, to the extent that the matter was raised with counsel, I do not consider that the exchange set out below and which was identified in argument as the apparent basis for the primary judge’s observation warranted the pejorative connotation contained in her Honour’s language, especially in the context of it being advanced as part of her Honour’s reasoning process for concluding that the notional application to revoke the grant was doomed to fail. The exchange was as follows:

“HER HONOUR:   You are just adding another string to your bow.

SNEDDON:      Exactly.

HER HONOUR:   I get that.”

Every amendment, otherwise than an amendment by way of deletion, “adds another string” to the bow of argument. Counsel’s acceptance of this characterisation of the amendment by the primary judge in the course of argument was innocuous and did not, in my opinion, justify the conclusion drawn about the proposed amendment. It was either being put forward bona fide or it was not.

72. It should also be noted, in this regard, that parties are entitled to make claims in the alternative. Thus, whilst it was correct that the Appellant’s contract and estoppel claims pre-supposed that his late father had at least sufficient capacity to enter a contract, and the allegation of lack of mental capacity (as at 2012) may be inconsistent or in tension with that fact (although it would turn on when any promises or contract were made), a party may plead factual allegations, grounds or claims inconsistent with any previous pleadings as long as they are pleaded in the alternative: r 14.18(2) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). In Suvaal v Cessnock City Council [2003] HCA 41; 200 ALR 1, McHugh and Kirby JJ (albeit in dissent in the result), observed, at [116], that:

“Parties at trial are entitled to present alternative cases. They often do. Sometimes, the alternatives contradict each other. This can occasionally present forensic problems. But it does not give rise to legal or logical problems.”

73. On the question of prejudice, it will be recalled that, in the course of the judgment, the items of prejudice that were sought to be identified were either neutralised or characterised as “real but not decisive”: see [30]-[32] above. At [107] of the judgment (see [13] above), the primary judge identified prejudice in the added costs which would be occasioned by the amendment. As explained below, the added costs are unlikely to impact anyone but the Appellant in circumstances where the contest over the balance of the estate is in truth between the Appellant and Mrs Photios who, as executor, is likely to be protected whether she wins or loses: if she wins, her costs will be payable by the Appellant; if she loses, they will, in the absence of unreasonable conduct on her part, be payable out of the estate.

74. In summary, for the conclusion that any application to revoke the grant of probate in common form was doomed to fail, given the evidence of Dr Wijeratne which the primary judge accepted raised an arguable case, the primary judge would have needed to find that the application for revocation of the 2012 Will amounted to an abuse of process. What was involved was more than the mere weighing of discretionary considerations. In my opinion, it was not open to her Honour to make the exceptional, albeit notional, finding that the application to amend, if allowed, would be bound to fail as an abuse of process. Further, the acquiescence of the Appellant, on which the primary judge appeared to place considerable store, was not for a significant period of time and, most significantly, was not apt to cause prejudice in any material sense.

75. Given that the only basis upon which the primary judge refused the application to amend the amended statement of cross-claim was her view that the amendment was bound to fail, in light of the conclusion that I have reached, the primary judge should not have refused leave on that basis.

Should leave to amend the cross-claim have been given?

76. In light of the above conclusion, it remains to consider, on a re-exercise of the discretion, whether leave to amend ought to be given.

77. The considerations in support of leave are as follows:

(i)   the fact that there was prima facie evidence, in the form of Dr Wijeratne’s expert report, that the Deceased lacked testamentary capacity to make the 2012 Will;

(ii)   the public interest in effect being given to the competent wishes and intentions of the Deceased;

(iii)   the undertakings proffered on behalf of the Appellant designed to:

1. preserve Mrs Photios’ right to make a claim pursuant to s 58 of the Succession Act 2006 (NSW); and

2. to insulate her against any attack in respect of distributions of the estate which have already occurred in the event that the grant of probate in common form is revoked;

(iv)   the fact that the Respondent will be protected by the usual costs orders that are the “price” of a late amendment;

(v)   the fact that the proceedings had not been set down for hearing at the time of the foreshadowing of the amendment and are not currently set down for a hearing;

(vi)   the fact that the Appellant will consent to the expedition of proceedings in their amended form;

(vii)   given that what is being fought over is money and, it is to be assumed that the proceeds of the sale of the Druitt Street Property are earning interest, any prejudice arising from delay is at least partially addressed; and

(viii)   the fact that it would be open to the Appellant to commence freestanding proceedings seeking revocation of the grant of probate in common form.

78. Some of these considerations speak for themselves; others can be elaborated upon briefly.

79. As to the second of these considerations, the passage from the decision of Lindsay J in Kouvakas set out at [49] above, and based upon his Honour’s scholarly review of the authorities, strongly supports the grant of leave.

80. As to the seventh of these considerations, no evidence was placed before the primary judge or this Court on the re-exercise of the discretion suggesting that Mrs Photios has any particular needs or is suffering any particular hardship. It may also be noted that she would appear to be entitled either under the 2010 Will or the 2012 Will to a half share of the superannuation fund which, on the evidence, should have received a third share of the proceeds of sale of the Druitt Street Property.

81. As to the eighth of the above considerations, this was the matter adverted to by the primary judge at [104] of the reasons which I have set out at [33] above and was no doubt the reason why her Honour implicitly took the view that the only basis on which the application for leave to amend could be justifiably refused was if the amended claim was bound or doomed to fail; otherwise, the refusal of leave would have lacked utility as, subject to arguments of abuse of process, the same relief would have been available in newly commenced proceedings.

82. In my opinion, even though there are matters pointing in the opposite direction such as the albeit brief delay and spare nature of the explanation advanced for the timing of the raising of the proposed new ground, on the re-exercise of the discretion, I would grant leave to amend. The first two factors referred to in [77] above are particularly compelling, in my opinion, and the Appellant’s dilatoriness in raising the question of his late father’s testamentary capacity was not such as to make either the claim or the attempt to raise it through an amendment an abuse of process.

83. I am fortified in my conclusion by the fact that any prejudice that may otherwise arise as a result of the amendment can be accommodated both by the undertakings proffered and conditions that it is appropriate to place on the grant of leave and to which I refer in the next section of these reasons.

Conclusion

84. In my opinion, the appeal should be allowed for the reasons given above.

85. Further, the Appellant should be granted leave to amend the amended statement of cross-claim in the form of the proposed further amended statement of cross-claim that was the subject of the notice of motion before the primary judge. That grant of leave is made on the following conditions:

1. the Appellant is to pay the Respondent’s costs thrown away by the amendments;

2. to the extent that the Respondent needs to reinterview any of the witnesses from whom a witness statement or affidavit has already been obtained and filed, the Appellant is to pay the Respondent’s costs of that exercise and the preparation of any further evidence consequent upon it;

3. the Appellant is to consent to any application for expedition of the hearing of the trial;

4. the Appellant gives to the Court and to the Respondent the undertakings in the form appended to these reasons; and

5. the Appellant is to consent to any further mediation sought by the Respondent, whether before or after the Respondent has filed her evidence in response to the allegations contained in the further amended statement of cross-claim and the evidence of Dr Wijeratne.

86. As to the question of costs of the application for leave to appeal, the appeal and the hearing of the notice of motion at first instance, prima facie, whilst the Appellant should be awarded his costs, Mrs Photios should be entitled to an indemnity from the Estate of Henry Basil Photios for her own costs and those which she will be obliged to pay the Appellant on account of his success in these proceedings: Drummond v Drummond [1999] NSWSC 923 at [43]; Boivard v Frost [2009] NSWSC 917 at [28] (Boivard); Poletti v Jones [2015] NSWCA 107 (Poletti); see also UCPR r 42.25(1) and Trustee Act 1925 (NSW) s 93(3) (Trustee Act). The Appellant has, however, advanced a submission that Mrs Photios should not be so entitled.

87. In this context, the Appellant makes reference to the decision of the Full Court of the Federal Court in Adsett v Berlouis (1992) 37 FCR 201 at 210-212 and its citation of the following part of the judgment of Bowen LJ in Re Beddoe; Downes v Cottam [1893] 1 Ch 547 at 562:

“The principle of law to be applied appears unmistakably clear. A trustee can only be indemnified out of the pockets of his cestuis que trust against costs, charges, and expenses properly incurred for the benefit of the trust — a proposition in which the word ‘properly’ means reasonably as well as honestly incurred. While I agree that trustees ought not to be visited with personal loss on account of mere errors in judgment which fall short of negligence or unreasonableness, it is on the other hand essential to recollect that mere bona fides is not the test, and that it is no answer in the mouth of a trustee who has embarked in idle litigation to say that he honestly believed what his solicitor told him, if his solicitor has been wrong-headed and perverse. Costs, charges, and expenses which in fact have been unreasonably incurred, do not assume in the eye of the law the character of reasonableness simply because the solicitor is the person who was in fault. No more disastrous or delusive doctrine could be invented in a Court of Equity than the dangerous idea that a trustee himself might recover over from his own cestuis que trust costs which his own solicitor has unreasonably and perversely incurred merely because he had acted as his solicitor told him.

If there be one consideration again more than another which ought to be present to the mind of a trustee, especially the trustee of a small and easily dissipated fund, it is that all litigation should be avoided, unless there is such a chance of success as to render it desirable in the interests of the estate that the necessary risk should be incurred.”

88. The Appellant contended that, as the estate has already in effect been distributed save for the proceeds of the third share in the Druitt Street Property following the orders to which I have referred in [19] above, and as the contest is in substance one between and only between Mrs Photios and the Appellant, the Court should refuse Mrs Photios the benefit of the indemnity provided for by the general law and UCPR r 42.25. This submission assumed, I think correctly, that rule 42.25 applies to an executor notwithstanding that the rule uses the word “trustee” which is not otherwise defined and, elsewhere in the UCPR, executors are referred to distinctly from trustees: see for example rr 7.9, 7.11 and 54.4. A trustee is, however, defined to include a legal representative of a deceased person in s 5 of the Trustee Act and the decisions in Boivard and Poletti referred to above treat r 42.25 as applicable to executors.

89. UCPR r 42.25 provides:

“(1)   Subject to subrule (2), a person who is or has been a party to any proceedings in the capacity of trustee or mortgagee is entitled to be paid his or her costs in the proceedings, in so far as they are not paid by any other person, out of the fund held by the trustee or out of the mortgaged property, as the case may be.

(2)   The court may order that the person’s costs not be so paid if:

(a)   the trustee or mortgagee has acted unreasonably, or

(b)   in the case of a trustee, the trustee has in substance acted for his or her own benefit rather than for the benefit of the fund.”

90. It may also be noted that s 93(3) of the Trustee Act provides:

“In any proceedings with respect to the management or administration of any property subject to a trust or forming part of the estate of a testator or intestate, or with respect to the interpretation of the trust instrument, the Court may, if it thinks fit, order any costs to be paid out of such part of the property as in the opinion of the Court is the real subject matter of the proceedings.”

91. The Appellant submits that this is a case for which r 42.25(2)(b) provides. I do not agree.

92. Sub-rule (2)(b) confers a discretion on the Court which in my opinion ought not to be exercised in the present case. Mrs Photios is currently executor of the estate following the grant in common form. No question has been raised as to the propriety of her conduct in that position. Whilst it is true that, following the earlier distributions, the fight over the remaining asset of the estate is between her and the Appellant, that there is such a fight is solely because of the cross-claim that has been brought by the Appellant and which, as he recognised through his counsel in submissions, requires a contradictor. It was not at all unreasonable for Mrs Photios to oppose the application to amend, being made when it was and after the evidence was otherwise complete and a mediation had occurred.

93. In reaching this conclusion, I am mindful of the observations of Mahoney JA (as he then was) in Nowell v Palmer (1993) 32 NSWLR 574 at 581-582 where his Honour said:

“Mr Anderson, in his submission, had in mind, I think, the attitude which the courts have traditionally taken to the costs of legal personal representatives in defending proceedings brought against an estate. If the legal personal representative acts in accordance with proper principles, she will be safeguarded as to costs; in an appropriate case, her costs and/or the costs which she is ordered to pay in an unsuccessful defence of the estate may be ordered to be paid out of the estate: see Re Estate of Paul Francis Hodges Deceased; Shorter v Hodges (1988) 14 NSWLR 698 at 709–710; see generally Halsbury’s Laws of England, 4th ed, vol 17, pars 917–919, vol 37, par 721.

However, in the present case, the appellant, in defending the proceeding, was not acting as, or merely as, the executrix of the estate. She was, in a real sense, defending her own interests. She was the sole beneficiary of the estate. In addition, she had purported to distribute the estate to herself and, to an extent, the proceeding brought against her was a proceeding by way of tracing the assets in the estate to which the respondent was entitled and to secure an accounting in respect of them: see, eg, Re Diplock; Diplock v Wintle [1948] Ch 465; affirmed sub nom Minister of Health v Simpson [1951] AC 251. I do not think that in these circumstances the principle to which I have referred should apply. The proceeding was essentially a defence by the appellant of her own interests.”

Whilst Mrs Photios’ opposition to the amendment could in one sense be characterised as in her own interest, the case is closer to Perpetual Trustee Co v Baker [1999] NSWCA 244 (Perpetual Trustee) where Giles JA and Brownie AJA observed (at [15]) that the executor was “a necessary contradictor, and can hardly be said to have acted unreasonably when possessed of a judicially sanctioned grant”.

94. It remains to make one final observation. As I have noted at [7] above, the proceeds of the sale of the Druitt Street Property were $4,050,000 and a third of that is the value, together with two years of interest, of what is being fought over in this litigation. The litigation, prior to the amendment, was estimated by the parties as being likely to take up to 10 days. As I have said, some 19 affidavits have been already been filed. The amendment, the reception of the evidence of Dr Wijeratne and the three volumes of medical records upon which he relied, the reception of lay and expert evidence in response to that evidence and potentially evidence in reply to that evidence is likely significantly to expand the length of the hearing.

95. Prima facie, Mrs Photios will be entitled to her costs out of the estate in the event that the Appellant succeeds at any trial. The value of any success to the Appellant in those circumstances may be correspondingly diminished. Of course, if the Appellant is ultimately unsuccessful, he may be liable for Mrs Photios’ costs and certainly could not be assured of securing his costs from the estate on the basis of the principle that “where the conduct and habits and mode of life of a testator have given ground for questioning his testamentary capacity the costs of the unsuccessful party should be paid out of the estate, as distinct from being left to be borne by that party”: Perpetual Trustee at [14]; see also Moyle v Moyle (Supreme Court (NSW), Santow J, 9 April 1998, unrep); Priestley v Priestley (No 2) [2017] NSWCA 212. In their decision in Perpetual Trustee, Giles JA and Brownie AJA noted that a majority of the High Court in Middlebrook v Middlebrook (1963) 26 ALJR 216 ordered that the parties bear their own costs; see also Shorten v Shorten (No 2) [2003] NSWCA 60.

96. As such, in light of the value of the asset the subject of litigation, the extent to which it will have been diminished as a result of the costs orders that will be made in and as a result of these proceedings, the likely length of the substantive litigation and the costs that will be incurred in preparing and conducting it, I consider that it is highly desirable and appropriate that the matter be referred for further mediation in light of the further amended statement of cross-claim, noting that the previous mediation held prior to the amendment (and prior to the addition of the contract claim in the cross-claim) failed.

97. As presently advised, I would be inclined, as a condition of the grant of leave to amend, to require the Appellant to pay the costs of the mediator for any second or resumed mediation sought by Mrs Photios for the reason that, had the claim based on incapacity which he seeks to propound by the further amended statement of cross-claim been made at an earlier stage in the proceedings, that issue would have formed part of the earlier (unsuccessful) mediation.

98. As this possible condition was not the subject of argument or submissions in the course of the oral hearing, I would propose to invite both parties to make a short further submission within five days of the publication of these reasons as to the appropriateness of such an additional condition.

99. GLEESON JA:I agree with Bell P.

100. LEEMING JA: I agree with Bell P.

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ANNEXURE A – UNDERTAKINGS

The appellant, David Photios gives to the Court the following undertakings should leave be granted to file the proposed further amended statement of cross-claim:

1.   In the event that the 12 August 2010 will is admitted to probate (and that in consequence the grant of probate in respect of the 11 December 2012 will is revoked) David will indemnify Lana in respect of:

a.   Any claim against Lana either as executor or in her own right by Michael Photios for the payment of the legacy of $100,000 due to him under the 2010 will, including interest due on the legacy.

b.   Any claim against Lana either as executor or in her own right by those beneficiaries (other than David), who have received legacies under the will of 11 December 2012 (or any claim by David in either his own right or as executor), subject to the orders of Ward CJ in Eq on 2 February 2018 and provided Lana, acting in good faith, has complied with her legal obligations as executor, in the event that:

i.    a claim is made against any of those beneficiaries to disgorge any part of the legacies received by them; and

ii.   such claim directly arises from the 12 August 2010 will being admitted to probate and the grant of probate in respect of the 11 December 2012 will being revoked.

2.   The indemnity in respect of a claim under paragraph 1(b) is limited to the amount disgorged by the beneficiary pursuant to a claim contemplated in paragraph 1(b) above.

3.   Liberty to apply for the purpose of any matter relating to the foregoing undertaking to the Court.

4.   For the avoidance of doubt, the acceptance of the foregoing undertaking does not affect the undertakings noted by Ward CJ in Eq on 2 February 2018, or the orders of 4 November 2016.

5.   David further undertakes to the Court that, in the event that leave is granted to file the proposed further amended statement of cross-claim, David:

a. Consents to Lana filing a cross-summons within 28 days’ claiming a family provision order out of the estate of the late Henry Basil Photios, pursuant to Chapter 3 of the Succession Act 2006 (NSW); and

b.   Consents to Lana’s application in paragraph 5(a) above being made more than 12 months after the death of the deceased.

Decision last updated: 27 June 2019