Re Anderson (No 2)

[2017] VSC 463

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY & PROBATE LIST

S PRB 2016 09752

IN THE MATTER of the will and estate of LORNA LOUISE ANDERSON, deceased

BETWEEN

ANTHONY CHRISTOPHER HILL	Plaintiff
v
ANNETTE LEE ROWAN and SUSAN HARTIGAN	Applicants

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF RULING:	11 August 2017
CASE MAY BE CITED AS:	Re Anderson (No 2)
MEDIUM NEUTRAL CITATION:	[2017] VSC 463

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COSTS—Application for revocation of probate—Where applicants relied on grounds of testamentary undue influence and fraud against non-party—Where non-party appeared and made submissions in response to allegations—Where grounds struck out or dismissed—Whether costs should be ordered in favour of non-party—Whether special or unusual feature or special circumstances exist—Indemnity costs—O’Keefe v Hayes Knight GTO Pty Ltd [2005] FCA 1559—Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189—Supreme Court Act 1986, s 24(1)

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	McCluskys
For the Applicants	Ms R G Morison	Batten Sacks
For Janette Williams	Mr N J McOmish	Armstrong Legal

HER HONOUR:

Introduction

1. By summons, the applicants sought revocation of the grant of probate of the will of their aunt, Lorna Louise Anderson (‘the deceased’).  Two of the three grounds relied upon by the applicants were contested by the plaintiff and by Janette Williams, also a niece of the deceased.

1. The particulars of the two contested grounds alleged testamentary undue influence and testamentary fraud on the part of Janette and another niece of the deceased, Michelle Luca, in respect of the deceased.  Their conduct was at the centre of the application for revocation of the grant of probate.  Prior to their application, the applicants had alleged, amongst other matters, a failure by the deceased to provide them with sufficient provision.  This allegation was misconceived as the applicants are not eligible persons under the relevant legislative scheme.[1]

   [1]See Part IV of the Administration and Probate Act 1958.

1. Janette and Michelle were named in the applicants’ summonses filed 16 January 2017 and 13 April 2017 respectively and in the affidavits filed in support of their application.  Janette retained solicitors and counsel on her behalf.  Her counsel appeared at the first directions hearing on 3 March 2017, at two further directions hearings on 31 March 2017 and 7 April 2017, at the hearing on 12 May 2017 and on the handing down of judgment on 16 June 2017.  Objection was not taken by the applicants to Janette being represented at any time.  On 16 June 2017, the applicants’ two contested grounds were struck out and dismissed respectively.[2]

   [2]Re Anderson [2017] VSC 338 (16 June 2017).

1. Following judgment, the solicitors for the applicants informed the Court that a dispute remained between the applicants and Janette as to her costs.  It was agreed that the dispute be determined on the papers.

1. Janette seeks her costs be paid, on an indemnity basis, by the applicants in respect of the two contested grounds.

1. The applicants oppose Janette’s application on the basis that it would not be appropriate in the circumstances of this proceeding.

Applicable principles

1. The Court’s jurisdiction in relation to costs is conferred by s 24(1) of the Supreme Court Act 1986. The Court’s general discretion in relation to costs must be exercised judicially and in accordance with Order 63 of the Supreme Court (General Civil Procedure) Rules 2015.[3]  The prima facie position in respect of costs litigation is for standard costs to be ordered by the Court.  The usual order as to costs is that costs follow the event and a successful party is entitled to an award of costs in its favour.[4] 

   [3]Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3) [2012] VSC 399 (14 September 2012) [11] (Croft J).

   [4]Oshlack v Richmond River Council (1998) 193 CLR 72, 97 (McHugh J) (‘Oshlack’).

1. The Court’s jurisdiction and general discretion in relation to costs extends to non-parties.  The majority of cases regarding costs of a non-party relate to orders made against a non-party, rather than in favour of a non-party.[5]  In either case, such an order is exceptional and the discretion must be exercised with caution. 

   [5]            See, eg, Bischof v Adams [1992] 2 VR 198; Burns Philp and Co Ltd v Bhagat [1993] 1 VR 203.

1. The cases where costs orders have been made in favour of a non-party are limited.  An example is found in O’Keefe v Hayes Knight GTO Pty Ltd, where Nicholson J set out the general principles and factors when considering costs orders in favour of a non-party.  These factors include the relationship between the non-party and the costs, whether the non-party costs were incurred in the proceeding and whether it is reasonable and in the interests of justice to exercise the discretion in favour of the non-party.[6]

   [6]O’Keefe v Hayes Knight GTO Pty Ltd [2005] FCA 1559 (4 November 2005) [24]. See also Naidoo v Williamson (2008) 37 WAR 516, 528 [41]–[42] (Steytler P).

1. The Court’s discretionary power also allows the Court to makes an award for costs other than on the standard basis.  The Court’s discretion to depart from the usual order for costs will only be exercised where a proceeding exhibits a special or unusual feature or special circumstances.[7]  The types of circumstances that may warrant a special costs order are not closed.[8]  Each proceeding must be considered on its own facts to ascertain whether those facts support the making of a special order for costs.  Where serious allegations of fraud have been made without a proper basis, orders have been made for costs to be assessed on an indemnity costs.[9]

   [7]Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 (14 June 2001); Lutar v Carley [2017] VSC 366 (23 June 2017) [21].

   [8]Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 (14 June 2001) [8] (Harper J).

   [9]Brown v Guss (No 2) [2015] VSC 57 (8 April 2015) [76].

Consideration

1. The applicants contend that Janette was not a real party in any critical or important aspects of the proceeding and should not be entitled to an order for costs in her favour.  This is because the determination of the Court in relation to the two contested grounds was a preliminary point, with the applicants bearing the onus to establish a prima facie case.  In those circumstances, they contend it was not critical, important or necessary for Janette to be involved in the proceeding at such an early stage.  While the applicants acknowledge that certain allegations made against Janette and Michelle were subsequently struck out, they contend that Janette’s presence at this preliminary stage of the proceeding was unnecessary as she was not a party to the litigation.  

1. While it is correct that the determination of the grounds of revocation of a grant of probate is made at an early stage of the application, it is nonetheless a critical aspect of the proceeding.  This is because the particulars of the grounds provide an understanding of an applicant’s case and inform the opposing side of the case it has to meet.  Particulars should limit the issues to be tried and define the questions for trial.  The applicants were given three opportunities to file their particulars of undue influence and were also granted leave to add the further ground of fraud out of time.

1. The two contested grounds made serious allegations of testamentary undue influence and fraud against Janette and Michelle.  They raise the most serious claims that can be made in a contested probate case.  Allegations of fraud should not be made lightly.  When they are made, proper practice dictates that the facts relied upon should support the grounds.  The applicants’ particulars failed to provide an adequate or proper understanding of their case.  They set out statements of a general nature over an unspecified time period and invited inferences and conclusions without establishing a connection to the very serious allegations made against Janette and Michelle.

1. Ordinarily, a non-party would not seek leave to be heard at the preliminary stage of an application for revocation of a grant of probate as the executor of the estate would consider the application made by the applicants.  The two contested grounds place Janette as a pivotal witness in respect of the serious allegations of fraud.  The executor of the estate is an independent solicitor.  The interests of the estate differ from the interests of Janette in protecting herself against these serious allegations.  Janette’s connection to the proceeding is axiomatic.  She was expressly named in the relevant summonses for revocation and her conduct was the subject of the application to revoke the grant of probate.  It would not have been a surprise to the applicants that Janette would seek leave to be represented on the application.  No objection to her attendance at the hearings was made by the applicants.

1. The applicants’ submission that it would not be just to make an award of costs in favour of Janette in relation to the ground of testamentary undue influence in the absence of a full merits assessment is rejected given the serious nature of the allegations made against Janette.

1. In the circumstances where the serious allegations of fraud made against Janette have now been struck out or dismissed, I am satisfied that it was reasonable and necessary for Janette to be represented separately at the preliminary stage of the proceeding and that a costs order should be made in her favour.

1. The applicants and their solicitors have obligations under the Civil Procedure Act 2010 to ensure, amongst other matters, that all claims brought have a proper basis, to narrow the issues in dispute and to minimise delay.[10]  The two contested grounds do  not conform with these obligations.  Not only have the applicants made allegations of fraud that ought never to have been made, they have also caused delay and wasted costs.  I am satisfied that this justifies the conclusion that their conduct falls within the scope of special or unusual features or special circumstances described in the authorities to warrant a special costs order in favour of Janette.

   [10]Civil Procedure Act 2010, ss 18, 23 and 25.

Orders

1. The Court will order that the applicants pay the costs of the non-party, Janette Williams, of and incidental to the applicants’ summonses for revocation filed 16 January 2017 and 13 April 2017 respectively on an indemnity basis, to be taxed in default of agreement.

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