Re Besanko (No 2)
[2020] VSC 281
•19 May 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S PRB 2019 21447
IN THE MATTER of the will and estate of CONSTANCE BESANKO, deceased
-and-
IN THE MATTER of an application pursuant to s 9 of the Wills Act 1997
| ROBERT JOHN BESANKO | Plaintiff |
| v | |
| MANDY DOROTHY BESANKO-HOPPEN (in her capacity as executor of the estate of CONSTANCE BESANKO) | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 19 May 2020 |
CASE MAY BE CITED AS: | Re Besanko (No 2) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 281 |
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COSTS — Where plaintiff sought probate of informal video will — Application pursued in disregard of known facts and established law — Application pursued for a collateral purpose — Where defendant executor acted properly and reasonably — Plaintiff to pay defendant’s costs on indemnity basis from his share of estate — Macedon Ranges Shire Council v Thompson [2009] VSCA 209.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr W Gillies | |
| For the Defendant | Mr J Rizzi | Pearce Webster Dugdales |
HER HONOUR:
On 9 April 2020, the Court dismissed the plaintiff’s application for probate of an informal video will of his mother (the ‘video will’), pursuant to s 9 of the Wills Act 1997.[1]
[1]Re Besanko [2020] VSC 170.
The defendant seeks her costs of the proceeding, paid on the indemnity basis, from the plaintiff’s share of the estate.
The plaintiff accepts that he is liable for the costs of the proceeding, but says that costs ought to be paid on the standard basis from the estate.
Relevant background
The background to the plaintiff’s application is set out in detail in the Court’s reasons for judgment.[2] The following account refers only to those matters that have a bearing upon the costs of the proceeding.
[2]Ibid [10]–[21].
The deceased died on 26 February 2014. Probate of her last will was granted to the defendant on 18 November 2015.
On 17 May 2016, the plaintiff filed an application for further provision from the deceased’s estate, pursuant to Part IV of the Administration and Probate Act 1958. He was represented by solicitors in that proceeding. The plaintiff says that he told his solicitors about the video will, but they did not view it. The Part IV application was settled at mediation on 14 December 2016. The terms of settlement required the plaintiff and his partner to vacate the estate property at 4 Bates Street, Malvern East (the ‘Bates Street property’) by 30 June 2017. They failed to do so.
The plaintiff asserted that he became aware that the video will may be an informal will sometime in October 2017, when he heard a radio program concerning digital wills. He took no steps to have the video will admitted to probate at that time.
On 20 November 2018, the defendant issued a warrant of possession for the Bates Street property, which was lodged with the Sherriff’s Office in early 2019. On 20 June 2019, the plaintiff issued an urgent application in the Practice Court to stay execution of the warrant of possession. The plaintiff represented himself at the hearing. One of his grounds for seeking a stay was an assertion that the deceased had made the video will. The application for a stay of execution was dismissed.
In approximately June to August 2019, the plaintiff obtained the services of pro bono counsel, who appeared on his behalf at directions hearings on 22 November 2019, 6 December 2019 and 17 December 2019.
On 6 August 2019, the plaintiff filed a summons in the probate proceeding seeking revocation of the deceased’s formal will, on grounds that she had made the more recent video will. At that stage, the plaintiff did not produce a copy of the video will to the defendant, or to the Court. He relied solely upon a transcript of the video exhibited to his affidavit in support of the summons. He was informed that his application to propound the video will must be commenced by separate proceeding, and that he must file the video will with the Court.
By letter to the plaintiff dated 29 August 2019, the defendant’s solicitors explained their view that the application for a grant of the video will was misconceived, and requested that the plaintiff seek legal advice as soon as possible.
By December 2019, the plaintiff had failed to commence the separate proceeding. On 6 December 2019, the Court made orders that the plaintiff file a separate proceeding by 20 December 2019 if he wished to seek to prove the video will. The plaintiff filed this proceeding on 20 December 2019.
At the trial on 24 February 2020 the plaintiff gave oral evidence and was cross-examined. He elected not to cross-examine the defendant’s witnesses.
Applicable principles
The Court’s jurisdiction to order costs of proceedings is exercised as a matter of discretion, in accordance with established principles.[3] The usual order as to costs is that a successful party to litigation is entitled to a costs award in his or her favour, and an unsuccessful party bears the liability for costs of the unsuccessful litigation.[4]
[3]Supreme Court Act 1986 (Vic) s 24(1).
[4] Oshlack v Richmond River Council (1998) 193 CLR 72, 97 [67] (McHugh J).
Costs are prima facie awarded on a standard basis, with the Court maintaining a discretion to award non-standard costs where the proceeding exhibits a special feature or unusual circumstance.[5] The circumstances in which the Court may consider a special costs order are not closed, and depend upon the facts of the relevant case. Circumstances which have been held to warrant a special costs order include where a party commences or continues proceedings for an ulterior motive, or in wilful disregard of known facts or clearly established law.[6]
[5]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.28.
[6]Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3) [2012] VSC 399, [14] (Croft J); Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7]-[8] (Harper J). Wilful disregard must be distinguished from a circumstance in which a party persists with an uncertain case that turns out to fail: Hamod & Anor v NSW & Anor (2002) 188 ALR 659, 665 [20] (Gray J, Carr and Goldberg JJ agreeing).
The Court of Appeal in Macedon Ranges Shire Council v Thompson observed:
Costs may be ordered whenever it appears that an action has been commenced in circumstances where the applicant properly advised should have known it had no chance of success. When a litigant presses on where on proper consideration their case should have been seen to be hopeless, the discretion to make a special costs order may be enlivened. French J (as he then was) in J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers Western Australia & Anor considered that the discretion to award such costs would be enlivened when a party persisted, for whatever reason, in what should on proper consideration have been seen to be a hopeless case, and alluding to the presumption referred to by Woodward J in Fountain Selected Meats said that it was an unnecessary condition of the power to award such costs that a collateral purpose or some species of fraud be established. But where the litigant did not recognise that its case was without merit a court may be disinclined to make a special costs order. The Court must measure the litigant’s conduct against the facts then known or which ought to have been known, the inquiries that the litigant ought reasonably to have made and the legal advice which the litigant ought reasonably to have obtained. This exercise may be subject to some qualification in respect of a self represented litigant.[7]
[7][2009] VSCA 209, [15] (Redlich JA and Beach AJA).
The Court of Appeal observed that, generally, a court will be more reluctant to make an order for indemnity costs against a self-represented litigant than against a represented litigant.[8] This is because a self-represented person cannot be expected to appreciate the strengths and weaknesses of his or her own case in the same way as a represented party.[9] However, it may be that the prevailing circumstances of a case are sufficient cause for the Court to overcome that reluctance. The Court may be more likely to award indemnity costs notwithstanding a litigant’s self-represented status where the proceeding was brought for an ulterior motive,[10] made baseless allegations of fraud, or where an unmeritorious claim or defence was continued notwithstanding legal advice to the contrary.[11]
[8]Ibid [16].
[9]Shaw v MAB Corporation (No 2) [2014] FCA 227, [10] (Mortimer J).
[10]Vink v Tuckwell (2008) 67 ACSR 547, 566 [108] (Robson J).
[11]Macedon Ranges Shire Council v Thompson (n 7) [22]; Auscare Dairy (Aust) Pty Ltd v Huang (No 4) [2019] FCA 1187, [6]-[7] (Davies J).
Costs ordered out of a trust fund or deceased estate in favour of a trustee or executor are commonly quantified on an indemnity basis, sometimes termed the ‘trustee basis’. This is the position at common law, and is also reflected in the Trustee Act 1958,[12] and the Supreme Court (General Civil Procedure) Rules 2015.[13] The basis for the principle is that persons engaged in litigation in a representative capacity should not, if a costs order is made in their favour, be out of pocket because of the litigation. The trustee’s right of indemnity is limited only to expenses properly incurred. The concept of ‘proper’ expenditure excludes costs which are of an unreasonable amount, have been unreasonably incurred, or have been incurred as a result of conduct that demonstrates want of prudence or diligence.[14]
[12]Trustee Act 1958 (Vic) s 36(2).
[13]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.26.
[14]GE Dal Pont, Equity and Trusts in Australia (Lawbook Co, 7th ed, 2018) 682 [23.135] citing Turner v Hancock (1882) 20 Ch D 303, 305; Re Beddoe [1893] 1 Ch 547, 558; Nolan v Collie (2003) 7 VR 287, 303–10 (Ormiston JA); Dimos v Skaftouros [2004] VSCA 141.
Where a trustee succeeds in litigation, his or her costs would ordinarily be allowed out of the estate. Where costs of the proceeding are to be paid out of the estate, the issue arises as to whether those costs should be borne by the estate or by the portion of the estate referable to any dispute whereby the costs have arisen. This reflects the principle that any ‘indemnity must be given effect to in such a way as to make the burden fall upon the beneficiaries equitably having regard to the circumstances under which the costs, charges and expenses were incurred’.[15]
[15]National Trustees Executors & Agency Company of Australasia Ltd v Barnes (1941) 64 CLR 268, 279 (Williams J, Rich ACJ agreeing).
Plaintiff’s submissions
The plaintiff concedes that he is liable for the costs of the unsuccessful litigation. He submits that those costs ought to be paid on the standard basis out of the estate, as there were no unusual features of the proceeding to justify an award of indemnity costs.
The plaintiff submits that he acted reasonably in commencing the application and any suggestion that his application had no prospect of success is a ‘matter of hindsight passing as wisdom’. He says that the fact that the proceeding was not dismissed out of hand indicates that it was not totally without merit. He also submits that this was the first case in Victoria in which a video will was considered, which meant there was no established law on the issue in Victoria to which he could have had regard.
The plaintiff says that the letter from the defendant’s solicitors dated 29 August 2019 is not sufficient to justify an award of indemnity costs. This is because the letter only stated that the use of a precatory statement was misconceived. He submits that was not the basis on which the Court dismissed the proceeding.
The plaintiff submits that although he was unsuccessful in the proceeding, he took an economical course and ran the trial as economically as possible. He did not cross-examine the defendant’s witnesses, nor did he subpoena medical records of the deceased. He says that the defendant’s subpoena of the medical records was unnecessary in circumstances where the Court determined the proceeding by reference to the video itself. In the event that indemnity costs are awarded, the plaintiff submits that the Court should deduct a percentage that reflects the production of documentation, such as the medical records, which were voluminous and ultimately of little assistance to the Court.
The plaintiff also submits that the Court has no power to order that the costs be paid from his share of the estate.
Defendant’s submissions
The defendant submits that the costs of the proceeding ought be paid from the plaintiff’s share of the estate on the indemnity basis, taxed by reference to a costs agreement entered into between the defendant and her solicitors on 21 August 2019. A table of the estate’s legal costs dated 10 February 2020 estimated the defendant’s costs of the proceeding, excluding counsel’s fees, at $45,000. The defendant has not provided an updated quantum figure following the trial. The defendant submits that a special costs order is appropriate because the plaintiff ought to have known that his application had no prospect of success, he commenced the proceeding for a collateral purpose, he continued the application in wilful disregard of established law and he was warned that his application was likely to be dismissed.
The defendant says that the plaintiff ought to have known that time jumps in the video will and the precatory nature of the deceased’s statements meant that his application had no prospect of success. Had he been properly advised, the defendant says that the plaintiff would have known that those features of the video will were fatal to his application. She says that the plaintiff’s continuation of the application notwithstanding those features demonstrates a wilful disregard of the facts or the clearly established law with respect to informal wills.
The defendant submits that the letter dated 29 August 2019 put the plaintiff on notice that his application had no prospect of success. She also refers to a second letter, dated 11 November 2019, in which her solicitors informed the plaintiff ‘[w]e will also be seeking the estate’s legal costs of defending the application from your share of the Estate.’
The defendant suggests that the plaintiff commenced his unfounded application because he wished to retain possession of the Bates Street property. This is demonstrated by the fact that the plaintiff did not bring the video will to her attention, or to the attention of the Court until his application for a stay of execution on 20 June 2019. The defendant says that it was that application which led to the plaintiff filing a summons in the probate proceeding, and ultimately to this proceeding.
Consideration
The plaintiff was wholly unsuccessful in his application for a grant of probate of the video will. The Court was not satisfied that the deceased’s statements in the video will were more than mere precatory statements of her testamentary intention, or that the deceased had testamentary capacity.[16] The Court placed particular weight upon the instructions given by the deceased that the plaintiff was to ‘have it done properly’, and that a lawyer could attend to take instructions for the production of a formal will sometime in the future.[17]
[16]Re Besanko, (n 1) [63].
[17]Ibid [52].
The Court also noted its concern with the unexplained gaps in the video will, which it described as ‘problematic’.[18] Those concerns were heightened by the Court’s conclusions regarding testamentary intention and testamentary capacity of the deceased. The Court observed:
The apparent lack of testamentary capacity on the part of the deceased makes the pauses in the video will even more problematic. There is no way for the Court to know exactly what transpired between Robert and the deceased when the recording was switched off. Robert denied that he coached or guided the deceased towards any conclusion. However, after each time jump… the deceased appears to have been moved from a state of confusion back toward the subject of the deceased’s will. The content therefore casts grave doubt upon whether Robert did in fact coach or guide the deceased toward particular thoughts or conclusions.[19]
[18]Ibid [51].
[19]Ibid [62].
The plaintiff pursued his application in wilful disregard of those facts, which were central to the Court’s rejection of his application. The deceased’s statements and the gaps in the recording are evident on the face of the video and they were clearly known to the plaintiff. The plaintiff also had the benefit of pro bono counsel from an early stage, before filing the proceeding, as well as the letters from the defendant’s solicitors as to their views of the application. As a result, the plaintiff ought to have been aware that he had no prospect of success in propounding the video will. He acted unreasonably in commencing the proceeding. In the circumstances, the plaintiff’s submission that any suggestion that the application had no prospect of success is a matter of ‘hindsight passing as wisdom’ is misconceived.
The plaintiff’s submission that ‘[i]t was not a case that was dismissed out of hand or could be said to have been unreasonable to have commenced’ is also misconceived. A proceeding in which an applicant seeks to propound an informal will must be heard and determined by the Court, pursuant to s 9 of the Wills Act 1997. The Court must be satisfied that it is appropriate to either make the grant or reject the application based on the evidence before it. This is because a grant of representation is a public act and the Court is concerned to give effect to the testamentary wishes of a competent testator.[20]
[20]Estate of Kouvakas: Lucas v Konakas [2014] NSWSC 786, [271]–[272] (Lindsay J).
The plaintiff is incorrect in submitting that this proceeding was the first Victorian case to consider a video will, and therefore that there is no established law in Victoria. The decision of Re Stuckey is a Victorian case that considered an application for probate of an informal codicil in the form of a video recording on the deceased’s mobile phone.[21] Furthermore, there is a considerable body of relevant interstate case law as all states and territories in Australia have enacted legislation which is in substantially the same terms as the Victorian Wills Act 1997.[22] In final submissions, counsel for the plaintiff relied on a number of interstate decisions concerning informal video wills. None of those decisions assisted the plaintiff’s case as:
In each of the cases, the deceased made clear their intention that the recording ought act as their will. No such statement was made by the deceased in the video will… there are several aspects of the video will that indicate that the wishes expressed by the deceased were merely precatory statements to be included in a formal will at a later date.[23]
[21]Re Stuckey [2014] VSC 221.
[22]GE Dal Pont and KF Mackie, Law of Succession (LexisNexis Butterworths, 2nd ed, 2017) 115 [4.31].
[23]Re Besanko (n 1) [58].
Section 9 of the Wills Act 1997 is clear in its terms, namely, the Court may admit to probate an informal document ‘if the Court is satisfied that that person intended the document to be his or her will.’ The plaintiff pursued the application without regard to the clearly established requirement that a deceased person must intend an informal document to be his or her will, as reflected in s 9 of the Act and the authorities relied upon by him. He did so despite a lack of any evidence of intention on the part of the deceased that she intended the video will to be her will.
The Court is satisfied that the plaintiff pursued the proceeding for the ulterior motives of either taking up residence again at the Bates Street property or, if the property were sold, obtaining a larger interest in the estate. This conclusion is supported by reference to the events leading up to the proceeding. The plaintiff knew of the video will because it was created by him. After probate of the deceased’s will was granted to the defendant, he pursued his Part IV claim against the estate. The terms of settlement executed in December 2016 required him and his partner to vacate the Bates Street property by 30 June 2017 so that it could be prepared for sale. He failed to vacate the property by that date and continued living there.
The plaintiff became aware of the possibility that the video will may be an informal will sometime in October 2017. He did nothing with that information until June 2019, when faced with eviction from the Bates Street property.
By the time of the trial the plaintiff was aware and accepted that the current liabilities of the estate were approximately $200,000. He conceded that payment of the liabilities required the sale of the property. His position was that if the video will granted him a life interest, he would be entitled to a life interest in the sale proceeds of the Bates Street property.
In pursuing the application without regard to the clearly established requirement that a deceased person must intend an informal document to be his or her will, the plaintiff has wasted the time of both the Court and the defendant, and also caused the defendant to incur further costs in defending the proceeding.
Although the plaintiff cannot be expected to understand the nuances of the law with regard to informal wills, he can be expected to have some appreciation of the clearly established requirements contained in s 9 of the Wills Act. Further, several features of the proceeding support the conclusion that the plaintiff was placed on notice that his application had no prospect of success. First, the plaintiff’s solicitors in the Part IV proceeding were made aware of the existence of the video will yet did nothing to pursue an application. Secondly, the defendant’s solicitors warned the plaintiff in writing that his application was without merit for the very reasons relied upon by the Court, and recommended that he seek legal advice. Notably, at the time of writing the 29 August 2019 letter the defendant’s solicitors do not appear to have viewed the video will, which was not provided to them until 20 December 2019. Had they viewed the video will, it is likely that the defendant’s solicitors would also have raised the unexplained gaps in the video at that stage. Thirdly, from sometime between June and August 2019 the plaintiff has had the benefit of counsel acting pro-bono. Notwithstanding all of the legal assistance that has been provided to him, the plaintiff continued with his application as a self-represented litigant. In the circumstances, notwithstanding the plaintiff’s status as a self-represented litigant, the defendant’s costs should be assessed on an indemnity basis and paid by the plaintiff.
The defendant should also be allowed her costs associated with the production of the deceased’s medical records. The records were voluminous and covered the period 13 March 2013 to 13 December 2013. The Court reviewed the medical records and concluded that they did not assist in determining the deceased’s testamentary capacity on the day of the video will.[24] Contrary to the plaintiff’s submission, the Court did not consider that the medical records were entirely irrelevant. Although the Court observed that ‘their utility is limited’, the records were ‘of some assistance in determining the deceased’s general cognitive state leading up to 8 January 2014.’ The Court is satisfied that the defendant acted reasonably in pursuing the deceased’s medical records and it was reasonable to rely on them in circumstances where the testamentary capacity of the deceased was a live issue in the proceeding.
[24]Ibid [60].
The plaintiff’s submission that the Court has no power to order that the costs of the proceeding be paid from the plaintiff’s share of the estate was not supported by reference to any authority. Costs are in the discretion of the Court, with the discretion to be exercised judicially in accordance with established principle.
If the defendant’s costs were paid out of the estate, the burden of the costs would fall on the beneficiaries inequitably, having regard to the circumstances in which the plaintiff has caused the costs. The only beneficiaries of the estate are the plaintiff, the defendant and their sister, Joanne. Joanne is not a party to the proceeding and the defendant is a necessary party, being the executor and trustee of the estate. The order sought by the plaintiff would substantially diminish the share of both the defendant and Joanne and provide a windfall for the plaintiff. At all times the defendant has acted reasonably and properly. The defendant is entitled to indemnity for her costs from the estate. Neither the defendant nor Joanne should have their entitlements diminished as a result of this proceeding.
Orders
The Court orders that the defendant’s costs of and incidental to the proceeding, assessed on the indemnity basis, be paid from the plaintiff’s share of the estate of the deceased, as amended by the terms of settlement dated 14 December 2016.
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