Re Hayes (No 3)
[2023] VSC 5
•13 January 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S PRB 2020 00044
| IN THE MATTER of the will and estate of THOMAS SYDNEY PASCOE HAYES, deceased | |
| IAN BENTLEY STILL (in his capacity as the executor of the will and estate of THOMAS SYDNEY PASCOE HAYES, deceased) | Plaintiff |
| v | |
| TACI HAYES | Applicant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 13 January 2023 |
CASE MAY BE CITED AS: | Re Hayes (No 3) |
MEDIUM NEUTRAL CITATION: | [2023] VSC 5 (First Revision 17 January 2023) |
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COSTS – Indemnity costs – Where applicant unsuccessful in seeking revocation of grant of probate – Whether special circumstances exist warranting indemnity costs order – Indemnity costs ordered – Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 – Supreme Court Act 1986 (Vic) s 24, Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.30.1.
CIVIL PROCEDURE – Whether overarching obligations contravened by applicant’s solicitor – Requirement of proper basis – Obligation to ensure costs are reasonable and proportionate – Obligation to narrow the issues in dispute – Where obligations contravened by solicitor – Where solicitor ordered to indemnify applicant in part – Yara Australia Pty Ltd v Oswal (2013) 41 VR 302 – Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5) (2014) 48 VR 1 – Civil Procedure Act 2010 (Vic) ss 18, 23, 24, 29.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Still & Co Lawyers | |
| For the Applicant | Sartori Legal Services | |
| For the non-parties | Sartori Legal Services |
HER HONOUR:
Introduction
Thomas Hayes (‘the deceased’) died on 21 November 2019. The deceased’s last will is dated 24 September 2008 (‘the 2008 will’), and the deceased’s penultimate will is dated 17 September 2003 (‘the 2003 will’). In January 2020, probate of the 2008 will was granted to the plaintiff.
The applicant is a niece of the deceased. She sought revocation of the grant of probate of the 2008 will on the basis that the deceased lacked testamentary capacity, and did not know and approve of the contents of the 2008 will or the 2003 will. The application was dismissed in reasons delivered 11 April 2022 (‘the reasons’),[1] with a finding that a prima facie case had not been established in respect of either ground. In the event that the parties could not agree on the costs of the application, the plaintiff and the applicant were to file written submissions by 10 May 2022.
[1]Re Hayes [2022] VSC 178 (‘reasons’).
For the reasons that follow, the Court has determined that:
(a) the applicant is to pay the plaintiff’s costs of and incidental to the application on an indemnity basis, to be taxed in default of agreement; and
(b) the solicitors for the applicant, Mr Peter Connor and his firm Constable Connor & Co, are to indemnify the applicant as to one quarter of those costs.
Background
Following the delivery of the reasons, the plaintiff’s costs up to 13 April 2022 were assessed on the standard basis by Grace Costs Consultants at $18,537, excluding GST, with disbursements of approximately $29,425.
On two occasions the plaintiff wrote to Constable Connor & Co regarding the costs of the application. By letter dated 5 May 2022, the plaintiff referred to the costs assessment by Grace Costs Consultants and enclosed proposed minutes of consent orders for his costs to be paid by the applicant. The plaintiff’s letter proposed that his costs be fixed by the Court in the sum of $49,815. Constable Connor & Co did not respond to the plaintiff’s letter, and on 9 May 2022 the plaintiff filed submissions seeking his costs of the application on an indemnity basis, alternatively, the standard basis. The plaintiff deposed that his costs should be paid on an indemnity basis and fixed in the sum of $55,292. In support of this proposal, the plaintiff claimed, amongst other things, that Mr Connor had breached his overarching obligations under ss 18 and 23 of the Civil Procedure Act 2010 (Vic) (‘the Civil Procedure Act’).
On 19 May 2022, Mr Connor emailed the Court explaining the applicant’s failure to provide written submissions within time, and noting that his instructions were that the applicant did not ‘wish to argue against the plaintiff’s submissions on costs’.
In further reasons delivered 1 September 2022 on the issue of costs (‘costs reasons’),[2] the Court determined that the plaintiff’s affidavits raised a number of conduct issues that needed to be addressed before any costs orders could be made. Mr Connor and Constable Connor & Co were invited to make submissions regarding possible contraventions of the Civil Procedure Act.
[2]Re Hayes (No 2) [2022] VSC 515 (‘costs reasons’).
By orders made 1 September 2022, the applicant, Mr Connor and Constable Connor & Co were to file written submissions addressing the question of whether and to what extent they should indemnify the applicant in respect of the plaintiff’s costs. Mr Connor and Constable Connor & Co were also added to the application as non-parties for the purposes of investigating whether they may have contravened any of their overarching obligations, specifically those contained in ss 18 and 24 of the Civil Procedure Act.
On 26 September 2022, the Court received submissions on this issue filed on behalf of the applicant, Mr Connor and Constable Connor & Co.
Should the applicant pay the plaintiff’s costs on an indemnity basis?
Applicable principles
Costs are in the discretion of the Court, unless otherwise provided by an Act, such as the Civil Procedure Act, or the Supreme Court (General Civil Procedure) Rules 2015 (Vic).[3] Within this legislative framework, the discretion is informed by general practices or guidelines,[4] seeking to do justice between the parties.[5]
[3]Supreme Court Act 1986 (Vic) s 24; Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.02.
[4]See Northern Territory v Sangare (2019) 265 CLR 164, 172–173 [24]–[25] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ); Innes-Irons v Forrest (Costs) [2017] VSC 10, [5] (Derham AsJ).
[5]Oshlack v Richmond River Council (1998) 193 CLR 72, 96 [65] (McHugh J); Gray v Richards (No 2) (2014) 315 ALR 1, 2 [2] (French CJ, Hayne, Bell, Gageler and Keane JJ). See also Chen v Chan (No 2) [2009] VSCA 233, [10] (Maxwell P, Redlich JA and Forrest AJA).
In probate proceedings, there are certain exceptions to the usual approach that costs follow the event.[6] As it is not argued that an exception applies here, the starting position is that the applicant should pay the plaintiff’s costs.
[6]Re Tsaousis [2019] VSC 511, [32]–[33] (McMillan J); Ballam v Ferro (No 2) [2022] NSWSC 1358, [75]–[80] (Hallen J).
The general rule concerning executors is that ‘costs properly and reasonably incurred by the executor in connection with the administration of the estate are payable from the estate’.[7] To avoid an executor being left out of pocket through acting in their representative capacity, they are usually entitled to their costs from the estate on an indemnity basis, so far as those costs have not otherwise been paid by another person.[8] However, the Court may depart from such an approach where appropriate.[9]
[7]Nobarani v Mariconte (No 2) (2018) 360 ALR 390, 391 [2] (Kiefel CJ, Gageler, Nettle, Gordon and Edelman JJ). See also National Trustees Executors and Agency Company of Australasia Ltd v Barnes (1941) 64 CLR 268, 274 (Starke J).
[8]Trustee Act 1958 (Vic) s 36(2), see also s 3 (definition of ‘trust’); Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.26. See also Re Vasiliades; Pappas v Vasiliades (No 2) [2022] VSC 16, [19] (McMillan J); Re Cvitkovic [2022] VSC 571, [32] (McMillan J).
[9]Re Cvitkovic (n 8) [32]–[33] (McMillan J).
Generally, costs payable by an unsuccessful party are quantified on the standard basis, unless a proceeding exhibits a special or unusual feature or special circumstances so as to warrant the making of an award of indemnity costs.[10] The categories of circumstances in which an award of indemnity costs may be made are not closed,[11] and may include: evidence of particular misconduct that causes loss of time;[12] unreasonable conduct causing unnecessary costs to be incurred;[13] the fact that a proceeding was commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law;[14] and ‘the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud’.[15] In Yara Australia Pty Ltd v Oswal, the Court of Appeal referred to the issue as whether a party had engaged in ‘unmeritorious or deliberate improper conduct such as would warrant the court showing its disapproval and at the same time preventing the [other party] being left out of pocket’.[16]
Plaintiff’s submissions
[10]Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 233 (Sheppard J) (‘Colgate-Palmolive’); Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7]–[8] (Harper J) (‘Ugly Tribe’); PCRZ Investments Pty Ltd v National Golf Holdings Ltd [2002] VSCA 24, [36] (Chernov JA, Callaway and Buchanan JJA agreeing).
[11]Ugly Tribe (n 12) [8] (Harper J).
[12]Colgate-Palmolive (n 10) 233 (Sheppard J).
[13]Ballam v Ferro (No 2) (n 6) [68] (Hallen J), quoting Vector Corrosion Technologies Ltd v E-Chem Technologies Ltd [2022] FCA 519, [38] (Jagot J).
[14]Colgate-Palmolive (n 10) 233 (Sheppard J).
[15]Ibid.
[16](2013) 41 VR 302, 317 [57] (Redlich and Priest JJA and Macaulay AJA) (‘Yara’). See also Bolitho v Banksia Securities Ltd (No 18)(remitter) [2021] VSC 666, [2048] (John Dixon J) (‘Bolitho’).
The plaintiff’s submissions were set out in the costs reasons,[17] and it is unnecessary to recount them in any detail here. In overview, the plaintiff asserted that an award of indemnity costs was justified on account of:
[17]Costs reasons [10]–[25].
(a) the applicant’s failure to file separate applications contesting each of the 2008 will and the 2003 will;
(b) the ‘serious allegations of impropriety’ made against the plaintiff in an unsworn affidavit of Mr Connor dated 8 July 2020 (‘the Connor affidavit’);
(c) the applicant’s reliance on unsworn affidavits and failure to respond to the plaintiff in this regard;
(d) the applicant’s failure to respond to the plaintiff on the question of costs; and
(e) the fact that it would be unfair to burden the beneficiaries of the deceased’s estate with the gap between the plaintiff’s costs (on an indemnity basis) and a party-party costs order on a standard basis.
The submissions also emphasised findings of the Court in the reasons regarding certain paragraphs of the applicant’s particulars, including that they lacked specification,[18] did not raise concern,[19] and were speculative and vague, with no particular factual basis.[20]
Submissions on behalf of the applicant, Mr Connor and Constable Connor & Co
[18]Reasons [42].
[19]Reasons [39].
[20]Reasons [56].
The submissions made on behalf of the applicant, Mr Connor and Constable Connor & Co following delivery of the costs reasons adopted the principles as to indemnity costs set out in Re Janson; Gash v Ruzicka (No 3).[21] Reliance was also placed upon Lutar v Carley,[22] in which the Court declined to order indemnity costs. The circumstances deemed to warrant an award of indemnity costs in Re Anderson (No 2)[23] were said to be distinguishable.
[21][2022] VSC 557.
[22][2017] VSC 366.
[23][2017] VSC 463.
In regard to the allegations of impropriety, Mr Connor and Constable Connor & Co asserted that the Connor affidavit was ‘an exemplary document prepared with the utmost care in extreme and urgent circumstances’, which displayed Mr Connor’s ‘full knowledge and understanding’ of his Civil Procedure Act obligations. In addition, it was submitted that the Connor affidavit – along with all other documents put forward by the applicant in the proceeding – was prepared by counsel, and thus Mr Connor and Constable Connor & Co could not be criticised for adopting and acting on it.
In regard to the plaintiff’s submissions in respect of an award of indemnity costs against the applicant, it was submitted that as the applicant is not a lawyer, ‘the decisions of [her] lawyers in the conduct of a proceeding do not call for indemnity costs personally against’ her. Further, it was submitted that the admitted failure of Mr Connor to carry out the last step regarding the swearing of the affidavits could not be a basis to award indemnity costs against the applicant, or against Mr Connor or Constable Connor & Co.
Consideration
The plaintiff acted reasonably and properly in defending the application and is entitled to his costs from the estate on an indemnity basis. An order that the applicant pay the plaintiff’s costs on a standard basis would leave the estate out of pocket in view of the shortfall between the plaintiff’s costs assessed on an indemnity basis and costs assessed on a standard basis. Such a shortfall would unduly burden the beneficiaries of the 2008 will.
Procedurally, the applicant filed her overarching obligations certificate three weeks after commencing the proceeding; relied upon unsworn affidavits; failed to comply with r 11.02(2)(b) of the Supreme Court (Administration and Probate) Rules 2014 (Vic) (‘the Probate Rules’) regarding the provision of grounds of revocation; filed grounds of revocation the morning her summons was returnable; failed to seek leave before filing and serving amended grounds; served amended grounds three days after the plaintiff’s objections to the grounds were filed; and failed to respond to the plaintiff’s attempt to settle costs. The applicant also raised serious allegations of undue influence against the deceased’s wife and other beneficiaries of the 2008 will and the 2003 will, particularly Jennifer Wright (‘Jennifer’) and Elizabeth Kay Gibson (‘Kay’), before abandoning these allegations in her amended grounds.[24]
[24]Reasons [7].
As identified in the reasons, the factual basis upon which the applicant relied had significant shortcomings.[25] Although fraud was not pursued as a discrete ground, as in Re Anderson (No 2),[26] it was asserted in a broad and unsupported way.[27] Further, the particulars in relation to lack of knowledge and approval which questioned the plaintiff’s joint status as executor and witness were without merit.[28]
[25]Reasons [42]–[44], [56]–[57].
[26][2017] VSC 463.
[27]See [35] below.
[28]Reasons [39].
The applicant was dogged in her belief that as the deceased’s ‘next of kin’ she had, or should have, certain rights. This was reflected in correspondence exhibited to affidavits, including her search for a legal ‘loophole’;[29] an email sent by the applicant’s former solicitors to the plaintiff on 4 June 2020 in which a demand was made for the payment of $300,000 plus costs to her and her family members (which figure equated to approximately one third of the estate); and an email sent directly to the plaintiff on 1 September 2020, stating:
Confirmation that claim can still be actioned, irrespective of the the (sic) Part 4 eligible list. 2. There are medical records, prior to 2003 of [the deceased’s] health that clearly illustrate [the deceased] would have suffered capacity of clear thinking, as a clear symptom of his prognosis.
[29]See [39]–[41] below.
However, as the applicant was seemingly advised, there was a significant difficulty with commencing a claim under Part IV of the Administration and Probate Act 1958 (Vic) (‘the Administration and Probate Act’) . While she ultimately pursued an application for revocation, the particulars upon which she relied were weak and, in some respects, incapable of supporting the grounds claimed by her.
The Court is conscious both that litigants should not be dissuaded from commencing meritorious claims and that in the probate jurisdiction, the requirement is to establish a prima facie case such that there is a ‘matter for investigation’.[30] However, several factors justify an order that the applicant pay the plaintiff’s costs on an indemnity basis, including the deficiencies in the plaintiff’s substantive case, combined with the identified procedural matters above; the broad and unsupported allegations of fraud and undue influence; the email sent directly to the plaintiff on 1 September 2020; and the undue burden that would otherwise fall on the beneficiaries of the 2008 will.
[30]Gardiner v Hughes (No 2) [2019] VSCA 198, [80]–[81] (Kyrou, McLeish and T Forrest JJA).
To the extent that Constable Connor & Co asserted that the applicant should not be accountable for decisions of her lawyers in the form of indemnity costs, the applicant has her own obligations under the Civil Procedure Act to ensure that claims have a proper basis, costs are reasonable and proportionate, delay is minimised, and the issues in dispute are narrowed.[31] The factors identified above are inconsistent with such obligations and their breach justifies an award of indemnity costs in favour of the plaintiff.[32]
[31]Civil Procedure Act, ss 10(1)(a), 18(d), 23–25.
[32]See Yara (n 16) 317 [56] (Redlich and Priest JJA and Macaulay AJA).
Should Mr Connor and/or Constable Connor & Co indemnify the plaintiff?
As noted above, the Court of its own motion requested submissions as to whether Mr Connor and/or Constable Connor & Co should indemnify the applicant in respect of the plaintiff’s costs, and ordered that both Mr Connor and Constable Connor & Co be joined as non-parties to investigate any contraventions of the Civil Procedure Act, specifically the obligations contained in ss 18 and 24.
Plaintiff’s submissions
While the plaintiff asserted that Mr Connor contravened ss 18 and 23 of the Civil Procedure Act in his original submissions on costs, he did not make further submissions as to whether Mr Connor and/or Constable Connor & Co should indemnify the applicant.
Submissions of the applicant, Mr Connor and Constable Connor & Co
The submissions of the applicant, Mr Connor and Constable Connor & Co emphasised the role of counsel in the proceeding. They drew attention to the fact that the proper basis certificate was signed after the initial conference between counsel and the applicant, and that all formal documents filed and served in the proceeding on behalf of the applicant were prepared and/or approved by two counsel, including the documents that made allegations of impropriety. It was asserted that a solicitor cannot be criticised for acting upon the advice of experienced counsel,[33] and that the duty of a solicitor to intervene only arises where a view is formed that counsel’s advice is clearly wrong.[34]
[33]Citing Davy-Chiesman v Davy-Chiesman [1984] Fam 48.
[34]Citing Bolitho (n 16); Re Albert (a barrister) and McLean (a solicitor) [2021] VSC 297; Harley v McDonald [1999] 3 NZLR 545; Patel v Tailor [2021] NZHC 3164.
Additionally, it was said that there were ‘many possible innocent explanations’ for failing to respond to correspondence in a timely fashion, such as illness/incapacity of the applicant. It was said that to advance evidence or documents in support of these possible explanations would be ‘inappropriate (and unfair to the plaintiff)’.
As to the merits of the applicant’s case, it was submitted that the question of a prima facie case in a revocation application is one upon which reasonable minds may differ. Further, it was stated that the applicant’s lawyers were keen to ‘press on the Court’ evidence regarding certain items of the deceased’s assets.
Ultimately, it was asserted that there was no basis for awarding indemnity costs against Mr Connor or Constable Connor & Co, and that such an order could not be made without a hearing ‘in which multiple witnesses are examined and cross-examined’.
Did Mr Connor and/or Constable Connor & Co contravene s 18 of the Civil Procedure Act?
Section 18(d) of the Civil Procedure Act provides that a person to whom the overarching obligations apply must not make any claim in a civil proceeding that does not, on the factual and legal material available to the person at the time of making the claim, have a proper basis. The principles guiding the operation of s 18(d), identified by John Dixon J in Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5),[35] have been summarised as follows:
(a)The overarching obligations prevail where there is an inconsistency between them and a legal practitioner’s duty to a client. When determining whether an overarching obligation has been contravened it is not relevant to consider that a solicitor was following the client’s instructions.
(b)The time when it is necessary to assess whether there was a proper basis is when a claim is made in a proceeding, for instance by filing a pleading. The statutory obligation is not continuous or ongoing, and material which only becomes known at a later time is not relevant.
(c)A person can discharge the overarching obligation by demonstrating a reasonable belief based on the available factual and legal material.
(d)Dismissal of a claim by a trial court does not create a rebuttable presumption that the claim lacked a proper basis when it was made.[36]
[35](2014) 48 VR 1 (‘Dura’).
[36]Elvin v Davey [2022] VSC 214, [82] (Keogh J), citing Dura (n 35) 33–35 [83]–[84], [87]–[89] (John Dixon J).
‘Claim’ in the context of s 18(d) is viewed as a cause of action or an assertion of a right that entitles a party to relief.[37] Of relevance is the nature of the litigation, in that complex proceedings involving interlocking factual and legal issues may not be readily characterised as ‘plainly unarguable’.[38] Further, as s 18(d) is addressed to the moment in time when a claim is made or responded to, ‘[h]indsight is to be resisted’.[39] The applicable standard of proof is the balance of probabilities, and in making its assessment, the Court must consider the gravity of the matters alleged, the nature of the claim and the subject matter of the proceeding.[40]
[37]Bolitho (n 16) [1344] (John Dixon J).
[38]Dura (n 35) 29 [74] (John Dixon J).
[39]Valentini (a pseudonym) v Trustees of the Marist Bros (Costs) [2022] VSC 550, [93] (Forbes J), citing Dura (n 35) 35 [89] (John Dixon J).
[40]Evidence Act 2008 (Vic) s 140(2). See also Dura (n 35) 42 [108] (John Dixon J); Elvin v Davey (n 36) [90]–[91] (Keogh J); Bolitho (n 16) [1384]–[1385] (John Dixon J).
In this proceeding, at least two different points may be identified as the relevant time for assessment of a proper basis. First, the parties’ submissions are directed toward the allegations made in the Connor affidavit, which was filed in support of the application on 8 July 2020. Alternatively, the ‘potential allegations’ referred to in the Connor affidavit crystallised into the applicant’s grounds for revocation filed 7 August 2020 (‘the grounds’). As such, it may be that a ‘claim was made’ at that time for the purposes of s 18(d). For the sake of completeness, both points in time will be considered.
The application was commenced by way of summons for revocation, with the Connor affidavit being the only supporting document at that time. Despite r 11.02(2)(b) of the Probate Rules, the Connor affidavit did not set out any particularised grounds upon which it was argued that the grant of probate of the 2008 will should be revoked. Rather, it asserted:
On the material so far before me, and bearing in mind my primary obligation to the Court, I believe that potential allegations of fraud, undue influence, incapacity, promissory estoppel and unconscionable conduct, are worthy of investigation and have signed the required proper basis certificate on this basis.
The application also failed to comply with s 42(1)(a) of the Civil Procedure Act, as it was not accompanied by a proper basis certificate, albeit a certificate was filed three days later.
In the Connor affidavit, Mr Connor deposed to having ‘scant material’ before him in the context of having received ‘urgent, last minute instructions’ from the applicant. He referred to spending much of his time examining the ‘huge delay’ in commencing the application, and noted that ‘the limitation period’ was ‘looming’. Two letters were referenced, one from the plaintiff’s firm to the applicant’s former lawyers dated 25 May 2020, and a second dated 5 July 2020 from Mr Connor to the plaintiff’s firm. The former letter referred to distribution of the deceased’s estate taking place shortly after 9 July 2020 if the plaintiff had not been served with a proceeding under Part IV of the Administration and Probate Act prior to then. The latter letter sought an undertaking that the estate would not be distributed prior to further investigations, as well as agreement in principle for the plaintiff to provide Mr Connor with an authority to obtain the deceased’s medical and nursing home records. Reference was made to the Civil Procedure Act, and the initiation of legal proceedings within the ‘next day or so’ in the absence of an ‘immediate and positive reply’.
The concern for urgency in filing the application on the basis of expiration of a limitation period was misconceived. While applications under Part IV of the Administration and Probate Act are subject to a statutory period within which an application may be made,[41] applications for revocation are not. Although in May 2020 the plaintiff had foreshadowed distributing the estate from 9 July 2020, the sense of urgency attributed to a ‘looming’ limitation period in the Connor affidavit was inaccurate, and the requirement for the claims to have a proper basis remained. More particularly, Mr Connor could not rely upon the expiration of a limitation period to excuse the absence of a proper basis certificate under s 44(1) of the Civil Procedure Act, and the failure to provide a proper basis certificate initially may be taken into account in determining costs.[42]
[41]Administration and Probate Act 1958 (Vic) s 99.
[42]Civil Procedure Act, s 46.
Returning to the ‘potential allegations’ of fraud, undue influence, incapacity, promissory estoppel and unconscionable conduct, the factual material upon which Mr Connor based his assertions was, on his own evidence, ‘scant’. From the material before the Court, it appears that Mr Connor received forwarded emails from the applicant on at least 17 June 2020 and 5, 6 and 7 July 2020. The applicant’s emails contained hearsay, as well as broad and serious allegations. For instance, in an email dated 24 November 2019 sent to another lawyer (and later forwarded to Mr Connor), the applicant stated:
I finally get (sic) a letter from [the plaintiff] addressing some of our queries.
…
You will notice that [the plaintiff] states there were two Wills - one in 2003 and then 2008. This is odd to us, when [the deceased’s wife] passed away n (sic) 2013. Would not a lawyer advise [the deceased] to an (sic) updated Will after she passed? [The deceased’s wife] was quite dominating.
…
We do not know the Will … [The deceased] has willed his estate to [the deceased’s wife] when she passed away before him. Maybe then it passes to Kay after he passes. If this is the case, obviously, we contest this under Part 4 [of the Administration and Probate Act] … as [the deceased] would have a care to his nieces and nephews. … I am aware how to do a probate caveat.
…
[The deceased] owns his house [in] Kilmore valued at about 900 000- 1 mill. We believe that [the deceased’s wife] would have been 50% of their estate and thus 50% be Willed to her family, but stand firm that [the deceased’s] family should also be acknowledged.
In a further email dated 28 November 2019 responding to a prompt from the lawyer to clarify her claim, the applicant provided:
I read the entire [Administration and Probate Act] and what entitles one to contesting [a] Will, or taking a family application under part 4. But, I see this restricts Nieces and Nephews, which I believe to be grossly unfair and wrong, when we are [the deceased’s] next of kin, closer than this [Jennifer’s] family.
[The deceased] informed us that he was under pressure and threats to ensure his estate went all to [Jennifer’s] family.
…
You may have thoughts on our rights as his next of kin. This [beneficiary] preyed on [the deceased] to ensure she received all of the estate.
In an email sent 27 November 2019 to a different lawyer, the applicant stated:
We wish to ensure that we are not booking and outlaying money, when we all ready (sic) know, there is no way we can contest or [be] able to take actions to ensure some right of claim.
I read the [Administration and Probate Act] and it appears, as nieces and nephews, we cannot contest the Will with [a] probate caveat, bring a part 4 application. I feel this [is] unjust when we were close to [the deceased] and he had not (sic) children. We are his Next of Kin.
Unless you have [a] strategy and know how it can be done with a loophole so to speak. I feel the dates of the Wills unusual, making no sense why [the deceased] did not do a Will after his wife passed away. I am sure the Will will state that he Wills all to his wife and in the event she passes before him, all goes to her cousins and her cousins (sic) children. This is why they isolated us, so [the deceased] could not change this. [The deceased’s wife], we know did always give him threats and influence, by always threatening she would leave him if all did not go t to (sic) her and her family. [The deceased] was even scared of her when she passes saying to my Mother that he could not sell the house cause he promised [the deceased’s wife] and she will kill him. My mother thought his mind was not sound saying this, when she had passed away. This is why it is odd that a Will for [the deceased] is stupidly worded that he has to pass everything to his wife when she died before him. A lawyer should advise that he had to do a[n] updated will after she died, even if his Will states in the event she passes away before him. This is stupid wording for a Will[.]
We could put a caveat asap on grounds that we feel possibly the two wills not maybe valid because done before [the deceased’s wife] passed before [the deceased].
In an email to Mr Connor dated 7 July 2020, the applicant reported having spoken to a doctor, who is said to have disclosed the deceased’s ‘extensive, huge, complicated medical issues’ and stated that the deceased had ‘mental/emotional issues’.
Multiple factors ought to have put a practitioner on alert regarding the applicant’s potential claim for revocation, including:
(a) the strength of her belief that the deceased’s next of kin should be acknowledged;
(b) the fact that she was looking for a ‘loophole’ after discussing matters with other lawyers; and
(c) the breadth and nature of her assertions.
These factors ought to have weighed in favour of Mr Connor taking a prudent approach to distilling the facts and evidence. Instead, after sending correspondence to the plaintiff on 5 July 2020, the application for revocation was commenced on 8 July 2020.
Although additional correspondence and information may have passed between Mr Connor and the applicant in June and July 2020, Mr Connor did not refer to such material, and a claim for legal professional privilege was not made. Rather, the submissions disclosed that Mr Connor signed a proper basis certificate after an ‘initial conference with Counsel and the Applicant’, and that allegations of impropriety against the plaintiff were made in documents ‘prepared and/or approved by Counsel’.
Based on the legal and factual material available at the time, Mr Connor could not have reasonably believed that the ‘potential allegations’ in the Connor affidavit had a proper basis. By his own admission, he needed to conduct further investigations, and it was inappropriate to rely upon the applicant’s general assertions. As to Mr Connor’s reliance on the Connor affidavit having been drafted by counsel, it has been observed that ‘[a] solicitor cannot escape liability for lack of diligence on the ground that counsel has been briefed’.[43]
[43]Bolitho (n 16) [1319(f)] (John Dixon J).
Three allegations were made in the grounds as eventually filed:
(a) a lack of testamentary capacity;
(b) undue influence by the deceased’s wife and members of her family; and
(c) a lack of knowledge and approval.
In order to establish a prima facie case, the applicant needed to satisfy the Court that there was a ‘case for investigation’ or ‘some ground’ for making the application,[44] that is, there was ‘enough ‘to go on’ to call for a trial’ regarding the 2008 will and the 2003 will.[45] While the Court may consider the weight that should be given to isolated particulars, an assessment also needs to be made as to whether the particulars as a whole constituted a narrative warranting further investigation.[46]
[44]Gardiner v Hughes (No 2) [2019] VSCA 198, [12] (Kyrou, McLeish and T Forrest JJA).
[45]Ibid [42], [80] (Kyrou, McLeish and T Forrest JJA).
[46]Ibid [82] (Kyrou, McLeish and T Forrest JJA).
The question is therefore whether, on the facts and law available to Mr Connor at the time of filing the grounds, there was a proper basis for believing that there was ‘a case for investigation’ on the matters identified in the grounds.
For the following reasons, Mr Connor could not have held a reasonable belief that there was a proper basis for two of the three allegations made in the grounds.
Testamentary capacity
On the facts known to Mr Connor at the time of filing the grounds, the applicant and her mother had visited the deceased on a limited number of occasions in the preceding 10 to 15 years, although the applicant’s mother did contact the deceased by phone at times. The applicant and her mother provided the following evidence, potentially informing the question of the deceased’s testamentary capacity:
(a) a belief on the part of the applicant’s mother that the deceased was showing ‘cognitive problems’ in 2005 and 2007 and had ‘decaying awareness’ in 2009;
(b) that the deceased had been in and out of hospital in 2008;
(c) that the dispositions made in the 2008 will and the 2003 will were contrary to those expressed to the applicant or members of her family in 1997, 1998 and 2008;[47]
[47]Regarding the intentions allegedly expressed by the deceased in 2008, the particulars were non-specific, with the applicant’s mother stating that she was ‘led to believe’ that the deceased’s house would be willed to her and her family.
(d) that the deceased’s wife would threaten and influence the deceased;[48]
[48]This allegation was not particularised in the grounds, although it is noted that pressure may impact upon testamentary capacity where a person is emotionally vulnerable: see Gardiner v Hughes (No 2) [2019] VSCA 198, [63] (Kyrou, McLeish and T Forrest JJA).
(e) that the deceased did not follow his wife’s wishes as to cremation in 2013, and said that he did not know how she died;
(f) hearsay evidence of a doctor to the effect that the deceased had had ‘mental/emotional issues’ since moving to a nursing home in 2003; and
(g) a belief on the part of the applicant that the deceased had ‘diabetes and associated dementia’ that was prevalent as far back as 2000.
However, this evidence was provided in a context where the death certificate (the accuracy of which the applicant also questioned) identified that the deceased died from advanced cancer; the 2008 will and the 2003 will were duly executed (albeit the applicant raised doubts concerning the involvement of the plaintiff and Jennifer); and the deceased executed a power of attorney in favour of Jennifer in 2016.
Taken together and at its highest, the law and facts known to Mr Connor at the relevant time could not have supported a reasonable belief that the claim regarding the deceased’s testamentary capacity in either 2008 or 2003 had a proper basis. The assertions of the applicant and her mother were general and conclusory in nature, and not contemporaneous with the making of either the 2008 will or the 2003 will, while the medical evidence was both hearsay and non-specific. Further, it is noteworthy that in her emails of late November 2019, the applicant appeared to suggest that she thought that the deceased should have made a new will in 2013.
Undue influence
An allegation of testamentary undue influence ‘is a serious claim of an equitable species of fraud’.[49] The assessment is fact-sensitive and nuanced, with cases identifying that more is needed than an ‘opportunity’ to influence, and drawing a distinction between ‘pressure, persuasion and appeals to affection’ and coercion.[50] It is apparent that the facts known to Mr Connor at the time of filing the grounds suffered from shortcomings similar to the claims concerning testamentary capacity.
[49]Re Savio [2018] VSC 676, [15] (McMillan J).
[50]Ibid [15]–[16] (McMillan J); Montalto v Sala [2016] VSCA 240, [26]–[27], [32] (Warren CJ, Whelan and Santamaria JJA); Re Demediuk [2016] VSC 587, [115]–[118], [149] (McMillan J).
Beyond the terms of the 2008 will and the 2003 will, the allegations relating to undue influence comprised broad assertions about the deceased’s wife’s personality; comments about the deceased that the deceased’s wife is alleged to have made to the applicant’s mother in 2001 and 2002; and isolated comments and observations said to be made by the deceased in 2005, 2007, 2016 and 2019, including that his wife would threaten to leave him.
Many of the particulars relied upon in support of these allegations were non-specific, or had limited or no relevance to the question of coercion in 2003 or 2008. In isolation the particulars were weak, and together they fell well short of forming a narrative. Further, it was apparent to Mr Connor that the deceased did not seek to change his will after the death of his wife and, in 2016, appointed Jennifer as his medical power of attorney. Overall, Mr Connor could not have held a reasonable belief that there was a proper basis for a claim of undue influence. This was also reflected in the fact that this ground was ultimately abandoned in the applicant’s amended grounds.
Lack of knowledge and approval
As the 2008 will and the 2003 will were executed in accordance with s 7 of the Wills Act 1997 (Vic), there is a presumption that the deceased knew and approved of the contents of both wills. The applicant was required to establish a prima facie case rebutting this presumption. The particulars upon which she relied fell into the following broad themes: inconsistency between the contents of the 2008 will and of the 2003 will and the deceased’s previously expressed testamentary wishes; the suspicious circumstances that were said to surround the making of the 2008 will and the 2003 will; and the behaviour of the plaintiff and Jennifer in the period leading up to and following the death of the deceased.
The particulars seeking to impugn the circumstances in which the 2008 will was made were weak, pointing only to the plaintiff’s status as executor and witness under the 2008 will, and evidence from 2019 that Jennifer was a client of the plaintiff’s firm. Both separately and taken together, these particulars could not have established a prima facie case of suspicious circumstances surrounding the making of the 2008 will or the 2003 will. Similarly, the particulars relied upon as raising suspicion regarding the conduct of the plaintiff and Jennifer were sparse, limited to a telephone conversation the applicant is alleged to have had with each individual and the fact that the deceased was not cremated despite instructions for such in the 2008 will.
The most substantial elements of the applicant’s knowledge and approval ground appeared to have been the apparent conflict between the contents of the 2008 will and the 2003 will and previous representations made to the applicant’s mother in around 2008, a missing reference to a particular gun collection, and negative comments that the deceased was alleged to have made regarding individuals who ultimately benefited under the 2008 will and the 2003 will. However, the particulars in this regard were again general, and in some respects, were not temporally connected to the making of either the 2008 will or the 2003 will.
Overall, despite the deficiencies in the claim as made in the grounds, the Court cannot conclude that Mr Connor could not have had a reasonable belief that the knowledge and approval ground had a proper basis. When taken as a whole at the time that the claim was made, it may have been that a narrative could have been identified which established a matter for investigation. However, as discussed below, evidence that the plaintiff subsequently filed weighed heavily against such a narrative.
Did Mr Connor and/or Constable Connor & Co contravene ss 23 and/or 24 of the Civil Procedure Act?
In accordance with s 23 of the Civil Procedure Act, Mr Connor was obliged to use reasonable endeavours to resolve by agreement any issues that could be resolved in that way, and to narrow the scope of the remaining issues in dispute.[51]
[51]While there are two express exceptions to this obligation outlined in s 23(c) and (d), they are not applicable in the circumstances.
Section 24 ‘imposes a positive obligation to take steps to ensure that costs are not excessive’.[52] It provides that reasonable endeavours must be taken to ensure that costs are reasonable and proportionate to the complexity or importance of the issues in dispute and the amount in dispute. A flexible test is to be applied, requiring the Court to ‘weigh the legal costs expended against the complexity and importance of the issues and the amount in dispute, in order to determine whether the parties used reasonable endeavours to ensure those costs were proportionate’.[53] The obligation is non-delegable, and a client’s instructions do not relieve a practitioner of responsibility.[54] The question of contravention requires an ‘objective evaluation’ of a person’s conduct, having regard to the issues and amount in dispute in the proceeding.[55]
[52]Yara (n 16) 307 [12] (Redlich and Priest JJA and Macaulay AJA).
[53]Ibid 307 [13] (Redlich and Priest JJA and Macaulay AJA).
[54]Ibid 307 [14] (Redlich and Priest JJA and Macaulay AJA).
[55]Ibid.
The scope of s 24 includes an obligation to ensure that parties are not over-represented,[56] and that large volumes of excessive and unnecessary material are not provided to the Court.[57]
[56]Ibid 313 [33] (Redlich and Priest JJA and Macaulay AJA).
[57]Ibid 314 [40] (Redlich and Priest JJA and Macaulay AJA).
At the resolution of the substantive issues in the proceeding, the plaintiff’s costs assessed on a standard basis were estimated to be $47,962. The conduct of the applicant in the proceeding that unnecessarily contributed to this figure included:
(a) relying upon unsworn evidence, necessitating additional requests from the plaintiff for sworn affidavits;
(b) commencing the proceeding with broad allegations and no particularised grounds, necessitating consideration by the plaintiff and the making of submissions by counsel;
(c) filing grounds on the day of the first directions hearing;
(d) including within the grounds two allegations that lacked a proper basis;
(e) abandoning a ground three days after the plaintiff filed his objections to the grounds, such that nearly two pages of the opposition to the grounds drafted by counsel and four paragraphs of the plaintiff’s affidavit (which required instructions to be sought) were no longer relevant; and
(f) persisting with the knowledge and approval ground, even in the context of evidence deposed by the plaintiff in his affidavit of 28 August 2020.
Regarding the latter, the plaintiff’s affidavit of 28 August 2020 noted, amongst other things: that Jennifer did not become a client of his firm until 2019; that the deceased’s gun collection was sold in 2000; that the deceased met Kay in 1948; and that the plaintiff had been provided with ‘ample photographic evidence’ of the deceased’s continued involvement with Jennifer, Kay and their families since that time. A number of photographs were exhibited in this regard. Also exhibited were a medical referral and a care plan from 2016, neither of which identified any cognitive issues prior to 2016. In light of such evidence, Mr Connor should have seriously questioned the key issues which remained in dispute, and whether there was merit in pursuing the claims. However, the factors listed in [64], in addition to the following correspondence sent on 2 September 2020, suggest that save for abandoning the undue influence ground, Mr Connor was prepared to allow the litigation to run its course with little regard to the real issues in dispute and associated costs:
My client does not know the Rules and she is very (very) passionate about this matter.
She wants to achieve Justice.
I have tried to explain to her that this matter is not about Justice, but about the law in Victoria.
I do not know if she will ever understand the difference, but I have tried to explain it to her.
…
My client thinks you are Satan so I have forbidden her to attend Friday’s Hearing.
…
I totally understand how you could easily forget that you were appointed executor. My client’s barristers do not, so I assume a Judge will not either.
Unfortunately, you will also need to explain, at some stage, your brain fade in reference to refusing to provide my client with a copy of the Will at her first request.
…
Anyway, I am looking forward to the Hearing on Friday. Not because you are under the pump, but because we may achieve something significant in terms of the development of the law in this area, which seems to have been stuck unmoved for a couple of centuries.
This ‘prima facie’ case requirement needs to be consigned to the dustbin of history. I think this may be the case for the Court of Appeal to do just that.
Happy to discuss on the understanding that my client is in no mood to talk settlement. I can’t see that changing until after the Court’s decision after argument on Friday.
Mr Connor’s focus on the plaintiff’s error regarding his knowledge of the deceased and failure to provide copies of testamentary documents upon the applicant’s initial request is misconceived. Further, on one view, in light of the deficiencies in the applicant’s particulars, the above correspondence perhaps suggests that Mr Connor was seeking to leverage the ‘prima facie case’ threshold with limited regard to the strength of the grounds or the applicant’s overall case and associated costs. At the very least, Mr Connor’s conduct was at odds with his overarching obligation to narrow the issues in dispute.[58]
[58]Civil Procedure Act, s 23.
Mr Connor also failed to provide any response to the plaintiff’s attempt to settle costs on a standard basis. The difference between the figure said to have been proposed in orders by consent and that which is now sought by the plaintiff on an indemnity basis is approximately $5,477.
While the estate is not small, the issues in dispute were not complex. Given the combined factors set out above, the Court is satisfied on the balance of probabilities that Mr Connor did not use reasonable endeavours to ensure that costs were reasonable and proportionate to the issues in dispute, and nor did he seek to narrow the issues in dispute. In reaching this conclusion, the Court is conscious of the gravity of the issues, and that it must ‘feel an actual persuasion of circumstances which established the contravention’.[59]
[59]Elvin v Davey (n 36) [91] (Keogh J), citing NOM v Director of Public Prosecutions (2012) 38 VR 618, 655 [124] (Redlich and Harper JJA and Curtain AJA).
Two further points of concern should be noted, albeit they relate to the applicant’s costs:
(a) at least from the filing of the grounds, both leading and junior counsel were instructed where the issues in dispute concerned an estate of approximately $1 million and chiefly turned on the available evidence rather than complex questions of law; and
(b) Mr Connor participated in conferences with counsel and the applicant, deposed an affidavit and commenced the application prior to providing the applicant with a costs estimate.
Should an order be made under s 29 of the Civil Procedure Act?
If satisfied that a person has contravened an overarching obligation, s 29 of the Civil Procedure Act ‘empowers the court with a wide discretion to make any order it considers appropriate in the interests of justice’.[60] This includes an order that the person pay some or all of the legal costs of any person arising from the contravention. Additionally, s 28(2) enables the Court, ‘in exercising its discretion as to costs, to take into account any contravention of the overarching obligations’.[61] The Court of Appeal has described these provisions as providing ‘a powerful mechanism to exert greater control over the conduct of parties and their legal representatives’, and the process of civil litigation more generally.[62] By these provisions, it is said that:
… Parliament has given the courts flexible means of distributing the cost burden upon and across those who fail to comply with their overarching obligations. A sanction which redistributes that burden may have the effect of compensating a party. It may take the form of a costs order against a practitioner, an order that requires the practitioner to share the burden of a costs order made against their client or an order which deprives the practitioner of costs to which they would otherwise be entitled. The [Civil Procedure Act] is clearly designed to influence the culture of litigation through the imposition of sanctions on those who do not observe their obligations. Moreover, the power to sanction is not confined to cases of incompetence or improper conduct by a legal practitioner. Where there is a failure by the practitioner, whether solicitor or counsel, to use reasonable endeavours to comply with the overarching obligations, it will be no answer that the practitioner acted upon the explicit and informed instructions of the client.[63]
[60]Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd (No 8) [2014] VSC 567, [254] (John Dixon J) (‘Hudspeth’).
[61]Yara (n 16), 310 [21] (Redlich and Priest JJA and Macaulay AJA). See also Civil Procedure Act, s 65C.
[62]Ibid.
[63]Ibid 309–10 [20] (Redlich and Priest JJA and Macaulay AJA).
In applying s 29, a two-step process is involved: the Court first considers whether an order should be made, before turning to the type of order.[64] In making an order under s 29, the Court must seek to give effect to the overarching purpose set out in s 7(1) of the Civil Procedure Act,[65] namely, the facilitation of the just, efficient, timely and cost-effective resolution of the real issues in dispute. Further, an order will ‘ordinarily be limited to costs or expenses that were caused by the contravention of an obligation to the court’.[66]
[64]Hudspeth (n 60) [255] (John Dixon J).
[65]Ibid [257] (John Dixon J).
[66]Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd (No 4) [2013] VSC 14, [5] (John Dixon J), referred to in Yara (n 16) 310–1 [24] (Redlich and Priest JJA and Macaulay AJA). See also Bolitho (n 16) [1724] (John Dixon J); Yunghanns v Colquhoun-Denvers (s 29 CPA application) [2021] VSC 243, [109]–[110] (Daly AsJ).
Mr Connor’s client was particularly passionate and sought to rely upon broad allegations of a serious nature. In such circumstances, he should have been especially alert to his obligations under the Civil Procedure Act. Although he deposed to being aware of his obligations at the commencement of the proceeding, his conduct demonstrated otherwise. In contravening s 18(d), Mr Connor made sweeping allegations without a proper basis and allowed two grounds to be pursued that should never have been commenced. Additionally, many of the factors in [64] above were procedural issues that went largely unexplained, and Mr Connor failed to seek to narrow the factual areas of dispute as the matter progressed. Ultimately, it is in the interests of justice that an order be made against Mr Connor and Constable Connor & Co (as the solicitor on record).
Given the contraventions of ss 18, 23 and 24 of the Civil Procedure Act, it is appropriate that Mr Connor and Constable Connor & Co bear a proportion of the costs owed by the applicant to the plaintiff, that is, the costs arising from:
(a) the allegations made in the Connor affidavit that were without a proper basis;
(b) the allegations of lack of testamentary capacity and undue influence that were made without a proper basis;
(c) the amending of the grounds three days after the plaintiff’s objections to the grounds were filed; and
(d) the failure to provide sworn evidence.
While it may be that these costs could be separately itemised, in light of the need to facilitate the just, efficient, timely and cost-efficient resolution of this matter, the Court considers it preferable to weigh the issues as a proportion of the plaintiff’s total costs of the proceeding. In particular, the proper basis that arguably existed for the knowledge and approval ground, the appropriate decision to abandon the undue influence ground, and the need to ensure that lawyers are not deterred from acting for clients with meritorious claims need to be taken into account. Further, an adjustment should be made in recognition of the overlap between the factors justifying costs paid on an indemnity basis and those supporting the conclusion that ss 18, 23 and 24 of the Civil Procedure Act have been contravened. Overall, it is in the interests of justice for Mr Connor and Constable Connor & Co to indemnify the applicant as to 25 per cent of the costs owing to the plaintiff.
Such a conclusion has been approached by the Court with considerable caution.[67] However, in light of the overarching purpose of the Civil Procedure Act and its intended influence on the culture of litigation,[68] the cumulative weight of the conduct of Mr Connor and Constable Connor & Co in the proceeding justify accountability by way of sharing the applicant’s costs burden.
[67]Dura (n 35) 39 [97] (John Dixon J).
[68]Civil Procedure Act, s 7. See also Yara (n 16) 309–10 [20], 311 [26] (Redlich and Priest JJA and Macaulay AJA).
Conclusion
The applicant is to pay the costs of the plaintiff on an indemnity basis and Mr Connor and Constable Connor & Co are to indemnify the applicant as to 25 per cent of the costs owing to the plaintiff.
Orders
The Court orders that:
(a) the applicant pay the plaintiff’s costs of and incidental to the application assessed on an indemnity basis; and
(b) the solicitors for the applicant, Mr Peter Connor and his firm Constable Connor & Co, indemnify the applicant as to 25 per cent of those costs.
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