Re Maddock; Bailey v Maddock (No 2)
[2023] VSC 2
•12 January 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S PRB 2020 24528
| MARCIA BAILEY | Plaintiff |
| v | |
| NELLIE THELMA O’CONNOR-GUNN and NORMAN WILLIAM MADDOCK JUNIOR (as executors of the will and estate of SHIRLEY TAYLOR MADDOCK, deceased) | Defendants |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 12 January 2023 |
CASE MAY BE CITED AS: | Re Maddock; Bailey v Maddock (No 2) |
MEDIUM NEUTRAL CITATION: | [2023] VSC 2 |
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COSTS – Contested probate proceeding – Where former defendant objected to grant on grounds of lack of testamentary capacity and suspicious circumstances – Where plaintiff did not accept open offer – Where determination of validity of will required prior to approval of compromise – Where plaintiff unsuccessful – Where failure to accept open offer was unreasonable in the circumstances – Supreme Court Act 1986 (Vic) s 24 – Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Maurice Blackburn | |
| For the Defendants | Hicks Oakley Chessell Williams[1] |
[1]The former defendant, Shirley Taylor Maddock, by her administrator, Australian Unity Trustees Limited, was represented by KCL Law.
HER HONOUR:
Introduction
This proceeding concerned the validity of the last will (‘the 2020 will’) of Norman William Maddock (‘the deceased’). Marcia Bailey, a friend of the deceased, is the plaintiff (‘the plaintiff’). The defendant was the deceased’s widow, Shirley Taylor Maddock, by her administrator, Australian Unity Trustees Limited (‘AUTL’). Mrs Maddock died on 30 May 2022 (‘the former defendant’).
Judgment was delivered on 21 June 2022.[2] The proceeding was dismissed, save for costs. The parties were unable to agree on the costs of the proceeding and filed submissions as to their costs.
[2]Re Maddock; Bailey v Maddock [2022] VSC 346.
By orders made 6 December 2022, the former defendant’s children, Nellie Thelma O’Connor-Gunn and Norman William Maddock Junior, in their capacity as executors and trustees of the former defendant’s estate, were substituted as the defendants in the proceeding (‘the defendants’).
Factual background
The details of the instructions given by the deceased to a solicitor, Anthony Naughton of the firm Morley Naughton Pearn & Cook (‘MNPC’), for the making of the deceased’s last three wills and a power of attorney in favour of the plaintiff, as well as in relation to the proposal that the deceased gift a property located in Bentleigh East (‘the Bentleigh East property’) to the plaintiff, are set out in the reasons for judgment.[3] In regard to the latter issue, Mr Naughton opined that if the deceased were to predecease the former defendant, there would be litigation by the former defendant and the deceased’s children.[4] As became clear, the former defendant had already lodged a caveat over the Bentleigh East property. Ultimately, the deceased devised the Bentleigh East property to the plaintiff in the 2020 will.
[3]Ibid [6]–[8], [43]–[57].
[4]Ibid [53].
2020
The deceased died on 17 June 2020. On 14 July 2020, AUTL filed a caveat against the making of a grant of probate of the 2020 will, pursuant to r 8.01 of the Supreme Court (Administration and Probate) Rules 2014 (Vic).
On 30 July 2020 the plaintiff filed an application seeking a grant of probate of the 2020 will. The application was filed by MNPC, as the plaintiff’s solicitors at the time. On the same date, AUTL’s solicitors wrote to MNPC raising concerns as to the validity of the 2020 will. MNPC responded to this correspondence on 10 August 2020.
On 18 August 2020 and in response to a request from the Registrar of Probates, MNPC filed an affidavit of the deceased’s treating doctor, Dr Andrew Batty, sworn on 17 August 2020. Exhibited to Dr Batty’s affidavit was a letter dated 4 February 2020, in which Dr Batty confirmed his belief that the deceased possessed testamentary capacity at the time.
On 19 August 2020 AUTL obtained approval from the Victorian Civil and Administrative Tribunal to pursue the caveat objecting to the plaintiff’s application.
On 25 August 2020 MNPC responded to requests from AUTL’s solicitors for the 2020 will and medical evidence by repeating an earlier assertion that AUTL was in a position of conflict as it had previously acted as administrator for the deceased. MNPC suggested that it could not provide the requested documents because AUTL ‘may be ceasing to act’ and accused AUTL of failing to provide any medical evidence that the deceased lacked testamentary capacity when he made the 2020 will.[5]
[5]In the circumstances, it was not AUTL’s role to provide medical evidence that the deceased lacked testamentary capacity.
On 1 September 2020 AUTL filed grounds of objection, alleging that the deceased lacked testamentary capacity and that the 2020 will was made in suspicious circumstances.
On 15 October 2020 procedural orders were made for, inter alia, the former defendant to be joined to the proceeding and for the plaintiff to provide to the former defendant copies of the 2020 will, the deceased’s death certificate and medical evidence.
On 16 November 2020 a first mediation was held which included the affected beneficiaries, all of whom were separately represented. The first mediation was unsuccessful.
In mid-December 2020 AUTL’s solicitors wrote to MNPC regarding the status of the estate properties. MNPC informed AUTL’s solicitors that the plaintiff and her partner were living at the Bentleigh East property and no rent was being paid by them, and that they were unaware whether anyone was living in the deceased’s holiday property.
2021
Despite no grant of representation having been obtained, in January 2021 MNPC sought AUTL’s consent for the release of estate funds for the purpose of the plaintiff funding her ‘defence’ and administration expenses.
On 25 February 2021 AUTL’s solicitors forwarded a report by Dr Karen Bird, neuropsychologist, to MNPC. The report concluded that at the time of making the 2020 will, it was very likely that the deceased did not have testamentary capacity due to memory and executive function deficits, and had a potentially high level of vulnerability to undue influence. Dr Bird also considered that Dr Batty and Mr Naughton did not conduct adequate assessments of the deceased’s testamentary capacity.
Also on 25 February 2021, AUTL’s solicitors made an open offer to the plaintiff in regard to, inter alia, the proceeding (‘the open offer’). The open offer was made subject to the consent of the residuary beneficiaries of both the 2020 will and the deceased’s penultimate will of 2019 (‘the 2019 will’), and any approval required by the Court. The open offer included terms that the 2019 will be admitted to probate, the plaintiff renounce any rights as executor of the 2019 will, and the plaintiff receive $75,000 from the estate inclusive of her costs. It also included mutual releases, including a release to the plaintiff from any claims regarding a 2019 power of attorney appointing the plaintiff as the deceased’s attorney, or as a result of the occupation of the Bentleigh East property by the plaintiff and her partner.[6] Otherwise AUTL’s right to seek payment of the former defendant’s costs was to be reserved. The open offer was stated to be open for acceptance until 15 March 2021 and was not to be treated as confidential. It was also stated that, if the open offer was not accepted, it would be relied on by AUTL in support of an application for indemnity costs against the plaintiff.[7]
[6]As at the date of the open offer, the plaintiff and her partner had occupied the Bentleigh East property without proper authority to do so and, in any event, without any payment of an occupation rent, for a period of 17 months.
[7]Referring to the principles set out in Calderbank v Calderbank [1976] Fam Law 93; Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435; Imbree v McNeilly (No 2); McNeilly v Imbree (No 2) (2008) 249 ALR 441.
On 17 March 2021 the parties sought consent orders that the proceeding be set down for trial at the earliest available date, given the age and health of the former defendant. On 6 April 2021 the Court informed the parties that it could provide an expedited trial date and listed the trial for 15 June 2021.
On 22 April 2021 MNPC informed the Court that an issue had arisen regarding its ability to continue to act for the plaintiff. MNPC then sought and obtained a ruling from the Law Institute Ethics Committee confirming that MNPC could no longer act for the plaintiff and that she would have to retain new solicitors.[8] As a result, the trial was subsequently re-listed for 13 September 2021.
[8] As discussed above, prior to MNPC acting for the plaintiff, Mr Naughton acted for the deceased in preparing the deceased’s last three wills and a power of attorney which appointed the plaintiff as the deceased’s attorney. He also took instructions from and advised the deceased on an inter vivos transfer of the Bentleigh East property to the plaintiff, upon which a caveat had been lodged by AUTL. The plaintiff was involved with the deceased and, in some respects, with Mr Naughton when he was acting for the deceased.
On 6 May 2021 MNPC ceased to act for the plaintiff and Davis Lawyers filed a notice of change of solicitor acting for the plaintiff.
On 27 July 2021 the plaintiff and AUTL attended an informal mediation where an in-principle agreement was reached as between the plaintiff and AUTL, subject to the approval of the Court and the agreement of the residuary beneficiaries.
On 16 August 2021 AUTL and the residuary beneficiaries, including the Royal Children’s Hospital Foundation (‘RCHF’), attended a private mediation. Terms of settlement were entered into on 16 August 2021.
On 8 September 2021 the plaintiff and AUTL signed conditional terms of settlement, subject to the approval of the Court, pursuant to r 15.08 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘the Rules’). The terms were also subject to AUTL applying for a grant of probate of the 2020 will or the 2019 will or a grant of letters of administration with the 2020 will or the 2019 will annexed.[9] On 8 September 2021 the Court was informed that this proceeding and a related proceeding[10] had resolved.
[9]It is unclear why the former defendant would seek a grant of the 2020 will when that will was objected to by her.
[10]Proceeding no. S ECI 2020 04648.
By email dated 6 October 2021 the Court informed AUTL’s solicitors that approval of the compromise could not occur until a grant of probate had been obtained and that once a grant had been obtained, AUTL should immediately file a summons for approval of the compromise in both proceedings, together with an affidavit, and the Court would consider the application for approval in the usual manner.
On 12 November 2021 AUTL filed an application on behalf of the former defendant seeking a grant of probate of the 2020 will.[11] AUTL’s caveat filed on 14 July 2020 alleging that the deceased lacked testamentary capacity and that the 2020 will was made under suspicious circumstances remained extant in this proceeding.
[11]Proceeding no. S PRB 2021 19648.
On 16 November 2021 the Court informed the parties there was insufficient evidence as to the testamentary capacity of the deceased at the date of the 2020 will. It required, inter alia, contemporaneous medical evidence to be filed together with an affidavit from Mr Naughton as to the steps he took to confirm that the deceased had testamentary capacity at the time of making the 2020 will. Alternatively, the parties were asked to consider whether it might be more appropriate to make an application for a grant of probate in respect of an earlier will of the deceased.
On 22 December 2021 AUTL’s solicitors informed the Court that in view of these concerns, AUTL would file a notice of discontinuance of its application for a grant of probate of the 2020 will. Further, they informed the Court that the 2019 will suffered from similar concerns as those in respect of the 2020 will and that the deceased’s earlier will of 2018 could not be located.
On 23 December 2021 AUTL filed a notice of discontinuance in the proceeding in which it sought a grant of probate of the 2020 will.
2022
On 23 February 2022 the plaintiff retained new solicitors, with a notice of change of solicitor being filed by Maurice Blackburn Lawyers.
Costs sought by the parties
Plaintiff
The plaintiff seeks that the costs of the parties be paid from the estate of the deceased on an indemnity basis. She submits that although judgment went against her, at all times she acted reasonably in seeking a grant of probate of the 2020 will. The 2020 will was drawn by a solicitor with almost 40 years of experience two weeks after Dr Batty had assessed the deceased as being sufficiently in possession of his faculties so as to be able to make a testamentary disposition, and not confused or sufficiently affected by any degenerative mental condition that would adversely impact his capacity to complete his will. Two weeks after the making of the will, Dr Batty formed a like conclusion.
The plaintiff submits that in circumstances where an experienced solicitor prepared the 2020 will and the evidence from the treating doctor proximate to the making of the 2020 will (if not contemporaneous) was that the deceased had testamentary capacity, it was reasonable for the plaintiff to put the 2020 will before the Court. This was a case where the plaintiff reasonably but unsuccessfully propounded a will, and so in bringing about the necessary investigation should no more have to bear her own costs than pay the costs of the other parties.
The plaintiff submits that the Court placed considerable weight upon the report of Dr Bird, which was filed on 8 April 2021, almost 10 months after the commencement of the proceeding.[12] While Dr Bird cast doubt upon the deceased’s testamentary capacity, she was not the deceased’s treating doctor and her report was a medico-legal report only. She submits Dr Bird’s report may have changed the balance of evidence to be weighed, but the question of testamentary capacity remained a live issue.
[12]While Dr Bird’s report was filed on 8 April 2021, the plaintiff received a copy of the report, together with the open offer, on 25 February 2021.
The plaintiff also submits that, practically speaking, the terms of settlement agreed between the parties in July 2021 required the plaintiff to proceed with her application for a grant, which she did.
Defendants
The defendants seek orders that the plaintiff:
(a) pay the former defendant’s costs of and incidental to the proceeding; and
(b) bear her own costs of and incidental to the proceeding;
(c) alternatively, have her reasonable costs and those of the former defendant borne by the estate but limited to the period from the commencement of the application:
(i) until 25 February 2021, when the open offer was made; or
(ii) until 16 November 2021, when it became apparent that the Court was concerned that there was insufficient evidence proving that the deceased maintained the requisite testamentary capacity such that probate of the 2020 will could be granted;
and thereafter the plaintiff should personally bear her own costs and those of the former defendant without indemnity from the estate.
The non-parties
Costs were also incurred by the affected beneficiaries of the 2020 will, namely, Ms O’Connor-Gunn and Mr Maddock Junior in their personal capacities, and RCHF.
These costs were incurred when AUTL and the residuary beneficiaries, including the RCHF, attended a private mediation on 16 August 2021 after the plaintiff and AUTL had attended an informal mediation on 27 July 2021 where an in-principle agreement was reached that was, inter alia, subject to the agreement of the residuary beneficiaries.
By email dated 16 November 2022, Natalie Talia, the solicitor for Ms O’Connor-Gunn and Mr Maddock Junior, informed the Court that Mr Maddock Junior’s costs were $35,000 up to and including the second mediation. However, a significant portion of those costs relate to his foreshadowed claim under Part IV of the Administration and Probate Act 1958 (Vic) rather than issues raised in these proceedings. In addition, further costs have been incurred since in the amount of approximately $3,000.
Ms Talia informed the Court that Ms O’Connor Gunn was separately represented in connection with matters relating to the deceased’s estate. She indicated that her firm had been informed that those costs have been paid and incorporated into the former defendant’s costs.
By email dated 2 December 2022, Simon Crawford, solicitor for RCHF, indicated that RCHF had incurred legal costs in the sum of $7,500 (inclusive of GST) up to and including its preparation and attendance at the second mediation, and it considered these costs to be payable from the estate upon a grant of representation being issued.
Applicable principles
Section 24(1) of the Supreme Court Act 1986 (Vic) provides that costs are in the discretion of the Court, unless otherwise provided for by an Act or the Rules.[13] The general discretion must be exercised in accordance with established principles[14] and through the prism of the civil procedure reforms, which stress the quick, cheap and efficient resolution of the real issues in dispute.[15]
[13]Supreme Court Act 1986 (Vic) s 24(1), exercised in accordance with Ord 63 of the Rules. See also Civil Procedure Act 2010 (Vic) s 65C(1).
[14]Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3) [2012] VSC 399, [11] (Croft J), affirmed on the issue of special costs: Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237, [538]–[551] (Warren CJ, Osborn JA and Macaulay AJA). See also Coombes v Ward (No 2) [2002] VSC 84.
[15]GE Dal Pont, Law of Costs (LexisNexis Australia, 5th ed, 2021) 162–3 [6.15], and in Victoria see Civil Procedure Act2010 (Vic) s 7(1).
The ‘usual order as to costs’ is that a successful party in litigation is entitled to an award of costs in its favour, and the unsuccessful party bears the liability for the costs of the unsuccessful litigation.[16] Such an award is typically for costs of and incidental to the proceeding, which includes costs incurred as part of the preparation of the litigation.
[16]Oshlack v Richmond River Council (1998) 193 CLR 72, 97 [67] (McHugh J).
Costs assessed on the standard basis are all costs reasonably incurred and of a reasonable amount.[17] Costs assessed on an indemnity basis are all costs except insofar as they are of an unreasonable amount or have been unreasonably incurred.[18]
[17] Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.30.
[18] Ibid r 63.30.1.
The prima facie position in respect of costs in litigation is for standard costs to be ordered by the Court. A special costs order will only be made where the proceeding exhibits a special or unusual feature or special circumstances.[19] Each proceeding must be considered on its own facts and, specifically, whether those facts support the making of a special order for costs.
Costs in probate litigation
[19]Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, 230 (Sheppard J), quoting Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, 400–1 (Woodward J).
Although, as in other litigation, the prima facie rule in probate litigation is that costs follow the event,[20] costs are usually paid out of the estate if the litigation has been caused, or contributed to, by the way in which a testator made his or her testamentary intentions known.[21] Where the testator is not the cause of the litigation, but circumstances exist that reasonably call for an investigation, there is usually either no order as to the unsuccessful party’s costs or costs are paid out of the estate.[22] For reasonable grounds calling for an investigation to exist, it must be established that, when a proceeding was commenced, all proper steps were taken to inform the challenger as to the facts of the case and, having done so, the challenger has been led reasonably to the bona fide belief that there were good grounds for impeaching a will.[23] If there is no reasonable cause for investigation — that is, if the unsuccessful party has not acted reasonably — then costs will usually follow the event.[24]
[20]See Twist v Tye [1902] P 92; Spiers v English [1907] P 122; Middlebrook v Middlebrook (1962) 36 ALJR 216, 217 (Dixon CJ); Re Green [1969] WAR 67, 83 (Wolff CJ).
[21]Hall v Carney(No 2) [2012] SASCFC 105, [8]–[12] (Gray J). See also Murdocca v Murdocca (No 2) [2002] NSWSC 505; Becker v Public Trustee of New South Wales [2006] NSWSC 1146, [12]–[15] (Nicholas J).
[22]Ibid.
[23] Davies v Gregory (1873) LR 3 PD 28, 33 (Sir J Hannan).
[24]Gray v Hart (No 2) [2012] NSWSC 1562, [19] (White J); Spiers v English (n 20); Re Cutcliffe’s Estate [1959] P 6; In the will of Millar [1908] VLR 682.
The usual rules relating to probate litigation are founded on the public interest in ensuring, on the one hand, that doubtful wills are not lightly admitted to proof by reason of the cost of opposing them and, on the other, the importance of parties not entering into ‘fruitless litigation’ on the basis that their costs will be paid by others.[25] If the litigation is adversarial litigation, it is common for the Court to apply the usual rule as to costs and order that the unsuccessful party pay the other party’s costs.[26] This means that it cannot be assumed that costs in probate litigation will be allowed either wholly or partly out of the estate.
Open offer
[25]Mitchell v Gard (1863) 3 Sw & Tr 275, 279 (Sir JP Wilde); Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698, 709 (Powell J); Shorten v Shorten(No 2) [2003] NSWCA 60, [15] (Mason P, Meagher and Sheller JJA agreeing).
[26]Re Buckton; Buckton v Buckton [1907] 2 Ch 406, 414–5 (Kekewich J); Murdocca v Murdocca (No 2) (n 21) [76]–[77] (Campbell J); Steel v Ifrah (No 2) [2013] VSC 167, [5] (Dixon J); Warton v Yeo [2015] NSWCA 115, [78]–[79] (Ward JA, Basten and Emmett JJA agreeing).
The defendants rely on the principles set out by the Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) in seeking indemnity costs against the plaintiff.[27] The correct approach is to treat the rejection of a Calderbank offer as a matter to which the Court should have regard when considering whether to order indemnity costs. The critical question is whether the rejection of an offer is sufficient to justify an order for indemnity costs being made. The answer to this question depends upon whether the rejection of the offer was unreasonable in the circumstances, having regard to at least the following matters:
[27](2005) 13 VR 435.
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree’s prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed; and
(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.[28]
[28]Ibid 442 [25] (Warren CJ, Maxwell P and Harper AJA).
The Court of Appeal specifically rejected the notion that an imprudent refusal of an offer of compromise gives rise to a presumption that the party rejecting the offer should pay the offeror’s costs on an indemnity basis if the offeree receives a less favourable result, stating that ‘the correct approach … is to treat the rejection of a Calderbank offer as a matter to which the court should have regard when considering whether to order indemnity costs.’[29]
[29]Ibid 440–1 [18]–[20] (Warren CJ, Maxwell P and Harper AJA).
The Court of Appeal also rejected the proposition that the maker of a Calderbank offer should not be entitled to costs unless the offer sets out with some specificity, the basis for his or her contentions that the compromise should be accepted, stating it is ‘neither necessary or desirable to lay down any general rule in this regard’.[30]
[30]Ibid 442 [26]–[27] (Warren CJ, Maxwell P and Harper AJA).
Consideration
The validity of the 2020 will was contested shortly after the death of the deceased, with AUTL filing a caveat against the making of a grant of probate of the 2020 will. On the day that the plaintiff filed her application for a grant of probate of the 2020 will, AUTL’s solicitors wrote to MNPC raising their concerns as to the validity of the 2020 will. Both the plaintiff and Mr Naughton were well aware — both before and at the time that the application to propound the 2020 will was made — that the application would be contested.
On 3 August 2020 the Court requested the plaintiff to file medical evidence from the deceased’s medical practitioner to establish the testamentary capacity of the deceased at the time the 2020 will was executed. The affidavit of Dr Batty filed in response to the requisition from the Registrar of Probates on 3 August 2020 only referred to consultations with the deceased on 30 December 2019 and 4 February 2020 and failed to provide evidence of testamentary capacity at the relevant date, that is, on 14 January 2020 when the 2020 will was made.
The plaintiff and Mr Naughton should have been aware that Dr Batty’s affidavit was not sufficient to establish the deceased’s testamentary capacity. In view of this and the requisition concerning the deceased’s testamentary capacity, Mr Naughton should also have filed an affidavit as to the deceased’s testamentary capacity, but did not do so.
AUTL filed detailed grounds of objection to the plaintiff’s application on 1 September 2020, and the first mediation, which included the affected beneficiaries with their own legal representation, was held on 16 November 2020, but was unsuccessful.
On 25 February 2021 the plaintiff and Mr Naughton were in possession of Dr Bird’s report and the open offer. Notwithstanding the evidence then relied on by the plaintiff regarding the deceased’s testamentary capacity, the detailed grounds of objection filed by AUTL and the opinion of Dr Bird, the plaintiff did not respond to the open offer and continued to propound the 2020 will. In these circumstances, it was not reasonable for the plaintiff to continue to propound the 2020 will.
After conditional terms of settlement were signed on 8 September 2021, the application effectively proceeded unopposed. The Court indicated on 16 November 2021 that Dr Batty’s affidavit should be considered in light of the evidence that the deceased’s mental state and cognitive function were not stable at the time, and that the notes from Mr Naughton’s will file for the deceased between 13 and 17 January 2020[31] did not reflect an adequate assessment of testamentary capacity. The Court also indicated that in order for it to be in a position to consider making a grant of probate, contemporaneous medical evidence should be filed as well as an affidavit by Mr Naughton as to the steps he took to confirm that the deceased had testamentary capacity at the time of making the will.
[31]As included in Dr Bird’s report.
The plaintiff was unable to provide any contemporaneous medical evidence but continued with her application. Ultimately Mr Naughton’s affidavit sworn 3 March 2022 was provided to the Court and he adopted his evidence in Court on 15 March 2022. In the detailed reasons in the judgment, the Court concluded that the deceased did not have testamentary capacity when he gave instructions for the 2020 will and when he signed the 2020 will.
In all of the circumstances above, it cannot be concluded that the plaintiff at all times acted reasonably in seeking a grant of the 2020 will. AUTL had reasonable grounds to challenge the validity of the 2020 will and, from a very early stage, it took proper steps to inform the plaintiff in detail of the basis of the former defendant’s challenge to the validity of the 2020 will. The plaintiff continued with her application to propound the 2020 will notwithstanding that she was well aware of AUTL’s detailed reasons and the evidence in support of that challenge. The fact that the parties reached a compromise is not to the point, as it was conditional upon, inter alia, a grant of probate being made in the estate of the deceased. The plaintiff was unsuccessful in the litigation and the costs of the proceeding should follow the event.
Open offer
At the date of AUTL’s open offer, the plaintiff was in possession of Dr Batty’s affidavit, AUTL’s detailed grounds of objection to the plaintiff’s application and Dr Bird’s report. She was also aware of AUTL’s position regarding the occupation of the Bentleigh East property by the plaintiff and her partner.
Having regard to the facts known by and documents in the possession of the plaintiff at the date of the open offer and the information that was provided by AUTL in the open offer, the period of time allowed to the plaintiff to consider the open offer was reasonable and the extent of the compromise was generous. The plaintiff’s prospects of success, assessed as at the date of the open offer, were accurately set out by AUTL and the terms of the open offer were clearly expressed. The open offer foreshadowed an application for indemnity costs in the event of the plaintiff rejecting it.
The open offer was made after the failed first mediation on 16 November 2020 and well before the first listing of the trial of the proceeding. The open offer was a genuine offer to settle the proceeding without the need for a trial, in accordance with AUTL’s obligations under the Civil Procedure Act 2010 (Vic). Acceptance of the open offer would have put the plaintiff in a better position than the dismissal of the proceeding and would have substantially reduced the high costs of the proceeding. In view of these factors, the plaintiff’s failure to accept the open offer was unreasonable and the costs of AUTL will be assessed on an indemnity basis as from 15 March 2021.
The non-parties
As set out above, the non-parties incurred costs as a result of attending the mediations arising from the plaintiff’s application to propound the 2020 will. These costs should also be paid by the plaintiff.
Conclusion
The plaintiff was unsuccessful in the proceeding and costs should follow the event. The plaintiff’s failure to accept the open offer was unreasonable and the plaintiff should pay the former defendant’s costs from 15 March 2021 assessed on an indemnity basis, as well as the relevant non-party costs.
Orders
The Court orders:
(a) The plaintiff bear her own costs without any indemnity from the estate of the deceased;
(b) The plaintiff pay the former defendant’s costs of and incidental to the proceeding, assessed on the standard basis up until 15 March 2021 and thereafter on an indemnity basis, to be taxed in default of agreement;
(c) The plaintiff pay the costs of the Royal Children’s Hospital Foundation of and incidental to the proceeding, assessed on the standard basis up until 15 March 2021 and thereafter on an indemnity basis, to be taxed in default of agreement;
(d) The plaintiff pay the costs of Norman William Maddock Junior of and incidental to the proceeding, assessed on the standard basis up until 15 March 2021 and thereafter on an indemnity basis, to be taxed in default of agreement;
(e) The plaintiff pay the costs of Nellie Thelma O’Connor-Gunn of and incidental to the proceeding, assessed on the standard basis up until 15 March 2021 and thereafter on an indemnity basis, to be taxed in default of agreement.
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