Re Mangan
[2016] VSC 480
•12 August 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S PRB 2016 04206
| JOHN ALEXANDER NICHOLAS NORGARD and DALTON ROBIN WALTER TILLYARD | Plaintiffs |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers, written submissions dated 29 July 2016 and 10 August 2016 |
DATE OF JUDGMENT: | 12 August 2016 |
CASE MAY BE CITED AS: | Re Mangan |
MEDIUM NEUTRAL CITATION: | [2016] VSC 480 |
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COSTS — Application for admission of informal codicil to probate — Where further evidentiary requirements of the Court not met — Application referred to Registrar of Probates for grant of will without informal codicil — Plaintiffs sought costs of application to propound informal codicil out of the estate — Whether usual order as to costs should apply — Exceptions to the usual order as to costs in probate litigation — Whether the litigation is the fault of the deceased — Reasonableness of the plaintiff in making the application — No evidence of testamentary intention and other matters — No duty to propound an informal document — Plaintiffs’ reasonable professional fees to make inquiries into and investigate the evidence for the application be paid out of the estate otherwise plaintiffs to bear own costs — Mitchell v Gard (1863) 3 Sw & Tr 275; (1863) 164 ER 1280 — Re Hodges (1988) 14 NSWLR 698
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | — | Whiting Lawyers |
HER HONOUR:
Background
By originating motion filed 17 March 2016, the plaintiffs, who are two of the executors named in the will of Louis Joseph Mangan dated 23 April 2009, sought to propound his will and an informal codicil dated 19 May 2015 (‘the informal codicil’). The informal codicil was not executed in accordance with s 7 of the Wills Act 1997. The deceased died aged 93 years on 27 May 2015, eight days after the date of the informal codicil.
In seeking to propound the informal codicil, the plaintiffs also sought leave to make application, either orally or by way of summons, for orders that the principal legatee, in an amount of $1 million, named as ‘The Cabrini Research Foundation’ in the informal codicil, be construed as a reference to an administrative unit within Cabrini Hospital known as ‘Cabrini Foundation’, said by the plaintiffs to be the deceased’s intended beneficiary.
Due to the evidentiary requirements not being met by the plaintiffs at the first instance, the Court was not satisfied that the deceased intended the informal document to form part of his will. On 7 June 2016, the plaintiffs were informed of the evidentiary requirements that the Court considered had not been met and leave was granted to them to file any further affidavits in support of the application on or before 21 June 2016.
The plaintiffs determined that the further evidentiary requirements could not be met. By email dated 9 June 2016, the solicitors for the plaintiffs informed the Court that the plaintiffs did not seek to rely on any further evidence in support of their application to propound the informal codicil.
Accordingly, on 9 June 2016, orders were made that the proceeding be referred to the Registrar of Probates for a grant of probate of the deceased’s will, without the informal codicil.
Plaintiffs’ application for costs
The plaintiffs seek the costs of the application to propound the informal codicil be paid or retained out of the estate of the deceased. Written submissions as to the costs were delivered to the Court on 29 July 2016. The summary of the costs claimed by the plaintiffs amount to $11,940 comprising the fees of their solicitors at $8,750 (inclusive of GST) and counsel’s fees of $3,190. The solicitors’ fees are calculated at $572 per hour pursuant to a costs agreement between the plaintiffs and the current solicitors’ predecessor firm. By email dated 10 August 2016, the plaintiffs’ solicitors provided further detail of the costs.
The plaintiffs submit that the application to propound the informal codicil was properly brought because:
(a) the plaintiffs, knowing the deceased, believed they had a duty to put forward the informal codicil, as they believed that it properly reflected the deceased’s testamentary intentions;
(b) but for the inability of the plaintiffs being able to obtain the consent of the deceased’s widow, who lacked capacity, the application would otherwise have been dealt with by the Registrar of Probates; and
(c) the plaintiffs acted in accordance with the legal advice given to them by their solicitors and counsel.
Applicable principles
Section 24(1) of the Supreme Court Act 1986 provides that costs are in the discretion of the Court. This discretion must be exercised in accordance with established principle. The ‘usual order as to costs’ is that a successful party in litigation is entitled to an award of costs in its favour. The unsuccessful party bears the liability for the costs of the unsuccessful litigation.[1]
[1]Oshlack v Richmond River Council (1998) 193 CLR 72, 97 (McHugh J).
Where professional fees are to be paid from a fund, such as an estate, the costs payable are governed by Part 3 of Order 63 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’). Part 3 applies to costs in a proceeding that, by or under any Act or the Rules or any order of the Court, are to be paid to a party to a proceeding either by another party or out of a fund. The default position set out in r 63.31 provides that the basis of taxation is the standard basis, that is, costs reasonably incurred and of reasonable amount, and not the indemnity basis.
Pursuant to r 63.34, whether the basis of taxation is the standard basis or the indemnity basis, a legal practitioner for a party to whom costs are payable is entitled to charge and be allowed costs in accordance with the Supreme Court Scale of Costs, unless the Court or the Costs Court otherwise orders. Whilst the Court has a broad discretion in relation to the costs of a proceeding, the usual position is that costs be on the standard basis in accordance with the Supreme Court Scale.
Where the litigation concerns probate, such as whether a grant should be made of an informal will, the Court generally applies the usual rules as to costs in probate proceedings; that is, where the litigation has been caused, or contributed to, by the way in which a testator made his or her testamentary intentions known, costs would usually be ordered to be paid out of the estate. The authorities concerning the costs in probate proceedings and the administration of an estate are conveniently and clearly set out in Nicholson v Knaggs (No 3)[2] and Hall v Carney (No 2).[3]
[2]Nicholson v Knaggs (No 3) [2009] VSC 328 (12 August 2009) [38], [43]–[48], [83]–[87] (Vickery J).
[3]Hall v Carney (No 2) [2012] SASCFC 105 (17 September 2012) [8]–[12] (Gray J). See also Fielder v Burgess [2014] SASC 98 (7 August 2014); Murdocca v Murdocca(No 2) [2002] NSWSC 505 (25 June 2002).
The reason for the usual costs rules relating to probate litigation was explained by Sir J P Wilde in Mitchell v Gard as follows:
It is of high public importance that doubtful wills should not pass easily into proof by reason of the cost of opposing them. It is of equal importance that parties should not be tempted into a fruitless litigation by the knowledge that their costs will be defrayed by others.[4]
[4] Mitchell v Gard (1863) 3 Sw & Tr 275, 279; (1863) 164 ER 1280, 1281–2.
These general rules were repeated in modified form by Powell J in Re Hodges some 125 years later, and remain the key principles for assessing whether, in exercising its discretion, the Court should decline to apply the ‘usual order’ in probate litigation.[5]
[5]Re Hodges (1988) 14 NSWLR 698, 709; Shorten v Shorten(No 2) [2003] NSWCA 60 (9 April 2003) [15] (Mason P).
Confusion as to costs in probate litigation can occur where there is a significant degree of overlap between circumstances in which the testator is properly seen as the cause of the litigation, and circumstances that reasonably call for an investigation. This was referred to by White J in Gray v Hart (No 2), where his Honour said:
Where the categories do overlap, if the testator is properly seen as the cause of the litigation, the usual order is that costs be paid out of the estate. It is where the testator is not the cause of the litigation, but an investigation is reasonably called for, that there is usually no order as to the unsuccessful party’s costs. Of course if there is no reasonable cause for investigation, that is, if the unsuccessful party has not acted reasonably, then he or she will pay the costs.[6]
[6]Gray v Hart (No 2) [2012] NSWSC 1562 (11 December 2012) [19].
Consideration
It is well established that the principles expressed in Briginshaw v Briginshaw[7] apply to an application to admit an informal testamentary document to probate.[8] In assessing the evidence required for the application to propound the informal codicil, the plaintiffs would have been aware that the Court would exercise an appropriate degree of caution in making its determination.
[7]Briginshaw v Briginshaw (1938) 60 CLR 336.
[8]Estate of Peter Brock [2007] VSC 415 (24 October 2007) [45]–[47] (Hollingworth J); Prucha v Standing[2011] VSC 90 (22 March 2011) [8] (Beach J); Fast v Rockman[2013] VSC 18 (7 February 2013) [48] (Habersberger J).
The plaintiffs rely on their knowledge of the deceased as the basis of their belief that the informal codicil reflected his testamentary intentions. As a result, they say that they believed they had a duty to propound the informal codicil. While it would be reasonable for executors to make inquiries into and investigate the nature of an informal testamentary document, there is no duty to bring an application for an informal document to be admitted as a testamentary document.[9]
[9]Rowe v Storer (No 2) [2013] VSC 635 (21 November 2013) [24] (McMillan J); Re Leonard Michial Quinlivan; Ex Parte Quinlivan [2013] WASC 286 (2 August 2013) [33]–[34] (C Boyle R).
The plaintiffs proceeded with their application to propound the informal codicil primarily based on their belief, without addressing the significant evidentiary difficulties inherent in doing so. When informed of these difficulties, they did not seek to rely on any further evidence in support of their application. This is not a case in which the plaintiffs had a duty to propound the informal codicil or where the circumstances required the Court to investigate the matter. Rather it is a question of fact as to whether it was reasonable for them to do so in light of the evidence. In substance, they acted on their subjective belief, rather than on the objective evidence, which is not a proper or reasonable basis to seek to propound a testamentary document.
The plaintiffs’ submission that, but for their inability to obtain the consent of the deceased’s widow, who lacks capacity, the application would otherwise have been dealt with by the Registrar of Probates is without substance. This submission related to the provision made by the deceased in his will for his widow. The deceased and his widow had mirror wills. By his will, the deceased made provision for certain legacies and left a life interest in his estate to his widow and, upon her death, to a perpetual charitable trust created by his will. The issue of a substantial change to the mirror wills of the deceased and his widow was not the subject of any submissions but it does concern the deceased’s intention. Prima facie, it would be unusual where a couple made mirror wills that one of them would make substantial changes to that long standing arrangement in a matter of days before his or her death.
The evidentiary requirements not able to be met by the plaintiffs went beyond the plaintiffs’ inability to obtain the consent of the deceased’s widow. On the application to propound the informal codicil, the usual presumption as to testamentary capacity is not applicable and the plaintiffs bear the onus of proving testamentary capacity.[10] The informal codicil was created eight days before the death of the deceased, who was then aged 93 years, and no medical evidence was produced by the plaintiffs to satisfy the onus.
[10]Robinson v Jones [2015] VSC 222 (1 June 2015) [22] (McMillan J).
The deceased’s accountant deposed that the deceased talked to him about changes to his will from early 2015. From that time onwards, no steps were taken by the deceased or his advisers to arrange for his solicitors to attend on him to take further instructions for his will. Instead, on 19 May 2015, eight days before the death of the deceased, the deceased’s accountant typed the informal codicil as a letter and the deceased signed it in his presence. By letter dated 19 May 2015, the accountant forwarded the informal codicil signed by the deceased ‘yesterday’ (making the date of execution more likely to have been 18 May) to the deceased’s solicitors ‘for your comments and any additional action’, as well as stating that he would ascertain the ‘missing details as to the correct names and addresses in due course’. Nothing further was done.
The deceased died left a substantial estate. His will was prepared by solicitors and was executed by the deceased in the presence of two solicitors. Prima facie, it seems unlikely that, having consulted solicitors in the past for the purposes of the disposition of his substantial estate, the deceased would intend to change his will in such a substantial manner by way of the informal codicil. Further, the plaintiffs were unable to provide satisfactory or adequate evidence of the identity of the principal legatee and another legatee named ‘Eddy’ in the informal codicil.
For these reasons, it is improbable that the Registrar of Probates would have dealt with the application on the basis that only the consent of the deceased’s widow was required.
The plaintiffs’ submission that they acted in accordance with the legal advice given to them by their solicitors and counsel substantially contradicts their first submission that they believed they had a duty to propound the informal codicil. If that is the position they now rely upon for their costs to be paid out of the estate, it raises issues that involve the advice of their advisers that necessarily is not before the Court. In any event, this submission is not a proper basis for the plaintiffs to have their costs of the application to propound the informal codicil out of the estate of the deceased.
Conclusions
In my view, the plaintiffs are entitled to their reasonable professional fees to make inquiries into and investigate the evidence that might support the informal codicil being propounded, but not the costs of making the application. By the time they had the results of their inquiries and investigations, they should have appreciated that the evidence to support the application was insufficient. Otherwise, the plaintiffs should bear their own costs.
The further detail of the costs provided by the plaintiffs’ solicitors on 10 August 2016 calculate the costs pursuant to the costs agreement with the plaintiffs. A costs agreement determines the professional fees chargeable as between solicitor and client, not the costs of a proceeding payable from a fund, unless the Court otherwise orders. The plaintiffs’ reasonable costs and expenses are to be calculated in accordance with the Supreme Court Scale on the standard basis, not pursuant to the costs agreement with their solicitors.
Counsel who originally advised on the application has not charged any fees. Counsel who attended on 7 June 2016 when the Court informed the plaintiffs of the evidentiary requirements still to be met has charged a fee to appear and advise. In the circumstances, those fees should be paid by the plaintiffs personally, and not out of the estate.
Orders
I will make the following orders:
(a) The plaintiffs’ application for costs in the amount of $11,940 out of the estate of the deceased be dismissed.
(b) On or before 19 August 2016, the plaintiffs file a calculation of their reasonable professional fees, in accordance with the Supreme Court Scale, for making their inquiries into and investigating the evidence that might support the informal codicil being propounded.
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