Roche v Roche & Anor (No 2) - [2017] SASC 75

SUPREME COURT OF SOUTH AUSTRALIA
(Testamentary Causes Jurisdiction)
ROCHE v ROCHE & ANOR (No 2)
[2017] SASC 75
Judgment of The Honourable Chief Justice Kourakis
5 June 2017
SUCCESSION - MAKING OF A WILL - TESTAMENTARY CAPACITY
SUCCESSION - PROBATE AND LETTERS OF ADMINISTRATION - COSTS - GENERAL PRINCIPLES
The plaintiff commenced proceedings for a revocation of a grant of probate issued to the defendants alleging that the deceased lacked testamentary capacity when executing his last will. The defendants filed a cross-action seeking a grant of probate in solemn form. The plaintiff’s application was dismissed and an order was made that a grant of probate be issued to the defendants in solemn form. The issue of costs now arises.
The plaintiff submits that the probate costs exceptions should be applied and that her costs be paid out of the deceased’s estate or in the alternative that there be no order as to costs. The defendants submit that the probate exceptions do not apply in the present case and the Court should not depart from the usual orders as to costs.
Held, per Kourakis CJ:
1. The plaintiff is to pay the defendants’ costs of the action on a party/party basis.
2. The defendants are to pay the costs thrown away by reasons of the late disclosure between Friday 13 November 2015 and 18 November 2015.
3. There be no further orders as to costs.
Supreme Court Act 1935 (SA) s 40; Supreme Court Civil Rules 2006 (SA) r 263; Supreme Court Supplementary Rules 2014 (SA) r 195, referred to.
Copping v ANZ McCaughan Ltd (1995) 63 SASR 523; Roche v Roche & Anor [2017] SASC 8; Fielder v Burgess [2014] SASC 98; Barbon v Tessar [2015] VSC 597, applied.
Mitchell & Anor v Gard & Anor (1863) 3 Sw.&Tr 275; Boughton v Knight (1873) LR 3 P & D 64; Twist v Tye [1902] P 92; Spiers v English [1907] P 122; Middlebrook v Middlebrook & Anor (1962) 36 ALJR 216; Hall v Carney & Ors (No 2) [2012] SASCFC 105; In the Estate of Ponikvar (Deceased) (No 2) [2016] SASC 166, discussed.

ROCHE v ROCHE & ANOR (No 2)
[2017] SASC 75
KOURAKIS CJ.
Introduction

This is an application for costs on the dismissal of a testamentary causes action. Shauna Roche (Shauna) sought an order that a grant of probate issued to Fiona Roche (Fiona) and Deborah Ann Hamilton (Deborah) on 22 August 2011 in respect of a will executed on 16 February 2006 (the Will) by John Justin Roche (John) be revoked and that John’s penultimate will, as varied by two codicils, be admitted to probate in solemn form. Fiona and Deborah brought a cross-action seeking a grant of probate in solemn form of John’s Will dated 16 February 2006.
On 8 February 2017 I handed down judgment ordering that Shauna’s application for the revocation of the grant of probate issued on 22 August 2011 be dismissed and that there be a grant of probate in solemn form of the Will. The parties were provided with liberty to file written submissions on the question of costs.
I accept that Shauna initially had some reason to be concerned about the executors’ involvement in the making of the Will. However, the evidentiary material available to Shauna before she instituted the action strongly supported the conclusion that John had testamentary capacity. Such residual doubt as there may have been does not warrant a departure from the ordinary rule as to costs. I order that Shauna pay the executors’ costs of the action on a party/party basis save as to one qualification appearing below.
My reasons follow.
The law on the question of costs in probate matters
The overarching legal principle is that costs are in the discretion of the Court. This position is firmly embedded in section 40 of the Supreme Court Act 1935 (SA) and r 263 of the Supreme Court Civil Rules 2006 (SCR 263) (the Rules). The discretion is unfettered, but must be exercised judicially.[1] As a general rule, a successful litigant is entitled to an order that costs follow the event.[2] Supplementary Rule 195 (SR 195) of the 2014 Supreme Court Supplementary Rules (the Supplementary Rules) is intended to operate consistently with SCR 263. Of course, an order modifying the operation of both rules may be made in an appropriate case if it is just to do so.
[1] Copping v ANZ McCaughan Ltd (1995) 63 SASR 523 at 527-528 per King CJ (with whom Mohr and Nyland JJ agreed).
[2] Supreme Court Civil Rules 2006 r 263(1).
There are two well recognised exceptions to the general rule in probate matters. These exceptions were first enunciated in the English Probate Court in the case of Mitchell v Gard[3] (Mitchell) in 1863 when Sir J.P. Wilde said:
… It is the function of this Court to investigate the execution of a will and the capacity of the maker, and having done so, to ascertain and declare what is the will of the testator. If fair circumstances of doubt or suspicion arise to obscure this question, a judicial inquiry is in a manner forced upon it. Those who are instrumental in bringing about and subserving this inquiry are not wholly in the wrong, even if they do not succeed.
[3] Mitchell & Anor v Gard & Anor (1863) 3 Sw & Tr 275, 277-278.
…
… the Court deduces the two following rules for its future guidance: first, if the cause of litigation takes its origin in the fault of the testator or those interested in the residue, the cost may properly be paid out of the estate; secondly, if there be sufficient and reasonable ground, looking to the knowledge and means of knowledge of the opposing party, to question either the execution of the will or the capacity of the testator, or to put forward a charge of undue influence or fraud, the losing party may properly be relieved from the costs of his successful opponent.
The reference to the testator’s fault is puzzling. The focus must always remain on the conduct of the litigants. For the purposes of the costs discretion, a party may be at fault by litigating unmeritoriously, but responsibility for that cannot be placed at the feet of the testator who, obviously enough, plays no part in the litigation.
The exceptions established in Mitchell were later considered and discussed in the English cases of Boughton v Knight,[4] Twist v Tye[5] and Spiers v English.[6] The High Court of Australia approved and applied the accepted principles in 1962 in Middlebrook v Middlebrook (Middlebrook).[7]
[4] (1873) LR 3 P & D 64.
[5] [1902] P 92.
[6] [1907] P 122.
[7] (1962) 36 ALJR 216.
In Middlebrook the deceased’s son caveated the Will and opposed a grant of probate alleging that the deceased suffered from a lack of testamentary capacity when executing his last Will. The Will had been prepared by a solicitor on the instructions of the deceased two days prior to his death while he was admitted to hospital. The solicitor, a practitioner of accepted integrity, gave evidence that the deceased had provided clear instructions and it never crossed his mind that the testator may be suffering from a lack of testamentary capacity. However, a doctor gave evidence that on the day before the making of the Will the deceased had deteriorated to a marked degree. He was then in a semi-comatose condition and sedated with drugs.
Nonetheless the trial Judge was satisfied that the deceased had a sound disposing mind and found that the last Will should be admitted to probate and made an order that the son pay the plaintiffs’ costs. The son appealed the decision to the High Court and the High Court dismissed the appeal, except as to the costs order. The High Court ordered instead that there be no order as to costs of the suit and the appeal. Relevantly, Dixon CJ explained:[8]
I am not content, however, to uphold his Honour’s order as to costs. His Honour ordered that the caveator to pay the plaintiffs’ costs of the suit. No doubt in probate suits the prima facie rule is that, as in other litigation, costs follow the event. But in probate suits there are considerations which more readily affect the application of this rule than in most other forms of litigation. See Re Keane, [1909] V.L.R. 231, at p. 239. An examination by Hood J. of the more important English cases decided up to the date of his judgment will be found in Re Millar, [1908] V.L.R. 682. There are in the present case circumstances which would naturally lead the caveator to think that an investigation of the validity of his father’s last will was justified. If this case were judged on its general circumstances only, I think that adequate reasons would be seen for entertaining some doubt as to the validity of the will. It is only as a result of investigations that the reasons for finding affirmatively in favour of the testator’s testamentary capacity distinctly appear. In these circumstances the proper course is to apply the principle enunciated by Sir Gorrell Barnes P. that “if the circumstances lead reasonably to an investigation of the matter then the costs may be left to be borne by those who have incurred them”. Spiers v English [1907] P. 122 at p.123.
[8] (1962) 36 ALJR 216 at 217.
In 2012, the principles affirmed in Middlebrook were applied by the Full Court of this Court in Hall v Carney & Ors (No 2) (Hall).[9]
[9] [2012] SASCFC 105.
However, in 2014 in Fielder v Burgess (Fielder)[10] even though the parties had agreed that the costs of and incidental to the proceedings of both parties be paid out of the deceased’s estate on a party/party basis, I observed:[11]
The probate costs rule is arguably anachronistic in modern times in which there is a greater concern with the need for proportionality in litigation. It may soon be necessary to reconsider it.
[10] [2014] SASC 98.
[11] [2014] SASC 98 at [65].
There have been subsequent judicial warnings that the probate exceptions might be invoked more than sparingly.
In Barbon v Tessar (Barbon)[12] McMillian J ordered that an unsuccessful defendant pay the plaintiff’s costs. McMillian J said:[13]
Looked at objectively, I am satisfied that the defendant knew of these matters or had the means of knowing them, yet she still made the decision to initiate the proceeding. In my view, knowing of these matters or having the means of knowing them, the defendant did not have reasonable grounds for challenging the validity of the deceased’s will.
The usual exceptions in the probate rules for costs not following the event should not apply to the defendant’s costs in this proceeding. In reality, the litigation has been adversarial litigation instituted by the defendant against the plaintiff and she has been unsuccessful. The usual rules as to costs should apply, that is, the defendant should pay the plaintiff’s costs of the proceeding.
[12] [2015] VSC 597.
[13] [2015] VSC 597 at [19]-[20].
In the matter of In the Estate of Frances Ponikvar (Deceased) (No 2)[14] a defendant opposed an application for a copy Will to be admitted to probate. The defendant proceeded on the basis that the presumption of revocation had not been rebutted. Stanley J found that ‘there was strong evidence that rebutted the presumption against revocation. Nonetheless, Ms Novak pressed ahead in opposing the application’. Stanley J ordered that Ms Novak pay 25 percent of the applicant’s cost of the trial on a party/party basis because she had pressed ahead against the weight of that evidence.
[14] [2016] SASC 166.
The underlying rationale for departing from the ordinary rule in some testamentary capacity cases remains. The risk that an aged, infirm or vulnerable testator will be manipulated in private, and away from independent scrutiny, to execute a testamentary document has subsisted through the ages. However, its relative importance as a costs consideration has been diminished by contemporary social conditions and professional practices. The expansion of public aged residential care has reduced the physical isolation of the aged. Medical care by general practitioners is readily available and the degree of specialist intervention and referrals for pathological testing is more extensive. Aged persons are not as confined and are more socially active than they once were. Record keeping by professionals is more detailed and their notes more readily accessible. Audio-visual records are more common. Nonetheless, invoking this Court’s testamentary jurisdiction may sometimes be sufficiently warranted to depart from the ordinary rule even if the challenge to testamentary competence ultimately fails. Cases in which a testator, suffering a material cognitive impairment has made a Will, particularly one which departs from previous testamentary dispositions, whilst under the close care of a potential beneficiary or beneficiaries, with no or very little independent evidence of capacity, are examples.
A person will not be penalised for invoking this Court’s supervisory jurisdiction in probate when the circumstances call for an investigation into the validity of a testamentary document. However, a person who challenges a testamentary disposition will risk an adverse costs order for persisting in an unmeritorious action after the discovery of evidential material which largely dispels any reasonable concerns. If a party ignores the weight of that evidential material and prosecutes an ultimately unmeritorious case to trial, the usual order that costs follow the event will be made. Exceptions from the ordinary order will not be made to allow beneficiaries a forum in which to air family disputes with impunity.
Circumstances surrounding the making the of February 2006 Will
John had been a patient of Dr Hecker’s from early in 2003 at the instigation of Deborah due to her concerns that John was forgetting conversations by the next day, or later in the day, and forgetting planned events.[15] On 23 June 2004, Dr Hecker wrote to Dr Bennett informing him that John had suffered from memory deterioration and that his performance was on the borderline of mild cognitive impairment and early dementia.[16] John remained under the care of Dr Hecker in 2005 and 2006.
[15] [2017] SASC 8 at [446].
[16] [2017] SASC 8 at [446].
On 29 June 2005, John and Fiona met with Mr Jenkins.[17]
[17] [2017] SASC 8 at [107].
There followed conferences between Fiona and Mr Winter in which changes to John’s Will consequent upon a restructure of the Justin Group, and to leave a legacy to Mrs Harris, were discussed. Consequently Mr Winter wrote to Dr Hecker on 24 August 2005, seeking a report on his testamentary capacity.[18] Mr Winter’s letter did not require Dr Hecker’s opinion in regard to the restructure of the Justin Group, but was limited to an assessment of John’s testamentary capacity to make a codicil leaving Mrs Harris a modest legacy.
[18] [2017] SASC 8 at [114].
A letter dated 24 August 2005 was also sent to Dr Hecker on a Justin Pty Ltd letterhead. The letter was prepared by Deborah from a precedent supplied by Mr Winter seeking a report from Dr Hecker on John’s contractual capacity and refers to a restructure of the Justin Group.[19] In my reasons in the substantive action I observed that ‘why the task of obtaining Dr Hecker’s opinions was approached in this convoluted way is not answered by the testimony of Mr Winter, Fiona or Deborah’.[20]
[19] [2017] SASC 8 at [115].
[20] [2017] SASC 8 at [116].
Dr Hecker saw John for the purposes of that assessment on 28 September 2005.[21] Deborah was present. I accepted Dr Hecker’s evidence that she told Deborah at that appointment that John did not have cognitive capacity to make major changes.[22] By letter dated the same day, Dr Hecker provided her opinion to Mr Winter stating that John had testamentary capacity for the purpose of making a codicil leaving a legacy to Mrs Harris.[23]
[21] [2017] SASC 8 at [118].
[22] [2017] SASC 8 at [386].
[23] [2017] SASC 8 at [118].
On 1 February 2006, Fiona and John met with Mr Winter at Kelly & Co.[24] Mr Winter’s notes from that meeting are sparse and undated.[25] During the trial the executors maintained that they relied upon a letter of instruction dated 1 February 2006 comprising three pages in the deceased’s handwriting. The letter was presented to Mr Winter at the meeting of 1 February. In my reasons I found:[26]
I am not satisfied that John prepared his letter of instruction of 1 February 2006 unilaterally and completely independently in the way described by Fiona.
….
I do not accept [Fiona’s] evidence that John wrote his letter of instruction of 1 February whilst alone in the office.
[24] [2017] SASC 8 at [223].
[25] [2017] SASC 8 at [228].
[26] [2017] SASC 8 at [239] and [241].
After the meeting, Mr Winter then provided John’s instructions to Ms Perry on 1 February 2006. Her notes contained the following bullet points:[27]
·capacity issue;
·to be actioned immed;
·Doctor’s letter verifying capacity;
·Doctor’s letter.
[27] [2017] SASC 8 at [251].
The correspondence on John’s Will and the restructure of the Justin Group after the meeting on 1 February 2006 was channelled through Fiona’s email address with John. Instructions were conveyed to Mr Winter by Fiona.[28]
[28] [2017] SASC 8 at [341].
On 15 February 2006, Ms Perry attended a meeting in which she and Mr Winter explained the 2006 Will to John. Fiona and Deborah were both present during that meeting.[29] Ms Perry’s file note provides a detailed record of the meeting.[30]
[29] [2017] SASC 8 at [265].
[30] [2017] SASC 8 at [266].
The last Will was then executed the following day on 16 February 2006 in the presence of Mr Winter and Ms Perry.
I accepted Ms Perry’s evidence about the conversations she had with John and which she recorded in her file notes.[31]
[31] [2017] SASC 8 at [266] and [293].
On 16 February 2006, Mr Winter wrote to Dr Bennett requesting a report on John’s testamentary capacity on 17 March 2006. Dr Bennett provided a brief letter that did little more than assert that John had testamentary capacity.[32] By letter dated 30 March 2006, prepared by Ms Perry, Dr Bennett was asked to expand on his report of 17 March 2006 in regard to John’s testamentary capacity. That letter enclosed a copy of Dr Hecker’s report of 28 September 2005.[33] Ms Perry attempted to contact Dr Bennett on numerous occasions thereafter.[34] Dr Bennett finally provided a further report that essentially mirrored Dr Hecker’s report. I repeat the finding I made on that report in the judgment:[35]
I have no confidence in Dr Bennett’s evidence or the opinion expressed in his report. This litigation may have been avoided if John had been referred to Dr Hecker for a contemporaneous assessment.
[32] [2017] SASC 8 at [282].
[33] [2017] SASC 8 at [283].
[34] [2017] SASC 8 at [284].
[35] [2017] SASC 8 at [292].
The resolution of the conflicting expert opinions of three geriatricians was a major component of this action. The litigation may have been avoided, or at the very least the complexity of the trial much reduced if the executors and their advisor had acted more reasonably. I suspect that the decision to obtain a report from Dr Bennett, instead of Dr Hecker, was motivated, at least in part, by a belief that he was more likely to provide a favourable assessment.
Be that as it may, Shauna was provided with Ms Perry’s file notes before commencing her action. There was no reasonable basis on which to contend that they were not credible and reliable. My acceptance of the truthfulness and accuracy of Ms Perry’s evidence and notes necessarily resolved the conflict in the expert testimony. The dispute between the expert geriatricians was always, on the face of their reports, dependent on what the lay evidence showed about John’s day-to-day functioning and, even more importantly, his interactions with the solicitors who prepared the Will.

Moreover, John’s reasonable level of cognitive functioning, as I found it to be in my substantive reasons, must have been apparent to Shauna. Indeed, she made no contemporaneous observation to the contrary to her siblings, or anyone else, at the time of heated meetings about the family assets in 2006 and 2007.
Shauna brought the action in the hope that some reason to reject Ms Perry’s evidence might emerge. It did not. Importantly I found that Shauna deliberately gave a false account that John suffered gross cognitive deficits. Shauna’s false testimony was most probably born of her appreciation that in all outward respects John appeared to be functioning reasonably well. Shauna’s attempt to change the balance of the evidence about John’s capacity by giving that false account also failed.
There is no reason therefore to excuse Shauna from the ordinary rule that costs follow the event.
Lack of disclosure
During the course of proceedings the executors made further disclosure from Friday 13 November 2015 through to 18 November 2015. The explanation offered by the executors’ counsel for the failure to disclose the evidence in the ordinary course of the proceedings was less than compelling. The saga that was caused as a result of their lack of compliance was simply not acceptable.
As executors they have a duty to the deceased’s estate and the court to act in a bona fide manner. All disclosure should have been provided to Shauna’s legal representatives in accordance with the rules and the times specified in the lead up to the trial. There is no reasonable excuse for the failure of disclosure rather it simply fed Shauna’s warrant for the inquiry.
Letters of offer dated 30 October 2015 and 5 November 2015
The executors made a Calderbank offer on 30 October 2015. This was only 9 days prior to the commencement of the trial and the offer was open for a period of 5 business days. By a further follow-up letter from the executors’ solicitors the time to accept the offer was reduced to 4.5 days. No other offers had been made by the executors prior to the letter dated 30 October 2015. Part of page 3 of that letter states:
Substance of the offer
The offer outlined below, in substance, puts your client in the same position as she would be if her claim succeeds and all of Mr Roche’s assets as at the date of his death were administered in accordance with his previous will.
On 6 November 2015, Shauna’s solicitor replied to the letter by rejecting the executors’ offer. Part of page 1 and 2 states:
The offer is made at a time when our client and her legal advisors are focusing their attention and efforts on preparation for trial.
The offer makes no provision for our clients’ costs. Instead, your clients’ costs of the action are treated as a testamentary expense with the effect that our client is effectively paying one-third of those costs by way of a reduction in her share in the estate.
In the circumstances, and especially given the timing of the offer and the short period in which it is able to be accepted, it is not unreasonable for our not client not to accept it.
In any event, there are a number of flaws with your clients’ contention that the offer puts our client in effectively the same position she would be in if she succeeds in the action.
I accept Shauna’s submissions that the time allowed for a response to the offer was inadequate. Furthermore, in the context of the letter it appears to have been part of a strategy to suggest that Shauna was improperly motivated by collateral considerations. Accordingly, I have given no weight to the open letter of offer dated 30 October 2015.
Conclusion
I make the following orders:
·The plaintiff is to pay the defendants’ costs of action on a party/party basis.
·The defendants’ are to pay the costs thrown away by reasons of the late disclosure between Friday 13 November 2015 and 18 November 2015.
·There be no further orders as to costs.