Romascu v Manolache (No 2)
[2012] NSWSC 87
•17 February 2012
Supreme Court
New South Wales
Medium Neutral Citation: Romascu v Manolache (No 2) [2012] NSWSC 87 Hearing dates: 6 February 2012 Decision date: 17 February 2012 Before: Hallen AsJ Decision: Make no order for either party's costs of the proceedings.
Catchwords: Costs of proceedings - Successful plaintiff, who was self represented, seeks costs from the Defendant, including the costs of the costs application as agreed or as assessed on the ordinary basis - Plaintiff submits that there should be no order for the Defendant's costs of the proceedings Legislation Cited: Civil Procedure Act 2005
Family Provision Act 1982
Succession Act 2006
Uniform Civil Procedure Rules 2005Cases Cited: Aspland v Tsakalakis [2012] WASC 35
Barden, Re; Florance v Shekelton-Barden (NSWSC, 15 December 1983, unreported)
Boughton v Knight (1873) 3 LRP. & D. 64
Cutcliffe's Estate, Re [1959] P 6
Grey Smith (dec), Re [1978] VR 596
Grounds, Re Estate of the late Hazel Ruby; Page v Sedawie [2005] NSWSC 1311
Hoare v Reyburn [2010] WASC 301
Hubbard, Re [2011] NSWSC 617
Lawrence v MD Nikolaidis & Co [2003] NSWCA 129
Pates v Craig; Estate of the late Joyce Jean Cole (NSWSC, 5 September 1995, Santow J, unreported)
Perpetual Trustee Co Ltd v Baker [1999] NSWCA 244
Petrovski v Nasev; The Estate of Janakievska (No 2) [2011] NSWSC 1474
Rennie v Massie (1866) 1 LRP. & D. 118
Romascu v Manolache [2011] NSWSC 1362
Von Reisner v Commonwealth of Australia (No 2) [2009] FCAFC 172; (2009) 262 ALR 430
Thornhill v Thomas [2010] WASC 297
Tu, In Margaret Sze v Mary Sze Tu (Also known as Mary Lowe) In The Estate of Tang Fung Sze Tu [2008] NSWSC 458
Wilson v Department of Human Services; re Anna (No 2) [2011] NSWSC 545Texts Cited: Miller's Probate Practice (Maxwell: 1900 Ed.) Category: Costs Parties: Florin Adrian Romascu (Plaintiff)
Elena Manolache (Defendant)Representation: Mr D Coleman (solicitor) (Plaintiff)
Mr J McEncroe (solicitor) (Defendant)
Lawyers and Legal Services Australia (Plaintiff)
John McEncroe & Company (Defendant)
File Number(s): 2010/272586
Judgment
HIS HONOUR: In this matter, I published my reasons for judgment on 12 December 2011, the medium neutral citation of which is Romascu v Manolache [2011] NSWSC 1362. I found that letters of administration with the deceased's Will made on 6 May 2009 annexed in solemn form should be granted to the Plaintiff in accordance with his application. In reaching this conclusion, I was not satisfied that a purported will, made by the deceased on 23 December 2009, was a valid will.
The issue that now arises concerns the costs of the proceedings. The Plaintiff, who was self represented throughout the proceedings, but who appeared by a solicitor on the costs application, seeks costs from the Defendant, "including the costs of the costs application as agreed or as assessed on the ordinary basis". He submits that there should be no order for the Defendant's costs of the proceedings.
The Defendant, who was legally represented throughout the proceedings, and who appeared by her solicitor on the costs application, also seeks costs, despite the fact that she was not successful in obtaining a grant of probate in solemn form of the December Will. Furthermore, to the extent that the estate in New South Wales is insufficient to meet those expenses, she seeks an order that the Plaintiff should personally be liable for those costs. I shall return to the bases of that claim.
Following judgment, I directed that if the parties were unable to agree on costs, each party was no later than 4:00 p.m. on Wednesday, 1 February 2012, to exchange, and also to provide to my Associate, in hard and soft copy, an Outline of Submissions, such Submissions to be no more than 3 pages in length.
The parties were unable to agree. The Plaintiff provided the submissions to my Associate as directed. It was served in accordance with my direction. However, the Defendant did not comply with the direction but provided written submissions, by email, to my Associate on the Saturday afternoon before the hearing of the costs argument. Apparently, the Defendant's solicitor provided a copy of those submissions, by email, directly to the Plaintiff, on the Sunday before the hearing. Because the submissions had not been received, it was necessary to allow the Plaintiff's solicitor an opportunity to read the submissions before his oral submissions commenced.
Neither side relied on any evidence on the costs argument. However, the Defendant's solicitor sought to hand up a document, to be treated as an aide memoire , relating to the quantum of the Defendant's costs and disbursements.
Background
As I indicated in the reasons for judgment, the proceedings were bitterly fought. It is not necessary to set out, in these reasons, the protracted procedural history of the proceedings.
Despite the fact that the estate in New South Wales, at the date of death, was disclosed as comprising only movable property, being cash in two bank accounts ($25,138), jewellery (value not shown) and household chattels (12 paintings of undisclosed value), and at the date of hearing, the amount of cash was $21,115, the hearing took three days. The oral submissions on costs took two hours (even though written submissions had been sent).
In the principal reasons for judgment, I noted:
"25 On a number of occasions, in pre-trial directions hearings, and, again, at the commencement of the hearing, I explained to the parties that if the matter proceeded to completion of the final hearing, and if an order for costs were made in favour of the Defendant (who was legally represented), out of the estate, there would, in all probability, be no estate, in New South Wales, for either the Plaintiff, as the sole beneficiary named in the May Will, or the deceased's granddaughter, as the sole beneficiary named in the December Will (if she reaches the age of 18 years).
26 I explained also that whilst it was important to determine which was the last Will of the deceased, to do so was really an exercise that would not benefit either party, or the minor beneficiary named in the December Will.
27 These explanations fell on deaf ears and the case has proceeded with elements of acrimony, mistrust and intransigence. The Plaintiff's determination to ensure a grant to him of the May Will is even more unfathomable, since it is his daughter, Andrea, with whom he does not have any parental relationship, who is the sole beneficiary named in the December Will."
When one considered the terms of the December Will, the Defendant appears to have defended the proceedings in order to protect the interests of the grandchild of the deceased (the daughter of the Plaintiff), as the sole beneficiary named in the December Will, and that the Defendant, herself, had no beneficial interest in the deceased's estate. However, she was also required to defend a claim made by the Plaintiff against her, personally, relating to a gift of $10,000 made by the deceased during her lifetime. Ultimately, I was satisfied that the deceased had, in fact, made such a gift and that the Defendant was entitled to retain the amount plus an amount of $30, which had also been paid to her. Accordingly, she was completely successful on this aspect and is entitled to retain those amounts.
The Plaintiff had also asserted that the Defendant's withdrawal of $2,000 from the deceased's bank account on the day before the deceased's death was unauthorised and should be repaid to the estate. On that claim, I found, at [163] of the principal reasons for judgment, that the Plaintiff achieved partial success, which success related to four amounts totalling about $477, which amounts the Defendant agreed she paid to herself, following the death of the deceased, and which were acknowledged not to be expenses of the deceased. I was not satisfied that the amounts (including interest which, in total, I rounded up to $500) should have been paid to the Defendant out of the estate and these amounts should, in due course, be repaid to the estate or, depending upon the result of the costs application, be otherwise taken into account.
Accordingly, on this aspect, each of the parties was partly successful.
Finally, in relation to the pleadings, I should note that the Plaintiff had asserted in the Statement of Claim that the Defendant's claim for a grant of Probate of the December Will should be dismissed "on grounds of size of the estate, lack of eligibility of the beneficiary and lack of relationship between executor and testatrix; on grounds of need for the Plaintiff ... due to the character of the Defendant ... on grounds of testatrix's moral obligation to the plaintiff ...". He also asserted that "the deathbed will and multiple transfers of funds in favour of the defendant are by all probabilities a result of the use by the defendant of the special opportunity available to her arising from the deceased's absence of sound judgment". In the defence to the Cross-Claim (described as a "Cross-Defence"), he also asserted that "[the solicitor] at the request of social workers and friends, has promoted the execution of a new will".
In relation to the first assertion, it can be seen that none of the matters would have been a basis for rejecting the validity of the December Will. They (and other matters raised in the pleadings) would go to the additional claim made by the Plaintiff, which it was unnecessary to decide, for a family provision order.
In relation to the balance of those assertions, at the commencement of the hearing, the Plaintiff confirmed, initially, in answer to a question from me, that he was asserting a positive claim of undue influence. However, he then acknowledged the difficulty in being able to establish such a claim. He then said, in response to the identity of "the influencer":
"Yes, it is the social worker, rather than the Defendant and my only point was because she signed the power of attorney at the same time, the attorney was present..."
It became clear, then, that the "Cross-Defence" of undue influence by the Defendant was not being pressed. Accordingly, on this aspect, the Defendant was successful.
The Submissions
In his written submissions, the Plaintiff relied upon "the general rule" regarding costs following the event (although he incorrectly referred to s 99 of the Succession Act 2006 (which refers to costs in a case where a family provision order is sought)). He also referred, wrongly, to s 33 of the Succession Act , (presumably meaning s 33 of the Family Provision Act 1982), which is also irrelevant to the proceedings which I have determined.
In his oral submissions, his solicitor submitted that costs ought to follow the event and that there were no good reasons why such an order should not be made in this case. He said that the Defendant had not provided reasons to displace that rule. In the written submission, the Plaintiff also submitted that there had been "no disentitling conduct", by him, in the conduct of the proceedings that could be relevant.
The Plaintiff submitted, also, that the Defendant should have known, at an early stage of the proceedings, that she may be liable for the costs of the proceedings if she was unsuccessful, and that she should have had a greater appreciation of that fact, when faced with the Plaintiff's evidence that the deceased lacked capacity.
He further submitted that the Defendant "was not acting in a manner absent of personal interest" and that she relied upon "excessive and unnecessary legal representation ... in conducting the defence which eventually proved to be unmaintainable, especially given the small size of the estate ...".
He pointed to a number of procedural matters during the course of the proceedings (that are not necessary to repeat but which have been considered), including the failure of the Defendant to serve submissions on costs, to demonstrate the last submission. In broad substance, he submitted that the Defendant's conduct increased his costs in the proceedings.
Neither the Plaintiff nor his solicitor dealt with the Probate cases, to which I shall refer, which relate to costs in probate proceedings, or what are said to be "exceptions to the usual order". However, when, during submissions, I referred to the factual features of this case that I thought were relevant to determine the burden of costs, the Plaintiff agreed that each could be taken into account.
The Defendant, in written submissions, referred to the usual costs order and also to the exceptions that apply in probate proceedings. In particular, she relied upon a principle stated in Florance v Shekelton-Barden (NSWSC, 15 December 1983, unreported), in which Holland J had stated:
"A further general principle which applies is that the making of a charge of fraud or undue influence cannot be justified unless there are reasonable grounds for making it and if it fails the loser must pay and may be required to pay the whole costs of the proceedings even if there were reasons warranting the contemporaneous investigation of due execution, knowledge and approval of (the will and) testamentary capacity: Re Cutcliffe's Estate ".
She submitted:
"33 ... by reason of his abandonment of his claim and defence of undue influence at the commencement of the hearing, the Plaintiff should be treated as if he either discontinued that claim then with the leave of the Court, or applied for and was granted its dismissal then, and/or as if that defence was struck out then, with the result that pursuant to Part 42 rule 19(2) and/or rule 20 of the UCPR the Plaintiff must pay the Defendant's costs of his claim and defence of undue influence up to and including the first day of the hearing, at the very least.
34. Secondly, ... that the Plaintiff charged undue influence without any reasonable grounds whatsoever, and should be required to pay the Defendant's whole costs of these proceedings pursuant to the general principle enunciated by Holland J in Re Barden , supra and stated in Mason and Handler at paragraph [s 3.6.5] on page 269.
35. Thirdly, in any event, ... that the Defendant was substantially successful on the claim for an account, and the Plaintiff should be required to pay the Defendant's costs of that claim.
36. Fourthly, it is submitted that, otherwise, the costs of both parties of the testamentary capacity issues should be paid out of the estate in accordance with the approach adopted in Perpetual Trustee v Baker , supra, the authorities referred to therein at paragraph [14] and Smith v Magi (No 2 ), supra, subject to the qualification that the Plaintiff should be required to personally pay the Defendant's costs of those issues to the extent that the estate is insufficient to cover her costs on the ordinary basis, as agreed or assessed."
Alternatively, she submitted that the Court has an unfettered discretion in regard to costs and that that discretion should be exercised by declining to make an order in the circumstances of this case. The submissions concluded with:
"47. In all the circumstances, it is submitted that it would produce an unfair and unjust result if the Defendant could not recover her reasonable legal costs of these proceedings from the estate and/or Plaintiff, on the ordinary basis, as agreed or assessed."
I regarded the last submission as one that meant, in the event that a favourable costs order in her favour were made, that the Plaintiff, himself, to the extent necessary, should pay any of the costs and disbursements ordered to be paid that were not recovered from the estate.
Costs of a Litigant in Person
Section 3 of the Civil Procedure Act 2005, defines "costs" in relation to proceedings, as meaning "costs payable in or in relation to the proceedings, and includes fees, disbursements, expenses and remuneration".
In his submissions, the Plaintiff "recognizes that his costs will not be as substantial as the Defendant's". However, he sought, at least, court fees, fees for the provision of legal advice, and expert witness fees. He referred to Lawrence v MD Nikolaidis & Co [2003] NSWCA 129 at [35]; (2003) 57 NSWLR 355 and to Von Reisner v Commonwealth of Australia (No 2) [2009] FCAFC 172; (2009) 262 ALR 430.
In Wilson v Department of Human Services; re Anna (No 2) [2011] NSWSC 545, I set out the relevant principles that apply where a litigant in person seeks costs and the extent of any costs that may be payable:
"110 The general rule in relation to the costs of self represented litigants has, recently, been set out by Campbell JA (with whom Tobias and Young JJA agreed) in Preston v Commissioner for Fair Trading [2011] NSWCA 40 as follows:
"Costs
[182] At the hearing Ms Mirzabegian accepted that, if the appeal were to be upheld, it would be appropriate to make in favour of the Appellant an order for costs of the limited type that can be made in favour of a self represented litigant who is not a lawyer, namely for reimbursement of certain out of pocket expenses. The Appellant did not seek any more extensive costs order, or argue in favour of any particular type of costs order. After the hearing, in response to a question asked by the bench during the hearing, and a suggestion that this was "somewhat of a test case", Ms Mirzabegian sent a note stating that she was instructed that, if the appeal were to be dismissed, the Commissioner would not seek costs against the Appellant. It is the former alternative that has become applicable.
[183] It has been held, under a previous statutory regime authorising the making of costs orders, that a litigant in person who is not a lawyer is not entitled to receive an order for costs to compensate him for time spent in preparing and conducting his case: Cachia v Hanes (1994) 179 CLR 403. However a self-represented litigant who is not a lawyer can recover an indemnity for at least some out-of-pocket expenses actually and reasonably incurred: Secretary, Department of Foreign Affairs v Boswell (No 2) (1992) 39 FCR 288; Lawrence v Nikolaidis [2003] NSWCA 129 ; (2003) 57 NSWLR 355 at [37]. It appears from Cachia v Hanes at 417 that those out-of-pocket expenses were ones of the type which would have been recoverable as disbursements if the Appellant had been legally represented. Thus such expenses include filing fees: Deva v University of Western Sydney 2008] NSWCA 137 at [82]. Though there are some English cases, and some previous Australian authority (including Boswell ) that say that under the heading of out of pocket expenses a litigant in person can get compensation for the opportunity cost of spending time on his litigation rather than on other paying work, since Cachia v Hanes those cases have not been followed in Australia: Lawrence v Nikolaidis at [37].
...
[185] There does not appear to be any relevant difference between the present statutory framework for costs orders, and the provisions that the High Court referred to in Cachia v Hanes . Thus the costs order should be the sort of order that the cases cited in [183] held was permissible."
111 It had been held in Cachia v Hanes (1994) 179 CLR 403 that the general rule means that a self-represented person is not entitled to recover compensation for time spent in preparing and conducting the case (at 412-414); that an order for costs is 'confined to money paid or liabilities incurred for professional legal services' (at 409), and that: 'costs are awarded by way of indemnity ... for professional legal costs actually incurred in the conduct of litigation' (at 410). Furthermore, that unless allowed for in the relevant legislation or rules, it is not permissible to treat, as a disbursement, any loss of earnings incurred by a litigant in presenting and conducting a case (at 417).
112 The litigant in person, normally, is entitled to out of pocket expenses actually, necessarily, and reasonably, incurred, and if the litigant qualifies as a witness, then she, or he, is entitled to the ordinary witness's fees, in addition to expenses for time actually spent giving evidence in court: Cachia v Hanes at 409, 410, 417; Lawrence v Nikolaidis & Co (2003) 57 NSWLR 355 at [35].
113 Expenses that have been found to be properly recoverable include court fees ( B v P [2000] FamCA 392 at [50]; transcript costs ( W (deceased) v W [2004] FamCA 319 at [41]); expenses for serving documents ( Winter v Fleeton [2002] WASCA 73 at [23]); fees for searching registers, such as an ASIC search fee ( Re Sullivan and Department of Industry, Science and Technology (1998) 51 ALD 767 at [45]); incidental expenses in relation to photocopying, postage and telephone and facsimile transmissions ( Shephard v Blueberry Farms of Australia (Corindi) Ltd (2001) 162 FLR 339 at [66]; Cary v Owners of Strata Plan No. 7241 [2002] FMCA 18).
114 Expenses which have been held not to be recoverable include travelling costs ( W (deceased) v W at [49]); Farquar and Farquar (No 2) [2008] FamCA 682; Cachia v Hanes at p 417); parking costs ( H v H [2006] FamCA 167 at [9]); and meals ( Maronis Holdings Ltd v Nippon Credit Australia Ltd [2002] NSWSC 838 at [14])."
If an order were to be made in favour of the Plaintiff, it would be one that would be limited to the amount of out-of-pocket expenses, of a type that would have been recoverable as disbursements if he had been legally represented and which he had actually and reasonably incurred concerning the present proceedings.
There was no evidence advanced on the quantum of such out-of pocket expenses.
The Defendant made no submissions on this topic.
The Principles relating to Costs in Probate Proceedings
In Petrovski v Nasev; The Estate of Janakievska (No 2) [2011] NSWSC 1474, I set out the principles in relation to costs in probate proceedings that apply:
"4 The Civil Procedure Act 2005, s 98(1), provides that subject to the rules of Court, and that, or any other, Act, costs are in the discretion of the Court. The discretion is broad but not unconfined. It is a judicial discretion to be exercised on a principled basis.
5 The Uniform Civil Procedure Rules 2005 ("UCPR"), r 42.1, provides that costs should follow the event, unless it appears to the Court that some other order should be made as to the whole, or any part, of the costs. UCPR r 42.20(1) provides that if the court makes an order for the dismissal of proceedings, then, unless the court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed.
6 In Re Green [1969] WAR 67, Wolff CJ pointed out (at 83) that the general rule prescribed by the Rules, also applies in probate suits: Twist v Tye (1902) P 92; Spiers v English (1907) P 122; Middlebrook v Middlebrook (1962) 36 ALJR 216 at 217; Nicholson V Knaggs [No 3 - Severance And Costs] [2009] VSC 328 at [38].
7 The effect of these two rules, in this case, is that the Defendant must pay the Plaintiffs' costs unless the court otherwise orders, and the court can only order otherwise if there is a discretionary decision to depart from what the rules provide: Australiawide Airlines Limited t/as Regional Express v Aspirion Pty Limited [2006] NSWCA 365 at [10]. In other words, the rules reflect the general proposition that an award of costs is discretionary, but, generally, the discretion is exercised in favour of the successful party: Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 at [25].
8 In probate suits there are considerations that more readily affect the application of the Civil Procedure Act and the UCPR than in most other forms of litigation. These considerations act as guides to the exercise of discretion, but they are not inflexible.
9 Before turning to the considerations, two principles that are of importance in litigation of this type should also be referred to. The first is that "parties should not be tempted into a fruitless litigation by the knowledge that their costs will be defrayed by others", and the other is that "doubtful wills should not pass easily into proof by reason of the cost of opposing them": Mitchell v Gard (1863) 3 Sw & Tr 275 at 279; 164 ER 1280 at 1281-1282.
10 Any suggestion that there is a general rule that costs in Probate proceedings are borne out of the estate should be immediately rejected. As long ago as 1926, it was said, in Re Plant [1926] P 139, at 152:
"I should be reluctant to do anything to create the idea that unsuccessful litigants might get their costs out of the estate, without making a very strong case on facts. The lure of "costs out of the estate" is responsible for much unnecessary litigation."
11 In relation to the question of costs, Powell J (as his Honour then was), in Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698, recorded the principles generally to be applied when determining how, in Probate proceedings, the Court's discretion as to costs may be exercised.
12 At pp 709-710, he said:
"... over the years, a number of exceptions to this general rule have come to be recognised. In the field of probate litigation, two such exceptions have come to be recognised, they being:
1. Where the testator has, or those interested in residue have, been the cause of the litigation, the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate;
2. If the circumstances led reasonably to an investigation in regard to the document propounded, the costs may be left to be borne by those who respectively incurred them...
To these exceptions to the general principle should, perhaps, be added the principle that, although a legal personal representative may be entitled to recover from a party to litigation costs only on a party/party basis, he, as a fiduciary, retains the right to an indemnity from the estate, and, thus, may have recourse to the estate for any difference between his costs on a trustee basis and the costs recovered from a party."
13 This passage was approved by the Court of Appeal in Shorten v Shorten (No 2) [2003] NSWCA 60 at [15]. However, it is clear that neither of the guidelines set out in the passage is exhaustive or prescriptive.
14 In the first of the guidelines referred to, although the word "fault" is sometimes used, it does not necessarily mean moral fault or culpability. Rather, the touchstone is whether it was the deceased's conduct which had led to his, or her, will "being surrounded with confusion or uncertainty in law or fact": Kostic v Chaplin [2007] EWHC 2909; [2007] All ER (D) 119.
15 In respect of the second exception, Dixon J, in Middlebrook v Middlebrook , in the course of determining a challenge to a will founded upon lack of testamentary capacity, observed:
"It is only as a result of investigation 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."
16 Whether this case falls within one, or both, of the two exceptions to the normal rule, the relevant time to consider the Defendant's position is the date of institution of the proceedings, although it must also be relevant to have regard to any knowledge or reasonable belief gained subsequently: Clay v Karlson [2001] WASC 141 at [160].
17 It is also useful to take account of what Powell J had said, in In the Estate of Gertrude Martha Elizabeth Hacke, Public Trustee v Wilson , (NSWSC, 13 November 1985, unreported):
"Although the authorities in which an unsuccessful defendant has been allowed his costs out of the estate have involved a variety of factual situations, they appear to embrace such situations as the following: -
1. The state of the testamentary papers has been such as to leave it doubtful whether an earlier will was revoked by a later ( Limas v Goodban (1865) LR 1 P & D 57; Jenner v Ffinch (1879) LR 5 PD 106) or whether an apparently executed will was intended to be testamentary ( Thorncroft v Clarke (1862) 2 Sw & Tr 479);
2. The conduct, habits and mode of life of the testator have given the defendant reasonable grounds for questioning the testator's capacity ( Davies v Gregory (1873) LR 3 P & D 28; Roe v Nix (1893) P 55,
3. The actions of the testator have given the defendant reasonable grounds for believing that the will was a forgery ( Orton v Smith (1873) LR 3 P & D 23);
4. The actions and statements of the testator immediately before, and subsequent to, the making of the will have given the defendant reasonable grounds for believing that the execution of the will had been induced by undue influence ( Cousins v Tubb (1891) 65 LT (NS) 716; Shortman v Shortman (1892) LT (NSW) 717)."
18 Finally, Campbell J (as his Honour then was) in Re Estate of the late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311 said:
"32 ... in the caselaw concerning probate litigation, it can safely be said that a consistent theme in the cases is that the principles concerning costs which are applied to a person who seeks probate (whether successfully or not) are not the same as the principles which apply to the costs of a person who opposes probate (whether successfully or not). In probate litigation, it is not only who succeeds in the litigation which matters - which is the only factor operating in the "costs follow the event" rule. As well, the role which a particular party has played in litigation, whether as plaintiff or defendant, is relevant. Further, facts about the knowledge available to parties, and the reasonableness of their conduct in conducting the litigation, can be taken into account."
19 Ultimately, in the light of all of the circumstances of the particular case, I must decide which costs order better achieves justice between the parties."
In Perpetual Trustee Co Ltd v Baker [1999] NSWCA 244 at [14], Giles JA and Brownie AJA said:
"As was said by Santow J in In the estate of Moyle: Moyle v Moyle (18 June 1988, unreported), if a testator is by his mental frailty and other circumstances in a position where the circumstances reasonably call for investigation of the validity of the will "in one sense the testator, though usually with no sense of blameworthy fault, has by his or her conduct caused the litigation to occur". A party reasonably but unsuccessfully propounding or challenging the will, and so bringing about the necessary investigation, should no more have to bear his own costs than pay the costs of the other party. So it has been said that where the conduct and habits and mode of life of a testator have given ground for questioning his testamentary capacity the costs of the unsuccessful party should be paid out of the estate, as distinct from being left to be borne by that party ( Davies v Gregory (1873) 3 P & D 28; Roe v Nix (1893) P 55; In the will of Millar (1908) VLR 682), and the costs of both sides in testamentary capacity cases have often been allowed out of the estate ( In the will of Severs (1887) 13 VLR 572; Phillips v Dundas (Smith J, VSC 4 December 1995, unreported); Redroff v Miegoch (Santow J, NSWSC, 22 April 1996, unreported); re Ryan: Williams v Ryan (1998) VSC, 109; In the will of Ryan: Williams v Ryan (Byrne J, VSC, 23 October 1998, unreported); cf Middlebrook v Middlebrook (1963) 26 ALJR 216 where Dixon CJ and McTiernan, Taylor and Owen JJ ordered that the parties bear their own costs but Menzies J would have ordered that the costs be paid out of the estate)."
Relevantly to the present case, whilst it is true that an executor is not obliged to propound a Will ( Rennie v Massie (1866) LR 1 P & D 118) it is nonetheless equally true that she, or he is, prima facie, entitled to propound the Will in which she, or he, is named as an executor: Boughton v Knight (1873) LR 3 P&D 64, at 77. In the latter case, it was said:
"... it appears to me that an executor is prima facie justified in propounding a will. That does not carry us very far, because, of course, although he may be justified in propounding it in the absence of any evidence throwing light on the testamentary capacity of the testator; yet, if it is made to appear that, when propounding it, he must have known that he was attempting to obtain the sanction of the court to a document which could not be supported, he ought to be condemned in the costs. It would be very unjust to hold otherwise."
And at p 79:
"I think the question of the Testator's capacity was a very grave one and he [the executor] could not be expected to take on himself the responsibility of leaving it undetermined."
In Pates v Craig; Estate of the late Joyce Jean Cole (NSWSC, 5 September 1995, Santow J, unreported) it was said:
"... Thus it is said that in probate the executor's title as executor is itself "generally in doubt and if he takes the risk of propounding the will, he would be wise to obtain an indemnity from persons beneficially interested, if he is not so interested himself"; Williams, Mortimer and Sunnucks, supra, at 402. Here of course the executor in question was interested herself as, if the will were successfully propounded, she would be the sole beneficiary.
However that simply means that the risk, of necessity, falls upon the executor so far as the costs are concerned unless within the exception. Thus an executor is prima facie justified in propounding the will, but is not bound to do so, and if an executor must or ought to have known that he is propounding a document that could not be supported, he will be condemned in costs; see earlier authorities cited and Williams, Mortimer and Sunnucks at 412. Nor is it necessary that a positive finding be made that, for example, the executor has acted improperly, such as by the exercise of undue influence. Rather, it is because executors typically have ample opportunity of observing the behaviour of the testator, in propounding the will, they will be condemned in costs if they are unsuccessful; see Williams, Mortimer and Sunnucks at 413 and the authorities there cited."
It must be remembered, also, that probate litigation is not entirely between parties, because they did not make the will and the Court is required to determine whether a document of somebody who is dead is a valid testamentary instrument. There is a public interest in ensuring that the matter is properly proved: see, In Margaret Sze Tu V Mary Sze Tu (Also known as Mary Lowe) In The Estate of Tang Fung Sze Tu [2008] NSWSC 458.
Ultimately, as said above, in the light of all of the circumstances of the particular case, the court must decide which costs order better achieves justice between the parties. As was said over a century ago in Miller's Probate Practice (Maxwell: 1900 Ed.) at 438 - 439:
"Two questions are to be considered with reference to an application for costs of the unsuccessful party: (1) Was there reasonable ground for litigation? (2) Was it conducted bona fide? Where both these questions can be answered in the affirmative it is the usual practice of the Court, without having regard to the amount or the ownership of the property, to order the general costs to be paid out of the personal estate".
The same sentiment was repeated by Campbell J (as his Honour then was) in Re Estate of the late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311:
"32 ... in the caselaw concerning probate litigation, it can safely be said that a consistent theme in the cases is that the principles concerning costs which are applied to a person who seeks probate (whether successfully or not) are not the same as the principles which apply to the costs of a person who opposes probate (whether successfully or not). In probate litigation, it is not only who succeeds in the litigation which matters - which is the only factor operating in the "costs follow the event" rule. As well, the role which a particular party has played in litigation, whether as plaintiff or defendant, is relevant. Further, facts about the knowledge available to parties, and the reasonableness of their conduct in conducting the litigation, can be taken into account."
Thus, the issue of costs may not be able to be decided simply on the basis of the findings of fact ultimately made.
In stating the above, I am not attempting to lay down any strict guidelines, to prescribe a general principle and exceptions, or even to give exhaustive examples. Ultimately, the court has a broad discretion as to costs under the Civil Procedure Act and the Uniform Civil Procedure Rules 2005 and that discretion must be exercised judicially and according to the circumstances and particulars of each individual case. What I have identified calls attention to discretionary considerations that may be taken into account in the exercise of the court's power to determine who is to bear the burden of the costs of the proceedings.
In view of the features of the case to which I shall refer, I should also mention Re Hubbard [2011] NSWSC 617, in which Windeyer AJ dealt with an application seeking advice from the court, in advance of the hearing of the substantive proceedings, whether the Plaintiff on the application was justified in defending probate proceedings. As in this case, an earlier will was being propounded, because the Plaintiff in the probate proceedings claimed that the deceased lacked testamentary capacity at the time the subject will was made.
His Honour said:
"[6] What Mr Hubbard is really seeking is protection out of the estate in the event that costs are incurred by him and he fails in the action but if he does fail in the action he will not be trustee of the estate. He will have no part in the estate and it seems to me there is no possible basis on which the court could order that he as trustee, which he would not be in those circumstances, be indemnified for his costs.
[7] I accept that Mr Hubbard is in a difficult position. He is the man who prepared the will. He presumably is of the clear view that the testator was of sound mind at the time that he made the will. If he were not of that view then presumably he would not be wishing to bring these proceedings. However, it is a matter for him to decide his course of action. Costs in probate proceedings do not always follow the event and on occasions if the litigation has arisen through fault of the testator it may be the costs of the unsuccessful party would be ordered to be paid out of the estate. Those matters are in the discretion of the court after the probate proceedings have been concluded. They cannot be decided in advance.
[8] It seems to me that Mr Hubbard has to make a choice. He can either bring the proceedings because, as his counsel says, he thinks there is a public interest in doing so and take the risk in doing so or he can take no further part in the estate, he can renounce probate and tell the Attorney-General that he is not going to seek a grant, that none of the named beneficiaries intend to seek a grant and it is a matter for the Attorney-General whether or not he wishes to apply for administration with the 2009 will annexed. That, in itself, has some difficulties but those difficulties would not be insurmountable if the Attorney-General decided that he should take some positive action so as, if successful, to obtain the advantage of a charitable gift."
The Plaintiff's Allegation of Undue Influence
Where a party relies upon undue influence in probate, the onus of proof lies upon him, or her, to prove the allegation. Otherwise, the onus of establishing the validity of the December Will rested on the Defendant.
In Re Cutcliffe's Estate [1959] P 6, Hodson LJ said in the course of his reasons in that case, at 21:
"It must surely be obvious to anyone who has studied the history of litigation in the Probate Division, notwithstanding the exceptions which are to be found in the books, that where pleas of undue influence and pleas of fraud are made, the probability, at any rate, if they are unsuccessfully made, is that the people who make such charges and fail will be condemned in the costs not only of that charge but of the whole action."
In Re Barden; Florance v Shekelton-Barden , Holland J was dealing with a case in which the relevant defendants put the plaintiff to proof of due execution and knowledge and approval and joined in alleging that the relevant testamentary documents were invalid because they were induced by undue influence of the first plaintiff. Only the first defendant alleged that the deceased lacked testamentary capacity. However, the plaintiffs succeeded in establishing the validity and admissibility to probate of the testamentary documents.
His Honour, after referring to the authorities and to the relevant facts held:
"In my opinion the charge of undue influence must have appeared to the defendants to be barely arguable by the time Mrs. May had completed her evidence, which was about one-quarter of the way through the case, and manifestly untenable by the time Mr. Florance completed his evidence, which was less than halfway through the case, yet both defendants continued to maintain the charge of undue influence to the end. In my opinion they ought to pay the plaintiffs' general costs of the proceedings on all issues except those incurred exclusively on the issue of testamentary capacity."
It follows that the Defendant's submission, at least in its starkest form, relying on Re Barden; Florance v Shekelton-Barden , cannot be accepted.
Determination
In this case, the following features are particularly relevant to the consideration of the costs issue and whether the Defendant should receive her, or pay the Plaintiff's, costs of the proceedings:
(a) The Defendant was the named executrix in the December Will. She had no beneficial interest in the deceased's estate. There was no suggestion that she did anything to encourage the deceased to make the December Will (in which the Plaintiff was excluded).
(b) A solicitor attended on the deceased at the time it would have been clear that she was dying. He prepared the December Will and assisted the deceased in executing it. There was also an interpreter present at the time the solicitor attended upon the deceased. Each of the solicitor and the interpreter gave evidence, in an affidavit that was read, of what had occurred at the time of execution.
(c) The solicitor said he could swear that the deceased had capacity at the time. His evidence was relied upon by the Defendant to support the validity of the December Will and to challenge the May Will upon the basis that it was not the last Will of the deceased. (The interpreter was not cross-examined.)
(d) The Defendant did not dispute the validity of the May Will. It was accepted, in the event that the December Will was not the last valid Will of the deceased, that there should be a grant of administration of that Will to the Plaintiff.
(e) The Defendant was representing the interest of a minor beneficiary in the proceedings.
(f) Whilst the Defendant may not have been able to take the precaution of obtaining security for her costs from the person interested in upholding the validity of that Will (because of the age of the sole beneficiary), there is no evidence that the Defendant took any such step, or that she endeavoured to seek any instructions from the guardian of the minor beneficiary (the mother of that beneficiary) on that, or any other relevant matter, going to the continuation of the proceedings, or the costs thereof if the Defendant were unsuccessful in defending the proceedings brought by the Plaintiff and in propounding the December Will.
(g) There was no suggestion made that the Defendant was seeking to propound an invalidly executed will. On its face, the December Will appeared to be valid and two persons of standing, independence, and apparent probity, witnessed the deceased's signature on it.
(h) The issue of the validity of the December Will, however, did require some investigation, because of the deceased's medical condition at the time she executed that Will, which investigation was completed following the cross-examination of the witnesses. Leaving that question for the Court's decision may have been, in the circumstances, reasonable. Yet, there was no evidence of any steps taken by the Defendant, at any time before she incurred substantial costs, to consider the contemporaneous medical records that had been produced to the court on subpoena. I do not know what steps, if any, the Defendant took, to consider the medical evidence to which the Plaintiff referred in his pleadings and in the affidavits.
(i) The Plaintiff served two reports from an expert, the first of which was dated 24 October 2010, both of which identified a real issue regarding the December Will, namely that of the deceased's testamentary capacity.
Even without those medical reports, it must have been clear that the deceased, at the time she made the December Will, was gravely ill and may not have had testamentary capacity.
(j) The Defendant did not seek to adduce any expert medical evidence that suggested, despite the grave medical condition of the deceased, which was not the subject of dispute, that the deceased's testamentary capacity would not, or might not, have been adversely affected. She did, however, cross-examine the Plaintiff's expert.
If the Defendant was merely concerned to carry out proper investigations, she could have sought expert evidence, based upon the medical records (which were available) to ascertain whether the opinion expressed in the first expert report, and other evidence identified by, the Plaintiff, could lead to the view that the deceased lacked testamentary capacity.
Of course, ultimately, the question of whether a will should be admitted to proof is one for the court. The onus of proving the validity of a later will rests upon any person seeking to propound it: Re Grey Smith (dec) [1978] VR 596. The propounder of an earlier will is not under any duty to establish that a later will is invalid or has no effect: Hoare v Reyburn [2010] WASC 301 at [8]; Thornhill v Thomas [2010] WASC 297 at [15]; Aspland v Tsakalakis [2012] WASC 35 at [54].
(k) The Defendant's case was one limited to evidence that was necessary to establish testamentary capacity. The two attesting witnesses each swore an affidavit, as did the Defendant. However, the person to whom instructions were said to have been given by the deceased did not give any evidence. In all, the Defendant relied upon only four affidavits.
(l) On the other hand, the Plaintiff had filed in excess of 20 affidavits, many of which were repetitive and which contained much irrelevant and inadmissible material. Furthermore, his defence of the Cross-Claim raised an affirmative defence of undue influence (with which he did not proceed) and the issues regarding an accounting to which I have referred above. He was successful only in establishing that $500 might have to be repaid to the estate.
In all the circumstances, having considered the matters set out above, recollecting the manner in which the proceedings were conducted by each of the parties and considering the ultimate result of the case, even though the Defendant failed in propounding the December Will, I do not think that she should pay the Plaintiff's costs of the proceedings. The costs of each party should be borne by the party who incurred them. I shall not order the Defendant to pay the Plaintiff's costs of the proceedings. However, I shall not order that she receive her costs out of the estate either.
I have reached the same conclusion by an alternative route.
During the proceedings, the Plaintiff vigorously asserted that the Defendant received an amount of $10,000 (and $30) out of the deceased's estate prior to her death and that she should repay that amount to the estate. He submitted that the amount had been paid to her to meet the funeral expenses of the deceased but that the Defendant did not use the amount for that purpose. The Defendant asserted that the deceased made her a gift of $10,000. The Plaintiff's challenge to the inter vivos payment took on a significant importance in the hearing and some time was spent on it.
Both parties asked me to determine this issue, which I was prepared to, and which I did, determine. I accepted the evidence of the Defendant. Accordingly, on that issue, the Defendant was successful.
Further, as set out above, until the hearing, the Plaintiff was asserting that in relation to the December Will, the Defendant had exercised undue influence. Ultimately, he did not persist with that assertion. Accordingly, on that issue, also, the Defendant was successful. However, there was no additional evidence on this aspect that the Defendant was required to adduce or deal with. Even so, it was an allegation that appeared, until the hearing, to be addressed to the Defendant.
Finally, as part of his claim, the Plaintiff was seeking an accounting, even though the Defendant, well prior to the hearing, had provided an account. In this regard, he was unsuccessful also. (He persisted with the argument about an accounting even on the costs application.)
Each of the matters advanced by the Plaintiff and in respect of which he was unsuccessful, or which he did not pursue, was a serious allegation made against the Defendant and which she was required to defend.
There is a legitimate argument that, in relation to those allegations, she should be entitled to her costs.
It was accepted that, in the circumstances of this case, since the Plaintiff is the sole beneficiary named in the May Will of which administration has been granted, there is not much point making an order for his costs to be paid out of the estate. I shall not make that order either.
Bearing in mind the nature and value of the deceased's estate, and the likely limited costs of the Plaintiff, I do not think that there should be any further disputes between the parties, including ones relating to the assessment of costs.
After submissions were made, I raised with the parties the possibility that I could reach the conclusion that there should be no order as to the costs of the proceedings. I raised the possibility that, then, I should not order the Defendant to refund to the estate, the amount of $500, but would treat that amount as part of the order. In other words, that if there were no order as to costs, the Defendant should not be ordered to repay that amount to the estate.
To his credit, the Plaintiff, by his solicitor, said that he did not wish to be heard on any alternative order. (In view of such an order being favourable to the Defendant, she supported such an order if no order for her costs was otherwise made.)
Looking at the matter globally, which I consider I should do, I make no order for the costs of the proceedings. I make no order for the payment by the Defendant to the Plaintiff, as administrator of the estate, of the amount of $500 referred to at [225] of the principal reasons for judgment.
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Decision last updated: 17 February 2012
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