Rowe v Storer (No 2)
[2013] VSC 635
•21 November 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
PROBATE LIST
No. PRB 17258 of 2012
IN THE MATTER of the Estate of OLIVE FRANCIS POOLE, deceased
| PATRICIA MARGARET ROWE | Plaintiff |
| v | |
| GLORIA ISOBEL STORER | Defendant |
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JUDGE: | McMillan J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 1 November 2013 | |
DATE OF JUDGMENT: | 21 November 2013 | |
CASE MAY BE CITED AS: | Rowe v Storer [No 2] | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 635 | |
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COSTS — Application for admission of informal will to probate — Application unsuccessful — plaintiff sought costs 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 pursuing the application — No evidence of testamentary intention — No duty to propound an informal will — Calderbank offer rejected unreasonably — Defendant did not seek costs against the plaintiff — Plaintiff to bear own costs
COSTS — Pendente lite application — Application unsuccessful — Application unnecessary because letters of administration granted — Reasonable application in the circumstances — Applicant entitled to costs out of the estate
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R B Phillips | McNab McNab & Starke |
| For the Defendant | Ms U Stanisich | Burdon-Smith & Associates |
HER HONOUR:
On 13 September 2013, I made orders dismissing an application by the plaintiff for a grant of probate, and granted letters of administration to the defendant subject to the requirements of the Registrar of Probates. The facts of this application and its determination are set out in my judgment in Rowe v Storer [No 1].[1]
[1][2013] VSC 385 (2 August 2013).
The question then arose as to the appropriate order for costs. The plaintiff submitted that the costs of both the plaintiff and the defendant should be paid out of the estate. The defendant submitted that the plaintiff should bear her own costs of the proceeding, and that the defendant’s costs should be paid out of the estate on an indemnity basis.
At the subsequent hearing in relation to costs, further affidavit material was filed indicating that on 13 November 2012 an offer of compromise ‘without prejudice save as to costs’ (‘the Calderbank offer’) had been made to the plaintiff, which was rejected on 27 November 2012. That offer was made by the four of the beneficiaries of the intestate estate of the deceased with the approval and consent of the defendant. It provided:
1.Your client withdraws her caveat and allows Letters of Administration to be granted to Linda Mayes.
2.The estate of the deceased be administered as follows:
a.The proceeds of the accounts held with the Commonwealth Bank be applied as follows:
i.$6 000 be paid to Tooradin Fire Brigade;
ii.$6 000 be paid to the Koo Wee Rup Memorial Hospital;
iii.Payment of the reasonable costs and disbursements of your client, Ms. Klemis, Ms Storer and our clients including administration expenses, such costs to be taxed in default of agreement;
b.The balance of the estate be divided into seven equal proportions with those proportions being shared equally between your client, Ms. Klemis, Ms. Storer and our clients.
The Usual Order As To Costs
Section 24(1) of the Supreme Court Act 1986 provides that:
24 Costs to be in the discretion of Court
(1)Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.
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.[2] In this matter, the defendant does not seek costs against the plaintiff.
[2]Oshlack v Richmond River Council (1998) 193 CLR 72, 97.
Costs in Probate Litigation
In relation to probate litigation, two exceptions to the ‘usual order’ were set out by Sir J P Wilde in Mitchell v Gard:
First, if the cause of litigation takes its origin in the fault of the testator or those interested in the residue, the costs may properly be paid out of the estate; secondly, if there be sufficient and reasonable grounds, 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.[3]
[3](1863) 3 Sw & Tr 275, 278.
In explaining the reason for these principles, Sir J P Wilde said:
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]Ibid 279.
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](1988) 14 NSWLR 698, 709; Shorten v Shorten[No 2] [2003] NSWCA 60 (9 April 2003) [15.
One further point should be made. The manner in which these principles have been applied in many cases has not always been described with a great deal of clarity. In a large part, this results from the nature of orders as to costs, which are often dealt with only briefly following reasons for judgment. However, the confusion also results from the 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. In this respect, whilst bearing in mind the discretion of the Court in respect of costs, I adopt the words of 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][2012] NSWSC 1562 (11 December 2012) [19].
The plaintiff submitted that the litigation was essentially caused by the deceased, and, in the alternative, that it was still reasonable to have the inquiry. The defendant submitted that the application was not made as a result of the testator’s fault, and that, even if it were appropriate to make reasonable enquiries, the costs should not be paid out of the estate.
Costs in Informal Will Applications Where the Application Is Refused
There have been a number of decisions, primarily in the Supreme Court of New South Wales in its probate jurisdiction, considering the appropriate orders as to costs where an application for an informal will has been unsuccessful. As can be seen, in each instance the appropriate order will turn of the facts of that particular case:
(a)In Re Morgan, Young J held that a charity that had opportunistically sought probate of a document that ‘really had little chance of succeeding’ should bear its own costs.[7]
(b)In Public Trustee v New South Wales Cancer Council, Einstein J held that, where the litigation had been necessitated by the conduct of the deceased, and ‘there [had] clearly on the findings been an arguable case’, the unsuccessful defendant’s costs should be paid out of the estate.[8]
(c)In Macey v Finch, Young CJ in Eq accepted the submission that the purported will would necessarily have been disclosed to the Court, and ruled on by the Court, irrespective of the conduct of the unsuccessful defendant, and that in the circumstances they ought to have their costs paid out of the estate.[9]
(d)In Anderson v Scrivenor, Campbell J held that the substantial cause of the litigation was the state in which the deceased had ‘left his testamentary papers’, and that the unsuccessful defendant’s costs should paid out of the estate.[10]
(e)The Western Australian Court of Appeal in Oreski v Ikac upheld the decision of the primary judge that the appellant had acted unreasonably in continuing to pursue the case after certain key facts emerged, and that as a result she should bear her own costs.[11]
(f)In Bell v Crewes, White J followed the approach of Young CJ in Eq in Macey v Finch, holding that owing to unsettled authorities and the fact that the court would in any case have had to rule on the document, the unsuccessful plaintiff was entitled to have her costs paid out of the estate.[12]
[7][1999] NSWSC 357 (21 April 1999).
[8][2002] NSWSC 220 (15 March 2002).
[9][2002] NSWSC 933 (30 September 2002).
[10][2002] NSWSC 900 (17 October 2002).
[11][2008] WASCA 220 (31 October 2008).
[12][2011] NSWSC 1159 (16 September 2011).
The Effect of a Calderbank Letter
In this case, the rejection of a Calderbank offer is also relevant to the exercise of the discretion. In Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority [No 2], the Court of Appeal explained that such an offer does not create any presumption or rule as to costs.[13] Instead, the Court endorsed the approach that, where the rejection of such an offer is unreasonable, it is a relevant factor in assessing whether to depart from the ordinary rule as to costs.[14]
[13](2005) 13 VR 435 (‘Hazeldene’s Chicken Farm’).
[14]Ibid 440–441.
In my view, the unreasonable rejection of a Calderbank offer is relevant in assessing whether costs should be borne by the estate in probate litigation, for the same reasons that the Court of Appeal considered an unreasonable rejection to be relevant to the question of indemnity costs, namely, to encourage settlement and save public costs.[15]
[15]Ibid 441.
In Hazeldene’s Chicken Farm, the Court also outlined factors relevant to the reasonableness of rejecting an offer of compromise:
The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:
(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;
(f)whether the offer foreshadowed an application for an indemnity costs in the event of the offeree’s rejecting it.[16]
[16]Ibid 442.
Fault of the Deceased
The plaintiff submitted that the deceased, by expressing her intention to the plaintiff and to third parties that the plaintiff should benefit from her will, and by inducing the plaintiff into believing she was going to benefit, was the cause of the litigation. The defendant submitted that, because there was no obligation on the plaintiff to propound the draft will, the testator had not caused the litigation in the same fashion as where a will is formally made and testamentary capacity is in issue.
In my reasons for decision in this case, I found that there was no evidence in support of the deceased’s intention that the particular document propounded was her will. The deceased was aware that the document would have no effect unless she signed it.[17] There was no evidence that the deceased intended to sign the document in its current form.[18] The evidence did not support the contention that she made arrangements to sign the document.[19] In fact, she was presented with an opportunity to sign the document and declined to do so.[20]
[17]Rowe v Storer [No 1] [2013] VSC 385 (2 August 2013) [17].
[18]Ibid [48].
[19]Ibid [50].
[20]Ibid [18].
A person considering whether to execute a draft will is entitled to consider her position, and change her mind. The law would be in an odd position indeed if every person who reached that point, only to decide not to execute, were held to be the cause of any ensuing litigation to the detriment of her beneficiaries under a previous will or under the intestacy provisions. Accordingly, in my view, the litigation in this case was not the fault of the deceased.
Reasonableness
The Gaps in the Evidence
The defendant submitted that, in this case, all of the evidence that was ultimately before the Court was available before the trial,[21] and that, as the Court found, there were clear gaps in that evidence that were ultimately fatal to the plaintiff’s case.
[21]No witnesses were cross-examined in the proceeding.
The plaintiff’s submission in this respect was that the reason for the failure of the application was that the assessment of the evidence was undertaken in accordance with the principles expressed in Briginshawv Briginshaw,[22] that the case in favour of the draft was otherwise sound, and that this meant the decision to seek probate of the document as an informal will was reasonable.
[22](1938) 60 CLR 336 (‘Briginshaw’).
It is well established that the principles expressed in Briginshaw apply to an application to admit an informal will to probate.[23] The plaintiff’s decision to undertake this proceeding was made before the decision of Habersberger J in Fast v Rockman.[24] That decision clarified the application of the principles in Briginshaw in informal will cases. However, that case did not change the law in this area. In assessing the evidence in support of her claim, the plaintiff should have been aware that the Court would exercise an appropriate degree of caution in making its findings.
[23]Estate of Peter Brock [2007] VSC 415 (24 October 2010) [45]–[47] (Hollingworth J); Prucha v Standing [2011] VSC 90 (22 March 2011) [8] (Beach J).
[24][2013] VSC 18 (7 February 2013).
The law in relation to informal wills very clearly requires evidence, on the balance of probabilities, that the deceased intended the particular propounded document to be her final will. As I considered in my reasons, there was no evidence of such an intention, and the plaintiff, who had all of the evidence that ultimately came before the Court available to her, was in a position to assess this from the outset.
No Duty to Propound
The plaintiff submitted that this was a case in which there was no fault in bringing the application, because the plaintiff had a duty to propound the will and required the Court to investigate the matter.
In response, the defendant submitted that, in fact, there is no obligation to prove an informal document, that such a document is presumed invalid, and that an application should only be made where there are reasonable prospects of success.
While it would be reasonable for a person named as executor in a document that is not a formally executed will at least to make some inquiries into the nature of that document, there is no duty to bring an application that the document should be admitted as an informal will.[25] The plaintiff made the decision to proceed, propounding a document for which she would be the substantial beneficiary, in full knowledge of the circumstances that I have already considered.[26]
The Calderbank Offer
[25]Re Leonard Michial Quinlivabn; Ex Parte Quinlivan [2013] WASC 286 (2 August 2013), [33]–[34].
[26]See above paragraphs [16]–[17], [20]–[21].
The defendant further submitted that in rejecting a Calderbank offer the plaintiff acted unreasonably and, in acting thus, extended the proceeding and incurred further costs that the beneficiaries of the intestate estate should not be required to bear.
The plaintiff submitted that the defendant cannot rely on a Calderbank offer that she did not make, and that in any event it was not unreasonable for the plaintiff to reject the offer.
It is to be noted that, although the offer was not made by the defendant, she consented to and approved of it and, in my view, is entitled to rely upon it.
The offer in question was made very early in the proceedings and the plaintiff had ample time to consider it. As I have noted, at that time, the plaintiff was aware of all of the facts that were ultimately put before this Court on the question of testamentary intention, and aware of the gaps in that evidence that I have considered above. This was brought to the attention of the plaintiff in the letter containing the Calderbank offer. The compromise offered was substantially less than the plaintiff would have been entitled to had the application been successful, but given that knowledge, and that the evidence relied upon was not altered at trial, in my view, it was unreasonable for the plaintiff to reject a genuine, clearly expressed attempt to settle the claim and avoid unnecessary legal costs. Her decision to reject that offer should not now further deplete the estate.
Costs in the Informal Will Application
Accordingly, in my view, given that the evidence filed at the time of the offer of compromise did not change, that the evidence did not demonstrate that the deceased intended the document to be her will, and that the plaintiff did not have a duty to propound the document, the plaintiff was not reasonable in deciding to make the application. Where a party has acted unreasonably in conducting probate litigation, the usual order as to costs would ordinarily apply. However, as the defendant does not seek costs against the plaintiff, it is appropriate for an order to be made that the plaintiff should bear her own costs of this litigation.
Costs in the Pendente Lite Application
The defendant also made an application for a grant of letters of administration pendente lite, which I dismissed by an order also made on 13 September 2013. The plaintiff sought costs in relation to that application out of the estate. The defendant submitted that the plaintiff should bear her own costs in that proceeding.
Although that application was dismissed, the plaintiff was not successful in that application. Had the plaintiff not made the informal will application, which I have already decided was unreasonable, the defendant would never have made the application. Accordingly, I consider that the plaintiff should bear her own costs of the pendente lite application.
Further, I consider that, where a pendente lite application is made by a party in circumstances where it is reasonable to make such an application, and, before the pendente lite application is decided, a grant of letters of administration is made to that party that in effect supersedes the pendente lite application, that party should ordinarily be entitled to his or her costs of the pendente lite application from the estate.
In my view, the defendant acted reasonably in bringing the application. She was unaware at the time how long the informal will proceeding would go on. The real property that formed the main asset in the estate was vacant, and needed to be insured and maintained. There was no suggestion that the application was urgent, but it was appropriate in the circumstances, and was not granted only because the Court, in hearing the matter swiftly, enabled a grant of letters of administration making the pendente lite application unnecessary.
Orders
I order that the plaintiff bear her own costs in both proceedings, and the defendant be entitled to her costs from the estate on an indemnity basis.
I shall hear the parties as to the appropriate form of orders.
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