Saunders v Maestri

[2025] NSWSC 244

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Saunders v Maestri [2025] NSWSC 244

Hearing dates:

On the papers

Date of orders:

21 March 2025

Decision date:

21 March 2025

Jurisdiction:

Equity - Probate List

Before:

Slattery J

Decision:

The plaintiff’s costs shall be paid out of the estate on the indemnity basis. 60% of the first to fourth defendant’s costs shall be paid out of the estate on the indemnity basis. The fifth defendant’s costs shall be paid out of the estate on the indemnity basis.

Catchwords:

COSTS – Party/Party – Payable out of a fund – deceased estate – Uniform Civil Procedure Rule (UCPR) r 42.20 – deceased leaves five children, four of his first wife and one of his second wife – his will appoints the child of his second wife, the plaintiff, as executrix of his will – disagreement arises about construction of the will and whether Powers ofAttorney Act 2003 s 22 applies to certain transactions using a power of attorney during the deceased’s lifetime – plaintiff commences proceedings joining the children of the first marriage as defendants – proceedings resolve subject to the consent of the second wife – but the second wife is a person under a legal incapacity and needs to be joined before the settlement can be perfected – the proceedings are dismissed by consent, subject to an extent contest about costs – the first to fourth defendants contend that the plaintiff executor’s costs of commencing and maintaining the proceedings were not properly and reasonably incurred and she should bear them herself and pay the costs associated with the jointer and advising of the second wife - the plaintiff and the second wife dispute these contentions.

Legislation Cited:

Powers of Attorney Act 2003

Uniform Civil Procedure Rules 2005 r 7.6

Cases Cited:

Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194

Australia Wide Airlines Ltd t/as Regional Express v Aspirion Pty Ltd [2006] NSWCA 365

Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff (No 2) [2009] NSWCA 12

Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32

Elite Protective Personnel Pty Ltd v Salmon (No. 2) [2007] NSWCA 373

Fordyce v Fordham (2006) 67 NSWLR 497

Foukkare v Angreb Pty Ltd [2006] NSWCA 335

McNamara v San [2010] NSWSC 809

Metro Chatswood Pty Ltd v CRI Chatswood Pty Ltd [2007] NSWSC 1120

Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622

New South Wales v Stanley [2007] NSWCA 330

Pentroth Pty Ltd v Kirschild Pty Ltd (2006) 96 SASR 129

Re the Estate of Hodges (1988) 14 NSWLR 698

Texts Cited:

G E Dal Pont, Powers of Attorney, 3rd Edition, LexisNexis, 2020 [9.39] to [9.42]

Category:

Costs

Parties:

Linda Anne Saunders (Plaintiff)
Colin Edwin Maestri (First Defendant)
Michael Warren Maestri (Second Defendant)
Bruce Kevin Maestri (Third Defendant)
Sandra Christine Remy (Fourth Defendant)
Beverley Anne Maestri (Fifth Defendant)

Representation:

Counsel:
E Glover (Plaintiff)
H Bennett SC (First-Fourth Defendants)
D Currie (Fifth Defendant)

Solicitors:
Tranter Lawyers (Plaintiff)
Glass Goodwin (First-Fourth Defendants)
Reidlaw (Fifth Defendant)

File Number(s):

2023/452944

Publication restriction:

Nil

JUDGMENT

1. These proceedings were commenced by Summons on 14 December 2023. On 24 May 2024, by consent, the Court ordered that the Summons be dismissed. But the parties could not agree upon costs. The Court made directions for the service of evidence and submissions on costs. The parties subsequently provided their evidence and submissions and requested that the matter be dealt with in chambers. This judgment deals with the costs of the proceedings.

Background

2. Raymond Eugene Maestri, died on 27 January 2023 leaving an estate consisting of approximately $1.3 million. At the time of his death he was resident in residential aged care with Opal Aged Care (“Opal”). His estate consisted principally of cash held in accounts with the Commonwealth Bank of Australia (“CBA”) totalling about $884,000 and a refundable accommodation deposit (“RAD”) in the amount of $480,000 owed to the estate by Opal. The deceased was also a joint tenant with Beverley in residential real estate in North Rocks (“the North Rocks property”), which passed to her by operation of law upon his death.

3. The deceased is survived by his wife, Beverley, and his five children. Without intending any disrespect to any person, in these reasons the Court uses the first names of family members as they mostly have the same surname, and they referred to one another in their evidence by first names.

4. The deceased had four children by his first wife, Nola, namely the first defendant, Colin, the second defendant, Michael, the third defendant, Bruce, and the fourth defendant, Sandra. The Court appointed Bruce under Uniform Civil Procedure Rules r 7.6 to represent the interests of all the first to fourth defendants. The deceased had one child by his second wife, Beverley, the plaintiff, Linda.

5. The Court infers from the relatively hostile correspondence in these proceedings between the legal representatives for Linda and the legal representatives of the first to fourth defendants that the relationship between Linda and these defendants, at least when represented by Bruce, is distant.

6. Linda is Beverley’s attorney, appointed by way of enduring power of attorney on 7 October 2021. By the time of the proceedings Beverley qualified as a person under a legal incapacity and required a tutor. On 26 April 2024, the Court ordered that Beverley be joined to the proceedings as the fifth defendant, with Mr David Reid as her tutor. For convenience of reference to distinguish Beverley, the fifth defendant, from the other four defendants they are referred to in these reasons as “the sibling defendants”, noting that their half sibling, the plaintiff, is on the other side of the record.

7. The deceased’s will (“the Will”) dated 30 October 2013 was admitted to probate on 16 June 2023. The Will appointed Beverley, as the deceased’s executor, and appointed Linda as executor in the alternative, if Beverley was unable or unwilling to act (clause 2). In the events which occurred, Beverley was unable to act, and Linda became the deceased’s executor.

8. The Will appears to be drafted upon the assumption that the deceased owned the North Rocks property. The Will made provision for Beverley to have a right of residence in the North Rocks property and in the event of its sale after his death for the sale proceeds to be split between Beverley and his children (clauses 3, 4 and 5). Whatever was the position at the time the Will was made, by the time the deceased died the joint tenancy meant that his interest in the North Rocks property did not become part of his estate and passed to Beverley by operation of law.

9. As to the balance of the estate the deceased gave:

1. to Beverley “50% of proceeds of all bank accounts are term deposits of which I am possessed of or operate at the time of my death” (clause 6);

2. to four charities a legacy each of $2,500 (clause 7); and

3. the residue of the estate to his five children, in equal shares as tenants in common (clause 8).

The Proceedings and Their Origins

10. This dispute about costs has its ultimate origins in two successive legal disagreements between the plaintiff and the sibling defendants. The first disagreement was about the legal effect of Beverley’s 2022 operation of a power of attorney which the deceased granted to her on 21 November 2013 (“the deceased’s POA”) under the Powers of Attorney Act 2003 (“the POA”). The second disagreement was about the operative effect of the deceased’s POA. The merits of the costs dispute cannot be adjudicated without some brief analysis of the way the parties conducted the underlying contest about the POA.

11. The deceased’s POA was executed with the professional assistance of the deceased’s long-standing solicitor, Mr Wayne Keen. The deceased’s POA was executed a little over three weeks after Mr Keen had prepared the Will. The Court infers that the taking of instructions for the Will lead to the taking of further instructions for the deceased’s POA.

12. The deceased’s POA has puzzling features. The POA Act makes a clear division between prescribed powers of attorney and enduring powers of attorney. In 2013 the structure of the POA Act was much the same as it is now but the details of altered slightly in ways that do not need to be discussed in these reasons. In 2013 prescribed powers of attorney were authorised under POA Act Part 2, ss 8 and 9 and subject to limitations in POA Act ss 10, 11, 12 and 13 on giving gifts and the like, authorised the attorney to do anything which are an attorney could lawfully do. POA Act s 8 authorised the execution of an instrument that “it is in or to the effect of the form set out in Schedule 2” to the POA Act. Schedule 2 to the POA Act set out a form which made no reference to enduring powers of attorney which are expressed to be given with the intention that they will continue to be effective if the principal lacks capacity.

13. In 2013, irrevocable powers of attorney were authorised under POA Act Part 3 and enduring powers of attorney were authorised under POA Act Part 4, s 19. The schedules to the POA Act did not include a form for an irrevocable power of attorney or an enduring power of attorney created under the POA Act but there were already forms available under the previous legislation in common use. Under POA Act Part 4, s 19 an instrument creating a power of attorney qualified as an enduring power of attorney if it was expressed to be given with the intention that it will continue to be effective if either the principal lacks capacity through loss of mental capacity after execution of the instrument and if it was executed in the presence of the prescribed witness, such as a legal practitioner.

14. The deceased’s POA that Mr Keen created was entitled in large bold letters “enduring power of attorney” and was witnessed by him as a “prescribed witness” by certification under POA Act, s 19. But perhaps unusually for an enduring power of attorney under the heading “commencement” in the deceased’s POA the commencement date of the deceased’s POA was ticked as the time of acceptance of the document, not when the deceased needed assistance in managing his affairs always medically certified as needing assistance.

15. And under the heading “powers” in the deceased’s POA not only were the additional powers to make gifts under POA Act ss 11, 12 and 13 crossed out but puzzlingly, so were the bolded words that (a) confer general authority for the attorney to act under POA Act Part 2 and the declaration that complied with POA Act s 19, and the bolded words “I give this power of attorney with the intention it will continue to be effective if I lack the capacity through loss of mental capacity”.

16. Mr Keen has said that this form of the deceased’s POA was in accordance with his instructions. And his sincerity in saying this can be accepted. But in the Court’s view that was always a challengeable proposition. An equally available inference is that he crossed out more of the “Powers” section of the deceased’s POA than the deceased intended. This document was entitled “enduring power of attorney” and contained a lengthy introductory explanation about the effect of enduring powers of attorney and was witnessed by prescribed witness. Moreover, it is odd that the “Powers” section of the document crosses out even the most basic powers of the attorney.

17. The Court does not have to decide this question. All that can be said is that the deceased’s POA was a legitimate source of confusion to anyone who had to deal with it.

18. On 12 July 2022, Beverley, acting under the deceased’s POA paid the RAD from the deceased’s bank account by cheque for $480,000 to Opal to facilitate the deceased’s entry into the Opal facility as he was becoming more incapacitated. This was about six months before his death in January the following year. At the date of the deceased’s death, the RAD was still with Opal and not in any of the deceased’s CBA bank accounts. It was ultimately repaid to the estate with some other monies with a total transfer of $485,018.57 on 30 June 2023.

19. Immediately after the deceased’s death on 27 January 2023, as the nominated alternate executor in the Will, the plaintiff appointed a local firm of solicitors, Tranter Lawyers, Ms Sarah Young, to commence acting act in the administration of the estate. Ms Young almost immediately received correspondence from one of the sibling defendants, Bruce, which exhibited strong distrust of the plaintiff, queried whether information was being withheld by Ms Saunders for the plaintiff about the deceased’s funeral and complained that Mr Keen should have been appointed as a solicitor for the estate (a wish expressed in the Will) rather than Tranter Lawyers. The plaintiff has explained that Tranter Lawyers were closer to her than Mr Keen.

20. From what the Court can see of this correspondence the criticisms of Ms Young and Tranter Lawyers were unjustified. The criticisms help perhaps to explain some of the subsequent somewhat combative correspondence that came from Mr Keen. Ms Young left Tranter lawyers a few months later and a principal of the firm, Ms Rebecca Wosman took over the file and has subsequently put on an affidavit setting out the history of the parties’ interactions in these proceedings.

21. Ms Young made one mistake in this correspondence. At one point in answer to a question from one of the sibling defendants she said that the deceased’s POA “was never exercised”. The Court accepts from Ms Wosman’s evidence that the deceased’s POA was exercised on several occasions by Beverley prior to and after the payment of the RAD to Opal.

22. On 8 May 2023, Bruce asked Tranter Lawyers for a copy of any notice of intention to distribute and accused the plaintiff of engaging in “questionable actions”, saying that “everything has been done ‘cloak and dagger’”, stating that if he was not treated fairly, he would seek to have the plaintiff removed. This was a somewhat premature accusation a little over three months after the deceased had been buried. But Ms Wosman explained that probate had not yet been granted and otherwise replied in courteous terms to Bruce.

23. Probate was granted on 16 June 2023. On 26 June 2023, Mr Keen came into the picture and wrote to Tranter Lawyers on behalf of the sibling defendants, seeking confirmation that the RAD would not be caught by clause 6 of the Will and would fall into residue and be dealt with by clause 8 of the will. Given that much of the estate was held in bank accounts, Mr Keen’s obvious concern in his client’s interests was to maximise their entitlements to their equal share of those funds by reminding the executor that the RAD was not in a “bank account or term deposit” at the time of the deceased’s death.

24. On 17 July 2023, Ms Wosman wrote to Mr Keen indicating that the RAD had been paid by Beverley in her capacity as the deceased’s attorney using the deceased’s POA. She contended that the effect of POA Act s 22, which applies to enduring powers of attorney, on Beverley’s disposition of the RAD in July 2022 using the deceased’s POA, was to give Beverley the same interest in any surplus arising from the disposition under the POA “as the named beneficiary would have had in the property if the disposition had not been made”.

25. The history and policy behind POA Act s 22, as amended in 2017, need not be discussed now but are well explained in Dal Pont, Powers of Attorney, 3^rd Edition, LexisNexis, 2020 [9.39] to [9.42]. But essentially the provision seeks to overcome with enduring powers of attorney, a common law presumption that an attorney who deals with the deceased’s property under the power of attorney may defeat a gift to a beneficiary by the doctrine of ademption. POA Act s 22 neutralises that outcome by giving a beneficiary who would have succeeded to an otherwise adeemed asset the same interest in any surplus money or other property arising from the disposition of the relevant asset as if the disposition had not occurred. Thus, Tranter Law were arguing that the effect of POA Act s 22 here was that the 50% of the RAD in Beverley’s July 2022 disposition to Opal using the deceased’s POA, would still be included in the clause 6 gift to her.

26. This was reasonably arguable. But it had some difficulties. On 19 October 2023, Mr Keen wrote to Ms Wosman pointing out those difficulties. Mr Keen contended that on the proper construction of clause 6 Beverley was entitled only to any remaining funds contained in the deceased’s accounts at the date of the deceased death. He further contended that POA Act s 22 did not apply because Beverley’s entitlement under the will was not adeemed by the RAD disposition payment of the RAD, nor could the payment of the RAD be characterised as a gift. This was an arguable position. Mr Keen also, perhaps erroneously, suggested that Beverley had breached her obligations under the deceased’s POA by exercising her authority in a manner which conferred benefits on herself, which it did not.

27. But this letter finished in an unfortunate tone calculated to escalate tensions in estate administration, no doubt on instructions to communicate the sibling defendants’ resolve. The letter said that if the sibling defendants were forced to commence proceedings seeking declarations that the RAD forms part of the residue of the estate and not part of the CBA accounts “then we will rely on this letter on any question of costs”. The letter also threatened to challenge the plaintiff’s right of indemnity for costs from the estate.

28. Other correspondence had taken place between Mr Keen and Tranter Law between July and October 2023 unrelated to the present issues, to which Ms Wosman responded. This correspondence related to an inheritance which the deceased was alleged to have received, bank statements, the collection of personal items, and interim distributions.

29. Mr Keen sent a reminder email on 1 December 2023. Ms Wosman responded on 4 December 2023 advising that the plaintiff was not proposing to distribute the estate until after the limitation period for the filing of the family provision claim and provided an update in relation to the administration of the estate. Ms Wosman also indicated that she would respond to Mr Keen’s letter of 19 October by no later than 15 December “as our client is seeking advice from counsel”.

30. Mr Keen was not satisfied with this. On 5 December 2023 he wrote asking for the documents which had been sought in his 19 October letter. He then said that “it appears that your client is deliberately delaying dealing with the matter until the limitation period has expired” and asserted there had been “prolonged failure” to respond to issues for many months. That assertion is contradicted by the relatively cooperative correspondence on other matters that had passed between the parties apart from the issue presently in focus. Mr Keen concluded by stating that unless the documents were provided within seven days he would seek instructions “as to the possibility of an application to the court”.

31. On 8 December 2023, Ms Wosman wrote to Mr Keen and noted that the plaintiff disputed the defendants’ interpretation of the Will and the application of POA Act, s 22, foreshadowed the commencement of proceedings about the issue, and provided the documents requested. This escalating pressure from Mr Keen was forcing a decision on Tranter Lawyers to commence these proceedings. The possibility of mediating the proceedings in a calm atmosphere was excluded by the escalating nature of Mr Keen’s correspondence, no doubt at the insistence of his clients.

32. On 14 December 2023, within the period that Ms Wosman had foreshadowed, the plaintiff commenced proceedings in this Court seeking a determination of whether on the true construction of the Will and POA Act, s 22 the gift contained in clause 6 included 50% of the RAD.

10. Correspondence about evidence and procedural matters passed between the parties between mid-December 2023 and early February 2024. The matter was mentioned in the probate list on 9 February 2024.

11. On 5 March 2024, Mr Keen sent a without prejudice except as to costs email to Ms Wosman. With it was his affidavit which sought to explain that the deceased’s POA was always intended to be a general power of attorney and was never an enduring power of attorney. The inferred legal consequence of this was, as Mr Keen’s letter argued, that the deceased had lost capacity by the time of the July 2022 disposition of the RAD to Opal and the deceased’s POA was therefore ineffective. Because the disposition was not pursuant to a valid POA under the POA Act, the plaintiff could not take advantage of POA Act, s 22, so the argument ran. In those circumstances, Mr Keen noted, the summons did not disclose a reasonable cause of action and requested that the plaintiff discontinue the proceedings with no order as to costs. The letter threatened that if this was not done an application would be made to dismiss the summons and an order would be sought for the plaintiff to pay the sibling defendants costs pursuant to Uniform Civil Procedure Rules 2005 (“UCPR”) r 42.20 which provides for payment of costs upon a dismissal by the party whose legal process was dismissed “unless the Court otherwise orders”.

12. But for the reasons earlier explained there were contradictory indicators in the deceased’s POA as to whether it was indeed an enduring POA. Mr Keen’s affidavit did not resolve the uncertainty within the document. He deposed that he had no recollection of meeting with the deceased to prepare the deceased’s POA and has been unable to locate a file or any file notes in relation to its preparation. But he deposed that it was his usual practice to strike out a portion of a document (and have himself and the client initial the strike out – which is evident here) if he was specifically instructed that that part of the document did not apply. That still does not put the matter to rest. On one view, given the extent of the powers that he crossed out, Mr Keen did not create any kind of power of attorney, either prescribed or enduring.

13. But two other problems immediately emerged from Mr Keen’s correspondence. The plaintiff seemed willing to consider discontinuing the proceedings. But the point that Mr Keen had recently raised placed her in a position of conflict-of-interest. If the deceased’s POA was invalid, she would benefit as a residuary beneficiary. If it was valid and POA Act s 22 applied, then Beverley would benefit. Any decision that the plaintiff made as executor or to resolve the proceedings would be affected by this conflict.

14. Ms Wosman responded promptly. On 12 March 2024, she wrote to Mr Keen, noting that the plaintiff could not discontinue the proceedings because of this conflict. She raised the idea that a tutor be appointed for Beverley, so that she could be joined to the proceedings and participate through the tutor in any dismissal of the summons by consent. This is what ultimately came to pass.

15. In this email Ms Wosman also raised another issue created by Mr Keen’s affidavit. He was putting himself forward as a material witness in the proceedings, leading to a looming contravention of Rule 27 of the Legal Profession Uniform Law Australia Solicitors Conduct Rules 2015. She requested that he cease to act.

16. Mr Keen in turn responded promptly. On 2 April 2024, Ms Goodwin of Glass Goodwin was recorded as the solicitor on the record for the sibling defendants. On that date, Ms Goodwin wrote to Ms Wosman reiterating that defendants’ position that the deceased’s POA was not enduring and requesting Linda to discontinue the proceedings. Ms Wosman replied and put Ms Goodwin on notice of Beverley’s interest in the proceedings and flagged the need to join Beverley to the proceedings and allow her to take advice before the proceedings could be discontinued. Ms Goodwin’s correspondence was appropriate for the situation but by this time the dye had been cast, and most of the costs had been incurred apart from arguing about costs.

17. On 4 April 2024, Ms Goodwin wrote to Ms Wosman and restated the defendants’ position that the summons did not disclose a reasonable cause of action and invited the plaintiff to consent to the dismissal of the proceedings.

18. On 5 April 2024, the matter came before the Court for directions. The proceedings were adjourned to allow Beverley an opportunity to take advice. This was necessary given that she was yet to find a tutor and be joined as a defendant. The sibling defendants were granted leave to move (orally to save further unnecessary costs) on a motion for strike out the summons returnable on the 26 April 2024.

19. On 17 April 2024, Mr Reid consented to his appointment as the tutor for Beverley.

20. On 26 April 2024, the Court ordered that Beverley be joined to the proceedings by her tutor and adjourned the proceedings to 24 May 2024. The defendants’ sought to agitate their motion for strike out on this date. The Court made directions for Beverley to indicate her position on the strike out by 22 May 2024 and, if a consent position was not reached, for the motion to be determined on the papers.

21. On 24 May 2024, the Court dismissed the summons by consent all parties, the plaintiff, the sibling defendants and Beverley by her tutor. The Court was informed that the parties had been unable to agree on costs. The Court made directions for the determination of costs on the papers in chambers. Additional evidence was subsequently filed. The Court also received extensive written submissions from counsel.

22. But given that this was only an argument about costs the Court indicated it was unwilling to allow further elaborate expenditure on costs and made a maximum costs order under UCPR r 42.4 preventing any party from recovering more than $5,000 from another party in relation to the argument about costs from that time forward. To the extent that any costs assessment needs to take place, this order stands and can be considered at that point.

Some Relevant Legal Principles

46. The sibling defendants submit that UCPR r 42.20(1) applies here because an order for dismissal has been made. UCPR r 42.20(1) provides:

If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, 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.

47. The Court of Appeal has interpreted UCPR r 42.20(1) rule as including dismissals by consent without a hearing on the merits as well as dismissals after a hearing: Australia Wide Airlines Ltd t/as Regional Express v Asperion Pty Ltd [2006] NSWCA 365, at [48]. UCPR r 42.20(1) does not give rise to a presumption that costs will be ordered against the plaintiff: see McNamara v San [2010] NSWSC 809 (“McNamara”) at [12(c)] citing Fordyce v Fordham (2006) 67 NSWLR 497; Foukkare v Angreb Pty Ltd [2006] NSWCA 335 at [65]; Pentroth Pty Ltd v Kirschild Pty Ltd (2006) 96 SASR 129; Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSW CA 365 at [53]; Bitannia Pty Ltd v Parkline Constructions Pty Ltd [200 9] NSWCA 32. However, it does create a starting point by requiring that the plaintiff must pay the defendant’s costs unless that outcome is displaced by a discretionary decision: see McNamara at [12].

48. Where the proceedings are dismissed prior to any hearing on the merits, “the Court cannot try a hypothetical action between the parties” to determine the question of costs: see McNamara at [12(f)] citing Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201; Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624; Metro Chatswood Pty Ltd v CRI Chatswood Pty Ltd [2007] NSWSC 1120 at [35]. The Court’s discretionary power as to costs is wide and is to be liberally construed to achieve justice in the particular case: see New South Wales v Stanley [2007] NSWCA 330 at [18]; Elite Protective Personnel Pty Ltd v Salmon (No. 2) [2007] NSWCA 373 at [8].

49. A relevant consideration will be whether the plaintiff acted reasonably in commencing the proceedings and whether the defendant acted reasonably in defending them: see McNamara at [12(g)] citing Fordyce v Fordham (200 6) 67 NSWLR 497 at [67]; Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201. All relevant circumstances, and not just the fact of dismissal should be considered: McNamara.

50. Ordinarily, costs will be assessed on a party-to-party basis, this is no different in probate litigation: UCPR, r 42.2; Re the Estate of Hodges (1988) 14 NSWLR 698. However, indemnity costs may be awarded in cases that are commenced or continued where “the applicant, properly advised should have known that [they] had no chance of success.”: Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff (No 2) [2009] NSWCA 12 at [14].

The Parties’ Submissions

51. The Court has had the benefit of extensive written submissions. It is not possible to reproduce them in any elaborate form. This section contains only concise summary of them.

52. The plaintiff. The plaintiff seeks an order that her costs, the defendants’ costs, (excluding the professional costs of Keen Lawyers and Mr Keen) and Beverley’s costs of the proceedings be paid from the estate on the indemnity basis.

53. In support of her position, the plaintiff submits she acted reasonably in commencing proceedings seeking the Court’s guidance on the true construction of the Will, in circumstances where the deceased’s POA on its face, and in its title, appeared to be an “enduring” POA.

54. She further submits that prior to the service of Mr Keen’s evidence the defendants had at one point themselves propounded the effectiveness of the deceased’s POA by suggesting that Beverley had breached her obligations under it. Once on notice of Mr Keen’s evidence, she contends that she acted reasonably in seeking that Beverley be joined to the proceedings, prior to consenting to their dismissal. She says she had to do this because she had a conflict of interest as a residuary beneficiary and as the attorney for Beverley, and Beverley was the party with the relevant economic interest in contending for the validity of the deceased’s POA.

55. She submits that the lapse of time between 5 March 2024 (when the consent dismissal was first raised by the defendants’) and 24 May 2024 (when the proceedings were dismissed by consent) was unavoidable given the need to join Beverley to the proceedings and for her to be advised. The proceedings were adjourned to allow Beverley time to appoint a tutor and obtain legal advice on her position in the proceedings.

56. Finally, the plaintiff submits that the proceedings were ultimately rendered unnecessary when Beverley decided not to file a ross-claim seeking rectification of the deceased’s POA and to consent to the dismissal of the proceedings. The plaintiff says that point she acted reasonably in quickly consenting dismissal of the proceedings.

57. In respect of Keen Lawyers and Mr Keen’s professional costs, Linda submits that those costs should not be borne by the estate because Mr Keen was a material witness in his client’s case and, further, much of the correspondence which passed between Keen Lawyers and Ms Wosman concern matters unrelated to these proceedings.

58. Linda is also critical of Glass Goodwin for continuing to incur costs agitating the strike out of the proceedings once on notice of Linda’s conflict of interest and the need to join Beverley to the proceedings before a discontinuance could be consented to after proper procedures were observed.

59. The First to Fourth Defendants. The sibling defendants seek orders that the plaintiff pay their costs on the ordinary basis and that she also pays Beverley’s costs on the indemnity basis, and that there otherwise be no order as to her costs, with the intent that she bear her own costs of the proceedings personally.

60. The sibling defendants submit that the costs of commencing and maintaining the proceedings were not costs which were reasonably and properly incurred by the plaintiff. They argue that the summons never disclosed a reasonable cause of action and had no prospects of success, because it assumed that the deceased’s POA was a valid enduring POA and that POA Act s 22 was engaged, in circumstances where, on its face, the POA clearly discloses that s 22 of the POA Act was not engaged. They say that the summons should have put in issue the validity of the POA. The defendants say that these issues were brought to Linda’s attention on 5 March 2024, but it took over 11 weeks before Linda, as plaintiff consented to the dismissal of proceedings.

61. The sibling defendants submit that the plaintiff did not provide any evidence that an enduring POA existed or that Beverley erroneously believed the deceased’s POA was an enduring POA. They point out that the plaintiff was appointed as the deceased’s financial manager by NCAT on 12 September 2022. They say this supports an inference that the deceased did not have capacity to manage his financial affairs from that time on, and thus any POA document would have no longer been operative.

62. The defendants also submit Linda failed to obtain the consent of the beneficiaries, including Beverley, to commence the proceedings, or otherwise to obtain judicial advice authorising their commencement. They say that if Beverley’s consent had been sought prior to the commencement of proceedings and she had had the benefit of her own advice, the form of the summons may have included the POA validity claim, or the proceedings may have been avoided entirely.

63. In respect of Keen Lawyers and Mr Keen’s costs, the sibling defendants reject that Mr Keen was a material witness. They submit that there is no evidence which shows that Mr Keen acted improperly.

64. The Fifth Defendant. Beverley seeks an order that her costs be paid from the estate on the indemnity basis. Her costs are the costs incurred by her tutor, a solicitor, Mr Reid. Special provision may be made for the payment of these costs by the parties or from a fund under the Court’s control: UCPR r. 42.24.

65. Beverley does not oppose the costs of the plaintiff and the sibling defendants also being paid from the estate.

66. Beverley submits it was proper and necessary that she be joined to the proceedings. She was joined to assist the Court to allow the proceedings to be finally resolved. She says she acted expeditiously and complied with all Court orders, enabling the parties to consent to the dismissal of the proceedings as soon as reasonably practicable. She says that she has acted reasonably, caused no delay and did not cause other parties to incur unnecessary costs.

67. Beverley contends that Mr Keen was the person truly responsible for the contest in these proceedings as his oversight and poor drafting of the POA led to confusion, family tension, and a lengthy legal dispute resulting in significant legal costs. She is also critical of Mr Keen’s affidavit evidence, which she contends, at is highest, merely indicates his ‘usual practice’.

68. Beverley submits that this dispute has a nexus with the deceased’s Will and that the deceased’s POA was prepared at the request of the deceased and that the form of the deceased’s POA was the cause of the litigation. Drawing upon some discretionary principles in relation to costs orders in contentious probate proceedings, Beverley submits that as the deceased through his agent Mr Keen in creating the deceased’s POA was the cause of the litigation. Therefore, all the costs of this litigation should be borne by the estate.

Consideration

69. The appropriate cost orders for each the parties are considered here in turn.

70. As to Beverley’s costs, they should be paid out of the estate on the indemnity basis. Her conduct is not contributed to any of the costs in these proceedings. She was only joined late and when joined took appropriate advice and consented to dismissal of the proceedings.

71. The Court does not accept Beverley’s submission that Mr Keen’s drafting of the deceased POA was the cause of this litigation and that the simple solution should be that all parties’ costs come out of the estate. The conduct of the parties is more nuanced.

72. As to the plaintiff’s costs, the sibling defendants’ arguments that she should pay their costs on the ordinary basis and should not be indemnified from the estate in respect of their costs and therefore she should bear the costs of the sibling defendants personally, is not justified. Nor is the contention that she should bear her own costs of the proceedings and not be indemnified out of the estate.

73. In the Court’s view, the plaintiff mostly conducted herself and through her solicitors reasonably and properly and should be wholly indemnified out of the estate in respect of her costs as executrix. The trigger for the incurring of substantial cost of these proceedings was certainly her decision to take the position that her mother, Beverley, might receive an entitlement that the sibling defendants also claimed.

74. But a reasonable reading of the pre-hearing correspondence shows that she was forced into commencing proceedings by the sibling defendants in a short time by their demands for immediate action. A more conciliatory response on their part, attempting to avoid litigation and work through the issues may have had a very different outcome. Their contentions now that she should have sought judicial advice, or the consent of the defendants, before commencing proceedings does not sit well with the pre-trial correspondence they vigorously pressed against her.

75. At one level the plaintiff’s legal advisers should have double-checked the deceased’s POA before taking that position on behalf of her mother. But looking at the deceased POA she and her legal advisers can hardly be blamed for interpreting it as an enduring power of attorney. The sibling defendants’ arguments to the contrary overlook its many puzzling ambiguities, which are barely resolved by Mr Keen’s “usual practice” evidence.

76. But at another level it is courageous for the sibling defendants to argue for more care on the part of the plaintiff legal advisers in commencing proceedings when Mr Keen did not appear to notice the self-contradictory document that he created in 2013.

77. Once the plaintiff commenced the proceedings, it was difficult for her to avoid the costs that then followed. Mr Keen’s evidence did not make the proceedings no longer maintainable. His evidence simply meant that the proceedings were more difficult to maintain. A summary application to strike out the summons would not have succeeded as a cross claim for rectification of the deceased’s POA was always available and the plaintiff’s argument based on POA Act s 22 was certainly not embarrassing.

78. But once Mr Keen raised the issue of the validity of the deceased’s POA, it was inevitable that further delay and costs in joining Beverley would be incurred. The subsequent delay in the discontinuance of the proceedings was a consequence of the need to join Beverley to the proceedings and have her advised.

79. It is suggested that Beverley could have been joined to the proceedings at their commencement or earlier than she was. But she only became a necessary party after the validity of the deceased’s POA was put in question. And for the reasons earlier stated, the plaintiff’s failure to see that issue before the proceedings commenced was not unreasonable.

80. The plaintiff’s costs of these proceedings will therefore be paid out of the estate on the indemnity basis.

81. As to the sibling defendants’ costs, at the time the proceedings were dismissed by consent and no party wished to go on with them, they had well arguable case that the deceased’s POA was invalid. But the Court cannot conclude that they were very likely to succeed and that the proceeding could not have been defended against them.

69. As to the reasonableness of their conduct, the Court has already commented about the way they pressed this litigation forward when it was probably avoidable with a more measured approach. Estate litigation can become expensive very quickly in this case is a clear example in which by more measured conduct litigation could have been avoided. The Court will not give the sibling defendants all their costs out of the estate for this reason.

70. But the same result is justified for another reason. Interspersed with the litigation correspondence was extensive correspondence about other issues in relation to the estate, which should be to the account of the sibling defendants and not the estate.

71. The Court is not persuaded by the argument the plaintiff advanced that Mr Keen was the cause of this litigation or that somehow his costs should be disallowed because he drafted the deceased’s POA. He clearly had no idea when he drafted an ambiguous document in 2013 that it would lead to a mushroom cloud of litigation in 2024. The fact he became a material witness was just incidental to the issues as they unfolded.

72. The plaintiff’s criticism lodged against Glass Goodwin is not justified. In the result, considering all these factors the Court will allow 60% of the sibling defendants’ costs out of the estate and make no other order as to costs.

73. Should any other issues arise out of these reasons, or the orders made, the Court will grant the parties 28 days to bring an application.

Conclusion

87. The Court:

1. ORDERS that the fifth defendant’s costs be paid from the estate on the indemnity basis;

2. ORDERS that the plaintiff’s costs of the proceedings be paid from the estate on the indemnity basis;

3. ORDERS that 60% of the first to fourth defendants’ costs be paid out of the estate on the indemnity basis; 

4. GRANTS leave to the parties for 28 days to make any application arising out of these orders and these reasons; and

5. NOTES that recovery from the estate pursuant to all the above costs orders is limited by ORDER 2 of the orders made on 24 May 2024 such that no party can recover more than $5,000 for work done between 24 May 2024 and today in relation to the to the contest about costs resolved in these orders.

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Amendments

28 March 2025 - Paragraph 87 - Orders

Decision last updated: 28 March 2025