Small v Phillips (No 3)

[2020] NSWCA 24

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Small v Phillips (No 3) [2020] NSWCA 24
Hearing dates:	On the papers (Submissions by 12 December 2019)
Decision date:	26 February 2020
Before:	Brereton JA; McCallum JA; Emmett AJA
Decision:	Order that: (1)   the costs of all parties, both of the appeal and of the proceedings in the Equity Division, be paid out of the estate of Mrs Phillips; (2)   the costs of the Appellant be paid on the indemnity basis; (3)   the costs of the First and Second Respondents be paid on the ordinary basis; and (4)   the costs of the Third and Fourth Respondents be paid on the indemnity basis.
Catchwords:	CIVIL PROCEDURE – Court of Appeal – Costs orders – Costs orders for proceedings in the exercise of protective jurisdiction – Whether the appellant’s costs should be paid on the ordinary basis or the indemnity basis.
Legislation Cited:	Civil Procedure Act 2005 (NSW) Succession Act 2006 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	A Ltd v J (No 3) [2017] NSWSC 931 Re MP’s Statutory Will [2019] NSWSC 331 Re K’s Statutory Will [2017] 96 NSWLR 69; [2017] NSWSC 1711 Small v Phillips (No 2) [2019] NSWCA 268
Category:	Costs
Parties:	Anthony Phillip Small (Appellant) Sharonne Rose Phillips (First Respondent) Robert Ellis Phillips (Second Respondent) Sharonne Rose Phillips and Robert Ellis Phillips in their capacity as private managers of the estate of Millie Phillips (Third Respondent) Millie Phillips by her Tutor, Michaela Money (Fourth Respondent)
Representation:	Counsel: C J Birch SC with J Mack (Appellant) H Morrison (First Respondent) L Ellison SC (Second Respondent) C Homer (Third Respondent) M K Meek SC (Fourth Respondent)   Solicitors: Dukes Lawyers (Appellant) David Landa Stewart (First Respondent) Glass Goodwin (Second Respondent) Brown Wright Stein (Third Respondent) MJM Lawyers (Fourth Respondent)
File Number(s):	2019/147133
Decision under appeal	Court or tribunal: Supreme Court of NSW Jurisdiction: Equity – Protective List Citation: [2019] NSWSC 331 Date of Decision: 15 April 2019 Before: Lindsay J File Number(s): 2018/373426

Judgment

1. THE COURT: On 25 September 2019, for reasons published on 4 November 2019[1] (the Principal Reasons), the Court allowed an appeal from orders made on 15 April 2019 by a judge of the Equity Division. [2] In these reasons, terms will be used as defined in the Principal Reasons. By the orders of 25 September 2019, the Court gave leave to Anthony under s 19 of the Succession Act 2006 (NSW) (the Succession Act) to apply for an order under s 18 of the Succession Act and, pursuant to s 18, ordered that a will of Mrs Phillips be made in the form set out in Annexure A to those orders. The Court reserved all questions of the costs of the appeal and the costs of the proceedings in the Equity Division. The Court has now received written submissions from all parties on the questions that were reserved.

   1. See Small v Phillips (No 2) [2019] NSWCA 268.

   2. See Re MP’s Statutory Will [2019] NSWSC 331.

2. In exercising the protective jurisdiction, the Court does not necessarily apply the principle that costs should follow the event. Rather, the Court should determine the proper order for costs to be made in all the circumstances. [3] When exercising the protective jurisdiction, the welfare and interests of the protected person are paramount. Individuals who would otherwise be concerned to act in the case of a person who is in need of protection should not be deterred from acting by the possibility of a costs order if the application is unsuccessful. Family members of a protected person should not be burdened with an obligation to pay costs in circumstances where the imposition of such an obligation might have an adverse effect on relationships with, or care for, the protected person. That is to say, proceedings in the exercise of the protective jurisdiction are not adversarial in the way that ordinary civil litigation is adversarial. Rather, proceedings in the exercise of protective jurisdiction have a strong public interest element. [4]

   3. See Civil Procedure Act 2005 (NSW), s 98, Uniform Civil Procedure Rules 2005 (NSW), r 42.1 and Re K’s Statutory Will [2017] 96 NSWLR 69; [2017] NSWSC 1711 at [14]-[18].

   4. See Re K’s Statutory Will at [14]-[18].

3. Proceedings for the making of a statutory will for an incapacitated person are of a character similar to proceedings in the protective jurisdiction. Thus, there is a public interest in making a statutory will to ensure the orderly distribution of the assets of an incapacitated person on the death of such a person. Further, a person who has a legitimate interest in an application to authorise a statutory will should not be dissuaded from assisting the Court to exercise its jurisdiction in a fully informed manner by reason of concern that the person may be obliged to do so at his or her own expense. In addition, a defendant, even if unsuccessful in opposing a statutory will, should ordinarily be given his or her costs from the estate of the incapacitated person on the indemnity basis if it was reasonable to resist the claim for a statutory will. [5]

   5. See A Ltd v J (No 3) [2017] NSWSC 931 at [8].

4. All parties agree the costs of all parties, both of the appeal and of the proceedings in the Equity Division, should be paid out of the estate of Mrs Phillips. In the circumstances, it is appropriate that the costs be paid out of the estate. The issue is whether the costs should be paid on the indemnity basis or on the ordinary basis. All parties agree that the costs of the Managers and the Tutor should be paid on the indemnity basis and that is also appropriate.

5. Anthony does not contend that it would be inappropriate for Sharonne’s and Robert’s costs to be paid on the indemnity basis. However, each of Sharonne and Robert accepts that her or his costs should be paid on the ordinary basis. In the circumstances, the appropriate order is that their respective costs be paid out of the estate of Mrs Phillips on the ordinary basis.

6. The question is whether Anthony’s costs should be paid on the ordinary basis or the indemnity basis. Anthony had a clear personal interest in the outcome of the proceedings in the sense that he stands to benefit personally from the orders that he sought and the orders that have been made. Nevertheless, the public interest has been served in that a will for Mrs Phillips is now in place whereas there would have been a real prospect of questions as to the status of the 2001 Will and possible intestacy. That is to say, the evidence indicated that Mrs Phillips believed that she had no extant will and the original of the 2001 Will has not been located. It is unclear whether, had Anthony not commenced the proceedings in the Equity Division, any other party would have done so in order to seek the making of a statutory will for Mrs Phillips.

7. Those considerations lead to the conclusion that, even if the Court had not facilitated the making of the statutory will, it may have been appropriate for Anthony to have his costs paid out of Mrs Phillips’ estate. In the events that have occurred, he has been successful in invoking the jurisdiction under the Succession Act and in persuading this Court to allow the appeal from the orders made by the primary judge.

8. It appears that the estate of Mrs Phillips will be of such a value that the costs of the litigation will be relatively insignificant. Nevertheless, Anthony should not be entitled to be indemnified for unreasonable costs. Noting that UCPR r 42.5(b) has the effect that costs that appear to have been unreasonably incurred or appear to be of an unreasonable amount will be disallowed even on the indemnity basis, the appropriate order is that Anthony’s costs incurred in the conduct of the proceedings before the primary judge and on appeal be paid out of the estate of Mrs Phillips, on the indemnity basis.

**********

Endnotes

Decision last updated: 26 February 2020