Zachary Rockman and Rachel Rockman (by their litigation guardian Lynette Anne Rockman) v John Fast

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2015 0098

ZACHARY ROCKMAN and RACHEL ROCKMAN (by their litigation guardian LYNETTE ANNE ROCKMAN)	Applicants
v
JOHN FAST & ORS	Respondents

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JUDGES:	WARREN CJ, TATE and FERGUSON JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	9 February 2016
DATE OF JUDGMENT:	9 November 2016
MEDIUM NEUTRAL CITATION:	[2016] VSCA 262
JUDGMENT APPEALED FROM:	[2015] VSC 337 (McDonald J)

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WILLS AND ESTATES — Incorporation of schedule referred to in Will — Bequests to testator’s children subject to abatement if schedule incorporated into Will — Whether incorporation of schedule altered legal effect of Will — Whether issue estoppel prevented primary judge’s incorporation of schedule — Whether natural justice denied in proceedings below — Application for leave to appeal dismissed.

COSTS — Cross-application by executors against costs order by primary judge — Application made out of time — Application for extension of time refused.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Dr K P Hanscombe QC with Mr A P Dickenson	Taussig Cherrie Fildes
For the Respondent	Mr P D Crutchfield QC with Mr T P Warner	Strongman & Crouch

WARREN CJ:

This proceeding concerns the will of the late Irvin Peter Rockman (‘Mr Rockman’).

On 27 August 2015, following substantive reasons for judgment delivered on 22 July 2015, a judge of the Trial Division declared that an unsigned schedule of trusts entitled ‘List of Irvin Rockman’s Family Trusts as at 1 April 2010’[1] was incorporated into the final will of Mr Rockman, which was admitted to probate on 6 March 2013. In addition, the judge ordered that the executors of Mr Rockman’s estate personally bear certain costs of the proceeding before him.
[1]Being Exhibit ELC-19 to the affidavit of Eleanor Lisa Coates sworn on 20 November 2014.

Four applications are presently before the Court:

(a) an application by two of Mr Rockman’s children for leave to appeal against the judge’s decision that the schedule was incorporated into the will admitted to probate;

(b) an application by the executors of Mr Rockman’s estate for the Court to receive further evidence at the hearing of the application for leave to appeal;

(c) an application by the executors for an extension of time in which to file and serve a cross-application for leave to appeal against the judge’s costs orders; and

(d) the executors’ cross-application for leave to appeal, if the extension of time is granted.

For the reasons that follow, I would:

(e) dismiss the application for leave to appeal;

(f) refuse the executors’ application for the Court to receive the affidavit of Mr Fast sworn on 15 December 2015 at the hearing of the application for leave to appeal;

(g) refuse the executors’ application for an extension of time in which to file and serve a cross-application for leave to appeal; and

(h) find it unnecessary to determine the merits of the executors’ cross-application.

Factual background

Mr Rockman died on 30 August 2010. He was survived by his six children: Matthew Myer Rockman, Edward Jacob Rockman, Rhett Nathan Rockman, Elle May Rockman, Zachary Philip Rockman and Rachel Lily Rockman. Zachary and Rachel Rockman are the applicants in the present proceeding. They are 17 and 13 years of age respectively. They sue by their litigation guardian, Lynette Anne Rockman, who is their mother.

The respondents in the present proceeding are John Fast, Michael David Schoenfeld and Philip Carey Brown. They are the executors and trustees of Mr Rockman’s estate.

In the years leading up to his death, Mr Rockman made formal wills in June 2005, April 2006, July 2008, October 2008, April 2009, June 2009 and April 2010. Each of those wills contained a clause 5 in the following terms:

PURSUANT to the powers given to me as the Appointor and Guardian of my Family Trusts I APPOINT my Trustees and if more than one then jointly to be the Succeeding Appointor and Guardian of any Family Trust of which I am the Appointor and Guardian as at the date of my death. FOR THE AVOIDANCE OF DOUBT I have attached to this my Will as a Schedule, a list of my various entities (including my Family Trusts) that are in existence at this time however I DIRECT that my Trustees shall also be the Succeeding Appointor and Guardian of any Trusts (including Family Trusts) formed after the date of this my Will that may contain similar Appointor/Guardian provisions, by whatever name they may be described therein.

Among other things, Mr Rockman’s will dated 1 April 2010:

(i) made a bequest to the Irvin Peter Holdings Trust of any monies owing to Mr Rockman by each of the entities named in the schedule;

(j) made bequests of $500,000 to each of Matthew and Edward Rockman;

(k) made a bequest of $125,000 to Elle Rockman; and

(l) gave the residue of Mr Rockman’s estate to Zachary and Rachel Rockman.

Although Mr Rockman signed a schedule at the time he executed the April 2010 will, it was not attached to the will. In addition, while it was entitled ‘First Schedule — List of Irvin Rockman’s Family Trusts as at 1 April 2010’, it omitted four trusts which were in existence at that date.

In early June 2010, Mr Rockman asked Mr Fast to work with Eleanor Lisa Coates, a solicitor of Kenna Teasdale Lawyers (‘KTL’), to prepare a final will for him. Following various meetings between Mr Rockman and Mr Fast, and the exchange of correspondence between Mr Fast and Ms Coates, on 25 August 2010 Ms Coates sent a final draft will to Mr Brown for Mr Rockman to sign. Mr Rockman was unable to sign the will due to illness, and five days later he died without having signed it.

On 6 March 2013, following proceedings in the Trial Division before Habersberger J, discussed further below, the unexecuted draft will was admitted to probate as an informal will pursuant to s 9 of the Wills Act 1997.[2]
[2]Habersberger J’s reasons for judgment were delivered on 7 February 2013: Fast v Rockman [2013] VSC 18.

Various clauses of the final will are relevant to the present proceeding. Clause 5 was in the same terms as in Mr Rockman’s previous seven wills,[3] that is, it referred to an attached schedule of entities. Clauses 6 to 10 made bequests of $500,000 to each of Matthew, Edward, Elle, Zachary and Rachel Rockman. Clause 16 made specific bequests totalling $3.710 million to various named individuals and organisations. Clause 17 gave the residue of Mr Rockman’s estate to a trust known as the 1965 Irvin Peter Rockman Trust. Clause 15 of the will stated:

SUBJECT to my Trustees first satisfying the bequests provided in Clause 16 of this Will I GIVE AND BEQUEATH the amount of any and all moneys owing to me or standing to my credit as at the date of my death by each of the entities named in the Schedule, as well as by any other companies, trusts or entities that may be formed or come into existence after the date of this Will which I may directly or indirectly control as (sic) the date of my death to The Irvin Peter Holdings Trust, constituted by deed dated 3 June 2008, whereof the current trustee is Irvin Peter Holdings Pty Ltd to be held as an accretion to that trust fund absolutely and beneficially.

[3]See [7] above.

No schedule was attached to the final draft will. At no stage during the preparation of Mr Rockman’s final will did Ms Coates, Mr Fast or Mr Brown discuss with Mr Rockman the schedule to which cl 5 referred, and none of the relevant emails or drafts included a schedule. Nevertheless, every draft referred to an attached schedule in the same terms as in the previous formal wills.

Procedural history

The probate proceeding

The conduct of the probate proceeding before Habersberger J is a matter of some relevance to the matters now before the Court. The following summary is taken from his Honour’s reasons and the parties’ agreed summary in this proceeding.

On 21 October 2010, Mr Fast, Mr Schoenfeld and Mr Brown filed an originating motion seeking a limited grant of Letters of Administration to allow the administration of Mr Rockman’s estate pending the determination of which document should be admitted to probate.[4] On 28 October 2010, Williams J made the grant sought, and a further order extending the powers of the executors under the limited grant was made on 25 November 2010 by Osborn J.[5]
[4]Fast v Rockman [2013] VSC 18 [4].
[5]Ibid [5].

On 26 October 2011, Mr Fast, Mr Schoenfeld, Mr Brown and Francis Anthony Ford[6] issued a summons seeking an order that they be at liberty to prove in solemn form the 1 April 2010 will or, alternatively, an informal will dated ‘2010’ (being either of two unexecuted wills put forward in that proceeding).[7] The executors adopted a neutral position as to which of the three documents should be admitted to probate.[8] Their summons also sought directions as to whether and to what extent the doctrine of abatement applied to the pecuniary legacies given in the will.[9]
[6]Mr Fast, Mr Schoenfeld and Mr Brown were the named executors in the 1 April 2010 will. Together with Francis Anthony Ford, they were also the named executors in the two unexecuted draft wills which were before Habersberger J: ibid [5].
[7]Ibid [6].
[8]Ibid.
[9]Ibid [7].

On 18 November 2011, Mr Rockman’s former third wife Lynette Rockman lodged a caveat. On 22 November 2011, she objected to the two unexecuted wills being admitted to probate, and issued a summons seeking an order that the 1 April 2010 will be admitted to probate. She also sought the deletion of certain parts of the unexecuted wills in the event that one was admitted to probate, and related orders.[10]
[10]Ibid [8].

The executors’ summons named Mr Rockman’s six children as the defendants. At a directions hearing on 25 November 2011, Habersberger J ordered by consent that Lynette Rockman be joined as a defendant and that she be appointed to represent the interests of her two children Zachary and Rachel Rockman.[11] Directions were made for the two summonses to be brought on for hearing on 20 March 2012. In addition, his Honour noted that Elle Rockman had agreed to act as a contradictor ‘by supporting the position that one or other of the unexecuted wills be admitted to probate’.[12] The other defendants did not file an appearance or play an active part in the proceeding.[13]
[11]Ibid [9].
[12]Ibid.
[13]In addition, Habersberger J recorded that no order adding Mr Ford as a plaintiff was sought or made at the directions hearing: ibid.

On 2 March 2012, the executors filed written submissions in the probate proceeding which included the following statement:

As there are insufficient funds in the estate to pay all of the pecuniary legacies under either will, a question of abatement will arise. This will be addressed at the hearing of the application.

The hearing of the summonses proceeded on 20 March 2012. During the hearing, the following exchange occurred between Habersberger J and senior counsel for the executors:

HIS HONOUR: Is there an issue about abatement?
COUNSEL:No, there isn’t [any] longer, Your Honour, an issue about abatement. The position is now clear so we don’t need to address you in respect of abatement.
HIS HONOUR: I’m puzzling over why there seemed to be some suggestion that there was a problem.
COUNSEL:We thought there might be. It’s resolved itself. We’ve identified all of the sources that the gifts might come from and there’s no question of abatement that we need to trouble Your Honour with.

His Honour recorded that ‘at the hearing, it was common ground between the parties that it was no longer necessary to determine the abatement question’.[14]
[14]Ibid [7].

A further feature of the proceeding before Habersberger J should be noted. As his Honour stated in his reasons for judgment:

What was … overlooked by everyone at [the 25 November 2011 directions] hearing was that the application to prove the will of the deceased in solemn form should have been made in a separate proceeding applying for a grant of probate supported by the normal evidentiary material required by the Supreme Court (Administration and Probate) Rules 2004. Despite raising the problem, I continued with the hearing on 20 March 2012 as I was satisfied that notice had been given to all interested persons. As foreshadowed by the plaintiffs’ senior counsel, the procedural deficiencies were subsequently rectified by the filing of an originating motion (S PRB 2012 07166) on 25 May 2012 seeking probate of the April 2010 will, alternatively, the first unexecuted will, alternatively, the second unexecuted will, together with the required evidentiary material concerning matters such as advertising and the proposed executors swearing that they would properly administer the estate. …[15]

[15]Ibid [10].

On 7 February 2013, Habersberger J delivered judgment. His Honour found that what he referred to as ‘the second unexecuted will’[16] ought to be admitted to probate as an informal will pursuant to s 9 of the Wills Act, subject to the excision of some material which is not of any present relevance. So redacted, that will was admitted to probate on 6 March 2013.
[16]Being Exhibit PCB-14 to the affidavit of Mr Brown sworn on 20 October 2011.

The Part IV proceedings

On 11 April 2013, Rhett Rockman issued a proceeding seeking an order for provision from the estate of Mr Rockman under Part IV of Administration and Probate Act 1958. Similarly, on 30 August 2013, Elle Rockman issued a proceeding seeking further provision from the estate. I refer to these proceedings together as ‘the Part IV proceedings’.

The trial of the Part IV proceedings began on 13 October 2014 before McMillan J. It was submitted on behalf of Zachary and Rachel Rockman that there would be no abatement of their bequests of $500,000, as the executors had deposed, because the will admitted to probate had no schedule. In response, the executors tendered a schedule signed on 3 April 2009.[17] Senior counsel informed McMillan J that while it was overlooked at the time of the probate proceeding before Habersberger J, the executors would seek to have the schedule admitted to probate. The trial of the Part IV proceedings was adjourned to enable the executors to make such an application.
[17]As will be seen, this was not one of the schedules which the executors ultimately sought to have admitted to probate.

The present proceedings

On 24 November 2014, the executors issued a summons in the probate jurisdiction of this court seeking an order that the will granted probate on 6 March 2013 be rectified under s 3(1) of the Wills Act by annexing the schedule which was exhibit ELC-19 to the affidavit of Eleanor Lisa Coates sworn on 20 November 2014, being an unsigned schedule entitled ‘List of Irvin Rockman’s Family Trusts as at 1 April 2010’.

On 13 March 2015, the executors advised all parties that they would seek leave to amend their summons to additionally seek, as alternative forms of relief:

(m) that the schedule at exhibit ELC-19 be incorporated by reference into the will granted probate;

(n) that the schedule at exhibit ELC-19 be admitted to probate under s 9 of the Wills Act, as a document referred to in the will granted probate; and

(o) that the schedule forming part of exhibit ELC-18, being a signed schedule entitled ‘List of Irvin Rockman’s Family Trusts as at 1 April 2010’, be incorporated by reference into the will granted probate, or admitted to probate under s 9 of the Wills Act as a document referred to in the will granted probate.

No party advised that they would oppose the grant of leave to amend the summons.

At the hearing of the executors’ application before the primary judge on 29 April 2015, the executors sought and obtained leave to amend their summons in the manner described above.

The primary judge’s decision
Substantive reasons

In his written reasons for judgment, the primary judge noted that it was not in dispute before him that Mr Rockman’s final will ‘was capable of operating effectively absent clause 15’. However, at the time of his death Mr Rockman was owed approximately $42.6 million by two of his family trusts: the 1965 Irvin Peter Rockman Trust and the IPR Gembrook Trust. If any of the alternative forms of relief sought by the executors were to be granted, these debts would be paid to the Irvin Peter Holdings Trust, with the practical effect that the $500,000 bequests to Mr Rockman’s children would be reduced to less than $100,000.[18]
[18]Fast v Rockman [2015] VSC 337 [5]–[6] (‘Reasons’).

His Honour found that three preconditions must be satisfied for the incorporation of a document into a will by reference, as follows:[19]

(i) the document must be referred to in the Will;
(ii)the reference to the document must be sufficient to identify the document;

(iii) the document must be in existence at the time the Will was made.

[19]Ibid [9], citing Treacy v Edwards (2000) 49 NSWLR 739 [33]; In the Estate of Mardon [1944] P 109, 110, 112; Re Spears (dec’d) [1959] VR 430, 431.

The judge held that the first and third preconditions were clearly met. Clause 15 expressly referred to ‘the Schedule’,[20] and there was no dispute that the schedule at exhibit ELC-19 existed on the computer system of KTL at the time the final will was made in August 2010.[21]
[20]Reasons [10].
[21]Ibid [25].

In relation to the second precondition, his Honour expressed his conclusion as follows:[22]

… I am satisfied beyond doubt that the reference to the Schedule in clause 15 is a reference to Exhibit ELC 19 which was signed and annexed to the April 2010 Will and which listed fourteen of Rockman’s family trusts as at April 2010.

[22]Ibid [11].

I interpolate here that while the schedule signed with the 1 April 2010 will was in fact the schedule forming part of exhibit ELC-18, the schedule at exhibit ELC-19 was an unsigned schedule with identical content. Nothing turns on this distinction for present purposes.

The primary judge identified the following matters as relevant to his conclusion that the second precondition was satisfied:

(p) Each of Mr Rockman’s four wills executed between October 2008 and April 2010 annexed a schedule of family trusts listing the same 14 family trusts listed in the schedule at exhibit ELC-19.[23]
[23]Ibid [17].

(q) Each of Mr Rockman’s three wills executed between April 2009 and April 2010 contained a clause identical to clause 15 of the final will.[24]
[24]Ibid.

(r) There were no discussions between Mr Rockman and his executors or legal advisors between April 2010 and August 2010 regarding the schedule referred to at clause 15 of the final will. The evidence was that this was not a matter to which Mr Rockman’s lawyer had turned her mind.[25] The evidence also ‘clearly support[ed] a finding that neither Rockman, his executors, nor his lawyers turned their minds to updating Exhibit ELC 19 at any time post October 2008’.[26]

(s) Although the schedule at exhibit ELC-19 did not in fact identify all of Mr Rockman’s family trusts in existence as at 1 April 2010, it was common ground that it did identify the two trusts which owed him approximately $42.6 million at the time of his death.[27]

(t) Although a further family trust had been created in May 2010, it fell into the same category as four trusts created in March and April 2006 and November 2008, which were not referred to in any of the signed schedules between October 2008 and April 2010.[28] There was evidence that although the schedule of family trusts on the KTL computer system could have been updated to reflect these new trusts, it never was.[29]

[25]Ibid [18]–[20].

[26]Ibid [22].

[27]Ibid [15].

[28]Ibid [14], [23].

[29]Ibid [21].

The judge also considered a submission made by senior counsel for Zachary and Rachel Rockman to the effect that incorporating the schedule at exhibit ELC-19 by reference would frustrate Mr Rockman’s testamentary wish of making bequests of $500,000 to each of Zachary and Rachel Rockman, as evidenced by his inclusion of these new bequests in the final will.

The judge accepted that Mr Rockman’s final will had to be construed consistently with Mr Rockman’s testamentary intention. However, he also observed that in doing so the words used in the will ought to be given their ordinary meaning.[30] His Honour said:[31]

…if Rockman had intended that [the $500,000] bequests were not to be subject to the possibility of abatement, they could have been included amongst the specific bequests in clause 16 of the final Will. These bequests are not subject to abatement because they must be satisfied before the bequest in clause 15 to the Irvin Peter Holdings Trust.
… Applying the ordinary meaning of the words in the final Will, I have concluded that it was Rockman’s testamentary intention that only the specific bequests totalling $3.710 million in clause 16 would not be subject to the possibility of abatement. Rockman’s final Will contains two categories of bequests: the specific bequests in clause 16 quarantined from the possibility of abatement; and the remaining bequests (including those to his children) which were subject to the possibility of abatement. I reject [senior counsel’s] submissions that incorporating Exhibit ELC 19 into clause 15 is irreconcilable with Rockman’s wishes regarding the bequests of $500,000 to the fourth, fifth and sixth defendants.

[30]Ibid [27], citing Jepson v Bowman [2014] VSC 590 [7] (McMillan J).

[31]Ibid [28]–[29].

His Honour concluded:[32]

I propose to make a declaration that the Schedule, being Exhibit ELC 19 to the affidavit of Eleanor Coates sworn 20 November 2014, is incorporated into the final Will of Irvin Peter Rockman admitted to probate on 6 March 2013. This declaration will not alter the legal effect of that Will. Rather, clause 15 has legal effect as a testamentary disposition in accordance with its express terms.

[32]Ibid [30].

In view of his conclusion that the schedule at exhibit ELC-19 was incorporated by reference into the final will, the judge considered that there was no basis for entertaining the executors’ alternative claim for rectification of the will.[33]
[33]Ibid [8].

Costs

In his substantive reasons for judgment, the primary judge observed:[34]

Plainly, the current proceedings could have been avoided if the plaintiffs had annexed Exhibit ELC 19 to the final Will prepared by Rockman’s solicitors in August 2010 which Habersberger J ordered should be admitted to probate. Presumably Exhibit ELC 19 was not in evidence in the proceedings before Habersberger J because Ms Coates did not annex a copy of that document to the final Will. … However, whatever the characterisation of Ms Coates’ failure to have annexed Exhibit ELC 19 to the final Will, there is no reason why the plaintiffs could not have tendered Exhibit ELC 19 in evidence before Habersberger J and advanced submissions as to why that document was incorporated by reference into the final Will.
In support of their application under s 31 of the Act for rectification of the final Will, the plaintiffs contended that Ms Coates’ failure to annex Exhibit ELC 19 to the final Will was a clerical error within the meaning of s 31(1)(a) of the Act. Arguably, this constitutes an admission by the plaintiffs of an error on the part of their legal representatives. I express no concluded view on that question.
It is sufficient to record my view that a substantive question arises as to whether, in the circumstances set out above, all of the costs incurred in the present proceedings should be paid out of the estate.

[34]Ibid [31]–[33].

The judge provided the parties an opportunity to file submissions on that question. This opportunity was also extended to KTL.

The executors contended that costs should follow the event, and that the proceeding would have been unnecessary had Zachary and Rachel Rockman not challenged the validity of clause 15 and the schedule in the Part IV proceedings. They did not address their failure to tender the schedule in evidence in the proceedings before Habersberger J.

The judge found that the executors’ criticism of Zachary and Rachel Rockman’s challenge to the validity of clause 15 and the schedule was not justified in circumstances where no schedule had been attached to the will admitted to probate. He considered that the incorporation of the schedule by reference was ‘by no means inevitable’: the omission of certain trusts from the schedule at exhibit ELC-19 gave rise to a legitimate issue as to whether that schedule was the one referred to in the final will; and the fact that the executors sought in the alternative that the final will be rectified further demonstrated that the position was not clear-cut.[35]
[35]Fast v Rockman (No 2) [2015] VSC 431 [9].

KTL’s submissions averred that senior counsel retained by that firm on behalf of the executors did not consider it necessary to raise the schedule with Habersberger J prior to the grant of probate,

having regard to the legal effect of the doctrine of incorporation by reference, and the perceived absence of any need to seek any Court determination in respect of the application of the doctrine …[36]

[36]Submissions of Kenna Teasdale Lawyers in connection with the Costs of the Application for Declarations, 5 August 2015, [12]: see ibid [11].

The judge gave senior counsel an opportunity to file an answering submission. Senior counsel’s submission stated that he had:

expressed the view to my instructing solicitors (Kenna Teasdale) and my clients (the executors) that the legal doctrine of incorporation by reference did not depend for its legal effect upon a grant of probate in respect of the document which was incorporated by reference and that, accordingly, it should not be necessary for a separate application for probate to be made in respect of the schedule, providing the legal tests for incorporation were met, which I considered was the case. I assume that paragraph 12 of the submissions of Kenna Teasdale filed 5 August 2015 refers to this view that I expressed orally in 2014.[37]

[37]Submissions of Norman J O’Bryan SC in response to the request of the Honourable Justice McDonald, 13 August 2015: see Fast v Rockman (No 2) [2015] VSC 431 [13].

The judge considered that the submissions of KTL and senior counsel left the Court in a position where it remained unclear why the executors failed to tender the schedule in evidence before Habersberger J. Nevertheless, his Honour considered that the costs of the proceeding before him were ‘directly attributable’ to that failure and ought not to be borne by the beneficiaries of Mr Rockman’s estate.[38] His Honour stated:[39]

The executors had the carriage of the proceedings before Habersberger J. They must bear primary responsibility for the failure to have tendered the Schedule in evidence in those proceedings. If the executors believe that their failure to do so was a result of the conduct of [KTL] and/or [senior counsel], they may have the capacity to mitigate any financial impact arising from the orders which I propose to make.

[38]Fast v Rockman (No 2) [2015] VSC 431 [16]–[17].

[39]Ibid [18].

The judge ordered that the executors bear their own costs of the proceedings, and that they be personally liable for the costs of Elle, Zachary and Rachel Rockman.

Application for leave to appeal

The applicants seek leave to appeal against the primary judge’s decision that the schedule dated 1 April 2010 was incorporated into the final will of Mr Rockman admitted to probate on 6 March 2013. They propose the following 12 grounds of appeal:

1.   The primary judge should have held that the effect of the final order of the Court made 6 March 2013 that probate be granted of the probated Will was to deprive the Court of jurisdiction to determine the plaintiffs’ applications for rectification of the probated Will or alternatively an order that a schedule be incorporated by reference.
2.   The primary judge had no jurisdiction to determine that the Schedule which is exhibit ELC-19 to the affidavit of Eleanor Lisa Coates made 20 November 2014 (the Schedule) was incorporated by reference into the probated Will.
3.   The primary judge erred in making an order inconsistent with the order of the Court made 6 March 2013.
4.   The primary judge erred in holding that the declaration he made did not alter the legal effect of the probated Will.
5.   The primary judge erred in finding that the schedule was incorporated by reference into the probated Will where the unchallenged evidence as to the deceased’s intentions regarding debts due to him was inconsistent with its incorporation.
6.   The primary judge erred in finding that the deceased had a testamentary intention that only the gifts in clause 16 of the probated Will would not be subject to abatement in circumstances where:
(a)no evidence was led as to that issue by any party;
(b)his Honour’s finding that “the mark ups [of the previous will] did not alter clause 12 of the April 2010 Will, which became clause 15 of the final Will” was contrary to the evidence;
(c)his Honour’s finding that the wills executed on 3 April 2009, 3 June 2009 and 1 April 2010 contained a clause identical to clause 15 was contrary to the evidence.

7. The primary judge erred in finding that the deceased formed an intention regarding the possibility of abatement of the bequests in the probated Will in circumstances where the only evidence on the point, that of John Fast, was expressly to the contrary.
8. The primary judge erred in finding that the Schedule was incorporated by reference when the evidence was that at the time of making the probated Will:
(a)the deceased gave no instructions about a schedule;
(b)the solicitor who prepared it did not think at all about a schedule; and
(c)neither John Fast nor Philip Brown, the only people who discussed the probated Will with the deceased while it was in preparation, thought about, or discussed, a schedule with the deceased.

9. The primary judge erred in applying the test for incorporation to the evidence which did not show beyond doubt that the schedule in issue fitted the description in the probated Will because:
(a)it had never been attached to any will of the deceased of which there was evidence and in particular it had never been attached to the probated Will; and
(b)it did not contain all trusts in existence at the time of the making of the probated Will, contrary to the description in clause 5 of the probated Will.

10. Because:
(a)the Court gave no indication in the hearing that the finding that only the gifts in clause 16 of the probated Will would not be subject to abatement might be operative in the Court’s adjudication of the proceedings;
(b)the appellants had no or no effective notice that this finding might be operative in the Court’s adjudication of the proceedings; and
(c)had the appellants had any or any effective notice that this finding might be operative in the Court’s adjudication of the proceedings, they could have adduced evidence, either in chief or in cross examination, and made submissions, in relation to that finding —
the appellants were denied natural justice in the adjudication of the proceedings.

11. Further, because:
(a)the Court gave no indication in the hearing that the finding that the deceased formed an intention regarding the possibility of abatement of bequests in the probated Will might be operative in the Court’s adjudication of the proceedings;
(b)the appellants had no or no effective notice that this finding might be operative in the Court’s adjudication of the proceedings; and
(c)had the appellants had any or any effective notice that this finding might be operative in the Court’s adjudication of the proceedings, they could have adduced evidence, either in chief or in cross examination, and made submissions, in relation to that finding —

the appellants were denied natural justice in the adjudication of the proceedings.
12. The primary judge erred in holding that the declaration he made would not change the legal effect of the Will in light of the uncontested evidence that the incorporation by reference of the Schedule would reduce the gifts to the appellants from $500,000 each to less than $100,000 each.

Grounds 1 to 3 — the jurisdiction of the primary judge

By grounds 1 to 3, the applicants dispute the jurisdiction of the primary judge to determine that the schedule at exhibit ELC-19 was incorporated by reference into Mr Rockman’s final will admitted to probate on 6 March 2013. They contend that the primary judge’s declaration was inconsistent with Habersberger J’s order, which admitted to probate a will which had no schedule.

In support of these grounds, the applicants submitted that the sole issue before Habersberger J in the probate proceeding was the identity of the document which Mr Rockman intended to be his last will. They submitted that Habersberger J made a finding of fact that the relevant document was ‘the second unexecuted will’. That document did not include a schedule, no schedule having been tendered in evidence in the probate proceeding. The applicants contended that this finding gave rise to ‘an issue estoppel [which] rendered the respondents’ application res judicata’. It was said that his Honour ought to have found that he had no jurisdiction to make any order affecting the grant of probate, and that he erred by instead making an order which, it was said, had the effect of altering the final will.

Issue estoppel ‘operates to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination made’ in a final judgment in an adversarial proceeding.[40] In Blair v Curran,[41] Dixon J described issue estoppel as ‘cover[ing] only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion’.[42]
[40]Tomlinson v Ramsey Food Processing Pty Ltd (2015) 323 ALR 1, [22] (French CJ, Bell, Gageler and Keane JJ) (citations omitted) (‘Tomlinson’).
[41](1939) 62 CLR 464.
[42]Ibid 531.

In Kuligowski v Metrobus,[43] the High Court adopted Lord Guest’s formulation of the elements of issue estoppel in Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2),[44] which was:

(1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.

[43](2004) 220 CLR 363, [22] (Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ).

[44][1967] 1 AC 853, 935. This formulation was recently reaffirmed in Tomlinson: (2015) 323 ALR 1, [90].

It is the first of those elements which is at issue for the purposes of grounds 1 to 3. In my view, there is no reason to consider that the primary judge determined a question already determined by Habersberger J. The following points are of particular relevance.

First, it may be accepted that the issue before Habersberger J was the identity of the document that Mr Rockman intended to be his last will, that is, the document which ought to be admitted to probate.

Secondly, it is common ground that the identity of any schedule incorporated into Mr Rockman’s last will was a question which was not raised in the probate proceeding, no schedule having been tendered in evidence before his Honour.

Thirdly, there arises the question whether, perhaps implicitly, Habersberger J’s decision involved a determination that no schedule was incorporated into Mr Rockman’s final will. In my view, having regard to the parties’ conduct of the probate proceeding, it could not be said that Habersberger J made (much less necessarily made) any such determination.[45] The question was simply not in issue. That is so notwithstanding that his Honour admitted to probate, as an informal will, a document which did not, in fact, attach a schedule. Whether some missing schedule ought to be incorporated into that document by reference was not a question which was traversed before his Honour.
[45]Nor does a reading of his Honour’s reasons for judgment suggest that he did. No party before Habersberger J appears to have noticed that while the second unexecuted draft will referred to a schedule, no schedule was attached.

On this point, at the hearing of the application for leave to appeal, senior counsel for the applicants emphasised that (1) counsel for the executors had told Habersberger J he did not need to worry about the foreshadowed abatement issue, and (2) the only way an abatement issue could have arisen under Mr Rockman’s will was if there was a schedule. This submission stopped short of suggesting that it was put to Habersberger J that the final will had no schedule; rather, it went to demonstrate that the applicants had understood there would be no abatement of their bequests, and that any schedule, which could have created an abatement issue, ought to have been adduced at that time. Even if those matters are accepted, they do not support the proposition that Habersberger J necessarily decided Mr Rockman’s final will had no schedule. The indication given to his Honour that there was no abatement issue could not of itself expand the scope of the issues necessarily determined by Habersberger J’s decision.

Fourthly, the primary judge’s decision did not alter the identity of the document which Habersberger J found Mr Rockman intended to be his last will. Although the executors had pursued an alternative claim for rectification of the final will admitted to probate, in the event the primary judge considered that there was no basis for entertaining that claim. The applicants therefore needed to establish that an alteration in the identity of the final will occurred by reason of his Honour’s finding that the schedule at exhibit ELC-19 was incorporated by reference into that will.

There is force in the submission, advanced on behalf of the executors, that the primary judge’s finding was more akin to a conclusion on a question of construction of the will than it was to a conclusion that a different will ought to have been admitted to probate. In Re Spears(dec’d),[46] Adam J remarked that while an unexecuted document incorporated in a will is typically included in the probate, this is because that course tends to reduce disputes as to the construction of the will, rather than because non-inclusion of the document precludes later reference to the document if such a dispute does arise. More recently, in Prosper v Wojtowicz,[47] Wilson J stated:

Probate is conclusive evidence of the validity and contents of a will and the appointment of an executor, but the admission of an instrument to probate does not pre-empt the functions of the Court as a court of construction. … Pertinently in the present case, where a testator effectually incorporates an unexecuted document into his will by reference, that unexecuted document becomes part of his will and is admissible in a court of construction, whether it is included in the probate or not.

Those observations might equally be made in this case. In concluding that the schedule at exhibit ELC-19 was incorporated by reference into Mr Rockman’s final will, the primary judge did not perform the function of a court of probate, but identified a document which, he found, already formed part of Mr Rockman’s will at common law.

[46][1959] VR 430, 431 (Spears).

[47][2005] QSC 177 [16], referring to Clark and Martin, Theobald on Wills (Sweet & Maxwell, 15^th ed, 1993), 212–13.

It was submitted for the applicants that the primary judge’s decision nevertheless altered the legal effect of the final will admitted to probate by Habersberger J. That proposition is incorrect, as I will shortly turn to explain.[48] This conclusion renders it unnecessary to consider the further submission made on behalf of the applicants that the primary judge engaged in a de facto rectification of the final will in a manner not authorised by s 31 of the Wills Act. It was not necessary for his Honour to be satisfied of either of the matters set out in s 31(1), because he did not make an order rectifying the will.
[48]See below at [66] to [68].

It follows that the primary judge did not rule on a question which had already been determined by Habersberger J in the probate proceeding. The applicants have not established that an issue estoppel arose, or that the primary judge otherwise lacked jurisdiction to declare that the schedule at exhibit ELC-19 was incorporated by reference into Mr Rockman’s final will.[49] Leave to appeal on the basis of grounds 1 to 3 should be refused.
[49]The applicants’ res judicata submission took as its premise the existence of an issue estoppel.

Grounds 4 and 12 — impact upon the legal effect of the will

By grounds 4 and 12, the applicants contended that the primary judge erred in finding that his declaration did not change the legal effect of Mr Rockman’s will.

It would appear that these grounds were advanced to reinforce the argument, made under grounds 1 to 3, that the primary judge’s declaration was inconsistent with the decision of Habersberger J. I consider them on that basis. As the executors submitted, grounds 4 and 12 would not otherwise identify any relevant error of law on the part of the primary judge, since the purported error did not underpin his Honour’s conclusion that the schedule at exhibit ELC-19 was incorporated by reference into the final will.

The source of the applicants’ complaint was the following statement made by the primary judge in contrasting the alternative forms of relief sought by the executors:[50]

The alternative forms of relief sought by the plaintiffs are of an entirely different character. The application for rectification seeks an order that alters the legal effect of the final Will in the form in which it was admitted to probate. It is premised on the final Will not carrying out Rockman’s testamentary intentions because a clerical error was made or the final Will does not give effect to Rockman’s instructions. On the other hand, the relief sought based on the incorporation by reference of ELC 19 into clause 15 does not alter the legal effect of the final Will admitted to probate. Rather, if Exhibit ELC 19 is incorporated into the final Will it has legal effect as a testamentary disposition in accordance with its express terms.

In a passage previously set out,[51] the judge repeated these remarks after arriving at his conclusion that the schedule was incorporated by reference into the final will.

[50]Reasons [7] (emphasis added).

[51]At [37], see Reasons [30].

The applicants submitted that there was no relevant distinction to be made between the ‘legal effect’ and any other effect of the will. Rather, in their submission ‘[t]he only effect of a will is to dispose of a deceased’s property’. They contended that the primary judge’s finding that the will’s legal effect would not be altered was incompatible with his finding, based on uncontested evidence, that the incorporation by reference of the schedule would reduce each of the applicants’ bequests from $500,000 to less than $100,000.[52]
[52]See Reasons [5].

At the hearing of the application for leave to appeal, senior counsel for the applicants advanced a submission that the primary judge acknowledged he was altering Mr Rockman’s final will when he stated:[53]

The final Will does carry out Rockman’s intentions, albeit that it is necessary to incorporate Exhibit ELC 19 into the final Will to achieve this outcome.

Senior counsel submitted that this statement showed that it was the act of the judge, in incorporating the schedule, which changed the effect of the final will. It was said that this amounted to rectification of the document, and was inconsistent with the order of Habersberger J.

[53]Ibid [8].

In my view, grounds 4 and 12 have no real prospects of success. It is clear that the primary judge recognised that if the schedule was understood to be incorporated by reference into the will, the doctrine of abatement would reduce the applicants’ bequests to under $100,000. But that does not advance the argument that the judge’s declaration changed the effect of Mr Rockman’s will, nor is it inconsistent with his Honour’s observation that the will would continue to have effect in accordance with its terms. Rather, the judge was simply acknowledging an undisputed practical consequence of the interpretation of the will that he found to be correct, which would arise due to the operation of the doctrine of abatement.

The applicants’ submission that the incorporation of the schedule was the act of the judge must be rejected. The relief granted by the judge was declaratory in nature. A fair reading of the judge’s reasons reveals that his Honour concluded, from the language of the final will in its context, that Mr Rockman incorporated the schedule into his will, by referring to it in that document. The judge’s declaration identified the status of the schedule, and thereby clarified an existing aspect of the will’s effect. But it did not change the will’s effect. Although the judge’s conclusion may not have accorded with the applicants’ understanding of Mr Rockman’s will, that is not a basis for considering that the judge’s declaration altered the will or its effect.

It follows that no error is established by grounds 4 or 12, and they provide no additional support to grounds 1 to 3. Leave to appeal should be refused on these grounds.

Ground 5 — Mr Rockman’s intentions regarding debts due to him

By ground 5, the applicants submitted that the judge erred in finding that the schedule at exhibit ELC-19 was incorporated by reference into the final will, given what was said to be unchallenged evidence that Mr Rockman intended to bequeath the monies owing to him by his various trusts to the 1965 Irvin Peter Rockman Trust. As previously noted, that trust is to receive the residue of Mr Rockman’s estate under the final will. It was submitted that the incorporation of the schedule had the effect that those monies would instead be paid to the Irvin Peter Holdings Trust pursuant to cl 15 of the final will, contrary to Mr Rockman’s intentions.

The particular evidence on which the applicants relied is found in paragraph 10 of the affidavit of Mr Fast sworn on 21 November 2014:[54]

In paragraphs 14 through to 24 of my earlier Affidavit I have deposed to the events that took place after I received the 15 June 2010 email from Mr. Philip Brown. There were a number of drafts of further Wills that were prepared and the Schedule listing the Trusts was not always sent with the drafts of the further Wills. However the List of Trusts had not altered since December 2008 and had from that time always formed part of the deceased’s signed Wills. Through my various meetings with the deceased in relation to his Will I can say that it was his intention to sweep up all monies owing to him from the various Trusts he controlled and devise those monies to the 1965 Irvin Peter Rockman Trust. I have no doubt that the Schedule referred to in clauses 5 and 15 of the probated Will is the list of Trusts set out in the First Schedule which is exhibit ELC-19 to Ms. Coates’ Affidavit. I know of no other Schedule that was prepared by the deceased or by any other person during the time of the preparation of the deceased’s last Will, as described above.

[54]Emphasis added.

The applicants submitted that Mr Fast adopted this evidence in the witness box and did not attempt to change it. They further contended that the respondents failed to protest or attempt to reopen the evidence when the applicants made submissions to the judge on this issue.

The executors submitted that the applicants did not rely at trial on Mr Fast’s reference to the 1965 Irvin Peter Rockman Trust, and ought not to be permitted to do so on appeal. In the executors’ submission, no party had sought at trial to suggest that any entity other than the Irvin Peter Holdings Trust was the intended beneficiary of the trust debts, and no error could be identified on the part of the judge in proceeding on the understanding that it was. The executors submitted that Mr Fast’s reference to the 1965 Irvin Peter Rockman Trust was an error overlooked by everyone at trial, and they sought to adduce further evidence as follows.

Application to adduce further evidence

On 17 December 2015, the executors filed an application for this Court to receive further evidence at the hearing of the application for leave to appeal, in the form of an affidavit of Mr Fast sworn on 15 December 2015. In that affidavit, Mr Fast referred to paragraph 10 of his 21 November 2014 affidavit and deposed that his reference to the 1965 Irvin Peter Rockman Trust was a mistake. He deposed that he had intended to refer to, and should have instead referred to, the Irvin Peter Holdings Trust in that part of his affidavit. He deposed that he did not notice the error before he signed the November 2014 affidavit.

The applicants opposed the executors’ application. At the hearing before this Court, senior counsel for the applicants submitted that Mr Fast had provided no explanation for his error. Counsel submitted that Mr Fast ought not to be permitted to change his evidence, as he would have been cross-examined on the issue had his evidence been different at trial.

The executors’ application is made pursuant to r 64.13 of the Supreme Court (General Civil Procedure) Rules 2015. That rule relevantly provides:

(1) Unless the Court of Appeal otherwise orders, in an application for leave to appeal or an appeal—
(a) oral evidence shall not be adduced; and
(b) evidence which was not before the court or tribunal whose decision is sought to be appealed or is being appealed shall not be relied upon.

(2) A party may apply for the Court of Appeal to receive oral evidence or further evidence, as the case may be.
(3) The application shall—
(a) be in accordance with Form 64B;
(b) be filed and served at least 28 days before the hearing of the application or the appeal;
(c) be accompanied by an affidavit stating—
(i)briefly but specifically, the facts on which the party relies;
(ii)the grounds of the application for leave to appeal or the appeal to which the application relates;
(iii)the evidence that the party wants the Court of Appeal to receive; and
(iv)why the evidence was not adduced in the court or tribunal the decision of which is the subject of the application or appeal; and

(d) be accompanied by any additional document required by any applicable practice direction to be filed at the time of commencing the application.

…

Rule 64.36(3) provides that subject to r 64.13, the Court of Appeal has power to receive further evidence upon questions of fact by oral examination in court, by affidavit or by deposition taken before an examiner. In Foody v Horewood,[55] Chernov JA observed that such a rule ‘imparts to the Court a wide and general discretion to receive further evidence notwithstanding that the appeal is in the nature of a rehearing’.[56] In the exercise of that discretion, the Court seeks to reconcile the interests of justice with the public interest in the finality of litigation.[57] His Honour noted that different considerations apply depending on whether the evidence sought to be adduced is of matters that were in existence before (or at the time of) trial, or of matters that arose after the trial. Where the evidence sought to be adduced relates to matters which were in existence before trial, the Court

will ordinarily refuse to admit such evidence unless it is satisfied that it is sufficiently credible, that it could not have been obtained with reasonable diligence for use at the trial and that there is a high probability that the result would have been different had it been received at trial.[58]

[55][2007] VSCA 130.

[56]Ibid [59].

[57]Ibid [60].

[58]Ibid [61].

Chernov JA additionally referred to Greater Wollongong City Council v Cowan, where Dixon CJ stated:[59]

It must be reasonably clear that if the evidence had been available at the first trial and had been adduced, an opposite result would have been produced or, if it is not reasonably clear that it would have been produced, it must have been so highly likely as to make it unreasonable to suppose the contrary. Again, reasonable diligence must have been exercised to procure the evidence which the defeated party failed to adduce at the trial.

[59](1955) 93 CLR 435, 444.

In my view, the executors’ application to adduce the affidavit of Mr Fast sworn on 15 December 2015 must be rejected for two reasons. First, there is no reason to suppose that an opposite result would have been produced if the substance of that evidence — that the reference to the 1965 Irvin Peter Rockman Trust was a mistake — had been in evidence at trial. On the contrary, it could only have reinforced the trial judge’s conclusion that the incorporation by reference of the schedule at exhibit ELC-19 into Mr Rockman’s final was consistent with Mr Rockman’s intentions. It is plain that the trial judge did not place weight on Mr Fast’s evidence of the trust to which Mr Rockman intended to bequeath the monies owed to him by his trusts, instead preferring the text of cl 15 as evidence of Mr Rockman’s intention. His Honour stated:[60]

Clause 15 expressly records Rockman’s testamentary wish that, subject to satisfying the specific requests of $3.710 million prescribed by clause 16, debts owing to him by the entities in “the Schedule” were to be bequeathed to the Irvin Peter Holdings Trust.

[60]Reasons [28].

Secondly, the scant explanation given in Mr Fast’s December 2015 affidavit of why the further evidence was not adduced at trial — the mere assertion of an error that was not discerned before the affidavit was sworn — does not provide a sufficient basis for the Court to be satisfied that the evidence could not have been produced at trial with the exercise of reasonable diligence. The swearing of an affidavit is a solemn task and in the ordinary course, the Court would expect a deponent to review an affidavit critically before swearing to the veracity of its contents. While errors may occur, the Court would expect that with the exercise of reasonable diligence, they would generally be identified in the course of a trial. I would not draw a conclusion that Mr Fast’s purported error could not have been so identified without further explanation than his December 2015 affidavit provided.

It follows that I would refuse the executors’ application made under r 64.13. That said, while the Court ought not to receive Mr Fast’s December 2015 affidavit as evidence that his earlier reference to the 1965 Irvin Peter Rockman Trust was an error, that in itself does not preclude the Court from finding, on the basis of the evidence which was before the trial judge, that such an error was in fact made.

Consideration of ground 5

A review of the transcript of the hearing before the primary judge reveals that Mr Fast was not taken to paragraph 10 of his November 2014 affidavit during cross-examination. Nor was he asked any questions about the apparent inconsistency between the statement in his affidavit and the effect of the schedule. Notably, however, counsel did ask Mr Fast about the vesting date of the Irvin Peter Holdings Trust. During re-examination, the judge took Mr Fast to paragraph 10 of his affidavit, though for the purposes of asking whether his understanding of the will as at August 2010 was that it would dramatically reduce the size of the $500,000 bequests to Elle, Rachel and Zachary Rockman. No point about paragraph 10 was made in the further cross-examination which occurred following the judge’s question.

It is clear that all parties proceeded at trial on the assumption that if there was a schedule to the will, monies owing to Mr Rockman by trusts in that schedule were to be paid to the Irvin Peter Holdings Trust. So much was acknowledged in a table annexed to the applicants’ written submissions at trial. It is true that in oral submissions, counsel for the applicants noted that it was ‘extraordinary’ that Mr Fast’s sworn evidence was that Mr Rockman intended ‘to sweep up all the money owing to him and put it into the 1965 trust’.[61] Counsel submitted that the incorporation of the schedule would have a contrary effect. But that is as far as the submission went. It could not have gone much further, given that the incongruity of Mr Fast’s reference to the 1965 trust was simply not put to him in cross-examination.
[61]T140.1-15.

In the circumstances, the applicants should be precluded, on the principles set out in Water Board v Moustakas,[62] from relying on ground 5 before this Court. It is a point that could possibly have been met by evidence from Mr Fast. Even if the ground were available to the applicants, however, I consider that it should be rejected for the following two reasons.
[62](1988) 180 CLR 491, 496–8. See also Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 [51]–[53].

First, as earlier noted, Mr Fast’s evidence was not the only evidence of Mr Rockman’s testamentary intention. Significantly, the text of cll 5 and 15 of the final will demonstrated an intention on Mr Rockman’s part to bequeath to the Irvin Peter Holdings Trust the monies owed to him by various trusts he controlled, as did cll 5 and 12 of Mr Rockman’s three previous wills. It was entirely consistent with the text of those clauses to consider that Mr Rockman intended to incorporate a schedule of such trusts into his final will.

Secondly, Mr Fast’s evidence was self-contradicting. Paragraph 10 of his November affidavit stated both (a) that Mr Rockman intended to ‘sweep up’ the trust debts to devise them to the 1965 trust, and (b) that Mr Fast had no doubt that the schedule at exhibit ELC-19 was the schedule referred to at cll 5 and 15 of the final will. The latter proposition indicates Mr Fast’s belief that the incorporation by reference of the schedule gave effect to Mr Rockman’s intention, and lends strong support to the hypothesis that there is a mistake in paragraph 10 of his November affidavit when he identifies the 1965 trust as the intended recipient of the trust debts. Self-evidently, if the schedule were to be incorporated it would have the effect that the monies owed by the listed trusts would be devised to the Irvin Peter Holdings Trust and not the 1965 trust. In that context, Mr Fast’s identification of the 1965 trust as the intended recipient could scarcely be considered to be persuasive evidence of Mr Rockman’s testamentary intention.

Accordingly, leave to appeal on the basis of ground 5 should be refused.

Ground 8 — Mr Rockman’s intentions regarding a schedule

By ground 8, the applicants submitted that the incorporation of the schedule at exhibit ELC-19 was inconsistent with the evidence of Mr Rockman’s testamentary intentions. In particular, they relied upon the evidence that during the period in which the final will was prepared, Mr Rockman gave no instructions about a schedule, his solicitor Ms Coates did not think at all about a schedule, and neither Mr Fast nor Mr Brown thought about a schedule or discussed it with Mr Rockman.

In the applicants’ submission, the trial judge ‘seems to have determined that the schedule was incorporated by reference because the [final will] referred to a schedule, and no other schedule was a candidate’. They contended that this was not a permissible path of reasoning, and that his Honour should have instead concluded that Mr Rockman had no intention regarding a schedule, and therefore no schedule could have been incorporated by reference into his final will. This conclusion was said to be reinforced by the fact that the final will would work effectively without a schedule, in that no partial intestacy would arise.

At the hearing before this Court, senior counsel for the applicants emphasised that the trial judge could not have been satisfied ‘without doubt’ that Mr Rockman intended the schedule at exhibit ELC-19 to be the schedule to which the final will referred, given that no schedule was discussed while that will was prepared. It was said to be irrelevant that Mr Rockman had previously given instructions regarding a schedule, in the context of his earlier wills, since those wills were revoked by the final will.

On the other hand, the executors submitted that there was abundant evidence at trial which supported the trial judge’s finding that the only reason no schedule was discussed between April 2010 and August 2010 was that the schedule was so well known and understood that there was no reason for anybody to turn their minds to it further.

In my view, ground 8 has no real prospect of success. As earlier noted, the trial judge summarised his review of the evidence relevant to this ground as follows:[63]

The evidence clearly supports a finding that neither Rockman, his executors, nor his lawyers turned their minds to updating Exhibit ELC 19 at any time post October 2008.

[63]Reasons [22].

In so finding, his Honour was clearly correct. However, contrary to the applicants’ submission, that finding did not necessitate a conclusion that Mr Rockman could not have intended to incorporate the schedule at Exhibit ELC-19 into his final will. The context of the finding is critical. Importantly, the evidence did not establish that Mr Rockman had never intended to incorporate any schedule of trusts into any will. On the contrary, the same list of the same 14 family trusts had formed a schedule to each of Mr Rockman’s wills dated 24 October 2008, 3 April 2009, 3 June 2009 and 1 April 2010 — the four wills prior to his final will.

Against that background, it is significant that in the period between 1 April 2010 and Mr Rockman’s death on 30 August 2010, the preparation of Mr Rockman’s final will did not involve the drafting of a completely original document, but the drafting of amendments to specific aspects of the 1 April 2010 will. Mr Fast and Mr Brown gave evidence that on 29 June 2010 they met with Mr Rockman at his home to discuss alterations Mr Rockman wished to make to his 1 April 2010 will. In Mr Fast’s words, they ‘went through’ that document with Mr Rockman ‘and marked on it the changes that [he] wished to make’. Following further discussions, Mr Fast met with Mr Rockman again on 15 July 2010 and ‘further discussed changes to his will’. The marked-up documents coming out of these meetings were tendered in evidence before the trial judge. Relevantly for present purposes, the final will represented the culmination of those amendments, following some further input from Ms Coates, discussion with Mr Rockman, and an indication from Mr Rockman that he would arrange a time to execute the final draft.

In that context, the fact that Mr Rockman did not give specific instructions in relation to the schedule does not assist the applicants. Clause 5 of the 1 April 2010 will,[64] which described the function of the schedule, was unchanged in the final will. Clause 12, which bequeathed the monies owing by the trusts listed in the schedule to the Irvin Peter Holdings Trust, was renumbered as cl 15 and made subordinate to the cl 16 bequests but was otherwise unchanged. Implicitly, and notwithstanding that he did not turn his mind to the schedule specifically, Mr Rockman must be taken to have intended to retain the unchanged aspects of his 1 April 2010 will and their consequences for the disposition of his estate. The logical conclusion of the applicants’ argument to the contrary would be that Mr Rockman’s testamentary intentions extended only to the amendments he made to the 1 April 2010 will, to the exclusion of the parts he did not change. This would produce an absurd result, which belies the applicants’ submission that the final will would work effectively without a schedule. Plainly enough, given Mr Rockman’s preparedness to execute the version sent to him on 16 August 2010, Mr Rockman did not consider that those aspects of his 1 April 2010 will required amendment.
[64]See [7] above.

It is true that no schedule was attached to the copies of the marked-up will which Mr Fast discussed with Mr Rockman in June and July 2010, or to the revised drafts prepared by Ms Coates thereafter. But given there was no evidence that Mr Rockman had any intention to vary the status or contents of the schedule to the 1 April 2010 will in the period between April and August 2010, there can be no doubt that Mr Rockman intended the same schedule to form part of his will. The trial judge so concluded. This was far from a conclusion that the schedule at exhibit ELC-19 was incorporated by reference simply because ‘no other schedule was a candidate’; it was a conclusion, well founded on the evidence, that Mr Rockman had no intention to remove the schedule which had formed part of the 1 April 2010 will or to replace it with any other. No error is established in the reasoning of the trial judge. Leave to appeal on the basis of ground 8 should be refused.

Ground 9 — the faults of the schedule

By ground 9, the applicants submitted that the trial judge erred in applying the test for the incorporation of a document by reference. They contended that the judge could not be satisfied ‘beyond doubt’ that the first two preconditions for incorporation were met; that is, that the schedule at exhibit ELC-19 was the document referred to in the will and that the reference to ‘the schedule’ in the will was sufficient to identify it.[65] On the contrary, it was submitted that the evidence showed that the schedule at exhibit ELC-19:

(1) ‘had never been attached’ to any of Mr Rockman’s wills of which there was evidence, including the final will; and

(2) did not contain all of Mr Rockman’s trusts in existence at the time the final will was made, contrary to the description of the schedule in cl 5.

[65]The applicants did not dispute the third precondition: that the schedule at exhibit ELC-19 was in existence at the time the final will was made.

On the first point, it was said that the judge erred in describing the schedule at exhibit ELC-19 as having been ‘attached’ to the October 2008 and April 2010 wills, and ‘annexed’ to each of the four wills made between October 2008 and April 2010.[66] At the hearing before this Court, senior counsel for the applicants referred to evidence that the April 2010 will was stapled and sealed with green tape, while the signed schedule which accompanied it was not included within the tape and bore no mark of having been stapled to any other document. It was submitted that the judge failed to deal with this evidence.
[66]At Reasons [20], [22], [24].

On the second point, it was submitted that the primary judge disregarded his own finding that four additional trusts came into existence between March 2006 and November 2009, which were not listed in the schedule at exhibit ELC-19, and that a further trust, the Silver Valley Trust, came into existence in or about May 2010.

The executors opposed ground 9 on the basis that the applicants sought to impose an overly burdensome standard of proof. It was said that the trial judge only needed to be satisfied on the balance of probabilities that the schedule at exhibit ELC-19 was the document referred to in the will, and that there was ‘abundant’ evidence to support such a conclusion. A further argument raised by the executors in opposition to ground 9 was that the schedule at exhibit ELC-19 in any event listed the three trusts which in fact owed Mr Rockman money at the time of his death. In reply, it was put for the applicants that this was of limited significance because (1) there was no evidence as to whether any of the other trusts owed him money during the period April to August 2010, and (2) the schedule was relevant beyond the disposition of trust debts because cl 5 had the effect of appointing the executors as the succeeding appointors and guardians of the trusts listed in the schedule.

The applicants relied on Spears in support of their submission regarding the relevant standard of proof. In that case, Adam J stated:

To entitle an unexecuted document to probate as being incorporated in a duly executed will or other testamentary paper it is necessary and sufficient that the unexecuted document was in existence at the time of the execution of the will or other testamentary paper; that it is referred to therein as an existing and not a future document; and that the document sought to be incorporated has been so described as to leave it beyond doubt, upon the admissible evidence, that such document is the document propounded.[67]

[67][1959] VR 430, 431 (emphasis added) (citations omitted).

Apart from the reference to Spears, the competing arguments about the applicable standard of proof proceeded on the basis of assertion. No argument was directed to why, as a matter of principle and leaving Spears to one side, a more stringent burden of proof than the balance of probabilities ought to be required in an incorporation by reference case. For the purposes of this case, it is unnecessary to resolve that question, although in my view it may be sufficient that the Court is satisfied on the balance of probabilities that the relevant preconditions are met.

If Spears were to be followed, in my view it was in any event beyond doubt that the schedule at exhibit ELC-19 was the schedule to which Mr Rockman’s final will referred. That was the test the trial judge applied and for three reasons, he did not err in concluding that it was met.

First, it is true that the schedule at exhibit ELC-19 was not attached to Mr Rockman’s final will. However, it is clear from the evidence of Ms Coates that this was because she did not turn her mind to the schedule when she emailed to Mr Brown the draft will which Habersberger J ultimately admitted to probate as an informal will. This was not a case where Mr Rockman signed his final will but signed no schedule; instead he died before signing the final will. The non-attachment of the schedule to that will must be seen in that context.

Secondly, as earlier observed,[68] a schedule listing the same 14 trusts as exhibit ELC-19 was signed at the same time as each of Mr Rockman’s four previous wills. Thus, schedules signed on 24 October 2008, 3 April 2009, 3 June 2009 and 1 April 2010 accompanied the wills signed on those dates. It is not possible on the evidence before this Court to determine whether those schedules were each ‘attached’ to the respective wills, although I observe that certain copies bore marks indicating that the schedules at one time or another had been stapled or had had holes punched in them. Ms Coates did not concede, as the applicants contended she had, that the schedules had ‘never been attached’ to any of Mr Rockman’s wills, although she did accept that the 1 April 2010 schedule contained no physical holes and was not within the tape binding that will. Whether the schedules were attached or merely stored with the wills, it was clear that Mr Rockman intended to incorporate the schedules by reference on each occasion.
[68]See above at [7].

Thirdly, alongside this evidence of a history of identical schedules was the evidence that Mr Rockman did not give any instructions between April and August 2010 to alter the schedule of trusts he habitually signed upon signing his will or, for that matter, any instructions to remove it altogether. It is beside the point that the trusts which owed Mr Rockman monies upon his death were in fact listed in that schedule. For the reasons given in refusing ground 8, the evidence was clear that Mr Rockman intended the same schedule would form part of his final will. It follows that the creation of trusts after October 2008 that were not listed in the schedule does not create doubt about the schedule to which the will referred. This was not a case where the schedule had been updated haphazardly and it was unclear which trusts were to be listed; the list had never changed. Although the language of cl 5 of each of the wills after October 2008 (‘a list of my various entities … that are in existence at this time’) was not a flawless description of the schedule, that cannot overcome the evidence that the same schedule was signed on each occasion, and no change was contemplated. There is no doubt as to the schedule to which the final will referred. Leave to appeal should be refused for ground 9.

Grounds 6 and 7 — Mr Rockman’s intentions as to abatement of his bequests

By grounds 6 and 7, the applicants contended that the trial judge erred in finding that Mr Rockman had a testamentary intention that his bequests to his children might be the subject of abatement, while his cl 16 bequests would not. The thrust of these grounds, as they were developed at the hearing, was that since the bequests to Mr Rockman’s children would abate if the schedule at exhibit ELC-19 was incorporated by reference into the final will, it could not be concluded that the schedule was so incorporated without evidence that Mr Rockman contemplated that consequence.

The applicants submitted that there was no evidence that Mr Rockman had intended that only the cl 16 bequests would not be subject to abatement, as the trial judge found.[69] Instead, there was evidence that Mr Rockman had turned his mind to increasing the bequests to Elle Rockman and the applicants to $500,000 each, based on advice from Ms Coates that his earlier proposed bequests could be insufficient to resist a Part IV claim. The applicants submitted that the incorporation of the schedule into the final will would run contrary to Mr Rockman’s intentions, by causing those bequests to abate to an amount much less than $500,000.
[69]Reasons [29].

The executors, for their part, submitted that Mr Rockman’s testamentary intentions were to be determined objectively, and that there was ‘continuous and unchanged’ evidence of his intentions in the language of his final and previous wills.

The applicants relied on several points in support of their submissions. Relevantly for ground 6, they submitted that the trial judge erred in finding that ‘the mark ups [sent by Mr Fast to Ms Coates on 6 August 2010] did not alter clause 12 of the April 2010 Will, which became clause 15 of the final Will’.[70] They contended that the clause was in fact marked up to include the opening words ‘SUBJECT to my Trustees first satisfying the bequests provided in Clause 13 of this Will’, cl 13 later becoming cl 16.
[70]Ibid [18].

On a related note, the applicants submitted that the trial judge erred in finding that cl 15 of the final will was ‘identical’ to cl 12 in Mr Rockman’s wills of 3 April 2009, 3 June 2009 and 1 April 2010.[71] The clauses differed in that cl 15 of the final will contained the opening words ‘SUBJECT to my Trustees first satisfying the bequests provided in Clause 16 of this Will’.
[71]Ibid [17].

It may be accepted that the opening words of cl 15 of the final will were absent from cl 12 of the three previous wills, and that they appeared in ‘mark-up’ format in the version sent by Mr Fast to Ms Coates on 6 August 2010. However, those matters do not negate the proposition that Mr Rockman held a testamentary intention that his cl 16 bequests should not abate, so much as they demonstrate that that intention was not as long held as the trial judge considered.

The difficulty with ground 6 is that the opening words of cl 15 of the final will themselves demonstrate Mr Rockman’s testamentary intention that the cl 16 bequests should be satisfied before the monies owed by the trusts listed in the schedule should be distributed. Those words were included in the document Mr Fast discussed with Mr Rockman on 29 June 2010 and in the revised draft sent to Mr Rockman on 16 August 2010, which Mr Rockman indicated he wished to execute. The effect of those words is to give the cl 16 bequests a position of priority in Mr Rockman’s final will. While it may be preferable to describe Mr Rockman’s testamentary intention as being to make the cl 16 bequests less vulnerable to abatement than his other bequests, for practical purposes there was no real error in the trial judge’s characterisation of Mr Rockman’s intention as one whereby the cl 16 bequests would not be the subject of abatement, while that possibility would remain in respect of the other bequests.

In support of ground 7, the applicants asserted that there was no evidence that Mr Rockman had ever turned his mind to the possibility of the abatement of any bequests under his will, and contended that Mr Fast gave evidence to the contrary, as follows:

[HIS HONOUR:][72] … to the best of your knowledge, Mr Rockman had no intent at the time of his death that the will should have the effect that the bequests of those children expressly provided for in the will should be reduced?---I don’t think he had turned his mind to it.
Yes and you hadn’t?---No because the estate was sufficient to meet all the bequests at that time.
Yes. And why is it not now?---Because there was a matrimonial settlement entered into with his former wife which took some $30m-odd out of the personal assets.
But he knew about that?---Well he didn’t - - -
He knew about that prior to the - - -?---He didn’t know of the quantum nor of the amount. There was a fair amount of difference of views about what that might entail but it was an unknown amount. And I don’t think he turned his mind to it in that way.
The property settlement with his wife was an unknown amount? I’m sorry, I don’t know [I] follow that, Mr Fast?---Well the settlement with Mrs Rockman I think occurred – and I need to refresh my memory but I think it happened some eight or ten months after he died. And so all – I mean at the time when he was still alive, there was a lot of going and – toing and froing about property and what – you know, dealing with the matrimonial matters that Mr Rockman was dealing with. I don’t think he had focused his mind at that stage clearly as to what that settlement was going to be, what quantum it would be and therefore what impact, if any, it would have on the ability of the estate to meet all the bequests.

[72]The transcript identifies the question as being asked by counsel for the executors, but it is plain from the context that it was posed by the trial judge.

The applicants relied also on the further cross-examination of Mr Fast which followed the above exchange with the trial judge:

COUNSEL: [Mr Rockman] knew that there was going to be a very substantial amount of money either ordered to be paid by the Family Court or agreed in Family Court settlement before he died, did he not?---I can’t say what he knew. I don’t know what he expected or what he knew. I can only - - -
So you didn’t ever discuss that with him either?---Oh he might’ve – there might’ve been numbers that had been spoken about but I don’t think that he’d actually turned his mind to whether they were or weren’t going to be the numbers that would end up being paid.
So it follows from that doesn’t it that he had no notion whatever that the 500,000 to each of my clients and to Elle would not be paid?---I don’t think he turned his mind to it. I can only tell you what I – I can’t tell you what he was thinking. I can only tell you what I believe. I don’t think he turned his mind to it.

The applicants’ submissions should be rejected. In the first place, the relevance of the text of Mr Rockman’s will to determining his testamentary intention was patent. Even if the judge did not inform the applicants that he might accord significant weight to the opening words of cl 15 in ascertaining Mr Rockman’s intention, it ought to have been plain to them that he might do so. The applicants’ representatives were aware at trial of the discrepancy between Mr Fast’s and Mr Brown’s versions of the April 2010 will. The evidence it was said cross-examination of Mr Fast on the subject could have yielded would have supported the submissions they in fact made to the trial judge,[78] yet such cross-examination was not pursued; this suggests a forensic decision was taken not to do so. It ought not to be assumed, and it is in my view doubtful, that further cross-examination of Mr Fast would nevertheless have proceeded if the trial judge had indicated, beyond the extent to which he did, that he might consider that the opening words of cl 15 evinced an intention that some gifts would be more susceptible to abatement than others.
[78]See [127]–[128] above.

In the second place, even if such cross-examination had proceeded, and assuming Mr Fast gave evidence that Mr Rockman was not the source of the opening words of cl 15, such evidence would have had limited significance in view of the evidence that Mr Rockman subsequently indicated that he wished to sign a draft of the will which contained those words.[79]
[79]See [112] above.

Finally, the use to which the applicants could have put further evidence from Mr Fast would have been limited. If the applicants had sought to go behind the text of the final will to challenge the opening words of cl 15 as evidence of Mr Rockman’s intention, there would have been a risk of inconsistency with the decision of Habersberger J not unlike that of which the applicants complained under grounds 1 to 3. It should not be supposed that the trial judge would have received such argument. In that context, the evidence the applicants submit they might have adduced could only have supported the submission they already made to the judge: that there was no evidence Mr Rockman intended his bequests to his children would be subject to abatement, but that there was evidence Mr Fast did not believe Mr Rockman turned his mind to the prospect of abatement. His Honour received that submission and addressed it directly in his reasons.[80]
[80]At [26]–[29].

In reaching his conclusion, the judge did not deny natural justice to the applicants. It follows that leave to appeal on the basis of grounds 10 and 11 should be refused, and the application for leave to appeal should be dismissed.

The executors’ application for an extension of time

Following the trial judge making final orders on 27 August 2015,[81] the applicants filed their application for leave to appeal on 24 September 2015 and served it on the executors on 29 September 2015. Pursuant to r 64.31(2) of the Supreme Court (General Civil Procedure) Rules 2015, any cross-application for leave to appeal was then due to be filed within 28 days, that is, by 27 October 2015.
[81]See [46] above.

By an application dated 21 December 2015, the executors sought that the time for filing a cross-application for leave to appeal be extended to 23 December 2015. The executors’ proposed cross-application seeks to challenge the trial judge’s orders (1) that the executors personally bear their own costs of the proceeding below, and (2) that the executors be personally liable for the costs below of Elle Rockman, Zachary Rockman and Rachel Rockman, including reserved costs.

The executors’ extension application is supported by an affidavit of Mr Fast sworn on 19 December 2015. Mr Fast deposed that the executors were represented by KTL in the various proceedings which had arisen in relation to Mr Rockman’s will, including the proceeding below. Their principal contact was Mr Brendan Kelly, partner. Mr Fast stated that when he read the trial judge’s substantive reasons for judgment upon their publication, he understood that the executors had successfully obtained a declaration that a schedule was incorporated by reference into Mr Rockman’s final will. However, he ‘came to the view that KTL was at risk of a costs order being made against it’. His co-executors shared this view. Mr Fast did not think it likely that personal costs orders would be made against the executors.

Mr Fast deposed that neither Mr Kelly nor anybody else from KTL ever raised with the executors the possibility that KTL ‘ought to be held personally liable’ for the costs of the proceeding below, or the possibility that KTL had a conflict of interest in advising the executors on issues of costs. Nor did KTL raise the possibility of the executors obtaining independent advice in relation to either of those matters.

On 22 July 2015, Mr Fast was informed by KTL that the trial judge had directed that ‘[y]ou, our office and the defendants file and serve written submissions regarding whether the costs are to be paid from the estate’. According to Mr Fast, the executors did not understand this statement to mean that the trial judge might consider making personal costs orders against the executors, and they did not receive advice to this effect.

Mr Fast deposed that he was aware that the executors’ submissions as to costs were prepared by senior counsel retained by KTL on behalf of the executors. He noted that those submissions do not argue that costs should be ordered against KTL. Mr Fast stated that it never occurred to him or the other executors that their submissions could or should argue that KTL should bear the costs of the proceeding.

Mr Fast received a copy of the costs submissions filed by KTL on 5 August 2015. He was travelling overseas at the time, and while he ‘scanned’ those submissions, he did not notice that they had been prepared by Colin Biggers & Paisley, independent solicitors acting for KTL.

Mr Fast deposed that following the making of costs orders against the executors in the proceeding below and in another proceeding, the executors approached Strongman & Crouch ‘in approximately late September 2015’ to seek advice on their rights of action. After receiving that advice, the executors decided to terminate the retainers held by KTL and to retain Strongman & Crouch to represent them in the ongoing litigation. KTL’s retainers were formally terminated on or about 20 November 2015 and their files in relation to the estate of Mr Rockman and the related proceedings were transferred to Strongman & Crouch in the week commencing 30 November 2015.

In December 2015, upon reviewing the costs submissions advanced by KTL in the proceeding below, Mr Fast became aware for the first time that they were prepared by independent solicitors for KTL and that they contained the submission ‘as a consequence no cost consequences should flow for Kenna Teasdale’.

Mr Fast deposed that the executors had not contemplated the possibility of KTL being held liable for the costs of the proceeding below prior to Strongman & Crouch taking over the conduct of the proceedings. Although the executors had sought advice from KTL and senior counsel regarding the possibility of appealing the trial judge’s costs orders shortly after those orders were made on 27 August 2015, Mr Fast stated that this advice ‘was not given in the context of such costs being sought against KTL’.

According to Mr Fast, the executors’ reason for not filing or serving their cross-application for leave to appeal within time was that they had ‘only recently [as at December 2015] been advised about the potential for this step … and were never advised about it by our former lawyers’.

The executors filed a written case in support of their proposed cross-application, in which they note that they do not seek to re-open the trial judge’s conclusions that (1) the costs of the proceeding below should not be paid out of the estate and (2) the proceeding below was ‘necessary’, given the failure to tender the schedule at exhibit ELC-19 before Habersberger J.

In brief, the executors submitted that the trial judge ought to have sought submissions and/or evidence as to the possibility of making a costs order against KTL, and that by failing to do so, his Honour erred in the exercise of his discretion to determine questions as to costs. The executors noted that there was some factual uncertainty about who was responsible for the failure to tender the schedule before Habersberger J, but contended that holding the executors responsible on the basis that they ‘may have the capacity to mitigate any financial impact arising’[82] overlooked the potential for the advocates’ immunity to prevent such recovery. They also submitted that the executors lacked independent advice in preparing their costs submissions, while KTL had such advice; this was said to be a further factor which ought to have prompted the trial judge to seek further submissions and/or evidence regarding KTL’s potential liability before making the orders he did.
[82]See [45] above.

The applicants filed submissions in response to the executors’ extension application. They note that the applicants have no direct interest in the cross-application, but seek to ensure that their costs below are paid, and not out of the estate. They also seek, if the Court orders that KTL pay costs, that this be subject to a condition that the executors jointly and severally indemnify the applicants in respect of the applicants’ costs below.

KTL did not make any submissions as to the executors’ extension application but filed ‘observations’ in response to the cross-application. They noted that KTL ‘does not express a view one way or another as to the correctness of the exercise of [the trial judge’s] discretion’. KTL observed that their submissions below had addressed the circumstances referred to in the trial judge’s substantive reasons,[83] and that Elle Rockman’s submissions below had addressed the question whether KTL ought to be liable for the costs of the proceeding. KTL contended that no party was deprived of an opportunity to make submissions to the effect that KTL should bear costs liability for the proceeding below.
[83]See [39] above.

KTL filed an affidavit of Mr Kelly sworn 20 January 2016, in which Mr Kelly deposed that on 24 July 2015 he attended a conference with senior counsel and the executors at which there was discussion of the possible costs orders that might be made. These included the possibility that KTL would be ordered to pay some costs and that the executors might be ordered to personally bear their own costs. Mr Kelly stated that he informed the executors that KTL had notified its professional indemnity insurer about the matter and that KTL would file its own submissions. He deposed that senior counsel prepared submissions on behalf of the executors without assistance or input from KTL. He deposed that the executors dealt directly with counsel to prepare and finalise the submissions, and KTL’s role was limited to filing and serving the submissions as the solicitor on the record for the executors.

In addition, Mr Kelly deposed that on 28 August 2015, the day after the trial judge made his final orders, Mr Brown telephoned him and said that the executors were going to instruct another lawyer and planned to speak to a solicitor at Strongman & Crouch regarding a potential claim against KTL and senior counsel. Mr Kelly stated that KTL did not advise the executors about the possibility of a cross-appeal but wrote to the executors on 7 October 2015 urging them to seek independent legal advice, because KTL had a conflict of interest which prevented it from advising on any cross-appeal. On 27 October 2015, the executors sought KTL’s view on the prospects of success of a cross-appeal and, the following day, Mr Kelly referred to his letter of 7 October 2015 and again urged the executors to seek independent legal advice. Mr Kelly’s affidavit was not answered and counsel for the executors submitted that they did not apprehend any need to respond to it.

The Court has power under r 64.08(1) to extend the time for filing of the executors’ cross-application for leave to appeal. Whether it should do so is within the discretion of the Court. As Kyrou JA observed in Gippsreal Ltd v Kenny:[84]

As with the exercise of any other discretion by the Court, the Court must seek to give effect to the overarching purpose in s 7 of the [Civil Procedure Act 2010], namely to ‘facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.’ The factors that are relevant to the exercise of the discretion under r 64.08 include the length of the delay, the reasons for the delay, the prospects of the application for leave to appeal succeeding and the extent of any prejudice to a respondent.

[84][2016] VSCA 65, [21]; see also Deak-Fabrikant v Grech [2016] VSCA 118, [34] (Priest and Beach JJA).

In the present case, it was not submitted that any relevant prejudice would be occasioned by the granting of an extension of time to the executors. That may therefore be taken to be a neutral consideration.

The delay in bringing the cross-application was in the order of two months after the expiry of the relevant time limit. In the context of a 28 day time limit, this was no minor delay, particularly where the orders sought to be appealed had been made in August 2015, one month before the time limit began to run.[85]
[85]While the 28 day period in which a timely cross-application for leave to appeal could be filed did not commence until the service of the applicants’ application for leave to appeal on 29 September 2015, the executors need not have waited for the filing of such an application to challenge the trial judge’s costs orders. Their challenge to the costs orders could have been brought by way of an application for leave to appeal rather than by a cross-application.

The reasons given for the delay are of particular relevance to the determination of any application for an extension of time. Yet Mr Fast’s affidavit in support of the executors’ extension application provided scarce explanation for the executors’ delay beyond the assertion that they were unaware they could have filed a cross-application for leave to appeal. In particular, Mr Fast offered no explanation for the executors’ delay between the making of the costs orders on 27 August 2015 and their approach, ‘in approximately late September 2015’, to Strongman & Crouch to seek advice about what action they could take. Nor did Mr Fast provide any detailed explanation for the additional delay between that time and the termination of KTL’s retainer on 20 November 2015. It might be inferred that some time was required to receive and consider Strongman & Crouch’s advice, but it is unclear how much time that process took. As it stands, it cannot be concluded upon the material before the Court that the executors acted reasonably in not taking action to contest the trial judge’s costs orders before December 2015.

Moreover, there is a difficulty with Mr Fast’s explanation that the executors were unaware until December 2015 of their ability to file a cross-application for leave to appeal. Mr Kelly’s affidavit, which went unanswered, shows that on 7 October 2015 KTL sent a letter to the executors stating:

We also note that [senior counsel] has advised that consideration should be given to cross-appealing the personal costs orders made against you by [the trial judge]. We have a conflict in advising whether or not you should cross-appeal and you should therefore seek independent advice about that. [Senior counsel] has advised you that you have 28 days from 29 September 2015 to file that application. We urge you to seek that advice as soon as you can.

Mr Kelly’s email to the executors of 28 October 2015 noted that the time to cross-appeal had passed and repeated the instruction to seek independent advice.

In my view, the executors have failed to provide a sufficient explanation in these circumstances for their delay in seeking to file a cross-application for leave to appeal. This is a factor weighing against the grant of the extension sought.

Turning to the prospects of success of the cross-application, it is important to recognise that the trial judge had a broad discretion to determine matters of costs. For the cross-application to succeed, the executors would have to persuade the Court that the trial judge failed to exercise his discretion on reasonable grounds, applied wrong principle or took a manifestly erroneous view of the facts.[86] The key errors identified by the executors are what are said to be the trial judge’s failure to seek or consider submissions and/or evidence regarding the possibility of making a costs order against KTL, and the trial judge’s mistaken suggestion that the executors may be able to ‘mitigate’ the financial impact of the costs orders against them by looking to their representatives.
[86]Peet Ltd v Richmond [2010] VSCA 71, [4] (Nettle JA).

Since the executors did not contend before the trial judge that KTL ought to pay the costs of the proceeding, the first purported error turns on Mr Fast’s assertion that the executors were unaware that they could make such a submission, in the absence of independent advice. The question is whether the trial judge erred in not specifically calling for submissions on this issue in the circumstances.

In my view, even leaving to one side the factual discrepancies between Mr Fast’s and Mr Kelly’s accounts of the advice the executors received in the course of preparing the executors’ costs submissions, it would appear that the executors were on notice as early as 22 July 2015 that KTL’s potential costs liability was in issue. KTL brought the trial judge’s substantive reasons to their attention on that date and noted that the judge had directed KTL to file its own submissions on the question of costs, in addition to the submissions to be filed by the executors and the defendants. Mr Fast’s affidavit showed that he read the judge’s substantive reasons at that time.

To reiterate, those reasons stated:[87]

Plainly, the current proceedings could have been avoided if the plaintiffs had annexed Exhibit ELC 19 to the final Will prepared by Rockman’s solicitors in August 2010 which Habersberger J ordered should be admitted to probate.
… whatever the characterisation of Ms Coates’ failure to have annexed Exhibit ELC 19 to the final Will, there is no reason why the plaintiffs could not have tendered Exhibit ELC 19 in evidence before Habersberger J and advanced submissions as to why that document was incorporated by reference into the final Will.

The judge clearly considered that the executors ought to have tendered the schedule before Habersberger J. In that context, his Honour’s statement that ‘a substantive question arises as to whether … all of the costs incurred … should be paid out of the estate’ could not reasonably be thought to imply that his Honour did not intend to determine who, if not the estate, ought to pay the costs. The judge was not posing an academic question; plainly, costs liability had to be determined. By providing an opportunity to the executors, KTL and the defendants to file submissions, the judge indicated that he would consider the potentially disparate contentions of each of them in the exercise of his discretion to make costs orders.[88]

[87]Reasons [31].

[88]This message was reinforced by the subsequent extension of that opportunity to senior counsel for the executors, following the filing of KTL’s submissions.

Mr Fast’s affidavit shows that upon reading the trial judge’s substantive reasons on 22 July 2015, the executors in fact understood ‘that KTL was at risk of a costs order being made against it’. In that context, it is difficult to accept his evidence that it did not occur to the executors that they could seek such an order. In view of the trial judge’s remark that ‘there is no reason why the [executors] could not have tendered Exhibit ELC 19 in evidence before Habersberger J’, if the executors believed that their lawyers were responsible for the failure, it was plainly in their interests to inform the trial judge of that belief and, if necessary, to seek time to secure independent representation.

Further indications that KTL’s potential costs liability was in issue were to be found in the costs submissions filed by KTL and by Elle Rockman. Mr Fast deposed that KTL’s submissions were emailed to him and the other executors on 5 August 2015. While he was abroad and merely ‘scanned’ those submissions, there is no indication that their contents did not come to the attention of the other executors, Mr Brown and Mr Schoenfeld. Nor is there any indication that Elle Rockman’s submissions did not come to the attention of one or more of the executors.

In the circumstances, even if the executors lacked independent legal advice during the period in which their costs submissions were prepared — and I make no finding that they did — there were in my view sufficient other indications that KTL’s potential liability was in issue for it to be reasonably expected that, before the trial judge made costs orders on 27 August 2015, the executors ought to have been aware that the trial judge would receive evidence and submissions on that issue. The judge, quite properly, extended to KTL and senior counsel the opportunity to be heard on costs once it became clear that their interests might differ from those of the executors. His Honour did not err in the exercise of his discretion as to costs by failing to call for more specific evidence or submissions on KTL’s liability.

In relation to the second purported error, it may be assumed for present purposes that the executors may be precluded by the advocate’s immunity[89] from mitigating the impact of the personal costs orders made against them by taking action against KTL and/or senior counsel. The question is whether the judge’s failure to advert to this possibility means that he gave weight to an irrelevant matter or proceeded on wrong principle.
[89]See Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 331 ALR 1; D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1; Giannarelli v Wraith (1988) 165 CLR 543.

The purported omission of the trial judge does not give rise to any error in the exercise of his discretion. His Honour’s substantive reasons had squarely indicated that the failure of the executors to tender the schedule before Habersberger J was a factor which had made the proceeding necessary.[90] The judge called for and received submissions as to costs from the executors, the applicants, KTL and senior counsel for the executors. For the reasons I have explained, it was reasonable for the judge to consider that the executors would bring to his attention at that time any explanation for the failure to tender the schedule that they wished to raise. Yet after all submissions had been received, the factual circumstances relating to the failure to tender the schedule remained unclear. In finding that primary responsibility rested with the executors, the judge found, in effect, that insufficient material had been advanced to persuade him that responsibility lay elsewhere. There was no error in that finding.

[90]Reasons [31].

In observing that the executors ‘may have the capacity to mitigate any financial impact arising from the orders’, the trial judge did no more than identify a possibility. He did not conclude that there would be no obstacles to the executors’ capacity to recover costs from their representatives, nor did he conclude that recovery would be impossible. The executors’ capacity to mitigate the impact of the costs orders would be a function of the factual circumstances surrounding the failure to tender the schedule, which as I have observed, remained unclear. While the judge need not have adopted the course that he did, it was open to him in the exercise of his discretion to make personal costs orders against the executors in the absence of a more fulsome explanation of the failure to tender the schedule.

For the above reasons, I consider that the cross-application would have limited prospects of success. This is a further factor weighing against the grant of an extension.

Taking into account all of the circumstances of the extension application, in my opinion the executors’ application for an extension of time should be refused. It is unnecessary to further consider the merits of the cross-application.

TATE JA:

I have had the considerable benefit of reading, in draft form, the reasons of Warren CJ. I agree with her Honour, for the reasons her Honour gives, that the application for leave to appeal should be dismissed, the application by the executors of Mr Rockman’s estate to adduce further evidence should be refused, and the application by the executors for an extension of time in which to file and serve a cross-application for leave to appeal in respect of the orders for costs made by the judge should be refused.

FERGUSON JA:

I agree with Warren CJ for the reasons her Honour gives.

[2016] VSCA 262

9 November 2016