Zivojin v Babic (No 2)
[2013] VSC 113
•20 FEBRUARY 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
PROBATE LIST
No. S PRB 2010 11002
| MARTIN ZIVOJIN AND ANNA ROBINSON | Plaintiffs |
| v | |
| OMER BABIC AND STANKA POSTOLOVA | Defendants |
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JUDGE: | HABERSBERGER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 20 FEBRUARY 2013 | |
DATE OF JUDGMENT: | 20 FEBRUARY 2013 | |
CASE MAY BE CITED AS: | ZIVOJIN v BABIC (No 2) | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 113 | |
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Practice and Procedure – Costs – Probate – Whether reasonable for plaintiffs to commence proceeding seeking revocation of grant of probate of earlier will of the deceased and grant of probate of alleged later will – Plaintiffs’ application for costs out of the estate refused – Second defendant added despite opposition of plaintiffs – She was widow of the deceased and principal beneficiary under the earlier will – Plaintiffs ordered to pay two sets of costs.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr J K Arthur | Haines & Polites |
| For the First Defendant | Mr G S Baker | Frank J Sagaria & Associates |
| For the Second Defendant | Mr R R Boaden | Slater & Gordon |
HIS HONOUR:
In the judgment I delivered this morning I held that the application by the plaintiffs, Martin Zivojin and Anna Robinson, for the grant of probate of the December 2005 will to be revoked and instead that there be a grant of probate of the alleged later August 2007 will, failed.
The question then arose as to what would be the appropriate orders for costs. The plaintiffs submit that all parties should have their costs out of the estate on a solicitor and client basis. In the end each of the defendants submitted that the plaintiffs should pay the defendants' costs on a party and party basis and that in addition there should be an order that the first defendant's costs of and incidental to the proceeding be paid or retained out of the estate.
It is trite law that costs are in the discretion of the Court and that the general rule is that costs follow the event. However, there are some exceptions peculiar to probate applications, only some of which are relevant to this proceeding. There is a well recognised exception that if the circumstances reasonably called for an investigation to be made before the Court could properly pronounce in favour of the will a contesting party who fails in such a case should not be required to pay costs and should be left to bear his own costs or, alternatively, that the costs should be allowed out of the estate, as was sought by the plaintiffs in this case.[1]
[1]Spiers v English [1907] P 122, Re Cutliffe's Estate [1959] P 6, and In the Will of Millar [1908] VLR 682.
The question that has been debated this morning is whether it was reasonable for the plaintiffs to attempt to revoke the grant of probate of the December 2005 will and to seek to have the alleged August 2007 will admitted to probate.
Mr Arthur of counsel, who appeared for the plaintiffs, submitted that the matters known to the plaintiffs at the time they commenced this proceeding were that they had an apparently valid will and that they had two independent witnesses who were able to give evidence as to the circumstances in which the will had been executed. He then submitted that some four months after the proceeding had been issued the plaintiffs' position was strengthened by the fact that the handwriting report prepared by Mr Joyce opined that it was highly probable that the signature on the will was that of Mr Mojcec. The contrary handwriting expert evidence from Mr Holland, which I have accepted in preference to that of Mr Joyce's opinion, was not provided until 9 February 2012, nearly a year later and some 20 days before the trial was due to commence. Mr Arthur also relied on the fact that Mr Joyce confirmed his opinion in a second report dated 23 February 2012, but that seems to me to be neither here nor there in terms of adding any further strength to the plaintiffs' position. Finally, Mr Arthur submitted that the plaintiffs were not themselves part of what he called the factual fray, by which I assume he meant involved in the preparation or execution of the alleged August 2007 will, and that there were no adverse findings made against them in my judgment.
It is correct to say that there was no evidence before me to say that the plaintiffs had any involvement in the preparation or execution of the alleged August 2007 will. However, there is no obligation on persons who are named as executors in a will to propound that document if they are not satisfied as to its validity.[2]
[2]See in Re Scott, Deceased; Huggett v Reichman (1966) 110 Sol Jo 852.
In my opinion, in terms of deciding whether or not the plaintiffs should have to pay costs, one has to look at the situation as at the time they commenced this proceeding to decide whether or not their action was reasonable. At that time they knew, one assumes, the evidence that was going to be given by Mrs Pisko and Mr Kujundzic about how Mr Mojcec had allegedly travelled to Sydney to have his will witnessed by Mrs Pisko, had left the will with Mrs Pisko and had then immediately returned to Melbourne. They also knew that despite them saying that they were present with or talked to Mr Mojcec shortly prior to his death, including conversations in which references were made to his estate, he did not say to either of them that there was a will with Mrs Pisko in which they were named as executors. They also knew from reading the document the errors and misdescriptions that I have referred to in my reasons for judgment.
Mr Boaden of counsel, who appeared for the second defendant, submitted that the story that Mr Mojcec had embarked on this flying visit to Sydney to have his will signed in the circumstances that I have outlined and then immediately returned to Melbourne was just not credible and, therefore, it was no basis for the plaintiffs to say that they were justified in seeking to propound the alleged 2007 will.
I agree and I will not repeat what I have said in my reasons for judgment as to why I find that the evidence of those two alleged witnesses cannot be accepted. In the circumstances, I do not consider that the plaintiffs have made out a case that at the time the proceedings commenced it was reasonable for them to commence this proceeding. Even if I am wrong in that, and the correct conclusion is that it was reasonable, it seems to be accepted as a general proposition, subject of course to all propositions being varied in an appropriate case, that where an executor is also a beneficiary and the executor elects to go forward and propound a will the executor takes the risk that if that application fails he or she or they will be ordered to pay costs. I refer again to Re Scott.[3]
[3](1966) 110 Sol Jo 852.
I also refer to the decision of the Full Court of the Supreme Court of Western Australia in Tarabini v Sylvester,[4] where Malcolm CJ, with whom Kennedy and Pidgeon JJ agreed, said as follows.
It is the general rule in probate actions, as in other actions, that costs follow the event: Twist v Tye (1902) P92, Re Elmsleys Goods; Yke v Williams [1871] LR 2 P&D 239. There are various exceptions to this rule. If an executor who is also a beneficiary elects to propound the will, he does so at his own risk as to costs: Re Scott; Huggett v Reichman (1966) 110 Sol Jo 852. In that case, the court, not being satisfied that the suspicion aroused by the circumstances had been dispelled or that the testator knew and approved the contents of a will under which the executor was a beneficiary, ordered him to pay the costs.
[4]Supreme Court of Western Australia, 6 December 1996, BC9606043.
I interpolate, that's precisely the situation in this case. Continuing with the Chief Justice's judgment:
Even if the executor is not guilty of a breach of duty, the court may order him to pay costs: Re Jeffries, Hill v Jeffries (1916) 33 TLR 80. As against that, if an executor had good reason for supposing that a testator was of sound mind and capable of managing his own affairs, he would be allowed his costs out of the estate, even though the will be pronounced against on the ground of testator's incapacity: Boughton v Knight [1873] LR 3 P&D 64 at 79-80 per Hannon J. In that case the executor was honestly led into the litigation by the fact that the testator seemed to all outward appearance to be capable of managing his affairs and, in the absence of evidence to the contrary, was justified in propounding the will.
In the Western Australian case itself there had been an unsuccessful application for propounding of the will and the trial judge made no order for costs against the appellant and also made no order that they should get their costs out of the estate. The appellants appealed and the decision of the Full Court was that the appeal should be dismissed. So that is a decision that the plaintiff, or the appellant in that case being the party seeking by counterclaim to propound a will, should not receive any costs. But his Honour did refer to and approve the decision in Re Scott, to which I have already referred.
It, therefore, seems to me that in all the circumstances the plaintiffs took the risk by embarking on this application and, it having been unsuccessful, there should be an order against them, that they should pay costs. To allow all of the parties their costs out of the estate would seem to me to be a grave injustice to the beneficiaries of the 2005 will.
The next question is how many sets of costs should be allowed. By order made on 18 August 2011 Mrs Postolova was added as a second defendant, the first defendant being of course the executor of the December 2005 will. Mr Arthur opposed the claim that each defendant should receive an order for costs in their favour. He submitted that it should be limited to the first defendant and that there was no need for the second defendant to be added or that if she did want to come in she did so in circumstances knowing that she may not, even if successful, eventually receive an order for costs. That was as matter that was discussed and highlighted on the application for addition of the second defendant.
Mr Arthur pointed out that by the time Mrs Postolova was added she and her son had already sworn affidavits in opposition to the claim so they were already available as witnesses in the proceeding. He submitted that it was clear that the first defendant was resisting the claim and defending the grant of probate. He also submitted that at trial the two defendants were at one in that no differences between their positions emerged.
Mr Boaden submitted on behalf of Mrs Postolova that it was essential in this adversarial litigation that she be present in her own right to defend the will under which she was a substantial beneficiary and that it was not sufficient to allow Mr Babic, an independent person named as the executor, to have the responsibility of defending the 2005 will.
Mr Boaden submitted that Mrs Postolova was directly and intimately involved in the events the subject of this application. In my opinion, the Court should be astute to prevent costs being incurred unnecessarily, but it is clear that whilst generally only one set of costs would be allowed, a second or even more sets of costs can be allowed where there is divergence between the interests of the parties such as to justify their separate representation.[5]
[5]See Ratcliffe v Barnes (1862) 2 SW & TR 486.
One particular task that was performed by Mrs Postolova's legal representatives after she had been added as a defendant was that it appears that they instructed Mr Holland to prepare his expert report on handwriting. That was an important piece of evidence. Mrs Postolova was the person who really did have all the knowledge of the events relevant to the application and, in my opinion, there was sufficient divergence of interests between that of Mr Babic as executor defending the 2005 will and Mrs Postolova as the beneficiary under that will to justify her separate representation.
Importantly, the counsel for the two defendants did not merely repeat the task of defending the will. By and large, the task of having the carriage of defending the attack on the December 2005 will was left to counsel for the second defendant. It is fair, therefore, it seems to me to say that the separate representation did not add to the time of the trial, but of course it still did add to the costs.
Nevertheless, in the exercise of my discretion it seems to me that the appropriate order in this case is that two sets of costs should be allowed and therefore that the plaintiffs should be ordered to pay both the first defendant's and the second defendant's costs of the proceeding.
The final issue is that it was clear that the first defendant as the independent executor with no personal interest should not be out of pocket in defending the will to the extent that he did. Therefore, I accept the submission by counsel for both defendants that the best way to accommodate this is to make a further order that the first defendant's costs of and incidental to the proceeding be paid or retained out of the estate.
On further reflection, after delivering these reasons, I decided that I should expressly state in the order that the first defendant’s recovery of costs from the estate was only to the extent that they were not recovered from the plaintiffs.
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