Wills and Estates: 23 March 2019
A recent decision of the Supreme Court of Victoria in the case of a contested Probate application has shown the Court is willing to order costs to be paid personally by a party to the proceeding, rather than by the Estate, when the party is found to be the cause of the litigation.
The Deceased died in October 2011 leaving three children, a son and two daughters.
The Deceased left a Will dated 10 December 2011 that was actually signed on 10 December 2010, as he had already passed away before 10 December 2011 ('the December 2010 Will').
The penultimate Will was made on 9 September 2010, the original of which was missing ('the September 2010 Will'). The antepenultimate Will was made on 28 October 2009 ('the 2009 Will'). Both left the residuary estate one third to each of the Deceased's three children.
The December 2010 Will appointed the son, the Plaintiff in this proceeding and the Deceased's daughter-in-law as executors, left certain gifts to the Plaintiff and one the daughters, Ms Lodder, and the residuary estate was shared equally between the Plaintiff and Ms Lodder. The other daughter, the Defendant in this proceeding, was not a beneficiary under the December 2010 Will.
In a trial conducted in 2013, on objection to probate being granted of the December 2010 Will from the Defendant, Ginnane J held that the Deceased had testamentary capacity in December 2010 but did not know and approve the contents of the December 2010 Will. On appeal, it was found that the Deceased lacked testamentary capacity in December 2010 and also did not know and approve the contents of the December 2010 Will. Therefore the December 2010 Will was declared invalid.
After judgment in the appeal, the Defendant, through her solicitors, sought to reach agreement with the Plaintiff, through his solicitors, to propound the 2009 Will with an independent administrator appointed. The Defendant provided reasons for the suggested resolution that (a) the September 2010 Will was within close proximity to the December 2010 where the Deceased was found to have lacked testamentary capacity and therefore the validity of the September 2010 was questionable; (2) there were evidentiary difficulties in propounding a copy of the September 2010 Will as to whether the presumption of revocation could be rebutted as the whereabouts of the original where unknown; (3) the costs of the earlier litigation, the appeal and further litigation (the earlier litigation and appeal costs were in excess of $1m). The attempts to resolve or narrow issues were unsuccessful.
The Plaintiff filed an application for a grant of probate of the September 2010 Will, or alternatively, the 2009 Will. The Defendant objected to this application on the grounds mentioned above and also that the Plaintiff was not a fit and proper person to administer the Deceased's estate as a result of a conflict of interest in relation to the costs orders made in the earlier litigation and also the Plaintiff's inability to deal with the Defendant impartially.
The Registrar of Probates forwarded preliminary requisitions in response to the Plaintiff's application requesting evidence as to searches made for the original September 2010 Will, medical evidence as to the Deceased's testamentary capacity when the September 2010 Will was executed and details of persons entitled to share on intestacy.
The Plaintiff's solicitor filed two lengthy affidavits in purported response to the requisitions, however these affidavits were found to also contain irrelevant material, submissions and opinion (which is not admissible and was not necessary to answer the requisitions).
On 5 February 2016, some 5 months after the Plaintiff's application was lodged, and after a court appearance and orders having been made, the Plaintiff agreed to propound the 2009 Will with an independent person being appointed administrator.
Both parties sought that their costs be paid out of the Estate, the Plaintiff claiming $38,336.14 and the Defendant claiming $44,800, both filing submissions accordingly.
Her Honour Justice McMillan noted that the general rule in probate matters is that the costs are usually paid out of the Estate where the litigation has been caused, or contributed to, by the testator or where the circumstances reasonably call for an investigation. Otherwise, the general rule that 'costs follow the event' should apply.
In this case, Her Honour found that the Plaintiff had the benefit of many facts and circumstances regarding the validity of the September 2010 Will and the 2009 Will as a result of the previous litigation and appeal and also the detailed correspondence from the Defendant's solicitor, which was cogent and convincing. Her Honour commented that despite the issues being pointed out to the Plaintiff within two weeks of the Appeal and then followed up by further correspondence from the Defendant's solicitor, the Plaintiff persisted in his application rather than accede to the Defendant's proposal (which was ultimately adopted in any event). Had the Plaintiff done so, there would have been no need for the costs of the enquiry of the Registrar or Probates or the contested proceeding. Her Honour held that it could not be said that the preliminary questions of the Registrar of Probates were caused by the Deceased or that there were reasonable grounds for an investigation as the Plaintiff was well placed to appreciate the difficulties in attempting to propound the September 2010 Will and was unreasonable in his stance as to the Defendant's proposed solution.
Ultimately, the Plaintiff was found to be the cause of the litigation and ordered to pay the Defendant's costs personally with no entitlement to reimbursement from the Estate for his own costs.