Nicol v Nicole; The Estate of Peter Nicole

1. [1]

   HIS HONOUR: These reasons relate to the estate of Peter Nicole (also known as Peter Nicol) (the deceased), who died on 17 August 2018, leaving a Will dated 12 October 1990.

2. [2]

   The instituted executor named in the Will was Marie Nicole, the wife of the deceased. She predeceased the deceased, having died on 4 August 2016. The substituted executors named in the Will of the deceased were the Plaintiff (Nicolas) and Defendant (Jackie, as he was referred to in the Will, but also known as Jack), who are the only children of the deceased. They are also the only beneficiaries, entitled equally, to share the whole of the estate of the deceased.

3. [3]

   The parties agreed that, following written submissions being filed and served, the Court could determine the outstanding issue, being the costs of the proceedings, on the papers and in Chambers.

The Proceedings

1. [4]

   On 16 July 2019, the Plaintiff published an online Notice of Intention to Apply for Probate of the deceased’s Will. The online Notice did not reveal that the instituted executor named in the Will had predeceased the deceased, or that the Plaintiff was applying for Probate without the named substituted co-executor having been joined in the application.

2. [5]

   Thereafter, proceedings were commenced by Statement of Claim filed on 26 July 2019, in which the Plaintiff sought a declaration that the Defendant be passed over upon the basis that he had a disqualifying conflict of interest, and that he was not a fit and proper person to act as executor; and an order that Probate in solemn form of the deceased’s Will be granted to the Plaintiff alone.

3. [6]

   The Defendant filed a Defence on 6 September 2019. A Statement of Cross-Claim was signed on the same date, but was not filed until 18 September 2019, pending an assessment, by the Registry, of an application for deferral of the filing fee. In the Cross-Claim, as subsequently filed, the Defendant sought a grant of Probate of the deceased’s Will, with leave reserved to the Plaintiff to come in and join the application or, in the alternative, a grant of Letters of Administration with the Will annexed to a suitably-qualified solicitor.

4. [7]

   Prior to the filing of the Cross-Claim, the Defendant, on 10 September 2019, provided the Plaintiff’s solicitors with an unsealed copy of the Cross-Claim and proposed, by letter, that the proceedings be resolved on the basis that an accredited specialist in wills and estates law be appointed as an independent administrator to administer the estate of the deceased.

5. [8]

   On 19 December 2019, the Plaintiff amended the Statement of Claim to seek, in the alternative, Letters of Administration with the deceased’s Will annexed to Christopher John Palmer or another suitably-qualified solicitor.

6. [9]

   From that point in time until February 2020, correspondence passed between the legal representatives of the parties in relation to the settlement of the proceedings. On 24 February 2020, in accordance with an agreement reached between the parties, Lindsay J made an order granting Letters of Administration with the Will annexed to Michael O'Neill (an accredited specialist solicitor in wills and estates law). His Honour also made consequential orders remitting the matter to the Probate Registrar “to complete the grant and to make such orders relating to the costs of the proceedings as may be necessary”.

7. [10]

   His Honour also noted that the parties “are unable to agree to the appropriate costs order and seek that the question of the costs of the parties be determined by the Court”. Directions were then made for the filing and service of affidavit evidence (if any) and written submissions. His Honour ordered that “all questions of costs relating to these proceedings be referred to the Probate Registrar for determination”.

8. [11]

   On 3 April 2020, the Senior Deputy Registrar in Probate noted that in light of the costs estimate provided in the affidavit of the Defendant’s solicitor, the Registrar’s delegation was exceeded, that upon receipt of the Defendant’s submissions, the matter would be referred to the Succession List Judge, and that the parties would be notified accordingly.

9. [12]

   In this regard, it is necessary to note that in an affidavit of Mr D Shad (sworn 3 March 2020), the solicitor with the carriage of the matter on behalf of the Plaintiff, the estimate of the Plaintiff’s costs, calculated on the indemnity basis of the proceedings, were $31,357.36. In an affidavit of Mr B J Dornan (sworn 30 March 2020), the partner on the record in the firm acting for the Defendant, the estimate of the Defendant’s costs, calculated on the indemnity basis, were $30,661.74.

10. [13]

    The matter had been listed for hearing on 14 April 2020 before the Senior Deputy Registrar. However, following receipt of the Court file, and because it seemed that further costs should be avoided, the Court suggested to the legal representatives that the issue of costs should be determined on the papers, in Chambers, and that they would be informed of the orders as soon as that had been done.

The Submissions

1. [14]

   The Court received comprehensive written submissions by counsel for each of the parties on the issue. I am most grateful to counsel for his, and her, written submissions respectively.

2. [15]

   In broad terms, the Plaintiff submitted that the proceedings were brought because, first, the Defendant, shortly after the death of the deceased, had accessed the deceased’s Commonwealth Bank Account and had withdrawn, for his own benefit, amounts totalling $51,120.90; and secondly, because in early 2019, the Defendant had been charged by NSW Police with possessing two prohibited weapons, possessing a prohibited substance (the drug known as ‘Ice’) and cultivating a prohibited substance (marijuana).

3. [16]

   The Plaintiff then submitted that the Defendant provided, in his Defence, particulars of his plea of guilty to the charges and the sentence that had been imposed and had admitted that he had withdrawn the amounts, in the period 17 August 2018 to 10 October 2018, but denied that they were applied for his benefit, and instead had pleaded that the majority of the amounts withdrawn were used to effect repairs and renovations to the deceased’s house. However, the Plaintiff submitted that the Defendant had not provided any documents, receipts or invoices in support of that claim and had not given any evidence of the repairs or renovations allegedly undertaken. What had been annexed to his Affidavit sworn 12 December 2019 were “estimates” that had been provided more than 12 months after he had withdrawn the amounts in order to quantify the work he asserted he had done. The Defendant had also denied having a conflict of interest, and had requested the Court to not pass him over as executor.

4. [17]

   Thus, the Plaintiff submitted that the Defendant's conduct had been the cause the proceedings, in that, before Probate had been granted, he had intermeddled in the estate by withdrawing funds from the deceased’s bank account; that the Defendant had been unreasonable in his defence of the proceedings, in that his explanation for the withdrawals was uncorroborated and unsupported by documentary evidence.

5. [18]

   Finally, the Plaintiff submitted that the Defendant should be ordered to pay his costs, calculated on the ordinary basis, of the proceedings. He submitted that the Defendant had acted unreasonably in defending the proceedings and that, by consenting to the orders made on 24 February 2020, he had effectively surrendered to the Plaintiff’s claim.

6. [19]

   The Defendant submitted:

7. [20]

   Counsel did not disagree on the legal principles which would guide the exercise of the Court's costs discretion where there had been no hearing on the merits, which principles included that where a proceeding was concluded before there had been a hearing, the Court should not resolve the issue of costs by engaging in a hypothetical trial; and that notwithstanding that general principle, a costs order may be justified where one party had acted unreasonably in bringing, or defending, the proceedings, and/or had effectively surrendered to the other.

Determination

1. [21]

   It is necessary to remember the comments of Allsop P (as his Honour then was), with whom Beazley and Campbell JJA agreed, in Baulderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited (No 2) [2009] NSWCA 12 at [5]:

2. [22]

   In determining the question, it is, however, necessary for the Court to take into account the parties’ conduct throughout the whole course of the proceedings: Fordyce v Fordham (2006) 67 NSWLR 497 at 509 [67]; [2006] NSWCA 274 at [67] (McColl JA, Beazley and Santow JJA agreeing).

3. [23]

   There are a number of matters which appear to me to be relevant to the determination of the costs issue. These are:

4. [24]

   It should have been obvious to both parties, from the outset, that the administration of the estate would be best served by the appointment of an independent person to administer the estate. This was, at least in part, due to the lack of trust, and the fact of some hostility, between them. It should have been equally obvious that the grant could not be made to both of them and that the appointment of only one of them would be likely to produce continued disagreement and substantially increased costs to the estate throughout its administration.

5. [25]

   Furthermore, each, with the assistance of his legal representatives, ought to have been aware that the Court’s overriding concern in this type of case is promoting the orderly administration of the estate and the welfare and best interests of all of the beneficiaries: Miller v Cameron (1936) 54 CLR 572 at 575 (Latham CJ), 579 (Starke J), 580 (Dixon J, Evatt and McTiernan JJ agreeing); [1936] HCA 13; Fysh v Coote [2000] VSCA 150 at [20] (Ormiston JA, Batt and Chernov JJA agreeing); Callaway v Callaway; The Estate of Aileen Margaret Callaway [2019] NSWSC 1275 at [10] (Slattery J), and that the Court’s principal concern would be to ensure that the estate was efficiently, and properly, administered according to the terms of the deceased’s Will: Mavrideros v Mack (1998) 45 NSWLR 80 at 101–2, 107–8 (Sheller JA, Priestley and Beazley JJA agreeing).

6. [26]

   However, each of the parties, for some time after the commencement of the proceedings, maintained in the proceedings (although not necessarily in the correspondence between solicitors) that probate should be granted to only one of them. In the affidavit of each of the parties, the deponent based his opposition to, amongst other things, the bad character of the other. In the case of the Plaintiff, he also advanced the potential conflict of interest in relation to the amounts that had been withdrawn from the deceased’s bank account and the use to which it had been put.

7. [27]

   At the end, it was not necessary for the Court to make any finding that either the Plaintiff, or the Defendant, was individually unfit to be the sole executor. No doubt, with the assistance of their legal representatives, each came to the view, albeit late, that it would not be necessary to make any criticism of one or the other of the parties in determining what was in the best interest of the due administration of the estate.

8. [28]

   Regrettably, despite the fact that each party incurred a similar amount of costs, and that, in any event, the estate was divided equally between the two of them, the parties, still, could not agree that an appropriate order was that each party should bear his own costs of the proceedings and it was left to the Court to determine this issue.

9. [29]

   Section 98 of the Civil Procedure Act 2005 (NSW) provides the Court with a wide discretion in relation to costs. While the Court’s discretion is broad, it must be exercised judicially and consistently with the overriding mandate provided for in Part 6 Division 1 (ss 56 - 60) of the Civil Procedure Act.

10. [30]

    The general rule is that costs follow the event, unless it appears that some other order should be made as to part or all of the costs, as provided in the Uniform Civil Procedure Rules 2005 (NSW), r 42.1. “The event” is to be taken as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] (Ward, Emmett and Gleeson JJA).

11. [31]

    Often the Court must take a broad-brush approach to costs and that approach usually is based upon impression and evaluation.

12. [32]

    In the submissions, neither party referred to the observations made by the Court of Appeal in Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681 at 688 [30]; [2018] NSWCA 84. In that case, Payne JA (Meagher JA agreeing) wrote, at [30]:

13. [33]

    At [2], Basten JA stated the relevant principle in similar terms, noting that “[w]here the parties resolve their differences, except as to the costs already incurred in litigation, they should usually expect that the court will not award costs”. His Honour also noted that where there has been a settlement without a trial, it is not usually possible to say that one party has been successful and the other unsuccessful. There is no “event” for costs to follow, applying the usual rule in r 42.1 of the Uniform Civil Procedure Rules. The orders made by consent may, or may not, demonstrate capitulation by the “unsuccessful” party. Where it is submitted that one party has been unreasonable in commencing or defending the litigation, the judgment as to unreasonableness should only be made where the conclusion “is manifest by reference to known circumstances, not in dispute between the parties”: see [8]. The Court should not embark upon reviewing large swathes of evidence to resolve, on a tentative basis, disputed questions of fact.

14. [34]

    It seems to me that in this case, the Plaintiff had acted reasonably in commencing the proceedings, although the relief sought in the proceedings should have been somewhat different. The Defendant, for his part, at a relatively early stage of the proceedings, suggested an outcome that, ultimately, found favour with the Plaintiff and with the Court. Both had, at least in his respective affidavit, escalated the likely dispute by asserting matters to do with the character and the conduct of the other. Yet, both parties, by his legal representative, had acted reasonably in continuing to negotiate in respect of bringing about the resolution of the matter, which resolution, once reached, meant that neither party was successful on the principal relief that he sought.

15. [35]

    Bearing in mind the issues that were raised, this is not a case where the Court is confident that, although both parties may have acted reasonably to begin with, one party was almost certain to have succeeded on his principal claim for relief if the matter had been fully tried. Nor can the Court be satisfied that one party has had a substantial victory and the other a substantial loss, or that there has been a marked difference in the reasonableness of the actions taken by the parties, so that one party should be rewarded for its reasonable actions and the other party should suffer a detriment in costs: Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302 at [5] (Davies AJA, Mason P and Meagher JA agreeing).

16. [36]

    The only reasonably confident prediction may be that the orders to which the parties agreed upon, ultimately, were orders that were likely to have been made at the conclusion of a contested hearing bearing in mind the principles to which reference has been made.

17. [37]

    Nor is this a case where an apportionment of costs is appropriate. Neither party has demonstrated, to my satisfaction, that there had been a marked difference in the reasonableness of the actions taken by him, so that one party should be rewarded for its reasonable actions and the other party should suffer a detriment in the form of a costs order against him.

18. [38]

    Furthermore, I am not satisfied that this is a case where I should separate the costs that were incurred after 13 January 2020, the date at which the Defendant made the offer that each party pay his own costs of the proceedings. By that date, the bulk of the costs had been incurred, and to make a special order for costs in favour of one side or the other would involve further costs being incurred.

19. [39]

    There is significant flexibility in determining questions of costs. The Court is entitled to examine the realities of the case and will attempt to do substantial justice as between the parties. Given all the circumstances, exercising the discretion under s 98 of the Civil Procedure Act, this case is one where the proper approach is for the Court to make no order as to costs, with the intent that each party will bear his own costs, respectively, of the proceedings, including the costs of the argument as to costs. That is the order that the Court now makes.

20. [40]

    The Court file has been returned to the Senior Deputy Registrar in Probate to continue to deal with the grant of administration.