Chalik v Chalik

1. [1]

   THE COURT: This appeal relates to a dispute over two wills created by Margaret Chalik (the deceased). The deceased’s penultimate will (the 1998 Will) split the estate equally between her sons, Gregory Chalik (the Appellant) and Isaac Chalik (the Respondent). The final will (the 2013 Will) left everything to the Appellant, and made him sole executor of the estate.

2. [2]

   The Appellant commenced proceedings, seeking to propound the 2013 Will and, in the alternative, claim family provision. After a hearing of six days, Justice Henry (the primary judge) held that the deceased did not have testamentary capacity when she made the 2013 Will, and admitted the 1998 Will to probate. The primary judge further concluded that the deceased’s own will was likely overborne by the Appellant and that she did not make a free and fully informed decision when she made the 2013 Will: PJ [349]. Her Honour also rejected the Appellant’s family provision claim, rejected his claim in relation to a debt asserted to be owed by the Respondent to the deceased’s estate in the sum of $150,000 and found that the Appellant owed $15,000 to the estate: Chalik v Chalik [2024] NSWSC 117 at [536(1)] (primary judgment or PJ).

3. [3]

   The Appellant challenges these findings on appeal.

4. [4]

   By application for leave to cross-appeal, the Respondent challenges costs orders made by Slattery J following the retirement of the primary judge. While her Honour had held that each party should bear their own costs from the amount to be received from the estate, the Respondent applied to re-open to draw attention to the fact of and rejection of a Calderbank letter and a formal offer of compromise issued prior to the commencement of proceedings and almost a year prior to the commencement of the hearing, respectively. Slattery J ordered that the Appellant pay the Respondent’s costs in the sum of $40,000, representing under a quarter of the Respondent’s disclosed costs and disbursements: Chalik v Chalik [2024] NSWSC 995 at [31(5)] (the costs judgment or CJ).

5. [5]

   For the reasons which follow, the appeal should be dismissed, leave to cross-appeal should be granted and the cross-appeal allowed.

Background

1. [6]

   In 1995, the Appellant moved in to live with the deceased in her Bondi unit following the death of her husband, Roman Chalik: PJ [75]. The Appellant subsequently moved to the United States in May 2000, returning to Sydney in late 2002 to live with the deceased in her Bondi Unit: PJ [101], [109]. Soon after, the Appellant moved to Melbourne, and returned to live with his mother in July 2003: PJ [110]. He returned to Melbourne in October 2009 and then returned to Sydney just over two years later in September 2011: PJ [134].

2. [7]

   On 31 August 1996, a “Deed of Loan” was signed by the deceased and the Respondent which contemplated that the deceased would loan $150,000 to the Respondent – to be repaid on 30 August 2016: PJ [79]-[81].

3. [8]

   On 2 April 1997, the deceased made a will (the 1997 Will) which made the Appellant the sole beneficiary of the estate, and nominated the NSW Trustee as executor: PJ [86].

4. [9]

   On 29 October 1998, the deceased created the 1998 Will, which split the estate equally between the Appellant and Respondent, and nominated the NSW Trustee as executor and trustee of the will: PJ [89]. There was no ultimate dispute at trial as to the 1998 Will’s validity: PJ [97].

5. [10]

   In or about 2010, the deceased signed an agreement with a real estate agent to sell her Bondi unit. There was evidence which the primary judge accepted that the deceased, in 2010, told the Respondent that she had no recollection of signing the agreement and that she never wanted to sell the unit. The Respondent called the sales agency, told them his mother had memory issues and that the agreement was unenforceable and they never heard from the agency again: PJ [121].

6. [11]

   On 30 August 2011, the deceased was admitted to St Vincent’s Hospital. Dr Day recorded that the deceased did not know why or how she arrived at the hospital. The notes described the deceased as rambling, presenting “acute confusion – worsening dementia” and had “deteriorating cognition (?dementia) over last 12-18 months”: PJ [124]-[126]. The notes also recorded a list of issues, which included: “Acute deterioration in mental state”; “long term deterioration in cognition?”; and “Dementia, depending on baseline ?”: PJ [126].

7. [12]

   On 31 August 2011, the Appellant contacted JewishCare and referred the deceased: PJ [130]. JewishCare’s records from the conversation with the Appellant recorded that the deceased was missing taking her medication, left out of date food in the fridge, and required assistance with socialisation: PJ [131]. The deceased was referred for assessment and intervention to Ms Assia Zinder.

8. [13]

   On 8 September 2011, Ms Zinder from JewishCare met with the deceased at her Bondi unit. JewishCare’s notes recorded that Ms Zinder explained to the Appellant that the deceased had issues with personal care, was repetitive, could not answer questions about what she ate or how she managed her daily life, and that there was rotting food in her unit: PJ [132].

9. [14]

   On 26 September 2011, Dr Maria Opacic, the deceased’s new GP, recorded after meeting with the deceased that she “forgets things in the fridge, forgets taking medications, ? short term memory, asking same questions”: PJ [144].

10. [15]

    The Appellant deposed that, after he moved back to Sydney from Melbourne, the deceased was in a “poor state”, with her unit being “dirty and messy” and it appearing that she had not showered for some time: PJ [135].

11. [16]

    On 16 March 2012, Dr Opacic completed a Centrelink Carer Payment report for the Appellant, noting that the deceased was “cognitively impaired”, and had “poor short term memory”: PJ [151].

12. [17]

    The Respondent and his children provided evidence that in 2012, the deceased was forgetful and could not remember where she was travelling in a car, or the rules of tennis or checkers: PJ [157]-[158].

13. [18]

    The Appellant provided evidence that in early 2013 and for years afterwards, although the deceased was “forgetful and absent minded”, this was only in relation to “trivial matters”, and that she could talk without difficulties about her husband, relatives and family history: PJ [159].

14. [19]

    On 17 April 2013, the deceased and the Appellant met with Mr Mourice Wermut, a solicitor, for the purposes of making a new will. During this meeting, Mr Wermut spoke with the deceased alone. He gave evidence at trial that:

    1. (1)

       the deceased was uneasy and uncomfortable when Mr Wermut told her that he wished to speak with the deceased alone: PJ [172(1)];

    2. (2)

       the deceased was psychologically quite dependent on the Appellant, evidenced by a tendency to look to the Appellant for reassurance: PJ [172(1)];

    3. (3)

       the deceased could not reply to Mr Wermut’s question about why she was attending the meeting: PJ [172(4)]. Mr Wermut accepted that this “raised a flag” as to the deceased’s capacity: PJ [176];

    4. (4)

       the deceased conversed with him at a basic level of Yiddish (describing his own Yiddish as “rusty but conversant”), and concluded that, while the deceased did not have a very agile mind, she was lucid, intelligible, responsive and adamant about the Appellant receiving everything under the new will: PJ [175];

    5. (5)

       Mr Wermut never asked the deceased to repeat back her understanding of the 2013 Will and could not say whether the deceased had considered her estate: PJ [176]; and

    6. (6)

       the deceased presented no indication of any cognitive impairment which suggested that she was unaware of what she was doing: PJ [176].

15. [20]

    On 23 April 2013, the deceased and the Appellant met with Mr Wermut for a second appointment, at which the 2013 Will was executed. Mr Wermut, who had retired from practice in 2018, did not retain notes of his two meetings with the deceased in 2013.

16. [21]

    The primary judge at PJ [295] summarised a body of evidence about matters predating the execution of the 2013 Will as follows:

17. [22]

    Various clinical records created shortly after the 2013 Will was made suggested that the deceased had declining cognition and potential dementia:

    1. (1)

       on 30 April 2013, St Vincent’s Hospital records reported declining cognition (including that the deceased could not recall her own date of birth or address) and that her cooperation, insight and judgement were “severely impacted”: PJ [179];

    2. (2)

       on 1 May 2013, Ms Klahr from the Geriatric Flying Squad was referred by St Vincent’s emergency department to conduct a home visit for the deceased, and recorded that the deceased was repetitive and deferred to her son to answer questions. Ms Klahr’s initial assessment report also observed that the deceased was unwashed, unkempt and had grazes on her nose, chin, fingers and the palms of her hands: PJ [181];

    3. (3)

       on 2 May 2013, following the deceased’s admission to the War Memorial Hospital, records stated that she had cognitive impairment and presented with confusion and dementia, requiring formal diagnoses. The deceased stated that she was forgetting and losing her mind. The hospital’s notes stated that the Appellant described the deceased as having chronic and deteriorating dementia: PJ [182]-[184];

    4. (4)

       on 7 May 2013, War Memorial Hospital discharge records stated that “dementia is a likely diagnosis” and that the deceased had poor short term memory: PJ [185]. This view was repeated in separate clinical notes on 9 and 21 May 2013 respectively: PJ [186], [188]; and

    5. (5)

       on 21 May 2013, St Vincent’s Community Health service conducted an assessment of the deceased at her Bondi unit. While she knew her age and home address, she stated that the year was 1912, then 2012, and could not count back from 20 to 1, or recall her home address minutes later: PJ [188].

18. [23]

    Around September 2013, the deceased purportedly typed and signed a letter in Russian (at the Appellant’s request) explaining the reasons (Statement of Reasons document) for giving the entire estate to the Appellant under the 2013 Will: PJ [190]. The reasons included that: (i) the Appellant helped with home loan repayments, to which the Respondent did not contribute; (ii) the Appellant cared for the deceased after her husband passed away; and (iii) the Respondent and his family infrequently visited the deceased: PJ [190]. The Appellant denied writing the letter: PJ [193]. The Respondent provided evidence that his mother never typed letters and the signature was not one that he recognised as his mother’s: PJ [194].

19. [24]

    In either September or October 2013, Dr Opacic formally diagnosed the deceased with dementia, after administering a Mini-Mental State Examination (MMSE), giving a score of 22/30: PJ [195].

20. [25]

    Between 5 and 11 September 2014, the Appellant transferred $25,000 from the deceased’s bank account to his own account, marked as “Mums Odessa trip”: PJ [206].

21. [26]

    On 25 September 2015, the Respondent commenced proceedings in the NSW Civil and Administrative Tribunal, seeking to appoint a financial manager and guardian for the deceased.

22. [27]

    On 21 December 2015, Dr Opacic completed a Health Professional Report form, noting that the deceased had mild to moderate dementia: PJ [213].

23. [28]

    On 4 January 2016, Acting Professor Brennan noted that the deceased had evidence of dementia and suspected Alzheimer’s disease: PJ [214].

24. [29]

    On 18 April 2016, JewishCare notes recorded that the deceased presented with “significant cognitive impairment”: PJ [216].

25. [30]

    On 17 December 2017, the Appellant opened a joint bank account with the deceased. He transferred a total of $98,000 from the deceased’s account into the joint account between 18 to 27 December: PJ [224]. He debited that entire sum by 2 April 2019: PJ [224]. The Appellant was living with the deceased at this time: PJ [225].

26. [31]

    On 1 November 2018, Fagan J ordered that the Appellant repay the $98,000 sum that had been removed from the deceased’s account: PJ [231].

27. [32]

    On 12 September 2019, the deceased was hospitalised after a fall, and had an operation: PJ [239]. Following this, on 10 October 2019, the deceased was moved into a nursing home: PJ [240].

28. [33]

    In June 2021, the deceased’s Bondi unit was sold for $1,620,000: PJ [246].

29. [34]

    On 20 July 2021, the deceased passed away: PJ [247].

Primary judgment

1. [35]

   The issues raised at trial were: (i) the validity of the 2013 Will (PJ [248]-[357]); (ii) money claims (PJ [358]-[393]); and (iii) the Appellant’s family provision claim: PJ [394]-[519].

2. [36]

   The primary judge held that the 2013 Will was invalid because the deceased lacked testamentary capacity, did not know and approve the contents of the will, and was subject to undue influence: PJ [329]. The primary judge was satisfied the deceased was suffering from a form of cognitive impairment, and that she would have been diagnosed with progressive dementia or Alzheimer’s disease if a formal assessment was made at the time of the making of the 2013 Will: PJ [312]. This conclusion was reached having regard to the various clinical records which identified cognitive impairment, many of which have been noted earlier in these reasons.

3. [37]

   The primary judge closely analysed the evidence of Mr Wermut who was cross-examined at some length during the trial. Her Honour’s reasoning bears full reproduction, given the emphasis the Appellant placed on the significance of Mr Wermut’s evidence in this Court:

4. [38]

   The primary judge also had regard to, without placing decisive weight (PJ [288]) upon, the parties’ joint expert, Dr Jane Lonie (an experienced clinical neuropsychologist): PJ [324]. Dr Lonie’s evidence in her report and in cross-examination was that, at the time of making the 2013 Will, the deceased:

5. [39]

   The primary judge also held that there were reasons to doubt whether the deceased knew and approved the terms of the 2013 Will, noting that the deceased’s cognitive impairment, the fact that the will was explained to her in Yiddish and that she did not read over the 2013 Will, and the Appellant’s involvement in making the will including arranging for the deceased to see Mr Wermut and attending the execution meeting, “are matters that excite suspicion in this case”: PJ [337].

6. [40]

   In relation to the Statement of Reasons document of 17 September 2013, the primary judge found the Appellant’s evidence as to its creation to be inherently unlikely having regard to the objective evidence: PJ [46]. Later in her reasons, at PJ [327], the primary judge held that she did not consider that:

7. [41]

   More generally, the primary judge was critical of the Appellant’s evidence and its reliability. She pointed to his self-interest, adverse view about his brother’s entitlement to anything from their mother’s estate, inconsistencies in his evidence, the tailoring of aspects of his evidence and attempts to resile from aspects of his affidavit of 7 March 2023: PJ [45]-[48]. In making these adverse findings, the primary judge possessed all of the advantages of a judge at first instance referred to by the High Court in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [29] (Fox v Percy) and Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55] (Lee). To the extent that the primary judge’s findings were influenced by assessments of credit (and there were many matters of disputed fact as between the brothers such as their competing perceptions of their mother’s capacity, and the extent of their respective involvement with her over time), the primary judge’s advantage presents a significant hurdle for the Appellant on appeal, especially given her Honour’s positive view as to the evidence of the Respondent as generally more consistent with the objective evidence and the corroboration of that evidence by his two sons, Richard and Nathan, whose evidence was described by the primary judge as credible: PJ [49].

8. [42]

   The primary judge further held that the 2013 Will was the product of the Appellant’s undue influence over the deceased (PJ [349]), and that the deceased’s cognitive impairment was severe enough to compromise her day to day functioning, and that she was reliant upon the Appellant for care, rendering her “extremely vulnerable” to the Appellant’s influence: PJ [350]. Her Honour found that the Appellant likely initiated the making of the 2013 Will, and that, given the deceased’s cognitive impairment, it was unlikely that she would have instructed Mr Wermut to change her 1998 Will – other than by the Appellant’s insistence: PJ [352]. Furthermore, the primary judge found that the Appellant asserted a “moral command” over the deceased, as a consequence of which, “the deceased’s own will was likely overborne by Gregory and she did not make a free and fully informed decisions [sic] when she made the 2013 Will”: PJ [354]. Her Honour described this as representing “practical coercion”: PJ [354].

9. [43]

   Consequently, her Honour held that the deceased did not have testamentary capacity when she executed the 2013 Will, and admitted the 1998 Will to probate: PJ [520]-[521].

10. [44]

    The primary judge rejected the Appellant’s claims that the Respondent owed money to the deceased’s estate by virtue of a Deed of Loan, in the sum of $150,000; and a 2001 Repay Document, in the sum of $130,000.

11. [45]

    In respect of the Deed of Loan, the primary judge held that the document was not enforceable as a deed because it was not witnessed: PJ [374]-[376]. The document was also unenforceable as a contract for want of consideration: PJ [379]. This is because her Honour was not persuaded that the deceased ever lent $150,000 to the Respondent: PJ [380]. Rather, as the Respondent deposed, the deed was signed close to the date of his wedding because the deceased and the Appellant wanted to protect the “family equity” in case of divorce: PJ [360].

12. [46]

    In respect of the 2001 Repay Document, the primary judge found that there was a lack of objective evidence suggesting that the deceased ever paid $130,000 to the Respondent: PJ [381]. In any event, the claims under the Deed of Loan and 2001 Repay Document were statute barred (Limitation Act 1969 (NSW), s 14(1)(a)), and the latter claim was not pressed in the Third Amended Statement of Claim: PJ [107], [383].

13. [47]

    Her Honour accepted the Respondent’s claim that the Appellant owed $15,000 to the deceased’s estate: PJ [391]. This was because, from 5 to 11 September 2014, the Appellant transferred $25,000 from the deceased’s bank account to his own account: PJ [388]. While he repaid $10,000 (PJ [389]), there remained $15,000 outstanding: PJ [391].

14. [48]

    On 24 February 2022, Hallen J made an interim distribution order, advancing $250,000 from the deceased’s estate to the Appellant: PJ [418]. The Appellant sought further final provision on the basis that the 1998 Will provided that the deceased estate be shared equally between the Appellant and Respondent: PJ [394].

15. [49]

    The value of the estate at the time of the primary judgment was $1,652,231.89, taking account of fees, interest, and adding back the $250,000 interim distribution to the Appellant: PJ [420]. Under the 1998 Will, the Respondent and Appellant would be entitled to receive $826,115.95 each: PJ [422]. However, having regard to the interim distribution and the $15,000 owed to the deceased’s estate (see [47]-[48] above), the Appellant would be entitled to receive a sum of $561,115.95: PJ [422].

16. [50]

    The primary judge held that the 1998 Will made adequate provision for the Appellant, and that the deceased was not morally obliged to provide him a greater sum: PJ [513]. Her Honour had regard to various matters including:

    1. (1)

       the sum provided, while not large, was not insubstantial (PJ [514]);

    2. (2)

       the Appellant was unemployed (PJ [470]);

    3. (3)

       the Appellant, whilst caring for the deceased (PJ [457]), benefitted financially by living in the deceased’s Bondi unit rent-free (PJ [509]); and

    4. (4)

       the sum would enable the Appellant to obtain suitable accommodation in Tamworth (noting that he did not require acreage: PJ [450]), undertake dental treatment, acquire furniture and a car, and left a $220,000 buffer for contingencies in life which her Honour noted “he may use to set up a business if he desires” (PJ [514]); and

    5. (5)

       in relation to the so-called “buffer”, her Honour noted that the Appellant would have the figure of $220,000 “even assuming that he has already spent the entirety of the interim distribution made to him ($250,000) on his daily needs and his legal expenses” (PJ [514]).

17. [51]

    Given her Honour’s assessment of the adequacy of the provision made for him in the 1998 Will in view of the size of the estate, the primary judge rejected the Appellant’s family provision claim: PJ [515]. At PJ [516]-[519], the primary judge held:

18. [52]

    At first blush, her Honour’s rejection of the Appellant’s family provision claim on the basis of the adequacy of provision for him in the 1998 Will is a little difficult to reconcile with what is stated in PJ [518]. It may be that the apparent tension is resolved once it is recognised that the Respondent’s costs of a six day trial were said to be $132,220 (PJ [532]) which would need to be added to the notional $700,000 referred to at PJ [518] and subtracted from the Appellant’s notional $951,000, effectively equalising the distribution of the estate. In any event it is clear enough from the context that the “better view” which ultimately prevailed is that described in PJ [519], and not PJ [518].

19. [53]

    In what follows, the Appellant’s grounds of appeal, many of which overlapped and some of which were difficult to follow, are grouped together as coherently as those grounds permitted, and considered.

Grounds 1, 2 and 5: Pleadings issues

1. [54]

   The Appellant contended that what he described as the Respondent’s “dementing” defence to the 2013 Will was invalid as it relied upon what he described as a criminal jurisdiction concept, namely dementia, which he maintained was inapplicable to civil probate proceedings. In this context, it emerged that the Appellant was referring to the Mental Health and Cognitive Impairment Forensic Provisions Act 2020 (NSW) (Mental Health Act) and to the definition of cognitive impairment in s 5 of that Act, subsection 2 of which identifies dementia as one of the conditions from which the statutory concept of cognitive impairment may arise.

2. [55]

   In [2] of his Amended Defence, the Respondent did not admit the validity of the 2013 Will or that the 2013 Will was explained to the deceased “in a language which she understood or at all”, did not admit that she was capable of understanding it or any explanation of it, and did not admit that she was not unduly influenced by the Appellant in relation to it. Paragraph 2B of the Amended Defence provided that:

3. [56]

   Detailed particulars of [2B] of the Amended Defence were provided as follows:

4. [57]

   The Appellant argued that the pleading should have been struck out pursuant to r 14.28(1) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) for causing prejudice and delay. Furthermore, the Appellant contended that the primary judge “erroneously amended” the “dementing” pleading to “lack of testamentary capacity”, which was said to have given rise to procedural unfairness. Such arguments were directed to the primary judge’s references at PJ [7] and [14] to the fact that the Respondent “challenges the validity of the 2013 Will on various grounds, including lack of testamentary capacity”.

5. [58]

   The Appellant’s arguments were misconceived as to the ability of the Respondent to raise the deceased’s dementia or deteriorating mental state in its Amended Defence and were without merit insofar as he claimed to have been denied procedural fairness. There was no basis for [2B] of the Amended Defence nor the particulars subjoined to it to have been struck out (even putting to one side the fact that was never sought).

6. [59]

   As to the Appellant’s first point, the Appellant’s reliance on the Mental Health Act appeared to proceed on the flawed binary assumption that, because dementia was mentioned in s 5(2) of that Act, dementia could have no relevance to any legal question outside the operation of that Act. This was self-evidently wrong. Whether or not a testator has dementia at the time of executing a will, while not itself determinative, is routinely taken into account in assessing the testator’s legal capacity to execute a will: see, for example, Gooley v Gooley [2021] NSWSC 56 at [1136], [1142]-[1144].

7. [60]

   As to the Appellant’s claim to have been the subject of procedural unfairness, it was clear beyond argument that the question of the deceased’s testamentary capacity was at all material times in issue, and that the Appellant well understood that fact. This may be understood from at least the following matters. First, [2.3] of the Reply pleaded that the deceased had testamentary capacity and understood the 2013 Will. Secondly, the Appellant’s opening outline of submissions before the primary judge acknowledged that the issues in dispute included the deceased’s testamentary capacity, and made positive arguments, relying upon Mr Wermut’s affidavits and Dr Lonie’s report, as to why the deceased had the requisite capacity. Thirdly, in closing submissions (which took the form of annotations to the Respondent’s closing submissions, differentiated by the use of blue font, and made at a time when the Appellant was representing himself), the Appellant advanced various counterarguments under the heading “The primary case: testamentary incapacity in 2013”, including that “there is no evidence adduced that poor physical health did, or even could have influenced testamentary capacity”.

8. [61]

   Further, in the course of oral argument on appeal, the following exchange occurred:

9. [62]

   To the extent that the Appellant complained on appeal that the Respondent’s Defence was frivolous and an abuse of process insofar as it called into question the testamentary capacity of the deceased, it was plainly legitimate to do so, as the primary judge’s detailed and closely analysed judgment bore out. There was no obscurity or misunderstanding that that was the first and central question in the case, as the Appellant accepted in oral submissions.

10. [63]

    Even if there were any merit in the Appellant’s pleading points (which there is not), if parties fight their cases in a manner that departs from the pleadings in a way that does not excite protestation at the time, that departure cannot generally be the subject of legitimate complaint on appeal: Gould v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490 at 517; [1916] HCA 81; Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286-7; [1990] HCA 11; Betfair Pty Ltd v Racing New South Wales (2010) 189 FCR 356; [2010] FCAFC 133 at [50]-[52]; Cheng v Motor Yacht Sales Australia Pty Ltd t/as The Boutique Boat Company (2022) 108 NSWLR 342; [2022] NSWCA 118 at [24]; Nitopi v Nitopi (2022) 109 NSWLR 390; [2022] NSWCA 162 at [102]-[104]. There was no objection of the kind sought to be raised on appeal in relation to any claimed departure from the pleadings and there was no merit to these grounds of appeal.

11. [64]

    Insofar as ground 5 which was expressed as “Respondent’s 2B(2) plea lacked s 19(2) evidence”, for the reasons given at [73]-[80] below, s 19(2) of the Succession Act 2006 (NSW) (Succession Act) was not relevant. As far as the question whether there was evidentiary support for the primary judge’s conclusion as to the deceased’s lack of testamentary capacity, there was a wealth of such evidence, much of which has already been referred to in summary at [21] above.

12. [65]

    Before leaving this topic, it should be noted that the Appellant pointed out that he was “appealing self-represented” and emphasised his status as a layperson. He had also represented himself in final submissions before the primary judge, having parted with his solicitor who represented him on the first three days of the trial. Mr Chalik presented as an articulate advocate. He answered “Absolutely” when it was put to him that he knew about Banks v Goodfellow (1870) LR 5 QB 549 (Banks v Goodfellow) and said that he had read it many times.

13. [66]

    At one point in his oral submissions, the Appellant who, as has been seen, contended on appeal that parts of the Amended Defence should have been struck out at first instance on the basis that it was frivolous, said:

14. [67]

    Plainly enough, the Appellant, when represented, was bound by the actions of his legal representative. When unrepresented, the Court was not under an obligation of the kind referred to. In this context, we note that, in a recent judgment (MTH v State of New South Wales [2025] NSWCA 122 at [66]), Adamson JA has stated that:

15. [68]

    With respect to her Honour, this passage, in our view, significantly overstates a court’s responsibility to an unrepresented litigant and is far too absolute in its use of the expression “an obligation to ensure …”. Such a statement finds no support in the High Court’s decision in Nobarani v Mariconte (2018) 265 CLR 236; [2018] HCA 36 (Nobarani) referred to nor is it supported by the passage from the judgment of Samuels JA in Rajski v Scitec Corporation Pty Ltd (Court of Appeal (NSW), 16 June 1986, unrep) at 25 (Rajski) which was quoted with approval in Nobarani at [47]. That passage was as follows:

16. [69]

    The question of the extent, if any, of assistance which a trial judge or appellate court should afford to an unrepresented litigant in civil proceedings is nuanced and has been the subject of many intermediate appellate judgments of this Court since Rajski was decided almost 40 years ago. Those decisions have emphasised that an unrepresented litigant should be provided with sufficient information about the practice and procedure of the court to ensure a fair trial takes place: see, for example, Jae Kyung Lee v Bob Chae-Sang Cha [2008] NSWCA 13 at [48]; Jeray v Blue Mountains City Council [2010] NSWCA 153 at [14]. Even then, care must be taken not to disturb the balance which the rules of practice and procedure are designed to afford both parties: Mohareb v Saratoga Marine Pty Ltd [2020] NSWCA 235 at [39], citing Barton v Wright Hassall LLP [2018] UKSC 12; [2018] 1 WLR 1119 at [18] per Lord Sumption.

17. [70]

    In Bauskis v Liew [2013] NSWCA 297 at [69], Gleeson JA (Beazley P and Barrett JA agreeing) noted that the duty of a trial judge to assist an unrepresented litigant “does not extend to advising the litigant as to how his or her rights should be exercised. That is, it is not the function of the court to give judicial advice to, or conduct the case on behalf of, the unrepresented litigant”. In Cicek v Estate of late Solomon [2014] NSWCA 278 at [130], Ward JA (Meagher and Barrett JA agreeing) held that none of the cases her Honour had reviewed:

18. [71]

    Handley JA expressed similar views more than 20 years earlier in Rowett v Westpac Banking Corp [1993] NSWCA 240:

19. [72]

    See also Hamod v State of New South Wales and Anor [2011] NSWCA 375 at [315]-[316]; Moleirinho v Talbot & Olivier Lawyers Pty Ltd [2014] WASCA 65 at [51]; Stone v Braun [2015] WASCA 103 at [62]-[69] per Beech J, Buss and Mazza JJA agreeing; Zerjavic v Chevron Australia Pty Ltd [2020] WASCA 40 at [74]-[75]. More recently, in Mendonca v Legal Services Commissioner [2020] NSWCA 84 at [21] McCallum JA (Basten and Leeming JJA agreeing) observed that “the Court is not required to undertake a partisan analysis of lengthy, unstructured assertions and misconceptions with a view to ensuring that a self-represented litigant has not missed some arguable point”.

Grounds 3 and 13: Testamentary capacity and s 19 of the Succession Act

1. [73]

   The Appellant made numerous references in his written and oral submissions to s 19(2)(b) of the Succession Act, submitting that the primary judge erred by failing to apply, or alternatively misapplying, the section when assessing the deceased’s testamentary capacity. The Appellant contended that s 19(2) constitutes the “necessary statutory evidence to establish” a lack of testamentary capacity.

2. [74]

   What was meant by “the necessary statutory evidence” was not made clear although, as emerged in his oral address, it appeared that he was submitting that s 19(2), because it referred to testamentary capacity, meant that common law cases such as Banks v Goodfellow and the myriad cases that have applied it, had no continuing relevance in cases conducted after the commencement of the Succession Act.

3. [75]

   Section 19(2) of the Succession Act lists the information which must be provided to the Court where an application is made under s 18 of the Act. Section 18 relates to the Court’s power to make an order authorising a will to be made or altered on behalf of a person who lacks testamentary capacity: Succession Act, s 18(1)(a). Section 19 of the Succession Act provides:

4. [76]

   The Appellant submitted that the passage of s 19(2) of the Succession Act was in effect a statutory replacement or modification of Banks v Goodfellow just as s 140(2) of the Evidence Act 1995 (NSW) (Evidence Act) was a statutory replacement of the common law rule in Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34. He acknowledged that the courts had for many years since the passage of s 19 of the Succession Act continued to apply Banks v Goodfellow but submitted, ambitiously, that they had been wrong to do so. The Appellant in this context also sought to rely upon s 42(1) of the Interpretation Act 1987 (NSW) (Interpretation Act) and r 94 of the Supreme Court Rules 1970 (NSW) (Supreme Court Rules) but in a way which, with respect, was not possible to follow or understand.

5. [77]

   As with his reliance on the Mental Health Act (see [59] above), the Appellant’s reliance upon s 19(2) of the Succession Act, s 42 of the Interpretation Act and his related submission in relation to Banks v Goodfellow, was wholly misplaced. Furthermore, and as the Respondent submitted (and the Appellant in fact accepted), the argument based upon ss 18 or 19 of the Succession Act, s 42 of the Interpretation Act and r 94 of the Supreme Court Rules was not advanced at first instance.

6. [78]

   This case was not concerned with an application under s 18 of the Succession Act. Nor did the proceedings engage r 94 of the Supreme Court Rules, which outlines the general functions of the registrar – making oblique reference to the Succession Act. In any event, apart from the reference in s 19(2)(b) to “satisfactory evidence of the lack of testamentary capacity of the person in relation to whom an order under section 18 is sought”, s 19 in fact offers no guidance as to what would constitute such satisfactory evidence. It is in the vast body of case law that guidance is to be found as to what evidence may be relevant to establishing the existence or absence of testamentary capacity.

7. [79]

   Section 19(2) of the Succession Act provides a non-exhaustive checklist of what the Court will normally require before granting leave under s 19(1) to make an application to the Court for an order under s 18 of the Act: Re Fenwick; Application of JR Fenwick; Re Charles (2009) 76 NSWLR 22; [2009] NSWSC 530 at [123] (Fenwick). Referring to s 19(2)(b), Palmer J said that “[a]s to the lack of testamentary capacity, the test is, obviously, that enunciated in Banks v Goodfellow” and that, absent urgency or some other compelling reason, an applicant for leave “should provide the best evidence available in the circumstances as to lack of testamentary capacity”: at [126].

8. [80]

   Section 19(2) was not relevant to the primary judge’s consideration of the deceased’s testamentary capacity, and her Honour did not err in failing to advert to it. Her Honour applied the well-established principles for assessing testamentary capacity in Banks v Goodfellow consistent with recent authority of this Court such as Photios v Photios [2019] NSWCA 158; (2019) 372 ALR 264 at [8], Lim v Lim [2023] NSWCA 84 at [7] (Lim) and Anderson v Yongpairojwong [2024] NSWCA 220 (Anderson). Her Honour’s analysis and conclusions were expressed by reference to those principles.

9. [81]

   Although it was not entirely clear under what ground of appeal the argument fell, the Appellant also advanced the oral submission that the meaning of capacity in the expression “testamentary capacity” should be derived from s 13 of the Evidence Act. That section, however, is concerned with the competency of a person to give evidence in court proceedings. It is not concerned with and has nothing to say about a person’s capacity to execute a will.

Grounds 4, 6, 7, 8 and 9: Use of evidence

1. [82]

   The Appellant, by ground 4 of his Further Amended Notice of Appeal, argued that the primary judge erred in admitting the 30 August 2011 clinical note of Dr Day which included the notation “?dementia” in relation to the deceased.

2. [83]

   The terms of the clinical record were as follows:

3. [84]

   The primary judge rejected the Appellant’s criticism of the notation, dealing with arguments that were, in some part at least, repeated on appeal:

4. [85]

   The Appellant contended that the medical note was irrelevant to the deceased’s capacity to give instructions to Mr Wermut on 17 April 2013, that it was hearsay evidence and was influenced by an allegedly fraudulent misrepresentation made by the Respondent to Dr Day. The 2011 medical note was said to be irrelevant as it was unrelated to the deceased’s capacity give instructions in April 2013.

5. [86]

   The note was plainly relevant as part of the overall corpus of medical evidence that was admitted and which bore upon the ultimate question of the deceased’s testamentary capacity. Indeed the note was referred to in the instructions to the jointly appointed Court expert, Dr Lonie. The Appellant’s argument appeared to be influenced by a misconception that, because the question of testamentary capacity is a legal question as opposed to a medical one (which correctly reflects well-established principle: see, for example, Zorbas v Sidiropoulous (No 2) [2009] NSWCA 197 at [65] (Zorbas), Croft v Sanders [2019] NSWCA 303 at [24]), medical evidence is not relevant to the question of testamentary capacity. This binary position, which was also reflected in ground 6 of the Further Amended Notice of Appeal, is not correct.

6. [87]

   In Zorbas at [65], in a passage that has been cited on many occasions, Hodgson JA (with whom Young JA and Bergin CJ in Eq agreed) observed:

7. [88]

   The significance of medical evidence for the judicial determination of testamentary capacity depends on the circumstances of each case. Medical evidence obtained after death is often to be given comparatively less weight. In this Court’s relatively recent decision in Wild v Meduri [2023] NSWCA 230 at [213] the following statement from Revie v Druitt [2005] NSWSC 902 at [34] was quoted with approval:

8. [89]

   In Fenwick, Palmer J described the best evidence as to testamentary capacity in the context of non-urgent applications for leave under s 19 of the Succession Act:

9. [90]

   Of course, in cases where a testator’s testamentary capacity is only an issue after their death, a specialist expert will invariably not have had the opportunity of examining the deceased whilst alive (unless they were a treating specialist) and must necessarily draw on underlying medical records, as was done, for example, in Wild v Meduri. The significance of expert evidence will vary with the facts of each case: see, for example, Anderson at [87]-[103], [138]-[145].

10. [91]

    Just as medical evidence will not be determinative, the same may be said of evidence of a solicitor who witnessed the execution of the disputed will. This is discussed in more detail in the context of Mr Wermut’s evidence at [94]-[102] below.

11. [92]

    As to the suggestion that what the Respondent is recorded as having told Dr Day was fraudulent, this submission must be rejected as it was by the primary judge. It was not put to the Respondent in cross-examination, and no proper basis was advanced in support of this characterisation. What Dr Day recorded in the note reproduced at [83] above was a reference to a son responding to a doctor’s inquiry about his mother’s medical history and condition more than a decade prior to her death, just as the note in question recorded that the doctor had also spoken to the Appellant. That what the note recorded did not support the Appellant’s argument as to his late mother’s testamentary capacity did not warrant or justify its characterisation as fraudulent in his submissions.

12. [93]

    Nor did the note constitute inadmissible hearsay evidence. The Respondent gave evidence and was able to be cross-examined about what was attributed to him in the doctor’s note, but he was not so cross-examined. The Respondent also issued a hearsay notice in advance of the trial under s 67 of the Evidence Act, notifying intended reliance on the note.

13. [94]

    By ground 7, the Appellant contended that the primary judge erred in rejecting Mr Wermut’s evidence, despite him being the “only and most reliable and relevant witness”. Mr Wermut was not the only relevant witness. This characterisation was reflective of the Appellant’s rigid (and incorrect) view that, because the question of testamentary capacity was a legal one, medical and other evidence was not relevant to that question. The reasons for why this understanding was wrong have already been explained.

14. [95]

    The primary judge’s detailed reasons for treating Mr Wermut’s evidence in the way that her Honour did have been set out in full at [37] above.

15. [96]

    That the evidence of a solicitor is not determinative but a matter of weight may be seen in any number of cases. In Chant v Curcuruto [2021] NSWSC 751 at [749] (Chant), for example, Hallen J held that:

16. [97]

    In Chant, the Court rejected the solicitor’s (Ms Blackadder) evidence, and noted that the solicitor failed to consider “red” flags”:

17. [98]

    In Ryan v Dalton [2017] NSWSC 1007 at [6], Kunc J found that the deceased lacked testamentary capacity, rejecting the solicitor’s evidence to the contrary:

18. [99]

    In Lim at [84], the solicitor’s (Mr Lee) assessment of capacity was given “limited weight”:

19. [100]

    No basis was established to reject the primary judge’s careful findings with regard to Mr Wermut’s evidence. We agree entirely with her Honour’s observation that it is difficult to see how he could have properly satisfied himself that the deceased had testamentary capacity when one of the first things she said to him was that she did not know why she was there: PJ [316].

20. [101]

    Further, in dealing with the undue influence case, her Honour formed “the strong impression” that whatever the deceased said to Mr Wermut, however “fixed and firm” her views may have appeared to him, “did not represent her own free and independent decision”: PJ [352]. This conclusion was plainly open to the primary judge and was “likely to have been affected by impressions about the credibility and reliability of witnesses formed by [her Honour] as a result of seeing and hearing them give their evidence”: Li v Tao (2023) 113 NSWLR 131; [2023] NSWCA 310 at [34]. Her Honour’s conclusion, as with her other findings, were scarcely “glaringly improbable” or “contrary to compelling inferences” so as to warrant appellate intervention: Fox v Percy at [29]; Lee at [55].

21. [102]

    The Appellant submitted that Mr Wermut could draw upon his interaction with the Appellant a number of years prior to 2011 for the purposes of satisfying himself as to the deceased’s testamentary capacity. That submission overlooked the fact that the question of testamentary capacity must be determined as at the date of the execution of the will, and a solicitor cannot rely upon the way a testator may have presented a number of years earlier to satisfy him or herself as to the testator’s capacity at the time of execution. Indeed, under cross-examination, Mr Wermut candidly accepted that in giving answers about his perceptions of the deceased’s mental capacity, he may have conflated the two meetings in April 2013 with a meeting in 2011, where the deceased granted the Appellant a power of attorney: PJ [319].

22. [103]

    Ground 8 of the Further Amended Notice of Appeal, with respect to the Appellant, is very difficult to understand. It was to the effect that “Henry J erred in law by excluding s 32 Evidence Act 1995 (NSW) which governs testatrix’s revived memory, claiming it as indicator of ‘lack of testamentary capacity’ [295] and dismissing solicitor’s recollection”. Section 32 of the Evidence Act is concerned with attempts to revive the memory of a witness in court. The testatrix was dead and self-evidently not giving any evidence in Court. Section 32 was not raised in the course of the trial and was not relevantly applied by the primary judge at all.

23. [104]

    The Appellant also asserted by ground 9 that the primary judge erred in considering Dr Lonie’s report because “she was not an impressive witness”; did “not clearly articulate her reasons”; did “not apply scientific methodology to the MMSE scores”; and failed to comply with the expert witness code of conduct because there was no cl 3(1)(i) declaration included in the report. Such a declaration confirms that the expert made all inquiries which the expert believed were desirable and appropriate.

24. [105]

    The Appellant further argued that Dr Lonie failed to inform the Court about the deceased’s UTI symptoms which merely resembled advanced dementia. Arguments concerning the UTI were rejected by the primary judge at PJ [293]-[294], as extracted above at [84].

25. [106]

    The primary judge had earlier held at PJ [52] that:

26. [107]

    The primary judge was best placed to make this assessment. Having reviewed Dr Lonie’s report and her cross-examination, there is no reason to doubt the primary judge’s assessment. It follows that ground 9 should also be rejected.

Grounds 10 and 11: Validity of the 1998 Will

1. [108]

   The Appellant contended that the primary judge erred in finding that the 1998 Will was valid on the basis that: (i) the deceased did not understand the law relating to wills at the time of making the 1998 Will; and (ii) her Honour upheld the 1998 Will in the absence of evidence adduced pursuant to s 19(2) of the Succession Act. The second contention can be dismissed for the reasons outlined above at [73]-[80].

2. [109]

   The Respondent argued that there was no challenge to the validity of the 1998 Will at trial. Rather, as the primary judge held at PJ [17]:

3. [110]

   The Appellant disputed this, suggesting that the primary judge erred at PJ [17], and that he did in fact challenge the validity of the 1998 Will. The Appellant’s opening written submission at first instance provided:

4. [111]

   The Appellant also relied upon the following exchange between his legal representative, Mr Adamson, and the primary judge on the first day of the trial:

5. [112]

   On the third day of the trial, however, Mr Adamson had made it clear that there was no challenge to the validity of the 1998 Will:

6. [113]

   The primary judge was fully entitled to proceed on the basis of what she had been told by Mr Adamson and was entirely correct in her statement at PJ [17], extracted above at [109].

7. [114]

   It should be observed at this point that, in the course of his oral submissions in this Court, the Appellant, who represented himself, made a number of complaints about his former legal representative who appears to have ceased acting for him at some stage after the third day of the trial on 27 April 2023. The trial resumed for closing submissions which were heard on 24 May, 6 and 26 July 2023. These complaints were not relevant to the issues before the Court. The Appellant was bound by the actions of his legal representative in the proceedings and the Court is entitled to proceed on the basis that the legal representative was acting on the basis of instructions. Any issue the Appellant has with his former legal representative has not properly been raised before this Court.

Ground 12: Fiduciary duty

1. [115]

   The Appellant argued that the primary judge erred in failing to find that the Respondent breached his fiduciary duty by concealing from the Court a debt in the form of the 2001 Repay Document. The concealment was said to have occurred due to the Respondent omitting to mention in his defence that he had failed to repay the debt recorded in the 2001 Repay Document.

2. [116]

   The Respondent contended that no argument based upon a breach of fiduciary duty was advanced at first instance, and it was inappropriate to advance it on appeal. That submission is undoubtedly correct and must be accepted.

3. [117]

   Furthermore, the 2001 Repay Document was found by the primary judge to not be binding on the Respondent, and the Appellant was statute barred from relying upon it.

Conclusion

1. [118]

   For the foregoing reasons, the Appellant’s appeal must be dismissed. In doing so, it may also be noted that, except possibly insofar as they included challenges to findings of fact, none of the Appellant’s grounds of appeal, as we understood them, entailed a challenge to the primary judge’s finding that the validity of the 2013 Will was impugned by her Honour’s finding of undue influence. Those findings would have had to be successfully challenged to result in the appeal being upheld even if other grounds of appeal had succeeded.

2. [119]

   The Appellant should pay the Respondent’s costs of the appeal.

Application for leave to appeal with respect to costs

1. [120]

   The Respondent sought, by summons filed on 6 September 2024, leave to appeal to challenge the costs judgment by reference to one ground:

2. [121]

   As noted at [4] above, the costs judgment was made by Slattery J as a result of the primary judge having retired before it was appropriate to draw attention to the existence and rejection of a Calderbank letter and formal offer of compromise. The primary judge in the principal judgment had ordered, without hearing from the parties on costs, that each party should bear their own costs from the amount which they would receive from the deceased’s estate: PJ [534]. Her Honour said at PJ [533] that:

3. [122]

   On 9 August 2024, Slattery J varied the primary judge’s costs order, and made a gross sum costs order that the Appellant pay the Respondent’s costs in the sum of $40,000: CJ [55(1)]. This sum represented less than a quarter of the Respondent’s disclosed costs and disbursements. His Honour noted that the primary judge’s concerns about making a costs order against the Appellant (PJ [533]) remained “potent” but needed to be weighed against new information concerning offers of compromise, of which the primary judge was unaware: CJ [48].

4. [123]

   The primary judge’s reference in PJ [533] to a “buffer for contingencies in life” was a reference back to PJ [513]-[515] where her Honour, in rejecting the Appellant’s family provision claim, said:

5. [124]

   It is not uncommon for judges, in family provision cases, to refer to a buffer for contingencies: see, for example, Limberger v Limberger [2021] NSWSC 474 at [473(c)] in which Hallen J held that “where a child, even an adult child, falls on hard times and where there are assets available, then the community may expect parents to provide a buffer against contingencies”. Such a buffer, in the “absence of specific potentialities being established by proper evidence”, generally reflects a relatively modest sum which is “rarely in six figures”: Oliveira v Oliveira [2023] NSWSC 1130 at [12]; Steinmetz v Shannon (2019) 99 NSWLR 687; [2019] NSWCA 114 at [101]. A “buffer” is not a term of art. It may simply be understood as part of an award for provision which the recipient is at liberty to spend or retain in the event of contingencies: see, for example, Porthouse v Bridge [2007] NSWSC 686 at [33]; see also Papantoniou v Foundouradakis [2023] NSWSC 1374 at [267].

6. [125]

   What her Honour was doing in [514] was not determining a claim for family provision per se but, rather, noting what the Appellant had been left as a result of the 1998 Will and the size of the estate in light of what he had identified as his future needs. Her Honour identified that after specified needs had been taken into account, the Appellant had the benefit of the $250,000 the subject of the interim distribution as well as a further $220,000. Her Honour noted that the Appellant may choose to use part of this to establish a business. That would be a matter for the Appellant, just as it was a matter for the Appellant to choose to use his funds to pursue litigation against his brother.

7. [126]

   It is important to note that the primary judge’s observations at PJ [533] were made without knowledge of a Calderbank offer which had been made prior to the commencement of proceedings and a formal offer of compromise which had been made almost a year before the trial commenced. Whether her Honour would have indicated the impact of an adverse costs order in the way she did in PJ [533] had she known of such offers and their rejection is a matter of speculation but, given the discretionary nature of the power to award costs, it is highly likely that the rejection of the offers would have been material.

8. [127]

   In Bassett, this Court observed at [198] that:

9. [128]

   Similar reasoning to Bassett was employed in Coss v Norman (No 2) [2021] NSWSC 1490 where Parker J held that:

10. [129]

    The primary judge’s observation at PJ [533], reproduced at [121] above, and the reference to the impact of a costs award on her “ultimate decision” appears to be a reference to her Honour’s decision to reject the Appellant’s family provision claim. In other words, her Honour appears to have been saying that a potential liability for costs would mean that the availability to the Appellant of discretionary spending money – what her Honour referred to as a buffer – would be reduced. This observation of her Honour was central to Slattery J’s decision to depart from the usual consequences of an unreasonable rejection of informal and formal offers to compromise proceedings.

11. [130]

    Before turning to his Honour’s reasoning, it is necessary to turn to the terms of the offers of compromise and to notice the important policy considerations that inform the usual consequences attending the unreasonable rejection of such offers.

12. [131]

    The Respondent made two offers to resolve the dispute, one made in September 2021 and a second in June 2022, some 10 months before the commencement of the trial. Slattery J held that these were unreasonably rejected by the Appellant: CJ [42], [47], [50]. No challenge was made to this finding.

13. [132]

    The first was a Calderbank letter dated 17 September 2021, issued prior to the commencement of proceedings, in which the Respondent’s solicitors “clearly explained” that the deceased lacked testamentary capacity, and that the deceased’s capacity was vitiated by the Appellant’s undue influence: CJ [17], [41]. The letter offered $20,000 in exchange for the Appellant supporting the 1998 Will, but was rejected by the Appellant: CJ [17]. Slattery J held at CJ [42] that:

14. [133]

    Secondly, the Respondent made an offer of compromise by letter dated 15 June 2022, following directions by the Court for the parties to exchange offers: CJ [19]. The Appellant offered to split the estate by having the 1998 Will admitted to probate, discontinue his claim relating to the $15,000 debt owing by the Appellant to the estate, and to bear his own costs: PJ [16]. Slattery J held at CJ [47] that:

15. [134]

    Slattery J used the language of UCPR r 42.15 (see CJ [43]), however it may be that the appropriate reference was UCPR r 42.15A because it was the Respondent who obtained judgment, and so the question should have been whether the judgment obtained by the Respondent was no less favourable than the offers made. Nothing in substance turns on this matter.

16. [135]

    The costs consequences for rejection of offers of compromise and Calderbank letters are well-established. The purpose for the rules concerning offers of compromise and Calderbank letters include (Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724):

17. [136]

    UCPR r 42.15A provides that, where a defendant’s formal offer of compromise is unreasonably rejected by the plaintiff, and the defendant obtains judgment which is no less favourable than the terms of the offer, then, “unless the court orders otherwise”, the defendant is entitled to: (i) costs on the ordinary basis up to the time that the offer was made; and (ii) costs on an indemnity basis thereafter. Satisfaction of the elements in UCPR r 42.15A therefore creates a “prima facie entitlement to indemnity costs” from the date of the offer: Leach v Nominal Defendant (QBE Insurance (Australia) Ltd) (No 2) [2014] NSWCA 391 at [40] (Leach); Houghton v Potts (No 3) [2023] NSWSC 69 at [16]. The unsuccessful party bears the onus of persuading the Court that indemnity costs should not be ordered: Leach at [29]; Snowy Mountains Grammar School Ltd v Adventurer AWD Pty Ltd [2022] NSWSC 53 at [4].

18. [137]

    In contrast, where a plaintiff rejects a Calderbank letter, and the defendant obtains judgment which is no less favourable than the terms of the offer – the offeror is not presumptively entitled to indemnity costs: Valmont Interiors Pty Ltd v Giorgio Armani Australia Pty Ltd (No 3) [2021] NSWCA 160 at [23]-[24]. Rather, as the Court held in Stewart v Atco Controls Pty Ltd (in liq) (No 2) (2014) 252 CLR 331; [2014] HCA 31 at [4]:

19. [138]

    Returning to the costs judgment in the present case, Slattery J was in the difficult position of having to exercise a discretion without having presided at the trial which had run for some six days. The discretion which inheres in the power to award costs will usually be informed by the knowledge of the judge who has presided over the trial. His Honour, because of the unusual circumstances in which he came to hear the costs application, did not enjoy this usual advantage.

20. [139]

    His Honour correctly noted that, usually, the rejection of a Calderbank letter or offer of compromise produces a “clear outcome of indemnity costs after the offer”: CJ [48]. Nonetheless, his Honour held that “the judicial exercise of the Court’s cost discretion still requires some constraints on giving full effect to” the Appellant’s letter and offer of compromise: CJ [48].

21. [140]

    Slattery J at CJ [49] referred to the primary judge’s concern expressed at PJ [533], and outlined above at [121], that any costs order would reduce the Appellant’s “buffer for contingencies”. His Honour held that:

22. [141]

    Having regard to the fact that the Respondent’s costs were $187,526, Slattery J made a gross sum costs order of $40,000, pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW): CJ [53]-[54].

23. [142]

    Slattery J’s decision is challenged on a number of bases, as set out in [120] above.

24. [143]

    His Honour’s decision was plainly powerfully influenced by what the primary judge had said at PJ [533]. That statement was, however, made without any knowledge on her Honour’s part of the two offers of compromise. It also appeared to be influenced by a view that the Appellant had some entitlement to the so-called buffer for contingencies. We agree with the Respondent’s observation that there was something of a conceptual conflation in this language. In using the expression, her Honour was in truth describing the residue that would be left over after he had spent part of his inheritance on accommodation, transport and discharging existing obligations. That amount was able to be used at his discretion. In no sense was it “allocated” by the Court as a result of the primary judgment. Slattery J’s use of the expression “unallocated buffer” may be subject, with great respect, to the same criticism.

25. [144]

    Any amount awarded, whether or not characterised as a “buffer”, is available for its recipient to use as he or she pleases. If that be in pursuing litigation as opposed to a business, the risks of failed litigation or a failed business are no different. Those risks are known, and not unforeseen or unforeseeable contingencies.

26. [145]

    In Haertsch v Whiteway (No 2) [2020] NSWCA 287 (Haertsch), this Court held that:

27. [146]

    In the present case, the primary judge held that the claim for family provision was not reasonable because the 1998 Will adequately provided for the Appellant. Secondly, there was no suggestion that the Appellant would be rendered impecunious in the event that costs were ordered against him. Thirdly, what this Court said in Haertsch was not said in the context of offers of compromise having been made.

28. [147]

    We respectfully disagree with Slattery J’s observation that “[t]he Calderbank letter and the offer of compromise do change the discretionary costs landscape slightly in [the Respondent’s] favour” (emphasis added). The unreasonable rejection of the formal offer of compromise, under the UCPR, operated presumptively to entitle the Respondent to indemnity costs. Both it and the Calderbank letter set out clear reasoning as to the basis of the offers. The Amended Defence which had been filed was very fully particularised, as may be seen in [56] above. This was a case where there was not one but two reasonable settlement offers made and rejected, one prior to the commencement of proceedings and one well prior to the commencement of the hearing. Further, whatever liberality of approach may obtain in relation to the question of costs to family provision claims, in the present case, the principal fight was as to the deceased’s testamentary capacity and the disputed loan claims. On these issues, the Respondent was wholly successful.

29. [148]

    It should also be noted that Slattery J’s decision to award a gross costs sum of $40,000 would result in the Respondent having unrecovered costs of almost $150,000, thereby eroding almost 20% of his inheritance in circumstances where his brother had unreasonably rejected offers and was found to have exercised undue influence over their late mother in the execution of the 2013 Will.

30. [149]

    In these circumstances, leave to appeal should in our opinion be granted and the appeal allowed in relation to the costs judgment.

31. [150]

    The Respondent submitted that, for simplicity’s sake, he sought 70% of the $187,526 costs incurred by the Respondent:

32. [151]

    In our view, there is merit in awarding a gross sum. The Court had before it material supporting the figure of $187,526 as having been expended in the proceedings below. The Respondent should be awarded costs of $130,000, being approximately 70% of the actual costs incurred.