The Estate of Nelly Mary Aston; The Estate of Riley Davis Aston

This is the second judgment in these two proceedings, which respectively concern the estate of the late Nelly Aston (Proceedings 2015/381877) (“the 2015 proceedings”) and the estate of the late Riley Aston (Proceedings 2020/140143) (“the 2020 proceedings”). The first judgment in both proceedings was given on 28 June 2024: The Estate of Nelly Mary Aston; The Estate of Riley Davis Aston [2024] NSWSC 804 (“the first judgment”). In the first judgment, the Court declared that the estate of the late Nelly Aston owes the sum of $275,000 to the estate of Riley Aston.

This judgment should be read with the first judgment and assumes that the reader is familiar with the first judgment. Events, matters and persons are referred to in both judgments in the same way. The principal actors in these proceedings were members of the same family and referred to one another by their first names. Without intending disrespect to any person, for convenience, the Court continues to adopt the same convention in these reasons.

In the first judgment, the Court left the issue of costs for later determination, but the Court directed the parties to provide oral arguments abouts costs consequent upon the reasons in the first judgment: first judgment at [47(2)]. The Court’s hope that costs could be dealt with quickly and efficiently by oral submissions was not realised. The parties wanted to put more complex submissions concerning costs in writing and the Court acceded to that course.

The issue determined in the first judgment arose out of a Motion that Anne brought against Ric filed on 27 June 2023 (“the June 2023 Motion”). In the June 2023 Motion, the moving party, Anne, describes herself as “the plaintiff” and Ric as “the defendant”. This incorrect nomenclature has intermittently persisted in the written submissions, although the procedurally correct description of the parties is “applicant” and “respondent”.

Anne had brought a previous motion against Riley on 6 December 2017 (“the December 2017 Motion”). The present costs contest between the parties included disputation about the costs that had been incurred prior to the filing of the June 2023 Motion, although there was no claim for recovery of those earlier costs.

Ric was successful on the June 2023 Motion in the first judgment. He now seeks his costs on the indemnity basis from the service upon him on 10 July 2023 of the June 2023 Motion. Anne contends that these costs should be borne by the estate.

In the alternative, Anne argues that she should only pay the costs associated with Ric’s preparation for and the appearance at the hearing on 26 April 2024, on the basis that the Court considerably narrowed the issues for determination at the hearing on 26 April and that Ric’s success only relates to those issues. In the alternative, Anne disputes what she claims are disproportionately high costs that Ric has incurred in defending her claim.

Unfortunately, this costs dispute has become as contentious as the contest out of which it arose. This means it is necessary to give a brief procedural history of the two Motions.

2017 Notice of Motion. Anne filed her December 2017 Motion in the 2015 proceedings, which related to Nelly Aston’s estate. The December 2017 Motion was filed after Nelly’s executor, her son David, died in 2017. The December 2017 Motion sought an order that David’s son, Riley, file and pass accounts in Nelly’s estate.

On the December 2017 motion the Court ordered, on 26 February 2018, Riley to file and serve accounts in Nelly’s estate by 5 March 2018. Riley did not comply with these orders. Between March 2018 and March 2019, Riley incurred significant costs in attempting to prepare and pass the ordered accounts.

On 11 February 2019, Riley filed answers to requisitions from the Court. The Registrar of the Court responded by email on 8 March 2019, identifying that the key issue in dispute between these parties was the inventory of the property of Nelly’s estate (namely a contest about what were the assets and liabilities of the estate) and that a Motion to file, verify and pass accounts does not address that issue. The Registrar said the following:

The Registrar’s communication to the parties was both clear and correct in law. The passing of accounts is essentially an auditing process and does not determine testing questions as to estate property. The Registrar reiterated this fundamental distinction to the parties in several other communications. Much of the contest that has occurred between these parties since March 2019 has resulted from the inexplicable failure of the parties to respond to this clear advice from the Registrar. As will be seen, it was only when the Court took control of this unfortunate situation in April of this year in the Probate list that the parties were directed back to address the very issue which the Registrar had raised five years earlier, in March 2019.

The Registrar nevertheless dealt with the passing of accounts issues that had been presented. The Registrar refused to pass accounts on the basis that Riley had not taken the necessary procedural step of filing an affidavit of additional assets to rectify certain differences between the inventory of property filed with the Grant of Probate in Nelly’s estate and the accounts submitted for filing. The Registrar informed the parties that the Registrar would not consider the accounts further until after 5 April 2019, by which time any affidavit of additional assets was to be filed and served. This was done by 22 March 2019.

The Registrar repeated her correct advice, which fell upon deaf ears. On 11 April 2019, the Registrar wrote to the parties advising that it had considered the affidavit of additional assets sworn by Riley, noted deficiencies in the explanation provided and reemphasised that the dispute before the Court was primarily about assets, which would not be resolved through the accounts process. Notably, the Registrar said:

The Court ultimately determined it would refuse to pass the accounts or consider them further until the issue of the estate’s assets had been resolved because, as had been apparent since the first requisitions, “the orders sought [would] not resolve the asset dispute. If the parties [sought] to have the issue of estate assets resolved one of them would need to file an appropriate application to the Court for determination.”

Nothing was done by either party to act upon the Registrar’s communication to facilitate determination of the real issue dividing these parties concerning the assets of Nelly’s estate, the issue ultimately determined in the first judgment.

2023 Notice of Motion and Subpoenas. Following Riley’s death in April 2020, Ric applied for a grant of probate of Riley’s will (the 2020 proceedings). Probate of Riley’s will was not granted until September 2021 following requisitions in relation to the circumstances of Riley’s death.

In January 2023, Anne applied for a copy of Riley’s will. And in June 2023, she filed the June 2023 Motion in the 2020 proceedings, seeking that Ric verify, pass and file the accounts of Nelly’s estate.

On 21 July 2023 at the first return date of her 2023 Motion, Anne sought and was granted leave to issue subpoenas to Gokani & Associates Legal (GAL) and Ric, seeking production of bank statements and other financial records documents which were related to the estates of Nelly, David and Riley. Anne was also granted leave to issue a subpoena to Commonwealth Bank of Australia (CBA). These subpoenas were issued on 1 August 2023.

Rather than seek to set aside the subpoenas addressed to them, Ric and GAL produced documents and attempted to respond to the subpoenas by letter and later claimed privilege over some of the documents they produced. CBA produced and general access was recorded on 18 August 2023.

On 13 October 2023, Lindsay J noted that the parties proposed to have informal discussions about the nature of dealings with the estate of Nelly and related matters with a view to resolving their disputes. Following this, on 17 October 2023, Trivett Keating, the solicitors for Anne, wrote to GAL as follows:

On 23 October 2023, GAL caused the following reply letter to be sent:

This did not appear to have satisfied Trivett Keating, as they continued with the June 2023 motion.

After several directions hearings in 2023, the matter came again before the Probate list in early 2024, when the Court indicated to the parties that it would deal, at a single final hearing, with the central issue dividing them that became the subject of the first judgment.

After the first judgment, parties filed detailed written submissions as to costs. It is necessary to set those submissions out in summary, commencing with Ric’s submissions and then dealing with Anne’s response. The Court’s analysis appears throughout.

Ric submits that Anne should pay his costs of the June 2023 motion on the indemnity basis. He identifies nine discretionary factors that he contends show that Anne conducted herself so unreasonably in relation to the June 2023 motion that the Court is now warranted in making an indemnity costs order in his favour from the date of filing of the 2023 Motion. Anne’s submissions in reply and Ric’s nine discretionary factors are discussed below followed by the Court’s analysis of these factors.

Ric submits that he made reasonable offers to resolve the proceedings which Anne rejected. One of these included what was claimed to be an offer in August 2017, made prior to the filing of the 2017 Motion. It is difficult to understand how offers made in 2017 could bear upon the awarding of costs on the motion filed in 2023. But the argument was put and is considered.

Ric’s submissions on this factor start with Trivett Keating’s letter to GAL dated 15 August 2017, which relevantly stated:

On 29 August 2017, GAL sent two letters in reply to Trivett Keating which indicated that they would comply with Anne’s request and the matter would be resolved. The first letter advised that they anticipated forwarding Anne’s final distribution and the requested accounts of Nelly’s estate by the end of the week to Trivett Keating and requested their trust account details in anticipation of this. The second letter enclosed the estate accounts and requested confirmation that Anne agreed with the accounts so that the final distribution of $114,942.05 could be made. Anne’s confirmation was not provided.

On 31 August and 11 September 2017, GAL telephoned Trivett Keating’s offices and left messages seeking Anne’s confirmation that the accounts were acceptable. On 11 September, Trivett Keating acknowledged receipt of these messages but did not provide confirmation as to the correctness of the accounts.

On 22 September 2017, following the death of David, GAL sent an email to Trivett Keating seeking GAL’s prompt response to the previous correspondence. Trivett Keating replied shortly afterwards confirming that Anne did not approve the accounts and further correspondence would be forthcoming the following week.

None of this correspondence contains a formal offer of settlement. Rather it is merely correspondence exchanged between parties discussing possible settlement terms. Nothing in these pre-2017 Motion communications stated that if the distribution was paid, proceedings would not be commenced. None of the correspondence issued during this period claimed to be a Calderbank letter. Nor did it meet the requirements of a Uniform Civil Procedure Rules 2005 (“UCPR”), r 20.26 offer of compromise.

After the 2017 Motion was filed in early 2018, Riley made two offers in the 2015 proceedings on a without prejudice basis except as to costs and that claimed to be Calderbank offers. The first was a GAL letter of 15 January 2018 and the second was of 20 February 2018. Before these offers were made, further relevant correspondence had passed between the parties between 26 September 2017 and 15 January 2018.

A 26 September 2017 letter from Trivett Keating had identified discrepancies with the inventory of property of Nelly’s estate and the information which had been supplied by GAL, and because of these discrepancies, Trivett Keating requested documents be given to Anne. Some of these discrepancies were for figures less than $1000, yet comprehensive document disclosure was requested.

A GAL 15 January 2018 letter provided GAL’s response to the 26 September 2017 letter. In its response, GAL included the requested documentation and provided explanations for the discrepancies most of which were to the effect that “it ought to have been obvious that rounded figures had been used”. The letter also outlined the change in instructions in relation to the inventory sworn in Nelly’s estate which is the subject of the first judgment. GAL’s letter then requested that Anne repay most of the $50,000 interim distribution which had been made to her, as upon the revised calculations based upon the changed instructions, GAL calculated that Anne had been overpaid her entitlement.

In addition to GAL’s 15 January 2018 response letter, GAL sent a Calderbank letter of the same date, 15 January 2018, to Trivett Keating explaining that as a result of the revised position contained in the January 2018 response letter, the sum payable by Anne to the Estate would be $40,079.82 and that she would only retain $9,920.18 of the $50,000 which had been paid to her. The letter further explained that costs may be recoverable in addition. It warned of the significant costs consequences and exposure to costs that could arise if the matter was fully litigated. The letter then offered an additional payment of $25,000 from Nelly’s Estate (which would have resulted in Anne receiving a total of $75,000) to finalise all issues in Nelly’s estate by agreement.

Anne rejected this offer on 22 January 2018, and made a counteroffer that in exchange for her withdrawing her 2017 Motion, she be paid her final distribution of $114,942.05 based on the original inventory and accounts. This is the position which the Court finally rejected in the first judgment. Riley did not accept this counteroffer. Anne also stated in this letter that she would seek to have the loan documents set aside on the basis that Nelly lacked capacity at the time of the agreements and that the loan documents were unconscionable and contrary to her interests.

GAL’s 20 February 2018 Calderbank letter explained that a contest about the loan documents based on Nelly’s alleged incapacity would not be successful as Nelly had been assessed as having legal capacity. The letter also said that the costs of litigating Nelly’s claim would diminish the value of any additional payment Anne might receive, given her minority interest in a relatively small estate. The 20 February 2018 letter put the following offer considering these circumstances:

Following the Court’s dismissal of the 2017 Motion for accounts and the commencement of the 2020 proceedings after Riley’s death, despite Ric’s attempts to open settlement discussions in October 2023, no offers were exchanged until 3 days’ before the 26 April 2024 hearing of the matter leading to the first judgment. On 23 April 2024, Trivett Keating issued a Calderbank offer which was in substantially the same terms as Trivett Keating January’s 2018 offer. It sought the payment to her of the sum of $114,942.05 plus interest at the rate prescribed by Probate Administration Act 1898 (NSW), s 84A(3) and that a headstone be purchased and installed at Nelly’s gravesite out of the funds that have become unclaimed monies with the Commonwealth from David’s superannuation fund.

Ric submits that Anne achieved a result no better than these Calderbank offers and that it was unreasonable for Anne to have rejected the offers. He submits that had the offers been accepted, the June 2023 motion would have become unnecessary and that the costs of litigating it would have been saved.

Ric submits that Anne’s June 2023 Motion sought identical relief to her December 2017 Motion. Ric submits that the December 2017 motion was unsuccessful, and that her June 2023 motion was brought contrary to the Registrar’s clear advice that it was the wrong procedure for resolving the issues between these parties.

Anne submits that the 2017 and 2023 Motions were filed in separate proceedings and that they are not duplicates. She submits that no order was made that the evidence in the 2015 proceedings be evidence in the 2020 proceedings and therefore a separate motion was required. Moreover, she submits that the 2017 Motion was successful and that it was Riley’s failure to verify, pass and file accounts that caused the matter not to be further considered by the Court. Anne submits that she was entitled to probate accounts and that was the purpose of her filing the 2023 Motion.

Anne submits that the 2023 Motion was abandoned by both parties following the Court’s prompting, and the parties’ acceptance, that the principal issue for determination was whether monies advanced to Riley from Nelly were loans or gifts.

The parties are both partly correct on this issue but neither side’s arguments really come to grips with the procedural inefficiency which has wasted costs in this matter. The June 2023 Motion may perhaps have been technically necessary in the 2020 proceedings concerning Riley’s estate through which Nelly’s estate was then being administered. But Anne was continuing to dispute the accounts Riley had provided for Nelly’s estate and was seeking to identify whether funds had passed from Nelly’s estate through David’s estate and Riley’s estate, to which Anne might have been entitled. None of that agitation on Anne’s part has been successful and the real issue was what were the assets of the estate, an issue which was not being pursued by Anne contrary to the advice of the Registrar.

Ric submits that Anne refused to refine the issues in the proceedings on the June 2023 motion until the Court suggested that course; and, that her conduct generally in the lead up to the hearing and determination of the June 2023 motion was unreasonable.

Ric submits that Anne and her lawyers’ conduct in the following matters caused him to incur four groups of avoidable costs:

(1) Responding to Anne’s case. Ric submits that Anne’s position in refusing to narrow the issues meant that Ric incurred unnecessary legal costs in responding to aspects of her case, such as a long affidavit of Mr Gokani which traversed issues in the Aston family as far back as 2009.

Anne put far too much in issue and this submission is accepted. But Ric ultimately also failed to list these proceedings and put a tight and simple proposal, of the kind that the Court identified, to focus on the real issues in dispute.

(2) Cross-examining Mr Gokani. Ric submits that Anne required Mr Gokani for cross-examination on his affidavit. This led to further unnecessary disputation between the parties as the Court requested a list of topics for cross-examination to be provided by Anne so that it could consider whether to require Mr Gokani to be examined.

The Court gave the direction to Anne to define cross examination topics but also directed that “the parties are to make identifiable efforts to minimise further costs in relation to the present contest”. The Court expected that the list of topics would be narrowed or discussed by the parties to efficiently utilise the Court’s time.

When GAL emailed Trivett Keating on 11 April 2024 requesting the list of topics, Mr Gokani deposed that GAL was met with a blank refusal and a request that Mr Gokani be present in Court with all the files for the two proceedings. Ric also submitted that cross-examining Mr Gokani was always inappropriate given he has sworn affidavits as an officer of the Court.

Anne submitted that she required Mr Gokani for cross-examination because of the length of his affidavit and its contents which included conferences with Riley who is now deceased. At a directions hearing before the argument took place, Anne ultimately proposed three topics for cross-examination: (a) whether Mr Gokani drafted the loan documents and his interpretation of such documents, (b) the costs of the proceedings, and (c) a possible challenge to his retainer.

The Court rejected Anne’s application to cross-examine Mr Gokani on these three proposed topics on the basis that cross-examination on those topics would not have assisted the Court. As to the drafting of the loan documents, the parties had agreed that the loan documents were signed by both Nelly and Riley; the circumstances of their execution seem to be irrelevant. The Court does not require evidence to construe them. As to the costs of the proceedings, the Court, can assess the appropriate costs order without cross-examination by reference to the conduct of the proceedings – the course which is being taken now. Finally, as to the challenge to Ric’s retainer of counsel on the basis that he lacked capacity, the application to cross-examine was misconceived – the Court would not allow cross-examination of whether Ric has legal capacity, where no motion had been filed challenging Ric’s retainer.

In summary, Anne’s conduct in pressing for cross-examination wasted time and incurred unnecessary costs and there is validity in Ric’s complaint about it. But GAL put submissions that were not accepted, such as arguing that Mr Gokani should not have been cross-examined merely because he was an officer of the Court. Officers of Court are frequently cross-examined about issues to which they have deposed. The lack of cooperation by Anne in identifying topics to examine Mr Gokani required his unnecessary preparation for a cross-examination that was ultimately not required to determine the proceeding.

(3) Anne’s conduct prolonged the proceeding. Ric submits that Anne unnecessarily prolonged the proceedings. He submits that this is demonstrated by the number of directions hearings and appearances in the matter, namely seven separate directions hearings on 21 July, 18 August, 13 October, 10 November, 8 December 2023, before Lindsay J and 8 March and 12 April 2024 before Slattery J before the two hearing days of the 2023 Motion (26 April and 24 May 2024). Ric submits that even the costs hearing, which was at the Court’s suggestion to save costs to be heard immediately following the handing down of judgment on 28 June 2024, was adjourned at Anne’s request.

Anne submits that this submission is unsupported and that the directions hearings were acquired by the Court and that the lack of cooperation involved poor communication on behalf of Ric’s lawyers. Anne submits that there was no other way for her to conduct the proceeding other than to capitulate.

Anne may have faced some obstruction from Ric but her pursuing a motion which was not calculated to resolve the real issues between the parties was never going to be productive. Moreover, the Registrar had sent her correspondence explaining to her that to obtain relief in relation to a dispute about the estate’s assets, she had to file a motion seeking that relief and that a motion seeking passing of accounts would not resolve the issue. Ric too did not seek to reframe the motion. In the end, the Court suggested during the directions hearing in March 2024 how to resolve the true issue in dispute.

(4) Preparation of a joint court book. The Court made orders on 8 March 2024 for the provision of a joint court book containing “all affidavits on which they propose to rely on the motion for the passing of accounts, including their written submissions which must be cross-referenced to the Court book, together with draft orders that each party proposes.” This was done. But the parties have each made lengthy submissions that the other was uncooperative in preparing the court book. The Court should not have to entertain a debate such as this, but it occupied so much of the parties’ attention that it should be addressed. Before the Court goes into the regrettable detail, it should be observed that if disagreement such as this cannot be resolved consensually and reasonably then the matter should ordinarily be relisted for quick action by the Court.

Ric submitted that Anne’s conduct was unbecoming of a model applicant who was advancing a motion. Ric submitted she brought her application and yet refused to prepare and circulate a court book for the application and that Ric’s solicitors had to incur the cost of preparing an electronic court book. Anne’s submissions raise complaints about not being provided with the documents which Ric sought to have included in the court book, and when they were provided, the fashion in which they were provided was an unnecessary driver of costs. Anne’s submissions also contend that they were not provided with a copy of the electronic court book which had been provided to the Court.

Between 11 to 19 March 2024, the parties exchanged several emails about this issue. These emails show an unnecessarily heated exchange between the solicitors regarding the contents of the court book. The initiating emails begin with the kind of cordial correspondence between counsel, Ms Hoskinson and Ms Fishburn, that the Court would expect. But this this was followed by more aggressive interchanges between the solicitors.

A few examples of this will suffice. On 12 March 2024 at 2:54 PM, Trivett Keating issued a request for documents which GAL sought to have included in the court book and stated that if a response was not provided by “4:00PM” they would not be included. GAL responded at 4:21PM and again at 4:23PM providing a comprehensive list of the material which GAL wanted included in the court book. At 5:22PM Trivett Keating sent an email which stated as follows:

Ms Fishburn emailed Ms Hoskinson on 12 March 2024 at 6:43PM, noting the documents requested for inclusion in the court book by Ric and stated that it was assumed that Trivett Keating had all the material for inclusion in the court book but otherwise Ms Fishburn indicated that she could be contacted.

On 13 March 2024 at 12:53PM, GAL emailed Trivett Keating with a protest at what had occurred as follows:

The Court has been shown more of the correspondence that has been exchanged between the solicitors for the parties about the court book and the provision to Anne of a copy of Ric’s electronic court book. The Court will not discuss these further other than to say that they demonstrate the depth of the uncooperative discussions between the parties regarding the court book.

Courts have constantly emphasised the need for parties to cooperate with one another. If parties cannot cooperate then one or other party should put a sensible middle ground proposal to the other and if the proposal is not accepted, it should then be put before the Court. It is unsatisfactory that the simple exercise of preparing a small court book of existing documents led to so much misunderstanding, disputation and the commitment of legal resources.

The Court observes on the court book issue that Trivett Keating’s correspondence is sometimes aggressive and was apt to escalate tensions between the parties. In contrast, Ms Fishburn volunteered to assist Trivett Keating should they not have the documents which were requested for inclusion. Setting an arbitrary deadline an hour after requesting a list of documents and seeking to rely on the deadline after being provided with the documents as a “late response” a stubbornly obtuse approach to litigation.

But GAL’s supply of documents in the form of unlabelled attachments across 23 emails was inefficient and inconsiderate. Parties should conduct litigation in a way which is calculated to reduce costs not only for themselves but for other for parties. The Court expects better from its officers. Secured links for sharing document drop boxes have been available for a long time before 2024.

It is noted that neither party has included the complete chains of emails but rather has included examples of correspondence. As a result, the Court is unable other than by example to fully assess the extent to which the parties have been uncooperative. And it is not productive for the Court to spend any more of the Court’s own resources on such disputes. But there was unnecessary duplication of costs of preparing the joint court book due to the failure of the solicitors to communicate cordially.

It is convenient to deal with these factors together given their similarity and the material relied upon by Ric in his submissions.

(4) Futility. Ric submits that Anne’s 2023 Motion was futile because it sought to reagitate issues which had already been considered by the Court in its consideration of the 2017 Motion. This submission is accepted. Ric further submits Anne sought disclosure by way of subpoenas and affidavits from Ric for information which she had been told he either did not have, had already been provided, or that was otherwise immaterial to the relief she was seeking. This information included enquiries into the unclaimed money account and David’s superannuation both of which did not relate to Nelly’s estate and the loan documentation.

In reply, Anne submits that her subpoenas were not futile, nor were her investigations futile merely because they did not bear fruit. She further submits that the movement of estate funds in and out of the estate’s bank account by either Ric or Riley was never explained to her and the methods she utilised to obtain information were not improper.

It can be observed that a communication breakdown between parties in the administration of an estate has clearly occurred if one party must resort to issue a subpoena to obtain information. The fact this argument took place at all is a demonstration of how poor communications were, particularly between the solicitors in this case. The Court will not reward conduct between parties that escalates tension and increases costs rather than that which deescalates hostility and reduces costs.

(5) Hopeless Prospects of Success. Ric submits that when the Court finally directed Anne’s 2023 Motion towards the real issue in dispute – whether the monies advanced by Nelly to Riley were gifts or loans – the motion was doomed to fail. Ric submits Anne did not challenge the authenticity of the loan documents: first judgment (at [26]). Ric submits Anne’s case was always predicated on the untenable position of seeking a final distribution based on the original inventory of assets, which since 2018, Ric had acknowledged was in error and should be amended: first judgment (at [33]-[37]).

In reply, Anne submits that the Court’s first judgment in June 2024 considered for the first time the issue of whether the monies advanced by Nelly to Riley were a loan or a gift and approved the second inventory of assets. Anne points to paragraph [43] of the first judgment which emphasises that the Court narrowed the issue:

Neither side’s perspective is entirely accurate on this issue. Anne’s submissions implicitly suggest that the Court changed the issues for determination and Anne is therefore not to be blamed for any costs wasted as a result. But the Court only narrowed the issue in this way because the June 2023 Motion was unlikely to ever determine anything useful for these parties. Ric has far less responsibility for the situation.

(6) Disproportionality in Costs Expenditure. The parties have incurred very different amounts of costs in these proceedings. To attempt to understand the total quantum of the parties’ costs, on 4 April 2024, the Court made order 2(e), which required them to provide a summary of their costs on the issues now before the Court and all issues in relation to the passing of accounts. These are extracted below:

Ric submits that Anne’s approach to the conduct and incurring of costs in the proceedings have been disproportionate to Anne’s 30% interest in the estate and the amount to which she would have been entitled had she been successful. Ric submits that Anne sought documentation and clarification of amounts charged to Nelly’s estate, which as low as $34.67, was never economic to question or contest. Moreover, Ric submits that Anne was notified that she was overpaid by Nelly’s estate in January 2018. Despite this, she pursued her claim, a decision which Ric submits highlights her unreasonableness. Ric contrasts Anne’s conduct in questioning small sums for little apparent return with Ric and Riley’s conduct in choosing not to take steps in respect of the overpayment to Anne and being prepared to compromise in light of the events which had occurred, given their regard for proportionality in the expenditure of costs.

Anne does not make responsive submissions to Ric on this point. However, she submits that Ric’s costs were disproportionate such that GAL has failed to have proper regard to Legal Professional Uniform Law, s 172. She submits that she understands Ric’s submission is that beneficiaries of low value estates should not run proceedings and accept what is offered to them and points to the real disproportion being Ric’s costs.

Given the amount in issue, the costs incurred in this matter on both sides were very high. This is a matter which the Court will consider further below.

(7) An unnecessarily invasive approach in obtaining information. Ric submits that Anne had been unnecessarily and unreasonably invasive in her investigations, which included seeking extensive information about estate assets including information which was well beyond the assets of Nelly’s estate. As set out in the 17 November 2023 Trivett Keating letter extracted above, Anne issued subpoenas to Ric, GAL and the Commonwealth Bank of Australia seeking information which she claimed was “to trace if the funds that should have been distributed to [her], were in fact retained by Riley Aston and upon his death, received by Ric as his sole beneficiary”. Further, in response to these subpoenas Ric and GAL prepared lengthy affidavits which responded to the enquiries. Notwithstanding this, she pressed her application.

Anne submits that her requests for information were not unusual and that the subpoenas seeking the deceased’s and estate’s bank accounts are common practice.

Anne further submits that the Court did not make a positive pronouncement that the 2023 Motion was hopeless, futile, or invasive or otherwise unreasonable and that it should not therefore be assessed that way in relation to costs. But this is a little glib when the scope of the subpoenas is examined.

Anne further stated that the subpoenas were issued to see “… if any funds from Riley were transferred to Ric. … to trace if the funds that should have been distributed to [Anne], were in fact retained by Riley Aston and upon his death, received by Ric as his sole beneficiary”. But this inquiry was essentially a speculative exercise in looking for misapplied funds and the subpoenas themselves request documents far broader than the purpose stated in correspondence. The subpoenas were as follows:

These subpoenas were very broad to the point of being oppressive.

Despite, Anne’s letter of 17 October 2023, which purported to set out the legitimate forensic purpose of her subpoenas, the more proficient approach was for her to make prior enquiries to ascertain whether Ric or GAL had limited classes of documents being sought in relation to narrowed issues and whether those classes of documents might be produced by agreement. But her failure to narrow the issues also led to these excessively broad and unreasonable subpoenas which created a significant burden for Ric.

Ric submits that being the executor’s executor, he had nothing to gain from the litigation. He only received $10,000 from Nelly’s estate. He submits he should not have to bear the expense of this litigation, particularly given the unreasonable nature of Anne’s conduct, including her rejecting reasonable offers.

The Court required the parties to disclose a summary of their legal fees. Ric submits that considering only his costs incurred between July 2023 and 29 February 2024 ($122,021 excluding GST) and from 1 March 2024 to 31 March 2024 ($25,830 excluding GST), it is apparent that he has incurred far higher costs than the greatest amount sought by Anne in the proceedings. The amount of Ric’s costs was disclosed to Anne. Notwithstanding, she continued to maintain her position, which Ric submits in all the circumstances was unreasonable.

Ric submits he has health issues including Asperger’s syndrome and schizophrenia and requires ongoing care. Ric submits that Anne is aware of his health circumstances. Ric points out he never had any dealings with Nelly’s estate until Riley’s death. He further submits that as a general matter, but particularly noting that background and the procedural complexity associated with the administration of Nelly’s estate, there was nothing unreasonable in his approach, which was to finalise the Nelly’s estate based on the instructions given by the original executor, Riley. On that basis, Ric submits the fair and equitable outcome is that he should be put in the same position he would have been but for Anne’s unreasonable conduct.

Anne submits that no costs agreements, invoices, time sheets or any other evidence has been provided to the Court to substantiate what Ric was charged or is now liable to pay, being the fees as claimed in his submissions. Moreover, she submits the Estate has over $500,000 in unclaimed moneys, which are funds she says appear either to be forgotten by or unknown to Ric. She submits this is a fund from which the solicitor's fees are available to be paid.

Ric submits that Anne was unreasonable during the litigation and says that this was referred to (both directly and indirectly) in the first judgment. Ric cites paragraphs [8] – [9] of the first judgment in which the Court stated:

Anne denies that the Court found any unreasonable conduct on her part in the first judgment. In the end, analysis of this factor has been subsumed into analysis of the other factors.

Ric’s submissions and Anne’s submissions in response raise the following questions for analysis:

The primary question is whether the ordinary rule that costs follow the event (UCPR r 42.1) should be applied to Ric’s success on the June 2023 motion. The issue is complicated by the original relief on the motion never being tried, because of the Court’s intervention to isolate the real questions in dispute. Ric was wholly successful on the issues isolated by the Court.

Anne argues that because the issues ultimately isolated were different from the relief claimed on the June 2023 motion that no costs order should be made in Ric’s favour on the motion.

But that argument is not persuasive. It has several answers based on the Court’s analysis above of the parties’ submissions. First, the original form of the June 2023 motion would not have been successful, as it was seeking relief that the Registrar had previously warned Anne was futile, because it would not have resolved the real differences between the parties. Secondly, the only way that finality was going to be brought between the parties was by isolating the issues which the Court identified should be determined, which it was open to Anne to do at any time, so the Court’s intervention is not a let out for Anne.

The next question is whether an order for indemnity costs should be made in Ric’s favour on the basis either of the unaccepted Calderbank letters (Factor 1 above) or based on Anne’s unreasonable conduct of the proceedings (Factors 2-9 above). Ric relies upon two Calderbank offers, one in January 2018 and the other in February 2018. It is first necessary though briefly to state the applicable law.

The January and February 2018 Calderbank letters – Indemnity Costs. The principles applicable to Calderbank offers are well settled. Principles concerning attempts to compromise proceedings by Calderbank offers are applicable in probate proceedings: Walker v Harwood [2017] NSWCA 228 (“Walker”) at [58]. The burden of demonstrating why an indemnity costs order based on a Calderbank offer should be made lies with the party such seeking an order in their favour. Generally, this means that that party should persuade the Court that the refusal to accept the offer was unreasonable in all the circumstances of the case: Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [20]. Therefore, unlike an offer made under the Uniform Civil Procedure Rules 2005 which shifts the onus of proving that non-acceptance was reasonable on to the offeree, a Calderbank offer does not shift the onus and is merely a discretionary consideration for the court in determining the appropriate costs order, albeit usually a powerful one.

The Court of Appeal’s decision in Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344 (“Miwa”), (at [9]), is authority for the proposition that an informal Calderbank offer must contain “a real and genuine element of compromise”: see also The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] 67 NSWLR 706; [2006] NSWCA 120, (at [8]). In Miwa, the Court noted that there is authority that the epithets “real” and “genuine” add little to the requirement of compromise: Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19, (at [23]); Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170, (at [17]-[18]).

The determination of whether the rejection of an offer was unreasonable is an evaluative judgment to be made by reference to the terms of the offer and all the relevant surrounding circumstances and should not be upheld other than on clear grounds: King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No. 2) [2009] NSWSC 8204 at [11] and Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [113].

The considerations relevant to the determination of whether a refusal of a Calderbank offer is unreasonable were stated in Miwa, at [12], based on Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No. 2) (2005) 13 VR 435; [2005] VSCA 298 ("Hazeldene's"), (at [25]). The Victorian Court of Appeal (Warren CJ, Maxwell P and Harper AJA) in Hazeldene's held that the following elements were relevant to determining whether the rejection of a Calderbank offer was unreasonable:

The applicable principles have also been summarised in authorities such as Benette v Cohen (No. 2) [2009] NSWCA 162 and Walker v Harwood [2017] NSWCA 228. One important matter for emphasis is that prima facie the consequence of non-acceptance of an offer of compromise will be that the rule will be enforced against the non-accepting party, because from the time of the non-acceptance “notionally the real cause and occasion of the litigation is the attitude adopted by the [party] which has rejected the compromise”: Maitland Hospital v Fisher (No. 2) (1992) 27 NSWLR 721 at 724 (“Maitland Hospital”).

The rationale for the rule is to encourage the compromise of litigation to advance both the private interests of the parties and public interest and to oblige the offeree to give serious thought to the risk involved in non-acceptance: Maitland Hospital at 724. An offeree may resist the cost presumption arising from an offer of compromise by establishing it was not unreasonable for them to reject the offer in all the circumstances: Arnott v Choy (No. 2) [2010] NSWCA 285.

The two Calderbank offers of January 2018 and February 2018 have a common feature which makes them unlikely candidates to ground Ric’s claim for indemnity costs. They also have individual features that do not assist in Ric’s claim for indemnity costs based on them.

As to the common feature of the two Calderbank offers, the principal difficulty for Ric in relying upon these offers is that they were both made before Anne’s June 2023 motion was filed. They were offers made by different party, Riley, to settle different proceedings, namely issues arising out of the determined December 2017 motion in the 2015 proceedings. As no Calderbank offer been made to settle the June 2023 Motion in the current proceedings, it is difficult to see how Ric can take advantage of an unaccepted Calderbank offer to settle the June 2023 Motion. An important feature of Calderbank offers is that they signal to the other party that there is conduct that the other party can take to resolve the dispute in current legal process and thereby avoid legal costs. It is the failure to accept the offer to bring the current legal process to an end (which was then later bettered by the offeror) which leads to the inference of unreasonableness, founding the claim for indemnity costs. The main problem with Ric’s Calderbank offer argument is that there was no action that Anne could have taken in response to the earlier expired Calderbank offers to avoid incurring legal costs on her June 2023 Motion. Ric therefore cannot now use these expired offers as an argument for indemnity costs.

But there were other problems with the offers. The 15 January 2018 Calderbank letter is read in conjunction with the 15 January 2018 response letter which replied to Anne’s inquiries. The response letter explained Riley’s change in instructions and the execution of the loan documentation which converted the interest-free loan to a gift.

Ric has bettered this January 2018 Calderbank offer, which offered to finalise the matter by consent in exchange for Anne retaining the $50,000 interim distribution which she had by then received as an overpayment plus her receiving an additional payment of $25,000. But this January 2018 Calderbank offer does not stipulate the time the offer would be open. It could have been accepted within a reasonable time, but that time expired long before Anne filed the June 2023 motion.

As to the 20 February 2018 offer letter, Riley offered Anne $5,000 and that she could retain the $50,000 overpaid in the interim distribution in exchange for finalising Nelly’s estate by consent. However, the offer was conditional upon Anne agreeing “… not to take any further part in the family affairs of [Riley] unless specifically invited to do so by [Riley]”. It is unclear what the scope of “family affairs” means. This condition makes it impossible to assess whether Ric bettered this offer. Moreover, this offer was only open for acceptance for 3 days which is too short for a dispute of this complexity.

Anne’s Alleged Unreasonable Conduct – Indemnity Costs. The other basis for Ric’s claim for indemnity costs is that by reason of the various factors Ric has identified that Anne conducted the case so unreasonably that indemnity costs order should be made. The conclusions drawn earlier in these reasons in relation to the factors are discussed in summary below. But first the applicable law is stated.

The usual rule as to costs in probate litigation is that costs are in the discretion of the Court and generally they follow the event, except where the testator has been the cause of the litigation and where the circumstances led reasonably to an investigation concerning the testator’s will, the costs may be left to those who bore them: Perpetual Trustee Co Ltd v Banker [1999] NSWCA 244 at [15]; Re Estate of Grounds [2005] NSWSC 1311.

Ordinarily, costs are assessed on a party-to-party basis, this is no different in probate litigation: UCPR, r 42.2; Re the Estate of Hodges (1988) 14 NSWLR 698. In Public Trustee v Annous; Re Taleh (unreported, NSWSC PD, Powell J, 31 July 1992) at [9], it was stated that costs will only be assessed on an indemnity basis if “the relevant party’s conduct involved an abuse of process – in the sense that the Court’s time and resources, and the litigants’ money, has been wasted on fraudulent, or totally frivolous and thoroughly unjustified, claims or defences.”

The principles relating to the award of indemnity costs were outlined by Black J in In the Matter of Indoor Climate Technologies Pty Ltd [2019] NSWSC 356 at [8]:

Indemnity costs may be awarded in cases that are commenced or continued where “the applicant, properly advised should have known that [they] had no chance of success.”: Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff (No 2) (2009) 15 ANZZ Insurance Cases 61-795; [2009] NSWCA 12 at [14].

Much of Anne’s conduct of the June 2023 Motion was unreasonable. The June 2023 Motion duplicated the relief in the 2017 Motion and ignored the Registrar’s advice to seek substantive relief rather than relief related to the passing of accounts: Factor 2. Anne’s conduct in putting much in issue and seeking to cross-examine Mr Gokani and the contest about the joint court book caused delay: Factor 3. Had Anne taken the advice of the Registrar and identified and pursued the correct dispute when filing the June 2023 Motion, much of the procedural complexity that followed of subpoenas, affidavits in response to Anne’s requests for information, attempts to cross-examine Mr Gokani would have been avoided.

As to the alleged futility and hopelessness of the proceedings, Anne would undoubtedly have lost on the original motion as filed, which was futile. But when directed by the Court to the real issues, Anne’s case was certainly arguable although unsuccessful: Factors 4 and 5. As noted by Ward CJ (as her Honour then was) in Anderson v Canaccord Genuity Financial Ltd (No 2) [2022] NSWSC 649 at [96] that “a high degree of certainty” is required concerning the deficiencies in a losing party’s case in order to reach the conclusion that it plainly had “no chance of success”, was pursuing a “hopeless case”, was “always clearly foredoomed to fail” or was “wholly untenable and misconceived”, and that caution is required to avoid considering the question of prospects with hindsight.

As to Factor 7, the Court has found above that Anne’s subpoenas were oppressive and were issued in furtherance of speculative inquiries that were not justified by the real issues in dispute between the parties. Her conduct in this respect was unreasonable and excessive.

As to Factors 6, 8 and 9, the conduct of the June 2023 Motion has led to $177,836 in costs being incurred by Ric/Riley in defending and responding to Anne’s various claims. Given the relatively small amounts in issue here, this is disproportionate. In the Court’s view, this is not all Anne’s fault. Ric could have applied at some point to narrow the issues, or to try and constrain some of this expenditure.

Ric bears some responsibility for not isolating and identifying the real issue in dispute and bringing it into focus for the Court. But Ric is an executor of estates, who would ordinarily be entitled to be indemnified out of Nelly’s and Riley’s estates in respect of costs that were reasonably and properly incurred by him in acting in that capacity and not due to his own wilful neglect or default: Trustee Act 1925, s 59 and UCPR, r 42.25. Ric should have made an application to narrow the proceedings earlier to try and reduce costs. That he did not do so is unfortunate. Instead, as he points out he has been required to bear the expense of the litigation himself. This is particularly unfair when he only received $10,000 from Nelly’s estate himself.

But Ric’s conduct should also be assessed in relation to his discharge of his role as an executor. Although this dispute had many of the characteristics of a personal dispute. The Court does not find that Ric conducted himself in the litigation in a manner which was unreasonable or improper. This means that theoretically he would have been entitled to reimburse himself out of Anne’s and his share of Nelly’s estate. But Nelly’s estate had been largely distributed by the time issues arose here. The costs that Ric was being forced to incur here, he has borne personally, even though they were really expenditure on behalf of the estates.

Ric also bears some responsibility for not isolating and identifying the real issues in dispute and bringing them into focus for the Court. When such high expenditure was being incurred it was incumbent upon Ric eventually to do something to limit that expenditure rather than simply to let the expenditure run on. Even a person acting in the capacity of an executor or trustee has a responsibility to display the prudence of an ordinary person in constraining legal costs before they become excessive.

But Ric should also be allowed some ordinary reaction time to respond to and deal with Anne’s burdensome conduct. And it is difficult to criticise Ric for trying to be cooperative in the first instance. He will therefore be allowed indemnity costs for a substantial time after the filing of June 2023 Motion, based on Anne’s unreasonable conduct of the proceedings. But he will not be allowed indemnity costs beyond the time when in the Court’s view he should and could have tried to limit the expenditure of costs. The Court assesses this to be about the end of February 2024.

The Court will therefore approach this matter in the following way. The Court will allow Ric indemnity costs for the period of GAL’s invoice numbered 6 above, covering the period from 1 July 2023 to 29 February 2024 and totalling $134,223 inclusive of GST. He will be allowed costs on the ordinary basis for the remaining two invoices, GAL 7 and 8 up to 31 March 2024 of $28,413 inclusive of GST and up to 13 April 2024 of $15,200 inclusive of GST. Any costs associated with the present application and judgment after that in April 2024 will be awarded on the ordinary basis.

Ric’s total legal fees include $53,785 in respect of the 2015 proceedings and the 2020 proceedings to the filing and service of the June 2023 Motion. But these are not sought on the application before the Court.

It may be appropriate for a lump-sum costs order to be made in respect of these costs under Civil Procedure Act 2005, s 98(4)(c) in order to save the parties the costs and aggravation of a costs assessment in respect of these orders for costs.

The parties have a residual dispute about unclaimed monies that were taken by the Commonwealth from David’s superannuation fund, or SMSF, apparently on the basis that David’s SMSF was not being administered. The exact quantum of those monies is unclear. But it at least includes the $275,000 RAD paid in error by the nursing home upon Nelly’s death.

This dispute should be resolved. It appears ultimately to be a claim made on behalf of Nelly’s estate against the corporate trustee of David’s SMSF, David Aston Superannuation Pty Ltd for the mistaken payment made by the nursing home to David’s SMSF. But there is an anterior claim by David’s SMSF, or the persons now entitled to the assets of David’s SMSF, against the Commonwealth. It should be noted that the trustee of David’s SMSF is not a party to these proceedings.

The substance of Ric’s submissions about those SMSF funds is that he wants clarity that he is the only claimant on behalf of David’s SMSF against the Commonwealth in respect of those unclaimed monies. He does not wish to be faced with a competing claim from Anne, which would be like to increase the expense of the claim.

Several observations should be made about this issue. The first is that it has not been properly argued by the parties and if it remains in issue, it may need a short additional hearing. Secondly, in the light of the Courts findings, it is difficult to understand what claim Anne might have to these funds. Thirdly, the fees that have been quoted for the recovery of these funds look to be wildly excessive for what should be a relatively simple process and such fees would not ordinarily be allowed by a Court without very clear justification. Finally, the Court may be unwilling to give relief at all with respect to this issue without the corporate trustee of David’s SMSF been joined. That being said, it is highly desirable that this issue be resolved among these parties as soon as possible. The Court will hear submissions in relation to this question.

For these reasons the Court will make orders and directions to the following effect: