Ballam & Ors v Ferro & Anor (No 2)

1. [1]

   HIS HONOUR: This is the judgment determining the appropriate order for costs arising out of the hearing of Probate and family provision proceedings and also what was described as “the separate proceedings” commenced by the Plaintiffs shortly before the hearing. The reasons for judgment of those claims were delivered on 7 September 2022 and bear the medium neutral citation Ballam v Ferro [2022] NSWSC 1200 (the principal judgment). This judgment should be read with the principal judgment as events, matters and persons are referred to in both judgments in the same way.

2. [2]

   At the request of the parties, the determination of costs could not be dealt with at the hearing or in the principal judgment: see [118] of the principal judgment.

3. [3]

   In summary, in the principal judgment, I concluded that:

   1. (1)

      The deceased had testamentary capacity at the time he made the 2012 Will.

   2. (2)

      The deceased knew and approved the contents of his 2012 Will.

   3. (3)

      Although each of the Plaintiffs was a grandchild of the deceased, they were not, at any particular time, wholly, or partly, dependent on the deceased and, therefore, each of them was not an eligible person within the meaning of s 57(1)(e) of the Succession Act 2006 (NSW).

   4. (4)

      In light of the finding as to the validity of the 2012 Will, the separate proceedings should be dismissed.

4. [4]

   Having reached the conclusion in (3) above, it was unnecessary for me to decide any additional issues in the claim for a family provision order.

5. [5]

   The Plaintiffs were unsuccessful in the entirety of each of the claims and in their defence of the Cross-Claim.

6. [6]

   Based on my conclusions, the Court ordered that, within seven days, the legal representatives of the parties provide short minutes of order, in each of the two matters, that reflected the reasons. This was done and the necessary orders, other than in respect of costs, were made.

7. [7]

   Following the publication of the principal judgment, I allowed the legal representatives an opportunity to discuss the question of costs (in each of the proceedings). However, and perhaps unsurprisingly, they were unable to agree upon how the costs of the proceedings should be borne.

8. [8]

   The costs hearing was listed before me on 28 September 2022 and the same counsel appeared. Although, helpfully, senior counsel stated that the parties did not require written reasons, I have considered that written reasons should be given because the appropriate orders are, indisputably, contentious and because they deal with costs, the quantum of which is significant.

Evidence in the Costs Proceedings

1. [9]

   The Defendants, effectively, tendered documents relating to an Offer of Compromise. I take the following matters as undisputed on the costs application.

2. [10]

   On 28 September 2021, Mr Di Girolamo, the Defendants’ solicitor, sent a letter to Mr Buchanan, the Plaintiffs’ solicitor, enclosing an Offer of Compromise. The letter provided that either of the first, second and/or third Plaintiff could accept the offer within 28 days, and also stated:

3. [11]

   Each of the Plaintiffs received the same Offer of Compromise, which was in the same terms, being:

4. [12]

   It is unclear whether the offer made in the Offer of Compromise was rejected, or whether it lapsed through the effluxion of time. In the circumstances, it does not matter.

5. [13]

   No evidence was relied upon by the Plaintiffs in relation to any offer made by, or on behalf, of any of them. However, during oral submissions, senior counsel tendered a copy of an email, dated 6 December 2021, which disclosed that each Defendant’s principal affidavit was sworn and served on 6 December 2021 (some 11 weeks after the date of the Offer of Compromise).

6. [14]

   The purpose of the tender of the email was to demonstrate that the principal affidavits of the Defendants, which included relevant evidence, was not available to the Plaintiffs at, or within the period of acceptance, of the Offer of Compromise.

Submissions

1. [15]

   With respect to the Probate proceedings, for the Plaintiffs it was submitted in writing that, although the Court, ultimately, was satisfied that the Defendants had discharged the burden of showing the deceased had testamentary capacity, that he knew and approved of the terms of the 2012 Will and that there were no suspicious circumstances, there were peculiar circumstances surrounding the preparation and execution of the 2012 Will.

2. [16]

   It was submitted that the circumstances requiring investigation were such that it was reasonable that the Plaintiffs put the Defendants to proof of the validity of the 2012 Will and that the deceased ought properly to be seen as the cause of the Probate proceedings.

3. [17]

   The Plaintiffs pointed to Gray v Hart; Estate of Harris (No 2) [2012] NSWSC 1562 at [4] (White J) as authority for the proposition that:

4. [18]

   Reference was also made to the principles, or exceptions, identified in Mitchell v Gard (1863) 3 SW & Tr 275; (1863) 164 ER 1280, namely that the costs may properly be paid out of the estate if the fault of the testator is the cause of the litigation and that if there is sufficient and reasonable ground to question the execution of the will or the capacity of the testator, the losing party may be properly relieved from the costs of the successful opponent.

5. [19]

   Finally, the Plaintiffs relied on White J’s findings in Gray v Hart; Estate of Harris (No 2) at [19] that:

6. [20]

   With respect to the family provision proceedings, the solicitor for the Plaintiffs relied on what Ward CJ in Eq had written in Karpin v Gough (No 2) [2022] NSWSC 682 at [14], submitting that the value of the estate is substantial and that the Defendants have benefited, inter vivos, and also under the 2012 Will.

7. [21]

   The Plaintiffs submitted that the costs of the parties, even if entirely borne by the estate of the deceased, would consume only a modest portion of the value of the estate whereas to order the Plaintiffs to bear the Defendants’ costs, in whole or in part, would impose a significant financial burden on each of them. It was submitted that the overall justice of the case would be best served by the Plaintiffs bearing their own costs of the family provision case and there being no order that the Plaintiffs pay the Defendants’ costs of the family provision case.

8. [22]

   Curiously, the Plaintiffs, in the written submissions, did not specifically address the issue of the Offer of Compromise made by the Defendants. As stated, however, the date of service of the Defendants’ principal affidavits, some weeks after the service of the Offer of Compromise, was relied upon, presumably to establish that it was not unreasonable for each of the Plaintiffs to not accept the offer made in the Offer of Compromise.

9. [23]

   With respect to the separate proceedings commenced shortly before the hearing, the solicitor for the Plaintiffs submitted that no order for costs should be made, to the intent that the parties should each bear their own costs, respectively, of the proceedings. The basis for that submission was not entirely clear bearing in mind the proceedings were dismissed. However, it seems that the basis of the submission was that it was only after the separate proceedings had been commenced that information came to light which resulted in the concession made that the proceedings should be dismissed if the 2012 Will was found to be the last valid Will of the deceased.

10. [24]

    Counsel for the Defendants sought the following orders as to costs:

    1. (1)

       In respect of the Probate proceedings:

    2. (2)

       In respect of the family provision claims:

    3. (3)

       In respect of the separate proceedings:

11. [25]

    Counsel for the Defendants submitted that it was understood that the Plaintiffs did not oppose orders for the Defendants’ costs, calculated on the indemnity basis, of the family provision claims, the Probate claim and the separate proceedings, otherwise being paid out of the estate of the deceased. An additional order will be required in regard to any costs not recovered from the Plaintiffs.

12. [26]

    With respect to the Probate proceedings, the Defendants acknowledged that there were two issues arising on the issue of costs, namely:

    1. (1)

       How the Plaintiffs’ costs of the Probate proceedings are to be borne; and

    2. (2)

       Whether the Plaintiffs ought to pay the Defendants’ costs of the Probate proceedings, and if so, from when and on what basis.

13. [27]

    Counsel for the Defendants relied on what I had written in Starr v Miller; Starr v Miller (No 2) [2021] NSWSC 685 at [62], and upon what White J had written in Gray v Hart; Estate of Harris (No 2) at [5]. They submitted that, whilst the public interest element is plain, there remains important, countervailing considerations to ensure that parties are not put to ‘fruitless litigation on the basis that their costs will be paid by others (or out of the estate): Starr v Miller at [71] citing In Re Tsaousis [2019] VSC 511 at [32]-[33] (McMillan J).

14. [28]

    It was acknowledged that, while the general proposition applies to probate proceedings (namely, that an award of costs is discretionary and the discretion is generally exercised in favour of the successful party), two exceptions to the general proposition have emerged, namely:

    1. (1)

       Where the testator has, or those interested in residue have, been the cause of the litigation, the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate; and

    2. (2)

       If the circumstances led reasonably to an investigation in regard to the document propounded, the costs may be left to be borne by those who respectively incurred them.

15. [29]

    It was submitted that the burden which the Plaintiffs must discharge to establish the first exception is a high one. They pointed to Starr v Miller at [67], in which I had written that “[i]n order to come within the first exception, and receive the benefit of a costs order, the unsuccessful party needs to show, relevantly, that the deceased was the “cause” of the litigation’.

16. [30]

    They then submitted that there was no proper basis on which the Plaintiffs could contend that the deceased was the “cause” of the litigation, and that the findings of the Court that concerned the deceased’s preparation, and then due execution, of the 2012 Will, were strongly against the submission made by the Plaintiffs.

17. [31]

    The Defendants also submitted that there were compelling reasons why the Plaintiffs did not come within the second exception. They again pointed to what I had written in Starr v Miller at [69] that “all proper steps should have been taken by the party challenging the Will”. They submitted that the Plaintiffs did not take all proper steps when challenging the validity of the 2012 Will.

18. [32]

    They submitted that the Plaintiffs had failed to undertake even the most basic steps to prepare, or investigate, their defence to the Probate claim and then pleaded a positive defence on 6 April 2022 in circumstances where:

    1. (1)

       They had been provided with Father Kariba’s affidavit made on 2 March 2021 for about one year before amending the Defence.

    2. (2)

       There was no evidence of them having made any inquiries of Father Kariba to ascertain the veracity of his written evidence.

    3. (3)

       They had failed to marshal any medical evidence in support of the allegation that the deceased was suffering from some type of cognitive impairment at the time the 2012 Will was executed.

    4. (4)

       They had not issued any subpoenas to doctors or hospitals for medical records of the deceased. The subpoenas that the Plaintiffs had issued were not served until 20 April 2022 and 3 May 2022.

19. [33]

    Counsel for the Defendants also relied on these circumstances to submit that “proper steps” had not been taken to investigate the circumstances of the 2012 Will and that it could not be said that the circumstances had “led reasonably to an investigation” of the validity of the 2012 Will. They submitted that “the Plaintiffs put their positive case without a feather to fly with!’: Counsel for the Defendants’ written Submissions dated 21 September 2022 at [29].

20. [34]

    Further, it was submitted that the Plaintiffs had failed to provide any probative evidence concerning lack of testamentary capacity to support the positive defence, and that the evidence of Dr Drago (the deceased’s treating physician in Sicily between 17 March 2010 and 31 December 2012) which stated that he had “no recollection and have no documents to confirm a diagnosis of Alzheimer’s dementia or other cognitive impairment”, which was not challenged at the hearing, should have caused the Plaintiffs to consider their position.

21. [35]

    On the question of indemnity costs, the Defendants submitted that the circumstances of the Probate proceedings were such that it was appropriate for the Court to order the Plaintiffs to pay the Defendants costs, calculated on the indemnity basis, from 6 April 2022 (being the date the amended Defence was filed).

22. [36]

    Counsel for the Defendants relied on s 98(1)(c) of the Civil Procedure Act 2005 (NSW) which gives the Court the power to make an order that costs be calculated on the indemnity basis. They pointed to Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; [1988] FCA 364, in which Woodward J held that indemnity costs are appropriate where “an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success.”

23. [37]

    They also relied upon the proposition that an indemnity costs order is appropriate if “for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case”: J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (No 2) [1993] FCA 42 (French J). They submitted that an indemnity costs order will be warranted where proceedings were maintained by a party having “no reasonable prospect of success”: Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [106]-[113] (Basten JA, Giles JA and Young CJ in Eq agreeing).

24. [38]

    The Defendants submitted that the Plaintiffs’ positive defence of the Probate proceedings fell into that category of case. They relied on paragraph [15] of the principal judgment. Counsel emphasised that the Plaintiffs were on clear notice, given by the Defendants’ former solicitor, that there was ‘abundant’ evidence to support the Defendants’ case that the deceased had testamentary capacity at the time the 2012 Will was executed, and that the Plaintiffs seemingly had no evidence, in their possession, to support their claim of a lack of testamentary capacity in December 2012.

25. [39]

    Counsel for the Defendants also noted that the Plaintiffs agitated the testamentary capacity issue from the time of the initial Defence, as was clear from what had been said during the several directions hearings from 29 November 2021 to 30 March 2022.

26. [40]

    Therefore, the Defendants were effectively put to the expense of the Plaintiffs’ lack of testamentary capacity defence as early as November 2021, even though this was not formally pleaded by the Plaintiffs until 6 April 2022.

27. [41]

    With respect to the family provision proceedings, the Defendants submitted that, on 28 September 2021, the Defendants had served an Offer of Compromise in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’). The Defendants had offered to compromise each claim with an order for provision out of the estate of the deceased for $150,000 plus costs. The offers remained open for acceptance by any of the Plaintiffs for 28 days. The offers had not been accepted by any of the Plaintiffs.

28. [42]

    Counsel for the Defendants submitted that the offers could be seen as a ‘genuine’ compromise (in that each was an ‘actual’ offer which contained a ‘real element of compromise’ by the Defendants): Hancock v Arnold (No 2) [2009] NSWCA 19 at [23] (Ipp, McColl and Basten JJA); Leichhardt Municipal Council v Green [2004] NSWCA 341 at [37]-[40] (Santow JA).

29. [43]

    Counsel for the Defendants also submitted that the covering letter to the Offer of Compromise drew explicit attention to the weakness of the Plaintiffs’ case, in terms consistent with the Court’s ultimate findings.

30. [44]

    It was submitted that the offers were made after each of the Plaintiffs had filed her and his primary affidavit evidence and shortly after the parties had attended a Court ordered mediation on 24 September 2021. Thus, the Plaintiffs were each well positioned, and informed, to properly assess the likelihood of success of the claims for a family provision order respectively, against the offers of settlement before them. In these circumstances, it was unreasonable for the Plaintiffs to not accept the offer made to her or him respectively.

31. [45]

    Counsel for the Defendants submitted that it is well established that UCPR r 42.15A applies to proceedings for a family provision order: Walsh v Walsh (No 2) [2013] NSWSC 1281 at [27]; Pawlowska v Zaiglic [2010] NSWSC 864 (Ball J).

32. [46]

    Counsel for the Defendants pointed to the features of family provision litigation identified by Kunc J in Bates v Cooke (No 2) [2014] NSWSC 1322 which ground ‘a stronger public policy basis for the encouragement of settling litigation than might apply in other types of cases’. They also pointed to the remark made by Ward CJ in Eq in Wheatley v Lakshmanan (No 2) [2022] NSWSC 851 at [103] that:

33. [47]

    They also relied on the general principles set out in Harkness v Harkness (No 2) [2012] NSWSC 35 at [17]-[18].

34. [48]

    The Defendants submitted that there was no proper basis, in this case, to displace the usual consequences of r 42.15A of the UCPR.

35. [49]

    With respect to the separate proceedings, the Defendants relied on the Plaintiffs’ concession that, in the event that the 2012 Will was the last valid Will of the deceased, there could be no compensation payable such that the separate proceedings should be dismissed. They submitted that it follows, ‘having regard to the hopeless nature of the defence to the Probate claim that by their own concession, the separate proceedings were also doomed to fail’: Counsel for the Defendants’ written Submissions dated 21 September 2022 at [41].

36. [50]

    Counsel for the Defendants also submitted that the circumstances in which the separate proceedings were commenced are reason enough for the Plaintiffs to be liable to pay the Defendants costs on an indemnity basis. They submitted that this is so because:

    1. (1)

       The Plaintiffs failed to undertake any proper searches or inquiries before commencing the separate proceedings, including searches into whether the relevant properties had been encumbered.

    2. (2)

       The Plaintiffs had offered no real explanation for the late filing of the claim.

    3. (3)

       The Plaintiffs had not filed any evidence which could truly establish the claim for compensation under s 107 of the Powers of Attorney Act 1998 (Qld) as:

37. [51]

    Neither party mentioned, in the written submissions, that the Plaintiffs had entered a conditional costs agreement with their legal representatives, the effect of which was that they would not have to bear their own costs of the proceedings: see [110] of the principal judgment and Tcpt, 2 June 2022, p 293(22-30). It followed that if the orders sought by the Plaintiffs were made, the Plaintiffs would be left to bear none of the costs that had been incurred.

The Law – Costs generally

1. [52]

   I shall first refer to some general principles relevant to the determination of costs and will then turn to what may be regarded as additional principles that apply in Probate and family provision cases.

2. [53]

   How costs are to be borne is a matter for the exercise of broad discretion by the Court: s 98 Civil Procedure Act 2005 (NSW); Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11.

3. [54]

   The section is expressed without any qualification and is unconfined, although, naturally, it must be exercised judicially (i.e. not arbitrarily or capriciously), having regard to any statutory context, established principle and the circumstances of the relevant case. The Court, also, must have regard to the requirement imposed by s 56 of the Civil Procedure Act to give effect to the overriding purpose to facilitate the just, quick and cheap resolution of the real issues in dispute in the proceeding. The exercise of the discretion must be appropriately reasoned: House v The King (1936) 55 CLR 499; [1936] HCA 40 at 503 and 505.

4. [55]

   Costs orders are compensatory in nature, to reflect the vindication of the successful claim or defence thereof, not punitive: Latoudis v Casey (1990) 170 CLR 534 at 543; [1990] HCA 59; Ohn v Walton (1995) 36 NSWLR 77; Sze Tu v Lowe (No 2) [2015] NSWCA 91 at [37] per Gleeson JA, with whom Meagher and Barrett JJA agreed.

5. [56]

   The exercise of discretion will be guided by well-established principles in order to promote consistency in decision-making: Norbis v Norbis (1986) 161 CLR 513 at 519; [1986] HCA 17 (Mason and Deane JJ, with whom Brennan J generally agreed); Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25 at [24]-[25] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ).

6. [57]

   Effectively, “[t]he disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires”: Gray v Richards [No 2] (2014) 89 ALJR 113; [2014] HCA 47 at [2] (French CJ, Hayne, Bell, Gageler and Keane JJ).

7. [58]

   In Commonwealth of Australia v Gretton [2008] NSWCA 117, Hodgson JA (with whom Mason P agreed) wrote at [121]:

8. [59]

   The observation was cited, with apparent approval, by the Court of Appeal in Heath v Greenacre Business Park Pty Ltd [2016] NSWCA 34 at [98] (Gleeson JA, with whom Macfarlan and Leeming JJA agreed).

9. [60]

   The usual order as to costs is that a successful party in litigation is entitled to an award of costs in his, her, or their, favour, and an unsuccessful party bears the liability for the costs of the litigation: UCPR r 42.1, unless it is considered that some other order ought to be made. That is, costs follow the event. The relevant ‘event’ is success in the action or on particular issues: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624; [1997] HCA 6 (McHugh J).

10. [61]

    The onus lies on the unsuccessful party to demonstrate a basis for departing from the usual rule: Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 at [10] (Brereton J); Maxwell v Maxwell (No 2) [2022] NSWSC 1146 at [10] (Ward P).

11. [62]

    Section 98(1)(c) of the Civil Procedure Act distinguishes between costs awarded “on the ordinary basis” or “on an indemnity basis”.

12. [63]

    UCPR r 42.2 provides:

13. [64]

    In Wright v Apthorpe [2020] NSWCA 300 at [54], Simpson AJA (with whom Bell P and McCallum JA agreed) wrote:

14. [65]

    There can be no doubt that the Court does have the power to make an order that the costs be calculated on the indemnity basis. The decision to award such costs will depend on the exercise of the Court’s discretion in light of the particular circumstances of the case.

15. [66]

    Again, ultimately, the question is whether the justice of the case requires the costs to be calculated on that basis: Bullabidgee Pty Ltd v McCleary (No 2) [2011] NSWCA 343 at [10] (Allsop P, Basten and Young JJA).

16. [67]

    Black CJ, in Re Wilcox; Ex parte Venture Industries (No 2) (1996) 72 FCR 151 at 152-153; [1996] FCA 1942, wrote:

17. [68]

    In Vector Corrosion Technologies Limited v E-Chem Technologies Ltd [2022] FCA 519 at [38], Jagot J wrote:

18. [69]

    In Ling v Beyond Development Group Pty Ltd (No 2) [2022] NSWSC 817, Ward P summarised the principles at [44]-[45]:

19. [70]

    There is no suggestion that the Civil Procedure Act, and the UCPR do not apply to probate proceedings or proceedings in which a claim for a family provision order is sought.

20. [71]

    I stress that these, and what follows, are general principles, which should not be elevated into rules of law, propositions of universal application, or rigid formulae. Nor do I wish to suggest that the jurisdiction should be unduly confined, or the discretion should be constrained, by statements of principle found in dicta in other decisions, or by preconceptions and predispositions. Decisions of the past do not, and cannot, put any fetters on the discretionary power, which is left largely unfettered. Also, I do not intend what is provided as a guide to be turned into a tyrant.

Costs – Probate Proceedings

1. [72]

   As was outlined by White J in Gray v Hart; Estate of Harris (No 2) at [5]:

2. [73]

   Kunc J recently stated in Brady v Mikan (No 2) [2022] NSWSC 1320 at [30] that:

3. [74]

   In this case, the parties were able to delineate the proportion of costs which should be attributed to each of the Probate proceedings and the family provision proceedings: see Paragraph [109] of the principal judgment.

4. [75]

   In Probate proceedings, and otherwise, the Court starts by treating the success or failure of the relevant party as being the starting point in consideration of the question of costs. Ordinarily, the successful party may reasonably expect to receive her or his costs, whether that outcome be described as costs following the “event” or otherwise.

5. [76]

   However, the question of costs is always within the Court’s unfettered discretion which must be exercised judicially and by reference only to considerations relevant to its exercise and upon facts connected with, or leading up to, the litigation: Northern Territory v Sangare at [24].

6. [77]

   I have recently set out the principles relating to the determination of costs, in Probate proceedings, in Starr v Miller at [51]-[86]. I recently summarised those principles in Chant v Curcuruto (No 2) [2021] NSWSC 882 at [32] as follows:

7. [78]

   A different view has been expressed in some probate judgments. In Fielder v Burgess [2014] SASC 98 at [65], Kourakis CJ observed that the costs principles in probate litigation were, arguably, anachronistic in modern times in which there is a greater concern with a need for proportionality in litigation and that it may soon be necessary to reconsider it.

8. [79]

   The view of Kourakis CJ accords with what had been written by Ward LJ in Shovelar v Lane [2011] EWCA Civ 802 at [44]:

9. [80]

   Ultimately, however, any costs order should reflect the way in which the proceedings were conducted and dealt with, or as was noted by Slattery J in Sydney Markets Credit Services Co-Operative Ltd v Taylor (No. 3) [2015] NSWSC 1236 at [32], “[t]he costs order should reflect the reality of the contest”.

Determination – Probate Proceedings

1. [81]

   I have carefully considered the Plaintiffs’ submissions. I have re-read the principal judgment, the contents of which I shall not repeat but which have been, again, carefully considered.

2. [82]

   I am unable to accept that there was anything in the conduct of the deceased that could reasonably have led the Plaintiffs to challenge the validity of the 2012 Will. All he did was exercise his testamentary freedom. Furthermore, the Plaintiffs had not seen the deceased between the time he and Maria had left Sydney in 2010 and when the deceased executed the 2012 Will.

3. [83]

   In my view, the Plaintiffs disputed the validity of the 2012 Will, as the provision made for them in the 2005 Will was much greater. In other words, the litigation was to advance their own interests. They had been served with the affidavit evidence of Father Kariba more than 12 months prior to the commencement of the hearing. There was nothing to suggest that his evidence was likely to be successfully challenged as he was the only person who could give evidence of the events that occurred on the day on which the 2012 Will was executed. There was no suggestion that they had instructed their legal representatives to contact Father Kariba prior to the hearing to discuss his evidence.

4. [84]

   In the reasons for judgment, I noted that I did not place very much weight on Mr James Ballam’s evidence as evidence of incapacity, particularly in light of the clear evidence of Father Kariba and Mr Maniscalco. I found his evidence about the topic unconvincing. He was the only non-party witness who was called by the Plaintiffs to give evidence on the deceased’s capacity in 2012.

5. [85]

   Furthermore, although Maree-Marcelle had annexed a photograph and caption that she had published on Facebook, she agreed that, if she had honestly thought that the deceased had no idea what was going on, the positing of the comment would be disrespectful of him, and that she had intended the photograph for the purposes of humour.

6. [86]

   Claudia had attended the wedding of Maree-Marcelle in 2012 but gave no evidence of observing any signs that suggested a lack of capacity. One might have thought that she would have done so had she observed any such signs.

7. [87]

   Benjamin did not attend the wedding and did not see the deceased after 2010. He could not provide any evidence on the issue of the validity of the 2012 Will.

8. [88]

   The medical evidence relied upon by the Plaintiffs was medical evidence obtained in the period from about 2016, that is to say some years after the execution of the 2012 Will. It did not assist the Plaintiffs in any way. For their part, the Defendants relied upon an email chain between their solicitor and Dr Drago, including an email dated 13 April 2022, in the Italian language, from that solicitor to Dr Drago and an email in reply from Dr Drago dated 27 April 2022, a copy of which had been provided to their solicitors, albeit not long before the hearing commenced.

9. [89]

   I have not found anything at all that would lead me to conclude that the Plaintiffs were justified in maintaining their opposition to the grant of Probate of the 2012 Will. Having seen a copy of the 2012 Will and having received, and considered, the evidence of Father Kariba, they should have reflected upon the Defendants’ case and determined that they were at risk as to costs if they proceeded with opposition to the Cross-Claim. Furthermore, the medical evidence about the deceased’s condition in 2016 ought to have led them to appreciate that the risk was a real one.

10. [90]

    However, there are four reasons why I am not satisfied that the Plaintiffs should bear the Defendants’ costs, calculated on the indemnity basis, of the Probate part of the proceedings. The first is that it was necessary, with the leave of the Court, for Father Kariba to supplement his affidavit evidence orally. It was only in his oral evidence that he described, in more detail, how the Will had been written out, and how the deceased had prepared for his meeting with Father Kariba; precisely how the deceased had dictated his wishes and intentions in Italian, and Sicilian dialect to Father Kariba; and how the instructions had been written in English: see [168]-[177] of the principal judgment.

11. [91]

    Father Kariba added that the deceased had prepared for the meeting as he had the various pieces of paper on which the details of the different properties to be devised were written in English. He did not know who had written the details on the paper, but he maintained that it was only the deceased who had identified the beneficiary, or beneficiaries, who was, or who were, to receive the relevant property. This evidence was not referred to in his affidavit and it was an important piece of the evidentiary mosaic which led to the ultimate conclusion.

12. [92]

    The second reason is that the evidence of Peter Maniscalco OAM, whose evidence I accepted, was only served shortly before the hearing, his affidavit having been made on 24 May 2022. He also gave evidence of the conversations that he had with the deceased in February 2013, and in September 2014 which corroborated the evidence of Father Kariba as to the deceased’s behaviour.

13. [93]

    The third reason is that had the Plaintiffs put the Defendants to proof of the validity of the 2012 Will, the evidence, broadly speaking, would probably have been the same. Not much Court time was spent in the cross-examination of Father Kariba and Mr Maniscalco.

14. [94]

    The fourth reason is that no Offer of Compromise, or on the evidence, any other offer, was served dealing with the Probate proceedings. That could have been done and had it been accepted, could have provided an opportunity for the Probate proceedings to be compromised.

15. [95]

    In the circumstances, the Plaintiffs should pay the Defendants’ costs, calculated on the ordinary basis, of the Probate part of the proceedings. To the extent that the costs calculated on the ordinary basis do not meet all of the Defendants/Cross-Claimants costs, the balance of those costs, calculated on the indemnity basis, should be paid out of the deceased’s estate.

The Law – Family Provision Proceedings

1. [96]

   I turn now to the principles of law relating to costs in the family provision proceedings. On this topic, the Offer of Compromise is particularly relevant.

2. [97]

   Rule 42.15A of the UCPR, which is applicable to family provision proceedings (Page v Page [No 2] [2016] NSWSC 1323 at [51]-[52]), provides:

3. [98]

   There was no submission made that the Offer of Compromise was not a genuine offer of compromise, or one merely made to trigger the costs consequences under the rules: Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368. I am satisfied that the offer made to each of the Plaintiffs represented a real compromise.

4. [99]

   I dealt with the principles in Chisak v Presot (No 2) [2021] NSWSC 754 at [54]-[66]). It is not necessary to repeat what I wrote there. The rule referred to leaves parties with an expectation of the costs consequences that, in the ordinary course of litigation, will flow from the non-acceptance of an offer of compromise made under the UCPR where the offerees obtain a less favourable result than the one made in the offer.

5. [100]

   Recently, in D Capital 2 Pty Ltd v Western (No 2) [2022] NSWSC 1283 at [127], Meek J referred to what I had written in Meres v Meres (No 2) [2017] NSWSC 523. In that case, I explained the two-stage process for determining the effect of what is said to be an Offer of Compromise at [43]-[44]:

6. [101]

   In Croghan v Blacktown City Council (2019) 100 NSWLR 757; [2019] NSWCA 248 the approach to be adopted by the Court was set out as follows at [11] and [13] (Meagher, McCallum JJA and Simpson AJA):

7. [102]

   The judgment in Croghan v Blacktown City Council was referred to in Mendonca v Tonna (No 3) [2020] NSWCA 332, in which the Court of Appeal (Bell P, Meagher and Payne JJA), wrote, at [24]:

8. [103]

   On the question as to whether the rejection of the offer was reasonable, albeit in the context of the service of a Calderbank offer, Ward CJ in Eq outlined the applicable principles in Wheatley v Lakshmanan (No 2) at [97]-[99]:

9. [104]

   The recent judgment of Payne JA in YWCA Australia v Chief Commissioner of State Revenue (No 2) [2021] NSWSC 102 demonstrates that there remains a difference in the authorities as to whether exceptional circumstances are required for the Court to “otherwise order”. Although his Honour was referring to UCPR r 42.14, what his Honour wrote, at [23], applies equally to UCPR r 42.15A:

10. [105]

    In Walker v Harwood [2017] NSWCA 228, Basten JA had written at [22]:

11. [106]

    Perhaps, a useful summary of what the Court ought to do in determining whether to “otherwise order” was provided by Kunc J in Bates v Cooke (No 2) (which was cited, with approval, by White J in AB v Curry (No 2) [2015] NSWSC 1209 at [4], and by the Supreme Court of Victoria in Briggs v Mantz (No 2) [2014] VSC 487 at [33]-[35] (McMillan J), and Smith v Whittaker [2016] VSC 287 at [36] (Derham AsJ)). Kunc J wrote at [33]:

12. [107]

    (An appeal from the substantive judgment of Kunc J was dismissed in Bates v Cooke (2015) 14 ASTLR 221; [2015] NSWCA 278. Nothing was written by the Court of Appeal about the costs judgment.)

13. [108]

    Because it is relevant to the submissions made on behalf of the Plaintiffs, I should note that the fact that an adverse costs order will cause hardship to the unsuccessful party will not be sufficient, on its own, to resist the usual order. In this regard, I refer to Houatchanthara v Bednarczyk [1996] NSWCA 253, in which Clarke JA (Handley JA and Santow AJA agreeing) expressed that:

14. [109]

    Furthermore, the impecuniosity of a party is not a ground for refusing to make an order for costs against that party: Sassoon v Rose [2013] NSWCA 220 at [10] (Meagher JA, Gleeson JA agreeing). As was written there, “[T]he fact that an unsuccessful party is, or may, not be able to meet an order for costs is not a good reason to deprive the successful party of the opportunity to enforce or attempt to enforce such an order”.

15. [110]

    The comments of the Court of Appeal in Bassett v Bassett [2021] NSWCA 320 at [198] are also relevant in this regard:

16. [111]

    I also remember what I had written in Page v Hull-Moody [2020] NSWSC 411 at [256]:

17. [112]

    More generally, in Harkness v Harkness (No 2) at [18]-[19], I set out the principles that relate to determining the issue of costs in family provision proceedings:

18. [113]

    In Bruce v Greentree (No 2) [2015] NSWSC 1636 at [43], I wrote:

19. [114]

    The principles in respect of costs orders in family provision matters were summarised by the Court of Appeal in Haertsch v Whiteway (No 2) [2020] NSWCA 287 at [4]-[11] (Macfarlan, Meagher and Leeming JJA).

20. [115]

    I have borne these principles in mind.

Determination – Family Provision Proceedings

1. [116]

   Senior counsel did not provide any submissions on the reasons why the order sought by the Defendants, based upon the service of the Offer of Compromise, should not be made. I have referred to what was orally submitted at the costs hearing and the copy letter referred to then.

2. [117]

   The offer made to each of the Plaintiffs clearly provided for a lump sum and the payment of costs, which lump sum, whilst not anything like the provision made for each in the 2005 Will, was clearly an offer that was a genuine compromise in all the circumstances. It is to be noted that the dispute existing in relation to eligibility was also pointed out in the covering letter enclosing the Offer of Compromise.

3. [118]

   No explanation was given, in correspondence, or otherwise, for rejecting the offer made by the Defendants or allowing it to lapse. Nor was there any suggestion that the Plaintiffs sought to have the offers reinstated following the receipt of the Defendants’ evidence, or to make a counter-offer, in the same, or similar, terms, as the Offer of Compromise, after it had lapsed.

4. [119]

   I commend to parties involved in proceedings in which a family provision order is sought, that every effort should be made to conduct negotiations frankly and openly, to try to resolve the proceedings, and if there are issues or concerns about an offer that has been made, to raise any issues at the first convenient opportunity with the offerors’ solicitors, so that any ambiguities, or other concerns, can be resolved. The Court should be able to see that the parties have considered what is being offered in a sensible, practical, and commercial way.

5. [120]

   One is left with the suspicion that as the Plaintiffs had entered into a conditional costs’ agreement with their legal representatives, they may have felt that they had nothing to lose by proceeding with their claims. If that is what they thought, they were quite wrong.

6. [121]

   In my view, the Plaintiffs should bear the Defendants’ costs, calculated on the ordinary basis, of the family provision proceedings up until a reasonable time after they had an opportunity to have considered the Defendants’ affidavit evidence. In the exercise of my discretion, I propose to otherwise order, at least in part taking into account the date of the service of the Defendants’ evidence.

7. [122]

   Bearing in mind when it was served, I am satisfied that the Defendants’ costs, calculated on the indemnity basis, after 31 January 2022 should be paid by them. Whilst this order does not strictly comply with the terms of UCPR rule 42.15A, I am considering the overall justice of the case so far as it relates to the family provision proceedings. The Plaintiffs should pay the Defendants’ costs, calculated on the indemnity basis, from 1 February 2022.

The separate proceedings

1. [123]

   There was really no basis for the Plaintiffs commencing the separate proceedings so close to the date of the commencement of the hearing.

2. [124]

   I have considered whether the costs should be calculated on the indemnity basis, but I have come to the conclusion that it should not. The Plaintiffs did not persist with the claim once the information about the debts was provided to them. Indeed, they consented to the dismissal of the separate proceedings in the event that the 2012 Will was found to be the last valid Will of the deceased.

3. [125]

   The Court orders:

   1. (1)

      In respect of the Probate proceedings:

   2. (2)

      In respect of the family provision claims:

   3. (3)

      In respect of the separate proceedings:

   4. (4)

      Orders that the Exhibits should be dealt with in accordance with the Uniform Civil Procedure Rules 2005 (NSW).