FEDERAL COURT OF AUSTRALIA Rostirolla v Fiakos (No 3) [2002] FCA 1643 COSTS – where applicants unsuccessful in establishing trust alleged – effect of conduct of the deceased DAYNA ROSTIROLLA and PETER ROSTIROLLA v JOAN FIAKOS and ROYAL & SUN ALLIANCE FINANCIAL SERVICES LIMITED N 958 of 2002 GYLES J SYDNEY 19 DECEMBER 2002 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N957 OF 2002 BETWEEN: DAYNA ROSTIROLLA FIRST APPLICANT PETER ROSTIROLLA SECOND APPLICANT AND: JOAN FIAKOS FIRST RESPONDENT ROYAL & SUN ALLIANCE FINANCIAL SERVICES LIMITED SECOND RESPONDENT JUDGE: GYLES J DATE OF ORDER: 19 DECEMBER 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: There be no order as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N958 OF 2002 BETWEEN: DAYNA ROSTIROLLA FIRST APPLICANT PETER ROSTIROLLA SECOND APPLICANT AND: JOAN FIAKOS FIRST RESPONDENT ROYAL & SUN ALLIANCE FINANCIAL SERVICES LIMITED SECOND RESPONDENT JUDGE: GYLES J DATE: 19 DECEMBER 2002 PLACE: SYDNEY EX TEMPORE REASONS FOR JUDGMENT 1 The matter has been stood over to today to deal with, amongst other things, the appropriate order for costs. The conclusion I have come to is that I should make no order as to the costs of the applicants, in other words, they will bear their own costs. I take that view because although in form the action is completely adversary, in substance it propounded alternative views about a trust the first of which was not established but an essential part of the case was to establish an alternate trust under which they are residuary beneficiaries. 2 Furthermore, I am satisfied that there is substance in the submission which Mr Cassidy QC puts on behalf of the applicants that there was sufficient conduct by the deceased to make it a reasonable action on their part to test the position. The declaration which was made by the deceased in the hospital is consistent with their case and I cannot see any reason why I would conclude that they had any particular knowledge (which they would necessarily regard as reliable) which would be to the contrary of that declaration. The fact that I noted that family pressure had been a factor in the change of mind by the deceased does not establish that they knew or believed that they were altering or seeking to alter irrevocable trusts which he had established at an earlier time. I also bear in mind in considering this issue that the respondent did conduct herself in relation to the deceased on the basis that they could bargain between themselves as to the proceeds of the policy. That is inconsistent with the position which I had found to exist. 3 Whilst Mr Cassidy has not been able to refer to any case in which the well known exception to the costs rule applicable where the deceased causes a problem in relation to trusts or wills has been applied in a precisely like situation, it seems to me that the analogy is close enough. Here the trust is, in substance at least, close to testamentary because the proceeds of the policy only come in after death and the declaration made just prior to death is very similar to that conduct of a testator which would give rise to a legitimate desire to have the matter clarified by evidence. The applicants were young at the time of the original arrangements and I have no reason to believe that they would have been privy to what took place at that time. Indeed, bearing in mind the then position between the deceased and his then wife, it is, I would judge, unlikely that he had confided the nature of his arrangements to his children or his then wife. 4 So far as the indemnity costs claim is concerned, in a sense that is washed away by the conclusion I have come to that it was not unreasonable to commence proceedings and that there should be no order as to costs. I would also add that there is substance to what Mr Cassidy says about the inability to really judge the content of the offers that were made compared with what the final financial result may turn out to be in the present state of knowledge. In my view, it is not a clear enough situation to impose an order for indemnity costs even if an order for costs were appropriate. I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate: Dated: 30 January 2003 Counsel for the Applicant: DI Cassidy QC and I Raine Solicitor for the Applicant: Williamsons Solicitors Counsel for the Respondent: R Angyal Solicitor for the Respondent: Keith Hurst & Associates Date of Hearing: 19 December 2002 Date of Judgment: 19 December 2002