New South Wales Supreme Court CITATION : Seeley v Back - Estate of John Michael Pegus Seeley [2005] NSWSC 634 12/10/04, 13/10/04, 14/10/04, 15/10/04, 19/10/04, 15/12/04 HEARING DATE(S) : Judgment: 18/02/05 13/04/05, 01/06/05 JUDGMENT DATE : 30 June 2005 Equity Division JURISDICTION : Probate List JUDGMENT OF : Barrett J DECISION : Costs of both plaintiff and defendants to be paid out of estate on the indemnity basis CATCHWORDS : COSTS - probate - successful application for revocation of probate - defendant executors not discharging onus of proof of testator's capacity - whether they should pay costs personally - whether testator was cause of the litigation Graham v Kahler (unreported, NSWSC, 17 July 1991) Re Carroll; Ryman v Public Trustee (unreported, NSWSC, 12 November 1979) CASES CITED : Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698 Seeley v Back - Estate of John Michael Pegus Seeley [2005] NSWSC 68 Harry Seeley - Plaintiff PARTIES : Francis Joseph Back - First Defendant Vernon Groves - Second Defendant FILE NUMBER(S) : SC 107958/03; 107987/03; 5569/01 Mr G.C. Lindsay SC/Mr C.P. Locke - Plaintiff COUNSEL : Mr J.R. Wilson SC - Defendants Oliveri Attorneys - Plaintiff SOLICITORS : Back Schwartz Vaughan - Defendants LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J THURSDAY, 30 JUNE 2005 5569/01 - Harry SeeleY v Francis Joseph back - estate of Michael Pegus Seeley & Anor 107958/03 - Harry Seeley V Francis Joseph back & Anor - the estate of John Michael Pegus Seeley 107987/03 - Harry Seeley V Francis Joseph back & Anor - the estate of John Michael Pegus Seeley JUDGMENT 1 In proceedings 107958 of 2003, I decided, for reasons published on 18 February 2005 (see Seeley v Back – Estate of John Michael Pegus Seeley [2005] NSWSC 68), that the grant of probate in common form made on 23 October 2001 to the defendants, Francis Joseph Back and Vernon Groves, in respect of the deceased's purported will dated 18 February 1993 should be revoked and that a grant of letters of administration of the estate of the deceased should be made to the plaintiff, Harry Seeley. That outcome made it inappropriate to grant any relief in the related proceedings 5569 of 2001 and 107087 of 2003. 2 Orders to give effect to my decision were subsequently made. It remains to deal with the question of costs. 3 The plaintiff says that the defendants should be subjected to an order that they pay the plaintiff's costs personally or, at least, that the defendants be denied costs. The defendants say that they should have their costs out of the estate on the indemnity basis. These are the basic propositions. There are also some matters about offers of compromise that will be relevant if the plaintiff's contentions prevail. 4 The plaintiff starts with a proposition stated by Young J in Graham v Kahler (unreported, NSWSC, 17 July 1991): "Carroll's case is also authority for the proposition that unless there are some special circumstances, if a person has obtained probate in common form and the grant is revoked and probate in solemn form is granted in an earlier will, that person usually pays the whole costs of the proceedings personally and is not entitled to any costs out of the estate and that is the reason why cases such as Levy and Carroll suggest that defendants in the present situation should always obtain an indemnity from the beneficiaries." 5 Re Carroll; Ryman v Public Trustee (unreported, NSWSC, 12 November 1979) contains a statement by Holland J about the duty of an executor who has obtained a grant of probate in common form and later sees overwhelming evidence of the invalidity of the will he has propounded. Such an executor should take active steps to bring the question of the validity of will before the court. In that case, the Public Trustee as executor was allowed costs out of the estate because he had no reason to doubt the validity of the will he sought to uphold. The present plaintiff says that the defendants were in no such position because (a) the terms of the will were unusual in that the principal beneficiary (second defendant) had no moral claim on the testator's bounty whereas the minor beneficiary (the plaintiff son) obviously did; (b) from at least March 2003, the defendants were aware that the will had been made on or about the day of the deceased's release from hospital where he had been on the medication that played a party in my findings concerning capacity; (c) from at least March 2003, the defendants had no reasonable basis for thinking that the plaintiff was not the deceased's son; (d) from at least September 2003, the defendants were on notice of the medical implications of the hospital records; and (e) the defendants approached the proceedings "as a partisan forensic contest", with the second defendant having a vested interest as principal beneficiary and the first defendant, although not a beneficiary, being a co-executor with the second defendant and having therefore a personal interest in obtaining commission. 6 The plaintiff also refers to particular aspects of the conduct of the proceedings by the defendants which showed that they proceeded "on an adversarial basis and with the prospect of advancing their personal interests". 7 The defendants resist any order making them liable for costs. They say that they, as executors, were seeking to uphold a will regular and rational on its face which was presumed to be that of a person of competent understanding in circumstances where the basis on which the deceased was found to lack capacity was not and could not have been apparent to the defendants (or to the first defendant when he took instructions to draw the will). The finding that the defendants, upon whom the onus lay, had not proved capacity was made after a contested hearing which included cross-examination of medical witnesses on both sides. The defendants therefore say that the matter should be regarded as one in which it was the conduct of the deceased that brought about the litigation, so that the applicable principle with respect to costs is the first of the two exceptions to the rule that costs follow the event referred to by Powell J in Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698, that is, that the costs of a party unsuccessfully opposing probate may be ordered to be paid out of the estate where the testator, or those interested in residue, have been the cause of the litigation. 8 I accept the submissions in this respect advanced on behalf of the defendants. The findings that led to my conclusion that the defendants had failed to discharge the onus of showing the deceased's testamentary capacity were made on the whole of the evidence after the trial. I do not think that any separate element of the evidence – or, indeed, the whole of the affidavit evidence (including experts' reports) in the "raw" form in which it existed before the trial – should be seen as having had a clear capacity to show the defendants the eventual outcome. It is true that they adopted an adversarial stance. But I do not think that, in that respect, they overstepped the boundaries of conduct appropriate to executors. 9 It is appropriate, in this case, to regard the testator as the cause of the litigation, so that the costs of the unsuccessful defendants should be paid out of the estate. 10 What I have said to this point concerns directly the probate proceedings. The same result is appropriate for the two related equity suits which were dealt with essentially as adjuncts to the probate suit. 11 I order that the defendants' costs in each of proceedings 5569 of 2001, 107958 of 2003 and 107987 of 2003, assessed on the indemnity basis, be paid out of the estate of the late John Michael Pegus Seeley. 12 I order that the plaintiff's costs in each of proceedings 5569 of 2001, 107958 of 2003 and 107987 of 2003, assessed on the indemnity basis, be paid out of the estate of the late John Michael Pegus Seeley. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.