Lynch-Frame v Lynch-Foster; Lynch-Foster v Lynch-Frame [2012] NSWSC 65

Supreme Court New South Wales

Medium Neutral Citation: Lynch-Frame v Lynch-Foster; Lynch-Foster v Lynch-Frame [2012] NSWSC 65 Hearing dates: 2 February 2012 Decision date: 02 February 2012 Jurisdiction: Equity Division Before: White J Decision: Refer to paras [34] and [35] of judgment. Catchwords: COSTS - costs in probate action - consent to dismissal of claim to rectify will - proceedings not reasonably commenced - costs to follow the event Legislation Cited: Succession Act 2006 Cases Cited: Perpetual Trustee v Baker [1999] NSWCA 244 Shorten v Shorten (No. 2) [2003] NSWCA 60 Category: Costs Parties: Ann Michelle Lynch-Frame (Plaintiff in 2010 proceedings) Helen Mary Lynch-Foster (Defendant in 2010 proceedings) Representation: R Brender (Plaintiff in 2010 proceedings) B Townsend (Defendant in 2010 proceedings) Trisley Lawyers (Plaintiff) O'Hearn & Bilinsky (Defendant) File Number(s): 2010/97776; 2011/66787

Judgment 1HIS HONOUR : These applications concern questions of costs. There are two proceedings in which the issues of costs arises. 2The first is proceeding 2010/97776 in which the plaintiff is Ann Michelle Lynch-Frame and the defendant is her sister, Helen Mary Lynch-Foster. 3The summons filed in those proceedings sought an order for rectification of the deceased's will of 24 March 2009. The summons also seeks a family provision order pursuant to chapter 3 of the Succession Act 2006. 4On 8 April 2011, orders were made by consent that the rectification question raised by prayers 1 and 2 of the summons, and any claim for construction in relation to the will, be decided separately from the family provision claim. 5Today I made orders by consent dismissing the claim for relief in prayers 1 and 2 of the summons, that is to say, dismissing the claim for rectification. 6The family provision claim is to proceed. The defendant, Helen Mary Lynch-Foster is to have the conduct of those proceedings on behalf of the estate. 7The second proceedings were commenced by Helen Lynch-Foster by a statement of claim filed on 1 March 2011. She sought an order that probate in solemn form of the deceased's will of 24 March 2009 be granted to her. 8The deceased died on 23 April 2009. The delay in applying for probate was owing to disputes that have arisen in relation to the estate, and in particular, to the claim made by Anne Lynch-Frame that the will should be rectified. 9Today I have made orders, also by consent, that probate in solemn form of the will be given to the two named executrixes, Helen Mary Lynch-Foster and Ann Michelle Lynch-Frame. I have noted undertakings of both parties given to each other and to the court to attend diligently to their duties as executrixes in a business-like manner. 10Contentions, as to the proper construction of the will, which had been advanced on behalf of Anne Michelle Lynch-Frame in correspondence from her solicitor, have been abandoned. That is noted in the short minutes of order. 11Helen Lynch-Foster seeks in substance an order in the first (2010) proceeding that the plaintiff, Ann Lynch-Frame, pay her costs in respect of the issues ordered to be tried separately. 12In the probate proceedings she seeks an order that the defendant to those proceedings pay her costs and that she be entitled to be indemnified out of the estate to the extent that her costs exceed the amount payable by the defendant. 13The orders I have made already arise from the abandonment by Anne Lynch-Frame of her contention that the will should be rectified, and arise from her not pressing an alternative claim for construction of the will advanced in correspondence. 14Prima facie , costs follow the event, and she should be ordered to pay the costs of Helen Lynch-Foster in respect of both proceedings except, I think, to the extent to which costs could have been recovered out of the estate, had the arguments not been advanced, and had an application for probate in common form been made by both parties. 15Counsel for Ann Lynch-Frame submits that this is a case in which special rules, which are acknowledged to apply from time to time in probate litigation, are relevant. He submits that the costs of both parties should be paid out of the estate; or alternatively as a fall back position, I assume, if that order is not made, that there should be no order that Ann Lynch-Frame pay costs. In Perpetual Trustee v Baker [1999] NSWCA 244, Giles JA and Brownie AJ said: " [13] Costs are in the discretion of the Court, and the established principle on which the discretion as to costs will normally be exercised is that costs follow the event. In probate litigation, in particular, however, exceptions have been recognised, one being that where the testator has been the cause of the litigation the costs of unsuccessfully opposing probate may be ordered to be paid out of the estate, and another being that if the circumstances led reasonably to an investigation concerning the testator's will the costs may be left to be borne by those who incurred them (see for example In the estate of Hodges: Shorter v Hodges (1988) 14 NSWLR 698 at 709). [14] The two exceptions tend to overlap. As was said by Santow J in In the estate of Moyle: Moyle v Moyle (18 June 1988, unreported), if a testator is by his mental frailty and other circumstances in a position where the circumstances reasonably call for investigation of the validity of the will ' in one sense the testator, though usually with no sense of blameworthy fault, has by his or her conduct caused the litigation to occur'. A party reasonably but unsuccessfully propounding or challenging the will, and so bringing about the necessary investigation, should no more have to bear his own costs than pay the costs of the other party. So it has been said that where the conduct and habits and mode of life of a testator have given ground for questioning his testamentary capacity the costs of the unsuccessful party should be paid out of the estate, as distinct from being left to be borne by that party ( Davies v Gregory (1873) 3 P & D 28; Roe v Nix (1893) P 55; In the will of Millar (1908) VLR 682), and the costs of both sides in testamentary capacity cases have often been allowed out of the estate ( In the will of Severs (1887) 13 VLR 572; Phillips v Dundas (Smith J, VSC 4 December 1995, unreported); Redroff v Miegoch (Santow J, NSWSC, 22 April 1996, unreported); re Ryan: Williams v Ryan (1998) VSC, 109; In the will of Ryan: Williams v Ryan (Byrne J, VSC, 23 October 1998, unreported); cf Middlebrook v Middlebrook (1963) 26 ALJR 216 where Dixon CJ and McTiernan, Taylor and Owen JJ ordered that the parties bear their own costs but Menzies J would have ordered that the costs be paid out of the estate). " (See also Shorten v Shorten (No. 2) [2003] NSWCA 60.) 16This is not a case in which the testatrix has been the cause of the litigation. Nor is it a case in which issues have been raised concerning the testamentary capacity of the testatrix. 17The substantive issue that was advanced, but not pursued, was whether the terms of the will gave effect to the testatrix's intentions and her instructions. 18The will in question was prepared by a solicitor, Mr Gregory Royden Williams. He kept notes of his instructions. I was advised that those notes were made available to the parties prior to any proceedings being commenced. His notes included instructions taken from the deceased when he visited her in hospital on 26 February 2009. Both Ann Lynch-Frame and Helen Lynch-Foster were present on that occasion. 19On that occasion, instructions were given by the deceased, which were recorded in the solicitor's notes, that after making certain specific gifts, the residue of the estate was to be given to those children who survived her in such proportions as would create an equality of distribution between the children. That is, in substance, the claim that Ann Lynch Frame sought to advance in her proceeding. 20Mr Williams has also provided a note of further instructions taken from the deceased by telephone on 2 March 2009. That note refers to changes to some specific gifts and includes a note " and residue to five children equally ". That is clearly a different instruction from the instruction that residue was to be divided in such proportions as would create an overall equality of distribution. 21In due course, Mr Williams prepared a will and sent it to the testatrix. It contains a residuary clause, in accordance with the note of the second instruction. Mr Williams deposed that the absence of any words qualifying a gift of residue was not the result of clerical error, but that the clause was intentionally drafted in the form it takes based on the instructions he received from the deceased by telephone on 2 March. 22I understand that it was then, faced with Mr Williams' affidavit, that Ann Lynch-Frame has decided not to pursue the claim for rectification. 23In an affidavit she swore in support of the claim for summons Ann Lynch-Frame deposed to having observed her mother read the will provided by the solicitor prior to its being signed in front of two witnesses. 24As to the question whether the will reflected the intentions and instructions of the deceased having regard to the difference between the will as signed and the instructions given on 26 February 2009, I do not think that the information that appears to have been available to Ann Lynch-Frame when the proceedings were commenced and pursued was such as to make it reasonable for the proceedings to be brought. 25It seems clear from the documents available to her that the deceased's instructions had changed after 26 February 2009. She had no evidence from the deceased's solicitor that would support a contention that the will contained a mistake. 26In these circumstances, I do not think that it would be just to order that the costs of the litigation on this issue be borne by the estate. Rather, the costs of the litigation have arisen as a result of Ann Lynch-Frame's decision to commence the proceedings for rectification, presumably in the belief that this would further increase the distribution to which she is entitled from the estate. Even if the recognised exceptions to the usual rule that costs follow the event that have been applied in probate litigation can, as a matter of principle, be applied to claims for rectification such as the present, I do not think that the strength of the claim for rectification was such as to justify the litigation. Accordingly, in proceedings 2010/97776, I will order that the plaintiff pay the defendant's costs in relation to the issues that were ordered to be tried separately and in advance of the claims for orders pursuant to chapter 3 of the Succession Act . 27As I have said, the probate litigation was occasioned by Ann Lynch-Frame maintaining that the will should be rectified. Had that contention not been advanced and persisted in, an application would have been made by both parties for a grant of probate in common form, and the costs of the 2011 proceedings would not have been necessary. 28Prima facie , the defendant to those proceedings should pay the costs to the extent that the costs exceed the costs that would have been incurred in any event. 29The only further matter that might be raised against that conclusion is that the statement of claim sought an order that probate be granted to the plaintiff in the 2011 proceedings, that is, Helen Lynch-Foster. The statement of claim did not seek an order that probate be given to the plaintiff with liberty to the defendant to join in and apply for a grant. That was a matter that was raised in correspondence from the solicitors for Ann Lynch-Frame, Court Solicitors, before the proceedings were commenced. They referred to the newspaper advertisement of Helen Lynch-Foster's intention to apply for probate and noted that the published notice made no mention of reserving leave for the other co-executor to come in and also apply for probate. Helen Lynch-Foster's solicitors, O'Hearn & Bilinsky, responded the following day stating that Ann Lynch-Frame would be joined as defendant, and that if she wished to join in taking a grant of the will in its unaltered form, she would have the opportunity to indicate that to the court. They added: " Whether that is in the best interests of the due and proper administration of the Estate will depend upon whether our two respective clients are able to deal with Estate matters together in a businesslike way without the constant intervention and involvement of their respective lawyers ". 30On 23 September 2010, O'Hearn & Bilinsky advised that Helen Lynch-Foster would agree to Ann Lynch-Frame joining as co-executor if the latter undertook to attend diligently to her duties as executor in a business-like manner. Those undertakings have been given, and thus, the issue as to who should be appointed as executors was ultimately resolved in a sensible way. 31I do not think that Helen Lynch-Foster took an inappropriate adversarial position in relation to the appointment of her sister as co-executrix. I do not think that this issue warrants a modification to what is otherwise the appropriate costs order. 32For these reasons, in the probate proceedings, Ann Lynch-Frame should be ordered to pay, on the ordinary basis, the additional costs that have been occasioned by the need for an application to be made for a grant in solemn form. 33The only remaining question, I think, is whether Helen Lynch-Foster should be entitled to the further order that she seeks in relation to the 2010 proceeding, namely that she be entitled to obtain from the estate the costs of defending that proceeding to the extent that they may not be recovered under the costs order. Although no grant had been made when the costs were incurred, she was in substance in the position of an executor defending the will, and I think should be entitled to an indemnity out of the estate. 34Subject to any submissions counsel may have as to the form of the orders, I propose the following orders in relation to each matter. 1. In proceedings 2010/97776, order that the plaintiff pay the defendant's costs in respect of the issues that were ordered to be tried separately from the family provision claim asserted in paragraphs 3 to 5 of the summons. 2. Note that order 1 applies in relation to costs of those issues whether arising before or after the order made on 8 April 2011 for the separate trial of issues. 3. Declare that to the extent the defendant's costs exceed the amount payable by and recovered from the plaintiff under the preceding orders the defendant may pay or retain the difference out of the estate. 35In proceedings 2011/66787 the orders I propose are that: 1. Order that the defendant pay on the ordinary basis the plaintiff's costs of the proceedings in respect of so much of those costs as exceed the amount of costs that would be payable from the estate in respect of an application for a grant of probate in common form. 2. Declare that the defendant is otherwise entitled to be indemnified out of the estate in respect of the costs of those proceedings. 3. To the extent that the defendant's costs of the separate issues assessed on the indemnity basis exceed the amount payable by, and recovered from, the plaintiff under the preceding orders, the defendant may pay or retain the difference out of the estate. [Counsel addressed.] [Orders made accordingly, except that in order 3 in proceeding 2010/97776 amended to read: 3. Declare that to the extent the defendant's costs of the separately tried issues on the indemnity basis exceed the amount payable by and recovered from the plaintiff under the preceding orders the defendant is entitled to pay or retain the difference out of the estate.] 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. Decision last updated: 13 February 2012