Supreme Court New South Wales Medium Neutral Citation: Magur v Brydon (No 2) [2015] NSWSC 548 Hearing dates: Decided on the papers Date of orders: 12 May 2015 Decision date: 12 May 2015 Jurisdiction: Equity Division Before: Robb J Decision: Order that the plaintiff's costs of the proceedings be paid out of the estate of the deceased on the ordinary basis up to 18 June 2014 and on the indemnity basis after that date. Category: Costs Parties: Daria Magur (plaintiff) Andrew Daniel Brydon (defendant) Representation: Counsel: R Colquhoun (plaintiff) A Paterson (defendant) Solicitors: Colquhoun & Colquhoun (plaintiff) Swaab Attorneys (defendant) File Number(s): 2014/47718 Publication restriction: None Judgment 1. On 5 December 2014 I published reasons for judgment in these proceedings. I made an order in favour of the plaintiff under s 59 of the Succession Act 2006 (NSW) that provision be made in favour of the plaintiff by way of payment of the sum of $170,000 out of the estate of her deceased mother. The defendant, who is the executor, is the estranged son of the plaintiff and the grandson of the deceased. I also ordered that the burden of this provision should be borne equally by the share of the estate passing to 3 named beneficiaries. I deferred dealing with the issue of costs. 2. In pars 131 to 152 of the reasons for judgment I made various observations concerning the costs of proceedings for family provision relief. Those observations were prompted by the appearance that the costs of the plaintiff and the defendant were relatively high. It appeared that they would total just short of 40% of the distributable estate. The appearance that the costs were abnormally high was true for both parties. 3. In par 150 of my reasons I required the legal representatives of the parties to appear before me, after judgment, to provide an appropriate explanation for the costs that had been incurred. I said that I would hear the parties as to the costs orders that should be made. 4. The plaintiff made submissions dated 10 December 2014 concerning the reasons why the plaintiff's costs appeared unusually high. In the event, at a directions hearing after judgment concerning the issue of costs, I accepted that the explanations that were provided to the Court by the parties' legal representatives justified the conclusion that, notwithstanding the magnitude of the costs, there was no justification for the Court to proceed upon the basis that the level of costs was unwarranted from the perspective of the legal representatives. 5. The submissions on costs that have been delivered by both parties raise further issues for determination by the Court. These reasons deal with those further issues. 6. The first issue concerns an application by the plaintiff that portion of her legal costs be paid on the indemnity basis as a result of the failure by the defendant to accept an offer of compromise served by the plaintiff under UCPR r 20.26 on 18 June 2014. The plaintiff offered to accept a legacy of $115,000 from the estate in settlement of her claim. That amount is substantially less than the legacy of $170,000 that I ordered be paid to the plaintiff. The plaintiff also served an offer of compromise on 1 September 2014, in which she offered to settle her claim for $110,000, but it is not necessary to deal with the second offer of compromise, because the first one is effective. 7. The defendant has accepted in his submissions that UCPR r 42.14 applies so that it will be appropriate for the Court to make an order that the plaintiff's costs be paid out of the estate on the ordinary basis up to 18 June 2014, and be paid out of the estate for the period thereafter on the indemnity basis. 8. The only issue concerning the payment of the plaintiff's costs on the indemnity basis that requires determination is whether the Court should order the defendant to pay those costs personally in so far as they exceed the amount of the costs that would have been paid in any event on the ordinary basis, rather than that they be paid out of the estate. Apparently, the possibility that an order to this effect should be made arose out of some comment that I made. The defendant has made submissions as to why such an order should not be made, and, as I understand the plaintiff's submissions in reply, she contests the submissions made on behalf of the defendant. It is not entirely clear to me that the plaintiff herself has made an application that the defendant personally pay any costs to the extent that the costs calculated on the indemnity basis would exceed the costs payable on the ordinary basis . 9. It is not appropriate that the Court make an order that the defendant pay any part of the plaintiff's costs personally. There may be cases where it is appropriate for the Court to order a defendant executor to pay some or all of the costs of a family provision claim. This is not the occasion for me to set out the principles that should govern that possibility. It is sufficient to note that, although executors have a duty to uphold the deceased's will, there may be cases where the executor is the primary beneficiary; in contesting a plaintiff's application the defendant is primarily acting in his or her own interests; and by reason of the way the case is conducted, and the outcome, there is good reason to make an exceptional order that requires the executor to pay some or all of the plaintiff's costs. I do not suggest that this brief summary adequately describes the circumstances in which such a costs order should be made. 10. In the present case the defendant acted in accordance with the executor's ordinary obligation to uphold the will, and he did so in the interests of beneficiaries other than himself. Although the orders that I made did not have the result of disturbing the bequest made by the deceased in favour of the defendant, it should be noted that he did not put on evidence concerning his own financial position in order to defend the bequest made in his favour. Further, while my observations concerning the relatively high level of costs incurred by both parties in these proceedings stand, the evidence before the Court at trial does not justify any finding that the defendant's costs of defending the proceedings were incurred in any delinquent way that would justify the making of any costs order against him personally. Additionally, for reasons touched upon in my principal reasons for judgment, I do not consider the plaintiff to be in a position by reason of the costs that she has incurred to be able reasonably to criticise the conduct of the defendant. 11. Generally, unless the conduct of the executor is obviously delinquent, if a plaintiff proposes to apply to the Court for the making of any costs order against the defendant personally, the plaintiff should ensure that that issue is disclosed to the defendant, and the issue is put in contest at the hearing. There may be cases where that approach is not feasible, but the principle of finality of litigation, particularly in the context of family provision matters, makes it highly undesirable that the Court be asked to make serious rulings about the conduct of the executor, after judgment has been given, for the purpose of making a personal costs order against the executor. It will generally, as in the present case, neither be fair to the executor, nor even feasible, for the Court to consider making adverse findings concerning the conduct of the executor, if the basis for making those findings has not fully and properly been established at the hearing. 12. Further, I accept the force of most of the submissions made on behalf of the defendant on this issue. The making of a costs order personally against the defendant, who is the executor in the context of a family provision application, does not flow from the operation of any part of UCPR r 42. There may be cases where the Court should look beyond the duty of the executor to uphold the will, but the importance of that duty must be remembered, so that the Court should hesitate to add to the burdens faced by executors the risk that their conduct could lead to personal liability for costs, as that would impose inconsistent interests on executors that they could not readily escape. It is not necessary in the circumstances for me to respond to the defendant's submission that the Court should be particularly solicitous of the difficulties faced by executors because family provision cases are by their nature more difficult to predict than other civil cases. I acknowledge, however, that there is force in the defendant's final submission that the order contemplated might impose upon the estate the burden of artificial assessments of the plaintiff's costs on the ordinary and indemnity bases, so that the difference can be determined. That would plainly be an undesirable outcome. 13. The second issue, which is raised by the plaintiff, is her claim that the Court should make an order that her costs of obtaining probate of an earlier will of the deceased, which was subsequently revoked by consent, should be paid out of the estate. I touched upon this subject in par 15 of my principal reasons for judgment. 14. It is not clear to me from the plaintiff's submissions whether she asks for the order she seeks to be accommodated within the cost order in her favour made in the family provision proceedings, or she seeks the order on some other basis in relation to the original probate proceedings. I note the plaintiff's submission in par 17 of her written submissions dated 29 January 2015 that in par 4 of the summons in these proceedings she sought "Such further or other Orders as this Honourable Court sees fit". 15. This claim by the plaintiff was not fought at the hearing of these proceedings. One of the plaintiff's affidavits contained some evidence concerning the circumstances in which the probate granted to her was revoked. The defendant objected to the admission of this evidence, and the only part that was admitted was evidence that the grant of probate had been revoked by consent. It seems that the application for revocation was made by summons; the plaintiff consented to the order for revocation; and at that time no order was made that her costs be paid out of the estate, and no agreement to that effect was made between the plaintiff and the defendant. I do not see how, in those circumstances, I can now properly make an order in proceedings other than the present proceedings that the plaintiff's costs be paid out of the estate. I could not make an order in the present family provision proceedings, on the basis of the summons filed by the plaintiff, that had the same effect. I could, in exercising my discretion as to the proper provision that ought to have been made by the deceased in favour of the plaintiff take into account her unpaid liability for the costs of the revocation proceedings. In a very general sense I did so, although as I see the issues as they were fought between the parties, the unpaid costs of the revocation proceedings were not at the forefront of the plaintiff's claim. It is probable that I would not have come to any conclusion other than the one that I did, even if the plaintiff had made more of an issue than she did of her unpaid costs liability in respect of the probate and revocation proceedings. In any event, I have made a final determination on that issue, which must stand absent a successful appeal being instituted by the plaintiff. It would not be proper for the Court to be influenced to make a more favourable order to the plaintiff in respect of the costs of these proceedings because of knowledge that the plaintiff remained bound to pay her own costs of the probate and revocation proceedings. 16. Accordingly, I decline to make any order in favour of the plaintiff based upon her liability to pay her own costs of the revocation proceedings. 17. The final issue to be determined is the claim by the defendant that the Court should make an order "capping" the costs payable to the plaintiff out of the estate. The defendant suggested that an appropriate cap would be $70,000. 18. I decline to make the order sought by the defendant. It would be inappropriate to do so in exercise of the Court's power under UCPR r 42.4 to make an order specifying the maximum costs that may be recovered by a party from the other, as an order of that nature should only be made by the Court at an early stage of the proceedings: see Sherborne Estate (No 2): Vanvalen v Neaves (2005) 65 NSWLR 268 at [26]. It will also be inappropriate in this case for the Court to make a gross sum costs order under s 98(4) of the Civil Procedure Act 2005 (NSW), as such an order should only be made when the evidence permits the order to be an informed one that is based on evidence of the costs actually incurred, and the circumstances that existed at the time they were incurred, so that a proper determination can be made as to whether or not the costs were reasonable. Such an order should only be made "in the exceptional case in which [the Court] is satisfied that such an application can deal with the costs issues more quickly, cheaply and justly than an assessment under the Legal Profession Act": Sherborne Estate at [41] to [44]. The evidence before the Court on the present application does not satisfy these requirements. The parties should deal with disputes as to the reasonableness of the costs that the other party incurred in the ordinary process of assessment. 19. The only additional order that I will make to those that I made at the time I delivered judgment in these proceedings is: (3) Order that the plaintiff's costs of the proceedings be paid out of the estate of the deceased on the ordinary basis up to 18 June 2014 and on the indemnity basis after that date. ********** 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: 12 May 2015