Wild v Meduri & Ors; Meduri & Anor v Neal & Anor; Meduri v Meduri & Ors No 2 [2023] NSWSC 669 (20 June 2023)

Last Updated: 30 June 2023

Supreme Court New South Wales

Case Name:	Wild v Meduri & Ors; Meduri & Anor v Neal & Anor; Meduri v Meduri & Ors No 2
Medium Neutral Citation:	[2023] NSWSC 669
Hearing Date(s):	10 May 2023
Date of Orders:	20 June 2023
Decision Date:	20 June 2023
Jurisdiction:	Equity
Before:	Hallen J
Decision:	See paragraph [75]
Catchwords:	SUCCESSION – COSTS – Probate, trust claim, and family provision claims determined in dispute between siblings – In the allocation of costs, by reference to the issues, parties agree that costs are incurred in different proportions – No agreement regarding how costs should be borne – In probate claim, in which Cross-Claimants successful, whether circumstances reasonably warranted investigation and whether the litigation caused by the conduct of the deceased – Trust claim made in the alternative to Probate claim and as the Cross-Claimants successful, in Probate claim, will be dismissed - Family provision claim, by two Plaintiffs who brought trust claim, in the circumstances, will also be dismissed – The Plaintiff’s Probate claim and her defence of the trust claim and family provision claim, if successful would have benefitted other siblings – Relevance in circumstances where the Plaintiff did not seek any indemnity from those beneficiaries whose interests would have increased and who, otherwise, did not participate in the proceedings (other than as a witness)
Legislation Cited:	Civil Procedure Act 2005 (NSW) s 77(3) Succession Act 2006 (NSW) s 59
Cases Cited:	Bassett v Bassett [2021] NSWCA 320 Brady v Mikan (No 2) [2022] NSWSC 1320 Calderbank v Calderbank [1975] 3 All ER 333 Commonwealth of Australia v Gretton [2008] NSWCA 117 Coregas Pty Limited v Penford Australia Pty Limited (No 2) [2013] NSWCA 11 County Securities Pty Ltd v Challenger Group Holdings Pty Ltd (No 2) [2008] NSWCA 273 Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 Evans v Braddock (No 2) [2015] NSWSC 518 Girardi as trustee for The Superannuation Fund – Greengate Investments v Duncum [2021] NSWSC 1138 Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 Hunter v Roberts (No 2) [2019] NSWCA 235 Jones v Bradley (No 2) [2003] NSWCA 258 Leichhardt Municipal Council v Green [2004] NSWCA 341 McGarry v Murphy [2021] NICh 21 Mitchell and Mitchell v Gard and Kingwell (1863) 3 Sw & Tr 275; (1863) 164 ER 1280 Re Cutcliffe's Estate [1959] P 6 Re Estate late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311 Re Hodges: Shorter v Hodges (1988) 14 NSWLR 698 Smith v Jones (No 4) [2022] NSWSC 1715 Spiers v English [1907] UKLawRpPro 3; [1907] P 122 Starr v Miller [2022] NSWCA 46 Starr v Miller; Starr v Miller (No 2) [2021] NSWSC 685 The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120; (2006) 67 NSWLR 706 Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 Walker v Harwood [2017] NSWCA 228 Wild v Meduri & Ors; Meduri & Anor v Neal & Anor; Meduri v Meduri & Ors [2023] NSWSC 113 Ying v Song [2011] NSWSC 618
Category:	Costs
Parties:	2020/239852: Rose Marie Wild (Plaintiff) Dominic Meduri (first Defendant) John Meduri (second Defendant) Richard John Neal (third Defendant) 2021/91132: Dominic Meduri (first Plaintiff) John Meduri (second Plaintiff) Richard John Neal (first Defendant) Rose Marie Wild (second Defendant) 2021/144417: Joseph Meduri (Plaintiff) Dominic Meduri (first Defendant) John Meduri (second Defendant) Richard John Neal (third Defendant)
Representation:	Counsel: 2020/239852: Mr N Kirby (Plaintiff) Ms J Needham SC with Mr A Joseph (first and second Defendants) Mr C Tam (third Defendant) 2021/91132: Ms J Needham SC with Mr A Joseph (first and second Plaintiffs) Mr C Tam (first Defendant) Mr N Kirby (second Defendant) 2021/144417: Ms P Muscat (Plaintiff) Ms J Needham SC with Mr A Joseph (first and second Defendants) Mr C Tam (third Defendant) Solicitors: 2020/239852: McIntyre Legal (Plaintiff) Puleo Lawyers (first and second Defendants) Teece Hodgson & Ward (third Defendant) 2021/91132: Puleo Lawyers (first and second Plaintiffs) Teece Hodgson & Ward (first Defendant) McIntyre Legal (second Defendant) 2021/144417: NSW Trustee and Guardian (Plaintiff) Puleo Lawyers (first and second Defendants) Teece Hodgson & Ward (third Defendant)
File Number(s):	2020/239852; 2021/91132 and 2021/144417
Publication Restriction:	Nil

JUDGMENT

Introduction

1. HIS HONOUR: This judgment deals with the particularly thorny question of the costs of a Probate proceeding, as well as with the costs of what was described as “the trust proceeding”, part of which included a claim for a family provision order by the two Plaintiffs, Dominic and John, in those proceedings. In a third proceeding, for a family provision order, by a person under a legal incapacity, the order for the costs of the Plaintiff, Joseph, was essentially agreed.
2. The judgment relating to the different proceedings was delivered on 23 February 2023, following a hearing of 11 days, in November and early December 2022. It bears the medium neutral citation Wild v Meduri & Ors; Meduri & Anor v Neal & Anor; Meduri v Meduri & Ors [2023] NSWSC 113 (the principal judgment).
3. These reasons should be read with the principal judgment as events, matters and persons are referred to in both judgments in the same way. I shall, where necessary, refer to paragraphs of the principal judgment by simply stating the paragraph number, although, at times, the principal judgment may have to be referred to in more detail.
4. At the commencement of the hearing of the proceedings, counsel for the main protagonists had agreed, and submitted, that the Court should not determine, in the principal judgment, how the costs of the proceedings should be borne: [154]. Counsel for both parties submitted that there were documents that might be relevant to how the burden of the costs of the proceedings should be calculated and how they should be borne.
5. Later in these reasons, I shall refer to one affidavit, sworn on 20 March 2023, by Mr Matthew Puleo, solicitor, in which a copy of correspondence dated 17 November 2022, containing what is said to be a Calderbank offer, sent in the proceedings, on behalf of Dominic and John, to Rose, was annexed. The affidavit was filed, in Court, at the hearing of the costs application, and was read, without objection.
6. In summary, in the principal judgment, the Court held that:
   • (1) The deceased had testamentary capacity at the time she made the 2009 Will: [83(a)] and [938].
   • (2) The deceased knew and approved the contents of her 2009 Will: [83(b)] and [933].
   • (3) The doctrine of suspicious circumstances was inapplicable: [83(c)], [119] and [933].
   • (4) Whilst it was unnecessary to determine the trust proceeding, because under the 2009 Will, Dominic and John had received an absolute devise of the land the subject of part of the trust claim, I was satisfied that, considering all the evidence, Dominic and John had made out each of the elements as against the deceased (and Giuseppe) required to establish the trust claim: [974].
   • (5) Whilst it was unnecessary to determine the family provision claim by each of Dominic and John, because of the result of the Probate proceedings, I was satisfied that adequate provision for the proper maintenance, education, or advancement in life of each had been made by the 2009 Will: [1037].
   • (6) Adequate provision for the proper maintenance or advancement in life of Joseph had not been made by the 2009 Will and that he ought to receive, absolutely, a lump sum out of the proceeds of sale of the property provided to him on trust in the 2009 Will: [1065] – [1066].
7. The parties were given an opportunity to resolve the form of orders and, if possible, agree on the costs orders to be made. As will surprise no-one familiar with the proceedings, they were unable to do so, and on 4 April 2023, the Court ordered that, within ten days, the legal representatives of the parties were to provide Short Minutes of Order in each of the three matters, that reflected the reasons. On the same day, the Court also ordered each party to provide any submissions on costs, in hard and soft copy, by 1 May 2023.
8. Each party, other than Joseph, who did not need to serve submissions, as his costs were not the subject of dispute, complied with the Court’s order. Again, unsurprisingly, there was a wide difference between the positions of the principal protagonists on the form of orders, and how the costs, estimates of which had previously been provided, and which were eye-watering, should be borne.
9. Whilst the outcome of the proceedings, respectively, on its face, might appear to be straightforward, it was complicated by the nature of the different proceedings, brought in the alternative, and because the costs of the litigation are so substantial. Consequently, it became necessary to give the parties an opportunity to address the Court by way of written submissions, with any affidavit in support, and then orally, because of the complexity of the issues, and the quantum of costs. Whilst, naturally, this added to the overall costs of the litigation, it was not suggested that the determination of how costs should be borne should be determined, in Chambers, on the papers.
10. The costs hearing was listed before me, for one day on 10 May 2023 and it was concluded within that time.
11. At the commencement of the costs hearing, the form of orders, in each proceeding was discussed, and agreement was, broadly, reached upon the orders, other than for costs, that ought to be made. The form orders, in each matter, including in respect of costs, can now be made, and will be included at the conclusion of these reasons.
12. (I should mention that the Probate proceeding will not be referred to a Senior Deputy Registrar in Probate to complete the grant as Rose has filed a Notice of Appeal on 23 May 2023. This should not cause unnecessary inconvenience to the parties as Mr Neal was appointed as the interim administrator pendente lite and receiver of the estate of the deceased, with identified powers: see [16].)

Relevant parts of the principal judgment relating to the costs

13. At [151] – [152] of the principal judgment, I referred to Ex. JS2, in which the estimated costs and disbursements of each party, calculated on the ordinary, and on the indemnity, basis (inclusive of GST), in relation to each of the proceedings, was set out as follows:

Description	Ordinary basis	Indemnity basis
Rose Wild
Solicitor’s fees	$387,000	$430,000
Counsel fees	$265,000	$265,000
Disbursements	$ 53,000	$ 53,000
Total	$705,000	$748,000
Dominic and John Meduri
Solicitor’s fees	$220,000	$300,000
Counsel fees	$350,000	$470,000
Disbursements	$ 10,000	$ 10,000
Total	$580,000	$780,000
Richard Neal, interim administrator
Solicitor’s fees	n/a	Proceedings no. 2021/144417: $16,465 Proceedings no. 2021/91132: $64,147
Counsel fees	n/a	$19,195 (to be split equally or proportionally as the case may be between these proceedings)
Disbursements	n/a	Proceedings no. 2021/144417: $7.50 Proceedings no. 2021/91132: $175.29
Total	n/a	$99,990
NSW Trustee and Guardian (as tutor for Joseph Meduri)
Solicitor’s fees	$ 49,500	$ 55,000
Counsel fees	$ 35,000	$ 35,000
Disbursements	Nil	Nil
Total	$ 84,500	$ 90,000

14. I noted, also, that Ex. JS2 revealed that, as at the date of the Schedule, Rose had paid $258,378 on account of her costs; Dominic and John had paid $2,333 on account of their costs; none of Joseph’s costs had been paid; and all the costs of Mr Neal, the interim administrator, had been paid out of the deceased’s estate. (There seems to be no dispute that Mr Neal’s costs, which have been paid out of the estate, were properly paid.)
15. In Ex. JS2, Rose estimated that the division of her costs was 55% incurred in relation to the Probate Proceedings; and 45% incurred in relation to the Trust Proceedings. Dominic and John estimated the division of their costs as 75% incurred in relation to the Probate Proceedings; 15% incurred in relation to the Trust Proceedings; and 10% incurred in relation to Joseph’s proceedings.
16. I was not sure that the division of the costs, as asserted by the parties, was correct. It seems to me that, apart from some of the evidence going to the financial and material circumstances of each of Dominic and John, and in his case, going to that of Joseph, upon which circumstances little time was spent, the evidence in the Probate proceeding and part of the trust proceeding needed to be considered in both of those proceedings.
17. This was discussed at the costs hearing and the parties agreed that the Probate proceeding, and part of the trust proceeding required about 85 per cent of the time and costs, Dominic’s and John’s family provision proceeding, required about 10 per cent of the time and costs, and Joseph’s family provision proceeding required about 5 per cent of the time and costs.

Summary of submissions

18. To determine the costs issue, it is next convenient to state the position adopted by each of the parties.
19. Rose’s principal submission was that whilst she was unsuccessful in the Probate proceedings, as the 2009 Will was found to be a valid Will of the deceased, she had been partly successful in the trust proceeding relating to the family provision claim because Dominic’s and John’s claim was each dismissed. She also submitted that she had been the proper contradictor representing the estate of the deceased in relation to all claims.
20. Rose also submitted, in relation to the Probate proceedings, that there was a reasonable case for investigation in relation to the validity of the 2009 Will. She pointed to the age of the deceased; that the deceased was frail; that she was uneducated and was illiterate in all languages; that she only spoke Calabrese and understood very limited English; and that Giuseppe, her husband of many decades, had passed away shortly before she had made the 2009 Will, at a time when she had been agitated and distressed.
21. Rose pointed to the terms of the 2009 Will, submitting that the Will was not simple (especially for someone who had never previously made a Will, who was uneducated, and who could not speak or read any English), in that it contained specific gifts of property of unequal and fluctuating value, as well as a right of residence and trust for the benefit of Joseph; that Dominic and John, together with Connie, had taken the deceased to see Mr Puleo to prepare a Will; that Connie had been the deceased’s full-time live-in carer since 2007 and had accompanied the deceased to all medical appointments; that the deceased had told Rose that “Everything is equal”; and that by 2009, the deceased had experienced mental and physical decline, which was supported by the two experts who had provided expert reports.
22. Counsel for Rose pointed out that Dr Joseph’s evidence, being the evidence of the only medical practitioner who conducted a capacity assessment on the deceased during her lifetime, was not available to the parties until she gave evidence orally on the 8th day of the hearing.
23. It was also submitted that Mr Puleo, the solicitor who had prepared and witnessed the 2009 Will had not conducted a capacity assessment at the time of obtaining the deceased’s instructions for the preparation of the 2009 Will, was not aware of the medical conditions from which the deceased was suffering and was not aware that Connie was the deceased's full-time carer. Furthermore, he was unable to produce any file notes or other contemporaneous records of his meetings with the deceased in 2009 and until a subpoena was issued by Rose to his firm in early 2022 and was unable to recall whether he had one, or two, meetings with the deceased in relation to the preparation and execution of the 2009 Will.
24. Counsel also pointed to the evidence of the other five lay witnesses upon whose evidence she had relied. It was submitted that it would be unjust for Rose to bear, not only her own costs of the Probate proceedings, but also the costs of Dominic and John.
25. With respect to the trust proceedings, counsel for Rose submitted that, as Rose was the only person who had defended the proceedings on behalf of the estate, it would be appropriate that she receive her costs of the trust proceedings out of the deceased’s estate on the indemnity basis or, alternatively, on the ordinary basis.
26. Counsel also submitted that as Dominic and John had failed in relation to their family provision claims, they should, accordingly, pay Rose’s costs, whilst bearing their own costs in relation to those claims.
27. It was submitted that any costs which were ordered to be paid out of the deceased’s estate should be borne proportionally by the assets specifically disposed of by Clauses 3, 5 and 6 of the 2009 Will (the gifts of real property to Dominic and John, to Rose and Connie, and to Tony). She accepted that the provision made for Joseph should not bear any part of the burden of her, or Dominic’s and John’s, costs of the proceedings.
28. Counsel for Rose relied on Re Estate late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311 (Campbell J) at [30] in which it was written that the costs discretion ought to be exercised in a way which best achieves justice. This meant that Rose ought to be entitled to receive part of her costs of the Probate proceedings out of the deceased’s estate.
29. Another matter raised was that Rose had incurred significant costs in the Probate proceedings in relation to the administration of the estate for the benefit of all the beneficiaries entitled under the operation of the rules of intestacy. If the 2009 Will were found to be invalid, each of Connie, Tony, Joseph, and Rose, would have received a greater share of the deceased’s estate under the operation of the rules of intestacy.
30. In relation to the Calderbank offer, Rose submitted that the Calderbank offer did not represent a sufficiently genuine compromise of the dispute, containing no more than a modest compromise as to costs, such that it was not unreasonable for her not to have accepted the offer: Brady v Mikan (No 2) [2022] NSWSC 1320 at [42]. She also relied, in submitting that it was not unreasonable to not accept it, upon the same matters that had been relied upon to support her claim for costs.
31. Counsel for Rose sought the following orders as to costs:
    • (1) In respect of the Probate proceedings:

      (a) Rose’s costs be paid out of the estate of the deceased in relation to:

      (i) The assistance she provided to Mr Neal, who was the interim administrator of the deceased’s intestate estate;

      (ii) The costs associated with the instruction of the joint experts; and

      (iii) The costs associated with preparing the various Court Books.

      (b) Dominic and John pay Rose’s costs associated with the evidence of Connie that was not read at the hearing, including evidence filed in reply to such evidence.

      (c) Otherwise, no order as to Rose’s costs should be made, to the intent that she would bear her own costs.

      (d) Dominic’s and John’s costs, calculated on the ordinary basis, of the proceedings, be paid out of the deceased’s estate; and

      (e) Mr Neal’s costs, calculated on the indemnity basis, of the proceedings, be paid, or retained, as the case may be, out of the deceased’s estate.

    • (2) In respect of the trust proceedings:

      (a) Rose’s costs in relation to the trust claim, calculated on the ordinary basis, be paid out of the deceased’s estate.

      (b) That there should be no order as to Dominic’s and John’s costs in relation to their family provision claims to the intent that they will bear their own costs.

      (c) Mr Neal’s costs, calculated on the indemnity basis, of the family provision part of the trust proceedings, be paid, or retained, as the case may be, out of the deceased’s estate.

      (d) Rose’s costs of the proceedings, calculated on the indemnity (or, alternatively, the ordinary) basis, be paid out of the deceased’s estate.

32. Senior counsel for Dominic and John submitted that they had been successful in relation to all three claims that had required determination, and that Rose had been entirely unsuccessful. She submitted that Rose’s costs should not be defrayed by either the estate, or by Dominic or John personally (including by their share of the estate) given Rose’s complete lack of success. It was put that costs should follow the event as between Dominic and John, on one side, and Rose on the other. Therefore, Rose should be ordered to pay their costs of both the Probate proceeding and of the trust proceeding and that no order be made in relation to Rose’s costs of the proceedings with the intention that she bear her own costs.
33. In the alternative, Dominic and John submitted that should any part of their, or Rose’s, costs, be ordered to be paid out of the estate, then those costs should not be borne by the Kemps Creek property.
34. Dominic and John also sought a costs order calculated on the indemnity basis, for their costs from 17 November 2022 onwards until the end of the hearing, based upon the service of a Calderbank offer during the course of the hearing.
35. Senior counsel pointed to Rose’s “trenchant opposition” (at [36]), and the finding that the 2009 Will was duly executed by the deceased (at [132]); that contrary to Rose’s assertions, the deceased had been aware of the substance of Giuseppe’s Will when she made the 2009 Will (at [161]-[168]); that despite her criticisms of Mr Puleo, in relation to the preparation of the 2009 Will, the Court had found him to be a credible and satisfactory witness and to have taken appropriate steps to ensure the deceased was properly assisted in the will making process (at [459]); that the suggestion by Rose that the photograph of the deceased with Graham Ball taken in about March 2010 had been somehow ‘mocked up’ was rejected (at [497]); that each of Dominic and John was a more credible witness than Rose (at [626] and [685]); that Rose had been found to be an unreliable, and at times, an untruthful, witness (at [746]-[750]); that Rose was found to have been motivated by what she regarded as the “unfairness” of the 2009 Will (at [1], [746]); that Alan had given evidence as an “interested party” who wished to support Rose’s case (at [770]); that Tony was an unimpressive witness (at [786]); that the more florid evidence of the deceased’s behaviour in or about 2009 was not supported by the medical evidence (at [786]), with no evidence that the behaviour in September 2009 was as it was in 2014 and thereafter (at [853]).
36. Senior counsel also referred to the finding that the 2009 Will was not irrational (at [929]), that it reflected the deceased’s intentions as instructed to Mr Puleo (at [933]); that it had been duly executed despite Rose’s evidence about the alleged differences in the mark which the deceased had made on the 2009 will on different pages (at [131]); and that the deceased had signed the Will without any assistance.
37. Senior counsel submitted that neither of the exceptions, as referred to in Re Hodges: Shorter v Hodges (1988) 14 NSWLR 698 at 709 (Powell J) was applicable in the Probate proceedings.
38. She also submitted that, in relation to the trust proceedings, Rose was not defending the proceedings as a representative of the deceased’s estate, but rather as a person promoting her own financial and personal interests.
39. Reference was made to the Court of Appeal (Bell P, Leeming, and Payne JJA)’s observations in Bassett v Bassett [2021] NSWCA 320 at [34]:

“... parties in family provision cases should not proceed on the assumption that their costs will necessarily be indemnified out of the estate, nor should parties assume, when representing an estate but ultimately in furtherance or defence of their own personal interests, that they will recover their costs even if the claim is unsuccessful.”

40. Therefore, it was submitted that merely because Rose had been substituted as an active Defendant in place of Mr Neal, this did not mean that she was automatically entitled to an indemnity from the estate.
41. In the alternative, counsel for Dominic and John submitted that if the Court did not make an order that Rose pay Dominic’s and John’s costs personally, then she ought to be indemnified out of the parts of the property other than the Kemps Creek property.
42. Counsel for Dominic and John sought the following orders as to costs:
    • (1) Rose pay Dominic’s and John’s costs and Mr Neal’s costs of both the Probate proceedings and the trust proceedings (including the claims for a family provision order), calculated on the ordinary basis until 28 November 2022, and then calculated on the indemnity basis thereafter; or

      (a) In the alternative, Rose pay Dominic’s and John’s costs, in both the Probate proceedings and the trust proceedings, calculated on the ordinary basis; or

      (b) Dominic’s and John’s costs in both the Probate proceedings and the trust proceedings be paid out of the deceased’s estate on the ordinary basis, with there being no costs borne by the Kemps Creek property which had been devised to them under the 2009 Will.

    • (2) There be no order made in relation to Rose’s costs of the proceedings with the intention that she bear her own costs; or

      (a) In the alternative, Rose’s costs of the trust proceedings be paid out of the deceased’s estate, excepting the devise of the Kemp’s Creek property.

    • (3) There be a special costs order for Dominic’s and John’s costs, from 17 November 2022 until the end of the hearing.

The Calderbank offer

43. On 17 November 2022, Mr Matthew Puleo, Dominic and John’s solicitor, sent a letter to Ms McIntyre, Rose’s solicitor, containing an offer, said to be made in accordance with the principles espoused in Calderbank v Calderbank [1975] 3 All ER 333 (the Calderbank offer) to settle both the Probate proceedings and the trust proceedings.
44. The Offer was in the following terms:

“1. Letters of Administration with the Will Annexed of the Will dated 18 September 2009 of the late Elizabeth Meduri be granted to Richard John Neal.

2. That any administration bond be dispensed with.

3. Our clients’ claim in proceedings numbered 2021/00091132 be dismissed

4. Your client to pay 75% of our clients’ costs to date on an ordinary basis in relation to both matter nos. 2020/00239852 and 2021/00091132.

5. Your client pay her own costs.”

45. The letter provided that the Offer would remain open for acceptance until 10:00 a.m. on 28 November 2022, and also stated:

“The Plaintiff should be able to have regard to her prospects of success and, in the circumstances, the likelihood that she will need to pay costs of the proceedings at the conclusion of the ten or more days of hearing. The offer gives her a significant discount on those costs.”

46. The Offer was rejected by Rose.
47. It was submitted that there were contextual reasons why Rose did not accept the Offer, namely, that at the time the Offer was made, the expert medical evidence of the two joint medical experts who attended the expert conclave had not yet been tendered in the proceedings. Counsel for Rose maintained that this expert medical evidence was an important aspect of the evidence in both the Probate, and the trust, proceedings.
48. Counsel pointed to Ying v Song [2011] NSWSC 618 at [26] (Ward J) as authority for the proposition that:

“The position in relation to offers expressed to be without prejudice except as to costs (and relied upon as being in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586) differs in that the party seeking to rely on the offer must establish both that it represents a genuine compromise of the dispute and that it was unreasonable for the offeree to reject it. It is recognised that the making of a Calderbank offer is one of the circumstances in which the court may exercise its discretion under Rule 42.1 to make some order other than that costs should follow the event but that it does not automatically follow that simply because the offer was more favourable than the judgment then an indemnity costs order will be made.”

49. It was further submitted that Dominic and John had failed to discharge their onus to satisfy the Court that it should exercise the costs discretion in their favour: Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [20], [26]; Commonwealth of Australia v Gretton [2008] NSWCA 117 at [9], [46]; Starr v Miller; Starr v Miller (No 2) [2021] NSWSC 685 at [29].
50. Counsel for Rose also submitted that the Offer did not represent a sufficiently genuine compromise of the dispute: Brady v Mikan (No 2) at [42].
51. Counsel for Dominic and John submitted that Rose’s rejection was unreasonable, for the following reasons:
    • (1) Rose had no reasonable basis to doubt the deceased’s capacity to make the 2009 Will and knew about its contents by the date of the Offer.
    • (2) There was no basis for Rose’s assertions that there were alterations to the Edensor Park clinical notes or that the photo of the deceased with Graham Bell had been the result of it being photoshopped.
    • (3) There was nothing in Dr Romeo’s cross-examination that affected his opinions as expressed in his affidavit that he had no significant concerns in relation to the deceased’s capacity in September 2009.
    • (4) There was nothing to support Rose’s allegation that other persons had been present when John Puleo took instructions and when the deceased executed her Will.
    • (5) There was no reasonable basis for relying on the two exceptions as to costs, based on the principles expressed in Walker v Harwood [2017] NSWCA 228 (Macfarlan JA) at [52]-[58].
    • (6) There was an offer to dismiss the trust proceedings so that the Kemps Creek Property would remain part of the deceased’s estate.
    • (7) There were still four days remaining in the hearing after 28 November 2022 and resolving the proceedings earlier would have saved significant costs from having to be incurred by Rose.

The Law

Indemnity from other persons who benefit

52. As earlier stated, one of the submissions pressed upon the Court, on behalf of Rose, was that, unlike Dominic and John, she was not bringing the Probate proceedings asserting an intestacy only on her own behalf, but as well, on behalf of all the deceased’s children who would benefit if the Court found that the 2009 Will was not valid (other than Dominic and John).
53. Bearing in mind that Tony gave evidence in support of Rose’s case, it seems likely that he supported her claim in the Probate proceedings that there was an intestacy and her defence of the trust proceeding. Connie was not available for cross-examination and her evidence was not read. However, she, with Joseph, would have benefitted if the Court had found that the 2009 Will was not a valid Will.
54. Neither counsel made any submissions on the principle that Rose could have taken the precaution of obtaining security, by way of an indemnity, for a proportion of the costs from the other persons interested in upholding the claim that the deceased had died intestate.

Probate and other proceedings

55. I dealt with the question of costs in Probate proceedings in Starr v Miller; Starr v Miller (No 2) [2021] NSWSC 685, at [51] – [75]. An appeal from the decision was dismissed, with costs, by the Court of Appeal: Starr v Miller [2022] NSWCA 46. There was no discussion, in the Court of Appeal, about what had been written about costs.
56. Whilst what was written in that case is lengthy, it should be repeated for the benefit of the parties:

“The legislative context

Section 98 of the Civil Procedure Act 2005 (NSW) provides:

“(1) Subject to rules of court and to this or any other Act:
(a) costs are in the discretion of the court, and
(b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and
(c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
(2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court...”

The use of this expression “full power to determine by whom, to whom and to what extent costs are to be paid” in the context of s 98(1)(b) “is to be understood as providing the Court with power (unconstrained except to the extent that it must be exercised judicially and in accordance with the relevant legal principles: Oasis Hotel Ltd v Zurich Insurance Company (1981) 28 BCLR 230 at 237 per Lambert JA), to make a costs order that it regards as just in all the circumstances of the case”: QBE Insurance (Australia) Limited v Hotchin [2013] NSWSC 315, per Bergin CJ in Eq, at [54].

As was written, “[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] HCA 47, at [2].

Any exercise of the discretion is to indemnify, or compensate, the successful party, not to punish the unsuccessful party. It is guided by well-established principles in order to promote consistency in decision-making: Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513, at 519 (Mason and Deane JJ, with whom Brennan J generally agreed); [1986] HCA 17.

The fundamental principle which guides the exercise of the discretion contained in s 98 is that costs should follow the event, and that the successful party is, prima facie, entitled to his, or her, costs against the expense of litigation: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67] (McHugh J) (“Oshlack”). The discretion to be exercised has been described as absolute, unconfined, or unfettered, except that it is required to be exercised judicially, that is, not by reference to irrelevant, or extraneous, considerations, or capriciously, but on facts connected with, or leading up to, the litigation: Oshlack at [34] (Gaudron and Gummow JJ).

A successful party may be deprived of a proportion of his, her, or its, costs, or even required to pay costs to the other party, if the successful party succeeded only upon a portion of the claim, or failed on issues that were not reasonably pursued, or where the result of the litigation might be described as mixed.

There is academic commentary, by Professor Dal Pont, that the “central and overriding principle is that of doing justice to the parties in each particular case, it being judicially remarked that there is ‘no better test than the test of what is fair and just between the parties’” (see G E Dal Pont, Law of Costs (4th ed, 2018, LexisNexis Butterworths) at 6.15).

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

"... underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs."

Next, reference should be made to Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”). Rule 42.1 of the UCPR states:

“Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.”

UCPR rule 42.2 provides:

“Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis.”

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

“Rule 42.2 is directed, not to courts, and not to the manner in which courts are to exercise the 98(1) discretion, but, rather, to costs assessors. In this respect it does create a presumption, or a default position, but it is not one that affects the exercise of the judicial discretion.”

Costs in Probate proceedings

At the outset, it must be remembered that probate litigation is not entirely between parties, because they did not make the will in dispute, and the Court is required to determine whether a document of a will-maker, who is dead, is a valid testamentary instrument. There is a public interest in ensuring that the matter is properly proved: see Tu v Tu Estate of Tu [2008] NSWSC 458.

As was outlined by White J in Gray v Hart; Estate of Harris (No 2) [2012] NSWSC 1562 at [5]:

“There is a public interest in keeping faith with the wishes of a capable will-maker that requires an investigation into the validity of the propounded wills. A grant of probate in solemn form operates in rem, that is, it binds the world, or at least those affected persons who have notice of the proceedings...There is, therefore, a public interest in the incurring of some level of costs in cases where there is genuine doubt about the validity of a will.”

In Petrovski v Nasev; The Estate of Janakievska (No 2) [2011] NSWSC 1474, at [6]-[19], I set out the principles in relation to costs in probate proceedings that apply:

“In Re Green [1969] WAR 67, Wolff CJ pointed out (at 83) that the general rule prescribed by the Rules, also applies in probate suits: Twist v Tye [1901] UKLawRpPro 53; (1902) P 92; Spiers v English [1907] UKLawRpPro 3; (1907) P 122; Middlebrook v Middlebrook (1962) 36 ALJR 216 at 217; Nicholson V Knaggs [No 3 - Severance And Costs] [2009] VSC 328 at [38].
The effect of these two rules, in this case, is that the Defendant must pay the Plaintiffs’ costs unless the court otherwise orders, and the court can only order otherwise if there is a discretionary decision to depart from what the rules provide: Australiawide Airlines Limited t/as Regional Express v Aspirion Pty Limited [2006] NSWCA 365 at [10]. In other words, the rules reflect the general proposition that an award of costs is discretionary, but, generally, the discretion is exercised in favour of the successful party: Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 at [25].
In probate suits there are considerations that more readily affect the application of the Civil Procedure Act and the UCPR than in most other forms of litigation. These considerations act as guides to the exercise of discretion, but they are not inflexible.
Before turning to the considerations, two principles that are of importance in litigation of this type should also be referred to. The first is that ‘parties should not be tempted into a fruitless litigation by the knowledge that their costs will be defrayed by others’, and the other is that ‘doubtful wills should not pass easily into proof by reason of the cost of opposing them’: Mitchell v Gard (1863) 3 Sw & Tr 275 at 279; 164 ER 1280 at 1281-1282.
Any suggestion that there is a general rule that costs in Probate proceedings are borne out of the estate should be immediately rejected. As long ago as 1926, it was said, in Re Plant [1926] P 139, at 152:

‘I should be reluctant to do anything to create the idea that unsuccessful litigants might get their costs out of the estate, without making a very strong case on facts. The lure of ‘costs out of the estate’ is responsible for much unnecessary litigation.’

In relation to the question of costs, Powell J (as his Honour then was), in Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698, recorded the principles generally to be applied when determining how, in Probate proceedings, the Court’s discretion as to costs may be exercised.
At pp 709-710, he said:

‘... over the years, a number of exceptions to this general rule have come to be recognised. In the field of probate litigation, two such exceptions have come to be recognised, they being:
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;
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...
To these exceptions to the general principle should, perhaps, be added the principle that, although a legal personal representative may be entitled to recover from a party to litigation costs only on a party/party basis, he, as a fiduciary, retains the right to an indemnity from the estate, and, thus, may have recourse to the estate for any difference between his costs on a trustee basis and the costs recovered from a party.’

This passage was approved by the Court of Appeal in Shorten v Shorten (No 2) [2003] NSWCA 60, at [15]. However, it is clear that neither of the guidelines set out in the passage is exhaustive or prescriptive.
In the first of the guidelines referred to, although the word ‘fault’ is sometimes used, it does not necessarily mean moral fault or culpability. Rather, the touchstone is whether it was the deceased’s conduct which had led to his, or her, will ‘being surrounded with confusion or uncertainty in law or fact’: Kostic v Chaplin [2007] EWHC 2909; [2007] All ER (D) 119.
In respect of the second exception, Dixon J, in Middlebrook v Middlebrook, in the course of determining a challenge to a will founded upon lack of testamentary capacity, observed:

‘It is only as a result of investigation that the reasons for finding affirmatively in favour of the testator’s testamentary capacity distinctly appear. In these circumstances the proper course is to apply the principle enunciated by Sir Gorrell Barnes P that “if the circumstances lead reasonably to an investigation of the matter then the costs may be left to be borne by those who have incurred them.” Spiers v English [1907] UKLawRpPro 3; [1907] P 122 at p 123.’

Whether this case falls within one, or both, of the two exceptions to the normal rule, the relevant time to consider the Defendant’s position is the date of institution of the proceedings, although it must also be relevant to have regard to any knowledge or reasonable belief gained subsequently: Clay v Karlson [2001] WASC 141 at [160].
It is also useful to take account of what Powell J had said, in In the Estate of Gertrude Martha Elizabeth Hacke, Public Trustee v Wilson, (NSWSC, 13 November 1985, unreported):

‘Although the authorities in which an unsuccessful defendant has been allowed his costs out of the estate have involved a variety of factual situations, they appear to embrace such situations as the following: -
1. The state of the testamentary papers has been such as to leave it doubtful whether an earlier will was revoked by a later (Limas v Goodban (1865) LR 1 P & D 57; Jenner v Ffinch [1879] UKLawRpPro 42; (1879) LR 5 PD 106) or whether an apparently executed will was intended to be testamentary (Thorncroft v Clarke (1862) 2 Sw & Tr 479);
2. The conduct, habits and mode of life of the testator have given the defendant reasonable grounds for questioning the testator's capacity (Davies v Gregory (1873) LR 3 P & D 28; Roe v Nix [1892] UKLawRpPro 76; (1893) P 55,
3. The actions of the testator have given the defendant reasonable grounds for believing that the will was a forgery (Orton v Smith (1873) LR 3 P & D 23);
4. The actions and statements of the testator immediately before, and subsequent to, the making of the will have given the defendant reasonable grounds for believing that the execution of the will had been induced by undue influence (Cousins v Tubb (1891) 65 LT (NS) 716; Shortman v Shortman (1892) LT (NSW) 717).’

Finally, Campbell J (as his Honour then was) in Re Estate of the late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311 said:

‘32 ... in the caselaw concerning probate litigation, it can safely be said that a consistent theme in the cases is that the principles concerning costs which are applied to a person who seeks probate (whether successfully or not) are not the same as the principles which apply to the costs of a person who opposes probate (whether successfully or not). In probate litigation, it is not only who succeeds in the litigation which matters - which is the only factor operating in the ‘costs follow the event’ rule. As well, the role which a particular party has played in litigation, whether as plaintiff or defendant, is relevant. Further, facts about the knowledge available to parties, and the reasonableness of their conduct in conducting the litigation, can be taken into account.’
Ultimately, in the light of all of the circumstances of the particular case, I must decide which costs order better achieves justice between the parties.”

The first exception referred to above was applied by the New South Wales Court of Appeal in Perpetual Trustee v Baker [1999] NSWCA 244. In that case, the Court of Appeal ordered that both parties’ costs, on a trustee or indemnity basis, be paid out of the estate. The reasons given were as follows, per Giles JA and Brownie AJA at [13]-[14] and Cole AJA at [43]:

“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).
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 [1892] UKLawRpPro 76; (1893) P 55; In the will of Millar [1908] ArgusLawRp 120; (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] VicLawRp 111; (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).
...
Although I disagree with the trial judge's finding of testamentary incapacity, in light of her Honour's finding it must be held that the respondents had reasonable grounds for seeking to impeach the capacity of the testator. In those circumstances the costs of the appellant and the respondent at the trial should each be paid out of the estate. See Browne v M'Encroe (1890) 11 NSWLR Eq. 134 at 146.”

In Shorten v Shorten (No 2) [2003] NSWCA 60, Mason P, in obiter, at [19], observed that early cases in which the first exception was applied:

“involved testators who left their testamentary papers ‘in confusion’ but the ‘conduct of the testator’ could include irrational actions giving rise to reasonable doubts about testamentary capacity provided they were genuinely held by those opposing the grant (see Davies v Gregory (1873) LR 3 P&D 28 at 31; Clarke v Clarke [1901] NSWStRp 42; (1901) 1 SR(NSW) B & P 25; Johnston v Public Trustee (1929) 24 Tas LR 71).”

In cases where a challenge is made to testamentary capacity, more than mental frailty or the incapacity of the deceased is required to say that the deceased caused the litigation and that the case falls within the first exception: King v Hudson [2009] NSWSC 1500 at [12] (Ward J, as her Honour then was). In 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.

Usually, it is easier for an unsuccessful litigant to bring herself, or himself, within the second exception than the first. What is required in the second exception is that the circumstances led reasonably to an investigation. But in such a case, the unsuccessful party will, often, still be left to bear her, or his, own costs.

Sometimes, what is not referred to in dealing with the exceptions referred to in the authorities, is the observation in Davies v Gregory (1873) LR 3 P& D 28, at 33, that in order to engage the second exception, it is necessary that all proper steps should have been taken by the party challenging the Will as to the facts of the case. But if, having done so, the party opposing the grant, bona fide believed in the existence of the state of things, which, if it did exist, would justify litigation, then each party must bear her, or his, own costs.

More recently, a different view has been expressed in some probate judgements. 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. (His Honour’s view was based upon the fact that the probate exceptions were rooted in the inquisitorial exercise that was conducted by the ecclesiastical courts and the Probate Division, where the Court had to be satisfied of the validity of the will before it could pronounce for the will and have it admitted to probate.)

In Re Tsaousis [2019] VSC 511, at [32] – [33], McMillan J noted:

“Although the prima facie rule is that costs follow the event, where the litigation concerns probate, the costs are usually paid out of the estate if the litigation has been caused, or contributed to, by the way in which a testator made his or her testamentary intentions known or alternatively by the conduct of the residuary beneficiaries. Where the testator is not the cause of the litigation, but circumstances exist that reasonably call for an investigation, there is either no order as to the unsuccessful party’s costs or costs are paid out of the estate. For there to be reasonable grounds that call for an investigation, it must be established that, when proceedings were commenced, all proper steps were taken to inform the challenger as to the facts of the case and, having done so, the challenger has been led reasonably to the bona fide belief that there was good ground for impeaching a will. If there is no reasonable cause for investigation — that is, if the unsuccessful party has not acted reasonably — then the costs will usually follow the event.
The usual rules relating to probate litigation are founded on the public interest in ensuring, on the one hand, that doubtful wills are not lightly admitted to proof by reason of the cost of opposing them and, on the other, the importance of parties not entering into ‘fruitless litigation’ on the basis that their costs will be paid by others. If the litigation is adversarial litigation, it is common for the Court to apply the usual rule as to costs and order that the unsuccessful party pay the other party’s costs. This means that in respect of costs in probate litigation, it can no longer be assumed that the costs will be allowed either wholly or partly out of the estate. This approach reflects the need to ensure that litigation not be encouraged, particularly if it is adversarial litigation between disunited families battling for their perceived true inheritance, together with the concerns frequently expressed on the proportionality of costs in litigation.”

(Her Honour, in fact referred to Davies v Gregory in a footnote in this decision.)

A perusal of cases where costs orders have been made in favour of the unsuccessful propounder of a will reveals that there is no invariable practice.

As was said over a century ago in Miller’s Probate Practice (Maxwell: 1900 Ed.), at 438-439:

“Two questions are to be considered with reference to an application for costs of the unsuccessful party: (1) Was there reasonable ground for litigation? (2) Was it conducted bona fide? Where both these questions can be answered in the affirmative it is the usual practice of the Court, without having regard to the amount or the ownership of the property, to order the general costs to be paid out of the personal estate.”

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”.”

The Law – Calderbank offer

57. What is commonly referred to as a “Calderbank offer” (a written offer made without prejudice except as to costs that does not comply with the relevant rules of court relating to the making of offers of compromise) is a well-recognised means of making an offer of settlement in circumstances where the party making the offer ultimately seeks a costs advantage if the offer is not accepted: Jones v Bradley (No. 2) [2003] NSWCA 258 at [5]; Trustee for the Salvation Army (NSW) Property Trust v Becker (No 2) [2007] NSWCA 194 at [27]. The offer is not admissible until the substantive issues have been determined. The result of the Court’s adjudication must be as, or more, favourable to the offeror than the offer made.
58. In Evans v Braddock (No 2) [2015] NSWSC 518, I wrote, at [50]:

“...service of a Calderbank offer serves a number of purposes, including to promote settlement and also to give the offeror cost protection in the event of an unreasonable refusal by the offeree. Furthermore, ‘to some extent any offer of compromise or Calderbank offer is necessarily a tactical weapon. At the heart of a Calderbank offer are two factors – settlement of the case and protection on costs if the offer is ultimately regarded as reasonable. Characterisation as a tactical weapon does not necessarily defeat the efficacy or the genuineness of the offer’: Zealley v Liquorland (Australia) Pty Ltd & Anor (Costs Ruling) [2015] VSC 133, per J Forrest J, at [18] and [24].’”

59. In Hunter v Roberts (No 2) [2019] NSWCA 235, the Court of Appeal (comprised of Meagher and Brereton JJA, and Simpson AJA) noted, at [6], that:

“The making of an offer of compromise in the form of a Calderbank letter may justify a departure from the ordinary basis on which costs are awarded and assessed and, as Giles JA observed in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37], the ultimate ‘question is whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule’.”

60. I cannot do better than repeat what was written, as a short summary of the principles, by Ward CJ in Eq in Girardi as trustee for The Superannuation Fund – Greengate Investments v Duncum [2021] NSWSC 1138 at [88] – [91]:

“While the rejection of a Calderbank offer (in circumstances where it later transpires that the final result in the proceeding is less favourable to the offeree), enlivens the discretion to award indemnity costs, it does not create a prima facie right to such an order (see Favotto Family Restaurants Pty Ltd v Chief Commissioner of State Revenue (No 2) [2020] NSWSC 519 (Favotto) at [28]; Chief Commissioner of State Revenue v Platinum Investments Management Ltd (No 2) [2011] NSWCA 197 at [9] per Campbell, Macfarlan JJA and Handley AJA). Where the offer is a Calderbank offer, the onus to demonstrate that it was unreasonable to reject it is on the party seeking to rely on the making of the offer (see Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26] per Giles, Ipp and Tobias JJA).

In order to warrant the making of a special costs order, the offer must constitute a genuine offer of compromise that it was unreasonable for the party against whom the order is sought not to accept (see Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [4] per Handley, Basten and Beazley JJA; see also Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19 at [23] per Ipp, McColl and Basten JJA; Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) (2006) 67 NSWLR 706; [2006] NSWCA 120 at [8] per Basten JA (with whom Santow JA and Young CJ in Eq, as his Honour then was, agreed); Leichhardt Municipal Council v Green [2004] NSWCA 341 at [23] per Santow JA (with whom Bryson JA and Stein AJA agreed).

The factors relevant to take into consideration when considering whether the rejection or non-acceptance of the offer was unreasonable (as summarised in Favotto at [20]-[30]) include: (i) the stage of the proceeding at which the offer was received; (ii) the time allowed to the offeree to consider the offer; (iii) the extent of the compromise offered; (iv) the offeree’s prospects of success assessed as at the date of the offer; (v) the clarity with which the terms of the offer were expressed; and (vi) whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it (see Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 at [25] per Warren CJ, Maxwell P and Harper AJA; Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398 at [8] per Buchanan and Tate JJA and Sifris AJA; Miwa v Siantan Properties at [12] per Basten JA (with whom McColl and Campbell JJA agreed).

Where a Calderbank offer is unreasonably rejected, and the offeror succeeds in litigation, costs may be made on an indemnity basis at least from the date of the offer or thereabouts. Whether such an order will be made will be determined in the exercise of the Court’s discretion (see Becker v Queensland Investment Corp (No 2) [2009] ACTSC 147 at [12] per Refshauge J).”

61. If a party wishes to rely upon a Calderbank offer, the terms of the offer should be clear and unambiguous: Coregas Pty Limited v Penford Australia Pty Limited (No 2) [2013] NSWCA 11 at [12]. The offer should embody ‘a real and genuine element of compromise’. The meaning of that phrase is set out in cases such as Leichhardt Municipal Council v Green [2004] NSWCA 341, per Santow JA at [23]; Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375, per Handley JA at [5]; The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120; (2006) 67 NSWLR 706, per Basten JA at [8].
62. The onus is on the party making the Calderbank offer to satisfy the court that it should exercise the costs discretion in its favour: Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26]; Commonwealth of Australia v Gretton [2008] NSWCA 117 at [46]; County Securities Pty Ltd v Challenger Group Holdings Pty Ltd (No 2) [2008] NSWCA 273 at [31]; Smith v Jones (No 4) [2022] NSWSC 1715 at [35].

Qualifications on “Principles”

63. I remain of the view that these principles apply in relation to the proceedings with which I am dealing.
64. As I have written in other cases, I do not intend what I have described as “principles” or “general principles” to be elevated into rules of law, propositions of universal application, or rigid formulae. The formulation of principles to guide the exercise of discretion, hopefully, avoids arbitrariness and serves the need for consistency that is an essential aspect of the exercise of judicial power.
65. The probate exceptions to which reference have been made are neither “exhaustive nor rigidly prescriptive. They, too, are guidelines and not straightjackets, and their application will depend on the facts of the particular case. They do not fetter the discretion of the court and in its discretion the court can take into account other circumstances”: McGarry v Murphy [2021] NICh 21 at [3(d)] (McBride J). They must be applied to a wide range of different factual situations.
66. As Sir J. P. Wilde (later Lord Penzance) stated in Mitchell and Mitchell v Gard and Kingwell (1863) 3 Sw & Tr 275 at 277; (1863) 164 ER 1280 at 1281-1282:

"It is hardly in the nature of discretion that its exercise should be adjusted by exact rule. No positive regulation could be established that would bear the strain put upon it by the justice or hardship of particular instances."

67. The guidelines upon which the Court’s discretion is exercised are also there for the assistance of those who are required to advise litigants before they embark on what will, undoubtedly, be expensive litigation, and to continue to advise during the course of the litigation, so that the litigants are provided with some idea of the risks being run as to costs: Re Cutcliffe's Estate [1959] P 6 at 21.

Determination

68. There are some matters which are particularly relevant to the issue of costs. These are:
    • (1) On the application for costs, neither party referred to any pre-litigation correspondence. (There had been some correspondence referred to, between Puleo Lawyers and McIntyre Lawyers, regarding Rose’s search for Wills, before Rose commenced the Probate proceedings at Ex. MB1/250 and Ex. MB1/252). The headlong rush by Rose into litigation is demonstrated by the fact that the Probate proceeding was commenced by her within 2 months of the date of death of the deceased: [37]-[39] and [43]-[44].
    • (2) Although both parties referred to the fact that Probate litigation has a public interest, I am satisfied that, in this case, each of the protagonists was advancing her, or their, own personal interests, respectively. It could hardly be said that incurring costs, to the level incurred in the proceedings, was beneficial to the estate. Rather, the litigation was conducted as contentious, and hostile, litigation between beneficiaries.
    • (3) In the case of Rose, there was her uncompromising belief that the 2009 Will was “unfair”, and that the distribution, equally, of the deceased’s estate was the appropriate way in which the estate should be divided. Clearly, based upon estimates provided, on that basis, she would receive more than her entitlement under the 2009 Will, as would Connie, Tony, and Joseph.

In the case of Dominic and John, they wished to retain the Kemps Creek property, on which they had lived for decades, and which was the property with the largest value, by far, in the deceased’s estate. They too, appear to have been equally uncompromising.

These conclusions are supported by the fact that despite what had been said at the commencement of the case by the legal representatives, the only document put forward as representing a compromise, was what was said to be a Calderbank offer made during the actual hearing.

• (4) As earlier stated, whilst Rose was acting, not only in her own interest, but in the interest of those siblings who would each receive more than she, or he, did under the 2009 Will, on intestacy, she gave no evidence of having attempted to obtain a partial indemnity as to costs from those beneficiaries who would benefit if she were successful, in order to avoid being burdened with the costs, in whole, or in part, of the proceeding. That she did not do so was a matter entirely for her. If the Court were to refuse to condemn a person in costs on the ground that she sought to assert that a duly executed Will were invalid, injustice might follow, for anyone who wished, improperly, to dispute the validity of a Will under the shield of representing persons entitled on intestacy without the risk of being burdened by costs.
• (5) Relatively early in the proceedings, Mr Puleo had set out what had occurred in relation to the 2009 Will and had stated that neither of Dominic, nor John, had been present during the part of the conference when he took instructions about her Will from the deceased: [408].

In addition, the evidence revealed that he was a very experienced solicitor, with experience spanning over 30 years. He had been involved in taking instructions from Giuseppe some years earlier: [380]-[385], [392].

• (6) Without, apparently knowing what had occurred at the time the 2009 Will was executed, or later, despite the evidence of Mr Puleo, Rose asserted that Dominic had guided the deceased’s hand in placing her mark on the Will, a matter which she did not advance at the hearing: [749(3)], [937].
• (7) Rose also asserted that a photograph had been doctored, which was a very serious allegation [749(2)] in circumstances where the real estate agent who appeared in the photograph had given evidence of the circumstances in which it was taken, which evidence I accepted: [492]. Other matters referred to which concerned the acceptance of Rose’s evidence are found at [749].
• (8) This was not a case in which the deceased, or persons interested in the 2009 Will, had been the cause of the litigation. The deceased did not leave her affairs in confusion. She made a duly executed Will, which not only reflected her own testamentary intentions, but also the apparently long held testamentary intentions of her husband, Giuseppe.
• (9) Rose had become aware of the contents of Giuseppe’s Will shortly after his death: [362]-[363]. She also knew that the deceased had made a Will in similar terms: [665]-[667], [749(3)].
• (10) The second exception, relied upon by Rose, does not assist her in obtaining the costs orders that she seeks because the principle, as stated in Spiers v English [1907] UKLawRpPro 3; [1907] P 122 at 123, is:

"if the circumstances lead reasonably to an investigation of the matter, then the costs may be left to be borne by those who have incurred them."

Furthermore, the inclusion of the word “reasonably” should be emphasised.

• (11) Neither party referred, specifically, to comments, from the Bench, at different times, prior to, and at, the hearing, referring to the costs being incurred, and to be incurred, and the risks that all the parties were taking as to costs. In addition, during the hearing, the parties were reminded, several times, that it should not be assumed that all the costs would come out of the deceased’s estate: see, for example, Tcpt, 2 November 2022, p 205(4-5); Tcpt, 8 December 2022, p 871(33) - p 872(12); 873(19-22) and (36-47); Tcpt, 13 December 2022, p 914(47-50).

(At the costs hearing, the legal representatives did not disagree with the proposition that the Court had, at different times, even prior to the hearing, commented upon the quantum of likely costs, and the risks that each of the parties (perhaps, with the exception of Joseph) was taking in respect of those costs: Tcpt, 10 May 2023, p 22(21-33); 26(33-45).)

All of the parties were fully appraised of the risks of the consequences being taken, in relation to costs, by the continuation of the proceedings.

69. I reject the principal submission made on behalf of Rose, as she was unsuccessful in the Probate proceedings and that, but for the result of those proceedings, Dominic and John would have obtained a declaration that the Kemps Creek property was held on trust for them: [1034].
70. Similarly, but for the result of the Probate proceeding, each would have received a family provision order: [1033] – [1035], albeit in a lump sum less than each had sought. It follows that in each of the proceedings, Dominic and John were, effectively, successful on each portion of the claims made, even though, ultimately, as submitted by Rose, the orders to be made will provide for each of the trust proceeding, including the family provision proceeding, brought by Dominic and John, to be dismissed.
71. The trust proceeding was brought in the alternative to the Probate proceeding. However, the family provision claim by each of Dominic and John was made even if they were successful in the trust proceeding because of costs: Tcpt, 7 December 2022, p 815(29-35); 8 December 2022, p 872(35-50), 873(24-30).
72. The orders to be made dismissing the trust proceeding, which included the claim for family provision orders, flow from Dominic’s and John’s success in the Probate proceeding. It follows that it is unnecessary to consider, as decisive, principles which apply in cases in which there are several claims, some of which are not successful.
73. In summary, as a result of Rose’s allegations concerning the validity of the 2009 Will, Dominic and John, who, it is to be remembered were the executors named in that Will, had no choice but to be involved in contested Probate proceedings. Had she not made the allegations in relation to the Probate proceedings, it would have been unnecessary for the Trust proceeding to be brought, leaving potentially, only the family provision claim brought by Dominic and John, if each persisted with it, and the family provision proceedings brought by Joseph. Each might have been resolved, or if continuing to a contested hearing , would have resulted in far less costs being incurred.
74. In all the circumstances, in the exercise of the Court’s discretion, in relation to costs, I am of the view that:

    (a) Rose should pay Dominic’s and John’s costs, calculated on the ordinary basis, of each of the Probate, and the part of the trust proceedings, other than in relation to their claim for family provision orders. They should bear their own costs of the part of the trust claim (10%) relating to the claim for family provision claim. On the estimates of time spent, that would be 85% of Dominic’s and John’s costs, calculated on the ordinary basis. (A separate costs order must be made in respect of Joseph’s costs (5%).)

    (b) I am not satisfied that Rose’s conduct, in the different proceedings, warrants an order that she should bear Dominic’s and John’s costs, calculated on the indemnity basis. There are some allegations, to which I have referred, that should not have been made, but I am not satisfied that those allegations warrant the making of an indemnity costs order. That is particularly so, if she is ordered to bear her own costs of the Probate proceedings.

    (c) Nor am I satisfied that the Calderbank offer affects the basis upon which the costs order should be made. It was made very late in the proceedings, at a time when some evidence had not yet been tested. I am unpersuaded that it was unreasonable for Rose to not accept the Calderbank offer.

    (d) In addition, I am not satisfied that the offer made really reflected a genuine compromise of the proceedings.

    (e) Because they were the executors named in 2009 Will, the difference between Dominic’s and John’s costs, calculated on the ordinary basis, and their costs calculated on the indemnity basis, of the Probate proceedings, should be borne proportionally by the assets specifically disposed of in Clauses 3, 5 and 6 of the 2009 Will (the gifts of real property to Dominic and John, to Rose and Connie, and to Tony, respectively), with Joseph’s share of the estate not bearing any part of the burden of Dominic’s and John’s costs of the proceedings.

    (f) Dominic and John should bear the balance of their own costs of the trust proceeding in its entirety (that is 10% of their costs). In making a claim for a family provision order, they were seeking to advance their own personal interests in that part of the trust proceeding.

    (g) Rose should receive her costs of defending the part of the trust claim made by Dominic and John for a family provision order. On the estimates of time spent, that would be 10% of her costs, calculated on the ordinary basis. Those costs should be borne proportionally by the assets specifically disposed of in Clauses 3, 5 and 6 of the 2009 Will (the gifts of real property to Dominic and John, to Rose and Connie, and to Tony respectively), with Joseph’s share of the estate not bearing any part of the burden of Dominic’s and John’s costs of the proceedings.

    (h) Other than in respect of defending the part of the trust claim made by Dominic and John for a family provision order, Rose should bear her own costs of the different proceedings.

    (i) Dominic’s and John’s costs and disbursements of Joseph’s proceedings, being a specified gross sum instead of assessed costs, agreed in sum of $7,500 (including GST), should be paid, proportionally, out of the assets specifically disposed of in Clauses 3, 5 and 6 of the 2009 Will.

75. I turn next to the form of orders, including the orders for costs, which the Court makes.

In respect of the Probate proceedings:

• (1) Notes the associated proceedings 2021/91132 and 2021/144417.
• (2) Notes that:

  (a) The parties to the proceedings consent to an independent administrator being appointed to administer the estate of Elisabetta Meduri (also known as Elizabeth Meduri and Elizabeth Pelmisano Meduri) (“the deceased”).

  (b) The parties agree that there are special circumstances, namely that it is in the best interests of the administration of the estate, for an independent administrator to be appointed.

  (c) The parties to the proceedings consent to the third Defendant, Richard John Neal, solicitor of Teece Hodgson and Ward, being appointed as the independent administrator.

  (d) The third Defendant has consented to being appointed as the independent administrator.

  (e) The third Defendant will not make a claim for commission in respect of the administration of the deceased's estate.

• (3) Orders that letters of administration with the Will dated 18 September 2009 annexed of the deceased, in solemn form, be granted to the third Defendant.
• (4) Orders that the matter be remitted to the Senior Deputy Registrar in Probate to complete the grant.
• (5) Orders that any requirement for an administration bond and sureties be dispensed with.
• (6) Orders that the third Defendant, Mr Neal, shall be entitled:

  (a) to be paid from the estate of the deceased all usual and proper charges at the usual hourly rates as are charged by the legal practice in which he is engaged and on the usual terms as to payment of that practice:

  (i) for his work as administrator or trustee of the estate, or both;

  (ii) for the professional and non-professional services rendered by him or that legal practice in the administration of the estate of the deceased or of the trusts of the Will, or both;

  (b) to engage the services of any other legal practitioner, accountant, or other professional adviser in relation to the administration of the estate where he considers it necessary to do so and to pay from the estate the costs incurred in having those services provided; and

  (c) to be paid the legal costs and disbursements incurred in the sale of any real estate in which the estate of the deceased has an interest, to be charged against the proceeds of such sale.

• (7) Orders that the Statement of Claim be dismissed.
• (8) Orders that the Cross-Claim otherwise be dismissed.
• (9) Makes no order as to Rose’s costs, to the intent that she will bear her own costs of the Probate proceedings.
• (10) Orders that Rose pay 85% of Dominic’s and John’s costs, calculated on the ordinary basis, of the Probate proceedings.
• (11) Orders that the difference between Dominic’s and John’s costs, calculated on the ordinary basis, and their costs calculated on the indemnity basis, of the Probate proceedings, be borne proportionally by the assets specifically disposed of in Clauses 3, 5 and 6 of the 2009 Will (being the devises of real property to Dominic and John, to Rose and Connie, and to Tony respectively), with Joseph’s share of the estate not bearing any part of the burden of Dominic’s and John’s costs of the proceedings.
• (12) Orders that the costs, if any of Mr Neal, calculated on the indemnity basis, that have not been paid, be paid, or retained, as the case may be, out of the residue of the deceased’s estate; and if the residue is insufficient to pay the balance of those costs, it be borne proportionally by the assets specifically disposed of in Clauses 3, 5 and 6 of the 2009 Will (the gifts of real property to Dominic and John, to Rose and Connie, and to Tony respectively).
• (13) Orders that Joseph’s share of the estate should not bear any part of Dominic’s and John’s costs of the Probate proceedings.

In respect of the trust proceeding:

• (1) Notes the associated proceedings 2020/239852 and 2021/144417.
• (2) Notes the orders made in the associated proceedings 2020/239852.
• (3) Notes that the relief in these proceedings was sought in the event that the Defendants did not succeed in the associated proceedings.
• (4) Orders, that the proceedings be dismissed upon the basis that Dominic’s and John’s claim asserting a declaration of trust were made in the alternative to the Probate proceedings and upon the basis that they received inadequate and proper provision under the 2009 Will of the deceased.
• (5) Orders that Rose pay the Plaintiffs’ costs of the trust proceeding (other than in respect of Dominic’s and John’s claims for a family provision order). (This order has been taken into account in reaching the percentage of costs in the Probate proceedings.)
• (6) Orders that Rose receive her costs of defending the part of the trust claim made by Dominic and John for a family provision order (amounting to 10% of her costs), calculated on the ordinary basis, which costs should be borne, proportionally, by the assets specifically disposed of in Clauses 3, 5 and 6 of the 2009 Will (the gifts of real property to Dominic and John, to Rose and Connie, and to Tony respectively), with Joseph’s share of the estate not bearing any part of the burden of Dominic’s and John’s costs of the proceedings.
• (7) Makes no order, otherwise, as to the costs of Dominic, John, or Rose, to the intent that they, and she, respectively, bear their, or her, own costs, of the trust proceeding (other than in relation to the family provision claim).
• (8) Orders that the costs, if any, of Mr Neal, be paid, or retained, as the case may be, out of the residue of the deceased’s estate.

In respect of Joseph’s family provision proceeding:

• (1) Notes the associated proceedings 2020/239852 and 2021/91132.
• (2) Orders, pursuant to s 59 of the Succession Act 2006 (NSW), that in lieu of the provision made for him in Clauses 4 and 8 of the Will dated 18 September 2009 of the deceased, the Plaintiff receive by way of provision, a lump sum being the greater of:

  (a) the net proceeds of sale of No 6, including the net rent which has been received from No 6 from the date of death of the deceased to the date of its sale; or

  (b) a lump sum of $897,450.

• (3) Notes that “net proceeds of sale” referred to in the order in Paragraph 2 means the proceeds of sale of No 6 less:

  (a) all costs associated with the sale of the property (including marketing costs, auction costs, agent’s commission and legal fees);

  (b) all transfer costs including conveyancing fees; and

  (c) any capital gains tax payable on the sale of 6 Onyx Close.

• (4) Notes the agreement of the parties that the third Defendant will sell the deceased’s property located at No 6 expeditiously following receipt of the grant of letters of administration from the Court.
• (5) Orders, pursuant to s 77(3) of the Civil Procedure Act 2005 (NSW) that the lump sum due to be paid to the Plaintiff out of the estate of the deceased, be paid to the NSW Trustee and Guardian as the Financial Manager for the Plaintiff.
• (6) Orders that provision made for the Plaintiff be provided out of:

  (a) the share of the deceased’s estate referred to in Clause 4 of the deceased’s Will in respect of which the Plaintiff is the sole discretionary object, for his lifetime;

  (b) to the extent that the share of the deceased’s estate referred to in Clause 4 of the deceased’s Will is insufficient to meet the order for provision for the Plaintiff referred to in Paragraph 2 above, the residue (if any) of the deceased’s estate referred to in Clause 8 of the Will; and then

  (c) the specific gifts in Clauses 5 and 6 of the Will.

• (7) Orders that Joseph’s costs and disbursements of the proceedings, being a specified gross sum instead of assessed costs, agreed in sum of $84,500 (including GST), be paid out of the estate of the deceased.
• (8) Orders that Dominic’s and John’s costs and disbursements of these proceedings, being a specified gross sum instead of assessed costs, agreed in sum of $7,500 (including GST), be paid out of the estate of the deceased.
• (9) Orders that Rose’s costs of these proceedings, calculated on the ordinary basis, of the proceedings, be paid, or retained, as the case may be, out of the residuary estate of the deceased; and to the extent that the residuary estate is insufficient, out of the balance of the estate of the deceased in the proportion calculated as the value of the property, that each of the other devisees receives under the 2009 Will when sold, divided by the total value of the real property in the estate, excluding the property devised to Joseph, after deduction of the costs and expenses of sale of each of the properties, excepting the property devised to Joseph.
• (10) Grants liberty to any party to apply, in these proceedings, for consequential and ancillary orders for the purpose of, or with respect to, giving effect to and implementing these orders.
• (11) Notes that Connie Di Maria and Anthony Meduri have been duly served with notice of these proceedings.

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Amendments

30 June 2023 - Amendment to Order (6) in Joseph's family provision matter - change reference to Paragraph 1 to Paragraph 2.