Citation: Tobin v Ezekiel; Estate of Lily Ezekiel [2011] NSWSC 571
Court: Supreme Court of New South Wales
Date: 23 May 2011
Judge(s): Brereton J
Background
The substantive proceedings concerned the estate of the late Lily Ezekiel. The plaintiffs, members of the deceased's family, had challenged a grant of probate on the grounds of want of testamentary capacity, undue influence, and lack of knowledge and approval of the will's contents. They also sought provision from the estate under the Family Provision Act 1982. On 1 March 2011, Brereton J dismissed the proceedings.
This judgment dealt with two residual matters following that dismissal: first, whether the estate assets should be preserved pending the plaintiffs' appeal; and second, how costs should be allocated given the conduct of both sides during the litigation.
The only significant estate asset was a property at Bondi Beach, valued at approximately $2.5 million. The defendants were the beneficiaries under the contested will.
Legal Issues
- Whether an order should be made restraining the defendants from alienating or encumbering the Bondi Beach property while the plaintiffs' appeal remained on foot
- What form that preservation order should take, and whether it should be fixed or flexible
- Whether the ordinary rule that costs follow the event should apply, or whether the circumstances of the probate litigation and the parties' conduct warranted a different approach
- How to apportion costs where both parties had contributed to the complexity and expense of the proceedings
Decision
Preservation of estate assets pending appeal
Brereton J accepted that some form of preservation order was appropriate to prevent the plaintiffs' appeal from becoming futile. Rather than making a definitive order fixed for the duration of the appeal, his Honour preferred a more flexible approach. The defendants consented to an order restraining them from alienating or encumbering the Bondi Beach property to secure more than $1.1 million without first giving 28 days' written notice to the plaintiffs' solicitors. His Honour reasoned that the parties' financial needs and the balance of convenience were liable to fluctuate, making a revisable order preferable to a once-and-for-all determination.
The order was made in the form of a court order rather than a mere undertaking, reflecting the significance of the matter. Corresponding undertakings were required from the plaintiffs regarding their own properties. Liberty to apply was reserved to both parties.
Costs
Brereton J acknowledged the general rule under the Uniform Civil Procedure Rules that costs follow the event, but recognised the established probate exception: where circumstances reasonably led to an investigation of the will, costs may be left to lie where they fall. His Honour found that the defendants had given untruthful accounts of the circumstances surrounding the making of the will. Those untruthful accounts were fundamental to why the undue influence claim was initiated and pursued, and a party who puts such an account before the court cannot fairly complain when the opposing party goes to lengths to disprove it.
At the same time, his Honour accepted that the plaintiffs had contributed to the overall cost burden through their own conduct of the proceedings, including serving evidence that was ultimately not pressed or rejected, and pursuing the litigation with considerable vigour. His Honour declined to make issue-by-issue costs orders, finding that approach would create an unworkable assessment exercise. Taking all factors into account, including a reference point of approximately $75,000 as the approximate costs of a two-day family provision claim on one side, Brereton J ordered the plaintiffs to pay the defendants' costs fixed in the lump sum of $100,000, representing a significantly reduced portion of the defendants' total actual costs.
Orders Made
- The defendants were restrained from alienating or encumbering the Bondi Beach property to an extent securing more than $1.1 million, except upon giving 28 days' written notice to the plaintiffs' solicitors specifying the nature, quantum, and parties to the proposed dealing
- Corresponding undertakings were required from the plaintiffs in relation to their respective properties, on the same notice terms
- Liberty was reserved to both parties to apply to vary the order, or in the event a notice of proposed dealing was given
- The plaintiffs were ordered to pay the defendants' costs, fixed in the sum of $100,000
Key Takeaways
- In probate litigation, the ordinary costs rule that costs follow the event may be displaced where the circumstances reasonably led to an investigation of the will, or where those interested in the estate caused the litigation.
- Where a defendant in probate proceedings puts an untruthful account of critical facts before the court, that conduct can found a significant reduction in any costs order in that party's favour, even where the defendant ultimately succeeds.
- A flexible preservation order, rather than a fixed interlocutory injunction, may be appropriate where the parties' needs and financial circumstances are likely to shift over the course of an appeal, with liberty to apply reserved accordingly.
- Courts may decline to make issue-by-issue costs orders in complex litigation, preferring instead a global assessment that reflects the overall justice of the case without creating an unmanageable burden for costs assessors.
- Lump-sum costs orders can be made as an alternative to assessed costs, allowing the court to achieve a proportionate result having regard to the relative conduct and positions of the parties.
Legislation and Cases Referenced
Legislation
- Civil Procedure Act 2005 (NSW), s 98
- Family Provision Act 1982 (NSW), s 7
- Uniform Civil Procedure Rules 2005 (NSW), r 42.1
Cases
- Re Estate of Paul Francis Hodges Deceased; Shorter v Hodges (1988) 14 NSWLR 698
- Tobin v Ezekiel; Estate of Lily Ezekiel [2011] NSWSC 81 (substantive judgment)
- Tobin v Ezekiel, Ezekiel Estate [2008] NSWSC 1108 (procedural judgment, Palmer J)
- Moore v Moore [2004] NSWSC 597