MacKenzie v Osburn and Ors (No 2);Osburn v MacKenzie

[2005] NSWSC 786

CITATION:	MacKenzie v Osburn & Ors (No 2);Osburn v MacKenzie [2005] NSWSC 786
HEARING DATE(S):	02/08/05
JUDGMENT DATE :	2 August 2005
JUDGMENT OF:	Gzell J
DECISION:	Order that the plaintiff's costs be paid by the defendants.

CATCHWORDS:

PROCEDURE - Costs - Application to have informal document declared to be a will under s 18A of the Wills, Probate and Administration Act 1898 - Application opposed unsuccessfully - Calderbank offer by plaintiff - Matters requiring investigation justifying rejection of offer - Informal document without residuary estate although all assets disposed of - S 46C(2) of the Wills, Probate and Administration Act 1898 requires debts to be met in the order outlined in Pt 2 of Third Sch - Cl 6 from assets specifically disposed off by will, rateably according to value - Under the informal document the highest valued asset, a house, passed to the successfull plaintiff - An order for her costs out of the estate would require her to bear the lion's share of the order

LEGISLATION CITED:

Wills, Probate and Administration Act 1898

CASES CITED:

Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698
Oshlack v Richmond River Council (1998) 193 CLR 72
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Nobrega v Trustees for the Roman Catholic Church for the Archdiocese of Sydney (No 2) [1999] NSWCA 133
LMI Australia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74

PARTIES:

In Matter 105416/04
Carolyn Anne MacKenzie - Plaintiff
William Hamilton Osburn - 1st Defendant
William John Osburn - 2nd Defendant
Alex Willaim Hamilton Osburn - 3rd Defendant

In Matter 117650/04
William Hamilton Osburn - Plaintiff
Carolyn Anne MacKenzie - Defendant

FILE NUMBER(S):

SC 105416/04; 117650/04

COUNSEL:

Mr L Ellison for Mrs MacKenzie
Mr John Wilson SC for the Osburns

SOLICITORS:

Miller Noyce Lawyers
Elenor Murphy & Co Solicitors

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

TUESDAY 2 AUGUST 2005

105416/04 CAROLYN ANNE MACKENZIE v WILLIAM HAMILTON OSBURN & ORS (N0 2)

117650/04 WILLIAM HAMILTON OSBURN V CAROLYN ANNE MACKENZIE

EX TEMPORE JUDGMENT

1 In proceedings numbered 105416 of 2004, consequent upon a hearing in which the application to have an informal document declared to constitute a will under s 18A of the Wills, Probate and Administration Act 1898 was opposed, I published my reasons for admitting that document to probate.

2 There were further proceedings numbered 117650 of 2004 in which one of the defendants in the earlier proceedings sought probate of an earlier will. Those proceedings were stood over pending my determination in the other.

3 In consequence of my view that the informal testamentary document should be admitted to probate, the second matter fails and the appropriate order, apart from an order as to costs, is that the summons be dismissed.

4 It seems to me that the appropriate order as to costs is that there be no order with the intent that each party bear his or her own costs, because that application was made but stood over pending the outcome of the first proceedings.

5 In consequence, I make orders in proceedings numbered 117650 of 2004 that the summons be dismissed and there be no order as to costs.

6 With respect to the first matter, there is no dispute that the following declaration and orders should be made:

“The Court declares:
1 The document dated 17 December 2001 is an informal testamentary document within s 18A of the Wills, Probate and Administration Act 1898.
The Court orders:
2 The plaintiff be granted probate of the informal testamentary document dated 17 December 2001.
3 The grant be referred to the Probate Registrar for completion in accordance with the Rules.”

I make orders in those terms.

7 The dispute is as to costs. Mr Ellison, who appeared for the successful plaintiff, seeks an order that the plaintiff’s costs, on an indemnity basis, be paid by the defendants and there be no order as to the defendants’ costs.

8 Mr Wilson SC, who appeared for the unsuccessful defendants, submitted that the appropriate order for costs was that the plaintiff’s costs on an indemnity basis and the defendants’ costs on a party and party basis be paid out of the estate assets.

9 I would be minded to make an order for costs to be paid out of the estate in line with Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698 at 709 but for the circumstance that there was in the informal document, notwithstanding my observation at par 50 of my reasons for judgment, no disposition of a residuary estate.

10 Effectively, the deceased dealt with the entirety of his estate in that document. The only assets of the estate were the house at Mount Colah, the furniture in the house, and cash balances.

11 On the view that I took of the correct interpretation of the testamentary document, the house and furniture were given to the successful plaintiff and the cash balances were divided equally amongst the unsuccessful defendants.

12 Technically, however, there was no disposition of the residuary estate and s 46C(2) of the Wills, Probate and Administration Act 1898 came into play. It provided:

“Where the estate of a deceased person is solvent the deceased person’s real and personal estate shall, subject to the provisions of any Act as to charges on property of the deceased and to the provisions, if any, contained in the deceased person’s will, be applicable towards the discharge of the funeral, testamentary, and administrative expenses, debts, and liabilities, payable thereout in the order mentioned in Part 2 of the Third Schedule.”

13 Part 2 of the Third Schedule contained an order of application of assets in a solvent estate. The particular provision applicable in the instant circumstances was cl 6 which provided: “assets specifically disposed of by will, rateably according to value.”

14 The consequence is that if I made an order that the plaintiff’s costs be paid out of the estate, she would have to bear the lion’s share of that order.

15 She has been successful in these proceedings and, in my view, it would be inappropriate to make an order that required her to contribute to her own costs.

16 A Calderbank offer was made shortly before the trial. When I say shortly, about three weeks before the trial. It sought the defendants’ agreement to orders that the document of 17 December 2001 be declared to be a testamentary document and an order that it be admitted to probate, an order that the plaintiff have her costs of the proceedings paid out of the estate on an indemnity basis and an order that the costs of the first defendant be paid out of the estate of the deceased on an indemnity basis.

17 The existence of a Calderbank offer is merely a circumstance that the Court is entitled to consider in exercising its discretion with respect to costs.

18 An order for indemnity costs is exceptional and requires the party seeking them to establish some delinquency on the part of the unsuccessful party (Oshlack v Richmond River Council (1998) 193 CLR 72, Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225).

19 Thus the rejection of a Calderbank offer will not justify an order for costs on an indemnity basis unless it was unreasonable to reject the offer (Nobrega v Trustees for the Roman Catholic Church for the Archdiocese of Sydney (No 2) [1999] NSWCA 133, LMI Australia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74).

20 At par 45 of my reasons for judgment, I set out a number of matters that were argued on behalf of the defendants to support their case. These were, first, that there were discrepancies in the letters written by David MacKenzie to Mr Francis; secondly, there was conflict in the testimonies of David MacKenzie and Stuart MacKenzie; thirdly, there was a failure to mention the informal document at a meeting with Mr Francis; and, finally, there was the giving of the title deed to the house to the Osburns.

21 It seems to me that those were matters that gave rise to a need to investigate and justified a rejection of the Calderbank offer.

22 In those circumstances, I am not prepared to make an order on an indemnity basis. Nor am I prepared to make an order that costs be paid out of the estate, which would have the effect of requiring the successful plaintiff in this case to bear part of her own costs.

23 The order I propose to make in matter numbered 105416 of 2004 is that the plaintiff’s costs be paid by the defendants and there be no order as to the defendants’ costs.

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