Neville Maxwell (the deceased), was survived by his wife, their three adult children and two grandsons.

The deceased’s last Will appointed two of his children executors and trustees; leaving

• his shareholding in a family company to each of his three children;

• gold bullion in specified shares between the three children and two grandchildren;

• the residue of the deceased’s estate divided equally between the three children.

Background

The three siblings were in dispute as to the administration of the estate therefore a solicitor was granted Letters of Administration with the Will annexed in September 2020.

The dispute related to the ownership of an amount of gold bullion that the deceased had given to the defendant for safekeeping in 2017. Initially, the dispute was as to the whole quantity (700 ounces) of the gold. However, by the time of the hearing the parties had reached an agreement that, of the 700 ounces, the deceased owned 445 ounces with the balance of 255 ounces owned by the family company.

The Court was asked to determine whether the deceased made an effective inter vivos gift to the defendant of the 445 ounces of gold held by her; or as the plaintiffs contend there was no effective inter vivos gift and the 445 ounces of gold is an asset of the estate for distribution under the deceased’s last Will.

The court concluded that there was an effective inter vivos gift of the gold bullion. Accordingly, it did not form part of the deceased’s estate for distribution under the Will.

Costs

The general rule is that costs follow the event under r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) unless it is considered that some other order ought to be made

The Court’s power as to costs is discretionary and subject to the rules of the court: see s 98(1)(a) of the Civil Procedure 2005 NSW. The court, in its discretion, may make an order other than that costs follow the event, or other than that costs be assessed on the ordinary basis: UCPR rr 42.1 and 2.

In some circumstances, it may be appropriate to apportion costs on an issue-by-issue basis. Where the successful party has

“unfairly, improperly, or unnecessarily increased the costs”

Trustee for the Salvation Army (NSW) Property Trust & Anor v Becker & Anor [2007] NSWCA 136 at 125

Probate exception

However, in probate proceedings, there are two exceptions to the general rule that costs follow the event, being:

• where the testator has been the cause of the litigation and
• where the circumstances led reasonably to an investigation concerning the testator’s will

“[i]n that area of overlap, the principles which are recognised by the two exceptions are insufficient to produce a result. It is a matter for the trial judge, in light of the circumstances of the particular case before him or her, to decide which costs order better achieves justice”. 

Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698 at 30

The decision

The court noted that while the present proceeding was not a probate proceeding, there are some similarities. Adding that the probate exceptions as to costs are applications of the broader principle that, where litigation is between parties with a claim over one fund, the court has jurisdiction to order costs to be paid out of the fund rather than personally by one or more of the litigants.

The court held that the deceased’s conduct led to the confusion surrounding the circumstances of the Inter Vivos Gift and the deceased at various times sought the help of the plaintiffs to recover the gold held by the defendant which explains their conduct in pursuing the claim.

In ordering that each party bear their own costs the court considered that it would not be a just result in all the circumstances for the plaintiffs – who sought to honour the deceased’s apparent wishes and instituted proper proceedings to procure a benefit for the estate in circumstances where there was confusion surrounding the gift – to be liable for the defendant’s costs;1 notwithstanding her success concerning the proportion of the disputed gold that has ultimately been found to be the subject of a perfected gift to her.