Cautionary Caveat Considerations

A caveat is a legal document filed in the Supreme Court that will prevent an application for probate or letters of administration from being granted. It is the starting point to challenge a will (ie, to have the will declared as invalid).

It is also an invaluable tool to protect one’s interest in an estate. Filing a caveat can allow a person lodging the caveat (caveator) time to obtain legal advice and investigate the circumstances surrounding the will’s validity. It can also provide the caveator access to important documents that might assist in investigating the will in question.

However, caveats can also be ‘double-edged swords’ and the decision to file a caveat should not be taken lightly. This is because:

• There are significant costs consequences for those who have filed a caveat without a proper legal or evidentiary basis.
• Substantiating the evidentiary requirements to support a caveat can be a complicated and costly process.

At Cornwalls, we are often contacted by or deal with people who have lodged a caveat against a will without first considering the potential consequences of their actions. The cases referred to in this article provide valuable salutary lessons and highlight the folly of such an approach.

Time limits to file a Caveat

In Victoria, a caveat can be filed before or after an application for a grant of probate has been filed; however, it must be filed before the grant has been made.

If a probate application has been granted, it is still possible to challenge the will – but this means the person seeking to challenge the will would need to file proceedings to have the grant of probate revoked. This creates an additional layer of difficulty because further procedural and evidentiary requirements apply to revoking a grant once it has been made.

Online probate applications can be processed by the Supreme Court within a matter of days from the day of filing, as opposed to the three to six weeks it previously took with paper applications. This means that persons seeking to challenge a will must be proactive: otherwise they lose the opportunity to protect their interests in an estate.

Standing – who can challenge a Will?

Under sections 58 and 82 of the Administration and Probate Act 1958 (Vic), any person can lodge a caveat against a probate application.

However, just because you can file a caveat does not necessarily mean you should. In order to successfully challenge a will, a caveator must have ‘standing’ – otherwise their caveat will be dismissed. This is because probate litigation is often referred to as ‘interest litigation’. Therefore ‘sticky beaks’ and ‘busybodies’ should not apply lest they face the wrath of the Supreme Court and find themselves on the wrong side of an adverse costs order.

The principles for standing in Victoria were outlined by McLeish JA in Gardiner v Hughes [2017] VSCA 167. Essentially, a caveator must demonstrate that they have a sufficient interest in the estate, which is established by showing that their rights would be impacted if the will / grant were revoked – even if this is only a bare possibility.

Examples of where the Courts have concluded that a person has a sufficient interest in an estate include:

• where an executor of a prior will seeks to challenge a later will;
• where beneficiaries under the rules of intestacy sought to challenge the deceased’s last three wills; and
• where a beneficiary entitled to jewellery and the deceased’s personal belongings under a prior will sought to challenge a later will of the deceased.

Examples of where a caveator will not have standing include:

• a creditor of the deceased’s estate;
• where the caveator had an expectation to receive a more favorable result in their family law proceeding if the deceased’s last will was invalid; and
• where the caveator had an entitlement to receive a gift of jewellery under the last will but did not stand to benefit under prior wills.

The case of Govindan v Charan [2020] VSC 137 contains an interesting discussion on the issue of standing. The caveator in the proceeding was the beneficiary of the deceased’s last will dated 11 May 2006, and was entitled to receive the deceased’s jewellery but was not a beneficiary under the deceased’s two prior wills – which meant that their caveat filed against the last will was adverse to their own interests. In dismissing the caveat, Keith JR concluded that:

• The caveator had no relevant interest in holding the 2006 will invalid.
• To be ‘an interest’ in the estate, there must be a proper basis for the Court to exercise its judicial power to determine a dispute or cause.
• The interest of the caveator did not warrant the estate incurring costs of the proceedings and the delay in the distribution of the estate.

The decision also confirms that a caveator in Victoria must likewise consider the overarching purpose of the Civil Procedure Act 2010, which imposes strict obligations on litigants to conduct civil proceedings in a manner proportionate to the complexity of the issues and amounts in dispute. Following this decision, those who seek to file a caveat to protect a minor or nominal interest in an estate should tread very carefully.

Grounds of objection

A will can be challenged / revoked on a number of grounds outlined in r 8.06(1) and (2) of the Supreme Court (Administration and Probate) Rules 2014 (Vic). However, r 8.06(3) also makes clear that the grounds set out are not exhaustive. The most common grounds are:

• the testator (ie the will maker) lacked testamentary capacity at the time of making the will;
• the testator did not know and approve the contents of the will (ie they did not understand or agree to the contents of their will), or there are suspicious circumstances surrounding the will;
• the testator was unduly influenced to make the will;
• the will is the product of a fraud;
• the will is a forgery;
• the will does not meet the formal requirements for a will and the testator did not intend the document to be their will;
• there is a later will; and
• the will was revoked by the testator during their lifetime.

Where the application before the Court concerns an application for letters of administration upon intestacy (ie, there is no will), grounds of objection can include:

• a will of the deceased does exist;
• the applicant does not have capacity;
• the caveator, or some other person, has a better right to a grant; and
• the applicant is disqualified to act.

Grounds of objection must provide a sufficient factual basis to raise at least a prima facie case for the grounds relied upon. The evidence required to establish a prima facie case will differ depending on the grounds of objection alleged.

In Victoria, the Supreme Court of Appeal in Gardiner v Hughes (No 2) confirmed that in order for a caveator to establish a prima facie case, they must show there is a ‘case for investigation’ or ‘something to go on’ to call for a trial. If a caveator cannot establish a prima facie case, then their caveat is likely to be dismissed at the first directions hearing of the matter or shortly after.

Costs

Although costs are ultimately a discretion of the Court, the general rule is that ‘costs follow the event’ (ie, the loser of the litigation pays the winner’s costs).

However, exceptions to this rule exist in probate litigation. These were outlined in Nicholson & Ors v Knaggs & Ors (No 3): that is, in circumstances where the deceased’s behavior prior to their death has caused the litigation; or where the circumstances surrounding the preparation / execution of the will warranted an investigation. The underlying principle behind the exceptions is that litigants who seek to investigate suspicious wills before they are admitted to probate should not be punished by an adverse costs order, provided they have behaved reasonably in the proceedings.

The Court’s discretion regarding costs and the scale of costs ordered (ie standard / indemnity costs) will also be impacted by the parties’ conduct in the proceedings. Specifically, the Court will have regard to:

• whether offers of compromise were exchanged;
• whether there was non-compliance with orders from the Court;
• whether a party has sought to include unnecessary or irrelevant evidence; and
• the seriousness of the allegations made by the caveator (ie undue influence, fraud and forgery), and whether the allegations were supported by evidence.

Although the Courts will not punish a litigant for investigating doubtful wills, the cases also make clear that a caveator must immediately withdraw their caveat once it is apparent that there is no reasonable prospect of opposing the grant. Typically, the Court will say this should occur after receipt of the plaintiff’s affidavit or after discovery of relevant documents has been completed.

The Courts will be particularly unforgiving and punitive where a caveat has been filed and maintained in ignorance or disregard as illustrated in the matter of Campbell v Campbell [2012] QSC 302. In this matter, the caveator and their solicitor filed a caveat against a will on the erroneous and baseless belief that the deceased lacked capacity and that a later will of the deceased existed.

Despite prolific warnings from the executors seeking to propound the will, the caveat was not removed and so an application to have the caveat dismissed was filed by the executors in the Supreme Court. At the hearing, Ann Lyons J made an adverse costs order against the caveator and a personal costs order against the caveator’s solicitor on the basis that:

• there was no legal or evidentiary basis to file the caveat;
• the caveator’s solicitor maintained the caveat even after she became aware there was no basis to justify the caveat; and
• the caveator’s solicitor ignored repeated requests to remove the caveat.

Practice points

At Cornwalls, we are often faced with emotional clients who are grieving the loss of a loved one, and we provide instructions to take urgent steps regarding an estate. However, a solicitor should not be a mouthpiece for their client and cannot blindly act on instructions. As Ann Lyons J warned in Campbell v Campbell [2012] QSC 302 at [72]:

‘[S]olicitors need to bring independent discretion and judgment to bear in relation to the cases they are involved in and need to be aware of the overall duty to the Court and the speedy and efficient administration of justice. Solicitors should be careful not to inflame already fragile relationships.’

Where there is insufficient evidence to support a caveat, the Courts will forensically examine the history of the matter to determine the point at which the caveat should have been removed.

Accordingly, in the course of caveat proceedings, there may be occasions where a prudent solicitor must take a step back, consider their client’s position, obtain advice from counsel and if required, withdraw their caveat. A failure to do so is likely to result in the unenviable outcome faced by the solicitor in Campbell v Campbell [2012] QSC 302.

Queries

If you have any questions about this article, please get in touch with an author or any member of our Wills & Estates and Litigation & Dispute Resolution team(s).

Disclaimer

This information and the contents of this publication, current as at the date of publication, is general in nature to offer assistance to Cornwalls’ clients, prospective clients and stakeholders, and is for reference purposes only. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.