HIS HONOUR: On 22 July 2015 I made an order for provision in favour of the plaintiff out of the estate of the late [Mrs P] (AB v Curry [2015] NSWSC 1063). The estate was a small one. Its likely net value after payment of the executor's costs was about $385,000. Under the deceased's last will the plaintiff was given a legacy of $20,000. I made a provision in her favour, in lieu of the legacy under the will by way of a legacy of $127,000 and by the delivery to her of any goods or chattels of the deceased that remained in the executors' possession. The executors had estimated that such goods and chattels would be worth about $5,000. That estimate was not challenged.
After judgment was delivered the defendants tendered an offer of compromise served on 24 September 2014. The defendants had offered to compromise the plaintiff's claim by way of a legacy of $220,000 in lieu of the plaintiff's legacy under the will. The offer was not accepted. There was no dispute that the offer of compromise was made in accordance with r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW). The defendants submit that in accordance with UCPR r 42.15(2) the appropriate costs orders are that the defendants pay the plaintiff's costs on the ordinary basis up to 24 September 2014 and that the plaintiff pay the defendants' costs on the indemnity basis from 25 September 2014. They submit that there is no reason for the Court to order otherwise.
Rule 42.15 provides:
"42.15 Where offer not accepted and judgment no more favourable to plaintiff
(cf SCR Part 52A, rule 22; DCR Part 39A, rule 25; LCR Part 31A, rule 20)
(1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the plaintiff obtains an order or judgment on the claim no more favourable to the plaintiff than the terms of the offer.
(2) Unless the court orders otherwise:
(a) the plaintiff is entitled to an order against the defendant for the plaintiff's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and
(b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis:
(i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and
(ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made."
The plaintiff submitted that the defendants should pay her costs of the proceedings on the ordinary basis. She did not submit that the special principles that can apply in family provision cases (e.g. Singer v Berghouse [1993] HCA 35 at [6]; (1993) 114 ALR 521 at 522 per Gaudron J; Chapple v Wilcox [2014] NSWCA 392; (2014) 87 NSWLR 646 at [136]-[141] per Barrett JA) were a reason for ordering otherwise under r 42.15(2). I agree with the reasons of Kunc J in Bates v Cooke (No 2) [2014] NSWSC 1322 at [27]-[33] that there are sound reasons of policy in family provision proceedings for the Court to be slow to depart from the prima facie position as to costs in relation to offers of compromise. That is so, even though the application of r 42.15 in this case will result in the successful plaintiff's not receiving a provision, after payment of costs, that would provide her with adequate provision for her proper maintenance, education or advancement in life. That is the consequence of her not having bettered the offer of compromise.
The Rules seek to give effect to the public policy of encouraging the settlement of litigation by imposing costs sanctions against a party who rejects an offer of compromise and does not better his or her position in the litigation. Application of the policy is necessary in the attempt to deter the frittering of estates in legal costs. This is yet another case in which the costs of the proceedings are out of proportion to the value of the estate. I do not attribute that to any fault on the part of the defendants.
Mr Ang, who appeared for the plaintiff, submitted that the offer of compromise was not "beaten" because the plaintiff obtained an order for the return of the deceased's chattels being items of sentimental value separate from the issue of monetary provision. He submitted that the defendants finally capitulated on this issue on the last day of hearing. That mis-states the position. The plaintiff had complained that the executors had given away items of the deceased which were of sentimental value to her. She did not seek an order designating such items as notional estate. The defendants did not oppose an order that the plaintiff receive such items of the deceased as were still kept in storage, provided she paid the expenses of removing the items. There was no capitulation on the issue by the defendants and the value of the items was only in the order of $5,000. It is clear that the plaintiff did not obtain orders for provision that bettered the offer of compromise. To the contrary, her success in the proceedings fell far short of what had been offered.
Therefore, the costs orders sought by the defendants should be made unless there is good reason to order to the contrary.
Nonetheless, the plaintiff submitted that her costs should be paid on the ordinary basis. The reasons for that submission were variously expressed in emotive terms. In many respects the submission was not substantiated by the evidence. Mr Ang summarised the plaintiff's submission as follows:
"a. The plaintiff was not accorded compassion, understanding, nor respect by the defendants throughout the grieving process which is continuing to the present day. The grieving process will likely continue for some time, given the plaintiff's continuing confusion over the intentions of her mother;
b. The sale of the deceased's [xx] home (settlement on around 23 June 2014) was conducted by the defendants and their solicitor in such a manner as to arouse suspicions of collusion either in the process of sale or in a suppression of the sale price. The sale should have been conducted at least with the appearance of being 'at arm's length' and neglect in this regard was poor professional judgement by the defendants' solicitor.
c. The conduct of the case by the defendants had a marked causative effect on the plaintiff's state of mind, confusion and fostered suspicions of wrongdoing by the defendants and their solicitor. This resulted in substantial legal costs incurred to investigate the issues that arose. The issues should have been dealt with by the estate in a more humane, compassionate and transparent manner.
d. Confusion surrounded the circumstances of the deceased's death. The 2005, 2009 and 2011 Wills were not produced by the defendants until 22 December 2014, after the offer. A significant proportion of the costs were incurred as a result of an enquiry into the intentions of the deceased and her financial circumstances."
Whether the plaintiff was accorded compassion, understanding or respect by the defendants is irrelevant to the question of costs. The defendants' position was that they should uphold the testator's intentions as expressed in her will. The question of how the burden of the costs of the proceedings should be borne depends upon the way the proceedings were conducted, including by the making of offers of compromise or settlement proposals, and the outcome of the proceedings; not by debatable issues as to whether the defendants were required to accord the plaintiff compassion, understanding or respect, or did so. Whether the defendants afforded the plaintiff compassion, understanding or respect was not an issue in the proceedings. There is no basis to find that they did not. But in any event, I do not think the question is relevant.
Issues relating to the sale of the deceased's home were raised by the plaintiff in her affidavits. The reason for the plaintiff's suspicion was that the purchaser of the deceased's house was a clerk who worked from time to time in the office of the defendants' solicitor. But the property was submitted for sale by auction. It was passed in. The executors had obtained a valuation from the son of the first defendant who is a valuer by profession. His valuation was not impugned. After the property was passed in at auction the executors sold the property to the underbidder at the valuation. There was no evidence that the property was sold at less than its fair value. No question was asked of any witness about the circumstances of the sale. The defendants' solicitor was cross-examined, but he was not cross-examined on any issue in relation to the sale. There is no basis for the submission that he showed poor professional judgment. The executors sold the property to the highest bidder at valuation after the auction. They could have been rightly criticised if they had not sold to the highest available buyer. The submission that there was a "suppression" of the sale price is wholly without foundation. The submission should not have been made.
In any event, these matters had only the most marginal relevance to the plaintiff's case. Affidavits in relation to the conduct of the auction and the obtaining of the valuation were read without objection, but no question was asked of any witness on the topic and no submission was made about it at the trial.
The plaintiff would only have been affected by the probity of the sale if an order for provision had been made that gave the entire estate to her or made her a residuary beneficiary. Even if such an order for provision were made, any claim to recover compensation from the executors for having allegedly sold the deceased's house for less than its fair value, could not have been determined in these proceedings. There is no reason to think that the allegation of collusion in the sale of the deceased's house could have had any bearing on a decision as to whether an order for provision should be made in favour of the plaintiff that gave her the entire estate, or the whole or a proportion of the residuary estate.
In short, the matter raised by the plaintiff increased the costs of the proceedings unnecessarily having regard to the true issues. Far from its being a matter which could justify the plaintiff's receiving an order for costs in her favour, it is a matter which confirms the appropriateness of the plaintiff's being required to pay the defendants' costs after the date of the offer of compromise on the indemnity basis. The issue appears to have been raised after the offer of compromise.
The third submission quoted above is repetitive of the first and second. I reject the submission that the executors should have dealt with the plaintiff's claim in a "more humane, compassionate and transparent manner". There is no basis for that submission. If the plaintiff was confused and suspicious of wrongdoing, that was not the fault of the defendants. I hope the plaintiff's legal representatives warned her against incurring unnecessary and disproportionate costs in pursuing such issues about which she was confused or suspicious. If they did not, a costs assessor should take that into account on any assessment of the plaintiff's costs as between her and her solicitor and counsel. But there is no reason the defendants should be liable for those additional costs.
Mr Ang did not refer to any evidence to support the submission that confusion surrounded the circumstances of the deceased's death or that additional costs were incurred because the 2005, 2009 and 2011 wills were not produced by the defendants until 22 December 2014. Without the benefit of any submission based on the evidence, it appears to me that the first request for the production of prior wills was made by the plaintiff on 15 December 2014 and they were produced a week later. I am at a loss to understand how this can be the basis for an adverse costs order against the defendants.
I accept that a significant proportion of costs were incurred as a result of an inquiry into the intentions of the deceased and her financial circumstances. But that does not justify any change to what would otherwise be the appropriate costs order. Such inquiries are part and parcel of a claim for a family provision order.
Mr Ang submitted that the executors had been unco-operative. He attacked the circumstances of the sale of the deceased's house. He submitted that the defendants' solicitor failed to exercise proper professional judgment and said that the plaintiff was a "soft target". These were serious allegations that should not have been made without evidence to support them. No questions were asked of either the defendants or their solicitor that could justify the submissions. I reject them.
For these reasons I have concluded that no order "otherwise" should be made under UCPR r 42.15.
I should record that on 6 August 2015, when this judgment was reserved, my associate received an email from the plaintiff personally that contained attachments that the plaintiff asked be provided to me. The plaintiff's email was not copied to the defendants' solicitors. I had made orders that submissions on costs be provided in writing. The plaintiff's counsel had provided such submissions. The plaintiff did not have leave to provide me with the "attached information". I have had no regard to the attachments.
I order that the defendants pay the plaintiff's costs of the proceedings on the ordinary basis up to 24 September 2014 and the plaintiff pay the defendants' costs of the proceedings on the indemnity basis from 25 September 2014.
[3]
Amendments
12 November 2015 - Names and places anonymised in accordance with orders of White J made 23/10/15
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Decision last updated: 12 November 2015