Succession - Family provision and maintenance - Practice - Procedure, orders and other matters - Other procedural matters - Costs - Applicant wholly successful - Small estate - Reasonable offer to settle rejected - Conduct of respondent considered.

Basterfield v Gay [1994] TASSC 120; (1993) 3 Tas R 293, Morse v Morse (No 2) [2003] TASSC 145, Quirk v Bawden (1992) 111 FLR 115; Koorneef & Lewkowicz v Lewkowicz [2001] ACTSC 81, Woolnough v Public Trustee (No 2) [2005] TASSC 102, referred to.

Judgment Number: [2009] TASSC 32

1 On 11 March 2009, reasons for judgment were published in respect of a claim by Mary Helen Adkins ("the applicant") pursuant to the Testators Family Maintenance Act 1912 ("the Act") for provision out of the estate of her deceased husband, Charles Adkins ("the TFM application"). Charles Adkins died on 7 July 2006. The claim had been actively opposed by Colin Adkins, one of the deceased's sons ("the respondent"). Other siblings chose not to take part in the ultimate hearing. The estate was small. It consisted basically of a home at 6 Barton Avenue, Triabunna ("the home"). The applicant had been left a life interest in that property which she had shared with the deceased for 26 years until his death. On the applicant's death the estate was to pass to two of the deceased's sons by his former marriage and a grandson, the son of a deceased child.

2 The effect of the reasons for judgment was that the applicant was to have the freehold of the home or the entirety of the estate, whatever the estate proved to be. The respondent did not appear in court when the reasons were published. He had been forewarned by the applicant's solicitors that, in the event the applicant was successful, she would be seeking an order for costs against him. In the circumstances the costs application was made but adjourned to a date to be fixed for hearing.

3 No formal orders at all were made at the time the reasons were published, the parties being given an opportunity to agree the final terms. That agreement was not forthcoming and, at the request of the applicant's solicitors, the matter was re-listed for the purpose of finalising the formal orders to be made, to give effect to the reasons for judgement, and to hear argument about the applicant's application for costs. No application has been made by the respondent for any order as to costs.

4 The respondent was given notice of the hearing about these issues but did not appear. The hearing proceeded in his absence. The orders sought by the applicant to give effect to the reasons were uncontentious in my view and were accordingly made. However the question of costs was more problematic. I heard argument from the applicant's solicitors and reserved my decision.

5 Counsel for the applicant sought orders that the respondent pay the applicant's costs of the TFM application on an indemnity basis or, in the alternative, that he pay such costs from Thursday 12 June 2008, which was the date upon which an offer was made to the respondent to settle the application. At the hearing on 8 April 2009, counsel for the applicant either tendered documents or relied on some already tendered during the course of the substantive hearing for the purpose of the costs application. These were:

-

affidavit of service of Lindsay Campbell sworn 17 June 2008,

-

copy letter dated 27 June 2008 from the respondent to the solicitors for the applicant,

-

copy letter dated 9 October 2008 from the respondent to the solicitors for the applicant,

-

copy letter dated 21 October 2008 from the solicitors for the applicant to the respondent,

-

copy letter dated 12 March 2009 from the solicitors for the applicant to the respondent,

-

copy letter dated 1 April 2009 from the respondent to the solicitors for the applicant.

It was apparent from the last of those documents that the respondent did not intend to take part in any exercise which would result in orders giving effect to the reasons for judgment published on 11 March.

6 The Act, s3(1), provides that on the hearing of an application the Court or a judge "... may make such ... order ... including an order as to costs, as the Court or judge thinks fit". That is, the Court effectively has an unfettered discretion to make an order for costs in such terms as it thinks fit. There is, in family provision cases, what might be described as a usual practice where an applicant is successful. That is, that the costs of all parties are provided for from the estate. In this case, counsel for the applicant asks the Court to exercise its discretion in a manner different from the usual practice.

7 An unfettered discretion does not of course mean that the Court may make a costs order capriciously, and the factors to be taken into account when dealing with an application for costs in proceedings under the Act have been discussed in a number of judgments of this and other courts. Underwood J (as he then was) identified in Basterfield v Gay [1994] TASSC 120; (1993) 3 Tas R 293, a number of factors which might influence the courts discretion when considering a costs application. Some of these were the financial circumstances of the applicant, the size of the estate, any lack of frankness with the court, the manner in which proceedings were conducted, and the merits of the applicant's case. Slicer J in Morse v Morse (No 2) [2003] TASSC 145, identified factors such as the merits and reasonableness of the claim, the conduct of the proceedings, the size of the estate, and the financial position of the applicant.

8 The courts have also identified that an offer to settle proceedings prior to any hearing may have an impact upon the exercise of a court's discretion, not only as to whether the usual practice might be departed from, but also as to the type of costs order which might be made if the practice is departed from: see Quirk v Bawden (1992) 111 FLR 115; Koorneef & Lewkowicz v Lewkowicz [2001] ACTSC 81 and Woolnough v Public Trustee (No 2) [2005] TASSC 102. In the present case, counsel for the applicant contends that not only should the usual practice be departed from, but also the Court should make an order for indemnity costs.

9 Professor Dal Pont in his text The Law of Costs, commencing at par16.35, identified a number of factors which might justify a special type of costs order. These factors are, in my view, relevant to a consideration of whether an indemnity costs order should be made in the present case. Some are:

-

Where the case pursued by a party against whom costs are sought might be considered to have been patently hopeless.

-

Where an unsuccessful litigant makes and persists with unfounded allegations against the other party, which allegations are ultimately determined to be unfounded.

-

Where a party engages in a deliberate attempt to frustrate proceedings by fraud or deception, or in conduct calculated to harm the other party.

-

Where there is a rejected offer of compromise.

10 In Woolnough v Public Trustee (No 2) (supra), Blow J exercised his discretion to make an order for costs against unsuccessful respondents. The factors considered by his Honour were that the applicant was wholly successful, that it was a small estate, the applicant was in need, and there had been an offer to settle which was rejected. In that case, the respondents filed affidavits which were clearly adversarial in nature in which they made allegations of wrongdoing against the applicant. They also rejected a reasonable offer. They were ordered to pay the applicant's costs from the date of filing of the adversarial affidavits, even though at trial they did not seek to rely on them, and did not cross-examine the applicant.

11 The present proceedings were commenced on 29 February 2008. On 12 June 2008, the respondent was personally served with the following documents, namely:

-

a letter dated 23 April 2008 addressed to him from the applicant's solicitors,

-

a copy of probate of the will of Charles Adkins, the deceased,

-

notice ordered to be served by the Court on the respondent in respect of the proceedings,

-

a copy of the application itself, and

-

a copy of the applicant's affidavit sworn 16 April 2008 in support of her application.

12 In the letter addressed to the respondent, dated 23 April 2008, he was advised as follows:

"As you are aware we act for Mary Adkins. Mary has now obtained probate of the last will of Charles Ernest Adkins dated the 9th day of June 1980. A copy of the probate (including a copy of the will) is enclosed.

You are a beneficiary under that will.

Mary has instituted proceedings under the Testators Family Maintenance Act 1912. The Court has directed service of notice of the proceedings upon you.

Served on you is a notice of the proceeding which advises you of your right to participate in the proceedings.

Also enclosed is a copy of Mary's affidavit filed in support of the application.

We suggest you consult your solicitor in respect of this matter immediately.

Also enclosed is a copy of the order of Justice Evans which ordered Phillip Adkins to pay Mary's costs in respect of proceedings No 389 of 2007 in relation to Rule 8 of Schedule 3 of the Administration and Probate Act 1935 and the application pursuant to Rule 942 of the Supreme Court Rules 2000.

One final but very important matter I raise is the offer Mary is prepared to make to settle her application.

If this matter proceeds to a hearing Mary will seek that the whole estate be awarded to her.

As you will see from Mary's affidavit the only asset in the estate is the house at 6 Barton Avenue which was recently valued at $268,000.00. I understand Mary may seek a slightly higher price, however, what it sells for will ultimately be determined by the market.

The expenses of the estate are difficult to quantify precisely.

The funeral account came to a total of $6,812.00. A deposit was paid (presumably by Phillip Adkins) if Mr Phillip Adkins seeks a reimbursement from the estate then this amount will need to be reimbursed. Otherwise the outstanding amount is $1,292.00.

The estate agent's costs and advertising will probably total in the vicinity of $10,000.00.

The Court has ordered that Phillip Adkins pay the costs of the proceedings in relation to the subpoena to produce a will. If these are not recovered from Mr Phillip Adkins then the cost will need to be borne by the estate. It is estimated that these costs will be in the vicinity of $15,000.00.

As you can see the estate is small. It will be our submission to the Court that it is appropriate (and usual in these circumstances) that the estate be awarded to the widow. It is not reasonable that she should be subject to the trust created by the will, and she should receive the estate outright.

In order to achieve an early resolution Mary is prepared to offer to each of the beneficiaries the sum of $5,000.00 on the basis that she receives payment of the whole estate (ie, she will be left as outright owner of the estate subject to the payment of $5,000.00 to each of the three beneficiaries and payment of the debts, funeral and administration expenses).

In addition each of the three beneficiaries would be entitled to be reimbursed from the estate their reasonable legal costs of obtaining advice from a solicitor relating to this proposal. We suggest it would be sensible for all three beneficiaries to use the same solicitor if possible.

This offer will remain open for 21 days from the date this letter is served on you. If you do not accept this offer and the matter proceeds to a hearing and Mary succeeds then she will raise this correspondence as part of a submission that all costs after the date the offer was not accepted should be paid by the parties who did not accept it."

13 The respondent replied to that letter on 27 June 2008 in the following terms:

"I refer to the batch of papers bearing textual matter, apparently holding some sway with YOU, recently bought [sic] to my attention.

It is noted you claim to act for Mary Adkins.

I have read the text on the papers and have many comments, however I propose not to air those comments at this time for the sake of expedience, save for the following.

Mary Adkins's 'Affidavit in support' is breathtaking, not in terms of that which it states, but in that which it omits to state, which is considerable.

Over a period of time during the latter stages of his lifetime my father came to the conclusion certain parties were intent on taking and attempting to take 'assets' and 'things' that were not their entitlement, and was further concerned that situations and events would further occur that were to the detriment of innocent parties. These concerns were made known to the writer on a number of occasions.

Unfortunately, time has given those concerns solid foundation.

Those matters aside, for the time being, it is appropriate to alert you to some pertinent facts that your client appears to be attempting to conceal as she is quite cognisant of them.

An Enduring Power of Attorney was granted to the writer (who accepted the position), said PoA being filed at the Recorder of Titles, Land Titles Office (a search shall reveal its existence).

Pursuant to the terms of the PoA and in accord with my fathers wishes a series of actions were carried out, of which two have a mentionable bearing on this current situation.

A synopsis of those actions is that 1/ A Contract and Transfer relative to my fathers property was drawn and executed (present status - unlodged), and, 2/ A Will, post date of 9th June 1980, and in sympathy with the effects of 1/ (above) was drawn and executed.

Make no mistake, it is my contention that your client finds herself in the current predicament due to her wilful failure to honour her previous agreements with my father, further compounded by her conduct and actions since his passing.

Despite your clients unsavoury conduct, I intend to honour my late fathers wishes and instructions, accordingly I am prepared to negotiate appropriate circumstances which ought allow your client to relocate to the North West Coast.

If your client does not wish to avail herself of this concession then please be aware this matter will be fully contested."

14 In a letter dated 9 October 2008 to the applicant's solicitors, the respondent advised, inter alia:

"In sympathy with the commitment proffered during the telephone conference directions hearing of 23rd September 2008 the following compromise is offered.

That the Estate sell the land and dwelling, specifically known as 6 Barton Avenue, Triabunna, Tasmania and apply the proceeds to secure, in substitution, a property commensurate with the reasonable accommodation/shelter needs of Mary Adkins (and her desire to relocate to the North West Coast / Ulverstone area), the Estate retaining Title and Interest in said property. Any subsequent relocations could be treated in the same manner.

The beneficiaries (potential or otherwise) submit this proposal adequately addresses and accommodates the 'stated' wishes of Mary Adkins and accords with the intentions of the '"1980" Will maker'.

I also draw your attention to the fact this same offer was flagged in the correspondence forwarded to your office dated 27th June 2008 (copy enclosed/attached).

Further noted is the advice advanced, within same correspondence, of the existence of my fathers further Will post date 9th June 1980.

It is noted this advice has been ignored, for reasons obviously known to your client but unknown to the writer; I query why this is so."

15 The hearing of the TFM application was listed to commence on Friday, 28 November 2008. On 27 November 2008, the respondent filed two affidavits. One was sworn by himself and the other by his mother, the former wife of the deceased. The respondent's mother did not appear at the hearing and her affidavit was not permitted to be read. In his own affidavit the respondent made a number of assertions about the applicant. Some of these were:

•

He claimed that the applicant wanted to leave the Ulverstone area in 1980 because "She was still smarting from having been involved in/connected to a court case, which ultimately was 'lost' and involved the real property she had gifted to her children." No evidence was produced to the Court to support this assertion and it was denied by the applicant.

•

He asserted that "Mary, by virtue of their marriage agreement, has 'salted away' a not inconsiderable sum of money over the many years and that Mary's statement as contained in paragraph 23 is not a true report of Mary's wealth or fiscal health." This also was never supported by any evidence and was denied.

•

He inferred she drank too much during the course of her marriage.

•

In response to the applicant's statements as to her income and ongoing ability to support herself, he said "It is suggested that anyone who falsely represents their true wealth would not hesitate to raise a claim they were finding difficulty making ends meet." Again, there was no evidence put to the Court to support the alleged falsity of the applicant's statement.

•

The applicant said in her affidavit that she had had a house cleaner but had been obliged to dispense with her services. The respondent's response was " ... the cleaner was most likely paid for by Charles and now that he is no longer around to pick up the tab Mary has obviously decided she shall not pay for this service out of her own stash."

•

The respondent made a sarcastic reference to the applicant's failure to attend her husband's funeral. The respondent had disagreed with the arrangements made by the applicant for her husband's funeral. He and his brother threatened court proceedings to prevent the applicant proceeding with her arrangements, and so she withdrew from the process. She instead held a private memorial function at her home. The respondent asserted the applicant had poisoned his father's friends' minds to prevent them attending the funeral organised by the respondent. No evidence was led to support this assertion.

16 In his affidavit the respondent also asserted that his father had executed an enduring power of attorney in his favour on 15 July 2005 which was registered with the Land Titles Office on 6 June 2006, that is about a month prior to the death of the deceased. He also said, at par22, that he had executed a contract to sell the home using the power of attorney, that the date of the contract was 12 June 2006, that the sale price was $197,800 with a deposit of $600, that the purchaser was the Adkins Family Trust, and that the contract was to be completed on 11 June 2012. The deposit was to be paid by instalments of $100, with the first instalment having been paid on execution of the contract and with further instalments to be paid annually. The respondent asserted the instalments had been paid and were held in trust by "Adkins". The reference to "Adkins" was not to the applicant.

17 The applicant's solicitors had been made aware of the existence of both these documents in a letter the respondent had written to them. However they had not seen the documents. The documents, along with a copy of the deed of trust relating to the Adkins Family Trust, were produced reluctantly by the respondent at the hearing. It was apparent from the documents that the respondent's family were the beneficiaries of the trust, that the trust would be entitled to vacant possession of the home in June 2011, and that the purchase price was to be paid by instalments with interest from July 2012, with the final payment to be due in June 2017. The terms of this contract, prepared by the respondent, if it were valid, in practical terms would potentially frustrate the intent of the deceased's will.

18 As a consequence of independent evidence led at the substantive hearing, I was satisfied that the deceased did not have the mental capacity to know what the enduring power of attorney said to have been signed by him was, or be able to rationally discuss with the respondent his concerns about his estate and what he wanted done with it.

19 The respondent also acknowledged during the course of his evidence that he was prepared to lie to serve his own purposes. In a letter to the applicant's solicitors he had said there was another will made by the deceased. In Court he admitted he lied when he said that. He also told the Court that he had considered preparing and executing another will for his father using the power of attorney.

20 The authorities upon which the Court ultimately relied to determine that the applicant was entitled to the whole of the deceased's estate absolutely, as opposed only to a life interest, were easily accessible to the respondent. Had he chosen to do so, advice as to their effect would have been simple to obtain. The respondent however chose to file and rely on affidavit material in which he made a number of attacks upon the character of the applicant and in which he asserted she was lying as to her financial circumstances. He also chose to pursue the applicant under cross-examination about these matters. That cross-examination did not produce any admissions to support the respondent's assertions. The respondent was invited to put to the Court any documents which he had which might support his assertions, particularly as to the applicant's financial position. He did not do so.

21 The factors referred to earlier in these reasons, which might persuade a court to exercise its discretion not only to make an order requiring the respondent in this case to pay the applicant's costs, but also to order those costs be paid on an indemnity basis, are almost all present in this case. In the circumstances it is appropriate that the respondent pay the applicant's costs of the proceedings. Further, given the approach of the respondent to the entirety of the proceedings, there is no reason why those costs should not be paid in relation to the entirety of the proceedings.

22 The order of the Court is therefore that the respondent pay the applicant's costs of the proceedings including the application for costs on an indemnity basis.