HIS HONOUR: I have, earlier this afternoon, delivered reasons for judgment in the substantive proceedings, the medium neutral citation of which is Bezjak v Wyatt [2018] NSWSC 199. In those proceedings, I ordered that the Plaintiff's Summons be dismissed.
Following the publishing of those reasons, counsel agreed that I could deal with the issue of costs immediately.
On the application for indemnity costs, counsel for the Defendant tendered a copy of a letter dated 10 October 2017, from the Defendant's solicitors, to the Plaintiff's solicitors, to which was attached an Offer of Compromise, also dated 10 October 2017. The Defendant offered to pay to the Plaintiff the sum of $40,000 and her costs "as assessed or agreed to the time of this offer". The offer was said to be able to be accepted on or before 10 November 2017.
No evidence was tendered by counsel for the Plaintiff on the costs application.
There was no dispute that all questions of relief have been determined so that to the extent necessary, the offer made could be disclosed to the Court in order to determine questions of costs. It was also clear that the order on the claim was no less favourable than the terms of the offer that was made by the Defendant, but not accepted by the Plaintiff.
There is no suggestion that the Civil Procedure Act 2005 (NSW) and the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") do not apply to family provision proceedings: Bruce v Greentree (No 2) [2015] NSWSC 1636 at [35].
UCPR rule 20.26 refers to offers of compromise. There is no dispute that the offer of compromise served by the Defendant's solicitors complies with UCPR rule 20.26. There was also no dispute that the offer of compromise made by the Defendant contained a genuine compromise at the time at which the offer was made.
Section 98(1) of the Civil Procedure Act provides that subject to the rules of Court and to that, or any other, Act, costs are in the discretion of the Court.
Section 99 of the Succession Act 2006 (NSW) provides:
"(1) The Court may order that the costs of proceedings under this Chapter in relation to the estate or notional estate of a deceased person (including costs in connection with mediation) be paid out of the estate or notional estate, or both, in such manner as the Court thinks fit."
It is clear that s 99 of the Succession Act, provides for an unfettered discretion as to how the costs of the proceedings for a family provision order may be borne. It also provides an unfettered discretion as to the part, or parts, of the estate, or notional estate, that is, or are, to bear the burden of costs. Importantly, the section relates to the payment of costs out of the estate or notional estate or both. It does not appear to relate to how costs may be borne otherwise.
There was no submission in this case that the costs of the Plaintiff should be borne by the estate. It was accepted, in the substantive proceedings, that, if she was unsuccessful, the Plaintiff should bear the burden of her own costs: Bezjak v Wyatt at [10]. The present costs application relates to whether the Plaintiff should bear any of the Defendant's costs of the proceedings, considering the Offer of Compromise. On that specific topic, s 99 is silent.
UCPR rule 42.1 provides that costs should follow the event, unless it appears to the Court that some other order should be made as to the whole, or any part, of the costs.
UCPR rule 42.20(1) provides that if the Court makes an order for the dismissal of proceedings, then unless the Court otherwise orders, the Plaintiff must pay the Defendant's costs of the proceedings to the extent to which the proceedings have been dismissed.
Part 42, Division 3 of the UCPR, relates to "proceedings in respect of which an offer of compromise (the offer) is made under rule 20.26 with respect to a plaintiff's claim (the claim)" (UCPR 42.13).
UCPR rule 42.15A relevantly provides:
"(1) This rule applies if the offer is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim no less favourable to the defendant than the terms of the offer.
(2) Unless the court orders otherwise:
(a) the defendant is entitled to an order against the plaintiff for the defendant'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 effect of these rules, in this case, is that the Plaintiff must bear the Defendant's costs of the proceedings for the family provision order, unless the Court otherwise orders. The Court can only order otherwise if there is a discretionary decision to depart from what the UCPR provide.
In Chapple v Wilcox [2014] NSWCA 392 at [27], Basten JA stated:
"Whether or not an unsuccessful applicant should be allowed to litigate without expense to the estate will depend on a variety of circumstances. There is always a discretion in the Court when making an order pursuant to s 98 of the Civil Procedure Act 2005 (NSW). The discretion conferred on the Court by that provision is subject to the rules of court (s 98(1)) and thus to r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW), which provides that costs will follow the event unless it appears to the Court that some other order should be made. That rule is not disapplied in relation to family provision orders. Nor should applicants for such orders have any expectation that, as a general rule, the discretion will be applied so as to exempt them from liability for costs incurred by an estate in the case of an unsuccessful application. In some cases applicants will already be beneficiaries of the estate and may thus have some incentive to ensure that the costs of litigation are kept within tight bounds. However, that is not always the case. Where an applicant is entirely unsuccessful, an order that he or she should pay the costs of the estate may well be the appropriate order."
Kunc J in Bates v Cooke (No 2) [2014] NSWSC 1322 (which was cited, with approval, by White J in AB v Curry & Anor (No 2) [2015] NSWSC 1209 at [4], and by the Supreme Court of Victoria in Briggs v Mantz (No 2) [2014] VSC 487 at [33]-[35], and Smith v Whittaker [2016] VSC 287 at [36]) wrote at [33]:
"Taking into account the language of r 42.15A, a party seeking to persuade the Court to order otherwise must identify some feature or features of one or more of the proceedings, the claim, the offer (including, for example, when it was made) and the order or judgment obtained by the successful party which provide a rational basis for the Court to displace what the rule specifies is the costs order to which "the defendant is entitled".
(An appeal from the substantive judgment of Kunc J was dismissed in Bates v Cooke (2015) 14 ASTLR 221; [2015] NSWCA 278. Nothing was written by the Court of Appeal about the costs judgment.)
In Meres v Meres (No 2) [2017] NSWSC 523 at [43]-[44], I wrote:
"From the authorities, it appears the question for determination regarding the effect of what is said to be an Offer of Compromise involves a two-stage process. The first stage is to enquire whether the offer made is an 'Offer of Compromise' at all, within the meaning of the UCPR. This will depend, in part, on whether it satisfies the formal requirements laid down by UCPR rule 20.26. It also depends, in part, on whether the offer made is one that can truly be called a 'compromise'.
If the court concludes that the offer which is made is an 'Offer of Compromise' within the meaning of the Rules, and that the offer made is one that can truly be called a compromise, then UCPR rule 42.15A(2) operates to establish a 'default' position, relevantly that, if the defendant obtains a judgment no less favourable than that which the defendant had offered to accept, then indemnity costs would follow. It is then that the second stage of the process arises, in that the court can 'otherwise order'. The court will 'otherwise order' if it is persuaded that is appropriate, in the interests of justice, that the 'default' position ought not apply: Manly Council v Bryne (No 2) [2004] NSWCA 227, per Campbell JA, at [10]; Evans v Braddock (No 2) [2015] NSWSC 518, at [52]."
I have, of course, remembered that a family provision claim raises different issues with respect to costs setting it apart from other forms of litigation. As such, there are potentially different considerations from the usual equity case where such a claim is unsuccessful.
Counsel for the Plaintiff was unable to identify any feature, or features, which provide a rational basis for the Court to displace what the rule specifies is the costs order to which the Defendant is entitled.
I raised with counsel the fact that I had found that the Plaintiff was an eligible person under s 57(1)(e) of the Act and that this might provide such a feature. However, bearing in mind the whole of the reasons for judgment, my overall impression of the Plaintiff's evidence, and the terms of the Defendant's Offer of Compromise, I am not satisfied that there is enough, in that fact, to displace the rule. Furthermore, it is to be noted that there was no evidence of any offer made on behalf of the Plaintiff.
Accordingly, I am satisfied that the overall justice of the case requires that the Defendant receive an order against the Plaintiff for his costs in respect of the claim, assessed on the indemnity basis, in accordance with UCPR rule 42.15A. Since the offer was made before the first day of the trial, the costs, calculated on the indemnity basis, should be from the beginning of the day following the day on which the offer was made (i.e. 11 October 2017). Since the proceedings have been dismissed, the Defendant is also entitled to an order against the Plaintiff for the Defendant's costs, to be assessed on the ordinary basis, in respect of the claim up to the time from which the Defendant becomes entitled to his costs calculated on the indemnity basis.
The Court orders that:
1. The Plaintiff is to pay the Defendant's costs, calculated on the ordinary basis, of the proceedings, up to and including 10 October 2017; and after 10 October 2017, the Plaintiff is to pay the Defendant's costs, calculated on the indemnity basis, of the proceedings.
2. To the extent that the Defendant's costs, calculated on the indemnity basis, of the proceedings, are not paid by, or recovered from, the Plaintiff, those costs are to be paid, or retained, as the case may be, out of the estate of the deceased.
[3]
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Decision last updated: 01 March 2018