Bosschieter v Howitt

Supreme Court of NSW|2024-12-09|Before: Slattery J

JUDGMENT

This is the Court's second judgment in these proceedings, which were brought by the plaintiff, Justine, for further provision out of the estate of the late Margaret Norma Howitt. The Court's first judgment upheld the defendant's Cross-Claim and set aside a gift of $200,000 made by the deceased to the plaintiff due to the plaintiff's undue influence and unconscionable conduct: Bosschieter v Howitt [2024] NSWSC 1676 (the "Principal Judgment"). This judgment deals with consequential issues of costs.
This judgment should be read with the Principal Judgment. Events, matters and persons are referred to in both judgments in the same way.
In the Principal Judgment, Justine's claim for further provision out of the deceased's estate had limited success but only to an amount equivalent to the estate's successful chose in action to recover the gift of $200,000 with interest. Costs were reserved and submissions were invited the same day that the Court made orders, namely 9 December 2024. Those orders were as follows: "(1) NOTES that for the purposes of these orders the following expressions have the following meanings (a) "the deceased" means Margaret Norma Howitt who died on 24 February 2022, (b) "the estate" means the estate of the deceased, (c) "the CBA transfer" means the sum of $202,247.29 inclusive of interest held on deposit by the deceased at the Commonwealth Bank of Australia and transferred by the deceased to the plaintiff/cross-defendant on or about 17 November 2021, and (d) "the Cross Summons chose in action" means the legal and equitable obligations created by reason of the Court making DECLRATION (5) and ORDER (6) below on the defendant/cross claimant's Cross summons; (2) DECLARES on the plaintiff's Summons that (a) the plaintiff is an "eligible person" within Succession Act s 57(e) able to bring her claim under Succession Act s 59, and (b) there are "factors warranting" the bringing of the plaintiff's claim within Succession Act s 59(1)(b). (3) ORDERS on the plaintiff's Summons pursuant to Succession Act ss 59 and 65(2)(f) that further provision is to be made out of the estate to the plaintiff in an amount equivalent to the value of the Cross Summons chose in action; (4) RESERVES for further consideration whether the award of further provision made in ORDER (3) should include the costs of the Cross Summons and all other questions of costs; (5) DECLARES on the defendant/cross-claimant's Cross Summons that the CBA transfer was procured on about 17 November 2021 by the undue influence and the unconscionable conduct of the plaintiff/cross-defendant; (6) ORDERS on the defendant/cross-claimant's Cross Summons that the plaintiff/cross-defendant repay the CBA transfer to the estate together with interest from 17 November 2021 up to today calculated under Civil Procedure Act s 100. (7) DIRECTS the parties to arrange with the Associate to Slattery J a suitable date in the next two weeks to hear oral argument in relation to costs and consequential orders for no more than one hour; (8) NOTE that the parties are on notice that pursuant to Uniform Civil Procedure Rules 2005 r 42.4 that the Court is likely to make a maximum costs order limiting the expenditure of further costs after today by any party on submissions and appearances in relation to issues of costs in these proceedings at no more than $6,000; and (9) GRANT liberty to apply."

The Course of Proceedings

Further evidentiary background to Justine's perspective on the course of proceedings was offered to inform the argument about costs. Mr Jason Di Michiel, the principal solicitor at Premier Compensation Law ("Premier") explained in his affidavit of 4 February 2025 that Justine instructed his firm in about December 2022 or January 2023. At the time Premier employed a wills and estates specialist, Ms Marie Walter, as a member of its staff. Mr De Michiel explains that he left the conduct of these proceedings on behalf of the plaintiff entirely in Ms Walter's hands and that she briefed Ms Reid of counsel. Ms Walter was assisted by a law clerk, who is not admitted in Australia but who had been a solicitor in in India for about five years.
The proceedings did not settle at an informal settlement conference held on 1 May 2023. Ms Reid advised in November 2023 that a conference should be held with Justine and that serious consideration should be given to making an offer of settlement to the Estate. This was wise advice, given the failure to resolve the proceedings at a settlement conference held in May 2023.
Ms Walter and Ms Reid conferred with Justine on 14 November 2023. Both solicitors and counsel stressed to her the benefits of making every effort to settle these proceedings, not least because of the large savings in legal fees that would follow both for her and for the Estate.
As the principal judgment explains, Justine was required to leave the Forestville property as a result of the determination in the NCAT proceedings. Justine moved out of the Forestville property at that time leaving it damaged. Thereafter, it became very difficult for Premier to contact her. Ms Walter was unable to contact Justine either by mail, email or telephone for some months. This meant that Ms Walter and Ms Reid could not obtain instructions to forward a Calderbank letter to the Estate. Eventually Justine contacted Ms Walter and a Calderbank letter was sent to the Estate on Justine's instructions on 5 June 2024. Once again after that, it became increasingly difficult to take instructions from Justine.
On 6 June 2024, Ms Walter left Premier with the hearing of these proceedings less than four weeks away. A replacement of equivalent experience could not be found for Ms Walter in the short term to conduct these proceedings. This created difficulty instructing Ms Reid during the trial, given the limited abilities of the law clerk assisting her.
Ms Reid from time to time herself raised difficulties about getting instructions during the hearing. The Court expressed concern about this situation. In the end, due to Ms Reid's efforts, those difficulties did not interfere with the course of the trial to any substantial degree. Moreover, the 4 February 2025 affidavit of Mr Di Michiel explains the situation to the Court's general satisfaction.
Mr Di Michiel's 4 February 2025 affidavit gives some insight as to why the proceedings did not settle before hearing in a way that might have avoided legal costs, given Premier's difficulty in contacting Justine. The Court has taken that additional history into account in its exercise of its costs discretion. But like all litigants Justine, advised by her lawyers, was still responsible for her conduct of the proceedings.

Issues Before Considering Calderbank Letters

The Estate contends there should be no order as to the costs of the Summons such that each party should bear his and her own costs. But, the Estate contends the cross-defendant, Justine, should be ordered to pay the Estate's costs of the Cross-Claim.
The Court has found the Estate's argument the more persuasive. The Estate did not commence these proceedings first. The Estate did not commit Estate funds to litigation to pursue the $200,000 which the Court found was procured by Justine's undue influence and unconscionable conduct. The Estate waited to see if any application might be made under Succession Act 2005, s 59. When Justine made her application just within the statutory time limit, the Estate sent warning correspondence to her foreshadowing that a Cross-Claim would be mounted for the repayment of the $200,000 and that senior counsel might be engaged.
It may readily be inferred from this correspondence and the Estate's prior caution in commencing litigation that if Justine had not commenced these proceedings that the Estate would not have cross-claimed for the $200,000.
The only relief that the Court granted the plaintiff was to put her back in the position that she would have been in had she not commenced these proceedings. She was not awarded, by way of further provision, any of the other benefits which she claimed from the Estate of the deceased, namely capital to purchase a home, motor vehicle, and funds by way of superannuation and savings. She was unsuccessful on all of these other claims.
Justine has not been forced to repay the $200,000 but she derived no other benefit from these proceedings. However, the Estate is far worse off, having borne the costs of the litigation.
Justine seeks an award of costs in her favour and, in the alternative, an order that each party bear his and her own costs of the proceedings. Given the outcome of these proceedings, it is difficult to justify any award of costs in her favour. Her own conduct in commencing the proceedings occasioned substantial additional expense to the Estate to produce an outcome which is no better than before she started. Given the deceased's recognition of Justine as an equal beneficiary with the deceased's own children in her will, a claim to increase Justine's share of the Estate at the expense of those children would always have been fraught with the risk of failure.
The Court is not inclined to cushion Justine against the consequences of a deliberate decision to take that risk and will not make a cost order in her favour. Ms Reid of counsel submitted that the costs that might awarded in the plaintiff's favour could be subject to a maximum costs order and capped at a figure in the order of $50,000 to $80,000. But making such an order would still require the defendants to underwrite the plaintiff's ill-advised decision to commence these proceedings.
Moreover, the Court should weigh heavily in the Estate's favour, the Estate's decision to act with restraint not to provoke this litigation and to encourage Justine to pull back from the precipice of action.
Similarly, acceding to the plaintiff's invitation that each party bear their own costs of the whole proceedings would also leave the defendants to require the beneficiaries of the Estate other than the plaintiff to bear entirely the Estate's costs of the plaintiff's decision, contrary to warnings, to pursue this risky litigation. Several of these beneficiaries can ill afford that burden.
Justine lost the two core contests in the proceedings. First, her denial that she misappropriated the $200,000 and that it was a voluntary gift was rejected. Second, after she had spent the $200,000, her claim that the nearly $600,000 given for her under the will was inadequate on established principles also failed.
But Justine had minor success on the Summons. This should be reflected in an order that each party bear their own costs of the Summons. An order for costs in her favour might have been appropriate had she succeeded on any of the claims other than neutralising the Estate's claim for $200,000 against her. However because that partial success gained her nothing more than restoring her to the position she would have been in had she not commenced proceedings, she should not be rewarded with any costs order in her favour and the Court will order that each party bear its own costs of the Summons.
But Justine should bear the costs of the Cross-Claim. She entirely lost that contest and costs should follow the event. It is now necessary to analyse whether the Calderbank letters served by the parties alter this outcome in any way.

The Parties' Calderbank Letters

At a pre-trial hearing the Court directed the parties to provide the evidence of their overall costs of the proceedings to date, up to trial and daily during the trial. This revealed that the parties costs were substantial on both sides.
The defendant's professional costs and disbursements incurred to date totalled $282,162.68 and their costs to finalisation of the proceedings (including the appearance on 9 December 2024) was an estimated a further $22,000. Thus, their total cost could be expected to be $302,162.68 or thereabouts.
The plaintiff's total professional costs and disbursements to date including counsel and solicitors were disclosed as $175,127.85.
The Court held a directions hearing on 29 May 2024 and ordered the parties to exchange Calderbank letters. These Calderbank letters came close to predicting the outcome of these proceedings but ultimately do not change the costs outcome. This is unfortunate because the plaintiff's legal fees incurred up to 29 May 2024 were $89,100. The estimated costs of the hearing to be incurred together with preparing the matter for hearing were $78,100. The anticipated costs of the of the hearing for each hearing day were estimated to be $11,000 inclusive of GST. An opportunity to save these future costs was lost.
The principles applicable to Calderbank offers are well settled. Principles concerning attempts to compromise proceedings by Calderbank offers are applicable in probate proceedings: Walker v Harwood [2017] NSWCA 228 ("Walker") at [58]. Parties seeking an order for indemnity costs based on a Calderbank offer have the burden demonstrating to the Court why such an order should be made in their favour, and, generally, this means that they should persuade the Court that the refusal to accept the offer was unreasonable in all the circumstances of the case: Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [20].
The Court of Appeal's decision in Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344 ("Miwa"), (at [9]), is authority for the proposition that an informal offer must contain "a real and genuine element of compromise": see also The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] 67 NSWLR 706; [2006] NSWCA 120, (at [8]). In Miwa, the Court noted that there is authority that the epithets "real" and "genuine" add little to the requirement of compromise: Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19, (at [23]); Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170, (at [17]-[18]).
The determination of whether the rejection of an offer was unreasonable is an evaluative judgment to be made by reference to the terms of the offer and all the relevant surrounding circumstances and should not be upheld other than on clear grounds: King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No. 2) [2009] NSWSC 8204 at [11] and Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [113].
The considerations relevant to the determination of whether a refusal of a Calderbank offer is unreasonable were stated in Miwa, at [12], based on Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No. 2) (2005) 13 VR 435; [2005] VSCA 298 ("Hazeldene's"), (at [25]). The Victorian Court of Appeal (Warren CJ, Maxwell P and Harper AJA) in Hazeldene's held that the following elements were relevant to determining whether the rejection of a Calderbank offer was unreasonable: "(a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; (f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it."
In the exchange of correspondence between the parties, Clear Lawyers ("Clear") offered on behalf of the Estate on 10 May 2024 to settle proceedings on the basis that the Summons would be dismissed. There would be judgment for the Estate against Justine in the sum of $200,000 inclusive of pre-judgment interest. The Estate's costs would be paid out of the Estate on the indemnity basis. There would be no order for Justine's costs of the proceedings to the intent that she bear her own costs. Justine would otherwise release the Estate from her rights to apply for a family provision order. Justine rejected this offer. The Estate did not better this offer at trial, because Justine obtained some family provision relief.
Justine made a counteroffer on 5 June 2024 which was expressed to be made pursuant Calderbank principles. The offer was: that there be no order by the Court in favour of the Estate for the recovery of the $200,000 payment made by the deceased to Justine; the plaintiff would retain her 20% share of the deceased's residuary estate under the will; and the Estate would pay the plaintiff's costs of the proceedings on the ordinary basis as agreed or assessed. The Estate rejected this offer by letter dated 7 June 2024.
The Estate subsequently made a further and final offer of settlement on 7 June 2024. In this offer the Estate contended that Justine's 5 June 2024 did not attract Calderbank principles in part because of its form. This denial of the 5 June 2024 letter's Calderbank status appears to have been a reference to the fact that Justine's offer requires the Estate to pay her costs in an unspecified sum.
The Estate's counteroffer on 7 June 2024 was as follows: that the Summons be dismissed; that there be judgment for the Estate on the Cross-Claim in the sum of $200,000 inclusive of prejudgment interest; that the Estate's costs of the proceedings be paid out of the Estate on the indemnity basis; there be no order as to Justine's costs on the Cross-Claim to the intent that she bears her own costs of the Cross-Claim. The Estate was to pay the plaintiff's costs of the Summons as agreed or assessed. Otherwise, there were to be mutual releases. This offer did contain a genuine attempt at compromise, given the level of costs incurred at the time, the Estate was giving up recovery of professional costs of about $39,000 and would pay the plaintiff its professional costs at the time of about $66,000.
Justine did not better her 5 June 2024 offer to the Estate. Justine has not gained a costs order in her favour but merely an order that each party bear his and her own costs of the Summons and she has a costs order against her on the Cross-Claim. The letter of 5 June 2024 had offered an outcome with a costs order in Justine's favour as part of the overall package.
This was still a Calderbank offer but one which had a higher chance of failure because it included a costs order in Justine's favour: Rockcote Enterprises Pty Ltd v FS architects Pty Ltd (No. 2) [2008] NSWCA 205. The safer way to make a Calderbank offer is not to include an offer in relation to costs of the proceedings. Whilst including a requirement that the offeror's, Justine's, costs be paid does not prevent her offer being treated as a Calderbank offer, it nevertheless complicates the assessment of whether Justine has truly bettered the offer: cf Elite Protective Personnel Pty Ltd v Salmon (No. 2) [2007] NSWCA 373 at [7].
But on any view Justine did not better the offer she made to the Estate. The Court has not made any costs order in her favour either in respect of the Summons (the actual order being that each party bear its own costs), or the cross claim (the actual order being that Justine should pay the Estate's costs). Neither of these outcomes is more favourable to Justine than her Calderbank offer. It was therefore reasonable for the Estate not to accept Justine's offer of 5 June 2024. She therefore cannot rely upon it to her advantage.
The Estate did not seek to separately rely upon either of its Calderbank offers other than to help ground its submission that the appropriate costs order in respect of the Summons was that each party should bear his and her own costs. The Estate did not better its 7 June 2024 letter of offer. That offer required full dismissal of the summons and for judgement on the cross-claim which would have involved Justine paying (or crediting) $200,000 back to the Estate. The outcome for the Estate did not better this offer.
The Court will therefore not vary the costs order that it proposes by reason of these Calderbank letters.

The Costs of the Cross-Claim

The Court is making separate costs orders for the Cross-Claim and the Summons. The general difficulty with making an order structured this way is the burden that it places on the costs assessor in separating out the costs of the Summons from the costs of the Cross-Claim. It is more efficient for the Court to anticipate the challenges of a future costs assessment and for the Court to fix a percentage of the Estate's overall costs, which should be attributable to the Cross-Claim.
The Estate submits that a substantial portion of its costs were expended on the Cross-Claim. Justine disputes this and says that the proportion of the Estate's costs incurred on the Cross-Claim is low.
Justine's submission is slightly more persuasive on this issue. As she submits, much of the case was occupied with her attempting to prove what she did for the deceased and the value of that work. The clash between the parties also included important evidence and cross examination about the $200,000 gift and related Cross-Claim issues.
But all those Cross-Claim issues occupied no more than one third of the Estate's total costs of preparation for the trial and conduct of the hearing of the proceedings. For the purposes of any costs assessment, this figure of one third will be noted in the orders below and should be applied by any cost assessor to simplify the assessment task.

Conclusions and Orders

In the result the Court orders as follows: 1. NOTE that in respect of the costs of the Summons there will be no order as to costs to the intent that each party will bear his and her own costs of the Summons; 2. ORDER that the plaintiff/cross-defendant, Ms Justine Bosschieter, will pay the defendant/cross-claimant's costs of the Cross-Claim; and 3. DIRECTS that in any costs assessment in these proceedings, that the defendant/cross-claimant's costs of the Cross-Claim should be treated as one third of the overall costs of the cross-claimant's Cross-Claim in the proceedings. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 February 2025

At a glance

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Judgment (6 paragraphs)

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Cases Cited (13)