EB v GB

Calderbank offer

1. The daughter's solicitors sent a letter dated 20 July 2022 to the respondents' solicitors making an offer in accordance with the principle applied in Calderbank v Calderbank [1975] 3 All ER 333. The offer remained open for acceptance until 1:00pm on 20 July 2022, the day before the hearing. It was evidently not accepted. The daughter relies upon the letter to seek the costs of her application on the indemnity basis from the date after that of the letter.
2. The effect of a rejected Calderbank offer is to raise the question of "whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule" as to costs: SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37] (Giles JA); Hunter v Roberts (No 2) [2019] NSWCA 235 at [6] (Meagher and Brereton JJA, and Simpson AJA); Valmont Interiors Pty Ltd v Giorgio Armani Australia Pty Ltd (No 3) [2021] NSWCA 160 ("Valmont") at [21] (Bell P, as his Honour then was, Macfarlan and Leeming JJA).
3. As the Court of Appeal stated in Valmont at [25], the considerations "relevant to the determination of whether the refusal to accept a Calderbank offer was unreasonable" include: (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; and (f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it.
4. The daughter's offer was expressed to be "along the following lines": 1. The Notice of Motion filed on 24 June 2022 is dismissed. 2. No order as to costs. 3. The Court notes that the Defendant's [sic] will allow the Plaintiff to physically visit her father, [father's name], once for two hours accompanied by her carer at [the aged care facility], subject to complying with Public Health Orders and giving 24 hours written notice to [Chief Operating Officer of the aged care facility], such access to be between the hours of 9.00am and 5.00pm, Monday to Friday. 4. The Court notes that the Defendants will allow the Plaintiff access to have Zoom meetings with her father thereafter by arrangement with [the Chief Operating Officer of the aged care facility]. 5. Liberty to apply on three's [sic] days' notice.
5. The daughter submitted that, in a practical sense, the outcome occasioned by the primary judgment was a better result for the daughter than the outcome that would have resulted from the acceptance of the offer because the final practical result of the judgment was that the daughter could arrange in-person visits with the father on an ongoing basis.
6. The father's death shortly after the delivery of judgment had the effect that the daughter was only practically able to see him once before he died. On the facts as they have happened, the Calderbank offer would have effected in substance the same outcome as occurred in the wake of the primary judgment. Of course, there is evidence that, once the respondents advised the aged care provider of their changed position which assented to the daughter's request to visit the father, the aged care provider told the daughter that she would be able to visit the father more than once, so long as the conditions imposed by the aged care provider were satisfied.
7. As I have noted above, however, the evidence does not satisfy me either way as to whether the delivery of the primary judgment alone would have sufficed to convince the aged care provider to grant the daughter access to the father, or whether it was the respondents' change of position that persuaded the aged care provider to allow the daughter to see the father.
8. It is primarily for the foregoing reason that I consider, as at the date of the Calderbank offer, it was not unreasonable for the respondents to reject the offer: (1) given that it was reasonable for the respondents to expect that, if they continued to object to the visit by the daughter, the aged care provider would abide by their objection, and (2) given that the mother's views would likely be given weighty consideration by the aged care provider as she herself was a resident of the aged care facility.
9. On that basis the Court will not order otherwise than that the respondents pay the daughter's costs on the ordinary basis.

The daughter's liability to her legal representatives

1. It is now convenient to consider the respondents' submission that the daughter in fact has no liability to pay her solicitors' costs and therefore that the costs sought by the daughter are not costs capable of being the subject of a costs order against the respondents.
2. The costs agreement entered into by the daughter and her solicitors dated 15 January 2020 is in evidence. Clause B of the costs agreement states that: "The work we have been instructed to do is to assume carriage of Protective List proceedings number 2018/00213582 and prosecute these proceedings to final hearing on 17, 18 and 19 March 2020." The apparently defined term "Work" appears throughout the costs agreement but there is no express definition of that term. The sensible construction is that clause B defines "Work".
3. I made an order in these proceedings on 7 May 2020, pursuant to s 41(1)(b) of the NSW Trustee and Guardian Act 2009 (NSW), that a financial management company (which I will refer to as "the manager") be appointed as manager of the daughter's estate, in place of the NSW Trustee and Guardian, but subject to the orders and direction of the NSW Trustee.
4. There is evidence of an email from the daughter's solicitor to the daughter dated 10 June 2022, copying a person whose email address implies they are an employee of the manager, and to whom I will refer as "GW". Much of the email is redacted but I infer, at least from the date of the email, that it concerned the prosecution of the notice of motion. The email relevantly stated: "We estimate the costs will be between $10,000 and $15,000 but could be less. We understand you will pay the invoices from your own resources and not [the manager], but we'll enquire of [G]. We do not intend to brief a barrister."
5. There is evidence of a further email from the daughter's solicitor to the daughter dated 12 July 2022. This email was not copied to GW. This email relevantly stated: "Costs: [GW] agreed to fund the access application to the amount of $5,000 against my original estimate of $15,000. The balance has to be paid by you. Fees already exceed the estimate and by the end of the hearing could be $25,000."
6. There is evidence of a letter from the daughter's solicitor to the daughter dated 25 July 2022. The letter commences by referring to "our original fee agreement dated 15 January 2020 and to the costs estimates provided to you on 10 June and 12 July 2022." It then sets out an explanation, in a summary way, of the costs incurred in prosecuting the notice of motion. The letter concludes: On your instructions, approved by your Financial Manager, [the manager], we commenced these access proceedings on your behalf. [The manager] has underwritten your costs to the extent of $10,000. The balance of the fees are to your account. In the event that your Application succeeds an application for costs will be made, but there is usually a shortfall between the recoverable costs and the actual payment due and owing. The fees not underwritten by [the manager] will be to your account.
7. In his affidavit of 18 August 2022, the daughter's solicitor deposed (at 43(d)): I am instructed by the applicant that she is currently funding the NOM personally except to the extent that her financial guardian ([manager] who consented to the NOM proceedings) has contributed the sum of $10,000.00 towards the prosecution of the NOM and that this represents a significant financial burden on her personal finances.
8. The daughter's solicitor also deposed that he communicates on a regular basis with the manager of the daughter's estate.
9. Finally, there is evidence of correspondence between the daughter's solicitor and the respondents' solicitors concerning the respondents' assertion that the provisions of the NSW Trustee and Guardian Act have the effect that the daughter has no costs liability to her solicitors. By letter dated 14 October 2022, the daughter's solicitor wrote: On 7 September 2020 [typo for 2022], we sent you a copy of our costs agreement with our client dated 15 January 2020 (Our Costs Agreement). Our client agreed to pay our costs as set out in Our Costs Agreement well before the appointment of [the manager] and, as our client was not a 'managed person' for the purposes of the Act as at 15 January 2020, your assertion regarding the operation of s 71 of the Act and the indemnity principle is incorrect.
10. The respondents submit that ss 66, 67 and 71 of the NSW Trustee and Guardian Act create a legislative scheme whereby the daughter, a managed person, was prohibited from dealing with her estate such that she could not pledge her estate by, for example, agreeing to bear a liability, and the daughter's solicitor was not permitted to contract on that basis. The costs agreement dated 15 January 2020 did not, by its terms, extend to the present application because it was concerned with the trial to be heard in March of that year, and it could not authorise payments prohibited by statute under s 71 of the Act.
11. The sections relied upon by the respondents relevantly provide: 66 NSW Trustee may authorise and direct functions of other managers (1) The NSW Trustee may, by order - (a) authorise a manager to have all, or any specified, functions necessary and incidental to the management and care of an estate and such other functions as the NSW Trustee may direct or authorise the manager to have or exercise, and (b) give the manager such directions in respect of the orders, authorities and directions authorised by this subsection as the NSW Trustee thinks fit. … 67 Managers may execute documents (1) A manager may, in accordance with an order or direction of the Supreme Court, the NSW Trustee or the Civil and Administrative Tribunal (in the case of a person under guardianship), execute and sign any document and do any other thing in the name of and on behalf of the managed person. (2) An exercise of a function by a manager under this section - (a) is as effective as if it were exercised by the managed person, and (b) to the extent to which that person lacks capacity to exercise the function, is as effective as if the person did not lack capacity. (3) A person acting on a document executed or signed by a manager under this section is not bound to inquire as to the manager's power to execute or sign the document or as to the application of any money paid pursuant to any dealing with the manager as a consequence of the document. 71 Managed person cannot deal with estate (1) The power of a managed person to deal with his or her estate is suspended in respect of so much of that estate as is subject to management under this Act. (2) However, the manager may, by instrument in writing, authorise the managed person to deal with so much of the estate as the manager considers appropriate and specifies in the instrument. …
12. The respondents' submission relies on two propositions of fact, one stated and one unstated. The stated proposition is that the costs agreement dated 15 January 2020 between the daughter and the daughter's solicitors did not extend to the prosecution of the notice of motion the subject of the primary judgment, a proposition which the daughter's solicitor opposed in his letter of 14 October 2022. I accept the proposition. The words of clause B of the retainer are most sensibly construed as pertaining to the prosecution of the substantive hearing in these proceedings occurring in March 2020. The scope of the retainer would have sensibly extended to matters directly relevant to that hearing arising in its wake, but I am not satisfied that the notice of motion, totally collateral and essentially irrelevant as it was to the original proceedings, was a matter directly relevant to the substantive hearing. That is the case even though the respondents took no issue with the daughter pursuing her relief as a notice of motion within these proceedings: J [3].
13. The unstated proposition, however, is that the daughter's manager has never authorised the daughter to deal with her estate in a way whereby she could and can continue to instruct her solicitors to prosecute the notice of motion and this costs application. That is a matter of fact which I consider to be incumbent upon the respondents to prove on the balance of probabilities. It is not enough for the respondents to present evidence of their questioning the daughter's solicitor on the nature of his and the daughter's professional arrangement, such that the onus shifts to the daughter or her solicitor to prove that the daughter's manager has approved the arrangement under s 67(1) or authorised the daughter to enter into the arrangement under s 71(2) of the NSW Trustee and Guardian Act. There is plain evidence, in the correspondence between the daughter and her solicitor, and in the solicitor's affidavit, supporting the conclusion that the daughter's manager in fact approved the daughter's representation by her solicitor and her prosecution of the notice of motion. I do not consider the daughter's solicitor's letter of 14 October 2022 to be some admission by implication that the 15 January 2020 costs agreement constituted the sole basis upon which he represented the daughter, and it is irrelevant whether the daughter or her solicitor believed that to be the case. There is ample evidence to suggest that the daughter, her manager, and her solicitor were acting in concert in a manner contemplated by the provisions of the NSW Trustee and Guardian Act to allow the daughter to be appropriately represented.
14. In those circumstances, I am not satisfied that the respondents have discharged their burden to prove, on the balance of probabilities, that the daughter has not accrued a liability to her solicitors on the basis that she was not authorised to instruct them in respect of the notice of motion. I find that that the daughter has accrued a liability to her solicitors in the ordinary way by which clients accrue a liability to pay costs to their lawyers.

Gross sum costs order

1. The daughter seeks an order pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) that the respondents pay to the daughter a specified gross sum in respect of the notice of motion. That provision provides that, "…at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to a specified gross sum instead of assessed costs".
2. The provision was recently considered by Meagher, White and Brereton JJA in Ahern v Aon Risk Services Australia Ltd (No 2) [2022] NSWCA 39 at [14]-[18]: [14] The principles relevant to the Court's exercise of discretion under s 98 were set out in Hamod v New South Wales [2011] NSWCA 375 at [813]-[820] (Beazley JA) (Hamod). Her Honour noted at [813]: [813] The discretion thereby conferred upon the court is not confined and may be exercised whenever the circumstances warrant its exercise, having regard to the scope and purpose of the provision: Harrison & Anor v Schipp [2002] NSWCA 213; 54 NSWLR 738 per Giles JA at [21]-[22]. In Harrison v Schipp, Giles JA considered that the discretion in s 98(4) may be exercised where the assessment of costs would be protracted and expensive and, in particular, if it appeared that a party obliged to pay the costs would not be able to meet a liability of the order likely to result from the assessment. However, his Honour stated, at [22]: "The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available." [15] The principal purpose of a specified gross sum costs order under s 98(4)(c) is to avoid the expense, delay and aggravation likely to be involved in a contested costs assessment process: Hamod at [816]-[817]. As Basten JA noted in James v Australia and New Zealand Banking Group Ltd [2017] NSWCA 84 at [3]: The power to make such an order is governed by the obligation of the court to give effect to the overriding purpose of the Act, as identified in Pt 6 of the Civil Procedure Act. The court is to ensure that the issues between the parties are resolved "in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute" (Civil Procedure Act, s 60); that obligation extends to the disposal of disputes as to costs. Although questions of costs undoubtedly play an important practical role in commercial litigation, disputes as to quantification are ancillary to the primary issues in dispute and consequential upon the resolution of the primary issues. Costs provide an opportunity for ongoing litigation about "non-essential issues" which should be resolved with as little technicality and expense as reasonably practicable. [footnotes omitted] [16] Primary considerations relevant to the exercise of the s 98(4)(c) discretion include "the relative responsibility of the parties for the costs incurred; the degree of any disproportion between the issue litigated and the costs claimed; the complexity of proceedings in relation to their cost; and the capacity of the unsuccessful party to satisfy any costs liability": Hamod at [816]; see also Kostov v Zhang (No 2) [2016] NSWCA 279 at [22]; eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (No 2) [2015] NSWCA 422 at [30]. [17] The power to award a gross sum should only be exercised when the Court considers that it can do so fairly between the parties and where an appropriate sum can be determined from the available materials: Harrison v Schipp (2002) 54 NSWLR 734 at 743; [2002] NSWCA 213 at [22]. The power may be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings: Hamod at [818]. [18] If it considers it appropriate to make the order, the Court may adopt a "broad brush" approach to quantification, as to require the Court to undertake a detailed examination of the kind carried out in a formal costs assessment would defeat the purpose of the order: Harrison v Schipp at 743; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7]. The costs ordered should be "based on an informed assessment of the actual costs having regard to the information before the court (for example, by relying on costs estimates or bills)": Hamod at [820]. Courts have typically applied a discount when assessing costs on a gross sum basis, though the aptness of a discount primarily depends on the accuracy and reliability of the costs evidence available to the Court: Hamod at [814].
3. The respondents oppose the Court determining the daughter's costs of the notice of motion on a gross sum basis.
4. The daughter has explained how she submits that the Court should assess her costs on a gross sum basis at pars 32 to 37 of her written outline of submissions. In essence, the daughter submitted that the Court should assess her costs in respect of her solicitor's fees up to 20 July 2022 by discounting the fees rendered by 35% and by discounting the fees rendered from 21 July 2022 by 10%. The total discount would be $15,501.36. The daughter submitted that the Court should allow the whole of counsel's fees of $19,342.75 (which included $5,500 (inclusive of GST) for the costs of preparing the daughter's written costs submissions). The daughter also submitted that the Court should allow all other disbursements having a total of $1,192.31. The result would be that in respect of the total costs and disbursements incurred by the daughter of $81,215.36, the Court would make a gross sum costs order in the amount of $65,714.
5. Although I acknowledge the convenience to the daughter of receiving the benefit of a gross sum costs order, and I also accept that there is a demonstrated level of antagonism between the daughter and the respondents and the normal costs assessment exercise may cause the daughter anxiety given her psychological condition, I am not satisfied that this is a proper case for the Court to make a gross sum costs order.
6. I do not accept that the respondents have conducted their response to the daughter's notice of motion in a way that would justify the Court in concluding that they will not act responsibly in the ordinary costs assessment process.
7. I am not in a position to comment on the reasonableness of the costs and disbursements incurred by the daughter, but an amount over $80,000 superficially appears to be high, and in any event is high enough in my view that it would be wrong for the Court to deprive the respondents of their ordinary right to challenge aspects of the daughter's costs and disbursements in the costs assessment process. It is not for the Court to prejudge the issue, but it may reasonably be available to the respondents to argue that the daughter's entitlement to her costs and disbursements should be adjusted to allow for changes in the way she presented her case at the hearing, and there is also a real question as to how much of the daughter's costs and disbursements incurred after the delivery of the primary judgment should be allowed.
8. This is not a case where I, as the presiding judge at the hearing, feel sufficiently confident that I can make a fair broad-brush assessment of the appropriate amount of costs and disbursements that should be awarded to the daughter on a gross sum basis to justify the deprivation of the respondents of their ordinary entitlement to submit the daughter's claim to cost assessment.

Order

1. In these circumstances the only order as to costs that the Court will make is the following: 1. The Court orders the respondents to pay to the applicant her costs of the notice of motion filed on 24 June 2022 on the ordinary basis.

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