These Reasons for judgment (published on 21 April 2020) are published in support of orders made on 17 April 2020 in the duty list.
[2]
REASONING
Laura Anna Delores Vella died on 16 December 2017 leaving a will dated 11 December 2017, a grant of probate of which was made to her daughter Vanessa (the defendant in the current proceedings) on 23 March 2018.
The estate has a current value of about $750,000 or, depending on findings about disputed facts, perhaps a bit more.
Two of the deceased's children (Sandra and Vincent) have made applications for a grant of family provision relief from the deceased's estate under Chapter 3 of the Succession Act 2006 NSW.
Sandra's application is made through a tutor (her financial manager, the NSW Trustee) because she is a person incapable of managing her own affairs.
Vincent's summons was filed on 30 November 2018. Sandra's on 14 December 2018. In each case, Vanessa is the defendant, representing the deceased's estate and (as the major beneficiary named in the deceased's will) her own interests.
The proceedings have been listed, together, for a final hearing (with an estimated duration of three days), commencing on 22 April 2020, before a judge other than myself.
Although minor complaints have been made about last-minute preparation, no party contends that the proceedings are otherwise than ready to proceed to a final hearing on the appointed day.
There is, however, a preliminary problem. Each of the plaintiffs contends, and the defendant disputes their contentions, that the proceedings should be taken as having been settled by the plaintiffs' acceptance of offers of compromise served by the defendant (in substantially the same terms) in each set of proceedings.
On 1 April 2020 or thereabouts Vanessa served on each plaintiff an offer of compromise (governed by Division 4 of Part 20 of the Uniform Civil Procedure Rules 2005 NSW) expressed, in effect, to be open for acceptance up to and including 21 April 2020, the day preceding the commencement of the final hearing.
Each offer of compromise was separate from the other. They were not expressed to be interdependent.
Each offer was expressed in terms that a certain specified amount of provision be made for the plaintiff out of the estate of the deceased (without any express reference to costs) and that the plaintiff's summons be dismissed.
The offers were not expressed to be "inclusive of costs" in contravention of rule 20.26(2)(c) of the Uniform Civil Procedure Rules ("UCPR"); but neither were they expressed to be offers of compromise "with no order as to costs" so as to fall within UCPR rule 20.26(3)(a)(i). They were silent as to costs.
The effect of UCPR rule 42.13A is that, if an offer of compromise (which makes no provision for costs) is accepted by a plaintiff, the plaintiff is entitled to an order against the defendant for the plaintiff's costs, assessed on the ordinary basis, up to the time the offer was made.
Upon receipt of the defendant's offers of compromise, the respective solicitors for the plaintiffs (before any acceptance of an offer) engaged in correspondence with the solicitor for the defendant about the meaning or operation of the particular offer addressed to their client vis a vis the question of costs.
That alerted the solicitor for the defendant to the existence of a difference between the parties as to their construction of the UCPR and the offers of compromise.
In substance, each plaintiff proceeded upon an assumption that, if the offer of compromise addressed to him or her were accepted, he or she would be entitled to an order for costs against the defendant in addition to the specified amount of provision offered by the defendant.
To the contrary, the defendant proceeded upon an assumption (now accepted by the parties to have been erroneous) that, because the proceedings were to be formally dismissed, acceptance of her offers of compromise (for an order for provision) would not expose her, under the UCPR, to an order for costs.
When the parties' differing views came to the notice of the solicitor for the defendant, the defendant foreshadowed to each plaintiff , in respect of each set of proceedings, an application to the Court, under UCPR rule 20.26(11), for leave to withdraw her offer of compromise.
Having been forewarned of the defendant's intention to seek leave to withdraw her offers of compromise, each plaintiff communicated to the defendant an "acceptance" of the offer addressed to him or her, and stood ready to oppose any application for leave to withdraw the offers.
The defendant's applications for leave to withdraw the offers came before me, as Duty Judge, on the afternoon of 16 April 2020, at which time the nature of the parties' dispute was ventilated and directions were given for further consideration of the proceedings early on the morning of 17 April 2020.
Each of the parties (the plaintiffs, in a similar interest, against their common defendant) filed and served affidavits (sworn by their respective solicitors) and written submissions.
All affidavits were read without objection. No deponent was cross examined.
In essence, the defendant advanced a case that she only ever intended to make offers "inclusive of costs" and that she served her offers of compromise in the mistaken belief that their effective operation achieved her intention.
In essence, the plaintiffs contended that the defendant and her legal advisers ought to have known that the form of her offers of compromise was such as to communicate (in the context of the UCPR) an offer of a sum certain "plus costs" rather than a sum "inclusive of costs".
It is not necessary, or helpful, to become entangled in the detail of the parties' competing allegations of fact. Particularly is this so in circumstances in which no affidavit was the subject of cross examination and the parties, wisely, refrained from elevating the defendant's application for leave to withdraw her offers into a "trial" collateral to the principal proceedings.
The central narrative, common ground between the parties, is that:
1. there was controversy between the parties as to the proper construction and operation of the defendant's offers of compromise in the context of the UCPR;
2. alerted to that controversy, the defendant foreshadowed an application for leave to withdraw the offers of compromise if the plaintiffs persisted in their contentions about the effect of the offers;
3. with notice of the defendant's foreshadowed intention to apply for leave, each plaintiff accepted the offer addressed to him or her.
In the absence of cross examination, the Court is not in a position to attribute bad faith to any deponent of the affidavits read on the defendant's application for leave. In particular, there is no cause for attributing to the solicitor for the defendant a lack of good faith in her characterisation of the parties' different views about the construction and operation of the UCPR and the offers of compromise as indicative of a "mistake" having occurred.
I am satisfied that, apart from (a) loss of a forensic opportunity to tie the defendant to a particular outcome of the principal proceedings and (b) costs thrown away by engagement with the defendant on her application for leave, neither of the plaintiffs would suffer material prejudice by an order that the defendant be granted leave to withdraw her offers of compromise. There is no suggestion that steps were taken by the plaintiffs, jointly or severally, in reliance upon their acceptance of the offers. There is no impediment to the principal proceedings proceeding to a hearing, on the merits, for which all parties have prepared.
The power conferred by UCPR rule 20.26(11) to grant leave for an offer of compromise to be withdrawn during the period of acceptance for the offer is not constrained by whether or not the offer has been accepted.
The plaintiffs have not submitted otherwise. They have accepted that the Court has power to grant the defendant leave to withdraw her offers notwithstanding their "acceptance" of the offers.
An offer of compromise made under UCPR rule 20.26, and the rule which provides for acceptance of an offer (UCPR rule 20.27), are both subject to the power of the Court in UCPR rule 20.26(11) to order that an offer may be withdrawn.
The power under UCPR rule 20.26(11) to grant leave for an offer to be withdrawn is to be exercised in the interests of justice, in the particular case, having regard to all the circumstances of the case. Cf, Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528.
In these proceedings, the dictates of justice favour a grant of leave because: (a) the defendant's offers, as made, were the subject of a mistake as to their intendment and effect; (b) the plaintiffs' acceptances of those offers were made with knowledge that the defendant proposed to apply for leave to withdraw the offers and to do so based upon a contention that they were affected by a mistake; (c) the proceedings have an allocated date for a final hearing, on the merits of the case, for which the parties have prepared; and (d) the plaintiffs will suffer no material prejudice, beyond costs, by reason of a grant to the defendant of leave to withdraw her offers.
Although not of themselves decisive considerations, I note two further matters. First, a family provision order is a form of relief which requires the Court to be satisfied of statutory criteria (in the present context, found principally in section 59 of the Succession Act), not one granted solely by reference to an agreement between parties. Secondly, because Sandra is an incapacitated person any agreement for a compromise of her claim for family provision relief requires (by reference to section 76 of the Civil Procedure Act 2005 NSW) the Court's approval.
[3]
CONCLUSION
Having formed the view that the interests of justice favoured a grant of leave to the defendant to withdraw her offers of compromise, on 17 April 2020 I made the following orders in each of the proceedings before the Court:
1. ORDER, pursuant to rule 20.26(11) of the Uniform Civil Procedure Rules 2005 NSW, that the defendant be granted leave to withdraw her Offer of Compromise dated 1 April 2020.
2. DECLARE that no contract for compromise of these proceedings arises from the plaintiff's purported acceptance of the defendant's offer of compromise.
3. ORDER that the listing of the proceedings for a final hearing commencing on 22 April 2020 (with an estimated duration of three days) be confirmed.
4. ORDER that the costs of the defendant's application for leave to withdraw her offer of compromise be the parties' costs in the proceedings.
5. ORDER that the papers relating to that application be placed in a sealed envelope marked "Confidential" and "Not to be opened without an order of a Judge made on notice to the parties".
An order that costs "follow the event" of the defendant's application is not calculated to do justice between the parties. A defendant who applies for leave to withdraw an offer of acceptance might ordinarily expect to be required to pay or bear the costs of the application. In making an order for the costs of the present defendant's application to be the parties' costs in the proceedings, I took into account, not only that fact, but the fact that the plaintiffs had actively opposed the defendant's successful application. On balance, I formed the view that costs on the application (on both sides of the record) were best characterised as costs incurred in the ordinary course of the proceedings, liable to abide the outcome of the proceedings.
[4]
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Decision last updated: 21 April 2020