Mathe v Coghill

1. The offer also included a mechanism for the division of chattels of the estate.
2. On 24 June 2025 the defendant made an offer of compromise to settle the plaintiff's claim on the same basis outlined above, except that the plaintiff would receive 20% of the Estate inclusive of costs. He also proposed a slightly different mechanism for division of chattels. The defendant estimated the value of the estate at $1.2 million.
3. Neither party accepted the other's offer, and at trial the plaintiff was awarded $560,000 from an estate that had an estimated value of $1,477,603.
4. The plaintiff says, on any view, she beat her offer of compromise. On her valuation of the estate, she was awarded 38% of the valuation of the estate, plus costs. On the defendant's valuation of the estate, she was awarded 47% of the valuation of the estate, plus costs.
5. The actual value of the estate is not yet known, as the Drouin South property has not been sold. I note that the defendant has submitted that it is now on the market for $1,675,000. The plaintiff beat her own offer of compromise, even if the property was to sell for this amount.
6. The plaintiff says, as a result, the usual costs order pursuant to Rule 26.08 should apply:

Per Rule 26.08:

(2) Where an offer of compromise is made by a plaintiff and not accepted by the defendant, and

the plaintiff obtains a judgment on the claim to which the offer relates no less favourable to

the plaintiff than the terms of the offer, then, unless the Court otherwise orders, the plaintiff

(b) in the case of any other claim of the plaintiff, to an order against the defendant for the

plaintiff's costs in respect of the claim before 11.00 a.m. on the second business day after the

offer was served, taxed on the ordinarily applicable basis and for the plaintiff's costs thereafter taxed on an indemnity basis.

1. She says the defendant failed to accept a very reasonable offer, and there is no reason to depart from the usual costs order.
2. The plaintiff was granted further provision as the Court recognised her need for housing. If her costs are not met out of the estate, she will have insufficient provision to buy a house.
3. The defendant does not dispute that the plaintiff beat her offer of compromise. He says that the Court should exercise its discretion not to grant the plaintiff indemnity costs because:

(a) It was not unreasonable for him to reject the plaintiff's offer of compromise;

(b) An order for indemnity costs will substantially reduce the residue of the estate which will fall solely on the defendant; and

(c) It was not clear from my reasons that the Court has considered the defendant's entitlement to an agreed $84,000 and the award to Ms Gair of $270,000.

1. I note, at paragraphs 89 to 92 of my reasons, that the plaintiff's valuation of the estate excluded the agreed amount of $85,000, as did the defendant's valuation of the estate. It was always agreed between the parties that the defendant was entitled to the value of the barn and that this did not form part of the estate. This was explicitly recognised in the offers made by both plaintiff and defendant. Further, I note the provision to Ms Gair from the estate pursuant to the will was $100,000. Ms Gair's claim against the estate settled during the trial. There was no evidence before the Court as to the amount of the settlement of that claim, and it was submitted by the plaintiff that the Court could and should only consider the evidence before it, namely that Ms Gair was entitled to a distribution of $100,000. It was for the defendant to put on evidence if that was not the case, which he did not seek to do. Where there was no evidence of any further provision to Ms Gair, it is not apparent to me how that further provision should have been taken into account. It is trite that a submission is not evidence.
2. The defendant further submitted that the award to the plaintiff "is unusually large given the moderate size of the estate" and that he was entitled to think that his offer of $280,000 was reasonable. It is not apparent how he has calculated that his offer amounted to a figure of $280,000.
3. In any event, the issue I must determine is whether there are particular circumstances in this case which warrant a departure from the usual order that a plaintiff who beats an offer of compromise is entitled to indemnity costs.
4. I note the following matters:

(a) The offer of compromise made by the plaintiff was not for a fixed sum, but for a percentage of the final value of the estate after sale of the Drouin South property and after taking out the value of the barn at $89,000. It was an offer inclusive of costs;

(b) At trial, the plaintiff sought, and was awarded a fixed sum, in addition to the provision of $100,000 under the will;

(c) A direct comparison of the offers against the award at trial is difficult given that like is not being compared with like; and

(d) The reasonableness of the rejection of the plaintiff's offer is a relevant factor.

1. There has been no precise determination of the value of the estate, nor is there any information before the Court as to what the costs were at the time the offer was made, and what the costs are now. I can infer that costs in June 2025 would be considerably lower than costs after a trial.
2. The defendant would be aware that the costs after a trial would be significantly higher than at the time the offer was made. From 1 January 2015, the costs in respect of family provision claims are to be determined in the exercise of the Court's general costs discretion.[1] There can no longer be an assumption that all costs will be paid out of the estate. An executor cannot assume that the consequences of a failure to act reasonably in relation to offers of compromise will be borne by all beneficiaries.
3. Nevertheless, I must look at the situation that existed at the time the offer was made, and the information available to the defendant at that time.
4. It is not apparent to me that the defendant knew the precise (and precarious) nature of the plaintiff's tenancy in the Mindarie house, whether she had any interest in that house, and whether she had a realisable interest in the property in her ex-husband's name in Drouin South. The defendant did not have precise information about the plaintiff's future needs. The defendant gave evidence at trial that he was not aware that the plaintiff was divorced.
5. Having regard to the size of the estate, the information available to the defendant at the time, and the fact that the ultimate provision to the plaintiff after trial was in a fixed sum as opposed to a percentage of the estate, I do not consider that it was unreasonable for the defendant to reject the offer of June 2025.
6. I am not satisfied that, if the plaintiff is not awarded indemnity costs, she will not be in a position to purchase a house, defeating the purpose of the judgment. I have no information about the difference between her costs as assessed on a standard or indemnity basis, which would enable me to reach that conclusion.
7. Having regard to the size of the estate and the testator's intentions in relation to her estate, and the fact that the legal costs incurred will come from the defendant's portion of the estate, I consider it is appropriate to exercise my discretion not to order indemnity costs. Given how finely balanced the arguments are, and given that I am departing from the usual order envisaged under the rules, it is appropriate for the plaintiff to also get her costs of this application.
8. Accordingly, I order that the defendant pay the plaintiff's costs, including the costs of this application, and any reserve costs, on a standard basis, to be assessed by the Costs Court in default of agreement.

[1] Re McKenzie (No 2) [2018] VSC 238 at [20]