PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS –
COSTS – INDEMNITY COSTS – RELEVANT CONSIDERATIONS
GENERALLY –
where the applicant applied for an order that adequate provision be made for his
Source
Original judgment source is linked above.
Catchwords
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS –COSTS – INDEMNITY COSTS – RELEVANT CONSIDERATIONSGENERALLY –where the applicant applied for an order that adequate provision be made for hismaintenance and support than wasmade under his father’s Will and Codicil– where the proceedings were dismissed – where the respondents nowseektheir costs on the standard basis until 30 September 2021 and thereafter onthe indemnity basis to be paid from the assets left bythe Will to the trusteesof the CMMTT – where, on 16 September 2021, the respondents made an offerto settle to the applicant– whether the respondents are soentitledUniform Civil Procedure Rules 1999 (Qld), r 681Bowyer v Woods[2007] SASC 327(2007) 99 SASR 190, citedCachia v Hanes (1994) 179 CLR 403,cited
Daley v Barton & Anor
Barton v Daley [2008] QSC 322,
cited
Dawson v Joyner (No 2) [2012] QSC 24, considered
Dobb v
Hackett (1993) 10 WAR 532, considered
Draper v Nixon [1999] NSWSC
629, considered
McCusker v Rutter [2010] NSWCA 318,
cited
McDermott v McDermott & Anor [2023] QSC 163,
cited
Sherborne Estate (No 2)
Vanvalen & Anor v Neaves & Anor
[2005] NSWSC 1003
(2005) 65 NSWLR 268, considered
Singer v Berghouse [1993] HCA 35
(1993) 67 ALJR 708,
considered
Underwood v Underwod [2009] QSC 107, cited
Jvanich v
Kennedy (no 2) [2004] NSWCA 397 cited
Judgment (38 paragraphs)
[1]
[1] The Court provided judgment in relation to this matter on 20 July 2023.[1] Defined terms in this judgment have the same meaning as in that judgment.
[2] The Court provided for the parties to make submissions as to costs. The submissions of the respondents and applicant were received on 17 August and 20 September 2023 respectively[2]. The respondents filed an affidavit of Ms Ranson sworn 17 August 2023 by leave. The respondents seek orders that they be paid:
[2]
(a) their costs on the standard basis until 30 September 2021; and
(b) thereafter, their costs on the indemnity basis,
[3]
to be paid from the assets left by the Will to the trustees of the CMMTT.
[4]
[3] The basis upon which the respondents seek their costs is that:
[5]
(a) they have been successful in the proceedings;
(b) the applicant increased the length and cost of the proceedings through his conduct of the proceedings, and by showing little appreciation of the true extent of his entitlement or the entitlement of the respondents who are also children of William;
(c) on 16 September 2021, the respondents made an offer to settle to the applicant, by an open letter which would have given him the benefit of all the surplus funds after a replacement property was bought for the applicant if the Moggill Property was sold being placed in the CMMTT with the respondents giving up their right to share in the surplus funds which otherwise was to be shared equally between the applicant and each of the respondents under the Will. The offer also provided for the respondents to act as trustees to effect that change to minimise costs to be paid to a trustee otherwise provided for under a codicil of the Will. Provision was also made for funding an accommodation bond. That offer is said to have been more favourable to the applicant than the outcome of the proceedings, given the application was dismissed. The respondents contend that it was unreasonable for the applicant not to have accepted the offer. It was accompanied by a "without prejudice" letter putting him on notice that if the offer was not accepted, the respondents' costs would be sought from the assets left to the CMMTT. The applicant did not respond to the offer; and
(d) prior to the offer of 16 September 2021 the respondents are entitled to their costs on a standard basis on the basis of the rule that costs generally follow the event.
[6]
[4] According to the respondents' submissions, the applicant has no capacity to pay costs from his own assets and, while the respondents as executors are entitled to be indemnified for their costs from the assets of the estate, unless an order is made in the terms sought, those costs will be paid first from the residue and then, to the extent that residue is insufficient, rateably from assets specifically gifted. That will reduce the amounts which the respondents as beneficiaries receive from the estate, which the respondents contend would not be consistent with the overall justice of the case. While the respondents accept the Court has a broad discretion in determining the appropriate costs order to be made to achieve the "overall justice of the case", the overall justice of the case has been said not to be "remote from costs following the event."[3]
[5] The applicant opposes such a costs order being made. As he was self-represented, no question of his own entitlement to costs arises and in that regard he stated he would be bearing his own costs.
[6] The applicant contends that the respondents engaged in disentitling conduct, including by their conduct contributing to the white ant problem at the Moggill Property and in seeking to persecute him by attempting to have him placed in a mental health unit for bringing the application, when they knew of past medical conditions which he had suffered from. The applicant relies on a decision of Draper v Nixon,[4] amongst others in support of his submission. In that case it was the deceased who was forcibly removed from his home to a psychiatric hospital, which caused him to make a new will. The plaintiff was found by the Court to have engaged in disentitling conduct from the benefit of any order for provision to which she might otherwise, in consequence of any relevant need, have established an entitlement.[5] That is quite different to the present case and is of little assistance.
[7] However the conduct of the respondents can be taken into account by the Court in determining the appropriate order as to costs.[6] The applicant seeks to rely on conduct of the respondents in effectively what he seems to be their obstructing the conduct of his case referring to statements of one of the respondent's that they were going to "run the Estate dry of funds then we will be forced to sell the house at 59 Lather Road and we... will get rid of you that way." He also contends witnesses did not attend on his behalf because of the conduct of the respondents and that contractors walked off the property because of the conduct of the respondents deterring them when he was trying to gather evidence. He otherwise seeks to raise matters in relation to the merits of his case in terms of issues with the Moggill property and need for matters to be repaired which he says were unattended to by the respondents.
[7]
"It is not uncommon, in the case of unsuccessful applications, for no order to be made as to costs, particularly if it would have a detrimental effect on the applicant's financial position."
[8]
[16] Relevant factors for the Court to have regard to have been identified as including how close one gets to the borderline, the nature of the relationship between the testator and the applicant, the basis upon which the claim was brought, and the potentially crippling effect of any costs orders, particularly where the orders will have minimal effect on the estate.[12]
[17] An offer to compromise by the successful respondent is relevant to the overall justice of the case. As was noted by Murray J in Dobb v Hackett:[13]
[9]
"The court should be careful not to foster the proposition that obstinacy and unreasonableness will not be punished by orders as to costs."
[10]
[18] While the offer in the present case was an open offer rather than one made under the rules, the Court has regard to such offers in family provision applications applying principles relevant to a Calderbank offer.[14]
[19] However as noted by Palmer J in Sherbourne (No 2)[15] the "fact that a plaintiff has recovered judgment in an amount less than an offer of settlement contained in a Calderbank letter does not automatically warrant the making of an order that the plaintiff pay the defendant's costs as from the date of refusal of the offer on an indemnity basis. While that circumstance undoubtedly has weight, all of the facts and circumstances of the case must still be taken into account in the exercise of the Court's discretion as to costs."
[20] In Dawson, McMeekin J did order the applicant to pay the respondent's costs of the proceeding on the standard basis up until the date of offer and on an indemnity basis thereafter. His Honour considered that the case was not a borderline one, that an important factor was that the testator and the applicant were estranged, that a commercial offer to settle was made, and that the applicant had a very unrealistic view of his entitlements. McMeekin J also considered that while an award of costs against the applicant would not have been welcomed by him, it was not shown to prove to be significantly adverse to his financial position.
[21] In the present case, I do not consider that the costs should be paid out of the funds up until the making of the offer on 16 September 2021 by the respondents to the applicant. While I considered that the applicant's prospects of success in the application were fairly weak, I do not consider the application was frivolous or vexatious or the result of some improper conduct.[16] The applicant had a close relationship with his father, William, and lived with his father up until his father's death. As was accepted by all parties at the hearing, the effect of the applicant living with his father meant that a number of his expenses were met by William. While it is true that the applicant did not demonstrate an appreciation of the competing claims of the respondents to William's estate who also shared a close relationship with William, the context of the application is relevant and the Will did differentiate between the applicant, for reasons William sought to explain in his will, and the respondents. The applicant challenged that reasoning and the differentiation in treatment particularly when it was uncontroversial that the applicant is on a disability pension and has few assets and was in a weaker financial state than his sisters.
[11]
(a) Unit 2/19 Bank Street, West End was given to the trustee of Christopher Martin McDermott's Testamentary Trust ("CMMTT"); and
(b) Unit 8, Kenmore Medical Centre was "shared" by Shona and the trustee of the CMMTT as the Court determines.
[12]
[26] As to the offer made on 16 September 2021 that offer would have placed the applicant in a better position than the outcome of the proceeding given his lack of success in the application in some respects, and his failure to accept the offer was unreasonable. It would have resulted in him having accommodation and a greater amount in the CMMTT to meet the costs in respect of the property in which he would reside, and potentially to pay him an allowance, given the terms of the Will but noting the CMMTT was a discretionary trust. In making the offer, the respondents offered to give up any claim on the surplus funds which would have formed part of the residuary, in respect of which only one third would have gone into the CMMTT. It also provided some advantage in terms of the respondents acting as trustees until the new property was purchased and the estate administered. In that regard, the respondents noted that an independent trustee was entitled to remuneration for acting as trustee of the CMMTT, as provided under clause 1 of the Codicil, and that they were attempting to minimise those costs. It also made provision for an accommodation bond.
[27] The offer made on 16 September 2021 provided for the CMMTT to have additional funds available to that proposed in the will, but on the basis of the respondents giving up their right to the surplus funds after the sale of the Moggill property and a replacement property being bought for the benefit of Christopher which otherwise was to be divided in equal shares between each of the respondents and the CMMTT.
[28] However, I do not consider that his failure to accept the offer should result in an order that he pay the respondent's costs on an indemnity basis but on a standard basis.
[29] The respondents were not wholly successful as to their construction of the Will in terms of the costs to be met by the CMMTT.[19]
[30] The applicant wishes to remain at the Moggill Property. His application for provision was premised in part on additional funds being placed in the CMMTT to enable him to do so with various repairs being made to the Moggill property, including to address white ant damage. The Will provided the trustee of the CMMTT to permit the applicant to live at the Moggill property for life but with the trustee having power, at Christopher's request or if the trustee deemed appropriate, to sell the Moggill Property and buy another residence for Christopher including by paying the entry fee into a care facility. While the applicant's wishes need to be considered by the trustee under the terms of the will, he does not have an absolute right to remain at the Moggill property under the terms of the Will.
[13]
(a) while the applicant's application had weak prospects of success, it was not without any prospect of success and was not frivolous or vexatious, albeit his assessment of the prospects of success of his application was unrealistic and had little appreciation of the competing claims of his sisters to William's estate;
(b) while the applicant's conduct of the case did result in some delay and undue lengthening of the trial, his conduct was not improper;
(c) the applicant and the respondents all shared a good relationship with William, who had sought under his Will to provide equitably for all of his children;
(d) the applicant lived with William at the Moggill property for some years;
(e) the applicant is without assets and on a disability pension with particular needs recognised by William in his Will and to provide for a costs order to the extent sought against the applicant by the respondents, particularly on an indemnity basis after 30 September 2021, would likely largely erode the provision which William carefully made for him, and have a greater adverse financial impact on him than the other beneficiaries, in particular the respondents;
(f) the legal fees will likely exceed the amount that will constitute the residuary estate of William;
(g) the respondents properly defended the family provision application to uphold the terms of the Will and the provision made for them as beneficiaries under the Will is likely to be depleted at least in part by the legal costs incurred in this proceeding for which as executors they would be entitled to be indemnified out of the estate;
(h) the offer made on 16 September 2021 to resolve the litigation would have placed the applicant in a better position in some respects and was a commercial one, which it was unreasonable for the applicant not to accept bearing in mind that the Court "should be careful not to foster the proposition that obstinacy and unreasonableness will not be punished by orders as to costs". However that does the compel the Court to determine that the failure to accept the offer should not result in indemnity costs. Without a costs order recognising the success of the respondents and their making a reasonable offer to resolve the proceedings they will bear a disproportionate amount of the burden of the litigation. However an indemnity costs order would likely unravel the intent of William and the provision made for the applicants. This differing considerations are appropriately recognised by making an order that the assets of the CMMTT be used to pay standard costs of the respondents after 30 September 2021; and
[14]
[35] The overall justice of the case is one which the Court considers requires that the respondents are paid their costs on a standard basis after 30 September 2021 from the assets left by the Will to the trustees of the CMMTT. That will not defeat provision made by William for applicant's maintenance and well-being, although the amount available in the CMMTT will be depleted by the costs order (but funds will continue to be available to the CMMTT through rental income earned by Unit 11), nor will it require the respondents to bear the full burden of the legal proceedings in terms of their entitlement under the Will, although they will suffer some of that burden of the costs in terms of their entitlements under the Will.
[15]
[36] The order of the Court is that the respondents are to be paid their costs on the standard basis after 30 September 2021 from the assets left by the Will of William Terrence Chisholm McDermott to the trustees of Christopher Martin McDermott's Testamentary Trust.
[8] The Applicant provided a lengthy list of cases annexed to his submissions. A number of those references had been relied upon in the applicant's closing submissions. The relevance of other references including as to bias was not readily discernible in relation to the present application. If the applicant wishes to raise bias by me that is for another forum to consider given judgment on the application has been determined.
[8] He further contends that he is on the disability pension and that the CMMTT does not need a debt on it, and that the respondents should pay their own way and he pay his own costs.
[9] The applicant's contentions fail to take account of the fact he was the applicant and that the proceedings had extended over many years. While he was self-represented and experiences some difficulties which I have referred to in the primary reasons, he was significantly responsible for the time the action took and had more than reasonable opportunities to obtain and provide the relevant evidence to prove his entitlement.
[10] Regardless of the statements the applicant refers to being made on behalf of the respondents in terms of the proceedings, the conduct of the proceedings was within his hands and there is no probative evidence that the respondents were responsible for extending the length of the proceedings or that they have conducted the proceedings unreasonably or in a way to increase the costs of the proceedings unreasonably. The subpoenas for the two witnesses not called by the applicant were set aside by the Court. I do not consider they failed in their duty by resisting the applicant's claim where they sought to uphold the terms of William's Will, albeit that they were also beneficiaries under that Will.[7]
[11] The applicant appears to raise complaints in relation to the reasons for judgment, however those matters do not bear upon the question of costs.[8]
[12] The financial state of the applicant and the fact that he is on a disability pension is of relevance to the Court's determination of the appropriate costs order.
[13] Pursuant to r 681 UCPR, costs generally follow the event. However, while that represents the usual position, other considerations may apply in the case of family provision claims.[9]
[14] The principles in relation to costs in respect of family provision applications were helpfully summarised by McMeekin J in Dawson v Joyner (No 2) (Dawson).[10]
[15] In particular, his Honour referred to the statements by Gaudron J in Singer v Berghouse, that family provision cases stand apart from cases in which costs follow the event and will generally depend on the overall justice of the case, which has subsequently been followed in a number of cases including from this Court. In that regard, her Honour commented:[11]
[22] The application was complicated by the fact that after William's death, the Moggill Property was damaged by white ants, which has caused the applicant a considerable amount of angst. He also contended that there were other issues with the Moggill Property which needed to be repaired or replaced. Some concessions were made by the respondents at the hearing that there were matters which did need to be repaired or which required further investigation.
[23] While the Court found that the applicant had an unrealistic sense of what would constitute "adequate provision" for him under the Will, that his approach to the litigation showed little appreciation for the fact that his sisters had competing claims, and that he lacked objectivity,[17] I do not consider that his claim for further provision was brought frivolously or vexatiously and was so unreasonable, it should never have been brought, such that prior to the offer the CMMTT should bear the costs of the respondents on a standard basis having regard to the overall justice of the case, particularly given the applicant's poor financial position and the fact that there is an element of subjectivity in determining family provision applications. While the applicant's conduct of the proceeding did give rise to some delay and the proceedings being unduly lengthened, in some respects, the applicant's affidavits were largely not objected to,[18] they were not such to cause me to consider a different costs order should be made up until the time of the offer, notwithstanding his lack of success.
[24] However I consider that position after the making of the offer of 16 September 2021 requires an order that the costs are paid from the assets of the CMMTT on a standard basis after 30 September 2021.
[25] The relief that the applicant had sought by way of additional provision was for the Will to be read and construed as if:
[31] The Court found that adequate provision was made under the Will for the applicant, including to ensure that the Moggill property remained in a reasonable state of repair, finding that there would be some surplus in the CMMTT which could be used for the purpose of repairs and maintenance if needed, as well as providing for the applicant's allowance.[20] The Court did, however, note that if no provision had been made for major or extraordinary repairs, and that if the costs of maintaining or repairing the Moggill property well exceeded the funds available in the CMMTT, William had provided for that contingency insofar as the will provides for the trustees to be able to sell the Moggill property if deemed appropriate and use the funds to buy alternative accommodation for the applicant.[21] The Will did however provide at least initially for the applicant to continue to live at the Moggill property and for his wishes to be taken into account in that regard.[22]
[32] As was explained in the accompanying without prejudice letter of 16 September 2021,[23] the acceptance of the offer necessarily to be of benefit to him required the Moggill property to be sold. That was premised on his claim being too high, maintenance and repair costs of the Moggill property which could not be met by the estate, and the applicant not being able to maintain the pool or grounds.
[33] Given the recognised wishes of William, while it would have placed the applicant in a better position than the outcome of the proceedings, the offer of the respondents did require him to accept that he would have to move from the Moggill property. To that extent, his resistance to doing so and not accepting the offer would not have been unexpected by the respondents, even though additional funds would have been placed in the CMMTT for the trustee to utilise for the applicant's benefit if he or she exercised their discretion to do so. A realistic assessment of his position would, however, at the time the offer was made have informed him that the offer was a commercial one which he reasonably should have accepted. His claim for further provision, particularly given the amount of costs he considered was necessary to place the Moggill property into the state he wished it to be in for him to continue living there, exceeded any reasonable expectation of what the Court would provide by way of adequate provision and was unrealistic.[24] If he had focussed at the time on what was required to succeed in a family provision application which he had to prove he would have appreciated the offer was favourable to him.
[34] In the present case, I consider however that notwithstanding I have found the applicant's failure to accept the offer was unreasonable, the overall justice of the case requires that the costs of the respondents after 30 September 2021, on a standard basis, be paid from the assets left by the Will of William Terence Chisholm McDermott to the trustees of Christopher Martin McDermott's Testamentary Trust given that:
(i) the size of the estate is reasonable under which the benefits to the respondents include each getting the benefit of the properties left to them under the Will capable of being income producing, and will not be depleted by the potential costs to the extent that the beneficiaries will not still get a significant benefit of what William provided for under the Will.