SIMPSON v HODGES

Supreme Court of NSW|2007-06-06|Before: Hall J

CITATION : SIMPSON v HODGES [2008] NSWSC 303

HEARING DATE(S) : 4, 5 and 6 June 2007; 19 and 20 July 2007

DECISION : (1) A declaration that the amount of $200,000 transferred from the St George Bank account of the late Pamela Amy Simpson on 6 November 2003 to the account held by the defendant and her husband, John Hodges, was made by the deceased with her knowledge and consent and such monies did not form part of the estate of the deceased. (2) That the plaintiff pay 85% of the costs of the defendant on the ordinary basis pursuant to Part 42 Rule 42.2 of the Uniform Civil Procedure Rules after 30 September 2006 and 100% of the defendant's costs on the same basis prior to 30 September 2006. (3) Judgment for the defendant on the statement of claim. No order as to costs, save as to (2) above. (4) Judgment for the defendant on the cross-claim. No order as to costs. (5) The plaintiff is to pay interest on costs in accordance with the above order pursuant to s.101(4) of the Civil Procedure Act 2005, UCPR Schedule 5 from the dates when an amount in respect of such costs was actually paid to be calculated on the full costs paid prior to 30 September 2006 and after that date on the basis of 85% of the costs paid to reflect the apportionment referred to in paragraph [78]. Liberty to apply with respect to the form or orders.

CATCHWORDS : COSTS - ordinary costs orders - indemnity costs - apportionment of costs - Exceptions to usual costs orders - whether misconduct by successful party - probate exceptions - whether genuine offer of compromise

Civil Procedure Act 2005 LEGISLATION CITED : Supreme Court Act 1970 Uniform Civil Procedure Rules

Anglo-Cyprian Trade Agencies Limited v Paphos Wine Industries Limited [1951] 1 All ER 873 BHP Billiton Iron Ore Pty Limited v National Competition Council (No 2) [2007] FCA 557 Cummings v Lewis (1993) 41 FCR 559 Dostock v Ramsay Urban Council [1900] 2 QB 616 F & D Bonaccorso Pty Limited v Cityy of Canada Bay Council (No 4) (2007) NSWLEC 649 Hughes v Westeran Australian Cricket Association (inc) [1986] ATPR 40-748 Jones v McKie & Movie Docks & Harbour Board (1964) 2 All ER 342 Kirkpatrick v Cotis [2005] NSWSC 178 Latoudis v Casey (1990) 170 CLR 534 Leichhardt Municipal Council v Green [2004] NSWCA 341 CASES CITED : NRMA Limited v Morgan (No 3) [1999] NSWSC 768 OHN v Walton (1995) 36 NSWLR 77 Oshlack v Richmond River Council (1998) 193 CLR 72 re Cutcliffe's Estate [1959] P 6 re Estate of Hodges (deceased); Shorter v Hodges (1988) 14 NSWLR 698 re Estate Late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311 Roebuck v Smoje [2001] WASC 95 Salvation Army & Anor v Becker & Anor [2007] NSWSC 136 Shorten v Shorten (No 2) [2003] NSWCA 60 Waters v PC Henderson (Australia) Pty Limited (1994) unreported BC9404952

PARTIES : Howard Collins Newby SIMPSON v Shelley Emma Elizabeth HODGES

P: In person (4 to 6 June 2007) COUNSEL : E Young (19, 20 July 2007) D: L Ellison SC

SOLICITORS : P: Mackenzie & Goldstein Legal (19, 20 July 2007) D: Miller Noyce

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HOWARD COLLINS NEWBY SIMPSON v. SHELLEY EMMA ELIZABETH HODGES JUDGMENT (On application for costs) 1 HIS HONOUR: In the judgment delivered on 6 November 2007 (the "principal judgment"), the parties were directed to lodge short minutes of orders. Leave was granted to the parties to make submissions as to costs. This judgment concerns costs and the orders to be made to give effect to the principal judgment. 2 On 14 November 2007, draft orders and cost submissions were forwarded to my associate on behalf of the defendant/cross-claimant. 3 On 26 November 2007, Mr E W Young of counsel, who appeared on behalf of the plaintiff, lodged Submissions for the Plaintiff on Costs. 4 On 3 December 2007, Mr L Ellison SC, who appeared on behalf of the defendant, lodged Defendant's Submissions in Reply. 5 The plaintiff commenced proceedings by way of statement of claim filed on 24 May 2005. There was no issue raised as to the deceased's testamentary capacity nor was there any challenge made to the Will. The plaintiff's claim for relief was principally based upon:-

(1) The alleged appropriation by the defendant of $200,000 from the deceased.

(2) The defendant allegedly obtaining $200,000 from the deceased through the exercise of undue influence or duress by the defendant upon the deceased. These latter grounds were abandoned at the hearing. 6 The plaintiff also claimed that the defendant was not a fit and proper person to take a grant of probate. 7 Wide-ranging relief was sought in the statement of claim including an order that letters of administration of the estate of the deceased with the Will annexed be granted to the Permanent Trustee Company Limited or such other trustee corporation or two persons jointly as the Court considered appropriate together with an order that the defendant account to the administrator and pay all monies allegedly appropriated or transferred to her from any bank account of the deceased. 8 In a cross-claim filed on 15 July 2005, the defendant claimed probate in solemn form of the Will of the deceased be granted to her together with an order for costs. 9 The issue pursued in the proceedings related to the alleged misappropriation of the deceased's funds amounting to $200,000. That issue was determined adversely to the plaintiff. 10 In addition, a determination was made that both the plaintiff and the defendant were entitled to take a grant of probate in respect of the deceased's Will, they both being bound to act properly as executors.

The defendant's submissions on costs 11 Mr Ellison, in his costs submissions contended that costs should follow the event: Uniform Civil Procedure Rules, Part 42, Rule 42.1. He further contended that the probate "exceptions" were not relevant. He submitted that the proceedings did not constitute a "probate" case involving a challenge to the Will but the case was an "equity case" involving allegations inter parties. 12 It was submitted that the plaintiff alleged fraud and to pursue such an allegation and fail inevitably meant that the plaintiff would suffer a costs order. He referred, in that respect, to observations made in Salvation Army & Anor v Becker & Anor [2007] NSWSC 136 by Ipp JA at 136. 13 Mr Ellison relied upon an email from the plaintiff dated 24 December 2004 raising serious allegations against the defendant and the response rejecting such allegations sent by the defendant's solicitor dated 22 April 2005. 14 It was further submitted on behalf of the defendant that bona fide attempts were made on her behalf to settle the proceedings. In this respect, reliance was placed upon copies of correspondence, in particular, a letter sent to Mr Kristjan Geering, solicitor, dated 17 October 2006 and a letter to Mackenzie & Goldstein Legal dated 5 July 2007. 15 Mr Ellison submitted that the estate is a very small one and to order other than that the plaintiff pay the defendant's costs on an indemnity basis "… would be to negate the intention of the deceased's Will and make futile the Court's decision" (paragraph 5). 16 In support of the defendant's submissions on costs, reliance was placed upon the affidavit of Douglas Dean Lee Spencer, solicitor for the defendant, sworn on 13 November 2007. In that affidavit, Mr Spencer said that the defendant had paid costs and disbursements in relation to the proceedings at various dates set out in his affidavit commencing 4 July 2005 to 31 July 2007, amounting to $116,873.77. 17 It was submitted on behalf of the defendant that whether or not an order is made on an indemnity or other basis, interest should run from the respective dates of payment of each account, given that the defendant is already out of pocket. In that respect, reliance was placed upon the Civil Procedure Act 2005, s.101(4) and (5), and Kirkpatrick v Cotis [2005] NSWSC 178 at [18] to [19].

Submissions for the plaintiff on costs 18 In his very detailed written submissions, Mr Young of counsel for the plaintiff, submitted that the case was "… unequivocally a probate case about whether or not to pass over an executor named in a Will who was seeking a grant of probate for herself (as she did in her cross-claim)" (paragraph 2). 19 It was submitted that a challenge to a Will is not the only criterion against which a matter may be properly characterised as a "probate case" nor, it was submitted, was it the sole factor for determination as to whether the probate exceptions to the usual costs orders are relevant. Mr Young submitted that the issues for determination in the case must be examined as a whole. 20 It was further contended that, regardless of "the label to be put on these proceedings", costs were in the discretion of the Court: s.98(1) of the Civil Procedure Act 2005. It was submitted that "this case was about whether or not the grant of probate should be made to the defendant …" (paragraph 5) and it was said to be "analogous to that when determining whether to grant an executor probate of a Will when the Will itself is challenged due to the conduct of a beneficiary (particularly where that person is also an executor)…" (paragraph 5 of the written submissions). 21 Mr Young contended that the judgment in Becker (supra) does not support the defendant's submission. 22 Mr Young submitted that the case was concerned with "investigating an allegation of the misappropriation of monies to determine whether a named executor should be passed over at probate and that the appropriate costs order would turn upon the facts of an individual case" (paragraph 7 of the written submissions). 23 It was contended for the plaintiff, on matters raised in the written submissions, that the appropriate costs order was that both of the parties' costs should be paid out of the Estate. 24 Mr Young's submissions then proceeded to analyse what he referred to as the "plaintiff's suspicions as to the defendant's conduct …". It was argued that the circumstances of the case, including, in particular, the statements which the plaintiff attributed to the deceased as having been made to him (see paragraph 41) "gave rise to reasonable suspicion in his mind" (paragraph 13) such as to render it reasonable for him to make inquiries and ultimately to bring proceedings in the face of what was said to be "… the defendant steadfastly refusing to be transparent about receiving $200,000 from the deceased". The defendant's conduct, it was submitted, in this regard (explained further below) simply compounded the plaintiff's reasonable suspicions (paragraph 13 of the written submissions). 25 It was argued that the initial cause of the plaintiff having any concern or suspicion at all as to the defendant in relation to her dealings with the deceased's money came from the deceased herself.

Costs principles 26 In the light of the submissions of the parties, it is necessary to refer to the relevant principles that apply and guide the exercise of the discretionary power to award costs, firstly, in the context of general litigation and, secondly, in the context of probate litigation. 27 In Part 7, Division 2 - Costs in proceedings - of the Civil Procedure Act 2005, s.98 provides for the powers of the Court as to costs. By s.98(1), subject to the rules of Court and to any provision of the Civil Procedure Act, costs are stated to be in the discretion of the Court (s.98(1)(a)) and the Court has full power to determine by whom, to whom and to what extent costs are to be paid (s.98(1)(b)) and the Court may order that costs are to be awarded on the ordinary basis or on an indemnity basis (s.98(1)(c)). 28 By Part 42 Rule 42.1, it is provided that, subject to Part 42, if the Court makes any order as to costs, it is to order that costs follow the event "… unless it appears to the Court that some other order should be made as to the whole or any part of the costs". See Oshlack v Richmond River Council (1998) 193 CLR 72 at 96-98 per McHugh J (dissenting with Brennan CJ in the result but not as to costs principles). In that case, McHugh J stated:- "Although the statutory discretion is broadly stated, it is not unqualified. It clearly cannot be exercised capriciously. Importantly, the discretion must be exercised judicially in accordance with established principle and factors directly connected with the litigation. In this manner, the law has gradually developed principles to guide the proper exercise of the discretion and, in some cases, to highlight extraneous considerations which, if taken into account, will cause the exercise of the discretion to miscarry … By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs." 29 As McHugh J observed in Oshlack (supra), the principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs, his Honour stated, are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. His Honour stated (at p.97):- "… if the litigation had not been brought, or defended, by the unsuccessful party, the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation." 30 This provision gives effect to the earlier general principle that the proper exercise of the costs discretion will normally require an order that the successful party's costs be paid by the unsuccessful party, at least to the extent to which that party's costs have been reasonably incurred in the conduct of the litigation: Latoudis v. Casey (1990) 170 CLR 534, 566-567. 31 In OHN v Walton (1995) 36 NSWLR 77, Gleeson CJ at 79 observed:- "When legislation confers the power to order costs, it is, in the absence of any contrary indication, to be understood as conferring a power to be exercised for that purpose. Two things follow:- 1. The usual rationale of making a costs order is that it is just and reasonable that the successful party should be reimbursed for costs incurred, in the absence of grounds connected with the charge or the conduct of the proceedings which make it unjust or unreasonable that there should be such reimbursement. 2. The test of whether an order for costs should be made against an unsuccessful plaintiff or complainant is not whether he or she has done anything to warrant punishment. It is whether, in the circumstances, the defendant or respondent should be compensated." 32 In relation to the costs of the present proceedings, the defendant, having been the successful party to the proceedings, is entitled to an order for costs in her favour "… unless it appears to the Court that some other order should be made as to the whole or any part of the costs". 33 In the present proceedings, Mr Young of counsel, on behalf of the plaintiff, relied, in particular, upon the following matters in opposing the order for costs sought in favour of the defendant:-

(1) That the plaintiff, upon the basis of the statements he said were made by the deceased to him (as to which, see paragraphs [147] to [156] of the principal judgment) could reasonably have been construed so as to give rise to a reasonable suspicion in him as to the transfer of the $200,000 by the deceased to the defendant and that this constituted a reasonable basis for bringing the proceedings.

(2) That the Court made findings that were adverse to the defendant in relation, firstly, to her evidence (and that of her husband) as to statements said to have been made to Mr Richardson by the deceased and, secondly, to the evidence of the defendant and her husband that the plaintiff had, prior to the death of the testatrix, been informed by the defendant of the transfer of the $200,000. 34 Although there are recognised grounds for depriving a successful litigant of the "ordinary" costs order, the discretion to depart from the provisions of Part 42 Rule 42.1 is subject to the application of settled principles. 35 In NRMA Limited v Morgan (No 3) [1999] NSWSC 768, Giles J (as his Honour then was), in relation to the general power to award costs under s.76 of the Supreme Court Act 1970 (the terms of which are in the same terms as to Part 42 Rule 42.1), stated:- "24. Principles according to which some other order may be made are fairly well established. If a party fails on some issues, the circumstances may make it reasonable that he deprived of the costs of those issues, or even be ordered to pay the other party's costs of those issues. For this purpose, issues may be issues in a pleading sense of bases of claim, or may be disputed questions of fact or law. But it must be remembered that parties should not be dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case, and, unless a particular issue or group of issues is clearly dominant or separable from the balance of the proceedings, it will ordinarily be appropriate to award the cost of the proceedings to the successful party without attempting to differentiate between the issues on which it was successful and those on which it failed …" 36 In the present proceedings, there was essentially a single issue not multiple issues in the sense referred to in NRMA v Morgan (supra). The evidence called by the plaintiff and the defendant was directed to the question as to whether or not the amount of $200,000 had been transferred by the testatrix to the defendant as a voluntary act by way of gift to her or whether the defendant had misappropriated that amount to her own benefit. 37 The fact that certain of the evidence given by the defendant and her husband directed to that issue was not accepted, does not relate to a separate or discrete issue and is not a circumstance that falls within the costs principles that apply to multiple issue cases. 38 In Oshlack (supra), McHugh J (at p.97) stated that the traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles that party to the beneficial exercise of the discretion. In that respect, McHugh J referred to dicta of Devlin J in Anglo-Cyprian Trade Agencies Limited v Paphos Wine Industries Limited [1951] 1 All ER 873 at 874 as follows:- "No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct." 39 McHugh J in Oshlack stated that "misconduct" in this context means:- "… misconduct relating to the litigation, … or in the circumstances leading up to the litigation. Thus, the Court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation … ; unnecessarily protracts the proceedings …; succeeds on a point not argued before a lower court …; prosecutes the matter solely for the purpose of increasing the costs recoverable …; or obtains relief which the unsuccessful party had already offered in settlement of the dispute …" 40 In the present case, the only possible exception that has been raised in the submissions for the plaintiff is, in effect, the issue of possible disentitling conduct by the defendant. In this respect, as previously noted, reliance was placed upon what was said to be a lack of transparency or a lack of information from the defendant as to the circumstances in which the deceased transferred the amount of $200,000 to her. 41 The principle judgment referred to the communications between the plaintiff and the defendant following the death of the testatrix (paragraphs [109] to [127]). It is sufficient to re-state here that the plaintiff did not refer or record any concern in his early email correspondence of 31 July 2004 and 11 August 2004, based on any statement to him by the deceased. Additionally, it was not until 16 August 2004 that the plaintiff first raised his "concerns" in connection with what he termed "the management of her pensions and banking" with the defendant. 42 On 17 August 2004, the defendant recorded, inter alia, that she was finding the plaintiff's questioning "illogical, erratic and difficult to follow". She suggested that he formalise his "claims" in detail through his solicitor. 43 The plaintiff's evidence included a "draft" letter dated 18 August 2004, being a draft having been prepared by his then solicitors, Gibson Sheat. The evidence did not appear to include all correspondence written by and to Gibson Sheat. In this respect, I note that a letter from Ms Townend dated 8 December 2004 referred to "previous correspondence". The evidence did not establish that the plaintiff, through solicitors, took all reasonable steps to acquire information as to the circumstances in which the monies in question were transferred. 44 The email correspondence that passed directly between the plaintiff and defendant reveals increasingly terse communications between them to the point of a complete breakdown of communications by December 2004. The defendant failed to communicate directly setting out the full facts of the matter in an attempt to address the plaintiff's expressed "concerns". However, the month before these proceedings were commenced on 24 May 2005, the defendant's solicitors sent a letter dated 22 April 2006 detailing a number of matters and contending that the deceased had transferred the monies by way of a gift. The plaintiff did not thereafter seek to communicate on the matter with the defendant's solicitor. The plaintiff, through his email correspondence, must accept responsibility for raising, without an adequate basis, a charge against the defendant and her husband of "conspiracy to defraud, theft, embezzlement, call it what you like, of $250,000 from (the deceased) …". He did not, at the time of commencing proceedings, demonstrate that he had sufficient material to establish the allegations made. 45 I have considered the submissions made on behalf of the plaintiff with a view to determining whether or not it can be fairly said that the defendant in her failure to communicate properly with him could be said to have, in effect, "invited" the litigation. 46 In accordance with relevant authority, a court is entitled to have regard to conduct and matters leading up to proceedings which could be said to be the occasion of litigation: Dostock v Ramsay Urban Council [1900] 2 QB 616 at 622. In that case it was said:- "The judge is not confined, in considering the question whether there is good cause for depriving the successful party of costs, to the conduct of the parties in the litigation itself, but must consider the whole circumstances of the case and everything which led to the action." 47 See also Jones v McKie & Movie Docks & Harbour Board (1964) 2 All ER 342 per Wilmer, Harman and Russell LJJ at p.5. 48 Whilst the defendant's conduct is open to criticism in that there was an initial absence of disclosure as to the full factual circumstances to the plaintiff concerning the transfer of the $200,000, I do not, at the end of the day, consider that such conduct was sufficient to deprive her as the successful party from the ordinary rule as to costs, namely, that costs follow the event. 49 The evidence in the proceedings does not establish, as I have earlier stated, that the plaintiff took appropriate steps through solicitors, to properly engage with the defendant in seeking information as to the transfer of the monies by the deceased. In December 2004 and in January 2005, the position accordingly was that he was charging the defendant and her husband with the most serious allegations of impropriety without then having exhausted appropriate lines of inquiry to ascertain the full facts and without having a proper foundation for the charges that he made against them. He did not put to the defendant any information that he contended was capable of evidencing impropriety for comment or explanation. 50 The issue of the plaintiff's conversation with his mother on 2 July 2004 was considered in the principal judgment at paragraphs [43] to [57] and at [147] to [156]. In paragraph [156] I stated:- "I do not consider that the plaintiff's evidence as to what his mother said on the occasion in question to be at all a reliable account and I do not accept it as an accurate account. The plaintiff did not, himself, before the proceedings were commenced, disclose that a conversation to which he now attached great significance had occurred. I have earlier noted that a similar point was made to the plaintiff the month before he commenced proceedings in the letter from Miller Noyce (see paragraph [58] above)." 51 On the basis of the findings made, I do not consider that on this costs application it is possible to conclude that any statement by the deceased (whatever had been its precise terms) could be said to constitute the basis of a reasonable suspicion in the plaintiff for concluding that the defendant had fraudulently misappropriated the amount of $200,000 from the deceased. 52 Accordingly, I have concluded that, subject to matters to which I will shortly refer, the defendant is entitled to an order against the plaintiff in respect of her costs of the proceedings. The question of the form of the order is a matter I will return to below.

Probate litigation - exceptions in relation to costs 53 Mr Young, in his written submissions dated 26 November 2007, contended that the case was "unequivocally a probate case" such as to attract the probate exceptions that apply in relation to the question of costs. He contended in that respect that the case was "… about whether or not to pass over an executor named in a Will who was seeking a grant of probate for herself (as she did in her cross-claim)" (paragraph 3). He further contended that "a challenge to a Will is not the only criterion against which a matter is assessed as being properly characterised as a 'probate case' nor is it the sole factor of determination as to whether the probate exceptions to the usual costs orders are relevant. The issues for determination in the case must be examined as a whole". 54 No authority was cited in support of the contention that these proceedings are properly categorised as a "probate case". It was, in the defendant's submissions "an equity case involving allegations inter partes" (paragraph 2 of the defendant's costs submissions dated 14 November 2007). 55 The line of authority that has considered the question of the discretionary award of costs of probate actions include: Shorten v Shorten (No 2) [2003] NSWCA 60; re Estate of Hodges (deceased); Shorter v Hodges (1988) 14 NSWLR 698, 709 per Powell J; re Cutcliffe's Estate [1959] P 6. See also re Estate Late Hazel Ruby Grounds; Page v Sedawie [2005] NSWSC 1311. 56 Unlike in the above cases and as noted above, no issue of testamentary capacity or validity of the Will arose as issues in the present case. The recognised exceptions that apply in probate matters have been stated as arising:-

(1) Where the litigation has been caused by the conduct of a testator, in which case the unsuccessful defendant may be relieved of the burden of costs and at times may be awarded costs out of the estate.

(2) Where there are circumstances which afford reasonable grounds for opposing a Will by the unsuccessful defendant. In such case, the unsuccessful party, although not usually awarded his costs out the estate, will usually be relieved of the burden of costs: Roebuck v Smoje [2001] WASC 95 per Hazluck J at [27]. 57 I do not consider that the present proceedings may properly be considered or described as "probate litigation" as that term has been used in the relevant line of authority. However, no matter how broadly that expression may be applied, the essential matter for consideration in the present case is that this case essentially involved the question of an alleged misappropriation of money. I have adverted above to the factual circumstances as to the plaintiff's conduct before the commencement of proceedings. Even if the costs rules relating to probate litigation could be said to apply to the present proceedings, they would not, in my opinion, improve or advance the plaintiff's position so far as his contention that there should be no as to costs in favour of the defendant. For reasons stated above, I do not consider that the plaintiff has established "reasonable grounds" relating to events leading up to the proceedings. 58 The remaining issues concern the form of the costs order that ought to be made. The defendant, as noted above, submitted that the estate was a very small one and to order other than the plaintiff pay the defendant's costs on an indemnity basis, would be to negate the intention of the deceased's Will and make futile the Court's decision (paragraph 5 of the written submissions, 14 November 2007). 59 It was also submitted for the defendant that as she had paid her solicitor who issued a number of accounts to her, that interest should run from the respective dates of payment of each account. Reliance, in this respect, was placed upon the provisions of s.101(4) and (5) of the Civil Procedure Act and upon the decision in Kilpatrick (supra) at [18] - [19]. Interest was claimed at the rate prescribed by UCPR Schedule 5. I consider the defendant is entitled to interest on costs paid as disclosed in Mr Spencer's affidavit. 60 In support of the application for indemnity costs, the defendant relied upon two letters sent by her solicitors, Miller Noyce, dated 17 October 2006 and 5 July 2007 to the plaintiff's former solicitors, Mr Kristjan Geering and Mackenzie & Goldstein. Both letters were in similar terms save for the amount of costs offered ($50,000 in the first letter and $60,000 in the second letter). 61 The offer set out in those letters was put to the plaintiff as a choice, namely, as to whether to continue the proceedings or not. In the above letters it was stated:- "If, on the other hand, your client now wishes to discontinue the proceedings, our client is prepared to resolve the matter on the following basis:- (1) That a Grant of Probate is issued to our client. The Estate can then at last be administered and finalised. Our client is prepared to provide regular accounts to your client in relation to the administration of the Estate. (2) That your client pays to our client the sum of $60,000 towards the costs incurred by her in relation to the proceedings to date. Your client's share of the Estate would be applied towards those costs. In addition, the balance of the costs incurred by our client, which approximately amount to a further $50,000 shall be paid out of the Estate prior to any distribution. (3) That your client pays his own costs in relation to the proceedings and the matter generally. (4) That the parties enter into a Deed of Release otherwise releasing each other from all and any claims in relation to the matter." 62 As noted above, Mr Spencer's affidavit established that the costs of the defendant were $116,873.77. 63 In the written submissions for the plaintiff on the question of indemnity costs, it was submitted that the above offers do not assist the plaintiff. It was observed that both letters seek probate solely to the defendant, contrary to the determination in the principal judgment that both parties should take probate. 64 Further it was also contended that the specified condition of settlement in the abovementioned correspondence for the execution of a Deed of Release, raised a difficulty in that it was unclear as to what it was supposed to mean. It was suggested that one possible meaning was that the plaintiff could not make a claim of probate and that:- "… in any event, whatever may have been envisaged in the broad ranging Deed of Release referred to by the defendant's solicitor, the defendant did not (and could not) achieve a result including such a release by way of judgment. This invalidates the offer from being a basis to seek that indemnity costs be paid by the plaintiff." 65 It was submitted further that if the defendant wished to make a genuine offer to compromise the proceedings, then it ought to have done so pursuant to UCPR Part 42 Division 3 (Offers of Compromise). The defendant did not do so. 66 I do not consider that the letters of offer referred to above do provide a basis for an indemnity costs order. I accept the submission made that the condition specified requiring a general Deed of Release did not provide a proper basis for such an order. The imprecise and general terms of paragraph 4 of each letter of offer did not, in my opinion, constitute an offer with the precision required for an effective offer. 67 I also record that the terms of the defendant's "offers" were "walk-away" offers requiring the plaintiff, inter alia, to pay the defendant's costs in the amounts specified in the letters of offer. See observations of Santow JA in Leichhardt Municipal Council v Green [2004] NSWCA 341. The defendant did not, in any event, rely upon the letters of offer as Calderbank letters: Defendant's Submissions Reply at [12]. 68 Mr Young further submitted that, in the alternative, that an appropriate order is for a certain fixed percentage (for example, 50%) of the defendant's ordinary costs to be paid, to be agreed or assessed. 69 The authorities dealing with apportionment of costs are well known. See NRMA v Morgan (supra) (Giles J) and Waters v PC Henderson (Australia) Pty Limited (1994) (unreported BC9404952). 70 It has been observed that it is appropriate in some instances, to apportion costs where the successful party does not succeed on all issues and the issues on which the successful party failed are separable from those upon which it succeeded, per Biscoe J in F & D Bonaccorso Pty Limited v City of Canada Bay Council (No 4) (2007) NSWLEC 649. 71 Notwithstanding the able submissions made by Mr Young in relation to those matters upon which the defendant and her husband were not accepted, that does not provide a basis for an apportionment of costs as sought in the alternative in the plaintiff's written submissions. There was no separable issue in those respects. The question in the proceedings was the single issue to which I have earlier referred. 72 However, I have considered whether, as Mr Young submitted, there is a basis for an order whereby the plaintiff is not required to pay the costs associated with the evidence of Mr Richardson. There is no basis upon which a finding can be made that the defendant or her husband were responsible for Mr Richardson's affidavit evidence which Mr Richardson admitted was false evidence in material respects. The matter is discussed at some length in the principal judgment. Mr Richardson's evidence was not led in response to anything the plaintiff said or did. It was relied upon by the defendant to bolster her case. It was totally discredited evidence. 73 The question of the costs of a successful litigant who fails on one or more issues, was also discussed: see Hughes v Western Australian Cricket Association (Inc) [1986] ATPR 40-748 per Toohey J at 48, 136 and Cummings v Lewis (1993) 41 FCR 559 at 602-603. The principles that apply to the costs of a successful litigant were recently reviewed in BHP Billiton Iron Ore Pty Limited v National Competition Council (No 2) [2007] FCA 557. In that case, Middleton J stated:- "(18) There must be some element connected to the proceeding to make it fair and reasonable to deprive a successful litigant of its costs. A good reason not to follow the ordinary rule may arise because of the unreasonable or inappropriate conduct of the successful litigant. It may also arise where there is an ability to identify separate issues or inquiries where the successful litigant has failed. (19) There may be other circumstances in which there needs to be some qualification to the starting point of presuming that the successful party is entitled to its costs where justice requires it. Any determination will always depend on the circumstances arising for the decision of the judge who has conducted the trial and who is considering the appropriate order as to costs. (20) However, it is to be observed that ordinarily a discount is applied, or said to apply, because of the inappropriate or unreasonable conduct of the successful party: see Ruddock 115 FCR at 236-237 and Latoudis 170 CLR at 544 per Mason CJ; 565-566 per Toohey J. (21) The fact that a successful party has lost on a particular issue or inquiry does not necessarily mean that the party has acted in the litigation inappropriately or unreasonably. Nevertheless, in certain circumstances, it may be an appropriate exercise of the court's discretion to apportion costs according to success or failure on a particular distinct or severable issue or inquiry irrespective of any inappropriate or unreasonable behaviour on the part of the successful party: see Cummings 41 FCR at 599-604; Hughes [1986] ATPR at 48,136." 74 His Honour also stated at [25]:- "I should interpolate that there may not need to be the ability to precisely identify separate costs in respect of particular issues. As Campbell J said in Roberts v Rodier [2006] NSWSC 1084 at [33]:- ' I do not accept that the appropriate way of exercising the costs discretion is limited to the identification of separate costs of particular issues. It could sometimes be within the scope of a proper exercise of discretion, where the costs of certain evidence was relevant to issues on which a plaintiff succeeded and also to issues on which the plaintiff failed, to decide to allow the plaintiff a proportion only of those costs.'" 75 In summarising relevant costs principles at [27], principle 6 was stated as follows:- "The court has the discretion to apportion costs even if it cannot identify separate costs in respect of distinct or severable issues or inquiries on which the successful litigant failed, but the matters on which the party failed must be at least capable of separation from the matters on which the litigant was successful." 76 In the present proceedings, the defendant raised the evidentiary issue of corroboration through Mr Richardson. The defendant sought through Mr Richardson and her husband to raise an affirmative evidentiary case based on meetings at which the deceased was said to have confirmed to Mr Richardson that she had given $200,000 to the defendant. I did not accept the evidence of Mr Richardson and I was unable to accept the evidence of the defendant or her husband as to the alleged corroboration. 77 Mr Richardson's evidence was taken over two days, although only a part of each of those days. Time was also devoted in submissions to the matter of the alleged meetings between the deceased and Mr Richardson, the defendant and her husband. That the affirmative case sought to be raised by the defendant and centred on Mr Richardson became a significant but discrete issue is apparent from the principal judgment (in particular paragraphs [159] to [178], [208] to [216], [220] to [227] and [237] to [244]. 78 I consider, in all the circumstances, that justice between the parties in relation to costs would be best served by apportioning the costs to be awarded in favour of the defendant so that the plaintiff is not required to pay costs referable to the evidence of Mr Richardson and the submissions generated by his evidence. I consider that a fair apportionment in this respect is that 15% of the proceedings were referrable to the evidentiary case raised by the defendant concerning Mr Richardson, being a matter on which the defendant failed and which is capable of separation from the matters on which the defendant was successful. On that basis, the defendant will be entitled to 85% of her costs on a party/party basis after 30 September 2006 and full costs on a party/party basis prior to that date. 79 Draft orders were lodged by Mr Ellison in the following terms:- "The Court declares:-

The transfer of $200,000.00 on the 6th November 2003 from the Deceased to the Defendant and John Hodges was made with the knowledge, approval and consent of the Deceased and as such the said sum (and proceeds thereof) does not form part of the Estate of the Deceased.

Probate of the Will of Pamela Amy Simpson dated 8th March 2004 be granted to Shelley Emma Elizabeth Hodges reserving leave to Howard Collins Newby Simpson to come in and apply for probate at some future date.

Proceedings referred to the Registrar to complete the grant in accordance with the Rules.

The Statement of Claim and Cross-Claim otherwise dismissed.

The Plaintiff to pay the Defendant's costs of the proceedings on an indemnity basis.

Interest pursuant to UCPR Schedule 5 to run on the costs referred to in order 5 from the respective dates the Defendant paid each of the accounts rendered by her solicitors.

The Defendant's costs (not otherwise satisfied by Order 5) to be paid out of the Estate of the Deceased on an indemnity basis.

No order as to the Plaintiff's costs of the proceedings to the intent he bears his own costs." 80 I have considered the appropriate form of orders to give effect to the judgment delivered on 6 November 2007 and having done so I grant relief in the following terms:-

(1) A declaration that the amount of $200,000 transferred from the St George Bank account of the late Pamela Amy Simpson on 6 November 2003 to the account held by the defendant and her husband, John Hodges, was made by the deceased with her knowledge and consent and such monies did not form part of the estate of the deceased.

(2) That the plaintiff pay 85% of the costs of the defendant on the ordinary basis pursuant to Part 42 Rule 42.2 of the Uniform Civil Procedure Rules after 30 September 2006 and 100% of the defendant's costs on the same basis prior to 30 September 2006.

(3) Judgment for the defendant on the statement of claim. No order as to costs, save as to (2) above.

(4) Judgment for the defendant on the cross-claim. No order as to costs.

(5) The plaintiff is to pay interest on costs in accordance with the above order pursuant to s.101(4) of the Civil Procedure Act 2005 , UCPR Schedule 5 from the dates when an amount in respect of such costs was actually paid to be calculated on the full costs paid prior to 30 September 2006 and after that date on the basis of 85% of the costs paid to reflect the apportionment referred to in paragraph [78].

81 Liberty to apply with respect to the form or orders. **********

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At a glance

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Judgment (36 paragraphs)

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Cases Cited (15)

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