Determination
64In this case, I am not satisfied that the Offer of Compromise served by the Defendant on the Plaintiffs was an effective one. I have come to this view because it was not one that was "exclusive of costs". The Offer of Compromise included the term that the Plaintiffs' costs, calculated on ordinary basis, would be paid out of the estate.
65Whilst I appreciate that the term of the Offer of Compromise made in relation to the Plaintiffs' costs is one that might have been expected to be made in the event that the Plaintiffs were successful, it is still an offer of compromise that refers to costs and, therefore, does not qualify as a valid one: Vaughan v Hoskovich (No. 2) [2010] NSWSC 835.
66Should it have been necessary, I would also conclude that the form of the offer made by the Defendant was one that was incapable of acceptance by one Plaintiff alone. In this regard, it is to be noted that the amount of $50,000, being the first payment to each Plaintiff, was to be made "upon both Plaintiffs vacating" the Tweed Heads property. Thus, even if one Plaintiff accepted the offer and agreed to, and did, vacate the Tweed Heads property, no payment to him was required to be made until the other Plaintiff vacated the Tweed Heads property also.
67Accordingly, I need not consider further the consequences that flow from the UCPR in respect of offers of compromise.
68In this case, I cannot treat the Offer of Compromise as a Calderbank offer. It was explicitly said to be an offer of compromise under UCPR r 20.26. Unlike the offer considered in Trustee for the Salvation Army (NSW) Property Trust & v Becker (No 2 ), it was not stated to be intended to operate as a Calderbank offer if it was ineffective under the UCPR: Dean v Stockland Property Management Pty Ltd and Anor (No 2) [2010] NSWCA 141 at [33] - [34].
69It probably does not matter much whether I do not treat it as a Calderbank offer, because a separate Calderbank offer, in similar terms, was made shortly afterwards by the Defendant.
70The next question, then, is whether any costs consequences flow from the non-acceptance of the Calderbank offer made in May 2011. In this regard, I note the recent comment made in Johnson v MNG Investments Pty Ltd t/as Australian Temporary Fencing & Ors [2011] ACTSC 150, with which I respectfully agree, that:
"15 Part of the rationale for the Calderbank principle is that, where there is a failure to accept a reasonable offer, the offeror will have incurred further expense, sometimes representing the costs and disbursements of many days of hearing, and would be only partially indemnified by an order for costs on a party-and-party basis. The offeror can be seen as having taken the only course available to it (or him or her) to avoid that exposure."
71The reasonableness of a decision not to accept a settlement offer is not to be determined with hindsight. The strength, or otherwise, of the claim should be considered prospectively as at the time of the offer: Noon v Bondi Beach Astra Retirement Village Pty Ltd (No. 2) [2010] NSWCA 285 at [11].
72I also remember that in Sherborne Estate (No 2): Vanvalen & Anor v Neaves & Anor; Gilroy v Neaves Palmer J said:
"56 A claim under the FPA is not quantifiable by the parties' legal advisers prior to judgment with anything like the prescience possible in a claim for a liquidated sum such as a contract debt, or even in a claim for unliquidated damages for personal injury or for future economic loss. There are statutory and judicial guidelines for the range of damages appropriate for various types of personal injury; expert accountants attempt to quantify damages for future economic loss by reference to historical financial information.
57 However, in a claim under the FPA the Court has to quantify what provision "ought to be made" for the applicant out of the deceased's estate "having regard to the circumstances at the time the order is made": s.7. Inevitably, that question involves a large element of subjective assessment by the Judge. Inevitably, on any particular set of facts, there would be a variety of answers given by different Judges. The decided cases offer broad parameters as to what provision "ought to be made" in certain kinds of circumstances but there is no formula and there is no yardstick on which the degrees of measurement are not etched by the Judge's own experience of life."
73A difficulty with the Calderbank offer made by the Defendant is as to its terms. It was one that was incapable of acceptance by one Plaintiff alone. To require the payment, the co-operation of both Plaintiffs was necessary.
74The Plaintiffs also submitted that there was nothing in the Calderbank offer that demonstrated how the payment of each sum would be secured, and for this reason, the Plaintiffs were not unreasonable in failing to accept the offer.
75There is nothing in the offer that stated when the Tweed Heads property was to be sold, and, hence, when the second payment would be made. In fact, there is nothing in the Calderbank offer that demonstrates, with any degree of clarity, that the Tweed Heads property was to be sold at all. Whilst one may infer that, there could have been further discussion between solicitors about the potential for breach of the term of the offer if the Defendant had, for example, rented the Tweed Heads property, or if he had, otherwise, been dilatory in placing the Tweed Heads property on the market for sale, that did not take place.
76Yet, the offer made must be unambiguous and clear. I am not satisfied that the Calderbank offer made was either.
77I commend to parties involved in proceedings in which a family provision order is sought, that every effort, particularly in a relatively small estate, as this one is, to conduct negotiations frankly and openly, to try to resolve the proceedings, and if there are issues or concerns about an offer that has been made, to raise any issues at the first convenient opportunity with the offeror's solicitors, so that any ambiguities, or other concerns, can be resolved. The Court should be able to see that the parties have considered what is being offered in a sensible, practical, and commercial way.
78For example, the Plaintiffs' solicitors could have enquired when the Tweed Heads property was to be placed on the market for sale by the Defendant and could have discussed the date when this was to be done; how the second amounts of $50,000 could be secured (e.g. by way of charge or caveat) if the Plaintiffs did, in fact, vacate possession of the Tweed Heads property; and, what would occur if the property was not able to be sold promptly (e.g. whether interest would be payable). The solicitors for the parties discussed none of these matters.
79This is stating no more than the principle that there should be clarity, disclosure and openness in modern civil litigation and the requirement for the fullest co-operation among parties and legal practitioners: The City of Sydney v Streetscape Projects (Australia) Pty Limited & Anor [2011] NSWSC 990 at [5].
80Despite this, I am satisfied that, in all the circumstances, the Plaintiffs were not unreasonable in failing to accept the offer made in the Calderbank offer. I cannot forget, in this case, that there was a degree of hostility between the parties and a distrust of the other. This may have added a further impediment to the rational consideration by them regarding the terms of any offer made.
81The likely outcome of the proceedings for a family provision order, or the range of outcomes of those proceedings was not, at the time the offer was made, so clear that it was unreasonable for the Plaintiffs to reject the offer. That becomes even clearer when one considers the manner in which the outcome was reached.
82As submitted by counsel for the Plaintiffs, the Calderbank offer did not deal with the possession proceedings, whereas the result of the proceedings is that those proceedings will now be concluded bearing in mind the way in which I have taken into account the claim for mesne profits or an occupation fee, and also the costs of those proceedings that Davies J ordered the Plaintiffs to pay. This is an important aspect since the amount of the lump sum ordered to have been paid may have been greater but for those matters.
83There is a further reason why I consider it was not unreasonable for the Plaintiffs to have not accepted the offer made. At the date of each offer, the Defendant had not set out fully and accurately the nature and value of the deceased's estate. In particular, there had not been disclosed the fact that a part of the estate had been distributed, being the Defendant's costs and disbursements which had already been paid, or which had been paid to the Plaintiff to reimburse him for amounts that he was alleged to have paid on behalf of the estate.
84I have not forgotten, in this regard, that the Defendant was the sole executor and universal legatee of the deceased's estate. Subject to any order of the Court, he was entitled to the whole estate. But, in my view, these matters should have been disclosed to the Court and to the Plaintiffs before the second day of the hearing.
85I have considered whether, under s 99 of the Succession Act , I am entitled to have regard to the fact that the Defendant made a number of attempts to resolve the proceedings and that the Plaintiffs appear to have made none (or, perhaps, one in early May 2011). Senior counsel for the Defendant says that I am able to, whereas counsel for the Plaintiffs says I am not able to.
86It is clear that whilst the amount to be provided to each of the Plaintiffs made in the offers in November 2010, prior to the commencement of the proceedings, was reasonably close to the lump sum, ultimately, to be made by way of a family provision order, none was more favourable to the Plaintiffs than the ultimate result of the proceedings. Furthermore, they seem to have been based upon the Tweed Heads property not being included as an asset of the estate.
87Accordingly, other than the fact that these offers were made around the time of the commencement of the proceedings, they do not seem to be relevant to the exercise of the discretion. There is nothing to suggest, in the letters from the Defendant's solicitors, that the Defendant was amenable to further negotiations. In fact, the last letter said that it was a "final offer".
88The more difficult question is how far the Offer of Compromise and the Calderbank offer should be considered in light of my conclusions. There is no evidence of any response to the either. Significantly, none of the matters that were raised at the hearing on costs were raised in correspondence between the parties' legal representatives.
89It seems to me that the Plaintiffs probably did not wish to accept any offer made by, or on behalf of, the Defendant, which did not equate to one third of the value of the estate. No evidence of the terms of any offer, or counter-offer, made by, or on behalf of, the Plaintiffs, was given. The evidence of Keith at the hearing demonstrated such an approach.
90In the circumstances, with some hesitation, and whilst I have some sympathy for the Defendant, I am of the opinion, that the Plaintiffs' costs, calculated on the ordinary basis, should be paid out of the deceased's estate.
91I note that the Defendant's total financial obligation to the Plaintiffs, by reason of the lump sum order is $155,000, and not $200,000 (as offered). In addition, some of the Plaintiffs' costs would have also had to be paid if the offer had been accepted. Finally, the possession proceedings have been concluded without further costs having to be incurred. In all the circumstances, I consider the overall justice of the case warrants the conclusion that I have reached.
92In relation to the costs of the notice of motion of 31 August 2011, the Plaintiff, Keith, should have enquired, by his solicitors, whether that was permissible to do so before selling any of the furniture in the Tweed Heads property. He should have realised, in the circumstances of this case, that his belief may not have been an intended one. The Defendant, even taking into account what had been said in Court, had not consented to the sale of that furniture. It was said in the context of the Plaintiffs' evidence of needing furniture for any accommodation to which they would have to go.
93On the other hand, some attempt could have been made by the legal representatives of the Defendant to ascertain what had been sold and what the proceeds of sale were likely to have been. The Defendant ought to have considered the costs of any notice of motion, with senior counsel being retained, before steps were taken to bring the matter urgently before the court. I have little doubt that the costs would have far exceeded the amount in issue.
94Furthermore, he would have had a reasonable idea of the nature and value of the items that were likely to have been sold. As is obvious from the amount of the proceeds of sale, it is unlikely that the items were of significant value.
95In my view, each party should bear their, or his, own costs of the notice of motion of 31 August 2011. In other words, the order for costs of the proceedings referred to above, should not include the costs of the notice of motion of 31 August 2011.
96In relation to the hearing of the argument about costs, I am of the view that each party should bear their, or his, own costs, despite the fact that the Defendant was unsuccessful in obtaining a special order for costs. No written submissions on costs were received from the Plaintiffs. Had they outlined the matters raised, orally, at the hearing on costs, a reasonable time before the hearing, the Defendant may not have proceeded to seek a special order as to costs. No opportunity to adopt that course was given to the Defendant.
97The parties, following the hearing, provided short minutes of orders. Even on these, agreement could not be reached. I have considered both drafts provided and it seems that the following orders are appropriate, taking into account, also, the orders to which I have referred above. I shall allow the parties a short opportunity to consider the orders that I propose, which are that:
(1) Provision for each of the Plaintiffs, in the sum of $77,500, be made for him out of the estate of the deceased.
(2) The Plaintiffs' costs, calculated on the ordinary basis, of the proceedings, other than the costs of the Defendant's Notice of Motion returnable on 31 August 2011 and the costs of the hearing to determine the costs, in respect of each of which each party is to pay their, or his own costs, shall be paid out of the estate of the deceased.
(3) The Defendant's costs calculated on the indemnity basis, of the proceedings, other than the costs of his Notice of Motion returnable on 31 August 2011 and the costs of the hearing to determine the costs, in respect of each of which each party is to pay their, or his own costs, shall be paid out of the estate of the deceased.
(4) The payment of the lump sum be made following the matters set out in (a), (b) and (c) hereunder occurring:
(a) the Defendant' solicitor is to provide a notice, in writing, ("the provision notice") to the Plaintiffs' solicitors, notifying that the lump sum is available to be paid to each Plaintiff;
(b) the Plaintiffs' solicitor, is to notify the Defendant's solicitor, in writing, within 7 days of the date on which the provision notice is given, of the date by which each Plaintiff will vacate the Tweed Heads property, which date to vacate should be no later than 14 days from the date of their notice;
(c) the Plaintiffs shall vacate the Tweed Heads property by the date stated in their solicitors' written notice to the Defendant's solicitors;
(d) the lump sum is to be paid by the Defendant to the Plaintiffs' solicitors no later than 2 working days before the date on which each Plaintiff is to vacate the Tweed Heads property, but shall not be paid by their solicitors to either Plaintiff until such time as the Defendant's solicitors confirm, in writing, that each Plaintiff has vacated the Tweed Heads property, such confirmation to be no more than 2 working days after the date that each Plaintiff vacated the Tweed Heads property;
(e) if either, or both, Plaintiffs does, or do, not vacate the Tweed Heads property within 21 days of the date on which the provision notice is given by the Defendant's solicitors to the solicitors for the Plaintiffs, that Plaintiff shall be liable to a deduction from the interim sum to which he is otherwise entitled of an amount calculated as follows:
(i) $225 per week for each week, or part thereof, during which both Plaintiffs remain in the property beyond the time provided for specified in Paragraph (b) (making a total amount of $450 per week); or
(ii) $450 per week for each week, or part thereof, during which only that Plaintiff remains in the Tweed Heads property beyond the time provided for specified in Paragraph (b).
(f) For the avoidance of doubt, the Defendant's solicitor is to advise the Plaintiffs' solicitors of the deductions that should be made pursuant to order 4(e)(i) or (ii), which deductions should be retained by the Plaintiffs' solicitors on behalf of the estate pending further order of the Court or the agreement of the parties.
(5) Leave to discontinue the possession proceedings 2010/426728 with no order as to costs is granted to the Defendant.
(6) All costs orders previously made in the possession proceedings be vacated.
(7) Further consideration as to the matters referred to in respect of Order 4 above be reserved.
(8) The Court notes that:
(a) any occupation by the Plaintiffs during the periods referred to in Paragraphs 4(a) and (b) is on the basis of no occupation fee being paid by the Plaintiffs.
(b) should either of the Plaintiffs not vacate the property within 21 days of the date provided for in 4(b) above, the Defendant shall be entitled to move on the writ of possession issued pursuant to the orders of Davies J of 9 June 2011 on the basis that any costs incurred by the Defendant in moving on that writ will not be affected, or covered by, order 5 above.