On 19 December 2014 I delivered reasons for judgment in these proceedings. I dismissed the plaintiff, Mr Theo Vanderloo's, claim for relief against the defendants under s 59 of the Succession Act 2006 (NSW) (the Act) in respect of the estate of the late Helen Vanderloo, who was the wife of Mr Vanderloo, and the mother of the two defendants, who were her executors. I also declined to give Mr Vanderloo leave to make his claim late under s 58(2) of the Act.
I made an order that Mr Vanderloo was to bear his own costs of the proceedings; I invited the parties to make submissions as to what, if any, order should be made against Mr Vanderloo in respect of the executors' costs; and subject of that order, I ordered that the defendants' costs of the proceedings were to be paid out of the estate on the indemnity basis.
The parties have delivered written submissions as to the order that should be made against Mr Vanderloo in respect of the executors' costs, and in these reasons for judgment I will deal with that issue.
Mr Vanderloo submits that he should not be ordered to pay the executors' costs in whole, and in the alternative that he should only have to bear part of the costs of the executors due to their conduct of the proceedings.
The executors submit that Mr Vanderloo should be ordered to pay the executors' costs on the ordinary basis up to 4 August 2013, and on the indemnity basis from 5 August 2013, which was the date on which the executors served on Mr Vanderloo a Calderbank offer.
Mrs Vanderloo at the time of her death was entitled to a superannuation fund worth some $96,765. Apparently, the trustee of the fund had a discretion under its rules as to whom the amount, to which the deceased was entitled, should be distributed. The trustee decided to pay half of that amount to Mr Vanderloo and to distribute the other half in equal shares to the executors. The executors disputed this decision, and apparently lodged an appeal by some mechanism allowed by the constitution of the superannuation fund. It is necessary to understand these circumstances as they are relevant to the terms of the Calderbank offer made by the executors.
It is also necessary to have regard to the fact that, under her will, Mrs Vanderloo left half of the value of her residential property to Mr Vanderloo, and the other half to her sons, the executors, in equal shares. Save for a number of small legacies, Mrs Vanderloo left the balance of her estate to the executors. The residential property was sold by the executors and completion took place on 24 April 2013. The net sale proceeds were $710,373.71, of which Mr Vanderloo was entitled to $355,186.85.
As I noted in par 98 of my primary reasons for judgment, Mr Vanderloo filed his summons seeking a family provision order out of time after his then solicitor had received an email from Mr David Milne, one of the executors, on 5 June 2013, by which the executors indicated that they would not distribute any part of the estate to which Mr Vanderloo was entitled unless he removed his claim on the superannuation fund. I found that the making of this inappropriate threat by the executors was a significant factor in inducing Mr Vanderloo to make his application for a family provision order out of time.
Relevantly, the executors' Calderbank offer dated 5 August 2013 was an offer to settle the proceedings on the basis that the executors would pay to Mr Vanderloo his half share in the net proceeds of sale of the residential property; the executors would withdraw their current appeal against the decision of the trustee of the superannuation fund, so that Mr Vanderloo would receive half of that fund; and the executors would pay Mr Vanderloo an additional sum of $5000 as a contribution to his legal fees.
Mr Vanderloo did not respond to this offer.
The executors did not paid to Mr Vanderloo any part of his half share in the residential property until 24 September 2013, when they paid to him $255,186.85. The executors retained an amount of $100,000 as a fund to cover the legal costs of the estate arising out of Mr Vanderloo's proceedings.
I do not accept that the executors' 5 August 2013 letter was an effective Calderbank offer. In saying that I should record that I do not think it was reasonable for Mr Vanderloo simply to ignore the letter. He should have responded to it, even if only to explain why he declined to accept it.
My principal reason for declining to accept that the letter was an effective Calderbank offer is the inclusion of the term that the executors would withdraw their current appeal against the decision of the trustee in relation to the disposition of the superannuation fund. The circumstances in which the trustee made its decision were not explored in the evidence. I must proceed upon the basis that the trustee was entitled to make the decision that it did. There is no basis for any suggestion that the executors had any grounds to appeal the trustee's decision, or any prospects of success. In fact, the evidence does not disclose what happened in relation to the appeal, save that, at the end of the day, Mr Vanderloo received half of the amount in the superannuation fund. The executors have therefore included in their offer to settle Mr Vanderloo's claim in these proceedings a term that involved the compromise of another claim in respect of which the Court has no basis for assessing whether the term offered involved any compromise at all by the executors.
Additionally, Mr Vanderloo claimed in his summons an order under s 84 of the Probate and Administration Act 1898 (NSW) that the executors make a distribution to the plaintiff under Mrs Vanderloo's will in the sum of $350,000, or such other amount as the Court deemed just. Mr Vanderloo therefore, in part, instituted these proceedings in order to force the executors to do what they were obliged to do under the will. The executors had refused to do that in order to secure the collateral, and inappropriate, advantage of obtaining Mr Vanderloo's agreement to abandon his claim in relation to the superannuation fund. Mr Vanderloo did not pursue this claim, after the executors paid him the sum of $255,186.85 on 24 September 2013. It is reasonable to regard Mr Vanderloo as having been partly successful in relation to the proceedings that he commenced, at least to that extent.
I do not, in the circumstances, regard the terms of the Calderbank offer as offering a significant compromise of the executors' entitlements as beneficiaries under their mother's will to make it effective. It is true that Mr Vanderloo has done no better than what was offered to him by the letter, and he is worse off to the extent that he will be obliged to pay his own costs, and, as will be seen, some of the costs of the executors. At that early stage of the proceedings, however, the executors did not offer to Mr Vanderloo any increase in the provision made to him under Mrs Vanderloo's will. That is significant because, at that time, Mr Vanderloo did not have evidence as to the financial circumstances of the executors. In his submissions Mr Vanderloo has complained about the tardiness in which the executors provided detailed evidence concerning their financial circumstances. It is true that the executors provided more details financial information over time, but I do not accept that they were remiss in the way they provided that evidence. It is also true that Mr David Milne perhaps ought to have disclosed earlier that his mother's estate was liable to pay a debt of $50,000 to the Commonwealth Bank of Australia. That fact was only disclosed late in the proceedings following a formal demand made by the Bank. I do not think Mr David Milne is to be criticised, but it is a fact that the estate appeared larger at the time the Calderbank offer was delivered than was really the case.
It is not necessary to recount the facts in detail, but there is some truth in the submission made by Mr Vanderloo that, quite apart from the refusal of the executors to pay him any part of his share of the proceeds of sale of the residential property, his circumstances at the time that he commenced the proceedings (particularly his prospects of gaining employment) gave him a greater apparent chance of success in obtaining a family provision order, then appeared at the time of the hearing, after the executors had given extensive evidence of their own circumstances, the reduction of the value of the estate by the $50,000 referred to above had been revealed, and Mr Vanderloo's own circumstances had improved (particularly as a result of his returning to Europe and gaining employment).
In all of these circumstances it would not be appropriate for the Court to accede to the executors' submission and ordered Mr Vanderloo to pay any part of their costs on the indemnity basis.
This is a case, upon which the Court should act upon the prima facie principle referred to by Barrett JA in Chapple v Wilcox [2014] NSWCA 392 at [139] that where an application for a family provision order is dismissed the unsuccessful plaintiff should pay the executors' costs. I acknowledge that there is a discretion to depart from this prima facie principle for good reason, even to the extent of ordering that the unsuccessful plaintiff's costs be paid out of the estate, but this is not an appropriate case for that departure to be made. While I accept that Mr Vanderloo's prospects of success probably diminished throughout the hearing as events unfolded, I have already expressed the view in the principal judgment that Mr Vanderloo did not have strong prospects at the beginning. He should have reviewed his position in response to the developments that occurred.
However, I have concluded that the appropriate order is that Mr Vanderloo should pay the executors' costs on the ordinary basis, but only from 24 September 2013 when they paid to him $255,186.85 of his share of the net proceeds of sale of the residential property. It is fair to conclude that Mr Vanderloo was successful in his proceedings up to that point.
In addition to the orders that I made on 19 December 2014, I therefore order the plaintiff to pay the defendants' costs on the ordinary basis from 24 September 2013.
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Decision last updated: 13 May 2015