Wilcox v Chapple

Supreme Court of NSW|2024-12-20|Before: Ward P

020] NSWSC 235 Truenergy Pty Ltd v Dispute Resolution Panel (No 2) [2009] VSC 612 Wilcox v Chapple [2024] NSWSC 1394 Wilcox v Wilcox (No 1) [2012] NSWSC 1138 Texts Cited: Dal Pont, Law of Costs (4th ed, LexisNexis, 2021) Category: Costs Parties: Robert William Wilcox (Plaintiff) John Francis Chapple (First Defendant) Lorraine Monique Wye (Second Defendant) Sanderson Estates Pty Ltd (Receivers & Managers Appointed) (Third Defendant) Benjamin Ian Alexander Wilcox (Fourth Defendant) Representation: Counsel: D Wilson (Plaintiff) (Solicitor) P Afshar (First Defendant) TE O'Brien (Second Defendant) B Koch (Third Defendant)

Solicitors: Wilsons Solicitors (Plaintiff) Newnhams (First Defendant) Bridges Lawyers (Second Defendant) Peterson Haines (Third Defendant) File Number(s): 2021/59314; 2023/168649 Publication restriction: Nil

Bases for the indemnity costs applications

There is some overlap as to the bases on which the respective indemnity costs applications are brought.
Both Monique and Mr Chapple seek indemnity costs on the basis of what they contend was the unreasonableness of Robert's conduct in this litigation (in that he unsuccessfully sought to relitigate claims that were the subject of a release contained in the Settlement Deed entered into in relation to proceedings brought against Patricia's estate and which had been litigated in earlier judgments - the 2010 Proceeding heard by Pembroke J and the appeal therefrom). Mr Chapple argues as a separate basis that there should be indemnity costs having regard to the bringing by Robert of unsuccessful fraud claims.
Similarly, Ben's application is brought on the ground that the proceedings were unreasonably brought against him (but in his case he bases this on matters relating to his family relationship with Robert, whom he accuses of always having been a bully and of having pressured him in relation to the proceedings; his view as to the construction of the Duffy Letter which precipitated the express trust claims by Robert; and his complaint that Robert has sought to claim half of Ben's entitlement from their mother (Patricia)'s estate).
Monique's also argues for indemnity costs based on the asserted unreasonableness of Robert's failure to accept two Calderbank offers served during the course of the respective proceedings (relying on the principles in Calderbank v Calderbank [1975] 3 All ER 333).
I deal with the various bases on which the indemnity costs orders are sought as follows.

Unreasonable re-litigation of claims

Both Monique and Mr Chapple submit that the conduct by Robert of the Equity Proceeding was unreasonable (amounting to "relevant delinquency" in the requisite sense; i.e., delinquency bearing a relevant relation to the conduct of the case). In this regard, they point to the findings by me to the effect that Robert was seeking to relitigate issues which had already been released (see my first judgment at [578]) or which had already been determined in Wilcox v Wilcox (No 1) [2012] NSWSC 1138 (Wilcox v Wilcox (No 1)) and so were barred by either issue estoppel or Anshun estoppel (first judgment at [621]; [630]). It is noted that I concluded in my first judgment that the defendants had been "vexed" by proceedings in which beneficial ownership of the very same assets was again in dispute and "simply argued on a different basis" (first judgment at [632]).
Indeed, Mr Chapple points out that Robert received substantial amounts of money in consideration for ending the litigation in relation to Patricia's estate (referring to the Settlement Deed) yet sought to pursue the same claims again. Mr Chapple emphasises that allegations of fraud (found to be baseless) (see first judgment at [566]) were made in support of Robert's attempt to negate the effect of the releases to which he had previously agreed.
Ben's complaint, which seems to me to be a complaint as to the unreasonableness of the bringing of the litigation in the first place (rather than the conduct of the litigation as such), includes a complaint that Robert (and his former solicitor, Mr Emanuel Oliveri) "forced" the Equity Proceeding on him and that he was pressured into becoming a submitting defendant. Ben complains that Robert sought from him half of everything and the cost of the Equity Proceeding if the claim was not successful. Ben emphasises the stress and anxiety that the litigation has caused him, including his bankruptcy and the ultimate failure of his own proceedings in the Supreme Court "including a loss of millions of dollars and approximately five years of my life wasted for nothing". Ben also complains that Robert is the bully of the family (and he states his regret that he gave Robert the Duffy Letter).

Robert's response

Robert denies that there was "relevant delinquency" on his part, pointing to the discovery of the Duffy Letter "outlining a family trust arrangement giving rise to the 2021 trust proceedings" and the much later discovery of the 1962 Trust Deed in the week before the hearing. Robert says that the type of trust arising from the Duffy Letter and the 1962 Trust Deed was an express trust - i.e., unlike any trust raised in the earlier Wilcox v Wilcox (No 1) proceedings. Robert argues that, even though the very same assets were the subject of both Wilcox v Wilcox (No 1) and the current litigation, the respective trusts were dissimilar. Robert thus maintains that there was no unreasonable re-litigation of issues.

Determination on this issue

At the outset I note that the reliance by Robert on the discovery of the 1962 Trust Deed as relevant to the reasonableness of his conduct of the Equity Proceeding is misconceived. The issue is as to the reasonableness of his conduct of the proceeding from its inception. Robert was not aware of the 1962 Trust Deed at the time he commenced the proceedings; nor, indeed, for the bulk of the time that he pursued his claims in the Equity Proceeding. Therefore it cannot be suggested that this document rendered reasonable his decision to relitigate matters already the subject of a binding release or which he was precluded by issue estoppel or Anshun estoppel from litigating.
Where a party claims indemnity costs on the basis of unreasonable conduct of proceedings, the language of delinquency is often used, i.e., there must be a level of "delinquency in the conduct of the proceedings" to justify a departure from the usual order as to costs (see Harrison v Schipp [2001] NSWCA 13, at [136] (per Giles JA, Handley and Fitzgerald JJA agreeing)). Such delinquency may arise where "the applicant, properly advised, should have known that he had no chance of success" (see Fountainhead Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, at 401 (Woodward J) (Fountainhead Selected Meats)), or where the party "persists in what should on proper consideration be seen to be a hopeless case" (J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) (1993) 46 IR 301, at 303 (French J (as his Honour then was))). These instances of delinquency (together with the making of allegations of fraud which I consider in relation to the second basis on which Mr Chapple seeks indemnity costs) illustrate the kind of circumstances in which an indemnity costs order is warranted in the exercise of the costs discretion.
Thus, relevant delinquency is not moral or ethical delinquency. It is satisfied in the present case by the fact that Robert was raising the same issues or claims (albeit on a different basis) as those which he had either already released or which had already been determined against him. The defendants had raised those matters in their defences at an early stage, yet Robert continued to pursue his claims. The whole process of the litigation evinces an unwillingness on Robert's part to accept the adverse determination of those issues. This is highlighted by the present submission (which I rejected in the first judgment) that his trust claim was a different type of trust claim from that determined in the earlier proceedings. Nor does the discovery of the Duffy Letter assist Robert in circumstances where the claims he made (as to the conversations in relation to a trust) were as to matters of which he was aware before the discovery of the Duffy Letter.
Had the question rested solely on the matters giving rise to the estoppels, I might have reached a different view but when those matters are coupled with the fact that the present claims had already been the subject of the release in the Settlement Deed (for which Robert had received a substantial sum which, until the hearing in this Court, he was not volunteering to repay) (and the making of serious fraud allegations in an attempt to set aside the Deed of Settlement and earlier judgments), I have concluded that indemnity costs orders in favour of both Monique and Mr Chapple in relation to the Equity Proceeding are warranted.
The position of Ben is somewhat different, in that (as I have indicated above) his real complaint seems to have been as to the bringing of the proceedings in the first place (and he was not a party to the Settlement Deed). Moreover costs orders are compensatory in nature (see Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59) and do not provide redress for stress and anxiety for example. Further, while Ben did file an appearance in the Equity Proceeding, no leave was sought to pursue him in bankruptcy. Ben thus played no active part in the proceedings (apart from brief oral submissions given by him at the conclusion of the hearing), at least from the time of his bankruptcy, which no doubt limits the costs he would have incurred in the litigation.
In those circumstances, the appropriate costs order is simply that Robert pay Ben's costs of the Equity Proceeding (on the basis that costs follow the event) and it will be a matter for Ben to establish what those costs were if he seeks to enforce the costs order against Robert.

Unreasonable litigation of allegations of fraud

The second basis on which Mr Chapple contends for an indemnity costs order has, in effect, been dealt with above. Mr Chapple submits (as is the case) that the making of allegations of fraud in circumstances where it is known or ought to have been known that such allegations have no proper basis may be a ground for the making of an indemnity costs order (see Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 230, 233; [1993] FCA 801 per Sheppard J (Colgate-Palmolive)). Mr Chapple says that this is an instance of a "relevant delinquency" (in the words of Gaudron and Gummow JJ in Oshlack v Richmond River Council (1998) 193 CLR 72 at 89; [1998] HCA 11). Mr Chapple also notes that such delinquency may be found in cases where proceedings are commenced or maintained in wilful disregard of known facts or clearly established law (citing Colgate-Palmolive at 233).
In this regard, Mr Chapple points out that Robert claimed that non-disclosure by Patricia and Mr Chapple (the executor of Patricia's estate) amounted to a lack of good faith and/or fraud for the purposes of r 36.15 of the Uniform Civil Procedure Rules 2005 (NSW) (when seeking to set aside the earlier judgments or the Settlement Deed). Mr Chapple refers to my finding that what is required to make good a case to set aside a judgment for fraud pursuant to r 36.15 is actual fraud ([682]), not equitable fraud (as Robert asserted). Mr Chapple points out that, contrary to his pleaded case, at the hearing Robert repeatedly and expressly disavowed any allegation of actual fraud (see [683]); and that Robert did not lead any evidence of fraud in chief (or reply) and declined (when given the opportunity to do so) to cross-examine him ([426]).
Mr Chapple submits that the above matters support the submission that there was no proper basis for the allegation of fraud and the inference that Robert knew or ought to have known that he had no proper basis to make or maintain, and no evidence to sustain, the allegations of fraud. Mr Chapple argues that without the fraud claims Robert would have not had any viable path to the relief he sought; and hence the Equity Proceeding, and the costs thereof, would have been entirely avoided had Robert not pursued fraud allegations that he knew or ought to have known had no proper legal or evidentiary bases. Mr Chapple submits that Robert's pursuit of the Equity Proceeding was thus also in wilful disregard of those matters.
Robert maintains his submission that the allegation was not one of fraud as such but rather was one of equitable wrongdoing attaching to the actions of the trustee of the "Sanderson Family Trust" under the 1962 Trust Deed and those executors subsequently dealing with the property of the "Sanderson Family Trust".
Pausing here, the pleaded claim in the Equity Proceeding cannot be so described (and it is relevant to note that the 1962 Trust Deed was not even discovered until the week before the hearing). Even reading the pleadings as they stood before the discovery of that 1962 Trust Deed, allegations of fraud were raised (even if not expressly identified as such). This was the basis, for example, on which the Settlement Deed was sought to be set aside.
Robert accepts that there was no factual basis or evidentiary basis to allege "criminal fraud or intentional deception" but says that, when bringing proceedings and arguing his case, there was a proper foundation for the allegation of fraud being brought (being one based on equitable wrongdoing).
Insofar as Mr Chapple relies on the fact that Robert's solicitor declined to cross-examine him when given the opportunity to do so, Robert points out that his solicitor sought to reopen his case to adduce fresh evidence and to cross examine Mr Chapple during the course of the hearing but that was not permitted.

Determination as to the making of fraud allegations

As I explained in the first judgment, the allegations of fraud properly understood must have been of actual fraud (since otherwise they would not have sufficed for the purpose of setting aside the Settlement Deed and the earlier judgments). The fact that Robert (and his most recent solicitor) may not have understood that does not change the fact that fraud allegations were made that had no evidentiary foundation (and hence should have been understood to have been baseless).
One "special or unusual feature" which may justify the exercise of this discretion is the making of an allegation of fraud which is subsequently not sustained (see, for example, Fountainhead Selected Meats, at 400-401). However, the mere making of an allegation of fraud, later ruled to be without merit, is not in and of itself a basis to award indemnity costs - something more is required (Hylepin Pty Ltd v Doshay Pty Ltd (No 2) [2020] FCA 1631, at [16] (O'Bryan J) (Hylepin); see also Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport Insurance Pty Ltd (1986) 71 ALR 287, at 288 (Woodward J)).
The making of such allegations may rise to the level of "something more" where the allegations of fraud "ought never to have been made" (i.e., where they lack any evidentiary foundation), or where the case is "unduly prolonged by groundless contentions" (see Ragata Developments Pty Ltd v Westpac Banking Corporation (1993) 217 ALR 175; [1993] FCA 115, at [15]-[17] (per Davies J)). So much was noted also by Dal Pont in Law of Costs (4th ed, LexisNexis, 2021), where it was said (at [16.66]) (cited with approval in Hylepin, at [25]): Special costs orders have been ordered in cases where a litigant makes and persists with allegations of fraud, or other allegations of improper conduct seriously prejudicial to the character or reputation of a party, which ultimately prove unfounded. This is almost an invariable outcome where the litigant knew or should have known that the allegations were false or unsupportable. It reflects the notion that a person should not allege fraud or other improper conduct without a proper evidentiary foundation, as such an allegation may be recounted in the community and through the media, and harm a litigant's reputation before evidence has been offered and submitted to the scrutiny of cross-examination or rebuttal. The court aims to deter unsupported allegations of this kind by, inter alia, costs orders, whether special orders against a litigant or a costs order against his or her lawyer.
The reason for such an approach to costs in circumstances where fraud is alleged, and disproved, was recently stated by Judge Davis-White KC in Goodwin v Avison [2021] EWHC 2356, at [21] (quoting David Richards J in Clutterbuck v HSBC plc [2015] EWHC 3233): Cases which allege fraud and which are lost or withdrawn will usually result not just in an adverse order for costs but an order for costs on the indemnity basis: The general provision in relation to cases in which allegations of fraud are made is that, if they proceed to trial and if the case fails, then in the ordinary course of events the claimants will be ordered to pay costs on an indemnity basis. Of course the court retains a complete discretion in the matter and there may well be factors which indicate that notwithstanding the failure of the claim in fraud indemnity costs are not appropriate, but the general approach of the court is to adopt the course that I have indicated. The underlying rationale of that approach is that the seriousness of allegations of fraud are such that where they fail they should be marked with an order for indemnity costs because, in effect, the defendant has no choice but to come to court to defend his position.
Thus, while the mere making of an allegation of fraud (later found to be unsustained) is not sufficient, without more, to justify a departure from the usual order as to costs, if the making of such an allegation is attended by some degree of delinquency (whether by reason of its falsity or lack of evidentiary foundation or the like), then a special costs order may be justified.
In the present case, Robert relied on allegations of fraud against Patricia (identified as the non-disclosure by her of the Duffy Letter and the matters pleaded at [20C] of the pleading) for his claim to set aside the judgments in the 2010 Proceeding before Pembroke J and appeal therefrom (see at [25]). He similarly relied on this when arguing that the Settlement Deed should be set aside. At [25] of his pleading, Robert expressly made the allegation of fraud and lack of good faith against the executor, Mr Chapple (an officer of the Court), based on the alleged non-disclosure.
In submissions, it was submitted for Robert that each of Trevor and Monique (whom he says was aware of the "trust"), failed to exercise his or her powers in good faith for the end designed of the alleged trust, and that this amounted to fraud (see [20]-[27] of Robert's closing submissions). This was again emphasised in oral closing submissions (see at 29/08/24; T 333). (The difficulty of identifying precisely which of the varying alleged trusts each is said to have been aware of is not clearly articulated but, in any event, there was no evidence that either Trevor or Monique knew at an earlier time of the claimed trust other than through the assertions made by Robert in the proceedings and the documents relied upon by Robert in the proceedings.)
Robert submitted that both Trevor and Monique fell short of their fiduciary duties to keep safe the 1962 Trust Deed (which I interpose to note was only discovered a mere days before the hearing), and that this amounted to recklessness and a failure to discharge the fiduciary duties of a trustee to the trust and its objects. Robert submitted that "this type of equitable fraud" is sufficient for the purposes of s 96(2) of the Succession Act 2006 (NSW) to "destabilise" the Deed of Settlement ([15] of Robert's closing submissions).
While I accept that there is a distinction between an allegation amounting to one of actual fraud (as Robert's allegation against Patricia must be understood to have been in order for it to be relied upon by Robert to set aside the judgments or the Settlement Deed) and an allegation of equitable fraud (as the alleged breach of fiduciary duties was said to be), the expansion of allegations of this kind against anyone who became a successor trustee or executor over the years shows the willingness of Robert to make serious allegations against all and sundry (with apparently insufficient regard to the nature of what was alleged and the evidence required to substantiate the allegations).
There was no evidentiary foundation for the allegations of fraud, as I explained in my first judgment. In this regard, I do not place weight on the fact that Mr Chapple's affidavit evidence was not challenged in cross-examination (as Mr Chapple has raised in his submissions) since Robert did make application (albeit after the evidence had closed and when closing oral submissions were listed to commence) to recall Mr Chapple and cross-examine him (which I refused for the reasons set out in my first judgment). However, the fact remains that the allegations of fraud by reason of non-disclosure of either the Duffy Letter or the matters pleaded at [20C] were not sustained on the evidence.
I regard the making of unsustained allegations of fraud (and in my view allegations that were unsustainable on the evidence) as a very serious matter, particularly when those allegations are made against an officer of the Court (Mr Chapple) whose reputation and integrity as a solicitor is thereby impugned. While it is not necessary, in light of my conclusion above, to rely on this as a standalone basis for the indemnity costs orders I propose to make in favour of Mr Chapple in the Equity Proceeding, had it been necessary to determine I would have concluded that the conduct of Robert in not just making but then pursuing (in the face of a dearth of evidence to support them) the fraud allegations against Mr Chapple (particularly in the light of the matters referred to above as to the conduct of the proceedings in the face of the releases and the fact that they had already been the subject of determination) did warrant an indemnity costs order in Mr Chapple's favour,

Calderbank Offers

The second basis on which Monique seeks a special costs order relies on the making of two Calderbank offers, which Robert did not accept. Monique submits (in the alternative to seeking indemnity costs for the whole of the costs of the Equity Proceeding) that her costs of both proceedings should be paid on an indemnity basis from the date of one or other of those offers (28 November 2023 or alternatively 7 June 2024). Given the conclusion that I have reached as to the unreasonable conduct of the Equity Proceeding, it is only necessary to consider this basis by reference to the Family Provision Proceeding.
The first of the Calderbank offers relied upon by Monique was made by letter dated 28 November 2023, at a time when Robert was represented by a solicitor (Mr Kable) and the proceedings had been set down for a six day hearing (First Offer). The offer included payment of the sum of $20,000, inclusive of costs, to Robert, with both proceedings to be dismissed. The offer included a term that the estate's costs be paid out of the estate on the indemnity basis and that Robert give a release in favour of Monique and the estate. The First Offer was expressed to be open until 8 January 2024. The letter noted that, if no order for further provision was made for Robert, then he would not receive any payment from Trevor's estate and that, if the claim was dismissed the likely order was that Robert would be ordered to pay his own costs and might be ordered to pay Monique's legal costs. The letter estimated that the estate's additional legal fees, up to and including a six day hearing, would exceed $250,000, not including additional disbursements such as transcript fees.
The second Calderbank offer was made by letter dated 7 June 2024 (Second Offer). At that stage, the hearing of the proceedings was about two months away. Mr Kable was still the solicitor on the record for Robert (although in the hearing before me it was said that he had ceased to provide legal services to Robert in May 2024). The Second Offer was in the same terms but increased the amount to be paid to Robert the sum of $170,000. Again, the letter drew attention to the position for Robert if the family provision claim were to fail. It also referred to the equity claim and stated the opinion that there was a real risk that the claim would fail, noting that in that event Robert would receive none of the properties the subject of his claim and would likely be ordered to pay the costs of all the defendants, including Monique. The letter noted that the estimated additional fees including Counsel fees up to and including a six day hearing from the date of the letter were $200,000, not including additional disbursements such as transcript fees. The Second Offer was expressed to be open until 5 July 2024.
Monique submits that the offers were genuine, pointing out that each involved a payment of money to Robert (i.e., it was not merely a "walk away" offer) in addition to providing for Monique's costs to be borne by the estate rather than Robert. Monique says that the amounts of money offered to be paid to Robert were not so small as to be illusory.
Monique also notes that the Second Offer far exceeded the amount of the provision which I indicated would have been made had Robert's family provision claim been successful (that being around $50,000; see first judgment at [753]) and that the First Offer represented a substantial proportion of that amount (40%). Further, it is noted that both offers involved Monique bearing her own costs from the estate, whereas she has now been awarded her costs.
Monique argues that Robert's failure to accept the offers was unreasonable, in circumstances where most of the weaknesses in his claims were obvious. Monique notes that Robert's claims in the Equity Proceeding failed because: (i) they had been released; (ii) alternatively, he was estopped from bringing them as a result of the earlier judgment which he could not set aside for fraud; and (iii) alternatively, the trust claims failed on their merits; and that each of those matters was squarely raised in her defence. As to the failure of Robert's claim in the Family Provision Proceeding (because he was not an eligible person (having not been dependent upon Mr Harland) and there were no factors warranting), Monique says that these are matters which are, or ought to have been, known to Robert (since all the evidence in the proceedings had been filed and a hearing date allocated at the time of the offers).
In his submissions, Robert says that both Calderbank offers were "unattractive" to him as he had expended moneys on his own legal costs in excess of the amounts expressed to be offered.
As to the First Offer (of $20,000), Robert says that this was not, by reason of its most modest quantum, a reasonable compromise on Monique's part, bearing in mind the nature and extent of the property that he claimed was in the many millions of dollars. (Pausing here, the relevant question, when determining whether the Calderbank principles are enlivened, is whether the offer involves a genuine element of compromise.)
As to the Second Offer, Robert says that this was made when he was without legal representation (and that this was the case during its 28-day acceptance period). Robert says that, without legal representation at the time the Second Offer was made, he lacked "any proper or clear understanding" of the nature and effect of the $170,000.00 all-inclusive Second Offer.
Finally, Robert argues that he acted reasonably in respect of the litigation regarding his claims, including his claim arising from the express trust (which he points out, as he did at the hearing, was a very different type of trust to the non-express trusts considered in the earlier 2010 litigation).
It is also submitted that the more recent history of Robert's legal representation (which is outlined in my first judgment) is a matter that is relevant to the exercise of discretion as to the indemnity costs application. In particular, Robert notes that Mr Kable prepared a Notice of Intention of Ceasing to Act on 13 May 2024, which was not filed until 13 June 2024, and that on 21 June 2024 that Mr Kable filed and served his Notice of Ceasing to Act. Robert says that he was without any legal representation until the week before the hearing (which was a month after the expiry of the Second Offer on 5 July 2024). Robert says that during the acceptance period attaching to the Second Offer he was a litigant in person without legal representation to provide any advice to him regarding the Second Offer; and he maintains that he was not able to give proper consideration to the Second Offer or assess the strengths, weaknesses, risks and probable outcomes of the proceedings.
Further, Robert refers to the discovery of the 1962 Trust Deed in the week leading up to the hearing. Robert argues that this supports his position that at the time both offers were made he did not have everything necessary to consider those offers and assess their reasonableness (including having the assistance of effective legal representation during the relevant period attaching to the Second Offer).
In reply submissions, insofar as Robert seeks to resist an indemnity costs order on the basis of the Second Offer because he was unrepresented at the time of that offer so could not obtain advice nor understand the offer, Monique points out that at the time the Second Offer was made Robert was still represented by Mr Kable (who did not cease acting until 21 June 2024). Further, it is noted that there is no evidence to suggest that Robert did not seek advice concerning the offer, nor that he did not understand it.
Insofar as Robert asserts that, at the time of both the Calderbank offers Robert "did not have everything necessary to consider those offers" because the 1962 Trust Deed had not been voluntarily disclosed, Monique says that a party does not need every document relevant to a case in order to determine whether or not to accept an offer to settle. Monique argues that the 1962 Trust Deed mattered little because, as was ultimately found, there was no evidence that any of the properties the subject of Robert's claims had been placed into the trust established by that deed (referring to my first judgment at [660]).

Determination

It is not disputed that a discretion to order costs on an indemnity basis is enlivened where a Calderbank offer has been made (embodying a genuine element of compromise), and a final judgment has been delivered which is no more favourable than the offer and the failure to accept the offer was unreasonable. The onus lies on the party relying on the non-acceptance of the Calderbank offer to satisfy the Court that it was unreasonable for the unsuccessful party not to accept it. Even then, there remains a discretion whether to order indemnity costs. There is no prima facie entitlement to such costs even when the Calderbank principles have been enlivened.
The underlying principle in the making of any costs order is that of fairness (see Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121] per Hodgson JA, with whom Mason P Beazley JA, as Her Excellency then was, agreed (Gretton)). As to the rationale underlying the making of special indemnity costs orders, in Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344, at [6]-[7] (Miwa), Basten JA made reference to Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721, where (at 724) the objects of settlement offers were identified as threefold: 1. To encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants which amount to a realistic assessment of the plaintiff's real claim which can be placed before its opponent without risk that its 'bottom line' will be revealed to the court; 2. To save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary, having regard to an earlier (and, as found, reasonable) offer of compromise made by a plaintiff to a defendant; and 3. To indemnify the plaintiff who has made the offer of compromise, later found to have been reasonable, against the costs thereafter incurred. This is deemed appropriate because, from the time of the rejection or deemed rejection of the compromise offer, notionally the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise. In such circumstances, that party should ordinarily bear the costs of litigation.
In Rinehart v Rinehart (No 2) [2020] NSWSC 235, I noted the public policy considerations in relation to the making of Calderbank offers by reference to what was said in Gretton (see at [141]).
As noted above there is no prima facie right to such an order (see Chief Commissioner of State Revenue v Platinum Investments Management Ltd (No 2) [2011] NSWCA 197 at [9]). Rather, in order to warrant the making of a special (indemnity) costs order, it is clear that the offer must "constitute a genuine offer of compromise, which it was unreasonable for the [unsuccessful party] not to accept" (Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [4] per Handley, Basten and Beazley JJA; see also Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) (2006) 67 NSWLR 706; [2006] NSWCA 120 at [8] per Basten JA, with whom Santow JA and Young CJ in Eq agreed; Leichhardt Municipal Council v Green [2004] NSWCA 341 at [23] (Leichhardt Municipal Council) per Santow JA, with whom Bryson JA and Stein AJA agreed).
Where the offer is a Calderbank offer, the onus to demonstrate that it was unreasonable to reject it is on the party seeking to rely on the making of the offer (see Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26]).
The factors to which a Court will have regard when considering whether the rejection or non-acceptance of the offer was unreasonable include: the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree's prospects of success assessed as at the date of the offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it (see Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398 at [8]; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 at [25]; Miwa at [12]).
As adverted to above, for a Calderbank offer to be taken into account, it must be a genuine offer of compromise and not merely constitute, in effect, a demand to capitulate (see Truenergy Pty Ltd v Dispute Resolution Panel (No 2) [2009] VSC 612 at [14] per Cavanough J, quoting Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65 at [17]) or a trigger for costs sanctions (see Leichhardt Municipal Council at [36], [39]).
In the present case, both Calderbank contained a genuine element of compromise, albeit that the monetary sum offered was low in the case of the First Offer. The fact that Robert considered the offers "unattractive" because they did not exceed the costs he had expended in the proceedings to date is not to the point. What is required when a Calderbank offer (or offer of compromise for that matter) is proffered is an objective assessment by the recipient of the prospects of the litigation as at the time of receipt of the offer (as is made clear by the authorities to which I have referred above). That Robert sought many millions of dollars' worth of property in the Equity Proceeding and may have expended a considerable sum in costs in pursuing that claim, does not speak to the prospects of success of the claims he had brought.
As to the time at which the offers were made, the First Offer was made at a time when the Equity Proceeding had been on foot for some time (and one would assume that the succession of solicitors and counsel who had been involved in that proceeding would have advised as to its prospects from time to time) and when the Family Provision Proceeding was at a stage where Robert must have been aware of the evidence against him in relation to the dispute as to his eligibility to make the claim and whether there were factors warranting such a claim. Since both offers were made after the proceedings had been listed for hearing, I would assume that there had already been a mediation of the dispute in accordance with the usual practice for listing matters in the Family Provision list for hearing, at which Robert would presumably have been made aware of Monique's position in relation to the Family Provision Proceeding (and in all likelihood this would have encompassed consideration of the Equity Proceeding).
While the monetary amount of the First Offer was low, it was not in my opinion derisory and it would have avoided the risk of Robert having to bear any of Monique or the estate's costs if (as turned out to be the case) he was unsuccessful in the litigation. As to the Second Offer, the monetary component well exceeded the provision that I would have made for Robert had there been factors warranting his claim.
Thus, for both of the offers, what was required was an objective assessment of the prospects of the Equity Proceeding (since only if that succeeded was it likely that Robert would have recovered a substantial sum). I consider that an objective assessment of Robert's prospects should have taken into account the real difficulty posed by the Settlement Deed he had earlier entered into; and the estoppel defences that had been squarely raised; as well as the evidentiary problems in establishing the trust claims in any event (not to mention the fraud claims).
As to the Second Offer, I cannot accept that Robert was not in a position to understand the import of that offer (and he was certainly in a position to seek advice from his then solicitor if he had any doubts as to that offer). Mr Kable was still the solicitor on the record at that time and the letter making the offer was sent to him. There is nothing to suggest that he did not act in accordance with his duty as a solicitor to convey that offer to Robert (and indeed Robert does not say that he was not aware of the offer). In my opinion had Robert felt he needed advice as to the Second Offer, Mr Kable would have had professional and ethical duties to provide that advice. Presumably, Robert's various legal representatives over the course of the respective proceedings would have given him advice as to the prospects of his claim.
Moreover, Robert is a frequent litigator in this Court. It beggars belief that he was not aware that costs consequences might follow non-acceptance of the offer; or that he did not understand what his claims were and the risk that he might not succeed in them. After all, he had already litigated the trust claims once (in the 2010 Proceeding and appeal therefrom) and he had already brought two family provision claims (one against his grandfather's estate and one against his mother's estate (which he had settled)). In other words, Robert was no litigation ingenu. What emerges quite clearly from his submissions on the present application is that Robert simply considered "unattractive" offers that did not exceed the costs he had already expended in the proceedings.
There was no ambiguity in the terms of the offers and they clearly foreshadowed the costs consequences that would be sought if the offers were rejected.
Robert's attention was clearly drawn to the risk that he would fail in the claim for provision out of Trevor's estate (an ambitious claim, to say the least, given the relationship between Trevor and Robert as emerged clearly at the hearing); and to what Monique perceived to be the "real risk" that he would fail in the trust claim. Robert's suggestion that the late discovery of the 1962 Trust Deed meant that he did not have sufficient information to assess either of the offers must be rejected. What was to be assessed by him were the prospects of success as at the date of the offers (not what might have been the position at some later stage, such as when the 1962 Trust Deed emerged).
As noted above, I have concluded that there was a genuine element of compromise in both offers so as to enliven the Calderbank principles. The ultimate judgment was clearly far less favourable to Robert than either of the offers.
That said, with some hesitation I have concluded that it was not unreasonable for Robert to reject the First Offer because of the relevantly low monetary amount in that offer. However, I consider that it was unreasonable for Robert to reject (or not to accept) the Second Offer. That is because I consider that, by the time that offer was made, the very real difficulties posed for Robert's claims in the Equity Proceeding should have been well understood (since they had been clearly identified in the defences that had been filed in that proceeding, which were raised at a time when there was no question that Robert had the benefit of legal advice, i.e., well before May 2024); and, in respect of the Family Provision Proceeding, the prospect of a successful claim must on any view have been considered to be extremely low (given Robert's obvious knowledge of the circumstances that ultimately led to the failure of that claim).
Thus, on this basis, I will award indemnity costs of the Family Provision Proceeding from 7 June 2024 (and ordinary costs of that proceeding for the period prior to 7 June 2024).

Orders

For the above reasons, I make the following orders in relation to the costs ordered to be paid by Robert when my first judgment was published:

As to the Equity Proceeding (2021/59314): 1. Order that the costs payable by the plaintiff (Robert Wilcox) to the first and second defendants (Monique Wye and John Chapple) be on the indemnity basis. 2. Order that the costs payable by the plaintiff (Robert Wilcox) to the fourth defendant (Benjamin Wilcox) be on the ordinary basis.

As to the Family Provision Proceeding (2023/168649): 1. Order that the costs payable by the plaintiff (Robert Wilcox) to the first defendant (Monique Wye) be on the ordinary basis up to and including 7 June 2024 and on the indemnity basis from 7 June 2024.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 December 2024

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