Supreme Court New South Wales Medium Neutral Citation: Gill v Garrett & Ors (No. 2) [2020] NSWSC 1473 Hearing dates: Decided in chambers on the papers. Date of orders: 23 October 2020 Decision date: 23 October 2020 Jurisdiction: Equity Before: Slattery J Decision: Order for indemnity costs made from 10 June 2017. Other consequential orders made. Catchwords: COSTS – indemnity costs – Calderbank letter – whether judgment no less favourable to the defendant than the unaccepted offer – whether the judgment no less favourable to the cross claimant than the unaccepted offer – no question of principle. Legislation Cited: Civil Procedure Act 2005, s 100 Succession Act 2005, Chapter 3 Uniform Civil Procedure Rules 2005, rr 20.26, 42.1, 42.14 and 42.15. Cases Cited: Calderbank v Calderbank [1975] 3 All ER 333 Gill v Garrett & Ors [2020] NSWSC 795 Category: Costs Parties: Plaintiff: Jason Adrian Francis Gill First Defendant: Alice Jemima Mary Garrett Second Defendant: Catherine Sarah Jane Garrett Third Defendant: Thomas Peter John Garrett Representation: Counsel: Plaintiff/Cross Defendant: S. Galitsky Defendants/Cross Claimants: E. Glover Solicitors: Plaintiff/Cross Defendant: Kirk Stewart McKenzie, Haylen McKenzie Solicitor Defendants/Cross Claimants: Michael Paul Carroll, LHD Lawyers File Number(s): 2016/328585 Publication restriction: No Judgment 1. This judgment deals with costs and other issues consequent upon the Court's principal judgment in these proceedings: Gill v Garrett & Ors [2020] NSWSC 795. This judgment should be read with the Court's principal judgment. Persons, matters and events are referred to in both judgments the same way. 2. These consequential issues were dealt with on the papers after the receipt of written submissions. Mr Gill no longer retains the solicitors and counsel that he retained at the trial of these proceedings and he represented himself in advancing his submissions. Although he has solicitors acting for him on an appeal. Ms E. Glover of counsel instructed by LHD Lawyers continue to be retained on behalf of the executors. Non-Costs Issues 1. Mr Gill's written submissions dealt with issues of costs. He did not advance any submissions to contest the executors' calculations of interest and their calculation of the set-off of the outstanding interest-free loan with the legacy of $200,000 payable to Mr Gill under the will. These issues can therefore be dealt with on the basis of the executors' submissions. 2. In the principal judgment, the Court noted (at [461]) that in their Cross-Claim filed on 5 May 2017 the executors had not made a separate claim for the recovery of the interest-free loans made to Mr Gill. In their supplementary submissions the executors indicated that the reason for that was that the amount outstanding on the interest-free loan of $152,134.80 was to be set off against the legacy of $200,000 to Mr Gill under the will. The Court has made a finding that $152,134.80 is due from Mr Gill to the estate. The orders at the conclusion of these reasons authorise the set-off of the sum due on interest-free loans against the legacy. 3. Also, the executors have undertaken and submitted calculations of the pre-judgment interest due under Civil Procedure Act 2005, s 100 in respect of the storage fees for the period 17 November 2008 to 6 August 2015 ($7,360) and the unauthorised cash withdrawals from the date of filing of the Cross-Claim on 5 May 2017 to after the date of judgment ($24,208). These calculations are not disputed and the Court will make orders accordingly. 4. One other non-costs issue needs to be resolved. In the principal judgment the Court granted leave to the plaintiff to seek to have issued a writ for possession from 16 October 2020. But the solicitors for the estate have raised the fact that they have given an undertaking to the Court not to do so and have sought to be released from that undertaking. 5. But Mr Gill has appealed. The appropriate course in these circumstances is to give Mr Gill a short opportunity to put on a motion in the Court of Appeal, if he so chooses, to restrain the estate from selling the Paddington property pending the outcome of the appeal. 6. He should have 28 days from today to put on this motion and have it returnable before the Court of Appeal. Unless there is further agreement between the parties on this issue or the Court of Appeal grants a restraint pending the hearing of the appeal, the Court will release the estate from its undertaking on Friday, 20 November 2020. The estate should approach the Court on that day and the orders can be made in Chambers, if they are required. Costs Issues 1. The first costs issue was raised by Mr Gill. He submitted that the Court should vary the order for costs that was made in favour of the executors and against him on 11 July 2020. He submitted that this is a case where the executors own costs of the proceedings should be paid out of the estate. In other words, he submits that the estate should bear its own costs of these proceedings. 2. Mr Gill's submissions that the estate should bear its own costs of these proceedings are not persuasive. And the Court's costs jurisdiction under Succession Act 2006, Chapter 3 is more flexible than that available under the Uniform Civil Procedure Rules 2005 ("UCPR"), r 42.1. It is not unknown in family provision litigation for costs orders not to be made against unsuccessful plaintiffs. One rationale for this practice was that if a costs order were to be made against an unsuccessful plaintiff, then the plaintiff could thereby become impecunious, generating the possibility of a future claim for provision out of a deceased person's estate. 3. But this was substantial litigation which went on for many days and involved a voluminous court book, detailed oral evidence and weighty written submissions. Moreover, strong findings were made against Mr Gill as to his credit, in answer to a case that was developed in considerable detail on his behalf. The estate would have incurred far greater cost in this case than in a more straightforward family provision application. The Court does not regard these circumstances as warranting the making of an order that the executors bear their own costs. The Court declines to make such an order. 4. The estate seeks indemnity costs from 6 March 2017. The executors make this claim on the basis of an offer of compromise, a Calderbank letter and on general principles concerning the conduct of the proceedings. 5. In order to understand the estate's offer of compromise and Calderbank letter, it is necessary to set out the state of the pleadings at the time. By Statement of Claim filed 19 October 2016, the estate commenced proceedings in the Common Law Division, Possession List (proceedings number 2016/311963) against Mr Gill, seeking judgment for possession of the Paddington property. By Summons filed 3 November 2016, Mr Gill commenced proceedings (proceedings number 2016/328585) in the Equity Division, Family Provision List against the estate. The final relief sought by Jason Gill is set out at paragraphs 5 to 9 of the Summons. On 5 December 2016, Hallen J ordered that the possession proceedings be heard concurrently with the equity proceedings. 6. Prayers for final relief 5 to 9 in Mr Gill's Summons filed 3 November 2015 were as follows: "5. A declaration upon the facts and circumstances of the case, the defendants hold the Paddington property on trust for the plaintiff. 6. An order that the defendants do all things necessary to transfer the Title to the Paddington property to the plaintiff and deliver to him the Certificate of Title issued accordingly, within 28 days of the date of the making of this order. 7. An order that the defendants provide the plaintiff with vacant possession of the Paddington property within 28 days of the date of the making of this order. 8. In the alternative to orders 5, 6, and 7 above, an order that the defendants pay compensation to the plaintiff on account of his services provided to the late Dr William John Garrett A.M. at the latter's request. 9. In the alternative to orders 5, 6, 7 and 8 above, an order that provision be made out of the Estate of the late Dr William John Garrett A.M., the deceased, who died on 5 November 2015, for the plaintiff's maintenance, education or advancement in life, pursuant to the Succession Act 2006 (NSW)." 1. In short, prayers for relief 5, 6 and 7 constitute Mr Gill's equitable estoppel claim for the Paddington property. Prayer for relief 8 deals with Mr Gill's alternative claim for equitable compensation on account of the services he provided to Dr Garrett. And prayer for relief 9 is Mr Gill's claim for further provision out of Dr Garrett's estate under the Succession Act, Chapter 3. 2. On 6 March 2017, the estate served an offer of compromise of that date on Mr Gill. This offer of compromise offered that prayers for relief 5 to 8 of the Summons filed 3 November 2016 be dismissed with no order as to costs. It also offered that in relation to the alternate relief sought in paragraph 9 of the Summons, in lieu of the provision made for Jason Gill in the will that he receive a legacy in the sum of $605,000 pursuant to the Succession Act, a gift of a painting by Jonathan Conlon titled, "In the Studio" and the deceased's 1998 Mazda Astina 323, 1.6L automatic motor vehicle. On the same date that the estate served the offer of compromise it also served a Calderbank letter on Mr Gill in relevantly identical terms. 3. But this March 2017 offer of compromise and Calderbank letter was overtaken by events. The March 2017 offer of compromise did not deal with a Cross-Claim which the estate later filed. 4. The Court ordered that this matter proceed by way of pleadings. On 6 April 2017, Mr Gill filed a Statement of Claim in the equity proceedings. The various prayers for relief 5 to 9 in the Summons were replicated in the Statement of Claim, paragraphs 1 to 6. And on 5 May 2017, the estate filed a Statement of Cross-Claim in the equity proceedings. The Cross-Claim sought possession of the Paddington property and it made the various other money claims dealt with in the principal judgment. On 23 May 2017, the possession proceedings were dismissed because the Cross-Claim sought the same relief. 5. To accommodate the change to pleadings and the filing of a Cross-Claim, the estate served a further parallel offer of compromise and Calderbank letter on 6 June 2017. 6. The offer of compromise dated 9 June 2017 provided for paragraphs 1 to 5 of the relief claimed in the Statement of Claim to be dismissed with no order as to costs, and that with respect to the relief claimed in paragraph 6, in lieu of the provision made for Jason Gill in the will he would receive a legacy in the sum of $1,001,000 together with the gifts previously mentioned. 7. The 9 June 2017 offer of compromise also provides for paragraphs 2 to 13 of the Cross-Claim to be dismissed with no order as to costs. And with respect to paragraph 1 of the Cross-Claim, the offer of compromise provides for judgment for the estate for possession of the Paddington property with no order as to costs. 8. In correspondence with the parties, the Court raised the question of whether or not the offer of compromise disposed of the whole of the proceedings. As a result of submissions received by the parties, the Court is satisfied that the offer of compromise did have this effect. The 9 June 2017 offer of compromise disposed of the whole of the claims for final relief in the Statement of Claim filed 6 April 2017. And the estate has bettered that offer by achieving the no less favourable result of the dismissal of the claims in the Statement of Claim together with an order for costs. 9. And the 9 June 2017 offer of compromise, if accepted, would have disposed of the whole of the claims for final relief in the Cross-Claim, by offering to accept the dismissal of the money claims and by only seeking judgment for possession but with no order as to costs. The estate has bettered that offer by the no less favourable result of obtaining judgment for possession of the Paddington property and judgment on various money sums claimed. 10. Mr Gill opposes the making of an indemnity costs order. He picked up the issue raised by the Court as to whether the offers of compromise disposed of the whole of the proceedings. He submitted that this is not a case where for that reason the defendants/cross-claimants (the executors) can rely upon the offer of compromise and Calderbank offer dated 9June 2017. But the Court is satisfied for the reasons given that the offers made, if accepted, would have disposed of the whole of the proceedings. 11. Further, and in the alternative, Mr Gill submitted that this is not a case that otherwise attracts the principles warranting costs to be awarded on an indemnity basis. He submitted in particular that this case: was not a hopeless case, without any reasonable prospects of success; did not involve an abuse of process; did not involve unreasonable conduct such as fraud or perjury; did not involve an unreasonable failure by the plaintiff to accept offers of settlement; did not involve the initiation or conducting of the proceedings in a manner that was frivolous or vexatious; involved him conducting proceedings in accordance with the administration of justice, and being mindful of the Court's limited resources to hear matters such as the present; did not involve any relevant misconduct that would justify costs to be awarded on an indemnity basis; involves a plaintiff, himself who is impecunious, and likely to suffer significant harm from costs orders being made against him. 12. But these submissions miss the point at issue. The Court is prepared to make an indemnity cost order from 10 June 2017 because of Mr Gill's non-acceptance of an offer of compromise that complies with UCPR, r 20.26 and the estate achieving no less favourable an outcome than the unaccepted offer both as defendant and as cross claimant: UCPR r 42.14 and r 42.15. The Court is not grounding its orders on Mr Gill's conduct of the proceedings apart from non-acceptance of the offer of compromise. It is not necessary for the Court to consider the parallel Calderbank letter. Conclusions and Orders 1. For these reasons, the Court makes the following orders and directions: 1. Order that the $200,000 legacy left by the deceased to the Plaintiff/Cross-Defendant be reduced by $152,134.80, being the balance of outstanding loans owing from the Plaintiff/Cross-Defendant to the deceased's estate. 2. Judgment for the Defendants/Cross-Claimants in the amount of $43,155.64, being the amount owing to the deceased's estate for storage fees incurred between 17 November 2008 and 6 August 2015 together with interest in the amount of $7,360 pursuant to s 100 of the Civil Procedure Act 2005. 3. Judgment for the Defendants/Cross-Claimants in the amount of $142,100, being the amount owing to the deceased's estate from unauthorised cash withdrawals, together with interest in the amount of $24,208 pursuant to s 100 of the Civil Procedure Act 2005. 4. Order the Plaintiff/Cross-Defendant to pay the Defendants/Cross-Claimants' costs of the proceedings on the ordinary basis up to 9 June 2017. 5. Order the Plaintiff/Cross-Defendant to pay the Defendant/Cross-Claimants' costs of the proceedings on an indemnity basis from 10 June 2017. ********** 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: 23 October 2020