Supreme Court New South Wales Medium Neutral Citation: Sun v Chapman (No 2) [2021] NSWSC 1231 Hearing dates: On the papers (Submissions 7 September 2021) Date of orders: 30 September 2021 Decision date: 30 September 2021 Jurisdiction: Equity Before: Emmett AJA Decision: Order that: 1. There be no order as to costs against the plaintiff. 2. The defendant be indemnified out of the estate for his costs of defending these proceedings. Catchwords: COSTS — party/party — payable out of a fund — deceased estate — unsuccessful family provision applicant — settlement offer made by estate — whether reasonable to accept offer — executor indemnification Legislation Cited: Succession Act 2006 (NSW), s 56 Cases Cited: Chapple v Wilcox (2014) 87 NSWLR 646; [2014] NSWCA 392 Sun v Chapman [2021] NSWSC 955 Texts Cited: Nil Category: Costs Parties: Wei (Rose) Sun (Plaintiff) Michael Alan Chapman (Defendant) Representation: Counsel: P Livingstone (Plaintiff) M Bridger with H Breeze (Defendant)) Solicitors: Wyatts Lawyers & Advisors (Plaintiff) Bainbridge Legal (Defendant) File Number(s): 2020/12509 Publication restriction: Nil Judgment 1. On 4 August 2021, for reasons published on that day (the Principal Reasons), [1] I ordered that the plaintiff's summons seeking a family provision order under s 59 of the Succession Act be dismissed but reserved liberty to the parties to make submissions on the question of costs. In these reasons, I shall use terms as they were defined in the Principal Reasons. 2. I have now received written submissions from both parties. The parties have agreed that the question of costs be determined on the basis of those submissions without any oral argument. 3. In her written submissions of 19 August 2021, Rose seeks an order that there be no order as to costs, to the intent that each party bear her or his own costs. In the alternative, Rose seeks deferral of payment of any order for costs until after disposition of any appeal if she commences an appeal, subject to any order that may be made by the Court of Appeal. The Executor, on the other hand, seeks an order that Rose pay his costs on the ordinary basis up to 30 March 2021 and on the indemnity basis on and from 31 March 2021. 4. The Executor seeks a special order on the basis of an offer made to Rose by letter of 30 March 2021. By letter of that date, the Executor's solicitors made an offer of compromise to Rose's solicitors that the Seaforth property be listed for sale and the proceeds of sale be applied as follows: 1. In payment of the costs of sale including real estate agent's fees, legal fees and auctioneer's fees, if any; 2. In payment of the debt owed by Richard's estate to the Department of Veterans Affairs; 3. As to the balance follows: 3.1 $420,000 to Rose; 3.2 Rose's costs as agreed or assessed on the ordinary basis; 3.3 The Executor's costs on the indemnity basis; and 3.4 Otherwise in accordance with the Will. The offer remained open until 5 pm on 13 April 2021 and was said to be without prejudice except that it may be tendered in evidence on any question of costs, including any application by the Executor for Rose to pay the Executor's costs on an indemnity basis. Rose did not accept the offer. 1. When the offer was made, the Executor's estimate of the net distributable estate was $1,872,155.70. At that time, the costs paid by the Executor from the estate on account of the proceedings and a mediation amounted to $108,898.60. As at 28 February 2021, Rose's costs were estimated to be $101,227.50. 2. The amount offered to Rose represented approximately 22.5 per cent of the estimated net distributable estate at the time of the offer, plus her costs to be agreed or assessed. Had Rose accepted the offer, she would have been significantly better off and would certainly have achieved a much better result than at the trial. Clearly enough, the offer was genuine and was a reasonable offer of compromise. At the time when the offer was made, all of Rose's evidence had been served, as had the Executor's affidavit and his evidence of the financial circumstances of beneficiaries who elected to adduce evidence of their financial circumstances. The Executor asserts that, in the circumstances, it was unreasonable of Rose not to have accepted the offer. 3. When the offer was made, Rose's claim for provision was that she be permitted to continue living in the Seaforth property, which was the most significant asset of the estate. The Executor contends that, in all the circumstances when the offer was made, Rose's claim was unrealistic and untenable, in that there would have been nothing left in the estate, which would have been insolvent and unable to pay the debt owing to the Department of Veteran Affairs, let alone satisfy Richard's testamentary intentions. The Executor asserts that it would have been obvious to Rose, when the offer was made, that the Seaforth property would have to be sold so as to meet the Executor's costs, meet any family provision order that might be made in Rose's favour and her costs, should her claim succeed. The offer did not require Rose to vacate the Seaforth property or to pay rent or an occupation fee pending its sale. That, the Executor asserts, would have been a further benefit for her had she accepted the offer. 4. I do not consider that Rose's decision to reject the offer was unreasonable in all of the circumstances. A very significant matter in that regard is Richard's statutory declaration to which reference is made in the Principal Reasons. The case advanced by Rose was that her relationship with Richard continued as described in the statutory declaration that he made on 10 June 2003. The position of the Executor was not only that there was no de facto relationship at Richard's death but that no such relationship ever existed. To that extent, the Executor's position was rejected. 5. Even at the end of the hearing, the Executor's position about whether or not Richard had made a false statutory declaration in 2003 was unclear. After a clear response was sought to questions about the statutory declaration, counsel for Richard finally conceded that the Executor was not seeking a finding that the statutory declaration was false. It is fair to say that, even then, counsel for the Executor continued to equivocate on that question. Thus, it was said that the declaration constituted a "ruse" to enable Rose to obtain a visa. After counsel for the Executor confirmed that the Court was not being asked to make a finding that the statutory declaration was false, it was said that there was "a certain murkiness there". Nevertheless, when asked whether it was contended that the declaration was "false or not", the response was "no, I'm not I don't know". 6. I found that the statutory declarations were positive evidence in favour of a finding that, at least in 2003, Rose was a person with whom Richard was living in a de facto relationship. The question, however, was whether that leads to the conclusion that, at the date of Richard's death, Rose was living in a de facto relationship with him. 7. I accepted evidence that Richard made numerous comments to the Executor that were critical of Rose and her perceived failure to perform her role as "carer". However, it was never suggested that Richard told Rose that she "has to go". Further, the Executor did not require Rose to vacate the Seaforth property after Richard's death. Richard did not at any stage ask the police to take steps to exclude her from the Seaforth property and the Executor, a prison officer, did not call on Rose to leave the Seaforth property during Richard's lifetime. 8. It is perhaps unusual that the de facto relationship that appears to have existed came to an end without separation. The state of the evidence did not enable a date or even a year to be identified when the de facto relationship ceased. I accept that any confusion as to the precise nature of the relationship between Rose and Richard in Rose's mind was understandable having regard to her comprehension of English and her background. There was evidence that any such confusion was shared by others, who at various times referred to her as Richard's "wife", "partner" or "carer". Richard could have brought an end to any confusion by using words similar to those that he repeatedly used with the Executor during his lifetime. However, he did not do so. 9. I consider that Richard must bear some of the responsibility for any confusion that might have developed in Rose's mind. Richard's conduct contributed to the cost of unravelling what was a complicated relationship. I accepted that there was a de facto relationship although I was not persuaded that it continued up until the time of Richard's death. In the Principal Reasons, I referred to evidence that Richard and Rose went on overseas trips and cruises together for the purpose of visiting both Richard's family and Rose's family. In addition, members of Rose's family came to Australia to visit Richard and her. Accordingly, I accept Rose's contention that her case was far from being reckless or foolish. Rather, in the circumstances, it was not unreasonable. 10. An analogy can be drawn between probate suits and applications for family provision orders. Departure from the rule that costs follow the event is often recognised as appropriate where the testator or deceased has been the cause of litigation, such as where there is an ambiguous will. In some cases, it is appropriate that the costs of unsuccessfully opposing an Executor may be ordered to be paid out of the estate. Thus, if a deceased has been the cause of family provision litigation by failing to make appropriate dispositions, the costs burden may often appropriately be placed upon the estate, even if the Court declines to make a family provision order. [2] 11. In all of the circumstances, I do not think that it is appropriate to require Rose to pay the Executor's costs of the proceedings. However, the Executor is entitled to be indemnified out of the estate for his costs of defending the proceedings. I shall make orders accordingly. ********** Endnotes 1. See Sun v Chapman [2021] NSWSC 955. 2. See Chapple v Wilcox (2014) 87 NSWLR 646 at 680; [2014] NSWCA 392 at [141]. 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: 30 September 2021