Ray v Greenwell [2009] NSWSC 1197

New South Wales Supreme Court

CITATION : Ray v Greenwell [2009] NSWSC 1197

HEARING DATE(S) : 29 October 2009 JUDGMENT OF : McLaughlin AsJ

EX TEMPORE JUDGMENT DATE : 29 October 2009

DECISION : 1. I order that Order 3 made by me on 11 September 2009 be varied, to read: 3. I order that the costs of the Defendant on the indemnity basis be paid out of the notional estate of the Deceased, and that there be no order in respect to the costs of the Plaintiff, to the intent that she will bear her own costs of the proceedings and will not be liable for the payment of any of the costs of the Defendant.

CATCHWORDS : COSTS - family provision proceedings - offers of compromise - non-acceptance by Plaintiff - order for provision no more favourable than Plaintiff would have received by accepting offer of compromise - automatic consequence, "unless Court otherwise orders" - whether Court should otherwise order - costs in family provision proceedings are treated differently from costs in other proceedings

LEGISLATION CITED : Uniform Civil Procedure Rules

CATEGORY : Procedural and other rulings

PARTIES : Judith Constance Ray (Plaintiff) Robyn Elizabether Greenwell (Defendant)

FILE NUMBER(S) : SC 3619 of 2008

COUNSEL : Mr R. Colquhoun (Plaintiff) Mr I. Davidson SC (Defendant)

SOLICITORS : Colquhoun & Colquhoun (Plaintiff) JSM Lawyers (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

ASSOCIATE JUSTICE McLAUGHLIN

Thursday, 29 October 2009

3619 of 2008 JUDITH CONSTANCE RAY –v- ROBYN ELIZABETH GREENWELL JUDGMENT 1 HIS HONOUR: On 11 September 2009 I published my reasons for judgment herein, and made orders in the substantive proceedings. Those orders included an order in respect to costs. 2 However, since I had not heard specific submissions on costs, the Defendant sought, and I allowed, that the matter be relisted for argument as to costs. 3 The matter has come before me this day for such argument. 4 I have had the benefit of receiving a written outline of submissions from Counsel for the Plaintiff and from Senior Counsel for the Defendant. There has also been placed before me, in respect to today's argument as to costs, copies of various items of correspondence and other documents regarding offers of compromise made by each party. 5 It was submitted on behalf of the Plaintiff that the costs order pronounced by me on 11 September 2009 should not be disturbed. That order was in the form of the costs order usually made in proceedings under the Family Provision Act 1982, where the Plaintiff has been successful in her claim. In the instant case, that order was as follows, I order that the costs of the Plaintiff on the party and party basis (such costs not to exceed $60,000) and the costs of the Defendant on the indemnity basis be paid out of the notional estate of the Deceased. 6 The Defendant, however, submitted that, in consequence of offers of compromise made on behalf of the Defendant, the usual costs order should not be made in the instant case. The effect of the non-acceptance by the Plaintiff of one or other of the Defendant's offers of compromise is, pursuant to Rule 42.15A of the Uniform Civil Procedure Rules 2005, that, unless the Court otherwise orders, the Defendant pay the costs of the Plaintiff on the party and party basis up to and including the date of the offer of compromise (or, more accurately, the date specified therein by which the offer should be accepted) and after that date the Plaintiff pay the costs of the Defendant on the indemnity basis. Nevertheless, in the instant case, the Defendant was not seeking an order to the foregoing effect. But, as stated in the outline of submissions presented by Senior Counsel for the Defendant, the Defendant was seeking an order that the costs of the Defendant on the indemnity basis be paid out of the estate of the Deceased, but that there be no order in respect to the costs of the Plaintiff, to the intent that the Plaintiff should bear her own costs of the proceedings, and should not be liable to pay any of the costs of the Defendant. 7 On 10 February 2009 the solicitor for the Defendant served upon the solicitor for the Plaintiff an offer of compromise as to costs, pursuant to rule 20.26 of the Uniform Civil Procedure Rules. By that offer of compromise the Defendant offered to pay to the Plaintiff the sum of $15,000, in respect of costs in full satisfaction of the Plaintiff's claim for costs. The offer of compromise was stated to remain open for a period of 28 days. 8 On the same date, 10 February 2009, the solicitor for the Defendant also served upon the solicitor for the Plaintiff an offer of compromise pursuant to Rule 20.26 of the Uniform Civil Procedure Rules. By that offer of compromise the Defendant offered to pay to the Plaintiff the sum of $161,000 plus costs as agreed or assessed in full satisfaction of the Plaintiff's claim. The offer of compromise stated that it would remain open for a period of 28 days. It also contained a condition, that the Plaintiff consent to the following orders: (i) that the statement of claim be dismissed; (ii) that the probate of the will dated 16 March 1998 in solemn form be granted to the Defendant. 9 Before the period of 28 days from the date of the foregoing offers of compromise had elapsed, the solicitors for the Defendant served upon the solicitors for the Plaintiff an offer of compromise pursuant to Rule 20.26 of the Uniform Civil Procedure Rules, in the following terms, that the Defendant pay to the Plaintiff the sum of $275,000 plus costs as agreed or assessed in full and final satisfaction of the Plaintiff's claim. That offer of compromise stated that it was open for acceptance for a period of 14 days from the date thereof. 10 On 31 March 2009 the solicitors for the Defendant sent to the solicitors for the Plaintiff a letter headed "without prejudice save as to costs" "Calderbank Offer". That letter referred to the obvious error in "clause 3" of their offer of compromise dated 10 February 2009, the letter stating that that error "was obvious to you, given that no statement of claim was filed and your client had not challenged the grant of probate to our client". The letter made reference to the Plaintiff's offer of compromise of 2 March 2008, and continued, Further, in the interests of compromise we have been instructed, to offer to your client the Sum of $176,000, inclusive of costs, and in addition to the $10,000 already received by your client from the Estate. 11 Where, as here, a party in the position of the present Plaintiff obtains an order for provision no more favourable to her than that which she would have received by accepting the offer of compromise, then, "unless the Court otherwise orders" the effect of rule 42.15A is as I have already set forth. 12 It was, however, submitted on behalf of the Plaintiff that the circumstances of the present case were such that it was appropriate that the Court should make an order which would deprive the Defendant of the benefit of the automatic consequence of the failure of the Plaintiff, in the light of the ultimate outcome of the substantive proceedings, to accept the offer of compromise. In this regard, it will be noted that, as I have already observed, the Defendant does not insist upon that automatic consequence, but is content that there be no order in respect to the costs of the Plaintiff, to the intent that the Plaintiff shall neither receive any costs out of the estate of the Deceased, nor be required to pay any costs to the Defendant. 13 Further, it was submitted on behalf of the Plaintiff that the circumstances of the present case were such that it was appropriate that the Plaintiff should retain the costs order which I had originally pronounced herein (I being, of course, at that time unaware of the offers of compromise which had been served by each party upon the other party). 14 It was submitted on behalf of the Plaintiff that costs in proceedings under the Family Provision Act are treated quite differently from costs in other kinds of proceedings (as was recognised by Gaudron J in Singer v Berghouse [1993] HCA 35; (1993) 67 ALJR 708 at 709). 15 I recognise that costs in proceedings under the Family Provision Act do not automatically adhere to the usual principle that costs follow the event and the losing party pays the costs of the winning party. In proceedings under that statute (and under its statutory predecessor, the Testator's Family Maintenance and Guardianship of Infants Act 1916) normally the costs of the Defendant are paid out of the estate, irrespective of the outcome of the proceedings. That is, even though a Defendant executor may be unsuccessful in resisting the claim of an applicant, the Defendant executor, nonetheless, is entitled to an order that her costs be paid out of the estate of the testator. The rationale behind such a practice regarding the executor's costs appears to be that the executor has an obligation to uphold the terms of the will, and that (in theory, at least) the circumstance which enlivens the discretion of the Court to make an order for provision in favour of the applicant is what might compendiously be described as an error or oversight on the part of the testator. 16 In such a case, then, it would not be fair to an executor in carrying out the executor's obligation to uphold the terms of the will, if the executor were to be held personally liable for an error or oversight on the part of the person who made that will. 17 It is not unknown (but rare) in family provision proceedings for an applicant to be unsuccessful in her claim, but not to be required to pay the costs of the successful defendant, that defendant having recourse only to the estate of the Deceased for her costs. 18 It was submitted on behalf of the present Plaintiff that the financial and material circumstances of the Plaintiff in the instant case were such that it would place upon her a serious financial burden if she were not to receive her costs out of the estate (even costs capped, as in my order, at the same figure as the amount of the additional benefit awarded to the Plaintiff in her substantive claim herein). 19 I am not unmindful of the financial and material circumstances of the Plaintiff. Those circumstances are such that, had the Defendant sought a costs order of the nature which would have been the automatic outcome of the failure of the Plaintiff to accept either of the offers of compromise on behalf of the Defendant, I would not have been disposed to have allowed such an automatic outcome to take effect. I would have "otherwise ordered", to the effect that the Plaintiff should not be required to pay any part of the costs of the Defendant. 20 My reason for so doing would have been that, in the event that the Plaintiff were required to pay any of the costs of the Defendant, that imposition in respect to costs would have had a significant effect upon the financial and material circumstances of the Plaintiff, and would have significantly diminished the benefit of the additional provision in favour of the Plaintiff which my substantive order herein was intended to give to her. 21 However, the Defendant, in the event, does not seek the automatic consequence of the Plaintiff's failure to accept one or other of the offers of compromise made by the Defendant, but is content that the Plaintiff neither receive any costs from the estate nor pay any costs to the Defendant. 22 It was submitted on behalf of the Plaintiff, however, that even the absence of any costs order against the Plaintiff would have a significant effect upon her financial circumstances, since she would still be responsible for her own costs of the proceedings. 23 The legal representatives of the Plaintiff have it within their own power to give practical effect to their expressed solicitude for the circumstances of their client in this regard. 24 It should not be overlooked in this case that the primary issue for determination in the litigation of the Plaintiff's claim was whether the Court should compel the Defendant to sell the residential property which has been the Defendant's home for the past 34 years. In my reasons for judgment I emphatically rejected the Plaintiff's contention that the Defendant should be deprived of her home and should be forced into living in some other, and cheaper, premises. 25 I am satisfied that, in the circumstances of the instant case, the interests of justice will be adequately served by the Plaintiff neither receiving any costs from the estate of the Deceased nor being required to pay any of the costs of the Defendant, but that the costs order normally made in favour of an executor in resisting a claim should be made. 26 Accordingly, I make the following order: 1. I order that Order 3 made by me on 11 September 2009 be varied to read: 3. I order that the costs of the Defendant on the indemnity basis be paid out of the notional estate of the Deceased, and that there be no order in respect to the costs of the Plaintiff, to the intent that she will bear her own costs of the proceedings and will not be liable for the payment of any of the costs of the Defendant. **********