Supreme Court New South Wales Medium Neutral Citation: Wayne Laurence Savage v Rebecca Ferguson [No 2] [2014] NSWSC 749 Hearing dates: 6 June 2014 Decision date: 06 June 2014 Jurisdiction: Equity Division Before: Kunc J Decision: First plaintiff's costs to be paid from estate on ordinary basis Catchwords: COSTS - Claim for provision from mother's estate - Calderbank letter - No issue of principle Category: Costs Parties: Wayne Laurence Savage (First Plaintiff) Marilyn Frances Smith (Second Plaintiff) Rebecca Ferguson (Defendant) Representation: Counsel: G. Van Der Vlag (Plaintiff) C.K. Hickey (Defendant) Solicitors: Caldwell Martin Cox (Plaintiff) T.D. Kelly & Co (Defendant) File Number(s): 2013/00112068 Publication restriction: No EX TEMPORE Judgment 1I delivered judgment in this matter on 30 May 2014. I found that the first plaintiff was entitled to an additional provision from his late mother's estate in the sum of $45,000. 2I gave the parties an opportunity to bring in short minutes and, if not able to be agreed, to make submissions as to costs. The parties have not been able to agree on the appropriate costs order. 3The basis for their disagreement is that within days of the court-annexed mediation in these proceedings, the defendant on 4 October 2013 made a Calderbank offer addressed to each plaintiff, but in this case relevantly to the first plaintiff, offering additional provision out of the estate of $45,000. In the events which happened, that Calderbank offer was for precisely the same amount that I ultimately found the first plaintiff was entitled to by way of additional provision. The first plaintiff did not accept the Calderbank offer. 4There is no dispute between the parties that the first plaintiff should have his costs of the proceedings out of the estate on the ordinary basis as agreed or assessed up to the date of the Calderbank offer of 4 October 2013. The question for determination is what is to occur in relation to the parties' costs after that date. 5The first plaintiff contends that costs should follow the event, such that he should have his costs of the entire proceedings as agreed or assessed on the ordinary basis out of the estate. The defendant submits that the first plaintiff should pay the defendant's costs incurred after 4 October 2013 on the ordinary basis. 6It is unnecessary for me to set out in any great detail the principles relating to the effect which Calderbank offers may have upon the exercise of the Court's very wide discretion in relation to costs. Those principles are well known. There is no doubt that, in the ordinary course, even in family provision litigation the ordinary rule is that costs should follow the event. Nevertheless, the Court has a substantial discretion in relation to the question of costs, that discretion having to be exercised rationally and for the purposes for which it has been conferred. 7In considering the effect which a Calderbank offer may have upon the exercise of the Court's discretion, in general two questions need to be answered. First, did the Calderbank offer represent a genuine compromise? There is no dispute between the parties that, in the circumstances of this case, the offer of 4 October 2013 represented a genuine compromise. 8The second question is whether or not the failure to accept the offer was unreasonable. The defendant submits that the first plaintiff's nonacceptance of the Calderbank offer was unreasonable for two broad reasons. 9First, that submission appears to work in hindsight by referring to my reasons to submit that, because I did not find the first plaintiff to have a need greater than $50,000 and otherwise did not accept the other bases for need which the first plaintiff sought to make out, it must necessarily be the case that the non-acceptance of the Calderbank offer was unreasonable. The defendant's second submission does not appear to me to say any more than that the amount of the offer equates to the amount to which I ultimately found the first plaintiff was entitled and that an inference of unreasonableness should follow from that. 10The first plaintiff submits that, in all the circumstances, the nonacceptance of the Calderbank offer was not unreasonable, again for two main reasons. First, the first plaintiff points out that the amount of the offer was not greater than the amount to which I ultimately found the first plaintiff was entitled. As it happens, it was equivalent to the amount to which I found the first plaintiff was entitled. 11Next, and significantly, the first plaintiff has drawn my attention to the state of the evidence during the time for which the offer was open. It is unnecessary for me to go into that in any detail, beyond observing that considerably more evidence about the circumstances of the estate and the defendant herself, which were important matters in the ultimate exercise of my discretion in the proceedings, did not become available until after the Calderbank offer had been made. The first plaintiff therefore submits that, in the absence of that further evidence and looking at what evidence was available to the first plaintiff during the currency of the Calderbank offer, non-acceptance of the offer was not unreasonable. 12Both parties have accepted the importance, particularly in relation to small estates, of every effort being made by the parties, with the assistance and encouragement of their legal advisers, to attempt to resolve such proceedings. There is no doubt that the parties attempted to do so in this case. That is because there is also evidence of an offer of compromise made by the first plaintiff in these proceedings, albeit for an amount which is greater than the amount to which I found he was entitled. 13While I give considerable weight to the important policy of encouraging parties to explore the resolution of litigation of this kind, that consideration does not detract from the fundamental question to which the authorities point, namely whether the non-acceptance of the offer in this case was unreasonable. I accept the submissions of the first plaintiff, which I have briefly set out above, that for the reasons he advances the non-acceptance of the Calderbank offer of 4 October 2013 was not unreasonable. Having so concluded, there is no basis for his costs in these proceedings to be dealt with other than in the usual way, namely that costs follow the event. 14The first plaintiff succeeded in demonstrating that there was inadequate provision and a present need which have been recognised by my finding that additional provision from the estate ought be made. In reaching my conclusion as to costs I have also taken into account the fact that if I were to make some costs order other than for his costs to follow the event, the ultimate financial position of the first plaintiff as a consequence of these proceedings, in particular the need for additional provision that I have identified, would inevitably be eroded. 15All of that having been said, the trial proceeded before me on the basis of an estimate, which I accepted, that the first plaintiff's costs of the proceedings (including the hearing) were $40,630 on the ordinary basis. It is entirely appropriate and usual in litigation of this kind for the Court to receive estimates of the parties' costs up to and including the time of hearing. Those estimates serve two very important purposes. The first is to focus the minds of litigants upon the expenditure that they have incurred and are likely to incur and the financial risks that they may run in prosecuting the proceedings. Second, the information assists the Court in forming a view as to what may be referred to as the value of the net distributable estate. 16The defendant has submitted that if, as I will do, I propose to make an order that the first plaintiff have his costs of the proceedings on the ordinary basis out of the estate, that should not preclude the estate from insisting upon an assessment of the first plaintiff's costs, if those costs are otherwise unable to be agreed. I accept that submission and will not seek to fix those costs now. However, the proceedings were conducted on the basis of the first plaintiff's estimate of costs on the ordinary basis. For this reason I will order that, insofar as the first plaintiff will be entitled to his costs of the proceedings out of the estate, that amount should not exceed the amount of the estimate which was provided to the Court and upon which the Court relied. 17Accordingly, to finalise these proceedings I will make orders in accordance with the short minutes which I will date today and place with the papers. 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: 10 June 2014