Supreme Court New South Wales Medium Neutral Citation: Callaway v Callaway; The Estate of Aileen Margaret Callaway (No. 2) [2019] NSWSC 1295 Hearing dates: 24 September 2019 Date of orders: 27 September 2019 Decision date: 27 September 2019 Jurisdiction: Equity Before: Slattery J Decision: Make no additional costs orders. Catchwords: COSTS – indemnity costs – Calderbank offer issued before trial – the Calderbank letter offered the same outcome as was achieved in the proceedings – whether a Calderbank offer was a basis for awarding indemnity costs in the plaintiff/cross-defendant's favour. Legislation Cited: Uniform Civil Procedure Rules 2005 Cases Cited: Callaway v Callaway; The Estate of Aileen Margaret Callaway [2019] NSWSC 1275 Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170 Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No. 2) (2005) 13 VR 435 Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344 The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] 67 NSWLR 706; [2006] NSWCA 120 Walker v Harwood [2017] NSWCA 228 Category: Costs Parties: Plaintiff/Cross-Defendant: Martin Garry Callaway Defendant/Cross-Claimant: Trevor John Callaway Estate of Aileen Margaret Callaway Representation: Counsel: Plaintiff/Cross-Defendant: S. Chapple Defendant/Cross-Claimant: R.J. Colquhoun; G. Scott-London Solicitors: Plaintiff/Cross-Defendant: Pamela Gabrielle Suttor, L. Rundle & Co Defendant/Cross-Claimant: Karina Penfold, Colquhoun & Colquhoun File Number(s): 2017/00382361 Publication restriction: No Judgment 1. This is the Court's second judgment in these proceedings. The Court's first judgment determined that, in a contest between two brothers for a grant of probate of their mother's will, the intractable underlying disputes between them resulted in neither of them having a grant, so the Court instead appointed an administrator cum testamento annexo: Callaway v Callaway; The Estate of Aileen Margaret Callaway [2019] NSWSC 1275. This judgment should be read with the Court's first judgment. Events, matters and persons are referred to in both judgments in the same way. 2. Upon appointing the administrator, the Court made an order that, subject to any application for a special costs order, each party would bear his own costs of the proceedings. But after judgment, the plaintiff/cross-defendant, Martin Callaway, tendered a letter of offer dated 6 September 2018 (Exhibit B). Martin submitted that the final outcome of the proceedings was no less favourable to him than he had offered in the 6 September 2018 letter and that it was unreasonable of defendant/cross-claimant, Trevor Callaway, not to have accepted it. He submitted he should have an order for costs of the proceedings on the indemnity basis from the date of that letter. 3. The 6 September 2018 letter made alternative offers, one of which is not relied upon and is not relevant. The first and relevant alternative is set out below. "We are instructed to make the following offer to settle the proceedings. Please note that this is an open letter and we intend to provide the Court with a copy. The plaintiff is willing to settle the proceedings on either of the following bases: 1. Letter of administration with the Will of the late Aileen Margaret Callaway dated 10 July 1998 annexed be granted to an independent person agreed by the parties, or as otherwise appointed by the Court. 2. No order as to costs of either party, to the intent that each will bear their own costs." 1. The letter was not marked without prejudice as to costs and did not declare itself to be a Calderbank letter. The letter's offer was left open for acceptance for 28 days. It was not accepted and no other correspondence passed between the parties about it at the time. 2. After giving the first judgment, the Court directed the parties to file notes of any cases relevant to the application of Calderbank principles to this case, so the Court could deal with this issue in chambers without a further Court listing. The parties agreed to that course. Notes of relevant cases were provided and were of assistance in the Court reaching its conclusion in these reasons. Applicable Legal Principles 1. The principles applicable to Calderbank offers are well settled. Principles concerning attempts to compromise proceedings by Calderbank offers are applicable in probate proceedings: Walker v Harwood [2017] NSWCA 228 ("Walker") at [58]. Parties seeking an order for indemnity costs on the basis of a Calderbank offer have the burden of showing the Court why such an order should be made in their favour, and, generally, this means that they should persuade the Court that the refusal to accept the offer was unreasonable: Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [20]. The Court of Appeal's decision in Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344 ("Miwa"), (at [9]), is authority for the proposition that an informal offer (and indeed an offer of compromise under the Uniform Civil Procedure Rules 2005) must contain "a real and genuine element of compromise": see also The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] 67 NSWLR 706; [2006] NSWCA 120, (at [8]). In Miwa, the Court noted that there is authority that the epithets "real" and "genuine" add little to the requirement of compromise: Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19, (at [23]); Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170, (at [17]-[18]). 2. But Walker is clear: (at [58]). Under the Calderbank principle "a Court may consider it appropriate to make a different costs order to that which it would otherwise have made if the unsuccessful party made an offer to settle on terms less favourable to the successful party than the outcome which the successful party ultimately achieved in the proceedings" [emphasis added]. 3. But here Martin achieved exactly the same result as the offer in the 6 September 2018 letter. Trevor did not reject an offer that was less favourable to the successful party (Martin). Had Martin offered to pay some of Trevor's costs on 6 September 2018 the result might have been different. 4. The considerations relevant to the determination of whether a refusal of a Calderbank offer is unreasonable were stated in Miwa, at [12], based on Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No. 2) (2005) 13 VR 435; [2005] VSCA 298 ("Hazeldene's"), (at [25]). The Victorian Court of Appeal (Warren CJ, Maxwell P and Harper AJA) in Hazeldene's held that the following elements were relevant to determining whether the rejection of a Calderbank offer was unreasonable: "(a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; (f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it." 1. But these principles do not need to be considered in this case, as the first threshold has not been reached for the letter to trigger the Calderbank principle. 2. No additional costs orders will therefore be made in this matter. ********** Amendments 08 October 2019 - [2] and [8] references to "Mark" changed to "Martin". 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