Browne v Macaulay (Executrix of the Will of the late John Henry Craig Macaulay)

[1999] WASC 217

BROWNE -v- MACAULAY (Executrix of the Will of the late JOHN HENRY CRAIG MACAULAY) & ORS [1999] WASC 217

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[1999] WASC 217
Case No:	CIV:1142/1998	Heard:	2 NOVEMBER 1999
Coram:	MURRAY J	Delivered:	4/11/99
No of pages:	7	Judgment Part:	1 of 1
Result:	Orders made as to payment of costs
PDF Version

Parties:	JOHN HENRY BROWNE ESMA VERA MACAULAY (Executrix of the Will of the late JOHN HENRY CRAIG MACAULAY) ESMA VERA MACAULAY VIVIENNE LAURINE JANNEY JOHN BARRY CRAIG MACAULAY
Catchwords:	Testator's family maintenance Whether Inheritance (Family and Dependants Provision) Act 1972 (WA) empowers the making of an order having retrospective effect Costs Successful application under Inheritance (Family and Dependants Provision) Act 1972 (WA) Applicant recovered less than defendants' informal offer of settlement Offer not made without prejudice as to costs Appropriate orders as to costs
Legislation:	Nil
Case References:	Dobb v Hacket (1993) 10 WAR 532 Grbavac v Hart [1997] 1 VR 154 Maxwell v Murphy (1957) 96 CLR 261 Rodway v R (1990) 169 CLR 515 Nil

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA CITATION : BROWNE -v- MACAULAY (Executrix of the Will of the late JOHN HENRY CRAIG MACAULAY) & ORS [1999] WASC 217 CORAM : MURRAY J HEARD : 2 NOVEMBER 1999 DELIVERED : 4 NOVEMBER 1999 FILE NO/S : CIV 1142 of 1998 MATTER : Inheritance (Family & Dependants Provision) Act 1972 (WA) s 6(1)

and

Estate of JOHN HENRY CRAIG MACAULAY (DEC)

BETWEEN : JOHN HENRY BROWNE

Plaintiff

AND

ESMA VERA MACAULAY (Executrix of the Will of the late JOHN HENRY CRAIG MACAULAY)
First Defendant

ESMA VERA MACAULAY
Second Defendant

VIVIENNE LAURINE JANNEY
Third Defendant

JOHN BARRY CRAIG MACAULAY
Fourth Defendant

(Page 2)

Catchwords:

Testator's family maintenance - Whether Inheritance (Family and Dependants Provision) Act 1972 (WA) empowers the making of an order having retrospective effect - Costs - Successful application under Inheritance (Family and Dependants Provision) Act 1972 (WA) - Applicant recovered less than defendants' informal offer of settlement - Offer not made without prejudice as to costs - Appropriate orders as to costs

Legislation:

Nil

Result:

Orders made as to payment of costs

Representation:

Counsel:

Plaintiff : Mr G H Lawton
First Defendant : Mr P W Nichols & Mr T B Bannerman
Second Defendant : Mr P W Nichols & Mr T B Bannerman
Third Defendant : Mr P W Nichols & Mr T B Bannerman
Fourth Defendant : Mr P W Nichols & Mr T B Bannerman

Solicitors:

Plaintiff : Lawton Gillon
First Defendant : T B Bannerman
Second Defendant : T B Bannerman
Third Defendant : T B Bannerman
Fourth Defendant : T B Bannerman

Case(s) referred to in judgment(s):
Dobb v Hacket (1993) 10 WAR 532
Grbavac v Hart [1997] 1 VR 154
Maxwell v Murphy (1957) 96 CLR 261
Rodway v R (1990) 169 CLR 515

Case(s) also cited:

Nil

(Page 3)


1 MURRAY J: In this case the plaintiff made an application under the Inheritance (Family and Dependants Provision) Act 1972 (WA) s 6(1). The first defendant was the executrix of the will of the deceased, who was the plaintiff's father. The second defendant was the deceased's widow and the third and fourth defendants were other children of the deceased. The second, third and fourth defendants were the beneficiaries under the will of the deceased, which made no provision for the plaintiff.

2 The deceased died on 23 December 1996. Probate of his will was granted on 15 August 1997. Prior to that date, on 26 June 1997, the solicitors for the plaintiff wrote to the solicitors for the first defendant advising the plaintiff's interest in his father's estate. The letter does not say that the plaintiff proposed to make a claim under the Inheritance Act and the originating summons which instituted that claim was not issued until 11 February 1998. Meanwhile, the estate had been substantially distributed; indeed, completely distributed except for one property at 57 Joel Terrace, East Perth.

3 Having heard the plaintiff's application, on 2 November 1999 I ordered the provision of that property out of the estate to the plaintiff, including that order in the probate of the will as required by the Inheritance Act s 14(4). I made an order requiring the first defendant, at the expense equally of the second, third and fourth defendants, to provide the plaintiff's solicitors with a duly executed registrable transfer of the land. In brief, upon the evidence, the Joel Terrace property is an income producing asset valued at about $350,000. The net rental income of the property is now about $150 per week. It was part of the residuary estate in which the second, third and fourth defendants were under the will to share equally.

4 The plaintiff seeks additional orders that the first defendant should account to the plaintiff for the income derived from Joel Terrace since the date of death, that such sum should be paid to the plaintiff, and that the plaintiff should have liberty to apply in respect of that income.

5 The Act, s 6(1), gives the court a complete discretion as to the order which is to be made for provision out of the estate of the deceased for the purposes enumerated in the subsection. Section 6(4) says that the provision may consist of a lump sum or periodical or other payment. It is clear that it is the circumstances which are relevant to the making of the order as they exist at the time when the order is being considered, which will govern whether or not an order is to be made and if so, in what form it is to be made. As I have already mentioned, under s 14(4) the order

(Page 4)

takes effect by its endorsement upon the probate of the will, in which case under s 14(5) the portion of the estate which is affected by the order is to be held subject to the provisions of the order. The portion of the estate so affected is to be specified in the order: s 14(1). Sections 15 and 16 empower the court on application to revisit the terms of an order and rescind it, suspend its operation and reduce or increase the provision made, having regard to the matters set out in those sections. Subject to all that, an order made under the Act takes effect as a codicil to the will of the deceased executed immediately before his death: s 10.

6 Where the estate has been distributed, s 8 of the Act provides for orders to be made under the Trustees Act 1962 (WA), s 65, with the court having the same powers in respect of the order as it would have in making an order under the Inheritance Act, but, as provided by the Inheritance Act, s 9, subject to the provisions of the Trustees Act, s 65(8). That subsection enables the court to decline to grant relief where it would be inequitable to do so having regard to the position of those who have been the beneficiaries of a distribution of the trust estate. The power to make an order under the Trustees Act is also, by the Inheritance Act, s 11, subject to there being no interference with a power preserved to the executor of the estate to provide, as may be immediately necessary after the death of the deceased, for any person who was totally or partially dependent upon the deceased at the time of the death.

7 I doubt whether those provisions confer the power to make the order sought with respect to the income of Joel Terrace, which has, since the date of death, been received by the estate and distributed to the second, third and fourth defendants upon the distribution of the estate. It seems to me that the Inheritance Act is so structured as to indicate that the intention is that the benefit of the provision made for the applicant out of the estate should be received and enjoyed prospectively. The right of a successful applicant to a benefit under the Act, in my opinion, would accrue upon the making of the order in favour of the applicant in the exercise of the court's discretion. That is a substantive right entirely derived from the operation of the Act. The Act does not expressly provide for an order to be made in terms which would give it a retrospective operation, and in my opinion there is no clear indication which would lead the court to the view that such a capacity may be derived by necessary implication from the terms of the Act: Maxwell v Murphy (1957) 96 CLR 261; Rodway v R (1990) 169 CLR 515.

8 Looked at another way, it seems to me that the effect of the Inheritance Act and equally of the Trustees Act is that an order made in

(Page 5)

favour of the applicant divests those otherwise interested in the estate, and entitled to benefit under the will or the law of intestacy, of their rights to do so. Again, in the absence of express terms in the legislation or clear implication to be derived therefrom of a contrary intention, the legislation should only be given a prospective effect and should only be taken to empower the making of an order having such an effect. I therefore decline to make the orders sought, but I would add that had I the power, I would not in the exercise of my discretion make such orders.

9 Of course, in a case where assets in a deceased person's estate are income producing and produce accumulations to the fund which the estate comprises, to make an order for the payment of a lump sum out of such fund, or having the effect that the fund would be committed to making periodic payments in the future would involve no element of retrospectivity. In this case the retrospectivity involved would be derived from the making of an order to provide as a lump sum to the plaintiff the income generated by the property during the period when the beneficial entitlement thereto was that of the beneficiaries of the estate.

10 As to the question of costs, the plaintiff seeks an order against the first defendant for the payment of his taxed costs out of the estate. As I am informed, no such order could be made because, apart from Joel Terrace, the estate has been distributed. In that event the plaintiff seeks to have the second, third and fourth defendants pay his costs to be taxed with a certificate for second counsel. The defendants do not seek their costs from the plaintiff and it is clear that in the circumstances they have no alternative, in view of the distribution of the estate, but to bear their own costs directly. However, they oppose the order sought by the plaintiff, although he has been successful in obtaining an award.

11 The submission made by the defendants is based upon attempts to achieve settlement. Their solicitors wrote first "without prejudice" to the solicitors for the plaintiff on 31 October 1997, before the originating summons had been issued, offering $200,000 in satisfaction of any claim which the plaintiff might have. His solicitors replied on 23 December 1997. He rejected the original offer and sought the transfer to him of the Joel Terrace property and an additional payment of $300,000. On 5 January 1998, in a letter which was not marked "without prejudice", the defendants' solicitor rejected that counter offer and made a further offer to settle the matter for either $350,000 or the Joel Terrace property. That of course effectively equates with the award I made.

(Page 6)

12 However, on 9 January 1998, that offer was refused and the plaintiff, through his solicitors, asked that his earlier offer be reconsidered. Thereafter the defendants' position firmed up and on a without prejudice basis, by their solicitor's letter of 22 January 1998, they effectively withdrew their previous offer and reverted to that originally made, the payment of $200,000 in final settlement of all claims, an offer which was to lapse after 30 days. As has been seen, that letter was followed by the issue of the originating summons on 11 February 1998.

13 Although I was told that an attempt was made at court-based mediation, it was without success. There seems to have been no capacity to compromise on either side. The plaintiff took the view that the defendants' offer was not acceptable; there seems to have been no reversion to the high point of that offer and the defendants' view was that the plaintiff's counter offer was simply too high. The defendants now argue that the plaintiff should have accepted the offer made on 5 January 1998 because that is what he ultimately achieved. They suggest, therefore, that he should be denied any order for costs, but bear his own costs of the proceedings.

14 Of course, no formal offer of compromise was made pursuant to the Rules of the Supreme Court, O 24A, but that is not fatal to the defendants' proposition. The court will have regard to an offer to settle litigation which is made informally, but in clear terms, and which is reasonably made, but unreasonably refused. In that event the making of the offer may properly have an impact in respect of the exercise of the discretion of the court as to costs: Grbavac v Hart [1997] 1 VR 154, 155, 160. But there is no rule, of course, that the successful party should be deprived of his costs and indeed, may be ordered to pay the costs of the unsuccessful opposition in such circumstances.

15 I did in fact make such orders, having regard to an offer of settlement of an application made under the Act, in Dobb v Hacket (1993) 10 WAR 532. In doing so I took the view that the policy was that:

"The court should preserve in the minds of litigants the conscious consideration that their behaviour may place them at risk as to costs if they refuse reasonable offers of settlement. The court should be careful not to foster the proposition that obstinacy and unreasonableness will not be punished by orders as to costs. Such considerations foster the public interest in the desirability, not only from the point of view of the particular litigants in the case in question, but from the point of view of

(Page 7)

litigants generally, of the court so behaving as to encourage the achievement of reasonable and timely settlements."

But in that case, the ultimately unsuccessful defendants continued up to the hearing of the application to have available to the plaintiff to be accepted, offers which varied, but all had the common feature that they would have produced to the plaintiff a benefit greater than that achieved by the order of the court.

16 In this case, while it is true that an unequivocal offer to settle the matter was made by the defendants before the proceedings were instituted in terms which would have produced to the plaintiff an early achievement of the benefit finally obtained by the court order, and whilst it is true that that offer was rejected, it was not rejected in such a way as to imply that no further negotiation for settlement was possible. The plaintiff asked that his earlier offer be reconsidered. The response to that was the making of an offer well below the benefit achieved by the plaintiff by my order and there is nothing to suggest that the position reached at that time ever changed thereafter. It appears that the position of the parties respectively became entrenched and the opportunity for settlement which had briefly existed was gone.

17 In those circumstances I am not prepared to conclude that the plaintiff behaved so unreasonably in the matter that he should be deprived of his costs of the originating summons and I note that having regard to my refusal to make an order effectively for the payment to him of the income of the property from the date of death, the plaintiff has by his failure to accept the offer made at the beginning of 1998, effectively deprived himself of the income of the property from that time.

18 In my opinion, for those reasons, I should order that the second, third and fourth defendants pay the costs of the plaintiff to be taxed with a certificate for second counsel, which was sought and not opposed.