Carter v Brine (No 2) - [2016] SASC 36

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
CARTER v BRINE (No 2)
[2016] SASC 36
Judgment of The Honourable Justice Blue
16 March 2016
PROCEDURE - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT - COSTS OF ISSUES
PROCEDURE - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT - COSTS OUT OF A FUND - WHEN COSTS ALLOWED OUT OF FUND
Costs in action claiming equitable interests in properties and additional provision out of estate.
Reasons for judgment previously delivered upholding equitable claims in respect of 446 Gilles Street Adelaide and the Royal Bank of Scotland bank account and otherwise dismissing the action. Judgment entered for the plaintiff for $571,830.
The plaintiff and the beneficiary defendants each seek an order that the other party pay their costs of action subject to a reduction on account of claims or issues on which they did not succeed. The executor defendants seek an order that their costs on an indemnity basis be paid out of the estate.
Towards the end of the trial, the plaintiff made a Calderbank offer to the defendants. The plaintiff seeks an order for payment of her costs after the expiry of the offer on a solicitor and client basis.
Held:
1.      In broad terms, the plaintiff should notionally recover her costs in respect of 446 Gilles Street and most of her costs in respect of the RBS bank account and the beneficiary defendants should notionally recover their costs in respect of the English apartment and 440 Gilles Street (at [16]-[19]).
2.      Subject to issues of alleged misconduct and the offer, on an overall assessment each party should bear their own costs (at [20] - [27]).
3.      The plaintiff’s conduct in relation to the litigation does not amount to reason to make a different costs order (at [36]).
4.      The rejection by the beneficiary defendants of the plaintiff's offer does not amount to reason to make a different costs order (at [53]).
5.      The costs of the executors on an indemnity basis should be borne by the estate (at [56]).
6.      There should be no order as to the costs of action as between the plaintiff and the beneficiary defendants (at [57]).
Inheritance (Family Provision) Act 1972 (SA) 7, referred to.
Oshlack v Richmond River Council (1998) 193 CLR 72, discussed.
Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 5) (1996) 64 FCR 73; Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873; Australian Trade Commission v Disktravel [2000] FCA 62; Belongil Progress Association Inc v Byron Shire Council [2000] NSWLEC 118; Bostock v Ramsey Union District Council [1900] 2 QB 616; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107; Chappel v Hart (1998) 195 CLR 232; Copping v ANZ McCaughan Ltd (1995) 63 SASR 523; Ellis v Wallsend District Hospital (1989) 17 NSWLR 553; F King & Co v Gillard & Co [1905] 2 Ch 7; Forlyle Pty Ltd v Tiver [2007] SASC 464; Jackson & Anor v Abram & Anor [2015] SASCFC 175; Knight Frank Australia Pty Ltd v Paley Properties Pty Ltd [2014] SASCFC 103; Milne v Attorney-General for the State of Tasmania (1956) 95 CLR 460; Mok v Minister for Immigration, Local Government and Ethnic Affairs (No 2) (1993) 47 FCR 81; Rosenberg v Percival (2001) 205 CLR 434, considered.

CARTER v BRINE (No 2)
[2016] SASC 36
Civil:
BLUE J:

These reasons address the costs of this action.[1]
[1] These reasons should be read in conjunction with my reasons in Brine v Carter (No 2) [2016] SASC 37.
Ms Carter sued the Brine estate claiming an equitable interest or increased equitable interest in five properties owned by Professor Brine or by Professor Brine and herself and further or alternatively sought an order under section 7 of the Inheritance (Family Provision) Act 1972 (SA) (the Act) that additional provision be made out of the estate for her proper maintenance, education or advancement in life.
On 22 December 2015, I delivered reasons for judgment in this action[2] and in the related action by the Brine executors against Ms Carter (the Brine action) [3]. In this action, Ms Carter succeeded in her claim that she was entitled to an equitable 50% interest as tenant in common in 446 Gilles Street, Adelaide, which interest was valued at $567,500, and to £6,560 forming part of the balance of Professor Brine’s RBS bank account. Ms Carter did not succeed in her claims that she was entitled to an equitable interest in 440 Gilles Street, Adelaide, a greater than 50% equitable interest in the French townhouse or a greater than 60% equitable interest in the English apartment. Ms Carter did not succeed in her claim under the Act.
[2] Carter v Brine [2015] SASC 204.
[3] Brine v Carter [2015] SASC 205.
In light of my findings, I order that judgment be entered in favour of Ms Carter as at 23 December 2015 for payment of a money sum representing the value of her beneficial interest in 446 Gilles Street, Adelaide as at that date ($567,500) together with the value of her beneficial interest in the RBS bank account converted on 10 November 2014 when the balance of the account was converted into Australian dollars ($12,070.40) together with interest ($443.13). An adjustment of $11,182 was made in favour of the estate and adjustments of $10,939 and $4,573.68 were made in favour of Ms Carter. This resulted in judgment being entered as at 23 December 2015 for $571,830.68.
Ms Carter seeks an order that the Brines pay her costs of action because she has been successful overall, subject to a reduction of 20% to reflect claims in respect of which she failed. Ms Carter seeks an order that such costs be adjudicated on a party and party basis up to 26 August 2015 and on a solicitor and client basis thereafter because the Brines imprudently rejected a settlement offer made by her on 19 August 2015 open until 26 August 2015.
The Brine estate beneficiaries seek an order that Ms Carter pay their costs of action on a party and party basis because they have been successful overall, subject to a small reduction to reflect claims in respect of which Ms Carter succeeded.
The Brine estate executors, who were separately represented but took a very limited role in the action, seek an order that their costs be paid on an indemnity basis. This is not opposed by Ms Carter or the Brine estate beneficiaries but they argue about who should bear those costs.
Mixed success
General principles
The overriding principle is that costs are in the discretion of the Court and this discretion is not to be fettered by a priori rules. The circumstances of any one case will always be unique to a greater or lesser extent. Nevertheless, certain principles have developed about the manner in which the discretion is commonly exercised, subject always to qualifications and the need ultimately to exercise the discretion taking into account all relevant factors.
In the simplest case, there is a single claim involving a single cause of action in which the plaintiff is successful on all issues and obtains a money or other judgment, or in which the defendant is successful on all issues and obtains a judgment of dismissal. In such cases, the court will normally (subject to other relevant matters such as conduct and offers) exercise its discretion to order that costs follow the event.[4]
[4] Milne v Attorney-General for the State of Tasmania (1956) 95 CLR 460 at 477 per Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ; Copping v ANZ McCaughan Ltd (1995) 63 SASR 523 at 527-528 per King CJ (with whom Mohr and Nyland JJ agreed). See also rule 263 (1) of the Supreme Court Civil Rules 2006 (SA).
In the next simplest case, there is a single claim on which the plaintiff succeeds but in the course of which the plaintiff failed on a non-essential issue, or in which the defendant succeeds but in the course of which the defendant failed on a non-essential issue (the unsuccessful issue). In such cases, assuming that the overall successful party did not unreasonably pursue or defend the unsuccessful issue or conduct its case on that issue unreasonably, the court exercises a discretion whether to deprive that party of the costs of the unsuccessful issue.[5] The discretion is more likely to be exercised to deprive that party of the costs of the unsuccessful issue:
·the more separate and distinct the issue;
·the greater the proportion of costs of the issue out of total costs;
·the greater the costs of the issue;
·the less the merit of the unsuccessful issue from the perspective of the successful party.[6]
[5] Regardless of whether the mechanism is to order that the overall successful party not recover those costs attributable to the unsuccessful issue (to be determined by the taxing officer) or, as is more common, it is to order that the overall successful party recover only a proportion of its costs on the basis of a broad estimate of the proportion of costs referable to the unsuccessful issue.
[6] See Australian Trade Commission v Disktravel [2000] FCA 62 at [3] per French, Kiefel and Mansfield JJ; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [3]-[6] per Finkelstein and Gordon JJ.
The discretion is less likely to be exercised to order that the successful party pay the costs of the unsuccessful party in respect of the unsuccessful issue.[7] However, that discretion is more likely to be exercised if the successful party unreasonably pursued or defended the unsuccessful issue or conducted its case unreasonably in the respect of that issue.[8]
[7] See Mok v Minister for Immigration, Local Government and Ethnic Affairs (No 2)(1993) 47 FCR 81 at 84 per Keely J; Belongil Progress Association Inc v Byron Shire Council [2000] NSWLEC 118 at [14] per Cowdroy J; Forlyle Pty Ltd v Tiver [2007] SASC 464 at [30] per Debelle J (with whom Sulan and Vanstone JJ agreed).
[8] See Mok v Minister for Immigration, Local Government and Ethnic Affairs (No 2)(1993) 47 FCR 81 at 84 per Keely J; Belongil Progress Association Inc v Byron Shire Council [2000] NSWLEC 118 at [14] per Cowdroy J.
A variation of this case is when the plaintiff relies on two alternative causes of action in support of the same claim. An example is when a plaintiff sues for damages caused by a false representation pleading one cause of action in misleading conduct (false representation in trade or commerce) and one cause of action in negligent misrepresentation (false representation made negligently in breach of duty of care) and fails on the non-essential issue of proving negligence but succeeds on misleading conduct. Assuming that the plaintiff did not unreasonably pursue the alternative cause of action or conduct its case unreasonably in pursuit of that alternative cause of action, a court is likely to exercise its discretion in a manner analogous to the case in which the plaintiff unsuccessfully pursues a non-essential issue considered above.
In a complex case in which a plaintiff pursues two independent claims and succeeds on one but not the other, a court is more likely to order that the plaintiff recover the costs of the successful claim but pay the defendant’s costs of the other claim.[9] In such cases, there may be very little evidence or work undertaken that is common to both claims or at the opposite extreme there may be a large amount of evidence and work common to both claims. In very general terms, all other things being equal, the less the common evidence and work, the greater the likelihood that a court will order that the plaintiff recover the costs of the successful claim but pay the defendant’s costs of the unsuccessful claim. If the costs of the claims are ordered to follow the event of the claims, it may be appropriate to order that the general or residual costs of work common to both claims be paid by the plaintiff or defendant or divided between them or disregarded.
[9] Regardless of whether the mechanism to implement this is to make separate costs orders (necessitating two adjudications) or making a single order that one party recover only a proportion of its costs on the basis of a broad estimate of the proportion of costs referable to the two claims and taking into account costs common to both claims.
In cases in which the court makes a costs order reflecting mixed success by the parties, the court may wield a broad axe and make a single costs order that one party pay a proportion or component of the other party’s costs (resulting in a single adjudication) rather than making differential costs orders.
The present case
Ms Carter made five equitable claims in respect of five different properties: the French townhouse, the English apartment, 440 Gilles Street,[10] 446 Gilles Street and the RBS bank account. The claims were independent of each other in the sense that each claim might have succeeded or failed independently of the success of the other claims.[11]
[10] Ms Carter contended that this claim incorporated 446 Gilles Street as well as 440 Gilles Street. However, this claim was separate and distinct from her claim in respect of 446 Gilles Street alone.
[11] If the claim in respect of 440 Gilles Street had succeeded and had incorporated 446 Gilles Street as well, in a practical sense it may have rendered otiose the independent claim in respect of 446 Gilles Street, but nevertheless those two claims remained independent of each other.
Ms Carter succeeded in her claim in respect of 446 Gilles Street. While her success was in establishing a 50% beneficial interest as tenant in common and not in establishing a 100% beneficial interest as joint tenant, the incremental work due to the joint tenancy aspect of the claim was minimal and should be disregarded for the purpose of determining an appropriate costs order. Ms Carter succeeded in the cause of action of proprietary estoppel. This rendered otiose and superseded the alternative lesser cause of action of joint endeavour contribution, which it became unnecessary to decide. Given the alternative nature of the causes of action, in principle and subject to other considerations addressed below, Ms Carter should notionally recover all of the costs of her claim in respect of 446 Gilles Street.
Ms Carter failed in her claims in respect of 440 Gilles Street and the English apartment. She failed because I was not satisfied that she had expended monies on improvements to 440 Gilles Street or in excess of 60% on improvements to or holding costs for the English apartment nor that Professor Brine led her to believe that she would have a beneficial interest in 440 Gilles Street. In principle and subject to other considerations addressed below, the Brines should notionally recover their costs of the claims in respect of 440 Gilles Street and the English apartment. Those costs include the costs of the issue whether 440 and 446 Gilles Street were regarded by the parties as a single property, on which Ms Carter failed.[12]
[12] This issue overlapped with the issue arising in the Brine action whether, on the proper construction of his will, the reference to Professor Brine's “principal residence in Australia” included not only 440 but also 446 Gilles Street. For reasons elaborated in my reasons for judgment in Brine v Carter (No 2) [2016] SASC 37, the costs of these overlapping issues should be dealt with in this action rather than in the Brine action.
Ms Carter’s claim in respect of the French townhouse was subsumed in the new arrangement made between the parties for equal beneficial ownership of 446 Gilles Street. On the one hand, Ms Carter established most elements of a cause of action of joint endeavour contribution; I was not called on to decide whether she would have succeeded based on an extension to the failed joint endeavour contribution cause of action and my finding that she made additional contributions in excess of her original 50% interest was relevant to her ultimate success on the 446 Gilles Street claim. On the other hand, Ms Carter failed on the promissory estoppel cause of action and did not succeed (although she did not fail) on a joint endeavour contribution cause of action. Relatively small time was devoted to the promissory estoppel cause of action and relatively greater time was devoted to the joint endeavour contribution cause of action or matters common to both. In principle and subject to other considerations addressed below, neither party should recover their costs in respect of the French townhouse subject to one qualification. The qualification is that in principle and subject to other considerations addressed below, Ms Carter’s costs of the factual issue of the respective contributions to improvements to the French townhouse up to mid 2001 should notionally be regarded as part of her costs in respect of 446 Gilles Street.
Ms Carter partially succeeded in her claim in respect of the RBS bank account. She claimed 60% of the whole of the balance in the bank account (60% of £60,933). She succeeded in her claim to 60% of £10,933 of that balance being the monies remaining in the bank account that could be traced as having derived from rental income from the English apartment. The costs in respect of this claim are much smaller than in respect of any of the claims in respect of the real properties and are relatively small overall. In principle and subject to other considerations addressed below, Ms Carter should notionally recover most of her costs of her claim in respect of the RBS bank account.
Ms Carter’s claim under the Act was made in the alternative to her equitable claims in the sense that she conceded that the statutory claim should be dismissed if she succeeded in her equitable claims to a 100% interest in 440 or 446 Gilles Street or both. However, Ms Carter did not succeed in her equitable claims to that extent and it was therefore necessary to consider her statutory claim against the background of my findings on her equitable claims. In that context, her statutory claim failed. It was unnecessary to reach a conclusion whether her statutory claim would have succeeded in the absence of the success that she did have on her equitable claims and in defending the breach of fiduciary duty claim in the Brine action. Ms Carter’s claim under the Act resulted in substantial work by both parties. However, the costs of this claim were smaller than the costs of the equitable claims.
Some of the work undertaken was common to all or several of the claims. Ready examples are cross-examination of Ms Carter as to credit and evidence of overall contributions by the parties to their relationship. Overall, the costs of matters common to the claims were relatively small compared to the costs of the six claims.
The Brines contend that, if Ms Carter had confined her claims to 446 Gilles Street and the RBS bank account, the costs of the action would have been much smaller. In support of that contention, Martin Brine gave evidence that hypothetically in that event the Brines would not have engaged Mr McPharlin to provide a report or give expert evidence about the overall contributions by the parties to their relationship between 1997 and 2012. He gave evidence that the Brines, and in particular Matthew Brine, would themselves have undertaken the analysis that Mr McPharlin undertook. Martin Brine was cross-examined by way of challenge to this hypothetical evidence.
In relation to Martin Brine’s evidence, I accept that he now holds the belief that Mr McPharlin would not have been engaged if Ms Carter had confined her claims to 446 Gilles Street and the RBS bank account. However, it is notorious that it is very difficult for a party to assess after the event how he or she would have acted in hypothetical circumstances when that party has a clear self-interest as to such hypothetical action.[13] When the Brines made the decision to engage Mr McPharlin, they had received a cost estimate that was exceeded only after Mr McPharlin had performed substantial work. The analysis undertaken by Mr McPharlin, and indeed by Mr Camens in response and by Mr McPharlin and Mr Camens jointly, was highly complex and involved the exercise of judgment requiring considerable forensic accounting expertise and experience. The Brines lacked the necessary expertise and time to themselves perform that analysis and, if they had attempted to do so, I find that they would nevertheless have engaged Mr McPharlin in due course to perform it. I find that they would not have abandoned reliance on the overall contributions by the parties to their relationship and merely addressed contributions to 446 Gilles Street and the RBS bank account.
[13] See, for example, Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 at 581-582 per Samuels JA (with whom Meagher JA agreed); Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 5) (1996) 64 FCR 73 at 75-77 per Lindgren J; Chappel v Hart [1998] HCA 55, (1998) 195 CLR 232 at [93] per Kirby J; Rosenberg v Percival [2001] HCA 18, (2001) 205 CLR 434 at [158]-[159] per Kirby J.

In relation to the costs of the action more generally, it is clear that the costs of the action would have been substantially less if Ms Carter had confined her claims to 446 Gilles Street and the RBS bank account. On the other hand, in that event Ms Carter would have recovered all of her costs of action on a party and party basis. In addition, when a plaintiff succeeds on only some of multiple claims, it is overly simplistic and inappropriate merely to assess what the costs of action would have been if the plaintiff had confined her or his claims to those that were successful.
The Brines identify a large number of what they characterise as issues, being issues relating to the separate claims by Ms Carter or common to all claims. They submit that they were successful on many of those issues, including some of the issues relating to the claims in respect of which Ms Carter was successful. In the circumstances of this case, the approach of the Brines to the identification of issues and analysis as to who was successful in relation to each is overly precise, unrealistic and artificial. However, in a broader sense I take into account the mixed success of the parties on issues as well as mixed success on claims.
The Brines referred to aspects of Ms Carter’s pleaded or original case at trial which they contend she ultimately abandoned or did not pursue and to aspects in which she changed her case over the course of the trial. While I take Ms Carter’s conduct in this respect into account holistically, it had a relatively small effect on the overall costs.
Ultimately, it is necessary to take a holistic view of the costs incurred in the action, the degree of success enjoyed by each party on the different claims and issues, the extent to which work was common to multiple claims and the responsibility of each party for the litigation. Both parties have succeeded to a substantial degree and both parties have failed to a substantial degree. Wielding a broad axe, neither party should be ordered to pay the other party’s costs of action.
Misconduct
A relevant factor in exercising the discretion as to costs is the extent to which the costs of litigation have been caused or increased by misconduct by a party in, relating to or leading up to the litigation.[14]
[14] Bostock v Ramsey Urban District Council [1900] 2 QB 616 at 623 per Vaughan Williams LJ; Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874 per Devlin J.
For this purpose, the actual conduct of the party that is the subject matter of the action does not itself qualify as misconduct.[15] The mere fact that the evidence of a party is rejected does not qualify as misconduct.[16]
[15] F King & Co v Gillard & Co [1905] 2 Ch 7 at 11 per Vaughan Williams LJ.
[16] Knight Frank Australia Pty Ltd v Paley Properties Pty Ltd [2014] SASCFC 103 at [57] and [62] per Blue J (with whom Sulan and Parker JJ agreed).
If it is concluded that a party has been guilty of relevant misconduct, it is necessary to analyse whether, and if so to what extent, the relevant misconduct caused or contributed to the existence, continuation or extent of the litigation and hence the incurring of costs in the litigation.[17]
[17] Knight Frank Australia Pty Ltd v Paley Properties Pty Ltd [2014] SASCFC 103 at [57]-[59] per Blue J (with whom Sulan and Parker JJ agreed).
In Oshlack v Richmond River Council,[18] McHugh J said:
The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd, Devlin J formulated the relevant principle as follows:
"No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct."
"Misconduct" in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute.[19]
[18] [1998] HCA 11; (1998) 193 CLR 72.
[19] At [69]. (Citations omitted)
The Brines contend that Ms Carter gave false evidence in various respects and refer to findings I made rejecting certain evidence given by her or in making an adverse finding in relation to her credit. As noted above, the mere fact that the evidence of a party is rejected does not in itself qualify as relevant misconduct. Something more is required to amount to relevant misconduct being treated as causing or contributing to the costs incurred in the action. I am not satisfied that this is so in respect of Ms Carter’s evidence.
The Brines contend that Ms Carter breached her disclosure obligations in the action and/or her duties as an executor to advance her case in various respects and refer to findings I made about her not seeking, disclosing or producing bank statements, tax returns, documents relating to investments and income or estate documents. While Ms Carter’s conduct in this respect was not exemplary and it did to some degree increase the costs incurred in the action, I am not satisfied that it was sufficiently egregious or sufficiently increased the costs of action as to justify a different costs order to that which would otherwise be appropriate.
The Brines contend that Ms Carter focused on her case on the four real properties and tried to avoid scrutiny of the overall contributions of the parties to their relationship. This was a strategic decision made by Ms Carter and does not amount to relevant misconduct for present purposes.
The Brines contend that Ms Carter put scurrilous allegations to the Brine brothers in cross-examination, for which she had no proper basis and which she did not pursue in closing address, concerning their non-pursuit of complaints about her breaches of her disclosure obligations and executor duties so as to be able to make a forensic point. I reject that contention.
Overall, Ms Carter’s conduct in, relating or leading up to the litigation is not a reason to make a different order as to costs than would otherwise be appropriate.
Offer of settlement
Ms Carter contends that an order should be made that the Brines pay her costs of action, or a proportion thereof, incurred after 26 August 2015 on a solicitor and client basis because they imprudently rejected a settlement offer made by her on 19 August 2015.
The trial commenced on 10 August 2015 and was estimated to last 10 days. After the completion of Ms Carter’s case apart from her expert witnesses, on 19 August 2015 (day 8) she made a without prejudice save as to costs offer to the Brines to settle the action (a Calderbank offer[20]). The offer was expressed to be open for acceptance until 5 pm on 26 August 2015. The trial proceeded on 19 and 20 August 2015 when Daniel and Matthew Brine gave evidence.
[20] Calderbank v Calderbank [1975] 3 All ER 333.
At the end of 20 August 2015, the trial was adjourned to 31 August 2015 for completion of evidence. Evidence was completed on 31 August, 1 and 2 September 2015. The trial was then adjourned for closing addresses on 28 October 2015.
Ms Carter’s offer was an indivisible offer to settle this action, the Brine action and the costs of action. Ms Carter offered to consent to judgment being entered in her favour against the estate in this action for:
1. payment to her of $900,000;
2.transfer to her of Professor Brine’s 40% interest in the English apartment; and
3. payment to her of her costs of action fixed at $350,000.
The offer was made on the basis that, in consideration of the judgment in her favour, Ms Carter would:
1. transfer to the Brines her 50% interest in the French townhouse;
2.surrender her life interest under the will in 440 Gilles Street (and 446 Gilles Street if applicable); and
3.consent to judgment dismissing her equitable claims in respect of 440 and 446 Gilles Street, the French townhouse and the RBS bank account and otherwise dismissing the action.
The offer was made on condition that the Brine action be dismissed with each party bearing their own costs.
Five issues arise in relation to Ms Carter’s contention. Did Ms Carter better the offer? Was it open for acceptance for a reasonable time? Was it made too late in the progress of the action? Did the Brines imprudently reject it? What effect should the rejection of the offer have on costs?
To answer the first question, it is necessary to assess the value of the offer compared to the value of the judgment obtained by Ms Carter. The first step is to assess the monetary value of Ms Carter’s offer and the second step is to assess non-monetary aspects of the offer. Leaving aside initially the component of the offer relating to costs, I assess the monetary value of the offer as $410,000 being the sum of the following components:
Cash legacy to be received                    $900,000
English apartment 40% interest to be received  $170,000[21]
Less French townhouse 50% interest to be foregone             -$160,000[22]
Less life interest in 440 Gilles St to be foregone  -$520,000[23]
Net monetary value  $390,000
[21] alue estimated by executors in statement of assets and liabilities at £200,000. 40% interest £80,000. Converted to A$ at $2.13 to £1 at 31 August 2015. Rounded to nearest $10,000.
[22] Value estimated at €200,000. 50% interest €100,000. Converted to A$ at $1.58 to €1 on 31 August 2015. Rounded to nearest $10,000.
[23] alue based on Mr Crump’s valuation of $590,900 at March 2015 discounted to $520,000 because his valuation was based on rental return of 3.4% per annum and I find that a market rental would have been in the vicinity of 3% per annum based on Mr Waterhouse’s evidence.
This figure is less than the money judgment Ms Carter obtained for $571,830.68. However, there are four qualifications to this comparison. First, Ms Carter’s offer included as an indivisible component payment of her costs of action fixed at $350,000. I infer that this represented her costs actually incurred up to 19 August 2015 (rounded to the nearest $10,000) rather than an estimate of costs that would be taxed on a party and party basis. No evidence was adduced as to the amount of party and party costs that would have been adjudicated. The ratio of party and party costs to actual costs commonly ranges from half to three quarters although it can be less or more than this range. Based on a rough rule of thumb that on average party and party costs are adjudicated in the vicinity of two thirds of actual costs, the offer entailed payment of approximately $120,000 in addition to party and party costs. This figure needs to be added to the net monetary value of the offer, giving $510,000 which is still less than $571,830.68 being the money value of the judgment that Ms Carter obtained.
Secondly, if Ms Carter had made a Calderbank offer in the same terms as her offer but submitting to such order as to costs as the Court should think fit, it is doubtful that 100% of her costs of action on a party and party basis would have been ordered in her favour. The offer was premised on the basis that Ms Carter would only be partially successful in her claims and a hypothetical costs order may well have reflected a mixed result entailing a reduction in the costs of action.
Thirdly, the assessment above of party and party costs being $230,000 is only a very general approximation based on a rule of thumb. The costs assessed on an adjudication could well be less than this figure.
Whenever indivisible offers are made incorporating a fixed sum for costs, it becomes very difficult to compare the actual result with the hypothetical result if the offer had been accepted because of the difficulty of ascertaining what costs would hypothetically have been ordered and adjudicated.[24]
[24] See Jackson & Anor v Abram & Anor [2015] SASCFC 175 at [118] and [121] per Stanley J (with whom Peek and Lovell JJ agreed).
Fourthly, Ms Carter’s offer differed in nature from the outcome of the action and from any outcome that was possible in the action. It included Ms Carter effectively selling to the estate (or the estate redeeming) her life interest for a lump sum in the vicinity of $520,000. The executors and beneficiaries may not have wished to redeem that life interest or to have done so for a lump sum in the vicinity of $520,000. It is very unlikely that such an order would have been made under the Act in the action. Likewise, Ms Carter’s offer included Ms Carter effectively trading her beneficial interest in the French townhouse (which had proved difficult to sell) for the estate’s beneficial interest in the English apartment. The executors and beneficiaries may not have wished to make such an exchange or do so on those terms.
In all of the circumstances and given the complications, I am unable to conclude that Ms Carter bettered the offer. However, it was an offer that involved genuine compromise in the same overall ballpark as the actual result and I defer deciding its potential effect on a costs order until after considering the other matters.
As to the second question, the offer was open for acceptance for a sufficient time. It was made after Ms Carter had completed her evidence at a point at which the Brines were objectively in a good position to assess quickly their prospects of success. It followed very soon after a mediation at which the Brines must have been in a position to assess terms on which they would be prepared to settle the action. They ought to have been in a position to assess whether or not to accept the offer within a short time. They did not respond to the offer suggesting that they did not have sufficient time in which to consider it.
As to the third question, the offer was made very late in the progress of the action. As at 26 August 2015 when the offer expired, nine days of trial had been completed and there remained only two or three days’ evidence and addresses to finish the trial.
As to the fourth and fifth questions, given the lateness of the offer and the matters considered in respect of the first question, the rejection of the offer by the Brines does not alter the costs order that is otherwise appropriate.
Costs of the executors
The executors seek an order that their costs be paid on an indemnity basis either out of the estate or by the substantive parties to the action.
The costs incurred by the executors in the action were approximately $6,500. The work undertaken by the solicitors for the executors was essentially work relating to Ms Carter’s claim under section 7 of the Act and providing information relating to the value of the estate.
The costs of the executors on an indemnity basis should be borne by the estate. While this entails that they will be borne by the Brines, this is offset by the fact that Ms Carter will bear the court filing and trial fees.
Conclusion
There should be no order as to the costs of action as between Ms Carter and the Brines.
The costs of action of the executors should be paid by the estate on an indemnity basis.