Catherine Louise Faulds v Robert James Faulds as trustee for the Estate of the Late Brian Charles Faulds and the Estate of the Late Robert Scott Faulds (No 2)
[2013] ACTSC 203
•26 September 2013
CATHERINE LOUISE FAULDS v ROBERT JAMES FAULDS AS TRUSTEE FOR THE ESTATE OF THE LATE BRIAN CHARLES FAULDS AND THE ESTATE OF THE LATE ROBERT SCOTT FAULDS (NO 2) [2013] ACTSC 203 (26 September 2013)
COSTS – Application by defendant for costs – where defendant’s application for summary judgment was successful – where plaintiff refused to accept a reasonable offer of settlement by the defendant – where application included substantial submissions by the defendant on delay, acquiescence or laches – whether the costs should be paid out of the estate – whether each party should bear their own costs – whether costs should be paid on an indemnity basis, solicitor and client basis, or a party and party basis.
Held: The plaintiff pay the defendant’s costs of the proceeding assessed on a party and party basis to be agreed or taxed.
Catherine Louise Faulds v Robert James Faulds as Trustee for the Estate of the late Brian Charles Faulds and the Estate of the late Robert Scott Faulds [2013] ACTSC 165 (15 August 2013)
Perpetual Trustee Company Limited v Baker [1999] NSWCA 244
Re, Cutcliffe’s Estate [1959] P 6
Watson v Ralph (1982) 148 CLR 646
Dal Pont GE, Law of Costs (2nd ed, Lexis Nexis Butterworths, 2009)
No. SC 580 of 2011
Judge: Besanko J
Supreme Court of the ACT
Date: 26 September 2013
IN THE SUPREME COURT OF THE )
) No. SC 580 of 2011
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:CATHERINE LOUISE FAULDS
Plaintiff
AND:
ROBERT JAMES FAULDS AS TRUSTEE FOR THE ESTATE OF THE LATE BRIAN CHARLES FAULDS AND THE ESTATE OF THE LATE ROBERT SCOTT FAULDS
Defendant
ORDER
Judge: Besanko J
Date: 26 September 2013
Place: Adelaide
THE COURT ORDERS THAT:
The plaintiff pay the defendant’s costs of the proceeding assessed on a party and party basis to be agreed or taxed.
These reasons deal with the costs of a proceeding in this Court. On 15 August 2013, I made an order that there be judgment for the defendant on the plaintiff’s claim in the proceeding. That order was made on the defendant’s application for summary judgment. I delivered reasons for making the order (Catherine Louise Faulds v Robert James Faulds as Trustee for the Estate of the late Brian Charles Faulds and the Estate of the late Robert Scott Faulds [2013] ACTSC 165 (15 August 2013)) and those reasons should be read with these reasons.
The defendant claims that the plaintiff should pay his costs of the proceeding on an indemnity basis, or, on a solicitor and client basis, or, on a party and party basis. The plaintiff claims that both parties’ costs should be paid out of the estate, or in the alternative, that each party should bear their own costs.
Each party filed and served written submissions addressing the issue of costs and neither sought to be heard further on the issue. Each party also filed and served an affidavit. The plaintiff did not object to the defendant’s affidavit (affidavit of Gregory Brackenreg sworn on 26 August 2013), but the defendant objected to parts of the plaintiff’s affidavit (affidavit of Lorraine White sworn on 6 September 2013). I would dismiss all but two of the defendant’s objections. I uphold the objections to paragraphs 3 and 5 on the ground that those paragraphs are not relevant to the issues before me. Paragraph 23 is of marginal relevance, but I will allow it to stand as a piece of background information. The other paragraphs are admitted either because they are part of the background, or, the decision to join the plaintiff’s brother – a decision criticised by the defendant – or the plaintiff’s attempts to have the construction of the will dealt with as a preliminary point.
A summary of my conclusions is as follows. For reasons I will give, I do not think that the proper order in this case is that the costs of the respective parties be paid out of the estate. Nor do I think it appropriate to order that each party bear their own costs. The defendant has been successful and should have his costs. The difficult question is whether the defendant’s costs should be assessed on an indemnity basis, or, on a solicitor and client basis, or, on a party and party basis. The defendant advanced three broad grounds in support of his application for indemnity costs. In my opinion, only one ground – the refusal by the plaintiff to accept a reasonable offer of settlement by the defendant – may provide a proper basis for an order for indemnity costs. The defendant made four offers to settle each by letter from his solicitors sent during the course of the proceeding. For reasons I will give, I have decided that only the last of these offers which was an offer made by letter from the defendant’s solicitors dated 2 May 2013, could form the basis for an order for indemnity costs. However, also for reasons I will give, I have decided that it is not appropriate to make an order for indemnity costs. The appropriate order is that the plaintiff pay the defendant’s costs of the proceeding assessed on a party and party basis to be agreed or taxed.
The plaintiff submits that there is a principle to the effect that the Court may order that costs be paid out of an estate where the litigation has resulted from the poor drafting of a will by the testator or his agent. She referred to Re, Cutcliffe’s Estate [1959] P 6; Watson v Ralph (1982) 148 CLR 646 at 654; Perpetual Trustee Company Limited v Baker [1999] NSWCA 244 at [13] – [15] per Giles JA and Brownie AJA.
It is true that in my earlier reasons I acknowledged that the defendant’s construction of the will, which I accepted as the correct construction, involved reading “my children” as “me” in clause 2 (at [58]). However, it seems to me that this case is very different from the paradigm case where an order for the costs of the proceeding to be paid out of an estate is appropriate. For a start, it is strongly arguable that there is no part of the testator’s estate which may be identified for the purposes of such an order. It is not a matter of tracing where there is an argument that there has been a breach of trust, but rather, where there is an undistributed estate and distribution awaits the Court’s ruling. Without complaint from any party, the defendant distributed the testator’s estate in late 1998. Even if the appropriate date is March 2000 when the plaintiff’s brother received his share, there is a very substantial delay between that date and the date upon which the plaintiff commenced this proceeding. There are issues of delay, acquiescence and laches and, although I did not determine the merits of these issues on the defendant’s summary judgment application, they are genuine issues. All in all, it seems to me that this is quite a different case from one where there is an undistributed estate and the parties approach the Court for a ruling in the case of a poorly drafted will.
In my opinion, there is no reason to make an order that each party bear their own costs of the proceeding. The plaintiff brought this action and was unsuccessful. She should pay the defendant’s costs of the proceeding.
As I have said, the defendant advanced three grounds in support of his application for indemnity costs. I will deal with the offers he made in due course. However, it is convenient at this point to mention his other two grounds. First, the defendant submits that the fact that I entered judgment in his favour on a summary judgment application is a circumstance supporting an order for indemnity costs. In the particular circumstances of this case, I think that this is a factor of limited weight. I did hold that the plaintiff’s claim was untenable, but that was in a context where I reached that conclusion after what I would describe as extensive argument. Secondly, the defendant submits that the plaintiff has adopted an unreasonable and combative attitude in the proceeding and that that is a ground upon which indemnity costs may be awarded. He identifies various issues in his written submissions which I have considered but which I will not repeat (see paragraph 11 et seq.). I am not persuaded that any of these matters form a proper basis for an award of indemnity costs.
I come now to the offers the defendant made to settle the proceeding.
The plaintiff commenced the proceeding in August 2011. On 8 September 2011 the defendant’s solicitors wrote to the plaintiff’s solicitors offering to settle the proceeding on the basis that they be discontinued and each party bear their own costs. That offer was repeated in a letter from the defendant’s solicitor to the plaintiff’s solicitors dated 12 September 2011. These offers did not involve a genuine element of compromise in the relevant sense (see Dal Pont GE, Law of Costs (2nd ed, Lexis Nexis Butterworths, 2009) at [13.53 – 13.55]).
On 23 September 2011 the plaintiff made an application in the proceeding that the defendant be restrained from dealing with, or dissipating, the sum of $350,000 from the estate of the grandfather. On 29 September 2011 a judge of this Court made an order that the application be dismissed and the plaintiff was ordered to pay the defendant’s costs.
On 16 December 2011 the defendant’s solicitors by letter made a further offer to the plaintiff’s solicitors. The offer was that the plaintiff discontinue the proceeding and that the defendant pay the plaintiff the sum of $25,000. The offer provided that the defendant would forgive the costs order made against the plaintiff on 29 September 2011. The costs relating to that order were said by the defendant to be $16,124.90 including GST. Otherwise, the offer provided that each party would bear their own costs.
On 30 March 2012 the defendant made his application for summary judgment. That application was set down for hearing on 17 December 2012, but at that time, it was not reached. It was argued before me on 27 May 2013.
On 2 May 2013 the defendant’s solicitors wrote to the plaintiff’s solicitors and advised them that an offer made by the plaintiff was rejected. I should say that the plaintiff had made a number of offers, but it is unnecessary for me to set out the details. In their letter dated 2 May 2013 the defendant’s solicitors made two offers. They offered to settle the proceeding on the basis that the defendant would pay the plaintiff the sum of $10,000 and the plaintiff’s costs to be agreed or assessed excluding those costs incurred as a result of the application made on 23 September 2011. The alternative offer was that the defendant would pay the plaintiff the sum of $20,000 together with the plaintiff’s costs and disbursements in the agreed amount of $40,000.
The only offer which I think might form the basis for an order for indemnity costs is the offer made by letter dated 2 May 2013. As to the third offer, although the offer is a factor, I am entitled to take into account other matters (Dal Pont 2009 at [13.58]). It was an offer which would not see any return to the plaintiff and it is likely she would be required to meet some of her costs from her own resources. Furthermore, I place weight on the fact that at about the time the offer was made the plaintiff was seeking to have the proper construction of the will determined as a preliminary point. That, it seems to me, was a sensible course. I am not critical of the defendant in this regard, but rather, think that the plaintiff should be given some credit for her attempts to have the proper construction of the will determined as a preliminary point. In this respect, I note the email from the plaintiff’s senior counsel to the defendant’s solicitors dated 26 September 2011, the telephone conversation between solicitors on the following day and the letter from the plaintiff’s solicitors to the defendant’s solicitors dated 13 December 2012.
The plaintiff’s refusal of the defendant’s offer by letter dated 2 May 2013 qualifies as a basis to make an order that the defendant’s costs after that date be assessed on an indemnity basis. However, I am not disposed to make such an order because the costs after that date were, for the most part, costs associated with the preparation and hearing of the defendant’s summary judgment application and that application included substantial submissions by the defendant on the question of delay, acquiescence or laches. As I said in my earlier reasons, these matters can raise fact laden inquiries inappropriate for determination on an application for summary judgment. I think that that is not an insignificant matter to be placed in the scales against an order for indemnity costs.
In all the circumstances, I think the appropriate order is that the plaintiff pay the defendant’s costs of the proceeding assessed on a party and party basis to be agreed or taxed.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.
Associate:
Date: 26 September 2013
Counsel for the plaintiff: Ms L White
Solicitor for the plaintiff: Baker Deane & Nutt
Counsel for the defendant: Mr G Brackenreg
Solicitor for the defendant: Meyer Vandenberg
Date of written submissions: 26 August 2013 and 6 September 2013
Date of judgment: 26 September 2013
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