Dencio v Dencio in her capacity as Administrator of the Estate of the late Brian Gordon Dencio, Deceased (No 3)
[2021] ACTSC 61
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Dencio v Dencio in her capacity as Administrator of the Estate of the late Brian Gordon Dencio, Deceased (No 3) |
Citation: | [2021] ACTSC 61 |
Hearing Date: | On the papers |
DecisionDate: | 16 April 2021 |
Before: | Burns J |
Decision: | See [27] |
Catchwords: | PRACTICE AND PROCEDURE – COSTS – where each party claims entitlement to costs order – amounts inferred where no precise figures available – offer of settlement – whether Calderbank offer – where each party enjoyed a degree of success in proceedings – whether claims pleaded were clearly without merit – whether party had taken an uncompromising approach |
Legislation Cited: | Court Procedure Rules 2006 (ACT), r 1732 |
Cases Cited: | Dencio v Dencio in her capacity as Administrator of the Estate of the late Brian Gordon Dencio, Deceased [2020] ACTSC 250 Dencio v Dencio in her capacity as Administrator of the Estate of the late Brian Gordon Dencio, Deceased (No 2) [2020] ACTSC 340 Sunlec International Ltd v Carroll Australiasia Pty Ltd [2001] WASC 354 |
Parties: | Christine Margaret Dencio (Plaintiff) Danielle Kristy Dencio in her capacity as Administrator of the Estate of the late Brian Gordon Dencio, deceased (Defendant) |
Representation: | Counsel Dr D Hassall (Plaintiff) G Blank (Defendant) |
| Solicitors O’Connor Harris & Co (Plaintiff) Farrar Gesini Dunn (Defendant) | |
File Number: | SC 309 of 2020 |
BURNS J:
The background to this matter may be found in my earlier decisions Dencio v Dencio in her capacity as Administrator of the Estate of the late Brian Gordon Dencio, Deceased [2020] ACTSC 250 (the first decision) and Dencio v Dencio in her capacity as Administrator of the Estate of the late Brian Gordon Dencio, Deceased (No 2) [2020] ACTSC 340 (the second decision). In the second decision I made declarations as to the extent of the beneficial ownership of the subject property enjoyed by the plaintiff and the defendant. I gave directions for each party to file submissions as to costs, which they have done. Put briefly, each party claims an entitlement to a costs order in their favour.
Pleading history
In her Amended Statement of Claim, the plaintiff sought the following alternative forms of relief:
(a) a declaration that Brian Dencio had held the entirety of his 50 per cent interest in the property on trust for the plaintiff;
(b) a declaration that Brian Dencio had held half of his 50 per cent interest in the property on trust for the plaintiff;
(c) an Order that the plaintiff and the defendant do all things necessary to cause title to the Property to be registered in the names of the Plaintiff and the defendant as Registered Proprietors as tenants in common in the following shares: 75 per cent share to Christine Margaret Dencio and 25 per cent share to Danielle Kristy Dencio as Administrator of the Estate of Brian Gordon Dencio;
(d) an Order that such equitable compensation shall be paid or made to Colin Dencio by the defendant is assessed by the Court as payable or to be made to Colin Dencio as equitable compensation for the benefit and enrichment conferred on the defendant.
The plaintiff also sought an Order that her costs of and incidental to the proceeding be paid from the estate of Brian Dencio.
The defendant was sued in her capacity as Administrator of the Estate of the late Brian Dencio. The proceeding was defended by the defendant on the basis that she was entitled to the whole of Brian Dencio’s 50 per cent interest in the property and that Brian Dencio had not held any portion of his 50 per cent interest on trust for the plaintiff.
In the second decision I effectively declared that Brian Dencio held his 50 per cent share of the property upon a constructive trust in favour of the plaintiff as to 16 per cent, with Brian Dencio being the beneficial owner of the remaining 34 per cent. This fixed the relative entitlements of the plaintiff and the defendant.
A suggested error in calculation of the plaintiff’s entitlement
The defendant submitted that I made an error in the second decision in calculating the extent of the plaintiff’s entitlement to a beneficial interest in the property, based on an amount paid by her (facilitated by gifts of money from Colin Dencio) in the period after the death of Brian Dencio. The defendant observed that in the first decision I found at [108] that the plaintiff paid $116,379.00 between 2012 and 2017 in discharging the NAB mortgage after the death of Brian Dencio. From this sum I deducted $25,000.00, being 50 per cent of the sum borrowed in 2002. I did so to reflect that it was intended that both the plaintiff and Brian Dencio were to benefit from this borrowing. In the second decision however at [10], I noted that the balance of the mortgage when Brian Dencio died was about $98,000.00. From this I deducted $20,000.00 to reflect the half share of the 2002 borrowing which should be the responsibility of the plaintiff. The defendant submits that I should have used the figure of $25,000.00 as I did in the first decision. This would result in the plaintiff’s entitlement being 14.9 per cent rather than the 16 per cent which I allowed in the second decision.
The sum of $20,000.00 adopted by me in the second decision was not an oversight on my part. The 2002 refinancing, in which an additional $50,000.00 was borrowed secured by mortgage over the property, took place 10 years before the death of Brian Dencio. It was reasonable to infer that some amount had been paid off this aspect of the mortgage over that 10 year period although I did not have precise figures to work with. To isolate this aspect of the mortgage borrowing from the remainder of the borrowing would simply inflate the defendant’s interest and deflate that of the plaintiff as at the date of Brian Dencio’s death. I do acknowledge that an explanation for the difference should have been given in the second decision.
The plaintiff’s submissions on costs
The plaintiff seeks an Order that the defendant pay her costs of and incidental to these proceedings on a party and party basis, or alternatively, upon a solicitor and client basis having regard to the defendant’s conduct leading up to, and in the course of the proceedings. In support of that position the plaintiff submitted:
(a) that she has substantially succeeded in her claim;
(b) as an alternative to her claim for all of Brian Dencio’s half share of the property, she had claimed a half of that half share, or 75 per cent of the premises overall;
(c) the defendant had opposed her original claim and also her alternative claims;
(d) she had in a letter dated 7 August 2018 via her solicitors, suggested that the defendant bring “some form of “case stated”” before the Court to reduce legal costs, something which the defendant did not do; and
(e) that the defendant and her solicitors chose to register interest on the title to the property in her own name and not as the Administrator of Brian Dencio’s estate at a time when they were on notice that the plaintiff claimed an interest in the property.
The plaintiff acknowledged that an award of costs is in the discretion of the Court, but the usual rule is “costs follow the event”: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72. The plaintiff submitted that she was obliged to commence proceedings because the defendant refused to acknowledge her claim. The plaintiff submitted that it would be just to require the defendant, either personally or out of the estate of Brian Dencio, to pay the plaintiff’s costs because:
(a) the plaintiff had substantially succeeded in her claim;
(b) the plaintiff was obliged to commence proceedings to vindicate her claim;
(c) the plaintiff was obliged to engage solicitors and brief counsel to vindicate her claim; and
(d) the defendant had opposed her claim.
The plaintiff further submitted that “in the ordinary course, costs would be awarded out of the disputed estate – which is no more than 50% of the legal title owned by Brian Dencio, or rather, the 34% of the title now held by the defendant”.
The defendant’s submissions on costs
The defendant’s principle submission is that the plaintiff should pay her (the defendant’s) costs on a party and party basis up to and including 2 September 2019, and thereafter on an indemnity basis.
The alternative advanced by the defendant is that the plaintiff pay the defendant’s costs, including any reserved costs, on party and party basis.
The defendant’s principle submission is based on an offer of settlement she made to the plaintiff in a letter dated 19 August 2019, described by the defendant as a Calderbank offer, after she received the sworn affidavit in support of the plaintiff’s case. The offer was expressed to be “without prejudice save as to costs” and was expressed to be open for acceptance for a period of two weeks. The defendant’s offer may be summarised as follows:
(a) the defendant would transfer 30 per cent of her share (15 per cent of the whole) of the property to the plaintiff in recognition of Colin Dencio’s contribution to it;
(b) Colin Dencio would separately release Brian Dencio’s estate from any claim he may otherwise have against it;
(c) the plaintiff would receive a personal right to continue to reside at the property, free of any obligation to pay rent or any other occupation fee. That right would be conditional on the plaintiff keeping the property in reasonably good condition and paying ongoings such as rates, taxes etc. The plaintiff’s right to reside in the property would continue until such time as she was in breach of her obligations, died or otherwise ceased to reside at the property;
(d) the parties would agree that after the plaintiff’s right to reside at the property expired, the property would be sold and the proceeds divided in shares of 65 per cent to the plaintiff and 35 per cent to the defendant;
(e) the parties would agree to a mutual release from family provision claims; and
(f) the plaintiff would pay the defendant’s legal costs “in the agreed amount of $7,000”, otherwise each party to bear their own legal costs.
The defendant referred to the decision of McWilliam AsJ in Jornad Pty Ltd v Sapme Pty Ltd (No 3) [2020] ACTSC 335, where her Honour said, at [15] to [20]:
The principles applicable to Calderbank offers have been set out in Hulanicki v Walton (No 2) [2015] ACTCA 45 at [13]-[16]. It is not enough that an offer is made in terms which are either equal to, or more favourable to the recipient of the offer than, the judgment obtained. A special costs order is not justified unless the Court is satisfied that the rejection of an offer that was not bettered at trial was unreasonable: Jones v Bradley (No 2) [2003] NSWCA 258.
A common approach is for the Court to consider two questions, the first being whether the offer was a genuine offer of compromise, and the second being whether it was unreasonable in the circumstances for the opposing party to reject the offer.
As to the first question, drawing from cases such as Pires v DibbsBarker Canberra Pty Limited [2014] ACTSC 283 at [97] and Financial Integrity Pty Ltd v Farmer (No 4) [2014] ACTSC 145 at [24]-[46], the considerations include:
(a) whether the correspondence relied upon was either open correspondence, or marked “without prejudice save as to costs”, enabling it to be tendered at any hearing concerning costs;
(b) whether the offer was a genuine compromise;
(c) whether the offer was a complete or final offer (in the sense of the terms being clear, unambiguous, and not being subject to any further negotiation); and
(d) whether the letter expressly foreshadowed the possible consequence of being relied upon in support of a special costs order, such as for solicitor and client costs, if the offer was not accepted.
There is no doubt as to the terms of the offer being a genuine offer of compromise. It is also not disputed that the offer was complete or clear and that the Offer contained the necessary warning as to the potential for an application for a special costs order.
As to the second question, the following considerations were outlined in Hulanicki at [14], citing Hazeldene'sChicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; 13 VR 435 at [25] with approval:
(a) the stage of the proceedings at which the offer was received;
(b) the time allowed to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree’s prospects of success as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed; and
(f) whether the offer foreshadowed an application for indemnity costs in the event of it being rejected.
A recipient of an offer (the offeree) must have available sufficient material to enable an assessment to be made of the prospects of success of the claim, together with an assessment of the damages that may be awarded: Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [9].
The defendant submitted that the offer contained in the letter dated 19 August 2019 should be considered to be equal to or more favourable than the orders I made in the second decision, even though the offer was for the plaintiff to be entitled to a further 15 per cent of the property and I found that she was entitled to a further 16 per cent. The defendant submitted that in assessing the benefit of an offer of settlement, I am not limited to considering only monetary amounts, citing Sunlec International Ltd v Carroll Australiasia Pty Ltd [2001] WASC 354 at [16]. The defendant submitted that the proposed right of occupation of the property was of particular significance in the present case as the arrangements between the plaintiff, Brian Dencio and Colin Dencio had all been directed to allowing the plaintiff to continue to reside at the property. The proposed right of occupation of the property rent free was also of significant, if unquantifiable, value.
The defendant submitted that in assessing the reasonableness of the plaintiff’s refusal of the offer it was open to take into consideration that the plaintiff is without financial means and the only way that she was going to be able to continue to reside at the property without accepting the defendant’s offer was if she was wholly successful in in the present proceedings.
With regard to her alternative submission, and generally, the defendant submitted that many of the claims pursued by the plaintiff were obviously without merit. The defendant submitted that the plaintiff’s express trust claim was doomed to fail by virtue of it being statute-barred. In addition, the plaintiff’s unjust enrichment claim on behalf of
Colin Dencio was unsustainable because Colin Dencio had provided the relevant monies to the plaintiff as a gift. Resulting trust and “life estate” arguments advanced by the plaintiff in submissions were not reflected in the pleadings.
The defendant submitted that the sole claim by the plaintiff which succeeded was the claim based on a constructive trust. In assessing this fact and its relevance for costs, the defendant submitted the Court should take into account:
(a) that the plaintiff was “on notice”, at least from the time that the defendant’s defence was filed, that her claim based on an express trust was statute-barred;
(b) that the plaintiff was aware from Colin Dencio’s affidavit that the sums he had provided towards repayment of the mortgage had been a gift to her, so that her claim based on unjust enrichment could not succeed;
(c) that even the constructive trust case brought by the plaintiff had “substantially failed” as the plaintiff had sought 100 per cent of Brian Dencio’s interest in the property but she had only been awarded 32 per cent; and
(d) the constructive trust case succeeded on a different basis to that advanced by the plaintiff.
Regarding the plaintiff’s submission that the defendant had taken an “uncompromising position” regarding the plaintiff’s claim, the defendant submitted that consideration of the correspondence between the parties did not support the proposition. With regard to the plaintiff’s complaint that the defendant chose to register an initial interest on the title of the property in her own name and not as an administrator, the defendant submitted that this had not precluded the plaintiff from commencing or pressing her claim, nor did it preclude the parties from attempting to resolve the claims.
Finally, the defendant submitted that having been sued in her capacity of Administrator of the estate of the late Brian Dencio, r 1732 of the Court Procedure Rules 2006 (ACT) (the CPR) applies. This rule provides:
(1) This rule applies to a party who sues or is sued as a trustee.
(2) Unless the court otherwise orders –
(a) the party is entitled to have costs of the proceeding that were not paid by someone else paid out of the fund held by the trustee; and
(b) the costs must be assessed on a solicitor and client basis.
(3) However, the costs caused by an unsuccessful claim or unsuccessful resistance to any claim to property must not be paid out of the fund, unless the court otherwise orders.
Consideration
There can be no doubt that each party has enjoyed a degree of success in this proceeding. The plaintiff is entitled to 32 per cent of Brian Dencio’s share of the property, and the defendant is entitled to 68 per cent. This closely corresponds with the proposed division of Brian Dencio’s share of the property suggested in the defendant’s offer of settlement dated 19 August 2019. That offer, however, does not operate as a Calderbank offer because it was a term of the proposed settlement that Colin Dencio release the deceased’s estate from any claim he may have had against it. Colin Dencio was not a party to the proceeding, and the plaintiff had no way of forcing him to provide such a release. Nevertheless, the defendant’s offer, together with the parties’ correspondence, dispels any suggestion that the defendant had taken an uncompromising approach to the plaintiff’s claim.
The “alternative” claim by the plaintiff, that she be entitled to 50 per cent of Brian Dencio’s interest, is a claim for a considerably larger share of the property than I have found her to be entitled.
I am satisfied that the plaintiff pleaded and/or pressed a number of claims that were clearly without merit, including the express trust claim, an unjust enrichment claim, a resulting trust submission, a life estate submission and an “additional contributions” submission.
The plaintiff’s constructive trust case had merit, but not on the basis advanced by her. It was reasonable for the defendant, in her capacity as Administrator, to defend the plaintiff’s principle claim and her alternative claims. The offer of settlement made by the defendant shows that she was prepared to approach resolution of the plaintiff’s claim on the same basis found by the Court.
There is no evidence that the actions of the defendant in having herself appointed as administrator or in registering her claimed interest in the property on the title in her personal name increased the costs of either party in these proceedings, or hindered their ability to resolve the matter.
Based upon my finding that Brian Dencio held 32 per cent of his half-share of the property on trust for the plaintiff, that portion of his legal interest in the property does not form part of his estate. Any order that the plaintiff’s costs be paid out of the estate would therefore result in those costs falling unfairly on the defendant as sole beneficiary of the estate.
In my opinion each party should bear their own costs, but with the defendant being entitled to have her costs paid out of the estate of the late Brian Dencio, assessed on a solicitor and client basis. For more abundant caution, I make it clear that I decline to order that any of the plaintiff’s costs be paid out of the estate.
| I certify that the preceding twenty-seven [27] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Burns. Associate: Date: |
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