Eckersley v Graeme Peter Eckersley as Executor of the Estate of the Late Gloria Dawn Eckersley (Dec)
[2016] WASC 154 (S)
•9 SEPTEMBER 2016
ECKERSLEY -v- GRAEME PETER ECKERSLEY AS EXECUTOR OF THE ESTATE OF THE LATE GLORIA DAWN ECKERSLEY (DEC) [2016] WASC 154 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASC 154 (S) | |
| Case No: | CIV:2267/2013 | 22 AUGUST 2016 | |
| Coram: | CHANEY J | 9/09/16 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Second defendant ordered to pay costs New limit of costs imposed | ||
| B | |||
| PDF Version |
| Parties: | GRAEME PETER ECKERSLEY GRAEME PETER ECKERSLEY AS EXECUTOR OF THE ESTATE OF THE LATE GLORIA DAWN ECKERSLEY (DEC) RAYLENE DAWN ECKERSLEY AS EXECUTOR OF THE ESTATE OF THE LATE GLORIA DAWN ECKERSLEY (DEC) BRENTON JOHN AUGHEY AS EXECUTOR OF THE ESTATE OF THE LATE GLORIA DAWN ECKERSLEY (DEC) RAYLENE DAWN ECKERSLEY MURRAY ALLAN ECKERSLEY |
Catchwords: | Costs Inheritance Act application Scales inadequate Complexity and importance of matter Indemnity costs Calderbank offer Whether nonacceptance of offer unreasonable Whether limit on costs should be removed Whether new limit should be imposed Proportionality of costs |
Legislation: | Legal Profession Act 2008 (WA), s 280(1), s 280(2), s 280(2)(c) Rules of the Supreme Court 1971 (WA), O 1 r 4B |
Case References: | Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S) Crawley Investments Pty Ltd v Elman [2014] WASC 233 (S) Daniels v Hall (as Administrator of the Estate of Arnold Edward Daniels) [No 2] [2014] WASC 272 Dean v Collins [No 2] [2015] WASCA 151 Eckersley v Graeme Peter Eckersley as Executor of the Estate of the late Gloria Dawn Eckersley (Dec) [2016] WASC 154 EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S) Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) Red Hill Iron Ltd v API Management Pty Ltd [2012] WASC 323 (S) Unioil International Pty Ltd v Deloitte Touche Tohmatsu [No 2] (1997) 18 WAR 190, 193 Wainwright v Barrick Gold of Australia Ltd [2014] WASCA 15 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
The Estate of Gloria Dawn Eckersley late of 28A Ballagin Street, Wagin in the State of Western Australia, deceased Probate No 297/2013
- Plaintiff
AND
GRAEME PETER ECKERSLEY AS EXECUTOR OF THE ESTATE OF THE LATE GLORIA DAWN ECKERSLEY (DEC)
RAYLENE DAWN ECKERSLEY AS EXECUTOR OF THE ESTATE OF THE LATE GLORIA DAWN ECKERSLEY (DEC)
BRENTON JOHN AUGHEY AS EXECUTOR OF THE ESTATE OF THE LATE GLORIA DAWN ECKERSLEY (DEC)
First Defendants
RAYLENE DAWN ECKERSLEY
Second Defendant
MURRAY ALLAN ECKERSLEY
Third Defendant
Catchwords:
Costs - Inheritance Act application - Scales inadequate - Complexity and importance of matter - Indemnity costs - Calderbank offer - Whether nonacceptance of offer unreasonable - Whether limit on costs should be removed - Whether new limit should be imposed - Proportionality of costs
Legislation:
Legal Profession Act 2008 (WA), s 280(1), s 280(2), s 280(2)(c)
Rules of the Supreme Court 1971 (WA), O 1 r 4B
Result:
Second defendant ordered to pay costs
New limit of costs imposed
Category: B
Representation:
Counsel:
Plaintiff : Dr P R MacMillan
First Defendants : No appearance
Second Defendant : Ms W F Gillan
Third Defendant : Ms W F Gillan
Solicitors:
Plaintiff : Taylor Smart
First Defendants : No appearance
Second Defendant : Butcher Paull & Calder
Third Defendant : Butcher Paull & Calder
Case(s) referred to in judgment(s):
Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S)
Crawley Investments Pty Ltd v Elman [2014] WASC 233 (S)
Daniels v Hall (as Administrator of the Estate of Arnold Edward Daniels) [No 2] [2014] WASC 272
Dean v Collins [No 2] [2015] WASCA 151
Eckersley v Graeme Peter Eckersley as Executor of the Estate of the late Gloria Dawn Eckersley (Dec'd) [2016] WASC 154
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S)
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95
Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
Red Hill Iron Ltd v API Management Pty Ltd [2012] WASC 323 (S)
Unioil International Pty Ltd v Deloitte Touche Tohmatsu [No 2] (1997) 18 WAR 190, 193
Wainwright v Barrick Gold of Australia Ltd [2014] WASCA 15 (S)
1 CHANEY J: On 24 May 2016, I delivered reasons allowing a claim by the plaintiff for a variation to the will of his mother, Gloria Dawn Eckersley, so as to make adequate provision for him: Eckersley v Graeme Peter Eckersley as Executor of the Estate of the late Gloria Dawn Eckersley (Dec'd) [2016] WASC 154. The alteration to the will was effected by an order that the provision giving the second defendant certain specified property be conditioned by a requirement that the second defendant pay to the plaintiff the sum of $200,000 by the end of August 2016. The question as to the appropriate costs orders now falls for determination.
2 The question of costs arises in the following context:
• The net value of the deceased's estate at the date of death was $1,497,384.82. By the time the matter came to trial, the value of the real estate assets within the estate had reduced by $99,000, thus reducing the overall value of the estate by that amount.
• Each of the plaintiff, the second defendant and the third defendant were beneficiaries of a discretionary family trust, the principal asset of which was a farming property worth $1.6 million.
• The plaintiff's share of the estate under the terms of the will was valued at $242,648.
• In the originating summons and affidavit in support filed in August 2013, the plaintiff did not quantify his claim to additional provision from the estate.
• The plaintiff's claim was quantified in a minute of specific relief filed on 9 September 2014. That document recorded an in-principle agreement to the effect that the principal trust asset be sold and the net proceeds distributed equally amongst the plaintiff, and the second and third defendants as primary beneficiaries of the trust. The plaintiff quantified his claim as an additional $611,000 from the estate, so that the total provision in his favour would be approximately $850,000. That provision was sought in addition to the anticipated receipt of one-third of the trust assets. The claim was couched in terms of it being an amount sufficient to enable the plaintiff to relocate his earthmoving business and provide him with a residence.
• On 30 September 2014, the second defendant's solicitors put forward an offer which, after some relatively minor amendments, was ultimately accepted on 2 November 2015, being the 'open proposal' outlined at [32] - [34] of the reasons. The net result of that agreement was that the plaintiff would receive approximately $706,450 from the trust in exchange for his interest in the trust.
• As a result of the acceptance of the open offer, the plaintiff amended his claim from the estate to $298,753.
• The plaintiff was successful to the extent of obtaining an increased provision from the estate in the sum of $200,000.
The plaintiff's costs
3 An affidavit by the plaintiff's solicitors deposed to the fact that the plaintiff had been charged for 642.6 hours of work by various solicitors, being for a total amount, including GST, of $320,142.35. In addition, counsel fees of $87,593 had been incurred. There is no evidence as to the amount of disbursements incurred by the plaintiff, but given the number of experts involved in the trial, it is likely that disbursements would be significant.
The plaintiff's costs application
4 Various alternative costs orders are sought by the plaintiff. The plaintiff's primary position is that there should be an order that the second defendant pay his costs to be taxed on an indemnity basis generally or as to an appropriate proportion for costs or, in the alternative, on an indemnity basis from 5 November 2015 and prior to that time without regard to the upper limits of item 11 of the Legal Profession (Supreme Court) (Contentious Business) Determination 2012 (WA) or the same item of the Legal Profession (Supreme Court) (Contentious Business) Report 2014 (WA) (which I will refer to as the scales) pursuant to s 280(2)(c) of the Legal Profession Act 2008 (WA) (LP Act).
5 In the alternative, the plaintiff seeks an order that the second defendant pay the plaintiff's costs to be taxed without regard to the upper limits of item 11 of the scales.
6 In the further alternative, the plaintiff seeks an order that the second defendant pay his costs to be taxed on a party and party basis.
7 The plaintiff seeks no costs order against the third defendant.
The second defendant's response
8 The second defendant accepts that it is appropriate that there be an order that she pay the plaintiff's costs on a party and party basis. She opposes any order for the payment of indemnity costs. She acknowledges, however, that it may be appropriate to lift the limit on item 11 of the scales, but contends that a different ceiling should be specified rather than removing the limit altogether, and submits that the costs allowable under item 11 of the scales should have an upper limit of 100 hours for preparation and the first day of hearing of the originating process.
The issues for determination
9 The concession by the second defendant that there should be an order against her for payment of the costs of the proceedings is appropriately made. It was the second defendant who actively opposed the plaintiff's application. She was unsuccessful in that opposition. In those circumstances, whilst it is always a matter for the exercise of discretion in the circumstances of each particular case, the usual position is that the unsuccessful party will bear the costs of the proceedings: Dean v Collins [No 2] [2015] WASCA 151 [34].
10 I also accept that this is an appropriate case in which there should be an increase in the limit imposed by item 11 of the scales.
11 Section 280(2) of the LP Act provides:
(2) Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -
(a) order the payment of costs above those fixed by the determination;
(b) fix higher limits of costs than those fixed in the determination;
(c) remove limits on costs fixed in the determination;
(d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.
The application is made pursuant to s 280(2)(c) of the Legal Profession Act 2008 (WA) (the Act). That section provides that a court may make an order of the kind sought by the respondents if it is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter. The section requires that before making an order pursuant to its terms the court must form an opinion which has two components. First, the court must determine that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate. Second, the court must conclude that the inadequacy arises because of the 'unusual difficulty, complexity or importance of the matter' (Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [11]). Having heard the matter and being familiar with the way in which the case was conducted and the issues which were litigated, the court is in a position to form the opinions required under the section as matters of impression rather than science or mathematics: EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S) [7]; Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58 (S2) [14].
13 The word 'unusual' in s 280(2) qualifies only the 'difficulty' of a matter and not its complexity or importance: Cape Lambert Resources [5]; Wainwright v Barrick Gold of Australia Ltd [2014] WASCA 15 (S) [9].
14 The word 'importance' in s 280(2) allows the court to have regard to whether the work done was appropriate to the significance of the issues to the parties, to other prospective parties, or to the public or community generally: Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [18] - [19] (Martin CJ); Red Hill Iron Ltd v API Management Pty Ltd [2012] WASC 323 (S) [7] (Beech J).
15 The question of whether or not a limit under the scales is inadequate is to be determined as a matter of impression rather than as a matter of detailed evaluation: Heartlink [20].
16 Item 11 of the 2014 scale provides an upper limit of $35,200, made up of two days' preparation and one day of hearing for counsel, and 50 hours of preparation by a senior practitioner. This case involved a wide range of issues involving expert evidence in a number of fields. The trial ultimately occupied four days of hearing. Although not determinative by itself, the evidence of the plaintiff's solicitors is that they were engaged on the matter for a total of 642.6 hours. Whilst it may be accepted that some of that time would have been spent in relation to chambers appearances covered by item 10 of the scales, it can be accepted that much more time than 50 hours was required in the preparation of the case. In those circumstances, I accept that the amount of costs allowable in respect of the matter under item 11 of the scales is inadequate.
17 I am also satisfied that the inadequacy arises because of the complexity or importance of the matter to the plaintiff. The complexity arose by reason of the need to examine the plaintiff's farming history and financial relationship with his parents over a period of some 25 years. That involved an examination of the plaintiff's farming practices, his business history, the contributing causes to the declining profitability of the farm and the financial accounts of the plaintiff's business. Those matters involved a level of complexity not usually encountered in Family Provision Act proceedings.
18 In those circumstances, there are two issues which require resolution. The first is whether there should be an order for the payment of indemnity costs for all, or any aspect of, the proceedings. The second is whether the limit in item 11 of the scales should be lifted by a specific amount, or simply removed and left to the discretion of the taxing master.
Indemnity costs
19 There are two bases upon which indemnity costs are sought. The first is that the second defendant acted unreasonably in making a series of allegations which were inflammatory or improper and which were not ultimately pursued at trial. Those allegations related to assertions as to two particular aspects of what was said to be a very poor relationship between the plaintiff and his parents, extravagant conduct by the plaintiff, hostile conduct by the plaintiff, and unauthorised withdrawal of funds from a partnership account by the plaintiff's wife.
20 Allegations of that nature are indeed to be regretted, especially when they were effectively abandoned at trial. Such allegations have the capacity to inflame tensions between the parties and create an excessively adversarial atmosphere in which proceedings are conducted. I do not consider, however, that making those allegations, in the context of this case, should result in an order for indemnity costs being made. That is because, quite properly, the plaintiff confined his responses to little more than bare denials. It is unlikely that dealing with the allegations made a significant difference to the plaintiff's overall costs. It would not be practical to seek to identify in the context of a taxation of costs any additional costs attributable to the making of those allegations.
21 The second basis upon which indemnity costs are sought is the rejection of a 'Calderbank offer' made on 5 November 2015. By that offer, the plaintiff offered to settle the proceedings on the basis that he receive an additional $130,000 from the estate of the deceased and payment of his costs to be taxed with a special costs order pursuant to s 280 of the LP Act. The offer was specified to remain open for acceptance until 12 November 2015.
22 On 9 November 2015, the second defendant's solicitors wrote to the plaintiff's solicitors enquiring whether the Calderbank offer remained open in light of the plaintiff entering into a conditional contract for the purchase of the Khedive Street property. The second defendant's solicitors also sought an estimate of the likely taxed costs of the proceedings assuming a special costs order under s 280.
23 On the same day, the plaintiff's solicitors replied saying that it was not possible to provide an estimate of taxed costs in the proceeding to that time, but advising that at that stage their total legal costs amounted to $268,897.20, with disbursements of $76,249.22. It was not specified whether those disbursements related to counsel fees or to external experts or to other disbursements.
24 The offer lapsed on 12 November 2015. The trial of the action then proceeded between 30 November and 3 December 2015.
25 Given the closeness of the offer to trial, and the uncertainty as to the costs that would have been payable had the offer been accepted, it is doubtful that the failure by the second defendant to accept the offer can be said to be unreasonable. It is not necessary to resolve that issue, however, because the plaintiff has adduced no evidence to identify any costs after 12 November 2015 which would not be covered by an order for party and party costs. All that happened after that date was (presumably) some last minute preparation, and then the trial of the action. Item 11 of the scales allows for the first day of hearing, a daily rate for each successive day for counsel, and an hourly rate for attendance at the hearing by a senior practitioner. In those circumstances, an order for indemnity costs after 12 November 2015 is not warranted: Unioil International Pty Ltd v Deloitte Touche Tohmatsu [No 2] (1997) 18 WAR 190, 193; Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [11].
26 No indemnity costs order in favour of the plaintiff is warranted.
Fixing a higher limit
27 Section 280(2) of the LP Act contemplates the court fixing a higher limit of costs than those fixed in the relevant determination or simply removing limits on costs fixed in the determination. It is not uncommon, once the threshold questions are answered in favour of removing a scale limit, for that limit to be removed without replacing it with a different ceiling on the basis that the proper limits on reasonable costs are a matter best determined by the taxing master - see, for example, Flotilla Nominees 104 - 105. In Crawley Investments Pty Ltd v Elman [2014] WASC 233 (S), Edelman J summarised the principles concerning special costs orders under s 280 of the LP Act. In relation to imposing a higher limit on a scale item, his Honour said:
Although replacing the amount of the Scale item with a different ceiling may be appropriate where sufficient information exists to make that assessment, it is not uncommon for an order to be made removing the limit for the Scale item without replacing that limit with a different ceiling [5].
28 His Honour cited EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S) [8] - [9], [13], and Red Hill Iron Ltd v API Management Pty Ltd [2012] WASC 323 (S) [5] as examples of the removal of a scale limit without replacement with a different ceiling. Neither of those cases appear to have considered the imposition of a different ceiling or the question of the sufficiency of information to enable that to be done.
29 In this case, as I have noted above, the information provided in relation to the actual work done went no further than a statement as to the total number of hours of work for which the plaintiff had been charged. No information is given as to how much of that work relates to matters that might fall under other recoverable items in the scales, such as item 10, or might fall outside what is described in item 11 of the scales as 'preparation of case'. The second defendant suggests that it would not be unreasonable to allow, 'for instance', twice the 50 hours of preparation. The second defendant does not proffer any rationale for that approach and it does not enable any proper assessment of an appropriate replacement ceiling.
30 Limits on recoverable costs are an important mechanism that seeks to avoid the costs of litigation being disproportionate to the subject matter of the litigation, especially costs reserved on a party and party basis. Section 280(1) of the LP Act regulates costs charged by law practices, and taxations of bills of costs, by reference to costs determinations. The regulation of legal costs, particularly in relation to costs payable by an unsuccessful party to litigation, is underlaid by considerations of the proper administration of the law and access to justice. Bourgeoning and disproportionate legal costs are a matter of concern to the courts. That concern is reflected by this court's case management objectives found in O 1 r 4B of the Rules of the Supreme Court 1971 (WA), which include ensuring that the costs of procedures to the parties are proportionate to the value, importance and complexity of the subject matter in dispute, and proportionate to the financial position of each party. In that context, there is much to be said for the judge who has had the benefit of case managing and hearing a matter at trial imposing, in appropriate cases, a higher limit on costs than those fixed in a determination where the threshold questions for the removal of the limit under s 280(2) of the LP Act are satisfied.
31 As the court observed in Cape Lambert Resources, having heard the matter and being familiar with the way in which the case was conducted, the court is in a position to form the opinions required under s 280(2) 'as matters of impression rather than science or mathematics'. Equally, it seems to me, the court will be, at least in some cases, in a position to fix a higher limit rather than leaving the limit open-ended to be determined essentially on the basis of whatever the taxing master considers to be costs reasonably incurred in relation to the item in question. That will be particularly so with items in the nature of items 11 and 17 (preparation for case) which relate to a broader range of work than the specific tasks identified in items dealing with the writ, pleadings, discovery, interrogatories, interlocutory chambers appearances and other more confined work tasks.
32 This action proceeded along the lines of a trial with witnesses called and cross-examined over four days.
33 In Daniels v Hall (as Administrator of the Estate of Arnold Edward Daniels) [No 2] [2014] WASC 272, EM Heenan J, after discussing a number of cases where excessive costs in inheritance proceedings have been the subject of judicial warnings and calls for restraint, described it as offensive to contemporary senses of justice that large proportions of an estate of any size should be consumed in the costs of litigation at the expense of the persons ultimately beneficially entitled in distribution [26]. His Honour said that those factors had caused courts to be sparing in the nature and extent of awards of costs made in this type of litigation [27].
34 In my view, those concerns call for the imposition, in this case, of an upper limit on the costs under item 11 of the scales.
35 Because these proceedings were conducted much along the lines of an action commenced by writ, albeit without pleadings, my view is that the upper limit for item 11 should be set by reference to the limits available for preparation of a case for trial (item 17) together with an allowance for first day of trial for counsel (item 20(a)). Under the 2014 scale, the limit of item 17, being preparation of case for trial, is 120 hours of time by a senior practitioner or $56,760. Counsel fee for the first day of trial is 3.5 days of preparation, together with the first day of trial, or $17,325. On that basis, item 11(a) of the scale should be increased by reference to those limits, making the maximum total recoverable amount under item 11(a) the sum of $74,085. Work done in preparation of the matter prior to the 2014 scale coming into operation should be assessed at no more than the maximum hourly rate for a senior practitioner under the 2012 scale.
Conclusion
36 There should be an order that the second defendant pay the plaintiff's costs to be taxed on the basis that the upper limit for item 11(a) of the scale is increased to the sum of $74,085, being for 120 hours' preparation of case and 3.5 days of preparation by counsel and counsel's fee on first day of hearing.
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