Fennell v Aherne (No 2) - [2005] SASC 364

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
FENNELL & ORS v AHERNE (No 2)
Judgment of Judge Withers a Master of the Supreme Court
23 September 2005
SUCCESSION - FAMILY PROVISION AND MAINTENANCE
Costs - consideration of effect of Calderbank letter - order for costs.
Morris v McEwen & Anor (Full Court, 29 July 2005, unreported, [2005] SASC 284), considered.

FENNELL & ORS v AHERNE (No 2)
[2005] SASC 364

JUDGE WITHERS. In this matter I delivered reasons for judgment on 22 July 2005. The parties wished to argue the issue of costs. Subsequent to the judgment two documents were filed. The first was an affirmation by Natasha Marie Jones, a solicitor for the defendant, which exhibited correspondence between the solicitors for the parties relevant to offers made. It exhibited a letter from the solicitors for the defendant to the solicitors for the plaintiffs in which the defendant on 10 March 2005 offered to settle the plaintiffs’ claim for a global sum of $75,000 inclusive of costs. That letter was in the nature of a Calderbank letter. It was marked to be “without prejudice save as to costs”. That offer was not accepted by the plaintiffs. The second was an affidavit of Mr Cronshaw, the solicitor for the plaintiffs, who relevantly attested that as at 10 March 2005 the solicitor/client costs for the plaintiffs were in the amount of $23,164.90. With counsel fees and Court fees it was suggested to me that the solicitor/client costs for the plaintiffs at that time amounted to approximately $25,000.
In my decision in this matter I awarded the plaintiffs in total an amount of $70,000 comprising $25,000 each for the third and fourth plaintiffs and $10,000 each for the first and second plaintiffs.
Counsel for the defendant asserted in relation to some parts of the affidavit of Mr Cronshaw that it was not the defendant’s fault that some adjournments occurred of chamber hearings in this matter. He referred to the fiats recorded by the Court. I did not take him to be challenging the veracity of Mr Cronshaw’s affidavit. In any event I do not regard these matters as being of any particular significance. He noted that the Calderbank letter offer that had been made on his client’s behalf was made well before the last time at which an offer could be made pursuant to Rule 40.01. His submission was that a Calderbank letter was more appropriate than a Rules of Court offer because of the multiple plaintiffs. That is somewhat consistent with the approach that had been taken by the solicitors for the plaintiffs who in earlier correspondence had put global offers forward on behalf of the plaintiffs, that is to say not a separate offer in respect of each plaintiff. However for reasons which I later give I disagree. I was referred to the recent decision of the Full Court in Morris v McEwen & Anor [2005] SASC 284 where Besanko J and White J accepted that a Calderbank letter was able to be taken into account by the Court on questions of costs but that it was important in considering the effect of such a letter that it complied so far as it could with the spirit of the Rules.
Counsel for the defendant said that the offer made was “around the mark”. I was then urged to take into account in the exercise of my discretion as to costs the circumstances of the parties so far as the primary claim under the Inheritance (Family Provision) Act was concerned. It was suggested that the defendant’s offer was at a level that it could not be said that she was acting unreasonably. That may be so but the reality of the matter is that the offer, taking into account the costs incurred, was well below that which would have been necessary to provide to the plaintiffs as a group the sum of $70,000 plus costs. While the claimed solicitor/client costs have not been subject to taxation it would be unreasonable to expect that a taxation would reduce them by such an amount as to bring the judgment sum plus costs into close proximity to the offer of $75,000.
Counsel for the defendant urged me to make no order as to costs
Counsel for the first, second and fourth plaintiffs submitted that the order proposed by the plaintiffs of solicitor/client costs to be paid out of the estate was the order commonly made in this jurisdiction. He said that by definition if a plaintiff is successful in his or her claim that means that the Court has found that plaintiff to be in need and has ordered an amount appropriate to meet that need or by way of what is called “proper” provision. Hence he argued it is inappropriate that a plaintiff in need for whom proper provision has been made should then have that provision diminished by having to meet the costs incurred in establishing the need and obtaining the provision. It seems to me that it would be difficult to sustain that argument in circumstances where a claimant did not accept an appropriate offer made in accordance with the Rules. The approach he described in my view goes more to the scale on which costs should be awarded rather than to entitlement.
Counsel then made some criticisms of the letter of offer noting:
·That it did not discriminate between plaintiffs.
·Was inclusive of costs.
·Created inevitable difficulties.
·In any event was clearly inadequate when compared with the award made by me and the costs of the plaintiffs at the time the offer was made.
Counsel submitted that really the offer amounted to an offer of about $52,000 or $53,000 plus costs. It was suggested to me that the usual rule should apply. It was also submitted that the plaintiffs had endeavoured to keep the costs to a minimum level by having joint representation as long as possible. It was not until 13 May 2005, less than a week before the hearing of this matter, that the third plaintiff became represented by solicitors different from those for the first, second and fourth plaintiffs. It was not until the hearing before me on 17 May 2005 that a separate counsel appeared for the third plaintiff.
Mr Goodall, for the third plaintiff, focussed on the adequacy of the offer. He submitted that unless the offer proved to be adequate in light of the judgment then the arguments put forward on behalf of the defendant had no validity. He calculated from the affidavit of Mr Cronshaw that the costs including Court fees and a low estimate as to likely counsel fees at that time would have amounted to approximately $25,000, such that an award of $70,000 to the plaintiffs plus their costs required an offer of $95,000 or thereabouts. The offer made was well below that figure. He noted that the defendant could not rely on the provisions of Rule 40, not having made a Rules offer.
In his reply counsel for the defendant sought to suggest for the first time that if the Court was minded to make a solicitor/client order for costs then it should also make an order providing a legacy for the defendant such that all the plaintiffs and the defendant would equally share in the diminution of the estate by reason of the payment of costs. His argument was that as sole residuary beneficiary it was his client who would bear the burden of any costs order. I declined to make such an order. It was far too late in the process for the Court to be urged to start making different orders in relation to the provision of amounts for claimants or residuary beneficiaries of the estate. Insofar as counsel’s submission could be taken as making a late oral application I reject it.
The balancing act required in this jurisdiction was undertaken by me in my reasons for decision delivered on 22 July 2005. The question of costs raises different issues and the exercise of a different discretion.
There is a fundamental problem with the Calderbank letter offering $75,000 to settle the claim of all plaintiffs. That problem is that it does not discriminate between the plaintiffs. No individual plaintiff was provided with an opportunity to accept an offer and withdraw from the litigation leaving the other plaintiffs free to pursue their claims. While the approval of the other plaintiffs as claimants on the estate may have been necessary, nevertheless the opportunity was not provided by the global offer. In these circumstances it is difficult to see how any of the plaintiffs can be prejudiced in their claim for costs. This was a claim by four individual plaintiffs.
In all the circumstances the usual order for costs made in this jurisdiction should be made in this matter. The amount of those costs will be a matter for either agreement between the parties or taxation by the Court if there is a debate as to quantum.
The order will be that the costs of the parties to the action be taxed or agreed as between solicitor and client and paid out of the estate of the deceased save that the costs of the defendant in her capacity as executor are to be taxed or agreed as between solicitor and client and paid out of the estate of the deceased upon the footing of an indemnity.
I now make a formal order for provision out of the estate and costs in terms of the Minutes that are this day initialled by me.