Kozlowski v Kozlowski (No 2)

[2013] SASC 66

SUPREME COURT OF SOUTH AUSTRALIA

(Summary Jurisdiction: Civil)

KOZLOWSKI v KOZLOWSKI (NO 2)

[2013] SASC 66

Judgment of The Honourable Justice Peek

6 May 2013

SUCCESSION - FAMILY PROVISION

SUCCESSION - FAMILY PROVISION AND MAINTENANCE - PRACTICE - PROCEDURE, ORDERS AND OTHER MATTERS

Application for costs by a plaintiff whose claim for family provision on an intestacy was granted - the substantive application was resisted by the second defendant only - the plaintiff made an offer of settlement before the institution of proceedings - offer rejected by the second defendant.

Whether the second defendant should pay the party-party costs of the plaintiff.

Held: application for costs granted -  it would not be appropriate for the costs of the parties to be paid out of the estate given its small size - the plaintiff's offer of settlment was reasonable considering the size of the estate - the trial would not have been necessary but for the attitude of the second defendant and material parts of her evidence were disbelieved and rejected at trial.

Inheritance (Family Provision) Act 1972 ss 7, 9(8); Supreme Court Civil Rules 2006 rr 263, 264(1), Practice Direction 8.1; Administration and Probate Act 1919 ss 72G, 72H; Supreme Court Act 1935 s 40(1), referred to.
Singer v Berghouse (1993) 67 ALJR 708; Bowyer v Wood (2007) 99 SASR 190; Re McCaffrey (deceased); Hay v Elder's Trustee and Executor Co Ltd (1982) 29 SASR 582; Ellis v Leeder (1951) 82 CLR 645; Kozlowski v Kozlowski [2013] SASC 57, considered.

KOZLOWSKI v KOZLOWSKI (NO 2)
[2013] SASC 66

Civil

1. PEEK J.   Application for costs.

2. This matter arose from an application by the plaintiff under s 7, Inheritance (Family Provision) Act 1972 seeking provision out of the estate of Mr Marian Kozlowski (the deceased).  The deceased’s estate comprises a property at 21 Mendez Street, Paralowie (the Mendez Street house) valued at $275,000 and $500 worth of the deceased’s personal effects.  The second defendant was the only party to resist the plaintiff’s application.  I delivered judgment on 24 April 2013 after a one day trial on 4 April 2013.  I found in favour of the plaintiff and made orders accordingly.[1]

   [1]    See Kozlowski v Kozlowski [2013] SASC 57.

3. On 24 April 2013, the plaintiff made an application for costs against the second defendant on a party-party basis and I granted that application giving brief oral reasons.  What follows are my full reasons for that decision.

   Costs in family provision matters

4. The Court’s power with respect to costs orders is set down in s 9(8), Inheritance (Family Provision) Act 1972:

   (8)The Court may make such order as to the costs of any proceeding under this Act as it considers just.

5. This section gives the Court a discretion to make whatever costs orders it considers just,[2] and is reflective of the general discretion the Court enjoys in respect of costs.[3]  The general rule that costs follow the event yields to what may be the overall justice of the case.[4]  These provisions are supplemented by Practice Direction 8.1, which provides as follows:

   [2]    Bowyer v Wood (2007) 99 SASR 190, 208-209 [65] (Debelle J).

   [3]    Supreme Court Act 1935 s 40(1); Supreme Court Civil Rules 2006 rr 263, 264(1).

   [4]    Singer v Berghouse (No 2) (1993) 67 ALJR 708, 709 (Gaudron J); Bowyer v Wood (2007) 99 SASR 190, 208-209 [68] (Debelle J).

   Direction 8.1 – Costs in Estate Matters (Rule 263)

   8.1The Judges have been concerned at the relatively high costs which are being run up in litigation involving estates, particularly when there are a number of separately represented parties.  In the past the Court has often as a matter of course tended to allow costs as between lawyer and client on the full Supreme Court scale to all parties out of the estate.  Practitioners are reminded that the Court will exercise its general discretion as to costs under Rule 263 as appropriate in the circumstances of a particular case, but having particular regard to:

   8.1.1  ordering costs against parties who have not succeeded;

   8.1.2 ordering costs in the light of whatever offers have been made under Rule 187;

   8.1.3 not giving full costs to separately represented parties where they could have properly been jointly represented;

   8.1.4  awarding less than full costs where the amount in issue is relatively small.

   (Emphasis added)

6. I note that a general practice has evolved in this jurisdiction that where an application is successful the Court will usually order that the parties’ costs be paid from the estate.[5] 

   [5]    Re McCaffrey (deceased); Hay v Elder’s Trustee and Executor Co Ltd (1982) 29 SASR 582, 592 (Cox J); Ellis v Leeder (1951) 82 CLR 645, 656 (Dixon, Williams and Kitto JJ); Bowyer v Wood (2007) 99 SASR 190, 208-209 [65] (Debelle J).

   The offer of settlement

7. During the hearing, the plaintiff tendered an affidavit of John Keith Atkinson, annexed to which was an informal offer of settlement, dated 4 May 2012, provided by the plaintiff to the defendants together with the second defendant’s response to that letter, dated 7 June 2012.  I received that affidavit and its annexures with the consent of the second defendant and on the basis that, while the second defendant’s letter was expressed to be “without prejudice”, it was a response to the plaintiff’s letter which was expressed to be “without prejudice save as to costs” and therefore privilege was waived on the issue of costs only.  The second defendant rejected the plaintiff’s offer.

8. In my view, the plaintiff’s offer was a very reasonable one and, if accepted, would have placed the second defendant in a substantially better position than she presently is as a result of the orders I made following the trial.

   Conclusion

9. Given the size of the estate and the strength of the plaintiff’s claim, I find that it would not be appropriate for the parties’ costs to be paid out of the estate.[6]  The second defendant was the only party to resist the plaintiff’s application and the offer made by the plaintiff was very reasonable, especially considering the size of the estate.  I also note that I specifically rejected the material parts of the second defendant’s evidence.[7]  The trial would not have been necessary but for her attitude and her evidence has been disbelieved.  Accordingly, I considered that the appropriate exercise of the discretion is to grant the plaintiff’s application for costs against the second defendant.

   [6]    See Kozlowski v Kozlowski [2013] SASC 57 [84].

   [7]    See Kozlowski v Kozlowski [2013] SASC 57 [42]-[44], [61], [63], [84].