Langford, Owen v Cleary, Shirley May (No 2)

[1998] TASSC 100

100/1998

PARTIES:  LANGFORD, Owen

v

CLEARY, Shirley May (No 2)

TITLE OF COURT:  SUPREME COURT OF TASMANIA

JURISDICTION:  ORIGINAL

FILE NOS:  M469/1989

DELIVERED:  24 August 1998

HEARING DATES:  3 August 1998

JUDGMENT OF:  Slicer J

CATCHWORDS:

Procedure - Costs - Departing from the general rule - Conduct of the parties - Pre-trial conduct - Agreement reached at settlement conference rescinded by respondent - Subsequent offer by respondent not accepted by applicant.

Singer v Berghouse (1993) 67 ALJR 708, applied.

Re Bodman [1972] Qd R 281 at 289, followed.

Biala Pty Ltd and Another v Mallina Holdings Ltd [1990] WAR 174; Field v Commissioner of Railways for New South Wales (1957) 99 CLR 285, referred to.

Rules of the Supreme Court, O24A and O80, r69A.

Aust Dig Procedure [575-585]

REPRESENTATION:

Counsel:

Applicant:  J E Green

Respondent:  T J Williams

Solicitors:

Applicant:  John Green

Respondent:  Gunson Pickard & Hann

Judgment category classification:

Court Computer Code:

Judgment ID Number:                  100/1998

Number of pages:  5

Serial No 100/1998

File No M469/1989

OWEN LANGFORD v SHIRLEY MAY CLEARY (No 2)

REASONS FOR JUDGMENT  SLICER J

24 August 1998

The applicant was a claimant to an entitlement of his father‘s estate which had been bequeathed to the respondent, his sister, who was the sole beneficiary and trustee of such estate. He was unsuccessful in his claim and the reasons therefore were published in A371998. It is not necessary to restate the circumstances giving rise to the making of the claim or the reasons for its rejection.

The respondent seeks an order that the applicant pay the costs of the proceedings, whilst the applicant submits that his costs ought be paid by the estate. The pecuniary interests of the respondent and the estate are identical.

Chronology

In July 1985, the testator made a will in which he devised his estate to his daughter. That will was revoked in October 1985 with the daughter being appointed sole executrix and remaining sole intended beneficiary. The testator died on 15 January 1989. The originating application was filed on 20 December 1989. Thereafter the matter has had a complex and tortuous history. Numerous affidavits were filed on behalf of both parties, with the last of significance being filed on 7 November 1995. The course of the proceedings was significantly affected by the making of a series of interlocutory applications, their determination, and, on occasion, appeal. Many of those interlocutory proceedings involve discovery and attempts to strike out portions of the affidavits. Between August 1990 and 2 November 1993 varying applications for inspection and discovery were listed or determined on some ten occasions. It is a fair assessment that the respondent resisted discovery and was unsuccessful in her resistance to her brother’s applications on a majority of those occasions. The conduct of the respondent as trustee and beneficiary in resisting proper discovery is a significant matter in the determination of a costs order.

In November 1995, the parties attended a “settlement conference” held under the auspices of this Court. The status of the terms of the agreement and of the discussion giving rise to the agreement were issues relevant to the trial of the matter and have been discussed in reasons for judgment A371998 at 11 and 12. However, the making of an agreement and its terms are relevant to, and admissible in, a subsequent costs hearing. In some circumstances where negotiations produce agreement, evidence of such may be subsequently admitted on the hearing (Biala Pty Ltd and Another v Mallina Holdings Ltd [1990] WAR 174). It would seem that the principle is not inviolate (Field v Commissioner of Railways for New South Wales (1957) 99 CLR 285). But the principles requiring the exclusion of the evidence on the trial of the issue do not require rejection in relation to the question of costs. If policy and common sense require parties to attempt to settle disputation, then a party who purports to rescind or breach such agreement ought not benefit by way of a costs order. Policy ought require that evidence of negotiations falling short of agreement not be relevant to a costs hearing. Nor, in the case of such negotiations, should the relative conduct of each party and the reasons for failure of negotiation, be regarded as germane to a costs order. But evidence of an agreement subsequently broken is relevant to the issue. The parties reached agreement that the applicant would receive the sum of $30,000 in satisfaction of his claim against the estate. The parties

signed a consent agreement addressed to the Registrar on 7 November 1995. On 13 November, the respondent advised, through her solicitors:

“We are instructed by our client to write withdrawing her agreement to the proposed settlement of this matter.”

On 31 July 1997, the respondent made an offer of compromise pursuant to Rules of the Supreme Court, O24A. The offer was in the terms that:

“The Respondent will pay to the Applicant the sum of $20,000.00 in full and final settlement of the claim. The offer is made on the basis that each party will pay its own costs of and incidental to the proceedings.”

The offer was never accepted by the applicant.

The hearing of the matter commenced on 23 September 1997, and lasted for seven days. The claim of the applicant was rejected.

Costs

In matters involving testator family maintenance legislation, it is not necessarily the case that costs follow the event. In Singer v Berghouse (1993) 67 ALJR 708, Gaudron J stated at 709:

“Family provision cases stand apart from cases in which costs follow the event. Leaving aside cases under the Act which, in s 33, makes special provision in that regard, costs in family provision cases generally depend on the overall justice of the case. It is not uncommon, in the case of unsuccessful applications, for no order to be made as to costs, particularly if it would have a detrimental effect on the applicant‘s financial position. And there may even be circumstances in which it is appropriate for an unsuccessful party to have his or her costs paid out of the estate.”

Further, where the trustee or administrator is also the beneficiary, a court should take into account the conduct of the estate in any consideration of a costs order. As Hoare J stated in Re Bodman [1972] Qd R 281 at 289:

“The incidence of any payment which might be ordered on the applications would fall upon the whole estate unless otherwise ordered (the Succession Acts Sec 90(3)). It is an important factor that the administrator was also a beneficiary, and the interests of the administrator (as beneficiary) conflicted with the interests of this beneficiary.”

Consideration of the above principles require that separate consideration be given to the conduct of the parties during the course of the proceedings, the position of the respondent as trustee and beneficiary and the justice of the applicant’s claim.

Different aspects of the case require separate consideration, since differing principles result in different conclusions. For convenience, these aspects will be dealt with under the headings of pre-trial conduct, settlement and findings at trial.

Pre-trial conduct

Despite the adverse findings concerning the applicant, it does not follow that his decision to take proceedings was unreasonable. There were but two adult children with a claim of

entitlement to their father‘s estate, one of whom had been bequeathed the whole of such estate. The respondent was and remains in secure financial circumstance. The applicant, whilst not disabled, had personal problems and did not enjoy good health. He was, at least, entitled to commence proceedings and give careful consideration to the decision of continuance. The respondent, as both sole trustee and beneficiary, was required to make full disclosure and permit inspection of the affairs of the estate. The history of these proceedings indicates that the respondent contested the making of full discovery. As trustee, the respondent ought not have adopted such a course and the estate ought to bear the cost of the proceedings until the date of the last order made in respect of these pre-trial proceedings, namely, 2 November 1993. It is relevant in defining this period, to note that the last significant affidavit was filed on 19 November 1993.

Thereafter, the applicant proceeded at his risk. He was able to consider all of the material and make decisions. In proceeding, he ran the risk of an adverse determination and of the possible consequence that, at least, he would be required to be liable for his own costs. The respondent was in turn required to give consideration to the value of the estate and the costs associated with further prolonged disputation.

Settlement conference

Whilst the Rules of the Supreme Court, O80, r69A, permits a taxing officer to allow costs in connection with the negotiations for the settlement of a matter, it does not follow that the respondent should have his costs paid by the estate for entering into such negotiations. It was in the interests of both parties that settlement be explored as the state of affairs existing since 2 November 1993 had not altered. No order for costs will be made for the costs of attendance at such conference.

The parties reached agreement at the settlement conference and confirmed that agreement in a joint letter forwarded to the Registrar. No reason has been advanced by the respondent as to why she altered her position. Had she abided by her agreement, the subsequent costs of the action would not have been necessary. Her failure to honour the compromise occasioned a continuation of proceedings. The applicant should have his costs paid by the estate from the date of the settlement conference until the date of the offer of compromise.

Offer of compromise

On 31 July 1997, the respondent made an offer of compromise in accordance with the Rules of the Supreme Court, O24A. No time limit was expressed in the offer. The applicant declined to accept the offer and thereafter proceeded at his own risk. The respondent is entitled to her costs from the date of offer until the date of trial.

Costs of trial

Whilst testator family maintenance proceedings are not inter parties, the applicant was seeking variance of the terms of his father’s will. He was able to make a considered assessment of the merits of his claim. It was submitted that his decision to proceed with the action was unreasonable in the circumstances and that he had been encouraged to do so by the conduct of the respondent in initially agreeing to a compromise at the settlement conference. It was further contended that, although unsuccessful, his claim was not without merit, given that there were two beneficiaries of the parent only, and the financial circumstances of the respondent were far more secure than his own. There is some substance in this approach, but more compelling reasons exist warranting the conclusion that the decision to go to trial was made on the basis of false expectation. The applicant claimed entitlement on the basis of ill health, absence of income and capital assets and necessity. Those claims were rejected. The applicant was not accepted as a credible witness. His

claim that he was unable to work was belied by his evidence given in Family Law proceedings and the history he had provided to his medical practitioners. He failed to provide accurate details of his financial circumstances in his affidavits, sworn for the purpose of these proceedings. There was good reason for concluding that the applicant had joined his business interests with those of his son, and had structured and presented his assets in such a way that it appeared his overall financial position was worse than it really was. He failed, on his own case, to establish entitlement. In such a case an applicant should not be entitled to expect that the estate should bear the costs of the trial. It follows that the respondent should have her costs on the trial.

Miscellaneous costs

In two cases involving interlocutory proceedings, namely, 7 December 1993 and 24 April 1994, the Court ordered that the costs of those proceedings be costs in the cause. Those orders are not affected by this general determination.

Conclusion

There remain other interlocutory proceedings in which the question of costs was reserved. Rather than give specific consideration to the merits of each hearing, the orders for costs will be made with respect to the various phases of the proceedings. To do otherwise would involve further complex argument and consideration of a myriad of issues in a matter which has already had a long and involved history in a relatively modest estate. The general orders for costs will relate to the periods:

1       Date of commencement, 20 December 1998, until 2 November 1993.

2       3 November 1993 until 6 November 1995.

3       7 November 1995 until 31 July 1997.

4       1 August 1997 until 22 September 1997.

5       23 September 1997 until 24 April 1998 (date of judgment).

Both parties have sought orders for costs in their favour for the whole period of the action. No party made compromise on the hearing of the costs application, and both were, in part, unsuccessful. Each party should bear their own costs with respect to these proceedings.

Orders

1       That the applicant‘s costs of the proceedings between 20 December 1989 and 2 November 1993 be paid out of the funds of the estate of the testator.

2       That each party pay their own costs of the proceedings between 3 November 1993 and 6 November 1995.

3       That the respondent pay the applicant’s costs of the proceedings between 7 November 1995 and 31 July 1997.

4       That the applicant pay the respondent‘s costs of the proceedings between 1 August 1997 and 22 September 1997.

5       That the applicant pay the respondent’s costs of the proceedings between 23 September 1997 and 24 April 1998.

6       That each party pay their own costs of the proceedings between 25 April 1998 until the date of this order.

Counsel will be afforded the opportunity to make submissions in relation to the precise formulation of the orders and as to any necessary consequential matters.