Lewis v Every (No. 2)
[2013] VSC 493
•16 September 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2007 6952
IN THE MATTER of Part IV of the Administration and Probate Act 1958
- and -
IN THE MATTER of the Estate of Donald Wright, deceased
| THE ESTATE OF ELVA JANIS LEWIS (DECEASED) and PETER NILS JOHN LEWIS | Plaintiff |
| v | |
| TIMOTHY AFRIC ROGERS and ROBERT WINSTON EVERY (who are sued as the Executors of the Estate of Donald Wright, deceased) AND ORS (according to the schedule attached) | Defendants |
---
JUDGE: | DALY AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 28 August and 4 September 2013 | |
DATE OF RULING: | 16 September 2013 | |
CASE MAY BE CITED AS: | Lewis v Every (No. 2) | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 493 | |
---
TESTATOR’S FAMILY MAINTENANCE – Costs – Plaintiff obtained less successful result than Calderbank letter – Impecunious plaintiff – Whether an adverse costs order would detract from order for adequate provision – Costs of executor.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr W Gillies | Andrew P Melville Lawyers |
| For the Second Defendant | Mr R Cook | Rogers + Every |
| For the Third to Seventh Defendants | Mr M McKenzie | Nicholas W J Rolfe Pty Ltd |
HER HONOUR:
On 28 August 2013 the Court delivered reasons for judgment (‘reasons’) following the trial of this proceeding, where it was held that:
(a)the will of Donald Wright (‘Don’), the father‑in‑law of Peter Lewis (‘Peter’) had failed to make adequate provision for Peter’s proper maintenance and support; and
(b)adequate provision for Peter required the provision of a life interest in favour of Peter in the property where he lives in Rutherglen, plus a life interest in the sum of $210,000, of which $30,000 was to be utilised by any trustee of the life interest to carry out any reasonable and necessary repairs and improvements to the Rutherglen property.
The provision ordered was less than that sought on behalf of Peter in the course of submissions, being an absolute interest in the Rutherglen property and the sum of $300,000, but greater than that contended for by the beneficiaries of Don’s will, being a life interest in the Rutherglen property and the income from the sum of $100,000.
The following matters remain to be resolved in the absence of agreement between the parties:
(a)the precise form of the orders;
(b)the identity of the trustee for Peter’s life interests;
(c)the dispute resolution mechanism to be adopted in the event that there is any dispute between Peter and the trustee regarding the selection of any future residence or aged care institution pursuant to the terms of paragraph 2 of the proposed orders;
(d)whether the estate was to pay the rates and insurance for the Rutherglen property out of the income generated by the funds retained in trust, or from the capital of the trust;
(e)whether the sum of $30,000 set aside for repairs and improvements to the Rutherglen property should be inclusive of the funds expended between the date of trial and the date of judgment, or exclusive of that amount; and
(f)the question of costs.
Taking the question of costs first, counsel on behalf of Peter and the executor submitted that I should make the usual order for costs, that is, that the costs of all parties ought to be borne by the estate. Given that I have granted a life interest in the Rutherglen property and a fixed capital sum to Peter, that would mean that the parties’ costs would be paid out of the pool of funds available for immediate distribution to the beneficiaries.
Counsel for the beneficiaries submitted that I should make an order that Peter be paid his costs up to 22 August 2012 on a solicitor-client basis, with Peter to pay the costs of the beneficiaries after that date on an indemnity basis. Further, the executor should not receive his costs from the estate. Alternatively, he submitted that I should make no order as to costs, to avoid the delay and expense arising out of a taxation.
In relation to the position of Peter, counsel for the beneficiaries relied upon the plaintiffs’ (including Elva prior to her death) dilatory conduct of the proceeding, and the terms of a Calderbank letter dated 22 August 2012. The terms of the letter were as follows (omitting formal parts):
Without prejudice save as to costs
The Defendants have considered their position in this proceeding, including the likely costs and disbursements they will incur if this proceeding continues further.
To resolve the Defendants’ involvement in this proceeding and to avoid incurring unnecessary costs, the Defendant wishes to put the following settlement proposal to your client.
The offer
The Defendants are prepared to settle this proceeding with your client on the following terms:
1.The property situate at 5 Fortune Street Rutherglen to be transferred to your client absolutely within 14 days of the claim being withdrawn;
2.The amount $100,000 to be paid to your client within 14 days of the claim being withdrawn;
3.Your client’s costs to date being $30,000.
Our client’s offer will remain open for your client’s acceptance until c.o.b. on 12 September 2012.
If your client rejects this offer or allows it to lapse, our client will rely upon this letter on the question of costs and will seek an order for indemnity costs, or alternatively, solicitor/client costs, from the date of this letter.
In seeking an indemnity costs order, our client will rely upon the principles expressed in Calderbank v Calderbank [1975] All ER 333 which have been adopted by Byrne J in Mutual Community Limited v Lorden Holdings Pty Ltd (unreported 28 April 1993), and by Gillard J in MT Associates Pty Ltd v Aqua‑Max Pty Ltd & Anor (No. 3) [2000] VSC 163.
If there is any aspect of this offer that is unclear or ambiguous please contact the writer to discuss clarification before the offer lapses.
Counsel submitted that if Peter had accepted the offer, he would have achieved a better financial outcome than he received at trial. Applying the life tenant factors from the Australian Life Tables to the outcome received at trial, based upon an assumed value of the Rutherglen property, and assuming that the costs estimate is reasonable, the value of the offer was $250,000, compared with the value of the outcome at trial of $166,403. The refusal of the Calderbank letter alone would be a sufficient reason to deny Peter his costs, but counsel also relied upon the lack of diligence in pursuing the claim.
In relation to the position of the executor, counsel submitted there had been a lack of diligence in finalising the estate, including taking whatever action was required to press the plaintiffs to either progress or discontinue their claim. Further, given that it was clear that the beneficiaries were actively defending the claim, counsel queried why it was necessary for the executor to be represented at the trial at all.
In response, counsel for Peter submitted that, among other things, the terms of the final outcome were different than the terms of the offer, such that it would not be possible to compare like with like. The delay in prosecuting the claim was caused by the ill health and subsequent death of Elva, and the impact this had upon Peter. At the time the offer was rejected, the estate was larger as this was prior to the collapse of Banksia. Finally, given that the claim is made under beneficial legislation, an order that Peter pay part or all of the beneficiaries’ costs, or bear his own costs, would detract from the finding that further provision be made for him from Don’s estate.
Counsel for the executor submitted that the executor was entitled to participate in the proceeding in order to defend the will, and the delays in the proceeding could not be sheeted home to the executor. There have been no findings of misconduct or incompetence on the part of the executor, and no basis for making such a finding.
In my view, Peter’s rejection of the offer contained within the Calderbank letter was unreasonable, given that the outcome at trial was substantially less favourable to him than the terms of the offer. However, this is merely a matter which is relevant to the determination of the question of costs, but it is not, of itself, conclusive.[1]
[1]Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, at 440–441.
Section 97(6) of the Act states that:
Subject to sub-section (7), the Court may make any order as to the costs of an application under section 91 that is, in the Court’s opinion, just.
In the current case, it is necessary to balance the competing considerations of promoting early settlement and the need to deter parties from unnecessarily incurring legal costs on the assumption they will be funded from the estate against the potential injustice to Peter, who is close to impecunious, of leaving him liable for his legal costs for what was ultimately a successful claim. In my view, the just outcome which minimises the disadvantage to Peter personally while giving appropriate weight to his unreasonable rejection of the Calderbank offer, is to order that Peter’s costs be paid from the estate, but only insofar as they exceed the costs already paid to Peter’s solicitors from the distribution made to Elva from the estate, as evidenced by the trust records produced by Peter’s solicitors at trial.
As for the executor, I see no reason to depart from the usual order that the executor receive his costs from the estate. It was necessary for the executor to at least participate in the proceeding. If, as was suggested, it was not necessary for the executor to be represented at trial, then that should have been made clear to the executor prior to the trial, and before counsel was briefed. There is no evidence that there was any communication to that effect.
In relation to the other matters in issue, I would make the following observations:
(a)paragraph 1 of the proposed orders needs to be amended to delete the reference to the life interest as being on the same terms as that given to Elva under Don’s will. Given that the effect of the reasons is that Peter will be liable to pay the rates and insurance on the Rutherglen property from his income, the terms are not precisely the same;
(b)there appears to be no real alternative, or imperative, for the trustee of the estate to be other than the executor, as long as he is willing and able to carry out the role;
(c)the dispute resolution mechanism in the proposed orders is probably more speedy and economical for the parties than the alternative, which is giving the parties liberty to apply to return to Court; and
(d)consistent with the reasons, any expenditure by the executor upon repairs to the Rutherglen property following the trial and before the making of final orders ought to be deducted from the $30,000 set aside for that purpose.
0
1
0