Lucas Missen (a minor by his litigation guardian Angela Moleta) v Leigh Missen and Anor (No 2)

[2016] VSC 602

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
TESTATORS FAMILY MAINTENANCE LIST

S CI 2014 05521

IN THE MATTER of the will and estate of Leonard Albert Missen, deceased

IN THE MATTER of an application under Part IV of the Administration and Probate Act 1958

BETWEEN:

LUCAS ALEXANDER PHILIP MOLETA MISSEN (a minor by his Litigation Guardian ANGELA HELEN MOLETA)

Plaintiff

v  

LEIGH JOHN MISSEN and
KAREN LORRAINE MISSEN

(who are sued in their capacity as Executors of the Will and Estate of LEONARD ALBERT MISSEN)

Defendants

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JUDGE:	Daly AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	3 October 2016
DATE OF RULING:	10 October 2016
CASE MAY BE CITED AS:	Lucas Missen (a minor by his litigation guardian Angela Moleta) v Leigh Missen and anor (No 2)
MEDIUM NEUTRAL CITATION:	[2016] VSC 602

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TESTATOR’S FAMILY MAINTENANCE – Application under Part IV of the Administration and Probate Act 1958 (Vic) – Application unsuccessful – Costs of successful defendant – Application not frivolous, vexatious, or with no real prospect of success – Section 97(7) of Administration and Probate Act 1958 (Vic) – Effect of rejection of Calderbank offer – Whether it was unreasonable to reject Calderbank offer.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N Jones	F Butera & Co
For the Defendant	Mr S McNab	BJT Legal Pty Ltd

HER HONOUR:

1. On 15 September 2016, I made orders dismissing the plaintiff’s application for further provision from the estate of his late grandfather.[1]  This ruling concerns the question of the parties’ costs of the proceeding.  Counsel for the plaintiff submits that the plaintiff should have his costs from the estate.  Alternatively, there should be no order as to costs.  Counsel for the plaintiff also submitted that, if I were to make any order for costs in favour of the defendants, those costs should only be on a standard basis. 

   [1][2016] VSC 569.

1. Counsel for the defendants submitted that the plaintiff should be ordered to pay the defendants’ costs of this proceeding, on a standard basis up to 27 August 2015, and on an indemnity basis thereafter.  The defendants relied upon a letter dated 27 August 2015, headed ‘Without prejudice save as to costs’ (‘Calderbank letter’).  The Calderbank letter:

(a)   contained an offer that the defendants pay the plaintiff the sum of $65,000 within 14 days of the approval of any compromise by the Court, plus the plaintiff’s legal costs, to be taxed failing agreement;

(b)  set out the basis upon which the defendants’ solicitor asserted that the offer was reasonable;

(c)   stated that the offer was subject to the approval of the Court; and

(d)  concluded with the following paragraph:

If your client does not accept this offer and a judgement or Order is obtained, or the proceeding is otherwise compromised, in more favourable terms to the Plaintiff than the terms of this offer, then this letter will be produced to the Court on the question of costs and our client will apply for costs on a solicitor-own client basis from the date of this letter in accordance with the principles outlined in Calderbank v Calderbank [1975] 3 All ER 333 and Cutts v Head [1984] 1 All ER 597 and adopted in the decisions of Gillard J in M T Associates Pty Ltd v Aquamax Pty Ltd and Cooks Bodyworks Pty Ltd [2000] VSC 163 and Ashley J in Clarke and Another v ABC and Another [2001] VSC 274.

1. The Calderbank letter post-dated by some weeks a formal offer of compromise made on behalf of the plaintiff to the effect that the plaintiff would accept a sum equivalent to twenty per cent of the value of the estate, plus his legal costs.  The time for acceptance of the offer in the Calderbank letter was extended after the defendants’ solicitors responded in writing to some queries made by the plaintiff’s solicitor. 

1. Counsel for the plaintiff submitted that the plaintiff’s rejection of the offer in the Calderbank letter was only one matter to be taken into account when exercising my discretion with respect to costs.  Counsel relied upon the statements of McMillan J in Briggs v Mantz (No 2)[2] and Byrne J in Bentley v Brennan; Re Bull (dec’d) (No 2)[3] to the effect that the usual order as to costs in civil litigation (that costs follow the event) has been the exception rather than the rule, and additional considerations apply in family provision matters. Counsel submitted that the provisions of s 97(7) of the Administration and Probate Act 1958 (Vic)[4] do not apply, as the plaintiff’s application was not made frivolously, vexatiously, or with no real prospect of success. 

   [2][2014] VSC 487.

   [3][2006] VSC 226.

   [4]Now repealed.

1. Further, counsel for the plaintiff noted that in Semmler v Todd,[5] Zammit J did not order an unsuccessful plaintiff to pay the other party’s costs, notwithstanding that the plaintiff had rejected two (substantial) Calderbank offers. 

   [5][2015] VSC 609.

1. Finally, counsel for the plaintiff submitted that the Calderbank letter did not satisfy the requirements set out in the decision of the Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2),[6] in that:

   [6](2005) 13 VR 435.

(a)   at the time the offer was made, the defendants had not provided any proper evidence of the size of the estate, which was not available until November 2015;

(b)  similarly, the time allowed to consider the offer was inadequate given the absence of any evidence regarding the size of the estate;

(c)   the extent of the compromise offered was not substantial, given the size of the estate and there being only one competing claimant, noting that I had found that if the deceased had owed a moral duty to the plaintiff, I would have ordered that the sum of $100,000 be paid for the benefit of the plaintiff;

(d)  the lack of clarity with which the terms of the offer was expressed, in terms of the basis upon which the plaintiff’s costs were said to be payable; and

(e)   the terms of the last paragraph of the Calderbank letter were confusing, and referred to costs being sought on a basis that no longer exists.

1. Counsel for the defendants relied upon the recent statement of the law with respect to costs by McMillan J in Rees v Rees (No 2),[7] to the effect that the usual order as to costs is that a successful party in litigation is entitled to a costs order in its favour.  Further, counsel submitted that the plaintiff’s rejection of the offer in the Calderbank letter amounted to a special circumstance justifying the making of a ‘special’ costs order in favour of the defendants, at least after 27 August 2015. 

   [7][2016] VSC 579.

1. Counsel for the defendants made the following submissions in support of their application for indemnity costs:

(a)   the Calderbank letter was clearly labelled as ‘without prejudice save as to costs’;

(b)  the terms of the offer were clear;

(c)   the offer was a genuine compromise;

(d)  the offer was subject to the approval of the Court, and therefore an independent assessment of its reasonableness would be made; and

(e)   the sum offered is in the range of awards made in cases involving claims by grandchildren.

1. Counsel for the defendants submitted that it was unreasonable for the plaintiff to reject the offer, on the basis that:

(a)   the plaintiff had information and knowledge of the facts in order to assess the offer, and his solicitors had sought and received further information, and the time for acceptance was extended accordingly;

(b)  the offer was made nine months prior to trial; and

(c)   there was a disparity between what was ordered by the Court (nil) and the sum of $65,000.

1. In my view, there should be no order as to the costs of the proceeding up to and including 27 August 2015, but the defendants ought have their costs on a standard basis after that date.  In the absence of the Calderbank letter, I would have made an order that there be no order as to the costs of the proceeding.  I accept that different considerations apply with respect to claims under Part IV of the Act.  The case relied upon by counsel for the defendants, Rees v Rees, was an estate case, but not a claim under Part IV of the Act.  There seems to be no reason why, in respect of the costs incurred up to 27 August 2015, the usual order should not be made. 

1. In reaching this view, I have had regard to the following matters:

(a)   first, as at the time the proceeding was commenced, the plaintiff’s position might be considered to have been more precarious than at the time of trial.  He was then only in his first year of secondary school.  His mother’s concerns that she may not be able to continue to work may well bear fruit at some stage, but have not yet borne fruit.  He has still not had to call upon the funds in Court, interest has continued to accumulate upon those funds, and is two years closer to the age of his legal majority;

(b)  secondly, given the limited contact between the plaintiff and his mother and the extended Missen family, it is unlikely that either the plaintiff or his mother would have been aware of the relevant matters relied upon by the defendants until their affidavits were filed, in particular, Leigh’s health issues and the substantial level of support and assistance provided by the defendants to the deceased in the years leading up to his death; and

(c)   if I were to make a costs order in favour of the defendants for this period, it would be compensating them for the costs of preparing affidavits which contained a substantial proportion of irrelevant, inadmissible, and on occasion, unnecessarily inflammatory material. 

1. However, I do consider that it was unreasonable for the plaintiff to reject the offer in the Calderbank letter.  However, while I do not consider the confusion that might have been caused by the reference to ‘solicitor-own client’ costs in the final paragraph of the Calderbank letter ineffective, I will nevertheless order that the costs be payable on a standard basis, rather than on an indemnity basis. 

1. Otherwise, I do not accept the submission that the timing and the contents of the Calderbank letter provide a basis for submitting that the plaintiff did not act unreasonably in rejecting the offer in the Calderbank letter.  The absence of a sworn valuation did not prevent the plaintiff making an offer that he receive an amount equivalent to twenty per cent of the estate.  His solicitors must have made that offer on the basis of some understanding of what that might amount to in monetary terms, notwithstanding that, given the task before the Court, it would be extremely unlikely that the Court would make an order in such terms (that is, order that a percentage of the estate be granted, as opposed to a specific sum).  The solicitors for the plaintiff wrote to the solicitors for the defendant after the Calderbank letter was served, seeking further information: presumably if there was any misunderstanding on the part of the solicitors as to the terms of the offer, or the costs consequences of failing to accept the offer, the solicitor for the plaintiff would have included any such queries in his correspondence. 

1. Further, by the time of the service of the Calderbank letter, all of the evidence, apart from the sworn valuations, were in evidence, and, even if the plaintiff and his solicitors did not understand the issues in the proceeding by that time, they would be in no doubt as to the position adopted by the defendants by reason of the terms of the Calderbank letter. 

1. In particular, the Calderbank letter stated that the offer was reasonable, based upon the strength of the plaintiff’s claim, having regard to a number of factors which the letter set out as follows:

(a)   Lucas had rare contact with his grandfather since the death of his father in 2007;

(b)  Lucas has been adequately provided for from his father’s estate;

(c)   Lucas is financially supported by his mother and grandmother who have extensive financial resources;

(d)  Lucas has no financial needs as he has not needed any of the money that is held in trust for him from his father’s estate;

(e)   the funds held in trust for Lucas are more than sufficient for Lucas to complete his education and support him until the time he obtains employment;

(f)    the main assets of the estate is farm land, which our clients use to derive their income; and

(g)  the precedents set out in Scarlett v Scarlett [2012] VSC 515 and Petruci v Fields [2004] VSC 425.

1. The relevance of the above factors, particularly (b) to (e) above, is evident from the reasons for judgment delivered following the trial. 

1. My finding that if I had found the deceased owed a moral duty to the plaintiff to provide for him from his estate, I would have awarded the sum of $100,000 is of limited relevance to the question of costs.  My primary finding was that no moral duty was owed.  Further, given that this amount represented the approximate cost of the plaintiff completing his secondary education at a private school, one could consider that this was an unduly generous (albeit in my view, justifiable) award in all of the circumstances, given the lack of provision made for any other grandchild. 

1. Accordingly, I will order that the plaintiff pay the defendants’ costs of the proceeding incurred after 27 August 2015 on a standard basis.

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