Parker v Australian Executor Trustees Limited (No 2) - [2016] SASC 115

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
PARKER & ORS v AUSTRALIAN EXECUTOR TRUSTEES LIMITED (No 2)
[2016] SASC 115
Judgment of The Honourable Justice Lovell
2 August 2016
PROCEDURE - COSTS
The defendant opposed the order of costs on a solicitor/client basis following judgment for family provision in favour of the plaintiffs - whether "standard order" should apply in South Australia.
Held: Court is to apply the usual discretion when considering costs but that the practice of making a "standard order" is to be given weight when exercising the discretion. Plaintiffs to have costs on a solicitor/client basis.
Whitington v Whitington (No 2) [2009] SASC 178, applied.
Pizimolas v Pizimolas & Zannis (No 2) [2010] SASC 209, discussed.

PARKER & ORS v AUSTRALIAN EXECUTOR TRUSTEES LIMITED (No 2)
[2016] SASC 115
Civil
LOVELL J.
Overview

On 1 June 2016 I handed down judgment in favour of the plaintiffs in this matter. On that day the defendant opposed the “standard order” as to costs and sought to make written submissions in support of their position. I allowed the application of the defendant to make written submissions and for the plaintiffs to reply accordingly. Mr Ower sought leave to file further submissions; leave was not opposed.
Background
The defendant, as executor of the estate, sought advice and direction from Stanley J and on 24 December 2015 his Honour made a direction that the defendant was justified in defending the proceedings. The defendant was also entitled to indemnify itself from the estate for its legal and other expenses.
It should be noted that the executor in this case had a direct financial interest in the outcome of the proceedings as the testator left the majority of the estate to the defendant to administer for which it would charge a fee. The fee charged was related to the amount of the fund to be administered. Such an arrangement is of course perfectly proper but as executor the defendant had an interest in the outcome.
Law
Whilst acknowledging the practice of a “standard order” namely that successful claimants have their costs paid out of the residual estate on a solicitor/client basis Mr Ower, counsel for the defendant, submitted there was no basis or rationale for this practice. He argued that I should order the costs of the plaintiffs be paid out of the residuary estate on a party/party basis. The plaintiffs submitted that the practice of awarding costs from the estate on a solicitor/client basis should not be disturbed and indeed followed in this case.
The issue of whether there should be a “standard order” in relation to the question of costs has not been considered by the Full Court in South Australia.
The defendant particularly relied on Kourakis J (as he then was) in Pizimolas v Pizimolas & Zannis (No 2)[1] where his Honour said:[2]
I order that the defendants have theirs costs paid from the estate. I am informed that such costs are often ordered on a solicitor/client basis. I am not persuaded that it is appropriate to so order. A practice direction has been issued on the award of costs in estate matters.
[His Honour then cited Practice Direction 8.1]
In my view, it better promotes the prudent settlement of family provision claims to limit the awards of costs of beneficiaries and claimants made out of the estate to party/party costs.
[1] [2010] SASC 209.
[2] [2010] SASC 209 [16]-[17].
The defendant quite properly acknowledged that since that decision other judges of this Court appear to have followed the “standard order” approach. The defendant submitted that there was no rational basis for the “standard order” and that I should follow the approach of Kourakis J. There is, it was submitted no reasoned or principled basis for any other order.
The plaintiffs submit that in the circumstances the “standard order” is appropriate in this case.
The plaintiffs submitted that the rationale of the “standard order” relates to the fact that a successful claimant will have demonstrated that the testator failed to make the provision for the claimant which the testator should have in fact have made. The courts only award such minimum level of provision in favour of the claimant as will discharge the duty owed by the testator. It was submitted that if there was a “gap” between the actual costs reasonably incurred by the claimant (that is, solicitor/client costs) and costs recoverable by the claimant calculated on a party/party basis, then it follows that the successful claimant will not, receive from the estate of the deceased the minimum level of provision that should have been made.
It can be accepted that the purpose of the legislation is remedial in character. However many parties come to court to enforce their legal rights, sometimes under remedial legislation, without having the benefit of a “standard order”.
In the case of Whitington v Whitington (No 2)[3] White J stated:[4]
It is common for the costs of a successful applicant under the IFP Act to be awarded on a solicitor/client basis. However, the Court’s usual discretion must be exercised and, amongst other things, account may be taken of the size of the estate, the successful applicant’s conduct in the litigation, and the effect of an order on a solicitor/client basis on any residuary beneficiary.
[3] [2009] SASC 178.
[4] [2009] SASC 178 [30].
Both Kourakis J and White J acknowledge the existence of a “standard order” and the fact that it has been the practice in South Australia for that to be followed. However it appears that White J, whilst acknowledging that the “usual discretion” on costs was to be exercised, was prepared to accept as a factor affecting the exercise of the discretion the practice of awarding solicitor/client costs to successful applicants.
With respect I agree that the approach of White J is preferable unless the Full Court determines otherwise. The practice of making a “standard order” is a factor to be taken into account when a court is exercising its discretion on costs.
In my opinion the parties to this type of litigation should not assume that a court will automatically award costs on a solicitor/client basis. A court may exercise the discretion on costs taking into account the practice of the “standard order” but also looking at the other factors mentioned by White J such as the size of the estate, the parties conduct in the litigation, what offers of settlement have been made by any party and the effect that the costs order may have on any beneficiary. Obviously other factors pertinent to the case may have relevance to the exercise of the discretion.
Discussion
In this matter it was common ground that:
1.The residuary estate was $1,173,250.17.
2.There were no relevant offers by any of the parties under r 187.
3.It was reasonable for the fifth plaintiff to be separately represented.
4.Offers were made by the plaintiffs but not accepted by the defendant; the defendant made no offers.
5.The defendant accepted that the conduct of the trial by the plaintiffs was reasonable.
I have taken into account the parties’ submissions about the informal offers made. The defendant rejected the offers made jointly by the plaintiffs; the defendant made no offers of settlement. I agree with the submissions of Mr Ower that in the circumstances it could not be said that it was imprudent or unreasonable for them to reject the offers made by the plaintiffs. It also could not be said here that the defendant acted in an unreasonable or improper manner in running the matter to trial. Such a finding, in general cases, would often lead to only party/party costs being awarded to successful plaintiffs. However I consider it an important factor here that no offers of settlement were made by the defendant. I also give weight to the usual practice.
Taking into account what I said earlier about the exercise of the costs discretion, on the facts of this case I am prepared to order that the plaintiffs are entitled to their costs on a solicitor/client basis.
Order
The plaintiffs to have their costs, to be agreed or taxed, on the solicitor/client scale.