Re Monshing (dec'd); Hobley v Stevenson (No 2)
[2004] VSC 87
•26 March 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 6022 of 2003
IN THE MATTER of an Application pursuant to Part IV of the Administration and Probate Act 1958
and
IN THE MATTER of the Will and Codicil and Estate of HORACE REGINALD MONSHING Deceased
| KATHLEEN ANNE WOODS | Plaintiff |
| v | |
| KATHLEEN MARGARET STEVENSON and HORACE REGINALD PETER MONSHING (who are sued as executors of the Estate of HORACE REGINALD MONSHING deceased) | Defendants |
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No. 6625 of 2002
IN THE MATTER of an Application pursuant to Part IV of the Administration and Probate Act 1958
and
IN THE MATTER of the Will and Codicil and Estate of HORACE REGINALD MONSHING Deceased
| HELEN THERESA HOBLEY | Plaintiff |
| v | |
| KATHLEEN MARGARET STEVENSON and HORACE REGINALD PETER MONSHING (who are sued as executors of the Estate of HORACE REGINALD MONSHING deceased) | Defendants |
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JUDGE: | Byrne J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 17 March 2004 | |
DATE OF JUDGMENT: | 26 March 2004 | |
CASE MAY BE CITED AS: | Re Monshing (deceased) (No. 2) | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 87 | |
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Family provision – successful claim – costs of plaintiffs – offer of compromise – whether judgment obtained not less favourable than offer – costs on solicitor and client basis.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff Woods | Mr R.B. Phillips | Wards |
| For the Plaintiff Hobley | Mr S. Newton | The Field Group |
| For the Defendants | Mr G. Baker | D.A. McKenzie-McHarg Bailey and Halliday |
HIS HONOUR:
The deceased, Horace Reginald Monshing, died on 14 May 2001 leaving a last will dated 5 August 1996 and a codicil dated 21 March 2000. The deceased was a farmer and the greater part of his estate comprised farm properties in the Myrtleford district together with farm plant and livestock.
The deceased was survived by his ex-wife, Kathleen Margaret Monshing (now Mrs Stevenson) and his four adult children, Kathleen Anne Bruton (now Mrs Woods), Horace Reginald Peter Monshing (known as Peter Monshing), Helen Teresa Monshing (now Mrs Hobley) and Andrew George Monshing.
The value of the estate at the date of death was $1,387,590.47 of which $1,137,000 represented real estate, $61,325.00 represented farm machinery and $112,693.86 represented livestock. Under the will, his family received the following bequests:
Mrs Stevenson: a life interest in a house at Mirriang. The house together with certain land at Mirriang which was not the subject of the life interest is valued at $200,000.
Mrs Woods: one-half interest in the land at Mirriang, other than the house the subject of the life interest, together with one-half interest in remainder in the house at Mirriang. Her bequest under the will of another house property on land described in Certificate of Title Volume 8377 Folio 808 valued at $25,000 passed by the codicil to her three daughters, Kate Elizabeth Bruton, Rebecca Joan Bruton and Clare May Bruton.
Peter Monshing: the farm property known as “Ovens” which had a probate value of $537,000 together with the stock and plant on it.
Mrs Hobley: one-half interest in the land at Mirriang, other than the house the subject of the life interest, together with one-half interest in remainder in the house at Mirriang. In addition she received the western part of the land described in Certificate of Title Volume 8177 Folio 690 which part was valued for probate at $25,000.
Andrew Monshing: the farm property known as “Tarrawingee” which had a probate value of $350,000 together with the stock and plant on it.
Both Mrs Woods and Mrs Hobley sought further provision from the estate pursuant to Part IV of the Administration and Probate Act 1958. Their applications were heard together and determined by Nathan J by judgment published on 19 December 2003[1]. Unfortunately, his Honour is unable to deal with the outstanding matters, namely, the form of the order for further provision and the costs of the applications. Accordingly, the Chief Justice has requested that I deal with these matters pursuant to s. 87(2) of the Constitution Act 1975 and, with the concurrence of the parties, I have undertaken this task.
[1][2003] VSC 498
His Honour analysed the entitlements of the four children under the will and codicil as a percentage of the probate value of the estate as follows:
§ Mrs Woods and her daughters 8.5 percent
§ Peter Monshing 49 percent
§ Mrs Hobley 10 percent
§ Andrew Monshing 31.5 percent.
Having considered the evidence, his Honour concluded that the deceased had, indeed, made insufficient provision for the daughters and he directed that the shares be adjusted so that the estate be distributed as follows:
§ Mrs Woods and her daughters 17.5 percent
§ Peter Monshing 40 percent
§ Mrs Hobley 17.5 percent
§ Andrew Monshing 25 percent
The questions as to costs are complicated by the fact that, although each of the daughters was successful there were given unaccepted offers of compromise as follows:
§ Mrs Woods on 26 August 2003 offered to accept the sum of $210,000 together with her costs to be agreed or taxed. The basis of taxing these costs was not specified. Her offer was made on the basis that she would forego her entitlements under the will and codicil. This means that she offered to forego her immediate entitlement to a share in the land at Mirriang and her gift in remainder of the house at Mirriang. The entitlement of her daughters was not affected.
§ Mrs Hobley on 26 May 2003 offered to compromise her claim by accepting the sum of $200,000 from the estate in lieu of all other entitlements together with her costs on a solicitor and client basis.
§ The Executors, for their part, made an offer on 5 May 2003 to pay to Mrs Woods $100,000 in satisfaction of her claim on the basis that she forego her right to the house and land at Mirriang.
It was accepted on behalf of the Executors that the two plaintiffs were entitled to their costs. The Executors’ offer of compromise is not relevant to my present task, if it be effective for any purpose. The Executors’ position was that the costs of the plaintiffs should be taxed on a party and party basis.
The two daughters, however, contend for solicitor and client costs or indemnity costs. They further argue that, since they have recovered a sum greater than they offered to accept in their respective offers, their costs after the time of the offer should in each case be borne, not out of the residue of the estate, but out of the shares of the brothers who unsuccessfully contested their claims. They contended that the order sought by the defendants would have the consequence that they, the plaintiffs, would each be bearing 17.5 percent of their own costs after the time of the offer. This, it was said, would defeat the purpose, if not the letter, of Order 25.
The first question is to determine whether the judgment obtained in each case is no less favourable to the plaintiff than the offer of compromise which she made. This raises three immediate difficulties in this case. First, the offer in a sum of money is difficult to compare with a percentage distribution as his Honour ordered. This is particularly the case where, as here, the legal costs of the estate must be accounted for in order to calculate the value of the shares. In this way, there arises a circle which must be broken if the comparison is to be justly made. The second is that of valuing the 17.5 percent share. Third is fixing the date at which the comparison is to be made. Is it to be the date of judgment so that the value of the estate available for distribution to each of the daughters in accordance with the judgment must then be ascertained? Or is it the date of the offer?
I address first the last question. The value of the share which his Honour awarded to each of the daughters must be ascertained by reference to the date of the judgment for it is then that their benefit is quantified. It was argued against a comparison at that date that, in a case of this kind, the fund available for distribution was greater at the time of the offer than at the time of judgment. This was because the Executors had refused to accept the offer and the case proceeded with the estate incurring greater legal costs. These costs would not have been incurred if the brothers had been more reasonable and realistic. Why then, it was said, should the successful plaintiffs suffer as a result of this attitude of the defendants? While I can see the force of such an argument in a family provision claim, Rule 26.08 requires a comparison of the offer with the value of the judgment. This means that, if an early offer is made, each party takes the risk that the estate may be increased by increases in property values, inflation or otherwise, or decreased by a contrary movement in the market, economic conditions and by the legal costs incurred by the trial. It is always open to a party to make a further offer to cater for these matters. I conclude that the value of the shares ordered by the Court on 19 December 2003 should be ascertained, if possible, as at that date and compared, if possible, with each of the plaintiffs’ offers.
What then is the value of the 17.5 percent share in the estate of the deceased as at 19 December 2003? The financial position of the estate at the date of trial is set out in the Executors’ affidavit sworn 26 September 2003. It appears that the farm properties remain and that, with one exception, their probate valuations stand. All personal estate has been realised or distributed. The exception is part of the land comprising the Ovens property which has been reduced by $90,000. The Executors have received $56,448,74 from income and the disposal of some shares and have paid out $55,888.72. This last sum includes $19,757.00 for legal fees, presumably fees of the Executors which appear to relate to these proceedings. The remaining expenses paid total $36,132.00. The Executors have also distributed plant and livestock to the beneficiaries. The current value of the estate, then, appears to be as follows:
Real Estate 1,047,000 Receipts 56,449 Less payments (36,132) Assets distributed 207,619 Total $1,274,936 From this should be deducted a disputed liability of $1,337.11 and estimate for contingent liabilities, not including the costs of these proceedings, totalling $45,902. The net present value of the estate, then, ignoring legal costs is $1,227,697. 17.5 percent of this net value is $214,846.97.
This sum, of course, does not represent the amount which each daughter is to receive under the will as varied by his Honour’s order, for it ignores the legal costs of the Executors and those of the plaintiffs. In the case of Mrs Woods it must also be reduced by $25,000 for the house property which passed to her daughters under the codicil. Her pre-costs recovery is therefore $189,846.97.
It follows from this that the result achieved by Ms Woods must be less favourable than the offer of $210,000.
With respect to the result achieved by Mrs Hobley, her pre-costs share of $214,847 has to be compared with her offer of $200,000. Assuming the costs of all parties are paid by the estate, her share of 17.5 percent would become less than $200,000 if the net value of the estate were reduced by a total costs burden of about $85,000.
The costs paid to date by the estate are nearly $20,000. The trial before his Honour ran for one day. The estimate of costs of $120,000 appearing in the Executors’ affidavit may be a little high but it would have to be reduced by about 50 percent if it were not to raise the share of Mrs Hobley over $200,000. This seems to me unlikely no matter on what basis the plaintiffs’ costs are to be awarded.
I conclude, therefore, that she, too, has not achieved a result no less favourable than her offer of 16 May 2003.
I approach the question of costs, then, on the basis that none of the offers of compromise meets the requirements of Rule 26.08. Moreover, looking at them in the broader context, I do not consider that they should be had regard to. His Honour in his judgment was careful to give his assessment of all of the children of the deceased and their mother as “honest, thoroughly decent and hardworking people”. It is regrettable that they have fallen out and that there may be bitterness between them which has led them to court. I am not in a position to point the finger at anyone of them for this and I do not do so. I will therefore approach the question of costs on the basis that the plaintiffs have simply been successful.
The common order in such a case is that the costs of all parties should come out of the estate. I propose therefore the following orders as to costs in each case:
1.The costs and expenses of the defendants of and incident to this proceeding be had and retained out of the estate of the deceased.
2.The costs of the plaintiff including reserved costs be taxed on a solicitor and client basis in default of agreement and when taxed or agreed be paid out of the estate of the deceased.
I will hear counsel further as to the form of orders to be made to give effect to his Honour’s conclusions and to these conclusions.
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