Re Williams; Smith v Thwaites (No 3)

[2018] VSC 431

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TESTATORS FAMILY MAINTENANCE LIST

S CI 2015 03820

IN THE MATTER of Part IV of the Administration and Probate Act 1958 (Vic)

-and-

IN THE MATTER of the Will of MARGARET MARY WILLIAMS, deceased

ELIZABETH RUTH SMITH	Plaintiff
v
ALAN KEITH THWAITES (Executor of the Will  and Trustee of the Estate of MARGARET MARY WILLIAMS deceased)	Defendant

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF JUDGMENT:	6 August 2018
CASE MAY BE CITED AS:	Re Williams; Smith v Thwaites (No 3)
MEDIUM NEUTRAL CITATION:	[2018] VSC 431

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COSTS — Family provision — Where plaintiff obtained judgment for further provision not more favourable than defendant’s offer of compromise — Where judgment amount marginally less than defendant’s offer of compromise — Whether appropriate to otherwise order in all the circumstances — Supreme Court (General Civil Procedure) Rules 2015, r 26.08(3).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S P Newton	McCarthy Partners
For the Defendant	Mr S E Marantelli	Meerkin & Apel

HER HONOUR:

Introduction

1. Judgment in this proceeding was delivered on 23 June 2017.  The Court ordered that further provision of $100,000 be made to the plaintiff from the estate of the deceased, in addition to her entitlement of $38,756 (as at the date of trial) under the deceased’s will.[1] 

   [1]Re Williams; Smith v Thwaites [2017] VSC 365 (23 June 2017) [69]–[70].

1. In respect of the plaintiff’s costs of the proceeding, the defendant sought an order that the plaintiff pay the defendant’s costs in accordance with r 26.08(3) of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) based on two offers of compromise made in accordance with Order 26 of the Rules. The plaintiff sought an order that her costs of and incidental to the proceeding be paid from the estate of the deceased on the standard basis.

1. On 19 December 2017, the Court delivered its reasons in respect of costs.[2]  The Court noted that either costs order sought by the parties would operate harshly on both parties, particularly in view of the quantum of the plaintiff’s costs compared to the amount ordered for her further provision.  The Court required the plaintiff’s solicitors to address the issue of the reasonableness and proportionality of the costs and provide details of the professional fees and disbursements claimed by the plaintiff to be paid out of the estate. 

   [2]Re Williams; Smith v Thwaites (No 2) [2017] VSC 771 (19 December 2017).

1. The plaintiff’s costs as initially calculated amounted to $66,790.76, being professional fees of $42,739.80 and disbursements of $24,050.96.  This amount was subsequently revised by the plaintiff’s solicitors, with the quantum now $44,000, comprising professional fees of $20,000 and disbursements of $24,000.  Based on the retainer letter dated 23 June 2015 to the plaintiff and an affidavit from the plaintiff’s solicitor filed before the mediation, the plaintiff’s costs up to and including the mediation were $25,000. 

1. The Court also sought details of the defendant’s quantum of costs of and incidental to the proceeding, both before and after the date of the first offer.  The defendant’s costs amounted to $57,460.69, being professional fees of $26,190.00 and disbursements of $31,270.69.  His costs up to and including the mediation of the proceeding were $24,510.83.

Consideration

1. In the first offer, the defendant offered to pay the plaintiff the sum of $101,000 by way of further provision, in addition to the plaintiff’s entitlement of a one quarter share of the deceased’s residuary estate.  At that stage, the plaintiff’s share of the residuary estate was $35,141.84 but for the purposes of the offer, the defendant rounded up the value of the plaintiff’s share of the estate to $40,000.  The offer stated that the defendant would pay $25,000 for the plaintiff’s costs and disbursements of and incidental to the proceeding, which amount accorded with the plaintiff’s estimate of costs at that time.  In monetary terms, the defendant’s offer was $141,000 exclusive of costs or $166,000 inclusive of costs.  The offer remained open for acceptance until 20 January 2016.  By letter dated 6 January 2016, the plaintiff rejected the defendant’s offer.  On 3 February 2016, the defendant made a second offer in substantially the same terms that was slightly more favourable than the first offer.  Shortly after the time for acceptance of the second offer had expired, the plaintiff made a counter offer of $200,000 exclusive of costs or $225,000 inclusive of costs.

1. The parties accepted that the relevant offer for consideration was the defendant’s first offer.[3]  Excluding the costs, the defendant’s first offer was marginally more favourable to the plaintiff than the amount ultimately awarded to her in the proceeding, namely, $141,000 compared to $138,756. 

   [3]Re Williams; Smith v Thwaites (No 2) [2017] VSC 771 (19 December 2017) [26].

1. The relevant authorities as to the Court’s exercise of discretion to depart from the ordinary consequences of r 26.08 of the Rules will depend on the relevant circumstances.[4]  As noted in the second judgment, a decision either way would operate harshly on both parties.[5]  This is still the case with the plaintiff’s revised quantum of costs.

   [4]Ibid [33]–[37].

   [5]Ibid [42].

1. For the reasons that follow, the Court is satisfied that there are no special, compelling or exceptional circumstances that warrant the exercise of the Court’s discretion to otherwise order, as provided by r 26.08(3) of the Rules, with respect to the plaintiff’s costs of the proceeding.

1. The defendant made early and reasonable attempts to resolve the proceeding.  The first offer was reasonable and provided an appropriate amount for the plaintiff’s further provision and costs.  After the first offer was rejected, the defendant made a second offer, which was also reasonable, and that offer was rejected.  The offers were made based on an assessment of the affidavits and after a mediation.  The plaintiff had ample opportunity to consider the offer and the assessment of the likely range of any further provision for the plaintiff was not difficult or complicated.  No person seeking further provision should assume an entitlement to costs being paid out of an estate or assume that he or she will not be ordered to pay the costs of the estate.[6]

   [6]Forsyth v Sinclair (No 2) (2010) 28 VR 635, 642 [27]; Webb v Ryan (No 2) [2012] VSC 431 (20 September 2012) [37]–[38].

1. The defendant’s conduct in the proceeding demonstrates clear and reasonable endeavours to resolve the dispute at appropriate stages in the proceeding and accords with the policy and objectives behind the costs rules.  His conduct is also consistent with the overarching obligations of litigants and practitioners under the Civil Procedure Act 2010, namely, encouraging settlement and avoiding unreasonable use of estate resources for the purposes of litigation.  In the circumstances as outlined, to otherwise order would penalise the defendant for his reasonable conduct in making the two offers to attempt to resolve the proceeding.

1. Accordingly, the Court will order:

(a)   the defendant pay the costs of the plaintiff of and incidental to the proceeding up to 11.00 am on the second business day after service of the first offer was effected, fixed in the sum of $25,000, such sum to be paid out of the net proceeds of sale of the estate property at 1 Montgomery Avenue, Mount Waverley (‘the net proceeds of sale’), not from the residue of the deceased’s estate, and thereafter the plaintiff bear her own costs fixed in the sum of $19,000;

(b)   the costs of the defendant of and incidental to the proceeding up to 11.00 am on the second business day after service of the first offer was effected, fixed in the sum of $24,510.83, be paid out of the net proceeds of sale, not from the residue of the deceased’s estate; and

(c)    the costs of the defendant of and incidental to the proceeding after 11.00 am on the second business day after service of the first offer was effected be paid by the plaintiff on the standard basis, to be taxed in default of agreement.

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