Tapp v The Public Trustee (No 2)
[2009] TASSC 62
•11 August 2009
[2009] TASSC 62
COURT: SUPREME COURT OF TASMANIA
CITATION: Tapp v The Public Trustee (No 2) [2009] TASSC 62
PARTIES: TAPP, Allan Roy
v
PUBLIC TRUSTEE (THE)
WHEELER, Donna Marie
THURSTANS, Laife Arthur
FILE NO/S: M300/2006
DELIVERED ON: 11 August 2009
DELIVERED AT: Hobart
HEARING DATE: 5 August 2009
JUDGMENT OF: Tennent J
CATCHWORDS:
Succession – Family provision and maintenance – Practice – Procedure, orders and other matters – Other procedural matters – Costs – Applicant wholly successful – Small estate with cash deficiency – Factors to be considered in the exercise of the Court's discretion as to costs.
Testator's Family Maintenance Act1912 (Tas), s3.
Woolnough v Public Trustee (No2) [2005] TASSC 102; Grace & Anor v Thomas Street Café Pty Ltd & Ors(No 2) [2008] NSWSC 72; Cutts v Head and Another [1984] 1 Ch 290, referred to.
Aust Dig Succession [335]
REPRESENTATION:
Counsel:
Applicant: C M Schokman
Respondent: A R McKee
Other parties: D F M Zeeman
Solicitors:
Applicant: Ogilvie Jennings
Respondent: Murdoch Clarke
Other parties: Butler McIntyre
Judgment Number: [2009] TASSC 62
Number of paragraphs: 26
Serial No 62/2009
File No M300/2006
ALLAN ROY TAPP v THE PUBLIC TRUSTEE,
DONNA MARIE WHEELER and LAIFE ARTHUR THURSTANS
REASONS FOR JUDGMENT TENNENT J
11 August 2009
On 31 July 2009, reasons for judgment were delivered in the matter of a claim by the applicant under the Testators Family Maintenance Act 1912 for provision out of the estate of his deceased wife. The reasons contained proposed draft orders. By those draft orders, it was proposed that, subject to further submissions and costs orders, the applicant would have a freehold interest in certain property, as opposed to the life interest left to him in the deceased's will. The reason final orders were not initially made was that it was recognised that, because of matters peculiar to this case, any costs orders might affect the final orders to be made. Submissions as to those final orders and issues of costs were therefore sought, and have now been made. For the purpose of these reasons, I will describe the various parties in the same way that I did in the substantive reasons.
Parties to the proceedings
The initial respondent to the proceedings was the Public Trustee as executor of the estate of the deceased. Two of the deceased's children, Donna Marie Wheeler and Laife Arthur Thurstans, were subsequently joined as respondents. At trial, another child of the deceased, Craig Thurstans, was represented by the same counsel as his siblings. All three were residuary beneficiaries of the deceased's estate. A fourth residuary beneficiary was a child, Ben Thurstans. While, normally, there should have been a litigation guardian appointed to represent his interests, as a result of an agreement to effectively quarantine his entitlement from any order of this Court, it was agreed that costs be kept down by not joining him to the proceedings. At the commencement of the trial, the Public Trustee appeared by counsel. Counsel for the Public Trustee read certain affidavits into evidence, but then took no further part in the trial as a result of the agreement reached about Ben Thurstans, and the fact that the respondents were opposing the orders sought. Again, this step was taken in an effort to minimise costs.
Submissions about proposed orders and costs
Counsel for the Public Trustee appeared for the purpose of these submissions. He sought on behalf of his client an order that its costs be paid from the estate on a solicitor/client basis. He made no other submissions about appropriate costs orders, save to repeat his written submissions as to how any particular orders as to costs should be accommodated in final orders. No other party opposed the Public Trustee's application for costs. The only reservation was from counsel for the applicant who submitted that the operation of any such order should be stayed until the transfer of property to the applicant.
The applicant sought orders that the respondents pay his and their own costs.
The respondents opposed any order that they should pay the applicant's costs, and sought an order that their own costs be paid by the estate on a solicitor/client basis. They were content that payment of their costs be deferred until the occurrence of a terminating event.
What therefore is the appropriate order?
The usual practice, as identified by Blow J in Woolnough v Public Trustee (No 2) [2005] TASSC 102, is that the costs of all parties to an application such as the present one are paid from the estate. Nevertheless, the Court has an unfettered discretion as to costs and is not bound absolutely by that recognised practice. Counsel for the applicant submitted that, in the case of the applicant's and the respondents' costs, that usual practice should be departed from. Counsel for the respondents argued that it should not be.
There were a number of factors relied upon by counsel for the applicant to support her contention. These were:
-the estate was small,
-the claimant was a widower and had a strong claim,
-there were no competing claims,
-the extent of the applicant's capital contribution to the real property which formed the major part of the estate,
-the substantial gifts of cash from the deceased to the respondents shortly prior to her death. As to those, the respondents did not volunteer information about this. It came out in Court under cross-examination.
-in their case opposing the orders sought by the applicant, the respondents produced no evidence as to any significant capital contribution by the deceased to the real property in her estate,
-the conduct of the proceedings generally by the respondents, and
-an offer of settlement.
Counsel for the applicant submitted that all of this information was known to the respondents at the time the decision was made to oppose the applicant's application. These factors were sufficient to warrant the Court's departure from the usual position as to costs.
Size of estate
The estate basically consisted of the deceased's interest in a home that she had shared with the applicant prior to her death, and some cash. A one quarter share in that interest in real property was to be quarantined for the child Ben Thurstans. If, as foreshadowed in the substantive reasons, the applicant were to have a fee simple interest in the balance of the real property, there would be a cash deficiency in the estate. That deficiency would be increased by the burden of any order for costs in favour of the Public Trustee, which will inevitably be made. If the respondents are successful in their application for costs, the deficiency would be even greater.
Claims against the estate
The applicant was the widower of the deceased. On the findings that I made, he had, in my view, a strong claim for provision. There were no competing claims.
Applicant's capital contribution to real property
I was satisfied that contribution was substantial. There was no evidence of any significant capital contribution by the deceased to the real property.
Gifts by deceased prior to death
A few days prior to her death, the deceased authorised her son Laife Thurstans to withdraw an amount of $36,500 from funds held in her name with financial institutions. Those funds were distributed as to $10,000 each to himself and his siblings. The balance was used to pay for things for the child Ben and Donna Wheeler's child. The residuary beneficiaries had therefore already had the benefit of a distribution of a substantial part of the deceased's property. Despite inferring in their affidavits that the applicant or his family had improperly taken from their mother's belongings an amount of $14,000 which they said she had kept with her at home, and in the case of Donna Wheeler, setting out her financial position in her affidavit, neither Donna Wheeler nor Laife Thurstans disclosed to the Court that they had received these substantial gifts of cash from their mother, a matter of a few days before her death. When each gave evidence, neither disclosed it in examination-in-chief. The information was elicited in the cross–examination of Mr Thurstans.
Conduct of proceedings generally
The proceedings were commenced on 20 November 2006, naming the Public Trustee as respondent. On 21 February 2007, a notice of appearance was filed on behalf of Donna Marie Wheeler and Laife Arthur Thurstans, two of the respondents. On 19 June 2007, a notice of appearance was filed on behalf of Craig James Thurstans. On 11 July 2007, affidavits were filed by Donna Marie Wheeler and Laife Arthur Thurstans. The affidavit of Donna Marie Wheeler raised issues of conduct in relation to the applicant, potentially directed towards disentitling him to provision. No material was ever filed on behalf of Craig Thurstans. At trial, all three of the deceased's children were represented by the one counsel. The affidavits of Donna Marie Wheeler and Laife Arthur Thurstans, insofar as they were determined as admissible, were relied upon by the respondents at trial.
The position of the respondents at trial was clearly that the applicant should receive no further provision from the estate of the deceased, apart from that which had been allowed to him by the deceased's will. The applicant was cross-examined. Counsel for the respondents submitted that, notwithstanding the affidavits of two of his clients, he did not pursue what might be described as "disentitling" issues when he cross-examined the applicant. A review of the transcript of evidence suggests that is not entirely correct. Counsel for the respondents cross-examined the applicant about his relationship with the deceased's children in the early days of their relationship, suggesting those children were not welcome in the applicant's home. This was not admitted. He also put to the applicant that when the deceased left him, she complained of verbal and physical abuse. The applicant denied that. Counsel then put that, in fact, the applicant had physically and verbally abused the deceased. The applicant did not agree with that. Counsel also suggested to the applicant that he had a lady friend in about 1996, which was denied.
It is obvious from the cross-examination of the applicant that counsel was raising issues for the purpose of arguing that the applicant had no moral claim on the deceased's estate, which was indeed what counsel ultimately did. It must be presumed he did so upon instructions from the respondents. Both parties made reference to passages from the decision of Blow J in Woolnough (No 2) . In the case of counsel for the respondents, he referred to passages which, he submitted, would be relevant in the event that I might consider an order as sought by the applicant.
Counsel for the respondents further submitted that it was not unreasonable for them to oppose the originating application. The Public Trustee was not present at the trial, and the respondents did no more than assist the Court with the running of the trial. Further, the applicant's moral claim was tenuous.
As far as conduct of parties to proceedings which might be relevant to the issue of costs orders, this is clearly a far different situation than that with which Blow J dealt in Woolnough. Further, with respect to the submissions of counsel for the respondents, their position at trial went far beyond mere assistance to the Court. It was an active opposition, during which it might almost be suggested two of the respondents were minded not to be wholly frank with the Court (the lack of disclosure of substantial cash gifts). By the time the Public Trustee absented itself from the proceedings, the position of the respondents was well and truly in place. I have no evidence to suggest that the respondents put relevant material to the Public Trustee which he declined to put before the Court, and thus avoid the respondents having to be as active as they were.
Offer of compromise
Counsel for the applicant sought to tender a letter dated 5 September 2008 which she had sent to the solicitors for the respondents. The letter contained some proposals to settle the proceedings. The parties agree that whatever offer was contained in that letter was rejected on 12 September 2008. Counsel for the respondents objected to the tender of the letter. It was received for the purpose of determining that objection. The basis of the objection was that the letter was headed "Without Prejudice". It contained no reservation to the effect that it may be used in the context of a costs argument and therefore cannot even be said to be a Calderbank offer. As such it was not admissible, even on the issue of costs.
Counsel for the applicant commenced her submissions as to the letter by referring to the manner in which a letter containing an offer of compromise was dealt with in the matter of Woolnough. There is no doubt that Blow J took into account a letter containing an offer in that case. However, the offer was made without prejudice save as to costs. Counsel for the applicant contended however that, notwithstanding that the letter in this case was marked simply "Without Prejudice", it was still open to the Court to have regard to it, and take it into account as one of the factors to consider when exercising its discretion. To support that contention, counsel referred to some passages in a decision of the Supreme Court of New South Wales in Grace & Anor v Thomas Street Café Pty Ltd & Ors(No 2) [2008] NSWSC 72. In that particular case, an issue arose as to the status of "without prejudice" correspondence which passed between the parties prior to hearing in relation to settlement. At pars28 - 30, the court said:
"28 The 'without prejudice' correspondence upon which the respondents stated that they would intend to rely on for the purposes of costs is now before the Court, without any objection from the appellants. The correspondence from the respondents' solicitors did not state that it was 'without prejudice except as to costs', which is the usual reservation made when a letter is intended to be relied upon for that purpose. Nor did either letter from the respondents (Annexure B or D) make any reference to costs. Nonetheless, the Court does not consider that the appellants would have been in any doubt that this was the use to which the respondents intended to put the letter, should they be successful on the question of discretion.
29 When a party asks the Court to exercise its discretion as to costs, all relevant circumstances are to be taken into account. Those circumstances include relevant correspondence between the parties relating to settlement of the matter or issues in the matter. That correspondence does not need to be in any set form or embrace any specific formulae. Accordingly, the fact that Annexures B and D were not marked 'without prejudice except as to costs' does not deprive them of relevance. What is relevant is the content of the correspondence: see Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322 at [7].
30 The settlement of proceedings is encouraged by the Court and the public policy underlying that encouragement is given effect in appropriate circumstances by making special costs orders where an offer of settlement is made which constitutes a genuine offer of compromise which is unreasonable for the other party to reject: see Computer Machinery Co Ltd v Drescher [1983] 3 All ER 153; [1983] 1 WLR 1379; Cutts v Head [1983] EWCA Civ 8; [1984] 1 All ER 597; [1984] 2 WLR 349; [1984] Ch 290 at 311; Leichhardt Municipal Council v Green [2004] NSWCA 341; South Eastern Sydney Area Health Service v King [2006] NSWCA 2; Macquarie Radio Network Pty Ltd v Arthur Dent (No 2) [2007] NSWCA 339; and Elite Protective Personnel Pty Ltd v Salmon."
Counsel for the applicant invited the Court, in the circumstances, to consider the contents of the letter dated 5 September 2008, and the fact that the offer contained therein was rejected, as a factor which it could consider when exercising its discretion on the issue of costs.
Counsel for the respondents relied on some commentary on the subject of "without prejudice" offers and negotiations contained in Halsbury's Laws of Australia at par325-6705. The learned authors said:
"[325-6705] 'Without prejudice' offers and negotiations Generally, offers and negotiations expressed to be 'without prejudice' may not be disclosed to the court except by consent of the parties. The rationale of the principle is that it exists to protect a litigant from being embarrassed by an admission made purely in an attempt to achieve a settlement. A 'without prejudice' offer may, however, be expressed to be subject to the reservation that if rejected, it will be drawn to the attention of the court on the question of costs. In such a case, in determining the incidence of costs, the court may have regard to the offer and may award costs in favour of the party making the offer from the date upon which it ought reasonably to have been accepted.
Offers made 'without prejudice … save as to costs' reflect a practice which developed in claims other than money claims, and where there was no machinery for payment into court or for the making of a formal offer under rules of court for example, in arbitration proceedings and admiralty cases. An offer of this kind is known as a Calderbank offer. However, where the action is one in which money may be paid into court or in which a formal offer of compromise may be made under the rules of court, with the consequences as to costs provided in the rules dealing with such offers, the court may not be prepared to give to a party the benefit of an order for costs where the rules of court are not utilised and the offer is made informally out of court."
Reference was also made to a case footnoted in the above passage, namely that of Cutts v Head and Another [1984] 1 Ch 290. In that case, the court had been concerned with an action involving access over land. A party sent a letter which was headed "without prejudice" which contained a proposal to resolve the action. The letter contained a reservation that, should the proposal prove to be unacceptable to the other party, the party sending the letter could bring the letter to the notice of the court on the issue of costs. The party who sent the letter was substantially successful at trial, and sought to bring the letter to the notice of the court. The trial judge refused to have regard to its contents on the basis that it was headed "without prejudice". On appeal, the court determined that the trial judge should have had regard to the letter because of the reservation contained in it. This case was in fact referred to in the matter of Grace. While there is no dispute that the letter in the present case is headed "without prejudice" and does not contain any reservation of the type in Cutts' case, counsel for the respondents referred to a passage appearing at 312 in the judgment of Oliver LJ where he said:
"I would add only one word of caution. The qualification imposed on the without prejudice nature of the Calderbank letter is, as I have held, sufficient to enable it to be taken into account on the question of costs; but it should not be thought that this involves the consequence that such a letter can now be used as a substitute for a payment into court, where a payment into court is appropriate. In the case of the simple money claim, a defendant who wishes to avail himself of the protection afforded by an offer must, in the ordinary way, back his offer with cash by making a payment in and, speaking for myself, I should not, as at present advised, be disposed in such a case to treat a Calderbank offer as carrying the same consequences as payment in."
Counsel contended that the impact of the note of caution there expressed supported his contention that it would be inappropriate for this Court to have regard to the letter now under consideration because it is not one which contains any reservation about costs, and further, because the applicant did not at any stage take advantage of the Supreme Court Rules 2000 ("the Rules"), r280, and file a formal offer of compromise with the Court.
It would not in my view be appropriate to permit the applicant to rely on this letter. Lawyers who involve themselves in litigation in this Court should be well aware of, and make appropriate use of, the Rules and practices which are available to them to further their clients interests. In this case, there were two steps available to the applicant. These were a formal filed offer and a letter sent "without prejudice save as to costs". The applicant's lawyers took neither of these steps. Having said that, I do not disagree with what was said by the court in Grace in the paragraphs set out above. It is the content of the letter which may determine its relevance and hence its admissibility. In this case, the letter is clearly directed at a resolution of the proceedings. However,
-it is directed to the solicitor for apparently only two of the respondents,
-it is not expressed as a clear offer to settle,
-it records an enquiry by the solicitor for the Public Trustee about a suggestion that solicitor made. It says if those two respondents agree with that suggestion, then the applicant's solicitor would be in a position to put a settlement proposal. It then briefly sets that out in general terms (there is, for example, nothing about costs) and asks if the two particular respondents would be interested in settlement along those lines.
-it also indicates there would be a need to obtain the approval of another party in any event.
It would not be clear that this letter was being written for the purpose of its being used in a costs argument if the proposal contained were not accepted.
In the circumstances, the letter will be disregarded for the purpose of the exercise of the Court's discretion as to costs.
The orders to be made as to costs
The first costs issue to be dealt with is the application for costs by the Public Trustee. It is to have its costs of these proceedings on a solicitor/client basis.
The second issue to be dealt with is the application by the respondents that their costs be paid out of the estate. There will be no order to that effect. The respondents are to meet their own costs. The estate is small, there is already a cash deficiency and that cash deficiency will be the greater because of provision for the Public Trustee's costs. The respondents have, in my view, taken an active role to prevent the applicant from obtaining the provision from the estate he sought, an approach which was not justified given the circumstances of this case. The respondents had access to significant cash sums from the deceased which they did not, in their initial position before the Court, disclose. The making of an order for costs in their favour will place an even greater financial burden on the applicant, in circumstances where, on the evidence, he can ill afford it.
The third issue is the applicant's costs. For the same reasons that I have already canvassed, it is appropriate that the respondents pay certain costs of the applicant. The approach of Blow J in Woolnough, in considering an application that respondents pay an applicant's costs, was to differentiate between stages in the proceedings. He took the view, quite pragmatically, that up to a point, that is the filing by respondents in that matter of affidavits putting contentious matters before the Court, the applicant would have had to do everything she did in any event to obtain provision from the estate. In my view, that same logic should apply here. In the circumstances, the respondents are to pay the costs of the applicant of and incidental to these proceedings on a solicitor/client basis from 11 July 2007. The applicant is to be responsible for any costs he incurred prior to that date.
Another issue arises as a consequence of the order which will result from the conclusion in the preceding paragraph. There is no dispute that the costs of the Public Trustee are to be met by someone other than the Public Trustee. If the order is, however, that those costs be paid wholly from the estate, the entire burden will fall on the applicant. While it is appropriate that part of the burden should fall upon him because the Public Trustee became a party to proceedings at his instigation, it is arguable that he should not be responsible for all of them in the circumstances of this case. Were the estate capable of bearing the costs without penalising the applicant, the situation might be different. In this case, however, the respondents should also bear some of the responsibility for the Public Trustee's costs. Much of the work done by the Public Trustee would have been required in any event. However the work arising more recently has been required because of the stage that these proceedings reached. There will, in the circumstances, be provision that the respondents pay the costs of the Public Trustee as and from the date upon which the trial commenced, with the balance to be paid out of the estate.
Final orders to resolve proceedings
The following orders are by way of orders to determine, not only the applications as to costs, but also the substantive proceedings:
1That, subject to order 6 herein, provision be made out of the estate of the deceased, Beverley Dawn Tapp ("the Testator"), for Allan Roy Tapp ("the Applicant"), by the transfer to him by the Public Trustee of three undivided one quarter shares in all the right, title and interest of the Testator in the property at 77 Chippendale Street, Claremont in Tasmania, more particularly described in Certificate of Title Volume 690974 Folio 4 ("the Chippendale Street property").
2That the Public Trustee hold the remaining one undivided one quarter share in the right, title and interest of the Testator in the Chippendale Street property on trust to allow the applicant to reside in the said property until the occurrence of a terminating event as defined in the last will and testament of the Testator dated 28 May 2004 ("the Terminating Event"), with the applicant to be responsible for the payment of all rates and taxes, for keeping the said property insured against loss and damage from storm and tempest in such amount and with such insurer as may be approved from time to time by the Public Trustee, and maintaining the said property in a state similar to that existing at the date of this order.
3That, on the occurrence of the Terminating Event, the Chippendale Street property be sold.
4That, upon the sale of the Chippendale Street property, whether upon the occurrence of the Terminating Event or otherwise, the Public Trustee hold one-eighth of the net proceeds of sale thereof upon trust for Ben Thurstans for his own use and benefit absolutely upon his attaining the age of twenty one (21) years.
5That the costs of the Public Trustee of and incidental to proceedings commenced in M300/2006, including any application as to costs, be paid on a solicitor/client basis:
(a) as to those costs incurred up to the commencement of the trial, by the estate, and
(b) as to those costs incurred on and after that date, by Donna Marie Wheeler, Laife Arthur Thurstans and Craig James Thurstans.
6That the operation of order 1 herein be stayed until the Applicant has paid to the Public Trustee one half of any cash deficiency in the estate of the Testator as at the date of such transfer and to the estate that portion of the costs of the Public Trustee which he is ordered to pay by these orders.
7That Donna Marie Wheeler, Laife Arthur Thurstans and Craig James Thurstans pay the costs of the applicant of and incidental to proceedings commenced in M300/2006, including any application as to costs, on a solicitor/client basis on and from 11 July 2007.
8That, in the event that any costs of any party to these proceedings are ordered to be paid from the estate of the Testator, no part of that order is to burden the entitlement of Ben Thurstans to a one eighth share in the Chippendale Street property.
9That, save as is provided for by these orders, there be no other orders as to costs of these proceedings.
10That a certified copy of these orders be made upon the probate of the Testator's will.
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