Tchadovitch v Tchadovitch

[2009] NSWSC 1481

CITATION:	Tchadovitch v Tchadovitch [2009] NSWSC 1481
HEARING DATE(S):	26 - 28 October, 30 November 2009
JUDGMENT DATE :	30 November 2009
JURISDICTION:	Equity Division
JUDGMENT OF:	Rein J
DECISION:	Defendants to pay out of the estate the sum of $150,000 towards the plaintiff's costs, such sum to be paid within four months of 9 December 2009, and such sum to be on account of the balance of costs, which costs are to be assessed if no agreement can be reached, with no exclusions of any categories of costs.
CATCHWORDS:	PROCEDURE - costs - costs from estate - costs of expert witness - Calderbank letter - whether three elements of the plaintiff's costs should be disallowed
LEGISLATION CITED:	Uniform Civil Procedure Rules 2005
CATEGORY:	Consequential orders
CASES CITED:	Farr v Hardy [2008] NSWSC 996 Leichhardt Municipal Council v Green [2004] NSWCA 341 Leue v Reynolds (1986) 4 NSWLR 590
PARTIES:	Sylvia Tchadovitch (Plaintiff) George Tchadovitch (First Defendant) Boris Tchadovitch (Second Defendant)
FILE NUMBER(S):	SC 4563/08
COUNSEL:	J Needham SC, V Culkoff (Plaintiff) R Wilson, S Adair (Defendants)
SOLICITORS:	Steven Klinger (Plaintiff) Rosier Partners Lawyers (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Rein J

17 December 2009

4563/08 Sylvia Tchadovitch v George Tchadovitch and anor

JUDGMENT (EX TEMPORE)

1 REIN J: This matter was stood over to today to deal with a question relating to costs.

2 The plaintiff, having succeeded in her claim is entitled, barring some special circumstance, to the costs out of the estate. The defendants originally sought an order capping costs. There were two affidavits of Mr Rosier filed in the capping application and there were affidavits in response from Mr Klinger, the plaintiff's solicitor, as well as extensive submissions from Ms Needham S.C. and shorter submissions from Mr Wilson on the capping issue.

3 The defendants abandoned their application for capping, but whilst accepting that the plaintiff's costs should be borne by the estate, they contend there are three elements of the plaintiff's costs which should not be allowed.

4 These are set out in the further affidavit of Mr Rosier of 8 December 2009 and they are: first, in relation to costs incurred prior to the grant of probate; secondly, legal costs incurred in relation to the investigation of Burramond Joinery Pty Limited and Casebella Constructions Pty Limited (apart from the loan of $523,533 owed to the deceased); thirdly, costs incurred in relation to report of Mr Walker, an actuary, and his evidence generally.

5 Much of the correspondence between the solicitors as is annexed to the various affidavits has a rather unfortunate tone, particularly from Mr Rosier. I think it is important for solicitors and, I would add, barristers, to avoid permitting the animosities between their clients to overtake their own dealings, which are best conducted in a polite and courteous manner, not only for the benefit of their own professional reputation and for the benefit of their profession generally, but for the benefit of their clients. Not only is personal animosity likely to obscure judgment, but it is almost certainly to lead to increases in costs.

6 There is no doubt that the costs claimed by the plaintiff's solicitor, which are in the order of $250,000, are extraordinarily high and it may well be that on taxation or assessment they will be proved to be excessive, as the defendants maintain.

7 It appears that a considerable time has been spent by the plaintiff's solicitor in attempting to ascertain the full picture of the testator's financial affairs, which were not uncomplicated.

8 It does seem that relations between the solicitors started badly when the plaintiff's solicitor threatened to commence proceedings within a very short time of the testator's death and sought prompt payment of an interim payment. I should note to Mr Rosier’s credit that when the plaintiff first contacted him he encouraged her to obtain legal representation and his earlier correspondence acknowledges the difficulty with the will’s provisions in favour of the plaintiff.

9 However, matters soon became tense when the plaintiff made demands and commenced proceedings at a stage before probate had been granted. The defendants had provided $10,000 to her and initially they took the view that this was sufficient, but I do not intend to traverse the details of what occurred save to note that as at 6 November 2009 there were, by agreement, orders made for the payment to the plaintiff of $3,000 per month on an interim basis and other ancillary orders confirmed in relation to the house and the car.

10 There is an avenue open to a widow or close relative who needs interim relief pending the grant of probate and determination of his or her claim: see Leue v Reynolds (1986) 4 NSWLR 590.

11 Although Mr Klinger’s litigation stance may have been somewhat precipitous, it achieved the result that interim maintenance arrangements were made, which as I said were the subject of consent orders in November.

12 So far as the investigations into the testator's financial arrangements are concerned, and again, without wishing to enter into the details as to what passed between the solicitors, the defendants appear to have taken the view with the strong support of the defendant's solicitor, Mr Rosier, that the plaintiff's inquiries were a needless irritation.

13 Some of Mr Klinger's apparent concerns may have been unfounded, but the plaintiff did succeed in showing that $523,533 owing to the testator by Averala should be treated as part of the estate, and demonstrated that the defendants’ contentions in relation to Tchadovitch Joinery Pty Ltd were unreliable.

14 I do not think that the plaintiff should be deprived of her costs because other inquiries, as matters transpired, led nowhere.

15 Attention needs to be drawn to the comment of his Honour White J in the case of Farr v Hardy [2008] NSWSC 996 in which his Honour said at [54]:

“The financial position of the superannuation fund and the Far Better Trust, and the rights of the plaintiff and her children in respect of the superannuation fund and the trust are plainly relevant circumstances. The executors are under a duty to make full disclosure to the plaintiff of the financial position and circumstances in relation to the superannuation fund and the trust. The fact that the assets of the superannuation fund and the trust are not assets of the estate does not in any way derogate from that duty. Unfortunately, it was only on my insistence on the first day of the hearing that the executors produced financial statements of the superannuation fund and the trust and of the income of the estate. It should be unnecessary to re-emphasise the duties of executors in these respects, but it is plainly necessary to do so. That observation is not confined to the circumstances of the present case."

16 The defendants’ solicitors may have taken the view that the obligation of the executors was limited, given that they personally were making no claim to a need for financial assistance out of the estate. There was some suggestion during the case that that approach adopted by White J was very wide and open to question, but even if that were correct (and I express no view on that point as it was not ultimately argued before me) it is a statement of principle which the plaintiff was entitled to rely upon in seeking what she did seek.

17 I turn now to the issue of Mr Walker's costs in support of the case. The plaintiff relied on the evidence of Mr Walker. During the trial I made a comment as to what seemed to me to be rather an extreme position adopted by Mr Walker in relation to the plaintiff's life expectancy. There was subsequent agreement on the issues to which Mr Walker's report went. He was not called in the case and his report was not relied on.

18 The defendants seek an order that the plaintiff not be entitled to the costs of this expert's report or the time spent in the case. I did not formally have to rule on the report and I do not know to what extent the views of Mr Walker has an impact on the facts that were agreed.

19 There may well be cases where the costs of a report or the expert's time generally should be disallowed, but it is an unusual step and I am not persuaded that such an unusual sanction should be applied in this case.

20 Accordingly, in my view, none of the items which the defendants contend should be removed from the costs order should be so removed.

21 There was a further matter that needs attention and that is the question of whether the plaintiff ought obtain an order for indemnity costs on the basis of a “Calderbank” letter of 28 May 2009 proposing a settlement of the matter.

22 There is no dispute that the offer contained in the letter was less than the result that has been obtained by the plaintiff in the proceedings. However, the rules in relation to Calderbank letters are different to offers of compromise made under the Uniform Civil Procedure Rules in that for a party to succeed in obtaining an indemnity costs order based on a Calderbank letter, it is necessary to show that it was unreasonable for the recipient of the offer to have rejected it: see Leichhardt Municipal Council v Green [2004] NSWCA 341 at [55]-[57] per Santow JA (with whom Bryson JA and Stein AJA agreed), where these issues are discussed.

23 Although the plaintiff has done considerably better than the offer, it is not a case in which there is any obvious figure that might be arrived at and I do not think that it is established that the defendants acted unreasonably by not accepting that offer. Accordingly I refuse the application for indemnity costs based on the Calderbank letter. The plaintiff’s costs, assessed on the usual basis, should be paid out of the estate.

24 I order that the defendants pay out of the estate the sum of $150,000 towards the plaintiff's costs, such sum to be paid within four months of 9 December 2009, and such sum is to be on account of the balance of costs which is to be assessed if no agreement can be reached.

25 The exhibits are to be returned after the expiry of two months from today, in the absence of an appeal.

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