Wenham v Wenham (No 2)
[2023] SASC 142
•9 October 2023
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
WENHAM v WENHAM & ORS (No 2)
[2023] SASC 142
Judgment of the Honourable Justice Kimber
SUCCESSION - FAMILY PROVISION - PROCEDURE - ORDERS AND OTHER PROCEDURAL MATTERS - COSTS - OFFER OF COMPROMISE
In these proceedings, the applicant sought further provision out of an estate pursuant to s 7 of the Inheritance (Family Provision) Act 1972 (SA). The applicant was unsuccessful in his claim. This judgment deals with the question of costs.
The applicant sought an order that his costs should be paid out of the estate on a solicitor client basis.
A formal offer was filed by the third and fourth respondents. They opposed the orders sought by the applicant and sought orders that their costs be paid by the applicant including on an indemnity basis from the date the offer expired on the ground that the applicant’s refusal to accept the offer was imprudent.
Held, per Kimber J:
1. The applicant did not act unreasonably in bringing the claim.
2.The applicant may not be able to support himself if the orders sought by the third and fourth respondents were made.
3.The application was finely balanced. However, given the formal offer was reasonable, it is not appropriate for the applicant to have all costs paid out of the estate.
4.The Court orders:
4.1. The costs of Christopher Wenham, Kym Wenham and Rodney Wenham, in their capacities as Executors of the estate, are to be paid by the estate of the deceased on a solicitor client basis and on the footing of an indemnity;
4.2. The costs of the applicant and the third and fourth respondents incidental to the application from 30 June 2022 to 16 January 2023, are to be paid by the estate of the deceased on the standard costs basis, to be taxed or agreed;
4.3. The costs of the third and fourth respondents incidental to the application from 17 January 2023, are to be paid by the applicant on the standard costs basis, to be agreed or taxed;
4.4. There be no order as to the costs of the applicant from 17 January 2023; and
4.5. The Executors of the estate are directed that any cost order made against the applicant is to be set off against any entitlement the applicant has in the estate of the deceased.
Inheritance (Family Provision) Act 1972 (SA) s 9; Uniform Civil Rules 2020 (SA) r 132.10, referred to.
Pizimolos v Pizimolas and Zannis (No 2) [2010] SASC 209; Bowyer v Wood and Ors (2007) 99 SASR 190, applied.
WENHAM v WENHAM & ORS (No 2)
[2023] SASC 142Civil: Application — costs
KIMBER J:
On 6 June 2023, I delivered judgment in this matter. Bruce Wilton Wenham (the deceased) passed away on 25 September 2021. The deceased was survived by his three adult sons. By his will made on 11 March 2020, the deceased left the residue of his estate to his sons in three equal parts. The three sons are Christopher Bruce Wenham (the applicant and fifth and sixth respondent, as Executor and Beneficiary of the estate respectively), Kym Thomas Wenham (the first and third respondent, as Executor and Beneficiary of the estate respectively) and Rodney Glen Wenham (the second and fourth respondent, as Executor and Beneficiary of the estate respectively).
In the judgment delivered on 6 June 2023, I dismissed the claim of the applicant for greater provision out of the estate than the equal shares left to him and his two brothers. I must now deal with the question of costs.
It is common ground that Christopher Wenham, Kym Wenham and Rodney Wenham, in their capacities as Executors of the estate, should have their costs paid by the estate of the deceased on a solicitor client basis and on the footing of an indemnity. I so order.
Christopher Wenham, in his capacity as the applicant, seeks an order that his costs in the claim for a greater provision out of the estate should be paid out of the estate and on a solicitor client basis. Christopher Wenham makes the same application with respect to the costs of Kym Wenham and Rodney Wenham in their capacity as Beneficiaries of the estate.
In their capacity as Beneficiaries of the estate, Kym and Rodney Wenham seek different orders to those sought by the applicant. The orders proposed are:
1.The third and fourth respondents’ costs of and incidental to this application from 30 June 2022 to 16 January 2023 be paid by the applicant on the standard cost basis to be taxed or agreed.
2.The third and fourth respondents’ costs of and incidental to this application from 17 January 2023 be paid by the applicant on an indemnity basis to be taxed or agreed.
3.There be no order as to the costs of the applicant.
4.The executors of the estate are directed that any cost order made against the applicant is to be set off against any entitlement the applicant has in the estate of the deceased.
In their capacity as Beneficiaries of the estate, the costs of Kym Wenham and Rodney Wenham in defending the applicant’s claim is a cost incurred as an incident of determining the just entitlements of the Beneficiaries under the will. Kym Wenham and Rodney Wenham were successful. They are entitled to have their costs paid by the applicant, or in the alternative, out of the estate.
The formal offer and other background
As set out above, the deceased passed away on 25 September 2021. A Grant of Probate was made on 20 January 2022. The applicant made the claim for further provision on 30 June 2022. A private mediation occurred on 22 September 2022. Obviously enough, the mediation did not result in resolution of the claim made by the applicant.
Kym Wenham and Rodney Wenham filed a formal offer on 21 December 2022. The applicant was offered an additional amount of $50,000 to be paid from the residue of the estate. Further, the offer also included that the costs of the applicant be paid on the standard cost basis from the estate. The offer made by Kym Wenham and Rodney Wenham expired on 17 January 2023. The trial took place on 23 March 2023.
On 5 July 2023, Christopher Wenham filed an affidavit. Among other things, he has set out that his costs agreement is ‘based exclusively on time spent and not the Supreme Court scale’; that at the time of mediation his legal bills, inclusive of counsel fees, were $32,000; that the offer was ‘token’ given the amount of the offer and the term relating to costs.
The Act and the Rules
Section 9(8) of the Inheritance (Family Provision) Act 1972 (SA) provides:
The Court may make such order as to costs of any proceeding under this Act as it considers just.
Rule 132.10 of the Uniform Civil Rules 2020 relevantly provides:
(1)In this rule—
relevant offer means a formal offer in compliance with rule 132.4 that—
(a) was filed and served on the offeree at least 21 days before the commencement of the trial or final hearing of the proceeding or such later date as the Court orders on an application made before the expiration of that period;
(b) was and remained open for acceptance at least 14 days after service;
(c) relates to an entire action and not merely to part of it;
(d) involves genuine compromise;
(e) contains a term that the respondent to the action is to pay the costs of the applicant on the standard costs basis up to acceptance of the offer or 14 days after service of the offer (whichever is earlier) or that the parties will submit to any order that the Court may make in the exercise of its discretion.
…
(3)When—
(a) a relevant offer is made by a respondent in an action;
(b) the offer is not accepted by an applicant; and
(c) either—
(i)the respondent obtains judgment dismissing the action; or
(ii)the applicant obtains judgment that is less favourable to the applicant than the terms of the offer,
then—
(d) the costs incurred in respect of the action up to 14 days after service of the formal offer are unaffected by the making of the formal offer; and
(e) subject to the overriding discretion of the Court, the respondent is entitled to an order against the applicant for the respondent’s costs of the action to which the relevant offer relates thereafter on an indemnity basis.
In Pizimolos v Pizimolas and Zannis (No 2),[1] Kourakis J (as he then was) held that the ordinary rule as to costs is more readily displaced in family provision matters. Kourakis J held that reflected the conflicting public interest considerations. Kourakis J held:
On the one hand unmeritorious litigation which dissipates the estate should not be encouraged. On the other hand the purpose of family provision legislation is to charge the estates of testators who have made inadequate provision with such an amount as is necessary for the support of their dependents; that public policy objectives may not be achieved in practice if meritorious claimants are discouraged from making a claim by the ordinary rule as to costs.[2]
[1] [2010] SASC 209 (Pizimolas).
[2] Ibid [6].
In Pizimolos, Kourakis J referred with approval to the observations of Debelle J in Bowyer v Wood and Ors.[3] In considering the exercise of the costs discretion in family provision claims, Debelle J stated:
[66]The reported decisions contain little discussion of the principles to be applied. In most instances the report simply notes the order as to costs. There is a substantial number of decisions in which no costs order was made in the case of an unsuccessful application: Re Maslin [1908] VLR 641; Re Chapman [1918] St R Qd 226; In the Will of Roberts [1919] VLR 125; Re Kennedy [1920] VLR 513; Re Richardson [1920] SALR 24; Re McCreedy [1938] St R Qd 293; Re Milanovic [1973] Qd R 205; Dobell v Van Damme [1982] VR 425. In Fox v Burvill (1955) 92 CLR 334 at 341, the High Court ordered that, in the particular circumstances of that case, the costs of the unsuccessful applicant who was also the appellant (she was the divorced widow of the testator) be paid out of the estate. In Krause v Sinclair at 78, Tadgell J ordered that an unsuccessful applicant should not have the benefit of an order for costs but at the same time she would not be ordered to pay costs. The executor’s costs were paid out of the estate. In Singer v Berghouse at 214, the majority noted that there is nothing in the Act which precludes an order for costs against an unsuccessful applicant. While that is unquestionably correct, their Honours were not discussing the ordinary rule nor did they question that in some circumstances an unsuccessful applicant might recover costs out of the estate. In exercising its discretion not to order costs against an unsuccessful applicant, the court will also consider the effect of an order for costs upon the applicant’s financial position: Re De Feu (deceased) [1964] VR 420 at 428.
[67]In some instances the question whether an unsuccessful applicant will be liable for costs will depend on the reasonableness of the application. In Re Testator’s Family Maintenance Acts (1916) 12 Tas LR 11 at 13 Ewing J held that in view of the fact that the applicant was ‘within his rights in coming to the Court there should not be an order for costs’ except as to the costs of two parties which were paid out of the estate. The decision was affirmed on appeal. In the case of a reasonable application based on a moral claim or obligation, the unsuccessful applicant may even obtain an order for costs in his favour out of the estate. Re Bodman [1972] Qd R 281 is an instance. In that case, a number of applicants succeeded but one failed. Hoare J ordered that both the successful applicants and the unsuccessful applicant be paid their costs out of the residuary estate of the deceased. He said:
As to costs I order that the costs of each applicant, including reserved costs, be taxed as between solicitor and client and be paid out of the residuary estate of the testator. So far as concerns the applicant George Albert Bodman, although his application failed, in the particular circumstances of this case especially having regard to the strong moral obligation of the deceased towards him, I order that his costs, including reserved costs, be taxed as between solicitor and client and paid out of the residuary estate of the deceased.
In Re Klease (1972) QWN 44 Hoare J ordered that unsuccessful applicants should have paid their costs out of the estate because ‘there was this moral obligation in their favour and the applicants could not be said to be unreasonable’.[4]
[3] (2007) 99 SASR 190.
[4] Ibid 209 [66]–[67].
The submissions
Rodney Wenham and Kym Wenham submit that no order should be made for the costs of the applicant. They submitted that such an order would be unjust and reduce their entitlement from the estate. It is submitted the indemnity costs order sought from 17 January 2023 is appropriate on the basis of the refusal of the applicant to accept the offer. It is submitted that refusal was ‘imprudent’. It is submitted that to make the order sought by the applicant would be inconsistent with UCR 132.10. Kym Wenham and Rodney Wenham submit that they should not be punished by the refusal to accept the formal offer.
Christopher Wenham submits that his claim, while unsuccessful, was held to be ‘finely balanced’ and it was not unreasonable for him to refuse the offer. The applicant submits that this is a case in which it is appropriate to depart from general rule. Christopher Wenham directs attention to UCR 132.10(3)(e) and the overriding discretion of the Court.
Consideration
I do not find the applicant acted unreasonably in bringing his claim. In dismissing the claim of the applicant, as the applicant emphasised, I found the matter was ‘finely balanced’.
In the ordinary course, an order that the applicant not have his costs paid out of the estate would be the appropriate order. While I am satisfied the attempt by the applicant to secure greater provision out of the estate was reasonable, it was ultimately found that the applicant had not discharged the onus of establishing that a one third share of the estate was not adequate provision.
The offer made on 21 December 2022 was a reasonable one. It would have given Christopher Wenham some further provision and avoided additional costs.
In the ordinary course, Christopher Wenham would have a costs order made against him.
However, having found that the claim of the applicant for greater provision was ‘finely balanced’ and the limited financial resources of the applicant as set out in my judgment given on 6 June 2023, I am concerned about the capacity of the applicant to support himself in future years if all the orders sought by Kym Wenham and Rodney Wenham are made. As the application was finely balanced and as a relevant consideration is the effect of a costs order upon the financial position of the respondent, I am not satisfied it would be appropriate to make all the orders sought by Kym Wenham and Rodney Wenham. At the same time, given the formal offer was a reasonable one, I am also satisfied that it is not appropriate for Christopher Wenham to have all of his costs paid out of the estate.
In the exercise of my discretion, I make the following further orders:
1.The costs of the applicant and the third and fourth respondents incidental to the application from 30 June 2022 to 16 January 2023, are to be paid by the estate of the deceased on the standard costs basis, to be taxed or agreed.
2.The cost of the third and fourth respondents incidental to the application from 17 January 2023, are to be paid by the applicant on the standard costs basis, to be agreed or taxed.
3.There be no order as to the costs of the applicant from 17 January 2023.
4.The Executors of the estate are directed that any cost order made against the applicant is to be set off against any entitlement the applicant has in the estate of the deceased.
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