Williams v Harrison

[2024] TASSC 18

[2024] TASSC 18

COURT:	SUPREME COURT OF TASMANIA
CITATION:	Williams v Harrison [2024] TASSC 18
PARTIES:	WILLIAMS, Howard Robert as Executor of the Estate of Joyce Evans
v
HARRISON, Elwin
HARRISON, Angela
FILE NO:	246/2021
DELIVERED ON:	12 April 2024
DELIVERED AT:	Launceston
HEARING DATE/S:	18 March 2024
JUDGMENT OF:	Pearce J
CATCHWORDS:

Procedure – Civil proceedings in State and Territory courts – Costs – Offers of compromise, payments into court and settlements – Offer of compromise or offer to settle or consent to judgment pursuant to rules – Generally – Tasmanian rules of no application to wholly successful defendant.

Supreme Court Rules 2000 (Tas), r 280
Aust Dig Procedure [1581]

Procedure – Civil proceedings in State and Territory courts – Costs – Offers of compromise, payments into court and settlements – Informal offers and Calderbank letters – Unreasonable refusal of offer – Application by successful defendant for indemnity costs from refusal of offer – Refusal of offer not unreasonable at time of refusal.

Aust Dig Procedure [1591]

REPRESENTATION:

Counsel:

Plaintiff:	F C Brimfield
Defendants:	N Terracall

Solicitors:

Plaintiff:	Bleyer Lawyers Pty Ltd
Defendants:	Terracall and Associates

Judgment Number:	[2024] TASSC 18
Number of paragraphs:	14

Serial No 18/2024 File No 246/2021

HOWARD ROBERT WILLIAMS AS EXECUTOR OF THE ESTATE OF JOYCE EVANS v ELWIN HARRISON and ANGELA HARRISON

REASONS FOR JUDGMENT PEARCE J
12 April 2024

1             This decision concerns the costs of an unsuccessful action. On 30 November 2023 I published reasons for dismissing an action brought by the plaintiff, in his capacity as executor of the estate of the late Joyce Evans: Williams v Harrison [2023] TASSC 47. In the action the plaintiff sought to enforce what he claimed to be a contract he entered into, as executor, with the defendants to settle a financial dispute between the defendants and Mrs Evans during her life. The claimed agreement would have required the defendants to transfer the property at Unit 4, 369A Hobart Road, Youngtown to the estate on certain terms. Although I was satisfied that the defendants intended to be contractually bound substantially in the terms alleged by the plaintiff, the action failed because at the time of the agreement the defendants were not aware Mrs Evans had died, and thought they were dealing with her and not the plaintiff, to whom they had no intention to bind themselves. There was a small counterclaim for accrued rent paid by a tenant between the date of Mrs Evans' death and determination of the action. The counterclaim succeeded, but the parties agreed that such order depended on, and followed, the result of the action.

2             The plaintiff agrees that he should pay the defendants' costs of the action. However the defendants seek special costs orders. They apply for costs on a solicitor and own client basis between 10 September 2021 and 24 January 2024, and on an indemnity basis from 25 January 2024. The submission that there should be special costs orders is made on the factual basis summarised as follows.

3             The writ was filed on 9 February 2021. The statement of claim was filed 9 March 2021. It alleged unconscionable conduct against the defendants and contained two iterations of the purported enforceable contract. A conciliation conference was conducted on 11 August 2021 in the course of which the defendants offered to resolve the action on the basis that the Youngtown property be sold and the proceeds, after payment of expenses, divided so that the plaintiff received 20 per cent and the defendants received 80 per cent. The offer was made on the basis that each party would pay their own costs of the action. The plaintiff rejected the offer.

4 On 24 August 2021 the defendants filed an offer of compromise pursuant to Part 9 of the Supreme Court Rules 2000. The offer was sent by letter to the plaintiff's solicitor on 26 August 2021. The substance of the offer was such that, if accepted, the defendants would pay $25,500 and an equal portion of the rent paid until then to the plaintiff, and the action would be dismissed with no order as to costs. The offer was open for acceptance for 14 days following service. It lapsed without being accepted on 9 September 2021.

5             By letter dated 15 December 2021 the defendants made another offer to resolve the proceedings. The defendants offered, subject to execution of a release in agreed terms, to pay to the plaintiff all of the rental income then held in the trust account of the plaintiff's lawyer, and the action be dismissed with no order as to costs. The letter concluded with the following passage:

"This offer is open for a period of 14 days from the date of this letter. If this offer is not accepted, and your client ultimately fails, I am instructed that my clients will seek an order for costs paid on an indemnity basis, which costs may be payable by your client personally if the estate has insufficient means to meet the judgment debt."

2   No 18/2024

6   The offer of 15 December 2021 was not accepted.

7             A substantially amended statement of claim was delivered on 10 March 2022. The amended claim abandoned the unconscionable conduct claim but introduced allegations of estoppel. The estoppel claims were abandoned on 11 October 2023, a few days before the trial commenced. The claim for indemnity costs is made on the basis that, from 25 January 2024, the plaintiff should not have resisted the claim for solicitor and client costs.

8             The defendants do not submit that the plaintiff's failure to accept the offer made during the conciliation conference on 11 August 2021 is, without more, sufficient to justify a special costs order.

9             As to the offer of compromise, the defendants contend that it gives rise to a presumptive entitlement to solicitor and client costs in accordance with r 289 and the principles explained by Porter J (as his Honour then was) in Partridge v Hobart City Council (No 2) [2011] TASSC 35 at [37], and by the Full Court in Spaulding v Eirth (No 2) [2017] TASFC 2 at [13]–[18]. However, in my view, the plaintiff derives little assistance from r 289. As I attempted to explain in Fingal Pastoral v Page Seager Lawyers (No 2) [2020] TASSC 40 at [13] and [17], the terms of r 289(2) do not cover a scenario in which a defendant makes an offer which is not accepted, but the plaintiff's action is wholly unsuccessful. Counsel for the defendants drew my attention to the terms of r 279, the interpretation section for Part 9 of the Rules. It provides that in that Part, the term "plaintiff" includes a defendant who has filed and served a counterclaim. The defendants contend, that as a result, the terms of r 289 should be read as applying in this case. I do not agree. In my view, what follows from the interpretation section is that the terms of r 289 may apply to an offer to compromise a counterclaim to the extent that it concerns the costs of the counterclaim. Even if I am wrong about that, I would "otherwise order" in accordance with r 289(1) because, in this case, resolution of the counterclaim played almost no part in the proceedings and added nothing to the costs. It was obvious from the start that it was the issues in the plaintiff's claim which were determinative of both the claim and the counterclaim.

10           In Fingal Pastoral v Page Seager Lawyers (No 2) I reviewed the authorities and principles which apply to a claim for indemnity or solicitor and client costs arising from an offer in the form of a Calderbank letter. The principles include that:

• a special order for solicitor and client costs or indemnity costs can properly be awarded in appropriate cases where "there is some special or unusual feature in the case to justify the court exercising its discretion in that way": Preston v Preston [1982] 1 All ER 41 at 58, Re Wilcox; ex-parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151;

• the onus to establish the basis on which a special costs order is justified is on the party seeking that order;

• the refusal of an offer of compromise is circumstance, sometimes a strong factor, relevant to an award of indemnity or solicitor and client costs: Stewart v Atco Controls Pty Ltd (in Liquidation) [No 2] [2014] HCA 31, 252 CLR 331 at [4];

• indemnity costs or solicitor and client costs are not designed to punish a party for persisting with a case that turns out to fail, but rather to more fully compensate a successful party for having unreasonably been subjected to the expenditure of costs;

• the critical question in the exercise of the discretion is whether the rejection was unreasonable in the circumstances which applied at the time of the refusal, not to be judged with the benefit of hindsight.

3   No 18/2024

11           In this case, I am not persuaded that the failure of the plaintiff to accept any of the offers made by the defendants was unreasonable. He was acting as executor of an estate and had a duty to protect the interests of the beneficiaries. He had no personal interest in the outcome. I found him to be a witness of honesty and integrity. Those considerations do not justify pursuit of an unreasonable claim. However, many issues at trial were resolved in the plaintiff's favour. The issue of the identity of the contracting parties was determinative against the plaintiff, but I found that the defendants otherwise intended to bind themselves to a compromise of the action in the terms claimed by the plaintiff.

12           The offers made by the defendants were genuine, but required a very substantial compromise on the part of the plaintiff. The first was the most beneficial to the plaintiff, but required acceptance of only one fifth of the value of the property and was not expressed in terms such that the failure to accept it would attract normally costs consequences. The subsequent offers were progressively less favourable. The offer of compromise involved payment of a sum which was a small proportion of the value of the property. The second defendant deposed that, at the time the offer was made, the property was worth at least $275,000. The plaintiff gave evidence at trial that the rental was $200 per fortnight. The accrued rental component of the offer was a small sum and of little relevance to the reasonableness of the offer. The third offer was even less favourable to the plaintiff. Acceptance involved almost complete capitulation in the action apart from the accrued rental and the risk that the plaintiff would be ordered to pay the defendant's costs. In my respectful view, the other factors in the plaintiff's conduct of the claim are not such to, either individually or collectively with the other relevant considerations, justify the making of special costs orders.

13           I would decline to make the special costs orders sought by the defendants. The defendants will be sufficiently compensated by an order in the usual terms. I do not accept the submission of counsel for the plaintiff that the costs order be expressed against the estate of Joyce Evans, rather than the plaintiff. Whether there are sufficient funds in the estate to meet any costs order was not the subject of evidence. Issues of the plaintiff's entitlement to indemnity from the estate and potential personal liability to meet a costs order in the event that there are insufficient estate funds were not the subject of evidence or full argument. Nevertheless, it is clear that the plaintiff brought the action in his capacity as executor.

14          For those reasons I order that the plaintiff pay the defendants' costs of the action on a party and party basis, save for the costs application as to which I would make no order as to costs.