Callaway v Callaway; The Estate of Aileen Margaret Callaway (No. 2)

This is the Court’s second judgment in these proceedings. The Court’s first judgment determined that, in a contest between two brothers for a grant of probate of their mother’s will, the intractable underlying disputes between them resulted in neither of them having a grant, so the Court instead appointed an administrator cum testamento annexo: Callaway v Callaway; The Estate of Aileen Margaret Callaway [2019] NSWSC 1275. This judgment should be read with the Court’s first judgment. Events, matters and persons are referred to in both judgments in the same way.

Upon appointing the administrator, the Court made an order that, subject to any application for a special costs order, each party would bear his own costs of the proceedings. But after judgment, the plaintiff/cross-defendant, Martin Callaway, tendered a letter of offer dated 6 September 2018 (Exhibit B). Martin submitted that the final outcome of the proceedings was no less favourable to him than he had offered in the 6 September 2018 letter and that it was unreasonable of defendant/cross-claimant, Trevor Callaway, not to have accepted it. He submitted he should have an order for costs of the proceedings on the indemnity basis from the date of that letter.

The 6 September 2018 letter made alternative offers, one of which is not relied upon and is not relevant. The first and relevant alternative is set out below.

The letter was not marked without prejudice as to costs and did not declare itself to be a Calderbank letter. The letter’s offer was left open for acceptance for 28 days. It was not accepted and no other correspondence passed between the parties about it at the time.

After giving the first judgment, the Court directed the parties to file notes of any cases relevant to the application of Calderbank principles to this case, so the Court could deal with this issue in chambers without a further Court listing. The parties agreed to that course. Notes of relevant cases were provided and were of assistance in the Court reaching its conclusion in these reasons.

The principles applicable to Calderbank offers are well settled. Principles concerning attempts to compromise proceedings by Calderbank offers are applicable in probate proceedings: Walker v Harwood [2017] NSWCA 228 (“Walker”) at [58]. Parties seeking an order for indemnity costs on the basis of a Calderbank offer have the burden of showing the Court why such an order should be made in their favour, and, generally, this means that they should persuade the Court that the refusal to accept the offer was unreasonable: Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [20]. The Court of Appeal’s decision in Miwa Pty Ltd v Siantan Properties Pte Ltd (No. 2) [2011] NSWCA 344 (“Miwa”), (at [9]), is authority for the proposition that an informal offer (and indeed an offer of compromise under the Uniform Civil Procedure Rules 2005) must contain “a real and genuine element of compromise”: see also The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] 67 NSWLR 706; [2006] NSWCA 120, (at [8]). In Miwa, the Court noted that there is authority that the epithets “real” and “genuine” add little to the requirement of compromise: Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19, (at [23]); Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170, (at [17]-[18]).

But Walker is clear: (at [58]). Under the Calderbank principle “a Court may consider it appropriate to make a different costs order to that which it would otherwise have made if the unsuccessful party made an offer to settle on terms less favourable to the successful party than the outcome which the successful party ultimately achieved in the proceedings” [emphasis added].

But here Martin achieved exactly the same result as the offer in the 6 September 2018 letter. Trevor did not reject an offer that was less favourable to the successful party (Martin). Had Martin offered to pay some of Trevor’s costs on 6 September 2018 the result might have been different.

The considerations relevant to the determination of whether a refusal of a Calderbank offer is unreasonable were stated in Miwa, at [12], based on Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No. 2) (2005) 13 VR 435; [2005] VSCA 298 (“Hazeldene's”), (at [25]). The Victorian Court of Appeal (Warren CJ, Maxwell P and Harper AJA) in Hazeldene’s held that the following elements were relevant to determining whether the rejection of a Calderbank offer was unreasonable:

But these principles do not need to be considered in this case, as the first threshold has not been reached for the letter to trigger the Calderbank principle.

No additional costs orders will therefore be made in this matter.