Sung v Malaxos (No 2)

1. [1]

   On 9 March 2015 I delivered judgment in these proceedings and ordered that the plaintiff’s claim for a family provision order be dismissed. I concluded that her claim was without merit and that adequate provision for her proper maintenance in life had been made by the will of the testator.

2. [2]

   The remaining outstanding matter relates to the costs of the proceedings. The defendant seeks an order that his costs be paid by the plaintiff on an indemnity basis while the plaintiff submits that she should have her costs out of the estate on an indemnity basis. Prior to the hearing the defendant made four offers to the plaintiff in an effort to settle the proceedings. The first offer was made on 6 June 2014. Each of the offers was well considered and reasonable. Had the plaintiff accepted any of the offers she would have been in a better financial position than she is in today.

3. [3]

   For the reasons that follow I have decided that costs should follow the event and that the defendant should have his costs on an indemnity basis from 7 June 2014 in accordance with Rule 42.15A (2)(b)(i) of the Uniform Civil Procedure Rules 2005.

Legal Principles

1. [4]

   The usual order in litigation in this court is that costs follow the event, namely that the unsuccessful party pays the costs of the successful party: Section 98(1) of the Civil Procedure Act 2005; Rule 42.1 of the UCPRs.

2. [5]

   It is however well accepted that family provision cases stand apart from ordinary cases and that different considerations sometimes apply. Section 99 of the Succession Act 2006 provides:

3. [6]

   For that reason, it is not uncommon in the case of unsuccessful applicants in family provision claims for no order to be made as to costs, with the result that the plaintiff bears the burden of his or her own costs: Singer v Berghouse [1994] HCA 40; 181 CLR 201 at [6] (per Gaudron J). In some cases, the plaintiff will be ordered to pay the defendant’s costs, with the result that the estate of the testator is not required to bear the burden of the costs incurred in defending the claim.

4. [7]

   In proceedings where the claim is meritorious, reasonable or borderline the court may often allow an unsuccessful plaintiff his or her costs out of the estate: McDougall v Rogers (Estate of James Rogers) [2006] NSWSC 484; Re Bodman [1972] QD R 281; Harkness v Harkness (No 2) [2012] NSWSC 35; Bowditch v NSW Trustee and Guardian [2012] NSWSC 702.

5. [8]

   In Harkness v Harkness (No 2) Hallen AsJ (as he then was) summarised the relevant principles, which I gratefully adopt:

Discussion

1. [9]

   Applying these principles, I have formed the view that the ‘overall justice’ of this case, even after applying a certain amount of ‘liberality and discrimination’, requires that the plaintiff, not the estate, bear both her own and the defendant’s costs of the proceedings. The only potentially relevant factor against making this order is that it will adversely affect the plaintiff’s financial position. However, this is not a case where the plaintiff will become impecunious or will have to sell assets to pay costs. The plaintiff’s provision out of the estate will be sufficient to pay the costs of the defendant and her own costs.

2. [10]

   The Calderbank Offer dated 6 June 2014 starkly foreshadowed the consequences for the plaintiff of failing to accept the defendant’s offer of compromise:

3. [11]

   I suspect that, as a matter of practical reality, the costs to be paid by the plaintiff are unlikely to unduly affect her financial position. It seems probable that the value of the Lilyfield property has increased by around $200,000 since the proceedings were commenced. This increase in value will be more than adequate to cover her legal expenses.

4. [12]

   A factor that I wish to emphasise is that the litigious process is inherently stressful for any party, in particular for individuals such as the testator’s daughter, Brita and her husband. That stress includes uncertainty and concern as to the amount of legal costs being incurred and the potential for those costs to deplete the estate. In some cases, of which Dickens’ fictional Jarndyce v Jarndyce is only one example, the costs not merely deplete the estate – they exhaust it.

5. [13]

   It is notorious that family provision claims frequently require parties to submit to an intrusive investigation of their personal lives and finances. Brita Benjamin and her husband were compelled to answer subpoenas and to subject themselves to the full panoply of an adversarial hearing in a public courtroom. This included cross-examination, criticism, comment and submission about their lifestyle, their holidays, their personal finances and Mr Benjamin’s medical condition. All of this could have been avoided if any of the offers of compromise had been accepted.

6. [14]

   The stresses of litigation have been recognised at the highest appellate levels in this country and in the United Kingdom. In this court, Allsop P (as he then was) said in Richards v Cornford (No 3) [2010] NSWCA 134:

7. [15]

   The plaintiff was aware or should have been aware that Mr Benjamin had a degree of psychological and psychiatric vulnerability which was real and not contrived. She should have been aware of the financial instability of Brita Benjamin and the likelihood of her emotional vulnerability arising from the loss of her father. The executor Mr Nick Malaxos has had to take time off work to attend conferences, prepare affidavits, and attend court. During this protracted process, he suffered a minor heart attack. He has done his duty to uphold the will faithfully and diligently.

8. [16]

   In the circumstances, I have reached the view that the plaintiff acted unreasonably in commencing and continuing the claim, especially after the offers of compromise. She unnecessarily exposed the executor and Mr and Mrs Benjamin to the rigours and strains of litigation, when there was never any merit in her contention that she should, in effect, supplant the testator’s daughter.

9. [17]

   There is one further factor. The number of affidavits and the quality of evidence tendered was disproportionate to the complexity of the dispute and the issues involved. There was no issue as to the eligibility of the plaintiff or her status as a de-facto. It was simply not reasonable to carry out the work represented by the compilation, drafting and tender of such a large quantity of evidence. A great deal of it was, in any event, of marginal relevance and little or no practical utility. This unfortunate aspect of the proceedings had the effect of increasing the defendant’s costs. As Palmer J said in Re Sherborne Estate (No 2); Vanvalen v Neaves [2005] NSWSC 1003; 65 NSWLR 268: ‘proportionality of costs to the value of the result is central to the just and efficient conduct of civil proceedings’ (at 274).

10. [18]

    In these circumstances, there are no discretionary factors to justify departure from the usual costs rule. In Jvancich v Kennedy (No 2) [2004] NSWCA 397 Giles JA observed (with Handly JA and McColl JA agreeing) that the ‘overall justice of the case’ is ‘not remote from costs following the event’.

Offers to compromise

1. [19]

   For completeness I should summarise each of the four offers to the plaintiff to compromise the claim:

2. [20]

   By making four separate offers, and increasing the final offer significantly, the defendant acted responsibly and reasonably in attempting to resolve the proceedings. The refusal of these offers suggests that the plaintiff did not consider what was being offered in a sensible, practical, and commercial way. I infer that experienced legal practitioners, advising the plaintiff, must have explained to her the risks as to costs if the offers were refused and if a less favourable result were achieved. While the plaintiff was entitled to take those risks, she is not entitled to escape the consequences of doing so.

3. [21]

   The offer contained in the letter of 6 June 2014 was made when the plaintiff was in a position to give it prompt, and informed consideration. Each of the points made by the solicitor for the defendant in support of all of the offers of compromise at the time they were served have been made out by the defendant at the trial. Each of the offers was clear and provided a time frame of 28 days within which to respond.

4. [22]

   UCPR 42.15A provides:

5. [23]

   In respect of the first offer made to the plaintiff on 6 June 2014, the defendant is prima facie entitled to his costs on an ordinary basis up to 6 June 2014 and on an indemnity basis from 7 June 2014.

Orders

1. [24]

   I therefore make the following orders:

   1. (1)

      The plaintiff pay the defendant’s costs on the ordinary basis up to 6 June 2014 and on the indemnity basis from 7 June 2014;

   2. (2)

      The plaintiff pay her own costs.

2. [25]

   As to possession of the Lilyfield property, I make the following orders:

   1. (1)

      The plaintiff to cease occupation of the Lilyfield property by 25 May 2015;

   2. (2)

      For each day that the plaintiff continues to reside in the Lilyfield property past 25 May 2015, she is to pay $160 per day, which if not paid shall constitute a charge on the plaintiff’s entitlement pursuant to the will;

   3. (3)

      During the occupation period the plaintiff shall: