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Queensland Judgments
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  • Unreported Judgment

Outram v Public Trustee of Queensland

 

[2020] QSC 159

SUPREME COURT OF QUEENSLAND

CITATION:

Outram v Public Trustee of Queensland [2020] QSC 159

PARTIES:

LYNETTE ANN OUTRAM, JUDITH ADA EVERINGHAM AND GARY RAYMOND EVERINGHAM

(Applicants)

v

PUBLIC TRUSTEE OF QUEENSLAND

(Respondent)

FILE NO/S:

BS 1410 of 2020

DIVISION:

Trial Division

PROCEEDING:

Application for costs

ORIGINATING COURT:

Supreme Court in Brisbane

DELIVERED ON:

5 June 2020

DELIVERED AT:

Brisbane

HEARING DATE:

On the papers

JUDGE:

Brown J

ORDER:

  1. The time for making the application under s 107 of the Powers of Attorney Act 1998 (Qld) (the Act) is extended up to and including 7 February 2020.
  2. Pursuant to s 107 of the Act, the Applicants are to be compensated out of the estate of Heather Delores Everingham (the Deceased) for the loss of the benefit of the gift under clause 7 of the Deceased’s will dated 25 August 2014 in the amount of $552,195.09, which is to be distributed evenly between the Applicants.
  3. The costs of the application of the Respondent are to be paid on an indemnity basis out of the remaining assets of the Deceased’s estate after the payment of compensation referred to in paragraph 1 above.
  4. The costs of the application of the Residuary Beneficiaries, Peter Webster, Heather Milner and Ian Webster, be paid on an indemnity basis out of the remaining assets of the Deceased’s estate, after the payment of compensation referred to in paragraph 1 above.
  5. The Applicants bear their own costs.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS – INFORMAL OFFERS AND CALDERBANK LETTERS – GENERALLY – where the parties exchanges offers to settle — where either party would have been in better position if the other party’s offer was accepted – whether the applicants or residuary beneficiaries should bear the cost of administering the estate

Uniform Civil Procedure Rules 1999 (Qld), r 700A

COUNSEL:

J Byrnes for the Applicant

G Dickson for the Respondent

C Brewer for the Residuary Beneficiaries

SOLICITORS:

Cooke & Hutchinson for the Applicant

Official Solicitor to the Public Trustee for the Respondent

Biggs Fitzgerald Pike for the Residuary Beneficiaries

  1. [1]
    BROWN J: I handed down my reasons in this matter on 17 April 2020.  In those reasons, I found that the appropriate compensation to the Applicants should be $552,195.09.  At the time, I indicated that costs of the application, the administration and testamentary expenses should be paid out of the residue of the estate. However, I provided for the parties to make submissions as to the appropriate form of order and submissions as to costs.
  2. [2]
    As at 10 March 2020, the size of the estate was $662,540.73.  Aside from the question of costs, and presumably some outstanding administration, $110,345.64, which may include tax liabilities, remains in the estate.
  3. [3]
    There is no dispute between the Applicants and the Residuary Beneficiaries that the Respondent should be paid its costs of the proceeding from the estate on an indemnity basis.
  4. [4]
    The Applicants have generally been successful in their application, insofar as the Court determined that compensation be made pursuant to s 107 of the Powers of Attorney Act 1998 (Qld), however, their entitlement was not in issue. That said, the real issue for determination before the Court was one of quantum, in relation to which neither party was entirely successful.
  5. [5]
    Had no offers been made, I was originally of the view that the residuary estate should bear the costs of administration and testamentary expenses, as well as, the costs of the application and the Applicants’ compensation be a fixed amount of $552,195.09 and not proportionately shared by all beneficiaries. However, that view was expressed subject to the parties being permitted to make further submissions as to costs.
  6. [6]
    Both the Applicants and the Residuary Beneficiaries made offers to settle the matter in June and July 2019.
  7. [7]
    The purpose of a Caldberbank offer is to encourage the resolution of disputes without the necessity of trial.[1] Unfortunately, the matter did not resolve at that early stage prior to all the parties incurring significant legal costs in respect of this application.
  8. [8]
    What the present case demonstrates, is that if both parties had acted in a more commercial manner to resolve the matter, they could have avoided incurring a substantial amount of legal costs,[2] and the parties would have been in a better position with the estate and the matter would have resolved much earlier. 
  9. [9]
    Where Calderbank offers have been made, the critical question is whether the rejection of either offer was unreasonable or imprudent judged objectively in the circumstances existing at the time.[3] The party seeking costs on an indemnity basis must show that the other party acted “unreasonably or imprudently” in not accepting the Calderbank offer.[4]
  10. [10]
    Under r 700A of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) the court may take into account in determining costs:
    1. (a)
      The value of the property the subject of the proceeding and in particular the value of the property about which there is a disputed entitlement; and
    2. (b)
      An offer to settle made by the parties to the proceeding.
  11. [11]
    Rule 700A(2) of the UCPR provides that:
  1. (1)
    Without limiting the court’s discretion under these rules to make an order about costs in relation to all or part of the proceeding, the court may, in determining an order for costs, take into account the following matters—
  1. (a)
    the value of the property the subject of the proceeding and, in particular, the value of the property about which there is a disputed entitlement;
  1. (b)
    whether costs have been increased because of any one or more of the following—
  1. (i)
    noncompliance with these rules;
  1. (ii)
    noncompliance with a practice direction;
  1. (iii)
    the litigation of unmeritorious issues;
  1. (iv)
    failure to make, promptly or at all, appropriate concessions or admissions;
  1. (v)
    giving unwarranted attention to minor or peripheral issues;
  1. (c)
    an offer of settlement made by a party to the proceeding.
  1. [12]
    The Applicants submit that the costs of all parties should be paid, on an indemnity basis, out of the remaining assets of the estate, after payment of compensation to the Applicants. In that regard, the Applicants rely on Calderbank offers made by them, which offered to resolve the dispute with the residuary parties for $570,000 (which was costs inclusive). The Applicants contend that acceptance of that offer would have avoided significant time and costs being wasted and led to a similar result for the Applicants that was achieved by the judgment, depending on the treatment of costs, without the corresponding depletion of the estate. The Residuary Beneficiaries would, in their contention, have been better off if they had accepted those offers, depending on costs. 
  2. [13]
    The Applicants also contend that they were successful in obtaining an order for compensation in circumstances where the Respondent and Residuary Beneficiaries only indicated close to the hearing that there was no opposition to the granting of the extension of time and the Applicant’s entitlement to compensation. They further rely on the fact that in applications of this nature, costs are usually met by the estate. They contend that it would be unreasonable for the Applicants to bear the costs of the Residuary Beneficiaries in circumstances where material relied upon by the Residuary Beneficiaries was of minimal relevance to the real issue, namely the determination of the quantum of compensation. I do not accept that that was the case.
  3. [14]
    The Residuary Beneficiaries contend that the appropriate order is that the Respondent’s and the Residuary Beneficiaries’ costs should be paid from the estate on an indemnity basis in the first instance and that the Applicants should pay the Respondent’s and Residuary Beneficiaries’ costs on an indemnity basis, with the amount to be deducted from the compensation the court determined was payable to the Applicants. They rely on an offer made on 7 June 2019 which was repeated on 8 July 2019 where the Residuary Beneficiaries made an offer to accept $100,000 inclusive of costs, with the balance of the estate being shared between the Applicants. It contends that, had that offer been accepted, the applicants and the Residuary Beneficiaries would both have been substantially better off than they are now post-judgment.
  4. [15]
    According to the Residuary Beneficiaries, had that offer been accepted, they would have received $100,000 and borne their own costs, which would have then been approximately $1,400 to $2,000, resulting in the Residuary Beneficiaries receiving approximately $98,000. The Applicants would have received approximately $562,240.73 with minimal costs incurred. The Residuary Beneficiaries estimate that by the Applicants not accepting the offer, they are worse off by some $10,045 with the Residuary Beneficiaries better off by $12,045, if costs are not paid out of the residue of the estate. In that context, the Residuary Beneficiaries contend that all parties would have been better off had the offer made in June 2019 been accepted. They contend that if all of the costs are paid out of the residue, the Residuary Beneficiaries are paying the costs and the likely distribution to them would only be $19,452.
  5. [16]
    The Residuary Beneficiaries contend that, given the quantum in dispute and the reasonable offer made well before the proceedings were instituted, the Applicants were unreasonable in not accepting the offer and that they should not have to bear the burden of the Applicants choosing to litigate the matter.
  6. [17]
    The Applicants contend, however, that it was reasonable not to accept the payment of $100,000 including costs, because it would have had the effect of transferring the risk of the costs of the administration from the Residuary Beneficiaries to the Applicants. The Residuary Beneficiaries were entitled to the remainder of the estate after costs, not a certain lump sum payment. The Applicants also contend that the Residuary Beneficiaries did not do better than their offers. They submit that the base figure to assess the offers should be the size of the estate as at the date of the death of the deceased, namely $639,408.65, rather than $662,540.73 which was the estate as at the date of the proceeding.
  7. [18]
    In my view, while the determination of appropriate compensation should have regard to the position as at the date of death, that is not the case in respect of assessing the reasonableness of an offer. To assess the relevant offer, in the circumstances of this case where the only competing rights to the estate were those of the Applicants and Residuary Beneficiaries, regard should be had to the value of the estate when the offer was made, not the date of death of the deceased.
  8. [19]
    The Residuary Beneficiaries recognised in the offers made that the Applicants’ had an entitlement under the estate because they were to be gifted the major asset, namely the house, if it had not been sold, both in the offers of compromise made by them and this litigation.
  9. [20]
    As at 18 July 2019, the Applicants’ offer of $570,000 inclusive of costs would not have resulted in a better outcome for the Applicants or the Residuary Beneficiaries[5] than the judgment, given that the compensation determined by the Court and that costs incurred by the Applicants would, at that stage, have been significantly less than $17,000.[6] While the property the subject of the proceedings had been sold for a significantly greater price at a time proximate to the deceased’s passing, there was no evidence that it was in a comparable state to what it would have been had it not been sold in 2016, which I addressed in my reasons of 17 April 2020. It was not, in my view, unreasonable or imprudent for the Residuary Beneficiaries not to accept the offer.
  10. [21]
    The offer of the Residuary Beneficiaries to settle for $100,000 inclusive of costs did, as contended by the Applicants, give benefit of the payment of a fixed sum rather than being subject to reduction for the costs of the administration of the estate. It is true that under the Will, the Applicants were entitled to a fixed interest, however, as evidenced by this case, it was also a gift liable to be lost if sold prior to death. As such the Applicants’ positon in relation to the transfer of risk must be seen in that light and is not of significant weight.
  11. [22]
    Using the value of the estate as at 10 March 2020, the Applicants would, at best, have received $562,240.73 (apart from costs). However, that would have been reduced to some extent by the administration costs of the estate estimated to be $7,185.58 up to March 2020. Assuming the administration costs would have been the same in June – July 2019, when the offers were made, and estate was approximately $662,240.73, the Applicants would have received approximately $555,082.15 had they accepted the offer at a time when their legal costs were minimal. Assuming some legal costs would have be incurred to effect the settlement, their position may have been marginally better or the same than the judgment received, if they accepted the offer of the Residuary Beneficiaries. The Residuary Beneficiaries, in my judgment, must meet the costs of the administration of the estate. Their position aside from the question of costs means their positon is slightly better than, or the same as, a result of the Court’s determination as it would have been if their offers had been accepted. Given the Applicant’s position would only have been approximately the same, aside from costs, if it had accepted the offer of the Residuary Beneficiaries, I do not consider their refusal to accept the offer was unreasonable or imprudent such that they should be liable for indemnity costs. In those circumstances, the Applicants’ should not have to pay the Respondent’s costs on an indemnity basis.
  12. [23]
    Given that neither the Applicant’s nor the Residuary Beneficiaries were wholly successful in their contentions before the Court, the appropriate order, taking into account the offers made, the size of the estate and the outcome of the litigation, should provide that the Applicant’s and Residuary Beneficiaries should bear their own costs. The estate should not bear the costs of the Applicants, which would ultimately be borne by the Residuary Beneficiaries.
  13. [24]
    Consistent with reasons of 17 April 2020, the Residuary Beneficiaries should bear the costs of the Respondent and the costs of the administration. The Respondent’s costs should be paid out of the estate on an indemnity basis. The Residuary Beneficiaries should be paid their costs on an indemnity basis out of the estate given that they are entitled to the residuary of the estate after payment of compensation is made to the Applicants and the costs of the Respondent and the costs of the administration are paid.
  14. [25]
    The orders of the court should therefore be:
  1. The time for making the application under s 107 of the Powers of Attorney Act 1998 (Qld) (the Act) is extended up to and including 7 February 2020.
  2. Pursuant to s 107 of the Act, the Applicants are to be compensated out of the estate of Heather Delores Everingham (the Deceased) for the loss of the benefit of the gift under clause 7 of the Deceased’s will dated 25 August 2014 in the amount of $552,195.09, which is to be distributed evenly between the Applicants.
  3. The costs of the application of the Respondent are to be paid on an indemnity basis out of the remaining assets of the Deceased’s estate after the payment of compensation referred to in paragraph 1 above.
  4. The costs of the application of the Residuary Beneficiaries, Peter Webster, Heather Milner and Ian Webster, be paid on an indemnity basis out of the remaining assets of the Deceased’s estate, after the payment of compensation referred to in paragraph 1 above.
  5. The Applicants bear their own costs.

Footnotes

[1] Beardmore v Franklins Management Services Pty Ltd [2003] 1 Qd R 1.

[2]  Which are estimated in total to be some $90,593.42.

[3] Wagner v Nine Network Australia (No 2) [2019] QSC 309 at [40] citing J & D Rigging Pty Ltd v Agripower Australia Ltd [2014] QCA 23 at [5] – [6].

[4] Wagner v Nine Network Australia (No 2) [2019] QSC 309 at [40] citing J & D Rigging Pty Ltd v Agripower Australia Ltd [2014] QCA 23 at [5] – [6].

[5]  The balance would have been $92,540.73 which would have been further reduced by the administration costs of the estate.

[6]  Court Document 20, Affidavit of A Goodman, Sworn 23 April 2020 at APG2, Letter of Cooke & Hutchinson to Biggs Fitzgerald Pike, dated 19 March 2020.

Close

Editorial Notes

  • Published Case Name:

    Outram v Public Trustee of Queensland

  • Shortened Case Name:

    Outram v Public Trustee of Queensland

  • MNC:

    [2020] QSC 159

  • Court:

    QSC

  • Judge(s):

    Brown J

  • Date:

    05 Jun 2020

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.
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