Gore v Rouse (No 2)[2017] QDC 115

DISTRICT COURT OF QUEENSLAND

Issues

1. [1]
   I delivered reasons for judgment on 27 April 2017 in respect of two proceedings. The parties were given liberty to provide written submissions as to costs. I received:

1. Affidavit KW Dalziel sw 3 May 2007;

2. Executor’s Submissions as to Costs;

3. Submissions on appropriate Orders and Costs on behalf of Kathleen Jean Rouse dated 5 May 2017;

4. Affidavit GC Young sw 5 May 2017;

5. Executor’s submissions in reply on Costs;

6. Affidavit KW Dalziel sw 5 May 2017.

2. [2]
   Proceeding BD 1232/15 contains a claim by the estate’s Executor against Mrs Rouse for delivery up of 10 chattels, or alternatively for $53,735 as the value of the chattels or as damages for their conversion. During the course of the trial, four of the chattels became the subject of a consent order for their return and claims for another four were abandoned by the Executor on the basis that they were of minimal value. Two chattels remained in issue. One was a Mazda motor vehicle and the other was a box trailer.

3. [3]
   Mrs Rouse failed in her claim for that car and that trailer. Counsel for Mrs Rouse concedes for this costs dispute that a judgment for the Executor was appropriate with orders for return of the two chattels; that the plaintiff is entitled to its costs of that proceeding to be assessed on a standard basis. Mrs Rouse’s counsel observed that costs should be limited to only those extra costs actually incurred in proceeding BD 1232/2015. That observation seems to be a matter best directed to the costs assessor’s attention.

4. [4]
   The issue with respect to proceeding BD 1232/15 is whether Mrs Rouse should pay the Executor’s costs after 23 December 2016 on the indemnity basis. A Calderbank offer was made on that date. 

5. [5]
   On 23 December 2016, the Executor offered to settle both proceedings on the following terms:

1. Mrs Rouse return to the Executor the campervan;

2. The Executor waives his claim to and therefore Mrs Rouse could retain the balance of the items referred to in the proceedings. Mrs Rouse would have retained the valuable Mazda car.

3. Mrs Rouse not make any claim against the deceased’s superannuation policy;

4. The Executor pay Mrs Rouse $125,000 within 14 days from the date the court makes orders to give effect to the terms of settlement or the date that the parties signed a deed of settlement to give effect to those terms; 

5. Mrs Rouse must pay her own costs;

6. The Executor would pay his own costs. 

6. [6]
   The Court of Appeal summarised the legal principles and factors for consideration where there is an application for indemnity costs as a result of a failure to accept a Calderbank offer.^[1]  A failure to accept a Calderbank offer is a matter to which a court should have regard when considering whether to order indemnity costs.  The mere fact of refusal of a Calderbank offer to compromise which was better for the offeree than the judgment does not warrant the exercise of the discretion to award indemnity costs.  The critical question is whether the rejection of the offer was unreasonable in the circumstances.  It was observed that a court would ordinarily have regard to at least: 

1. The stage of the proceedings at which the offer was received;

2. The time allowed to the offeree to consider the offer; 

3. The extent of the compromise offered;

4. The offeree’s prospects of success, assessed as at the date of the offer;

5. The clarity with which the terms of the offer were expressed;

6. Whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it. 

7. [7]
   Because the offer to settle on 23 December 2016 related to both proceedings, when assessing whether the rejection was unreasonable in the circumstances, it becomes necessary to consider both proceedings when considering the matters to which the court should have regard.

8. [8]
   Mrs Rouse’s reasonable costs of both proceedings incurred to 23 December 2016 were about $81,000, including GST and disbursements. To the date of judgment on 27 April 2017, they rose to about $129,000. To 5 May, they had risen to $131,000 approximately.

9. [9]
   In submissions in reply for the Executor there was mention of the reasonableness of the Executor’s Calderbank offer, having regard to the information he had at that time about costs incurred by Mrs Rouse.  The issue is not the reasonableness of the Executor’s conduct when considering the appropriateness of an order for indemnity costs.  It is the reasonableness of the conduct of Mrs Rouse in refusing the offer.  It is relevant that her costs to that stage were about $81,000. 

10. [10]
    The offer of $125,000 would have met Mrs Rouse’s costs to that date and left her with a balance of $44,000 and a number of assets, the most valuable of which would have been the Mazda motor vehicle. The Mazda was significantly more valuable than the other assets.

11. [11]
    The result of the judgments in the two proceedings will be that Mrs Rouse recovers the car and $70,000. On that crude measure alone, Mrs Rouse has recovered $26,000 more than she would have had in hand in December 2016, after paying her legal fees. That crude surplus is diminished by the value of the assets other than the Mazda, because she could have retained all assets but the campervan. The value of the assets she could have retained had she accepted the offer would not have amounted to $26,000. Mrs Rouse is marginally better off for having litigated save for the fact that she will be ordered to pay the costs of proceeding BD 1232/15. She will be obliged also to bear her own costs of that failed proceeding.

12. [12]
    Mrs Rouse may or may not have bettered the Calderbank offer. It is possible (if both parties’ sets of costs in proceeding BD 1232/15 are deducted from the total of the distribution and costs Mrs Rouse will receive for the proceedings to the date of the offer) that Mrs Rouse has not bettered the offer. It remains unclear. Mrs Rouse’s failure to better the Executor’s offer is not the ultimate issue. The ultimate issue is whether, on 23 December 2016, it was imprudent or unreasonable to reject the Executor’s combined offer to compromise two proceedings.

13. [13]
    I am not persuaded that it was imprudent or unreasonable for Mrs Rouse to reject the offer at the time. I do not regard it as appropriate to order that she pay the Executor’s costs of each proceeding after 23 December 2016 on an indemnity basis.

14. [14]
    With respect to the proceeding BD 1232/15, costs should follow the event in which the Executor was successful. Mrs Rouse should pay the Executor’s costs of that proceeding on the standard basis.

15. [15]
    A common order for costs where an applicant successfully obtains an order for further provision from the estate is an order that the costs be paid on an indemnity basis. That is the appropriate order in proceeding BD 1940/15.

16. [16]
    I gave the parties liberty for 7 days to provide a draft order giving effect to the reasons previously provided. Counsel for the Executor provided a draft order in respect of the substantive orders to be made in both proceedings. Counsel for Mrs Rouse did not and did not submit for any different order. I infer that Mrs Rouse is satisfied that the draft provided for the Executor, except for costs, does give effect to my earlier reasons. I have incorporated the orders proposed for the Executor and my orders as to costs in these reasons.

17. [17]
    The parties have liberty to apply.