Thompson v Cyati (No. 2)[2025] QDC 32

DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   In April 2017 the applicant commenced proceedings for provision under s. 41 of the Succession Act 1981. On 29 November 2024, I refused that application.^[1] The applicant has appealed the whole of that decision. The issue of costs remains to be determined.
2. [2]
   In the protracted course of the interlocutory stages of the proceeding, there have been two instances of costs being reserved, two instances of costs being ordered to be the respondent’s costs of the proceeding and one instance of costs being ordered to be the parties’ costs of the proceeding.  There also remains the costs of the final hearing, and those not yet the subject of orders, to be determined.
3. [3]
   The respondent completely succeeded in the hearing, and now applies for her costs.  In order to save confusion, I will refer to the parties by the roles they occupied in the substantive proceedings.
4. [4]
   On 7 February 2025, the applicant applied for a stay of my decision, “including pertaining to costs” under r. 671(2) of the UCPR. Regardless of the precise wording of the application, it is clear that the applicant wants to preserve her position in terms of my judgment of 29 November 2024 and to have any costs application stayed or adjourned until the determination of the appeal against the primary judgment.

Consideration – Stay of enforcement.

5. [5]
   On 15 January 2025 the applicant filed an application for the costs hearing to be adjourned until after the appeal is heard. On 7 February 2025 she filed an amended application that struck out that application and in its stead sought an order staying “the enforcement and Orders dated 29 November 2024” made in these proceedings, “including pertaining to costs” under r. 761(2) of the UCPR.
6. [6]
   The applicant has filed an affidavit that asserts that she understands it would be a denial of natural justice if further steps, including the making of a costs order, were taken given that an appeal has been lodged against my earlier ruling. She does not explain why that would be so in either the affidavit or in oral submissions. She does express a concern that the respondent will both disburse the estate and proceed to enforce any costs order before the appeal is heard, thereby entailing bankruptcy proceedings. She bases her concern on what she says is past behaviour.
7. [7]
   The respondent takes issue with the ability to amend the application without leave, and contends that the costs hearing should proceed. Whether leave is required, or not, is an issue I need not dwell on as I am not satisfied that a stay can be granted.
8. [8]
   While the application is to stay the enforcement and orders I made, r. 761 only confers power to stay the enforcement of the orders. There is nothing to enforce. My order refused the application. It does not require enforcement action to be given effect. Further, it would not be appropriate to injunct her from doing what she is entitled to do, on the material before me.
9. [9]
   If I am wrong about that, I would have refused the application because, regardless of what the merits of the appeal are, there is no real risk of the respondent failing to recoup any money necessary to the estate were the applicant ultimately successful. The undertaking given by the respondent in her affidavit of 28 August 2023 concerning the interim distributions would apply on any fresh assessment concerning a provision by the Court of Appeal or this Court.
10. [10]
    Also, the passage of time means that there is real utility in finally administering the estate. To do otherwise would be, to adopt the terminology of Keane JA in Drew v Makita,^[2] failing to ensure that final orders are efficacious and would leave a residue of avoidable injustice with the successful party.
11. [11]
    I cannot make a stay order under r. 761 as to costs. There has not been any order yet to be stayed and, in any event, r. 761 requires that an appeal be filed before jurisdiction is granted.
12. [12]
    The application for a stay is refused and, if necessary, leave to amend is refused.

Consideration – Adjournment of costs hearing.

13. [13]
    The applicant submits that the costs hearing should not proceed while she is not legally represented, and also that it should not be heard until after the appeal is determined. She contends that she will suffer a denial of procedural fairness, which is not articulated in the latter respect.
14. [14]
    In my view the costs should be determined.
15. [15]
    There is utility in the parties knowing their position on costs. The applicant informs from the Bar table that she has had preliminary discussions with a legal practitioner about representation, but she is unable to suggest when, and if, the practitioner would be engaged. The proceedings have been on foot for a period approaching 8 years, and a further undefined period of delay is undesirable.
16. [16]
    Further, the applicant’s submissions on costs are consistent with complaints she made throughout the course of the trial, admittedly when she was also self-represented. It cannot be thought that the submissions are rushed or not fully considered.
17. [17]
    Considerations as to the utility in the finality of litigation, including as to costs, favour disposition. Should the appeal against the primary judgment succeed, and a new trial is ordered, any costs order will likely be considered as an ancillary order on appeal. Further, if it is considered that I have erred in a manner that would not be captured by that process, the aggrieved party can seek leave to appeal the costs order under s. 118B of the District Court of Queensland Act 1967 and, if successful, have it dealt with at the time of the substantive appeal thereby saving a duplication of costs, time and expense. Any party who appeals can apply for a stay if they consider there are reasonable prospects of succeeding on that application.
18. [18]
    Further, the respondent accepts that I have power to order costs be paid, but further order that the enforcement of them be delayed for a period. That will address the applicant’s concerns about being forced into bankruptcy before the appeal is heard.

Consideration – costs.

19. [19]
    The essence of the applicant’s submissions on costs are that broader considerations of the justice of the situation apply to the consideration of costs of family provision applications more prominently than they apply to other proceedings, relying on dicta Gaudron J in an application for security for costs in Singer v Berghouse.^[3] It is submitted that the manner of conduct of the proceedings by the respondent is such that she should not have the benefit of a costs order.
20. [20]
    The respondent submits that all costs yet to be determined should follow the event, and that they should all be paid on the indemnity basis.  Alternatively, if the applicant is not ordered to pay the whole of the undetermined costs on the indemnity basis, that order should be made on and from one of two dates on which offers were made and not accepted.
21. [21]
    Although not clearly articulated, it seems at one level that the applicant is submitting that the costs of the parties should be paid from the estate. I do not agree, and I accept that the costs should follow the event. The sole beneficiary of the estate is the respondent. Were the estate to bear the respondent’s costs, or both parties’ costs, it would be tantamount to the respondent personally paying the costs of proceedings that were thrust upon her because of, I found in the primary judgment, the applicant’s erroneous expectation that she had an automatic right to an equal share of the estate.
22. [22]
    Further, while the applicant complains about the conduct of the proceedings by the respondent, she overlooks that the respondent’s complaints that the applicant had not properly disclosed her financial position in her initial affidavit, thereby delaying the respondent’s reply, were made out at trial in significant respects. Many other delays, and hence expenditure of legal costs from the estate, were also related to delays caused by the applicant, or her bankruptcy.
23. [23]
    The applicant also relies on the asserted misuse of the estate funds for the respondent’s own benefit. The respondent has accepted that she drew down on the estate when she understood that the guillotine effect of Judge Koppenol’s order had taken effect. That position was not reckless or unreasonable in the circumstances. The respondent’s undertaking to repay, if necessary, was proper.
24. [24]
    The applicant also refers to other draw downs that she asserts amounts to in excess of $900,000. On my review of the material, it seems that she has conflated the concept of personal draw downs from the estate with withdrawals made for the purposes of short terms investments or other estate expenses. For example, it is true that $400,000 was withdrawn from the estate bank account about a month prior to the mediation, but the applicant overlooks that $400,286.18 was deposited exactly one month later. It was clearly a short-term deposit. I am not satisfied that there were any withdrawals from the estate, other than those explained in the paragraph above, or for legitimate estate expenses.
25. [25]
    The applicant also makes several factual submissions to justify her position, on which the evidence is silent. Given the caution with which her evidence had to be approached, I cannot accept unsubstantiated factual assertions on this application.
26. [26]
    I am not satisfied that the respondent’s handling of the estate is such as to deprive her of her costs. I do not consider that the overall justice of the situation would be reflected by an order that any or all of the parties’ costs be paid by the estate, especially where it is a relatively modest estate.
27. [27]
    The issue then is on what basis they should be ordered and, if ordered on the indemnity basis, for what period of time. 
28. [28]
    The discretion as to ordering costs is unfettered, but must be exercised judicially. In a proceeding of this nature, r. 700A of the UCPR provides some specific guidance. The object of a costs order, whether on the standard or indemnity basis, is not to punish the unsuccessful party, but rather to compensate the successful party for the expense to which they were put, and to the extent which is justified in all of the circumstances.  There may be many bases for justifying an indemnity costs order, but underlying them must be some “relevant delinquency” on the part of the unsuccessful party.^[4] Importantly, the overall justice of case must accommodate such an order. I am also conscious of the warning by White J (as her Honour then was) that “it is important that applications for the award of costs on the indemnity basis not be seen as too readily available ...”.^[5]
29. [29]
    The applicant’s apparent impecuniosity is not a reason to deny the respondent the benefit of the order, if it is otherwise appropriate.^[6]

The first basis of the application for indemnity costs.

30. [30]
    The first basis for indemnity costs relied on by the respondent is related to the reasons for commencing the litigation, and its subsequent conduct.  In addition to the above considerations, the oft-cited observations in Colgate-Palmolive v Cussons^[7] are relevant.
31. [31]
    The commencement and conduct of the litigation was, in my view, complicated by the applicant’s physical and mental health ailments,^[8] and the effect of other setbacks in the applicant’s life such as a litany of unsuccessful litigation and the strained relationship with her family.^[9]  It was further complicated when the appellant no longer retained legal representation, and commenced acting for herself in October 2020.^[10]
32. [32]
    In the primary judgment I found that the applicant commenced proceedings for reasons other than a belief that adequate provision had not been made for her, as that phrase is understood in a legal sense.^[11]  If, by that finding, I conveyed that proceedings were commenced maliciously, that was unintended.  I sought to convey that they were commenced on the erroneous understanding that the applicant had an automatic entitlement to an equal share of the estate with her sister.  The difference is important for present purposes.
33. [33]
    I also noted that the prolonged period to bring proceedings to a resolution diminished the value of the estate. Although there were difficulties in laying all of that at the feet of the applicant,^[12] much of it must fall there.
34. [34]
    Of relevance for present purposes, the applicant did not file her first affidavit, the one required by Practice Direction 8 of 2001, until about 14 months after the Originating Application was filed.  There is nothing before me to show when the Originating Application was served, but the affidavit was dated the day before it was filed. Such a delay, even if not in breach of the time limits expressly provided for in the Practice Direction, is at least arguably inconsistent with its intent, and with the implied undertaking as to expediency in r. 5 of the UCPR.
35. [35]
    The applicant strongly argues that the respondent was in breach of the Practice Direction by not filing her affidavit in response until 28 August 2023, over five years after the applicant filed her initial affidavit. While that chronology is correct, it omits the true context. It is apparent that the respondent contended that the applicant had not made full disclosure in that affidavit. This was ultimately borne out at trial. The arguments about disclosure resulted in the guillotine order being made by Koppenol DCJ on 19 July 2019, which order the respondent had, in my view, reasonably thought had been executed. The consequence was that it was understood that no affidavit was required to be filed, as the proceedings were thought to be at an end. The bankruptcy intervened, and the proceedings were stayed during their currency. The affidavit was filed reasonably quickly after the applicant gained leave to take a step in the proceedings in July 2023.
36. [36]
    I note that the costs of the application before Koppenol DCJ were ordered against the applicant on the indemnity basis.  While his Honour’s reasons are not before me, at least part of the justification for that must have been the delay in the applicant’s conduct of the proceedings to that point, which was the focus of the application. 
37. [37]
    The commencement of the proceedings was, in my view, misguided but not malicious. The proceedings were conducted over an undoubtedly longer period than was desirable, but that was contributed to by the applicant’s complicated presentation.  They were also considerably affected by the applicant’s bankruptcy. While the applicant voluntarily entered that bankruptcy, she does not appear to have appreciated that it would operate as a stay on the proceedings.^[13]
38. [38]
    I accept that deficiencies in the disclosure of material during the interlocutory period were revealed during the trial. That includes the provision of the bank account statement that had been altered by somebody to hide the fact that it was held by the applicant for the benefit of her son as trustee, but it was not the only instance.^[14] This tends to tell against an order favourable to the applicant.
39. [39]
    The respondent also argues that much expense has been incurred in relation to answering irrelevant and argumentative material.  I accept that much of the applicant’s material, especially after she became self-represented, suffered from a lack of conciseness and precision that would be expected if legally represented, but that is commonly the product of self-representation. There is nothing before me to show that this was a deliberate tactic and, while it is a relevant feature to consider, it is not an overwhelming one.
40. [40]
    The primary judgment shows that many of the applicant’s submissions were unsuccessful, but that does not mean, of itself, that indemnity costs should be ordered.  I am particularly disinclined to make such an order where, in part, the applicant was pressing a submission based on legal advice, which she had been advised was arguable.^[15]
41. [41]
    I accept that the respondent has a legitimate basis to argue for costs on the indemnity basis from the commencement of the proceedings.  However, in the context of the complicated presentation of the applicant and the complications that attended the disposition of the proceedings, and in light of the relevant principles, I am not satisfied that overall considerations of justice are met by such an order.

The second basis of the application for indemnity costs

42. [42]
    Alternatively, the respondent points to an open offer made to the applicant on 17 July 2019, and its refusal, to justify indemnity costs from that date.
43. [43]
    The offer was to the effect that the loan debts owed by the appellant to the deceased, and the interest on them, would be forgiven and the parties would bear their own costs, if proceedings were discontinued.
44. [44]
    At that time, the proceedings had been on foot for about two years and three months but, perversely, they were still in the early stages of the interlocutory steps. The offer was made two days prior to the hearing before Koppenol DCJ, the focus of which was an asserted lack of disclosure by the applicant. She should have had an awareness of the difficulty of her position on that issue at the time. 
45. [45]
    The position taken by the respondent at trial was that those debts were unenforceable. Although I thought the contrary position was arguable,^[16] I did ultimately proceed on that basis and the respondent should be taken to be bound to that position for the purposes of this application.  That is particularly so given she too benefits from the agreed unenforceability of the earlier debts incurred by her and her then-husband.  Therefore, that aspect of the offer should be taken to fall away for present purposes, and the effect of the offer should be understood to be that the applicant discontinue proceedings, and for the parties to bear their own costs. 
46. [46]
    There would have been some benefit to the applicant to accept the proposal, in light of the eventual outcome.  However, there was little compromise included in the offer; it was tantamount to a demand to capitulate, albeit when the applicant should have understood she was in breach of her disclosure obligations.^[17] While not mandated, the absence of compromise is still a relevant feature in an open offer. The offer was also made early in the disclosure process. The refusal of the offer was unfortunate, with the benefit of hindsight but, in the particular circumstances, I do not consider that its refusal was so imprudent or unreasonable so as to justify costs on the indemnity basis.

The third basis of the application for indemnity costs.

47. [47]
    The final basis on which indemnity costs are sought by the respondent relies on an offer made under Chapter 9, Part 5 of the UCPR.  The written offer was dated 20 November 2023 and can be taken to have been served that same day.  In effect, it offered the applicant $300,000 in exchange for the filing of a Notice of Discontinuance. The written offer was silent as to costs already incurred. It remained open for 14 days.
48. [48]
    The applicant was not legally represented by this time, but it should be recognised that she does have legal qualifications, although she is not admitted as a practitioner and has very little practical experience. She had previously been served with the affidavit of 28 August 2023^[18] which attested to the nett value of the estate being about $721,000, not accounting for some legal costs yet to be invoiced. That figure did not include interim distributions already made to Ms Cyati of about $344,000, but did include the loans to both sisters and the interest accrued on the applicant’s loans, totalling about $322,000. Therefore, the nett value of the estate at that time should be seen as being about $742,000, before allowance for outstanding legal costs.
49. [49]
    I recognise that the applicant did not, even at trial, accept that various other properties should be excluded from the valuation of the estate, and that may well have influenced her decision about the acceptance of the offer. As explained in the primary judgment, some of those contentions were simply unmaintainable. In respect of one property, the applicant was relying on legal advice received. She cannot be blamed for relying on it at trial but, for the purposes of considering the offer to settle, she should have realised that the advice was proffered in guarded terms and that, even if that property’s presumed value was included, the offer was still substantial.
50. [50]
    As the offer was silent as to costs, the applicant would have remained liable for the respondent’s costs up to the date of discontinuance.^[19] I was informed from the Bar table that there was no intention to pursue costs had the Notice of Discontinuance been filed. The point is in any event moot as the applicant does not suggest that was the reason she did not accept the offer.
51. [51]
    The respondent contends that rule 361A of the UCPR applies in the circumstances. I agree. Although offers to settle under the rules are not generally available to proceedings commenced by an originating application,^[20] I accept that the automatic application of Practice Direction 8 of 2001 to the proceedings brings it within the exception in r. 352(c) of the UCPR.
52. [52]
    Accordingly, costs must be ordered to be paid by the applicant to the respondent on the standard basis up to the date of the offer and on the indemnity basis thereafter, unless it is shown that another order is appropriate in the circumstances.
53. [53]
    If I am wrong about r. 361A applying, I would have treated the purported offer as a Calderbank offer.^[21] That approach is consistent with the approach of the Victorian Court of Appeal, in Grbavac v Hart^[22] and of Helman J in Kozak v Matthews & Anor.^[23]
54. [54]
    Under r. 361A, there is a rebuttable presumption that costs will be ordered on the indemnity basis. The onus to rebut it is carried by the applicant. That means that the applicant carries a heavier burden than if the offer is treated as a Calderbank offer. Nonetheless, the criteria in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No. 2)^[24] are useful, but not exhaustive, guideposts for the exercise of the discretion under both bases.
55. [55]
    Applying those criteria:

    1. The offer was made at a time when proceedings were well advanced, and shortly after an unsuccessful mediation. The applicant can be taken to be aware of the issues, and the difficulty of her position.
    2. The applicant had been afforded 14 days in which to consider the offer. That, in my view, was sufficient time to realise the benefits of accepting it, even though she was not legally represented.
    3. The value of the estate at the time of the offer is noted above. In my view, given the difficulties the applicant faced in the conduct of the litigation, there was a considerable compromise by the respondent included in the offer.
    4. The respondent had good prospects of success in the litigation, as outlined in the primary judgment and, even if the applicant succeeded on the jurisdictional question, there were good prospects of any provision to the applicant being less than the amount offered.
    5. The offer was clear in its terms as to the amount offered, but was silent as to costs. The amount of costs could have reasonably been assumed to be considerable given the length of time proceedings had been pending, but there was apparently no intention of pursuing the costs. More importantly, there is no suggestion that the offer was refused because of the possibility of costs being pursued. The reasonableness of the refusal does not turn on this issue.
    6. The document did not foreshadow an application for indemnity costs if the offer was not accepted. While it might be seen to have been intended have that consequence as it purported to be an offer under Chapter 9 Part 5 of the UCPR, that must also be seen in light of the applicant being self-represented, albeit with some legal qualifications but almost no practical experience. That lack of clarity detracts from the contention that costs should be ordered on the indemnity basis from that date.
56. [56]
    Balancing all relevant features, the offer was a good offer, and in all the circumstances I am satisfied that the refusal was imprudent and unreasonable. While I am not satisfied that the conduct of the proceedings by the applicant was such as to warrant indemnity costs for the whole of the proceedings, given that overall history and factoring in the refusal of this offer, I am satisfied that an order for indemnity costs from the date of the offer is warranted, regardless of whether considered through the prism of r. 361A or as a Calderbank offer. The respondent’s costs should be paid on the standard basis prior to that date.
57. [57]
    I however consider that it is appropriate to delay enforcement of the costs for a period of time to allow the appeal to be heard. The respondent’s Counsel did not hold instructions to provide an undertaking not to enforce them earlier than that and, were steps taken towards bankruptcy, they would be difficult to unwind were the appeal to succeed, especially by a self-represented litigant.
58. [58]
    The appeal is currently listed for hearing on 6 May 2025, and the applicant has filed an outline adhering to the timetable set for the appeal although, if the history of the litigation is any guide, the hearing may well not proceed at that time. The respondent contends that the form of orders should include a specific date, so that the progress, or otherwise, of the appeal does not necessarily deprive her of the benefits of any order, with the ability for the parties to seek variations of the order if there are appellate delays. That seems reasonable. The provision of precise dates alleviates the possibility of unintended consequences. Six weeks after the listed hearing date is an appropriate allowance, at this stage.