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Re Janson; Gash v Ruzicka (No 3) [2022] VSC 557 (20 September 2022)

Last Updated: 20 September 2022

AT MELBOURNE

COMMON LAW DIVISION

TESTATORS FAMILY MAINTENANCE LIST

S CI 2018 02081

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COSTS – Where sole issue in dispute was quantum of provision – Where defendant made Calderbank offer and offer of compromise and open offer – Where all offers rejected by plaintiff – Where further provision substantially less than Calderbank offer and offer of compromise – Where plaintiff’s rejection of offers was unreasonable – Where plaintiff seeks that all costs be paid out of the estate – Supreme Court Act 1986 (Vic) s 24 – Supreme Court (General Civil Procedure) Rules 2015 (Vic) rr 26.08, 63.26 – Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435.

LEGAL PRACTITIONERS – Overarching obligations under the Civil Procedure Act – Where plaintiff’s solicitor failed to comply with Court’s instruction to address irrelevant and inadmissible material – Whether plaintiff’s costs claimed are reasonable and proportionate to issues and amount in dispute – Discretionary considerations under the Civil Procedure Act – Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.23 – Civil Procedure Act 2010 (Vic) ss 20, 22, 24, 25, 29 – Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5) [2014] VSC 400; (2014) 48 VR 1.

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HER HONOUR:

Introduction

1 Milan Janson (‘the deceased’) died on 7 August 2017, leaving a will dated 20 March 2015. The deceased was survived by his partner (‘the defendant’), his brother and his two adult daughters. The plaintiff is a daughter of the deceased.
2 By this proceeding, the plaintiff sought further provision from the deceased’s estate pursuant to Part IV of the Administration and Probate Act 1958 (Vic) (‘the Administration and Probate Act’). Following a trial held in April 2020, the Court delivered preliminary reasons on 23 July 2020 (‘the first reasons’)^[1] in which it concluded that it was unable to make any order for further provision as the evidence presented by the plaintiff of her financial circumstances was deficient, and provided the plaintiff with an opportunity to file further evidence. Following a further day of trial, the Court delivered its final judgment on the plaintiff’s claim on 21 March 2022 (‘the final reasons’)^[2] in which it was ordered that further provision for the proper maintenance and support of the plaintiff be made out of the deceased’s estate.^[3]
3 In the final reasons, the parties were ordered to file written submissions as to the costs of the proceeding by 9 May 2022, with the matter to thereafter be determined on the papers. This ruling provides reasons for the orders to be made as to costs.

Procedural history

4 The plaintiff’s originating motion was filed on 4 June 2018. At the first directions hearing on 21 August 2018, the plaintiff informed the Court that she sought further provision in the amount of 80 per cent of the deceased’s estate. As the estate was initially valued by the defendant at $3,279,324,^[4] the amount sought by the plaintiff at this time was equivalent to approximately $2,623,459.
5 On 11 December 2018, the parties attended a court ordered mediation, which was unsuccessful.^[5]
6 In an email to the parties dated 29 March 2019, the Court raised significant concerns in relation to the joint trial document filed 4 March 2019 and made the following queries:

(a) At the first directions hearing, the plaintiff’s solicitors stated to the Court that the plaintiff sought 80% of the estate for her further provision from the estate. The estate at that time was said to be around $3,279,324. This means that the plaintiff sought $2,623,459 for further provision. Does the plaintiff still seek this amount, or has the quantum changed?

(b) The agreed facts are verbose and many are irrelevant to the issues in dispute. The practitioners are to revisit the agreed facts to relevant agreed facts.

(c) The parties have no objections to the affidavits filed by the parties. From the Court’s perspective, there is a substantial amount of irrelevant material in the affidavits. The parties are to revisit whether there are any objections to the affidavits.

(d) The estimate of the trial is 2 days. Bearing in mind the above matters being completed, is it now possible that the trial estimate would be 1 day?

(e) The estimated costs are unquestionably high at a total estimate of $160,000. The parties and practitioners are reminded that the Court will investigate costs is [sic] they are considered not reasonable or proportionate to the issues in dispute. Prima facie, this appears to be the case in this proceeding.

Her Honour requires you to respond to these queries before the proceeding is set down for trial.

7 Save for agreeing that some irrelevant and inadmissible matters contained in the affidavits which had been filed to date should be struck out, the parties failed to address or remedy any of the other issues set out in this email.
8 On 18 June 2019, the defendant made a Calderbank offer to settle the plaintiff’s claim (‘the Calderbank offer’). The Calderbank offer provided that the plaintiff would receive a payment of $750,000 as further provision from the deceased’s estate plus her legal fees taxed on an ordinary basis. The Calderbank offer was stated to expire on 30 July 2019, and it foreshadowed that an application for indemnity costs would be made by the defendant against the plaintiff should the offer be rejected. The Calderbank offer was not accepted by the plaintiff before it expired.
9 On 25 June 2019, orders were made listing the proceeding for trial on 21 April 2020. In the preamble to these orders, the Court reiterated the queries which remained outstanding from its email of 29 March 2019, again informed the practitioners that the estimated costs were unquestionably high, and reminded the parties that the Court would investigate costs if they were considered not to be reasonable or proportionate to the issues in dispute.
10 The Court also noted that the parties sought to list the trial for hearing on an estimate of four days. In light of the failure of the parties to address the outstanding issues, the Court informed the practitioners that it would list the proceeding for trial with a warning that the parties and their practitioners may have failed to consider their overarching obligations and associated sanctions pursuant to Parts 2.3 and 2.4 of the Civil Procedure Act 2010 (Vic) (‘the Civil Procedure Act’).
11 On 13 March 2020, pursuant to O 26 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘the Rules’), the defendant served an offer of compromise on the plaintiff (‘the offer of compromise’). The offer of compromise provided that the plaintiff would receive an amount of $940,000, comprising $875,000 for her further provision and $65,000 in respect of her legal costs, and was expressed to remain open for acceptance for 14 days after service on the plaintiff. The offer of compromise was not accepted by the plaintiff.
12 Also in March 2020, prior to the commencement of the trial, the plaintiff revised her claim to 51 per cent of the deceased’s estate, or $1,672,455.
13 At the trial on 21 April 2020, the defendant made an open oral offer of settlement to the plaintiff equivalent to a further 10 shares in the deceased’s estate (‘the open offer’). The defendant re-stated the open offer in closing submissions. The plaintiff did not accept the open offer.
14 During the trial, the plaintiff again revised her claim for further provision to at least one third of the deceased’s estate. As the estate was then valued at $3,179,462, her revised claim was worth at least $1,059,820.
15 In the first reasons, the Court concluded that it was unable to make any orders for further provision for the plaintiff on the evidence before it, for the following reasons:^[6]

A moral claim alone is not sufficient to warrant an order for further provision. Despite the concessions of the defendant, the onus nonetheless remains on the plaintiff to lead sufficient evidence of her financial situation. To make an order for family provision without appropriate evidence of the plaintiff’s need would be ‘to do no more than act on speculation’. It would also be contrary to the requirements of pt IV of the [Administration and Probate Act].
On the evidence before the Court, an order for further provision cannot be made in the plaintiff’s favour.
However, in the circumstances, and particularly given that the defendant has conceded that further provision in the form of an additional 10 shares of the estate should be granted to the plaintiff, the plaintiff will be provided with a further opportunity to file and serve documentary evidence of her financial circumstances at the time of trial within 28 days. Otherwise, the proceeding will be dismissed.

16 The plaintiff filed further affidavits in August and December 2020. The matter was relisted for trial on 3 May 2021, at which time the plaintiff again revised her claim for provision, seeking $1,600,000 to $1,900,000. At trial, the defendant reiterated that the open offer remained on foot.
17 In the final reasons, orders were made for the plaintiff to receive further provision, operative as a codicil to the deceased’s will, in the following terms:

In addition to the one-hundredth part of the estate of the deceased bequeathed to the plaintiff, ten parts be paid to the plaintiff for her further provision by giving the plaintiff five parts from the amount bequeathed to Josef Jandovsky, three parts from the amount bequeathed to Klara Jandovska and two parts from the amount bequeathed to Vaclava Klempt.^[7]

18 In monetary terms, based on the estimated value of the estate provided at the time of trial, the plaintiff was to receive approximately $317,964 in further provision, or $349,741 when combined with the plaintiff’s initial one share bequeathed pursuant to the deceased’s will.^[8]
19 By letter dated 13 April 2022, the defendant informed the plaintiff that she would seek costs against the plaintiff from the date of the Calderbank offer, alternatively, the date of the offer of compromise.
20 The defendant and plaintiff filed their written submissions on costs on 6 and 9 May 2022 respectively. On 11 May 2022, the Court emailed the parties seeking details of the quantum of costs of both parties. Both parties forwarded details of their costs and disbursements categorised into three periods, taking into account the Calderbank offer and the offer of compromise:^[9]

21 The plaintiff’s quantum of costs in respect of the second and third periods is unclear, as different amounts are listed at different points in the affidavit sworn by the plaintiff’s solicitor. For the second period, the plaintiff’s professional costs inclusive of GST are stated as either $26,964.30 or $28,526.30 and third party disbursements are stated as equal to $26,478.52. Although the plaintiff deposed to a total of $55,004.82 for this period, based on the variance, it is unclear whether that amount is correct. For the third period, the plaintiff’s professional costs inclusive of GST are stated as either $28,526.30 or $26,478.52 and third party disbursements are $7,329. The plaintiff deposed that total costs for the third period are equal to $33,707.52, but based on the variance, it is not clear whether this amount is correct.
22 Subject to the queries above, the combined costs of the parties amount to $294,095.96.

Submissions

Plaintiff’s submissions

23 The plaintiff seeks an order that the defendant pay the plaintiff’s costs of the proceeding on the standard basis, and the defendant’s costs be paid out of the estate of the deceased. Alternatively, the plaintiff seeks an order that the defendant pay the plaintiff’s costs on the standard basis until 27 April 2020, being the expiry of the date for acceptance of the offer of compromise, that the plaintiff bear her own costs thereafter and that the defendant’s costs be paid out of the deceased’s estate.
24 The plaintiff accepts that, by reason of her failure to accept the offer of compromise, the defendant has an entitlement to a costs order against the plaintiff unless the Court otherwise orders, in line with r 26.08 of the Rules. However, the plaintiff submits for the reasons outlined below, the Court should otherwise order.
25 The plaintiff contends that she has ultimately been successful in obtaining an award of further provision from the estate, and that she therefore ought to be entitled to her costs of the proceeding, at least until the date of the Calderbank offer. The plaintiff further submits that the parties appear to be in agreement on this point.^[11]
26 For the following reasons, the plaintiff submits that it was not unreasonable for her to reject the Calderbank offer and the offer of compromise:

(a) The nature of the proceeding was one in which reasonable minds might differ, and given the quantum of the offers made, it was not unreasonable for the plaintiff to consider that an amount equivalent to one third of the estate (as was sought at the commencement of trial) or similar would be awarded;
(b) The plaintiff’s evidence of financial matters showed that it was not unreasonable to argue that the plaintiff had a high level of need, nor was it unreasonable to consider that the plaintiff’s future need for accommodation would be met in some way by an award of provision from the estate;
(c) The defendant filed no material demonstrating any form of competing need, and it was therefore not unreasonable for the plaintiff to consider that the measure of need in her situation would not be moderated by any competing needs of the beneficiaries of the estate;
(d) It was not unreasonable for the plaintiff to consider that she had provided information about her financial circumstances in such a way as to establish her case and that the level of description provided to the Court would be adequate to demonstrate substantial need. Moreover, there was no indication that the plaintiff’s financial position would be subject to the degree of scrutiny that it ultimately was; and
(e) After delivery of the first reasons, the plaintiff filed further affidavits exhibiting many documents which verified her need to a secure home and provision for her future. It was not unreasonable for the plaintiff to consider that an amount of provision would be made which took those substantial needs into account.

27 Moreover, the plaintiff submits that an award of costs against her would undermine the award made in the final reasons. In circumstances where the further provision awarded was intended to cover the plaintiff’s stated needs and provide a ‘nest egg’ for the future, an order that the plaintiff bear her own costs or pay the defendant’s costs would substantially reduce the amount of further provision, and would in effect ‘falsify’ the judgment by depriving the plaintiff of the benefit that the Court has ordered she ought to have. The plaintiff submits that, if the deceased’s estate were to bear the costs of both parties, there would be little correlative burden on the estate, which would be distributed across a range of beneficiaries.
28 The plaintiff relies on the same matters set out above to submit it was not unreasonable to reject the open offer, as well as to contend that the rejection of the open offer ought not be used to undermine the judgment itself. Further, the plaintiff submits (albeit without citing authority) that when an offer is close to, or the same as, a determination by a court, it is not obvious that the offer ought to have been accepted, and it therefore was not unreasonable for the plaintiff to not have accepted the open offer.
29 For these reasons, despite her rejection of the Calderbank offer, the offer of compromise and the open offer, the plaintiff seeks that the Court exercise its discretion to otherwise order that the defendant pay the plaintiff’s costs of the proceeding on a standard basis and that the defendant’s costs be paid out of the estate of the deceased.

Defendant’s submissions

30 The defendant seeks an order that the plaintiff pay the defendant’s costs of the proceeding taxed on an ordinary basis up to 18 June 2019, being the date of the Calderbank offer, and on an indemnity basis thereafter. Alternatively, the defendant seeks an order that the plaintiff pay the defendant’s costs of the proceeding taxed on an ordinary basis up to 15 March 2020,^[12] and thereafter on an indemnity basis. In the further alternative, the defendant seeks that the plaintiff pay the defendant’s costs of the proceeding taxed on an ordinary basis up to the date of trial, being the date that the open offer was made, and thereafter on an indemnity basis.
31 In respect of the Calderbank offer, the defendant submits that the offer set out all matters that ought to have been taken into account by the plaintiff in assessing whether such offer was, in all the circumstances, reasonable. The defendant submits that, having regard to the principles set out in Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2),^[13] the Court should take into account the following considerations:

(a) The Calderbank offer was made after pleadings had closed, discovery had been exchanged and the issues in dispute had been ventilated at the mediation on 11 December 2018;
(b) The defendant allowed the plaintiff 42 days to consider the Calderbank offer before it expired on 30 July 2019;
(c) The Calderbank offer represented payment to the plaintiff of approximately 20 per cent of the deceased’s estate, plus her legal costs. At the date of the Calderbank offer, the plaintiff claimed an entitlement to 80 per cent of the estate by way of further provision. The defendant submits that this claim, which reflected the plaintiff’s position both during and after mediation, had very low prospects of success;^[14]
(d) The Calderbank offer contained a discussion of the plaintiff’s likelihood of success in the proceeding and accepted that the deceased owed the plaintiff a moral duty to provide for her proper and adequate maintenance and support, but not in the ‘excessive’ sum sought by the plaintiff. The Calderbank offer set out the following matters in this regard:

(i) The plaintiff had not provided any medical evidence to support claims made about her husband’s condition, prognosis and needs in the future;
(ii) The plaintiff’s estrangement from her parents, the deceased’s wishes as set out in his will and the plaintiff’s financial independence for decades would be taken into account by the Court in determining the extent of the deceased’s moral duty to make provision for the plaintiff;
(iii) The plaintiff had not justified her stated need to purchase a three bedroom house in suburbs with high housing costs in circumstances where she and her husband were renting a house suitable for their present needs, nor had she justified her need for a new car where cheaper models were available second-hand that would suit her needs;
(iv) The other primary family beneficiaries under the deceased’s will were of retirement age, not engaged in full-time work and to some extent financially dependent on the deceased before his death.

(e) The Calderbank offer clearly set out the terms of the defendant’s offer and stipulated that an application for indemnity costs against the plaintiff would be made by the defendant if the Calderbank offer were refused.

32 In the defendant’s submission, as a result of these considerations, the Court should find that the plaintiff’s failure to accept the Calderbank offer was unreasonable and order that the plaintiff pay the defendant’s costs of the proceeding taxed on an ordinary basis to 18 June 2019 and thereafter on an indemnity basis.
33 In the alternative, in respect of the offer of compromise, the defendant relies on r 26.08 of the Rules to submit that as a result of the plaintiff’s failure to accept the offer of compromise, the Court should make a costs order requiring the plaintiff to pay the defendant’s costs of the proceeding taxed on an ordinary basis up to 15 March 2020 and thereafter on an indemnity basis.
34 In the further alternative, in respect of the open offer, the defendant submits that the plaintiff ‘unreasonably and unmeritoriously’ maintained her claim for 80 per cent of the deceased’s estate until the first day of trial, when she advised that the claim had been reduced to 50 per cent of the estate. In the defendant’s submission, even that reduced percentage claim was unmeritorious and unlikely to succeed, especially in circumstances where the Court found that the plaintiff had failed to put on clear evidence as to her financial need, and gave her a second opportunity to provide that evidence, without which the plaintiff’s claim would have failed entirely. Further, even when the second opportunity was provided, the defendant submits that the plaintiff failed to make full and proper disclosure of the existence of National Disability Insurance Scheme payments received by her husband until she was cross-examined, which payments were said to be directly relevant to the plaintiff’s claim that her husband’s medical condition would contribute to her financial needs into the future.
35 The defendant further submits that the Calderbank offer put the plaintiff on notice that the absence of medical evidence in support of allegations about her husband’s medical condition, prognosis and future needs would adversely affect her claim, and that her estrangement from her father and financial independence throughout her adult life would adversely affect the scope of her claim. In addition, in the defendant’s submission, the terms of the deceased’s will and explanation given therein for only providing the plaintiff one out of 100 shares in his estate should have been considered by the plaintiff in deciding whether to accept the open offer.

Applicable principles

36 Costs are a matter for the discretion of the Court, unless otherwise provided by an act or the Rules.^[15] Costs in respect of family provision claims are to be determined in the exercise of the Court’s general costs discretion.^[16] The usual order as to costs is that a successful party in litigation is entitled to an award of costs in its favour, and an unsuccessful party bears liability for the costs of the litigation.^[17] That is, costs follow the event. The relevant ‘event’ is success in the action or on particular issues.^[18] The discretion must also approached from the perspective of civil procedure reforms, the main object of which being the quick, cheap and efficient resolution of the real issues in dispute.^[19]
37 The prima facie position in respect of costs in litigation is for standard costs to be ordered by the Court, with the Court having the discretion to award costs other than on the standard basis.^[20] A special order for costs will only be made where there is some special or unusual feature in the proceeding, or special circumstance, which justifies it. Each proceeding must be considered on its own facts, specifically whether those facts support the making of a special order for costs.
38 Costs ordered out of a trust fund or deceased estate in favour of a trustee or executor are commonly quantified on an indemnity basis, sometimes termed the ‘trustee basis’. This is the position at common law, and is also reflected in the Trustee Act 1958 (Vic) and the Rules.^[21] The basis for the principle is that persons engaged in litigation in a representative capacity should not, if a costs order is made in their favour, be out of pocket because of the litigation.
39 Where a trustee fails in litigation, his or her costs may be allowed out of the estate. Where a trustee succeeds, his or her costs would ordinarily be allowed out of the estate. However, the basis of quantification of costs remains in the discretion of the Court. The Court may deny or reduce the quantification for indemnity by reference to, for example, the size of the estate, the parties’ conduct in the litigation, any offers of settlement that were made, or the effect a costs order may have on a beneficiary. Any indemnity ‘must be given effect to in such a way as to make the burden fall upon the beneficiaries equitably having regard to the circumstances under which the costs, charges and expenses were incurred’.^[22]

Calderbank offers

40 When considering the effect of a Calderbank offer, the correct approach is to treat the rejection of it as a matter to which the Court should have regard when deciding whether to order indemnity costs. The critical question is whether the rejection of the offer warrants the making of an indemnity costs order, with the answer to this question depending upon whether the rejection of the offer was unreasonable in the circumstances.^[23]
41 Whether an offeree’s decision to reject a Calderbank offer was unreasonable depends on a number of considerations. Whilst it is not possible to give an exhaustive list of all the potentially relevant considerations in any given case, in Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2), the Court of Appeal noted that regard should at least be given to the following:^[24]

(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree’s prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed; and

(f) whether the offer foreshadowed an application for an indemnity costs in the event of the offeree’s rejecting it.

Offers of compromise

42 Rule 26.08(3) of the Rules provides that where an offer of compromise is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains judgment on the claim that is no more favourable than the terms of the offer, then unless the Court otherwise orders:

(a) the plaintiff shall be entitled to an order against the defendant for the plaintiff’s costs in respect of the claim before 11am on the second business day after the offer was served, taxed on the ordinarily applicable basis; and
(b) the defendant shall be entitled to an order against the plaintiff for the defendant’s costs in respect of the claim thereafter, taxed on the ordinarily applicable basis.

43 In persuading the Court to exercise its discretion to depart from the ordinary consequences of r 26.08,^[25] the party seeking to displace the prima facie rule bears the onus.^[26] The Court must be mindful of the fact that a plaintiff who rejects an offer of compromise is assumed to have taken into account any risks and vicissitudes that may ensue.^[27] As stated in Maitland Hospital v Fisher (No 2):^[28]

Litigation is inescapably chancy. The purpose of the rule is to put a premium on realistic assessment of cases. It is not to demand perfect foresight which is denied even to the judges. That is why a discretion is retained, under the rule, for the court to order otherwise than as the rule provides. But the ordinary provision is expected to apply in the ordinary case. It has added a new duty to the functions of legal practitioners advising litigants. It is a duty which is both protective of the interests of litigants and of the public interest in the prompt and economical disposal of litigation. It is the duty of courts, allowing for exceptions in particular cases, to give effect to the purpose of the rule...

44 The Court must exercise caution in departing from the prima face rule and should only do so in cases that warrant such a departure. Such instances are often described in terms such as ‘compelling and exceptional circumstances’, ‘for proper reasons which, in general, only arise in an exceptional case’ and ‘special circumstances’.^[29]
45 Ultimately each case is dependent on its own circumstances. Factors relevant to the assessment include whether a plaintiff had ample opportunity to consider the offer, whether or not a plaintiff chose to obtain any professional advice, the difference between the shortfall in the amount sought and that awarded, and whether the assessment as to the likely range of an award was difficult.^[30]

Consideration

46 The plaintiff’s position that she was successful in the second part of the proceeding because she obtained an order for provision is misconceived. The plaintiff’s entitlement to such further provision was not in dispute – the only issue between the parties was the amount of any such further provision. Acceptance of any of the defendant’s offers would have put the plaintiff in a better position than the Court’s order for provision. The Calderbank offer was made after the mediation and the Court’s email dated 29 March 2019, which raised significant issues with the joint trial document. Before the expiry of the Calderbank offer, the plaintiff and her solicitors received the orders dated 25 June 2019, which included a recitation of significant issues in the proceeding, a warning to the practitioners as to costs and a further warning that both the parties and their practitioners may have failed to consider their overarching obligations and associated sanctions under the Civil Procedure Act.
47 The Calderbank offer represented approximately 20 per cent of the estate plus the plaintiff’s costs. The plaintiff had 42 days to consider the offer. The Calderbank offer acknowledged that the deceased had a moral duty to provide for the plaintiff and set out a comprehensive consideration of the merits of the plaintiff’s then claim of 80 per cent of the estate. By the time of the Calderbank offer, the plaintiff had filed three affidavits and the defendant had filed five affidavits in response. Having regard to the defendant’s affidavits, it ought to have been clear to the plaintiff’s solicitor where the issues as to the amount of provision were disputed and the reasons for the dispute. The Calderbank offer also foreshadowed that in the event the offer was refused by the plaintiff, the defendant would seek indemnity costs from the plaintiff. An offer of 20 per cent of the estate was generous in the circumstances of the evidence sought to be relied on by the plaintiff. The plaintiff’s failure to accept the Calderbank offer was unreasonable.
48 The offer of compromise dated 13 March 2020 was made before the commencement of trial on 21 April 2020. The offer of compromise increased the quantum of the plaintiff’s claim to $940,000, inclusive of costs. The offer expired two weeks later and was not accepted by the plaintiff. Given the history of the proceeding and that the trial was to commence some five weeks later, the expiry date provided ample opportunity for the plaintiff and her solicitor to consider the offer.
49 The plaintiff’s submission that it was not unreasonable for the plaintiff to reject the Calderbank offer and the offer of compromise fails to address the evidence that was relied on by the plaintiff. Both the first reasons and the final reasons set out the inadequacies of the plaintiff’s evidence in detail. The plaintiff’s submission that the Calderbank offer and the offer of compromise make it reasonable for the plaintiff to have sought one third of the estate is misconceived, and shows little regard for the reality of the plaintiff’s evidence. The plaintiff’s solicitors are taken to have known that admissible evidence of the plaintiff’s financial circumstances was necessary to substantiate a claim for further provision. Their failure to provide that evidence meant that a finding could not be made after the first day of trial. At the time the trial was relisted, some of the financial information remained incomplete. The proceeding should only have taken one day, and the plaintiff’s inadequate evidence was the reason for the relisting of the trial for a further day.
50 The Calderbank offer and the offer of compromise were made well before the commencement of the trial. Both were genuine offers to settle the proceeding without the need for a trial, in accordance with the defendant’s obligations under the Civil Procedure Act. The defendant acted properly and reasonably in all of the circumstances of the proceeding. The Court is satisfied that it was unreasonable for the plaintiff to reject the Calderbank offer and the offer of compromise. In light of this finding, it is unnecessary to consider the open offer.
51 In considering the circumstances and outcome of the proceeding as a whole, contrary to the plaintiff’s submission that her claim succeeded, it can be concluded that the defendant was substantially successful in her defence of the proceeding. Thus in the ordinary course, the order for costs would be that the plaintiff pay the defendant’s costs of the proceeding, taxed on a standard basis up to 30 June 2019, being the expiry date of the Calderbank offer, and thereafter on an indemnity basis, and that the plaintiff bear her own costs.

Court’s investigation

52 However, the matter does not end there, as the Court has concerns as to the costs of the proceeding which remain to be considered. The issue of costs was raised in the Court’s email dated 29 March 2019 and again in orders made on 25 June 2019, before the proceeding was listed for trial. At that time, costs were estimated to be $160,000. The costs now total approximately $294,000.
53 The defendant’s practitioners sought to resolve the proceeding at an early stage. When the mediation was unsuccessful, the defendant promptly made the Calderbank offer. As that offer was not accepted, this necessarily required the defendant to file responses to the various affidavits and correspondence received from the plaintiff’s solicitor and defend her position.
54 In view of the Court’s email dated 29 March 2019 and the preamble to the orders made on 25 June 2019, it appears that the plaintiff’s practitioners disregarded the Court’s communications, failed to co-operate with the Court in connection with the conduct of the proceeding and ignored the Court’s warning as to costs.
55 Had the plaintiff’s solicitor addressed the Court’s queries, the proceeding could have been finalised in one day. Instead, the defendant’s solicitor incurred additional costs in considering the plaintiff’s further affidavits, obtaining instructions to address further issues, drawing and settling affidavits in response and preparing for the relisting of the trial.
56 Rule 63.23 of the Rules sets out the circumstances in which a lawyer may be liable to pay the costs of a party to a proceeding, often referred to as a ‘wasted costs’ order. The jurisdiction to make a non-party costs order, especially against solicitors for a party to a legal proceeding, is exceptional and should be exercised with caution.^[31] Although its object is compensatory, a non-party costs order falls within the inherent jurisdiction of the Court to discipline those who come before it.^[32] However, r 63.23 does not require a party seeking costs from a solicitor to establish dishonesty, criminal conduct or personal obliquity; misconduct, default or negligence will suffice.^[33]
57 In Dura (Australia) Constructions Pty Ltd v Hue Boutique Living (No 5), John Dixon J usefully summarised the matters that a court should take into account in the exercise of its wasted costs jurisdiction:^[34]

(a) The court’s jurisdiction to make a wasted costs order against a solicitor is founded on breach of the duty owed by the legal practitioner to the court to perform his duty as an officer of the court in promoting, within his own sphere, the cause of justice.

(b) ‘Negligent’ should be understood in an untechnical way to denote failure to act in a way no reasonably well-informed and competent ordinary member of the profession would have done.

(c) The jurisdiction to order a legal practitioner to pay the costs of legal proceedings in respect of which he or she provided legal services must be exercised with care and discretion and only in clear cases.

(d) The wasted costs jurisdiction discloses a tension between two important public interests, one that the wasted costs orders should not become a back-door means of recovering costs not otherwise recoverable against a legally-aided or impoverished litigant, and that the remedy should not grow unchecked to become more damaging than the disease and, two, that litigants should not be financially prejudiced by the unjustifiable conduct of litigation by their or their opponents’ lawyers.

(e) A legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he or she acts for a party who pursues a claim or a defence that is plainly doomed to fail.

(f) The legal practitioner is not the judge of the credibility of the witnesses or the validity of the argument.

(g) A judge considering making a wasted costs order arising out of an advocate’s conduct of court proceedings must make full allowance for the exigencies of acting in that environment; only when, with all allowances made, an advocate’s conduct of court proceedings is quite plainly unjustifiable can it be appropriate to make a wasted costs order.

(h) A legal practitioner against whom a claim for a costs order is made must have full and sufficient notice of the complaint and full and sufficient opportunity of answering it, and a legal practitioner should not be called on to reply unless an apparently strong prima facie case has been made.

(i) Where a legal practitioner’s ability to rebut the complaint is hampered because the client maintains client legal privilege, full allowance must be given for the practitioner’s inability to tell the full story and he or she should be given the benefit of the doubt. In such circumstances, the court should not make an order against a practitioner without satisfying itself that it is in all the circumstances fair to do so, or, put the other way, it is only when, with all allowances made, a practitioner’s conduct of proceedings is quite plainly unjustifiable that it can be appropriate to make a wasted costs order.

(j) The procedure to be followed in determining applications for wasted costs must be fair and as simple and summary as fairness permits.

58 In deciding whether to make a wasted costs order, the Court has regard to the framework created by the Civil Procedure Act for the conduct of civil proceedings. Section 28(2) of the Civil Procedure Act provides that, in exercising its discretion as to costs, a court may take into account any contravention of the overarching obligations under the Civil Procedure Act.
59 Relevantly, s 20 of the Civil Procedure Act provides that a person to whom the overarching obligations apply must co-operate with the Court in connection with the conduct of that proceeding. Section 22 provides, inter alia, that a person to whom the overarching obligations apply must use reasonable endeavours to resolve a dispute, while s 24 provides that practitioners and parties must ensure that the costs of the proceeding are reasonable and proportionate to the complexity or importance of the issues in dispute and the amount in dispute. Section 25 provides that a person to whom the overarching obligations apply must use reasonable endeavours to act promptly and minimise delay.
60 Pursuant to s 29(1) of the Civil Procedure Act, the Court may make any order it considers appropriate in the interests of justice if it is satisfied, on the balance of probabilities, that a person has contravened any overarching obligation. In particular, s 29(1)(a) provides that the Court may order that such a person pay some or all of the legal costs or other costs or expenses of any person arising from the contravention of an overarching obligation. In the exercise of this power, as with the exercise of any power under the Civil Procedure Act,^[35] the Court must seek to give effect to the overarching purpose of the Civil Procedure Act, namely ‘to facilitate the just, efficient, timely and cost‑effective resolution of the real issues in dispute’.^[36]
61 Finally, the Court retains the power to make orders under both r 63.23 of the Rules and s 29 of the Civil Procedure Act on its own motion.^[37]

Conclusion and orders

62 Prima facie, the Court considers that the plaintiff’s solicitors may have contravened one or more of the above overarching obligations. The Court orders that:
(a) Pursuant to s 29 of the Civil Procedure Act 2010 (Vic), the plaintiff’s solicitors, Marshalls+Dent+Wilmoth, located at Level 21, 570 Bourke Street, Melbourne, be added as a non-party to the proceeding for the purposes of investigating whether it may have contravened any of its overarching obligations, specifically those contained in ss 20, 22, 24 and 25 of that Act.
(b) By 4pm on 11 October 2022, the plaintiff’s solicitors, Marshalls+Dent+Wilmoth, file any written submissions addressing the question of whether and to what extent it should indemnify the plaintiff in respect of the defendant’s costs.
(c) Costs reserved.

---

^[1] Re Janson; Gash v Ruzicka [2020] VSC 449 (‘first reasons’).

^[2] Re Janson; Gash v Ruzicka (No 2)  [2022] VSC 139  (‘final reasons’).

^[3] Ibid [97].

^[4] At the time of trial, the value of the deceased’s estate was recalculated at $3,179,462.54. The later figure was used to calculate the value of the 10 additional shares in the deceased’s estate awarded to the plaintiff by way of further provision in the final reasons.

^[5] An affidavit filed by the plaintiff’s solicitors on 16 August 2018 provided an estimate of $44,000 for costs to the end of mediation.

^[6] First reasons [44]–[46].

^[7] Final reasons [97(a)].

^[8] It should be noted that the value of the plaintiff’s 10 shares may vary, depending on whether orders are made for costs from the deceased’s estate.

^[9] As is evident, there is some variance in the start and end dates of each period stipulated by each party. While the plaintiff bases such dates upon the expiry of the Calderbank offer and the offer of compromise, the defendant instead relies upon the date at which each of these offers was made.

^[10] While the affidavit of the defendant’s solicitor lists 3 March 2020 as the end date of the second period and the start date of the third period, this is presumably a typographical error, given that it is preceded by the words, ‘the date the Offer of Compromise was made’.

^[11] However, such an observation does not appear to be borne out by the defendant’s submissions, as summarised further below.

^[12] Though this date is presumably intended to reflect the two business days after the making of an offer of compromise referenced in r 26.08 of the Rules, it should be noted that 13 March 2020, being the date of the offer of compromise, fell on a Friday and thus 15 March 2020 was a Sunday.

^[13] (2005) 13 VR 435.

^[14] The defendant further submits that the plaintiff’s reduced claim to approximately 50 per cent of the estate, provided at the commencement of trial, similarly had very low prospects of success in the circumstances.

^[15] Supreme Court Act 1986 (Vic) s 24(1).

16. ^[16] Sections 97(6) and (7) of the Administration and Probate Act 1958 (Vic) were repealed by the Justice Legislation Amendment (Succession and Surrogacy) Act 2014 (Vic).

^[17] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 97 [67] (McHugh J).

^[18] Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, 624 (McHugh J); Seng Hpa v Walker [2017] VSC 320, [77] (McMillan J).

^[19] GE Dal Pont, Law of Costs (LexisNexis Australia, 5^th ed, 2021) 163 [6.15].

^[20] Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.28.

^[21] Trustee Act 1958 (Vic) s 36(2); Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.26.
^[22] National Trustees Executors and Agency Co of Australasia Ltd v Barnes [1941] HCA 3; (1941) 64 CLR 268, 279 (Williams J).

^[23] Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435 (‘Hazeldene’s Chicken Farm’) 440–1 (Warren CJ, Maxwell P and Harper AJA).

^[24] Ibid 442.

25. ^[25] Victoria v McIver [2005] VSCA 50; (2005) 11 VR 458, 468 [31] (Callaway JA, with whom Ormiston and Batt JJA agreed); Simply Irresistible Pty Ltd v Couper [2011] VSC 33 (‘Simply Irresistible’) [16] (Kyrou J); Nakos v Serdaris [2016] VSC 179 (‘Nakos v Serdaris’) [17]–[18] (Zammit J); Stevens v Spotless Management Services Pty Ltd (No 2) [2016] VSCA 311, [26] (Kyrou and McLeish JJA and Elliott AJA).

^[26] Simonovski v Bendigo Bank Ltd [2003] VSC 139, [17] (Ashley J); Shellharbour City Council v Johnson (No 2) [2006] NSWCA 114; (2006) 67 NSWLR 308, 314 [19] (Hunt AJA, with whom Beazley and Tobias JJA agreed); Yarra Valley Dairy Pty Ltd v Lemnos Foods Pty Ltd (No 2) [2011] FCA 283, [8] (Middleton J).

^[27] Page v Incorporated Nominal Defendant [1981] VicRp 19; [1981] VR 170, 173–4 (Murphy J); Hultquist v Universal Pattern and Precision Engineering Co Ltd [1960] 2 All ER 266, 272 (Sellers LJ, with whom Ormerod and Upjohn LJJ agreed); Re Williams; Smith v Thwaites (No 2) [2017] VSC 771, [33]–[34] (McMillan J).

28. ^[28] (1992) 27 NSWLR 721, 725–6 (Kirby P, Mahoney JA and Samuels AJA). See also New South Wales Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100, 102 (Gleeson CJ, with whom Clarke and Cripps JJA agreed); Morgan v Johnson [1998] NSWSC 367; (1998) 44 NSWLR 578, 581–2 (Mason P, with whom Sheller JA agreed and Powell JA relevantly agreed); Hazeldene's Chicken Farm (n 23) 441 [21].

^[29] IFTC Broking Services Ltd v Commissioner of Taxation [2010] FCAFC 31; (2010) 268 ALR 1, 4 [9] (Stone, Edmonds and Jagot JJ); Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437; (2004) 212 ALR 281, 284 [16]–[17] (Hely J); Simply Irresistible (n 25); Nakos v Serdaris (n 25) [18].

^[30] Titan v Babic (1991) 104 FLR 220, 225–6 (Hogan M).

^[31] Knight v FP Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178, 198 (Dawson J); Dura (Australia) Constructions Pty Ltd v Hue Boutique Living (No 5) [2014] VSC 400; (2014) 48 VR 1, 19 [48] (John Dixon J) (‘Dura’).

^[32] See generally, Myers v Elman [1940] AC 282.

^[33] Etna v Arif [1999] VSCA 99; [1999] 2 VR 353, 385 [82] (Batt JA, with whom Charles and Callaway JJA agreed). As to the latter, mere negligence will suffice: see Gabelich v Donaghey [2018] VSC 184, [76] (Daly AsJ).

^[34] Dura (n 31) 22–3 [57] (John Dixon J).

^[35] Civil Procedure Act 2010 (Vic) s 8(1).

^[36] Ibid s 7(1). See also Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd (No 8) [2014] VSC 567, [257] (John Dixon J).

^[37] Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 1.14(2)(a); Civil Procedure Act 2010 (Vic) s 29(2)(b).