Koorneef & Lewkowicz v Lewkowicz [2001] ACTSC 81 (10 August 2001)

Last Updated: 4 May 2002

ZOFIA KOORNEEF, RICHARD LEWKOWICZ, ZENON LEWKOWICZ, MICHAEL LEWKOWICZ & STEVEN LEWKOWICZ v JOHN LEWKOWICZ [2001] ACTSC 81 (10 August 2001)

CATCHWORDS

COSTS - Family Provision Act 1969 - plaintiffs unsuccessful - whether claim is in probate jurisdiction - it is not - no reason why plaintiffs should not pay costs of defendant.

COSTS - offer by defendant to pay small sum and costs before trial - offer rejected - plaintiffs to pay defendant's costs after rejection of offer on indemnity basis.

Family Provision Act 1969

Wills and Administration Act 1929, s 9

Supreme Court Act 1933, s 20, s23, s 25

Charter of Justice 1823

Mann v Carnell [2001] ACTSC 18; (2001) 159 FLR 466

Re Klease [1972] QWN 44

Quirk v Bawden [1992] ACTSC 118; (1992) 111 FLR 115

No. SC 1020 of 1999

Judge: Miles CJ

Supreme Court of the ACT

Date: 10 August 2001

IN THE SUPREME COURT OF THE )

) No. SC 1020 of 1999

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: ZOFIA KOORNEEF

RICHARD LEWKOWICZ

ZENON LEWKOWICZ

MICHAEL LEWKOWICZ

STEVEN LEWKOWICZ

Plaintiffs

AND: JOHN LEWKOWICZ, Executor

of the Will of MICHAEL

LEWKOWICZ

Defendant

ORDER

Judge: Miles CJ

Date: 10 August 2001

Place: Canberra

THE COURT ORDERS THAT:

1. The costs of the defendant on a party and party basis up to and including 28 July 1999 as taxed or agreed be paid by the plaintiffs.

2. Subject to order 1, the costs of the defendant on a solicitor and client basis as taxed or agreed be paid as follows:

(a) costs incurred up to and including 28 July 1999 out of the estate; and

(b) costs incurred after 28 July 1999 by the plaintiffs.

3. Costs include disbursements.

4. The title of the proceedings be amended by striking out the references to the will of Michael Lewkowicz and to the Family Provision Act 1969 and by striking out the words "named in" and inserting in their place the word "of".

1. This is an application for costs following the dismissal of an application for provision under the Family Provision Act 1969 (the Family Provision Act).

2. The successful defendant, who is the executor of the will and one of the two beneficiaries under the will, applies for an order that his costs as taxed or agreed be paid by the plaintiffs, inferentially on a party and party basis, that his solicitor and client costs be paid out of the estate and that there be no orders as to the costs of the plaintiffs.

3. The unsuccessful plaintiffs (including the only daughter of the deceased and the only other beneficiary under the will) apply for an order that their costs as taxed or agreed be paid as part of the costs of the administration of the estate.

4. It is submitted on behalf of the plaintiffs that the order sought is the general rule "in line with probate practice, supplanting the rule in common law litigation that costs follow the event."

5. I am not aware of such a practice although I accept that the common law does not apply in the probate jurisdiction, and never did in this Court, or, it seems, in any other court in Australia exercising the probate jurisdiction conferred by the Charter of Justice 1823.

6. The present probate jurisdiction of this Court derives from s 9 of the Wills and Administration Act 1929 and (possibly overridden by s 20 of the Supreme Court Act 1933 (the Supreme Court Act)). Although it may be considered to be something of an academic point, the jurisdiction to make an order under the Family Provision Act is not, in my view, jurisdiction in probate but part of the equitable jurisdiction conferred on this Court by s 25 of the Supreme Court Act. The title of the proceedings should be amended in order to avoid any suggestion that the proceedings are in probate jurisdiction.

7. In any event s 23(1) of the Supreme Court Act gives the Court, in the exercise of its jurisdiction in all matters which come before it for determination, a full discretionary power to make orders as to costs. Section 23(2) provides:

"Subject to any other law of the Territory (including rules of court), the court may determine -

(a) the amount of costs of and incidental to proceedings in the court, including the administration of an estate or trust; and

(b) by whom and to what extent such costs are to be paid."

8. There is no reason for concluding that the power to determine the amount of costs in the administration of an estate, which might otherwise be relevant to the present case, fetters the discretionary power to award costs.

9. It may well be that the discretion continues to be constrained by the common law rule that costs follow the event. The true position in this Territory, consistent with the authorities here and elsewhere in Australia, is that, unless there is something about the case that leads to a contrary conclusion, there is no reason to exercise the discretion except by an award of costs that has the same effect as the common law rule. In other words the winner gets costs, the loser pays costs: Mann v Carnell [2001] ACTSC 18; (2001) 159 FLR 466. The law could have developed differently, as it has apparently in parts of the United States of America where, unless there is reason to make an order for costs, none is made. But that did not happen in this country, possibly because the practice in equity became the standard after the introduction of the Judicature Acts. Further, the authorities cited to support the so-called practice in the probate jurisdiction do not support the submission. On the contrary, in Re Klease [1972] QWN 44, Hoare J said at 104 that applications for provision in the case of smaller estates should not be encouraged by the making of orders in favour of unsuccessful applicants. I agree.

10. I do not see any reason to make the orders sought by the plaintiffs. It was submitted on their behalf that the plaintiffs, as persons entitled under the Family Provision Act to make application, had a reasonable expectation that their father would have provided reasons in the will for not including them in it. This novel proposition appears to introduce into the area of costs allocation principles of administrative law which are quite inappropriate and inapplicable. It was further submitted that the plaintiffs reasonably minimised their costs by banding together and settling the differences between them as well as instructing only one solicitor. No doubt that was a wise and sensible course, and to that extent even praiseworthy, but it does nothing, in my view, to support the proposition that fairness requires the estate to shoulder the burden of their costs.

11. I do acknowledge that the written submissions of counsel on the matter of "jurisdiction" to make orders under family provision legislation were of considerable assistance on that aspect. However, again that does not bear on whether it is fair and equitable to award costs to the plaintiffs. As far as the quality of counsel's submissions is concerned, pride in professional excellence has to be its own reward.

12. In my view, the executor has shown that he was correct in defending the testamentary intentions of his father and there is no reason why the estate should be burdened by having to pay the costs of those who unsuccessfully sought to challenge the dispositions of the will.

13. The defendant sought an order that the costs of defending the action be paid out of the estate on a solicitor and client basis. There are many cases recorded in which such an order has been made. In the present case there is one overriding reason for it. The solicitor for the defendant wrote to the solicitor for the plaintiffs on 15 July 1999 a letter marked "Without prejudice save as to costs". The letter contained an offer to pay the plaintiffs' costs to date up to a maximum of $4,000.00 and, in effect, that otherwise the estate be distributed according to the provisions of the will. The letter explicitly warned, in measured terms, of the possibility of an order for costs against the plaintiffs personally. The offer was rejected by letter dated 28 July 1999.

14. It was submitted on behalf of the plaintiffs that the offer and its rejection should not be taken into account for the purpose of costs, partly because it was not a true "Calderbank" letter. I do not know what this submission means. In any event, there is, in my view, no profit to be found in addressing the issue. The principles to be applied are set out in the decision of the Full Court of this Court in Quirk v Bawden [1992] ACTSC 118; (1992) 111 FLR 115. They are well known. They extend to family provision cases.

15. I do not accept that the defendant failed to carry out his duty by resisting the plaintiffs' claim. The plaintiffs all knew about their respective situations, and after the offer was made they took a chance in continuing the litigation that cannot be justified by their apparent assumption that the costs would eventually come out of the estate. I do not accept that the costs order proposed by the defendant constitutes an "aggressively partisan" attempt to load the costs onto the daughter, even if she is the most needy of all of the children. However, costs on a solicitor and client basis should be restricted to costs incurred after the rejection of the offer. The orders I make are:

1. The costs of the defendant on a party and party basis up to and including 28 July 1999 as taxed or agreed are to be paid by the plaintiffs.

2. Subject to order 1, the costs of the defendant on a solicitor and client basis as taxed or agreed are to be paid as follows:

(c) costs incurred up to and including 28 July 1999 out of the estate; and

(d) costs incurred after 28 July 1999 by the plaintiffs.

3. Costs include disbursements.

4. The title of the proceedings is amended by striking out the references to the will of Michael Lewkowicz and to the Family Provision Act 1969 and by striking out the words "named in" and inserting in their place the word "of".

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Chief Justice Miles.

Associate:

Date: 10 August 2001

Counsel for the Plaintiffs: Mr T Johnstone

Solicitor for the Plaintiffs: Tetlow Jansen & Doyle

Counsel for the Defendant: Mr C Erskine

Solicitor for the Defendant: Dibbs Barker Gosling

Date written submissions

for the Plaintiffs received: 4 June 2001, 7 June 2001

Date written submissions

for the Defendant received: 7 June 2001

Date of judgment: 10 August 2001