Calderbank

A Calderbank offer is made by one party putting the other side on notice that if the dispute goes before a court, and the outcome is less favourable to the other, the court, in exercising its discretion as to costs, can order a party who rejected the settlement offer to pay the successful party’s costs up to the time the offer was made, on an ordinary basis; and from the date of the offer to the end of the litigation on an indemnity basis.

In August 2018, Olga Hart was advised by her solicitor that a “no-contest clause” in her Will would be unenforceable. However under ACT law if a deceased estate had no net value there would be no funds available to create the Olga Hart Trust (“the Trust”) and write cheques (the Cheques) totalling $1.2M  in favour of the Trust to “exhaust” her estate. Clause 10 of the Trust deed provided that upon Olga’s death her daughter Donna Gordon succeeded her as trustee.

On 5 September 2018, Olga Hart prepared her final will (the Will) naming Donna as the sole executor and making a provision that her former de facto partner James Ross receive a cash sum of $200,000.00 but no property from the estate(the Estate). James was not made aware of the existence of this will until after Olga’s death.

Following Olga’s death in September 2018 Donna became the trustee of the Trust. James filed a caveat on 18 October 2018  against the probate of Olga’s estate. On 25 October, James was informed that the Estate had insufficient assets to pay the Cheques issued by Olga to the Trust, therefore any gifts and bequests in the Will would not be satisfied. However, if James agreed to abandon any rights against the Estate by 14 November 2018 he would be paid the bequest in the Will.

James failed in proceedings seeking declaratory relief, an order for family provision, damages for the tort of devastavit, and relief in equity against Donna in her capacity as trustee of the Trust, and, in her capacity as Executor of the estate.

Donna was granted probate on 25 March 2019. In late April 2019, the Cheques were presented and dishonoured by a financial institution. The Cheques were dishonoured on 26 April 2019.

The purpose of a costs order is to reach a fair and just result, usually the unsuccessful party is ordered to pay the costs of the successful party however in this matter the defendants made it clear in the September 2019 Calderbank letter of offer that an indemnity costs order would be sought and that the plaintiff received legal advice. Ultimately the defendants sought the usual order as to costs.

In the Court’s view, justice required that the unsuccessful party pay the costs of the successful party on the usual basis.

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