Simonetto and Anor v Dick [2014] NTCA 4

 

PARTIES:                                         SIMONETTO, Craig

                                                        

                                                         AND

                                                        

                                                         SIMONETTO, Louise

 

                                                         v

 

                                                            DICK, Mary Julienne

 

TITLE OF COURT:                           COURT OF APPEAL OF THE NORTHERN TERRITORY

 

JURISDICTION:                               CIVIL APPEAL FROM THE SUPREME COURT EXERCISING TERRITORY JURISDICTION

 

FILE NO:                                          AP 12 of 2013 (21128762)

                                                         AP 5 of 2014 (21128762)

 

DELIVERED:                                   3 July 2014

 

HEARING DATES:                           4-5 June 2014

 

JUDGMENT OF:                              RILEY CJ, SOUTHWOOD

                                                         and BARR JJ

 

APPEALED FROM:                          HILEY J in proceedings No 11 of 2011

 

CATCHWORDS:

 

SUCCESSION – APPEAL – Family provision and maintenance – testator’s moral obligation to make adequate provision for grandchildren –grandchildren’s father died before testator – relevant factors in determining whether adequate provision under the will – the continuing support of a parent and grandchildren’s own assets upheld to be relevant factors – appeal dismissed – s 8(1) of Family Provision Act (NT).

 

SUCCESSION – APPEAL – Family provision and maintenance – testator’s moral obligation to make adequate provision for grandchildren – no moral obligation by virtue of the existence of grandparent-grandchild relationship – in the absence of special circumstances, no moral obligation upon grandparent – appeal dismissed – s 8(1) of Family Provision Act (NT).

 

SUCCESSION – Family provision and maintenance – testator’s moral obligation to make adequate provision for grandchildren  – special need or special claim required for adult grandchildren claimants who can maintain and support themselves – special need not established – appeal dismissed.

 

COSTS – CROSS-APPEAL – Family Provision Act matters – general rule no order as to costs – costs orders dependent upon the overall justice of the case – principles relating to Calderbank Offers applicable – settlement offer – imprudent refusal of settlement offer – order for costs against appellants – cross-appeal allowed – Supreme Court Rules 1987( NT) r 48.12.

 

Family Provision Act 1970 (NT) s 7(1), 7(3).

 

Supreme Court Rules 1987 (NT) O 48 O 63 r 48.12, r 63.02.

 

Bowyer v Wood (2007) 99 SASR 190; House v The King (1936) 55 CLR 499; Singer v Berghouse (1993) 114 ALR 521 at 522; Singer v Berghouse (1994) 181 CLR 201; Vigolo v Bostin (2005) 221 CLR 191; Veetemp Australasia Pty Ltd v GRD Group NT Pty Ltd [2012] NTSC 93, applied.

 

Andrew v Andrew [2011] NSWSC 115; Bennett v Bennett [2001] NSWSC 987; BHP Billiton Ltd v Parker (2012) 113 SASR 206; Bowditch v NSW Trustees and Guardian [2012] NSWSC 275; Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225; Coull v Nationwide News [2008] NTCA 13; Devereaux-Warnes v Hall (No 3) (2007) 35 WAR 127; Edgar v Public Trustee for the Northern Territory (2011) NTSC 21; Golosky v Golosky [1993] NSWCA 111 (5 October 1993); Lacey v Public Trustee for the Northern Territory (2010) NTSC 1; Mann v Starkey [2008] NSWSC 263; Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9; Scarlett v Scarlett [2012] VSC 515; Simonetto v Dick [2013] NTSC 77; Simonetto v Dick (No 2) [2014] NTSC 6, referred to.

 

In re Allen (deceased), Allen v Manchester[1922] NZLR 218, followed.

 

 


 

REPRESENTATION:

 

Counsel:

    Appellant:                                    P A Heywood-Smith QC

    Respondent:                                 S D Ower

Solicitors:

    Appellant:                                    CridlandsMB

    Respondent:                                 Gardiner & Associates

 

Judgment category classification:   B

Number of pages:                            35


IN THE COURT OF APPEAL

OF THE NORTHERN TERRITORY

OF AUSTRALIA

AT DARWIN

 

Simonetto and Anor v Dick [2014] NTCA 4

No. AP 12 of 2013 (21128762)

No. AP 5 of 2014 (21128762)

 

 

                                                     BETWEEN:

 

                                                     CRAIG SIMONETTO

                                                         First Appellant

 

                                                     AND:

 

                                                     LOUISE SIMONETTO

                                                        Second Appellant

 

                                                     AND:

 

                                                     MARY JULIENNE DICK

                                                         Respondent

 

CORAM:    RILEY CJ, SOUTHWOOD and BARR JJ

 

REASONS FOR JUDGMENT

 

(Delivered 3 July 2014)

 

RILEY CJ:

Introduction

[1]       The appellants are the grandchildren of Bruno Seccondo Simonetto (“Bruno”) who died on 3 July 2010 at the age of 95. They applied to the Supreme Court under the Family Provision Act 1970 (NT) (“the Act”) for provision out of the estate of their grandfather. They were entitled to claim as grandchildren of the deceased person because their father, who was the son of the deceased, died before the deceased.[1]

[2]       Pursuant to s 8 of the Act:

… if the Court is satisfied that adequate provision is not available, under the terms of the will of a deceased person … from the estate of the deceased person for the proper maintenance, education and advancement in life of the person by whom, or on whose behalf the application is made, the Court may, in its discretion and having regard to all the circumstances of the case, order that such provision as the Court thinks fit be made out of the estate of the deceased person.

[3]       The matter came before the Supreme Court where the trial judge correctly observed that claims under the Act involve two stages:[2]

a)   the first stage requires the Court to determine whether or not there has been adequate provision made under the terms of the will for the proper maintenance, education and advancement in life of an applicant; and

b)   if the Court is satisfied that adequate provision has not been made the Court would consider what provision ought to be made.[3]

[4]       The judge determined that the appellants’ applications should be dismissed. Following detailed reasons, his Honour concluded:

Having regard to the financial positions of the (appellants), the size and nature of Bruno’s estate, the totality of the relationships between the (appellants) and Bruno, the relationship between Bruno and other persons such as Mary (his daughter) who have legitimate claims upon Bruno’s bounty, and contemporary community standards and expectations, I am not satisfied that adequate provision is not available for the proper maintenance, education and advancement in life of either (appellant).

[5]       The appellants appeal against the decision on wide-ranging grounds.

[6]       His Honour subsequently dealt with an application for costs and determined that, in all the circumstances, no order for costs should be made. The respondent has appealed against the costs order.

The relevant family history

[7]       In the reasons for decision, the trial judge provided a detailed history of the family.[4] A summary of that history derived from the reasons for decision is sufficient for present purposes.

[8]       The testator was born in Italy on 15 September 1914. He married Ida Simonetto in 1943 and they had two children, Paul (born 4 August 1946) and Mary (born 4 June 1950). Bruno, Ida and Paul moved to Australia from Italy in about 1948 and settled in Alice Springs. Ida died in 2005.

[9]       Paul Simonetto married Margaret and together they have two children, the appellants in these proceedings, Craig (born 20 January 1977) and Louise (born 27 September 1978). Both appellants have married although Louise subsequently divorced from her husband. Neither appellant has children. Paul Simonetto died on 28 July 1995.

[10]    Mary married Gregory Dick and they have three children, Kim (born 8 July 1972), Benjamin (born 29 August 1973) and Daniel (born 14 February 1977). Each of those children has married and has children. Mary separated from her husband in 2002.

The estate

[11]    At the time of his death, Bruno had an estate valued at $2,129,662.08.

[12]    Throughout his working life in Australia Bruno worked as a builder and property investor. He built homes in which the family lived and which were then sold. He reinvested the profits of his building work in properties around Alice Springs on which he would build houses for sale.

[13]    Paul left school at the age of 15 years and joined his father in the business which thereafter traded as B Simonetto and Son. As the years passed Paul took an increasingly responsible role in the business. Bruno’s active involvement in the business decreased from the early 1980s until he “formally” retired in 1989. The business continued until Paul died in 1995.

[14]    The business was run as a “family” business. Assets that were acquired were held by family members in various combinations without apparent regard to who contributed to the cost of acquisition. Bruno and Paul drew equal salaries and the business provided income and other benefits for Bruno, Paul and Mary and their respective families. This continued until the death of Paul.

[15]    It is not in dispute that Margaret, the mother of the appellants and the wife of Paul, did not have a good relationship with Bruno. The reasons provided for the unhappy relationship and consequent estrangement varied but the appellants maintained that Bruno was substantially, if not wholly, to blame. The trial judge conducted a detailed review of the evidence on this issue and concluded that:  “I am not in a position to find the estrangement was due to the fault of Bruno”.[5]

[16]    After the death of Paul, the situation worsened and Margaret and Bruno each engaged solicitors.

[17]    The winding up of the estate of Paul was complex and made more difficult by virtue of the poor relationship. After considerable negotiation a “Deed of Settlement” was completed in April 2000 between Terrence Webber as the executor of Paul’s estate, Margaret, Bruno and Ida, Gregory and Mary, and Craig and Louise.

[18]    The parties to the Deed adopted the “arrangements” provided for in the document and the parties agreed to accept those arrangements “in full and final settlement satisfaction and discharge and in redemption of any entitlement of all claims… for or in any way related to (Paul’s) will or estate or the said businesses” and went on to release and discharge each of the parties from liability relating to those matters.

[19]    Recital D to the Deed provided, in relation to the appellants:

(The appellants) are parties to this deed for the purpose of firstly signifying their agreement to and acceptance of that which is proposed pursuant hereto noting that they receive no direct beneficial interest in the estate as a consequence of the provisions hereof and secondly for the purpose of acknowledging the expressed intention of (Bruno and Ida) in the context of this agreement that they intend to deal with their assets in a fair and even-handed manner as between the grandchildren (taking into account benefits previously provided hereto) and with the intention that (the appellants) not be prejudiced in this context.

[20]    The judge concluded that the evidence did not permit an assessment of the respective contributions of Paul and Bruno or a conclusion that those contributions were not adequately reflected in the Deed. His Honour observed that, even if Bruno did owe something to Paul or to his estate following the Deed this would not give rise to a moral duty to provide for his adult grandchildren more than 10 years after the death of their father.

[21]    The appellants submitted that the Deed did not result in any wholesale redistribution in ownership of the various properties, and was not designed to reflect the contributions made to the acquisition of those assets. However upon the execution of the Deed, Margaret received property and cash. The issues regarding ownership of the properties were thereby finally resolved.

[22]    Thereafter, the relationship between Margaret and the appellants on the one hand, and Bruno, Ida and Mary on the other, deteriorated further.  The appellants distanced themselves from their grandparents in support of their mother, apparently out of loyalty, and without knowing the full history of the matters giving rise to the estrangement.  The appellant Craig had no contact with his grandparents at all and the appellant Louise had very limited contact with them. The grandparents were not invited to Craig’s 21st birthday and neither he nor Louise attended the funeral of either grandparent.

[23]    Following the execution of the Deed in 2000, when the issues of ownership of the various properties had been resolved, the relationship between the appellants and their grandparents did not improve. Craig observed that by that time “the relationship between my grandparents (sic) had disintegrated to the point of no further contact was required”. Louise said the continuing estrangement was due to the “strain that he caused my mother” arising out of the issues regarding property even though the property settlement was completed with the Deed in 2000.

[24]    Mary and her children continued a close and loving relationship with Bruno and Ida and provided increasing assistance to them as they grew older and increasingly frail.

The Will

[25]    Ida died in 2005. On 18 May 2007, Bruno made a new will leaving his entire estate to Mary and appointing her executor of the estate. No provision was made for any of the grandchildren. Included within the will was a statement in the following terms as to why Bruno did not provide for the appellants:

I declare that I am making no provision in my will for my grandchildren Craig and Louise (the children of my late son Paul Simonetto) because during my lifetime I made substantial gifts of real estate to my son. On the death of my son the real estate passed to his wife Margaret and it is my expectation that these assets will pass to Craig and Louise. I also own real estate in joint names with Margaret which will pass to her on my death.

The circumstances of Craig Simonetto

[26]    At the date of Bruno’s death, Craig had three university degrees; a Bachelor of Economics, a Bachelor of Arts and a Master’s degree in Management. The fees for his undergraduate degrees had been paid from the joint bank accounts of his mother and his grandparents. He joined the workforce full-time in 1999 and was, in 2010, employed by Private Health Care Australia. At the same time he was engaged in speculative activity using margin loans to purchase shares. During the financial year 2009 – 2010 his gross income was about $214,000 and his taxable income about $165,000.

[27]    In his witness statement received at the hearing he said his net assets in 2010 were approximately $431,000. However, he acknowledged that by 2013 his net assets were approximately $800,000.

[28]    It was submitted on his behalf that he “harboured the desire to do an MBA and assistance from his grandparents’ estates would have and would still enable that to occur”. It was submitted that it was “unconscionable that that had been denied him”. The trial judge concluded: [6]

I do not consider that Craig’s requirement for financial assistance of this kind leads to the conclusion that his needs were such as to satisfy the Court that adequate provision was not available for his proper maintenance, education and advancement in life. Nor do I consider that it is unconscionable that he has been denied such assistance out of Bruno’s estate. I do not consider that contemporary community standards would expect a testator with Bruno’s means to fund such an endeavour.

The circumstances of Louise Simonetto

[29]    Louise attended Griffith University for about six months in 1998 and then returned to Alice Springs where she went to TAFE and studied Business and Tourism. She started work at age 19 and commenced full-time work in April 2000. She moved to Darwin in December 2002. She married in 2005 but separated from her husband in 2008. She paid $50,000 to her ex-husband by way of property settlement. She went overseas for six months in 2006. She worked for the Northern Territory Government until she resigned in April 2013. She now works in sales and marketing for the Mantra Hotel Group earning $65,000 per year and an additional $2000 a year as a part-time gym instructor.

[30]    In her witness statement, Louise estimated her net assets at around $300,000 in February 2011. As at October 2012, she had net assets of $526,000. There was no clear statement of her assets as at the date of death of the testator. The trial judge found her evidence unsatisfactory in some respects.

[31]    It was submitted on her behalf that she had a modest wage and a need for advancement at the time of the testator’s death because of “her relative youth, the failure of her marriage, the need to make her own way in life, including the need for retraining into a new career path, increased cost of living in Darwin, the need for heart surgery in the near future, and the hope of retirement from the workforce to commence a family”.

[32]    The trial judge concluded in relation to Louise Simonetto that:[7]

Although her yearly salary was somewhat lower than Craig’s her net assets were not insubstantial and her prospects of a normal lifestyle were strong, subject to her heart condition about which Bruno was unaware. Whilst her desire to embark upon and train for a new career path is understandable I do not consider that she did not have the means to afford this, or that Bruno had any duty to provide this kind of advancement.

The principles applicable to the appeal

[33]    The trial judge determined that adequate provision had been made under the terms of the will for the proper maintenance, education and advancement in life of the appellants. This is the so-called “jurisdictional question”.[8] In light of that determination his Honour did not go on to consider what other provision ought to be made.

[34]    It was acknowledged by the parties that the jurisdictional question was one of objective fact which involved the making of value judgments, for example the finding as to a lack of a moral duty being owed to the appellants.[9] An appeal against this decision is governed by principles concerning appellate review of a discretionary decision.[10] The following principles found in House v The King have application:[11]

It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion and in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.

[35]    In Singer v Berghouse[12] Mason CJ, Deane and McHugh JJ approved the following passage from the judgment of Kirby P in Golosky v Golosky[13]:

Unless appellate courts show restraint in disturbing the evaluative determinations of primary decision-makers they will inevitably invite appeals to a different evaluation which, objectively speaking, may be no better than the first. Second opinions in such cases would be bought at the cost of diminishing the finality of litigation in a troublesome area and, sometimes at least, with a burden of costs upon the estate which should not be encouraged.

The principles applicable to the claims

[36]    The trial judge dealt in detail with the principles applicable to claims under the Act and, in particular, in relation to claims by grandchildren.

[37]    In the Northern Territory, claims by grandchildren are permitted under s 7(3) of the Act only where (a) the parent of the grandchild who was a child of the deceased person died before the deceased person died; or (b) one or both of the parents of the grandchild was or were alive at the date of the death of the deceased person and the grandchild was not maintained by the parent or by either of those parents immediately before the death of the deceased person. In this case, each of the appellants fell within subparagraph (a).

[38]    As his Honour observed, the basic principle underlying the legislation is as expressed in In re Allen (deceased), Allen v Manchester:[14]

The Act is … designed to enforce the moral obligation of a testator to use his testamentary powers for the purpose of making proper and adequate provision after his death for the support of his wife and children, having regard to his means, to the means and deserts of the several claimants, and to the relative urgency of the various moral claims upon his bounty. The provision which the Court may properly make in default of testamentary provision is that which a just and wise father would have thought it his moral duty to make in the interest of his widow and children had he been fully aware of all the relevant circumstances.

[39]    It is not for the court to rewrite the will of a testator in accordance with its own ideas of fairness and justice.[15] The court is to restrict itself to ensuring that adequate provision is made for the proper maintenance and support of an applicant.[16] In the case of an adult son who is, prima facie, able to maintain and support himself, some special need or some special claim is required before the court will intervene.[17] The size and nature of the deceased’s estate, the nature of the relationship between the applicant and the deceased, the relationship between the deceased and other persons who have claims upon his or her bounty and, of course, the applicant’s financial position are all relevant considerations.[18]

[40]    In relation to the particular claim of a grandchild, his Honour adopted the following observations from Hallen AsJ in Bowditch v NSW Trustees and Guardian:[19]

In relation to a claim by a grandchild, the following general principles are, in my view, relevant and should be remembered:

a)   As a general rule, a grandparent does not have a responsibility to make provision for a grandchild; that obligation rests on the parent of the grandchild. Nor is a grandchild, normally, regarded as a natural object of the deceased’s testamentary recognition.

b)  

c)   The mere fact of a family relationship between grandparent and grandchild does not, of itself, establish any obligation to provide for the grandchild upon the death of the grandparent. A moral obligation may be created in a particular case by reason, for example, of the care and affection provided by a grandchild to his, or her, grandparent.

d)   Generosity by the grandparent to the grandchild, including contribution to the education of the child, does not convert the grandparental relationship into one of obligation to provide for the grandchild upon the death of the grandparent. It has been said that a pattern of significant generosity by a grandparent, including contributions to education, does not convert the grandparental relationship into one of obligation to the recipients, as distinct from one of voluntary support, generosity and indulgence.

e)  

f)    It is relevant to consider what inheritance, or financial support, a grandchild might fairly expect from his, or her, parents.

[41]    Whilst the New South Wales legislative scheme differed from that in the Northern Territory by requiring that a grandchild could only apply if he or she was wholly or substantially maintained or supported by the deceased, the observations remain apposite to the Northern Territory legislation.

The appellants’ case

[42]    In summary form, the appellants’ case was that the testator, Bruno, was supported by his son, Paul, for a substantial part of his life and his assets were substantially contributed to by the efforts of Paul. Following the death of Paul the testator turned against his son’s widow, Margaret, and his “bitterness and vindictiveness” led him to  become estranged from his grandchildren and, as a consequence, determined to deny them “any bounty from his estate”. It was contended that the testator had a strong moral obligation to the grandchildren which he acknowledged but did not discharge. There was, it was argued, ample scope for the appellants’ lives to be “advanced” in the manner contemplated by the Act.

The appeal

(a) Grounds 1 and 2

[43]    The first ground of appeal was that the trial judge erred in approaching        s 8(1) of the Act by requiring the appellants to establish that adequate provision was not available from anywhere else to address their particular needs and, in particular, by considering the assets of their mother as a relevant source. The second ground was that his Honour only considered the necessities of life as being relevant needs.

[44]    A review of the reasons for decision demonstrates that the judge approached the matter by reference to the words of s 8 of the Act which required a determination of whether adequate provision was available under the terms of the will for the proper maintenance education and advancement in life of each appellant. As there was no such provision under the terms of the will, the question to be resolved was whether this amounted to adequate provision for the proper maintenance of each appellant. It was necessary for his Honour to evaluate the needs of each of the appellants which could not be met from his or her own resources.[20]

[45]    In relation to the words “adequate provision” and “proper maintenance and support”, reference was made by his Honour to the observations of Dixon CJ in Scales where it was noted that the words must be considered as relative to the capacity and needs of the claimant and the claimant’s own resources for meeting them. [21] Whilst the words “proper maintenance and support” must be “treated as elastic, (they) cannot be pressed beyond their fair meaning”.[22] His Honour noted that the words “advancement in life” have a wide meaning.

[46]    The judge took into account the financial position of the appellants’ mother who, it was concluded, could reasonably be expected to provide for their needs. The continuing support of a parent who would normally be expected to have assumed direct responsibility for the grandchild’s advancement and welfare is a relevant consideration.[23] At the time of Bruno’s death, the mother had net assets of about $1.7 million.

[47]    In my opinion, these grounds of appeal are not made out.

(b) Ground 3

[48]    The appellants complain that the trial judge erred in law in approaching the appellants’ claims as grandchildren by reference to the provisions of the New South Wales Succession Act. Whilst it is the case that his Honour made reference to, and applied, observations made in the New South Wales case of Bowditch[24] and referred to other New South Wales authorities in so doing, the difference between the Northern Territory legislation and the New South Wales legislation was noted. I see no error on the part of his Honour and, in my opinion, the observations made in those New South Wales cases were both apposite and helpful.

(c)  Ground 4

[49]    The appellants complain that the trial judge erred in approaching the application of s 8(1) of the Act by asking whether the testator’s conduct was “unconscionable”. As is made plain by the judgment, counsel for the appellants submitted that the conduct of Bruno was “unconscionable” and the observations of the judge were a simple and direct response to that submission and nothing more. No error has been identified.

(d) Ground 5

[50]    The appellants complain that the trial judge erred in failing to approach the application of the Act by having proper regard to “advancement in life”. It was submitted that his Honour did not address this issue beyond “something that is needed”. As noted above at [45], the judge addressed the proper construction of the expression “advancement in life”. His Honour noted that the words have a wide meaning and then went on to consider and reject claims made on behalf of the appellants in respect of further education, retraining, commencing a family and the like. This complaint is without foundation.

(e) Ground 6

[51]    The appellants complain that the trial judge erred when considering the claim of the beneficiary Mary Dick by excluding from her assets the assets of her husband Gregory Dick.

[52]    The judge considered the assets of Mary Dick. At the same time his Honour identified the assets of Gregory Dick and went on to observe that Ms Dick had been separated from her husband since 2002. There was no suggestion before the trial judge that the assets of Gregory Dick were really the assets of the respondent and no cross examination was directed to that issue. This complaint is without foundation.

(f) Ground 7 and Ground 9

[53]    The appellants complain that the trial judge erred in failing to have regard to the significance of the moral claim of the appellants and the basis for such a claim and erred by not concluding there was a strong moral claim. The basis of that submission is set out above.[25]

[54]    The judge considered this matter in some detail in the reasons for decision. It must be borne in mind that the appellants were the grandchildren of Bruno, not his children. The authorities make it clear that, in the absence of special circumstances, there is no moral obligation upon a grandparent to make provision for the maintenance, support or advancement of grandchildren simply by virtue of the existence of such a relationship.[26] The history of the relationship was addressed and his Honour concluded that, whilst there was estrangement between the appellants and Bruno, it had not been established that this was due to the fault of Bruno. His Honour observed that the estrangement negated the existence of a moral duty on the part of Bruno to provide for the appellants in his will.

[55]    The appellants argued that the suggested moral duty owed by Bruno to his grandchildren arose from the efforts of the appellants’ father (Paul) to whom, it was said, Bruno owed a particularly strong moral duty based upon his contribution to building up the family estate.

[56]    In ground 9, the appellants claimed that the judge erred in finding that there was insufficient evidence to form a view about the contribution made by Paul to the family estate. The judge addressed this issue in some detail before finding that the evidence did not permit him to conclude that the respective contributions of Paul and Bruno were not adequately reflected in the Deed entered into by all relevant parties after the death of Paul. In addition, his Honour found that the evidence did not enable him to make a finding as to the relative contributions of Paul and Bruno. His Honour was clearly correct in this regard. The evidence did not go beyond revealing that, at the commencement of the relationship, Bruno had worked for some years establishing the business and then, gradually, brought his son into it. Over time the roles of father and son changed and eventually the son became the more significant contributor to the business operations. Bruno continued to work, although doing less and less physical work, until finally he retired. There was no direct evidence of the levels of involvement of father and son at the various stages of the business operation.

[57]    Further, his Honour concluded that, even if Bruno did owe something to Paul or Paul’s estate, it would not “give rise to a moral duty to provide for his adult grandchildren more than 10 years after Paul’s death”.[27]

[58]    It has not been demonstrated that his Honour erred in so concluding. There was an evidentiary basis for the conclusions reached and no error of principle has been identified.

(g) Ground 8

[59]    This ground was not pressed.

(h) Ground 10

[60]    The appellants complain that, contrary to the evidence, the trial judge erred in fact in failing to find that the testator was responsible for the estrangement between himself and the appellants. Counsel for the appellants conducted a detailed review of the evidence relevant to the issue of the estrangement emphasising evidence that:

(a)     the deceased unnecessarily delayed resolution of the property issues which ultimately led to the Deed of 2000;

(b)     the deceased in 1997 effectively revoked codicils to his will which had, prior to revocation, left interests in the family home occupied by Margaret and the appellants to Margaret; and

(c)     suggested vindictiveness on the part of the testator towards Margaret.

[61]    This evidence went to the estrangement between Bruno and Margaret. It did not go to any estrangement between the appellants and Bruno. The focus of the appellants’ complaints as to the conduct of Bruno was upon the effect his failure to allow their mother, Margaret, to become the sole registered proprietor of the family home had upon her. However, prior to the parties entering into the Deed in 2000, the evidence suggested that throughout the negotiations the overall position of Bruno was that Margaret should have sole ownership of the family home. His Honour observed, correctly in my opinion, that the appellants had:

(P)erceptions… based on inadequate knowledge on their part as to Bruno’s true position in relation to the (family home) and in relation to other dealings between their mother and Bruno.

[62]    In any event, whatever may have been the understanding of the situation on the part of the appellants, the issue was resolved by the Deed of 2000. Notwithstanding the resolution of this issue, which the appellants contended underlay their estrangement from the testator, the appellants did not have anything to do with Bruno between the date of the Deed and his death in 2010.

[63]    The trial judge reviewed the relevant evidence and concluded that he was not in a position to find that the estrangement was due to the fault of Bruno. There was a clear evidential basis for so concluding. No allegations of serious misconduct were made against Bruno. I see no error on the part of his Honour.

(i)          Grounds 11 and 12

[64]    The appellants complain that the trial judge erred in his approach to the interpretation of the clause of the will in which the testator provided reasons for making no provision for the appellants.[28] The appellants acknowledged that his Honour correctly applied s 22 of the Act which requires that the court shall have regard to the testator’s reasons, so far as they are ascertainable, for making the dispositions made by his will, or for not making provision or further provision for a person who is entitled to make application under the Act. It was asserted that the trial judge erred in failing to find that the declaration that was made contained significant factual errors.

[65]    The trial judge noted that a testator’s reasons for not providing for a family member cannot supplant the court’s necessary enquiry, pursuant to the terms of the Act, into whether the person has been the subject of adequate provision. The explanation provided by the testator may “cast light on the relationship between the deceased and that person, at least from the deceased’s perspective”.[29]

[66]    His Honour addressed each of the asserted “mistakes” and demonstrated that they were not necessarily mistakes. His Honour then went on to reject the claims of the appellants based upon different considerations including the financial positions of the appellants, the size and nature of the estate, the nature of the relationship between the appellants and Bruno, the relationship between Bruno and other persons who had a legitimate claim to his bounty and concluded that he was “not satisfied that adequate provision is not available for proper maintenance, education and advancement in life of either (appellant)”. Again I see no error on the part of the trial judge.

(j) Ground 13

[67]    The appellants complain that the trial judge erred in finding that the appellants had, in some way, not been forthcoming with details as to their interests. In the course of the reasons for decision, his Honour accepted the submission of the respondent that the appellants had not provided evidence as to their relevant expenses or expenditure. There was no evidence that they were unable to meet such expenses. Those observations are, of course, relevant to the claims of the appellants that they had a need for provision in the will for their advancement. The provision of such information is an aspect of providing full and frank disclosure. Such information was a factor to be taken into account in the overall assessment.[30] The observations of his Honour reflected that fact.

(k) Ground 14

[68]    The final ground of appeal was that his Honour erred in failing to pay any, or sufficient, regard to the evidence of Terence Raymond Webber. Mr Webber was a close friend of Paul and Margaret Simonetto and was the executor of Paul’s will. He lived in Alice Springs until February 1976 and then moved to Adelaide. Thereafter, contact was by telephone and occasional visits. The evidence of Mr Webber as to the nature of the relationship between various parties, the contribution of each of Paul and Bruno to the business, and the conduct of Bruno towards Margaret in the period after 1976 was not based upon direct observation. It was what he gleaned from conversations.  Paul died in 1995. Mr Webber did not have direct communication with Bruno after 1996. Bruno did not die until 2010.

[69]    The trial judge did not make any express findings in relation to this evidence. However, his Honour noted that it was not “necessary or practicable” to recount the evidence concerning the respective contributions, roles and work performed by Bruno and Paul because of the Deed of Settlement entered into in 2000. The negotiations that led to the finalisation of that Deed were reflected in the correspondence which passed between the various parties and their legal advisors. The direct evidence of Mr Webber of his recollection of these events did not add significantly to what was revealed by the correspondence.

[70]    I see no error on the part of his Honour in failing to mention the evidence of Mr Webber.

[71]    In my opinion, the complaints of the appellants have not been made out.  I would dismiss the appeals.

The cross-appeal

[72]    Following the dismissal of the appellants’ application, the respondent sought an order for costs against the appellants. The appellants sought an order that the costs of the proceedings be paid out of the estate or, alternatively, that there be no order as to costs. The trial judge delivered written reasons for decision on 26 February 2014 at the conclusion of which his Honour determined that “the overall justice of the case requires that there be no order as to costs”.

[73]    His Honour noted that, whilst costs usually follow the event, different considerations apply to applications under the Act. Reference was made to the observations of Gaudron J in Singer v Berghouse, where it was said: [31]

Family provision cases stand apart from cases in which costs follow the event. … (C)osts in family provision cases generally depend on the overall justice of the case. It is not uncommon in the case of unsuccessful applications, for no order to be made as to costs, particularly if it would have a detrimental effect on the applicant’s financial position. And there may even be circumstances in which it is appropriate for an unsuccessful party to have his or her costs paid out of the estate.

[74]    His Honour adopted the observations of Debelle J in Bowyer v Wood[32] where, after reviewing a range of authorities, his Honour said:[33]

There is, therefore, a substantial body of consistent opinion as to the rules which ordinarily operate in relation to an unsuccessful application. The principles are that, generally speaking, there will be no order as to costs of an unsuccessful application. The court may in its discretion make an order in favour of an unsuccessful applicant who makes a reasonable application founded on a moral claim or obligation. While it is unnecessary to decide the issue in this case, the cases also suggest that the court may in its discretion order an unsuccessful applicant to pay costs when the claim was frivolous or vexatious or made with no reasonable prospects of success or when the applicant has been guilty of some improper conduct in the course of the proceedings.

[75]    In deciding to make no order as to costs, his Honour referred to the contents of offers of settlement made by each of the parties at a settlement conference. His Honour concluded that the appellants’ applications were not frivolous or vexatious and were not made with “no reasonable prospects of success”. His Honour also had regard to the size of the estate compared to the financial position of the appellant Louise Simonetto. No mention was made of the financial position of the appellant Craig Simonetto.

[76]    The principal ground of appeal is that the trial judge erred in his consideration of the offer of settlement made by the respondent at the Order 48 settlement conference. His Honour stated:

Whilst I have had regard to its contents, I consider there to be a significant difference between the costs consequences that might operate in the present case and those that would normally follow following the service of a formal offer under Rule 26.08 of the Supreme Court Rules or even following a Calderbank offer.

[77]    The judge did not identify the “significant difference” to which reference was made.

[78]    The Supreme Court Rules provide for settlement conferences in circumstances where a Judge or the Master is of the opinion that a proceeding is capable of settlement or ought to be settled.[34] If an offer of settlement is made during a settlement conference, the offer must be recorded and placed in a sealed envelope on the court file. The Order then provides that:[35]

(T)he offer may be taken into consideration by the Court in exercising its discretion to award costs once final judgment in the proceeding is given.

[79]    A settlement conference was held on 18 March 2013. It was attended by each of the parties who were represented by their respective counsel who also subsequently appeared at the hearing and again on appeal. At the conclusion of the settlement conference it was noted that the matter did not resolve. Two “final” offers of settlement were recorded. The appellants offered to accept 40% of the net worth of the estate inclusive of costs which, the parties agreed, was an amount of $880,000. The respondent offered 25% of the net worth of the estate plus a payment of the appellants’ costs estimated at $40,000 which, the parties agreed, amounted to an offer of $590,000 inclusive of $40,000 legal costs. The figures were based upon valuations which were “to hand at the settlement conference”.

[80]    In this Court it was suggested on behalf of the appellants that they were justified in not accepting the offer of settlement because there was some doubt about the full value of the estate. This submission cannot be sustained. It was acknowledged that the value placed upon the estate at the time of the settlement conference was based upon valuations available at that time and was the same value as applied at the time of trial.

[81]    Accepting that the claims of the appellants were not frivolous or vexatious or without prospects of success, it was still necessary for his Honour to give consideration to the offer of settlement made at the settlement conference. In determining what order for costs should be made, the court exercises a broad discretion which must be exercised judicially. The making of an offer of settlement is one of a number of matters relevant to the exercise of that discretion.[36] The imprudent refusal of an offer of settlement may be significant in determining an appropriate order for costs. It will be a factor to be considered in determining the “overall justice of the case”.[37]

[82]    In my opinion, considerations applicable to Calderbank offers will, in a general sense, also have application to offers made at a settlement conference convened pursuant to the Supreme Court Rules. The purpose of such procedures is the same and includes maximising the prospects of resolving disputes at an early time by endeavouring to ensure parties make genuine and realistic attempts to settle the litigation. The fact that a party has imprudently refused an offer and ends up worse off than if the offer had been accepted is a matter to be taken into consideration. In determining the impact of such a failure it is necessary to look at the surrounding circumstances of the particular case and the reasonableness of the failure of the party to accept the offer in light of those circumstances.[38] The question will be whether the failure to accept the offer, in all the circumstances including those particularly relevant to applications under the Family Provision Act, warrants departure from the ordinary rules as to costs in such cases. Such an approach does not discourage potential claimants from bringing a dispute to the courts but, rather, serves to ensure that claimants adopt a reasonable and responsible attitude to the proceedings and that the burden of unnecessarily incurred legal costs does not deplete the estate.

[83]    In this case, the respondent made a significant, indeed generous, offer of settlement at the settlement conference. The only reason provided by the appellants for their failure to accept the offer related to an unjustified concern regarding the size of the estate. In my opinion, it was both imprudent and unreasonable for the appellants to reject the offer.

[84]    In my opinion, his Honour erred in determining the overall justice of the case by failing to give due weight to the fact that the respondent was successful in the proceedings and the appellants had imprudently and unreasonably rejected an offer of settlement. I would allow the appeal and set aside the costs order.

[85]    Bearing in mind the matters discussed above and the financial position of each of the appellants, I would order that there be no order as to costs up to and including the date of the settlement conference, 18 March 2013. I would order that the appellants pay the costs of the respondent thereafter on a party and party basis.

SOUTHWOOD J:

[86]    I agree with the reasons for decision of Riley CJ.

BARR J:

[87]    I agree with Riley CJ that the appeal should be dismissed, for the reasons given by him.

[88]    In relation to the cross-appeal, however, I respectfully disagree. I do not consider that the learned trial judge erred in the exercise of his discretion in the manner found by Riley CJ at [84] of his judgment, or otherwise.

[89]    It is true that the costs order made by the trial judge favoured the entirely unsuccessful applicants (cross respondents on the costs appeal), and in particular the applicant Craig Simonetto, who had significantly greater earning capacity than his sister.  It is clear, in retrospect, that the applicants were  unwise to have rejected an offer of $590,000, which included $40,000 legal costs, made by the respondent (cross appellant) at the Order 48 settlement conference.[39] After a contested hearing, the trial judge dismissed the applicants’ application, and they received nothing. However, those matters do not lead me to conclude that the judge’s costs discretion miscarried. 

[90]    Under Order 48 Rule 12(8), evidence of things said or admissions made at a settlement conference is not admissible “in either the proceeding or a court” without the consent of the parties to the settlement conference.  There are two exceptions to the ‘without prejudice’ nature of the settlement conference: (1) evidence is admissible to prove that a settlement was reached between the parties and the terms of the settlement,[40] and (2) evidence of an offer made at a settlement conference “may be taken into consideration by the Court in exercising its discretion to award costs once final judgment in the proceeding is given”.[41]

[91]    Order 48 Rule 12(12)(b) thus makes admissible evidence of ‘without prejudice’ offers made at a settlement conference - which would otherwise not be admissible - and permits such evidence to be considered, along with all other relevant evidence, when the court determines the issue of costs. Generally speaking, and even in the absence of any requirement to do so under statute or court rules, a court would consider relevant admissible settlement offers in determining a proper order in relation to costs.

[92]    I agree with Riley CJ and with the trial judge[42] that the “overall justice of the case” was the determining costs principle, rather than the oft-stated principle (sometimes called ‘the usual order’) in other civil litigation, that costs follow the event.  Costs issues in family provision cases are often determined differently than in other civil litigation, as explained by Debelle J in Bowyer v Wood.[43] 

[93]    I also agree with Riley CJ in all of the following respects. In determining a proper costs order, the trial judge was exercising a broad discretion which had to be exercised judicially. Notwithstanding the trial judge’s assessment that the claims of the applicants were not frivolous or vexatious or without prospects of success, it was still necessary for his Honour to consider the offer of settlement made by the respondent at the settlement conference, since the making of such an offer was one of a number of matters relevant to the exercise of his broad discretion. The imprudent refusal of an offer of settlement may be significant in determining an appropriate order for costs, as a factor to be considered in determining the “overall justice of the case”. 

[94]    However, I bear in mind that, subject only to the requirement that the trial judge exercise the costs discretion judicially, the matters to be taken into account by his Honour and the weight to be given to them was for him to determine.  In this context, it does not matter whether an appellate court agrees or disagrees with the result to which the trial judge’s considerations led him. The questions which truly arise are whether the trial judge failed to consider any relevant matter in relation to costs; and whether he took into account some irrelevant matter. Where it is argued that a trial judge failed to give sufficient weight to a particular matter, in contrast to an assertion that the judge disregarded a matter altogether or took an irrelevant matter into consideration, an appellate court must be cautious not to substitute its own opinion for that of the judge in the absence of clear error, since that would be an inappropriate substitution of one discretion for another.

[95]    The principal attack on the costs decision and orders of the trial judge was based on his treatment of the applicants’ non-acceptance of the respondent’s offer made at the Order 48 settlement conference.

[96]    There is no doubt that the trial judge considered the settlement offer made by the respondent, and the fact that it had not been accepted. His Honour considered[44] that there was a “significant difference” between the costs consequences that might operate in the present case, where a party had not accepted an offer under Order 48 Rule 12 of the Supreme Court rules, and the consequences where a party had not accepted an offer under Rule 26.08 of the Supreme Court Rules or a Calderbank offer. 

[97]    Unfortunately, his Honour did not explain the significant difference he referred to. Nonetheless, a valid distinction can be made between offers, and the consequence of non-acceptance of those offers, based not only on the amount of the offers and the ultimate result post-trial, but also on the period of time the offers are open for acceptance. In the present case, the respondent’s offer made at the Order 48 settlement conference was a snapshot insight into the otherwise ‘without prejudice’ positions of the parties at a particular point in time, presumably at or towards the end of the settlement conference. There is no evidence that the offer remained open for acceptance for or at any period of time after the conference came to an end.[45] In that respect, the situation can be distinguished from that in Coull v Nationwide News[46] where the appellant had not only made the offer relied on at an Order 48 settlement conference, where it had been rejected, but had repeated the offer some 12 days later and left it open for acceptance during the course of the trial.

[98]    The trial judge concluded in the present case that the application was not frivolous or vexatious. Moreover, his Honour did not consider that the application had no reasonable prospect of success.  He accepted that the applicants might have thought that they had some kind of moral claim upon the estate, notwithstanding their estrangement from the testator, based upon an erroneous assumption that they would be left something in the deceased’s will additional to that which they had already received after the winding up of the partnership between their deceased father and the testator.[47]

[99]    In response to a submission by the applicants that a costs order against them would be of serious detriment, particularly to the applicant Louise Simonetto,[48] the trial judge took into account the size of the estate, and the financial situation of Ms Simonetto, and the costs consequences to each, not only to pay their own costs but also in the event that they were required to pay the costs of their respective opponents.[49]  

[100]  There were several possible costs orders which the learned trial judge could legitimately have made in the exercise of his discretion. His Honour’s principal judgment demonstrates a very careful analysis by him of the documentary and oral evidence, as well as a considered understanding of the Simonetto family dynamics, the former partnership business and the joint acquisition of real property. These matters, some of them disputed, were at the core of the inability of the parties to resolve the matter pre-trial. It must be borne in mind that his Honour denied the plaintiffs any costs from the estate. The decision “that there be no order as to costs” meant that each party should bear his or her own costs.[50]  That decision should be taken to reflect the obvious consideration that the applicants had been wholly unsuccessful, and the other matters referred to by his Honour, including the rejection by the applicants of the offer at the settlement conference.  

[101]  It has not been established that the learned trial judge erred in the exercise of his discretion in relation to costs or that the costs order made by him was unjust. I would therefore not interfere with the order made.

+ + + + + + + + + + +

 



[1] Family Provision Act1970 (NT) s 7(1), (3).

[2] Singer v Berghouse (1994) 181 CLR 201 at 208-209 per Mason CJ, Deane and McHugh JJ; Vigolo v Bostin (2005) 221 CLR 191 at 201-204 per Gleeson CJ, 218-219 per Gummor and Hayne JJ, 227-230 per Callinan and Heydon JJ.

[3]Singer v Berghouse (1994) 181 CLR 201 at 208-211.

[4] Simonetto v Dick [2013] NTSC 77.

[5] Simonetto v Dick [2013] NTSC 77 at 61 [166].

[6] Simonetto v Dick [2013] NTSC 77 at 47 [123].

[7] Simonetto v Dick [2013] NTSC 77 at 53 [143].

[8] Singer v Berghouse (1994) 181 CLR 201 at 209.

[9] Singer v Berghouse (1994) 181 CLR 201 at 211.

[10] Singer v Berghouse (1994) 181 CLR 201 at 212 per Mason CJ, Deane and McHugh JJ; Vigolo v Bostin (2005) 221 CLR 191 at 220 [82] per Callinan and Heydon JJ.

[11] House v The King (1936) 55 CLR 499 at 504-505 per Dixon, Evatt and McTiernan JJ.

[12] Singer v Berghouse (1994) 181 CLR 201 at 212.

[13] [1993] NSWCA 111 (5 October 1993) at 13.

[14] [1922] NZLR 218 at 220-221 per Salmond J.

[15] Vigolo v Bostin (2005) 221 CLR 191 at 224 [99] per Callinan and Heydon JJ.

[16] Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 19 per Dixon CJ.

[17] Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 19-20 per Dixon CJ.

[18] Singer v Berghouse (1994) 181 CLR 201 at 209-210 per Mason CJ, Deane and McHugh JJ.

[19] [2012] NSWSC 275 at [113].

[20] Devereaux-Warnes v Hall (No 3) (2007) 35 WAR 127 at 146 [83] per Buss JA.

[21] Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 19-20.

[22] Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 19 per Dixon CJ.

[23] Scarlett v Scarlett [2012] VSC 515 at [101] per Vickery J.

[24] Bowditch v NSW Trustees and Guardian [2012] NSWSC 275.

[25] At [42].

[26] Scarlett v Scarlett [2012] VSC 515; Bowditch v NSW Trustees and Guardian [2012] NSWSC 275.

[27] Simonetto v Dick [2013] NTSC 77 at [178].

[28] See [25] above.

[29] Andrew v Andrew [2011] NSWSC 115 at [25] per Hallen AsJ.

[30]  Bennett v Bennett [2001] NSWSC 987 at [23] per Master McLaughlin; Mann v Starkey [2008] NSWSC 263 at [25] per White J.

[31] Singer v Berghouse (1993) 114 ALR 521 at 522.

[32] Bowyer v Wood (2007) 99 SASR 190.

[33] Ibid at 210. Both Singer v Berghouse and Bowyer v Wood were referred to in the judgments of Kelly J in Lacey v Public Trustee for the Northern Territory (2010) NTSC 1 and Edgar v Public Trustee for the Northern Territory (2011) NTSC 21 which were, in turn, applied by his Honour.

[34] Supreme Court Rules 1987 (NT) r 48.12.

[35] Supreme Court Rules1987 (NT)  r 48.12(12)(b) .

[36] BHP Billiton Ltd v Parker (2012) 113 SASR 206 at 265 [264]-[265] per Doyle CJ and White J; Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233 per Sheppard J.

[37] Singer v Berghouse (1993) 114 ALR 521 at 522 per Gaudron J.

[38] Veetemp Australasia Pty Ltd v GRD Group NT Pty Ltd [2012] NTSC 93 at [33] and [35] per Riley CJ.

[39] The applicants were not prepared to accept less than $880,000, inclusive of costs. The settlement conference took place on 18 March 2013, just over three months before the trial commenced on 24 June 2013.

[40] Supreme Court Rules r 48.12(8).

[41] Supreme Court Rules r 48.12(12)(b).

[42] Simonetto and Simonetto v Dick (No 2) [2014] NTSC 6 at [14]. 

[43] Bowyer v Wood (2007) 99 SASR 190 at [65] to [69], per Debelle J; Nyland and Anderson JJ agreeing. 

[44]  Simonetto v Dick (No 2) [2014] NTSC 6 at [22].

[45]  This was confirmed by counsel for the respondent at the appeal hearing.

[46]  Coull v Nationwide News Pty Ltd [2008] NTCA 13 at [2], [6].

[47]  Simonetto v Dick (No 2) [2014] NTSC 6 at [22].

[48]  Simonetto v Dick (No 2) [2014] NTSC 6 at [19].

[49] Simonetto v Dick (No 2) [2014] NTSC 6 at [23].

[50] Supreme Court Rules r 63.02(2).