DEBRA GAY MITCHELL v DIANNE GAIL MITCHELL [2025] SASC 60

APPLICANT: DEBRA GAY MITCHELL Counsel: MR G STATHOPOULOS - Solicitor: TERESE WACYK LEGAL First Respondent: LINDSAY DALE MITCHELL (AS EXECUTOR OF THE ESTATE OF DORIS ISOBEL MITCHELL) Counsel: MR E BELPERIO - Solicitor: D'ANGELO LAWYERS Second Respondent: KAITLYN EMILY MITCHELL No Attendance Third Respondent: ASHLEIGH CLARE MITCHELL No Attendance Fourth Respondent: RICHELLE AMY MITCHELL No Attendance Fifth Respondent: SHANE TYSON OATES No Attendance Sixth Respondent: JASON SCOTT OATES No Attendance Seventh Respondent: DIANNE GAIL MITCHELL Counsel: MR E BELPERIO - Solicitor: D'ANGELO LAWYERS Hearing Date/s: 11/03/2025 File No/s: CIV-23-002815 B SUPREME COURT OF SOUTH AUSTRALIA (Civil: Application) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. MITCHELL v MITCHELL & ORS (No 2) [2025] SASC 60 Judgment of the Honourable Justice McDonald 8 May 2025 SUCCESSION - ADMINISTRATION OF ESTATE - DISTRIBUTION SUCCESSION - FAMILY PROVISION - REQUIREMENT FOR ADEQUATE AND PROPER MAINTENANCE - WHETHER APPLICANT LEFT WITH INSUFFICIENT PROVISION - CLAIMS BY CHILDREN SUCCESSION - FAMILY PROVISION - PROCEDURE - ORDERS AND OTHER PROCEDURAL MATTERS - COSTS - GENERALLY This is an application for costs, made by both the applicant and first and seventh respondents. Following the initiation of these proceedings, a formal offer was filed by the first respondent on 29 August 2023. That offer was declined by the applicant with no counteroffer. The matter subsequently proceeded to trial. The applicant was successful at trial in that it was held that the testator had not made adequate provision for the proper maintenance and advancement of life in respect of the applicant. An order was made that provision be made for the applicant to be paid the sum of her outstanding mortgage as it was on the date of the delivery of judgment. The applicant in bringing this application for costs seeks an order that costs be paid out of the residuary estate on an indemnity basis. -- 1 of 12 -- The first and seventh respondents seek an order that the applicant pay the first and seventh respondents’ costs on a standard basis up to the expiration of the formal offer, and on an indemnity basis from the expiration of the offer onward. The first and seventh respondents seek that the balance of the costs between a standard order and an indemnity order be paid from the estate. Held; 1. The applicant is entitled to costs on a solicitor/client basis to be paid from the estate. 2. The first and seventh respondents are entitled to costs (other than those incurred as an executor) on a solicitor/client basis to be paid from the estate. 3. The costs incurred by the first respondent as the executor will be paid from the estate on an indemnity basis. Inheritance (Family Provision) Act 1972 (SA) s 7, s 9(8); Uniform Civil Rules 2020 (SA) r 194.6, r 194.6(2), r 132.11; Succession Act 2023 (SA) s 119(8), referred to. Mitchell v Mitchell & Ors [2024] SASC 154; Doedens & Ors v Owen (No 2) [2018] SASC 23; Bramwell v Bramwell [2023] SASCA 94; Pizimolas v Pizimolas (No 2) [2012] SASC 209; Butcher v Craig [2010] WASCA 92 (S); Nobarani v Mariconte (No 2) [2018] HCA 49, applied. -- 2 of 12 -- MITCHELL v MITCHELL & ORS (No 2) [2025] SASC 60 Civil: Application McDONALD J. 1 On 23 December 2024, I delivered judgment in this matter.1 2 There has now been an application for costs by both the applicant and the first and seventh respondents. 3 In the originating application, the applicant applied for further provision from her deceased mother’s (the testator) estate under s 7 of the Inheritance (Family Provision) Act 1972 (SA). The applicant sought further provision in the quantum of 50 per cent of the estate. 4 At the time of her death, the testator had a son (the first respondent), a daughter (the applicant) and five grandchildren (respondents 2 to 6).2 The main asset of the estate is a family beach house at Carrickalinga. On the valuations obtained, the beach house is worth between about $2.4 million and $3 million. The terms of the Will of the testator provided that a testamentary trust be established in relation to the property with the first respondent acting as sole trustee and executor, and for him “to have the use, occupation and enjoyment thereof for so long as he shall wish to reside in and/or manage the property free of rent”.3 The trust is subject to the following conditions:4 1. The first respondent must pay all rates and taxes, insurance premiums and the other outgoings payable in relation to the property; 2. The first respondent must keep the property in good order and condition, insured against loss and damage; and 3. On the death of the first respondent, or by notice from the first respondent in writing that he no longer wishes to enjoy the life interest in and/or manage the residence (whichever is the earlier of the two dates), the first respondent should hold the property and household furniture for the applicant, the first respondent and the grandchildren (respondents 2 to 6) in equal shares. 5 In delivering judgment, I found that the testator had not made adequate provision for the proper maintenance and advancement of life in respect of the applicant. In assessing the provision that should have been made, I considered that the testator, acting wisely and justly, would have reasoned that it was necessary to 1 Mitchell v Mitchell & Ors [2024] SASC 154. 2 The seventh respondent is the son’s wife. 3 Exhibit A2 at [5]. 4 Ibid. -- 3 of 12 -- [2025] SASC 60 McDonald J 2 provide the applicant with sufficient means to pay off her mortgage, such that she is not at risk of losing her home in the future. As a consequence of that finding, I made an order that provision should be made for the applicant to be paid the sum of her outstanding mortgage of $158,710 as it was on the date of the delivery of judgment. 6 A fundamental consideration to my determination of the application was a finding that the testator had clearly expressed a wish for the property to remain available for her children and grandchildren for as long as that outcome could be achieved. The history of proceedings 7 The originating application was filed on 14 March 2023. 8 On 29 August 2023, the first respondent filed a formal offer. The offer was for payment of $175,000 (inclusive of costs and interest) within 60 days of the date of the offer. 9 The applicant declined to accept the offer and made no counteroffer. The matter proceeded to trial. Of note, as of the date of the offer, the applicant’s legal costs were $22,972.06, and by the date of the expiry of the offer, they had increased by $5,597.38 to $28,569.44. 10 The trial commenced on 4 March 2024, and on 23 December 2024, I delivered judgment in favour of the applicant, albeit for a sum significantly less than she had sought, and very close to the amount of the formal offer made by the first respondent. Orders sought 11 The applicant seeks an order that her costs be paid out of the residuary estate on an indemnity basis. 12 The first and seventh respondents seek orders that will result in a complete indemnity for costs. The manner in which it is contended that this should be achieved is that the applicant pay the respondents’ costs on a standard party/party basis up until 29 August 2023, the date upon which the formal offer was made, and on an indemnity basis after the offer was made. The balance of the costs would then be paid out of the estate, resulting in the respondents being fully indemnified for all costs. The relevant legislation and rules The Inheritance (Family Provision) Act 1972 (SA) 13 Section 9(8) of the Inheritance (Family Provision) Act 1972 (SA) provides that the Court may make such orders as to costs of any proceedings under the Act, -- 4 of 12 -- [2025] SASC 60 McDonald J 3 as it considers just.5 This allows for the broad exercise of a discretionary judgement as to what is just in all of the circumstances. The nature of the discretion conferred by s 9(8) is no more confined than the general discretion as to costs, and may, in some respects, be broader.6 14 The breadth of this discretion permits the Court to give due weight to the competing considerations in a family provision claim, which includes the public policy objectives underpinning these claims, the size of the estate, and the likely effect of an order for costs on the parties and any residuary beneficiary. Rules 132.11 and 194.6 Uniform Civil Rules 2020 (SA) 15 Rules 132.11 and 194.6 of the Uniform Civil Rules 2020 (SA) (‘the Rules’) are also relevant to the question of the application for costs. 16 Rule 194.6 provides that in exercising its discretion as to costs, the Court may have regard to any factors it considers relevant. In providing examples of what may amount to a relevant consideration, r 194.6(2) provides: 194.6—Discretionary factors … (2) For example, the Court may have regard to the following factors— (a) any misconduct or unreasonable conduct of a party in connection with a proceeding; … (d) the making or not making of an offer by a party to resolve the proceeding; (e) the non-acceptance by a party of an offer made by another party to resolve the proceeding; … 17 It was agreed by the parties that because the offer made by the first respondent did not provide for the payment of costs, r 132.11 of the Rules is the rule that applies to the offer that was made. Rule 132.11 provides: 132.11—Costs in other cases (1) This rule applies in cases when rule 132.10 does not apply. (2) When— (a) a party has made a formal offer; 5 This is now reflected in s 119(8) of the Succession Act 2023 (SA). 6 Doedens & Ors v Owen (No 2) [2018] SASC 23 at [12] as cited in Bramwell v Bramwell [2023] SASCA 94 at [137]. -- 5 of 12 -- [2025] SASC 60 McDonald J 4 (b) the offer was not accepted; and (c) judgment is granted in respect of the action or part of an action the subject of the offer on terms no less favourable to the offeror than the terms of the offer, in a proceeding in which the Court is contemplating making an order for costs of the action or proceeding, the Court is to take these matters into account on the question of costs. (3) Without affecting the generality of the discretion of the Court, in exercising its discretion as to costs under subrule (2), the Court may— (a) order that the offeree pay the costs of the offeror in respect of the action or the part the subject of the offer from 14 days after service of the formal offer on a specified basis; (b) order that the offeree bear its own costs in respect of the action or the part the subject of the offer from 14 days after service of the formal offer; or (c) make such other or further order as to costs as it thinks fit. (4) Without affecting the generality of the discretion of the Court, in exercising its discretion as to costs, if the Court considers that a party unreasonably rejected a formal offer or failed to make a formal offer, the Court may— (a) order that that party pay the costs of the opposing party after the rejection or date when an offer should have been made on a specified basis; (b) order that that party bear its own costs after the rejection or date when an offer should have been made; or (c) make such other or further order as to costs as it thinks fit. (5) For the purposes of this rule, if a formal offer is filed during a moratorium under rule 64.5, the formal offer will be treated as having been filed on the first day after the moratorium ends. Was the judgment sum more advantageous for the applicant than the formal offer? 18 There is a dispute between the parties as to whether r 132.11 applies to the determination of the question of costs in this case, given the nature of the offer that was made, and the judgment sum that was awarded. 19 It is the applicant’s contention that the amount awarded is in fact of greater financial benefit to the applicant because it is not inclusive of costs. Although the offer of $175,000 was, on the face of it, greater than the judgment sum of $158,710, it was submitted that it is a relevant consideration that if the applicant had accepted the formal offer she would have been required to pay the legal costs that she had expended up to that point in time. As of 29 August 2023, the applicant’s costs amounted to $22,972.06 (and increased to $28,569.44 at the date of the expiry of -- 6 of 12 -- [2025] SASC 60 McDonald J 5 the offer).7 Once those costs were paid, the applicant would have been left with $152,027.94 (or $146,430.56 at the expiry of the offer), which would have been insufficient to satisfy her mortgage which was at that time $163,593.25.8 20 That is to be compared with the current situation in which the applicant has been awarded an amount sufficient to pay off her mortgage in its entirety and, as the successful party, has an expectation that at least some of her costs will be paid from the estate. 21 The first and seventh respondents challenge the applicant’s approach to the comparison of the formal offer (which did not include costs) with the judgment sum (in addition to which costs may be awarded), on the basis that it is not comparing ‘apples with apples’. It was submitted that the relevant comparison is the offer (exclusive of costs) and the judgment (exclusive of costs).9 On that approach, the filed offer was clearly more favourable that the judgment sum. 22 There is some force to the argument made by the respondents; the only fixed monetary reference points are the offer and the judgment sum. There is a lack of certainty surrounding the costs that the applicant would be likely to receive, both at the time that the formal offer was made, right up until judgment was handed down and this costs application was determined. 23 As to the former, the evidence is based on a draft invoice produced specifically for this costs argument.10 No final invoice has been generated, nor is it clear what the terms of the retainer were, and whether the full amount in the draft invoice was to be charged. 24 The position on costs at this point in time is even more opaque, with the parties seeking significantly different costs orders. In the event that the first and seventh respondent are entirely successful in their application, with some of their costs to be paid by the applicant, the applicant will be in a far worse position than she would have been if she had accepted the formal offer. Alternatively, if she is successful in her argument, she will have a more advantageous outcome than had she accepted the offer. 25 In my view, in the circumstances of this case, the appropriate comparison is between the $175,000 that was the subject of the formal offer made on the 29 August 2023 and the judgment sum of $158,710. It follows pursuant to r 132.11 of the Rules, that the Court is to take the failure to accept this offer into consideration on the question of costs. 26 Having arrived at that position, at a practical level, it has limited impact on the application before me because regardless of whether r 132.11 applies, under 7 FDN 48, Affidavit of Terese Ann Wacyk dated 3 March 2025 at [3]. 8 The relevant time being as of 29 August 2023, the date on which the formal offer was made (FDN 47 at [4]). 9 T29 (11 March 2025). 10 FDN 48, Affidavit of Terese Ann Wacyk dated 3 March 2025 (TAW-2). -- 7 of 12 -- [2025] SASC 60 McDonald J 6 r 194.6(2)(d), one of the discretionary factors that may be taken into account is the making or not making of an offer by a party to resolve proceedings. Relevant considerations 27 The starting point in relation to the question of costs is that ordinarily costs follow the event. The event here is that I found that inadequate provision had been made for the applicant, and awarded a judgment sum in her favour. 28 The question that then arises is whether the formal offer has upset the ordinary natural provision in relation to costs. 29 The formal offer was greater than the judgment sum awarded. It is therefore necessary to consider what consequences should flow to the applicant from the failure to accept that offer or make an alternative offer. 30 The latter is of some significance in circumstances in which the shortfall between the applicant meeting her mortgage and legal costs, was in the vicinity of $11,406.7511 to $17,162.69.12 Had the applicant been content with an outcome of that nature, it would be expected that an alternative offer would have been made by her in slightly increased terms. This suggests that it is unlikely that the applicant would have been content with such an outcome, but rather, was pursuing a far greater sum in the order of the value of half of the beach house, which is the amount that was contended for at trial. 31 It was submitted by the applicant’s counsel that it was not imprudent to reject the formal offer because once it was determined that inadequate provision had been made, the sum awarded fell towards the lower end of the scale of what she may have expected to receive. 32 In determining what is necessary to meet the justice of this case, it is important that I bear in mind the competing public interest considerations relevant to the making of a costs order in a family provision claim, as was discussed by Kourakis J (as he then was) in Pizimolas v Pizimolas (No 2):13 The ordinary rule as to costs is more easily displaced in family provision claims. In my view that approach reflects conflicting public interest considerations. On the one hand unmeritorious litigation which dissipates the estate should not be encouraged. On the other hand the purpose of family provision legislation is to charge the estates of testators who have made inadequate provision with such an amount as is necessary for the support of their dependents; that public policy objectives may not be achieved in practice if meritorious claimants are discouraged from making a claim by the ordinary rule as to costs. … 11 Representative of the applicant’s legal costs as of 29 August 2023, the date on which the formal offer was filed. 12 Representative of the applicant’s legal costs after the expiry date of the formal offer. 13 [2010] SASC 209 at [6]. -- 8 of 12 -- [2025] SASC 60 McDonald J 7 33 Other factors to be taken into account include the size of the estate, the financial circumstances of the applicant and the applicant’s conduct in the litigation. 34 In Doedens v Owen (No 2),14 Nicholson J discussed the manner in which these considerations may intersect in an application for provision. His Honour explained:15 As a general proposition, costs will follow the event and applicants who are successful following a trial will be entitled to receive their costs out of the estate. However, even an unsuccessful applicant may, where just, obtain an order for costs out of the estate, particularly where the claim was reasonably arguable and the applicant’s conduct during the course of the action is not to be characterised as unmeritorious. It is said that such a potentially “indulgent” approach is more compelling in claims against large estates or where a costs order would adversely affect the applicant’s financial position. (Footnote omitted) 35 As to the question of the applicant’s conduct in the litigation, I note that I have made findings of credibility or, at the very least, reliability against the applicant. I have considered whether this is a matter that should be factored into how I exercise my discretion in relation to the question of costs. I have come to the view that in these proceedings, emotion and family dynamics have played a role in the parties’ differing perspectives of how the relevant events have unfolded. In those circumstances, whilst I preferred the evidence of the first respondent over that of the applicant, it would not reflect the justice of the situation to factor that into a determination on the question of costs. 36 The issue that arises in this case, is that I have made a finding that inadequate provision has been made for the applicant, and in order to redress the situation, I made an order that she be provided with adequate means to pay off her mortgage to remove, or at least minimise, any risk that she will lose her home. 37 In the event that I do not make a costs order in the applicant’s favour, or I make a costs order against her, the result that the judgment attempted to achieve will be undermined. The question that therefore arises is whether the applicant’s failure to accept the formal offer is of such a nature that it justifies this outcome. 38 Those considerations relate both to the question of whether any costs order should be made for the period after the failure to accept the formal order and, whether any such costs should be paid on a party/party basis or on a solicitor/client basis. It has generally been accepted that similar considerations as those that underpin why the ordinary rule as to costs is more readily displaced in family provision claims, result in the Court’s preparedness to more readily award costs on a solicitor/client basis with claims of this nature. 14 [2018] SASC 23. 15 Ibid at [13]. -- 9 of 12 -- [2025] SASC 60 McDonald J 8 39 In Bramwell v Bramwell,16 in considering the basis upon which costs should be paid, the Court of Appeal discussed the rationale behind the Court’s preparedness to award costs on a solicitor/client basis in the following terms:17 … A successful claimant in a family provision claim will necessarily have demonstrated that the testator failed to make adequate provision for his or her proper maintenance, education or advancement. The court will only award such provision as is necessary to discharge the duty owed by the testator to the claimant. If there is a difference of any significance between the actual costs reasonably incurred by the claimant (the solicitor/client costs) and the costs recoverable calculated on a party/party basis, then it follows that the successful claimant will not have received from the deceased estate, to that extent, the ‘adequate’ provision that should have been made. (Footnotes omitted) Consideration of the applicant’s application 40 Whilst it is unfortunate that the applicant did not accept the formal offer, and instead proceeded to trial at a considerable expense for all involved, I do not find that the applicant acted entirely unreasonably in failing to accept the offer. 41 In all of the circumstances, it is a fair and just outcome that the applicant’s costs be paid from the estate on a solicitor/client basis. I accept that this will have the potential to impact on whether the respondents are in a position to retain the beach house, however I am hopeful that given the ability for the property to generate an income, the testator’s intention can still be carried out. Consideration of the first and seventh respondents’ application 42 The orders sought by the first and seventh respondents are more complex. The first and seventh respondents seek an order that the applicant pay their costs on a standard basis up to the expiration of the offer, and on an indemnity basis from the expiration of the offer onwards. The balance of the costs between a standard order and an indemnity would be paid from the estate. 43 For the reasons that I have already given, I do not propose to make an order that the applicant pay the first and seventh respondents’ costs. Any costs order that I make in favour of the first and seventh respondents are to be paid from the estate. The first respondent’s role as executor 44 A preliminary issue arose on this application as to whether the first respondent should receive the benefit of indemnified costs on the basis that he is the executor of the estate. 16 [2023] SASCA 94. 17 Ibid at [145]. -- 10 of 12 -- [2025] SASC 60 McDonald J 9 45 Usually, where indemnity costs are awarded, there has been some improper or unreasonable conduct by the parties or their lawyers.18 In addition to this however, there is a general rule that executors, like trustees, should receive their costs properly and reasonably incurred in connection with the administration of the estate on an indemnity basis, payable from the estate. These costs include litigation expenses19 and are subject to the executor acting reasonably. For that reason, the first respondent contended that his costs should be paid on an indemnity basis. It was submitted that the first respondent was joined in his capacity as executor, and contested in his capacity as executor, and therefore he should receive an indemnity against costs. 20 46 That submission however, failed to take into account that the first respondent wore two hats in these proceedings, and that the first respondent’s involvement in the proceedings in his role as the executor, was very limited. His obligation as executor extended to filing an affidavit of assets and liabilities, which was to be updated as required. 47 The reality is that the proceedings were conducted by the first respondent in his own personal capacity as a beneficiary of the estate; the rules requiring that all beneficiaries be joined in the action. 48 In my view the first respondent should receive any costs incurred in his role as the executor from the estate on an indemnity basis. All costs otherwise incurred by the first and seventh respondents should be paid by the estate on a solicitor/client basis. 49 Although the applicant was successful in her application for further provision, the respondents behaved reasonably throughout these proceedings. The formal offer was an appropriate and sensible offer and at no stage did the applicant make a counteroffer in an attempt to avoid the need for a trial. In such circumstances, with no offer coming from the applicant, it would be unreasonable to suggest that it was incumbent on the respondents to make any further offers. 50 The first and seventh respondents are entitled to their costs (other than those incurred by the first respondent as an executor) on a solicitor/client basis to be paid from the estate. The costs incurred as the by the first respondent as executor will be paid from the estate on an indemnity basis. Orders 51 I make the following orders: 1. That the applicant be paid the judgment sum of $158,710 from the estate. 18 Butcher v Craig [2010] WASCA 92 (S) at [13]. 19 Nobarani v Mariconte [No 2] [2018] HCA 49 at [2]. 20 T34 (11 March 2025) -- 11 of 12 -- [2025] SASC 60 McDonald J 10 2. That the applicant be paid her costs from the estate on a solicitor/client basis. 3. That the first respondent be paid his costs incurred in his role as executor from the estate on an indemnity basis. 4. That the first and seventh respondents be paid their costs (excluding those incurred by the first respondent in his capacity as executor) from the estate on a solicitor/client basis. -- 12 of 12 --