Arguments over who ‘won’ and who ‘lost’ in estate litigation over a $1.3 million Northland property centred on wording of ‘Calderbank’ letters. Written offers to settle out of court before trial affect how legal fees are later divvied up if settlement offers are unreasonably spurned.
Keeley Hamilton is one of three children adopted by her late father Desmond Hetherington. She learnt on her father’s death that a promised one-third share of his 59 hectare rural property at Mangawhai had vanished. He no longer owned the property. Prior to his death, it had been transferred to a family trust, now controlled by her brother, Craig. Keeley is not a beneficiary of the family trust. She sued.
After a five day High Court hearing in May 2020, Justice Woolford reversed the effect of the family trust transfer. Work Keeley had done on the property meant her father could not go back on his word. The Mangawhai property now formed part of the Desmond Hetherington Estate to be inherited according to terms of his 2015 will. The will states that the property is to be transferred to Keely and her two brothers as ‘tenants in common in equal shares.’ All three are part owners of the entire property. Having part-ownership was never going to work; Keeley and brother Craig do not get on. An ongoing family dispute had been simmering over the fact Keely lived rent-free on the Mangawhai property for over ten years, during which time she built a house on the property, later setting up on site businesses as a hairdressing salon, gift shop, garden centre and spiritual centre.
At a subsebquent High Court hearing, Keeley and Craig argued over the legal effect of ‘Calderbank’ letters sent by their respective lawyers prior to trial offering to settle out of court. Successful litigants are penalised for subsequent legal costs incurred if they unreasonably turn down a Calderbank offer before trial, winning their case but not getting as much as was previously offered.
Before trial, Keely offered to settle for a nominated 14 hectares of the land, well short of the 19.6 hectare one third share she was later ruled entitled. It was reasonable for brother Craig to reject that offer, Justice Woolford ruled. This 14 hectares was the most commercially valuable part of the property; separating out that land would leave the rest of the bush-clad property virtually inaccessible.
In turn, Craig had offered to carve out eight hectares of land for his sister, with Keeley having to pay survey and legal costs. At first glance, Keeley obtained a better result by going to trial; getting an order she is entitled to one-third of the land with no obligation to pay survey costs. In normal course of events, she would be entitled to increased compensation for her trial costs. Justice Woolford ruled no increase was payable. Arguably she was not better off, he ruled. Instead of being sole owner of eight hectares, the court ruling left her as one-third part-owner of 59 hectares likely needing to bring further court action to force subdivision of the property.
re Estate Desmond Wayne Hetherington – High Court (24.08.20 & 25.01.21)
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