AAR v PFN
[2015] NZHC 330
•3 March 2015
IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY
CIV-2013-443-301 [2015] NZHC 330
UNDER The Family Protection Act 1955 IN THE MATTER
of an appeal from Interlocutory Orders made in the Family Court in the matter of FAM-2013-043-0115
AND
IN THE MATTER
of the Estate of JTPR (Deceased)
BETWEEN
AAR Appellant
AND
PFN Respondent
On the papers Appearances:
SC Herbert for Appellant
SW Hughes QC for Respondent, in personal capacitySE Gifford for Respondent, as administrator of the deceased's estate
Judgment:
3 March 2015
COSTS JUDGMENT OF TOOGOOD J
This judgment was delivered by me on 3 March 2015 at 1:30 pm
Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
:
AAR v PFN [2015] NZHC 330 [3 March 2015]
[1] On 10 June 2014 I gave a judgment on an interlocutory appeal related to orders made in the Family Court in this family protection case.1
[2] The appellant had argued that the Judge was not entitled, at a judicial conference, to rule on discovery and interrogatory applications which had been filed in accordance with the specific provisions of Part 4 of the Family Court Rules 2002 dealing with interlocutory matters. The appellant submitted that the powers to make such orders in a judicial conference were reserved for circumstances in which the Judge decided to act on his or her own motion. Further, it was argued that the obligation of the administrator of an estate to disclose information to beneficiaries is of fundamental importance and that the Court should not have declined to make the orders sought.
[3] I decided that the Family Court Judge was entitled to use the judicial conference to consider and to determine the interlocutory applications and that, in light of the circumstances, he was entitled to come to the view that the applications should be dismissed. I held that the rules about interlocutory applications, like the other rules, are procedural tools which are to be applied flexibly and pragmatically to
achieve just outcomes without undue formality.2 In the course of the judgment, I
agreed with the Judge’s analysis that the estate was “small”,3 and that the Judge was entitled to regard the amount remaining in dispute in the proceeding as very modest.4
[4] Dismissing the appeal, I held that the respondent was entitled to costs as administrator and in her personal capacity as a beneficiary of the estate. I observed that:5
… Given the size of the estate, an order that her personal costs shall be paid out of the estate may result in her effectively meeting her costs herself, but I express no concluded view on that issue.
1 AAR v PFN [2014] NZHC 1295.
2 At [33].
3 At [40].
4 At [42].
5 At [52].
[5] Ms Hughes QC has filed a brief memorandum on behalf of the respondent as beneficiary seeking conventional costs, on the agreed 2B basis. The costs are accurately calculated in accordance with the High Court Rules and, together with disbursements, total $10,458. Recognising the appellant’s limited financial resources, Ms Hughes submits that the costs should be paid out of any distribution of the estate made in favour of the appellant.
[6] On behalf of the respondent in her capacity as administrator, Mr Gifford has calculated costs and disbursements owing to be the sum of $9,065. Similarly, he notes that the appellant’s actions in bringing the unsuccessful appeal have depleted the value of the estate (he said he spent 35 hours on attendances relating to the appeal) and asks that the costs be awarded against the appellant personally, to be paid out of her share of the estate.
The appellant’s position
[7] On behalf of the appellant, opposing the making of the orders sought, Mr Herbert accepts the costs calculations of counsel for the respondent. He also acknowledges that a party who fails in respect of an interlocutory application should pay costs to the party who succeeds.6 He argues that while the issues on the appeal were important they were not the substantive issue between the parties and submits that because the respondent has not advised the Court or the appellant of her actual
costs on the appeal the Court cannot be satisfied that the claimed costs do not exceed the actual costs incurred.
[8] As to the latter point, the calculation of costs by reference to the Schedules set out in the High Court Rules is intended to reflect an estimate of reasonable costs incurred in a proceeding; to recognise the principle that a successful party should be entitled to recover approximately two-thirds of what would be a reasonable fee for the work undertaken; and to give effect to the principle that costs should be
predictable. It is not necessary for a party who is not seeking increased or indemnity
6 High Court Rules, r 14.2(a).
costs to inform the Court of the actual costs incurred. I am content to rely on the integrity of both Ms Hughes QC and Mr Gifford not to seek an order which does more than reimburse the costs or part of the costs actually incurred by the respondent.
[9] Mr Herbert also takes issue with the claim for costs by the respondent in her capacity as administrator because, he alleges, she has breached “her duty of even- handedness … [and] has made extensive submissions contrary to the interests of the appellant, a person to whom that duty is owed.” He argues that counsel for the administrator was obliged to simply submit to the judgment of the Court, citing In Re
McCarthy, Public Trust v Public Trust.7
[10] In the course of the appeal, the respondent was entitled to rebut, by evidence and submissions, allegations of impropriety in the way in which she had conducted the affairs of the estate. Equally, Mr Gifford was entitled to ensure that the Court was fully informed about matters in respect of which Mr Herbert criticised Mr Gifford’s conduct. The convention that an executor or administrator should simply inform the Court and not take an adversarial approach does not apply in circumstances where that person’s conduct is under attack. Here, one of the limbs of the appellant’s argument was that the Family Court Judge should have ordered discovery on a very wide ranging basis. Both Mr Gifford and the respondent were entitled to explain to this Court that, as was apparent to the Family Court Judge, all relevant information had been provided and that the further disclosure sought by the appellant was of unreasonable proportions.
[11] Mr Herbert reasonably submits that the Court should disregard in the costs context assertions by counsel for the respondent that what have been said to be reasonable settlement offers have been rejected by the appellant. Since I am unaware that the settlement offers were made without prejudice except as to costs, and I have no ability to judge their reasonableness in any event, I disregard any
reference to settlement discussions as being irrelevant.
7 In Re McCarthy, Public Trust v Public Trust [1919] NZLR 807 at 808-809.
[12] Mr Herbert is also critical of references by Ms Hughes QC in her submissions to the appellant’s reliance, in opposing a costs award, on her limited financial resources and arguing that the appellant ought to have applied for legal aid. The appellant has sworn an affidavit stating that she has been advised by relevant authorities that she is not eligible to receive legal aid in support of her application. Whatever the legal position, I approach the application on the basis that the reasons why the appellant must meet her own costs are irrelevant to the Court’s consideration of the appropriate assessment of the costs she should contribute to the respondent. Whether the more than 300 hours of work which Mr Herbert says he has undertaken on the appellant’s behalf in the family protection proceeding and in respect of the appeal was reasonable, bearing in mind the size of the estate and the amount at issue, and whether any fee he charges his client is reasonable, are matters between the appellant and her counsel.
[13] I disregard as unfounded the allegation in Mr Herbert’s submissions that a substantial portion of the expenses already charged to and deducted from the estate are not administration expenses, and the assertion that the estate’s funds have been used “for adversarial maintenance and preference of the administrator’s personal position and for resisting the appellant’s legitimate request for information.” As I have observed, the Family Court Judge ruled that the appellant had received adequate information from the administrator and I agreed with that proposition in dismissing the appeal.
[14] I accept, however, that the extent to which any order that payment of costs be made out of the estate would amount to the respondent effectively meeting her costs herself depends on the final corpus of the estate and what, if any, further distribution is made from it in favour of the appellant. If the estate is to be divided simply in accordance with the statutory provisions, the respondent would, on Mr Herbert’s calculations, receive something of the order of $230,000 and the appellant would take $93,000. These figures are reached on the basis of the costs of the appeal being paid for by the estate.
[15] Mr Herbert also referred to the effect on the appellant if costs were awarded against her personally, pointing out that she has three dependent children; a very
modest income; and no assets apart from her contingent interest in her father’s estate. The appellant borrowed against her contingent interest to pay the security for costs and an award of costs against her personally could only be satisfied out of her interest in the estate. Such an order would diminish her interest somewhere between
10 and 21 percent.
[16] Mr Herbert also argued that the administrator had delayed in providing financial and other information in a timely manner but any such argument, if tenable at all, could only apply to the Family Court proceedings and not to the appeal. Similarly, Mr Herbert’s argument about whether any costs award should be conditional upon the overall outcome of the Family Court proceeding confuses the incidence of costs on the interlocutory appeal, which was wholly unsuccessful, and costs on the appellant’s substantive application in the Family Court.
[17] I am also unmoved by the suggestion that the respondent could have avoided the costs of appeal by consenting to the orders which she opposed in the Family Court and which, I held on appeal, the District Court Judge was entitled to refuse. Mr Herbert’s proposition is obviously correct, but the same argument must apply to any case where a respondent successfully resists an appeal. The appellant failed in the Family Court. She chose to appeal; she failed again. The respondent is entitled to a contribution to her costs
Decision
[18] In the ordinary course of events, costs on an unsuccessful appeal such as this would simply follow the event.8 The position is somewhat complicated by the appellant having an interest in the estate and her patent inability to meet an award of costs herself at this stage.
[19] All matters related to costs are at the discretion of the Court.9 Taking all relevant factors into account, I consider the respondent’s costs as a beneficiary
should be met by the appellant out of the appellant’s interest in the estate and that the
8 High Court Rules, r 14.2(a).
9 Rule 14.1.
respondent’s costs as administrator should be met out of the estate generally. Accordingly, I order:
(a) The appellant shall pay the respondent’s costs as a beneficiary in the sum of $10,458. I authorise the payment of that sum out of the estate on the basis that an equivalent amount shall be deducted from the amount which the appellant would otherwise receive from the estate.
(b) The respondent’s costs as administrator in the sum of $9,065 shall be
paid out of the estate generally.
…………………………….
Toogood J
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