Ball v Saint
[2022] NZHC 3607
•22 December 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-1876
[2022] NZHC 3607
IN THE MATTER OF an application for probate in solemn form under Part 18 of the High Court Rules 2016 IN THE MATTER OF
of JOHN ELLIOTT LAWFORD, of
Auckland, Retired, Deceased
BETWEEN
DENISE JOY BALL, TIMOTHY JOHN LEWIS and ROBERT McDOUGALL FERRIER
Plaintiffs
AND
BELINDA BEVERLEY GWENDOLEN SAINT
First Defendant
JACK LEE PORUS and DAVID LUNNY
Second DefendantsMYLES CURLING LAWFORD
Third Defendant
Hearing: 22 November 2022 Appearances:
S Grant for the plaintiffs
A McDonald for the first defendant
Judgment:
22 December 2022
JUDGMENT OF ROBINSON J
[Application for Leave to Apply for Security for Costs]
This judgment was delivered by me on 22 December 2022 at 3:30pm
pursuant to Rule 11.5 of the High Court Rules
…………………………………………………………………… Registrar/Deputy Registrar
Solicitors/Counsel: AJO Legal, Auckland; Hesketh Henry, Auckland; Glaister Ennor, Auckland; Lee Salmon Long, Auckland; Gregory Simon Law, Auckland; S Grant, Auckland; V Bruton KC, Auckland; A McDonald, Auckland; D Chambers KC, Auckland
BALL v SAINT [2022] NZHC 3607 [22 December 2022]
Introduction and background
[1] The plaintiffs apply for probate in solemn form in respect of a will dated 18 April 2007 executed by John Elliott Lawford (Mr Lawford) (2017 will). The first defendant is defending the plaintiffs’ claim and pursues counterclaims. She alleges that the 2017 will is invalid because Mr Lawford lacked testamentary capacity and/or was unduly influenced by the second- and/or third-named plaintiff(s) when he executed it. She seeks an order that the second defendants be granted probate in respect of Mr Lawford’s penultimate will which he executed on 6 November 2013.
[2] On 12 May 2021 Whata J set the matter down for a seven-day trial.1 That trial commenced on 30 May 2022. After seven days it was adjourned part-heard. It will recommence for a further ten days on Monday, 13 February 2023.
[3] In the interim, the plaintiffs seek leave to apply for an order that the first defendant provide security for costs in the form of a mortgage against her otherwise unencumbered property to secure her potential liability to the plaintiffs for costs of up to $1 million.
[4] The plaintiffs submit that the adjournment and extension of the trial amount to a material change of circumstances that increases the likelihood the first defendant will be unable to meet a costs award against her if she is unsuccessful. The plaintiffs’ concerns are exacerbated by their belief that the first defendant will be liable for increased or indemnity costs. They say the adjournment and extra trial time is required only because of the first defendant’s approach to the case. In particular, the plaintiffs say the first defendant’s cross-examination has focused on matters that are irrelevant or of limited relevance.
[5] In a results judgment dated 16 December 2022 I declined the plaintiffs’ application for leave. These are the reasons why.
1 Ball v Saint HC Auckland CIV-2020-404-1876, 12 May 2021 (Minute of Whata J).
Relevant legal principles
[6] The plaintiffs require leave to bring an interlocutory application for security for costs because the close of pleadings date has passed.2 To obtain leave they must “surmount the three formidable hurdles” of showing that doing so would be in the interests of justice, would not significantly prejudice other parties, nor cause significant delay.3 It has been observed that the farther or closer the application is to trial, the less or more formidable those hurdles will be.4
Does the Court have jurisdiction to order security for costs?
[7] Counsel for the first defendant, Ms McDonald, submits (amongst other things) that in the circumstances the Court would not have jurisdiction to order the first defendant to provide security for costs.
[8]Rule 5.45 of the High Court Rules 2016 relevantly provides:
5.45 Order for security of costs
(1)Subclause (2) applies if a Judge is satisfied, on the application of a defendant,—
…
(b)that there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the plaintiff’s proceeding.
(2)A Judge may, if the Judge thinks it is just in all the circumstances, order the giving of security for costs.
…
(6)References in this rule to a plaintiff and defendant are references to the person (however described on the record) who, because of a document filed in the proceeding (for example, a counterclaim), is in the position of plaintiff or defendant.
[9] Ms McDonald submits that the first defendant is neither the plaintiff nor “in the position of plaintiff”.
2 High Court Rules 2016, r 7.7(1).
3 Elders Pastrol Ltd v Marr (1987) 2 PRNZ 383 (CA) at 385.
4 Lyttleton Port Co Ltd v Aon New Zealand [2019] NZHC 726 at [22].
[10] Ms McDonald relies heavily on the English case Rose v Epstein as authority for the proposition that a caveator contesting a grant of probate is not in the position of a plaintiff for the purposes of a security for costs application.5 While that decision does not appear to have been applied in New Zealand, it is referenced in Sim’s Court Practice as authority for that point.6
[11] Ms McDonald submits further that jurisdiction to order security for costs against a defendant/counterclaim-plaintiff does not exist where the subject matter of the counterclaim is so inextricably mixed with the subject matter of the plaintiffs’ claim that the counterclaim must necessarily succeed if the plaintiffs’ claim fails.7 In this case Ms McDonald points out that the first defendant makes precisely the same allegations by way of affirmative defence as she makes by way of counterclaim (lack of testamentary capacity and undue influence). She submits that the remedy the first defendant seeks (a grant of probate of the penultimate will) must follow if she successfully defends the plaintiffs’ claim for a grant of probate of the 2017 will.
[12] Counsel for the plaintiffs, Mrs Grant, says the first defendant is in the position of a plaintiff in respect of her counterclaims. Counsel submits that the first defendant is not merely putting the plaintiffs to proof of the validity of the 2017 will, but has launched a substantial counterclaim alleging undue influence and a lack of capacity. Mrs Grant submits these crossclaims have a vitality of their own such that the first defendant is the “actor” in the proceeding, and as such is in the position of a plaintiff.8 She says the first defendant has the onus of proving undue influence.
5 Rose v Epstein [1974] 2 All ER 1065 (Ch). Upheld on appeal in Rose v Epstein [1974] 1 WLR 1565 (CA).
6 Matthew Casey and others Sim’s Court Practice (online ed, LexisNexis) at [5.45.4(f)].
7 Citing Oceania Furniture Ltd v Debonaire Products Ltd HC, Wellington CIV-2008-485-1701, 24 April 2009 at [9] – [12] and [21]; and Onop Properties Ltd v Fallon Properties Ltd (1988) 1 PRNZ 26.
8 Citing Oceania Furniture Ltd v Debonaire Products Ltd, above n 7.
[13] Mrs Grant notes that no Court in New Zealand has ever cited Rose v Epstein. She points out that Pennycuick V-C, who decided that case, would have preferred not to conclude as he did:9
I would much like to hold, in those circumstances, that [the caveator/defendant] is in the position of plaintiff in these proceedings, but bearing in mind the way in which this matter has been approached in Re Emery and the earlier cases, I am unable to reach that conclusion.
[14] The English Court of Appeal observed that Pennycuick V-C had “somewhat reluctantly, concluded that there was no power to award security for costs”;10 while James LJ confessed to having a degree of doubt in the matter – though not so much doubt that he thought the conclusion was wrong or that he ought to dissent.11
[15] Mrs Grant relies instead on the New South Wales Supreme Court decision in Re Estate Condon; Battenberg v Phillips, a probate case in which Lindsay J did award security for costs.12 In doing so he noted that orders for security for costs in probate proceedings are uncommon and authority on the topic is scant;13 and texts deal with that topic in passing references only.14 Lindsay J noted Rose v Epstein but referred to English texts supporting the proposition that security for costs may be given in probate cases on the same principles as in other actions.15 Lindsay J also noted the observation of HC Mortimer that:16
…on the question of the immunity of a defendant from giving security for costs, the substantial, and not the nominal position of defendant and plaintiff respectively in the suit should be considered; as in certain cases in the Probate Division the nominal position of plaintiff or defendant depends on the mode in which the cause commenced.
[16] Having considered these texts, Lindsay J observed that although the same principles may apply to all proceedings, the application of those principles depends
9 Rose v Epstein (Ch), above n 5, at 1070.
10 Rose v Epstein (CA), above n 5, at 746 per Russel LJ.
11 At 748.
12 Re Estate Condon; Battenberg v Phillips [2017] NSWSC 1813.
13 At [60].
14 At [61].
15 At [70]–[73], citing John Ross Martyn and Alexander Learmouth (eds) Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (20th ed, Sweet and Maxwell, London, 2013) at [39-15]; and HC Mortimer The Law and Practice of the Probate Division of the High Court of Justice (1st ed, Sweet and Maxwell, London, 1911) at 703.
16 At [73].
upon the facts of the particular case, including peculiarities about the nature of the proceedings in which they are to be applied.17
[17] For the purposes of this leave application, I proceed on the basis that the Court does have jurisdiction to order security for costs against the first defendant in respect of her counterclaims. Notwithstanding the reasoning of the English Courts in Rose v Epstein, there is merit in the submission that in assessing an application for security for costs the Court should consider the substantive position being taken by a party resisting probate, rather than whether that party is nominally a plaintiff or a defendant. The fact that the first defendant’s affirmative defences and counterclaims are based on the same factual allegations may be relevant to whether a Court should order security for costs, not whether it has jurisdiction to do so.
Is it in the interests of justice to grant leave?
[18] The interests of justice require the leave application to be decided in a manner that will best achieve a just determination of the substantive proceeding without unnecessary and prejudicial expense, delay or technicality.18 The timing of the application and the reasons for delay are relevant.19 Leave is required because after the close of pleadings date, the parties should focus on preparing for trial (or in this case, proceeding with trial). They should not be distracted by interlocutory matters, nor should they use the Court’s resources without good cause.
[19] In terms of timing, Mrs Grant accepts the application is late but says there are good reasons for that. Counsel submits there has been a material change in circumstances, namely the adjournment and extension of trial, for which the first defendant is responsible. Mrs Grant relies on Bligh v Earthquake Commission20 in which case the defendant sought and obtained security for costs in advance of a ten- day trial in circumstances where it had not sought security prior to an earlier seven- day trial that did not proceed because the plaintiff did not appear.21 I agree with Mrs
17 At [74].
18 Powell v K2 Investment Group Ltd [2020] NZHC 3181 at [19].
19 At [14].
20 Bligh v Earthquake Commission [2017] NZHC 2994.
21 The plaintiff’s litigation funder had terminated their arrangements shortly before or on the morning of trial. Judgment was entered for the plaintiff, but subsequently set aside.
Grant that an adjournment and extension of trial may justify a defendant reconsidering its position in terms of security for costs. However, I consider the present case can be distinguished because in Bligh the trial was not already underway when the defendant applied for security.
[20] In determining whether it is in the interests of justice to grant leave, the Court must also consider the merit of the proposed application (in this case, for security for costs).22 If the security for costs application has substantial merit, leave may be permitted even where serious prejudice and significant delay will arise.23 Assessing the merits of the security for costs application requires the Court to balance the interests of the parties. It would also require an assessment, as far as possible, of the merits of the underlying (counter)claim.24 In Ambrose v Pickard, the Court of Appeal considered it was appropriate for a judge dealing with a security for costs application to assess the merits of the underlying claim for that purpose even if the judge dealing with that application would also be the trial judge.25 Again, the present case is unusual in that I am the trial judge and the trial is already seven days through.
[21] In these circumstances , I do not consider it would be in the interests of justice to grant the plaintiffs leave at this stage.
[22] I am not satisfied that there are reasons to believe that the first defendant will be unable to meet an award of costs. The first defendant with her unencumbered
$1.35m property does not appear to be impecunious as that term is usually understood in this context. In opposition to this application the first defendant says she is meeting her litigation costs “from her own funds”; elsewhere she estimates these to be $1 million to date. Although the first defendant has chosen not to provide more detail about the source of these funds, I am not satisfied at this stage that there is reason to believe she would be unable to pay costs if unsuccessful in the proceeding.
[23] The plaintiffs suggest that if the first defendant is unsuccessful she may be exposed to an award of increased or indemnity costs. As noted, they say that she is
22 Body Corporate 355492 v QLDC [2022] NZHC 1494 at [50].
23 Body Corporate 325261 v McDonough [2014] NZHC 1821 at [10].
24 Ambrose v Pickard [2009] NZCA 502 at [32].
25 At [32].
responsible for the adjournment and the extended trial time. They also submit that her undue influence counterclaim is essentially an allegation of fraud by the second- and third-named plaintiffs.
[24] For her part, the first defendant does not accept that she is responsible for the adjournment and resulting delay. Ms McDonald points out that when the seven-day fixture was allocated the first defendant took a view that it was premature to do so. She also subsequently raised concerns that the seven-day fixture would be insufficient.
[25] In any event, Ms McDonald submits that on a proper application of the well- established principles in In re Paterson,26 the first defendant should be relieved from any liability to pay costs even if her defences/counterclaims are unsuccessful. Furthermore, Ms McDonald says that even if the first defendant is unsuccessful her defences/counterclaims are reasonable and there would be good grounds for an order that her costs be paid from the estate.
[26] I would need to consider these matters in order to determine the plaintiffs’ application for security for costs. I do not consider it is necessary or in the interests of justice to do that at this stage. With the trial well underway, the most appropriate time to consider the cost consequences of matters arising during trial is after it is finished and the result is known.
[27] Having said that, I agree with Ms McDonald that on the authority of In re Paterson, a party who unsuccessfully challenges an application for a grant of probate may be relieved of costs liability. So, in a case of this sort, costs may not necessarily follow the event. Without in any way determining how the principles of In re Paterson will apply in this case, the fact that in principle costs might not follow the event is relevant to this application and tells against it.
[28] As noted, in order to determine an application for security for costs I would also need to assess the merits of the parties’ underlying claims, albeit in an indicative way. Ms McDonald submitted that I am better placed to do that than most judges considering security for costs issues because the plaintiffs’ case is well underway. I
26 In re Paterson (deceased) [1924] NZLR 441 (SC).
disagree. I do not consider it would be in the interests of justice for me to assess the merits of the substantive claims part way through trial even on a preliminary or indicative basis.
Result
[29]The application for leave to apply for security for costs is declined.
Costs
[30] The first defendant is entitled to costs. My preliminary view is costs should be calculated on a 2B basis. If the parties are unable to agree counsel for the first defendant and then counsel for the plaintiffs should file a memorandum of no more than five pages by Friday, 3 February 2023 and Friday 10 February 2023 respectively.
Robinson J
7
1