BEE LENG KHO AND WEI CHEN (aka ALEX CHEN)
[2024] NZHC 2944
•10 October 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2023-404-001654
[2024] NZHC 2944
UNDER the Wills Act 2007 IN THE MATTER OF
the Estate of CHIAW PENG KHO
BY
WEI CHEN (aka ALEX CHAN)
Applicant
CIV 2023-404-002775 UNDER
Section 5 of the Administration Act 1969 and r 27.6 of the High Court Rules
IN THE MATTER OF
the Estate of CHIAW PENG KHO
BETWEEN
BEE LENG KHO
Plaintiff
AND
WEI CHEN (aka ALEX CHEN)
Defendant
on the papers Counsel:
PJK Spring and W M van Roosmalen for the Applicant/Defendant P F Dalkie and D Watson for the Plaintiff/Respondent
Judgment:
10 October 2024
JUDGMENT OF TAHANA J
[Costs]
This judgment was delivered by me on 10 October 2024 at 1.30pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
The Estate of KHO [Costs] [2024] NZHC 2944 [10 October 2024]
Introduction
[1] In a judgment delivered on 12 August 2024, I declined the application of Mr Wei Chen (the applicant) to be appointed temporary administrator of Chiaw Peng Kho’s estate (the estate) and declined his application for security for costs against Bee Leng Kho (the security application).1 I appointed Perpetual Guardian as temporary administrator under s 21 of the Administration Act 1969.2
[2] The siblings of Mr Kho are the respondents in CIV-2023-404-001654 (the respondents). Bee Leng Kho is also the plaintiff in CIV-2023-002275. In this judgment, I refer to the siblings as the respondents.
[3] As the respondents were successful in opposing the applications, my preliminary view was that costs should be fixed on a 2B basis.3 I granted leave to file costs memoranda if costs could not be agreed. Costs memoranda have now been filed.
[4] The parties have agreed costs for the security application but have been unable to agree costs for the appointment application.
[5] The respondents seek 2B costs on the appointment application of $6,811.50. The applicant submits that costs should lie where they fall and that certification for second counsel is not reasonable.
[6] I therefore need to determine whether costs on the appointment application should lie where they fall or whether the respondents are entitled to 2B costs with certification for second counsel.
1 Re Kho [2024] NZHC 2262 at [49].
2 At [50].
3 At [51].
Should costs lie where they fall?
Relevant law
[7] Costs are at the discretion of the court.4 The general principles that apply include that the party who fails should pay costs to the party who succeeds5 and an award of costs should reflect the complexity and significance of the proceeding.6 The court may refuse to make an order for costs or may reduce costs if the party claiming costs has contributed unnecessarily to the time or expense by failing without reasonable justification, to admit evidence.7 The court may also refuse or reduce costs if there is some other reason which justifies a refusal or reduction.8
Are there grounds on which the Court should refuse or reduce the costs claimed?
[8] Mr Spring for the applicant submits that the respondents withheld pivotal evidence of the cash reserves of the estate until the hearing and that ambush tactics should not be rewarded with costs. Mr Spring submits that had that evidence been provided sooner, the application may have been withdrawn and the costs of arguing the application avoided.
[9] At the hearing, the respondents sought to adduce a document setting out the extent of the estate’s assets, which included bank accounts holding significant funds. The applicant objected to the admissibility of that document. After the hearing, the respondents filed an affidavit of Vanya Jones affirmed on 1 August 2024 annexing an asset and liability schedule for the estate. I considered Ms Jones’ affidavit was clearly relevant to the appointment application:9
[19] Ms Jones’ affidavit is clearly relevant to the issues I need to determine and is admissible. It assists in determining the estate’s assets and is relevant to Mr Chen’s argument that the estate cannot afford the fees of Perpetual Guardian. The further evidence indicates that there are sufficient funds to cover any fees to be charged by Perpetual Guardian. It also indicates that Mr Chen is not aware of the full extent of the estate’s assets.
4 High Court Rules 2016, r 14.1(a).
5 Rule 14.2(a)
6 Rule 14.2(b).
7 Rule 14.7(f)(iii).
8 Rule 14.7(g).
9 Re Kho, above n 1, at [19]–[20].
… In circumstances where the respondents challenge the credibility of Mr Chen and the evidence indicates that he is not aware of the full extent of the estate’s funds, it is appropriate that an independent administrator is appointed.
[10] Mr Dalkie for the respondents submits that the estate’s ability to afford an independent administrator was not raised in the appointment application and that while there was an “inkling” this was an issue in the applicant’s submissions, the submissions were not filed until a day and a half before the hearing (Monday 29 July).
[11] Mr Spring has provided an email confirming that the submissions were emailed to Mr Dalkie on Friday 26 July 2024.
[12] The applicant’s submissions set out his position as to the assets of the estate, the reason for the application and why he opposed appointment of Perpetual Guardian:
The estate
The deceased’s estate appears at this stage to consist of his house in Westmere. It is unencumbered and currently subject to a residential tenancy agreement.
The full extent of the estate cannot be ascertained as no one currently has authorisation to act on its behalf by, for example, making enquiries of retail banks as to the deceased’s bank accounts.
Administration
To resolve that issue (of the absence of an administrator), Mr Chan has applied for a direction under section 7 of the Administration Act 1969 that he be appointed as interim administrator. …
The siblings say that Perpetual Guardian should be appointed. The available evidence suggests that Perpetual Guardian will cost the estate $50,000 per year (not including legal fees).
Mr Chan therefore objects to that on the basis that the estate cannot afford it as it is illiquid and the rent collected is modest and in any case insufficient, it would seem, to cover certain outgoings required in respect of the property.
[13] Mr Dalkie submits it is a reasonable interpretation of the applicant’s submissions that he already had some level of understanding about the cash assets yet was nonetheless proceeding with the application. Mr Dalkie argues that had the evidence been provided earlier, it would have made no difference.
[14] Mr Dalkie’s submission ignores the content of the applicant’s submissions (as set out at [12] above). The respondents were aware, upon receipt of the submissions, that the applicant was relying on the illiquid assets and modest rental income as the basis for opposing the appointment of Perpetual Guardian. The assertion that the submissions infer the applicant understood the cash assets is rejected because such an understanding is directly contrary to the submission that the assets are illiquid and the rental insufficient to afford Perpetual Guardian’s fees. If the respondents’ solicitors held evidence that contradicted the applicant’s submission, it should have been disclosed to minimise unnecessary time and expense in arguing the issue.
[15] Despite knowledge of the applicant’s position, the respondents filed submissions on 30 July 2024 without addressing the evidence as to the bank accounts held in the deceased’s name. Nor did the respondents’ submissions respond to the applicant’s position that the assets were illiquid and insufficient to meet the fees of Perpetual Guardian. Rather, the respondents’ submissions argued that there was animosity between the parties and for this reason, an independent administrator should be appointed.
[16] I do not consider that any reasonable justification has been provided for not disclosing the evidence of the bank accounts to the applicant upon receipt of his submissions. The assets of the estate were clearly relevant to the affordability of Perpetual Guardian’s fees, which was the reason the applicant advanced for opposing their appointment as temporary administrator.
[17] For these reasons, I reject the assertion that the evidence’s relevance was unknown until Mr Spring made his oral submissions. That argument ignores the content of the applicant’s submissions served on 26 July.
[18] The objective of the High Court Rules 2016 is to secure the just, speedy and inexpensive determination of a proceeding or an interlocutory application.10 The parties are expected to conduct themselves in accordance with that objective. By withholding evidence and then seeking to adduce it at the last minute, the respondents have contributed unnecessarily to the time and expense of opposing the application.
10 High Court Rules, r 1.2.
In these circumstances, it is appropriate that the costs be reduced to reflect the respondents’ contribution to costs.
[19] I accept that the costs of preparing a notice of opposition are reasonable and should be awarded. The costs of the other steps claimed (preparation of submissions, appearance at hearing and second counsel) could have been avoided if the evidence was provided to the applicant after receiving the applicant’s submissions. I agree with Mr Spring that parties should not be rewarded for conduct that unnecessarily contributed to the costs incurred.
Result
[20] I understand that the parties have agreed costs of the security application, so it is unnecessary to make any orders in relation to that application.
[21] In relation to costs of the appointment application, the applicant is required to pay 2B costs of $1,434.00 to the respondents. I decline the respondents’ application for any other costs of the appointment application.
Tahana J
Solicitors:
Churton Hart & Divers, Auckland
Keegan Alexander, Auckland
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