Berridge v Donovan HC Napier CIV 2009-441-344

[2010] NZHC 800

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2009-441-344

UNDER  the Family Protection Act 1955

IN THE MATTER OF     the estate of Michael Evanghelos Claudatos

BETWEEN  J M BERRIDGE Plaintiff

ANDT P DONOVAN & T M CLAUDATOS Defendants

Judicial Settlement Conference:        17 March 2010

Judgment on Costs:  18 March 2010 at 4.00 pm

JUDGMENT AS TO COSTS OF ASSOCIATE JUDGE D.I. GENDALL

This judgment was delivered by Associate Judge Gendall on 18March 2010 at 4.00 pm pursuant to r 11.5 of the High Court Rules.

Solicitors:           Elvidge & Partners, Solicitors, PO Box 609, Napier

Willis Toomey Robinson, Lawyers, Private Bag 6018, Napier

J M BERRIDGE V T P DONOVAN & T M CLAUDATOS HC NAP CIV-2009-441-344  18 March 2010

[1]      At the Judicial Settlement Conference scheduled for this proceeding on 17

March 2010 settlement of the plaintiff’s claim against the defendants was reached and Consent Orders were made.

[2]      That settlement resolved all matters between the plaintiff and the defendants save the question of costs.

[3]      The  plaintiff  sought  payment  of  her  entire  costs  and  disbursements  in bringing this proceeding from the estate represented by the defendant trustees.  The defendants opposed an award of costs and disbursements to her.

[4]      At the settlement conference it was agreed that costs should be reserved and that I would decide the issue based upon oral submissions made to me at the time by counsel for the parties.

[5]      Those submissions were made and I now provide my judgment on the costs issue.

[6]      This proceeding involved a claim by the plaintiff, a daughter of the deceased Mr Michael Evanghelos Claudatos (“the deceased”) seeking some provision from his estate under the Family Protection Act 1955.  The claim was notionally opposed by the defendants as executors of the estate and Trustees of the Pelagos Trust and the Pelagos Two Trust.

[7]      Under the will of the deceased, his entire estate was effectively left to two trusts established in his lifetime the Pelagos Trust and the Pelagos Two Trust.  His will made no specific provision for either of his two children, first, his daughter the plaintiff and secondly, his son Thomas Michael Claudatos (“Thomas”), although they are both discretionary beneficiaries under the two Pelagos Trusts.

[8]      The plaintiff brought this present proceeding under the Family Protection Act

1955 upon the basis that her late father the deceased had breached his moral duty as testator to provide for her as his daughter.

[9]      The settlement reached in this proceeding, agreed to by the defendants both as executors of the estate and trustees of the Pelagos Trust and Pelagos Two Trust, provided for the deceased’s will to be modified so that his residuary estate was effectively divided equally between the plaintiff and Thomas in equal shares as his children.   The plaintiff, was to receive her one-half share of the residuary estate immediately but Thomas’s one-half share was to be held in trust until he attained the age of 30 years.

[10]     That said, the plaintiff’s claim in this proceeding has effectively succeeded. She along with her half-brother, Thomas, are now to share their late father’s estate.

[11]     Turning to the question of costs here, it is clear that in the past the traditional (but not invariable) practice in Family Protection proceedings was to order that the costs of all parties were to be paid out of the residue of the estate.  As McGechan on Procedure at para. HR pt 14.16 notes however:

.......... such an order (for costs to be paid out of the residue of the estate) can impact unfairly on the residuary beneficiary, particularly if the estate is not large.  Perhaps for that reason, the Court, in a defended Family Protection proceeding, often left costs to lie where they fell, with the result that the parties had to meet their own costs out of their respective shares of the estate.

More recent cases suggest costs in Family Protection cases should not be excluded from r 14.2 costs principles, in particular the principle that costs should follow the event.

[12]     On this, Asher J in Barker v Barker High Court, Auckland, 7 December 2006, CIV-2006-404-181 helpfully commented:

[18]In two recent High Court cases it has been noted that it is not the invariable practice that the estate pays costs:  Re:  Miller (2001) 20 FRNZ 459, para [6], and Vincent v Lewis (HC Auckland, CIV 2002-404-2440, 26 April

2006, Randerson J at para [5]).  In Weir v Hotham (HC Auckland, CIV-

2005-404-5300, 1 August 2006), Lang J noted that in a defended family protection claim the Court will often order that costs lie where they fall. The parties are thus required to meet their own costs out of the respective shares in the estate that each party will receive.

[13]     In the present case, the net value of the deceased’s estate is a reasonably significant amount, as I understand it to be something over $800,000.00.  Before me, Mr Kerr for the plaintiff indicated that the plaintiff’s costs and disbursements in this matter are arguably modest as they are likely to be something in the region of

$15,000.00.   From the Consent Order made, the plaintiff is to receive a one-half share of this reasonably substantial estate with the other one-half share as I have noted passing to her half brother Thomas.   Although served with the proceedings, Thomas chose to play no part in this matter.

[14]     Before me it was accepted by all parties that at the outset, the plaintiff after discussion with the second-named defendant, was encouraged by him to bring the present  proceeding  so  that  what  were  seen  as  potentially difficult  and  sensitive family matters might be properly resolved.  Further, with the settlement and Consent Order the plaintiff has effectively succeeded in this proceeding and, applying the general costs principles in r 14.2(a) High Court Rules, the starting point must be that as the party who has succeeded the plaintiff should be entitled to an award of costs.

[15]     Further, in my view this is a case where the traditional practice of ordering costs of all parties to be paid out of the residue of the estate should apply.

[16]     Mr Wenley for the defendants brought  forward the argument that as  the plaintiff was to receive only one-half of the residuary estate an order for costs to be paid by the estate would have the impact that one-half of these would be met by the other residuary beneficiary her half-brother Thomas.  Whilst that is the case, I note that first, as I have mentioned above, Thomas chose to take no part in this proceeding and secondly, as a result of the proceeding Thomas is now a substantial beneficiary in the deceased’s estate whereas previously all assets were left to Trusts.  In addition, to expect Thomas effectively to bear one-half of the plaintiff’s costs in this matter to an amount of only about $7,500.00 from his share in the residuary estate, given the overall magnitude of the estate, would not be unreasonable.

[17]     Under all the circumstances prevailing in this case, I take the view that it is appropriate that the plaintiffs costs and disbursements in bringing and pursuing this proceeding should be paid out of the residue of the deceased’s estate.   This is a reasonably large estate, and in my view, that conclusion provides a fair outcome.

[18]     An order is now made that the reasonable costs and disbursements incurred by the plaintiff in bringing and pursuing this proceeding (which I understand to be in

the region of $15,000.00) are to be met by the defendants and paid out of the deceased’s estate.   That is to occur before any distribution is to be made to the residuary beneficiaries.

‘Associate Judge D.I. Gendall’