Carson v O'Neill
[2025] NZHC 100
•10 February 2025
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CIV-2023-412-116
[2025] NZHC 100
UNDER Part 18 of the High Court Rules 2016 Trusts Act 2019 IN THE MATTER
of the ESTATE OF ROBERT JAMES CARSON
BETWEEN
WENDY CARSON
Plaintiff
AND
PAUL STAFFORD O’NEILL and TODD CRAIG WHITCOMBE
Defendants
Hearing: (On the papers) Counsel:
V Timpany and M Kirkland for Plaintiff J G O’Neill for Defendants
Judgment:
10 February 2025
JUDGMENT OF ASSOCIATE JUDGE LESTER
(as to costs)
CARSON v O’NEILL [2025] NZHC 100 [10 February 2025]
[1] In this proceeding Ms Wendy Carson sought a declaration that an indemnity requested by the defendant executors and trustees was unlawful, a declaration that the trustees complete a final distribution of the estate, along with an order that any costs incurred by them in relation to the preparation of the indemnity be refunded to the estate and an order for costs in respect of the proceeding.
[2]The proceeding was defended.
[3] The defendants are trustees and executors of the estate of the late Robert James Carson who died on 7 March 2018. Mr Carson’s Will from June 2011 was promptly probated on 10 April 2018. Mr Carson left a relatively modest estate to his two daughters, the plaintiff and a Ms Smith.
[4] An interim distribution of $50,000 was made to Ms Smith in April 2019 and a further $10,000 on 20 May 2020. On 16 November 2020, the defendants say they made an interim distribution to Ms Carson of $60,000 albeit, Ms Carson pleaded that the distribution was $10,000. It seems that Ms Carson’s original statement of claim in that regard was in error and that the interim distribution to her was $60,000.
[5] In mid-2021 it seems the defendants were prepared to make a final distribution. However, before completing that distribution the defendants wrote to Ms Carson’s solicitors setting out the amount to be distributed and including a deed of indemnity for signing by Ms Carson. The indemnity was also sought from Ms Smith. The indemnity was in respect of liability for legal proceedings, costs, claims or expenses to be made against the estate, not against the executors personally.
[6] Ms Carson’s solicitors replied in terms which frankly were not conducive to a practical resolution of the then dispute. The defendants had sought the indemnity from Ms Carson by a letter dated 8 June 2021. Ms Carson’s solicitors replied a little over two months later advising that they considered the indemnity was unlawful and it would not be signed. The letter also advised that Ms Carson; “continues to work with [c]ounsel in regard to further steps she may wish to take as to her claims in law and potential remedies.”
[7] The letter also referred to Ms Carson wishing to “record her despair at the way the [e]xecutors have conducted the administration of her late Father’s estate”.
[8] At that stage the trustees were faced with the notification of potential claims by Ms Carson. The defendants replied in November 2021 requesting further information as to the basis of Ms Carson’s “despair” in relation to the administration of the estate. As to the advice from Ms Carson’s solicitors that they were working with counsel in relation to further steps Ms Carson may wish to take, the defendants asked for the nature of those issues.
[9]On 24 February 2022, the defendants wrote to Ms Carson’s solicitors advising:
The only outstanding matter before distribution of the estate can be completed is Wendy’s advice of her intention to make a claim in relation to the estate. No details of any such claim have been forthcoming from Wendy. The executors have requested an indemnity from Sue and Wendy so that distribution of the estate can proceed, however, this has been rejected by Wendy.
[10] The defendants also advised that as they remain as executors subject to a potential claim by Ms Carson in relation to the estate, distribution would only occur upon the provision of an appropriate indemnity, after the expiry of the limitation period, or any resolution of any claim Ms Carson may make.
[11] There it seems matters rested until Ms Carson issued the present proceeding in October 2023.
[12] With Ms Carson signalling a potential claim against the estate, following the issuing of this proceeding I issued a Minute directing there be a telephone conference and said:
The purpose of the telephone conference is to clarify the plaintiff’s intentions as to a possible claim against the executors – and if such a claim is intended, its nature and the alleged loss suffered. If no claim is intended, then what, if any, barriers to distribution exist are to be identified …
[13] Ultimately, the executors gave notice to Ms Carson pursuant to s 79 of the Trusts Act 2019 which essentially required Ms Carson to bring any claim she may
have within the 30 day timeframe specified in s 79(2)(c). If she did not bring the claim, the estate could be distributed.
[14] Ms Carson did not bring a claim and the defendants are now willing to distribute the estate subject to the issue of costs being resolved.
[15] Frankly, each party here bears some responsibility for the state of affairs that has eventuated. It is not clear to me why what, at first blush, appears to be a straightforward estate took nearly three years to get to the point where the executors were proposing to make a final distribution and sought the indemnity on 8 June 2021 recalling that probate was issued 10 April 2018. Equally, even if Ms Carson felt some frustration at delay or otherwise, the tone of her solicitor’s letter in reply to the issue of the indemnity was unhelpful. Once Ms Carson signalled an intention to bring a claim, the executors were entitled to “sit tight” especially when having sought details of Ms Carson’s concerns, no details were provided. No prudent trustee would distribute an estate when a beneficiary had advised they were in despair about the administration of the estate and engaging with counsel.
[16] It is not clear to me how Ms Carson could, in her proceeding, seek an order for a distribution while not clarifying that she did not intend to bring a claim against the estate.
[17] The statement of defence specifically pleaded that “distribution cannot be effected until the [p]laintiff’s claims yet to be notified, have been settled”.
[18] It is also not clear to me what prompted the executors’ request for an indemnity made in their letter of 8 June 2021. While the statement of defence says that Ms Carson gave notice on various dates including 10 August 2021 that she wished to bring a claim against the estate, no other written notice of claim has been identified by the executors in the material filed in this proceeding or in respect of costs. The defendants, in a memorandum filed in August 2024, referred to Ms Carson having given indications she intended to bring a claim, but no details in respect of those other alleged indications of intention to make a claim are provided. If they pre-dated the
call for an indemnity, that would put the indemnity in a different light but again, I am given no detail of the dates of the claimed indications of a claim by Ms Carson.
[19] Both parties seek costs. The key issue is the party and party costs. Ms Carson seeks that the executors personally pay her scale costs plus a 50 per cent uplift of
$19,376.93. Ms Carson also seeks an order that any costs charged by the executors in respect of the proceeding be reimbursed and the estate not be liable for costs of preparing the indemnity.
[20] Ms Carson claims to have been the successful party, saying the defendants conceded her claim. She submits the defendants acknowledged their requirement for Ms Carson to execute the indemnity was unlawful and unreasonable.
[21] Again, once Ms Carson signalled unspecified claims against presumably the estate and/or the executors, the executors were entitled to “sit tight” in terms of the distribution of the estate. With Ms Carson not being prepared to sign an indemnity, but not retracting the possibility of a claim, it should have been obvious to Ms Carson’s legal advisors that the estate was not going to be distributed while the potential for claims remained over the heads of the defendants.
[22] The defendants say they were the successful party and seek that their costs be paid from the estate. They seek costs on a 2B basis, submitting that while they acknowledge Ms Carson was not obliged to sign an indemnity again, having indicated that she would bring claims, it was that step by Ms Carson that resulted in the estate not being finally distributed. The defendants seek scale costs of $8,365 plus disbursements, which are slightly less than the actual costs incurred by the defendants in respect of the proceedings.
[23] I am satisfied that in substance the defendants have been the successful party in respect of the fundamental issue in this proceeding. There was no barrier to the defendants requesting an indemnity and equally, it was common ground that Ms Carson was entitled to decline to sign the requested indemnity. However, it was Ms Carson’s unspecified possible further claims that muddied the waters. The defendants sought details of the claims referred to in general terms in Ms Carson’s
solicitor’s letter of 10 August 2021 but no details were ever provided. Nor did Ms Carson at any stage say that she would not be bringing a claim. Ms Carson’s position required the defendants to issue the s 79 notice referred to at [13] before the potential of a claim by Ms Carson could be cleared away.
[24] Accordingly, in my view, at the heart of this dispute was Ms Carson’s raising of unparticularised possible future claims that only served to lock-up the estate.
[25] As to the costs of the indemnity, they are to be borne by the defendants personally. The defendants did not enquire of the beneficiaries whether they would be prepared to give an indemnity before presenting the indemnity for signing. The indemnity did not benefit or add value to the estate and, as I have said, there is no evidence before me of any claims being intimated by Ms Carson before her solicitor’s letter of 10 August 2021. I have no doubt that if such claims existed in writing, they would have been referred to me. Accordingly, the costs of the indemnity are not payable by the estate.
[26] Ms Carson is to pay to the defendants costs on a 2B basis as per Schedule F of the defendants’ memorandum dated 22 January 2025. For the avoidance of doubt, that payment is to be made from Ms Carson’s share of the residuary estate. Ms Smith’s share of the estate should not be decreased.
[27] Accordingly, and by way of clarification, the total amount that may be deducted from Ms Carson’s share of the estate as costs of the proceeding is $8,475, not the $10,468.63 actual costs set out at paragraph [14] of the defendants’ memorandum. The difference is to be borne by the defendants.
[28] As to pre-proceeding costs, it is not clear what amount was charged by the defendants in respect of the preparation of the indemnity. I suggest they propose a reasonable round sum figure to resolve that issue and to avoid unnecessary further costs on both sides. If such cannot be agreed leave is reserved to apply.
[29]There is no costs award in respect of the fixing of costs.
Associate Judge Lester
Solicitors:
Victoria Law, Dunedin (for Plaintiff)
O’Neill Devereux, Dunedin (for Defendants)
Copy to counsel:
M Kirkland, Barrister
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