Darlow v Halpin

[2023] NZHC 548

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-930

[2023] NZHC 548

UNDER

Part 18 of the High Court Rules and s 133 of the Trusts Act 2019

BETWEEN

CHRISTOPHER ROBERT DARLOW and

DAVID ROBERT APPLEBY as executors of the estate of BARBARA STAFFORD MORRIS

Plaintiffs

AND

SALLY-ANNE HALPIN

First Defendant

DAVID CHRISTOPHER STAFFORD MORRIS

Second Defendant

TIMOTHY MORRIS
Third Defendant

RICHARD STAFFORD MORRIS

Fourth Defendant

Hearing:	On the papers
Judgment:	17 March 2023

JUDGMENT OF WYLIE J

[Costs]

This judgment was delivered by Justice Wylie

On 17 March 2023 at 2.00 pm Pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:………………………..

Solicitors/counsel:

Grove Darlow & Partners/G Blanchard KC, Auckland Morris Legal/D P H Jones KC, Auckland

Keegan Alexander, Auckland

DARLOW v HALPIN [2023] NZHC 548 [17 March 2023]

Background

[1]    The plaintiffs are the executors of the deceased—Barbara Morris. The defendants are her children. Ms Morris died on 11 August 2021. She left a will dated 9 May 2014 and a codicil dated 25 June 2019. The plaintiffs seek directions from the Court in relation to various issues, including Ms Morris’ interest in a business trading as MTC Perennials (“MTC”). They asserted in the statement of claim that it is unclear whether Ms Morris’ interest in MTC was as trustee or agent for the fourth defendant or whether she had full legal and beneficial ownership in her personal capacity. The statement of claim also records that the plaintiffs have identified irregularities in the accounts of MTC, including in relation to improperly claimed expenses and GST refunds for online gaming by the fourth defendant. The plaintiffs seek various directions from the Court in relation to these issues.

[2]    The fourth defendant filed a statement of defence dated 12 August 2022. Inter alia, he asserted that, at the time of her death, Ms Morris held an interest in MTC as trustee or agent for him. In relation to the alleged improperly claimed expenses, he asserted that if there were any such expenses (which was denied), then that was of no concern to the plaintiffs as executors, because he was the beneficial owner of MTC.

[3]    On 2 September 2022, the first to third defendants gave notice to the fourth defendant pursuant to r 5.21 of the High Court Rules 2016, requiring further particulars of his statement of defence. Inter alia, the first to third defendants sought further detail of his pleading in relation to MTC and the beneficial interest asserted by him. The fourth defendant did not respond.

[4]    The notice was followed by an interlocutory application dated 19 September 2022, seeking further particulars from the fourth defendant. The fourth defendant filed a notice of opposition on 13 October 2022. On the same day, he filed an amended statement of defence. In the amended statement of defence, he asserted that, at the time of her death, Ms Morris held an interest in MTC, and that she held it in her personal capacity. In regard to the alleged improperly claimed expenses, he asserted that if there were any such expenses, then an adjustment of his share of the estate could

be made to take them into account without the need to issue proceedings. He invited the plaintiffs to discuss the sums with him.

[5]    On 18 October 2022, the fourth defendant filed a memorandum confirming that he had filed a notice of opposition to the first to third defendants’ application and advising that nothing further needed to be filed, save submissions and a common bundle, and asking that the application be set down for hearing. Shortly thereafter, the first to third defendants filed a memorandum seeking a direction that the fourth defendant file and serve an affidavit in support of his opposition to the application, addressing his interest in MTC and asking him to set out the factual basis for his assertions in his initial statement of defence dated 12 August 2022. It was also asserted that the fourth defendant should explain the change of stance in his pleadings. The first to third defendants also asserted that they would be seeking an order for indemnity costs.

[6]    In a minute issued on 26 October 2022, Associate Judge Sussock directed the fourth defendant to file a memorandum confirming whether or not he consented to filing an affidavit as sought by the first to third defendants.

[7]    The fourth defendant in a memorandum dated 27 October 2022, indicated that he was opposed to any requirement that he file the affidavit sought.

[8]    The matter came before Associate Judge Sussock on 28 October 2022. She determined that the evidence sought from the fourth defendant was not relevant to the application for further and better particulars. She directed the fourth defendant to confer with the plaintiffs in respect of the irregularities in the financial accounts of MTC, to determine whether agreement could be reached on any adjustment to his share of the estate. She also put in place a timetable in order to bring the first to third defendants’ application on for hearing and she allocated a hearing date on 7 March 2023.

[9]    The first to third defendants then sought costs in respect of the amended statement of defence filed by the fourth defendant. Associate Judge Sussock declined to make a costs order at that stage and reserved the issue of costs. She explained the

view that any wasted costs should be considered following the determination of the first to third defendants’ interlocutory application or after the substantive hearing if that was more appropriate.

[10]   In the event, the fixture on 7 March 2023 was vacated after the first to third defendants advised the Registrar that they were no longer seeking to pursue the application. That advice was given on 14 February 2023.

[11]   After the filing of conflicting memoranda, Lang J, on 15 February 2023, recorded that the fourth defendant was entitled to seek costs and directed that the parties should file memoranda in that regard.

[12]   Those memoranda have now been filed and the issue of costs has been referred to me as Duty Judge.

Memoranda filed

[13]   The fourth defendant is seeking costs on a 2B basis in the sum of $8,116.50. He notes that the first to third defendants discontinued their application for further and better particulars and that he was required to oppose the request from the first to third defendants that he file an affidavit.

[14]   The first to third defendants claim that the fourth defendant has manipulated the Court’s processes and has sought to avoid providing potentially damaging answers when asked to do so. They argue that the fourth defendant’s application for costs is unsustainable and that the further particulars were only sought because of the fourth defendant’s initial pleading. They argue that costs should be reserved and dealt with when the proceedings are resolved or at some other appropriate time.

Analysis

[15]   There are two sets of costs in issue—first, any wasted costs incurred by the first to third defendants as a result of the filing of the amended statement of defence and secondly, the fourth defendant’s costs incurred in resisting the first to third

defendants’ interlocutory application for further particulars and the request that he file an affidavit.

[16]   I am satisfied that the costs should be fixed now and not left to be resolved after the substantive proceedings or at any other time. Rule 14.8 of the High Court Rules provides that costs on an opposed interlocutory application must be fixed in accordance with the rules when the application is determined, unless there are special reasons to the contrary. Here, there are no such special reasons.

[17]   I deal first with the first to third defendants’ wasted costs incurred as a result of the filing of the amended statement of defence.

[18]   Rule 7.77(8) provides that if an amended pleading is filed, the party filing the amended pleading must bear all the costs of, and occasioned by, the original pleading and any application for amendment, unless the Court otherwise orders.

[19]   Here, the first to third defendants have not itemised any claim to wasted costs. Rather, they have previously claimed indemnity costs, but given no detail of the costs they have incurred. As a result, it is difficult to consider what costs award, if any, is appropriate. Further, on the face of it, little or no wasted costs have been incurred. No reply has been filed by the first to third defendants in response to the amended statement of defence.

[20]   In the circumstances, I decline to make an award of costs in favour of the first to third defendants for wasted costs incurred as a result of the filing of the amended statement of defence. It seems to me preferable to approach the issue by considering a reduction in the costs to which the fourth defendant is otherwise entitled.

[21]I now turn to the fourth defendant’s costs.

[22]   The fourth defendant was the successful party. The first to third defendants withdrew their application for further and better particulars. Prima facie, in accordance with r 14.1(a), the fourth defendant is entitled to costs.

[23]   Costs are claimed on a 2B basis and the schedule attached to the fourth defendant’s memorandum itemises the costs claimed. The calculation appears to be in order and no issue has been taken with it by the first to third defendants.

[24]   Pursuant to r 14.7, the Court can refuse to make an order for costs or reduce the costs otherwise payable in certain circumstances. Inter alia, the Court can reduce costs otherwise payable where the party claiming costs has contributed unnecessarily to the time or expense of the proceeding or a step in it by taking or pursuing an unnecessary step or an argument that lacks merit, or, where some other reason exists which justifies the Court refusing costs or reducing costs despite the principle that the determination of costs should be predictable and expeditious.

[25]   Here, a reduction in costs is, in my view, appropriate, because the assertions made by the fourth defendant regarding MTC in the initial statement of defence and in the amended statement of defence are mutually exclusive. The two cannot be read together. The amended statement of defence is not a refinement of the initial pleading. Rather, it refutes and makes assertions inconsistent with the original pleading.

[26]   The first to third defendants were entitled to seek further and better particulars of the initial pleading. There was however no justification for their subsequent demand that the fourth defendant file an affidavit explaining his change in stance. The change in stance and any consequences flowing from it were matters for the substantive hearing and not for interlocutory application. There is no provision in the rules entitling parties to an affidavit in such circumstances and the demand for the affidavit was unwarranted. The fourth defendant was nevertheless required to respond to the demand.

[27]   In my judgment, to recognise these various matters, it is appropriate to reduce the costs otherwise payable to the fourth defendant by 25 per cent, to recognise the about-turn in his pleadings. But for the first to third defendants’ unwarranted request for an affidavit, the deduction may well have been higher.

[28]Accordingly, I award costs in favour of the fourth defendant in the sum of

$6,087.38, being the amount claimed ($8,116.50) less 25 per cent ($2,029.12). Liability as between the first to third defendants is joint and several.

Wylie J