Elishua v Freeland
[2022] NZHC 895
•3 May 2022
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2018-485-150
[2022] NZHC 895
UNDER Part 18 of the High Court Rules 2016 AND UNDER
section 44 of the Administration Act 1969
AND UNDER
sections 83A and 83B of the Trustee Act 1956
IN THE MATTER OF
the Estate of Ilse Goldstein
BETWEEN
HUE ELISHUA
Applicant
AND
GORDON JEFFREY FREELAND
First Respondent
THE TRUSTEES FOR THE GOLDSTEIN FAMILY TRUST (NO. 1)
Second RespondentsTHE TRUSTEES FOR THE RATNAM FAMILY TRUST
Third Respondents
On the Papers Counsel:
J Dean and D McLay for the Applicant D McKay for the First Respondent
A Butler for the Second Respondents
No appearance for the Third RespondentsJudgment:
3 May 2022
COSTS JUDGMENT OF GWYN J
Solicitors:
John Dean Law Office, Wellington Perpetual Guardian, Auckland Becker & Co Ltd, Wellington
ELISHUA v FREELAND [2022] NZHC 895 [3 May 2022]
Background
[1] The applicant, Hue Elishua, is the sole surviving grandson of Ilse Goldstein, who died on 22 October 2009. Mr Elishua was one of three residuary beneficiaries under the will. Probate was granted on 3 March 2010 and the estate was finally distributed by the end of 2013.
[2] Mrs Goldstein’s will, dated 8 November 2005, contained the following key provisions:
(a)Mr Freeland was appointed as the executor of the estate.
(b)Any debts owed by the Goldstein Family Trust and the Ratnam Family Trust were forgiven.
(c)$50,000 was gifted to the Goldstein Family Trust.
(d)Mr Freeland was to distribute personal chattels at his discretion, and in accordance with any instructions left by Mrs Goldstein.
(e)The residue of the estate was split into three equal portions, to the Goldstein Family Trust, the Ratnam Family Trust and Mr Elishua (when he turned 21).
[3] Mr Elishua claimed that he had not received his full entitlement from the estate. He also claimed that the estate expenses and administration fees were excessive. Mr Elishua applied for leave to appeal out of time for various orders, including an order under s 44 of the Administration Act 1969 that the administrator of the estate provide “a true and perfect inventory and account of the estate of the deceased”.
[4] Mr Freeland, the first respondent, opposed the application for leave, on the basis that, as executor, he had already provided all the relevant information to Mr Elishua.
[5] The application for an extension of time was heard by Collins J on 8 March 2019. Justice Collins dismissed the application.1 The Judge noted that, as a consequence, the first, second and fourth limbs of the originating application were struck out.2
[6] Mr Elishua’s alternative claim, under s 83B of the Trustee Act 1956, was for an audit of the accounts of the Goldstein Family Trust and the Ratnam Family Trust. Both the Goldstein Family Trust and the Ratnam Family Trust were established by Mrs Goldstein during her lifetime. Mr Elishua is a discretionary and final beneficiary of both trusts.
[7] As Collins J noted,3 Thomas J had previously (on 3 July 2018) ordered Mr Elishua to replead the s 83B claim by 13 August 2018, in light of the various information relating to those trusts that had already been provided to him. As at the date of the Judgment, no amended pleadings had been filed. The Judge directed that if Mr Elishua still wished to pursue his claim against the Goldstein Family Trust and the Ratnam Family Trust, he must amend his pleadings by 3.00 pm on 29 March 2019.
[8] As is apparent from the minute of Cull J, dated 6 July 2021, Mr Elishua filed a memorandum dated 1 July 2021 in which he advised the Court that he would not be filing any amendment to the pleadings and “the matter is to be concluded”. At that stage, Cull J urged the parties to resolve costs between themselves.
Costs of the proceeding
[9]In relation to costs, the Judgment said:4
I am satisfied Mr Elishua’s application for costs must be dismissed. Mr McLay advised that there may be some legal aid issues relating to costs. I will refrain from making any further costs orders until the proceeding is concluded.
1 Elishua v Freeland [2019] NZHC 398 (the Judgment).
2 At [27].
3 At [26].
4 At [29].
[10] Subsequently, by minute of 10 September 2021, Grice J noted that no agreement on costs had been reached and both the applicant and first respondent have applied for costs. The minute notes:5
The applicant resists any costs application on the basis of inter alia the fact that there was a grant of legal aid for a period dating from the first originating application on notice dated 6 February to the hearing on 8 March 2019 before Collins J…
[11] Justice Grice went on to note that there was nothing on the Court file indicating that the Registrar was advised of that grant of legal aid or its withdrawal and that such notice is required under ss 24(1) and (3) of the Legal Services Act 2011. The Judge therefore directed that, before the costs issue could be considered further, proper evidence of the legal aid grant (if there was a grant) and the period of any grant, together with the date of withdrawal, must be provided. Justice Grice set a timetable for that to occur.
[12] In response to that direction, the applicant filed a costs memorandum dated 20 August 2021 and an affidavit of Rachael Isobel Barton, dated 20 September 2021, providing details of the grant of legal aid to the applicant. Mr Freeland filed an affirmation dated 22 September 2021. Counsel for Perpetual Trust Limited (the recently appointed trustee of the Goldstein Family Trust (No. 1)) filed a memorandum dated 17 September 2021 and an updating memorandum dated 20 October 2021.
[13] Ms Barton’s affidavit shows that the Legal Services Agency made an interim grant of legal aid to John Dean Law Office (JDLO), acting for the applicant, on 24 July 2018. The Legal Services Agency wrote to JDLO on 22 November 2018 notifying a decision to not make a full grant of legal aid and confirming payment of legal aid as per the earlier interim grant to JDLO.
[14] The memorandum filed on behalf of the applicant states that there was a second grant of legal aid made retrospectively to 12 May 2020 and that there was no legal aid from 21 November 2018 to 12 May 2020. Counsel notes that a retrospective
5 Elishua v Freeland, CIV-2018-485-150, 10 September 2021 (Minute of Grice J) at [3].
application will now be required “for the instructing solicitors and counsel’s fees from 12 May 2020 to date.”
Costs sought by the applicant
[15] The applicant seeks costs in relation to the period from March 2018 until December 2019, on a solicitor-client basis. The total sought is 17.7 hours at a rate of
$250 (plus GST).
[16] The applicant also seeks costs for the period from January 2020 to the date of his costs memorandum (30 August 2021). The total sought for that period is
42.4 hours.
[17] Some of the costs – it is not entirely clear to me whether these are said to fall into the period between March 2018 and December 2019 or post-January 2020 – are said to arise in relation to what the applicant’s costs memorandum suggests was a distribution in breach of trust, together with allegations of lack of professional care and/or ignorance of the terms of the deed on the part of the trustees. The applicant relies on the Spencer case,6 and Hunter v Hunter.7 In the memorandum of counsel filed on the applicant’s behalf, he says: “Apart from having express findings that there has been a breach of trust, the applicant has succeeded in seeking relief in relation to the Goldstein trust.”
Costs sought by first respondent
[18] Mr Freeland seeks costs from 21 November 2018 to the date of filing of his costs memorandum (7 September 2021). The first respondent’s actual costs (including disbursements and GST) were $12,695. The first respondent has provided a tax invoice from his solicitor, Greg Kelly Law.
[19]In terms of scale costs, the first respondent seeks the following:
Schedule 3 High Court Rules
Originating Application
6 Spencer v Spencer [2013] NZCA 449.
7 Hunter v Hunter [1938] NZLR 520.
Respondents Notice of Opposition (28 May 2018)
Preparation case mgmt. conference Filing memoranda
Item 38
Item 10
Item 11
2 days
0.4 days
0.4 days
Call over (12 Nov. 2018)
Item 12
0.2 days
Preparing submissions
Item 32
2 days
Attendance at hearing (8 March 2019)
Item 34
½ days
Respondent’s Oppn to Amdd Application
(6 May 2019)
Item 38
2 days
Filing memoranda
Item 11
0.4 days
Call over (31 May 2021)
Item 12
0.2 days
Total: 8.1 days at Band B
[20] For the period up to 8 March 2019, the first respondent submits that some increased costs are appropriate, under r 14.6(3)(b) of the High Court Rules 2016 (the Rules) because the applicant’s argument lacked merit.
[21] In relation to the period after 8 March 2019, the first respondent says he is entitled to a costs award by analogy with the costs principles applicable on a discontinuance.
Costs of the second respondent
[22] In May 2021 Mr Butler, counsel for Perpetual Trust Limited (PTL), the newly- appointed trustee of the Goldstein Family Trust (GFT), filed a memorandum advising of PTL’s appointment (the then trustees of GFT having retired). In subsequent memoranda, counsel has advised that PTL has received requests for the payment of legal costs in the following sums:
(a)Greg Kelly Law Limited: $2,685.00. Greg Kelly Law acted on behalf of the former trustees of the GFT.
(b)Becker & Co: $6,100.75. Becker & Co acted on behalf of Gordon Freeland, one of the former trustees of the GFT.
(c)TDSL: $3,881.80. TDSL acted on behalf of Carol Ratnam, one of the former trustees of the GFT.
[23] Mr Butler advises that PTL is not in a position to commit to making any payment out of the GFT trust fund in respect of costs claimed and will await the outcome of the various orders as to costs sought by the parties. PTL reserves its right to put the matter of costs before the Court.
Costs principles
[24] Costs are at the discretion of the Court.8 That discretion must, however, be exercised in both a judicious manner and in a way that is consistent with the rules. The relevant principles are these:
(a)the prima facie position is that the successful party in a proceeding is entitled to a reasonable contribution to its costs from the other party;
(b)costs should be resolved as predictably, consistently and expeditiously as possible;
(c)provision is made for increased and indemnity costs, as well as reduced and no costs, in appropriate circumstances.
Costs for the period after 8 March 2019
[25] First, I consider Mr Elishua’s continued allegations of serious misconduct by the trustees. These allegations are not the subject of any proceeding, much less any finding. As Cooke J noted when this matter was called before him in the Judge’s Chambers list on 31 May 2021, the apparent potential claims for breach of trust had never been articulated in a pleading. The applicant was directed to file and serve a statement of claim if he wished to pursue those allegations. 9 As I have already noted, at [8] above, the applicant advised the Court that he did not intend to do so. No such proceedings have since been filed. Counsel for the applicant says that, “apart from
8 High Court Rules 2016, r 14.1.
9 Elishua v Freeland, CIV-2018-485-150, 31 May 2021 (Minute of Cooke J) at [5].
having express findings that there has been a breach of trust”, Mr Elishua has succeeded in seeking some relief. But the absence of any findings in his favour is a critical factor in considering costs. Mr Elishua cannot have costs in respect of a claim he never brought.
[26] The first respondent also seeks costs for the period after March 2019, as a result of dealing with additional preparation and appearances following the Judgment, in the respondents’ favour, principally to deal with allegations made by the applicant that he has now failed to pursue by way of a proper pleading. Mr Freeland says that, in relation to this period, the applicant’s position is analogous to a party who has discontinued and costs should be dealt with as if under r 15.23 of the Rules. Rule 15.23 states:
15.23 Costs
Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.
[27] Rule 15.23 establishes a presumption that a plaintiff who discontinues a proceeding against a defendant must pay the defendant’s costs of the proceeding up to and including the discontinuance. The rule has been applied by analogy to other situations where a plaintiff has elected not to continue a proceeding.10
[28] The applicant in response says that there was poor compliance by the first respondent with the discovery order, with ASB bank statements not being provided until 2021. Nor did the first respondent comply with r 8.18(1) (the continuing obligation to give discovery and offer inspection at all stages of the proceeding).
[29] It is not at all clear which discovery order counsel was referring to, or whether there was in fact a proceeding on foot which would have given rise to the r 8.18(1) obligation. There is no evidence of this assertion before the Court.
[30] I accept that this case is sufficiently analogous that the r 15.23 presumption should apply in relation to the first respondent’s costs after 8 March 2019.
10 McGechan on Procedure (looseleaf ed, Brookers) at [HR15.23.07].
[31]The first respondent is entitled to 2B costs for this period.
Costs in relation to claims before Collins J
[32] Turning to costs in relation to the issues that were before Collins J, while identification of the successful party is contested by the applicant, on the face of the Judgment there is in fact no contest.
[33] Mr Elishua’s application for an extension of time was dismissed and, as a consequence, the first, second and fourth limbs of the originating application were struck out. Justice Collins noted in the Judgment,11 “I am satisfied Mr Elishua’s application for costs must be dismissed.” The Judge did not make costs orders at the time, for the reasons already discussed. As already noted, Mr Elishua chose not to file an amended pleading progressing his remaining claim. There is no basis on which Mr Elishua is entitled to costs for the proceeding. On the contrary, prima facie the successful respondents are entitled to their costs of the proceeding.
[34] The first respondent, Mr Freeland, does seek costs for this period, as one of the “successful” parties to the proceeding. The applicant, in response, says no award of costs should be made in favour of the first respondent against him, because he was legally aided and s 45(1) of the Legal Services Act applies.
[35]Section 45(1) of the Legal Services Act 2011 provides:
45 Liability of aided person for costs
(1) If an aided person receives legal aid for civil proceedings, that person’s liability under an order for costs made against him or her with respect to the proceedings must not exceed an amount (if any) that is reasonable for the aided person to pay having regard to all the circumstances, including the means of all the parties and their conduct in connection with the dispute.
…
[36] Section 45 does not apply to prohibit a costs award for the period when legal aid did not apply.
11 The Judgment, above, n 1, at [29].
[37] It appears that the applicant had legal aid for the period from 24 July 2018 to 22 November 2018. The applicant’s counsel states that a further grant of legal aid was made retrospectively to 12 May 2020, but there is no evidence of that, despite Grice J’s direction on 10 September 2021 that the applicant had five days to file evidence by way of affidavit attaching the relevant grant and withdrawal and confirming the period for which aid was granted.12
[38] The first respondent is entitled to costs on a 2B basis for the relevant period, excluding the period 24 July 2018 to 22 November 2018, when the applicant was legally aided. The first respondent does not seek costs for this period and there is nothing before me to suggest that exceptional circumstances apply, which might allow for an award of costs against the applicant, notwithstanding his receipt of legal aid.13
[39] The first respondent submits that he is also entitled to increased costs, under r 14.6 of the Rules, for this period. Mr Freeland relies on those portions of the Judgment where Collins J noted, first, that Mr Elishua had made allegations that he had not received his full entitlement from the estate, without supporting evidence.14 Second, the Judge was satisfied that there was nothing in any of the matters alleged by Mr Elishua that justified leave being granted to pursue an application under s 44 of the Administration Act 1969.15
[40]Rule 14.6(3)(b) provides:
(3)The court may order a party to pay increased costs if—
…
(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
(i)failing to comply with these rules or with a direction of the court; or
(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or
(iii)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or
12 See [14] above.
13 Legal Services Act 2011, s 45(2).
14 The Judgment, above, n 1, at [21].
15 At [23].
(iv)failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or
(v)failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or
…
[41] While the Judgment is somewhat critical of Mr Elishua for bringing the application, the criticism is brief and succinct. It is difficult for another Judge, at a considerable remove, and not having had the benefit of considering the application and the evidence first-hand, to make an assessment whether increased costs are appropriate. It is not such an obvious case that I would be prepared to do so with the benefit of only the papers before me, some three years later. I decline Mr Freeman’s application for increased costs.
Orders
[42]I make costs orders in favour of the first respondent in the following terms:
March 2018 to December 2019
[43] Costs as set out at paragraph [9] of the costs memorandum of counsel for Gordon Freeland, dated 7 September 2021.
January 2020 to 7 September 2021
[44] Costs as set out at paragraph [26] of the costs memorandum of counsel for Gordon Freeland, dated 7 September 2021.
[45] Leave is reserved to the second respondent to come back to the Court in respect of any costs claimed from the Goldstein Family Trust fund.
Gwyn J
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