Ellin v Public Trust

[2018] NZHC 1082

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-1172

[2018] NZHC 1082

BETWEEN

CHRISTINE ANNE ELLIN, JOHN

CAMPBELL GREENLEES, MICHAEL LENNOX GREENLEES
Plaintiffs

AND

THE PUBLIC TRUST

First Defendant

DERMOT RICHARD BLAKE

Second Defendant

Hearing:

On the papers

Counsel:

S J Callanan for the Plaintiffs

G Traves for the First Defendant
J Strauss for the Second Defendant

Judgment:

17 May 2018

JUDGMENT No 2 OF PALMER J

This judgment is delivered by me on 17 May 2018 at 11 am pursuant to r 11.5 of the High Court Rules.

.....................................................

Registrar / Deputy Registrar

Solicitors/Counsel:

Lewis Callanan, North Shore City John Strauss, Barrister, Auckland North Harbour Law, Orewa

ELLIN v THE PUBLIC TRUST No 2 [2018] NZHC 1082 [17 May 2018]

Judgment and clarification

[1]    In this proceeding, the plaintiffs alleged the deceased, Ms Doreen Greenlees, lacked testamentary capacity and was subject to undue influence by Mr Dermot Blake, in making a will on 28 September 2015. The Public Trust, as first defendant, accepted the deceased lacked testamentary capacity based on a report it commissioned from Dr Jane Casey of 5 November 2017. On 28 February 2018, after obtaining a second opinion, Mr Blake as second defendant also accepted that. The proceeding was discontinued.

[2]In a costs judgment of 12 April 2018, I stated:1

The plaintiffs could have sought full solicitor-client costs but have not. I award costs to the plaintiff, who has succeeded, on a 2B basis as they request. It is reasonably that expert advice be taken to determine the question of testamentary capacity. The Public Trust consented to the application once Dr Casey’s report was available. Accordingly, I direct the half of the costs payable by the Public Trust as trustee can be paid out of the estate.

I direct the half of the costs payable by Mr Blake be paid out of the estate also, in relation to all those steps up until his response to the Calderbank offer. After that point, I consider it is fair for Mr Blake to bear personally the cost of the additional steps in the proceedings that were required only to satisfy him of the validity of the application. Those steps appear to be the updating memorandum of plaintiffs for the duty judge list and appearance at the duty judge list.

[3]    The parties subsequently sought clarification of the cost award. In a minute of 26 April 2018, I clarified:

(a)The half of the costs awarded against Mr Blake, payable out of the estate, should be paid before the residual estate is distributed, reflecting my view that it was not unreasonable for Mr Blake (and the Public Trust) to test the application for recall of probate until Dr Casey’s report was available and the Calderbank offer was made and rejected. After that it was unreasonable and Mr Blake must pay, personally, the costs awarded from that point.

1      Ellin v The Public Trust [2018] NZHC 667 at [12].

(b)The judgment had not explicitly answered the application for Mr Blake’s own costs to be paid from the estate. They should be, up until the same point of rejection of the Calderbank offer, and they should be paid personally thereafter.

Further request for clarification

[4]    Ms Callanan, for the plaintiffs, now seeks further clarification. Ms Callanan says the plaintiffs do not believe the Court intended the consequence of the minute. The consequence is the residuary estate, which would otherwise largely be distributed to the plaintiffs, would fund all Public Trust’s costs, Mr Blake’s costs (except for those after the Calderbank offer) and the plaintiffs’ costs (except those after the Calderbank offer), when the plaintiffs succeeded in having probate recalled. She effectively asked me to reconsider my orders “so that a fair allocation of the costs can be made”.

[5]The Public Trust abides the Court’s decision.

[6]    Mr Strauss, for Mr Blake, initially adopted the position the Court is functus officio and did not intend to file a response. I reiterated my request for submissions on the basis I was considering whether to recall my judgment. In response, Mr Strauss submits there are no reasons to recall judgment consistent with the test for doing so. He submitted case law supports Mr Blake’s costs being paid from the residuary estate, and there is good reason for that. He observed it was the Public Trust which obtained probate of the will and also obtained Dr Casey’s report. He submits Mr Blake relied upon the Public Trust’s satisfaction of the deceased’s testamentary capacity. He seeks costs for preparing the memorandum.

Law of costs and estates

[7]    As stated in my original judgment, it is a fundamental principle of New Zealand civil law that costs follow the event: a losing party pays a winning party a contribution towards their legal costs.2

2      At [10], citing High Court Rules 2016, r 14.2(a) and Manukau Golf Club Inc v Shoye Venture Ltd

[2012] NZSC 109, [2013] 1 NZLR 305 at [8].

[8]    There are further principles relating to costs in respect of estates that effectively soften the impact of the general rule on unsuccessful parties. I have further reviewed the relevant case law. In Loosley v Powell, the Court of Appeal set out the following paragraph from Re Paterson:3

The Court has a general discretion as to costs in all actions and proceedings before it, but there are certain well-established principles upon which that discretion should be exercised in cases of contested wills. They are as follows:

(i)If the litigation originates in the fault of the testator - eg, by the state in which he left his testamentary writings, or by his eccentric or irrational habits and mode of life — or of those interested in the residue, the costs may properly be paid out of the estate.

(ii)If there be sufficient and reasonable ground, looking to the knowledge and means of knowledge of the opposing party, to question either the execution of the will or the capacity of the testator, or to put forward a charge of undue influence or fraud, the losing party may properly be relieved from the costs of his successful opponent.

(iii)Unless the circumstances of the case are such as to bring it within one of the foregoing exceptions, the general rule that costs should follow the event ought to prevail.

[9]The Court then said:4

As this statement indicates, in determining costs in a proceeding challenging a will or aspect of the will the reasonableness of the positions taken by the executors and claimants is central. Although in the end one side is likely to win and the other to lose in proceedings, it can often be reasonable in the case of wills for the parties to put their respective positions to the court for a judge to decide on the outcome. Executors are often bound by their duties to propound or contest a position.

[10]   However, while the second principle in Re Paterson might generally mean the unsuccessful but reasonable party should not bear the costs of the successful party, this does not necessarily mean the estate should always bear the unsuccessful party’s own costs. This will vary based on all relevant circumstances “to do justice to all of the parties”, as Davidson J stated in Re Taylor, where he ordered costs to lie where they fell.5

3      Loosley v Powell [2018] NZCA 3 at [118], citing Re Paterson [1924] NZLR 441 (SC) at 442 (paragraph formatting modified).

4 At [119].

5      Re Taylor [2016] NZHC 483.

Costs here

[11]   Here, I concluded it was not unreasonable for Mr Blake to test the application for recall of probate until after Dr Casey’s report was available and the Calderbank offer was made and rejected. Accordingly, I consider the costs awarded against the defendants should be met out of the estate, until that point. The losing party was properly relieved from the costs of his successful opponent, following the second principle in Re Paterson. That is the effect of my judgment. I decline the (implicit) application to recall it.

[12]   However, I consider I was too hasty in treating the second defendant’s own costs the same in paragraph [4] of my Minute of 26 April 2018. Ordinarily, as the unsuccessful party, the defendants would be liable for the successful plaintiffs’ costs. The effect of Re Paterson is to allow unsuccessful parties an indulgence so they are not required to pay the successful party’s costs. Mr Blake is entitled to that, given his initial testing of the application for recall of probate was reasonable.

[13]   But while I consider the losing parties are properly relieved from (most of) the costs of their successful opponents, I do not consider the estate should also bear Mr Blake’s own costs, in the circumstances of this case. That is primarily because the result of such an order, given the provisions of the will here, would be that all the costs of the litigation would effectively be borne by the plaintiffs, despite their success. And while it may have been reasonable to question the recall, Mr Blake did so substantively for his own benefit. I recall the order in paragraph [4] of my minute of 26 April 2018, on the basis I had not had regard to relevant authoritative decisions. 6

[14]The overall effect of my orders is:

(a)the successful parties’ costs will be paid out of the estate rather than by the defendants;

(b)the defendants’ costs will lie where they fall.

6      Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC) at 633; Unison Networks Ltd v Commerce Commission [2007] NZCA 49 at [32].

[15]   I consider this accords with the interests of justice. I do not make any costs awards in relation to these, or the previous, memoranda.

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Palmer J