Estate of Keast

[2015] NZHC 1505

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

CIV-2014-485-007847 [2015] NZHC 1505

UNDER

THE ADMINISTRATION ACT 1969

IN THE MATTER OF

THE WILL OF

WILLIAM ROBERT KEAST

Hearing:	1 July 2015 (On the papers)
Appearances:	JNP Young for the Estate J G French for Caveator A J Woods for the Beneficiaries
Judgment:	1 July 2015

JUDGMENT OF DUNNINGHAM J RE:  COSTS DECISION

[1]      On 20 May 2015, I issued a decision in these proceedings granting probate of the 28 November 2012 will of the late William Robert Keast and rejecting the argument of the late Mr Keast’s son, Lance Keast, opposing such grant on the basis that the will was procured through the undue influence of one of his sisters.

[2]      At  the  conclusion  of  the  decision  I  indicated  that  2B  costs  seemed appropriate, but reserved the issue of costs and provided a timetable for exchange of costs memoranda.

[3]      Memoranda have now been received.  The position of the four daughters of the late Mr Keast (the beneficiaries),1  is that they seek an uplift on costs calculated

1      I refer to the four sisters as the beneficiaries for convenience only, noting that Lance Keast, too, is also a beneficiary.

ESTATE OF WILLIAM ROBERT KEAST [2015] NZHC 1505 [1 July 2015]

on a 2B basis under the costs schedule in the High Court Rules.  They calculate their entitlement to costs if awarded on a 2B basis is $22,785.50.2   However, they seek an uplift on that, noting that their actual solicitor-client costs are $30,187.50 including GST.

[4]      The uplift is sought in reliance on the High Court Rules, r 14.6(3)(d) which permits the Court to order higher costs if “some other reason exists which justifies the Court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious”.  The reason given in this case is that, through Lance Keast’s actions by, first, refusing to co-operate to apply for probate when he was a trustee of the estate, and then resigning as trustee and filing a caveat, he has financially disadvantaged the beneficiaries.  Those steps meant that demand could not be made for repayment of the $862,067.29 loan Lance Keast’s family trust owed to the estate, nor could the 1.3 per cent interest rate be increased.  The beneficiaries point out that if interest was able to be claimed at, say, an estimated five per cent then, in the 22 months which have elapsed since their father’s death, there would be an additional $58,815.90 paid by Lance Keast’s family trust to the estate. They assert that this is a ground for ordering increased costs.

[5]      In response, Lance Keast (“the caveator”), submits that there is no reason to depart from costs being awarded on a 2B basis.  In particular, he argues there is no valid foundation for the beneficiaries’ claim because:

(a)       the  purpose  of  costs  is  to  ensure  the  unsuccessful  party makes  a

contribution to the successful party’s legal costs of the litigation;

(b)costs are not intended to provide compensation for the successful party in relation to an alleged loss which was not the subject of a litigation;

(c)       there  has  been  no  finding  of  legal  liability  in  respect  of  the

beneficiaries’ claim over interest; and

2      Although the caveator calculates 2B costs as totalling $18,805.50.

(d)      the costs regime should not be used as a “a back door” method of

obtaining compensation or damages in relation to a separate matter.

Discussion

[6]      It is well understood that the Court should start from the presumption that the standard costs regime contained in the High Court Rules should apply unless the party seeking a departure from that regime satisfies the Court there is reason to do so.  In Bradbury v Westpac Banking Corporation, the Court of Appeal summarised, in general terms, when increased or indemnity costs might be awarded saying:3

[27]     The distinction among our three broad approaches – standard scale costs, increased costs and indemnity costs – may be summarised broadly:

(a)      standard scale applies by default where cause is not shown to depart from it;

(b)      increased costs may be ordered where there is a failure by the paying party to act reasonably; and

(c)      indemnity  costs  may  be  ordered  where  that  party  has behaved either badly or very unreasonably.

[7]      The unreasonable conduct must be in relation to the proceeding and thus, after it was commenced, not earlier conduct.4    The Court should also consider the extent to which the failure to act reasonably contributed to the time or expense of the proceeding.5

[8]      I accept that there was nothing about the caveator’s approach to the litigation which unreasonably contributed to the time or expense of the proceeding.   While r 14.6(3)(d) is expressed very generally, I do not think it goes so far as to encompass using costs awards to effect a compensatory regime for actions which are unrelated to the reasonableness of the legal costs incurred in the litigation.  For these reasons I

do not think this is a case where it is proper to award increased costs.

3      Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400.

4      Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [160].

5      Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24

NZTC 24,500 at [165].

[9]      For the same reasons, the more stringent threshold which must be reached to award indemnity costs has not been reached in this case.

[10]     In any event, it is clear that scale costs do compensate the beneficiaries for a reasonable  proportion  of  their  actual  costs,  which  is  the  intention  of  the  costs regime.6      A  2B  costs  award  will  see  the  beneficiaries  recover  approximately two-thirds of their actual  reasonable legal  costs,  whether the ceaveator’s  or the beneficiaries’ calculation is accepted. That, too, points against a higher costs award.

[11]     The only other issue in dispute is whether, if 2B costs are awarded, the calculation advanced by the caveator or by the beneficiaries should apply.  The only difference between them is that the beneficiaries claim for both step 2 (commencement of defence by defendant) and step 38 (filing note of opposition and

supporting affidavits) from Schedule 3.7    However, that in my view duplicates the

claim for costs for that stage of the proceeding.  The proceeding was analogous to an originating application and did not require the filing of a statement of defence in addition to filing affidavits responding to the caveator’s position.   Only step 38 should therefore be claimed.

[12]     Accordingly,   the  beneficiaries  are  entitled  to   2B  costs  calculated  in accordance  with  the  steps  listed  in  the   caveator’s  costs  submissions  dated

22 June 2015.

Solicitors:

Preston Russell Law, Invercargill

French Burt Partners, Invercargill

Smith Wood & Woods, Gore

6      High Court Rules, r 14.2(d) states that the daily recovery rate “should normally be two-thirds of

the daily rate considered reasonable in relation to the proceeding or interlocutory application”.

7      High Court Rules, sch 3.