Estate of O'Brien

[2022] NZHC 2282

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2021-485-614206

[2022] NZHC 2282

IN THE MATTER

of the estate of DAWN O’BRIEN

UNDER

Section 60 of the Administration Act 1969

BETWEEN

ERIN JANE O’BRIEN

Applicant

AND

CINDY MARIE O’BRIEN

Caveator

Hearing:	On the papers
Counsel:	G E Slevin for the Applicant S J Zindel for the Caveator
Judgment:	8 September 2022

JUDGMENT OF DOOGUE J

As to Costs

This judgment was delivered by me on 8 September 2022 at 12.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

RE ESTATE OF O’BRIEN [2022] NZHC 2282 [8 September 2022]

Introduction

[1]        Dawn O’Brien (the deceased) died intestate on 1 May 2021 and is survived by her four daughters, Cindy Marie O’Brien (the caveator), Christine Hema Broderick, Maria Dawn O’Brien and Erin Jane O’Brien (the applicant).

[2]        The deceased’s estate comprises a sum of slightly less than $200,000, being the proceeds of the sale of her house. The funds are held in the trust account of the applicant’s solicitors, subject to the statutory trusts that apply on intestacy.

[3]        The applicant has now been granted administration of the deceased’s estate by order of the Court dated 9 August 2022 and applies, as administrator, for costs against the caveator pursuant to s 60(3A) Administration Act 1969 (the Act).

Background

[4]        The deceased’s health deteriorated in 2019. Following a series of falls at home and a short time in hospital she left the family home in Westport, where the caveator had been living with her, to live with Christine Broderick. Around this time the deceased granted the applicant and Christine Broderick enduring power of attorney for her personal care and welfare and property. The deceased remained living with Christine Broderick and her partner until she was admitted to a rest home some months before her death.

[5]        The caveator remained in occupation of the family home until shortly before it was sold and issued proceedings in the Family Court alleging misconduct by the applicant and Christine Broderick as the deceased’s attorneys. The Family Court proceedings were eventually discontinued.

Conduct of this proceeding

[6]        Christine Broderick and Maria O’Brien agreed that the applicant should apply for letters of administration. Correspondence to the caveator seeking her consent to the application went unanswered.

[7]        The applicant applied for letters of administration on 22 October 2021, not knowing  that  the  caveator   had   lodged   a   caveat   against   administration   on 15 October 2021. Subsequent correspondence to the caveator seeking to understand and resolve her concerns also went unanswered.

[8]        Counsel for the applicant wrote to the caveator’s solicitor on 31 January 2022, again seeking to resolve the caveator’s concerns without the need for proceedings. Counsel for the applicant was then advised that the caveator did not consider the applicant to be a trustworthy person to administer the estate and sought the appointment of an independent administrator such as the Public Trust.

[9]        This was not agreed to, given the simplicity of the administration (involving an equal distribution of the funds comprising the estate) and an indication from the Public Trust the costs of administration would be in the order of $7,000 – $8,000.

[10]      No further communication was received from the caveator and the applicant applied for an  order  nisi  on  11  March  2022,  which  the  Registrar  granted  on  26 April 2022.

[11]      The caveator effectively withdrew her caveat by signing a consent memorandum that was filed in court to allow it to be discharged on 3 August 2022. The caveator only did so when it became apparent that she could not continue to delay matters, by not complying with directions that she provide evidence to support her objection to the application.

[12]      On 6 May 2022, a memorandum was filed by the caveator alleging drug use and financial exploitation of the deceased by the applicant as the caveator’s reasons for requiring the applicant to stand aside in favour of the Public Trust administering the estate.

[13]      At a teleconference and in a Minute of 10 May 2022, Nation J pointed out that there appeared to be little scope for mismanagement of the estate funds and suggested a solution whereby the applicant could give an undertaking that the funds be distributed equally between the deceased’s children after payment of estate liabilities, such undertaking to bind her solicitor in whose trust account the funds are held.

[14]      Nation J also warned the parties that if resolution was not achieved and one of the parties was unsuccessful in what they sought, all costs might have to be paid out of that person’s share of the estate rather than the estate generally. Timetabling directions were made as proposed by the caveator’s counsel.

[15]      Further to Nation J’s Minute, counsel for the applicant wrote to counsel for the caveator on 13 July, conveying the applicant’s offer to give the undertakings as suggested if the caveator would agree to pay the costs the applicant had by then incurred as a result of the caveat. That offer was not accepted.

[16]      A case management conference was held on 5 July before Lester AJ and further timetabling directions were made. Those directions were not complied with.

[17]      Another teleconference was convened on 28 July, at which counsel for the caveator indicated he had instructions that his client no longer wished to oppose the application and would consent to the discharge of the caveat. A consent order was made. An order nisi was made absolute on 9 August 2022.

Costs principles

[18]      Costs are at the discretion of the Court but must be determined by the application of the principles set out in r 14.1 of the High Court Rules 2016.

[19]In short:

(a)the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds;

(b)an award of costs should reflect the complexity and significance of the proceeding;

(c)an award of costs should not exceed the costs incurred by the party claiming costs; and

(d)so far as possible, the determination of costs should be predictable and expeditious.

Increased costs

[20]Increased costs may be awarded under r 14.6:

14.6     Increased costs and indemnity costs

…

(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

…

(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

(c)the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; …

The applicant’s submissions

[21]      It is apparent from the memoranda filed on her behalf that the caveator’s concerns related to the applicant’s conduct as the deceased’s attorney, which she had

previously challenged in Family Court proceedings and eventually chose not to pursue.

[22]      Ample opportunities were afforded in this proceeding to the caveator to substantiate her concerns as to the applicant’s conduct. She did not do so. There is therefore no evidence to show that the caveator had any justifiable basis for lodging the caveat. It appears in those circumstances that the caveat was lodged vexatiously or frivolously by the caveator.

[23]      The applicant submitted increased costs are justified in this case by the caveator’s failure to comply with directions of the Court, her pursuit of an argument that the applicant is untrustworthy without justification and in circumstances where the estate comprises a modest fund held in trust. The applicant submitted that it may be inferred that the caveator’s intervention was not motivated by a genuine concern as to how the estate might be administered but instead was lodged for a collateral purpose. I do not need to draw any inferences here as to motive, that is unnecessary.

[24]      The applicant submitted that it was unreasonable of the caveator in the circumstances of this case not to accept the applicant’s offer to dispose of the proceeding, (made at the Court’s suggestion and immediately after the first case management conference).

[25]      Further, the applicant submitted that the proceeding is of general importance to Christina Broderick and Maria O’Brien, who have been kept out of their share of the estate for almost 12 months for no justifiable reason and that it was reasonable for the applicant to bring the proceeding in their interests.

[26]      The applicant submitted that increased costs should be awarded for the above reasons, with an uplift of 50 per cent over 2B scale costs of $9,082.00.

[27]      The applicant further submitted that actual costs are relevant as an administrator has indemnity from the estate for recovery of their actual and reasonable costs. In this case, these amount to $13,998.38 as per the itemised schedule.

[28]      An uplift of 50 per cent would result in an award of $13,623.00, which would leave a residual amount of $375.38 to be met by the estate. The applicant submitted it would be unfair to impose any greater costs burden on the other three beneficiaries of the estate by encumbering their shares with the costs of proceedings that were made necessary by the caveator alone.

Costs by deduction from share of estate

[29]      The applicant submitted this is an appropriate case for the Court to make an order that any costs ordered to be paid by the caveator should be paid by deduction from her share of the estate.1

[30]      An order to this effect would settle matters in circumstances where enforcement proceedings would prolong conflict within the family and likely be uneconomical for the applicant, as administrator, to pursue.

The caveator’s submissions

[31]      Counsel for the caveator submitted that the caveat was not lodged vexatiously or frivolously but in good faith due to the caveator’s concern about the applicant’s lack of financial management skills and trustworthiness.

[32]      Counsel for the caveator submitted that Nation J’s timetabling directions were not met as a result of communication difficulties and the Court was advised as soon as instructions could be obtained that the case would be withdrawn.

[33]      He also submitted the caveator has received a bill for legal costs of $2,100.00 for work from December 2021. Little or no information was provided about what that was made up of. It was said this will have to be paid from her share of the inheritance.

[34]      It was also submitted that the applicant’s legal costs, being more than six times higher than the caveator’s, may well be excessive. That submission ignores the fact

1      Tavendale v Hargreaves [2013] NZHC 2990; Wakefield v Wakefield [2021] NZHC 203; Hopkins v Banks [2021[ NZHC 1367 and Moleta vDarlow (Costs No. 2) [2022] NZHC 620.

that the caveator had very little active participation in the proceeding and the running had to made by the applicant.

[35]      The caveator has been unable to pay the bill for legal costs and it will need to come from her inheritance.

[36]      The work was not complicated nor involved but it is accepted by the caveator that scale 2B costs would be $9,082.00.

[37]      Finally, counsel for the caveator submitted that scale costs are more than sufficient for the work done and that no uplift be imposed.

Conclusion

[38]      The course of the proceeding makes it very clear that although the caveat was lodged a caveatable interest was not ever established.

[39]The entire exercise was therefore unnecessary cost to all concerned.

[40]This is a clear case justifying an uplift, and a generous one.

[41]      I am satisfied the applicant has made out a case for 2B costs and an uplift of 50 per cent against the caveator.

[42]      I am also satisfied that it is in the interests of all parties for the costs to be paid directly from the caveator’s share of the estate.

Doogue J

Solicitors:

Connors Legal, Greymouth Zindels, Nelson

CC:

G Slevin, Christchurch