Farn v Loosley
[2017] NZHC 1951
•16 August 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-485-006345 [2017] NZHC 1951
BETWEEN EVELYN GWYNNE FARN,
KATHERINE ANNE POWELL, BARBARA ANNE POWELL, JILL ROSEMARY ELEVELD AND MARK ELEVELD
Plaintiffs
AND
JENNIFER LOOSLEY AND ROBERT GEORGE LOOSLEY
Defendants
THOMAS ALEXANDER LOOSLEY and NICHOLAS EDWARD LOOSLEY Interested Parties
Hearing: On the papers Judgment:
16 August 2017
JUDGMENT OF COURTNEY J [COSTS]
This judgment was delivered by Justice Courtney on 16 August 2017 at 3.00 pm
pursuant to R 11.5 of the High Court Rules
Registrar / Deputy Registrar
Date………………………..
FARN & ORS LOOSLEY [2017] NZHC 1951 [16 August 2017]
Introduction
[1] In my decision of 2 March 2017 I made an order recalling probate of the will made by Allison Slater on 8 May 2014. The plaintiffs asserted that Allison had lacked testamentary capacity when she executed the will or, alternatively, that she had been unduly influenced by the defendants, Allison’s sister and brother-in-law, Jennifer (Jenny) and Robert Loosley, who were the executors of the will, and the interested parties, Thomas (Tom) Loosley and Nicholas (Nick) Loosley, who shared the residuary estate under the 2014 will.
[2] I was not satisfied that Allison had testamentary capacity either when she executed the will or when she instructed her solicitor a few days earlier. The application to recall probate therefore succeeded on the ground of lack of testamentary capacity. I did not, however, find that Allison had been unduly influenced in the making of the will.
[3] The plaintiffs seek costs on a 2C basis against Jenny, Tom and Nick personally. The defendants and interested parties do not accept that all the steps in the proceedings justify costs on a 2C basis. Nor do they accept that they should meet the costs personally. Instead, they say that the costs of all parties relating to the issue of testamentary capacity should be met from the estate and that the costs of the defendants and the interested parties on the undue influence issue should be met by the plaintiffs personally.
[4] The following questions arise:
(a) Are costs to be assessed on a 2B or 2C basis?
(b)Should costs on the undue influence issue be separated from costs on the testamentary capacity issue?
(c) Should the plaintiffs’ costs be met by the defendants and/or interested
parties or from the estate?
(d)Should the defendants’ costs be met from the estate either in part or whole?
(e) If the defendants’ costs are to be met from the estate, either wholly or in part, should those costs include the costs associated with their counsel, Mr Grant?
(f) Should the costs of the interested parties be met, wholly or in part, from the estate?
Costs categorisation
[5] The basis for the plaintiffs’ claim to have costs assessed on a 2C basis derives from Faire J’s minute of 31 March 2015 in which he described the case as a “complex defended proceeding” and specified costs category 2. I do not accept that Faire J’s description of the matter as a complex defended proceeding was intended to convey that costs should be applied across the board on a 2C basis. Categorisation does not extend to the appropriate daily rate.1 Rather, costs are to be assessed by applying the appropriate daily rate “to the time considered reasonable for each step reasonably required in relation to the proceeding”.2
[6] In my view, this proceeding does not justify band C. This was an application to recall probate which fell to be determined within a relatively narrow factual scope and on well known principles. It is true that the expert evidence gave rise to issues of some complexity. But they were not beyond what could reasonably be expected in a proceeding of this type. I therefore proceed on the basis that costs are appropriately assessed on a 2B basis for all steps in the proceeding.
Costs on the undue influence issue
[7] Ordinarily, the party who fails can expect to pay costs to the party who succeeds.3 Although this general principle may not apply where a party has
succeeded on one issue but failed on another, cases such as Packing In Ltd (in
1 High Court Rules, r 14.3.
2 High Court Rules, r 14.2(c).
3 High Court Rules, r 14.2.
liquidation) formerly known as Bond Cargo Ltd v Chilcott4 and Weaver v HML Nominees Ltd5 show that the question is rarely as simple as whether a party succeeded or failed on a particular issue. The assessment of costs in such cases requires a broader appraisal; the ultimate outcome and the significance of the issue in
terms of time and cost both in preparation and at trial will usually be more significant indicators of where costs should fall.
[8] The defendants and interested parties say that the allegation of undue influence was purely speculative and that, upon receipt of the evidence that Mr and Mrs Loosley were absent from Auckland for most of the relevant time, the claim should have been abandoned. Therefore, even though the plaintiffs succeeded in having probate recalled, it is the defendants and interested parties who should have costs on the undue influence issue.
[9] I do not accept that the position was so clear that the claim ought to have been abandoned before trial. First, the evidence of statements made by Allison before her death and by Jenny to her mother following Allison’s death had some probative value on this issue. Ultimately, I found that these statements did not evidence undue influence but that finding was made with the benefit of cross- examination. The position before trial was not so clear cut.
[10] Secondly, Jenny and Robert’s own conduct following Allison’s death and the secrecy with which they dealt with probate raised understandable suspicions of undue influence. I am satisfied that their conduct was no more than a misguided effort to limit what they perceived would be the unhappy reaction from other family members. But in the circumstances they can hardly complain that those same family members drew an adverse inference from it.
[11] In any event, it was the question of testamentary capacity that consumed most of the time and cost in the proceeding. My broad assessment is that the testamentary capacity issue accounted for about 80 per cent of the time and cost of the proceeding.
It required careful attention to medical records, fact evidence and, of course,
4 Packing In Ltd (in liquidation) formerly known as Bond Cargo Ltd v Chilcott (203) 1 [PRNZ]
189 (CA).
5 Weaver v HML Nominees Ltd [2016] NZHC 473 at [7].
extensive expert evidence, which was the determining factor in the outcome of the case. By comparison, the evidence relevant to the allegation of undue influence fell within a relatively narrow timeframe. Further, much of that evidence would have been covered in relation to the testamentary capacity issue in any event because Allison’s interactions with her family were important in determining her physical and mental condition in the weeks leading up to the making of the will. Although the expert evidence did touch on this aspect, it was not the primary focus of the case as it was run at trial. I therefore do not think it necessary or appropriate to treat costs on these issues differently.
Should the estate meet some or all of the parties’ costs?
[12] Although all matters as to costs are at the discretion of the Court,6 in the probate context, it has long been recognised that costs in cases of contested wills may be awarded out of the estate on the basis of the following principles, summarised by Stringer J in Re Paterson:7
(i) If the litigation originates in the fault of the testator e.g. 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 of costs. (iii) Unless the circumstances of the cases are such as to bring it within one of the foregoing exceptions, the general rule that costs should follow the event ought to prevail.
Should the plaintiffs’ costs be met from the estate?
[13] The plaintiffs seek an order for costs against the defendants and interested parties personally. Conversely, the defendants seek to have any costs to which the plaintiffs are entitled met from the estate.
[14] The plaintiffs’ position undoubtedly stems from the clear indication given by the defendants at the interlocutory stage that if the plaintiffs failed, the defendants
6 High Court Rules, r 14.1.
7 Re Paterson [1924] NZLR 441, applying Mitchell & Mitchell v Gard & Kingwell (1863) 3 Sw & Tr 275 and Spiers v English (1907) P 122; see e.g. Squires v Nijsse HC Auckland CIV-2002-404-
1618, 6 July 2004.
and interested parties would seek costs against them personally. However, I am satisfied that most of the plaintiffs’ costs award ought to be met from the estate on the basis that the case falls within the first category of cases identified in Re Paterson. On the issue of testamentary capacity the litigation was largely attributable to Allison’s own conduct, albeit that her conduct was largely the unfortunate result of her illness and medication.
[15] I have, however, reached the view that the defendants should meet 20 per cent of the plaintiffs’ costs award. The reason is that, by keeping the terms of the will secret until probate had been granted, the executors contributed to the costs of determining the validity of the will. From an early stage the plaintiffs held concerns about Allison’s testamentary capacity and suspicions about undue influence. The former was based largely on their perception of how unwell Allison had been in the weeks preceding her move to Dove House. The latter was based largely on statements that Allison had made to them about Robert and their perception that he and Jenny had exercised an inappropriate level of control over her.
[16] Had the executors been open about the will there is no doubt that the plaintiffs would have lodged a caveat and probate would ultimately have been required to be proved in solemn form. Had that happened, some of the cost involved in the proceeding would have been avoided. For example, since it is certain that the defendants, as executors, would have propounded for the will, the cost of determining which party bore the onus of proof would have been avoided.8 In these circumstances I consider that the executors should bear a proportion of the plaintiffs’ costs award personally.
Should the defendants’ costs be met from the estate?
[17] It follows from my observations above that I also consider that the executors ought to have a proportion of their costs met from the estate. Given the circumstances in which the will was executed there was plainly an issue over testamentary capacity which would inevitably have resulted in litigation if only by
way of proof of the will in solemn form as opposed to an application to recall
8 See Farn v Loosley [2015] NZHC 1045.
probate. The defendants, as executors, would have propounded for the will and it would have been reasonable to do so.
[18] The defendants contributed to the suspicion of undue influence and to the manner in which proceedings were ultimately brought. For this reason they should bear a proportion of the costs themselves. The defendants will therefore have 80 per cent of their costs on a 2B basis met from the estate.
Costs associated with defendants’ counsel
[19] Throughout this matter and at trial the defendants have been represented by counsel, Mr Grant. The plaintiffs assert that Mr Grant has acted for the defendants personally rather than in their capacity as executors and that costs associated with his representation must be met entirely by the defendants personally. In a memorandum dated 8 May 2017 Mr Scotter, for the plaintiffs, traced the statements made by Mr Grant at the interlocutory stage which, he says, show that Mr and Mrs Loosley were represented in their capacities as executors by Wynyard Wood and that Mr Grant’s involvement was in relation to their involvement in a personal capacity as beneficiaries and (in Mr Loosley’s case) a witness.
[20] In a memorandum dated 18 July 2017 Mr Grant, for the defendants and interested parties, asserted that Mr and Mrs Loosley were sued in different capacities, namely as executors and as defendants for the equitable wrong of undue influence and had been represented in both capacities throughout by the firm of Duthie White with Mr Grant as counsel. In the circumstances of the case Mr Grant submitted that all of the costs incurred by the defendants in both capacities ought to be met from the estate.
[21] I do not accept Mr Grant’s proposition that Mr and Mrs Loosley were sued in two different capacities. In the first amended statement of claim the plaintiffs pleaded that one or more members of the Loosley family had exerted undue influence over Allison. The allegation was particularised by reference to various events and statements. However, those allegations did no more than lay the factual foundation for the cause of action. No relief was sought against Mr or Mrs Loosley.
The only relief sought were orders recalling probate of the disputed will and granting probate of the previous will and costs. In my view, the defendants were sued jointly and, clearly, only in their capacity as executors.
[22] Mrs Loosley certainly had an interest in the proceeding as a beneficiary as well and would have been entitled to participate in the proceeding to advance that interest. But her participation as a defendant was advanced in tandem with her husband, who was not a beneficiary, and was consistent with their positions as executors. I am satisfied that Mr Grant’s representation of the defendants was related to their status as executors and that the calculation of costs should include the costs of that representation.
[23] This conclusion does not deal with the position of Wynyard Wood. It was a solicitor from that firm who prepared the will and it appears that Wynyard Wood and the defendants accepted (properly) that it would be inappropriate for it to act for the executors on the litigation. Both the plaintiffs and the defendants consider that Wynyard Wood should be entitled to charge their reasonable costs against the estate and seek to have an order made to that effect. It seems appropriate, and indeed usual, that Wynyard Wood’s costs as solicitor for the estate would be met but it does not require an order to effect that.
Should the interested parties’ costs be met from the estate?
[24] In his memorandum of 20 April 2017 and 18 July 2017 Mr Grant submitted that the interested parties should have their costs met from the estate. Both had a direct interest in the outcome of the litigation and Tom, in particular, faced specific allegations in relation to the undue influence cause of action.
[25] I agree that a beneficiary in this situation may be justified in being represented and actively participating in the trial. In those circumstances it is likely to be appropriate that their costs be met from the estate.9 But there is a problem in this case in that the interested parties were not separately represented. Their position
was effectively subsumed in the defence presented by the executors. Without some
9 See e.g. Mumby v Mumby [2016] NZCH 2836.
basis on which to conclude that the interested parties were themselves incurring the costs of participating in the trial, I see no reason to make a separate costs award in relation to them.
Result
[26] The plaintiffs are entitled to costs on a 2B basis to be met 80 per cent by the estate and 20 per cent by the defendants. The plaintiffs are also entitled to the actual costs of the expert witness and reasonable disbursements, both of which are to be met by the estate.
[27] The defendants are entitled to have costs assessed on a 2B basis with 80 per cent of the costs together with the actual costs of expert witnesses and reasonable disbursements met from the estate.
[28] I make no order as to costs in relation to the interested parties.
[29] If counsel cannot agree as to the costs calculation the parties may file memoranda and I will deal with the matter on the papers.
P Courtney J
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