Gibson

[2022] NZHC 1797

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV 2020-485-547

[2022] NZHC 1797

IN THE MATTER OF

AND

Section 14 of the Wills Act 2007

IN THE MATTER OF

an application by RODERICK DEAN GIBSON

On the papers

Counsel:

P Cranney and A J Connor for Applicant

G S McCardle and N J Tutt for Dianne Sullivan

Judgment:

25 July 2022

JUDGMENT OF MALLON J

(Costs No 2)

Introduction

[1]    In the substantive judgment in this proceeding, I made an order under s 14 of the Wills Act 2007 declaring two documents valid as the last will of Goossewinus Johannes Huurdeman.1 That declaration was unsuccessfully opposed by Melanie Mitchell, the daughter of Mr Huurdeman’s long-term partner, on the grounds that  Mr Huurdeman may have lacked testamentary capacity or been subject to undue influence.

[2]    The issue of costs now falls to be considered. The questions are whether the applicant, Roderick Gibson, should be awarded costs on a 2B basis (an amount totalling $25,249.50) against Ms Mitchell, or whether an order should be made that costs are paid out of the assets of the estate.

1      Re Gibson [2021] NZHC 3256 [Substantive judgment].

Re Gibson (Costs No 2) [2022] NZHC 1797 [25 July 2022]

[3]    In an interim costs judgment,2 I indicated that if I were to make an order for costs against Ms Mitchell, it would be appropriate for those costs to be met from the estate. I also indicated that, as both parties should have their own reasonably incurred costs reimbursed from the estate, there would be no need to make an order for costs against Ms Mitchell. I gave the parties the opportunity to make submissions if they wished to oppose this course. I indicated that if both parties accepted this position, then each party would be entitled to their reasonably incurred costs as approved by the administrator.

[4]    I have since received submissions from both parties. Ms Mitchell accepts the approach set out in my interim costs judgment with reliance on Wilson v Donnellan, Mumby v Mumby and Squires v Nijisse.3 Mr Gibson opposes the proposed approach. He maintains his position that there should be costs ordered against Ms Mitchell as the unsuccessful party and that such costs should not be met by the estate. He further submits it would be unjust if all or some of her costs were met by the estate.

Relevant principles

[5]    The general principle is that costs follow the event meaning that Ms Mitchell, as the unsuccessful party, would pay Mr Gibson’s costs.4 However, the Court retains residual discretion to award costs in such a manner as achieves justice between the parties.5

[6]    The issue of costs in s 14 will validation applications has been addressed by a series of cases. Most helpfully, the Re Paterson (Deceased) principles – that set out when an unsuccessful challenging party’s costs may be met by the estate – were summarised by Davidson J in Harris v Taylor.6 While maintaining the principle that courts should ensure parties “will not be tempted into fruitless litigation by the knowledge that the costs will be defrayed by the estate of the testator”,7 an

2      Re Gibson [2022] NZHC 1326 [Interim costs judgment] at [4].

3      Wilson v Donnellan [2014] NZHC 1609; Mumby v Mumby [2016] NZHC 2836; and Squires v Nijise HC Auckland CIV-2002-404-1618, 6 July 2004.

4      High Court Rules 2016, r 14.2.

5      Rule 14.1.

6      Harris v Taylor [2016] NZHC 483 at [27]; and Re Paterson (Deceased) [1924] NZLR 441 (SC).

7      Harris v Taylor, above n 6, at [16], quoting G E Dal Pont Law of Costs (3rd ed, LexisNexis, Australia, 2013) at [10.17].

unsuccessful party opposing validation may have their costs borne by the estate where they have “taken proper steps to acquaint themselves of the facts and have been led reasonably to a bona fide belief that good ground existed for impeaching the will”.8 There has also been a practice in some cases of awarding costs of all parties to be paid out of the residue of the estate.9

Submissions

[7]    Mr Gibson submits that Ms Mitchell’s own costs should not be reimbursed by the estate. He submits Ms Mitchell’s contest to the deceased’s testamentary capacity was  unnecessary  in  light  of  the  evidence  before  the  Court.  He  claims  that   Ms Mitchell’s contest caused the estate and the applicant unnecessary expense. He refers to without prejudice save as to costs correspondence in which a not insubstantial offer was made to settle the matter and the strength of the applicant’s position was pointed out in detail. Further he is concerned that, as that there is no information before the Court about what Ms Mitchell’s costs are, the Court should be cautious to make an order granting her costs to be paid out of the estate.

Decision

[8]    I remain of the view that it is not necessary to make an order for costs against Ms Mitchell. That is because I consider that each party is entitled to their reasonably incurred costs from the estate. A costs order against Ms Mitchell would simply be reimbursed from the estate.

[9]    As discussed in the substantive judgment,10 there were grounds for Ms Mitchell to be suspicious about whether Mr Huurdeman had testamentary capacity and was subject to undue influence at the time that the two documents were created. In short,

8 At [16].

9      See Mumby v Mumby, above n 3 (Courtney J ordered that 50 per cent of the costs awarded in favour of the successful party and a witness’ costs who joined the proceeding should be met by the estate. There was an evidential foundation for raising the issue of undue influence.); Wilson v Donnellan, above n 3 (Clifford J concluded that the nature of the death “unavoidably” made testamentary capacity an issue and it was appropriate that costs be awarded out of the estate, with a reduction due to delay.); and Squires v Nijise, above n 3 (Baragwanath J considered that the plaintiff’s submission for all costs of active parties to be met by the estate was “principled and appropriate” as the circumstances fell within the second Re Paterson principle).

10 Substantive judgment, above n 1, at [72]–[75].

Mr Huurdeman had recently been hospitalised as a result of a serious stroke, there were some things that were possibly consistent with muddled thinking following his discharge, and the uncompleted will documents made substantial gifts to the sons of Mr Gibson, who had been around Mr Huurdeman at this time, rather than to his unwell long-term partner.

[10]   I consider it was reasonable for Ms Mitchell to have this issue tested on the evidence presented in a court despite the without prejudice save as to costs correspondence. I understood from counsel for Mr Gibson at the hearing that even if I found in his favour (as I did), there would be discussions with Ms Mitchell over an appropriate payment to her mother or her in any event which the without prejudice save as to costs offer likely reflects to some extent.  I also remain of the view that  Ms Mitchell tested the evidence in an efficient manner. I would be surprised if substantial legal costs were incurred by her in doing so. The protection against this is an order that the administrator of the estate approve only reasonable costs. That applies to both Mr Gibson’s costs and Ms Mitchell’s costs in this proceeding.

[11]   I therefore order that each party is entitled to their reasonably incurred costs from the estate as approved by the administrator.

Mallon J