Griffin v Walters

[2012] NZHC 929

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2011-454-316 [2012] NZHC 929

UNDER  Section 21 Administration Act 1969

IN THE MATTER OF     the Estate of Amy Thelma Walters

BETWEEN  ANNE IRENE GRIFFIN AND JOHN HAMISH FREEBAIRN

Applicants

ANDPETER MICHAEL WALTERS Respondent

Hearing:         On papers

(Heard at Wellington)

Counsel:         A N Isac for Applicants

J A Langford for Respondent

Judgment:      7 May 2012

JUDGMENT OF MILLER J

[1]      This judgment responds to an application for indemnity costs.

[2]      On 10 August 2011 I made orders, without opposition, removing Mr Walters as trustee and executor of an estate and vesting the estate’s main asset, a home at Palmerston North, in the applicants as the remaining executors.  The respondent and one of the applicants, Anne Griffin, are children of the testatrix, and Mr Freebairn is a partner in Fitzherbert Rowe.

[3]      Mr Walters was removed because of a conflict of interest.  It was agreed that the home would be sold to him, subject to finance.  He sought several extensions of time  in  relation  to  the  finance  condition.    The  last  extension  was  granted  on

condition that he signed a variation to the agreement for sale and purchase, providing

GRIFFIN AND FREEBAIRN V WALTERS HC PMN CIV-2011-454-316 [7 May 2012]

a “cash out” clause of four working days and further providing that decisions about the sale could be made by the applicants alone.   However, Mr Walters refused to sign the variation and moved into the property without consent.  He then refused to agree to cancellation of the agreement for sale and purchase, and prevented the remaining executors from selling the property to a third party.

[4]      Since Mr Walters was removed there have been negotiations over costs.  The trustees sought indemnity costs but were willing to settle for scale on a 2B basis, in the  sum  of  $9,571.00.    Mr  Walters  failed  to respond  to  this  offer  initially but eventually offered $5,000.00, to be deduced from his share of the estate.  That offer is not acceptable to the remaining beneficiaries, his siblings.

[5]      Indemnity costs are seldom awarded.  They are reserved for truly exceptional cases.   Under r 14.6(4)(a), the Court must be satisfied that  the party has acted vexatiously, frivolously, improperly, or unnecessarily in defending the proceeding. Apart from that, indemnity costs may be awarded where a party has behaved badly or very unreasonably.[1]    They are rarely awarded against a trustee in the absence of fraud or other dishonest behaviour.  Costs must reflect how the parties acted during the litigation, not before it.[2]   Behaviour beforehand may be the subject of an award of damages.

[1] Bradbury v Westpac [2009] 3 NZLR 400.

[2] Paper Reclaim Ltd v Aotearoa International Limited [2006] 3 NZLR 188.

[6]      I am not prepared to order indemnity costs in this case.  It is clear that Mr Walters faced a conflict of interest which he ought to have recognised by resigning. Instead he actively frustrated the sale of the property.   However, it cannot be said that his conduct of the litigation, is opposed to his behaviour before it, has added unnecessarily to costs, and there was no reasoned judgment so there is no finding of dishonesty.

[7]      There can be no doubt, however, that the trustees are entitled to scale costs on a 2B basis.  Judgment may be sealed for that sum at once.  It is for the executors to

decide whether they will set the costs off against Mr Walters’ share of the estate.

[8]      The  applicants  should  submit  a  schedule  of  costs  to  the  Registrar  for approval, copying it to counsel for Mr Walters, who must respond within seven days of receipt if he wishes to debate quantum.

Miller J

Solicitors:

Fitzherbert Rowe, Palmerston North for Applicants

Langford Law, Wellington for Respondent