Guthrie v Brown

[2022] NZHC 748

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2021-412-61

[2022] NZHC 748

UNDER

the Senior Courts Act 2016 and Property Law Act 2007

BETWEEN

JENNIFER ANNE GUTHRIE and CHRISTOPHER WILLIAM RUSHTON,

as executors and trustees of the ESTATE OF BEVERLEY ANN RUSHTON

Plaintiffs

AND

JONATHAN ANDREW BROWN

Defendant

Hearing:	Determined on the papers
Counsel:	R M Reeve for Plaintiffs G A Paine for Defendant
Judgment:	12 April 2022

JUDGMENT OF ASSOCIATE JUDGE LESTER

(Costs)

GUTHRIE v BROWN [2022] NZHC 748 [12 April 2022]

[1]        The plaintiffs in this proceeding sought orders giving effect to a settlement reached at a Judicial Settlement Conference (JSC) held in the Family Court, which agreement was recorded in orders of the Family Court.

[2]        The defendant in this proceeding, Mr Brown who lives in America, was represented at the JSC by counsel and was in contact with counsel by telephone during the JSC. The agreement reached was recorded in a handwritten note (the Agreement) signed by all parties and by Mr Brown’s counsel.

[3]        The terms of settlement were then recorded in a deed of family arrangement (the Deed), again, signed by all parties save for Mr Brown, but his counsel orally confirmed Mr Brown’s consent to the Deed. The Deed, along with a draft consent order, were emailed to the Family Court with Mr Brown’s counsel copied in. The covering email recorded that Mr Brown’s counsel had the oral agreement of his client to the Deed. The Family Court sealed the consent order in October 2020, that being the order subject to this proceeding.

[4]        Under the order, Mr Brown was obliged to sign a listing agreement to allow  a property owned by the executors and trustees of Estate of Beverley Ann Rushton (the Estate) and Mr Brown, to be sold. The listing agreement was sent to Mr Brown’s counsel in late November 2020 and, while counsel orally advised that Mr Brown would sign the listing agreement, he never did so.

[5]        Accordingly, this proceeding sought, pursuant to  s 121  of  the  District  Court Act 2016, an order authorising the Registrar of the High Court to sign, on behalf of Mr Brown, all necessary documents required to sell the property. Mr Brown, through counsel, filed a statement of defence.

[6]        In Mr Brown’s statement of defence, he admitted being represented by counsel at the JSC and having telephone discussions with his counsel during the JSC but, in substance, denied being bound by the Agreement reached at the JSC.  A theme of  Mr Brown’s pleading was that he had “[i]nsufficient knowledge and therefore denies” the allegation that his counsel agreed to the settlement on his behalf, signed the terms

of the settlement Agreement on his behalf, or orally agreed to the terms of the Deed on his behalf.

[7]        The plaintiffs sought leave to apply for summary judgment of their application, that being necessary as they had not sought summary judgment initially.

[8]        A  notice  of  opposition  was  filed   in  which  Mr Brown  claimed  he  had  a “complete defence to the claim by the plaintiffs …”.

[9]        When the matter came before me on 18 November 2021, I adjourned the matter to allow time for Mr Brown to apply to set aside the judgment in the Family Court.   I directed that application was to be filed and served by the next call of the application. I noted that, if the Family Court order was not set aside, then summary judgment was, in my view, inevitable. I recorded the sealed order was based on the Agreement reached at a JSC where Mr Brown, while not present in person, was represented by counsel. Counsel for Mr Brown was in touch with Mr Brown by telephone during  the JSC.    Counsel signed the Agreement  and subsequent Deed on behalf of the    Mr Brown.

[10]      I recorded the challenge to the Agreement could only be on the basis that the Agreement was signed without Mr Brown’s authority. Following the relatively brief informal handwritten Agreement, the formal Deed was circulated which ultimately formed the basis of the Court order. When that order was tabled for sealing, plaintiffs’ counsel advised the Court by email:

The Deed of Family Arrangement has not been signed by American based Jonathan Brown, although his solicitors … have confirmed that he has no concerns with the settlement and will provide a signed counterpart when he can. As you can see, I have included Mr Brown’s lawyer … in circulation.

[11]      I recorded in my Minute of 19 November 2021, that it followed that Mr Brown was making serious allegations against his former counsel namely that his former counsel signed the Agreement on Mr Brown’s behalf and subsequently confirmed to plaintiffs’ counsel that Mr Brown had no concern with the Deed without authority. As I recorded in the Minute, that the handwritten Agreement following the JSC was signed without Mr Brown’s consent may possibly have been explained away as

a miscommunication, but not the subsequent advice from his counsel that Mr Brown was happy with the Deed.

[12]      I recorded that it followed Mr Brown was putting in issue his instructions and his discussions with counsel. If Mr Brown was to maintain that position, it followed he would be waiving solicitor-client privilege in relation to those discussions.

[13]Section 65(3) of the Evidence Act 2006 (the Act) provides:

(3)A person who has a privilege waives the privilege if the person—

(a)acts so as to put the privileged communication, information, opinion, or document in issue in a proceeding; or

(b)institutes a civil proceeding against a person who is in possession of the privileged communication, information, opinion, or document the effect of which is to put the privileged matter in issue in the proceeding.

[14]      Mr Brown’s apparent position that his former solicitor acted without authority would fall within s 65(3)(a) of the Act. I required Mr Brown, if he was to maintain his position, to confirm he waived privilege in relation to his discussions with his counsel from the day prior to the JSC to the date of the sealed order. I noted Mr Brown could not maintain that his counsel had not carried out his instructions while clinging to privilege. Mr Brown declined to waive privilege. Mr Brown did not apply to set aside the Family Court order. Accordingly, when the matter came before me again on 9 December 2021, the result was interim orders were made that in substance permitted the Estate’s property to be sold.

[15]      The property was listed for sale in the New Year of 2022. I am told the property has been sold at a price all parties were content with and the net proceeds are now held on trust.

Costs should follow the event

[16]      By the time of the call on 9 December 2021, Mr Brown had effectively withdrawn his opposition saying in a memorandum of counsel that he was happy “without prejudice to sign all necessary documents” in respect of the sale of the

property. In substance Mr Brown did not on 9 December 2021, oppose the orders sought on 9 December 2021. As recorded in my Minute of 9 December 2021, the orders I suggested were adopted by the parties. The plaintiffs succeeded in obtaining the orders they sought.

[17]      Accordingly, in accord with r 14.2(1)(a) of the High Court Rules 2016, I am satisfied that costs should follow the event in favour of the plaintiffs.

[18]      Mr Paine, counsel for Mr Brown, submitted that the proceeding was served in a period of COVID lockdown which made it very difficult for Mr Brown to take advice and for the necessary documents to be prepared, filed and served. Mr Paine suggests that Mr Brown took all appropriate steps to protect his position as a one-half owner of the property, subject to the Estate’s application.

[19]      I do not accept that issues of COVID lockdown (Mr Brown being based in the United States of America), are relevant. When the application for leave to apply for summary judgment came before the Court, while a notice of opposition had been filed, there was no affidavit in support. Further time was allowed for Mr Brown to file such an affidavit, but no affidavit in opposition was ever filed.

[20]      I do not accept Mr Paine’s submission that costs should either lie where they fall to enable matters to progress with the next part of the Estate, or that costs be reserved until all matters relating to the Estate have been resolved. Orders as to costs in this proceeding will conclude it. It is appropriate that costs be dealt with now and not left on some open-ended basis.

Quantum

[21]      Mr Paine    submits    that     the     proceeding     should     be     treated     as a Category 1 proceeding. I do not accept that.  This is a Category 2 proceeding and  to  so  classify  it  is  not  a  “punishment”  as   Mr Paine  submits.    This  was  not    a straightforward matter such that Category 1 would be appropriate.   I consider it     a Category 2B matter and I take that as the starting point.

[22]      As the plaintiffs were invoking s 121 of the District Courts Act 2016, s 121(2) of that Act applies. That section provides costs may be awarded to the plaintiffs in such a proceeding only if the High Court is satisfied that the proceeding was necessary and proper to enforce the Judgment. I am satisfied that the proceeding was proper and necessary for the plaintiffs to bring the proceeding in this Court. At the outset of the proceeding I had suggested by Minute that enforcement should be through the Family Court but Judge Smith of the Family Court, upon review, confirmed that she did not see enforcement options available in that Court.

[23]The real issue is whether an increase in costs is justified.

[24]      In support of the claim for increased costs, the plaintiffs say Mr Brown acted improperly in refusing to comply or repudiating the order of the Family Court.      Mr Reeve, counsel for the Estate, notes Mr Brown failed to file affidavit evidence in support of his notice of opposition, that he failed to take any steps to set aside the consent order made in the Family Court and that he raised a number of matters that were of no relevance to his being bound by the Family Court order. These points are well made.

[25]      I direct that costs payable by Mr Brown are costs on a 2B basis plus an uplift of 25 per cent, together with disbursements in the sum of $1,472.58 as detailed at para [11] of  the  plaintiffs’ submissions  (dated  18  February  2022)  seeking  costs. I further direct that the plaintiffs may deduct this sum from any amount payable to Mr Brown upon the final distribution of the Estate or upon the distribution of the sale proceeds of the property subject to this proceeding.

[26]      I award the uplift (less than that sought by the plaintiffs) as it was not tenable for Mr Brown to deny the effect of the Family Court order which he was committed to through his counsel without taking steps to set aside the Family Court order, nor following through on the waiver of privilege inherent in his position. This caused unnecessary costs and represented the adoption of an unreasonable position.

[27]      As to the direction that costs  can  be  deducted  from  any  distribution  to  Mr Brown, the short point is Mr Brown is presently based in the United States of America and the economics of enforcing a costs order against Mr Brown in America speak for themselves. It was suggested that Mr Brown owns property in Christchurch, but to require enforcement against that property will only create further costs. Therefore, the costs will be deducted from the final distribution or any other amount payable to Mr Brown, as directed in [25] above.

Associate Judge Lester

Solicitors:

Home Transfer Centre, Dunedin (for Plaintiffs)

Brittens Lawyers, Palmerston North (for Defendant)

Copy to counsel:

R M Reeve, Barrister, Dunedin (for Plaintiffs) G A Paine, Barrister, Dunedin (for Defendant)