Harvey v Harvey
[2021] NZHC 3264
•1 December 2021
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2017-419-295
[2021] NZHC 3264
UNDER the Law Reform (Testamentary Promises) Act 1949 IN THE MATTER
of the estate of MARTIN LEONARD HARVEY
BETWEEN
BRETT LEONARD HARVEY
Plaintiff
AND
PAUL MARTIN HARVEY and CLARK
ROLAND HARVEY as executors of the estate of MARTIN LEONARD HARVEY
Defendants…/cont
Hearing: On the papers Counsel:
DRI Gay for Brett Harvey
SWM Piggin for Delwyn Sinclair P J Stevenson for Margaret Harvey
K A Badcock and LAL Badcock for Bryce Harvey A McMillan for Paul Harvey
S C Dench for the Executors of the Estate of Martin Harvey
Judgment:
1 December 2021
JUDGMENT OF GORDON J
[As to costs]
This judgment was delivered by me
on 1 December 2021 at 4.30 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
HARVEY v HARVEY [2021] NZHC 3264 [1 December 2021]
CIV-2019-419-21
UNDER the Family Protection Act 1955
IN THEMATTER OF the estate of MARTIN LEONARD HARVEY
BETWEEN BRYCE CHARLES HARVEY
Plaintiff
AND PAUL MARTIN HARVEY and CLARK
ROLAND HARVEY as executors of the estate of MARTIN LEONARD HARVEY
Defendants
CIV-2019-419-68
IN THEMATTER OF the estate of MARTIN LEONARD HARVEY
BETWEEN DELWYN MARGARET SINCLAIR
First Plaintiff
ANDDELWYN MARGARET SINCLAIR and MARGARET CHRISTINE HARVEY as
trustees of the Maraetai Trust Second Plaintiffs
AND PAUL MARTIN HARVEY and CLARK
ROLAND HARVEY as executors of the estate of MARTIN LEONARD HARVEY
Defendants
CIV-2019-419-82
IN THEMATTER OF the estate of MARTIN LEONARD HARVEY
BETWEEN PAUL MARTIN HARVEY
Plaintiff (DISCONTINUED)
AND PAUL MARTIN HARVEY and CLARK
ROLAND HARVEY as executors of the estate of MARTIN LEONARD HARVEY
Defendants
…/cont
CIV-2020-419-158
UNDERthe Property (Relationships) Act 1976 and the Family Protection Act 1955
IN THE MATTER of the estate of MARTIN LEONARD HARVEY
BETWEEN MARGARET CHRISTINE HARVEY
Applicant
AND PAUL MARTIN HARVEY and CLARK
ROWLAND HARVEY as executors of the estate of MARTIN LEONARD HARVEY
Respondents
Solicitors:Allen Needham & Co Ltd, Morrinsville Le Pine & Co, Taupo
Badcock Law, Rotorua
Carson Fox Bradley, Auckland B Knowles, Auckland
Counsel:DRI Gay, Auckland SWM Piggin, Auckland P J Stevenson, Auckland A MacMillan, Albany
[1] This judgment decides applications for costs by siblings Brett Harvey, Delwyn Sinclair and Paul Harvey and their mother, Margaret Harvey, against Bryce Harvey, their brother and son respectively.1
[2] The substantive proceedings were in relation to the Will of Mrs Harvey’s late husband, Martin Harvey, who died on 6 April 2016. Mr Harvey was survived by his wife, Mrs Harvey, and his five adult children: Paul, Brett, Clark, Delwyn and Bryce. The background to the claims is set out in my judgment of 14 September 2021.2 I reproduce that background below:
[4] Brett, Delwyn, Bryce and Mrs Harvey are all plaintiffs in these proceedings. Brett’s case and Delwyn’s case are centred on debts which are presently classified as loans in the assets of Mr Harvey’s estate. Brett says that at the time his debt arose, there was an agreement between him and his father that his father would forgive the debt in his will. Delwyn’s case is the same in respect of her debt. Will 9 however, unlike Mr Harvey’s previous wills, does not contain a provision for forgiveness of debts. Brett and Delwyn bring claims in contract and alternatively in estoppel. Brett also makes a claim under the Law Reform (Testamentary Promises) Act 1949 (Testamentary Promises Act) as a further alternative.
[5] The main legal issue before the Court in Brett and Delwyn’s proceedings is whether they can satisfy the Court that the debts do not form part of the estate, notwithstanding that Mr Harvey did not forgive each of the two debts in Will 9.
[6] Brett and Delwyn are supported in their claims by their mother. Bryce defends the claims by Brett and Delwyn. The executors adopt a neutral position.
[7] Bryce’s claim arises out of what he says was a promise by his father prior to Bryce signing certain documents in May 2002, that he would “even up” Bryce’s position in relation to his siblings because Bryce received less than his brothers as a consequence of a rearrangement in 1999–2002 of the family’s assets. Bryce says his father repeated that statement over the years. Bryce says he is entitled to a payment from the estate in an amount equal to what his shareholdings and current accounts in two family companies, which he gave up as part of the rearrangement, would be valued at today.
[8] Brett, Delwyn and Mrs Harvey all defend Bryce’s claim. The executors adopt a neutral position.
[9] Mrs Harvey brings a claim under the Property (Relationships) Act 1976 (PRA). Her claim is based on the presumption that all property owned
1 I will refer to Margaret Harvey and her deceased husband as Mr and Mrs Harvey. Given the common surname, I will refer to all the sons by their first names. Although Delwyn uses her married name, for consistency I will also refer to her by her first name. No disrespect is intended by the use of first names.
2 Harvey v Harvey [2021] NZHC 2405 at [4]–[13].
by Mr Harvey at the date of death is relationship property and Mrs Harvey’s property owned at that time is also presumed to be relationship property. This presumption is subject to the terms of a contracting out agreement, which Mr and Mrs Harvey signed on 29 June 1999 (the contracting out agreement) and the property that is classified as the separate property of each of them in that agreement.
[10] Brett and Delwyn support their mother’s claim. Bryce defends it. The executors are again neutral.
[11] Separately, each of the four plaintiffs brings a claim under the Family Protection Act 1955. Mrs Harvey acknowledges that, depending on the outcome of her claim under the PRA, any award under the Family Protection Act may be modest to negligible but she notes her priority under the Family Protection Act ahead of the other claimants.
[12] Brett, Delwyn and Bryce all adopt the position that their claims under the Family Protection Act are contingent on the outcome of their primary claims. For Bryce, his claim under the Family Protection Act is also contingent on the outcome of the primary claims of his mother and two siblings. If those claims succeed to the extent they reduce Bryce’s entitlement under Will 9, then he pursues his claim under the Family Protection Act.
[13] Paul also made a claim in contract and estoppel in relation to a debt which he said, like Brett’s debt and Delwyn’s debt, his father had said he would forgive and which was not forgiven in Will 9. Bryce initially applied to be joined to Paul’s claim but then withdrew that application. As a consequence, there was no opposition to Paul’s claim and Paul has filed a notice of discontinuance. There remains the issue of costs on Paul’s claim.
…
[3] Brett and Delwyn both succeeded in their primary claims in contract and estoppel. I found against Brett on his Law Reform (Testamentary Promises Act) 1949 (Testamentary Promises Act) claim which was an alternative to his two primary claims. As noted in the extract above, Brett and Delwyn’s claims under the Family Protection Act 1955 (FPA) were brought on a contingency basis in case their primary claims failed. If those primary claims had failed, Brett and Delwyn argued that their father did not make adequate provision for their maintenance and support in his probated Will. Given that the primary claims for both Brett and Delwyn succeeded, I did not consider it necessary to consider their claims under the FPA and dismissed those claims.
[4] Mrs Harvey succeeded on her claims under the Property (Relationships) Act 1976 (PRA) and under the FPA.
[5] It follows from the above that Bryce’s defences of the primary claims made by Brett and Delwyn and Mrs Harvey’s claims failed. Bryce’s own claim for estoppel also failed as did his alternative claim under the FPA.
[6] In my timetable for costs submissions, I did not make provision for reply submissions. All of the claimants for costs sought leave to file submissions in reply concurrently with the filing of those reply submissions. Bryce submits that as no provision for reply submissions was made, those submissions should not be considered by the Court. I propose to grant leave for the filing of reply submissions. I found them helpful, especially having regard to the volume and detailed content of the material filed by all parties.
The costs claims and opposition in summary
Brett
[7] Brett claims 2B scale costs against Bryce in the sum of $87,611.00 (that sum includes a claim for preparation of costs submissions) with a 25 per cent uplift, namely
$21,902.75. The total costs sought are therefore $109,513.75. Brett also claims disbursements of $10,461.34, resulting in a total claim for costs and disbursements of
$119,975.09.
[8] Bryce agrees that costs should be awarded on a 2B basis and does not challenge the disbursements claimed. However, in opposition to Brett’s claim, Bryce’s position is that no costs should be awarded for preparation of costs submissions, increased costs should not be awarded and Brett’s claim should be reduced by 10 per cent for his failed Testamentary Promises Act claim and alleged wasted time at the hearing.
[9] Mr Badcock, counsel for Bryce, submits that if the Court finds that increased costs are justified, then any uplift should be at the lower end of the range referred to in his submissions (in the range of 10 per cent to 25 per cent).
[10] Mr Badcock also submits that pursuant to r 14.15 of the High Court Rules 2016, only one set of costs should be awarded in relation to the defences in Bryce’s proceeding. He further submits that only one set of costs should be awarded in relation
to all steps in all proceedings where the other parties took steps jointly. He next submits that Brett’s claims for items, which do not relate to Brett’s own proceeding or Bryce’s proceeding, but proceedings of other parties, should be disallowed.
[11] As a consequence of Bryce’s position, Mr Badcock submits the costs and disbursements award for Brett against Bryce should be no more than $72,174.14.
Delwyn
[12] Delwyn claims 2B scale costs against Bryce in the sum of $90,735.00 (that sum includes a claim for preparation of costs submissions) with a 25 per cent uplift, namely $22,683.75. That results in total costs of $113,418.75. Delwyn also claims disbursements of $28,851.36. The largest individual components are witness expenses for the expert accounting witness, Matthew Kemp, and a solicitor, Barbara McDermott. The total of costs and disbursements claimed is $142,270.11.
[13] Bryce accepts that the starting point for costs is scale on a 2B basis. However he disputes Delwyn’s claim under five general headings (the first four are in common with his opposition to Brett’s claim): only one set of costs should be awarded in accordance with r 14.15 and for all steps in all proceedings where the other parties took steps jointly; Bryce is not responsible for other inter-party costs; costs should not be awarded for preparation of costs submissions; Delwyn does not meet the threshold for increased costs and there should be no claim for Ms McDermott’s expenses as she was a witness of fact. As a consequence, Mr Badcock submits the costs and disbursements award for Delwyn against Bryce should be no more than $93,652.33.
[14] Finally, Mr Badcock submits if the Court finds that increased costs are justified, as with Brett, the uplift should be at the lower end of the awards referred to at [9] above.
Mrs Harvey
[15] Mrs Harvey claims 2B scale costs against Bryce of $85,473.00 (that sum includes a claim for preparation of cost submissions) together with an uplift in scale costs of 25 per cent, namely $21,368.25. That amounts to total costs of $106,841.25.
Mrs Harvey also seeks disbursements of $8,689.50, making a total claim of
$115,530.75 for costs and disbursements.
[16] Bryce accepts that the starting point for costs is scale on a 2B basis. However he disputes the quantum of costs claimed on four bases in common with his opposition to the claims by Brett and Delwyn: only one set of costs should be awarded in accordance with r 14.15 and for all steps in all proceedings where the other parties took steps jointly; Bryce is not responsible for other inter-party costs; costs should not be awarded for preparation of costs submissions; and Mrs Harvey does not meet the threshold for increased costs.
[17] Mr Badcock submits the correct quantum of costs and disbursements for Mrs Harvey against Bryce is $81,379.17.
Paul
[18] Paul claims indemnity costs against Bryce of $86,480.00 plus disbursements of $1,218.80. In the alternative, he seeks 2B scale costs of $40,829.00 with an uplift of 50 per cent, namely $20,414.50 in costs plus disbursements of $1,090.00. That is a total of $62,333.50 in costs and disbursements.
[19] Bryce’s position is that Paul is not entitled to recover costs from him. Bryce says he did not defend Paul’s proceeding and it was discontinued. Bryce says if the Court does not accept that submission, he agrees that the starting point for costs should be 2B scale costs. But he says the amount calculated as scale costs is excessive: a number of the items claimed were for Paul acting in his role as executor; he again makes the submission under r 14.15 that only one set of costs should be allowed and that this principle should apply to all steps in the proceedings where the other parties took steps jointly; he repeats his submission that Bryce should not be liable for costs relating to steps the other parties took in each other’s proceedings; there should be no costs allowed for preparing costs submissions; and that the threshold for indemnity costs and increased costs is not met.
[20] As a consequence, the costs award for Paul against Bryce should be no more than $10,998.00. However, if the Court finds increased costs are justified, then the uplift should be at the lower end of the awards referred to at [9] above.
Estate costs
[21] The evidence at the substantive hearing was that the estate had incurred legal costs of $180,984.00. Subsequent to the hearing, an evaluation by the estate’s legal advisors of the proportion of the invoices and estate legal costs incurred for the litigation is calculated to be $165,712.80 (including GST and disbursements).
[22]The executors are neutral in relation to costs.
[23] Brett and Delwyn seek an order that Bryce pay and reimburse the estate for its litigation costs for work undertaken by the various estate solicitors and counsel, all of which they say has arisen both from Bryce’s own proceeding and his requiring the estate to defend the claims by Margaret, Brett and Delwyn. The estate would not otherwise have incurred these costs. Brett and Delwyn say if the estate litigation costs are not met by Bryce, then those costs will fall on the residuary estate and the residuary beneficiaries. They have filed a joint memorandum in support of the order sought. Brett and Delwyn are supported in their submissions by Mrs Harvey and Paul.
[24] Bryce submits that the amount of $165,712.80 claimed is excessive and unfounded. Mr Badcock submits that at best costs for the estate calculated on a 2B scale basis should no more than $8,540.00. Mr Badcock submits that all the parties (with the exception of Clark) filed claims and actively participated in the proceedings. He says that impact on the residuary beneficiaries is not unfair given the active role (with the exception of Clark) they took. Mr Badcock also submits that the claim includes steps taken prior to the litigation commencing, including mediation between the parties. Costs cannot be claimed for these prior steps.
Costs principles
[25] The starting point in any costs assessment is that all matters with regard to costs are at the discretion of the Court.3 This discretion, however, is not an unfettered one and is to be guided by the general principles in rr 14.2 to 14.5 of the High Court Rules 2016 (HCR). A fundamental costs principle is set out in r 14.2(1), which provides that the party who failed with respect to a proceeding should generally pay the costs of the successful party. The rules are intended to create a framework for determining costs in individual cases that is both “predictable and expeditious”.4
[26] Ultimately, the overriding consideration when exercising a discretion to award costs is that any award ought to do justice between the parties.5
Issues
[27] As is apparent, a number of points raised by Bryce in opposition are common to all of the claims:
(a)Whether only one set of costs should be awarded in Bryce’s proceeding and for steps in all proceedings where the other parties took steps jointly;
(b)Whether Bryce should be liable to pay costs for steps taken by the parties in the proceedings of other parties in the case;
(c)Whether the Court should allow for preparation of costs submissions; and
(d)Whether increased costs should be awarded.
[28] Additionally, there is the issue of indemnity costs for both Paul and the estate. I will consider the claims for indemnity costs before considering increased costs as for Paul, increased costs are an alternative to his claim for indemnity costs.
3 High Court Rules 2016, r 14.1.
4 Rule 14.2(g).
5 Packing In Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA) at [5].
[29] There is also the question of whether any claims should be reduced where the claimant for costs did not succeed on a cause of action or for counsel’s alleged conduct in the hearing. Finally, there is the issue of whether there should be a reduction for any success Bryce might have had.
[30] In relation to disbursements, there is Bryce’s challenge to Delwyn’s claim for expenses for the witness Ms McDermott.
Separate costs awards or one set of costs?
[31] Bryce submits that under r 14.15 of the HCR, the parties should not receive separate costs because he says there was an overlap and community of interest in the litigation position of the opposing parties. He says that this position is evidenced by the fact that the parties all sought the same relief in respect of Bryce’s proceeding and the impact of the relief was the same on all the other parties. He says it is clear that steps were taken in defence of Bryce’s claim in the singular, and accordingly these steps should be allocated proportionately between the other parties so there is only one set of costs.
[32] Further, Bryce submits that r 14.15 should be applied to all steps in all proceedings where the other parties took steps jointly (e.g. preparation of joint memoranda).
[33]Rule 14.15 provides:
14.15Defendants defending separately
The court must not allow more than 1 set of costs, unless it appears to the court that there is good reason to do so, if—
(a) several defendants defended a proceeding separately; and
(b) it appears to the court that all or some of them could have joined in their defence.
[34] I first address the application of r 14.15 to the defence of Bryce’s proceeding (estoppel and claim under the FPA).
[35] Mr Gay, counsel for Brett, submits that even where Brett, Delwyn and Mrs Harvey combined to file a single document (e.g. memoranda, and their composite statement of defence on 25 March 2020) the time taken in discussion and amendment of the various drafts, to achieve a result that adequately protected each party and covered their individual positions, was not less than if separate pleadings had been filed. Additionally, Mr Gay says that had separate documents been filed, that would not have been as efficient for the Court or for Bryce.
[36] Mr Gay also submits that while at trial, Brett, Delwyn and Mrs Harvey did divide the responsibility for cross-examination of Bryce and the delivery of closing submissions in defence of Bryce’s claims. He says each party and counsel provided necessary input. Mr Gay further submits it was necessary for all counsel to remain present during the cross-examination and delivery of closing submissions. This was to ensure all matters were covered from the perspective of each party.
[37] Mr Piggin, for Delwyn, repeats the submission made by Mr Gay in relation to the statement of defence. He submits that Brett, Delwyn and Mrs Harvey appropriately provided a combined statement of defence but that represented the time and effort of three counsel. He submits it would have been remiss if counsel primarily engaged for each party had not had input and made contribution to the joint statement of defence.
[38] Mr Piggin also makes the point that each of Brett, Delwyn and Mrs Harvey led quite distinct affidavit evidence in defence of Bryce’s claim (in the case of Delwyn there was not only her own evidence but also that of two solicitors), with varying emphases which were reflected in and which contributed to the joint defence.
[39] Mr Piggin submits the same considerations apply not only to the filing of the joint defence to Bryce’s claim but also as to the later trial preparation and conduct of the trial in relation to opposing Bryce’s estoppel claim. Mr Piggin characterises that claim as a wholesale attack on the entire family, first in respect of the family rearrangements in 2000 and 2002, which affected each family member differently and in respect of which each family member would suffer a different outcome in relation to the estate if Bryce had been successful.
[40] Mr Piggin submits in these circumstances, it would have been inappropriate to have required Delwyn and Brett and Mrs Harvey to join in engaging single counsel or to conduct a single conduct of the defence.
[41] Mr Piggin notes that counsel for Brett and Delwyn prepared and provided joint closing submissions with Mr Gay delivering those closing submissions. But even so, both Brett and Delwyn brought different perspectives to Bryce’s claim, which involved both counsel contributing to the preparation of the submissions.
[42] Mr Piggin emphasises the point also made by Mr Gay that although Mr Gay delivered the closing submissions in defence of Bryce’s estoppel claim, it was necessary for other counsel to attend at court throughout to ensure their client’s position was addressed.
[43] Accordingly, Mr Piggin submits that separate defences were justified, both in relation to the pre-trial preparation and the attendance at trial itself and for the purposes of r 14.15 separate representation was warranted.
[44] I accept the submissions made by Mr Gay and Mr Piggin. For all the reasons they advance, I do not consider that Brett, Delwyn or Mrs Harvey could have joined their defence. They each brought a different perspective to the defence. At trial, where the Court was operating under time constraints, Mr Gay took responsibility for delivering closing submissions. However, I accept it was necessary for other counsel to have input into those submissions and also to be present in court at all times during the defence of Bryce’s claim to ensure all matters were covered from their client’s perspective.
[45] I therefore allow a separate set of costs for each defendant defending Bryce’s claims, both for pre-trial attendances, and at trial, and for the preparation of submissions.
[46] Next, there is Mr Badcock’s submission that r 14.15 should be applied to all steps in all proceedings where the other parties took steps jointly. First, as Mr Gay points out, r 14.15 applies to defendants defending separately. There is no provision
equivalent to r 14.15 for multiple plaintiffs. In any event, in relation to Mrs Harvey’s claims there was a conflict of interest between Mrs Harvey and Brett and Delwyn (and her other children). The size of the residue (under which the children benefitted) would be affected by Mrs Harvey’s claims under the PRA and FPA. Also, the Court’s findings on the debt claims by Brett and Delwyn would affect the relationship property pool which would have included Brett and Delwyn’s debts if they were not forgiven. Therefore, it was proper that Mrs Harvey was separately represented.
[47] As far as Brett and Delwyn are concerned, each had their own separate claims arising out of separate and distinct factual backgrounds. It was also appropriate that they were separately represented.
[48] Although all the cases were case-managed and heard together, they were not consolidated. Even where parties other than Bryce took steps jointly in proceedings other than Bryce’s proceedings, I accept that it was necessary for each counsel to have input into any documents filed jointly.
[49] For all the above reasons, I do not accept Bryce’s submission that r 14.15 should be applied to all steps in all proceedings where the other parties took steps jointly.
Steps by party in another party’s proceeding
[50] Mr Badcock makes the submission (and I use Brett as the example) that Brett claims a number of items, which do not relate to Brett’s proceeding or Bryce’s proceeding but rather the proceedings of other parties involved in the hearing. Mr Badcock submits these costs are a matter as between Brett and the other parties. He submits each party sought to be heard on each other’s claims, and these steps were not necessary from Bryce’s point of view. He submits Bryce had nothing to do with any steps the other parties took in each other’s proceedings and Bryce did not cause Brett to incur these costs. Mr Badcock therefore submits that any costs award cannot include any steps that e.g. Brett took in relation to the proceedings of other parties.
[51] Mr Gay submits that a realistic approach needs to be taken and assessed against the background context of how the litigation arose. He submits it was because of
Bryce’s intransigent position on the forgiveness of debts owed to the estate by each of Brett, Delwyn and Paul (and Margaret on PRA issues and under the FPA) was required to make their claims against the estate. Mr Gay submits that ordinarily, where there is no issue about the estate meeting the costs of a successful claimant (from residue or otherwise), the estate would meet the costs of A as a successful claimant, including A’s costs for reasonable steps taken by A:
(a)in relation to steps taken by the estate; and
(b)in relation to the claims and other steps taken by B and other claimants.
[52] Mr Gay submits that where, as in this case, a decision is made by a beneficiary (Bryce) to defend the estate against claims by A and B, and both A and B are successful, it is reasonable for Bryce to meet the costs of both A and B, including the cost of reasonable steps taken by A in relation to B’s claim and vice versa.
[53] Mr Gay submits that Bryce’s submission is unreasonable and unprincipled, particularly where Bryce’s position on the debts required both A and B to initiate their claims and where both were successful. Mr Gay notes there is no issue raised that any steps taken by any of the parties in relation to other claims was unreasonable.
[54] I accept Mr Gay’s submission. The fundamental point is that it was Bryce’s conduct and the position he took in relation to his father’s Will (contrary to the position adopted by all other family members) that required each of the other parties to issue their separate proceedings. Using Brett as an example, he filed a notice of appearance in relation to the claims by Delwyn, Paul and Mrs Harvey. He did not oppose their claims but sought to be heard on them in the event that any relief granted may impact his own claim. I accept that step was reasonable and, as I have said, arose directly from Bryce’s position in relation to his father’s Will.
[55] Accordingly, steps taken by any party in another party’s proceeding are properly claimed against Bryce.
Costs on costs
[56] It is well established that costs may be awarded in respect of an application for costs.6 An application for costs is to be treated no differently for costs purposes from an ordinary interlocutory application. Costs may be awarded according to scale or on an increased or indemnity basis as appropriate.7
[57] The proceedings commenced in this Court in late 2017. There were a significant number of steps taken between that time and the hearing. Although I put a page limit on costs memoranda, that limit did not include attachments. With input from all counsel, Mr Piggin took responsibility for the preparation of a large spreadsheet covering all steps for all parties. The spreadsheet was updated after Bryce’s memoranda in opposition to the cost claims were filed and served. The updated version was filed with Mr Piggin’s reply submissions.
[58] Having regard to the history of the proceedings and the extensive steps taken, the Court was significantly assisted by the costs submissions filed. Further, as will be apparent from reading the rest of this judgment, the parties claiming costs largely succeeded in their claims (except in relation to indemnity costs for Paul). I therefore accept Brett’s, Delwyn’s, Paul’s and Mrs Harvey’s respective claims for costs for the preparation of costs memoranda. These awards form part of the totals that I will consider, when I come to consider increased costs.
Indemnity costs?
Law
[59] Despite a general rule that so far as possible the determination of costs should be predictable and expeditious, the court may award indemnity costs for particular reasons. In claiming indemnity costs, Paul and the estate rely on r 14.6(4)(a) and (f) of the HCR. The relevant provisions of r 14.6 provide:
6 Body Corporate Administration v Mehta (No 4) [2013] NZHC 213 at [85] citing Auckland Regional Council v Arrigato Investments Ltd (2002) 16 PRNZ 217 (HC).
7 Body Corporate Administration v Mehta (No 4), above n 6, at [85].
14.6 Increased costs and indemnity costs
(1) Despite rules 14.2 to 14.5, the court may make an order—
…
(b) that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs)
(4)The court may order a party to pay indemnity costs if—
(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or
…
(f)some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.
[60] The standard required to make an award of indemnity costs is very high. Indemnity costs only are awarded in rare cases, commonly involving breaches of confidence or flagrant misconduct.8 Courts generally award indemnity costs when a party has behaved extremely badly.9 In those cases, the parties would have exhibited exceptionally bad behaviour.10
[61] The Court of Appeal in Bradbury v Westpac Banking Corp outlined situations that could meet the very high threshold, including allegations of fraud despite knowing the claim is false, particular misconduct that causes loss of time to the court and to other parties and making allegations which ought never to have been made (i.e., a “hopeless case”).11
[62] The general principle in costs is that an award should reflect the conduct of parties during the proceedings, not prior.12 The onus is on the party seeking indemnity or increased costs to prove they should be awarded.13
8 Prebble v Awatere Huata (No 2) [2005] NZSC 18, [2005] 2 NZLR 467 at [6].
9 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [29].
10 At [29].
11 At [29].
12 Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [160].
13 Prasad v Prasad [2016] NZHC 474 at [36]; citing Strachan v Denbigh Property Ltd HC Palmerston North CIV-2010-454-232, 3 June 2011 at [27].
Paul
[63] Ms MacMillan, for Paul, says that on 3 August 2017, Bryce was provided with Paul’s Deed of Agreement with his father and it was pointed out to Bryce that the deed contained a clause that the debt would be forgiven in Mr Harvey’s Will (unlike the case for Brett and Delwyn where each of them argued, and I accepted, that the agreement by Mr Harvey to forgive the debts was an oral agreement). Ms MacMillan submits that at no time prior to Paul issuing proceedings did Bryce acknowledge the forgiveness of debt clause or attempt to settle Paul’s claim, thus forcing Paul to issue proceedings.
[64] Ms MacMillan refers to the mediation in December 2018 attended by all family members where a Deed of Family Arrangement was proposed by Estate Counsel that included provision for the debts owing to Mr Harvey by Brett, Delwyn and Paul be forgiven. All family members agreed, except Bryce who required the three debts to be recalled into the estate. As a result of the mediation being unsuccessful, the Court ordered that all claims by any family members were to be filed by 27 March 2019. (Delwyn’s claim and Paul’s claim were the only claims not yet filed).
[65] Paul filed his claims (in his personal capacity) on 25 March 2019, alleging breach of contract and estoppel together with notices of appearances to the claims of other family members to protect his position. Paul sought indemnity costs against Bryce in his claim. Ms MacMillan notes that on 26 June 2019, prior to the first case management conference held on that day, Bryce filed an urgent interlocutory application for joinder to Paul’s claim. Then when Bryce did accept Paul’s claim, he only did if there was no issue as to costs. He then opposed costs, thus continuing Paul’s involvement in the proceeding.
[66] Ms MacMillan submits that Bryce then acted unreasonably and/or vexatiously by serving three notices to produce documents against Paul on 30 April 2019, 25 November 2019 and 28 February 2020, each claiming different documents. Bryce then filed an interlocutory application for discovery against his non-party company on 22 November 2019. He also tried to serve Paul directly as executor on 11 March 2019, despite having counsel for the estate acting. He then again tried to serve him directly
with the non-party application on 28 February 2020, instead of serving the company by its registered office.
[67] Ms MacMillan notes that prior to trial, Bryce advised that Paul was required for cross-examination. Bryce then refused to consent to Paul appearing remotely by virtual meeting room (VMR) from the Far North, thus forcing Paul to apply to the Court seeking to appear by VMR. Bryce then opposed that application. When the Court granted Paul’s application to appear by VMR, Bryce then abandoned his requirement that Paul appear for cross-examination. In summary, Ms MacMillan says Paul seeks indemnity costs from Bryce due to the irrefutable nature of Paul’s claim regarding Paul’s debt. She submits that indemnity costs are necessary to recognise Bryce’s very bad and very unreasonable conduct towards Paul.
[68] In response, Bryce submits Paul is not entitled to recover costs from him at all, let alone indemnity costs. He says Paul commenced his proceeding on 25 March 2019 of his own volition. He says Paul wrongly assumed that Bryce would not agree that Paul’s loan from his father be forgiven. He originally applied to be joined to the proceeding, but then withdrew the application. Bryce says Paul obtained judgment on 6 November 2019, which was effectively the end of Paul’s proceeding. He says he does not know why Paul waited until 24 July 2020 to file a Notice of Discontinuance.
[69] It is first necessary to decide whether costs should be awarded at all. That issue does not require any detailed consideration. Clearly costs should be awarded. Paul took steps in the proceedings in which he succeeded. The issue at this point is whether indemnity costs should be awarded.
[70] On 6 November 2019, Edwards J reserved costs in relation to Bryce’s withdrawn application for joinder and the proceeding itself.
[71] I accept that it was necessary for Paul to file his proceeding given Bryce’s position requiring the debts for Brett, Delwyn and Paul to be recalled into Mr Harvey’s estate. At the time Bryce applied to be joined to Paul’s proceeding, Bryce was aware that the written agreement between Paul and his father contained a clause forgiving Paul’s debt. Paul’s claim was a sound one and there was no apparent defence.
However, I consider, albeit by a small margin, Bryce’s conduct in applying to be joined to Paul’s claim and his conduct in relation to Paul subsequently does not meet the level for indemnity costs to be awarded. Rule 14.6(4)(a) applies where the party, in this case Bryce, has acted vexatiously, frivolously, improperly or unnecessarily in defending a proceeding or a step in a proceeding. In applying this test, I consider the relevant word might be “unnecessarily”. However, that word takes its meaning and flavour from the preceding adverbs “vexatiously, frivolously, improperly”.14 It might be said that Bryce behaved unnecessarily in defending Paul’s proceeding, when the word unnecessarily is viewed out of context. But when viewed in context and taking its colour from the preceding words in r 14.6(4)(a), I do not consider the test is satisfied.
[72] I therefore refuse indemnity costs as claimed by Paul against Bryce, but I will further refer to Bryce’s conduct in the context of Paul’s alternative claim for increased costs.
The estate
[73] The claim made by Brett and Delwyn is that the estate would not have incurred any litigation costs but for Bryce effectively compelling Delwyn, Brett and Paul to bring proceedings in respect of forgiveness of their debts and Mrs Harvey to bring her relationship property claim. Brett and Delwyn seek an order from the Court that Bryce pays and reimburses the estate for the litigation costs of $165,712.80. They claim the litigation arose from Bryce’s own proceeding, which failed or from his unsuccessful defence of all the other proceedings.
[74] The claim is made by Brett and Delwyn and is supported by Paul and Mrs Harvey. For convenience, I will refer to those parties collectively as “the claimants”. The claimants submit that if the estate litigation costs are not met by Bryce, then those costs will fall on the residuary beneficiaries. The claimants submit there is no question that the executors’ litigation costs have been correctly incurred and for a proper purpose. The claimants submit there has been very extensive
14 Saunders v Winton Stock Feed Ltd [2009] NZCA 148, (2009) 19 PRNZ 342 (CA) at [30], endorsed in Bradbury v Westpac Banking Corp, above n 9, at [26].
correspondence throughout by Bryce and his legal advisors with the various estate solicitors which, as regards the litigation work, ran from October 2017 through to July 2021. They submit that the executors, whilst remaining neutral, have incurred significant litigation costs with the solicitors and counsel instructed by the estate solicitors. Those costs are itemised in the estate’s legal advisor’s invoices which are annexed to counsel’s memorandum.
[75] The claimants (excluding Mrs Harvey who does not benefit under the residue) note that not only will their shares in the residuary estate be affected, but there is also the position of Clark who is a residuary beneficiary. He was not a party to the proceedings and was unrepresented in his personal capacity. The claimants submit that a further factor which adds weight to the appropriateness of an award of indemnity costs is that the lion’s share of the litigation costs related not to family protection proceedings, but to claims of a common law or general law nature, along with the statutory claim in respect of Mrs Harvey’s relationship property. Bryce failed in all respects and therefore it should be expected that costs follow the event. The claimants submit it would be unjust to impose any of those costs on the innocent residuary beneficiaries. They, therefore, submit that the appropriate order against Bryce in respect of estate litigation costs is the sum of $165,712.80. That would then be brought into account in the estate distribution.
[76] Mr Badcock submits that it does not make sense that the estate, which took limited steps in respect of the litigation, incurred $165,712.80 in costs for abiding the decision of the Court. He submits instead that the estate should not be awarded more than $8,540.00.
[77] Mr Badcock submits that the starting point for costs should be scale on a 2B basis. He submits that any impact on the residuary beneficiaries is not unfair given the active role of all the residuary beneficiaries, with the exception of Clark, in the proceedings. Additionally, Mr Badcock submits that the claim appears to be for every step the estate alleges it took even though the administration of the estate continued during that time. Mr Badcock also submits that the claim includes steps the estate took prior to the litigation. These steps are not attributable to the litigation and therefore Bryce cannot be liable for those steps.
[78] In my costs judgment in Brown v Brown,15 I discussed the issue of the impact on residuary beneficiaries if the executors’ costs are to be borne by the estate as follows:16
[16] In Fry v Fry, Asher J referred to the position of executor’s costs as follows:17
[11] In such proceedings there is generally a need for the executor to be represented in the proceedings as the notional defendant, and so that the net assets of the estate and any other issues relating to the estate can be properly put before the Court. It is often the case that in such proceedings there is no actual appearance for the executor at the trial, the executor having provided the necessary information and abiding the decision of the Court. The general approach in such cases is that the actual costs of the executor come out of the estate.
[17] However, in Talbot v Talbot,18 it was held that where the costs of the executors unfairly burden the residuary beneficiaries, and the plaintiff’s claim was unmeritorious, the Court may award the executors costs against the unsuccessful plaintiff personally.
…
[22] The position referred to by Asher J is reflected in the commentary in
McGechan on Procedure where it is stated:19
The traditional, but never invariable, practice was to order the costs of all parties to be paid out of the residue of the estate. However, such an order can impact unfairly on the residuary beneficiary, particularly if the estate is not large. Perhaps for that reason, the court, in a defended Family Protection proceeding, often left costs to lie where they fell, with the result that the parties had to meet their own costs out of their respective shares of the estate.
More recent cases suggest costs in Family Protection cases should not be excluded from r 14.2 costs principles, in particular the principle that costs should follow the event. …
An order that costs follow the event was departed from where, for example, a plaintiff with a small share of a substantial estate is unsuccessful, but had a claim that was arguable and had some merit. Vincent v Lewis HC Auckland CIV-2002- 404-2440, 26 April 2006 was such a case.
15 Brown v Brown [2021] NZHC 2030.
16 At [16], [17] and [22].
17 Fry v Fry [2015] NZHC 2716 at [11].
18 Talbot v Talbot [2017] NZHC 257.
19 Andrew Beck and others McGechan on Procedure (online looseleaf ed, Thomson Reuters, Wellington) at [HR14.16].
Recent cases are helpfully collected by Asher J in Barker v Barker HC Auckland CIV-2006-404-181, 7 December 2006 at [18].
[79] I also refer to the commentary in Bill Patterson’s Law of Family Protection and Testamentary Promises:20
… [t]he costs of the administrator … are usually met out of the estate. … However, if the result of charging the trustee’s costs against the estate will unfairly penalise a residuary beneficiary a court may depart from the usual course of action and direct that the unsuccessful claimants pay the trustee’s costs on an indemnity basis.
[80] I accept in this case that Bryce should bear the costs of the estate in the litigation. It was his conduct which effectively required Brett, Delwyn, Paul and Mrs Harvey to file their claims. The effect would otherwise be that the costs would unfairly fall on the residuary beneficiaries.
[81] I now turn to the question of quantum. Costs must be either of a proceeding, incidental to a proceeding or of a step in the proceeding.21 In my costs decision in Arriesgado v Gallagher Family Investments Ltd,22 I said:23
[10] A proceeding must be “extant” before costs can be incidental to it.24 In Braeburn Dairies Ltd v McGregor & White Electrical Ltd, French J considered a claim for costs prior to commencement of the proceedings. These costs were described as “incidental to the proceeding” in the same terms as r 14.1(1)(b). The Judge did not accept this part of the claim:25
I do not accept that these are costs incidental to a proceeding within the meaning of the Rule. Surprisingly, there appears to be no authority on point, but in my view the proceeding must be extant before costs can be incidental to it. Otherwise, such costs would always be recoverable, which cannot be the intention of the Rule. Certainly, there was nothing unusual or exceptional about the legal work that had to be undertaken to investigate this claim.
[11] As I have awarded indemnity costs, r 16.4(1)(b) is also relevant and, as noted above, while indemnity costs are actual costs incurred by a party, they must be reasonably incurred:
20 Bill Patterson Law of Family Protection and Testamentary Promises (5th ed, Wellington, 2021) at 357.
21 High Court Rules, r 14.1.
22 Arriesgado v Gallagher Family Investments Ltd [2020] NZHC 567.
23 At [10]
24 Braeburn Dairies Ltd v McGregor & White Electrical Ltd HC Dunedin CIV-2009-412-668, 16 December 2011.
25 At [14].
… that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).
[12] Where the Court considers actual costs are unreasonably high, a lesser amount may be awarded. McGechan on Procedure states “[c]osts are reasonably incurred if a reasonable observer would expect those costs be incurred.”26 In addition, McGechan also states “[s]pecific items of expenditure which are found to be unreasonable are excluded or reduced.”27 However, the Court of Appeal has found a Court should not assess reasonableness in terms of the quantum of the dispute; the issue is not that amount but whether the costs were “reasonably incurred”.28
…
[14] Following the reasoning in Braeburn Dairies, which I respectfully adopt, a large portion of these costs were not incidental to a proceeding and cannot be claimed. However, I am prepared to consider whether a proceeding is “extant” immediately prior to the filing of the statement of claim. This is to address whether the 10.9 hours spent in drafting the statement of claim and other materials to commence proceedings and the discussions with the Reyes on the statement of claim immediately prior to its filing come with the definition of “incidental to a proceeding”. They cannot be “of a proceeding” or “a step in a proceeding”, the other matters in r 14.1(1) because both presume there is a proceeding and this did not occur, in this case, until 26 August 2019.
[15] Proceedings which are extant are those in existence. No proceedings existed in this case until 26 August 2019 when the statement of claim was filed. However, that statement of claim had to be prepared by Mr Lloyd and approved by the Reyes. While “extant” would normally exclude such activities, I am prepared to accept that once an intention is formed to commence proceedings and steps are taken to draft the claim on the basis of that intention, proceedings are extant. Alternatively, these steps are incidental to a proceeding for the purposes of r 14.1(b). I would therefore accept the
10.9 hours spent on preparing the statement of claim and discussions with the Reyes immediately prior to the filing of the claim. Those costs were reasonably incurred.
[82] The first proceeding was filed in this case when Brett filed his claim on 2 October 2017. The solicitor’s invoices, copies of which were filed with Brett and Delwyn’s costs memorandum, include attendances prior to that date. However it is apparent from the spreadsheet calculating costs, also filed, that these invoices for prior attendances are not included in the costs claim. I therefore do not accept Mr Badcock’s submission that the claim includes steps prior to litigation commencing.
26 At [HR14.6.03(2)(a)]. See Bradbury v Westpac Banking Corp (2009) 18 PRNZ 859 (HC) at [204].
27 At [HR14.6.03(2)(a)].
28 Edel Metals Group Ltd v Geier Ltd [2018] NZCA 494 at [62].
[83] The next issue is whether the claim for costs is reasonable and associated with that issue is whether administration costs have been included. I accept the submission on behalf of the claimants that the costs for the administration of the estate have been separated out. That is apparent from matching the invoices with the spreadsheet. As to the reasonableness of the claim, I accept the estate was required to take steps, which included the following:
(a)To gather all evidence together from various solicitors and Mr Harvey’s accountants and to assess its significance;
(b)To assess the claims made against the estate and provide an analysis to support the steps proposed and taken by the executors in the litigation;
(c)To provide, by way of affidavit, all evidence relevant to the family protection claims made against the estate;
(d)To provide, by way of affidavit, all evidence relevant to the relationship property claim, including the evidence relevant to Mr Harvey’s acquisition and disposal of assets (and liabilities) since the signing of the Property Agreement on 29 June 1999 and including the source of all funds used by Mr Harvey, and an analysis of the separation (and intermingling) of separate property and relationship property;
(e)Briefing the evidence of solicitor, Mr Wilson, and preparing and amending Mr Wilson’s affidavit to address evidence in relation to making of Mr Harvey’s final Will;
(f)Attending to discovery: collating and listing the estate documents, folders and files and deeds and making them available for inspection by all parties and providing copies of documents requested; and
(g)Preparing memoranda and appearing at the case management issues conferences.
[84] For all the above reasons, I accept that indemnity costs of the estate in all the proceedings should be borne by Bryce with those costs to commence at 2 October 2017. The sum claimed, which I accept, is $165,712.80.
Increased costs?
[85] Brett, Delwyn and Mrs Harvey (and Paul in the alternative), seek increased costs under rr 14.6(3)(b)(ii), (3)(b)(iii) and (3)(d) of the HCR. Brett, Delwyn and Mrs Harvey also seek increased costs under r 14.6(3)(b)(v) in relation to a settlement offer Mrs Harvey made on 23 November 2018.
Law
[86] This Court may order increased costs under r 14.6(1)(a) of the HCR where one or more of the provisions in r 14.6(3) is satisfied. Rules 14.6(3)(b)(ii), (3)(b)(iii), (3)(b)(v) and (3)(d) provide:
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 proceedings or step in it by—
…
(ii)taking or pursuing an unnecessary step or an argument that lacks merit; or
(iii)failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument.
…
(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.
(d) some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
[87] In assessing whether a failure to accept a settlement offer is reasonable, the Court’s assessment is a broad one, taking into account the offer itself, its timing and size, the reasonable expectations of the party who refuses the offer, and whether the party was in a position to assess the merits when the offer was received.29 The reasonableness of a party’s rejection of a r 14.10 offer is required to be assessed at the time of the rejection not against the subsequent result.
[88] When assessing whether to grant increased costs, the court generally will consider behaviour during litigation, not before it.30 This Court is required to consider the extent to which the failure to act reasonably contributed to the time or expense of the proceeding.31 That extent influences whether an uplift is justified.32
Submissions
[89] Brett relies on r 14.6(3)(b) and (d). In respect of r 14.6(3)(b), Brett refers to the lack of merit in Bryce’s estoppel and FPA claims. He says that Bryce’s defence, while not wholly lacking merit, was never a strong defence. Regarding r 14.6(3)(d), Brett submits another reason that Bryce should pay increased costs to Brett is due to his intransigence towards the claims of his siblings, which forced them to issue proceedings against the estate. Finally, Brett refers to the Calderbank offer that Mrs Harvey sent to Bryce on 23 November 2018, which all the other parties approved and endorsed.
[90] Brett says that his actual costs from 27 September 2017 to 1 October 2021 amount to $238,389.25. He submits his claim for costs of $109,513.75 (which includes a 25 per cent uplift) is reasonable as it is approximately 45 per cent of his actual costs.
29 New Zealand Sports Merchandising Ltd v DSL Logistics Ltd HC Auckland CIV-2009-404-5548, 19 August 2010 at [36]; Samson v Mourant [2016] NZHC 1119 at [44]; and Weaver v HML Nominees Ltd [2016] NZHC 473 at [30].
30 Paper Reclaim Ltd v Aotearoa International Ltd, above n 12, at [160].
31 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24 NZTC 24,500 at [165].
32 At [165].
[91] Delwyn seeks increased costs against Bryce because of the lack of merit of Bryce’s claims and defences and the Calderbank offer. With a 25 per cent uplift the total costs claimed are $113,418.75.
[92] Mrs Harvey relies on rr 14.6(1)(a), (3)(b)(ii), (3)(b)(iii) and (3)(b)(v). Her main submission is that Bryce’s defence to both her claims lacked merit. He claimed that she had received adequate provision under Mr Harvey’s estate. The Court found otherwise.
[93] Ms Stevenson notes Bryce’s stubborn refusal to acknowledge Mrs Harvey’s relationship property interest in Mr Harvey’s estate. Further, Bryce refused to accept that Mr Harvey’s last Will breached the moral duty he had to Mrs Harvey. Mrs Harvey says she succeeded in her claims and successfully defended Bryce’s claims. Mrs Harvey claims a total of $106,841.25, which includes a 25 per cent uplift.
[94] Paul’s alternative claim is for increased costs of 50 per cent on 2B scale costs, which amounts to $61,243.50 (2B scale costs of $40,829.00 and an uplift of 50 per cent on scale costs, which is $20,414.50).
[95] In response to all increased costs claims except for Paul’s claim, Bryce refers to three cases where the High Court and the Court of Appeal awarded increased costs in the range of 10 to 25 per cent.33 In regard to Paul’s claim of a 50 per cent uplift, Bryce refers to cases that awarded an uplift of between 25 to 57 per cent.34 Bryce submits that I did not make any findings regarding his conduct that are consistent with the cases. Therefore, no party should receive increased costs against him. If they do, the uplift should be at the lower end.
[96] Bryce also submits that it was Mrs Harvey who made the settlement offer. Accordingly, the offer should not have a bearing on any costs award in favour of Brett
33 Sharrock v Wedd [2018] NZHC 603 at [14(6)] and [23]; Ginivan (as trustees of Gift Trust) v Southern Response Earthquake Services [2021] NZHC 2354 at [18]; and Jarden v Lumley General Insurance (NZ) Limited [2018] NZCA 6 at [24]–[25].
34 Jarden v Lumley General Insurance (NZ) Limited, above n 33, at [24]–[25]; Baker v Waimakuku Whanau Trust Board Incorporated HC Napier CIV-2010-441-581, 13 October 2011 at [19]; and Summer Construction Ltd v Bakker HC Wellington CIV-2006-485-1499, 10 November 2006 at [34].
or Delwyn against him. He also submits the offer was not reasonably capable of acceptance. Mr Badcock explains that Mrs Harvey’s counsel made the offer on 23 November 2018, when he was on holiday in London. The offer was made on the basis that it would expire on 30 November 2018. Mr Badcock replied promptly requesting an extension until 14 December 2018. Mrs Harvey refused the request. Mr Badcock replied again requesting an extension until 7 December 2018 to give time to take instructions from Bryce. Mrs Harvey refused the request. In light of this interaction, Mr Badcock submits that rejecting extensions of seven to 14 days and when the matter ran for a further two and a half years following the offer, was patently unreasonable and should not provide a basis for increased costs.
Findings in relation to Bryce in substantive judgment
[97] I set out below findings I made in relation to Bryce as context for my consideration of the claims for increased costs:35
[186] Before assessing the evidence, it is necessary to record that I did not find Bryce to be a reliable witness. Nor was his evidence credible in many respects. For example, at times he resolutely adhered to his stated position in the face of evidence that showed that his position was demonstrably wrong or there was no proper basis for it. That was particularly so in respect of his stance in relation to Mrs Harvey’s claim and what he insisted was the separate property of his father as opposed to relationship property.
[187] Where Bryce’s evidence conflicts with any of the evidence of Brett or Delwyn or Mrs Harvey, I prefer the evidence of Brett, Delwyn and Mrs Harvey.
…
[199] Bryce is the only one who makes the assertion about his father’s alleged representation. None of the other family members who were present on 17 May 2002 (the signing meeting) accept that Mr Harvey made a statement that he would “even things up” for Bryce for giving his shareholder advances in MLHS and NZWD. In fact, Bryce goes further and says that he was not only promised this by his father but also his family said things would be evened up in due course and he would be paid back for what he had given up. He says he trusted what his father and “my family” told me.
[200] On that theme, Bryce says that his mother said, “ … Absolutely it will be equal …”. Mrs Harvey denies she said that. Bryce claims that his mother is lying, “… because that was said and everybody was in accordance when we were signing the papers”. He says everyone else is lying.
35 Harvey v Harvey, above n 2, at [186], [187], [199], [200], [229] and [248].
…
[229] The alleged promise in the way now propounded by Bryce for some kind of arithmetical or accounting evening up is inconsistent with the evidence of Ms McDermott, whose file notes record Mr Harvey’s approach to making of testamentary provision for his children. The promise, as alleged by Bryce, is also wholly inconsistent with the repeated statement in Mr Harvey’s earlier wills that the provision he was making may not appear to be treating his children equally, but was fair. The whole history of Mr Harvey making provision for his children during their lifetimes, as well as in his wills, is not about arithmetic equality and not about “compensation”. As was said by Paul, who was not cross-examined on his affidavit:
26.Bryce makes claims about Dad promising to “even things up”. That is not true as Dad was never about that. None of us have received the same. Each of us have received assets of different value and with different mortgages depending on what he wanted to do for us.
27.It’s not about being an equal amount. It was about giving each of us what was best for us and what he wanted to give us. It was his decision. There is no requirement to give equally to your children and Dad knew that. He would have been devastated if a child of his compared what he gave each of us and demanded more.
…
[248] It was apparent to me as Bryce gave his evidence that his overall approach was to deny matters which did not align with his own view of events and to put the other parties to proof even where he had no knowledge and could adduce no evidence. In relation to Paul, he denied there had been any forgiveness of debt until after Paul had issued his proceeding, even though Bryce had previously been provided with a copy of the agreement between Paul and his father in which the forgiveness of debt term was expressly included.
Brett
[98] Turning to Brett’s claim for increased costs against Bryce, I consider that an uplift for increased costs is appropriate. That is because Bryce ran meritless arguments in the Court and acted unreasonably throughout the proceedings, which contributed unnecessarily to the time and cost of the proceedings. I accept Mr Gay’s submission that Bryce pursued arguments that lacked merit.
[99] In addition, Bryce failed without reasonable justification to admit facts, evidence and legal argument from the other parties. In particular, during cross- examination, Bryce resisted evidence that in all Mr Harvey’s wills (except for Will 9), his father had provided for the forgiveness of all debts. In the judgment, as noted above, I said “Bryce’s overall approach was to deny matters which did not align with
his own view of events and to put other parties to proof even where he had no knowledge and could adduce no evidence”.36
[100] In respect of the Calderbank offer, I find that it does concern Brett, Delwyn, Mrs Harvey, Paul and the executors because Bryce’s refusal to accept the Calderbank offer affected their involvement the proceedings. The settlement proposal stated:
1. Bryce would receive the shares in Ohinewai Holdings Limited and thereby obtain ownership of the land buildings and cash balances currently held by that company. It is implicit in the settlement that Bryce also receives the benefit of:
Martin’s one share in BC Harvey Industries Limited; and
Martin’s OHL Shareholder Current account balance (approximately
$374,145.00).
2. The Executors would be authorised to treat as forgiven all outstanding loans from Martin to Brett, Paul and Delwyn (or their respective companies or Trusts) with the proviso that either Brett, Paul or Delwyn might transfer or assign the benefit of those loans to a third party at his or her option.
…
5. A Deed of Family Arrangement would be drawn up as a formal record of the terms of agreement upon receipt of written acceptance of this offer in full and final settlement of all disputes between the parties and whether arising from Martin’s Estate or otherwise, from all of Margaret’s children.
…
This settlement proposal is open for acceptance by all of Margaret’s children including your client by 5 pm on 30 November 2018, and if accepted by all, it will bind the Estate, Margaret and all five children.
[101] The offer itself, including the benefits Bryce would have received, was reasonable. However, the timing for the acceptance of the offer was not reasonable. Mrs Harvey only provided Bryce with a week to respond at a time when his counsel was overseas. When counsel for Bryce replied with a request to extend the time by first 14 days and then 7 days, Mrs Harvey refused the request. While counsel for Bryce had access to emails and might well have been able to telephone Bryce, I consider Mrs Harvey’s rejection of the requests for an extension of time to instruct
36 Harvey v Harvey, above n 2, at [248].
Bryce were unreasonable. Mr Badcock was without his physical file and not able to meet Bryce to discuss the offer in person.
[102] I therefore put the Calderbank offer to one side. However, Bryce brought a number of arguments that lacked merit and failed without reasonable justification to accept legal arguments. These actions contributed significantly to the time and expense of the proceeding.
[103] I consider that an uplift of 25 per cent as claimed on 2B scale costs for all the steps claimed is an appropriate costs award for Brett against Bryce. In reaching this decision I have not taken into account Brett’s reference to Bryce’s behaviour before the proceeding began.37
Delwyn
Many of the same reasons for justifying an increased costs award for Brett apply to Delwyn: Bryce making arguments that were meritless and failing without reasonable justification to accept legal arguments. For instance, Bryce defended Delwyn’s contract claims and estoppel, despite conceding he had no personal knowledge of the Del Properties transaction and the promises Mr Harvey made to Delwyn.
[104] An increased costs award of 2B scale costs with a 25 per cent uplift on all the steps claimed is appropriate.
Mrs Harvey
[105] I accept that Bryce adopted a meritless defence against Mrs Harvey’s PRA claim and FPA claim. During the entire course of the proceedings, Bryce contributed significantly to the cost of the proceedings due to his consistent defences that were unreasonable in light of Mrs Harvey’s relationship to Mr Harvey and the merits of her claim.
[106] I consider an increased costs award of 2B scale costs with a 25 per cent uplift on all the steps claimed is appropriate for Mrs Harvey.
37 Paper Reclaim Ltd v Aotearoa International Ltd, above n 12, at [160].
Paul
[107] Before addressing the issue of increased costs, I note that the only costs accepted by Bryce for Paul consist of Paul’s filing of his claim, filing two memoranda, obtaining judgment, filing a notice of discontinuance and one of the three notices to produce. In challenging the amount of scale costs sought by Paul, Bryce makes no allowance for: any preparation or appearances at the two conferences; any filing of or contribution to any other memoranda or appearances; the other two notices to produce; the notices of appearance filed to protect Paul’s position overall; the affidavit filed in opposition to Bryce’s affidavit evidence in chief, which Paul filed in Bryce’s proceeding; the joinder application (later abandoned by Bryce); and no allowance for discovery or inspection, or attendances in relation to the application for VMR appearance at trial. These are just some of the challenges. I accept Ms MacMillan’s submission that Bryce’s proposed scale calculation for Paul is wholly inadequate. I accept the items claimed by Paul.
[108] Although I have not accepted Paul’s claim for indemnity costs, I consider that Paul’s claim for increased costs is warranted under r 14.6(1)(a), (3)(b)(ii) and (3)(b)(iii) of the High Court Rules, for all the reasons advanced on Paul’s behalf in relation to his claim for indemnity costs.
[109]I consider a 30 per cent uplift on scale costs as claimed is justified.
Reduction for claims that did not succeed?
[110] I do not make a reduction for the claims in which Brett and Delwyn did not succeed. Brett’s claim under the Testamentary Promises Act was an alternative to his primary claims in contract and estoppel. He relied on more or less the same evidence as relied on for his primary claims and legal submissions on the Testamentary Promises Act were limited.
[111] For both Brett and Delwyn, their claims under the FPA were brought as a back- up in case their primary claims in contract and estoppel did not succeed. It was proper for them to proceed in that way. The evidence was the same as relied on for the primary claims and legal submissions were not extensive.
Counsel’s alleged conduct in the hearing
[112] Mr Badcock submits that counsel for Brett caused significant delay during the trial with the Court having to regularly remind him of time constraints. Mr Badcock submits this was a significant contributing factor for the Court being required to sit longer each day and a further day needing to be allocated for closing submissions. Mr Badcock submits that there should be a reduction in costs claimed by Brett for this reason.
[113] That is a novel submission. First, it relates to the alleged conduct of counsel, not a party. In any event, there is simply no substance in the submission. The estimate provided for the hearing by all counsel was inadequate. The Court was therefore required to start each day early and sit late in order to give all parties the opportunity to put their own case and to defend the case(s) they were defending. There were four separate cases with a complex background of facts spanning many years to be concluded within the inadequate time estimated by counsel. Even then, the Court sat for a sixth day to hear legal submissions (with the submissions on the Family Protection Act considered on the papers, with the consent of all parties).
[114] I accept that with Brett’s case being heard first it was necessary for Mr Gay to set out the factual matrix and traverse a chronology which covered events in relation to other parties. Any reminders to counsel of time constraints when Bryce was being cross-examined needs to be seen in the context of the way in which Bryce responded to questions and his frequent refusal to accept the obvious. That was what caused the Court to comment on time constraints, not the conduct of counsel cross-examining.
[115] In short, there is no basis for reducing the costs award to Brett on this alleged basis.
Did Bryce succeed on anything?
[116] Bryce failed comprehensively in his defence of the primary claims by Brett and Delwyn and his mother’s claims under the PRA and FPA. He also failed in his own claims. He suggests he has been successful in some interlocutory applications. However, the transfer of all proceedings to the Hamilton High Court was a matter dealt
with by consent of all parties. The joinder applications were also dealt with by consent. Bryce agreed to defend the claims made by Brett, Delwyn and Mrs Harvey on behalf of the estate and those three parties agreed to defend Bryce’s claim.
[117]No adjustment is required under this heading.
Witness expenses claimed by Delwyn
[118] Delwyn claims expert witness expenses for accountant Mr Kemp and witness expenses of solicitor Ms McDermott. Bryce does not challenge the claim for Mr Kemp’s expenses but does challenge the claim for Ms McDermott’s expenses. Mr Badcock’s concession in relation to Mr Kemp is a proper one. Expert witness costs are an actual cost recoverable under r 14.12.38 Mr Kemp’s invoices are attached to counsel’s memorandum. Mr Kemp’s evidence was relevant and in my substantive judgment I accepted Mr Kemp’s approach as opposed to the approach of the accounting witness called by Bryce.
[119] The challenged expenses are those of solicitor Ms McDermott, being two invoices totalling $4,755.16. Mr Piggin, for Delwyn, submits that the expenses for Ms McDermott are also governed by r 14.12. Mr Piggin submits Ms McDermott’s evidence was relevant both as to Delwyn’s estoppel claim and for a determination of Bryce’s estoppel claim. He submits it is apparent that Ms McDermott, as a principal in a Hamilton law firm, has discounted her fees (having regard to the volume of her evidence and her attendances at court as well as her self-evident preparation). He submits the charges are reasonable. Mr Piggin further submits that it is reasonable that a practising solicitor witness be reimbursed for time away from work, and also where the amount claimed is not at the full rate and/or not for the full amount of time engaged.
[120] In opposing the claim for expenses for Ms McDermott, Mr Badcock submits that Ms McDermott appeared in the proceedings as a witness of fact in relation to her recollection of the Harvey family asset redistribution. It seems that is the basis on which Bryce opposes the claim for witness expenses.
38 Air New Zealand Ltd v Commerce Commission [2007] NZCA 27, [2007] 2 NZLR 494 at [37].
[121] Witness expenses for “non-experts” are claimable. Previously, witness expenses were dealt with under the Witnesses and Interpreters Fees Regulations 1974. Since 2003, witness expenses have been dealt with in the HCR. Such expenses are not listed in r 14.12(1)(b) (as disbursements in relation to a proceeding). They therefore need to be approved by the Court under r 14.12(2)(a)(i). The disbursement must be of a class that is approved by the Court for the purpose of the proceeding, specific to the conduct of the proceeding, reasonably necessary for the conduct of the proceeding and reasonable in amount.39 I accept that Ms McDermott’s evidence was specific to the conduct of the proceeding and reasonably necessary for the conduct of the proceeding.40 I have reviewed Ms McDermott’s two invoices. Taking into account the volume of Ms McDermott’s evidence, her attendances at the hearing, as well as the preparation necessarily required, the amount claimed is reasonable.
Result
[122]I make the following costs awards:
Brett
(a)An award of $119,975.09 (being increased costs with a 25 per cent uplift on 2B scale costs of $87,611.00, amounting to $109,513.75 plus disbursements of $10,461.34) to Brett against Bryce.
Delwyn
(b)An award of $142,270.11 (being increased costs with a 25 per cent uplift on 2B scale costs of $90,735.00, amounting to $113,418.75 plus disbursements of $28,851.36) to Delwyn against Bryce.
39 High Court Rules, r 14.12(2)(b), (c) and (d).
40 See Harvey v Harvey, above n 2, at [135]–[138]; [142]–[143]; [146]–[148]; [215]–[216]; and
[218]–[226].
Mrs Harvey
(c)An award of $115,530.75 (being increased costs with a 25 per cent uplift on 2B scale costs of $85,473.00, amounting to $106,841.25 plus disbursements of $8,689.50) to Mrs Harvey against Bryce.
Paul
(d)An award of $54,167.70 (being increased costs with a 30 per cent uplift on 2B scale costs of $40,829,00 amounting to $53,077.07 plus disbursements of $1090.00) to Paul against Bryce; and
The estate
(e)An award of indemnity costs to the estate in the sum of $165,712.80 against Bryce.
Gordon J
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