Ireland v Grant
[2016] NZHC 2752
•17 November 2016
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CIV-2014-412-000014 [2016] NZHC 2752
BETWEEN DENNIS PAUL IRELAND AND
ANGELA CATHERINE IRELAND Applicants
AND
STEPHEN JOHN GRANT AND DAVID JAMES SMILLIE
First Respondents
ROLIEN GEERTRUIA BUSCH Second Respondent
Hearing: 10 March 2016 (and memoranda filed subsequently) Appearances:
L A Andersen for Appellants
J K Hambleton for First Respondent
T J Shiels QC for Second RespondentJudgment:
17 November 2016
JUDGMENT OF GENDALL J (As to Costs)
[1] This judgment deals with costs sought on appeals from a judgment of the
Family Court dated 9 December 2013.
[2] That judgment was appealed to this Court (successfully) in a judgment I gave on 2 July 2014. The appeal judgment of this Court was itself subject to applications for leave to appeal to the Court of Appeal. Finally, following the Court of Appeal’s dismissal of an appeal brought by the second respondent (Ms Busch), the applicants here (the Irelands) seek costs in relation to what was their ultimate success in their claim. This was a testamentary promises claim brought against the estate of the late
Betty Osmand (Mrs Osmand) who had died on 4 September 2011.
IRELAND v GRANT [2016] NZHC 2752 [17 November 2016]
[3] The respondents oppose this costs application and submit that at most costs throughout should lie where they fall.
Procedural Background
[4] The applicants (the Irelands) sought an order from the Family Court under the Law Reform (Testamentary Promises) Act 1959 (the TPA) with respect to a farm property at Portobello Road, Dunedin (the farm), which was the major asset in the estate of the late Mrs Osmand.
[5] Their application to the Family Court was advanced on the ground that the Irelands had undertaken work and rendered services to Mrs Osmand during her lifetime and that she had expressly promised to reward them for this work and services by leaving the farm to the Irelands. In a will she made in 1991, indeed Mrs Osmand had left the bulk of her estate and the farm to Mr Ireland. But in both her later and last wills signed by her in 2001 and 2008 respectively, Mrs Osmand revoked this and left all her estate to her adoptive daughter, Ms Busch.
[6] In the Family Court decision, a reserved judgment delivered by Judge Flatley, the Ireland’s claim was dismissed. The Judge found that no testamentary promise was made to the Irelands by Mrs Osmand in terms of the TPA.
[7] On 24 January 2014, the Irelands appealed that Family Court decision to this
Court, on the following stated grounds:
…the Learned Family Court Judge erred in fact and in law in the following respects:
(a) In failing to grant the Appellants relief under the Law Reform
(Testamentary Promises) Act 1949;
(b) In determining that the Appellants did not establish that the deceased made a promise of testamentary disposition as a reward for service rendered or work done when the evidence clearly established the existence of such a promise in return for the Appellants moving in New Zealand from their home in England;
(c) There was no proper basis for the determination that the appellants fabricated and manipulated evidence.
[8] Following a two day hearing in this Court, on 2 July 2014, I allowed the appeal. In finding for the Irelands on this appeal, effectively I divided the estate between them and Ms Busch (who was previously in effect Ms Osmand’s major beneficiary) so that the Irelands ended up with a one half share of the estate’s farm property. In relation to costs in that decision, I stated:1
[116] As to costs on this appeal, I express the tentative view, without predetermining the issue, that costs should lie where they fall in this matter and that it should not be taken for granted that costs will be borne by the estate.
[117] The parties are to agree on costs. If they cannot, the parties may file memoranda on costs sequentially.
[9] Subsequent to that decision, a memorandum dated 13 November 2013 was filed on behalf of the Irelands indicating that costs could not be agreed. Mr Andersen, counsel for the Irelands, referred this Court to the general principle, applicable in both the then District Court Rules 2009 and the current High Court Rules, that the party who fails with respect to a proceeding should pay costs to the party who succeeds. The Irelands’ therefore sought costs as he outlined as follows:
(a) Costs in the Family Court of $26,582.50 plus disbursements of $40.59 payable by the estate based on the District Court 2B scale and;
(b) Costs in the High Court of $13,860.50 plus disbursements of
$2,302.20 payable by the respondents based on the High Court 2B
scale.
[10] Meanwhile, the second respondent, Ms Busch, had sought from this court leave to appeal my 2 July 2014 decision to the Court of Appeal. On 10 October
2014, I dismissed this leave application on the ground that the threshold for an appeal to the Court of Appeal had not been met. In my judgement dismissing leave to appeal, I held that costs on the leave application were to follow the event in the usual way. They were therefore awarded to the Irelands, this being on a category 2B basis, to be fixed by the Registrar.
[11] Ms Busch than applied to the Court of Appeal for special leave to appeal my
2 July 2014 appeal decision. On 19 March 2015, the Court of Appeal granted leave for Ms Busch to appeal that decision.2 In the Court of Appeal judgment granting leave, the Irelands were ordered to pay costs to Ms Busch for a standard application on a band A basis with usual disbursements.
[12] On 11 August 2016, the Court of Appeal then heard and dismissed Ms Busch’s substantive appeal. In the Court of Appeal’s judgment, costs were reserved pending the filing of memoranda advancing reasons why costs should not follow the event.
Submissions
[13] Following the Court of Appeal’s dismissal of Ms Busch’s appeal, the Irelands now seek costs as pursued in Mr Andersen’s memorandum of 13 November 2013, noted at [9] above.
[14] Ms Busch in turn submits that, in light of the “tentative” views on costs I had expressed in my substantive judgement (and noted at [8] above), costs in the High Court should now be held to lie where they fall. And, with regard to my decision to award costs to the Irelands on my refusal to grant leave to appeal my substantive decision to the Court of Appeal, as outlined at [10] above, Ms Busch here sought to recall that judgment. She contends that, in light of the Court of Appeal’s decision granting special leave to appeal, Ms Busch’s limited success means that she should not be ordered to pay costs.
[15] The first respondents, Mr Stephen Grant and Mr David Smillie, the executors and trustees named in Mrs Osmand’s 2008 will, submit that in any event no order of costs should be made against them here and, in their submissions on costs relating to the Family Court hearing the first respondents contended:
(a) As the Court of Appeal has given a decision on appeal from the High Court’s appeal decision, the High Court is functus officio (the High Court not having reserved the issue of costs);
(b)If the High Court is not functus officio, it should not deal with the application but leave costs in the Family Court to be dealt with by that Court; and
(c) No order is appropriate in respect of costs in the Family Court.
[16] In reply to this submission, Mr Andersen for the Irelands maintains that the High Court has a wide jurisdiction on appeal under High Court r 20.19. The jurisdiction to make a costs order that it considers should properly have been made in the Family Court exists both under r 20.19(1)(a) and 20.19(1)(c). Rule 20.19(1) provides:
(1) After hearing an appeal, the court may do any 1 or more of the following:
(a) make any decision it thinks should have been made:…
(b) …
(c) make any order the court thinks just, including any order as to costs.
[17] The Irelands suggest here that there is no benefit to the parties, and it would simply introduce further delay and uncertainty, to require a costs application here to be made to the Family Court. And, with regard to Ms Busch’s application to recall (or even to reverse or discharge) the earlier costs judgment, Mr Andersen contends that there is simply no principled basis for that discretion to be exercised.
[18] And, as to Ms Busch’s application to recall my costs judgment on her leave to appeal application before this Court, Mr Shiels QC, for Ms Busch, acknowledges now that in fact such a recall application is inappropriate. Instead, Mr Shiels QC contends now that the Court should exercise its jurisdiction under r 14.8(2) of the High Court Rules. This rule provides that the Court may reverse, discharge or vary an order for costs on an interlocutory application if satisfied subsequently that the original order should not have been made. Mr Shiels QC submits that, given the Court of Appeal did grant leave to appeal, this Court should be satisfied that the original order declining leave should not have been made.
[19] In reply on this aspect, Mr Andersen maintains that under r 14.8(1), costs should follow the event in the normal way and the Irelands being successful here, they should be entitled to costs. And with regard to whether the discretion under r 14.8(2) should be exercised, Mr Andersen contends that:
(a) There are two separate and distinct jurisdictions with regard to the granting of leave and the fact that the Court of Appeal granted leave does not mean that the High Court should have granted leave and the situation is quite different to a decision that is successfully appealed when it can be said the “original order should not have been made”;
(b) It is likely that if the Court of Appeal had a better knowledge of the facts of the case then it would have declined leave to appeal because the ultimate decision was based on the facts and did not involve a question of law.
[20] I now turn to address these issues.
Analysis
[21] The starting point to any costs judgment is that all matters with regard to costs are at the discretion of the Court.3 It is also acknowledged however that this discretion is not unfettered and should be guided by the general principles of r 14.2 which state:
14.2 Principles applying to determination of costs
The following general principles apply to the determination of costs:
(a) the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds:
(b) an award of costs should reflect the complexity and significance of the proceeding:
(c) costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application:
(d) an appropriate daily recovery rate should normally be two-thirds of the daily rate considered reasonable in relation to the proceeding or interlocutory application:
(e) what is an appropriate daily recovery rate and what is a reasonable time should not depend on the skill or experience of the solicitor or counsel involved or on the time actually spent by the solicitor or
3 High Court Rules, r 14.1
counsel involved or on the costs actually incurred by the party claiming costs:
(f) an award of costs should not exceed the costs incurred by the party claiming costs:
(g) so far as possible the determination of costs should be predictable and expeditious.
[22] At the outset, I deal with the preliminary issue noted at [15] above, before considering how costs should be awarded here. This is the first respondents’ submission that this court is “functus officio” in its jurisdiction to award costs in this matter relating to the Family Court proceeding. The basis for this involves the suggestion that, as the decision of this Court was under appeal and was being heard in the Court of Appeal, the High Court no longer had jurisdiction to hear matters of costs. I do not accept this assessment however. As Mr Andersen properly noted before me, r 20.19 of the High Court Rules expressly allows an appeal court, after hearing an appeal, to make “any order the Court thinks just, including any order as to costs”. These are very extensive powers on appeal. The Court of Appeal’s discretion to grant special leave and to hear Ms Busch’s appeal does not, as I see it, preclude this court from awarding costs on the earlier matters before it.
Should costs be awarded on my refusal to grant leave to appeal?
[23] On this aspect the respondents submit that either costs should lie where they fall and therefore this Court should discharge the original costs award against Ms Busch when it refused her application to grant leave or, as a possible alternative, costs on this application should be awarded to the respondents. The respondents contend primarily that this Court ought to have granted leave to appeal, in light of the subsequent Court of Appeal decision which did grant special leave to appeal to it.
[24] In light of the ultimate outcome on the appeal, however, and under all the circumstances here, I do not accept the contention that costs awarded against Ms Busch by this Court for her application to grant leave should be discharged. I accept Mr Andersen’s submission that the discretion to grant leave in this Court, and the discretion to grant special leave in the Court of Appeal, are two separate and distinct jurisdictions. The fact that the Court of Appeal granted special leave does not mean that the High Court ought not to have granted leave. All awards of costs
are specific to the individual circumstance of the case. The situation may be different where a substantive appeal had been successful in the appeal court, but that is not the case here. My costs award in favour of the Irelands on the leave application to this Court in my decision of 2 July 2014 stands.
How should costs be awarded here?
[25] The starting point on any award for costs is that the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds. However, the learned authors of Law of Family Protection and Testamentary Promises did observe, in a situation rather different from that facing the Court here, that:4
If an appeal against an award made to an application in the Court below is successful costs will not normally be awarded against the applicant who succeeded in the Court below; the general rule that costs are met out of the estate supplanting the rule in common law litigation that costs follow the event.
[26] The authorities on how costs are to be awarded in Family Protection claims assist in considering costs on Testamentary Promises claims. In general, the starting point is that costs are awarded out of the residue of the estate in Family Protection cases, including appeals. 5 There is not, however, any absolute presumption or even “rule of thumb” that costs are awarded out of the estate. 6 The reason costs may be
awarded out of an estate is that claims and appeals will usually fail on their merits rather than on issues of standing, and there is reluctance on the part of Courts to
exacerbate family rifts through personal costs orders.7
4 Mr W Patterson Law of Family Protection and Testamentary Promises (4th ed, Wellington, LexisNexis NZ) at [17.41].
5 See the discussion in Wightman v Public Trust [2015] NZHC 1091 at [18]-[21]; Wood-Luxford v
Wood [2012] NZCA 377, [2013] 1 NZLR 31; Wood-Luxford v Wood [2013] NZSC 153, [2014] 1
NZLR 451; Paewai-Kohe v Paewai [2014] NZHC 3137 at [96]; Public Trust v LB-B [2014] NZHC 2497 at [38]; Henry v Henry [2006] NZFLR 502 (HC) at [120]-[121]; Re Allardice (1909) 29 NZLR 959 (CA) at 971; Re Allen (deceased) [1922] NZLR 218 (SC) at 224; Welsh v Mulcock [1924] NZLR 673 (CA) at 684 and 688; Bosch v Perpetual Trustee Co Ltd [1938] AC
463 (PC) at 484; Mudford v Mudford [1947] NZLR 837 (CA) at 847; Re Williamson [1954] NZLR 288 (CA) at 302; Re Clapham (Deceased) (1988) 4 FRNZ 628 (HC).
6 Re Lawler HC Palmerston North AP 10/02, 8 April 2003 at [87]; Re Blakey (deceased) [1957] NZLR 875 (SC) at 878;
7 Keelan v Peach [2003] NZFLR 727 (CA) at [7].
[27] This also aligns with the approach to costs that seems to have been taken in cases of contested wills:8
The Court has a general discretion as to costs in all actions and proceedings before it, but there are certain well-established principles upon which that discretion should be exercised in cases of contested wills. They are as follows:
(i) If the litigation originates in the fault of the testator - eg, by the state in which he left his testamentary writings, or by his eccentric or irrational habits and mode of life - or of those interested in the residue, the costs may properly be paid out of the estate.
(ii) If there be sufficient and reasonable ground, looking to the knowledge and means of knowledge of the opposing party, to question either the execution of the will or the capacity of the testator, or to put forward a charge of undue influence or fraud, the losing party may properly be relieved from the costs of his successful opponent.
(iii) Unless the circumstances of the case are such as to bring it within one of the foregoing exceptions, the general rule that costs should follow the event ought to prevail …
[28] In the past, Courts have appeared to award costs in circumstances like the present out of the estates in question unless the factual situation prevailing required departure from that approach. However, recently, courts have emphasised in some cases that the discretion should be exercised in the ordinary way – in other words in accordance with the High Court Rules and r 14.2(a) noted at [21] above in particular.
In Re Miller Rodney Hansen J said:9
[6] The traditional practice in family protection cases has been for the Court to order the costs of all parties to be borne out of the residue of the estate. However, this was never the invariable practice. Sometimes a successful applicant would be required to meet his or her own costs. In my view, there is now no reason why family protection proceedings should be excluded from the operation of the general principles as to costs as set out in…the High Court Rules. It is desirable that the prospect of an adverse costs award should operate as an incentive to settlement in appropriate cases. Parties who are sui juris and active contestants in family protection litigation generally should expect costs to follow the event.
[29] In a family protection appeal, Barker v Barker, which exhibited to some extent similar circumstances to those before me, the plaintiffs were successful in the
8 Re Paterson (Deceased) [1924] NZLR 441 (SC) at 442-443.
9 Re Miller (costs) (2001) 20 FRNZ 459 (HC). For example TB v JB [2014] NZHC 1478, (2014)
29 FRNZ 674; Fisher v Kirby [2012] NZCA 310, [2013] NZFLR 463; Brain v Harwood [2014] NZHC 2067.
Family Court, but on appeal to the High Court Asher J reduced the award made to them.10 In addressing questions of costs, Asher J said:
[16] I consider that there is a need for finality in the proceedings between these brothers, and that it is in the best interests of all parties that I determine the issue of costs in both the Family Court and High Court in this judgment. All parties accept that I have jurisdiction to do this, and the power to do so is contained in r 7(8)A(1)(c). In awarding costs I see no reason why I should not look at both sets of proceedings on an overview, rather than treat them on a strictly compartmentalised basis.
[30] In my view there is also a need for finality in the present proceeding. Like Asher J in Barker v Barker I think it appropriate in this case to determine the costs issues in both the Family Court and this Court in the present judgment.
[31] The case before me, as I see it, has resulted largely from the fault of Mrs Osmand the testator. To a significant extent Mrs Osmand might be seen as responsible for the situation which has developed, by not providing for the Irelands in her will as she promised to do. Had she made provision in her last will for the testamentary promises she had made to the Irelands earlier, the current proceeding would not have been brought.
[32] In all the circumstances prevailing in this case, it is my view that Mrs Osmand’s residuary estate should effectively bear the costs incurred by the Irelands in both the substantive proceeding before the Family Court and the High Court appeal. The Irelands ultimately have been the entirely successful party here. Costs should follow the event in the normal way and I see no circumstances which arise in this case to justify a different approach.
[33] It is acknowledged that this would mean that Ms Busch as the residuary beneficiary in the estate will effectively be the party detrimentally affected by this costs decision. That is unavoidable however and arises in part as a result of what can be seen as Mrs Osmand’s error in not making proper provision in her final will for the Irelands. This also reflects, to some extent, the position taken by Ms Busch here
to actively oppose all steps taken by the Irelands in the various courts involved in
10 Barker v Barker HC Auckland CIV-2006-404-181, 7 December 2006; and see TB v JB, above n
9; and Brain v Harwood¸ above n 9; Fry v Fry [2015] NZHC 2716.
this proceeding. I bear in mind too that the first respondents, as executors in Mrs Osmand’s estate, should not be liable personally for costs in this case for what appears in significant measure to be the fault of the testator.
Result
[34] First, the second respondent Ms Busch is to pay the Irelands’ costs and disbursements on her unsuccessful application to this Court to grant leave to appeal.11 This award of costs and disbursements as noted at para [10] above is confirmed.
[35] Secondly costs and disbursements are awarded here to the Irelands, to be paid from Mrs Osmand’s residuary estate, both in relation to the substantive appeal to this Court and in relation to the Family Court substantive hearing. Before me, no issue was taken as to calculation of the costs in question or their quantum. These costs are calculated on a category 2B basis. These amounts plus disbursements are to be as follows:
(a) costs of $26,582.50 plus disbursements of $40.59 for the Family
Court proceeding based on the District Court 2B scale; and
(b) costs of $13,860.50 plus disbursements of $2,302.20 for the High
Court appeal based on the High Court 2B scale.
...................................................
Gendall J
Solicitors:
Leonard Anderson, Dunedin
O'Neill Devereux, Dunedin
Trevor Shiels QC, Dunedin
11 Ireland v Grant [2014] NZHC 2496 at [27].
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