Johnston-O'Loughlin v Johnston

[2025] NZHC 733

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-000783

[2025] NZHC 733

UNDER THE

Administration Act 1969 and the Property Law Act 2007

IN THE MATTER OF

Estate of Heather Joy Johnston

BETWEEN

DESTINEE-JOY JOHNSTON- O’LOUGHLIN

Applicant

AND

CUSHLA-JOY JOHNSTON

Respondent

Hearing:	On the papers at Auckland
Judgment:	1 April 2025

JUDGMENT (NO.2) OF POWELL J

[Costs]

This judgment was delivered by me on 28 March 2025 at 12.00 pm.

Pursuant to R 11.5 of the High Court Rules.

…………………..

Registrar/Deputy Registrar

DESTINEE-JOY JOHNSTON-O’LOUGHLIN v CUSHLA-JOY JOHNSTON [2025] NZHC 733 [1 April 2025]

[1]                 By judgment dated 25 February 2025 I granted Destinee-Joy Johnston- O’Loughlin’s (“Destinee-Joy”) application to remove Cushla-Joy Johnston (“Cushla-

Joy”) as an administrator of the Estate of Heather-Joy Johnston.1

[2]                 I indicated that my preliminary view was that Destinee-Joy was entitled to costs. I fixed a timetable for the filing of the submissions and indicated that any issue of costs would be determined on the papers.2 Submissions were subsequently filed as directed.

The position of the parties

[3]                 Destinee-Joy has confirmed her actual costs were $26,364 and seeks costs in either the sum of $24,695, or $23,616 together with disbursements of $970. The larger sum of costs sought is a mixture of scale, increased and indemnity costs for different stages of the proceedings, while the second figure is scale costs increased by 50 per cent. Destinee-Joy also seeks a direction that the costs be paid directly out of Cushla- Joy’s share of the estate following the sale of the property.

[4]                 Specifically, Destinee-Joy submits, with reference to r 14.6(3) of the High Court Rules 2016 (Rules) and Bradbury v Westpac Banking Corporation,3 her application was necessary, and while scale costs were appropriate up to the point Cushla-Joy agreed to the order for sale,4 her subsequent conduct justifies the increase in costs sought. She points in particular to Cushla-Joy initially agreeing to, and then pulling out of an agreement for sale and purchase of the property, refusing to engage with the proceedings, and failing to file any opposition but appearing at the hearing anyway.

[5]                 In response, while Cushla-Joy opposes any award of costs, her submissions are directed at the substance of the application itself, rather than the issue of costs or the quantum of costs now sought. By way of illustration, Cushla-Joy submits “that the

1      Johnston-O’Loughlin v Johnston [2025] NZHC 276 [Judgment].

2 At [19].

3      Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400 at [27] and [204]–[209].

4 Judgment at [6].

current applications should not proceed any further”, and instead seeks the following orders in response to the application for costs:

·Postpone the sale of the property until the issues of false statements and the respondent’s rightful entitlement are fully addressed.

·Consider equitable relief for the respondent in recognition of her dedication and commitment she displayed during the last 5 years of her mother’s life.

·Investigate the accuracy and truthfulness of the applicant’s sworn affidavits and submissions.

·Once it has been established that the applicant has misled the Court make an order to ensure that the applicant’s submissions are corrected to reflect the true facts.

Discussion

[6]                 There can be no dispute about the applicable principles regarding costs and disbursements. All matters relating to costs remain at the discretion of the Court,5 however, ordinarily, the loser will pay the winner’s costs in accordance with the scale set out in the Rules.6 Nevertheless, the Court may award indemnity costs if, among other reasons, the party claiming costs is entitled to indemnity costs under a contract.7 The Court also retains the discretion to award increased costs where the party opposing costs has contributed unnecessarily to the time or expense of the proceeding.8

[7]                 A successful party may also claim disbursements. Rule 14.12(2) specifies that a disbursement will be recoverable where it is claimed and verified; is specific to the conduct of the proceeding; reasonably necessary for the conduct of the proceeding; and reasonable in amount. Where a disbursement satisfies these requirements, the party claiming the disbursement will be entitled to recover the actual fee or expense (not just the deemed two thirds of them, as for costs).9 The recovery of disbursements is to be assessed separately to any claim for costs, whether those costs sought are scale, increased or indemnity costs.

5      High Court Rules 2016, r 14.1(1).

6      Rule 14.2(1)(a).

7      Rule 14.6(4).

8      Rule 14.6(3).

9      Air New Zealand Ltd v Commerce Commission [2007] NZCA 27, [2007] 2 NZLR 494 at [47]–

[48] and [62]; Scandle v Far North District Council HC Whangarei CIV-2008-488-203, 31 March 2011 at [34].

[8]                 Having reviewed the file and my judgment, I am satisfied that increased costs should be paid by Cushla-Joy to Destinee-Joy, but not by the full amount sought by Destinee-Joy.

[9]                 It is not open for Cushla-Joy to attempt to revisit the outcome of the application. It is likewise clear that the way in which Cushla-Joy has participated in the proceedings has contributed unnecessarily to the time and expense of the proceeding by ineffectively and unjustifiably blocking the sale of the property after having consented to the order for sale and signing the agreement for sale and purchase. Cushla-Joy’s conduct inevitably required Destinee-Joy to take the application to its conclusion. Even then, Cushla-Joy took what can only be described as a “spoiling role” by not formally participating or raising anything substantive in opposition. She nonetheless indicated throughout that she would do so and ultimately turned up to the hearing notwithstanding the lack of formal steps taken, which increased the costs of Destinee-Joy.

[10]             Ultimately, I am satisfied that the appropriate costs calculation is to take scale costs for the proceedings, which I accept are properly calculated in the sum of $15,774, and uplifting those by a total of 30 per cent, reaching a total sum of $20,467.20. I am also satisfied that the disbursements sought are in order.

[11]             As noted, Destinee-Joy seeks that the costs awarded be deducted from Cushla- Joy’s share of the estate. This issue was considered by Cooke J in Hennessey v Hennessey.10 This case involved the successful removal of one trustee and executor of an estate by the other, and the successful plaintiff sought that the costs payable be deducted from the defendant’s share of the estate. His Honour however concluded:11

I do not think there is jurisdiction for the Court to make that order. In his supplementary submissions Mr Sheppard indicated he could find no previous case where such orders had been made, but referred to s 81(2) of the Trusts Act 2019 and s 38(2) of the Trustee Act 1956. But these provisions are directed to costs incurred by the trustee, and not costs award against a beneficiary in the trustee’s favour. The defendant’s liability under the costs award can be addressed by the plaintiff in her capacity as administrator. I proceed on the assumption that the plaintiff’s legal costs are being met out of the estate.

10     Hennessy v Hennessey [2021] NZHC 1198.

11 At [18].

[12]Given that position and for the same reasons I take this second issue no further.

Decision

[13]Cushla-Joy Johnston is to pay Destinee-Joy Johnston-O’Loughlin the sum of

$20,467.20 together with disbursements in the sum of $970, a total of $21,437.20.

Powell J