Kang v Perpetual Trust Limited

[2023] NZHC 2231

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2022-485-316

[2023] NZHC 2231

UNDER

the Administration Act 1969 and Part 18 of the High Court Rules 2016

IN THE MATTER

of the estate of Alexander Gavin Brown

BETWEEN

RONG KANG

Plaintiff

AND

PERPETUAL TRUST LIMITED

First Defendant

GAVIN WILLIAM BROWN
Second Defendant

NATALIE MARGARET BROWN

Third Defendant

Hearing:

On the papers

Appearances:

A S Butler KC and J E M Lethbridge for the Plaintiff N L Walker and F G Wilson for the First Defendant L C A Farmer for the Second Defendant

D H McLellan KC and J W H Little for the Third Defendant G J Angus for the Interested Party (Tiger Brown)

Judgment:

17 August 2023

JUDGMENT OF COOKE J

(Costs)

[1]    By judgment dated 16 June 2023 I recalled the grant of letters of administration that had previously been issued and granted probate under a will of Mr Alexander Brown that had subsequently been found.1 The substantive argument between the

1      Kang v Perpetual Trust Ltd [2023] NZHC 1501.

KANG v PERPETUAL TRUST LIMITED [2023] NZHC 2231 [17 August 2023]

parties concerned the identity of the administrator to be appointed under the grant of probate. Madam Kang, Mr Brown’s second wife, sought to be appointed administrator under the will in place of Perpetual Trust Ltd (PTL) which had earlier been appointed administrator when letters of administration had been issued. Her application was supported by her son Mr Tiger Brown, but it was opposed by the second and third defendants who are the children of Mr Brown’s first marriage. I accepted the arguments by the defendants that Madam Kang should not be appointed administrator, and appointed PTL instead.

[2]    I reserved leave on the question of costs if that could not be resolved. The first, second and third defendants each seek a substantial award of costs. Madam Kang argues that costs should be met by the estate.

Should all costs be met by the estate?

[3]    Madam Kang argues that all parties’ costs should be met from the estate, or alternatively that her costs should be. She relies on the decision of the Court of Appeal in Loosley v Powell where the Court made such an order in relation to a contested application relating to a will which largely depended on whether the testator had capacity.2 The Court held that whilst the usual position was that the losing party would pay costs, this approach needed to be modified. The Court relied on the decision in Re Paterson where the Court held that costs ought not to follow the event if the litigation originated with the fault of the testator, or if there was sufficient and reasonable grounds to question the capacity of the testator.3 In Loosley the Court of Appeal found that the opposing parties did have sufficient and reasonable grounds to question the testator’s capacity, and they ought not to pay costs notwithstanding that they did not succeed with their argument.4

[4]    Whether there is an exception to the normal principle that costs should follow the event depends on the circumstances of the case. The present case did not involve a dispute about the testator’s capacity. I accept that there will be other circumstances when there are disputes about wills where costs may not be awarded against the losing

2      Loosley v Powell [2018] NZCA 73.

3      Re Paterson (Deceased) [1924] NZLR 441 (SC) at 422–443.

4      Loosley v Powell, above n 2, at [7].

party, and where costs might be met by the estate. But I do not accept that this is such a case.

[5]    First, there was no formal opposition to the application that the grant of letters of administration be recalled and probate granted under the will. A question was raised by the second defendant over whether it had been established that the will was genuine, but even that did not involve formal opposition.

[6]    The real dispute, and the matter that led to the parties incurring costs, was whether Madam Kang should be appointed administrator. On that matter the arguments of the defendants prevailed. Under the costs rules Madam Kang should pay costs unless a recognised exception, such as that arising in Loosley, applies. I do not accept that there is such an exception in the present case. The dispute on who should exercise the power of the administrator is in the context of sizeable assets in dispute where there are already a number of proceedings on foot and multiple issues. The identity of the administrator mattered because the administrator exercised relevant powers in relation to the litigation. So the dispute really focused on the identity of the person who would exercise power over the litigation, and other disputes, already taking place. It was part of a wider ranging series of disputes between the parties. I see no reason why costs ought not to follow the event in those circumstances.

[7]    It is also relevant that, whilst the underlying disputes involve assets of considerable value, there is little of value currently held by the estate. PTL needs to borrow funds from beneficiaries to fund its activities as administrator. So an order that the costs of the proceedings be met by the assets of the estate would be an order requiring the beneficiaries to fund PTL to meet those costs. That would not be appropriate. I accordingly do not accept Madam Kang’s arguments, or the first and second alternative arguments she advances.

[8]    Neither do I accept the first element of her third alternative argument — that she should have costs as against Mr Gavin Brown in respect to the validity of the will, and that any costs in relation to her appointment as administrator should be discounted. As indicated, whilst Mr Brown put Madam Kang to proof in relation to the will he did not formally oppose this application. And in any event this argument was not the

primary argument that the Court needed to address. I see no reason to discount the normal costs because of that issue.

Level of costs

[9]    This does not mean that the costs claimed by each of the defendants should be granted as claimed, however.

[10]   First, I accept Madam Kang’s argument that costs should only be awarded on a category 2 basis, and reject the argument for the defendants that costs should be awarded on a category 3 basis. Although the amounts in dispute are substantial, and the underlying proceedings are complex, the application nevertheless falls squarely within category 2 of r 14.3 of the High Court Rules 2016 — “proceedings of average complexity requiring counsel of skill and experience considered average in the High Court”. The ultimate issue before the Court was not a complex one — namely whether in all the circumstances of the case, PTL rather than Madam Kang should remain as the administrator. Applications of that kind do not move into category 3 simply because the assets are substantial, or the disputes between family members are complicated. In fact, that is not uncommon.

[11]   There is also an issue arising from the fact that all three defending parties each apply for separate costs awards. I do not consider such awards to be appropriate. 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.

[12]   In my view the second and third defendants should only be entitled to a single award of costs in accordance with this rule. They may each have reasons why they are separately represented, but there is really no reason why they could not jointly oppose the application in this proceeding. For that reason, there will be a single set of costs, on a category 2 basis, awarded against the plaintiff to the second and third

defendants. In terms of the costs claimed by second and third defendants I do not consider that a claim under time band C is appropriate other than for preparing written submissions. The amount awarded will accordingly be $29,861.75.

[13]   I accept that there was good reason for PTL to be separately represented as the existing administrator. Having said that I do not consider it should be awarded costs on the basis of a party that opposed the plaintiff’s application. As administrator its function was to act independently. An award of costs would only be appropriate to recognise the cost to the estate in appearing before the Court to provide assistance, and filing affidavit evidence to advise the Court of the current position. Such a costs award might not be normally appropriate at all for an administrator exercising such a role, with the costs normally to be borne by the estate. But in the current situation, where the estate has no cash assets and PTL needs to be funded by the beneficiaries, it is not appropriate to make that order. For these reasons I do not allow the claim under items 38, 40 or 43 in the schedule attached to the memorandum of counsel for PTL. The claim is otherwise allowed. This involves an award against the plaintiff of $15,581.50.

Cooke J

Solicitors:

Martelli McKegg for the Applicant

Russell McVeagh for the First Defendant

Clark Boyce, Christchurch for the Second Defendant Anthony Harper, Auckland for the Third Defendant Morris Legal, Auckland for the Tiger Brown