Kirby v Sims HC Wellington CIV-2010-485-794
[2011] NZHC 2028
•22 December 2011
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2010-485-794
IN THE MATTER OF the Family Protection Act 1955
AND IN THE MATTER OF the estate of Donald Hammond Murray
BETWEEN MELISSA TANIA KIRBY Plaintiff
ANDEDWARD WILLIAM JOHN SIMS AND CARMEL MIRINGA FISHER Defendants
CIV-2010-485-1019
AND IN THE MATTER OF the Family Protection Act 1955
AND IN THE MATTER OF the estate of Irma Murray
BETWEEN MELISSA TANIA KIRBY First Plaintiff
ANDNATHAN HAMMOND MURRAY Second Plaintiff
ANDJOHN LESLIE BIRCH Third Plaintiff
ANDCARMEL MIRINGA FISHER AND HUGH GLADSTONE FISHER Defendants
Hearing: On the papers
Judgment: 22 December 2011
COSTS JUDGMENT OF CLIFFORD J
KIRBY V SIMS AND FISHER HC WN CIV-2010-485-794 22 December 2011
Introduction
[1] Irma Murray died on 12 May 2009, aged 79. She is survived by the two adopted children of her marriage with Donald Murray, Melissa Kirby and Nathan Murray. She is also survived by her natural child of a previous marriage, John Birch. Donald Murray pre-deceased Irma Murray, dying on 17 June 1994 aged 60.
[2] In these proceedings:
(a) Melissa Kirby claimed under the Family Protection Act 1955 against the estate of her father Donald Murray; and
(b)each of Melissa Kirby, Nathan Murray and John Birch claimed under that Act against the estate of their mother, Irma Murray.
[3] By agreement, the claims against both estates were heard together on the basis of common affidavit evidence.
[4] The named defendants, Edward Sims and Carmel Fisher, and Carmel and Hugh Fisher, are the trustees of Donald and Irma Murray’s estates respectively. In their capacities as such, they abided the decision of this Court.
[5] The plaintiffs’ claims against the estates of Donald and Irma Murray were opposed by the children of Donald Murray’s sister, Wanda Wakem – Carmel Fisher, Peter Wakem, Gregory Wakem and Melanie Wakem (together “the Wakem Children”). They are beneficiaries, indirectly through their mother and directly, of those estates.1
[6] Melissa Kirby’s daughter, Olivia Murray-Kirby, was also represented at the hearing. Olivia has a remainderman interest under her grandfather Donald Murray’s will. She has no direct entitlement under her grandmother Irma Murray’s will, but is
a person entitled to claim from that estate under the Family Protection Act.
1 All four Wakem Children are, by way of gift over through their mother, beneficiaries of Donald’s estate. Carmel Fisher, and Peter and Melanie Wakem, but not Gregory Wakem, are beneficiaries in their own right of Irma’s estate. Where appropriate, references in this judgment to the Wakem Children are to be understood accordingly.
[7] In my judgment of 22 August 2011 I declined Melissa Kirby’s claim against her father’s estate but upheld her claim, and those of Donald Murray and John Birch, against their mother’s estate.2
[8] I awarded:
(a) Ms Kirby, a specific bequest of $750,000 in place of a specific bequest of $50,000 which, under her mother’s will, was to vest when she turned 50;
(b) Nathan Murray, a specific bequest of $600,000, noting that his
mother’s will had made no provision for him; and
(c) John Birch, a specific bequest of A$350,000 in place of the discretionary fund of $50,000 created by his mother’s will.
[9] As Melissa Kirby’s claim against her father’s estate failed, the question of any additional provision from that estate for Olivia Murray-Kirby did not arise and I declined to consider a late claim by her against her grandmother, Irma Murray’s estate.
The question of costs
[10] I asked for submissions on costs if the parties were unable to agree on that question. The parties have, not surprisingly, been unable to agree and memoranda have been filed.
[11] Each of the plaintiffs, on the basis of what they say is the general practice in family protection cases, asks for awards of solicitor and client costs to be paid out of the residue of their mother’s estate. Melissa Kirby claims the cost of bringing her unsuccessful claim against her father’s estate from the residue of her mother’s estate as well. In doing so, the plaintiffs refer to Calderbank offers made to, but not accepted by, them and the fact that the awards made by me exceed those Calderbank offers made.
[12] The amount of costs claimed are:
(a) Melissa Kirby, $157,141.44;
(b) Nathan Murray, $135,968.78; and
(c) John Birch, $54,786.26.
[13] Olivia Murray-Kirby seeks costs of $29,276.04 equally from both estates or,
failing that, from Donald Murray’s estate alone.
[14] Those claims are supported by copies of relevant invoices provided with written submissions.
[15] The costs claimed are significant - $347,896.48 in total. Given that they are claimed against the residue of Irma Murray’s estate, they would be borne by the Wakem Children. The resolution of those claims involves determining the effect of the Calderbank offers, and a number of other issues raised by the Wakem Children in face of what the plaintiffs say is the accepted practice of awarding indemnity costs out of the residue of the estate in question. My judgment is under appeal. If, and subject to the extent that, the Wakem Children succeed on appeal, all of those issues may need to be revisited. After considering the memoranda filed, I therefore proposed deferring my decision on costs until the Court of Appeal’s decision was available. Although counsel for the trustees of the two estates agreed to that course of action, the Wakem Children – in effect with the support of the plaintiffs – requested that I determine costs now. I accede to that request.
[16] The issues can be put simply. In response to the plaintiffs’ claims, the
Wakem Children say:
(a) Whilst awarding costs from the residue of the estate was a general practice, it was never a universal one. More recent authority suggests that a normal approach to costs should be taken. As regards Melissa Kirby’s unsuccessful claim against Donald Murray’s estate, her costs should follow the event. If costs are to be awarded to Melissa Kirby, they should fall on Donald Murray’s estate, not that of Irma Murray.
At this point, I note that Melissa Kirby and her brother, Nathan Murray, are the residuary beneficiaries of Donald Murray’s estate. As regards that claim, the Wakem Children should be awarded costs against Melissa Kirby: scale costs up to the date of the Calderbank letter, solicitor and client costs thereafter. On that basis, the Wakem Children claim costs of $58,827.54 from Melissa Kirby.
(b)As regards the successful claims against Irma Murray’s estate, costs should lie where they fall. If not, only scale 2B costs should be awarded, calculated to be $15,096, $17,766 and $15,096 respectively for Melissa Kirby, Nathan Murray and John Birch.
(c) Olivia Murray-Kirby’s costs incurred as regards Melissa Kirby’s claim against Donald Murray’s estate should not be borne by the estate, but by Melissa Kirby. There should be no order for costs for Olivia Murray-Kirby’s involvement in the claim against Irma Murray’s estate. Her claim in that regard was only raised at the hearing, and there was no legal basis for it.
The law
[17] I acknowledge the former practice in family protection claims of awarding solicitor and client costs out of the residue of the estate in question. Having said that, I endorse and adopt the approach of Rodney Hansen J in Brown v Harrop.3
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, that 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 necessary reason why family protection proceedings should be excluded from the operation of the general principles as to costs as set out in r 47 of 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.
[18] In adopting that approach, I note that similar comments have been made by a number of High Court Judges in recent cases.4
[19] In adopting that approach, I note that in my judgment I commented adversely on the voluminous affidavits, particularly those filed by Nathan Murray and, for the Wakem Children, Carmel Fisher. I note further that Ms Fisher was the first to raise issues of estrangement which thereafter were the focus of so much attention. As I observed in my judgment:5
Carmel provided most of the affidavits on behalf of the Wakem Children. She was, in fact, the first to raise issues of estrangement. In her (first) affidavit of 10 November 2009 filed in the proceedings against Donald’s estate, and after Melissa had commenced proceedings against Irma’s estate but before Nathan had done so, she alleged that Melissa became estranged from her mother following Donald’s death, and that the relationship between Donald and Irma and their children deteriorated as the children reached adulthood.
...
Carmel, as I have noted, alleged that Melissa and Nathan were estranged from both their parents. There is in my view simply no reliable evidence to find that Melissa or Nathan were estranged from their father, or that Melissa was estranged from her mother. Difficulties there may have been, but that is not unusual. The only real issue in my view is what is the significance here of Nathan’s undeniable estrangement from Irma.
[20] I also commented, at trial and in my judgment, adversely on the response of
the Wakem Children to John Birch’s claim. There I observed:6
The Wakem Children have, somewhat belatedly, accepted that Irma breached her moral duty to her son, John Birch.
John’s largely uncontested affidavit evidence was that, as a young child, he was looked after by his grandmother, Irma’s mother. Aged about seven, he went with his mother and lived in Sydney, during which time his mother left him at boarding houses for children on a temporary basis. He then attended boarding school during which time he saw his mother only infrequently. He was 15 when Irma married Donald and he moved to New Zealand to finish his last year of secondary education at Horowhenua College. From the age of 16 onwards he had little to do with Irma, a situation that would appear to have been largely of Irma’s doing. He trained as a linotype operator, and worked in the newspaper business from then on. John eventually moved to Australia and married. His wife died in 2002.
4 Barker v Barker HC Auckland CIV-2006-404-181, 7 December 2006; Vincent v Lewis HC Auckland CIV-2002-404-2440, 26 April 2006; Weir v Hotham HC Auckland CIV-2004-404-
5300 and CIV-2005-404-5740, 1 August 2006.
5 Kirby v Sims and Fisher HC Wellington CIV-2010-485-794, 22 August 2011 at [72] and [79].
6 At [166]-[168].
John can only be described as poor. He lives alone some two hours north west of Toowoomba on a six acre block of scrub land worth A$16,000 in a kitset house worth A$15,000. He is a beneficiary. It was, as I said during the hearing, a somewhat remarkable proposition that the Wakem Children advanced when they submitted that John was a person who wanted little. That a person is poor, and has little, does not equate to them wanting little. Having said that, John is now 60 years old. He has no children of his own.
[21] Both those matters are, in my view, relevant to the question of costs.
[22] Before turning to the individual costs claim, there is one further matter to note. In my judgment I recorded the basis upon which Melissa’s claim against her father’s estate and her and her brother’s claim against their mother’s estate had been heard together:7
All parties have approached this case on the basis that the two estates, and the testators’ dispositions, are to be considered together. Given the terms of Donald’s will, and particularly as the date of Irma’s death became the Annuity Date, I consider that to be generally appropriate. Moreover, the Wakem Children defend Melissa’s and Nathan’s claims on their mother’s estate by reference to their inheritance under their father’s will. Whilst Melissa’s claim against her father’s estate must, as a matter of law, be considered separately, I will therefore consider it alongside her claim against her mother’s estate.
[23] In my view, that is also relevant to the issues of costs that I must decide. [24] I turn now to the individual cost claims.
Melissa Kirby’s claim against Donald Murray’s estate
[25] As Melissa Kirby’s claim against her father’s estate failed, I do not consider that she is entitled to costs. The question is whether, and on what basis, the Wakem Children as defendant beneficiaries, having successfully defended that claim, are entitled to costs. On normal principles the Wakem Children would be entitled to scale 2B costs to be paid by Melissa Kirby. There is, here, the significance of their Calderbank offer to consider. The purpose of a Calderbank offer is set out in r 14.11(3) of the High Court Rules. Calderbank offers effectively protect an unsuccessful party from costs beyond the point in time at which the Calderbank offer is made if, although successful, the other party is not any more successful than the
Calderbank offer made. The Wakem Children have however, and by reference to their Calderbank offer, sought indemnity costs as from the date of that offer. McGechan comments:8
A successful r 14.10 offer does not of itself give rise to an entitlement to increased or indemnity costs. Any such entitlement is under r 14.6. That results from r 14.11(2)(b), citing Oceania Furniture Limited v Debonaire Products Limited HC Wellington CIV-2008-485-1701, 16 September 2010 at [41] [a decision incidentally of mine].
[26] In my view, the fact that in their Calderbank offer the Wakem Children indicated they would seek indemnity costs if Melissa Kirby did not succeed relative to that offer does not, in and of itself, entitle them to indemnity costs. Furthermore there is not, in my view, any basis for an award of indemnity costs to the Wakem Children as regards Melissa Kirby’s claim against her father’s estate. Whilst that claim did not succeed, Melissa Kirby successfully obtained leave to bring that claim against the Wakem Children’s opposition, that grant of leave in and of itself speaking to the substantive merit of the claim. Nor, in my view, did Melissa Kirby advance her claim against her father’s estate in such a way as to give rise to a circumstance that would make indemnity costs appropriate. The question is therefore, is there any reason why the Wakem Children should not receive costs in the ordinary course from Melissa Kirby? In my view there is.
[27] First, Melissa Kirby successfully obtained leave to bring her claim against her father’s case against the Wakem Children’s opposition. In terms of that claim, the argument as to leave was a significant part of the contest between the parties. Melissa Kirby succeeded to that extent. Any award of costs in favour of the Wakem Children would have to recognise that appropriately.
[28] Secondly, and as noted above, Melissa Kirby’s claims against her father’s and mother’s estates, and Nathan’s claim against his mother’s estate, were defended by the Wakem Children by reference to the extent to which each had inherited under their father’s will. Issues relating to Nathan Murray’s estate therefore featured throughout the case. Melissa Kirby succeeded in her claim against her mother’s estate, notwithstanding that line of reasoning by the Wakem Children by reference to her father’s estate. In my view that is a further reason against an award of costs in
favour of the Wakem Children against Melissa Kirby. Taking account of both those matters it is in my view inappropriate in these circumstances for Melissa Kirby to pay costs to the Wakem Children. The Wakem Children’s costs relating to Melissa Kirby’s claim against her father’s estate will also lie where they fall.
The estate of Irma Murray
[29] Each of Melissa Kirby, Nathan Murray and John Birch has succeeded in their claim against their mother’s estate. In my view, normal principles should apply. They are therefore, in the ordinary course, entitled to scale costs against the three Wakem Children who, as beneficiaries of Irma’s estate, defended those claims, namely Carmel Fisher and Peter and Melanie Wakem. The plaintiffs have, however, claimed indemnity costs, albeit against the estate. The question is whether indemnity or increased costs are appropriate.
[30] In terms of indemnity costs, I consider that indemnity costs are appropriate in John Birch’s case only. As I observed above, in my view John Birch had, from the outset, an unanswerable claim that his mother had failed to discharge her moral duty to him. The Wakem Children recognised that belatedly, and in the context of what I have described as a somewhat remarkable proposition relating to John Birch’s circumstances. I am quite satisfied that indemnity costs are appropriate here. There will therefore be an order that the (three) Wakem Children pay John Birch’s costs of
$54,786.26.
[31] As regards the claims by Melissa Kirby and Nathan Murray, I am not satisfied that this is an appropriate occasion for an award of indemnity costs. I repeat my observation that I do not think an entitlement to indemnity costs arises simply because, in the relevant Calderbank letters, the Wakem Children indicated they would claim indemnity costs by reference to those letters. I am, however, satisfied that it is an appropriate occasion for an award of increased costs. I have reached that conclusion for two reasons:
(a) The first is by reference, through Carmel Fisher’s affidavits, to the Wakem Children’s responsibility for the extent to which, and the way in which, the case featured voluminous affidavits of the type criticised
by Richardson P in Williams v Aucutt.9 Melissa Kirby played little part in those exchanges. Whilst the tone of Nathan Murray’s affidavits can also be criticised, I think he was far less responsible than the Wakem Children, and Carmel Fisher in particular.
(b)Secondly, my view is that what I regard as the quite inappropriate action by Carmel Fisher and her husband in advancing funds from Irma’s estate for these legal proceedings can be marked by an award of increased costs. I do not think the Wakem Children, other than Carmel, can object to that, as it was their fees that were paid in that manner.
[32] The question becomes what is the appropriate award. The costs claims that have been filed do not, in Melissa Kirby’s case, differentiate between attendances as regards her claim against her father’s estate and as regards her claim against her mother’s estate. Given the way in which the cases were prepared and argued, I do not find that surprising. However, it is appropriate to take account of the fact that Melissa did not succeed against her father’s estate. At the same time, and as regards Nathan Murray, I think it is appropriate to have regard to the fact that I did comment adversely on the tone of his affidavits as regards his relationship with his mother. I also note that none of the plaintiffs have filed costs submissions outlining what they consider would be an appropriate award of scale costs. Notwithstanding the difficulties created by both of those considerations – noting that in other circumstances I would have asked for submissions from the relevant plaintiffs on the question of what they consider are the appropriate scale costs – but to bring some finality (at least at this stage) to my consideration of these matters, I have decided in the round that an award of costs of $70,000 against the (three) Wakem Children as regards Melissa Kirby and Nathan Murray’s claims against their mother’s estate is the appropriate amount to award. I so order.
[33] I turn finally to the costs claimed by Olivia Murray-Kirby. Olivia Murray-Kirby is not sui juris, and her legal representation was appointed by the Court to protect her interest under her grandfather, Donald Murray’s estate.
Therefore, the general principle as set out at [17] does not answer the question of what is the proper approach to the costs claimed by Olivia Murray-Kirby. I think the previous general principle should apply as regards the proper defence costs of claimants who are not sui juris. On that basis, I order that Olivia Murray-Kirby’s costs as regards Melissa Kirby’s claim against Donald Murray’s estate, be paid out of the residue of that estate. In my judgment, I concluded that representation for Olivia Murray-Kirby had been ordered by the Court because of her mother’s claim against her grandfather’s estate, and not with respect to her mother’s claim against her grandmother’s estate. I therefore do not consider it appropriate that Olivia Murray- Kirby’s costs in bringing what I described as a late and non-notified claim against her grandmother’s estate should be borne by that estate. Rather, I consider that they should be borne by her mother, Melissa Kirby, and order accordingly.
[34] I note finally that it became apparent during these proceedings that solicitor and client costs, totalling some $152,000, incurred by the Wakem Children had been paid out of Irma Murray’s estate. In his submissions on costs, counsel for the Wakem Children commented:
The solicitors representing the plaintiffs make much of the fact that funds have been advanced to the Wakem children by the executor of Irma’s estate to pay fees. The funds have been advanced by the executors from the proceeds of the sale of the shares in Papaitonga Cattle Company Limited which have been bequeathed to the Wakem children as per clause 3.2 of Irma’s Will. In effect, the advances amount to interim distributions of their own money. The executors are entitled to do that if they so wish. The payment of costs in this way has had no effect on the ability of the executors to pay the awards or to meet any legacies or other expenses.
[35] Ms Fisher and her brother, Hugh Fisher, are executors of Irma Murray’s estate. Pending the outcome of litigation, the proceeds of an estate should not, in my view, be distributed in this manner – whether on an interim basis or otherwise. Where all parties claiming against the estate agree, then the position would be otherwise. That was not the case here.
“Clifford J”
Solicitors:
T Manktelow, P O Box 31-265, Lower Hutt (Counsel: G Manktelow, [email protected]). Cooper Rapley, P O Box 1945, Palmerston North ([email protected]).
Hornabrook Macdonald, P O Box 91845, Auckland ([email protected]) (Counsel, G C Jenkin:
[email protected]).
ARL Lawyers, P O Box 30-430, Lower Hutt ([email protected]).
Grant O’Donnell, P O Box 900, Palmerston North ([email protected]) (Counsel, G Mason,:
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