Lane v Li
[2025] NZHC 37
•30 January 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-1265
[2025] NZHC 37
BETWEEN JAMES TO’ESE LANE
Applicant
AND
XINFENG LI
Respondent
Hearing: On the Papers Counsel:
T D Bloy for Applicant
K McDonald for Respondent
Judgment:
30 January 2025
JUDGMENT OF CHURCHMAN J
[Costs]
[1] James To’ese Lane was successful in proceedings seeking a declaration from the Court as to which will of the late Frank Lane (the deceased) was valid.
[2] The hearing occupied two days and involved both cross-examination of witnesses and the making of extensive written and oral submissions by counsel.
[3] There were three parties who took an active part in the proceeding: the applicant, Xinyeng Li (Lily) on her own behalf and on behalf of her son Dylan Smith (Dylan) and Vincent Tan (Vincent).
[4] Although Vincent filed an application in support of Lily, he made himself available for cross-examination and essentially adopted a neutral position.
LANE v LI [2025] NZHC 37 [30 January 2025]
[5] In my substantive judgment1 I held that the 2023 will was invalid having been executed when the deceased lacked capacity and also being the subject of undue influence. I therefore accepted the applicant’s arguments and rejected those of Lily.
The costs application
[6] As the wholly successful party, the applicant has applied for costs. The costs application is advanced on two separate grounds: firstly indemnity costs are sought because it is claimed that Lily acted vexatiously, frivolously, improperly or unnecessarily in opposing the application; that Lily’s opposition to the applicant’s proceedings was hopeless from the outset on the ground of undue influence alone; that, at the hearing, Lily had ignored the issue of undue influence concentrating almost exclusively on the issue of testamentary capacity; Lily had relied on poor quality, unhelpful, and misguided opinion evidence on the issue of testamentary capacity; and Lily’s opposition to the application was unnecessary as probate of the 2023 will was sought in the alternative and Lily could have maintained a neutral position as Vincent had done.
[7]Other reasons advanced in support of a claim for indemnity costs were:
(a)Lily was primarily responsible for the 2023 will being made;
(b)the actions of Paul Young in relation to the 2023 will were directly attributable to Lily;
(c)Lily had manipulated Frank including in connection with the 2023 will; and
(d)there were many instances in the proceeding where Lily and her former counsel displayed a lack of diligence, preparation and respect for the Court procedure.
1 Lane v Li and others [2024] NZHC 3663.
[8] As an alternative to an application for indemnity costs the applicant sought increased costs under r 14.6(1)(a) of the High Court Rules 2016 (HCR).
[9]The amount sought was $117,654.95 comprised of:
(a)$65,964 being scale costs on a category 2 basis as set out in sch 1 to the application with a Band B categorisation being claimed for all items except those numbered 3, 5, 7, 16, 20—22, and 29 in the table of sch 1, which are claimed at Band C;
(b)$34,655, being 100 per cent uplift on the cost items claimed under the heading ‘origination applications’ in sch 3 of the HCR; and
(c)disbursements of $17,035.95 as set out in sch 1.
[10]The increased costs were sought on three grounds:
(a)the nature of the originating application in the proceedings was such that the time required by the application would substantially exceed the time allocated under Band C;
(b)Lily has pursued an opposition that lacks merit and failed, without reasonable justification, to accept the applicant’s legal argument regarding undue influence; and
(c)other reasons exist to support a claim for increased costs namely the same reasons that were said to support a claim for indemnity costs.
Lily’s position
[11] Lily opposes the application for costs. She initially filed a lengthy memorandum in support of her opposition which was clearly drafted without the benefit of any legal assistance. The memorandum did not address any of the specific legal propositions put forward in support of the application for costs. Instead, Lily
attempted to re-litigate the facts upon which the Court’s decision was based and to plead impecuniosity.
[12] Subsequently, pursuant to leave granted,2 Ms McDonald filed a memorandum dated 28 January 2025. That memorandum opposed the applicant’s claim for indemnity or, in the alternative, increased costs. It claimed that Lily should not have any costs awarded against her at all.
[13] The memorandum also made submissions in respect of some of the particular claims for costs made by the applicant.
[14] The first of the specific submissions was that the applicant’s claim for scale 2 costs included an allowance for costs in respect of the following:
(a)filing an interlocutory application for permission to commence proceeding by Originating Application;
(b)preparing written submissions in support of an application for permission to commence proceeding by Originating Application; and
(c)filing an originating application for Grant of Administration and supporting affidavit.
[15] On Lily’s behalf it was submitted that even if she had taken a neutral position, the estate would have had to incur the costs of filing the Originating Application for Grant of Administration and the associated Interlocutory Application and written submissions. It was submitted that the costs of filing the Originating Application, together with the Interlocutory Application and written submissions relating to it, were costs which should be borne by the estate.
2 Minute of Churchman J, Lane v Li CIV-2023-404-1265 19 December 2024.
Analysis
[16] There is no doubt that it is appropriate to award costs in respect of the Originating Application and associated Interlocutory Application. However, on the basis that it was necessary for this to happen irrespective of the position adopted by Lily, it is appropriate that these costs be paid out of the estate.
Increased costs
[17] Lily opposes the award of increased costs on the basis that she had a ‘strongly held view’ that the 2023 will was an accurate reflection of the deceased’s testamentary intentions therefore it was not unreasonable for her to oppose the application for a grant of administration of the 2010 will. Lily also relies on the fact that she obtained a medical opinion which supported her view as to the capacity of the deceased to give instructions.
[18] Both of these submissions ignore the obvious point that they do not address the Court’s finding that the will was invalid both because the deceased lacked capacity and because of undue influence.
[19] The Court elected to prefer the opinion of the applicant’s medical expert for the reasons set out in the substantive decision. Lily is obliged to accept that finding. The finding of undue influence is also one which can not be ignored by Lily. The evidence in support of that conclusion was overwhelming.
[20] Lily also disputes the applicant’s claim that her opposition had no prospect of success. She submits that the applicant had overstated the effect of the Court of Appeal’s decision in Carey v Norton.3
[21] The facts of the present case were very different from those of Carey v Norton but that case illustrates that even in situations where a beneficiary was simply present at the making of the will and did not take any active part in influencing the deceased, issues of undue influence may arise. The facts supporting the Court’s decision that this case clearly involved undue influence are set out in detail in the substantive
3 Carey v Norton [1998] 1 NZLR 661.
decision. Not only was Lily present at the making of the will, she actively intervened in the process including making suggestions as to what should or should not be in the will. Lily was also the person directly responsible for involving Paul Young in the drafting of the will. The submissions drafted by Ms McDonald describe Mr Young as being a lawyer and say that he held himself out to Lily as being qualified and capable to act in the matter of drafting the will. The submissions say:
Ms Li cannot be held responsible for any deficiencies in the manner in which Mr Young proceeded to take the Will instructions and provide legal services to the deceased.
[22] For the reasons set out in the judgment, Mr Young clearly was of the view that his obligations were to Lily (and other beneficiaries) rather than to the deceased. He did not provide ‘legal services’ to anyone. Legal services can only be provided by a lawyer and, although he had once been a lawyer, he was not a lawyer at the time Lily engaged him. If Mr Young misrepresented his status to Lily (and I am not in any position to make a finding on that claim), then she may have a claim against him.
[23] The extent to which Mr Young’s deficiencies were relevant to the issue to whether the deceased had capacity and whether he was subject to undue influence is set out in detail in the decision.
[24] It would have been obvious to anyone familiar with the law in this area that the facts of this case called out for the assistance of a skilled and experienced legal practitioner who should have taken steps to satisfy themselves as to the deceased’s capacity and approached the actual drafting of the will in a way that avoided any suggestion that anyone who benefited from the contents of the will exerted what could be described as undue influence on the deceased. Mr Young did neither.
[25] The applicant, in support of his application for indemnity or uplifted costs also was critical of the counsel who appeared for Lily in the substantive hearing. The submissions drafted by Ms McDonald claim that Lily was not responsible for Mr Swan’s actions and she was entitled to rely on his expertise in relation to the conduct of the hearing. I have not been able to identify anything in the conduct of trial counsel that would warrant increased or indemnity costs.
[26] Finally, in response to the applicant’s reference to post hearing conduct as being grounds for increased or indemnity costs, it is submitted that, at the time, Lily was not represented and that she was unfamiliar with court processes. It is also submitted that post judgment conduct is irrelevant to the issue of costs.
The law
[27] The principles to be applied in fixing costs are well settled. Rule 14.1 HCR provides that all matters as to costs are at the discretion of the Court. The principles to be applied in the exercise of the discretion are also well established:
(a)questions of costs are ultimately a matter of discretion, the overall objective being to achieve an outcome that best meets the interests of justice;
(b)the discretion is not unfettered—it is qualified by the applicable costs rules (rr 14.2—14.10) and must be consistent with established principles;
(c)the costs regime is of a regulatory character and it is important that its integrity be maintained;
(d)there is accordingly a strong implication that the Court is to apply the regime in the absence of some reason to the contrary;
(e)any departure must be a considered and particularised exercise of the discretion; and
(f)although the Court does not need to give reasons for a costs order that applies the regime, reasons (albeit brief) must be given for any departure.
[28]Rule 14.2 HCR provides further guidance on the general principles.
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 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 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 [(not being a party acting in person)];
(g)So far as possible the determination of costs should be predictable and expeditious.
[29]HCR 14.3 categorises proceedings into three separate categories:
(a)Category 1 proceedings are proceedings of a straightforward nature able to be conducted by counsel considered junior in the High Court.
(b)Category 2 proceedings are proceedings of average complexity requiring counsel of skill and experience considered average in the High Court, and
(c)Category 3 proceedings are proceedings that because of their complexity or significance require counsel to have special skill and experience in the High Court.
[30] HCR 14.5 also categorises proceedings or, parts of a proceeding, on the basis of a reasonable time. It divides proceedings into three bands:
(a)for Band A a comparatively small amount of time is considered reasonable;
(b)Band B a normal amount of time is considered reasonable; or
(c)Band C if a comparatively large amount of time for a particular step is considered reasonable.
[31] Different steps in a proceeding can fall within different bands. I note that the respondent’s submissions did not specifically address the applicant’s claim for Band C categorisation for some steps in these proceedings. I am satisfied that the Band C claims are reasonable and award these as claimed.
Analysis
[32]The following matters remaining to be determined are:
(a)what the scale costs for these proceedings are;
(b)whether there is a basis for increased costs and if so, and what sum; and
(c)whether there is a basis for indemnity costs and, if so, whether the indemnity costs claimed are reasonable.
Scale costs
[33] The memorandum filed by Ms McDonald on behalf of Lily does not directly challenge the calculation of scale costs as set out in schedule 1 to the annexure to the memorandum of counsel for the applicant dated 11 December 2024. The total scale costs came to $65,964. Disbursements came to $17,035.95. There was no challenge to the quantum of disbursements either.
[34]The costs claimed for;
(a)Filing the interlocutory application for permission to commence proceeding by originating application;
(b)preparation of written submissions in support of application for permission;
(c)filing the originating application for grant of administration and supporting affidavits;
(d)filing memorandum of counsel in support of originating application for grant of administration of $22,944
are said to be properly payable by the estate.
[35] I accept the argument of counsel for the respondent that these costs would have been incurred in any event. Accordingly, I agree that they are payable by the estate.
[36] That leaves the balance of scale costs at $43,020. These costs are clearly payable by Lily who was wholly unsuccessful. The only issue is whether the costs should be increased or be fixed on an indemnity basis.
Increased or indemnity costs
[37] The party claiming increased or indemnity costs carries the onus of persuading the Court that such an award is justified: Strachan v Denbigh Property Limited.4
[38] Increased costs may be awarded where there is a failure by the paying party to act reasonably.5 However, the Court’s focus on how the party acted during the litigation not before or after it.6
[39] The Court must consider the extent to which the failure to act reasonably contributed to the time or expense of the proceeding and it is only to that extent that any percentage uplift from scale can be justified.7
[40] HCR 14.6(3) sets out the circumstances where an order for increased costs may be appropriate. Relevantly, they include where the party opposing costs has contributed unnecessarily to the time or expense of the proceeding by pursuing an
4 Strachan v Denbigh Property Limited HC Palmerston North CIV-2010-454-232 3 June 2011 at [27].
5 See Bradbury v Westpac Banking Corp [2009] 3 NZLR 400.
6 See Paper Reclaim Limited v Aotearoa International Limited [2006] 3 NZLR 188.
7 See Commissioner of Inland Revenue v Chesterfields Preschools Limited [2010] NZCA 400.
argument that lacks merit, failing to admit a legal argument or for some other reason justifying the Court making an order for increased costs.
[41] Indemnity costs are governed by HCR 14.6(4)(a) and can be awarded if a party has acted vexatiously, frivolously, improperly, or unnecessarily.
[42] Indemnity costs may be awarded in a ‘hopeless case’.8 The concept of ‘hopeless’ in this context is equated with ‘totally without merit’ and ‘bound to fail’.9
[43] The aspect of this case which provides the strongest support for a claim of increased or indemnity costs is the hopelessness of the opposition to the claim of undue influence.
[44] Counsel for the applicant’s submissions properly rely on the decision of the Court in Carey v Norton.10
[45] I accept the applicant’s submission that Lily has largely ignored the undue influence aspect of this case and has concentrated primarily on the testamentary capacity component.
[46] On the facts that I have found existed in this case, Lily’s argument that there was no undue influence was a ‘hopeless’ position that was ‘bound to fail’. I am satisfied that it would be appropriate to award indemnity costs for that proportion of the applicant’s costs that I have found should be payable by Lily rather than the estate.
Outcome
1.The estate should meet the cost of those parts of the proceedings set out in paragraph [9] above.
8 Ben Nevis Forestry Ventures Limited v Commissioner of Inland Revenue [2014] NZCA 348.
9 The Circle.co.nz Limited v Trends Publishing International Limited (in liq and in rec) [2021] NZCA 235 at [34].
10 Carey v Norton above n 3.
2.The applicant is entitled to indemnity costs payable by Lily in respect of all work in relation to these proceedings other than as set out in paragraph [34] above.
3.The applicant is entitled to disbursements in the sum of $17,035.95 payable by Lily.
[47] The applicant is to submit a revised costs claim in accordance with the findings in this decision.
Churchman J
Solicitors:
Evolution Lawyers, Auckland for Applicant Gallie Miles, Te Awamutu for Respondent
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