Lowrey v Jonathan

[2017] NZHC 27

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-485-008201 [2017] NZHC 27

IN THE MATTER OF	the Administration Act 1969
IN THE ESTATE OF	NICOLA TANGI JONATHAN
BETWEEN	TREVOR ALEXANDER LOWREY Plaintiff
AND	SAMANTHA LEE JONATHAN Defendant

Hearing:	On the papers
Counsel:	C M Wakelin for the Plaintiff P N Allan for the Defendant
Judgment:	20 January 2017

JUDGMENT OF NATION J

Background

[1]      Nicola Jonathan (Nicola) died on 27 September 2012.  She was the mother of the defendant, Samantha Jonathan (Ms Jonathan).  She was the de facto partner of the plaintiff, Trevor Lowrey (Mr Lowrey).

[2]      In November 2013, Ms Jonathan applied for and was granted letters of administration.   As administrator, she subsequently sold her mother’s Temuka property.   She distributed the modest funds representing the equity in that trust between herself and a trust of which her brother was beneficiary, investing most if not all those funds in a residential property in Christchurch.  It became the subject of

a mortgagee sale with the loss of any equity in it.

LOWREY v JONATHAN [2017] NZHC 27 [20 January 2017]

[3]      On 17 February 2014, Mr Lowrey filed an application with the High Court for the recall of the grant of letters of administration.   He ultimately filed an application  for judgment  based  on  admissions  made by Ms  Jonathan,  including admissions in response to interrogatories.   There was a hearing in relation to that application on 18 May 2016.  Ms Jonathan’s counsel was given leave to withdraw. The hearing proceeded on an undefended basis.

[4]      In a judgment of 1 June 2016, I held that Mr Lowrey had been entitled to the grant of letters of administration on the basis he was the de facto partner of Nicola at the time of her death.1    Mr Lowrey was entitled to the judgment he sought on the basis of admissions which the evidence established Ms Jonathan had made and other evidence which was before the Court.

[5]      I declined to make an order granting letters of administration to Mr Lowrey because to do so would have led to him incurring further expense in obtaining sealed orders from the Court.   It would also have subjected him to obligations which I considered would have been an unnecessary burden given there was no longer any property available to the estate.   Ms Jonathan was a beneficiary.   It thus appeared that there would have been nothing to gain for the estate if, as administrator, Mr Lowrey had wished to pursue proceedings against Ms Jonathan over the way she had dealt with property in her mother’s estate.

[6]      At the time of the hearing, Mr Lowrey had also sought costs on an indemnity basis against both Ms Jonathan and the estate.  In my judgment, I noted that there was nothing in the deceased’s estate which could be used to meet any order for costs but said it might well be appropriate for the Court to make an order for costs against Ms Jonathan personally given her conduct in relation to her mother’s estate and the manner in which the proceeds of sale of the Temuka property were dealt with.

[7]      Against  the  background  referred  to  in  the  judgment,  I  considered  the appropriate  time  to  deal  with  costs  would  be  when  the  Court  knew  all  the proceedings were at an end.  I said that situation could arise when and if Mr Lowrey

filed a notice of discontinuance of the proceedings.  I said this could be done with

1      Lowrey v Jonathan [2016] NZHC 1166.

leave reserved to him to pursue his application for costs.  I said that, if a notice of discontinuance was filed, I would give a decision on the application for costs that had already been made.

[8]      I noted in my judgment that Ms Jonathan had, through her counsel, indicated she no longer had any interest in the proceedings.  Despite that, I directed that her counsel should send to her address for service a copy of the memorandum of counsel supporting the application Mr Lowrey was making for a costs order.  I directed that, within 21 days of that memorandum having been sent to her counsel, Ms Jonathan must file any memorandum she wishes to in response.   If and when a notice of discontinuance had been filed, I would then consider both Mr Lowrey’s application for costs and any memorandum filed by Ms Jonathan.

[9]      A notice of discontinuance was filed on 22 June 2016.  Mr Lowrey’s counsel

confirmed that a copy of the memorandum of costs was sent to Ms Jonathan on 23

June 2016 by email.   Ms Jonathan responded in a manner which acknowledged receipt.  The only comment she made in response in that email was “hilarious!”.  She has made no other submission.

[10]     Counsel asked me to address the issue of costs as I indicated I would do in my substantive judgment.  I now do so.

Discussion

[11]     Mr Lowrey seeks indemnity or increased costs.  The actual costs incurred by Mr Lowrey, which he seeks on an indemnity basis, amount to $99,300.60.  On a 2B basis, the amount he seeks would be $76,043 and disbursements in the sum of

$1,955.22.

[12]     Mr  Wakelin,  for  Mr  Lowrey,  submitted  r  14.6(4)(a)  applied  in  that  Ms Jonathan had acted “vexatiously, frivolously, improperly, or unnecessarily” in commencing proceedings (the application for the grant to her of letters of administration) and, in defending Mr Lowrey’s application for the recall of that grant.   He submitted Ms Jonathan had repeatedly failed to comply with discovery and timetabling directions of the Court, had unnecessarily sought security for costs

as a tactical manoeuvre to make it difficult for Mr Lowrey to continue with the proceedings.  He submitted the proceedings had been unnecessarily prolonged by her failing to discover the statement which she had made to the Police in which she indicated she considered Mr Lowrey and her mother had continued to be in a de facto relationship at the time of her mother’s death.

[13]     I am satisfied that Ms Jonathan’s conduct, in relation to the events which made it necessary for Mr Lowrey to issue the proceedings and other conduct in relation  to  matters  at  issue,  was  of  such  an  exceptional  nature  and  of  the  sort (“flagrant misconduct”) that might justify an order for indemnity costs.2

[14]     Mr Lowrey had to issue proceedings because Ms Jonathan had obtained a grant of letters of administration as to an intestate estate, stating in an affidavit that, at  the  time  of  her  mother’s  death,  her  mother  was  not  living  in  a  de  facto relationship.  She did that in an application made through new solicitors, after telling earlier solicitors that Mr Lowrey was her mother’s partner.  She also did this after she had provided a witness statement to the Police in which she provided specific information showing she considered that, at the time of death, her mother and Mr Lowrey were still in a de facto relationship which she acknowledged they had been in previously.

[15]     During  the  course  of  the  proceedings,  Ms  Jonathan,  as  administrator, distributed effectively to herself and her brother the proceeds of sale from the deceased’s Temuka property.   Subsequently, through mortgage defaults and a mortgagee sale, equity that was originally in the estate has been lost.  The Temuka property had been sold as part of a settlement then reached between the parties.  The funds were distributed on the day and an unless order was made by Associate Judge Osborne holding that Mr Lowrey’s claim would terminate if he did not file and serve a particularised statement of claim by 7 November 2014.  Ms Jonathan did that after new counsel for Mr Lowrey had contacted Ms Jonathan’s counsel on 29 October

2014  indicating  that  he  was  actively  pursuing  matters  for  Mr  Lowrey.    On  7

November 2014, that new solicitor also filed with the Court a memorandum setting

2      The threshold as referred to by the Court of Appeal in Bradbury v Westpac Banking Corporation

[2009] NZCA 234.

out how matters had developed and asking for further time to take the required steps. That  led  to Associate  Judge  Osborne  on  18  November  2014  making  an  order suspending the unless order.   It had been agreed as part of the settlement that the Temuka property would be sold but one third of the net proceeds of sale would be paid to Mr Lowrey’s solicitor’s trust account, one third would be paid to Ms Jonathan’s solicitor’s trust account and one third would be paid to Ms Jonathan as administrator for the benefit of her brother until he attained his majority.  The way Ms Jonathan ultimately dealt with those funds, associated with her conduct in the proceedings, was in breach of the fiduciary obligation she had as an administrator.  It ultimately deprived Mr Lowrey of the ability to receive from the estate what he would have been entitled to as a de facto partner of Nicola.

[16]     At a conference with Associate Judge Matthews on 4 March 2016, it was agreed by Ms Jonathan’s then instructed counsel that there would be a half-day fixture on an application which Mr Lowrey’s counsel would be making for judgment based in part on the answers which Ms Jonathan had given to interrogatories that had been issued.   Associate Judge Matthews directed Mr Lowrey to file such an application.    He  did  this  with  supporting  affidavits.    The Associate  Judge  also directed Mr Lowrey to file and serve a full synopsis of argument and a bundle of document comprising pleadings and affidavits.  All this had to be done no later than

10 working days prior to the fixture.   Ms Jonathan was directed to file her submissions no later than five working days before the fixture.

[17]     Given the history of the proceedings and the matters which appeared to be at issue, the work required of Mr Lowrey’s solicitors in this regard was significant and reflected in the costs which he incurred as a result.  On a 2B basis, the costs which Mr Lowrey is claiming for steps taken in the proceedings after 4 March 2016 total

$24,530.

[18]     No   submissions   were   filed   for   Ms   Jonathan.      It   was   only   at   the commencement of the hearing that the Court were advised that Ms Jonathan no longer had any interest in the proceedings, did not want to be involved further and was not going to take any further steps herself.   Her counsel was given leave to withdraw.  The explanation given to the Court by Ms Jonathan’s counsel was that

this was because, with the mortgagee sale of the property, there were no longer assets of any significance in the estate and she had been denied legal aid.

[19]     It is apparent, from information on the Court file, that the financial situation with regard to the estate had been apparent to Ms Jonathan many months before the conference of 4 March 2016 when she confirmed through counsel that she would continue to be involved with the proceedings and would be involved in the hearing scheduled for 18 May 2016.  Neither the Court nor Mr Lowrey had been advised that the necessity for that hearing was dependent on whether or not she was granted legal aid.

[20]     Given Ms Jonathan’s ultimate but delayed withdrawal from the proceedings, I accept this was a situation where, for a time, she acted vexatiously, frivolously, improperly, or unnecessarily in continuing to defend the application and indicated to the Court that she was going to actively oppose the applications which Mr Lowrey was making.  That has resulted in Mr Lowrey incurring significant costs which could have been avoided.

[21]     After there had been initial discovery, Mr Lowrey had to make an application for further and particular discovery.  Such an application was justified as reflected in Associate Judge Matthews making an order on 4 March 2016 requiring Ms Jonathan to file a further affidavit by way of discovery and to make discovery of particular documents.

[22]     There are however certain other matters which have to be weighed in the balance in considering whether or not there should be an order for indemnity costs and the quantum of any costs order that might be made against Ms Jonathan.

[23]     The  stance  which  Ms  Jonathan  took  in  denying  the  continuation  of  Mr Lowrey’s de facto relationship with her mother must have been emotionally hurtful to him.  Nicola’s estate was however always going to be a modest one so that, given the cost of proceedings, there was always likely to be at best a modest financial benefit from the issuing and continuing of proceedings.

[24]     There was thus much to be gained from the settlement of the proceedings in the way that appeared to have been achieved as recorded in a deed of 1 July 2014. Given his continuing de facto relationship with Nicola, Mr Lowrey may have made a concession in agreeing that he should receive just one third of the proceeds from the sale of the Temuka property but, given the expense of continued Court proceedings and the family relationships involved, there was real value in the settlement.

[25]     That  settlement,  at  least  initially,  broke  down  because  of  a  dispute over Nicola’s ashes.  It was a term of the settlement that Mr Lowrey would disclose to Ms Jonathan who was currently holding Nicola’s ashes.  The settlement deed provided for Ms Jonathan to consult with family members and to make a decision about where they were to be interred.  Associate Judge Osborne’s minute of 8 September 2014 records that, following discussions with counsel, it appeared to be common ground that Ms Jonathan had been unable to access Nicola’s ashes and that they may have been in Australia.   At that point, Mr Lowrey’s then solicitor withdrew from the proceedings.

[26]     Associate Judge Osborne recorded in his minute of 8 September 2014 that, despite that difficulty, for the time being, the settlement agreement remained on foot. Ms Jonathan then cancelled the settlement agreement on the basis Mr Lowrey had obligations to make Nicola’s ashes available to her and had refused to meet that obligation.   There was a dispute as to whether she was entitled to cancel on that basis.

[27]     Whatever the legal position in relation to that, it does appear the deed of settlement contemplated that it would be possible for Ms Jonathan to decide as to where the ashes would be interred.  At the time implementation of the settlement broke down, there was no suggestion she was in breach of that agreement.

[28]     Ms Jonathan did make an application as to security for costs.  She must have known, through  the financial  assistance which  Mr  Lowrey had  provided  to  her mother, that he had a significant income from his employment in Australia.   As ultimately became apparent, she must also have known that there was merit in his contentions over the continuation of the de facto relationship.  It may well have been

the case that she brought the application for security for costs for tactical reasons. At the same time however, Mr Lowrey made application for a prospective order that his costs be paid from Nicola’s estate.

[29]     Both parties incurred costs in relation to these applications.  They were fully argued and, after a hearing on 22 April 2015, Associate Judge Osborne dismissed Mr Lowrey’s application for a prospective costs order. At the time the applications were argued, Ms Jonathan was not being legally represented.  Associate Judge Osborne held that, in those circumstances, it would be inappropriate to grant any order for security but at that time said there could be merit in the application if she did have to be represented.  Rather than dismissing the application, he adjourned it with leave for it be brought on again if circumstances changed.

[30]     There were ways in which Ms Jonathan breached timetabling directions and did not assist in the progression of the proceedings.  The same could be said at times in terms of Mr Lowrey’s actions.   That was reflected in the unless orders which Associate Judge Osborne made on 26 September 2014.

[31]     Given  the  information  I  was  given  by  counsel  that,  in  May  2016,  Ms Jonathan was a beneficiary, that her home had been the subject of a mortgagee sale with her having a residual debt to the mortgagor bank, I appreciate she may well have limited means to meet any order for costs.  I agree with the observation made by Priestley J that the impecuniosity of a party should not, of itself, be a reason for denying an order for costs which would otherwise be appropriate.3   An impecunious litigant should not be able to make unreasonable decisions with regard to the commencement  or  conduct  of  proceedings  without  the  fear  of  any  financial  or perhaps other consequences that might flow from this.  Impecunious clients should

have to conduct themselves in litigation under the same constraints as those who would be able to meet a costs order.   Some of Ms Jonathan’s conduct in these proceedings suggests she may have considered she could effectively do what she liked because she would have nothing to lose if Mr Lowrey ultimately succeeded in

the proceedings he brought.

3      Teitiota v The Chief Executive of the Ministry of Business, Innovation and Development [2013] NZHC 3401 at [6]. See also Bruns v Gay HC Auckland CIV-2004-404-297, 28 October 2004 at [12].

Conclusion

[32]     In the end, the award of costs and the amount of any award is at the discretion of the Court.  Taking all matters into account, I am rejecting the claim for indemnity or increased costs.   Because of the matters already referred to which impact negatively on Mr Lowrey’s claim, I am also not going to award him all the costs he seeks on a 2B basis.

[33]     I consider that justice will be best served if there is an order for costs but it is for just a proportion of those costs which Mr Lowrey would be entitled to on a 2B basis.

[34]     I make an order that the above named defendant is to pay costs to the above named plaintiff in the sum of $30,000, together with disbursements of $1,955.22.

Solicitors:

Phillip N Allan, Barrister, Christchurch

Ronald W Angland & Son, Leeston.