McFadzean v Moleta

[2013] NZHC 2694

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2012-441-000682 [2013] NZHC 2694

UNDER

the Administration Act 1969

IN THE MATTER

of the Estate of the late DONNA JUNE BENGSTON

BETWEEN

JOHN DOUGLAS McFADZEAN

Plaintiff

AND

GLYNIS ROSILYN MOLETA AND KIM ANTHONY MOLETA

Defendants

PETER KANE BENGSTON
Added Party

Judgment:                  16 October 2013

JUDGMENT AS TO COSTS OF COLLINS J

Introduction

[1] In a decision dated 28 June 2013 I determined that Donna Bengston had testamentary capacity when she made a will on 27 February 2012, and granted probate to the plaintiff (executor), in relation to that will. I allowed the parties to file memoranda within 15 working days on costs if they could not be agreed upon. Counsel have since filed memoranda, with the Moletas seeking full indemnity costs out of the estate and Mr Bengston seeking costs from the Moletas. The last submissions on costs were filed on 25 September 2013.

Background to the proceedings

[2] The executor of Donna Bengston’s will sought a grant  of  probate  but otherwise remained neutral. The Moletas, who were Donna Bengston’s adult brother and sister, opposed the application for probate, as they claimed that Donna Bengston

McFADZEAN v MOLETA [2013] NZHC 2694 [16 October 2013]

lacked testamentary capacity at the time the will  was  made.  Mr  Bengston, Donna Bengston’s husband and the sole beneficiary under the will, supported the executor’s application and sought to have the will declared valid. The result of my finding that Donna Bengston had testamentary capacity, and that she made a valid will on 27 February 2012, meant that Mr Bengston’s case was successful.

Mr Bengston’s position on costs

[3] As the successful party, Mr Bengston  has  claimed  2B  costs  and disbursements from the Moletas. He accepts that Donna Bengston’s testamentary capacity justified investigation. However, in circumstances where he is the sole beneficiary under the will, he will effectively have to meet his own costs out of the estate.

The Moletas’ position on costs

[4]    The Moletas seek to have their costs and disbursements met by the estate on an indemnity basis.

[5]     The Moletas submit that estate litigation is an exception to the usual rule, that an unsuccessful party should pay the successful party’s costs. They submit that they were justified in opposing the will made while Donna Bengston was seriously ill, very soon before her death. They therefore submit it is appropriate that they be reimbursed for their total costs and the disbursements they incurred in challenging the will.

Analysis

[6] The general principle prescribed by the High Court Rules in respect of this Court’s civil jurisdiction is that costs should follow the event, and be awarded to a successful party against an unsuccessful party.1 Departures from that general principle are allowed in the circumstances set out in r 14.7.

1       High Court Rules, r 14.2(a).

[7] In probate proceedings where the capacity of the testator is at issue, this presumption can be displaced, as it is the Court’s obligation to ensure that legitimate concerns about the capacity of the testator are investigated.2

[8] In re Paterson (deceased) sets out the two situations where, in the context of contested wills, the usual principle should be displaced:3

(i.)If the litigation originates [at] the fault of the testator—eg by the state in which he left his testamentary writings, or by his eccentric or irrational habits and mode of life—or of those interested in the residue the costs may properly be paid out of the estate.

(ii.)If there be sufficient and reasonable ground, looking to the knowledge and means of knowledge of the opposing party, to question either the execution of the will or the capacity of  the testator or to put forward a charge of undue influence or fraud, the losing party may properly be relieved from the costs of his successful opponent.

[9] In my view, there were sufficient and reasonable grounds for the Moletas to challenge the capacity of Donna Bengston when she made her 2012 will. Those grounds were:

(1)Donna Bengston was seriously mentally unwell at the time the will was made;

(2)The will was made within 24 hours of her death;

(3)The new will substantially altered the dispositions under the old will;

(4)It was not entirely clear, in law, whether the will was valid, and the question of Donna Bengston’s testamentary capacity involved a complex question of law as to the scope of her moral duties.

[10] This would seem to justify relieving the Moletas of paying Mr Bengton’s costs, and allowing both parties’ costs to be paid by the estate.

2       Fraser v Chalmers (1997) 11 PRNZ 348 (HC) at 352.

3       In re Paterson (deceased) [1924] NZLR 441 (SC) at 442-443 (footnotes omitted).

[11] Although Re Paterson does not seem to justify ordering the unsuccessful challenger costs out of the estate, this has been ordered a number of times:

(1)In Woodward v Smith, the Court of Appeal upheld the High Court’s findings of testamentary capacity, but was satisfied that the point was sufficiently uncertain that the challenger was justified in testing the executor’s entitlement to probate. However, instead of just excusing the challenger from paying the successful party’s costs, the Court awarded costs to the challenger out of the estate.

(2)In Nijsse v Squires,4 the testator was seriously ill in hospital when the will was made. The hospital will, propounded by the plaintiff, was declared valid, however the Judge noted that the decision was finely balanced, and that “the doubts raised by the evidence made it wholly appropriate for the caveat to be lodged and for [the plaintiff] to be required to prove the will in solemn form.”5 For that reason, the Judge accepted the plaintiff’s proposal that both parties’ 2B costs should be paid out of the estate, but he noted this as “generous”.6

(3)In Fraser v Chalmers, the deceased left the bulk of his estate to his caregiver. Giles J held that the deceased’s brother and niece were justified in challenging the validity of the will even though they were unsuccessful. They were relieved of paying the successful party’s costs, but were not awarded their own costs out of the estate.

Decision

[12] Overall, each case turns on its own particular circumstances.  I consider that the Moletas, even though unsuccessful parties, were justified in challenging the will given the nature of the case, and the issues it raised. Given the size of the estate, they should be entitled to recover their costs on a scale 2B basis and disbursements as set by the Registrar, from the estate.

4       Nijsse v Squires HC Auckland CIV-2002-404-1618, 12 December 2003.  Validity of the will overturned by the Court of Appeal in CA53/04, 15 December 2004.

5 At [159].

6       Nijsse v Squires HC Auckland CIV-2002-404-1618, 6 July 2004 at [17].

D B Collins J

Solicitors:

John Harding, Waipukurau for Plaintiff McDonald Brummer, Hastings for Defendants

Sainsbury Logan & Williams, Napier for Added Party