McNeish v McArthur

[2020] NZHC 1611

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-000798

[2020] NZHC 1611

IN THE MATTER OF

the Estate of Ian James McArthur

BETWEEN

DARYL WARREN McNEISH and JOANNE MARIE McNEISH

Plaintiffs

AND

JAMES McARTHUR

Defendant

On the Papers

Counsel:

D J Ballantyne and C J Cousins for the Plaintiffs

S D Campbell and J Anson-Holland for the Defendant

Judgment:

7 July 2020

JUDGMENT OF DOOGUE J

(Costs)

Introduction

[1]    This application for costs by  the  defendant  follows  my  judgment  dated  12 December 2019.1 I found the plaintiffs had  failed to  establish that the will  of  Ian McArthur dated 5 March 2013 was invalid (being in breach of mutual wills made by Ian and his wife Lorraine McArthur on 18 December 2002).2

1      Due to the impacts  of  COVID-19,  the  application  was  not  brought  to  my  attention  until  18 June 2020.

2      McNeish v McArthur [2019] NZHC 3281.

McNEISH v McARTHUR (Costs) [2020] NZHC 1611 [7 July 2020]

[2]    The plaintiffs seek to displace the dual presumptions that costs follow the event and that the losing party should pay costs to the successful party.3 They ask the Court to let costs lie where they fall.

[3]    The Estate was entirely successful in defending the claim. I found there was insufficient evidence to establish the plaintiffs’ claim to the standard required by the doctrine of mutual wills.

Defendant’s submissions

[4]    Counsel for the defendant relied on Shirley v Wairarapa District Health Board as authority for the longstanding principle that unless there are exceptional reasons, costs should follow the result.4 He submitted there are no exceptional circumstances in this case.

[5]    The defendant does not seek increased or indemnity costs. The defendant also points to the fact that they have not claimed costs for second counsel.

Plaintiff’s submissions

[6]    The plaintiffs relied on their good faith and certain claims about findings that were made or that ought to have been made in the proceeding. Put simply, much of the plaintiffs’ submissions were directed to relitigating the facts as I found them to be. I do not intend to recite those submissions as they are inappropriate.

[7]    The plaintiffs also relied on a line of authority in the context of probate and the Wills Act 2007 (and its predecessor) for the propositions that where litigation originates from fault on the testator’s part or a challenge is made on sufficient and reasonable grounds, costs may properly be paid out of the estate or an unsuccessful party may properly be relieved from costs.5

3      High Court Rules 2016, r 14.2(1)(a).

4      Shirley v Wairarapa District Health Board [2006] NZSC 63, 3 NZLR 523 at [19].

5      See, for example, Harris v Taylor [2016] NZHC 483 at [9]; Squires v Nijsse HC Auckland CIV-2002-404-1618, 6 July 2004 at [6].

[8]    In addition, they submitted on a similar approach has been adopted in the context of the Family Protection Act 1955 where the court’s traditional – but not invariable – practice was to order the costs of all parties to be paid out of the residue of the estate or to let costs lie where they fell, with the result that the parties had to meet their own costs out of their respective shares of the estate.

[9]    Finally, they relied on authorities in the general civil litigation context where the courts have been prepared to exercise a residual discretion to reduce or refuse costs in circumstances where:

(a)the successful plaintiffs contributed to much of the difficulty giving rise to the litigation;6

(b)a successful defendant’s failure to honour the spirit of a family arrangement gave rise to the proceedings;7

(c)there is pre-proceeding misconduct which the Court found amounted to “another reason” under r 14.7(g);8

(d)there exists some other special reason why it was just and equitable that the plaintiff not pay costs to the defendant;9 and

(e)where the successful party may have behaved “reprehensibly”.10

[10]   The plaintiffs submitted that Ian McArthur’s conduct contributed to the claim being brought by Lorraine McArthur’s children, he failed to honour his agreement of mutual expectation with Lorraine McArthur, and that  by  giving  assurances  to Daryl McNeish that he would honour Lorraine McArthur’s wishes, he would have known he had created an expectation in their minds. The plaintiffs submitted that these facts are of a special nature that would make it unjust and inequitable that his step-children pay costs to his Estate.

6      A’s Company Ltd v Dagger HC Auckland M-1482-SD00, 14 August 2003.

7      Goodwin v Rocket Surgery Ltd [2013] NZCA 172, (2013) 3 NZTR 23-009 at [30].

8      Vulcan Steel Ltd v McDermott [2013] NZHC 3232.

9      Moodie v Strachan [2015] NZHC 327 at [15].

10     Sawyer v Homewood [2015] NZHC 2781 at [14].

[11]   As to the amount claimed, the plaintiffs point out that the defendant’s scale costs are calculated by reference to the current High Court costs schedules. These schedules were updated from 1 August 2019.11 The High Court in Delegat v Norman held that costs or steps taken before the current schedules came into force should be assessed under the schedule in force when the steps were taken.12

[12]   Accordingly, for all steps taken before 1 August 2019, the applicable daily rate for Category 2 proceedings is $2,230.00. The plaintiffs do not object to the proceeding being assessed at Category 2B, or to the disbursements claimed by the Estate. Accordingly, they say the correct schedule of costs totals $30,354.50 and not the

$31,538.50 claimed by the defendant.

Discussion

[13]   In the judgment I observed that all parties acted in good faith and out of respect for what they perceived to be the wishes of their parents. Good faith in this context means that the litigation was prosecuted honestly. All this means for the purposes of costs is that the parties conducted themselves in a way that the Court expects of every litigant.

[14]    However, conducting litigation in good faith is not a basis for a departure from the presumption that costs follow the event where the defendant has been entirely successful in circumstances where:

(a)the claim failed on an insufficiency of evidence;

(b)the plaintiffs were legally advised at all times and were able to make an informed assessment of the evidence; and

(c)the defendant acted appropriately in defending and could not have dissuaded the plaintiffs from bringing or prosecuting their claim.

11     High Court Amendment Rules 2019, r 11.

12     Delegat v Norman [2014] NZHC 1099 at [31].

[15]   An  analogous  situation  is  found  in  the  High  Court  costs  decision  Hardy v Whitcombe.13 That decision followed the Court entering summary judgment for the defendant in the context of claims under the doctrine of mutual wills and the law of secret trusts.14 The Court held that although there was an agreement that the plaintiffs would be looked after, the case failed due to the lack of any evidence of an express commitment of the nature required to found a case on mutual wills. An uplift of 25 per cent above a scale 2B award was ordered on this basis.

[16]   In this instance, the plaintiffs made certain assumptions about the conduct of their mother and stepfather. They concluded they would be provided for in the estate of their step-father after embracing what they perceived to be a concept of moral or familial obligation. But irrespective of the plaintiffs’ own moral code, there was no express commitment between their mother and their step-father of the nature required to establish a successful claim under the doctrine of mutual wills.

[17]   The authorities relied upon by the plaintiffs need to be treated with caution. Certain Wills Act 2007, Family Protection Act 1955, and probate claims are very different to the present case and their costs are resolved using different principles. The present claim was a hostile and unsuccessful claim against the Estate by persons claiming a beneficial interest through a constructive trust which did not on the facts exist.

[18]   The plaintiffs have thus failed to displace the time-honoured principles that costs follow the event and that the losing party must pay costs to the successful party.

[19]   The defendant accepts the 2B scale costs as calculated by the plaintiffs are correct. The proper award on a 2B basis is $30,244.50 in costs and $110.00 in disbursements.

13     Hardy v Whitcombe [2017] NZHC 3132.

14     Hardy v Whitcombe [2017] NZHC 2382.

Result

[20]The plaintiffs are ordered to pay costs to the defendant in the sum of

$30,244.50 costs plus $110.00 disbursements.

Doogue J

Solicitors:

Canterbury Legal, Christchurch Wynn Williams, Christchurch