Moleta v Darlow

[2022] NZHC 1330

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-858

CIV-2019-404-1469 [2022] NZHC 1330

UNDER

Part 18 of the High Court Rules 2016

BETWEEN

DELLISSE MOLETA

Plaintiff

AND

CHRISTOPHER ROBERT DARLOW

Defendant

JOLENE SCHOLLUM
Second Defendant

LORRAINE MOLETA

Third Defendant

Hearing:	On the papers
Judgment:	27 May 2022

JUDGMENT OF HINTON J

(Costs No 2)

This judgment was delivered by me on Thursday 26 May 2022 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:…………………………

Solicitors:

Grove Darlow, Auckland (First Defendant)

McVeagh Fleming, Auckland  (Second Defendant) Greg Kelly Law Limited, Wellington (Third Defendant)

Copy to:
Plaintiff

MOLETA v DARLOW [2022] NZHC 1330 [27 May 2022]

[1]    The substantive dispute in this matter concerned  claims  to  the  estate  of Mrs Moleta. Two of her daughters, Jolene Moleta and Lorraine Schollum, claimed further provision under the Family Protection Act 1955, whereas a third daughter Dellisse claimed a constructive trust over properties owned by the estate.

[2]    I gave judgment on 5 August 2021 in favour of Jolene and Lorraine.1 On 31 March 2022, I delivered a costs judgment awarding costs against Dellisse in favour of the Jolene and Lorraine.2 I reserved the question of whether those costs could be ordered to be paid out of Dellisse’s share of the estate. Having received further submissions, this judgment addresses that matter.

[3]Dellisse, who now represents herself, makes submissions to the effect that:

(a) the costs awarded were unreasonable in quantum; (b) the parties should bear their own costs; and (c) costs should be borne by the estate, including her costs. I have already dealt with these issues in my judgment of 31 March 2022 and make no further comment on them. There is no point raised that goes to the question of costs being paid from Dellisse’s share of the estate.

Discussion

[4]    The defendants submit that  the starting point is the High Court Rules 2016,   r 14.1, which provides that all matters relating to costs are at the discretion of the Court.3 I am not sure that this rule goes so far as to empower the Court to make the order still at issue.

[5]    However, the defendants also note that ss 4 and 5 of the Family Protection Act 1955 (the Act) relevantly provide:

4Claims against estate of deceased person for maintenance

(1) If any person (referred to in this Act as the deceased) dies, whether testate or intestate, and in terms of his or her will or as a result of his or her intestacy adequate provision is not available from his or her estate for the proper maintenance and support of the persons by whom or on whose behalf

1      Moleta v Darlow [2021] NZHC 2016.

2      Moleta v Darlow [2022] NZHC 620.

3      In relation to steps taken in the Family Court, the Family Court Rules 2002, r 207 provides the same discretion.

application may be made under this Act, the court may, at its discretion on application so made, order that any provision the court thinks fit be made out of the deceased’s estate for all or any of those persons.

…

5Terms of order

(1)        The court may attach such conditions to any order under this Act as it thinks fit or may refuse to make such an order in favour of any person whose character or conduct is or has been such as in the opinion of the court to disentitle him to the benefit of such an order.

(2)        In making any such order the court may, if it thinks fit, order that the provision may consist of a lump sum or a periodical or other payment.

[6]    These sections give the Court not only wide remedial powers in terms of provision out of the deceased’s estate, but also the power to attach conditions to orders under the Act.

[7]    Although the cases do not appear to expressly cite the above provisions, it is well-established that the Court has a discretion to order costs from an estate.4 Often costs are ordered from the residual estate, which affects the entitlement of residuary beneficiaries. In principle, beneficiaries’ interests in an estate can be affected by costs awards.

[8]    There are a number of cases where the costs award has been ordered to be paid out of a particular beneficiary’s portion of the estate.

[9]    In Hills v Public Trust, the plaintiff was unsuccessful in the proceedings and liable for costs.5 Potter J ordered that the Public Trust’s costs be met from the plaintiff’s share of the estate, and not from the residual beneficiaries’ share. In respect of practicalities, the Judge said that “[t]he costs payable by the plaintiff as above are to be paid from her share in the estate … by way of deduction prior to distribution”.6

[10]   While Hills involved payment of the executor’s costs, in Re Cooke, two of the plaintiff’s sisters successfully opposed the plaintiff’s claim to a larger share of the

4      See Fry v Fry [2015] NZHC 2716 at [10]-[18].

5      Hills v Public Trust HC Auckland, CIV-2008-404-2217, 23 September 2010.

6 At [12].

estate7 and Penlington J ordered the plaintiff to pay costs to the two sisters out of his share.8

[11]   In Public Trust v Relph, Mrs Relph’s relationship property claim against her late husband’s estate had been heard together with his children’s provision claim, and both had succeeded. Heath J ordered that  a proportion of the  costs come  out of  Mrs Relph’s share of the estate.9

[12]   In Re Hyde, Mr Hyde was an existing beneficiary under a will. 10 His siblings successfully claimed for provision under the will. Mr Hyde’s conduct in the proceedings was unsatisfactory, including his rejection of a reasonable settlement offer. Judge von Dadelszen concluded that the “amount which he is to receive should be reduced by appropriate awards of costs”.11 The Judge made orders as to the distribution of the estate to everyone except Mr Hyde, then from the “residue” (being Mr Hyde’s allowance) he ordered costs to be paid before the balance went to Mr Hyde. Although not explicitly stated this appears to have been achieved by exercising the discretion under ss 4 and 5 of the Act.

[13]   Additionally, the Court has a similar and analogous power to apportion the indemnity costs of executors and trustees against shares of an estate or trust fund: see McNamara v McNamara.12 This power, while in relation to a separate issue, demonstrates the breadth of the Court’s discretion to achieve a just outcome in relation to costs.

[14]   I am satisfied on the basis of the broad terms of ss 4 and 5 of the Act and the line of case law set out above that I have the power to order that costs of successful claimants against an estate can be met from a particular beneficiary’s portion of the estate. Having found costs against Dellisse, it is appropriate to order the costs are met from her share of the estate.

7      Re Cooke HC Hamilton, CP 116-90, 28 September 1994.

8      At 10.

9      Public Trust v Relph (No. 2) HC Auckland, CIV-2008-404-1922, 18 June 2009 at [30] and [34].

10     Re Hyde FC Fielding FP015/199/93, 2 September 1994.

11     At 11.

12     McNamara v McNamara [2022] NZHC 547 at [77]–[80].

Order

[15]   The costs awards set out in my judgment of 31 March 2022 shall be paid out of Dellisse Moleta’s share of the estate.

Hinton J