Public Trust v Andrews

[2024] NZHC 1240

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2023-412-76

[2024] NZHC 1240

IN THE MATTER

of the Estate of Mervyn Stanley John Andrews

BETWEEN

PUBLIC TRUST as proposed Administrator or Executor of the Estate of Mervyn Stanley John Andrews

Applicant

AND

DESMOND CHARLES ARTHUR ANDREWS

First Respondent

MAURICE RICHARD MERVYN ANDREWS

Second Respondent

continued over

Hearing:

Further Submissions:

20 February 2024

29 February 2024

Appearances:

G M Cairns for Applicant

M R Andrews, Second Respondent, in person

Judgment:

17 May 2024

JUDGMENT OF PRESTON J

(Costs)

This judgment was delivered by me on 17 May 2024 at pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date……………

PUBLIC TRUST v ANDREWS [2024] NZHC 1240 [17 May 2024]

THERESA JOSEPHINE MARGARET MCKAY, STANLEY ROBERT MCKAY and
YBT NOMINEES LIMITED, as trustees of the MCKAY FAMILY TRUST

Third Respondents

DANIEL ROBERT MCKAY

Fourth Respondent

CAMERON JOHN MCKAY

Fifth Respondent

REBECCA HANNAH MCKAY

Sixth Respondent

Introduction

[1]                 The Public Trust as executor of the estate of Mervyn Stanley John Andrews (the deceased) applied to the Court for a grant of probate of the deceased’s last will, dated 5 July 2019 or, in the alternative, of his previous will dated 20 March 2009.

[2]                 The application was made in solemn form as the second respondent Maurice Andrews (Maurice) had raised concerns about his father’s capacity when he made the 2019 will. Ultimately, however Maurice did not file a statement of defence and the hearing proceeded by formal proof. By judgment of same date as this judgment I granted the application for probate in solemn form of the 2019 will, finding that the deceased had testamentary capacity at the time he made the will.

[3]                 The Public Trust seeks costs against Maurice. In essence, it says the application in solemn form was necessary only due to Maurice’s unreasonable approach to the proceeding.

[4]                 Maurice opposes the application and says the costs should be borne by the estate. Further, he says that Public Trust is not acting in an even-handed way in pursuing costs.

The Public Trust’s position

[5]                 The Public Trust seeks costs on a category 2 band B basis.1 Costs are not sought on an indemnity or increased costs basis but are submitted as appropriate to reflect the time and complexity of the case.

[6]                 Mr Cairns notes that the Public Trust in most cases does not seek costs on an application in solemn form, consistent with its neutral position putting all wills before the Court. The Public Trust generally has no direct financial interest in the outcome of litigation and can rely upon the standard executor indemnification to cover its costs incurred in acting appropriately and in good faith.

[7]                 However, Public Trust points to Maurice’s conduct as justifying an award, given that:

(a)Maurice’s registration of a caveat on 9 December 2021 – on the basis his late father lacked testamentary capacity at the date of the last will – prevented a grant of probate in common form.

(b)To address Maurice’s concerns the Public Trust obtained and provided a retrospective medical assessment from the deceased’s general practitioner which confirmed that he had testamentary capacity when making the 2019 will.

(c)Maurice continued to raise objections in correspondence and declined to remove the caveat, but did not seek to challenge the medical opinion or provide a contrary opinion.

[8]                 Mr Cairns submits that if Maurice had not registered the caveat or had removed it after being provided with sufficient evidence of the deceased’s testamentary capacity, an application would have been made in common form, at significantly lower cost to the estate.

1      High Court Rules 2016, Part 14.

Maurice’s position

[9]                 Maurice submits that the costs of the application in solemn form should be met by the estate. He denies that he acted unreasonably and says that:

(a)The caveats and therefore the application in solemn form were the only reason he was able to obtain medical and Public Trust records in relation to his father’s mental capacity.

(b)Had the Public Trust properly addressed his concerns and provided information regarding the 2019 Public Trust meetings in a timely and appropriate manner, the application in solemn form would not have been necessary.

(c)There were three bases of his challenge to the deceased’s last will – testamentary capacity, undue influence and testamentary promise – ventilated in a letter from his then lawyer. The costs application has accordingly been brought on a “conflicted” basis and the Public Trust is not acting even-handedly in advancing it.

(d)He has himself experienced some costs, in responding to the costs application. Mr Andrews spent all of Christmas preparing his costs submissions.

(e)The Public Trust “view” in acting even-handedly in relation to all the residual beneficiaries caused the temporary administration order, which itself incurred costs to obtain.

(f)Under s 122(2) of the Public Trust Act 2001 the total amount Public Trust can charge an estate is restricted to 5% of the total value of the assets of the estate. Further, absent any application under s 61(a) of the Administration Act 1969 to discharge the caveat as vexatious or frivolous the Public Trust must be taken to have accepted the caveat was properly registered.

Costs principles

[10]             Courtney J recorded the costs principles applying to estate litigation in Mumby v Mumby, noting first that all matters as to costs are at the Court’s discretion, which must be exercised in a principled way in accordance with Part 14 of the High Court Rules 2016.2 The usual starting point is that the party who fails ought to pay costs to the party who succeeds.3

[11]             As her Honour observed however, in estate litigation the position is different. There is a longstanding practice of awarding costs out of the estate and on a solicitor/client basis. Courtney J noted:4

… The principles underlying this practice were summarised in Re Paterson (deceased):

(i)if the litigation originates in the fault of the testator e.g. 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 costs.

(iii)unless the circumstances of the case are such as to bring it within one of the foregoing exceptions, the general rule that costs should follow the event ought to prevail.

(footnotes omitted)

[12]             These principles were described by the Court of Appeal in Woodward v Smith as emphasising the High Court’s entitlement to award costs in probate proceedings in such manner as achieves justice between the parties.5 Despite the consistent application of these principles, however, parties ought not to be encouraged into unmeritorious litigation by the expectation that costs will be met from the estate.6

2      Mumby v Mumby [2016] NZHC 2836.

3 At [3].

4 At [4].

5      Woodward v Smith [2009] NZCA 215.

6      Mumby v Mumby, above n 2, at [5].

[13]             Although he did not withdraw the caveat and later renewed it, Maurice did not defend the Public Trust’s application. As the Court of Appeal has explained in context of a defended proceeding, a party who abides a cause of action averts cost for the plaintiff where judgment may be entered by formal proof as a result. Even though the level of costs will be less than if the action was defended, the Court will still need to consider whether it is just that the usual scale measure of costs should be visited on that party.7

Discussion

[14]             Applying those principles in this case, I do not consider Maurice’s initial registration of a caveat was inexplicable or necessarily unreasonable. He was apparently surprised at the content of the 2019 will which had not been made known to him by the deceased, with whom he then lived. It appears that the first respondent had also expressed surprise, in that regard. It is also evident from the medical records that at the time the deceased passed away in November 2021 his condition of old-age dementia had progressed such that he had been certified as mentally incapable for purpose of activating an enduring power of attorney.

[15]             While Maurice continued in early 2022 to hold doubt on the issue of testamentary capacity the Public Trust responded to the concerns in the letter from his lawyer and addressed his enquiries on all substantive aspects by no later than their letter of 25 November 2022. This included providing the deceased’s medical information and other financial information together with the retrospective certificate of Dr Windfuhr. It confirmed that the Public Trust officer who had taken the deceased’s will instructions in 2019 had no concerns regarding testamentary capacity. It provided the Statement to Accompany Will setting out the deceased’s reasons for the only significant change to the will. Further, and in response to Maurice’s potential claim of undue influence, the Public Trust provided the brief information upon their file concerning the attendance of the deceased’s daughter during the will meeting.

7      Hong v Deliu [2016] NZCA 75 at [23].

[16] I am satisfied the Public Trust provided Maurice a full and unhurried opportunity to review the information supporting its intended application for a grant of probate in common form and to remove the caveat to facilitate this. His election not to do so and to renew the caveat has resulted in a significantly more costly and protracted process. However, as discussed at [20] below an issue relating to the deceased’s testamentary capacity remained on the face of the retrospective certificate of Dr Windfuhr.

[17]             The crux of Maurice’s response is that the caveats and the solemn form probate process were necessary in order for him to obtain information from Public Trust to document and compile his claims. As Mr Cairns submits, it is not for the Public Trust to take steps in relation to any claim of undue influence, rather it is for the person ascertaining such claim to advance it. In the event, none of the claims Maurice raised through his lawyer and subsequently maintained personally were advanced by a statement of defence. This notwithstanding that the Court provided enlargement of time to allow late opportunity to file if Maurice so intended.

[18]             There was no basis for the Public Trust to seek the discharge of the caveat as lodged vexatiously or frivolously, as Maurice suggests.8 Based on Maurice’s claims in correspondence it was obliged to, and did, adopt a neutral position and put the available evidence before the court under the application in solemn form.

[19]             Further, s 122(2) of the Public Trust Act does not assist as Maurice contends. That provision relates to remuneration, that is fees Public Trust may charge for management or administration of an estate. Mr Cairns notes that court costs or other costs of litigation are a special fee incurred in addition to the ordinary costs of administration. As noted, the Public Trust does not seek an order that Maurice pay costs in relation to the temporary administration order. Further, counsel advises that the actual costs incurred in dealing with the solemn form application are higher than those sought on a 2B basis.

8      Administration Act 1969, s 61(a)(i).

[20]             On the other hand, as the substantive judgment records, an element of ambiguity arose upon the retrospective certificate of testamentary capacity which was not finally clarified until following the hearing. The doctor’s underlying opinion that the deceased had testamentary capacity at the relevant time did not change. Still, the ambiguity went to a central issue – the impact of the deceased’s old age dementia – which was recorded as one of Maurice’s concerns from the outset. The delay in clarifying the evidential issue is properly recognised in an adjusted award of costs.

[21]             Finally, although some additional preparation time was necessitated by subsequent memoranda Maurice filed identifying concerns he did not file a defence and the application proceeded by formal proof. The standard preparation time for hearing as claimed should be reduced, accordingly.

Quantum

[22]             Weighing all those matters in the round and determining costs in such a manner as achieves justice between the parties it is appropriate that Maurice Andrews pays a contribution to the scale costs as claimed. I do not direct costs of commencement of the proceeding, nor the full costs of preparation of affidavits or of preparation for the brief formal proof hearing, which costs as claimed are adjusted. The costs of hearing time is awarded in full.

Result

[23]I award costs in favour of the Public Trust.

[24]             The second respondent Maurice Richard Mervyn Andrews is to pay costs in the amount of $4,182.50.

………………………………………

Preston J

Solicitors:

Thomas Dewar Sziranyi Letts, Lower Hutt Copy to: Mr Maurice Andrews