Rule v Rule

[2015] NZHC 1145

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-005837 [2015] NZHC 1145

BETWEEN

DOUGLAS IAN RULE AND

ELIZABETH JANE BELCHER Plaintiffs

AND

LESLEY LOUISE RULE AND ANTHONY CHARLES BENNETT COUPE AS EXECUTORS AND TRUSTEES OF THE ESTATE OF MURIEL GWENDOLINE RULE Defendants

Judgment:                27 May 2015

JUDGMENT OF COURTNEY J

RULE v RULE [2015] NZHC 1145 [27 May 2015]

[1]      In this proceeding the plaintiffs seek to challenge their mother’s will under which they did not receive anything and their sister, Louise Rule, did.  The executors of the estate are Louise Rule and a solicitor, Anthony Coupe.   I note, whilst the executors   are   represented   by  McVeagh   Fleming,   Louise   Rule  is   separately represented in her capacity as a beneficiary of the estate.

[2]      In my decision dated 2 April  2015  I determined two preliminary points, namely whether the parties had reached a binding settlement agreement and, if so, whether the agreement required the defendants (as executors of the estate) to pay a previous costs order made against them  by Associate Judge Bell.   Both parties asserted that there had been a concluded settlement agreement; the real argument was whether the costs order should have been paid from the estate.

[3]      I held that although the parties had agreed on settlement terms they did not intend to be bound until a deed of settlement had been executed, which had not occurred and, as a result, there was no binding settlement agreement.  Had a binding settlement been effected on the terms that had been agreed, however, the costs would have had to be paid from the estate.

[4]      The  plaintiffs  now  seek  either  increased  or  indemnity  costs  against  the defendants on the basis that the defendants’ position on the preliminary hearing was futile because, regardless of whether there had been a concluded settlement, the costs order remained payable by the estate (as the plaintiffs had contended).  Further, it is said that the executors have invoiced the estate $9,265 in relation to the preliminary determination hearing and deducted that fee from the estate, which they should not have done. The plaintiffs also seek an order requiring McVeagh Fleming to meet any costs award personally.

[5]      A joint memorandum has been filed on behalf of the executors and Louise Rule in her capacity as a beneficiary.   The memorandum also addresses McVeagh Fleming’s position, including material which might have been better included in an affidavit.  This combined response on behalf of the defendants, Louse Rule in her personal capacity and McVeagh Fleming in its personal capacity, might be viewed as

rather inappropriate, given the issues raised by the plaintiffs.  It is a matter that those parties may wish to consider before the matter proceeds much further.

[6]      The gist of the executors’ position is that they did not participate in the settlement negotiations at which the disputed terms of agreement were reached and relied on advice from Louise Rule’s counsel that the agreement was that the costs award was not to be paid by the estate.  McVeagh Fleming’s position is essentially that the solicitor for the estate made proper inquiries regarding the settlement terms and relied on the advice he received from counsel for the beneficiary.

[7]      In a memorandum in reply the plaintiffs’ counsel rejects the suggestion that the defendants were excluded from negotiations, asserting that they were forwarded all correspondence between the plaintiffs and Louise Rule and were therefore fully aware of the negotiations and the terms that were being proposed.

[8]      The executors, Louise Rule and McVeagh Fleming also level criticism at Ms MacMillan for making demand for payment of the costs award so late and for wrongly calculating the costs payable.   Rather pointlessly, the memorandum also traverses much of the same ground that I determined in my earlier judgment.

[9]      There is no question that had the negotiating parties specifically turned their minds to the outstanding costs award during the negotiations, the dispute would never have arisen.   However, blame is a futile exercise and I consider that costs should follow the event.  I do not, however, consider that the circumstances warrant increased costs, indemnity costs or costs against the solicitors personally.  Although the plaintiffs have prevailed the dispute cannot be regarded as so clear cut that either interpretation was unreasonable.   Nor has there been misconduct or unreasonable behaviour that would justify such orders.   I therefore order costs against the defendants on the preliminary determination on a 2B basis.  I leave the calculation of those costs to counsel to agree upon.

[10]     The question of whether McVeagh Fleming should have charged the estate for the preliminary issue and whether its fee was reasonable is not a matter that is

before me. That is a matter for the executors to consider and possibly a matter to

include in the proceedings if they are to proceed further.

P Courtney J