Scott v Garnham

[2021] NZHC 1039

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-99

[2021] NZHC 1039

UNDER

the Family Protection Act 1955

IN THE MATTER

of the estate of the late Mary Patricia Scott- Smith

BETWEEN

JAZZ SCOTT

Appellant

AND

MICHAEL ROBERT GARNHAM

Respondent

Hearing:	On the papers
Appearances:	S J Zindel for Appellant M R Garnham in Person K L Hoult for A Scott
Judgment:	11 May 2021

JUDGMENT OF COOKE J

(Costs)

[1]    In my judgment of 23 March 2021 I dismissed the appellant’s appeal against the decision of the Family Court awarding her 10 per cent of the net value of her mother’s estate under the Family Protection Act 1955.1 I directed the parties to file memoranda if costs could not be resolved and memoranda have now been filed. Two issues have been raised by Ms Ann Scott who was effectively the successful respondent to the appeal notwithstanding the executor, Mr Garnham, is the named respondent. The issues raised are:

1      Scott v Garnham [2021] NZHC 592.

SCOTT v GARNHAM [2021] NZHC 1039 [11 May 2021]

(a)that the Court direct that the appellant’s costs should not be met by the estate; and

(b)that there are exceptional circumstances allowing for an award of costs against the appellant notwithstanding she was legally aided in accordance with s 45 of the Legal Services Act 2011.

Costs not met by the estate

[2]    In her memorandum, counsel for Ms Ann Scott submitted that the appellant’s costs for the appeal should not be met by the estate. She said that there was a line of authority reflecting a practice that costs of parties to Family Protection Act claims are met by the estate, but that this was not an invariable practice and it remained in the discretion of the Court. She then argued that such a practice should not be followed in the present case.

[3]    That submission was not responded to by counsel for the appellant. I expect that is because the appellant is in receipt of legal aid for the appeal and there is unlikely to be a suggestion that the estate should meet the appellant’s costs. If Ms Ann Scott’s argument in relation to s 45 was accepted I agree it would not be appropriate for the appellant’s costs liability to be met by the estate. More generally I accept that it would be unfair to Ms Ann Scott for the appellant’s costs to be met by the estate. That would, in substance, involve Ms Ann Scott paying a substantial amount of those costs given that the appellant is only entitled to 10 per cent of the residue of the estate, with the balance being Ms Ann Scott’s entitlement.

[4]Accordingly I direct that the costs of the appeal should not be met by the estate.

Order under s 45

[5]Section 45 of the Legal Services Act 2011 provides:

45       Liability of aided person for costs

(1)If an aided person receives legal aid for civil proceedings, that person’s liability under an order for costs made against him or her with respect to the proceedings must not exceed an amount (if any) that is reasonable for the aided person to pay having regard to all the

circumstances, including the means of all the parties and their conduct in connection with the dispute.

(2)No order for costs may be made against an aided person in a civil proceeding unless the court is satisfied that there are exceptional circumstances.

(3)In determining whether there are exceptional circumstances under subsection (2), the court may take account of, but is not limited to, the following conduct by the aided person:

(a)any conduct that causes the other party to incur unnecessary cost:

(b)any failure to comply with the procedural rules and orders of the court:

(c)any misleading or deceitful conduct:

(d)any unreasonable pursuit of 1 or more issues on which the aided person fails:

(e)any unreasonable refusal to negotiate a settlement or participate in alternative dispute resolution:

(f)any other conduct that abuses the processes of the court.

(4)Any order for costs made against the aided person must specify the amount that the person would have been ordered to pay if this section had not affected that person’s liability.

(5)If, because of this section, no order for costs is made against the aided person, an order may be made specifying what order for costs would have been made against that person with respect to the proceedings if this section had not affected that person’s liability.

…

[6]    Two factors are identified in the submissions for Ms Ann Scott justifying an exceptional circumstances order under this section:

(a)that the appellant’s evidence and submissions improperly and intentionally denigrated the character of Ms Ann Scott; and

(b)that there were offers made by Ms Ann Scott of amounts greater than the appellant was entitled to that were not accepted.

[7]    In addressing the general approach to be taken under this provision the Court of Appeal said in Laverty v Para Franchising Ltd that the enquiry “… is a broad one,

which importantly includes the means of all the parties and their conduct. For circumstances to qualify as exceptional, however, they have to be ‘quite out of the ordinary’”.2

[8]    As to the first factor relied upon I accept that the appeal did include allegations against Ms Ann Scott, and that there was not a proper foundation for those allegations. I addressed those matters in the judgment at [43]–[51].3 Mr Zindel argues that “this matter was gently handled”. But the fact that the allegations were made somewhat faintly, or indirectly does not obscure the fact that they were made and they had no foundation. On the other hand it seems to me that the fact that those allegations were made did not increase the costs incurred by Ms Ann Scott. She was put to the cost of defending the appeal irrespective of these allegations. For that reason this case does not fall within s 45(3)(a). Neither do the other factors in s 45(3) obviously apply. For those reasons I do not accept that the advancement of those allegations provide a basis for an exceptional circumstances order being made under s 45.

[9]    As to the second matter, I accept that it is significant that the appellant rejected the 10 per cent entitlement offered throughout, and also rejected the higher offer made without prejudice except as to costs before the hearing of this appeal. Under the High Court Rules 2016 that could have resulted in costs consequences. Under r 14.11 a defendant who offers the plaintiff more than they ultimately recover can be entitled to the costs of the proceeding from the time of the offer. Under rr 14.6(3)(b)(v) and 14.7(f)(v) an unreasonable refusal to accept an offer can also provide reason for increasing or decreasing a costs award. But the enquiry under s 45 is a different one. Section 45(3)(e) is not directed to a failure to accept a settlement offer, but to a failure to engage in settlement processes. In other words it is directed at unreasonable conduct by a refusal to engage in reasonable settlement processes at all.

[10]   I have been provided with information about the settlement discussions which occurred on a without prejudice except as to costs basis. The appeal was lodged in February 2020. In July 2020 the appellant’s counsel offered to settle for 35 per cent

2      Laverty v Para Franchising Ltd [2006] 1 NZLR 650 at [31]. See also Gill v Lethlean [2021] NZHC 296 at [28].

3      Scott v Garnham [2021] NZHC 592.

of the net estate. He followed that offer up in August 2020 and then again in February 2021. In response Ms Ann Scott’s solicitors offered 20 per cent of the net value of the estate the Friday before the fixture on Monday. The same day the appellant’s counsel counter-offered to settle for 25 per cent.

[11]   All the offers involved amounts materially higher than the appellant was found to be entitled to. The appellant would have been in a better position had she accepted Ms Ann Scott’s offer of 25 per cent of the net value of the estate. But by itself this does not demonstrate that s 45(3)(e) applies. The fact that the offers were higher than the appellant’s entitlement is relevant, but it still cannot be said that the appellant failed to engage in settlement discussions. If anything it was the appellant who was initiating these discussions. Moreover the 25 per cent offer was only made the Friday before the Monday fixture.

[12]   Stepping back and looking at both of the factors raised by Ms Ann Scott I do not accept they provide a basis for the exception in s 45(2) to be applied. The reality is that Ms Ann Scott has been put to the costs of the appeal simply because it has been pursued. The case does not involve exceptional circumstances. It is unfortunate that the modest value of the estate has been depleted by proceedings in two Courts, and that this has happened notwithstanding that Ms Ann Scott offered to pay what the appellant was entitled to before both hearings. But the manner in which the mother of the parties dealt with her estate created suspicion and a high risk of litigation, and the results in these kinds of cases are not always obvious.

[13]   For these reasons I do not accept that there were exceptional circumstances under s 45. There will be no order of costs against the appellant.

Cooke J

Solicitors:

Zindels, Nelson for Appellant

Niemand Peebles Hoult, Hamilton for Respondent Copy to: M R Garnham