Shin v Connolly - [2022] NZHC 2065

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1073

[2022] NZHC 2065

BETWEEN
JENNIFER HAE QUEONG SHIN

Plaintiff

AND

SIMON JAMES CONNOLLY

Defendant

Hearing: On the papers

Counsel:

S Robertson QC for the Applicant/Defendant

RJ Connell and S Anthony for the Respondent/Plaintiff

Judgment:

19 August 2022

COSTS JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 19 August 2022 at 11.30am pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors/Counsel:
McVeagh Fleming, Auckland Connell & Connell, Auckland

S Robertson QC, Bankside Chambers, Auckland

SHIN v CONNOLLY [2022] NZHC 2065 [19 August 2022]

Introduction

[1] The defendant, Mr Simon Connolly, applies for costs following a successful summary judgment application as a defendant on the claim brought by the plaintiff, Ms Shin.1 Mr Connolly is the executor and beneficiary of his late father’s estate. Ms Shin is the wife of the deceased.

[2] The will directed Mr Connolly to complete a subdivision of the property that his father and Ms Shin had lived in (if not subdivided already). Following the settlement of proceedings brought by Ms Shin pursuant to the Family Protection Act 1955, Ms Shin is to receive a fixed interest of 46 per cent in the proceeds of sale of Lot 1. Mr Connolly is to receive four-fifths of the residuary estate and Ms Shin’s two daughters are to receive the remaining one-fifth.

[3] Mr Connolly submits that costs ought to be paid on an indemnity basis out of Ms Shin’s share of the estate as otherwise the beneficiaries of the residuary estate, Mr Connelly and Ms Shin’s daughters, will bear the costs of the litigation.

[4] Mr Connolly’s indemnity costs total $38,830 including disbursements. For comparison, Mr Connolly attaches a schedule to his memorandum setting out scale costs on a 2B basis, except for the filing of the interlocutory application for which he has calculated costs on a 2C basis for the reasons discussed below. Costs on a combined 2B/2C basis amount to $21,043.75 including disbursements.

[5] Ms Shin, by contrast, considers that costs ought to be awarded on a 2B basis and that she ought not to be required to pay the costs until the properties are sold so the costs can be deducted from the estate’s payments to her.

[6] Counsel for the plaintiff acknowledges in their memorandum that two issues arise:

1 Shin v Connolly [2022] NZHC 664.

(a)Whether the costs awarded by the Court should be at the higher indemnity award?

(b)Who should bear the estate’s actual legal costs (in excess of the sum the Court finds Ms Shin should pay), given the residuary estate will be divided between Ms Shin’s two daughters (one-fifth) and Mr Connolly (four-fifths)?

Should the costs awarded by the Court be indemnity costs?

[7] The executor is entitled to an indemnity from the estate for all expenses and liabilities incurred acting reasonably on behalf of the estate, including legal costs. In the Court…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Shin v Connolly

Details

AGLC: Shin v Connolly [2022] NZHC 2065
Case: [2022] NZHC 2065
Decision Date: 19 August 2022

CaseChat Overview and Summary

In Shin v Connolly, the High Court of New Zealand was called upon to determine the appropriate allocation of costs following a successful summary judgment application by the defendant, Simon Connolly, against the plaintiff, Jennifer Shin. The dispute arose out of a will which directed the defendant, as executor, to complete a subdivision of property owned by the deceased and the plaintiff. Following the settlement of proceedings under the Family Protection Act 1955, the plaintiff was to receive a fixed interest in the proceeds of the sale of one of the lots, while the defendant and the plaintiff's two daughters were to share the remaining estate.

The court was tasked with deciding two main issues: whether the costs should be awarded on an indemnity basis and who should bear the costs of the litigation. The defendant argued that the costs should be paid on an indemnity basis out of the plaintiff's share of the estate to prevent the beneficiaries of the residuary estate from bearing the costs. In contrast, the plaintiff contended that the costs should be awarded on a standard basis and that she should not be required to pay the costs until the properties were sold so the costs could be deducted from the estate's payments to her.

The court found that the executor was entitled to an indemnity from the estate for all expenses and liabilities incurred acting reasonably on behalf of the estate, including legal costs. The court referred to several precedents that established the principle that trustees are entitled to be indemnified for costs properly incurred in the administration of the trust. However, the court also noted that the executor's right of indemnity was subject to the limitation that the expenses were "properly incurred." The court concluded that the executor acted reasonably in defending the claim and bringing the application for summary judgment. It was reasonable, in fact beneficial to the estate, for the executor to incur the costs of the summary judgment application rather than allow the estate to suffer the costs of a full defence of the plaintiff's claim.

The court held that 90 per cent of the indemnity costs should be paid out of the plaintiff's share in the estate with the remaining 10 per cent to be paid by the residuary estate. The court found that by bringing these proceedings against the executor as the defendant, the plaintiff risked a costs award being made against her. Although the executor was wholly successful in his application and defence, his acceptance prior to proceedings being brought that the settlement conference had proceeded on a mistaken basis may have avoided proceedings. To take account of this possibility, the court considered it appropriate for 90 per cent of the indemnity costs to be paid out of the plaintiff's share in the estate with the remaining 10 per cent to be paid by the residuary estate. The court ordered that the full amount of the defendant's costs of $38,830 be reimbursed by the estate, with 90 per cent ($34,947) to be paid out of the plaintiff's share of the estate by way of deduction from the sale proceeds of Lot 1.

Orders