Shrimpton v Freeman

[2021] NZHC 865

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1302

[2021] NZHC 865

BETWEEN

JEFFREY MARK SHRIMPTON AND ERNEST RAYMOND SHRIMPTON
Plaintiffs

AND

APRIL LORRAINE FREEMAN

First Defendant

ANGELA JOY FREEMAN
Second Defendant

ROBERT EDWARD SADGROVE

Third Defendant

Hearing:

On the papers

Counsel:

R O Parmenter for Plaintiffs S A Keall for First Defendant Second Defendant in person

R V Sami for Third Defendant

Judgment:

23 April 2021

COSTS JUDGMENT OF WHATA J

This judgment was delivered by me on 23 April 2021 at 3.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: ………………………….

Solicitors:           Daniel Overton & Goulding, Onehunga

Murdoch Price Limited, Auckland

SHRIMPTON v FREEMAN [2021] NZHC 865 [23 April 2021]

[1]    The second and third defendants withdrew their opposition to the grant of probate in solemn form, which was granted by me on 11 March 2021. I must now address the issue of costs.

[2]    The submissions of counsel are somewhat prolix, but I think can be reduced to the following core propositions:

(a)The plaintiffs claim that they should have costs out of the estate, given that they have incurred those costs for the benefit of the estate.

(b)The first defendant claims costs against the second and third defendants on an indemnity basis per r 14.6(4)(a) of the High Court Rules 2016 because:

(i)the second and third defendants never made any serious attempt to substantiate their opposition;

(ii)they have not acted reasonably in terms of settlement discussions; and

(iii)they have otherwise acted reasonably.

(c)The first defendant also seeks costs pursuant to rr 14.6(4)(c) or (f) in respect of the temporary administrator against the first and second defendants.

(d)The second defendant refers to:

(i)alleged abuse by the first defendant of the deceased;

(ii)information suggesting to her that the deceased was in an extremely vulnerable state and affected by drugs at about the time she made amendments to her will;

(iii)the second defendant’s unfamiliarity with the probate process and, therefore, joined with the third defendant to engage counsel to save costs;

(iv)several attempts the second defendant made to come to a reasonable agreement without having to go to Court;

(v)there being no other option but to register their concerns with the Court against the backdrop of ongoing acrimony between them and the first defendant; and

(vi)they endeavoured to provide prompt responses to requests from the executors’ lawyers.

(e)The third defendant, through counsel, submits:

(i)they had serious and genuine concerns about their mother’s wellbeing and sought all relevant information from the executors;

(ii)they had no option but to file their defences or what they thought were genuine grounds, while they awaited discovery of all relevant evidence;

(iii)they had not unreasonably blocked the executors’ attempt to administer the estate;

(iv)compromise was reached not to go to trial based on the overall circumstances;

(v)the third defendant may have pursued concerns about the reasonableness of the plaintiffs’ costs via the Law Society’s complaints process;

(vi)as the merits are not tested, all defendants should carry their own costs;

(vii)the costs of the hearing were avoided;

(viii)it is accepted that the third defendant did not consent to a request for interim distribution but, instead, required proof of financial need;

(ix)they too have incurred significant costs (in the sum of

$18,529.30); and

(x)the second and third defendants have prudently taken appropriate steps, including genuine engagement, to settle the dispute and that lodging the caveat was a reasonable and viable option pending release of all requested medical and related evidence.

Assessment

Costs in the proceedings

[3]    The plaintiffs are entitled to their reasonable costs out of the estate. The first defendant is entitled to her costs against the second and third defendants on a 2B basis only, to be fixed by the Registrar.

[4]    My reasons are as follows. The plaintiffs were acting for the benefit of the estate and should have their reasonable costs.1 The first defendant was required to take steps given the allegations levelled at her by the second and third defendants. As the second and third defendants later admitted the statement of claim, they should pay the first defendant’s 2B costs per rule r 14.2(a), to be fixed by the Registrar.

1      See Loosley v Powell [2018] 2 NZLR 618 (CA).

[5]    However, I am not satisfied that the second and third defendants have acted so unreasonably as to attract an uplift per rr 14.6(4)(a) or (f). Those rules provide for indemnity costs as follows:

14.6     Increased costs and indemnity costs

(1)       …

(4)The court may order a party to pay indemnity costs if—

(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or

…

(f)some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.

[6]    I am not satisfied on the evidence before me that the first or second defendants acted vexatiously, frivolously, improperly, unnecessarily or unreasonably. Their pleaded claims appear to have a plausible basis and it was not unreasonable for them to require completion of discovery before admitting the plaintiffs’ claims. Moreover, I am not prepared to make an order for indemnity costs without affording the second and third defendants an opportunity to file evidence which would in effect be an invitation to litigate some of the matters resolved by consent. That would be a wasteful use of the parties’ resources and Court time.

[7]There shall be orders accordingly.

Temporary administrator’s costs

[8]    The temporary administrator, Mr Bilkey, was ultimately appointed by consent. Mr Bilkey is a solicitor and was well placed to manage the estate and, in particular, the process of disposing of estate property. Neither he nor the plaintiff executors have sought an order for his costs against the second and third defendants. Rather, as noted, the first defendants seek them on the basis that the elements of r 14.6(4)(c) are satisfied. That rule states:

14.6     Increased costs and indemnity costs

…

(4)       The court may order a party to pay indemnity costs if—

…

(c) costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding;

…

[9]    The first defendant’s claim pursuant to r 14.6(4)(c) is misconceived. The temporary administrator is not “a party to the proceedings” and has “not acted in the proceedings”. I am not aware of any case where this rule has been applied to the benefit of a non-party.2 Moreover, Mr Bilkey’s costs lie in the administration, which he is entitled to recover from the estate. The order appointing Mr Bilkey reserved rights to the applicants (being the plaintiffs’ executors) to seek orders as to his remuneration. That is the proper vehicle for any claim in respect of his costs. Presumably, the plaintiffs’ executors have not thought it a necessary use of resources to litigate this aspect, bearing in mind that some of cost of administration would likely have been incurred in any event. My preliminary view is that they were wise not to do so.

[10]   I therefore dismiss the first defendant’s claim to the costs of the temporary administrator.

Outcome

[11]   The plaintiffs are entitled to their reasonable costs out of the estate. The first defendant is entitled to 2B costs per rule r 14.2(a), with quantum to be fixed by the Registrar if not agreed.

2      The rule might apply by analogy under r 14.6(4)(f) which states that the Court may for any other reason which justifies an order for indemnity costs make such an order. But for the reason expressed above, I do not consider that it is justified.