Smith v Descendants of Pauline Marsh (deceased)

[2023] NZHC 2423

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2022-485-606693

[2023] NZHC 2423

UNDER

The Administration Act 1969

IN THE MATTER OF

ESTATE OF GRACE ELIZABETH SMITH

BETWEEN

JACK JOHN SMITH and HENRY SMITH

Plaintiffs

AND

THE DESCENDANTS OF PAULINE

MARSH (Deceased)

WALTER SMITH (Deceased) RUTH TAKIMOANA (Deceased) HARA KINGI (Deceased Respondents

Hearing:	On the papers at Auckland
Judgment:	31 August 2023

JUDGMENT (NO.2) OF POWELL J

[Costs]

This judgment was delivered by me on 31 August 2023 at 4.00 pm pursuant to

r 11.5 of the High Court Rules

…………………..

Registrar/Deputy Registrar

Solicitors:

Lateral Lawyers Ltd, Auckland

JACK JOHN SMITH and HENRY SMITH v THE DESCENDANTS OF PAULINE MARSH (Deceased) [2023] NZHC 2423 [31 August 2023]

[1]                 On 19 December 2022, I made an order nisi absolute granting the administration of the estate of Grace Elizabeth Smith (“Grace”) to her two surviving siblings, Jack John Smith and Henry Smith (“the plaintiffs”).1

[2]                 The proceedings arose when the descendants of Grace’s deceased siblings (“the respondents”) opposed the grant of administration and filed a caveat in response to the plaintiff’s application.2 On behalf of the respondents, Elizabeth Teou Hudson, sought to be appointed an administrator alongside the plaintiffs. No substantive hearing to determine the application was required. Instead, counsel provided their respective submissions in a joint memorandum and I then determined the issue on the papers.

[3]                 In my judgment I held that it was neither necessary nor appropriate to add Elizabeth as an administrator.3 The plaintiffs were accordingly granted administration.

[4]                 In the proceeding, the plaintiffs sought costs on an indemnity basis against the respondents. Having considered the application, I held:4

… I do not think that it is appropriate in the context of a whānau dispute to award costs against the respondents (as defined) or against any particular person. By the same token, I do not consider that it is appropriate for Jack and Henry to bear the costs of the application. I therefore make an order that the reasonable costs and disbursements of Jack and Henry in relation to gaining administration of Grace’s estate should be borne by the estate.

[5]                 In accordance with deadlines set out in the judgment, Mr Moughan, on behalf of the plaintiffs, filed a memorandum on 30 January 2023 setting out costs and disbursements claimed for the Court’s approval. The costs claimed were significant:

$58,000 (plus GST) for legal fees, together with disbursements of $663.

[6]                 On 1 March 2023 I issued a minute requiring further information in order to determine whether the costs sought were reasonable. I requested that Mr Moughan provide copies of all relevant time records and set out costs on a 2B basis by way of comparison.

1      Re Smith [2022] NZHC 3525.

2 At [3].

3 At [12].

4 At [16].

[7]                 I have now received and reviewed the time records from the plaintiff’s solicitors and proceed to determine the remaining costs issues arising from that judgment, and specifically whether the costs claimed by the plaintiffs are reasonable.

Reasonable costs

[8]                 As at 30 January 2023, when the plaintiff’s counsel submitted the initial memorandum on costs, the plaintiffs claimed $58,000 (plus GST) in legal fees and

$663 in disbursements (GST inclusive). No actual invoice nor detailed breakdown of the amounts claimed was provided but Mr Moughan submitted that “approximately

$25,000” was attributable to the procedural steps required by the application, albeit he submitted it was all properly attributable to the estate.

[9]                 On 10 March 2023 following the issue of my minute, Mr Moughan provided raw time records, in the form of an invoice, for the period ending 20 February 2023. No meaningful narrative has been provided in support of the invoice. The time records, which are all the Court has by way of evidence, run to nine pages in length and show legal fees in the sum of $66,966.95 now outstanding (plus GST) and disbursements of $738.74. The accompanying submissions advised that the plaintiffs’ solicitors law firm routinely discount fees by 10–15 per cent. The figure of $58,000 was therefore calculated by applying a 12.5 per cent discount to the gross legal fees.

[10]              In particular, the very brief descriptions of services do not provide helpful justification for various work undertaken nor provide an explanation for how the service was relevant to the administration application. For example, many of the entries concern “emails” which are not explained. Moreover, it is not entirely clear how the fee entries concerning the Status of Children Act 1969, insurance, or engaging a locksmith relate to the application (some of the disbursements also relate to the locksmith’s services).

[11]             There is also no explanation of the reason why four solicitors (two apparently senior and two junior) were required to be involved in the file. Nor has evidence been provided as to the experience of the solicitors involved so as to explain what on the face of it are high charge out rates ($575 per hour for the senior solicitors and between

$275 and $425 for the juniors, both GST exclusive).

[12]             A party seeking indemnity costs, as here, bears the onus to produce evidence establishing that the costs sought are reasonable. In assessing the reasonableness of costs, the Court should not regard what is objectively necessary as the test for reasonableness. The test involves a holistic assessment, involving looking at the context of the proceeding, the experience of counsel, the skill and complexity of the case and any other factors which may be relevant.

[13]             In this case, in the light of my comments above with regard to the lack of information provided in support of the amounts claimed, I am by no means satisfied that the amounts claimed on behalf of the plaintiffs are in any way reasonable.

[14]             In the circumstances I can neither approve the amount claimed, nor given the paucity of information make an intelligent estimate of what the reasonable costs of the application might have been. Instead, I consider that the only way forward is to determine costs according to scale. Having considered the calculation prepared by Mr Moughan of costs on a 2B basis I consider it is broadly appropriate, and even somewhat generous in terms of the preparation for hearing given the application was in fact never set down for a fixture. I am not, however, prepared to allow for the costs of the memorandum in support of costs as claimed, given the lack of information provided. I am therefore satisfied that costs on a 2B basis would be $20,076.

[15]             This should then be uplifted by 50 per cent to provide a basis for reasonable actual costs, noting that scale costs are nominally calculated as being two-thirds of actual costs, so that a 50 per cent uplift nominally reflects the reasonable costs of the plaintiffs in this case.

[16]             Taking these matters together I order that the plaintiffs are entitled to costs on the application and payable by the estate in the sum of $30,114, together with disbursements of $738.73, a total of $30,852.73.

Decision

[17]             The plaintiffs are entitled to costs on the application in the sum of $30,114, together with disbursements of $738.73, a total of $30,852.73, to be paid out of the estate of Grace Smith.

Powell J