Vincent v Frew

[2015] NZHC 1544

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2014-409-000278 [2015] NZHC 1544

BETWEEN

JENNIFER CHARLOTTE VINCENT

First Applicant

AND

MARYANNE WEALLEANS Second Applicant

AND

JOHN GORDON FREW First Respondent

AND

STEVEN JAMES FREW Second Respondent

Hearing:	3 July 2015 (On the papers)
Appearances:	R W Maze for Applicants S J Hembrow for Respondents
Judgment:	3 July 2015

JUDGMENT OF DUNNINGHAM J (RE  COSTS DECISION)

[1]      This proceeding arose out of disputes relating to the administration of the estate of the late Charlotte Frew, the mother of the four parties to this proceeding.

[2]      The applicants, being Mrs Frew’s daughters, sought various orders against their two brothers John and Steven Frew as the named trustees and executors of their late mother’s estate, including to grant administration of the estate to the applicants. The orders were sought because the applicants asserted the respondents owed debts to the estate and had purported to complete their dealings with the estate without recovering those debts.

[3]      Once the various parties were properly legally advised (which also involved a change of representation for one of the parties), they were able to reach agreement

VINCENT AND ANOR v FREW AND ANOR [2015] NZHC 1544 [3 July 2015]

on a way forward.  They signed a consent memorandum by which administration of the estate was handed over to an independent solicitor, Mr McLean.  To date he has recovered the sum of $84,000 from the respondents which will enable a distribution to the applicants.

[4]      The  applicants  now  seek  costs  on  the  basis  that  they are,  in  effect,  the successful  party  because,  through  the  making  of  their  application,  they  have achieved:

(a)       the respondents stepping aside from the administration of the estate;

(b)the appointment of an independent executor and trustee who is able to properly administer the estate; and

(c)       the recovery of a large portion of the net debt the respondents owed the estate.

[5]      The respondents generally accept the factual background provided by the applicants (except to dispute the size of the debt John Frew owed the estate and any suggestion that funds were “misappropriated” from the late Charlotte Frew or her estate).  They also accept they were “slow to properly administer the estate” saying they  received  “some  poor  legal  advice”,  but  they  also  say  they  were  “always indebted to the estate and always intended to meet that debt”, saying the letter from Hardy Jones Clark dated 11 October 2013 recognised this.

[6]      In those circumstances they say the claimed success of the applicants was limited.   The applicants sought to be appointed as administrators but it was clear, given the allegations being made, that an independent administrator should be (and subsequently was) appointed.  The proceedings were also not required to obtain the refund of the debt owed, as that had been acknowledged as owing by the respondents before the litigation commenced.

[7]      For these reasons they submit that, in my discretion I should not award costs to the applicant, or if I do, they should be limited to, say, 30 per cent of the costs claimed of $5,174 plus disbursements.

Relevant background

[8]      The late Mrs Frew was a widow and she declined in health over the last few years of her life.  In 2006, she appointed her son, John Frew, as her attorney for the purposes of pt 9 of the Protection of Personal and Property Rights Act 1988 and shortly afterwards went into care in a secure dementia facility.  Sometime between

28 July 2006 and 12 September 2006, John received some of his mother’s funds. The applicants say he “misappropriated” a sum of $16,000, while he says there was a loan to him of $7,680.

[9]      On 12 September 2006 Mrs Frew executed a new deed appointing both her sons jointly as her attorney for the purpose of pt 9 of the Protection of Personal Property Rights Act 1988, as well as a will which revoked her former wills, left the residue of her estate to her four children equally and appointed her two sons as trustees of her estate.

[10]     In late 2006, the sons, acting under the enduring power of attorney, sold their mother’s residential property to themselves at the price established in a registered valuation of $165,000.   Payment was effected  by way of a loan to themselves, without interest, to be repaid to their mother on demand.  They resold the property shortly afterwards to a third party for $229,000.

[11]     Mrs Frew passed away on 9 February 2013 and, in their capacity as trustees, the  respondents  took  some  desultory  attempts  to  administer  the  estate.     On

30 December 2013 they wrote to the applicants stating that they “now conclude the estate” and distributed $2,500.43 to each of them, being the funds left in the deceased’s bank account.  In the same email they asserted that “legal costs have now reduced mum’s estate to under the $15,000 maximum for which probate is required”, when that was plainly incorrect given the outstanding debts they owed to the estate.

[12]     Unsurprisingly in the circumstances, the applicants filed these proceedings on

13 May 2014 seeking to advance the administration of the estate on the grounds that the respondents had failed or refused to apply for probate of the will, had taken no steps to recover debts they owed to the deceased’s estate and had purported to complete their dealings with the estate without recovering those debts.  By this stage, it was some 15 months since the deceased had died.

[13]     The  proceedings  were  opposed  by  the  respondents,  who  asserted  that John Frew would renounce his role in the estate administration and Steven Frew would continue as executor and trustee and would apply for probate and call in the debts owing to the estate.

[14]     The proceedings have now been resolved by consent in the manner described in [3] above.

Discussion

[15]     Part 14 of the High Court Rules governs how the discretion to award costs is to be exercised, stating, at the outset, that costs are at the discretion of the Court.1

[16]     Rule 14.2 sets out the principles that apply to the determination of costs and guide the exercise of the discretion.   These principles include that “the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds”.2   It also sets out presumptions about the calculation of costs using the appropriate daily recovery rates and time spent on each step reasonably required for the proceeding.  However, these are not in dispute in this particular case.

What is in dispute is whether it is appropriate, in the exercise of my discretion, to treat the applicants as the successful party in this case for the purpose of awarding costs.

[17]     While  the  proceedings  have  been  resolved  without  the  need  to  go  to  a hearing,  there  is  no  suggestion  by  either  party  that  this  is  the  equivalent  of  a

discontinuance.    It  is  not,  and  the  presumptions  in  r  15.23  as  to  costs  on  a

1      High Court Rules, r 14.1.

2      Rule 14.2(a).

discontinuance do not apply.   Instead, I approach the exercise of discretion taking into account the statement in Waihi Mines Ltd v Auag Resources Ltd, which suggests that regard should be had to who, in reality, has been the successful party.3

[18]     I also consider it is relevant to have regard to which party was responsible for bringing about the litigation.   If one party’s actions necessitated the need for  a plaintiff  or  applicant  to  bring  the  proceeding  to  obtain  relief,  and  relief  was ultimately obtained (whether through agreement or judicial decision), then that may be an appropriate case for the responding party to pay the plaintiff or applicant’s costs.     That  was  the  case  in  Cameron  v  Westland  District  Council  where Associate Judge  Osborne  held  that,  by  insisting  that  the  plaintiff  bring  the proceeding for relief if the plaintiff wished to resist cancellation of release, the

defendant itself brought about the litigation.4   The discontinuance of the proceeding

came about, not because of a lack of merit in the plaintiff’s case, but because the immediate object of the application, which was to protect the plaintiff’s leasehold interest, was achieved. The plaintiff in that case was awarded costs in its favour.

[19]     The present case has some analogies.  If the respondents consider the letter of

11 October 2013 constituted an admission that a debt was owed to the estate and that they would proceed to properly administer the estate, that assertion was clearly cancelled by the subsequent email sent in December 2013.   The email effectively said the estate administration had been completed, without the need to seek a grant of probate, and, by implication, the debts owed by the brothers would not be repaid to the estate and distributed.   In those circumstances, and given the time that had elapsed and the uncertainty about what the debts were in fact owed to the estate by the respondents, it was entirely understandable that the applicants brought the proceedings.

[20]     While I accept that  the  appointment of one or both of the applicants  to administer the estate (as was sought in their application) was never going to be

acceptable, equally it was clear that the respondents could not continue in their role

3      Waihi Mines Ltd v Auag Resources Ltd (1993) 13 PRNZ 372 (CA) at 373.

4      Cameron v Westland District Council HC Christchurch CIV-2009-418-26, 22 October 2009 where the defendant chose to issue a Property Law Act notice claiming sums at levels for which it had no existing contractual entitlement.

as executors and trustees.  The proceedings brought that issue to a head.  Similarly, I am satisfied that the repayment of the debt to the estate was an immediate consequence of issuing proceedings, and was necessary in light of the December email.

[21]     In summary, I consider the respondents, by failing to take appropriate steps to call in the estate debts and seek probate within 15 months of their mother’s death were responsible for the application needing to be made.   In a large part, the application was successful in achieving its intended outcome, being to have the respondents step aside from the estate administration and to repay most of the debt to the estate.

[22]     This is a case, therefore, where I consider that, in the interests of justice, costs be awarded to the applicants.   Those costs, on a 2B basis, total $5,174 plus disbursements.

[23]     In relation to the disbursements, the applicants seek the filing fee for the originating  application,  being  $1,350,  and  the  hearing  fee  paid  for  the  hearing initially allocated in December, being $640.

[24]   The respondents point out that the hearing did not proceed.   In those circumstances the hearing fee should be refunded to the applicants and is not, in my view, a disbursement that can properly be claimed under r 14.12.

[25]     Accordingly, I order that the respondents pay the applicants 2B costs in this proceeding, totalling $5,174, plus $1,350 in disbursements.

Solicitors:

Richard Maze, Barrister, Christchurch

Stephen Hembrow, Barrister, Christchurch