Ware v Reid
[2019] NZHC 1706
•19 July 2019
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CIV-2016-412-000151
[2019] NZHC 1706
BETWEEN JOCELYN DALE WARE
Plaintiff
AND
JAMES ROBERT REID AND ANTHONY JAMES HARRIS
Defendant
Hearing: On the papers Appearances:
H C Matthews and R A Kay for Plaintiff D Sim and J Pierce for Defendants
A J Logan for Helen Walker
T J Shiels QC for J M Reid and G J HarrisJudgment:
19 July 2019
JUDGMENT OF DUNNINGHAM J RE: COSTS
Introduction
[1] This proceeding involved Family Protection Act claims made by two daughters against the estate of their late mother, Dorothy Maureen Walker.
[2] Jocelyn Dale Ware (Dale), who is one of four sisters, initiated these proceedings, but withdrew her claim shortly before trial. However, a further claim had been made by the youngest sister, Helen Walker (Helen), so the proceedings continued to trial. Helen’s claim was unsuccessful.
WARE v REID [2019] NZHC 1706 [19 July 2019]
[3] The named defendants, the trustees and executors of the estate, now seek costs against both Dale and Helen (the plaintiffs). Costs are also sought by the two other sisters, Jill Reid and Gaye Harris (the beneficiaries).
[4]The determination of costs is more complex in this case than usual because of:
(a)the transition of the role of plaintiff from Dale to Helen; and
(b)the nature of the claims, and the way they were pursued, which have given rise to arguments that increased or indemnity costs should be awarded to the defendants and the beneficiaries.
[5] All parties filed detailed memoranda on costs, and their respective claims for costs are set out in summary as follows.
Claim by defendants
[6] The defendants, Mr Reid and Mr Harris, as executors and trustees of the estate, claim, as alternatives, the following costs from the plaintiffs:
(a)indemnity costs; or
(b)costs on a 2B basis, with costs for affidavits on a 2A basis and costs for documents on a 2C basis, plus disbursements.
Alternative 1: indemnity costs
[7] The actual costs incurred by the defendants are stated to be $60,547.50 (including GST). They claim these costs against the plaintiffs jointly and severally.
[8] The defendants submit that their costs should be covered in full in order to restore the share in the residue that the beneficiaries would have received had the proceedings not been brought. Any costs not paid by the plaintiffs will be taken from the residue of the estate. The defendants contend this should be considered when assessing the overall impact of costs orders.
[9] The defendants also state that they have incurred very significant costs due to the nature of the arguments raised by the plaintiffs. These costs relate largely to discovery and matters of valuation, as it was necessary to undertake wide-ranging historical research into dealings with family assets. The defendants submit that the responsibility and costs for discovery and collation of these documents fell largely to them. Even an award of the actual costs incurred would not completely restore the estate’s position, as the delay in distribution meant further administration costs were incurred by the estate.
Alternative 2: combination of 2A, 2B and 2C
[10] In the alternative, if the Court is only minded to grant scale costs, the defendants ask for costs for affidavits on a 2A basis because they accept that the time allowed for affidavits under 2B may be more than what was actually required by them in undertaking that step. They seek costs for documents on a 2C basis, because they believe the amount of time spent on documents was “significantly” greater than that contemplated under 2B. All other costs are requested on a 2B basis.
[11] The defendants also claim disbursements of $4,771.57. The justification for this figure is set out in a table in sch A of the defendants’ submissions on costs, and includes the sum of $2,783 for the valuation of the property at 16 Scaife Place, Wanaka.
Claim by beneficiaries
[12]Jill and Gaye claim, as alternatives:
(a)indemnity costs; or
(b)increased costs; or
(c)costs on a 2C basis.
[13] If indemnity costs are not granted, then in addition to increased costs or costs on a 2C basis, they claim disbursements including costs for expert witnesses (accountants and valuers). The usual disbursements total $3,437.83 and the expert witnesses’ costs total $33,580.
Alternative 1: indemnity costs
[14]The beneficiaries state that the actual costs incurred by them amount to
$292,362.47. This includes disbursements and expert witness fees. They claim full indemnity costs jointly and severally against the plaintiffs up to 15 February 2019, and from Helen alone after that time.
[15] The claim for indemnity costs against Dale is made on the basis that Dale’s actions in commencing and continuing the proceedings were vexatious, frivolous, improper, and unnecessary.1 Mr Shiels QC, counsel for the beneficiaries, submits that Dale’s claim was entirely speculative. She relied on an alleged failure to achieve equality with no authority to support the proposition that inequality is a proper basis for such a claim. Mr Shiels submits that Dale relied on incorrect assertions and hearsay statements in making her claim, such as the assertion that the parties could agree to a market value in relation to the Hazeldale property she acquired from her parents, while having no valuation expertise, and by referencing the opinion evidence of Doug Harvie.
[16] Mr Shiels also submits that the way in which Dale handled the valuation evidence regarding Hazeldale was vexatious, frivolous, improper and unnecessary. The valuation of Hazeldale was essential to her claim. The property valuation undertaken by Ian Harvey was supplied to her on 7 November 2017, at which point Mr Shiels suggests she should have abandoned her claim. Instead, Dale took another 13 months to obtain her own valuation, and instructed that valuation to be done on the basis of a different date to that of Mr Harvey. Mr Shiels contends that if Dale had been more efficient in obtaining relevant valuation advice, and more realistic about the appropriate valuation date, her claim would either not have been made, or could have been resolved much earlier.
1 High Court Rules 2016, r 14.6(4)(a).
[17] The beneficiaries seek full indemnity costs against Dale up to 15 February 2019 on the basis that this is the date the Court was advised she no longer wished to pursue her claim. They accept that it might be open to the Court to award indemnity costs in relation to some parts of the proceedings but not others,2 but advance full indemnity costs as their primary argument.
[18] In regard to Helen, the beneficiaries also seek indemnity costs on the basis that her actions in commencing and continuing the proceedings were frivolous, vexatious, improper and unnecessary. This submission primarily relates to Helen’s reliance on unreasonableness as the basis of her claim, which Mr Shiels submits was not tenable based on Court of Appeal authority. Mr Shiels also notes that Helen, in her reply affidavit sworn 29 June 2018, stated: “Bob, Jill, and Gaye appeared to have been using Mum’s money as their own”. He submits this was effectively an allegation of fraud, which was very hurtful to the beneficiaries but insignificant to the case. They seek full indemnity costs against Helen.
[19] Additionally, Mr Shiels submits that a proposal was made to Helen to settle the proceedings without costs on 21 February 2019, shortly before the hearing. Helen failed to accept that offer. Mr Shiels therefore submits that if the Court did not wish to impose full indemnity costs against Helen, then indemnity costs after 22 February 2019 would be appropriate at the least.
Alternative 2: increased costs
[20] If the Court is not prepared to grant indemnity costs, the beneficiaries alternatively seek increased costs against the plaintiffs based on their proposed scale costs (detailed below under Alternative 3). They do not specify the quantum of such an increase.
[21] Increased costs are available under r 14.6(3) High Court Rules 2016. The beneficiaries submit that the nature of the proceedings required their counsel to spend substantially longer on discovery and the preparation of affidavits than the time
2 Foodstuffs (Auckland) Ltd v Progressive Enterprises Ltd HC Auckland M680-SW02, 13 November 2002; Alison v Dahiya Enterprises Ltd HC Napier CIV-2007-441-526, 23 April 2008.
allocated under band C. They ask that, should the Court decide to make such an order, directions be given for full details of the actual time involved in those steps to be provided to the Court.
Alternative 3: costs on a 2C basis
[22] If the Court is not prepared to grant increased costs, the beneficiaries alternatively seek scale costs on a 2C basis. It is submitted for them that a comparatively large amount of time was necessary for some steps, and that band C should therefore apply to those steps. They do not claim costs against Dale after the date of her formal advice to the Court that she did not seek further provision.
[23]Under this alternative, the beneficiaries claim:
(a)$41,471 against the plaintiffs jointly and severally; and
(b)$2,230 additional costs from Dale; and
(c)$4,460 additional costs from Helen.
Disbursements
[24] If the Court grants increased costs or scale costs, the beneficiaries additionally seek disbursements. In respect of disbursements other than expert witness fees they claim:
(a)$3,071.23 against the plaintiffs jointly and severally; and
(b)$366.60 from Helen.
Expert witness costs
[25] If the Court grants increased costs or scale costs, the beneficiaries also seek reimbursement of their expert witness costs for their expert valuer, Ian Harvey and their expert accountant, Henry Van Dyk. They claim $33,580 against the plaintiffs jointly and severally for those experts’ fees.
Submissions for Dale
In response to the beneficiaries’ claim
[26] Dale does not accept that she and Helen should have joint and several liability for costs to the beneficiaries. She relies on the dissenting judgment of (then) Winkelmann J in Narayan v Arranmore Developments Ltd, where her Honour suggested that it would be preferable to divide the costs between liable parties, with each being made liable for their fixed share.3 The commentary in McGechan on Procedure also suggests that this is the correct approach.4 Dale submits that it would be unreasonable to allow the beneficiaries to choose which of she and Helen they recover costs from, and then leave that sister to seek a contribution from the other.
[27] In addition, Dale submits that she should not be liable for costs up to 15 February 2019. She contends that her solicitor wrote to all other counsel on 1 February advising, unequivocally, that she was going to discontinue her claim. Counsel for the beneficiaries responded on 11 February acknowledging receipt of that letter. Dale therefore submits that her liability should cease as of 1 February 2019.
[28] In response to the beneficiaries’ claim for indemnity costs, Dale strongly refutes that her behaviour met the requirements in r 14.6(4). She argues that her claim was not “entirely speculative”, as there was no real dispute that the deceased and her husband intended to treat their four daughters equally, as best they could. Even if that claim for equality had been unsuccessful, Dale argues that there would still have been a basis for an award for recognition of familial connection and belonging.5 Such an award does not require financial need by the complainant.6 Dale therefore submits that it was reasonable for her to bring such a claim.
[29] Dale also refutes that her actions in continuing the proceedings after receiving the expert valuation were vexatious and unnecessary. She argues that it is untenable to expect that a party to litigation should discontinue proceedings on receipt of expert
3 Narayan v Arranmore Developments Ltd [2011] NZCA 681 at [75]-[79].
4 McGechan on Procedure (online ed, Thomson Reuters) at [HR14.14.01(2)].
5 Cannell v Hendry [2015] NZFC 1976 at [37].
6 Cartwright v Joseph [2018] NZHC 2383; Ehau v Wilson [2014] NZFC 6250; and Williams v Aucutt [2000] 2 NZLR 479, [2000] NZFLR 532 (CA).
evidence from the other side. Expert evidence is to be tested in court under cross-examination. In support of this, Dale notes that after the conferral between the parties’ experts, the beneficiaries’ expert decreased his original valuation by $250,000 to meet her own expert in the middle of their two valuations.
[30] Dale submits that she should also not be liable for increased costs. She argues the proceeding was not of unusual complexity and did not involve an out-of-the-ordinary amount of documentation in respect of discovery or the preparation of affidavits. However, should the Court find some increased costs appropriate, she disputes the fees noted by the beneficiaries for Mr Shiels as being unreasonably high because of the overuse of senior counsel.
[31] In regard to scale costs, Dale submits that the appropriate cost category for each step is 2B. She disagrees with the beneficiaries’ claim that she did not attempt to provide a full analysis of her claim of inequality in affidavits, and refers to her affidavit dated 9 December 2016 to support this. Dale submits that the appropriate costs payable by her on a 2B basis is $12,488, calculated as follows:
(a)50 per cent of the costs amount of $20,516 against her and Helen, being
$10,258; plus
(b)$2,230 for the statement of defence.
[32] Dale asks that disbursements be shared severally between her and Helen. This would require her to pay half the costs that applied to both of them, and all of the costs pertaining to her alone. This amounts to $1,902.11.
[33] The same argument of severalty is made in favour of expert costs. Dale argues that Mr van Dyk’s evidence was not relevant to her claim, and she should therefore not be liable for his costs. She accepts liability for half of the expert fees of Mr Harvey, being a sum of $4,312.50.
In response to the defendants’ claims
[34] Dale asks for severalty to be applied between her and Helen in respect of the defendants’ claim as well.
[35] In relation to indemnity costs, Dale disputes that these are warranted for the same reasons given in relation to the beneficiaries’ claim.
[36] The defendants seek 2C costs for dealing with documents. Dale submits that the discovery documentation in this proceeding was not extensive by High Court standards. She contends that 2B is the appropriate basis, and disputes the award of costs for:
(a)preparing for and attending the hearing, as well as attendance at the teleconference on 15 February 2019, given defendants’ counsel were made aware on 1 February that Dale no longer pursued her claim; and
(b)the two repeats of item 30 in sch A of the defendants’ costs memorandum.
[37] On this basis, Dale submits her maximum liability for costs to the defendants is $14,140.
Submissions for Helen
[38] Helen disputes that she should be required to pay any costs. If costs are to be awarded against her, she submits they should be apportioned at 75 per cent against Dale and 25 per cent against her to reflect where the efforts of the claimants were directed. From 1 February 2019 onwards she accepts she should pay any costs awarded in full.
In response to the beneficiaries’ claim
[39] Helen submits that costs should lie where they fall between herself and the beneficiaries. She lists a number of reasons for this claim, including that all three opposed Dale’s claim, that she was invited by the trustees to show how equality
had not been achieved, that her arguments were reasonable and efficiently conducted, and that a costs order would exacerbate rather than heal the family rift.
[40] In response to the beneficiaries’ claim for indemnity costs, Helen submits that this case does not meet the necessary standard. She contends that her claim was arguable and evidentially supported. Helen further submits that the statement made by her and referred to in the beneficiaries’ submissions as an allegation of fraud, does not provide a basis for indemnity costs. That statement was based on bank statements, and involved no allegation of impropriety. Any suggestion of impropriety, she states, was then expressly disclaimed during the hearing. Furthermore, the beneficiaries made no response to that statement until now, and incurred no costs in relation to it.
[41] The beneficiaries also argue that indemnity costs would be appropriate because Helen failed to accept a settlement offer. Helen disputes this. She submits that the letter was received six working days prior to the trial, and contained no offer to compromise her claim, but simply proposed that she walk away. It could therefore not provide a basis for indemnity or increased costs.
[42] In regard to the beneficiaries’ claim for increased costs, Helen submits there was nothing out of the ordinary in relation to discovery or the preparation of affidavits. She contends that neither process was unusually lengthy or complex, and therefore no uplift to scale costs is required.
[43] If scale costs were to be awarded, Helen submits these should be on a 2B basis, with some exceptions:
(a)Discovery: Helen acknowledges there was substantial documentation involved in the proceeding, and accepts that reimbursement on a 2C basis may be appropriate for discovery. However, she submits any award should be payable 75 per cent by Dale and 25 per cent by herself.
(b)Statement of defence: This is dated 10 March 2017, and relates solely to Dale’s claim. Helen submits her claim was filed and served on 30 March 2017. She therefore contests that she should pay any costs for the earlier statement of defence.
(c)Unsuccessful opposition to application for admissibility ruling on Dale’s January 2019 affidavit: Given this was unsuccessful, Helen submits costs should lie where they fall.
[44] Finally, Helen disputes the full inclusion of Mr van Dyk’s expert fees as part of her reimbursements. She submits his affidavit was in response to both her and Dale’s claims, and her contribution should therefore be no more than 50 per cent. In regard to the expert fees of Mr Harvey, Helen contends that she did not engage Mr Harvey to respond to Dale’s claim, and that it was only Dale’s claim that his evidence responded to. She submits that she should not be subject to any order in respect of Mr Harvey’s fees.
In response to the defendants’ claim
[45] Helen submits it would be unjust to require her to contribute to the costs of the defendants, given they invited Helen to explain how she had been disadvantaged. In these unusual circumstances she contends that costs should lie where they fall.
[46] Helen acknowledges that the defendants seek indemnity costs, but submits that they make no attempt in their memorandum to address the principles of indemnity costs or make out the case for such an award. Given this onus is on the person claiming indemnity costs, Helen states she has no need to respond to this claim.
[47] If scale costs are to be awarded, Helen submits that 2B costs should be the ceiling. She disputes the appropriateness of the defendants’ scale costs submissions in relation to some steps:
(a)Statement of defence: Helen submits that no statement of defence was filed or served in response to her claim. It should be noted that the defendants filed a second costs memorandum in response to this, stating that a statement of defence was filed on 19 April 2017, but may not have been formally served on Helen.
(b)Affidavits: The defendants have claimed for three affidavits on a 2B basis. Helen contends the scale provides for all affidavits to be recognised in a single award of 2.5 days, not 2.5 days for each affidavit. Additionally, she submits costs for affidavits should be on a 2A basis if awarded at all, because the administration required for them was relatively low.
(c)Preparation for hearing: Helen submits the three days claimed for this step is inappropriate given the defendants did not prepare written submissions, did not present oral submissions, and did not participate in the hearing. She disputes that any costs should be available for this step.
(d)Appearance at hearing: This role was discharged by a junior lawyer. Helen accepts any award for this is her sole responsibility, but submits it should be on a 2A basis or not at all.
[48] No issue is taken with the defendants’ disbursements. Helen submits, however, that as with costs they should be divided 75 per cent against Dale and 25 per cent against her.
Principles applying to the determination of costs
[49] The Court has an overriding discretion when determining how costs are to be awarded in a proceeding. However, that discretion is to be exercised on a principled basis, which includes that:7
7 Rule 14.2(1).
(a)the party who fails should pay costs to the party who succeeds;
(b)the award should reflect the complexity and significance of the proceeding;
(c)costs should be assessed having regard to a reasonable time spent on each step reasonably required in relation to the proceeding;
(d)what is reasonable does not depend on the skill or experience of the solicitor or counsel involved, nor on their time actually spent, or the costs actually incurred by the party claiming costs; and
(e)as far as possible, the determination of costs should be predictable and expeditious.
[50] Notwithstanding those principles, there is provision to award increased or indemnity costs in the circumstances described in r 14.6(3) and (4).
Costs in Family Protection Claims
[51] As counsel for Helen pointed out, the conventional practice in Family Protection Act cases was that the costs of all parties were borne by the estate.8 However, this is no longer invariable practice and reasons from departing it can include where such a costs order would unfairly affect the residuary beneficiaries of the estate.9 There is also the principle that courts should be “alert to the dangers of encouraging litigation, and discouraging settlement of doubtful claims at an early stage, if costs are allowed out of the estate to the unsuccessful party”.10
[52] In this case, I am satisfied it is appropriate to adopt the orthodox approach to costs in civil proceedings, with the unsuccessful parties paying costs to the successful parties. This is particularly so in this case where the successful residuary beneficiaries
8 Bones v Wright [2013] NZHC 2093; Wightman v Public Trust [2015] NZHC 1091; and
Wood-Luxford v Wood [2012] NZCA 377, [2013] 1 NZLR 31.
9 Bones v Wright, above n 8.
10 Shovelar v Lane [2011] EWCA Civ 802 at [34], citing from Kostic v Chaplain [2007] EWHC 2909 (Ch) at [21].
would be unduly disadvantaged if both the defendants’ costs, and the two unsuccessful plaintiffs’ costs, were met from the residue of the estate.
[53] However, I also bear in mind the family context of these proceedings, and the reluctance of the Court to exacerbate family rifts by personal costs orders.11 The call by the successful parties for increased or indemnity costs should, in my view, be tempered by this consideration.
Should the award of costs be made jointly or severally?
[54] An issue which needs to be considered before I address the individual costs claims is whether the award of costs should be made jointly or severally.
[55]High Court r 14.14 provides that:
14.14 Joint and several liability for costs
The liability of each of 2 or more parties ordered to pay costs is joint and several, unless the court otherwise directs.
[56] Thus, joint and several liability is the default position but that can give way in appropriate cases. In my view, the appropriate outcome in this case is to make discrete awards of costs against each plaintiff, rather than to make the award on a joint and several basis. My reasons for doing so in this case are:
(a)although combined in the same proceedings, the plaintiffs advanced discrete claims, which could have been heard separately at greater cost;
(b)the separate nature of the claims is emphasised by the fact they were commenced on separate dates and concluded on separate dates;
(c)there is no suggestion that either of the plaintiffs will be unable to meet the award of costs made against her; and
11 Keelan v Peach [2003] NZFLR 727 (CA) at [7].
(d)given the context of these claims, where the parties are all family members, I accept it would be inappropriate to leave open the possibility that the beneficiaries choose which sister they recover costs from, leaving that sister to seek a contribution for the other.
[57] For these reasons, the cost orders I make will specify that each plaintiff is liable for a fixed share.
When should Dale’s liability for costs end?
[58] Another issue in dispute is when Dale’s liability for costs should end, with Dale saying that they should end when her solicitor wrote to other counsel on 1 February 2019 and not when the Court was advised that she was withdrawing her claim on 15 February 2019.
[59] I accept that Dale advised the other parties she was not continuing with her claim on 1 February 2019. No further steps needed to be taken on her claim from that point forward. Her liability for costs will therefore end on that date.
The defendants’ costs claim
Should indemnity costs be awarded against Dale and Helen? If not, should increased costs be awarded and if so, at what level?
[60] The defendants, as executors and trustees of the estate are, of course, entitled to have the costs they have incurred in participating in these proceedings met from the estate funds. However, as the defendants point out, that would unfairly erode the share of the three sisters who are entitled to share in the residue of the estate (Dale being the only one who receives a fixed sum and no share in the residue).
[61] I accept that this is a material consideration in estate litigation, particularly as in this case, the successful parties are beneficiaries of the residuary estate which would otherwise have to meet the defendants’ costs.
[62] I am however not prepared to award indemnity costs. Indemnity costs are only awarded in the limited range of cases set out at r 14.6(4). They generally require unreasonable or improper conduct by the party from whom costs are claimed.
[63] In my view, Dale’s claim cannot be seen as within the category that usually attracts indemnity costs. The fact she was awarded only $30,000 from an estate of approximately $2,000,000 at least warranted some enquiry as to whether this testator had discharged her moral duty to Dale. Sensibly, albeit after a considerable passage of time, Dale acknowledged that in light of the valuation evidence as to the benefits she had received during her lifetime, compared with the benefits her sisters had received, her claim was unlikely to succeed.
[64] I have less sympathy for Helen’s claim. As I explained in my judgment, I did not consider a distribution of approximately $400,000 from an estate worth approximately $2,000,000 could have, on its face, been said to have breached the testator’s moral duty to that daughter. This was reinforced by the fact that Helen had received considerable benefits from her parents during their lifetime, although not as much as the other sisters had received. However, at least to the point where Dale had withdrawn her claim, and Helen had received a letter inviting her to withdraw her claim with no issue as to costs, I do not think that the existence of Helen’s claim contributed unnecessarily to the expense of the proceeding’s costs to the point where she should be liable for an increased order of costs. Accordingly, I consider Dale and Helen should each be liable to the defendants for 50 per cent of the costs on a 2B basis for each step in the proceedings, up until 1 February 2019.
[65] In ordering 2B costs I note that the defendants sought three allocations of costs for affidavits on a 2A basis. However, I consider that the time allocation in sch 3 for the preparation of briefs or affidavits refers to briefs and affidavits collectively. Accordingly, the defendants cannot make three claims for this step for the three affidavits, but rather one claim on a 2B basis.
[66] While the defendants have sought 2C costs for the list of documents and I accept that the costs for the listing of documents (item 20 in sch 3) was much more extensive than normal, I am not prepared to make an award of costs on a 2C basis
(which would amount to $15,610). In refraining from uplifting these costs to 2C costs I note that, calculated largely on a 2B basis, the defendants’ costs are reasonably close to the actual costs. I also bear in mind that the plaintiffs are also having to meet the beneficiaries’ costs claims.
[67] I also award the defendants the disbursements claimed of $4,771.57. Again, the plaintiffs will each be liable to pay 50 per cent of that sum.
[68] In terms of steps taken after 1 February 2019, I accept that these are the responsibility of Helen alone. Although arguably Helen’s claim was sufficiently unmeritorious to warrant an increased award of costs, I cannot say that this translated into additional costs for the defendants who were not heavily involved in the hearing. Indeed, I accept her submissions that, as the defendants were not required to prepare for the hearing or actively participate in the hearing there should be no claim for preparation. However, despite the submission it should be awarded on a 2A basis, I consider their appearance at the hearing should attract costs on a 2B basis.
The beneficiaries’ costs claim
Should indemnity costs be awarded to the beneficiaries? If not, should increased costs be awarded and if so, at what level?
[69] For the same reasons as I have ruled out an award of indemnity costs to the defendants, I do not consider that indemnity costs should be awarded to the beneficiaries. While I consider Dale’s claim was sensibly withdrawn prior to hearing and Helen’s claim lacked obvious merit, in neither case were the claims so vexatious or unreasonable that a punitive award of indemnity costs is required.
[70] In my view, the appropriate costs category for the costs claim by the beneficiaries for all steps up to the withdrawal of Dale’s claim should be 2B. While I have acknowledged that Helen’s claim was less meritorious than Dale’s claim based on their respective entitlements under the will ($30,000 compared with approximately
$400,000), this is not a claim where I am minded to award increased costs, at least not until the point where Helen had to decide whether to proceed with the claim on her own.
[71] Following the withdrawal of Dale’s claim at the beginning of February 2019, counsel for the beneficiaries wrote to Helen on 21 February 2019 on a “without prejudice save as to costs” basis. The letter fully and carefully explained why a claim promoted on the basis of achieving “equality” rather than any traditional understanding of “adequate provision for proper maintenance and support” was unlikely to succeed. As Mr Shiels explained, the idea that the parents were obliged to achieve effective equality in benefits after taking into account CPI adjustments, was not supported at all by caselaw. The proposal in that letter was that Helen seek a discontinuance immediately and in return, the beneficiaries would not seek costs against her and would also direct the trustees and estate’s solicitors that they did not wish the estate to seek costs against Helen. While, I accept this does not offer Helen a cash settlement of her claim, I consider it does fall within r 14.6(3)(b)(v) of failing, without reasonable justification, to accept an offer of settlement under r 14.10 or some other offer to settle or dispose of the proceeding.
[72] Rule 14.10 refers to written offers made to another party that are “expressly stated to be without prejudice except as to costs; and relates to an issue in the proceeding”. However, of course, the effect (if any) that the making of an offer under r 14.10 has on the question of costs remains at the discretion of the Court.12 Although in this case no sum of money was offered, it was an offer “that would have been more beneficial to [Helen] than the judgment obtained”.13 In this case, continuing to hearing and being required to pay costs as an unsuccessful party is a less beneficial outcome than that proposed in the offer.
[73] In my view, this offer should be taken into account even though it did not include a payment to Helen and was made close to hearing, which are factors that, in my view, lessen the weight I should put on the offer. Nevertheless, the offer:
(a)came shortly after Dale had discontinued her involvement in the proceedings so was at a time when Helen should have reflected on the merits of continuing her claim, given the costs involved; and
12 Rule 14.11(1).
13 Rule 14.11(3)(b).
(b)clearly and accurately explained why her claim was unmeritorious.
[74] These factors should have lead Helen to reflect on the merits of her claim at this point. However, she chose to continue. I think this should be reflected in the costs that are awarded from this point forward. However, I am conscious that 2C costs may be too high, and also that some of the preparation for hearing would have already been undertaken by this point in any event.
[75] Accordingly, I order Helen to pay the beneficiaries 2B costs, but with a 50 per cent uplift, on the steps taken in preparing for and attending the hearing.
What disbursements should be awarded and how should those disbursements be allocated between Dale and Helen?
[76] I am satisfied that the disbursements claimed by the beneficiaries should also be met by the plaintiffs. However, there is a dispute as to whether both plaintiffs should be equally responsible for all disbursements, including expert witness fees.
[77] Disbursements, excluding expert witness fees, are awarded on the basis that the plaintiffs are equally liable for them up until 1 February 2019, after which those disbursements are payable by Helen alone.
[78] In respect of expert witness fees, Helen disputes that she should contribute to Mr Harvey’s valuation fees, saying his valuation and associated work was to defend Dale’s claim and that his valuation, while assisting in disposing of Dale’s claim also benefited Jill and Gaye as it was used in Mr Cameron’s evidence to show that Dale had indeed received “the lion’s share” of the parents’ wealth. However, I consider it would be artificial to extract Mr Harvey’s valuation work and say it was relevant only to Dale’s claim when it was relied on by the accountants to show the respective benefits each sister had received in their parents’ lifetime and so to respond to Helen’s claim that she had been unfairly disadvantaged as compared with her sisters. She is liable to pay 50 per cent of this fee as well as of the other expert witness fees of the beneficiaries.
[79] While Helen also disclaims liability to reimburse the defendants for the filing of a statement of defence, that is contested by the defendants who note that a statement of defence to her claim was filed on 19 April 2017. Fifty per cent of the costs and disbursements related to that are payable by Helen.
Summary
[80] In summary, I have made a range of general orders and have not sought to quantify or calculate the dollar value of the defendants’ and beneficiaries’ entitlement to costs. I expect the parties to work that out applying the determinations set out in this costs decision. These are:
(a)The plaintiffs are each liable for 50 per cent of the defendants’ costs up until 1 February 2019 on a 2B basis. The costs payable are those in sch A of the defendants’ memorandum on costs, with the exception that the defendants may only make one claim for preparation of briefs or affidavits.
(b)The plaintiffs are each liable for 50 per cent of the defendants’ disbursements up until 1 February 2019.
(c)Helen is liable for all the defendants’ costs and disbursements after 1 February 2019 on a 2B basis, but the defendants cannot claim for preparation for hearing.
(d)The plaintiffs are each liable for 50 per cent of the beneficiaries’ costs up until 1 February 2019 on a 2B basis.
(e)The plaintiffs are each liable for 50 per cent of the beneficiaries’ disbursements up until 1 February 2019.
(f)The plaintiffs are each liable for 50 per cent of the beneficiaries’ expert witness fees.
(g)Helen is liable for all the beneficiaries’ costs and disbursements after 1 February 2019. This is to be calculated on a 2B basis, with a 50 per cent uplift on the steps taken in preparing for and attending the hearing.
[81] I reserve leave to the parties should there be any omission or ambiguity in this judgment over the plaintiffs’ liability for costs to revert to the Court for clarification so that final figures can be calculated and paid.
Solicitors:
White Fox & Jones, Christchurch Gallaway Cook Allan, Dunedin
Ross Dowling Marquet Griffin, Dunedin Wanaka Law, Wanaka
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