Wong v Lim-Yip

[2022] NZHC 523

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-000514

[2022] NZHC 523

UNDER

the Administration Act 1969

IN THE MATTER OF

The estate of Shue-Wah Lim

BETWEEN

SUEY YIP WONG, STEVEN YIP LIM and SELINA YIP LIM

Applicants

AND

MING LIM-YIP and HONG LIM-YIP

Respondents

Hearing:	On the papers
Counsel:	AC Sorrell and KH Morrison for Applicants VTM Bruton QC and PA Brown for Respondents
Judgment:	22 March 2022

JUDGMENT OF DOWNS J

(Costs)

This judgment was delivered by me on Tuesday, 22 March 2022 at 10 am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Meredith Connell, Auckland. VTM Bruton QC, Auckland. PA Brown, Auckland.

WONG v LIM-YIP [2022] NZHC 523 [22 March 2022]

Discontinuance at trial

[1]    Shue-Wah  Lim died 20  February 2019.  She made wills 10 July 2012 and  20 May 2015. These divided her eight adult children. Suey, Selina and Steven, whom I call the applicants, advanced the 2012 will. Hong and Ming, whom I call the respondents, advanced the 2015 will. The remaining children—Mary, Susanne and Sumy—supported the respondents.

[2]    The applicants argued Mrs Lim lacked testamentary capacity when she made the 2015 will. They also argued Ming and Susanne procured that will through undue influence. On day five of the trial—and while Suey was being cross-examined—the applicants discontinued their claim and acknowledged the 2015 will should have probate. This left only costs, which I address here.

The two wills

[3]    The 2012 will was prepared by Fui Loong Chan, Mrs Lim’s longstanding lawyer. Mrs Lim changed lawyers late 2013. She then saw Christine Ding. The 2015 will was ultimately prepared by a third independent lawyer, Stella Chan, albeit based on earlier input from Ms Ding. All three spoke Cantonese. Mrs Lim spoke little English and could not read English.

[4]    Despite the litigation, the two wills are not greatly different. Ming and Steven are the executors under the 2012 will; Ming and Hong the executors under the 2015 will. Both wills give the residue of the estate to Ming, Hong and Steven in equal shares. Both make little provision for the daughters on the assumption they had been provided for during Mrs Lim’s lifetime.1 Both forgive Ming’s indebtedness to the estate; the 2015 will goes further by forgiving Ming’s trust-related indebtedness too. The 2012 will is silent on the appointment and removal of trustees in relation to a family trust. By virtue of the family trust’s deed, these powers vested in the administrators of the estate. The 2015 will deals with this expressly; Ming and Hong have the power to appoint and remove trustees.

1      Aside from forgiveness of Selina’s indebtedness.

[5]    The one significant difference between the wills is this: the 2012 will forgives Selina’s indebtedness to Mrs Lim of $500,000; the 2015 will does not.

Principle

[6]    The case involves an intersection of costs principles. The first is that costs are at the discretion of the Court.2 The second is that the party who fails must typically meet the costs of the successful party.3 The third, which is presumably a subset of the second, is that a party who discontinues a proceeding must pay costs to the defendant “of and incidental to the proceeding up to and including the discontinuance”.4 The remaining principles are “well-established” ones which animate the first principle  “in cases of contested wills”.5 Or, as Stringer J explained early last century:6

(i)If the litigation originates in the fault of the testator—eg by the state in which he left his testamentary writings, or by his eccentric or irrational habits and mode of life—or of those interested in the residue, the costs may properly be paid out of the estate.

(ii)If there be sufficient and reasonable ground, looking to the knowledge and means of knowledge of the opposing party, to question either the execution of the will or the capacity of the testator, or to put forward a charge of undue influence or fraud, the losing party may properly be relieved from the costs of his successful opponent.

(iii)Unless the circumstances of the cases are such to bring it within one of the foregoing exceptions, the general rule that costs should follow the event ought to prevail.

[7]    Citing these remarks, the Court of Appeal has said “the reasonableness of the positions taken by the … claimants is central”, and “it can often be reasonable in the cases of wills for the parties to put their respective positions to the court for a Judge to decide”.7

[8]    The High Court decision underlying that of the Court of Appeal is illustrative. The plaintiffs alleged the will-maker lacked testamentary capacity and had been subject to undue influence. The first contention succeeded; the second failed.

2      High Court Rules 2016, r 14.1(1).

3      Rule 14.2(1)(a).

4      Rule 15.23.

5      In Re Paterson (Deceased) [1924] NZLR 441 (SC) at 442.

6      At 442.

7      Loosley v Powell [2018] NZCA 3, [2018] 2 NZLR 618 at [119].

Courtney J held approximately 80 percent of the case was devoted to testamentary capacity, and the estate should bear the same percentage of the plaintiffs’ costs on the basis of Stringer J’s principle (i): “the litigation was largely attributable to [the will- maker’s] own conduct”.8 The Judge held the defendants should personally meet the remaining 20 percent of the plaintiffs’ costs because of unreasonable behaviour: the defendants kept the “terms of the will secret until probate had been granted”.9 However, the defendants were entitled to 80 percent of their costs from the estate because, in the circumstances, it was reasonable for them to propound the will.10 They had to bear the balance of their own costs because they “contributed to the suspicion of undue influence” by keeping the terms of the will secret.11

[9]    The Court of Appeal upheld this reasoning as an available “exercise of discretion”.12

[10]   Other costs principles also comprise the intersection because of contentions indemnity or increased costs are warranted.13

Should all the respondents’ costs be met by the estate?

[11]   The respondents’ actual costs, including disbursements, total $282,444.47. They argue this amount was reasonably incurred and should be met by the estate.

[12]   The applicants do not argue otherwise, save for $18,987.05 in costs and disbursements for the respondents’ abandoned attempt for an order nisi. No one else on behalf of the estate or in connection with it opposes the respondents’ costs being met from the estate.

[13]I order accordingly in relation to the sum of $263,457.42.14

8      Farn v Loosley [2017] NZHC 1951 at [14].

9 At [15].

10 At [17].

11 At [18].

12     Loosley v Powell, above n 7, at [124].

13     High Court Rules, r 14.6.

14     Being $282,444.47 less $18,987.05.

Should the applicants personally bear all their costs?

[14]   On behalf of the respondents, Ms Bruton QC contends this should be the outcome because:

It is clear from the evidence provided prior to and during the hearing that the claim of undue influence and lack of capacity were without merit and the applicants’ position in these proceedings was for an improper purpose and constituted an abuse of process.

[15]   These contentions are not elaborated in the respondents’ costs submissions beyond a submission that lack of capacity and undue evidence were bereft of evidential foundation and bound to fail.15

[16]   The contention Mrs Lim lacked testamentary capacity ultimately rested on her prescription of Vesicare (urinary medication) seven days before she made the 2015 will.16 The drug can cause confusion. Suey said the weekend after her mother began taking it, she appeared “confused”. Her mother tried three times to call a relative but “could not get the numbers right even when the phone book was in front of her”. The 2015 will was made three or four days later.17

[17]   The applicants also relied on context. Mrs Lim was elderly. She suffered type two diabetes. Hong implied she had become forgetful. He said from about “early 2015”, he had to polish his mother’s pots “after she burnt them on multiple occasions”. By October 2015, hence within five months of making the 2015 will, there was unmistakable evidence of Mrs Lim’s cognitive impairment.

[18]   This mix was sufficient to raise the prospect of a lack of testamentary capacity. It justified the applicants’ exploration of the point, at least until the evidence had been framed. The record supports this conclusion. At a telephone conference 12 May 2020, the respondents accepted the validity of the 2015 will would need to be addressed “substantively”.18 That concession was sensible.

15     Respondents’ costs submissions, paras 2, 3, and 12–21.

16     Vesicare was prescribed 13 May 2015.

17     Suey does not say whether this occurred Saturday 12 May or Sunday 13 May 2015.

18 Minute of Whata J, 12 May 2020, at [1].

[19]   The contention of undue influence relied on the same mix with additional elements. The most significant of these was that Ming took Mrs Lim to a new lawyer, Ms Chan, to make the 2015 will, and without reference to his siblings. Ming and his wife paid the fees, not Mrs Lim, so the attendance would go unnoticed by the other children. The 2015 will was therefore a surprise. Moreover, Ming benefitted most from that will. Taking all these things together (including Mrs Lim’s possible confusion), there was sufficient to raise the prospect of undue influence, at least until the evidence had been briefed.

[20]   It follows the applicants’ costs fall within principle (ii) of Stringer J’s formulation and should be met from the estate until 7 October 2021, subject to what follows. The significance of 7 October 2021 I return to.

How much should the estate bear of the applicants’ costs until 7 October 2021?

[21]   Some cases in this area permit reasonable costs from the estate, including actual costs;19 others, scale costs only.20 The key criterion is reasonableness.

[22]   The applicants’ scale costs until 7 October 2021 are $39,913; their actual costs to then, $178,230.52. The former presents as inadequate given the nature and scope of the dispute. The latter presents as excessive, particularly as (a) the respondents spent $98,397.89 to 7 October 2021; and (b) spent much less than the applicants overall.21

[23]   Painting with a broad brush, I consider $100,000 reasonable. The estate bears this amount of the applicants’ costs, again, subject to what follows.

The respondents’ settlement offer

[24]   Trial was to begin 15 November 2021.22 On 7 October 2021, the respondents offered to settle the litigation. Their offer presupposed probate of the 2015 will, but with the concession Selina’s debt to the estate of $500,000 be forgiven. As will be

19     For example, Crawford v Phillips [2018] NZCA 351.

20     For example, Farn v Loosley, above n 8.

21     The respondents’ total costs are $282,444.47; the applicants’, $395,701.52.

22     I later adjourned the trial until 29 November 2021, but nothing turns on this.

recalled, the 2012 will forgave this debt; the 2015 will did not. Again, this was the significant difference between the two.

[25]   The applicants declined the offer. The respondents argue this was unreasonable. On behalf of the applicants, Mr Sorrell contends otherwise. He points to efforts by the applicants to resolve the litigation, particularly earlier invitations to the respondents for mediation and a judicial settlement conference. This submission does not address the argument.

[26]I make eight points.

[27]   First, no new factual evidence emerged to support the contention of testamentary   incapacity.   By   7   October   2021,   the   applicants   had   briefed Dr Ian Goodwin, a forensic psychiatrist. Dr Goodwin said the evidence “raises concerns about a lack of testamentary capacity”. This tentative statement of opinion was supported by post-will evaluations of Mrs Lim only, and nothing contemporaneous with the making of the 2015 will (beyond the points at [16] and [17]). In relation to Vesicare, Dr Goodwin said no more than the drug could cause confusion, and this “appears to have been the case” with Mrs Lim. His affidavit did not identify the basis for this statement, which absent elaboration, presented as submission.

[28]   Second, by 7 October, the respondents had an answer to the contention. The two experienced lawyers who dealt with Mrs Lim in relation to the 2015 will said she had capacity. Ms Ding said in her affidavit:

I found Mrs Lim totally coherent at all times when I acted for her. I do believe that Mrs Lim was of sound mind when I acted for her and at the time she executed her Will at Forest Harrison on 20th May 2015. I had no concerns about Mrs Lim’s legal and mental capacity despite Mrs Lim’s change of mind on matters related to whom of her children she favoured at the time. This being due to the conflict in the family between her various children and she wanted to appease them all.

[29]Ms Chan said:

Throughout my instruction by Mrs Lim, I considered she had sufficient mental capacity to give me instructions, in particular as to the signing of the Amended Will.

[30]   The lawyers’ evidence was supported by Dr Jane Casey, a consultant psychiatrist specialising in old age. Dr Casey’s affidavit (of 14 July 2021) extensively reviewed the evidence. She noted there was “no objective medical evidence of … confusion”23. Dr Casey concluded:

Mrs Lim had a large family and a complex estate. There were multiple meetings with her lawyers over a two-year period discussing various matters in relation to business and her estate. The will was discussed and drafted when Mrs Lim was well and cognitively intact during late 2013 and early 2014.

At the time of the signing of the last will, Mrs Lim was able to sustain a meeting of over 4 hours duration. The two lawyers who observed her over this period reported her to be attentive and coherent. If the meeting had been held in the morning, Mrs Lim would have been at her cognitive best. Moreover, this would have been prior to the administration of the medication that was implicated in the side effect of temporary confusion.

Mrs Lim knew the nature and extent of her estate. She was able to express her wishes clearly and consistently. Mrs Lim understood the situation and appreciated the consequences of her decision-making. She retained knowledge of matters between meetings and confirmed she remained satisfied with the final will on 2 July 2015. This suggests that even if there was undetected or subtle cognitive impairment, it did not preclude Mrs Lim from demonstrating the ability to understand and retain information with consistent rationale.

Therefore, in my Expert Opinion, on the available evidence, Mrs Lim had the requisite capacity to understand and make a consistent and sound assessment of her circumstances and the consequences of her decision-making. The original instructions were taken by an experienced lawyer who knew her well. The review and revision was undertaken in a considered fashion. There is evidence that the components of the legal test to make a will were met and there was consistency in the expressed wishes. Thus, on the grounds of probability Mrs Lim would have had testamentary capacity at the time of the revision and signing of her will dated 20 May 2015.

[31]   Third, by 7 October 2021, the evidence revealed Mrs Lim had been consistent in her intention to forgive Ming’s indebtedness, in turn tending to rebut the contentions of testamentary incapacity and undue influence.24 By way of examples only:

(a)Mrs Lim signed a document to this effect, which she gave Ming 2013 or 2014.

23     Emphasis added.

24     Mr  Sorrell  argues  Mrs  Lim’s  “testamentary  writings  [were] in  disarray”.    The submission overlooks the similarities between the 2012 and 2015 wills.

(b)Ms Ding recorded an instruction from Mrs Lim 4 November 2013 she wanted to forgive Ming’s debts. Ms Ding also recorded, at or about this time, Steven and Suey did not want Ming’s debts forgiven.

(c)Mrs Lim’s original lawyer, Fui Loong Chan, told Ms Ding in a handover email 5 November 2013 that Mrs Lim had been consistent about forgiving Ming’s indebtedness “from day one”.25

(d)Ms Chan recorded an instruction to forgive Ming’s debts 20 May 2015, that is, when Mrs Lim made the 2015 will. Ms Chan also said Mrs Lim “liked the idea” of his trust-related debt being repaid 20 May.

[32]   Fourth, the respondents’ settlement offer addressed the significant difference between the wills by providing for forgiveness of Selina’s indebtedness. In other words, the offer addressed the only point that could be reasonably considered contentious.26

[33]   Fifth, by 7 October 2021, it was apparent Ming’s potentially suspicious behaviour in relation to the 2015 will was (well) capable of innocent explanation:

(a)On or about 26 March 2015, Ms Ding considered a conflict of interest arose in making Mrs Lim’s will because of legal advice she had given to members of the family about a transaction involving a car  yard.  Ms Ding believed a new lawyer needed to make Mrs Lim’s will to avoid this conflict. So, Ming did not cause or orchestrate the change from Ms Ding to Ms Chan.

(b)Ming sought to keep the making of the 2015 will secret because he said his mother asked him to do just that. She was tired of the incessant family squabbling about her affairs and potential meddling in her testamentary intentions.

25     Fui Loong Chan gave extensive evidence on this topic at trial. However, the issue must be assessed as at 7 October 2021, and not with the benefit of testimony that emerged at trial.

26     There was evidence Mrs Lim had been consistent in wanting to forgive Selina’s debt too.

(c)It had long been known why Mrs Lim appeared to favour Ming. She and Ming’s father asked him to leave school at the age of 15 to help the family business. Ming did so. Forgiveness of his debt recognised this sacrifice.

[34]   Sixth, the contention Susanne played a material role in unduly influencing her mother was improbable. Susanne lived in Melbourne. She was there, not here, when Mrs Lim made the 2015 will.  This too was known, or reasonably ascertainable, by   7 October 2021.

[35]Seventh, Mrs Lim was a strong-minded individual. Her children knew that.

[36]   Eighth, Mrs Lim’s estate was not particularly large. It was worth approximately $2 million at this time.

[37]   In summary, by 7 October 2021, it was clear there should be no real contest about testamentary capacity. By the same time, it was clear the allegation of undue influence was marginal, and likely to fail. The respondents’ settlement offer constituted an eminently sensible compromise, especially given the size of the estate and likely cost of a High Court trial. The offer recognised the one significant difference between the two wills—Selina’s indebtedness—and by providing for its forgiveness, addressed what should have been the only contentious issue between the parties. The applicants acted (quite) unreasonably in declining it.

[38]   Another point is commensurate with this analysis. Suey and Selina are not residuary beneficiaries to their mother’s estate; of the applicants, only Steven is. Suey and Selina’s insistence on a trial (beyond 7 October) should not be indulged by the estate bearing that cost.

[39]   Two things follow. First, the applicants’ behaviour means they must meet their own costs from this point. In terms of the Court of Appeal’s observations at [7], from 7 October 2021, it was no longer reasonable for the applicants to put their position to the Court. Second, the applicants must reimburse the estate for the respondents’ costs from 7 October.

[40]The respondents contend reimbursement should be on an indemnity basis—

$184,046.58.27 Indemnity costs are typically reserved for egregious behaviour.28

[41]   The applicants’ behaviour was unreasonable but does not cross the (high) threshold for indemnity costs.

[42]I reimburse the estate $100,000.29

[43]   This amount offsets what the estate would have contributed to the applicants’ costs until 7 October 2021. It means the applicants ultimately bear their own costs. This is the just outcome given the applicants’ unreasonable behaviour in rejecting settlement and proceeding, unnecessarily and wastefully, to trial.

Other reasons to increase costs?

[44]The respondents also seek increased costs because the applicants:

(a)Filed late the evidence of Patricia James. Ms James is a specialist document examiner. She concluded some of Ms Ding’s documents exhibited after-the-fact entries.

(b)Did not provide a particularised  pleading  of  undue influence until  11 November 2021.

[45]   I decline to uplift for either. The applicants were entitled to assume Ms Ding’s documents had not been altered after-the-fact.30 The pleading point would warrant increased costs had the respondents sought a particularised pleading well before trial. They first sought one November 2021.

27     Their scale costs from 7 October 2021 are $54,133.

28     Bradbury v Westpac Banking Corporation [2009] 3 NZLR 400 (CA) at [27]–[28].

29     Failing without reasonable justification to accept a settlement offer may result in increased costs; High Court Rules, r 14.6(3)(v). It does here.

30     Even with the best of intentions.

The costs of Ms Ding, Ms Chan and Fui Loong Chan

[46]   On 11 May 2021, Associate Judge Gardiner directed the estate bear the costs of Ms Ding and Ms Chan in relation to the preparation of their affidavits. The respondents seek an enlargement of the direction to encompass the giving of their testimony in court. I decline this. Each was giving evidence as a witness of fact, not as an expert.

[47]   The applicants contend Ms Ding’s preparation costs should not be met from the estate because she did not comply with the suite of orders made by  the  Associate Judge, and because Ms Ding altered documents.

[48]   These complaints ought not disentitle Ms Ding from the costs associated with her preparation of the affidavits. Ms Ding’s alteration of documents was imprudent, but with the best of intentions. Having seen and heard Ms Ding testify, I do not doubt she was trying to help the Court by annotating some documents; in her mind, to clarify matters.

[49]   Fui Loong Chan was subpoenaed; he did not prepare an affidavit. I confine his expenses to those governed by High Court Rule 9.53 and s 41 of the Senior Courts Act 2016.

Result and orders

[50]The estate bears:

(a)The respondents’ costs and disbursements of $263,457.42.

(b)The reasonable costs of Ms Ding and Ms Chan in relation to the preparation of their affidavits.

(c)Fui Loong Chan’s expenses, confined to [49].

[51]The applicants bear their own costs.

……………………………..

Downs J