BALE v PATEL [2021] NZHC 3399

BALE v PATEL [2021] NZHC 3399 [10 December 2021]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2019-485-87[2021] NZHC 3399IN THE MATTER of the Trustee Act 1956 and DeclaratoryJudgments Act 1909BETWEEN MICHAEL GEORGE BALE ANDHEMGRA JEETENDRA AS EXECUTORSAND TRUSTEES OF THE LAST WILL OFNARSHAIFirst PlaintiffsMICHAEL GEORGE BALE ANDHEMGRA JEETENDRA AS TRUSTEESOF THE VALLABH NARSAI FAMILYTRUSTSecond PlaintiffsAND BHARATI PATELFirst DefendantASHA PATELSecond DefendantJEETENDRA VALLABHThird DefendantHearing: On the PapersCounsel: K P Sullivan for First and Second PlaintiffsR J Fowler QC and K H Lawrence for First and SecondDefendantsL M McKeown for Third DefendantJudgment: 10 December 2021JUDGMENT OF ISAC J[Costs]Introduction[1] This was a proceeding by the executors and trustees of the last will of Vallabh(Wally) Narsai seeking directions under s 66 of the Trustee Act 1956 or, alternatively,s 133 of the Trusts Act 2019. The trial was scheduled to proceed before me on 12 and13 April 2021 but at the commencement of the hearing I was advised by counsel forthe parties that they had reached agreement which would settle the proceeding and thata judgment by consent could be entered. I subsequently received a joint memorandumof counsel accompanying draft orders by consent. By minute dated 14 April 2021, Ithen went on to make the agreed orders.[2] I reserved the issue of costs. Failing agreement, the parties were directed toserve memoranda.[3] Asha and Bharati Patel, the first and second defendants, have reachedagreement with the plaintiff executors and trustees as to costs. Jeetendra Vallabh, thethird defendant, objects to this agreement and seeks costs orders against Asha andBharati.Background[4] Wally settled a family trust in 1994. The discretionary beneficiaries includedhis children, Asha, Bhatri and Jeetendra. Jateendra was later made final beneficiary ofthe trust. Wally passed away on 1 June 2016. His last will left the residue of the estateto the trust, the residuary beneficiary.[5] The proceeding principally concerned the status of several properties inNewtown, and whether they had been validly transferred to the trust. But the plaintiffsalso sought orders declaring:(a) that the first plaintiffs as the validly appointed administrators of theEstate were/are entitled to collect up particular assets which comprisethe estate, and distribute them in accordance with the will;(b) that the second plaintiffs were/are the current trustees of the Trust;(c) that the trust owns particular assets, including the properties inNewtown; and(d) that the second plaintiffs have authority as trustees to manage andadminister the assets of the trust in accordance with the terms of thetrust deed and their statutory duties as trustees.[6] Bharati and Asha opposed the applications. Jeetendra supported the plaintiffs'applications.Parties' proposals[7] As I have noted, Asha and Bharati have reached agreement with the plaintiffsas to costs. That agreement would see 75% of Asha's and Bharati's actual costs anddisbursements ($62,729 incl GST) paid as an interim distribution from the trust(40 per cent) and estate (60 per cent). Jeetendra opposes this agreement. His costs inthe proceeding on a solicitor-client basis total $63,049.37. He seeks an order requiringBharati and Asha (on a joint and several basis) to pay him $31,444.751 together withan order that the balance of his costs ($31,604.621) be met 60% by the estate($18,962.77) and 40% by the Trust ($12,641.85).Discussion[8] All matters relating to costs are discretionary.2 But the discretion must beexercised on a principled basis. And the determination of costs, so far as possible,should be both predictable and expeditious.3 Although the party who fails with respectto a proceeding should generally pay costs to the party who succeeds,4 that principleis not strictly applicable in this context. It is hard to see strict winners and losers here.Likewise, the general rule that a plaintiff who discontinues a proceeding against a1 Category 2B costs and disbursements of $21,036.50 and increased costs (50 per cent uplift on 2Bcosts,excluding disbursements) of $10,408.25.2 High Court Rules, r 14.1.3 Rule 14.2(1)(g).4 Rule 14.2(1)(a).defendant must pay costs to the defendant must be seen in the context of this case,which concerned a family trust, and the fact it was discontinued very late in the piecedue to late disclosure.[9] The parties have levelled criticisms at each other in terms of the merits of theoriginal proceeding, and whether it should have been brought in the first place. Indeed,Jeetendra applies for increased costs against Bharati and Asha on the basis they madeand pursued arguments that lacked merit and failed, without reasonable justification,to admit facts, evidence, documents, and accept legal arguments. And their concessioncame more than two years after the proceedings were filed, and at an extremely latestage, with the details still being negotiated at Court prior to the hearing commencingon 12 April 2021.[10] Mr Fowler QC, on behalf of Bharati and Asha, unsurprisingly rejects thiscontention. He submits there was a real question as to whether the properties and fundsin question were estate or trust property, as well as a number of related questions. It isunnecessary to traverse the various legal issues that were in issue — and whether theproceeding had merit — but Mr Fowler points to the late disclosure provided to hisclients the day before the hearing, which, as he says, changed the picture considerably.In essence, the late disclosure made clear that the initial property transfers were valid,and that Wally had treated the trust as valid to a greater extent than previousdocumentation had indicated. It was in that context that his clients took the view thatthe matter ought to be resolved by consent.[11] As I see it, the proceeding was fundamentally about the actions of Wally or atleast the operation and administration of the trust generally. While there may havebeen personal motivations for bringing and defending the proceeding, it remainedfocused on the trust. In that context — and considering the plaintiffs have taken a verypragmatic view of costs — I cannot see why a personal costs order should be madeagainst Bharati and Asha. It seems to me that the agreement reached as between Ashaand Bharati and the plaintiffs is a sensible approach to the various claims of thebeneficiaries without attributing any blame.[12] It follows that Jateendra's claim for increased costs is not warranted. Increasedcosts should only be made where there has been a failure to act reasonably.5 That is arelatively high threshold, which has not been met here. I accept Mr Fowler'ssubmission that until the late disclosure, the plaintiffs' position was not obvious orincontrovertible to the extent required to justify an award of increased costs.[13] And as Associate Judge Johnston said in Driver v Radio New Zealand Ltd:6[11] It is true that the Court retains an overarching discretion, and there isprovision for increased and decreased costs. However, it appears to me to beimportant in achieving the objective of the regime for the Court to resistmaking orders for increased or decreased costs other than in exceptionalcircumstances. Certainly, the fact that one side has been wholly successful andthe other side wholly unsuccessful is not a basis for departure from scale costs,even if, with the benefit of hindsight, it appears the Court had little difficultyin dismissing the case for the unsuccessful party.[12] Any other approach it seems to me would risk costs becomingunpredictable and another regular source of contention that would only leadto further costs being incurred.[14] The agreement reached between the plaintiffs and Asha and Bharati outlinedat [7] is a sensible resolution of the competing positions of the parties. Costs areordered in keeping with it. Jeetendra's costs are also to be borne by the estate and thetrust in the proportions he sought (60% from the estate; 40% from the trust).Isac JSolicitors:WCM Legal, Wellington for PlaintiffsGreg Kell Law Ltd, Wellington for First and Second DefendantsDuncan Cotterill, Wellington for Third Defendant5 Bradbury v Westpac Banking Corp [2009] 3 NZLR 400, (2009) 19 PRNZ 385 (CA) at [27].6 Driver v Radio New Zealand Ltd [2020] NZHC 3398.