AB v RT AND ST [2016] NZHC 1399

AB v RT AND ST [2016] NZHC 1399 [24 June 2016]IN THE HIGH COURT OF NEW ZEALANDNELSON REGISTRYCIV 2013-442-306[2016] NZHC 1399UNDER the Family Protection Act 1955UNDER the Administration Act 1969BETWEEN ABPlaintiffAND RT AND STDefendantsHearing: On PapersCounsel: I Hunt and C Light for PlaintiffD E Holloway for DefendantsG Downing for BeneficiariesJudgment: 24 June 2016COSTS JUDGMENT OF BROWN J[1] In my judgment of 11 December 20151 I held that the plaintiff's mother hadbreached her moral duty owed to the plaintiff in making a bequest in the amount of $25,000 from an estate of approximately $2.4 million.[2] On the plaintiff's claim for $1.25 million under the Family Protection Act 1955 (the Act), I made an award of $335,000 which, together with the $25,000 bequest, represented 15 per cent of the estate. In accordance with the fundamental principle that costs follow the event2 I stated that prima facie the plaintiff was entitled to costs. However consequent upon Mr Downing's request that the partiesmake submissions on costs, I set a timetable for the filing of submissions.1 AB v RT and ST [2015] NZHC 3174.2 Manakau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305.[3] All parties filed submissions in compliance with that timetable.[4] The parties' position on costs is summarised in the plaintiff's submissions:7. The plaintiff's position is that costs should be awarded on asolicitor/client basis, i.e. indemnity costs. The position of thedefendant beneficiaries is that the "best case scenario" for theplaintiff is an award of costs on a 2B basis, or that costs should liewhere they fall. The executors' position is that indemnity costs arenot appropriate in this case.[5] In support of her request for indemnity costs, the plaintiff advances a number of factors including:(a) the longstanding practice in the Family Protection Act jurisdiction to award costs out of the estate on a solicitor/client basis;(b) while there are exceptions to that principle, they do not apply in this case as the estate is a large one and a costs award would not absorb the entire value of the estate;(c) the costs award would not have a substantial effect on the major beneficiaries;(d) there are no disqualifying features that make payment of a costs award out of the estate inappropriate. The bequest of one per cent of thesubstantial estate was a manifest breach of the plaintiff's mother'smoral duty to her;(e) the defendant executors who were major beneficiaries of the estate breached a duty of even-handedness by first distributing the estate and then informing the plaintiff of this, thereby frustrating the plaintiff'sclaim under the Act;(f) despite the breach of moral duty the defendant beneficiaries defended the proceeding on the basis that the plaintiff was guilty of disentitling conduct.[6] The plaintiff's actual costs and disbursements total $136,433.70 whereasscale costs on a schedule 2B basis would be $35,838, which would leave asignificant shortfall and substantially erode the amount of the Court's award.[7] The plaintiff placed particular reliance upon observations of Whata J inWightman v Public Trust in support of her claim for costs on an indemnity basis.3[8] The submission for the trustees and executors was that costs should be determined in accordance with the High Court Rule and attention was drawn to the observations of Associate Judge Matthews at the first case management conference. If that approach was adopted, it was further submitted that the Court should depart from the normal principle of costs following the event and refuse to award costs against the executors by applying r 14.7 which permits the Court to refuse or reduce costs in certain circumstances.[9] So far as Wightman is concerned, the point was made that that case did not involve a claim in respect of executors and that in any event the Court declined to award the indemnity costs sought.[10] The submissions for the beneficiaries similarly noted the classification of costs as category two at the first case management conference. Reference was also made to the commentary in McGechan on Procedure at 14.6 to the effect that the traditional practice in Family Protection claims was to award costs to all parties out of the estate but that more recent cases suggest that costs in Family Protection cases should not be excluded from the High Court Rules costs principles, noting in particular the decision in Barker v Barker.4[11] It was contended that the beneficiaries would be unfairly impacted if theplaintiff's actual costs were awarded out of the residue of the estate in addition to the further award she has received. It was observed that all parties have incurred costs and that costs should lie where they fall. It was also emphasised that the plaintiff3 Wightman v Public Trust [2015] NZHC 1091.4 Barker v Barker HC Auckland CIV-2006-404-000181.was only partially successful in her claim, with the award made representing only 26 per cent of the amount claimed.[12] The beneficiaries' submission concluded in this way:11. If any Costs Award is to be made in favour of the Plaintiff, such an award should be made on a scale 2B basis. One of the costs principles set out at High Court Rule 14.2 is that as far as possible the determination of costs should be predictable and expeditious. Civil litigation conducted in the High Court in the modern age is done in the expectation that scale costs usually follow the event. Although historically Family Protection claims have been the subject of different costs principles, since the High Court scale was introduced that is no longer be the case.12. In conclusion, while costs are always at the discretion of the Court, there are costs principles to follow and case law to inform the decision. This case in my submission is one where costs should lie where they fall. Alternatively, costs should be awarded on a scale 2B basis.[13] I agree with the tenor of Mr Downing's submissions for the beneficiaries that costs in Family Protection claims should generally be determined in accordance with the costs principles in the High Court Rules. In that regard I note that, notwithstanding the passages in Wightman on which the plaintiff relies, Whata J made a costs award in accordance with the High Court Rules, namely on a schedule 3C basis for all parts of the proceeding. In doing so he was mindful of the fact that Panckhurst J had made an award of costs on a schedule 2B basis in relation to a preliminary hearing. But with the benefit of having heard the full case, Whata J considered it would be plainly unjust to limit the costs to the plaintiffs to a 2B award.[14] In my view a similar approach should be adopted in this case. I have considered the submissions made on the various aspects of the costs argument, including settlement negotiations and the manner in which the parties' cases were run, including in particular the focus of the defendant beneficiaries on alleged disentitling conduct on the part of the plaintiff and the effect which that had on the nature and extent of the evidence adduced.[15] I do not accept that an award on an indemnity basis is appropriate. However, as in Wightman, I consider that this case amply justifies an award on a schedule 3C basis. I calculate that sum to be $110,763 (not including disbursements).[16] I accept the plaintiff's submission that RT, ST and YZ, who were the major beneficiaries of the estate, were the active defendants and that they strenuously opposed the plaintiff's claim. I agree that in the circumstances it is appropriate that they should bear the plaintiff's costs, albeit on the schedule 3C basis that I have awarded. I order accordingly.[17] In the plaintiff's reply submission the plaintiff requested that there should also be an award of costs in her favour in respect of the costs application itself. I agree that that is appropriate. I make an additional award of $2,000 in respect of the costs argument.___________________________Brown J