CALPHURNIA MAMELE FUNGAVAKA v AUDRA MARIE WATTS [2018] NZHC 2951

CALPHURNIA MAMELE FUNGAVAKA v AUDRA MARIE WATTS [2018] NZHC 2951 [14 November 2018]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2013-404-000616[2018] NZHC 2951BETWEEN CALPHURNIA MAMELE FUNGAVAKAApplicantAND AUDRA MARIE WATTSRespondentOn the papersJudgment: 14 November 2018COSTS JUDGMENT OF HINTON JThis judgment was delivered by me on 14 November 2018 at 11.00 ampursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarCounsel/Solicitors:Kathryn Davenport QC, AucklandRowan Butler, Barrister, AucklandFrank Hogan, Barrister, AucklandGregory J Thwaite, Auckland[1] This judgment relates to costs following estate litigation, which involved anapplication for an accounting, for removal of the respondent as administrator, and forcosts.[2] The applicant is the mother of five children whose father, Mr Fungavaka, diedin very tragic circumstances in Tonga in August 2012. The respondent was the wifeof Mr Fungavaka at the time of his death.[3] Mr Fungavaka died intestate. On 20 May 2013, the respondent obtained lettersof administration appointing her as administrator of the estate.[4] When Mr Fungavaka died, he had a life insurance policy which it seems passeddirectly to his wife as the named beneficiary. It was therefore not part of his estate.The amount payable to her under the policy was approximately $200,000.[5] There were other assets which did form part of the estate, includingMr Fungavaka's Police superannuation pay-out. These assets totalled approximately$100,000. In the absence of challenge, on an intestacy the respondent was entitled tothe first $155,000 of the estate, and therefore the full estate.[6] The above details were not known, or inadequately known or verifiable by theapplicant.[7] In addition to the above, in 2015 the respondent (as Mr Fungavaka'sadministrator) brought a proceeding under the Fatal Accidents Act in Tonga. I notethat counsel for the respondent said the proceeding was not brought under that Act,but my impression from a reading of the Act was that an action would not otherwisehave lain for damages following death. Under the Fatal Accidents Act, every actionhad to be brought in the name of the executor or administrator of the deceased personfor the benefit of the wife, husband, parent or legitimate child of that person, and inevery such action the Court may award such damages as it thinks fit, having regard tothe injury to the parties respectively. The Court must then divide the amount recoveredin damages amongst the parties for whose benefit the action is brought in such sharesas the Court may direct. Section 6 of the Act provides that not more than one actionshall be brought for, and in respect of, the same complaint.[8] The applicant and respondent were not on good terms.[9] Acting on erroneous advice from counsel in Tonga, the applicant refused toassist in the Tongan litigation for the benefit of the children and claimed (throughcounsel in Tonga) to be intending to run her own litigation for them.[10] In March 2016, the respondent reached a confidential settlement of the Tonganproceeding and received approximately NZ$240,000. As part of the settlement, sheagreed that she would take active steps to create a trust or trusts providing the sum ofapproximately NZ$20,000 for the benefit of each of Mr Fungavaka's children. Thetrust or trusts were to mature upon each child attaining the age of 23, with provisionfor advance of capital or income prior to then. The settlement also provided that therespondent received $45,000 for out-of-pocket expenses and costs. The settlementwas to be paid by eight equal payments with the last payment in March 2018.[11] Presumably acting under the deed of settlement, in May 2016, the respondentsettled a trust whereby she and New Zealand Trustees Services Limited were thetrustees and she had power of appointment and removal of the second trustee. Thiswas called the Kalibunga Trust. The trust deed was a global one which named all ofthe children and the respondent as discretionary beneficiaries. In a number of respects,in my view, the terms of the Trust were inappropriate or incorrect.[12] The applicant requested full details of the estate in her capacity as litigationguardian for the children, including details of the Tongan settlement.[13] The respondent did not provide an accounting, including details of the Tongansettlement, despite that settlement having been achieved, in my view, in her role asadministrator of the estate. While to some degree the respondent's actions wereunderstandable, given the applicant had declined to assist with the Tongan settlement,the respondent had a clear legal duty as administrator to provide a full verified account.[14] In July 2016, the applicant filed applications for an accounting in the estate;for removal of the respondent as administrator of the estate, and for costs.[15] Counsel appeared before me on a number of different occasions in connectionwith this matter. Inter alia, the applications were set down for hearing on 6 December2016, for which the applicant filed full submissions on 22 November 2016. Two daysprior to the hearing, the respondent provided documents evidencing the Tongansettlement. The hearing was adjourned by consent. Settlement was not reached and anew hearing was allocated in May 2017. In March 2017, the respondent provided averified account of the estate.[16] The upshot was that, after full information was provided and analysed, allmatters between the parties were resolved, and in particular a new trust was settled.[17] The only residual issue is one of costs.[18] The parties had several conferences or hearings before me regarding costs.Costs are always difficult where a proceeding has settled, but I agreed with theapplicant that the application had been properly brought, and the matter would nothave settled without it (and the steps that followed).[19] In the course of the conferences, I indicated that costs in the order of $15,000would be reasonable. The applicant indicated acceptance of that and the respondentwas prepared to pay an amount of that order, but not by way of costs, rather by furtherpayment into the children's Trust.[20] The parties thought they would be able to resolve the costs issue and it was leftto them to do so.[21] Unfortunately, not only were costs not resolved, but the costs issue becametortuous.[22] The relevant submissions as to costs are as follows:(a) Applicant's memorandum dated 3 July 2017.(b) Respondent's submissions dated 4 July 2017.(c) Outline of respondent's rebuttal submissions as to costs dated 11 July2017 (including a letter from the applicant's solicitor offering that$15,000 be paid into a lawyer's trust account as full and final settlementof costs).(d) Memorandum of solicitor for respondent as to status dated 31 July2017. (The respondent's solicitor invited the applicant's solicitor todraft a joint memorandum as to position, but no response was received.)(e) Memorandum of counsel for the applicant dated 7 August 2017(referring to the applicant's memorandum dated 3 July 2017 setting outthe basis for a costs award).(f) Memorandum of counsel for the applicant dated 5 October 2017 askingthat the "agreed award" of $15,000 be paid to the applicant in person,and not the Trust, as she is not a beneficiary of the Trust.(g) Memorandum of solicitor for respondent as to status dated 9 October2017, advising the respondent's offer was to pay $15,000 to the Trust.(h) Memorandum of solicitor for respondent as to undertaking dated9 November 2017. This states that, if there is no hearing on costs andno order for costs made against the respondent, the respondentundertakes to pay within two weeks' notice of the Court's ruling thesum of $15,000 to the Trust established for the Fungavaka children.(i) Further memorandum of counsel for the applicant dated 21 November2017, reiterating that costs of $15,000 should be paid to the applicantin person. The applicant points out in this memorandum that her claimwas not abandoned. She says that the respondent provided theinformation sought by her shortly before the hearing, and accordinglyshe is entitled to costs.[23] The respondent says that the following memoranda are also relevant:(a) The respondent's substantive submissions of 9 May 2017.(b) The applicant's supplementary submissions of 9 May 2017.(c) The respondent's memorandum as to issues of 19 May 2017.(d) The respondent's chronology of 22 May 2017.(e) The respondent's memorandum as to status of 22 June 2017.[24] In addition, at my request, counsel filed further memoranda on 31 October2018 and 2 November 2018 to assist me to navigate the relevant material. I foundthese very helpful.[25] I have determined to fix costs in the sum of $17,500, for the following reasons:(a) The application for failure to account was properly brought and therewere significant attendances before there was a full accounting.(b) Matters escalated in the meantime, such that for example at, or close toprovision of a full accounting, the respondent objected to theapplicant's counsel representing her, and raised an application toremove the applicant as testamentary guardian of the children.(c) In estate proceedings, it is not uncommon for solicitor/client costs to bereimbursed out of the estate. I have no doubt that solicitor/client costs,or certainly time incurred, well exceeded the sum I have fixed. Herethe estate and the respondent are as one, the respondent being the onlybeneficiary on this intestacy.(d) There can also be no serious dispute that the way in which therespondent initially structured the Kalibunga Trust was incorrect orinappropriate. This was an issue that was resolved as a consequence ofthe proceeding. While not directly at issue in the proceeding, it wasindirectly at issue as part of, or flowing from the obligation to accountand the application for removal.(e) Matters would not have been resolved without the issue of proceedingsand the steps that followed.(f) The applicant says that 2B scale costs came to $17,259.50 and therespondent calculates those costs at $12,000-odd. While I do notconsider costs in a case such as this can fairly be limited to aconsideration of scale costs, those figures provide some parameters.(g) In response to my indication, counsel for the respondent said that$15,000 would be an acceptable sum to be paid, but said that it shouldbe paid into the Kalibunga Trust. While the parties tried to work theirway around what was a point of principle, they were not able to do so.Costs have been incurred by the applicant personally, on behalf of thechildren, and in the absence of agreement to the contrary, have to beordered to her account. (That is still indirectly to the benefit of thechildren, which I appreciate was a concern of the respondent's.)(h) Although I advised that I considered $15,000 would be a reasonablecosts award, the applicant has had to file a number of memoranda sincethen, and hence the uplift to $17,500.(i) While the applicant sought an "uplift" of 50 per cent on what she saidwas scale of $17,259, to reflect the "respondent's procedural conduct",and on the basis that the respondent had some ulterior motive, ordisplayed ill-will, I do not consider the case falls into that category. (Ishould make it plain that I do not consider the respondent had any ill-will at all towards the children, to the contrary.)[26] To avoid further aggravation between the parties, I direct that the respondentpays the sum of $17,500, being the award of costs in favour of the applicant, into thetrust account of Norton Law, Kumeu, being Ms Davenport QC's instructing solicitors,on behalf of the applicant, rather than directly to the applicant.----------------------------------------------Hinton J