VERRALL v BROWN [2022] NZHC 689

VERRALL v BROWN [2022] NZHC 689 [5 April 2022]IN THE HIGH COURT OF NEW ZEALANDNELSON REGISTRYI TE KŌTI MATUA O AOTEAROAWHAKATŪ ROHECIV-2022-442-7[2022] NZHC 689IN THE MATTER of an interlocutory application without noticefor a pre-judgment freezing/charging orderUNDER section 4 of the Family Protection act 1955and s 3 of the Law Reform (TestamentaryPromises) Act 1949BETWEEN LEANNE NARASSA VERRALLApplicantAND DEBRA JOY BROWN as executor of theestate of Colin David KetchRespondentHearing: On the papersAppearances: A R Shaw for ApplicantJ C D Guest for RespondentJudgment: 5 April 2022JUDGMENT OF ASSOCIATE JUDGE JOHNSTON[Costs][1] The late Mr Colin Ketch died on 12 November 2021. The parties to thisproceeding are his daughters. By his will, Mr Ketch appointed Ms Debra Brown (therespondent) as the executor and trustee of his estate, and apparently left the bulk of hisresidual estate — 90 per cent —to her. The balance — 10 per cent — was left toMs Verrall (the applicant). I am told that the estate consists essentially of Mr Ketch'sformer home in Dunedin with a value of something like $1.5 m.[2] Ms Verrall is seeking costs in connection with orders sought by her to preservethe estate pending the resolution of claims that she is to make or has made under theFamily Protection Act 1955 and the Law Reform (Testamentary Promises) Act 1949.She anticipates bringing an action for a half share in the estate. There is someindication that the parties may have at some stage agreed that the estate should beshared equally between them. As to this, litigation and arguments about costs is hardlyconducive to a sensible resolution of the substantive matters between siblings.[3] In his submissions for Ms Verrall in support the costs application, Mr Shaw setout a chronology. This is a helpful way of outlining the background. Moreover, itsessential accuracy has not been challenged by Mr Guest on behalf of Ms Brown. Ireplicate it below:10. Key Chronology:Backgrounda. 12 November 2021 – Colin Ketch passes away.b. 16 November 2021 – Applicant advised by respondent that 90percent of estate left to the respondent and 10 percent to theapplicant.c. 19 November 2021 – Applicant learns that her late father'shome has had the locks changed by the respondent executor.d. 22 November 2021 – Applicant's solicitors write to therespondent's solicitor raising issues of conflict and FamilyProtection Act 1955 claim.e. 23 November 2021 – Respondent's solicitor confirms thatrespondent will stand by a 50/50 split of the estate and willenter into a Deed of Family Arrangement once probategranted.f. 23 November 2021 – Probate Granted.g. 17 December 2021 – Applicant learns of probate throughenquiry to the High Court in Wellington. Applicant's solicitormakes enquiry with respondent's solicitor accordingly.h. 17 December 2021 – Respondent's solicitor says a deedwould be drafted "once the house is sold and forwarded forpartner's approval"Undertakings Soughti. 20 December 2021 – Applicant's solicitor seeks undertakingfrom respondent's solicitor that net sale of house proceeds tobe held in trust pending court order or agreement.j. 28 January 2022 – Applicant's solicitor writes to respondent'ssolicitor noting no response to 20 December correspondenceseeking undertakings, raising a concern of dissipation andadvising of interim injunction application if undertaking orsatisfactory alternative arrangements not agreed upon.k. 1 February 2022 – Respondent's solicitor responds providingno undertakings and saying that she does not give them unlessshe determined it is "required".Irrevocable Instructions Sought as Alternative to Undertakingl. 3 February 2022 – Applicant's solicitor writes to respondent'ssolicitor seeking irrevocable instructions be given by therespondent to her solicitor as an alternative to undertakings. Aresponse is requested by close of business the following day(4 February 2022).m. 8 February 2022 - Applicant's solicitor writes to respondent'ssolicitor seeking an urgent response to 3 Februarycorrespondence.n. 8 February 2022 – Respondent's solicitor talks past requestfor irrevocable instruction and advises that respondent hassought legal advice as a beneficiary.o. 8 February 2022 – Applicant instructs counsel to preparewithout notice application proceedings.Last Minute Attempts to Avoid Proceedingsp. 10 February 2022 – Respondent's solicitor confirms propertyunder contract for sale $1.5 million and advising net proceedswill be held on IBD through trust account when received,pending expiry of the 6 month period from Probate,agreement or court order. However, no undertaking wasgiven.q. 10 February 2022 – Applicant's solicitor seeks undertaking interms of advice provided by respondent's solicitor from10 February.r. 10 February 2022 at 2:47 pm – Respondent's solicitorprovides draft undertaking but will not commit to undertakingunless respondent's solicitor as a beneficiary has givenconsent.s. 10 February 2022 at 3:08 pm – Applicant's solicitor agrees towording of proposed undertaking by respondent's solicitorand points out that it is a matter for the executorship of theestate and not for the respondent in her capacity as abeneficiary.t. 10 February 2022 at 3:37 pm – Applicant's solicitor advisesthat if no undertaking is received proceedings will be filed at3:45 pm.Proceedings Filedu. 10 February 2022 at 4:50 pm – Applicant files proceedingswithout notice but on a Pickwick basis. Respondent's solicitorreceives proceedings by email contemporaneously withfiling.v. 10 February 2022 at 4:57 pm – Respondent's solicitorprovides undertaking sought by the application.[4] It is contended on behalf of Ms Verrall that she was justified in commencingproceedings as indicated by Ms Brown's almost immediate offer of undertaking.[5] Mr Shaw has calculated costs on a 2B basis pursuant to the scales in theHigh Court Rules. On his analysis, costs total $5,975 and disbursements consisting ofa filing fee only amount to $500 so that the total amount claimed is $6,476.[6] Mr Guest's submissions in response on behalf of Ms Brown come down to thefollowing key points:(a) He says that in terms of s 47 of the Administration Act 1969 Ms Brownin her capacity as the executor of the estate would have placed herselfin a position of having personal liability had she distributed anyproportion of the estate in the face of the notified claim or otherwiseimproperly, so that that in itself should have provided Ms Brown withthe necessary assurance, and there was no need to ask for more;(b) It is said that it was inappropriate for Ms Verrall through her solicitorsto seek an undertaking from Ms Brown's solicitors not to distribute theestate as that was ultimately not a matter for the solicitors to determine;(c) It is said that it was equally inappropriate to demand an undertakingfrom Ms Verrall because an undertaking given by a non-lawyer doesnot add anything;(d) Mr Guest submitted that on any view the Family Court is the obviousvenue for this proceeding and that this is relevant in considering costs;(e) Finally, Mr Guest contended that, had Ms Verrall, instead of investingmonths in seeking to extract an assurance that the estate would not bedistributed, taken the obvious step of commencing substantiveproceedings in the Family Court, that would then have enabled her toseek interim relief in that Court if necessary.[7] In my assessment, this is a finely balanced costs application.[8] There is much in the points made on Ms Brown's behalf. In particular it isquite correct that litigants in Ms Verrall's situation invariably rely on s 47 of theAdministration Act and do not seek interim relief except in extraordinarycircumstances where there is compelling evidence of the possibility of fraud orsomething of that nature. Section 47 provides that an administrator or executor will bepersonally liable for making distributions from an estate if they are made after serviceon them of an application or written notice of an application or intention to make anapplication under any of the statutes listed in s 47(1). Included in that list is both theFamily Protection Act and the Law Reform (Testamentary Promises) Act.[9] It also seems to me to be fair to say that there is no obvious reason whyproceedings should not have been commenced in the Family Court, which is theobvious venue for the substantive proceeding, and therefore, any application forinterim relief.[10] Having said that, the way in which matters played out between the parties andtheir advisers, as demonstrated by Mr Shaw's chronology, cannot help but have raisedconcerns in Ms Verrall's mind about her sister's intentions, and it is not difficult tohave some sympathy for her wish for certainty.[11] Without intending criticism, I would also observe that whilst it is a very niceargument to talk about the nature of a solicitor's undertaking and the position of aclient being asked for an undertaking, if, when Ms Verrall originally sought assurance,that had been forthcoming in one form or another, that would almost certainly haveput paid to her concerns. This did not occur. It was the evasive nature of the responsesthat almost guaranteed that matters would develop in the way that they have.[12] In the end, the view I have reached is that it will do substantial justice betweenthe parties in this case to make an order in favour of Ms Verrall for costs in connectionwith the commencement of these proceedings on a 2B basis, but on the District Courtscales (as opposed to the High Court scales).Associate Judge JohnstonSolicitors:C & F Legal Ltd, Nelson for ApplicantSolomons, Dunedin for Respondent