Kinney v Pardington [2021] NZCA 174 (12 May 2021)

Last Updated: 18 May 2021

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA100/2020 [2021] NZCA 174

	BETWEEN	ERIN MAUREEN KINNEY Appellant
	AND	MARGARET MYRTLE PARDINGTON, DAVID JOHN PARDINGTON AND KENNETH MARK PARDINGTON AS EXECUTORS AND TRUSTEES OF THE ESTATE OF KENNETH JOHN PARDINGTON First Respondents
	AND	DAVID JOHN PARDINGTON AND KENNETH MARK PARDINGTON Second Respondents

Hearing:	16 February 2021
Court:	Gilbert, Thomas and Edwards JJ
Counsel:	C T Gudsell QC for Appellant No appearance for First Respondents S W Hughes QC for Second Respondents
Judgment:	12 May 2021 at 11.30 am

JUDGMENT OF THE COURT

1. The appeal is dismissed.
2. The appellant must pay costs to the second respondents for a standard appeal on a band A basis and usual disbursements.

100. The second respondents must pay costs to the appellant on their abandoned cross-appeal for all steps up to the date of abandonment as for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Gilbert J)

• [1] Questions of costs are ultimately a matter of discretion. The exercise often requires assessment of a wide range of factors. The overall objective is to achieve an outcome that best meets the interests of justice in the given case in accordance with any applicable costs rules and consistent with established principles. The trial judge is uniquely placed to make this assessment.^[1] It is well-settled that an appellate court should not interfere with a costs award unless satisfied that the judge acted on a wrong principle, failed to take account of some relevant matter, factored in the irrelevant or was plainly wrong.^[2] This is why appeals against costs awards seldom succeed.
• [2] Erin Kinney appeals against a costs judgment made in her favour following her successful claim in the High Court under the Family Protection Act 1955.^[3] Ms Kinney contends the Judge ought to have required the respondents (collectively referred to as the Pardingtons) to meet the costs award personally instead of directing that the costs be paid out of the estate. She argues that the Judge overlooked five relevant considerations and factored in one irrelevant consideration in reaching this erroneous conclusion. In order to comprehend the criticisms, it is necessary to commence by briefly summarising the background.

Background

• [3] Kenneth Pardington Snr (the deceased) died nearly 10 years ago, on 1 September 2011. In his last will executed in 1989, he left a life interest in his estate to his widow, Myrtle Pardington, and upon her death to his children in equal shares. Mrs Pardington and her two adult sons, David and Kenneth, are the executors of the estate and they obtained probate in September 2011.
• [4] Unbeknown to the Pardingtons, the deceased had fathered a third child, Ms Kinney, who was born in July 1990 (after the will was executed). After learning of Ms Kinney’s existence, the Pardingtons agreed she was entitled to share equally with the two sons in the residuary estate. However, Ms Kinney contended she was entitled to a greater share.
• [5] The Family Protection Act proceedings commenced in the High Court at New Plymouth in February 2013.^[4] Two main issues soon emerged — the value of the estate and the share Ms Kinney should receive. Despite the comparatively modest value of the estate (eventually agreed in August 2018 at $615,000) and the willingness of the Pardingtons from an early stage to recognise Ms Kinney’s entitlement to at least half of the residuary estate (and pay it out to her immediately), it took more than six years for the dispute to be determined (excluding costs issues).
• [6] In the three-year period prior to the engagement of Ms Kinney’s current lawyers in June 2016, considerable time and money was wasted on the misguided pursuit of a contention on behalf of Ms Kinney that jointly owned assets formed part of the estate and had to be brought to account. In October 2015, Associate Judge Osborne expressed concern about the delay in achieving resolution of the proceeding and set a timetable for any further steps, a close of pleadings date of 13 November 2015 and allocated a trial date of 15 August 2016.^[5]
• [7] On 15 July 2016, Williams J declined an application for an adjournment of the trial by Ms Kinney’s present advisers (who had then only recently been instructed).^[6]
• [8] However, Cull J adjourned the hearing part-heard on 16 August 2016 because of a concern there was insufficient information as to the assets and liabilities of the estate. At that stage, the net assets of the estate were shown in the most recent administration statement as being approximately $253,000 comprising assets of $779,000 and liabilities of $526,000 (ignoring legal costs).
• [9] The principal assets were:

Half-share of house in Omata	$211,666
Half-share of house in New Plymouth	$303,750
Marina berth at Whitianga	$200,000
Advance to the K J Pardington Family Trust (the Trust)	$61,250

• [10] The principal liabilities were:

Half-share of house loan from the Trust	$280,140
Part loan from the Trust (unassigned)	$114,389
Part loan from the Trust (assigned by the Trust to the Pardington sons on 20 December 2013)	$131,680

• [11] Ms Kinney disputed, with justification as it turned out, the quantum of the outstanding loans made to and by the Trust, which had been settled by the deceased in 1984. Like many family trusts, its affairs were somewhat intermingled with his personal affairs.
• [12] Determining the correct state of the account between the estate and the Trust was particularly difficult, time consuming and expensive because the deceased had not kept proper records. In order to ascertain the position as accurately as possible, Ms Kinney’s advisers sought to trace the underlying transactions back more than 30 years to when the Trust was established. They required discovery of all accounting records held by the Trust including financial statements, tax returns and source documents such as bank statements, cheque butts, deposit slips together with the accountant’s working papers. They also sought Trust resolutions to track significant Trust transactions and distributions of income and capital by the Trust.
• [13] The reconstruction exercise was a drawn out process conducted mainly through correspondence between the solicitors, but with the respective accountants formulating and answering questions as further records were sought to fill information gaps as they emerged. The process took two years to complete and involved considerable expense on both sides. As noted, in August 2018, the parties agreed to proceed on the basis that the net value of the estate at that stage was $615,000. This was a substantially higher figure than that presented in the administration statements prepared at the time Ms Kinney’s present advisers became involved. This was partly because of an increase in the market value of the two properties and the marina in the intervening period, but there were also significant adjustments to the balances outstanding under the loans involving the Trust.
• [14] The contest over the value of the estate having been resolved, the hearing resumed in December 2018 before Cull J to determine the share Ms Kinney should receive. In a reserved judgment delivered on 1 March 2019, the Judge decided that the minimum necessary to remedy the accepted breach of moral duty by the deceased was to award Ms Kinney 70 per cent of the net value of the estate after deduction of yet to be determined costs (the substantive judgment).^[7] This meant the share that each son would receive from their father’s estate reduced to 15 per cent.

Costs judgment

• [15] In assessing costs, the Judge had the benefit of having had the carriage of the proceedings over the preceding three years. She determined the question of costs in a comprehensive judgment delivered on 3 September 2019 (the costs judgment).^[8]
• [16] The Judge considered first whether any costs should be awarded. The Pardingtons submitted that costs should lie where they fall. After addressing the parties’ competing submissions, the Judge concluded that Ms Kinney had succeeded in the proceeding and was entitled to an award of costs to do justice between the parties.^[9]
• [17] The Judge then turned to consider the basis on which costs should be awarded. Ms Kinney sought costs calculated on a 3C basis. Alternatively, if costs were to be allowed on a 2B basis, she sought a 100 per cent uplift for increased costs. After reviewing in detail the parties’ submissions on this aspect, the Judge concluded there was no reason to depart from the normal rule that costs should be allowed on a 2B basis. She was not persuaded there should be any uplift for increased costs in all the circumstances.^[10]
• [18] The next question, of central importance to the present appeal, was who should bear the costs — the estate or the Pardingtons personally. The Judge concluded that party costs payable to Ms Kinney should be paid out of the estate for reasons encapsulated in the following two paragraphs of her judgment:

[33] Ms Kinney has been put to considerable work to succeed in her claim, spanning nearly seven years now. I accept that some of the applications made by Ms Kinney’s counsel earlier in the proceeding have caused significant delay, but equally I accept that the Pardingtons experienced significant difficulties with locating and providing the Court with relevant documents as to both the Trust and the liabilities of the estate.

[34] I also observe that the Pardingtons’ difficulties in locating relevant documents was a result of the deceased’s omission to keep adequate records. However, there is one issue relevant to conduct and that is the disclosure of documents. I deal with this issue under administrator’s costs, as I consider it is more relevant to the amount of those costs than here. I do not consider either of the parties’ positions outweighs the general rule for present purposes, that costs should follow the event in these circumstances. I also consider that it is appropriate that Ms Kinney’s costs be paid out of the estate rather than personally by the Pardingtons. This has been a difficult case for all parties concerned and the fairest approach in my view is that Ms Kinney’s costs are payable by the estate.

• [19] Finally, the Judge addressed the question of administration costs, applying the general rule that executors are entitled to be indemnified for all costs reasonably and properly incurred in the performance of their duties. The Judge concluded that most of these costs should be paid by the estate as having been properly incurred. The exception was for some of the costs incurred in relation to disclosure. The Judge acknowledged that the Trust and estate documents had been left in a poor state by the deceased making it difficult for the executors to locate and provide relevant documents. However, she considered that some documents, particularly those relating to the loan of $131,680 assigned by the Trust to the Pardington sons in December 2013, ought to have been discovered earlier in the process. The Judge said the delay in providing these documents was unacceptable and she was therefore not prepared to allow the executors to recover their costs for providing these documents post-August 2016. The Judge said it was unclear from the information provided what part of the costs incurred post-August 2016 was attributable to this discovery issue. She assessed the appropriate proportion as being 20 per cent and calculated the amount to be $9,580. The Judge ordered that this sum was to be paid by the Pardingtons as executors in their personal capacity.^[11]
• [20] In the result, the Judge awarded costs to Ms Kinney calculated on a 2B basis to be paid by the estate. As noted above, administration costs were also to be paid out of the estate apart from $9,580 which was to be paid by the Pardingtons personally. The quantification of the 2B costs was left for later determination in accordance with a timetable directed by the Judge.^[12]
• [21] The outstanding costs quantification was dealt with in a subsequent judgment delivered on 31 January 2020.^[13] Costs payable to Ms Kinney were calculated as being $57,662 less the sum of $10,000 to take account of the unsuccessful interlocutory applications pursued by Ms Kinney in the period prior to August 2016. Disbursements of $74,018.33 were allowed including $65,157.56 paid to the forensic accountant engaged by Ms Kinney to assist with her claim.
• [22] In summary, total costs and disbursements to be paid to Ms Kinney out of the estate (valued at $615,000) amounted to $121,680.33. Administration costs in the sum of $90,413.80 were also to be paid from the estate with the balance of $9,580 to be paid by the Pardingtons personally. This leaves a residuary estate of $402,905.87, which means that Ms Kinney can expect to receive approximately $282,000 whereas the Pardington sons will each receive approximately $55,000 from their father’s estate after payment of costs. However, the actual returns will be less for all parties because of the unrecovered costs each has incurred over the past eight years of litigation since the proceedings commenced in 2013.

The appeal

• [23] Ms Kinney appeals against the costs judgment arguing that the costs awarded to her should be paid by the Pardingtons personally, rather than out of the estate.
• [24] Mr Gudsell QC, for Ms Kinney, addressed the grounds of appeal under six headings:

(a) The Judge failed to take into account the Pardingtons’ conduct.

(b) The Judge failed to take into account the impact on Ms Kinney’s 70 per cent in the residuary estate of the costs award being met from the estate.

(c) The Judge failed to take into account settlement offers exchanged between the parties.

(d) The Judge failed to consider whether costs should be met from the Pardington sons’ 30 per cent share.

(e) The Judge failed to take into account all relevant legal principles.

(f) The Judge took into account an irrelevant consideration, namely that some of the unsuccessful interlocutory applications made by Ms Kinney earlier in the proceeding had caused significant delay.

• [25] Before addressing these grounds, we note one further issue. After Ms Kinney appealed against the costs judgment, the Pardington sons filed an appeal against the substantive judgment contending that the 70 per cent allocation to Ms Kinney was excessive. They subsequently abandoned this appeal, but the parties have not been able to agree costs. We address this issue at the end of the judgment.

Ground 1 — failure to take into account the Pardingtons’ conduct

• [26] Ms Kinney’s primary ground of appeal is that the Judge failed to take into account “[t]he extent to which the Pardingtons’ conduct of the proceedings contributed to [her] costs”. Mr Gudsell says most of the costs and disbursements covered by the costs award were incurred in the two-year period from the time he was instructed in August 2016 until agreement was reached as to the value of the estate on 27 August 2018. He says throughout this period the fundamental issue was discovery of the assets and liabilities of the estate. He notes that the Judge recorded her concerns about the adequacy of discovery of Trust documents in successive minutes:

(a) 2 December 2016 — “I record that I have expressed my dismay that the Trustees appear to be withholding information”.^[14]

(b) 27 April 2017 — “The obstacle to reaching agreement is the liabilities referred to in the Administration Statement. They have a significant bearing on the ultimate value of the estate”.^[15]

(c) 19 July 2017 — “I consider the financial statements from the Pardington Family Trust (if they exist) need to be disclosed”.^[16]

• [27] On 15 February 2018, the Judge dealt with an application by Ms Kinney to consolidate the family protection proceedings with separate proceedings she had initiated in October 2017 against the trustees of the Trust (the Pardington sons, Royce Wood and Wayne McCurdy). Mr Gudsell notes that while the Judge declined the consolidation application, she granted the “alternative” application for particular discovery of various Trust records.^[17] The Judge made an order for discovery of the documents detailed in a letter from Ms Kinney’s lawyers dated 2 February 2018, which included missing bank statements, deposit slips and cheque butts relating to the Trust dating back to July 1992 together with financial statements for the period 1989 to 1999 and various other documents including the accountant’s working papers.^[18]
• [28] Mr Gudsell says the Pardingtons’ conduct in relation to the disclosure of documents was not only relevant to administration costs, it was also relevant to the question of who should bear Ms Kinney’s costs. While it was proper for the Judge to disallow part of the executors’ normal entitlement to indemnity costs on this account, he submits the Judge should also have taken the same conduct into account in the assessment of party and party costs. Mr Gudsell submits that this should have resulted in the Pardingtons being required to meet Ms Kinney’s costs personally.
• [29] The Judge was acutely aware of the difficulties arising out of discovery, having dealt with the matter throughout the relevant period including reviewing the many memoranda and affidavits filed, presiding over numerous case management conferences and hearings and making the various directions and orders. The Judge had the full benefit of all this background information when making her assessment as to the incidence of costs.
• [30] It is plain from reading the costs judgment that the Judge expressly took account of the discovery issues when considering whether Ms Kinney’s costs should be met by the estate or the Pardingtons personally. She recorded Mr Gudsell’s submission on this aspect:^[19]

[30] ... Mr Gudsell submits [the Pardingtons] failed to advise the Court of the assets and liabilities of the estate in a timely, transparent and efficient manner, putting Ms Kinney to significant cost and causing an extraordinary delay in the determination of the proceeding. For that reason, Mr Gudsell submits that Ms Kinney’s costs should be met by the Pardingtons in their personal capacities, in both their interested party and defendant capacities, because the issues on which Ms Kinney succeeded and the “conduct” issues addressed relate to both capacities. In that way, it would mean that Ms Kinney’s share of the residuary estate is not unfairly eroded by costs.

(Footnote omitted.)

• [31] The Judge then addressed the submission of who should bear the costs in light of the discovery issues directly in the passage quoted at [18] above. In short, the Judge found that the problems encountered in ascertaining the value of the estate stemmed from the deceased’s failure to keep adequate records. That was obviously not the Pardingtons’ fault. The Judge accepted they experienced significant difficulties locating relevant documents and providing these to the Court. This is hardly surprising given they were being required to search for detailed financial records relating to the Trust spanning over a 30-year period. The Judge considered the fairest approach in all the circumstances was for Ms Kinney’s costs award to be met from the estate.
• [32] There is an implicit acknowledgement in the way this ground of appeal is articulated in the notice of appeal that the Judge did take account of this matter and that the real complaint is one of weight — it being contended that the Judge “failed to take into account the extent to which the Pardingtons’ conduct of the proceedings contributed to Ms Kinney’s costs”. An argument about the weight to be accorded to any relevant factor will not justify an appeal court interfering with the exercise of a costs discretion unless the decision is plainly wrong.^[20] We are far from satisfied that is the case here. The Judge was entitled to conclude that the Pardingtons were not responsible for the deceased’s failure to maintain adequate accounting records and that they experienced significant difficulties locating and providing historical Trust documents to establish the extent of the indebtedness of the estate to the Trust. While the Judge attributed some fault to the Pardingtons on one aspect of the discovery process, she did not consider this justified an order requiring them personally to pay the entirety of the costs awarded to Ms Kinney. That was an outcome available to the Judge. There is no inflexible costs rule requiring otherwise. This ground of appeal must accordingly be dismissed.

Ground 2 — failure to take into account the impact on Ms Kinney’s 70 per cent in the residuary estate of the costs award being met from the estate

• [33] Given Ms Kinney will receive 70 per cent of the net value of the residuary estate after deduction of costs, she will in effect only receive 30 per cent of the costs award. Mr Gudsell calculates (correctly) that if the Pardingtons had been ordered to meet these costs personally, Ms Kinney’s entitlement would increase by $85,000 from $282,000 to $367,000 (approximately). Taking account of the costs award of $121,680.33, Ms Kinney would receive approximately $489,000 and the distribution to each of the Pardington sons would reduce to approximately $13,000 (after payment of the costs award to Ms Kinney and the $9,580 the Judge ordered them to pay personally). Mr Gudsell submits the Judge “failed to give any consideration as to how the deduction of the costs award from the estate’s assets impacted upon Ms Kinney’s interest in the residuary estate”. He says this “requires correction”.
• [34] The obvious consequence of directing that costs be paid out of the estate was to reduce the amount Ms Kinney would receive. The equally obvious consequence, if the Pardington sons had been ordered to pay Ms Kinney’s costs personally, would be to reduce the net amount they would receive. It is inconceivable the Judge would not have been aware of this and it is clear she was. The Judge recognised that some costs would be deducted from the agreed value of the estate when setting the amount required to remedy the deceased’s breach of moral duty. She awarded Ms Kinney “70 per cent of the value of the estate, subject to a further determination on the deduction of costs from the agreed value of the estate of $615,000”.^[21] The Judge referred in her subsequent costs judgment to a general concern in family protection claims that “a costs order against the residue of an estate can impact unfairly on residuary beneficiaries, particularly where the estate is not large”.^[22] The Judge also recorded Mr Gudsell’s submission urging her to require the Pardingtons to meet Ms Kinney’s costs personally so as to avoid eroding her share of the residuary estate. This is recorded at [30] of the costs judgment (quoted at [30] above).
• [35] It is clear that the Judge did take into account that by ordering costs to be met from the estate, Ms Kinney’s net entitlement would reduce as a result. We are satisfied there is nothing in this ground of appeal.

Ground 3 — failure to take into account settlement offers

• [36] As the Judge acknowledged, this proceeding was difficult for everyone involved.^[23] Kenneth Pardington explained in an affidavit sworn in May 2013 that the proceedings were causing “an enormous amount of distress” to his elderly mother, the first-named respondent. Partly for that reason, the Pardington sons endeavoured to resolve the proceeding from an early stage. They accepted that Ms Kinney should receive half of the value of the residuary estate and offered to cash out her entitlement immediately. They made numerous settlement offers on this basis (including an offer based on 60 per cent of the residual estate) but because these offers were calculated on an erroneous assessment of the value of the estate (primarily the correct state of account between the estate and the Trust), none came close to the sum Ms Kinney was ultimately awarded ($367,000 excluding costs). For example, on 13 August 2016 the Pardingtons offered a global settlement of the family protection and trust proceedings of $160,000 when the net assets of the estate were understood to be approximately $198,000 after deduction of administration costs.
• [37] Mr Gudsell submits that in making these offers, the Pardingtons “‘hid behind’ a less than transparent accounting as to the value of the estate”. He says the settlement offers were “insulting” and “perpetuated their father’s treatment of Ms Kinney” who he describes as “a young woman of limited means, neglected by the deceased throughout her life”. Mr Gudsell argues that the settlement offers were inadequate and should be treated as an aspect of the Pardingtons’ conduct of the proceeding. He submits the Judge erred by failing to consider these offers in determining who should bear Ms Kinney’s costs.
• [38] Ms Hughes QC, for the Pardingtons, submits to the contrary that the Judge was right to ignore the settlement offers made prior to the value of the estate being settled by agreement in August 2018.
• [39] Mr Gudsell’s submission effectively invites us to accept that the Pardingtons acted in bad faith and attempted to dupe Ms Kinney into accepting an inadequate and unfair settlement by misrepresenting the value of the estate. This is tantamount to an allegation of serious misconduct. It does not appear that any such submission was made to the Judge. Moreover, it seems clear the Judge did not take that view, as she specifically acknowledged the difficulties the Pardingtons faced locating relevant documents as a result of the deceased’s failure to keep adequate records.^[24]
• [40] It is important to bear in mind that both parties were represented by senior counsel at the time the offers were exchanged. Further, Ms Kinney had the benefit of funding from a third-party benefactor and the assistance of an experienced forensic accountant. There was no power imbalance. Neither side’s position was wholly vindicated. For example, at the time the parties compromised on an agreed estate value of $615,000 (less administration costs of the order of $90,000) following completion of discovery in August 2018, it was contended for Ms Kinney that the net value of the estate was approximately $829,000 whereas the Pardingtons’ assessment was $448,000. Further, Ms Kinney’s position was that she should receive 80 per cent of the residual estate, more than she was awarded by the Judge. The Pardingtons consistently acknowledged that Ms Kinney was entitled to at least 50 per cent of the value of the estate.
• [41] Nothing in the affidavits or correspondence we have reviewed suggests to us that the Pardingtons acted other than in good faith throughout or that they knowingly misrepresented the assets and liabilities of the estate at any stage. We do not consider that the offers made by the Pardingtons reflected poorly on them or were otherwise relevant to the costs assessment. This ground of appeal must also fail.

Ground 4 — failure to consider whether costs should be met from the Pardington sons’ 30 per cent share

• [42] Mr Gudsell quite properly abandoned this ground of appeal at the hearing.

Ground 5 — failure to take into account all relevant legal principles

• [43] Mr Gudsell raises three issues under this ground of appeal.
• [44] First, he contends that the Judge failed to take into account that “the overarching consideration must be that any award of costs should do justice between the parties”.^[25] Having made that submission, Mr Gudsell immediately acknowledged that the Judge used this exact same phrase (also citing Ormsby v Van Selm) when discussing whether costs should be awarded.^[26] The Judge also addressed the same issue when concluding Ms Kinney was entitled to an award of costs “in order to do justice between the parties”.^[27] However, Mr Gudsell says these statements were made in that part of the judgment where the Judge considered whether costs should be awarded. In the later section, where the Judge turned to the question of who should bear the costs, Mr Gudsell points to the Judge’s use of the word “fairness” rather than “justice” — “the fairest approach in my view is that Ms Kinney’s costs are payable by the estate”.^[28] This criticism overlooks the Judge’s earlier statement in this section of the judgment that the Court “must consider what costs outcome would do justice between the parties”.^[29] In any case, we do not consider there is any material difference in this context between “justice” and “fairness”. We are satisfied the Judge did not misdirect herself.
• [45] Mr Gudsell further says that irrespective of whether a distinction can be drawn between “justice” and “fairness”, the Judge failed to take into account all relevant considerations, namely those addressed in the previous grounds of appeal. It is not clear what these considerations add to this ground of appeal. The earlier grounds of appeal having been dismissed, they cannot be resurrected here.
• [46] Secondly, Mr Gudsell submits that the Judge failed to take into account four cases he relied on where costs were awarded in family protection proceedings against respondents in their personal capacities.^[30] Mr Gudsell acknowledges that the Judge cited three of these cases but says she did not address them as precedents for costs awards against parties in their personal capacities.^[31]
• [47] We do not consider there is anything in this point. The Judge was plainly aware that an award of costs against the Pardingtons personally was an available option and such orders had been made in other cases, including those cited by counsel. The Judge nevertheless explained why she considered the appropriate outcome in all the circumstances of the present case was to order that party costs be paid out of the estate. We have already discussed her understandable reasons for reaching that view in the previous grounds of appeal.
• [48] Thirdly, Mr Gudsell submits the Judge failed to take into account a statement of principle drawn from Rodney Hansen J’s judgment in Re Miller that, as a general rule, contestants in family litigation should expect costs to follow the event:^[32]

[6] The traditional practice in family protection cases has been for the Court to order the costs of all parties to be borne out of the residue of the estate. However, this was never the invariable practice. Sometimes a successful applicant would be required to meet his or her own costs. In my view, there is now no necessary reason why family protection proceedings should be excluded from the operation of the general principles as to costs as set out in r 47 of the High Court Rules. It is desirable that the prospect of an adverse costs award should operate as an incentive to settlement in appropriate cases. Parties who are sui juris and active contestants in family protection litigation generally should expect costs to follow the event.

• [49] The Judge specifically cited this passage from Re Miller and noted the increasing trend towards costs following the event in family protection cases. The Judge also cited various examples where this had occurred.^[33] However, Mr Gudsell submits the Judge did not take this principle into account when determining who should bear the costs. He says the Pardington sons were sui juris and active contestants who unsuccessfully defended Ms Kinney’s claim and therefore should have been ordered to bear her costs.
• [50] As the authorities make clear, there is no inflexible rule requiring that costs be paid personally by the unsuccessful party in family protection proceedings. It depends on the circumstances. Here, it was well within the scope of the Judge’s discretion to direct that Ms Kinney’s costs be paid out of the estate rather than by the Pardingtons personally. The Judge considered this to be the fairest approach in the particular circumstances of this case which she recognised had been difficult for all concerned.^[34] We see no appealable error in this.

Ground 6 — did the Judge take into account an irrelevant consideration, namely that some of the interlocutory applications made by Ms Kinney earlier in the proceeding had caused significant delay

• [51] Mr Gudsell submits that any delay caused by Ms Kinney’s previous counsel prior to the change of representation in June 2016 was irrelevant to the question of who should bear the costs and should not have been taken into consideration. This is because the Judge made a stand-alone deduction of $10,000 from Ms Kinney’s costs award to recognise the unsuccessful interlocutory applications pursued during that period. Mr Gudsell says that having made that allowance, the focus should have been solely on the Pardingtons’ conduct when considering who should bear Ms Kinney’s costs.
• [52] As Mr Gudsell points out, a large proportion of the costs awarded to Ms Kinney were incurred following the change in representation and were in respect of the steps taken to establish the net value of the estate, primarily the state of the account between the estate and the Trust. The Judge recorded Mr Gudsell’s submission that the Pardingtons should be required to pay Ms Kinney’s costs personally because of their alleged failure “to advise the Court of the assets and liabilities of the estate in a timely, transparent and efficient manner”.^[35] However, with one exception, the Judge did not hold the Pardingtons responsible for the difficulties encountered in locating relevant records (mostly Trust records) to enable the correct accounting position to be established. As we have seen, the Judge accepted that the Pardingtons “experienced significant difficulties with locating and providing the Court with relevant documents as to both the Trust and the liabilities of the estate”.^[36] The Judge went on to observe that these difficulties were the result of the deceased’s omission to keep relevant and adequate records. The Judge concluded that this had been a difficult case for all parties and the fairest approach was for the costs be paid by the estate. We are unable to see any appealable error in that analysis. It does not appear that the delays caused by Ms Kinney’s unsuccessful interlocutory applications earlier in the proceedings had any material bearing on the decision to direct that her costs should be met from the estate.

Costs on abandoned cross-appeal by the second respondents

• [53] The second respondents abandoned their cross-appeal against the substantive judgment without securing any arrangement about costs. We see no reason why costs should not follow the event in the usual way in respect of that appeal and we make an order accordingly.

Result

• [54] The appeal is dismissed.
• [55] The appellant must pay costs to the second respondents for a standard appeal on a band A basis and usual disbursements.
• [56] The second respondents must pay costs to the appellant on their abandoned cross-appeal for all steps up to the date of abandonment as for a standard appeal on a band A basis and usual disbursements.

Solicitors:
Nielsen Law Solicitors, Hamilton for Appellant
Quin Law, New Plymouth for Second Respondents

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^[1] Tower Insurance Ltd v Kilduff [2019] NZCA 82 at [19].

^[2] Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [15].

^[3] Kinney v Pardington [2019] NZHC 2196 [Costs judgment].

^[4] The proceedings were originally commenced by Ms Kinney’s half-sister in the belief she was the deceased’s daughter. She discontinued her claim in July 2013 after it was established this was not the case. Ms Kinney, who had been added as the second plaintiff on 13 May 2013, then became the sole plaintiff.

^[5] Kinney v Pardington HC New Plymouth CIV-2013-443-58, 7 October 2015 (Minute of Associate Judge Osborne).

^[6] Kinney v Pardington HC New Plymouth CIV-2013-443-58, 15 July 2016 (Ruling of Williams J).

^[7] Kinney v Pardington [2019] NZHC 317 [Substantive judgment].

^[8] Costs judgment, above n 3.

^[9] At [9]–[20].

^[10] At [21]–[28].

^[11] At [52]–[56].

^[12] At [57]–[60].

^[13] Kinney v Pardington HC Wellington CIV-2013-443-58, 31 January 2020.

^[14] Kinney v Pardington HC New Plymouth CIV-2013-443-58, 2 December 2016 (Minute of Cull J) at [4].

^[15] Kinney v Pardington HC New Plymouth CIV-2013-443-58, 27 April 2017 (Minute of Cull J) at [3].

^[16] Kinney v Pardington HC New Plymouth CIV-2013-443-58, 19 July 2017 (Minute of Cull J) at [10].

^[17] Kinney v Pardington [2018] NZHC 155 at [17] and [18]–[24].

^[18] At [22]–[23].

^[19] Costs judgment, above n 3.

^[20] Shirley v Wairarapa District Health Board, above n 2, at [15].

^[21] Substantive judgment, above n 7, at [82].

^[22] Costs judgment, above n 3, at [6]; citing Bones v Wright [2013] NZHC 2093 at [5].

^[23] At [34].

^[24] At [33]–[34].

^[25] Ormsby v Van Selm [2016] NZHC 484 at [6].

^[26] Costs judgment, above n 3, at [9].

^[27] At [18].

^[28] At [34] (emphasis added).

^[29] At [32] (emphasis added).

^[30] Barker v Barker HC Auckland CIV-2006-404-181, 7 December 2006; Kirby v Sims HC Wellington CIV-2010-485-794, 22 December 2011; Fry v Fry [2015] NZHC 2716, [2016] NZFLR 713; and AB v RT [2016] NZHC 1399.

^[31] Costs judgment, above n 3, at [6], [7] and [21].

^[32] Re Miller (2001) 20 FRNZ 459 (HC).

^[33] Costs judgment, above n 3, at [6]–[7].

^[34] At [34].

^[35] At [30].

^[36] At [33].