Parlane v Parlane HC Auckland CIV 2009-404-7607 [2011] NZHC 1695 (25 November 2011)

Last Updated: 30 November 2011

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

_{CIV 2009-404-7607}

UNDER s 66 Trustee Act 1956 and Part 18 High

Court Rules

IN THE MATTER OF the estate of Lindsay Harold Parlane

BETWEEN MILES WINSTON PARLANE AND DAVID LAWRENCE SCHNAUER Plaintiffs

AND MILES WINSTON PARLANE AS ESTATE BENEFICIARY

First Defendant

AND LINDA NOELINE PARLANE-POWELL AS ESTATE BENEFICIARY

Second Defendant

AND LINDA NOELINE PARLANE-POWELL AS ESTATE BENEFICIARY EXECUTRIX

Third Defendant

Hearing: On the papers

Counsel: NK Kearney for plaintiffs

RW Bell-Booth for second and third defendants

Judgment: 25 November 2011

JUDGMENT OF ASSOCIATE JUDGE FAIRE [on costs]

Solicitors: Schnauer & Co, PO Box 31 272, North Shore City 0741

Bell-Booth Sherry, PO Box 33 022, North Shore City 0741

PARLANE V PARLANE HC AK CIV 2009-404-7607 25 November 2011

[1] The plaintiffs are two of the three executors appointed by the will of the late

Lindsay Harold Parlane. The third executor is the third defendant.

[2] In my judgment of 30 May 2011, I refused the plaintiffs’ application which was made under s 66 of the Trustee Act 1956. I expressed my regret that the procedure adopted by the plaintiffs was not appropriate to determine the dispute which clearly exists between the parties. The result was that a determination of the matter on the merits could not be made by me in the particular proceeding that had been issued.

[3] I recorded counsel’s request that I reserve costs. I further recorded that, if counsel could not agree, memoranda were to be filed in support, opposition and reply at seven-day intervals.

[4] Counsel for the second and third defendants filed a memorandum dated

3 June 2011. In that memorandum, the second and third defendants sought an order for indemnity costs in the following terms:

(a) That the costs of the second and third defendants in respect of this proceeding be paid by the plaintiffs; and

(b) That the costs of the estate in respect of this proceeding be paid by the plaintiffs.

[5] The file was not referred to me by the Registry on receipt of counsel’s memorandum, no doubt in anticipation of a memorandum being filed by the plaintiffs’ counsel.

[6] The plaintiffs’ counsel filed a memorandum on 11 November 2011. It does not directly address questions of costs in the proceedings. It refers to settlement proposals that had been advanced between the parties, and the fact that there has been no response to them from the defendants’ solicitors.

[7] The memoranda received were referred to me. I issued a minute of

14 November 2011 inviting counsel for the defendants to respond to the plaintiffs’ memorandum. A memorandum in reply has been filed. In that memorandum, counsel indicates that any reference of the case to a judicial settlement conference might only be relevant after costs on this application are determined. In short, there is no consent to convening a judicial settlement conference at this stage, particularly in relation to a proceeding that has been concluded by the judgment that I had delivered, save as to the question of costs. In light of that position and, having regard to the fact that this originating application has been determined, it is not appropriate that I order a judicial settlement conference in reliance on r 7.79 of the High Court Rules. Having said that, this is clearly a case that would benefit from a settlement discussion in a properly constituted forum where the real issues and dispute between the parties are evaluated by them with a view their endeavouring to reach an overall settlement of all estate matters. Until a proper proceeding is placed before the court it is inappropriate for me to make any order as to how the parties proceed in relation to their choice of forum to discuss settlement.

[8] That leaves the question of costs on this proceeding.

[9] Counsel’s memoranda did not make reference to the High Court Rules, or to the traditional basis upon which costs are ordered n relation to proceedings. It is appropriate that I review the applicable principles.

[10] Rule 14.1 gives the Court a discretion to order costs in relation to a step taken in a proceeding. That discretion is generally to be exercised in accordance with the specific Rules contained in rr 14.2-14.10: Glaister v Amalgamated Dairies Ltd.[1] In Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt) Ltd it was said of the costs regime contained in what is now rr 14.2-14.10 that:[2]

there is a strong implication that a Court is to apply the regime in the absence of some reason to the contrary

The test to be applied is entirely an objective and not a subjective one. The only reference which it is necessary to make towards actual costs is to be found in r 14.2(f), namely that an award of costs should not exceed the costs incurred by the party claiming the costs: Glaister v Amalgamated Dairies Ltd.[3]

[11] Rule 14.2 lists the principles applying to determination of costs. Subrule (a) affirms the principle that the losing party should pay the costs to the successful party. Subrule (b) requires that the costs reflect the complexity and significance of the proceedings and refers specifically, therefore, to the categorisation of a proceeding which is provided for in r 14.3. Subrule (c) requires a consideration of each step for which costs are sought and an application of the daily rate having regard to the appropriate band which is to be applied after a consideration of r 14.5(2) and the Third Schedule to the High Court Rules.

[12] Rule 14.8 requires costs on opposed interlocutory applications, unless there are special reasons to the contrary, to be fixed in accordance with the rule when the application is determined and to become payable when they are fixed.

[13] Rule 14.6 sets out the circumstances where increased or indemnity costs can be awarded.

[14] Rule 14.6 dealing with increased costs provides:

14.6 Increased costs and indemnity costs

(1) Despite rules 14.2 to 14.5, the court may make an order—

(a) increasing costs otherwise payable under those rules (increased costs);

or

(b) that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).

...

(3) The court may order a party to pay increased costs if—

(a) the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or

(b) the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

(i) failing to comply with these rules or with a direction of the court; or

(ii) taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii) failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or

(iv) failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or

(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or

(c) the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or

(d) some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.

[15] In Holdfast NZ Ltd v Selleys Pty Ltd guidance was provided on the correct approach where an award of increased costs is sought.[4] Four specific steps require analysis. The first is the establishment of the category for the proceeding. The second step requires a consideration of the reasonable time for each step in the proceeding under r 14.5. The third step requires a consideration of whether any of the steps would substantially exceed the time allocated under Band C. The fourth step requires one to stand back and look at the costs award and determine whether

any of the matters set out in subr (3)(b) can be applied.

[16] Rule 14.6 in relation to indemnity costs provides:

14.6 Increased costs and indemnity costs

(1) Despite rules 14.2 to 14.5, the court may make an order—

(a) increasing costs otherwise payable under those rules

_{(increased costs); or}

(b) that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).

....

(4) The court may order a party to pay indemnity costs if—

(a) the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or

(b) the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or

(c) costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or

(d) the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or

(e) the party claiming costs is entitled to indemnity costs under a contract or deed; or

(f) some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious: rr 14.2-14.10.

[17] In Paper Reclaim Ltd v Aotearoa International Ltd the Court of Appeal considered the application for indemnity costs pursuant to the now r 14.6(4)(a).[5] The Court emphasised the need to examine the specific grounds set out in the Rule for ordering indemnity costs.

[18] In Hedley & Ors v Kiwi Co-operative Dairies Ltd it was said:[6]

[8] Such authorities as there are indicate that indemnity costs are awarded where truly exceptional circumstances exist.

_{The court’s approach was approved in Bradbury v Westpac Banking Corporation.}[7]

[19] I deal with the second of the two aspects of the second and third defendants’ application for costs. That is a request that I order that the costs of the estate be paid personally by the plaintiffs in respect of this proceeding. I am not satisfied that such an order is appropriate in the case. Counsel for the second and third defendants, in any event, has indicated that that issue could properly be determined pursuant to the Lawyers & Conveyancers Act 2006. I make it plain in this judgment that I am making no ruling on that aspect of the application for costs, other to say that I am not prepared to make an order in the form sought. In my view, that is a matter that is for the estate to take up directly with its solicitors and not by this proceeding.

[20] The costs of this proceeding, however, are a matter that requires consideration. I have already referred to the fact that the procedure adopted by the plaintiffs was inappropriate to determine the real matters in dispute in this proceeding. That, as it has turned out, is unfortunate. The airing of material, however, will have given both sides access to information not previously in their hands and no doubt will have an important bearing on any final resolution of the case.

[21] The second and third defendants’ frame their application for costs on the basis that indemnity costs are justified. I am not satisfied that any of the matters referred to in r 14.6(4), in respect of this particular proceeding, would justify an order for indemnity costs. That position is reached in part by the fact that it has not been possible to answer the real issues in dispute between the parties in this proceeding. Indeed, as I found in my judgment, what is required to resolve this dispute is the full machinery of the court’s assistance where there are disputed facts. That will involve the analysis of the documents and general background circumstances, and the cross-examination of, particularly, the third defendant. Whether there is shown to be a case for indemnity costs in respect of the subsequent proceeding is something that must be deferred at that time until such time as the proceeding is determined. It is certainly not something that justifies an order for indemnity costs in respect of this proceeding.

[22] Although it was not sought, I do not consider that there is a justification for increased costs either. When one considers r 14.6(3)(b) there is nothing asserted or alleged that would justify increasing the costs order that would normally apply.

[23] Accordingly, the question comes back to whether there is any good reason for departing from the principle that the party who was successful, in this case the defendants in opposing the application sought, should not receive an order for costs based on the appropriate category and banding for the steps taken. I conclude that there are no goods reasons for refusing costs in favour of the defendants.

[24] Having reached that step, the next step is to determine the appropriate categorisation for the proceeding. When I consider r 14.3 I reach the conclusion that this is a Category 2 proceeding.

[25] The next inquiry requires a consideration of the appropriate band for each step taken in the proceeding. Nothing has been presented to me to suggest other than that Band B, as referred to in r 14.5, would not be appropriate in this case. Having reach this position I conclude that the appropriate order for costs, is an order for costs in favour of the second and third defendants based on Category 2 Band B for each step taken in the proceeding, together with disbursements as fixed by the Registrar.

[26] The appropriate steps for which costs are to be ordered in respect of the proceeding can be ascertained by counsel by reference to Schedule 3 of the High Court Rules. To ensure that a formal figure is arrived at I order that the second and third defendants’ shall file and serve a memorandum that provides counsel’s calculation of costs based on Category 2 Band B for the Registrar’s consideration. In the event that there is any difficulty about the actual quantification the matter is to be referred to me for further orders.

[27] I rule accordingly.

---

[1] _{Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 at [19].}

[2] Mansfield Drycleaners Ltd v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt) Ltd

[2002] NZCA 277; (2002) 16 PRNZ 662 (CA) at 668.

[3] Glaister v Amalgamated Dairies Ltd, above n 1, at 610[14].

[4] Holdfast NZ Ltd v Selleys Pty Ltd [2005] NZCA 302; (2005) 17 PRNZ 897 (CA).
[5] _{Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA).}
[6] _{Hedley & Ors v Kiwi Co-operative Dairies Ltd (2002) 16 PRNZ 694 at [8], Goddard J.}
[7] Bradbury v Westpac Banking Corporation [2009] NZCA 234; [2009] 3 NZLR 400; (2009) 19 PRNZ 385 (CA).