Scott v Miller HC Gisborne CIV 2009-416-236 [2011] NZHC 712 (11 February 2011)

Last Updated: 26 July 2011

IN THE HIGH COURT OF NEW ZEALAND GISBORNE REGISTRY

_{civ 2009-416-236}

BETWEEN COLLEEN SCOTT Applicant

AND NICHOLAS KAYNE MILLER First Respondent

AND ROBERT WALTER PROUDFOOT AND GORDON RICHARD WEBB AS EXECUTORS AND TRUSTEES OF THE ESTATE OF ASHLEY RONALD SCOTT (DECEASED)

Second Respondents

Hearing: (on the papers)

Counsel: M B Beech for Applicant

D A T Hollings QC for First Respondent

G Webb for Second Respondent

Judgment: 11 February 2011

_{JUDGMENT OF HEATH J}

Solicitors:

Sharp Tudhope, Private Bag 12020, Tauranga

Atkins Holm Joseph Majurey, PO Box 1585, Auckland

Nolans, PO Box 1141, Gisborne

Counsel:

D A T Hollings QC, Bankside Chambers, Level 22 Lumley Centre, Shortland Street, Auckland

SCOTT V MILLER HC GIS civ 2009-416-236 11 February 2011

Introduction

[1] Nicholas Miller was born on 13 June 1989. His mother is Ms Caroline Miller. She alleged that Mr Ashley Scott was Nicholas’ father. To establish that fact Ms Miller instituted proceedings in this Court in late 1989, to obtain a declaration of paternity.1 By the time that application was heard, Mr Scott had, tragically, died in an accident.

[2] A declaration of paternity was made on 1 October 1990, by Thorp J.2 Almost

19 years later, on 24 July 2009, Colleen Scott (the deceased’s sister) applied to the

Family Court at Gisborne for a declaration of non-paternity.3

[3] A hearing for Ms Scott’s application was scheduled for 14 December 2010. Advance notice of her intention to discontinue the proceeding was given to the Court on 3 December 2010, though a notice of discontinuance was not formally filed until

13 December 2010. Nicholas seeks costs on the discontinuance.

The relevant facts

[4] Lengthy submissions, supported by affidavit evidence, have been filed in support of and in opposition to the costs application. I see no point in endeavouring to resolve conflicts in the evidence. Plainly, Nicholas is entitled to some costs on the discontinuance of the application.4 The real question is whether, as Ms Hollings QC submits on his behalf, either increased or indemnity costs5 should be awarded on the

_{basis that the proceeding was fundamentally flawed from commencement.}

1 _{Status of Children Act 1969, s 10.}

2 _{Miller v Devonport and Proudfoot HC Gisborne SC 1/90, 1 October 1990.}

3 Status of Children Act 1969, s 10(3), as substituted from 1 July 2005 by s 12 of the Status of

_{Children Amendment Act 2004.}

4 There is a presumption in favour of costs being awarded on discontinuance of any proceeding in the

_{High Court: High Court Rules, r 15.23.}

5 See Bradbury v Westpac Banking Corporation [2009] 3 NZLR 400 (CA) at para [6] and Kroma

Colour Prints Ltd v Tridonicatco NZ Ltd [2008] NZCA 150; (2008) 18 PRNZ 973 (CA) at para [12].

[5] The application for a non-paternity order was filed in the Family Court on 24

July 2009. The timing of the application is significant. Following Thorp J’s declaration that Nicholas was Mr Scott’s son, a settlement had been reached between Ms Scott and Nicholas in relation to the distribution of the estate of the late Mr Scott. That settlement was approved by this Court on 22 May 1992, when David Williams J

made an order to that effect.6 As a result of the settlement, Nicholas became entitled

to 11/20ths of the deceased’s estate, with the balance of 9/20ths going to Ms Scott. Nicholas’ share was to be held on trust and distributed to him on his 20th birthday: 13

June 2009.

[6] The non-paternity application was filed, initially, in the Family Court. Because there was a collateral challenge to the earlier order of this Court, Judge Neal made an order removing the application from that Court for determination in this Court.7

[7] Ms Hollings QC submits that the application had no prospect of success. That is not conceded by Mr Beech. His position is that his client does not accept that she would have lost on the merits of her application. It appears that she now proposes to bring an application to the Court of Appeal to extend the time to appeal against Thorp J’s order of 1 October 1990.

[8] On Ms Scott’s evidence, although she sat through the original paternity hearing and was a party to settlement of the claim brought on behalf of Nicholas under the Family Protection Act 1955, she states that (for reasons into which I need not go) she had no clear understanding of the evidence that could have been called at the paternity hearing and was unaware of any ability to challenge the judgment by way of appeal. She says that it was because she (allegedly mistakenly) understood the paternity declaration to be final that she entered into settlement of the Family

_{Protection Act proceedings.}

6 _{Re Scott; Miller v Devonport and Proudfoot HC Gisborne SC 5/91, 22 May 1992.}

7 CS v KM FC Gisborne FAM 2009-016-311, 12 October 2009.

[9] Ms Scott states that, as a result of discussions with her own daughter, she decided it would be appropriate to seek a DNA sample from Nicholas to ascertain whether Mr Scott was Nicholas’ father. That attempt was rebuffed.

[10] Because Ms Scott considered that Nicholas’ mother may have been with other men around the time Nicholas was conceived and, in her view, Ms Miller’s claim was “opportunistic”, she considered that the original order should be challenged. Counsel submits, on her behalf, that the decision to make the application for non-paternity “was not made lightly” and was done with the motive of attaining certainty for all concerned, through application of the most scientific testing possible. DNA testing of the type now available would not have been accessible in 1990.

[11] Ms Hollings submits that Nicholas was under no obligation to consent to DNA tests. She submits that he has grown up believing that Mr Scott was his father, a belief that is confirmed by an extant order of this Court. Ms Hollings also points out that the costs of opposing the application have been significant. Nicholas is handicapped as a result of an accident in which he was involved when aged 10 years and the costs incurred will deplete the share of Mr Scott’s estate that he is entitled to take. She also emphasises that the proceeding has been disconcerting for Nicholas, given the doubt which has been cast on his sense of identity.

Analysis

[12] Nicholas seeks costs on an increased or indemnity basis to reflect Ms Hollings’ submission that the proceeding had no prospect of success. The circumstances in which increased or indemnity costs might be ordered are set out in r 14.6(3) and (4) of the High Court Rules. Those provisions state:

...

(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.

(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.

[13] In Bradbury v Westpac Banking Corporation,8 the Court of Appeal considered whether particular conduct justified either an award of indemnity costs. In doing so the Court considered the inter-relationship among the rules dealing with standard, increased and indemnity costs. The position was summarised by Baragwanath J, delivering the judgment of the Court:

[6] Indemnity costs form an exception to the normal New Zealand costs regime. While expressed to be at the discretion of the court (r 46(1), now r

14.1), that general discretion is qualified by the specific costs rules and is

exercisable only in situations not contemplated or not fairly recognised by them (Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA)). Ordinarily the loser must pay the winner’s costs according to scale. The scale reflects the complexity and significance of the proceeding and are assessed at 2/3 of the daily rate set by the Rules Committee (r 47, now r

14.2). The rate is reviewed annually.

...

[27] The distinction among our three broad approaches: standard scale costs;

increased costs; and indemnity costs may be summarised broadly:

(a) standard scale applies by default where cause is not shown to depart from it;

(b) increased costs may be ordered where there is failure by the paying party to act reasonably; and

(c) indemnity costs may be ordered where that party has behaved either badly or very unreasonably.

[14] It is a fundamental principle that an order made by a Court of unlimited jurisdiction (of which the High Court is one) remains valid and enforceable until such time as it is set aside by a Court of competent jurisdiction.9 The order made on

1 October 1990 has never been challenged on appeal. Nor has any application been made to set it aside. A fresh application for a non-paternity order can only be viewed as a collateral attack on the original order. While that order remained in force, irrespective of any strict notion of issue estoppel or res judicata, it was almost inevitable that this Court would decline to grant relief of the type sought.

[15] Notwithstanding Ms Scott’s evidence, it is difficult to avoid the inference,

given the proximity of the application to the Family Court to the time at which

_{Nicholas was entitled to receive his inheritance, that Ms Scott and her daughter were}

8 _{Bradbury v Westpac Banking Corporation [2009] 3 NZLR 400 (CA).}

9 Isaacs v Robertson [1984] 3 All ER 140 (PC) at 143.

concerned about protecting what they believed was their moral right to receive the entire proceeds of the late Mr Scott’s estate.

[16] So far as indemnity costs are concerned, it would be necessary to demonstrate that Ms Scott has acted “vexatiously, frivolously, improperly or unnecessarily”10 in commencing bringing and continuing the proceeding. To use the more colloquial language adopted by Baragwanath J in Bradbury v Westpac Banking Corporation, it must be demonstrated that Ms Scott has “behaved either badly or very unreasonably”.11

[17] By a fine margin, I am not prepared to make a finding of fact to that effect. Without cross-examination, although there are doubts as to motive, I am not prepared to brand Ms Scott as someone who has brought proceedings vexatiously, frivolously or very unreasonably. It seems more likely that Ms Scott has convinced herself that the step she has taken is designed to resolve doubts that she has always harboured about Nicholas’ paternity. That type of rationalisation would be needed for any (otherwise) reasonable person to challenge a Court order so long after the event and at a time proximate to when financial benefits are due to flow to the child.

[18] However, I am satisfied that increased costs should be ordered. In my view, Ms Scott maintained an argument over a period of some 18 months which had little or no prospects of success.12 Those circumstances justify an uplift on the usual award of costs on discontinuance. I consider the appropriate uplift to be 50%.

Result

[19] Ms Scott is ordered to pay costs to Nicholas on a 2B basis (with an uplift of

50%) together with reasonable disbursements. Both costs and disbursements are to be fixed by the Registrar.

10 _{High Court Rules, r 14.6(4)(a).}

11 _{Bradbury v Westpac Banking Corporation [2009] 3 NZLR 400 (CA) at para [27](c).}

12 High Court Rules, r 14.6(3)(b)(ii). In saying this I do not overlook the caution against speculation on the outcome of discontinued proceedings advanced in Kroma Colour Prints Ltd v Tridonicatoco NZ Ltd [2008] NZCA 150; (2008) 18 PRNZ 973(CA) at para [12]. The jurisdictional issue is a legal point that does not require contested facts to be resolved.

[20] For completeness, I record that the executors and trustees of the estate of the late Mr Scott took no active step in the proceeding. They will be entitled to their

_{costs out of the estate. They do not seek costs against Ms Scott.}

_{P R Heath J}

Delivered at 3.00pm 11 February 2011