Heppelthwaite v Heppelthwaite [2021] NZHC 2278 (1 September 2021)

Last Updated: 24 September 2021

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2020-409-595 [2021] NZHC 2278

UNDER	s 19 Administration Act 1969
IN THE MATTER	of the will of Janet Heppelthwaite late of Christchurch
BETWEEN	STEPHEN HEPPELTHWAITE and ANDREW MILES HEPPELTHWAITE Plaintiffs
AND	SIMON GRANT HEPPELTHWAITE Defendant

Appearances:	G M Brodie for Plaintiffs K W Clay for Defendant
Judgment:	1 September 2021
	(Determined on the papers)

JUDGMENT OF OSBORNE J

[Costs]

This judgment was delivered by me on 1 September 2021 at 12.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

HEPPELTHWAITE v HEPPELTHWAITE [2021] NZHC 2278 [1 September 2021]

A costs application

• [1] Janet Heppelthwaite died at Christchurch on 27 May 2019. By her will dated 19 December 2013 she left her modest estate equally to her three children (the two plaintiffs and the defendant), appointing the three of them her executors and trustees. Issues arose in relation to the administration of the estate. The plaintiffs applied for an order nisi under the Administration Act 1969. The proceeding was settled by the making of consent orders.

• [2] The parties now make competing applications for costs.

Factual background

• [3] The parties’ father had predeceased their mother (dying on 28 February 2018). It appears that his estate had been largely administered by the time Mrs Heppelthwaite died.

• [4] The plaintiffs both live in Christchurch, as had their parents, and enjoyed a relatively close relationship with both parents. The defendant has lived in New Zealand since 2018, but previously (since 2002) lived and worked in Asia. His relationship with the plaintiffs was not close.

• [5] The law firm, Kannangara Thomson, acted for Mr and Mrs Heppelthwaite. The firm then acted in relation to Mr Heppelthwaite’s estate. Subsequently, upon Mrs Heppelthwaite’s death, it began to act in relation to her estate, albeit with its instructions coming from the plaintiffs only.

• [6] A point was reached where the plaintiffs and Kannangara Thomson intended to make a substantial interim distribution of $70,000 to the three sons (leaving some

$30,000 in the estate). The defendant took issue with that course as he required further information about the financial affairs of both parents and their estates. The defendant perceived a conflict of interest on the part of Kannangara Thomson as the lawyers taking instructions from the plaintiffs as executors of Mr Heppelthwaite’s estate and then giving advice to the plaintiffs and the defendant as executors of Mrs Heppelthwaite’s estate.

• [7] Ultimately counsel (Mr G M Brodie and Mr A J F Wilding QC) were instructed by the plaintiffs and the defendant respectively. Detailed correspondence followed in relation to matters being raised by the defendant, including as to Kannangara Thomson’s purporting to act for Mrs Heppelthwaite’s estate.

• [8] Mr Wilding in June 2020 raised the possibility of exploring resolution of issues by way of a round table meeting but explained that the defendant would not attend such a meeting until he had all relevant information. Mr Wilding referred also to the need for probate to be sought in relation to Mrs Heppelthwaite’s estate. He recorded that Kannangara Thomson did not have instructions from the executors and trustees (meaning all three).

• [9] Mr Brodie responded, having been instructed by Kannangara Thomson. He provided some of the requested information. He recorded that he had been instructed by the plaintiffs to apply for a grant of probate. He asked whether the defendant would facilitate an application for probate on behalf of all three siblings. He suggested that the additional request for information should be dealt with by the executors of the estate once probate had been granted.

• [10] Mr Wilding responded with a lengthy history of the estates. Objection was taken on behalf of the defendant to Kannangara Thomson’s and Mr Brodie’s taking steps on behalf of the estate. Mr Wilding stated the defendant was lodging a caveat against a grant of administration. Mr Wilding recorded that the defendant would not consent to Kannangara Thomson or Mr Brodie acting for the estate. The letter did not expressly record whether the defendant would agree to a joint application for probate if other solicitors were instructed for the estate.

• [11] Mr Brodie replied in another detailed letter. He concluded by observing that the plaintiffs wished to apply for probate, intended to instruct Kannangara Thomson to act for them, and that if the defendant did not wish to participate in that process the defendant would then have his remedies.

• [12] Mr Wilding responded in a further, detailed letter. He stated it was regrettable that a dispute over lawyers “impedes sensible resolution”. Mr Wilding repeated earlier

requests for further information. He recorded that neither Kannangara Thomson nor Mr Brodie were authorised to incur costs on behalf of the estate.

• [13] Mr Brodie replied, having taken further instructions in relation to matters of background. He indicated that the plaintiffs were giving authority for further information to be provided to the defendant. He gave notice the plaintiffs now intended to apply for probate, but were inviting the defendant to join in the application, failing which the application would be made under s 19 Administration Act 1969, to the exclusion of the defendant. Mr Brodie indicated that alternatively the plaintiffs would be prepared to renounce probate so long as the defendant renounced probate, with the three of them consenting to the appointment of a partner from a Christchurch law firm acting as administrator, and consenting to the payment of three identified fees incurred by the plaintiffs.

The proceeding

• [14] On 30 November 2020 the plaintiffs filed their originating application in this proceeding, seeking an order nisi calling upon the defendant to show cause why probate of Mrs Heppelthwaite’s will should not be granted to them, and an order granting them probate of the will. Additionally they sought an order that the defendant be directed to pay the costs of the proceeding, to be deducted from his share of the estate.

• [15] The defendant filed a notice of opposition rejecting the assertion that he had neglected or refused to prove Mrs Heppelthwaite’s will and stating that he wished to be and was able to be an executor and trustee. By his notice of opposition he recorded that the main issue impeding the plaintiffs and the defendant making an application for probate of will was a dispute regarding which law firm should act for the estate in seeking of probate and administration.

• [16] Mr K W Clay had now been instructed as counsel for the defendant.

• [17] Ahead of the first call of the proceeding, the matter was at the request of counsel set down for a one day hearing (on 9 June 2021).
• [18] Ahead of that hearing the parties resolved their differences. By consent they sought an order confirming the three of them as the executors and trustees of the will of Mrs Heppelthwaite. By their consent memorandum they noted that a key issue had been that relating to which law firm should act for the estate in seeking probate and administration. They recorded the parties had now agreed that it was appropriate that Michael O’Regan of Cameron & Co so act.

• [19] On 21 May 2021 I gave judgment (by consent) in relation to those matters and reserved the costs of the proceeding.

Submissions as to costs

Overview

• [20] The plaintiffs seek an order that the fees and disbursements which they have incurred with Kannangara Thomson and Mr Brodie (totalling $16,210) be reimbursed to them from the estate.

• [21] The defendant opposes that application and seeks instead that the plaintiffs be ordered to pay to him increased costs (and disbursements), based on a 50 per cent uplift above a scale 2B award of costs, totalling $9321 (excluding disbursements).¹

• [22] The plaintiffs oppose the defendant’s application for costs.

Submissions for plaintiffs

• [23] For the plaintiffs, Mr Brodie made a number of points:

(a) The application was necessary because the defendant failed or refused to join the plaintiffs in making a joint application;

(b) the plaintiffs had no wish to exclude the defendant from administration; and

¹ High Court Rules, Category 2 under r 14.3(1) and band B under r 14.5(2).

(c) Mr Brodie did not receive a reply to his final (29 October 2020) letter giving seven days’ notice of the plaintiffs’ intention to make an application for probate or failing that an application under s 19 Administration Act.

• [24] In these circumstances Mr Brodie submitted that the plaintiffs have incurred their costs in attempting to obtain a grant of probate in common form and in making the application under s 19 Administration Act. Mr Brodie referred to the various steps taken by the plaintiffs in relation to Mrs Heppelthwaite’s estate. He attached the invoices of Kannangara Thomson and himself.

Defendant’s submissions

• [25] Mr Clay submitted that in this case the plaintiffs should be ordered to pay to the defendant the costs of the proceeding on the basis that costs should follow the event. Mr Clay observed that the plaintiffs’ application was in essence (through the order nisi sought), an application to exclude the defendant from the administration, incorrectly asserting that the defendant had failed or refused to apply for probate.

• [26] Mr Clay noted that the consent order confirmed both the plaintiffs and the defendant as executors and trustees, with an independent law firm, Cameron & Co, appointed to act in the administration. Mr Clay observed this was exactly what was proposed by the defendants, through Mr Wilding, in Mr Wilding’s 12 July 2020 letter, where it was recorded:

Simon would agree with an independent lawyer, it is proposed from Buddle Findlay or Cameron & Co, acting for the three brothers in seeking probate in the usual way. Is that agreed to?

• [27] Mr Clay made a number of points:

(a) Usually obtaining probate is simple, with the executors and trustees agreeing to instruct a law firm;

(b) here, for professional reasons legitimately raised by the defendant, there was an issue as to whether Kannangara Thomson was an appropriate law firm to be so instructed;

(c) Kannangara Thomson itself (on 18 December 2019) had recognised the entitlement of the brothers, collectively, to decide, which law firm to instruct;

(d) the plaintiffs, through Mr Brodie, continued through 2020 to insist on the appointment of Kannangara Thomson (and Mr Brodie) to act, requiring the defendant to join with them in instructing Kannangara Thomson if he wished to jointly apply for probate; and

(e) the defendant, through Mr Wilding, repeatedly indicated his willingness and ability to be a trustee and executor of Mrs Heppelthwaite’s estate, provided independent lawyers were appointed.

Plaintiffs’ reply submissions

• [28] In reply, Mr Brodie recorded the plaintiffs wished to make “the very strong point” that they did not, and did not wish to, exclude the defendant from executorship. Mr Brodie submitted the plaintiffs have consistently made it clear that they recognise that probate could only be granted to all three sons unless the defendant failed or refused to act. It was only in the event of such a failure or refusal that they sought a grant of administration to themselves alone.

• [29] Mr Brodie submitted that the issue as to the appointment of legal advisors was “a complete red herring”.

Discussion — the facts

• [30] Importantly for Mrs Heppelthwaite’s estate, its administration is now able to take place because, through this proceeding, the parties have been confirmed as the executors and trustees of Mrs Heppelthwaite’s will.
• [31] Importantly also, in that regard, the parties have now obtained by consent the Court’s order appointing the independent firm, Cameron & Co, to act as solicitors for the estate.

• [32] The issue of the appointment of independent legal advisors is not the “complete red herring” suggested by Mr Brodie. The detailed correspondence between counsel had clearly pointed to the willingness and ability of the defendant to be one of the executors and trustees. What stood in the way of his joining in the application for probate was the fact that the plaintiffs had not engaged with him on the appointment of an independent lawyer to act for the three sons. The plaintiffs had instead asserted there was no reason why Kannangara Thomson should not be instructed. The firm now to be instructed (by virtue of the consent order), namely Cameron & Co, is one of the two firms suggested by the defendant in July 2020. It is inescapable that, had the plaintiffs engaged with that suggestion in July 2020, then an application for probate in the usual way would have followed and probate would have been granted.

• [33] Therefore, standing back and looking at the outcome in its entirety, it is the defendant who has been substantially successful in this proceeding.

• [34] I do not overlook the fact that the plaintiffs (through Mr Brodie) indicated in October 2020 that they were prepared to renounce probate, so as to consent to the appointment of a partner in the law firm, Weston Ward & Lascelles, becoming administrator of Mrs Heppelthwaite’s estate. That, however, was conditional upon the defendant consenting to the payment of three accounts. Given that the consideration of whether accounts should appropriately be met by the estate was properly a matter for the administrator of the estate, the plaintiffs’ conditional offer unsurprisingly was not engaged with by the defendant. The fact the conditional offer was made cannot affect costs considerations.

Costs — the regime under the High Court Rules

• [35] All matters of costs are ultimately in the discretion of the Court, although the discretion is qualified by the specific costs rules under rr 14.2–14.10 High Court Rules.²

• [36] The primary principle is that “costs follow the event”.³

• [37] Here, it was consistently the defendant’s position that he would join in an application for probate provided an independent law firm acted for the estate, with Cameron & Co specifically suggested as one of two possibilities. It is the defendant who has been successful — he has achieved the outcome for which he was striving. It was in the circumstances an appropriate outcome.

• [38] This assessment is not intended to reflect adversely on the way in which the plaintiffs had taken steps towards the getting in of assets and the administration of the estate. There will clearly have been valuable work undertaken by them in that regard. But the nature of the present proceeding, especially when the outcome was achieved through consent orders, does not permit this Court to make any reliable assessment of the value of the plaintiffs’ steps in relation to estate administration. Furthermore, the plaintiffs’ application for costs is expressly related to the costs of and incidental to this present application. Any reimbursement of the plaintiffs’ legal costs relating to matters of administration will be a matter for consideration by the three executors with the benefit of the advice they will receive from Cameron & Co. In the event issues arise or persist in that regard the executors will be able to apply to this Court for directions. But such direction should be unnecessary given that Cameron & Co will be able to provide the executors with expert, impartial advice as to what earlier costs should be treated as reimbursable costs of administration.

² High Court Rules, r 14.1. See also Manukau Golf Club Inc v Choye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7] and [16].

³ High Court Rules, r 14.2(1)(a).

The costs of this proceeding

• [39] I find no reason to depart from the principle that costs should follow the event. It is just that the plaintiffs pay to the defendant the costs of the proceeding.

• [40] Mr Clay submits that this is a case for an award of increased costs (under r 14.6(3) High Court Rules). He submits that increased costs are justified because the application was flawed, given the plaintiffs should have agreed to the appointment of another law firm. Implicitly, Mr Clay was invoking r 14.6(3)(b)(ii) High Court Rules (taking or pursuing an unnecessary step or an argument that lacks merit).

• [41] While I am satisfied that the most appropriate outcome has been achieved through the consent orders made, I am not satisfied that there was no merit at all in the plaintiffs’ view that the preferable course was for Kannangara Thomson to continue to administer not only Mr Heppelthwaite’s estate but also Mrs Heppelthwaite’s estate. Furthermore, there has been, through this proceeding, the benefit that (without cost to the estate) the three parties have been confirmed as the executors and trustees of the estate.

• [42] In these circumstances, the just award of costs is, on a 2B basis (as calculated by Mr Clay), $6,214.

Order

• [43] I order the plaintiffs to pay to the defendant the costs of the proceeding fixed at $6,214, together with disbursements to be fixed by the Registrar.

Osborne J

Solicitors:

Kannangara Thomson, Christchurch Counsel: G M Brodie, Barrister, Christchurch Purnell Creighton, Christchurch

Counsel: K W Clay, Barrister, Christchurch