IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2007-404-7543

BETWEEN	D A ARMER Plaintiff

AND	J P SIMPSON & ORS Defendants/applicants

Hearing:	1 July 2010

Appearances: A H Waalkens QC and A L Credin for defendants/applicants
C T Gudsell QC for plaintiff/respondent

Judgment:	22 July 2010

JUDGMENT OF ALLAN J

In accordance with r 11.5 I direct that the Registrar endorse this judgment with the delivery time of 4 pm on Thursday 22 July 2010

Solicitors/counsel:
H Waalkens QC, Auckland Waalkens@quaychambers.co.nz
acredin@quaychambers.co.nz
Fisher Lamberg, Auckland
C T Gudsell QC Hamilton ctgudsell@xtra.co.nz
McKenzie Elvin, Tauranga

D A ARMER V J P SIMPSON & ORS HC AK CIV 2007-404-7543  22 July 2010

[1]       This is an application for review of a decision in respect of costs given by Associate Judge Robinson on 18 December 2009.  It is made pursuant to s 26P(1) of the Judicature Act 1908, and r 2.3 of the High Court Rules.

[2]       This proceeding was commenced by Ms Armer under the Family Protection

Act 1955.  She sought further provision from the estate of her late mother.

[3]       After affidavits had been filed on either side and discovery was complete, Ms Armer  chose  to  discontinue  the  proceeding.    Her  sister,  Ms Simpson,  the principal beneficiary under her late mother’s will, sought an order for costs in the sum  of  $18,368.     The  executors  of  the   estate  sought  $3,520.     Associate Judge Robinson considered that, notwithstanding the default rule as to costs in the event of a discontinuance, the circumstances were sufficiently unusual to justify a direction that costs would lie where they fell.  The costs applications were therefore dismissed.

[4]       Ms Simpson and her daughter Jennifer (jointly represented) seek to review that decision.  They say it was wrong in principle and that an order for costs ought to have been made in their favour.   The executors seek also to join in the review application.    Mr Waalkens  indicated  that  his  argument  on  behalf  of  Ms Armer applied equally to the executors.  It is appropriate in my view to consider the position of the executors as well.

Jurisdiction

[5]       Robinson AJ dealt with the application on the papers.  Having received very detailed submissions on either side, he delivered a brief reasoned decision (two pages) which made only limited reference to the issues raised by counsel in their memoranda.

[6]       Counsel are agreed that it is appropriate to proceed by way of review and not on appeal.   They are also agreed that because there was no defended hearing, the provisions of r 2.3(5) apply.  That sub-rule provides:

In all other cases,—

(a)        a review proceeds as a full rehearing; and

(b)	the Judge may give the order or decision the weight he or she thinks appropriate.

[7]       In practice, the Court on review will tend to accord a degree of weight to the decision of an experienced Associate Judge, especially where (as here), there has been an exchange of substantive submissions, and the judgment itself contained reasons (albeit somewhat truncated in this case):  Lovie v Medical Assurance Society
New Zealand Ltd,;  Team Maddison Ltd v Franchise Assoc of South Africa.

[8]       Mr Gudsell asks the Court to note in addition that Associate Judge Robinson had been involved in case management aspects of the proceeding from the time of filing, and that in general he was familiar with the competing contentions and the evidence.

The judgment under review

[9]       The decision of Robinson AJ read in its entirety:

[1]        Proceedings by the plaintiff for further provision out of the Estate of the late Joyce Norma Winifred Palmer were settled in December 2008. In terms of that settlement the plaintiff filed a notice of discontinuance pursuant to rule 475 of the High Court Rules.

[2]        The parties have not agreed on costs. Consequently, submissions have been filed by the plaintiff, the defendants and two of the beneficiaries who were resisting the plaintiff’s claim.

[3]        The deceased is survived by two daughters namely the plaintiff and Jillian Simpson. In terms of her Will the deceased bequeathed $5,000 to the plaintiff. She also bequeathed $5,000 to Julie Lesley and $5,000 to six of her grandchildren.  In  addition she  bequeathed  $20,000 to  her  granddaughter Jennifer Louise Howarth whose mother Jillian Patricia Simpson is the other child of the deceased.

[4]        The  balance  of  the  deceased’s  Estate  was  left  to  the  Simpson Pauanui Family Trust and the Simpson Family Trust. It is understood that the beneficiaries of these Trust are Jennifer Howarth and her mother Jillian Simpson.

[5]        It is submitted on behalf of the defendants and Mrs Simpson and Miss Howarth that the plaintiff’s claim for further provision was bound to fail and was in effect a “try on”. Consequently, there are no good reasons to depart from the principle which is referred to in rule 476c of the High Court Rules namely that a plaintiff who discontinues a proceeding against a defendant  must  pay  costs  to  the  defendant  of  and  incidental  to  the proceeding up to and including the discontinuance. In this respect it is submitted that Miss Simpson and Miss Howarth are in effect defendants. The  plaintiff’s  claim  if  successful  would  probably  have  resulted  in Miss Howarth and Mrs Simpson’s interest in the Estate being reduced.

[6]        It is submitted on behalf of the plaintiff that the plaintiff had a genuine claim in that a bequest of $5,000 to the plaintiff out of an Estate worth just under $1 million dollars did not satisfy the testators moral obligation to the plaintiff in terms of the Family Protection Act 1955.

[7]        It is impossible in the circumstances I have outlined to determine whether as claimed by counsel for the beneficiaries and defendant that the plaintiff’s claim was a try on or whether the plaintiff had a genuine claim for further provision out of the Estate. However, due recognition must be given to the plaintiff’s responsible attitude in settling her claim. Her decision has saved the beneficiaries the emotional stress of a defended hearing together with the extra costs involved. The costs being sought by the beneficiaries inclusive of disbursements total $21,345.00. The defendant's costs amount to
$3,520.

[8]        It is likely that the costs incurred by the plaintiff to date will exceed the amount of her bequest of $5,000.

[9]        Consequently,  in  the  unusual  circumstances  of  this  case  having regard to the very small bequest received by the plaintiff compared with the substantial amounts inherited by the beneficiaries I have concluded that it is appropriate for there to be no order for costs against the plaintiff. Consequently, the application by the beneficiaries and the defendants for costs against the plaintiff will be dismissed.

[10]	The grounds upon which the learned Associate Judge refused to make an order for costs, appear therefore to have been that:

a)        Ms Armer   received   a   very   small   bequest   compared   with   the substantial amounts inherited by other beneficiaries;

b)        it was impossible in the circumstances to determine whether her claim was  a  “try-on”  or  whether  she  had  a  genuine  claim  for  further provision out of the estate;

c)        due recognition had to be given to her responsible attitude in settling the  claim,  a  decision  which  saved  the  beneficiaries  the  emotional stress of a defended hearing, together with the extra costs involved.

Legal principles

[11]     Rule 15.23 provides:

15.23   Costs

Unless  the  defendant  otherwise  agrees  or  the  court  otherwise  orders,  a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.

[12]     The presumption in r 15.23 may however be displaced if the circumstances render a different costs outcome just and equitable.  In other words, the general costs discretion in r 14.1 can over-ride r 15.23.  In general, the Court will not speculate on the merits of a case which it never heard, and only in a case where the merits are clear  will  they  influence  the  Court’s  decision  in  respect  of  costs,  following  a
discontinuance:  North Shore City Council v Local Government Commission.

[13]     Having said that, the Court is able to consider the reasonableness of the stance in  the litigation  of  the various  parties.    The circumstances  in  which  the proceeding was commenced and defended, and the circumstances in which it was discontinued may all be of relevance:   see generally Kroma Colour Prints v Tridonicato NZ Ltd.

Discussion

[14]     Associate Judge Robinson declined to consider the merits.  He did however take into account in Ms Armer’s favour the fact that her decision to discontinue saved the estate and other parties considerable costs and a degree of emotional stress.

[15]     Mr Waalkens submits that the learned Associate Judge was wrong to decline to consider the merits.   He says that in this case they are clear, and that once examined  they preclude  a  decision  to  depart  from  the  ordinary principle  that  a plaintiff must pay costs following a discontinuance.

[16]     While  I  accept  the  general  principle  that  the  Court  will  not  ordinarily examine the merits for the purposes of determining costs on a discontinuance, there is more room for the Court to pay a degree of attention to the strength of the discontinued claim where, as here, the dispute is almost entirely factual and the case would, in accordance with the universal practice in respect of family protection cases, have gone to trial on the affidavits, without cross-examination.

[17]     In those circumstances, I am prepared to consider the broad merits of the case as I am urged to do by Mr Waalkens.

[18]     This was a somewhat unusual case.   The principal parties, Ms Armer and Ms Simpson, are sisters.  There have been a number of tragic deaths in the family, four of them in the Erebus disaster.  Each of the sisters has remarried.  The litigation concerns the estate of their late mother, whose husband was one of those who died at Erebus.  Under her husband’s will, she received a life interest;  upon her death each of the two daughters received about $3 million from the estate of their late father.

[19]     The present estate is worth approximately $938,000, of which the principal asset is a property at Pauanui.  In addition, debts of about $450,000 were owing to the deceased by family trusts at the time of her death.

[20]     Under her last will, dated 6 May 2004, the testatrix made the following provision:

a)	forgiving all loans made to the family trust in her lifetime which had not been repaid at her death;

b)	bequeathing the sum of $5,000 to Ms Armer;

c)        bequeathing  other  legacies  of  $5,000  or  $10,000  to  a  variety  of persons;

d)        giving the Pauanui property to the Simpson Pauanui Family Trust (so benefiting Ms Simpson);

e)        providing out of residue a legacy of $20,000 to Jennifer Howarth, (Ms Simpson’s  daughter)  and  further  legacies  of  $5,000  to  other grandchildren;

f)         directing  that  the  balance  of  the  residue  be  paid  to  the  Simpson

Family Trust.

[21]     The broad effect of the will was to provide $5,000 for Ms Armer and the bulk of the estate to Ms Simpson.   Ms Armer considered the will to be unfair.   Her solicitor wrote to the solicitors for the estate suggesting that her legacy be increased to $70,000, and that legacies to grandchildren be likewise increased.   It was also proposed that Ms Armer’s family trust be given the opportunity to purchase the Pauanui property at fair market value.  That proposal evidently came to nothing, and ultimately  this  proceeding  was  commenced.     Shortly  thereafter,  counsel  for Ms Simpson wrote to the plaintiff’s solicitors, asserting that the claim was meritless and that indemnity costs would be sought if it proceeded.

[22]     In an affidavit sworn by Ms Armer in support of the application, she said:

I considered  that  the  $5,000  legacy  left  to  me  by  my  mother  does  not adequately recognise my place in the family as her daughter and falls well short of satisfying the moral duty that my mother owed me.  I am seeking an increase of that legacy and a fair division of my mother’s personal and family effects between my sister and myself.

[23]     To  the  extent  that  this  approach  reflected  a  claim  to  an  entitlement  to recognition as part of the family, there is of course support in the cases:  Williams v Aucutt..  A child is entitled to recognition of his or her place in the family and of having been an important part in the overall life of the deceased.   It must be said

 
however, that awards on that ground are usually modest.  Nevertheless Ms Armer’s reliance on an entitlement to be recognised as part of the family was not misplaced.

[24]     But her affidavit was not devoted principally to supporting a claim based on Williams v Aucutt principles.  Instead, much of it was spent in criticising her sister’s role in the care of the deceased, to her own alleged effective exclusion.  As in most families, responsibility for care of the older generation tended to fall on one sibling, in this case Ms Simpson, rather than Ms Armer.  This seems mainly to have been for geographical reasons in the first instance.  But Ms Armer contended in her affidavit that her sister deliberately alienated the deceased from her over a period, and actively worked towards limiting and restricting the relationship between mother and daughter.  There are suggestions in Ms Armer’s affidavit also that the imbalance in the last will of the deceased (contrary to the pattern of earlier wills) was the result of pressure upon her mother from Ms Simpson.

[25]     The heavy criticism of Ms Simpson which appeared in Ms Armer’s affidavit was quite unnecessary for the purpose of building a case on family recognition principles.     Unsurprisingly,  it  produced  a  flurry  of  affidavits  in  opposition. Ms Simpson  filed  a  long affidavit  which  detailed  the  extent  of  her  care  of  the deceased over many years.   Over the last 10 years or so of her life the deceased suffered  from  serious  multiple  health  problems  which  required  Ms Simpson  to devote herself for significant periods to the full time care of her mother.  In that task Ms Simpson was assisted at times by her granddaughter.

[26]     Ms Simpson’s affidavit was supported by about half a dozen other affidavits, all attesting to the quality and scope of her care of her mother.

[27]     Ms Armer’s affidavit in reply was detailed and comprehensive.  Some of it was devoted to answering criticisms which Ms Simpson in turn had made about her sister.

[28]     Overall, the tone of the affidavits was unfortunately confrontational.  In my view that stemmed from the stance adopted at the outset by Ms Armer.  There could be no doubt that at trial a Judge would have determined that Ms Simpson had indeed

devoted herself substantially to the full time care of her mother over the last years of her life at a time when she was effectively an invalid who was hospitalised on many occasions for a variety of reasons.  But I also think it unlikely that a Judge would have regarded Ms Armer as other than a dutiful daughter.  Her difficulty was that she lived in another city, and that opportunities for frequent contact were limited.

[29]     That  brings  me  to  the  other  issue  of  significance  in  the  case;    namely Ms Armer’s personal circumstances.  She acknowledged in her initial affidavit that she was living an affluent lifestyle, although she gave little detail about her personal financial position.   Ms Simpson, however, contended that Ms Armer’s husband of more than 20 years was worth more than $100 million, and that he (or possibly he and Ms Armer) own at least two properties worth several million dollars in total. Moreover, Ms Armer received (as was known by the deceased) almost $3 million from her father’s estate on the death of her mother.  None of this was disputed by Ms Armer.

[30]     The extent to which Ms Armer has access to her husband’s assets is not clear. But on any view, she was and is extraordinarily well off (it is perhaps relevant here to recall that Ms Simpson also received about $3 million from the estate of her late father upon the death of the deceased, but that is of little relevance to an assessment of the strength of Ms Armer’s claim to breach of moral duty).

[31]     Given  that  Ms Armer  was  not  in  need  for  the  purposes  of  the  Family Protection Act, her only viable claim lay in an argument that rather more than a legacy of $5,000 was needed in order adequately to recognise her place in the family. To mount such a claim it was completely unnecessary for her to denigrate her sister (as she tended to do) and to play down to some extent the degree to which her sister had cared for the deceased in the latter years of her life.  By mounting a case that involved criticism of her sister, Ms Armer brought upon herself the counterattack appearing in the affidavits filed by Ms Simpson and other deponents.

[32]     In her reply affidavit Ms Armer advised (having responded to that counter attack to some degree) that she proposed to discontinue the claim.  She elected to do so because:

… irreparable damage has occurred to my relationship with [Ms Simpson]

[33]     In  my  view,  that  damage  would  not  have  occurred  but  for  Ms Armer’s decision to include in her initial affidavit a great deal of material that tended to belittle her sister.   It was unnecessary to do so for the purposes of the only basis upon which she could realistically mount a claim, namely that of recognition as part of the family.  In other words, Ms Armer brought upon herself the circumstances in which she found it necessary to discontinue the proceeding.

[34]     As is observed in Kroma Prints, considerations of that sort are relevant to the issue of costs following a discontinuance.

[35]     Quite  apart  from  that,  it  is  difficult  to  see  how  Ms Armer  could  have succeeded at trial, given her extremely strong financial position and the fact that careful (albeit modest) provision was made for her by way of a legacy.  Claims by very affluent adult children where the estate is relatively modest pose considerable difficulties (see the discussion on the topic in the judgment of Richardson P in Williams v Aucutt at [45]-[49]).

[36]     Even if Ms Armer had been able to persuade the Court that further provision was appropriate, the amount of any additional award would not have been likely to exceed her own legal costs.

[37]     In summary therefore, I consider that:

a)        Ms Armer’s claim in the proceeding stood only a modest chance of success.  Any award obtained was unlikely to exceed her own costs;

b)        Ms Armer decided to discontinue the proceeding by reason of the damage being done to her relationship with her sister.  In my opinion that damage resulted from the tone and content of her own initial affidavit which, having regard to the only viable basis for a claim (family recognition) ought not to have included such allegations as those appearing in paragraph 37.   There, Ms Armer contends that Ms Simpson was responsible for the terms of the deceased’s last will,

and further that she had been engaged in a calculated attempt to exert control and influence over the deceased’s life, extending to the degree of contact that the deceased was able to have with Ms Armer and her children.

[38]     Drawing all of these threads together, I conclude that this is a case in which the Court is able to consider the merits for costs purposes.  I am of the opinion that Ms Armer’s proceeding stood, at best, only a modest chance of success.  Moreover, she  decided  to  discontinue  the  proceeding  by  reason  of  a  damaged  sibling relationship caused largely by her own allegations against Ms Simpson.

[39]     It is for a party who contends that r 23.15 ought not to apply to make out a case for a departure from the rule.  Having carefully read the affidavits, I find that Ms Armer has not established that costs ought to lie where they fall.   It follows therefore that I take a different view from that expressed in the decision of Associate Judge Robinson, having engaged in a much closer analysis of the affidavits than he appears to have undertaken.

Result

[40]     For the foregoing reasons the application for review succeeds.  Ms Simpson is entitled to costs calculated in accordance with category 2B, of $18,240, together with disbursements of $128, making in all the sum of $18,368.

[41]     Ms Simpson is also entitled to costs calculated in accordance with category

2B in respect of the present application for review.

[42]     I see no reason to take a different approach to the claim for costs by the executors.   Ms Armer is to pay the executors’ costs calculated in accordance with category 2B, and amounting to $3,520.   The executors are not entitled to any additional order for costs in respect of the present review, they having been in effect represented by Mr Waalkens.

C J Allan J