IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CIV 2021-404-1544
[2022] NZHC 3	

IN THE MATTER OF	The Family Proceedings Act 1980 and The Property (Relationships) Act 1976	
BETWEEN	STEPHEN HENRY CYRIL JOHNS
Appellant	
AND	CHRISTOPHER NORMAN LORD AND COLIN CLIVE HOLLOWAY
First Respondents

GAIL PATRICIA JOHNS
Second Respondent	

On the papers		
Counsel:	S R Mitchell for the appellant G C Jenkin for the respondents	
Judgment:	7 January 2022	

JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 7 January 2022 at 4:00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

JOHNS v LORD AND HOLLOWAY [2022] NZHC 3 [7 January 2022]

[1]	The appellant, Mr Johns, appeals against an award of costs by Judge D A Burns in the Family Court at Auckland.1

Background

[2]	In October 2018, Mr Johns filed an application under ss 3 and 4 of the Family Protection Act 1955 seeking further provision out of his late father’s estate. The application was advanced on the basis his father (Mr L R Johns) had failed to make provision from his estate for Mr Johns’ proper maintenance and support.

[3]	The executors of Mr L R Johns’ estate were the respondents to Mr Johns’ application (and are the first respondents to this appeal). They filed a notice of defence. This stated, among other things, that there were insufficient net assets in the estate to pay a bequest of $20,000 provided for in the will to Mr Johns (or, indeed, any other bequests provided for in the will). The executors had earlier advised Mr Johns of this in a letter which recorded the estate’s financial position.

[4]	Mrs Johns, the widow of the late Mr Johns, was ordered to be served with Mr Johns’ application in her capacity as a beneficiary. Mrs Johns opposed the application. She is the second respondent to this appeal.

[5]	Mr Johns’ application was allocated a half-day hearing on 1 October 2020. Shortly before the hearing Mr Johns advised the Court and parties that he intended to apply for an adjournment. He made that application at the start of the hearing.

[6]	Mr Johns sought the adjournment on the basis that the executors had failed to take appropriate steps to ensure assets were properly brought within the estate. His argument focussed on the proceeds of the sale of a property, inherited by Mr L R Johns, of about $394,000 which Mr L R Johns had received in 2014, three years before his death. At the time of receipt Mr L R Johns had lost capacity and Mrs Johns had an enduring power of attorney. Mrs Johns decided under the power of attorney that the money should be paid into their joint account. Approximately $170,000 was

1	Johns v Lord [2021] NZFC 4522.

subsequently used to pay Mr L R Johns’ rest home fees. The balance passed to Mrs Johns by way of survivorship when Mr L R Johns died.

[7]	Mr Johns argued that Mrs Johns’ decision to pay the money into the joint account was a form of self-dealing and was in breach of her fiduciary obligation. He argued that the executors should have taken action against Mrs Johns and their failure to do so was a breach of their duty to bring in the assets of the deceased’s estate.

[8]	The executors and Mrs Johns opposed the adjournment application and contended the substantive application should be dismissed.

[9]	Judge Burns delivered his substantive judgment on 16 October 2020 (the substantive judgment).2 He dismissed the application for an adjournment and then dismissed the substantive application. In his view there was little or no prospect of success if Mr Johns was to seek to set aside or review Mrs Johns’ decision. Even if Mr John was to succeed in such a claim, he was unlikely to receive significantly more than the specific legacy that had been provided. For these and other reasons there was little or no merit in the substantive claim, which Judge Burns dismissed.

[10]	The Judge said this about costs:

[23] I order costs on a 2B basis in favour of [Mrs Johns] who has had to  bear the costs of defending the application because there is no asset in the estate. That should cover Mr Jenkin’s appearances and also Mr Gay’s [respectively counsel for Mrs Johns and the executors]. I direct counsel to confer and see if they can reach agreement on the appropriate quantum. If there is disagreement memorandum can be filed and placed before me for resolution of the disputed quantum issue.

[11]	For completeness, I note that Mr Johns appealed Judge Burns’ substantive judgment to this Court. His appeal was dismissed by Gordon J by judgment given on 25 February 2021.3

2	Johns v Lord [2020] NZFC 8974.
3	Johns v Lord [2021] NZHC 281.

Costs judgment

[12]	Agreement on the quantum of costs was not reached. Counsel filed further memoranda and the Judge convened a further hearing which was held on 12 March 2021. Additional memoranda were filed. The Judge then delivered his costs judgment on 5 July 2021.

[13]	Costs in the sum of $49,540.63 were claimed by Mrs Johns and the executors. These were calculated on a 2B basis with an uplift of 25 per cent. Mr Johns resisted that claim. He said costs should lie where they fell, that the claim was excessive and not justified and that an uplift was not justified.

[14]	The Judge declined to order an uplift. That decision has not been challenged.

[15]	The Judge did not accept the 2B costs calculations of counsel for Mrs Johns and the executors. The Judge found that some of the claimed time allowances were inappropriate for a Family Court proceeding. He ordered costs in favour of the executors for $13,000 (rather than the $16,808 claimed) and in favour of Mrs Johns for $14,500 (rather than the $22,824.50 claimed). There has been no challenge to the Judge’s decisions on particular time allowances.

[16]	The Judge held that the executors were entitled to costs as well as Mrs Johns. This was because both had to engage counsel “and Mr Gay [counsel for the executors] gave the reasons for that in court which I accept”.4 This decision was the focus of Mr Johns’ appeal.

[17]	Finally, the Judge addressed whether Mr Johns enjoyed the protection from costs conferred by s 45(2) of the Legal Services Act 2011. He found that the grant of legal aid to Mr Johns came to an end on 29 August 2020 and thereafter he did not enjoy the protection of s 45(2). The Judge awarded costs only from 29 August 2020 onwards. Mr Johns’ notice of appeal said that the Judge was wrong to not consider his grant of legal aid. However, Mr Mitchell, counsel for Mr Johns, did not pursue that challenge in his submissions.

4	Johns v Lord [2021] NZFC 4522 at [25].

Mr Johns’ appeal

[18]	The parties agreed, and the Court directed, that the appeal be determined on the papers following the filing of submissions. Mr Mitchell filed submissions in support. Mr Jenkin filed submissions in response on behalf of the executors and Mrs Johns. Mr Mitchell then, by agreement, filed reply submissions.

[19]	The sole ground of appeal pursued in the submissions filed by Mr Mitchell was that Judge Burns was wrong to award two sets of costs (one to the executors and one to Mrs Johns).

Submissions

[20]	Mr Mitchell submitted that Judge Burns’ decision to award two sets of costs was in error for two reasons.

[21]	First, at [23] of his substantive judgment (quoted above at [10]) Judge Burns awarded costs to Mrs Johns and said that those costs should cover the appearances of counsel for Mrs Johns and counsel for the executors. Mr Mitchell submitted that the Judge had thereby determined costs (except for quantum) and so it was not open to him to make a further costs award in favour of the executors.

[22]	Secondly, Mr Mitchell submitted the Judge was wrong not to apply r 14.14 of the District Court Rules 2014 (the Rules). Rule 14.14 provides:

14.14	Defendants defending separately

The court must not allow more than 1 set of costs, unless it appears to the court that there is good reason to do so, if—

(a)	several defendants defended a proceeding separately; and

(b)	it appears to the court that all or some of them could have joined in their defence.

[23]	Mr Mitchell submitted that Mrs Johns and the executors had a common position in the proceeding and it was not necessary for them to be separately represented. He says the Judge failed to give any reasons for awarding two sets of costs rather than applying r 14.14.

[24]	Mr Mitchell acknowledged the narrow scope of an appeal against the exercise of the discretion to award costs. However, he says the Judge was clearly wrong in awarding two sets of costs.

[25]	Mr Jenkin filed submissions on behalf of both Mrs Johns and the executors. Mr Jenkin submitted that the Judge’s award of costs to Mrs Johns in his substantive judgment did not prevent him making a further award in favour of the executors. He submitted it was proper for Mrs Johns and the executors to be represented separately in the Family Court proceeding because their interests diverged. Rule 14.14 was therefore not engaged.

Issues on appeal

[26]	There are two issues on this appeal:

(a)	Did the Judge’s award of costs to Mrs Johns in his substantive judgment mean that it was not open to him to make a costs award in favour of the executors?

(b)	If it was open to the Judge to make a costs award in favour of the executors, did the Judge err in failing to apply r 14.14 and instead allowing two sets of costs?

Decision

Did the Judge’s award of costs to Mrs Johns in his substantive judgment mean that it was not open to him to make a costs award in favour of the executors?

[27]	In his substantive judgment, Judge Burns ordered costs in favour of Mrs Johns. This decision finally determined the incidence of costs as between Mrs Johns and Mr Johns, subject to any appeal against that decision (which no party pursued) and subject to determination of the quantum of those costs.

[28]	The Judge’s decision to award costs in favour of Mrs Burns did not, however, determine the incidence of costs as between the executors and Mr Johns. The Judge did not make any decision on those costs. I appreciate that the Judge said that the

award in favour of Mrs Johns “should” cover the appearances of the executors’ counsel. That was merely an indication of the Judge’s view on the appropriate quantum of the costs award in favour of Mrs Johns. The Judge was not saying, let alone deciding, that the executors would not be awarded costs.

[29]	It therefore remained open for the Judge to decide whether to make a costs award in favour of the executors.

Did the Judge err in failing to apply r 14.14 and instead allowing two sets of costs?

[30]	For r 14.14 to be engaged two threshold requirements must be satisfied:

(a)	Several defendants defend a proceeding separately; and

(b)	It appears to the Court that all or some of them could have joined in their defence.

[31]	It is only where those requirements are satisfied that there is a presumption of one set of costs. Even then, that presumption can be displaced if it appears to the court that there is good reason to allow more than one set of costs.

[32]	In this case, the key question is whether the executors and Mrs Johns could have joined in their defence of Mr Johns’ application. In my view they could not have. They had different roles. The executors’ role was largely a neutral one, as it generally is in a claim under the Family Protection Act for further provision from an estate. For example, executors have obligations of disclosure under that Act as to the financial affairs of the estate and as to the deceased’s reasons for making dispositions or for not making provision for any person. Mrs Johns’ role, by contrast, was to defend Mr Johns’ claim. Again, that is generally the role played by a beneficiary in such a claim.

[33]	For that reason alone, Judge Burns was correct to conclude that both the executors and Mrs John had to engage counsel. Rule 14.14 was therefore not engaged, and the Judge did not err in allowing two sets of costs.

[34]	This position was reinforced by the serious allegations of misconduct that Mr Johns made against both respondents. Mr Johns alleged that the executors had failed in their duty to bring in the assets of the deceased’s estate. He alleged that Mrs Johns had breached her fiduciary duty as Mr Johns’ attorney. It was appropriate that the executors and Mrs Johns separately defend these allegations.

Costs of this appeal

[35]	Only Mrs Johns sought costs on the appeal. She has succeeded in resisting the appeal and is entitled to costs.

[36]	The parties agreed that the appeal was appropriately categorised as 2B. Mrs Johns is entitled to costs for commencement of response to the appeal (0.5 days) and for preparation of written submissions. The 2B allowance for the latter is three days, but I consider that two days is more appropriate given the narrow focus of the appeal. I also allow one day for the preparation of various memoranda. The total allowance is therefore 3.5 days and the costs award is $8,365.

Result

[37]	The appeal is dismissed.

[38]	Mr Johns is to pay costs of $8,365 to Mrs Johns.

Campbell J