IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CIV-2020-404-2218
[2021] NZHC 878	

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	

Hearing:	On the papers	
Appearances:	S Mitchell for the Appellant
DRI Gay for the First Respondents
G C Jenkin for the Second Respondent	
Judgment:	23 April 2021	

JUDGMENT OF GORDON J
[As to costs]

This judgment was delivered by me on 23 April 2021 at 12 pm, pursuant to
r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:	Conveyancing Centre, Auckland
Craig Griffin & Lord, Auckland Brannigans, Auckland
Counsel:	S Mitchell, Auckland DRI Gay, Auckland G C Jenkin, Auckland

JOHNS v LORD [2021] NZHC 878 [23 April 2021]

Introduction

[1]	This is an application for costs by the first respondents, Christopher Lord and Colin Holloway, the executors of the estate of the late Lewis Johns (the executors) and the second respondent, Gail Johns, Mr Johns’ widow.

[2]	The appellant, Stephen Johns,1 (the son of Mr Johns from a former marriage) appealed Judge Burns’ decision in the Family Court refusing his application for further provision from his father’s estate under s 4(1) of the Family Protection Act 1955. In my judgment dated 25 February 2021, I dismissed Mr Johns’ appeal.

[3]	The executors and Mrs Johns each seek standard 2B scale costs and disbursements of $12,060 and $13,255 respectively against Stephen.

[4]	Stephen opposes paying any costs because he claims he is impecunious, and it would be unfair to require him to pay. He also opposes paying costs because he says it is unfair that the executors and Mrs Johns had separate counsel.

Background

[5]	The late Mr Johns died on 26 September 2017. Probate of Mr Johns’ will, dated 15 May 2002, was granted on 1 November 2017 in favour of the executors.  Mr Johns’ will provided for Mrs Johns, who received gifts of chattels. The will also provided a bequest of $20,000 to Stephen, $30,000 to one of his sisters and $40,000 to the other. Mr Johns’ brother received an annuity of $4,000 and the residual trust property went to the Lewis Richard Trust (the Trust).

[6]	On 21 February 2018, the executors sent a letter to the beneficiaries advising there were insufficient net assets in the estate to pay the bequests or the annuity. The value of the estate comprised cash of $710.

[7]	On 31 October 2018, Stephen filed an application in the Family Court under ss 3 and 4 of the FPA seeking further provision from his father’s estate on the basis

1	Given the common surname I will refer to the appellant by his first name and his father as either Mr Johns or the late Mr Johns.

that his father had failed to make provision for his proper maintenance and support. He then filed an application to adjourn the substantive application, submitting that funds that had been paid by Mrs Johns into a joint bank account during his father’s lifetime should have been part of his father’s estate. He submitted that issue needed to be resolved first and the executors should have made demands from Mrs Johns for that sum. The executors had previously made it clear that they did not intend to do so.

[8]	The executors accepted that Stephen fell under s 3 of the FPA and could make an application under s 4 of the FPA. However, they submitted there were insufficient net assets available to pay Stephen the bequest of $20,000.

[9]	Judge Burns refused the adjournment application and dismissed the substantive application on the basis there were no funds in the estate.

[10]	Stephen appealed Judge Burns decision under s 174(1B) of the Family Proceedings Act and s 39(3) of the Property (Relationships) Act 1976 to this Court. Specifically, he appealed Judge Burns’ refusal of his s 4(1) of the FPA application. In my judgment, I said:

[37] Before I turn to the grounds of appeal, I make a preliminary observation. The purpose of this proceeding is not for this Court to determine the rights and wrongs of the decision on the application for an adjournment. The purpose is to determine whether or not adequate provision has been made for the proper maintenance and support of Stephen from the estate. That is the inquiry required under s 4(1) of the FPA. It is Judge Burns’ decision on that issue that is the subject of the appeal. That is clear from the notice of appeal. It states that “The appellant appeals against Part B of the judgment
…”. I note there was no part of the judgment under appeal specifically identified as Part B, but the notice of appeal goes on to say:

The part of the judgment appealed against is the part declining the claim for an award pursuant to Section 15.

…

[39] In broad terms, the adjournment was refused on the grounds of delay and that any application under s 103 of the PPPRA to review the decision of Mrs Johns regarding payment of the $394,142 into a joint account was unlikely to succeed. If there were any errors in the Judge’s analysis on that latter issue, it is not necessary for this Court to decide that. They go to the Judge’s decision on the adjournment, which, as I have noted, is not under appeal.

…

[45]	As I have noted, the Family Court does have power to review dealings under s 107 of the PPPRA regarding the holders of powers of attorney if an application is made under s 103 of the PPPRA. But as I have also noted no such application has ever been filed even though the possibility of doing so was flagged by counsel for the appellant in the middle of 2019.

[46]	There being no assets in the estate, the Judge’s decision refusing the substantive application was inevitable.

Costs principles

[11]	Awarding costs is a discretionary exercise.2 Rule 14.2 of the High Court Rules (HCR) outlines the general principles that apply in an assessment of costs. Generally, the party who fails with respect to a proceeding should pay costs to the party who succeeds.3 The costs award should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in respect of the proceeding.4 The determination of costs should be predictable and expeditious.5

[12]	However, the HCR provide for circumstances where the court may refuse to make an order for costs or may reduce the costs award under r 14.7 of the HCR.

Unfairness claim

[13]	Mr Mitchell for Stephen submits that an award of costs against him would be unfair because there were two counsel representing the executors and Mrs Johns. He also submits that the costs the executors and Mrs Johns claim separately exceed the actual costs incurred during the proceeding.

Two counsel

[14]	Rule 14.15 of the HCR governs costs awards in the event of defendants defending separately. That rule provides:

2	Rule 14.1 of the High Court Rules.
3	High Court Rules 2016, r 14.2(1)(a).
4	Rule 14.2(1)(c).
5	Rule 14.2(1)(g).

14.15	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.

[15]	The rule suggests that courts should be cautious about awarding costs where there is more than one defendant (or in this case respondent) particularly where the parties have common or overlapping interests in the litigation position of the parties seeking costs.6

[16]	In this case the executors and Mrs Johns were jointly represented by counsel for Mrs Johns for the pre-hearing case management conference. Only Mrs Johns claims for preparation and the appearance at the case management conference.

[17]	As far as the appeal itself, despite the appeal being brought only in respect of the substantive decision of the District Court Judge, the submissions for Stephen in this court addressed matters more relevant to an application under s 103 of the PPRA seeking a review of dealings by the holder of a power of attorney. The submissions made allegations regarding the conduct of Mrs Johns and asserted that the executors should have reviewed her decision to make the payment referred to above into a joint account. I accept that the executors and Mrs Johns each had a separate interest in responding to those submissions. However in the end (as counsel for both respondents argued) those matters were irrelevant given the basis of the appeal. They otherwise had a community of interest in opposing the appeal and there was an overlap in their submissions on relevant issues.

[18]	I therefore propose to award costs on a 50:50 basis (subject to my consideration of further arguments made by Stephen below) for the three steps of: opposing the appeal; preparing written submissions to oppose the appeal; and appearance at the

6	Independent Māori Statutory Board v Auckland Council [2017] NZHC 678 at [8]-[9] citing Norfolk Trustee Co Ltd v Tattersfield Securities Ltd HC Auckland CIV-2004-3668, 30 March 2005 at [51].

hearing. The three steps separately claimed by Mrs Johns in relation to the case management conference will be awarded to her.

[19]	The executors also claim for preparing a third volume of the common bundle following the failure of counsel for Stephen to do so. Mr Gay for the executors proposes 0.5 of a day (being 50 per cent of the allocation for the preparation of a case on appeal). That is appropriate.

[20]	As far as disbursements are concerned, each respondent is entitled to the separate disbursement claimed (filing fee).

Costs exceed actual costs?

[21]	I do not accept Mr Johns submission that the costs claims of the executors and Mrs Johns exceed actual costs incurred in this proceeding. Mr Jenkin, for both the respondents, notes in a joint reply memorandum that both respondents incurred costs during the proceeding that exceed the sum of $25,315. I accept that the costs both parties incurred during the proceeding exceed the claims for costs.

[22]	The Court is advised that having regard to the lack of assets in the estate,  Mrs Johns has advanced funds to the executors to assist in the payment of counsel for the executors. The arrangement is informal and is anticipated that the debt created may, depending on the circumstances, be repaid from any costs awarded.

Claim of impecuniosity

[23]	Mr Johns claims he cannot pay costs because he is impecunious. He has filed an affidavit saying so. I accept that Mr Johns is impecunious. Nevertheless, financial hardship is not an answer to a claim for costs.7 Even an impecunious party should have to pay meaningful costs.8 This Court has held that the courts should apply the HCR regime, unless there is good reason to depart from it.9 The personal

7	Chesterfields Preschools Ltd v Commissioner of Inland Revenue [2011] NZCA 640 at [7].
8	Te Whare o Kaitiaki Ngahere Incorp Society v West Coast Regional Council [2014] NZHC 2969 at [16].
9	At [9].

circumstances of the party that failed in the proceeding need to be exceptional to depart from the general principle that the winner in a proceeding is awarded costs.10

[24]	An example of where this Court has departed from the general principle that costs are awarded to the party that succeeds in the proceeding is Simister v Tauranga Cruise.11 Andrews J held that reducing the award of costs against one of the parties was warranted because the party would go into liquidation if the amount requested was awarded.12 The Judge stated that imposing costs on the party “would not be of benefit to either party”.13

[25]	The courts have been cautious to expand the scope of r 14.7(g) to cover impecunious parties because it may undermine the expediency and predictability of the HCR costs regime.14 It also may have the effect of encouraging hopeless cases through the court if parties may be able to claim impecuniosity to avoid paying costs.15

[26]	Mr Johns personal circumstances are not exceptional. Although he provides an affidavit to this Court, his claim is that he cannot afford to pay costs at all. He refers to a sickness benefit and a lack of savings to pay costs. That does not satisfy the exceptionality test.

[27]	Further, Stephen was advised in February 2018 that there was no money in the estate. Despite that, he pursued proceedings in the Family Court then appealed to this court. The basis on which the appeal was brought meant it was destined to fail. But Stephen deliberately filed and advanced his appeal knowing that the estate had no money.

Scale costs

[28]	I consider awards of scale costs on a 2B basis are appropriate (subject to the division already referred to).

10	Foni v Foliaki [2018] NZHC 3126 at [11].
11	Simister v Tauranga Cruise [2015] NZHC 2133.
12	At [16].
13	At [16].
14	Foni v Foliaki, above n 10, at [9]–[11].
15	Te Whare o Kaitiaki Ngahere Incorp Society v West Coast Regional Council, above n 8, at [4(d)].

[29]	I award costs in favour of the executors against Stephen in the sum of
$6,572.50 together with disbursements in the sum of $110. The total of costs and disbursements is $6,682.50.

[30]	I award costs in favour of Mrs Johns against Stephen in the sum of $7,767.50 together with disbursements in the sum of $110. The total of costs and disbursements is $7,877.50.

Gordon J