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Hamilton v Kirwan [2021] NZHC 19 (25 January 2021)

Last Updated: 16 February 2021

JUDGMENT OF WOOLFORD J

[As to costs]

This judgment was delivered by me on Monday, 25 January 2020 at 4:30 pm

pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

HAMILTON v KIRWAN [2021] NZHC 19 [25 January 2021]

• [1] On 24 August 2020, I gave judgment allowing in part the plaintiff Ms Hamilton’s claim against the first defendant Mr Kirwan, the executor of the estate of her late father, Mr Desmond Hetherington. I dismissed her claim against her brother Mr Craig Hetherington, the second defendant, the trustee of the Cove Road Trust.¹

• [2] At the conclusion of my judgment, observing that costs ordinarily follow the event, I reserved leave to the parties to file memoranda in the event they were unable to agree as to costs. They have not been able to agree. Memoranda have been filed, and the issue of costs now arises for determination.

Background

• [3] On 30 May 2016, Mr Desmond Hetherington executed a will directing that his residuary estate be divided equally between his three children. However, on the same day, he settled a 58.9450 hectare property at Mangawhai on the Cove Road Trust, of which he was then sole trustee. Mr Hetherington had purchased that property in his own name in 1984. Ms Hamilton had lived on the property since 1997, and since 2000 had, together with her partners, made improvements to the property. She did this on the basis of assurances from Mr Hetherington that he would leave Ms Hamilton a one- third share in the property on his death.

• [4] Ms Hamilton’s two brothers, together with Mr Desmond Hetherington’s grandchildren, were beneficiaries of the Cove Road Trust. Ms Hamilton was not. In this respect, it was relevant that in Mr Desmond Hetherington’s earlier will dated nine months earlier, on 1 September 2015, he had directed that after his death, the property was to be transferred to Ms Hamilton and her two brothers as joint tenants, in accordance with the assurances referred to above.

• [5] Mr Desmond Hetherington died on 1 January 2017. Before his death, he had resigned as sole trustee of the Cove Road Trust and appointed his son, Mr Craig Hetherington, as sole trustee.

¹ Hamilton v Kirwan [2020] NZHC 2149.

• [6] On 26 April 2017, Ms Hamilton filed proceedings in the Family Court, which were transferred to the High Court. She sought an order requiring that the property at Mangawhai be subdivided at the Trust’s expense, with a one-third share of the property vesting in her. This on the basis that Mr Desmond Hetherington was estopped from dealing with the property in a manner contrary to Ms Hamilton’s equitable interest that arose from him having created the expectation on her part that, on his death, she would inherit the property equally with her two brothers.

• [7] I accepted this claim. As to relief, I determined the “minimum equity” needed to do justice to Ms Hamilton was an order declaring Mr Desmond Hetherington’s disposition of the property to himself as trustee was void ab initio, such that the property remained in his estate. I directed that the property was then to be transferred to his three children as tenants in common in equal shares.

• [8] Ms Hamilton also brought six further causes of action, some against both defendants and others against Mr Craig Hetherington (variously in his capacity as trustee and him personally) or Mr Kirwan as executor only; in constructive trust, in undue influence, under the Family Protection Act 1955, under the Law Reform (Testamentary Promises) Act 1949, for failure to account, and for orders replacing Mr Craig Hetherington as trustee under s 51 of the Trustee Act 1956.²

• [9] I dismissed each of these causes of action, with the result that Ms Hamilton was successful in her claim in proprietary estoppel against the estate and Mr Kirwan as executor but had not succeeded in any claim against Mr Craig Hetherington.

Parties’ Positions

• [10] Counsel for Ms Hamilton, Mr Crossland, submits that Ms Hamilton is entitled to costs on a 2B basis and disbursements, uplifted by 50 per cent, in the total amount of $105,855.77. Half this award should be met, he submits, by Mr Kirwan (from the estate) and half by Mr Craig Hetherington and Mr Desmond Hetherington’s second

2. Counsel for Ms Hamilton purported to advance an unpleaded claim for the removal of Mr Kirwan as administrator of the estate pursuant to s 21 of the Administration Act 1969 at the hearing. Leave to add this as an eighth cause of action was refused.

wife, Mrs Marlena Hetherington, whom Mr Crossland describes as an interested party who also defended the proceeding.

• [11] An award of scale costs against both defendants is appropriate despite Ms Hamilton not having succeeded against Mr Craig Hetherington because, counsel submits, in succeeding in her proprietary estoppel claim, Ms Hamilton obtained the remedy that she sought, that Mr Craig Hetherington had opposed. An uplift from scale is warranted, counsel submits, because in May 2019 Ms Hamilton offered to settle the proceeding by accepting the subdivision of the property and the transfer of only 35 acres, or about 14 hectares, of the land, rather than the 19.6483 hectares she was ultimately awarded. From counsel’s memorandum, it appears the majority of Ms Hamilton’s costs were incurred after this date.

• [12] Counsel for Mr Craig Hetherington, Mr Jenkin, observes that, while Ms Hamilton’s second through seventh causes of action failed, including those against Mr Craig Hetherington as trustee of the Cove Road Trust, my order reversing the settlement of the property on the Trust has left the trust “a hollow shell”. Mr Jenkin accepts that, “in that sense”, the plaintiff succeeded against the Trust on the first cause of action. However, he notes, judgment was entered in favour of the Trust in respect of the second, third, and seventh causes of action (being all of those in respect of which Mr Craig Hetherington as trustee was a defendant) and submits this should be “taken into account” in the assessment of any award of costs in Ms Hamilton’s favour. In particular, he submits, referring to other cases in which a party succeeded on only some issues,³ that the “shambolic” way in which Ms Hamilton’s case was advanced, both in terms of the large number of generally unsuccessful causes of action pleaded and the, he submits, “repetitive, prolix, and often...irrelevant” affidavit evidence filed. On this basis, he submits a reduction is appropriate in any costs awarded to Ms Hamilton for partial success.

• [13] Furthermore, Mr Jenkin submits, the defendants are entitled to their costs since 17 May 2019 on a 2B basis, and disbursements, in the amount of $55,080, as a result of Ms Hamilton’s not accepting, and failing to beat, a Calderbank offer dated 11 May

3. Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZCA 544, (2007) 18 PRNZ 743; TFAC Ltd v David HC Auckland CIV-2006-404-3984, 5 March 2008.

2020. By that letter, the defendants proposed to agree to the subdivision of the property and the vesting of 8 hectares of the land in her name in full settlement of the claim, the 8 hectares in question being, Mr Jenkin says, the most valuable part of the land, most of which is inaccessible and covered in bush. Ms Hamilton would have been required to pay the costs of subdivision.

• [14] While, Mr Jenkin acknowledges, Ms Hamilton has obtained the award of a greater absolute area as a tenant in common, she has not obtained any defined share of the land and would need to bring further proceedings to obtain partition of the land and would not necessarily obtain the most desirable part of the land. In particular, counsel submits, Ms Hamilton has not obtained exclusive title to the land under the improvements she has previously made to the property. He therefore submits that she has not beaten the defendants’ offer.

• [15] For the same reason, Mr Jenkin submits, nor can Ms Hamilton be said to have beaten her offer to the defendants, such that there is no basis for uplift of any costs awarded to her.

• [16] Mr Craig Hetherington is himself entitled to an award of costs on a 2B basis, counsel submits, as he has succeeded in all causes of action touching him personally, being Ms Hamilton’s unsuccessful claims of undue influence and under the Family Protection Act 1955 and the Law Reform (Testamentary Promises) Act 1949. Mr Craig Hetherington is properly considered a successful party in respect of each of these claims, Mr Jenkin submits, as he is a residuary beneficiary under the will and his interest in the estate was directly in issue in respect of each claim. He therefore submits Mr Craig Hetherington is entitled to costs on a 2B basis and disbursements in the total amount of $53,278; this amount reflecting, Mr Jenkin explains, only the two days of the hearing concerned with the issues on which Mr Craig Hetherington actually succeeded.

• [17] Finally, Mr Jenkin submits that it is not appropriate for any award of costs to be made against Mrs Hetherington. While she was served with notice of the proceeding, and gave evidence on behalf of her step-son, she was not a party to the

proceeding and took no formal steps. Therefore, he submits, there is no basis for an award of non-party costs.

• [18] Counsel for the first defendant, Mr Moodley, advances similar points on Mr Kirwan’s behalf, submitting that Mr Kirwan is entitled to costs on a 2B basis from 17 May 2019 in the total amount of $41,347.

• [19] In reply, Mr Crossland submits that Ms Hamilton’s pursuit of six unsuccessful causes of action did not significantly increase the costs of the defendants, the factual allegations for the unsuccessful causes of action being the same as those for her claim in proprietary estoppel, with the same witnesses required to be called. In particular, he submits, the same evidence relevant to the proprietary estoppel claim provided the foundation of the claims under the Family Protection Act 1955 and the Law Reform (Testamentary Promises) Act 1949 claim. The only causes of action that led to further evidence being adduced, Mr Crossland submits, were the failure to account cause of action and the application for removal of Mr Craig Hetherington as a trustee, and neither of these “significantly” increased the defendants’ costs. Accordingly, he submits, there is no basis for a reduction in the plaintiff’s costs.

• [20] The defendants are also incorrect to submit, Mr Crossland says in reply, that Ms Hamilton is not entitled to increased costs. While, Mr Crossland accepts, Ms Hamilton has not obtained exclusive title to a subdivided parcel of the Mangawhai property, she has obtained a greater share of the property, and is not required (unlike under the defendants’ offers) to pay any part of the cost of subdivision. While she holds the property as a tenant in common with her siblings, that estate entitles what Mr Crossland terms “full rights of ownership”. Nor is it correct on the evidence, Mr Crossland says, to submit that the parcel of land offered to Ms Hamilton was more valuable to her than an unascertained one-third share of the property.

Discussion

• [21] Several issues as to costs arise for determination. I address first the liability of Mrs Hetherington for any costs awarded against her step-son, as that issue can be addressed in isolation. I then turn to the remaining issues, which obviously interrelate.
• [22] Mrs Hetherington was ordered to be served with notice of the proceeding. So too was, I note, Kane Hetherington, Mr Desmond Hetherington’s other son. As counsel observes, Mrs Hetherington gave evidence on Mr Craig Hetherington’s behalf. She clearly favoured the defendants’ position. She was not however an interested party in any material sense, being a fixed beneficiary of the estate to the amount of a specified legacy and monies held in particular bank accounts. She had no interest in the residuary of the estate, or the Mangawhai property.

• [23] In these circumstances, there is no basis for the award of what would essentially be non-party costs against her. Her having given evidence on her step- son’s behalf plainly does not come close to supplying the exceptional circumstances required for the award of non-party costs.⁴

• [24] As to the other issues, it is fundamental that the award of costs is to be predictable and expeditious,⁵ in accordance with the scheme set out in Part 14 of the High Court Rules 2016 and the general principle, as referred to in my judgment, that costs are to follow the event. Accordingly, in giving effect to the notion that “the loser, and only the loser, pays”,⁶ the Court is disinclined to engage with reified analyses of who “won” and who “lost”. Thus the well-established principle that “success on more limited terms is still success”⁷ and that the focus is to be on the success of the successful party,⁸ and also the robust definition of success applicable to money claims in terms of whom is adjudged liable to pay money to whom.⁹ Where, as here, the claim is other than for money, the correct focus, as follows, is on the result.

• [25] The simple point, then, is that Ms Hamilton’s objective in this proceeding was to obtain a one-third share of the Mangawhai property. Each of her first five causes of action sought, by varying means, that outcome. She plainly succeeded in achieving that goal. That the “minimum equity” she was awarded on her successful proprietary

4. Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2004] UKPC 39, [2005] 1 NZLR 145, approved Mana Property Trustee Ltd v James Developments Ltd [2010] NZSC 124, [2011] 2 NZLR 25.

⁵ High Court Rules 2016, r 14.2(1)(g).

⁶ Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [19].

⁷ Weaver v Auckland Council [2017] NZCA 330, (2017) 24 PRNZ 379 at [26].

⁸ Water Guard NZ Ltd v Midgen Enterprises Ltd [2017] NZCA 36 at [13].

⁹ At [13].

estoppel claim did not give her the precise interest she sought, even if those terms could be said to be less favourable, does not detract from her success in largely achieving her desired result, whatever the outcome of those causes of action. The more granular approach the defendants propose I adopt in examining success and failure in respect of these other causes of action does not accord with the robust approach the principles noted above require. That approach points plainly in favour of Ms Hamilton obtaining an award of costs against both defendants.

• [26] It also points against Mr Craig Hetherington being entitled to costs against Ms Hamilton in respect of her claims under the Family Protection Act 1955 and the Law Reform (Testamentary Promises) Act 1949, subject to the settlement offers referred to by counsel in submissions, which I address below. While, obviously, those claims did not succeed – and I agree with Mr Jenkin’s observation that the claim under the Law Reform (Testamentary Promises) Act 1949 was infelicitously drawn – the point remains that, as Mr Jenkin acknowledged in submissions, each was focused on Ms Hamilton’s claim for a share of the Mangawhai property, which she obtained.

• [27] For the same reasons, I do not accept counsel for the defendants’ submissions that some reduction in the costs payable to Ms Hamilton in respect of her success in obtaining an interest in the property is warranted on the basis that her bringing her second through fifth causes of action contributed unnecessarily to the time or expense of the proceeding in terms of r 14.7(f). Also, I agree with Mr Crossland that the only causes of action that led to further evidence being adduced, Mr Crossland submits, were the failure to account cause of action and the application for removal of Mr Craig Hetherington as a trustee. As follows from the above, the first through fifth causes of action reflected the plaintiff trying to fit the same peg into different holes.

• [28] It is convenient to address at this juncture one aspect of Mr Crossland’s calculation of Ms Hamilton’s costs claim. The schedule of claimed costs annexed to his memorandum includes claims for a number of steps taken by Ms Hamilton before 27 May 2019, at which time, it is not disputed, she was self-represented. As counsel

for the defendants submit, Ms Hamilton is not entitled to an award of costs for any steps taken by her personally before that date.¹⁰

• [29] As to this, Mr Crossland submits that Ms Hamilton is entitled to costs in respect of these steps as she had instructed Mr Anthony Grant, I infer pursuant to a limited retainer, to assist her in conducting her own claim. He advises that Ms Hetherington incurred expenses of $74,175 in instructing Mr Grant in this respect and submits that what is sought is in fact a contribution towards what Mr Grant received, calculated as if a claim for scale costs.

• [30] Mr Crossland’s approach misapprehends the approach applicable in this situation. As he notes, a self-represented litigant who obtains legal advice in representing themselves is entitled to claim those expenses as a disbursement,¹¹ subject to the ordinary rules regarding recovery of disbursements. A claim for a disbursement, by definition, is not to be included in a schedule of costs and parcelled out as if a claim for scale costs. By not seeking to recover the full amount spent on Mr Grant’s services, Mr Crossland has in fact claimed less than Ms Hamilton could have potentially received.

• [31] As follows, Ms Hamilton is entitled to a disbursement in respect of such portion as the fees paid by her to Mr Grant prior to 27 May 2019 as relate to work done by him related to those issues on which, in substance, she succeeded, subject to the ordinary principles regarding the recovery of disbursements.¹²

• [32] The position is different however in terms of the sixth and seventh causes of action – the failure to account cause of action and the application for removal – both in terms of who can be said to have succeeded, and its potential impact on Ms Hamilton’s entitlement to costs where she did succeed. These causes of action had nothing to do with the Mangawhai property. As follows, the defendants succeeded completely in respect of these actions, and the bringing of these claims served to add to the time, expense, and complexity of the dispute; as did, albeit to a more limited

¹⁰ Re Collier (A Bankrupt) [1996] 2 NZLR 438 (CA), approved McGuire v Secretary for Justice

[2018] NZSC 116, [2019] 1 NZLR 335.

¹¹ See, for example, Harrison v Keogh [2015] NZHC 3320.

¹² High Court Rules 2016, r 14.12.

extent, the bringing of the undue influence claim, which involved examination of the making of the will dated 30 May 2016. Costs following the event, the defendants are entitled to costs incurred in pursuit of the causes of action in respect of which they succeeded, subject to the effect of their Calderbank offer, as addressed below.

• [33] Furthermore, I agree with Mr Jenkin that, pursuant to r 14.7(f), there should be a reduction in the costs to be awarded to Ms Hamilton in respect of the success that she enjoyed. Adopting a robust approach, I agree the appropriate reduction is to make awards as if the hearing was two, rather than four, days in duration, and the time allowed for preparation accordingly.

• [34] That leaves for consideration the effect, if any, of the parties’ settlement offers. As noted, Ms Hamilton claims an uplift from scale of 50 per cent in respect of her costs incurred from May 2019 because, she says, the defendants unreasonably failed to accept a settlement offer, and the defendants say they are entitled to all of their costs from 17 May 2019 by reason of Ms Hamilton’s failing to beat their Calderbank offer dated 11 May 2019.

• [35] As to Ms Hamilton’s claim for uplifted costs, whether an offer of settlement has been refused unreasonably for the purposes of r 14.6(3), such that an award of increased costs is appropriate, is to be determined with regard to matters as they stood at the time of the offer, and the parties’ reasonable expectations at that juncture, taking into account the time to trial, the value of the offer compared to the sums at stake, and the parties’ ability to assess the merits of the offer at that point in time.¹³

• [36] Adopting this approach, I do not consider the defendants’ rejection of Ms Hamilton’s May 2019 offer was unreasonable. Her offer was to settle for about 14 hectares of the land; so, less than the one third identified in her prayer for relief. Those 14 hectares however, I agree with Mr Jenkin, were the most valuable portion of the land and, moreover, would have rendered practicably inaccessible the remaining two-thirds of the land. That was not a reasonable offer, and the defendants are not to be penalised for their rejection of the offer.

¹³ Loktronic Industries Ltd v Diver [2014] NZHC 1189 at [14]; and Weaver v HML Nominees Ltd

[2016] NZHC 473 at [30].

• [37] As to the defendants’ Calderbank offer, pursuant to r 14.11, Ms Hamilton’s declining that offer produces a presumptive entitlement to costs on the part of the defendants only if it would have been more beneficial to her than the judgment she in fact obtained, subject to the overriding discretion of the Court.

• [38] Here, I am not satisfied that is the case. Ms Hamilton has, by going to judgment, obtained a greater share of the property in absolute terms, as a tenant in common has full ownership rights in respect of the land, and bears no costs of subdivision. In these respects, she has equalled or can be said to have bested the defendants’ offer. On the other hand, as Mr Jenkin submits, she has not obtained exclusive title to a subdivided part of the property and will need to bring further proceedings to partition the property. As follows, it is difficult to be satisfied she has done better, in the sense of having obtained a greater benefit, than that which would have resulted from accepting the offer. In a case such as this, where the benefit of the judgment can be said, at best, to be close to the value of the offer, the Court has particular discretion as to whether r 14.11 should apply with the result that a costs order should be made.¹⁴ I consider no costs order should be made on the strength of the defendants’ Calderbank offer, it not being clear whether Ms Hamilton did beat the plaintiffs’ offer, such that the policy behind of r 14.11 of promoting reasonable settlement would not be promoted by making a costs order in this case.

Result

• [39] For the above reasons, Mrs Marlena Hetherington should have no liability in respect of costs, and costs should be awarded as follows:

(a) the first and second defendants are to pay Ms Hamilton’s costs in respect of her first through fifth causes of action on a 2B basis, plus disbursements as relate to those causes of action only, provided that she is to be entitled to costs on the basis of a two day hearing only in respect of steps 30, 32, and 34 of sch 3 to the High Court Rules 2016; and

¹⁴ See, for example, Craig v Donaldson [2012] NZHC 3100.

(b) Ms Hamilton is to pay the first and second defendants’ costs in respect of their success in respect of the sixth and seventh causes of actions on a 2B basis, and their disbursements as relate to those causes of action only.

• [40] In accordance with r 14.17 of the High Court Rules 2016, the parties’ respective costs are to be set off and the lesser of these sums deducted from the greater.

• [41] It is not possible, on the information provided by the parties, to determine the quantum of costs resulting from the above orders. I therefore direct that, if any dispute as to quantum arises, the parties are to file memoranda within 20 working days of the date of this judgment, as part of which counsel for Ms Hamilton is to correctly state any claim by her for disbursements in respect of the advice she sought from Mr Anthony Grant. All counsel are also to ensure that their calculation of quantum properly accounts for the daily recovery rate for category 2 proceedings having increased non-retrospectively from 1 August 2020.

Woolford J

Solicitors: Shieff Angland (K Crossland), Auckland, for the Plaintiff McElroys (P Moodley), Auckland, for the First Defendant

Keil & Associates (K Stirling), Auckland, for the Second Defendant

Counsel: L J Kearns, Auckland, for the Plaintiff

G C Jenkin, Auckland, for the Second Defendant