Legal fees on all sides totalled over four million dollars. Of that, fees totalling $1.26 million incurred by estate executors defending unsuccessful legal action by Warwick Burgess as a disappointed beneficiary of his late mother’s estate are an estate expense, the High Court ruled, not to be deducted directly from his share of her estate.
This ruling reduced by $440,000 a bequest payable to fellow estate beneficiary, his brother. Estate executors argued the unsuccessful legal action was for Mr Burgess’ personal benefit and costs should not fall on his brother.
Mr Warwick Burgess pursued a long and expensive legal campaign over his claimed rights to a family farm and forestry holdings at Tihoi on the western shores of Lake Taupo. His expectation had been to inherit his parents’ land holdings on the death in 2007 of his widowed mother Molly. He didn’t inherit. Estate executors sold the land. Mr Burgess sued. By the time his claims against Molly’s executors and the farm purchasers came to trial, Mr Burgess had already personally spent over $1.5 million in legal fees. The trial involved 32 days of evidence. His claims were dismissed, described by the trial judge as ‘built on flimsy assumptions rather than sound factual allegations’.
Defending Mr Burgess’ claims cost Molly’s executors $1.26 million. They said these costs should come out of Mr Burgess’ share of Molly’s estate; the unsuccessful legal action was solely for his benefit and it would be inequitable for his brother as the other beneficiary to have his share reduced in payment of these legal costs. Justice Davison ruled the executors were bound by the terms of Molly’s will: the residue of her estate was to be split 60:40 between Mr Burgess and his brother after payment of ‘testamentary expenses’. Legal fees defending Mr Burgess’ claim were ‘testamentary expenses’. These expenses had to be taken into account before the cash balance was divided between the two brothers. Mr Burgess’ greater share at 60 per cent was in recognition of the work done around the farm whilst his parents were alive.
Mr Burgess’ brother died before the 32-day trial. After deduction of Molly’s executors’ legal costs, his 40 per cent final payout is reduced by $440,000 to $298,000. This money goes to his estate. Both brothers received interim payments as advances on their entitlement to Molly’s estate prior to the 32-day trial. Mr Burgess’ final payment of his 60 per cent share is $649,000, down from the final payment of $1.3 million he would have received but for the legal bill run up defending his claim. The court was told this $649,000 is his only asset. Mr Burgess is personally liable for legal costs of $1.13 million incurred by other defendants he sued unsuccessfully in the 32-day trial. A home he previously owned in Paeroa valued at about $550,000 was sold at auction in late 2018.
Monk v. Burgess – High Court (1.03.19)
19.051