Aitkenhead v Kooperberg

[2017] NZHC 3071

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-1955 [2017] NZHC 3071

UNDER

Section 51 of the Trustee Act 1956 and the

Court's inherent jurisdiction

IN THE MATTER

of the Caldan Trust, being a trust settled on 6 April 2006, pursuant to a Deed of Trust executed on that date

BETWEEN

HELEN DENISE AITKENHEAD, NATALIE ELEANOR JONKERS AS TWO OF THE THREE TRUSTEES OF THE CALDAN TRUST

Applicants

AND

PHILLIP LEONARD KOOPERBERG AS THE THIRD TRUSTEE OF THE CALDAN TRUST

First Respondent

NEW ZEALAND TRUSTEE SERVICES LIMITED

Second Respondent

Hearing:	On the papers
Appearances:	F N McGeorge for the Applicants P A Craighead for the First Respondent
Judgment:	11 December 2017

JUDGMENT OF PALMER J

This judgment is delivered by me on 11 December 2017 at 4.30 pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

AITKENHEAD & ANOR v KOOPERBERG & ANOR [2017] NZHC 3071 [11 December 2017]

Summary

[1]      I  appoint  New  Zealand  Trustee  Services  Ltd  (NZ Trustee  Services),  the second respondent, as trustee in substitution for the applicants and first respondent. NZ Trustee Services will need to assess administration costs for payment.   The application should not have been necessary.  It was Mr Kooperberg’s defaults which occasioned its costs.   I award indemnity costs of the application against Mr Philip Kooperberg, the first respondent, personally.

The Caldan Trust

[2]      Ms Helen Aitkenhead, one of the applicants, settled the Caldan Trust (the Trust). The trustees were her, her mother Ms Natalie Jonkers, and, from 2007, her then de facto partner, Mr Kooperberg.   The beneficiaries were initially Ms Aitkenhead’s children but she and Mr Kooperberg were added as discretionary beneficiaries.  Ms Aitkenhead and Mr Kooperberg are joint appointors and have the power to add and remove trustees.

[3]      The assets of the Trust are the proceeds of sale of the home occupied by Ms Aitkenhead and Mr Kooperberg and shares in a company otherwise owned by them, which  is  being liquidated.   There were various  lending and  gifting transactions between Ms Aitkenhead and Mr Kooperberg and the Trust.   Ms Aitkenhead has applied to the Family Court to determine whether the Trust’s debts are relationship property.

This application

[4]      In this application Ms Aitkenhead and Ms Jonkers applied:

(a)       to remove Mr Kooperberg and, if necessary, themselves as trustees of the Trust;

(b)to appoint NZ Trustee Services as trustee and appoint Ms Aitkenhead as an advisory trustee;

(c)       for the costs of the applicants in managing the affairs of the Trust and in making the application be met from the trust fund; and

(d)      for costs to be awarded against Mr Kooperberg personally.

[5]      Mr Kooperberg consented to NZ Trustee Services being appointed a trustee and to himself being removed as trustee if both applicants were also removed.  On that basis, the applicants abandoned the application that Ms Aitkenhead be appointed an advisory trustee.  Mr Kooperberg did not oppose the administration costs being paid if he approved a list of costs before payment.  He opposed costs being awarded against him personally.

Trustees and administration costs.

[6]      Under s 51 of the Trustee Act 1956 (the Act), I appoint NZ Trustee Services as trustee in substitution for Ms Aitkenhead, Ms Jonkers and Mr Kooperberg.  I do so by consent and because it is in interests of the due administration of the trust.

[7]      NZ Trustee Services will need to assess the administration costs, which the applicants estimate at $1,443.54 for accounting fees, for payment.

Costs

Submissions

[8]      Ms Aitkenhead  seeks  the  costs  of  the  application,  of  $14,530.20,  on  an indemnity basis against Mr Kooperberg personally.   This is on the ground of Mr Koooperberg’s persistent inaction as a trustee since 2013 when they separated.  Ms Aitkenhead provides details of her unanswered requests of Mr Kooperberg as a trustee in an affidavit of 21 August 2017, including of this application. Alternatively, Ms Aitkenhead seeks costs on a 2B basis from Mr Kooperberg personally, or, as a last resort, indemnity costs from the Trust per r 14.6(4)(c).

[9]      In his affidavit of 30 October 2017, Mr Kooperberg acknowledged he had been reluctant to enter into any agreements.   He did not really explain why, other

than to say he had misunderstood the legal situation and to say Ms Aitkenhead had an accounting background and he did not.

Law

[10]     The costs of legal applications that benefit trusts can be paid out of trust property or otherwise as seems just to the Court in exercising its supervisory jurisdiction over the administration of trusts. As I observed in Burnside v Burnside:1

If a trustee is successful in litigation brought as a trustee, and their position was reasonably taken, costs would ordinarily be payable from the trust property. If a trustee is unsuccessful, and their position was not reasonably taken, they will not be payable from the trust property.

[11]     Section  71  of  the  Act  empowers  the  Court  to  order  the  costs  of  any application under the Act be paid out of the property in respect of which it is made, “or to be borne and paid in such manner and by such persons as to the Court may seem just”.

[12]     Reflecting this, r 14.6(4)(c) of the High Court Rules 2016 provides the Court may order a party to pay indemnity costs if “costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding”.   In Waitara Leaseholders Association Inc v New Plymouth District Council, Harrison J held the rule “was apparently  drafted”  to  recognise  situations  where  the  costs  of  all  parties  are

necessarily incurred for the benefit of the estate.2    He declined an application for

indemnity costs in respect of legal fees where the purposes of the fund did not allow for payment  of legal  costs  and  where the  claim  was  antithetical  to  the estate’s benefit.3

[13]     In Borrell v Tangitu, Fisher J held costs can be awarded against trustees personally “where it appears their own deficiencies have been the cause of loss to the

1      Burnside v Burnside (No 2) [2017] NZHC 1678 at [9].

2      Waitara Leaseholders Association Inc v New Plymouth District Council (2005) 1 NZTR 15-013 (HC) at [16].

3 At [15].

estate” including in relation to the costs of bringing proceedings “due to the dilatoriness or lack of cooperation of the original trustees”.4

Decision on costs

[14]     This application should not have been necessary, for two reasons.  First, Mr Kooperberg had an obligation to discharge his duties as trustee or to resign.   His persistent failure to do either, even when on notice of the prospect of this application in relation to trustees and costs, made the application necessary.  Furthermore, once Mr Kooperberg engaged with the application, the substance of the application in relation to appointment and dismissal of trustees was resolved.  As joint appointors, Mr Kooperberg and Ms Aitkenhead were able to, and should have, come to that resolution without involving the Court and associated costs.

[15]     Accordingly, I do not consider the Trust fund should meet the costs of the application.   Mr Kooperberg should do so personally.   It was his defaults, or deficiencies,  which  occasioned  the  costs.    I  order  Mr  Kooperberg  to  pay  the indemnity costs of the application personally.

………………………….

Palmer J

Solicitors/Counsel:

Martelli McKegg, Auckland

P A Craighead, Barrister, Auckland

4      Borell v Tangitu (1990) 1 NZTR 0-001 (HC).