Bone v Tuck

[2020] NZHC 393

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2018-470-000006

[2020] NZHC 393

BETWEEN

CARLENE JOY BONE

Plaintiff

AND

CRAIG GARRY TUCK and YRW TRUSTEES 2016 LIMITED

Defendants

Hearing:

On the papers

Counsel:

R J Connell for Plaintiff

C B Hirschfeld and J P Hickey for Defendants

Judgment:

4 March 2020

COSTS JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

BONE v TUCK [2020] NZHC 393 [4 March 2020]

Introduction

[1]    These proceedings were initiated by the plaintiff, Carlene Bone (Ms Bone), in January 2018, against her brother, the first-named defendant, Mr Craig Tuck (Mr Tuck) and the second-named defendant YRW Trustees 2016 Ltd (YRW).

[2]    The proceedings relate to a family trust, the Tuck Family Trust (“trust”) of which Mr Tuck, together with YRW, were trustees.

[3]    Ms Bone alleged that Mr Tuck had not acted appropriately as a trustee and ought to be removed.

[4]    Mr Tuck agreed to his removal as a trustee in a memorandum of admission of cause of action, dated 11 February 2019. That admission was filed not long after Jagose J, on an ex parte application by Ms Bone, suspended Mr Tuck as a trustee of the trust. Jagose J concluded that Ms Bone had a serious case for trial that Mr Tuck had failed to properly manage trust assets and to treat all beneficiaries equally and impartially.

[5]    On 22 November 2019, there was an examination hearing of Mr Tuck before me and in relation to monies paid by the trust to Mr Tuck and alleged impropriety and failure by Mr Tuck properly to account for monies paid to him.

[6]    The parties have since filed submissions on the question of costs, following an examination hearing. This decision, made on the papers, deals with that issue.

Relevant legal principles

[7]    The principles the Court should apply are not in dispute.  They are set out at  r 14.2 of the High Court Rules and include the principle that costs follow the event  (r 14.2(1)(a).

Decision

[8]Ultimately, costs are of course at the discretion of the Court (r 14.1).

[9]    I find that my discretion should be exercised to award costs against Mr Tuck and in favour of Ms Bone. In my view, Ms Bone was successful with her application and in accordance with the primary principle that “costs follow the event”1 Mr Tuck should be liable for costs.

[10]   I acknowledge that Mr Tuck agreed to his removal as a trustee (i.e. the substantive relief sought by Ms Bone) at a relatively early stage in the proceeding. However, I am of the view that the subsequent action taken by Ms Bone, essentially to insist on Mr Tuck fully accounting for his actions or omissions as a trustee, were justified and legitimate ones. This included the pursuit of an examination hearing because of failures by Mr Tuck to respond in a timely manner with directions regarding discovery and interrogatories.

[11]   I also accept the submission advanced by Ms Bone that Mr Tuck has caused delays to the proceedings. The examination hearing was adjourned on a number of occasions on application by Mr Tuck and he had to re-answer his interrogatories several times. That was because, as counsel for Ms Bone rightly pointed out, the answers provided were not adequate.

[12]   I acknowledge that Mr Tuck has made a genuine effort to try and resolve was is essentially an internal family dispute, but that provides no justification for his reluctance to provide the information sought or to account for his actions as a trustee to the beneficiaries of the trust.

[13]   I conclude therefore, that Mr Tuck should pay costs to the plaintiff, Ms Bone, on a 2B basis in the sum of $32,026 as calculated in the costs schedule to the plaintiff’s memorandum of 19 December 2019. I am not persuaded that there should be an uplift of costs, although the grounds advanced for such an uplift by Ms Bone were not without merit.

[14]   In his affidavit of 18 February 2020, Mr Tuck has requested that the Court not order him to pay Ms Bone’s costs but that the costs should instead come out of the estate “as a cost of the estate”. However, “the estate” is not a party to the proceedings

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

before me and I am unclear as to whether Mr Tuck in fact meant that costs should come out of the Tuck Trust.

[15]   In a recent decision of the Court of Appeal, Sunde v Sunde,2 the Court confirmed that the general principle that the right of a trustee to compensation from the assets of the trust for costs and expenses properly and reasonably incurred in the administration of the trust is longstanding and well settled. In New Zealand this right has been codified in s 38(2) of the Trustee Act 1956.

[16]   I doubt that the test of expenses properly and reasonably incurred has been made out in relation to Mr Tuck. In any event, the new trustee, namely the Public Trust, would need to be given the opportunity to express a view, before I could properly determine that matter.

Result

[17]   I order that the defendant, Mr Craig Tuck, is to pay costs to the plaintiff, Ms Carlene Bone, on a 2B basis in the sum of $32,026 (as set out in the costs schedule to the plaintiff’s memorandum of 19 December 2019), plus disbursements as fixed by the Registrar.

[18]Leave is granted to apply for further directions, should that be necessary.

Associate Judge P J Andrew

2      Sunde v Sunde [2019] NZCA 552.