Bundz v Anderson

[2025] NZHC 887

IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY

I TE KŌTI MATUA O AOTEAROA TE TIHI-O-MARU ROHE

CIV-2022-476-19

[2025] NZHC 887

UNDER

the Trusts Act 2018

IN THE MATTER

of the inherent jurisdiction of the Court

BETWEEN

KODIE BUNDZ

First Plaintiff

ROY BUNDZ
Second Plaintiff

AND

RUSSELL GRAY REID ANDERSON

First Defendant

HG LAW TRUSTEES 105 LIMITED

Second Defendant

Hearing:

(On the papers)

Counsel:

G A Paine for Plaintiffs

R G Napier for First Defendant
P V Cornegé for Second Defendant

Judgment:

11 April 2025

Reissued:

16 May 2025

JUDGMENT OF ASSOCIATE JUDGE LESTER

(costs)

Note:This judgment has been reissued under the Slip Rule. The following paragraphs have been changed: [12], [13], [14], and [24] to reflect the change of name from “Perpetual Guardian” to “Perpetual Trust Limited”.

BUNDZ v ANDERSON [2025] NZHC 887 [11 April 2025]

[1]    At the heart of this proceeding as originally filed, was an error made by the first defendant, Mr Anderson. It seems Mr Anderson, a trustee of the LC Craighead Family Trust (the Trust), mistakenly believed that a property at Gleniti Road in Timaru (the property) was owned by him personally when in fact it was owned by the Trust. The trustees  of  the  Trust  are  Mr Anderson  and  HG  Law  Trustees  105 Limited (HG Law).

[2]    The first plaintiff, Mr Kodie Bundz (Kodie), is the final beneficiary of the Trust. Initial enquiries made on his behalf resulted in Kodie being informed that all assets of the Trust had been distributed and that there were no assets remaining in the Trust. It is common ground that was an error. The property remained in the ownership of the Trust.

[3]    Mr Paine, counsel for Kodie, at that point acting for Mr Roy Bundz (Roy) who is Kodie’s father, wrote on 12 October 2021 to the solicitors for Mr Anderson referring to what Mr Paine understood was Mr Anderson’s intention to sell the property and use the proceeds of sale for himself. The letter also referred to the possibility of an application  to  remove  the  then  trustees  of  the  Trust  and  replace  them  with    an institutional trustee.

[4]    On the same date, Mr Paine wrote to Mr Gavin Arnet of Arnet Law, who acted for the second defendant, HG Law, advising that he had instructions to apply to remove Mr Anderson and H Law as trustees of the Trust. That letter concluded:

It would be my view that it would be quicker, easier and considerably cheaper for your company and Mr Anderson to realise the hopeless position that you are both in and agree to resign as trustees and appoint an institutional trustee company to manage the [T]rust. If you do not do this and court orders are necessary, indemnity costs will be sought against all those parties involved regardless of who they believe they are acting for, and the court will not make an order of costs against the [T]rust so the costs will be paid personally.

[5]    Arnet Law replied to Mr Paine on 14 October 2021. On behalf of the trustees of the Trust, Arnet Law advised they had been attempting to contact Kodie, the final beneficiary of the Trust, but did not have contact details for him, and that Mr Paine would not make the contact details available. The letter recorded Arnet Law’s past instructions from Mr Anderson that the assets of the Trust had been distributed and there were no remaining assets. The error in respect of the property was identified, with an acceptance that it was Trust property. The letter also noted a debt back to the late Mrs Craighead relating to the transfer of the property.

[6]Mr Arnet said:

To wind up the Trust, the final vesting date of the Trust was brought forward, this meaning the asset should transfer to the final beneficiary. The final beneficiary being “the children of Roy Philip Bundz” which is Kodie Bundz.

Had the trustees had the correct information the Trust would never have been wound up. The trustees did not intend the asset to be transferred to the final beneficiary at this point. Nor would the trustees have agreed to the transfer of the assets to Mr Anderson solely.

[7]    The letter went on to refer to other issues between Mr Anderson and the Settlor of the Trust.

[8]    Mr Paine, in his reply of  15 November 2021,  seized  on  the  advice  from Mr Arnet that the vesting date of the Trust had been brought forward, but at the same time ignored that this had not been intended by the trustees, and was an error. Mr Paine referred to instructions from Kodie to require that the Trust asset be transferred to him in accordance with the Trust Deed.

[9]    In my view, calling for the transfer of the Trust property was an unrealistic position to adopt when, at the heart of the trustees’ decision to bring forward the vesting date was an error, it seemed the Trust had a debt back to Mrs Craighead’s estate — or at least there was an issue in that regard to be resolved.

[10]   In December 2021, Mr Paine wrote to Arnet Law noting there had been no response to his call for the transfer of the Trust asset and that a caveat had been lodged against the property. Mr Paine again referred to the Trust’s vesting date being accelerated but did not refer to the fact that it was due to an error.

[11]   Nothing then happened until July 2022 when Mr Paine asked the solicitors acting for Mr Anderson if they were authorised to accept service of these proceedings. These proceedings were filed on 8 July 2022.

[12]   The proceedings sought various orders, including removing the defendants as trustees and appointing Perpetual Trust Ltd as replacement trustee.

[13]   HG Law filed an appearance for ancillary purposes on 12 September 2022 saying it did not oppose the plaintiffs’ claim that it be removed as trustee of the Trust or the appointment of Perpetual Trust Ltd as replacement trustee but that it wished to be heard on the matter of costs. Mr Anderson filed a statement of defence referring to the fact that there remained issues to be dealt with in respect of the debt back to Mrs Craighead’s estate relating to the transfer of the property.

[14]   Ultimately, the matter was resolved by agreement, with orders being made by consent whereby the defendants agreed to be removed as trustees and Perpetual  Trust Ltd appointed in their place. None of the other orders sought by Kodie, including the vesting of the property in him, were made. I note the order sought was that Perpetual Trust Ltd convey the property to Kodie — Perpetual Trust Ltd was not a party to this proceeding so no order affecting it could be made.

Issues of costs remained

[15]   I have no doubt that HG Law is entitled to be indemnified for its costs from the Trust property.

[16]   The existence of the error as to the status of the property was acknowledged on its behalf early on through its solicitors, along with it being made clear that the vesting date was brought forward due to the error in relation to the property. It was also acknowledged that there remained issues between the Trust and the transferor of the property, that is, the debt back. When the proceedings were issued, HG Law did not oppose the application that it be replaced as trustee.

[17]   Mr Anderson’s defence noted the need for the debt back to the transferor to be taken into account, along with other issues.

[18]   Mr Paine’s apparent insistence on the property being transferred to Kodie was at the heart of the reason of the matter not being resolved earlier. The then trustees confirmed that their decision to wind up the Trust was based on a mistake. The trustees becoming aware of the true position were not obliged to act as if the mistake represented a truly informed decision, and immediately distribute the property to Kodie as demanded by Mr Paine as if they had intended to wind up the Trust.

[19]   Mr Anderson’s error seems to have played a part in this state of affairs coming about. However, again, there was no attempt by Mr Anderson to conceal that error.

[20]   The plaintiffs allowed more than seven months to go by before they issued these proceedings. There was no renewed call from them on the defendants to retire before the proceedings were filed. While the matter had been subject to correspondence through the second half of 2021, as I have said, nothing happened until July 2022.

[21]   The general rule in civil litigation is that there should be a “letter before action”. Accordingly, I asked the parties, when the costs memoranda were first filed, to advise if there had been a letter before action.

[22]   Associate Judge Osborne declined costs to a successful applicant for security for costs on the basis they had not raised the issue of security with the respondent prior to filing the application, saying:1

[22]Except sometimes in situations of clear urgency, the Court expects plaintiffs and applicants, before issuing proceedings or making applications, to explore resolution informally. In relation to general proceedings, this is frequently done through a “letter before action”. A failure to pursue resolution through either a non-litigious approach or through a less expensive course of proceeding may attract the Court’s invocation of r 14.7. The Australian commentary in Professor Dal Pont’s Law of Costs, in relation to the disallowance of costs in certain cases, includes the following:

1      Morrell v World Solar Ltd [2018] NZHC 518.

8.18The court’s general costs discretion dictates that, where in accordance with its proper exercise, a court deems that costs should be disallowed to a litigant, even if he or she is ultimately successful, it may make an order to this effect. What costs should be disallowed depend on the circumstances of each case. For instance, Courts have disallowed costs incurred:

…

·that might fairly have been rendered unnecessary by a little forethought:

·as a result of an unnecessary application:

·where a less expensive course of effecting the same outcome was readily available.

(footnotes and citations omitted)

[23]     When the above principle is coupled with the trustees’ usual entitlement to be indemnified, HG Law’s response to the proceedings that it did not oppose it being replaced as trustee, and Mr Anderson’s advice that there were broader Trust issues to be considered, I consider the defendants as trustees are entitled to be indemnified for their costs. As I have said, there was nearly seven months delay in the issuing of these proceedings without further contact, and the plaintiffs’ approach was driven by an incorrect focus on the date of distribution being brought forward notwithstanding such was the result of a mistake. Distribution would not have been brought forward had the true position been known, yet the plaintiffs based their approach on that error.

[24]     I find the defendants are entitled to be indemnified from the Trust property in respect of HG Law’s costs, totalling $15,756.32 including GST and disbursements. Of that amount, $6,302.00 including GST relates to Arnet Law’s fees and of that amount, $3,684.03 including GST and disbursements relates to the work done to effect the transfer of the Trust assets to Perpetual Trust Ltd. It was agreed the costs to effect transfer of the Trust assets were to be paid from the Trust assets. The balance of HG Law’s costs relate to counsel’s fees.

[25]Mr Anderson’s costs are $13,309.71 including GST and disbursements.

[26]     There is an order that the first and second defendants are entitled to be indemnified for the amounts set out in [24] and [25] above from the Trust.

[27]     There is a further order that the plaintiffs’ reasonable costs on a 2B basis are to be paid to Kodie from the Trust. For the avoidance of doubt, that cost award is not payable by the first and second defendants personally.

Associate Judge Lester

Solicitors:

Marks & Worth Lawyers, Dunedin RSM Law, Timaru

Arnet Law, Pukekohe

Copy to counsel:

G Paine, Barrister, Dunedin

P Cornegé, Barrister, Hamilton Perpetual Trust Ltd