Cornes v Hirst - [2023] NZHC 3000

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-1110

[2023] NZHC 3000

UNDER sections 112 and 114 Trusts Act 2019 and the inherent jurisdiction of the High Court Rules

AND UNDER

Part 19 High Court Rules

IN THE MATTER

of the BELLE STOREY TRUST

BETWEEN

KATHRYN MAY CORNES, GREGORY GRAHAM CORNES, JORDAN WILLIAM CORNES AS BENEFICIARIES OF THE BELLE STOREY TRUST

Applicants

AND

JANETTE JOY HIRST AND CODYMO TRUSTEES NO 2 LIMITED AS

TRUSTEES OF THE BELLE STOREY TRUST

Respondents

On the Papers:

Counsel:

M I S Phillipps for Applicants

A Steele for First Named Respondent Janette Hirst
B P Thomas for Second Named Respondent Codymo Trustees No 2 Limited

Judgment:

26 October 2023

JUDGMENT ISAC J

[Costs]

CORNES, CORNES, CORNES TRUST v HIRST AND CODYMO TRUSTEES NO 2 LIMITED AS TRUSTEES OF THE BELLE STOREY TRUST [2023] NZHC 3000 [26 October 2023]

Introduction and the issues

[1] In this proceeding, the applicants, the beneficiaries of the Belle Storey Trust, sought the removal of the respondents as trustees of the Trust. However, the parties resolved the matter informally before it was heard and, in a joint memorandum dated 18 August 2023, sought orders by consent removing the respondents as trustees and appointing Comac Trustees Ltd in their place. I made the orders sought in a Minute of 21 August 2023,1 and issued a judgment the following day setting out my reasons.2

[2] In accordance with the parties’ joint memorandum, I ordered that they could file memoranda if they were unable to reach agreement as to costs.3 The parties have not been able to agree and have asked that the Court determine the issue.

[3] The applicants seek costs on a 2B basis of $10,038, and invite the Court to consider awarding increased or indemnity costs.4 The applicants also ask that their costs be met by the trustees personally on the basis that it would be unfair for the beneficiaries to bear the costs of bringing the proceeding.5 The applicants point to a financial investigation report issued by the Public Trust on 24 November 2022 pursuant to s 153 of the Trusts Act 2019. They say the report discloses significant deficiencies in the management and administration of the Trust which made it “abundantly plain” that the trustees had to retire. Nevertheless, Ms Hirst refused to accept service of proceedings by email when she was overseas in July 2023, and the respondents waited until after the date for filing an opposition to notify their consent to the application. It is said that these steps were unreasonable, frivolous, and put the applicants to unnecessary expense in the proceeding.

[4] The respondents oppose an uplift to costs on the basis that the applicants’ allegations (which are denied) concern pre-litigation conduct which is irrelevant to the question of costs. Further, the respondents seek indemnification from the Trust’s assets for their costs in the proceeding.

1 Cornes v Hirst HC Auckland CIV-2023-404-1110, 21 August 2023 (Minute…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Cornes v Hirst

Details

AGLC: Cornes v Hirst [2023] NZHC 3000
Case: [2023] NZHC 3000
Decision Date: 26 October 2023

CaseChat Overview and Summary

The High Court of New Zealand Auckland Registry dealt with a matter concerning the Belle Storey Trust, in which the beneficiaries sought the removal of the trustees and their replacement. The respondents, Janette Joy Hirst and Codymo Trustees No 2 Limited, did not oppose the application, and the parties reached an agreement to replace the trustees with Comac Trustees Ltd. The Court made the necessary orders on 21 August 2023 and issued a judgment the following day. The parties were unable to agree on the costs of the proceeding, and the applicants now seek costs on a 2B basis, with an invitation for the Court to consider increased or indemnity costs. They also seek for their costs to be borne personally by the trustees, arguing that it would be unfair for the beneficiaries to bear the costs of bringing the proceeding.

The primary issues for the Court to decide were whether costs on a 2B basis were appropriate, whether the respondents' conduct warranted an uplift to costs, and whether the respondents should be indemnified for their costs in the proceeding. The Court found that 2B costs were appropriate, given that the applicants were successful in their application. However, the Court did not consider that there was any conduct warranting an uplift or indemnity costs, as the applicants' complaints were directed at conduct that occurred before the litigation commenced. The Court also found that the respondents were entitled to be indemnified from the Trust's assets for their costs in the proceeding, as the Trust Deed provided for such an indemnity, and no breaches of trust had been established.

In conclusion, the Court ordered that the applicants were entitled to costs of $10,038, together with disbursements of $740, and that those costs were to be paid from the trust assets. The respondents could indemnify themselves from the trust assets for their actual and reasonable costs incurred in the proceeding, with leave to apply reserved in case of disagreement.

Orders