Dawson v Snedden

[2019] NZHC 1208

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-419

[2019] NZHC 1208

BETWEEN

MARIE-LAURE DAWSON

Plaintiff

AND

DAVID WARWICK SNEDDEN AND BENJAMIN NESBIT AS PURPORTED

TRUSTEES OF THE GALLAIS FAMILY TRUST

First Defendants

AND

DAVID WARWICK SNEDDEN AND BENJAMIN NESBIT SNEDDEN AS EXECUTORS OF THE ESTATE OF

PHILIPPE ALAIN ROBERT GAILLAIS
Second Defendants

AND

SUSAN LYNETTE REID

Third Defendant

AND

JASMINE HANAWY

Fourth Defendant

AND

CHRISTINE LAGARDE

Fifth Defendant

Hearing:

On the papers

Appearances:

J P Cundy for Plaintiff (excused due to non-opposition of application)

R C Knight & T A Chubb for First Defendants
K G Davenport QC & A M Cameron for Third Defendant

Judgment:

30 May 2019

COSTS JUDGMENT OF PAUL DAVISON J

This judgment was delivered by me on 30 May 2019 at 1:00 pm Pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

DAWSON v SNEDDEN COSTS JUDGMENT [2019] NZHC 1208 [30 May 2019]

[1]                 This is an application by Ms Reid, the third defendant in the substantive proceeding, for 2B costs on her application to this Court for an interim distribution from the first defendants (the Trustees) and the second defendants (the Executors).

[2]                 Ms Reid says that as she was successful in her application costs should follow the event. She seeks costs in the sum of $8,641.00.

[3]                 The Trustees, who were the respondents to Ms Reid’s application, say that both parties had a measure of success and it would therefore be appropriate for costs to lie where they fall. In the alternative, if the Court is minded to award costs to Ms Reid, they should be fixed on a 2B basis amounting to $7,024.50.

Background

[4]                 Ms Reid was the de facto partner of the late Mr Philippe Gallais (Mr Gallais) who died on 26 June 2014. Under the terms of Mr Gallais’ will, Ms Reid was bequeathed a number of chattels. In his will Mr Gallais directed that the residue of his estate, being the bulk of his estate, be distributed to the trustees of the Gallais Family Trust (the Trust), of which Ms Reid is both a principal and final beneficiary.

[5]                 Ms Reid’s application for an interim distribution from the Trust arose as a result of significant delays in the administration of the estate caused by proceedings brought by the plaintiff, Ms Dawson, in which she challenges the validity of the Trust. The Executors of Mr Gallais’ estate have prudently deferred making a final distribution of the estate residue to the Trust until the plaintiff’s claim is finally determined. The unfortunate consequence of this situation was that ever since Mr Gallais’ death in June 2014, Ms Reid has not had access to any funds from the Trust notwithstanding her interest as a principal beneficiary of the Trust. Since Mr Gallais’ death Ms Reid has struggled financially and has had to borrow from friends and third parties in order to meet her living expenses and legal costs.

[6]                 Having regard to these circumstances I made orders directing the Executors to make an interim distribution to the Trustees in the sum of $100,000 to enable the Trust to advance an equivalent sum to Ms Reid, and an order directing the Trustees to make a distribution to Ms Reid of that amount. The orders I made also required Ms Reid to

provide a written undertaking to the Court and the Executors to indemnify the Executors, for an amount not exceeding the amount she receives by way of an interim distribution from the Trust should its assets of the estate be insufficient to meet all its liabilities.

[7]                 At the conclusion of my judgment I directed both parties to file memoranda as to costs.

Analysis

[8]                 Ms Reid claims costs against either the Trustees alone, or jointly and severally with the Executors.

[9]                 The Executors have not taken steps or been represented in this proceeding, despite being joined as a party against whom an order was sought, and despite the fact that the Executors are also the Trustees and thereby acting in dual capacities.

[10]              Mr Knight, for the Trustees, argues that costs should lie where they fall because this was not a usual case where the application was defended, as the Trustees did not actually oppose the orders sought. The Trustees appeared and were represented because they were concerned about the implications of Mrs Gallais’ challenge to the existence of the Trust in the proceedings she has commenced, and they were appropriately cautious about making an interim distribution. The Trustees’ other main concern was whether the Court had jurisdiction to make an order directing an interim distribution.

[11]              Ms Davenport QC, for Ms Reid, acknowledges that neither the Trustees or the Executors opposed the application. However, counsel for the Trustees did appear at the hearing, and made submissions concerning the Court’s jurisdiction to make the orders sought. Ms Davenport says that while no party has failed in the application, Ms Reid has enjoyed success to the extent that an order has been made in her favour.

[12]              I agree that Ms Reid has enjoyed success. She sought an order in circumstances where her prior requests to the Trustees for an interim distribution had been declined. I determined that an interim distribution be made to her by the Trustees from funds

advanced to the Trust by the Executors to enable that to occur. On the basis of the authorities referred to in my Judgment I determined that the Court has jurisdiction to make such an order and that in the circumstances Ms Reid was entitled to such an order.

[13]              The Court made the orders having regard to, and to alleviate, the financial hardship that the delayed distribution of money from the Trust had caused Ms Reid. Having been successful in her application, it follows that she is entitled to costs against the Trustees and Executors.

[14]              While I note the submission for the Trustees that costs should lie where they fall, were an order for costs not made in Ms Reid’s favour, her obligation to meet her own legal costs would impose a financial burden on her, when the Court orders were made for the purpose of alleviating her financial hardship.

[15]              Costs should therefore follow the event. I hold that Ms Reid is entitled to costs on a 2B basis payable jointly and severally by the Trustees and Executors.

[16]              I agree with the Trustees that 2B costs should be calculated at $7,024.50. In the schedule provided by Ms Davenport, she seeks costs for the preparation of a bundle for the hearing, when no bundle was prepared. I do however allow $278.75 as the costs sought for second counsel, and note that the Trustees were represented by two counsel. That sum is to be added to the amount of costs as calculated by counsel for the Trustees.

Result

[17]Ms Reid’s application for 2B costs is successful.

[18]              The First and Second Defendants are jointly and severally ordered to pay costs to Ms Reid in the sum of $7,303.25.

Paul Davison J

Solicitors:

Lee Salmon Long, Auckland TGT Legal, Auckland

Wilson McKay, Auckland