Dewat v Lal - [2024] NZHC 697

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2023-470-09

[2024] NZHC 697

UNDER

AND
Part 18 of the High Court Rules 2016 and the Trusts Act 2019

IN THE MATTER

of the SANATAN DHARAM TRUST

BETWEEN

SANJEEV DEWAT, KULDIP KUMAR, MOHAN LAL SAILY, ROMAN SAILY and

SANJEEV SHARMA as trustees of the SANATAN DHARAM TRUST

Plaintiffs

AND

DARYODHAN LAL, RAM LUBHAIA, AJAY SHARMA and RAM DITTA SAILY

as trustees of the SANATAN DHARAM TRUST

Defendants

Hearing: On the papers

Appearances:

J Delaney for the Plaintiffs A Singh for the Defendants

Judgment:

28 March 2024

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 28 March 2024 at 11 am pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar

Solicitors:
Harrington Chambers, Tauranga

DEWAT v LAL [2024] NZHC 697 [28 March 2024]

Introduction

[1] The plaintiffs apply for costs following a successful application for summary judgment in respect of their removal as trustees of the Sanatan Dharam Trust (Judgment).1

[2] In my decision I recorded that the plaintiffs had succeeded and in the usual course would be entitled to costs.2 I observed that in my preliminary view it might be appropriate to order costs against the defendants personally because it ought to have been clear to them that they could not proceed as they purported to.3 I asked the parties to confer and, only if costs could not be agreed, to file memoranda. The parties were unable to agree and memoranda have been filed.

[3] The plaintiffs submit that the Judgment largely determines the proceeding and, on that basis, seek costs in respect of both the summary judgment application and the proceeding itself. They acknowledge that the question of whether an independent trustee is to be appointed is still to be determined and so propose that the costs of the proceedings so far ought to be reduced by 30 per cent. The plaintiffs submit that the defendants should pay these costs personally because the general indemnities under the Trusts Act 2019 or the Trust Deed can be displaced if the trustees’ costs are unreasonable or not properly incurred.4

[4] As far as the level of costs to be awarded, the plaintiffs submit that indemnity costs are appropriate or alternatively an uplift of 50 per cent.

[5] In addition, the plaintiffs seek a declaration that the defendants are not entitled to an indemnity from the assets of the Trust for their own costs.

[6] Finally, the plaintiffs seek a declaration that they may recover from Trust assets the difference, if any, between the costs awarded against the defendants personally and the plaintiffs’ actual costs claimed of $39,216.42.

1 Dewat v Lal [2023] NZHC 1908 at [84].
2 At [88].
3 At [88].
4 Sunde v Sunde [2019] NZCA 552 at [13]–[14].

[7] The defendants oppose the plaintiffs’ application for indemnity costs or an uplift in costs and instead seek either that:

(a)costs be reserved pending the determination…

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 Dewat v Lal

Details

AGLC: Dewat v Lal [2024] NZHC 697
Case: [2024] NZHC 697
Decision Date: 28 March 2024

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Dewat v Lal involved a dispute between trustees of the Sanatan Dharam Trust. The plaintiffs, Sanjeev Dewat, Kuldip Kumar, Mohan Lal Saily, Roman Saily, and Sanjeev Sharma, sought costs following their successful application for summary judgment to remove the defendants, Daryodhan Lal, Ram Lubhaia, Ajay Sharma, and Ram Ditta Saily, as trustees. The plaintiffs argued that the defendants' actions in removing them as trustees were unreasonable and not in accordance with the Trust Deed, and thus the defendants should be liable for their costs personally. The defendants opposed this, arguing that costs should either be reserved or lie where they fall, and that the plaintiffs' amendments to their pleadings contributed to increased costs.

The Court considered the relevant legal principles, including the discretionary nature of costs under the High Court Rules 2016 and the principle that the losing party should generally pay the winning party's costs. The Court also noted the settled law that trustees have a right to indemnity from trust assets for reasonable costs and expenses incurred in the administration of the Trust, subject to the Court's supervisory jurisdiction. The Court held that the plaintiffs' actions in seeking orders to reinstate themselves as trustees and to appoint an independent trustee were reasonable given the dysfunction between the trustees. The Court further found that the defendants acted unreasonably in removing the plaintiffs as trustees and were given the opportunity to avoid the proceedings. Therefore, the Court ordered that the defendants pay the plaintiffs' costs personally for the summary judgment application and a proportion of the substantive proceedings, while the remainder of the plaintiffs' costs should be indemnified by the Trust assets. The Court also ruled that the defendants were not entitled to an indemnity from the Trust assets for their costs.

The final orders were that the defendants are to pay the plaintiffs $16,081.25 in 2B costs personally, the plaintiffs may recover the remaining costs from the Trust assets, and the defendants are not entitled to an indemnity from the Trust assets for any part of the plaintiffs' costs or for their own costs up until 1 September 2023. The entitlement to indemnity for the remainder of the proceedings is to be resolved in the usual way.

Orders