Goodman v Campbell

[2015] NZHC 2780

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2015-409-000259 [2015] NZHC 2780

UNDER	the Trustee Act 1954, Section 68
BETWEEN	JULIE RUTH GOODMAN Plaintiff
AND	JEREMY ZANE CAMPBELL Defendant

Hearing:	9 November 2015 (Determined on the papers)
Counsel:	P J Shamy for Plaintiff A D Marsh for Defendant
Judgment:	10 November 2015

COSTS JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

Introduction

[1]      The plaintiff, Ms Goodman, is the mother of George David Campbell who was  born on  24  May 2004.    His  father,  Clinton  Campbell,  died in  June 2014. Although he and Ms Goodman had not lived together for some years before he died, they had enjoyed a good relationship, and Clinton Campbell was a supportive and loving father.  George is his only child.

[2]      Clinton Campbell left a will dated 17 October 2013 which was admitted to probate.  He appointed his brother, Jeremy Zane Campbell, the defendant, as his sole executor and trustee.   He appointed his parents, David and Helen Campbell, as guardians of George.   He left the residue of his estate to such of his children as should survive him and attain the age of 21 years.   In fact, George is his sole

beneficiary.

Goodman v Campbell Costs Judgment [2015] NZHC 2780 [10 November 2015]

[3]      The will empowers the trustee to pay or apply all or any part of the expectant or presumptive share George has in the estate for or towards his maintenance, education  or  other benefit.   The  will  also  provides  that  the trustee will  not  be personally liable for any loss incurred as a trustee in the course of administration of the estate and that if personal liability is asserted, the trustee is entitled to full indemnity  from  the  estate  unless  that  liability  arose  from  the  trustee’s  own dishonesty or from the wilful commission or omission by the trustee of an act known to be a breach of trust.

[4]      On 6  May 2015  Ms  Goodman filed an  interlocutory application  without notice for an order appointing her litigation guardian for George under r 4.35 of the High Court Rules.  She stated that requests had been made by her to the executor of the estate for information relating to the trust, and the requests had been refused. She therefore wished to be appointed as litigation guardian to pursue court orders requesting provision of the information.

[5]      Ms Goodman filed an affidavit in support of this application, setting out the reasons it had been made.  She annexed correspondence from the solicitors acting for the defendant trustee, Mr Jeremy Campbell.

[6]      I  received  and   considered  the  interlocutory  application  for  an  order appointing Ms Goodman as litigation guardian and a supporting affidavit.  I issued a judgment dated 8 May 2015 appointing Ms Goodman as litigation guardian, and giving reasons for so doing.  After reviewing the material then before the Court, I formed the view that it may be possible for the issues raised by Ms Goodman to be resolved without her statement of claim being filed, with the attendant cost involved not only in that step being taken, but also in relation to the defended proceeding

which might ensue.  I therefore put the following paragraph in the judgment:1

[9]     I direct that a copy of this judgment is to be served on Mr Campbell, through his solicitors, and that Ms Goodman abstain from filing the proceeding  for  a  period  of  10  working  days  after  that  to  ensure  that Mr Campbell has an opportunity to consider the judgments of the Privy Council in Schmidt v Rosewood Trust Ltd [2003] UKPC 26; [2003] AC 709, and of the High Court in Foreman v Kingstone [2004] 1 NZLR 841. From his present stance, as far as it may be gleaned from the correspondence

1      Goodman v Campbell HC Christchurch CIV-2015-409-000259, 8 May 2015.

produced to the Court in support of this application, it could possibly be inferred that he has overlooked the principles of law applying to his duty of disclosure, which are discussed in these cases.

[7]      Counsel for Ms Goodman followed this course and, as a result, Mr Jeremy Campbell made available to Ms Goodman the information she sought in relation to Mr Clinton Campbell’s estate.  Unfortunately, however, there has been no agreement in relation to the legal fees Ms Goodman necessarily incurred, and she now seeks costs.  On her behalf, Mr Shamy phrases the issues for determination in these terms:

(i)      Whether the plaintiff is entitled to costs for the application made to this Court and the preparation in draft of the substantive proceedings from the Trustee personally or from the Trust.

(ii)   Should the Trustee if he incurred legal fees throughout the correspondence be entitled to claim those fees from the Trust?

(iii)    In terms of the cost sought, should the plaintiff be entitled to solicitor client costs?

Correspondence prior to issue

[8]      On behalf of Ms Goodman, Mr Shamy wrote to Saunders Robinson Brown, solicitors acting in the estate of the late Clinton Campbell, on 1 December 2014. After indicating the basis of his request, he asked for a copy of Mr Campbell’s will, and  of  a  trust  which  he  understood  Mr  Campbell  had  set  up  in  his  lifetime. Mr Shamy indicated that Ms Goodman would like to see the provision that had been made for George, and the terms of the trust.

[9]      Mr Parkes of Saunders Robinson Brown replied on 5 December 2014.   He enclosed a copy of the probate for Mr Clinton Campbell’s last will, with the will attached.  He advised that George was Mr Campbell’s only child.  He indicated that although he acted for Mr Campbell during his lifetime, he did not recall ever having received instructions, nor having prepared a trust deed and a search of his firm’s records, and those of Mr Parkes’ prior practice, had not revealed any record of a trust being formed.  Mr Parkes went on to refer to an insurance policy with AMP under which Ms Goodman had received settlement.   This letter answered the inquiries asked by Mr Shamy in his letter of 1 December.

[10]     Mr Shamy wrote again on 20 December.   He referred to the testamentary

trust and sought “some clarity over the terms of that trust as understood by the

trustee”. After referring to an expectation that there would be provision for George’s education advancement and maintenance, he referred to a proposal which had come to Ms Goodman’s attention that members of Mr Jeremy Campbell’s family, along with George, take a trip to Dubai.  Understandably, Mr Shamy commented that he could not immediately see that as being within the terms of a testamentary trust set up for a boy of 10.  He therefore went on to ask what assets formed the residue of Mr Clinton  Campbell’s  estate  and  what  Mr  Jeremy  Campbell  planned  or  was considering in respect of them.

[11]     Mr Shamy received a reply dated 26 February 2015.   Mr Parkes said there were no other terms to the trust created by the will other than the direction in the will itself, to which I have referred earlier.  He said that Mr Jeremy Campbell would be controlling the estate fund and would liaise direct with Ms Goodman in regard to its application, according to George’s needs from time to time, until he attains the age of

21 years.  Mr Parkes advised that there was no trip to Dubai intended, though it had been discussed.

[12]     Mr Parkes also said:

The trustee has also advised that he does not feel obliged to disclose to your client the assets which would be the residue of the deceased’s estate, other than to say that they would be reasonably significant and would provide a good financial base for George in due course.

[13]     The  balance  of  the  letter  relates  to  a  superannuation  fund  held   by Mr Clinton Campbell  with  CareSuper  in Australia.    He  asked  Ms  Goodman  to complete a form in relation to this fund and supply a birth certificate for George. Apart from the passage I have quoted, the response by Mr Parkes was co-operative and informative.

[14]     On 19 March Mr Shamy replied informing Mr Campbell’s solicitors of his “clear and strict duty to provide information to beneficiaries or their authorised agents when so required”.  It was not, Mr Shamy said, a matter of whether the trustee feels “obliged to disclose” the assets to Ms Goodman, a reference to Mr Parkes’ former letter.   Mr Shamy said it was clear law that beneficiaries are entitled to receive information which would enable them to ensure the accountability of trustees

in terms of the trust deed.  He noted the decision of the Court in The Cats’ Protection League v Deans,2  and said his client was entitled, as guardian of George, to full details of assets and liabilities of the trust, plus full details of the trust’s accounts.  He reiterated his request for this information and advised that if it was not forthcoming an application would be made to the High Court for an order.   He noted that this would incur costs and advised that in the circumstances these costs would be sought

against the trustee himself.  He advised that Ms Goodman did not wish to engage in litigation,  but  that  Mr  Campbell’s  response  left  no  other  alternative  unless  his position was reconsidered.

[15]     This letter did not result in the required information being supplied and this proceeding was therefore filed.

Discussion

[16]     In  his  submissions  in  opposition  to  the  orders  sought  by  Mr  Shamy, Mr Marsh, for Mr Campbell, describes Ms Goodman as the ex-partner of Mr Clinton Campbell, and says she is not herself a beneficiary of the trust.  He says first that as Mr Clinton  Campbell  was  a  very  private  person,  Mr  Jeremy  Campbell  was uncomfortable in having the estate’s assets scrutinised by his ex-partner.   He was also  “uncomfortable  in  the  absence  of  some  express  authority  in  releasing information to someone who was not a beneficiary of the trust”.  Mr Marsh says that as soon as the Court appointed Ms Goodman as George’s litigation guardian, she became entitled to the information which she was seeking, and it was immediately provided.  In his conclusion, Mr Marsh says:

As soon as the position with regard to the plaintiff’s authority was clarified with her appointment as George’s litigation guardian, the defendant then immediately provided further information in relation to the Trust assets.

[17]     This explanation for Mr Campbell’s conduct is without valid foundation. Ms Goodman is, and has been since he was born, the guardian of George – s 17, Care of Children Act 2004.   Her right to seek the information that she sought is

supported  by  established  law,3   and  by  virtue  of  her  status  as  guardian.    Her

2      The Cats’ Protection League v Deans (2010) 20 PRNZ 584.

3      See n 2 above.

application to be appointed as a litigation guardian is different and arises from the provisions of the High Court Rules, not from any lack of status as a guardian in other matters relating to her son in his infancy.

[18]     Further, Mr Marsh’s reference in his memorandum to paragraph [9] of the

judgment dated 8 May 2015, contains the following sentence:

Finally, as was clearly indicated by the Court in paragraph 9 of its judgment dated  8  May  2015,  the  judgment  appointing  the  plaintiff  as  litigation guardian was to be served on the defendant to enable him to reconsider the position  in  light  of  that  judgment  (ie:  confirmation  of  the  plaintiff’s position).   Given the judgment, the defendant was then reasonably in a position to confirm that the information as sought should then be disclosed. That was immediately done, as is accepted by the plaintiff.

[19]     Reference to paragraph [9] of the judgment demonstrates clearly that the reason  given  in  the  bracketed  phrase  in  the  above  quote  is  unfounded.    The suggestion that the defendant have an opportunity to reconsider his position was expressly made in the context of reference by the Court to the cases which set out the right of a beneficiary to receive information in relation to a trust.  No inference can be drawn from the judgment that the opportunity given to Mr Jeremy Campbell to reconsider his position was related to the appointment of Ms Goodman as a litigation guardian.    Due  attention  to  her  status  as  George’s  guardian  under  the  Care  of Children Act and the relevant principles of law in advance of these proceedings having to be issued would, or certainly should, have directed Mr Jeremy Campbell and/or his legal advisors to the legal obligations to Ms Goodman as guardian of an infant non-discretionary beneficiary in the estate.

[20]     In my opinion, well before the proceedings were issued, Mr Shamy had sufficiently made out his client’s right to the provision of full details of the assets in the estate.  He even went as far as referring the estate’s solicitor to a case on point. In the judgment in that case reference is made to both the cases referred to in the judgment of the Court dated 8 May in this proceeding.

[21]     I  am  satisfied,  therefore,  that  there  should  be  an  award  of  costs  to Mrs Goodman.  The Court may order a party to pay indemnity costs under r 14.6(4) in certain circumstances.   In my opinion, on the basis of the events which I have

summarised, it can fairly be said that Mr Campbell has acted unnecessarily in putting Ms Goodman to the expense of bringing this proceeding.  In particular, he failed to recognise her status as guardian, notwithstanding the fact that he knew her to be the mother of George, and he failed to comply with the established duties of a trustee in his position, for reasons which are irrelevant to the decision a trustee is required to make.  References to Mr Clinton Campbell being a private person indicates that he also took into account a fact of no relevance to the decision he was required to make, and the statement by his solicitor that Mr Jeremy Campbell did not feel obliged to disclose to Ms Goodman the assets shows either that the latter did not properly investigate his obligation, or that he did so, but chose to ignore it.

[22]     This is an appropriate case for indemnity costs to be awarded, and I so direct. That leaves the issue of the incidence of those costs, and whether Mr Campbell is entitled to an indemnity for his own costs from the assets of the estate.

[23]     George Campbell is the sole beneficiary in the estate.  If these costs are paid from the assets of the estate, they are effectively paid by George. As Associate Judge Osborne said in The Cats’ Protection League v Deans:4

The plaintiff is the single income beneficiary of the trust involved in this case.   If it receives costs from the defendants and they are met from the capital of the trust it is the plaintiff which ultimately suffers the financial effect of those costs.   Secondly, if for their own costs in relation to this proceeding the trustees reimburse themselves from the trust estate, the plaintiff again suffers the financial effect of that.

[24]     The position in this case is the same.

[25]     Trustees may be made personally liable for the costs of a proceeding which is caused by the trustee’s failure to carry out those duties.  In Furness v Public Trustee Stringer J said:5

It is, of course, clearly established that as a general rule a trustee is entitled to his costs as between solicitor and client in litigation connected with the administration of the estate, unless it is shown that he has been guilty of some misconduct which results in excessive or unnecessary costs being incurred.  Now, as stated in Lewin on Trusts 12 ed 887, it is the bounden duty

4 See n 2 above at [35].

5      Furness v Public Trustee [1922] NZLR 920 at 923.

of the trustee to keep clear and distinct accounts of the property he administers, and he exposes himself to great risks if he omits to do so.  “It is the first duty,” observed Lord Plumer, “of a trustee to be constantly ready with his accounts”.

[26]     There is no suggestion in this case that Mr Jeremy Campbell has not prepared accounts for the estate, but I cite this authority for the proposition that a trustee may be personally liable for costs, and not be entitled to an indemnity for his own costs, from  the  assets  of  an  estate,  if  his  misconduct  has  resulted  in  excessive  or unnecessary costs  being  incurred.6      In  my  opinion,  and  for  the  reasons  I have enunciated, Mr Jeremy Campbell failed in his duty to the trust of which he is the sole trustee by failing to provide information to which Ms Goodman was entitled and, in so  doing,  he  has  caused  the  estate  to  incur  a  liability  for  indemnity  costs  to

Ms Goodman and in respect of legal fees he has incurred.  Mr Shamy identified and informed him of the applicable principle of law and the fact that costs would be sought against him.  Both these are therefore to be paid by Mr Campbell personally. For completeness, the provision in the will which I have referred to in paragraph [3] does not alter the law as stated in Furness v Public Trustee.

Outcome

[27]     Costs are awarded to Ms Goodman on an indemnity basis in the sum of

$5,950 inclusive of disbursements.   This sum is to be paid by Mr Campbell personally.  Further, he is not entitled to an indemnity for his own costs on this case

from the assets of the estate.

J G Matthews

Associate Judge

Solicitors:

Hatherly Loughnan (Sarah Roberts), Christchurch.

Saunders Robinson Brown, Christchurch.

6      See also Re Skinner [1904] 1 Ch 289, Re Holton’s Settlement Trusts (1918) 119 LT 304, 88 LJ Ch 44 and Re FG Jeeves Sons’ Trust HC Whangarei CP1/86, 13 November 1986.