Houchens v Ruscoe - [2023] NZHC 3427

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2023-485-431

[2023] NZHC 3427

UNDER Parts 4 and 19 of the High Court Rules 2016 and the Trusts Act 2019

BETWEEN

RYAN MARSHALL HOUCHENS

First Applicant

AND

GIA THANH PHAN

Second Applicant

AND

TRISTEN ANTHONY ROBINSON

Third Applicant

AND

JOSHUA DAVID STEVENSON

Fourth Applicant

AND

DAVID IAN RUSCOE AND MALCOLM RUSSELL MOORE

Respondents

Hearing: On the papers

Counsel:

E B Moran for the Applicants

M A Corlett KC and S A Barker for the Respondents

Minute:

29 November 2023

JUDGMENT OF PALMER J

(Costs)

Counsel/Solicitors
J S Cooper KC, Auckland P G Watts KC, Auckland M A Corlett KC, Auckland Buddle Findlay, Wellington
Buddle Findlay, Christchurch
DLA Piper New Zealand, Wellington

HOUCHENS v RUSCOE [2023] NZHC 3427 [29 November 2023]

Judgment

[1] On 24 October 2023, I issued a judgment declining an interlocutory application by the applicants to appoint a special trust adviser and independent representative of account holders/beneficiaries of Cryptopia.1 I held:

(a)There was no evidence of anything approaching a breach of trust.2 The application seemed not to be based on an existing problem but was a means to find a problem – a fishing expedition. There is an insufficient evidential basis of a practical problem to make the sort of appointments sought.

(b)The appointments sought would not be an effective means of protecting the interests of account holders.3 I was not satisfied a representative counsel or special trust adviser would be able to reconcile the interests of account holders. It would seem inevitable that the proposal is practically unworkable.

(c)The appointment of counsel to assist the Court is a more effective means of protecting the interests of account holders.4 If an account holder has a significant issue they wish to pursue, they are able to apply to the Court to appear and be heard.

(d)In any case, the identified High Court Rules 2016 (the Rules) or provisions of the Trusts Act 2019 do not provide the Court with the jurisdiction to make the appointments sought or confer upon a special trust adviser the powers sought.5 If there was any jurisdiction to make the orders sought it would be found in the Court’s inherent equitable jurisdiction.6 But no problem of fairness affecting the interests of

1 Houchens v Ruscoe [2023] NZHC 2969.
2 At [20].
3 At [21].
4 At [22].
5 At [23]–[24].
6 At [25].

account holders, which they could not reasonably be expected to address, has been identified.

(e)“Costs follow the event”.7

Relevant law of costs

[2] Rule 14.6 of the Rules provides for increased and indemnity costs. It provides, relevantly:

(3)The court may order a party to pay increased costs if—

…

(b)the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

(i)failing to comply with these rules or with a direction of the court; or

(ii)taking or pursuing an unnecessary step or an argument that…

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 Houchens v Ruscoe

Details

AGLC: Houchens v Ruscoe [2023] NZHC 3427
Case: [2023] NZHC 3427
Decision Date: 29 November 2023

CaseChat Overview and Summary

The High Court of New Zealand was presented with an interlocutory application in the case of Houchens v Ruscoe, where the applicants sought the appointment of a special trust adviser and an independent representative of account holders/beneficiaries of Cryptopia. The applicants were Ryan Marshall Houchens, Gia Thanh Phan, Tristen Anthony Robinson, and Joshua David Stevenson. The respondents, David Ian Ruscoe and Malcolm Russell Moore, were liquidators of Cryptopia. The primary legal issue revolved around the applicants' request for the court to appoint a special trust adviser and an independent representative of account holders, which the respondents argued lacked merit and jurisdictional support.

The court, in its previous judgment, declined the interlocutory application on several grounds, including the absence of evidence of a breach of trust, the impracticality of the proposed appointments, and the lack of jurisdiction under the High Court Rules 2016 or the Trusts Act 2019. The court found that the application seemed more like a fishing expedition rather than a legitimate effort to address a real problem. The court also held that the appointment of counsel to assist the court was a more effective means of protecting the interests of account holders. The court further noted that the proposed appointments would not reconcile the interests of account holders and would be practically unworkable.

In the current judgment, the respondents sought costs on an indemnity basis, arguing that the application was brought for an ulterior purpose, was unsupported by evidence, and contributed unnecessarily to the time and expense of the proceeding. The applicants, on the other hand, argued that there was no basis to depart from the ordinary approach to awarding costs. The court found that while the application was a fishing expedition and there were procedural deficiencies, the lack of evidence supporting the allegations of breach of trust warranted a 25% uplift in costs. The court also noted that the applicants had no ulterior motives and that the application was not brought for an improper purpose.

Ultimately, the court awarded costs on a 2B basis of $13,503.50, increased by 25% to $16,879.38, plus disbursements of $95.65, to the liquidators. The court did not award costs for the costs memorandum as the applicants were not successful in their application. The court also noted that some of the procedural issues were a result of the complex nature of the originating applications and that the orders sought were novel. The court found that the lack of evidence supporting the allegations of breach of trust put the liquidators to additional time and expense, justifying the uplift in costs.

Orders