Johnston v Brown

[2021] NZHC 1018

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2018-412-92

[2021] NZHC 1018

IN THE MATTER

of the Where A Wha Kawe Family Trust

AND

IN THE MATTER

of the Trustee Act 1956

BETWEEN

TOBY GREGG JOHNSTON

Plaintiff/First Counterclaim Defendant

AND

JENNIFER EVA BROWN

First Defendant/Counterclaim Plaintiff

AND

NIGEL WARREN HUGHES

Second Defendant/Second Counterclaim Defendant

Hearing:

(Determined on the Papers)

Counsel:

J I Taylor and J J Anson-Holland for the First Defendant and Counterclaim Plaintiff

T G Johnston - self-represented (Plaintiff/First Counterclaim Defendant)

Judgment:

7 May 2021

JUDGMENT OF ASSOCIATE JUDGE LESTER

(Costs)

This judgment was delivered by me on 7 May 2021 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 7 May 2021

JOHNSTON v BROWN [2021] NZHC 1018 [7 May 2021]

[1]        This judgment concerns an application for costs against Mr Johnston arising from a judgment dated 15 March 2021 (the Stay Judgment).1

[2]        The Stay Judgment concerned an application for a stay by Mr Johnston, along with other orders. The judgment sought to be stayed was an earlier judgment of mine dated 7 September 2020 (the Summary Judgment).2

[3]        In the Summary Judgment, orders were made removing both Mr Johnston and Ms Brown as trustees from a family trust, appointing a new independent trustee    and granting judgment to Ms Brown  for  a  sum  I  held  was  payable  to  her  by  Mr Johnston arising from a settlement agreement reached at a settlement conference in the Family Court. The settlement conference took place in December 2018, with the agreement being recorded in an order of the Family Court Judge who chaired the conference. There was an issue between the parties as to the meaning of that agreement and more particularly, Mr Johnston’s position was that the Family Court order did not properly record the agreement reached.

[4]        Mr Johnston’s defences were dismissed. Ms Brown was the successful party in that proceeding. Costs on a 2B basis were awarded in her favour.

[5]        Mr Johnston appealed that decision and brought an application for a stay. The document prepared by Mr Johnston was called “Notice of request for stay whilst appeal processed”.  That document, at para 3, set out the various orders sought by  Mr Johnston  pending  the  hearing  of  the  appeal.   The  six  applications  made    by Mr Johnston were as follows:

(a)that the Summary Judgment be stayed;

(b)that publication of the judgment on the internet be suspended;

(c)that an independent lawyer be appointed by the Court to represent the parties’ son;

1      Johnston v Brown [2021] NZHC 507.

2      Johnston v Brown [2020] NZHC 2298.

(d)that there be a prohibition placed on all parties, except Mr Johnston, from entering the property owned by the Family Trust in order to prevent the removal of Mr Johnston’s personal property (the Summary Judgment concerned in part the sale of the property);

(e)that there be a prohibition placed on any person entering onto the property for the purposes of the property being marketed or sold; and

(f)that the Court direct a formal mediation conference occur in respect of the dispute between the parties.

[6]        The above applications were addressed in the Stay Judgment. All applications, other than the application for a stay, were dismissed.

The Stay

[7]        One of the orders made in the Summary Judgment was that the new trustees for the Family Trust place the property owned by the Trust on the market for sale. Leave was reserved to the trustees to seek any necessary directions in that regard.

[8]        Prior to the hearing of the stay and other applications, Ms Brown, who opposed all of the applications, proposed in her written submissions a partial stay. Ms Brown suggested, given it had been common ground that the property would be sold and the real dispute was around the distribution of the sale proceeds, that the property be sold and the sale proceeds held subject to the outcome of Mr Johnston’s appeal. Ms Brown suggested $300,000 be retained that would reflect her entitlements under the Summary Judgment orders along with the new trustee’s costs and a buffer. The balance would be divided equally between new trusts of Mr Johnston and Ms Brown.

[9]        At the hearing, Mr Johnston did not oppose the general idea of the property being sold with an amount retained, but he did not agree with the amount proposed by Ms Brown nor did he propose an alternative amount. Accordingly, a settlement was not reached.

[10]      However, given Ms Brown’s preparedness to allow all of the sale proceeds to be held in trust pending the hearing of the appeal, I adopted that course.

[11]      The Stay Judgment gave Mr Johnston a little over two weeks to vacate the property and reserved leave for the new trustees to seek an order for possession if  Mr Johnston did not vacate. The property would then be sold and the net proceeds held pending the appeal.

The costs application

[12]      Counsel for Ms Brown submit she was the successful party in respect of all of the applications that were subject to the Stay Judgment. All of the applications, other than the stay application, were dismissed in their entirety. In relation to the partial stay application, the Court adopted Ms Brown’s proposal that a sale occur and the sale proceeds held pending the appeal, albeit that Ms Brown had suggested an interim distribution with $300,000 retained by the trustees.

[13]      I agree Ms Brown was the successful party in respect of all the applications and as such there is no reason why costs should not follow the event. Counsel for  Ms Brown seeks costs on a 2B basis in the sum of $7,130.62 including a 25 per cent uplift. The uplift is sought pursuant to r 14.6(3)(b)(ii) and (v) of the High Court Rules 2016 (the Rules). That is, counsel seeks an uplift on the basis Mr Johnston’s applications lacked merit  and he failed  without reasonable justification  to accept    a proposal to resolve the stay application.

[14]I accept the applications other than the stay application lacked merit.

[15]      As to the application that the Court order mediation, the Court was functus officio and therefore had no ability to order the parties to attend mediation. Once the summary judgment was determined, the proceeding was at an end and could not be used as a vehicle in which other applications could be made.   Were  it otherwise,     a proceeding would never be at an end.    By contrast, the Rules specifically allow    a stay application when an appeal is filed.

[16]      In respect of the application that counsel be appointed for the parties’ child, again the Court was functus officio.

[17]      As to the application that publication be stayed, Mr Johnston did not articulate any relevant adverse consequences that might have flowed from publication and in any event, by the time the matter came before the Court, the Judgment had already been published.

[18]      As to Mr Johnston’s application for exclusive occupation, that is, orders preventing anyone entering the property to remove his chattels or for the purposes of sale, these had no prospect of success. Mr Johnston had no legal basis to demand exclusive occupation. Mr Johnston had been removed as a trustee but more fundamentally had not opposed a sale. A sale was always going to require vacant possession and/or access to the property by the newly appointed trustees or their marketing advisers. The new trustees could not be kept out of the property.

[19]      I accept the submission that the applications in relation to mediation, the appointment of  counsel  for  the  parties’  child,  the  staying  of  publication  and  the exclusive occupation orders had no prospect of success.

[20]      I accept that Mr Johnston’s applications contributed unnecessarily to the time and expense of the proceeding.

[21]      In relation to the issue of stay, I consider Mr Johnston did not have reasonable justification for not engaging on the issue of the amount of money to be held pending the appeal. The amount to be held was never going to be Ms Brown’s entitlement under the judgment under appeal. As the amount to be held by the trustees would also be the fund from which trustees’ costs would be met, a margin was always going to be required. Whether that margin required $300,000 to be held or say $250,000 might have been debatable, but Mr Johnston did not engage on what  a suitable figure might be.

[22]      The proposed uplift of 25 per cent on 2B costs is appropriate in the circumstances. Accordingly, there is a costs award in favour of Ms Brown against  Mr Johnston in the sum of $7,020.62 together with disbursements of $110.

[23]      Mr Johnston, in his memoranda, has raised a number of issues relating to matters between the parties that have occurred over an extended period of time. Those matters are not relevant to the fixing of costs in relation to the stay proceeding. To the extent that Mr Johnston maintains that the Family Court order, which was the subject of the summary judgment proceeding, was “fraudulent or inaccurate”, I give those matters no weight. I did not accept Mr Johnston’s arguments in that regard in the summary judgment hearing and Mr Johnston’s appeal against the Summary Judgment was deemed abandoned on 29 March 2021.

[24]      Mr Johnston makes passing reference to a case Ms Brown apparently lost in an Australian court where, according to Mr Johnston, she had been prevented from bringing proceedings in Australia relating to the Family Trust. Any costs issues in relation to that proceeding are for the Australian courts and not for me.

[25]      Mr Johnston has also raised a number of criticisms in respect of my Stay Judgment. On a number of occasions Mr Johnston has referred to what he calls “family violence issues”. Such matters were not put before the Court in the Summary Judgment proceeding. Whether Mr Johnston has raised such issues with his counsel in the past is beside the point when they were not pleaded in the Summary Judgment hearing. The summary judgment and the appeal fall to be determined on the material in the affidavits. It is not a matter of the Court ignoring those matters when they were not raised in the required way.

[26]      I make no comment in respect of the proposals outlined in Mr Johnston’s email of 30 April 2021 as such is a matter for Ms Brown. It is not for the Court to impose settlement on either party.

[27]      Mr Johnston refers to costs he says he has incurred while he was a trustee and to which he believes he is entitled to be indemnified from the Trust fund. The reality is this was hostile litigation between Mr Johnston and Ms Brown who are both trustees

and beneficiaries. The general rule is that in such hostile litigation, trustees are not entitled to be indemnified for their costs. As there is no formal application before me in that regard, I make no further comment.

[28]      Finally, Mr Johnston says he made an application that the newly appointed trustees be removed as trustees. This was not one of the orders sought in the stay application. In a document entitled “Response to further memorandum of opposition to the application for a stay by Ms Brown and her lawyers”, at para 32, referring to the newly appointed trustees, Mr Johnston’s final bullet point was that the “Touchstone [Trustees] should resign”. Beyond this statement and other unfounded allegations that the trustees lacked independence and there was no application in this regard.

[29]      Accordingly, I do not consider this issue was overlooked in the Stay Judgment. There was no formal application in that regard and nor did the trustees, who were represented at the stay hearing, consider they were subject to such an application. In any event, such an application would require a fresh proceeding given what I have said about the Court being functus.

[30]      Finally, Ms Brown seeks that the costs award in her favour arising from the stay be paid to her from the funds otherwise payable to Mr Johnston’s new Trust. Such an order was made in respect of the costs award following the Summary Judgment hearing and I consider a similar direction to be appropriate here, and I so direct.

Associate Judge Lester

Solicitors:
Wynn Williams, Christchurch

Copy to:
Mr T B Johnston (self-represented)