Judd v Hodgkinson

[2015] NZHC 318

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2013-441-121 [2015] NZHC 318

BETWEEN

MICHELLE KERRIAN JUDD

Plaintiff

AND

HAWKE'S BAY TRUSTEE COMPANY LIMITED

RICHARD WILLIAM HODGKINSON as TRUSTEES OF THE RICHARD HODGKINSON FAMILY TRUST Defendants

On thepapers:
Counsel:	J L Bates for Plaintiff M E J Macfarlane for Defendants
Judgment:	2 March 2015

JUDGMENT OF WILLIAMS (COSTS)

[1]       In a reserved judgment issued on 17 December 2014, I found in favour of Ms Judd’s

claim against her husband’s trust to the extent of $65,000.1    Ms Judd’s initial claim was to

40 per cent of the value of the trust property at Lane Road, valued at over $800,000.  The judgment sum fell well short of that.  I found that Ms Judd will be entitled to costs albeit reduced to reflect her limited success.

[2]       In the memoranda filed by counsel as to costs, one issue was contested.  That was whether costs should be awarded to the plaintiff on the High Court scale (totalling $38,009) or  the  District  Court  scale  (totalling  $28,365),  plus  disbursements  of  $9,329.20  (High Court).2   A sub-issue of that contest was the extent to which the Court of Appeal decision in Murrell v Hamilton3 bore on my decision in this case – did the nature and complexity of this

1      Judd v Hawke’s Bay Trustee Company Ltd [2014] NZHC 3298.

2      Counsel for Ms Judd did not provide a figure for disbursements on a District Court scale.

3      Murrell v Hamilton [2014] NZCA 377.

JUDD v HAWKE'S BAY TRUSTEE COMPANY LIMITED & ORS [2015] NZHC 318 [2 March 2015]

proceeding justify its filing in the High Court as opposed to the District Court, given the amount of the claim and the ultimate judgment sum?

[3]       There was also mention by Mr Macfarlane of an offer to settle for $70,000.   He rightly accepted in a subsequent memorandum that the offer was too late in the piece to be relevant to the ultimate determination of costs.  I have accordingly not considered that offer in reaching my conclusion as to costs.

[4]      Where the plaintiff could have proceeded in the District Court, costs will normally be awarded at the District Court level, unless the Court considers otherwise.4   The Court will exercise its general discretion as to costs for cases that are properly tried in the High Court if so satisfied after considering: (i) the amount of the claim and judgment; (ii) the nature and complexity  of  the  proceeding;  (iii)  the  kind  of  factual  and  legal  issues  raised  by  the

pleadings; (iv) whether the case raises matters of public important; and (v) the parties’

approach to the litigation.5

[5]      Counsel for the plaintiff argues High Court costs are justified because, when she filed her claim, the Murrell litigation had not been determined in the High Court.6   As such, the  plaintiff’s  claim  was  “without  close  precedent,  but  was  always  a  principled  one”. Counsel for the defendants on the other hand says that, on all but one issue, this was a straightforward application of Gillies v Keogh.7   The defendants have appealed the judgment on that issue.

[6]      In Murrell v Hamilton the Court of Appeal addressed the question of whether a spouse or de facto could claim a constructive trust over the value of his or her contributions during a relationship to a property owned by a trust of which that spouse or de facto was not a beneficiary.  It also considered whether, the other spouse or de facto being a trustee, that spouse could bind the trust by his or her actions alone.  My analysis of the Court of Appeal’s judgment is set out at [57]-[63] of the December judgment.  I do not repeat it here, except my conclusion at [63]:

I take the subsequent effect of Murrell v Hamilton to be that notwithstanding those authorities, an additional inquiry is now required in respect of the

4      High Court Rules, r 14.13.

5      Fuehrer v Thompson [1981] 1 NZLR 699 (CA).

6      Since this proceeding was filed, Ms Murrell’s claim was unsuccessful in the High Court, but successful in the Court of Appeal.  The Supreme Court declined leave to appeal: Hamilton v Murrell [2014] NZSC 162.

7      And therefore Lankow v Rose [1995] 1 NZLR 277 (CA).

extent to which the non-participating trustee or trustees have abjured, delegated or abdicated their relevant responsibility to the defendant former spouse.

[7]       I also note Mr Bates’ comment that: “Absent that ruling, the present case would not have had any chance of success in the District Court.”

[8]      I interpret that to mean that Ms Judd would not have brought her claim at all (let alone in the High Court) were it not for the Court of Appeal’s ruling, or at least would have abandoned it had the Court of Appeal’s decision in Murrell not favoured the Ms Judd’s case. In my view, while the Murrell v Hamilton decision added another layer to the usual Lankow v Rose inquiry, it requires a relatively orthodox analysis of the facts in order to determine whether a requirement of trustee unanimity could be implied in the circumstances.  This is a case that could easily have proceeded in the District Court on the basis of a more realistic claim as to entitlement.

[9]      District Court based costs and disbursements are awarded to Ms Judd accordingly.

Williams J

Solicitors:

Gresson Grayson Solicitors, Hastings

Sainsbury Logan & Williams, Napier