Kain v Hutton
[2007] NZCA 373
•29 August 2007
IN THE COURT OF APPEAL OF NEW ZEALAND
CA237/03
CA271/04
[2007] NZCA 373
BETWEENGEORGINA KAIN, GEORGE HARRY COUPER KAIN, GEORGE CHARLES KAIN, GEORGE THOMAS CARLTON KAIN AND GEORGE MICHAEL KAIN
Appellants
ANDJONATHON RHODES HUTTON
First Respondent
ANDWILLIAM ALEXANDER XAVIER COUPER
Second RespondentANDANNETTE ELIZABETH COUPER
Third RespondentANDWAYNE KEITH STARTUP
Fourth RespondentANDGEORGE THOMAS KAIN
Fifth RespondentANDMARY HUTTON
Sixth Respondent
CA4/05
AND BETWEEN GEORGE THOMAS KAIN, GEORGE CHARLES KAIN AND GEORGE THOMAS CARLTON KAIN AS TRUSTEES
Appellants
ANDJONATHON RHODES HUTTON
First Respondent
ANDWILLIAM ALEXANDER XAVIER COUPER
Second RespondentANDANNETTE ELIZABETH COUPER
Third RespondentANDWAYNE KEITH STARTUP
Fourth Respondent
CA267/05
AND BETWEEN WILLIAM ALEXANDER XAVIER COUPER
Appellant
ANDGEORGINA KAIN, GEORGE HARRY COUPER KAIN, GEORGE CHARLES KAIN, GEORGE THOMAS CARLTON KAIN AND GEORGE MICHAEL KAIN
First Respondents
ANDJONATHON RHODES HUTTON
Second RespondentANDANNETTE ELIZABETH COUPER
Third RespondentANDWAYNE KEITH STARTUP
Fourth RespondentANDGEORGE THOMAS KAIN
Fifth Respondent
Hearing:22 May - 1 June 2006
Court:Glazebrook, Hammond and Robertson JJ
Counsel:J S Kos QC and S P Rennie for Appellants in CA237/03 and CA271/04 and for First Respondents in CA267/05
J V Ormsby for Appellants in CA4/05
M R Camp QC and R J B Fowler for Second Respondent in CA237/03, CA271/04 and CA4/05 and for Appellant in CA267/05
T C Weston QC and J Costigan for First, Third and Fourth Respondents in CA237/03, CA271/04 and CA4/05 and for Second, Third and Fourth Respondents in CA267/05
R A Osborne for Third and Sixth Respondents in CA237/03 and CA271/04
R B Stewart QC for the Kain grandchildren (apart from Mr and Mrs Hutton's children)
Judgment:29 August 2007 at 4pm
FURTHER JUDGMENT OF THE COURT
AIn CA271/04 and CA267/05 the following judgment is entered in favour of the first, third and fourth respondents in CA271/04 and the second, third and fourth respondents in CA267/05:
The appellants’ prayers for damages or compensation allegedly suffered by them personally or by the trusts, or inquiries into the same are dismissed with judgment entered for the first, third and fourth respondents in CA271/04 and the second, third and fourth respondents in CA267/05.
BIn CA237/03 and CA271/04 the appellants must pay costs of $42,000 plus usual disbursements to the second respondent. We certify for second counsel.
CThe appellants in CA237/03 and CA271/04 must pay costs of $42,000 plus usual disbursements to Mrs AE Couper, Mrs M Hutton and the Hutton grandchildren.
DEach of the appellants in CA237/03 and CA271/04 are jointly and severally liable for the above costs awards.
EThe appellants in CA4/05 are to be jointly and severally liable with the appellants in CA237/03 and CA271/04 for $6,000 of each of the above costs awards.
FIn CA267/05 there is no costs award.
GThe first, third and fourth respondents in CA237/04 and CA271/04 are entitled to indemnity for their reasonable costs (based on a seven day hearing) and disbursements from the assets of the trusts of which they were trustees. We certify for second counsel.
HMrs AE Couper, Mrs M Hutton and the Hutton grandchildren are entitled to be paid the balance of their reasonable costs from the assets of the trusts.
IAny dispute with the Public Trust about the reasonableness of the costs can be referred to the Registrar.
JThe appellants in CA237/03 and CA271/04 are to reimburse a sum of $42,000 plus usual disbursements to the Public Trust in relation to the costs of the first, third and fourth respondents in CA237/03 and CA271/04.
KThe appellants in CA237/03 and CA271/04 are to pay to the Public Trust $42,000 plus usual disbursements as part reimbursement for the payment of Mr Stewart QC’s costs and disbursements in representing the Kain grandchildren.
LEach of the appellants in CA237/03 and CA271/04 are jointly and severally liable for the reimbursement amounts set out at J and K above.
MThe appellants in CA4/05 are to be jointly and severally liable with the appellants in CA237/03 and CA271/04 for $6,000 of each of the reimbursement amounts set out at J and K above.
NThe costs are to be allocated by the Public Trust to the various trusts as the Public Trust sees fit. If there is any issue as to the appropriate allocation the Public Trust has leave to apply to this Court for directions.
OThe fifth respondent in CA237/03, CA271/04 and CA267/05 and the appellants in CA4/05 are not entitled to indemnity for their costs or any costs awards against them from the assets of the trusts.
____________________________________________________________________
REASONS
(Given by Glazebrook J)
Table of Contents
Para No
Introduction [1]
Form of judgment [2]
Submissions on costs [5]Mr WAX Couper [5]
The respondent beneficiaries [7]
The three trustees [10]
Reimbursement of the Public Trust [12]
Kain trustees’ indemnity [15]
Position of the Public Trust [17]
What costs orders should be made? [18]
Mr WAX Couper [18]
The respondent beneficiaries [22]
The three trustees [24]
Reimbursement of the Public Trust [25]
Kain trustees’ indemnity [30]
Result [31]
Introduction
[1] On 22 May 2007, in [2007] NZCA 199, this Court dealt with a number of appeals and cross-appeals in relation to a dispute over the administration of some family trusts. The appellants in the main appeal (CA271/04) were referred to in our 22 May 2007 judgment as the Kain children. The first, third and fourth respondents in CA271/04 were called the three trustees. The appellants in CA4/05 were called the Kain trustees.
[2] The appeals in CA237/03, CA271/04, CA4/05 and CA267/05 were dismissed. Cross-appeals in CA271/04, CA4/05 and CA267/05 were allowed to the extent set out at [300] and [301] of our 22 May judgment. At [301] of the 22 May judgment, we held that the three trustees were entitled to have judgment entered for them in the High Court. Pursuant to leave reserved, the parties have filed submissions on the form of judgment to be entered and costs. We deal with those issues in turn.
Form of judgment
[3] The three trustees submit that the wording of the judgment to be entered in CA271/04 and CA267/05 ought to be:
That the appellants’ prayers for damages or compensation allegedly suffered by them personally or by the trusts, or inquiries into the same are dismissed with judgment entered for the [three trustees].
[4] The other parties to the appeals either support that form of judgment or do not comment on it. Accordingly it is appropriate that this form of judgment be entered with regard to the claim.
Submissions on costs
Mr WAX Couper
[5] Mr WAX Couper contends that, since he has been successful in the appeals, he should have costs awarded in his favour. This is particularly the case as he absorbed his own costs in the High Court. Mr WAX Couper argues that the daily rate should be set at $7,500 rather than the usual $6,000. He submits that a higher rate is justified due to the large ambit of the issues, the seniority of counsel, the multiplicity of parties involved and the heavy burden of preparation caused by the extent and unrefined nature of the appeal grounds filed prior to the exchange of submissions. He also points to the extended Court hours.
[6] It is accepted by the Kain children and the Kain trustees that Mr WAX Couper is entitled to costs. They also accept that due to the extended Court hours, the hearing may reasonably be taken to have occupied a seven day period. Despite this (for reasons not immediately apparent) they submit that only six days costs should be paid and that the costs should be split between the Kain children and the Kain trustees, with five days for the Kain children’s appeal and one day for the Kain trustees’ appeal. They also submit that the daily rate should be $6,000 as there are no exceptional circumstances which would justify a higher rate.
The respondent beneficiaries
[7] Mrs A E Couper, Mrs M Hutton and the Hutton grandchildren (called the respondent beneficiaries in this judgment) submit that they are also entitled to costs. In their submission, the award of costs should be made against the Kain trustees as well as the Kain children due to their lack of success, their hostility and the fact that the Kain trustees actively pursued their own appeals and provided full arguments for other appeals.
[8] The respondent beneficiaries submit that it was proper for their counsel to remain throughout the hearing, as they were affected by all of the arguments on appeal. They also submit that the credit the Kain children received for their success in the High Court on the Ponui issue should be taken into account given the reversal on appeal in relation to that issue. They argue for a higher daily rate of $7,500 due to the extent of the issues and argument and preparation required.
[9] The Kain children submit that the respondent beneficiaries were only involved to a limited extent in the appeals and thus that they should only be entitled to two days costs at the standard daily rate of $6,000 per day.
The three trustees
[10] The three trustees submit that, as this Court upheld the decision of the High Court that they were entitled to full indemnity for their costs in that Court, they should be entitled to the same for their reasonable costs in this Court. Although their counsel spoke only for two hours, they submit that their involvement has been substantial and their presence at the hearing was essential. The involvement of second counsel was also necessary. Ms Costigan, as solicitor in charge of discovery, was present until it became apparent that the Kain childrens’ application for discovery was not to be pursued.
[11] The Kain children accept that the three trustees should be entitled to indemnity costs from the trust fund of the trusts of which they were trustees but submit that the three trustees had minimal involvement in the appeal. Accordingly the Kain children submit that the Public Trust should be allowed to determine the reasonable level of their costs taking into account this limited involvement.
Reimbursement of the Public Trust
[12] The respondent beneficiaries (supported by Mr WAX Couper) submit that the Kain children should be ordered to pay costs to the Public Trust as the trusts have met and will continue to meet various fees for the representation of the three trustees with regard to the various appeals.
[13] It is also submitted by the respondent beneficiaries that the Kain children and the Kain trustees should reimburse the Public Trust for the costs of representation of the Kain grandchildren by Mr Stewart QC, whose costs have been paid by the Public Trust in its capacity as trustee of the relevant trusts. The respondent beneficiaries submit that representation of the Kain grandchildren was rendered necessary because of the actions of the Kain children.
[14] The Kain children point out that the three trustees have not made any application for party/party costs. In their submission this is appropriate as the three trustees were not involved substantively on the appeal as their position was largely in support of Mr WAX Couper. They also submit that, as the Public Trust has not applied to intervene in this proceeding or to be heard on the issue of costs, it has clearly decided not to become involved and may have good reason as a trustee not to have done so. It may have taken into account the financial position of the Kain children in not seeking costs.
Kain trustees’ indemnity
[15] The Kain trustees submit that they should be entitled to indemnity from the trusts for their costs relating to the Mangaheia Trust, the Wellwoods Trust, the Richmond Trust and any costs awards made against them in relation to those arguments. They submit that their involvement in the appeals was reasonable.
[16] The respondent beneficiaries (with Mr WAX Couper in support) argue that the Kain trustees’ decision to pursue appeals after the High Court judgment went beyond what was reasonable and they should not be indemnified. Furthermore, since none of the three trustees was a trustee of the Mangaheia trust, indemnity from that trust is not appropriate. They also point out that Mr GT Kain, by the provisions of the 2002 consent order, undertook in his capacity as trustee to abide by the decision of the Court. Therefore he ought not have pursued the Wellwoods issue on appeal.
Position of the Public Trust
[17] The Court ordered the Public Trust to be provided with copies of the parties’ costs submissions. It was given the opportunity to make submissions. It has not done so. In our Minute of 8 August 2007, we indicated that a failure to file submissions would be taken as meaning that the position of Public Trust remains, as advised to the three trustees and the respondent beneficiaries, that the Public Trust abides the decision of the Court in relation to costs.
What costs orders should be made?
Mr WAX Couper
[18] The parties are agreed that Mr WAX Couper is entitled to costs. Given the extended Court hours, we consider that seven days costs should be paid.
[19] Mr WAX Couper applies for costs at a higher daily rate. This is largely due to the complex nature of the appeal. The practice of this Court is to award costs at a daily rate of $6,000, apart from in exceptional circumstances. There is at present a consultation paper by the Rules Committee, Recovery of Costs in the Court of Appeal ‑ see This suggests, as one of its options, that there should be a differential daily rate depending upon complexity. The date for submissions on the consultation paper closed on 1 March 2007 and the matter is still under consideration by the Rules Committee. In our view, it would be inappropriate to change the current practice of the Court until the outcome of the Rules Committee consideration is known. We consider, therefore, that the daily rate should be the normal daily rate of $6,000.
[20] The Kain children submit that the costs award should be split between the Kain children and the Kain trustees based on the days in the appeal they allege were taken up by those parties. In our view, such a split is not appropriate. The arguments of the Kain trustees were duplicative of those put forward by the Kain children and were supported by the Kain children. Therefore, the Kain children should pay costs to Mr WAX Couper for the whole of the seven days ($42,000).
[21] Among themselves, the Kain children should be jointly and severally liable for these costs. Given the agreed split between the Kain children and the Kain trustees, however, it is appropriate for the Kain trustees to be jointly and severally liable with the Kain children for the costs of one of the days (amounting to $6,000).
The respondent beneficiaries
[22] We accept the submission that the level of involvement of the respondent beneficiaries in the hearing was appropriate. As possible beneficiaries, they were potentially affected by all of the appeals and cross-appeals.
[23] For similar reasons to those set out above with regard to Mr WAX Couper, a costs award is made against the Kain children for the seven days of the hearing at the standard daily rate of $6,000 per day. It is also appropriate that the Kain trustees be jointly and severally liable in respect of $6,000 of that amount with the Kain children who, among themselves, are jointly and severally liable for the whole of the $42,000 awarded. The respondent beneficiaries are entitled to claim from the trusts any reasonable costs in excess of this award.
The three trustees
[24] We accept the submission that the three trustees are entitled to claim indemnity from the assets of the trusts of which they were the trustees for their reasonable costs. We also accept their submission that their level of involvement in the appeals was appropriate. Indeed, given the challenge to the indemnity costs order, their personal interests were also engaged. The challenge to the costs award was on the basis of all the alleged breaches of trust at issue in the appeals.
Reimbursement of the Public Trust
[25] We accept the submission that it was the actions of the Kain children in bringing the unsuccessful appeals that caused the involvement of the three trustees and the Kain grandchildren and that this necessitated representation for those parties.
[26] We thus accept the submission of the respondent beneficiaries that the Kain children should reimburse the Public Trust a portion of the costs of the three trustees. This reimbursement is set at $42,000 plus usual disbursements (with the Kain children jointly and severally liable for that sum).
[27] We also accept the submission that the Public Trust should be reimbursed in part for the costs of representation of the Kain grandchildren by Mr Stewart QC. In this regard, we order that the Kain children reimburse the Public Trust for $42,000 plus usual disbursements in respect of the Kain grandchildren’s representation. The Kain children are to be jointly and severally liable for that sum.
[28] The Kain trustees are also to be jointly and severally liable with the Kain children for $6,000 of each of the above reimbursement amounts.
[29] We do not accept the Kain children’s submission that the Public Trust must be taken to oppose any reimbursement of its costs. The Public Trust was given the opportunity to make submissions but has not done so. Its position has been to abide the decision of the Court.
Kain trustees’ indemnity
[30] We do not consider that it was necessary for the Kain trustees to have been involved in the appeals. Their position was duplicative of that of the Kain children. We accept the submissions of the respondent beneficiaries recorded at [16] above. We therefore consider that the Kain trustees should not receive indemnity from the trusts for their costs or for any costs awards made against them.
Result
[31] In CA271/04 and CA267/05 the following judgment is entered in favour of the three trustees as follows:
The appellants’ prayers for damages or compensation allegedly suffered by them personally or by the trusts, or inquiries into the same are dismissed with judgment entered for the first, third and fourth respondents in CA271/04 and the second, third and fourth respondents in CA267/05.
[32] In CA237/03 and CA271/04 the Kain children must pay costs of $42,000 plus usual disbursements to Mr WAX Couper. We accept that the matter warranted second counsel and that disbursements should be calculated accordingly. The Kain children must also pay costs of $42,000 plus usual disbursements to the respondent beneficiaries. The Kain children are jointly and severally liable for the above costs awards. The Kain trustees are jointly and severally liable with the Kain children for $6,000 of each of the above costs awards. In CA267/05 there is no costs award.
[33] The three trustees are entitled to indemnity for their reasonable costs (based on a seven day hearing) and disbursements from the assets of the trusts of which they were trustees. We accept that the involvement of second counsel was appropriate and that costs and disbursements should be calculated accordingly. The respondent beneficiaries are entitled to be paid the balance of their reasonable costs from the assets of the trusts. Any dispute with the Public Trust about the reasonableness of the costs can be referred to the Registrar.
[34] The Kain children are to reimburse a sum of $42,000 plus usual disbursements to the Public Trust in relation to the costs of the three trustees. The Kain children are also to pay to the Public Trust $42,000 plus usual disbursements as part reimbursement for the payment of Mr Stewart QC’s costs and disbursements in representing the Kain grandchildren. The Kain children are jointly and severally liable for the above costs awards. The Kain trustees are jointly and severally liable with the Kain children for $6,000 of each of the above reimbursement amounts.
[35] The costs are to be allocated by the Public Trust to the various trusts as the Public Trust sees fit. If there is any issue as to the appropriate allocation, the Public Trust has leave to apply to this Court for directions.
[36] The Kain trustees are not entitled to indemnity for their costs or any costs awards against them from the assets of the trusts.
Solicitors:
Rhodes & Co, Christchurch for AppellantsChapman Tripp, Christchurch for First, Third and Fourth Respondents
Phillips Fox, Wellington for Second Respondent
Wynn Williams & Co, Christchurch for Fifth Respondent
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