Karaka v Ngai Tai Ki Tamaki Tribal Trust
[2014] NZHC 603
•28 March 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2011-404-7664 [2014] NZHC 603
BETWEEN EMILY ANNE KARAKA
First Plaintiff
PETER GEORGE HENRY KARAKA Second Plaintiff (Discontinued)
DEBORAH PACE Third Plaintiff
AND
NGAI TAI KI TAMAKI TRIBAL TRUST Defendant
Continued…
Hearing: On the papers Counsel:
S W M Piggin for Plaintiffs
K R M Littlejohn for DefendantJudgment:
28 March 2014
JUDGMENT OF KATZ J (Costs)
This judgment was delivered by me on 28 March 2014 at 2 pm
Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors: Robb & Brown, Auckland
Whaley & Garnett, Auckland
Copy to; S W M Piggin, Auckland
K R M Littlejohn, Auckland
KARAKA v NGAI TAI KI TAMAKI TRIBAL TRUST [2014] NZHC 603 [28 March 2014]
CIV-2012-404-1507
IN THE MATTER OF
BETWEEN
an application for removal of trustees
STEPHEN MAXWELL NGEUNGEU ZISTER & OTHERS
Plaintiffs
EMILY ANNE KARAKA First Defendant
AND
DEBORAH PACE Second Defendant
Introduction
[1] This application for costs follows my decision in Karaka v Ngai Tai Ki Tamaki Tribal Trust.1 The applicants, Ms Karaka and Ms Pace, seek an award of costs against the respondents, the majority group of trustees, personally.
[2] The majority trustees submit that both parties had a measure of success in the proceedings and that costs should accordingly lie where they fall.
Background
[3] All of the parties were trustees of the Ngai Tai Ki Tamaki Tribal Trust
(“Trust”).
[4] In November 2003, Ms Karaka and her brother Mr Karaka, who were both then trustees of the Trust, applied for orders in respect of the management and administration of the Trust. Due to the dysfunctional nature of the Trust, Heath J removed all of the trustees and appointed an interim trustee in their place. This situation remained in place until December 2009. At that time the management of the Trust was restored to its trustees and Ms Karaka and her daughter Ms Pace were
confirmed as trustees, along with a number of others.
1 Karaka v Ngai Tai Ki Tamaki Tribal Trust [2013] NZHC 589, [2013] NZAR 500.
[5] The relationship between Ms Karaka and Ms Pace and the other trustees was, unfortunately, difficult from the outset. In March and May 2010, the majority trustees resolved to remove Ms Karaka and Ms Pace as trustees. Ms Karaka and Ms Pace responded by issuing proceedings against the majority trustees in November 2011. The majority trustees filed separate proceedings against Ms Karaka and Ms Pace. Both groups alleged that the other had acted improperly and should be removed as trustees.
[6] A consent order was made on 21 December 2011 which acknowledged that Ms Karaka and Ms Pace should continue to be trustees and that proper procedures under the Trust Deed must be followed. Further breaches of the Trust Deed occurred, however. Ms Karaka and Ms Pace accordingly applied for an interim injunction to enforce the consent order.
[7] An interim judgment was given on 7 August 2012 by Keane J. The injunction application was declined, in reliance on an undertaking provided by the majority trustees (dated 2 August 2012) that the Trust Deed would be strictly complied with. There was no order for costs.
[8] The substantive hearing of both proceedings subsequently took place before me. In my judgment, dated 27 March 2013, I concluded that the current group of trustees was dysfunctional and could not work together constructively. I found that the majority of trustees had acted unlawfully between 10 March 2010 and
21 December 2011. However, in their 2 August 2012 undertaking they had made a commitment to do better and had done so. The majority trustees had not subsequently breached their undertaking in relation to the review and supervision of negotiators, nor did they breach their undertaking by removing Ms Karaka as a negotiator.
[9] While the conduct of the respondents was somewhat lacking at times, I observed that they were deeply committed to advancing the key objective of the Trust, namely negotiating a Treaty settlement with the Crown. Removing them as trustees would serve little purpose and would have potentially serious consequences, paralysing the Trust and leaving it without a quorum. I declined Ms Karaka’s and
Ms Pace’s request to remove the majority trustees, but did order fresh trustee elections.
[10] I also declined the majority trustees’ separate application that I remove Ms Karaka and Ms Pace as trustees. I noted their evidence as to the general dysfunctional nature of the trust and the difficulties they had experienced in working with Ms Karaka and Ms Pace. I did not, however, see removal of Ms Karaka and Ms Pace as the appropriate solution. Rather, the matter should be put back to the iwi, by way of a fresh “clean sweep” trustee election.
[11] On 1 September 2013 that election took place. Ms Karaka was not re-elected. Ms Pace did not stand for re-election. Eight of the nine majority trustees stood and all of them were re-elected.
Should costs be awarded to Ms Karaka and Ms Pace?
[12] Ms Karaka and Ms Pace seek costs personally against the majority trustees. They calculate 2B scale costs at $51,919.44, however, as the actual legal aid costs are $49,305.52, they claim the lesser of the two amounts.2
[13] Whether an award of costs is appropriate turns on two key issues:
(a) the significance of a proposal by Ms Karaka and Ms Pace that the issues between the trustees (or at least some of them) be addressed by holding a fresh election; and
(b) determination of which group of trustees (if any) can be considered to be the successful party in the proceedings.
[14] I will consider each issue in turn.
2 Pursuant to r 14.2(f).
Proposal by Ms Karaka and Ms Pace that the issues between the trustees be addressed by holding a fresh election
[15] Prior to a case management conference before Heath J on 7 May 2012, Ms Karaka and Ms Pace filed a memorandum setting out a proposal for discussing the calling of a special general meeting to address the issue of ongoing trustee positions. The applicants submit that, in accordance with r 14.6(3)(b)(v) of the High Court Rules, the “unreasonable” refusal of the offer to hold a new trustee election should count against the majority trustees in relation to costs.
[16] It is obviously both proper and appropriate that, in the context of interpersonal issues between trustees, resulting in a dysfunctional trust, various options for resolution will be explored. The suggestion of a “clean sweep” election was one option that was put on the table for discussion.
[17] The majority trustees say that they considered that proposal and set out their concerns with it in a memorandum in response. They submit, however, that the suggestion of a fresh trustee election was not an “offer” of the type contemplated by the High Court Rules.
[18] I accept that submission. Rule 14.6 (which relates to increased and indemnity costs) does not apply. Rule 14.10 relates to written offers expressly made on a “without prejudice except as to costs” basis. It is also inapplicable. The suggestion of a fresh trustee election was not “without prejudice.” Rather, it was raised, along with many other issues, in the context of a court conference, as one possible way to move the Trust forward.
[19] Even if the suggestion had been accepted, it would not have resolved the proceedings. There were a number of other issues requiring determination by the Court. The proposal of a fresh trustee election does not constitute a “settlement offer” of the type envisaged by the costs provisions of the High Court Rules, so as to justify the imposition of an award of costs on the majority trustees.
Which party was “successful?”
[1] Costs are a matter for the Court’s discretion.3 The primary principle is that “costs follow the event”, i.e. the party who fails in a proceeding should pay costs to the party who succeeds.4 The applicants submit that they were, in effect, the successful party are therefore entitled to an award of costs.
[20] Such a view is, however, simplistic. The reality is that neither party can claim complete success. As is apparent from the brief summary of my judgment at [3] to [11] above, both parties succeeded on some issues and failed on others. Neither group was successful in having the other group removed as trustees, which appeared to have been both parties primary objective in the proceedings. To that extent, both parties were likely disappointed in the outcome.
[21] The applicants did, however, seek a fresh trustee election as an alternative and this aspect of their claim found favour. (I note, in fairness to the majority trustees, that they did not strenuously oppose such an outcome). The applicants met with less success on other issues, including the legal validity of the Agreement in Principle with the Crown and whether Ms Karaka had been validly removed as a Treaty negotiator. The majority trustees were successful on those issues.
[22] Where both sides have had some success in the proceedings, the proper approach was set out by the Court of Appeal in Packing In Ltd (in liq) v Chilcott.5
The Court said at [5]-[6]:
In a case... where in broad terms each party has had similar success, we do not consider it helpful to focus too closely on the question which party has failed and which has succeeded. Costs in a case such as this should rather be based on the premise that approximately equal success and failure attended the efforts of both sides. To that starting point should be added issues such as how much time was spent on each transaction or group of transactions in issue, and any other matters which can reasonably be said to bear on the Court's ultimate discretion on the subject of costs. In the end, as in all costs matters, the Court must endeavour to do justice to both sides, bearing in mind all material features of the case.
...
3 High Court Rules, r 14.1.
4 Rule 14.2(a).
5 Packing In Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA).
Success or failure... is better assessed by a realistic appraisal of the end result rather than by focusing on who initiated what step, and the extent to which that step succeeded or failed.
[23] A realistic appraisal of the end result in this case leads inexorably to the conclusion that costs should lie where they fall. Both parties had a degree of success and failure. Neither party was a clear “winner” at the end of the day. It is therefore appropriate that both sides carry their own costs.
Result
[24] The costs application is dismissed. Costs are to lie where they fall.
Katz J
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