Khan v Hussain

[2019] NZHC 99

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-1648

[2019] NZHC 99

UNDER

the Judicial Review Procedure Act 2016

IN THE MATTER

of an application for Judicial Review

BETWEEN

ISMAIL RAHIMAN KHAN

First Applicant

AND

……………………………/continued

MOHAMMED ZAKIR HUSSAIN, MOHAMMED RAFIQ WANIA, MOHAMED AHAMED NADAT and

ABDUL AZIA as trustees of the Abut Harairah Trust

First Respondents

NEW ZEALAND MUSLIM ASSOCIATION

Second Respondent

Hearing:

26 November 2018

Counsel:

IM Hutcheson for applicants NJ Scampion for respondents

PC Murray for New Zealand Muslim Association

Judgment:

7 February 2019

JUDGMENT OF FITZGERALD J

This judgment was delivered by me on 7 February 2019 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar …………………………………  Date………………………..…

Solicitors:           The Small Law Firm, Auckland

Smith & Partners, Auckland

To:  P Murray, Auckland

Khan v Hussain [2019] NZHC 99 [7 February 2019]

Applicants continued

FARHAZ ASHIK REHMAN
Second Applicant

MUNTAJ ALI

Third Applicant

AZAD ALI

Fourth Applicant

MOHAMMED ATIK

Fifth Applicant

Introduction

[1]                 The applicants seek judicial review of certain actions taken by the first respondents in their roles as the current trustees of the Abu Harairah Trust Kelston (Trust).1

[2]                 It is not necessary for the purposes of this costs judgment to set out the detail of the applicants’ claim, but in short, the dispute is between two factions of the purported trustees of the Trust: the former trustees (the applicants) and the current trustees (the first respondents). The first respondents have, at various times, purported to remove the applicants as trustees of the Trust. That removal and consequent actions of the first respondents as new trustees, in particular, transferring the Kelston Mosque property and certain funds (Funds) to the second respondent, the New Zealand Muslim Association (NZMA), is challenged.

[3]                 NZMA has been joined as second respondent to these proceedings. It takes no position on the dispute between the applicants and first respondents. The applicants’ claim again NZMA2 is contingent on their success in claims against the first respondents. The applicants’ judicial review claims are to be heard in a one-day hearing on 18 February 2019. Whether the claim against NZMA proceeds will depend on the outcome of that hearing.

[4]                 Pending determination of their claims, the applicants sought interim preservation orders effectively “freezing” the Funds, which are now in NZMA’s possession. That application  was  to  be  heard  by  me  in  a  half-day  hearing  on 26 November 2018. Ultimately, and by consent, preservation orders were made, subject to a proviso sought by NZMA, to the effect that it may have access to the Funds for the reasonable ongoing costs and expenses of running the Mosque (the proviso).

[5]                 At the conclusion of the 26 November hearing, counsel for NZMA indicated that his client would likely seek costs on the application. I accordingly made timetable

1      The Trust is in fact an incorporated society.

2      Pursued as a claim of “knowing receipt in breach of trust and/or implied/resulting/constructive trust.”

orders in the event any party sought costs. The first respondents and NZMA now seek costs (though reduced from scale to avoid over-recovery). The applicants say the respondents should not be awarded costs and that costs ought to be reserved into the substantive proceedings.

Factual background

[6]                 The manner in which the preservation orders came about is a little unusual. Some background relevant to the question of costs is therefore required.

[7]                 The preservation orders sought by the applicants, but with the proviso sought by NZMA, were actually made (on the papers) by consent by Wylie J shortly before the 26 November hearing. The applicants’ consent to the orders being made in that form was, however, in error, based on a misunderstanding on the part of their counsel (who was travelling at the time Court staff were corresponding with the parties about the orders). That the orders had been made with the proviso attached was not, it seems, immediately appreciated by counsel for the applicants. Submissions on behalf of the applicants were therefore made in advance of the 26 November hearing on the basis that orders ought to be made in terms of the application, i.e. without the proviso.

[8]                 Clarification was sought by counsel for NZMA in the lead up to the hearing, but this was not forthcoming. As a result, counsel for NZMA, not unreasonably in my view, prepared for the hearing on the contingency that the Court might revisit the orders (given the misunderstanding), and thus prepared argument as to why the proviso should attach to the preservation orders.

[9]                 When the matter came before me on 26 November, counsel for the applicants effectively sought orders rescinding or setting aside the earlier orders, given the misunderstanding which had led to them being made. I noted that given the orders had been made by consent, the review process under r 7.49 of the High Court Rules was not available.3 I further noted that while there is authority to the effect that the Court has inherent jurisdiction to set aside a consent order obtained as a result of a

3      High Court Rules 2016, r 7.49(2)(a).

mistake where the interests of justice require it,4 a proper process would need to be adopted in any application to revoke or vary such an order (being a formal court order), including evidence being put before the Court as to the basis upon which the earlier consent order had been made.

[10]             After discussion with counsel, it was agreed that the consent orders (i.e. with the proviso) would stand, but supplementary orders would be made to the effect that if NZMA intended to have recourse to the Funds, it would give three working days’ notice to the applicants. Supplementary orders to that effect were made by consent shortly after the hearing.

NZMA’s position on costs

[11]             NZMA seeks costs of $4,000 in relation to preparation for and attendance at the 26 November 2018 hearing.

[12]             NZMA says that it was in substance the “successful party” on the application. NZMA notes that the application, as filed, sought to freeze the Funds absolutely. NZMA points to the fact that from the outset, it consented to interim preservation orders, subject only to the proviso being added, which was ultimately the outcome of the application.

[13]             NZMA also points to the fact that despite the consent orders having been made by Wylie J, as noted above, the applicants filed and served submissions on the basis that whether the interim preservation orders ought to be made, and whether they should include the proviso, remained live issues. This led to counsel for NZMA taking further steps, seeking to clarify the position and urgently preparing for the hearing based on the matters outlined in the applicants’ synopsis. NZMA says this preparation was largely unnecessary and could have been avoided.

4      Waitemata City Council v Mackenzie [1988] 2 NZLR 242 at 249.

First respondents’ position on costs

[14]             The first respondents broadly adopt NZMA’s position and submissions on costs. The first respondents seek costs of $3,500, which are also less than scale costs to prevent over-recovery.

Applicants’ position on costs

[15]             Counsel for the applicants notes that no notices of opposition were filed in response to the application for preservation orders, which was consented to, though on the basis of the proviso being included. Counsel for the applicants says that the outcome was similar to a proposal advanced by the applicants prior to the hearing, which would have reserved leave for NZMA to apply to the Court should it wish to have recourse to the Funds. Counsel for the applicants acknowledges, however, that the consent orders as made now shift the onus to the applicants to apply in such circumstances.

[16]             The applicants also note that the 26 November hearing proceeded more in the nature of a mentions hearing/conference and say that in that context, the costs sought are excessive. The applicants submit that costs should be reserved pending the hearing of the substantive issues.

Discussion

[17]             I do not agree that costs ought to be reserved pending determination of the substantive issues. High Court Rule 14.8 is plain that unless special reasons exist, costs of interlocutory applications ought to be determined at the time the interlocutory application itself is determined. There does not appear to me to be any principled reason why costs of the application should not be dealt with now.

[18]             Ultimately, the applicants sought preservation of the Funds pending determination of their substantive claims. Orders broadly to that effect were made, albeit subject to the proviso. At the time the application was filed, however, NZMA was not yet a party to the proceedings. Further, NZMA was clear from the outset that it did not object to preservation orders being made, and indeed gave undertakings to

that effect in its first memorandum filed with the Court. As outlined above, NZMA did, however, seek the addition of the proviso, which was ultimately ordered by the Court.

[19]             In all the circumstances, an appropriate costs outcome as between the applicants and NZMA might have been for costs to lie where they fall, particularly as the applicants do not advance a claim for costs at this time. The applicants did obtain preservation orders broadly along the lines of those sought. But there was never any substantive objection to that course by NZMA, and it was ultimately successful in having the proviso added.

[20]             In the somewhat unusual circumstances outlined above, however, I have reached the conclusion that a modest costs award ought to be made in favour of NZMA. The confusion which led to the orders being made by Wylie J cannot be sheeted home to NZMA. I am also satisfied that NZMA will have unnecessarily incurred some costs in preparing substantive submissions on the question of the proviso in advance of the 26 November hearing when it ought not to have had to do so.

[21] In terms of the quantum of costs to be awarded to NZMA, I must take a relatively robust and broad-brush approach, given not all NZMA’s costs as sought will have been wasted in the sense outlined at [20] above. I consider a payment of $1,500 by the applicants to NZMA to be appropriate recognition of the inevitable wasted costs.

[22]             As to the first respondents, the preservation orders were sought against NZMA only, as the party in possession of the Funds. As counsel for the applicants notes, the first respondents could have abided the Court’s orders and avoided incurring any costs on that aspect of the application. In those circumstances, I consider an appropriate costs outcome as between the applicants and the first respondents is for costs to lie where they fall.

Result and orders

[23]There is a costs award against the applicants in favour of NZMA in the sum of

$1,500.00.

[24]Costs of the application otherwise lie where they fall.

Fitzgerald J