Mason v Dodd
[2024] NZHC 1245
•17 May 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-936
[2024] NZHC 1245
BETWEEN ALEXANDER CHARLES MASON
Plaintiff
AND
PAUL MORLEY DODD
Defendant
Hearing: On the papers Counsel:
G J Thwaite for Plaintiff
M C Harris and S T Coupe for Defendant
Judgment:
17 May 2024
JUDGMENT OF O’GORMAN J
This judgment was delivered by me on 17 May 2024 at 4 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
…………………………………
Solicitors/Counsel:
G J Thwaite, Auckland M C Harris, Auckland Gilbert Walker, Auckland
MASON v DODD [2024] NZHC 1245 [17 May 2024]
[1] This is an application for costs in circumstances where the plaintiff discontinued his claims one week before a five day witness hearing due to commence on 4 March 2024.
[2] The defendant seeks costs and disbursements totalling $44,777.35. An uplift of 30 per cent from 2B scale costs is sought on the grounds that the plaintiff’s claims lacked merit and the plaintiff repeatedly failed to comply with Court directions.
Factual background
[3]The proceeding concerns one of a series of disputes between:
(a)Mr Mason; and
(b)Mr Dodd, Mr Mason’s daughters and many other persons who had responsibility for the care of Mr Mason’s wife, Wendy Mason,
about legal arrangements put in place (trusts and a will), and the appropriate care for Mrs Mason after she was diagnosed with dementia in 2012. Those disputes have been the subject of various proceedings in the Family Court, the High Court, the Court of Appeal,1 and the Supreme Court.2
[4] The critical events in question in this proceeding date back to 1994. In early 1994, Mr and Mrs Mason instructed Mr Dodd to form a family trust for their assets and the deed was duly settled on 26 April 1994 (the Mamari Trust). Mr and Mrs Mason were the settlors and trustees. They were also the beneficiaries, along with their three children, their grandchildren, their parents, and any future spouse. The Trust’s assets were the family home, a commercial business, and cash holdings.3
1 Mason v Dodd [2024] NZHC 219 at [6].
2 Mason v Triezenberg [2022] NZSC 99 (leave to appeal declined).
3 Mason v Triezenberg [2022] NZCA 138 at [7].
[5] Mrs Mason was diagnosed with early stage degenerative dementia in 2012. This led to the settlement of another trust under a deed dated 20 May 2013 (the Mamari (No 2) Trust), with Mr Jorgensen acting as legal adviser to Mr and Mrs Mason for these matters. The settlors were Mr and Mrs Mason, and the trustees were Mr and Mrs Mason, Ms Triezenberg (the daughter of Mr and Mrs Mason), and Mr Dodd. The beneficiaries were Mr and Mrs Mason, their three children, and their grandchildren.
[6] Following this, Mrs Mason’s dementia worsened and, by 10 August 2015 on the day of her admission to Middlemore Hospital, she was certified as mentally incapable due to her dementia. Upon her discharge on 1 September 2015, she was transferred to residential care at St Andrew’s Village. This decision was made by Ms Triezenberg under a power of attorney, acting on advice from a clinical team. Mr Mason was vehemently opposed and wanted Mrs Mason to return home. This led to a number of disputes relating to that decision and the administration of the trust.
[7] Ultimately, following, a mediation held on 22 and 23 September 2016, a settlement was reached whereby Mrs Mason was transferred home with 24/7 care to be provided by an external nursing agency. Mrs Mason’s general condition improved, but difficulties were encountered in payment of the invoices for in-home care because of Mr Mason’s refusal to approve that.
[8] By July 2017, Ms Triezenberg and Mr Dodd applied to remove Mr Mason as trustee of the two trusts and for other Court directions. Fitzgerald J made orders for his removal on 17 January 2019.4 Mr Mason appealed Fitzgerald J’s decision to the Court of Appeal, and he commenced the current proceeding against Mr Dodd.
[9] This substantive claim was for professional negligence. The plaintiff alleged that the defendant (his former accountant) was negligent in advising him to establish the family trusts in 1994 and in 2013. The accountant denied any negligence and said the plaintiff had not suffered any loss. The defendant also said the claims were clearly time-barred.
4 Triezenberg v Mason [2019] NZHC 14.
[10] The plaintiff’s claim commenced as an application for summary judgment on liability, but that was dismissed.5
[11] Following Mrs Mason’s death on 26 January 2024, on 7 February 2024 the plaintiff applied to adjourn the substantive hearing in this proceeding. Mr Thwaite, on behalf of the plaintiff, said that Mrs Mason’s death had been a tremendous blow to Mr Mason, who had just started the grieving process. He argued that the rigours of participating in a trial, particularly of giving evidence, were likely to be stressful and beyond Mr Mason’s capacity. Mr Mason also sought the adjournment so that he could initiate three sets of legal proceedings and seek to have those determined:6
(a)the removal of Mr Dodd and Ms Triezenberg as trustees of the two trusts and the appointment of Mr Mason and a third party as trustees;
(b)an investigation into whether the orders of the Family Court regarding the making of a will by Mrs Mason were carried out and, if appropriate, into the validity of the will; and
(c)an investigation into the conduct of Mr Allen.
[12] On 19 February 2024, the Court declined the application for the adjournment because van Bohemen J was not satisfied that Mr Mason would be unable to prepare adequately for the hearing.7 Although Mr Mason would undoubtedly be grieving, this had not inhibited him from preparing a detailed affidavit in support of his adjournment application.8 The proceeding had been commenced more than four years earlier, and the hearing date was set more than 18 months earlier. Mr Dodd had already had the disadvantage of this proceeding hanging over him, relating to events long ago, and there was no certainty what new hearing dates might be available, particularly if the hearing were adjourned until after the other proceedings that Mr Mason intends to
5 Mason v Dodd [2020] NZHC 1508.
6 Mason v Dodd, above n 1, at [29].
7 At [42].
8 At [43].
commence. The fact that Mr Mason wanted to obtain a tactical advantage by pursuing three new proceedings was not something that assisted his case for adjournment.9
[13] On 27 February 2024, the plaintiff filed his notice of discontinuance. The following day, Moore J vacated the fixture and gave directions for the filing and service of submissions on costs (in the absence of party agreement), so that costs could be determined on the papers.
Legal principles
[14] Rule 15.23 of the High Court Rules 2016 provides that, unless the defendant otherwise agrees or the Court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of an incidental to the proceeding, up to and including the discontinuance.
[15] The default position is that the applicant who withdraws an application is required to pay costs unless the Court orders otherwise.10 Exceptions are based on an assessment of who was the successful party.11
[16] When the Court is asked to exercise its discretion to order costs on a withdrawal or discontinuance, the Court does not normally consider the merits of the respective cases, unless they are so obvious that they should influence the costs outcome.12 That is particularly the case where increased costs are sought.13
[17] Rule 14.8(2) of the High Court Rules expressly provides that, despite the requirement to fix costs on an interlocutory application, the court may reverse, vary, or discharge an order for costs if it is satisfied subsequently that the original order should not have been made. There are three primary circumstances in which this rule is used:14
9 At [44].
10 Ip v Ip [2016] NZHC 528 at [16] and [19].
11 Obrecht v Earthquake Commission [2015] NZHC 555 at [25].
12 Peterberic v Eady [2020] NZHC 2079 at [8].
13 Ip v Ip, above n 10, at [21].
14 David Bullock and Tim Mullins The Law of Costs in New Zealand (LexisNexis, Wellington, 2022) at [2.51]; Palmerston North City Council v Hardiway Enterprises (struck off) [2018] NZHC 3005 at [6]–[8]; and Jindal v Kamal [2024] NZHC 827 at [13].
(a)where a judgment on an interlocutory matter is reversed after an appeal (this being the most common reason);
(b)to remedy the failure of counsel to advise the court that their client sought costs; and
(c)where there is a lack of information before the court when making the costs award, such as the court not being aware of an unreasonable failure to accept an offer when making its original costs award (often where a costs award is made without the court requesting submissions).
[18] In general terms, r 14.8(2) does not afford an opportunity to come back for another “bite” at the argument.15 The courts prefer finality, absent a good reason to revisit the issue (i.e., whether an order is later found to have been “wrongly made”). Otherwise, res judicata applies.16
Party submissions
Defendant’s position
[19] The defendant has calculated costs based on a classification of Category 2 (proceedings of average complexity requiring counsel of average skill and experience), Band B (a normal amount of time for steps). The defendant seeks increased costs under r 14.6(3)(b) on four grounds:
(a)The summary judgment decision of Katz J determined that the application fell short “by a very wide margin” and took the unusual step of awarding costs on the basis that it should have been apparent from the outset that the claims were not suitable for summary determination.17
15 At [2.51]; Palmerston North City Council v Hardiway Enterprises (struck off), above n 14, at [9]; and Jindal v Kamal, above n 14, at [14].
16 Laura O’Gorman (ed) Sim’s Court Practice (online ed, LexisNexis) at [HCR14.8.4], referencing Capital Property Ltd v Cook HC Auckland CP257/IM02, 3 February 2003; and Crusader Meats New Zealand Ltd v New Zealand Meat Board HC Wellington CIV-2002-485-958, 30 September 2003.
17 Mason v Dodd, above n 5, at [45] and [47].
(b)The first and third causes of action were plainly time-barred, seeking damages for breach of contract and negligence based on alleged deficiencies in giving advice during 1994. Mr Mason sought to meet that limitation defence by pleading “mistake” and “fraud”, arguing that the mistake was believing advice was correct and the fraud was a failure to disclose that his advice was negligent. Neither can defer the running of time, otherwise there could never be any limitation defence to a negligence claim.
(c)Mr Mason never served any evidence from an expert supporting his claims that the advice was negligent, despite the observation in the summary judgment decision that this would usually be required.18
(d)Mr Mason never served any evidence from an expert supporting his claim to damages of some $3.4 million. There was no realistic prospect that a court would award damages based on Mr Mason himself purporting to give evidence about the value of assets, in reliance on some emails received from real estate agents not called as witnesses.
[20] The defendant alleges that the awards of cost already made at interlocutory stages of the proceeding can be revisited at the conclusion of the proceeding as a whole, after the claims are abandoned by discontinuance.
[21] The defendant also refers to an offer to settle on an open basis made on 19 July 2023, on terms that no costs would be sought if the proceeding were discontinued by 11 August 2023. That letter noted that increased or indemnity costs may be sought if Mr Mason persisted with the claim.
Plaintiff ’s position
[22]The plaintiff advances four arguments:
(a)no costs should be awarded owing to the conduct of the defendant;
18 Mason v Dodd, above n 5, at [26].
(b)costs should lie where they fall;
(c)alternatively, costs should be at the scale as fixed by the Registrar after reference to the parties; and
(d)if costs are awarded, they should be paid by the plaintiff only when he has received the exact amount of costs to make such payment from the Mamari trusts.
[23] Under the Memorandum of Guidance applicable for the two family trusts, the plaintiff says there is a primary duty to ensure the comfort and welfare of the plaintiff and (before her death) Mrs Mason.19 Related to this, the plaintiff refers to the judgment of Associate Judge Gardiner declining to order security for costs because the trustees effectively control the ability of the plaintiff to meet any costs award (given that his assets were transferred to the trusts).20
[24] The plaintiff argues that costs should lie where they fall because of the defendant’s attempt to impede the plaintiff (by applying for security for costs) and because the legal bases for the claims were sound, so the plaintiff’s claim should not be treated as a failure upon a discontinuance. The evidence about the alleged inadequacies of the advice came from the defendant’s own evidence:21
I did say that [Mr and Mrs Mason] would retain control having the powers to appoint and remove trustees, however I should have added that power would be available if they were acting in the interests of all beneficiaries and they had mental capacity.
[25] The plaintiff’s submissions on the third argument about scale costs are that he “repeats the position in Argument 2” and states (without further explanation) that the tort and contract claims were not time-barred by a limitation period.
19 Triezenberg v Mason, above n 4, at [156].
20 Mason v Dodd [2020] NZHC 2916 at [39].
21 Mason v Dodd, above n 5, at [9] quoting the affidavit filed in Family Court proceedings.
[26] In support of the last argument, the plaintiff repeats the position in Argument 1, namely that the defendant in his position as trustee of the two Mamari trusts decides whether to make the cash available, so the plaintiff should not have to pay any cost awards until one or other of the trusts provides sufficient funds to do so.
Analysis
[27] Rule 15.23 of the High Court Rules applies, so the starting position is that the defendant is entitled to costs from the plaintiff upon the proceeding being discontinued.
[28] In terms of the underlying merits, there is no basis on which to treat the discontinuance as reflecting “success” on the part on the plaintiff. I reject the plaintiff’s assertion that the legal bases for the claims were sound, and that contractual breach or negligence is evident from the quote referred to at [24] above. As referred to in the summary judgment decision of Katz J, the key question was whether usual or accepted professional standards and practice at the time would have required a further explanation that the power to appoint and remove trustees was subject to their ongoing capacity and compliance with trustee obligations.22 Removal of a trustee for misconduct is rare, and there has never been any expert evidence produced that a reasonable advisor in 1994 would have given such advice (beyond explaining that the assets are held for beneficiaries and must be dealt with in accordance with the trust deed).23
[29] For the same reason, I reject the plaintiff’s submission that costs should lie where they fall. In my assessment, there has not been any disentitling conduct on the part of the defendant.
[30] The plaintiff has requested that scale costs should be fixed by the Registrar after reference to the parties. The procedure for determining costs was set by Moore J on 28 February 2024. The parties have had the opportunity to make submissions on costs. The plaintiff’s memorandum on costs was filed two weeks after the defendant’s
22 Mason v Dodd, above n 5, at [26]–[29].
23 At [29].
memorandum. The plaintiff has had the opportunity to comment on the defendant’s calculation of scale costs on a 2B basis, as set out in the Schedule. In accordance with the directions of Moore J, costs are now being determined by me on the papers.
[31]I have considered the four grounds for seeking increased costs summarised at
[19] above. As referred to at [16] above, the Court does not normally consider the merits of the respective cases unless they are so obvious, they should influence the cost outcome.
(a)The analysis of the merits by Katz J for summary judgment purposes was different. Katz J determined that the application fell short of the summary judgment test “by a very wide margin”, but that was primarily because the claim involved disputed issues.
(b)Katz J observed that the first and third causes of action were likely to be time-barred, but that a limitation defence did not appear to arise in respect of the fourth cause of action.24 Associate Judge Gardiner accepted that the first and third causes of action would almost certainly fail based on limitation, but for the remaining causes of action the Judge did not conclude that Mr Mason’s claims in relation to Mamari (No 2) Trust were “so obviously without merit that they should not be heard” (despite the Masons receiving legal advice from Mr Jorgensen for that settlement, so Mr Dodd’s role was limited).25 Both decisions indicate the claims were weak, but given the conclusion that the claims could properly proceed to trial, I do not believe the uplift on costs threshold is met on those grounds alone.
(c)However, I accept the remaining two criticisms that no expert evidence was filed and, in those circumstances, the plaintiff’s case was very likely to fail, particularly when considered along with the weaknesses considered above. Mr Mason and his lawyers were on express notice of these expert evidence issues from the summary judgment hearing.
24 At [34]–[36] and [43]–[44].
25 Mason v Dodd, above n 20, at [23].
On the other hand, I am unable to determine whether Mr Mason failed to seek the evidence (e.g., for cost reasons), or whether (and if so, when) he knew that no expert would provide such evidence. I consider this further below.
[32] On 19 July 2023, Gilbert Walker wrote to counsel acting for Mr Mason, offering to settle all matters by foregoing any claim to costs if he discontinued the proceeding by 11 August 2023. Mr Mason was put on notice that if he persisted with his claims, the letter would be used as a foundation for seeking increased or indemnity costs.
[33] That offer letter was written when Mr Mason was under timetable obligations to prepare his briefs of evidence for trial and serve them by 4 October 2023.26 After the plaintiff’s non-compliance with that deadline, it was extended to 24 November 2023.27 By that time at the latest, Mr Mason should have known whether his claims were supported by expert evidence. In either of the two scenarios at [31](c) above, his decision to continue with the proceeding regardless was conduct that I find is deserving of increased costs for the substantive steps the defendant was subsequently required to take. I do not award an uplift for the settlement offer as such (which expired well before his briefs of evidence were due),28 but that letter is relevant to assessing the point when it became unreasonable to proceed to trial.
[34] Accordingly, I award an uplift of 30 per cent for the steps after 24 November 2023 (the adjusted deadline for the plaintiff’s briefs of evidence), other than steps for which a 2B costs award was already made. In other words, I apply a 30 per cent uplift for:
26 Mason v Dodd HC Auckland CIV-2019-404-936, 9 August 2022 at [2](b).
27 Mason v Dodd HC Auckland CIV-2019-404-936, 16 November 2023 at [6](a).
28 In Hira Bhana Ltd v PGG Wrightson Ltd [2007] NZCA 342, the Court of Appeal found that a “walk away” no costs offer could not entitle the successful defendant to an award of either increased or indemnity costs, but that was based on the ultimate issue of whether it was unreasonable at that point to proceed to trial, and the offer had been made early in the proceeding.
(a)preparation of briefs of evidence for trial; common bundle attendance;29 and
(b)two days of preparation for trial due to commence 4 March 2023 (a reduction on the scale amount in Schedule 3 of the High Court Rules of five days for a five-day hearing). I consider two days reasonable given that submissions and cross-examination preparation would have been well-advanced by the time the discontinuance was received.
[35] In my view there are insufficient grounds to revisit the 2B awards already made.
Payment of costs
[36] I do not accept that Mr Mason’s entitlements as a beneficiary under the trusts should impact on the award of costs. As noted in the summary judgment decision:30
Mr Mason’s hostility had resulted in significant dysfunction in the operation of the trusts and an unsustainable dissipation of trust assets, including large sums spent on legal fees.
[37] The decision of Associate Judge Gardiner about declining to order security for costs was based on a concern that Mr Mason would thereby be prevented from advancing his claim (an access to justice issue). Mr Mason has now had that opportunity and the usual cost consequences should follow.
[38] In terms of whether Mr Mason can expect those costs to be met out of assets in the Mamari trusts in accordance with the Memorandum of Guidance, that is a decision that will need to be assessed by the trustees in accordance with their obligations. Even if there is a primary duty to Mr Mason, the trustees presumably also have a duty to consider the impact on other beneficiaries and the sustainability of applying large sums on ongoing legal fees for proceedings commenced by Mr Mason. These are not matters for determination in this costs application.
29 In the defendant’s calculations the time allocation of three days for an affidavit hearing of five days was applied in error (Schedule 3, item 30) whereas the correct allocation for a witness hearing is five days (Schedule 3, item 33).
30 Mason v Dodd, above n 5, at [2] (footnote omitted).
Result
[39] For the above reasons, I award scale costs (with an uplift for the two trial preparation steps) of $44,095.50 as set out in the Schedule,31 plus the disbursements for filing fees of $191.90.
O’Gorman J
31 The costs of the summary judgment are not included because those have already been awarded and quantified separately. The Schedule does include costs awarded by Associate Gardiner in her minute of 23 March 2023 (item 7), by myself in my minute of 16 November 2023 (items 9 and
10) and by van Bohemen J is his judgment dated 19 February 2024 (items 12 and 13), in each of those cases because the quantum was never determined and costs sealed.
Schedule
| Item | Step | Description | Days requested | Uplift calculation | Awarded |
| 1 | Commencement of defence by defendant | Statement of defence dated 12 November 2019 | 2.0 | 2.0 | |
| 2 | Pleading in response to amended pleading | Statement of defence to third amended statement of claim dated 19 July 2023 | 0.6 | 0.6 | |
| 3 | Filing memorandum | Memorandum of counsel for defendant for first case management conference dated 8 September 2020 | 0.4 | 0.4 | |
| 4 | Filing memorandum | Memorandum of counsel for defendant for case management conference dated 30 May 2022 | 0.4 | 0.4 | |
| 5 | Appearance at first or subsequent case management conference | Appearance at case management conference on 1 June 2022 | 0.3 | 0.3 | |
| 6 | List of documents on discovery | Defendant’s affidavit of documents dated 3 November 2022 | 2.5 | 2.5 | |
| 7 | Filing memorandum | Memorandum regarding non- compliance by plaintiff dated 20 February 2023 | 0.4 | 0.4 | |
| 8 | Inspection of documents | Inspection of plaintiff’s affidavit of documents dated 11 April 2023 | 1.5 | 1.5 | |
| 9 | Filing memorandum | Memorandum regarding plaintiff’s breach of timetable dated 8 November 2023 | 0.4 | 0.4 | |
| 10 | Appearance at mentions hearing or callover | Appearance on 16 November 2023 | 0.2 | 0.2 | |
| 11 | Preparation of briefs, authorities, agreeing common bundle | Preparation of briefs of evidence for trial; common bundle attendance | 3.0 | 5.0 | 5.0 |
| 12 | Filing memorandum | Memorandum on behalf of defendant opposing adjournment of trial dated 8 February 2023 | 0.4 | 0.4 | |
| 13 | Appearance | Appearance at hearing of adjournment request on 15 February 2023 | 0.25 | 0.25 | |
| 14 | Preparation for hearing | Preparation for trial due to commence 4 March 2023 | 2.0 | 2.0 | 2.0 |
| Total days | 14.35 | 7.00 | 16.35 | ||
| Rate (Category 2) | $2,390.00 | $2,390.00 | $2,390.00 | ||
| Costs | $34,296.50 | $16,730.00 | $39,076.50 | ||
| Uplift (30 per cent) | $10,288.95 | $5,019.00 | $5,019.00 | ||
| Total costs | $44,585.45 | $44,095.50 | |||
| Disbursements | $190.90 | $190.90 | |||
| Total costs and disbursements | $44,776.35 | $44,286.40 |
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