Mason v Dodd
[2020] NZHC 2916
•12 November 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-000936
[2020] NZHC 2916
BETWEEN ALEXANDER CHARLES MASON
Plaintiff
AND
PAUL MORLEY DODD
Defendant
Hearing: 20 October 2020 Appearances:
G J Thwaite for the Plaintiff / Respondent S T Coupe for the Defendant / Applicant
Judgment:
12 November 2020
JUDGMENT OF ASSOCIATE JUDGE GARDINER
This judgment was delivered by me on 12 November 2020 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
Gilbert Walker, Auckland G J Thwaite, Auckland
MASON v DODD [2020] NZHC 2916 [12 November 2020]
Introduction
[1] The defendant, Paul Dodd, has applied for orders that the plaintiff, Alexander Mason, pay security for the defendant’s costs in the sum of $65,000, and that this proceeding is stayed until the plaintiff provides that security.
[2] Mr Mason claims that Mr Dodd, his former accountant, gave him incorrect advice in 1994 about setting up a family trust (“the Mamari Trust”) and transferring his assets to it. Mr Dodd is alleged to have given Mr Mason further incorrect advice and/or failed to correct his earlier advice in 2013 when a second trust (“the Mamari (No 2) Trust”) was established.
[3] Mr Mason’s first and third causes of action relate to the settlement of the Mamari Trust. Mr Mason says that Mr Dodd breached both his contractual obligations and/or his duty of care to Mr Mason. Mr Mason’s second and fourth causes of action relate to the settlement of the Mamari (No 2) Trust. Again, one cause of action is in contract, the other in tort.
[4] The application for security for costs is made in reliance on r 5.45 of the High Court Rules 2016, and on the basis that there is reason to believe that Mr Mason will be unable to pay Mr Dodd’s costs if Mr Mason is unsuccessful at trial. Mr Dodd relies on the fact that Mr Mason has failed to promptly pay judgment debts and costs awards in separate legal proceedings, resulting in enforcement action being taken against him. Mr Mason has also failed to pay Mr Dodd’s costs following Mr Mason’s unsuccessful application for summary judgment in this proceeding.
[5] Mr Dodd further contends that Mr Mason’s claim lacks merit, and is unlikely to succeed, and that in all the circumstances it is just that an order for security for costs is made.
[6] Mr Mason opposes the making of an order for security for costs, arguing that there is no reason to believe that Mr Mason will be unable to pay the costs of Mr Dodd if he is unsuccessful. Further, Mr Dodd contends that the Court should not exercise its discretion to make an order, given that Mr Mason has a sound legal claim, the
proceeding arises out of errors on the part of a government entity, there is no significant difference in evidence between the parties, and Mr Dodd has omitted certain evidence, has caused Mr Mason’s present financial situation and is in breach of his duties as trustee.
Factual background
[7]The facts have previously been summarised by her Honour Katz J as follows:1
[6] Mr and Mrs Mason engaged Mr Dodd as their accountant in 1993, and in early 1994 they asked him to assist with asset planning, including the establishment of a trust. At the time Mr Dodd (who is now in his early 70s) had been working as an accountant for over 20 years, including seven years at Price Waterhouse and four years at his own firm. He was familiar with the operation of trusts and the duties of trustees.
[7] Mr Dodd advised Mr and Mrs Mason on the establishment of the Mamari Trust. Once the trust was established, Mr and Mrs Mason transferred personal assets into it. They were the sole trustees.
[8] Mr Mason says that he made it clear to Mr Dodd that he needed to retain control of his financial affairs. He claims that Mr Dodd advised him that he and his wife would always have control of the trust and the trust assets, given that they would be the settlors, trustees and also hold the powers of appointment of trustees.
[9] In a reply affidavit filed in Family Court proceedings relating to the care and welfare of Mrs Mason, Mr Dodd stated that:
I did say [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.
[10] On 1 November 2012, Mr and Mrs Mason, together with their daughter Vicky Triezenberg, met with Mr Dodd to discuss how the Mamari Trust would operate in the event of the death of either Mr Mason or Mrs Mason. The possibility of resettling the assets of the Mamari Trust into a new trust was discussed. Mr Dodd admits that prior to the formation of the Mamari (No 2) Trust in 2013 he discussed with Mr and Mrs Mason the control they would exercise over trust assets as trustees and the persons holding the power of appointment. He says further, however, that Mr and Mrs Mason received legal advice on the formation of a new trust from their long-time solicitor, Finn Jorgensen of Sellar Bone & Partners and that Mr Jorgensen and his firm handled the drafting and finalisation of the trust deed.
[11] Mr Jorgensen was Mr and Mrs Mason's solicitor for over 30 years. He states in his affidavit that he met with Mr and Mrs Mason, and
1 Mason v Dodd [2020] NZHC 1508 at [6].
Ms Triezenberg, for two to three hours on 14 March 2013. They discussed trust matters and also signed enduring powers of attorney at that meeting. A file note of that meeting indicates that the matters discussed included issues relating to control of the proposed new trust, and the appointment of two additional trustees (Mr Dodd and Ms Triezenberg). Following the meeting Mr Jorgensen had further discussions with Mr Dodd and gave further thought to Mr and Mrs Mason's trust and estate planning issues. He sent a draft deed of trust to Mr Dodd on 17 March 2013. The signed Mamari (No 2) trust deed, signed by all the trustees, is dated 20 May 2013. The Masons appointed themselves, Ms Triezenberg, and Mr Dodd as trustees of the Mason (No 2) Trust.
[12] On 21 May 2013 Mr Jorgensen wrote to Mr and Mrs Mason in relation to the new trust and new wills. He set out in that letter that Mr Mason, Mr Dodd and Ms Triezenberg would be the trustees of the new trust and would also be added as trustees of the existing trust. (This is somewhat puzzling given that the document was signed, or at least dated, the previous day).
[13] After some correspondence with Mr Mason a meeting was held on 30 May 2013 with Mr and Mrs Mason, Ms Triezenberg and Mr Dodd. Mr Jorgensen says he discussed the various trust and estate planning documents in detail, going through each document individually and explaining its meaning and purpose before it was signed. The relevant documents included a deed of resettlement, deed of forgiveness, various trust resolutions, and new wills for Mr and Mrs Mason. Mr Jorgensen says that he answered any questions as they arose and states that:
I was satisfied that both [Mr and Mrs Mason] in particular were aware of and understood the effect and implications of the various documents before they were signed.
[14] Hence, on 30 May 2013 Mr and Mrs Mason (as trustees of the Mamari Trust) resettled the cash assets of the Mamari Trust into the Mamari (No 2) Trust. Other assets remained in the Mamari Trust. Ms Triezenberg and Mr Dodd were added as trustees of the Mamari Trust.
[15] In late 2015 a dispute arose between the trustees as to whether Mrs Mason, who was suffering from dementia, required residential care. In short, Ms Triezenberg and Mr Dodd were of the view that Mrs Mason required residential care, and they wanted to use trust funds to pay for that care. Their view was shared by Ms Triezenberg’s two siblings and Mrs Mason's clinical team. Mr Mason did not want Mrs Mason placed into care or to use trust funds for such a purpose.
[16] Matters escalated, resulting in the operation of both trusts becoming dysfunctional. In 2017, Ms Triezenberg and Mr Dodd issued proceedings seeking Mr Mason’s removal as trustee. The claim went to trial in September 2018. On 17 January 2019 Fitzgerald J delivered judgment. She removed Mr Mason, for the reasons I have set out at [2] above. Mrs Mason was also removed as a trustee, on the grounds of incapacity. Ms Triezenberg and Mr Dodd remained trustees. All trust distributions since that time have been for the benefit of either Mr Mason or Mrs Mason.
[8] Mrs Mason was removed as a trustee due to her incapacity as a result of dementia. In Mr Mason’s case, Her Honour Fitzgerald J found that he displayed a fundamental lack of understanding of the role and duties of a trustee, and that he was no longer able to discharge his duties as a trustee in a fair and impartial manner.2
[9] Mr Mason has appealed that decision to the Court of Appeal. In that appeal, Mr Mason seeks reinstatement as a trustee of the two trusts, or alternatively, an order dissolving the trusts and returning the assets to Mr and Mrs Mason.
[10] Mr Mason has previously brought an application for summary judgment of this proceeding. The application was dismissed by Her Honour Katz J, who held that “Mr Mason has failed to establish, by a very wide margin, that Mr Dodd has no reasonable ground of defence to any and all of the causes of action pleaded”.3
Legal framework
[11] Rule 5.45 of the High Court Rules provides that the Court may, if it thinks it would be just in all the circumstances, order a plaintiff to give security for costs where there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the proceeding.
[12] As to proof of the plaintiff’s alleged inability to pay costs, the rule does not imply any onus or standard of proof; it simply states that the Court must be “satisfied” of the plaintiff’s inability to meet an award of costs, that is, that the Court must come to a decision on the evidence before it.4 There should be credible evidence of surrounding circumstances from which it may be reasonably inferred that the plaintiff will be unable to pay costs; however, the evidence need not amount to proof that the plaintiff will, as a matter of fact, be unable to pay costs.5 In the absence of direct evidence, it can be sufficient to adduce evidence of surrounding circumstances from which an inference of inability to pay can reasonably be drawn.6 Further, although the
2 Triezenberg v Mason [2019] NZHC 14, (2019) 5 NZTR 29-001.
3 Mason v Dodd [2020] NZHC 1508 at [45].
4 Wishart v Murray [2015] NZHC 3132 at [7].
5 Concorde Enterprises Ltd v Anthony Motors (Hutt) Ltd (No 2) [1977] 1 NZLR 516 (SC).
6 Totara Investments v Abooth Ltd HC Auckland CIV-2007-404-990, 4 March 2009 at [28].
Court will give due weight to a plaintiff’s sworn assertion that he/she will be able to meet costs awarded, that will not be decisive.7
[13] As to whether an order for security of costs would be “just in all the circumstances”, whether or not to order security and, if so, the quantum, are discretionary.8 The Court’s discretion is generally not to be fettered by constructing “principles” from the facts of previous cases.9 The following considerations may nevertheless be relevant:10
(a)Balancing the interests of the plaintiff and defendant is the overriding consideration.11 This includes the plaintiff’s right to access to justice.
(b)As far as possible, bearing in mind the early stage of the proceeding, the Court will endeavour to assess the merits and prospects of success of the claim.12 There is however a very real limit as to how far such an inquiry can be made, particularly at this early stage in the proceeding.13
(c)Where the plaintiff’s impecuniosity results from the defendant’s actions, it may be unjust to order a security of costs.14
Issues
[14]Accordingly, the issues for determination are:
(a)Based on the evidence of surrounding circumstances, is it reasonable to infer that Mr Mason will be unable to pay Mr Dodd’s costs if he is unsuccessful in this proceeding?
7 New Zealand Democratic Party for Social Credit Inc v Minister of Land Information
[2020] NZHC 1104 at [16].
8 A S McLachlan Ltd v MEL Network Ltd (2002) 16 PRNZ 747 (CA) at [15].
9 At [15].
10 McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR5.45.03].
11 Highgate on Broadway v Devine [2012] NZHC 2288, [2013] NZAR 1017 at [24](c).
12 McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR5.45.03(2)].
13 Meates v Taylor (1992) 5 PRNZ 524 (CA); and Lee v Lee [2019] NZCA 345 at [73].
14 Bell-Booth Group Ltd v Attorney-General (1986) 1 PRNZ 457 (HC).
(b)Is it just in all the circumstances, balancing the interests of Mr Mason and Mr Dodd, that Mr Mason is required to pay the security for costs?
Analysis
Will Mr Mason be unable to pay costs?
[15]In support of Mr Dodd’s application, Mr Coupe submits that:
(a)Mr Mason was a defendant in a claim made against him by his former barrister, Mr Hacking. Mr Mason was unsuccessful in that proceeding and was ordered to pay $48,852 plus interest and costs to Mr Hacking. A further award of costs of $16,311.75 was made against Mr Mason in connection with an appeal in that proceeding. Mr Hacking had to commence enforcement action in relation to a property owned by Mr Mason in Australia to recover the debt.
(b)Mr Mason was liable to pay two costs awards of $46,500 and
$13,122.10 in relation to Family Court proceedings he commenced against Mrs Mason’s property manager and welfare guardian, Mr Allen. Bankruptcy proceedings were issued against Mr Mason to enforce these debts.
(c)Mr Mason has not paid costs of $6,309.65 awarded to Mr Dodd by Katz J following his unsuccessful summary judgment application.
(d)Mr Mason is also involved in another proceeding which relates to the Mamari Trusts (namely, the appeal of Fitzgerald J’s decision). It is reasonable to infer that Mr Mason owes or may incur significant legal fees of his own in relation to each of these actions.
(e)Mr Mason’s income is the pension and a monthly distribution of $4,000 from the Mamari Trusts. He lives in a property owned by the Mamari Trust, and his only other known assets are a property in Australia and a half-share in a loan of $100,000 made to his son.
[16] Mr Coupe referred to Mr Mason’s statements in his affidavit dated 9 October 2020. In that affidavit, Mr Mason states that he has limited funds, and is dependent on his superannuation and a modest allowance from the family trusts derived from a property at Onehunga.
[17]In response, Mr Thwaite, for Mr Mason, submits that:
(a)Mr Mason engaged in the litigation relating to Mr Hacking’s costs and the bankruptcy proceedings in good faith and for legitimate reasons.
(b)Mr Mason has now paid the judgment debts and outstanding costs awards, using the “modest amount” of personal funds he had left after settling most of his assets into the trusts.
(c)Mr Mason has real estate in Australia against which enforcement action could be taken should Mr Mason be unsuccessful.
(d)Mr Mason will have funds to pay an adverse costs order if he is successful in the Court of Appeal in having Mr Dodd and Ms Triezenberg removed as trustees, himself reinstated as a trustee, and a further trustee appointed.
[18] In relation to Mr Thwaite’s submission at [17](a), Mr Coupe refers this Court to Downs J’s decision, in which his Honour awarded increased costs against Mr Mason, noting that “this reflects an utterly meritless appeal and Mr Mason’s associated attempt to delay payment of fees he ought to have paid years ago”.15 In relation to [17](d), Mr Coupe says that awarding security along with a stay of the proceeding would ensure that Mr Mason, if he is successful in the Court of Appeal and regains control of the trust assets, will have that option available to him.
[19] I am satisfied that there is reason to believe that Mr Mason will be unable to pay Mr Dodd’s costs if he is unsuccessful in this proceeding. I place considerable weight on Mr Mason’s own evidence in his affidavit dated 9 October 2020 that he has
15 Mason v Robertson [2019] NZHC 3391 at [8].
“minimal assets and income and is dependent on his superannuation and a modest allowance from the trusts”. He has said that he exhausted what personal funds he had retained outside the trusts to pay the legal costs associated with the litigation brought by Mr Hacking and the Family Court proceedings.
[20] As to the property in Australia, there is no evidence of its value or confirming Mr Mason’s interest in the property before me. Further, whether or not Mr Mason will be successful in the Court of Appeal is purely speculative at this stage and does not provide adequate evidence of an ability to pay an adverse costs order in this litigation.
Should the Court exercise its discretion and make an order for security for costs?
[21] Mr Coupe submits that Mr Mason’s claims in these proceedings have no merit and that this supports the need for an award for security for costs:
(a)Her Honour Katz J found that a limitation defence to the first and third causes of action (relating to settlement of the Mamari Trust 25 years ago) is “strongly arguable”.
(b)There is a potential limitation defence in relation to the second cause of action (relating to settlement of the Mamari (No 2) Trust in 2013).
(c)Mr Mason’s case faces difficulties in relation to breach, causation and loss. As Katz J observed, “it is open to argument whether there has been any loss at all”.
(d)Mr Mason received independent legal advice in relation to the establishment of the second trust. Mr Dodd says he did not advise Mr Mason on the trust deed or associated documents.
(e)Mr Mason seeks to overcome limitation issues based on a bare assertion that the fraudulent concealment exception to limitation defences applies. That assertion is unsupported by any particulars. It is precisely
the type of unsupported assertion criticised by the Supreme Court in
Trustees Executors Ltd v Murray.16
[22]Mr Thwaite submits the following:
(a)It is relevant that the origin of this proceeding is a defective medical certificate from a psychiatrist at Middlemore Hospital in 2015 which led to Mrs Mason being taken to a rest home against Mr Mason’s wishes.
(b)There is no significant difference between the parties on the key evidence — namely Mr Dodd’s statement in his affidavit of 9 November where he acknowledges that he did not advise Mr Mason and Mrs Mason that they would only retain control of the trust if they acted in the interests of all beneficiaries and had mental capacity. The trial will therefore be relatively short.
(c)The plaintiff has a sound claim, despite Katz J’s dismissal of the application for summary judgment. The liability arises out of Mr Dodd being asked a question and giving an answer to Mr Mason which was misleading and negligent. Further, Katz J’s conclusion that there appears to be a limitation defence to the second cause of action is based on the date of the second (amended) statement of claim dated 29 May 2019 as opposed to the first (original) statement of claim dated 17 May 2019. The trust was settled on 20 May 2013, therefore any breach of contract, which is the second cause of action, must have occurred by that date — it follows that the statement of claim dated 17 May 2019 was filed within the six-year limitation period.
(d)In any case, the limitation period was stayed by fraud, being Mr Dodd’s failure to admit to Mr Mason that he had not given proper advice, and his subsequent conduct towards him.
16 Trustees Executors Ltd v Murray [2007] NZSC 27, [2007] 3 NZLR 721 at [34].
(e)The evidence of the defendant is incomplete in that he did not disclose to the Court that he had been asked for funds by Mr Mason to pay his legal costs and the costs award against him, and had refused. This factor should weigh against the discretion being exercised.
(f)The defendant caused the plaintiff’s present financial circumstances. He could have paid at least some of Mr Mason’s legal costs and/or the costs awards against him and if he had, there would be no prospect of this application succeeding. He could also offer that the trust pays the outstanding costs award of $6,000 in relation to the summary judgment.
(g)Finally, the defendant has been using his connections with the other creditors to assist his personal position. He is in close contact with Mr Allen, Mrs Mason’s guardian, who brought bankruptcy proceedings against Mr Mason. (Mr Coupe strongly rejects this, submitting that there is no evidence of cooperation).
[23] I have considered the decision of her Honour Katz J on the summary judgment application. Certainly, Mr Mason faces several difficulties in his case against Mr Dodd. The first and third causes of action relating to the settlement of the Mamari Trust will almost certainly fail based on limitation. Further, Katz J observed in passing that there “appears to be a potential limitation defence to the second cause of action”; however, I accept Mr Thwaite’s submission that the first statement of claim was filed within the six-year limitation period. It also appears that Mr and Mrs Mason received legal advice from their long-time solicitor, Mr Jorgensen, on the resettlement of the trust — another obstacle for Mr Mason in this claim against Mr Dodd. Despite that, I do not conclude that his claims in relation to the Mamari (No 2) Trust are so obviously without merit that they should not be heard.
[24]In that regard, I observe the conclusion reached by her Honour Fitzgerald J:17
[125] First and perhaps most importantly, it became clear over the course of Mr Mason's evidence that he disputes and does not believe in the very concept of the two trusts. His view is essentially that the trust assets are his (and
17 Triezenberg v Mason [2019] NZHC 14, (2019) 5 NZTR 29-001.
Mrs Mason’s) and he ought to be able to do with them as he likes. He quite candidly accepted in cross-examination that the reason he is unhappy with Ms Triezenberg and Mr Dodd is that they will not let him do whatever he likes with trust assets.
[126] This displays a lack of understanding on Mr Mason’s part of the role and duties of a trustee, including the duty to administer the trust assets for the benefit of all beneficiaries. Ultimately, a person who does not accept or believe in the very concept of the trust of which they are a trustee is the antithesis of who ought to be a trustee.
[25] The sad reality is that Mr Mason, having transferred most of his assets into trust, he has now lost control of those assets because he does not believe in the very concept of a trust. I am reluctant to make an order that might deprive Mr Mason of the opportunity to have his claims in relation to settlement of the trusts heard.
[26] Against that, is the very reasonable submission made by Mr Coupe that Mr Dodd should not have to defend proceedings relating to events which took place in 1994 and 2013 respectively without some security against his costs.
[27] However, I am troubled by the fact that Mr Dodd, the applicant, is in control of Mr Mason’s ability to meet an order for security for costs as a trustee of the two trusts. Mr Coupe acknowledged that this presents an unusual situation but says that Mr Dodd is a professional trustee and bound to act in accordance with the trust deed in the best interest of the beneficiaries. He pointed out that Fitzgerald J had determined that Mr Dodd should remain a trustee, having regard to the fact that he had, together with Ms Triezenberg, “worked hard to conscientiously carry out their role as trustees”.18
[28] Mr Coupe said that Mr Mason is free to make a request to the trustees (Mr Dodd and Ms Triezenberg) for a distribution to fund this proceeding and to pay any order for costs. He suggested several practical solutions, including that the decision could be made by an independent decision-maker or put to the Court to determine. Mr Coupe said that in any event, if any order for security was made, then this proceeding may be stayed until security is paid. Mr Mason himself has sought a stay pending determination of his appeals. If Mr Mason is successful in the appeals
18 At [140].
and is appointed a trustee (as he seeks), he can make a distribution to pay the order for security (assuming he determines this to be in the best interests of the beneficiaries). Alternatively, he can make a request to the existing trustees.
[29] Against this, Mr Thwaite relied on the refusal of Mr Dodd as trustee of Mamari (No 2) Trust to advance Mr Mason funds to pay costs ordered against him in the Family Court, the District Court and the High Court.
[30] It appears that, on 19 June 2020, Mr Mason wrote to Mr Dodd requesting that the trust provide funds towards costs awards made against him. The letter is not in evidence in this application or proceeding, but is referred to in the following letter.
[31] In a letter dated 29 June 2020 (which is in evidence), Mr Dodd declined that request. He said:
I am writing as a trustee of the Mamari No 2 Trust regarding your request, by letter dated 19 June 2020, for funds to pay legal fees ordered by the Courts against you [Mr Mason].
After careful consideration I have resolved to decline your request.
Pursuant to clause 14.2 of the trust deed, the decision has been made by me alone, due to a potential conflict of interest on Vicki Triezenberg’s part.
[32] On 3 July 2020, Mr Mason queried that decision, including asking what Mr Dodd had considered in making the decision and how the decision was consistent with the Memorandum of Guidance. This is a document that Mr and Mrs Mason signed on 30 May 2013, having settled the Mamari (No 2) Trust. It states that:
The first responsibility of the Trustees shall be to consider on a regular basis the circumstances of each of [Mr and Mrs Mason] while they are respectively living … so that the comfort and welfare of each of [them] while they or either of them are respectively living is the primary consideration of the trustees.
When [Mr and Mrs Mason] have both died then unless there is good reason to the contrary existing at that time, we request that the Trust be wound up and the assets distributed equally between our three children.
[33] On 14 July 2020, Mr Dodd responded, saying that Ms Triezenberg considered that she was unable to participate in the decision due to a conflict, as the decision being made as trustee would affect her in her capacity as beneficiary. He also stated:
We note also the non-binding memorandum of guidance which you have also sent to us is that which relates to the Mamari Trust.
If you wish the trustees of the Mamari No 2 Trust to reconsider their 29 June decision, please let the trustees have a statement of assets and liabilities and a statement of income and expenses.
[34] Mr Thwaite observes that this assertion is inconsistent with the conclusion reached by Fitzgerald J that the Memorandum of Guidance was intended to apply to both trusts. Her Honour noted the following:19
[20] The plaintiffs [there, Mr Dodd and Ms Triezenberg] plead in their statement of claim that the Memorandum of Guidance was directed to the trustees of the Mamari (No. 2) Trust. Mr Mason [there, the first defendant] admits this in his statement of defence. I also observe that from the contemporaneous correspondence from Mr Jorgensen to Mr Mason, the Memorandum of Guidance appears to have been intended for both trusts; Mr Jorgensen referred in a letter to Mr Mason dated 21 May 2013 to the benefit of having a memorandum of guidance in relation to both trusts and enclosed a draft for consideration. No separate memorandum of guidance directed to the trustees of the Mamari (No.2) Trust was, however, adduced in evidence.
[21] I nevertheless proceed on the basis that the Memorandum of Guidance was intended and applies to both trusts. This reflects the pleadings in relation to the Memorandum of Guidance, its express terms and, as noted at the outset of this judgment, the parties’ agreement that so long as each of Mr and Mrs Mason are alive, their comfort and welfare is the priority in both trusts.
[35] In a further letter of 5 August 2020, Mr Dodd said that he “understood that trustees are not required to give reasons for their decisions. I can say that I carefully weighed the relevant factors, including the needs and interests of all beneficiaries (including you, Wendy, and your three children) and the memorandum of wishes”.
[36] Mr Thwaite puts a great deal of emphasis on this exchange of correspondence. He submits that it was evidence of Mr Dodd’s not acting properly as a trustee, and that indeed it was advantageous for Mr Dodd to decline to pay the funds so Mr Mason would be adjudicated bankrupt, thereby putting an end to this proceeding.
[37] The conduct of Mr Dodd as trustee in relation to this decision, and more generally, is not in issue before me. It is a matter which Mr Mason will argue in the Court of Appeal. There is incomplete evidence before me on the trust arrangements
19 Triezenberg v Mason [2019] NZHC 14, (2019) 5 NZTR 29-001.
and Mr Dodd’s performance of his obligations as trustee. That is simply not relevant to this proceeding or this application.
[38] However, I do find this exchange relevant as it highlights the peculiarity of this situation, where the defendant/applicant here is the very same person who determines Mr Mason’s ability to meet an order for security for costs and/or an adverse costs order. It also shows Mr Dodd refusing to give Mr Mason financial aid to pay legal costs when Mr Mason is facing enforcement action in Australia and potential bankruptcy here. I make no comment on the correctness of that decision, as I do not have full evidence before me and it is not directly relevant to this application. But the fact remains that the request was made, and it was declined.
Conclusion
[39] I conclude that it would not be “just in all the circumstances” to require Mr Mason to pay security for costs for the following reasons:
(a)He has used all his personal funds to pay earlier judgment debts and costs awards.
(b)Having transferred all his assets into the Mamari Trusts and now been removed as trustee, he has no way of meeting a security of costs award other than by asking the remaining trustees.
(c)He previously asked the trustees to pay the outstanding judgment debts and costs awards (to avoid enforcement action and bankruptcy), and Ms Triezenberg recused herself and Mr Dodd declined.
(d)The trustee of Mamari (No 2) Trust who has control over whether Mr Mason can meet an adverse costs award and a security for costs order is the defendant in this proceeding and the applicant for security.
(e)While Mr Mason’s claim undoubtedly faces significant obstacles, he deserves the opportunity to have his claims in relation to the settlement of the trust in 1994 and resettlement of the trust in 2013 heard.
(f)An order for security for costs may deprive him of that opportunity.
(g)The suggestion of an order for security and a stay of the proceeding pending the outcome of the Court of Appeal does not address this risk, as Mr Mason may not be successful in the Court of Appeal, in which case he remains dependant on Mr Dodd for access to funds to pay costs.
Result
[40]The application for security for costs is dismissed.
[41] Mr Mason is entitled to his costs on this application on a 2B basis. Mr Thwaite sought costs with a 50 per cent uplift. I do not consider that justified in the circumstances. Mr Dodd did not act unreasonably by bringing this application. He established the first limb of the test, that of Mr Mason’s inability to pay, and Mr Mason’s claim does face significant obstacles.
[42] The parties are to file an agreed memorandum within two weeks. Failing agreement, the plaintiff is to file a memorandum within two weeks and the defendant one week later.
Associate Judge Gardiner
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