McGowan v Kennington

[2013] NZHC 2366

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV 2013-409-001471 [2013] NZHC 2366

BETWEEN  ANDREW CLIFFORD McGOWAN and KIRSTIE ANNE KENNINGTON Plaintiffs

ANDSHANE ALLEN KENNINGTON Defendant

Hearing:                   3 September 2013

Counsel:                  JWA Johnson for Plaintiffs

N Till QC for Respondent

Judgment:                11 September 2013

COSTS JUDGMENT OF WHATA J

[1]      Andrew McGowan and his daughter, Kirstie Kennington, are trustees of the Kennington Family Trust.   Shane Kennington, Kirstie’s former partner, is also a trustee of the Kennington Family Trust.  The main asset of the Trust is a property located in Avonside and within the Red Zone.  The property is subject to a sale and purchase agreement with the Crown.  Mr McGowan and Kirstie wanted to settle on the sale, while Shane did not.  Mr McGowan and Kirstie sought, under urgency, an order for mandatory interim injunction, in effect forcing Shane to settle on the sale and purchase agreement.   Happily the trustees reached agreement on the second allocated day of the hearing before me on terms attached to this judgment. (An earlier  agreement  reached  on  the  first  allocated  day  of  hearing  could  not  be finalised.)  Unhappily they do not agree about costs.

[2]      Mr McGowan and Kirstie seek to be indemnified from the Trust and for an order to be made against Shane for increased or indemnity costs. They say that

Shane never had a proper basis to refuse to settle. To the extent that he had a claim

McGOWAN and KENNINGTON v KENNINGTON [2013] NZHC 2366 [11 September 2013]

against the trust, he should have commenced his own proceedings rather than put the trust in jeopardy by refusing to settle.

[3]      Shane responds that the costs of all trustees should be paid out of the trust. He says that implicit in his agreement to sell was a commitment to assist him to find alternative accommodation for him and the children (being the final beneficiaries of the trust). He says he had no option but to refuse to settle because he could not afford to find alternative accommodation.

[4]      I make the following orders:

(a)      The plaintiff trustees’ costs shall be indemnified out of the trust up to and   including   the   second   allocated   day   of   the   hearing.   The proceedings were a prudent course to take to protect the assets of the trust for the benefit of the beneficiaries.

(b)The defendant’s costs shall be indemnified out of the trust up to and including the second allocated day of the hearing, reduced by 10% to reflect the Court’s concern at his conduct as a trustee and refusing to settle. I accept however that he has been partially successful in resolving his claim also based on the interests of the beneficiaries, thereby avoiding the full cost of any associated litigation.

(c)      I refuse to make any orders for costs against either party. Ultimately I am satisfied that both sides had legitimate concerns which have been vindicated by the settlement.

[5]      The parties are to agree quantum. There shall be orders accordingly.

Solicitors:

Wynn Williams, Christchurch

Murray Withers & Associates, Christchurch