Reid v Caterton Auto Court Limited T/A McKenzie Motors HC Masterton CIV 2010-435-120

[2011] NZHC 1717

IN THE HIGH COURT OF NEW ZEALAND MASTERTON REGISTRY

CIV 2010-435-120

UNDER  the Judicature Act 1908, the Judicature Amendment Act 1972, the Declaratory Judgments Act 1908, the Credit (Repossession) Act 1997, the Land Transfer Act 1952, and the New Zealand Bill of Rights Act 1990

IN THE MATTER OF     the judicial review of judgments of the Masterton District Court Registrar and the Masterton High Court Sheriff

BETWEEN  JAMES ROBERT REID AND GRAEME FREDERICK HALE AS TRUSTEES OF THE FREDERICK FRANK FAMILY TRUST

Applicants

ANDCARTERTON AUTO COURT LIMITED TRADING AS MCKENZIE MOTORS First Respondent

ANDMASTERTON DISTRICT COURT Second Respondent

ANDMASTERTON HIGH COURT Third Respondent

Hearing:         On the papers

Counsel:         G F Hale for the Applicants

A Hewton for the First Respondent
T Warburton for the Second and Third Respondents

Judgment:      1 December 2011

JUDGMENT OF MALLON J

REID v CARTERTON AUTO COURT LIMITED TRADING AS MCKENZIE MOTORS HC MAS CIV 2010-

435-120 1 December 2011

[1]      A number of interlocutory matters are before me for determination on the papers.

Mr Reid as a party

[2]      The first matter concerns whether Mr Reid should be added as a party.  The second and third respondents submit that the application to add Mr Reid has not been brought properly.  This is on the basis that they understand that a filing fee has not been paid.  If a filing fee has not been paid, that is a matter for the registry to pursue with the applicants.   An application has been filed and it is before me for consideration.  I proceed to consider it.

[3]      As set out in my minute dated 4 October 2011:

Mr Reid was struck out as a party and was not permitted to act as advocate for the applicants.   Since then he had been appointed a trustee of the trust and he and Mr Hale now seek that he be added as a party.  It appears that this is intended to enable Mr Reid to act “in person” in this matter.  This is despite the previous directions from the Court that Mr Reid does not have the necessarily skills to assist Mr  Hale  and  that  he  had  already  incurred  unnecessary  cost  to Mr Hale and the respondents.

If any order adding Mr Reid as a party is to be made, it would be made under r 4.52. ...

[4]      Rule 4.52 applies if, after a proceeding has commenced:

(a)       There is an event causing a change or transmission of interest or liability; or

(b)      An interested party comes into existence:

which makes it “necessary or desirable” that a person be made a party.

[5]      In this case Mr Reid was not a trustee when the proceeding was commenced. He has now been made a trustee.  As such there has been a transmission of interest and/or an interested party has come into existence.  The question then is whether it is necessary or desirable that Mr Reid be added.  The first respondent submits that it is

not “desirable” that Mr Reid be added because it is clear that he has been made a trustee in order that, in effect, he be able to represent Mr Hale when he does not have the necessary skills or attributes to do so.

[6]      While I agree that it may not be “desirable,” the addition of Mr Reid is now “necessary”.  That is because, as is provided for in r 4.23, it is the trustees that may sue on behalf of the trust and, unless there is a provision in the trust deed to the contrary, the trustees exercise their powers jointly.[1]     I have not received any submissions to the effect that under the trust deed the powers may be exercised by one trustee acting alone.

[1] Philip H Pettit Equity and the Law of Trusts (11th ed, OUP, New York, 2009) at 400 to 401.

[7]      The only other point raised in opposition is a query as to whether there is a further  trustee  of  the  trust  who  may  not  be  aware  of  Mr  Reid’s  involvement. However the applicants have responded with evidence, which they submit shows that Mr Hale and Mr Reid are the only trustees.  If that is not in fact the case, then that is a matter as between the trustees rather than a matter for this Court.

[8]      None of the grounds of opposition being made out, Mr Reid is now added as an applicant in his capacity as a trustee of the trust.

Security for costs

[9]      The first respondent applies for security for costs on the grounds that there is reason to believe that the applicants will be unable to pay costs if they are unsuccessful in the proceeding (r 5.45(1)(b)).   The applicants have offered to pay security in the sum of $1880 but this has been rejected by the first respondent, which seeks security in the sum of $26,000.

[10]     The applicants were directed to file a statement of the trust’s assets and liabilities but have not done so.  The applicants were also to provide details of the mortgage held by the trust over Mr Hale’s property.  The applicants have provided a copy of the certificate of title which records two mortgages on the property.  One of

those is in favour of “Mortgage Holding Trust Company Limited”.  The other is in

favour of Mr Hale.  No detail of the mortgages has been provided other than that Mr

Hale’s mortgage is said to secure Mr Hale’s “tenancy and occupancy”.

[11]     The applicants have had the opportunity to provide evidence that they will be able to meet costs if they are unsuccessful in their claim.  The information provided is inadequate.  There are therefore grounds to make an order.  The question is how much security ought to be ordered.  The amount claimed by the first respondent is based on third schedule costs through to a defended hearing on a category 2B basis. The applicants offer is based on the amount of security that would be ordered if this proceeding were an appeal.

[12]     The applicants say that the Court cannot determine whether the “defence is weak relative to the claim” because no defence has been filed.  However Mr Hale has rejected advice from a lawyer and has terminated his services.  It appears that Mr Hale is instead relying on “advice” from Mr Reid who is not qualified and in respect of whom it has been said does not have the necessary skills or attributes to represent him. Against this background the Court cannot have much confidence that the claim is a strong one.   That  will, however, be a matter for the Judge who hears the proceeding to determine in light of the evidence and submissions presented.

[13]     The applicants say that the trust’s limited resources have been caused by the respondents.  I accept that can be a relevant factor.  However, it has less weight when the claim brought is not a strong one.

[14]     I consider that the amount claimed by the first respondent is too high.  It is based on a three day hearing when the hearing should take no more than one day.  It is based on category 2B costs when the matter should be straightforward.  It seeks costs through to the end of the hearing, when staged security would meet the first respondent’s concerns.  I order security in the sum of $3750.  I have calculated this sum on the basis of three days preparation at the daily rate of $1250.   The first respondent may make a further application for security when interlocutory steps have been completed and the proceeding is ready to be heard.

Costs

[15]     The respondents seek an order for costs relating to matters heard by Ronald Young J on 15 September 2010.  At that time the Judge reserved costs.  The first respondent also seeks costs in relation to the summary judgment application.  That application was dismissed by Miller J on 11 October 2010 without it being necessary for the respondents to take any steps in relation to that application.

[16]     The first respondent has not correctly applied the third schedule.  The steps are as per the second and third respondent’s memorandum.     But in any event I consider the appropriate course is to continue to reserve costs on the steps to date.  I note that the applicants have now been successful in the application to add Mr Reid as a party (albeit through the step of adding Mr Reid as a trustee and despite the Court’s comments that Mr Reid does not have the necessary skills or attributes to act for the trust in this proceeding).   I also note that, although the first respondent is successful in its application for security for costs, the sum ordered is closer to what the applicants had offered than what was claimed by the first respondent.

Particulars of fraud

[17]     I note that particulars of fraud have been requested and the applicants have responded to this request.  No order is sought in respect of this.

Next steps

[18]     The applicants will need to pay the security for costs that has been ordered. Once that has been done timetable orders should be put in place for this proceeding. The parties may file a memorandum proposing the timetable orders for consideration of the Duty Judge on the papers.

Mallon J