Ryan v Lobb
[2024] NZHC 1997
•19 July 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-1591
[2024] NZHC 1997
BETWEEN VERENA COLLEEN RYAN
First Plaintiff
DIGBY JOHN NOYCE
Second PlaintiffAND
STUART JAMES LOBB
First Defendant
LOCKHART TRUSTEE SERVICES NO. 56 LIMITED
Second DefendantWAG TRUSTEES (2020) LIMITED
Third Defendant
Hearing: 26 February and 30 April 2024 (plus subsequent memoranda in May 2024) Appearances:
L W Dixon for the First Plaintiff
H Thompson for the Second Plaintiff (appearance excused during hearing)
R Latton for the First Defendant
No appearance for the Second or Third DefendantsJudgment:
19 July 2024
JUDGMENT OF GAULT J
This judgment was delivered by me on 19 July 2024 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
RYAN v LOBB [2024] NZHC 1997 [19 July 2024]
TABLE OF CONTENTS
Introduction [1]
Factual background [12]
Hinton J’s substantive decision of 6 April 2023 [13]
Subsequent events [18]
Related costs judgments [37]
Receiver’s costs and apportionment sought [39]
The Court’s jurisdiction to apportion the receiver’s costs [48] Mr Stuart Lobb’s involvement in the steps causing the receiver’s costs [53] Whether Mr Lobb’s involvement can be attributed to the Lothbury
Trust in this resettlement context [73]
Conclusion on apportionment [77]
Other issues
Stakeholder Amount [79]
Ms Ryan’s outstanding costs [80]
The reasonableness of Lockhart’s costs [81] Result [82]
Costs [83]
Introduction
[1] This judgment addresses the apportionment of the costs of a Court-appointed receiver of family trust assets in the context of a long-running dispute following a relationship breakdown between the first plaintiff (Ms Ryan) and the first defendant (Mr Stuart Lobb).
[2] The apportionment issues arise on Ms Ryan’s application dated 6 November 2023, which sought orders:
(a)That the costs and disbursements (including solicitors’ costs and disbursements) of Mr Digby John Noyce1 (receiver) as receiver of the Lothbury Trust2 in the receivership be apportioned in such manner as the Court considers appropriate so as to:
(i)charge against the share to be retained within the Lothbury Trust after the resettlement contemplated by cl 2.5(3) of the trust deed (resettlement) on the trustees of the Verena Ryan Family Trust such amount or such proportion of his costs which, having regard to the conduct of Mr Stuart Lobb and parties associated with him, it would be inequitable to be borne by the trustees of the Verena Ryan Family Trust; and
(ii)charge the balance of his costs against the Lothbury Trust fund prior to the resettlement.
(b)Directing that the costs of and incidental to this application be charged against and deducted from the share of the Lothbury Trust remaining after the resettlement.
1 The second plaintiff.
2 On 27 July 2020, Edwards J removed the trustees of the Lothbury Trust (Ms Ryan, Mr Stuart Lobb and Lockhart Trustee Services No. 56 Ltd) and appointed the receiver in a separate proceeding: Lockhart Trustee Services No 56 Ltd v Ryan (as Trustee of Lothbury Trust) [2020] NZHC 1823 at [40]-[41].
[3] Ms Ryan’s application was made pursuant to leave reserved in the substantive judgment of Hinton J dated 6 April 2023.3 The application was supported by an affidavit from Ms Ryan.
[4] The receiver did not wish to incur further costs in relation to Ms Ryan’s application but counsel for the receiver, Mr Thompson, filed a memorandum indicating that the receiver is broadly supportive of the application. The receiver considered it would be inequitable for all of his remuneration and expenses to be met from the Lothbury Trust fund before it is divided in terms of Hinton J’s judgment.
[5] No notice of opposition was filed, but on 8 December 2023 Mr Stuart Lobb (who was self-represented at the time) filed an appearance under protest to jurisdiction. This was not accompanied by any evidence. Ms Ryan treated the protest to jurisdiction as a notice of opposition and filed a reply affidavit.
[6] In Hinton J’s absence, Ms Ryan’s application came before me for hearing on 26 February 2024. Mr Stuart Lobb was by then represented by Mr Latton. The protest to jurisdiction was not pursued.
[7] At the hearing, as indicated in my minute of 26 February 2024, I considered that Mr Stuart Lobb should have a further opportunity to file evidence responding to one issue raised; that is, whether he disputes that he had involvement in the steps taken by other parties associated with his family. I made timetable orders.4
[8] As indicated in my minute of 18 March 2024, Mr Stuart Lobb did not provide an affidavit but his brother, Mr Blair Lobb, did so. Ms Ryan filed an affidavit in reply.5 I made further timetable directions for supplementary written submissions, an updating memorandum from the receiver in relation to further costs incurred, and for a further submissions-only hearing.6
3 Ryan v Lobb [2023] NZHC 689 at [179].
4 Ryan v Lobb HC Auckland CIV-2019-404-1591, 26 February 2024 (Minute) at [3]-[4].
5 Ryan v Lobb HC Auckland CIV-2019-404-1591, 18 March 2024 (Minute) at [2].
6 At [5].
[9] The further hearing took place on 30 April 2024. As recorded in my minute of 1 May 2024, I also made timetable orders in respect of any other applications.7 This was to ensure that all remaining issues – including any issue as to the reasonableness of the receiver’s costs – could be addressed together and to avoid issues being raised piecemeal. No further applications were filed.
[10] However, Ms Low for the second defendant (Lockhart) filed a memorandum dated 20 May 2024 seeking confirmation that the costs it seeks under its former trustee’s indemnity are reasonable. In my minute of 28 May 2024, I made a timetable direction for any response to this.8 No response was filed.
[11] Thus, this judgment determines the reasonableness of Lockhart’s costs as well as apportionment of the receiver’s costs. I deal first with the receiver’s costs.
Factual background
[12] The factual and procedural background is set out in detail in the 6 April 2023 judgment of Hinton J,9 and need not be repeated in full. For present purposes, it suffices to repeat the following:
[2] The parties were married in January 2000 and separated in October 2016. The bulk of their property had been transferred to a trust settled in 2005 (the Lothbury Trust).
[3] The trust deed made express provision for the breakdown of their relationship. Clause 2.5(3) provided that:
If the Settlors separate (or their marriage is legally dissolved), either Settlor may give the Trustees written notice requiring them to resettle (on new Trusts acceptable to the Settlor who has given notice) such part of the Trust assets as the Trustees consider fair and equitable having regard to the respective contributions of the Settlors (whether by gifting, inheritance or otherwise) to the total assets of the Trust.
[4] In September 2017, Ms Ryan gave notice to the trustees under cl 2.5(3) requiring resettlement of half of the trust assets on a new trust she had settled (the Verena Ryan Family Trust). That was strongly opposed by Mr Lobb.
7 Ryan v Lobb HC Auckland CIV-2019-404-1591, 1 May 2024 (Minute) at [2](c).
8 Ryan v Lobb HC Auckland CIV-2019-404-1591, 28 May 2024 (Minute) at [4].
9 Ryan v Lobb [2023] NZHC 689.
[5] In October 2017, Ms Ryan requested arbitration in accordance with the terms of the trust deed. Mr Lobb rejected this request, asking instead that the parties attend mediation.
[6] In June 2019, Ms Ryan again requested that Mr Lobb and the other trustees attend arbitration. That was rejected.
[7] In August 2019 Ms Ryan filed this proceeding seeking a declaration as to the construction of cl 2.5(3).
Hinton J’s substantive decision of 6 April 2023
[13] Hinton J identified that the only asset of the Lothbury Trust of any value still in existence at the time of separation was a property at 23 Orakei Road, Remuera.
[14] After addressing the meaning of cl 2.5(3) of the trust deed, Hinton J dealt with the settlors’ claimed contributions to the assets of the Lothbury Trust. She concluded their contributions were equal. She also rejected a claim by Mr Stuart Lobb that his father (Mr Warwick Lobb) was always the beneficial owner of Ms Ryan’s share in the home at 23 Orakei Road.10 The reasons for rejecting that claim included that Mr Warwick Lobb had not made any such claim, and that Ms Ryan contributed a much greater sum than any cash contribution Mr Warwick Lobb may have made to the purchase of 23 Orakei Road, by way of funds borrowed from Westpac and applied to the purchase of that property.11
[15] Hinton J made orders to implement resettlement of the Trust’s assets, including:12
3.Mr [Stuart] Lobb and others occupying 23 Orakei Road, Remuera are to provide vacant possession to the receiver within two months of the date of this judgment.
4.The receiver is directed to sell 23 Orakei Road at such a price and upon such terms as he thinks fit.
5.50 per cent of the sum reached by deducting from the gross sale price only the costs of sale, the receiver’s costs and the sum of $1.4m,13 is to be paid to the Verena Ryan Family Trust.
10 Ryan v Lobb [2023] NZHC 689 at [154]-[164] and [168].
11 At [155] and [157].
12 At [176].
13 $1.4m was the amount of debt accepted to be secured by a mortgage initially in favour of Westpac but subsequently assigned - see further below at [18].
[16] Hinton J reserved leave to the receiver, Ms Ryan and/or Mr Stuart Lobb to seek further orders or directions.14
[17]Finally, Hinton J stated that all orders were to be implemented without delay.15
Subsequent events
[18] Unfortunately, there have been a number of subsequent complications thwarting implementation of Hinton J’s orders without delay, as further Court judgments show. The first series of post-judgment events involved the third defendant, WAG Trustees (2020) Ltd (WAG), which had taken an assignment from Westpac of the mortgage registered over 23 Orakei Road soon after the receiver was appointed.16 These events were summarised in the judgment of Edwards J dated 19 June 2023 on the receiver’s application for declarations and orders in relation to the mortgage and Mr Stuart Lobb’s application to stay Hinton J’s judgment pending determination of an appeal:17
[29]The Judgment was delivered on 6 April 2023.
[30] Two days later, on 8 April 2023, WAG purported to issue a PLA notice under s 119 of the PLA. The receiver and Ms Ryan contend there are deficiencies with this notice and it was not served on all the registered proprietors of the Property. Mr Warwick Lobb has sworn an affidavit in which he accepts the deficiencies in the notice.
[31] On 2 May 2023, the receiver applied for various orders pursuant to the leave reserved by Hinton J. Downs J made some of the orders sought on 4 May 2023 including an injunction in the following terms:
Injuncting WAG Trustees (2020) Limited from taking any steps under its notice dated 8 April 2023, purportedly given to the plaintiff and to the first defendant under section 119 of the Property Law Act 2007; or under mortgage 9977107.3; or both, pending further order of the Court.
[32] The hearing of the current applications took place on Wednesday, 24 May 2023. The decision was reserved.
[33] Following that hearing, Mr Blair Lobb (Mr Lobb’s brother, and the son of Mr Warwick Lobb) purported to act on behalf of WAG by issuing trespass notices to the other registered proprietors of the Property (Ms Ryan
14 Ryan v Lobb [2023] NZHC 689 at [177]-[179].
15 At [180].
16 WAG is the sole trustee of a family trust associated with Mr Warwick Lobb.
17 Ryan v Lobb [2023] NZHC 1518.
and Lockhart) and purporting to issue a notice of mortgagee in possession. Those notices were subsequently withdrawn, with an acknowledgement that WAG was no longer in possession and that the injunction prohibited any steps being taken on the PLA notice or Mortgage pending further order of the Court.
[34] Finally, and for completeness, I record that Mr Lobb commenced a proceeding against Ms Ryan for contribution to the repayment of the Westpac loan. Ms Ryan’s protest to jurisdiction on the grounds that the claim fell within the exclusive jurisdiction of the Family Court was upheld, and the High Court proceedings were dismissed.
[19]Edwards J made orders (including):18
(a)Declaring that the registered proprietors of the land in Identifier NA52A/1231, with the street address of 23 Orakei Road, Remuera (Property) do not owe any money or other obligation to [WAG].
(b)Declaring that Mortgage Instrument 9977107.3 of which [WAG] is the registered mortgagee does not secure the repayment of any debt or the performance of any obligation whether of the registered proprietors of the Property or Mr Lobb or at all.
(c)[WAG] shall take all reasonable steps without delay to discharge the Mortgage pursuant to s 83 of the Property Law Act 2007.
[20] Edwards J also dismissed Mr Stuart Lobb’s application for a stay pending appeal of Hinton J’s judgment.19 The appeal was subsequently deemed abandoned.
[21] On 10 July 2023, the receiver obtained a possession order in respect of 23 Orakei Road.
[22] On 28 July 2023, Edwards J delivered a further judgment.20 As steps to discharge the mortgage had not been taken, the receiver sought an order that WAG discharge the mortgage within five working days of the grant of the order, failing which the registrar execute a discharge of the mortgage on behalf of WAG. In the meantime, WAG had filed a notice of appeal against that part of Edwards J’s 19 June 2023 judgment relating to the mortgage and an application for a stay pending appeal. Edwards J made the following order:
18 Ryan v Lobb [2023] NZHC 1518 at [94].
19 At [95].
20 Ryan v Lobb [2023] NZHC 1998.
[13] The order I made at [94(b)]21 of my substantive judgment shall have effect as if it were a duly executed mortgage discharge instrument under s 83 of the Property Law Act 2007. This order shall lie in Court pending determination of WAG’s application for a stay of the substantive judgment pending appeal, or further order of the Court.
[23] On 4 August 2023, the receiver finally took vacant possession of 23 Orakei Road.
[24] On 21 August 2023, Lothbury Management Ltd (LML) lodged a caveat against 23 Orakei Road. Mr Stuart Lobb was the sole director and shareholder of LML.
[25] On 23 August 2023, WAG and Mr Warwick Lobb lodged caveats. These were subsequently withdrawn by agreement, including that no further caveat was to be filed.
[26] On 1 September 2023, Powell J dismissed WAG’s application for a stay of execution of part of Edwards J’s judgment of 19 June 2023.22 Powell J also made the following orders:
[17] Notwithstanding the dismissal of the stay application, I consider the orders proposed by the receiver are in any event appropriate and make the orders as follows:
(a)Promptly following settlement of his sale of the [property], the receiver will pay WAG, in cleared funds, without deduction, in the sum of $1,400,000, as contemplated in the judgment of Hinton J, delivered on 6 April 2023.
(b)In addition to paying WAG the sum of $1,400,000 referred to in (a) above, the receiver will, after first implementing order number 5, listed at [176] of the judgment of Hinton J, withhold from net proceeds of the sale of the Property a further amount (‘the Stakeholder Amount’), being the sum of:
(i)$105,963.75, which is the difference between the sum of [$1,505,963.75] (being the total amount advanced by WAG to [Mr Stuart Lobb] under a deed dated 3 September 2020) and the sum of $1,400,000; and
(ii)Whatever sum is due (as at the date of settlement of the receiver’s sale of the Property) to Norfolk Nominees Limited by WAG, by way of accrued interest (including interest paid to Norfolk Nominees by WAG — but not interest paid by [Mr Stuart Lobb] — and further accrued but unpaid interest) on the sum of $1,363,535.75 advanced by Norfolk Nominees
21 At [19](b) above.
22 Ryan v Lobb [2023] NZHC 2452 at [15].
Limited to WAG and on-lent by WAG to [Mr Stuart Lobb] provided that —
(iii)If the remaining net sale proceeds are less than the sum of the amounts in (i) and (ii) above, then the Stakeholder Amount will be that lesser amount.
(c)Either the receiver or his solicitors must hold the Stakeholder Amount in an interest bearing trust account pending the determination of WAG’s appeal in CA 388/2023, whereupon the receiver must deal with the Stakeholder Amount and any accrued interest on the Stakeholder Amount, in accordance with the Court of Appeal’s judgment, or if the appeal is abandoned, upon the further order of this Court.
(d)The Mortgage Discharge Order is hereby released from the date of this judgment, with the effect that the receiver may now use it to discharge WAG’s mortgage over the Property without any further delay or requirement.
[27] The receiver had listed 23 Orakei Road for sale by auction. Mr Stuart Lobb did not want the auction to go ahead. On 4 September 2023, he sent emails to real estate agents about the legal situation and the property, which gave rise to a contempt application.
[28]On 11 September 2023, the mortgage was discharged.
[29] On 20 September 2023, 23 Orakei Road was sold at auction to Pendrell Investments Ltd (Pendrell) for $3.69 million. Following this purchase, Pendrell was acquired by Lobb family interests. Pendrell lodged a caveat. Settlement of the sale to Pendrell was scheduled for 27 October 2023.
[30] On 13 October 2023, following a hearing on 11 October 2023, Powell J made an order by consent that the caveat lodged by LML be removed.23
[31] In the event, Pendrell was unable to settle; it forfeited the deposit, and the receiver cancelled the contract. The receiver subsequently entered negotiations with other bidders from the auction which resulted in a further sale to an unrelated third party for $3.05 million. Settlement was scheduled for 20 December 2023.
23 Noyce v Lothbury Management Ltd HC Auckland CIV-2023-404-2082, 13 October 2023 (Minute).
[32] In a further judgment dated 8 December 2023, Powell J decided that Mr Stuart Lobb’s 4 September 2023 emails sent to real estate agents were a deliberate attempt to obstruct the sale of the property and were a contempt of court.24 The receiver was granted power to execute all documents and take all steps necessary to transfer the property to a purchaser upon settlement of the receiver’s intended sale.25
[33] By 13 December 2023, several further caveats had been lodged against 23 Orakei Road by Lobb family interests in addition to Pendrell’s caveat – by Mr Stuart Lobb, LML (its second caveat), the WAG Trust, Mr Warwick Lobb and the Mattson Partnership. On 19 December 2023, Powell J delivered judgment on the receiver’s originating application in respect of these caveats. Powell J removed all these caveats and ordered that:26
[71] No member of the wider Lobb family, (including Stuart Lobb, Warwick Lobb, Blair Lobb, or Gareth Lobb) and/or any of the entities of which they are directors and shareholders (including Lothbury Management Limited and WAG Trustees (2020) Limited) is to make, file, lodge, or otherwise purport to file or lodge a caveat against the title of 23 Orakei Road, Remuera (being the land in identifier NA52A/1231) unless leave (in advance) is granted by the Court.
[34] Settlement of the sale and purchase of 23 Orakei Road took place on 20 December 2023. The sale price after deducting costs of sale and the receiver’s costs was $2,489,307. The receiver’s distribution schedule dated 21 December 2023 shows that this was applied as follows:
(a)paying $1.4 million to WAG;
(b)setting aside $250,000 as a reserve to meet anticipated costs in concluding the receivership;
(c)paying the trustees of the Verena Ryan Family Trust $419,653.79 (referred to in the schedule as due to Ms Ryan);
(d)paying Ms Ryan $27,600 proceeds of sale of antique furniture;
24 Ryan v Lobb [2023] NZHC 3595 at [26] and [30].
25 At [33].
26 Noyce v Pendrell Investments Ltd [2023] NZHC 3778.
(e)setting aside $392,053.79 as the Stakeholder Amount referred to in Powell J’s 1 September 2023 judgment; and
(f)recording $419,653.79 as being due to Mr Stuart Lobb (meaning the Lothbury Trust’s residual share).
[35] Since then, the receiver has continued to incur costs, including in relation to an issue with storage of chattels.
[36] Also, despite the Court’s 4 May 2023 injunction and the subsequent orders in relation to discharge of the mortgage, and appeals being abandoned, WAG has continued to file in Court purported reports by the “Mortgagee in Possession” (dated 31 July 2023, 31 October 2023, 31 December 2023 and 31 March 2024).
Related costs judgments
[37] The Court has also made various costs orders in this proceeding and in the receiver’s caveat removal proceedings:
(a)Following the judgment of 6 April 2023, Hinton J made costs orders on 29 February 2024:27
[37] Costs of $76,969.5 are to be borne from the trust fund prior to resettlement, together with disbursements of $110.
[38] Ms Ryan is awarded indemnity costs in the sum of $444,135 inclusive of GST.
[39]Disbursements of $17,518.43 are allowed.
[40] I have not received submissions as to whether an order is sought regarding payment out of Mr Lobb’s share of the trust fund of the sums referred to at paras [38] and [39] and leave is reserved in that regard.
27 Ryan v Lobb [2024] NZHC 386. As this costs order affected the distribution which the receiver had made following settlement of the sale of 23 Orakei Road, I made a direction on 28 May 2024 as sought by the receiver that he pay Ms Ryan the sum of $38,539.75 from the Stakeholder Amount in order to satisfy the direction at paragraph [37] of Hinton J’s costs judgment dated 29 February 2024.
(b)Following the judgment of 19 June 2023, Edwards J made costs orders on 16 November 2023:28
[21]Ms Ryan is awarded the following costs:
(a)Scale costs in the sum of $12,906 plus disbursements in the sum of $147.80. [Mr Stuart Lobb and WAG] are jointly and severally liable for these costs and disbursements.
(b)Indemnity costs in the sum of $3,596.25 plus GST. [WAG] is liable for these costs.
[22]The receiver is awarded the following costs:
(a)Scale costs in the sum of $13,384 plus disbursements in the sum of $1,320.18. The [Mr Stuart Lobb and WAG] are jointly and severally liable for these costs and disbursements.
(b)Indemnity costs in the sum of $3,000. [WAG] is liable for these costs.
(c)In a further costs judgment dated 31 May 2024, Edwards J addressed an outstanding application for costs by Lockhart, awarding indemnity costs in favour of Lockhart against WAG of $2,400 excluding GST. 29
(d)Powell J’s 13 October 2023 order by consent that LML’s caveat be removed included an order that LML pay the receiver costs and disbursements of $12,992.47.30
(e)Following the judgments of 1 September, 8 December and 19 December 2023, Powell J awarded costs on 17 May 2024:31
[25] For the reasons set out in this judgment I award costs on the three judgments as follows:
(a)On the WAG stay judgment WAG is to pay costs
$8,030.40 together with disbursements of $110, a total of $8,140.40 to the receiver.
28 Ryan v Lobb [2023] NZHC 3239.
29 Ryan v Lobb [2024] NZHC 1409 at [8]-[9].
30 Noyce v Lothbury Management Ltd HC Auckland CIV-2023-404-2082, 13 October 2023 (Minute).
31 Ryan v Lobb [2024] NZHC 1237.
(b)On the Stuart Lobb contempt judgment Stuart Lobb is to pay costs in the sum of $30,107.50 to the receiver with disbursements in the sum of $572.45 a total of
$30,679.95; and
(c)On the caveat removal judgment Stuart Lobb, Warwick Lobb, Pendrell Investments Ltd, Lothbury Management Limited, and WAG Trustees (2020) Ltd are jointly and severally liable to pay costs to the receiver in the sum of $49,195.
[38] Thus, in relation to the steps taken since the substantive judgment of Hinton J, the receiver has been awarded costs and disbursements totalling $118,712. Of this, Mr Stuart Lobb is liable (individually or jointly and severally) to the extent of
$94,579.13. These costs are not the receiver’s full indemnity costs. Also, the costs orders do not address the issue of apportionment raised by Ms Ryan’s application.
Receiver’s costs and apportionment sought
[39] The starting point is that the order made by Edwards J on the appointment of the receiver in 2020 was for the receiver’s remuneration and reasonable costs to be met out of the assets of the Lothbury Trust.32
[40] The effect of Hinton J’s order to deduct the costs of sale and the receiver’s costs from the gross sale price is, for all practical purposes, that Ms Ryan and Mr Stuart Lobb bear those costs equally. As Mr Dixon, for Ms Ryan, acknowledged, that would have been entirely just and equitable if the parties had cooperated with the receiver to give effect to the judgment (subject to proper steps such as exercising any rights of appeal in a timely fashion).
[41] However, Mr Dixon submitted that Mr Stuart Lobb and his associates have done everything in their power to delay and hinder the receiver in the execution of his duties, and ultimately to deny Ms Ryan the fruits of her judgment.33 He submitted that their conduct has caused the receiver’s costs to balloon enormously. The receiver’s
32 Lockhart Trustee Services No 56 Ltd v Ryan (as Trustee of Lothbury Trust) [2020] NZHC 1823 at [41](c).
33 Mr Dixon also referred to the receiver’s costs associated with securing 23 Orakei Road and storage of various items disclaimed by Ms Ryan.
memorandum supports this position. The receiver considers that 70-80 per cent of his time has been spent dealing with the Lobb parties and issues presented by them.
[42]By 21 December 2023, the receiver’s costs and disbursements totalled
$660,746 excluding land agents’ fees and disbursements of $192,786, which made the receiver’s total costs and disbursements $853,532. The receiver has provided a breakdown of the costs, which have substantially increased since the judgment of Hinton J. No party has challenged the reasonableness of the receiver’s costs.
[43] Given the receiver’s breakdown, Mr Dixon sought to attribute $572,370 of the receiver’s costs to Mr Stuart Lobb, based on:
(a)75 per cent of the receiver’s costs of $512,194 incurred to 31 October 2023;
(b)85 per cent of the receiver’s costs of $148,560 incurred from 1 November to 20 December 2023; and
(c)$61,950 of the land agents’ costs of $122,637.
[44] As resettlement partially occurred on 21 December 2023, Mr Dixon confirmed at the further hearing that Ms Ryan only seeks apportionment in respect of the costs to that date. He accepted that, if the apportionment provides for the extra approximately
$286,000 (that is, 50 per cent of the $572,370), she has no further interest in the Lothbury Trust.
[45]Thus, Ms Ryan sought orders on the application:
(a)directing the receiver to recalculate the distribution schedule as at 21 December 2023 … on the basis that $572,370.00 is to be attributed to Mr Lobb and his family;
(b)determining the additional amount to be paid to the trustees of the Verena Ryan family trust and pay the same;
(c)consequentially, to restate the amount of the Stakeholder Fund;
(d)directing the receiver to report to the court as soon as convenient stating the amount of his further costs and disbursements including
solicitor's costs and disbursements from 20 December 2023 and his opinion (as a percentage) as to the appropriate apportionment thereof;
(e)leave to further apply should that be necessary.
[46] Mr Thompson’s initial 7 November 2023 memorandum said that, instead of spending further time and resources attempting to recover costs awards from the Lobb parties, the receiver proposed for the purposes of distribution of net sale proceeds notionally to treat those costs as monies recovered in the receivership. He said that would have the practical effect of increasing the distribution to Ms Ryan – the costs would form part of Mr Stuart Lobb’s share of the trust fund and it would be up to him to recover the costs from related parties. The receiver sought Court approval of this proposed arrangement. That was based on the assumption that after all costs were met there would still be a fund to return to Mr Stuart Lobb and his share would include the unpaid costs orders.
[47] However, the position has moved on somewhat. Mr Thompson’s updating memorandum of 23 April 2024 advised that the receiver’s legal costs had increased by
$21,928.81. He anticipated further costs of $10,000-$15,000. He also stated that if Ms Ryan obtains an order that the balance of the costs awarded to her by Hinton J be met from Mr Lobb’s share of the trust fund,34 that will exhaust the fund and leave a shortfall (subject to the $250,000 provision). Hence, the receiver proposed to take steps to recover unpaid costs orders.
The Court’s jurisdiction to apportion the receiver’s costs
[48] It is common ground that the Court has jurisdiction to apportion the remuneration of a Court-appointed receiver. Part 7, subpart 4 of the High Court Rules 2016 deals with Court-appointed receivers. Rule 7.62 relevantly provides:
7.62 Remuneration of receiver
(1)A receiver must be paid the remuneration fixed by a Judge.
(2)A Judge may, in the order appointing a receiver or in a later order, name the party or parties who must pay the remuneration and, if more than 1 party is named, the proportion to be paid by each party.
34 Ryan v Lobb [2024] NZHC 386 at [40]; see above at [37](a).
…
[49] Mr Dixon submitted that “remuneration” in this context is to be given an expansive construction to include costs and expenses incurred in the receivership.35 If not, he submitted there exists an equivalent power to apportion the receiver’s costs and expenses in the Court’s inherent jurisdiction. As Mr Latton accepted, r 7.62 is wide enough to cover the receiver’s costs and disbursements in this proceeding. In any event, under the Court’s inherent jurisdiction a Court-appointed receiver is entitled to be indemnified in respect of his costs and expenses, and his remuneration if he is entitled to be remunerated, out of the assets in his hands as receiver.36 Here, that means indemnified out of the assets of the Lothbury Trust.
[50] Given the trust resettlement context here, Mr Dixon also referred to the Court’s jurisdiction to apportion costs between beneficiaries of a discretionary trust discussed in Macnamara v Macnamara.37 In that case, following separation, consent orders had been made and independent trustees appointed to give effect to the orders including resettlement of trust assets. As a result of steps taken by one party to hinder the process, Wylie J held there was jurisdiction to vary the consent orders to determine what proportion of the costs was caused by either party and to permit the trustees to deduct any sum attributable to one or other from that that person’s share, relying on the principles set out in Monk v Burgess and Cochrane v Bettley.38 Acknowledging that Macnamara involved Court-appointed trustees, Mr Dixon submitted the principle was equally applicable to Court-appointed receivers.
[51] Mr Latton did not dispute that such apportionment could apply to the costs of a Court-appointed receiver, but he sought to distinguish the cases cited on two bases. First, that here Mr Stuart Lobb is not the cause of all the allegedly increased costs and,
35 In Rea v Omana Ranch Ltd [2012] NZHC 2639, [2013] 1 NZLR 587 at [21], n 9, Katz J noted that the parties appeared to proceed on the assumption that r 7.62 was directed to remuneration, costs and expenses, but it was unnecessary to determine whether this was so.
36 Capewell v Revenue & Customs Comrs [2007] UKHL 2, [2007] 1 WLR 386 at [21]; and Rea v Omana Ranch Ltd [2012] NZHC 2639, [2013] 1 NZLR 587 at [12]-[14].
37 Macnamara v Macnamara [2022] NZHC 547 at [77]-[81]; and Macnamara v Macnamara [2022] NZHC 1478 at [25].
38 Monk v Burgess [2019] NZHC 324, [2019] NZAR 534; and Cochrane v Bettley [2020] NZHC 2092.
second, even if he was, the beneficiaries of the Lothbury Trust will suffer rather than him.
[52] I deal with each of these issues next. But, in principle, I accept that the same equitable principles enabling apportionment of a trustee’s costs can apply in the context of a Court-appointed receiver’s costs. Each is entitled to be indemnified out of the relevant assets and the Court has power to determine what proportion of the costs was caused by either party and to permit the indemnified party (trustee or Court- appointed receiver) to deduct any sum attributable to one or other from that person’s share.
Mr Stuart Lobb’s involvement in the steps causing the receiver’s costs
[53] The first issue is whether Mr Stuart Lobb caused the receiver’s costs in question.
[54] At the initial hearing, Mr Dixon noted that Mr Stuart Lobb had not filed evidence opposing the application and in particular disclaiming his involvement in the steps taken by other parties associated with his family. Mr Dixon submitted that I should draw appropriate inferences and that it was inconceivable Mr Stuart Lobb’s family members would have taken the steps without his approval. Mr Dixon also sought to produce Mr Stuart Lobb’s closing submissions to Hinton J dated 7 September 2022 to support the inference that Mr Stuart Lobb was involved in the steps taken by his father, brother and associated entities which led to the receiver’s costs. He submitted that those submissions indicate Mr Stuart Lobb saw himself as representing other members of his family, including in particular his father. Mr Dixon also submitted that the Mortgagee in Possession reports were prepared by Mr Stuart Lobb, or with his involvement, and were presented on the basis that the mortgage secured every conceivable indebtedness to the Lobb family entities, involving the same arguments. He submitted there was a unity of interests between Mr Stuart Lobb and the Lobb family entities.
[55] As indicated, at the initial hearing I considered that Mr Stuart Lobb should have an opportunity to file evidence responding to the issue of whether he disputes that he had involvement in the steps taken by other parties associated with his family.
Following that opportunity, Mr Stuart Lobb did not file an affidavit but his brother, Mr Blair Lobb, did so.
[56] There is no doubt that if Mr Stuart Lobb, and his family members and associated entities who entered the fray, had not taken the inappropriate steps that they did, the receiver’s costs and expenses would not have been nearly as high as they are. However, I accept Mr Latton’s submission that apportionment cannot simply be determined on the basis of the receiver’s memoranda since they do not distinguish between the actions of Mr Stuart Lobb and those of other members of his family or associated entities. The cases relied on by Mr Dixon all deal with situations where a particular beneficiary of a trust or estate personally took unreasonable steps at the expense of another beneficiary – not where someone else has taken steps with the cost visited upon the beneficiary. It is common ground that costs can only be attributed to Mr Stuart Lobb on the basis of his actions or omissions, or where he was involved in the actions or omissions of his brother, father and associated entities (including WAG, Pendrell and LML). If they were acting independently of Mr Stuart Lobb to advance different interests, their conduct should not be attributed to him.
[57] Mr Latton identified 35 steps that have caused the receiver to incur additional costs and submitted that only five of them were directly attributable to Mr Stuart Lobb. He submitted the other steps were taken by Mr Blair Lobb, as a director of WAG (said to be owed more than the $1.4 million accepted by Hinton J) or Pendrell, or by Mr Warwick Lobb.
[58] Mr Dixon also relied on a series of emails from Mr Stuart Lobb to Ms Ryan to show that Mr Stuart Lobb was prepared to do anything in his power to ensure Ms Ryan received nothing from the Lothbury Trust. Those emails, dated from February 2019 to May 2021, indicate Mr Stuart Lobb’s spiteful attitude at the time they were sent. In those emails, he also asserts that his parents and brothers share his commitment – they had a common cause. In particular, on 5 February 2019 he said:
I want you to know my parents, brothers and I are all firmly resolved to ensure that you don’t get a single penny you are not entitled too [sic]. We are well prepared for the 3-7 year NZ legal process.
[59] I do not consider that these emails alone are sufficient to demonstrate that Mr Stuart Lobb was involved in the actions of others in 2023. I also do not consider that Mr Stuart Lobb’s voluminous September 2022 closing submissions to Hinton J should be treated as evidence as to his involvement in subsequent steps.
[60] The affidavit of Mr Blair Lobb dated 4 March 2024 maintained that WAG and Mr Warwick Lobb had advanced significant (unspecified) sums in relation to 23 Orakei Road and that they were left in a difficult position following Hinton J’s orders. He said that WAG took steps to protect its mortgage – entering into possession and opposing the receiver’s application to remove the mortgage from the title – and that his brother was not involved in these steps. He said that he and his father took those steps as directors of WAG. He also said that Mr Stuart Lobb was not involved in Pendrell, that he and his father are the directors and shareholders and that Mr Stuart Lobb has disagreed with a number of the steps they took. Mr Blair Lobb confirmed that he and his father are independent of Mr Stuart Lobb.
[61] In the absence of cross-examination, I do not make credibility findings in relation to Mr Blair Lobb’s evidence about Mr Stuart Lobb’s lack of involvement in the steps taken by WAG and Pendrell. Even so, the continued assertion that WAG and Mr Warwick Lobb are owed a significant sum is inconsistent with the findings in the Court’s earlier judgments referred to above. Also, for the purposes of this apportionment application, “involvement” in the steps that caused the receiver additional cost is not limited to the formal actions of directors or shareholders (as the controlling mind of each entity). It does not require an assessment of who principally caused each step. It suffices for this purpose if Mr Stuart Lobb has had involvement such as encouraging or assisting his brother or father to take the steps that they or their associated entities took. Mr Blair Lobb’s affidavit does not deny involvement of that sort.
[62] As indicated, Mr Latton accepts that five steps were directly attributable to Mr Stuart Lobb – having to be removed from 23 Orakei Road by possession order and his lodging of caveats in December 2023. However, the evidence indicates that Mr Stuart Lobb had wider involvement in the steps that caused the receiver additional cost. At least during July and August 2023 when the Lobb family were expressing
interest in purchasing 23 Orakei Road, they were represented by the same lawyers. On 31 August 2023, LML lodged a caveat. On 21 September 2023, Mr Stuart Lobb raised claims by LML and sent invoices to the receiver claiming deductions from the purchase price for 23 Orakei Road. His affidavit of 26 September 2023 opposing the receiver’s application for removal of the caveat lodged by LML (addressed in Powell J’s judgment of 19 December 2023 referred to above at [33]) said that he was the sole director and shareholder of LML. In relation to sale of 23 Orakei Road, he said that:
It is not satisfactory for the Property to be sold and the proceeds held by the Applicant pending resolution of LML’s claims as set out above. This is for the following reasons:
(a)I believe that the establishment of LML’s claims will affect whether GST is due on the sale of the Property (because, if successful, a beneficial owner of the property will have claimed GST refunds for development costs). However, if the claims are established but the Property is sold to LML or a related party, GST will not be due on the sale.
(b)It has been my longstanding desire for the Lobb family to acquire full ownership of the Property. Establishing LML’s interest will be important, as it will reduce the equity which needs to be purchased by LML, me or other members of the Lobb family.
(c)On 20 September 2023, the Property sold at auction to a company called Pendrell Investments Limited (“Pendrell”). However, it has been agreed with the owners of Pendrell that, prior to settlement, Pendrell will come under the control of myself or other members of the Lobb family. It will therefore be a related party at the time of settlement. As set out immediately above, establishing LML’s claims will assist in net settlement of that sale (as it will reduce the balance due from Pendrell).
[63] This reference to control of Pendrell indicates that he was also sufficiently involved in the steps taken by Pendrell despite not personally becoming a director or shareholder. Since Pendrell failed to settle on its purchase, the receiver’s subsequent steps to re-sell the property were attributable to Pendrell, and so too Mr Stuart Lobb given his assertion of control.
[64] As well as lodging his own caveat, Powell J’s judgments indicate that Mr Stuart Lobb was involved in filing caveats in the names of other Lobb entities, which continued to claim interests in 23 Orakei Road more or less interchangeably until December 2023.
[65] The costs orders of Edwards and Powell JJ also indicate that Mr Stuart Lobb was involved in steps since the substantive judgment of Hinton J. In relation to the first series of post-judgment events addressed by Edwards J on 19 June 2023,39 she subsequently awarded costs against Mr Stuart Lobb and WAG jointly and severally.40 On the caveat removal judgment,41 Powell J ordered costs against Mr Stuart Lobb, Mr Warwick Lobb, Pendrell, LML and WAG jointly and severally.42 As indicated, of the receiver’s total awarded costs and disbursements of $118,712, Mr Stuart Lobb is liable (individually or jointly and severally) to the extent of $94,579.13. As none of these costs have been paid, there is no risk of double-counting the costs attributable to Mr Stuart Lobb’s acts or omissions.
[66] Further, WAG’s so-called Mortgagee in Possession reports include claims by LML and advance Mr Stuart Lobb’s interests as well as WAG’s. These reports annex documents created by Mr Stuart Lobb (with his initials in the footer), documents with his handwritten annotations and documents discovered to him by Westpac. This is also consistent with Mr Stuart Lobb having some involvement with the steps taken by his brother or father and their associated entities. A number of the documents created by him or with his annotations post-date Hinton J’s judgment. The 31 March 2024 report is signed by Mr Blair Lobb “on behalf of the mortgagee / major Creditors”.
[67] Also, accepting that WAG and Pendrell thought the GST issue could have consequences upon the sale of 23 Orakei Road, Mr Stuart Lobb’s interest in avoiding a GST issue for LML or himself also suggests his involvement in the steps they took. Finally, there is insufficient evidence that WAG and Pendrell took material steps that Mr Lobb disagreed with to conclude that he was not involved in the steps that increased the receiver’s costs.
[68] In relation to the quantum of apportionment, Mr Dixon indicated a preference for me to decide the apportionment on the evidence available, but was willing, if I decided that further information was required, for the Court to direct the receiver to provide further information and for the quantum of apportionment to be determined
39 See above at [18].
40 Ryan v Lobb [2023] NZHC 3239 at [20]-[22].
41 See above at [33].
42 Ryan v Lobb [2024] NZHC 1237 at [25](c).
thereafter. At that time, it was possible that the reasonableness of the receiver’s costs would be disputed.
[69] I have considered whether it might be useful to seek further information from the receiver, or more convenient to direct the receiver to break down his costs further as between Mr Stuart Lobb and his brother, father and associated entities. In Macnamara, the Court empowered the trustees to determine the apportionment. Here, however, given my conclusions, including as to the sort of involvement that is required, it is appropriate that I simply direct the level of apportionment taking a common sense and not overly robust approach.
[70] Overall, the evidence indicates that Mr Stuart Lobb was sufficiently involved in the steps (beyond proper steps) taken by the Lobb family that the receiver identified as attributable to them. Those steps substantially added to the receiver’s costs.
[71] Finally, as indicated, no party challenged the reasonableness of the receiver’s costs. Given the Court’s supervisory role in fixing the receiver’s remuneration and reasonable costs, I record that while the total costs are very high, especially in proportion to the assets of the Lothbury Trust, I am satisfied that the receiver’s time, costs and expenses were reasonably incurred. The extent of costs is attributable to the steps taken to hinder the receiver’s attempts to carry out the orders of Hinton J.
[72] For these reasons, I consider the receiver’s apportionment of costs to the actions of the Lobb family is appropriate, and that Mr Stuart Lobb was sufficiently involved in those actions. I accept the figure of $572,370.
Whether Mr Lobb’s involvement can be attributed to the Lothbury Trust in this resettlement context
[73] The second issue is whether, despite Mr Stuart Lobb’s involvement in causing the receiver additional cost, it is appropriate in this resettlement context to attribute those further costs to the Lothbury Trust’s residual share rather than to the Lothbury Trust before distribution of 50 per cent of the funds to the Verena Ryan Family Trust, so that the additional costs would not be shared equally in the resettlement.
[74] Mr Latton submitted that this case is distinguishable from the cases relied on by Mr Dixon as the order sought here would not attribute the costs to Mr Stuart Lobb personally but instead to the Lothbury Trust; that is, reducing the amount available for the other discretionary beneficiaries as well as Mr Stuart Lobb. Mr Latton submitted the beneficiaries of the Lothbury Trust should not bear the cost.
[75] However, as Mr Dixon submitted, Macnamara also involved resettlement of a family trust where the costs caused by Mr Macnamara were attributed to the trust resettled for him which also had other family members as discretionary beneficiaries.43 In that respect, this case is not materially different. The resettlement involves splitting the family trust into two trusts – one with Mr Stuart Lobb remaining as a beneficiary and the other, new trust with Ms Ryan as a beneficiary. Their two adult children will be beneficiaries of each trust. Thus, the adult children are affected by the wasted costs whatever the apportionment between the two trusts.44 In this context, it is not unfair for Mr Stuart Lobb’s actions to be attributed to the Lothbury Trust’s residual share rather than to the Lothbury Trust before distribution of 50 per cent of the funds to the new Verena Ryan Family Trust. It is not suggested that Ms Ryan caused the receiver extra cost following Hinton J’s judgment.
[76] A related issue is whether the receiver should seek to enforce the costs orders made in his favour before deducting his final remuneration, costs and expenses from the assets of the Lothbury Trust. Recovering costs directly from the parties ordered to pay them (including Mr Stuart Lobb) would reduce the impact of the receiver’s costs on the innocent beneficiaries of the Lothbury Trust. But the receiver will need to decide what steps to take to enforce the outstanding costs orders, balancing the potential gains against the further cost to the Lothbury Trust of taking those steps. Given Mr Stuart Lobb’s involvement in the actions underpinning the costs orders sought to be recovered, any further reasonable costs relating to their recovery will also be attributable to the Lothbury Trust’s residual share rather than the new Verena Ryan
43 See also the subsequent judgment in Macnamara v Macnamara [2023] NZHC 715 at [90]-[95].
44 Given it is the Lothbury Trust that is being divided and the terms of Hinton J’s order, the need to apply the principles of hotchpot to multiple funds does not arise: see Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth [2019] HCA 20, (2019) 268 CLR 524 at [163]-[165].
Family Trust. Thus, while enforcement of the costs orders may delay finalisation of the receivership, it need not delay finalisation of the resettlement.
Conclusion on apportionment
[77] For these reasons, I consider that it is appropriate to vary Hinton J’s order in accordance with the leave reserved in her judgment, to direct the receiver to recalculate the distribution schedule as at 21 December 2023 on the basis that $572,370 is to be attributed to the Lothbury Trust’s residual share, so as to determine the additional amount to be paid to the trustees of the Verena Ryan Family Trust and pay the same.
[78] I reserve leave to the receiver to seek further orders or directions if necessary to give effect to this judgment.
Other issues
Stakeholder Amount
[79] Given the abandonment of the appeal, the purpose of the Stakeholder Amount is spent. I therefore vary the 1 September 2023 order of Powell J and release the Stakeholder Amount to the Lothbury Trust.
Ms Ryan’s outstanding costs
[80] As indicated, Hinton J reserved leave for Ms Ryan to seek an order that the costs awarded to her be paid out of Mr Stuart Lobb’s share of the trust fund.45 Ms Ryan filed submissions pursuing that course. On 18 June 2024, Hinton J issued a minute indicating it was not clear from the submissions whether there was jurisdiction to make such an order and noting that it may be moot whether Mr Stuart Lobb will be due any share of the trust fund following resettlement.46 Hinton J reserved the issue until it is known whether Mr Stuart Lobb is entitled to, or is at least likely to be entitled to, any part of the trust fund following resettlement, or until further order.47 I expect that issue can now be progressed.
45 Ryan v Lobb [2024] NZHC 386 at [40]; see above at [37](a).
46 Ryan v Lobb HC Auckland CIV-2019-404-1591, 18 June 2024 (Minute) at [4]-[5].
47 At [5].
The reasonableness of Lockhart’s costs
[81] As indicated, Ms Low for Lockhart filed a memorandum dated 20 May 2024 seeking confirmation that the costs it seeks under its former trustee’s indemnity are reasonable. No response was filed. The costs sought total $12,313. The Court has already ordered that Lockhart is entitled to be paid its reasonable costs and expenses out of the assets of the Lothbury Trust.48 Having reviewed Ms Low’s memorandum, I am satisfied that the costs sought are reasonable. They are recoverable out of the assets of the Lothbury Trust (before apportionment in accordance with the orders made on Ms Ryan’s application).
Result
[82]I make the following orders:
(a)varying Hinton J’s order in accordance with the leave reserved in her judgment of 6 April 2023, to direct the receiver to recalculate the distribution schedule as at 21 December 2023 on the basis that
$572,370 is to be attributed to the Lothbury Trust’s residual share, so as to determine the additional amount to be paid to the trustees of the Verena Ryan Family Trust and pay the same;
(b)varying the 1 September 2023 order of Powell J and releasing the Stakeholder Amount to the Lothbury Trust;
(c)reserving leave to the receiver to seek further orders or directions if necessary to give effect to this judgment; and
(d)confirming that the costs of $12,313 that Lockhart seeks under its former trustee’s indemnity are reasonable and recoverable out of the assets of the Lothbury Trust (before apportionment in accordance with the orders made on Ms Ryan’s application).
48 Ryan v Lobb [2022] NZHC 513 at [45].
Costs
[83] Ms Ryan is entitled to costs on her application. My preliminary view is that Mr Stuart Lobb should pay 2B costs and disbursements and it may be appropriate for those costs to be deducted from the share of the Lothbury Trust remaining after resettlement. I urge the parties to take a reasonable and proportionate approach to finalising costs. The costs principles applicable under the High Court Rules 2016 are settled. They provide guidance to the parties to assist in the quantification of costs in a cost-effective way.
[84] If costs cannot be agreed, memoranda (not exceeding three pages) may be filed within 20 working days, and I will determine costs on the papers.
Gault J
Solicitors / Counsel:
Mr L W Dixon, Patterson Hopkins, Auckland
Mr H Thompson, McMahon Butterworth Thompson, Auckland Mr R Latton, Barrister, Auckland
Ms G R Grant (Mr Lobb’s instructing solicitor), Grant & Co., Auckland
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