Slavich v Slavich HC Hamilton CIV-2010-419-1406

[2011] NZHC 918

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2010-419-1406

UNDER  the Trustee Act 1956 and the

Administration Act 1969

IN THE MATTER OF     an application under s 51 of the Trustee Act

1956 and s 21 of the Administration Act

1969 to remove John Kenneth Slavich as trustee and administrator of the estate of Steven Frank Slavich

BETWEEN  ALLISON SLAVICH Plaintiff

ANDJOHN KENNETH SLAVICH Defendant

Hearing:         (on papers)

Appearances: K I Bond and T M Braun for the Plaintiff

Defendant in person

Judgment:      18 August 2011 at 4:30 PM

JUDGMENT OF WOODHOUSE J (Costs)

This judgment was delivered by me on 18 August 2011 at 4:30 p.m. pursuant to r 11.5 of the High Court Rules 1985.

Registrar/Deputy Registrar

……………………………………

Solicitors / Parties:

Mr K I Bond and Mr T M Braun, Harkness Henry, Solicitors, Hamilton

Mr J Slavich, Hamilton

SLAVICH V SLAVICH HC HAM CIV-2010-419-1406 18 August 2011

[1]      The plaintiff seeks costs following settlement of all issues save for costs. The settlement memorandum records that “costs remain in issue and the parties have agreed should remain at the discretion of the Court”.   It was further agreed that memoranda should be filed on the question of costs.

[2]      I received two memoranda for the plaintiff and two for the defendant.  In a minute dated 9 June 2011 I sought clarification of certain points both from the plaintiff and the defendant.   I received a further memorandum for the plaintiff but have not received any further memorandum for the defendant.   In his second memorandum, the defendant had sought a hearing on the application for costs for reasons that were unclear.  In order to determine whether there should be a hearing I sought clarification from the defendant.  This is the matter in respect of which there has been no response for the defendant and it is accordingly appropriate to determine the issue on the papers as had originally been agreed between the parties.

[3]      The proceeding was filed on 1 November 2010.  The plaintiff, Mrs Allison Slavich, is the widow of Mr Steven Slavich who died on 26 February 1991.  The defendant, Mr John Slavich, was one of the two executors and trustees named in the will of Steven Slavich.   The other executor and trustee was, and remains, the plaintiff’s brother, Mr Allan Moore.

[4]      The main asset of the estate is shares that had been owned by Steven Slavich in Slavich Properties Co. Ltd and Nic Slavich Ltd.

[5]      The  plaintiff  applied  for  an  order  that  the  defendant  be  removed  as  an executor and trustee and replaced by Mr Wayne Bishop.  The grounds for removal were, in essence:

(a)       The defendant had taken de facto control of the estate.

(b)There were discrepancies in the management  of the estate and  in Slavich Properties Co. Ltd, with these alleged discrepancies requiring investigation.

(c)      The defendant had been declared bankrupt on 2 October 2006 and not discharged until 12 may 2010.

(d)The defendant had been convicted on 12 October 2006 for offences of dishonesty and on 21 November 2006 he was sentenced to 2 years 3 months imprisonment and ordered to pay reparation of $60,000.

(e)       All the beneficiaries of the estate wanted the defendant removed and

Mr Bishop to be appointed.

[6]      The defendant opposed the application.  In his statement of defence, filed on

17  January  2011,  he  admitted  the  allegations  relating  to  bankruptcy  and  the conviction and sentence, but said that these past events had “no effect on his trusteeship”.  A substantial part of his defence was that, in effect, the application had been brought by the plaintiff improperly to seek a transfer of shares in Slavich Properties Co. Ltd.

[7]      There was a statement in reply by the plaintiff.   She said, amongst other things, that she had requested that the trustees transfer to her 50% of the shares that had  been  held  by  her  husband  in  Slavich  Properties  Co.  Ltd  pursuant  to  a matrimonial property agreement that she and her husband had entered into in 1990.

[8]      Settlement of this proceeding was recorded in a memorandum dated 31 May

2011.  The submissions for the plaintiff in support of the application for costs are reasonably extensive.  It is unnecessary to seek to summarise these.  The principal ground of opposition from the defendant to the application for costs was that he had opposed the substantive application until he had secured  an assurance from  the plaintiff relating to the shares in Slavich Properties Co. Ltd.  This is conveniently described by setting out three clauses in the settlement memorandum:

2.The  basis  of  the  defence  to  the  plaintiff’s  application  is  the defendant’s expressed concern that the proposed replacement trustee/administrator will agree to a transfer of shares from the estate to the plaintiff in accordance with a matrimonial property agreement. The defendant is of the view that such a transfer would be unlawful.

…

Settlement

4.Since that date, the parties have agreed to settle the proceedings on the basis that the defendant will voluntarily resign as trustee/administrator on the basis of an assurance from the plaintiff, and the new and continuing trustee, that the share transfer described at paragraph 2 above will not take place without an application first being made to the Court.

5.Any such application would seek a declaration that the transfer is lawful, and name the directors of the company concerned as defendants.

[9] I am satisfied that the plaintiff is entitled to costs. The parties have agreed that costs are to be determined by the Court in its discretion, with this determination to be made on the papers. A determination on the papers cannot be based on disputed facts (unless the facts are clear beyond reasonable argument, notwithstanding the dispute). Some undisputed facts are recorded above at [5](b)-(e) above. These matters should have resulted in the defendant’s not opposing an application for his removal. In addition, there were the allegations of discrepancies in the management of the estate and in the management of Slavich Properties Co. Ltd. These allegations were denied and a determination as to the merit of the allegations cannot be made. However, the fact that the allegations were made immediately gave rise to a conflict of interest for the defendant unless there was no basis whatsoever for the allegations. At the least this reinforces the conclusion based on the other matters that Mr Slavich should not have opposed the application.

[10]     The matters raised by the defendant in relation to transfer of the shares to the plaintiff did not provide grounds for opposing the application.   The presence or absence of the defendant as an executor and trustee of the estate has no bearing on the question whether the plaintiff was entitled to a transfer of shares pursuant to a matrimonial property agreement.  If there was a valid agreement with an entitlement to transfer of the shares, the executors and trustees were bound to give effect to it, whoever the executors and trustees were.  If there was no valid agreement a request for transfer could properly be opposed, whoever the executors and trustees were.

Quantum of costs

[11]     The plaintiff has sought costs on a 2B basis of $20,304 and disbursements of

$868.94, a total of $21,172.94.  The defendant submitted that, if there was to be an award of costs, the quantum sought was opposed.   The plaintiff provided an itemisation based on schedule 3 to the High Court Rules.  The defendant advised that he required proof of cost in respect of these items.  He referred specifically to the following and with the following observations:

33.      If awarded the Defendant disputes the time allocations made by the

Plaintiff’s Counsel and requires proof of cost.

For example:

Item 4.7 (Inspection 1.5 days) involved 7 short documents, 5 of which were also in the Plaintiff’s position [sic].

Item 4.10 (Filing memorandum 0.4 days) was for a standard track mention hearing, the memorandum involving standard issues most giving a “no” request or answer.

Item 4.11 (Mention hearing 0.3 days) was a 10 minute phone conference.

Item 7.1 (Briefs 2.5 days) involved 5 briefs.   One Brief being 5 pages and 4 Briefs virtually identical and only half a page each.

[12]     In  response  to  the  quantification  challenge  Mr  Bond  submitted  for  the plaintiff that there was no justification for reduction in terms of r 14.7.  In respect of specific steps  it  was  submitted  that  focus  on  individual  items  was  not  justified because, if the actual time for some items might be less than scale time, the actual time for others was more.  Mr Bond advised that the plaintiff’s actual costs exceed the scheduled costs claimed.  There is no challenge to this and I accept Mr Bond’s advice.  Mr Bond noted in respect of the claim for inspection, based on band B, that “the Court may prefer to allow costs on a band A basis”.   That would result in a reduction of $1,880.  He said that the plaintiff nevertheless maintained the full claim as being a claim in accordance with the Rules and underlying principles.

[13]     I consider the plaintiff’s submissions are correct in terms of principle.  There is no justification for, in effect, cherry picking individual items when actual costs exceed scale costs.

[14]     Accordingly,  there  is  judgment  for  the  plaintiff  for  costs  in  the  sum  of

$20,304 together with disbursements in a sum of $868.94.

Peter Woodhouse J