Smith v Penney - [2014] NZHC 619

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV2013-404-003064 [2014] NZHC 619

BETWEEN
NIGEL PHILIP SMITH (in his capacity as

a trustee of the Maria Charles Family

Trust) Plaintiff

AND

STEPHEN CHARLES PENNEY (in his personal capacity and in his capacity as a trustee of the Maria Charles Family Trust) First Defendant

DONNA MARIA SIMUNOVICH (in her personal capacity and in her capacity as a trustee of the Maria Charles Family Trust) Second Defendant

Hearing: (on the papers)

Appearances:

M Heard and F Whyte for the Plaintiff WGC Templeton for the First Defendant S McCabe for the Second Defendant

Judgment:

31 March 2014

[COSTS] JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie on 31 March 2014 at 4.00 pm
Pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

SMITH v PENNEY & ANOR [2014] NZHC 619 [31 March 2014]

Introduction

[1] I refer to my reserved judgment dated 12 November 2013.1 In that judgment, I upheld various orders made by Associate Judge Christiansen. I held that the plaintiff, Mr Smith, and the second defendant, Ms Simunovich, were entitled to an award of costs in their favour, and I invited counsel to file memoranda in that regard.2

[2] Mr Smith seeks either indemnity costs, or increased costs. So does Ms Simunovich. They both argue that the first defendant, Mr Penney, has acted frivolously and vexatiously, and that he has ignored Court orders.

[3] The first defendant, Mr Penney, opposes the applications. He accepts that costs should follow the event, but submits that there was nothing vexatious or frivolous in his behaviour, and that such unreasonableness (if any) as was displayed by him does not justify increased costs.

Background

[4] As noted in my substantive judgment, Mr Smith was, at all relevant times, the independent trustee of a family trust known as the Maria Charles Family Trust. The first and second defendants were his co-trustees. They were also the ultimate beneficiaries of the trust.

[5] When disputes arose in relation to the trust and the finalisation of its accounts, Mr Smith commenced proceedings. He sought various orders against Mr Penney. After initial difficulties with service (which were attributable to Mr Penney), the proceedings were heard by Associate Judge Christiansen on
7 August 2013. He considered it clear that Mr Penney had been receiving, but not accounting, for trust income, and he made orders requiring Mr Penney to pay to the trust all rental income he had received from trust properties, to deliver up to Mr Smith and Ms Simunovich as his co-trustees, all records concerning the leasing
of trust properties, and to refer to all trustees of the trust, all decisions made in

1 Smith v Penny [2013] NZHC 2988.
2 At [73].

relation to trust property, and comply with directions made by the trustees in accordance with the trust deed. Indemnity costs were ordered against Mr Penney.

[6] Mr Penney immediately breached the orders made by Associate Judge Christiansen. He belatedly filed a…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Smith v Penney

Details

AGLC: Smith v Penney [2014] NZHC 619
Case: [2014] NZHC 619
Decision Date: 31 March 2014

CaseChat Overview and Summary

In Smith v Penney, Nigel Philip Smith, as trustee of the Maria Charles Family Trust, sought costs against Stephen Charles Penney and Donna Maria Simunovich, also trustees of the trust. The court was required to determine the appropriate costs for Smith and Simunovich, given that Penney had allegedly acted frivolously and vexatiously, and ignored court orders. Smith sought indemnity costs or increased costs, arguing Penney’s actions warranted such costs, while Penney opposed the application, contending his behaviour was not vexatious or frivolous and did not justify increased costs.

The court reviewed Penney's actions, which included breaching court orders, filing a late and irrelevant statement of defence, and submitting late submissions. Penney's application for review was found to be without merit. Smith's actions were deemed necessary to ensure compliance with the trust deed and Penney's obligations, while Simunovich's participation was deemed appropriate. Penney's actions, however, added significantly to the costs incurred.

The court held that an award of indemnity costs was appropriate for Smith, as Penney’s actions were vexatious, frivolous, and in clear contravention of his obligations as a trustee. Smith’s costs were set at $19,630, along with reasonable disbursements. For Simunovich, the court found that while increased costs were appropriate due to Penney's failure to comply with court directions and advancing meritless arguments, an award of indemnity costs was not suitable, partly due to the legacy of matrimonial bitterness between Simunovich and Penney. Costs were awarded on a 2B basis, increased by 25 percent. Both Smith and Simunovich agreed to accept costs on a 2B basis up until the date of the hearing before Associate Judge Christiansen.

Orders