Solomon
[2024] NZHC 1520
•12 June 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2024-485-000029
[2024] NZHC 1520
UNDER Part 19 of the High Court Rules 2016 IN THE MATTER OF
an application by MAUI SOLOMON for prospective costs orders
Hearing: (On the papers) Counsel:
R A Kirkness and H Z Yang for Applicant
N J Russell, N L Walker and B Murfitt for the trustees of Te Keke Tura Moriori Identity Trust and Hokotehi Moriori Trust
Judgment:
12 June 2024
JUDGMENT OF LA HOOD J
(Prospective costs orders)
[1] In a judgment dated 26 April 2024, I granted the applicant, Maui Solomon, leave to commence an application for prospective costs orders by way of originating application under r 19.5(1) of the High Court Rules 2016.1
[2] As noted in my earlier decision, the application for a prospective costs order relates to an intended proceeding seeking the Court’s clarification of the powers of the trustees of a group of Moriori Trusts, namely Te Keke Tura Moriori Identity Trust (TKT), Hokotehi Moriori Trust (HMT) and the Moriori Imi Settlement Trust (MIST). Mr Solomon and a co-trustee, Ms Wadsworth, object to their purported removal as trustees of TKT and exclusion from its administration. Before commencing the intended proceeding, Mr Solomon wishes to seek a prospective costs order confirming
1 Re Solomon [2024] NZHC 947.
Re Solomon [2024] NZHC 1520 [12 June 2024]
that his costs (or any costs he might be ordered to pay) arising from the proceeding will be met by TKT.
[3] On 9 May 2024, the parties filed a joint memorandum of counsel recording the parties’ agreement that TKT will abide the Court’s decision on the prospective costs order application, subject to the condition that TKT may apply for the prospective costs order to be varied or revoked if:
(a)the substantive proceeding becomes hostile in terms of category 3 of the Re Buckton categories;2 or
(b)the applicant seeks any order or relief which goes beyond the scope outlined in [2] and [3](c) of the prospective costs order.
The memorandum also records agreement that HMT may apply to be joined as an interested party in the substantive proceeding, and that such an application will not be opposed by Mr Solomon.
[4] The memorandum further records agreement that Mr Solomon would file submissions in support of his prospective costs application by 24 May 2024 and those submissions would then be referred to a judge for a decision on the papers.
[5] The application has now been referred to me for a decision. I grant the prospective costs orders for the reasons that follow.
Background
[6] The background to the application is set out in the affidavit of Mr Solomon dated 22 December 2023:
2I am currently leasing the family farm known as Manukau on Rekohu, where I am regeneratively farming sheep and cattle and undertaking ecological restoration of 200 hectares by planting trees and restoring waterways and native bird populations. My wife, Susan Thorpe, and I have also established a native Rekohu plant nursery with the aim of growing and planting 200,000 native plants by 2026.
2 See Woodward v Smith [2014] NZHC 407 at [23], citing Re Buckton [1907] 2 Ch 406 (Ch) at 413– 417.
3I first became involved in Moriori affairs in 1984 at the age of 23 when I was appointed by the Solomon Family as Chair of the Tommy Solomon Memorial Trust Foundation. Tommy Solomon was my grandfather. The Trust erected a statue of Tommy Solomon in 1986. I have been involved in every Moriori organisation since that time (over a 40-year period).
(a)In 1988, I filed the first Waitangi Tribunal claim for Moriori (Wai 64). I was also chief negotiator for the Moriori Treaty settlement claims that were settled in 2020.
(b)In 2001, I had a leading role in establishing Hokotehi Moriori Trust (HMT) and served HMT as a trustee, Vice Chair and Chair. I resigned in 2022.
(c)I played a leading role in negotiating the “Crown Gift” of $6m to establish Te Keke Tura Moriori Identity Trust (TKT) in 2008. I became an initial trustee of TKT at that time and was also appointed inaugural Chair of TKT. I retained that position until my purported removal in June 2023, which I elaborate on further below. My current position at TKT is unclear.
(d)In 2010, after practising as a barrister sole for 25 years, I moved to Rekohu to help HMT, which was struggling financially. I served as HMT’s Chief Executive Officer from 2010 to 2020 and as Executive Chair from 2020 until I stepped down as a trustee in October 2022.
(e)I became a trustee and Chair of Moriori Imi Settlement Trust (MIST) in 2018. MIST is the Post Settlement Governance Entity (PSGE) for Moriori. I continue to hold both roles.
(f)I am Co-Chair and trustee of the Aotearoa New Zealand Peace and Conflicts Studies Trust and one of two Māori/Moriori representatives on the Partnership Council of the Indigenous Peoples Economic Trade and Cooperation Arrangement for APEC countries.
(g)I am a Pukenga (Expert Advisor) to Nga Toki Whakarururanga a body set up in 2019 to ensure compliance with Te Tiriti o Waitangi in New Zealand’s negotiations of Free Trade Agreements.
4I provide this affidavit in support of an application for prospective costs orders in relation to a proceeding I intend to bring seeking clarification of the identities of TKT’s trustees and the validity of certain payments from TKT to HMT.
TKT
5TKT was formed in 2008 to receive a Crown “gift” of $6 million. The interest on this amount was to be used to revive Moriori culture and identity via grants. Trustees of TKT are appointed by the board of
HMT (subject to the process for appointing independent trustees). A copy of the TKT Trust Deed is annexed as Exhibit A.
[7] Given the conclusion I have reached that it is appropriate to grant the prospective costs orders, I do not consider it necessary to detail the helpful further background matters canvassed in the applicant’s submissions. It is sufficient to note that the kaupapa of TKT, as set out in cl 4.1 of the Trust Deed, are “the relief of cultural ‘poverty’ or ‘need’ of all Moriori through the preservation, revival, support and promotion of Moriori identity, culture, language and heritage”.3 More specifically,
TKT seeks to:4
(a)rebuild, reclaim and revive Moriori culture, heritage and identity;
(b)promote better understanding and educational awareness of Moriori culture and identity among both Moriori and the wider general public; and
(c)promote and foster better understanding of the Moriori legacy of peace.
[8] The importance of these kaupapa must be understood against the history of the Moriori people, which is summarised in s 8 of the Moriori Claims Settlement Act 2021. This summary outlines, among other things, the decline of the Moriori population after contact with two Māori tribes from northern Taranaki, and the perpetuation of myths about the Moriori people, which resulted in generations of Moriori being stigmatised for, or ignorant of, their heritage and culture. As Mr Solomon states in his affidavit, TKT “is a vital cog in the revival and renaissance of Moriori culture, identity, our unique language and telling our correct history”.
Legal principles
[9] I accept the following summary of the relevant principles from the applicant’s submissions.
3 TKT Trust Deed at [4.1(a)–(c)].
4 TKT Trust Deed at [4.1(a)]
[10] PCO applications are common in trust litigation. There are two types of such orders:5
(a)“Indemnity” or “own costs” orders: where the applicant’s own costs are paid out of the trust fund on an indemnity basis. Such an order may include directions limiting the extent to which such costs may be compiled.
(b)“Immunity” or “other party costs” orders: where the applicant is not liable to pay costs to any other party.
[11] Prospective costs orders may routinely be made in what are known as the first two out of three broad categories of trust proceedings identified in Re Buckton, being:6
(a)proceedings brought by trustees to obtain the Court’s guidance on the construction of the trust deed or some aspect of the trust’s administration; and
(b)a similar application by someone other than a trustee (such as a beneficiary), in a case which would have justified an application by a trustee.
[12] In these two categories, the costs of all parties necessarily participating are treated as incurred for the benefit of the trust estate and ordered to be paid out of the trust fund.7
[13] This can be contrasted with the third category, where a beneficiary is making a “hostile claim” against the trustees or other beneficiaries. There may be some overlap between the categories; for example, a hostile claim may still involve a point of construction or administration where a beneficiary claims an entitlement under a different construction from that taken by the trustees.8 In McCallum v McCallum,
5 Woodward v Smith, above n 2, at [28].
6 At [23], citing Re Buckton [1907] 2 Ch 406 (Ch) at 413–417. See also at [39].
7 At [23(a)].
8 At [23(c)].
Kós P writing for the Court of Appeal noted in the context of Beddoe orders that the term “hostile litigation” is a crude label, and might be better described as “self- interested litigation”.9
[14] In essence, whatever the label, prospective costs orders are generally not made if the Court is called upon to “determin[e] rights between adverse litigants”,10 or the claimant is not acting for the benefit of the trust estate.11 Prospective costs orders are also not granted where a trustee’s actions are being challenged as a breach of trust.12 In such cases, the usual costs principles generally apply, although prospective costs orders may still be made in a Re Buckton category 3 case in very special circumstances.13
Application of principles to this case
[15] The application is made in reliance on these proceedings being the type of trust proceedings identified in categories 1 and 2 of Re Buckton in the alternative (depending on whether Mr Solomon is still a trustee).
[16]The purpose of the intended proceeding is to clarify:
(a)the appointment and removal powers for future administration;
(b)the identity of the current trustees of TKT, so that Mr Solomon and Ms Wadsworth have certainty as to whether they are under trustee obligations; and
(c)whether it is permissible in accordance with its trust deed for TKT to advance funds to related entities for the purpose of making good those entities’ debts or cashflow shortages.
9 Which are similar to prospective costs orders.
10 Re Buckton, above n 2, at 415.
11 Solomon-Rehe v Hokotehi Moriori Trust [2016] NZHC 239 at [20].
12 Fundación Pimjo AC v Aguilar and Aguilar Ltd [2015] NZHC 1402 at [39].
13 Woodward v Smith, above n 2, at [23(c)].
[17] The proceedings therefore seek to clarify aspects of the administration of TKT for the benefit of TKT.
[18] As Mr Solomon explains in his affidavit, the events of 2023 have made him concerned that HMT will increasingly draw on the funds of TKT to make up for its deficits. The basis for Mr Solomon’s concern includes the sudden removal of Mr Solomon as TKT trustee together with an immediate loan of $250,000 from TKT to HMT, HMT’s request for funds from MIST, and the view expressed by the HMT Board in a June 2023 meeting with MIST trustees (that funds should be transferred to HMT to manage). Mr Solomon considers these matters suggest that:
(a)HMT is in a difficult financial position;
(b)it is looking to its related entities to remedy that position;
(c)there is a view that it can do so without regard to the related but distinct objects of each of the different Moriori trust entities; and
(d)there is willingness to resort to summary procedures to remove those who hold a different view.
[19] Mr Solomon therefore considers there is a real risk that TKT funds may be misapplied and diverted away from the specific purposes for which TKT was created. He says that the intended proceeding seeks to minimise that risk by clarifying whether transactions like the $250,000 loan to HMT are permissible and, if so, on what basis.
[20] Further, Mr Solomon says that the intended proceeding is required to determine whether Mr Solomon still remains a TKT trustee and is subject to obligations that come with that position.
[21] Finally, it is submitted that the intended proceeding also seeks to test whether HMT is correct that it may remove TKT trustees who cease to be HMT trustees, or whether its removal power is limited to the circumstances in cl 7.9(f) of the TKT Trust Deed. This is important because it determines the circumstances in which future TKT trustees may be removed by HMT without their consent or court oversight.
[22] I accept Mr Soloman’s submission that the clarification of these issues is in the interests of all beneficiaries of TKT as they raise questions of management on which there is current disagreement, and resolution of them will be highly relevant to the way in which TKT is managed in the future.
[23] I also accept the submission that, while there may be differing views about the issues sought to be clarified in the intended proceeding, it is not “hostile” litigation. Mr Solomon is not claiming any personal benefit or interest, such as in a case of beneficiaries seeking to enforce entitlements. He seeks clarification of whether his removal was in accordance with the Trust Deed and therefore whether he still owes trustee duties. He seeks clarificatory declarations only and not compensatory or injunctive relief.
Conclusion
[24] For these reasons I am satisfied it is appropriate to grant the prospective costs orders sought. I therefore order Mr Solomon to be indemnified out of the funds of TKT in respect of the intended proceeding in respect of:
(a)his costs (“indemnity” or “own costs” orders); and
(b)any costs he might be ordered to pay in the event he is unsuccessful in his intended proceeding (“indemnity” or “other party costs” orders).
[25] However, the orders are subject to the condition that TKT may apply for them to be varied or revoked if:
(a)the substantive proceeding becomes hostile in terms of category 3 of the Re Buckton categories; or
(b)the applicant seeks any order or relief that goes beyond the scope outlined in [2] and [3](c) of the application.
La Hood J
Solicitors:
Tripe Matthews Feist, Wellington for Applicant
Russell McVeagh, Wellington for trustees of Te Keke Tura Moriori Identity Trust and Hokotehi Moriori Trust
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