SR Hamilton Corporate Trustee Limited v White

[2019] NZHC 3002

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2014-470-189

[2019] NZHC 3002

UNDER

The Trustee Act 1956

IN THE MATTER

of an application for directions pursuant to section 66 of the Act

BETWEEN

SR HAMILTON CORPORATE TRUSTEE LIMITED AND LAMB TRUST SERVICES LIMITED

Plaintiffs

AND

STEPHEN ROYCE WHITE & ORS

Defendants

Hearing:	1 November 2019
Appearances:	R J Connell for S R White and M E Parsons E J Hudson for the Trustees
Judgment:	19 November 2019

JUDGMENT OF POWELL J

[Costs]

This judgment was delivered by me on 19 November 2019 at 4 p.m. pursuant to R 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

SR HAMILTON CORPORATE TRUSTEE LIMITED & ANOR v WHITE & ORS [2019] NZHC 3002 [19

November 2019]

CIV-2014-470-434

UNDER  The Trustee Act 1956

IN THE MATTER             of Deed of Trust establishing the WHR

and ZD WHITE FAMILY TRUST

BETWEENSTEPHEN ROYCE WHITE AND MAUREEN EDITH PARSONS

Plaintiffs

ANDSR HAMILTON CORPORATE TRUSTEE LIMITED AND LAMB TRUST SERVICES LIMITED

Defendants

[1]        Stephen White and Maureen Parsons have taken issue with the costs claimed by SR Hamilton Corporate Trustee Limited and Lamb Trust Services Limited (“the Trustees”) at the conclusion of long running litigation.

Background to application

[2]        The issue on costs has arisen after Heath J issued two judgments determining the substantive proceedings,  an  application  by  the  Trustees  for  directions  in  CIV ending 189 (“the Trustee application”), and an application by Mr White  and  Ms Parsons to remove the Trustees in CIV ending 434 (“the removal of Trustee application”).1 In the primary judgment on the Trustee application Heath J commented with regard to costs:2

Formally, I reserve questions of costs. My provisional view is that reasonable costs and disbursements incurred by all parties to the application for directions shall be paid out of trust funds, so that the net amount available for distribution is adjusted to ensure no beneficiary is out of pocket. I incline to the view that such costs would include those incurred both in the present proceeding and Mr Stephen White’s and Ms Parsons’ separate application to remove the trustees. If this approach were adopted by the parties any dispute about the reasonableness of costs incurred by any of them could be referred to me for determination.

A joint memorandum shall be filed on or before 29 July 2016 advising whether agreement has been reached on costs and, if not, what (in summary form) are the positions taken by each. If questions of costs remain live, the Registrar shall allocate a telephone conference before me at 9.00am on the first available date after 5 August 2016 so that further directions can be made for all questions of costs in both proceedings to be resolved.

(Footnotes omitted.)

[3]        As the primary judgment was appealed the costs issue was reserved until the appeal was determined.

[4]        Following determination of the appeal questions relating to costs in the High Court proceedings were referred back to Heath J. After hearing argument as to whether Mr White and Ms Parsons should pay costs in respect of the removal of the

1      SR Hamilton Corporate Trustee Ltd v White [2016] NZHC 1408 (“the primary judgment”) and White v SR Hamilton Corporate Trustee Ltd [2016] NZHC 1409 dealing with the removal of trustee proceeding.

2      The primary judgment at [84] and [85].

Trustee application, Heath J issued a further judgment on both proceedings

(“Judgment (No. 2)”) in which he concluded:3

For those reasons, I order that the reasonable costs and disbursements incurred by the Trustees, Dr Chambers and Mr White and Ms Parsons respectively, in respect of attendances involving both proceedings, shall each be paid out of the trust fund. In the event that there are any issues as to the reasonableness of costs and disbursements claimed, leave to apply is reserved.

[5]        In the event issues did arise, and, as Heath J had retired in the interim, in July 2018 these were referred to me as duty Judge in Hamilton. Following the filing of memoranda annexing copies of the invoices incurred by all parties, the costs claimed by Dr Chambers4 and Mr White and Ms Parsons5 have been resolved, leaving the only remaining issue being the costs claimed by the Trustees.

The concerns of Mr White and Ms Parsons

[6]        The primary issue advanced on behalf of Mr White and Ms Parsons is that the way in which the Trustees conducted the litigation in both proceedings was unreasonable; that the Trustees’ fixed position necessitated the Trustee removal proceedings and it was only during the course of the hearing when the statement of claim was further amended, whereby the Trustees’ discretion was surrendered to the Court, that enabled Heath J to identify the resolution set out in the primary judgment.

[7]        In addition, Mr White and Ms Parsons challenged the quantum of the costs incurred noting in particular:

(a)the legal costs and disbursements incurred by the Trustees totalled

$221,124.14 and these were substantially higher than the $129,438.23 incurred by Mr White and Ms Parsons and the $125,494.00 claimed and approved for Dr Chambers;6

3      SR Hamilton Corporate Trustee Ltd v White (No. 2) [2017] NZHC 1248 at [12].

4      SR Hamilton Corporate Trustee Ltd v White Minute (No. 3) dated 17 June 2019.

5      SR Hamilton Corporate Trustee Ltd v White Minute (No. 4) dated 4 November 2019.

6      Dr Chambers originally claimed costs and disbursements in the total sum of $134,438.88 but following a query from the Court regarding Invoice 2948 in the total sum of $8,954.60 this was not claimed by Dr Chambers.

(b)there was an overpayment of $15,000.00 by the Trustees to Mr Hudson that has not been explained; and

(c)interest in the total sum  of  $8,867.80  was  paid  by the  Trustees  to Mr Hudson due to the late payment of invoices rendered by Mr Hudson.

Discussion

[8]        At the outset I note that while Mr White and Ms Parsons have purported to challenge not only the legal costs and disbursements incurred by the Trustees in respect of the proceedings, they have also challenged the quantum of the fees rendered by the Trustees in their capacities as trustees. Other than the general issue of the reasonableness of the Trustees’ actions (addressed below) no particular basis for challenge to the quantum of the fees rendered by the Trustees has been identified. After discussions with counsel I consider that the appropriateness of the fees rendered by the Trustees to the trust falls outside the ambit of the current application for costs on the proceedings which are, and have been, properly focused on the legal costs and disbursements incurred by the parties (including the Trustees), rather than the costs of the Trustees as a party.

[9]        With regard to the legal costs and disbursements incurred by the Trustees, I am satisfied that the primary issue raised by Mr Connell, which goes to whether the Trustees should be entitled to have their legal costs and disbursements met by the Trust, has already been conclusively determined by Heath J in Judgment (No. 2).7 Specifically, His Honour was in the best position to determine this issue having heard the case and being well aware of the positions taken by the parties at different points. His Honour nonetheless concluded “that the reasonable costs and disbursements incurred by the trustees … shall be paid out of the trust funds”.8 Given that conclusion I conclude it is not open to Mr White and Ms Parsons to now challenge the Trustees’ right to claim costs in the proceedings. The only issue left outstanding for me to determine is whether there is “any [issue] as to the reasonableness of [the] costs and disbursements claimed” by the Trustees.

7 See [4] above.

8      SR Hamilton Corporate Trustee Ltd v White (No. 2) [2017] NZHC 1248 at [12].

[10]       As to whether there is any issue with the reasonableness of the costs incurred by the Trustees, the simple comparison undertaken by Mr Connell is insufficient to show that such costs  were  unreasonable.  Although  the  legal  costs  incurred  by Dr Chambers and Mr White and Ms Parsons appear at first glance to be broadly comparable and considerably less than the costs and disbursements claimed by the Trustees, such comparison in fact fails to take into account that Dr Chambers was only involved in one of the proceedings, the Trustee application, and therefore the direct comparison is somewhat misleading. In any event simply because a party has incurred higher costs than another is not necessarily an indication that those higher costs are unreasonable but can be indicative of a range of matters including, as discussed with counsel at the hearing, judgment calls in respect of a party’s ability to pay and also reflect different charge out rates claimed by counsel. In this case there is no evidence before the Court that the amounts claimed are in fact unreasonable or otherwise excessive and, in the absence of such evidence, this Court has no ability to determine whether the costs claimed are unreasonable.

[11]      Likewise, neither of the two other specific issues identified by Mr Connell go to the reasonableness of the costs incurred by the Trustees in the course of the proceedings. It is obviously incumbent on the Trustees to ensure that they have paid only for the costs that have been invoiced and therefore any other payment or overpayment should be investigated. The same issue applies to the interest charged by Mr Hudson; it does not go to the reasonableness of the fees charged but rather to a delay in the payment of that fee at a point where the Trustees had insufficient funds at the time payment fell due. It does not prove anything with regard to the reasonableness of the fees charged but goes instead to the terms of the retainer between the Trustees and Mr Hudson which Mr Connell does not dispute.

Decision

[12]      Taken together I have no basis on which to reach a conclusion that the legal costs and disbursements claimed by the Trustees in respect of the proceedings are unreasonable and direct that if they have not yet already been paid, they now be paid out of the trust funds.

Powell J