Stephens v Miers

[2012] NZHC 2883

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-6525 [2012] NZHC 2883

IN THE MATTER OF     the Trustee Act 1956

BETWEEN  WENONA STEPHENS Plaintiff

ANDGILBERT LESLIE MIERS, BARRY BRUCE WILLIAMS AND BRYAN DEO LITHGOW

First Defendants

ANDPETER  KERRY KNIGHT Second Defendant

Hearing:         On the papers

Counsel:         P J Stevenson for Plaintiff

A S R Kashyap for Second Defendant

Judgment:      1 November 2012

COSTS JUDGMENT OF ASSOCIATE JUDGE ABBOTT

This judgment was delivered by Associate Judge Abbott on 1 November 2012 at 4.30 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date: ...................................

Solicitors:           Stafford Klaasen, Auckland:  [email protected]

A S R Kashyap, Auckland:  [email protected]

Counsel:            P J Stevenson, Auckland:  [email protected]

STEPHENS V MIERS HC AK CIV-2011-404-6525 [1 November 2012]

Introduction

[1]      The  plaintiff,  Mrs  Wenona  Stephens,  has  applied  for  indemnity  costs following discontinuance of this proceeding.

[2]      Mrs Stephens is the principal beneficiary of the Esplanade Family Trust (the trust).  The first-named first defendant, Mr Gilbert Miers, and the second defendant, Mr Knight, were appointed as trustees when the trust was established in 2002. When Mr Knight retired in July 2006, Mr Miers continued to act as trustee and two further trustees, the second-named and third-named first defendants, were appointed.  The first defendants are thus the present trustees.

[3]      The  trust  is  the  beneficial  owner  of  a  property  at  15  Kiwi  Esplanade, Mangere Bridge (the property).   Mrs Stephens has been trying, for a considerable period of time and with the support of the first defendants, to get the property transferred into the name of the present trustees, and issued this proceeding seeking an order to compel Mr Knight to sign a document needed to effect the transfer.

[4]      Mr Knight has been residing, at least for part of the year, in Queensland, Australia.    Mrs  Stephens  had  difficulty  serving  this  proceeding  on  him,  and eventually did so after obtaining an order for substituted service. After being served, Mr Knight signed the necessary document and the property has been transferred.

[5]      Having achieved what she was seeking, Mrs Stephens discontinued this proceeding, subject to seeking indemnity costs.  She says that the proceeding should never have been necessary, and that costs were compounded by Mr Knight’s refusal to make himself available for service.

[6]      Mr Knight says that he should not be liable for any costs (having regard to the history of the matter) but, alternatively, if costs are payable then he is entitled to indemnification  from  the  trust.    He  says  that  the  proceeding  was  unnecessary because the document should have been presented to him for signature when he

retired, and that he was justified in declining to sign it when requested in 2010 because he was asked to do so at his own cost.

History

[7]      Mr Knight retired as a trustee of the Esplanade Family Trust on or about

2 July 2006.   A transfer of the property from  the name of the former  trustees, including Mr Knight, into the name of the present trustees was overlooked at that time.    On  3  June  2010,  Mrs  Stephens’ solicitor  wrote  to  Mr  Knight  by  email requesting that Mr Knight sign an authority and instruction form that was needed to effect the transfer.  Mr Knight responded the same day referring to distress he had suffered as a result of certain actions by Mrs Stephens and saying he was:

... not of a mind that I am obliged to go further at my own cost.

[8]      Mrs Stephens’ solicitor wrote again the following day, 4 June 2010, again

requesting completion of the form and saying:

...  all  that  is  required  now  is  for  you  to  sign  the  authority  as  per  the attachment we sent you.  There should not be any need for you to be put to any cost.

[9]      Mr Knight did not reply to the solicitor’s email of 4 June 2010, and there was no further contact between the parties until 3 February 2011 when the solicitor sent another email letter, repeating the earlier request, and informing Mr Knight that:

Following your original refusal, we have investigated whether there is any other way of dealing with this matter without bothering you.  Unfortunately, the only way is for an application to be made to the High Court at Auckland.

...

In your response last year, you indicated that the reason for your refusal to assist  was  because  of  the  actions  of  Wenona  Stephens,  one  of  the beneficiaries of this trust.   As a person who is familiar with the responsibilities of a trusteeship you will know that you have wider responsibilities   as   a  trustee  to   your  fellow  trustees   and   to   all  the beneficiaries.

[10]     Mr Knight did not reply to that letter.  Mrs Stephens filed this proceeding in

October 2011.

Service of the proceeding

[11]     Mrs  Stephens  first  attempted  to  serve  the  proceeding  on  Mr  Knight  at

113 St Andrews Road, Epsom, Auckland, where Mr Knight had previously resided. Mrs Stephens or her solicitors must have then made enquiries into Mr Knight’s whereabouts (although curiously, there is no evidence of any attempt to contact him by email) because an agent next attempted to serve Mr Knight at 41 Coco’s Crescent, Broadbeach Waters, Queensland on 21 February 2012.  When it was found that there was  no  such  address,  further  enquiries  were  made  and  the  agent  went  to

42 Coco’s Crescent on 21 March 2012.   A woman at that address (subsequently identified as Mr Knight’s wife) confirmed it was Mr Knight’s address but said that he was in New Zealand and would be away for two to three weeks.

[12]     Mrs Stephens then attempted to serve Mr Knight at an address in Auckland:

1/54 Liverpool Street, Epsom.   There is no evidence as to how that address was obtained.  An agent has given evidence of visiting that property on three occasions on 29 March 2012 and again on 30 March 2012, but getting no response when knocking at the door (although he observed vehicles parked in the garage at the property).  Mr Knight contends that there was no attempted service at 1/54 Liverpool Street,  and  claims  (without  giving  any basis  for the assertion) that  service was erroneously attempted at a neighbouring property (54A/1, the residents of which do not know him).

[13]     On 18 May 2012, Mrs Stephens applied for, and was subsequently granted, an order for substituted service, on the basis of the above attempts.

Principles for indemnity costs

[14]     The Court may award indemnity costs in the circumstances set out in High

Court Rules, r 14.6(3).

[15]     New Zealand courts have adopted, as a guide, a categorisation of conduct that crosses the threshold for an award of indemnity costs.   Those categories were summarised in the judgment of the Federal Court of Australia in Colgate-Palmolive

Co v Cussons Pty Ltd,1  adopted in Hedley v Kiwi Co-operative Dairies Ltd,2  and endorsed in Bradbury v Westpac Banking Corp.3   One such category  is evidence of particular misconduct, causing loss of time to the court and other parties.4

Issues

[16]     Two issues arise:

(a)      whether Mrs Stephens was put to the cost of issuing this proceeding unreasonably; and

(b)      whether there was ground for an order for substituted service.

Was it unreasonable to put Mrs Stephens to the cost of this proceeding?

[17]     There  can  be  no  question  that,  as  a  retiring  trustee,  Mr  Knight  had  an obligation to transfer the property into the names of the new trustees.  The essential issue is whether it should have been necessary for Mrs Stephens to have issued this proceeding, given that obligation.

[18]     Mr Knight raises two matters in defence of his refusal to sign the authority and instruction form sent to him, which would have permitted the transfer to be effected:

(a)      He says that he refused to sign the document “at his cost”.  He says that  he  raised  this  in  his  reply  email  on  3  June  2010,  and  that Mrs Stephens’ solicitor  failed  to  address  it  in  the  email  sent  the following day or in the email sent in February 2011.  Thus Mr Knight contends that it was never conveyed to him that he would not be liable

for costs.

1      Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.

2      Hedley v Kiwi Co-operative Dairies Ltd (2002) 16 PRNZ 694 (HC)

3      Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400.

4      Colgate-Palmolive Co, above n 1, at 233.

(b)He says that the incoming trustees were negligent in failing to arrange for him to sign the form at the time of his resignation (no document was prepared or sent to him for signing at that time).

[19]     I do not accept that either matter gave Mr Knight ground to refuse to sign the authority and instruction form.  There was no suggestion that he was being asked to meet any costs.  He was being asked to complete a straightforward task, required by his duties as a retiring trustee.  He has not identified any costs to which he might be put.  Mrs Stephens’ solicitor had responded appropriately to his vague claim that he was not obliged to go further “at my own cost”.   The onus was on Mr Knight to identify what the costs might be, if, indeed there were any.   Instead Mr Knight simply failed to reply to the emails of 4 June 2010 and 3 February 2011.  I accept that Mrs Stephens had no option but to bring this proceeding.

[20]     Mr Knight also contended that he did not receive the form.  However, I am satisfied that it was attached to the email that was sent to him on 3 June 2010 (it is mentioned as being attached and Mr Knight has not provided any proof that it was not so attached).  Further, if it had been omitted, I would have expected Mr Knight to mention that in his reply email of 3 June 2010, or in response to either of  the subsequent emails.

[21]     Lastly, I note that Mrs Stephens’ solicitor made it clear to Mr Knight in his email of 3 February 2011 that the proceeding would be necessary if he continued in his refusal.   Had Mr Knight co-operated at that point, the failure to obtain his signature at time of retirement would have been remedied, simply, and without any need for the proceeding. To that extent, there was nothing in the second point raised.

Were   the   costs   of   obtaining   an   order  for  substituted   service   incurred reasonably?

[22]     Mr Knight says that there was no need for Mrs Stephens to have applied for substituted  service.    He  claims  that  he  was  readily  contactable  by  his  home telephone, mobile phone, his email, his solicitor, or through any of Mrs Stephens’ three sisters, with whom he has a close friendship.

[23]     I accept that there is some merit in these criticisms (although it is always easy to  see  such  things  with  the  benefit  of  hindsight).     The  points  of  particular significance are that there was no evidence of any contact with Mr Knight being attempted using either of two email addresses used for communication in 2010 and

2011  (one  a  New  Zealand  service provider  and  the other  an Australian  service provider) or using Mr Knight’s mobile telephone (Mr Knight’s evidence that both Mrs Stephens and her solicitor have used that number to contact him in the past was not challenged).  Those steps could have been taken easily, and without great cost. Had that occurred, and Mr Knight not responded or made himself available for service, he would have no ground to challenge the need for the order for substituted service.   In the absence of any evidence of those steps, there must be doubt as to whether the application for substituted service was indeed necessary.

[24]     I  do  not  accept,  however,  that  Mrs  Stephens  can  be  criticised  for  not continuing to try and make contact via the telephone at the Liverpool Street address (a call to that address went unanswered and there was no message service) nor is there any reason to believe that an enquiry made of Mrs Stephens’ sisters would have resulted in anything more than the information already known (the email addresses, perhaps the mobile phone number and the Queensland address).   Mr Knight also says he could have been contacted through the solicitor now acting for him (because he has acted for Mr Knight for some years, and Mrs Stephens’ solicitor had dealings with him in 2010 in respect of another trust).  However, Mrs Stephens’ solicitor says that he was not advised that the solicitor was acting for Mr Knight in this matter until June 2012, that Mr Knight had another solicitor acting for him at the time of his retirement, and the dealing he had had on the conveyancing matter for the other trust had been through counsel rather than the solicitor.  There is no evidence to show that the solicitor was acting for Mr Knight personally rather than in relation to the trust, or that that was a continuing relationship.

Are indemnity costs warranted?

[25]     I can see no legitimate reasons for Mr Knight to have resisted Mrs Stephens’ requests for the property to be transferred to the new trustees.   Although the proceeding should probably have been brought by the new trustees, no issue is taken

over the fact that Mrs Stephens brought it, in light of her entitlement as principal beneficiary.  The critical factor is that it should not have been necessary to issue the proceeding at all.  Mr Knight had no reason to resist.  In my view that is sufficient ground to justify an order for indemnity costs in respect of the issue of the proceeding.

[26]     I  do  not  consider  an  award  of  indemnity  costs,  or  indeed  any  costs,  is warranted in respect of the application for substituted service, on the facts before the Court.  Nor do I consider that there is any entitlement to costs for the conferences that took place after the initial conference (which followed naturally from the issue of proceeding) up until the time that Mr Knight was served.

[27]     In addition to indemnity costs in respect of the preparation and issue of the proceeding, Mrs Stephens is entitled to indemnity costs for the initial conference and any further attendances after Mr Knight was served and up to the date of delivery of the authority and instruction form and discontinuance of the proceeding.

[28]     Costs since discontinuance, in respect of the dispute over Mrs Stephens’ claim for costs, are to lie where they fall, given that both parties have had some success.

[29]     It will be apparent from the above that I do not consider it appropriate for

Mr Knight to be reimbursed from the assets of the trust.

[30]     I invite counsel to confer over the quantum of the indemnity costs.  If there is any issue over them, counsel may file further memoranda.  Those memoranda are to

be filed within 15 working days.

Associate Judge Abbott