Thompson v Brooks

[2020] NZHC 274

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-590

[2020] NZHC 274

UNDER THE

Trustee Act 1956

IN THE MATTER OF

an application to vest property

AND

IN THE MATTER OF

the Jadat Trust

BETWEEN

JANET ADA THOMPSON, STEVEN CAVELL BROOKS and JANE BELLE BROOKS

Applicants

AND

NICHOLAS ROGER BROOKS

Respondent

Hearing:

On the papers

Counsel:

D J C Russ for Applicants

K J Patterson for Respondent

Judgment:

26 February 2020

JUDGMENT OF ASSOCIATE JUDGE LESTER

[Costs Judgment]

This judgment was delivered by me on 26 February 2020 at 2.30pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

26 February 2020

THOMPSON v BROOKS [2020] NZHC 274 [26 February 2020]

[1]    As I  noted in  a previous  minute in this matter, here the applicants  sought   a vesting order under the Trustee Act 1956 on the grounds that the respondent had been removed as a trustee but declined to execute the documents to transfer trust property to the newly appointed trustees.

[2]    Prior to the first call counsel for the applicants advised that the necessary documentation had been signed by the respondent. That left the issue of costs and counsel for the applicants has now sought costs, essentially on the basis that the proceedings were necessary to get the respondent to execute the documents that he had declined to execute for some time. Costs on a 2B basis are sought.

[3]The respondent resists costs, both as to liability and quantum.

[4]    The respondent through counsel, Mr Patterson, submits in summary that the respondent was justified in not signing the Authority and Instruction (“A&I”) documentation as he had not been provided with disclosure of documents relating to the operation of the Trust.

[5]    These proceedings were filed on 25 October 2019 and included an application for leave to use the originating application procedure which was granted in November 2019. Coincidentally, on the day the respondent contacted the applicants’ solicitors to advise that he was prepared to sign the A&I documents, he was served with the court documents.

[6]    In the past when the respondent said he was not prepared to sign the A&I forms because he was concerned about the administration of the Trust, he was provided with letters from the main beneficiaries (who had been appointed replacement trustees) offering an indemnity to the respondent to cover any claim relating to the Trust. In my view, the offer of that indemnity should have marked an end to the respondent’s refusal to sign.

[7]    The principal beneficiaries (now the trustees) were content with the state of the Trust’s affairs. As the principal beneficiaries and new trustees, it is they who would

make any claim against the respondent. The contents of their letters and the offer of the indemnity was confirmation that such a claim was not going to take place.

[8]    Respondent’s counsel says that the offer of an indemnity was a shock and the respondent could not understand why that would be offered. In fact, it is standard practice for trustees who are retiring or who are removed to be provided with an indemnity.

[9]    Mr Russ, counsel for the applicants, wrote to the respondent by letter dated   1 October 2018 which the respondent said he only discovered in his junk mail folder some time in December 2019. The suggestion is that Mr Russ should have followed up on the earlier letter given the passage of time, rather than issuing proceedings. That is something of a counsel of perfection. The respondent had been called upon to execute trust documents and had declined to do so despite the indemnity and despite numerous prior calls to do so. Colloquially, the ball was in the respondent’s court and it was incumbent on him to respond in the circumstances I have outlined.

[10]In those circumstances, I consider costs should follow the event.

[11]   The respondent’s counsel suggests that rather than category 2 costs, category 1 should apply. I do not agree. This is appropriately categorised as a 2B case.

[12]   As to the items claimed, I do not allow the second memorandum/submissions covering the application for leave which was a result of Associate Judge Paulsen’s Minute of 7 November 2019. The matters covered in the second memorandum should probably have been dealt with in the first memorandum given the matters identified by the Judge at [4] of the Minute of 7 November 2019.

[13]   Respondent’s counsel suggests that the applicants’ lawyers have not provided any evidence of the actual time or cost spent. That is the point of scale costs. The scale avoids the need for the provision of actual invoices and supporting material that would apply where indemnity costs were sought. Mr Russ as experienced counsel is aware the High Court Rules provide that scale costs cannot exceed actual costs and implicit in him seeking scale costs are that his actual charges were higher than scale.

[14]   In short, the proceedings were necessary, and the applicants succeeded. Costs should follow the event.

[15]   Accordingly, there is an award of costs in favour of the applicants on a 2B basis as per Mr Russ’s schedule annexed to his memorandum of 14 February 2020, save that item 24 is not allowed.

Associate Judge Lester

Solicitors:
Fletcher Vautier Moore, Nelson

K J Patterson, Barrister & Solicitor, Tauranga