Toailoa v Eliu

[2024] NZHC 2030

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-1748

[2024] NZHC 2030

UNDER

Trusts Act 2019, the Charitable Trusts Act 1957, and Part 18 of the High Court Rules

IN THE MATTER OF

the Samoan Independent Seventh Day Adventist Church charitable trust board and the Samoan Independent Seventh Day Adventist Property Trust charitable trust board

BETWEEN

SIAOSI DAVID SOOTAGA TOAILOA

First Applicant

Cont:/

Hearing:

18 July 2024

Counsel:

B O’Callahan and R J Warren for applicants (respondents to stay application)

J D McBride and B E Smith for first, second, third and fourth respondents (the first applicants being stay applicants)
D L Harris and A A A Ghandour for fifth respondent
M K Mahuika for Samoan Independent Seventh Day Adventist Church

Judgment:

24 July 2024

Reissued:

26 July 2024

JUDGMENT OF JOHNSTONE J

(application for stay pending appeal)

Solicitors:

This judgment was recalled and reissued by me on 26 July 2024 pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Zhang Law, Auckland

CM & Associates, Auckland
Crown Law Office, Wellington

TOAILOA & ORS v ELIU & ORS [2024] NZHC 2030 [24 July 2024]

AND

FEU SEUMAALII

Second Applicant

AND

PENIATA SAUNIA

Third Applicant

AND

MATAUAINA ELIU, SALETAULUA CHARLES FAAMANATU MAKA AND TONGA SEINI FATA, AS TRUSTEES OF THE SISDA PROPERTY

TRUST
First Respondents

AND

SUNRISE GLOBAL HOMES LIMITED

Second Respondent

AND

WILLIE PAPU

Third Respondent

AND

WILLIE JUNIOR PAPU

Fourth Respondent

AND

ATTORNEY-GENERAL

Fifth Respondent

[1]    By  result  judgment  dated  28  March  2024,1  with  reasons  delivered   on 31 May 2024,2 I made orders in this proceeding (the Costs Proceeding):

(a)declaring it reasonable and appropriate for the  applicants  (the  Toailoa applicants) to commence proceedings (the Main Proceeding) seeking to remove the trustees of trusts I referred to as the Property Trust and the Church, and otherwise regularising aspects of the trusts’ constitutions and administration;

(b)declaring it reasonable and appropriate for the Toailoa applicants to seek interim orders in the Main Proceeding appointing an interim receiver or trustee of the Property Trust and the Church; and

(c)directing that the Toailoa applicants be reimbursed such of their reasonable legal costs in doing so as may be approved by the Registrar of this Court, from the assets of the Church and, if necessary, the Property Trust.

[2]    Trustees of the Property Trust seek a stay of those orders, pending determination of their appeal against them to the Court of Appeal.

Background

[3]    The circumstances in which my result judgment was issued are described in my reasons judgment. Following my results judgment of 28 March 2024:

(a)The application in the Main Proceeding for interim orders was heard, on 8 April 2024.

(b)The legal representation of the Church and of the Property Trust changed. Mr Kohler KC and Ms Short had appeared before me in the Costs Proceedings,   and   before   Wilkinson-Smith    J    in    the Main Proceedings, as counsel for the first- to fourth-named

1      Toailoa v Eliu [2024] NZHC 701.

2      Toailoa v Eliu [2024] NZHC 1412.

respondents, advising that (notwithstanding the applicants’ submission that they were trustees of the Church), their clients “in effect” represented the Church. On 27 May 2024, a memorandum of change of representation advised that Mr McBride and Ms Woods are now counsel for the first- to fourth-named respondents.

(c)Justice Wilkinson-Smith appointed an interim manager to administer the affairs of the Church and the Property Trust,3 and has since granted leave to appeal against that appointment, staying the appointment pending appeal.4

(d)By order dated 12 June 2024, the Church was formally added as a fifth respondent   to   both    the    Main Proceeding    and    the    Costs Proceeding.5 Mr Mahuika has accepted instructions to appear for the Church.

(e)The Court of Appeal has scheduled the appeals in both the Costs Proceeding and the Main Proceeding for hearing on 8 October 2024.6

How should applications for stay pending appeal be determined?

[4]    Under r 12(3) of the Court of Appeal (Civil) Rules 2005, pending the determination of an appeal, the court appealed from or the Court of Appeal may, on an interlocutory application, order a stay of the proceeding in which the decision was given or a stay of execution of the decision, or grant any interim relief.

[5]    As Fitzgerald J indicated in Yu v Bradley, a court determining an application for a stay of execution is required to “strike an appropriate balance” between the interests of parties desiring the fruits of judgment and of parties who might be

3      Toailoa v Eliu [2024] NZHC 1509.

4      Toailoa v Eliu [2024] NZHC 1621.

5      Toailoa v Eliu HC Auckland CIV-2023-404-1747, 12 June 2024 (Minute of Wilkinson-Smith J).

6      Eliu v Toailoa CA255/2024 and CA428/2024, 11 July 2024 (Minute of Goddard J).

successful on appeal yet have been required in the interim to meet the judgment.7 Factors typically taken into account include:8

(a)whether the appellant’s right of appeal will be rendered nugatory if no stay is granted;

(b)whether the appellant is acting in good faith in pursuing the appeal;

(c)whether the successful party will be arduously affected by the stay;

(d)any effect on third parties;

(e)the novelty and importance of the questions involved;

(f)the public interest in the proceedings;

(g)the overall balance of convenience; and

(h)the apparent strength of the appeal.

[6]    Where there are grounds to believe a successful party may not be able to repay, or otherwise restore the position if the appeal succeeds, security is ordinarily required.9 Nevertheless, each case must be decided on its own circumstances, within which:10

… sufficient justification must always be found before the Court acts to protect the defendant’s position by granting a stay or imposing conditions on a successful plaintiff who wishes to execute a judgment.

Parties’ positions

[7]For the trustees of the Property Trust, Mr McBride submits that:

(a)As the 8 October 2024 Court of Appeal fixture indicates, they are pursuing their appeals diligently and in good faith.

7      Yu v Bradley [2021] NZHC 1098 at [19].

8 At [19].

9      Julius Harper Ltd v FW Hagedorn & Sons Ltd [1989] 2 NZLR 471 (HC) at 501.

10     Haines v Carter (2001) 15 PRNZ 124 (CA) at 127.

(b)The Costs Proceedings have been brought on the basis that the  Toailoa applicants are not able themselves to fund their legal costs in the Main Proceedings. If the Property Trust trustees are successful on appeal, there is a clear risk that funds of the Church and of the Property Trust,

(c)which should not have been paid to the Toailoa applicants, will be irrecoverable. Accordingly, without a stay, the Property Trust may suffer irreversible harm.

(d)Counsel for the Toailoa applicants are likely to continue to act in the appeals, rather than withdraw because their clients may not meet their fees. In the meantime, the assets of the Property Trust are the subject of an interim preservation order made by Lang J on 17 August 2023.11 There is therefore no risk the applicants will suffer long term prejudice by a stay.

(e)There is merit in the appeals. In the Costs Proceeding in particular:

(i)The fact the Church had not formally been joined as a party should have prevented the making of the order that the applicants’ reasonable costs be met from the assets of the Church, prior to any balance being met from the assets of the Property Trust.

(ii)The amount of costs which the Toailoa applicants have since sought that the Registrar certify as reasonable is “extraordinary and without precedent”. My judgment should have set a cap on the amount of claimable costs. The cap should have been referable to the estimated costs, set out in the legal opinion which accompanied the original without notice Beddoe

11     Toailoa v Eliu HC Auckland CIV-2023-404-1747, 17 August 2023 (Minute of Lang J).

application and was then made the subject of orders that the application be served and the opinion not disclosed.12

[8]For the applicants, in response to the stay application, Mr O’Callahan submits:

(a)The appeals lack merit.

(b)The Toailoa applicants’ counsel (Mr O’Callahan and Ms Warren) have so far agreed only to act in relation to steps already taken in this Court. Mr O’Callahan’s personal circumstances are such that he could not guarantee he will be available  for  the  appeal  in  any  event,  and  Ms Warren is not prepared to act as lead counsel on the appeal. Accordingly, there is a very real prospect of the Toailoa applicants being unrepresented in the Court of Appeal if a total stay is granted.

(c)If the Court is minded to grant a stay, it should be granted on condition that  a  fund  of  $120,000  is  paid  into  this  Court,  with  the   Toailoa applicants being permitted to draw upon the fund when fees become due and payable in connection with the leave to appeal or stay applications in this Court, or the appeals in the Court of Appeal. The figure of $120,000 is an estimate, generated from anticipated hours to be spent by Mr O’Callahan and Ms Warren, at rates of $600 and

$300 per hour respectively.

[9]    For the Church, Mr Mahuika cautions that he was only recently instructed, but advises that the Church supports the Property Trustees’ application for stay. He adds that the Church opposes Mr O’Callahan’s proposal that if a stay is granted the Toailoa applicants are funded to defend the appeals. In this regard, the Church regards the proceedings in this Court as hostile, and not about regularising the operations of the Church and Property Trust.

[10]For the Attorney-General, Ms Harris:

12     Toailoa v Eliu HC Auckland CIV-2023-404-1748, 17 August 2023 (Minute of Lang J); and Toailoa v Eliu HC Auckland CIV-2023-404-1747, 31 August 2023 (Minute of Becroft J).

(a)continues to acknowledge that serious concerns are raised as to the proper administration of the Church and the Property Trust, and that the Attorney-General abides the litigation generally;

(b)submits that now more costs are to be expended by way of appeal, there is a justice interest in equality of arms (favouring Mr O’Callahan’s proposal); and

(c)notes the possibility of the Court appointing a contradictor on appeal, but is troubled by the looming 8 October 2024 appeal.

[11]   In reply to Mr O’Callahan’s proposal, Mr McBride for the Property Trust repeats his submissions supporting a total stay, adding that a pre-payment of appeal costs and a stay of costs to date would pre-judge the appeals, and would be excessive in amount.

Where do the interests of justice lie?

[12]The appeals do not appear to me to have abundant merit:

(a)While the Church was not formally named as a party, the applications for Beddoe orders and for appointment of a receiver expressly sought relief against, and were brought by, and were served upon, the key members of the two factions which have formed within, the Church. Now that the Church is represented separately from the respondents other than the Attorney-General (the trustees of the Property Trust, the company they formed to receive property of the Property Trust, and Pastors Willie Papu and Willie Junior Papu), counsel for the Church is instructed simply that the litigation is hostile, and not about regularising operations of the Church. The Church continues to seem disinclined to address concerns shared by the Attorney-General and two judges of this Court. The Church appears to occupy the same position it would have occupied had it been separately represented at first instance, except that now it is unlikely to be sharing its legal costs in defence of the litigation with the Property Trust.

(b)By the time I issued the results judgment in the Costs Proceeding, numerous steps had been taken in both proceedings. Opposition papers, and extensive affidavit evidence and submissions, had been filed. A contested hearing had taken place, with another timetabled. Affidavit  evidence  indicated  that  by  26  January  2024,  the  Toailoa applicants had incurred costs of about $304,933, whereas by 15 February 2024 the first to fourth respondents had incurred costs of about $285,772.65. I consider it at least arguable that the estimate set out in the legal opinion accompanying the without notice Beddoe application had been superseded, in light of the intensity of the first to fourth respondents’ opposition. To date, the Property Trust has not identified the extent of its own legal costs, and it has not specified the amount of costs it suggests would reasonably have been incurred by the Toailoa applicants. The Registrar will have access to the original estimate, and may yet seek to be informed of the respondents’ costs. Overall, a cap may have risked an injustice by way of both retrospectivity and arbitrariness.

[13]   Nevertheless, the Property Trust (and the Church) are entitled to pursue the appeals for hearing on 8 October 2024, and they are pursuing the appeals diligently. If they are successful, they face the prospect of  their  successful  appeal  in  the Costs Proceeding being pyrrhic. Mr O’Callahan for the Toailoa applicants does not dispute that they would be unlikely to repay such reasonable legal costs as might be awarded by the Registrar (assuming those costs are determined and required to be paid before the appeal is determined). The costs would have been paid to the Toailoa applicants’ lawyers and could not be called upon by way of refund. The Toailoa applicants do not have the financial means to meet the costs, or a refund of the costs, themselves.

[14]   That said, a total stay of my judgments in the Costs Proceedings would expose the Toailoa applicants to a risk of being unrepresented, due to their inability to meet legal fees, on an appeal against judgments entitling them to the payment of reasonable legal fees. The Toailoa applicants’ present counsel were prepared to act beyond their retainer, without certainty of payment, at first instance. But I do not consider it

appropriate, given my view of the merits of the Costs Proceedings, to expect counsel to continue to act in the appeal without their fees being met as they are incurred. Despite the regrettable escalation of legal costs that appears in the round to be under way, I accept the submission for the Attorney-General that there is a general justice interest in equality of arms.

[15]   For these reasons, I intend to stay my result judgment in the Costs Proceedings, and to make a fresh interim order providing for payment by the Property Trust of a proportion of the Toailoa applicants’ legal costs in respect of the appeals. Taking the view — bearing in mind the charitable nature of the funds at stake — that reasonable rates for senior and for junior counsel in the appeals should be no more than $500 per hour and $250 per hour respectively, I intend to adjust the figure estimated on behalf of the Toailoa applicants as necessary for payment into court accordingly.

Result

[16]   The application dated 4 June 2024 by Matauaina Eliu, Saletaulua Maka and Tonga Fata, as trustees of the SISDA Property Trust, is granted. Under r 12(3) of the Court of Appeal (Civil) Rules:

(a)my judgment in this proceeding dated 28 March 2024 is stayed, pending determination of the appeal in CA255/2024; and

(b)the Property Trust must pay the sum of $100,000 to the Registrar of the High Court at Auckland, to be paid to, or in accordance with the instructions of, the Toailoa applicants, upon certification by their solicitor as to amounts due and payable, at rates for senior counsel of

$500 per hour and for junior counsel of $250 per hour, in respect of:

(i)the applications in this Court: in CIV-2023-404-1747 for leave to appeal Wilkinson-Smith J’s judgment dated 10 June 2024, and for a stay pending that appeal; and in this proceeding, for a stay pending appeal of my judgment dated 28 March 2024; and

(ii)the appeals in CA255/2024 and CA428/2024.

Johnstone J