Wallace v Wallace - [2024] NZHC 372

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2022-419-188

[2024] NZHC 372

IN THE MATTER Of an application seeking directions pursuant to the Trusts Act 2019

AND

IN THE MATTER

of Part 18 High Court Rules

AND

IN THE MATTER

Of the IONE WALLACE TRUST

BETWEEN

SHANE CRAIG WALLACE and EDWARD

DEAN CLARKE as trustees of the IONE WALLACE TRUST

Plaintiffs

AND

GAVIN ROLAND WALLACE

Defendant

Hearing: On the papers

Counsel:

D M O’Neill for Plaintiffs Defendant in Person

Judgment:

29 February 2024

JUDGMENT OF LANG J

[Costs]

Solicitors/counsel:

This judgment was delivered by Justice Lang On 29 February 2024 at 3.00 pm
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Date:……………………

Harkness Henry, Cambridge/D M O’Neill, Barrister, Hamilton Copy to:
Mr G R Wallace

WALLACE v WALLACE [2024] NZHC 372 [29 February 2024]

[1] In this proceeding the trustees of the Ione Wallace Trust sought directions under s 133 of the Trusts Act 2019. They sought orders sanctioning a proposal under which the vesting date of the Trust was to be brought forward and the assets of the Trust distributed in equal shares to the six named final beneficiaries.

[2] The defendant, Mr Gavin Wallace, is one of the final beneficiaries. He opposed the trustees’ application. He also applied for an order dismissing the proceeding and granting freezing orders over the assets of the Trust.

[3] In a judgment delivered on 19 October 2023, I granted the trustees’ application and dismissed Mr Wallace’s applications.1 I also indicated my view that the trustees had been the successful parties and would ordinarily be entitled to an award of costs in their favour.2 I reserved leave for the parties to file memoranda if they could not reach agreement regarding costs.

[4] The parties have been unable to reach agreement regarding costs. I am therefore required to determine that issue based on the memoranda they have filed.

The arguments

[5] Mr O’Neill submits that the trustees should receive an award of indemnity costs. This would require Mr Wallace to pay costs on a solicitor-client basis. Mr O’Neill also submits that the costs should be deducted from the share of trust assets that Mr Wallace will receive. In the alternative, Mr O’Neill contends that the trustees should receive costs on a category 2B basis together with a 50 per cent uplift to reflect the fact that the arguments Mr Wallace advanced at the hearing had little or no merit.

[6] Mr Wallace opposes any award of costs being made against him. He says that costs should lie where they fall. He sets out reasons for this in lengthy submissions filed in opposition to the trustees’ application for costs. The arguments he advances are, however, largely not relevant to the issue of costs following a hearing in which he has been the wholly unsuccessful party. In large part they seek to traverse issues that

1 Wallace v Wallace [2023] NZHC 2928.
2…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Wallace v Wallace

Details

AGLC: Wallace v Wallace [2024] NZHC 372
Case: [2024] NZHC 372
Decision Date: 29 February 2024

CaseChat Overview and Summary

In this case, the trustees of the Ione Wallace Trust sought directions under the Trusts Act 2019, aiming to bring forward the vesting date of the Trust and distribute the assets equally among the six named final beneficiaries. Gavin Wallace, one of the final beneficiaries, opposed the trustees' application and sought orders dismissing the proceeding and imposing freezing orders on the Trust's assets. The High Court granted the trustees' application and dismissed Wallace's applications, reserving the issue of costs for later determination.

The legal issues centred on whether the unsuccessful party, Wallace, should contribute to the successful party's costs and, if so, the appropriate basis for the award. The trustees argued for indemnity costs, contending that Wallace acted unreasonably by opposing the proceeding. Wallace argued that costs should lie where they fall, contending that the proceeding was unnecessary and a waste of trust assets.

The Court rejected Wallace's arguments, finding that the trustees acted reasonably in seeking court sanction due to Wallace's refusal to sign an indemnity document. The general principle is that the unsuccessful party should contribute to the successful party's costs. The Court found that Wallace's arguments were not without merit, particularly regarding the interpretation of the trust deed. The Court held that Wallace did not act very badly or unreasonably, so an award of indemnity costs was not appropriate. Additionally, while Wallace's argument regarding the trust deed's interpretation was not misconceived, it did not justify an award of increased costs.

The Court ordered that the trustees were entitled to an award of costs against Wallace on a category 2B basis, together with disbursements as fixed by the Registrar. The costs were to be deducted from Wallace's share of the trust assets. This outcome ensures that the remaining beneficiaries are not required to contribute to Wallace's costs, maintaining fairness in the distribution of the Trust's assets.

Orders