Morgan v Martin HC Hamilton CIV 2011-419-1305 [2011] NZHC 1841 (20 December 2011)

Last Updated: 16 January 2012

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

_{CIV 2011-419-1305}

BETWEEN TUKUROIRANGI MORGAN Plaintiff

AND TANIA ERIS MARTIN First Defendant

AND WAIKATO-TAINUI TE KAUHANGANUI INCORPORATED

Second Defendant

Hearing: On the papers

Counsel: D M Salmon & I T K F Hikaka for Plaintiff

W C Pyke for First Defendant

J A McKay & J W J Graham for Second Defendant

Judgment: 20 December 2011

JUDGMENT OF KEANE J [re costs]

This judgment was delivered by on at pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Date:

Solicitors: Lee Salmon Long, PO Box 2026, Shortland Street, Auckland 1140:

[e-mail]

Chapman Tripp, Auckland: [e-mail]

_{Copy to: W C Pyke, Barrister, Hamilton:} [e-mail]

TUKUROIRANGI MORGAN V TANIA ERIS MARTIN HC HAM CIV 2011-419-1305 20 December 2011

[1] On 6 August 2011, at the half yearly general meeting of Te Kauhanganui, the incorporated society of the Waikato iwi, a resolution was passed, as the chairperson of the society, Mrs Martin, held to be by a sufficient majority, disqualifying Mr Morgan from being an elected member of the society.

[2] The effect of that resolution, which the society confirmed as the rules require by notice to the marae Mr Morgan was elected to represent, Te Hoe O Tainui Marae, was that he ceased to be qualified to represent that marae as from the date on which it received the notice.[1] There was also an immediate consequent effect. Mr Morgan ceased to be able to continue as the chairperson of the executive of the society, Te Arataura.[2]

[3] At the meeting itself Mr Morgan immediately challenged the validity of the resolution. Of the 68 marae comprising the society, 65 were represented at the meeting, each entitled to one vote. Six of the votes cast were ruled to be invalid. There were two abstentions. Twenty-seven voted against the resolution. Mr Morgan contended that for the resolution to be valid a majority of 30 affirmative votes was not enough. At least 33 were called for.

[4] Mrs Martin, in the face of that challenge, upheld the validity of the resolution; a declaration that was conclusive as to the fact that the motion had been carried and by a particular majority.[3] Mr Morgan's only recourse, Mrs Martin said to him, if he wished to challenge the validity of the resolution, was to bring an application for relief in this Court.

[5] In a letter, dated 7 August 2011, the solicitors to Te Kauhanganui expressed an opinion vindicating Mr Morgan's interpretation of the rules. On 31 August 2011, Stace Hammond, on instructions from Mrs Martin, expressed the contrary opinion that the majority had been sufficient because it was the majority of the valid votes cast for or against the motion at the meeting. So the position was when on 12

_{September 2011 Mr Morgan brought this case seeking declaratory and other relief.}

[6] In my decision dated 23 September 2011, I granted Mr Morgan the relief he sought. I made an order quashing Mrs Martin's declaration as to the validity of the resolution. I made related declarations that Mr Morgan was not a disqualified member and that, to have been valid, the resolution should have been 50% or more of the sum of votes of all marae comprising the society, 34 votes, or at least 50% of those present at the meeting, 33 votes.

[7] In my decision I reserved costs and in memoranda filed since Mr Morgan has sought an indemnity award against Te Kauhanganui, as which the society raises no issue in principle and will abide the decision of the Court; and Mrs Martin, though I did not vindicate her interpretation of the rules, also seeks such an indemnity award.

[8] Mrs Martin does so on the basis that she was sued not in her personal capacity but as chair of the society, and that the issue at stake was one central to the governance of the society - what constitutes a simple or special majority. Here too the society will abide the decision of the Court but on a highly qualified basis.

[9] The society submits, if implicitly, that Mrs Martin exceeded her role which is to preside over the society in general meeting. That role, the society says, is not to be equated with that of the executive, which manages the society's affairs, including the conduct of litigation. The society also relies on the fact that I did not vindicate Mrs Martin's interpretation and that she elected not to take their solicitor's advice as to the meaning of the rule, or to participate in a dispute resolution process.

[10] The society, on the face of the submissions made, therefore distinguishes between Mr Morgan's right to indemnity, which it endorses, and that of Mrs Martin, which it does not endorse. It also says, and I share this concern, that such indemnity awards should not become so assured as to encourage members to litigate arbitrarily at the society's expense. This immediate case has a wider context.

Four cases this year

[11] This is the third instance in the last 12 months in which Mrs Martin, the society's chair, and Mr Morgan, the chair of the society's executive, have clashed in

Court proceedings, involving in each instance the society; and that appears to reflect a more fundamental tension within the society between the members generally that have their voice at half yearly and special general meetings and the executive, Te Arataura.

[12] A not insignificant number of members have supported a review of Te Arataura in its conduct of the society's affairs; a review that Mrs Martin has promoted but that the executive has resisted because it has plenary authority to conduct the affairs of the society and the rules neither require nor permit any such review. The executive, Mr Morgan especially it seems, have sought to hold Mrs Martin to account for intermeddling.

[13] This began on 6 December 2010 when the Maori King, Kīngi Tuheteitia, purported to dismiss Mrs Martin as the society's chair and to appoint in her place a member of Te Arataura, Mr Miller, as acting chair.

[14] That led Mrs Martin to bring a case against the members of Te Arataura, amongst them Mr Morgan and Mr Miller, the society and Mr Miller himself, seeking a declaration that she was the duly appointed chair and orders that she be able to act in that capacity until removed in accord with the rules, or until she resigned. She also sought an order restraining Mr Miller from acting as the chair.

[15] Mrs Martin did not succeed in obtaining an order without notice, preserving her position. But, on 14 December 2010, when her application on notice was first called, the defendants acknowledged that she was the duly authorised chair, able to exercise the powers of that office, and that Mr Miller made no claim to act in her place. On 10 June 2011, furthermore, Dobson J awarded her indemnity costs.[4]

[16] Mrs Martin, he held, had reasonably brought her claim, out of a concern that decisions being taken within the Waikato Iwi were inconsistent with the society's rules, and she had been vindicated. He also thought it unlikely that she would ever

_{have obtained the acknowledgements she had as to her status and responsibilities}

without bringing her case. Her actual costs, he held, ought to be met out of the fund held by the society.

[17] Then on 17 June 2011, the society itself brought a case in which it applied for and obtained an order restraining Mrs Martin, in her capacity as chair, from persisting with a half yearly general meeting to take place on 18 June 2011.

[18] Allan J held that the notices given of the meeting were either invalid or out of time and due notice, he said, was important because Mrs Martin and others intended to promote at the meeting what he described as 'large scale constitutional changes', and to remove from office by resolution all but one of the members of Te Arataura.

[19] The materials to members on which the proposed resolutions were said to be justified, Allan J held, were too brief to enable members to consult with their hapu. They were also too brief to enable the members of Te Arataura adversely affected to respond and that was a matter of fundamental natural justice.

[20] Allan J confirmed that Mrs Martin had been properly named as the defendant, simply because as chair, charged with conducting meetings validly, she had to be. He said also that if she had remained neutral in the case, as he thought she had, and had only opposed the society's application to put the other side of the argument, she ought not to carry any costs. That might not be so, he said, if she had taken a leading role in an attempt to unseat the members of Te Arataura.

[21] Allan J also expressed surprise that the application had been brought by the society and not by those contending for the relief applied for; in other words by the members of the executive, principally Mr Morgan. If the case were to continue, he said, that would need to be revisited.

[22] That issue did not arise in this present case. Mr Morgan, the subject of the resolution passed disqualifying him as a member, as Mrs Martin held by a sufficient majority, rightly sought relief on his own behalf. He rightly joined Mrs Martin as principal defendant and the society as a necessary defendant. The society itself made limited and neutral submissions on the disputed issue under the rules.

[23] Since then, however, at least as it appears from the memoranda filed, the society has brought a further case against Mrs Martin.[5] And at a meeting of the society on 4 December 2011 resolutions were passed approving the payment of her costs in this case and calling for the new case against her to be withdrawn or approving the payment of her costs in that case also.

[24] Whether this new case has been rightly brought by the society against Mrs Martin does not arise in this proceeding, except to this extent. It does put in issue whether, even here, Te Arataura and the society have become so closely aligned that in any debate about the rules, especially in any as to Mrs Martin's capacity as chair, she is the only likely balancing voice; the only effective contradictor.

[25] In that, I wish to be clear, I accept at once that the opinion Chapman Tripp gave as to the rules on 7 August 2011 was uncoloured by any partisan interest. But that does not answer the underlying concern that Mrs Martin raises; that as a matter of realpolitik as well as under the rules, whenever the society speaks Te Arataura is the real speaker. That, however, is an issue, as I have said, that need not complicate these present applications.

Costs principles

[26] Costs ultimately lie in the discretion of the Court. All the specific rules governing costs are subject to that paramount principle.[6] But the particular rules will ordinarily apply. The discretion is reserved for 'the unexpected and the unforeseen' case for which the particular rules do not cater[7]

[27] The usual general principle is that the party who fails should pay the costs of the party who succeeds and that any award should reflect the complexity and significance of the proceeding.[8] It is that usual rule on which the society in part

_{relies, as it appears to me, to distinguish between Mr Morgan and Mrs Martin.}

[28] Also invoked, and by both Mr Morgan and Ms Martin, is the Court's ability to grant increased and indemnity costs under HCR 14.6(4)(c) where 'costs are payable from a fund, the party claiming costs is a necessary party to the proceeding effecting the fund, and the party claiming costs has acted reasonably in the proceeding'. As to Mr Morgan's right under this rule the society takes no issue. As to Mrs Martin it does.

Conclusions

[29] Mr Morgan, I am satisfied, as the society effectively accepts, is entitled to an indemnity award of costs against its fund on the principles set out in the decision of Dobson J in Martin v Morgan & Ors,[9] with which I agree.

[30] As a result of a resolution taken by the society in general meeting on 6

August 2011, and taken invalidly, Mr Morgan ceased to be a member of the society and became disqualified from chairing its executive arm. He acted reasonably in pursuing the relief he obtained, and his right to relief turned on an issue in the society's rules that could only be resolved in this proceeding.

[31] I am satisfied equally that Mrs Martin, though I did not vindicate her interpretation of the society's rules, is entitled as well to an indemnity award against the society's fund. She was a necessary party to the proceeding because it arose from a decision she was obliged to take as to the validity of the vote at a general meeting and, though I did not vindicate her interpretation of the rules, it was not unreasonable.

[32] The meaning of the rule on which Mrs Martin and Mr Morgan differed is central to the society's constitution. It governs by what majority the society may take decisions at general or special meetings. It is expressed elliptically. Its meaning is not self evident and what it means could not be resolved authoritatively under any disputes process binding only Mr Morgan and Mrs Martin. It could only be resolved

_{for all purposes by this Court.}

[33] It has to be of concern, I accept, that there have now been four instances in which Mrs Martin or Mr Morgan or the society have had resort to this Court, in each instance engaging the others. And so, I wish to be clear, Mr Morgan and Mrs Martin are both entitled to indemnity from the society in this case only because their dispute turned not unreasonably on the meaning of a central rule.

[34] No member of the society should assume that this present award constitutes a precedent. The contrary is the case. In future cases, the likelihood is, applications for relief and any for an indemnity award against the society will be assessed with increasing stringency. That said, in this present case, I make the indemnity awards

_{against the fund of the society that Mr Morgan and Mrs Martin apply for.}

P.J. Keane J

---

[1] _{Waikato-Tainui Te Kohanganui Incorporate Rules, rule 5.3.2(b).}
[2] _{Rule 15.4.1(a).}
[3] Rule 12.6.

[4] Martin v Morgan & Ors & Waikato-Taunui Te Kauhanganui Inc & Miller HC Hamilton CIV

2010-419-1628, 10 June 2011.
[5] _{Waikato-Tainui Te Kauhanganui Inc v Martin HC Hamilton CIV 2011-419-1621.}
[6] _{HCR 14.1}
[7] _{Glaister v Amalgamated Dairies [2004] 2 NZLR 606 at [24].}

[8] HCR 14.2(a), (b).

[9] Martin v Morgan & Ors HC Hamilton CIV 2010-419-1628, 10 June 2011.