Gregory v Bason HC Palmerston North CIV-2008-454-545 [2011] NZHC 520 (25 May 2011)

Last Updated: 19 June 2011

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

_{CIV-2008-454-545}

UNDER the Trustee Act 1956

BETWEEN JEANETTE MARGARET GREGORY Plaintiff

AND NANCY JANET LOUISE BASON, IAN CHARLES EASTON AND ALAN MCKENZIE LARSEN

Defendants

Judgment: 25 May 2011

JUDGMENT OF DOBSON J (Application for recall of costs judgment)

[1] The substantive issues in these proceedings were resolved by consent, but differences remained as to the cost consequences. On 7 March 2011, I heard argument on whether costs orders were appropriate and, if so, in what terms.

[2] The plaintiff (Jeanette) sought costs to be paid to her out of the funds of the Moutoa Trust (the Trust). The defendants were, when the proceedings were commenced, the trustees of the Trust. Jeanette has a beneficial interest in the Trust that is likely to be reflected in approximately 40 per cent of the Trust’s final distribution.

[3] Two of the then trustees, Mrs Bason (Nancy) and Mr Larsen, sought costs against the third trustee, Ian Charles Easton (Ian) on the basis that it was the stance he adopted to the issues in the litigation which required the proceedings to be

_pursued.

GREGORY v BASON & ORS HC PMN CIV-2008-454-545 25 May 2011

[4] My judgment of 8 March 2011 made orders that Jeanette was entitled to costs on a 2B basis, to be paid out of the assets of the Trust, and that Nancy and Mr Larsen were entitled to a contribution to their costs and disbursements, to be met by Ian.

[5] On 22 March 2011, application was made on behalf of Ian for recall of my costs judgment on the basis that I had misunderstood material aspects of the factual circumstances, and that the appropriate outcome was that costs ought to lie where they fell. Ian swore an affidavit dated 22 March 2011 in support of the application for recall. Counsel for Jeanette, and for Nancy and Mr Larsen, filed Memoranda opposing the application for recall, dated 18 and 13 April 2011 respectively.

[6] In a telephone conference convened on 10 May 2011, it was agreed (in the absence of Mr Johnston, counsel for Nancy and Mr Larsen) that Mr Upton QC ought to have a further seven days in which to file written submissions in response, and I ought thereafter to deal with the application for recall on the papers. I have subsequently received and considered Mr Upton’s submissions dated 17 May 2011. No objection was subsequently raised by Mr Johnston to that course.

[7] Five matters were raised as justifying a recall of the costs judgment.

[8] First, a perceived inequality in Jeanette being granted costs out of the Trust, when an award in favour of Ian in the sum of $2,150, made against Jeanette in her earlier unsuccessful family protection proceedings, remained unpaid. However, Mr Larsen made a deduction of the sum of $2,150 from amounts that would otherwise be payable to Jeanette from the Trust in 2006. So, Ian’s proper complaint is that Mr Larsen has not accounted to him for that. That is not a matter that can be held against Jeanette. There are other proceedings in which Ian is suing Mr Larsen for inadequacies in services provided as Ian’s accountant. If at all, the failure to account for the sum of $2,150 is more appropriately pursued in those proceedings, than making any attempt to reflect it in the discrete costs considerations in the present context.

[9] Secondly, Ian disputes the characterisation that he had been in on-going

“practical control” of the assets of the Trust. Ian says that it was Mr Larsen who

enjoyed “practical control” of the assets. The relevant point is that the substantial assets of the Trust constituted a farming operation. After their father’s death, Ian was the farmer in day-to-day control of that farming operation. Financial decisions about funding farming operations, and accounting to beneficiaries of the Trust for distributions from the net proceeds of the farming operation, may have been agreed to, or even led for a period by, Mr Larsen. Relevantly, once the proceedings for removal of Ian as a trustee were commenced, Mr Larsen shared with the Nancy the attitude that they should all resign.

[10] In those circumstances, I am not persuaded that the context in which I had regard to Ian’s control of the Trust assets, so far as it had any bearing on the appropriate costs orders in the present proceedings, was wrong.

[11] Thirdly, Ian now raises a concern that I had misunderstood the sense in which he claimed to have acted in reliance on professional advice at all relevant times. The point Ian wished to make was that his conduct in the period prior to commencement of the proceedings, which was the subject of criticism in Jeanette’s claim, had been taken on the advice of Mr Larsen. In those circumstances, Ian now argues that it is unfair for Mr Larsen as a co-trustee, and a person who sanctioned the conduct being criticised in Jeanette’s pleading, to obtain the benefit of a costs order against Ian.

[12] Again, to the extent that this concern is justified, it is more appropriately reflected in Ian’s claims against Mr Larsen. In the context of the steps required in the present proceedings, from very shortly after their commencement Mr Larsen agreed with Nancy as a co-trustee and Jeanette as the plaintiff that Ian should resign as a trustee. Mr Larsen also accepted that the other trustees’ resignations should occur at the same time. Ian’s conduct in this litigation opposing the relief sought by Jeanette is inconsistent with that concession by Mr Larsen. Accordingly, Ian’s conduct in these proceedings can hardly be the consequence of current advice from Mr Larsen to adopt the stance he has.

[13] Ian also complains that a costs order against him and in favour of his co- trustees is unfair, given the extent to which he has taken initiatives, at his considerable financial cost, to progress matters relevant to the family disputes. I am

not satisfied that any new factors have been raised under that heading, and certainly not to a material extent that would justify recall.

[14] Fourthly, Mr Upton argues on behalf of Ian that counsel for Nancy and Mr Larsen have misstated the extent to which they made it clear from the outset of the present proceedings, or shortly thereafter, that they would consent to both their removal as trustees of the Trust, and as executors of Nancy and Ian’s mother’s estate.

[15] On this point, the 13 April 2011 Memorandum filed by Mr Johnston on behalf of Nancy and Mr Larsen stated:

...it was made quite plain on their behalves from the outset that they envisaged, and consented to, orders for the removal of all three trustees of the Trust and executors of the Estate and their replacement by a corporate trustee.

[16] Mr Upton disputes that the second aspect was made clear, ie that Nancy and Mr Larsen would also consent to their removal as executors of the estate of Mrs Easton Snr. Mr Upton claims that that uncertainty is relevant because Ian took the view that all issues ought to be progressed together. Ian saw the roles as trustees of the Trust and executors of their mother’s estate as being inevitably linked.

[17] I am not satisfied that this requires a revisiting of the analysis leading to the costs orders I have made. The argument for Ian cannot go so far as to attribute to Nancy and Mr Larsen a wish to stay on as executors of the estate of Mrs Easton Snr. His narrower complaint is that it was not made clear to him from the outset that they took a consistent view about their roles as executors of the estate. That does not justify continuation of the present proceedings as that occurred.

[18] A final matter objected to on behalf of Ian is that he was unfairly attributed with responsibility for delaying a resolution of the present proceedings for as long as that has occurred. I did observe that the effect of numerous initiatives pursued on behalf of Ian had been to delay a fixture in the proceedings.[1] I accept that the period that elapsed from commencement of the proceedings until their settlement is not a

_{matter that can be blamed entirely on Ian. His application for consolidation of his}

substantive proceedings against Mr Larsen and the present proceedings was heard some nine months after his proceedings were filed, and a judgment was not delivered for a further five months. Nonetheless, the period between pursuit of Jeanette’s proceedings and their resolution is explained, to a material extent, by the initiatives taken on behalf of Ian.

[19] I did not attribute any great weight to the delays, to the extent they may have been attributable to Ian, in determining the costs outcome. On considering all the points made on behalf of Ian by Mr Upton, I am not prepared to see that as materially advancing the case for recall.

[20] Accordingly, the application for recall is declined. There will be no order as to costs.

Dobson J

Solicitors:

M B Ryan, Palmerston North for plaintiff

Jacobs Florentine, Palmerston North for Nancy Bason

Rainey Collins, Wellington for Ian Easton

Brittens, Palmerston North for Alan Larsen

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[1] At [4], [15].