Martin v Morgan HC Hamilton CIV-2010-419-1628 [2011] NZHC 580 (10 June 2011)

Last Updated: 24 June 2011

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

_{CIV-2010-419-1628}

BETWEEN TANIA ERIS MARTIN Plaintiff

AND TUKOROIRANGI MORGAN, CHARLES JOE, PATIENCE TE AO, RUKUMOANA SCHAAFHAUSEN, KINGI PORIMA, SONNY WILSON, RAHUI PAPA, ROBERT TUKIRI, TAITIMU MAIPI, MAXINE MOANA-TUWHANGAI AND GREG MILLER

First Defendants

AND WAIKATO-TAINUI TE KAUHANGANUI INCORPORATED

Second Defendant

AND GREG MILLER Third Defendant

Judgment: 10 June 2011

JUDGMENT OF DOBSON J (Costs)

This judgment was delivered by me on 10 June 2011 at 11am pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:..............................

Solicitors:

Stace Hammond, Hamilton for plaintiff

_{Chapman Tripp, Auckland for defendants}

MARTIN v MORGAN & ORS HC HAM CIV-2010-419-1628 10 June 2011

[1] This is an opposed application for costs on behalf of the plaintiff (Mrs Martin) in proceedings where, without a contested hearing, formal acknowledgements were provided on behalf of the defendants, which effectively addressed the matters on which relief was sought. Mrs Martin seeks indemnity costs for all the steps taken on her behalf in the proceedings until that point, and also for the costs incurred since that time in seeking to recover the costs that she has incurred. The defendants contend that costs should lie where they fall.

[2] Mrs Martin is the elected chairperson of Waikato-Tainui Te Kauhanganui Incorporated (Te Kauhanganui). Te Kauhanganui is the representative body for the Waikato-Tainui iwi, responsible for supervising the governance of the business and other interests of that iwi. It treats itself as a tribal parliament with representatives of relevant marae as its members. It is also the trustee of the Waikato Raupatu Lands Trust.

[3] The business of the iwi is managed by an executive body, Te Arataura. The first named defendant (Mr Morgan) is the chairperson of Te Arataura. Te Arataura exercises operational and financial control over the iwi’s assets.

[4] Initiatives that Mrs Martin has pursued to have an independent governance review of matters including the management of Te Arataura have been a source of tension between her and at least some of the first defendants, whose position has been supported by Kīngi Tuheteitia (the Māori King). On 6 December 2010, the Māori King purported to dismiss Mrs Martin as chairperson of Te Kauhanganui and to appoint the third defendant, a member of Te Arataura (Mr Miller) as acting chairperson of Te Kauhanganui.

[5] The proceedings were commenced seeking a declaration that Mrs Martin was the duly appointed chairperson of Te Kauhanganui, and orders that she was to discharge the responsibilities of that office until removed in accordance with the rules of Te Kauhanganui or until she resigned. Mrs Martin also sought an order restraining Mr Miller from acting as chairperson of Te Kauhanganui.

[6] On the day the proceedings were filed, Brewer J declined an application that had been made without notice for an interlocutory injunction to preserve the status quo. On 14 December 2010, Mrs Martin’s application for an interlocutory injunction was to be called, on an on notice basis. By that date, solicitors for the defendants

_{provided formal acknowledgements that:}

Mrs Martin was duly appointed as the chairperson of Te Kauhanganui and was entitled to conduct the business and exercise the powers of that

_office;

Mr Miller did not purport to act as chairperson; and

the defendants would not pursue the appointment of a mediator, which initiative had been mooted by Te Arataura in circumstances that Mrs Martin perceived to be contrary to her position as elected

_chairperson.

[7] In seeking costs, Mrs Martin swore an affidavit dated 25 March 2011. She addressed why she believed it had been necessary for her to commence the proceedings. She referred, among other things, to her belief that Mr Morgan had wanted the Māori King to sack her, and that after the purported sacking occurred, Mr Morgan had made statements consistent with supporting what had happened. Mrs Martin’s affidavit on costs described a further vote taken by Te Kauhanganui as to whether she should be confirmed as its current chairperson, and that a motion in those terms was passed, as was a subsequent vote of Te Kauhanganui, to the effect that all her costs should be met. The reality is that Te Arataura as the management entity controls the funds of the whole organisation, and that body has refused to act on the vote by Te Kauhanganui to meet the costs.

[8] The first issue is whether pursuit of the proceedings was a reasonable and appropriate response to the perceived breach of the rules of Te Kauhanganui, and of Mrs Martin’s rights, at the time.

[9] The defendants dispute that the proceedings were either necessary or appropriate for a range of reasons. First, that the action purporting to dismiss Mrs Martin was taken by the Māori King who was not sued, and conversely the action had not been taken by the defendants. Second, that the proceedings were commenced without any warning, and without a letter before action seeking to clarify what the defendants’ view was of the legal position. As soon as Mrs Martin’s concerns, and the legal analysis on which they depended, had been conveyed to the defendants, they acknowledged the legal position, including confirmation of her status as the chairperson of Te Kauhanganui.

[10] In support of the defendants’ opposition to the application, Mr Morgan swore an affidavit dated 1 April 2011 on behalf of the governing body of Te Arataura. That affidavit gave Mr Morgan’s perspective on the propriety of steps that Mrs Martin had taken to pursue a governance review, citing criticisms of her conduct as being perceived by the Māori King as sufficient to pursue her sacking. Mr Morgan denied that he or other members of Te Arataura had taken steps to have her removed. In particular, Mr Morgan denied that he had forced the Māori King to “sack” Mrs Martin. Mr Morgan accepted the legal analysis on which Mrs Martin’s claims were founded, so that Te Arataura acknowledged that her purported removal was not lawful.

[11] Mr Morgan’s affidavit was responded to by one in support of Mrs Martin’s costs application from an elder, Charles Tumai. He deposed to having been present on 4 December 2010 for the meeting at which comments were made in respect of sacking Mrs Martin. Mr Tumai deposed to hearing Mr Morgan say to the Māori King, among other things:

My Lord, I want you to sack her.

She has brought Tainui into disrepute. Her figures are wrong.

[12] It is that difference over any part that Mr Morgan had played in her purported removal that caused Mrs Martin to pursue an application to have Mr Morgan cross- examined on his affidavit on costs. I resolved that application against Mrs Martin.[1]

[13] I have carefully reviewed the whole of this file, and am satisfied that in the particular circumstances confronting Mrs Martin, commencement of the proceedings was reasonable and appropriate. In an environment where the formal legal structures might sit uneasily with cultural hierarchies, it was appropriate for the chairperson of Te Kauhanganui to be concerned both personally and in an institutional sense for steps taken which ignored the legal structure. Although it is now easy to acknowledge that the institutions would respect the legal position, the practical reality of where power lay within the Waikato-Tainui iwi structures could quite reasonably have left her considering that her own position, and the lawfulness of the conduct of business on behalf of the iwi, was under threat.

[14] Nor do I consider that the appropriateness of her proceedings is lessened by the absence of a letter before action, inviting the defendants to recognise the unlawfulness of her purported removal and the appointment of Mr Miller as acting chairperson. Given the dynamics of a range of initiatives that the opposing factions were pursuing and the need for an urgent acknowledgement of what the lawful position was, it was reasonable for Mrs Martin and those advising her not to signal an intention to seek the assistance of Court orders, and instead to urgently commence that process. I respect the initial reaction of Brewer J in declining to deal with the application on a without notice basis, but his initial impression on considering the application does not derogate from the reasonableness in these particular circumstances of moving in the way that Mrs Martin did.

[15] Certainly, the courts encourage dialogue between parties in all possible circumstances, before resorting to proceedings. This is one of what may be relatively unusual circumstances in which the absence of such a communication

_{should not be held against Mrs Martin in considering her entitlement to costs.}

[16] The next issue is whether Mrs Martin’s position in asserting the claims she did has been vindicated in the outcome. That is not decisive of the costs outcome, but is a primary factor in considering the conventional starting point that costs ought to follow the event.

[17] It is argued for the defendants that there has been no vindication for two reasons. First, because Mrs Martin did not sue the Māori King, who was the only person who took an initiative to have her removed. Secondly, because the relief she sought as to the lawfulness of her position as chairperson of Te Kauhanganui was indisputable. In addition, it is argued that on the two occasions on which she sought interim relief, first on a without notice basis before Brewer J on 10 December 2010, and secondly on notice before Hansen J on 14 December 2010, she failed to obtain any relief. However, that is not the full story. Brewer J acknowledged from a first reading of the documents that he could readily see a substantive argument to be made, but he was unable at that point to assess where the balance of convenience lay. By 14 December 2010, consideration of the entitlement to interim relief was rendered unnecessary by the defendants’ acknowledgements. I consider it more likely than not that Mrs Martin would not have received the comfort of the precisely worded acknowledgements as to her legal position in the timely way that she did (ie by 14 December 2010) unless the defendants perceived that step as being necessary to pre-empt the prospect of interim orders in the proceedings.

[18] Having accepted that the position confronting Mrs Martin in the days before the proceedings were filed on 10 December 2010 justified her commencing proceedings, then it follows that the acknowledgements procured from the defendants to pre-empt any argument in Court are appropriately seen as vindicating her position.

[19] For those reasons, I am satisfied that Mrs Martin is entitled to an award of costs. A further series of considerations applies in relation to quantum.

[20] Mr Brant’s submissions in support of Mrs Martin’s claim for indemnity costs rested on three principal points. First, that the proceedings were a reasonable and appropriate response to the predicament caused by unlawful conduct. Secondly, that

the proceedings were not pursued for any form of personal benefit, but rather to ensure that the lawful constraints on conduct by the various institutions were respected. Thirdly, that the proceedings arose in relation to the administration of a fund as that concept is used in the provisions of the High Court Rules (the Rules) providing for circumstances in which indemnity costs may appropriately be ordered.

[21] It is unnecessary to add further analysis on the first point. I have addressed reasons why I consider the proceedings were a reasonable and appropriate response.

[22] As to the second issue, the defendants characterise Mrs Martin’s motives as purely personal, intended to protect her individual position as chairperson. In a situation like this, it is impossible to discount an office-holder’s personal concern that his or her tenure in the office not be ended peremptorily or prematurely in circumstances that could infer unfitness for office. Beyond that, however, if the steps she challenged were not contested, then a precedent could have been set that struck at the heart of the constitutional arrangements for her iwi. I therefore treat the larger issue of constitutionality of the conduct of business for the iwi to be the dominant feature of the proceedings. That justifies Mrs Martin in treating them as not for her personal benefit.

[23] The third issue is whether this is a proceeding in respect of “a fund” as

contemplated in r 14.6(4)(c). That rule provides:

14.6 Increased costs and indemnity costs

...

(4) The court may order a party to pay indemnity costs if—

...

(c) costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or

[24] Mr Brant treats his claim, at least against the second defendant, as constituting a claim for indemnity from a fund on the basis that the objects of Te Kauhanganui include those of acting as trustee of the Waikato Raupatu Lands

Trust, which has assets that he advises are in the region of $550-$600 million. Mrs Martin is an elected member of Te Kauhanganui and to qualify as a representative one has to be a beneficiary. The proceedings do not relate directly to expenditure from the fund, but did raise an issue going to the lawfulness of the governance of Te Kauhanganui. In the sense intended by the Rules, I consider that this was a dispute “affecting the fund” for the purposes of the Rules.

[25] The parties have taken opposing views on the application of cases that could provide guidance on the issue. Both referred to the Chancery Division decision in Re Buckton.[2] In that case, Kekewich J categorised cases in which directions were sought from the Chancery Division in relation to the administration of trusts. His Honour identified three classes relevant to the entitlement for applicants to receive their costs out of the funds administered by trustees. The judgment described the first two classes in the following terms:[3]

In a large proportion of the summonses adjourned into Court for argument the applicants are trustees of a will or settlement who ask the Court to construe the instrument of trust for their guidance, and in order to ascertain the interests of the beneficiaries, or else ask to have some question determined which has arisen in the administration of the trusts. In cases of this character I regard the costs of all parties as necessarily incurred for the benefit of the estate, and direct them to be taxed as between solicitor and client and paid out of the estate...

There is a second class of cases differing in form, but not in substance, from the first. In these cases it is admitted on all hands, or it is apparent from the proceedings, that although the application is made, not by trustees (who are respondents), but by some of the beneficiaries, yet it is made by reason of some difficulty of construction, or administration, which would have justified an application by the trustees, and it is not made by them only because, for some reason or other, a different course has been deemed more convenient. To cases of this class I extend the operation of the same rule as is observed in cases of the first class. The application is necessary for the administration of the trust, and the costs of all parties are necessarily incurred for the benefit of the estate regarded as a whole.

[26] Mr Brant submitted that the present proceedings should be likened to these first two classes of case recognised by Kekewich J.

[27] However, the submissions for the defendants treated the present circumstances as analogous with a third class identified by Kekewich J,[4] in which a beneficiary makes a claim that is adverse to other beneficiaries. The submissions for the defendants also relied on the costs judgment in Waitara Leaseholders Association Inc v New Plymouth District Council.[5] In the substantive proceedings, the leaseholders’ association had successfully challenged a decision of the local authority to make an offer, in respect of what was known as the Waitara Endowment Land, to the Crown.[6] On a costs application argued subsequently, Harrison J found that the leaseholders’ challenge did not constitute a proceeding affecting “a fund” for the purposes of entitlement to indemnity costs.[7]

[28] There, the defendant local authority held the relevant land on specific trusts for certain statutory purposes. Those purposes did not include funding legal expenses and there must certainly also have been an issue that the leaseholders association did not naturally qualify as a beneficiary.

[29] I consider the context in Waitara Leaseholders to be distinguishable. I would not treat the absence of a specific power for Te Kauhanganui to meet legal expenses incurred by a beneficiary to take the present situation out of those contemplated by r 14.6(4)(c).

[30] A concern raised by a beneficiary as to the lawfulness of the governance of the trustee of assets is, as an analogy, closer to the second category cited by Kekewich J in Buckton, than the third. It would mischaracterise these proceedings to suggest that Mrs Martin’s initiatives were adverse to the interests of beneficiaries generally, when all beneficiaries must be treated as interested in having the trustee’s

_{governance regulated lawfully.}

[31] As to the other elements of the rule, Mrs Martin was a necessary party to the proceeding, and I consider from a review of the file that she has acted reasonably in it.

[32] Accordingly, in the particular factual situation arising here, I find that the rule does apply, if not literally, then certainly the situation is sufficiently analogous to apply the approach suggested by that rule.

[33] Mr Brant relied in the alternative on r 14.6(4)(f) which provides that the

Court may order indemnity costs if:

some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.

[34] If I am wrong in treating the circumstances of this claim as coming within r 14.6(4)(c), then an analogy is certainly justified to apply (f) to the present claim.

[35] It was argued for the defendants that the Court should disregard the vote taken, by a majority of the representatives on Te Kauhanganui, to meet Mrs Martin’s costs. It was submitted for the defendants that the resolution was both beyond the jurisdiction of Te Kauhanganui, and irrelevant to the Court’s consideration. At the very least, a body in the nature of a tribal parliament can express a wish, as indeed the submissions for the defendants implicitly conceded:[8]

All the resolution indicates is that there was support within Te Kauhanganui for the plaintiff’s costs to be met, not that the issue of costs is settled or determined.

[36] The support for payment of Mrs Martin’s costs by the iwi representatives on Te Kauhanganui is most likely one aspect of the division between that aspect of the governance, and the executive represented by Te Arataura. It is not a matter of taking sides, in acknowledging the wish of the elected representatives, but their view is nonetheless a factor confirming the appropriateness of treating this claim for costs

_{as one appropriately met on an indemnity basis.}

[37] In the end, Te Arataura has indicated that it wished the issue of costs to be resolved by Court order, and I am satisfied that Mrs Martin is entitled to costs on an indemnity basis for the costs of and incidental to the proceedings, including her costs on the dispute in relation to costs. Those were quantified, at the time of Mr Brant’s submissions in support of the costs claim, at $26,755.54, and $10,126.13.

Dobson J

---

[1] See Minute of 2 June 2011.
[2] _{Re Buckton [1907] 2 Ch 406.}
[3] At 414-415.
[4] _{At 415.}
[5] Waitara Leaseholders Association Inc v New Plymouth District Council HC New Plymouth _{CIV-2004-443-162, 20 December 2005.}
[6] Waitara Leaseholders Association Inc v New Plymouth District Council HC New Plymouth CIV-2004-443-162, 4 November 2005, which decision was reversed by the Court of Appeal in New Plymouth District Council v Waitara Leaseholders Association Inc [2007] NZCA 80, confirmed by the Supreme Court at [2007] NZSC 44.
[7] 20 December 2005 judgment at [14].

[8] Defendants’ submissions as to costs, 20 April 2011, at [25.1(a)].