IN THE MĀORI LAND COURT OF NEW ZEALAND WAIARIKI DISTRICT A GRAEME DENNETT ON BEHALF OF THE TRUSTEES OF FAIRY SPRINGS LAND TRUST Applicant
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1 178 Waiariki MB 24 IN THE MĀORI LAND COURT OF NEW ZEALAND WAIARIKI DISTRICT A UNDER IN THE MATTER OF BETWEEN AND Sections 225(j) and 237, Te Ture Whenua Māori Act 1993 Rotohokahoka D North 2A and Other Blocks GRAEME DENNETT ON BEHALF OF THE TRUSTEES OF FAIRY SPRINGS LAND TRUST Applicant TE TUMU PAEROA Respondent Hearing: 4 August 2017 (Heard at Rotorua) Appearances: Mr Dennett for the applicant Judgment: 21 December 2017 RESERVED JUDGMENT OF JUDGE C T COXHEAD Copies to: G Dennett, P O Box 644, Rotorua, graeme27@xtra.co.nz G Shaw and C Reuhman, Te Tumu Paeroa, P O Box 5038, Wellington 6140, greg.shaw@tetumupaeroa.co.nz christine.reuhman@tetumupaeroa.co.nz
2 178 Waiariki MB 25 Introduction [1] The applicants seek an award for the costs incurred in pursuing these proceedings against Te Tumu Paeroa. Although an agreement was reached prior to the Court hearing, the applicants claim that the costs they incurred should be met by the Māori Trustee (now Te Tumu Paeroa), given their unreasonable resistance to requests for the proper transfer of trust records. Te Tumu Paeroa contends however, that no award of costs should be made. [2] The issue for determination therefore, is whether costs should be awarded. Background [3] The Fairy Springs Land Trust is an ahu whenua trust over Rotohokahoka D North 2A, Rotohokahoka F Section 4 and Rotohokahoka F Section 5 blocks, which are all Māori freehold land. The trust was constituted on 17 December 1962 pursuant to s 438 of the Māori Affairs Act On 3 March 1983, an order was made vesting the lands in the Māori Trustee as custodian trustee with nine managing or responsible trustees, following a resolution passed at an owners meeting held to consider the future administration of the lands. 2 On 8 April 2016 an order was made terminating the Māori Trustee as the custodian trustee and vesting the land in Pihopa Kingi, Piwiki Heke, Rau Manahi, Matemoe Bird, Norma Sturley, Alec Wilson, Kerry Bird, Bryce Morrison and Haukekea Mitchell as responsible trustees. 3 Those trustees are the current trustees of the trust. Procedural History [4] Mr Dennett on behalf of the trustees of the Fairy Springs Land Trust filed an application on 8 June 2017 pursuant to ss 225(j) and 237 of Te Ture Whenua Māori Act The application sought orders and directions that Te Tumu Paeroa, the former custodian trustee, deliver to the current trustees the records it held in relation to the trust, relating to the duration of their trusteeship. The application also sought orders of such compensation as to the Court seems just and of such costs as to the Court seems just Rotorua MB (120 ROT ) Rotorua MB 380 (205 ROT 380) Waiariki MB (139 WAR 61-66).
3 178 Waiariki MB 26 [5] The application was heard by Judge Savage on 4 August 2017, by which stage some of the documents sought had been provided to the applicants. The parties had filed a joint memorandum of counsel advising that they considered it was unnecessary for the application to proceed to a hearing, and the application could be dismissed with no order as to costs. At the hearing however, Mr Dennett requested that the application not be dismissed and the issue of costs be considered. Judge Savage noted that the records sought were now to hand and reserved the issue of costs. He directed the trustees to file submissions as to costs within 21 days and for Te Tumu Paeroa to reply within a further 21 days. Judge Savage directed that the matter then be referred to the resident Judge. Accordingly, the application was referred to me for consideration. 4 [6] Mr Dennett filed submissions on 17 August 2017 and Te Tumu Paeroa filed submissions in reply on 8 September 2017 together with an affidavit of Stuart Allan, Chief Financial Officer for Te Tumu Paeroa. Applicants submissions [7] Mr Dennett sought costs for such amount as the Court thinks fit on the basis that the costs were reasonably and properly incurred in relation to the proceedings, as a result of the obstruction and delays of the respondent in supplying to the applicants the trust s funds and the trust s records. [8] Mr Dennett noted that The Māori Trustee was removed from the office of custodian trustee on 8 April 2016 due to failures to respond and act on the directions of the responsible trustees and to provide proper, or any, accounting of their actions. A resolution was passed by the responsible trustees to have the administration transferred from Te Tumu Paeroa to Deloitte, accountants in Rotorua. Mr Dennett argued that, at least from 8 April 2016, the applicants were entitled as legal owners to hold the trust s funds and records, and that they were essential for the applicants, including their administrator, to hold in order to manage the trust s financial operations and the trust properties. 4 Mr Dennett also request a variation to the trust order to allow for trustee meeting fees, costs and travelling expenses to be paid and for an honorarium payment to the chairman to be approved. Judge Savage directed that an amended application be filed. That amendment application is still to be processed.
4 178 Waiariki MB 27 [9] Mr Dennett submitted that Te Tumu Paeroa only supplied certain documentation to the applicants following the constant requests of the applicants administrator. Those documents included the trust s financial accounts for the year to 31 March 2016 and draft financial accounts for the year to 31 March 2017, IRD numbers, and a notice that funds would be supplied once each trustee signed a form acknowledging, they say, that the records supplied were the only trust records to which the applicants were entitled. Mr Dennett says other trust records were not supplied and are noted by Te Tumu Paeroa as additional documents. Te Tumu Paeroa claims those additional documents belong to them and they are obliged to retain them as public archives under the Public Records Act. [10] Mr Dennett argued that due to the approach of Te Tumu Paeroa, the applicants were required to obtain legal assistance and were required to further pursue the documents and ultimately file an application with the Court. He says Te Tumu Paeroa finally paid over the trust funds on 25 July 2017 and provided a USB drive to the administrator on 31 July 2017, which contained the trust s financial records, general ledger, minutes of meetings and minute book records. On further request, the last GST and tax returns filed were also supplied together with confirmation that if the trustees needed to access further source documentation, this would be provided upon request. [11] Mr Dennett submitted that the applicants incurred in excess of $5, for accountancy costs and in excess of $2, for legal costs, although I note no invoices or other evidence of the costs were supplied. Mr Dennett also stated that no claim was made for attendances in respect of the consent memorandum or the Court hearing. Respondent s submissions [12] Ms Reuhman acted for Te Tumu Paeroa and provided submissions in response to the applicants claims, together with an affidavit in support from Stuart Allan. [13] Ms Reuhman submitted that the parties had agreed to dismiss the application without costs, as outlined in the joint memorandum of counsel filed with the Court dated 2 August This agreement was on the basis that the issues had been resolved on a practical level without the need to hear arguments on the legal position of the parties. She argued that Mr Dennett acknowledged that he no longer required the relief originally sought by signing the joint consent memorandum and in his appearance at the hearing, however, he still seeks
5 178 Waiariki MB 28 compensation for time involved in pursuing the additional documents in the form of a costs order. She says this is entirely inconsistent with the agreement reached by the parties as to how costs ought to be dealt with. The costs application is therefore without merit and should be dismissed. [14] In response to the matters raised by Mr Dennett, Ms Reuhman submitted that at the heart of the matter is the trustees erroneous belief that the trust owns Te Tumu Paeroa s historic information that relates to the trust. She says that the documents provided by Te Tumu Paeroa were those documents necessary for the responsible trustees to carry out their duties in administering the trust, which, in law, is the extent of the Māori Trustee s legal duty. Te Tumu Paeroa also provided the trustees with additional information and confirmed they could have access to historical documents. She says that the silence of both the responsible trustees and their administrator for 10 months from 4 July 2016, was indicative to Te Tumu Paeroa that the responsible trustees had all the information necessary for their on-going administration of the trust. [15] Ms Reuhman argued that the evidence provided in the affidavit of Mr Allan demonstrates that there has been no obstruction or delay by Te Tumu Paeroa. She says any delays in the transfer of funds are the responsibility of the applicant, as Te Tumu Paeroa either lacked the consent of the responsible trustees to transfer funds to their administrator, or lacked an encoded deposit slip for the trust s nominated bank account. Ms Reuhman further noted that Te Tumu Paeroa has a standard hand-over procedure consistent with standard business practice. To complete the hand-over, Te Tumu Paeroa required the deposit slip to ensure the funds were being paid to an account in the trust s name, and confirmation as to whether the responsible trustees required Te Tumu Paeroa s copy of the ownership list, in which case Te Tumu Paeroa asked for the responsible trustees agreement that they would keep the ownership information in strict confidence. [16] In relation to the accountant costs incurred by the applicants, Ms Reuhman pointed out that no invoices have been provided to establish what tasks were undertaken by the accountants, nor any time/cost records to justify a fee of $5, Further, she argued that as outgoing custodian trustee, Te Tumu Paeroa has no liability to meet the costs of the responsible trustees accountants to check or review documents handed over, and the
6 178 Waiariki MB 29 additional documents sought were not essential for the management of the business of the trust and so those costs should be absorbed by the responsible trustees. [17] In terms of the legal costs, Ms Reuhman submitted that Mr Dennett s letter dated 10 May 2017 demanding all records was ill-conceived, given counsel s erroneous assumption that the trust owned the information produced by Te Tumu Paeroa in undertaking their fiduciary duties, which is wrong in law. Mr Dennett then proceeded to file an application for hearing based on this assumption, despite knowing that Te Tumu Paeroa was preparing a response. Ms Reuhman argued that Te Tumu Paeroa has fulfilled their obligations to the trust and provided other additional documents. Mr Dennett signed the consent memorandum, accepting that the matter had been resolved and accepting that the application be dismissed without costs, thereby avoiding the trial of the substantive issue and the risk that his clients may be liable to Te Tumu Paeroa for costs. Accordingly, Ms Reuhman submitted that Te Tumu Paeroa should not be required to contribute towards the applicants legal costs. The Law [18] Section 79(1) of Te Ture Whenua Māori Act 1993 provides: 79 Orders as to costs (1) In any proceedings, the court may make such order as it thinks just as to the payment of the costs of those proceedings, or of any proceedings or matters incidental or preliminary to them, by or to any person who is or was a party to those proceedings or to whom leave has been granted by the court to be heard. [19] The legal principles that apply to an award of costs are well established. In Samuels v Matauri X Incorporation Matauri X Incorporation the Court summarised the principles as follows: 5 (a) The Court has an absolute and unlimited discretion as to costs; 5 Samuels v Matauri X Incorporation Matauri X Incorporation (2009) 7 Taitokerau Appellate MB 216 (7 APWH 216). These principles were recently endorsed by the Māori Appellate Court in Bratton v Le Lievre [2017] Māori Appellate Court MB 351 (2017 APPEAL 351).
7 178 Waiariki MB 30 (b) Costs normally follow the event; (c) A successful party should be awarded a reasonable contribution to the costs that were actually and reasonably incurred; (d) The Māori Land Court has a role in facilitating amicable, ongoing relationships between parties involved together in land ownership, and these concerns may sometimes make an award of costs inappropriate. However, where litigation has been conducted similarly to litigation in the ordinary Courts, the same principles as to costs will apply; and (e) There is certainly no basis for departure from the ordinary rules where the proceedings were difficult and hard fought, and where the applicants succeeded in the face of serious and concerted opposition. [20] When determining costs, a two-step approach is required. The Court must first determine if costs should be awarded. If so, the Court must then consider an appropriate quantum. Discussion Should an award of costs be made? [21] As noted, one of the principles in relation to costs, is that costs normally follow the event, and a successful party should be awarded a reasonable contribution to the costs actually and reasonably incurred. [22] In the present case, while the application did proceed to hearing, an agreement was reached prior to hearing which effectively rendered it unnecessary. A joint consent memorandum to that effect was filed with the Court shortly before the hearing. Other documents provided to the Court show that both parties made some concessions in reaching that agreement; Te Tumu Paeroa provided additional documents to the responsible trustees; and the responsible trustees did not pursue further the totality of the documents originally sought. In that regard, I find that neither party could strictly be considered as the successful party.
8 178 Waiariki MB 31 [23] In terms of the costs incurred by the applicants, Mr Dennett has not filed any invoices to substantiate these costs and nor has he filed any affidavit evidence detailing the exact nature of the costs. Without such information, the Court is unable to make an assessment of the actual costs incurred and whether such costs were reasonable. [24] I note Mr Dennett s submissions about the difficulties he says the applicants experienced in obtaining the information they sought, along with Ms Reuhman s corresponding submissions in response to those contentions. I acknowledge the frustrations which the applicants undoubtedly experienced. However, I am not convinced that the actions of Te Tumu Paeroa amount to obstruction or undue delay. Te Tumu Paeroa were entitled to properly consider their position regarding the records they held and provide an appropriate response. They communicated that consideration to Mr Dennett prior to the filing of the application. [25] In any case, as Ms Reuhman has pointed out, Mr Dennett signed the joint memorandum of counsel, filed with the Court on 2 August 2017, representing the parties agreement to a practical solution which avoided the need for defended proceedings. That memorandum shows that Mr Dennett agreed on behalf of the applicants that the application could be dismissed with no order as to costs. His claim for costs is entirely inconsistent with that agreement and I therefore consider that an award of costs is not appropriate. Decision [26] There will be no order for costs and the application is dismissed. Pronounced in open Court in Rotorua at 9.00am on Thursday this 21 st day of December C T Coxhead JUDGE
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