Braithwaite v Spence

[2019] NZHC 1079

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2018-419-000193

[2019] NZHC 1079

IN THE MATTER

of s 52 of the Trustee Act 1956 and ss 132 and 133 of the Land Transfer Act 1952

IN THE MATTER

of an application for a vesting order and an order removing a “no survivorship” notation

BETWEEN

ROBERT MACDONELL BRAITHWAITE
Applicant

AND

MURRAY ALICK SPENCE, DONNA MAREE SPENCE and ALISON RAEWYN MORRISON

Respondents

Hearing:	On the papers
Judgment:	16 May 2019

COSTS JUDGMENT OF DOWNS J

This judgment was delivered by me on Thursday, 16 May 2019 at 3.30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Harkness Henry, Hamilton.

BRAITHWAITE v SPENCE [2019] NZHC 1079 [16 May 2019]

[1]                  Mr Braithwaite is the sole trustee of the Fulansis Trust. Trust assets include a property in Pauanui, which was registered in the names of the three previous trustees. From February 2018, Mr Braithwaite sought the former trustees’ authorisation to transfer  the  property  to  him.   Only  one  promptly  agreed.   So,  in  June  2018, Mr Braithwaite applied to the Court to have the property vested in him as trustee. He also applied to remove the “no survivorship” notation from the title to the property. On 20 February 2019, both orders were granted. By this time, only one of the three former trustees had not agreed to the transfer.

[2]                  Mr Braithwaite seeks 60 per cent of his actual costs against the two former trustees who did not promptly agree, Mr Spence and Ms Morrison. Alternatively,  Mr Braithwaite  seeks  60  per  cent  of  2B  scale  costs  against  Mr  Spence  and  Ms Morrison. The former comes to $11,597.66; the latter $8,850.32. Mr Braithwaite does not seek to recover the remaining 40 per cent from them; he accepts time expended on the “no survivorship”  notation  is  not  referable  to  Mr  Spence  or  Ms Morrison. Instead, Mr Braithwaite seeks indemnification from the Trust.

[3]Mr Spence has not responded. Neither has Ms Morrison.

[4]                  Mr Braithwaite was successful. There is no reason he should not have costs. The beneficiaries should not bear the cost of the former trustees’ failure to transfer a trust asset to the new trustee. However, costs should be 2B—not actual—because the respondents’ conduct does not warrant actual costs. Indemnity costs are reserved for “rare cases generally entailing breach of confidence or flagrant misconduct.”1 This is not such a case; the complaint about the respondents is that they did little or nothing.

[5]                  The remainder of Mr Braithwaite’s legal costs should be met by the Trust. Section 38 of the Trustee Act 1956 indemnifies trustees against “all expenses reasonably incurred in or about the execution of the trust or powers.” The Court of Appeal has described such indemnity as “one of the fundamental rights of an honest express trustee”.2 Mr Braithwaite’s costs were properly incurred.

1      Prebble v Huata [2005] NZSC 18, [2005] 2 NZLR 467 at [6].

2      Butterfield v Public Trust [2017] NZCA 367 at [20]. I note however, this right is constrained by the requirement expenses are “properly incurred” – see New Zealand Maori Council v Foulkes [2015] NZCA 489 at [31].

[6]                  Mr Spence and Ms Morrison are liable to pay costs on a 2B basis in accordance with schedule 1 to Mr Braithwaite’s submissions of 13 March 2019. Mr Braithwaite is entitled to indemnification from the Trust for the balance of his legal costs.

……………………………..

Downs J