Sunde v Sunde

[2018] NZHC 3080

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-000768

[2018] NZHC 3080

BETWEEN

ROY MELVIN SUNDE

First Plaintiff

MARINA ANNE SUNDE
Second Plaintiff

ANNE VERA SUNDE
Third Plaintiff

LEO ZANE SUNDE
Fourth Plaintiff

AND

LEO ZANE SUNDE, ANNE VERA SUNDE, ROY MELVIN SUNDE, KEVIN PAUL SUNDE and MARINA ANNE

SUNDE as trustees of the Leroy Trust Defendants

Hearing:	On the papers
Judgment:	27 November 2018

JUDGMENT OF DOWNS J

This judgment was delivered by me on Tuesday, 27 November 2018 at 3 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:

Lee Salmon Long, Auckland. Patterson Hopkins, Auckland. Keegan Alexander, Auckland. Cook Morris Quinn, Auckland. JR Wain, Auckland.

SUNDE v SUNDE [2018] NZHC 3080 [27 November 2018]

Introduction

[1]        This judgment addresses the application for 2B costs by Roy, Marina and Anne in the wake of their successful summary judgment application,¹ and their allied contention Kevin should bear costs personally, including his own. Kevin says costs should lie where they fall, and in any event, be borne by the Leroy Trust.² I (continue to) use Christian names for ease of reference given commonality of surname.

[2]        First, a little background. Roy, Kevin and Marina are brothers and sister. Anne is their mother. In late 2005, all agreed to transfer their respective property interests to the trust. And, for each to be a creditor of the trust, and trustee. Interest was payable by the trust on the investment of each. Each could also withdraw principal. Both required notice.

[3]        On 13 March 2018, Roy, Marina and Anne sought payment of interest for identified  years;  and  Marina  and  Anne  sought  repayment  of  principal.    The   total:

$2,547,152.05. These demands accentuated existing disagreements between Kevin and the rest of the family. Roy, Marina and Anne sought summary judgment. Kevin opposed. Roy, Marina and Anne succeeded. Kevin ultimately abandoned all grounds of opposition.

Should costs lie where they fall even though Roy, Marina and Anne were successful?

[4]        Kevin acknowledges a successful litigant is ordinarily entitled to costs. But, he argues circumstances mean costs should lie where they fall. Kevin’s unifying proposition is that Roy, Marina and Anne did not need to bring a claim for summary judgment, and unlike him, acted unreasonably before and after filing it. Kevin relies on a full affidavit which sets out, from his perspective, the genesis of the family dispute—and much else. Roy, Marina and Anne replied in kind. They do not share Kevin’s views. Or recollection.

[5]        I decline to enter this mix for two reasons. First, I am not well placed to resolve factual disputes. Second, all this has little relevance to costs. What is important is the litigation, and how it was conducted. As to it, Kevin filed an extensive notice of opposition and affidavit. He alleged the claims by Marina and Anne had the effect of

1      Sunde v Sunde HC Auckland CIV-2018-404-000768, 24 July 2018 (Minute).

2      The trust.

defeating the object and purpose of the trust; Roy’s 2016 interest demand was not properly served; and amounts claimed by the plaintiffs were not owed.

[6]        Kevin abandoned the first ground only two working days before the hearing. By then, Marina and Anne had addressed it. Kevin abandoned the second ground at the same time. By then, Roy had comprehensively answered it, through both evidence and submission. Kevin abandoned the final ingredient of the last ground (an argument about proper accounting of Roy’s wood business) at the hearing. By then, Roy had answered this as well.

[7]        Kevin observes, correctly, he resisted the trust’s payment of the credit balance of each plaintiff, being six percent of the original claim for summary judgment. To elaborate, each family member has a beneficiary account with the trust. Roy’s has a balance of

$23,691; Marina’s $22,486; and Anne’s $99,109.09. Each accepted these sums should be offset from those sought, a reduction of $145,286.09 from $2,547,152.05. Or, a net figure of $2,401,865.96.

[8]        Kevin’s resistance of a small percentage of the initial claim does not invest the balance of his opposition with merit. There was no merit in Kevin’s opposition the claims had the effect of defeating the trust’s object and purpose, or in his other grounds of opposition. That the claim for summary judgment was successful—and ultimately by consent—demonstrates as much. And, for reasons explained shortly, Kevin’s resistance did not save the trust money.

[9]Costs should follow as normal.

Should the trust indemnify Kevin?

[10]      The trust contains an indemnity provision. However, it is common ground Kevin is entitled to indemnity only if he acted properly and reasonably (as a trustee) in defending the plaintiffs’ claims.

[11]      The points above address this issue. Again, no defence existed to the claims brought by Roy, Marina and Anne. The legal position was clear: each was entitled to payment of interest; and Marina and Anne repayment of principal.

[12]      Moreover, there was no basis for Kevin to assert the claims by Marina and Anne were contrary to the trust’s object and purpose. This contention lacked foundation and, contrary to Kevin’s submission, was not confined to another family member in relation to whom litigation continues.

[13]      Kevin observes the trust has previously met legal fees, citing a resolution from 17 December 2014. However, when the plaintiffs commenced their proceeding, they informed Kevin he had no authority to use trust funds to meet their claim and needed to apply for a Beddoe order if he wished to be indemnified. Kevin did not.

[14]      Kevin also contends a personal award of costs may aggravate family dynamics. I acknowledge as much. However, this is not a principled basis for resisting the plaintiffs’ claim: indemnity would cause them to share the burden of Kevin’s unreasonable defence.

[15]      This leaves Kevin’s position in relation to the beneficiary accounts. I do not accept this saved the trust money for the simple reason the small set-offs would have occurred anyway. In other words, Kevin’s position had a neutral effect on the trust’s balance sheet.

Kevin’s use of the trust to pay his legal fees in relation to the claim

[16]      Earlier reasoning largely addresses this issue. Kevin argues he advanced only “limited opposition”, and his expenses as a trustee were therefore properly incurred. And reasonable.

[17]      I disagree. Kevin’s opposition was broad. It narrowed only as grounds were abandoned as untenable, answered, or both. Finally, none were left. But that was at the hearing. And as observed, Kevin contended, without foundation, two of the claims were contrary to the trust’s object and purpose. Again, the plaintiffs should not share any of this.

Result

[18]      Kevin must personally pay the plaintiffs’ 2B legal costs, and may not draw on the trust for his own.

……………………………..

Downs J