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Baker and Rameka as Trustees of the Thomas Baker Whanau Trust HC Napier CIV-2010-441-581 [2011] NZHC 1288 (13 October 2011)

Last Updated: 2 November 2011

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

_{CIV-2010-441-581}

BETWEEN EDWARD HENRY BAKER AND WHAKAWE CHARLES RAMEKA AS TRUSTEES OF THE THOMAS BAKER WHANAU TRUST

Applicants

AND WAIMAKUKU WHANAU TRUST BOARD INCORPORATED Respondent

Judgment: 13 October 2011 at 3:30 PM

_{JUDGMENT AS TO COSTS OF ASSOCIATE JUDGE D.I. GENDALL}

This judgment of Associate Judge Gendall was delivered on 13 October 2011 at 3.30 pm under r 11.5 of the High Court Rules.

Solicitors: Hansen & Bate Limited, Solicitors, PO Box 235, Hastings 4156

_{Crown Law, PO Box 2858, Wellington 6140}

EH BAKER AND WC RAMEKA AS TRUSTEES OF THE THOMAS BAKER WHANAU TRUST V WAIMAKUKU WHANAU TRUST BOARD INCORPORATED HC NAP CIV-2010-441-581 13 October 2011

[1] This judgment relates to costs to be awarded with respect to two unsuccessful applications brought in the present proceeding.

[2] The first application was brought by the respondent, Waimakuku Whanau Trust Board Incorporated seeking orders that Mr Edwin Michael Bate be removed as counsel for the applicant, the Thomas Baker Whanau Trust.

[3] The second application was also brought by the respondent and sought joinder of the Attorney General and Mr David Porteous (Mr Porteous) (the Trust Board’s former solicitor and counsel in Chisholm v Waimakuku Whanau Trust Board Incorporated HC, Napier, CP 27/00, 29 August 2005) as parties to the present proceeding. In the alternative, this application sought leave to file a Third Party Notice joining those two parties to the present proceeding.

[4] Both of these applications brought by the Waimakuku Whanau Trust Board

Incorporated were unsuccessful.

[5] Costs on both applications were effectively reserved. A decision on the issues was to follow the filing of memoranda on costs from the parties. Given that the applicants in this proceeding, the trustees of the Thomas Baker Whanau Trust who successfully opposed all applications sought orders for costs against the respondent and a non-party Mr Nigel Baker (who it appears had sworn almost all the Waimakuku Whanau Trust Board Incorporated’s affidavits in these matters), directions were given for the filing of memoranda by all parties, including a memorandum on behalf of Mr Nigel Baker.

[6] The following memoranda on costs have now been filed in this Court: (a) Memorandum from the applicants dated 26 April 2011.

(b) Memorandum from the respondent dated 27 May 2011.

(c) Memorandum from applicants in reply dated 10 June 2011.

(d) Memoranda from counsel for the Attorney General and from the applicants each dated 15 August 2011.

(e) Memorandum from Mr Soper the amicus curiae appointed in this matter dated 6 September 2011.

(f) Further memorandum from counsel for the respondent and effectively for Mr Nigel Baker dated 8 September 2011.

[7] I have now had an opportunity to consider these memoranda and all the material before the Court and give my decision on the costs question.

[8] At the outset I need to say that the applicants with respect to both applications noted at paras [2] and [3] above have been entirely successful in opposing those applications. In my view they are entitled to an award of costs with respect to both. The starting principle in any determination of costs outlined in r

14.2(a) High Court Rules, that the party who fails with respect to an interlocutory application should pay the costs of the successful party, applies here.

[9] There are effectively only two issues to be determined by the Court here:

(a) Whether an uplift in the standard category 2B scale costs by way of an increase pursuant to r 14.6(3) High Court Rules should be awarded here given that the applicant seeks a 50% increase over scale; and

(b) Whether any award of costs here should be made against both the Waimakuku Whanau Trust Board Incorporated as respondent and also against the non-party Mr Nigel Baker.

[10] At the outset I note from the Memorandum from counsel for the Attorney General dated 15 August 2011 and from the Memorandum from the amicus, Mr Soper, dated 6 September 2011 that first, the Attorney General does not seek costs against the Waimakuku Whanau Trust Board Incorporated in this matter and secondly, the amicus, Mr Soper, suggests that his costs relating to these unsuccessful

applications should be reserved and considered at the completion of this substantive proceeding.

[11] In my view those are generous concessions at this point. It is appropriate as I see it, for the costs of the Attorney General and the amicus on these applications to be reserved at this point and considered at the completion of these substantive proceedings. An order to this effect is now made.

[12] For the sake of completeness, I simply note that, from the Memorandum from counsel for the Attorney General any suggestion that the Waimakuku Whanau Trust Board Incorporated might itself endeavour to seek costs against the Attorney General here on its unsuccessful applications are opposed. As I see the position, the respondent Waimakuku Whanau Trust Board Incorporated is certainly not entitled to any award of costs on these entirely unsuccessful applications. I need say nothing further on that aspect.

[13] I turn now to consider the first question of whether an order for increased costs under r 14.6(3) is appropriate in this case.

[14] Rule 14.6(3) deals with increased costs and provides:

14.6 Increased costs and indemnity costs

(3) The court may order a party to pay increased costs if—

(a) the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or

(b) the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

(i) failing to comply with these rules or with a direction of the court; or

(ii) taking or pursuing an unnecessary step or an argument that lacks merit; or

(iii) failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or

(iv) failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or

(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 14.10 or some other offer to settle or dispose of the proceeding; or

(c) the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or

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

[15] As to the threshold required for increased costs to apply, McGechan on

Procedure at para HR14.6.02 states in part:

HR14.6.02 Increased costs

(1A) Threshold

In Bradbury v Westpac Banking Corp [2009] 3 NZLR 400, (2009)

[2009] NZCA 234; 19 PRNZ 385 (CA) at [27] the Court of Appeal stated ―increased costs may be ordered where there is failure by the paying party to act reasonably‖. The unreasonable conduct must be in relation to the proceeding, and thus after it was commenced, not earlier conduct: Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3

NZLR 188 (CA) at [160]. Further, the court should consider the

extent to which the failure to act reasonably contributed to the time or expense of the proceeding. Only to that extent could any percentage uplift from scale be justified: Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400 at [165].

[16] Turning now to the first of the two applications which were before the Court, this relating to the Waimakuku Whanau Trust Board Incorporated’s application to remove Mr Bate as counsel for the applicant, in my view it could not be said that this application itself met the threshold for an award of increased costs. Mr Bate clearly had some involvement in the past with the wider Baker family and the trust involved here, and to that extent there was some possibly arguable question of his disqualification in this case.

[17] I conclude therefore that an award of category 2B costs (with no uplift) on this first application is appropriate.

[18] Turning now to the second application before the Court, that being the application by Waimakuku Whanau Trust Board Incorporated for orders joining Mr Porteous and the Attorney General as parties to the proceedings (or alternatively

seeking leave for the issue of third party notices against them), in my view the situation however is somewhat different.

[19] At paras [33] and [34] of my judgment dated 26 July 2011 dismissing that application I found effectively that the application itself was a collateral attack here and an abuse of process. There is no doubt in my mind that generally speaking the respondent’s joinder application was meritless and the wide ranging material filed on its behalf contributed unnecessarily to the time and expense of this proceeding – Maruha Corporation v Amaltal Corporation NZ Limited, HC, Auckland, CIV-2002-

404-1773, 13 February 2004. At paras [33] and [34] of that judgment I noted specifically:

[33] More generally, the current proceedings are an application by the trustees of the TBWT as to the future management of the funds which it holds on trust. Even if the WW Trust Board’s claims may not be strictly barred through the doctrine of res judicata, I am satisfied that they are being brought here as a collateral attack on the TBWT’s application for directions and this must amount to an abuse of process. If the WW Trust Board was allowed to continue in its application to join the Attorney and Mr Porteous, who have no interest in the TBWT’s management of its assets, in my view, that would cause a considerable injustice to all parties including the TBWT.

[34] Accordingly, even if the WW Trust Board could satisfy the requirements of r 4.56, and I am satisfied it has failed here to do so, I would not allow joinder as the WW Trust Board is estopped from doing so and joinder would be an abuse of process.

[20] That said, in my view, the provisions of r 14.6(3)(b)(ii) whereby the respondents have taken and pursued an unnecessary step in this proceeding that lacked merit and which thereby caused the applicant unnecessary time, cost and expense apply here. The joinder application I found was an abuse of process. Increased costs are therefore appropriate on that application, and in my view an uplift of 50% on scale 2B costs as sought should be awarded.

[21] An order to this effect is to follow.

[22] The last remaining question is whether Mr Nigel Baker a non-party in this proceeding is actually the ―real party‖ as respondent to this litigation and accordingly the orders of costs now to be made should be made against him as well.

[23] That application by the trustees of the Thomas Baker Whanau Trust as applicants is effectively brought pursuant to r 14.1 High Court Rules which provides that all matters relating to costs are at the discretion of the Court. The applicant contends that it is Mr Nigel Baker who is pursuing this litigation for his own benefit (and perhaps also at his own expense) and that therefore he should be responsible for the respondent’s costs here – Dymocks Franchise Systems (NSW) Pty Limited v Todd (No. 2) [2005] 1 NZLR 145 (PC).

[24] With regard to the principles relevant to an award of costs against a non- party, these were summarised by Asher J in Asset Building M Pritchard Limited v Hambeg Limited, HC, Auckland, CIV-2008-404-3781, 21 November 2008. The jurisdiction of Courts in New Zealand to award costs against a non-party was confirmed by the Privy Council in Dymocks Franchise Systems (NSW) Pty Limited v Todd (No. 2).

[25] From the authorities it is clear that an award of costs against a non-party is exceptional. That award will always depend on the facts of each individual case. On this aspect, reasons for awarding costs against a non-party were summarised by Tompkins J in Carborundum Abrasives Limited v Bank of New Zealand (No. 2) [1992] 3 NZLR 757 as follows:

Where proceedings are initiated and controlled by a person who, although not a party to the proceedings, has a direct personal financial interest in their result, such as a receiver or manager appointed by a secured creditor, a substantial unsecured creditor or a substantial shareholder, it would rarely be just for such a person pursuing his own interests, to be able to do so with no risk to himself should the proceedings fail or be discontinued. That will be so whether or not the person is acting improperly or fraudulently.

[26] On the question of whether the non-party is the ―real party‖ to the litigation, Asher J in Asset Building noted five features which were useful in determining non- party liability:

(a) Whether the unsuccessful party is liable for costs; (b) Whether the non-party controlled the litigation;

(c) Whether the non-party stood to benefit from the outcome of the litigation;

(d) The merits of the litigation under the control or influence of the non- party; and

(e) The procedural steps taken under the control or influence of the non- party.

[27] The respondent here is an Incorporated Society. Although counsel for the respondent contended that it ―enjoys charitable status‖ it does not appear to be a registered charity pursuant to s 21 Charities Act 2005.

[28] As to the question whether the non-party Mr Nigel Baker stands to benefit from the outcome of this litigation there are several matters here which need to be mentioned. These are:

(a) Para 20 of the respondent’s costs memorandum dated 27 May 2011 refers to the role of the respondent in this proceeding as:

―.... obtaining and processing funds resulting from a rectification of what the Trust Board used as mistakes contained in the 1995 WAI 147

Settlement Deed; and

distributing those funds to the rightful party or parties .... an unsigned draft of these resolutions is attached.‖

(b) And, under para (e) of this draft resolution, this object is described as:

―to redirect, in the sole discretion of the Waimakuku Whanau Trust Board Incorporated in meeting, any part of, or, all of the funds resulting from the object stated immediately above to the people who are rightfully entitled to succeed to Estate Henry Baker III.‖

(c) And, at para 7 of his 3 November 2010 affidavit Mr Nigel Baker states:

―I am the son of Henry Baker III.‖

[29] It seems that Mr Nigel Baker is the sole beneficiary to his father’s estate and the tenor of the respondent’s costs memorandum confirms that Mr Nigel Baker remains:

―effectively the sole decision maker in all of the (respondent’s) affairs.‖

- p. 12 of the judgment of Durie J dated 29 August 2005 – annexure B to the affidavits of EH Baker and WC Rameka sworn 18 and 24 August 2010.

[30] In addition, counsel for the respondent confirms in his submissions that the

―target land‖ in the applicant’s substantive application here is owned by Mr Nigel Baker and ―there is an undeniable interest in Nigel Baker taking a leading role in matters.‖

[31] Mr Nigel Baker himself, throughout his affidavits filed in this proceeding, makes repeated references to first, what appears to be a major personal dispute he has with the Trustees of the applicant trust, and secondly his allegedly selective

―ring-fencing‖ of access to ancestral burial grounds through his property.

[32] Given all these matters, it is difficult to escape the conclusion that Mr Nigel Baker is pursuing this litigation for his own benefit and presumably at his own expense rather than for the benefit of the respondent itself. It seems from all the material presently before the Court filed on behalf of the respondent (the vast bulk of which has been filed by Mr Nigel Baker and including almost all affidavits provided here under his own name) it is generally speaking only he who stands to principally benefit from the respondent’s action in this case.

[33] I conclude therefore that the non-party, Mr Nigel Baker, stands to benefit from the outcome of this litigation and he clearly controls it on behalf of the respondent.

[34] Next, it is quite clear from my findings above that the respondent, as the unsuccessful party in bringing the two interlocutory applications in question, is liable for costs.

[35] Considering next the merits of the respondent’s position in this litigation, a position which I find is clearly under the control or influence of Mr Nigel Baker, in my view those merits do not appear to be strong. The procedural steps which he has chosen to take in bringing the two unsuccessful interlocutory applications in addition were of little merit.

[36] For all these reasons, I am satisfied that this is one of those exceptional cases where it is just and appropriate to award the costs noted above on the two unsuccessful interlocutory applications, not only against the respondent, but also against the non-party Mr Nigel Baker personally.

Conclusion

[37] For all the reasons outlined above the following orders are now made:

(a) The respondent the Waimakuku Whanau Trust Board Incorporated and the third party Mr Nigel Baker jointly and severally are to pay to the applicant costs on a category 2B basis together with disbursements as fixed by the Registrar on the respondent’s unsuccessful application to have Mr Bate removed as counsel for the applicant.

(b) The respondent Waimakuku Whanau Trust Board Incorporated and the third party Mr Nigel Baker jointly and severally are to pay to the applicant increased costs which are to be calculated on a category 2B basis (with an uplift of 50% on those costs) together with disbursements as fixed by the Registrar on the respondent’s unsuccessful application to join the Attorney General and Mr Porteous as parties to this proceeding or alternatively to seek leave to file third party notices against those parties.

(c) Costs of the Attorney General and the amicus curiae on those unsuccessful applications are reserved.

(d) Leave is reserved for any party to approach the Court further on 48 hours notice if additional directions may be required regarding the quantum of costs here ordered.

‘Associate Judge D.I. Gendall’