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Maori Land Court of New Zealand |
Last Updated: 7 February 2012
IN THE MAORI LAND COURT OF NEW ZEALAND TAITOKERAU DISTRICT
33 Taitokerau MB 11 (3 TTK 11) A20100009786
UNDER Sections 18(1)(a) and 18(1)(d), Te Ture
Whenua Maori Act 1993
IN THE MATTER OF Te Horo 2B2B2B Residue
BETWEEN HOUSING NEW ZEALAND LTD Applicant
AND SUSAN TAWHAI Respondent
Judgment: 23 December 2011
RESERVED JUDGMENT AS TO COSTS OF JUDGE D J AMBLER
Copy to:
Mr PJ Magee, Thomson Wilson Law, PO Box 1042, Whangarei 0140 pjm@thomsonwilson.co.nz
HOUSING NEW ZEALAND LTD V TAWHAI MLC 33 Taitokerau MB 11 23 December 2011
Introduction
[1] On 2 March 2011 I issued an oral decision following a hearing over two days wherein I granted the orders sought by Housing New Zealand Limited. Specifically, I made orders determining that the house situated on Te Horo 2B2B2B Residue within the area of the occupation order granted to Margaret Hoterene was a chattel and the property of Housing New Zealand Limited, and that Housing New Zealand Limited was entitled to enter onto the land to remove the house.
[2] Housing New Zealand had brought the application because Susan Tawhai occupies the house, refuses to pay rent and claims that the house was owned by her late father, Te Rau Hoterene, and is therefore property that she is entitled to. Ms Tawhai made that claim notwithstanding that around the time the house was brought onto the land two bailment agreements were entered into which acknowledged that the house remained the property of Housing New Zealand Limited.
[3] Housing New Zealand Limited now claims an award of between 80 and 100 percent of solicitor-client costs of $40,969.13 (including GST).
Housing New Zealand Limited’s submissions
[4] Mr Magee, for Housing New Zealand Limited, filed detailed submissions in support of the application for costs. In summary, he says that Housing New Zealand
Limited is entitled to costs as:
The application was successful and costs should
follow the
event.
Housing New Zealand Limited should be
rewarded a reasonable contribution to the costs actually and reasonably
incurred.
The litigation was conducted similar to litigation
conducted in the ordinary Courts.
The proceedings involved detailed legal
submissions and
Housing New Zealand Limited faced a serious and concerted opposition.
[5] Mr Magee says in support of an award of between 80 and 100 percent of
actual solicitor-client costs that:
Ms Tawhai’s case lacked merit and was contrary
to the leading
authorities.
Ms Tawhai acted unreasonably in pursuing an
unmeritorious case, failing to enter into earlier negotiations after proceedings
were filed, failing to make any reasonable settlement proposals
and seeking to get “something for nothing”.
Ms Tawhai was granted an adjournment of the
original scheduled hearing on the grounds that her counsel had been
unable to
brief “key” witnesses, which witnesses were then not
called at the actual hearing.
Ms Tawhai consistently failed to comply with
timetabling
directions.
The proceedings were formal and akin to civil litigation.
[6] Mr Magee refers to and relies on Samuels v Matauri X Incorporation.1
[7] Furthermore, Mr Magee asks that the Court order costs against not only Ms
Tawhai but also the trustees of the Te Rau Paraha Moetahi Hoterene Whanau Trust, which now holds the land interests that previously belonged to Te Rau Hoterene. He
seeks such an order on the basis that Tracey Shortland and William Shortland, Ms Tawhai’s sister and brother and co-trustees of the whanau trust, had supported Ms Tawhai in opposing the application.
Ms Tawhai’s submissions
[8] I directed Mr Potter, who represented Ms Tawhai, to file submissions on costs within seven days of receipt of Mr Magee’s submissions. Mr Potter did not file any submissions in reply, nor did he seek leave to withdraw and nor did he advise the Court directly that his instructions had ceased. Instead, at my direction the Case Manager phoned Mr Potter who only then advised that he no longer acted for Ms Tawhai. Such a lack of courtesy to the Court is disappointing. Ms Tawhai has not made any submissions. I approach the matter on the basis that she and her co- trustees oppose costs.
Discussion
[9] The principles that apply to this Court’s exercise of discretion in awarding
costs are discussed in several leading decisions: Riddiford v Te Whaiti,2
Manuirirangi v Paraninihi ki Waitotara Incorporation,3 Vercoe v Vercoe,4 Samuels v Matauri X Incorporation,5 Phillips v Trustees of Mohaka A4 Trust,6 and Nichols v Nichols – Part Papa Aroha 6B Block.7 I need not recount the principles as they are
well settled. I deal with Ms Tawhai and her co-trustees in turn.
2 Riddiford v Te Whaiti (2001) 13 Takitimu Appellate MB 184 (13 ACTK 184).
4 Vercoe v Vercoe (2004) 10 Waiariki Appellate MB 263 (10 AP 263).
5 Samuels v Matauri X Incorporation (2009) 7 Taitokerau Appellate MB 216 (7 APWH 216).
6 Phillips v Trustees of Mohaka A4 Trust (2010) 2010 Māori Appellate Court MB 425 (2010
APPEAL 425).
7 Nicholls v Nicholls – Part Papaaroha 6B Block (2011) 2011 Māori Appellate Court MB 64
(2011 APPEAL 64).
Ms Tawhai
[10] I determine that Housing New Zealand Limited is entitled to costs against Ms Tawhai. It was successful in its application, the application was similar to ordinary litigation and costs should ordinarily follow the event.
[11] In my assessment, Housing New Zealand Limited should be entitled to an award of 80 percent of its solicitor-client costs for the following reasons:
Ms Tawhai’s case lacked merit and was contrary
to the leading authorities. She was attempting to argue that, in the
face of a
clear agreement and documentation that confirmed Housing New Zealand
Limited’s continued ownership of the house,
she and others should be
entitled to the windfall of the house
simply because it was affixed to the land.
Housing New Zealand Limited responsibly
set out the background in detail in correspondence to Ms Tawhai and
invited
her to negotiate a settlement. Indeed, the start of the hearing on 1 March
2011 was delayed to allow last minute negotiations
to take place. Ms Tawhai did
not take up that opportunity because, I must conclude, of her and her
counsel’s
unrealistic assessment of Ms Tawhai’s situation.
Ms Tawhai and her counsel took an unsatisfactory
approach to the preparation for and attendance at the hearing. The initial
fixture of 15 February 2011 was adjourned at Mr Potter’s request because
of his inability to brief witnesses. Ultimately,
those witnesses were not
called to give evidence and even Ms Tawhai did not give evidence at the hearing.
Mr Potter was otherwise
dilatory in complying with the Court’s
timetable.
[12] There is one matter that requires more thorough consideration. Mr Magee sought costs based on the total amount paid by his client of $40,969.13 (including GST). Should my award of 80 percent of solicitor-client costs be based on a GST inclusive or exclusive figure?
[13] In terms of the liability of a costs award for GST, there is High Court and Court of Appeal authority that a recipient of a costs award is not liable to account for GST. In Bellis v NZMC Limited No.28 Tipping J observed that:
It does not seem to me that the party and party costs are themselves subject to GST. They are simply a contribution made by the losing party to the successful party in respect of that party’s solicitor and client costs which will of course themselves be subject to GST.
[14] The Court of Appeal made similar obiter observations in Thoroughbred and
Classic Car Owners Club (Inc) v Coleman.9
[15] Giles J in the High Court addressed the specific issue I am concerned with, namely, whether an assessment of solicitor-client costs should factor in the GST component, in Signature Carpet Distributors Ltd v Shaw Carpets Limited.10 After referring to the above two decisions His Honour ruled:
The rationale underlying the observations made by Tipping J is no doubt that in directing a party to make a contribution to a successful party’s costs, there is no “service” involved within the meaning of the Goods and Services Act
1985. But I do not read Tipping J as suggesting that a liability to meet GST
will be irrelevant to the question of “costs actually incurred”. If, for example, the party recovering costs is registered for GST purposes, then there will be an ability to recover GST from the Inland Revenue Department and, in those circumstances, it would not be right for the GST liability to have any influence on the “reasonable contribution” because the GST registered party will be making a full recovery in any event. But, where the successful party is not GST registered, no such right will exist. In those circumstances, that party will incur an irrecoverable GST liability and, to that extent, GST would be properly considered by the Court when focussing on the total costs payable by the successful litigant. Although the matter has
9 Thoroughbred and Classic Car Owners Club (Inc) v Coleman (CA203/93, 25 November 1993,
unreported but noted in [1994] BCL 10.
not been addressed in counsels’ submissions, I suspect that this plaintiff is
GST registered.
[16] Thus, if Housing New Zealand Limited is GST registered, then the 80 percent figure should be based on the GST exclusive amount as Housing New Zealand Limited has already recovered the GST component from the Inland Revenue Department. I proceed on the basis that Housing New Zealand Limited is GST registered. Accordingly, the figure of 80 percent of costs will be based on the GST exclusive amount. Mr Magee will need to confirm that amount.
The trustees of the Te Rau Paraha Moetahi Hoterene Whanau Trust
[17] Mr Magee relies on s 79 (1) and (3) of Te Ture Whenua Māori Act 1993 (“1993 Act”), which 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.
(3) Where the Court is satisfied that any party to the proceedings has acted, not only on his or her own behalf, but on behalf of other persons having a similar interest in the proceedings, the Court shall have the same power to make an order for the payment of the costs of those proceedings by those other persons as it has under subsection (1) of this section in respect of that party.
[18] Thus, the Court has the power to award costs against non-parties on whose behalf a party has acted in proceedings. Mr Magee says that Ms Tawhai was supported by her brother and sister and that the whanau trust was set to gain from Ms Tawhai successfully opposing the application.
[19] I am not aware of any decisions of this Court or the Māori Appellate Court where s 79(3) has been invoked to award costs against a non-party. I take guidance from decisions which have considered the jurisdiction of the High Court to award costs against a non-party.
[20] In Carborundum Abrasives Ltd v BNZ11 Master Hansen (as he then was) relied on the then r 46(1) of the High Court Rules 1985 (now r 14.1 High Court Rules 2008) to conclude that the High Court could award costs against a non-party in exceptional cases, provided that the non-party is served and given an opportunity to be heard. This power also arises from the High Court’s inherent jurisdiction.
[21] In Asset Traders Ltd v Favas Sportscar World Ltd12 Winkelmann J stated:
[8] The starting point in respect of considering whether costs should be awarded against a non-party is the decision of the Privy Council in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2005] 1 NZLR 145; (2004)
17 PRNZ 115. In that case the Privy Council summarised the general principles applicable as follows (at [25]):
(1) Although costs orders against non-parties are to be regarded as “exceptional”, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such “exceptional” case is whether in all the circumstances it is just to make the order. It must be recognised that this is inevitably to some extent a fact- specific jurisdiction and that there will often be a number of different considerations in play, some militating in favour of an order, some against.
(2) Generally speaking the discretion will not be exercised against “pure funders”, described in para [40] of Hamilton v Al Fayed as “those with no personal interest in the litigation, who do not stand to benefit from it, are not funding it as a matter of business, and in no way seek to control its course”. In their case the Court’s usual approach is to give priority to the public interest in the funded party getting access to justice over that of the successful unfunded party recovering his costs and so not having to bear the expense of vindicating his rights.
(3) Where, however, the non-party not merely funds the proceedings but substantially also controls or at any rate is to benefit from them, justice will ordinarily require that, if the proceedings fail, he will pay the successful party’s costs. The non-party in these cases is not so much facilitating access to justice by the party funded as himself gaining access to justice for his own purposes. He himself is “the real party” to the litigation, a concept repeatedly invoked throughout the jurisprudence — see, for example, the judgments of the High
11 Carborundum Abrasives Ltd v BNZ [1992] 3 NZLR 187.
Court of Australia in Knight and Millett LJ’s judgment in
Metalloy Supplies Ltd (in liq) v MA (UK) Ltd [1997] 1 WLR
1613.
[22] In Premier Soft Goods Ltd v Warnock13 Elias J (as she then was) observed that there would need to be truly compelling reasons why costs should be awarded against a non-party.
[23] In Baker No-Tilage Ltd v Cross Slot Technology Ltd14 Master Faire distilled
the following factors as being relevant to the exercise of the Court’s discretion:
(1) The Court has a wide and overriding discretion on all questions of costs that must be exercised judicially. Carborundum Abrasives v BNZ (supra).
(2) As a general approach, costs will not be awarded against a person not a party. Carborundum Abrasives v BNZ (supra), p 764.
(3) The discretion to order costs against a non-party should only be exercised against a person standing behind a company litigant and in exceptional circumstances. Dorset J Forest Pty Ltd v Keen Bay Pty Ltd (1991) 4 ACSR 107 at 122.
(4) For costs to be awarded against a non-party, that person must have some connection with or involvement in, the proceedings:
Such an order would be justified only where the circumstances demonstrate that the connection or involvement was such as to justify the making of what I accept should be regarded as an exceptional order.’“Carborundum Abrasives v BNZ (supra), p
764.
(5) Generally, costs are not to be awarded against the directors of an insolvent company only because they caused the company to bring or defend proceedings when they know or suspect that the company may not be able to meet an order for costs against it. Carborundum Abrasives v BNZ (supra), p
764.
(6) A persuasive reason for awarding costs against a non-party would arise if that non-party has been involved or connected with the prosecution or defence of proceedings through the insolvent company and has acted with impropriety, or with mal fides. Carborundum Abrasives v BNZ (supra), p
764.
(7) There may be other cases which justify an order for costs against a non-party, for example where proceedings are:
13 Premier Soft Goods Ltd v Warnock (1996) 10 PRNZ 150.
14 Baker No-Tillage Ltd v Cross Slot Technology Ltd (HC Auckland M1098/96, M56/97, CP 16/97,
14/5/97, Master Faire,) at pp 6 - 7.
controlled by a person who, although not a party to the proceedings, has a direct personal financial interest in their results 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.
[24] Having regard to those principles I do not agree that the grounds are made out to invoke s 79(3).
[25] First, there is no evidence that the whanau trust supported Ms Tawhai’s stance. In fact, Tracey Shortland had previously occupied the house and paid rent. But, even if the whanau trust did support Ms Tawhai’s stance, her co-trustees’ conduct is not such that I am persuaded that they should share the burden of an award of costs.
[26] Second, Mr Potter was only ever acting upon instructions from Ms Tawhai.
[27] Third, as I commented in my oral judgment (paragraph 13), it was not clear from Mr Potter’s arguments who he said the house belonged to, that is, whether the whanau trust or the ahu whenua trust or other individuals.
[28] Finally, and in summary, in my view the Court should only invoke s 79(3) where it is clear that a party to proceedings has acted with the authority of the non- party. That is not the case here. To do otherwise would lay the responsibility for costs at the feet of individuals who had not taken an active part in the proceedings. Furthermore, in the present case the circumstances are neither exceptional nor compelling.
Outcome
[29] I award Housing New Zealand Limited 80 percent of the costs of $40,969.13 less the GST component. Mr Magee is to file a memorandum calculating the award of costs on the adjusted figure and an appropriate order for execution.
Pronounced in open Court in Whangarei at 2.05 pm on Friday this 23rd day of
December 2011.
D J Ambler
JUDGE
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