martin v morgan judgment 020611

8/6/2019 Martin v Morgan Judgment 020611

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MARTIN V MORGAN & ORS HC HAM CIV-2010-419-1628 [10 June 2011]

IN THE HIGH COURT OF NEW ZEALAND

HAMILTON REGISTRY

CIV-2010-419-1628

BETWEEN TANIA ERIS MARTINPlaintiff

AND TUKOROIRANGI MORGAN, CHARLESJOE, PATIENCE TE AO, RUKUMOANASCHAAFHAUSEN, KINGI PORIMA,SONNY WILSON, RAHUI PAPA,ROBERT TUKIRI, TAITIMU MAIPI,MAXINE MOANA-TUWHANGAI ANDGREG MILLER

First Defendants

AND WAIKATO-TAINUI TE KAUHANGANUIINCORPORATEDSecond Defendant

AND GREG MILLERThird Defendant

On papers

Judgment: 10 June 2011

JUDGMENT OF DOBSON J

(Costs)

This judgment was delivered by me on 10 June 2011 at 11am

pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:

Solicitors:Stace Hammond, Hamilton for plaintiff

Chapman Tripp, Auckland for defendants


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[1] This is an opposed application for costs on behalf of the plaintiff(Mrs Martin) in proceedings where, without a contested hearing, formal

acknowledgements were provided on behalf of the defendants, which effectively

addressed the matters on which relief was sought. Mrs Martin seeks indemnity costs

for all the steps taken on her behalf in the proceedings until that point, and also for

the costs incurred since that time in seeking to recover the costs that she has

incurred. The defendants contend that costs should lie where they fall.

[2] Mrs Martin is the elected chairperson of Waikato-Tainui Te KauhanganuiIncorporated (Te Kauhanganui). Te Kauhanganui is the representative body for the

Waikato-Tainui iwi, responsible for supervising the governance of the business and

other interests of that iwi. It treats itself as a tribal parliament with representatives of

relevant marae as its members. It is also the trustee of the Waikato Raupatu Lands

Trust.

[3] The business of the iwi is managed by an executive body, Te Arataura. Thefirst named defendant (Mr Morgan) is the chairperson of Te Arataura. Te Arataura

exercises operational and financial control over the iwis assets.

[4] Initiatives that Mrs Martin has pursued to have an independent governancereview of matters including the management of Te Arataura have been a source of

tension between her and at least some of the first defendants, whose position has

been supported by Kngi Tuheteitia (the Mori King). On 6 December 2010, the

Mori King purported to dismiss Mrs Martin as chairperson of Te Kauhanganui and

to appoint the third defendant, a member of Te Arataura (Mr Miller) as acting

chairperson of Te Kauhanganui.

[5] The proceedings were commenced seeking a declaration that Mrs Martin wasthe duly appointed chairperson of Te Kauhanganui, and orders that she was to

discharge the responsibilities of that office until removed in accordance with the

rules of Te Kauhanganui or until she resigned. Mrs Martin also sought an order

restraining Mr Miller from acting as chairperson of Te Kauhanganui.


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[6] On the day the proceedings were filed, Brewer J declined an application thathad been made without notice for an interlocutory injunction to preserve the status

quo. On 14 December 2010, Mrs Martins application for an interlocutory injunction

was to be called, on an on notice basis. By that date, solicitors for the defendants

provided formal acknowledgements that:

Mrs Martin was duly appointed as the chairperson of Te Kauhanganui and

was entitled to conduct the business and exercise the powers of that

office;

Mr Miller did not purport to act as chairperson; and

the defendants would not pursue the appointment of a mediator, which

initiative had been mooted by Te Arataura in circumstances that

Mrs Martin perceived to be contrary to her position as elected

chairperson.

[7] In seeking costs, Mrs Martin swore an affidavit dated 25 March 2011. Sheaddressed why she believed it had been necessary for her to commence theproceedings. She referred, among other things, to her belief that Mr Morgan had

wanted the Mori King to sack her, and that after the purported sacking occurred,

Mr Morgan had made statements consistent with supporting what had happened.

Mrs Martins affidavit on costs described a further vote taken by Te Kauhanganui as

to whether she should be confirmed as its current chairperson, and that a motion in

those terms was passed, as was a subsequent vote of Te Kauhanganui, to the effect

that all her costs should be met. The reality is that Te Arataura as the managemententity controls the funds of the whole organisation, and that body has refused to act

on the vote by Te Kauhanganui to meet the costs.

[8] The first issue is whether pursuit of the proceedings was a reasonable andappropriate response to the perceived breach of the rules of Te Kauhanganui, and of

Mrs Martins rights, at the time.


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[9] The defendants dispute that the proceedings were either necessary orappropriate for a range of reasons. First, that the action purporting to dismiss

Mrs Martin was taken by the Mori King who was not sued, and conversely the

action had not been taken by the defendants. Second, that the proceedings were

commenced without any warning, and without a letter before action seeking to

clarify what the defendants view was of the legal position. As soon as Mrs Martins

concerns, and the legal analysis on which they depended, had been conveyed to the

defendants, they acknowledged the legal position, including confirmation of her

status as the chairperson of Te Kauhanganui.

[10] In support of the defendants opposition to the application, Mr Morgan sworean affidavit dated 1 April 2011 on behalf of the governing body of Te Arataura. That

affidavit gave Mr Morgans perspective on the propriety of steps that Mrs Martin had

taken to pursue a governance review, citing criticisms of her conduct as being

perceived by the Mori King as sufficient to pursue her sacking. Mr Morgan denied

that he or other members of Te Arataura had taken steps to have her removed. In

particular, Mr Morgan denied that he had forced the Mori King to sack

Mrs Martin. Mr Morgan accepted the legal analysis on which Mrs Martins claims

were founded, so that Te Arataura acknowledged that her purported removal was not

lawful.

[11] Mr Morgans affidavit was responded to by one in support of Mrs Martinscosts application from an elder, Charles Tumai. He deposed to having been present

on 4 December 2010 for the meeting at which comments were made in respect of

sacking Mrs Martin. Mr Tumai deposed to hearing Mr Morgan say to the Mori

King, among other things:

My Lord, I want you to sack her.

She has brought Tainui into disrepute.

Her figures are wrong.


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[12] It is that difference over any part that Mr Morgan had played in her purportedremoval that caused Mrs Martin to pursue an application to have Mr Morgan cross-

examined on his affidavit on costs. I resolved that application against Mrs Martin.1

[13] I have carefully reviewed the whole of this file, and am satisfied that in theparticular circumstances confronting Mrs Martin, commencement of the proceedings

was reasonable and appropriate. In an environment where the formal legal structures

might sit uneasily with cultural hierarchies, it was appropriate for the chairperson of

Te Kauhanganui to be concerned both personally and in an institutional sense for

steps taken which ignored the legal structure. Although it is now easy to

acknowledge that the institutions would respect the legal position, the practical

reality of where power lay within the Waikato-Tainui iwi structures could quite

reasonably have left her considering that her own position, and the lawfulness of the

conduct of business on behalf of the iwi, was under threat.

[14] Nor do I consider that the appropriateness of her proceedings is lessened bythe absence of a letter before action, inviting the defendants to recognise the

unlawfulness of her purported removal and the appointment of Mr Miller as acting

chairperson. Given the dynamics of a range of initiatives that the opposing factions

were pursuing and the need for an urgent acknowledgement of what the lawful

position was, it was reasonable for Mrs Martin and those advising her not to signal

an intention to seek the assistance of Court orders, and instead to urgently commence

that process. I respect the initial reaction of Brewer J in declining to deal with the

application on a without notice basis, but his initial impression on considering the

application does not derogate from the reasonableness in these particular

circumstances of moving in the way that Mrs Martin did.

[15] Certainly, the courts encourage dialogue between parties in all possiblecircumstances, before resorting to proceedings. This is one of what may be

relatively unusual circumstances in which the absence of such a communication

should not be held against Mrs Martin in considering her entitlement to costs.

1 See Minute of 2 June 2011.


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[16] The next issue is whether Mrs Martins position in asserting the claims shedid has been vindicated in the outcome. That is not decisive of the costs outcome,

but is a primary factor in considering the conventional starting point that costs ought

to follow the event.

[17] It is argued for the defendants that there has been no vindication for tworeasons. First, because Mrs Martin did not sue the Mori King, who was the only

person who took an initiative to have her removed. Secondly, because the relief she

sought as to the lawfulness of her position as chairperson of Te Kauhanganui was

indisputable. In addition, it is argued that on the two occasions on which she sought

interim relief, first on a without notice basis before Brewer J on 10 December 2010,

and secondly on notice before Hansen J on 14 December 2010, she failed to obtain

any relief. However, that is not the full story. Brewer J acknowledged from a first

reading of the documents that he could readily see a substantive argument to be

made, but he was unable at that point to assess where the balance of convenience lay.

By 14 December 2010, consideration of the entitlement to interim relief was

rendered unnecessary by the defendants acknowledgements. I consider it more

likely than not that Mrs Martin would not have received the comfort of the precisely

worded acknowledgements as to her legal position in the timely way that she did

(ie by 14 December 2010) unless the defendants perceived that step as being

necessary to pre-empt the prospect of interim orders in the proceedings.

[18] Having accepted that the position confronting Mrs Martin in the days beforethe proceedings were filed on 10 December 2010 justified her commencing

proceedings, then it follows that the acknowledgements procured from the

defendants to pre-empt any argument in Court are appropriately seen as vindicatingher position.

[19] For those reasons, I am satisfied that Mrs Martin is entitled to an award ofcosts. A further series of considerations applies in relation to quantum.

[20] Mr Brants submissions in support of MrsMartins claim for indemnity costsrested on three principal points. First, that the proceedings were a reasonable and

appropriate response to the predicament caused by unlawful conduct. Secondly, that


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the proceedings were not pursued for any form of personal benefit, but rather to

ensure that the lawful constraints on conduct by the various institutions were

respected. Thirdly, that the proceedings arose in relation to the administration of a

fund as that concept is used in the provisions of the High Court Rules (the Rules)

providing for circumstances in which indemnity costs may appropriately be ordered.

[21] It is unnecessary to add further analysis on the first point. I have addressedreasons why I consider the proceedings were a reasonable and appropriate response.

[22] As to the second issue, the defendants characterise Mrs Martins motives aspurely personal, intended to protect her individual position as chairperson. In a

situation like this, it is impossible to discount an office-holders personal concern

that his or her tenure in the office not be ended peremptorily or prematurely in

circumstances that could infer unfitness for office. Beyond that, however, if the

steps she challenged were not contested, then a precedent could have been set that

struck at the heart of the constitutional arrangements for her iwi. I therefore treat the

larger issue of constitutionality of the conduct of business for the iwi to be the

dominant feature of the proceedings. That justifies Mrs Martin in treating them as

not for her personal benefit.

[23] The third issue is whether this is a proceeding in respect of a fund ascontemplated in r 14.6(4)(c). That rule provides:

14.6 Increased costs and indemnity costs

(4) The court may order a party to pay indemnity costs if

(c) costs are payable from a fund, the party claiming costs is anecessary party to the proceeding affecting the fund, and theparty claiming costs has acted reasonably in the proceeding;or

[24] Mr Brant treats his claim, at least against the second defendant, asconstituting a claim for indemnity from a fund on the basis that the objects of

Te Kauhanganui include those of acting as trustee of the Waikato Raupatu Lands


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Trust, which has assets that he advises are in the region of $550-$600 million.

Mrs Martin is an elected member of Te Kauhanganui and to qualify as a

representative one has to be a beneficiary. The proceedings do not relate directly to

expenditure from the fund, but did raise an issue going to the lawfulness of the

governance of Te Kauhanganui. In the sense intended by the Rules, I consider that

this was a dispute affecting the fund for the purposes of the Rules.

[25] The parties have taken opposing views on the application of cases that couldprovide guidance on the issue. Both referred to the Chancery Division decision in

Re Buckton.2 In that case, Kekewich J categorised cases in which directions were

sought from the Chancery Division in relation to the administration of trusts. His

Honour identified three classes relevant to the entitlement for applicants to receive

their costs out of the funds administered by trustees. The judgment described the

first two classes in the following terms:3

In a large proportion of the summonses adjourned into Court for argumentthe applicants are trustees of a will or settlement who ask the Court toconstrue the instrument of trust for their guidance, and in order to ascertainthe interests of the beneficiaries, or else ask to have some questiondetermined which has arisen in the administration of the trusts. In cases of

this character I regard the costs of all parties as necessarily incurred for thebenefit of the estate, and direct them to be taxed as between solicitor andclient and paid out of the estate

There is a second class of cases differing in form, but not in substance, fromthe first. In these cases it is admitted on all hands, or it is apparent from theproceedings, that although the application is made, not by trustees (who arerespondents), but by some of the beneficiaries, yet it is made by reason ofsome difficulty of construction, or administration, which would have justified an application by the trustees, and it is not made by them onlybecause, for some reason or other, a different course has been deemed moreconvenient. To cases of this class I extend the operation of the same rule as

is observed in cases of the first class. The application is necessary for theadministration of the trust, and the costs of all parties are necessarilyincurred for the benefit of the estate regarded as a whole.

[26] Mr Brant submitted that the present proceedings should be likened to thesefirst two classes of case recognised by Kekewich J.

2 Re Buckton [1907] 2 Ch 406.3 At 414-415.


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[27] However, the submissions for the defendants treated the presentcircumstances as analogous with a third class identified by Kekewich J,4 in which a

beneficiary makes a claim that is adverse to other beneficiaries. The submissions for

the defendants also relied on the costs judgment in Waitara Leaseholders Association

Inc v New Plymouth District Council.5 In the substantive proceedings, the

leaseholders association had successfully challenged a decision of the local

authority to make an offer, in respect of what was known as the Waitara Endowment

Land, to the Crown.6 On a costs application argued subsequently, Harrison J found

that the leaseholders challenge did not constitute a proceeding affecting a fund for

the purposes of entitlement to indemnity costs.7

[28] There, the defendant local authority held the relevant land on specific trustsfor certain statutory purposes. Those purposes did not include funding legal

expenses and there must certainly also have been an issue that the leaseholders

association did not naturally qualify as a beneficiary.

[29] I consider the context in Waitara Leaseholders to be distinguishable. I wouldnot treat the absence of a specific power for Te Kauhanganui to meet legal expenses

incurred by a beneficiary to take the present situation out of those contemplated by

r 14.6(4)(c).

[30] A concern raised by a beneficiary as to the lawfulness of the governance ofthe trustee of assets is, as an analogy, closer to the second category cited by

Kekewich J inBuckton, than the third. It would mischaracterise these proceedings to

suggest that Mrs Martins initiatives were adverse to the interests of beneficiaries

generally, when all beneficiaries must be treated as interested in having the trusteesgovernance regulated lawfully.

4 At 415.5 Waitara Leaseholders Association Inc v New Plymouth District Council HC New Plymouth

CIV-2004-443-162, 20 December 2005.6 Waitara Leaseholders Association Inc v New Plymouth District Council HC New Plymouth

CIV-2004-443-162, 4 November 2005, which decision was reversed by the Court of Appeal in

New Plymouth District Council v Waitara Leaseholders Association Inc [2007] NZCA 80,confirmed by the Supreme Court at [2007] NZSC 44.

7 20 December 2005 judgment at [14].


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[31] As to the other elements of the rule, Mrs Martin was a necessary party to theproceeding, and I consider from a review of the file that she has acted reasonably in

it.

[32] Accordingly, in the particular factual situation arising here, I find that the ruledoes apply, if not literally, then certainly the situation is sufficiently analogous to

apply the approach suggested by that rule.

[33] Mr Brant relied in the alternative on r 14.6(4)(f) which provides that theCourt may order indemnity costs if:

some other reason exists which justifies the court making an order forindemnity costs despite the principle that the determination of costs shouldbe predictable and expeditious.

[34] If I am wrong in treating the circumstances of this claim as coming withinr 14.6(4)(c), then an analogy is certainly justified to apply (f) to the present claim.

[35] It was argued for the defendants that the Court should disregard the votetaken, by a majority of the representatives on Te Kauhanganui, to meet Mrs Martins

costs. It was submitted for the defendants that the resolution was both beyond the

jurisdiction of Te Kauhanganui, and irrelevant to the Courts consideration. At the

very least, a body in the nature of a tribal parliament can express a wish, as indeed

the submissions for the defendants implicitly conceded:8

All the resolution indicates is that there was support within Te Kauhanganuifor the plaintiffs costs to be met, not that the issue of costs is settled ordetermined.

[36] The support for payment of Mrs Martins costs by the iwi representatives onTe Kauhanganui is most likely one aspect of the division between that aspect of the

governance, and the executive represented by Te Arataura. It is not a matter of

taking sides, in acknowledging the wish of the elected representatives, but their view

is nonetheless a factor confirming the appropriateness of treating this claim for costs

as one appropriately met on an indemnity basis.

8 Defendants submissions as to costs, 20 April 2011, at [25.1(a)].


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[37] In the end, Te Arataura has indicated that it wished the issue of costs to beresolved by Court order, and I am satisfied that Mrs Martin is entitled to costs on an

indemnity basis for the costs of and incidental to the proceedings, including her costs

on the dispute in relation to costs. Those were quantified, at the time of Mr Brants

submissions in support of the costs claim, at $26,755.54, and $10,126.13.

Dobson J

martin v morgan judgment 020611

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