HEENAN FAMILY TRUST 1960 & ORS V GORE & ORS HC DUN CIV-2006-412-1031

HEENAN FAMILY TRUST 1960 & ORS V GORE & ORS HC DUN CIV-2006-412-1031 19 December 2007IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY CIV-2006-412-1031BETWEEN HEENAN FAMILY TRUST 1960 & AMENDED HEENAN FAMILY TRUST 1960 & AMENDED HEENAN FAMILY TRUST NUMBER TWO Plaintiffs AND DE VELLA JUNE GORE & ORS DefendantsCIV-2006-412-1023BETWEEN HEENAN FAMILY TRUST 1960 DAVID STANLEY HEENANFirst Plaintiffs A N D AMENDED HEENAN FAMILY TRUST 1960, MR. LEE, MRS MS. WADSWORTH, DAVID STANLEY HEENANSecond Plaintiffs A N D AMENDED HEENAN FAMILY TRUST NUMBER TWO, MR. LEE, MRS MS. WADSWORTH, DAVID STANLEY HEENANThird Plaintiffs A N D DA VELLA JUNE GOREFirst Defendant A N D WAYNE RICHARD GORE Second Defendant A N D PHILIP JONESThird Defendant A N D JOHN FOOKESFourth Defendant A N D ALISTAIR MCLAYFifth Defendant2 A N D HEENAN FAMILY TRUST NUMBER TWOSixth Defendant A N D NEVILLE PETRIE FAGURLUNDSeventh Defendant A N D ROBERTA JANE MARY HEENANEighth Defendant A N D HFK TRUSTEES LTDNinth Defendant A N D EUAN HILSONTenth Defendant A N D MICHAEL KEYSEleventh Defendant A N D CAMERON FLEMINGTwelfth Defendant A N D JEFFERY ROBERT MORRISONThirteenth Defendant A N D VASILI ENTERPRISES LTDFourteenth Defendant A N D RHYES JAMES CAINFifteenth Defendant A N D ROBIN ALAN MACDUFFSixteenth Defendant A N D GRAHAM MCGARRYSeventeenth Defendant A N D BRUCE BOIVINEighteenth Defendant A N D GREGG ROSSNineteenth Defendant A N D ALASDAIR ROYTwentieth Defendant A N D STUART DAVID MORGANTwenty-First Defendant3 A N D ALEXANDER EDWIN CUTHBERTTwenty-Second Defendant A N D JOHN PAUL HEDGESTwenty-Third Defendant A N D GERARD CURRYTwenty-Fourth Defendant A N D JAMES GARETH DONKINTwenty-Fifth Defendant A N D WARWICK GRIMMERTwenty-Sixth Defendant A N D ROGER SINCLAIRTwenty-Seventh Defendant A N D JERARD HANSONTwenty-Eighth Defendant A N D EXECUTORS OF LYN SAUNDERSTwenty-Ninth Defendant A N D HENRY STOKES & PUBLIC TRUSTThirtieth Defendants A N D JOHN FRENCHThirty-First Defendant Judgment: 19 December 2007 at 3.30 pmJUDGMENT AS TO COSTS OF ASSOCIATE JUDGE D.I. GENDALLThis judgment was delivered by Associate Judge Gendall on 19 December 2007 at 3.30 p.m. pursuant to r 540(4) of the High Court Rules 1985.Solicitors/Parties: D Heenan M Ryan, Anderson Lloyd, Solicitors, Queenstown A J Fincham, Russell McVeagh, Solicitors, Auckland J G French, French Burt Partners[1] This judgment relates to costs on an earlier decision given in this proceeding on 8 October 2007. [2] In that judgment I ordered that the plaintiffs' proceedings being an appeal against a judgment of Judge Somerville given in the District Court on 5 December 2006, and a fresh proceeding brought in this Court be struck out in their entirety. [3] At paragraphs [136] and [137] of that 8 October 2007 judgment I stated:"[136] As to costs, the defendants having succeeded with their strike out applications, they are entitled to an award of costs. No submissions were put to me as to the quantum of costs to be awarded or as to who should bear responsibility for these costs. [137] That said the following directions with regard to this issue of costs are now made: a) within 20 working days of the date of this judgment counsel for the defendants are to file and serve any memoranda they may wish to regarding the issue of costs; b) within a further 20 working days of receiving those memoranda from counsel for the defendants, the plaintiff trusts, Mr. Heenan, and the other persons said to be trustees of the plaintiff trusts, Ms. Wadsworth and Trevor Allen Lee, shall have an opportunity to provide memoranda in response on the issue of costs; c) all those memoranda are then to be forwarded to me and I will then decide the issue of costs based upon the material before the Court."[4] Various memoranda as to costs have been filed. David Stanley Heenan ("Mr. Heenan") on behalf of the plaintiffs filed an initial memorandum on 5 November 2007. Associate Judge Christiansen in a minute dated 26 November 2007 then gave him until 14 December 2007 a further opportunity to file an additional costsmemorandum for consideration by me. He has now done so. That further costs memorandum was filed on 14 December 2007. [5] Both the appeal and the fresh substantive proceedings were commenced in the names of the following three plaintiffs: (a) Heenan Family Trust 1960 by Mr. Heenan as the sole surviving trustee. (b) Amended Heenan Family Trust 1960 by Trevor Alan Lee ("Mr. Lee") and Pamela Joan Wadsworth (Ms. Wadsworth") as trustees and through David Stanley Heenan by a certain power of attorney. (c) Amended Heenan Family Trust No. 2 by Mr. Lee and Ms. Wadsworth as trustees and Mr. Heenan by a certain power of attorney. [6] The proceedings were purported to be issued on behalf of the three named trusts noted above. In my judgment (and in earlier judgments of this and other Courts) those entities, however, were found not to exist. [7] So far as the first-named plaintiff is concerned, in my view, this proceeding was effectively brought by Mr. Heenan alone. With regard to the second and third plaintiffs, however, those claims were brought not only by Mr. Heenan but also by Mr. Lee and Ms. Wadsworth "as trustees". [8] In addition, it is clear from the 18 May 2007 affidavit of Ms. Wadsworth filed in this proceeding that she joined with Mr. Heenan in launching and continuing these proceedings on behalf of the second and third plaintiffs. In her affidavit she gave evidence that she was familiar with the three plaintiff trusts and with the basis of the various claims. In addition, she entirely supported Mr. Heenan's assertions including the allegations of fraud/corruption/perversion of the course of justice against the various defendants. [9] As I noted at paragraph [136] of my 8 October 2007 judgment, the defendants in question who had been successful in their strike out applications were entitled to awards of costs. I saw no reason why costs should not follow the event inthe normal way with those successful defendants being entitled to costs from the plaintiffs as unsuccessful parties in terms of Rule 47(a) High Court Rules. [10] The issues now before the Court are twofold. First, the identity of the parties who are to bear the award of costs to be made in favour of the various defendants needs to be determined. Secondly, the quantum of costs to be awarded needs to be assessed. I turn first to consider who is to be liable for the costs awards. [11] On this aspect it must be remembered at the outset that Mr. Heenan is an undischarged bankrupt. Notwithstanding this, in an earlier costs judgment dated 13 October 2006 in Proceedings CIV 2005-425-223 given by His Honour Justice John Hansen, costs were awarded against Mr. Heenan and directed to be paid from a fund of money held by the Public Trustee from certain sale proceeds following the mortgagee sale of a Heenan property. In my view, an order to this effect is appropriate here. [12] In addition to Mr. Heenan, the other named plaintiffs in this proceeding are Ms. Wadsworth and Mr. Lee. They are specified in the pleadings as trustees of the "Amended Heenan Family Trust 1960" and the "Amended Heenan Family Trust No. 2". [13] It is significant that, in delivering his judgment concerning claims for costs in Proceedings 2005-425-223 which I have noted above, John Hansen J at para. 4 warned specifically that if Mrs Wadsworth continued to be involved with Mr. Heenan's court proceedings generally and if they continued to be conducted in a similar improper manner she might well personally face a costs order in the future. In my view that is precisely what has occurred here. [14] Although it may be that Ms Wadsworth and Mr Lee have once again to use the words of John Hansen J at paragraph 4 of his 13 October 2007 judgment "been sucked into these proceedings", the clear warning given at para. 4 of that judgment has been flagrantly ignored.[15] Ms. Wadsworth did not heed the warning, particularly when she provided an affidavit in support of the plaintiffs' present claims. In addition, Mr. Lee by his participation in this proceeding has also clearly ignored the warning. [16] That said, and given the involvement of both Ms Wadsworth and Mr Lee in these matters in their capacities as named second plaintiffs and third plaintiffs, an award of costs against them personally, in addition to a costs order against Mr. Heenan is justified here. [17] So far as the quantum of costs to be awarded in favour of the particular defendants is concerned, as I have noted above, memoranda have been filed by counsel for a number of the defendants and by Mr. Heenan. [18] I have now had an opportunity to consider all matters raised in those memoranda. [19] That said the starting point for a consideration of costs in this case must be the comments at para. 134 of my 8 October 2007 judgment which I repeat:"As I signalled at the outset in this judgment, these proceedings bear all the hallmarks of vexatious litigation. They are pursued by an almost compulsive litigant against a widening circle of defendants and involve extravagant and unfounded claims and attacks upon those defendants. I have no doubt they are designed to cause the defendants unnecessary trouble and expense and to tie up a group of defendants in litigation which can only be described as frivolous and vexatious. They are a misuse of the judicial process. I am fully satisfied that it would be an injustice and an abuse of the process of the Court to allow the proceedings to continue."[20] In light of these comments, and given my findings on the strike-out applications and taking into account also the vexatious manner in which Mr. Heenan chose to conduct these proceedings, I am satisfied that this is an appropriate case for an award of indemnity costs.[21] On this Rule 48C(1) provides:"[48C Increased Costs and Indemnity Costs(1) Despite rules 47 to 48B, the Court may make an order (a) Increasing costs otherwise payable under those rules (increased costs); or (b) That the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).[22] In addition Rule 48C(4) provides:"The Court may order a party to pay indemnity costs if— (a) The party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or (b) The party has ignored or disobeyed an order or direction of the Court or breached an undertaking given to the Court or another party to the proceeding; or (c) Costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or (d) The person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to the proceeding; or (e) The party claiming costs is entitled to indemnity costs under a contract or deed; or (f) Some other reason exists which justifies the Court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.]".[23] The starting point noted in Hedley v Kiwi Co-Operative Dairies Limited(2002) 16 PRNZ 694 is that indemnity costs are to be awarded only where truly exceptional circumstances exist. From Hedley however, Goddard J noted that:"circumstances warranting the exercise of the discretion to award indemnity costs include: (a) The making of allegations of fraud knowing them to be false, and the making of irrelevant allegations of fraud; (b) Evidence of particular misconduct that causes loss of time to the Court and other parties; (c) The fact that the proceedings were commenced with some ulterior motive; (d) The fact that the proceedings were commenced in wilful disregard of known facts or clearly established law; (e) The making of allegations that ought never to have been made or the undue prolongation of a case by groundless contentions; (f) An imprudent refusal of an offer to compromise".[24] Significantly at page 19 of the plaintiffs' statement of claim in proceeding 1023 the pleading notes that:"These proceedings are designed to cause these thirty one defendants expense "[25] In my view the circumstances of the present proceedings constitute what is an overwhelming case for an award of indemnity costs in favour of the defendants in the strike out applications against Mr. Heenan, Mr Lee and Ms Wadsworth. Allegations are made in these proceedings which, in my view, should never have been made. The proceedings allege fraud quite improperly and they have been prolonged unnecessarily through the actions of the plaintiffs. They are improperly brought by plaintiffs who have been found not to exist and, in my view, they arelikely to have been commenced with an ulterior motive. This is all wholly unacceptable. [26] As to quantum, counsel for the fifteenth, sixteenth, twenty-ninth and thirty- first defendants have provided a breakdown of the solicitor and client costs incurred by these Official Assignee defendants. These details provide for: (a) Costs of $10,880.00 (b) GST of $ 3,160.00 (c) Disbursements of $ 1,488.89 TOTAL $15,528.89 A detailed breakdown of the time spent at 53.6 hours and hourly rates at $200.00 (for the bulk of the work) and $240.00 (for some 4 hours) are provided. These are appropriate as are the disbursements listed and I approve all these sums claimed. [27] Orders are now made as follows: (a) That Mr. Heenan, Mr. Lee and Ms. Wadsworth jointly and severally are to pay this sum of $15,528.89 costs and disbursements to the fifteenth, sixteenth, twenty-ninth and thirty-first defendants. (b) This award of costs and disbursements against Mr. Heenan is to be paid from the fund held by the Public Trustee noted at para. [11] above. [28] So far as the eighth defendant, Robert Jane Mary Heenan, is concerned, her counsel has not provided in her costs memorandum dated 3 October 2007 any breakdown of her actual legal costs in this matter. She has simply stated that these total $28,525.70. There is no actual detail of this costs figure showing the time spent in this matter or the hourly rate nor are there any details of a disbursements claim. [29] I direct therefore that within 15 working days of the date of this judgment, counsel for the eighth defendant is to file and serve a detailed memorandum setting out a calculation and breakdown of the indemnity costs and disbursements claimed by the eighth defendant for consideration and approval by either the Registrar ormyself. The plaintiffs are also to have 10 working days from receipt of that memorandum to provide a memorandum strictly in response. [30] With regard to the quantum of costs payable to the twelfth, thirteenth, fourteenth, twenty-first, twenty-second, twenty-fourth, twenty-fifth, twenty-sixth, twenty-seventh and twenty-eighth defendants, their counsel in his memorandum dated 1 November 2007 seeks an award of indemnity costs which I understand totals $35,229.00 and disbursements of $1,525.00. These costs seem to be sought against Mr Heenan. [31] In addition, these particular defendants appear to seek costs (possibly calculated on a Category 2B scale basis) against Ms. Wadsworth and Mr. Lee of $8,800.00 and again disbursements of $1,525.00 on a joint and several basis. There is some confusion over this, as I see it, however. [32] Although there are certain brief schedules attached to this 1 November 2007 memorandum from counsel, I have had some difficulty following the memorandum and attached details. And, in my view there is not a proper breakdown to show the actual time spent in this matter or the hourly rate or hourly rates charged. [33] I direct therefore that within 15 working days of the date of this judgment counsel for the twelfth, thirteenth, fourteenth, twenty-first, twenty-second, twenty- fourth, twenty-fifth, twenty-sixth, twenty-seventh and twenty-eighth defendants are to file and serve a detailed memorandum setting out a calculation and breakdown of the indemnity costs and disbursements claimed here for consideration and approval by either the Registrar or myself. The plaintiffs are also to have 10 working days from receipt of that memorandum to provide a memorandum again strictly in response. [34] And so far as the quantum of costs payable to the other defendants who were successful in the strike-out application are concerned (the third, fourth, fifth, sixth, seventh, ninth, tenth, eleventh, seventeenth, eighteenth, twenty-third and thirtieth defendants), within fifteen working days of the date of this judgment, counsel for those defendants are also to file and serve detailed memoranda setting out acalculation and breakdown of the indemnity costs and disbursements claimed by those defendants against the plaintiffs. The plaintiffs are also to have 10 working days from receipt of that memorandum to provide a memorandum strictly in response. These are then to be referred to either the Registrar or myself for approval. [35] One final matter requires mention. In the memorandum from counsel for the fifteenth, sixteenth, twenty-ninth and thirty-first defendants an additional order is sought in terms of the inherent jurisdiction of this Court pursuant to s. 16 Judicature Act 1908. This further condition according to counsel is said to be justified having regard to the past history of these and earlier proceedings and the likelihood that the plaintiffs will attempt to bring fresh proceedings against all or some of the current defendants irrespective of whether or not the costs now ordered are paid. [36] Counsel accordingly requests that an order be made that the costs now awarded are required to be paid in full before the plaintiffs Mr. Heenan, Mr. Lee and Ms. Wadsworth are entitled or able to issue "any other proceedings" against the defendants named in this proceeding. [37] Counsel refers me to McGechan on Procedure at para. J16.07(2)(j) which refers to the Court's inherent jurisdictional power to restrain frivolous and vexatious litigation. Counsel submits that if this additional order is made this will prevent potential future abuses of the Court's process and will enhance the efficacy of the orders now made. Counsel submit that it will also restrain what is said to be a constant stream of frivolous and vexatious litigation. [38] Whilst I have some sympathy with the sentiments which accompany this request from counsel Mr. French, I note first that none of the other defendants have sought a similar order and secondly, no formal application for this order has been made. That said, by a rather slim margin I am of the view that such an order is not appropriate here. There has been no detailed argument addressed to me on this issue and it is obviously a matter of considerable significance.[39] Therefore, no such order is to be made presently. This does not preclude, however, any appropriate application being brought by any of the present defendants for such an order if this is thought appropriate.'Associate Judge D.I. Gendall'