HEENAN FAMILY TRUST 1960 & AMENDED HEENAN FAMILY TRUST 1960 & AMENDED HEENAN FAMILY TRUST NUMBER TWO V DE VELLA JUNE GORE & ORS HC DUN CIV-2006-412-1031

HEENAN FAMILY TRUST 1960 & AMENDED HEENAN FAMILY TRUST 1960 & AMENDED HEENAN FAMILY TRUST NUMBER TWO V DE VELLA JUNE GORE & ORS HC DUN CIV-2006-412-1031 1 April 2008IN 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 TWOPlaintiffs AND DE VELLA JUNE GORE & ORSDefendantsCIV-2006-412-1023BETWEEN HEENAN FAMILY TRUST 1960 DAVID STANLEY HEENANFirst Plaintiffs A N D AMENDED HEENAN FAMILY TRUST 1960, TREVOR ALLEN LEE, PAMELA JOAN WADSWORTH and DAVID STANLEY HEENANSecond Plaintiffs A N D AMENDED HEENAN FAMILY TRUST NUMBER TWO, TREVOR ALLEN LEE, PAMELA JOAN WADSWORTH and 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: 1 April 2008 at 1.00 pmJUDGEMENT AS TO COSTS OF ASSOCIATE JUDGE D.I. GENDALLThis judgment was delivered by Associate Judge Gendall on 1 April 2008 at 1.00 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] On 8 October 2007 I gave a judgment in this proceeding striking out the plaintiffs' claims which were an appeal against a judgment of Judge Somerville in the District Court on 5 December 2006 and a fresh proceeding brought in this Court. [2] In that 8 October 2006 judgment at paragraphs 136 & 137 I referred to the issue of costs and 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, Pamela Joan 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."[3] Various memoranda as to costs were filed. Then on 19 December 2007 I gave a further judgment in this proceeding which related to this issue of costs. In that judgment I made an order awarding $15,528.89 costs and disbursements to the fifteenth, sixteenth, twenty-ninth and thirty-first defendants against David Stanley Heenan ("Mr. Heenan"), Trevor Allen Lee ("Mr. Lee") and Pamela Joan Wadsworth ("Ms. Wadsworth") jointly and severally and directed that the award of costs anddisbursements against Mr. Heenan was to be paid from the fund held by the Public Trustee noted at paragraph [11] of that judgment. [4] So far as costs sought by the other defendants in this proceeding were concerned, in that 19 December 2007 judgment I directed that those defendants were to have an opportunity to provide additional memoranda with respect to the calculation and breakdown of the costs and disbursements sought in each case with the plaintiffs having an opportunity to reply. [5] The time for those additional memoranda to be filed has now expired. The plaintiffs have taken the opportunity to provide further memoranda and other documents on 31 January 2008, 5 February 2008 and 20 February 2008. [6] Counsel for the eighth defendant, Ms. Ryan and Mr. Couling, (who were also counsel at the hearing for the third to eleventh, the seventeenth and eighteenth, twenty- third and thirtieth defendants) filed a further memoranda as to costs dated 5 February 2008. [7] Mr. Finchem, counsel for the twelfth, thirteenth, fourteenth, twenty-first, twenty-second, twenty-fourth, twenty-fifth, twenty-sixth, twenty-seventh and twenty- eighth defendants has also filed a further memorandum as to costs dated 24 January 2008. [8] I have had an opportunity to consider all the additional material filed together with the earlier memoranda and material provided prior to my 19 December 2007 judgment and now give my decision on the costs issues.Background[9] In this proceeding both the plaintiffs' appeal and the fresh substantive proceedings brought against all the defendants were commenced in the names of three plaintiffs: a) Heenan Family Trust 1960 by Mr. Heenan as the sole surviving trustee.b) Amended Heenan Family Trust 1960 by Mr. Lee and Ms. Wadsworth as trustees and Mr. Heenan by certain power of attorney. c) Amended Heenan Family Trust No. 2 by Mr. Lee and Ms. Wadsworth as trustees and Mr. Heenan by the power of attorney. [10] Although the proceedings were purported to be issued on behalf of the three trusts named above, in my 8 October 2007 judgment (and in earlier judgments of this and other Courts) those entities were found not to exist. [11] In my 19 December 2007 costs judgment I noted that so far as the first named plaintiff was concerned, in my view, the present 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". [12] It is also clear from an 18 May 2007 affidavit of Ms. Wadsworth filed in this proceeding together with a further affidavit of both Ms. Wadsworth and Mr. Heenan sworn 12 December 2007 that she joined with Mr. Heenan in launching and continuing these proceedings on behalf of the second and third plaintiffs. In these affidavits Ms. Wadsworth deposes that she was familiar with the three plaintiff trusts and with the basis of the various claims. In addition it seems she entirely supports Mr. Heenan's assertions including the allegations of fraud/corruption/perversion of the course of justice against the various defendants. Further, it is clear from these affidavits and the other material before the Court that both Ms. Wadsworth and Mr. Heenan have made claims and assertions throughout "also for and on behalf of Mr. Lee" and that Mr. Lee through a power of attorney he has given and otherwise has participated in the proceeding and the various actions over time involving the second and third plaintiff "trusts". [13] At paragraph [136] of my 8 October 2007 judgment I noted that the defendants who had been successful in their strike out applications were entitled to awards of costs against the plaintiffs. 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. [14] In addition, at para. 134 of that judgment I made the following comments which can be considered as a proper starting point for a consideration of costs in the present case:"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."My Decision[15] There are effectively two issues before the Court in addressing these costs questions. The first is a determination as to the identity of the parties who are to bear the awards of costs to be made here in favour of the various defendants. The second relates to the quantum of costs to be awarded in each case. [16] Turning first to consider who is to be liable for the costs award, at the outset it needs to be remembered that Mr. Heenan is an undischarged bankrupt. Notwithstanding this in an earlier costs judgment dated 13 October 2006 in proceedings CIV 2005-425-223, His Honour Justice John Hanson awarded costs against Mr. Heenan and directed these 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. As I see the position, a similar order to this effect is appropriate here. [17] In addition to Mr. Heenan, as I have noted above, the other named plaintiffs in this proceeding are Ms. Wadsworth and Mr. Lee. As I noted in my 19 December2007, judgment, in my view it is significant that, in delivering his judgment concerning claims for costs in proceedings CIV 2005-425-223, His Honour Justice John Hansen at paragraph [4] warned Ms. Wadsworth specifically that if she continued to be involved with Mr. Heenan's Court proceedings generally and if they continued to be conducted in a similarly improper manner, Ms. Wadsworth might well personally face a costs order in the future. As I have already opined, that is precisely what has occurred here. Although it may be that Ms. Wadsworth and Mr. Lee have once again "been sucked into these proceedings" in the words of His Honour Justice John Hansen at paragraph 4 of his 13 October 2007 judgment, the clear warning given in that judgment has been flagrantly ignored. [18] Ms. Wadsworth did not heed the warning particularly when she provided the affidavits in support of the plaintiffs' present claims which she has done. In addition, by his participation in this proceeding, Mr. Lee has also clearly ignored this warning. [19] That said and again given the involvement of both Ms. Wadsworth and Mr. Lee in these matters in their capacities as named second plaintiffs and third plaintiffs, in my view the same award of costs against them personally as will be made here against Mr. Heenan is warranted. [20] I now turn to consider the quantum of costs to be awarded. [21] On this, the various defendants have generally sought costs on an indemnity basis. [22] As to this matter, Rule 48C(1) provides:"[48C Increased Costs and Indemnity Costs(1) Despite rules 47 to48B, 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).[23] 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.".[24] 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".[25] 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 "[26] 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 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 on behalf of the plaintiff trusts who have been found not to exist and, in my view, they are likely to have been commenced with an ulterior motive. This is all wholly unacceptable. [27] I turn now to the issue of quantum. On this it is clear that if, as here, actual costs are sought, an appropriate detailed breakdown of those costs should be provided to the Court – ACC v Robinson, 6 December 2002, O'Regan J., High Court Whangarei AP38/02. I will now deal with this quantum question in relation to each of the three separately represented groupings of defendants.(A) Fifteenth, Sixteenth, Twenty-Ninth and Thirty-First Defendants [28] An order for costs GST and disbursements totalling $15,528.89 was made in favour of these defendants against Mr. Heenan, Mr. Lee and Ms. Wadsworth jointly and severally at paragraphs [26] and [27] of my 19 December 2007 judgment. This order is confirmed here. (B) Eighth Defendant (together with Third, Fourth, Fifth, Sixth, Seventh, Ninth, Tenth, Eleventh, Seventeenth, Eighteenth, Twenty-Third and Thirtieth Defendants) [29] On 3 October 2007 Ms. Ryan who appeared as counsel for each of these thirteen defendants filed her memorandum as to costs. On 5 February 2008, Mr. Couling on behalf of Ms. Ryan filed a further memorandum as to costs. These memoranda indicated that they were provided "on behalf of the eighth defendant". At the hearing of the strike out application, however, Ms. Ryan appeared as counsel for not only the eighth defendant but also each of the twelve defendants noted above under this section (B). I am proceeding therefore on the basis that each of these memoranda relate to costs sought for not only the eighth defendant but also for the other twelve defendants noted in this section. [30] In these memoranda, counsel seek total legal costs of $23,979.55 plus GST of $3,092.48 and disbursements of $1,278.43 giving a grand total of $28,350.46. A detailed breakdown of the actual legal costs, GST and disbursements incurred by these defendants and claimed against the plaintiffs has been provided. [31] So far as the costs claim of $23,979.55 is concerned, counsel here indicated that this is made up as follows: (i) 9.06 hours charged at $220.00 = $ 1,993.20 (ii) 81.87 hours charged at $245.00 = $20,058.15 (iii) 6.22 hours charged at $310.00 = $ 1,928.20 $23,979.55[32] In addition to these costs, GST at $3,092.48 on this sum and disbursements of $1,278.43 are claimed. The disbursements include a Court filing fee of $600.00, photocopying of $180.12, a mileage charge of $396.80, together with other minor disbursements. [33] In my view the hourly rates charged in this matter for the various staff members involved effectively on behalf of these thirteen defendants in preparation for and the hearing of this strike out proceeding are appropriate. And, given the complex nature of these proceedings, the wild and unsubstantiated allegations made against all these defendants which needed to be dealt with individually and the lengthy period occupied by the hearing of these applications, the total hours charged together with the disbursements listed are reasonable. I therefore approve the total costs, GST and disbursements of $28,350.46 claimed here by counsel for these thirteen defendants. An order to this effect is to follow. (C) Twelfth, Thirteenth, Fourteenth, Twenty-First, Twenty-Second, Twenty- Fourth, Twenty-Fifth, Twenty-Sixth, Twenty-Seventh and Twenty-Eighth Defendants [34] So far as these defendants are concerned, counsel have filed memoranda as to costs dated 1 November 2007 and 24 January 2008. The claimed indemnity costs sought by counsel for these defendants totalled $35,229.00. In addition disbursements totalling $1,525.00 are sought. [35] With regard to the costs claim of $35,229.00 counsel advise that the breakdown using an average hourly rate is as follows: a) Senior Solicitor at $299.00 per hour – hours spent 63.8 $19,096.00 b) Law Graduate at $155.00 per hour – 53.6 hours $ 8,283.00 c) Junior Solicitor at $231.00 per hour – 12 hours $ 2,772.00 d) Partner – hourly rate $612.00 – 8.3 hours $ 5,078.00 TOTAL $35,229.00[36] So far as the $1,525.00 clamed for disbursements are concerned, this included $800.00 for filing fees on two strike out applications, domestic air travel to Dunedin for the hearing of this matter totalling $648.00 and certain other minor disbursements. [37] Although it might be thought that the hourly rates charged in this matter for the various staff members engaged by counsel for these defendants is towards the higher end of charges particularly for the partner involved, I am satisfied that these rates are appropriate. The bulk of the work here was completed by a senior solicitor and law graduate at appropriate rates. The highest charge-out rate which was for a partner involved only a total of 8.3 hours of a total of 137.7 hours. It is significant also that this work was carried out on behalf of 10 separate defendants and ranged over a number of different claims made against them. [38] As I have already noted elsewhere, the plaintiffs by their actions have made wild and unsubstantiated allegations which have included allegations against these defendants as well. All these baseless allegations needed to be responded to on an individual basis. [39] I am satisfied therefore that the total hours charged together with the disbursements listed are reasonable. I therefore approve the total costs at $35,229.00 and disbursements at $1,525.00 claimed here by these 10 defendants. An order to this effect is also to follow. [40] For the submissions advanced on behalf of these defendants, one other matter needs to be mentioned. Although in their memoranda, counsel for these defendants suggested that costs only on a Category 2B scale of $8,800.00 should be awarded against Ms. Wadsworth and Mr. Lee and the balance of the indemnity costs should be awarded against Mr. Heenan alone, for the reasons I have outlined earlier in this judgment, I see no justification for this approach. The total award of costs and disbursements in favour of these 10 defendants is to be met on a joint and several basis by Mr. Heenan, Mr. Lee and Ms. Wadsworth.Orders[41] As to the indemnity costs and disbursements sought here by the individual defendants orders are now made as follows: a) The order made at paragraph 27 of my earlier costs judgment dated 19 December 2007 is confirmed to the following effect: (i) That Mr. Heenan, Mr. Lee and Ms. Wadsworth jointly and severally are to pay the sum of $15,528.89 costs and disbursements to the fifteenth, sixteenth, twenty-ninth and thirty-first defendants. b) An order is made that Mr. Heenan, Mr. Lee and Ms. Wadsworth jointly and severally are to pay the sum of $28,350.46 costs and disbursements to the third, fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, seventeenth, eighteenth, twenty-third and thirtieth defendants. c) An order is made that Mr. Heenan, Mr. Lee and Ms. Wadsworth jointly and severally are to pay the sum of $35,229.00 costs and $1,525.00 disbursements to the twelfth, thirteenth, fourteenth, twenty-first, twenty-second, twenty-fourth, twenty-fifth, twenty-sixth, twenty- seventh and twenty-eighth defendants. d) A further order is made that all the awards of costs and disbursements noted in this paragraph against Mr. Heenan personally are to be paid from the fund held by the Public Trustee noted at paragraph 11 of my judgment as to costs dated 19 December 2007.'Associate Judge D.I. Gendall'