NGAI TAI KI TAMAKI TRIBAL TRUST V KARAKA COA CA215/2011

NGAI TAI KI TAMAKI TRIBAL TRUST V KARAKA COA CA215/2011 [21 June 2012]IN THE COURT OF APPEAL OF NEW ZEALANDCA215/2011[2012] NZCA 268BETWEEN THE NGAI TAI KI TAMAKI TRIBALTRUSTAppellantAND PETER GEORGE HENRY KARAKAFirst RespondentAND EMILY ANNE KARAKASecond RespondentHearing: 22 May 2012Court: Ellen France, Venning and Asher JJCounsel: K R M Littlejohn and E M Lonnberg for AppellantS W M Piggin for First and Second RespondentsF J Thorp for Official Assignee in bankruptcy of the former interimtrustee, Mr StevensJudgment: 21 June 2012 at 2.30 pmJUDGMENT OF THE COURTA The appeal against orders 1, 2 and 3 of the sealed judgment dated 15 March 2011 is dismissed.B The appeal against order 4 of the sealed judgment is allowed to the extent that the costs order as sealed is set aside. The order for costs to the respondents on a 2B basis is, however, confirmed.C The appellants are to pay the interim trustee costs for a standard appeal on a band A basis.____________________________________________________________________REASONS OF THE COURT(Given by Venning J)Table of ContentsPara NoIntroduction [1]The appeal [4]The issues in the case [6]Background [8]The orders for remuneration and professional costs [19]Jurisdiction to award trustee's remuneration to Mr Stevens(agreed issue (a)) [26]Did the Court err in making the order for remuneration in this case(agreed issues (b) and (c))? [50]Total amount paid to the trustee [59]The amount and difficulty of the services rendered by the trustee [61]The liabilities to which the trustee is or has been exposed and the responsibilities imposed on him [65]The skill and success of the trustee in administering the Trust [67]The value of the Trust property [71]The time and services reasonably required [72]Whether any commission or percentage should be refused orreduced by reason of delays in the administration of the Trustthat could have reasonably have been prevented by the trustee [73]Other relevant circumstances [74]The professional expenses after 31 March 2005(agreed issues (d) and (e)) [82]The respondents' costs (agreed issue (g)) [91]Result [99]Costs [101]Introduction[1] The Ngāi Tai Ki Tāmaki Tribal Trust (the Trust) was formed in August 1992as a charitable trust. It was established, inter alia, as a vehicle to represent the iwi ofNgāi Tai Ki Tāmaki in their claims against the Crown under the Treaty of WaitangiAct 1975.[2] In 2004 the respondents, who at the time were trustees, applied to the High Court for various orders relating to the administration of the Trust. Heath J removedall existing trustees and appointed Mark Stevens as interim trustee in their place.1The Judge then supervised the administration of the Trust until 14 December 2009 when he confirmed the appointment of 12 new trustees (the current trustees) who had been elected earlier that year and terminated the appointment of Mr Stevens and Mr Kirkwood (who had by then been appointed as an additional interim trustee).[3] The Judge then convened a hearing to deal with the issue of the fees and expenses charged and incurred by the interim trustees (primarily Mr Stevens) and also the costs sought by the respondents. After the hearing the Court made orders:2(a) Fixing Mr Stevens' total remuneration at $240,653.00 to be paid outof the assets of the Trust. (We refer to this as trustee's remunerationor Mr Stevens' remuneration).(b) Fixing Mr Kirkwood's remuneration at $3,000.00 to be paid out of theassets of the Trust.(c) Declaring that expenses totalling $374,614.90 were proper liabilities of the Trust. (We refer to these as professional expenses).(d) Directing that the costs incurred by the respondents were to be fixed on a 2B basis and paid out of Trust funds together with reasonable disbursements.(e) Directing that the reasonable legal costs and disbursements incurred by both current and former trustees were in relation to the remuneration/expenses hearing to be paid out of the Trust assets.1 We also refer to Mr Stevens as the trustee or as the interim trustee.2 Karaka v The Ngāi Tai Ki Tāmaki Tribal Trust HC Auckland CIV-2003-404-6164, 15 March2011 [remuneration judgment].The appeal[4] The Trust appeals to this Court.3 The Trust challenges:(a) the trustee's remuneration directed to be paid to Mr Stevens;(b) the direction that the professional expenses incurred by Mr Stevens after 31 March 2005 were to be paid by the Trust, rather than him;(c) the order of costs in the respondents' favour.[5] The Trust does not challenge the order in Mr Kirkwood's favour nor the costsawarded in relation to the hearing itself.The issues in the case[6] Counsel have settled a list of agreed issues. The agreed issues are:(a) Did the High Court have jurisdiction to award trustee's remunerationto Mr Stevens?(b) To the extent the jurisdiction to award Mr Stevens remuneration arose under s 72 of the Trustee Act 1956 (the Act):(i) did the Court err in making an award where the Trust is alleged to be impecunious;(ii) if not, did the Court err in the exercise of its discretion either by adopting an approach inconsistent with s 72 of the Act and/or by failing to take into consideration or giving undue weight to all or some of the circumstances in s 72(1A) of the Act?3 Of the 12 current trustees, three (Ms Karaka, Mr Karaka and Ms Pace) do not support the currenttrustees' stance in appealing Heath J's decision.(c) To the extent the jurisdiction arose other than under s 72 did the Court err in the exercise of its discretion to determine what was a just and reasonable remuneration in all the circumstances, including by failingto give due weight to Mr Stevens' shortcomings or by giving undue weight to his meritorious conduct?(d) Did the Court err in holding that the professional expenses incurred after 31 March 2005 were reasonably incurred and a proper liability of the Trust by failing to take into account the provisions of s 38 of the Act?(e) Did the Court err in failing to find Mr Stevens failed to exercise reasonable skill and care in the performance of his duties and that that rendered him personally liable for professional expenses?(f) If the answer to either (d) or (e) is yes, did s 69 of the Act protect the trustee from personal liability for the professional expenses?(g) Did the Court err in the exercise of its discretion to award costs to the respondents having regard to the nature and outcome of the proceeding?[7] Mr Thorp also proposed a further issue in the event the answer to (d) or (e) was yes, namely whether s 73 of the Act absolved Mr Stevens from personal liability for the professional expenses. Mr Littlejohn did not consider that to be a relevant issue. For the reasons that follow we do not need to consider it further.Background[8] To put the matters in issue in context, it is necessary to refer to the generalbackground to Mr Stevens' involvement with the Trust. Between 1997 and 2004 astate of disharmony developed within the Trust. By 2004 two distinct factions had emerged. In early 2004 the respondents applied to the Court for directions in relation to the management and administration of the Trust. They sought ordersconfirming their appointment as trustees and appointing Mr Stevens of Wellington,"chartered accountant, as an administrator". Heath J declined to confirm therespondents as trustees and instead, on 9 March 2004, made orders removing all the existing trustees and appointing Mr Stevens as interim trustee.4[9] Heath J then retained oversight of the Trust's activities for the next five and ahalf years. The extent of the oversight and supervision is apparent from the 29 minutes and eight judgments issued over that time. During this period, the Judge also maintained oversight of Mr Stevens' actions as interim trustee. We take the following summary of the initial oversight of Mr Stevens' actions from theremuneration judgment:[11] On 6 August 2004, I received Mr Stevens' first report. I consideredthat he had "done an excellent job, both in relation to rebuilding relationswith others with whom the Trust must work and in bringing a measure oforganisation to the affairs of the Trust". [Karaka v Ngai Tai ki Tamaki Tribal Trust HC Auckland CIV 2003-404-6164, 10 August 2004 at para [2]]. Theparties were in broad agreement with Mr Stevens' recommendations. I gavedirections to give effect to them. Mr Stevens was empowered to convene a hui a iwi, in October or November 2004, for the purpose of informing members of the iwi about the background to his appointment of a sole interim trustee; acceptance and approval of (unaudited) financial statements for the years 31 March 1997 to 31 March 2004; Treaty claims WAI 423 andWAI 357; Ngai Tai's position in relation to the Fisheries Bill; forestry claims made by Ngai Tai; beneficiary enrolment and validation processes; income derived from resource consent; other activities carried on on behalf of the Trust; and its use and approval of the nomination process for persons seeking appointment as trustees. [Karaka v Ngai Tai ki Tamaki Tribal Trust HC Auckland CIV 2003-404-6164, 10 August 2004 at para [6].]...[15] On 7 March 2005, I observed that "great progress [had] been madein rebuilding trust among those who have a beneficial interest in the Trust and in preparing the Trust for future activities, including resolution ofWaitangi Tribunal claims and discussions concerning fisheries entitlements". [Ngai Tai ki Tamaki Tribal Trust (Judgment No 4) HC Auckland CIV 2003- 404-6164, 7 March 2005 at para [2].] I referred to Mr Stevens' further reportof 18 February 2005. That report indicated that financial statements had been prepared (though an audit was still be to be completed), taxation liabilities had been established and potential sources of income for the Trust had been identified [Ngai Tai ki Tamaki Tribal Trust (Judgment No 4) HC Auckland CIV 2003-404-6164, 7 March 2005 at para [4].]4 Karaka v The Ngāi Tai Ki Tāmaki Tribal Trust HC Auckland CIV-2003-404-6164, 9 March2004.[10] The Judge's oversight of Mr Stevens as interim trustee continued. On 7 March 2005 Heath J confirmed Mr Stevens' position as interim trustee until 7 March 2006 and authorised the formation by Mr Stevens of Management and Claims Negotiation Committees. The Judge also recorded that he approved fees and expenses incurred by Mr Stevens since his appointment on 8 March 2004 in the sum of $132,500.00 for fees and $31,502.87 for expenses. The Judge went on to note:5... However, payment of those debts must not be made until Court approval has been sought and obtained by Mr Stevens on notice to those person who have given an address for service in this proceeding. There is insufficient money presently available to pay the fees and disbursements but, it is hoped, that that position will change soon.[11] Heath J subsequently continued Mr Stevens' appointment as sole interim trustee until 19 December 2006 requiring him to convene another hui a iwi on or before 13 June 2006. The Judge also approved payment of a further three items setout in Mr Stevens' third report, namely:6(i) [Approving] the Trustee services fees and personal expenses incurred by the Interim Trustee for the six months period 31 March to 30 September 2005 being $89,768 and $18,709.52 ... .(ii) [Approving] the use by the Trustee of a total of $39,800 of funds held by the Trust to meet personal expenses of the Trust with the consequence that the balance of personal expenses incurred by the Trustee for the period up to 30 September 2005 which remains outstanding is $10,412.39.(iii) [Approving] the outstanding accounts incurred by the Trust since the appointment of the Interim Trustee on 9 March 2004 being $213,373.92 ... as being payable by the Trust to the various third parties who have rendered those accounts.[12] On 13 March 2007 Heath J heard from counsel following a hui a iwi that had been held on 11 February 2007. The Judge recorded that because all concerned considered it necessary for the Waitangi Tribunal claim to proceed, he furtherextended Mr Stevens' appointment as interim trustee to enable that to be done. TheJudge expressed the view that governance issues could be addressed once the Tribunal hearing was completed. At that time the Waitangi Tribunal was hearing an urgent application on which a recommendation was sought that the Crown not settle5 At [15].6 At [19].with Ngāti Whatua o Orakei pending resolution of other claims brought in respect ofTāmaki Makaurau, including that of Ngāi Tai.[13] The Judge then convened a judicial settlement conference at the Maungarei Marae on Saturday 12 May 2007. The conference was unsuccessful.[14] The Waitangi Tribunal delivered an interim report dealing with the TāmakiMakaurau settlement process on 12 June 2007.7 The report recommended the settlement in principle with Ngāti Whatua o Orakei be put on hold. It also recommended the Crown support Ngāi Tai so that Ngāi Tai could enter negotiations and conclude its own treaty settlements as soon as possible. As a result of that successful outcome it became necessary for formal processes to be put in place to enable treaty negotiations to be undertaken for the benefit of all members of the Ngāi Tai Ki Tāmaki iwi.[15] On 31 August 2007 the Judge convened a further hearing at which all partiesagreed he should continue to supervise the Trust's affairs notwithstanding his role atthe settlement conference.8 The Judge again confirmed approval of Mr Stevens'performance as a Court appointed trustee but noted he considered it appropriate for additional interim trustees to be appointed. He appointed two additional interim trustees, a Mr Kirkwood and a Mr Taua.9 Mr Taua was subsequently removed at his own request.[16] In May 2008 the Judge gave directions in relation to an annual general meeting to be held to decide whether to apply to the Court to liquidate the Trust or to appoint trustees to continue its operation. The annual general meeting was deferred to enable the Treaty claim to be progressed. It was ultimately held in March 2009 and a number of people were elected as trustees. When the matter was referred back to the Court in December of that year, the Judge confirmed the appointment of the7 Waitangi Tribunal The Tamaki Makaurau Settlement Process Report (Wai 1362, 2007).8 Karaka v The Ngāi Tai Ki Tāmaki Tribal Trust HC Auckland CIV-2003-404-6164, 31 August2007 (Minute No 9).9 Karaka v The Ngāi Tai Ki Tāmaki Tribal Trust (No 6) HC Auckland CIV-2003-404-6164,13 November 2007 at [21]–[26].trustees and terminated Mr Stevens' (and Mr Kirkwood's) appointment as interimtrustees.10[17] In the meantime, from early 2009 Mr Stevens suffered a series of health issues which culminated with him being hospitalised with a stroke in July 2009. Thereafter his ability to deal with business matters associated with the Trust was affected. In July 2010 he was adjudicated bankrupt on the petition of the Inland Revenue Department.[18] As there was a dispute about Mr Stevens' remuneration and the professional expenses he had incurred on behalf of the Trust, the Judge made directions for a hearing to determine the issues. Following that hearing in February 2011 Heath J issued the remuneration judgment on 15 March 2011 making the orders noted above (at [3]).The orders for remuneration and professional costs[19] Mr Stevens claimed that between March 2004 and March 2009 he had spent 2,530 hours on Trust business. Between March 2004 and March 2005 his charge-out rate was $175.00 per hour. For the balance of the time he charged $196.00 per hour. Mr Stevens sought a total of $480,000.00 for his services.[20] Heath J noted that, during the course of his supervision of the Trust's affairs,he had authorised fees totalling $222,268.00 together with personal expenses of $31,502.87 but had reserved the right to the parties to revisit the actual remuneration to be paid. The Judge also noted that in an earlier judgment he had endeavoured to provide an indication of the level of fees he considered appropriate without committing himself to any particular position:11[7] ... Using some figures purely as a guideline, if he were entitled to remuneration of $50,000 per annum, the total remuneration of at least $275,000 would be available: five and a half years at $50,000 per annum. As I see the position at present, subject to any legal issues the new trustees10 Karaka v The Ngāi Tai Ki Tāmaki Tribal Trust (No 7) HC Auckland CIV-2003-404-6164,14 December 2008.11 Karaka v The Ngāi Tai Ki Tāmaki Tribal Trust HC Auckland CIV-2003-404-6164, 24 August2010 (Minute No 24).may raise, it would be difficult to gainsay an entitlement to remuneration of at least that amount.[21] Heath J then stated that, on the information he now had, he considered remuneration at the rate of $75,000.00 per annum to be reasonable, noting that that over a period of five and a half years that equated to $412,500.00, some $67,500.00 less than that claimed by Mr Stevens.[22] Heath J then deducted from the figure of $412,500.00 the professional expenses incurred by the accountants instructed by Mr Stevens after 31 March 2005 of $121,847.00 and a further $50,000 to represent Mr Stevens' time spent with theprofessionals he had instructed to arrive at the final figure of $240,653.00 for Mr Stevens' remuneration. That remuneration calculates out at approximately$43,755.00 per annum, or, on the basis of the hours claimed by Mr Stevens, an hourly rate of about $95.00.[23] Heath J then addressed the professional expenses incurred by Mr Stevens of $374,614.90. The $374,614.90 was made up as follows:FJ Thorp, counsel forinterim trustees31.03.05 $52,660.21 31.03.09 $252,767.82TCP Consulting 31.03.05 $25,431.60 31.03.09 $42,923.72G Freeland 31.03.05 $21,447.00 31.03.09 $22,965.75Tax Planning Services 31.03.05 $32,817.29 31.03.09 $55,957.61Total $132,356.10 $374,614.90[24] The Judge noted there was no dispute as to the reasonableness of theprofessional expenses and rejected the appellant's submission Mr Stevens should be personally liable for them. The Judge fixed the professional expenses payable by the Trust at $374,614.90.[25] The appellant does not challenge its responsibility to meet the professional expenses of $132,356.10 incurred to 31 March 2005. Its issue is with the balance of$242,258.80 incurred after that date. It says Mr Stevens should be personally liable for those professional expenses.Jurisdiction to award trustee's remuneration to Mr Stevens (agreed issue (a))[26] Against that background we address the issues identified by counsel. Thefirst is whether there was jurisdiction for the Court to order trustee's remuneration atall in this case. On this aspect Mr Littlejohn noted that Heath J appeared to rely on s 49(5) of the Act as providing jurisdiction to allow remuneration on a just and reasonable basis12 and submitted:the Judge wrongly premised his award on s 49(5)(b) rather than s 72 of the Act;no award was possible under s 72 because there was no property from which any award could have been paid.[27] Section 49(5) of the Act reads:49 Advisory trustees may be appointed to assist responsible trustee...(5) Subject to the provisions of the instrument (if any) creating the trust and to any order made by the Court, in any case where remuneration is payable to the trustee of any trust property, remuneration or commission may be paid to both the responsible trustee and the advisory trustee, and subject as aforesaid the amount thereof shall be determined,—(a) where the responsible trustee is the Maori Trustee, by or under regulations made under the Maori Trustee Act 1953:(aa) where the responsible trustee is Public Trust, in accordance with Public Trust's scale of charges:(b) in any other case, by the responsible trustee if he is entitled to fix his own remuneration, or by the Court.12 Karaka v The Ngāi Tai Ki Tāmaki Tribal Trust (No 8) HC Auckland CIV-2003-404-6164,15 March 2011 at [54].[28] Section 49 provides for the appointment and remuneration of an advisory trustee. An advisory trustee is appointed as an additional trustee to advise the responsible trustee(s).[29] Applying the wording of s 49, Mr Stevens was appointed by the Court as the responsible trustee (albeit on an interim basis) rather than as an advisory trustee. The Court removed the existing trustees and appointed Mr Stevens in their place as the sole responsible trustee.[30] In context, s 49(5) provides the basis and method for authorising and calculating the remuneration payable to an advisory trustee but does not independently create an additional basis for remuneration of the responsible trustee.13 The reference to "in any case whether remuneration is payable to the trustee" contemplates an existing authority for the payment of remuneration either under the trust deed or otherwise.[31] Section 49(5) therefore confirms that, where remuneration is payable to the responsible trustee, remuneration will also be payable to the advisory trustee. The remuneration is to be determined in accordance with the provisions of s 49(5)(a), (aa) and (b). However, those provisions do not independently create any additional jurisdiction to provide for the responsible trustee's remuneration.[32] It follows that we agree with Mr Littlejohn's submission that s 49(5) does not provide jurisdiction for Mr Stevens' remuneration in this case. However, despitethat, we are satisfied that there was jurisdiction for Heath J to make orders for Mr Stevens' remuneration and for the awards of professional expenses both underother provisions of the Act and also in the exercise of the Court's inherentjurisdiction.[33] The starting point is that a trustee, other than the Public Trustee (and some other special trustees), has no right to charge for his or her time and trouble unless:(a) the trust deed so provides;13 See also s 50(4) which provides for remuneration of custodian trustees.(b) he or she acts in a professional capacity and the other trustees have agreed in writing they may be remunerated;(c) the beneficiaries are sui generis and have agreed;(d) the trustee is a solicitor and the payment is authorised under the exception recognised in Cradock v Piper;14(e) the trust property is situated abroad and it is the custom of the local courts to allow remuneration; or(f) the Court authorises payment of remuneration under its statutory or inherent jurisdiction.15[34] The Ngāi Tai Ki Tāmaki Tribunal Trust deed of 17 August 1992 makes noprovision for trustee's remuneration. Subparagraphs (b) to (e) do not apply to Mr Stevens' position either. However, ss 72 and 38 of the Act and the Court's inherentjurisdiction are relevant in this case.[35] Section 72 in particular provides for an allowance of such commission orpercentage for the trustee's services as is just and reasonable out of property subjectto the Trust:72 Commission(1) The Court may, out of the property subject to any trust, allow to any person who is or has been a trustee thereof or to that person's personal representative such commission or percentage for that person's services as is just and reasonable....[36] Although the section refers to a commission or percentage, in a number of cases the High Court has applied the section (and its predecessors) to allow thepayment of trustee's remuneration on a more general basis, without restricting14 Cradock v Piper (1850) 1 Mac & G 664; 41 ER 1422 (Ch).15 David Hayton, Paul Matthews and Charles Mitchell Underhill and Hayton: Law of Trusts andTrustees (18th ed, LexisNexis, London, 2010) at 54.1; Peach v Jagger (1910) 30 NZLR 423(SC); Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters,Wellington, 2009) at 5.3.1(6)(c).trustee's remuneration to a commission or percentage value of the income or capital of the Trust estate. In Re Allan Mclean Denniston J noted the former provision to be:16... a convenient but somewhat empirical method, not necessarily to be adopted in all cases.[37] In Re Cawthron the matter came before the Court following a Registrar'sreport.17 The Registrar had made a recommendation founded on the time expended by the trustee rather than on a commission basis. Chapman J confirmed theRegistrar's report. In Re Bourke (deceased)18 Hutchison J fixed a commission by taking into account the fees charged by auctioneers and other professional parties butalso made an overall allowance for the trustee's management of a farm.[38] In Gyles v Gyles Eichelbaum J awarded trustee's commission in reliance ons 72 but in a rounded figure.19[39] We also note that in Re Paehinahina Mourea Savage J said in relation to s 72:20... In the context of that legislation the word commission is synonymous with renumeration [sic].[40] We are satisfied that s 72 provides jurisdiction for the High Court to make an order for trustee's remuneration which need not be calculated as a commission or apercentage of the trust estate. The order is to be in a sum that is just and reasonable.[41] However, Mr Littlejohn submitted that there was no jurisdiction for an order under s 72 in this case as an order could only be made if the Trust estate had property from which the remuneration could be paid at the time of the order. We see no reason to read the section in such a restrictive way.21 There is no reason in principle why the Court could not make an order for trustee's remuneration to be paid out of16 In re Allan Mclean (deceased) (1911) 31 NZLR 139 (CA) at 143.17 In re Cawthron [1920] NZLR 814 (SC).18 Re Bourke (deceased) [1966] NZLR 327 (SC).19 Gyles v Gyles HC Wellington A187/81, 1 March 1984.20 Re Paehinahina Mourea Maori Appellate Court of New Zealand 1991/19, 23 February 1995.21 We note the appellant does not take the same objection in relation to the award inMr Kirkwood's favour.the property of the Trust estate in anticipation that the order will be satisfied when the Trust estate is put in funds. That is the effect of the order in this case. To the extent that the Trust estate does not have sufficient assets then the award may not be capable of enforcement. That, however, is a different issue to whether the award can be made at all.[42] Further, the requirement that the remuneration payable pursuant to an order under s 72(1) is to be made out of the Trust property may fulfil a further purpose. For example, in this case, it confirms that the present trustees are not personallyliable to meet Mr Stevens' remuneration.[43] In making the order that Mr Stevens' remuneration was to be paid out of the assets of the Trust the Judge was aware of the financial position of the Trust and that payment of any remuneration was dependent on the Trust being put in funds. In the judgment appointing Mr Stevens as interim trustee the Judge recorded the position:22Finally, I note that Mr Stevens is cognisant of the lack of funds available to the Trust. I specifically asked him in Court whether he was prepared to accept appointment on the basis that he was to act gratuitously23 in the first instance, albeit with leave to apply for remuneration as an appropriate trustee in due course. Mr Stevens indicated to me that he was aware of the background and was prepared to be appointed on that basis.[44] Further, in an earlier judgment of 13 November 2007 the Judge repeated that:24Mr Stevens acknowledges that, although he has undertaken significant work, he can only receive fees if the Waitangi Tribunal claim is successful and the Court authorises reasonable fees and expenses to be paid.[45] Apart from s 72, s 38(2) may also provide jurisdiction for payment of part, atleast, of Mr Stevens' claim:22 Karaka v The Ngāi Tai Ki Tāmaki Tribal Trust HC Auckland CIV-2003-404-6164, 9 March 2004at [25].23 Peach v Jagger (1910) 30 NZLR 423 (SC).24 Karaka v Ngāi Tai Ki Tāmaki Tribal Trust (No 6) HC Auckland CIV-2003-404-6164,13 November 2007 at [4].38 Implied indemnity of trustees...(2) A trustee may reimburse himself or pay or discharge out of the trust property all expenses reasonably incurred in or about the execution of the trusts or powers; but, except as provided in this Act or any other Act or as agreed by the persons beneficially interested under the trust, no trustee shall be allowed the costs of any professional services performed by him in the execution of the trusts or powers unless the contrary is expressly declared by the instrument creating the trust:provided that the Court may on the application of the trustee allow such costs as in the circumstances seem just.[46] Section 38 provides an indemnity in relation to the costs and expenses incurred by a trustee. It also excludes the costs of any professional services performed by the trustee unless expressly permitted by the trust deed. However, importantly, the proviso may enable the Court to allow a professional trustee the costs of his or her professional services in certain, limited circumstances.[47] The principal difficulty in relying on s 38 in this case is whether Mr Stevens'services can be categorised as professional services. While he has accountancy qualifications, he instructed third parties to attend to the accounts. It may be difficult to categorise the work Mr Stevens carried out for the Trust as professional services, if that phrase is to be limited to services provided in the course of carrying out a profession. However, it is unnecessary to consider that matter further given that Mr Stevens did not rely on it in the High Court and we have already found there wasjurisdiction to award trustee's remuneration under s 72. In the present case the relevance of s 38(2) is limited to the professional expenses incurred by Mr Stevens, a matter we deal with below.[48] Apart from the statutory authority to order trustee's remuneration, the HighCourt retains inherent jurisdiction in this area. Mr Littlejohn referred to an article by Master Jacob "The Inherent Jurisdiction of the Court"25 to support a submission that the inherent jurisdiction of the Court was not available if to invoke it would contravene a statutory provision. However neither s 72 nor any other provisions of the Act necessarily constrain the inherent jurisdiction of the Court in this regard. To25 IH Jacob "The Inherent Jurisdiction of the Court" (1970) CLP 23.invoke the inherent jurisdiction of the Court is not to contravene any statutory provision in the present case. It is generally recognised that the Court has inherent jurisdiction to authorise, either prospectively or retrospectively, remuneration or extra remuneration for a trustee: In re Duke of Norfolk's Settlement Trusts.26 InRe Spedding (Deceased) McCarthy J expressly acknowledged that the Court'sinherent jurisdiction could be invoked to authorise payment of fees in addition to s 72: 27First, the Court may authorize payment of fees as part of its inherent jurisdiction. It also has statutory power to do that, see s.72 of the Trustee Act 1956, ... .[49] For the above reasons we are satisfied that, either pursuant to s 72 of the Act or under its inherent jurisdiction, the Court had jurisdiction to make orders for Mr Stevens' remuneration.28Did the Court err in making the order for remuneration in this case (agreed issues (b) and (c))?[50] Mr Littlejohn submitted that, if there was jurisdiction for an order, having regard to the factors in s 72 Mr Stevens was not entitled to trustee's remuneration inthis case.[51] He first submitted that the Judge was wrong to make an award where theTrust was impecunious and unable to pay the trustee's remuneration and professionalexpenses ordered by the Court. Mr Littlejohn noted the Crown policy that post settlement governance entities did not include charitable trusts, so that the Trust would not receive any funds directly from that source.26 In re Duke of Norfolk's Settlement Trusts; Perth (Earl) v Fitzalan-Howard [1982] Ch 61, [1981]3 WLR 445 (CA); Hayton, Matthews and Mitchell, above n 15, at 54.13 and following; Butler,above n 15, at 128–129.27 Re Spedding (Deceased) [1966] NZLR 447 (CA) at 465, per Turner J. See also LawCommission Some Problems in the Law of Trusts (NZLC R79, 2002) at [17] in which theCommission identified the situations in which a trustee is entitled to remuneration including:"[w]ith the leave of the High Court pursuant to its inherent jurisdiction or to the Trustee Act1956 section 72".28 We deal with the issue of s 38(2) below.[52] However, that submission overlooks the recognition by Mr Stevens and theCourt that the Trust's ultimate financial position would be determined by the claimsbefore the Waitangi Tribunal. Further, despite the Crown policy, it appears the Trust anticipates that substantial funds will ultimately flow to it from the Crown from the settlement of Treaty claims. The report presented to the annual general meeting ofthe Trust on 17 October 2010 recorded, inter alia, that the Trust had an as yetundetermined share of Fisheries' assets totalling $7,932,000 through their 1/12thshare in the Hauraki Maori Trust Board. The report then went on to state:11. The Crown has since provided the Trust with a preliminary response which essentially highlights various factors for the negotiation team to consider when substantive discussions commence regarding the quantum amount. We note that no substantive discussions have been had regarding that quantum amount yet. As the iwi may recall, Sir Doug Graham indicated in his initial report that the indicativequantum for Ngāi Tai Ki Tāmaki was $5 million. Over thecourse of the next few months, the negotiation team hopes to enter into detailed discussions with the Crown regarding thequantum which Ngāi Tai Ki Tāmaki will ultimately receive.[53] Further, it is accepted the Trust has an income of approximately $80,000 per annum from its resource management consultancy. In summary on this point, it hasalways been Mr Stevens' position that both his fees and the accounts incurred by himwould be payable out of the Trust funds. That remains the position.[54] As noted above (at [43] and [44]) the Judge was well aware of the Trust'sfinancial position. In those circumstances there was no error in his decision to fixMr Stevens' remuneration and direct that it be paid out of the property of the Trust.[55] Mr Littlejohn then submitted that the Judge's approach to assessingremuneration was flawed.[56] Mr Littlejohn first submitted that by taking what he considered to be areasonable remuneration of $75,000.00 a year the Judge effectively "put the cart before the horse" and the subsequent deductions from that sum were arbitrary. MrLittlejohn submitted that such an approach was contrary to that required by s 72.[57] He argued that the Judge had improperly ignored and/or given insufficient weight to the significant disentitling conduct of the trustee and had given improper weight to positive conduct the Judge considered beneficial.[58] While it is convenient to address Mr Littlejohn's submissions by reference tothe mandatory s 72(1A) considerations, the overriding consideration under s 72 is that the payment must be just and reasonable in all the circumstances. Very similarconsiderations would apply to remuneration directed under the Court's inherentjurisdiction. In exercising its inherent jurisdiction the Court is required to balance two somewhat conflicting considerations. The first is that the office of the trustee is generally gratuitous and there is a need to protect the interests of beneficiaries against claims by trustees. The second consideration is that it is of importance to thebeneficiaries the Trust be well administered and the beneficiaries' interests advanced. If the Court concludes, having regard to the nature of the Trust, the experience and skill of the trustee, and to the amounts which he or she seeks to charge compared with what other trustees might require to be paid for their services and to all the other circumstances of the case, that it would be in the interests of the beneficiaries to provide for the remuneration, then the Court may do so.29Total amount paid to the trustee[59] Mr Littlejohn submitted that what other trustees in a comparable position had been paid might have been relevant, but there was no evidence of that and the Judgewas wrong to use Mr Stevens' claim as a starting point. He submitted that noremuneration had been allowed or paid to Mr Stevens before the remuneration hearing.[60] Two preliminary points can be made. The Judge was well aware that the trustdeed did not provide for payment. He was also aware of the Trust's financial position, as was Mr Stevens. Despite that, and during the period of Mr Stevens'trusteeship, the Court had actually approved fees and expenses, some in principle,29 In re Duke of Norfolk's Settlement Trusts, above n 26, at 79.and had authorised payment of other sums.30 The Judge (and other parties) wasgenerally aware of the basis for Mr Stevens' claims for remuneration.The amount and difficulty of the services rendered by the trustee[61] Mr Littlejohn submitted Mr Stevens' work had not justified the fees chargedand that the Judge overstated the difficulties he had faced, particularly given that Mr Stevens was aware of them when he undertook the assignment.[62] Mr Stevens knew that he was assuming a difficult task as interim trustee, but it was made even more difficult by the actions of certain members of Ngāi Tai who opposed him. As Heath J observed:31On occasion, Mr Stevens had to endure communications from those who opposed his stewardship that were both obscene and insulting. It is hardly surprising that someone faced with those difficulties and the need to respond to that type of communication would end up spending greater time on the affairs of the Trust than would otherwise be the case. Those who acted in that way have only themselves to blame for what occurred. ...[63] The extent of Mr Stevens' service and the amount of effort he went to as trustee is confirmed by the six reports he presented to the Court. The reports were lengthy and detailed. In his affidavit for the remuneration hearing Mr Stevens summarised the work that he had carried out as follows:9. The First Report addressed the matters referred to by the Court in its initial judgment in some detail and was considered at a hearing on 10 August 2004. In a judgment delivered that day my appointment was extended until 12 August 2005 and I was directed to convene a hui a iwi in October or November 2004 and then to file and serve a further report in February 2005.10. My Second Report dated 18 February 2005 was divided into three main parts addressing progress achieved with relevant issues since August 2004, governance issues, and recommendations to the Court. A particular focus was the considerable difficulties being experienced by me and my dealings with representatives of the Crown including TPK and OTS. The Second Report also annexed the minutes of the Court ordered hui a iwi held on 28 November2004 and chaired at the Court's request by Mr Stephen Clark. Thoseminutes record further information relevant to the Land, Forestry30 See [10] and [11] above.31 Karaka v The Ngāi Tai Ki Tāmaki Tribal Trust HC Auckland CIV-2003-404-6164, 15 March2011 at [51].and Fisheries claims which was submitted to and discussed by the iwi at that hui. The Second Report was considered at a hearing on 7 March 2005. In a judgment issued that day my appointment was extended until 7 March 2006, and I was directed to file and serve a further report in September 2005 which time was subsequently extended until February 2006.11. My Third Report dated 25 January 2006 addressed matters asdirected in the Court's judgment dated 7 March 2005. The reportcontains further detailed information relevant to the Land, Forestry and Fisheries claims of the iwi and to the financial position of the Trust generally. It annexed at Tabs 1 and 2 financial statements for the Trust prepared by TPS for the periods ending 31 March 2005 and 30 September 2005. The basis upon which the Land, Forestry and Fisheries claims were valued in those financial statements is clearly set out in both the financial statements themselves and in the ThirdReport. In that report I emphasised that the Crown's preference for a direct settlement with Ngati Whatua o Orekei ("Ngati Whatua") constituted a major impediment in settling Ngai Tai's treaty claimsand that the continuing alienation by the Crown of land sites identified by Ngai Tai in its Treaty Claim WAI 423 was also a matter of extreme and on-going concern. The Third Report, which also contained separate sections on governance issues and the development of a strategic plan, was considered at a hearing on 13 March 2006. In a judgment issued later that day my appointment was extended until 19 December 2006 and I was directed to convene two hui a iwi prior to 13 June and 28 November 2006. The judgment also made provision for the election and appointment of Advisory Trustees, and noted that those Advisory Trustees would have the right to apply to the Court for directions on any issues relating to my decision making with which they took issue. The judgment further noted that if after the hui held in June there were any concerns on the part of any beneficiaries as to the viability of the Trust an application to dissolve the Trust should be filed.12. In my Fourth Report dated 12 March 2007 I reported on the two Court ordered hui a iwi held on 10 June 2006 and 11 February 2007 respectively and also addressed other matters including treaty claim issues and financial reports. The minutes of each hui as attached to that Report detail the level of discussion which took place amongst iwi members present in relation to treaty issues and the financial status of the Trust. The Report emphasised the severely limiting effect of the almost complete absence of funding. Part 3 of the Report detailed the steps taken by me following the announcementin 2006 of the signing of an Agreement In Principle ("AIP") between the Crown and Ngati Whatua for the settlement of Ngati Whatua'streaty claims including the filing by me of a separate application on behalf of the Trust for an urgent enquiry by the Waitangi Tribunalinto the Crown's settlement negotiations with Ngati Whatua. At thetime of my Fourth Report, the Waitangi Tribunal had granted Ngai Tai and three other iwi permission to be heard at urgent hearings.13. My Fourth Report was considered at a hearing on 13 March 2007. In a minute issued that day my appointment was extended, a judicial settlement conference was directed to take place in May 2007 and Iwas directed to provide a further report to the Court in advance thereof.14. My Fifth Report dated 7 May 2007 was considered at the judicial settlement conference held on 12 May 2007. The Court then issued Minute No 6 which required counsel acting on my behalf to file andserve a memorandum after receipt of the Tribunal's Tamaki Makaurau Settlement Process Report ("Settlement Report"). Thesubsequent memorandum dated 6 August 2007 summarised the recommendations in the Settlement Report and detailed events occurring subsequent to [its] release. I confirm the accuracy of the factual statements contained therein. The Settlement Report records that I, together with Mr Taua and Emily Karaka, were regarded as key players for Ngai Tai. The evidence which I gave at that hearing referred in detail to the negotiations that I had endeavoured to have with the Crown up until that time including my dealings with TPK, OTS and the Minister. The reports which I had completed for this proceeding up until that time were produced at the hearing. My evidence was cited in the Settlement Report and was instrumental in establishing that severe prejudice had been suffered by Ngai Tai as aresult of the Crown's behaviour. The essence of the SettlementReport was that the proposed settlement with Ngati Whatua should not proceed at that stage and that the Crown should work with other tangata whenua groups including Ngai Tai to negotiate settlements for them.15. My Sixth Report dated 30 August 2007 reviewed developments which had occurred since the release of the Settlement Report. Memoranda filed by counsel acting on my behalf dated 30 and 31 August 2007 addressed matters raised in Minute No 7 dated 7 August 2007 including the formal processes necessary to be put in place to enable Treaty negotiations to be undertaken for the benefit of all members of the iwi and other relevant developments. I confirm the accuracy of the factual statements contained in those memoranda. Those documents were all considered at the hearing of the application for directions heard on 31 August 2007.[64] We note that although the appellant was represented at the remuneration hearing by both Mr Littlejohn and senior counsel, there was no request for Mr Stevens to be cross-examined. We are satisfied the Judge was aware of, and properly took into account all relevant factors relating to the amount and difficulty of the services rendered by Mr Stevens.The liabilities to which the trustee is or has been exposed and the responsibilities imposed on him[65] Mr Littlejohn submitted Mr Stevens faced no unexpected liabilities as trustee.[66] We generally agree, but note that Mr Stevens personally incurred direct costs of in excess of $70,000 which he carried for a time.The skill and success of the trustee in administering the Trust[67] Mr Littlejohn submitted Mr Stevens was insufficiently skilled to discharge the tasks ordered of him and was unsuccessful and inefficient in doing so.[68] We are not able to accept that submission. Mr Stevens brought a number of skills to his role as interim trustee. As his Curriculum Vitae discloses, he had spent a number of years working on Maori, Economic and Business Development initiatives and was a financial controller at Te Runanganui o Ngati Kahungunu responsible to Government audit. He also had expertise in areas of fishing, tourism, land development and forestry, particularly fishing. These were all directly relevant to the advancement of the Treaty claim which Mr Stevens was directed to address on behalf of the Trust.[69] The Judge was satisfied that Mr Stevens achieved a number of advances on behalf of the Trust during his trusteeship, particularly in relation to the proceedings before the Waitangi Tribunal. That was also confirmed by the Waitangi Tribunal report. As the Judge recorded following the outcome of the Waitangi Tribunal hearing:32I am satisfied with Mr Stevens' performance as a Court appointed trustee.And later:33... Subject to the need for some assistance from Mr Stevens, who has borne the burden of prosecuting the Tribunal proceedings in the meantime, it is time for members of the iwi to take responsibility for future actions. ...[70] While the Court may have expected that, because of his accountancy qualifications, Mr Stevens would not have needed to instruct accountants as he did, the Judge was aware that he did so, and took that into account by reducing32 Karaka v Ngāi Tai Ki Tāmaki Tribal Trust (No 6) HC Auckland CIV-2003-404-6164,13 November 2007 at [20].33 At [22].Mr Stevens' remuneration by the exact amount of the accountant's costs incurredafter 31 March 2005.The value of the Trust property[71] This issue has been addressed above.The time and services reasonably required[72] Although Mr Littlejohn criticised Mr Stevens' failure to keep accuraterecords of attendances on behalf of the Trust, it is apparent from the detail and content of his reports, (quite apart from the 29 minutes and eight judgments issued by the Court) that Mr Stevens devoted a considerable amount of time to the Trust affairs. The Judge was in the best position to assess the time Mr Stevens had spentand the value he had added to the Trust. On Mr Stevens' figures he had claimed he had spent approximately 25 per cent of his time on Trust affairs. In taking the starting point of $75,000 per annum as reasonable, the Judge accepted that Mr Stevens had spent between approximately one fifth and one quarter of his time onthe Trust's affairs. We do not consider he erred in doing so.Whether any commission or percentage should be refused or reduced by reason of delays in the administration of the Trust that could have reasonably have been prevented by the trustee[73] Mr Littlejohn did not suggest that such delays as there were should be laid at the feet of Mr Stevens.Other relevant circumstances[74] Mr Littlejohn submitted the Judge had failed to take account of disentitling conduct by Mr Stevens. He identified three features in particular:(a) failing to administer the Trust with utmost honesty;(b) breaching accountancy standards; and(c) failing to maintain proper accounts.[75] Mr Littlejohn suggested that, by failing to correct the Court's assumption thathe was a chartered accountant, Mr Stevens failed in his duty to administer the Trust with the utmost honesty. We consider that submission overstates the position. Mr Littlejohn referred to the case of In Re Spencer.34 While authority for the general proposition that an administrator must act with utmost punctuality, regularity and honesty, the disentitling conduct in that case was extreme. The administrator had told the beneficiary there was nothing in the estate and it was not worth proving the will, which was plainly wrong. In the present case, while the Court referred to him as a chartered accountant, Mr Stevens had not suggested he was a chartered accountant. His Curriculum Vitae was clear in that regard. It records he held a Bachelor of Commerce and Administration majoring in accountancy but did not suggest that he was a chartered accountant. While Mr Stevens should have clarified that issue for the Judge, his failure to do so does not disentitle him from receiving an otherwise appropriate order of remuneration for his services, particularly when his services on behalf of the Trust extended far beyond the provision of accounting work.[76] Next, it is said that by incorporating a figure for intangible assets into the financial reports after 31 March 2005 the accounts for which Mr Stevens was responsible breached accountancy standards. The Judge accepted, and we agree, that the accounts should not have included the expected proceeds from the outcome of the Waitangi Tribunal claim in that way. Whether those expected proceeds of the claim should more properly have merely been referred to as a contingent asset or should have been the subject of a note to the accounts is not, however, particularlymaterial. We agree with the Judge's assessment that none of the parties who had aninterest in this matter could reasonably suggest that they were not aware of theTrust's financial position or that the Waitangi claim was the Trust's principal asset.[77] Complaint was also made in respect of a sum of $45,400 advanced to the Trust by a Mr Kao. However, the circumstances of that transaction were disclosed by Mr Stevens in his reports to the Court.34 In Re Spencer (1910) 12 GLR 692 (SC).[78] In circumstances where even a breach of trust does not, of itself, necessarily disentitle the trustee to remuneration or commission,35 we do not accept there is anybasis to disallow Mr Stevens' remuneration on the basis of the failings identified bythe appellant.[79] Under agreed issue (c) Mr Littlejohn submitted in the alternative that if thejurisdiction to award trustee's remuneration arose other than under s 72, the Judgeerred in the exercise of his discretion by failing to give due weight to Mr Stevens'shortcomings or by giving undue weight to his meritorious conduct.[80] As we noted above (at [58]) there is a large degree of overlap between the considerations informing the appropriate award for trustee's remuneration under s 72and the Court's inherent jurisdiction.[81] While the focus of our discussion at [59] to [78] was on the factors referred to under s 72(1A) we are satisfied that, for the same reasons, standing back and looking at the matter more generally, the Judge did not err in his approach or in the weight he gave to the particularly relevant factors in this case.The professional expenses after 31 March 2005 (agreed issues (d) and (e))[82] It is convenient to consider the issues of whether the Court erred in holding the professional expenses incurred after 31 March 2005 were reasonably incurred and a proper liability of the Trust or whether Mr Stevens' actions should haverendered him personally liable for the professional expenses together.[83] As noted, s 38(2) is relevant to both the issue of the costs of professional services provided by the trustee and, importantly in this case, to the professional costs incurred by him. Section 38 provides an indemnity in relation to costs and expenses reasonably incurred by the trustee.35 Phipps v Boardman [1965] 1 All ER 849 at 857-858 per Lord Denning MR (affirmed on thatpoint by the House of Lords in Boardman v Phipps [1967] 2 AC 46, [1966] 3 All ER 721).[84] The appellant does not challenge the professional expenses incurred by the trustee to 31 March 2005. Nor does it challenge the quantum of the fees charged by the parties instructed by Mr Stevens. However, it submits the professional expenses after 31 March 2005 were not reasonably incurred and that Mr Stevens should be personally responsible for them. To support that submission Mr Littlejohn made the point that after 31 March 2005 the accounts included the figure for intangibles whichmisstated the Trust's financial position. But as we have previously noted, Mr Stevens was well aware of the Trust's actual financial position and that theaccounts for professional expenses would have to be paid out of funds to be received by the Trust in the future.[85] The professional expenses incurred were legal and accountancy fees. In our view, the legal fees were properly incurred. As Mr Thorp noted, a large number of Court appearances were involved. It was reasonable for Mr Stevens to obtain legal representation at those hearings. We note for example that in Minute No 12 dated 15 May 2008 Heath J directed Mr Stevens to obtain legal representation and confirmed such representation in later minutes.36 Mr Thorp also assisted Mr Stevens to prepare for the Waitangi Tribunal hearings which were clearly for the benefit of the Trust.[86] The appellant next criticises Mr Stevens' decision to instruct accountants toprepare the accounts. It is apparent that Heath J took that into account:37... I am particularly mindful of Mr Stevens' instructions to otherprofessionals in relation to the preparation of accounts and financialreporting with which I had understood that he, as a "chartered accountant"would deal. While I consider separately with particular expenses incurred by Mr Stevens, I propose to adjust those to reflect duplication by reducing those costs from the remuneration to which Mr Stevens would otherwise be entitled. Together, those costs total $121,847.08, as at 31 March 2009.[87] To the extent that the professional fees represented additional accounting services the Judge has effectively required Mr Stevens to pay for those services himself in any event because he deducted the exact amount of all the professional36 Karaka v The Ngāi Tai Ki Tāmaki Tribal Trust HC Auckland CIV-2003-404-6164, 1 August2008 (Minute No 14); 9 September 2008 (Minute No 16).37 Karaka v The Ngāi Tai Ki Tāmaki Tribal Trust HC Auckland CIV-2003-404-6164, 15 March2011 at [56].fees (apart from Mr Thorp's fees) after 31 March 2005 from the amount he hadcalculated as otherwise payable to Mr Stevens.[88] Mr Littlejohn then submitted that the Judge had failed to take into account the failure by Mr Stevens to discharge the onus on him to show the expenses had been properly incurred. However, it is accepted that accounts were required for the Trust.Mr Stevens did not prepare them. The onus is on the appellant to prove Mr Stevens'actions in instructing others to prepare the accounts was unreasonable. In ReO'Donoghue Hammond J affirmed:38Finally, on the law under this head, it must surely be the case that where, onthe face of things, the trustee's actions appear regular enough the burden of proving unreasonableness falls on the party alleging the same.And earlier:39The notion that a trustee must act "reasonably" is necessarily qualified in various ways. First, it has never been thought unreasonable for a trustee to hire a properly qualified person to carry out work which the trustee is not qualified to undertake. Second, the trustee does not have a limitless ability to resort to the law: his function is to assert the interest of the beneficiaries only to a point where there is a judicial ruling on something that is properly required, ... Third, a trustee is not entitled to expenses arising out of his own misconduct.[89] The Judge, who was in the best position to assess the reasonableness orotherwise of Mr Stevens' actions, addressed the issue of the professional expenses incurred after 31 March 2005 and rejected the submission that Mr Stevens should be personally responsible for them as untenable. We agree.[90] In the circumstances there is no need to consider agreed issue (f). For completeness we note that we agree with the Judge's view at [54] of his judgmentthat s 69 does not apply.38 Re O'Donoghue [1998] 1 NZLR 116 (HC) at 122.39 At 121–122.The respondents' costs (agreed issue (g))[91] In awarding costs on a 2B basis to the first and second respondents the Judge gave as his reasons:40I accept that Mr Sorenson's [the solicitor instructed by the respondents] costs are reasonable. However, it seems to me that Mr and Ms Karaka should meet their own costs. Given their role in initiating this proceeding and in being heard helpfully on a number of occasions, I award costs in their favour (to be paid out of Trust funds) on a 2B basis, together with reasonable disbursements, both to be fixed by the Registrar.[92] The Judge thus declined an indemnity award of costs, and restricted his award to scale costs. The costs were fixed on that basis by the Registrar at $24,760.00 (including $1,260.00 disbursements).[93] Mr Littlejohn submitted that at most the first and second respondents' costs ininitiating proceedings should be met by the Trust and no more. He noted other parties had entered appearances during the course of the proceedings. However, during the course of oral submissions he noted that in the first judgment of the Court appointing Mr Stevens, Heath J had expressly made no order for costs.[94] Mr Littlejohn also noted that other parties had entered appearances and had attended a number of the hearings but had not been awarded costs for those appearances.[95] We consider there is a difference between the position of the first and second respondents who initiated the application to the Court and other interested parties. In the circumstances the Trust was in at the time the application was made, it was entirely appropriate for the respondents to seek the intervention of the Court. Given that the respondents were parties to the proceedings from the outset and were potentially at risk in relation to costs we consider it appropriate that they receive an award of costs. The Judge was entitled to award a contribution towards the legal costs they incurred.40 Karaka v The Ngāi Tai Ki Tāmaki Tribal Trust (No 8) HC Auckland CIV-2003-404-6164,15 March 2011 at [71].[96] We note, however, that the calculation of the costs is itself in error in a number of ways. First, there should be no allowance for the costs of attending the first hearing. We agree with Mr Littlejohn that as the Judge directed there was to be no order for costs on the first hearing, there should be no costs allowed for that first hearing itself. Next, the solicitor was wrong to class the application as an interlocutory application. It was an originating application properly brought under Part 4 of the then High Court Rules, (now Part 18) which would have supported an allowance of three days for the commencement of the proceeding (as opposed to the 0.6 days claimed).[97] The other principal problem with the costs award is that the respondents have claimed costs at the scale rate of $1,880 a day. That rate did not apply at the relevant time. The rate that applied up to 31 January 2009 was $1,450 a day, and thereafter $1,600 a day. The rate of $1,880 a day only applied to attendances after 23 May 2010.[98] In the circumstances, while we confirm the Judge's award of costs to therespondents on a 2B basis, we allow the appeal against the quantum of costs as sealed. Counsel for the respondents should file a fresh schedule with the Registrar of the High Court to have costs fixed on a proper basis.Result[99] The appeal against orders 1, 2 and 3 of the sealed judgment dated 15 March 2011 is dismissed.[100] The appeal against order 4 of the sealed judgment is allowed to the extent that the costs order as sealed is set aside. The order for costs to the respondents on a 2B basis (excluding costs on the first hearing) is, however, confirmed.Costs[101] In this Court the appellant is to pay the interim trustee costs for a standard appeal on a band A basis. In the circumstances we make no order for costs in relation to the respondents in this Court.Solicitors:McCaw Lewis Ltd, Hamilton for AppellantSorensen Law, Auckland for RespondentsRobb & Brown, Auckland for Official Assignee