KARAKA V THE NGAI TAI KI TAMAKI TRIBAL TRUST HC AK CIV 2003-404-6164

KARAKA V THE NGAI TAI KI TAMAKI TRIBAL TRUST HC AK CIV 2003-404-6164 15 March 2011IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV 2003-404-6164BETWEEN PETER GEORGE HENRY KARAKAFirst ApplicantAND EMILY ANNE KARAKASecond ApplicantAND THE NGAI TAI KI TAMAKI TRIBALTRUSTRespondentHearing: 24 February 2011Counsel: F J Thorp for former Interim TrusteesG Illingworth QC and K Littlejohn for Current TrusteesNo appearance by or on behalf of ApplicantsJudgment: 15 March 2011JUDGMENT (NO. 8) OF HEATH JThis judgment was delivered by me at 4.00pm on 15 March 2011 pursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors:McCaw Lewis Chapman, PO Box 9348, HamiltonFleming Foster & Co, DX EP 76002Counsel:G Illingworth QC, PO Box 7205, Wellesley Street, AucklandK Littlejohn, PO Box 106215, AucklandF J Thorp, PO Box 3995, Shortland Street, AucklandThe issue[1] Former (Court-appointed) interim trustees of The Ngai Tai ki Tamaki Tribal Trust (the Trust) seek remuneration and expenses to be paid out of Trust assets. Their applications are opposed, at least in part, by nine of twelve current (elected) trustees.1Background[2] The Trust is registered under the Charitable Trusts Act 1957. It was formed to promote the interests of the Ngai Tai iwi. Between 1997 and 2004, a state of disharmony developed within the Trust. By 2004, two distinct factions had emerged.[3] In early 2004, two of the (then) trustees, Mr Peter Karaka and Ms Emily Karaka, sought directions2 in relation to the management and administration of the Trust. Alternatively, they sought an order confirming their appointment as trustees and one appointing Mr Mark Stevens, of Wellington, ―chartered accountant as an ―administrator.[4] Their application was heard on 8 March 2004. In a judgment given the following day,3 I made orders removing the existing trustees and appointing Mr Stevens as interim trustee, with specific powers.4 Those orders were made to promote both transparency in the operation of the Trust and a spirit of kotahitanga, so that mana of the iwi could be restored following a hui-a-iwi being held.5[5] Contrary to my expectation, Court oversight of the Trust's activitiescontinued for more than five years, until 14 December 2009. At that time, I terminated the appointment of Mr Stevens and (by then) Mr Kirkwood as interim1 See para [5] below.2 Under s 66 of the Trustee Act 1956.3 Karaka v Ngai Tai ki Tamaki Tribal Trust HC Auckland CIV 2003-404-6164, 9 March 2004.4 Ibid, at para [26].5 Ibid, at paras [10] and [11].trustees.6 The election of 12 new trustees (the current trustees) was confirmed: They are: James Brown, Billy Brown, Peter Karaka, Stephen Zister, David Beamish, Laurie Beamish, Tipa Compain, Emily Karaka, Deborah Pace, Hiraina Whaanga and Lucy Steel. Of those, three (Ms Karaka, Ms Pace and Mr Karaka) do not support thecurrent trustees' stance in opposing the present application. The Trust continues to operate, under the stewardship of the current trustees.[6] While many aspects of the remuneration and expenses in issue have been resolved by consent, there remain significant issues to be determined in respect of the amounts claimed by Mr Stevens and Mr Kirkwood. The most significant objection is based on an allegation that Mr Stevens did not carry out his duties to an appropriate standard and incurred unnecessary fees and expenses.[7] Mr Littlejohn, for the current trustees, submits that, in the circumstances in which he was appointed, Mr Stevens failed to exercise prudence, diligence, reasonable skill and care in the discharge of his functions. Those factors are said to be disqualifying conduct, so far as remuneration is concerned. The complaint in relation to Mr Kirkwood is that he, as a member of the iwi who was providing voluntary services to the Trust, is not entitled to remuneration. Rather, it is submitted, he ought to have acted gratuitously.History of the interim trusteeship[8] In March 2004, it was anticipated that the Trust would take a lead role in endeavouring to settle a Waitangi Tribunal claim that had been brought on behalf of Ngai Tai, one of the Tamaki Makaurau iwi. When appointing Mr Stevens as sole interim trustee on 9 March 2004,7 I took the view that it was not in the interests of the iwi for two distinct factions, running on parallel courses, to purport to lead the Trust in important negotiations with the Crown and other bodies.6 Karaka v Ngai Tai ki Tamaki Tribal Trust (No. 6) HC Auckland CIV 2003-404-6164, 13 November 2007. Mr Kirkwood had been appointed as an additional trustee on 13 November 2007.7 Karaka v Ngai Tai ki Tamaki Tribal Trust HC Auckland CIV 2003-404-6164, 9 March 2004.[9] On Mr Stevens' initial appointment, I did not remove the existing trustees out of any sense of criticism but, rather, to avoid the need to address historical questions about whether persons who claimed to be trustees had been invalidly appointed or removed.8[10] My formal orders were:9a) I remove all existing trustees of the Trust and appoint Mark Stevens of Wellington, chartered accountant, as interim trustee of the Trust in their stead;b) Generally, Mr Stevens shall have all powers conferred upon trustees by the trust deed dated 9 August 1992. In particular he shall:(i) Take control of all assets, bank accounts, books of account, minutes and records of the Trust.(ii) Take responsibility for the administration of the affairs of the Trust generally, with all powers and duties set out in the Trust Deed and under the general law.(iii) Produce, as soon as practicable, the best possible financial statements for the years ended 31 March 1998, 1999, 2000, 2001, 2002 and 2003. He shall also prepare, at the end of the financial year, the best possible statements for the financial year ended 31 March 2004.(iv) Take steps to convene a hui of all iwi represented by the Trust before 30 September 2004. He shall ascertain whether Mr Stephen Clark of McCaw Lewis Chapman, solicitors, Hamilton, is prepared to act as chair of that meeting. If he is, he shall appoint Mr Clark as chair and instruct him to take whatever steps are necessary to convene the meeting prior to the stipulated date. At the hui nominations should be taken of those whom members of the iwi wish to appoint as trustees so that Mr Stevens can apply to this Court for orders appointing trustees in his place after the hui.(v) File in this Court and serve on the solicitors for the applicants and on Mr Stephen Clark of McCaw Lewis Chapman a report identifying:a. The financial position of the Trustb. A progress report with regard to the convening of a hui a iwi8 Ibid, at para [18].9 Ibid, at para [26].c. A progress report on negotiations involving Waitangi Tribunal claims.That report shall be filed and served by 5pm on Friday 30 July 2004.[11] On 6 August 2004, I received Mr Stevens' first report. I considered that he had ―done an excellent job, both in relation to rebuilding relations with others with whom the Trust must work and in bringing a measure of organisation to the affairs ofthe Trust.10 The parties were in broad agreement with Mr Stevens'recommendations. I gave directions 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 and WAI 357; NgaiTai'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.11[12] Mr Stevens sought the Court's approval to explore the possibility of raisingfunds under clause 3(p) of the Trust Deed. I considered it was appropriate for Mr Stevens to make inquiries, though, in the circumstances he had disclosed, I added:12... he may well wish to seek directions from the Court before committing to any particular arrangement. No doubt he will take advice on that issue.No directions of that type were ever sought.13[13] At a hearing on 14 December 2004,14 Messrs Zister, Beamish and James Brown (all three of whom currently hold office as elected trustees) sought an order for party status in the proceeding, so that they could make submissions to the Court10 Karaka v Ngai Tai ki Tamaki Tribal Trust HC Auckland CIV 2003-404-6164, 10 August 2004 at para [2].11 Ibid, at para [6].12 Ibid, at para [8].13 See also paras [12] and [13] for further comments on the possibility of directions being sought.14 Karaka v Ngai Tai ki Tamaki Tribal Trust HC Auckland CIV 2003-404-6164, 15 December 2004.on matters addressed at the hui a iwi held on 28 November 2004.15 Because I was not disposed to deny, in any event, the right of any beneficial owner to be heard in Court on any issues associated with the property of the Trust, I declined the application. I reiterated the supervisory nature of the Court's role, saying:16... the object of the present orders is to restore order to the management of the Trust and to build confidence of beneficial owners in those who ultimately will assume the mantel of trustees. I hope that at the next hearing scheduled for 7 March 2005 it will be possible to appoint co-interim trustees who have been nominated by beneficial owners and who will then continueto assist in restoration of the Trust's affairs.[14] I held that Messrs Zister, Beamish and Brown, having filed an address for served in the Court, were entitled to be served with all documents and heard on any matters associated with the Trust.17 I also took the opportunity to expand on earlier comments about the interim trusteeship:[15] ... I intended any person having a beneficial interest in the Trust property to be entitled to make an application for the appointment of interim co-trustees; while that application and any affidavits in support can be filed at any time prior to 5pm on 11 February 2005, ordinarily I would have thought any person proposing to make such an application would first want to consider the matters raised by Mr Stevens in his report to be filed and served by 4 February 2005. The scope of the direction, however, permits an application to be made earlier.[16] The second issue is of a more delicate nature. It relates to concerns that Mr Stevens may have made comments on cultural issues that may go beyond the scope of his authority as interim trustee. This issue is raised specifically to ensure Mr Stevens is aware of the concerns. It is not raised, in any way, as an attempt to discipline Mr Stevens. That was expressly disavowed by Mr Littlejohn [for Messrs Zister, Beamish and Brown].[17] The functions and powers of the interim trustee are those to which I have already referred. However, territorial authorities in particular, and other government agencies more generally, seek to deal with a person who has authority to speak on behalf of a particular group. It is understandable that the territorial authorities and government agencies see the interim trustee as someone with whom they can properly deal. Nevertheless, the concerns that have been raised demonstrate the need for a person in the position of an interim trustee to take care and be cautious in his or her approach to cultural issues. It is important that confidence of a particular group of beneficial owners not be lost through inadvertent comments being made.15 Ibid, at para [2].16 Ibid, at para [7].17 Ibid, a para [8].[18] I take the matter no further than that. I am sure Mr Stevens has the good judgment to understand the issues and to consult on any issues that may arise and require some public utterance with those Kaumatua and Kuia understood to have expertise in the area.[15] On 7 March 2005, I observed that ―great progress [had] been made in rebuilding trust among those who have a beneficial interest in the Trust and in preparing the Trust for future activities, including resolution of Waitangi Tribunalclaims and discussions concerning fisheries entitlements.18 I referred to Mr Stevens' further report of 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.19 Without opposition, I made the following orders:[6] I confirm the appointment of Mr Stevens as interim trustee until 7 March 2006.[7] I approve the formation by Mr Stevens of the following committees to assist him over the next year.a) First, a Management Committee to assist with issues of culture and heritage, including waahi tapu.b) Second, a Claims Negotiation Committee to assist with direct negotiations in relation to Treaty of Waitangi claims made on behalf of Ngai Tai.I note that Mr Stevens will consult fully in determining the membership of those committees and that those who have taken steps in the proceeding repose confidence in Mr Stevens in that regard.[8] I approve fees and expenses incurred by the interim trustee since his appointment on 8 March 2004. They will be in the sums set out in para 4.1(c) and detailed in tab 3 to his second report of 18 February 2005. I declare those moneys are payable to Mr Stevens by the Trust. 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. (my emphasis)[16] On 13 March 2006, a further hearing took place ―to monitor progress in an attempt to return the mana of the iwi to the administration of Ngai Tai ki Tamaki18 Ngai Tai ki Tamaki Tribal Trust (Judgment No 4) HC Auckland CIV 2003-404-6164, 7 March 2005 at para [2].19 Ibid, at para [4].Tribal Trust.20 I had before me the third report of Mr Stevens, as sole interim trustee.[17] I made a number of orders designed to enable a decision to be made in 2006 about whether the Trust was to continue. I indicated that properly elected trustees ought to be in place by the end of the year.[18] I emphasised my role as providing a transitional arrangement, which would bring into the decision-making mix more members of the iwi, with a view to a final decision being made on whether to adopt the strategic plan advanced by Mr Stevens.21[19] I 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 2006.22 I also authorised payment of the three items set out in the interim trustee'sreport.23 They had been expressed by Mr Stevens in this way:243.1 The Trustee respectfully requests that the Court make the following orders:(i) Approve 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 respectively as detailed in Parts B and C of the Schedule contained in Tab 15 to the Third Report;(ii) Approve 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) Approve the outstanding accounts incurred by the Trust since the appointment of the Interim Trustee on 9 March 2004 being $213,373.92 as detailed in part B of the Schedule contained in Tab 15 to the Third Report as being payable by the Trust to the various third parties who have rendered those accounts.20 Ngai Tai ki Tamaki Tribal Trust (Judgment No 5) HC Auckland CIV 2003-404-6164, 13 March 2006 at para [1].21 Ibid, at paras [5] and [6]. A summary of the strategic plan, taken from para 2.84 of Mr Stevens third report, was set out at para [6].22 Ibid, at para [7].23 Ibid, at para [8].24 Set out at para [9].[20] Time was extended to allow the hui-a-iwi to be held later; first by Keane J on 8 December 2006 and then by me on 7 February 2007.[21] On 13 March 2007, I heard from counsel following a hui a iwi that had been held on 11 February 2007.25 Because all concerned considered it necessary for the Waitangi Tribunal claim to proceed, I confirmed Mr Stevens appointment as an interim trustee to enable that to be done.26 I expressed the view that governance issues could be addressed once the Tribunal hearing was completed.27 At that time, the Waitangi Tribunal was hearing an urgent application in which a recommendation was sought that the Crown not settle with Ngati Whatua o Orakei, pending resolution of other claims brought in respect of Tamaki Makaurau, including that of Ngai Tai.[22] I also suggested that a judicial settlement conference be convened for the purpose of enabling interested parties to be heard on a prospective governance structure. That conference was held at Maungarei Marae on Saturday 12 May 2007. I conducted the conference. It was unsuccessful.28[23] The interim report of the Waitangi Tribunal dealing with the Tamaki Makaurau settlement process was released on 12 June 2007.29 As a result of the successful outcome of the application, it was necessary for formal processes to be put in place to enable Treaty negotiations to be undertaken for the benefit of all members of the iwi.[24] A hearing was convened on 31 August 2007, so that I could hear from counsel on those issues. All parties had agreed that I should continue to supervisethe Trust's affairs, notwithstanding my role at the settlement conference. In a judgment given on 13 November 2007,30 I explained the background as follows:25 Karaka v Ngai Tai ki Tamaki Tribal Trust (Minute No 5) HC Auckland CIV 2003-404-6164, 13 March 2007.26 Ibid, at para [10](a).27 Ibid, at para [4].28 Karaka v Ngai Tai ki Tamaki Tribal Trust (Minute No 6) HC Auckland CIV 2003-404-6164,12 May 2007.29 Waitangi Tribunal The Tamaki Makaurau Settlement Process Report - Wai 1362 (2007).30 Karaka v Ngai Tai ki Tamaki Tribal Trust (Judgment No 6) HC Auckland CIV 2003-404-6164, 13 November 2007.[3] Mr Stevens has been the steward of the Trust's affairs since that time.However, soon after his appointment, the fractious relationship among beneficiaries manifested itself again, in varying degrees of support for oropposition to Mr Stevens' role. Some members of the iwi have supported him throughout. Some have opposed his involvement in the Trust. Others have wavered between the two extremes.[4] Mr 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.[5] Issues relating to the Waitangi Tribunal claim became more acute earlier this year. Ngai Tai ascertained, along with four other tribal groups, that (since 2003) Ngati Whatua o Orakei had been engaged in negotiations with the Crown in relation to settlement of Treaty grievances arising in Tamaki Makarau (Auckland). An agreement in principle had been reached between Ngati Whatua and the Crown without the knowledge of those five tangata whenua groups.[6] Ngai Tai and the other four iwi complained about that state of affairs and, at their request, the Waitangi Tribunal (between 12 and 15 March 2007) embarked upon an inquiry into the circumstances in which the agremeent in principle had been reached: see The Tamaki Makarau Settlement Process Report (WAI 1362, June 2007). The Tribunal made a strongrecommendation that the Crown's proposed settlement with Ngati Whatuanot proceed. Instead, the Tribunal recommended that the Office of Treaty Settlements should work with other tangata whenua groups (including Ngai Tai) to negotiate settlements for them. Only then, the Tribunal concluded, might it be possible to determine appropriate redress, both cultural and commercial, to all Tamaki Makarau tangata whenua. The Tribunal considered that an overall settlement was required to uphold the mana of all tribes.[7] In those circumstances, the application for directions filed by the Karakas in early 2004 was set down for final disposition before me on 31 August 2007. No cross-examination on existing affidavits took place but, with the consent of all involved in the process, individual members of the iwi (whether represented by counsel or not) had an opportunity to address me from the back of the Court on any concerns.[8] Although I expressed some reservations about continued Court involvement because of the way in which some members of the iwi hadresponded to Mr Stevens' appointment, I was satisfied from observations made by those present that the overriding concern was for the Court to bring some order to the administration of the Trust, to enable the Waitangi Tribunal claims to be pursued.[25] I remarked that the hearing of 31 August 2007 represented a ―watershed event for the Ngai Tai iwi because of the need for the five Tamaki Makaurau iwi (other than Ngati Whatua) to determine individual questions of mandate and topersuade the Crown to accept that mandate.31 Importantly, for present purposes, I expressed approval of Mr Stevens' performance as a Court appointed trustee.However, for two reasons, I thought it was appropriate for additional interim trustees to be appointed. I said:[21] First, it is inappropriate that he continue alone in a role which involves attempting to placate disputing parties while, at the same time, pursuing benefits for the iwi as a whole. Second, the time has come for members of the iwi to resume responsibility for running the Trust. If they cannot work together for their mutual benefit, they risk losing the prized redress they seek for past wrongs they believe have occurred.[22] My initial goal, when appointing Mr Stevens on 9 March 2004, was to restore the mana of the iwi through a process of kotahitanga. While I see scant evidence of progress in resolving differences among whanau, the Court should not, for the reasons given earlier, seek to impose paternalistic solutions on the beneficiaries. 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. My response to the present application is to provide a short term solution pending the next Annual General Meeting.[23] Five people have consented to act as trustees; Tauke Kirkwood, Peter Karaka, Te Warena Taua, Emily Anne Karaka and Mark Stevens. Nobody else has filed a consent to act as a trustee.[24] My view is that fewer than five trustees would be better able to advance the cause of Ngai Tai through the settlement process and to achieve some degree of reconciliation among whanau groups. Both aspects are important.[25] From my own observations at the meeting at the Marae and the views expressed to me at that time and in Court, it is plain that, for good reason or for bad, the confidence of the group as a whole does not extend to Mr and Ms Karaka. It is clear that both have done good work in the past but I regret that I cannot appoint them when there is a real risk that the current state of disharmony might worsen as a result of the perception of others that they will not act impartially. A physical altercation that occurred towards the end of my Marae visit has influenced me considerably in reaching that view.[26] In those circumstances, my decision is to appoint two additional interim trustees, Mr Kirkwood and Mr Taua. From my interaction with them, I believe that they, in association with Mr Stevens, can act conscientiously for the benefit of iwi as a whole and promote the necessary reconciliation among members of the group.[27] I made it clear, at the end of the 31 August 2007 hearing that not all present would like any decision I made. I sought (and received) assurances from all present that they would support whatever decision was made,31 Ibid, at para [11].whether it accorded with personal views or not. I expect that everyone (including Mr and Ms Karaka) will do so. (my emphasis)[26] Mr Taua was subsequently removed as an interim trustee, at his own request. He had views about the future path that did not fit with those of either Mr Stevens or Mr Kirkland. I continued the appointment of Mr Stevens and Mr Kirkwood.32 I gave directions in relation to an Annual General Meeting at which I considered that those who could whakapapa into the iwi could decide whether to apply to the Court to liquidate the Trust or to appoint trustees to continue its operation. I appointed Mr Sorenson and Mr Littlejohn, counsel who had appeared for other interested beneficiaries, as joint chairs of that meeting.33[27] That Annual General Meeting was subsequently deferred for reasons associated with progression of Treaty claim negotiations. While, before the Annual General Meeting was held, Mr Kirkwood had indicated a desire to resign as an interim trustee, I prevailed upon him to remain in that capacity until the Annual General Meeting was held. I reiterated my gratitude to both Mr Stevens and MrKirkwood ―for undertaking their onerous duties as interim trustees on behalf of the Court.34 I directed that the Annual General Meeting be held no later than the end of January 2009.[28] The Annual General Meeting was held in March 2009. Twelve people were elected as trustees.35 On 14 December 2009,36 I terminated Mr Stevens' and MrKirkwood's appointments as interim trustees and confirmed the election of those 12 people. I made directions in relation to the preparation, filing and service of financial statements for the period 9 March 2004 to 14 March 2009 and reserved questions of remuneration and expenses for later determination.3732 Karaka v Ngai Tai ki Tamaki Tribal Trust (Minute No 12) HC Auckland CIV 2003-404-6164, 15 May 2008.33 Ibid, at paras [7](c) and (d).34 Karaka v Ngai Tai ki Tamaki Tribal Trust (Minute No 16) HC Auckland CIV 2003-404-6164, 9 September 2008.35 See para [5] below.36 Karaka v Ngai Tai ki Tamaki Tribal Trust (Judgment No 7) HC Auckland CIV 2003-404-6164, 14 December 2008.37 Ibid, at para [7].Competing contentions[29] Mr Illingworth QC and Mr Littlejohn, for the current trustees, prefaced their submissions by commenting that no ―intense scrutiny had been undertaken in respect of the interim trusteeship until now. They submitted that Mr Stevens had made inadequate disclosure, during the term of his stewardship, primarily in relation to the value of intangible assets in the accounts. Relying on the evidence of a chartered accountant, Mr Wilgermein, specific concerns were advanced that intangible assets had been incorporated into the accounts, contrary to generally accepted accountancy principles and that, even if it were appropriate to include assets of that type in the balance sheet, there were no notes in the financial statements to indicate the way in which the figures had been calculated.[30] The current trustees now accept that the Trust has responsibility for a number of expenses that are due. It is unnecessary for me to refer to them because no orders are required, in that regard.38 However, professional costs remain in issue[31] The remaining challenges are directed to:(a) Fees charged by Mr Stevens, for his own benefit.(b) Professional costs incurred by Mr Stevens, for which they say there was no authority.(c) Remuneration claimed by Mr Kirkwood.[32] Mr Littlejohn pointed out that no records had been kept by Mr Stevens in relation to the hours he had worked. Nor was there anything to support the reasonableness of the hourly rate charged. That submission was made in the context of an acceptance by Mr Stevens that he was not a chartered accountant. I was of the impression that he was when I made my initial order appointing him as an interim trustee.3938 If I were wrong, leave to apply for such orders is reserved: see para [73](f) below.39 See para [3] above.[33] Mr Littlejohn submitted that Mr Kirkwood was obliged, as a member of the iwi, to provide services as a trustee gratuitously. However, it was acknowledged that significant out of pocket expenses had been incurred by Mr Kirkwood in relation to the holding of the Annual General Meeting that Mr Kirkwood had not claimed.[34] Mr Thorp, for the former interim trustees, relies on s 69 of the Trustee Act 1956 as an absolute protection, both for the remuneration charged by Mr Stevens and the professional expenses he incurred. Section 69 provides:69. Protection of trustee while acting under direction of CourtAny trustee acting under any direction of the Court shall be deemed, so far as regards his own responsibility, to have discharged his duty as such trustee in the subject-matter of the direction, notwithstanding that the order giving the direction is subsequently invalidated, overruled, set aside, or otherwise rendered of no effect:Provided that this subsection shall not extend to indemnify any trustee in respect of any act done in accordance with any such direction if he has been guilty of any fraud or wilful concealment or misrepresentation in obtaining the direction or in acquiescing in the Court making the order giving the direction.[35] Mr Thorp emphasised the need to bear in mind that a bright line exists between trustee remuneration and expenses incurred. While no time sheets had been kept by Mr Stevens, Mr Thorp submitted his were ―conservative estimates of the time he had spent on the Trust's affairs. As far as the relevant expenses were concerned, Mr Thorp contended that it was within the discretion of the interim trustee to incur them to perform functions that Mr Stevens could not do himself. He submitted that there was no duplication of costs.[36] Mr Thorp also pointed to comments made in the Waitangi Tribunal's Tamaki Makaurau Settlement Process Report40 that reflected well on the work undertaken by Mr Stevens, in obtaining a successful recommendation from the Tribunal in relation to settlement issues for Tamaki Makaurau generally.[37] Mr Thorp submitted that Mr Kirkwood was entitled to remuneration as an interim trustee. In any event, even if Mr Kirkwood were obliged to act gratuitously,40 Waitangi Tribunal The Tamaki Makaurau Settlement Process Report - Wai 1362 (2007) at 29-30.he should receive reimbursement for the expenses he incurred in relation to the calling of the Annual General Meeting.[38] In reply, Mr Illingworth submitted that Mr Thorp's reliance on s 69 of the Trustee Act was misplaced. He submitted that the protection afforded by that provision only applies to functions undertaken by a trustee that are exercised under the direction of the Court; not to the general exercise of a trustee's powers. MrIllingworth submitted it was necessary to separate out the two types of functions, in order to determine whether an indemnity, under s 69, is appropriate.Analysis(a) Mr Stevens' remuneration[39] For the period between March 2004 and March 2009, Mr Stevens claims that he has spent a total of 2,530 hours on Trust business. In the period between March 2004 and March 2005 his charge out rate was $175 per hour. For the balance of the time, he charged at $196 per hour. The hourly rates were not approved by the Court, in advance.[40] For the periods in question, the amounts claimed are:(a) March 04 to July 04 $90,168.75(b) August 04 to March 05 $42,331.25(c) April 05 to September 05 $90,268.00(d) October 05 to February 07 $88,592.00(e) March 07 to August 07 $100,800.00(f) September 07 to March 09 $67,840.00Total $480,000.00[41] Mr Littlejohn submitted that it was ―unreasonable, imprudent and contrary to the interim trustee's duty of care for him to incur such large costs, in circumstanceswhere he knew, from the outset, that the Trust had no substantial funds from whichto meet those liabilities. That ―imprudence was, in Mr Littlejohn's submission,exacerbated by the fact that Mr Stevens failed to comply with elementary financial reporting standards.[42] Mr Littlejohn's primary complaints about the level of Mr Stevens' fees were:(a) Mr Stevens, by putting intangible assets into the balance sheet of the Trust, misreported the true financial position over the period of his administration. Mr Littlejohn suggests that was done to justify―continued expenditure which was simply unsustainable. Thecurrent trustees assert that $242,258.80 of professional expenses were improperly incurred as a consequence of the alleged misreporting.(b) Mr Stevens engaged professional consultants to carry out work that he was qualified to do and which he had held himself out as being capable of doing from the time of his appointment. Concerns areexpressed about the engagement of consultants ―without letters ofengagement, estimate of costs, forecasted expense budgets or thelike. An element of double counting is alleged: it is suggested that Mr Stevens has claimed for time spent by other consultants who, themselves, were paid for their services.(c) The inability to verify the extent of hours actually spent by Mr Stevens when working on Trust administration.(d) Mr Stevens failed to leave the Trust with audited financial accounts for the period 1997 to 2009, even though that was one of the tasks entrusted to him.[43] Before exploring Mr Stevens' responses to those criticisms, something mustbe said about his current situation. After falling ill in early 2009, Mr Stevens was hospitalised with a stroke in July 2009. While his well-being has improved, he remains impaired. On 5 July 2010, Mr Stevens was adjudged bankrupt, on the application of the Commissioner of Inland Revenue. His financial affairs are now in the hands of the Official Assignee, to whom any payment of past remuneration would need to go. There may or may not be a surplus to go back to Mr Stevens, after payment of his proved debts and administration costs.[44] Mr Stevens responded to the criticisms made of him, in an affidavit sworn on 15 February 2011. He was not called for cross-examination on that affidavit. In rejecting criticisms made of his administration and claimed remuneration, Mr Stevens deposed:...42. I reject the criticisms contained in those paragraphs and make the following comments:a. The period of time for which I remained appointed as an Interim Trustee extended for considerably longer than I (and I suspect anyone else involved with this proceeding) expected or desired. In no small part this was due to ongoing dysfunction and conflict within the iwi – not only as between those person who were parties to the initial application to the Court but also involving certain persons associated with the Umupuia Marae. I was regularly undermined and threatened during the course of my trusteeship.b. The extent of the work carried out is apparent in particular from a review of reports which I have prepared. Part 3 of the First Report notes that the extent of the work required from me at the outset was such that I was required to remain in Auckland for the majority of the four months leading up to completion of that Report. Full disclosure of the hours worked by me is contained at Tab 10 to that First Report. Similar disclosures were subsequently made by me in the Second Report at Tab 3, the Third Report at Tab 15 and the Fourth Report at Schedule 1.c. I did not keep timesheets or diary entries stipulating the precise amount of time spent each day on Trust business. The details of the time given by me on a regular and progressive basis were conservative estimates of the time spent by me in that regard. Fees calculated on the basis of those conservative estimates at a notified rate were approved from time to timewithout any adverse comment from iwi members or other parties who received those reports.d. At the outset of my appointment I was conducting regular (almost weekly) hui with iwi members in order to address thematters required of me under the Court's initial judgment. Atthat time the Trust was not recognised by many relevant bodies including [the Office of Treaty Settlements, Te Puni Kokiri], the Department of Conservation, and the Auckland, Manukau, North Shore and Waitakere City Councils, and it was necessary to rebuild relationships in that regard.e. The schedules of travel costs forwarded to Mr Littlejohn on 24 August 2010 confirms the regularity with which visits had to be made to Auckland to attend to the affairs of the Trust.f. I spent considerable time preparing for and subsequently giving evidence at the hearings before the Waitangi Tribunal which led to the granting of urgency and to the subsequent Settlement Report.g. My dealings with the Crown and related entities including [Te Puni Kokiri] and [the Office of Treaty Settlements] were characterised by an obstructive stance on their part including in particular a last minute withdrawal of funding on the part of [Te Puni Kokiri] in an apparent attempt to frustrate the holding of a hui a iwi. This stance, and an almost complete absence of income being derived by the Trust, meant that I had little option but to utilise my own funds if I wished to progress the interests of the Trust in the interim and in particular issues associated with Treaty Claims.h. After delivery of the Settlement Report I attended numerous meetings of the [Tamaki Makaurau Collective]. Once again the Crown unilaterally abandoned its dealings with [the Tamaki Makaurau Collective] in circumstances where assurances of funding had been given to those participating in that aspect of the settlement process.i. Even after the Settlement Report, and the negotiations with the [Tamaki Makaurau Collective], the interests of the iwi were undermined by certain factions who sought, without notice, to enter into a side deal with the Government and other iwi factions.43. At the time the New Trustees were appointed in December 2009, the claims of Ngai Tai had largely been secured. The work which the ongoing Trustees and their advisers are now carrying out is in that sense a continuation of the work carried out during my trusteeship.[45] From the start of the interim trusteeship, Mr Stevens knew that the only way in which fees could be paid was if the Waitangi Tribunal claim were successful. The intangible assets of the Trust to which Mr Wilgermein refers in his evidence isrepresented by the estimated value of the Waitangi Tribunal claim. It is true, as Mr Illingworth submitted, that settlement funds could never be an asset of the Trust.41 But, nevertheless, I would have thought that costs incurred in achieving a settlement which have been incurred through the Trust, as a body with substantial responsibility for promoting the Treaty claims, could genuinely be viewed as an expense, to be deducted from the gross proceeds of settlement received.[46] I agree with Mr Wilgermein that reporting was not completed in an appropriate way. Strictly, the ―assets ought not to have been included or, at least,the notes should have explained their qualification. However, I do not think anyone associated with the Trust could have been misled by the way in which reporting was undertaken. Everyone knew that money had to come from a Treaty settlement if the Trust were to be put in funds, in any material way.[47] I frame the question as whether there has been any disqualifying conduct on the part of Mr Stevens that would disentitle him to receive remuneration, for all or part of the time that he has been a trustee.[48] The general rule is that trustees act gratuitously; exceptions arise if remuneration is authorised either by the Trust instrument or the Court.42 In Mr Stevens' case it is clear that there was an expectation on the part of all concerned that he would be able to charge professional fees for the work he undertook inrelation to the Trust's affairs, while an interim trustee. In my view, he ought to be remunerated reasonably, by authority of a Court judgment.[49] During the period of the interim trusteeship I approved, at various times, fees claimed by Mr Stevens for work undertaken at particular times. In summary, subject to the need for the Court to assess total reasonable remuneration at some future time, I authorised:41 The Crown would require establishment of a distinct governance entity to receive the funds.42 Peach v Jagger (1910) 30 NZLR 423 (SC). See also Guinness Plc v Sanders [1990] 2 AC 663 (HL), Re Duke of Norfolk's Settlement Trusts; Perth (Earl) v Fitzalan-Howard [1982] 1 Ch 61 (CA),Wellington Audio Visual Ltd v Euro Boston Group Ltd (2010) 3 NZTR 20-010 and Trustee Act 1956, ss 49(5)(b) and 72.(a) Fees and expenses incurred by Mr Stevens in the sums set out in para 4.1(c) and detailed in tab 3 to his second report of 18 February 2005.43Those fees totalled $164,002.87.(b) Fees for the six months 31 March to 30 September 2005 being $89,768.44Together, those fees total $253,770.87.[50] Notwithstanding those approvals, I reserved the right to revisit the actual remuneration to be paid. In my judgment of 13 March 2006 I made it clear to a person beneficially entitled to property of the Trust (who queried the fees) that ―ifthere were any concerns about the extent of the payments that have been made they are matters that can be put before the Court in an appropriate way at some time in the future when Mr Stevens will have an opportunity to respond to any criticisms.45This is the occasion to look more broadly at Mr Stevens' services as a trustee and todetermine what represents fair remuneration for the overall work undertaken.[51] I am not persuaded that Mr Stevens should be disentitled from receiving remuneration based on his conduct of the trusteeship. As is clear from my summary of events during the interim trusteeship,46 Mr Stevens was supported by some members of the iwi and opposed forcefully by others. On 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. The appropriate path for complaint was a formal application to the Court, rather than voicing personal abuse directly at Mr Stevens.43 Karaka v Ngai Tai ki Tamaki Tribal Trust (Judgment No 4) HC Auckland CIV 2003-404-6164, 7 March 2005 at para [8].44 Karaka v Ngai Tai ki Tamaki Tribal Trust (Judgment No 5) HC Auckland CIV 2003-404-6164, 13 March 2006 at para [8].45 Ibid, at para [9].46 See paras [2]-[28] above.[52] It is not possible to do other than to make a broad based assessment of the remuneration to which Mr Stevens is entitled. He has not been cross-examined. Nor have any of the current trustees who have made affidavits to oppose the remuneration sought. My task is to determine, as best I can from available evidence, a fair remuneration.[53] No authorities were cited to me in relation to the Court's jurisdiction to awardremuneration. However, I took from the way in which the case was argued that there was an implicit acceptance that my source of jurisdiction came from s 49(5)(b) of the Trustee Act:4749 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,—...(b) In any other case, by the responsible trustee if he is entitled to fix his own remuneration, or by the Court.....The term ―trustee is wide enough to cover Mr Stevens' role as a Court appointed interim trustee. The reference to ―responsible trustee is designed to differentiate between someone in Mr Stevens' position and an advisory trustee with whom heworked.48[54] An analysis of the circumstances in which s 69 of the Trustee Act will apply49is not required. Section 69 is directed to indemnities sought by a trustee for losses suffered by the Trust. It throws upon a trustee the need to assume liabilities personally, if he or she has failed to discharge duties cast upon trustees by the47 Section 49, generally, deals with the appointment and role of an advisory trustee and the demarcation of authority between that person and the responsible trustee.48 Trustee Act 1956, s 49(3). See also the definitions of ―trust and ―trustee in s 2 of the Trustee Act1956.49 See paras [34] and [38] above.Trustee Act and the general law. It is not specifically directed to questions of remuneration. Entitlement to remuneration is based on the reasonableness of the charges, having regard to what has been achieved. While I prefer to rest my jurisdiction on s 49(5) of the Trustee Act, s 72 emphasises the point I have made inproviding for the Court to allow a trustee ―such commission or percentage for that person's services as is just and reasonable. The phrase ―just and reasonable is asmuch a touchstone for consideration of s 49(5) remuneration as it is for commission, under s 72.[55] Viewing Mr Stevens' total claim for remuneration in that way, I have concerns about its amount because of duplication of cost (as between Mr Stevens and professionals retained to undertake tasks I had expected Mr Stevens to perform personally), the absence of reliable records against which I can assess the time Mr Stevens spent on Trust business, the few business overheads that Mr Stevens had to incur in proportion to the hourly rates changed and the absence of adequate financial statements at the end of his stewardship. There is also the absence of any express (advance) Court sanction of the hourly rate charged by Mr Stevens, having regard to work he actually undertook.[56] In the context of these comments, I am particularly mindful of Mr Stevens'instructions to other professionals in relation to the preparation of accounts and financial reporting with which I had understood that he, as a ―chartered accountantwould deal.50 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 2009.51[57] In an earlier judgment, I endeavoured to provide an indication of the level of fees I thought might be appropriate, without committing myself to any particular position. I said:5250 See paras [3] and [32] above.51 See paras [63]-[65] below. This is made up of the fees charged by TCP Consulting Ltd, G Freeland and Tax Planning Services Ltd, scheduled in para [63] below.52 Karaka v Ngai Tai ki Tamaki Tribal Trust Minute (No. 24) HC Auckland CIV 2003-404-6164, 24 August 2010.[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 trustees may raise, it would be difficult to gainsay an entitlement to remuneration of at least that amount.[58] Those figures may not be too wide of the mark, given the need to deduct expenses on grounds of duplication, to discount the fee because of the lack of reliable information about either the hourly rate or hours worked and to take account of the lack of adequate financial statements at the end of the trusteeship.[59] On the information I now have, I consider remuneration a rate of $75,000 per annum to be reasonable, without taking account of the adjustments to which I have referred. Over a period of five years and six months that equates to $412,500. That is a sum of $67,500 less than what is claimed by Mr Stevens.53 From that figure I deduct the sum of $121,847.08,54 as duplicated professional expenses.55 I further deduct a figure of $50,000.00 (taking account of the need for Mr Stevens to liaise with professional advisors) to reach a remuneration figure of $240,653.[60] That remuneration calculates out at approximately $43,755 per annum. Alternatively, on the hours claimed by Mr Stevens,56 it would amount to an hourly rate of about $95 per hour.[61] I am fortified in my view that that remuneration benefits the beneficiaries of the Trust, as members of the Ngai Tai iwi, by the references made by the Waitangi Tribunal to Mr Stevens' evidence at the hearing of the application that sought a recommendation halting the Crown's negotiations with Ngati Whatua o Orakei, infavour of the Crown treating with all Tamaki Makaurau iwi.57 Those references make it clear that he was performing admirable services for the benefit of the iwi at that time. That also tends to negate any suggestion that Mr Stevens was guilty of53 See paras [39] and [40] above.54 See para [56] above.55 See paras [63]-[65] below.56 See para [39] above.57 Waitangi Tribunal Tamaki Makaura Settlement Process Report - Wai 1362 (2007) at 89 and 90.disentitling conduct in respect of indemnity for professional expenses incurred on behalf of the Trust after 31 March 2005.58(b) Professional fees incurred by Mr Stevens[62] As well as disputing Mr Stevens' entitlement to remuneration, the current trustees also contend that he ought to be personally responsible for all professional expenses that he incurred on behalf of the Trust, after 31 March 2005. While Mr Littlejohn argued that it was ―imprudent and improper for Mr Stevens to engage professionals and incur further costs after that date, this submission is untenable for the reasons I have given.[63] Evidence was produced to explain the progressive increase in professional fees incurred, from information contained in Mr Stevens' reports to the Court. They show: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[64] There is no dispute about the reasonableness of the costs incurred. The question is whether Mr Stevens should be personally responsible for costs incurred in the four years from 31 March 2005 to 31 March 2009.[65] Although I hold that all of the expenses to which para [63] above refers are expenses of the Trust, I have deducted those for TCP Consulting, Mr Freeland and58 See para [62] below. See also paras [25], [27] and [61] above.Tax Planning Services from the remuneration to which Mr Stevens would otherwise be entitled. That being the case I find that the amounts owing to each of the persons and firms set out in para [63] are liabilities of the Trust to be met out of its assets.(c) Mr Kirkwood's remuneration[66] In my view, s 49(5) of the Trustee Act provides jurisdiction for me to award remuneration in favour of Mr Kirkwood, in relation to the time he spent as both an advisory and a responsible trustee.[67] Mr Kirkwood has specified the amount he seeks but indicates that he spent approximately $1,500 of his own money to ensure that the Annual General Meeting proceeded in April 2009. He did not seek reimbursement for that expense.[68] Mr Kirkwood's first formal involvement with the Trust was in November2008. I consider an allowance of $3,000 to be appropriate, bearing in mind that Mr Kirkwood is a member of the iwi who should gain benefits through any settlement that is ultimately negotiated.(d) Costs incurred by Mr and Ms Karaka[69] There is a dispute about the Trust's obligation to meet professional costsincurred by Mr and Ms Karaka in initiating the proceeding and in being represented during it. They instructed Sorenson Law, who have billed their time at $32,200. The grounds of opposition to meeting that payment are:Sorenson Law2.47 In the Financial Information provided to the Court in May 2010 five invoices from Sorensen Law, totalling $38,200, are included. The memorandum filed with this information on behalf of the Interim Trustee notes at paragraph 15(d) that the invoices were periodically forwarded to the Interim Trustee by the solicitors for the First and Second Plaintiffs, Peter and Emily Karaka and a claim made for their payment by the Trust. The memorandum further advised that the Interim Trustee has not agreed that the accounts should be met by the Trust.2.48 The Trust is not prepared to meet the legal costs incurred by Peter and Emily Karaka in these proceedings from Trust funds, nor does it consider that the Trust should be liable to pay them as an expense incurred by the Interim Trustee, because they were not incurred by him. Although Peter and Emily Karaka were trustees of the Trust when they commenced these proceedings, their application was not made on behalf of the Trust: indeed the Trust was named as defendant to it.[70] The current trustees submit that these costs are the personal responsibility of Mr and Ms Karaka and should be dealt with as costs in the cause, as opposed to expenses of the Trust. I agree.[71] I accept that Mr Sorenson's 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.(e) Costs in relation to the remuneration hearing[72] During the course of the hearing, I indicated to counsel that I considered the arguments advanced in support and in opposition to the remuneration issues were put forward in good faith and were, at least, arguable. In those circumstances, I direct that the reasonable legal costs and disbursements incurred by both the current and former interim trustees be paid out of Trust assets in full. I certify for two counsel, for the current trustees.Result[73] I make the following orders:(a) Mr Stevens' total remuneration is fixed at $240,653 to be paid out of assets of the Trust.5959 See para [59] above.(b) Mr Kirkwood's remuneration is fixed at $3,000, to be paid out ofassets of the Trust.60(c) I declare that the expenses scheduled in para [63] above are proper liabilities of the Trust.(d) Costs incurred by Mr and Ms Karaka shall be fixed and paid on the basis set out in para [71] above.(e) Costs incurred on the remuneration argument shall be paid in the manner set out in para [72] above.(f) Leave to apply is reserved, in case additional orders are required, to give effect to the agreement to which I refer in para [30] above.[74] As this will be the last occasion on which I deal with this proceeding, I wish all members of the iwi well for the future.________________________P R Heath JDelivered at 4.00pm on 15 March 201160 See para [68] above.