X V X AND ANOR CA CA68/2009

X V X AND ANOR CA CA68/2009 26 February 2010NOTE: NO PUBLICATION OF THIS PROCEEDING IS PERMITTED UNDER S 35A OF THE PROPERTY (RELATIONSHIPS) ACT 1976, EXCEPT WITH THE LEAVE OF THE COURT THAT HEARD THE PROCEEDINGS, AND WITH THE EXCEPTION OF PUBLICATIONS OF A BONA FIDE PROFESSIONAL OR TECHNICAL NATURE IN THE COURT OF APPEAL OF NEW ZEALAND CA68/2009 [2010] NZCA 42BETWEEN X Appellant AND X First Respondent AND L T GRANT AND C A ATCHISON AS TRUSTEES OF THE X FAMILY TRUST Second Respondents Court: O'Regan, Robertson and Ellen France JJ Counsel: M J Southwick QC and J H Hunter for Appellant A E Hinton QC for First Respondent A F Grant for Second Respondents Judgment: 26 February 2010 at 3 p.m.SUPPLEMENTARY JUDGMENT OF THE COURT A The application for costs in favour of the second respondents is declined. B We make no order for costs.____________________________________________________________________REASONS OF THE COURT(Given by Robertson J) [1] Following the delivery of our judgment of 14 December 2009 (after what we had hoped was the final hearing in this matter) the Court received on 26 January 2010 an application on behalf of the trustees of the X Family Trust which noted:3. Counsel for Mrs X has asked the Trustees to apply for an award of costs in all three Courts. The solicitors who act for Mr X have indicated that they will oppose an award being made in favour of the Trust. 4. The Trustees consider that in circumstances where an application was made to modify the Trust under s 182 of the Family Proceedings Act and the application was unsuccessful, it is appropriate that they should seek an award of costs in the Court of Appeal and, to the extent that the Court of Appeal is able to make an award of costs for the hearing in the High Court, to seek an appropriate award of costs in respect of that hearing.[2] By Minute of 5 February 2010, which was sent to all parties, we indicated that any submissions on behalf of the Trust were to be filed and served by 12 February 2010, submissions from counsel for Mr X opposing by 19 February 2010 and a brief reply submission by 23 February 2010. These have been received. [3] In his submissions on behalf of the Trust, Mr Grant relevantly noted:3. Mr X's application under s.182 was rejected by the Family Court, the High Court and the Court of Appeal. 4. Although the trustees adopted a neutral role in the litigation, the intensity of the conflict and the fact that the law concerning s.182 had not been the subject of attention from the high Courts in recent years, made it inevitable that the Trust would incur significant fees in responding to the application. 5. If the Trustees had a choice, they would obviously have preferred not to have incurred the expenses that they did in responding to the application, so as to leave more resources in the Trust, and especially for its final beneficiaries, the children.6. The Trustees are aware of the likelihood that Mr X will oppose the application. If he does, the Court will consider his reasons for doing so and determine whether they should prevail. The trustees application is based upon the following reasoning: (a) Mr X applied for an order that the Trust should be modified under the powers that are given to the Courts by s.182 of the Family Proceedings Act. (b) The Trust incurred very significant legal fees during the course of the litigation in responding to the application. (c) The application was unsuccessful. (d) If it had not been for the application under s.182, the Trust would have significantly greater resources to assist the family, and especially the children. 7. Counsel for Mrs X has asked the Trustees to seek an order for costs on a B basis. The Trustees understand Mrs X's concern that the Trust should recoup as much money as possible for the benefit of its beneficiaries but leave the applicable classification to the Court.[4] In response, Ms Southwick stressed that the application was at the instigation of the first respondent. She emphasised nonetheless the novel nature of the application under s 182, and the history of events involving the Trustees in the proceedings. [5] In our view, if a separate costs award in favour of the Trustees was appropriate, it should have been made and considered as part of the costs hearing in December 2009. [6] We do not criticise the trustees for not making their application then as they may not have been aware of Mrs X's costs application. However, we consider the present application on the same basis as we would have considered it if it had been before us at the time we were considering costs in December 2009. We are clear that the costs award we made in December would not have been different if the present application had been before us then. We were conscious of the result of the appeal relating to s 182 and this was a factor in the award we made. A separate award of costs in favour of the trustees would involve double counting. [7] The Trust was the vehicle that, prior to their dispute, the parties mutually decided should own a significant part of their combined assets. When there was aneed to distribute relationship property, it was inevitable that the Trust would be involved. We do not see the Trust's position being separate or discrete for the purposes of a costs exercise. The diminution in its funds flowing from the involvement of the Trust in the litigation is simply a consequence of the parties' joint decision to vest property in it. [8] The application by the trustees for costs in the substantive proceedings against Mr X is declined. We make no award of costs in respect of this application.Solicitors: Morgan Coakle, Auckland for Appellant Haig Lyon, Auckland, for First Respondent Taylor Grant Tesiram, Auckland, for Second Rsepondents