Castle Marsden Trust Limited v Vowles
[2015] NZHC 1175
•28 May 2015
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CIV-2014-412-000069 [2015] NZHC 1175
BETWEEN CASTLE MARSDEN TRUST LIMITED
Plaintiff
AND
SUSAN MARGARET VOWLES AND SOUTHERN TRUSTEES 2005 LIMITED Defendants
Submissions
received:
19 February 2015 (Defendant); 24 March 2015 (Plaintiff); and
14 May 2015 (Defendant)
Appearances:
L A Andersen for Plaintiff
B C Nevell for DefendantsJudgment:
28 May 2015
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
as to costs
[1] The first-named defendant, Ms Vowles, seeks an order of costs and
disbursements upon the plaintiff’s discontinuance of this proceeding. Rule 15.23
High Court Rules applies so that the plaintiff must pay costs unless the Court otherwise orders.
[2] The second-named defendant, Southern Trustees 2005 Ltd, took only a very preliminary part in this proceeding before retiring as a trustee of the Trust, whose interests were represented by Ms Vowles.
[3] Ms Vowles, on the other hand, has been an active party in the proceeding and seeks costs. She was belatedly a recipient of legal aid for the proceeding. Mr Nevell has properly advised the Court that the total fees and disbursements approved by the Legal Services Agency amount to $5,426.85, which constitutes the sum which the
first-named defendant seeks by way of costs and disbursements. The figure is, as Mr
CASTLE MARSDEN TRUST LIMITED v VOWLES [2015] NZHC 1175 [28 May 2015]
Nevell notes, less than the first-named defendant would have received on a 2B scale basis.
[4] The plaintiff, Castle Marsden Trust Ltd (CMTL), opposes costs. Mr Andersen, for CMTL, submits that this is a case where costs should not follow the discontinuance for three reasons:
(a) the validity of CMTL’s substantive case;
(b) Ms Vowles’ position; and
(c) access to funds to meet any costs award.
Applicable considerations
[5] I adopt the summary of principles as stated by the authors of McGechan on
Procedure which are derived from the leading authorities:1
HR15.23.01 Principles
The following emerge from Kroma Colour Prints Ltd v Tridonicatco NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973 and FM Custodians Ltd v Pati & Ors [2012] NZHC 1902 at [10]-[12]:
(a) Although the r 15.23 presumption is designed to give a certain and predictable outcome upon discontinuance, it may be displaced if the Court finds there are circumstances which make it just and equitable that it should not apply.
(b) Although the Court is not limited in the factors it may take into account when considering whether the presumption is displaced, generally:
(i) The Court will not consider the merits of the respective cases, unless they are so obvious that they should influence the costs outcome.
(ii) The Court will consider the reasonableness of the stance of both parties: whether it was reasonable for the plaintiff to bring and continue the proceeding, and for the defendant to oppose the proceeding up to the point of discontinuance.
(iii) Conduct prior to the commencement of the proceeding may be relevant (for example, if any conduct by a defendant
1 McGechan on Procedure (online looseleaf ed, Brookers) at [HR 15.23.01].
precipitated the litigation), as may be the reason for discontinuing (for example, a change of circumstances rendering the proceeding unnecessary).
(c) The Court’s general discretion in r 14.1 as to costs can also override
the general principles relating to discontinuance.
The three considerations raised by the plaintiff
A The validity of CMTL’s substantive case
[6] CMTL’s claim was brought under s 339(1) Property Law Act 2007. Philip Marsden and Ms Vowles had been unable to agree on the division of their interests following their separation. The home was owned by their family trusts as tenants in common in equal shares. CMTL accordingly sought either an order as to his purchasing the property or such other order as the Court considered appropriate. It
applied for summary judgment. That application was dismissed.2
[7] In dismissing the summary judgment application, I nevertheless recognised that the property needed to be sold. However, because arguments between the parties as to differing equity contributions to the property could not be resolved in a summary judgment context, the Court could not be satisfied that an order of sale was clearly the appropriate resolution. More accurate information was required.3
[8] I accept the thrust of Mr Andersen’s submission that the substantive proceeding was justifiably brought as the parties needed to reach a conclusive determination of their respective interests.
B The defendants’ position
[9] In the evidence filed for the defendants, Ms Vowles identified her aspiration as being that she wished to enable the children to remain in the home until they had grown up. Ms Vowles had four children by a previous marriage (aged between nine and 15 years) and Ms Vowles and Mr Marsden had twin daughters who were five years old at the time of the summary judgment proceeding. Ms Vowles remained the
primary carer of all six children. Although I dismissed the summary judgment
2 Castle Marsden Trust Ltd v Vowles [2014] NZHC 3220.
3 At [70]–[72].
application on the basis summarised above, I nonetheless observed that it had been an unrealistic goal on the part of Ms Vowles to have the plaintiff effectively be locked into co-ownership of the property so long as Ms Vowles has children at home.4
C Access to funds to meet any costs award
[10] The respective family trusts existed to hold the interests (as tenants in common) of each party. Mr Andersen records his instructions in relation to the costs application as being that the only means of CMTL to satisfy a costs award is to realise its interest in the property and to realise the value of a vehicle at present used by Ms Vowles.
[11] Although Mr Andersen submits that those are the only means the plaintiff has to satisfy a costs award, that can only be correct so far as it is a reference to immediate satisfaction. As and when CMTL receives its equity from the property (I am not informed by counsel whether there is any anticipated date at this point) it would appear that CMTL will have the means to satisfy an award.
Explanation of CMTL’s discontinuance
[12] Mr Andersen, in his submissions, explained CMTL’s discontinuance in terms of CMTL’s inability to continue funding loan repayments in relation to the property. CMTL had made all payments of principal and interest while Ms Vowles and Mr Marsden lived together. It paid rates and insurance as well. For a period after the separation in June 2013, the Vowles trustees contributed an estimated 50 per cent of mortgage payments and outgoings but later reduced that to less than 50 per cent. In order to not allow payments to fall into arrears CMTL made up the shortfall by receiving additional funds from Mr Marsden personally. CMTL commenced this proceeding in June 2014 against that background of unequal payments.
[13] Mr Andersen explains the decision of CMTL to discontinue this proceeding thus:
4 At [72].
Mr Marsden has elected not to continue advancing money to the Plaintiff as it is clear there will be no early resolution of this matter and it is possible the money advanced will not be recoverable.
The Plaintiff has discontinued the proceedings as it envisages that action to be taken by the mortgagee will pre-empt any Court decision.
Discussion
[14] CMTL’s discontinuance occurred at a point after its summary judgment application was dismissed but apparently before there has been any agreed resolution between the parties.
[15] The position adopted by CMTL in discontinuing the proceedings is clearly based on practical and, arguably obvious, commercial reasons. It cannot compel Mr Marsden to continue making advances to sustain the property, or indeed to sustain this litigation. It may well be, as Mr Andersen apparently anticipates, that action taken by the mortgagee will either effect a sale of the property or force CMTL and the defendants to themselves sort out the fate of the property.
[16] Notwithstanding the failure of this proceeding to deliver an adjudicated outcome for the parties, the proceeding itself was an appropriate means of seeking a resolution. There was, and remains, a need for the parties’ interests to be clarified and the property’s ultimate ownership determined in the parties’ mutual interests. The defendants themselves could equally have initiated such a proceeding. The inference is that Ms Vowles’ did not wish to be a plaintiff or counterclaim plaintiff because her preference was to maintain the status quo for at least another decade.
[17] By reference to r 14.7(g) High Court Rules, I find this to be case where there is reason justifying the Court either refusing or reducing costs despite the principle that determination of costs should be predictable and expeditious. The substantive proceeding commenced by CMTL provided an appropriate route, or at least incentive, for the parties to find a resolution. That said, CMTL elected to take upon itself the role of plaintiff and, additionally, to pursue its identified remedy by summary judgment.
[18] I conclude that the proceeding was appropriately and responsibly commenced but that it is just, given that CMTL elected to discontinue when unsuccessful at summary judgment, that CMTL meet 50 per cent of what would otherwise be an appropriate order of costs, together with reasonable disbursements to be fixed by the Registrar.
Order
[19] I order:
(a) the plaintiff shall pay the costs of the first-named defendant in the sum of $2,736.25;
(b)the plaintiff shall pay the reasonable disbursements of the first-named defendant, to be fixed by the Registrar; and
(c) there is no order of costs in favour of the second-named defendant.
Associate Judge Osborne
Solicitors:
L A Andersen, Barrister, Dunedin
Ben Nevell Law, Dunedin
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