Chi v Yan
[2019] NZHC 3489
•20 December 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-1944
[2019] NZHC 3489
UNDER the Property (Relationships) Act 1976 IN THE MATTER
of an appeal
BETWEEN
TYRONE NGAE CHI
First Appellant
KO HOE NGAE
Second AppellantCHING YUN KONG
Third AppellantAND
AMANDA KOH SHEE YAN
Respondent
Hearing: On the papers Counsel:
D Zhang and S Boon for appellants
NA Farrands and PWG Ahern for respondent
Judgment:
20 December 2019
JUDGMENT OF FITZGERALD J
[As to costs]
This judgment was delivered by me on 20 December 2019 at 3 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Amicus Law, Auckland (R Zhao)
Morrison Kent, Auckland
Ngae v Koh [2019] NZHC 3489 [20 December 2019]
Introduction
[1] The first appellant, Mr Ngae, and the respondent, Ms Koh, were previously in a de facto relationship. When that relationship came to an end, issues arose as to whether they had indeed been in a de facto relationship, and if so, what the appropriate division of relationship property should be. The key asset in question is a residential property in Mt Wellington (the Property) of which Mr Ngae and Ms Koh are registered proprietors. The second and third appellants, Mr Ngae’s parents, argued that the Property was in fact held (in its entirety) on trust for them.
[2] These matters were the subject of a claim in the Family Court. In resolving that claim the Family Court Judge held that there was a de facto relationship, and made rulings as to the division of relationship property between Mr Ngae and Ms Koh.1 The Judge dismissed Mr Ngae’s parents’ claim of a trust, largely on the basis of a gifting certificate signed by Mr Ngae’s mother and given to the bank providing a loan to purchase the Property at that time.
[3] Mr Ngae and his parents appealed to this Court, though not in relation to the finding a de facto relationship existed. The basis of the appeal was again that the Property, in its entirety, was held on trust for Mr Ngae’s parents (being either an express, constructive or resulting trust).
[4] As a result of discussion with counsel at the hearing, the claim that the entirety of the Property was held on trust for Mr Ngae’s parents was abandoned (by way of memorandum from counsel for the appellants after the appeal hearing), with the trust claim confined to that portion of the Property reflecting funds advanced by Mr Ngae’s parents and contributing to the purchase price. In my substantive judgment, I upheld that trust claim (on a resulting trust basis).2 As result of this finding, I also made consequent amendments to the division of relationship property between Mr Ngae and Ms Koh.
1 Koh v Ngae [2018] NZFC 6072.
2 Ngae v Koh [2019] NZHC 2466.
[5] At the conclusion of my substantive judgment, I addressed the question of the costs of the appeal. I stated the following:3
It would be in the parties’ interests to agree costs of the appeal. Given the outcome on the appeal, it may be appropriate that costs lie where they fall. While the appeal has been successful in part, a key basis upon which the appeal was brought, namely that the entire Property was held by Mr Ngae and Ms Koh on an express trust for the second and third appellants, was misconceived, and abandoned after the hearing in any event. The trust argument on which the second appellant has been successful was adopted in the appellants’ post-hearing memorandum only. On the balance of the issues, there has been mixed results for the parties. The overall result, particularly relative to the costs of pursuing this matter to a hearing, remains in line with that predicted by Hinton J.
[6] The parties have since conferred but not been able to agree on the costs of the appeal. The appellants seek costs on a 2B scale basis, while Ms Koh says that my initial and non-binding view that costs should lie where they fall ought to be the final costs outcome.
Submissions
Appellants’ submissions
[7] Counsel for the appellants has put before the Court copies of two “without prejudice save to costs” offers made by the appellants to Ms Koh. Those offers followed a judgment of Hinton J delivered on 25 March 2019 dealing with the appellants’ application to adduce (substantial) further evidence on the appeal.4 The Judge largely rejected that application, though permitted some further evidence on whether funds in a bank account in Ms Koh’s name were separate or relationship property to be adduced on the appeal, given new information on that account emerging after the Family Court judgment. In Hinton J’s judgment, and based on counsels’ advice to the Court that the Property was worth no more than about $1 million, she noted that the amounts in issue were extremely limited and firmly encouraged the parties to settle.
3 At [133].
4 Ngae v Koh [2019] NZHC 566.
[8] The above encouragement is presumably what led to the two settlement offers being made by the appellants. In the first offer, made about two weeks following the release of Hinton J’s judgment, the appellants offered to pay Ms Koh $52,000 in full and final settlement of the substantive dispute, together with $18,000 as full and final settlement of Family Court costs. In a further offer made on 29 April 2019, the appellants increased their offer on the substantive proceedings by $10,000 to $62,000 in full and final settlement of the substantive dispute.5
[9] The appellants note that as a result of the appeal judgment, and on the assumption the Property is still worth around $1 million, Ms Koh will receive only about $5,000 plus three years’ interest (at 5%). My substantive judgment also quashed the Family Court costs judgment, and the Family Court will need to reconsider costs in light of the appeal judgment. As the indicative amount to be paid to Ms Koh as a result of the appeal is significantly less than the April 2019 offers, the appellants submit that it was unreasonable for Ms Koh to reject the offers and force the appellants to proceed on the appeal.
[10] While the appellants would have ordinarily sought increased costs in such circumstances, they seek standard 2B costs plus disbursements only, given the indications in my substantive judgment that both parties had some measure of success on the appeal.
Ms Koh’s submissions
[11] Counsel for Ms Koh submits that the appellants’ position that the offers made subsequent to Hinton J’s judgment are substantially better than the sum likely to be due to Ms Koh on the appeal is wholly dependent on the Property only being worth around $1 million. Ms Koh says that that issue remains at large. Ms Koh provides with her submissions on costs an October 2019 appraisal of the Property which indicates a sale price may be in the range of $1.128 million to $1.207 million. Ms Koh notes that if the true value of the Property is at the higher end of this range or even
5 The second offer did not deal with the position of costs in the Family Court, which was presumably maintained on the basis set out in the first offer.
exceeds it, then the amount to be recovered by her is significantly in excess of the amount that was offered by the appellants.
[12] Given this, Ms Koh submits that it was not unreasonable for her to turn down the offers, given they were reliant on the value of the Property, and the uncertainty of that in the absence of a market sale. For these reasons, Ms Koh’s position is that costs on appeal should lie where they fall.
Approach
[13] Costs are at the discretion of the Court. The overarching principle is that costs follow the event and ought to be awarded to the successful party. Where a party who is prima facie the successful party overall has nevertheless failed on some issues which significantly increased the unsuccessful party’s costs, or has otherwise taken steps or engaged in conduct unnecessarily adding to the time and cost of the proceedings, the appropriate approach may be to reduce the costs that would otherwise be awarded, or even make an order that costs ought to lie where they fall. It would generally be unprincipled to make a positive costs award in favour of a losing party.
[14] There is also no doubt that when fixing costs, the Court may take into account any pre-trial settlement offers made on a without prejudice save as to costs basis. In this context, it is important to consider the context in which an offer is made, in order to assess whether a failure to accept it was unreasonable and thus ought to sound in costs consequences. The onus is on the party claiming costs on the basis of the rejection of an offer to persuade the Court that the award is justified. That party must satisfy the Court that the failure to accept the offer of settlement was unreasonable. Importantly, the reasonableness of the rejection is to be assessed at the time of the rejection, not just against the subsequent result at trial.6
Discussion
[15] The appellants were overall the successful parties on the appeal. While not successful to the full extent of their claim, a key issue was whether the Property was
6 Easton Agricultural Ltd v Manawatu-Wanganui Regional Council, HC Palmerston North CIV-2008-454-31, 22 December 2011, at [12].
held on trust for Mr Ngae’s parents. As noted above, I ultimately found that that portion of the Property reflecting the funds advanced by Mr Ngae’s parents towards its purchase price was held by Mr Ngae and Ms Koh on a resulting trust.
[16] Despite this, however, and as set out in the extract from my substantive judgment quoted at [5] above, the argument pursued on the appeal was that the entire Property was held on trust for the parents. Further, the precise legal foundation for that proposition was unclear, being variously expressed as an express trust, a constructive trust or a resulting trust. As I noted at the conclusion of my substantive judgment, the argument pursued both before the Family Court and initially on appeal that the entire Property was held on trust for the parents (and that Ms Koh was somehow a volunteer to its purchase) was misconceived.
[17] Further, I accept that if, and if so to what extent, the settlement offers represent a materially better position than Ms Koh’s ultimate position on the appeal is uncertain, given the true value of the Property is unknown. What is important, however, is the reasonableness or otherwise of Ms Koh’s steps in declining to accept those offers at the time they were made.
[18] In this context, it is also correct that the value of the Property at that time was unknown. The offers were based on a value of around $1 million. I note that a value in this range was in fact suggested by both parties to Hinton J, as reflected in her judgment on the admissibility of further evidence.7 Despite that, however, I accept that in the absence of a sale, there was some uncertainty as to the actual figure. Further, at the time the offers were made, the appellants were pursuing their appeal to this Court on the basis that Ms Koh retained no interest in the Property.
[19] Given this, and the ultimately confused and in parts misconceived basis for the appellants’ trust claims, I do not consider it was unreasonable for Ms Koh to reject the April 2019 offers, at least to the extent required to have a substantive impact on costs of the appeal. I accordingly consider the position outlined (on an initial and non- binding basis) in my substantive judgment, namely that costs ought to lie where they fall, is indeed the appropriate outcome. Ultimately, the appellants were successful on
7 Ngae v Koh [2018] 566, at [35].
an issue which only arose during the course of the appeal hearing itself and after the primary arguments advanced on appeal had been abandoned. There is no doubt that that approach to the appeal would have significantly increased the respondent’s costs in the context of arguments that were not successful. There was, as noted in my substantive judgment and responsibly accepted by the appellants, mixed success on the remaining property relationship issues.
[20]I accordingly make an order that costs on the appeal are to lie where they fall.
Fitzgerald J
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