K P Malcolm Limited v Malcolm HC Rotorua CIV-2008-463-403

[2011] NZHC 917

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

CIV-2008-463-403

BETWEEN  K P MALCOLM LIMITED First Plaintiff

ANDKENNETH PETRIE MALCOLM AND SYLVIA JANE MALCOLM

Second Plaintiffs

ANDLINDA MARGARET MALCOLM First Defendant

ANDCLIVE STUART MALCOLM Second Defendant

Hearing:         (on papers)

Counsel:         E Hudson and D Reynolds for the Plaintiff

M McKechnie for the Defendants

Judgment:      18 August 2011 at 3:00 PM

JUDGMENT OF WOODHOUSE J (Costs)

This judgment was delivered by me on 18 August 2011 at 3:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.

Registrar/Deputy Registrar

……………………………………

Counsel:

Mr E Hudson, Barrister, Hamilton
Mr M McKechnie, Barrister, Rotorua

Instructing Solicitors:

Mr M McGhie, Solicitor, Tauranga

Jensen Waymouth Lawyers Ltd, Solicitors, Taupo

K P MALCOLM LIMITED V MALCOLM HC ROT CIV-2008-463-403 18 August 2011

[1]      There are applications for costs.

[2]      As recorded in the judgment on the substantive issues, dated 18 February

2011, the defendants were the registered proprietors of a farm property, the entire purchase price of which had been provided by the plaintiffs.  The defendants were the son and daughter-in-law of the second plaintiffs.  After some years difficulties arose between the defendants and the second plaintiffs. The defendants left the farm, and at a later date the plaintiffs brought this proceeding.

[3]      Until a few days before the hearing commenced the plaintiffs were claiming to be entitled to the entire beneficial interest pursuant to a resulting trust.  Notice that this claim was not to be pursued was given shortly before the hearing commenced. The principal claim that remained was that the plaintiffs had an entitlement to a share pursuant to a constructive trust.   The issues then became ones largely of quantification.

[4]      Expert quantification evidence was provided on both sides.   The plaintiffs’ accounting expert provided a methodology which was accepted by the first defendant’s accounting expert.[1]     There were differences in the figures relating to financial contributions of the plaintiffs.  In the result, the sum determined as the net value of financial contributions from the plaintiffs was $568,000 as opposed to the calculation of $720,000 by the plaintiffs’ accountant and the calculation of $470,000

by the first defendant’s accountant.  This represented a 32% share of the farm, when the net contribution figure was assessed in relation to the agreed market value at the date of hearing.   A further 5% share was awarded to the plaintiffs in respect of further contributions adjusted against other contributions from the defendants.

[1] The first defendant was the daughter-in-law of the second plaintiff. The second plaintiff ’s son, the

second defendant, did not defend the claim.

[5]     At the conclusion of the substantive judgment I noted that there had, understandably, been no submissions on costs at the conclusion of the hearing.  I said “my provisional, but reasonably firm, opinion is that each party should bear their

own costs”.  Leave was nevertheless reserved to apply for costs.

[6]      Following  delivery  of  the  judgment  time  was  required  for  the  parties’ accounting experts to re-calculate the precise figures in terms of the judgment.  The figure earlier mentioned of $568,000 was agreed in due course.  The first defendant then made an application for costs.   Four grounds were advanced which may be summarised as follows:

(a)      Until the commencement of the trial “it was at the forefront of the plaintiffs’ case that there was an express trust in their favour” and to answer this the first defendant briefed expert evidence from a senior commercial solicitor.  In the event this evidence was not required.

(b)The  opinions  expressed  by  the  farm  consultant  and  accountant engaged for the plaintiffs were “required to be significantly revised as a result of the workings of the” equivalent experts for the first defendant.

(c)      Further  costs  were  incurred  in  determining  the  figure  for  net contributions on the basis of the judgment.

(d)There were some submissions for the plaintiffs which “had little or no prospect of acceptance” and there was reference to [63] of the substantive judgment.

[7]      In a memorandum in reply for the plaintiffs it was stated that at no time prior to the opening of the case for the plaintiffs had the first defendant conceded that the plaintiffs had an interest in the property pursuant to a constructive trust.  In a further memorandum for the first defendant issue was taken with this statement and a further submission on behalf of the second plaintiffs.   That response was provided at my request.  However, in the event I do not consider it is necessary to make any formal determination in this regard.

[8]      The submission on behalf of the plaintiffs responded to further contentions on behalf of the first defendant.  It was then said that the plaintiffs had been prepared to let costs lie where they fell, “as the proceedings were for the benefit of both parties”.

But it was then said that, in the light of the submissions for the first defendant, the plaintiffs now sought costs.

[9]      Having considered the further submissions for both parties I am satisfied that this is a case where my discretion should be exercised by declining to make an order in favour of the plaintiffs or the first defendant.  I agree with the substance of what is contained in the submission for the plaintiffs that the proceedings were for the benefit of both parties.   As happens often enough, the claims advanced for the plaintiffs were modified over time, and it is certainly the case that a significant claim was withdrawn at a late stage.  However, the submissions for the first defendant did not indicate any substantial costs being incurred by the first defendant in respect of the claim that was not pursued.  More importantly, this is a case where the plaintiffs were fully justified in seeking a determination of their share.  Differences remained between the parties and in the event both succeeded to an extent.

[10]     The  fact  that  both  parties  succeeded  to  an  extent  would  often  provide adequate grounds for the parties to bear their own costs.  In addition, this is a case arising out of extended family relationships which unfortunately did not endure in the way that all parties had originally hoped and the overall justice of the case in my judgment warrants a result where, in effect the parties meet their costs from the shares of the farm to which they are now entitled.

[11]     In consequence the applications for costs are dismissed.

Peter Woodhouse J