Kenealy v Morton-Jones - [2015] NZHC 297

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2014-404-1237 [2015] NZHC 297

BETWEEN
TIMOTHY WILLIAM KENEALY

Plaintiff

AND

ALAN STUART MORTON-JONES First Defendant

GRAEME ALASTAIR MORTON-JONES Second Defendant

Hearing: (on the papers)

Counsel:

B Gustafson and S J Nicolson for Plaintiff
P J Kennelly for First and Second Defendants

Judgment:

27 February 2015

JUDGMENT OF HEATH J

This judgment was delivered by me on 27 February 2014 at 11.00am pursuant to
Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar

Solicitors:
Lowndes Jordan, Auckland Kennelly Law, Orewa Counsel:
B Gustafson, Auckland

KENEALY v MORTON-JONES [2015] NZHC 297 [27 February 2015]

Introduction

[1] Dr Kenealy entered into an agreement with Messrs Alan and Graeme Morton- Jones to acquire investment properties. He contends that it had the status of a partnership. The participants intended to garner profits from rent and the benefit of any capital gains. On 23 May 2014, Dr Kenealy issued proceedings in this Court alleging misconduct on the part of Messrs Morton-Jones. He sought an order
dissolving the partnership, and ancillary relief.1

[2] On the same day, Dr Kenealy made an application for an interim injunction. That application was designed to restrain Mr Alan Morton-Jones from dealing with funds in a partnership bank account to prevent Messrs Morton-Jones from obstructing or interfering with the mortgagee sale of one of the partnership properties, in Greenway Rise, Gulf Harbour.

[3] The interim injunction application came before Andrews J on 23 May 2014. It was adjourned to the Duty Judge List on 28 May 2015, for timetabling directions and the allocation of a hearing. Directions were made by Faire J on 28 May 2014, and the application adjourned for further mention on 25 June 2014, after a notice of opposition, affidavits in opposition and reply affidavits had been filed and served. At that time, Messrs Morton-Jones appeared in person but indicated an intention to instruct solicitors to oppose the application.

[4] The interim injunction was listed for further mention on 25 June 2014, when Katz J allocated a half day fixture. Subsequently, a memorandum indicating that settlement might be reached was filed. When the application came before Lang J on
3 November 2014, a hearing was allocated for 19 February 2015. That hearing was vacated following withdrawal of the application.

Costs applications

[5] Notwithstanding the fact that Dr Kenealy withdrew his application, he seeks costs against Messrs Morton-Jones. He does so on the basis that a settlement was
reached rendering the need for the relief sought to be granted. It is unnecessary to

1 Partnership Act 1908, ss 32, 38 and 44.

traverse the reasons for that. Messrs Morton-Jones also seek costs on the basis that no order was made against them.

[6] Mr Gustafson, for Dr Kenealy, acknowledges that the application should be treated in a manner akin to the discontinuance of a proceeding.2 Generally, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant.3 On a discontinuance, it is necessary for…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Kenealy v Morton-Jones

Details

AGLC: Kenealy v Morton-Jones [2015] NZHC 297
Case: [2015] NZHC 297
Decision Date: 27 February 2015

CaseChat Overview and Summary

Dr Kenealy filed proceedings against Messrs Alan and Graeme Morton-Jones, alleging misconduct in relation to the acquisition of investment properties. The parties intended to form a partnership to gain profits from rent and capital gains. Dr Kenealy sought an order dissolving the partnership and ancillary relief. He also made an application for an interim injunction to prevent Messrs Morton-Jones from dealing with partnership funds and interfering with the mortgagee sale of one of the partnership properties. The interim injunction application was withdrawn, but Dr Kenealy sought costs on the basis that a settlement was reached. Messrs Morton-Jones also sought costs on the basis that no order was made against them.

The court had to determine whether to award costs to Dr Kenealy or Messrs Morton-Jones. The court considered the principles of costs on discontinuance of a proceeding and withdrawal of an application for interim relief. The court noted that it is generally reluctant to embark into an inquiry on the merits or conduct of parties in cases where an application is withdrawn or a proceeding discontinued. The court also considered that the merits of the application for interim relief in this case may coincide with or be different from the merits of the substantive proceeding. The court decided that it was not appropriate to address the respective merits of the cases advanced by the parties, or their conduct, on the application for interim relief.

The court fixed costs on a 2B basis, together with reasonable disbursements, but reserved the incidence of those costs until determination of the substantive proceeding. The court directed the Registrar to allocate a case management conference before an Associate Judge as soon as practicable, in order to progress the substantive proceeding.

The court's decision was based on the principles of costs on discontinuance of a proceeding and withdrawal of an application for interim relief. The court considered that it was not appropriate to address the respective merits of the cases advanced by the parties, or their conduct, on the application for interim relief. The court fixed costs on a 2B basis, together with reasonable disbursements, but reserved the incidence of those costs until determination of the substantive proceeding. The court also directed the Registrar to allocate a case management conference before an Associate Judge as soon as practicable, in order to progress the substantive proceeding.

Orders