Macnamara v Macnamara
[2022] NZHC 1071
•16 May 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-000404
[2022] NZHC 1071
BETWEEN SHERYL ANN MACNAMARA
Plaintiff
AND
NOEL JAMES MACNAMARA
Defendant
CIV-2020-404-000646 BETWEEN
NOEL JAMES MACNAMARA
PlaintiffAND
SHERYL ANN MACNAMARA
First Defendant
SHERYL ANN MACNAMARA, NOEL JAMES MACNAMARA and GRAHAM
LINCOLN WILFRED CRAIG as trustees of the MACNAMARA HOME TRUST
Second Defendants
….Continued overleaf
Hearing: On the papers Judgment:
16 May 2022
JUDGMENT OF WYLIE J
[Costs]
This judgment was delivered by Justice Wylie On 16 May 2022 at 4.00 pm
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar Date:…………………………
MACNAMARA v MACNAMARA [2022] NZHC 1071 [16 May 2022]
SHERYL ANN MACNAMARA, NOEL JAMES MACNAMARA and GRAHAM
LINCOLN WILFRED CRAIG as trustees of the MACNAMARA FAMILY TRUST
Third Defendants
Introduction
[1] I refer to my reserved judgment dated 23 March 2022.1 I granted most of the variations to the consent orders sought by Ms Macnamara in her interlocutory application. I recorded that Mr Macnamara was the unsuccessful party and that both the trustees and Ms Macnamara were entitled to their costs and disbursements. I directed the filing of memoranda.
[2]Those memoranda have now been received.
Mr Macnamara’s notices of application
[3]Mr Macnamara has also filed notices of application seeking:
(a)recall of my judgment or the correction of what is said to be an error; and
(b)leave to appeal.
Both of these applications are opposed by Ms Macnamara. She has filed notices of opposition to the same.
[4] The Registrar is to set these applications down for hearing on the first available date, in consultation with counsel – estimated time, one and a half hours. I direct that any submissions in support are to be filed not less than three working days prior to the allocated fixture date and that any submissions in opposition are to be filed not less than one working day prior to the allocated fixture date. Mr Macnamara, as the applicant, is responsible for preparing the bundle of relevant authorities (if any). The bundle is to be filed and served not less than one day prior to the allocated fixture date.
The claims to costs/disbursements
[5]I now turn to consider the issue of costs.
1 Macnamara v Macnamara [2022] NZHC 547.
[6] The trustees seek scale costs of $10,775 and disbursements of $126.96 – in total $10,881.96. They have annexed to their memorandum their costs calculation. They seek costs in part on a 2A basis and in part on a 2B basis.
[7] Ms Macnamara has calculated scale costs on a 2B basis in the sum of $27,007. She seeks an uplift of 50 per cent on scale costs – taking the total order sought for costs to $40,510.50. Counsel advise that costs in this sum are less than Ms Macnamara’s total (and I assume actual) costs. Ms Macnamara also seeks disbursements of $11,842. The total amount sought is $52,352.50.
[8] Mr Macnamara claims that he was not the unsuccessful party. He argues that only elements of Ms Macnamara’s application were successful. As a result, he argues that there should be no order for costs as between him and Ms Macnamara and that there should be no order that either party pay costs to the trustees, with the result that the trustees’ costs should be met from the trust fund. In the alternative, he argues that Ms Macnamara’s costs ought to be reduced under r 14.7(d) or (g) of the High Court Rules 2016, because “the sting” of Ms Macnamara’s application failed. He takes no issue with the costs calculations made by the trustees, but he does take issue with aspects of the costs calculations made by Ms Macnamara.
[9] Costs are of course in the discretion of the Court.2 The exercise of the discretion is however governed by various well-established principles and it is not unfettered. It is subject to the applicable costs rules set out in the High Court Rules and it must be exercised in a way that is consistent with established principles.3
[10] First, I deal with Mr Macnamara’s assertion that he was not the unsuccessful party.
[11] I have already so held.4 Any challenge to that finding will have to proceed by way of an appeal. Further, and in any event, in my judgment, Mr Macnamara’s assertion is incorrect. Ms Macnamara filed an interlocutory application seeking
2 High Court Rules 2016, r 14.1.
3 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7] and [16].
4 Macnamara v Macnamara, above n 1, at [95].
further directions in relation to the consent orders made by the Court on 27 August 2020 and variations of those consent orders. The application was opposed by Mr Macnamara. After considering the matter, I made orders in terms of paragraphs [1](a), [1](b)(i), [1](b](iii), [1](b)(iv) and [1](b)(vi) of Ms Macnamara’s application. I did not make orders in terms of paragraph [1](b)(ii) of her application because it proposed an alternative order to the order sought in paragraph [1](b)(i). Other variations sought had become otiose and they were not advanced at the hearing. In my view, Ms Macnamara was the successful party. She obtained the orders she was seeking. Mr Macnamara was unsuccessful in his opposition.
[12] One of the general principles applicable to the determination of costs is that the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.5 It follows that, in my judgment, Mr Macnamara is liable to costs awards.
[13] No issue is taken with the quantum of the costs sought by the trustees. Pursuant to r 14.15, the Court must not allow more than one set of costs to defendants unless it appears to the Court that there is good reason to do so. Strictly, the trustees were not defendants. In any event, they, and various steps taken by them, were under direct attack by Mr Macnamara. He was alleging that he was entitled to compensation from the trustees based on principles of quantum merit, or by way of an institutional constructive trust.6 He was challenging various determinations made by the trustees.7 It was argued on his behalf that the circumstances were capable of supporting the conclusion that the trustees had not acted reasonably and that they had become partisan.8 The trustees had no alternative but to become involved.
[14] Mr Macnamara’s allegations were, in my judgment, irrelevant to the issues that I was required to address and I declined to deal with them. Nevertheless, the trustees should be entitled to their costs incurred in being required to participate in the hearing, effectively because of the stance taken by Mr Macnamara. I make an order for costs against Mr Macnamara, in favour of the trustees, in the sum of $10,881.96.
5 High Court Rules, r 14.2(1)(a).
6 See Macnamara v Macnamara, above n 1, at [68].
7 At [71].
8 At [84] and [91].
[15]I turn next to Ms Macnamara’s claim for costs and disbursements.
[16] Various aspects of the costs calculations made by Ms Macnamara are challenged. There is however no challenge to her base assertion that costs should (broadly) be assessed on a 2B basis. In my judgment, this is appropriate. The proceeding was of average complexity, requiring counsel of average skill and experience; the proceedings and the various associated steps would have involved a normal amount of time considered to be reasonable.
[17] Mr Macnamara challenges various steps claimed for by Ms Macnamara. I list them as follows:
(a)filing a memorandum dated 2 June 2021;
(b)filing a memorandum dated 18 June 2021;
(c)preparation of written submissions dated 15 October 2021;
(d)preparation of bundle for hearing on 29 October 2021; and
(e)appearance at hearing on 29 October 2021.
Mr Macnamara asserts that these steps did not form part of Ms Macnamara’s application.
[18] I disagree. The memoranda filed related to Ms Macnamara’s application and addressed matters raised by Mr Macnamara in his notice of opposition and by the trustees. She was seeking a hearing and a timetable. Ultimately, the application came before van Bohemen J. Preparation was required for that hearing as was an appearance. The Judge deferred any decisions on the application until trial and he reserved costs pending the outcome at trial. The trial has now concluded and it is appropriate that costs should now be fixed for all steps taken in bringing the matter to judgment.
[19] Some time allocations claimed were challenged by Mr Macnamara. It was asserted that costs on some matters should be fixed on a band A basis rather than on a band B basis. Again, I disagree. It is a principle underlying the costs regime that costs should be predictable and expeditious.9 This is largely achieved by categorising proceedings and fixing the appropriate daily recovery rate for steps taken to advance them. I have already expressed my view that costs were appropriately claimed on a 2B basis. From Ms Macnamara’s perspective, the various steps taken in advancing the application and in bringing it to judgment required a normal and reasonable amount of time.
[20] One of the disbursements claimed – fees for an expert – was not accepted by Mr Macnamara. While the schedule attached to the submissions challenging the expert’s fees indicated that the issue would be dealt with in submissions, it was not. In any event, there is in my view no proper basis for the challenge. Ms Macnamara obtained a report from an accounting expert, Ms Mistry. She is a chartered accountant. Mr Macnamara had put in evidence a report from Mr Beylefeld, also an accountant. Ms Mistry’s report dealt with Mr Beylefeld’s report and sought to counter it. It was, in my judgment, both appropriate and necessary for Ms Macnamara to obtain Ms Mistry’s report. I allow the disbursement.
[21] I have checked the various steps for which Ms Macnamara claims costs. I am satisfied that each was taken and that the calculations which have been made on a 2B basis have been made correctly. Costs, on a 2B basis, total $27,007.
[22] Ms Macnamara seeks increased costs under r 14.6. This rule provides that the Court can make an order increasing the costs otherwise payable under the Rules, if the party opposing costs has contributed unnecessarily to the time or expense of the proceeding by, inter alia, taking or pursuing an unnecessary step or an argument that lacks merit, or by failing, without reasonable justification, to admit facts or accept a legal argument. The Court can also order increased costs if some other reason exists which justifies the Court making such an order. In short, increased costs can be ordered where there is a failure by the paying party to act reasonably.10
9 High Court Rules, r 14.2(g).
10 Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27(b)].
[23] The Court uplifts from scale and any uplift is not a matter of awarding a percentage of actual costs. The Court of Appeal has provided guidance as to the correct approach when considering an award of increased costs.11 First, the Court should categorise the proceeding under r 14.3. I have done that above. Secondly, the Court should work out a reasonable time for each step in the proceeding under r 14.5. I have considered this above as well. I am satisfied that scale costs have been appropriately assessed on a 2B basis. No extra time has been sought for any particular step under r 14.6(3)(a). Finally, an applicant for costs should step back and look at the costs award he or she would be entitled to and then argue for additional costs under r 14.6(3)(b) if it is considered appropriate to do so. This is what Ms Macnamara has done.
[24] Ms Macnamara argues that Mr Macnamara opposed the application because of grievances he has about the trustees’ decisions to date. She points out that in his notice of opposition he sought to question:
(a)who was entitled to the profits of Oneheat Ltd;
(b)the appropriate accounting for the trusts;
(c)whether he needed to pay rental for use of the Karaka property during the period he paid spousal maintenance;
(d)whether the rental for the remaining period was correct; and
(e)whether either he or Ms Macnamara had increased the costs incurred by the trustees.
It was argued for Ms Macnamara that those issues did not arise on her application. She says that she was nevertheless put to the expense of having to answer the points raised, including by engaging an expert. It was noted that, prior to the hearing before van Bohemen J, Mr Macnamara agreed that any determination by the trustees of the amounts owed by either him or Ms Macnamara should be deducted from the separate
11 Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [40] and [46]–[48].
trusts to be set up in favour of each of them, but that he nevertheless continued to assert that the trustees’ determinations could not be implemented without consideration, by way of full hearing, of each of the issues raised in his notice of opposition. It was also asserted that Mr Macnamara failed to comply with directions of the Court by seeking to expand agreed issues, by filing additional submissions without leave and by continuing to argue for cross-examination, when a decision had already been made that there was to be no cross-examination. It was argued that all of these steps required additional preparation and attendances by Ms Macnamara.
[25] Any increase can only be to reflect how the parties acted during the course of the application before me and not before it.12 Accordingly, I have not taken into account, in considering whether or not costs should be increased, the background to this matter.
[26] In my judgment, there is considerable force in the submissions made for Ms Macnamara. The arguments advanced by Mr Macnamara at the hearing did not directly engage with Ms Macnamara’s application. Rather, he sought to advance a host of peripheral issues, none of which could properly be raised on the papers before the Court. The stance taken by Mr Macnamara contributed unnecessarily to the time taken and the expense of the proceeding. Mr Macnamara failed to file his own application or proceedings. He pursued arguments that lacked any merit in the context of Ms Macnamara’s application. He failed, in regard to Ms Macnamara’s application to vary the consent orders to permit the trustees to determine what proportion of costs incurred by them were caused by him, to address the key issue. He did not engage with recent judgments given in this Court relevant to the issue. Rather, the arguments advanced by him were tendentious and, in part, vituperative. In my judgment, an order for increased costs is appropriate.
[27] Increased costs permit an uplift on scale costs. The Court of Appeal has indicated that any increase above 50 per cent should be rare, given that the daily recovery rate set out in the Rules seeks to reimburse the successful party for two-thirds of the daily rate considered reasonable for the proceeding.13 Counsel for
12 Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [160].
13 Holdfast NZ Ltd v Selleys Pty Ltd, above n 11, at [46]–[48].
Ms Macnamara has however assured me that an uplift of 50 per cent will not take the resulting costs award beyond Ms Macnamara’s total costs incurred. I accept and rely on this assurance.
[28] In my judgment, an uplift of 50 per cent is appropriate, given Mr Macnamara’s conduct in resisting Ms Macnamara’s application. The matter could have been dealt with much more speedily, expeditiously and cheaply if Mr Macnamara had confined himself to the issues raised by Ms Macnamara and not sought to embroil her and the trustees in peripheral arguments which were not open to him on the papers filed.
[29] Accordingly, I award costs against Mr Macnamara, and in favour of Ms Macnamara, in the sum of $40,510.50. I also make an award of disbursements in Ms Macnamara’s favour in the sum of $11,842.
Wylie J
Solicitors/counsel:
Shieff Angland Lawyers, L J Kearns QC, Auckland Claymore Partners Ltd/B O’Callahan, Auckland
LeeSalmonLong, Auckland
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