Macnamara v Macnamara
[2022] NZHC 287
•25 February 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 287
BETWEEN SHERYL ANN MACNAMARA
Plaintiff
AND
NOEL JAMES MACNAMARA
Defendant
CIV-2020-404-000646 BETWEEN
NOEL JAMES MACNAMARA
Plaintiff
AND
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
SHERYL ANN MACNAMARA, NOEL JAMES MACNAMARA AND
GRAHAM LINCOLN WILFRED CRAIG as
trustees of the Macnamara Family Trust Third Defendants
Teleconference: 21 February 2022 Appearances:
L J Kearns QC for S A Macnamara
B O’Callahan and J D Ryan for N J Macnamara J Cundy for Trustees
Judgment:
25 February 2022
JUDGMENT OF VAN BOHEMEN J
[application for leave to appeal]
This judgment was delivered by me on 25 February 2022 at 1.00pm.
Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
MACNAMARA v MACNAMARA [application for leave to appeal] [2022] NZHC 287 [25 February 2022]
Introduction
[1] Mr Macnamara applies for leave to appeal orders made in my minute of 13 December 2021, reissued on 17 December 2021. As recorded in that minute, I declined Mr Macnamara’s application to cross-examine witnesses in the hearing of Ms Macnamara’s application to vary the consent orders made by Moore J on 27 August 2020 (Consent Orders). That hearing has been set down for 14 and 15 March 2022.1
[2] The Consent Orders concern the administration and winding up of two trusts which hold most of the assets of Mr and Ms Macnamara. Prior to the making of the Consent Orders, Mr and Ms Macnamara had both been trustees and beneficiaries of the trusts.
[3]Ms Macnamara opposes the application for leave to appeal.
[4] The independent trustees of the trusts, who had been appointed in accordance with the Consent Orders, abide the Court’s decision.
Relevant background
[5] Mr and Ms Macnamara separated in February 2019. Since then, they have been unable to agree on what should happen to the property of the two trusts.
[6] Ms Macnamara and then Mr Macnamara each filed proceedings. Before their substantive claims were heard, they reached agreement on steps to resolve their property disputes, as recorded in the Consent Orders. Those steps included the retirement of the existing trustees and the appointment of independent trustees, who were to realise the assets of the trusts and settle those assets in new trusts for Mr and Ms Macnamara.
[7] Despite the agreement recorded in the Consent Order, matters have not proceeded smoothly. There were delays over the sale of properties at Pauanui and
1 Macnamara v Macnamara HC Auckland CIV-2020-404-404, 17 December 2021 (Minute of van Bohemen J).
Karaka and disagreements over the operation and valuation of OneHeat Ltd, the underfloor heating business that Mr Macnamara has operated and in which Ms Macnamara had also been involved. As noted in my judgment of 19 November 2021, the resolution of the issues between the Macnamaras has involved a considerable amount of Court time.2
[8] Ms Macnamara considers that Mr Macnamara has tried to frustrate the implementation of the Consent Orders and has been principally responsible for the delays and for the trustees incurring unnecessary and additional costs. For these reasons, Ms Macnamara applied for a variation to the Consent Orders so that unnecessarily incurred costs are not shared equally by the new trusts but are deducted from the assets of Mr Macnamara’s new trust.
[9] Ms Macnamara’s application was set down for a hearing on 29 October 2021. At that hearing, I heard submissions on Ms Macnamara’s application and on how the remaining issues in contention between the Macnamaras might be resolved. As recorded in my minute of that date:3
… it became apparent that all parties were willing to cooperate in finding a means of resolving expeditiously the principal remaining issues in contention between Ms Macnamara and Mr Macnamara, despite their differences on those issues and on other issues concerning the implementation of the Consent Orders.
[10] By consent, I made the directions, which had been prepared by counsel, annexed to that minute.
[11] In accordance with the timetable directions, there was a telephone conference before me on 13 December 2021 for the purpose of setting down Ms Macnamara’s application for hearing.
2 Macnamara v Macnamara [2021] NZHC 3141 at [6].
3 Macnamara v Macnamara HC Auckland CIV-2020-404-404, 29 October 2021 (Minute of van Bohemen J).
My minute of 13 December 2021
[12] As I stated in my minute made after the telephone conference on 13 December 2021:
[2][The timetable] directions addressed three factual matters:
(a)Whether, in the opinion of the independent trustees appointed in accordance with the Consent Orders, the trustees’ costs incurred in implementing the Consent Orders were attributable to the conduct of either Mr Macnamara or Ms Macnamara;
(b)Whether Mr Macnamara’s liability for rental for the former matrimonial home at Karaka should take into account Mr Macnamara’s payment of spousal maintenance for Ms Macnamara;
(c)Whether the trustees’ assessment that there has been an overpayment by Oneheat Ltd to Mr Macnamara should be revised to take into account Mr Macnamara’s personal goodwill over the period of the asserted overpayment, and any consequential issues arising from any such adjustment.
[3] The directions also set out the process for determining how those matters were to be resolved, namely the setting down of a further hearing on those matters.
[4] The directions also recorded that they did not preclude Mr Macnamara, Ms Macnamara or the trustees from applying for other orders in relation to other issues arising from the Consent Orders but that any such application would be considered separately unless the Court directed otherwise.
[5] Counsel for Mr Macnamara, Ms Macnamara and the trustees complied with the timetable in the directions, albeit with some slippage agreed to by consent.
[6] Counsel for Ms Macnamara and the trustees have also complied with the substantive import of the directions by addressing the matters at [2] above.
[7] In terms of hearing time, Ms Kearns, counsel for Ms Macnamara, submits that a one-day hearing limited to submissions would be sufficient to consider those matters.
[8] The submissions of counsel for Mr Macnamara have ranged more broadly.
[9] In his submissions dated 19 November 2021, Mr O’Callahan, counsel for Mr Macnamara has sought:
(a)to put in issue:
(i)the basis of the trustees’ assessment of Mr Macnamara’s financial obligations as director and employee of Oneheat;
(ii)the value of Ms Macnamara’s contributions as a director and employee of Oneheat; and
(b)to explore the possibility of Mr Macnamara seeking compensation against the trustees based on the principles of quantum meruit and institutional constructive trust and a review of the trustees’ actions in accordance with s 126 of the Trusts Act 2019.
[10] In addition, in his submissions dated 1 December 2021, Mr O’Callahan seeks to put in issue the validity and probity of the trustees’ actions and costs and their impartiality as independent trustees.
[11] In his submissions dated 10 December 2021, Mr O’Callahan seeks to put in issue additional matters, including the validity of a statement in Ms Kearns’ submissions regarding an alleged threat by Mr Macnamara against Ms Macnamara.
12] On the basis of these submissions, Mr O’Callahan submits that a five- day hearing is required, allowing three days for cross examination of witnesses, namely Ms Macnamara, Ms Macnamara’s expert, Ms Mistry, and the trustees.
[13] As I said at the telephone conference, I consider most of the matters that Mr Macnamara seeks to put in issue through Mr O’Callahan’s submissions to be well beyond the scope of my directions and of these proceedings.
[14] These proceedings are focused on implementing the Consent Orders. As recognised by the Consent Orders, Mr Macnamara has been removed as a trustee of the Macnamara Home Trust (Home Trust) and the Family Trust and consented to the appointment of the independent trustees. Consequently, Mr Macnamara has no right to oversee or second guess the decisions of the trustees short of an application by him as a beneficiary alleging breach of trust. No such application has been made or would be appropriate in the current proceedings.
[15] For these reasons, I do not accept that Mr Macnamara has established any adequate basis for the Court to allow cross-examination of the trustees, bearing in mind that the hearing is for the purposes of determining Ms Macnamara’s interlocutory application. Given that Mr Patterson’s affidavit of 15 November 2021 and the accompanying memorandum were provided in response to a Court direction and not in support of or in opposition to Ms Macnamara’s application, r 7.28 of the High Court Rules 2016 does not apply. Even if it did apply, I do not consider that special circumstances exist that would warrant an order for the attendance of the trustees for the purposes of cross-examination.4
4 Mr Patterson is one of the two independent trustees.
[16] In discussion, Mr O’Callahan agreed that the question of whether Mr Macnamara made the alleged threat to Ms Macnamara is irrelevant to the issues that have to be decided. Accordingly, there is no basis for requiring Ms Macnamara to be cross-examined. I am also satisfied that the issues Mr O’Callahan wishes to address with regard to Ms Mistry’s affidavit can dealt with way of submission.
[13] For these reasons, I held that cross-examination of witnesses was not required and that the hearing would be on the basis of submissions only.
Mr Macnamara’s application for leave to appeal
[14] Mr Macnamara contends that I erred in ruling that the affidavits of Ms Macnamara, Ms Mistry and Ms Patterson can be read without those deponents being available for cross examination. Specifically, Mr Macnamara says I erred in failing to identify that the issues to be determined are, substantively, issues that would ordinarily be before the Court on applications under pt 18 of the High Court Rules 2016 and that, in accordance with r 18.15(1)(b), evidence must be given by affidavit in accordance with rr 9.72 to 9.89.
[15] Mr Macnamara also advances other grounds to support his assertion that contested matters of fact and opinion in the relevant evidence cannot be adequately determined without cross-examination.
[16] At a telephone conference on 21 February 2022, Mr O’Callahan explained that an additional reason for seeking leave to appeal was that the effect of s 56(5) of the Senior Courts Act 2012 is that, if Mr Macnamara did not seek leave to appeal my decision that witnesses were not required for cross-examination, he would be precluded from challenging any decision that may result from the hearing in March if he should conclude that he might have obtained a different outcome if the witnesses had been subjected to cross-examination.
Considerations relevant on an application for leave
[17] In Greendrake v District Court of New Zealand,5 the Court of Appeal, referencing the decision of Fitzgerald J in Finewood Upholstery Ltd v Vaughan,6 agreed that the requirement for leave to appeal should serve as a “filtering mechanism,” to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance to either the parties or more generally, do not unnecessarily delay the proceedings in which the orders were made.
[18] The Court of Appeal in Greendrake also recognised the following considerations as relevant to an application for leave to appeal:
(a)a high threshold exists;
(b)the applicant must identify an arguable error of law or fact;
(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;
(d)the circumstances must warrant incurring further delay; and
(e)the ultimate question is whether the interests of justice are served by granting leave.
Analysis
[19] As Fitzgerald J said in Finewood Upholstery, the Court hearing an application for leave to appeal from an interlocutory order needs to stand back and assess, in a pragmatic and realistic way, whether the interests of justice are served by granting leave to appeal. As Her Honour also said, it is necessary to bear in mind the inherent tension of being both the Judge who delivered judgment in the matter and the Judge who must consider whether that judgment discloses arguable errors of law or fact.7
5 Greendrake v District Court of New Zealand [2020] NZCA 122 at [6].
6 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].
7 At [14] and [15].
The alleged error
[20] Mr Macnamara’s application is indirect in its identification of error. It says that, in accordance with r18.15(1)(b) and 9.74 of the High Court Rules 2016, r 9.74(3) should apply because, ordinarily, the issues to be determined at the hearing would be before the Court under pt 18 of the Rules.8
[21] The application does not address the applicability of r 7.28, which was the rule discussed in submissions at the hearing on 13 December 2021 and to which I referred at [15] of my minute of that date. I infer, however, that the import of the application is that I erred in considering the application that witnesses should be available for cross-examination under pt 7 of the High Court Rules rather than under pts 9 and 18.
[22] The difficulty with that proposition is that pt 9 of the High Court Rules applies to evidence to be given at the dispositive phase of a proceeding. For interlocutory applications, pt 7 applies. That must also be so with respect to interlocutory applications made in a proceeding brought under pt 18, as was the case with Ms Macnamara’s proceeding as set out in her statement of claim dated 4 March 2020.
[23] Under r 1.3 of the High Court Rules, “interlocutory application” means an application made in accordance with rr 7.19 or 7.41. Ms Macnamara’s application states that it is made in reliance on rr 7.19 and 7.43 of the Rules. It is titled “INTERLOCUTORY APPLICATION FOR FURTHER DIRECTIONS AND VARIATION OF CONSENT ORDERS DATED 27 AUGUST 2020”. No objection was made by Mr Macnamara to the form or content of Ms Macnamara’s application.
[24] For these reasons, I am satisfied that Ms Macnamara’s application is interlocutory. It follows that pt 7, subpt 2 of the Rules applies. I find it difficult to accept, therefore, that it is even reasonably arguable that I made an error of law in considering the application under pt 7 of the High Court Rules.
8 Under r 9.74(3), a person desiring to cross-examine a person who has sworn or affirmed an affidavit in support of an opposite party may serve on that party a notice requiring the production of that person for cross examination. The rule also provides that the affidavit of a person who is not produced must not be used as evidence unless the evidence is routine or there are exceptional circumstances and, in either case, the Court grants leave.
The gravity of the alleged error
[25] Even if it is accepted that it is arguable that the trustees, Ms Macnamara and Ms Mistry should been made available for cross-examination in accordance with pts 9 and 18 of the High Court Rules, I do not consider that the error is of general or public importance warranting determination or otherwise of sufficient importance to Mr Macnamara to outweigh the lack of general or precedential value.
[26] First, even if r 9.74(3) applies, it does not apply to the trustees. Mr Patterson is an independent trustee. His affidavit is made pursuant to the consent directions I made on 13 December 2021. It is not made on behalf of any party opposite to Mr Macnamara. Accordingly, notice could not have been served on the trustees under the rule.
[27] Secondly, as recorded at [16] of my minute of 13 December 2021, whether or not Mr Macnamara made the alleged threat to Ms Macnamara is irrelevant to the issues that have to be decided. Accordingly, any cross-examination directed at that question would be inadmissible in accordance with s 7(2) of the Evidence Act 2006.
[28] Thirdly, Ms Mistry is giving evidence as an expert on the appropriateness of the drawings taken from OneHeat by Mr Macnamara. Her evidence is made in response to the evidence of Mr Beylefeld who prepared a report on behalf of Mr Macnamara. The matters on which the experts give evidence are not of general or public importance. I am also satisfied that they are not of sufficient importance to Mr Macnamara to outweigh the lack of general or precedential value. The issues are clearly set out in the experts’ reports and will be the subject of submissions.
Do the circumstances warrant further delay?
[29] This proceeding commenced on 5 March 2020. Despite the Consent Orders being made on 27 August 2020, the parties have continued to spar over their implementation. Mr Macnamara, in particular, has regularly taken issue with the decisions of the independent trustees to whose appointment he consented.
[30] If leave is granted, the hearing set down for 14 and 15 March 2022 will have to be vacated. Given the current pressure on the Court schedule, another two day fixture would be unlikely before late 2022 or early 2023. A five day fixture, which is the length of time advocated by Mr O’Callahan, would not be possible in 2022. To grant leave would mean a further delay of at least six months and possibly more.
[31] It is quite unsatisfactory that a proceeding in respect of which Consent Orders were made and independent trustees appointed to implement those Orders remains unresolved two years after the proceeding commenced and 18 months after the Orders were made. I am more than satisfied that the appeal that Mr Macnamara seeks leave to bring does not warrant further delay.
Overall interests of justice
[32] For all these reasons, and standing back and assessing in a pragmatic and realistic way whether the interests of justice lie in granting leave to appeal, I am satisfied that leave to appeal should not be granted.
Result
[33] For all the above reasons, Mr Macnamara’s application to for leave to appeal is dismissed.
Costs
[34] Ms Macnamara and the trustees are entitled to costs on a 2B basis on Mr Macnamara’s application for leave to appeal.
G J van Bohemen J
Counsel/ Solicitors:
L J Kearns QC, Barrister, Auckland B O’Callahan Barrister, Auckland
Claymore Partners Limited, Auckland Shieff Angland Solicitors, Auckland Lee Salmon Long, Auckland
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