Macnamara v Macnamara
[2021] NZHC 3141
•19 November 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-000404
[2021] NZHC 3141
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
Hearing: 29 October 2021 (by VMR) 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:
19 November 2021
JUDGMENT OF VAN BOHEMEN J
This judgment was delivered by me on 19 November 2021 at 3.30pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
MACNAMARA v MACNAMARA [2021] NZHC 3141 [19 November 2021]
Introduction
[1] Sheryl Macnamara has applied for further directions and a variation of consent orders made by Moore J on 27 August 2020 (Consent Orders) regarding the resolution of issues concerning two trusts which are to be wound up and their assets distributed between Ms Macnamara and her former husband, Noel Macnamara.
[2] Mr Macnamara opposes the orders in the terms sought and proposes that there be a hearing to resolve the issues between the parties.
[3] The trustees of the trusts generally do not oppose the orders sought and have said they will abide the Court’s decision.
[4] At the hearing of Ms Macnamara’s application on 29 October 2021, it became apparent that all parties were willing to cooperate in finding a means of resolving 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. As annexed to my minute issued following the hearing, I made timetable directions for that purpose by consent.1
[5] Notwithstanding those directions, Ms Kearns QC, counsel for Ms Macnamara, asked that I issue a judgment on Ms Macnamara’s application to this point.
Background
[6] The resolution of the issues between Ms Macnamara and Mr Macnamara has involved a considerable amount of Court time over the past 18 months. For convenience, I adopt the description of the background to these proceedings given by Venning J in a judgment issued on 10 September 2021:2
[2] Sheryl and Noel Macnamara separated in February 2019. Most of their assets were held in two trusts, the Macnamara Home Trust (Home Trust) and the Family Trust. In broad terms, the Home Trust held property and the Family Trust held 998 of the 1,000 shares in Oneheat Limited. Both Mr and
1 Macnamara v Macnamara HC Auckland CIV-2020-404-404, 29 October 2021 (Minute of van Bohemen J).
2 Macnamara v Macnamara [2021] NZHC 2361.
Mrs Macnamara were trustees of the Trusts as was Mrs Macnamara's father, Mr Craig.
[3] Following their separation Mr and Mrs Macnamara have been unable to agree what was to happen to Trust property. The Trusts were not able to be administered.
[4] Mrs Macnamara filed a claim (the 404 proceedings) in relation to the Home Trust seeking, amongst other things, the appointment of an independent trustee. In separate (the 646) proceedings, Mr Macnamara filed a similar claim in relation to both Trusts.
[5] Before the applications were heard the parties agreed to a number of consent orders including the retirement of the existing trustees and the appointment of Mr Patterson and Mr Darlow as independent trustees. The trustees were to realise the assets of the Trusts and resettle the net assets to new trusts for Mr and Mrs Macnamara. Orders to that effect together with a number of ancillary orders were made by consent on the 27 August 2020.
[6] Unfortunately, the appointment of the trustees has not resolved the ongoing conflict between Mr and Mrs Macnamara. In February 2021, Downs J was required to consider an application by Mr Macnamara for further directions and also an application by the trustees relating to the realisation of an asset of the Home Trust. There were then further issues in relation to the sale of one of the Trust's properties. Those issues required the involvement of another judge, Muir J.
[7] On 2 June 2021 Mrs Macnamara made application for further directions and variation of the consent orders. That application is opposed by Mr Macnamara and is scheduled for hearing on 29 October 2021.
[7] The hearing before me was that referred to at [7] of Venning J’s judgment. Venning J’s judgment relates to a discrete issue that is not relevant to Mrs Macnamara’s application.
Mrs Macnamara’s application
[8] Mrs Macnamara’s application is premised on her view that Mr Macnamara has sought to frustrate the implementation of the Consent Orders and, in so doing, has caused the trustees to incur unnecessary and additional costs which, she considers, should be borne by Mr Macnamara and should not be deducted equally from the assets of the new trusts that are be established in accordance with the Consent Orders.
[9] Mrs Macnamara also seeks orders in relation to outstanding issues regarding the rental to be paid by Mr Macnamara for occupation of the former family home at Walters Road, Karaka (Karaka Property) between the time of their separation and the
sale of the Karaka Property, and the money said to be owed by Mr Macnamara to Oneheat Ltd, the company through which Mr Macnamara operated his underfloor heating business.
[10] Leaving aside questions that have already been resolved, Mrs Macnamara seeks:
(a)Orders that the trustees be directed to deduct from the trust to be established in Ms Macnamara’s favour:
(i)Half the rental they determine that Mr Macnamara owes the Home Trust for occupation of the Karaka Property; and
(ii)Half the amount that they determine that Mr Macnamara owes to Oneheat for unauthorised drawings and unauthorised salary;
(b)The Consent Orders to be varied so that:
(i)the trustees shall determine what proportion of the trustees’ costs in implementing the Consent Orders is attributable to Mr Macnamara’s unreasonable conduct, or, in the alternative, a hearing be set down to determine the costs attributable to Mr Macnamara’s conduct based on a memorandum to be prepared by the trustees of their costs incurred in implementing the Consent Orders and the trustees’ views on the costs attributable to Mr Macnamara’s conduct;
(ii)the costs attributable to Mr Macnamara’s conduct, a costs order against Mr Macnamara for an earlier step in the proceedings and the trustees’ costs on the present application are deducted from the trust to be established in Mr Macnamara’s favour and credited to the trust to be established in Ms Macnamara’s favour;
(iii)any costs incurred by the trustees as a result of Mr Macnamara failing to vacate the Karaka Property or by causing damage to the Karaka Property are deducted from the trust to be established in Mr Macnamara’s favour and credited to the trust to be established in Ms Macnamara’s favour;
(iv)the trustees implement the recommendations of Mr Tauber, a chartered accountant retained by the trustees, regarding the winding up of Oneheat; and
(v)Mr Macnamara meets the costs of the present application.
Hearing on 29 October 2021
The trustees’ position
[11] By memorandum dated 13 August 2021, Mr Cundy, counsel for the trustees, set out the trustees’ position on Ms Macnamara’s application. The memorandum advised that, with one qualification, the trustees did not oppose the orders sought and would abide the decision of the Court. The qualification was that the trustees considered that determination of what proportion of their costs was attributable to Mr Macnamara’s conduct, as envisaged in [10(b)(i)] above, was a matter for the Court. However, the trustees were prepared to file a memorandum setting out their costs incurred in implementing the Consent Orders and their views on the costs attributable to Mr Macnamara’s conduct as envisaged in the alternative order in [10(b)(i)].
[12] Mr Cundy reaffirmed that position at the hearing on 29 October 2021 and, with encouragement from counsel for the Macnamaras and from me, stayed for the duration of the hearing and contributed to the discussion.
Submissions of counsel for Ms Macnamara
[13] In her submissions, Ms Kearns acknowledged the courts’ caution in varying or setting aside orders made by consent, as discussed by the Court of Appeal in Butcher
v Finnigan,3 and more recently by Jagose J in Gibson v Official Assignee.4 Ms Kearns also referred to Stead v The Ship “Ocean Quest of Arne”, where Thomas J had no doubt that the Court has an inherent jurisdiction to vary consent orders to ensure that the dictates of justice are served,5 and to the Court of Appeal’s decision in Waitemata City Council v MacKenzie, where Casey J accepted that the Court has inherent jurisdiction to set aside a consent order in certain circumstances if the interests of justice require that.6 Ms Kearns submitted that those cases established the Court’s jurisdiction to vary the Consent Orders, even if opposed by Mr Macnamara.
[14] Ms Kearns also acknowledged that there is a question about the powers of trustees to make unequal distributions among beneficiaries when winding up an estate, even where the actions of one of those beneficiaries have been found to have significantly increased the costs incurred by the trustees. In Monk v Burgess, Davison J had held that, in the circumstances of that case, such an unequal distribution could not be made because on the terms of the will under which the estate was being administered.7 On the other hand, in Cochrane v Bettley, Walker J was satisfied that she had the power to determine that the costs of that proceeding could be deducted from one beneficiary’s share of the residue of an estate and trust because of the way the estate had been structured.8 Ms Kearns submitted that the fetter that had applied in Monk v Burgess, namely the terms of the will, did not apply in the present case and that the Court has the power to direct that some of the trustees’ costs be deducted only from Mr Macnamara’s share of the redistribution of assets and credited to Ms Macnamara’s share.
[15] Ms Kearns accepted that the distance between the positions of Ms Macnamara and Mr Macnamara appeared to have narrowed somewhat as a result of Mr Macnamara’s acceptance of a wash up of costs owed to or by each of them as part of the resettlement of the new trusts, as signalled in the submissions filed by Mr O’Callahan in advance of the hearing. Ms Kearns also accepted that the hearing
3 Butcher v Finnigan [2012] NZCA 250 at [6].
4 Gibson v Official Assignee [2019] NZHC 532 at [25] – [26].
5 Stead v The Ship “Ocean Quest of Arne” [1995] 3 NZLR 415 at 421.
6 Waitemata City Council v MacKenzie [1988] 2 NZLR 242 at 249.
7 Monk v Burgess [2019] NZHC 324.
8 Cochrane v Bettley [2020] NZHC 2092.
concerning the consequences of Mr Macnamara’s conduct could not be held immediately as it would take some time for the trustees to draw up the memorandum that Ms Macnamara had proposed in her application and which Mr Cundy had confirmed the trustees would prepare.
[16] However, Ms Kearns submitted that, given the history of the proceeding to date and the established conduct of Mr Macnamara, it would be appropriate for the Court to make an order in principle that the Consent Orders should be varied to enable the trustees to deduct from the assets to be distributed to the trust in Mr Macnamara’s favour the costs incurred by the trustees as a result of Mr Macnamara’s unreasonable conduct. Ms Kearns also submitted that the Court should make the orders regarding the payment of rental in respect of Mr Macnamara’s occupation of the Karaka Property and his withdrawal of funds from Oneheat in accordance with the determinations already made by the trustees.
Submissions of counsel for Mr Macnamara
[17] Mr O’Callahan, counsel for Mr Macnamara, confirmed that Mr Macnamara had always envisaged that, at the point of distributing the assets of the Home Trust and the Family Trust, there would be a wash up that would take into account amounts owned to and by the two parties. It was for that reason that Mr Macnamara had not paid the costs order made against him for the earlier step in the proceeding because he had envisaged that sum being deducted from his share of the distribution of assets.
[18] Mr O’Callahan said Mr Macnamara did not dispute that he should pay rental in respect of his occupation of the Karaka Property or that there needed to be an accounting with respect to Oneheat. However, as he had stated in his notice of opposition to Ms Macnamara’s application and in Mr Macnamara’s affidavit of 30 July 2021, he took issue with the period of the rental and with the basis of the trustees’ calculations with respect to Oneheat. Mr Macnamara also reserved his rights to challenge other determinations by the trustees, including the calculations of their costs. He also disputed Ms Macnamara’s account of his actions and considered that Ms Macnamara’s own actions had caused the trustees to incur unnecessary costs. Mr O’Callahan said it was for these reasons that Mr Macnamara had proposed, in his
notice of opposition that there be directions to enable a hearing and resolution of all issues.
[19] Mr O’Callahan said Mr Macnamara opposed the Court making any in-principle determination of how costs were to be allocated until the facts had been established. Mr Macnamara was not opposed to the trustees preparing the proposed memorandum, but he considered that the trustees should look at the conduct of both parties as it had contributed to the trustees’ costs. Mr O’Callahan also said he had not had the opportunity to consider some of the authorities to which Ms Kearns had referred and of which Ms Kearns had acknowledged she had only very recently become aware. He asked that he be given the opportunity to make submissions on the jurisdictional issues before the Court made any determinations, even on an in-principle basis.
[20] In the meantime, Mr O’Callahan submitted that the Court might be able to assist the parties to agree on a mechanism and timetable for resolving the outstanding issues.
Discussion
[21] As a result of discussions with counsel, I made the timetable directions annexed to my minute of 29 October 2021.9
[22] As I said to Ms Kearns at the hearing on 29 October 2021, I did not consider it appropriate to make any determinations on varying the Consent Orders, even on an in- principle basis, at or following that hearing.
[23] Leaving said the jurisdictional issues, on which Mr O’Callahan sought further time to address the Court, it is apparent from the authorities referred to by Ms Kearns that a principal consideration in any decision to vary consent orders is that the Court is satisfied that the variation is in the interests of justice.
[24] I accept that Ms Macnamara’s affidavit filed in support of her application and her earlier affidavits filed in the proceedings provide evidence from which the Court
9 Macnamara v Macnamara, above n 1.
could conclude that Mr Macnamara has been obstructive and has sought to delay and even to frustrate the trustees’ execution of their duties. However, until the Court has had the opportunity to consider the memorandum that the trustees have undertaken to file10 and has heard submissions on that memorandum and on the actions that should be taken as a consequence, I do not consider there is an adequate or appropriate basis for making any decisions on varying the Consent Orders.
Result
[25] For these reasons, I make no orders on Ms Macnamara’s application and defer decisions on the application until the trial to be held in accordance with the timetable directions annexed to my minute of 29 October 2021.
[26]I reserve costs pending the result of the trial.
G J van Bohemen J
Postscript
[27] I regret that a bereavement in my family delayed this judgment beyond the timeframe indicated to counsel.
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
10 The trustees’ memorandum was filed on 18 November 2021. I have deliberately not read that memorandum while I have been finalising this judgment.
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