MacNamara v MacNamara
[2021] NZHC 2500
•24 September 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 2500
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: 22 September 2021 (by VMR) Appearances:
L Kearns QC for S A Macnamara
B O’Callahan and J D Ryan for N J Macnamara J Cundy for Trustees
Judgment:
24 September 2021
JUDGMENT OF VENNING J
Application for leave to appeal and stay
This judgment was delivered by me on 24 September 2021 at 12.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
MACNAMARA v MACNAMARA [2021] NZHC 2500 [24 September 2021]
Introduction
[1] In a judgment delivered on the 10 September 2021 the Court gave the trustees directions they had sought in relation to the payment of a debt owed by the Trusts.1 Mr Macnamara now seeks leave to appeal that judgment and a stay of the effect of the directions pending the hearing of the appeal. The trustees generally abide the decision of the Court on the applications but Mr Cundy addressed some brief submissions to assist the Court. Mrs Macnamara opposes the applications.
Background
[2]The background can be taken from the judgment:
[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 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.
1 Macnamara v Macnamara [2021] NZHC 2361.
[8] In the meantime, the trustees now seek directions on an urgent basis in light of the threatened claim by the Craig Trust in relation to a debt of
$500,000 said to be owed to it by the Family Trust.
[9] The trustees have reviewed the claim by the Craig Trust for repayment of the $500,000 and consider there is no defence to the claim. They are anxious to avoid further costs and potential personal liability if they are required to defend the Craig Trust’s claim for repayment.
[10] The trustees seek directions under the leave reserved in the orders of 27 August 2020 and/or s 133 of the Trusts Act 2019 that they should pay the Craig Trust the principal and interest owing as recorded under the deed or for such other response to the claim as the Court considers appropriate.
[3] For the reasons given in the judgment the Court made the directions sought by the trustees namely:
the trustees are to pay the Craig Trust the principal of $500,000 claimed together with interest owing under the terms of the Acknowledgement of Debt.
Application for Leave
[4] Mr McNamara seeks leave to appeal from two aspects of the judgment. First the grant of the direction sought by the trustees, and second, the decision to decline Mr McNamara’s application under High Court Rules 2016, r 9.34 to have the original deed produced for examination by a handwriting expert. He also seeks an order deferring the determination of costs following the judgment.
Application for stay
[5] In a related application the applicant seeks an order staying the effect of the directions given by the Court in the judgment of 10 September 2021 pending further order of the Court. In practical terms, the stay is sought until the proposed appeal is heard.
Leave principles
[6] The principles to apply on an application under s 56(3) of the Senior Courts Act 2016 are relatively settled. In Ngai Te Hapu Inc v Bay of Plenty Regional Council the Court of Appeal referred with apparent approval to the considerations identified
by Fitzgerald J in Finewood Upholstery Limited v Vaughan.2 The Court also accepted that leave would only be granted where the significance or implications of an arguable error of fact or law, either for the particular case or for the applicant or as a matter of precedent, warranted the further delay which the appeal process would involve.
The leave application
[7] To support the application for leave Mr O’Callahan submitted the Court erred in finding summarily there was no reasonable dispute as to the Family Trust’s obligation to repay $500,000 to the Craig Trust (together with interest) and was in error in making the direction sought by the trustees.
[8] Further, he submitted the directions were made without meeting the standard required for trustees to obtain the protection afforded by directions under s 133 of the Trusts Act 2019.
[9] In relation to the decision to dismiss the application for an order for examination of the deed under r 9.34 Mr O’Callahan submitted the Court erred in finding the applicant’s disavowal of the deed was so lacking in credibility and inherently implausible that it did not satisfy the threshold test for the exercise of discretion under that rule.
[10] Mr O’Callahan submitted the proposed appeal raised matters of significance in that applications for directions under s 133 of the Trusts Act are ordinarily brought as a proceeding in which case the appeal would lie as of right. Alternatively, the application for directions was dealt with summarily and has final effect in the same way as the granting of a summary judgment from which an appeal would lie as of right. He argued the questions raised by the appeal have general application in terms of guidance in relation to directions under s 133 of the Trusts Act and in relation to orders under r 9.34.
2 Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291, citing Finewood Upholstery Limited v Vaughan [2017] NZHC 1679.
[11] Mr O’Callahan submitted the appeal was bona fide and the applicant undertook to prosecute it diligently. It was in the interests of justice the appeal be heard by the Court of Appeal.
[12] Ms Kearns QC submitted that Mr Macnamara could not meet the high standard for leave to be granted. The Court had not erred or made any properly arguable error of law or fact in granting the directions sought by the trustees.
[13]Further, the Court had not applied the wrong test under r 9.34.
[14]The overall interests of justice did not support the grant of leave.
[15] For the trustees, Mr Cundy submitted that as a matter of form the trustees’ application was an interlocutory application and leave was required. He noted the trustees were concerned at the ongoing delay in the administration of the Trusts.
[16] Mr Cundy also submitted there was no reason to defer the fixing of costs in accordance with the Court’s judgment.
Jurisdiction – leave
[17] The first issue in this case is whether leave is required to appeal the judgment insofar as it relates to the directions given to the trustees by the Court. Leave is required under s 56(3), Senior Courts Act 2016 where the Court makes an order or decision “on an interlocutory application”.
[18] As the Court noted in its judgment, directions of the type sought by the trustees are generally given on a formal application made under either Part 18 or Part 19 of the High Court Rules. As such, the directions judgment would ordinarily be amenable to an appeal to the Court of Appeal as of right.
[19] In this case, for the reasons given in the judgment, including that the directions sought related to the leave reserved to the trustees when they were initially appointed, the Court was prepared to deal with the application for leave on the basis of the application contained within the memorandum of counsel for the trustees. Other
Judges had previously dealt with directions sought by the trustees in that way and relevantly, that was also the approach that Mr Macnamara had taken when he had sought directions within the existing proceedings.
[20] On one view of the application then, it was an informal interlocutory application, as Mr Cundy submitted.
[21] However, in my judgment the wording of s 56, Senior Courts Act 2016, is determinative. The intent of s 56 is clear when the section is read as a whole. Section 56(3) applies a filtering mechanism to interlocutory decisions made during the course of a substantive proceeding. However, as s 56(4) confirms, where the effect of the decision (even made on an interlocutory application) is final, then leave to appeal is not required. It follows that in context, and reading the section as a whole, the important point is not so much how the application for directions came before the Court, but rather the effect of the order or decision itself. In the present case the directions given by the Court had substantive effect. They were final to the extent that no further process or hearing was required. A judgment giving trustees directions would normally be appealable as of right.
[22] For those reasons I do not consider leave is formally required for the applicant to appeal the judgment in so far as it relates to the directions provided to the trustees.
[23] Leave is, however, required in relation to the applicant’s challenge to the Court’s decision to decline his request for an order for examination under r 9.34. That application was also made informally but an application for an order under r 9.34 is clearly interlocutory. Leave to appeal the decision on r 9.34 is required under s 56(3).
[24] Leave is declined to appeal that aspect of the decision for the following reasons:
(a)the rule provides a process for examination. The applicant must establish a basis for the order, and, if he or she does, the Court has a discretion whether to make such an order;
(b)there were several reasons why the Court was not minded to exercise its discretion in the present case. Mr Macnamara’s evidence was relevant to both the issue of threshold for the order and discretion. Mr Macnamara’s evidence about the deed in issue and his execution of it was contradictory and inconclusive. The Court had regard to the proposed expert’s affidavit but determined that Mr Macnamara’s evidence did not support the requirement for an examination;
(c)Mr Macnamara has still not expressly deposed that he did not sign the deed. The basis for the examination proposed remains speculative;
(d)there is no public or general interest in the proposed appeal under r 9.34.
Stay – principles
[25] The principles to apply on an application for stay also well settled. In Keung v GBR Investment Limited the Court of Appeal confirmed:3
[11] The stay application is brought under r 12(3) of the Court of Appeal (Civil) Rules 2005. In determining whether or not to grant a stay, the Court must weigh the factors “in the balance” between the successful litigant's rights to the fruits of a judgment and “the need to preserve the position in case the appeal is successful”. Factors to be taken into account in this balancing exercise include:
(a)Whether the appeal may be rendered nugatory by the lack of a stay;
(b)The bona fides of the applicant as to the prosecution of the appeal;
(c)Whether the successful party will be injuriously affected by the stay;
(d) The effect on third parties;
(e) The novelty and importance of questions involved;
(f) The public interest in the proceeding; and
(g) The overall balance of convenience.
That list does not include the apparent strength of the appeal but that has been treated as an additional factor.
3 Keung v GBR Investment Limited [2010] NZCA 396 at [11].
The stay application
[26] Mr O’Callahan argued that without a stay pending the hearing of the appeal, if the trustees acted in accordance with the direction the appeal will be rendered nugatory because payment will have been made to the Craig Trust and the Court and applicant will have no jurisdiction or ability to require recovery or repayment from the Craig Trust.
[27] Mr O’Callahan referred again to the merits of the proposed appeal. He identified the errors he said the Court had made in granting the directions. He referred again to the need to have the original deed inspected. He also repeated his challenges to the evidence of Ms McCowan who had witnessed his signature to the deed and referred to other aspects of the evidence which he said supported Mr Macnamara’s argument the $500,000 was a gift.
[28] Mr O’Callahan then submitted that any injury to the Trust fund by the granting of a stay would be limited to the potential for further interest accruing on the $500,000 and any costs that may be incurred in, in his words, “the unlikely event the Craig Trust brings proceedings against the McNamara Family Trust”. The McNamara Family Trust holds funds on his behalf that substantially exceed any such potential liability and which could be applied to indemnify the Family Trust if the Court so ordered. Mr O’Callahan made the point that there was no evidence of the particular need by the Craig Trust for the money.
[29] Ms Kearns submitted that Mr Macnamara’s proposed appeal was not bona fide and was an attempt to thwart the process Mr Macnamara had agreed to by agreeing to the consent orders. Next, Mr Macnamara did not represent the interests of all the beneficiaries. If a stay was granted, the trustees would be back in the same position they were in when they sought the directions from the Court. They would face a summary judgment application by the Craig Trust.
[30] Ms Kearns also submitted there was no novelty or importance in the proposed issues on appeal, and no public interest in the proceeding.
[31] Finally, Ms Kearns submitted that for the reasons given in relation to the leave application, there was no merit in the application for leave. The Court had:
(a)considered the deed itself, the evidence of the other parties to the advance, a solicitors’ note annexed to Mr Macnamara’s own affidavit, and the fact that, if it was a gift, it could have been made to Ms Macnamara personally. All supported the position that the advance was a loan;
(b)reasonably held that Mr Macnamara’s evidence was contradictory and inconclusive;
(c)not erred in accepting there was jurisdiction to make a direction under s 133 of the Trusts Act 2019 because the Court had more than sufficient information to properly consider and determine the application and no errors were made as to the existence and weight of evidence; and
(d)properly considered the qualifications and experience of the trustees, the fact that they had sought and obtained input from both parties and then had responsibly sought the Court’s ratification of the decision.
[32]Ms Kearns submitted the interests of justice did not support the issue of a stay.
Consideration
[33] While Mr O'Callahan is correct that, if the application for stay is declined the appeal may be rendered nugatory, that is not of itself determinative as the Court of Appeal has confirmed on several occasions.4
[34] There are two particular features of the present case which count against a stay. The first is the position of the Craig Trust.
4 Keung v GBR Investment Limited, above n 3; Cousins v Heslop [2007] NZCA 377 at [10]; and
Dymocks Franchise Systems NSW Pty Ltd v Bigola Enterprises Ltd (1999) 13 PRNZ 48.
[35] Even if the Court were to grant the stay sought by Mr Macnamara in relation to the directions, that could have no impact on the Craig Trust’s rights to take proceedings against the Trusts to recover the $500,000 together with interest and costs.
[36] The evidence before the Court at the previous hearing was clear. The Craig Trust intends to take steps to enforce its claim for payment of the debt of $500,000 including by the issue of proceedings if necessary. Despite Mr O’Callahan’s suggestion such proceedings were “unlikely” the correspondence from the Craig Trust’s solicitors is unequivocal about their intention to pursue the matter.
[37] The result of such a proceeding, namely an application for summary judgment for repayment of the $500,000 plus interest would inevitably be a judgment in favour of the Craig Trust against the Trusts. The trustees could not responsibly oppose the application for judgment. The trustees have considered all relevant material and information and come to the view the debt should be paid. The $500,000 has been documented as advanced to the Family Trust. The sole issue Mr Macnamara wishes to raise is whether it is a gift as opposed to a loan. The deed of debt confirms it as a loan. The difficulty that Mr Macnamara faces is that on the face of the documentation he signed the deed. While he says he wants to have the original deed examined, he has not, even by this stage, deposed that he did not sign it. All of the other parties to the document confirm its veracity. The document is also consistent with other documents and the steps taken by the parties at or around the material time that the $500,000 was advanced.
[38] The second relevant feature of the present case is the consent order agreed to by Mr Macnamara and the background to the proceedings in which the consent order was made.
[39] The intent of the consent orders was to place the administration of the Trusts in the hands of independent trustees because Mr and Mrs Macnamara could not agree how the Trusts were to be administered or how to deal with the issues facing the Trusts. The consent orders that Mr Macnamara agreed to gave the trustees authority to make
a decision on the issue of whether the $500,000 ought to be paid to the Craig Trust. In particular order 4.7 of the consent orders confirmed the authority of the trustees to:5
4.7 After consulting with Mr and Ms Macnamara either reach a determination on any liability of the Trusts to the Craig Trust for the sum of $500,000 or seek determination of the liability either from the Court or, by way of arbitration.
[40] As Ms Kearns observed, Mr Macnamara had the opportunity to put in issue the matters he now seeks to raise but by agreeing to the compromise of the earlier substantive proceedings by the consent orders, he has given the trustees the authority to determine this issue. The trustees, who are independent and experienced legal practitioners, after consultation with both parties and after considering the relevant information concerning the Craig Trust’s claim for the $500,000 came to the view there was no arguable defence and the claim should be paid. That was within their powers under cl 4.7 of the consent orders. The directions of the Court simply protect the trustees from liability by acting in accordance with the direction. To grant a stay would, as Ms Kearns submitted, “thwart” the intention of the consent orders.
[41] The trustees as the successful applicant for directions, will be affected by any stay. The administration of the Trusts will be delayed. The trustees will be cited as defendants to an action which they could not responsibly oppose.
[42] While the appeal may be arguable, for the reasons given by Ms Kearns, the appellant faces difficulties with it on the merits.
[43] There is no public interest in this proceeding. Nor is there any particular novelty or importance in the proposed appeal. The principles upon which the Court can give directions to trustees are settled.6
[44] It is not in the interests of justice to allow Mr Macnamara to further delay the administration of the Trusts.
[45]For those reasons the Court is not prepared to grant a stay of execution.
5 Macnamara v Macnamara [2021] NZHC 173.
6 Marley v Mutual Security Merchant Bank and Trust Co Ltd [1991] 3 All ER 198 (PC).
Orders/directions
[46](a) Leave is not required to appeal the decision of the Court to make the directions at [39] of the judgment of 10 September 2021.
(b)Leave is declined to appeal the decision of the Court declining the application for an order under r 9.34.
(c)The trustees are released from any undertaking they may have given not to implement the orders of the Court.
(d)The application to defer fixing costs as directed in the judgment of 10 September 2021 is dismissed.
Costs
[47] Although Mr McNamara has succeeded in part inasmuch as the Court's view is leave is not required in relation to the proposed appeal from the direction of the Court, in practical terms Mr McNamara has not achieved his purpose. For those reasons Mr Macnamara is to pay costs on both applications on a 2B basis to the trustees and Mrs Macnamara.
Venning J
Solicitors: Lee Salmon Long, Auckland
Shieff Angland Solicitors, Auckland Claymore Partners Limited, Auckland
Counsel:L Kearns QC, Auckland B O’Callahan, Auckland
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