McCarthy v McManamon

[2021] NZHC 825

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2019-470-029

[2021] NZHC 825

BETWEEN

CHRISTOPHER WAYNE MCCARTHY,

personally, as Trustee and Beneficiary of the Earnscleugh Trust and as Trustee and Beneficiary of the Elizabeth Street Trust
Plaintiff

AND

CATHERINE MCMANAMON

Defendant

AND

CHRISTOPHER WAYNE MCCARTHY CATHERINE MCMANAMON IMPACT LEGAL TRUSTEE LIMITED

as Trustees of the Elizabeth Street Trust Second Defendant

On the papers:

Counsel:

A H Brown and J Y Leenoh for the Plaintiff

R C Laurenson and C D Batt for the First Defendant No appearance for the Second Defendant

Judgment:

20 April 2021

JUDGMENT OF GRICE J

(re: costs)

[1]                 In my judgment of 26 February 2021,1 I noted that each party had been successful in some measure. I went on to say that it appeared to be an appropriate case for costs to lie where they fell. However, I left it open for counsel to apply for costs by way of a memoranda. Memoranda were filed although the costs determination was

1      McCarthy v McManamon [2021] NZHC 294 at [270] [“Substantive Judgment”].

MCCARTHY v MCMANAMON [2021] NZHC 825 [20 April 2021]

postponed until the appropriate draft orders effecting the terms of the judgment were provided.2 That has now occurred.

[2]                 The plaintiff has filed an application for costs based on his submission that he was largely successful in the claim. In particular, Mr McCarthy points to the fact that an order for payment was made in his favour under s 182 of the Family Proceedings Act 1980. In addition, he points out that in my judgment I indicated that if the application under s 182 had not been successful, the constructive trust argument would have been successful. The approach that I preferred to take was by the application of s 182.3

[3]                 Both parties also point to settlement negotiations. Neither party made a proposal which could be characterised as a successful Calderbank offer. Each made offers but they were not the equivalent of nor more favourable to them than the outcome in the judgment. I am unable to say that one party should have the benefit of costs due to their proposals in settlement negotiations. Each were attempting to settle this matter.4

[4]                 The defendants say that both parties were successful. It was the s 182 claim that ultimately succeeded, and they had both filed applications under s 182.

Costs

[5]                 The usual rule is that costs follow the event. In this case, neither party was seeking the exact orders that I ultimately directed under s 182 of the Family Proceedings Act. Nevertheless, there is some force in the submission of Mr McCarthy that the s 182 order could equally have been made using a constructive trust as a vehicle.  The  constructive  trust   argument  was  a  head  of  claim   brought   by   Mr McCarthy. The defendants opposed orders of the type I made under s 182. Both parties sought amendments to the Trust deeds to make them workable. None of the defendants’ general defences, based on undue influence and unconscionable bargain

2      McCarthy v McManamon HC Wellington CIV-2019-470-029, 19 March 2021.

3      Substantive Judgment, above n 1, at [251].

4      The defendants point to an offer based on a percentage it says was within the range of the percentage applied in the judgment. However, the offer was based on valuations at the date of separation so it is not comparable.

or failure to perform the heads of agreement, were successful in preventing the plaintiff from succeeding in obtaining a judgment in his favour.

[6]                 The starting point is that “success on more limited terms is still success”.5 The inquiry as to success must be fact specific.6 In real terms, Mr McCarthy was successful under both s 182 and would have been, but for the orders under s 182, successful in his application based on a constructive trust. The defendants opposed his having any share in the property at all. Much of the trial time was taken up with the defendants’ defences.

[7]                 As I mentioned earlier, the general principles applying to the determination of costs include that the parties who fail in respect of a proceeding should pay costs to the party who succeed. Other principles set out at r 14.2(1) of the High Court Rules 2016 are that an award of costs should reflect the complexity and significance of the proceeding;7 costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding;8 an appropriate daily rate is normally two-thirds of the daily rate considered reasonable in relation to the proceeding;9 what is an appropriate daily recovery rate should not depend on the skill of counsel or time actually incurred; an award of costs should not exceed the costs incurred by a party claiming costs; and so far as possible, the determination of costs should be predictable and expeditious.

[8]                 In this case, despite my indication that this may be a case where costs should lie where they fall, I am persuaded that Mr McCarthy was largely successful in these proceedings and that costs should follow.

[9]                 The proceedings were appropriately categorised as category 2, band B. They were not entirely straightforward and involved a number of complexities, which make it appropriate for that categorisation.

5      Weaver v Auckland Council [2017] NZCA 330, (2017) 24 PRNZ 379 at [26].

6      Water Guard NZ Ltd v Midgen Enterprise Ltd [2017] NZCA 36 at [13]; Flanaghan Helmore Brown v Scott [2018] NZHC 2302 at [19].

7      High Court Rules 2016 at r 14.2(b).

8      Rule 14.2(1)(c).

9      Rule 14.2(1)(d).

[10]              Accordingly, I award costs on a 2B basis in favour of Mr McCarthy together with reasonable disbursements. I also note this was an appropriate matter to have junior counsel involved. Both parties had at least one junior counsel to assist lead counsel. There were extensive documents involved and some complex areas of argument. In addition, junior counsel undertook some cross-examination. It was appropriate that junior counsel were available to assist in both the hearing and preparation.

[11]              I note that no issue has been taken by the defendants with the detail of the schedule and amendment made in view of the award of costs made on interlocutory matters and with the exclusion of the claims  for attendances  on 4  June  2020 and 15 June 2020. These were largely related to the removal of counsel for the defendant, which was ultimately withdrawn.

[12]              The defendant should by memorandum filed within three days of this judgment raise any specific issues in relation to the schedule as I note the amended schedule was provided in reply by the plaintiff.

Grice J

Solicitors:

K3 Legal Limited, Auckland for the Plaintiff. Batt Law, Masterton for the Defendants.