McLaughlin v McLaughlin
[2022] NZHC 1841
•28 July 2022
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2017-442-52
[2022] NZHC 1841
BETWEEN MARK JAMES McLAUGHLIN and ANDREW ASHLEY McLAUGHLIN (as
beneficiaries of the Ashley Trust) PlaintiffsAND
JOHN DAVID MANUEL McLAUGHLIN
(as trustee of the Ashley Trust) First Defendant
AND
GLASGOW HARLEY TRUSTEE LIMITED
Second Defendant
AND
BRETT McLAUGHLIN
Interested Party
Judgment: 28 July 2022
COSTS JUDGMENT OF GENDALL J
[1]This judgement relates to issues of costs concerning this proceeding.
[2] Following a lengthy trial in this proceeding extending to nearly three weeks of hearing time and involving no less than seven memoranda filed by counsel thereafter, on 9 November 2021 I issued a lengthy judgment in this proceeding which totalled some 434 paragraphs.
McLAUGHLIN v McLAUGHLIN [2022] NZHC 1841 [28 July 2022]
[3] In that judgment, I noted counsel’s request that costs be reserved and at paragraph [431] I stated specifically:
[431] Counsel for the parties are urged to liaise with a view to endeavouring to resolve between themselves all issues as to costs. Failing this being achieved, then the parties may file (sequentially) memoranda of submissions as to costs and, in the absence of either party indicating they wish to be heard on that question, I will decide the issue of costs based upon the memoranda filed and all the other material which has been provided relating to this proceeding.
[4] Counsel for the parties have now filed a significant number of memoranda here. These indicate that they have been unable to resolve the question of costs between themselves and they seek now that this issue is to be determined by the Court.
[5] In addition, counsel for the present trustees of the Ashley Trust (those trustees not being a party to this proceeding) have filed in this court a memorandum dated 19 May 2022 seeking orders to add the trustees as interested parties for the purposes of this costs consideration. They have also made certain comments concerning costs issues.
[6] The addition of the present Ashley trustees as interested parties to this proceeding for costs purposes is not opposed by any party here and it is appropriate in my view. An order is now made adding those trustees as interested parties here.
[7] Turning now to the overall outcome in this proceeding as outlined in my 9 November 2021 judgment, it was the defendants who were largely the successful parties here. The major claims by the plaintiffs here essentially have failed. This is notwithstanding the fact that late in the piece at the conclusion of all evidence at the hearing in this proceeding the first defendant, John David Manuel McLaughlin (John) agreed to retire as a trustee of the Ashley Trust as the plaintiffs, his brothers (Mark and Andrew) had sought in their first cause of action. The grounds for seeking John’s removal relating to alleged misconduct on his part in his role as a trustee generally did not succeed, however, and so far as the plaintiffs’ additional causes of action against the defendants were concerned, they failed and were dismissed.
[8] As to the plaintiffs’ pleaded second cause of action, which was one against both John and the second defendant, Glasgow Harley Trustee Limited (GHTL), this sought compensation for alleged breach of their duties as trustees at the time of the Ashley Trust to the beneficiaries, including the plaintiffs, relating to and known as the Ching’s Block subdivision. This claim failed entirely.
[9] And, as to the plaintiffs’ pleaded third cause of action, this sought an account of profits from both John and GHTL with respect to alleged breaches of fiduciary duty on their part. This claim, too, failed entirely.
[10] It is important to note also at this point that the interested party in this litigation, Brett McLaughlin (Brett), (the brother of both John and the plaintiffs) played some role in this proceeding in that he was represented throughout and largely supported in full all the claims which the plaintiffs Mark and Andrew were making against John and GHTL.
[11] I turn now to the costs sought here as between the parties and also relating to the Ashley Trust. I will address each of these in turn.
1. Costs incurred by the plaintiffs Mark and Andrew
Mark and Andrew as plaintiffs, as I note, have largely failed in their claims here against both John and GHTL, apart from their achieving the essential remedy sought under their first cause of action with the ultimate retirement of John as a trustee of the Ashley Trust.
[12] Mr Johnson, for Mark and Andrew has confirmed, in my view properly given they were essentially the unsuccessful parties here, that they do not seek costs against either any other party or as against the Ashley Trust itself. That is simply noted at this point.
2. Costs incurred by the first defendant, John
[13] The first defendant, John, seeks from the Court orders first, for party and party costs and disbursements against the plaintiffs Mark and Andrew, jointly and severally,
amounting to $456,442.81 and, secondly, for indemnification from the Ashley Trust for the shortfall between the quantum of costs actually awarded to John here against the plaintiffs and his actual total solicitor and client costs incurred to 31 December 2021 (which total he says amounts to $1,104,778.38 inclusive of GST). On the basis that this Court might make the costs and disbursements award John seeks against the plaintiffs of $456,442.81 noted above, then his calculation of the shortfall sum he seeks from the Ashley Trust would amount to $648,337.51 (GST inclusive).
[14] So far as these claims are concerned, the position taken by Mark and Andrew as plaintiffs appears to be as follows:
(a)Their initial contention is that essentially they were the successful parties as to their first cause of action and, although the defendants succeeded with respect to the second and third causes of action, costs here simply should lie where they fall. As I see the position, however, this is entirely unrealistic. Overall, John and GHTL were effectively the largely successful parties in this long-running, bitter, and acrimonious family litigation brought by the plaintiffs and should each receive a significant award of costs and disbursements. It is my view also, however, that a reduction in the costs claimed by John of 20 per cent is appropriate. This is because, in the interests of doing justice to all parties here, it is appropriate to impose a reduction in the costs and disbursements to be paid to John to this extent, to reflect the increased time and work involved for all in addressing the retirement issue itself, an issue which John did not effectively concede until late in the hearing before me. In saying this, I accept that a simple percentage reduction in both the costs and disbursements to be paid to John here is a relatively blunt instrument. But, in all the circumstances of this major and long-running family squabble, it is appropriate in my view, not least of all to provide some finality for all concerned.
(b)Next, the plaintiffs in any event suggest this matter should simply be costed on a scaled category and band basis here with no uplift. They say John has not discharged the burden he has of showing that any uplift
on scale costs is warranted. In this regard, the $456,442.81 total costs and disbursements John seeks against the plaintiffs is made up as follows:
(i)Costs calculated on a scale basis with blended bands and categories — $239,429.75.
(ii)An uplift and increase of 30 per cent of scale, amounting to
$68,651.93.
(iii)Disbursements (including witness costs) of $148,361.13.
(iv)In total, all these amounts come to $456,442.81.
(c)Mr Johnson confirms that the plaintiffs largely accept the level of disbursements claimed with one or two minor qualifications. These qualifications seem to relate mainly to the costs invoices from the defendants’ witnesses Mr Russell and Mr Hinton. These invoices total in all $5294.20 and I find the amounts claimed are reasonable and proportionate in all the circumstances here. Some of their evidence could be seen as “expert” here in my view, but in any event it was of assistance to the Court. I dismiss the plaintiffs’ disputes over these witness cost disbursements. As to the suggestion that total disbursements should also be subject to a reduction to reflect the plaintiffs’ suggested success under their first cause of action following John’s retirement as a trustee, I accept this.
(d)Overall, I do not intend to embark upon a lengthy discussion of the detailed arguments all counsel have endeavoured to place before me regarding costs in this proceeding. John’s claim to a mixture of scale and band costs sought here, and what I see as his relatively modest 30% “increased costs” uplift under R.14.6 (as opposed to an indemnity costs award which might otherwise have been sought under R.14.6(4)) in my view is properly made. Suffice to say that overall, this unfortunate,
heated, and hostile dispute between these siblings can only be seen as one initiated by Mark and Andrew, it occupied considerable Court time, it involved a number of senior and other counsel, such that in all the circumstances a costs and disbursements award to John against the plaintiffs Mark and Andrew of 80 per cent of the total amount claimed of $456,442.81 (amounting to $365,154.24) is appropriate. An order against Mark and Andrew to this effect is to follow.
3. John’s claim for indemnification from the Ashley Trust for the costs shortfall
[15] As I have noted above, John seeks from this Court an order against the Ashley Trust to indemnify him for the shortfall between the quantum of costs and disbursements awarded to him against the plaintiffs and his actual paid solicitor and client costs he says that amount to $1,104,778.38.
[16] On this, the present Ashley Trustees, as interested parties in this proceeding for costs purposes, emphasise in the memorandum dated 19 May 2022 from their counsel that the trustees adopt a neutral stance in relation to this claim by John for his costs shortfall. Also, they note their strong preference that the Court should determine this issue now to avoid unnecessary delays and the spectre of further litigation. The alternative suggestion that an independent senior lawyer might determine the reasonableness of John’s total costs here (as the plaintiffs seek) is not favoured.
[17] With all this in mind, I take the view that John, in his capacity as a trustee at the time, is entitled here to an order against the Ashley Trust for the balance of his indemnity costs and disbursements claimed at total costs being $1,104,778.38 less what I see as the reasonable 20 per cent reduction noted above for his failure to retire as a trustee of the trust until what can only be seen as the eleventh hour.
[18] That said, an order is to follow that, when its funds permit, the Ashley Trust is to reimburse John for the sum of $518,668.40. This is calculated taking into account the 20 per cent reduction ($220,955,66) on total costs and disbursements of
$1,104,778.38 to leave a balance of $883,822.04 less the $365,154.24 payment to be made by Mark and Andrew.
Costs claim by the second defendant GHTL
[19] Both counsel for GHTL and counsel for the plaintiffs Mark and Andrew have confirmed that payment of costs to GHTL by Mark and Andrew have been agreed specifically between them. I am told by counsel for GHTL that this agreed amount totals $70,980.20. Counsel for GHTL specifically seeks an order that this amount be paid.
[20]An order is to follow to this effect.
[21] The second defendant GHTL also seeks indemnification from the Ashley Trust for the balance of its costs relating to this proceeding. As counsel notes, however, that it is only when costs orders are made by the Court in favour of the first defendant John that GHTL will then be able to quantify the balance of its costs for which it will seek an indemnity from the trust. As I understand it, in part this is because initially it seems both the first defendant and the second defendant retained the same lawyers, Buddle Findlay, to represent them in relation to this dispute but then, after proceedings were commenced in August 2017, GHTL considered it prudent to retain its own legal advice. At that point it retained another firm, Morgan Coakle. Nevertheless, to avoid duplication, but acknowledging too that it was benefitting from legal work undertaken by Buddle Findlay, GHTL agreed to pay certain amounts towards.
[22] Some new calculations, it seems, will now be required. Accordingly leave will be reserved for GHTL to approach the Court again on notice. Any further order relating to indemnification by the Ashley Trust of GHTL’s additional costs and disbursements not addressed by the costs order made against Mark and Andrew, will follow then.
[23] In this respect and for completeness, I record my view that GHTL, as an independent former trustee of the Ashley Trust drawn into this litigation largely through no fault on its part, is entitled to be reimbursed for all its reasonable legal costs and disbursements appropriately incurred throughout this long and acrimonious dispute between members of the McLaughlin family, and in carrying out its functions as such trustee.
Costs claimed by the interest party, Brett McLaughlin
[24] The interested party Brett, brother to John, Mark, and Andrew, makes a claim against the Ashley Trust for $49,936.85 (including GST) being his actual costs incurred in relation to this proceeding. His counsel, Ms McGuigan, confirms in her costs memorandum dated 28 April 2022 that Brett here claims his actual costs in circumstances where these costs are lower than what she says he would be entitled to under category 2B scale costs.
[25] Although not a direct party to this proceeding, as I note in the substantive judgment, Brett gave lengthy evidence as a witness at trial, supporting entirely the plaintiffs Mark and Andrew. He opposed John’s position as trustee and seemed to support all the unsuccessful claims Mark and Andrew had advanced against John and GHTL.
[26] Notwithstanding this, and potential issues over whether first, Brett as a non-party acted reasonably in this matter and secondly, whether his detailed involvement, to say the least, may to some extent have been unfortunate, given the fact that as I see it some real finality in this whole process is important, I do not propose to embark upon a lengthy consideration as to whether the various positions Brett took were indeed necessary.1
[27] Accordingly, an order is now made that, as and when funds permit, the Ashley Trust is to pay to Brett the sum of $49,936.85, representing his actual costs and disbursements with respect to this proceeding.2
Orders
[28]For all the reasons I outline above, the following orders are now made:
1 As to this, included in the costs Brett has incurred are amounts for his counsel’s appearance on virtually every day of the trial hearing before me, despite the fact that at the outset his counsel confirmed this involvement was simply to entail some form of “watching brief”.
2 This litigation against John in particular can only be described as “hostile”. That Brett, as an interested party, chose to inject himself into the proceeding in support of the plaintiffs Mark and Andrew, he did so with the presumption that he would not be assuming the risk of an adverse costs order. Notwithstanding this, John’s position outlined in the 13 May 2022 costs memorandum from his counsel is that he does not formally oppose or consent to Brett’s claim for indemnity from the Ashley Trust.
(a)Costs and disbursements totalling $365,154.24 are awarded to John against Mark and Andrew and this amount is to be paid promptly.
(b)The Ashley Trust is to pay and reimburse John $518,668.40 by way of a shortfall in the reasonable actual costs and disbursements he is entitled to here. This payment to be made to John when the funds of the Ashley Trust permit.
(c)Costs and disbursements totalling $70,980.20 are awarded to GHTL against Mark and Andrew and this amount is to be paid promptly.
(d)Leave is reserved for GHTL on giving notice to the Ashley Trust and to all parties to this proceeding (including Brett) to approach the Court, by memorandum, to seek indemnification and reimbursement from the Ashley Trust for its additional costs and disbursements reasonably incurred in this proceeding.
(e)The Ashley Trust is to pay and reimburse Brett $49,936.85 as his actual costs and disbursements in this proceeding. This payment to be made to Brett when the funds of the Ashley Trust permit.
Gendall J
Solicitors:
Wynn Williams, Auckland
N Lawrence, Barrister, Christchurch Jeremy Johnson Barrister, Auckland
Nathan Gedye QC, Barrister, Auckland Buddle Findlay, Christchurch
Janna McGuigan Barrister Limited, Christchurch
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