Taufa v Makapa
[2014] NZHC 2363
•26 September 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-003602 [2014] NZHC 2363
UNDER the Property Law Act 2007 IN THE MATTER
Section 339 Property Law Act 2007
BETWEEN
JOSEPHINE TAUFA
Plaintiff
AND
PETER MAKAPA First Defendant
Continued…
Hearing: On the papers Counsel:
P N Teei for Plaintiff
Second Defendant in person (and also appearing on behalf ofFirst, Third and Fourth defendants). PA Fuscic for Fifth Defendant
Judgment:
26 September 2014
JUDGMENT OF KATZ J (Costs)
This judgment was delivered by me on 26 September 2014 at 3:00 pm
Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors: Teei & Associates, Henderson Presland & Co, Auckland McVeagh Fleming, Auckland
TAUFA v MAKAPA [2014] NZHC 2363 [26 September 2014]
TOMMY MAKAPA Second Defendant ISATINA MAKAPA Third Defendant SANTEALE MAKAPA Fourth Defendant
ANGELA NAOMI MAKIRU as Administrator of the estate of GEOFFREY TUINIUE MAKAPA
Fifth Defendant
Introduction
[1] Salemisa Makapa died on 19 December 2006. He left his entire estate, which mainly comprised his home in Kingsland, Auckland, to his six children equally.
[2] As Salemisa Makapa had not named an executor in his will, his six children agreed to the appointment of his daughter Josephine Taufa (née Makapa) as the administrator of the estate. Ms Taufa and her daughter moved into the Kingsland property, with the consent of her five siblings. Another sibling, Peter Makapa, also moved into the property. Both agreed to pay rent of $100 per week to the estate. From the estate account payments were made for land rates, insurance, maintenance and other outgoings.
[3] A dispute arose between the parties as to whether the property should be sold and, if so, on what terms. The parties were unable to resolve their differences and, as a result, Ms Taufa filed proceedings, seeking orders under s 339 of the Property Law Act 2007 for either the sale of the property to a third party or, in the alternative, that the siblings who wished to retain ownership of the property buy out Ms Taufa’s share.
[4] The first four defendants were Ms Taufa’s siblings Peter Makapa, Tommy Makapa, Isatina Makapa and Santeale Makapa. The fifth defendant, Angela Makiru, is the executor of the estate of the fifth sibling, Geoffery Makapa, who is now deceased. Ms Makiru counterclaimed against Ms Taufa, seeking orders, in effect, that Ms Taufa pay the outstanding rent she owed to the estate and also reimburse the estate for any funds that she had wrongfully taken and used for personal purposes.
[5] By the time of the hearing there was considerable common ground between the parties. It was agreed that the first to fourth defendants should be given an opportunity to purchase the interests of the plaintiff and fifth defendant in the property, albeit a valuation had not yet been agreed. Ms Taufa accepted that she owed some money to the estate, but the relevant sum had not yet been properly
quantified (it was largely quantified as a result of analysis undertaken during the course of the hearing).
[6] In my judgment of 4 August 2014 I ordered that the first four defendants were entitled to purchase the house from the estate for $650,000.1 I also ordered Ms Taufa to account to estate for the rent and other unauthorised “borrowings” from the estate in the sum of $27,742.86, together with interest on that sum. I reserved the issue of costs.
[7] It is somewhat difficult to regard any party as a clear winner. Ultimately all parties received more or less what they were seeking, with the Court only being required to resolve issues of valuation or quantum. The first to fourth defendants’ position in the litigation was that they wanted an opportunity to buy the house. They have succeeded in that. The plaintiff and fifth defendant wanted to be able to exit their interest in their property, which they have achieved. The fifth defendant (supported by the first to fourth defendants) wanted to ensure that Ms Taufa reimbursed the estate for any unauthorised sums she had taken from the estate for personal expenses. She obtained an order to that effect.
[8] If there had not been a total breakdown in the relationship between the parties, this dispute should have been readily capable of resolution without the need for a Court hearing. Fixing an appropriate value for the house should not have been unduly difficult. Similarly, quantifying the amount that Ms Taufa owed the estate should have been relatively straightforward. The matter seems to have been complicated, however, by a lack of proper financial records and a high degree of distrust and animosity between the parties.
[9] All parties now apply for costs. Rule 14.2 of the High Court Rules establishes the general rule that successful litigants will be entitled to scale costs. There are several generally accepted qualifications to this principle. These include that costs may be restricted if the successful party has acted unreasonably, or if the application is only partly successful. Refusal of a reasonable settlement offer is also
a factor to take into account.
1 Taufa v Makapa [2014] NZHC 1820.
Costs in relation to Ms Taufa’s claim against the first to fourth defendants
[10] Ms Taufa’s statement of claim sought orders under s 339 of the Property Law Act 2007 for either the sale of the property to a third party or, in the alternative, that one or more of her co-owners purchase her share in the property at a fair and reasonable price.
[11] By the time of trial, the first to fourth defendants opposed the first order, but did not oppose the second, alternative, order. That is the order that was ultimately made. The only real issue I was required to determine was the appropriate valuation of the house for buy-out purposes. On that issue neither side were successful. The first to fourth defendants argued for a valuation that was less than the $650,000 valuation I adopted. Ms Taufa, on the other hand, thought that the $650,000 valuation was too low and sought leave to obtain a further valuation post trial.
[12] In such circumstances the appropriate course in my view is for costs as between Ms Taufa and the first to fourth defendants to lie where they fall.
Costs on counterclaim by Ms Makiru against Ms Taufa
[13] Ms Makiru’s primary aim in the proceedings was to exit her interest in the property. On that issue her interests were aligned with those of Ms Taufa.
[14] In one area, however, Ms Makiru’s interests were contrary to those of Ms Taufa. She cross-claimed against Ms Taufa seeking an order that she account for and reimburse the estate in respect for any amounts owing. Ms Makiru was successful in her counterclaim, as I ordered that Ms Taufa to account to estate for the rent and other unauthorised “borrowings” she had taken from the estate in the sum of
$27,742.86, together with interest on that sum. Accordingly, if there had not been any pre-trial settlement offers, Ms Makiru would be entitled to costs on her counterclaim.
[15] There were, however, relevant pre-trial settlement offers. Ms Taufa offered to accept her share in the property less $40,000 to cover any unauthorised sums she had taken from the estate. This offer was originally made in October 2011 and was
repeated in March 2014. It was not accepted by Ms Makiru or any of the other
defendants. Ms Taufa’s offer exceeded the award ultimately made by the Court.
[16] Rule 14.11(3) of the High Court Rules provide that if a party rejects an offer that exceeds the ultimate award, that party will generally be required to pay costs from that point forward. On that basis, Ms Taufa is potentially entitled to a costs award against Ms Makiru in respect of the counterclaim.
[17] On the particular facts of this case, however, I am not satisfied that justice would be served by making such an order. In particular, I have some reservations as to whether Ms Makiru was provided with sufficient information prior to trial to enable her to properly assess the adequacy of Ms Taufa’s offer. The amount that Ms Taufa had taken from the estate, without authority, was a matter known solely to Ms Taufa. Given Ms Taufa’s conduct, Ms Makiru was entitled to a detailed breakdown of the sums she had taken, together with supporting documentation. Although Ms Taufa provided a handwritten schedule of estate expenditure, it lacked detail. It is not clear that Ms Makiru was provided with the necessary supporting documentation, such as bank statements. The extent to which the “blame” for this can be laid at Ms Taufa’s door is not entirely clear. There was some dispute as to what happened to the relevant bank statements. Ms Taufa’s evidence was that she had given them to her brother Tommy Makapa. He denied that.
[18] It is not clear why the sums Ms Taufa owed the estate could not have been readily quantified prior to trial. Instead the exercise was undertaken at trial (and immediately following), based largely on an analysis of the handwritten schedule Ms Taufa had provided some three years previously. In my view all of the parties must bear some of the responsibility for the failure to resolve this issue prior to trial. A constructive dialogue regarding Ms Taufa’s settlement offer, which was ultimately shown to be a reasonable one, would probably have resolved matters.
[19] In all of the circumstances of this case the most appropriate course, in my view, is for the costs of the counterclaim to lie where they fall.
Costs on cross claim by Ms Makiru against first to fourth defendants
[20] Ms Makiru also filed a cross claim against the first to fourth defendants. It was essentially a “back up” against the possibility that Ms Taufa might settle with the first to fourth defendants and discontinue her claims against them. In that event, Ms Makiru gave notice that she would continue the proceeding with the aim of obtaining orders for the sale of the property and division of the proceeds.
[21] Ultimately Ms Taufa did not discontinue her claims. The safety net provided by the cross claim ultimately did not prove necessary. In my view it did not impact on the costs incurred in the proceedings in any significant respect.
[22] Costs in respect of the cross claims should also accordingly lie where they fall.
Result
[23] Costs are to lie where they fall.
Katz J
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