VICTORIA MARGARET MCEVEDY AND MICHAEL THOMAS MCEVEDY AND MICHAEL THOMAS MCEVEDY and BENJAMIN WILLIAM MCALPINE TOTHILL s AND CATHERINE MCEVEDY and ALEXANDRA RUTHERFORD s AND BENJAMIN WILLIAM MCALPINE TOTHILL AND THE...
[2024] NZHC 2584
•9 September 2024
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2021-409-583
[2024] NZHC 2584
BETWEEN VICTORIA MARGARET MCEVEDY
Plaintiff
AND
MICHAEL THOMAS MCEVEDY
First Defendant
AND
MICHAEL THOMAS MCEVEDY and BENJAMIN WILLIAM MCALPINE TOTHILL
Second Defendants
AND
CATHERINE MCEVEDY and ALEXANDRA RUTHERFORD
Third Defendants
AND
BENJAMIN WILLIAM MCALPINE TOTHILL
Fourth Defendant
AND
THE PARTNERSHIP OF DUNCAN COTTERILL
Fifth Defendant
Hearing: On the papers Counsel:
M D Arthur for the Plaintiff
G J Ryan for the First and Third Defendants
A J Gaborieau for the Second and Fourth Defendants P L McKinnon for the Fifth Defendant
Judgment:
9 September 2024
JUDGMENT OF HARLAND J
(as to costs on plaintiff’s application for preservation orders)
MCEVEDY v MCEVEDY [2024] NZHC 2584 [9 September 2024]
[1] On 21 December 2023, I issued my judgment on the plaintiff’s application for preservation orders in relation to the Connemara Trust (the Trust).1 That judgment also dealt with the defendants’ application for security for costs. I have issued a costs judgment on the defendants’ application for security for costs.2 This judgment should be read in conjunction with that costs judgment.
[2] The plaintiff’s application for preservation orders was opposed by the first and second defendants. The plaintiff claims she was successful in obtaining meaningful preservation of the Trust’s capital. She seeks an order for costs and disbursements in the sum of $9,099.85.
[3] The first and second defendants submit that they were successful in opposing the plaintiff’s application and seek an award of costs in the sum of $43,020.
[4] The plaintiff submits that, if I agree with the first and second defendants that they successfully opposed her application, they should only be awarded costs of
$8,475.
[5] This judgment determines both applications for costs. I have decided to grant the first and second defendants’ application for costs in part and award costs of
$20,315 to them plus disbursements of $110. I dismiss the application for costs by the plaintiff.
Judgment in relation to preservation orders
[6] I dismissed the plaintiff’s application for preservation orders.3 I set out the background to the proceeding filed by the plaintiff and the factual disputes that, as best I was able to ascertain on an interlocutory basis, I considered underpinned the plaintiff’s claim against the defendants. I dealt with the application for preservation orders at paras [68]-[87] of my judgment.
1 McEvedy v McEvedy [2023] NZHC 3875.
2 McEvedy v McEvedy [2024] NZHC 2583.
3 McEvedy v McEvedy, above n 1, at [89].
[7] I first outlined the basis for the plaintiff’s application for preservation orders, which was based on the contention that significant funds had been removed from the Trust since 2005 and continue to be removed. Her concern was that the capital of the Trust and her right to a one-third share in it was at risk.
[8] The plaintiff sought orders that, until the proceedings were resolved, leave of the Court or her prior written approval should be required before any transfer, distribution or other dealing by whatever means of Trust capital could occur or, in the alternative, that any other order the Court considered appropriate to preserve Trust capital.
[9]The plaintiff filed five affidavits in support of her application.
[10] The plaintiff’s application was opposed by the first and second defendants for various reasons, which I outlined in para [73] of my judgment.
[11] I addressed the risk of dissipation of Trust capital in paras [77]-[87] of my judgment. While expressing the need for caution in expressing an opinion about the strength of the plaintiff’s claim, I acknowledged that an assessment of the merits, as best as could be ascertained, was required. I observed that, on a preliminary assessment, the plaintiff’s case could not be said to be strong, but I observed it might not be entirely without merit.4
[12] I next considered whether there was a proper basis or good reason to make preservations orders, noting that the onus was on the plaintiff to satisfy the Court of this requirement. I was not persuaded that that onus had been met by her. I concluded that there was nothing to suggest likely untoward behaviour by the first or second defendants pending the outcome of the substantive hearing. Accordingly, I dismissed the application by the plaintiff for preservation orders.5
[13] It follows that the defendants succeeded in their opposition to the plaintiff’s application.
4 McEvedy v McEvedy, above n 1, at [80]-[81].
5 At [89].
The competing applications for costs
First and second defendants
[14] The first and second defendants filed a memorandum dated 9 February 2024 seeking costs of $40,020 and disbursements of $110. Part of the costs claimed includes an uplift of 20 per cent, sought on the alleged grounds that the plaintiff’s application lacked merit and that the plaintiff failed to, without reasonable justification, accept reasonable offers to settle her application.
[15] The first and second defendants maintain that the plaintiff’s application was misconceived as there had never been any intention to dissipate the Trust capital and, in fact, the capital had not been dissipated, which they claimed had been outlined to the plaintiff on numerous occasions.
[16] The first and second defendants also referred to the amended notice of opposition filed on 18 October 2023, noting the hearing was 22 August 2023. Described as “entirely unorthodox” and rejected in my judgment, an uplift is sought on this ground too.6
[17] The first and second defendants submit they made three offers to preserve some of the capital of the Trust with each declined, it is contended, on an unreasonable basis by the plaintiff. They also submit that settlement discussions were significantly disrupted by the fact that the plaintiff engaged five different legal firms to represent her between 2021 and 2023.
[18] Finally, the first and second defendants submit the plaintiff’s failure to appear at the hearing on 28 February 2023, as canvassed in the security for costs judgment, saddled the defendants with additional costs that, while not the fault of the plaintiff’s counsel, should not be borne by the defendant’s counsel.
6 McEvedy v McEvedy, above n 1, at [13].
Plaintiff
[19] The plaintiff submits she is the successful party because the assurance given to the Court that the Trust capital would be preserved provided her ultimately with what she sought. The plaintiff also submitted that the wider context is relevant, noting this is essentially a familial dispute in which she has sought to protect her interests. She seeks $7,648 in costs and $1,451.85 in disbursements from the first and second defendants.
[20] If the Court does not agree, the plaintiff submits any award of costs to the first and second defendants should be limited to $8,365 in costs and $110 in disbursements. The plaintiff resists the submission that an uplift or wasted costs awards are justified.
[21] The plaintiff notes, at an earlier judicial case management conference, the Court expressed a view that interim measures could be made to protect the Trust capital. The plaintiff notes that assurance to protect Trust capital has now been given though it previously had not been. The plaintiff submits that the history of these proceedings means it was reasonable for her to seek as much, with the inference being that the proceeding cannot be said to have lacked merit.
[22] Regarding the wasted costs submissions made by the first and second defendants, the plaintiff repeats the arguments she made in response to the defendants’ application for costs in relation to security for costs.
[23] The plaintiff submits her refusal to accept a partial preservation of Trust capital was not unreasonable as she submits the offers made were “highly qualified and conditional”. She maintains that full disclosure of various documents was required to assist her to determine whether or not the offers were reasonable, but such disclosure was not and has still not been made.
[24] The plaintiff submitted that matters such as change of counsel are “entirely irrelevant” to the matter of costs.
Discussion
[25] This is a clear case where costs should follow the event.7 I found that the plaintiff had not discharged the onus of proving there was a proper basis or good reason to make a preservation order.8 I found the issue to be more nuanced than simply a case of the first defendant acting as he wished with regard to the Trust’s capital and, further, I found his response to these proceedings was, in any event, responsible.9
[26] The first and second defendants have also claimed wasted costs as well as costs under rr 30 and 32 of the High Court Rules 2016 (HCR) for preparation for the hearing and for the preparation of affidavits. The plaintiff submitted such costs are not claimable for interlocutory applications. I have dealt with the issue of wasted costs in my judgment on costs in relation to the defendants’ application for security for costs.10 It is not necessary to revisit this finding. I have also dealt with the ability for the first and second defendants to claim for preparation of affidavits on this application in that judgment.
Uplift
[27] I consider the 20 per cent uplift sought by the first and second defendants excessive. Increased costs under r 14.6(3)(b)(ii) of the HCR are not imposed lightly.11 Rather, they are reserved for cases that can be described as “hopeless”. That is a high threshold and it has not been met here.12
[28] While I did not view the plaintiff’s case as strong, neither was it entirely without merit.13 It must be remembered that the merits of a case are difficult to assess at the interlocutory stage.
[29] Furthermore, and directly relevant to my decision not to grant the preservation order, there were matters I considered to be discretionary. I was satisfied that none of the threats alleged by the plaintiff had transpired (even though that does not necessarily mean that the threats were not made). That, and the familial context of these
7 High Court Rules 2016, r 14.2(1)(a).
8 McEvedy v McEvedy, above n 1, at [86].
9 At [82]–[83].
10 McEvedy v McEvedy, above n 2, at [17]–[19].
11 Corrick v Silich [2018] NZCA 221, [2018] NZCCLR at [61].
12 Oxygen Air Ltd v LG Electronics Australia Pty Ltd [2020] NZHC 1863 at [22]–[23].
13 McEvedy v McEvedy, above n 1, at [81].
proceedings, could justify the plaintiff taking a cynical view of matters, necessitating, in her view, an order. That reasoning also applies to my assessment that there is unlikely to be any untoward behaviour to the plaintiff by the first and second defendants pending the outcome of the substantive hearing.14 While I accept the defendants’ contention that the plaintiff’s amended notice of opposition was effectively an effort to “bolster her position”, it had little effect as it was promptly rejected. I do not view that action as sufficient justification for an uplift.
[30] In a similar vein, the plaintiff’s refusal to accept the offers, at this stage, does not appear so unreasonable that it justifies an uplift. There is a fundamental divide in view between the parties as to appropriate Trust distribution, and the plaintiff is clearly still of the view that insufficient information has been provided to her to enable her to make a fully informed decision about any settlement offers. These issues are largely a matter for trial. With reference to the factors identified by Katz J in Weaver v HML Nominees Ltd,15 the plaintiff’s rejection of the settlement offers made to her do not appear so unreasonable as to justify increased costs under r 14.6(3)(b)(v) of the HCR.
[31] Finally, I agree with the plaintiff that her engagement of several counsel is not a relevant matter in determining costs. No case law was cited to support this proposition and it does not fall into any of the categories identified in r 14.6 of the HCR. While I can appreciate that regular change of counsel over a two-year period has caused issues for the defendants, more concrete evidence of loss attributable to the plaintiff’s actions on this ground would be needed to entertain what appears to be a novel ground of argument.
[32] With reference to the first and second defendant’s schedule for costs, I have decided to grant the following:
(a) notice of opposition to the plaintiff’s application for preservation orders:
$1,434.
(b) preparation of written submissions for the adjourned hearing: $3,585.
(c) preparation of bundle for adjourned hearing: $1,434.
15 Weaver v HML Nominees Ltd [2016] NZHC 473 at [30].
(d) preparation for the reconvened hearing: $4,780.
(e) appearance at reconvened hearing: $2,390.
(f) memoranda dated 13 May 2022; 26 May 2022; 21 June 2022 (fourth defendant only); 22 June 2022; 29 June 2022; 18 August 2022; and 3 November 2022: $6,692.
[33] The defendants’ claimed for the memoranda outlined in [32](f) on this application for costs rather than on the costs application for security for costs. As the defendants succeed on both applications for costs and taking a pragmatic approach, I award them on this application for costs and not on the costs application for security costs as the apportionment exercise between the defendants was not specified on the latter.
[34]The total costs awarded to the first and second defendants are therefore
$20,315.
[35]The disbursement fee claimed of $110 is granted.
Result
[36] I grant the first and second defendants’ application for costs which was jointly sought and order:
(a) the plaintiff is to pay to the first and second defendants’ costs of $20,315; and
(b) the plaintiff is to pay to the first and second defendants’ disbursements of
$110.
Harland J
0