Ursell-Smith v Smith [1999] NZCA 165; [2000] NZFLR 85; (1999) 18 FRNZ 700 (30 August 1999)

Last Updated: 1 December 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA6/99

	BETWEEN	PENELOPE ANN URSELL-SMITH
		Appellant

	AND	PETER WILLIAM FRASER SMITH
		Respondent

Hearing:	18 August 1999
Coram:	Gault J McGechan J Paterson J
Appearances:	C L Cook for the Appellant R A Hacking for the Respondent
Judgment:	30 August 1999

JUDGMENT OF THE COURT DELIVERED BY PATERSON J

[1] The appellant, Ms Ursell-Smith, appeals from a costs decision of Williams J given on 2 December 1998.

Background Facts

[2] The parties lived in a de facto relationship for approximately 20 years. When the relationship came to an end in 1996, the appellant issued proceedings against the respondent claiming that one-half of the respondent’s assets were held by him on a constructive trust for her. At some stage in late 1997, the parties went to mediation. Although the mediation did not resolve the matter, it did narrow the issues and there were various settlement proposals considered. By the time the matter came before Williams J in September 1998, there were only three assets in contention between the parties. There were incidental related matters for determination, including the date on which the relationship began and a claim by the appellant for interest.

[3] All relevant assets had been purchased in the name of the respondent and he had been the major income earner during the period of the relationship. The three assets in respect of which His Honour was required to determine the appellant’s claim were the property on which the parties had had their home near Opua in the Bay of Islands and which contained 12.7230 hectares, (the Waikino property), an interest in an oyster farm including a marine lease in the Waikare Inlet, and a 41% interest in Southern Ocean Tuna which was a partnership between the respondent and two other persons. The valuations submitted by the parties of the Waikino Road property varied considerably and because of the conflicting variations, the Judge was not able to determine an appropriate value. In an amended statement of claim, the appellant had claimed a 50% share in all the net assets in the respondent’s name although Ms Cook advised that at the hearing the appellant merely sought an interest in Southern Ocean Tuna and did not quantify that interest as equivalent to 50% of the respondent’s interest. The respondent’s position at the time of the hearing, as noted in the judgment, was that the appellant was entitled to a maximum of 30% to 35% of the Waikino Road property and 25% of the oyster lease. He denied that the appellant was entitled to any part of his share in Southern Ocean Tuna. The Judge determined that the appellant was entitled to a 50% interest in the Waikino Road property and a 30% interest in the oyster lease, but was not entitled to any interest in Southern Ocean Tuna. The appellant therefore succeeded in full in her claim to an interest in the Waikino Road property, obtained a slightly greater interest than the respondent was prepared to concede in the oyster lease but less than the 50% interest which she had claimed, but failed on her claim for an interest in Southern Ocean Tuna. Under the judgment, the appellant benefited by obtaining interests in the disputed assets, the aggregate value of which exceeded the aggregate value of the interest offered by the respondent prior to the hearing. While it is not possible to put an exact monetary value on the appellant’s success, because this depends ultimately on the valuation of the Waikino Road property and the other assets, it would appear to be approximately $45,000.

[4] The Judge invited counsel to file memoranda on the question of costs. Counsel for the appellant sought a reasonable contribution of the appellant’s costs and submitted that such a contribution would be 70% of the actual legal costs and disbursements paid. Her total costs and disbursements were in excess of $47,000. Counsel for the respondent submitted that each party should bear his or her own costs. The respondent’s costs were slightly less than $44,000.

[5] In his costs decision, Williams J noted that he had taken into account the submissions filed by counsel for both parties and the authorities collected in the appropriate sections in McGechan on Procedure. He then specified four matters to which he had had particular regard and determined that this was a case where each of the parties should bear his or her own costs, but did order that the respondent should pay to the appellant half the Court filing fees and the hearing fees paid by her.

The Appellant’s Position

[6] The first ground stated in the notice of appeal was that costs should follow the event and the Judge erred by applying matrimonial property costs principles to a case of this nature. This ground was that the costs decision was based on the cornerstone of matrimonial property principles and that such principles should not apply in a case of this nature. Other grounds referred to but relied on to a lesser extent, were the failure to take into consideration delays caused by the respondent, his refusal to make a reasonable settlement offer of any sort until just prior to the hearing, and a failure to take into account other established principles for fixing costs, including the preparation involved, the length of hearing, the amount of funds involved, the importance of the issues in a monetary and non-monetary sense, and delay in failure to settle.

Matrimonial Property Ground

[7] It is apparent that there is a practice which appears to be reasonably widespread, but not universal, of not awarding costs in matrimonial property cases. The reason for this practice appears to be that the resolution of disputes in a matrimonial property case is for the benefit of both parties, and in a sense, neither should be regarded as a winner or a loser. The validity of this practice was not in issue before us. Two comments, however, need to be made. First, the Court in both matrimonial property proceedings and in de facto property claims, has an unfettered discretion as to costs. Section 40 of the Matrimonial Property Act 1976 confirms this discretion in matrimonial property claims and r 46 of the High Court Rules clearly applies to the present case. Secondly, any practice which may have arisen in matrimonial property cases cannot be elevated to the status of a principle which overrides a discretion either in matrimonial property cases or other cases to which r 46 of the High Court Rules applies. The rationale upon which the practice in matrimonial property cases appears to be based may be one of the matters to be taken into account in the exercise of the Judge’s discretion in de facto property cases.

Exercise of the Discretion

[8] Costs are highly discretionary. An appellate Court will not upset a trial Judge’s discretion in awarding costs unless that discretion has been exercised on wrong principles.

[9] In this case, Williams J noted that he had read the submissions of counsel and considered the principles which are collected in the appropriate passages in McGechan on Procedure. The matters to which he had particular regard, apart from the practice in matrimonial property cases, were the parties’ actual costs, the length of the hearing and the complexity of the issues ultimately for decision coupled with the history of the proceeding, and the parties’ agreement on all but a restricted number of issues. These were all relevant matters to take into account.

[10] There were two references to the Matrimonial Property Act. In the first, it was noted that this proceeding was an ordinary proceeding and not a claim under the Matrimonial Property Act but that it had obvious affinities with claims under that statute. Accordingly, His Honour bore in mind the practice in those cases which are not out of the ordinary where parties often bear their own costs. The second reference is in a paragraph where His Honour noted that in broad terms, each of the parties succeeded on some issues and failed on others. He then said “[i]n a sense, this case was similar to cases under the Matrimonial Property Act 1976 where the parties invoked the Court’s assistance to resolve issues they have been unable to resolve for themselves but that is particularly the case where the principal matter in issue between the parties was the wide divergence between the valuers.” That wide divergence in values related to the Waikino Road property where one party’s valuer in December 1997 valued it at $790,000 and the other party’s valuer at $458,000. The valuation was relevant because of the respondent’s stated intention at that time to pay out the appellant her share of the property. His Honour did take into account the factor which is behind the practice in the Matrimonial Property Act. However, not only was His Honour entitled to do this, but also he did take into account other factors as already indicated. He was not applying a Matrimonial Property Act principle, but taking into account as one of the relevant matters, a factor which has been taken into account by many Judges in fixing costs under the Matrimonial Property Act. Because of the matters in issue before him he was entitled to do so. He weighed other relevant factors and in his discretion, came to his decision.

[11] Other Judges may have come to a different view on the facts of this case. However, the decision which His Honour came to in the exercise of his discretion was clearly one available to him after taking into account the matters which he did take into account. There was no error in principle in the exercise of his discretion and accordingly no grounds exist for altering the decision. The appeal is therefore dismissed.

[12] In the circumstances of this case, there will be no order for costs on this appeal.

Solicitors

Thomson Wilson, Whangarei for the Appellant

Shieff Angland, Auckland for the Respondent