Aksinya Enterprises Limited v Bhagirath - [2024] NZHC 2048

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2016-404-3158

[2024] NZHC 2048

UNDER The Companies Act 1993

IN THE MATTER OF

of the liquidation of Aksinya Enterprises Limited (in liquidation)

BETWEEN

AKSINYA ENTERPRISES LIMITED

First Plaintiff

AND

HENRY DAVID LEVIN and VIVIEN JUDITH MADSEN-RIES

Second Plaintiff

SHIV SHARAN TEK SINGH BHAGIRATH
First Defendant

Cont’d on next page

Teleconference: 22 July 2024 at 9.00 am

Appearances:

J Katz KC for G McLean and G Kanji (with leave, having been advised of his recent retirement)

P Vinnell for the Public Trust

Judgment:

25 July 2024

JUDGMENT OF MUIR J

This judgment was delivered by me on 25 July 2024 at 4.30 pm, Pursuant to Rule 11.5 of the High Court rules.

Registrar/Deputy Registrar Date: ……………………………

Solicitors: Glaister Ennor

AKSINYA ENTERPRISES LIMITED v LEVIN and MADSEN-RIES [2024] NZHC 2048 [25 July 2024]

SHIV SHARAN TEK SINGH BHAGIRATH and SHARANDEEP SINGH BHAGIRATH and SHIV BHAGIRATH FAMILY TRUST
Second Defendants
GURCHETAN SINGH and SHIVENDER
PAL SINGH as trustees of the SHIV BHAGIRATH FAMILY TRUST
Third Defendants
RADHA MANI SWAMY
Fourth Defendant

Introduction

[1] Gaynor McLean and Gulab (George) Kanji apply for orders removing them as trustees of the Shiv Bhagirath Family Trust (the Trust) and appointing the Public Trust as the replacement trustee. They also apply for certain consequential orders.

[2] Both existing trustees are or have been legal practitioners. Mr Kanji has been retired for many years and Ms McLean retires towards the end of this year.

[3] They make the application on the basis that their appointment was only ever intended to be temporary, they do not have the resources or ability to continue as trustees and that the Public Trust is therefore appropriately substituted for them.

[4] The Public Trust does not consent to the appointment. It says that it has a statutory mandate to operate as an efficient business and that, given the financial circumstances of the Trust, it is unlikely to be able to charge or to charge appropriately for its services. It acknowledges however that, given it has not been possible to identify any viable alternative trustees, there is an “inevitability” that the court will wish to appoint it, which such appointment it is obliged to accept under s 114(4)(a) of the Trust Act 2019 (the Act).

Background

[5] The application is made against a complex factual background, fully traversed in many previous Judgments and Minutes of this Court.1 In short:

(a)The Trust was settled in 1998 by Shiv Bhagirath and his then partner, Tafaoga Meli.

(b)The trustees appointed under the Trust Deed were Shiv Bhagirath and his two brothers, Mr Gurchetan Singh and Mr Shivender Pal Singh.

1 Aksinya Enterprises Ltd v Bhagirath [2020] NZHC 2788; and Aksinya Enterprises Ltd v Bhagirath [2022] NZHC 3526. See also the following minutes: Aksinya Enterprises Ltd v Bhagirath HC Auckland CIV-2016-404-3158, 22 February 2019; 3 February 2020; 10 February 2020; 3 March 2020; 4 February 2021; 21 July 2022;…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NZHC 2048
Decision Date: 25 July 2024

CaseChat Overview and Summary

Gaynor McLean and Gulab (George) Kanji, who had been appointed as trustees of the Shiv Bhagirath Family Trust, have applied to the High Court of New Zealand for orders to remove them as trustees and to appoint the Public Trust as their replacement. The Trust was established in 1998 by Shiv Bhagirath and his then partner, Tafaoga Meli, and the original trustees were Shiv Bhagirath and his two brothers, Gurchetan Singh and Shivender Pal Singh. However, the brothers were disengaged from the Trust's operations, and in 2016, the Trust became involved in litigation brought by the liquidators of Aksinya Enterprises Limited. To manage the litigation, McLean and Kanji were appointed as trustees on a temporary basis. They have now applied to be removed as trustees, citing their lack of resources and ability to continue in their roles, and to be replaced by the Public Trust.

The court considered whether it had jurisdiction to remove the trustees and appoint a replacement. Section 112 of the Trust Act 2019 allows the court to remove a trustee if it is necessary or desirable and difficult or impracticable to do so without the court's assistance. Similarly, Section 114 allows the court to appoint a new trustee if it is necessary or desirable and difficult or impracticable to do so without the court's assistance. The court found that it had jurisdiction under these sections because the Trust Deed did not provide a mechanism for the removal of the trustees, and the settlors were unable to exercise their power to appoint new trustees.

The court also considered the application for consequential orders, including vesting the Trust's property in the Public Trust, granting an indemnity to McLean and Kanji, and awarding costs. The court noted that the Trust's only income was from boarders residing at a property in Otahuhu, and that the Public Trust was entitled to be remunerated for its services. The court awarded McLean and Kanji $5,000 in costs, to be paid from the Trust's assets as they became available.

The court made orders in terms of the draft filed with the court, removing McLean and Kanji as trustees and appointing the Public Trust as their replacement, vesting the Trust's property in the Public Trust, granting an indemnity to McLean and Kanji, and awarding costs to McLean and Kanji in the amount of $5,000. The Public Trust was given an opportunity to be heard on the matter but did not consent to the appointment. However, the court noted that the Public Trust was obliged to accept the appointment under Section 114(4)(a) of the Trust Act 2019.

Orders