Bone v Tuck

[2018] NZHC 3415

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV 2018-470-0006

[2018] NZHC 3415

BETWEEN

CARLENE JOY BONE

Plaintiff

AND

CRAIG GARRY TUCK and YRW TRUSTEES LTD

Defendants

Hearing:

19 December 2018 (by telephone conference)

Appearances:

R J Connell for the Plaintiff

C B Hirschfeld for the Defendants (on a Pickwick basis)

Judgment:

19 December 2018

ORAL JUDGMENT OF JAGOSE J

Solicitors/Counsel:

Connell & Connell, Auckland

Charl Hirschfeld, Barrister, Auckland

BONE v TUCK [2018] NZHC 3415 [19 December 2018]

[1]As duty judge I have Ms Bone’s without notice application for orders Mr Tuck:

(a)be suspended as trustee of the Tuck Family Trust (the “Trust”);

(b)not operate any Trust bank accounts; and

(c)explain withdrawals of some $330,000 from the Trust’s bank account on 30 October and 30 November 2018—

on grounds such withdrawals are alleged to have been made unilaterally, without reference to the other trustee, without regard for the interests of final beneficiaries (of whom Ms Bone is one), for Mr Tuck’s personal benefit, in breach of his fiduciary duties, and presenting risk to other Trust assets. She provides the required undertaking.

[2]                 Ms Bone’s application is brought in pre-existing proceedings in which she seeks the defendants be discharged as trustees of the Trust, on grounds of an alleged dysfunctional relationship between trustees and beneficiaries. The existence of the Trust, the defendants’ trusteeship, and at least some Trust assets, is admitted. There is evidence in the Trust’s 2018 financial statement of the Trust’s assets extending to bank accounts, at that time including funds exceeding $400,000. Counsel for the defendants has been provided with the application and supporting documents, but only in anticipation he may appear on a Pickwick basis – that is, to assist the Court to the extent he can or wishes to do, given the absence of notice.1 Mr Hirschfeld advises Mr Tuck abides my decision.

[3]                 I am satisfied requiring Ms Bone to proceed on notice would cause undue delay or prejudice to her, being the risk of dissipation of Trust assets, and the application for the orders set out at [1(a)] and [1(b)] above can properly be dealt with without notice.2

[4]                 However, I am not satisfied that also is the case in relation to the order for an explanation, set out at [1(c)] above, particularly given the ongoing proceeding, for which there is a pending case management conference on 12 February 2019. There are

1      Pickwick International Inc (GB) Ltd v Multiple Sound Distributors Ltd [1972] 1 WLR 1213 (Ch) at 1214-1215.

2      HCR 7.46(3).

orders for tailored discovery in that proceeding, in which issues are noted as including the defendants’ benefit from Trust transactions.3

Applicable legal principle

[5]                 Interim injunction applications are determined on the basis of whether the plaintiff has a serious question for trial, and whether the balance of convenience and overall interests of justice favour granting the injunction.4 On the latter consideration(s), the question is whether refusing the injunction would be harder on a plaintiff who was successful at trial, than would granting it be on the successful defendant.5 This assessment is undertaken by reference to the adequacy of damages, preservation of the status quo, the uncompensable disadvantages to either party, and the relative strengths of their cases.6

Discussion

[6]                 I am satisfied Ms Bone has a serious case for trial, the present allegation effectively particularising her (denied) allegations of Mr Tuck’s failures to properly manage Trust assets and to treat all beneficiaries equally and impartially.

[7]                 I also am satisfied the risk of dissipation of Trust assets – particularly in light of the other trustee’s notification of its wish to resign, on grounds of trustee conflict – would make refusing the injunction harder on Ms Bone (as one of the final beneficiaries) than would its grant on Mr Tuck (as trustee). That is particularly as Mr Tuck will have leave to apply, on seven days’ notice to Ms Bone, to vary or discharge the orders.

[8]                 I convened a brief telephone conference with counsel to discuss the necessary orders. Section 45(3) of the Trustee Act 1956 anticipates “there will be either a trustee corporation or at least 2 individuals to act as trustees to perform the trust”. Mr Tuck’s sought suspension would mean he is unable “to perform”, and therefore the other

3      Minute of Andrew AJ, 19 June 2018.

4      American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL); and Klissers Farmhouse Bakeries Ltd

[1985] 2 NZLR 129 (CA).

5      Wellington International Airport Ltd v Air New Zealand Ltd HC Wellington CIV-2007-485-1756, 30 July 2008 at [4] citing Kane v Global Natural Resources Plc [1984] 1 All ER 225 (CA) at 237.

6      Wellington International Airport Ltd v Air New Zealand, above n 5, at [6]-[14].

trustee cannot be discharged. Mr Hirschfeld is unable to advise me of the corporate trustee’s position.

Orders

[9]I therefore order, pending further order of this Court:

(a)Mr Tuck’s powers as trustee of the Tuck Family Trust are hereby suspended; and

(b)Mr Tuck may not operate any Trust bank account.

[10]I direct:

(a)Mr Tuck has leave to apply, on seven days’ notice to Ms Bone, to vary or discharge the orders set out at [9] above;

(b)counsel are to file memoranda in advance of the next case management conference in this proceeding, setting out a timetable (desirably, agreed) for determination of or compliance with Ms Bone’s application for an explanation of the identified withdrawals from Trust accounts; and

(c)costs on the present application are to be determined in conjunction with that application.

—Jagose J