Connor v Connor

Case [2018] NZHC 1721


IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE

CIV-2017-485-980

[2018] NZHC 1721

UNDER the Trustee Act 1956

IN THE MATTER

of the Balena Family Trust and the Balena Trust

BETWEEN

MARK RICHARD CONNOR

Plaintiff

AND

PAUL HARWOOD GEORGE CONNOR

Defendant

Hearing: 21 June 2018

Counsel:

J S McHerron and K H Lawrence for Plaintiff A J Knowsley and M R Turner for Defendant

Judgment:

12 July 2018


JUDGMENT OF THOMAS J


[1]    In 1996, George Connor (George) desired to leave his home in Wellington and retire to Australia. He set up a  trust  for the  protection and  management  of his  New Zealand assets (the Trust). The final or primary beneficiaries of the Trust were his three children, Paul Connor (Paul), Christine Faulkner, nee Connor (Christine) and Mark Connor (Mark). During George’s lifetime, Mark and Paul were, at various times, appointed trustees, required to a sign deed of retirement as trustees and perhaps removed as trustees. George’s mental capacity declined around 2010 and he died in 2014. The only remaining assets of the Trust are a bank account or bank accounts which are frozen and debts owed to the Trust by both Mark and Paul.

CONNOR v CONNOR [2018] NZHC 1721 [12 July 2018]

[2]    Mark and Paul have a difficult relationship and cannot agree who is a trustee of the Trust. Paul has commenced legal proceedings purportedly as trustee to recover Mark’s debt to the Trust. Mark claims the Trust is dysfunctional and has applied to the Court for the removal of the existing trustees and replacement with professional independent trustees. Paul opposes the application on the basis it is not necessary.

Background

The Trust

[3]    There are four signed trust deeds and dispute as to which is the operative deed. Allied with this is a dispute as to whether there is one Trust or two. The deeds are variously dated 29 March 1996 (Balena Trust), 31 March 1996 (Balena Trust), 1 April 1996 (Balena Family Trust), 1 April 1996 (Balena Trust/Balena Family Trust).

[4]    Each of the deeds names the same trustees (George, Dianne Connor (George’s former wife) and Mark) and beneficiaries (the three children). However, the deeds have different provisions relating to the appointment of trustees and different provisions as to whether resolutions of trustees must be unanimous or not.

[5]    Paul maintains there is one Trust only, the Balena Trust, and the names Balena Trust and Balena Family Trust have been used interchangeably by all parties, including George and a lawyer acting for the Trust. While Mark was originally a trustee, Paul maintains he resigned on 9 May 2002 and has not been reappointed. Paul says he himself was appointed a trustee on 1 August 2003 and that George appointed him sole appointor in late-August and/or September 2009. He also relies on a statutory declaration by George dated 26 October 2012 confirming that, in September 2009, Paul was appointed the sole appointor of the Trust.

[6]    Paul…

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Connor v Connor [2018] NZHC 1721
Case
[2018] NZHC 1721
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CaseChat Overview and Summary

The High Court of New Zealand was called upon to decide a dispute between two brothers, Mark Connor and Paul Harwood George Connor, over the administration and management of their father's trust, the Balena Family Trust and the Balena Trust. The key legal issue before the Court was whether the existing trustees should be removed and replaced with professional independent trustees. Mark argued that the Trust was dysfunctional and that neither he nor Paul could act in the best interests of the beneficiaries. Paul opposed the application, arguing that he and Natalie Connor were the current trustees and that the only dysfunction was due to Mark's behaviour. The Court found that the Trust was indeed dysfunctional and that the appointment of independent trustees was necessary to ensure the proper administration of the Trust and the protection of the beneficiaries' interests. The Court appointed Mike Curtis, an accountant, and David Chapman, a lawyer, as the new trustees. The Court emphasised the importance of treating the beneficiaries equally and considering the interests of all parties involved. The Court also highlighted the need for the trustees to address the outstanding loans made to Mark and Paul and to consider the appropriate interest rates and repayment terms.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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