Easton v Larsen - [2017] NZCA 258

IN THE COURT OF APPEAL OF NEW ZEALAND

CA521/2016
[2017] NZCA 258

BETWEEN	IAN CHARLES EASTON Appellant
AND	ALAN MCKENZIE LARSEN Respondent

Hearing:	8 June 2017
Court:	French, Miller and Clifford JJ
Counsel:	J O Upton QC for Appellant S M Hunter and S F Alawi for Respondent
Judgment:	19 June 2017 at 10.30 am

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellant must pay the respondent costs for a standard appeal on a band A basis together with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by French J)

Introduction

Mr Easton issued a proceeding in the High Court against Mr Larsen.[1] Justice Ellis struck out the proceeding. She did so on the grounds that at its highest the claim was a claim for breach of trust to which Mr Larsen had a complete defence under an indemnity clause in the relevant trust deed.[2]
[1]A company owned by Mr Easton called Easton Agriculture Ltd was also a plaintiff in the High Court but has not appealed the decision. Earlier proceedings filed in 2009 by Mr Easton and his company alleging professional negligence and breach of trust by Mr Larsen were discontinued: Easton v Larsen [2013] NZHC 2859.
[2] Easton v Larsen [2016] NZHC 2234.
Mr Easton now appeals that decision.

Background

Mr Larsen was the accountant for Mr Easton and various entities associated with Mr Easton and his extended family. One of those entities was the Moutoa Trust (the trust), a trust established by Mr Easton’s parents. In addition to doing the accounting work for the trust, Mr Larsen was one of the trustees.[3] Mr Easton and his two sisters were discretionary and final beneficiaries under the trust.
[3]After the death of his parents Mr Easton became a trustee, joining one of his sisters and Mr Larsen.
The Easton family owned a number of farming properties. Two of those properties are at issue in this appeal. Both were owned by companies controlled by the trust. The trust owned all the shares in one land-owning company, and about 17 per cent of the non-voting shares and 100 per cent of the voting shares in the other company.[4]
[4]Mr Easton owned the majority of the non-voting shares.
After Mr Easton’s parents died in 2000, Mr Easton and his two sisters became embroiled in a dispute under the Family Protection Act 1955. The trust was the sole residuary beneficiary in both estates.
On 28 January 2003 a family meeting was held at Mr Larsen’s office. An agreement was reached to the effect that, pending resolution of the dispute, Mr Easton was to be given the opportunity to farm the farm properties in his own right, subject to him not being at a financial disadvantage. He was to lease the land. A market rental was to be fixed and apportioned between the various entities “relying upon the strict understanding that when the rental is paid, it will then be paid out in the appropriate shares” to Mr Easton and…

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: [2017] NZCA 258
Decision Date: 19 June 2017 at 10.30 am

CaseChat Overview and Summary

In the Court of Appeal of New Zealand, Ian Charles Easton, the appellant, brought a proceeding against Alan McKenzie Larsen, the respondent, who was his accountant and trustee of the Moutoa Trust. Easton's appeal against the High Court's decision to strike out his proceeding was dismissed. The Court held that the claim was a claim for breach of trust, to which Larsen had a complete defence under an indemnity clause in the trust deed. The claim was incapable of repair by further amended pleading.

The appeal raised the issue of whether Larsen's actions constituted a breach of fiduciary duty, as alleged by Easton. The Court found that the promise made to Easton was conditional on rental being paid, and the rent was not paid or not paid in sufficient amounts to enable Larsen to make a distribution. Easton was unable to articulate how he had been disadvantaged by Larsen's failings, and there was no suggestion that Larsen was responsible for the fact the rent was not paid. The Court held that the claim, at best, was a claim for negligent administration of a trust, to which Larsen had a complete defence under the indemnity clause.

The Court dismissed the appeal and ordered Easton to pay Larsen's costs for a standard appeal on a band A basis together with usual disbursements. The Court held that Easton's financial difficulties were not a reason to exempt him from an order of costs.

Orders