Easton v Larsen - [2016] NZHC 2234

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2014-454-102 [2016] NZHC 2234

IN THE MATTER OF the Trustee Act 1956

BETWEEN

IAN CHARLES EASTON First Plaintiff

EASTON AGRICULTURE LIMITED Second Plaintiff

AND

ALAN MCKENZIE LARSEN Defendant

Hearing:
17 June 2016

(Heard at Wellington)

Counsel:

J O Upton QC for Plaintiffs
S M Hunter for Defendant

Judgment:

22 September 2016

JUDGMENT OF ELLIS J

I direct that the delivery time of this judgment is
4 pm on the 22nd day of September 2016

EASTON v LARSEN [2016] NZHC 2234 [22 September 2016]

Table of Contents

Background [2] The Moutoa Trust [4] IEL, IGBM and EAL [8] The 2009 proceedings against Mr Larsen [10] The 2014 proceedings against Mr Larsen [14] The third amended statement of claim [23] First cause of action [25] Second cause of action [27] Third cause of action [29] Fourth cause of action [30] Evidentiary matters [31] The grounds for Mr Larsen’s applications [34] Preliminary comment on tenability of the third amended statement of claim [36] Limitation [39] Section 21 [46]
Do the new claims involve allegations of fraud or fraudulent
breach of trust? [49] When did the rights of action accrue? [51] Section 28 [57] Clause 20 of the Trust Deed [59] Dishonesty [61] Wilful breach of trust [64] Abuse of process [69] Conclusions and result [70]

[1] Mr Ian Easton and his company, Easton Agriculture Ltd (EAL) have been engaged in a long-standing and tortuous dispute with Mr Alan Larsen, an accountant. The present matter for determination is whether the latest iterations of their claims made against Mr Larsen should be struck out or whether summary judgment should be issued in his favour.

Background

[2] The narrative which follows is undisputed.

[3] Mr Larsen was at material times the accountant for Mr Easton and entities associated with him and his family, namely EAL, the Moutoa Trust (MT), Ian Easton Ltd (IEL) and IG & BM Easton Ltd (IGBM). Mr Larsen was, until August 2012, a director of EAL, IEL and IGBM.

The Moutoa Trust

[4] The MT was settled by Mr Easton’s parents in 1997. Mr Easton and his two sisters are both discretionary and final beneficiaries. The Trust Deed contains two clauses that are presently of some relevance. First, cl 16 states:

Any Trustee may participate in the exercise by the Trustees of the powers conferred upon the Trustees by this Deed notwithstanding that such Trustee is associated as director, trustee or otherwise, or is in any other way interested in any company, trust or other entity to which the Trustees sell or lease any property forming part of the Trust fund, or in which the Trustees hold or propose to acquire shares or other investments as part of the Trust Fund, or with which the Trustees otherwise deal as Trustees of these presents; and notwithstanding that the interests or duty of such Trustee in any particular matter or matters may conflict with his or her or its duty to the Trust Fund…

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: [2016] NZHC 2234
Decision Date: 22 September 2016

CaseChat Overview and Summary

The plaintiffs, Ian Charles Easton and Easton Agriculture Limited, are seeking to sue the defendant, Alan McKenzie Larsen, on four causes of action in the third amended statement of claim. The claims relate to alleged breaches of trust by Mr Larsen in his capacity as a trustee of the Moutoa Trust and as the accountant for the plaintiffs and various associated entities. The defendant has applied to strike out the claims or for summary judgment in his favour. The court found that while the claims were properly characterised as claims for breach of trust, they were not statute barred. However, the claims were struck out on the basis that the alleged breaches of trust were not dishonest or wilful. The plaintiffs' claims were also struck out on the basis that they were an abuse of process. The defendant was awarded costs.

Orders