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Enright v Enright

Enright v Enright

Case [2019] NZHC 1124 22 May 2019

Fiduciary Duty

Breach of Trust

Equitable Compensation

Conflict of Interest

Unconscionable Conduct

Trusts & Equity

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2016-404-1636

[2019] NZHC 1124

UNDER Part 18 of the High Court Rules

IN THE MATTER

of the J.J. Enright Trust

BETWEEN

TERRENCE JOHN ENRIGHT,

CATHERINE ANN NEWTON, WILLIAM JAMES YOUNG, WAYNE MICHAEL

ENRIGHT, GENE HERSCHEL ENRIGHT
Plaintiffs

AND

SHANE ANTHONY ENRIGHT

First Defendant

…/cont

Hearing: 11-21 February 2019

Appearances:

T M Molloy and S L McColgan for the Plaintiffs

D A T Chambers QC, I T F Hikaka and C Upton for the First, Third and Fourth Defendants
S L Robertson QC and A H H Choi for the Fifth Defendant

Judgment:

22 May 2019

JUDGMENT OF PALMER J

This judgment was delivered by me on 22 May 2019 at 11.30 am, pursuant to
r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Counsel/Solicitors:
T M Molloy & S L McColgan, Barristers, & Spencer Legal, Auckland D A T Chambers QC & I T F Hikaka, & LeeSalmonLong, Auckland
S Robertson QC & A H H Choi, Auckland & Glaister Ennor, Auckland

ENRIGHT v ENRIGHT [2019] NZHC 1124 [22 May 2019]

THE NEW ZEALAND GUARDIAN TRUST COMPANY LTD
Second Defendant

SHANE ANTHONY ENRIGHT
Third Defendant

ERIC JOHN THOMSON
Fourth Defendant

SOUTHERN LAKES HOLDINGS LTD
Fifth Defendant

Contents

Summary [1]

What happened? [4]

The Family [4]

Jack fell out with the children other than Tony [7]

The J J Enright Trust [14]

The trustees and early events in the life of the Trust  [15]
Appointment of Trust capital to Tony  [18]
Purchase of Southern Lakes Holdings Ltd, Wye Creek and Dunstan Burn     Station    [19]
Distribution of the Trust  [23]
A further falling out and Jack’s final years  [30]

The proceeding [35]

The meaning of the Trust Deed [41]
Interpretation of trust deeds [42]

The Deed [47]

Capital and income under the Deed [49]

Income and income beneficiaries under the Deed [51]

Capital and capital beneficiaries under the Deed  [66] Issue 1: Did income vest in the income beneficiaries and can it be traced to SLH?  [70] The sub-issues  [70]
Sub-issue 1: Did the trustees reserve income unanimously, each year, by the time
required?  [73]
Sub-issue 2: Were reservation decisions made in breach of the trustees’ duty of
impartiality?  [79]
Phase 1: NZGT and Jack  [87]
Phase 2: Were Tony’s and Jack’s reservation decisions improperly made?                 [90] Phase 3: Were Mr Thomson’s and Jack’s reservation decisions improperly made? [99] Sub-issue 3: What income was reserved?  [118]
Sub-issue 4: Can the vested income be traced into SLH’s hands?  [130] Issue 2: Did SLH unconscionably receive vested income?  [137] Relevant law of unconscionable receipt and unjust enrichment  [137]

Submissions [142]

Did SLH unconscionably receive payments? [144] Issue 3: Did Jack, Tony and Mr Thomson breach their fiduciary duties? [153] The three sub-issues [153]

Relevant law of trustees’ duties [154]

Sub-issue 1: Did Jack breach his fiduciary duties? [161]
Sub-issue 2: Did Tony breach his fiduciary duty against conflicts of interest? [165]
Sub-issue 3: Did Jack…

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.

Continue reading Enright v Enright

Details

AGLC: Enright v Enright [2019] NZHC 1124
Case: [2019] NZHC 1124
Decision Date: 22 May 2019

CaseChat Overview and Summary

- Parties:
The parties involved in the case are Terrence John Enright, Catherine Ann Newton, William James Young, Wayne Michael Enright, Gene Herschel Enright (plaintiffs) and Shane Anthony Enright (first defendant). The second defendant is The New Zealand Guardian Trust Company Ltd, the third defendant is Eric John Thomson, and the fourth defendant is Southern Lakes Holdings Ltd.

- Nature of the dispute:
The dispute revolves around the J.J. Enright Trust and the distribution of its assets. The plaintiffs, who are the children of Jack Enright, claim that the trustees of the trust breached their fiduciary duties and that the trust's income was not properly vested and traced to Southern Lakes Holdings Ltd (SLH). They seek equitable relief, including compensation and tracing of funds.

- Court:
The case was heard in the High Court of New Zealand, Auckland Registry.

- Legal issues:
The legal issues in this case include the interpretation of the trust deed, the validity of the trustees' decisions to reserve income, whether the trustees breached their duty of impartiality, the tracing of vested income into SLH's hands, whether SLH unconscionably received the income, and the appropriate remedies for the plaintiffs.

- Court's reasoning and outcome:
The court found that the trustees did not validly reserve income as required by the trust deed, and that the income vested in the income beneficiaries each year. The court also determined that the trustees breached their duty of impartiality, particularly in the decisions made by Mr. Thomson and Jack. The court ordered equitable compensation and interest to be paid by the defendants to the successful plaintiffs. The court rejected the claims of Tony and the defendants' defence of honest and reasonable trustees. The court granted the plaintiffs equitable relief, including compensation and interest, but did not impose a constructive trust over the property. The court also considered the appropriate costs to be awarded.

- Final orders:
The final orders of the court include Mr. Tony Enright accounting for $711,095 (for the dividend) and $492 (for income reserved in conflict of duty), plus simple interest, to the successful plaintiffs. Mr. Tony Enright, as the administrator of Jack Enright's estate, must pay equitable compensation of $8,303 plus simple interest to the successful plaintiffs, or alternatively, Mr. Eric Thomson must pay the same amount. SLH must pay equitable compensation of $995,859, plus simple interest, to the successful plaintiffs. The court also granted leave for the plaintiffs to file submissions on costs within 15 working days of the judgment, and for the defendants to file submissions within ten working days of that.

Orders