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Erceg v Erceg

Erceg v Erceg

Case [2015] NZHC 594 27 March 2015

Equitable Estoppel

Breach of Trust

Unjust Enrichment

Admissibility of Evidence

Fiduciary Duty

Trusts & Equity

Insolvency Law

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-002352 [2015] NZHC 594

BETWEEN IVAN VLADIMIR JOSEPH ERCEG Plaintiff

AND

LYNETTE THERESE ERCEG and DARRYL EDWARD GREGORY AS TRUSTEES OF ACORN FOUNDATION TRUST

First Defendants

LYNETTE THERESE ERCEG and DARRYL EDWARD GREGORY AS TRUSTEES OF INDEPENDENT GROUP TRUST

Second Defendants

Hearing: 5 December 2014

Appearances:

C M Meechan QC and R B Hucker for Plaintiff
G M Coumbe QC and F C Monteiro for First and Second
Defendants

Judgment:

27 March 2015

JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney
on 27 March 2015 at 4.30 pm and re-issued on 5 May 2015 pursuant to R 11.5 of the High Court Rules

Registrar / Deputy Registrar

Date……………………….

ERCEG v ERCEG [2015] NZHC 594 [27 March 2015]

Introduction

[1] Under s 101 of the Insolvency Act 2006 all of a bankrupt’s property vests absolutely in the Official Assignee upon the bankruptcy. The main issue in this case is whether the right of a discretionary beneficiary to seek disclosure of trust documents constitutes property for the purposes of s 101.

[2] The plaintiff, Ivan Erceg, is a discharged bankrupt.1 Prior to his bankruptcy in 2010 he was both a discretionary and final beneficiary of the Acorn Foundation Trust and the Independent Group Trust. These trusts were settled by Mr Erceg’s late brother, Michael Erceg, in 2002 and 2004 respectively. The trusts were wound up in December 2010 without any distribution being made to Mr Erceg. In this proceeding Mr Erceg asserts that, as a beneficiary, he is entitled to seek disclosure of documents relating to the administration of the trusts. He is seeking an order requiring the former trustees to provide a variety of documents relating to the trusts
and has applied for summary judgment.2

[3] The first defendants were the trustees of the Acorn Foundation Trust and the second defendants the trustees of the Independent Group Trust. They argue that any right Mr Erceg had to seek disclosure of trust documents constituted property for the purposes of s 101 and vested in the Official Assignee upon bankruptcy; as a result Mr Erceg does not have standing to bring this proceeding. Alternatively, they say that if Mr Erceg is entitled to bring the proceeding I should exercise my discretion against ordering disclosure. They oppose the summary judgment application and have applied for summary judgment against Mr Erceg or, alternatively, an order striking out his statement of claim.

Jurisdiction

[4] The plaintiff’s summary judgment application falls within r 12.2(1) of the High Court Rules under which the Court may grant summary judgment if satisfied that the defendant has no defence to a cause of action or a particular part of any
cause of action. The concept of “no defence” was described in Pemberton v

1 Mr Erceg was discharged from bankruptcy in 2014.
2 The plaintiff also sought a declaration that he is a beneficiary of the trusts but the defendants do not dispute that fact so there is no…

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 Erceg v Erceg

Details

AGLC: Erceg v Erceg [2015] NZHC 594
Case: [2015] NZHC 594
Decision Date: 27 March 2015

CaseChat Overview and Summary

In Erceg v Erceg, the High Court of New Zealand considered whether the right of a discretionary beneficiary to seek disclosure of trust documents constitutes property for the purposes of the Insolvency Act 2006, and if so, whether the Official Assignee had abandoned this right. The plaintiff, Ivan Erceg, a discharged bankrupt, sought disclosure of documents relating to the administration of two trusts settled by his late brother, Michael Erceg, in 2002 and 2004. The trustees argued that Mr Erceg's right to seek disclosure constituted property for the purposes of s 101 of the Insolvency Act, which vests all of a bankrupt’s property in the Official Assignee upon bankruptcy. Alternatively, they argued that if Mr Erceg was entitled to bring the proceeding, the court should exercise its discretion against ordering disclosure.

The court concluded that Mr Erceg's interest as a final beneficiary in the trusts was property for the purposes of s 101 of the Insolvency Act and vested in the Official Assignee upon his bankruptcy. Therefore, Mr Erceg did not have standing to bring the proceeding in his capacity as a final beneficiary. However, the court also concluded that a discretionary beneficiary's right to seek disclosure of trust documents was a right in relation to property for the purposes of s 101, and that such a right vested in the Official Assignee upon bankruptcy. The court found that there was no evidence that the Official Assignee had abandoned the right to seek disclosure. Even if Mr Erceg had standing, the court would have exercised its discretion against requiring disclosure given the potential for family disruption and the absence of any specific concerns about the administration of the trusts.

Accordingly, the court dismissed Mr Erceg’s application for summary judgment and allowed the trustees’ application for summary judgment, rendering the application to strike out unnecessary. The court also dismissed the application to strike out. Costs were to be addressed by memoranda filed by the parties within specified periods. The court made orders to preserve the confidentiality of information provided for the purposes of the hearing.

Orders