Forgan v Lee - [2025] NZHC 3212

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2025-409-175

[2025] NZHC 3212

UNDER the Trusts Act 2019 and in the Court’s inherent jurisdiction

IN THE MATTER

of the Blackwood Bay Trust and the Snowden Trust

BETWEEN

REBECCA LUCY FORGAN

Plaintiff

AND

ARTHUR MATHEWSON LEE and

ROBYN ANDREA LEE, as trustees of the Blackwood Bay Trust
First Defendant

AND

ARTHUR MATHEWSON LEE and

ROBYN ANDREA LEE as trustees of the Snowden Trust

Second Defendants

Hearing: On the papers

Appearance:

J M McGuigan and J I Taylor for Plaintiff J C Woods for Public Trust

C Upton and N C Dodds for Covisory Trust No. 2 Ltd

Judgment:

24 October 2025

JUDGMENT OF OSBORNE J

Introduction

[1]By this judgment I determine matters of costs in this proceeding.

FORGAN v LEE [2025] NZHC 3212 [24 October 2025]

[2]My substantive judgment was delivered on 6 August 2025.1

The proceedings

[3] The proceedings were heard by way of formal proof and involved claims against Arthur and Robyn Lee (the defendants) as trustees of two traditional discretionary family trusts:- the Blackwood Bay Trust and Snowden Trust (the Trusts), of which the plaintiff, Ms Forgan, was a discretionary beneficiary.

[4] The Blackwood Bay Trust was settled by David Lee, Robyn’s husband, in April 1973. The Snowden Trust was settled by David and Robyn on May 2016. David is now aged 84 and has been diagnosed with early-stage dementia.

[5] I found there had been serious breaches of the trustees’ duties.2 Arthur had failed to avoid his conflict of interest and had exercised powers for his own benefit. Both defendants had breached their duty to act for the benefit of the beneficiaries and prudently manage the Trusts’ affairs.

[6] The breaches of trustee duties involved Arthur borrowing funds for his personal benefit and for his company by giving security over trust assets and causing the Trusts to incur interest liability and to fall into default under the loans. After proceedings were commenced, trust properties were sold by agreement to pay off these loan obligations. The sales were sufficient to pay off the debts with funds remaining and to have an independent, professional trustee accept appointment. Before the financial position of the Trusts was clear, Public Trust was notified it may be appointed as trustee of the Snowden Trust. Although this ultimately was not required, Public Trust’s solicitor filed a memorandum setting out its position.

[7] Ms Forgan provided extensive evidence in support of the proceeding. The background was complex. Ms Forgan’s affidavits informed of her difficulty in obtaining information about the Trusts due to the defendants withholding requested information and failing to abide by discovery directions.

1 Forgan v Lee [2025] NZHC 2310.
2 Forgan v Lee, above n 1.

[8] Associate Judge Lester made an order for costs in relation to an application for pre-commencement discovery—the defendants were ordered to meet Ms Forgan’s solicitor-client costs on that matter.3

[9] Due to the defendants’ breaches, I ordered…

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 Forgan v Lee

Details

AGLC: Forgan v Lee [2025] NZHC 3212
Case: [2025] NZHC 3212
Decision Date: 24 October 2025

CaseChat Overview and Summary

The case of Forgan v Lee involved proceedings against Arthur and Robyn Lee, who were trustees of the Blackwood Bay Trust and the Snowden Trust, in which Rebecca Lucy Forgan, a discretionary beneficiary, sought removal from office and relief against breaches of trust. The court found that Arthur had failed to avoid conflicts of interest and exercised powers for personal benefit, while both trustees breached their duties to act for the benefit of beneficiaries and to manage the trusts prudently. The court ordered the removal of the defendants as trustees and appointed Covisory Trust No. 2 Limited as the new trustee. The substantive issue before the court was the determination of costs and disbursements claimed by the plaintiff. Ms Forgan sought an order for her costs and disbursements of $126,575.03 to be met from the assets of the trusts on a joint and several basis. The court found that the costs claimed were reasonable and appropriate for the complexity of the work undertaken.

The court noted that the proceedings fell into the third category of trust litigation, where a beneficiary makes a hostile claim against the trustees. In such cases, the usual principles of costs apply, and the successful party is ordinarily entitled to costs and disbursements payable from the trust. The court held that it was appropriate for the trusts to bear Ms Forgan's costs on a solicitor and client basis, as she was a necessary party to the proceedings and had acted reasonably throughout. The court ordered that the plaintiff's costs and disbursements of $126,575.02 be paid jointly and severally from the Blackwood Bay Trust and the Snowden Trust.

Orders