Gillespie v Guest - [2013] NZHC 669

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-1629 [2013] NZHC 669

BETWEEN BRUCE JAMES GILLESPIE, PRUDENCE JULIET GILLESPIE, CHRISTOPHER JAMES GILLESPIE, NICHOLAS JOHN GILLESPIE AND JONATHAN PAUL GILLESPIE Plaintiffs

ANDANDREW JOHN DEXTER GUEST First Defendant

ANDVIRANDA PROPERTY NETWORK LIMITED
Second Defendant

ANDRSM PRINCE & PARTNERS First Third Party

AND MORRISON CREED
Second Third Party (DISCONTINUED)

ANDGRAEME HAMILTON SINCLAIR Third Third Party

Hearing: 10 May 2012

Counsel: A Barker for Plaintiffs
A J D Guest, First Defendant, in person

Judgment: 4 April 2013

JUDGMENT (No.2) of ASSOCIATE JUDGE BELL On application for strike-out

This judgment was delivered by me on 4 April 2013 at 1:00pm
pursuant to Rule 11.5 of the High Court Rules.

...................................
Registrar/Deputy Registrar

GILLESPIE V GUEST HC AK CIV-2011-404-1629 [4 April 2013]

[1] This decision, like the decision on the plaintiffs’ discovery application, comes long after the hearing, far too long. I appreciate that the parties have been kept waiting and that the delay must have caused inconvenience. I apologise for the time taken.

[2] Mr Guest, the first defendant, applies to strike out the statement of claim against him because it discloses no reasonably arguable cause of action and that the cause of action cannot succeed. The plaintiffs oppose. The basis for Mr Guest’s application is that he is entitled to the limitations on the liability of trustees under the plaintiffs’ trust deed. He says that he was a trustee.

The plaintiffs’ claim

[3] The plaintiffs are the trustees of the Gillespie Family Trust. The trust was established under a deed dated 11 July 1995. Bruce and Prudence Gillespie are the settlors. They have the power to appoint new trustees. Bruce, Prudence, and their son Christopher, were the initial trustees. Their sons Nicholas and Jonathan have since been appointed by deed.

[4] The plaintiffs’ case is that Mr Guest was the primary financial advisor for the Gillespie family and the Trust since approximately 1987. On his advice, they made an investment of $1,830,000 by way of term loan in a company, Titan 1 Finance Ltd. Titan 1 Finance Ltd failed. The plaintiffs have been partly repaid, in part because of proceedings taken against the guarantors, but they have suffered a residual loss. They sue Mr Guest for that loss.

[5] The statement of claim has four causes of action: (a) Breach of fiduciary duty;
(b) Breach of contract of retainer; (c) Negligence; and

(d) Breach of the Fair Trading Act 1986.

[6] Mr Guest’s statement of defence includes the following at its very start:

Limited Liability and Indemnity

AThat he is not liable to the Plaintiff Trust as claimed but that if he is found to be liable then his liability is limited only to loss attributable to dishonesty or the wilful commission or omission of an act which he knew to be a breach of trust and such conduct he denies in all respects.

PARTICULARS

a)That he was either appointed and acted as a Trustee of the Plaintiff Trust from 2004 until 2008…

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 Gillespie v Guest

Details

AGLC: Gillespie v Guest [2013] NZHC 669
Case: [2013] NZHC 669
Decision Date: 4 April 2013

CaseChat Overview and Summary

The Gillespie family sought to strike out a claim for damages against Andrew John Dexter Guest, who was a financial advisor to the Gillespie family and the Gillespie Family Trust. The Gillespies, as trustees of the Gillespie Family Trust, alleged that Mr Guest was liable for losses that the trust suffered after investing in Titan 1 Finance Ltd, a company that failed. Mr Guest applied to strike out the claim on the basis that the trust deed limited his liability to losses attributable to his own dishonesty or to his wilful commission or omission of an act known to be a breach of trust. The Gillespies opposed the application. The court noted that Mr Guest’s application was unusual, as he did not provide an affidavit in support of it. The court also noted that the Gillespies had not filed a reply to Mr Guest’s statement of defence, but granted them leave to file one. The court considered whether Mr Guest had been appointed a trustee of the Gillespie Family Trust. The trust deed gave Mr and Mrs Gillespie the power to appoint new trustees. Mr Guest relied on certain correspondence and a deed appointing another trustee to argue that he was appointed a trustee. The Gillespies submitted that the deed in question contained an error and that Mr Guest was never appointed a trustee. The court held that it was far from clear that Mr Guest was a trustee, but that this was an arguable case. The court also considered whether Mr Guest acted as a trustee in the matters for which he was sued. The Gillespies submitted that, even if Mr Guest had been appointed a trustee, he was acting in a different capacity when he acted in relation to the investment in Titan 1 Finance Ltd. The court held that it was not unequivocal that Mr Guest was working solely as trustee on those matters. The court also considered whether the provisions of the trust deed limited Mr Guest’s exposure to liability. Mr Guest submitted that his liability was limited to losses attributable to his own dishonesty or to his wilful commission or omission of an act known to be a breach of trust. The Gillespies submitted that there was an irreducible core of obligations resting on a trustee from which it was not possible to exempt from liability by clauses such as the one in question. The court held that the defence raised by Mr Guest did not provide a complete bar to a claim against him. The court dismissed Mr Guest’s application to strike out the claim, but required the Gillespies to review their pleadings after discovery had been completed.

Orders