DOUGLAS MURRAY KINNON AND AVRYL MARGARET KINNON AS TRUSTEES OF THE CEDAR LODGE TRUST First Respondents
DOUGLAS MURRAY KINNON Second Respondent
JAALA FERNANDE DYER Third Respondent
NOMINEES AND TRUSTEES LIMITED Fourth Respondent
Hearing:
21 May 2024
Court:
Courtney, Muir and Cull JJ
Counsel:
Appellant in person M C Nicholls for First, Second and Third Respondents No appearance for Fourth Respondent
Judgment:
14 April 2025 at 2:00 pm
JUDGMENT OF THE COURT
AThe appeal against the judgment of Jagose J in CA265/2023 is allowed in part. We uphold the findings of Jagose J in respect of Mr Hong’s claims of perjury, equitable fraud and breach of good faith. We otherwise allow the appeal and remit the proceeding to the High Court for determination of an application by Mr Hong to amend his statement of counterclaim to address his right to indemnity.
BThe appeal against the judgment of Harvey J in CA433/2023 is dismissed. We remit the proceeding to the High Court for determination of the account of profits.
CWe make no order as to costs.
REASONS OF THE COURT
(Given by Courtney and Muir JJ)
Para No
Introduction
Issues on appeal
Background
The Trust and the Property
The High Court proceeding
Appeal against decision of Jagose J
Alleged breach of fiduciary duty through perjury
Alleged equitable fraud and breach of good faith
Observations on possible limitation defence to Mr Hong’s counterclaim
Appeal against decision of Harvey J
Judgment of Harvey J
Did the Judge err in determining the causes of action in respect of which Mr Hong had filed a statement of defence?
The Judge’s finding that the Trust is the equitable owner of the property
Hearsay evidence
Notes of evidence from the Tribunal hearing
Reliance on Jagose J’s findings as to the nature of the payment
Was the Judge’s conclusion as to ownership correct?
Did the Judge err in finding Mr Hong breached his fiduciary duties?
Did the Judge err in relation to the remedies granted?
Costs
Result
[1]
[6]
[9]
[9]
[21]
[26]
[26]
[28]
[45]
[56]
[56]
[60]
[68]
[70]
[72]
[77]
[82]
[83]
[86]
[89]
[91]
Introduction
[1] These appeals arise from the 2008 purchase of a property in Kerikeri (the Property) by the Cedar Lodge Trust (the Trust). The trustees of the Trust were the settlor, Mr Kinnon Snr, his daughter-in-law, Ms Dyer, and the lawyer for the trust, Mr Hong. It was Mr Hong who provided the bulk of the purchase price.[1] The basis on which he did so was not the subject of any written agreement and is disputed.
[1]The money was provided by a company controlled by Mr Hong.
[2] The trustees were later replaced by a trustee company controlled by Mr Hong, Nominees and Trustees Ltd (NTL).[2] Later still, Mr Hong transferred the property into his own name.[3] In 2021 the current trustees of the Trust (Ms…
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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AGLC
Hong v Kinnon [2025] NZCA 117
Case
[2025] NZCA 117
Decision Date
CaseChat Overview and Summary
The case of Hong v Kinnon involves appeals against decisions of the High Court relating to the ownership and transfer of a property in Kerikeri. The property was originally purchased by the Cedar Lodge Trust, with Mr Hong, a trustee, contributing the majority of the purchase price. The current trustees of the Trust, Ms Dyer's former husband Douglas Kinnon and Avryl Kinnon, brought a proceeding to recover the property, while Mr Hong counterclaimed against both the current trustees and against Ms Dyer and Mr Kinnon personally. The appeal against the decision of Jagose J in respect of the counterclaim was allowed in part, and the appeal against the decision of Harvey J was dismissed. The Court upheld the findings of Jagose J in respect of Mr Hong's claims of perjury, equitable fraud, and breach of good faith. The Court found that Mr Hong had made the payment to settle the purchase in his capacity as a trustee and was entitled to be indemnified in respect of it. The Court agreed with Jagose J's characterisation of the payment, which is consistent with the evidence. The consequence is that Mr Hong is entitled, as a matter of law, to be indemnified. The Court considered that the appeal should be allowed and remitted the counterclaim to the High Court for Mr Hong to make an application to amend his pleading to enforce his proprietary interest. The Court found that the Trust obtained legal and equitable ownership of the Property upon settlement and that, despite the subsequent transfers, its equitable ownership remained. The Court agreed with Jagose J's finding that Mr Hong had paid the balance of the purchase price in fulfilment of his duty as a trustee to settle the Trust's purchase. The Court held that Mr Hong had breached his fiduciary duties by prioritising his interest in being repaid or reimbursed over the respondents' interests, by not keeping parties sufficiently informed, and by breaching the rule against self-dealing. The Court declared that Mr Hong held the Property on constructive trust for the Trust and that Mr Hong and NTL were, in principle, liable for an account of profits. The Court made no order as to costs on the appeals.