Ieriko v Fa'afuata HC Auckland CIV 2009-404-6067
[2010] NZHC 1949
•6 October 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2009-404-006067
UNDER the Trustee Act 1956
AND UNDER the Declaratory Judgments Act 1908
BETWEEN PAULO IERIKO Plaintiff
AND FERETI FA'AFUATA First Defendant
ANDTHE WESLEYAN SAMOAN METHODIST CHURCH OF NEW ZEALAND INCORPORATED Second Defendant
Hearing: 23 September 2010
Appearances: S I Perese for Plaintiff
G M Illingworth QC and M J Morris for Defendant
Judgment: 6 October 2010
RESERVED JUDGMENT OF HON. JUSTICE FRENCH
A.Under the Declaratory Judgments Act 1908 the Court declares that the following named persons are the current lawful trustees of the Evangelical Samoan Wesleyan Church of New Zealand Trust Board:
i) Fereti Fa’afuata ii) Paulo Ieriko
iii) Leautuli Sua
iv) La’auilima Lilomaiava v) Faleao Suemai
vi) Alaimoana Fa’afuata
B. Costs are reserved.
IERIKO V FA'AFUATA AND ANOR HC AK CIV-2009-404-006067 6 October 2010
Introduction
[1] This proceeding concerns a dispute between two Samoan Methodist church groups, each seeking control over a trust fund to which both groups have contributed.
[2] By agreement, the only issue which I am required to consider is “Who are the current and validly appointed trustees”.
Factual background
[3] The Evangelical Samoan Wesleyan Methodist Church of New Zealand Trust Board was created by a deed of trust dated 12 December 1999 and incorporated under the Charitable Trusts Act 1957 on 18 January 2000.
[4] The original trustees were all members of a newly established church called the Evangelical Samoan Wesleyan Methodist Church.
[5] The original trustees – nine in total – were:
i) Tanielu Sao
ii) Fereti Fa’afuata iii) Paulo Ieriko
iv) Atia’i Peilua
v) Aloalii Fuimaono vi) Leautuli Sua
vii) La’auilima Lilomaiava viii) Faleao Suemai
ix) Alaimoana Fa’afuata
[6] According to the plaintiff, Rev Paulo Ieriko, it was the church’s annual conference that was the vehicle by which trustees were appointed to the board, a practice which he deposes is based on Samoan cultural practices. Rev Ieriko also states that the elected office holders of the church were (by virtue of those offices)
also the office holders of the trust board. Thus, the person who was elected church president automatically thereby became the chairperson of the trust board.
[7] Unfortunately, factions developed within the church. On one side was Rev Ieriko and his supporters, and on the other side was a group led by the first defendant, Rev Fereti Fa’afuata and another minister, Rev Filemoni. Revs Ieriko and Fa’afuata were both original trustees.
[8] The conflict came to a head with the purported dismissal of Rev Ieriko as church president on 17 December 2004.
[9] Following Rev Ieriko’s dismissal, Rev Fa’afuata called an urgent meeting of the trust board on 24 December 2004, giving only one day’s notice.
[10] Four of the original trustees attended the meeting. There was one apology, from Mr Sua who was in Australia. The four in attendance made a number of decisions, including a decision to freeze the trust’s bank accounts. They also passed a unanimous resolution purporting to remove three of the original trustees, namely Rev Ieriko, one of his supporters Mr Alaimoana Fa’afuata and a third trustee, Mr Aloalii Fuimaono.
[11] The minutes of the Christmas Eve meeting state that the decision to remove the three was made pursuant to clause (e)(iv) of the trust deed. Clause (e)(iv) states:
If any Trustee shall: –
(aa) Become physically or mentally incapable of acting as a Trustee
(bb) Commit any act of bankruptcy
(cc) Be convicted of any criminal offense involving moral turpitude
(dd) Behave in such a manner which in the opinion of the majority of
Trustees is not in the interests of the Trust
he shall either tender a written resignation or be dismissed from his office as Trustee by the remaining Trustee or Trustees and a new Trustee shall be appointed.
[12] The Christmas Eve meeting was followed by another meeting on 30
December 2004. This time only three of the four trustees who had met on 24
December were in attendance, one of their number (Mr Peilua) having resigned in the meantime. Mr Sua was still in Australia and again sent an apology.
[13] At the 30 December 2004 meeting, the three in attendance appointed seven new trustees.
[14] Meanwhile, Rev Ieriko was taking steps of his own. Like the other group, his supporters purported to appoint new trustees. Rev Ieriko also issued proceedings in the High Court challenging his removal as president and trustee.
[15] In August 2007 those proceedings were settled out of Court. Under the settlement agreement, Rev Fa’afuata and Rev Filemoni acknowledged that the decision to remove Rev Ieriko as president had been made in breach of the rules of natural justice. They agreed he should be reinstated. It was also agreed there would be a reconciliation meeting where the two would offer a public apology and plans would be made for the holding of a new election for church office holders.
[16] The settlement agreement concluded with a statement that the settlement marked the beginning of a positive new way forward and a new unity for the church.
[17] However, the expressions of unity proved short-lived. The reconciliation meeting ended in a walk-out by Rev Fa’afuata and his supporters.
[18] The competing factions then issued separate notices purporting to convene meetings of the trust board.
[19] The meeting convened by Rev Fa’afuata was held on 24 August 2007. At that meeting, Rev Ieriko and Mr Alaimoana Fa’afuata were re-appointed to the Board, as was Mr Peilua who, having previously resigned, decided to accept appointment.
[20] The 24 August 2007 meeting also passed a resolution to the effect that the board was now the same entity as the second defendant, the Samoan Wesleyan
Methodist Church of New Zealand Inc, this being a new entity established the week before by Rev Fa’afuata’s group.
[21] The meeting convened by Rev Ieriko had met earlier, on 21 August 2007, and had resolved to hold trustee elections on 29 August 2007. Those elections were duly held and a resolution passed that the new appointments were additional to those appointed in 2004 by the 2004 church conference. A further election for trustees was held in October 2008 at the church conference. It is those trustees whom Rev Ieriko’s group say comprise the current trust board.
[22] Rev Fa’afuata’s group however contends that the current lawful trustees are those appointed at their 24 August 2007 meeting.
Discussion
[23] An obvious starting point is to examine the provisions of the trust deed.
[24] The front page of the trust deed lists the names of the nine original trustees and then states:
(Hereinafter together with the survivors of them or their administrators for the time being called “the Trustees”)
[25] Under the deed, the government, control, direction and management of the trust is expressly vested in the trustees, including significantly the power to dismiss and appoint new trustees.
[26] The relevant clauses are:
(d)The Trustees shall have the Government, Control, direction and management of the said Trust and all property at any time affected by the Trusts for the sole purpose of furthering the charitable objects specified in this Trust Deed.
(e) (i) The affairs of the Trust shall be conducted by the Trustee or Trustees thereof PROVIDED HOWEVER that the Trustee or Trustees may appoint any one of their number to be a manager of the Trust Fund or property or properties or appoint any other person or persons to manage such property or properties but such manager or managers shall not be [sic] virtue only of that appointment be empowered to exercises
[sic] any of the powers herein contained and exercisable by the Trustee or Trustees.
(ii) Such Trustees shall be in number not less than eight (8) and not more than twelve (12) PROVIDED HOWEVER that
should the number of Trustees at any time be less than eight (8) the continuing Trustees may have the power and may as soon as practicable proceed to appoint a further Trustee or
Trustees to bring the number of Trustees to not less than eight (8) and pending such appointment the continuing
Trustees may exercise all the powers vested in the trustee or
Trustees by these presents.
(iii) The persons subscribing to this Deed shall be the first
Trustees hereunder and shall hold office until death or resignation or disqualification or dismissal under the terms hereof.
(iv) If any Trustee shall: –
(aa) Become physically or mentally incapable of acting as a Trustee
(bb) Commit any act of bankruptcy
(cc) Be convicted of any criminal offense involving moral turpitude
(dd)Behave in such a manner which in the opinion of the majority of Trustees is not in the interests of the Trust
he shall either tender a written resignation or be dismissed from his office as Trustee by the remaining Trustee or Trustees and a new
Trustee shall be appointed.
(v) The power or [sic] appointing new Trustees of this Deed is vested in the Trustees and the survivor of them or in the
executor or administrator of the last survivor of them
PROVIDED HOWEVER that no person shall be appointed a Trustee hereunder except by the unanimous decision of the
persons entitled to make such appointment.
[27] There is nothing in the deed which authorises the church conference to appoint trustees, and no evidence that the trustees agreed to act in that way.
[28] In those circumstances, and having regard to the express provisions of the deed, I am satisfied that if there has been a practice of the church conference appointing new trustees then those appointments are invalid. The provisions of the deed regarding appointment are clear and unambiguous. Only the trustees can appoint other trustees.
[29] In my view, there is nothing in any of the case law, including Inglis v
Dunedin Diocesan Trust Board HC Dunedin CIV-2007-412-000504, 1 December
2008, Baragwanath J which would support any other outcome. The Court’s role is one of interpretation, not creation.
[30] It follows that those trustees purportedly appointed at the October 2008 church conference are not the current lawful trustees.
[31] In order to determine whether the trustees appointed or reconfirmed at Rev Fa’afuata’s August 2007 meeting are the current trustees, it is necessary to go back in time and examine the validity of the resolutions passed at the Christmas Eve 2004 meeting.
[32] Under the trust deed, the holding of a trustees’ meeting is regulated by clauses (e)(vi) and (e)(vii), which state:
(vi) The Trustees shall hold such meetings and at such times as they shall determine PROVIDED HOWEVER that any trustee may requisition a meeting of the Trustees by notice in writing directed to the secretary[.] Upon receiving any such notice the secretary shall convene a meeting of Trustees accordingly and shall give to the Trustees seven (7) days notice in writing of such meeting.
(vii) No meeting of Trustees shall transact any business unless a quorum of Trustees is present. A quorum shall be such a number of Trustees as shall be a majority of the Trustees for the time being.
[33] In my view, the resolutions passed at the Christmas Eve meeting are questionable because:
a) the meeting was not convened by the secretary, and only one day’s notice was given;
b)the decision to remove Rev Ieriko and Mr Alaimoana Fa’afuata was made in breach of the rules of natural justice, the notice that was given failing to alert them that they were in jeopardy of being removed;
c) there was not a sufficient quorum in terms of the trust deed.
[34] It is unnecessary for me to make any concluded rulings on the first two matters because I have come to the clear view that there definitely was not a quorum at the Christmas Eve meeting.
[35] The quorum required was “a majority of the trustees for the time being”.
[36] For the reasons I have already mentioned, “the trustees for the time being” cannot include any appointments that may have been made at any conferences between January 2000 and December 2004.
[37] For that reason, and because prior to 24 December 2004 the trustees themselves had never appointed any new trustees, the focus must be on the original nine trustees.
[38] As at 24 December 2004 one of the nine had died and one, Mr Fuimaono, had left the church.
[39] It was common ground that obviously the trustee who had died should not be included in calculating the necessary quorum. What should be done about the trustee who had left the church was however more problematic.
[40] If only the deceased trustee is excluded and the trustees for the time being were eight, then the four who attended the Christmas Eve meeting were not a majority and therefore the meeting lacked a proper quorum.
[41] If, however, there were seven current trustees, then four would be sufficient.
[42] The legal status of the person (Mr Fuimaono) who left the church therefore becomes pivotal. If he was still a trustee before the resolution to remove him was passed, then there was not a proper quorum.
[43] Ironically, both parties claim he was no longer a trustee, but for different reasons. Rev Ieriko says Mr Fuimaono lost his trusteeship because he had left the Church, which is also why Rev Fa’afuata and his supporters cannot be trustees. The defendants, however, say membership of the Evangelical Samoan Wesleyan Methodist Church is not a pre-requisite. According to the defendants, Mr Fuimaono was no longer a trustee not because he had left the Evangelical Church, but because of abandonment. Their counsel, Mr Illingworth, acknowledges that if this were correct, it was completely unnecessary for the meeting of 24 December to have
passed the resolution it did removing him, but submits I am not bound by the view taken at the time.
[44] There is nothing in the trust deed to the effect that trustees will automatically forfeit their trusteeship on leaving the Church. Further, the objects of the trust are very broad, being primarily concerned with the promotion of Christianity as distinct from being for the benefit of any specified church, or indeed denomination. In those circumstances I am not persuaded that a person who leaves the Evangelical Samoan Wesleyan Methodist Church of New Zealand without more thereby ceases automatically to be a trustee.
[45] I accept as a matter of principle that a trustee may be taken to have abandoned their duties. However, the evidence does not satisfy me that matters had reached that stage as regards Mr Fuimaono by December 2004. Apart from anything else, the Trust Board had never met, which makes a nonsense of Rev Fa’afuata’s assertion in evidence that the reason Mr Fuimaono was removed was because he had not attended any trust board meetings. There was evidence as to the difficulties in contacting Mr Fuimaono. However it was too vague and inconclusive to support a finding of abandonment.
[46] In my view, the correct analysis is that as at 24 December 2004 Mr Fuimaono was still legally a trustee.
[47] It follows that the meeting lacked a quorum, and the resolution removing the three trustees was invalid. As Mr Illingworth acknowledged, if I came to that conclusion then it had what he described as a “cascading effect” on the subsequent decisions taken by Rev Fa’afuata and his group.
[48] My finding therefore is to reject the contention of both groups and to declare instead that the current lawful trustees of the Evangelical Samoan Wesleyan Church of New Zealand Trust Board are the following original trustees, namely
i) Fereti Fa’afuata ii) Paulo Ieriko
iii) Leautuli Sua
iv) La’auilima Lilomaiava v) Faleao Suemai
vi) Alaimoana Fa’afuata
[49] Three of the nine original trustees are excluded; the trustee who died, Mr Peilua (who resigned voluntarily and whose subsequent re-appointment was made at an invalid meeting) and Mr Fuimaono. Mr Fuimaono is excluded because I am satisfied that as at 2010 he has now indeed abandoned his trusteeship. He has been living in Australia since 2007 and has had nothing to do with the trust for ten years. Both parties accepted that in those circumstances he should be excluded were I to find that the current trustees are the original trustees.
[50] The finding is made by way of a declaratory judgment under the Declaratory
Judgments Act 1908.
[51] The practical effect of this judgment is that the trust board now consists of three people from each faction.
[52] That will necessitate dialogue. I urge the parties to endeavour to resolve any further matters themselves, without the need for any more Court proceedings. As I commented during the course of the hearing, I found this a very sad case indeed.
[53] As regards costs, my expectation is that this also will be able to be resolved by agreement. If that does not prove possible, I reserve leave for either party to come back to the Court if I am required to make an award.
Solicitors:
Tua Saseve, Manukau
(Counsel: S I Perese, Auckland) Woodroffe Law Partnership, Auckland
(Counsel: G M Illingworth QC, Auckland)
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