Kite v Hodge - [2014] NZHC 3025

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2010-419-000980 [2014] NZHC 3025

IN THE MATTER OF The Trustee Act 1956

BETWEEN

JAN CAROLINE KITE First Plaintiff

CARLA HODGE Second Plaintiff

AND

GRAEME HODGE First Defendant

MAUREEN DE LA RUE Second Defendant

HODGE TRUST LIMITED Third Defendant

GRAEME HODGE TRUST LIMITED Fourth Defendant

Hearing:
29 October 2014 and by supplementary submissions received

on 12 and 26 November 2014

Appearances:

J Niemand and D M Kostanich for plaintiffs
S A McKenna for defendants

Judgment:

1 December 2014

JUDGMENT OF LANG J

[on application for declarations as to breach of trust]

This judgment was delivered by me on 1 December 2014 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

JAN CAROLINE KITE v GRAEME HODGE [2014] NZHC 3025 [1 December 2014]

[1] This proceeding forms part of a wide ranging dispute between several members of the Hodge family. The principal protagonists for present purposes are Mr Graeme Hodge (Graeme) and his son and daughter, Mr David Hodge (David) and Ms Jan Kite.

[2] At all times material to this proceeding Graeme, David and Ms Maureen De La Rue were trustees of both the David Hodge Trust and the Kite Family Trust. In this proceeding the Court is required to determine whether Graeme breached his obligations as a trustee of those trusts when he entered into certain transactions on their behalf. The transactions involved the transfer of property to the third and fourth defendants, Hodge Trust Ltd and Graeme Hodge Trust Ltd (as corporate trustees of two further trusts, the Hodge Trust and the Hodge Family Trust). They also involved subsequent distributions of capital that the David Hodge Trust and the Kite Family Trust made to Graeme.

[3] The plaintiffs also originally sought orders removing the trustees of all four trusts with which this proceeding is concerned. That aspect of the proceeding appears to have been rendered moot by the fact that Graeme and Ms De La Rue have now apparently resigned as trustees of the David Hodge Trust and the Kite Family trust. In addition, the corporate trustees of the Hodge Trust and the Hodge Family Trust are now apparently in liquidation and are therefore unable to perform their roles as trustees any further. As a result, the plaintiffs seek an order appointing the Public Trust as trustee of all four trusts in their place. I will deal with that issue at the end of this judgment.

The transactions

The David Hodge Trust

[4] The David Hodge Trust was formed by deed of trust dated 1 November 1996. It owned a house situated at 24 MacFarlane Street, Hamilton. As at July 2006, that property had a market value of approximately $317,000, and was encumbered by a mortgage securing the trust’s indebtedness to a bank in the sum of $208,532.82.

[5] On or about 10 July 2006, Mr Graeme Hodge and Ms De La Rue entered into an agreement under which they sold the property to…

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 Kite v Hodge

Details

AGLC: Kite v Hodge [2014] NZHC 3025
Case: [2014] NZHC 3025
Decision Date: 1 December 2014

CaseChat Overview and Summary

The High Court of New Zealand was tasked with determining whether Graeme Hodge breached his obligations as a trustee of the David Hodge Trust and the Kite Family Trust when he entered into certain transactions on their behalf. The transactions involved the transfer of property to Hodge Trust Limited and Graeme Hodge Trust Limited, as well as subsequent distributions of capital made by the David Hodge Trust and the Kite Family Trust to Graeme. The plaintiffs, Jan Caroline Kite and Carla Hodge, originally sought orders removing the trustees of all four trusts involved, but this aspect of the proceeding became moot as Graeme and Maureen De La Rue had resigned as trustees of the David Hodge Trust and the Kite Family Trust, and the corporate trustees of the Hodge Trust and the Hodge Family Trust were in liquidation.

The Court was required to decide whether Graeme acted in breach of his obligations as a trustee of the David Hodge Trust and the Kite Family Trust through his involvement in the decision to make the capital distributions. The Court held that Graeme acted in breach of the terms of the trust deed by joining with Ms De La Rue in the decision to make the capital distribution by the David Hodge Trust in favour of himself. In relation to the Kite Family Trust, the Court concluded that both Graeme and Ms De La Rue breached the requirements imposed by clause 7.1 when they signed the resolution approving the capital distribution to Graeme.

The Court also addressed the issue of the removal and appointment of trustees. It exercised its inherent supervisory jurisdiction to ensure that the terms of the trust were carried out and made an order removing all the present trustees of the David Hodge Trust, the Kite Family Trust, the Hodge Trust, and the Hodge Family Trust. A further order was made appointing the Public Trust as the sole trustee of those trusts.

Finally, the Court granted the plaintiffs costs on a category 2B basis together with disbursements as fixed by the Registrar. If the parties were unable to reach agreement regarding costs within 21 days, counsel for the plaintiffs was to file a short memorandum setting out the orders his clients seek. Counsel for the defendants was to respond no later than 31 January 2015, and the Court would then determine the issue of costs on the papers.

Orders