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Kusabs v Staite

Kusabs v Staite

Case [2019] NZCA 420 9 September 2019

Fiduciary Duty

Breach of Trust

Rectification

Unconscionable Conduct

Trusts & Equity

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IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA652/2017
[2019] NZCA 420

BETWEEN	ANDREW MARUTUEHU KUSABS AND ORS AS TRUSTEES OF THE TUMUNUI LANDS TRUST Appellants
AND	PETER DANIEL STAITE AND ORS AS TRUSTEES OF THE WHAOA NO 1 LANDS TRUST Respondents

Hearing:	30-31 October 2018
Court:	Cooper, Brown and Williams JJ
Counsel:	M S McKechnie and A F S Vane for Appellants D G Chesterman, J P Koning and R P Nolan for Respondents
Judgment:	9 September 2019 at 2.30 pm

JUDGMENT OF THE COURT

A The appeal is allowed.

B The order for rectification of the Tumunui Lease is set aside.

CThere is no order for costs. If the Tumunui Trust wishes to revisit the issue of costs below, then that should be addressed in the High Court.

____________________________________________________________________

Table of Contents

Para No

Introduction  [1]
Relevant facts  [6]
     The Blackler leases  [8]
     The Mills lease  [11]

Proposed assignment of Mills lease to the Tumunui Trust                    [14]
The Tumunui Lease  [21]
The first rent review  [26]

High Court judgment  [31]
The recall judgment  [47]
Scope of appeal  [55]
Parties’ submissions  [59]
     The Tumunui Trust’s submissions  [59]
     The Whaoa Trust’s submissions   [62]
Rectification: relevant principles  [66]
Discussion  [69]
     The pleadings  [70]
     The Judge’s initiative  [71]
     Mr Bamber  [74]
     Mr Edwards  [76]
     Mr Kusabs  [84]
     Evaluation of the witnesses’ evidence  [87]
     The Davys Burton letter of 16 November 1992  [90]
     Subsequent conduct  [101]
     Conclusion  [111]
Mr Moke  [113]
Costs  [119]
Result   [120]

REASONS OF THE COURT

(Given by Brown J)

Introduction

The respondents, who are the trustees of an ahu whenua trust (the Whaoa Trust), own Māori freehold land at Reporoa comprising approximately 529 hectares known since 1982 as Rotomahana Parekarangi No 8 Block (the No 8 Block). On 16 February 1994 the Whaoa Trust executed a lease of the land in favour of another ahu whenua trust, the trustees of which are the appellants (the Tumunui Trust).
The lease (the Tumunui Lease) which, subject to rights of renewal, may run to 2032 provided for the payment of rent calculated as follows:
… at a yearly rental calculated on the basis of five dollars per centum of the capital value of the said land according to a special valuation carried out by Valuation New Zealand for the purpose at the expense of the lessee … provided always that for the purposes of such valuation there shall be deducted from the said capital value the value of all improvements made on or to the said land by the lessee or its predecessor since the 13th day of December 1961 and during the terms hereof by the lessee and subsisting at the date of valuation …
In a proceeding commenced in 2009 the Whaoa Trust sought rescission of the Tumunui Lease, contending that the involvement of Mr Edward Moke in its negotiation, who was a trustee of both trusts, was a breach of Mr Moke’s fiduciary duty of loyalty to the Whaoa Trust of which the…

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 Kusabs v Staite

Details

AGLC: Kusabs v Staite [2019] NZCA 420
Case: [2019] NZCA 420
Decision Date: 9 September 2019 at 2.30 pm

CaseChat Overview and Summary

The Court of Appeal of New Zealand was asked to consider an appeal by the Tumunui Trust against an order for rectification of a lease made by the High Court. The Whaoa Trust had sought rescission of the Tumunui Lease, contending that the involvement of Mr Edward Moke, who was a trustee of both trusts, in its negotiation was a breach of Mr Moke’s fiduciary duty of loyalty to the Whaoa Trust. The High Court found that Mr Moke did breach his duty of loyalty to the Whaoa Trust but declined to order rescission of the lease, instead making an order for rectification of the lease to remove the words “or its predecessor since the 13th day of December 1961 and” from the Tumunui Lease. The Tumunui Trust appealed the order for rectification, contending that Mr Moke’s breach of fiduciary duty was not of such a character as to justify either rescission or rectification of the Tumunui Lease. The Whaoa Trust did not cross-appeal. The Court of Appeal held that the evidence did not establish a common intention that the lease arrangement was inaccurately reflected in the terms of the Tumunui Lease. The Court of Appeal found that the evidence of subsequent conduct was inconsistent with the Whaoa Trust’s assertion of a common intention. The Court of Appeal concluded that the Whaoa Trust had not established the requisite common intention to support a claim for rectification. The appeal was allowed and the order for rectification of the Tumunui Lease was set aside. There was no order for costs.

Orders