Masters v Stewart - [2014] NZHC 2419

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-409-001308 [2014] NZHC 2419

BETWEEN
PHILLIP RALPH MASTERS

Plaintiff

AND

LESLIE JAMES WILLIAM STEWART AND RUSSELL JAMES CASSIDY Defendants

STEPHEN ANDREW MASTERS Second Defendant

MICHAEL EDWARD MASTERS Third Defendant

KATHRYN JANE MASTERS Fourth Defendant

Hearing: 15-17 September 2014

Appearances:

G Brodie for Plaintiff
K Clay and P O'Dea for First Defendants
No appearances by or for Second, Third and Fourth Defendants

Judgment:

3 October 2014

JUDGMENT OF MANDER J

[1] In July 1980, the R K Masters Family Trust (the Trust) was established by Mr Ken Masters (Ken). The two defendants, Mr Leslie Stewart and Mr Russell Cassidy are the sole trustees. Ken was appointed as an advisory trustee, and his children, the second, third and fourth defendants and the plaintiff, Mr Phillip Masters (Phillip), are the discretionary beneficiaries of the Trust.

[2] The Trust was used by Ken as a vehicle to purchase commercial property in and around Rangiora. One of the first properties purchased was situated in Golflinks Road (the property). Phillip had been interested in purchasing this property himself,
however, on his father’s suggestion, it was agreed that the Trust would purchase the

MASTERS v STEWART & ORS [2014] NZHC 2419 [3 October 2014]

property on the basis it would be resold to Phillip for the original purchase price of

$115,000 at some future time. The property consisted of some six acres with a house and three large glasshouses, and was to be operated as a market garden growing tomatoes. It was proposed that Phillip would work on the property and maintain other commercial properties including another market garden owned by the Trust.

[3] From April 1981 until 1989, Phillip worked both full-time and part-time on the property, maintaining the wider Trust market garden business and its other commercial buildings and carrying out associated tasks, including bookwork and the like. In 1989, Phillip commenced full-time employment but continued to work on the property and undertook other maintenance work in respect of the Trust’s other property interests.

[4] As the years went by Phillip made periodic payments to the Trust in furtherance of the agreement that he had with Ken that the property would be transferred to him for the original purchase price. In September 1990, Phillip married. He and his wife, Philippa, were concerned that his ownership of the property be clarified and confirmed. As they embarked on their married life, they sought assurance that contributions they made towards the acquisition and development of the property were for their benefit. The alternative for them was to purchase their own property elsewhere.

[5] In response to Phillip and his wife’s representations, Ken approached the trustees which resulted in Ken’s intentions in respect of the property being formally documented. The parties are agreed that the following documents accurately capture the position as understood by Ken, Phillip and the trustees at that time. The document of October 1990 records as follows:

I, RALPH KENNETH MASTERS as Advisory Trustee HEREBY REQUEST that…

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 Masters v Stewart

Details

AGLC: Masters v Stewart [2014] NZHC 2419
Case: [2014] NZHC 2419
Decision Date: 3 October 2014

CaseChat Overview and Summary

Phillip Masters brought an action against the trustees of the R K Masters Family Trust, Leslie Stewart and Russell Cassidy, alleging that the trustees had breached their duties in exercising their discretion to distribute $250,000 to Phillip's siblings in 2006, excluding Phillip. Phillip argued that the trustees had failed to take into account the benefit he had received from the Trust as a result of the transfer of property to him at the original purchase price of $115,000. The Court found that the trustees had breached their duty by failing to take into account Phillip's contribution to the Trust arising out of the arrangement relating to the property when making the decision to distribute capital to his siblings. The Court directed the trustees to reconsider the appropriation of capital made by them to Phillip's siblings, taking into account an assessment of Phillip's contribution to the Trust before the property was transferred to him in 2003. The Court declined to make any finding of an entitlement on the part of Phillip to be treated equally in respect of the appropriation of capital, or to require a payment to Phillip by the Trust. The costs of the proceeding were reserved.

Orders