McKeown v Small - [2015] NZHC 1043

IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY

CIV-2014-476-000023 [2015] NZHC 1043

BETWEEN
JAMES SUTHERLAND MCKEOWN

Plaintiff

AND

ANGELA JEAN SMALL AND NICOLA JANE GEARY

First Defendants

GEOFFREY ANDREW CHAPMAN, ANGELA JEAN SMALL AND NICOLA JANE GEARY

Second Defendants

Hearing: 23 March 2015

Appearances:

J V Ormsby for Plaintiff
C A O'Connor for Defendants

Judgment:

18 May 2015

JUDGMENT OF GENDALL J

Contents

The claim................................................................................................................[1] Background ............................................................................................................[3] Procedural background.........................................................................................[14] What is in dispute? ...............................................................................................[15] The value of Peter’s estate ...................................................................................[17] South Canterbury Finance and Dominion Finance Losses ..................................[18] James’ position [18] Defendants’ position [21] Accounting evidence [25] Resolution [28] Outcome [41] The doctrine of survivorship and Partnership assets ............................................[43] Peter’s partnership salary .....................................................................................[50] Losses on Heather’s shares ..................................................................................[52] Conclusion............................................................................................................[55] Costs .....................................................................................................................[62]

MCKEOWN v SMALL [2015] NZHC 1043 [18 May 2015]

The claim

[1] The Plaintiff, James McKeown (James), brings an action against the first defendants, Angela Small (Angela) and Nicola Geary (Nicola), his sisters, as beneficiaries under the estate of their mother Heather McKeown (Heather), the estate of their father Peter McKeown (Peter), and the McKeown Family Trust No 2 (The Trust). James also brings an action against Angela, Nicola and Geoffrey Chapman (Mr Chapman), as executors of Heather’s estate.

[2] Prior to explaining the nature of the claims before the Court in more detail, it is necessary to set out the events leading up to this proceeding. At this stage it is sufficient to state that James’ central complaint is that, due to the actions of the first and second defendants, his interest under his father Peter’s will, has been substantially diminished, while the interests of Angela and Nicola (including their interest under the will of their late mother which preferred them over James) have been correspondingly enlarged.

Background

[3] Peter and Heather were farmers in the Totara Valley. They together had the three children named above, James, Angela and Nicola. For some time it seems Peter and Heather jointly arranged their affairs so that their assets would devolve to their children upon their death. Both Peter and Heather are now deceased, Peter having died on 2 November 2002, and Heather on 22 November 2008.

[4] On 20 July 2001, Peter settled the Trust. Peter named himself, together with Heather and a Mr Rupert Scott (Mr Scott) as trustees of the Trust. The terms of the Trust Deed relevantly provide:

(a) the discretionary beneficiaries are Peter, Heather, their children, along

with “remoter issue” of Peter and Heather (cl 4.1(3));

(b) the final beneficiaries are James, Angela and Nicola as children of

Peter and Heather (cl 4.1(5));

(c) during the trust period (defined in cl 4.1(9)), the trustees may use as much of the capital of the Trust Fund (defined in cl 4.1(8)) as they think necessary for the past, present or future maintenance, education, advancement or benefit of the discretionary beneficiaries (cl 2.4);

(d)on the distribution date the trustees will divide the trust fund equally among the final beneficiaries but have the power to make an earlier nomination…

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 McKeown v Small

Details

AGLC: McKeown v Small [2015] NZHC 1043
Case: [2015] NZHC 1043
Decision Date: 18 May 2015

CaseChat Overview and Summary

The High Court of New Zealand, Timaru Registry, presided over by Justice Gendall, heard a case between James McKeown, the plaintiff, and Angela Small, Nicola Geary, and Geoffrey Chapman, the defendants. James brought the action against his sisters Angela and Nicola, and Geoffrey Chapman, as beneficiaries under the estates of their parents, Peter and Heather McKeown, and the McKeown Family Trust No 2. James claimed that his sisters and Geoffrey Chapman, as executors and trustees, substantially diminished his interest under his father's will, while enlarging their own interests. The main issue in dispute was the valuation of Peter's estate. James sought his true entitlement from his father's estate, which he claimed to be $93,125.67. Justice Gendall found in favour of James on all points raised in relation to the value of Peter's estate. James' interest in Peter's estate was increased by $93,126.67, and interest accrued on that sum at the Judicature Act 1908 rates from 8 July 2010 until the date of final payment. The court left it to the parties to determine the method by which James would receive his additional entitlement. The court also noted that the manner in which the estates had been handled was somewhat unsatisfactory, with poor accounting records and a lack of timely information provided to James. The court did not comment in detail on the remainder of James' assertions but granted leave for the parties to return to the court for directions should there be any dispute as to the implementation of the order. The court did not grant the costs orders in the absence of both parties being afforded an opportunity to be heard.

Orders