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McLaughlin v McLaughlin

McLaughlin v McLaughlin

Case [2018] NZHC 3198 6 December 2018

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IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2017-442-52

[2018] NZHC 3198

BETWEEN MARK JAMES MCLAUGHLIN AND ANDREW ASHLEY MCLAUGHLIN AS BENEFICIARIES OF THE ASHLEY
TRUST
Plaintiffs

AND

JOHN DAVID MANUEL MCLAUGHLIN, GLASGOW HARLEY TRUSTEE

LIMITED AND MARK WILLIAM RUSSELL AS TRUSTEES OF THE ASHLEY TRUST

First Defendants

BRIAN JAMES MAURICE NELSON
Second Defendant

Cont’d …

Hearing: 12-13 November 2018

Counsel:

W J Palmer and O D Peers for Applicants/Defendants

J W A Johnson and G J C Carter for Respondents/Plaintiffs J Little for Respondents’/Plaintiffs’ Children

J M McGuigan for Brett McLaughlin

Judgment:

6 December 2018

JUDGMENT OF THOMAS J

MCLAUGHLIN v MCLAUGHLIN, [2018] NZHC 3198 [6 December 2018]

CIV-2017-442-78

UNDER the Trustee Act 1956 IN THE MATTER of the Ashley Trust
BETWEEN GLASGOW HARLEY TRUSTEE
LIMITED AND JOHN MCLAUGHLIN
Applicants

ANDMARK JAMES MCLAUGHLIN AND ANDREW ASHLEY MCLAUGHLIN
Respondents

Table of contents

Introduction  [1]
The Applications  [8]
The Substantive Proceedings  [8]
The Beddoe Application  [9]
Issues  [17]

Beddoe orders and prospective costs orders – relevant legal principles [18]

Further background  [39]
Ching’s Block  [47]
Homestead Block  [53]
Reports  [57]
Merits of the Substantive Proceedings  [62] First cause of action: removal of trustees  [63] Conflict of interest  [66]

Hostility [69]
Mismanagement of the Ching’s Block subdivision [71]

Second cause of action: application for directions [80]
Third, fourth and fifth causes of action [98]

Is it in the best interests of the Ashley Trust to make a Beddoe order

authorising the trustees to defend the Substantive Proceedings?                   [110]
Should the trustees be indemnified from the Ashley Trust against the
costs they have incurred to date?  [129]
Should the trustees indemnify Brian Nelson from the Trust assets in
respect of any costs for which he is or may become personally liable?          [132]
Orders  [133]
Costs  [136]

Introduction

[1] On 26 February 2004, Jim and Edna McLaughlin settled their family trust, the Ashley Trust. Jim and Edna McLaughlin had four sons, one of whom, John, is a trustee of the Ashley Trust, together with an independent trustee company, Glasgow Harley Trustee Ltd (Glasgow Harley). All four sons are discretionary beneficiaries as well as final beneficiaries of the Ashley Trust. Two of the sons, Mark and Andrew, are suing the trustees for breach of their trustee duties. They apply for removal of the trustees, appointment of an independent trustee and directions concerning the future conduct of the Ashley Trust (the Substantive Proceedings).

[2] The trustees deny any allegations of wrongdoing and apply to the Court for a Beddoe order approving their decision to defend the Substantive Proceedings at the cost of the Ashley Trust (the Beddoe Application).1 This followed Mark and Andrew’s application for a restraining order seeking to restrain the trustees from using the Ashley Trust funds to defend the Substantive Proceedings (the Restraining Application).

[3] The trustees are therefore the applicants in the Beddoe Application, the defendants (together with Brian Nelson, a former trustee) in the Substantive Proceedings and the respondents in the Restraining…

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 McLaughlin v McLaughlin

Details

AGLC: McLaughlin v McLaughlin [2018] NZHC 3198
Case: [2018] NZHC 3198
Decision Date: 6 December 2018

CaseChat Overview and Summary

- Parties: Mark James McLaughlin and Andrew Ashley McLaughlin, as beneficiaries of the Ashley Trust, are suing the trustees of the Ashley Trust, John David Manuel McLaughlin, Glasgow Harley Trustee Limited, and Mark William Russell, for breach of their trustee duties.

- Nature of the Dispute: The plaintiffs are seeking the removal of the trustees, appointment of new independent trustees, and directions concerning the future conduct of the Ashley Trust. The trustees, on the other hand, are applying for a Beddoe order authorising them to defend the proceedings at the cost of the Ashley Trust.

- Court: The High Court of New Zealand, Nelson Registry.

- Legal Issues: The court had to decide on the following issues:

1. Whether it is in the best interests of the Ashley Trust to make a Beddoe order authorising the trustees to defend the Substantive Proceedings.
2. Should the trustees be indemnified from the Ashley Trust against the costs they have incurred to date?
3. Should the trustees indemnify Brian Nelson from the Trust assets in respect of any costs for which he is or may become personally liable?

- Court's Reasoning and Outcome:

1. The court found that the Beddoe Application must fail in relation to the first, third, fourth, and fifth causes of action. However, it granted the trustees' Beddoe application to use the assets of the Ashley Trust to pay the reasonable legal and associated costs in defending the second cause of action, subject to considerations of proportionality.
2. The court decided that the Ashley Trust assets can be used in the defence of the second cause of action in the Substantive Proceedings, but only to the limited extent necessary to progress the claim. The parties were given 14 days to agree on the identity of senior counsel, who would decide the costs, and if they failed to agree, the court would decide on the papers.
3. The court ruled that the trustees should not indemnify Brian Nelson from the Trust assets in respect of any costs for which he is or may become personally liable, as it would be improper if he was found to have breached his trustee's duties.

- Final Orders:

1. The Beddoe Application was granted in respect of the reasonable and proportionate legal and associated costs of defending the second cause of action of the Substantive Proceedings only.
2. If the parties were unable to agree on the identity of senior counsel by 31 January 2019, they were to file a memorandum of no more than two pages in length.
3. Costs were reserved and would be addressed in accordance with the court's previous decision.

Orders