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McLaughlin v McLaughlin

McLaughlin v McLaughlin

Case [2023] NZCA 473 29 September 2023

Breach of Trust

Implied Terms

Unjust Enrichment

Remuneration of Trustees

Conflict of Interest

Implied Authorization

Charging Clauses

Trusts & Equity

Family Law

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IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA712/2021
CA435/2022
[2023] NZCA 473

BETWEEN	MARK JAMES MCLAUGHLIN AND ANDREW ASHLEY MCLAUGHLIN Appellants
AND	JOHN DAVID MANUEL MCLAUGHLIN First Respondent
AND	GLASGOW HARLEY TRUSTEE LIMITED Second Respondent
AND	BRETT GARDNER MCLAUGHLIN Interested Party

Hearing:	7 March 2023
Court:	French, Courtney and Clifford JJ
Counsel:	J W A Johnson, S T Dymond and A A H Low for Appellants N S Gedye KC, G G Dill-Russell and O D Peers for First Respondent No appearance for Second Respondent J M McGuigan for Interested Party
Judgment:	29 September 2023 at 3 pm

JUDGMENT OF THE COURT

AThe appellants’ application for leave to adduce the further evidence of Mark James McLaughlin is declined.
BThe appeal in CA712/2021 is dismissed.
CThe appeal in CA435/2022 is dismissed and the cross-appeal allowed. The High Court’s imposition of a 20 per cent reduction on the costs and disbursements otherwise payable to the first respondent by the appellants and the Trust is quashed, but in all other respects the High Court’s decision on costs is affirmed.
DThe appellants must pay the first respondent costs on the two appeals and cross-appeal calculated on the basis of a standard appeal, band A, together with usual disbursements. We certify for second counsel.

____________________________________________________________________

REASONS OF THE COURT

(Given by French J)

Table of Contents

Introduction [1]
Background [8]

Events leading to the creation of the Trust  [8]
The creation of the Trust in 2004  [18]
Events after the creation of the Trust  [27]
Appointment of John as project manager 2008  [38]
Events after the commencement of the Ching’s Block development                [60]
The court proceedings  [80]
The hearing in the High Court  [88]
The High Court judgment  [92]
Preliminary matters prior to appeal hearing  [104]

Arguments on appeal [110]
Analysis [114]

The rule against self-dealing and the exceptions to it  [114]
John’s conflict of interest as adjoining landowner  [129]
John’s conflict as a paid project manager  [139]
Implicit authorisation?  [139]
Express authorisation — clause 13  [149]

The costs appeal and cross-appeal [186]

The High Court costs decision  [186]
Arguments on appeal  [190]
Analysis  [194]

Outcome [205]

Introduction

John McLaughlin (John) was a trustee of a family discretionary trust established by his parents.[1] The Trust undertook a residential subdivision which included the Trust’s own land as well as land belonging to John and his wife. John’s company was engaged by the Trust as the project manager for the subdivision and was paid a fixed fee.
[1]To avoid confusion, we refer to all members of the McLaughlin family by their first names.
John’s three brothers, who are discretionary beneficiaries, became unhappy with the way the Trust was being run. Two of them, the appellants Mark and Andrew McLaughlin, issued proceedings in the High Court making various claims of breach of trust against John and another trustee, the second respondent Glasgow Harley Trustee Ltd. Those claims included a cause of action against John for an account of profits.
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 McLaughlin v McLaughlin

Details

AGLC: McLaughlin v McLaughlin [2023] NZCA 473
Case: [2023] NZCA 473
Decision Date: 29 September 2023 at 3 pm

CaseChat Overview and Summary

The appeal in CA712/2021, brought by Mark and Andrew McLaughlin against John McLaughlin, a trustee of the Ashley Trust, was dismissed. The appeal in CA435/2022, regarding the costs of the original High Court proceedings, was also dismissed but the cross-appeal brought by John was allowed. The Court quashed the High Court's imposition of a 20 per cent discount on the costs and disbursements otherwise payable to John by the appellants and the Trust, but affirmed the High Court's decision on costs in all other respects. Mark and Andrew were ordered to pay John's costs on the two appeals and cross-appeal calculated on the basis of a standard appeal, band A, together with usual disbursements. The Court found that John, as a trustee, was not liable to account for personal benefits obtained in his capacity as the owner of land adjoining the Trust's subdivision and as project manager, as the conflicts were appropriately managed and authorised by the Trust Deed. The Court also found that while the litigation was unnecessarily prolonged by Mark and Andrew's conduct, the Judge's imposition of a 20 per cent reduction on the costs payable to John was erroneous.

Orders