McLaughlin v McLaughlin - [2021] NZHC 3015

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2017-442-52

[2021] NZHC 3015

BETWEEN
MARK JAMES MCLAUGHLIN and ANDREW ASHLEY MCLAUGHLIN (as

beneficiaries of the Ashley Trust) Plaintiffs

AND

JOHN DAVID MANUEL MCLAUGHLIN

(as trustee of the Ashley Trust) First Defendant

AND

GLASGOW HARLEY TRUSTEE LIMITED

Second Defendant

AND

BRETT MCLAUGHLIN

Interested Party

Hearing: Memoranda Filed:
17 May 2021 – 2 June 2021; 24 – 25 June 2021

16 and 25 June 2021, 9, 16, 23 and 28 July 2021 and 3 August
2021

Appearances:

J W A Johnson, J R Halligan and N G Lawrence for the Plaintiffs N S Gedye QC, O D Peers and G Dill-Russell for First Defendant J Bierre for Second Defendant

J H McGuigan for Interested Party Brett McLaughlin

Judgment:

9 November 2021

JUDGMENT OF GENDALL J

This judgment was delivered by me on 9 November 2021 at 1.30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date: .

MCLAUGHLIN v MCLAUGHLIN [2021] NZHC 3015 [9 November 2021]

Table of Contents

Introduction [1]

First words  [11]
Background  [18]
(a)The Marsden Valley farm  [18]
(b)The McLaughlin family  [24]

Jim and Edna [25]

The sons [30]

The grandchildren [37]

Formation of the Trust [41]

The subdivision activities [50]

The pleadings [74]

Remedies sought in their pleadings by Mark and Andrew [86]

Causes of action [87]

Costs and repayment of legal fees [90]

Admissibility of evidence [93]

FIRST CAUSE OF ACTION — Removal Of Trustee  [107]
(a)Removal of John as a trustee  [107]
(b)Replacement trustee  [118]

SECOND CAUSE OF ACTION – Breach of Duty [152]

(a)Pleadings  [153]
(b)Trustees’ duties  [154]
(c)Clause 9.2 of the Trust Deed and the settlor’s intentions  [172]
(d)Did the Trustees breach their duty of prudent investment?                 [199]
(i)Failure to analyse and understand the needs of the
beneficiaries?  [215]
(ii)Failure to consider and/or analyse or to take advice on

alternative investments? [221]

(iii)Failure to adopt a proper decision-making process?                 [226]
(iv)Failure to consider financial progress of the subdivision          [230]
(e)The Ching’s Block subdivision  [233]
(f)Failure of Trust management processes and budgeting?  [270]
(g)Failure to appoint a suitable and qualified project manager             [277]
(h)Failure to provide financial information?  [288]
(i)Failure to consult with beneficiaries?  [292]

(j) Causation of loss? [293]

(k) Exemption clauses in Trust Deed and s 73 Trustee Act 1956 [305]

THIRD CAUSE OF ACTION – Account of profits [320]

(a) Pleadings [323]

(b) A fiduciary’s duties [324]

(c) Discussion [343]

(i)      John’s appointment and remuneration as project manager [365]

(ii)     John’s contribution as a neighbour to the initial resource consent cost
[386]

(iii)     Were John’s decisions as trustee to undertake the Ching’s Block and Homestead Block developments made in his self-interest rather than in the interests of the Trust?
[394]

(iv)     Has John derived benefits and/or profited from the Trust’s subdivision of the Ching’s Block as an adjoining landowner?
[400]

(d) Third cause of action against…

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 [2021] NZHC 3015
Case: [2021] NZHC 3015
Decision Date: 9 November 2021

CaseChat Overview and Summary

This case involved a dispute between brothers, Mark and Andrew, and their brother John, over the administration of the Ashley Trust. The Trust, settled by their parents Jim and Edna, held a significant farm property in the Marsden Valley, Nelson. The dispute centred on the trustees' management of the Trust's property, particularly the decision to develop the property into residential lots. Mark and Andrew alleged that John, one of the trustees, had breached his fiduciary duties by mismanaging the Trust and acting in his self-interest. They sought the removal of John as a trustee, compensation for the alleged breaches, and an account of profits. John and the other defendant, Glasgow Harley Trustee Limited (GHTL), denied the allegations and defended the claims. The court found that John would retire as a trustee, and Paul Dorrance would be appointed as his replacement. The court dismissed Mark and Andrew's claims for compensation and an account of profits, holding that the trustees had acted prudently and in the best interests of the beneficiaries. The court reserved costs for later determination.

Orders