Percy v Percy - [2020] NZHC 828

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2019-441-000089

[2020] NZHC 828

UNDER s 51 of the Trustee Act 1956 and the Court’s inherent and supervisory jurisdiction

IN THE MATTER OF

claims of breach of contract, breach of trust and fiduciary duty and an application for removal of Trustees

BETWEEN

DOUGLAS WILLIAM PERCY

First Plaintiff

VIRGINIA FRANCES PERCY
Second Plaintiff

AND

VANCE CHARLES PERCY

First Defendant

STEPHEN PETER LUNN
Second Defendant

VANCE CHARLES PERCY and DENISE MARY PERCY

Third Defendants

Hearing: 23 March 2020 (by telephone)

Counsel:

J L Bates for Plaintiffs

D J O’Connor for Defendants

Judgment:

29 April 2020

JUDGMENT OF DOOGUE J

(Prospective Costs Application)

PERCY & ANOR v PERCY & ORS [2020] NZHC 828 [29 April 2020]

Introduction

[1] In proceedings filed in November 2019 the plaintiffs (Douglas and Virginia) allege that the first defendant (Vance), their brother and a trustee of the Percy Farming Trust (the trust), together with the second defendant (Mr Lunn), a solicitor and co- trustee of the trust, have failed to act in good faith and in the best interests of the trust’s beneficiaries.

[2] Douglas and Virginia are discretionary beneficiaries of the trust as to income and capital at the date of distribution. They have filed a substantive action seeking a variety of remedies against Vance and Mr Lunn, including:

(a)declarations of breach of trust, and that they are in breach of their fiduciary duty to the beneficiaries;

(b)the removal of Vance and Mr Lunn as trustees and the appointment of independent trustees;

(c)a declaration that Vance and his wife Denise as partners in the farming partnership known as the Shiloh Santa Gertrudis Stud (the Shiloh Stud) have knowingly assisted Vance to enter into transactions in breach of trust and fiduciary duty; and

(d)enquiries into losses and profits as a result of the above declarations, and various subsequent financial remedies, including compensation and/or account for profits.

[3] Douglas alone also seeks damages from Vance and Mr Lunn for breach of contract.

[4] Previous proceedings alleging the same or very similar causes of action were settled in December 2017 by deed of settlement between Douglas, Vance and Mr Lunn.

[5]In this interlocutory proceeding, Douglas and Virginia seek:

(a)a prospective costs order (PCO) that the costs of bringing the substantive proceedings be paid out of the assets of the trust upon monthly invoicing until finalisation of the litigation;

(b)an order prohibiting the trustee defendants from using trust assets to defend the case against them; and

(c)an order that the defendants personally pay the plaintiffs’ costs of this interlocutory application, on an indemnity basis.

Background

[6] The trust was established on 15 December 1969 by Frank William Percy (the settlor), the father of Douglas, Virginia and Vance. The beneficiaries were the settlor’s wife and his children and grandchildren and the wives or widows of any sons or grandsons of the settlor.

[7] The F W Percy Farming Company Limited (the company) was incorporated on…

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 Percy v Percy

Details

AGLC: Percy v Percy [2020] NZHC 828
Case: [2020] NZHC 828
Decision Date: 29 April 2020

CaseChat Overview and Summary

The plaintiffs, Douglas and Virginia Percy, commenced proceedings against the first defendant, Vance Percy, and the second defendant, Stephen Lunn, in relation to the Percy Farming Trust. The plaintiffs sought a prospective costs order, as well as an order prohibiting the defendant trustees from using trust assets to defend the case against them and an order that the defendants personally pay the plaintiffs’ costs of the interlocutory application. The plaintiffs submitted that the defendants have failed to act in good faith and in the best interests of the trust’s beneficiaries, including by entering into transactions in breach of trust and fiduciary duty. The defendants argued that the plaintiffs’ claims were weak and unlikely to succeed. The Court found that the case fell within the third category of trust litigation as per Re Buckton and that the plaintiffs had not demonstrated exceptional circumstances to justify a prospective costs order. The application for a prospective costs order was dismissed, as was the application that the defendants bear the costs of the interlocutory application personally. Costs in respect of the interlocutory application were reserved.

Orders