Percy v Percy - [2017] NZHC 1989

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2016-441-50 [2017] NZHC 1989

UNDER Section 51 of the Trustee Act 1956

IN THE MATTER

of claims of breach of trust and fiduciary duty and an application for removal of trustees

BETWEEN

DOUGLAS WILLIAM PERCY Plaintiff

AND

VANCE CHARLES PERCY AND MURRAY DAVID RIDDELL

First defendants

VANCE CHARLES PERCY and

DENISE MARY PERCY Second defendants

Hearing: 26 June 2017

Appearances:

J L Bates for the plaintiff

D J OʼConnor for the first-named first defendant and for the second defendants

No appearance for the second-named first defendant

Judgment:

18 August 2017

JUDGMENT OF ASSOCIATE JUDGE SMITH

PERCY v PERCY [2017] NZHC 1989 [18 August 2017]

CONTENTS

The application .................................................................................................................................. [1] Background........................................................................................................................................ [2] The amended statement of claim ................................................................................................... [10] Statement of defence ....................................................................................................................... [24] Mr Riddell’s position....................................................................................................................... [31] Douglas’ application for appointment of auditors and reviewers ............................................... [33] The notice of opposition filed by Vance and Denise ..................................................................... [37] Evidence ........................................................................................................................................... [38] Issues ................................................................................................................................................ [43]
Issue 1 — does the Court have jurisdiction to appoint auditors and/or reviewers to enquire
into and report on the matters identified in Douglas’ application? ............................................ [45]

Discussion and conclusions.......................................................................................................... [45]

Issue 2 — If the Court has jurisdiction to appoint auditors and reviewers, should any of
the orders sought be made? What should be the scope of any audit and/or review? ............... [65]

Submissions .................................................................................................................................. [65]

Discussion and conclusions.......................................................................................................... [66]

Issue 3 — are Mr Palairet and Mr Fan-Robertson truly independent, and do they have
the necessary skills to conduct any audit and/or review the Court might order? ..................... [89]

Issue 4 — if it is not appropriate to appoint an auditor and/or reviewer under s 83B of
the Act or in the Court’s inherent jurisdiction, should the Court appoint an expert under r 9.36 of the High Court Rules, to enquire into and report on the matters raised in the application?...................................................................................................................................... [90]

Discussion and conclusions.......................................................................................................... [97]

Result .............................................................................................................................................. [103]

The application

[1] This is an interlocutory application by the plaintiff, Douglas Percy (Douglas), for an order appointing auditors and reviewers to a family trust which had been established in 1969 by his father, the late Frank William Percy.

Background

[2] The Trust is known as the Percy Farming Trust (the Trust). The current trustees of the Trust are the above-named first defendants Vance Percy (Vance), who is Douglas’ brother, and Mr Murray Riddell, who is a retired farmer (the trustees).

[3] The Trust owns 50 per cent of the shares in a farming company called the F W Percy Farming Co Ltd (the Company), which was incorporated around the same time as the Trust was settled. The balance of the shares are owned by Vance (30 per cent), Douglas and Vance’s mother Leone Helen Percy (20 per cent), and Vance’s wife, Denise Mary Percy (Denise) (who holds one share).

[4] Until recently Douglas had spent many years working as a safari operator in Kenya. He has recently returned to New Zealand, and…

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 [2017] NZHC 1989
Case: [2017] NZHC 1989
Decision Date: 18 August 2017

CaseChat Overview and Summary

The case of Percy v Percy involved an interlocutory application by Douglas Percy for an order appointing auditors and reviewers to a family trust. The Trust was established in 1969 and owned 50% of the shares in a farming company. Douglas, a beneficiary of the Trust, alleged that the trustees of the Trust, Vance Percy and Murray Riddell, had breached their fiduciary duties and acted in their own interests. The application sought the appointment of John Palairet and Glenn Fan-Robertson as independent auditors and reviewers to investigate and review the Trust's assets and their use. The legal issues in the case were whether the Court had jurisdiction to appoint auditors and/or reviewers, whether any of the orders sought should be made, whether the proposed auditors and reviewers were truly independent and had the necessary skills, and whether the Court should appoint an expert under the High Court Rules. The court concluded that the Court had inherent jurisdiction to consider Douglas' application, but that the orders sought were not appropriate under s 83B of the Trustee Act 1956 or the Court's inherent jurisdiction. The court also found that the proposed auditors and reviewers did not have the necessary skills to conduct the proposed audit and/or review, and that there was no basis for the appointment of an expert under the High Court Rules. Douglas' application for the appointment of Mr Palairet and Mr Fan-Robertson as auditors and reviewers under s 83B of the Act or in the Court's inherent jurisdiction was dismissed. The court declined to appoint an expert under r 9.36 to investigate and report on the questions referred to in the notice of application.

Orders