Rae Beverly Adlam v John Tionga Savage - [2017] NZSC 11

IN THE SUPREME COURT OF NEW ZEALAND

SC 120/2016
[2017] NZSC 11

BETWEEN

RAE BEVERLY ADLAM
Applicant

AND

JOHN TIONGA SAVAGE, LAWRENCE TE AOKAHARI NIAO, PATRICK MAYNE SAVAGE, SAMUEL KELVIN BARNES AND TAMATI DRAWBRIDGE AS TRUSTEES OF THE MATATA PARISH 39A 2A AHU WHENUA TRUST
First Respondents

HELEN MARIA SAVAGE AND RAELYN ARIHIA PEITA AS TRUSTEES OF THE OTONGA WHANAU TRUST
Second respondents

HUIA ANN PACEY, JOHN TIONGA SAVAGE, LAWRENCE TE AOKAHARI NIAO, REGINA VICTORIA RINTOUL AND SAMUEL KELVIN BARNES AS TRUSTEES OF THE MATATA PARISH 39A 2B 2B 2A AHU WHENUA TRUST
Third Respondents

Court:	Glazebrook, Arnold and OʼRegan JJ
Counsel:	J R Billington QC and D M Hughes for Applicant D G Hurd for First Respondents P J Andrew for Third Respondents
Judgment:	17 February 2017

JUDGMENT OF THE COURT

A The application for leave to appeal is dismissed.
B Costs of $2,500 are awarded to the first respondents.
CThe order for stay of the determination of the Court of Appeal made on 23 November 2016 is discharged.

____________________________________________________________________

REASONS

This application for leave to appeal arises out of the development of two geothermal power stations on Maori freehold land at Kawerau.
Both power stations are located on a block of land known as the Bath block, which is administered by an ahu whenua trust called the Bath Trust.[1] The applicant, Ms Adlam, was a trustee of the Bath Trust until her suspension in 2008 and later removal in 2014 by the Māori Land Court.
[1]An ahu whenua trust can be constituted by a court under s 215 of the Te Ture Whenua Māori Act 1993 where “the court is satisfied that the constitution of the trust would promote and facilitate the use and administration of the land in the interests of the persons beneficially entitled to the land.” The land, money and other assets of an ahu whenua trust are held in trust for the persons beneficially entitled to the land in proportion to their several interests in the land.
The first power station (TG2) was developed in the early 1990s. The second (GDL power station) was commissioned in September 2008 by Geothermal Developments Ltd (GDL Ltd), a company established by Ms Adlam. Although the GDL power station is on the Bath block, it draws its geothermal resource from a well on an adjacent block known as the Farm block, which is administered by a separate ahu whenua trust called the Farm Trust. Ms Adlam was not a trustee of the Farm Trust.
Ms Adlam received just over $2.44m in royalties from the TG2 power station and in 2010 made a profit of $11.2m from the GDL power station by selling her shares in GDL Ltd.

Māori Land Court

Proceedings were brought by the second respondents in the Māori Land Court in relation to those profits.[2] Ms Adlam acknowledged at the Māori Land Court hearing that she had acted in breach of her duties as trustee of the Bath Trust.[3] With regard to the Farm Trust, Judge…

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.

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Details

Case: [2017] NZSC 11
Decision Date: 17 February 2017

CaseChat Overview and Summary

Rae Beverly Adlam filed an application for leave to appeal against the Court of Appeal's decision in relation to a dispute over geothermal power stations on Māori freehold land at Kawerau. The stations are located on a block of land known as the Bath block, administered by an ahu whenua trust called the Bath Trust. The applicant, Ms Adlam, was a trustee of the Bath Trust until her suspension in 2008 and later removal in 2014 by the Māori Land Court. Ms Adlam received just over $2.44m in royalties from the TG2 power station and made a profit of $11.2m from the GDL power station by selling her shares in GDL Ltd. Proceedings were brought by the second respondents in the Māori Land Court in relation to those profits. Ms Adlam acknowledged at the Māori Land Court hearing that she had acted in breach of her duties as trustee of the Bath Trust. With regard to the Farm Trust, Judge Coxhead concluded that no claim had been properly pleaded by that trust against Ms Adlam for breach of fiduciary duty. On appeal to the Māori Appellate Court, the order to account for the $11.2m was set aside and the matter remitted back to the Māori Land Court to determine what portion of the profits should be disgorged to the Bath Trust. Ms Adlam appealed against the Māori Appellate Court decision to the Court of Appeal but abandoned her appeal prior to the hearing. The Court of Appeal allowed the cross-appeal in relation to accounting for the $11.2m of profits. Ms Adlam now seeks leave to appeal to this Court.

The court was required to decide whether Ms Adlam should be able to appeal against the Court of Appeal's decision. The court considered the submissions made by Ms Adlam and the opposition to her application for leave. The court noted that nothing raised by Ms Adlam suggested that the Court of Appeal may have been in error in concluding that in this case a causal link between the breach and the profits made sufficed. The court also noted that there was no valid reason raised for an allowance to be made for the existence of a third party’s assets contributing to the profit. The Bath and Farm Trusts have agreed that the profit should be apportioned between them. Ms Adlam has not put forward any convincing reason why she should keep any of the profit made at the expense of innocent parties.

The court dismissed Ms Adlam's application for leave to appeal. The court found that there was no valid reason raised for an allowance to be made for the existence of a third party’s assets contributing to the profit. The Bath and Farm Trusts have agreed that the profit should be apportioned between them. Ms Adlam has not put forward any convincing reason why she should keep any of the profit made at the expense of innocent parties. The court awarded costs of $2,500 to the first respondents and discharged the order for stay of the determination of the Court of Appeal relating to the order to account for $11.2m made by this Court on 23 November 2016.

Orders