Ram Custodian Limited v Raymond - [2012] NZHC 3438

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-3798 [2012] NZHC 3438

UNDER the Trustee Act 1956 and Part 19 of the
High Court Rules

IN THE MATTER OF an application by trustees for directions under section 66 of the Trustee Act 1956

BETWEEN RAM CUSTODIAN LIMITED, JOHN RUSSELL STRAHL AND BENJAMIN WILLIAM MCALPINE TOTHILL Applicants

ANDRICHARD WYNNE RAYMOND, DAVID ATHOL HAMILTON BROWN AND BENJAMIN WILLIAM MCALPINE TOTHILL
First Respondents

ANDJOHN RUSSELL STRAHL AND JOHN CARLAW HAGEN
Second Respondents

Hearing: 24 October 2012

Appearances: A S Ross and R A Rose for the Applicants
T C Weston QC and A V Foote for the First Respondents
N Ingram QC and A Kyriak for the Gough Bros

Judgment: 26 October 2012

Reasons: 17 December 2012

REASONS FOR JUDGMENT OF ELLIS J

This judgment was delivered by me on 17 December 2012 at 11am, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors: Chapman Tripp, PO Box 2206, Auckland 1140
Duncan Cotterill, PO Box 5, Christchurch 8140
Kyriak Law, 4/40 Eden Crescent, Auckland 1010
Wynn Williams, PO Box 4341, Christchurch

Counsel: T Weston QC, PO Box 3976, Christchurch 8140
N Ingram QC, 2006 The Precinct, 6 Lorne Street, Auckland 1010
RJB Fowler, PO Box 10048, Wellington 6143

RAM CUSTODIAN LTD V RAYMOND HC AK CIV-2012-404-3798 [26 October 2012]

[1] This judgment sets out my reasons for decisions made by me on 26 October

2012:

(a) declining an application for stay of this proceeding (CIV 2012-404-

3798) pending the determination of the proceeding numbered CIV

2011-404-6645;

(b)granting an application to consolidate this proceeding with the proceeding numbered CIV 2011-404-6645.

[2] This proceeding and the proceeding numbered CIV 2011-404-6645 both involve the Head Trust of the Tracy Thomas Gough Estate (the applicants) and (directly or indirectly) the sub-trusts that represent two branches of the Gough family, the Blair Gough Sub-trust and the Owen Gough Sub-trust. The Head Trust has become something of a focal point for the longstanding internecine struggle between Tracy Gough’s descendants.

[3] The Head Trust is required by its Trust Deed to have three trustees. The trustees of the two sub-trust each appoint one trustee and then those two trustees then appoint the third. Mr Tothill is the Blair Gough Sub-trust’s appointee to the Head Trust. Mr Strahl is the Owen Gough Sub-trust’s appointee and RAM Custodian Limited (RAM) is the independent trustee appointed by Mr Tothill and Mr Strahl..

[4] Tracy, Harcourt and Anthony Gough (collectively referred to as the Gough brothers) are beneficiaries under the Owen Gough Sub-trust.

[5] The first respondents are the trustees of the Blair Gough Sub-trust.

[6] The 2011 proceeding concerns a claim made by one of the Gough brothers, Harcourt Gough, that Mr Tothill and RAM were invalidly appointed as Trustees of the Head Trust (“the vires proceeding”). By way of consequential relief, he seeks declarations that any decisions purportedly made by the trustees of the Head Trust during the relevant period “are of no effect”.

[7] In the course…

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: [2012] NZHC 3438
Decision Date: 26 October 2012

CaseChat Overview and Summary

The High Court of New Zealand heard an application by Ram Custodian Limited, John Russell Strahl, and Benjamin William Mcalpine Tothill, the trustees of the Head Trust of the Tracy Thomas Gough Estate, against Richard Wynne Raymond, David Athol Hamilton Brown, and Benjamin William Mcalpine Tothill. The trustees sought directions to wind up the Head Trust. The Gough brothers, Tracy, Harcourt, and Anthony Gough, beneficiaries under the Owen Gough Sub-trust, opposed the application and sought a stay of the proceeding pending the determination of a separate proceeding concerning the validity of the trustees' appointments. The court had to decide whether to grant the stay and whether to consolidate the two proceedings.

The court declined to stay the winding up proceeding as it believed that the Gough brothers' propositions would impede the resolution of the fundamental issue of the practical consequences of the invalid Head Trustee appointments. The court found that the declarations sought by the Gough brothers in the vires proceeding were largely empty and unhelpful. The court also found that the invalid appointments' effect on the Head Trustees' standing to bring the winding up proceeding could only be determined in the context of a substantive determination of the issues put before the Court by the winding up proceeding. The court also found that the Gough brothers' objections could not be maintained if the Head Trustees made a further application to wind up the trust. The court concluded that all those reasons militated strongly against a stay of the winding up proceeding.

The court found that the two proceedings were intertwined and that there was a considerable overlap of both legal and factual issues. The court concluded that consolidation was appropriate under High Court Rule 10.12. The court noted that attempts to separate out and separately determine the issues arising in the vires proceeding had not been successful. The court found that the two proceedings were already being managed together by Courtney J, who would continue to manage both the vires and the winding up proceedings together.

The court declined to grant a stay of the winding up proceeding and granted an application to consolidate the proceeding with the vires proceeding. The court found that the two proceedings were intertwined and that there was a considerable overlap of both legal and factual issues. The court found that attempts to separate out and separately determine the issues arising in the vires proceeding had not been successful. The court concluded that consolidation was appropriate under High Court Rule 10.12.

Orders