Roband v O'Sheas - [2017] NZHC 2468

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA
KIRIKIRIROA ROHE

CIV-2013-419-000966 [2017] NZHC 2468

BETWEEN
JANINE MAREE ROBAND

Plaintiff

AND

OʼSHEAS
First Defendant

MICHAEL CANN Second Defendant

Hearing: 1-5 and 8-11 May 2017

Appearances:

S J Rawcliffe and S P Middlemiss for the Plaintiff
L J Taylor QC and R C Woods for the First Defendant
M Cann (Self-represented Second Defendant) in Person

Judgment:

9 October 2017

JUDGMENT OF EDWARDS J

This judgment was delivered by Justice Edwards on 9 October 2017 at 4.00 pm, pursuant to
r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Counsel: L J Taylor QC, Wellington

Solicitors: Harkness Henry, Hamilton
Robertsons, Auckland

Copy To: M Cann, Hamilton

ROBAND v OʼSHEAS [2017] NZHC 2468 [9 October 2017]

Table of Contents

Para No.

Introduction ..............................................................................................................[1] Narrative of events ...................................................................................................[4] Claims and defences ...............................................................................................[16] Provision of the unlimited interlocking guarantee..............................................[21] Was there a conflict or potential conflict of interest? [31] Was there a breach causing loss? [55] Was the provision of the Guarantee outside the Trustees’ powers? [61] Application of the Newstead proceeds..................................................................[69] Did Ms Roband give informed consent to repayment of the Companies’ debts? [74] Did O’Sheas fail to take the necessary steps to protect the Trust’s interests? [86] BNZ refinancing – Alconbury ...............................................................................[91] Did Ms Roband give her informed consent to the Alconbury payment? [98] Failure to enforce leases....................................................................................... [112] RHT lease [113] Paddy Smith lease [122] Loss of equity and income ...................................................................................[125] Removal of Mr Cann as trustee ..........................................................................[128] Summary of findings............................................................................................[138] Result .....................................................................................................................[143]

Introduction

[1] Ms Roband and her former husband, Mr Cann, are trustees of the McGerkinshaw Property Trust. At the relevant time, they were also owners of a trucking business operated through two companies which are now in liquidation. Mr O’Shea (a partner in the law firm O’Sheas) was an independent trustee and the solicitor to the Trust, trucking companies, Ms Roband and Mr Cann (collectively referred to as the Group).

[2] Ms Roband sues her fellow trustees, and O’Sheas, in relation to a number of transactions which she says preferred the interests of the companies to those of the Trust. Her primary claim is in relation to the Trust’s guarantee of the companies’ debts under an unlimited and interlocking guarantee given by each member of the Group in 2006. Other claims concern payments made by the Trust to discharge the debts of the companies, and the enforcement of leases of the Trust property. She pleads breach of fiduciary duty, breach of trust, negligence and breach of retainer in relation to these transactions.

[3] Mr O’Shea and Mr Cann deny each of these claims. In addition, they raise a number of affirmative defences under the indemnity provisions of the Trust deed, and the Limitation Act 1950.

Narrative of events

[4] Ms Roband and Mr Cann were married in 1994 and have two children. They operated a trucking business together and were equal shareholders in Roadhaul (N.I) Ltd (RNI) and RHT…

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] NZHC 2468
Decision Date: 9 October 2017

CaseChat Overview and Summary

Ms Roband sued her former husband and co-trustee, Mr Cann, O’Sheas, and O’Sheas’ partner, Mr John O’Shea, over a number of transactions which she says preferred the interests of the companies to those of the Trust. Ms Roband’s claims include breach of fiduciary duty, breach of trust, negligence and breach of retainer in relation to the transactions. Mr O’Shea and Mr Cann deny each of these claims. They also raise a number of affirmative defences under the indemnity provisions of the Trust deed, and the Limitation Act 1950. The court considered whether O’Sheas breached its fiduciary duty by continuing to act for the Trust and the companies, and whether it failed to advise the Trust to take steps to protect its interests. The court found that there was no conflict of interest between the Trust and the companies which precluded O’Sheas from acting for both parties. As to the application of the proceeds of sale from the Newstead property, the court found that Ms Roband knew that the bank required all the proceeds of sale to be applied in reduction of the group’s debt. The court found that O’Sheas should have turned their mind to protecting the Trust’s interests once the payments had been made. However, there was insufficient evidence that their failure to do so in the circumstances was a breach of their duty of care, or a breach of retainer. Even if there was a breach, it did not cause the loss, as there was no basis to suggest that the trustees would have agreed to liquidate the companies or that the loss which was sustained would have been avoided. The court also found that Ms Roband did not give instructions to enforce the leases to RHT and Paddy Smith. The application to remove Mr Cann as trustee was adjourned with leave reserved to Ms Roband to file a memorandum and further evidence outlining the current financial status of the Trust, and proposing a substitute trustee. The plaintiff’s remaining claims were dismissed. The defendants were entitled to an award of costs.

Orders