Santeater Limited v Wakelin - [2019] NZHC 2264

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-000282

[2019] NZHC 2264

BETWEEN
SANTEATER LIMITED

Plaintiff

AND

GEOFFREY JAMES WAKELIN

First Defendant

AND

BLACK DOG TRUSTEES LIMITED

Second Defendant

Hearing: On the papers

Appearances:

J V Ormsby for Plaintiff

Judgment:

10 September 2019

JUDGMENT OF DUNNINGHAM J

This judgment was delivered by me on 10 September 2019 at
4.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: 10 September 2019

[1] The plaintiff is a corporate trustee of the Black Dog Trust (“the Trust”). It was appointed in March 2018 by Ms Arnott, who is a settlor and beneficiary of the Trust, pursuant to her power of appointment under the Trust deed.

[2] The first defendant, Mr Wakelin, is also a settlor and beneficiary of the Trust and is a director of the second defendant. The second defendant was, until appointment of the plaintiff, the sole corporate trustee of the Trust.

SANTEATER LIMITED v WAKELIN [2019] NZHC 2264 [10 September 2019]

[3] Ms Arnott and the first defendant were in a relationship from January 2006 to December 2015. The Trust was settled by them in October 2008. The initial trustee was the second defendant, and Ms Arnott and the first defendant were its directors. Ms Arnott resigned as a director in November 2019 for various reasons, including her concerns about the first defendant’s unwillingness to share Trust information with her as a co-director and to properly administer the affairs of the Trust through the second defendant.

The proceedings

[4] The plaintiff filed a statement of claim on 20 May 2019 alleging various breaches of their duties as trustees by the first and second defendants, including:

(a)failure to complete financial statements and tax returns for the Trust;

(b)failure to account for Trust income and using or diverting Trust income for personal use;

(c)failure to consent to the provision of Trust information to the plaintiff; and

(d)failure to act in the best interests of the Trust.

[5] The plaintiff sought the removal of the second defendant as a trustee of the Trust (and at the same time consented to its own removal as trustee), and the appointment of a professional trustee independent of the plaintiff and first defendants to regularise the operation of the Trust and remedy any deficiencies and breaches.

[6] On 31 May 2019, I made directions as to service of the statement of claim and orders regarding the use and administration of trust property as sought by the plaintiff.

[7] The proceedings have since been served on the first and second defendants as confirmed in the affidavit of Verdi Johannus Cornelius Van Beek sworn on 30 August 2019.

[8] The defendants have not filed a statement of defence in this matter and the time for doing so has now expired.

This application

[9] The plaintiff now makes a further without notice application to deal with the Trust property in the circumstances that have arisen since…

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 Santeater Limited v Wakelin

Details

AGLC: Santeater Limited v Wakelin [2019] NZHC 2264
Case: [2019] NZHC 2264
Decision Date: 10 September 2019

CaseChat Overview and Summary

Santeater Limited, a corporate trustee of the Black Dog Trust, filed a statement of claim against Geoffrey James Wakelin and Black Dog Trustees Limited, alleging breaches of trust by the defendants. The defendants did not file a statement of defence. The plaintiff sought various orders to deal with the Trust property, including the sale of Trust property, pending a formal proof hearing on the substantive claim. The defendants did not oppose the application. The Court granted the application, allowing the plaintiff to deal with Trust property and to sell or refinance the property, and imposing conditions on the use of proceeds from the sale. The Court also ordered the defendants to provide certain documents to the plaintiff and directed the plaintiff to report to the Court on its actions.

The primary legal issue before the Court was whether to grant the plaintiff’s application to deal with Trust property, including selling or refinancing the property, pending a formal proof hearing on the substantive claim. The Court considered whether it had jurisdiction to make such an order and whether the order was necessary to protect the interests of the Trust beneficiaries. The Court found that it had jurisdiction to make the order under its inherent jurisdiction to supervise and intervene in the administration of the Trust for the welfare of the beneficiaries. The Court also found that the order was necessary to avoid mortgagee sales and to regularise the Trust’s affairs, given that the defendants had not filed a statement of defence and the Trust was in a perilous state.

The Court granted the plaintiff’s application and made the orders sought. The Court emphasised that the orders were temporary and designed to bridge the gap while the substantive claim was being heard. The Court also imposed conditions on the use of proceeds from the sale of Trust property and required the plaintiff to report to the Court on its actions. The Court noted that the proceedings were to be set down for a formal proof hearing as soon as practicable. The Court granted leave to any party to return to the Court if necessary.

The Court’s reasoning was based on the need to protect the interests of the Trust beneficiaries and to regularise the Trust’s affairs. The Court found that the plaintiff’s application was necessary to avoid mortgagee sales and to ensure that the Trust property was dealt with appropriately. The Court also found that the orders were an interim measure and that the plaintiff had sought a formal proof hearing on its substantive claim. The Court emphasised that the orders were temporary and that the proceedings were to be set down for a formal proof hearing as soon as practicable. The Court imposed conditions on the use of proceeds from the sale of Trust property and required the plaintiff to report to the Court on its actions.

Orders