Staite v Kusabs - [2022] NZSC 123

IN THE SUPREME COURT OF NEW ZEALAND

I TE KŌTI MANA NUI O AOTEAROA

SC 72/2022
[2022] NZSC 123

BETWEEN	PETER DANIEL STAITE, JEAN TANIRAU-CARSTON AND LYNETTE KATHLEEN PALMER AS TRUSTEES AND REPRESENTATIVES OF THE BENEFICIARIES OF THE WHAOA NO 1 LANDS TRUST First Applicants
PETER DANIEL STAITE, JEAN TANIRAU-CARSTON, TERESSA HURIHANGANUI, DOROTHY RAROA AND LYNETTE KATHLEEN PALMER AS TRUSTEES AND BENEFICIARIES OF THE NGĀTI WHAOA MĀORI RESERVATION Second Applicants
AND	ANDREW MARUTUEHU KUSABS, CRAIG JOHN KUSABS, WALLY VICTOR HOHEPA LEE, ROBERT LESLIE MACFARLANE AND WIREMU MATAIA KEEPA AS TRUSTEES OF THE TUMUNUI LANDS TRUST First Respondents
ANDREW MARUTUEHU KUSABS, DONALD MAIRANGI BENNETT, JULIAN KUMEROA KEEPA AND WIREMU WAAKA AS RETIRED TRUSTEES OF THE TUMUNUI LANDS TRUST Second Respondents

Court:	Glazebrook, O’Regan and Ellen France JJ
Counsel:	D G Chesterman and J P Koning for Applicants M S McKechnie for Respondents
Judgment:	20 October 2022

JUDGMENT OF THE COURT

A The application for leave to appeal is dismissed.
B The applicants must pay the respondents costs of $2,500.

____________________________________________________________________

REASONS

Background

The applicants are the trustees of the Whaoa Trust, an ahu whenua trust, which owns Māori freehold land at Reporoa. On 16 February 1994 the Whaoa Trust executed a lease of the land in favour of another ahu whenua trust, the Tumunui Trust. The respondents are the trustees of the Tumunui Trust.
In a proceeding commenced in 2009 the Whaoa Trust sought rescission of the lease on the basis of Mr Edward Moke’s involvement in its negotiation. Mr Moke was a trustee of both trusts. The Whaoa Trust alleged that the terms of the lease were unfavourable to the Whaoa Trust both by reason of the duration of the lease and the rental being significantly below market value.

Decisions below

High Court judgment

Heath J in the High Court accepted that Mr Moke breached his fiduciary duty of loyalty to the Whaoa Trust by acting on both sides of the lease transaction and that his involvement had provided material assistance to the Tumunui Trust in the lease negotiations.[1] However, the Judge made a positive finding that Mr Moke was not responsible for what the Judge considered to be an error in the drafting of the rental provision.[2] The Judge declined to order rescission of the lease but instead made an order for rectification of the lease.[3]

Court of Appeal judgment

[1]Staite v Kusabs [2017] NZHC 416 (Heath J) at [167(a)], [170] and [262(a)].

[2]At [169].

[3]At [213] and [262(b)]. Note that the effect of the order for rectification was modified in the recall judgment of Staite v Kusabs [2017] NZHC 2299 (Heath J) at [46].

The Tumunui trustees appealed against the order for rectification to the Court of Appeal.[4] They further contended that Mr Moke’s breach of fiduciary duty was not of such a character as to justify either rescission or rectification of the lease.[5]
[4]Kusabs v Staite [2019] NZCA 420 (Cooper, Brown and Williams JJ) [CA judgment].
[5]At [5].
The Court of Appeal allowed the appeal…

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 Staite v Kusabs

Details

AGLC: Staite v Kusabs [2022] NZSC 123
Case: [2022] NZSC 123
Decision Date: 20 October 2022

CaseChat Overview and Summary

In the Supreme Court of New Zealand, the case of Staite v Kusabs involved an application for leave to appeal from the trustees of the Whaoa Trust, who sought to challenge the Court of Appeal's decision on the lease of Māori freehold land at Reporoa. The Whaoa Trust had previously sought to rescind the lease, which was executed in favour of the Tumunui Trust in 1994. The Whaoa Trust alleged that the lease terms were unfavourable, primarily due to the involvement of Edward Moke, who was a trustee of both trusts. The Court of Appeal had upheld the High Court's order for rectification of the lease but overturned the order for rescission, concluding that Moke's involvement did not constitute a conflict of interest warranting rescission and that the lease was fair when viewed in its proper context.

The legal issues before the Supreme Court centred on whether the Court of Appeal had correctly applied the principles established in Fenwick v Naera regarding conflicts of interest in Māori land trusts and whether there was sufficient cause to grant leave to appeal. The applicants argued that the Court of Appeal's decision involved matters of general or public importance, given the significant number of ahu whenua trusts in New Zealand and the commercial and cultural significance of these trusts. Conversely, the respondents contended that the Court of Appeal had properly applied the principles from Fenwick v Naera and that the appeal did not involve issues of general or public importance.

The Supreme Court found that the Court of Appeal had correctly applied the principles from Fenwick v Naera and there was no indication that the principles were misunderstood or misapplied. Given that the case did not concern issues of general or public importance, the application for leave to appeal was dismissed. The applicants were ordered to pay the respondents' costs of $2,500.

Orders