Staite v Kusabs
[2014] NZHC 1183
•30 May 2014
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
CIV-2009-463-888 [2014] NZHC 1183
UNDER the Trustee Act 1956 and the Delcaratory
Judgments Act 1908
BETWEEN
PETER DANIEL STAITE, JEAN TANIRAU-CARSTON, DEBORAH PAKAU, LEONIE REI NICHOLLS and BRUCE ANDERSON BAMBER as trustees and as representatives of the beneficiaries of the Whaoa No.1 Lands Trust
First Plaintiffs
PETER DANIEL STAITE, JEAN TANIRAU-CARSTON, BRUCE ANDERSON BAMBER, DAVID TE NOHI, JAN NIKORA, LUCKY JR PEHI, OONAGH BERENICE MARINO, TERESSA HURIHANGANUI and DOROTHY RAROA as trustees and as representatives of the beneficiaries of the Ngati Whaoa Maori Reservation
Second Plaintiffs
AND
ANDREW MARUTUEHU KUSABS, DONALD MAIRANGI BENNETT, JULIAN KUMEROA KEPA and WILLIAM WAKA as trustees of the Tumunui Lands Trust
First Defendants Continued page 2
Hearing: 10 and 11 February 2014 Appearances:
D Chesterman and H Koning for the Plaintiffs
M McKechnie for the DefendantsJudgment:
30 May 2014
JUDGMENT OF ELLIS J
This judgment was delivered by me on Friday 30 May 2014 at 10.00 am pursuant to Rule 11.5 of the
High Court Rules.
Registrar/Deputy Registrar Date:………………………….
STAITE & ORS v KUSABS & ORS, [2014] NZHC 1183 [30 May 2014]
ANDREW MARUTUEHU KUSABS and DONALD MAIRANGI BENNETT as trustees of the Tumunui Lands Trust Second Defendants
EDIE TE HUNAPO MOKE and PIPI PHEOBE MOKE as personal representatives of the Estate of Edward Paurini Moke, as a former Trustee of the Whaoa No. 1 Lands Trust and the Ngati Whaoa Maori Reservation
Third Defendants
[1] This proceeding was commenced on 17 December 2009. Leave to amend the statement of claim, and to join parties, was granted by Associate Judge Christiansen on 14 December 2012. The amended claim (in which the original single cause of action had been supplemented by five more) was subsequently struck out by the learned Associate Judge on 25 July 2013.1 The plaintiffs now seek review of that decision.
[2] The proceeding is centrally concerned with a lease signed in 1994 between the Whaoa No. 1 Trust (the Whaoa Trust) and the Tumunui Lands Trust (the Tumunui Trust) in relation to a block of Maori freehold land known as Rotomahana Parekarangi 8 (RP8) (the Tumunui Lease).
[3] The first plaintiffs are the present day trustees of the Whaoa Trust. The Whaoa Trust was constituted under s 438 of the Maori Affairs Act 1953 and continues as an ahu whenua trust under s 354 of Te Ture Whenua Maori Act 1993. The Whaoa trustees are the registered proprietors of the land that is the subject of the Lease.
[4] The second plaintiffs are the trustees of the Ngati Whaoa Maori Reservation Trust (the Reserve Trust). At all material times the Whaoa Trust and the Reserve Trust had the same trustees. The beneficiaries of the two Trusts are not, however, the same. The reservation land that is the subject of the Reserve Trust is contiguous with the land that is the subject of the Tumunui Lease.
[5] All plaintiffs are said to be named both as trustees and “as representatives of the beneficiaries” of the respective trusts. That is a matter on which I shall briefly touch at the end of this judgment.
[6] The first and second defendants are, respectively, the present and past trustees of the Tumunui Trust. The third defendants are the personal representatives of the estate of Mr Edward Moke who was, during his lifetime, not only a trustee of
both the Whaoa Trust and the Reservation Trust but also a beneficiary and, it seems
1 Staite v Kusabs [2013] NZHC 1851.
a de facto trustee2 of the Tumunui Trust. Mr Moke died in 2003. It is his involvement on both sides of the negotiation of the Tumunui lease that lies at the heart of the plaintiffs’ claim. For convenience, I shall refer in this judgment to the third defendants simply as “Mr Moke”.
[7] It is relevant to note that approximately 80 per cent of the beneficiaries of the Whaoa Trust are, either directly or through marriage, also beneficiaries of the Tumunui Trust.
[8] In these proceedings the plaintiffs say that the Tumunui Lease is voidable and wish (inter alia) to have it rescinded. They also say that part of the reserve land has been wrongly included in the Lease area and seek that to be remedied.
Background
[9] The relevant background to the Lease is a little complicated but I attempt to summarise the plaintiffs’ pleading of it below. Although (as a result of the application to strike out) no statement of defence has been filed, it is clear that some of the alleged facts below are contested.
[10] The RP8 land originally comprised two lots totalling 529.8624 hectares. Between 1964 and 1989 the land was leased to, and farmed by, H Allen Mills & Son Limited (Mr Mills).
[11] By order dated 19 May 1982 the Maori Land Court made orders amalgamating the two separate lots to form RP8. On the same day the Court also made a Trust Order vesting RP8 in the Whaoa Trustees. There were seven original trustees, including Mr Bruce Bamber (who is one of the first plaintiff trustees) and Mr Moke, who died in 2003.
[12] On October 1985 the trustees of the Whaoa Trust and Mr Mills entered into a partial surrender of the memorandum of lease whereby approximately 174.02 hectares of RP8 was released from its terms. The Maori Land Court then made a
recommendation that the land so released was to be set aside for the purposes of a
2 See [27] to [31] below.
timber reserve, catchment area and a place of historical interest for the benefit of the owners, their descendants and Ngati Whaoa. At that time the Court appointed the trustees of RP8 to be the trustees of the Reserve Trust.
[13] On 13 December 1985 the Whaoa trustees entered into a new lease of the RP8 land to Mr Mills. This lease, which ran from 13 December 1982 was for 21 years with a right of renewal for a further 8 years, giving an expiry date of 13
December 2011.
[14] On 17 February 1986 the Reserve land was set apart by Gazette notice as being an area of approximately 174.02 hectares.
[15] In 1989 the Tumunui Trust succeeded in negotiating an assignment of Mr Mills’ lease to the Trust in exchange for $180,000. Although it is alleged that the Whaoa Trust was not initially aware of the proposed assignment, the transfer was later approved by the trustees. The Tumunui Trust gradually converted the land from dry stock grazing to a profitable dairy unit.
[16] By November 1990 the Whaoa Trust and the Tumunui Trust had agreed that Mr Mills’ lease should be terminated and that a new lease be entered into between them.
[17] In order to fund the conversion of the land to a dairy unit, Tumunui had sought to mortgage the land. This was not possible without certificates of title first being issued for the farm land and for the reserve land. Surveyors were engaged for that purpose. The resulting survey plan (which was allegedly based on existing stock proof fences wrongly erected by Tumunui Trust) depicted the Whaoa Reserve as comprising 158.16 hectares, which was approximately 15.8 hectares less than the area set aside as reserve land in 1985. Certificates of title were subsequently issued based on the survey.
[18] On 16 November 1992 the trustees of the Whaoa Trust and the Tumunui
Trust agreed on the terms and conditions for the new lease of RP8 and on 3
December 1992 those terms and conditions were confirmed at a meeting held at Mr
Moke’s home. The Lease purported to exclude the area comprising the Whaoa Reserve. The excluded reserve area was, as noted above, 15.8 hectares less than the reserve set aside by the Maori Land Court in 1985.
[19] The deed of lease was executed on 16 February 1994 and on 23 June 1994 it was registered. The terms of the Lease relevantly provided:
(a) a deemed commencement date of 13 December 1992; (b) that the land subject to the Lease was 370.9 hectares;
(c) that the rental would be $45,250 per annum from 13 December 1992 to 12 December 2002;
(d) for rights of renewal for a further term of ten years from 13 December
2012 and 13 December 2022 with a final termination date being 12
December 2032;
(e) for rental reviews every 10 years for the first 20 years and every three years thereafter;
(f) future rental was to be calculated on the basis of 5 per cent of the capital value of land but improvements made on or to the land since
13 December 1961 were to be deducted from the capital value; (g) a maximum term of 40 years;
(h)that at termination date, no compensation was payable to the lessee in relation to any improvements effected by the lessee upon or to the land.
The plaintiffs’ claim
[20] As I have said, the central issue with which the present claim is concerned arises from the fact that, at the time the Tumunui Lease was negotiated, Mr Moke
was both the chairman and trustee of the Whaoa Trust and a de facto trustee and beneficiary of the Tumunui Trust. The claim pleads that Mr Moke negotiated a lease that favoured Tumunui and disadvantaged Whaoa and that, in effectively participating for both sides of the negotiation, he acted contrary to the fiduciary duty owed by him to the Whaoa beneficiaries. The claim seeks (inter alia) a declaration that the Tumunui Lease should be rescinded as a breach of the rule against self- dealing.
[21] Particular concerns that the plaintiffs have about the terms of the Lease are that:
(a) its effective term (ie including the time during which Tumunui leased the land by virtue of the assignment from Mr Mills) is alleged to be at least 21 years longer than a standard farm-lease between commercial parties;
(b) the rental payable by the Tumunui Trust for the 21 year period from
13 December 2011 (being the date on which the Mills lease would have expired) is significantly below market rental because it continues to be calculated based on the condition of the land as at December
1961; and
(c) part of the bush reserve has been wrongly included.
[22] When the original claim was filed in 2009 the only defendants were the Tumunui Trustees, although the claim was based on alleged self-dealing by Mr Moke. In that sense (and as I explain in more detail later) it was plainly misconceived.
[23] The amended claim that was filed following the grant of leave was significantly longer. It is necessary to set out the various causes of action in some detail.
First cause of action
[24] The first cause of action is pleaded against all defendants and alleges breach of fiduciary duty and/or breach of the rule against self-dealing. The central allegation is that Mr Moke owed fiduciary duties in his capacity as trustee to the beneficiaries of the Whaoa Trust and to the beneficiaries of the Reserve Trust and to his co-trustees. The particulars pleaded are that he had duties:
(a) to deal with RP8 in the best interests of the beneficiaries;
(b)to ensure that his duties as a trustee of the Whaoa Trust and as a trustee of the Reserve Trust were not in conflict with:
(i) the interests of the Tumunui Trust;
(ii) his personal interests as a beneficiary of the Tumunui Trust; (c) not personally to profit directly from his role as trustee; and
(d) of confidentiality and loyalty.
[25] The claim pleads that Mr Moke breached these duties because he had an actual or apparent conflict of interest when negotiating the Tumunui Lease on behalf of the plaintiffs, because he had a personal interest on the other side of the transaction as a beneficiary of the Tumunui Trust. It is also alleged that in conducting the negotiations Mr Moke was holding himself out as a trustee of the Tumunui Trust and as that Trust’s agent. Thus he is said to have been “actively engaged” on behalf of both Trusts when negotiating the Lease.
[26] It is alleged that the beneficiaries of the Reserve Trust and of the Whaoa Trust did not consent to or acquiesce in Mr Moke’s breach of duty and that Mr Moke’s estate is liable for the damage and loss caused by that breach, to the extent of the assets of his estate.
[27] The second defendants, who were the trustees of the Tumunui Trust at the time of the negotiations, are said to be implicated in the first cause of action because (it is alleged):
(a) the Tumunui trustees conducted those negotiations in the knowledge that:
(i)Mr Moke was a trustee and the controlling decision maker of the Whaoa Trust and the Reserve Trust;
(ii)Mr Moke was actively involved in the negotiation of the Tumunui Lease and was promoting the interests of the Tumunui Trust to the plaintiffs;
(b)the Tumunui trustees “used” Mr Moke in the negotiations to enable them to enter into the Tumunui Lease on terms favourable to them and unfavourable to the plaintiffs;
(c) in breaching his fiduciary duty during the lease negotiations, Mr
Moke was acting “as an agent for the Tumunui Trust”.
[28] It is pleaded that as Mr Moke’s principal, the second defendants are liable for the losses caused by his breaches of fiduciary duty “in furtherance of his agency”.
[29] As far as the first defendants are concerned, the pleading is that they:
… as co-Trustees of the second defendants, and as lessors, are liable for losses caused by the acts of Edward Paurini Moke, committed in furtherance of his agency.
[30] The agency pleading is of critical importance because it is only by way of that pleading that the first and second defendants are said to be implicated in not only the first, but three of the remaining five causes of action.3 The specific details of the agency relationship between Mr Moke and the Tumunui Trust are pleaded as
follows:
3 The existence of an agency relationship has no bearing on the fourth and sixth causes of actions.
15. Edward Paurini Moke was at all material times:
…
15.3 a beneficiary of the Tumunui Trust;
15.4held himself out [sic] as being a Trustee of the Tumunui Trust without any formal appointment by the [Maori Land] Court, and so acted as an agent for the Tumunui Trust in respect of the Tumunui Lease at all material times;
15.5a signatory of the Tumunui Lease for the Whaoa No 1 Trust and also for the Tumunui Trust, ostensibly as a Trustee for both, but in fact he was an agent of the Tumunui Trust because he had not been approved by the Court as a trustee.
[31] The amended statement of claim later explains that Mr Moke’s father (Eria Tupuritia Moke) had been one of the original trustees of the Tumunui Trust but that, by the time of entry into the Lease, Mr Moke senior had died. The allegation is that Mr Moke junior simply stepped into the shoes of his father without his appointment as a Tumunui trustee ever being formalised. As far as I am aware it is not in dispute that Mr Moke junior did, indeed, purport to sign the Tumunui Lease in that capacity.
[32] The relevant damage said to have been suffered by the first plaintiffs as a
result of the defendants’ alleged breach of fiduciary duty is as follows:
(a) lease terms that are favourable to the Tumunui Trust and unfavourable to the Whaoa Trust and, in particular:
(i)a lease term which is said to be “at least 21 years longer than a standard farm-lease between commercial parties”;
(ii)the absence of any provision for the improvements on and to the land to revert to the Whaoa Trust on 13 December 2011, (which is alleged to be a standard term for a farm-lease between commercial parties);
(iii)rental that is set at significantly below market for the 21 year period between 13 December 2011 and 12 December 2032,
because “rental continues to be calculated based upon the condition of the land at 13 December 1961”.
[33] It is then pleaded that the terms of Tumunui Lease are “extraordinary” and that the standard terms of a commercial lease “would have” included a termination date of 12 December 2011 “or 1 June 2012 by mutual agreement to coincide with the end of the dairy season”. To the extent that the Lease had at that date been renewable for a further 21 years, it is alleged that the following terms “would have” been agreed:
(a) a full market rental for the property based upon the actual improved condition of the land as at 12 December 2011 (or 1 June 2012 by mutual consent); or
(b) rental calculated:
… according to the formula in the Tumunui Lease on the basis of five dollars per centum of the capital value of the improved value of the land as at 12 December 2011, but removing from that formula the proviso which allows the lessee to deduct from the capital value the value of all improvements made on or to the land since 13
December 1961.
(c) a three-yearly rental review period with rental at each renewal date not to be fixed below the rental for the previous period;
(d) a five-year lease renewal period.
[34] As far as the second plaintiffs are concerned the damage pleaded is that the Tumunui Lease included 15.8 hectares of Reserve Trust land when it should not have.
[35] In terms of remedies, the plaintiffs seek:
(a) as against Mr Moke’s estate, numerous declarations are sought as to
Mr Moke’s breaches of fiduciary duty;
(b)as against the first defendants, an order rescinding the Tumunui Lease on the following terms:
(i)all improvements upon and to the land are to revert to the plaintiffs without any payment required to be made by the plaintiffs;
(ii)the rescission is to commence from 1 June being the end of the current dairy season at the time of Judgment; and
(iii)the defendants are to pay damages for loss of market rental for the period between 13 December 2011 and the date of rescission according to a pleaded formula;
or
(c) as against the first and second defendants:
(i)damages for loss of market rental (the proposed calculation of which is fully pleaded);
(ii)ongoing damages past the date of judgment (the proposed calculation of which is also fully pleaded);
(iii)an enquiry into damages for the wrongful inclusion of 15.8 hectares of the Reserve Land within the Lease (the parameters of which are fully pleaded); and
(iv) exemplary and punitive damages of $40,000.
Second cause of action
[36] The second cause of action is pleaded in the alternative to the first cause of action and focuses on Mr Moke’s alleged breach of his trustees’ duties under the
Whaoa Trust Order. The Trust Order is pleaded “as to all of its terms” but particular reliance is placed on clauses 4 and 5 which respectively provide:
Personal Interest of Trustees
Notwithstanding any general rule of law to the contrary no person shall be disqualified from being appointed or from holding office as a Trustee or as representative of the trust by reason of his employment as a servant or officer of the Trust or by his being interested or concerned in any contract made by the Trustees PROVIDED THAT he shall not vote or take part in the discussion on any matter that directly or indirectly affects his remuneration or the terms of his employment as a servant or officer of the trust or that directly or indirectly affects any contract in which he may be interested or concerned.
Protection of Trustees
In any case where any Trustee is of the opinion that any direction determination or resolution of a meeting of the Trustees or general meeting of beneficial owners conflicts or is likely to cause conflict with the terms of this trust or with any rule of law or otherwise to expose it to any personal liability or is otherwise objectionable then, and in reliance upon the effect of the provisions of subsection 2A of section 438 and of paragraph € of subsection 1 of section 30 of the Maori Affairs Act 1953 and of section 49 of the Trustee Act 1956 he may apply to the Maori Land Court for directions in the matter PROVIDED HOWEVER that nothing herein shall make it necessary for him to apply to the Court for any such directions
[37] By his actions in negotiating the Lease Mr Moke is said to have intentionally breached his duties under the Order “in the knowledge that his actions were contrary to the interests of the beneficiaries, or alternatively, he was recklessly indifferent to whether his actions were contrary to their interests”.
[38] The first, second and third defendants are alleged to be liable for the losses caused by Mr Moke’s actions on the basis pleaded in relation to the first cause of action. The remedies sought are also the same as in relation to the first cause of action.
Third cause of action
[39] The third cause of action is an undue influence claim made against all defendants. The relevant “influence” pleaded is that:
(a) during the relevant period Mr Moke “had the capacity to influence his co-Trustees on the plaintiff Trusts and the beneficiaries of those trusts”, due to:
(i) his position as the Chairman of Trustees of both Trusts from
April 1988 onward;
(ii) his status as the only Trustee of the Trusts who was a
Rangatira;
(iii) his status as the only Trustee who had Ngati Whaoa lineage; (iv) his position as the controlling decision-maker within the
Trusts;
(v) his position as beneficiary of both Trusts;
(vi) his “apparent position” as trustee of the Tumunui Trust; (b) Mr Moke did in fact exercise influence on the plaintiffs;
(c) the influence exercised by Mr Moke during the negotiation of the
Tumunui Lease was undue because:4
(i) The plaintiffs relied upon him and trusted him;
(ii) Mr Moke used his influence to procure the Tumunui Lease and to do so on favourable terms for the Tumunui Trust;
(iii) The Whaoa Trust was disadvantaged during the negotiation of the Tumunui Lease by its reliance on Mr Moke who kept information from them or misinformed them (as previously particularised);
(iv) The Tumunui Lease was manifestly disadvantageous for the plaintiffs Trusts;
(v) Mr Moke’s co-Trustees “did whatever [he] wanted them to do in relation to decisions affecting trust property, because of their relationship with him and his status”;
4 The following five sub-paragraphs are a quotation from the amended statement of claim.
(d)Mr Moke’s influence brought about the Tumunui Lease and the terms of it that were favourable to the Tumunui Trust and unfavourable to the plaintiff Trusts.
[40] The first and second defendants are said to be liable for the losses caused by the actions of Mr Moke on the previously pleaded agency basis. The damage said to have been suffered and the remedies sought are the same as those earlier pleaded.
Fourth cause of action
[41] The fourth cause of action is a claim of knowing receipt/unjust enrichment and is also made against all defendants. The relevant pleading is:
(a) by granting the Lease to the Tumunui Trust, Mr Moke disposed of property belonging to the plaintiff Trusts;
(b)Mr Moke disposed of the Trusts’ property in breach of his duties as trustee and exercised undue influence on the plaintiffs as previously pleaded;
(c) the second defendants and Mr Moke knew, or should have known, that the Tumunui Trust obtained the Lease on favourable terms, and wrongly obtained the 15.8 hectares of Reserve Land. Particulars of the alleged knowledge by the second defendant are pleaded;
(d)the first and second defendants and Mr Moke benefitted from Mr Moke’s breach of duty, namely obtaining the Tumunui Lease on favourable terms;
(e) the first and second defendants and Mr Moke were unjustly enriched at the expense of the plaintiffs and are liable for the earlier pleaded losses caused by Mr Moke’s actions.
[42] The agency pleading is rather mysteriously repeated. The damage said to have been suffered and the remedies sought are the same as those earlier pleaded.
Fifth cause of action
[43] The fifth cause of action is a claim against all defendants under ss 80 and 81 of the Land Transfer Act 1952. It alleges that:
(a) as a result of the wrongful actions of the second defendants and Mr Moke, the certificates of title to Lot 1 and Lot 2 were issued and contain errors as to the correct land size of the two Lots as follows:
(i)Lot 1 is described as 158.006 hectares whereas the correct land size is described in the Court Orders as 174.0183 hectares;
(ii)Lot 2 is described as 370.00 hectares whereas the correct land size as deduced from the Court orders is 355.847 hectares.
(b) the title descriptions were therefore wrongfully obtained;
(c) as a result of the error, the first defendants have wrongfully gained farming rights under the Tumunui Lease over 15.8 hectares of the Reserve Land.
[44] The plaintiffs seek:
(a) orders under s 80 or s 81 of the Land Transfer Act 1952, that:
(i) the District Land Register is to cancel the titles to Lot 1 and
Lot 2; or
(ii)the District Land Registrar is to correct the land area descriptions in the titles so that they accurately reflect the land areas confirmed by the Maori Land Court Registry; and
(b)an order that the Tumunui Lease is to be corrected to reflect the correct area of the land subject to the Lease by reducing that area of land by 15.8 hectares; and
(c) declarations that:
(i)the land area description within Lot 1 as being 148.160 hectares more or less is incorrect and the correct land size is as described in the Court file as 174.0183 hectares (430 acres) more or less;
(ii)the land description within Lot 2 as being 370.00 hectares is incorrect and the correct land size is 355.279 hectares;
(iii)the titles to Lot 1 and Lot 2 were issued through breaches of fiduciary duty owed by Mr Moke to the Reserve Trust; and
(d) damages.
Sixth cause of action
[45] The sixth cause of action relates to much more recent alleged breaches of a right-of-way on the leased land by the first defendants. I do not need to go into the detail of the relevant pleading for present purposes.
The application to strike out and the Associate Judge’s decision
[46] The first and second defendants applied to strike out all the claims on the grounds that they were frivolous, vexatious and an abuse of process. Although these grounds are not expanded in the application, it seems that at some point the plaintiffs must have been made aware that more specific defences of limitation and laches were to be advanced by the defendants, as these are referred to (and rejected) in their
notice of opposition to the strike out.5
[47] I record at this point that the third defendants have taken no formal steps in the proceeding since they were joined as a result of Associate Judge Christiansen’s
5 It might be observed that while proceedings that are barred by a specific limitation period are regarded as an abuse of process, that cannot be the case where a laches defence is raised. Laches do not operate as a complete or absolute bar to a claim but rather requires the Court to balance competing equities. It seems to me that questions of abuse of process do not therefore arise.
judgment in December 2012. I was advised, however, that they support the first and second defendants’ application to strike out. While such a coat-tailing stance is entirely understandable in the circumstances, it is nonetheless problematic because the legal and factual position of the third defendants (by whom I really mean Mr Moke) is necessarily materially different from that of the first and second defendants.
[48] In any event, two affidavits in support of the first and second defendants’ application to strike out were filed. It is apparent that those affidavits covered matters which are contentious. The plaintiffs chose to file no evidence in response.
[49] It is clear from the reading of the judgment under review that the learned Associate Judge was strongly of the view that the claim had not been improved by the amendments to it, for which he had earlier granted leave. This view finds expression throughout the decision. It also appears that the Judge regarded the application for strike out as something akin to an application for summary judgment;6 he is repeatedly critical of the plaintiffs’ lack of “evidence” and refers as well to the defendants’ “unchallenged evidence” about certain matters.
[50] In the event, the Associate Judge struck out all six causes of action. I set out his conclusions in full, below:
[77] In appropriate cases Courts can examine whether a party ought to be able to pursue claims for equitable relief in situations where delay has occurred which might or has caused prejudice and where the overall interests of justice are threatened. In cases where the equitable relief sought is analogous to an available common law remedy, the Court has been prepared to strike out a proceeding where the delay was greater than the period of time permitted in an analogous common law case.
[78] The plaintiffs’ position is that time limits do not apply in this case because the only available defence is Laches in the absence of any analogous common law remedy. It follows that regardless of any circumstances affecting the appointment of a person as a trustee of one’s trust whilst he holds a similar position with another trust, all decisions of either trust may, even beyond the foreseeable future, be challengeable if at that later time it is perceived by either trust that they were then disadvantaged in connection with an arrangement that all trustees of both trust entities representing all of the landowner beneficiaries of the land in the control of the trusts were
perfectly happy with when the decision in question that was made. It matters not it seems that a majority of the Whaoa beneficiaries (who numbered about
200) were also beneficiaries of the Tumunui trust (whose members numbered more than 4000).
[79] It is the plaintiffs’ case that at the end of the enquiry if they are to succeed it will be because the balancing of equities has favoured it. They say that if that is to be the outcome then, as case authority has identified, the Courts will not be distracted by considerations of honesty, propriety or receipt of good advice.
[80] But, this Court considers there ought to be a sufficient case available to warrant the Court acknowledging there are competing equities needing balance. With respect to the plaintiffs in this case this Court does not consider an appropriate case has been made out.
[81] More is required of pleadings than general allegations of impropriety. In this case those allegations appear improbable or extravagant. What is provided is inadequate.
[82] The case is about a lease the terms of which were engaged by all after an extensive process of review. Claims of influence by Mr Moke are not supported by any evidence at all.
[83] It involved Tumunui taking bare land which it improved and maintained at considerable expense thereafter, and for which it provided significant added value for the purpose of running a dairy farming activity and at the end of the lease Whaoa will receive the benefit of all improvements free of any cost.
[84] Claims of a poor lease bargain are not explained by reference to any material or evidence.
[85] The parties’ business arrangement has endured for about 18 years
until this proceeding was filed.
[86] What is significant is that the plaintiffs have had access to the records of their trust and they say there has been recently discovered material that has assisted them to better able plead their case. Yet, there is no reference to evidence which has been discovered which is relied upon in support of their allegations. Obviously it does not exist.
[87] There ought to be some responsibility upon a plaintiff to provide pleadings that identify some lawful purpose in the outcome. Such is not evident in this case. Any perception of a need for the balancing of equities does not appear to be identified by recourse to a properly identifiable reason.
[88] Mr Moke died 10 years ago. His estate representatives contacted Mr McKechnie shortly prior to this hearing. They have had insufficient time to instruct counsel. They support the strike out applications. The plaintiffs sue Mr Moke’s estate to recover the losses it is claimed have occurred due to Mr Moke’s actions more than 20 years ago.
[89] The import of the plaintiffs case is that Laches should not provide a defendant with any means to challenge the adequacy of a plaintiffs case
which pleads that because of perceptions of double-dealing a plaintiff is entitled to a trial hearing to assess whether the equities of both sides need rebalancing. It is the Court’s view that where all available evidence is likely to be subject to written record and when there has been a lapse in time of 20 years and because the two trusts concerned unanimously embraced a business arrangement which is continuing and which had not before now been challenged, that it is proper for a consideration of the defence of Laches when it appears the plaintiffs have no evidence available or likely to become available to support pleadings of reasons which are vague and uncertain.
[90] Whilst recourse to the defence of Laches usually requires a thorough examination of competing equities it may however be appropriate for a Court to conclude that, pleadings notwithstanding, there is simply no suggestion of evidence available to the plaintiffs to prove its case. By their strike out application the defendants have clearly placed in issue the question of the sufficiency of evidence to support the pleadings
Was the Associate Judge correct to strike out the claim?
[51] I have formed the respectful conclusion that there are several difficulties with the learned Judge’s reasoning set out above.
[52] First, I accept Mr Chesterman’s submission that (contrary to the view implicit in the Judge’s comments at [81], for example) no impropriety is required to establish the relevant breach of fiduciary duty pleaded in this case. Nor is it relevant that the plaintiffs may have been independently advised about the lease transaction and consented to it (a factor that is mentioned a number of times in the decision including in [79] and [82]). The recent Court of Appeal decision in Naera v
Fenwick makes those matters clear.7 The Court said in that case:
[85] When considering a claim relating to breach of trust, the starting position is that trustees of Maori land are under the same obligations as other trustees. Equitable principles such as the duty of loyalty and good faith, the duty to act personally, and the duty not to profit, apply equally to Maori trustees. Those general principles may be modified, however, by the Act or by the trust order. In Rameka v Hall the position was described by this Court as follows:
“[19] … The trustees have obligations to the beneficiaries to administer the trust property in accordance with general trust law, the requirements of the Trustee Act 1956 and the provisions of the Act. In other words, trustees are subject to traditional trustee duties with the statutory overlay of particular obligations arising from the context of ahu whenua trusts.”
[86] It is necessary to first consider the position at common law where a trustee has a conflict of interest but nevertheless participates in decision making. The second stage is to examine whether there is anything in the Act or the trust order which alters this outcome.
[87] At common law, trustees have a clear obligation of single-minded loyalty to their principal. To establish a breach of this duty it is sufficient to show that the trustee has placed him or herself in a position of potential conflict. As expressed by Lord Brougham in Hamilton v Wright:
“There cannot be a greater mistake than to suppose … that a trustee is only prevented from doing things which bring an actual loss upon the estate under his administration. It is quite enough that the thing which he does has a tendency to injure the trust; a tendency to interfere with his duty. ”
[88] This is because fiduciary doctrine is prophylactic in nature: it holds that prevention is better than cure. As noted by Matthew Conaglen, “removing the fruits of temptation is designed to neutralise the temptation itself by rendering it pointless”.
[89] A position of potential conflict will arise where:
“A reasonable man looking at the relevant facts and circumstances of the particular case would think that there was a real sensible possibility of conflict; not that you would imagine some situation arising which might, in some conceivable possibility in events not contemplated as real sensible possibilities by any reasonable person, result in a conflict. ”
[90] Where the trustee is conflicted in this manner, he or she cannot deal with the trust without the informed consent of all beneficiaries or of the Court. If neither of these steps is taken, and the conflicted trustee participates in decision making, any resulting transaction will be voidable regardless of the fairness or otherwise of that transaction. Indeed, “no inquiry on that subject is permitted”.
[91] Furthermore, the transaction will be voidable regardless of whether or not other trustees were similarly conflicted. In Re Thompson's Settlement Vinelott J held:
“The principle is applied stringently in cases where a trustee concurs in a transaction which cannot be carried into effect without his concurrence and who also has an interest in or holds a fiduciary duty to another in relation to the same transaction. The transaction cannot stand if challenged by a beneficiary because in the absence of an express provision in the trust instrument the beneficiaries are entitled to require that the trustees act unanimously and that each brings to bear a mind unclouded by any contrary interest or duty in deciding whether it is in the interest of the beneficiaries that the trustees concur in it.”
[92] The trustees will be jointly and severally liable for any breach of trust. This is because where there is more than one trustee, the trustees are
expected to act jointly. Barring an express provision in the trust deed, all of the trustees' decisions must be unanimous. Therefore, liability for breach of trust attaches to the trustees jointly and severally, regardless of which of them was directly responsible for the breach of trust.
(citations omitted) (emphasis in original)
[53] Secondly, I do not agree that the onus was on the plaintiffs to provide evidence supporting their claims at the strike out stage. Although the Judge was entitled not to take obviously extravagant or untenable pleadings at face value, it seems to me that he went further than this. As I have said, there are repeated references in the judgment to the absence of evidence supporting the plaintiffs’ case. But evidence is not the proper subject of pleading and this was not an application for summary judgment. In the absence of a clear limitation defence (in response to which a plaintiff may, for example, be obliged to respond at a pre-trial stage with prima facie evidence of fraud) I consider the orthodox strike out rules apply and the pleaded facts should generally have been assumed to be true.
[54] Thirdly, I do not agree that the existence of a potential laches defence, however strong it might apparently be, can properly form the basis for striking out the claims in this case. As Tipping J said in Matai Industries Limited v Jensen:8
… analytically the rule whereby an equitable claim can be barred by analogy with the statutes of limitation is separate from the general equitable defence of laches. Because I am of the view that the equitable bar by analogy clearly applies, it is not strictly speaking necessary for me to consider the separate suggestion raised by the Receiver that the claim should be barred by laches. All I wish to say on that subject is that it would in my view be difficult to adopt that view, in the light of the principles which apply to the doctrine of laches, without considering the position fully at trial. It must, I would have thought, be a rare case indeed where an equitable claim should be barred in limine by a finding of laches as opposed to an equitable bar by analogy.9
The essence of the defence of laches is that where a Plaintiff has a right in equity the Defendant demonstrates that his plea of laches outweighs the Plaintiff's right. Questions of acquiescence, alteration of position, capacity and the like all have to be weighed. Had the Receiver not been able to pray in aid the rule that equity acts by analogy with the Statute of Limitations where there is a sufficient correspondence between the equitable claim and a claim at law which is already barred then I do not think that the Defendants could have succeeded in striking out this cause of action at this stage under the general doctrine of Laches.
8 Matai Industries Limited v Jensen [1989] 1 NZLR 525 (HC) at 545 - 546.
9 It is important to note that Mr McKechnie did not ultimately seek to pursue any argument that there was an equitable bar by analogy in relation to any of the present causes of action (although see [74] below).
[55] Here, it is not difficult to have considerable sympathy for the position in which the defendants find themselves. Nor is it difficult to conceive that a plea of laches may well ultimately prevail at trial. But if it is accepted that the learned Associate Judge was wrong in his preparedness to engage at an interlocutory stage with evidence that is likely to be contested (as I consider he was) it is difficult to see how the relevant equities can be balanced or how it can be concluded that the
plaintiffs had no relevant equities at all10. Moreover, and notwithstanding what
appears to be very considerable delay and acquiescence by the plaintiffs, it is difficult to see why (for example) the doctrine of laches should inevitably operate to prevent them from obtaining at least declaratory relief in relation to Mr Moke’s alleged breach of fiduciary duty.11
[56] Although I accept Tipping J’s dicta in Matai Industries Limited v Jensen were not expressed in absolute terms, any slight equivocation appears to me to simply be a reflection of the customary judicial caution when expressing a view on the way in which the law might in future apply to as yet undreamed of cases. The reality remains that Mr McKechnie was not able to point me to a single decision in which laches have formed the basis for a successful strike out.12 Nor do I consider that the present is appropriately such a case.
[57] Lastly, I accept Mr Chesterman’s submission that the learned Associate Judge appears to have given no separate consideration at all to the fifth and sixth causes of action, which are not based in equity and to which the doctrine of laches could not apply. And the sixth cause of action relates, in any event, to much more recent events than the other five.
Should the claims nonetheless be struck out?
[58] The difference of view between me and the learned Judge does not, however, necessarily dispose of the matter. It is trite that an application for review proceeds
by way of rehearing, and I spent considerable time canvassing with counsel a range
10 As the learned Judge appears to do at [80] of the judgment under review.
11 Mr Chesterman was at pains to emphasise that the plaintiffs would, in fact, be satisfied with such declaratory relief.
12 The decision in Lee v Lee [2013] NZHC 1069, for example, was ultimately based on the finding of an equitable bar by analogy.
of other issues arising from the plaintiffs’ claims as pleaded. While I accept Mr Chesterman’s submission that the courts are, on occasion, reluctant to partially grant a strike out application, I consider it would not be in the interests of any of the parties in the present case simply to reinstate what may be, for other reasons, hopeless claims.
[59] In my view the first four causes of action, in particular, do pose a number of quite serious problems. The question becomes whether any of them are sufficiently fundamental to justify striking out any or all of the claims. I propose to address the issues on a cause of action by cause of action basis.
First cause of action
[60] The principal difficulty with the first cause of action relates to the plaintiffs’ attempt to implicate the past and present Tumunui Trustees in what is, quite clearly and centrally, a claim for breach by Mr Moke of fiduciary duties owed by him to the beneficiaries of the two plaintiff Trusts.
[61] As regards the second defendants (the historic Tumunui trustees), the relevant pleading is that Mr Moke acted as their agent when negotiating the Lease. Putting to one side the fact that permitting Mr Moke to act as their agent in this way would, itself, be likely to put the second defendants in breach of trust,13 the existence of any such agency does not, it seems to me, have any relationship with the fiduciary duty claim.
[62] The (assumed) fact that Mr Moke’s alleged breach of fiduciary duty involved him acting as the “agent” of the Tumunui Trust does not logically mean that the fiduciary duty claim can be advanced against Tumunui. The relevant duty was owed by Mr Moke personally (and qua his role as a Whaoa Trustee) to the plaintiff Trusts. On any analysis, the Tumunui Trust (whether Mr Moke’s principal or not) owed no such fiduciary duty. The agency pleading cannot, therefore, sensibly give rise to
liability by the second defendants to the plaintiffs. And if the second defendants
13 For impermissibly delegating their trustee functions to Mr Moke.
cannot thereby be liable for Mr Moke’s breach of fiduciary duty it is inconceivable
that the first defendants could be so.
[63] Notwithstanding my finding that the first cause of action is untenable against the first and second defendants, I accept that, on the basis of the Court of Appeal’s decision in Naera, the Lease may prima facie be voidable, if it was negotiated by Mr Moke in breach of the self-dealing rule.
[64] Whether or not the Lease could ultimately be voided, however, depends (inter alia) on whether the second defendants had knowledge of Mr Moke’s breach. I accept that the existence of such knowledge is alleged by the plaintiffs and would properly be a matter for trial. The potential voidability of the Lease also means that, although I consider that the first cause of action should be struck out against the first and second defendants, the present Tumunui trustees should remain as parties,
because they are potentially affected by the outcome of the claim.14
Second cause of action
[65] The second cause of action is, in essence, a repeat of the first but with emphasis on Mr Moke’s obligations pursuant to the Whaoa Trust Order rather than his general fiduciary duties. In my view it also suffers from the same defects as the first and cannot therefore be maintained against either the first or the second defendants. And as against Mr Moke, it would appear to add little, if anything, to the more general fiduciary claim. That said, however, it cannot be said that the claim against him is untenable.
Third cause of action
[66] Although the pleading of the third cause of action is not particularly clear, the logic of the undue influence claim must be that Mr Moke was acting as the agent of
14 I do not propose to comment in this judgment about whether the remedy of partial rescission that is sought by the plaintiffs – namely rescission of the Lease from 11 December 2011 only – is possible. I merely record that whether such a remedy is available appears to me to be far from clear. The fact that only partial rescission is sought does serve to underscore the very real problems that exist with each of the first four causes of action due to the effluxion of time. Even though the laches defence cannot form the basis of a strike out, I have little doubt that delay in general, and such a defence in particular, would weigh heavily against the plaintiffs were the matter to be permitted to proceed to trial against any of the defendants.
the Tumunui Trust when he negotiated the Lease with the plaintiff trustees (amongst whom was himself, wearing his Whaoa hat). That is because an undue influence claim is centrally concerned with the relationship between the parties to the transaction that is sought to be impugned, namely the Lease.
[67] I have already observed above that it seems arguable (and is pleaded) that Mr Moke negotiated and signed the Lease on behalf of the Tumunui Trust but was never in fact formally made a trustee of that Trust. Thus it seems arguable that he was held out by the Tumunui Trust as having its authority to do so.15 In that sense I am prepared to accept that the agency pleading is not by and of itself untenable.
[68] Beyond that, however, it seems to me that the thinking underlying the cause of action as a whole does not bear close scrutiny. That is because, even assuming:16
(a) that Mr Moke did indeed influence his fellow Whaoa Trust and
Reserve Trust Trustees (and the beneficiaries of those trusts); and
(b) that his influence upon them was “undue”;
his ability to exert that influence cannot have been founded in any position of agency he might have had in relation to Tumunui (ie in his capacity as a de facto Tumunui trustee). That is because there is not alleged to have been any relationship of influence involving the Tumunui Trust over the plaintiffs Trusts; any influence Mr Moke exerted over those Trusts was personal to him and necessarily derived from the role he played within those Trusts, not from Tumunui.
[69] This point is made quite clear from the pleading of Mr Moke’s capacity to influence the plaintiff Trusts. That pleading focuses squarely on the relationship between Mr Moke and the plaintiff Trusts. The pleading, which I repeat here for
convenience, is that Mr Moke’s capacity to influence the plaintiffs was derived from
15 That position gives rise to a host of other legal questions including, in particular, whether the Tumunui Trustees impermissibly delegated their own Trustee obligations to him. But those issues do not appear necessarily to have significance in the present context, which is concerned with Mr Moke’s relationship with the Whaoa Trust and the Reserve Trust.
16 As is required for the purposes of considering a strike out application.
(a) his position as the Chairman of trustees of both Trusts from April
1988 onward;
(b) his status as the only trustee of the Trusts who was a Rangatira;
(c) his status as the only Trustee of the Trusts who was Maori with Ngati
Whaoa lineage;
(d) his position as the controlling decision-maker within the Trusts; and
(e) his position as beneficiary of both Trusts.
[70] Although there also follows a single line of pleading that refers to Mr Moke’s “apparent position” as trustee of the Tumunui Trust, there is no logical connection between that position and any power he might have been able exercise over the plaintiffs, for the reasons I have just given. In short, Tumunui was not Mr Moke’s principal when he exerted his alleged influence, and Mr Moke could not therefore be Tumunui’s agent when doing so. Suing Mr Moke as Tumunui’s agent would also be inconsistent with the express capacity in which Mr Moke (his estate) has been named as a defendant, which is in his capacity as a Trustee of the plaintiff Trusts.
[71] The third cause of action is, in my view, accordingly untenable against all three defendants.
Fourth cause of action
[72] The claim of knowing receipt/unjust enrichment is based on the contention that the leasehold interest held by the plaintiff Trusts and granted to Tumunui is property that was disposed of “by Mr Moke” to the Tumunui Trust and, allegedly, to Mr Moke personally, in breach of his fiduciary obligations.17 The relevant receipt or enrichment is said to be the terms of the lease that were unduly favourable to the
defendant Trusts and the terms which allegedly would not have been agreed had Mr
Moke not been in breach.18
[73] The original Tumunui trustees are alleged to have known about Mr Moke’s breach of fiduciary duty; particulars of the Trust’s knowledge are pleaded. Both the present trustees were original Trustees.
[74] I have some reservations about aspects of this cause of action. In particular, proof of the relevant “receipt” or “enrichment” would appear to require the plaintiffs to establish what the lease terms would have been if Mr Moke had not been involved and then somehow to quantify the difference. It seems to me to be far from obvious, for example, that the Lease would have been negotiated (absent Mr Moke) on the same basis as an ordinary commercial lease. And even to the extent those things could be established, there would of course remain available to Tumunui a strong defence of laches/acquiescence.
[75] Be all that as it may, however, I do not consider that it can fairly be said that the fourth cause of action suffers from the more fundamental defects that I have identified in relation to the first, second and third causes of action.
Fifth cause of action
[76] I do not propose to deal in any detail with the fifth cause of action in this judgment other than to say (as I have, above) that it should not have been struck out by the learned Associate Judge.
[77] I do, however, record that Mr McKechnie made it quite clear that Tumunui accept that 15.8 hectares of reserve land was mistakenly included in the Lease and that this should be rectified. Whether in those circumstances it is desirable to attempt somehow to sheet the mistake home to Mr Moke is something upon which I do not comment. I simply observe that it does not seem necessary to make that allegation in order to obtain the relief sought.
[78] Quite how the mistake should be rectified, however, is not presently clear to me; as I understood it from counsel there are a number of complicating factors. The Registrar-General of Land may need to be joined. What is clear, however, is that the parties need to work together. It therefore appears to me to be unfortunate that an inevitable by-product of this litigation will be a further lessening of the co-operative spirit that is required. It may nonetheless be that the matter will be capable of resolution without the need for this Court’s intervention, other than (perhaps) in some sort of formal capacity.
Sixth cause of action
[79] The sixth cause of action should also not have been struck out. It relates to the first defendants only and is modern in origin. Again, I would hope that it relates to matters that should be capable of resolution between the parties. The matters underlying the claim appear to be a function of the regrettable deterioration of the relationship between the parties over the last few years. As I have said, there can be little doubt that this litigation has unhelpfully compounded that deterioration.
Parties
[80] Before summarising the conclusions I have reached in relation to the strike out, it is necessary to say something, finally, about the question of parties. This was discussed in some detail during the review hearing and I was advised that the plaintiffs had sought the Court’s guidance on the matter at the time of the application for leave to amend. Such guidance did not, for whatever reason, eventuate, and the request was later rendered moot by the strike out decision. This judgment, of course, somewhat reverses that position.
[81] Although I do not propose to make any formal rulings in this regard it may assist if I briefly canvas the matters that I consider require further thought.
[82] The principal two issues appear to me be:
(a) should the plaintiffs in the proceedings be the Trustees of the Whaoa Trust and the Reserve Trust or should the plaintiffs be named, or representative, beneficiaries of those trusts?
(b) if the former, how is Mr Bamber’s role to be addressed?
[83] As presently pleaded, the first and second plaintiffs are the present day trustees of the Whaoa Trust and the Reserve Trust respectively. The wording of the intituling, however, suggests that they are named in some form of hybrid capacity “as trustees and as representatives of the beneficiaries” of the respective Trusts.
[84] Of the present day plaintiff trustees, only Mr Bamber was also a trustee (of both Trusts) at the time the Tumunui Lease was negotiated. Mr Moke was, of course, also a trustee of both Trusts at that time.
[85] At the time of the hearing I was concerned that if Mr Moke committed a breach of trust during the lease negotiations then Mr Bamber would be jointly and severally liable (with Mr Moke’s estate) for that breach.19 Not only would the existing defendants be entitled to join him in that capacity but the remaining, present day, plaintiff trustees are also arguably required to do so.20 Moreover, in the event that Mr Bamber were to be joined as a defendant either by the plaintiffs or the defendants, he would, irrespective of fault, be personally liable (jointly and severally) together with Mr Moke’s estate.21 And even if Mr Bamber could establish that he was entirely innocent22 he would then be entitled to be indemnified by the
plaintiffs from the plaintiffs’ trust funds.
19 See Naera v Fenwick, above n 7.
20 Although, in general terms, a plaintiff is entitled to choose which of a number of jointly and severally liable defendants he wishes to pursue, the instant case does not seem quite so straightforward. That is because while the present day plaintiff trustees are not liable for breaches of trust committed by earlier trustees, they are nonetheless required to take appropriate steps to remedy that breach upon discovering it; if necessary by suing the old trustees. While the
plaintiffs have arguably done this by instituting the present proceedings against Mr Moke’s
estate, that necessarily begs the question why they are not also pursuing Mr Bamber.21 In the event that Mr Moke himself is found to have breached his fiduciary duty.
22 Which would, in my view, be difficult given that the nature of the third cause of action (for example) would mean that Mr Bamber (in permitting himself to be unduly influenced by Mr Moke) necessarily was in breach of his own trustee duties.
[86] The upshot of my analysis above, however, is that Mr Bamber is not in substantive jeopardy from these proceedings. Although he might be the subject of the declaratory relief sought in relation to the first and second causes of action, he is not (as the claim is presently pleaded) in danger of an award of damages being made against him.
[87] That said the potential liability of Mr Bamber does seem to me to raise an issue about whether the present day Whaoa and Reserve Trustees are the appropriate plaintiffs in the proceedings. In that respect I note that r 4.23 of the High Court Rules provides:
(1) Trustees, executors, and administrators may sue and be sued on behalf of, or as representing, the property or estate of which they are trustees, executors, or administrators.
(2) There is no need to join persons beneficially interested in a trust or an estate to a proceeding because the trustees, executors, and administrators represent those persons.
(3) However, the court may, at any stage, order that a beneficially interested person be made a party, either in addition to or instead of the trustees, executors, or administrators.
[88] Sub-clause (3) which permits joinder of beneficiaries in person, is said to have particular relevance in situations where questions arise between beneficiaries and trustees as to the trustees’ conduct.23 That may be a better course in the present proceeding, in which case an application should be made. To the extent that certain Whaoa and Reserve Trust beneficiaries wished to bring a representative action on behalf of all beneficiaries, then r 4.24 would also requires either the consent of those
other beneficiaries or a direction of the Court.
Conclusions
[89] I have formed the view that the learned Associate Judge’s decision to strike
out all the claims on the basis of a laches defence should be set aside. I nonetheless consider that:
23 See for example McDonald v Simmonds (1994) 8 PRNZ 12 (HC), and James v Public Trustee [1935] GLR 557 (SC). I note in this respect that the plaintiffs in Naera v Fenwick (above n7) are beneficiaries of the Ahu Whenua trusts concerned.
(a) the first and second causes of action should be struck out in their entirety as against the first and second defendants.24 Insofar as the causes of action are brought against Mr Moke’s estate (declaratory relief only) they are to remain;
(b) the third cause of action should be struck out as against all defendants;
(c) although not without difficulty, the fourth cause of action should remain, insofar as relates to the first and second defendants. Insofar as it relates to Mr Moke’s estate, it is struck out;
(d) the fifth and sixth causes of action should remain.
[90] As to costs, neither the plaintiffs nor the first and second defendants have wholly succeeded, and my present view is that they should lie where they fall. If counsel have a different view, memoranda may be filed within 10 working days.
Postscript
[91] As I was in the final throes of completing this judgment the Supreme Court granted leave to appeal the Court of Appeal’s decision in Naera.25 Leave was granted in relation to the following two questions:
1. Was the Court of Appeal correct to hold that the Tikitere Project Agreement was voidable because three of the trustees were beneficially interested in other trusts which were parties to the Agreement?
2. If so, was the Court of Appeal correct to hold that the remedy of rescission could be withheld only if third party interests were affected or should it have required general inquiry into whether rescission was in all the circumstances appropriate?
[92] The grant of leave on these issues does not affect the conclusions I have reached which are, necessarily, based on the law as the Court of Appeal has
articulated it. That said, however, the two questions posed by the Supreme Court
24 Notwithstanding the striking out of first and second causes of action in relation to the first and second defendants, the second defendants would be adversely affected by the remedies sought, and accordingly have a right to be heard in that regard.
25 Naera v Fenwick [2014] NZSC 58.
appear to me to be material to what remains of the plaintiffs’ claims. The fact that those questions are now at large might, perhaps, give the plaintiffs further pause in terms of their resolve to pursue proceedings which seem likely only to deepen the
regrettable rifts that have recently arisen between the parties.
Rebecca Ellis J
3
3
1