Van Delden v MNS Trustees Limited

[2015] NZHC 4

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-003376 [2015] NZHC 4

UNDER

the Declaratory Judgments Act 1908

IN THE MATTER OF

the Layne Kells Family Trust

BETWEEN

BORIS VAN DELDEN and PERI FINNIGAN AS LIQUIDATORS OF KINGIE TRUSTEE SERVICES LIMITED (IN LIQUIDATION) Plaintiffs

AND

MNS TRUSTEES LIMITED and TAKANINI FREEHOLD LIMITED AS TRUSTEES OF THE LAYNE KELLS FAMILY TRUST

First Defendants

McVEAGH FLEMING Second Defendants

GRAHAM & CO Third Defendants

Hearing:	On the papers
Judgment:	7 January 2015

JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney on 7 January 2015 at 3.45 pm

pursuant to R 11.5 of the High Court Rules

Registrar / Deputy Registrar

Date………………………..

VAN DELDEN & OR v MNS TRUSTEES LTD & ORS [2015] NZHC 4 [7 January 2015]

[1]      The plaintiffs are the liquidators of Kingie Trustee Services Limited (in liquidation) (Kingie).   Before it was liquidated Kingie operated as a professional trustee company and was a trustee of the Layne Kells Family Trust.  In its capacity as trustee Kingie became the registered proprietor of a number of properties owned by the trust. Kingie retired as a trustee in 2012.   The current trustees are the first defendants, Takanini Freehold Limited and MNS Services Limited.

[2]      Although Kingie was no longer a trustee it nevertheless remained a registered proprietor of various of the trusts properties.  Following its liquidation the liquidators took steps and incurred costs in removing Kingie’s name from the titles to the various  properties.    These  fees  and  disbursements  total  $130,355.29  (excluding GST).

[3]      The liquidators wish to recover their costs from the trust’s assets. They particularly wish to access surplus sale proceeds from mortgagee sales presently held by the second defendants, McVeagh Fleming, and rent from some of the properties presently held by the third defendants, Graham & Co.

[4]      Under clause 16 of the trust deed retired trustees are entitled to an absolute indemnity from trust assets in respect of any loss incurred after retirement by reason of carrying out any function of a trustee and clause 21 entitles professional trustees to be paid all usual business and trade charges for acts done by it in connection with the trust. However, the first defendants dispute the liquidators’ rights to indemnification under clauses 16 and 21.  They wish to use the surplus sale proceeds and the rent to pay trust creditors and do not accept that Kingie’s claim takes priority over those creditors.

[5]      The second and third defendants have refused to release the surplus sale proceeds and rent until the dispute is resolved.

[6]      In this proceeding the liquidators seek declarations that they are entitled to be indemnified from the trust assets for their costs and that their claim for indemnity takes priority over other claims to trust assets, together with orders requiring the

second and third defendants to pay the surplus sale proceeds and rent to the liquidators.  In a without notice application for directions as to service the liquidators have sought orders directing that the proceedings be served on MNS Trustees Limited, Takanini Freehold Limited, McVeagh Fleming and Graham & Co on the grounds that the proceeding is brought under the Declaratory Judgments Act 1908 and not in the Kingie liquidation proceeding and that the parties are interested in the relief sought either by virtue of their holding the funds in respect of which the indemnity is claimed or through their claim to the funds in question.  The application is made in reliance on rr 18.7 and 18.8 of the High Court Rules.

[7]      Having considered the proceedings filed and the background to the dispute set out in the affidavit of Ms Finnigan, I am satisfied that the named parties should be served and that there are no other apparent parties who require to be served. I therefore make an order directing that the plaintiffs’ statement of claim and notice of proceeding  be  served  upon  MNS  Trustees  Limited,  Takanini  Freehold  Limited,

McVeagh Fleming and Graham & Co.

P Courtney J