Section 238, Te Ture Whenua Maori Act Pipituangi A

Transcription

1 7 Tairawhiti MB 39 IN THE MAORI LAND COURT OF NEW ZEALAND TAIRA WHITI DISTRICT UNDER IN THE MATTER OF BETWEEN AND A Section 238, Te Ture Whenua Maori Act 1993 Pipituangi A THOMAS JOHN BROWNLIE MAREE ROSE BROWNLIE Applicants JOANNE BROWN HELEN MARY RENNER Respondents Hearing: 17 March 2010 (Heard at Gisbome) Appearances: G Webb for the applicants J Bunbury for the respondents Judgment: 2 July 2010 RESERVED JUDGMENT OF JUDGE C T COXHEAD Introduction [1] The hearing of this application continues a long and protracted series of applications between these parties. This application was filed by Mr and Mrs Brownlie (the Brownlies) in 2008 following a previous long running dispute between the parties. [2] The history of litigation between these parties, the Brownlies, who are current lessees of the Pipituangi A block (the block), and the trustees past and present, sets the backdrop to these current proceedings.

2 7 Tairawhiti MS 40 [3] Mr and Mrs Brownlie previously held positions as trustee and secretary of the Trust, respectively. In July 2003, while they held these positions, the lease of Euan Hovell for the block expired. [ 4] In December 2004 the Brownlies took possession under the provisions of a new lease. Concerns were raised about the terms of the new lease. In particular that the lease was to run for 21 years with a right of renewal for a further 21 years and there was no rent review provision before that renewal date. There were also issues about discrepancies that existed between copies of the lease filed with Land Information New Zealand and the Maori Land Court and the overall conduct of the Applicants when in control of the Trust. [5] In May 2006 proceedings were commenced by two owners in the block to audit the accounts of the Trust and query the management of the then trustees. 1 These proceedings were taken over by the present trustees, Joanne Brown and Helen Mary Renner, who are the respondents in the present case. [6] Following the resignation of one trustee and the removal of another due to bankruptcy,2 and the subsequent resignation of Mr Brownlie, the Court appointed four new trustees on 2 February Two of these trustees subsequently resigned, and the trustees were accordingly reduced to the two, Joanne Brown and Helen Mary Renner. 4 [7] Between these trustee movements there was a meeting held on 14 August 2007 where an agreement was reached (14 August agreement). 5 The Brownlies and trustees agreed to: a. cancel the Brownlie lease and substitute a five year lease starting at 1 December 2004, with a right of renewal for a further five years. 173 Ruatoria ME 104, 74 Ruatoria MB 31-38, 169 Gisbome MB 91-99, and 170 Gisbome MB Gisbome ME Gisbome ME Ruatoria MB Gisbome ME

3 7 Tairawhiti M8 41 b. Include in the new lease a no-compensation and fertiliser clauses which had been excluded from the previous lease; and c. Include a 7.5% annual administration fee. [8] This agreement was conditional upon the previous lease being surrendered, the new lease being signed by the current trustees and the Brownlies paying $8, to the Trust. This $8, being paid from the Brownlies to the trustees was full and final settlement of the issue of grazing rental and moneys expended by the current lessees on the block during that grazing period. [9] To date, the previous lease has been surrendered and the new lease has been signed by the trustees. These were sent to the Court for noting on 23 June The Brownlies have their new lease but have yet to make the payment of $8, Applications [10] The Brownlies filed this application in 2008, in response to the trustees' pursuit of the investigation of the lease arrangements and the previous trustees' actions. [11] In 2009 three further applications regarding the block were filed. These were: a) A application for recovery of Maori Freehold Land. Filed by the trustees based on breaches of covenants in the lease; b) A application to appoint an additional trustee. Filed by the trustees to include Mr Hovell as a trustee following a hui held on 31 January 2009; c) A application for injunction. Filed by the Brownlies to stop the trustees from taking any steps to terminate their lease. [12] The trustees accept that the application for recovery of Maori Freehold Land is at an end, although the parties still need to complete a rent review in accordance

4 7 Tairawhiti MB 42 with the provisions of the lease. The remaining issue in relation to that application is costs. [13] The application to appoint an additional trustee remains active, though adjourned till the conclusion of this application. [14] The application for injunction was granted. 6 Current application before the Court [15] The current application asked the Court to order: a) the trustees to file a report on their trusteeship; b) enforcement of the fiduciary duties of the trustees, if necessary; c) an investigation into the affairs for the Trust under the broad powers of section 237 of the Act; and d) the trustees to disclose all details of their spending on legal fees and disbursements to date and anticipated spending on legal costs in the future. [16] The purpose of these orders sought is to call into question the trustees' actions in spending on legal fees in relation to ongoing legal struggles against the Brownlies. [17] The request that the Trustees "disclose all details of their past spending on legal fees" has been dealt with when the Court granted an order to provide discovery7 and the trustees' authorisation for the documentation to be released from their previous solicitor. On 13 May 2009 this order for discovery was clarified in that it encompassed all documents relating to "any matter in question in this proceeding" Ruatoria MB Gisbome MB Gisbome MB

5 7 Tairawhiti MS 43 [18] The three remaining orders sought address the same issues. I shall deal with them together. Live issues [19] The remaining branches of the application - requesting that the trustees file a report on their trusteeship, that the Court enforce the fiduciary duties of the trustees, if necessary and conduct an investigation into the affairs for the Trust under the broad powers of section 237 of the Act - relate to two central allegations of misconduct. The Brownlies submit: a) that there has been an improper use of Trust money in financing and pursuing legal action against them; and b) the trustees have not acted with the appropriate stewardship in fairly and even handedly carrying out their duties. [20] In his written submission counsel for the Brownlies submits that given the trustees actions, they should be removed and replaced with an independent trustee. Improper use of Trust money [21] The Brownlies submit that it is improper for the trustees to use Trust money to fund actions in the Court relating to the lease over the block and associated matters. An associated claim is that use of Trust funds on lawyer's fees has been excessive. They also submit that the resolution to instruct a lawyer was ultra vires as only two of four trustees were present at the meeting and three were needed for both quorum and to obtain a majority for decisions. [22] I find the allegation that it is improper for the Trust to be funding a lawyer to assist with the applications dealing with the current lease and previous trustees' behaviour completely unjustified. [23] The Brownlies are questioning the Trust's right to fund an investigation, through the Court, into actions committed by themselves which appear to have

6 7 Tairawhiti MB 44 seriously undermined the financial viability of the Trust. It strikes me as a bit rich for the Brownlies to make such a claim when, but for their actions, all parties would not have found themselves in Court. [24] I also find the claim of excessive spending on legal fees to be unjustified. Once again the fees incurred, small and large, have been due to the Brownlies' actions and the adversarial approach they have adopted. [25] Engaging legal counsel to assist in this endeavour is absolutely a proper use of Trust money, and completely in accordance with both the letter and the spirit of the duties of trustees as laid out both in Te Ture Whenua Maori Act 1993 and the Trustee Act [26] While we would certainly encourage parties to try and resolve their disputes without the need for Court involvement, sometimes Court assistance is needed to bring disputes to finality. Unfortunately the Brownlies' actions have necessitated Court involvement and legal costs. [27] I do not consider that the final plank of the argument has any weight, as one of the four trustees resigned around that time so the trustees could simply have reaffirmed their resolution after her resignation to the same effect, but also because a lawyer was needed to represent and advise the Trust in the legal proceedings at that time, in order to ensure "the effective management of the trust", as provided for in section 236 ofte Ture Whenua Maori Act Trustees have not acted with the appropriate stewardship [28] The Brownlies' concern here is founded upon the idea that the trustees are conflicted by their relationship with Mr Hovell, who is their brother and the previous lessee of the block. The Brownlies contend that the trustees provided Mr Hovell a copy of the lease prior to it being signed. 9 See, for example, sections 223(b) and 226(2) ofte Ture Whenua Maori Act 1993 and section 29(1) and (3)(b) of the Trustee Act 1959.

7 7 Tairawhiti MS 45 [29] Further the Brownlies have concerns with Mr Hovell in that he is the largest shareholder, he wants to farm the block, opposes any lease to them and filed to partition the block soon after the 14 August agreement. Their concerns with Mr Hovell's action have influenced their responses and actions towards the trustees. [30] I can do no more than restate what I said in the hearing - regardless of Mr Hovell's feelings towards the lessees, his intentions or potential partition applications, there has been, on the trustees' part, as complete an indication of good faith as can be expected, in preparing the new lease for signing and registering the surrender. [31] It was the Brownlies who stymied the resolution of this issue. As a beneficiary, Mr Hovell was entitled to a copy of the lease, although all the provisions were public anyway by virtue of the settlement being recorded in Court on 17 August 2007, when Mr Hovell was present. [32] The Brownlies contend that Mr Hovell's filing of a partition application, after he had received a copy of their new lease, was fundamental in their not making the payment of $8, as contemplated in the 14 August agreement. They claim the 14 August agreement had been repudiated by the actions ofmr Hovell. [33] This seems to me to be illogical and nonsensical. The Brownlies had a signed lease. Mr Hovell could not upset that lease by filing a partition application. There was no guarantee he would be successful in his partition application and in any case, even if he was successful, it would be difficult to see this Court granting a partition that would upset a binding lease. In short the Brownlies' lease was safe and has proven to be so. Miscellaneous issues [34] In both the affidavit supporting their application and in the subsequent hearings the Brownlies have brought up several issues and instances which they claim adds to the picture of misconduct by the trustees outside the two issues I have

8 7 Tairawhiti MS 46 discussed here. None of these issues has evidence enough to support them, and most are either incorrect in what they assume to be wrongdoing or simply irrelevant. Concluding remarks [35] For the reasons above the application is dismissed. [36] As I have stated above, the Brownlies have their lease and have had that lease for some time now. It is difficult to understand why the money due as per the 14 August agreement has not been paid over. [37] Mr Webb counsel for the Brownlies indicated that the $8, is currently being held by his firm in its trust account. I understand that the trustees have commenced District Court proceedings to seek the payment of the $8, as per the 14 August agreement. Those proceedings are yet to be decided. I would make the comment that it seems to me that some finality to the issues between the trustees and Brownlies could be concluded with payment of the money to the trustees. [38] In terms of the issue of costs counsel have 10 working days from when they receive this decision to file submission (if need be) in relation to costs. Pronounced in open Court in Wellington at July 2010 am/paron Friday this 2 nd day of C T Coxhead JUDGE