IN THE MĀORI LAND COURT OF NEW ZEALAND TAITOKERAU DISTRICT A A WYNYARD KAWITI Respondent. C Hockly for the respondent

Transcription

1 162 Taitokerau MB 269 IN THE MĀORI LAND COURT OF NEW ZEALAND TAITOKERAU DISTRICT A A UNDER IN THE MATTER OF Section 19 and 240, Te Ture Whenua Māori Act 1993 Motatau 2 Section 65A BETWEEN TERENCE KAWITI AS TRUSTEE ON BEHALF OF THE WATENE RAUA KO EMA KAWITI WHĀNAU TRUST Applicant AND WYNYARD KAWITI Respondent Hearing: 3 February October March 2017 (Heard at Whangārei) Appearances: K Taurau for the applicant C Hockly for the respondent Judgment: 02 November 2017 JUDGMENT OF JUDGE M P ARMSTRONG Copies to: K Taurau, McLeods Lawyers DX AA Kerikeri C Hockly, Hockly Law PO Box 59211, Mangere Bridge, Auckland, 2022

2 162 Taitokerau MB 270 Introduction [1] Terence Kawiti seeks an order: (a) Removing Wynyard Kawiti as a trustee of the Watene raua ko Ema Kawiti whānau trust ( the trust ); and (b) Granting a permanent injunction prohibiting Wynyard from entering onto Motatau 2 Section 65A. [2] This judgment determines whether these orders should be granted. The whānau trust [3] The beneficiaries of the trust are the descendants of Watene and Ema Kawiti. Watene is deceased. His wife, Ema remains as a trustee along with her sons Terence Kawiti, Wynyard Kawiti, Rongomau Kawiti and Ross Kawiti. 1 [4] The trust is the sole owner of Motatau 2 Section 65A ( the land ). 2 This is hectares of Māori freehold land. It contains a house ( the house ), sheds and other facilities. The land is used for forestry and farming. The trust also hold shares in other multiply owned blocks of land. Accepted facts [5] Watene passed away in Following his death, Ema lived in the house on her own. Wynyard was residing in Auckland. He travelled to the land regularly to assist with the farming operations. Wynyard was not paid, but was reimbursed by the trust, for his travel and related costs to carry out this work. [6] In 2014, Wynyard, and later his partner Tristan, moved into the house with his mother. Wynyard continued to manage the farm and was reimbursed for expenses. Wynyard s relationship with his mother, and his siblings, deteriorated. Ema moved out, and obtained a protection order against him. Between 2014 and 2015, Wynyard sold stock 1 18 Waikato Maniapoto MB (18 WMN ) Whangarei MB 246 (97 WH 246).

3 162 Taitokerau MB 271 owned by the trust for $29, Wynyard paid this money into his personal bank account. What are the applications about? [7] Terence brings these applications on behalf of the trust. He is supported by the other trustees. Terence argues that Wynyard has breached his duties as a trustee by: (a) Moving into the house without the consent of the other trustees and without paying rent or rates; (b) Receiving, and failing to account for, trust funds; 3 and (c) Acting in a threatening and abusive manner. [8] Terence submits that Wynyard has failed to perform his duties satisfactorily and should be removed as a trustee. [9] In 2016, Wynyard and Tristan vacated the land for unrelated reasons. Terence expressed concern that Wynyard may seek to re-enter the land. On 10 October 2016, I granted an interim injunction preventing Wynyard from entering or residing on the land pending the determination of these substantive applications. 4 Terence now seeks a permanent injunction against Wynyard. [10] Wynyard opposes the application seeking his removal as a trustee. He also contends that a permanent injunction would be unduly oppressive and should not be granted. 3 Terence does not seek an order requiring Wynyard to repay these funds. 4 Kawiti v Kawiti Motatau 2 Section 65A (2016) 139 Taitokerau MB 136 (139 TTK 136).

4 162 Taitokerau MB 272 Should I remove Wynyard as a trustee? Legal principles [11] Section 240(a) of Te Ture Whenua Māori Act 1993 provides that I may remove a trustee if I am satisfied the trustee has failed to carry out their duties satisfactorily. The general responsibilities of a trustee, as set out in s 223 of the Act, are: (a) Carrying out the terms of the trust; (b) The proper administration and management of the business of the trust; (c) The preservation of the assets of the trust; and (d) The collection and distribution of the income of the trust. [12] These statutory duties are not exhaustive and general trustee obligations apply including: 5 (a) A duty to acquaint themselves with the terms of the trust; (b) A duty to adhere rigidly to the terms of the trust; (c) A duty to transfer property only to beneficiaries or to the objects of a power of appointment or to persons authorised under a trust instrument or the general law to receive property; (d) A duty to act fairly by all beneficiaries; (e) A duty to invest the trust funds in accordance with the trust instrument or as the law provides; (f) A duty to keep and render accounts and provide information; 5 Rameka v Hall [2013] NZCA 203.

5 162 Taitokerau MB 273 (g) A duty of diligence and prudence as an ordinary prudent person of business would exercise and conduct in that business if it were his or her own; (h) A duty not to delegate his or her powers not even to co-trustees; (i) A duty not to make a profit for themselves out of the trust property or out of the office of trust. [13] When applying s 240 of the Act, I must assess these duties together with the broader approach having regard to the special nature of Māori land trusts and the provisions of the Act. The prerequisite for removal is not a simple failure or neglect of duties, but a failure to perform them satisfactorily. An assessment of the trustee s performance is essential. In determining whether removal is appropriate, I need to consider the impact of the trustee s actions on the beneficiaries and any apprehension of risk to the trust s assets. 6 Did Wynyard breach his obligations moving into the house? [14] Wynyard sent a text message to Terence advising he was moving into the house. He then moved in without seeking, or obtaining, approval from the other trustees. Clause 9 of the trust order requires that decisions by the trustees must be by majority. Wynyard did not receive proper approval to live in the house. [15] Trustees cannot make a profit for themselves out of trust property. This includes using trust property for personal benefit. Wynyard s occupation of the house, without payment of rent, is a personal benefit in breach of trust. [16] Despite that, the trustees subsequently ratified this arrangement. Wynyard was originally living in Auckland and was travelling to undertake work on the farm. When he moved in, he continued to carry out this work. The trustees did not expressly approve his occupation of the house, but they were aware he was living there, and allowed it to continue. At that time the arrangement was working. The trustees did not take steps to remove him from the house and they continued to reimburse his costs for managing the farm. Wynyard s management of the farm also provided benefit to the trust. Terence and 6 Ibid.

6 162 Taitokerau MB 274 Rongomau accept he was doing a good job. While he was not paying rent, the benefit the trust received offset any loss to the trust. [17] I do not consider this justifies Wynyard s removal as a trustee. Did Wynyard receive, and fail to account for, trust funds? [18] Wynyard accepts he received funds from the sale of stock, and paid this into his personal bank account. He states he spent the funds on the farm. Mr Hockly argued that, as part of his role managing the farm, there was a tacit arrangement which allowed Wynyard to receive and administer these funds. I reject this argument. [19] Clause 10 of the trust order states: Control of funds All monies received by or on behalf of the trust shall forthwith be paid to the credit of the trust s bank account. All payments from the trust bank account shall first be approved at a meeting of trustees. All cheques and withdrawal slips drawn on the account shall be signed by the treasurer and at least one (1) other trustee. [20] Payment of trust funds into Wynyard s personal account is in direct breach of cl 10. There is no evidence that Wynyard was authorised to receive trust funds into his personal account. The arrangement was that Wynyard would manage the farm, and would seek reimbursement for costs he incurred. He was never authorised, tacitly or otherwise, to receive trust funds into his account and to apply those funds unilaterally. [21] Wynyard also argued the trustees failed to reimburse him for costs incurred, and failed to function properly, so he was required to step in and manage the funds directly. This is a flawed argument. If other trustees failed to discharge their duties, Wynyard could have sought their removal, to enforce their obligations, to review the trust, or directions from the Court. It was never an option to take matters into his own hands. In any event, I do not accept this explanation. Wynyard formed the view he was entitled to these funds as he was carrying out work on the farm: Taitokerau MB (141 TTK ) at 354.

7 162 Taitokerau MB 275 K Taurau: And you have decided too that where you were not being reimbursed as you felt you should be, you would simply retain funds where you sold cattle that belonged to the trust that was trust property? W Kawiti: That came about because like, yes. Well they had to be done anyway those cattle were going to go whether we were talking, the trust was talking to each other or not. That s what was going to happen. But instead of sending in the money I put the money into my bank account okay that s what happened yes. Because at that stage I was thinking you know well I'm doing the work here, I'm going to move these cattle and then sell them and get some money. And then I'm going to give the money away to these fullas who are doing nothing I mean you know it doesn t make sense to me. [22] Trustees are not entitled to remuneration for loss of time or trouble unless one of the strict exceptions to this rule apply. Wynyard was not authorised to retain these funds by the other trustees, the trust order or the Court. This was a gross breach of trust. [23] I also find that Wynyard has failed to account for these funds. Wynyard contends he spent the funds on the farm. He has filed various receipts and invoices ( the financial records ) to demonstrate this. This was a retrospective attempt to justify the use of trust funds he was never authorised to spend. [24] Wynyard received $29, in trust funds. Terence gave evidence that the financial records total $18, His evidence was not challenged by Mr Hockly in cross examination. This leaves a shortfall of $10, not accounted for. Wynyard argued the shortfall relates to cash payments he made for hay and other expenses where he did not receive receipts. 8 There is no objective or cogent evidence establishing this. [25] There are also serious questions around the financial records provided. There is no proper basis to determine whether many of the records relate to farm costs or personal costs. Wynyard filed a number of receipts concerning petrol and maintenance for his Holden Commodore. Wynyard states he used his vehicle for work on the farm including to feed out hay. This is questionable given the trust owned a tractor and an Isuzu truck for use on the farm. There are also receipts for the purchase of a mobile phone, and payments of monthly phone bills. Again, there is no objective evidence demonstrating that these costs relate to the farm Taitokerau MB (151 TTK ) at 244.

8 162 Taitokerau MB 276 [26] Wynyard gave evidence that he did not use trust funds to purchase bee hives placed on the land. He claimed he used his own money and that he owned these hives. However, invoices for the purchase of bee hives, a bee suit, and related equipment, is included in the financial records filed to account for the trust funds. There are also receipts for costs which do not relate to the farm such as the purchase of food. 9 [27] I accept that some of the financial records likely relate to costs spent on the farm. However, the obligation is on Wynyard to keep clear and full records accounting for the use of all trust funds. He has failed to do so. Has Wynyard acted in a threatening and abusive manner? [28] A trustee must act impartially administering the trust and its assets for the benefit of the beneficiaries. It is implicit that a trustee must act objectively, reasonably and rationally in discharging those duties. Wynyard s behaviour as a trustee is characterised by threats, bullying and intimidation and promoting his personal interests over that of the other trustees and beneficiaries. [29] During trustee meetings, Wynyard often disagreed with the other trustees. They would make decisions by majority which he objected to. He considered that ordinary talking wasn t working 10 and so he would swear and use profanity to get his point across. Wynyard also told the other trustees they couldn t enter the land without his permission and that his siblings who do not have children have no right to the land. [30] Rongomau gave evidence that in 2015 he went onto the land to take photographs of the forestry operation. He states Wynyard said: 11 From now on any of you fullas coming here to this place you need my permission. You f-ing stay off here. I ll stop you. I ll break your leg. Punch you in the face. [31] Wynyard accepts he told Rongomau they had to ask for his permission to enter the land but could not recall making these threats. 12 I accept Rongomau s evidence. I consider he was an honest and reliable witness and that he gave an accurate account of what 9 Invoice from Mac s Prime Meats relates to $58.90 spent on meat and vegetables Taitokerau MB (141 TTK ) at Ibid at Ibid at 349.

9 162 Taitokerau MB 277 occurred. Wynyard did not deny making these threats only that he could not recall. Rongomau s evidence of the threats made is consistent with Wynyard s unreasonable and irrational behaviour and the complete disregard he showed for the other trustees and beneficiaries. Should I grant an order removing Wynyard as a trustee? [32] In deciding whether to remove Wynyard I must consider his performance as a whole, and determine whether he carried out his duties satisfactorily. [33] Wynyard did make positive contributions to the trust. The farm was difficult to manage. The trust could not afford to employ a farm manager. The other trustees accept he was doing a good job managing the farm. Clearly this provided benefit to the trust. However, that must be weighed against his other conduct. [34] Wynyard paid trust funds into his personal bank account. He spent the funds without proper authorisation from at least a majority of trustees. He also failed to account for the expenditure of those funds. He has acted unreasonably and irrationally using threats, intimidation and bullying to get his way. [35] While the trustees agreed to reimburse Wynyard for his costs, he was not being paid for managing the farm. Wynyard formed the view that he was entitled to be paid and if the trustees would not give it to him he would take it. This resulted in him keeping trust funds, refusing access to the other trustees, unilaterally deciding who the beneficiaries should be and ultimately claiming that he owned the farm personally: 13 W Kawiti: I ve been on this farm here and it hasn t paid me anything so therefore I own this place. That s what I said you know just out of you know out of that time, okay. And afterwards this fullas was sending that fulla up there up onto the farm after I ve just told well told Terry that s what I think of this whole situation now that I own it because it s not hadn t paid me a cent and I ve done all the work on the place it owes me a lot. There s no money to be paid to pay for wages well I own it. You know if you can t afford to pay well then I ll get it another way Taitokerau MB (141 TTK ) at

10 162 Taitokerau MB 278 W Kawiti: Not for the work. I was being reimbursed for the money I was spending but not for the work I was doing. We re talking about $300,000 or maybe more that s a cheap one.. K Taurau: So the trust owes you half a million dollars? W Kawiti: That s what I'm saying yes. K Taurau: For the work you have done. W Kawiti: And this is last year, yes. And that was the reason why I said that farm belonged to me. If they couldn t afford to pay half a million dollars well I own the farm, okay, okay. [36] Wynyard has failed to carry out his duties satisfactorily and should be removed. Should I grant a permanent injunction? [37] I have jurisdiction to grant an injunction with respect to any actual or threatened trespass on Māori freehold land. 14 The trustees are the owners of the land. They decide who can enter, who can reside there and how the land should be managed. 15 A majority of the trustees are concerned that Wynyard may re-enter the land. They seek a permanent injunction preventing him from doing so. [38] Mr Hockly accepts the trustees are acting by majority and the elements for the action of trespass (or in this case threatened trespass) are made out. 16 The question is whether I should exercise my discretion to grant an injunction. 17 [39] Mr Hockly submits that an injunction will be unduly oppressive. He argues removing Wynyard as a trustee is a sufficient measure as he will no longer have authority to enter or manage the land. Mr Hockly submits the other trustees and beneficiaries need to have an avenue to reconcile the relationship with Wynyard. He contends a permanent injunction is not conducive to that and may lead to Wynyard being permanently alienated from the land. I do not agree. 14 Te Ture Whenua Māori Act 1993, s 19(1)(a). 15 Eriwata v Trustees of Waitara SD s6 and 91 Land Trust - Waitara SD s6 and 91 Land Trust (2005) 15 Whanganui Appellate Court MB 192 (15 WGAP 192) Taitokerau MB (151 TTK ) at See Taueki v Horowhenua Sailing Club Horowhenua 11 (Lake) Block [2014] Maori Appellate Court MB 60 (2014 APPEAL 60).

11 162 Taitokerau MB 279 [40] Wynyard has shown blatant disregard for the authority of the other trustees. He has treated them with contempt and has expressed strong beliefs that he is the true and rightful owner of this land. Even with his removal as a trustee, I consider a real risk remains that he will attempt to re-enter the land. An injunction is necessary to prevent him from doing so. [41] I agree that the parties should attempt to reconcile. An injunction does not prevent that. If reconciliation is achieved, any party can apply to cancel the injunction per r 9.9 of the Māori Land Court Rules That option is also available to Wynyard if the trustees are unreasonable in their treatment of him in the future. Additional remedies are available to Wynyard including seeking a review of the trust, or to enforce the trustees obligations. [42] Both sides agree that damages are not suitable as an alternative remedy. I also consider the other trustee have acted reasonably. Before filing this application, they attempted to resolve this issue within the family. They offered to grant a lease of the land to Wynyard so that he could continue to farm it but with exclusive possession. This would have provided income to the trust. They also offered that the funds Wynyard received from the sale of the stock could be treated as an interest free loan. This offer was rejected by Wynyard but it demonstrates that the other trustees tried to resolve this issue within the family before seeking intervention from the Court. [43] The grant of an injunction is consistent with the kaupapa of the Act set out in sections 2 and 17. While Wynyard is a beneficiary of the trust, he is one of many. An injunction will allow the land to be utilised by the trustees for the common benefit of all beneficiaries. [44] I consider a permanent injunction should be granted. The interim injunction can be cancelled. Decision [45] I grant the following orders: (a) Per s 240 of the Act removing Wynyard Kawiti as a trustee of the Watene raua ko Ema Kawiti Whānau Trust;

12 162 Taitokerau MB 280 (b) Per s 19(1)(a) of the Act by way of a permanent injunction prohibiting Wynyard Kawiti, his agents, employees, contractors or invitees from entering or residing upon Motatau 2 Section 65A; (c) Per r 9.9 of the Māori Land Court Rules 2011, cancelling the interim injunction granted on 10 October Pronounced in open Court in Whangarei at 3:30 pm on this 2 nd day of November M P Armstrong JUDGE