16 October 2014

Family trust: Harre v. Clark

It was the views of an 86 year old matriarch that won out in a dispute over the sale of eleven hectares of valuable land on the outskirts of west Auckland owned by a family trust.  The High Court ruled she did not act improperly when removing her daughter and a local solicitor as trustees following arguments over the method and timing of any sale.
The Harre family established a family trust in 1989 which took ownership of eleven hectares of farm land on Totara Road, Whenuapai.  The land is not economic as a farm, but has been used to run dry stock.  Now worth millions, its value is expected to increase as Auckland expands.
The Trust land is all that remains of a farm which has been in the Harre family since the 1860s.  At age 86, Lois Harre is the oldest living descendant.  Her descendants and their spouses are named as beneficiaries of the Trust.  The court was told there had been a family meeting in late 2009 with general support for a sale.  Dissension followed within the family about what should happen: one daughter looking for an immediate sale; a son looking to wait and subdivide later before selling.
Matters reached a head when two of the trustees, daughter Lynette Clark and solicitor Colin Lucas took steps to market the property and it was listed for auction in March 2012.  The auction was cancelled following objections by matriarch Lois and a son, Roderick.
Evidence was given that Lois then used her power of appointment in the Trust deed to appoint herself and son Roderick as trustees.  Colin Lucas was removed as trustee at the same time.   When daughter Lynette objected, she too was removed as trustee.
The High Court was asked to rule on who were now in charge of the Trust.  The two dismissed trustees claimed to still be trustees and they claimed the appointments of Lois and Roderick were made for improper reasons.  It was alleged that Roderick was attempting to misuse his position as trustee to buy some of the land cheaply.  It was also alleged Lois was angling to continue using the Trust land.  The court was told she lives on an adjoining property.
The power in a trust deed to appoint and remove trustees must be used for a proper purpose, consistent with the purpose of the trust and in the best interests of the beneficiaries as a whole.  Justice Brewer described Lois Harre as a determined and formidable person.  He said the dismissed trustees had failed to prove on the balance of probabilities that the two new trustees had been appointed for an improper purpose.
Harre v. Clark – High Court (16.10.14)

14.048