Stubborn resistance blocking beneficiary entitlement to payment from a family trust had its consequences; Kevin Sunde as a trustee of the LeRoy Family Trust was ordered to pay personally legal costs that followed.
The LeRoy Trust was established in 2005 at the initiative of two brothers: Roy and Leo Sunde. It owns properties in the Auckland suburbs of Oratia, New Lynn and Royal Oak. Family members transferred these properties to the Trust, receiving in return acknowledgement of a debt owing for the value of each property. When in 2018 several family members triggered demand for repayment of $2.5 million owed them, Kevin Sunde as one of the trustees dug in his heels. He argued capital should be preserved for the benefit of Sunde grandchildren, not paid out to his Sunde siblings and their mother. He also questioned the need for repayment of another $2.85 million demanded on behalf of another relative, Leo Sunde. The High Court was told Leo, aged 91 and now mentally incapable, lives in a retirement village with his financial affairs managed by a relative holding an enduring power of attorney.
With Kevin the only trustee not agreeing to pay the total demanded of $5.35 million, family members sued in the High Court seeking summary judgment on their contractual right to payment. The LeRoy Trust was described as dysfunctional. Demands for payment and Kevin’s intransigence are coloured by a long-running family dispute. In the end, Kevin abandoned his claimed defences to all but Leo’s demand for prepayment. At a subsequent costs hearing, Kevin was ordered to contribute to family members’ legal costs and further was refused permission as trustee to recover his own legal costs from assets of the LeRoy Trust. The legal position was clear, Justice Downs said. There was no merit in his objections to payment claimed by relatives suing for $2.5 million.
Kevin’s only potentially valid legal defence to non-payment concerned repayment of $2.85 million demanded on behalf of Leo. Kevin alleges repayment is not for Leo’s benefit, but for the benefit of the family member holding Leo’s enduring power of attorney. If so, payment is potentially unlawful and in breach of the Protection of Personal and Property Rights Act. The relative in question disputes the allegation. At a summary judgment hearing, Associate judge Andrew said judgment in favour of Leo for his claimed $2.85 million would be entered in five months if the family has not sorted out its differences within that time.
Sunde v. Sunde – High Court (29.10.18 & 27.11.18)
19.013