Beneficiaries of Percy Family Trust which is part owner of the Hawkes Bay farm where Shilo Stud breeds Santa Gertrudis cattle allege brother Vance Percy is cooking the books to their disadvantage. Their request in advance of a High Court trial for the Trust to carry their legal costs was refused, despite Justice Doogue ruling there is a strong case brother Vance is in the wrong.
Siblings Douglas and Virginia Percy want to see brother Vance and fellow trustee Stephen Lunn removed from control of the Percy Family Trust and damages paid to them as beneficiaries for alleged breach of fiduciary duty. Battle lines have been drawn with relationships between the two sides described as ‘intensely acrimonious.’
Shiloh Stud is owned by Vance and Denise Percy. Their stud stock is grazed on farmland owned by FW Percy Farming Co Ltd, a company owned 50/50 by the Percy Family Trust and interests associated with Vance Percy. Percy Trust beneficiaries complain that Vance sits on both sides of the fence; on one side as a trustee of the Trust which is part-owner of the farm and on the other as farmer leasing the farm. In particular there are two major complaints: leasing fees paid by Shilo Stud to Percy Farming (which provide income for the Trust) are below market rates; and interest paid on a $220,000 loan from the Trust is at a below market rate. There is evidence from farm valuers supporting these complaints. Vance says Trust beneficiaries have not taken into account below market annual salaries he charged the business and business expenses he paid personally.
Justice Doogue ruled Trust beneficiaries have a strong case that Vance has a conflict of interest. It is for a future court hearing to decide if this conflict has been abused. Beneficiaries request for a prospective costs order was refused. This was not an exceptional case justifying a prospective costs order, she said. Beneficiaries wanted Percy Trust to bear their legal costs with Vance as trustee not permitted to dip into Trust assets to pay his legal costs.
Percy v. Percy – High Court (29.04.20)
20.072