Napier lawyer Stephen Peter Lunn is challenging bankruptcy proceedings brought against him personally for a debt owed by Thackery Trust held liable to pay $510,000 damages following litigation over management of a Napier hotel.
The $510,000 debt arose from out-of-court negotiations settling a dispute over cancellation of hotel management rights then held by USAR Napier Ltd. Thackery Trust was the hotel developer. A negotiated agreement saw Thackery Trust agreeing to pay damages. The legal rule is that a trust has no legal persona. It describes a relationship. Trustees are personally liable for trust debts, unless they have limited or excluded any personal liability.
The High Court was told Stephen Lunn is a trustee of Thackery Trust. USAR is looking to recover from the trustees personally the $510,000 still owed. As an opening gambit, it issued a bankruptcy notice against Mr Lunn. Failure to pay becomes proof of insolvency, a precursor to having someone bankrupted. Mr Lunn claims his liability to USAR is limited to the extent of Thackery’s assets.
Associate judge Johnston refused to set aside USAR’s bankruptcy notice. There was no evidence that Mr Lunn limited his personal liability when signing the out-of-court settlement agreement leading to $510,000 debt. Only after the agreement was signed did he advise USAR that he signed as a professional trustee, accepting no responsibility for payment beyond what was available from Thackery Trust assets. That claim to limit his personal liability came too late.
USAR Napier Ltd v. Lunn – High Court (22.07.22)
22.129