The application focused on two payments made to Henderson for work on the farm — $10,000 in 2018 and $5000 in 2021 – and other decisions in which he was involved, including a proposal by him in 2019 to live in the house on the land.
The proposal went ahead after being signed off by four trustees and despite advice from the trust’s solicitor at the time that the proposal needed modification, would need to be approved by the block’s owners, and that further directions should be sought from the Māori Land Court.
Decisions to pay Henderson and for him to move into the house were not made at properly convened trustee meetings.
Insurance cover Henderson had organised for the trust also came under scrutiny because he had initially included some of his own assets in it — two private vehicles, two trailers and a boat.
The Māori Land Court ruled Henderson had breached trustee duties and that he had also breached a section of Te Ture Whenua Māori Act 1993, which forbids a trustee from voting or participating in the discussion on any matter concerning payments to themselves.
Henderson refuted those findings and took a case to the Māori Appellate Court. However, its three presiding judges upheld the land court’s findings and the decision to remove him from the trust.
In a decision, recently published online, the Appellate Court judges largely rejected legal arguments advanced on Henderson’s behalf.
Counsel John Kahukiwa had argued the trust order implied payments to trustees were permitted, even if that authorisation was not expressly stated. Further, Henderson and his brothers were entitled to participate in the trustee discussion and vote to approve payments to Henderson.
Even if wrong on these points, the circumstances surrounding the payments did not constitute sufficient grounds to remove Henderson as a trustee, Mr Kahukiwa said.
The appeal court judges said the arguments were “strained”. The Court did not accept there was an implied power in the trust order to pay trustees.
In response to Mr Kahukiwa’s claim that the trust order directed trustees to work the land themselves and therefore there was an implied authority for them to be remunerated, the judges said the trust order simply granted trustees the power to work the land themselves — it didn’t direct them to do so. Choosing to work the land, “certainly did not in any way authorise payment to trustees”.
“If the trustees decide to work the land themselves, they must not breach their trustee duties in doing so, including the duties to not act for their own benefit, to not profit and to act for no reward.”
The Court said that even if there was an implied power to pay trustees (which it did not accept), it was not exercised properly or prudently.
The case raised an important question of how sibling trustees should act in those roles, the judge said.
Mr Kahukiwa had invited the Court to conclude that because the Māori Land Court appointed all trustees to all ahu whenua trusts (Māori land trusts), it therefore somehow released sibling trustees from their duty to avoid conflicts that might arise due to their familial relationships.
That was “jabberwocky”, the judges said. The Māori Land Court often appointed siblings as trustees, particularly for whānau trusts, and sometimes without knowledge those people were siblings. The duty on all trustees to avoid conflicts was a default duty under the Trust Act 2019.
There could be no implied authorisation for sibling trustees to breach the duty to avoid conflicts simply because they were appointed by the court, the judges said.
