FOUNDATION CUSTODIANS LTD V L THORNTON AND ANOR HC AK CIV-2009-404-003112

FOUNDATION CUSTODIANS LTD V L THORNTON AND ANOR HC AK CIV-2009-404-003112

Clause 10.11 was intended to exclude personal and unlimited liability of a named limited liability trustee and to limit recourse to the assets of the trust; the second sentence only removes that limitation where the trustee has lost the right of indemnity (eg by breach of trust) so as to make personal liability appropriate; the value limit is assessed at the time of enforcement, and because the mortgagee sale produced proceeds equal to that enforcement value ITL retained an arguable defence and summary judgment was not justified.

Citation
openlaw-fa07c738_013c_458b_9ef1_613e3729f8f0.pdf
Parties
Plaintiff: Foundation Custodians Ltd; First Defendant: Lea Thornton; Second Defendant: Lea Thornton and ITL Trustees 2006 Ltd as trustees of the Mabago Family Trust
Court
High Court
Jurisdiction
New Zealand
Judgment Date
2 November 2009
Procedural Posture
Civil / Summary Judgment Application
Outcome
Summary judgment application dismissed
Legal Topics
Interpretation of Trustee Limitation Clause, Trustee Indemnity and Personal Liability, Mortgagee Sale, Summary Judgment Test
Contract Trusts Property Law Civil Procedure Interpretation of Trustee Limitation Clause Trustee Indemnity and Personal Liability Mortgagee Sale Summary Judgment Test

Case Brief

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Parties

Foundation Custodians Ltd

Plaintiff

Lea Thornton

First Defendant

Lea Thornton and ITL Trustees 2006 Ltd as trustees of the Mabago Family Trust

Second Defendant

Procedural Posture

Civil / Summary Judgment Application

Legal Issues

  1. 1 Whether clause 10.11 of the loan agreement imposes personal liability on a named limited liability trustee beyond trust assets
  2. 2 If clause 10.11 imposes a capped personal liability, whether the cap is fixed at the date of the agreement or at the date of enforcement
  3. 3 Whether ITL has raised an arguable defence sufficient to defeat summary judgment

Ratio Decidendi

Clause 10.11 was intended to exclude personal and unlimited liability of a named limited liability trustee and to limit recourse to the assets of the trust; the second sentence only removes that limitation where the trustee has lost the right of indemnity (eg by breach of trust) so as to make personal liability appropriate; the value limit is assessed at the time of enforcement, and because the mortgagee sale produced proceeds equal to that enforcement value ITL retained an arguable defence and summary judgment was not justified.

Court Disposition

Summary judgment application dismissed

Orders

  • Application for summary judgment dismissed
  • Costs reserved