The Māori Appellate Court has ordered the Trustees of an Ahu Whenua Trust to repay $84,000 after they failed to properly manage conflicts of interest.

The Trust made a resolution to employ and back-pay an administrator of the Trust for work she had done in the past. She was paid $40,000. However, the administrator was the partner of the Chair of the Trust. Additionally, two of the trustees were brothers of the Chair.

Although they all raised the conflict during the relevant meeting, the conflicted Trustees continued to participate in the meeting and decision to make the payment.

At a separate meeting the Trustees agreed to pay $50,000 to a company for services in relation to providing roading and access for logging in the Trust’s forestry block. The Māori Appellate Court found that none of the Trustees identified any conflict of interest.

In particular, the Chair did not declare that he was both the Chair of the Trust and Director and sole shareholder of the company.

The Court held that the Trustees had significantly breached their duties to the Trust and ordered the Trustees to repay the $50,000 paid to the company, and $34,000 of the $40,000 paid to the Chair’s partner. An allowance of $6,000 was granted for the services she had provided to the Trust.

Trustees must be vigilant to properly manage conflicts of interest. This includes disclosing any conflicts of interest and ensuring they do not play a role in any decision that may take place where they are conflicted. Failure to do so may see the Court order trustees to personally repay the trust for any payments made.

If there are uncertainties around how to manage conflicts of interest within your Trust, it is important to obtain advice from a professional experienced in the area.

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Peter Johnston
Māori Issues Lawyer