'Heated and hostile' sibling feud over subdivision quashed at appeal court

Wednesday, 4 October 2023

Marsden Valley, the centre of a long-running dispute over a subdivision development. (File photo)

A long-running dispute between siblings over a Nelson subdivision has failed at the final hurdle, with two brothers left with legal costs of $456,000.

Court of Appeal Justices said Mark and Andrew McLaughlin’s claim their brother had mismanaged the development of family land was “not supported by the evidence, and [was] more indicative of their hostility”.

The land, in Stoke’s Marsden Valley, was bought by the brothers’ parents, Jim and Edna, in the 1960s.

In 2004, the couple set up a trust to manage the land. Their four sons were beneficiaries, and one, John, was appointed as a trustee.

According to another trustee, quoted in the judgment, “[Jim] trusted John … and none of his other sons had any interest in [the subdivision project]”.

By the time his father died in 2007, John had taken over project management, and was working unpaid on the development. He negotiated a fee with the trust, but was not paid for around eight years, until the trust could afford to pay him a backdated salary.

It was only once a plan change happened, initiated by John, to rezone the property for residential use, that the development was pursued in earnest.

In 2011, Mark and Andrew raised concerns about the management of the project, and their brother’s conflict of interest: as a rule, trustees aren’t entitled to receive payment, to avoid a conflict between personal interests and duty to their beneficiaries.

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However, there are exceptions to this rule, and the courts held that they applied to John’s role.

Over the years, Mark and Andrew continued to contest their brother’s role, hiring an expert to look into the trust when an independent review failed to highlight any issues, and taking their dispute to the High Court.

At a High Court hearing in 2017, Mark and Andrew claimed the project had been a “disaster” due to John’s mismanagement, and that the beneficiaries would’ve been better off financially had the trust land been sold.

The brothers claimed the only person who had benefited from the subdivision was John, who had been “desperate for work”. They also accused other trustees of “secrecy and hostility”.

However, Court of Appeal Justices upheld the High Court ruling, citing a judgment “littered with damning comments” about the pair’s lack of evidence, and their “scathing comments” about John’s abilities that were “not supported by the evidence and were more indicative of their hostility towards their brother than any other objective assessment”.

According to the judgment, John had performed his role “competently, diligently and with considerable hard work”. It also noted that Andrew and Mark were “hostile”.

An earlier version of this article said the two brothers had to pay $1.5 million in legal costs to John McLaughlin. The correct figure is $456,000. Amended: 2.07pm, October 5.