Trust feud tears Kain family asunder

By Chris Hutching

Friday 19th March 2004

The seating arrangements in the court said it all.

A family trust feud over more than $35 million worth of farms in Hawke's Bay and Canterbury was heard in the High Court in Christchurch this week before Justice Graham Panckhurst.

On one side of the court room sat patriarch George Kain, 86, surrounded by sons Mick, 55, Charles, 48, Tom, 53, Harry, 52, and daughter Georgina, 50.

On the other side was another daughter Mary, 46, sitting with husband Johnathon Hutton, 49, and the uncle of the children, Tom Couper, 78.

Tom and Charles Kain were founders of the listed Apple Fields empire, a company that sold down its property assets in the 1990s to satisfy debts.

The family properties held by 17 trusts were originally part of a legacy left by grandparents Ernest and Helen Couper to their children Tom, and daughter Janet (who married George Kain). If the trusts were wound up the Kains would stand to gain between $2 million and $3 million each. However, they want the High Court to appoint the Public Trust to take over the affairs of the trusts.

Market sources suggest the properties may be worth double their $35 million book value.

On the other hand, Mr Couper says he wants to protect the capital of the trusts for future generations and considers the Kain children have received considerable benefits already.

The court heard how he had bailed out Mick Kain from a $4 million debt, how the trusts had funded Georgina into a restaurant, how Tom and Charles had borrowed money against the trust assets and how Mr Couper had assisted them at various times with his own money.

In the early 1990s the trustees of the trusts had comprised a mix of the Kain children, Mr Couper, and long-time accountant John Springford, and solicitor Laurie Smith.

The Kain children did not have particular knowledge about the trust's financial affairs but had always been included in a general way and had visited new properties when they were bought.

But in the mid-1990s Mick, Charles, Tom, Harry and Georgina became increasingly concerned about the influence of their sister's husband, Mr Hutton, who they claim had "got alongside Mr Couper," who was formulating ways of restructuring the properties into two super trusts.

After 1996 Mr Couper, using discretionary powers, replaced his solicitors in favour of Chapman Tripp, where Mr Hutton worked and began to change the trustees in favour of Mr Hutton and his wife Mary. He also made Mary a beneficiary of various assets.

One of the more curious sidelines to the main story is the way Mr Couper arranged for the Te Mata farm property in Hawke's Bay, considered to be the jewel in the portfolio and valued at about $7 million, to be leased to Montana for 62 years, effectively locking it up well beyond the term of the trust itself and making his second wife Annette a life beneficiary, with rights to occupy the homestead. She was a former housekeeper and bookkeeper for Mr Couper until they married in 1986 when she was 46 and he was 63. They separated last year. The capital beneficiary of Te Mata was changed to Mary and her descendants. The Kains consider that this land, near Havelock North, has greater value for residential subdivisions and that prudent action from trustees would see this avenue pursued.

During 1999 Mr Couper further restructured the trusts by removing the other Kain children as trustees and replacing them with May and Mr Hutton. Mr Hutton was also appointed as a director of some of the farm-owning companies.

These moves prompted the Kains to began litigation in 1999 and it is noteworthy that the action is against JR Hutton & Others, such is the depth of feeling against the perceived interloper.

But the court also heard about Tom Couper's fears of keeping the trust properties intact for the benefit of grandchildren. For example, the Kain brothers had made loans using the trust farms as security and in one case involving the Waipuna Farm Properties Trust. Tom and Charles defaulted on a $2.2 million loan. In a circular transaction the trustees of the new Te Mata Trust took over the loan from Westpac and initiated its own demands for repayment against Tom Kain.

The court heard how "in a nasty twist," Mr Couper caused George Kain's income (in 2000 at the age of 83), to be terminated as a way of putting pressure on him.

(Proceeding)

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