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AECT Chairman Welcomes High Court Decision

AECT Chairman Welcomes High Court Decision

The Chairman of Auckland Energy Consumer Trust (AECT), Warren Kyd, says he welcomes the decision of the High Court on his ruling that Mr Collinge, as an AECT Trustee, has a material interest in a matter being considered by the Trust.

The issue of a Trustee’s conflict of interest, either direct or indirect, was a critical procedural matter, under Clause 15 of the Trust Deed, and not one of personalities or politics.

“The relief sought by Mr Collinge in taking the matter to the High Court was declined. Mr Justice Paterson found that Mr Collinge does have a material interest for the purposes of Clause 15 of the Trust Deed. In his ruling on the matter he said, under Clause 15, the Chairman’s ruling on the matter is ‘final and conclusive’.

“The issue arises out of a section of the Trust Deed which precludes Trustees voting on any matter in which they have a material interest. It was my view, now backed by the High Court, that Mr Collinge (via both his family trust and his wife) has a material interest in a substantial volume of Capital Bonds issued by Vector Ltd, and the status and value of these securities may be affected by decisions taken by the Trust. Mr Collinge’s interest was not extinguished by his resignation as a trustee of his family trust, nor would it be extinguished by divestment at this stage.

“It is widely known that trustees must not vote on any matter in which they have a conflict of interest. My only surprise in this case was that Mr Collinge did not recognise his conflict earlier.”

Mr Kyd says he is pleased the issue around voting eligibility has been clarified prior to taking decisions on the significant commercial matters currently before the Trust.

“This leaves Mr Collinge in the position of having to disqualify himself, or having the Chair rule.

“How other Trustees vote later this week will be entirely up to them.”

Mr Kyd said he was particularly grateful to Mr Paterson for the following part of his judgment: “In my view, the trustees, although elected by consumers, assume the duties imposed on them by the Trust Deed and the law of equity relating to trustees. Political platforms do not allow them to breach duties imposed on them by law. They have a very important role in approving certain major or significant transactions. Those transactions are on behalf of companies incorporated under the Energy Companies Act 1992 which states in s36 that the principal objective of any energy company shall be to operate as a successful business. A trustee who fetters his or her discretion to act in the best interests of the Trust and Vector, because of a particular policy on which he or she campaigned, may well be in breach of his or her duties as a trustee. Such a trustee may well be allowing interest to conflict with duty.”

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