Court removes trustees for mismanagement of Northland's Stephenson Island

Two trustees have been removed for failing to properly manage affairs on Stephenson Island while others are in the spotlight. Photo / Supplied

A court has removed two trustees for mismanaging an island in Northland, including grazing sheep and allowing a company to establish mussel farms without authority.

The Māori Land Court is also concerned about the actions of two other trustees of the Ririwha Ahu Whenua Trust and has ordered a general meeting of beneficiaries be called within three months to address, among other things, whether the remaining trustees should be removed.

Michael Sheehan and Desmond Rudolph have been removed while those remaining are Charlie Tua, Hone Tua, John Timoti-Hohaia, Wake Rua, Rata Murray, Mathew Redden, Walter Busby, Joan Fenton, Kana Pourewa, Ned Pomana, Adrian Tua, and Terrence Tauroa.

The nearly 116-hectare Stephenson Island, off Whangaroa Harbour, is administered by the trust on behalf of its 564 beneficial owners.

One of the owners, Ani Taniwha, took Sheehan and Rudolph to court, alleging they have benefited personally from using the island, failed to follow proper processes, and have established third parties to administer affairs without proper authority.

Both men had acted as trustees since 1991.

Sheehan has grazed about 650 sheep on the island since 2009 without an agreement and paid no rent, grazing fees, or rates.

He sold the wool and occasionally donated mutton to the local marae and community events.

The trust contributed funds towards repairs and maintenance of a woolshed used to shear his sheep for his personal benefit while he supplied materials.

Part of the $90,000 in grants the trust received in the year ending March 2011 was also spent on the woolshed while the majority of the money was spent on paying wages to a trustee who acted as supervisor on the island.

Sheehan argued he was able to graze sheep as he was a beneficial owner of the land and that he has not profited from his position as a trustee because the income from sale of wool only covered outgoings.

Judge Miharo Armstrong rejected his argument, saying his fiduciary obligations imposed stricter requirements on him if he was to personally use or benefit from trust property.

In March 2010, Sheehan and Rudolph signed on behalf of the trust a joint venture agreement with Westpac Mussel Distributors to establish mussel farms around the island without obtaining approval from two-thirds of the trustees as the law stipulated.

The other issue concerned the duo, together with John Tua and Joan Fenton, incorporating the Ririwha Restoration Trust around December 2009 in order to create job opportunities and undertake biodiversity projects on the island such as to eradicate pests and protect grey-faced petrel.

Again, the court found the new trust was established without being properly authorised by a sufficient majority of trustees.

While the remaining trustees were not actively involved in any of the breaches, Judge Armstrong said that didn't necessarily excuse their obligation to actively protect the trust's interests.

"It seems many of these trustees were inactive or failed to take sufficient steps to ensure that proper processes were being followed and that the trust's assets were being protected."