The Court of Appeal says it cannot rule on the wider doctrinal and spiritual dimension of the disagreement, but the spiritual director, Khyentse Rinpoche Lama, did not have the power to dismiss four New Zealand trustees.

The trustees – Ross Hope, Lama Karma Shedrup, Thelma Burchell and Ellen Duckworth – administer the New Zealand Karma Kagyu Trust, which runs the Karma Choeling Monastery at Kaukapakapa, northwest of Auckland.

Khyentse Rinpoche visited New Zealand in 2004 after a lama who had taught at the monastery resigned over criminal allegations. He brought with him a locksmith and a group of supporters. Police were called but declined to become involved. A shortlived accord ended with one trustee forcing entry to the monastery and issuing trespass notices to the visiting spiritual director and supporters, the Court of Appeal said.

Khyentse Rinpoche responded by issuing notices saying the four were no longer trustees. The removed trustees asked the High Court to rule on the legality of their removal. The Public Trustee has acted as manager of the trust in the interim.

The High Court found in favour of Khyentse Rinpoche, but the Court of Appeal overturned that decision.

It said his general powers to supervise and assist the trust board did not extend to removing trustees. It called for an orderly handover of control.

The three Court of Appeal judges said difficulties could continue in the administration of the trust because the trustees were at odds with the person who held supervisory and other powers over them.

"The situation will require both parties to exercise restraint and to act in an inclusive and tolerant manner."

They said there was no allegation that the trustees had acted in any way contrary to their powers, nor were there allegations of any other improper actions on their part. The dispute was over who was the new incarnation of the head of the Karma Kagyu School of Buddhism, a matter which had split the four regents appointed to oversee its lineage in the meantime.