Barrett v Osborne
[2024] NZHC 1733
•1 July 2024
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE
CIV-2022-441-000081
[2024] NZHC 1733
BETWEEN SONJA ASTRID BARRETT
Plaintiff
AND
SILKE NICOLE OSBORNE
First Defendant
THE PUBLIC TRUST as trustee of the Estate of Lothar Herzog
Second Defendant
Hearing: 17-18 June 2024 Counsel:
P Mooney and A Thompson for Plaintiff D Kerr for First Defendant
P Vinnell for Second Defendant
Judgment:
1 July 2024
JUDGMENT OF LANG J
This judgment was delivered by Justice Lang On 1 July 2024 at 10.00 am
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Date:…………………………
Solicitors/counsel:
Mooney & Webb, New Plymouth
Bramwell Bate, Hastings/D Kerr, Barrister, Napier Public Trust, Wellington
BARRETT v OSBORNE [2024] NZHC 1733 [1 July 2024]
[1] This is yet another sad story involving the breakdown of the relationship between siblings caused by an uneven distribution of assets following the death of their parents. One sister, Ms Silke Osborne (Silke), received all the assets owned by a family trust (the trust) whilst the other, Ms Sonja Barrett (Sonja), received nothing. This has led to the present proceeding.
[2] Sonja alleges that her sister and father breached their duties as trustees of the trust. She also alleges that her father breached a fiduciary duty that he owed to her as settlor of the trust when he appointed Silke to receive the only asset owned by the trust. This was a house property situated on the outskirts of Hastings.
Background
[3] Mr Lothar Herzog (Lothar) and his wife, Roswitha (Rita), emigrated to New Zealand in 1985 from West Germany. They brought with them their two daughters, Sonja and Silke. Sonja was born in March 1972 and Silke was born in June 1974.
[4] The family settled in Hawkes Bay, where Lothar set up business in Hastings as a fitter and turner. This enabled him to buy a home for the family in Hastings. A few years later, the family moved to another home on the outskirts of Hastings.
[5] The two girls finished at their schooling in Hastings before they left school to pursue careers working for a fast-food franchise. Both moved from casual work to positions of administrative responsibility within their organisation.
[6] On 8 October 1997, Lothar and Rita formed a family trust and transferred the family home to the trust. It seems that some other investments were also transferred to the trust at that time but there is no evidence as to what subsequently became of these.
[7] Lothar was initially the trustee of the trust along with his solicitor. The solicitor subsequently retired and Silke was appointed as a trustee in his place.
[8] The income beneficiaries of the trust were Lothar, Rita, their two daughters, any children of their daughters born before the death of the survivor of Lothar and Rita, together with such other persons as Lothar and Rita or the survivor of them
nominated in writing. The capital beneficiaries were Sonja and Silke, together with such of their children as were born before the death of the survivor of Lothar and Rita. Importantly for present purposes, Lothar and Rita (or the survivor of them) had the power to appoint which of their daughters should receive the capital of the trust fund and in what proportions.
[9] Lothar and Rita separated in 2004 or 2005.1 Thereafter, Rita lived variously with Sonja in the Manawatu and Taranaki regions and also with Silke in Hawkes Bay. Lothar continued to live in the home owned by the trust.
[10] Rita suffered a heart attack at the beginning of 2014. At this stage she was living in New Plymouth, and following her heart attack she moved in to live with Sonja and her family. A short time later she moved from New Plymouth to live in a cottage next door to Silke in Hawkes Bay.
[11] Rita passed away in January 2016. Her estate was divided equally between Sonja and Silke.
[12] In 2020, Lothar exercised his power as the surviving settlor of the trust to appoint Silke as the sole recipient of the assets of the trust. By this stage the sole asset of the trust was the property in which Lothar was living. At the same time Lothar and Silke resolved as trustees to bring the date of distribution forward so that the Hastings property could be distributed to Silke immediately. Lothar and Silke executed documents giving effect to these arrangements on 5 June 2020. However, neither Lothar nor Silke told Sonja about Lothar’s decision to distribute the trust assets to Silke. Lothar continued to reside in the property on the basis that he paid the rates and insurance together with a peppercorn rental.
[13] In or about August 2020, Lothar was diagnosed with cancer. He passed away on 21 January 2021. Sonja did not discover what Lothar had done with the property owned by the trust until after Lothar had died. Lothar explained his reasons for distributing the trust’s assets to Silke in a letter that he had written to his solicitor on 1 May 2020. He instructed Silke not to give a copy of this letter to Sonja until after
1 Sonja says they separated in September 2005 whilst Silke says they decided to separate in mid- 2004.
he had died. Silke gave Sonja a copy of the letter on the day before Lothar’s funeral, together with a copy of Lothar’s will. The will left the bulk of Lothar’s personal assets to Silke. Sonja received a Mercedes motor vehicle that she gave to her son together with Lothar’s stamp collection and some shares.
[14] Not surprisingly, Sonja was deeply upset when she discovered what Lothar had done. She found herself unable to attend Lothar’s funeral. Lothar’s actions in distributing the bulk of his personal assets and the whole of the trust’s assets to Silke caused the relationship between the two sisters to deteriorate to the point where it seems they now have little to do with each other.
Sonja’s claims
[15] Although it is pleaded last in the current version of the statement of claim, Sonja’s primary claim is that Lothar breached a fiduciary duty that he owed to her when he exercised his power as surviving settlor to appoint Silke to receive the whole of the trust assets. Sonja advances this claim against the Public Trust as second defendant in its capacity as executor and trustee of Lothar’s estate. The Public Trust has played no part in the present proceeding.
[16] In the alternative, Sonja contends that Lothar and Silke breached their obligations as trustees in giving effect to the arrangement promulgated by Lothar. Because it is determinative of the remaining claims, I propose to deal first with Sonja’s claim that Lothar breached a fiduciary duty that he owed to her in his capacity as settlor of the trust.
[17] The evidence traversed a multitude of family events and issues that spanned approximately 30 years. It explains why Lothar and his daughters acted as they did during this period. However, the principal issue raised by the proceeding is a legal one. I have therefore only described the factual background to the extent necessary to understand that issue.
Did Lothar breach a fiduciary duty that he owed to Sonja in his capacity as the surviving settlor of the trust?
The Deed of Trust
[18]The preamble and operative section of the Deed of Trust provide as follows:
WHEREAS the Settlors in consideration of their love and affection for their daughters SONJA ASTRID HERZOG and SILKE NICOLE HERZOG
have contemporaneously with the execution of this deed agreed to transfer to the Trustees the land described in the schedule hereto to be held by the Trustees upon the trusts and with and subject to the powers provisions and conditions herein contained:
NOW THIS DEED WITNESSES that the parties hereto DO HEREBY
SEVERALLY ACKNOWLEDGE AND DECLARE that the said land and all other property real and personal which may hereafter be vested in the Trustees (all of which are hereinafter referred to as “the Trust Fund”) shall be held by the Trustees upon the trusts and with and subject to the powers provisions and conditions hereinafter set forth that is to say:
[19] The clauses of the deed that dealt with the distribution of the capital and income of the trust provide:
4 THE DATE of distribution of the Trust Fund shall be the date of death of the survivor of the said Lothar Herzog and Roswitha Gerlinde Elsbeth Herzog or such earlier date as the Trustees shall in their discretion appoint. The perpetuity period applicable to the trust shall be 80 years from the date of the signing of this deed.
5 THE TRUSTEES shall at the date of distribution hold the capital as well as the income of the Trust Fund for such of the capital beneficiaries whether exclusively for any one or more of them, or equally or unequally among some or all of them to the exclusion of the other or others of them, as the Settlors shall by deed or as the survivor of the Settlors shall by deed or will appoint. In default of any such appointment or insofar as such appointment does not extend the Trustees shall hold the Trust Fund for the said Sonya Astrid Herzog and Silke Nicole Herzog as tenants in common in equal shares. If either of them shall have died before the date of distribution leaving a child or children her surviving then such child or children shall take on attaining the age of twenty-five years and if more than one then as tenants in common in equal shares the interests in the Trust Fund to which his her or their parent would have been entitled had she lived to attain a vested interest therein.
The law
[20] The issue for present purposes is whether, in exercising the power given to the settlors under cl 5 of the deed of trust, Lothar owed any fiduciary duty to the capital
beneficiaries. Silke contends this issue must be answered in the negative. She says that in exercising this power Lothar was not subject to any fiduciary duty to the capital beneficiaries. Sonja argues to the contrary. She contends that the settlors, or the survivor of them, owed a fiduciary duty to the capital beneficiaries when exercising the power under cl 5.
[21] Counsel have been unable to locate any authority dealing with the situation that has arisen in the present case. However, analogous situations have arisen in other litigation involving the exercise of similar powers granted under trust deeds. In Clayton v Clayton, a deed of trust granted the settlor, Mr Clayton, the power to appoint or remove discretionary beneficiaries.2 He was also named as the Principal Family Member and in this capacity held the power to appoint himself as sole recipient of the assets of the trust on the date of distribution. The Supreme Court was satisfied that the powers given to Mr Clayton under the trust deed amounted to a general power of appointment in relation to the assets of the trust. This was properly classified as a bundle of rights for the purposes of the Property (Relationships) Act 1976. The Court went on to say:3
[58] These provisions meant that Mr Clayton is not constrained by any fiduciary duty when exercising the [Trust] powers in his own favour to the detriment of the Final Beneficiaries. The fact that he cannot remove the Final Beneficiaries does not alter the fact that he can, unrestrained by fiduciary obligations, exercise the [Trust] powers to appoint the whole of the trust property to himself. …
[22] In the present case Lothar did not have the power to appoint himself to receive the trust assets as was the case in Clayton. This meant he clearly owed a fiduciary duty to the capital beneficiaries not to deal with trust assets in a manner that was contrary to their interests or that advanced his own interests at the expense of theirs. However, he had the unfettered power to nominate which of his two daughters and/or their children should receive the trust assets and in what proportion.
[23] In the subsequent case of McLaren v McLaren, Dobson J described the effect of the Supreme Court’s decision in Clayton as follows:4
2 Clayton v Clayton [Vaughan Road Property Trust] [2016] NZSC 29, [2016] 1 NZLR 551.
3 At [58].
4 McLaren v McLaren [2017] NZHC 161 at [37].
[37] The essence of the Supreme Court’s reasoning is that, in the context of a relationship property dispute, the appointor could exercise a power of appointment in a personal sense, rather than as a component of duties as a trustee, and was not fixed with fiduciary obligations in respect of that power. The power was unfettered to an extent that it qualified as property, thereby enabling Mrs Clayton to bring the assets of the [Trust] within those to be assessed as relationship property.
[24]Dobson J then went on to observe:
[38] [The analysis in Clayton] excluded the relationship between the equivalent of an appointor and beneficiaries from the categories of relationship recognised as having a fiduciary character. It is relevant to the reasoning in the Clayton judgments that the Principal Family Member (appointor) was also the settlor, and by analogy it would apply where there is a close identity between settlor and appointor. It leaves open the question whether respect for the unconstrained nature of a power vested in an appointor should also apply where there is no meaningful identity of interests between the settlor and the appointor. Further, that starting position does not exclude the prospect of factual circumstances arising in a particular relationship where circumstances of vulnerability of a beneficiary and the nature of the reliance placed on the appointor may justify the imposition of fiduciary obligations of an appropriate extent.
(Emphasis added)
Analysis
[25] In the present case there is an extremely close identity of interests between the settlor and appointor because they are one and the same person. On the analysis undertaken by Dobson J, the factual situation in the present case would therefore be analogous to that in Clayton. If this is correct Lothar had the ability to exercise the power under cl 5 of the trust deed unconstrained by any fiduciary duty to the capital beneficiaries.
[26] On Sonja’s behalf, Mr Mooney relies on the last sentence in the passage set out above. He submits that a fiduciary duty arose in the present case because of the nature of the relationship between Sonja and her father. Mr Mooney contends Sonja was vulnerable to the actions of her father, and she was also reliant on him to exercise his powers in a manner that would not result in her being excluded from receiving a share of trust assets.
[27] I accept that Sonja was vulnerable to the actions of her father to the extent that he had the power as surviving settlor to appoint either or both of his daughters to
receive the trust assets and, if he chose to appoint both, in such shares as he saw fit. He therefore had the power to completely exclude Sonja if he so chose. However, this vulnerability did not arise from the particular nature of the relationship between Lothar and Sonja as will usually be the case where fiduciary duties are imposed. Rather, it arose from the nature of the power given to Lothar under cl 5 of the trust deed.
[28] Further, I do not view Sonja as having been reliant on Lothar to exercise his power so as not to exclude her from receiving a share of trust assets. Unlike the position of the plaintiffs in McLaren, Sonya had not contributed in any way to the acquisition of the assets that were transferred to the trust. Nor did she have any rational basis for placing reliance on Lothar to ensure that she received a share of those assets. The trust deed made it clear that the settlors had the right to appoint one or more of the capital beneficiaries to receive the trust assets to the exclusion of the others.
[29] I accept that Sonja may well have had an expectation that she would receive a share of the Hastings property when Lothar died. However, there is nothing in the evidence to suggest she was reliant in any way on that occurring. The evidence suggests she was well established financially in her own right by the time Lothar appointed Silke to receive the assets of the trust in 2020. For these reasons I do not consider the relationship between Lothar and Sonja gave rise to a fiduciary duty on Lothar’s part. The factual situation in the present case does not fall within the exception noted by Dobson J in McLaren.
[30] Mr Mooney also submits on Sonja’s behalf that in exercising the power Lothar was required to act in good faith, for a proper purpose, on rational grounds and for good reason. He emphasises that the purpose of the trust was to enable both Sonja and Silke to share in the assets of the trust. He says this meant Lothar was required to take that purpose into account when exercising the power of appointment under cl 5.
[31] Mr Kerr accepts on Silke’s behalf that the power of appointment under cl 5 of the trust deed was not completely unfettered. First, it could only be exercised in favour of the capital beneficiaries named in the deed of trust. Secondly, Lothar could not exercise the power capriciously or arbitrarily. To take an extreme example, he could not exercise the power to exclude one of the capital beneficiaries because of the colour
of her eyes or hair. Mr Kerr also accepts that Lothar was required to exercise the power in good faith and in accordance with the purposes of the trust.
[32] I accept that Lothar was required to act in good faith and in accordance with the purpose of the trust when exercising the power under cl 5. Importantly, however, the trust deed does not have as an express purpose the welfare or best interests of the capital beneficiaries. Rather, the preamble states that the settlors vested the assets in the trust “in consideration of their love and affection for their daughters”.5
[33] As Dobson J noted in McLaren, the intentions of the settlor, as evident from the trust deed, are generally important in determining the nature of powers created by the terms of the deed.6 I consider the factual situation in the present case to be similar to that in Penson v Forbes.7 In that case, as in the present, the settlor of a trust had transferred assets to it in consideration for the love and affection she had for the beneficiaries. The trustees, one of whom was the settlor of the trust, subsequently exercised their power under the trust deed to exclude one of the named discretionary beneficiaries. The settlor subsequently died and appointed two of the discretionary beneficiaries to act as trustees in her place.
[34] Following the settlor’s death the beneficiary who had been excluded issued proceedings against the trustees. She argued that they owed a fiduciary duty to her when exercising the power to exclude her as a beneficiary. This required them to act honestly and in good faith and not to act capriciously or irrationally. She also argued the trustees had a duty to act even-handedly as between beneficiaries. The trustees applied to strike the claim out on the basis that it was not tenable in law.
[35] Associate Judge Osborne (as he then was) granted the trustee’s application for the following reasons:8
[24] In his submissions for Ms Penson, Mr More dealt with the concepts of irrationality and good faith largely on a combined basis. To the extent that Mr More made submissions specifically towards irrationality or caprice, he stated:
5 Set out above at [18].
6 McLaren v McLaren, above n 4, at [55].
7 Penson v Forbes [2014] NZHC 2160.
8 Footnotes omitted.
The plaintiff was a discretionary beneficiary, and before deciding to remove her, the trustees were under an obligation to consider that decision. They were not entitled to act capriciously. They were not entitled to take into account irrelevant considerations, such as the deceased’s dislike of the plaintiff. The deceased put her own personal interests ahead of her obligation as a trustee. The trustees were required to consider the plaintiff’s personal situation including her financial circumstances. There is no evidence that the trustees gave any consideration to the plaintiff’s circumstances. See Turner v Turner [1984] 1 Ch 100.
[25] In relation to irrationality or caprice, Ms Penson’s claim is therefore put upon the basis that the trustees in exercising their power to remove Ms Penson as a beneficiary acted in breach of trust because the decision was taken as a result of [the settlor’s] dislike of Ms Penson.
[26] Given that Ms Penson’s assertion of breach of trust is in this regard put in that way, it is not tenable.
[27] To adopt Lord Templeman’s terminology in Re Manisty’s Settlement, the “sensible expectations of the settlor” plainly include expectations that those who remain in her affections may remain in the class of discretionary beneficiaries and that those who fall from her affections may be removed from that class. The power to remove in this case is express and is not limited in its terms. There is no reason to read down the power in such a way as would exclude from the consideration of the settlor her intervening disaffection for her daughter. To again adopt the observations in Re Manisty’s Settlement, the trustees’ decision to exclude Ms Penson was not based on a capricious or irrational concept such as height or complexion. Rather, it was on Ms Penson’s pleading based on the reason (or rationale) that one of the discretionary beneficiaries, who may have benefitted from this family trust, was no longer in the affection of her mother, the settlor of the family trust.
[28] The inability of the Court to invalidate the trustees’ decision in the present circumstances is reinforced by the observation that the Court is not an appellate body for trustees’ decisions. While particular Judges might have reached a different view if exercising the same discretion, that is insufficient. A Judge’s view cannot be substituted for that of the trustees in whom the settlor imposed her trust.
[29] Towards the conclusion of the paragraph which I quoted from Mr More’s submissions, he submitted that the trustees were in breach of trust by failing to consider Ms Penson’s financial circumstances. Such a breach has not been separately pleaded but I will consider it under the heading of “irrationality” as presented. It takes Ms Penson’s case no further. The decision-making of the trustees in relation to the class of beneficiaries is not alleged to have been taking place in the context of financial need. Rather, it is alleged to have been taking place because of disaffection. The financial circumstances of particular beneficiaries would have become a relevant consideration when distributions were made. The trustees were not at that point in August 2012.
[36] In order to understand the power of appointment under cl 5 against the purpose of the trust in the present case it is necessary to have regard to the situation that existed
in 1997 when Lothar and Rita formed the trust. At that time Sonja was 25 years of age whilst Silke was 23 years of age. Both daughters were well advanced in their respective careers at this stage.
[37] However, the evidence makes it clear that Sonja had a difficult relationship with her father from an early age. She had been rebellious whilst at school and became involved in activities that Lothar disapproved of. These included the consumption of alcohol, drugs and cigarettes as well as social activities with boys. Lothar held strong, some might say cast-iron, views on these matters as well as topics such as politics and religion. He and Sonja did not see eye to eye on these issues. Arguments between Sonja and her father appear to have been commonplace and to have traversed many issues. By the time she left secondary school, Sonja had moved out of the family home and was living with a family friend.
[38] I accept Mr Mooney’s argument that Lothar and Rita must still have regarded Sonja with love and affection in 1997 because they included her and her children as capital beneficiaries under the trust deed. This occurred even though they plainly knew of Sonja’s propensity to act in a manner that was contrary to her father’s wishes. However, I am also satisfied that, when Lothar and Rita formed the trust, they anticipated further disagreements may arise with Sonja in the future. I consider this was the reason why they reserved to themselves the power to appoint either or both of their two daughters to receive the assets of the trust. As in Penson v Forbes, Sonja and Silke retained their status as beneficiaries so long as they retained the love and affection of their parents, or the survivor of them. When this ceased to be the case, they were at risk of losing that status.
[39] In the present case the letter that Lothar wrote to his solicitor explaining why he had appointed Silke to receive the trust assets made it clear that Lothar no longer regarded Sonja with love and affection. Mr Mooney challenges the validity of the reasons Lothar gave for excluding Sonja as a beneficiary. He also points out that the letter contained several factual inaccuracies. However, as Associate Judge Osborne pointed out in the passage set out above from Penson v Forbes, the Court is not an appellate body for decisions of this type. The Court cannot interfere merely because
it would not have exercised the power under cl 5 to exclude Sonja from receiving any share in the trust assets for the reasons given by Lothar in his letter.
[40] Viewed objectively, many of the reasons Lothar gave would not cause a reasonable person in Lothar’s position to take the step that he did. Sonja also gave evidence that she and her father still retained respect and affection for each other despite the issues Lothar raised in his letter. This may well have been the case from Sonja’s perspective. However, I consider two matters that Lothar raised in the letter are illustrations of conduct on Sonja’s part that is likely to have contributed to Lothar losing his love and affection for her.
[41] The evidence demonstrates that Lothar was prepared to lend money to family and friends but only when he considered it appropriate to do so. He also required the loans to be repaid, even though Silke said that on one occasion he gave the full amount of the loan back to her as a gift as soon as she had repaid it.
[42]Lothar referred in the letter to an occasion when he loaned Sonja the sum of
$10,000 to enable her to complete the purchase of a property in Foxton. She settled the purchase of the property on 25 January 2013. In the letter Lothar erroneously stated that he thought Sonja purchased the property in 2009 but this is of no moment for present purposes. There appears to have been a misunderstanding between Lothar and Sonja as to when Sonja was required to repay the loan. Sonja stated in her brief of evidence that she believed she was required to repay the loan when she sold the Foxton property. In cross-examination she said this was incorrect and that she believed she was required to repay it when she sold another property that she owned in Shannon.
[43] It is clear, however, that Lothar believed she had agreed to repay the loan much sooner than this. On 10 February 2013 Lothar sent Sonja an email in which he required the loan to be repaid in full immediately, together with another loan in the sum of
$3,370. He told Sonja he would not have any further contact with her until the two loans had been repaid. Sonja immediately responded by sending Lothar an email stating “FUCK YOU!!!!”.
[44] Lothar also referred in the letter to an occasion on which he decided to go for a trip to the South Island at the time he was considering whether he should separate from Rita. Sonja talked to Rita on the telephone about this without knowing that Lothar was listening to their conversation. Lothar said in the letter that he heard Sonja say “Why does this idiot of a father need a holiday for?” Ms Marina Richter, who was a close friend of Rita and Lothar and had organised the trip for Lothar, also heard this conversation. She recalls that Sonja said to her mother “what does the old fart need a holiday for? It’s about time he goes and pays me my inheritance.” These incidents go some way towards explaining why Lothar ultimately decided that he no longer had sufficient love or affection towards Sonja for her to retain her status as a capital beneficiary.
[45] I accept that, viewed in isolation and objectively, another person may not regard the two incidents I have described as being sufficiently serious to justify Lothar effectively removing Sonja as a capital beneficiary of a family trust. However, I do not accept Mr Mooney’s submission that Lothar could only exercise the power under cl 5 to exclude or treat capital beneficiaries unequally for good reason. This would involve the Court imposing a requirement that the power be exercised in an objectively reasonable manner when the wording used in cl 5 does not suggest that the exercise of the power is subject to this type of qualification or restriction. The background against which the trust was formed also confirms that the settlors wished to reserve to themselves the unfettered ability to determine how the capital of the trust should be distributed. Further, the imposition of such a requirement would involve the Court effectively becoming an appellate body with the ability to scrutinise the manner in which the settlors exercised the power. As Associate Judge Osborne made clear in Penson, that is not the Court’s function in cases such as the present.
[46] It also needs to be remembered that these incidents form part of a much wider and more longstanding background of friction and disagreement between Sonja and her father. Events that occurred prior to the formation of the trust remain relevant because they form part of the background against which Lothar made his ultimate decision.
[47] It is obviously deeply regrettable when family dynamics produce an outcome such as the present. However, I cannot say that Lothar acted in bad faith, capriciously or irrationally when he decided to exclude Sonja as a capital beneficiary. In the absence of any fiduciary duty towards her he was entitled to exercise the power he retained under the trust deed to take that step once he reached the view that he no longer held Sonja in his love and affection.
[48]It follows that Sonja’s claim based on breach of fiduciary duty cannot succeed.
The remaining claims
[49] The trust deed in the present case did not give the trustees the power to decide how either income or capital should be distributed. That power rested solely with the settlors or the survivor of them. In the event that the settlors did not exercise this power before they both died, the trustees were required to distribute the trust assets equally between Sonja and Silke. If either of them had died, one-half of the trust assets were to be distributed to the deceased’s daughter’s children in equal shares when they reached 25 years of age.
[50] The terms of the trust mean that the remaining claims cannot succeed. Once Lothar validly exercised his power as surviving settlor to appoint Silke to receive the whole of the trust’s assets, the trustees were bound to give effect to that appointment. They would have been in breach of their duties as trustees if they did not do so. It follows that Silke and Lothar cannot be liable for breaching their duties as trustees in any of the ways that Sonja alleges.
Result
[51]Sonja’s claims are dismissed.
Costs
[52] Silke is the successful party and as such is entitled to an award of costs and disbursements in her favour. This is a category 2 proceeding and I anticipate that costs for all steps taken in the proceeding would be calculated on a band B basis.
[53] If the parties cannot resolve costs their counsel have leave to file concise memoranda dealing with that issue and I will determine costs on the papers.
Lang J
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