Bisson v King
[2020] NZHC 2426
•17 September 2020
IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY
I TE KŌTI MATUA O AOTEAROA NGĀMOTU ROHE
CIV-2017-443-50
[2020] NZHC 2426
IN THE MATTER of the estate of ALAYNA WAIMANA CLARK BETWEEN
ALLEN KENNETH BISSON, VINCENT GEORGE BROWN AND GEORGINA JOHANSEN
Plaintiffs
AND
MAUREEN DORIS KING, MATEHAERE ANITA EDWARDS AND JOHN DAVID
HANNING as Executors of ALAYNA WAIMANA CLARK
Defendants
Hearing: On the papers and on 27 August 2020 Counsel:
R T Wilson for Plaintiffs
L H Watson for Defendants
Judgment:
17 September 2020
JUDGMENT OF ELLIS J
[1] Alayna Clark died on 23 January 2015. She was survived by her husband Colin, but he died on 12 September 2015. Alayna and Colin had no children, and Alayna’s parents predeceased her.
[2]This judgment relates to problems arising from Alayna’s will.
Background
[3] While she was alive, Alayna’s property was held and managed on her behalf by a Kaitiaki Trust constituted under s 217 of the Ture Whenua Maori Act 1993 (the
BISSON & ORS v KING & ORS [2020] NZHC 2426 [17 September 2020]
Act). The purpose of a Kaitiaki Trust is to administer Māori freehold land and other assets of Māori persons under a disability, as Alayna was. At the time of her death, Ms Maureen King and Ms Matehaere Edwards were the trustees of the Trust. Ms King worked for many years as the Manager for IHC1 in Hawera and had looked after Alayna in her professional capacity for a long time.2
[4] At the time of Alayna’s death, the assets managed by her Kaitiaki Trust had a total value of approximately $1.25 million. They comprise:
(a)Beneficial interests in what are referred to as the “Watson/Brown blocks”:
(i)A beneficial interest in three lots of Māori land (Waitara West 30A2, Waitara West 41B & 158 Part and Matarikoriko 2B) that had been wholly owned by Alayna’s great great grandmother, Metepere Paraone. The plaintiffs, in their personal capacity, are all beneficial part owners of these blocks—as was Alayna.3 The combined value of Alayna’s interest in the blocks is approximately $400,000.
(ii)A (minor) beneficial interest in an urupā (Matarikoriko No 3A). This interest has limited commercial value but has cultural and spiritual value for members of the Watson/Brown whānau.
(b)A (relatively minor) beneficial interest in three other lots that were partially owned by Metepere Paraone (Ngatihaupoto 90B, Ngatirahiri 6C, and Waitara East 81B). The combined value of Alayna’s interest in these lots is approximately $36,000.
1 IHC New Zealand, an organisation that provides support and care for people of all ages with intellectual disabilities. It began as the Society for Intellectually Handicapped Children—hence the acronym.
2 Alayna’s will describes Ms King as Alayna’s friend.
3 There are currently 42 members of the Watson/Brown whānau, all descendants of Metepere Paraone, who comprise the beneficial owners of these three blocks of land.
(c)A property (218 Tukapa Street, New Plymouth) that is Māori freehold land and has a rateable value of $355,000.4
(d)Cash and investments.5
The making of Alayna’s will
[5] In 2012 Ms King obtained a psychologist’s report as to Alayna’s cognitive capacity and adaptive functioning. The report opined that Alayna had a moderate intellectual disability, with an IQ score in the range of 37–45. She was assessed as being able to participate in decision-making but needing appropriate support in order to do so effectively. The recommendations for support included providing information to Alayna about her whānau, and kōrero with whānau members about whānau and whenua.
[6] The available evidence indicates that Alayna had a general wish to leave the assets of her Kaitiaki Trust, including 218 Tukapa Street, to her wider whānau. It seems that the disability trust idea came from Ms King who, as a result of her longstanding involvement with IHC, no doubt saw a genuine need for the provision of respite care for the carers of intellectually disabled persons.
[7] Alayna’s will (the Will) was drafted by Mr Hanning, in consultation with both Ms King and Ms Edwards (the other trustee of Alayna’s Kaitiaki Trust). Mr Hanning was a vastly experienced solicitor (now retired) who had been the legal adviser for IHC since 1967. There is no dispute as to his experience or competence.
[8]The operative clause of the Will is cl 3, which provides:
I give the funds, property and investments held in my Kaitiaki Trust pursuant to Trust Order dated 17 October 2008 and together with the property at Tukapa Street, New Plymouth or the proceeds of sale of such property or any property
4 In 2009 the Māori Land Court authorised the sale of one of the blocks of land held by the Kaitiaki Trust so that a home for Alayna and her husband could be purchased. The home purchased was 218 Tukapa Street, New Plymouth. In May 2009, the Māori Land Court made a status order determining 218 Tukapa Street to be Māori Freehold Land.
5 The block of land that was sold to enable the purchase of Tukapa Street was Waitara West 3B29 Part Block, which was wholly owned by Alayna at the time of sale. Because it was sold for approximately $1m and Tukapa Street was purchased for only $305,000, the Kaitiaki Trust held (and Alayna’s estate now holds) significant cash and investments.
purchased in substitution for it (“my Kaitiaki Trust Fund” to my Trustees upon the following Trusts:
3.1To permit my husband COLIN to have the use, occupation and enjoyment of the income of my Kaitiaki Trust Fund during his life;
3.2After COLIN’s death to divide the assets of my Kaitiaki Trust Fund into two (2) equal parts and to hold such parts upon the trusts following:
3.2.1As to one such part for such of the persons referred to in section 108(2) of the Te Ture Whenua Maori Act 1993 (“The Act”) as shall be determined by the Māori Land Court pursuant to section 113 of the Act or if there is no eligible persons then upon the trusts declared in 3.2.2 hereof.
3.2.2As to the other such part to transfer the same to Otaraua Hapū Management Committee6 upon perpetual charitable trust by way of pūtea or whānau trust to apply both capital and income for the provision of respite care to or for the benefit of persons with an intellectual disability resident in Taranaki who are members of the hapū associated with the land or persons entitled to succeed as defined in s 108(2)(a) to (f) of the Act.
[9] Before its execution, the Will was read to Alayna by the two psychologists who had written the earlier report; she then signed it, on 19 June 2014. There is no written record of what was said or how it was explained to her. It seems clear that the plaintiffs and their whānau were not consulted about the making of the Will and had had no discussions with Alayna about it. I acknowledge that it would be possible to explain the underlying ideas in relatively simple terms.
Mr Hanning’s evidence
[10] Subsequently (and in the context of the present litigation), advice was received by counsel from Mr Hanning about the reference to s 108(2) in cl 3.2.1 of the Will. He has recently deposed that he held on the relevant file a hard copy of ss 108–110 of the Act. This comprised three pages, with s 108 being prominent.
[11] But the heading for s 109 was at the bottom of the first page and relatively easy to miss. There is also a handwritten note on the file (not, as I understand it, penned by Mr Hanning) recording: “Q: Amend will to provide for succession to s 108(1)(c)”.
6 Otaraua Hapū is a recognised hapū within the iwi of Te Atiawa. It operates through an incorporated society called Otaraua Hapū Management Committee Incorporated (Otaraua).
There is, in fact, no s 108(1)(c)—but there is a s 109(1)(c), which provides for succession on intestacy in cases where the will-maker has no siblings (as Alayna did not).
[12] Mr Hanning has said that he now believes that when drafting cl 3.2.1 he mistakenly referred to s 108(2) instead of s 109(1). I return to the significance of this point later.
[13]Probate was granted on 12 March 2015.
These proceedings
[14] These proceedings were filed in July 2017. The claim was against Mr Hanning and the trustees of Alayna’s estate. The plaintiffs were all people who would be entitled to inherit under cl 3.2.1 of the Will.7 They claimed that cl 3.2.2 was void, either due to undue influence or due to a number of other reasons, which I do not need to recite here.
[15] The plaintiffs’ position was that all of Alayna’s assets should go to the people included in the class referred to in cl 3.2.1.
[16] In July 2019 a joint memorandum was filed, seeking orders from this Court to give effect to a settlement that had been reached. All parties to the litigation, apart from the Otaraua Hapū Management Committee (Otaraua), had executed the deed recording the settlement (the Deed). Otaraua was given the opportunity to sign but declined to do so. By its terms, the Deed remains binding on the parties who have signed.8
[17]The Deed records a compromise involving alterations to the Will so that:
(a)The Watson/Brown Blocks go to those who would have taken on
Alayna’s intestacy under s 109(1) of the Act.
7 This is so, regardless of whether cl 3.2.1 refers to s 108(2) or 109(1).
8 Otaraua has also been served with these proceedings but has taken no steps.
(b)The Tukapa Rd property goes to the Disability Trust.
(c)Cash and investments of the Kaitiaki Trust Fund, to an amount equivalent to the value of Tukapa Street, would be paid to those who would have taken on intestacy.
(d)Of the remaining assets of the Kaitiaki Trust Fund, half goes to the Disability Trust and half goes to those who would have taken on intestacy.
(e)Maraina Kuratopi Trust would replace Otaraua as the trustee of the Disability Trust.
[18] More specifically, the Deed contemplates a rewriting of cls 3.2.1 and 3.2.2 in the following terms:
3.2After Colin’s death to pay all remaining funeral, administration expenses and debts and to divide the remainder of my Kaitiaki Trust Fund into four parts as follows:
3.2.1the first part to comprise cash and investments equal to the value of the Tukapa Property together with my interests in the following blocks of land:
3.2.1.1Waitara West Section 30A No 2 being all the land in Certificate of Title CFR 451388,
3.2.1.2Section 158 Waitara West District and Part Section 41B Waitara West being all the land in Certificate of Title CFR 475876,
3.2.1.3Matarikoriko No 28 being all the land in Certificate of Title CFR 506170, and
3.2.1.4Matarikoriko No 3A being all the land in Certificate of Title CFR 425588.
3.2.2the second part to comprise the Tukapa Property,
3.2.3the third part to comprise an equal one half share of the remaining assets of my Kaitiaki Trust Fund, and
3.2.4the fourth part to comprise the remaining equal one half share of the remaining assets of my Kaitiaki Trust Fund.
3.3After Colin’s death to hold such parts set out in 3.2 hereof upon the trusts following:
3.3.1As to the first and third of such parts for the persons referred to in section 109(1) of the Te Ture Whenua Māori Act 1993 (“the Act”) as shall be determined by the Māori Land Court pursuant to section 113 of the Act or if there are no eligible persons then upon the trusts declared in clause 3.3.2 hereof.
3.3.2As to the second and fourth such parts to transfer the same to the Trustees for the time being of the Maraina Kuratopi Trust, being an Ahu Whenua Trust constituted by the Māori Land Court on 5 August 1999, upon perpetual charitable trust to apply both capital and income for the provision of respite care to or for the benefit of persons with an intellectual disability resident in Taranaki who are members of the hapū associated with the land or persons entitled to succeed as defined in section 108(2)(a) to (f) inclusive of the Act.
[19] To give effect to this settlement, the Court’s assistance is required. So the Court is asked to:
(a)change the reference to s 108(2) in cl 3.2.1 (now cl 3.3.2) to s 109(1);
(b)appoint replacement trustees of the Disability Trust under s 51 of the Trustee Act 1956 (the TA); and
(c)approve the variation of the will trusts on behalf of the unknown beneficiaries of the cl 3.2.2 Trust under s 64A(1)(b) of the TA.
Reference to the Attorney-General
[20] In June 2019, Cooke J referred the matter to the Attorney-General, seeking his views as to the appropriateness of the proposed amendments to the Will. On 25 November 2019, Mr Kinsler (on behalf of the Attorney) filed a memorandum identifying certain issues but advising that the Attorney-General did not seek to be joined to the proceeding.
[21] The proceeding then fell into a state of quiescence until, on 12 March this year, a further joint memorandum was filed, responding to the Attorney-General. The file then came before me as Duty Judge, shortly before the COVID-19 lockdown.
[22] More recently, I convened a brief hearing to obtain further clarity around some of the issues. I am now in a position to address the appropriateness of the changes and approvals sought, and I do so below.
Does the settlement represent a compromise?
[23] It is, of course, unnecessary for me to determine whether the plaintiffs’ claims would have succeeded. And it is unnecessary for the defendants to admit any liability. Rather, it is submitted by the parties, and I accept, that the plaintiffs’ undue influence claim was arguable, by dint of the following matters:9
(a)Alayna was intellectually disabled;
(b)the Disability Trust was not Alayna’s idea;
(c)there was necessarily a power imbalance between Alayna and Ms King;
(d)the solicitor who prepared the Will was the longstanding solicitor for IHC;
(e)there is no written record of what occurred when the Will was read over and explained to Alayna; and
(f)there was no consultation or discussion between Alayna and her paternal whānau before the making of the Will.
[24] I am therefore satisfied that the settlement recorded in the Deed represents a compromise between the parties.
[25] The next questions are whether the Court can and should authorise the amendments to the Will set out at [19] above.
9 There is no allegation that any of the participants have acted in bad faith or any way improperly. Such is not a prerequisite for a claim of undue influence. Nor is it the case that any of the defendants stood to gain personally from Alayna’s will.
Should the reference in cl 3.2.1 to s 108(2) be replaced with a reference to s 109(1)?
[26] To reiterate, cl 3.2.1 relevantly leaves half of Alayna’s estate to “such of the persons referred to in section 108(2) … as shall be determined by the Māori Land Court pursuant to section 113 of the Act”.
[27] I have already referred to Mr Hanning’s affidavit, in which he indicates that a mistake seems to have been made by him in including the reference to s 108(2) in cl 3.2.1. The parties say that independent support for Mr Hanning’s indication can be found in the fact that the reference to s 108(2) creates insurmountable problems, and that the trust purportedly created by cl 3.2.1 potentially fails for certainty of object. Making the substitution sought not only would yield the same result as a partial intestacy but is also more likely to be what Alayna had intended.
[28] In order to explore this proposition further, it is necessary to say a little more about ss 108 and 109.
Sections 108 and 109
[29] Section 108(1) prevents owners of beneficial interests in Māori Freehold land from disposing of such interests except under subs (2) and (3).10 Subsection (2) is a permissive provision that allows owners of Māori Freehold land to leave such land to a range of people who, broadly speaking, are related to or connected with the land. The classes specified in s 108(2) are:
(a)Children and remoter issue of the will-maker;
(b)Any other persons who would be entitled under s 109(1) of the Act to succeed to the interest if the will-maker died intestate;
(c)Any other persons who are related by blood to the will-maker and are members of the hapū associated with the land;
10 Subsection (3) is not relevant for present purposes.
(d)Other owners of the land who are members of the hapū associated with the land;
(e)Whāngai of the will-maker; and
(f)Trustees of persons referred to in any of paragraphs (a) to (e).
[30] Because Alayna had no children or whāngai, it is (b), (c) and (d) that are the relevant provisions here.
[31] Subsection (b) refers to the class of people who would have been entitled to the Māori Land interests on intestacy under s 109, which relevantly provides:11
(1) Subject to subsection (2) of this section, on the death intestate of the owner of any beneficial interest in Māori freehold land, the persons primarily entitled to succeed to that interest, and the proportions in which they are so entitled, shall be determined in accordance with the following provisions:
…
(c)Where the deceased leaves no issue and no brothers and sisters, the persons entitled to succeed shall be ascertained always by reference to the derivation of entitlement by the deceased and shall be the issue, living at the deceased’s death, of the person nearest in the chain of title to the deceased who has issue living at the deceased’s death, that issue to take through all degrees, according to their stocks, in equal shares if more than one.
[32] Here, the evidence is that “the person nearest in the chain of title to the deceased who has issue living at the deceased’s death” is Metepere Paraone. Accordingly, it is the living descendants of Metepere Paraone who would take on intestacy, namely the 42 members of the Watson/Brown whānau.
[33] By contrast, s 108(2)(c) refers to a very wide class of people.12 The parties say, and I accept, that it would be nigh on impossible to create a list of all the individuals who fall within it. In order to do so, it would be necessary to ascertain all people who
11 Emphasis added. In the event of an intestacy s 109 would not determine who would be entitled to those parts of Alayna’s estate that is not Māori freehold land.
12 See Kameta v Nicholas [2012] NZCA 350, [2012] 3 NZLR 573 at [26].
shared a sufficiently proximate common ancestor with Alayna (either on her father’s or on her mother’s side). Then, it would be necessary to ascertain which of those people were members of hapū associated with any of the relevant land. While it might not be so difficult to ascertain whether any given person fell within the relevant class, it would be quite another matter to draw up a complete list of all its members.
[34] Section 108(2)(d) also creates a large class of people. Matarikoriko No 3A and Waitara East 81B both have a considerable number of owners, all of whom will be members of hapū associated with those blocks. The parties accept, however, that all members of the s 108(2)(d) class could, if necessary, be ascertained—using Māori Land Court records.
[35] So in order to (attempt to) give effect to the reference to s 108(2) in cl 3.2.1 of the Will, the assistance of the Māori Land Court would be required. And even then, the parties say the task would be impossible insofar as determining the class referred to in s 108(2)(c) is concerned. The cost of any attempt would be prohibitive.13
[36] Because the trust purportedly effected by cl 3.2.1 is a fixed trust rather than a discretionary trust, both conceptual and evidential certainty are required. A fixed trust requires that a full list of beneficiaries can be drawn up.14 The applicants say that this is unlikely to be possible here and that the trust created by cl 3.2.1 is at risk of failing because there is no certainty of objects. And in the event of such a failure, a partial intestacy would be created, in which case the relevant fund goes to those provided for in s 109(1):15 the same result as is sought to be achieved by the Deed of Settlement.
Should the Court exercise its power of correction under s 31 of the Wills Act?
[37]Section 31 of the Wills Act 2007 provides:
13 The parties also say there is a lack of clarity about the meaning in cl 3.2.1 of the words “such of the persons … as shall be determined by the Māori Land Court pursuant to s113”. They say these words arguably suggest that the Māori Land Court is to be given the task not only of drawing up a list of all who come within the class but of then choosing which persons within the class should benefit. But that is not, in my view, the applicants’ most compelling point.
14 Inland Revenue Commissioners v Broadway Cottages Trust [1955] Ch 20, [1954] 3 All ER 120 (CA).
15 The partial intestacy is not cured by the words “or if there are no eligible persons then upon the trusts declared in clause 3.2.2 hereof” because there are indeed eligible persons, so the proviso does not apply.
(1)This section applies when the High Court is satisfied that a will does not carry out the will-maker's intentions because it—
(a)contains a clerical error; or
(b)does not give effect to the will-maker’s instructions.
(2)The Court may make an order correcting the will to carry out the will- maker’s intentions.
[38] In light of the matters set out above, I am satisfied that the reference to s 108(2) in cl 3.2.1 was a clerical error. I say that both on the basis of Mr Hanning’s affidavit and because of the problems that would be created if that reference were to be maintained. I do not need to go so far as to decide that the cl 3.2.1 trust would certainly fail; it suffices, I think, that the Māori Land Court process would be protracted, expensive, and potentially not determinative.
[39] Although not strictly necessary, I also consider that substituting the reference to s 108(2) with a reference to s 109(1) is likely to be closer to Alayna’s intentions; it makes sense that she would wish to see those with a closer relationship to her—and to the land—succeed. By contrast, it makes very little sense that she would have wished to leave this part of her estate to all persons to whom she could possibly have left Māori Freehold land.
[40] For completeness, I record that Mr Kinsler suggested that there was a difficulty with this outcome because if Alayna had intended for the relevant assets to be left to those entitled to take on intestacy she would not have made a will in the first place. But I can see no point of principle that prevents a will-maker from making a will with named beneficiaries who are the same as those entitled to take under an intestacy, particularly when the relevant options are prescribed by statute. Moreover, the operative provisions of Alayna’s will are not limited to cl 3.2.1. There remain the bequests effected by cl 3.2.2.
[41]I consider that cl 3.2.1 should be corrected as requested by the applicants.
Should the Court substitute new trustees?
[42] The parties ask the Court to exercise its powers under s 51(1) of the Trustee Act 1956 (the TA) to remove Otaraua as the trustee of the cl 3.2.2 Disability Trust and to replace it with the trustees of the Maraina Kuratopi Trust. Section 51 provides:
(1)The Court may, whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient, difficult, or impracticable so to do without the assistance of the Court, make an order appointing a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee.
[43] Although subs (2) goes on to list circumstances in which the power may be exercised (none of which are relevant here), that list is expressly stated to be “without prejudice to the generality of” subs (1).
[44] The proposed substitution is said to be appropriate for cogent reasons that I do not need to go into here. The Otaraua trustees have taken no steps to oppose the substitution. And, importantly, the substituted trustee would be required to hold the property on behalf, and to act in the best interests, of the beneficiaries in the same manner as the Otaraua trustees would. There can be no question of prejudice to the beneficiaries.
[45] For completeness, I record that I asked counsel about the significance of the substitution of an ahu whenua trust (which is what the Maraina Kuratopi Trust is) for the original reference in cl 3.2.2 to the trustees holding the relevant assets upon perpetual charitable trust “by way of pūtea or whānau trust”.
[46] Counsel explained that all three types of Trusts are all constituted by the MLC pursuant to Part 12 of the Act. The MLC has exclusive jurisdiction to constitute such trusts.16 More specifically:
16 Te Ture Whenua Maori Act 1993, s 211. The Trustees are appointed by the Court: s 222. All of the Trusts are constituted by way of Order of the Court which includes the terms of the Trust in a “Trust Order”: s 219. All of these trusts are monitored within the jurisdiction of the MLC, which has the ability to review the Trusts. Disaffected beneficiaries have recourse to the MLC and can seek remedies there.
(a)A pūtea trust is established under section 212 of the Act. “Pūtea” means money or funds. Where dividends are derived from Māori land and where those dividends might be so small as to make it impractical to distribute to owners of the land, a pūtea trust can administer those funds for Māori community purposes.
(b)A whānau trust is established under section 214 of the Act. Such a trust holds Māori land assets (and funds derived from Māori land) for beneficiaries who descend from a named ancestor and are generally regarded as a “whānau” or family. Succession to the individual interests does not occur while the Trust is in existence.
(c)An ahu whenua trust is established under section 215 of the Act. “Ahu whenua” can be translated as “progressing/developing the land”. Such a trust holds Māori land assets over a particular block or blocks of land as an administration structure; within its shareholding can be individuals, or pūtea trusts, or whānau trusts.
[47] Counsel further explained that the fact that cl 3.2.2 specifies a pūtea or whānau trust as the vehicles by which the charitable trust purposes would be implemented does not obviate the need for the MLC’s approval. And at the time of negotiation of the Deed of Settlement, it was considered more appropriate that the trust vehicle be an ahu whenua trust. That is because the funds to be administered are not minimal, and the beneficiaries are not all from one family. And, importantly, using the ahu whenua trust does not alter the class of beneficiaries under the Will or the purposes for which the trust funds will be allocated.
[48] In any event, on the basis of the material before the Court, I am satisfied that the proposed change to the trustees is appropriate.
Should the Court approve the variation of cl 3.3.2 on behalf of the beneficiaries?
[49] The change proposed to the cl 3.3.2 trust would see the assets transferred to the Disability Trust altered and their value reduced, from one half to about one third of
their total value. I am asked to approve that variation under s 64A of the TA, which relevantly provides:17
(1)Without limiting any other powers of the Court, it is hereby declared that where any property is held on trusts arising under any will, settlement, or other disposition, or on the intestacy or partial intestacy of any person, or under any order of the Court, the Court may if it thinks fit by order approve on behalf of—
(a)Any person having, directly or indirectly, an interest, whether vested or contingent, under the trusts who by reason of infancy or other incapacity is incapable of assenting; or
(b)Any person (whether ascertained or not) who may become entitled, directly or indirectly, to an interest under the trusts as being at a future date or on the happening of a future event a person of any specified description or a member of any specified class of persons, so however that this paragraph shall not include any person who would be of that description, or a member of that class, as the case may be, if the said date had fallen or the said event had happened at the date of the application to the Court; or
(c)Any unborn or unknown person; or
(d)Any person in respect of any discretionary interest of his under protective trusts where the interest of the principal beneficiary has not failed or determined—
any arrangement (by whomsoever proposed, and whether or not there is any other person beneficially interested who is capable of assenting thereto) varying or revoking all or any of the trusts, or enlarging the powers of the trustees of managing or administering any of the property subject to the trusts:
provided that, except by virtue of paragraph (d) of this subsection, the Court shall not approve an arrangement on behalf of any person if the arrangement is to his detriment; and in determining whether any such arrangement is to the detriment of any person the Court may have regard to all benefits which may accrue to him directly or indirectly in consequence of the arrangement, including the welfare and honour of the family to which he belongs:
provided also that this subsection shall not apply to any trust affecting property settled by any Act other than the Administration Act 1969.
(2)Any rearrangement approved by the Court under subsection (1) of this section shall be binding on all persons on whose behalf it is so
17 Because the trust effected by cl 3.2.2 is a charitable trust, I discussed with counsel whether the variation should instead be sought under s 32 of the Charitable Trusts Act 1957. But I am now satisfied that that section does not apply here, for essentially the same reasons as in Re McGruer, Armour v The New Zealand Guardian Trust Co Ltd HC Christchurch M No 158/93, 21 October 1993.
approved, and thereafter the trusts as so rearranged shall take effect accordingly.
[50] Section 64A thus enables the Court to authorise variations of a trust arising under a will on behalf of persons who come within one of the four categories of beneficiaries described in subs (1)(a) to (d). Here, it is the category described in (b) that is relevant. That is because there are a number of steps that will need to be taken before entitlement can arise, including the transfer of the relevant land into the Trust (which requires the involvement of the MLC) and relevant administrative measures being put in place by the trustees. Any entitlement will depend on the happening of these “future” events.
[51] I am satisfied that the proposed variation remains consistent with the purpose of the trust created by cl 3.2.2 and with Alayna’s general intentions.18 But as the first proviso in s 64A(1) makes clear, the Court cannot give its approval if the arrangement is to the detriment of the relevant beneficiaries. In a straightforward financial sense, that is the case here.
[52] That said, however, the cases make it clear that the concept of detriment is a relatively expansive one; it is not confined to financial detriment. Indirect and intangible benefits can be considered.19 So when it is looked at in a global and realistic way, I am satisfied that the settlement here is, ultimately, not to the overall detriment of the beneficiaries. More particularly:
(a)the variations to the trust will avoid the risk that cl 3.2.2 might be found to fail in its entirety (if the undue influence claim proceeded and was successful), to the detriment of the beneficiaries; and
(b)the settlement giving rise to the variations will avoid the need for continuing litigation, which would undoubtedly diminish the value of the trust.
[53]I am satisfied that the variation should be approved, accordingly.
18 Putting to one side any question of undue influence.
19 See for example McKnight v Craig [2010] 3 NZLR 860 (HC).
Orders
[54]In formal terms, I make the following orders:
(a)The terms of the attached Deed of Settlement dated 23 December 2018 are approved and shall be given full effect in all respects as orders of this Court.
(b)By virtue of s 51 of the Trustee Act 1956, the trustees for the time being, and as appointed from time to time, of the Maraina Kuratopi Trust (an Ahu Whenua Trust constituted by the Māori Land Court on 5 August 1999) are appointed as trustees of the Trust created by clause 3.2.2 of the will of the deceased (now varied by order 1 above) in substitution for the existing trustee.
Rebecca Ellis J
Solicitors:
QuinLaw, New Plymouth for Plaintiffs Leo H Watson, Napier for Defendants
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