Broadbent v Broadbent - [2014] NZHC 254

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-2678 [2014] NZHC 254

UNDER section 51 of the Trustee Act 1956

IN THE MATTER

of the Broadbent Family Trust

BETWEEN

VICTORIA ROSANNE BROADBENT Plaintiff

AND

JOHN STEPHEN BROADBENT AND VICTORIA ROSANNE BROADBENT, as Trustees of the Broadbent Family Trust Defendants

Hearing: 4 and 5 February 2014

Appearances:

CM Webster for Plaintiff
JS Broadbent, first named Defendant, in person

Judgment:

24 February 2014

JUDGMENT OF BREWER J

This judgment was delivered by me on 24 February 2014 at 11:30 am pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors: Rennie Cox (Auckland) for Plaintiff
(Copy to first named Defendant in person)

BROADBENT v TRUSTEES OF THE BROADBENT FAMILY TRUST [2014] NZHC 254 [24 February 2014]

Introduction

[1] Mr and Mrs Broadbent are the trustees of the Broadbent Family Trust (“the Trust”) of which they are the settlors and under which they hold jointly the power of appointment.

[2] Mrs Broadbent applies to the Court for orders removing herself and

Mr Broadbent as trustees and appointing in their place an independent corporate

trustee.1

Mr Broadbent opposes.

Background

[3] The Trust was established by deed on 10 March 2003. Mr and Mrs Broadbent are discretionary beneficiaries, as are their two (adult) daughters. The key assets of the Trust are two pieces of real property:

(a) 19D Balfour Road, Parnell, Auckland. This is a residence occupied currently by Mr Broadbent. Its value seems to be in the region of
$1.7m; and

(b) 151F Te Punga Road, Whangapoua, Coromandel. This is a residence/luxury lodge occupied currently by Mrs Broadbent. Its value might be around $3.2m.

[4] Mr and Mrs Broadbent have, as trustees, guaranteed various loans and credit card accommodations made by BNZ to them personally or at their request. The guarantees are secured by a mortgage registered against the Balfour Road property. In total, the mortgage secures around $1.1m.

[5] The Trust has no significant source of income.

[6] Mr and Mrs Broadbent separated in January 2012. There is litigation between them in the Family Court over the division of relationship property and

1 A memorandum of counsel dated 4 February 2014 elucidated the orders sought in the first amended statement of claim.

spousal maintenance. I am advised also that Mrs Broadbent has made application for a protection order under the Domestic Violence Act 1995.

[7] Mrs Broadbent’s position is that in these circumstances it would be prudent for the trustees to sell the two real properties and make distributions so that BNZ can be repaid and so that the Trust’s remaining assets can be applied in accordance with the provisions of the Trust deed. However, she cannot attract co-operation from Mr Broadbent.

[8] Mr Broadbent’s position, as set out in his first amended statement of defence dated 21 August 2013, is that the assets of the Trust have been managed prudently since the separation and that the Trust continues to be administered in accordance with the Trust deed. Therefore, there is no…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Broadbent v Broadbent

Details

AGLC: Broadbent v Broadbent [2014] NZHC 254
Case: [2014] NZHC 254
Decision Date: 24 February 2014

CaseChat Overview and Summary

In the High Court of New Zealand, Victoria Rosanne Broadbent sought to remove herself and John Stephen Broadbent as trustees of the Broadbent Family Trust and replace them with an independent corporate trustee. The Trust was established by deed on 10 March 2003 and holds two residential properties as its key assets, valued at approximately $1.7 million and $3.2 million respectively. The couple had separated in January 2012, leading to ongoing litigation between them and the Trust's assets being inadequately managed. Mrs Broadbent argued that the trustees should sell the properties to repay the Bank of New Zealand and distribute the remaining assets in accordance with the Trust deed, while Mr Broadbent opposed the removal of trustees and proposed alternative options for managing the Trust.

The court had to decide whether the trustees should be removed and replaced by an independent corporate trustee, as sought by Mrs Broadbent. The legal issues included whether the Trust was being administered properly, whether the trustees were acting in the best interests of the beneficiaries, and whether the court should exercise its powers under the Trustee Act 1956 to appoint new trustees or direct the sale of Trust assets.

The court found that the Trust was not being administered properly and that the trustees were regarding the Trust's assets as relationship property, without considering the interests of the beneficiaries. The court also found that the Trust's real properties needed to be sold to discharge the Trust's liabilities and provide funds for the welfare of the beneficiaries. The court granted Mrs Broadbent's application to remove her and Mr Broadbent as trustees and appointed a corporate trustee, controlled by a well-known Auckland solicitor, to replace them. The new trustee was directed to sell both of the Trust's real properties in the most beneficial manner.

The court awarded costs to Mrs Broadbent on a 2B basis against Mr Broadbent, as it considered that trustees in their position should have recognised the necessity of relinquishing their posts and appointing independent trustees. The court found that it would be wrong to order that costs be paid by the Trust.

Orders