Brown v Hallet - [2016] NZHC 2861

IN THE HIGH COURT OF NEW ZEALAND MASTERTON REGISTRY

CIV-2016-435-16 [2016] NZHC 2861

IN THE MATTER of Section 64A Trustee Act 1956

BETWEEN

THOMAS DAVID MALCOLM BROWN, DONALD GRAHAM DOBSON AND DAVID OʼBRIEN BAKER

Applicants

AND

ROSEMARY SHONA HALLET, VICKY SHONA ORDISH AND ALISTER DOUGLAS MALCOLM BROWN Respondents

On the papers

Counsel:

I R Millard QC for Applicants
R L Roff for Minor and Unborn Grandchildren

Judgment:

29 November 2016

JUDGMENT OF CLIFFORD J

[1] This is an application under s 64A of the Trustee Act 1956 (the Act). The applicants, the trustees of the Waihi Station Trust (the Trust), seek the Court’s approval on behalf of a number of minor beneficiaries and potential (unborn) beneficiaries to changes to the trust deed. Those changes would regularise past, and provide for future, payments of income and, limited, capital to their grandfather, the original settlor of the Trust.

Law

[2] Section 64A of the Act gives the Court power to approve, on behalf of infants and unborn persons having direct or indirect vestable contingent interests in a trust,

BROWN v HALLET [2016] NZHC 2861 [29 November 2016]

variations to the trust and enlargement of the powers of the trustees. That power is, however, subject to the following limitation:1

… provided that … 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 …

[3] The ambit of the Court’s power under s 64A has been summarised by

Winkelmann J in Ewington v Schulz in the following terms:2

(a) A trust can be varied with the consent of all beneficiaries, actual or contingent.

…

(c) The court’s discretion is very wide and is to be exercised in the interests of the person on whose behalf it is asked to consent. The court should ask if that person would have approved the variation if of full capacity and properly advised.

(d) When considering the arrangement, the court must start by recognising that under the rule in Saunders v Vautier, beneficiaries who are sui juris and together absolutely entitled to the trust property have the right to defeat the intention of the settlor by varying or revoking the trust as they see fit.

(e) The court may not consent to an arrangement that is detrimental to the person not legally able to consent, that is to say in this case the minor, the contingent beneficiaries or the potential unborn beneficiaries.

(f) But the court is to take a wide approach to benefits and detriments in arrangements. It is not simply a matter of actuarial calculation. The arrangements must be considered as a whole. Indirect and intangible benefits and detriments are relevant, including the welfare and honour of the…

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.

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Details

Case: [2016] NZHC 2861
Decision Date: 29 November 2016

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Brown v Hallet involved the trustees of the Waihi Station Trust seeking approval for changes to the trust deed to allow for payments of income and limited capital to their grandfather, the original settlor of the Trust. The applicants, the trustees of the Trust, sought the court's approval on behalf of minor beneficiaries and potential (unborn) beneficiaries for these changes. The legal issues before the court were whether the proposed variations to the trust deed were in the best interests of the minor and unborn beneficiaries, and whether they would be to their detriment. The court had to consider whether the arrangements were to the detriment of any person by taking into account 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.

The court found that the arrangements proposed by the Deed of Variation were ones to which it should consent on behalf of the minor and unborn grandchildren. The court considered the strong capital position of the Trust, the consent of the adult grandchildren, the very limited impact on the interests of the minor and unborn grandchildren, and the benefits that accrue to them relating to the "welfare and honour of the family" from provision being made for Malcolm at this time of his life. The court was satisfied that the variations proposed to the Trust were not to the detriment of the minor and unborn grandchildren and approved the Deed of Variation as sought by the applicants.

Orders