Calver v Fogarty - [2024] NZHC 961

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2023-441-7

[2024] NZHC 961

IN THE MATTER OF the Fogarty Family Trust

AND

The Trusts Act 2019

BETWEEN

GREGORY WILLIAM CALVER AND E4 TRUSTEE COMPANY LIMITED

Applicants

AND

YVONNE GRACE FOGARTY

First Respondent

AND

DANIEL MARK FOGARTY

Second Respondent

AND

TRACEY MARIE FOGARTY

Third Respondent

AND

KAREN YVONNE O’HALLORAN

Fourth Respondent

AND

PATRICK MAURICE FOGARTY

Fifth Respondent

Hearing: 14 February 2024

Appearances:

A S Butler KC and D T Haradasa for the Applicants

Y G Fogarty in person and for the Second and Third Respondents G F Kelly for the Fourth Respondent

R J B Fowler KC for the Fifth Respondent

Judgment:

29 April 2024

JUDGMENT OF PALMER J

Solicitors/Counsel
A S Butler KC, Wellington
R J B Fowler KC, Wellington
Greg Kelly Law Limited, Wellington

CALVER v FOGARTY [2024] NZHC 961 [29 April 2024]

What happened?

The family

[1] Karen O’Halloran (the fourth respondent), Daniel Fogarty (the second respondent), and Tracey Fogarty (the third respondent), are the children of Yvonne Fogarty (the first respondent) and Patrick Fogarty (the fifth respondent).1

[2] Karen was adopted out at birth to Jennifer Warren. The evidence of Karen and Jennifer is that this was an open adoption, that she had an increasing relationship with the Fogarty family from the age of 13, and she had a relationship with her grandparents. Karen provided evidence of that relationship including cards that her grandfather wrote her, a photograph of her grandfather at her wedding, and his death notice describing her as a “loved granddaughter”. Yvonne’s evidence is that the adoption was not open, that she had contact with Jennifer and Karen once Karen was 13, but that Yvonne’s parents never saw Karen as a granddaughter.

[3]Karen has three adult children. Daniel has two children who are minors.

The Trust

[4] On 1 July 1998, Yvonne settled the Fogarty Family Trust (the Trust). Yvonne and Patrick are the appointors of the Trust. Yvonne, Patrick, and Mr Gordon Stoddart were the initial trustees. According to the Trust Deed, there are two classes of beneficiary of the Trust:

(a)the final beneficiaries, who are recorded as Karen, Daniel, and Tracey; and

(b)the discretionary beneficiaries, who are recorded as Karen, Daniel, Tracey and any child of Karen, Daniel, and Tracey born before the date of distribution (1 July 2078).

1 Because many of the parties have the same last name, I refer to all of the parties by their first name.

[5] Clause 18 of the Trust Deed permits the settlor, Yvonne, to remove any person from the class of discretionary beneficiaries but does not allow her to remove any of the final beneficiaries. In May 2002, Yvonne exercised her power to remove Karen and her three children as discretionary beneficiaries. I am satisfied that she has not removed Karen as a final beneficiary. She does not have the power to do so under the Deed.

[6]The trustees have wide powers under the Trust…

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 Calver v Fogarty

Details

AGLC: Calver v Fogarty [2024] NZHC 961
Case: [2024] NZHC 961
Decision Date: 29 April 2024

CaseChat Overview and Summary

The case of Calver v Fogarty involves the Fogarty Family Trust and its trustees seeking approval to sell the principal asset of the trust, a property called Bullock Hill, to Patrick Fogarty, the father of the final beneficiaries. The trustees argue that the dysfunctional relationships within the Fogarty family make it impossible to manage the trust to the satisfaction of all interested parties. They propose to sell the property, wind up the trust, and distribute the proceeds equally among the final beneficiaries, Karen, Daniel, and Tracey. This proposal is opposed by some of the beneficiaries, notably Yvonne, Daniel, and Tracey, who disagree with the proposed equal distribution and seek a higher sale price. The legal issues revolve around whether the trustees' decision to sell the property and distribute the proceeds is lawful, reasonable, and in the best interests of the beneficiaries. The court had to determine whether the trustees' opinion was one that a reasonable body of trustees could have formed, whether there was any conflict of interest, and whether the proposed sale and distribution were within the trustees' powers.

The court found that the trustees had indeed formed a reasonable and lawful opinion based on their duties and the evidence before them. The dysfunctional family dynamics and the impracticality of managing the trust further supported the trustees' decision. The proposed sale price of $2.4 million, though lower than some other valuations, was considered reasonable given the circumstances, including the property's lease and the flat market conditions. The court also ruled that the trustees were not required to obtain a further valuation or go to market, as a lower valuation and increased costs would not be in the beneficiaries' best interests. Finally, the court agreed that the distribution should be in equal shares, as per the trust deed, and not delay the distribution further.

In conclusion, the court granted the trustees' application to sell the property to Patrick Fogarty for $2.4 million and to wind up the trust, distributing the proceeds equally among the final beneficiaries, Karen, Daniel, and Tracey. The court also ordered that the legal costs of the trustees and final beneficiaries related to this application be met from the trust funds on an indemnity basis.

Orders