Candida Trust - [2024] NZHC 976

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-173

[2024] NZHC 976

IN THE MATTER of the CANDIDA TRUST

UNDER

Part 19 of the High Court Rules 2016

AND

UNDER

Sections 122–125 of the Trusts Act 2019 and the inherent jurisdiction of the High Court to supervise the administration of trusts

BETWEEN

RAYMOND GOUBITZ and CANDIDA TRUSTEE COMPANY LIMITED

Applicants

Hearing: On the papers

Counsel:

K H Lawrence and A S Cavanaugh for Applicants

Judgment:

29 April 2024

JUDGMENT OF RADICH J

[1] The applicants, who are the trustees of the Candida Trust (the Trust), seek an order under s 125 of the Trusts Act 2019 waiving the requirement that remote relatives of the settlor provide their consent to a deed of variation of the Trust dated 12 December 2023.

[2] Orders are sought, in addition, under the inherent jurisdiction of the Court confirming that the grandchildren of the settlor are not required to consent to the deed

RE CANDIDA TRUST [2024] NZHC 976 [29 April 2024]

of variation or, in the alternative, an order under s 125 of the Trusts Act waiving their consent.

[3] Finally, a direction is sought under the inherent jurisdiction of the Court confirming that the applicants as trustees may sign a new restated Trust deed incorporating the deed of variation and that they may use this as their operating document.

[4] The orders are sought because, as matters stand, the Trust will vest well before the settlor had intended it to which will cause significant adverse tax consequences.

Directions for service, representation and conduct of proceeding

[5] In my minute of 26 March 2024, I made orders, on the applicants’ without notice interlocutory application, granting leave for the proceeding to be commenced by originating application and dispensing with service of the application and supporting documents on beneficiaries of the Trust.

Background

[6] The Trust was settled by Klaus Girardet by deed dated 15 April 1980. Mr Girardet died in 2022 and was survived by his wife, Dagmar Anja Lily Girardet.

[7] Mr and Mrs Girardet had three children together, being Stephanie Katja Bertha Girardet (Stephanie), Antonia Barbara Elisabeth Girardet (Antonia) and Sibilla Anja Beate Girardet (Sibilla). The Trust will vest on the death of Mrs Girardet. It is sufficiently clear from the evidence that that was not the settlor’s intention. Mrs Girardet was born on 28 May 1938 and is now 85 years old.

[8] The Trust holds significant assets including shares in Candida Stationery Ltd and Candida Office Park Ltd, a property holding company. If the Trust vests, there will be significant adverse tax consequences. As Mr Pavis, the company’s accountant, explains in his evidence, depreciation accumulated by the Trust amounting to over
$3,300,000 would become payable, despite there being no sale of assets, which would be a significant burden for the Trust and its beneficiaries.

The beneficiaries of the Trust

[9]Mrs Girardet is a life tenant, or income beneficiary, of 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 Candida Trust

Details

AGLC: Candida Trust [2024] NZHC 976
Case: [2024] NZHC 976
Decision Date: 29 April 2024

CaseChat Overview and Summary

The applicants, Raymond Goubitz and Candida Trustee Company Limited, trustees of the Candida Trust, sought orders to waive the requirement for remote relatives of the settlor, Klaus Girardet, to consent to a deed of variation dated 12 December 2023. They also sought an order confirming that the grandchildren of Mr Girardet are not required to consent to the deed of variation and a direction under the inherent jurisdiction of the Court confirming that they may sign a new restated Trust deed incorporating the deed of variation and use it as their operating document. The applicants sought these orders to prevent the Trust from vesting before Mr Girardet intended, which would result in significant adverse tax consequences.

The court considered whether the requirement for Mr Girardet’s remote relatives to consent to the deed of variation should be waived. Under s 125 of the Trusts Act, the Court must take into account the nature of any person’s interest in the trust property and the effect of the proposed order on that interest, the benefit or detriment that may result to any person with an interest in the trust property if the Court makes or refuses to make the proposed order, and the intentions of the settlor of the trust, if it is practicable to ascertain those intentions. The court found that the interests of Mr Girardet’s remote relatives were particularly limited, and the detriment to them was limited. However, the benefit to Mrs Girardet, Stephanie, Antonia and Sibilla were significant. The court found that it was appropriate to waive the requirement for Mr Girardet’s remote relatives’ consent to the 2023 deed of variation. The court also found that the grandchildren of Mr Girardet were not required to consent to the deed of variation and that it was appropriate for the Court to confirm that the applicants as trustees may sign a new restated Trust deed incorporating the terms of the December 2023 deed of variation and to use this as their operating document.

The court made the following orders and directions: (a) an order under s 125 of the Trusts Act 2019 waiving the requirement that the brothers, sisters, nieces and nephews of the settlor of the Candida Trust provide their consent to the deed of variation dated 12 December 2023; (b) an order under the inherent jurisdiction of the Court confirming that the grandchildren of the settlor are not required to consent to the deed of variation dated 12 December 2023; (c) a direction under the inherent jurisdiction of the Court confirming that the applicants as trustees may sign a new restated trust deed incorporating the deed of variation and that they may use the new restated trust deed as their operating document; and (d) an order that the applicants’ costs relating to this proceeding be paid from the Candida Trust on a solicitor-client basis.

Orders