Card
[2024] NZHC 142
•12 February 2024
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2023-409-575
[2024] NZHC 142
UNDER Part 18 of the High Court Rules 2016 and Trusts Act 2019 IN THE MATTER OF
the A & S Card Family Trust
BETWEEN
SHONA LEE CARD and
LANDSBOROUGH TRUSTEE SERVICES NO. 31 LTD
Plaintiffs
Hearing: On the papers Appearances:
M E Morrison and J V Ormsby for Plaintiffs
Judgment:
12 February 2024
Reissued:
9 April 2024
JUDGMENT OF DUNNINGHAM J
This judgment was delivered by me on 12 February 2024 at 10.00 am, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Re CARD [2024] NZHC 142 [12 February 2024]
The application
[1] This is an application to vary a trust to include the adult child of one of the settlors of the trust as a beneficiary.
The background
[2] The settlors of the trust were Aaron William Terrence Card (Aaron) and Shona Lee Card (Shona). They commenced a de facto relationship and then married on 21 February 2004. They had three children being:
(i)Ella Grace Card, born in 2004;
(ii)Finn JT Card, born in 2007; and
(iii)Kyan Hayes Card, born in 2009.
[3] On 22 February 2008, Aaron and Shona settled the A & S Card Family Trust. The trust was settled to:
(a)hold investment properties and their family home for asset protection purposes; and
(b)primarily benefit Aaron, Shona and their children.
[4]The trust deed provides that the discretionary beneficiaries include:
(a)the settlors, that is, Aaron and Shona;
(b)the final beneficiaries, being the child or children or the marriage or relationship of the settlors born or adopted before the vesting day;
(c)any trust which includes for the time being among its beneficiaries (contingent or otherwise) any beneficiary;
(d)any association, club, institution, society, organisation or trust, not carried on for the private profit of any person whose funds are applied wholly or principally to any civic, community, charitable, philanthropic, religious, benevolent or cultural purpose, whether in New Zealand or elsewhere; and
(e)any person appointed pursuant to cl 7.1(a).
[5] The power in cl 7.1(a) to appoint beneficiaries, however, is limited to this being done “by deed executed by both [settlors] during their joint lifetimes, before the expiry of the Trust period”.
[6] Circumstances have arisen where the trustees wish to appoint an additional beneficiary, Aaron’s adult child, Aisling Joy Morton Adair (Ash), but were unable to formally do so before Aaron died unexpectedly. Shona and the other trustee, Landsborough Trustee Services No. 31 Ltd, now seek the Court’s assistance to do this.
[7] To provide more explanation of the background to this application, Shona has provided an affidavit in support of the application explaining the history of the trust and the circumstances which had led to them wishing to add Ash to the trust.
[8] The trust was established shortly before Aaron and Shona’s third child was born. The couple then established Card Roofing Ltd which was a successful commercial and residential roofing company. The trust continues to own most of the shares in that company. The trust also owns shares in four other companies which have been used for property investment or development.
[9] While it was known that Aaron had a hereditary heart condition and he was being treated for that, his death on 23 January 2023, at age 51, was unexpected.
[10] Approximately seven years prior to his death, Aaron learnt he had a daughter, Ash, from a previous relationship. Neither Shona, nor he, were aware of her existence before this. She was aged about 18 years at the time.
[11] Happily, Ash was accepted into the Card family as Aaron’s daughter and, as Shona describes it, she is “completely integrated into our family”. Aaron walked Ash down the aisle at her wedding and Shona and Aaron’s three children, have all said that it was “the best day of their lives” when they met Ash.
[12] Prior to his death, Aaron discussed including Ash in the trust as a beneficiary. This was something that Shona also wanted, but she says they did not have a chance to complete this before Aaron’s unexpected death. She did not realise that, on Aaron’s death, she would not be able to unilaterally do this under the current terms of the trust. She was concerned, based on legal advice, that resettling the trust on a new trust which included Ash as a beneficiary carried with it additional complications, but also there was a concern that it could be seen as an improper exercise of powers.
[13] She therefore seeks the assistance of the Court to vary the trust by appointing Ash as a discretionary and final beneficiary and amending the definition of “final beneficiaries” by replacing it with the following definition:
“Final Beneficiaries” means:
(a)the child or children of the marriage or relationship of the Settlors born or adopted before the Vesting Day; and
(b)Aisling Joy Morton Adair, being the child of Aaron William Terrence Card.
[14] As she says, this is in the best interests of the family as it would ensure Aaron’s wishes are carried out as well as the wishes of her and their three children.
Service
[15] Prior to this application being referred to me, orders were made on a without notice application which:
(a)dispensed with service on Shona and Ella, because:
(i)Shona is an applicant and trustee; and
(ii)Ella has provided a signed consent to the application.
(b)dispensed with service on Ash because she had signed written consent to being added as a beneficiary; and
(c)dispensed with service on any other person including the minor children, Finn and Kyan, on the basis that their interests will not change with the proposed variation, they will still have an expectancy as discretionary and final beneficiaries, and further it was in the interests of justice to secure the expeditious and inexpensive determination of the proceeding without unnecessary cost or complexity.
Provision of Consent of Minor Beneficiaries
[16] I also note that the supporting affidavit gives every indication that those two children, who are now teenagers, have had the purpose of the application explained to them and are supportive of it.
[17] Thus, this is a case, as in Re Drummond, where the proposed variation would not affect the interests of minor beneficiaries of the trust to such an extent as to require the appointment of counsel to represent their interests.1 I am also satisfied, in approving the variation proposed, that the Court should provide consent to the variation on their behalf, under s 124 of the Trusts Act 2019.
Variation of the trust
[18] I am satisfied that the Court has the power to vary the trust in the way sought and the mechanism of varying the trust is more expeditious than to approve the resettlement of the trust on a new trust which includes Ash as a beneficiary.
[19] The variation is permitted under s 122 of the Trusts Act, where there is consent from every beneficiary and, where the beneficiary does not have legal capacity to
1 Re Drummond [2023] NZHC 847 at [11].
provide consent as a minor, the Court has approved the variation on their behalf under s 124.
[20] In the present case, the variation sought simply seeks to put into effect the wishes of the settlors of the trust which they could have carried out, pursuant to cl 7.1(a) of the trust deed, had Aaron not unexpectedly died.
[21] In my view, it is a proper exercise of the High Court’s supervisory jurisdiction in relation to trusts to facilitate a variation of the trust which was desired by all affected parties and which was only thwarted by the settlor’s unexpected death.
Orders made
[22]Accordingly, I make the following orders:
(a)that Aisling Joy Morton Adair is appointed a discretionary and final beneficiary of the A & S Card Family Trust;
(b)that the definition of “Final Beneficiaries” as at cl 2.1 of the trust deed of the A & S Card Family Trust is amended and replaced with the following definition:
“Final Beneficiaries” means:
(i)the child or children of the marriage or relationship of the Settlors born or adopted before the Vesting Day; and
(ii)Aisling Joy Morton Adair, being the child of Aaron William Terrence Card;
(c)the Court provides consent on behalf of the minor beneficiaries of the trust pursuant to s 124 of the Trusts Act 2019 in respect of these variations;
(d)the Court waives the requirement for consent from any other beneficiaries or potential beneficiaries pursuant to s 125 of the Trusts Act 2019 in respect of these variations.
Solicitors:
Cameron & Co, Christchurch
Copy to:
J V Ormsby, Barrister, Christchurch
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