Card - [2024] NZHC 142

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.…

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

AGLC: Card [2024] NZHC 142
Case: [2024] NZHC 142
Decision Date: 12 February 2024

CaseChat Overview and Summary

In this case, the plaintiffs, Shona Lee Card and Landsborough Trustee Services No. 31 Ltd, applied to the High Court of New Zealand to amend the terms of the A & S Card Family Trust to include Aisling Joy Morton Adair, the adult child of one of the settlors, as a beneficiary. The trust was originally established by Aaron William Terrence Card and Shona Lee Card to hold investment properties and their family home for asset protection purposes, and to primarily benefit the settlors and their children. The trust deed provided that the beneficiaries included the settlors, the final beneficiaries being the children born or adopted before a certain date, and other specified categories of beneficiaries. The power to appoint additional beneficiaries was limited to being done by deed executed by both settlors during their joint lifetimes. Aaron died unexpectedly, and Shona sought the court's assistance to appoint Ash as a beneficiary, as they had not had the opportunity to do so before his death.

The court was required to decide whether it had the power to vary the trust to include Ash as a beneficiary, and whether this was an appropriate exercise of the court's supervisory jurisdiction over trusts. The court noted that the variation was permitted under s 122 of the Trusts Act, where there is consent from every beneficiary, and where a beneficiary does not have legal capacity to provide consent as a minor, the court can approve the variation on their behalf under s 124. The court also had to consider whether the proposed variation would affect the interests of the minor beneficiaries to such an extent as to require the appointment of counsel to represent their interests.

The court held that it had the power to vary the trust in the way sought, and that the mechanism of varying the trust was more expeditious than approving the resettlement of the trust on a new trust which included Ash as a beneficiary. The variation was permitted under s 122 of the Trusts Act, where there is consent from every beneficiary, and the court had approved the variation on behalf of the minor beneficiaries under s 124. The court also held that it was a proper exercise of its 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. The court made orders appointing Ash as a discretionary and final beneficiary of the trust, amending the definition of "Final Beneficiaries" to include Ash, providing consent on behalf of the minor beneficiaries of the trust, and waiving the requirement for consent from any other beneficiaries or potential beneficiaries.

In conclusion, the court granted the application to vary the trust to include Ash as a beneficiary, and made orders to that effect. The court held that it had the power to vary the trust, that the variation was an appropriate exercise of its supervisory jurisdiction over trusts, and that the proposed variation did not affect the interests of the minor beneficiaries to such an extent as to require the appointment of counsel to represent their interests. The court's decision ensures that Aaron's wishes are carried out, as well as the wishes of Shona and their three children, and provides for the best interests of the family.

Orders