Carswell v Carswell

[2020] NZHC 3307

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2020-488-000026

[2020] NZHC 3307

UNDER

Part 19 of the High Court Rules

IN THE MATTER

of an application for an order rectifying the terms of a Trust

BETWEEN

SHIRLEY ANNE CARSWELL

Applicant

AND

SHIRLEY ANNE CARSWELL and

ROBERT JAMES CARSWELL as Trustees of the D & S Carswell Family Trust Respondents

On the papers:

Counsel:

P J Magee for the Applicant

Judgment:

14 December 2020

JUDGMENT OF WOOLFORD J

This judgment was delivered by me on Monday, 14 December 2020 at 4:30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:           Thomson Wilson Law (P J Magee), Whangarei, for the Applicant Counsel:  D M Shanahan, Whangarei, for the minor beneficiaries

CARSWELL v CARSWELL [2020] NZHC 3307 [14 December 2020]

[1]    On 26 May 2020, Shirley Anne Carswell filed an originating application seeking an order rectifying the terms of the D & S Carswell Family Trust. At the same time, she sought leave to commence the proceeding by way of an originating application under pt 19 of the High Court Rules 2016. She also sought directions as to service.

[2]    On 2 June 2020, Associate Judge Bell granted leave to commence the proceeding by way of an originating application. He also made directions as to service of the proceeding. On 16 October 2020, Associate Judge Bell directed the Registrar to set the matter down for hearing. A date was set for the hearing of 8 December 2020, but I determined that, in the absence of any opposition, the matter could be heard on the papers.

Factual background

[3]    Mrs Carswell and her husband, Robert Douglas Carswell, established the D & S Carswell Family Trust by deed dated 1 May 2000. They were the original settlors and trustees. The family home at the time was transferred to the trust. Mrs Carswell’s husband has since retired as a trustee and been replaced by their son, Robert James Carswell. Under  the deed, the  discretionary beneficiaries  are defined  to include  Mr and Mrs Carswell’s children, any person who is a spouse of their children and any widow or widower of any of their children and any of their grandchildren born before the vesting day. By oversight, Mr and Mrs Carswell are not discretionary beneficiaries.

[4]    It was, however, intended that Mr and Mrs Carswell would be discretionary beneficiaries.  Although  their  solicitors  have  long  since  destroyed  their  file,  Mrs Carswell has retained a letter from them dated 11 April 2000 in which one of the partners has recorded, “Your beneficiaries would include yourselves, all your children and your grandchildren.”

[5]    At the same time as they signed the trust deed, Mr and Mrs Carswell each signed a memorandum of wishes, which reflected their understanding that they were to be discretionary beneficiaries of the trust they had created.

[6]    Mrs Carswell deposes that they only became aware of the fact that they were not discretionary beneficiaries of the trust when they received a letter from Work and Income dated 12 April 2018, which recorded that the deed dated 1 May 2000 indicated that they were not beneficiaries of the trust when it was initially established. Up until then, Mrs Carswell says that she had always believed she and her husband were discretionary beneficiaries of the trust. All their property dealings after the establishment of the trust were conducted and settled by their various solicitors on that basis. Mrs Carswell details the various property transactions they undertook subsequent to the settlement of the trust.

Service on parties

[7]    Affidavits in support of Mrs Carswell’s application have been filed by her three children — Robert James Carswell, Jennifer Anne Lyman and Phillip John Carswell. Mrs Carswell has six grandchildren. At the time of the application, five of them were of full age. Each of them has also consented to the application.

[8]    The Court directed that counsel be appointed to represent the interests of the minor grandchildren. The sole remaining minor grandchild’s clear instructions to counsel was that she wished her grandparents to be included in and have the full range of benefits as discretionary beneficiaries of the trust. Counsel representing the interests of the minor grandchild therefore has no opposition to the claim for rectification by Mrs Carswell.

Discussion

[9]    The object of a claim for rectification is to bring a document which was intended to record or give effect to prior agreement into harmony with that prior agreement.1 It is not the agreement that is rectified, but the incorrect manner in which the common intention of the parties has been expressed in the document sought to be rectified.2

1      Lovell and Christmas Ltd v Wall (1911) 104 LT 85 (CA).

2      Dundee Farm Ltd v Bambury Holdings Ltd [1978] 1 NZLR 647 (CA).

[10]   I am satisfied that the trust deed was settled by Mr and Mrs Carswell on the basis that while they settled the family home on the trust, they would remain discretionary beneficiaries of the trust. I am also satisfied that the trust has been operated on the basis that the settlors were discretionary beneficiaries of the trust. There is unfortunately no power in the trust deed to vary the terms of the trust or to add discretionary beneficiaries.

[11]   I therefore order in reliance on the doctrine of rectification, pt 19 and rr 19.5 and 17.9 of the High Court Rules and the inherent jurisdiction of the High Court, that cl 1.2 (Definition of Discretionary Beneficiary) of the D & S Carswell Family Trust settled by deed of trust dated 1 May 2000 be rectified so that Shirley Anne Carswell and her husband, Robert Douglas Carswell, being the settlors of the trust, are included as discretionary beneficiaries of the trust.

Woolford J