Clarke v Duffy - [2017] NZHC 2025

IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY

CIV-2017-476-000043 [2017] NZHC 2025

UNDER THE TRUSTEE ACT 1956

IN THE MATTER OF

AN APPLICATION FOR CERTAIN ORDERS AND DIRECTIONS AFFECTING THE ONGOING ADMINISTRATION OF THE DUFFY FAMILY TRUST

BETWEEN

GARY JOHN CLARKE Applicant

AND

MARY HAY DUFFY Current Trustee

Hearing: Dealt with on the papers

Counsel:

W van Vuuren

Judgment:

23 August 2017

JUDGMENT OF GENDALL J

Introduction

[1] Applications before the Court in this proceeding seek orders that it is said are necessary to enable ongoing administration of a trust known as the Duffy Family Trust (the Trust) which has reached a “road-block”. Presently it seems the Trust is unable to deal with or make decisions in respect of its Trust property. This includes two properties at Timaru and a Trust bank account. These difficulties have resulted because of the death of one of the three current Trustees and the medically certified mental incapacity of a second Trustee.

[2] Overall, what is sought here is the approval of this Court to:

RE THE DUFFY FAMILY TRUST [2017] NZHC 2025 [23 August 2017]

(a) Arrangements in respect of the Trusteeships, including the removal of the incapacitated Trustee;

(b)Vesting of the Trust property in a proposed new Trustee and the continuing Trustee; and

(c) Approval of a new independent Trustees’ indemnity clause.

Background facts

[3] The Trust was settled by Deed on 1 May 2000. The Settlors were Arthur Lawrence Duffy (Arthur) and Mary Hay Duffy (Mary). The initial Trustees of the Trust were Arthur and Mary and the applicant Gary John Clarke (Mr Clarke).

[4] Arthur has died. The current Trustees are Mary and the applicant Mr Clarke.

[5] The beneficiaries of the Trust are the Settlors Mr and Mrs Duffy, their children and grandchildren, including their spouses, together with any other person appointed as a beneficiary under the Trust Deed. Distribution of income and capital is at the discretion of the Trustees but then at the final distribution date, which is to be 1 May 2040 (or such earlier date as the Trustees decide), the Trust fund is to be distributed to the final beneficiaries. Those final beneficiaries are the Settlors’ grandchildren and/or any other person appointed by the Trustees.

[6] As I have noted, Arthur has died. Mary suffers from serious dementia. There is medical evidence before the Court to confirm this. The applicant, Mr Clarke, has filed an originating application seeking:

(a) An order under r 19.5 High Court Rules to permit these proceedings to be commenced by originating application.

(b) An order that service of the proceeding on Mary and any of the Trust’s

beneficiaries be dispensed with.

(c) An order removing Mary as a Trustee of the Trust.

(d)An order vesting property of the Trust at 194 Rocky Hundreds Road, Timaru and at 23 Selwyn Street, Timaru and a bank account with the Co-operative Bank, being assets currently held in the names of Arthur, Mary and Mr Clarke as Trustees into the names of the…

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 Clarke v Duffy

Details

AGLC: Clarke v Duffy [2017] NZHC 2025
Case: [2017] NZHC 2025
Decision Date: 23 August 2017

CaseChat Overview and Summary

This case concerns the Duffy Family Trust, which has reached a stalemate due to the death of one Trustee and the incapacity of another. The applicant, Gary John Clarke, seeks various orders to enable the ongoing administration of the Trust, including the removal of the incapacitated Trustee, vesting of Trust property in a new Trustee, and the approval of an indemnity clause. The High Court of New Zealand, Timaru Registry, dealt with the matter on the papers, with counsel W van Vuuren representing the applicant. The Court granted the relief sought by the applicant, resulting in several orders being made.

The legal issues before the Court were whether the Court had the power to remove the incapacitated Trustee, appoint a new Trustee, vest the Trust property in the new Trustee, and amend the Trust Deed to include an indemnity clause. The Court found that it had the power to make these orders under the Trustee Act 1956 and its inherent jurisdiction over trusts. The Court also found that the orders sought were in the best interests of the beneficiaries and the Trust as a whole.

The Court first granted leave for the proceedings to be brought by way of originating application and dispensed with service on the incapacitated Trustee and beneficiaries. The Court then removed Mary Hay Duffy as a Trustee due to her incapacity and appointed Aoraki Trustees Co (2013) Limited as a replacement Trustee. The Court also made vesting orders to transfer the Trust property to the new Trustees and amended the Trust Deed to include the indemnity clause. Finally, the Court ordered that the costs of the application be paid from the Trust resources.

In conclusion, the Court granted all the orders sought by the applicant, enabling the ongoing administration of the Duffy Family Trust. The Court found that it had the necessary power to make these orders under the Trustee Act 1956 and its inherent jurisdiction, and that the orders were in the best interests of the beneficiaries and the Trust as a whole.

Orders