Client Trustee Services Limited v Khodaverdi - [2023] NZHC 1772

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2022-412-000092

[2023] NZHC 1772

IN THE MATTER OF THE LK FAMILY TRUST

AND IN THE MATTER OF

THE TRUSTS ACT 2019

BETWEEN

CLIENT TRUSTEE SERVICES LIMITED

Applicant

AND

LAURA MICHELLE KHODAVERDI

Respondent

Hearing: 5 July 2023

Appearances:

J M McGuigan and D R Weatherley for the Applicant

Judgment:

7 July 2023

JUDGMENT OF GENDALL J

Introduction

[1] The applicant Client Trustee Services Limited (CTSL) applies for orders under s 112 and 114 of the Trusts Act 2019 that it be removed as a trustee of the L K Family Trust (the Trust) and the Public Trust appointed in its place.

[2]In addition, in that application, CTSL specifically seeks at 1.1 a further order:

…pursuant to Section 133 of the Trusts Act 2019 and/or pursuant to the Court’s inherent jurisdiction that Client Trustee Services Ltd, or any trustee appointed in its place, abide the decision of the Family Court in Khodaverdi v Khodaverdi (FAM-2021-012-000211).

CLIENT TRUSTEE SERVICES LIMITED v LAURA MICHELLE KHODAVERDI [2023] NZHC 1772 [7 July 2023]

[3] The Trust was settled on 28 February 2018 by the respondent, Laura Khodaverdi (Laura). Laura and CTSL have been trustees since the Trust was settled.

[4] The sole asset of the Trust as I understand it is a property at 45 Hunt Street, Dunedin where Laura and her former husband, Darren Khodaverdi (Darren), used to reside. The property was purchased on 13 March 2018. Since that time, again as I understand the position, Laura has left New Zealand, has not participated in trustee decision-making and has failed to respond to CTSL’s or her former husband Darren’s attempts to contact her. In the meantime, Darren has paid all mortgage payments, insurance premiums, rates and other outgoings in relation to the property.

[5] Darren has brought the Family Court relationship property proceedings against Laura (FAM-2021-012-000211) noted in [2] above in the Dunedin Family Court. Laura has been served but has taken no steps in the proceeding. An issue arises in the Family Court as to the division of the Hunt Street property and whether it may even be relationship property. Orders of the Family Court directed the trustees of the Trust to be served. CTSL has advised the Family Court that it is seeking directions from this Court as to whether it is required to defend the Family Court proceedings.

[6] Counsel for CTSL, Ms McGuigan, confirms that numerous attempts have been made to contact Laura to have her engage in the Family Court proceeding and other Trust decisions but she has not responded. Consequently, CTSL has sought the orders from this Court as I have noted above:

(a)that CTSL (or the Public Trust in its place) abides the decision of the Family Court in the relationship property proceedings;

(b)removing CTSL as a trustee of the Trust; and

(c)appointing the Public Trust as a replacement trustee of the Trust.

[7] For some time these proceedings were on…

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.

Keep reading for free

Create a free CaseChat account to read Client Trustee Services Limited v Khodaverdi and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2023] NZHC 1772
Decision Date: 7 July 2023

CaseChat Overview and Summary

The High Court of New Zealand, Dunedin Registry, heard an application by Client Trustee Services Limited (CTSL) to be removed as a trustee of the L K Family Trust and for the Public Trust to be appointed in its place. Laura Khodaverdi, the other trustee, has been unresponsive and absent from New Zealand, impeding the trust's administration. Additionally, CTSL sought directions on whether it should defend family court proceedings concerning the trust's sole asset, a property at 45 Hunt Street, Dunedin. The court had to decide whether CTSL should be removed as a trustee, whether the Public Trust should be appointed as a replacement, and whether CTSL should abide by the family court's decision.

The court found that removing CTSL as a trustee and appointing the Public Trust was necessary and desirable, as the trust could not function effectively with Laura's absence and unresponsiveness. The court relied on sections 112 and 114 of the Trusts Act 2019, which allow the court to remove a trustee and appoint a replacement if it is difficult or impracticable to do so without judicial assistance. However, the court decided not to grant the direction sought under section 133 of the Trusts Act, which would require the trustees to abide by the family court's decision, until the Public Trust, now appointed as a replacement trustee, had an opportunity to respond. The court emphasised that the interests of all beneficiaries should be considered, and it was inappropriate to make such an order without the Public Trust's input.

The court ordered CTSL's removal as a trustee and the Public Trust's appointment as a replacement, and it adjourned the consideration of CTSL's application for directions on the family court proceedings until the Public Trust communicated its position. The court also ordered that CTSL was entitled to reasonable costs and disbursements of and incidental to the application.

Orders