Codymo Trustees Limited v Chapman

[2016] NZHC 1007

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-3025 [2016] NZHC 1007

BETWEEN

CODYMO TRUSTEES LIMITED, KIM

LESLEY SAWYER AND BRETT AARON SAWYER AS TRUSTEES OF THE CHAPMAN SAWYER FAMILY TRUST

Plaintiffs

AND

PAUL RAYMOND CHAPMAN First Defendant

ASTERON LIFE LIMITED Second Defendant

Hearing:	On the Papers
Counsel	A Sorrell for Plaintiffs S P Bryers for First Defendant B Ward for Second Defendant
Judgment:	17 May 2016

JUDGMENT OF FOGARTY J

This judgment was delivered by Justice Fogarty on

17 May 2016 at 4.30 p.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors:

Devonport Law, Auckland

Bell Gully, Auckland
Copy to:

A Sorrell, Auckland

S Bryers, Auckland

CODYMO TRUSTEES LIMITED v PAUL RAYMOND CHAPMAN [2016] NZHC 1007 [17 May 2016]

[1]      In these proceedings the plaintiffs and the first defendant as trustees seek the Court’s direction approving their settling of a dispute as to an asset of the Chapman Sawyer Family Trust.

[2]      The parties have reached a settlement and invite the Court to by direction approve the trustees entering into the settlement exercising its power in s 66 of the Trustee Act 1956 which provides:

66       Right of trustee to apply to Court for directions

(1)       Any trustee may apply to the Court for directions concerning any property subject to a trust, or respecting the management or administration of any such property, or respecting the exercise of any power of discretion vested in the trustee.

(2)       Every such application shall be served upon, and the hearing may be attended by, all persons interested in the application or such of them as the Court thinks expedient.

[3]      One of the advantages of the trustees is then to obtain the statutory indemnity by operation of s 69 of the Act which provides:

69       Protection of trustee while acting under direction of Court

Any trustee acting under any direction of the Court shall be deemed, so far as regards his own responsibility, to have discharged his duty as such trustee in the subject-matter of the direction, notwithstanding that the order giving the direction is [subsequently] invalidated, overruled, set aside, or otherwise rendered of no effect:

Provided that this subsection shall not extend to indemnify any trustee in respect of any act done in accordance with any such direction if he has been guilty of any fraud or wilful concealment or misrepresentation in obtaining the direction or in acquiescing in the Court making the order giving the direction.

Narrative

[4]      On 1 October 2013 the first defendant owned outright an investment portfolio described as Asteron Life Policy No.H879389P, (hereafter referred to as “the investment portfolio”, managed by the second defendant and at that time having a value said by the second defendant to be $453,436.34.

[5]      By a Deed dated 16 October 2013 the first defendant, who I will call Paul, as the parties do, transferred this investment portfolio to the then trustees of the Chapman Sawyer Family Trust, being Codymo Trustees Ltd and himself, Paul.

[6]      A few days later, by Deed dated 23 October, Kim and Brett Sawyer were appointed additional trustees of the Trust.  On the same day Paul gave effect to the Deed  by  signing Asteron  Life  Ltd’s  form  of  transfer  in  favour  of  the  trustees, including himself.

[7]      The formal requirements to give effect to the transfer were not completed by Paul, who had not obtained the prior written consent of Asteron Retirement Investment Ltd, the trustee of the relevant Asteron Fund.  Before this happened, Paul then directed the second defendant not to complete the transfer.   Since then some money has been withdrawn by Paul from the investment portfolio.

[8]      In relation to the transaction and related transactions on which the plaintiffs rely, issues have been raised by Paul as to his capacity at the time to enter into those transactions,  undue  influence,  unconscionability,  and  whether  he  was  properly advised in relation to the context and effects and implications of the transactions.

[9]      The plaintiffs have consistently denied these contentions and have sought to uphold the transfer of the investment portfolio.

[10]     Since then Paul has had the advice of counsel.  He is settled in his objective of separation of interest from the Trust.   He proposed this be achieved by being acknowledged as the owner of the investment portfolio free of any debt to the Trust and resigning as a trustee of the Trust and being excluded as a beneficiary of the Trust.

[11]     To that end, the plaintiffs, first defendant and the second defendant have entered  into  a  settlement  agreement  dated  14  April  2016.    The  agreement  is expressed to  be  in  full  and  final  settlements  of all  matters between  the parties including, but not limited to, any claims the plaintiffs or Paul may have against Asteron in any way arising from the property in dispute be any claim the plaintiffs

and Paul may have against each other in relation to their respective conduct as trustees.  The settlement and accompanying Deeds are executed in escrow pending a direction to the trustees of approval to the terms by the High Court.

[12]     The High Court needs to approve three executed document currently being held in escrow. They are:

(a)      “Deed of Variation varying appointors”.  By this Deed Paul assigns all his rights as appointor  and surviving settlor to Brett Sawyer and Kim Sawyer, two of the current trustees.

(b)“Deed excluding beneficiary”.   By this Deed Paul gives irrevocable notice to the trustees for the time being of the Trust that as from the date of the Deed he declares himself forever excluded from the class of beneficiaries of the Trust.  All the trustees, including Paul, agree they will make no further claim in the future regarding their acts or omissions in that capacity. All record they have received separate and independent advice.

(c)      “Deed changing trustees”.  By this Deed Paul retires irrevocably from the office of trustee.   He is discharged from the Trust effective immediately.   This is by consent of the appointors and continuing trustees and the vesting of the Trust assets in the continuing trustees. The appointors and continuing trustees each declare the Trust assets vest in and are transferred to them as joint tenants upon Trust and subject to the powers and provisions of the Trust Deed.

[13]     The continuing trustees agree to indemnify Paul from and against all liability as retiring trustee arising out of the conduct of the Trust.  They declare they hold the Trust assets when vested or transferred to them upon the Trust and subject to the powers and provisions of the Trust Deed.   Likewise they have declared they have received separate and independent advice.

[14]     This Court pursuant to the aforesaid s 66 of the Trustee Act and in exercise of the inherent powers of this Court as guardian of trusts, by direction approves the trustees entering into the settlement between the parties.   As a result the Deeds executed in escrow now take effect.