Dagmar Girardet Family Trust

[2024] NZHC 2201

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-394

[2024] NZHC 2201

IN THE MATTER

of the DAGMAR GIRARDET FAMILY TRUST

UNDER

Part 19 of the High Court Rules 2016

AND

UNDER

Sections 122–125 of the Trusts Act 2019 and the inherent jurisdiction of the High Court to supervise the administration of trusts

BETWEEN

RAYMOND GOUBITZ and CANDIDA

TRUSTEE COMPANY LIMITED, both as

trustees of the DAGMAR GIRARDET FAMILY TRUST

Applicants

Hearing:	On the papers
Counsel:	K H Lawrence and A S Cavanaugh for Applicants
Judgment	7 August 2024

JUDGMENT OF RADICH J

[1]                The applicants, who are the trustees of the Dagmar Girardet Family Trust (the Trust), seek a set of orders that would enable a variation to the trust deed to take effect and which would then enable them to sign a restated trust deed, reflecting modern drafting practice.

[2]                If approved, the orders would provide for a level of consistency between the trust deed for the Trust and the trust deed for a related trust – the Candida Trust –

RE DAGMAR GIRARDET FAMILY TRUST [2024] NZHC 2201 [7 August 2024]

which was restated following my decision in Re Candida Trust of 29 April 2024.1 The circumstances that led to, and the grounds for, that decision are similar to those which lead to this application.

[3]In particular, orders are sought:

(a)approving a deed of variation of trust dated 12 December 2023 on behalf of unborn and future beneficiaries of the Trust under s 124 of the Trusts Act 2019;

(b)waiving the requirement that the settlor’s adult grandchildren, their spouses (if any) and the trustees of any trusts which qualify as discretionary beneficiaries consent to the deed of variation under s 125 of the Trusts Act; and

(c)by way of a direction under the inherent jurisdiction of the Court confirming that the applicants may sign a new restated trust deed (incorporating the deed of variation of 12 December 2023 and an earlier variation) and that they may use it as their operating document.

[4]                The variation, to which the orders sought would give effect, is intended to address the enactment of the Trusts Act, to extend the vesting date of the Trust so that it can be used for the longer-term benefit of the settlor’s descendants, to modernise the terms of the Trust and to protect against increased risk of relationship property claims from spouses on separation.

Directions for service, representation and conduct of proceeding

[5]                In my minute of 17 July 2024, I made orders, on the applicants’ without notice interlocutory application, granting leave to bring the application by way of originating application and dispensing with service of the application and supporting documents on any of the beneficiaries of the Trust.

1      Re Candida Trust [2024] NZHC 976.

Background

[6]                The  Trust  was  settled  by  Dagmar  Anja  Lily  Girardet  by  deed  dated   22 September 1988. Mrs Girardet was married to Klaus Girardet, who passed away on 27 May 2022.

[7]                Mr and Mrs Girardet had three children together – Stephanie Katja Bertha Girardet (Stephanie), Antonia Barbara Elisabeth Girardet (Antonia) and Sibilla Anja Beate Girardet (Sibilla).

[8]                The Trust holds significant assets including shares in Candida Stationery Ltd, Candida Stationery Pty Ltd and Adidnac Pty Ltd. It will vest on the date of death of the last to die of Mr Girardet, Mrs Girardet, Stephanie, Antonia or Sibilla, or such earlier date as the trustees might appoint.

[9]                The final beneficiaries of the Trust are Stephanie, Antonia and Sibilla. The trust deed contains gift-over provisions in the event that one of them dies before the vesting date leaving children.

[10]            Following the death of Mr Girardet, the discretionary beneficiaries of the Trust are Stephanie, Antonia and Sibilla, the descendants and spouses (or widows or widowers) of Stephanie, Antonia and Sibilla, and their descendants, and trusts associated with those beneficiaries.

The 2023 deed of variation

[11]            A deed of variation, dated 12 December 2023, was signed by the applicants, together with Mrs Girardet, Stephanie, Antonia, Sibilla and Antonia’s husband pursuant to s 122 of the Trusts Act.2 By way of summary, the deed of variation:

(a)extends the life of the Trust to 125 years;

(b)prescribes the priority of classes of discretionary beneficiaries;

2      Neither Stephanie nor Sibilla are married. Their de facto partners are not, under the terms of the Trust, beneficiaries. Accordingly, they are not required to consent to the 2023 deed of variation.

(c)removes spouses, widows and widowers of the final beneficiaries as a separate class of discretionary beneficiaries, and removes Mr Girardet who has passed away;

(d)specifies that Stephanie, Antonia and Sibilla are “primary discretionary beneficiaries” and their children are “secondary discretionary beneficiaries”;

(e)includes a power for the trustees to add or remove discretionary beneficiaries;

(f)includes the power to vary the trust deed;

(g)updates the trust deed comprehensively to reflect modern drafting practice and the terms of the Trusts Act; and

(h)makes stylistic changes to modernise and simplify the language.

Approval of the December 2023 deed of variation on behalf of Mrs Girardet’s adult grandchildren, their spouses and associated trusts

[12]            Under s 124 of the Trusts Act, the Court may, on behalf (amongst others) of a person who may acquire beneficial interests at a future date or a future person who may acquire a beneficial interest, approve a variation of a trust. In considering the application of the provision, the Court is to take into account the following factors:3

(a)The nature of any person’s interest in the trust property and the effect of the proposed order on that interest.

(b)The benefit or detriment that may result to any person with an interest in the trust property if the Court makes or refuses to make the proposed order.

3      Trusts Act 2019, s 124(4).

(c)The intentions of the settlor of the Trust in settling the Trust, if it is practicable to ascertain those intentions.

[13]            The amendments contained in the variation are such that it is able to be used for the longer-term benefit of Mr and Mrs Girardet’s descendants. It better provides for their interests and it safeguards and modernises the Trust for their benefit. Their interests are improved considerably through the amendments specifying that they are secondary discretionary beneficiaries and through the removal of spouses, widows and widowers of the former final beneficiaries as a separate class of discretionary beneficiary.

[14]            Generally, the Trust will be able to last for longer, providing greater potential for future asset-planning and improved creditor and relationship property protections for future generations.

[15]            As Mrs Girardet has said in her evidence in support of this application, when she settled the Trust, her intentions and wishes were for her family and descendants to benefit from the assets that she and Mr Girardet built up and for the earlier generation of beneficiaries to take priority, in each case, over later generations.

[16]            It could be said that the power to add or remove discretionary beneficiaries is of detriment to future descendants. However, I accept the point made by counsel for the applicants that the power will be held by the trustees and that, therefore, it is subject to fiduciary obligations on their part.4 The power does not permit the removal of final beneficiaries or affect their interests and is a common feature in modern trust deeds, allowing trustees to respond to unforeseen situations, including unexpected family developments.

[17]            The removal of future spouses as a class of discretionary beneficiaries increases the prospect of the Trust assets being available for Mrs Girardet’s descendants by adding protection against claims from spouses and partners. The

4      Reference is made by the applicants to McLaren v McLaren [2017] NZHC 161 at [63]–[69], emphasising that the obligations include using the powers for a proper purpose, not capriciously, and in accordance with fiduciary constraints.

removal provides clarity for all concerned. It means that discretionary beneficiaries can enter into future relationships with more confidence.

[18]            Future trusts associated with beneficiaries are not disadvantaged. The class remains. The variations there are only to descriptive wording.

[19]            In balancing the interests of those whose interests are to be considered under s 124(4) of the Trusts Act, I am satisfied that the benefits to the future and unborn beneficiaries outweigh comfortably the more limited detriments to future spouses. The interests of the Girardet family as a whole will be protected, as was Mrs Girardet’s wish and intention. The order may be made under s 124.

Waiver of requirement of consent from adult grandchildren, spouses and associated trusts to the December 2023 deed of variation

[20]            Stephanie has two children and Sibilla has three. The consent of those children to the 2023 deed of variation is required unless waived by the Court under s 125.

[21]            Stephanie and Sibilla’s children are aged between 19 and 25 and, while they are aware that their grandparents settled various assets on trust, they are not aware of the extent of the Trust assets. The 2023 deed of variation does not change their beneficial entitlements. They remain discretionary beneficiaries of the Trust and contingent final beneficiaries in the event of the death of their parent before the vesting date. Mrs Girardet has, in her evidence, explained her intentions. She has said that, while her grandchildren knew that she and Mr Girardet were successful in business, they are not aware of the extent of the wealth of either the Trust or the related Candida Trust. She prefers that this remains the case for the time being. She has explained that she and Mr Girardet raised their children to value education and hard work, that they did not grow up with wealth and that they all developed a strong work ethic. They are now all involved in the Candida stationery business.

[22]            Mrs Girardet has gone on to explain that she would prefer that her grandchildren, as still relatively young adults, have the opportunity to work to establish their own independence, with support where required, before they come to appreciate the extent of the assets held in trust. This approach will, she believes, give

the best chance of the Trust fund being maintained over the long term and being available for the benefit of future generations. Accordingly, she has said she would prefer that her grandchildren are not involved in this application unless it is absolutely necessary.

[23]            The interests of the grandchildren are affected only to the extent that the terms of the variation prescribe the order of the priority of discretionary beneficiaries and include a power to remove discretionary beneficiaries. However, as discussed, the trustees would be expected to exercise their powers in accordance with their fiduciary obligations. Moreover, Mrs Girardet has given evidence that the priorities specified reflect her intentions and the trustees would be expected to consider those priorities. Accordingly, it is in my view in order for the  waiver to be granted in  relation to  Mrs Girardet’s grandchildren.

[24]            Waiver is sought also in relation to any spouses of the grandchildren (there are none) and trusts associated with the beneficiaries.

[25]            The deed of variation does not affect the class for trusts associated with beneficiaries other than to modify the wording describing it. I am satisfied that the consent of the class of trusts can be waived without issue.

[26]The order may be made under s 125.

Restated trust deed

[27]            On the basis of the orders the Court will make, the deed of variation will take immediate effect. A direction under the Court’s inherent jurisdiction confirming that the applicants as trustees may sign a new restated trust deed which incorporates the terms of the December deed of variation, and to use it as their operating document from here, is appropriate in the circumstances.5

5      The Court is empowered to act effectively in the supervision and management of trusts: Clark v Karaitiana [2011] NZCA 154 at [38].

Costs

[28]            Because the application has been brought by the trustees reasonably and in good faith, an order is appropriate to confirm that all costs relating to this proceeding are payable from the Trust fund in accordance with trustees’ rights to an indemnity under s 81 of the Trusts Act.

Orders

[29]I make the following orders and directions:

(a)An order approving a deed of variation of trust dated 12 December 2023 on behalf of the unborn and future beneficiaries of the Dagmar Girardet Family Trust, under s 124 of the Trusts Act 2019.

(b)An order waiving the requirement that the settlor’s adult grandchildren, their spouses (if any), and the trustees of any trusts which qualify as discretionary beneficiaries consent to the deed of variation of trust dated 12 December 2023, under s 125 of the Trusts Act 2019.

(c)A direction under the inherent jurisdiction of the Court confirming that the applicants as trustees may sign a new restated trust deed (incorporating the deed of variation dated 12 December 2023 and an earlier variation), and use this as their operating document; and

(d)An order that the applicants’ costs in respect of this application be paid from the Trust on a solicitor-client basis.

Radich J

Solicitors:

Greg Kelly, Wellington for Applicants