Elizabeth Ann Bensaude Family Trust (No. 2)

[2022] NZHC 1214

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2022-485-135 [2022] NZHC 1214

UNDER

Part 18 of the High Court Rules 2016

AND UNDER

S 124 of the Trusts Act 2019

IN THE MATTER OF

The Elizabeth Ann Bensaude Family Trust (NO. 2)

BETWEEN

ELIZABETH ANN BENSAUDE, LOUISA SHANNON and AKA TRUSTEES 2

LIMITED as trustees of the Elizabeth Ann

Bensaude Family Trusts (NO. 2) Applicants/ Plaintiffs

Telephone conference hearing:	26 May 2022
Appearances:	G F Kelly and A S Cavanaugh
Judgment:	27 May 2022

JUDGMENT OF GENDALL J

IN RE ELIZABETH BENSAUDE [2022] NZHC 1214 [27 May 2022]

Introduction – the Present Application

[1]    This re-settlement application made under s. 124 of the Trusts Act 2019 is brought by the plaintiffs Elizabeth Ann Bensaude, Louisa Shannon and AKA Trustees 2 Limited as trustees of the Elizabeth Ann Bensaude Family Trust (No. 2) (the Bensaude Trust). Those trustees of the Bensaude Trust have applied to resettle the Trust assets on a new trust known as the JJ Family Trust. The JJ Family Trust was created under a deed of trust dated 14 December 2021. The JJ Family Trust is settled by Elizabeth Ann Bensaude. It has as its trustees Elizabeth Ann Bensaude, Louisa Shannon and AKA Trustees 2 Limited.

[2]    The Bensaude Trust was settled on 12 January 1993 by Elizabeth Bensaude’s mother Joyce Johnston. It has assets now of approximately $4 million which are primarily investments.

[3]The beneficiaries of the Bensaude Trust are:

(a)Elizabeth Bensaude

(b)Her late husband, Daniel

(c)Her children, Louisa Shannon (now aged 57) and Oliver Bensaude (now aged 54).

(d)Her grandchildren

(e)Her great-grandchildren

(f)Such other members of her family as are described in the trust deed.

[4]    Elizabeth Bensaude deposes in her 9 March 2022 Affidavit filed herein that at present she has two grandchildren being the  children  of  Louisa,  who  are  Benjamin William Shannon and Kate Elizabeth Shannon now aged 32 and 30 years respectively.

[5]    She says also that at present she has two great grandchildren who are Benjamin’s children. These great-grandchildren are Fergus William Shannon born on 8 October 2019 and Jake David Shannon born on 31 July 2021.

[6]    Elizabeth Bensaude notes that any future great-grandchildren of hers will also be beneficiaries of the trust.

[7]    Issues it seems have arisen with the Bensaude Trust which have led to the present application for resettlement. These issues include:

(a)The inability to distribute capital to respective beneficiaries when it would be of most benefit to them.

(b)The inability to bring forward the vesting date, should that be considered desirable at some stage in the future. With the current vesting date/ date of distribution set at 80 years from the date of execution of the current trust deed, this would be in year 2073. Elizabeth Bensaude says her daughter and son would then be 109 and 106 years of age respectively, if they were still living then.

(c)The possibility of an inequitable result between different branches of the family resulting on final distribution, as some of Elizabeth Bensaude’s children and grandchildren have had children and others have not. The JJ Family Trust names Elizabeth Bensaude’s two children as the final beneficiaries to resolve the risk of inequity.

[8]    In addition, Elizabeth Bensaude deposes in her affidavit before the Court that a further reason for the proposed resettlement is that the current trust deed contains significant limitations on how the trustees can use and deploy the capital of the Trust.

[9]    The trust deed for the Bensaude Trust also does not allow the trustees to bring forward the vesting date for the Trust.

[10]   As to the issue over beneficiaries under the Trust, Elizabeth Bensaude in her affidavit confirms that the discretionary beneficiaries of the JJ Family Trust are the

same as those named in the Bensaude Trust, with the exception of her late husband (who died) and was removed. The final beneficiaries of the JJ Family Trust however are Elizabeth Bensaude’s children rather than her grandchildren which is what the earlier trust provided. It is considered this is more appropriate in present circumstances as one of Elizabeth Bensaude’s children has had children whilst the other has not. If final distribution of the Bensaude Trust were to occur now, her son, Oliver would not benefit at all, whereas her daughter, Louisa’s two children would benefit.

[11]   Under earlier directions issued by this Court, Sally Morris was appointed as counsel for the unborn, minor and future beneficiaries of the Bensaude Trust. She has provided to this Court a detailed Memorandum dated 6 May 2022 for which I thank her. This concludes that the proposed resettlement here ought to be approved, provided it is assured that the great grandchildren of Elizabeth Bensaude are added as discretionary beneficiaries of the JJ Family Trust.

[12]In particular Ms Morris concludes:

The resettlement will only be in the interests of the Great Grandchildren if they are added as discretionary beneficiaries of the JJ Family Trust and their interest under cl. 8.4 of the JJ Family Trust Deed extends to both capital and income. In that case, the effect of the resettlement would not materially alter their interest under the Trust but would extend it by creating for them a discretionary interest in the capital of the Trust Fund.

[13]   To address these concerns that the great-children were included as discretionary beneficiaries, on 16 May 2022 Elizabeth Bensaude, as the appointor under the JJ Family Trust deed, signed a Deed of Appointment of Discretionary Beneficiaries. Under this, her great-grandchildren are included as an additional class of discretionary beneficiaries under the  Trust.  A further  concern  was  raised  by Ms Morris as counsel for those future beneficiaries. This relates to the status of the great grandchildren as final beneficiaries. Ms Morris and counsel for the applicant plaintiffs, however, have now confirmed to me that they agree this concern is directly met here by the terms of existing provisions contained in the JJ Family Trust. No issue therefore arises on this aspect.

[14]   On this basis, Ms Morris confirms her approval to the proposed resettlement in all respects.

Legal Principles

[15]   Section 124(1) empowers the Court to consent to the variation or re-settlement of a trust on behalf of minor, unborn and unascertained beneficiaries.

[16]   In considering applications under s. 124 and assessing whether consent is appropriate, the Court is required to take into account:

(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 of 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.

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

[17]   Section 124(5) precludes an order if its effect would be to reduce or remove any vested interest in the property but is not relevant for present circumstances.

[18]   In Gavin v Gavin, Mander J summarised the guiding principles in terms of any application under s 124 as follows:1

(a)The power to approve a variation is discretionary.

(b)The court may, on behalf of any beneficiary described in s.124(2) who has an interest in the property of a trust, consider any proposal to terminate, vary or resettle a trust.

1      Gavin v Gavin [2021] NZHC 550 at [15]

(c)The court’s discretion is to be exercised with reference to the factors identified in s 124(4), including the intentions of the settlor, to the extent these can be ascertained.

(d)The court can approve a scheme which conflicts with the intentions of the settlor but should not do so lightly.

(e)The court considers the trust provisions afresh if circumstances have arisen which were not foreseen or may not have been foreseeable at the time the trust was established.

(f)The court is able to approve an arrangement to the detriment of any person on whose behalf the court is giving consent, provided the effect of the orders would not reduce or remove a vested interest in the trust property.

(g)The court is to take a wide approach to benefits and detriments and arrangements and must consider the arrangements as a whole in a practical and business-like way. Indirect and intangible benefits and detriments are relevant, including the welfare and honour of the family.

(h)Difficulties may be met by amendments to the proposal or covenants by persons benefitting to make good losses to the disadvantage of other beneficiaries.

(i)An order approving a proposed variation may be conditional.

[19]    Taking all these matters into account here, and noting the clear position adopted on behalf of both Elizabeth Bensaude and Ms Morris on behalf of the minor, unborn and future beneficiaries, I am satisfied the settlement and other orders sought in this case are properly made.

[20]Orders are now made therefore pursuant to s. 124 of the Trust Act 2019:

(a)On behalf of the minor, unborn and future beneficiaries, consenting to the resettlement of the assets of the Elizabeth Ann Bensaude Family Trust (No. 2) onto the JJ Family Trust: and

(b)That the trustees’ costs and the costs of counsel for the minor unborn and future beneficiaries are to be paid from the trust fund on an indemnity basis.

Gendall J

Solicitors: .Greg Kelly Law, Wellington