Estate of Doak

[2022] NZHC 3111

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2022-485-426

[2022] NZHC 3111

IN THE MATTER

of the Trusts Act 2019

AND

IN THE MATTER

of an application by KIERON LYNDSAY DOAK for an order authorising Kieron Lyndsay Doak as trustee of the estate of

Edith Rydolphina Doak to distribute trust property, disregarding the share of Arthur Wayne Doak

Hearing:	On the papers
Appearances:	K W Clay for the Applicant
Judgment:	25 November 2022

JUDGMENT OF COOKE J

[1]                  Edith Rydolphina Doak died at Christchurch on 15 July 2015. Kieron Lyndsay Doak, the applicant, is her son and the executor of her estate. He seeks an order under s 136 of the Trusts Act 2019 allowing the distribution of the estate disregarding the share of his brother Arthur Wayne Doak (‘Wayne’), who along with the applicant, is the only other beneficiary under Edith’s will.

[2]                  The application is supported by affidavits from the applicant sworn 25 July 2022 and an affidavit from Verdi Van Beek sworn 27 September 2022. It was first called before me in the Judge’s Chambers List on 12 September 2022. At that stage I directed the applicant to file written submissions in support of the application following which I would determine it on the papers. Those submissions have subsequently been filed.

RE ESTATE OF DOAK [2022] NZHC 3111 [25 November 2022]

Background

[3]                  The applicant and his brother were separated from a young age when Wayne went to live with another family in Christchurch in 1961 at the age of 13. In 1968 he moved to Australia. It was understood by the applicant the move was permanent. It appears there was little contact with Wayne after that. There was some contact by way of letters, but no contact after the 1960s. When the brothers’ father died in 1995, attempts to contact Wayne were unsuccessful.

[4]                  Under Edith’s will, the applicant is to be gifted all of her furniture and other personal effects, while all other property was to be gifted to the applicant and his brother in equal shares. Edith originally appointed her own brother as the sole executor and trustee of her estate, however he passed away in 1997. This led to the applicant applying for the grant of letters of administration in 2016 and being subsequently appointed administrator of his mother’s estate. The net assets of the estate to be distributed are valued at approximately $250,000.

[5]                  At the time of the 2016 application the applicant made enquiries into the whereabouts of Wayne. He instructed the estate’s solicitors, Cameron & Co, to engage services to attempt to locate him. Reports were obtained from two private investigator firms in 2017.

[6]                  As a consequence of inquiries of the New Zealand Customs Service it was confirmed that Wayne had not returned to New Zealand since 1995. The reports of the private investigators also indicated that there had also been no trace of Wayne in Australia, including that there was no record of his death, or any record of him on any public indices, commercial or licensing databases, property or rental databases, Court or Correctional databases, or on the internet or social network sites. There is also no record of him receiving pension or state benefits in New Zealand or Australia as might be expected given his age.

[7]                  Prior to the filing of the proceeding a social media search was undertaken and no record of Wayne could be found. Accordingly the applicant deposes that he does not know whether Wayne is alive or dead, and if he is alive where he is living. In his report Mr Van Beek advises that he has exhausted all avenues of inquiry in

New Zealand and Australia. He indicates that he believes it likely Wayne is living in a country other than New Zealand or Australia, and that it is unlikely he has died as this would likely have been reported to the family.

Discussion

[8]Section 136 of the Trusts Act provides:

136Trustee may apply to court to allow distribution of missing beneficiaries’ shares

(1)The court may, on application by a trustee, make an order authorising the trustee to distribute trust property—

(a)as if a potential beneficiary or a class of potential beneficiaries does not exist or never existed or has died before a date or an event specified; and

(b)if, because of the order, it is not possible or practicable to determine whether any condition or requirement affecting a beneficial interest in the property or any part of it has been complied with or fulfilled, as if that condition or requirement had been or had not been complied with or fulfilled.

(2)The court may make an order only if it is satisfied that—

(a)reasonable measures have been taken to bring the notice of the potential beneficiary or beneficiaries their potential beneficial interest or interests; and

(b)at least 60 days have passed since the last of those measures was taken; and

(c)no potential beneficiary with respect to whom an order is sought has come to the attention of the trustee as a result of those measures, or the claim of any such beneficiary may be disregarded in the circumstances.

[9]                  Prior to the Trusts Act 2019 s 76 of the Trustee Act 1956 contemplated that the trustees would engage in advertising to locate missing beneficiaries, usually in newspapers.1 Section 136 replaced s 76 of the Trustee Act 1956 following the review by the Law Commission who recommended a more flexible approach to this issue.2 In Hodgson v Hodgson Thomas J explained:3

1      Trustee Act 1956, s 76.

2      See Chris Kelly and others, Garrow and Kelly: Law of Trusts and Trustees (8th ed, LexisNexis, Wellington, 2022) at [23.188]–[23.191].

3      Hodgson v Hodgson [2021] NZHC 906 at [15]. .

Following that review, Parliament enacted the Trusts Act 2019, which included s 136. That provision is significantly shorter, and uses broader, more flexible language to determine whether adequate enquiries have been undertaken. Specifically, the test is set out in s 136(2), and includes the threshold of the applicant having taken “reasonable measures” to bring to the notice of the potential beneficiary their interest in the estate.

[10]              In Hodgson the Court declined the application due to a number of shortcomings with the steps taken in that case.4 The Court also noted that “case law concerning and applying s 76 remains instructive”.5 Young v Young involved similar circumstances to the present case.6 The applicant was the sole executor of the estate of his late father. He sought orders under s 76. His brother had not been seen or heard of since 1988 despite extensive searches to locate him. The steps taken included retaining private investigators on three occasions, internet-based searches and placing advertisements in three papers to which there was no response.7 The Court granted the order authorising distribution of the estate as if the applicant’s brother had passed away. The Court directed the distribution be made to the brother’s son instead, which appeared to be consistent with the testator’s wishes.

[11]              In the present case the applicant has taken a number of steps as described in [5]–[7] above, including:

(a)instructing the estate’s solicitors to engage a number of persons to attempt to locate Wayne prior to his application for grant of administration;

(b)undertaking the searches in New Zealand and Australia described in the reports from Avon Investigations dated 16 August 2016 and Corporate Risks dated 13 October 2017, which confirm that Wayne cannot be found.

(c)conducting a further social media search, again without success.

4      At [19]–[22].

5 At [16].

6      Young v Young [2013] NZHC 1396.

7      At [9] as directed by the Court.

[12]              It seems to me that one of the important changes introduced by s 136 is that there is no longer a need to follow a formulaic approach involving public advertising. Rather what is required is the taking of reasonable measures. The Court’s assessment of the measures should focus on practical considerations, including the size of the beneficial interest in issue when considering what is reasonable in the circumstances. If there is uncertainty as to what steps would be reasonable it would be open for an applicant to apply to the Court for directions before taking steps.

[13]              As part of taking reasonable measures, particularly in relation to a person who is likely to have left New Zealand, inquiries are appropriate to ascertain where the person is likely to be. I accept on the basis of the evidence here, and the enquiries conducted in both New Zealand and Australia, that Wayne is unlikely to be in either country. In those circumstances, any attempts to engage in advertising would not appear to be reasonable. The position may be different in relation to a person likely to be still in New Zealand. This is a case where, literally, it cannot be known where in the world Wayne is. I also accept that all reasonable lines of inquiry have been exhausted. It would appear that Wayne has elected to put his life in New Zealand, and his family, behind him, and to leave without trace.

[14]              For these reasons, and unlike the situation in Hodgson, I accept that all reasonable measures have been taken to give notice to Wayne of his potential beneficial interest, and that the requirements of s 136 are satisfied.

[15]              I make an order that the applicant may distribute all the trust property of the estate disregarding the share of Arthur Wayne Doak and direct that the costs of and incidental to this proceeding are to be paid from the estate.

Cooke J