Eyal Corporate Trustees Ltd

[2025] NZHC 1944

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2025-485-171

[2025] NZHC 1944

UNDER

Part 19 of the High Court Rules, ss 122, 124, 125 and 133 of the Trusts Act 2019 and the inherent jurisdiction of the High Court

RE

EYAL CORPORATE TRUSTEES LIMITED

as trustee of the Eyal Development Trust Applicant

Hearing:

On the papers

Counsel:

L M McKeown for the Applicant

A S Cavanaugh as Counsel assisting

Judgment:

15 July 2025

Reissued:

1 October 2025

JUDGMENT OF GWYN J

[Application to approve a deed of resettlement; orders under ss 122–125 and 133 of the Trusts Act 2019]

Application

[1]    This application is brought by Eyal Corporate Trustees Ltd in relation to a proposal to resettle the assets of the Eyal Development Trust (ED Trust) on the Aharoni Investment Trust (AI Trust).

[2]The applicant has applied for the following orders:

(a)approving the proposed definition of uncertain discretionary and final contingent beneficiaries of the ED Trust under the inherent jurisdiction

RE: EYAL CORPORATE TRUSTEES LIMITED [2025] NZHC 1944 [15 July 2025]

of the Court or, in the alternative, under s 133 of the Trusts Act 2019 (Act);

(b)approving a deed of resettlement on behalf of minor, future and unascertained beneficiaries of the ED Trust, under s 124 of the Act;

(c)waiving the requirement that certain discretionary beneficiaries of the ED Trust consent to the resettlement of the ED Trust on to the AI Trust, under s 125;

(d)confirming the applicant as trustee may sign the deed of resettlement and complete the resettlement, under s 122 of the Act and the inherent jurisdiction of the Court; and

(e)approving that the applicant’s costs in respect of this application are to be paid from the ED Trust’s trust fund on a solicitor-client basis.

[3]    On 26 March 2025 Associate Judge Skelton granted leave to the applicant to bring the substantive application by way of originating application.1 Associate Judge Skelton also appointed Ms Cavanaugh as counsel to assist the court and to report on the interests of, and act for, the minor, future and unascertained beneficiaries and/or qualifying beneficiary trusts, in relation to the proposed resettlement.

Background

[4]    Eyal Aharoni (Eyal) is the economic settlor of the ED Trust and the AI Trust. The ED Trust was settled on 7 October 2003 and the AI Trust on 10 October 2003. The applicant, Eyal Corporate Trustees Limited, is a corporate trustee which is the sole trustee of the ED Trust. It has two directors, being Eyal, and David Briscoe, partner, of Duncan Cotterill. Eyal is the sole shareholder. The applicant’s constitution requires the trustee to have at least one professional director.

1      Re Eyal Corporate Trustees Ltd HC Wellington CIV-2025-485-171, 26 March 2025.

[5]    Eyal says that there are now significant assets in both trusts, largely comprising property-owning entities, and they are part of a wider asset structure including another trust settled by his wife, and a third party.

[6]    Eyal has four children, Karyn, Guy, Daniela and Ilana. He is now married to Antonietta Muollo (Etta) and was previously married to  Mira  Aharoni  (Mira).  Eyal has one grandchild, being Karyn’s daughter.

[7]The discretionary beneficiaries of the ED Trust are defined as being:

(a)Eyal (who is also the primary beneficiary and protector);

(b)Karyn, Guy and any of Eyal’s children born after 7 October 2003;

(c)any issue of the children;

(d)various trusts or settlements which include discretionary beneficiaries of the ED Trust among their objects (however excluding trusts of which any of the following are beneficiaries):

(i)the named settlor (Michael Switzer), the trustees, Eyal, Eyal’s spouse, or Eyal’s children under the age of 20 years; and

(e)Etta and Mira, only in the event that Eyal consents to a distribution to them, or in the event that Eyal, his children, and issue of any of the children have died.

[8]    The ED Trust Deed provides for charitable objects to benefit at the trustees’ discretion, with the consent of the protector.

[9]    The first class of final beneficiaries are those of the discretionary beneficiaries (or charitable objects) that are nominated in Eyal’s will. In the absence of any such nomination and appointment, the second class of final beneficiaries are “the children living at the date of final distribution” with gifts over to issue.

[10]   The third class of contingent final beneficiaries includes Etta and Mira and, if they are not living at the date of distribution, the fourth class of contingent final beneficiaries are charities to be nominated by the trustee or trustees.

Proposed resettlement of ED Trust Assets on AI Trust

[11]   It is proposed that the assets of the ED Trust are resettled on the AI Trust. The advice provided to Eyal by KPMG is that resettlement will have a number of significant benefits.2

[12]   The terms of the AI Trust appear to be essentially identical to the terms of the ED Trust, both of which have been varied by deeds of variation. The beneficiaries of the trusts are therefore the same, with one exception — in the AI Trust Eyal’s children are defined as Karyn, Guy, Daniela, Ilana and any other children Eyal may have who are born after 10 October 2003.

[13]   The applicant has raised an issue as to the interpretation of the terms of the ED Trust and, in particular, what is meant by “the children” in the various definitions used for the purposes of identifying discretionary and final beneficiaries. This is relevant to the interests of the beneficiaries the trustee must have regard to and it affects the classes of beneficiaries required to consent to the proposed resettlement (or those on whose behalf the court will need to grant approval) and therefore must be addressed, as a preliminary issue.

Interpretation of “the children”

[14]   The ED Trust Deed does not define the term “the children”. It is therefore not clear who are the discretionary and contingent final beneficiaries of the ED Trust.

[15]The applicant seeks the Court’s approval that:

(a)the discretionary beneficiaries who are currently defined as “any issue of the children” are correctly interpreted as any issue of Karyn, Guy, Daniela, Ilana or any other child of Eyal born after 7 October 2003; and

2 These are discussed at [43] below.

(b)the second-tier final beneficiaries are correctly interpreted as Eyal’s children.

[16]   The applicant says the proposed interpretation would give certainty and result in the final contingent beneficiaries of the ED Trust having the same descending order of priority as the discretionary beneficiaries of the ED Trust (with the exception of the qualifying beneficiary trusts who are not included as final contingent beneficiaries of the ED Trust).

[17]   All of the adult beneficiaries of the ED Trust, being Karyn, Guy, Daniela, Ilana, Etta and Mira, have each given their consent to this proposed interpretation.

[18]   At the time of this application, Karyn is the only one of Eyal’s children who has had a child. Karyn’s daughter is one year old and therefore unable to give her consent.

[19]   Consents have not been sought from the existing qualifying beneficiary trusts because, the applicant says, it is difficult and impractical to ascertain the number of such trusts with any certainty as they may have been settled by third parties (such as a member of Mira’s family, for example). In any event, the applicant says the interests of a beneficiary of the ED Trust who is also a beneficiary of an existing qualifying beneficiary trust are most likely aligned.

Counsel assisting

[20]Counsel assisting’s memorandum addresses this question of interpretation.

[21]   Counsel notes a preliminary issue whether a direction as to the proper interpretation of a trust deed is to be brought under s 133 of the Act or under the inherent jurisdiction of the court and concludes that the question here would appear to fall within the ambit of s 133. In any event, as counsel notes, the relevant principles of interpretation are the same.

[22]   On the substantive question, counsel refers to the legal principles relating to the interpretation of trust deeds generally,  as  set  out  in  Holland  v  Jonkers.3  Those principles were applied by the High Court in Re Merona Trustees Limited4 when interpreting the words used in a trust deed to describe a class of beneficiaries.

[23]   In Merona, the Court focused on the intentions of the settlor and the words used in the context in which the trust was settled.5

[24]   Counsel assisting sets out in her memorandum the definition of the discretionary beneficiaries contained in the ED Trust Deed which illustrates the context in which the term “the children” arises:6

The Protector:  EYAL AHARONI

The Primary Beneficiary:                   EYAL AHARONI

The Discretionary Beneficiaries: (a) KARYN AHARONI,

GUY AHARONI and any children of the Primary Beneficiary born hereafter;

(b)any issue of any of the children;

(c)any trust or other settlement.

[25]   Counsel assisting notes that the first reference to “the children” is to the children of the primary beneficiary (Eyal), at (a) above. While “the children” was not defined, the term is used numerous times elsewhere in the ED Trust Deed and a plain reading of it would suggest that definition was simply omitted from the end of (a).

3      Holland v Jonkers [2021] NZHC 3469 at [109].

4      Re Merona Trustees Limited [2022] NZHC 1971 at [33]–[37].

5 At [37].

6      ED Trust Deed, First Schedule, Definitions.

[26]   Counsel assisting says that the interpretation proposed by the applicant (which would interpret “the children” to include Karyn, Guy, Daniela, Ilana and any other children of Eyal’s born  after  7 October 2003)  is consistent with the terms of the  ED Trust Deed, with Eyal’s recollection and with events when the Trust was settled.

[27]   Counsel notes that in Eyal’s affidavit filed in support of the application he confirmed that his intention when settling the Trust was to provide for himself, his children, his grandchildren and his great-grandchildren and he has always held the view that the term “the children” referred only to his children, being Karyn, Guy, Daniela, Ilana and any of his children born after 7 October 2003.

[28]   At the time the ED Trust was settled on 7 October 2003, Eyal had only two children, being Karyn and Guy, however the possibility of future children was contemplated and provided for. Eyal subsequently had two further children, Daniela and Ilana, born in 2005 and 2006 respectively.

[29]   As counsel assisting records, the flow-on effects of the proposed interpretation are that:

(a)the class of discretionary beneficiaries who are the “issue of any of the children” would include the issue of Karyn, Guy, Daniela, Ilana and any other children born after the date on which the ED Trust was settled; and

(b)the class of final beneficiaries who will receive the remaining trust fund on the vesting day, if no other discretionary appointment has been made, will be “the children”, and in each case with gifts over to the next generation.

[30]   Counsel records that, to the extent there may be unknown children, they would only fall within the definition of “the children” if born after the ED Trust was settled.

[31]   Counsel assisting submits that the orders sought and the proposed interpretation are appropriate, and the orders can be made under s 133 of the Trusts Act, as was the case in Merona.7

Result

[32]   Having regard to the ED Trust Deed, Eyal’s affidavit and the advice of counsel assisting, I accept that the proposed interpretation of “the children” and the consequent interpretation of certain discretionary  and  contingent  final  beneficiaries  of  the  ED Trust is appropriate, and will direct accordingly under s 133 of the Act.

Further interpretation issues

[33]   Counsel assisting notes that the definitions of the relevant discretionary and final beneficiaries of the AI Trust are identical to the definitions in the ED Trust (although the AI Trust was settled four days later). Counsel says it therefore seems likely that any determination in respect of the interpretation of the ED Trust Deed will guide the trustee of the AI Trust also.

[34]   Counsel notes there also appears to be a potential interpretation issue with respect to the third category of contingent final beneficiaries of the ED Trust (noting the same provision is included in the AI Trust Deed). Clause (c) describes this class as:

If none of the children or their issue survive to take under subclause (b) then for the persons referred to in paragraph (d) of the Discretionary Beneficiaries description alive at the date of final distribution and if any such siblings has failed so to survive leaving issue him or her surviving then such issue shall take per stirpes the share which his or her or their parent would have taken had he or she been living at the expiration of Date of Final Distribution.

(emphasis added)

[35]   The discretionary beneficiaries referred to in paragraph (d) are Etta and Mira (who are not siblings of any other beneficiary).

7      Re Merona Trustees, above n 4, at [92].

[36]   Counsel assisting expresses the view that the words given emphasis above were likely included by mistake. The word “siblings” is used in a trust deed which does not otherwise refer to siblings in any capacity.

[37]The applicant’s solicitors have confirmed that:

(a)Etta was born in 1970;

(b)Mira was born in 1960; and

(c)neither Etta nor Mira have any children other than their children with Eyal (nor are they likely to).

[38]   Accordingly, as counsel assisting notes, the words emphasised do not create any additional class of beneficiaries (Etta or Mira’s potential future children with other persons).

[39]   In light of that, counsel proposes that the emphasised words can be disregarded given they appear to have been mistakenly included and do not clearly refer to anyone who is a sibling.

[40]   Counsel assisting suggests that an order may be appropriate confirming that the AI Trust Deed should be interpreted as omitting the words emphasised (or alternatively rectifying the AI Trust Deed on the basis that those words were mistakenly included).8

[41]   I agree that the AI Trust Deed should be interpreted in that way and I will make a direction accordingly.

8      See Re Alexander HC Wellington CIV-2024-485-364, 20 June 2024, where rectification was granted in relation to wording used to define the settlor of a trust and consequently the final beneficiaries, on the basis that the trust deed should give effect to the intentions when the trust was settled.

Proposed resettlement

[42]   The second substantive issue to be considered is the proposed resettlement of the ED Trust’s assets on to the AI Trust.

[43] The applicant advises that KPMG is the accountant for the ED Trust, the AI Trust and the wider asset structure (referred to at [5] above). As Eyal’s affidavit records, KPMG have advised the applicant and the trustee of the AI Trust that the proposed resettlement will greatly simplify the overall trust administration and reduce the annual compliance cost across the wider asset structure. It would also allow the trustee of the AI Trust to offset substantial tax losses from entities within the wider asset structure. The administration of the ED Trust and the AI Trust will be simplified.

[44]   The unsigned deed of resettlement, which sets out the terms on which the resettlement is proposed to take place, is annexed to Eyal’s affidavit.

[45]   The ED Trust Deed does not give the applicant a general power to resettle the Trust. Further, the AI Trust is not a qualifying beneficiary trust, as the discretionary beneficiaries of the AI Trust include Eyal, Daniela, Ilana and Etta.

[46] The adult beneficiaries have consented to the proposed resettlement. Consents have not been sought from the existing qualifying beneficiary trusts for the same reason set out at [19] above.

[47]   The deed of resettlement will not take effect unless or until the court provides its approval on behalf of the minor, unborn and future beneficiaries under s 124 of the Act and waives any requirement that the existing qualifying beneficiary trusts consent to the proposed resettlement, under s 125 of the Act.

[48]   Sections 122–125 of the Act reflect the statutory expression of the rule in Saunders v Vautier.9 As counsel assisting notes, s 122 of the Act permits the trustees and beneficiaries of a trust to unanimously agree to the variation or resettlement of a trust, on such terms as they see fit. Section 124 allows the court to approve a variation

9      Saunders v Vautier (1841) 4 Beav 115.

or resettlement on behalf of those beneficiaries who are unable to consent due to their minority, incapacity, or not yet having been ascertained (such as a future grandchild or a class of potential charitable objects). Section 125 allows the court to waive the requirement that any particular beneficiary or class of beneficiaries consent to a proposed variation or resettlement.

[49]   Section 124(4) sets out the factors the Court must take into account in deciding whether to approve a variation. The principles relevant to the exercise of the Court’s powers under s 124, which were summarised in Gavin v Gavin:10

(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;

(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;

10     Gavin v Gavin [2021] NZHC 550 at [15]; adopted in Re Macaslister [2021] NZHC 3572 at [23].

(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; and

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

[50]   Counsel also cites a number of cases where the s 125 power has been used to waive the consent of adult beneficiaries due to practicalities in obtaining their consents or due to their remote or negligible interests.11

[51]   The Court must not make an order of approval if its effect would be to reduce or remove a vested interest in the Trust property. Counsel assisting advised that no interests have bested in the Trust property.

Minor, future, and unascertained beneficiaries

[52]   In this application there is one minor beneficiary, being Karyn’s one year old daughter. There are likely to be other future grandchildren and, in due course, great- grandchildren. They are discretionary beneficiaries and in the second class of final beneficiaries (in the event of a parent’s death before the date of distribution).

[53]   Karyn has provided her consent on behalf of her one year old daughter to the proposed resettlement and Guy, Daniela and Ilana (as potential parents of future beneficiaries) have also provided their consent, indicating they consider the resettlement to be in the interests of their families.12

11 See, for example, Talijancich v Talijancich [2021] NZHC 753 (a number of consents waived after principal beneficiaries’ consents obtained).

12 The consent of parents was a consideration when the Court made an order under s 124 in Re Power [2024] NZHC 3449 at [30]–[32]. It was also noted in Re Trustee Company [2025] NZHC 653 at [46].

[54]   There is also a class of potential charitable objects. They are potential discretionary objects (however the protector must consent to any charitable distributions during the life of the ED Trust), eligible members of the first class of contingent final beneficiaries (at the primary beneficiary’s discretion), and the fourth class of contingent final beneficiaries.

[55]   Counsel assisting advises that there is no change to the interests of the beneficiaries as a result of the proposed resettlement. The terms of the AI Trust Deed appear to be essentially identical to the terms of the ED Trust Deed. The AI Trust has a different corporate trustee, however Aharoni Corporate Trustees Limited appears to have an identical constitution to Eyal Corporate Trustees Limited, as well as the same shareholder and directors.

[56] The anticipated benefits of the proposed resettlement are addressed in Eyal’s evidence and summarised at [43] above.

[57]   Eyal identifies one possible detriment which is that the proposed resettlement would mean that the assets resettled from the ED Trust on to the AI Trust could potentially be exposed to any claims against the AI Trust.

[58]   However, in counsel assisting’s assessment, based on information from the applicant’s solicitors, the activities of the ED Trust carry a similar risk to those of the AI Trust. Both hold property-owning entities and the risk of creditor claims against either trust is considered similar. It is not expected to increase as a result of the proposed resettlement.

[59]   Counsel says that even if there was a degree of increased risk which is unforeseen at this stage, the anticipated tax benefits associated with the resettlement could go some way towards counter balancing that.

[60]   In conclusion, counsel assisting says that, given the terms of the ED Trust and the AI Trust are essentially identical, and the position of the minor beneficiary and future beneficiaries will be unchanged as a result of the proposed resettlement, the actual benefits of the proposed resettlement likely outweigh the potential detriments

to these classes. There will likely be more funds available for the benefits of Eyal’s grandchildren and other issue if the resettlement proceeds, whereas the potential detriments of increased creditor exposure are uncertain. Increasing the assets available for the benefit of a beneficiary is consistent with Eyal’s description of his intentions, as economic settlor.

[61]   Counsel assisting concludes that the same is likely true for unascertained charitable interests.

[62]   On that basis, counsel assisting recommends that it is appropriate for the court to approve the proposed resettlement on behalf of the minor, future, and unascertained beneficiaries of the ED Trust under s 124 of the Act.

[63]   Having regard to the principles applicable to the application of s 124 and to counsel assisting’s analysis and recommendation, on behalf of the minor, future, and unascertained beneficiaries I will approve the proposed resettlement of the ED Trust assets on to the AI Trust, under s 124 of the Act.

Waiver

[64]   There is only one class of beneficiaries whose consent is proposed to be waived. This is the third class of discretionary beneficiaries of the ED Trust, being the “qualifying beneficiary trusts”.

[65]   Eyal’s evidence is that he is not aware of any qualifying beneficiary trusts but suspects that there are some trusts in existence which include Karyn, Guy and Daniela (his children over the age of 20) and/or Mira (his former wife) as discretionary beneficiaries.

[66]   Eyal says there may be practical difficulties in identifying all such trusts and obtaining the consent of their trustees.

[67]   As counsel assisting notes, waiver of consent was granted in similar circumstances in Re Hamilton.13

[68]   In relation to s 125(3), the same matters are relevant as set out above in relation to the minor, future, and unascertained beneficiaries. The qualifying beneficiary trusts remain beneficiaries of the AI Trust on the same terms as they are beneficiaries of the ED Trust. In that sense their position is unaffected. In addition, the actual benefits of the proposed resettlement are assessed as being likely to outweigh potential detriments.

[69]   For that reason, counsel assisting submits that it is appropriate for an order to be granted under s 125 of the Act waiving the requirement that the qualifying beneficiary trusts consent to the proposed resettlement.

[70]   I agree that it is appropriate to waive the requirement that qualifying beneficiary trusts consent, and I will order accordingly under s 125 of the Act.

Ancillary issues

Deed of resettlement

[71]   The applicant seeks an order confirming that it may sign the deed of resettlement and complete the resettlement. The order is sought under s 122 of the Act or, alternatively, under the inherent jurisdiction of the court.

[72]   Counsel assisting advises that if the deed of resettlement is signed by all of the adult beneficiaries and the orders under ss 124 and 125 of the Act are made by the court, then the s 122 requirements have been met. However, counsel assisting suggests that the court might confirm that the requirements of s 122 will have been met once the deed of resettlement is signed and the applicant may proceed in accordance with that section.

[73]I agree it is appropriate for the Court to give this confirmation and I will do so.

13     Re Hamilton [2024] NZHC 3893 at [29]–[33].

Costs

[74]   The applicant seeks an order that its costs are payable from the ED Trust on a solicitor-client basis.

[75]   As counsel assisting advises, that would be usual in circumstances where an application of this kind has been brought by a trustee reasonably and in good faith.   It confirms the trustees’ statutory (and other) rights to indemnity from the trust fund.14

[76]   I see no reason here to depart from the general rule and I will order that costs are payable from the ED Trust.

Result

[77]   I am grateful for the assistance provided by counsel assisting. On the basis of counsel’s analysis and for the reasons set out above, I make the following orders:

(a)approving the proposed definition of “the children” and the consequent interpretation of certain discretionary and contingent final beneficiaries of the ED Trust, under s 133 of the Trusts Act 2019;

(b)confirming that the ED Trust Deed should be interpreted as omitting the words in clause (c) of the definition of the final beneficiaries in the Trust Deed which are emphasised at [34] above;

(c)on behalf of the minor, future, and unascertained beneficiaries, approving the proposed resettlement of the ED Trust assets on to the AI Trust, under s 124 of the Trusts Act 2019;

(d)waiving the requirement that the qualifying beneficiary trusts consent to the proposed resettlement of the ED Trust assets onto the AI Trust, under s 125 of the Trusts Act 2019;

14     See, for example, Re Hamilton at [47]–[49]; Re Trustee Company, above n 12, at [69]–[70]; and

Re Goubitz [2024] NZHC 2201 at [28].

(e)confirming that the requirements of s 122 will have been met once the applicant trustee and the adult beneficiaries sign the proposed deed of resettlement and the applicant may proceed in accordance with that section; and

(f)confirming that the applicant’s costs in respect of this application be paid from the ED Trust on a solicitor-client basis.

Gwyn J

Solicitors:

Greg Kelly Trust Law, Wellington Duncan Cotterill, Wellington