Freeman v Freeman

[2016] NZHC 2100

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV-2016-442-54 [2016] NZHC 2100

UNDER

the Trustee Act 1956, section 64A

IN THE MATTER

of the E R Freeman Family Trust

BETWEEN

DOREEN JOYCE FREEMAN, ALAN RUSSELL FREEMAN, WARWICK STEPHEN FREEMAN AND ROBERT BRUCE FREEMAN AS TRUSTEES OF THE E R FREEMAN FAMILY TRUST First Plaintiffs

ERIC RUSSELL FREEMAN Second Plaintiff

AND

DOREEN JOYCE FREEMAN First Defendant

ALAN RUSSELL FREEMAN Second Defendant

WARWICK STEPHEN FREEMAN Third Defendant

ROBERT BRUCE FREEMAN Fourth Defendant

BROOKE NICOLE FREEMAN Fifth Defendant

MEG ESTHER ADEANE FREEMAN Sixth Defendant

LEONIE ROSE LOUIE ADEANE FREEMAN

Seventh Defendant

GRACE ELLEN ADEANE FREEMAN Eighth Defendant

MOLLY ADEANE FREEMAN Ninth Defendant

DOREEN JOYCE FREEMAN, ALAN RUSSELL FREEMAN, WARWICK STEPHEN FREEMAN AND ROBERT BRUCE FREEMAN AS TRUSTEES OF THE E R FREEMAN FAMILY TRUST v DOREEN JOYCE FREEMAN [2016] NZHC 2100 [5 September 2016]

READE ERIC FREEMAN Tenth Defendant

SOFIA LOUISA FREEMAN Eleventh Defendant

CIV-2016-442-55

UNDER  the Trustee Act 1956, section 64A IN THE MATTER  of the D J Freeman Family Trust

BETWEEN  ERIC RUSSELL FREEMAN, ALAN RUSSELL FREEMAN, WARWICK STEPHEN FREEMAN AND ROBERT BRUCE FREEMAN AS TRUSTEES OF THE D J FREEMAN FAMILY TRUST First Plaintiffs

DOREEN JOYCE FREEMAN Second Plaintiff

ANDERIC RUSSELL FREEMAN First Defendant

ALAN RUSSELL FREEMAN Second Defendant

WARWICK STEPHEN FREEMAN Third Defendant

ROBERT BRUCE FREEMAN Fourth Defendant

BROOKE NICOLE FREEMAN Fifth Defendant

MEG ESTHER ADEANE FREEMAN Sixth Defendant

LEONIE ROSE LOUIE ADEANE FREEMAN

Seventh Defendant

GRACE ELLEN ADEANE FREEMAN Eighth Defendant

MOLLY ADEANE FREEMAN Ninth Defendant

READE ERIC FREEMAN Tenth Defendant

SOFIE LOUISA FREEMAN Eleventh Defendant

On the papers
Counsel:	G J Harley for Plaintiffs and Defendants C R Carruthers QC for contingent beneficiaries
Judgment:	5 September 2016

DIRECTIONS AND JUDGMENT OF CLIFFORD J

[1]      In these proceedings, the plaintiffs seek consent of the Court under s 64A of the Trustee Act 1956 for amendments to two family trusts: the D J Freeman Family Trust and the E R Freeman Family Trust (the Family Trusts).  The Court’s consent is sought on behalf of unborn and contingent beneficiaries, namely possible future children of the second to fourth defendants, Alan Russell Freeman, Warwick Stephen Freeman and Robert Bruce Freeman.

[2]      The Family Trusts  are  mirror trusts.   They were established in  1986  by Doreen  and  Eric  Freeman.    Eric  Freeman  is  the  life  beneficiary  of  the  trust established by Doreen Freeman, and Doreen Freeman is the life beneficiary of the trust established by Eric Freeman.  As relevant, the Family Trusts each provide for the vesting of the trust property in the “final beneficiaries” upon the death of the relevant life beneficiary. The final beneficiaries are Doreen and Eric Freeman’s three sons: Alan Russell Freeman, Warwick Stephen Freeman and Robert Bruce Freeman and their children, currently Brooke Nicole Freeman, Meg Esther Adeane Freeman, Leonie Rose Louie Adeane Freeman, Grace Ellen Adeane Freeman, Molly Adeane Freeman, Reade Eric Freeman and Sofia Louisa Freeman (the second to eleventh defendants respectively).

[3]      Mr Eric Freeman has recently been diagnosed with a terminal illness.  He and his wife, their three sons and their grandchildren are all in agreement that the Family Trusts should be varied so that vesting will not take place until the end of the perpetuity period (that is 8 July 2066).

[4]      The Freeman family wishes to enable the Family Trusts to continue to own the profitable family business that they have owned for the last 30 years.   The Freeman family wishes to avoid the successful trust structure being disturbed by vesting.

[5]      The Freeman family has executed a deed of variation of the Family Trusts to give effect to that and related changes.   That deed is contingent upon this Court approving those changes on behalf of the contingent beneficiaries, that is, possible unborn grandchildren of Eric and Doreen Freeman.

[6]     The three Freeman sons are aged 65, 63 and 61.   Their children, the “grandchildren”  are  aged  between  28  and  38  years of age.    None of  the three Freeman brothers anticipates having any further children.

[7]     In anticipation of an order appointing him to represent the contingent beneficiaries, namely unborn grandchildren, Mr Colin Carruthers QC of Wellington has provided a memorandum.  In that memorandum he supports the Court agreeing to this variation on behalf of those contingent beneficiaries.

[8]      In my view, the interests of the contingent beneficiaries are best seen as being co-extensive with those of the current grandchildren.  The current family considers that a continuation of the ownership status quo of the successful family business is in everyone’s interests.  Eric and Doreen Freeman are keen to see the changes made as soon as possible, particularly given their advanced years – they have reached the grand ages of 88 and 90 years respectively, and Mr Eric Freeman’s recent diagnosis.

[9]      I  have  read  the  statements  of  claim,  the  applications  for  directions,  the affidavits of Eric and Doreen Freeman, Alan Freeman, Warwick Freeman and Robert Freeman, the memorandum of Mr Carruthers QC and the current terms of the Family

Trusts and of the deed of variation.  I am satisfied that it is appropriate for this Court to approve the proposed changes on behalf of the contingent beneficiaries, that is, any unborn grandchildren of Eric and Doreen Freeman/children of Alan Freeman, Warwick Freeman and Robert Freeman.

[10]     Therefore I:

(a)       make  directions  in  terms  of  the  applications  for  directions  dated

5 September   2016   filed   in   these   proceedings,   save   for   such consequential variations resultant upon this matter being considered by me on the papers at Nelson this 5th day of September 2016; and

(b)make orders as sought in the statements of claim filed in these proceedings,  approving  under  s  64A of  the Trustee Act  1956,  on behalf of all unborn children who are or could be beneficiaries of the D J Freeman Trust and the E R Freeman Trust, the amendment of each of the Family Trusts by the variations detailed in those statements of claim.

[11]     I thank Mr Harley for the comprehensive papers and submissions.

“Clifford J”

Solicitors:

Chapman Tripp, Wellington