Gallagher-Dekker v Gallagher - [2024] NZHC 1329

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-002186

[2024] NZHC 1329

UNDER
Part 19 of the High Court Rules 2016, ss 112 and 114 of the Trusts Act 2019 and the

inherent jurisdiction of the High Court to supervise trusts

IN THE MATTER

of the estate of James Joseph Gallagher

BETWEEN

SALAMINA ELAINE GALLAGHER-DEKKER

Applicant

AND

OWEN ROE GALLAGHER and ALPHONSUS CUCHULLAIN TE KOOTI

LAFOIA GALLAGHER as executors and trustees of the estate of James Joseph

Gallagher Respondents

Hearing: 21 May 2024

Appearances:

G T Angus and M A Cousens for Applicant K I Bond and J R Field for Respondents

Judgment:

17 June 2024

Reissued:

11 July 2024

JUDGMENT OF ANDERSON J

This judgment was delivered by me on 17 June 2024 at 11 am pursuant to r 11.5 of the High Court Rules 2016.

.…………………………..
Registrar/Deputy Registrar

Solicitors: Morris Legal, Auckland
Braun Bond and Lomas, Hamilton

GALLAGHER-DEKKER v GALLAGHER [2024] NZHC 1329 [17 June 2024]

[1] The parties are the executors and trustees of the Estate of their late father, James Joseph Gallagher. They are three of his five adult children. Mr Gallagher died in September 2019. His wife, Meletina Gallagher, has survived him and is in good health.

[2] The applicant, Elaine,1 applies to the Court to remove the respondents (her two brothers, Owen and Cuchullain) as trustees, conditional on her own resignation as trustee, and to appoint Perpetual Guardian as the sole replacement trustee. The respondents say that it is not desirable, necessary nor in the best interests of the beneficiaries to make the orders sought.

Background facts

[3]There is no dispute between the parties as to the general background facts.

[4] Mr Gallagher’s last will was dated 28 October 1992. The applicant and respondents were named as executors and trustees of this last will in his second codicil dated 31 December 2015. Probate was granted on 10 December 2019.

[5] Under cl 5 of Mr Gallagher’s will, the trustees are to hold the residue of his estate on trust and pay the net income to Mrs Gallagher for her lifetime. Following Mrs Gallagher’s death, the residue is to be divided equally between Mr Gallagher’s five children. Mrs Gallagher is in her late seventies and it could be many years before the Estate can be finally distributed.

[6]The following clauses of Mr Gallagher’s will are relevant:

(a)Mrs Gallagher is to be paid the net income of the Estate for her lifetime.2

(b)Any trustee engaged in a professional business may be so employed or act and is entitled to charge and be paid professional or other charges

1 I use the parties’ first names to avoid confusion.
2 Clause 5(a).

for any business done by that person or their firm in connection with the trust including acts which a trustee could have done personally.3

(c)The trustees are entitled to have recourse to the capital of the residue estate if at any time in their sole discretion…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Gallagher-Dekker v Gallagher

Details

AGLC: Gallagher-Dekker v Gallagher [2024] NZHC 1329
Case: [2024] NZHC 1329
Decision Date: 17 June 2024

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Gallagher-Dekker v Gallagher involves three siblings who are the executors and trustees of their late father's estate. The applicant, Elaine Gallagher-Dekker, seeks the removal of her two brothers, Owen and Cuchullain Gallagher, as trustees of the estate, contingent on her own resignation, and the appointment of Perpetual Guardian as the replacement trustee. The respondents argue against the removal and replacement of the trustees, asserting that it is neither necessary nor in the best interests of the beneficiaries. The central legal issues revolve around whether it is necessary or desirable to remove the respondents as trustees under the Trusts Act 2019 and the inherent jurisdiction of the Court to supervise trusts.

The Court considered the arguments presented by both parties, focusing on whether the trustees' removal was necessary or desirable to ensure the proper administration of the trust. Elaine raised concerns about conflicts of interest, mismanagement of the estate, and the inability of the trustees to work together effectively. However, the Court found insufficient evidence to support the removal based solely on conflicts of interest or mismanagement. While acknowledging some mismanagement, such as the delay in setting up a dedicated estate bank account, the Court did not find these issues significant enough to warrant removal. The Court also noted that the trustees' personal property holdings, while potentially creating conflicts, were contemplated by the testator and did not materially impact the trust's administration.

The Court found the critical issue to be the trustees' inability to work together. Despite their disagreements, the Court determined that the breakdown in their relationship was severe enough to impede the trust's proper administration. The Court concluded that leaving the trustees to manage the trust was not in the best interests of the beneficiaries, given the likelihood of continued disagreements and the inability to reach unanimous decisions on essential matters.

Consequently, the Court decided to remove the respondents as trustees, contingent on Elaine's resignation, and to appoint a replacement trustee. The Court proposed giving the parties time to agree on a replacement trustee and provided a timetable for the parties to submit their proposals. The Court reserved costs until the proceeding is finally determined.

Orders