Gamble v Schepens - [2023] NZHC 3191

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2022-488-000086

[2023] NZHC 3191

BETWEEN
DEBORAH ANNE GAMBLE, DEIRDRE JANE LEADLEY and HAYLEY MAREE LEITH

Plaintiffs

AND

JOHN EMILE SCHEPENS and BRUCE

JOSEPH MORRIS in their capacity as trustees of the estate of LILY JOSEPHINE SCHEPENS
First Defendants

JOHN EMILE SCHEPENS and BRUCE
JOSEPH MORRIS in their capacity as trustees of the estate of ALLAN VICTOR SCHEPENS

Second Defendants

Hearing: 14 – 15 and 17 August 2023

Appearances:

J P Browne and J P Cartwright for Plaintiffs

J P Golightly for First Defendant (J Schepens) C Muston for Second Defendant (B Morris)

Judgment:

13 November 2023

JUDGMENT OF ANDREW J

This judgment was delivered by Justice Andrew on 13 November 2023 at 3.30 pm
pursuant to r 11.5 of the High Court Rules 2016 Registrar / Deputy Registrar
Date ………………………

GAMBLE v SCHEPENS [2023] NZHC 3191 [13 November 2023]

Introduction

[1] The three plaintiff sisters, Deirdre, Deborah and Hayley,1 apply under the Trusts Act 2019 to remove and replace the current trustees of two testamentary trusts. They, together with one other sister, Shannon, are the remainder beneficiaries of these testamentary trusts.

[2] The testamentary trusts are those of the plaintiffs’ grandparents’ estates. The principal asset of the trusts is a large farm at Waimatenui, Northland. It is in a remote location adjacent to the Waipoua forest. Farming in the district is challenging.

[3] Mr John Schepens is the uncle of the plaintiffs and one of the two trustees of the testamentary trusts. The other trustee is Mr Bruce Morris. For many years John has farmed both the trust property and the adjacent farm, which is owned by John personally. The properties have been managed as one farm.

[4] The plaintiffs say that the relationship between the trustees was and is dysfunctional and that the farm, being the principal trust asset, has significantly declined in value under the current trusteeship. It is contended that the trustees have failed to properly maintain the farm, including by failing to maintain buildings and other improvements, failing to control wild pigs and goats, and failing to apply fertiliser.

[5] It is not in dispute that Bruce should be removed; Bruce expects and wishes to be discharged as a trustee. The critical issue is whether John should also be removed and the trusts governed solely by an independent solicitor trustee, as proposed by the plaintiffs.

1 For ease of reference, I shall refer to all of the parties by their first names. No disrespect is intended.

Factual background

(a)The Schepens’ estates

[6] The plaintiffs’ late grandparents, Allan and Lily Schepens, owned the farm at Waimatenui, more particularly described as the land comprised in Certificates of Title NA1368/36, NZ1311/38, NA226/220, NA981/221 and NA935/207 (the Schepens’ farm). They owned the farm as tenants in common in equal shares.

[7] Lily Schepens died on 5 July 1988. On 16 January 1989, probate of her will dated 16 September 1985 and codicil dated…

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 Gamble v Schepens

Details

AGLC: Gamble v Schepens [2023] NZHC 3191
Case: [2023] NZHC 3191
Decision Date: 13 November 2023

CaseChat Overview and Summary

The case of Gamble v Schepens involved three plaintiffs, sisters Deborah, Deirdre, and Hayley, seeking to remove and replace the trustees of two testamentary trusts established by their grandparents, Allan and Lily Schepens. The primary asset of these trusts was a large farm in Waimatenui, Northland, which had allegedly declined in value under the current trustees, John Schepens and Bruce Morris. The plaintiffs argued that the trustees had failed to maintain the farm properly, leading to its deterioration. While Bruce agreed to be removed, John contested this and proposed continuing as a trustee alongside a new independent solicitor trustee.

The court found that removing John as a trustee was necessary and desirable for the beneficiaries' interests. The dysfunctional relationship between John and Bruce, the decline in the estates' cash reserves, John's significant debt to the estates, and the steady decline of the farm supported this decision. The court also highlighted John's unilateral management of the trusts, which amounted to an unlawful delegation of Bruce's powers. The court appointed Schepens Trustee Ltd as the new trustee, a company incorporated by Thomson Wilson, solicitors, of Whangarei. Additionally, the court ordered that the remuneration for the new trustee should be paid from the trusts' income, considering the extensive work required to address the trustees' breaches and mismanagement.

The final orders included removing John and Bruce as trustees, appointing Schepens Trustee Ltd as the new trustee, approving the reasonable remuneration for the new trustee, and requiring the new trustee to report quarterly to the beneficiaries and John. The court emphasized the importance of maintaining a respectful relationship among the parties despite the orders made.

Orders