Gower - Hope Gower Family Trust

[2020] NZHC 890

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV 2020-419-000082

[2020] NZHC 890

IN THE MATTER

of an application under section 64A of Trustee Act 1956 for variation

AND

IN THE MATTER

of Part 18 High Court Rules

AND

Of the HOPE GOWER FAMILY TRUST

GEORGE ALEXANDER HOPEFUL GOWER and GORDON ROBERT
HOPEFUL GOWER as trustees of the HOPE GOWER FAMILY TRUST

Applicants

continued overleaf…

Hearing:	on the papers
Counsel:	K P Forgeson for the Applicants
Judgment:	4 May 2020

JUDGMENT OF VAN BOHEMEN J

This judgment was delivered by me on 04 May 2020 at 2.00 pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:

D M O’Neill, Barrister, Hamilton Forgeson Law, Te Kuiti

HOPE GOWER FAMILY TRUST & GORDON GOWER FAMILY TRUST [2020] NZHC 890 [4 May 2020]

continued from previous page…

CIV 2020-419-000083

IN THE MATTER

of an application under section 64A of Trustee Act 1956 for variation

AND

IN THE MATTER

of Part 18 High Court Rules

AND

Of the GORDON GOWER FAMILY TRUST

AND

GEORGE ALEXANDER HOPEFUL GOWER and GORDON ROBERT

HOPEFUL GOWER as trustees of the GORDON GOWER FAMILY TRUST

Applicants

Introduction

[1]                  George Alexander Hopeful Gower (Hope) and Gordon Robert Hopeful Gower (Gordon), both trustees of the Hope Gower Family Trust (Hope Trust) and the Gordon Gower Family Trust (Gordon Trust), apply for orders under s 64A of the Trustee Act 1956 approving:

(a)Variations to the Hope Gower Family Trust Deed (Hope Trust Deed) to:

(i)Amend clause 2.8 to include Hope as a “discretionary beneficiary”; and

(ii)Remove clause 11, which provides that no trustee may benefit from the Trust;

(b)Variations to the Gordon Gower Family Trust Deed (Gordon Trust Deed) to:

(i)Amend clause 2.8 to include Gordon as a “discretionary beneficiary”; and

(ii)Remove clause 11, which provides that no trustee may benefit from the Trust.

[2]                  Mr Neill, counsel for the trustees in both applications, has filed memoranda in support of the applications that confirm that the applicants are content for the Court to decide the applications on the papers.

[3]                  The applicants seek leave to dispense with service on the grounds that all interested parties consent to the application.

Evidence in support of applications

[4]                  In an affidavit sworn on 25 March 2020, Hope sets out the reasons for the application to vary the Hope Trust Deed, the current beneficiaries of the Hope Trust

and the nature and value of the Hope Trust’s assets. The current beneficiaries are Hope’s wife, Moya Gower, the children of Hope and Moya, the children’s spouses, and the grandchildren of Hope and Moya. All of the current beneficiaries are adults.

[5]                  Annexed as exhibits to Hope’s affidavit are a copy of the Hope Trust Deed and copies of statements of consent to the proposed variations signed by all current beneficiaries.

[6]                  In an affidavit sworn on 25 March 2020, Gordon sets out the reasons for the application to vary the Gordon Trust Deed, the current beneficiaries of the Gordon Trust and the nature and value of the Gordon Trust’s assets. The current beneficiaries are Gordon’s wife, Frances Gower, the children of Gordon and Frances, the children’s spouses, and the grandchildren of Gordon and Frances. All but two of the current beneficiaries are adults. The two who are not adults are Tara Gower and Curtis Gower. They are the children of Dean Gower, who is the son of Gordon and Frances, and Sue Gower.

[7]                  Annexed as exhibits to Gordon’s affidavit are a copy of the Gordon Trust Deed and:

(a)Copies of statements of consent to the proposed variations signed by five of the adult beneficiaries; and

(b)Copies of emails from the seven remaining adult beneficiaries sent to the secretary of counsel for the trustees confirming their consent.

[8]                  Gordon says it had been intended to secure signed consents from all beneficiaries at a meeting to be held to discuss the proposed variations but the meeting had not proceeded because all had consented to the variations. In his affidavit, Gordon says he recognises the email addresses of each of the beneficiaries. He asks the Court to accept these consents as presented and says it has been quite a task to get the matter this far.

[9]                  In an affidavit sworn on 13 February 2020, Dean and Sue Gower consent to the variations on behalf of Tara and Curtis Gower. They also say they do not see a need for counsel to be appointed to represent their children.

Background

[10]              The two Trusts were as settled on 15 August 1977 by the father of Hope and Gordon for the purpose of holding family assets for the families of Hope and Gordon. The discretionary beneficiaries in each case are:

(a)The Hope Trust: the wife of Hope, the children of Hope, the children’s spouses and the grandchildren of Hope;

(b)The Gordon Trust: the wife of Gordon, the children of Gordon, the children’s spouses and the grandchildren of Gordon.

[11]According to the affidavits sworn by Hope and Gordon:

(a)The Hope Trust assets, which comprise farmland and investments, are conservatively estimated to be worth approximately $7 million;

(b)The Gordon Trust assets, which comprise farmland and investments, are conservatively estimated to be worth approximately $22 million.

[12]              Hope and Gordon both say they are nearing retirement and intend to appoint new trustees from their family. They see the appointment of family members as trustees as important to ensuring that Gower family members are able to direct the Gower families’ farming operations into the future.

[13]              Both Hope and Gordon say it is unlikely that there will be further grandchildren given the ages of their children. Dean, Gordon’s youngest child, and his wife Sue reaffirm this point with respect to the Gordon Trust in their affidavit.

[14]              The purpose of the proposed variations is to enable Hope and Gordon and any subsequently appointed trustees to benefit from the Trusts by:

(a)Including Hope as a discretionary beneficiary of the Hope Trust;

(b)Including Gordon as a discretionary beneficiary of Gordon Trust; and

(c)Removing the prohibition in both trust deeds on trustees from benefitting from the Trusts.

[15]              The trust deeds do not contain an express power to vary their terms. While all existing beneficiaries can consent to vary the trust deeds, and while Hope and Gordon both say it is unlikely that there will be further grandchildren falling within the class of discretionary beneficiaries in either trust deed, that possibility remains. That is the reason for the applications which seek the Court’s approval of the variations on behalf of those possible unborn grandchildren.

Legal principles

[16]              Under s 64A of the Trustee Act, the Court may, on behalf of beneficiaries who cannot legally consent, approve variations that alter beneficial instruments provided for in the trust instrument, provided there is no opposition from beneficiaries of full legal capacity.1

[17]              Section 64A(1) provides that, in determining whether to exercise its power to approve variations to trust deeds:2

… the Court shall not approve an arrangement on behalf of any person if the arrangement is to his detriment; and in determining whether any such arrangement is to the detriment of any person the Court may have regard to all benefits which may accrue to him directly or indirectly in consequence of the arrangement, including the welfare and honour of the family to which he belongs …

[18]                In Ewington v Schulz,3 Winkelmann J set out the relevant principles as follows:

1      Re Greenwood [1988] 1 NZLR 197 at 206.

2      Trustee Act 1956, s 64A(1).

3      Ewington v Schulz (2009) 2 NZTR 19-013 (HC) at [20], citations omitted.

(a)A trust can be varied with the consent of all beneficiaries, actual or contingent;

(b)Section 64A confers on the court the power to approve a variation on behalf of persons not legally able to do so for themselves or who have a contingent interest, and any unborn person;

(c)The court’s discretion is very wide and is to be exercised in the interests of the person on whose behalf it is asked to consent. The court should ask if that person would have approved the variation if of full capacity and properly advised;

(d)When considering the arrangement, the court must start by recognising that under the rule in Saunders v Vautier (1941) 4 Beav 115 [1835-42] All ER Rep 58, beneficiaries who are sui juris and together absolutely entitled to the trust property have the right to defeat the intention of the settlor by varying or revoking the trust as they see fit;

(e)The court may not consent to an arrangement that is detrimental to the person not legally able to consent, that is to say in this case the minor, the contingent beneficiaries or the potential unborn beneficiaries;

(f)But the court is to take a wide approach to benefits and detriments in arrangements. It is not simply a matter of actuarial calculation. The arrangements must be considered as a whole. Indirect and intangible benefits and detriments are relevant, including the welfare and honour of the family.

(g)The court approaches the arrangement in a practical and businesslike way, including assessment of the total amounts of the advantages and the various parties’ bargaining strength.

Discussion

[19]              I am satisfied that service should be dispensed with and order accordingly in respect of both applications.

[20]              All of the existing beneficiaries of legal capacity of the Hope Trust have formally given their consent to vary the Hope Trust Deed, as confirmed by the evidence annexed to the Hope’s affidavit.

[21]              Five of the existing beneficiaries of legal capacity of the Gordon Trust have formally given their consent to vary the Gordon Trust Deed as confirmed by the evidence annexed to the Gordon’s affidavit. The other seven existing beneficiaries of legal capacity have informally given their consent to vary the Gordon Trust Deed, as evidenced by the copies of the emails annexed to Gordon’s affidavit. The parents of the two existing beneficiaries who are not of legal capacity have given consent on behalf of their children to vary the Gordon Trust Deed.

[22]              I am satisfied that this evidence establishes that all of the existing beneficiaries of the Gordon Trust have consented to the application for approval to vary the Gordon Trust Deed.

[23]              I acknowledge that the proposed variations of the trust deeds could reduce the amount of provision that might be available to any future, albeit unlikely, unborn grandchildren. However, given the value of the Trusts’ assets and the intentions of the families to continue the farming operations into the future, any such reductions are likely to be limited. Any reductions may also be more than offset by any increase in value that flows from the families’ continued involvement in and direction of the farming operations. I accept that unless these variations are made, family members may be precluded from being trustees.

[24]              I consider it is also likely that future grandchildren of age and capacity, were any to be born, would approve the proposed variations, just as the existing beneficiaries have approved the variations.

[25]              For these reasons, I am satisfied that approving the proposed variations does not detrimentally affect the interests of future, unborn grandchildren and does not substantially alter the trust arrangements as they presently stand.

[26]              For these reasons, I consider that the Court should approve the proposed variations.

Orders

[27]In accordance with s 64A of the Trustee Act 1956, I make the following orders:

(a)The Hope Gower Family Trust Deed is varied by:

(i)Amending cl 2.8 to include George Alexander Hopeful Gower as a beneficiary of the Trust; and

(ii)Deleting cl 11.

(b)The Gordon Gower Family Trust Deed is varied by:

(i)Amending cl 2.8 to include Gordon Robert Hopeful Gower as a beneficiary of the Trust; and

(ii)Deleting cl 11.

G J van Bohemen J