Hodgson v Hodgson

[2023] NZHC 2025

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

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

CIV-2023-488-70

[2023] NZHC 2025

UNDER

Section 136 of the Trusts Act 2019

IN THE MATTER

of the Estate of THOMAS WINSTON HODGSON

BETWEEN

IAN BRIAN HODGSON

Applicant

AND

IAN BRIAN HODGSON and VANESSA

JOYCE HODGSON as beneficiaries in the ESTATE OF THOMAS WINSTON HODGSON

Respondents

Judgment:

(On the papers)

1 August 2023

JUDGMENT OF BREWER J

Solicitors:

Thomson Wilson (Whangārei) for Applicant

HODGSON v HODGSON [2023] NZHC 2025 [1 August 2023]

[1]        The following is taken from the judgment of Thomas J who dealt previously with this matter:1

[1]        Thomas Winston Hodgson died on or about 10 June 2019 leaving a will. Probate has been granted. Mr Ian Hodgson (the applicant) is the administrator of the estate.

[2]        The applicant is one of the children of the deceased and a beneficiary of the deceased’s estate. There are two other beneficiaries: Vanessa Hodgson and Kevin Hodgson (the deceased’s other two children). According to the applicant, the deceased and his family have not had any contact with Kevin Hodgson since 1996.

[3]        The applicant has now filed a without notice originating application seeking a declaration that the trustee may distribute funds in the deceased’s estate. Specifically, pursuant to s 136 of the Trusts Act 2019, the applicant seeks an order declaring the remainder of the estate, being approximately

$320,000, be distributed amongst the remaining beneficiaries whose whereabouts are currently known (the applicant and Vanessa Hodgson).

[4]        The grounds of the application are that the applicant has been unable to ascertain the whereabouts of Kevin Hodgson, and that all other persons who may be potentially affected by the granting of the order have consented to the application.

[2]        Justice Thomas declined the application. I will elaborate shortly.

[3]        The applicant has now filed a further without notice originating application seeking the same relief. Further affidavits from the applicant and Vanessa Hodgson have been filed. There is also an affidavit from Dr Francine Tyler describing work she has done to try to find Mr Kevin Hodgson.

[4]        I am satisfied, as was Thomas J, that the application can properly proceed on a without notice basis.2

[5]As to the legal principles, I gratefully adopt Thomas J’s description:

[12]Section 136 of the Trusts Act 2019 provides:

136       Trustee may apply to court to allow distribution of missing

beneficiaries’ shares

(1)The court may, on application by a trustee, make an order authorising the trustee to distribute trust property—

1      Estate Hodgson [2021] NZHC 906.

2      High Court Rules, 2016, r 7.46.

(a)as if a potential beneficiary or a class of potential beneficiaries does not exist or never existed or has died before a date or an event specified; and

(b)if, because of the order, it is not possible or practicable to determine whether any condition or requirement affecting a beneficial interest in the property or any part of it has been complied with or fulfilled, as if that condition or requirement had been or had not been complied with or fulfilled.

(2)The court may make an order only if it is satisfied that—

(a)reasonable measures have been taken to bring to the notice of the potential beneficiary or beneficiaries their potential beneficial interest or interests; and

(b)at least 60 days have passed since the last of those measures was taken; and

(c)no potential beneficiary with respect to whom an order is sought has come to the attention of the trustee as a result of those measures, or the claim of any such beneficiary may be disregarded in the circumstances.

[13]      Section 136 replaces s 76 of the Trustee Act 1956. Section 76 provided the machinery for ascertaining the existence or whereabouts of unknown or missing claimants, saying the trustee may:

… publish such advertisements (whether in New Zealand or elsewhere) as are appropriate in the circumstances calling upon every such person and every person claiming through any such person to send in his claim within a time to be specified in the advertisements, not being less than 2 months in any case from the date on which the advertisement is published. Where the trustee is in doubt as to what advertisements should be published under this subsection, he may apply to the court for directions in that regard.

[14]      In a 2012 review of the Trustee Act 1956, the New Zealand Law Commission described s 76 as a “long and impenetrable provision that essentially sets out a process for trustees to follow where beneficiaries cannot be ascertained”.3 The Commission recommended a more flexible approach to enquiries to ascertain the existence or whereabouts of unknown or missing beneficiaries.4

[15]      Following that review, Parliament enacted the Trusts Act 2019, which included s 136. That provision is significantly shorter, and uses broader, more flexible language to determine whether adequate enquiries have been undertaken. Specifically, the test is set out in s 136(2), and includes the threshold of the applicant having taken “reasonable measures” to bring to the notice of the potential beneficiary their interest in the estate.

[16]      Given that s 136 was only recently enacted, case law concerning and applying s 76 remains instructive. Two relevant cases are Re Holland and Young v Young. In the former, Van Bohemen J observed that it “appeared

3      Te Ako Mature o Te Ture | New Zealand Law Commission Law of Trusts: Preferred Approach

(NZLC IP31, 2012) at [11.58].

4      At [11.60]-[11.62].

implicit” in s 76 that advertisements were expected as the minimum requirement to satisfy the Court that adequate inquiries had been undertaken.5 While the applicant had not published advertisements, they had engaged a private investigator to try and find the relevant beneficiary, which the Judge considered to go beyond the minimum requirement of an advertisement, as it actively sought out the missing individual.6

[17]      In the latter case, Mallon J was satisfied that the (unsuccessful) use of private investigators, internet searches and newspaper advertisements in Australia constituted reasonable inquiries to locate the relevant beneficiary, and granted an order under s 76 to distribute the estate of the deceased as if the relevant beneficiary had died.7 That case also has some relevance to the present, given the reasonably significant sums of money involved in the estate.8

[6]        Justice Thomas did not consider that “reasonable measures” had been taken by the applicant to bring to the notice of Mr Kevin Hodgson his interest in the estate. Accordingly, the Judge declined the application.

[7]        The steps taken at that stage were advertising in Australian and New Zealand newspapers and, apparently, some search attempts were made through the police and through the Salvation Army.

[8]Justice Thomas said:

[23] Perhaps more to the point, though, is the likelihood of bringing to a potential beneficiary’s notice their potential interest by publishing a newspaper advertisement in the current age of social media. The applicant should undertake searches on social media, which would arguably have a far greater likelihood of locating Kevin Hodgson or learning of his fate, no matter where in the world he might be or have been. Affidavit evidence of those steps and the results should then be provided. Alternatively, as was the case in Young v Young, use of a private investigator could be considered.

[9]        The latest affidavits of the applicant and Vanessa Hodgson depose that there has not been any further contact with Mr Kevin Hodgson.

5      Re Holland [2019] NZHC 1146 at [11]. See also Re McKenzie (As Executors in the Estate of Gilmor) [2019] NZHC 128.

6 At [12].

7      Young v Young [2013] NZHC 1396 at [10.

8      At [7] the relevant beneficiary’s half-share would have amounted to some $85,000.

[10]      Dr Tyler is a director of a genealogy research company which specialises in helping executors and administrators of deceased estates identify and locate beneficiaries. Dr Tyler is well qualified to provide such help. She deposes:

Our company’s service provides an alternative to the traditional private investigator model. We use only publicly available information combined with personal contact with extended family and friends as well as social media and genealogy resources.

[11]      Dr Tyler sets out the very considerable efforts which have been made to find Mr Kevin Hodgson. Her conclusion is:

To date more than 80 hours has [sic] been expended searching for Kevin Thomas Hodgson. I have explored every avenue that I reasonably consider might provide a lead to his whereabouts. Nothing that I have pursued has provided any concrete information. Without co-operation from authorities who might hold information that could help in the search to locate Kevin Thomas Hodgson, I believe that all reasonable steps have already been taken to bring to Kevin notice of his interest in the estate, to no avail.

[12]      I will describe in general terms the efforts made by Dr Tyler:

(a)Searches of genealogy databases;

(b)Searches of Facebook;

(c)A search of the New Zealand electoral rolls;

(d)Searches of 34 publicly searchable electronic databases in New Zealand and Australia;

(e)A google search for “Kevin Thomas Hodgson” resulting in 31 results, all of which were investigated;

(f)A focused contact with the Whangārei Boys High  School Alumni (Mr Kevin Hodgson attended the school);

(g)Contact with 28 expatriate Kiwi Facebook groups.

[13]      Somewhat frustratingly, the Department of Internal Affairs (DIA) has twice refused requests under the Official Information Act as to whether Mr Kevin Hodgson has a current New Zealand passport. The DIA cites Mr Hodgson’s right to privacy. Given the context, it seems unlikely that Mr Kevin Hodgson would thank the DIA for its protection.

[14]      The New Zealand Customs Service, unlike the DIA, did respond promptly to an Official Information Act request as to whether Mr Kevin Thomas Hodgson returned to New Zealand after 1998. The response was to the effect that there is no record of him doing so.

[15]      One initially promising result was a profile for a member of MyHeritage, a genealogy database headquartered in Israel. The record shows that Mr Kevin Thomas Hodgson, aged in his 50s from New Zealand, joined MyHeritage on February 6, 2020. However, that was the only date he was active on the site. Numerous attempts to engage with MyHeritage have failed.

[16]The above is not an exhaustive account of the inquiries made by Dr Tyler.

Decision

[17]      The test in s 136(2)(a) is that the Court must be satisfied that reasonable measures have been taken to alert a beneficiary to their interest in a trust. What constitutes “reasonable measures” will depend on the circumstances of the case. The circumstances will include the amount of money at stake and whether the interest is vested or potential. Here, the sum at stake is around $100,000 and the interest in that sum is vested.

[18]      I am satisfied that Dr Tyler’s investigation satisfies the s 136(2)(a) test. There has been an active search for Mr Kevin Hodgson targeting social media, official databases, government departments and people who might know of his whereabouts. An exhaustive investigation is not required, but Dr Tyler’s investigation comes close to that standard.

[19]      I am satisfied that at least 60 days have passed since the last of Dr Tyler’s inquiries.

[20]      I am satisfied that neither Mr Kevin Hodgson nor anyone claiming to be his child has come to the attention of the applicant as a result of the measures taken, or otherwise.

[21]      The application is granted. I make an order authorising the applicant to distribute the Trust property as if Mr Kevin Thomas Hodgson, or his child or children (if any), do not exist or never existed or have died before the date of this judgment.

Brewer J