Hodgson v Hodgson

[2021] NZHC 906

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2021-485-155

[2021] NZHC 906

UNDER

Section 136 of the Trusts Act 2019

IN THE MATTER

the Estate of THOMAS WINSTON HODGSON

BETWEEN

IAN BRIAN HODGSON

Applicant

AND

IAN BRIAN HODGSON, VANESSA JOYCE HODGSON AND KEVIN

THOMAS HODGSON as beneficiaries in the Estate of THOMAS WINSTON HODGSON

Respondents

On the papers
Counsel:	N C R Perry for Applicant
Judgment:	28 April 2021

JUDGMENT OF THOMAS J

[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.

ESTATE HODGSON [2021] NZHC 906 [28 April 2021]

[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.

Background

[5]                  Both the applicant and Vanessa Hodgson have filed affidavits in support of the application.

[6]                  The applicant deposes that, since 1996, the deceased did not have any contact or communication with Kevin Hodgson, and the deceased was unaware of his whereabouts. The last information the applicant was given of Kevin Hodgson’s whereabouts was from a family friend who informed the applicant that they had seen Kevin Hodgson in Melbourne in 1999.

[7]                  According the applicant, neither Kevin Hodgson nor any person knowing his whereabouts attended the deceased’s funeral or contacted the deceased’s family after his death.

[8]                  Vanessa Hodgson deposed that the last time she saw Kevin Hodgson was on 19 October 1994, and that he flew out to Australia on 21 October 1994. She believed that Kevin Hodgson had a telephone discussion with their mother in 1997 and that was her last contact with him. Ms Hodgson received a telephone call from Kevin Hodgson in 1999, believing him to live in Australia at the time.  That was her last contact  with him.

[9]                  Ms Hodgson also deposed that, in an effort to trace Kevin Hodgson, both her aunt had contacted the Salvation Army Family Tracing Service and her mother

contacted the New Zealand Police, but to no avail. There is no affidavit evidence from either Ms Hodgson’s aunt or her mother and no explanation as to why that is so. Vanessa Hodgson opined that she did not know of any reason why Kevin Hodgson would choose to distance himself from the family. She confirmed her consent to the application.

[10]              The applicant deposed that he had made enquiries with family and friends as to Kevin Hodgson’s whereabouts, to no avail. He also advertised in the New Zealand Herald and in the Melbourne Sun Herald on 24 October 2020 and 31 October 2020 requesting anyone knowing the whereabouts of Kevin Hodgson to contact the applicant’s lawyers by 15 January 2021. There has been no communication to the applicant or his lawyers by Kevin Hodgson or any person purporting to know his whereabouts as a result of these advertisements.

Analysis

[11]              I am satisfied in the circumstances that the application can properly proceed on a without notice basis.1

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

136Trustee 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—

(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

1      High Court Rules 2016, r 7.46.

(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”.2 The Commission recommended a more flexible approach to enquiries to ascertain the existence or whereabouts of unknown or missing beneficiaries.3

[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 implicit” in s 76 that advertisements were expected as the minimum requirement to satisfy the Court that

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

(NZLC IP31, 2012) at [11.58].

3      At [11.60]-[11.62].

adequate inquiries had been undertaken.4 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.5

[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.6 That case also has some relevance to the present, given the reasonably significant sums of money involved in the estate.7

[18]              Here, the applicant has advertised in both Australian and New Zealand newspapers, and there appears (although there is no direct evidence of this) to have been some attempts to search for Kevin Hodgson through the Police and Salvation Army over the years, although the extent of those searches is not clear.

[19]              However, I consider there are deficiencies in the application for a number of reasons. First, although counsel’s memorandum advises that his firm undertook a search of the online death records in New Zealand and there were no results for Kevin Hodgson, this is simply noted in the background to the memorandum and there is no evidence to support that statement. Furthermore, the memorandum says that the applicant “advised” that there had been a search of the death register in New Zealand and in Australia. Affidavit evidence to support this assertion is required.

[20]              Secondly, the deceased’s will provides for Kevin Hodgson’s share to pass to Kevin Hodgson’s child or children if Kevin Hodgson had died before the deceased. There is no evidence of efforts made to ascertain whether Kevin Hodgson has any children.

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

5 At [12].

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

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

[21]              Thirdly, I am not satisfied as to the information provided in the newspaper advertisements. The advertisements read:

ESTATE OF THOMAS WINSTON HODGSON

of Whangarei in New Zealand

The lawyers acting for the above estate are seeking the whereabouts of KEVIN THOMAS HODGSON. You, or any person claiming through you. Please contact us and/or send notification of any claim on or before 15 January 2021.

[22]              I am not convinced that the wording of the advertisement would bring to the notice of Kevin Hodgson or any children “their potential beneficial interest”. Also, I do not consider an advertisement in a Melbourne newspaper to be sufficiently extensive, given the scant information as to where in Australia Kevin  Hodgson might be.

[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.

[24]              For these reasons, I am not satisfied “reasonable measures” have yet been taken to bring to the notice of the potential beneficiary his interest in the estate.

Result

[25]The application is declined.

Thomas J

Solicitors:

Mathews and Associates, Whangarei for Applicant