Hudson v Hudson
[2024] NZHC 45
•31 January 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-3038
[2024] NZHC 45
UNDER Section 109 of the Trusts Act 2019 IN THE MATTER OF
An application under s 109 of the Trusts Act 2019
BETWEEN
JANICE MARGARET HUDSON
Applicant
AND
STEPHEN BRUCE HUDSON
First Respondent
JANICE MARGARET HUDSON and
STEPHEN BRUCE HUDSON as trustees of The Hudson Family Trust
Second Respondent
JANICE MARGARET HUDSON and
STEPHEN BRUCE HUDSON as trustees of The Stephen and Janice Hudson Family Trust
Third Respondent
Hearing: On the papers Counsel:
Z L Wackenier for Applicant
Judgment:
31 January 2024
JUDGMENT OF O’GORMAN J
This judgment was delivered by me on 31 January 2024 at 3 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Tompkins Wake, Auckland
HUDSON v HUDSON [2024] NZHC 45 [31 January 2024]
Introduction
[1] This is a without notice interlocutory application seeking leave to commence proceedings by way of originating application under pt 19 of the High Court Rules 2016. The substantive application seeks orders under s 109 of the Trusts Act 2019 preventing removal of the applicant, Ms Hudson, as trustee from two family trusts. The trustees of the two different trusts are named in that capacity as the second and third respondents. The first respondent is the applicant’s ex-husband. Their marriage was dissolved in 2019 and the two parties remain in dispute, with proceedings before the Family Court concerning the division of relationship property.
[2] Each of the trust deeds contains a clause to the effect that the discretionary trustee powers may only be exercised if there is at least one independent trustee who is not a beneficiary. At present there is no independent trustee appointed to either of the two trusts. The applicant and the respondent were the two trustees, which has led to problems with decision-making given the disputes between them.
[3] On 17 November 2023, the first respondent served a notice to remove the applicant as trustee of both trusts, purporting to exercise that power under s 105 of the Trusts Act. The notice was due to take effect on 15 December 2023 unless an application was made under s 109 within that same time frame.1 Under s 110 of the Trusts Act, an applicant must produce evidence that raises a genuine dispute as to whether the removal decision was reasonably open to the person in the circumstances.
Legal principles
[4] Part 19 of the High Court Rules is designed to provide a relatively speedy and inexpensive process for determining applications under specific statutory provisions, or where the process is suitable in the interests of justice.
[5] Part 19 was initially designed as a simpler and more expedient process in cases where there was in reality no opposing party.2 That narrow approach is no longer
1 Trusts Act 2019, s 107(3).
2 Jessica Gorman and others McGechan on Procedure (looseleaf ed, Brookers) at [HRPt19.01].
strictly applied.3 However, for contested proceedings that are not specifically listed in r 19.2, it remains an exceptional procedure limited to cases where the interests of justice do not require pleadings or interlocutory steps (such as discovery) for a proper determination of the issues.4 The originating application procedure is unlikely to be appropriate if there are material factual issues in dispute, if discovery may be required, where the substantive rights involve the application of common law doctrines, or where there is a possibility of crossclaims or counterclaims.5
[6] Although not listed in r 19.2, there have been many instances where leave has been granted for proceedings under the Trusts Act to be commenced by originating application. This includes applications for the removal or replacement of trustees.6 However, that is usually where there is no dispute between the parties and/or no opposition to using pt 19.
[7] An alternative would be for the application to be dealt with under pt 18 of the High Court Rules. High Court Rule 18.1(b)(xiii) provides that pt 18 applies to proceedings in which the relief is claimed solely under the Trusts Act 2019. In Jones v O’Keeffe, in an appeal concerning costs, the Court of Appeal suggested that pt 19 may be inappropriate if criticism of a trustee’s conduct is relevant and disputed.7
[8] The key differences between pts 18 and 19 is that under pt 18 the proceeding commenced by statement of claim and an application for directions, and it is subject to full case management under sub-pt 1 of pt 7 (whereas under pt 19 there is more confined case management control).8
Analysis
[9] In this case, the applicant acknowledges that the proceeding will be opposed and contentious. The applicant takes the position that an originating application procedure is nevertheless still appropriate because particularised proceedings are not
3 Commissioner of Inland Revenue v McIlraith (2003) 21 NZTC 18, 112 (HC) at [16]; and
Commissioner of Inland Revenue v Muir [2013] NZHC 2881, (2013) NZTC 21-044.
4 Jones v O’Keeffe [2019] NZCA 222, [2019] NZAR 1448 at [52].
5 See McGechan on Procedure, above n 2, at [HR19.5.01].
6 Wellwood v Wellwood [2019] NZHC 801 at [8]; and Re Hooper [2021] NZHC 576.
7 Jones v O’Keeffe, above n 4, at [50]–[60].
8 Clarkson v Clarkson [2020] NZHC 2211 at [14]–[16].
necessary, nor is discovery. The key issues are already articulated in the correspondence between the parties, and both parties already have access to the key documentation (primarily correspondence between the parties about the notice of removal). The applicant also observes that a speedy process is desirable so that a functioning process for decision-making in respect of the two trusts can be put in place without delay.
[10] As the applicant notes, the overarching objective in the interests of all parties is the “just, speedy and inexpensive determination of this proceeding”.9
[11] I accept there may be a basis for commencing under pt 19, and r 18.4(2) does not preclude this. However, I consider it necessary to hear from the respondent on these issues. I therefore direct as follows:
(a)the application seeking leave to commence proceedings by way of originating application must be served on the first respondent (along with the originating application, memorandum and supporting affidavit);
(b)the first respondent is asked to file and serve a memorandum within two weeks of service advising its position on these procedural issues; and
(c)the matter is to be re-listed before the duty judge once the above steps have occurred.
O’Gorman J
9 Solar Bright Ltd v Martin [2019] NZHC 300 at [18].
6
1