In the Matter of section 133 of the Trusts Act 2019 and under the inherent jurisdiction of the Court and OFan application by Hoglie Trustees Limited, as trustee of the Larry Robertson Family TRUSTApplicant

[2024] NZHC 2832

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-1654

[2024] NZHC 2832

IN THE MATTER OF

section 133 of the Trusts Act 2019 and under the inherent jurisdiction of the Court

AND OF

an application by HOGLIE TRUSTEES LIMITED, AS TRUSTEE OF THE LARRY ROBERTSON FAMILY TRUST

Applicant

Hearing:	on the papers
Counsel:	G D Stringer for applicant
Judgment:	1 October 2024

JUDGMENT OF JOHNSTONE J

This judgment was delivered by me on 1 October 2024 at 4pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors: CooneyLeesMorgan, Tauranga

an application by Hoglie Trustees Limited as trustees of the Larry Robertson Family Trust [2024] NZHC 2832 [1 October 2024]

[1]    Hoglie Trustees Limited sought leave to commence a proceeding, seeking various directions and orders in respect of the Larry Robertson Family Trust, by way of originating application. And it sought an order dispensing with service on the Trust’s beneficiaries.

[2]    I granted leave to commence the proceeding by originating application. But I invited Hoglie Trustees to reflect on the possibility the Trust has been void from its inception due to lack of certainty of its objects, and to file a memorandum of its counsel setting out its view.

[3]    The view set out in the memorandum in response is equivocal.  Indeed, Hoglie Trustees filed with its memorandum a draft amended notice of application, adding an alternative claim: an order declaring a resulting trust in favour of the Trust’s settlor, to be made “if” the Trust lacks certainty.

[4]    In light of the view I have reached on the certainty issue, I intend to make orders without further ado.

Certainty of trust objects

[5]    Except in ways not relevant in the present case, the Trusts Act 2019 applies to all express trusts, whether created before, on, or after the Act’s commencement date. Section 15 provides as follows:

15 Creation of express trust

(1)An express trust may be created—

(a)by or under an enactment; or

(b)by a person (the settlor) who, clearly and with reasonable certainty (and subject to any formalities prescribed by any enactment),—

(i)indicates an intention to create a trust; and

(ii)identifies the beneficiaries (or classes of beneficiaries) or the permitted purpose of the trust; and

(iii)identifies the trust property.

(2)A trust created under subsection (1) commences when a trustee holds property of the trust.

(Emphasis in original.)

[6]    Thus, at s 15(1)(b), the Act states the three certainties, necessary at common law, for the validity of express trusts: certainty of intention; certainty of objects; and certainty of subject matter.1

[7]    Naturally, the context will inform whether a trust’s objects are certain. Certainty as to the objects of fixed trusts, where the settlor has specified the property the beneficiaries are to receive, requires that it be possible to make a complete list of beneficiaries. Certainty as to the objects of discretionary trusts, where the trustees are to have a discretion over the property the beneficiaries are to receive, requires that it be possible to state with “conceptual certainty” that an individual is or is not a beneficiary.2

[8]    It has been observed that a definition of beneficiaries that is hopelessly wide may be found to be uncertain.3 However, as s 15 indicates, an express trust with unidentified beneficiaries may be possible, so long as its permitted purpose is identified clearly and with reasonable certainty.

The deed of trust in this case

[9]    Graeme Halse, barrister and solicitor, has acted for his client, Larry Robertson, for several decades. Mr Halse is a director of Hoglie Trustees, and filed an affidavit in support of its application. This discussion of the facts relies on Mr Halse’s affidavit.

[10]   With a business partner, Mr Robertson operated a scampi fishing business for many years. On 14 August 1992, Mr Robertson executed a deed of trust which,

1      James Anson-Holland “Express trusts” in Law of Trusts (NZ) (online ed, LexisNexis) at [TRU15.01] citing Knight v Knight (1840) 3 Beav 148, 49 ER 58 (Ch).

2      At [TRU15.03] citing Inland Revenue Commissioners v Broadway Cottages [1955] Ch 20 and Re Beckbessinger [1993] 2 NZLR 362 (HC).

3      At [TRU15.03] citing R v District Auditor, ex parte West Yorkshire Metropolitan CC [1986] RVR 24 (also cited as R v District Auditor No 3 Audit District of West Yorkshire MCC, ex parte West Yorkshire MCC [2001] WTLR 785 (QB)).

excluding cover and contents pages, ran to 38 pages. His purpose in doing so was to seek asset protection.

[11]   The Deed names Mr Robertson’s business partner and Mr Halse as original trustees. However, Mr Robertson as the “Settlor” was granted a power to appoint new trustees. The original trustees retired and Hoglie Trustees was appointed by deed on 7 November 2019.

[12]   The Deed provides broad powers to accumulate income, to apply income and capital, and for final distribution of income and capital, relevantly as follows:

3.Power to accumulate income

Until the Date of Distribution, the Trustees in their discretion may accumulate any of the income of the Trust Fund for any periods they think fit, and will hold any accumulations as part of the Trust Fund: WITH POWER nevertheless at any time or times and from time to time, to resort to accumulations as if they were current income.

4.Power to apply income and capital

(i)At any time or times until the day preceding the date of distribution, and subject to paragraph E3 [Power to accumulate income], the trustees in their discretion may pay, apply, appropriate, or appoint any of the Trust Fund and any of the income from it, in any proportions, equal or unequal, to, or for the benefit and advancement (in the very wide senses attributed to those terms by paragraph G1.01(3)) of, any one or more of the Beneficiaries, to the exclusion, if thought fit, of any others or other of them, either absolutely, or subject to any limitations, conditions, and restrictions, or upon any trusts and with any powers (whether or not similar to the trusts and powers appearing in this Deed), and generally in any manner the Trustees think fit.

…

5.Final distribution of income and capital

(i)On and from the date of distribution, the Trustees will hold whatever then remains of the Trust Fund, ON TRUST to transfer it absolutely to such of the Beneficiaries who then are alive, in such shares, as the Trustees, in their discretion, exercised on or before the date of distribution, determine in writing,  and,  IN  DEFAULT   of   such   determination,   ON TRUST to transfer it absolutely to the Grandchildren then in being of the Settler in equal shares as tenants in common provided that, if any such Grandchild dies before that date leaving Issue surviving, him then those Issue take between

them, in equal shares per stirpes, the share or interest that grandchild would have taken had it lived.

(ii)At the date of distribution, should there be no Beneficiaries alive to take under sub-paragraph (i) of this paragraph E5: whatever then remains of the Trust Fund will be held on the statutory trusts which would have applied had the Settlor died intestate and a bachelor on that date and had Trust Fund comprised his total estate and assets.

[13]   The “Date of Distribution” was defined, in essence, as the last day of the 80-year period commencing on 14 August 1992, or another date, either earlier or (with Mr Robertson’s consent) later, appointed by the trustees in their absolute discretion.

[14]   Thus, the Deed provided the trustees broad powers to distribute the Trust Fund, either finally, at any time within 80 years (or longer with Mr Robertson’s consent), or on an interim basis. Distributions do not require to be made for any particular purpose. And they must be made either to the “Beneficiaries”, or by way of final distribution to Mr Robertson’s grandchildren in equal shares.

[15]The question arises: who are “the Beneficiaries”?

[16]Clause B, headed “Interpretation”, provides relevantly as follows:

(i)Where these expressions appear they are to be read as follows:

…

‘Beneficiary’ or ‘Beneficiaries’ means:

any person who receives or may receive any interest in the Trust Fund. ‘Discretionary Beneficiaries’ means:

(i)Any spouse including spouse for the time being of the Settlor.

(ii)the Final Beneficiaries;

(iii)any issue of any of the Final Beneficiaries;

(iv)any wife, husband, widow, widower, for the time being of any of the Final Beneficiaries or of any issue of the Final Beneficiaries.

(iv)any sibling or parent or the issue of any sibling of the Settlor or of any spouse of the Settlor.

(v)the trustees of any trust which includes for the time being among its beneficiaries (contingent or otherwise) any person specified in this paragraph of this clause as a Beneficiary;

(vi)any company in which any person specified in this paragraph of this clause as a Beneficiary holds individually or collectively at least fifty per cent of the shares, or is entitled to at least fifty per cent of the proceeds on its winding up;

(vii)any person who is living or has lived with a Beneficiary of the opposite sex on a domestic basis in such a manner as if they were legally married to each other, although not so married;

(ix)such other person as the Trustees before the Vesting Day shall, revocably or irrevocably, appoint by deed;

(x)any charitable purpose or organisation in New Zealand for the time being.

[17]   While, as can be seen, a definition of “Discretionary Beneficiary” was provided, the term does not appear elsewhere in the deed. And while the definition of Discretionary Beneficiary relied upon the notion of “Final Beneficiaries”, the latter term was not defined.

[18]   More problematically, the definition of “Beneficiaries” is circular: the Deed permits the trustees to distribute the Trust Fund to “Beneficiaries”, a group comprised of “any person who receives or may receive any interest in the Trust Fund”.

Does the Deed of Trust establish certainty of objects?

[19]   The circularity of the definition of “Beneficiaries” prevents the Deed establishing the necessary certainty of objects.

[20]   First, it is at least arguable that the definition falls foul of the “is or is not” test for conceptual certainty of the identity of beneficiaries of a discretionary trust. The argument, of course, is that the fact persons are described as those receiving, or possibly receiving, an interest in the Trust Fund, does not assist in identifying them.

[21]   And second, the counter-argument does not assist. The counter-argument can only be that it seems the world’s entire population of individuals and legal corporates should be regarded as beneficiaries. The “is or is not” test is met, because everyone “is”. In that case, the Deed would require to identify a permitted purpose of the trust,

clearly and with reasonable certainty. As stated above, distribution of the Trust Fund is not stated to require any particular purpose.

[22]   The Deed of Trust did not adequately identify the beneficiaries or the permitted purpose of the trust it was intended to create. No express trust was validly formed by it.

Consequences

[23]   The primary consequence is that the property previously considered to form the Trust Fund has always been held on resulting trust for Mr Robertson.

[24]   A secondary consequence may be that Hoglie Trustees is not, in terms of the Trusts Act, a “trustee”. Under s 9 of the Act, “trustee means a person who is appointed as trustee of a trust”. It is not clear to me that Hoglie Trustees’ status as a resulting trustee has arisen by way of appointment.

[25]   Nevertheless, the inherent jurisdiction of this Court to supervise and intervene in the administration of a trust is not affected by the Trusts Act, except to the extent the Act provides otherwise.4 I consider there to be no jurisdictional impediment to making the declaration sought by Hoglie Trustees in the event I were to come to the view I have.

[26]   On the other hand, I am not at present persuaded that I should make an order indemnifying Hoglie Trustees for its fees as trustee. The basis on which it has incurred fees  may  require  re-assessment,  discussion  as  between  Hoglie  Trustees  and   Mr Robertson, and potentially argument. In the circumstances, I intend to make no order as to costs, without prejudice to Hoglie Trustees’ entitlement such as it may be to apply further in future.

4      Section 8(1).

Result

[27]I declare that:

(a)The  deed  of  trust  of  the  Larry  Robertson  Family  Trust  dated   14 August 1992 failed to establish an express trust.

(b)All property held by Hoglie Trustees on account of Mr Robertson in respect of the Larry Robertson Family Trust is held for him by way of resulting trust.

[28]   I make no order as to costs, without prejudice to Hoglie Trustees’ entitlement such as it may be, pursuant to any future, separate application.

Johnstone J