In the Matter of the Oakridge Trust By Oakridge Trust Co Limited Applicant

[2024] NZHC 2860

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-2243

[2024] NZHC 2860

UNDER

the Trusts Act 2019 and Part 19 of the High Court Rules 2016

IN THE MATTER

of the OAKRIDGE TRUST

BY

OAKRIDGE TRUST CO LIMITED

Applicant

Hearing:	On the papers
Counsel:	JWH Little for Applicant
Judgment:	2 October 2024
Reissued:	3 October 2024

JUDGMENT OF WILKINSON-SMITH J

This judgment was delivered by me on 02/10/2024 at 4pm. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:
TGL Legal, Auckland

Shortland Chambers, Auckland

RE OAKRIDGE TRUST CO LIMITED [2024] NZHC 2860 [2 October 2024]

Introduction

[1]                  The applicant, Oakridge Trust Co Ltd is the sole trustee of the Oakridge Trust (the Trustee). The  Trustee’s  three  directors  are  Lance  Noel  Worthington, Raewyn Anne Worthington and an independent professional, Bernard Mazur (chartered accountant). The Trustee applies for  an  order  under  s 124  of  the  Trusts Act 2019 approving variations to the Oakridge Trust deed.

Background

[2]                  The background to the application is set out in the affidavit of Mr Worthington. The trust was established in 1996 and was intended to be for the primary benefit of Mr Worthington, Ms Worthington and their three children.

[3]                  The trust deed identified Tracey Barraclough of Auckland as the settlor of the trust  and  records  her  as  having  made  a  payment  to  the  Trustee  of   $10. Tracey Barraclough is Mr Worthington’s sister, who since signing the trust deed has reverted to using her maiden name Tracey Worthington. The trust was  settled by  Ms Tracey Worthington because Mr and Ms Worthington had been advised, at the time the trust was established, that someone other than themselves should be named as nominal settlor. All  of  the  property  settled  in  the  trust  derives  from  Mr  and  Ms Worthington.

[4]                  Starship Children’s Hospital is named as a beneficiary. At the time the trust was settled there was no entity called Starship Children’s Hospital. It is said that the reference to Starship Children’s Hospital in the trust deed should be treated as referring to the Starship Foundation. The intention was to benefit Starship Children’s Hospital. That would be achieved by naming the Starship Foundation as a beneficiary.

[5]                  No additional beneficiaries have been appointed since the trust was established. Mr and Ms Worthington are the economic settlors and primary beneficiaries of the trust.

The application

[6]                  The Trustee wishes to exercise its power under s 122 of the Trusts Act to amend the trust deed and to update it to reflect modern drafting practices and changes in the law.

[7]                  The Trustee, all living beneficiaries, and the Starship Foundation support the amendments.

[8]                  The Court’s approval is required to the amendments on behalf of any future children of Mr and Ms Worthington, as unborn future persons who may acquire a beneficial interest in the trust in terms if s 124(2) of the Trusts Act. Such approval is necessary for the Trustee to exercise its amendment power under s 122.

[9]The Trustee seeks orders:

(a)granting leave to commence this proceeding by way of originating application;

(b)dispensing with service of the proceeding;

(c)approving, under s 124, the variations to the Oakridge Trust deed reflected in the restated trust deed exhibited to  the  affidavit  of  Lance Noel Worthington dated 5 September 2024 on behalf of any future children of Mr Worthington and Ms Worthington; and

(d)directing that the Trustee’s reasonable costs of and incidental to this proceeding be paid from the trust fund.

[10]              The  matter  was  called  in   the   Duty   Judge   list   before   Muir   J   on   11 September 2024. Muir J noted that the table referred to in counsel’s memorandum was not attached to the memorandum. Muir J also queried whether the consent of the legal settlor should be obtained, while recognising that was not a statutory requirement. It was also suggested that consideration should be given to whether the

matter should be set down for a one-hour hearing due to the number and implications of the proposed changes.

[11]              Counsel for the Trustee subsequently filed the table of amendments. An affidavit was filed on 1 October 2024,  exhibiting  a  deed  of  consent  signed  by  Ms Tracey Worthington.

[12]              Counsel for the Trustee states that the Trustee is content for the application to either be determined on the papers or to be set down for a one-hour hearing. It is submitted that determination on the papers is appropriate because that appears to be the usual course for applications of this type.1

Leave

[13]              Leave to bring the application under pt 19 of the High Court Rules 2016 is sought.

[14]              The application has the consent of the legal settlor and all living beneficiaries. There are no factual issues in dispute. I agree that it is in the interests of justice to grant the leave application in order to secure the expeditious determination of the application without unnecessary cost or complexity.

Representation

[15]              I am satisfied that there no potential adverse effects of the proposed variation on the interests of minor, unborn future beneficiaries given Mr and Ms Worthington’s ages and stated intention not to have any future children. There is no adverse effect on minor, unborn or future beneficiaries to require the appointment of counsel to represent their interests.

1      Citing Re Drummond [2023] NZHC 847; Re Goubitz [2024] NZHC 976; and Talijancich v Talijancich [2021] NZHC 753.

Service

[16]              There are no parties affected by the application who have not already provided their written consent to the variation. Service is not required. A direction dispensing with service of the application is appropriate.

Application

[17]The main amendments are summarised as follows:

(a)To include as additional discretionary beneficiaries:

(i)other trusts of which the beneficiaries are beneficiaries, a standard provision in modern deeds;

(ii)the lineal descendants of Mr and Ms Worthington’s children to enable future generations of the family to benefit from the trust; and

(iii)associations, clubs and charitable entities to enable greater flexibility in charitable giving.

(b)Clarify the classes of family member beneficiaries and their priority as beneficiaries. Mr and Ms Worthington would continue to be the primary beneficiaries (First Beneficiary Group); their children (including any future children) would be the Second Beneficiary Group, and the lineal descendants of Mr and Ms Worthington’s children would be the Third Beneficiary Group.

(c)Clarify that there is a power to appoint new beneficiaries (to be exercisable by the trustee under the revised deed).

(d)Confer on the Trustee the power to remove beneficiaries, to resettle any part of the trust fund, and to vary the trust deed (with the consent of Mr and Ms Worthington or the survivor of them), all of which powers are standard in modern trust deeds.

(e)Clarify the application of the default duties appearing in the Trusts Act and add a “no self-benefit clause”.

(f)Provide that trustee decisions must be unanimous except where otherwise specified in the deed (for example, in the “no self-benefit” clause).

(g)Extend the date of distribution to the maximum possible under the  Trusts Act.

(h)Clarify that the default final beneficiary referred to in the current deed as the “Starship Children’s Hospital” and as “the trustees for the time being of the Starship Children’s Hospital” is the Starship Foundation.

(i)Generally, update the deed to reflect modern drafting practice.

[18]              Section 124 of the Trusts Act empowers the Court to approve variation of a trust on behalf of any person who lacks capacity or who may acquire a beneficial interest at a future date.

[19]                Section 124(4) of the Trusts Act set out the factors which the Court must take into account on an application for an order of approval. Those factors are:

(a)the nature of any person’s interest in the trust property and the effect of the proposed order on that interest;

(b)the benefit or detriment that may result to any person with an interest in the trust property if the Court makes or refuses to make the proposed order; and

(c)the intentions of the settlor of the trust in settling the trust, if it is practicable to ascertain those intentions.

[20]              The Court must not make an order of approval if the effect would be to reduce or remove any vested interest in the trust property.2 An order of approval binds the person on whose behalf it is made and takes effect without any further steps.

[21]              The factors in s 124(4) support the granting of the order. The varied trust deed will continue to recognise Mr and Ms Worthington as the primary beneficiaries of the trust. The interest of any future children in the trust property is effectively redundant given Mr and Ms Worthington’s ages and their stated intention not to have any further children. Any future children would, in any event, continue to be discretionary beneficiaries.

[22]                   Mr and Ms Worthington, as economic settlors and primary beneficiaries, and the other beneficiaries consider the proposed amendments to be of substantial benefit to them and the beneficiaries as a whole. Their children and any future children who are existing beneficiaries will also benefit indirectly by the addition of their children as beneficiaries.

[23]              Further, all beneficiaries will benefit from a trust deed that is consistent with modern drafting practice and which has been updated to reflect changes in the law.

[24]              I am satisfied that the amendments are consistent with the intentions of the settlors in settling the trust.

[25]              Having regard to the matters set out in s 124 of the Trusts Act, I am satisfied that the substantive application should be granted.

Result

[26]I make the following orders:

(a)Leave is granted for the proceeding to be commenced by way of originating application.

2      Trusts Act 2019, s 124(5).

(b)Service on the beneficiaries of the trust is dispensed with.

(c)The application to approve the variations to the Oakridge Trust deed reflected in the restated trust deed exhibited to  the  affidavit  of  Lance Noel Worthington dated 5 September 2024 on behalf of any future children of Mr Worthington and Ms Worthington is granted under s 124 of the Trusts Act.

(d)The Trustee’s reasonable costs of and incidental to this proceeding are to be paid from the trust fund.

Wilkinson-Smith J