Khan v Scott

[2013] NZHC 1180

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-007255 [2013] NZHC 1180

BETWEEN  MOHAMMED FAIYAM KHAN Applicant

ANDLYNN MARIE SCOTT AS GUARDIAN OF MATTHEW SCOTT PEACOCK (MINOR), SAMANTHA JENNIFER PEACOCK (MINOR)

Joint First Respondents

ANDAMANDA INGRID PEACOCK AS GUARDIAN OF MICHAEL TONY PEACOCK (MINOR)

Second Respondent

Hearing:         On the papers

Judgment:      22 May 2013

JUDGMENT OF ELLIS J

This judgment was delivered by Justice Ellis on 22 May 2013 at 4:30 pm

pursuant to R 11.5 of the High Court Rules Registrar / Deputy Registrar Date……………………….

Solicitors:           Khan & Associates, P O Box 23492 Hunters Corner, Manukau

Fax: [phone]

Counsel:             M F L Dreaneen, P O Box 92, Waimauku 0842

Fax: [phone] – Email: [email protected]

KHAN V SCOTT & OR HC AK CIV-2012-404-007255 [22 May 2013]

[1]      Khan is the executor of the estate of Richard Edward Peacock, who died on

15 November 2011.   He has applied to this Court for orders approving a Deed of

Family Arrangement under s 64A of the Trustee Act 1956.

[2]      The three beneficiaries of Mr Peacock’s estate are his minor children and on

20  February  2013  I  made  orders  appointing  their  respective  mothers  as  their litigation guardians.

[3]      Formal  service  has  occurred  on  the  children  by  way  of  their  litigation guardians.  As I indicated on 20 February 2013, I am satisfied that the application matter can be dealt with on the papers.

[4]      Mr Peacock left a will  dated 3 February 2006  which he executed while married to Amanda Ingrid Peacock who is the mother of one of the minor beneficiaries, Michael Tony Peacock.  Michael was born on 15 September 2005

[5]      Mr Peacock had previously had two other children, Matthew Scott Peacock and Samantha Jennifer Peacock, with his former wife, Lynn Marie Scott.   Those children were born on 6 August 1997 and 2 Sept 1999 respectively.

[6]      In Mr Peacock’s 3 February 2006 will he provided for the distribution of his estate as follows:

Clause 6

(a)       I  give  three  hundred  thousand  dollars  ($300,000)  to  be  divided equally among those of my children, Matthew Scott Peacock, Samantha Jennifer Peacock and Michael Tony Peacock, if they are living at my death and reach the age of 20 years.

…

Clause 7

I give all my property to my trustee upon trust on the following terms:

(a)       My trustee shall pay my debts, funeral and executorship expenses and any duty on my estate.

(b)       My  trustee  shall  give  the  balance  of  my  estate  (“my  residuary estate”) to (“my wife”) Amanda Ingrid Peacock of Auckland, Category Manager, if she is living at my death.  If she is not living at

my death then I give my residuary estate to Michael Tony Peacock if he is living at my death and reaches the age of 20 years.

[7]      The difficulty arises because Mr Peacock’s marriage to Amanda Peacock was dissolved on 29 August 2011.  For that reason her son, Michael, stands to receive the entire portion of the residuary estate and thus a greater share than the other two children, Matthew and Samantha.  The approximate value of the residuary estate is

$510,128.02.

[8]      The proposed Arrangement is intended to provide for all of the children equally.  Its terms have been agreed by Ms Scott and Mrs Peacock who consider that the Arrangement would maintain good and harmonious relationships amongst the three children of Mr Peacock, and would be in the best interests of them all.

[9]      In McKnight v Craig French J said:[1]

[1] McKnight v Craig [2010] 3 NZLR 860 (HC) at [7] and [8].

[7]       The role of the Court in an application under s 64 of the Trustee Act is to give consent to the arrangement on behalf of persons such as minors, unborn and unascertained beneficiaries who are unable to give consent themselves.

[8]       The following principles may be distilled from the authorities: see

Re Greenwood [1988] 1 NZLR 197, Re Byrne HC Wellington CIV-2003-

485-000167, 25 May 2004, Miller J and Ewington & Anor v Schulz & Ors

HC Auckland CIV-2008-404-006596, 5 May 2009, Winkelmann J. i)        The power to approve a variation is discretionary.

ii)        The  Court  may  consider  any  proposal  which  varies  or revokes any or all of the trusts or a proposal which enlarges the powers of the trustees in managing or administering the property subject to the trust.

iii)       The discretion is exercised in the interests of the person on whose behalf the Court is asked to approve the variation and from their point of view. The Court should therefore ask itself whether the person would have given approval if that person were alive, of full capacity and properly advised.

iv)       The Court can approve a scheme which conflicts with the intentions of the settlor but should not do so lightly.

v)        The   Court   considers   the   trust   provisions   afresh   if circumstances have arisen which were not foreseen or may

not  have  been  foreseeable  at  the  time  the  trust  was established.

vi)       The Court cannot approve an arrangement to the detriment of any person on whose behalf the Court is giving consent.

vii)      But the Court is to take a wide approach to benefits and detriments in arrangements and must consider the arrangements as a whole in a practical and business like way.    Indirect and intangible  benefits and detriments are relevant including the welfare and honour of the family.

viii)     Difficulties may be met by amendments to the proposal or covenants by persons benefitting to make good losses to the disadvantage of other beneficiaries.

ix)      An order approving a proposed variation may be conditional.

[10]     Taking into account these principles I am satisfied that, in the present case, the proposed arrangement should be approved for the three reasons that follow.

[11]     First, it is clear that the circumstances in which Mr Peacock’s will was made and which were contemplated by the will to continue, had materially changed by the time of his death.  Any suggestion that it was ever his intention even contingently to favour Michael over his two half siblings must be seen in that context.  There is no reason to think that Michael was potentially favoured other than by virtue of his mother’s continued relationship with Mr Peacock.

[12]     The second point follows from the matters I have noted in the preceding paragraph.   This is not, in my view, a case where the proposed Arrangement can fairly be seen as being plainly or directly at odds with the settlor’s intentions.  That conclusion is confirmed (to the extent it can be) by the evidence of Mr Anthony Peacock, who is the father of the deceased.   He has deposed to his belief that it would not have been his son’s intention that the minor children receive different amounts.

[13]     And lastly, I am satisfied that the financial detriment to Michael that would arise from the Arrangement is counter-balanced to the extent of extinguishment by the benefit he receives from it.   In that respect I record that his grandfather, his mother and Ms Scott have all deposed about the importance and desirability of

maintaining harmony between the three children and of ensuring that there is no future impediment to that.

[14]     The application is granted accordingly.   I make an order approving under s 64A of the Trustee Act 1956 a Deed of Family Arrangement in relation to the estate of Richard Edward Peacock.

[15]     The form of the approved arrangement is that which is attached as exhibit

MFK-2 to the affidavit of Mohammed Faiyam Khan affirmed on 12 November 2012 in these proceedings.

Rebecca Ellis J