MA Payne Trustee Ltd v New Plymouth Family Court
[2019] NZHC 1215
•30 May 2019
IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY
I TE KŌTI MATUA O AOTEAROA NGĀMOTU ROHE
CIV 2018-443-072
[2019] NZHC 1215
BETWEEN MA PAYNE TRUSTEE LTD AS TRUSTEE OF THE M.A. PAYNE FAMILY TRUST
First PlaintiffAND
DOREEN EDNA MALONEY-COLES AND RAYMOND JOHN KURTH AND JAMES PETER FISHER
Second Plaintiffs
AND
NEW PLYMOUTH FAMILY COURT
First Defendant
AND
JOHN PATRICK LARMER AND SHEREE ANN PAYNE AS TRUSTEES OF THE
BERNARD AND NANCY PAYNE FAMILY TRUST
Second Defendants
AND
SHEREE ANN PAYNE
Third Defendant
AND
STUART TRUNDLE AND NEIL ROBERT MAULDER AS EXECUTORS AND
TRUSTEES IN THE ESTATE OF MARK ANDREW PAYNE
Fourth Defendants
AND
NICHOLSONS
Fifth Defendants
AND
NANCY PAYNE
Sixth Defendants
Hearing: 21 May 2019 Counsel:
M Phillipps, V Ammundsen and N Dennison for First and Second Plaintiffs
No appearance by First Defendant
P Wright for Second and Third Defendants No appearance by Fourth Defendants
MA PAYNE TRUSTEE LTD AS TRUSTEE OF THE M.A. PAYNE FAMILY TRUST v NEW PLYMOUTH FAMILY COURT [2019] NZHC 1215 [30 May 2019]
N Faulkner for Fifth Defendant
No appearance by Sixth Defendant
Judgment:
30 May 2019
JUDGMENT OF ELLIS J
[1] Mark Payne (Mark) died suddenly in March 2002. In his will, Mark left his personal belongings to his “spouse” and the residue of his estate to the M.A. Payne Family Trust (the MAPFT). The primary beneficiaries of the MAPFT were Mark and his children. The discretionary beneficiaries were Mark, his spouse, his children, their spouses and any other person related to Mark “by blood, marriage or adoption of any degree and of any kind and whether now living or born after the execution of this deed”.1 The principal assets of the estate were a 48 hectare farm property at Oakura in Taranaki, Fonterra shares, 120 dairy cows and farm buildings and equipment.
[2] At the time of his death Mark had been in a de facto relationship with Sheree McNeill (Sheree) for around six months. It is not in dispute that this qualified her as his spouse for testamentary purposes. Sheree had two children by a previous relationship. Mark had no children of his own.
[3] After Mark’s death both Sheree and Mark’s parents (Bernard and Nancy) brought claims against Mr Payne’s estate under the Family Protection Act 1955 (the FPA). Those claims were settled, and consent orders were made in the Family Court in 2003. The effect of those orders was that the residue (farm, shares etc) of Mark’s estate bypassed the MAPFT and was, instead, transferred to the Bernard and Nancy Payne Family Trust (BNPFT) for the benefit of Bernard, Nancy, Sheree and her two sons.2
1 Also included as discretionary beneficiaries were “any charitable trust or charitable purpose or charitable institution”.
2 The details of the transfer will be discussed later in this judgment.
[4] The second plaintiffs are three of Mark’s cousins.3 As such they fall within the “blood relative” class of discretionary beneficiary under the MAPFT. There is no dispute that they were unaware of this status until 2018. They have now effected the replacement of the former MAPFT trustees and, in these proceedings, ask the Court to undo what occurred in 2003. More specifically they now seek to have the consent orders set aside, as a first step to further action they wish to take against the second, third and fifth defendants for knowing assistance and knowing receipt.
[5] Before turning to consider their claim, however, it is necessary to set out the not uncomplicated background in a little more detail.
BACKGROUND
[6] In October 2001 Sheree and her two children (born 1997 and 1999) moved in with Mark.
On 22 November 2001, Mark:
(a)settled the MAPFT; and
(b)executed his will.
[8] The primary beneficiaries of the MAPFT were Mark and his children. As noted earlier:
(a)Mark had no children at the time the MAPFT was settled and none at the time of his death;
(b)the discretionary beneficiaries were:
(i)himself and his children (of which he had none);
(ii)his spouse;
3 It is not clear to me whether Mark has any more cousins, or other “blood relatives”.
(iii)any other person who is related to Mark “by blood, marriage or adoption of any degree and of any kind” whether living at the time of execution or born later; and
(iv)unidentified charities.
[9]The Trust Deed provided that during the Trust Period the Trustees could:
(a)pay or apply the income of the Trust Fund:
… to, for or towards the personal support, maintenance, comfort, education, advancement in life or otherwise for the benefit of such of the Discretionary Beneficiaries as may from time to time be living or in existence or such one or more of them at such time in such manner and if more than one in such shares and proportions as the Trustees in their absolute and uncontrolled discretion shall think proper and with power to appropriate moneys for one or more Discretionary Beneficiaries to the exclusion of others.
(b)pay or apply the whole or any part of the capital of the Trust Fund:
… to or for the benefit of such of the Discretionary beneficiaries as may then be living or such one or more of them to the exclusion of the others other of them at such times and if more than one in such proportion and in such manner and subject to such terms and conditions as the Trustees shall think fit and, without limiting the generality of the forgoing, or towards the personal support, maintenance, comfort, education and advancement in life or otherwise for the benefit of such beneficiary or beneficiaries.
[10] There are no final beneficiaries separately named in the Trust Deed. Rather, it provides:
On the Vesting Day the Trustees shall pay the capital and income of the Trust Fund as may then remain UPON TRUST to such one or more exclusively of the others or other of the Discretionary Beneficiaries and in such shares and proportions as the Trustees shall appoint.
[11] The Trustees of the MAPFT were Mark and two of his friends, Steven Looney and Neil Maulder (the Trustees).4
4 By deed dated 26 March 2018, Steven Looney and Neil Maulder retired as trustees and Doreen Maloney-Coles and Tracy Renata were appointed as trustees of the M.A. Payne Family Trust (MAPFT). By deed dated 16 April 2018 Doreen Maloney-Coles and Tracey Renata retired as trustees and MA Payne Trustee Ltd was appointed sole trustee of the Trust. Ms Maloney-Coles is the director of MA Payne Trustee Ltd.
[12] Mr Payne’s will provided that his personal belongings would go to his spouse (which was defined to include a living de facto partner) and the rest would go to the MAPFT. The named Executors of his estate were Steven Looney and Neil Maulder.
[13] A draft memorandum of wishes in relation to the MAPFT was prepared on instructions by Mr Payne’s lawyer (Mr Fitzgibbons of the firm Nicholsons, the fifth defendant) and sent to Mr Payne on 27 November 2001 but was never signed. It recorded (inter alia) that:
(a)if Mark were to leave a spouse or child, the Trust should operate for their benefit;
(b)if Mark left no spouse or child, but if his parents survived him, the Trust should operate for the benefit of his parents; and
(c)otherwise, the trustees “might consider adding any special friends of mine as beneficiaries and making provision for them from the Trust Deed and should also make provision for charities as follows: …”5
[14] On 27 March 2002 Mark was killed in a quad bike accident. Shortly afterwards Sheree changed her surname to “Payne”.
[15] Probate was granted on 11 April 2002. On 8 May 2002, the Oakura farm was transferred to Messrs Looney and Maulder as Trustees and Executors of Mark’s estate.
The FPA proceedings
[16] On 6 September 2002 Sheree’s lawyer (Mr Matheson of Reeves Middleton Young) wrote to the lawyer for the Estate (Mr Fitzgibbons of Nicholsons) advising of her intention to make a claim under Property (Relationships) Act 1976 and under the FPA.6 He also advised that Sheree had been experiencing some difficulties in her communications with Mr Looney.
5 The draft required Mark to identify those charities for whom he wished to make provision. It seems he had not done this by the time he died.
6 A potential claim under the Law Reform (Testamentary Promises) Act 1949 was also flagged.
[17] On 20 September 2002 the lawyer for Bernard and Nancy (Mr King of Till Henderson King) wrote to Mr Fitzgibbons noting that Mr Matheson had lodged a claim on behalf of Sheree,7 and advising that Bernard and Nancy would also be making a claim either:8
(a)under s 3(1)(e)(i) of the FPA, on the basis that they were being partly maintained by Mark “through instalments on the vendor mortgage” being paid by him; or
(b)on the basis that the court subsequently determines that it cannot make an order in favour of Sheree (ie under s 3(1)(e)(ii) of the FPA).
[18] On 23 September Mr King (for Bernard and Nancy) wrote to Mr Fitzgibbons making a proposal whereby:
(a)Sheree would file her claim under the FPA;
(b)that claim would be settled between Sheree and Bernard and Nancy on the basis that the residuary estate would be divided as follows:
(i)a 50 per cent share going outright to Sheree; and
(ii)the other 50 per cent vesting in a new Trust with both income and capital being for the benefit of Bernard and Nancy during their lifetimes but with the remainder reverting on their deaths to Sheree;
(c)the new trust and Sheree would own the farming business in equal shares and as tenants in common with the trust’s 50 percent share transferring on the Paynes’ deaths to a trust for the benefit of Sheree and her sons.
7 Although in fact that claim had not yet been filed.
8 Sections 3(1)(e)(i) and (ii) now find form in ss 3(1A)(a) and 3(1A)(b)(ii) of the FPA respectively. For the purposes of this judgment the numbering applicable in 2003 will be used.
[19] On 25 September Mr Matheson (for Sheree) wrote to Mr Fitzgibbons referring to Mr King’s letter and addressing certain procedural matters, including that court orders would be required because minors (Sheree’s sons) were involved. He concluded by saying “If there are issues of concern, a meeting involving yourself, Roger Mori,9 myself and Dennis King might be appropriate”.
[20] On 24 October 2002, Mr Matheson filed Sheree’s FPA claim against the Executors in the Family Court, together with Sheree’s affidavit in support in which she deposed (inter alia) that:
(a)she was very close to Nancy and Bernard who regard her as their daughter in law and her children as their grandchildren;
(b)she understood that Mark had acquired the farm from his parents some time ago;
(c)she and Mark had worked on the farm as a team;
(d)she and Mark had been very close and were planning to have a child together;
(e)Mark had loved her sons as if they were his own and wished for one of them one day to take over the farm;
(f)the lawyer for Mark’s parents had written to her lawyer with a proposal for the distribution of Mark’s estate;
(g)she supported the settlement proposal but “there has been no satisfactory response from the Trustees”; and
(h)she was seeking to have Mr Looney removed as an Executor of the estate.
9 Mr Mori (also of Nicholsons) was the Trustees’ lawyer.
[21] Sheree’s affidavit annexed (inter alia) the MAPFT Deed, the letter containing the settlement proposal and the draft trust deed for the proposed new trust.
[22] Also filed on 24 October 2002 was a memorandum addressing service of the proceedings. It advised that Mark was an only child and had no children of his own. Then it stated:
THE only other persons who would be entitled to pursue a claim under the Family Protection Act 1955 are the Plaintiff's children and the Deceased’s elderly parents - Bernard and Nancy Payne of New Plymouth, both aged in their late seventies.
THE Plaintiff and her children had an extremely good relationship with the Deceased and even though the relationship was of relatively short duration, the Deceased had accepted Sheree and her children as being his family. The Plaintiff and the Deceased had intended the relationship to be permanent. They had planned to marry and have a child. The Plaintiff continues to have an extremely good relationship with the Deceased's parents who have accepted the Plaintiff and her children as being part of the Payne family.
THE M A Payne Family Trust, which is entitled to the entire residue of the Estate, involves uncertainty as to what the Plaintiff (and other potential beneficiaries) might receive. The Trustees have a wide discretion.
THERE is currently an agreement between the Plaintiff and the deceased's parents as to how the estate should be distributed. Hopefully this will form the basis of Consent Orders. However, at this stage, the Trustees have not indicated their willingness to consent to the proposal.
THE only Order sought at this stage is an Order that the proceedings be served on the deceased's parents, Bernard and Nancy Payne and the Defendants. Bernard and Nancy Payne have already instructed Till Henderson King in respect of the matter and it is anticipated that Till Henderson King will be authorised to accept service.
[23]The Court then directed that the proceedings be served on Bernard and Nancy.
[24] On 6 November 2002, Mr Looney resigned as an Executor of Mark’s estate and was replaced by Stuart Trundle (Mr Trundle and Mr Mauldey will henceforth be referred to as the Executors). Mr Looney remained as a Trustee of the MAPFT.
[25] On 5 December 2002, Bernard and Nancy filed a statement of claim under the FPA in which they alternatively claimed:
(a)they were being maintained (wholly or partly or were legally entitled to be maintained wholly or partly) by Mark at the date of his death; or
(b)at the date of the claim there was no living de facto in favour of whom the court could make an order and no child of a de facto relationship of the deceased.
[26] And on 11 December 2002, the Trustees’ lawyer (Mr Mori) filed a “Notice of Appearance Reserving Rights”, noting that “[the] Trust is a residuary beneficiary of [Mark’s] estate [and] as Trustees of the Trust they desire to reserve their rights without filing a Statement of Defence”.
[27] Sometime after this, the Executors filed an undated statement of defence to both FPA claims recording that they “… intend to adopt a neutral stance on the question of whether or not the Plaintiff[s] should receive an award from the deceased’s Estate”.
[28]On 23 December 2002 Mr Fitzgibbons wrote to Mr Looney in which he said:
As you are aware, Sheree and Bernard and Nancy Payne have each filed proceedings under the Family Protection Act, seeking greater provision from Mark's Estate.
I think you have probably seen a letter dated 23 September 2002 from Till Henderson King (acting for Bernard and Nancy), setting out a proposal to which the Payne Snrs and Sheree all agree. In case you have not seen this letter, a copy is attached.
The Trustees of the Estate have given consideration to the proposal put on Sheree's, Bernard's and Nancy's behalf.
The Trustees seek your comment as a Trustee of the M A Payne Family Trust to a counter-proposition, which would involve:
· the formation of a new Trust in which the proposed discretionary beneficiaries would be Bernard, Nancy, Sheree and her children;
· it would be proposed that the Trustees of the new Trust would include a representative of Bernard and Nancy,
· it is proposed that the Trust Deed contain a provision requiring that Trustees' decisions be unanimous;
· it is proposed that the Trust Deed would include a specific provision that the farming operation be retained during the lifetime of Bernard and Nancy or the survivor of them;
· it is proposed that there be a specific provision for payment of a minimum monthly amount to Bernard and Nancy from the new Trust, perhaps initially in continued reduction of their mortgage debt, and thereafter by way of distributions of income or capital;
· it is proposed that the power to appoint new Trustees be vested in Sheree's nominees, but with provision that the Trustee representing Bernard's and Nancy's interests not be able to be removed during the lifetime of the survivor of Bernard and Nancy, that Bernard and Nancy have power to nominate another Trustee in the event that their original representative should die or retire, and that their representative automatically retire on the death of the survivor of Bernard and Nancy;
· it is proposed that the remaining Estate assets (if any) be utilised firstly in payment of all parties’ costs, including reimbursement to Bernard and Nancy of costs already paid, with the balance (if any) being paid to the Trustees of the M A Payne family Trust as the beneficiary in the Estate.
The Trustees of the Estate wish to respond to the claims made by Sheree, Bernard and Nancy as early as possible in the New Year. The Trustees of the Estate ask that you give consideration to the propositions outlined above, and let them have your views as soon as possible.
[29] Mr Looney did not reply to that letter and Mr Fitzgibbons chased him up by letter dated 22 January 2003. On 26 January 2003 Mr Looney met with Mr Trundle after which he wrote a handwritten note to Mr Fitzgibbons advising that after discussions with Mr Trundle:
(a)he fully endorsed the alternative trust structure “that seeks to secure the future of Bernard & Nancy”; and
(b)he believed that after their deaths “the assets of M Payne family trust should be held in trust and/or sold up and distributed to the benefit of more than 1 person, namely extended members of the Payne family and various charities that Mark supported during his lifetime”.
[30] On 4 February 2003 Mr Matheson advised the Family Court that the settlement proposal had been put to the Trustees by his client (Sheree) and by Mark’s parents “who are the only other interested parties”. He said that because the Trustees had not yet accepted the proposal, a settlement conference was required.10
[31] On 6 March 2003 the lawyer for the Executors (Mr Fitzgibbons) put forward an amended settlement proposal which involved all the farming assets of the Estate to be vested in a new Trust. This is the proposal that was eventually agreed to and is set out in more detail below. But for present purposes it is relevant to note that in the course of negotiations it was confirmed (at the request of Mr Fitzgibbons for the Executors) that:
2.The existing liability to Mr and Mrs Payne Snr ($14,480.00 as at 31 March 2002, but since reduced) is to be assumed by the new Trust.
3.Payments to be made by the new Trust to the parents are to be maintained at least at the present level of approximately $1,100 per month. The present payments are in reduction of the loan, but it is intended that monthly payments of at least that amount continue after the loan is repaid
[32] On 7 May 2003, a consent memorandum was filed with the Family Court and signed by:
(a)counsel for Sheree;
(b)counsel for Bernard and Nancy Payne; and
(c)counsel for “defendants [Neil and Stuart as Executors and Trustees of the Estate] and M A Payne Family Trust [Neil and Stephen as Trustees of the Trust]”.
[33] The consent memorandum recorded that settlement had been reached on the following terms:
10 It is not entirely clear to me whether the reference here to the Trustees means the Trustees of the MAPFT or the Executors.
5.1The net cash assets of the estate are to be used to pay the reasonable costs of the parties. The balance is to be transferred to the M A Payne Family Trust and will be used for charitable purpose in accordance with the deceased’s previously expressed wishes;
5.2The farming operation including the land and buildings, plant and equipment, stock and dairy company shares are to be transferred to a new trust. Sheree and her children (including future children) and the deceased’s parents will be the discretionary beneficiaries, the deceased’s parents as to income only. The trustees will comprise a nominee of the deceased’s parents and a nominee of Sheree. The nominee of the deceased’s parents may not be dismissed during their lifetime (except by Court order for misconduct) but will be obliged to retire on the death of the survivor of the deceased’s parents;
5.3All trustee decisions are to be unanimous;
5.4The Power of Appointment is to be held by Sheree or her nominees subject to the deceased’s parents being entitled to nominate a replacement trustee in the event of the death, disability or retirement of their original nominee;
5.5The Trust Deed is to contain a provision that the farming operation not be disposed of during the lifetime of the deceased’s parents. In addition, the Trust Deed will make provision for payment to by the deceased’s parents during their lifetime.
[34] That same day, Judge Fitzgerald in the Family Court issued an oral decision granting orders in terms of the consent memorandum. His judgment is brief and so I set it out in full. He said:
There was to have been a settlement conference today in relation to these proceedings concerning the estate of the late Mark Payne. However, as a result of ongoing discussions and negotiations that have been taking place between the parties and their Counsel, agreements have been reached. The terms of those agreements are set out in a consent memorandum that has been handed to me this afternoon, together with draft orders for sealing.
Present today here with me in the courtroom is Ms Sheree Payne with her lawyer, Mr Matheson; Mr and Mrs Payne who are Mark’s parents with their lawyer, Ms Manning and Mr Mori, who is Counsel for the defendants, the trustees of the estate.
Having heard from all Counsel I am satisfied that there has been a qualifying breach of moral duty sufficient for me to have jurisdiction to make the orders as sought. The basis upon which I find that to exist is that the will in its existing terms provides for the residue of the estate to be left to a trust and the parties are discretionary beneficiaries under that existing trust. As Mr Matheson has pointed out, and this is a point accepted by other Counsel, that situation provides no definition of the share to which Sheree Payne or Mr and Mrs Payne would be entitled and in that sense, given the uncertainty created about an entitlement to the estate, there has been a breach of moral
duty. I have been referred to earlier cases in which the Court has found this to be so.
What has happened over some time now in this case, has been an attempt to find a sensible and practical way to settle matters. The terms of settlement that are set out in the documents provided today achieve that in the view of all interested parties.
Having considered the material provided and heard from Counsel, I am satisfied that the terms of settlement are an intervention sufficient to create a [remedy11] and no more. It is on those grounds that I now make orders on the terms that are set out in the draft order submitted. That includes leave to apply for further directions should that be necessary.
[35]The consent orders were sealed on 12 May 2003.
[36] The BNPFT was settled in accordance with those orders, on 20 June 2003. The only beneficiaries of the BNPFT are Sheree, her two children and Bernard and Nancy. The Trustees are Sheree and Mr John Larmer.
[37] On 21 August 2003, all of the assets of the estate (including the farm and farming operation but save for personal belongings and some cash) were transferred to Sheree and Mr Larmer as trustees of the BNPFT. The transfer of the farm from the Executors (Neil and Stuart) to Sheree and John (as trustees of the BNPFT) was registered on the title.
Subsequent events
[38] On 5 April 2005 and 6 December 2005, the MAPFT received a partial distribution of $30,000 and a final distribution of $11,318.49 from Mark’s estate. Some of those funds were distributed to Bernard Payne for the purchase of a bed and chair.
[39]Bernard died on 7 September 2007.
[40] The farm ceased operation in 2008/2009 with the dairy herd (worth approximately $200,000), farm equipment and Fonterra shares (worth approximately
$226,000) sold by BNPFT and the proceeds were distributed.12
11 The word used in the judgment is “breach” but this can only be a typographical error.
12 It is unclear to me to whom the proceeds were distributed.
[41] In 2014, a small (1 hectare) property farm was subdivided from the farm by BNPFT and sold for $290,000.
[42] Following the cessation of farming operations, the farm was leased to John Washer for rent of $50,000 per year until it was sold in 2018.
[43] On 17 March 2017 Mr Looney emailed by Mr Fitzgibbons asking what it would cost to wind up the MAPFT. He recorded his understanding that “there are no beneficiaries mentioned in the trust deed” and proposed that the funds held by the trust be split equally between the Trustees (ie Mr Looney himself and Mr Maulder). He was told that this course was not possible.
[44] By means that do not need to be set out here, in 2018 the second plaintiffs came to learn of events some 15 years earlier, including that they fell within one of the classes of discretionary beneficiaries under the MAPFT.
[45] Messrs Looney and Maulder retired as trustees of the MAPFT on 26 March 2018, and Doreen Maloney-Coles (one of the second plaintiffs) and Tracy Renata were appointed in their stead. On 16 April 2018 Ms Coles and Ms Renata were replaced as trustees by MA Payne Trustee Ltd. That company (which is the first plaintiff in these proceedings) is owned by Mr Looney. Ms Maloney-Coles is the sole director.
[46]As at October 2018, there is almost $2 million in the BNPFT.
THE PLAINTIFFS’ CLAIM
[47]The statement of claim was filed on 31 October 2018. It constitutes:
(a)an application for judicial review against the first defendant (the Family Court), second defendant (BNPFT), third defendant (Sheree) and fourth defendants (Messrs Maulder and Trundle as Executors of Mark’s estate);13
13 Nancy Payne was subsequently added as the sixth defendant in relation to the application for judicial review.
(b)a claim alleging knowing assistance against the fifth defendants (Nicholsons lawyers); and
(c)a claim alleging knowing receipt against second and third defendants (BNPFT and Sheree).
[48] In the application for judicial review the plaintiffs seek orders setting aside the Judge Fitzgerald’s order dated 7 May 2003 on the grounds that it was order was irregularly obtained because the Family Court did not “act judicially and consistent with the rights and entitlements of the parties who may be affected by its decision and in accordance with the principles of natural justice”. Illegality and irrationality is also pleaded.14
[49] The plaintiffs also seek a consequential declaration that the BNPFT holds its assets on behalf of the Trust, pending the resolution of the Family Court claims by Sheree Payne and Bernard and Nancy Payne.
[50] The knowing assistance claim alleges that Nicholsons owed a duty of care to the Trustees to act with reasonable care when advising them on the Family Court case. The plaintiffs say that, as part of a “dishonest and fraudulent design”, Nicholsons failed to advise the Trustees as to how to satisfy their obligations which (it is alleged) included advising the second plaintiffs of their status as discretionary beneficiaries and ensuring they were given an opportunity to be heard on the FPA claims. They seek orders requiring Nicholsons to account to the plaintiffs for the farm assets transferred from the Estate to the BNPFT.
[51] The knowing receipt claim alleges that the BNPFT and Sheree in her personal capacity had actual knowledge that the assets were transferred from Mark’s estate to the BNPFT “at the expense and exclusion of the second plaintiffs without their participation or knowledge, as part of a dishonest and fraudulent design”. The plaintiffs seek orders requiring all assets of the BNPFT be transferred to the MAPFT, full accounting for the BNPFT since it was settled and Sheree to account to the
14 The precise nature of these allegations is discussed shortly, below.
MAPFT for all distributions and benefits she has received from the BNPFT since it was settled.
Mallon J’s directions
[52] On 18 Feb 2019, Mallon J issued a minute directing that the application for judicial review be heard and determined first, and separately from the civil claims. She recorded her agreement with Mr Matheson’s’ assessment that the judicial review claim was a simple one: whether the discretionary beneficiaries of the Trust should have been a party in the Family Court proceedings.
The defendants’ position in relation to the application for review
[53] Only the second and third defendants (the BNPFT and Sheree) took active steps in response to the application for review.15 Their starting point is that there are discrete principles that govern an application to set aside a consent order and that this aspect of the plaintiffs’ claim should be determined by reference to those principles rather than treated as an application for judicial review strictly so-called. It is clear that this Court may exercise supervisory power over consent orders made in the Family Court.16
[54] In the end, no real issue was taken with that submission by Mr Phillipps for the plaintiffs. And in my view he was right not to quibble. There can be no doubt that setting aside the consent orders is the object of the judicial review claim and any suggestion that framing the application as one for judicial review could lead to a different (more favourable) result seems to me wrong in principle. In any event, it seems to me that the principles governing applications to set aside are sufficiently flexible to accommodate the arguments advanced by the plaintiffs in support of their application for review. I therefore proceed on the basis proposed by Mr Wright.
15 The fourth defendants (the Executors) have taken no steps. The fifth defendants (Nicholsons) have filed a statement of defence to the civil claims. They plead (inter alia) that, in substance, the knowing assistance claim is a claim in negligence, which is now time-barred. Nancy (the sixth defendant) is now 95 years old and in a retirement home but still has capacity. She abides the decision of the Court.
16 New v New [2002] NZFLR 901 (HC) at [17].
SETTING ASIDE CONSENT ORDERS: RELEVANT PRINCIPLES
[55] The relevant principles governing applications to set aside were helpfully summarised by Fisher J in New v New as follows:17
[b]Although a consent Court order is not a contract, where mistake or misrepresentation is relied upon the Courts will, in the exercise of this jurisdiction, draw broad assistance from contractual principles by way of analogy.
[c]For cases based on unilateral mistake that will usually mean that the plaintiff will have to show that he was mistaken as to a significant fact, that the other party knew at the time that he was so mistaken, and the result was a substantially unequal exchange of values. If the case is based on common mistake both of the parties must have made the same mistake and this must similarly have resulted in a substantially unequal exchange of values.
[d]Misrepresentation will normally need to be substantial before the consent order will be set aside.
[e]Even where the plaintiff establishes contractual grounds of that nature the Court will not normally intervene until it is shown that there would otherwise be a serious miscarriage of justice. Whether there is a serious miscarriage of justice is a broad question but the principal consideration is likely to be whether there is a major disparity between rights under the Act and the effect of the order sufficient to override the desirability of finality in litigation and certainty for the parties in planning their future lives.
[f]There is ultimately an overriding discretion whether to grant relief bearing in mind all the surrounding circumstances including the extent to which one party may have acted in reliance on the order, delay, effect on third parties, and the conduct of the parties.
[56] As these principles make clear, consent orders will not be “easily disturbed”.18 The Court must approach an application to set aside with “considerable caution” and the application must only be granted in “cases which clearly require the setting aside of the order”.19
17 At [17] referring to Phillips v Phillips [1993] 3 NZLR 159 (CA); Aplin v Lagan (1993) 10 FRNZ 562 (HC); Jones v Borrin [1990] NZFLR 1 (HC) and Arthur v Arthur [1994] NZFLR 120 (HC).
18 Kain v Hutton [2007] NZCA 199, [2007] 3 NZLR 349 at [230].
19 Legend of Bathurst Ltd v Hobbs [2014] NZHC 2080 at [29].
DISCUSSION
[57]In essence, the plaintiffs say that in making the consent orders:
(a)there was a breach of natural justice in relation to the first plaintiff (MAPFT) because:
(i)it was the sole residuary beneficiary under Mark’s will but its trustees were not named as a party to the FPA proceedings or directed to be served;
(ii)the trustees filed no defence or evidence in relation to the claims;
(iii)the trustees were not present or represented when the consent order was made.
(b)there was a breach of natural justice in relation to the second plaintiffs because:
(i)they were not directed to be, and were not, served with the FPA proceedings;
(ii)they were not made aware of the claims or consent orders sought; and
(iii)they were not present when the consent order was made
(c)there were three jurisdictional problems:
(i)Sheree was in a relationship of short duration and there was no evidence before the Court capable of satisfying section 4A of the FPA;
(ii)section 3(e) of the FPA means that the claim by Bernard and Nancy was precluded by Sheree’s claim, unless they were being maintained by Mark prior to his death, as to which there was no evidence; and
(iii)the Family Court failed to consider whether it was necessary to transfer the entirety of the residuary estate to the BNPFT in order to rectify the breaches of moral duty and (so) to take into account the effect of the orders on the other residuary beneficiaries under the MAPFT.
[58]I address each of the three groups of issues in turn.
Breach of natural justice in relation to MAPFT
[59]This allegation can readily be dealt with.
[60] It is true that the MAPFT was not named as a party to the FPA proceedings and it is true that the Trust had an interest in them. But the factual narrative I have set out earlier shows that the Trustees were well aware of the proceedings, and of the proposal to settle them. Moreover, they filed a notice of appearance and (through their counsel) signed the consent memorandum on which the orders were based. That same lawyer was present in Court when Judge Fitzgerald made the orders. In my view they were not only afforded but (to the limited extent they wished) took, the opportunity to be heard.
[61]Any issues about whether:
(a)their actions were somehow in breach of their trustee duties;
(b)they were appropriately advised; or
(c)there was some conflict of interest involved in the Trustees and the Estate being represented by the same lawyer;
are properly directed against the original trustees or the lawyer concerned and are well beyond the scope of the application to set aside (or the judicial review application).20
Breach of natural justice in relation to the second plaintiffs
[62] Again, there is no dispute that no attempt was made to identify persons (other than Nancy and Bernard) falling within the “relatives” class of discretionary beneficiary under the MAPFT Deed or, accordingly, that the second plaintiffs did not know either of their status or the existence of the FPA proceedings until 2018. But that does not automatically establish a breach of natural justice. Rather, it is necessary to inquire whether the principles of natural justice required them to be served with the FPA proceedings. Such service would have had the effect of notifying them of their status as discretionary beneficiaries under the MAPFT and enabled them to take whatever step in the proceedings they wished.
[63] There are two aspects to the requirements of natural justice here. The first is whether there was compliance with whatever statutory rules as to service applied. Those rules are, of course, a legislative embodiment of natural justice rights. The second involves a more general inquiry as to the nature of the second plaintiffs’ interest in both the MAPFT and in the proceedings and so, in their interest in being heard. That is because I accept it is possible that, notwithstanding compliance with statutory service requirements, there was nonetheless an obligation to notify the second plaintiffs in order that they could (if they wanted) take steps to protect those interests.
The statutory service requirements
[64] The relevant enactments are the FPA and any applicable Family Court Rules 2002 (FCR).21
20 Lest it be thought that I consider that there are obvious grounds for such further action, I record my view that the Trustees’ agreement to the settlement can fairly be seen as broadly consistent with Marks’ draft memorandum of wishes.
21 The Family Court Rules 2002 came into effect on 21 October 2002 just a few days before Sheree’s Family Protection Act 1955 (FPA) proceedings were issued.
[65] Section 4(3) of the FPA provides that it shall not be necessary to serve or make provision for the representation of any person by reason only of the person being entitled to apply under the Act unless the person is the spouse, or child of the deceased or the court considers there are special circumstances which render it desirable that the person be served or represented.
[66] The second plaintiffs were not entitled to apply under the Act. The issue of “special circumstances” does not therefore arise.
[67] Rule 18 of the FCR provides that the general rules as to service of applications made in Family Court proceedings contained in pt 2 of the Rules are modified by any rules in pt 5 that apply to the proceedings. Part 5 relates to proceedings under (inter alia) the FPA, and service and related matters in proceedings under that Act are specifically dealt with in rr 379–382. Rule 37 also makes it clear that the specific service rules in pt 5 prevail over the general rules.
[68] Rule 379 makes it clear that the only respondent to be named in an application made under either Act is the personal representative of the person against whose estate the claim is brought.
[69] Most relevantly, however, at the time material to these proceedings r 380 provided that:
(a)s 4(3) of the FPA “affects” who must be served with a copy of an application under that Act;
(b)an applicant to proceedings under the FPA must file an interlocutory application without notice for directions as to service if— 22
(i)that is required by law; or
(ii)the applicant is in doubt as to the person on whom the application must be served; or
22 And, if required an interlocutory application without notice for orders for representation (where an order is sought that a person represent a person, or class or persons, who should be served).
(iii)the Court directs the applicant to do so.
[70] Rule 380(3) provided that such an application must specify the directions sought and be accompanied by a memorandum signed by the applicant’s lawyer explaining why the directions are considered appropriate and be supported by the information specified in r 381 which, in turn stipulated (and still does so) that the applicant must provide information to the Court in support of the application, by affidavit or some other means, that will enable it to decide—
(a)which persons or classes of persons are interested in the applicant's claim;
(b)which persons or classes of persons may be adversely affected by the applicant's claim; and
(c)by what means the interests of each person or class of persons referred to in paragraph (a) or paragraph (b) may be adequately represented.
[71] Those requirements are limited and made more specific, however in subcl (2), which states that the information to be provided under subcl (1) is—
(a)the date of the death of the deceased and the date of grant of probate or letters of administration;
(b)whether the deceased died testate or intestate and, if testate, a copy of his or her last will with any codicils;
(c)the value of the estate, so far as it is known to the applicant;
(d)the names, addresses, occupations, and ages of the beneficiaries under the will or persons entitled on the intestacy, as the case requires;
(e)the names, addresses, occupations, and ages of the persons of each class entitled to claim under that Act; and
(f)any other relevant information.
[72] As already noted, in the present case the second plaintiffs were not required to be served under the FPA. Moreover, Sheree’s lawyer, Mr Matheson, did file an application for directions and the required memorandum. Directions as to service were sought as to service on Bernard and Nancy who were (other than Sheree’s children) the only other people with a claim under the FPA. Sheree filed an affidavit in support.
[73] While I acknowledge that the second plaintiffs now say that they are persons who were interested in Sheree’s claim and were adversely affected by it (in terms of r 381(1)) I do not consider that there was any failure to provide the requisite information to the Court (in terms of r 381(2)). More particularly, the second plaintiffs were not beneficiaries under Mark’s will and were not (as I have said) entitled to claim under the FPA. Sheree provided the Court with a copy of the will and of the MAPFT Deed (which refers to the class of discretionary beneficiary to which the second plaintiffs belong). And the memorandum identified the MAPFT as the party entitled to the entire residue of the estate and that the Trust involved uncertainty as to what Sheree and other potential beneficiaries might receive.23 The Court had before it all the information it needed to make decisions about service.
[74] I am therefore satisfied there was no breach of natural justice as a result of non-compliance with the statutory service requirements.
More general requirements
[75] As should by now very clear, the second plaintiffs are discretionary beneficiaries by virtue only of the fact that they form part of a very wide and arguably inchoate class of persons described in the MAPFT Trust Deed. Indeed, Ms Mahoney-Coles has named five further person she says would qualify as members of the class. There may well be more.
23 Which uncertainty was the basis for her application under the FPA.
[76] That said, however, the law seems clear that a trust containing a class of objects which is so widely defined is not void for uncertainty, provided it can clearly be determined, on a case by case basis, whether a particular individual falls within that class. Equally, however, it seems there is no obligation on the trustees to take active steps to identify all persons falling within such a class (either at the time of settlement of subsequently). As Templeman J (as he then was) said in in Re Manisty’s Settlement:24
The Court cannot insist on any particular consideration being given by the trustees to the exercise of the power. If a settlor creates a power exercisable in favour of … his relations … the trustees may for many years hold regular meetings, study the terms of the power and the other provisions of the settlement, examine the accounts and either decide not to exercise the power or to exercise it only in favour, for example, of the children of the settlor.
In my judgment it cannot be said that the trustees in those circumstances have committed a breach of trust and that they ought to have advertised the power or looked beyond the persons who are most likely to be the objects of the bounty of the settlor. The trustees are, of course, at liberty to make further inquiries but cannot be compelled to do so at the behest of any beneficiary. The court cannot judge the adequacy of the consideration given by the trustees to the exercise of the power, and cannot insist on the trustees applying a particular principle or any principle in reaching a decision.
If a person within the ambit of the power is aware of its existence he can require the trustees to consider exercising the power and in particular to consider a request on his part for the power to be exercised in his favour. The trustees must consider this request, and if they decline to do so or can be proved to have omitted to do so, then the aggrieved person may apply to the court which may remove the trustees and appoint others in their place. This, as I understand it, is the only right and only remedy of any object of the power.
[77]And so, as noted by the authors of Lewin on Trusts:25
… [t]here is no requirement to disclose the existence of a settlement to all objects of fiduciary powers in all circumstances, whether by direct communication, advertisement or otherwise. We consider that what the trustees need to do is identify those discretionary beneficiaries who are, in the circumstances, real potential candidates for benefit in the proper exercise of the discretion under the trust or power; and disclosure may, indeed normally should, be limited to those discretionary beneficiaries.
24 In re Manisty’s Settlement [1974] Ch 17 at 25 (citations omitted).
25 Lyton Tucker, Nicholas Le Poidevin and James Brightwell Lewin on Trusts (19th ed, Sweet & Maxwell, 2018) at 23-009. See also the discussion in Erceg v Erceg [2017] NZSC 28, [2017] 1 NZLR 320 at [58] – [62].
[78] The plaintiffs accept that the trustees’ duty to identify does not extend so far as to require identification of all beneficiaries within a wide class. They say that the duty is “to identify sufficient beneficiaries to ensure the due and proper administration of a trust”. That is right, but it begs the question. And here, I am not persuaded that any failure to inquire and identify the existence of the second plaintiffs did mean that there could be no due and proper administration of the trust. Rather, it seems to me that the Trustees’ knowledge of the existence of Bernard and Nancy, and what can be assumed was their knowledge that Mark had no siblings would suffice for that purpose, particularly in light of his draft memorandum of wishes. I do not consider their duty went further. There is nothing in Palmer J’s very recent decision in Enright v Enright that suggests a different approach or conclusion.26
[79] And if the Trustees were not obliged to take steps to identify all persons falling within the “relatives” class of discretionary beneficiary, it is difficult to see how anyone else could be so obliged. And unless and until they had been identified, it would be impossible to afford them any natural justice rights.
[80] Even if I am wrong in that, the nature of the second plaintiffs’ beneficial interest is not such as to give them natural justice rights of the sort asserted here.
[81] First, s 49 of the District Courts Act 1947 provided (at the time material to these proceedings) that “any trustee ... may sue and be sued ... as if he were a party in his own right, without joining any of the parties beneficially interested in the trust or estate and shall be considered as representing such parties …”. While the court could nonetheless order that any beneficiaries should be joined at any stage, the starting point is that notice to/service on the Trustees’ will suffice to ensure that the interests of the beneficiaries will or can be represented.
26 Enright v Enright [2019] NZHC 1124 at [196]-[198].
[82] Secondly, the question of whether special circumstances existed that would warrant separate service on the second plaintiffs is confounded by the fundamental point made earlier.27 The second plaintiffs had not been (and were not required to be) identified as discretionary beneficiaries at the relevant time and so the relevant assessment could not be made.
[83] Thirdly, even if the issue could be addressed in hindsight, the reality is that under the MAPFT Deed the second plaintiffs were only (relatively remote) discretionary beneficiaries. Discretionary beneficiaries can have no more than a hope that the Trustees’ discretion will be exercised in their favour. It is trite that they have no interest in the trust property or trust fund by reason simply of being so-named. Unless and until the Trustees’ discretion is exercised there is no interest vested or contingent, merely an expectation. And I am unable to agree with Mr Phillipps that their de facto status as “final” beneficiaries makes a difference in that regard; even on vesting day it was up to the Trustees to decide whether they would receive any part of the trust fund.
[84] It is because discretionary beneficiaries have no interest in the trust that their consent to a resettlement is not required. Trustees have no obligation to consult such beneficiaries before excluding them or to notify them that they have been excluded as beneficiaries. As noted earlier, a trustee is not, in general, obliged to volunteer documents or information to discretionary beneficiaries. Nor do they have to provide a beneficiary with information relating to the reasons for excluding them.
[85] Accordingly, in my view the second plaintiffs’ interest in the MAPFT was, without more, an insufficient basis for the natural justice rights asserted. I consider that they could have no reasonable expectation that they would be served or heard on the FPA claims.
27 The relevant special circumstances will usually involve an identified failure by the trustee to perform a duty owed by the trustee to the beneficiary to protect the trust estate or to protect the interests of the beneficiary in the trust estate.
The jurisdictional issues
[86] As noted earlier, there are three jurisdictional issues raised by the plaintiffs. To reiterate, they are whether the Family Court:
(a)had proper grounds for concluding that Sheree was capable of satisfying section 4A of the FPA;
(b)had proper grounds for concluding that Bernard and Nancy were not precluded from claiming by s 3(e) of the FPA; and
(c)failed to consider whether it was necessary to transfer the entirety of the residuary estate to the BNPFT in order to rectify the breaches of moral duty.
[87] Before turning to consider these issues, I record that there is no dispute that the Family Court had a duty to act independently to assure itself of the merits of the orders sought.28 That said, however, as Fisher J noted in New that duty extends only so far.
And so, he said:29
[42] … In a case where there has already been an exchange of full affidavits, experienced counsel, a joint memorandum appearing to justify the settlement on its face, discussion at a judicial conference and no obvious warning signals to the Judge, it would be a counsel of perfection to expect the Court to go further.
[88] And in Re Julso the Court held that the consent of the parties could not oust the discretion given to the Court by s 4(1) of the FPA to make such provision as the Court thinks fit.30 The Court retains, and must exercise judicially, the discretion to approve or not approve the order sought.
[89] Similarly, consent orders cannot confer jurisdiction on the Court where there is none.
28 New v New, above n 16, at [41] citing Jones v Borrin, above n 17; Dinch v Dinch [1987] 1 WLR 252, [1987] 1 All ER 818 (HL) at 819 and W v W [2005] NZFLR 1122 (HC).
29 At [42].
30 Re Julso (deceased) [1975] 2 NZLR 536 (SC) at 539.
The factual basis for the orders made in favour of Sheree, Bernard and Nancy
[90] It is convenient to consider the contentions summarised at [86(a)] and [84(b)] above together. They are related.
[91] The starting point is s 3 of the FPA which specifies those persons who are entitled to make a claim under the Act. These relevantly include both a de facto partner who was living in a de facto relationship with the deceased at the date of his or her death and also the parents of the deceased.
[92] But because Sheree’s de facto relationship with Mark was short lived, s 4A governs her ability to claim. The effect of that provision is that the Family Court could not make an order in Sheree’s favour unless it was satisfied that:
(a)there was a child of the de facto relationship; and
(b)failure to make the order would result in serious injustice to Sheree.
[93] The term “child of the relationship” is defined by reference to s 2 of the Property (Relationships) Act 1976, which provides that it:
(a)means any child of both de facto partners; and
(b)includes any other child (whether or not a child of either de facto partner) who was a member of the family of the de facto partners—
(i)at the time when they ceased to live together; or
(ii)at the time immediately before an application under this Act, if at that time they had not ceased to live together; or
(iii)at the date of the death of one of the de facto partners
[94] Sheree’s claim could only therefore succeed if her children could properly be regarded as members of her and Mark’s family at the time of his death (and failure to make the order would result in serious injustice to her).
[95] As far as Bernard and Nancy were concerned, the effect of s 3(e) of the FPA is that they were unable to make a claim unless:
(a)they were being maintained (wholly or partly or were legally entitled to be maintained wholly or partly) by Mark at the date of his death; or
(b)at the date of the claim there was no living de facto in favour of whom the court could make an order and no child of a de facto relationship of the deceased.
[96]Accordingly:
(a)if Sheree did not have a claim then Bernard and Nancy were undoubtedly entitled to make a claim the purposes of s 3; but
(b)if Sheree did have a claim then Bernard and Nancy could only bring a claim if they were being maintained.
[97]In light of the orders made, it is the latter position which must be assumed.
[98] The plaintiffs say that there was no evidential basis on which the Family Court could make the requisite factual findings either in relation to Sheree or in relation to Bernard and Nancy. More specifically, they say that there was no evidence:
(a)about whether there were any children of the de facto relationship; or
(b)about whether the failure to make the order would result in serious injustice to Sheree; or
(c)about whether Bernard and Nancy were maintained by Mark.
[99] In the circumstances of this case (by which I mean that Sheree’s application was, in light of the settlement proposal, unopposed) I consider that Sheree’s affidavit (summarised above) did provide an adequate basis for concluding both that her sons were children of the relationship and that she would suffer injustice if orders were not made. It is not (as I understand it) disputed that her sons lived with her and Mark and there was no evidence to contradict her account of their relationship with Mark. As to injustice, Sheree’s affidavit makes clear that she was living on in the farm house on
Mark’s property with her two children and facing much uncertainty following his death. Her primary source of income came from working on the farm property and she was suddenly required to manage outgoings of which Mark had previously been taking care of (including meeting mortgage payments on her previous house and payments on her car).
[100] The position in relation to Bernard and Nancy is slightly less clear-cut. Neither filed affidavits, and so there was no evidential basis for concluding that they had previously been maintained by Mark. That would undoubtedly be problematic if the matter were one (for example) of formal proof.
[101] In the end, however, I agree with Mr Wright that by consenting to the orders Sheree, Mark’s Executors and the Trustees of the MAPFT were essentially accepting the existence of the necessary factual foundation for them. It is clear from the preceding correspondence that there was some factual basis put forward for the maintenance claim and, while I tend to agree with Mr Phillipps that payments by Mark of a pre-existing mortgage debt could not in law constitute “maintenance”, it must be assumed that the lawyers at the time concluded otherwise.
[102] From the Court’s perspective, all parties were legally represented and it would have been clear from the material filed that there had been negotiations over some months; this was not a case where there was any obvious risk of an agreement reached under duress (and it was not). Accordingly, I consider that the Judge was entitled to proceed on the basis that consent would not have been given if the necessary jurisdictional facts did not exist. And the reality is that the same outcome could have been achieved in other ways. For example, the estate could have been transferred to the MAPFT and the Trustees could have consented to, and implemented, an arrangement very similar to the one that was agreed without the need for the FPA thresholds to be met.
[103] In any event, I consider that the Court’s duty to assure itself of the merits of the orders sought was, in my view, more limited than in some other cases, for the reasons given by Fisher J in New. I find no jurisdictional error here.
Supervisory Jurisdiction, Creation of a New Trust & Irrationality
[104] As I understand this aspect of the plaintiffs’ case, it is principally that, in effectively making orders transferring all of Mark’s residuary estate to the BNPFT, the Court went further than was permissible. Reliance is placed on the decision in Little v Angus where the Court of Appeal held that the discretion in s 4 of the FPA to order any provision the Court thinks fit for those entitled to an order should only be exercised to the extent necessary to remedy the relevant breach of moral duty, judged by the standards of a wise and just testator.31 I have set out Judge Fitzgerald’s decision above, in full. On its face it suggests that the Judge was satisfied that there had been a qualifying breach of moral duty and that the consent orders were an appropriate intervention to remedy the breach “and no more”. On its face, therefore, the decision complies with the dicta in Angus. I can see no reason to go behind it.
[105] Nor am I able to see any basis for the further contention that it was irrational to order the property be transferred to a trust that did not yet exist.
Conclusion: no vitiating error
[106] As will be evident form the foregoing discussion, I do not consider that the consent orders can be impugned either for breach of natural justice or on jurisdictional grounds. Strictly speaking, that view suffices to dispose of the plaintiffs’ application.
[107] Out of an abundance of caution, however, I propose also to consider whether (if there has been a vitiating error) the interests of justice would favour setting aside the consent orders. As it happens, my conclusion on that issue merely serves to fortify my earlier conclusions.
Interests of justice
[108] As noted earlier, Fisher J in New noted that the threshold for setting aside, even in the face of a clear error or mistake is a high one. He said that the Court needs to be satisfied that a serious miscarriage of justice would arise were the orders not set aside. To reiterate, the principal consideration is likely to be whether there is a significant
31 Little v Angus [1981] 1 NZLR 126 (CA) at 127.
disjunct between the applicants’ rights under the FPA and the effect of the consent order. The disjunct must be sufficient to override the desirability of finality in litigation and certainty for the parties in planning their future lives.
[109] The starting point is, again, that the second plaintiffs had no rights under the FPA. By and of itself that tilts the scales towards letting the orders be. But I am prepared proceed on the assumption that (contrary to my conclusions above) the plaintiffs should nonetheless have been heard on the FPA applications and might have been able to persuade the Family Court to make orders that protected their expectancy by requiring that some or all of the residue of Mark’s estate be transferred to the MAPFT. But even if that had occurred, however, the second plaintiffs’ interest in the trust fund would have remained an expectancy only. They would have had no entitlement to a distribution. The scales remain tipped in favour of the orders remaining extant.
[110] And even putting all of that to one side, the fundamental and, in my view, inevitably fatal point is that 16 years have now passed since the orders were made. Mark’s estate has long since been finally distributed. It is for sound policy reasons that s 9 of the FPA and other materially identical statutory provisions32 impose strict time limits on the making of applications which seek to alter testamentary dispositions.33 Without exception, final distribution is a line in the sand which cannot be crossed. The Court of Appeal has confirmed that even in a case of fraudulent concealment time limits under those Acts cannot be extended where the estate has been finally distributed.34
32 Such as s 90 of the Property (Relationships) Act 1976.
33 Section 9 of the FPA prevents a court from hearing an application under that Act unless it was made within 12 months from the date of the grant in New Zealand of administration of the deceased estate. While the first proviso to s 9 empowers the Court to extend the period for applying under the Act even after it has expired that proviso is itself qualified and no such extension is to be granted unless the application for extension is made before final distribution of the estate. Moreover, s 9 further stipulates that no distribution of any part of the estate made before the administrator (a term which includes an executor) receives notice of the application for extension is to be disturbed.
34 Re Stewart [2004] 1 NZLR 354, [2004] NZFLR 329 (CA). The executors and the beneficiaries concealed from the claimants – two adult sons of the deceased – that their mother had died, and thereby thwarted their ability to make a claim under the Act.
[111] There can be no doubt that Sheree and her sons and Bernard and Nancy have all relied on the orders in conducting their affairs and living their lives since 2003. There is, by now, only a remote relationship between the corpus of the BNPFT and Mark’s residuary estate. Any tracing exercise (if that, indeed, is one of the plaintiffs’ ultimate objects) would undoubtedly be complex.
[112] Although Ms Ammundsen for the plaintiffs submitted that setting the consent orders aside would have the effect of “undistributing” the estate and revivifying the two FPA applications, that seems to me to ignore the reality just mentioned. In any event, the very limited nature of any rights originally held by the plaintiffs in relation to the FPA claims and the remote nature of any interest held by them in whatever assets and funds are now held by the BNPFT, does not warrant requiring the Court or the defendants to grapple with the undoubtedly complicated consequences of the outcome sought.
Conclusions
[113]By way of summary:
(a)The application for judicial review is more appropriately regarded as an application to set aside the consent orders made by Judge Fitzgerald in 2003.
(b)No grounds for setting aside the consent orders have been established. More particularly:
(i)there was no breach of natural justice vis a vis the MAPFT when the orders were made;
(ii)there was no breach of natural justice vis a vis the second plaintiffs when the orders were made; and
(iii)there was sufficient material before the Family Court to enable it to make the orders it did.
(c)Even if grounds for setting aside did exist, the effluxion of time (in particular) means that the interests of justice would militate against the Court doing so.
[114]The application is dismissed accordingly.
[115] 2B costs should follow the event in the usual way. If they cannot be agreed memoranda may be filed.
Rebecca Ellis J
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