McCallum Jnr v McCallum

[2021] NZCA 237

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA294/2020
 [2021] NZCA 237

BETWEEN	WILLIAM FRASER MCCALLUM JNR Appellant
AND	CARRICK ROBERT ZACHARY MCCALLUM, CALLUM FRASER MCCALLUM AND MCCALLUM INDEPENDENT TRUSTEES LIMITED AS TRUSTEES OF THE MCCALLUM FAMILY TRUST First Respondent CARRICK ROBERT ZACHARY MCCALLUM AND CALLUM FRASER MCCALLUM AS EXECUTORS OF THE ESTATE OF WILLIAM FRASER MCCALLUM SNR Second Respondent FIONA CATHERINE JANE MCCALLUM BY HER LITIGATION GUARDIAN MARTHA SELWYN Third Respondent

Hearing:	4 May 2021
Court:	Kós P, Gilbert and Goddard JJ
Counsel:	D A T Chambers QC and J M McGuigan for Appellant A S Butler and A M Cameron for First and Second Respondents S L Robertson QC for Third Respondent
Judgment:	8 June 2021 at 9 am

JUDGMENT OF THE COURT

AThe applications to adduce fresh evidence are granted to the extent identified at [26] of this judgment.

BThe appeal is allowed to the extent identified in [68] and [69] of this judgment.

CNo order is made for costs.

____________________________________________________________________

REASONS OF THE COURT

(Given by Kós P)

TABLE OF CONTENTS

Para No

Introduction
Background

Trusts and transfers
Litigation

Judgment appealed
Appeal
Trustee duties, trustee costs, and Beddoe applications

Trustee duties
Trustee costs
Beddoe applications

Should Beddoe orders be abolished in New Zealand?
Should Beddoe orders have been made here?

Breach of natural justice
“Hostile litigation” —– submissions
“Hostile litigation” —– discussion

Costs
Result

[1]
[5]
[6]
[15]
[20]
[23]
[27]
[28]
[29]
[37]
[46]
[52]
[53]
[56]
[59]
[71]
[72]

Introduction

1. “Beddoe orders” are directions given by a court approving trustees bringing or defending proceedings at the cost of the trust.[1]  With a Beddoe order in place, trustees may pursue or defend claims with the confidence that they will not be liable personally for costs reasonably incurred.  Without such an order, they proceed at risk.

   [1]So-called after the decision of the English Court of Appeal in Re Beddoe [1893] 1 Ch 547 (CA).

2. These orders are supposed to be fast and inexpensive.  The orders sought in this case have been fought tooth and nail for two years.  So, neither fast nor inexpensive. 

3. Beddoe orders will only be made where necessary and in the best interests of the trust (as opposed to the trustees).  And they will seldom be appropriate where the litigation is “hostile”, that is, alleging wrongdoing by the trustees. 

4. In this case, partial Beddoe orders were made by Gwyn J.[2]  This appeal challenges the making of these partial orders.

Background

[2]McCallum v McCallum [2020] NZHC 907 [Judgment appealed].

1. The McCallum family moved from Scotland to South Auckland in the 1860s.  There they acquired land:  the Pakihi and Karamurau Islands off the Clevedon coast, and an estate at Wairoa Bay, Clevedon, known as Lismore.  There they built a substantial homestead.   

Trusts and transfers

1. In 1986 Bill Snr (1936–2017) settled the W F McCallum Trust (Old Trust).  The beneficiaries of that trust were his wife, Heather; children, William Jnr and Fiona; any grandchildren; any trust or…