Peers - [2023] NZHC 2120

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2023-409-349

[2023] NZHC 2120

UNDER the Trusts Act 2019

IN THE MATTER

of an application to vary the Onslow Trust

BETWEEN

MICHAEL JOHN PEERS and KATHERINE ALLISON PEERS

Applicants

Hearing: (On the papers)

Counsel:

C D Trewin for Applicants

Judgment:

9 August 2023

JUDGMENT OF OSBORNE J

This judgment was delivered by me on 9 August 2023 at 3.45 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

RE PEERS [2023] NZHC 2120 [9 August 2023]

[1] The trustees of a family trust apply for an order approving the variation of the trust.

[2] They have previously been granted leave to commence the proceedings by way of an originating application. All adult beneficiaries have consented to the proposed variation. The Court has dispensed with service on any other person.

The Onslow Trust

[3]The Onslow Trust was settled by deed on 9 December 1992.

[4]Under the terms of the trust deed, the Trust will vest on 22 November 2024.

[5] The Trust is one of two partners in a partnership established in June 2006. Under the terms of the partnership deed, that partnership will dissolve on the vesting date of either of the partner trusts.

[6] Should the Onslow Trust vest on 22 November 2024 and the partnership be consequentially dissolved, there will be an estimated tax liability for the Onslow Trust in the financial year ending 31 March 2025 of $252,665.

[7] Michael and Katherine Peers, the applicants in this proceeding, are the trustees of the Onslow Trust. They have taken tax advice from Mark Lodder, the tax national leader of BDO New Zealand. He has provided an affidavit in this proceeding as an expert. He explains his calculation of the potential tax liability ($252,665) and how it would arise from recovered depreciation. He has identified the postponement of the date of distribution of the Onslow Trust as the best option available to the Trust to mitigate the impending tax liability.

The interests of beneficiaries

[8] The scheme of the Trusts Act, in Part 6, is that beneficiaries who together hold all of the beneficial interest in the trust property may permit the trustee to vary the terms of the trust or to resettle the trust. Section 122 of the Act provides for that

situation and sets out the conditions for any such variation or resettlement by the trustee.

[9] Here all the adult beneficiaries have, in terms of s 122(2) of the Act, consented to requiring the variation and have requested the trustees to vary the terms of the Trust on their behalf.

[10] The Court’s power to approve a variation (or termination or resettlement) of a trust in other situations is provided for in s 124. Section 124 provides:

124Power of court to approve termination, variation, or resettlement of trust

(1)The court may, on behalf of any of the beneficiaries described in subsection (2) who has an…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] NZHC 2120
Decision Date: 9 August 2023

CaseChat Overview and Summary

The applicants, Michael John Peers and Katherine Allison Peers, as trustees of the Onslow Trust, sought an order from the High Court of New Zealand approving the variation of the trust. This application was pursuant to the Trusts Act 2019. The trust, established on 9 December 1992, was set to vest on 22 November 2024, which would result in a partnership dissolution and an estimated tax liability of $252,665 for the Onslow Trust. The applicants have obtained consent from all adult beneficiaries for the proposed variation and have taken expert tax advice to support their application. The key legal issues before the Court were whether the proposed variation would benefit the beneficiaries and align with the settlor's intentions.

The Court examined whether the proposed variation would benefit the beneficiaries, particularly the unborn grandchildren who might acquire a beneficial interest. The Court found that the variation would not cause any detriment to the beneficiaries, including the unborn grandchildren, and would instead protect and grow trust assets for the benefit of the family. While the specific intentions of the settlor, Warwick Peers, could not be ascertained, the Court inferred that his intention was to benefit the applicants and their next two generations through an efficient structure. The Court concluded that the proposed variation was in the interests of all beneficiaries, including future persons who may acquire a beneficial interest.

In light of the above, the Court approved the variation of the Onslow Trust to extend the date of distribution to 8 December 2117. The trustees were authorised to take all necessary actions to give effect to this approval.

Orders