Pennell v Carter - [2022] NZHC 3094

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2022-485-356

[2022] NZHC 3094

UNDER the Trusts Act 2019 and the inherent jurisdiction of the High Court

IN THE MATTER

of the Carter Family Trust

BETWEEN

SIDNEY HERBERT PENNELL AND JOAN PENNELL

Applicants

AND

PETER BERNARD CARTER

First Respondent

TERESA MARY BROSNAHAN

Second Respondent

Hearing: 17 October 2022

Appearances:

A S Butler KC and S W H Fletcher for the Applicants E M S Cox and R Georgiou for the First Respondent

M Freeman and G M Cairns for the Second Respondent

Judgment:

24 November 2022

JUDGMENT OF COOKE J

[1] By originating application dated 4 July 2022 the applicants seek directions relating to the Carter Family Trust established by Trust Deed dated 30 July 1991. In particular directions are sought concerning two matters, namely:

(a)whether the applicants were properly appointed as trustees of the Trust, and if not regularising their appointment; and

PENNELL v CARTER [2022] NZHC 3094 [24 November 2022]

(b)determining whether the second respondent, as the executor of the estate of Graham Carter, has a beneficial interest in the trust fund under the Trust Deed, or whether the trust fund is solely for the benefit of Graham’s brother, Peter Carter (the first respondent).

[2] The directions relating to the first matter are not opposed. The directions in relation to the second matter are supported by the second respondent but opposed by the first respondent.

Background facts

[3] Colin and Greta Carter had two sons, Graham and Peter. They also had a daughter, Marilyn, but she died in 1975.

[4] Colin and Greta accumulated modest assets during their lifetime. Their primary asset was their property in Alice Street, Alicetown which had been in the family for some time.

[5] On 9 February 1990 Colin and Greta executed wills. Under them if one predeceased the other Peter and Graham were to be their executors and their real and personal property was to be held on trust for their children “in equal shares as shall survive me”. There was also a gift over clause — if any of the children predeceased Colin or Greta then their grandchildren would take their parent’s share once they reached 20 years of age.

[6] Some 17 months after executing these wills Colin and Greta settled the Carter Family Trust. The Trust Deed was prepared by a solicitor. There were proposals to introduce asset testing for rest home care subsidies at that time. Death duty was also still in existence, although it was abolished shortly thereafter. I accept that Colin and Greta established the Trust to prevent them having property in their own names which could be subject to asset testing as this might affect their ability to receive rest home care subsidies.

[7]The Trust Deed relevantly provides:

2. The Trust shall continue for the lifetime of the Settlors.

…

4. The Trustees shall stand possessed of the Trust Fund and the income thereof UPON TRUST to…

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.

Continue reading Pennell v Carter

Details

AGLC: Pennell v Carter [2022] NZHC 3094
Case: [2022] NZHC 3094
Decision Date: 24 November 2022

CaseChat Overview and Summary

This case involved a dispute over the interpretation of the terms of a family trust, established by Colin and Greta Carter, and their wills. The applicants, Sidney Herbert Pennell and Joan Pennell, sought directions from the Court concerning their appointment as trustees of the Carter Family Trust and the beneficial interests in the trust fund. The first respondent, Peter Bernard Carter, argued that he was the sole beneficiary of the trust fund, while the second respondent, Teresa Mary Brosnahan, argued that she was entitled to benefit from Graham Carter's shares as his executor.

The court found that the applicants were not validly appointed as trustees, but had acted as trustees de son tort, and therefore should be appointed as trustees under the Trusts Act 2019. The court also found that the second respondent was entitled to benefit from Graham's shares in the trust fund, as his representative. The court rejected the argument that the Trust Deed only benefited the senior members of the family and excluded the grandchildren.

The court declined to indemnify the applicants for their legal expenditure from the assets of the trust, and made a costs award on a 2B basis against the first respondent in favour of the second respondent. The court also reserved leave for all parties to apply for further or consequential orders.

Orders