Penson v Forbes - [2014] NZHC 2160

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2013-412-000469 [2014] NZHC 2160

BETWEEN
BRONWYN ELIZABETH PENSON

Plaintiff

AND

LYNLEA ELLEN FORBES and

EDWARD JOHN JACK First Defendant

AND

WEBB FARRY TRUSTEE SERVICES LIMITED

Second Defendant

Hearing: 8 September 2014

Appearances:

L A Andersen for First Defendants/First Applicants M E Parker for Second Defendant/Second Applicant D J More for Plaintiff/Respondent

Judgment:

8 September 2014

JUDGMENT OF ASSOCIATE JUDGE OSBORNE
on Strike Out Application

[1] The plaintiff (Ms Penson) is the daughter, and one of five children, of the late

Sylvia Jack (Mrs Jack) who died in October 2012.

[2] Mrs Jack in December 2006 had established the S I Jack Family Trust (the Trust). The discretionary beneficiaries of the Trust included Mrs Jack’s five children.

[3] The trustees of the Trust were Mrs Jack and the second defendant (the corporate trustee). In August 2012, Mrs Jack and the corporate trustee by deed
varied the Trust so as to exclude as beneficiaries Ms Penson and a deceased brother.

PENSON v FORBES [2014] NZHC 2160 [8 September 2014]

At the time she was excluded, Ms Penson had no vested interest. As a discretionary beneficiary she also had no contingent interest. She had a mere expectation.1

[4] On the same day as she signed the deed of variation, Mrs Jack made her last will. By that will she directed the trustees of her estate to transfer the residuary estate to the trustees of the Trust. She also directed the trustees of her estate to divide the residuary estate equally between such of her three children (being the three who were named beneficiaries of the Trust) as survived her. By her will she also exercised her power of appointment to appoint two of her children (the first defendants) as trustees of the Trust in her place.

[5] On the same day, she forgave the debt which the Trust owed her on the

Trust’s 2006 purchase of Mrs Jack’s house property.

[6] Mrs Jack subsequently died (in 2012).

[7] The Trust sold the house property and made distributions for the benefit of the three children-beneficiaries and for grandchildren.

[8] Ms Penson sues the current trustees.

[9] This judgment relates to the trustees’ application to strike out Ms Penson’s

claim.

Ms Penson’s four causes of action

[10] I summarise Ms Penson’s four causes of action in her Amended Statement of

Claim (the Statement of Claim):

(1) Breach of trust

Ms Penson alleges that Mrs Jack and the corporate trustee had a fiduciary duty which required them in relation to the power to exclude a beneficiary to:

• act honestly;

1 Foreman v Kingstone [2004] 1 NZLR 841 (HC) per Potter J at [48].

• act in good faith;

• not act capriciously;

• not act irrationally; and

• act even-handedly as between beneficiaries.

Ms Penson alleges that the decision to exclude her as beneficiary was made because of Mrs Jack’s personal dislike of Ms Penson and was in breach of fiduciary obligation. In the same cause…

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 Penson v Forbes

Details

AGLC: Penson v Forbes [2014] NZHC 2160
Case: [2014] NZHC 2160
Decision Date: 8 September 2014

CaseChat Overview and Summary

In Penson v Forbes, the plaintiff, Bronwyn Elizabeth Penson, sued the trustees of the S I Jack Family Trust, seeking damages for alleged breaches of fiduciary duty and fraud on the power of exclusion. The court was required to decide whether Ms Penson's causes of action were tenable. The court examined the trustees' powers, the duty to act rationally and in good faith, the duty of even-handedness, and the concept of fraud on the power. The court found that the trustees' decision to exclude Ms Penson as a beneficiary was not capricious or irrational, as it was based on the settlor's disaffection for her daughter. The court also found that the concept of fraud on the power did not apply to the power of exclusion in this case. Consequently, the court struck out Ms Penson's statement of claim, finding that all causes of action were untenable. The court specified that but for the plaintiff being legally aided, it would have ordered the plaintiff to pay the defendants' costs on a 2B basis.

Orders