Power
[2024] NZHC 3449
•19 November 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-2899 [2024] NZHC 3449
UNDER the Trusts Act 2019 and Part 19 of the High Court Rules 2016 IN THE MATTER
of an application for approval of a variation of trust deed on behalf of a beneficiary under section 124 of the Trusts Act 2019
BY
PATRICIA CAROL POWER as trustee of the F.R.B. Power Family Trust
Applicant
Hearing: On the papers Counsel:
A Grant for the Applicant
Judgment:
19 November 2024
JUDGMENT OF GORDON J
This judgment was delivered by me
on 19 November 2024 at 1 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors/Counsel:
The Property Law Centre, Auckland A Grant, Barrister, Auckland
RE POWER [2024] NZHC 3449 [19 November 2024]
[1] This is an application by Patricia Power, as the sole trustee of the F.R.B. Power Family Trust (Trust).
[2] Mrs Power seeks the Court’s approval under s 124 of the Trusts Act 2019 (Act) of certain variations to the Deed of Trust (Deed) which was settled by Mrs Power’s husband, Ffarington Power, in 1981.
[3] The Court’s approval is required because Mr Power, one of the beneficiaries proposed to be added, lacks capacity and cannot consent to the variation. Some of the other existing beneficiaries, grandchildren of Mr and Mrs Power, are minors. They also cannot consent.
[4]Mr Grant, counsel for Mrs Power, has filed:
(a)a without notice application for: permission to proceed by way of originating application; orders dispensing with service; and orders as to the trustee’s expenses;
(b)a proposed originating application for variations to the Deed;
(c)an affidavit of Mrs Power; and
(d)memorandum of counsel.
Background
[5] Mr and Mrs Power have been married since December 1972. In May 1981 Mr Power settled the Trust which was intended to make provision for their four children who were the original beneficiaries and, later on, for their grandchildren. A copy of the Deed is annexed to Mrs Power’s affidavit.
[6] Mrs Power is the original trustee of the Trust. She has continued in this role since the Trust was settled. Since approximately late 2023 Mr Power has suffered from dementia. This is confirmed by a medical certificate dated 16 February 2024.
The medical certificate records that Mr Power’s mental incapacity to make complex decisions regarding his financial situation is likely to continue indefinitely.
[7] Mrs Power says that as her husband’s condition has worsened and as they have both aged, they have both required a greater level of care which she says can be expensive. In particular, Mr Power requires full-time care and will continue to do so in the future.
[8] Mrs Power also notes that recently she has found it more difficult to take on the burden of being the sole trustee. She is concerned about what will happen to the Trust if she loses capacity or is otherwise unable to continue performing the role of trustee. She says her children have said that they are happy to take on the role of trustee of the Trust instead of or in addition to her.
[9] Mrs Power says in late 2023 they decided as a family that some of the Trust’s funds would be best used to help to pay for Mr Power’s care and, to a lesser extent, for her care. She says she and her children also decided that at least one of them should come on as a trustee of the Trust.
Deed of Amendment of Trust
[10] Mrs Power says that after the family decision in late 2023 they met with a solicitor in early 2024. The solicitor drew up a document called a “Deed of Amendment of Trust” for the Trust (Deed of Amendment) which reflected the changes (Variations) they wished to make to the Trust Deed. A copy of the Deed of Amendment is annexed to Mrs Power’s affidavit. The Variations in summary are as follows:
(a)to add Mr and Mrs Power as beneficiaries of the Trust to assist with their welfare, care and maintenance and to modify cl 6 of the Deed to specify that Mr and Mrs Power may benefit from the Trust fund;
(b)to modify cl 4 of the Deed to specify that in the event of the death of one of Mr and Mrs Power’s four children, the children of that deceased child will receive their deceased’s parent’s share equally;
(c)to amend the “date of distribution” in the Deed to align with the maximum duration period in the Act, being a maximum period of 125 years;
(d)to acknowledge that the powers to remove trustees currently reside with the trustees in accordance with s 92(1)(b) of the Act; and
(e)to vary cl 9(b)(ii) of the Deed to specify that there may be more than two trustees at any time, and to appoint the two children nominated in the Deed of Amendment and referred to in Mrs Power’s affidavit as additional trustees in line with that position.
Consent on behalf of Mr Power and unborn and minor beneficiaries
[11] The Deed of Amendment has been signed by Mr Power as settlor by way of two of his children who have power of attorney, by Mrs Power as trustee, by Mr Power again by way of two children who hold powers of attorney and Mrs Power as beneficiaries, by the Powers’ four children as beneficiaries and by a grandchild as beneficiary.
[12] Mrs Power says she is aware that because Mr Power is the settlor and is to be added as a beneficiary of the Trust, his consent is required under the Deed to the Variations, in addition to the consent of the other beneficiaries, for the Variations to take effect.
[13] Mrs Power also notes that she understands because Mr Power does not have capacity he cannot give that consent and it is for that reason that she has made the application seeking the Court’s consent on his behalf.
[14] Mrs Power acknowledges, as well, that the Court’s consent needs to be sought on behalf of the Trust’s unborn and minor beneficiaries. She lists the living minor beneficiaries by name. She seeks the Court’s consent on their behalf.
Reasons for Variations
[15] Mrs Power says that in respect of Mr Power, the Variations will ensure that he has provision from the Trust for the care he needs for the rest of his life. She says this will allow him to be comfortable and will alleviate much of the rest of the family’s worry about whether he is being properly taken care of.
[16] Mrs Power expresses the view that the Variations are consistent with the purpose of the Trust. It is for that reason their four children suggested varying the Trust Deed in the way proposed and is the reason they have all consented. She has no doubt that if he were able to, Mr Power would give his consent to the Variations being in his best interests and the best interests of the rest of the family.
[17] As to the minor and unborn beneficiaries, Mrs Power says the Variations ensure that their grandparents are cared for, and they update several important provisions of the Trust Deed for their benefit. The Variations also install new trustees to ensure the Trust is appropriately managed into the future.
Procedural issues
[18] There are three procedural matters to be addressed before I consider the substance of the application under s 124.
Permission to bring originating application
[19] Mrs Power seeks permission under r 19.5 of the High Court Rules 2016 to bring the s 124 application by way of originating application.
[20] The application is not one of those listed under r 19.2 which provides that the enactments listed in that rule must be made by originating application. Under r 19.5 the Court may permit any proceeding not mentioned in r 19.2 to be commenced by originating application if it is in the interests of justice.
[21] I am satisfied on the affidavit evidence of Mrs Power and on the basis of case law cited by Mr Grant,1 that it is appropriate and in the interests of justice to grant leave to commence this proceeding by way of originating application. My reasons, shortly stated, are as follows:
(a)there is no need for an exchange of statements of claim and defence to better define the issues;
(b)no interlocutory procedures would be needed to resolve issues;
(c)all beneficiaries of the Trust capable of giving consent have done so by signing the Deed of Amendment;
(d)there are no factual issues in dispute; and
(e)this is a straightforward change to the Deed for a clear purpose.
Service of application
[22] Rule 19.5(2) provides that the Court’s permission may be sought without notice.
[23] I am satisfied there are no parties affected by the application who have not already provided their written consent to the Variations.
[24]Accordingly, it is appropriate to dispense with service.
Representation
[25] As Mrs Power notes in her affidavit there are minor beneficiaries whose interests must be considered and protected. This Court has previously determined that separate counsel is not required for such beneficiaries in a s 24 application where the
1 See, for example, Re Oakridge Trust Co Ltd [2024] NZHC 2860 at [14]; Re Goubitz [2024] NZHC 2201 at [5]; Re Tau [2023] NZHC 2544, (2023) 6 NZTR 33-016 at [39]; Re Fidelis Trust Ltd [2024] NZHC 2740 at [2].
Court is satisfied that there are no potential adverse effects of the proposed Variations on the interests of the beneficiaries.2
[26] I consider that approach is appropriately followed in this case. All minor beneficiaries of the Trust are children of beneficiaries who have given their consent to the Variations by signing the Deed of Amendment. Mrs Power, as trustee, has considered their interests in seeking the Variations. As noted, some of the Variations are expressly designed to future-proof the Trust for future generations of the family.
[27] Accordingly, there is no need for counsel to be appointed to represent the minor or unborn beneficiaries.
Application under s 124 of the Act
[28]Section 124(4) of the Act provides:
124Power of court to approve termination, variation, or resettlement of trust
…
(4)On an application for an order of approval, the court must take into account each of the following factors:
(a)the nature of any person’s interest in the trust property and the effect of the proposed order on that interest:
(b)the benefit or detriment that may result to any person with an interest in the trust property if the court makes or refuses to make the proposed order:
(c)the intentions of the settlor of the trust in settling the trust, if it is practicable to ascertain those intentions.
[29] The Court must not make an order of approval if its effect would be to reduce or remove any vested interest in the Trust property.3 An order of approval binds the person on whose behalf it is made and takes effect without any further step.4
2 Re Oakridge Trust Co Ltd, above n 1, at [15].
3 Section 124(5).
4 Section 124(6).
[30] I consider that as applied to this case, the factors in s 124(4) support the granting of the order as sought. First, the Deed as varied will continue to recognise the interests of the existing beneficiaries, subject only to an amendment that also makes provision for the care of their parents and grandparents. The adult beneficiaries obviously consider such provision to be appropriate and for the substantial benefit of the family, having given their consent to the Variations by signing the Deed of Amendment. The Variations are clearly in the interests of both Mr and Mrs Power.
[31] As regards the Variations that relate to trusteeship, dates of distribution and other such amendments, they are consistent with the interests of the beneficiaries because they update the terms of the Trust and ensure its continuing viability. The children and grandchildren of Mr and Mrs Power will benefit from these changes that are designed to ensure appropriate management of the Trust into the future.
[32] Finally, the Court accepts that the Variations are likely to be consistent with the intentions of Mr Power as settlor. Although as settled, the Trust was originally a family trust for his children, I accept that if he was of sound mind, Mr Power would contemplate the use of Trust funds for his care and his wife’s care in circumstances where his children have all consented to that course of action.
[33] It follows that having regard to the matters set out in s 124 of the Act, I am satisfied that the substantive application should be granted.
Result and orders
[34]I make the following orders:
(a)leave is granted for the proceeding to be commenced by way of originating application pursuant to r 19.5 of the High Court Rules 2016;
(b)service of the originating application on the beneficiaries of the F.R.B. Power Family Trust (Trust) is dispensed with;
(c)the variations to the Trust Deed of the Trust reflected in the Deed of Amendment of Trust exhibited to the affidavit of Patricia Power dated
29 October 2024 on behalf of the settlor of the Trust, Ffarington Power, and any unborn or minor beneficiaries of the Trust are approved under s 124 of the Trusts Act 2019;
(d)pursuant to s 133 of the Act the Trustee’s reasonable costs of and incidental to this proceeding are to be paid from the Trust fund.
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Gordon J
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