Re McMillan

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2021-485-29

[2021] NZHC 1497

UNDER the Trusts Act 2019

ON THE APPLICATION

of DIXON McMILLAN Trustee of the Token Trust, Wellington

Applicant

On the papers

Counsel:

R J Chiu for Applicant

Judgment:

22 June 2021

JUDGMENT OF SIMON FRANCE J

[1] The Token Trust holds assets remaining from a toy token scheme (akin to a gift card scheme) once operated through the Toyworld chain of retain stores. The tokens were bought in varying dollar amounts to be used as a gift for children.

[2]The structure was:

(a)a company called Nationwide Toy Retailers Ltd (Nationwide) (being a company owned by Toyworld retailers) sold the tokens to Toyworld stores;

(b)the proceeds of these sales were held by Nationwide in a discrete account;

(c)the Toyworld stores sold the tokens to customers; and

Re Application of Dixon McMillan [2021] NZHC 1497 [22 June 2021]

(d)when the tokens were subsequently redeemed at a store, the store was reimbursed by Nationwide.

[3]In 1999 the assets of Nationwide were placed into the Token Trust.

[4] In 2001 Nationwide was placed into receivership. In 2003 it was liquidated and in 2004 removed from the Companies Register.

[5] The trustees advertised a final redemption date for tokens of 31 December 2002. Redemptions were nevertheless honoured beyond that, with the last redemption being 4 December 2009.

[6]The trustees have resolved to wind up the Trust. Difficulties arise because:

(a)the Trust Deed requires remaining assets to be distributed to Nationwide; and

(b)the Trust Deed cannot be amended without the consent of Nationwide.

[7] The Trustees seek orders from the Court under s 133 of the Trusts Act 2019. Its predecessor (s 66 of the Trustee Act 1956) was considered by Kós J in New Zealand Māori Council v Foulkes where the broad equitable jurisdiction it recognises was affirmed.1 I am content to adopt its approach, noting it is important that here there is no disputed fact or outcome.

[8] Orders should be made. It is unlikely that any further redemption will be sought. The Chief Financial Officer of the company now operating Toyworld stores has confirmed redemption of any tokens will not be sought from the Trust in the unlikely event a Toyworld store accepts a now long-out-of-date token. The sum held by the Trust is very modest.

[9] The Trustees intend to distribute the assets to two hospice charities that assist children and young persons. This is an appropriate resolution.

1 New Zealand Māori Council v Foulkes [2014] NZHC 1777 at [44].

Orders

[10](a) That the final assets of the Token Trust be distributed to charities that provide services for children –

(i)Rainbow Place, a hospice for children and young persons in Hamilton; and

(ii)Hospice Southland, a hospice facility in Invercargill that provides services for children and young persons; and

(b)That the Token Trust be wound up;

(c)Leave to apply for further directions if needed.

Simon France J

Solicitors:
Simpson Grierson, Wellington for Applicant

CaseChat Overview and Summary

The case of Re McMillan concerns the distribution of the remaining assets of the Token Trust, which was established to manage the assets of a toy token scheme previously operated by Toyworld stores. The tokens were sold by a company called Nationwide Toy Retailers Ltd and the proceeds were held in a discrete account. After Nationwide was liquidated, the remaining assets were placed into the Token Trust. The trustees have resolved to wind up the Trust but are unable to do so because the Trust Deed requires the remaining assets to be distributed to Nationwide, which no longer exists, and the Trust Deed cannot be amended without Nationwide's consent. The trustees sought orders from the Court under section 133 of the Trusts Act 2019 to resolve the issue. The central legal issue was whether the Court should exercise its equitable jurisdiction to allow the distribution of the Trust's assets to charities instead of to Nationwide. The Court considered the appropriate resolution of the issue and noted that no further redemptions are likely to be sought and the sum held by the Trust is very modest. The Court concluded that the appropriate resolution would be to distribute the assets to two hospice charities that assist children and young persons. The Court granted the orders sought by the trustees.

The Court's reasoning was based on the broad equitable jurisdiction recognised in section 133 of the Trusts Act 2019, which was affirmed in New Zealand Māori Council v Foulkes. The Court noted that there was no disputed fact or outcome in this case and that it was appropriate to make the orders sought by the trustees. The Court also noted that the Chief Financial Officer of the company now operating Toyworld stores had confirmed that redemption of any tokens would not be sought from the Trust in the unlikely event a Toyworld store accepts a now long-out-of-date token. The Court concluded that the appropriate resolution was to distribute the assets to two hospice charities that assist children and young persons, namely Rainbow Place, a hospice for children and young persons in Hamilton, and Hospice Southland, a hospice facility in Invercargill that provides services for children and young persons. The Court granted the orders sought by the trustees, which included the distribution of the final assets of the Token Trust to the two charities, the winding up of the Token Trust, and leave to apply for further directions if needed.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

On the papers
Counsel:	R J Chiu for Applicant
Judgment:	22 June 2021