Rowan v Pharazyn - [2024] NZHC 3381

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2024-485-383

[2024] NZHC 3381

UNDER The Property Law Act 2007

IN THE MATTER OF

an application for a sale order

BETWEEN

DOUGLAS ROWAN

Applicant

AND

WENDY PHARAZYN, NINA ANNE PHARAZYN and NICHOLAS MARTIN PHARAZYN

Respondents

Hearing: On the Papers

Counsel:

D D Vincent for the Applicant

Judgment:

13 November 2024

JUDGMENT OF CHURCHMAN J

Introduction

[1] On 25 June 2024, Mr Douglas Rowan, Trustee of the Estate of Charles Conrad Pharazyn (the Estate), filed a without notice application for directions that:

(a)It is a proper exercise of his powers, as Trustee of the Estate to bring proceedings against the trustees of the J & R Pharazyn Trust (the Trust) seeking sale orders under s 339 of the Property Law Act 2007 as set out in the affidavit of Douglas Rowan filed in support of the application; and

ROWAN v PHARAZYN, PHARAZYN and PHARAZYN [2024] NZHC 3381 [13 November 2024]

(b)He is indemnified accordingly from the assets of the Estate for costs properly and reasonably incurred for the benefit of the Estate in prosecuting the application.

[2] The applicant seeks these directions on the grounds that they are necessary to give effect to the terms of the Co-owners deed between the Estate and the other Co-Owners so that the Estate can separate its interests from the Trust’s and be paid the amounts agreed for its interest in the land, livestock and forestry block.

Background

[3] On 10 July 2020, the applicant was appointed trustee of the Estate, replacing the previous trustee Peter Neville Smith.

[4] The beneficiaries of the Estate are the deceased’s widow Wendy Pharazyn, and their children Nicholas Martin Pharazyn and Nina Anne Pharazyn. Wendy is the life tenant of the Estate’s interest in Motere Station. After Wendy’s death, that interest will vest in equal shares in Nicholas and Nina as remaindermen.

[5] The Estate is a one third owner of the farm known as “Motere” with the remaining two thirds owned by the Trust. Motere is made up of several adjacent properties which combined cover approximately 2,000 hectares of farmland in Hawkes Bay.

[6] In addition to Motere, the Estate and the Trust are also co-owners of stock which were subject to a bailment agreement with Motere Station Limited (MSL) until this was terminated on 31 December 2023. There is also a forestry block on the Station the ownership of which is divided between the co-owners in the same manner.

[7] MSL leased the farm until it gave notice of termination effective 31 December 2023. The applicant alleges that due to MSL having been unable to pay a commercial rent for the land and failing to meet its good husbandry obligations, the Estate is not receiving the income from the farm it is entitled to and is concerned about the maintenance of its capital.

[8] The parties entered into a co-owner’s deed on 15 August 2022 (the Deed) which provided…

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 Rowan v Pharazyn

Details

AGLC: Rowan v Pharazyn [2024] NZHC 3381
Case: [2024] NZHC 3381
Decision Date: 13 November 2024

CaseChat Overview and Summary

The case of Rowan v Pharazyn involved Douglas Rowan, the trustee of the Estate of Charles Conrad Pharazyn, who filed an application seeking directions from the court regarding the sale of a property and the separation of interests from the J & R Pharazyn Trust. The application was filed without notice, seeking directions to proceed with the sale and seeking indemnification from the Estate’s assets for the costs incurred. The background of the case revealed that the Estate owned one third of the farm, Motere, along with other assets, with the remaining two-thirds owned by the Trust. The co-owners had entered into a deed that outlined the sale of a specific block of land and the subsequent acquisition of the Estate’s interest by the Trust. However, complications arose when the sale of the specified block failed, and the Trust claimed the deed was no longer applicable.

The legal issues before the court included whether the applicant had the authority to seek directions regarding the sale and whether the proposed litigation was in the best interests of the Estate. The court examined the rules governing Beddoe applications and the principles that guide such applications, emphasizing the need to balance the interests of the trust and its beneficiaries. The applicant argued that the litigation was necessary to secure a better return on the Estate’s capital and that there were strong prospects of success due to the binding nature of the deed. The court agreed, finding that the application was appropriately filed without notice and that proceeding with the litigation was in the best interests of the Estate. The court also accepted the applicant’s estimation of the litigation costs and found that the Estate had sufficient funds to cover them.

The court concluded by granting the Beddoe application, allowing the trustee to bring proceedings against the Trust for sale orders under the Property Law Act 2007 and providing for the indemnification of costs from the Estate’s assets. This decision enabled the Estate to proceed with the litigation to disentangle its interests from the Trust and reinvest its capital for the benefit of its beneficiaries.

Orders