Ruocco v Ruocco

[2020] NZHC 1150

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2020-485-49

[2020] NZHC 1150

IN THE MATTER OF

The Trustee Act 1956

IN THE MATTER OF

Proceedings under Part 18 of the High Court Rules 2016

BETWEEN

LUISA RUOCCO, ANTONELLA THERESE ASPELL, JOHN PAUL

RUOCCO AND JOHN CLAYTON MEO
Plaintiffs

AND

LUIGI GERARD RUOCCO

Defendant

Hearing:	On the papers
Appearances:	C Matsis for the Plaintiffs
Judgment:	28 May 2020

JUDGMENT OF GRICE J

(Approval of variation of terms of trust)

[1]    The plaintiffs have applied for certain orders arising out of the settlement of other High Court proceedings (CIV-2016-485-1004). In those proceedings the defendant (referred to as Bidgi in the affidavits and memoranda) claimed he was being deprived of his fair share of the S L and L Ruocco Family Trust, and sought distributions of his fair share.

[2]    A settlement has been reached by the family members of those claims and it involves a distribution to Bidgi of what the parties agree to be an appropriate share.

LUISA RUOCCO, ANTONELLA THERESE ASPELL, JOHN PAUL RUOCCO AND JOHN CLAYTON MEO v LUIGI GERARD RUOCCO [2020] NZHC 1150 [28 May 2020]

[3]    A deed of settlement dated 7 February 2020 recorded the terms of settlement which were in summary:

20.1The Trustees shall transfer to Bidgi a one-fifth share of the ITQ¹ held by the Family Trust.

20.2The Trustees shall effect a capital distribution to Bidgi of a one-fifth share of the net value of the remaining cash assets and liabilities of the Family Trust, after deduction of certain agreed amounts and expenses.

20.3Bidgi shall seek leave to discontinue the initial proceedings with no issue as to costs.

20.4Bidgi, his children, grandchildren and remoter issue are excluded as Interim Beneficiaries and Final Beneficiaries of the Family Trust and will have no further rights or entitlements under the Family Trust.

[4]    To give effect to that settlement certain orders and directions are sought from the Court as follows:

(a)Orders under section 64A of the Trustee Act approving the variation of the Trust Deed such that the defendant, his children, grandchildren and remoter issue are excluded as Interim Beneficiaries and Final Beneficiaries of the family trust and will have no further rights or entitlements under the family trust.

(b)A direction under s 66 of the Trustee Act that the plaintiffs to make the transfers and distributions provided in the Deed of Settlement.

[5]    The settlement was effectively reached between family members. These include the children of Luigi Ruocco who settled the trust, including Bidgi and Luisa Ruocco, the settlor’s widow and mother of the children. Two of the children (Antonella and John) together with Luisa Ruocco, and Mr Meo are the trustees.

[6]    There are a number of discretionary beneficiaries including children under the age of 18 years. The beneficiaries are:

1      Individual Transferrable Quota in dry fish and wet fish.

Interim beneficiaries

·     Each of the plaintiffs apart from John Clayton Meo.

·     The defendant.

·     Two other Ruocco siblings (Antonino (Tony) Salvatore Ruocco and llma (Ilma) Maria Angela Cave).

·     The six Ruocco grandchildren (Gemma Patricia Aspell, Michaela Louise Antonietta Aspell, Xavier Leo Salvatore Aspell, Erinn Antonella Ruocco Aspell, lmilia Patricia Ruocco and Benedict Salvatore Ruocco).

Final beneficiaries

·     The Ruocco children and, if any of them have died prior to the winding up leaving a child or children alive, then that child or children takes their parent's share, and if any such grandchild has died, that grandchild's child or children take their parent's share.

·     Charities listed as Mary Potter Hospice Foundation as to half share and St Frances Catholic Church as to one half share.

[7]    The assets of the family trust are represented by a perpetual individual transferable quota valued in August 2019 at $3,469,538 plus GST, and cash deposits of around $500,000.

[8]    The family dispute and resulting litigation has been stressful and divisive. The family members all wish to resolve the issues and have recorded that resolution in the settlement deed. Written consents to the settlement and the orders sought have been provided by thediscretionary beneficiaries, with the exception of children who are under 18 years of age. For those under 18 years consents have been provided by their parent.

[9]    Earlier directions were made by the Court that given the consents which had been filed and the background to the settlement the only service required to be made was on:2

(a)The defendant;

(b)The two other siblings (Tony  and Ilma) and the grandchildren over  18 years Gemma, Michaela and Xavier Aspell.

2      Minute of Cooke J dated 14 February 2020.

[10]   The Judge had considered the issue of whether a litigation guardian should be appointed in relation to the interests of the children less than 18 years of age. He was satisfied that the background circumstances as described in an affidavit, including the apparently equitable nature of the settlement contemplated, together with the concern expressed about mounting costs, persuaded him that there was nothing to be gained by such an appointment.3

[11]   In addition no service was required on the two charities named as beneficiaries. The evidence showed that they were well removed. It would require all the Ruocco children, grandchildren and great grandchildren to have died before they could take under the trust.

[12]   Section 64A of the Trustee Act 1956 gives the court power to authorise variations of trust as follows:

64A     Power of court to authorise variations of trust

(1)Without limiting any other powers of the court, it is hereby declared that where any property is held on trusts arising under any will, settlement, or other disposition, or on the intestacy or partial intestacy of any person, or under any order of the court, the court may if it thinks fit by order approve on behalf of—

(a)any person having, directly or indirectly, an interest, whether vested or contingent, under the trusts who by reason of infancy or other incapacity is incapable of assenting; or

(b)any person (whether ascertained or not) who may become entitled, directly or indirectly, to an interest under the trusts as being at a future date or on the happening of a future event a person of any specified description or a member of any specified class of persons, so however that this paragraph shall not include any person who would be of that description, or a member of that class, as the case may be, if the said date had fallen or the said event had happened at the date of the application to the court; or

(c)any unborn or unknown person; or

…

[13]   In this case the approval is sought on behalf of the infant beneficiaries and persons who might become entitled on the happening of a future event.

3      Minute of Cooke J dated 14 February 2020.

[14]   The application for directions is made pursuant to s 66 of the Trustee Act which provides as follows:

66       Right of trustee to apply to court for directions

(1)Any trustee may apply to the court for directions concerning any property subject to a trust, or respecting the management or administration of any such property, or respecting the exercise of any power or discretion vested in the trustee.

(2)Every such application shall be served upon, and the hearing may be attended by, all persons interested in the application or such of them as the court thinks expedient.

[15]   The jurisdiction of s 66 is intended to allow for directions by the Court in matters where the trustees are in doubt as to the appropriateness of the action that is contemplated. In this case as there are no matters in dispute or contest or allegations of breach of trust the application under s 66 for directions is appropriate.

[16]   Trustees obtain the statutory protection afforded by s 69 the Trustee Act. This protection depends on the accuracy of the information provided.4 The Court does not rubberstamp such applications but must consider the evidence before it.

[17]   The interests of the beneficiaries of the settlements and so the interests of the trust strongly favour the granting of the approval and the directions sought. The benefits include:

(a)The stress and disruption caused to the family by the ongoing disputes and litigation.

(b)The expense for the trust involved in legal fees for all parties.

(c)Allowing the defendant to make his own provision for his children, grandchildren and remoter issue.

(d)The harm to the good name and reputation of the family in its close knit community.

4      Trustee Act, s 69; Garrow and Kelly, Law of Trusts and Trustees (7th Ed, Lexis Nexis, Wellington) at [24.34](i). FFP Trustee (NZ) Ltd v Peng [2019] NZHC 3301 at [59].

[18]   In addition, the interim beneficiaries or their parents all actively consent to the variation and the directions sought.

[19]   While the transfers and distributions will remove assets and funds from the trust corpus, the exclusion of Bidgi and those who claim through him as beneficiaries of the trust makes the distribution equitable. His children and descendants will also benefit from arrangements for them which may be made by Bidgi from his share allocated from a trust in which he considered was not getting a fair share. The proceedings have been costly and created stress and conflict between family members when the trust was intended to benefit them. In addition, the distractions caused by the dispute if it continues may divert attention from the proper management of the trust assets.

[20]   I am satisfied on the material put before me that it is in the best interests of the beneficiaries to the trust to approve the variation and make the direction sought.

[21]   No orders as to costs was sought. In the circumstances I anticipate that that issue has been resolved.

[22]Accordingly, the order and direction sought are made as follows:

(a)An order approving the variation of the Trust Deed for the Family Trust such Orders under section 64A of the Trustee Act approving the variation of the Trust Deed such that the defendant, his children, grandchildren and remoter issue are excluded as Interim Beneficiaries and Final Beneficiaries of the family trust and will have no further rights or entitlements under the family trust.

(b)An order under s 66 of the Trustee Act directing the plaintiffs to make the transfers and distributions provided in the Deed of Settlement.

Grice J