Sherwin v JKA Holdings Limited - [2024] NZHC 920

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-1514

[2024] NZHC 920

IN THE MATTER of the Trusts Act 2019

IN THE MATTER

of the DOUGLAS HILTON FAMILY TRUST

BETWEEN

MARTIN BRIAN SHERWIN

Applicant

AND

JKA HOLDINGS LIMITED and VULCAN

TRUSTEE CO (2012) LIMITED as trustees of the DOUGLAS HILTON FAMILY

TRUST
First Respondents

PAUL HILTON SHERWIN
Second Respondent

Cont/…

Hearing: 13 and 14 November 2023

Appearances:

P Dale KC for the Applicant

B Vautier and Mr Kim for the First Respondents No appearance by or for the Second Respondent J Skinner for the Third Respondent

I Hutcheson for the Fourth Respondent B Molloy for the Fifth Respondent

Judgment:

24 April 2024

JUDGMENT OF BECROFT J

This judgment was delivered by me on 24 April 2024 at 4pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar

……………………………………

SHERWIN v JKA HOLDINGS LTD & ORS [2024] NZHC 920 [24 April 2024]

JAN SUSAN WALLACE
Third Respondent

WAYNE ANTONY SHERWIN
Fourth Respondent

ZOE MAATA SHERWIN
Fifth Respondent

The application

[1] The five Sherwin siblings (the siblings) are the beneficiaries of the Douglas Hilton Family Trust.1 It was settled in 1985 by their father, Dr Douglas Sherwin, a medical practitioner, who died in 2006.2

[2] The trust deed sets the date of final distribution of the trust assets as being the twentieth anniversary of the father’s death. In the meantime, the trustees, in their absolute discretion, can make payments to the siblings, or any one of them (if necessary to the exclusion of other siblings) as they think proper. Although some distributions have been made, a significant amount of trust assets remain.

[3] The siblings are all clear that they want the trust terminated as soon as possible. However, they are not agreed about the terms and conditions of the termination. Four siblings want equality of distribution (that takes into account the unequal payments that have already been made to the siblings). However, Wayne Sherwin desires inequality of distribution and wants a greater share because of his relatively straitened financial circumstances, his various health needs, and that the fact he does not own his own home.

[4] In his will, Dr Sherwin left half of his estate to Wayne, and one-eighth shares to the remaining siblings. To date, Wayne has already received approximately
$100,000 from his father’s estate. However, for reasons I will outline, there will be very little left in the estate, which was only recently finalised, and Wayne may stand to gain no more than a further $100,000. Accordingly, Wayne seeks for the family trust to be distributed unequally so that his financial needs can be met.

[5] If the Court agrees that the trust assets should be distributed unequally, two of the other siblings, Zoe Sherwin and to a lesser extent Jan Wallace, seek greater shares of the assets to reflect their own needs.

1 The five siblings are Martin, Paul, Jan, Wayne, and Zoe.
2…

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.

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Details

Case: [2024] NZHC 920
Decision Date: 24 April 2024

CaseChat Overview and Summary

In Sherwin v JKA Holdings Limited, the High Court of New Zealand dealt with a dispute among the beneficiaries of the Douglas Hilton Family Trust, seeking its termination and the distribution of its assets. Martin Sherwin, as the applicant and on behalf of all beneficiaries, sought orders to terminate the trust, divide the assets equally among the beneficiaries, and review the trustees' proposal for distribution. The trustees proposed a distribution that would equalise the assets among the beneficiaries, taking into account prior distributions from the trust and the estate.

The court first addressed whether section 124 of the Trusts Act 2019 applied, allowing the court to approve the termination of the trust on behalf of beneficiaries lacking capacity or future beneficiaries. The court found this section inapplicable as none of the beneficiaries fell into these categories. The court then considered section 125, which allows the court to waive the requirement for beneficiary consent to terminate the trust. The court determined that this section was also not applicable as it does not empower the court to decide the terms of termination, only to waive consent.

The court proceeded to review the trustees' proposal under sections 126 and 127 of the Act, which allow a beneficiary to apply for a review of a trustee's act or decision. The court found that the trustees' proposal for equal distribution was reasonably open to them, considering the circumstances and the terms of the trust deed. The court rejected the argument that the trustees should have considered the diminished estate available for distribution under the will when making their decision.

The court concluded that the trustees' proposal for equal distribution was reasonable and within their discretion. The court found no basis to waive the requirement for beneficiary consent under section 125 or to terminate the trust early. The court ruled that the trustees' proposal could proceed and that the trust assets should be used to pay for the legal costs of the proceedings.

Orders