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Talijancich v Talijancich

Talijancich v Talijancich

Case [2021] NZHC 753 8 April 2021

Variation of Trust

Beneficiary Consent

Court Approval of Trust Variation

Waiver of Beneficiary Consent

Discretionary Powers of Trustees

Independent Trustee

Trusts & Equity

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IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2021-442-5

[2021] NZHC 753

UNDER the Trusts Act 2019

IN THE MATTER

of an application relation to variation of the Deed of Trust for the Majac Trust

BETWEEN

MICHAEL ANTHONY TALIJANCICH, GRAEME PETER MALONE and M & L TRUSTEES LIMITED

Applicants

AND

LORRAINE MARISE TALIJANCICH, MICHAEL ANTHONY TALIJANCICH, JULIA JANE TALIJANCICH, CAROLINE FLEUR GIBBONS, SCOTT WILLIAM GIBBONS, ANGELA MARGARET TALIJANCICH, MILAN DANIEL TALIJANCICH and FELICITY ANNE TALIJANCICH

Respondents

Hearing: On the papers

Counsel:

M R C Wolff for Applicants

Judgment:

8 April 2021

JUDGMENT OF ISAC J

Introduction

[1] The applicants (the Trustees), Michael Talijancich (Michael), Graeme Malone, and M & L Trustees Limited are trustees of the Majac Trust (the Trust).

[2] The Trustees seek several variations to the Trust Deed pursuant to the Trusts Act 2019 (the Act). It is said the proposed variations relate to the management and
TALIJANCICH, MALONE and M & L TRUSTEES LIMITED v TALIJANCICH & ORS [2021] NZHC 753
[8 April 2021]

administration of the Trust, will enable the Trust to be administered more efficiently, and update the Trust to reflect modern practice and changes in the law since the Trust was settled.

[3] Not all the beneficiaries have given their consent to the variations. Other beneficiaries are either incapable of giving informed consent or are as yet unborn. Accordingly, the Trustees have applied under s 125 of the Act for an order waiving the requirement for unanimous consent of the beneficiaries or, alternatively, an order under s 124 approving the variations on their behalf.

The Trust

[4] The Trust was established in 1987 by Margaret Ann Talley (the Settlor). The Trust was settled to enhance and protect the interests of Margaret’s son, Michael, and his family. The Trust currently owns and administers substantial assets, including a shareholding in Talley’s Group Limited.

[5] The Trust Deed gives the Trustees discretionary powers of distribution. Discretionary distributions can be made without further qualification to Michael, his wife, his children, and their spouses for the time being and any further remoter issue of Michael. These beneficiaries are called primary discretionary beneficiaries in the materials filed in support of the application.1 There are currently 19 of them.

[6] There is an additional class of beneficiary referred to in the application as contingent discretionary beneficiaries.2 These beneficiaries are the other children of the Settlor and their children and remoter issue. They only qualify for a distribution if there are no longer any beneficiaries alive who might fall into the category of primary discretionary beneficiaries.3

1      There are currently eight adult and 11 minor primary beneficiaries, with the prospect of more primary beneficiaries being born in the future.
2      These too are grouped into adult, minor, and future contingent beneficiaries.
3      Given the number of primary discretionary beneficiaries, it is unlikely that contingent discretionary beneficiaries will ever take an interest in the Trust’s assets.

Proposed Variations

[7]Mr Wolff, counsel for the applicants,…

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 Talijancich v Talijancich

Details

AGLC: Talijancich v Talijancich [2021] NZHC 753
Case: [2021] NZHC 753
Decision Date: 8 April 2021

CaseChat Overview and Summary

The applicants, Michael Talijancich, Graeme Malone, and M & L Trustees Limited, trustees of the Majac Trust, sought variations to the Trust Deed under the Trusts Act 2019. The proposed variations aimed to update the Trust to reflect modern practice and changes in the law since the Trust was settled. However, not all beneficiaries had given their consent to the variations. Some beneficiaries were either incapable of giving informed consent or were as yet unborn. Therefore, the Trustees applied under s 125 of the Act for an order waiving the requirement for unanimous consent of the beneficiaries, or alternatively, an order under s 124 approving the variations on behalf of those beneficiaries.

The court had to decide whether it was empowered to make an order under s 125 waiving the requirement for all beneficiaries to consent to the proposed variations or whether s 124 also came into play. The court held that s 122(2) was clear in its effect, and a trust could only be varied if every beneficiary consented to the variation, a trustee had received a request to vary the terms of the trust, and if any of the beneficiaries was a beneficiary described in section 124(2), the court had made an order under section 124 approving the variation of terms or resettlement on behalf of that beneficiary, and the trustee had agreed to the proposal. In this case, the minor and future primary beneficiaries as well as the contingent discretionary beneficiaries fell under s 124(2) as they either lacked capacity, they may acquire a beneficial interest at a future date or on the happening of a future event or on becoming a member of a certain class of persons, or they were a future person who may acquire a beneficial interest. Therefore, the Court needed to make an order under s 124 approving the variation before the Trust could be varied.

The court was satisfied that it was appropriate to grant the orders as sought under ss 124 and 125 of the Act enabling variations of the Trust Deed. The Court waived the requirement that the adult discretionary beneficiaries of the Majac Trust Deed dated 8 June 1997 consent to the Proposed Variations to the Trust Deed. The Court also approved the variation of the Trust Deed proposed by the Trustees on behalf of all beneficiaries who lacked capacity (including the minor primary beneficiaries), and/or persons who may acquire a beneficial interest at a future date or on the happening of a future event or on becoming a member of a certain class of persons and/or future persons who may acquire a beneficial interest. The Trustees were permitted to meet the costs of this application from the funds of the Majac Trust.

Orders