Wallace v Wallace - [2023] NZHC 2928

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2022-419-188

[2023] NZHC 2928

IN THE MATTER of an application seeking directions pursuant to the Trusts Act 2019

AND

IN THE MATTER

of Part 18 High Court Rules

AND

IN THE MATTER

of the IONE WALLACE TRUST

BETWEEN

SHANE CRAIG WALLACE and EDWARD

DEAN CLARKE as trustees of the IONE WALLACE TRUST

Plaintiffs

AND

GAVIN ROLAND WALLACE

Defendant

Hearing: 9 October 2023

Appearances:

D M O’Neill for Plaintiffs Defendant in person

Judgment:

19 October 2023

JUDGMENT OF LANG J

[on application by trustees for directions]

This judgment was delivered by Justice Lang
On 19 October 2023 at 10.00 am Pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:…………………………

Solicitors/counsel:
Harkness Henry, Cambridge/D M O’Neill, Barrister, Hamilton

Copy to:
Mr G R Wallace

WALLACE v WALLACE [2023] NZHC 2928 [19 October 2023]

[1] The plaintiffs in this proceeding are the current trustees of the Ione Wallace Trust (the Trust). The Trust was settled by Mrs Beverley Ione Wallace by a deed dated 1 November 2004. Mrs Wallace died on 9 April 2021. The plaintiffs are the executors and trustees under her will as well as being the trustees under the deed of trust.

[2] The Trust’s sole asset is cash on deposit in the sum of just under $700,000. This represents the sale proceeds of the residential property in which Mrs Wallace had been living up until her death together with rental income subsequently derived from the property and accrued interest.

[3] Unless brought forward, the Vesting Day under the deed of trust is 1 November 2084, being 80 years from the date on which the Trust was settled.

[4] The trustees wish to bring forward the vesting date and distribute the funds they currently hold to the six final beneficiaries named in the Trust. One of those beneficiaries, Mr Gavin Wallace (Gavin), opposes the application. He considers the Court, and not the trustees, should be responsible for making the decision as to what should happen to the assets owned by the Trust.

[5] Gavin has filed interlocutory applications seeking freezing orders over the Trust’s assets and an order dismissing the plaintiffs’ application for directions.

Background

[6] Mrs Wallace was survived by her three children, namely Shane Craig Wallace (Shane), Cherie Beverley Luxton and Gavin. She was also survived by her three stepchildren, namely Timothy John Wallace, Bronwyn Mary Wallace and Vivien Clare Hibbert. In addition, Mrs Wallace had 11 grandchildren at the date of her death.

[7] Mrs Wallace was originally a trustee of the Trust along with a solicitor, Mr Edward Dean Clarke. Following Mrs Wallace’s death Mr Clarke and Shane signed a Deed of Appointment dated 21 May 2021 under which Shane was appointed as trustee of the Trust in his mother’s place.

[8] Clause 11 of the deed of trust provides for what should happen to the trust assets on the Vesting Day. It provides as follows:

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 Wallace v Wallace

Details

AGLC: Wallace v Wallace [2023] NZHC 2928
Case: [2023] NZHC 2928
Decision Date: 19 October 2023

CaseChat Overview and Summary

The plaintiffs in this proceeding are the current trustees of the Ione Wallace Trust, Shane Craig Wallace and Edward Dean Clarke. The defendant is Gavin Roland Wallace, one of the beneficiaries of the Trust. The Trust was settled by Mrs Beverley Ione Wallace, who passed away on 9 April 2021. The Trust's sole asset is approximately $700,000 in cash, representing the sale proceeds of a residential property, rental income, and accrued interest. The vesting date, originally set for 1 November 2084, is 80 years from the date the Trust was settled. The trustees seek to bring forward the vesting date and distribute the funds to the six final beneficiaries named in the Trust deed. Gavin opposes this move, arguing that the Court, rather than the trustees, should decide the disposition of the Trust's assets.

The Court addressed Gavin's interlocutory applications seeking a freezing order over the Trust’s assets and an order dismissing the proceeding. The Court dismissed the application for a freezing order, finding no grounds to believe the assets would be dissipated or removed outside the jurisdiction. The application for summary dismissal of the proceeding was also dismissed, as none of the grounds pleaded would justify such an order. The Court proceeded to consider the trustees' application for directions under s 133 of the Trusts Act 2019.

In assessing the trustees' application, the Court examined whether the proposed course of action was a proper exercise of their powers and whether the trustees had a rational basis for their decision to bring forward the vesting date. The Court found that the trustees' decision to distribute the trust assets to the final beneficiaries now, rather than in 2084, was based on rational considerations, including the modest size of the trust assets and the ongoing family conflict. The Court also rejected Gavin's argument that the discretionary beneficiaries had a vested interest in the trust assets, noting that such an interest would only arise if one or more of them had been appointed to receive a share of the assets by the settlor or the current trustees.

The Court granted the trustees' application for directions, setting the vesting date for 30 November 2023, and ordered that the trust assets be distributed equally among the named final beneficiaries. The Court concluded that the trustees' decision to distribute the assets now was justified and in accordance with the terms of the Trust deed. The trustees were granted costs, with the parties given leave to file memoranda if they could not agree on the amount.

Orders