Whale v Silich - [2022] NZHC 3339

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2022-488-48

[2022] NZHC 3339

UNDER The Trusts Act 2019

IN THE MATTER

of The Vernwith Valley Farm Trust

BETWEEN

GARY JON WHALE

Applicant

AND

TANYA MAREE SILICH

First Respondent

VERNWITH VALLEY TRUSTEE COMPANY LTD

Second Respondent

Judgment:

(On the papers)
9 December 2022

JUDGMENT OF BREWER J

This judgment was delivered by me on 9 December 2022 at 4 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Hammonds (Dargaville) for Applicant

WHALE v SILICH [2022] NZHC 3339 [9 December 2022]

Introduction

[1] Mr Gary Jon Whale is one of three trustees of the Vernwith Valley Farm Trust (the Trust). The other trustees are his former wife, Ms Tanya Maree Silich, and the Vernwith Valley Trustee Co Ltd (the Trustee Company).1

[2]Mr Whale applies by way of originating application for:2

(a)removal of Ms Silich and the Trustee Company as trustees of the Trust;3

(b)appointment of a new trustee in addition to himself as the existing trustee;4

(c)the Court to review the acts, omissions or decisions of Ms Silich;5 and

(d)the Court to appoint a receiver to administer the Trust.6

[3]Ms Silich and the Trustee Company have taken no steps in the proceeding.

[4] On 5 October 2022, having considered the documents filed in support of the application, I issued a Minute giving notice of my decisions:

(a)I would grant the application for removal of Ms Silich and the Trustee Company as trustees.

(b)I would also remove Mr Whale as trustee.

(c)I would appoint Mr Desmond Bernard Quinn as a trustee.

1      Mr Whale and Ms Silich are directors and shareholders of the Trustee Company. Mr Whale and Ms Silich each hold 49 shares in the Trustee Company, with a third entity, JMA Bay of Islands Ltd, holding two shares.
2      I granted leave to commence proceedings by way of originating application on 12 July 2022.
3      Trusts Act 2019, s 112.
4      Section 114(1).
5      Section 126(1).
6      Section 138(1).

[5] As the Trust Deed requires a minimum of two trustees, I required Mr Whale to nominate a second independent trustee. I also indicated that it would be premature to make any of the further orders sought in [2] above. The new trustees would be able to review the operation of the Trust either themselves or through appointing a qualified accountant.

[6]Mr Whale has since nominated a second independent trustee.

[7]I now give reasons for my decisions and make the relevant orders.

Background

[8]Mr Whale and Ms Silich married in 1989.

[9] Mr Whale is a carpenter by trade. He had been involved in the building industry and was a member of the Certified Builders Association, which recommended the creation of family trusts to its members as a means of protecting assets and for succession purposes.

[10] The Trust was formed by Deed dated 8 June 2004. The three settlors of the Trust were Mr Whale, Ms Silich and Spicers Trustee…

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 Whale v Silich

Details

AGLC: Whale v Silich [2022] NZHC 3339
Case: [2022] NZHC 3339
Decision Date: 9 December 2022

CaseChat Overview and Summary

The High Court of New Zealand dealt with an application by Mr Gary Jon Whale to remove trustees from the Vernwith Valley Farm Trust, of which he was one of the original trustees. The other trustees were his former wife, Ms Tanya Maree Silich, and the Vernwith Valley Trustee Company Ltd. Mr Whale sought to remove Ms Silich and the Trustee Company, appoint a new trustee, review Ms Silich's decisions, and appoint a receiver for the trust. Ms Silich and the Trustee Company did not respond to the proceedings.

The court had to decide whether to remove Ms Silich and the Trustee Company as trustees and whether to remove Mr Whale as a trustee. The court also had to determine if there were grounds to appoint new trustees and if the new trustees should review Ms Silich's actions and decisions. Lastly, the court had to decide if appointing a receiver was necessary.

The court found that there were sufficient grounds to remove Ms Silich and the Trustee Company as trustees, as well as Mr Whale. The court concluded that the trust's proper execution was being frustrated by the unilateral decisions made by Ms Silich without Mr Whale's knowledge or consent. The court noted that some of these decisions appeared to benefit Ms Silich personally rather than the trust's beneficiaries. The court also found that Mr Whale could not remain as a trustee due to the level of estrangement between him and Ms Silich. The court appointed Mr Desmond Bernard Quinn and Mr William Edward Mallett as new trustees of the trust. The court did not grant the other orders sought by Mr Whale, such as reviewing Ms Silich's decisions and appointing a receiver, as the new trustees would be able to do so themselves or through appointing a qualified accountant.

The court granted the application for the removal of Ms Silich and the Trustee Company as trustees, removed Mr Whale as a trustee, and appointed Mr Desmond Bernard Quinn and Mr William Edward Mallett as trustees of the Trust. The court reserved leave for the new trustees to apply for further or ancillary orders to ensure a smooth transition in the trust's operation. The court also allowed the costs of the proceeding and the new trustees' duties to be paid from the trust's assets.

Orders