Wiggins v Wiggins
[2024] NZHC 863
•19 April 2024
IN THE HIGH COURT OF NEW ZEALAND MASTERTON REGISTRY
I TE KŌTI MATUA O AOTEAROA WHAKAORIORI ROHE
CIV-2023-435-3
[2024] NZHC 863
BETWEEN JENNIFER ANN WIGGINS
Plaintiff
AND
IAN WIGGINS
Defendant
Hearing: 18 April 2024 Appearances:
R Marsich for Plaintiff
D G Dewar for Defendant
Judgment:
19 April 2024
JUDGMENT OF CHURCHMAN J
[1] The plaintiff and defendant (the parties) are siblings. They are the children of the late Stuart and Catherine Wiggins.
[2] Stuart and Catherine Wiggins were the settlors of the Hamerton Trust (the Trust) which was established on 6 October 2008.
[3] Following the death of Stuart and Catherine in 2017 and 2018 respectively, the parties are now the sole trustees of the Trust. Until recently the accountants who had acted for Stuart and Catherine during their lives, through their trustee company BMWD Trustee Company 26 Ltd, had been the independent Trustee. The independent trustee resigned as a result of assertions of misconduct made by Jennifer Wiggins (Jennifer) and her lawyer.
WIGGINS v WIGGINS [2024] NZHC 863 [19 April 2024]
[4] Jennifer asserts that Ian has failed to communicate or work with her “on all critical Trust functions from routine administration to future planning”. Ian denies these allegations.
[5] Peta Walker, a chartered accountant with the firm B W Miller Dean Ltd whose Trustee company was the independent Trustee has filed an affidavit in these proceedings. She rejected Jennifer’s allegations saying “… it is quite untrue to say that Mr Ian Wiggins did not engage his responsibilities as a Trustee.” She described Jennifer in these terms “I confirm that the plaintiff has always disengaged from any Trust process. She did not accept signing authority over the Trust bank account when offered, she has declined to attend meetings, she has refused to sign and return annual accounts.” She also said “I had correspondence with Jennifer Wiggins and with her Lawyer. I have found them to be oppositional and confrontational.”
[6] Following the death of the parties’ mother, issues arose as to whether Jennifer should receive Stuart and Catherine’s house and the ownership of a rental property owned by the Trust.
[7] In 2022 the parties participated in mediation before a Mediator, Grant Allan, which resulted in a settlement. The effective result of that was that Ian was to sell to Jennifer his interest in their parent’s former family home. The purchase price of Ian’s half interest was to be funded through the Trust. It was also agreed that Jennifer would purchase the investment property from the Trust with that transaction also being funded by the Trust. The net result was that Jennifer became a debtor to the Trust and Ian a creditor of the Trust.
[8] The Trust receives regular income distributions from the nominee company which holds shares in W Wiggins Ltd as the Trustee for the Trust. Income distributions are received twice a year and can vary significantly in quantum. The mediated settlement contains a formula for the payment out to Jennifer and Ian of those distributions. The debt owed by Jennifer to the Trust has been reduced by the allocation of part of those payments to the reduction of the debt.
[9] The parties shared equally in the cost of the mediation, the total cost of which was apparently $23,000. It is Ian’s view that the mediation resolved all of the issues between the parties.
[10] W Wiggins Ltd (the company) was founded by the parties’ great grandparents in the 19th century. The dividends paid by the company to the nominee company and then on to the Trust represent almost all of the Trust’s income. There are restrictions on who can own shares in the company. Owners have to be direct descendants of the company’s founder. I was advised that there is also a pre-emption clause giving existing family shareholders the right to purchase any shares that a shareholder may wish to sell.
[11] The parties both appear to agree that a solution to the present difficulties would be the division of the shares owned by the Hamerton Trust into two equal parcels, one beneficially owned by Jennifer and the other by Ian. Such a transaction would need the approval of the nominee company.
[12] The nominee company appears to have no difficulty with such a transaction in principle and their solicitors even offered to prepare the necessary documentation. However, for reasons that were not explained to the Court, Jennifer’s lawyer would not agree to the wording of the documents proposed by the nominee company’s lawyers and, at least for the last 12 months, there has been no progress.
The present application
[13] On 12 June 2023 Jennifer filed a statement of claim against Ian. The relief sought included:
(a)An order under s 112 of the Trusts Act 2019 for the removal of the defendant as Trustee of the Hamerton Trust.
(b)An order under s 114 of the Trusts Act 2019 appointing a new, independent, Corporate Trustee in the Defendant’s stead to act as Trustee of the Hamerton Trust together with the plaintiff, and costs.
[14] Ian has filed a statement of defence denying the various factual allegations pleaded by Jennifer. He doesn’t accept that there is any need for a Corporate Trustee to be appointed given the very limited nature of the Trust’s activities.
[15] By way of application dated 9 February 2024 Jennifer sought a direction from the Court pursuant s 145(1)(b) of the Trusts Act 2019 that the parties be referred to mediation, with Grant Allan being the mediator. Amongst other things the application contends that;
(a)There is friction and hostility between the Trustees that has led to an impasse in the administration of the Hamerton Trust.
(b)The defendant has not engaged with his duties as Trustee and there required an urgent resolution to the issues between the parties given the Trusts present inability to properly function because of the impasse between the Trustees.
[16] Given the evidence of Peta Walker referred to above at [5] Jennifer may have some difficulty establishing some of those claims.
The law
[17] Section 145 of the Trustee Act provides that the Court, may, at the request of a Trustee or a beneficiary or on its own motion, submit any matter to an ADR process other than in the situation where the terms of the Trust indicate a contrary intention.
[18] A further qualification is that s 145 only applies to “internal matters”. Section 142 of the Act defines “matter” to include “a legal proceeding brought by or against a Trustee in relation to the Trust” other than “a legal proceeding or a dispute about the validity of all or part of a Trust”. “Internal matter” is defined as including a matter to which the parties are… a Trustee and one or more other Trustees, of the Trust”.
[19] The matters at issue at the present case are clearly “internal matters” and provide the jurisdiction for the Court to invoke s 145.1
[20] However, the Court has a discretion as to whether to invoke s 145. There are many factors that can be taken into account in the exercise of that discretion. In S v N2 Wylie J listed some of those matters as being cost, confidentiality, speed, the seriousness and complexity of the matter, the suitability of the proposed mediator, the wishes of the parties, the wishes of the settlor (if known) finality and enforceability.
Analysis
[21] The principal ground for the defendant in opposing the reference to mediation is that it would be futile without the nominee company being a party to it, as the mediation could not bind the nominee company. Although the nominee company is in agreement, in principle, to a division of the shares, it is Jennifer’s lawyer who has objected to the nominee company’s proposals.
[22] Until Jennifer and the nominee company agree to a mechanism for the splitting of the shareholding it would seem to be premature to order mediation. If Jennifer and the nominee company can reach agreement, then it is possible that there would be no need for mediation as it seems Ian is happy to accept a partition of the shares.
[23] The facts of this case are clearly distinguishable from the facts in Wright v Pitfield3 where the Court did invoke s 145 in the context of an application for removal of a Trustee. Mediation will not produce an outcome which is enforceable against the nominee company and therefore could not be said to be final. The costs of a mediation would therefore potentially be wasted.
[24] I am also not convinced that there is any particular urgency that would justify reference to mediation. The fact that there was a delay in processing the distributions received by the Trust appears to be directly referable to the Trust’s long term accountants resigning as a result of Jennifer’s treatment of them. Following their
1 Wright v Pitfield [2022] NZHC 285.
2 S v N [2021] NZHC 2860.
3 Wright v Pitfield, above n 1.
resignation, the accountants did agree to Jennifer’s request that they prepare last year’s accounts and facilitate the distributions to the parties.
[25] In an updating affidavit of 10 April 2024 filed by Ian, a letter from the Trust’s former accountants was appended explaining why they were unwilling to become further involved in the Trust. The relevant passage says:
We resigned as accountants for the Trust in Sept 2022. To help out – we reluctantly agreed to do the Annual accounts for 2023 as they hadn’t found anyone else to do them (on an undertaking from Jenny that she would sign them – which hasn’t happened yet). We won’t be doing any further accounting work for the Trust.
[26] Notwithstanding the former accountant’s unwillingness to become involved, the updating affidavit confirmed that the 31 March 2024 dividend had been received into the Hamerton Trust’s bank account.
Outcome
[27] This is not an appropriate case for the exercise of my discretion under s 145. The application accordingly dismissed.
Costs
[28] I invite the parties to settle costs between themselves but in the absence of an agreement, within 14 days, the defendant is to file a memorandum of no greater than three pages in length with the plaintiff having five working days to respond with a memorandum no greater than three pages in length. The matter of costs will then be dealt with on the papers.
Churchman J
Solicitors:
Dyer Whitechurch, Auckland for Plaintiff
Thomas Dewar Sziranyi Letts, Lower Hutt for Defendant
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