Introduction ....................................................................................................................................... [1] Preliminary matters .......................................................................................................................... [3] The background facts........................................................................................................................ [4] The Trusts ........................................................................................................................................ [17] The APLJ Smith Family Trust....................................................................................................... [17] The Wanstead Trust ...................................................................................................................... [21] Other parties ................................................................................................................................ [25] Combined asset position as at 31 March 2012 ............................................................................. [29] Contentious evidence ...................................................................................................................... [31] Business philosophy ..................................................................................................................... [31] Disharmony .................................................................................................................................. [40] The claim in respect of the Wanstead Trust .................................................................................. [44] The claim in summary .................................................................................................................. [44] The transactions ........................................................................................................................... [45] Self-dealing................................................................................................................................... [46] Investments ................................................................................................................................... [54] Obligation to act “prudently” ...................................................................................................... [59] Good faith..................................................................................................................................... [61] Requirement to act unanimously .................................................................................................. [62] The claim in respect of the APLJ Smith Family Trust ................................................................. [64] The claim in summary .................................................................................................................. [64] Transactions relied upon .............................................................................................................. [65] Self-dealing distributions.............................................................................................................. [67] Investments ................................................................................................................................... [72] Overall complaint ......................................................................................................................... [73] Claim for rectification ..................................................................................................................... [75] The Wanstead Trust ...................................................................................................................... [75] The APLJ Smith Family Trust....................................................................................................... [76] Limitation Act 1950 ......................................................................................................................... [79] The relief sought .............................................................................................................................. [80] Section 64 of the Trustee Act 1956 ............................................................................................... [81] Discretion to decline relief ........................................................................................................... [82] Section 73 ..................................................................................................................................... [83] Removal of trustees dependent on all the circumstances.............................................................. [84] Need for removal? ........................................................................................................................ [87]
My assessment .............................................................................................................................. [89] Result ................................................................................................................................................ [95] Appendix 1 : APLJ Smith Family Trust
Appendix 2 : Wanstead Trust

Introduction

[1] Ashley Woodward (the plaintiff) seeks removal of the trustees of two family trusts in which he is a beneficiary. His complaint is that Jon Philip Smith, his uncle and a trustee in respect of both trusts, is in a position of conflict. He says that his uncle has infringed the rule against trustee self-dealing in breach of trust, and in breach of his fiduciary duties to the beneficiaries. He also says that his uncle has breached the trust by making interest-free advances to entities in which he had an interest. He has the same concerns in respect of the other two trustees of one of the trusts, who are Jon Philip Smith’s wife and son. As well as seeking the appointment of independent trustees in place of the existing trustees, Ashley Woodward seeks declarations to the effect that all income allocation decisions and drawings made by the trustees to themselves…

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 Woodward v Smith

Details

AGLC: Woodward v Smith [2013] NZHC 1226
Case: [2013] NZHC 1226
Decision Date: 28 May 2013

CaseChat Overview and Summary

The parties in this case are Ashley Woodward, who is a beneficiary of two family trusts, and the trustees of those trusts, who are Jon Philip Smith, Jon Bower Daniel Smith, Shelley-Lou Smith, and Elaine Coral Woodward. Ashley Woodward has brought proceedings seeking the removal of the trustees, declarations that certain actions taken by the trustees are in breach of trust, and orders for inquiries into loss. The case was heard on a summary judgment application. The central issue is whether the trustees have breached the trusts by engaging in self-dealing and making imprudent investments. The court found that while it appeared that the trustees may have breached the trusts, it was not appropriate to order the relief sought on a summary judgment application. The court found that the evidence was not sufficiently clear to determine whether the trustees had acted in good faith and in accordance with the terms of the trust. The court also found that there was no danger of dissipation or inappropriate use of trust assets, and that the trustees had undertaken to make no material changes in the trusts pending further order of the court. The application for summary judgment was dismissed, and the application to adduce further evidence was granted. The court reserved costs.

Orders