IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV 2012-409-002287 [2013] NZHC 1402

BETWEEN	BARBARA JANE SHERRIFF Plaintiff
AND	BARBARA JANE SHERRIFF NORMAN TREVOR THOMAS
SHERRIFF

ASHLEY COLIN SHERRIFF Defendants

Hearing:	(On papers)

Counsel:	P A Robertson for Plaintiff

Judgment:	12 June 2013

JUDGMENT OF WHATA J

[1]	The current trustees of the W B Sherriff Family Trust are in deadlock.  The primary asset of the Trust is a managed fund of approximately $5,195,477.

[2]	This is an application to remove trustees and vary the Trust pursuant to ss 51 and 64A of the Trustee Act 1956.   Section 51(1) provides:

51        Power of Court to appoint new trustees

(1)        The Court may, whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient, difficult, or impracticable so to do without the assistance of the Court, make an order appointing a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee.

[3]	Section 64A gives this Court the power to authorise variations of trust.  The

test is simply “the Court may if it thinks fit”.1

1	Section 61(a)(1).

[4]       The Court must not however approve an arrangement on behalf of any person if that arrangement is to their detriment.2

[5]       The   trustees,   together   with   the   minor   and   unborn   beneficiaries   are represented.   Their  counsel have jointly filed a memorandum  consenting to the orders sought.

[6]       The proceedings have also been served  as directed on Mr Peter Charles Dalziel, in whom power of appointment of trustees vested on the death of Wayne Brendon Sherriff, by virtue of his will.

[7]       Essentially counsel are agreed that given the circumstances of dysfunction of the Trust as set out in the plaintiff’s affidavit sworn 13 September 2013, that removal of the current trustees and replacement is appropriate.   A memorandum signed by Mr Dalziel has been filed recording that he does not consider it appropriate that he have a role in the Trust.  He supports the proposal set out by counsel.

[8]       The agreed solution is as follows:

5.1       An  Order  directing  the  Registrar  of  the  court  to  liaise  with  the President of the Canterbury-Westland Branch of the new Zealand Law   Society   who   is   hereby   requested   and   authorised   upon discussion with, and acceptance by the candidates, to nominate two suitable candidates to accept appointment as trustees of the W B Sherriff Family Trust; such candidates to be Christchurch practitioners and to have no less than 10 years professional legal experience each, particularly in relation to trust administration.

...

5.2       An Order removing the current trustees of the W B Sherriff Family Trust immediately following the appointment of two new trustees as set out in clause 5.1.

5.3       An Order approving a variation to the W B Sherriff Family Trust to become effective immediately following the removal of the current trustees,  by  deleting  clauses  21.1,  21.2,  21.3  and  21.4  and  by inserting new clauses 21.1 and 21.2:

5.3.1.	The power of appointment of new trustees shall be vested in the current trustees.

2	Section 64A(1)(d).

5.3.2	That the exercise of the power of appointment should always be by Deed.

5.4       That the costs of the parties, of Mr Elliott (counsel appointed to represent the minor and unborn beneficiaries) and of Mr Evans (solicitor for Mr Hamish Davies) be met from the assets of the Trust.

5.5       That leave be reserved to the parties, Mr Elliott and Mr Evans to bring  the  issue  of  costs  back  to  the  Court  on  7  days’ notice  if necessary.

[9]       Counsel say that the orders sought:

(a)	Are suitable, practicable and efficient;

(b)	Meet the Court’s duty to see trusts are properly executed;

(c)	Serve the welfare of the beneficiaries – which is the litmus test.

Procedure

[10]     It was initially envisaged that an Associate Judge would make the orders, given that they are sought by consent.  They accept that the Associate Judge’s power under s 26I(1)(e) of the Judicature Act 1908 includes the granting of any orders by consent.  However, counsel consider that the consent of the parties is not sufficient in this case because the Court must be satisfied that the relevant statutory criteria are met.   It is then said that s 26I(2) of the Judicature Act 1908 lists the enactments under which the Associate Judge may exercise jurisdiction and power.  The Trustee Act 1956 is not included in the list.

[11]     As this matter has not been thoroughly argued before me, I am not going to express a view one way or other.   I will simply proceed, on a cautious basis, and determine this matter.

Assessment

[12]     I have now had the opportunity to read the affidavit of the plaintiff, Barbara

Jane Sherriff.   She identifies a number of what she calls issues, discrepancies and

anomalies relating to the assets of the Trust.   It is unnecessary for me to traverse them here save to record that as counsel suggest:3

The hostility between the plaintiff and the two other trustees of the Trust
evidenced in the plaintiff’s affidavit risks prejudicing the beneficiaries.

[13]     The plaintiff’s detailed narrative, combined with the consent of all parties served, provides a proper basis for the grant of orders sought.

[14]     For   completeness,   since   lodging   of   the   joint   memorandum,   consent documents by Paul Stuart Gooby and Peter Christopher Eastgate have been lodged. They consent to being appointed as trustees of the W B Sherriff Family Trust and they confirm that they have no less than ten years professional experience and have experience in relation to Trust administration.

Result

[15]     Given that there is clear evidence that the current trust arrangements are not functioning as they need to and given the consent of all of the affected parties, I grant the orders as sought.   In short, it is expedient that the current trustees be removed and replaced.  Also, I am satisfied that the proposal to vary the terms of the Trust is appropriate and will not be to the detriment of any of the beneficiaries.

[16]     Accordingly, there shall be the following orders:

3.1       Appointing Peter Christopher Eastgate, Paul Stuart Gooby as Trustees of the W b Sherriff Family Trust;

3.2       Authorising a variation to the W B Sherriff Family trust to become effective immediately following the removal of the current trustees, by  deleting  clauses  21.1,  21.2,  21.3  and  21.4  and  inserting  new clauses 21.1 and 21.2 as follows:

“21.1   The power of appointment of new trustees shall be vested in

the current trustees.”

3	Paragraph 8 of joint memorandum dated 20 March 2013.

“21.2   That the exercise of the power of appointment should always

be by deed”

3.3       That the costs of the parties, and of Mr Elliott and Mr Evans, be met from the assets of the W B Sherriff Family Trust.

3.4       That leave be reserved to the parties, Mr Elliott and Mr Evans, to bring  the  issue  of  costs  back  to  the  Court  on  7  days  notice  if necessary.

Solicitors:
Mortlock McCormack Law, Christchurch