Borich Family Trust

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2014-404-000754 [2014] NZHC 780

IN THE MATTER OF
the Trustee Act 1956 and the Court's

Inherent Jurisdiction

AND

IN THE MATTER OF

the BORICH FAMILY TRUST

AND

IN THE MATTER OF

an Application by the Trustees PAUL IVAN BORICH and JONATHAN PETER SIMCOCK

Applicants

On the papers.

Counsel:

D J Jenkin for the Applicants

Judgment:

15 April 2014

JUDGMENT OF GILBERT J

This judgment is delivered by me on 15 April 2014 at 11 am pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

BORICH FAMILY TRUST [2014] NZHC 780 [15 April 2014]

[1] The applicants, who are trustees of the Borich Family Trust, seek removal of the other trustee, Len Ivan Borich, on the basis that he suffers from severe frontal lobe dementia and is unable to manage his own affairs, let alone those of the trust. His condition is incurable and is expected to become progressively worse over time. He is currently receiving care in the residential home and hospital facility to which he was admitted in early 2012.

[2] The Borich Family Trust was formed by deed dated 7 December 1999. The three original trustees were Mr Len Borich, his wife, Anita Borich, and a family friend, Dr Jonathan Simcock. Mrs Anita Borich died on 14 June 2013. She left her estate to the Borich Family Trust. Following her death, the sole beneficiaries of the trust are Mr Len Borich and their son, Paul Ivan Borich. Mr Paul Borich replaced his mother as a trustee of the trust upon her death.

[3] Prior to her death Mrs Anita Borich met the costs associated with her husband’s care. While her estate was left to the trust, the funds cannot be dealt with for the benefit of beneficiaries because the trustees must act unanimously and there is no prospect of Mr Len Borich being able to participate in any decision-making for the trust. For this reason, the trust is presently unable to function. The result is that substantial expenses associated with Mr Len Borich’s care have accumulated and cannot be paid.

[4] Dr Simcock and Mr Paul Borich are willing and able to discharge their responsibilities as trustees of the trust. They consider that it is not necessary to appoint a further trustee to replace Mr Len Borich. They are concerned not to impose further cost on the trust. In these circumstances, they simply seek an order removing Mr Len Borich as trustee.

[5] The Court has an inherent jurisdiction to remove a trustee, without appointing another, in circumstances such as these, where the trustee is no longer capable of fulfilling his or her obligations as trustee. The Court may exercise this power whenever it is desirable to do so in the interests of the beneficiaries. I am satisfied that it is in the best interests of the beneficiaries to make the order sought in the particular circumstances of this case.

[6] Accordingly, I make an order that Len Ivan Borich of Auckland, retired, be

removed as a trustee of the Borich Family Trust.

M.A. Gilbert J

CaseChat Overview and Summary

The applicants, Paul Ivan Borich and Jonathan Peter Simcock, trustees of the Borich Family Trust, sought the removal of the third trustee, Len Ivan Borich, due to his severe frontal lobe dementia, which rendered him incapable of managing his own affairs, let alone those of the trust. The Borich Family Trust was established by deed on 7 December 1999, with Len Ivan Borich, Anita Borich, and Jonathan Peter Simcock as the original trustees. Following Anita Borich's death, her estate was left to the trust, with Len and Paul as the beneficiaries, and Paul assuming his mother's role as a trustee. The trustees argued that Len Borich's condition is incurable and expected to worsen, making him unable to participate in decision-making for the trust. Consequently, the trust has been unable to function, leading to accumulated expenses that cannot be paid.

The legal issues before the court involved whether the court had the inherent jurisdiction to remove a trustee without appointing another, and whether such a removal would be in the best interests of the trust beneficiaries. The applicants contended that Len Borich's removal was necessary for the trust to function properly, while ensuring no additional costs were incurred. They asserted that the remaining trustees were willing and capable of managing the trust effectively. The court had to determine whether the inherent jurisdiction to remove a trustee in such circumstances was applicable and whether it was appropriate to exercise this power in the specific context of the Borich Family Trust.

In considering the case, the court held that it possessed the inherent jurisdiction to remove a trustee without appointing a replacement when the trustee was incapable of fulfilling their obligations. The court determined that this power could be exercised whenever it was desirable in the interests of the beneficiaries. Given the particular circumstances, the court was satisfied that removing Len Ivan Borich as a trustee was in the best interests of the beneficiaries. Consequently, the court made an order removing Len Ivan Borich from his position as a trustee of the Borich Family Trust.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

IN THE MATTER OF	the Trustee Act 1956 and the Court's Inherent Jurisdiction
AND
IN THE MATTER OF	the BORICH FAMILY TRUST
AND
IN THE MATTER OF	an Application by the Trustees PAUL IVAN BORICH and JONATHAN PETER SIMCOCK Applicants

On the papers.
Counsel:	D J Jenkin for the Applicants
Judgment:	15 April 2014