Middlemiss v Fidels Trust Limited

[2024] NZHC 1488

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-001247

[2024] NZHC 1488

IN THE MATTER

of s 124 of the Trusts Act 2019

AND

IN THE MATTER

of an application by Samuel James

Middlemiss for orders approving variation of the terms of the JAMES VICTOR DAVERN TRUST NUMBER 2 Trust Deed

BETWEEN

SAMUEL JAMES MIDDLEMISS

Applicant

AND

FIDELIS TRUST LIMITED as trustee of the JAMES VICTOR DAVERN TRUST NUMBER 2

Defendant

Hearing:	6 June 2024
Appearances:	D Grove for Applicant
Judgment:	6 June 2024

JUDGMENT OF VENNING J

This judgment was delivered by me on6 June 2024 at 2.45 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Foy & Halse, Auckland Counsel:      D Grove, Auckland

MIDDLEMISS v FIDELIS TRUST LIMITED [2024] NZHC 1488 [6 June 2024]

Application

[1]Samuel Middlemiss (Sam) applies for orders:

(a)granting leave to proceed by way of originating application; and

(b)approving a proposed variation of the James Victor Davern Trust No 2 Trust Deed (the Trust).

Background

[2]        By Deed of Trust dated 22 December 1975 James Victor Davern (James) settled the Trust. The respondent Fidelis Trust Ltd (Fidelis) is the sole trustee of the Trust. Jeanette Barbara Davern (James’ wife) is a director of Fidelis.

[3]        James is 94 years old and lacks capacity. His property is controlled by Jeanette pursuant to an enduring power of attorney.

[4]        Sam is the sole beneficiary of the Trust subject to a gift over in the event of his death. The corpus of the Trust is to be held until a date being either the date of death of James or the date on which Sam shall obtain the age of 30 years, whichever is the latter. At the time the Trust was entered Sam was 13 years old. He is now 52.

[5]        Sam seeks variations to the Trust Deed to pass control of the Trust to him through the power of the appointment of trustees and to add his children as beneficiaries of the Trust. Fidelis and Jeanette have consented to the orders sought.

[6]        In the circumstances, orders would generally be made under s 122 of the Trusts Act 2019 (the Act). The difficulty is however that the effect of cl 2 of the Trust is that in the event of Sam’s death before James’ death “the Trustees shall apply the capital and income for such charitable purposes in New Zealand as the Trustees shall think fit”.

[7]The application is made under s 124 of the Act:

Power of court to approve termination, variation, or resettlement of trust

(1)The court may, on behalf of any of the beneficiaries described in subsection (2) who has an interest in the property of a trust, approve the termination, variation, or resettlement of the trust.

(2)The beneficiaries are—

(a)a beneficiary who lacks capacity:

(b)a person who may acquire a beneficial interest at a future date or on the happening of a future event or on becoming a member of a certain class of persons:

(c)a future person who may acquire a beneficial interest.

(3)An application for an order of approval may be made by—

(a)the trustees or any one of them:

(b)any person with a beneficial interest in the trust property.

(4)On an application for an order of approval, the court must take into account each of the following factors:

(a)the nature of any person’s interest in the trust property and the effect of the proposed order on that interest:

(b)the benefit or detriment that may result to any person with an interest in the trust property if the court makes or refuses to make the proposed order:

(c)the intentions of the settlor of the trust in settling the trust, if it is practicable to ascertain those intentions.

(5)The court must not make an order of approval if its effect would be to reduce or remove any vested interest in the trust property.

(6)An order of approval binds the person on whose behalf it is made and takes effect without any further step.

[8]        In Re Borthwick the Court accepted it was in the interests of justice to permit an application of a similar nature to be brought by way of originating application.1 I accept that there are no contested questions of fact and that the proceedings are straightforward. It is appropriate to grant leave to bring the proceedings by way of originating application.

[9]        The Court’s approval is sought on behalf of the interests represented by the very generally worded “such charitable purposes in New Zealand as the Trustees shall

1      Re Borthwick [2023] NZHC 3685.

think fit”. As Mr Grove submits, the charitable purposes are highly contingent and speculative, quite apart from the fact there is no assistance in the Trust Deed as to the nature of the charitable purposes proposed.

[10]      It appears the intention of James as settlor at the relevant time was to ensure Sam did not take until he was at least 30. As noted, he is now 52 years old.

[11]      On the affidavit evidence before the Court Sam and his family have need for access to the Trust funds at present.

[12]      Having regard to the speculative and ill- defined nature of any charitable trusts’ interest in the Trust property as a result of a gift over and the apparent intention of the settlor in settling the Trust I am satisfied that it is appropriate to approve the variations sought, particularly given the consent on behalf of Fidelis and Jeanette on behalf of James.

Result/orders

[13]The following orders are made:

(a)granting leave to commence the proceedings by way of originating application;

(b)confirming that Fidelis is the only party required to be served; and

(c)approving the variations to the Trust as set out in the substantive application para 1(a)(i)–(v).

Venning J