Amber Lee Mcnulty v Brian Frank Mcnulty

• Jurisdiction: New Zealand
• Judge: OSBORNE
• Judgment Date: 30 September 2011
• Neutral Citation: [2011] NZHC 1173
• Court: High Court
• Date: 30 September 2011
• Docket Number: CIV 2010-412 000810

[2011] NZHC 1173

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV 2010-412 000810

In The Matter of s 68 of the Trustee Act 1956

Between

Amber Lee Mcnulty

First Plaintiff

and

Carl Michael Mcnulty

Second Plaintiff

and

Brian Frank Mcnulty

First Defendant

and

GCA Legal Trustee 2008 Limited

Second Defendant

and

Peter Austin Gowing

Third Defendant

Counsel:

D P Robinson and M Dalgleish for Defendants/Applicants

C Luke for Plaintiffs

T J Shiels for McNulty's Investment Ltd and McNulty's Transport Limited (appearing but then excused)

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

as to defendants' strike out and summary judgment applications

Introduction

1 In this proceeding, the plaintiffs attack a decision of the trustees of what is their grandfather's family trust. The decision involved appointing the trust's major asset to Brian McNulty who was a trustee as well as a beneficiary.

2 The various defendants have applied for summary judgment against the plaintiffs or alternatively an order striking out the plaintiffs' claims.

The Trust and its history

3 Frank McNulty settled the McNulty Family Trust (“the Trust”) by deed dated 20 January 1995. The trustees appointed were his solicitor (Evan Moore) and two accountants (Kenneth Fergus and Alexander Laing). Frank McNulty and his wife were appointed advisory trustees. Frank McNulty was given the power of appointment of any new trustee during his lifetime or by Will. He was also given a power to remove trustees for any cause whatsoever and without giving reasons.

4 The Trust is a discretionary trust.

5 The beneficiaries included the settlor, settlor's spouse, settlor's children and remoter issue of those children, spouses of beneficiaries and any charity nominated by an advisory trustee.

6 Frank McNulty had two sons, namely Brian and Allan McNulty. The plaintiffs, Carl and Amber McNulty, are Allan's children (and Frank's grandchildren).

7 Clause 4 of the Trust deed makes provision for income and capital payments in the following terms –

INCOME AND CAPITAL PAYMENTS The Trustees may at their discretion until the Vesting Day pay or apply the whole or any part of the capital and/or income for or towards the personal support, maintenance, comfort, education or advancement in life or other benefit of any of the Beneficiaries then living or in existence during the trust period in any manner, at any times, in any proportions and subject to any terms and conditions which the Trustees in their absolute discretion may decide. Any income not paid to or applied for any Beneficiary during, or within six months after, any income year shall be accumulated and added to the trust fund.

8 Clause 9 makes provision for final distribution in these terms –

FINAL DISTRIBUTION On Vesting Day the trust fund shall be divided equally among the Settlor's Children then living but if any one or more of them has died before the Vesting Day leaving children or remoter issue then the children or remoter issue shall take per stirpes and, if more than one, as tenants in common in equal shares the share in the trust fund which would otherwise have been distributed to the deceased parent.

9 The “Vesting Day” referred to in clause 9 is dealt with in clause 2 of the deed which provides –

TERM OF TRUST The Trust shall continue until the Vesting Day, which means:

• (a) the 1st day of December 2074;

• (b) any earlier date which the Trustee in their absolute discretion appoints by deed for the whole or any specified part of the trust fund and any date appointed shall be the Vesting Day of the trust fund or the specified part, as the case may be.

10 The deed expressly deals with conflicts of interest in clause 14 which provides –

14

TRUSTEE'S CONFLICTS OF INTEREST 14.1 The Trustees shall be entitled to act as Trustees and exercise all of the Trustee's powers and discretions, even if: (a) the Trustees are associated in any way with any person, trust or unincorporated body of persons with whom or which the Trustee is dealing; (b) the interests or duty of the Trustees may conflict with their duty to the trust fund or any Beneficiary; or (c) the Trustees are dealing with the trust fund in a personal capacity as well as that of Trustee. 14.2 The Trustees may: (a) act in any capacity for any company or any company associated with that company in which the trust fund has a debt or equitable interest; and (b) retain any remuneration and other payments properly chargeable in respect of so acting.

11 The deed deals with the scope of the trustees' discretion in clause 10 which materially provides –

10

GENERAL POWERS 10.1 To achieve the objects of the trusts in this deed, the Trustee shall have all rights, powers and privileges of a natural person in the administration, management and investment of the trust fund and, subject to the trusts in this deed, may deal with the trust fund and any appropriated and partitioned part of the trust fund as if the Trustee were beneficially entitled to it. 10.2 Except as otherwise expressly provided in this deed, the Trustees shall have absolute and uncontrolled discretion to exercise the powers and discretions vested in the Trustees but shall always take into consideration the advice of the Advisory Trustee(s). 10.3…

12 The following changes of trusteeship occurred –

• • 26 January 2004 (by deed). Alexander Laing retires. Frank appoints Brian and Allan McNulty as (additional) trustees.

• • 4 May 2007. Allan McNulty dies.

• • 5 September 2008 (by deed). Kenneth Fergus and Evan Moore retire.

• • 5 September 2008. Frank McNulty appoints GCA Legal Trustee 2008 Limited (“GCA”) an additional trustee.

13 It was on the same date as the latter two deeds (5 September 2008) that Brian McNulty and GCA, by Deed, appointed the Trust's only asset, a Cromwell property (also referred to as the “Inlet property”) to Brian McNulty himself.

14 The parties differ as to the value of the Cromwell property. Carl McNulty by affidavit has sworn that the Cromwell property is currently worth in the region of $4,000,000 to $5,000,000. He is not qualified to provide valuation evidence and there is no basis on which the Court can accept his evidence of value. His uncle, Brian McNulty, has produced evidence of the (1 September 2010) valuation used for rating purposes, which indicates a capital value of $1,210,000.

15 Other matters of background, some accepted but some disputed, appear in the affidavits filed. None of these matters is pleaded. They accordingly may be relevant in the summary judgment application but not in the strike out application.

16 Carl McNulty states that the intention of the Trust was that Brian's and Allan's families would share the benefit of the Cromwell property. That intention does not appear in the Trust document itself. There is no other evidence to indicate that it was an intention of the Trust or indeed of the settlor. For his part, Brian says that he does not know the origin of the suggestion that there was such an intention of the Trust.

17 There is a hint whence the concept of “intention” may have come in a letter sent by the plaintiffs' solicitors to the defendants' solicitors on 1 September 2009, which refers to the plaintiffs' having seen a copy of Frank McNulty's old will. It is there stated –

From viewing Mr McNulty's will it appears that his intention for the property is that it is to be for the benefit of both Brian and Allan McNulty (and any issue thereof).

The will was not in evidence. The comment in the letter is not admissible evidence in itself. This all serves to underscore why the Court should not place any reliance on Carl McNulty's reference to “the intention of the trust”.

18 Carl and Amber McNulty, as well as being beneficiaries of their grandfather's family trust, were beneficiaries of their father's trust (the Allan McNulty Family Trust) and of their father's estate. Their uncle, Brian McNulty, was an executor of Allan's estate and a trustee of Allan's trust. It is his uncontradicted evidence that the estate and trust between them have a 50 per cent interest in McNulty Investment Limited and McNulty's Transport Limited which in July 2010 had a mid-point value (for the half share) of $1,570,500. Brian McNulty's deposes that that full value is held for the benefit of Carl and Amber McNulty.

19 It is Brian McNulty's further uncontradicted evidence that the Allan McNulty Family Trust also owns a substantial house property (which Amber McNulty lived in for a period).

20 Carl McNulty has deposed to hostility on the part of Brian McNulty to Carl and Amber. He refers to difficulties over access to the home owned by the Allan McNulty Family Trust. He refers to his uncle as having initially denied taking a gold coin collection (belonging to Allan's estate) but later admitting he had it. He says that neither Brian McNulty nor any of the other defendants has ever enquired either directly or indirectly as to the welfare, financial situation or other means of Amber and himself. He says that he and his sister do not believe that Brian McNulty has been able to put aside a conviction that Amber and Carl should not get any benefit from the McNulty family property following Allan's death. He says that Brian has not been able to put aside Brian's self-interest so as to be able to credibly and fairly exercise his duty as trustee of the McNulty Family Trust. He refers to his uncle's actions:

in arranging the resignation of the remaining independent trustees, appointing his solicitors as trustee, and appointing the entire trust property to himself, and refusal to provide any reason for the appointment…

21 Brian McNulty disputes most of the accusations made against him. He accepts that hostility has occurred but relates that to what he says is an unresolved personal grievance which Carl McNulty brought against McNulty's Transport Limited after some limited...