Vincent Family Corporate Trust Ltd (as trustee of the ET and P Vincent Trusts)

• Jurisdiction: New Zealand
• Judge: Van Bohemen J
• Judgment Date: 30 August 2021
• Neutral Citation: [2021] NZHC 2250
• Docket Number: CIV 2021-463-000017
• Court: High Court

UNDER Part 19 of the High Court Rules 2016

IN THE MATTER of the ET and P VINCENT TRUSTS

Between

Vincent Family Corporate Trust Limited as trustee of the ET and P Vincent Trusts

Applicants

[2021] NZHC 2250

Van Bohemen J

CIV 2021-463-000017

IN THE HIGH COURT OF NEW ZEALAND

ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE

Trusts — application for “Beddoe orders” authorising the applicant to defend a proceeding brought by a beneficiary and to have its costs indemnified from the Trusts' funds — consideration of principles and practices relating to Beddoe applications — classification of proceedings for indemnity for trustees costs

Appearances:

A F S Vane for the Applicant

S D Campbell & J R Halligan for Rosemary Jean Vincent

JUDGMENT OF Van Bohemen J

This judgment was delivered by me on 30 August 2021 at 12 noon

Pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

TABLE OF CONTENTS

	Para No.
Introduction	1
Background	7
The beneficiaries under the Trusts	8
The trustees of the Trusts	10
Apportionment of Trust property	14
Care and custody arrangements for Dante and Toby Marshall	15
Rosemary Vincent seeks recognition of Dante and Toby Marshall as beneficiaries	17
Substantive proceeding commenced	20
Application for Beddoe Orders	23
Trustee duties, trustee costs and Beddoe orders and applications	26
Trustee duties	29
Trustee costs	30
Classification of proceedings in which indemnity might or might not be given	33
Beddoe applications	38
Submissions of Applicant	42
Submissions of interested party	48
Discussion	53
Preliminary observations	56
Categorisation of causes of action	62
Is it in the interests of the Trusts to grant Beddoe orders?	72
The nature of the claims	73
The nature of the Trusts	76
Merits and prospects of first cause of action	78
Merits and prospects of second cause of action	90
Other reasons why Beddoe orders may be in the interests of the Trusts	101
Conclusion on whether Beddoe derations orders are in the interests of the Trusts	107
Where to from here?	111
Applicant's request for order that costs incurred to date be met from Trust funds	113

Introduction

1 The Vincent Family Corporate Trust Ltd (the Applicant), as sole trustee of the ET Vincent Trust and the P Vincent Trust (the Trusts), applies for “Beddoe orders” 1 authorising it to defend a proceeding brought by Rosemary Jean Vincent (the substantive proceeding) and to have its costs indemnified from the Trusts' funds.

2 The Applicant also seeks a direction that its costs in the Beddoe application are paid for out of funds of the Trusts.

3 The substantive proceeding comprises two causes of action, seeking:

• (a) In the first cause of action, declarations that:

  • (i) the term “grandchildren” in the deeds of trust (Trust Deeds) establishing the Trusts includes grandchildren of the settlors by whāngai in the context of the trust instruments;

  • (ii) two named children of Rosemary Vincent's daughter are beneficiaries of the Trusts;

• (b) In the second cause of action, declarations as to whether:

  • (i) a company can be validly appointed as sole trustee of the Trusts;

  • (ii) the Applicant has been validly appointed as trustee of the Trusts;

  • (iii) the actions taken by the Applicant as trustee of the Trusts are valid.

4 The Beddoe application does not refer to affirmative outcomes sought by the Applicant in its statement of defence in the substantive proceeding or to a counterclaim made by the Applicant. However, in a memorandum dated 11 February 2021,

Mr Vane, counsel for the Applicant, submits that the Applicant's costs in relation to those outcomes should also be indemnified from Trust funds

5 The affirmative outcomes sought by the Applicant, which are identical to the orders sought in the counterclaim, are that, in the event the Court grants the declarations sought by Rosemary Vincent, the Court should also grant:

• (a) Declarations that:

  • (i) the Applicant can be appointed sole trustee of the Trusts;

  • (ii) the Applicant's appointments were valid; and

  • (iii) the Applicant's actions and decisions as trustee were valid; or

• (b) In the alternative, orders:

  • (i) validating the actions of the Applicant and of former trustees when acting as trustee of the Trusts; or

  • (ii) appointing the Applicant as sole trustee of the Trusts and:

    • a. discharging any existing or former trustee from any trusts that have not already been discharged; and

    • b. relieving the Applicant and any former trustee from any liability arising from their appointment as trustee.

6 Rosemary Vincent, as an interested party to Beddoe the application, does not oppose the application but raises questions as to the appropriateness of the orders sought, having regard to the principles and practices that have been developed in decisions on Beddoe applications.

Background

7 The Trusts were settled respectively by Ernest Thomas (Tom) Vincent and Paretekohera (Polly) Vincent (the Settlors) by the Trust Deeds. The Trust Deeds, which are identical in all relevant respects, are both dated 24 June 1985.

The beneficiaries under the Trusts

8 Under the Trust Deeds, the income beneficiaries of the Trusts were:

• (a) Polly Vincent, under the ET Vincent Trust and Tom Vincent under the P Vincent Trust;

• (b) Manuka Vincent, a son of Polly Vincent;

• (c) Eight named children of the Settlors, including Rosemary Jean Vincent; 2

• (d) 16 named grandchildren of the Settlors, including Theresa Hinemoa Vincent, the oldest grandchild, and Marie Anahera Marshall, the daughter of Rosemary Vincent;

• (e) All other grandchildren of the Settlors born within 35 years of the date of the Trust Deeds; and

• (f) Any children of Theresa Hinemoa Vincent born within 35 years of the date of the Trust Deeds.

9 The capital beneficiaries are the grandchildren of the Settlors in [8](d) and (e) above and the children of Theresa Vincent in [8](f) above. Under the Trust Deeds, capital beneficiaries could also be income beneficiaries.

The trustees of the Trusts

10 Originally, each Trust had three trustees: the relevant Settlor and two others.

11 The Settlors died in 1991 and the other original trustees retired as trustees in November 1992. However, other individuals were appointed as trustees, including David Wayne Morris, who is now a director of the Applicant but was previously a trustee of both Trusts in his personal capacity.

12 Between November 1992 and May 2014, each Trust had two trustees: Mr Morris and David Mackersey, until Mr Mackersey died in September 2008, and then Mr Morris and Marian Glazewski, until Mr Glazewski died on 16 May 2014. Following Mr Glazewski's death, Mr Morris became the sole trustee of each Trust.

13 On 4 July 2014, the Applicant was appointed a trustee of the P Vincent Trust. On 15 August 2016, Applicant was appointed a trustee of the E T Vincent Trust. Mr Morris retired as trustee of each Trust on the dates the Applicant was appointed trustee.

Apportionment of Trust property

14 Under the Trust Deeds, at the Date of Final Apportionment the Trustees are to hold the capital of the Trusts and any undistributed income of the Trusts on trust in equal shares for the capital beneficiaries who have reached or later survive to 20 years of age. The Date of Final Apportionment is 24 June 2020. As a consequence, the Applicant is preparing for a final apportionment of the capital and any retained income of the Trusts to the capital beneficiaries.

Care and custody arrangements for Dante and Toby Marshall

15 On 5 August 2003, Dante Marshall was born to Marie Anahera Marshall. On 20 June 2005, the Family Court granted custody of Dante Marshall to his grandmother, Rosemary Vincent.

16 On 14 July 2009, Toby Marshall was born to Marie Anahera Marshall. On 11 May 2011, the Family Court made parenting and guardianship orders in respect of Toby Marshall in favour of Rosemary Vincent and her partner, Bryan Kumm.

Rosemary Vincent seeks recognition of Dante and Toby Marshall as beneficiaries

17 In September 2019, Rosemary Vincent advised Mr Morris that she was lodging a whāngai claim for Dante and Toby Marshall for whom, she said, she and Mr Kumm had been parents in every way. Mr Marshall responded that he did not consider that the boys could be considered as beneficiaries of the Trusts. He said he would require a detailed legal opinion from Rosemary Vincent if she wished to pursue the claim because he did not consider Trust funds should be used to obtain legal advice.

18 By letter dated 30 April 2020 to Mr Morris, Wynn Williams, the solicitors for Rosemary Vincent, set out why they considered Dante and Toby Marshall should be classified as beneficiaries of the Trusts. The letter discussed the history of the Trusts, what that history indicated about the intentions of the Settlors and the extent to which whāngai relationships are recognised in law. The letter also advised that Rosemary Vincent and her partner had applied to adopt Dante and Toby Marshall. The letter suggested that, if the trustees were not willing to recognise the children as beneficiaries, the best way to resolve matters would be for the trustees to apply under s 66 of the Trustee Act 1956 for a declaration regarding the children's status.

19 By email dated 15 May 2020, Mr Morris advised Wynn Williams that the trustees considered there was no room for the interpretation contended by Rosemary Vincent and that Dante and Toby Marshall would not be recognised as beneficiaries under the Trusts.

Substantive proceeding commenced

20 On 24 June 2020, Rosemary Vincent filed the substantive proceeding seeking...