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What a difference a day makes

 

How free are we to dispose of assets during our life?  Commons v Commons, which has to date has focused on discovery issues, has at it’s heart the vexed question as to whether inter vivos gifts to family trusts should be equated with testamentary dispositions.  

Flowing from this Commons raises important issues regarding the proportionality of beneficiaries’ rights to disclosure and how these must be balanced against competing considerations such as the private rights of the recipients of trust distributions .  As noted by Sargisson AJ at [41]:

” … The right to disclosure via discovery is not to be used as a de facto means of obtaining broad and highly intrusive disclosure of documents of marginal relevance to allegations to the central complaint of mismanagement in making distributions of estate income and capital.”

Commons  highlights the complex interplay between discovery and disclosure and the difficulties that confront those who seek to review the exercise of trustee  discretion.

Also see Commons v Commons (trustee removal and appointment), where the incapacitated executor and trustee is removed and a trustee company is appointed as a trustee.   Whether the estate was at the administrative or trustee phase was not explored.  However, the following comments from the judgment are illustrative regarding the suitability of the appointment of an independent trustee:

[13] First, I am of the view that Comac Trustees can quickly ascertain the beneficiaries’ circumstances and interests upon its appointment as a trustee.

[14] Secondly, while Andrew may not charge for his services as a trustee, it is beneficial to have independent oversight of the trust’s activities by an independent trustee company such as Comac Trustees.

[15] Thirdly, Andrew also asserts that his appointment is supported by his brother and nephew. Although the proceedings were served on Andrew’s brother and nephew, they have taken no steps and have not formally advised the Court of their position. Andrew invited the solicitors acting for Hamish and Jonne to contact them to confirm their support. The solicitors have not done so however. So, all the Court is left with is Andrew’s assertion, when they themselves have taken no steps in the proceedings.

[16] Fourthly, while Andrew was identified as a trustee by John in earlier wills (dated 18 April 1994, 6 August 1996 and 11 October 1999), he was not so identified in the will in respect of which probate was granted. To my mind John’s intention was clearly expressed when he excluded Andrew as a trustee in his most recent will.

[17] Fifthly, Andrew will not be able to cause family members to work constructively together. There is an irretrievable breakdown in the relationship between Andrew, Hamish and Jonne. Andrew says that counsel for Hamish and Jonne must be in a position to advise the Court as to whether they can put their “personal feelings” aside to work in the best interests of the beneficiaries if he was appointed as replacement trustee. I am of the view that counsel is not, however, required to do so. Hamish and Jonne have not stated at any point that they “dislike” Andrew (as he has asserted in correspondence), but rather that they and Andrew could not possibly work together constructively to administer the estate. I agree with counsel for Hamish and Jonne that their position cannot be surprising to Andrew because he presently suing them in their capacity as trustees. The relationship between them has broken down to the extent that they have no communication with each other, other than between their solicitors in respect of the current application and the related proceedings.

[18] Sixthly, the beneficiaries do not require “an equality of arms”. The executors and trustees of John’s will are required to be even-handed with the beneficiaries in accordance with their fiduciary duties. If a beneficiary is of the view that the trustees favour one beneficiary or class of beneficiaries, then proceedings can be taken against them. This is exactly what Andrew has done.

References:

  • Commons v Commons [2019] NZHC 1850
  • Commons v Commons [2019] NZHC 966

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