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Beneficiaries, Beneficiary rights, Disclosure, Discovery, Right to trust information

A fishing we shall go?

Kirby v Kirby is an application for tailored discovery in the context of a Family Protection Act claim in circumstances where the deceased left the residue of his estate after payment of expenses to a trust, the Jubilee Trust (the Trust).  The application, which was made by one of the deceased’s two children is defended by the executor (the Deceased’s wife and the plaintiff’s step-mother) in her capacity as a beneficiary of the deceased’s will.  By way of background the defendant (in her capacity as executor) filed a schedule of assets and liabilities.  As noted at [9] to [11]:

[9] The plaintiff did not accept that to be correct. She is aware that during her father’s lifetime he had a number of business and property interests. She filed an application for tailored discovery on 4 October 2019. The plaintiff seeks discovery of the documents set out in the schedule to the application.

[10] The application is opposed by the defendant on the basis that:

(a) the extent of the estate does not justify the discovery sought;
(b) a number of the documents sought do not exist;
(c) other documents sought are not relevant to the issues that arise in this proceeding;
(d) the defendant has provided other relevant information;

[11] The defendant says the plaintiff’s request for discovery is effectively a fishing exercise to see whether she may have a claim against various trusts.

Tailored discovery “must be ordered when the interests of justice require “more or less” discovery than standard discovery. The concept of proportionality is central to tailored discovery.”   See Commerce Commission v Cathay Pacific Airways Ltd at [12].

The principal issue with respect to any discovery application is relevance.

As noted at [25] the residuary beneficiary of the deceased’s estate is the Jubilee Trust about which nothing is known including for example whether the plaintiff is a beneficiary.  The decision also noted confsuing information regarding what did comprise the deceased’s estate.

[26] Ms Kearns submitted, by reference to Re Wilson (deceased) and Re Hardie that the Courts generally do not accept the existence of a discretionary trust as sufficient to discharge a deceased’s moral duty. A beneficiary under a trust has no enforceable right to either the assets or income of the trust. On that basis, Ms Kearns submitted details concerning Jubilee Trust were irrelevant although she acknowledged that in certain circumstances a beneficiary’s entitlement under a trust may be relevant. The issue in the present case is, however, different to that in Re Wilson (deceased) and Re Hardie. In Re Wilson the deceased had created a trust providing for a life interest only for his wife in his will. In Re Hardie the deceased had created a different and separate inter vivos trust for his children.

[27] What is clear from the authorities, particularly Re Hardie and Flathaug v Weaver is that the Court had information before it about the terms of the trusts and also information about the assets of the trusts in issue. Where, as here, the Trust is the residuary beneficiary of the entire estate, the provisions of the Trust Deed and the financial position of the Trust will be relevant to the consideration of whether adequate provision has been made for the plaintiff.

[28] For example, if the Jubilee Trust was established for charities as opposed to family or if it already has substantial assets, the fact the deceased left his estate to it rather than make any provision for the plaintiff will be relevant considerations for the Court.

The ambit of the discovery ordered included:

    • documents recording debts owing to the deceased
    • discovery of any documentation that discloses that the deceased held the shares in specified companies as a trustee
    • financial statements for the Trust

Although all discovery sought was not required to be provided, the plaintiff enjoyed sufficient sucess to be awarded costs on a 2B basis.  It was noted that with ” … further cooperation from the defendant there should have been no need for [the] application.”

The take home message is whether fishing or not, a critical assessment of the information sought is required to avoid a contrary costs judgment.

 References

  • Kirby v Kirby [2020] NZHC 401
  • High Court Rule 8.8
  • Commerce Commission v Cathay Pacific Airways Ltd [2012] NZHC 726
  • Re Hardie [2002] NZFLR 229
  • Flathaug v Weaver [2003] NZFLR 73

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