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Beddoe Order, Beneficiaries, breach of trust, Corporate trustee, Discretionary, Indmenity, Trustees, Trusts, Trusts Act 2019

Beddoes and beyond

By way of background in Vincent Family Corporate Trust Limited (as trustee of the ET and P Vincent Trusts) as noted by Van Bohemen J (above and below):

In Vincent Family Corporate Trustee the parties were urged to find resolution. When this was not possible the court was required to determine matters. Helpfully, Van Bohemen J confirmed the view that the Buckton and Alsop categories are both relevant in determining the circumstances where trustees should be able to advance litigation with confirmation that their costs will be met from the relevant trust. As a precursor to such an application, whether it is necessary to provide an opinion of senior counsel and an estimate of costs, while good practice, is not necessarily a barrier to an order. As noted at [60] and [61]:

Editor’s note: See the High Court Rules that were amended with effect from 20 May 2021 regarding Beddoe applications under rule 19.4 and 19.4A.

In Vincent Family Corporate Trust Limited the first cause of action related to the construction of the relevant trust deeds and who could benefit from the trusts. A construction that allowed the recognition of further beneficiaries will be at the expense of other beneficiaries the view of the court was that there was “a real contest between current and potential beneficiaries.” As noted at [74]:
The second cause of action related to whether or not the trustee was validly appointed. As noted at [75]

” … the declarations sought by Rosemary Vincent may result in determinations of breach of trust if it is found that the Applicant was not validly appointed. While no allegations of wrong-doing, impropriety, dishonesty, negligence or breach of duty have been made, a finding that a professional trustee company was not a validly appointed trustee may well give rise to questions of breach of duty and negligence on the part of the Applicant and, perhaps, by its professional advisers. In such circumstances, a Beddoe order would be unlikely to be appropriate.”

With respect to the first cause of action:

As then noted at [87]:
While the view of the court was that the merits of the first cause of action were not strong, it could not be said that the cause of action was frivolous or vexatious and accordingly there was a serious question to be tried.

The second cause of action relates to what might otherwise be referred to as the Jasmine problem (see the smell of Jasmine). In this regard the court noted that an opinion of senior counsel would have been helpful (see [90]). By way of explanation:

It was also submitted that (at [98]):

In this regard the Applicant trustee’s prospect of success is not strong. By way of conclusion:

Vincent Family Corporate Trust Limited highlights the importance of careful construction of trust terms regarding the appointment of trustees and the difficult road of a trustee in circumstances where the identification of beneficiaries and the determination as to who a trustee owes duties is not crystal clear.

References:

  • Vincent Family Corporate Trust Limited (as trustee of the ET and P Vincent Trusts) [2021] NZHC 2250

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