//
you're reading...
Beneficiaries, Deed of Trust, Memoranda of Wishes

Be careful what you wish for

Memoranda of wishes, also referred to as statements or letters of wishes, letters or memoranda of guidance and similar are a common feature of modern trusts. However, perhaps surprisingly there has been little guidance regarding the position of subsequent memoranda of wishes, specifically where subsequent wishes are inconsistent with earlier wishes do the most recent wishes over-ride earlier wishes. This was considered in Public Trust v Kain (see Mandatory or permissible and what about subsequent?) where the following directions were given:

That decision was appealed.

In Kain v Public Trust, with one exception, the Court of Appeal up-held all aspects of the High Court decision with respect to subsequent memoranda of wishes. With respect to the direction at [134(a)] (set out above), that direction was set aside and replaced with the following, more detailed direction:

The reason for the amended direction is to address the question as to whether Public Trust was required to tale the settlor’s wishes into account, thus making the consideration mandatory. As stated at [121]:

This is in line with the Court of Appeal decision in Chambers v SR Hamilton where the Court of Appeal said that “it is necessary for trustees to read and understand the statement of wishes to discern the settlor’s views, having done so, the trustees must then make an independent assessment of the appropriate course of action.  That is, whatever the settlor’s wishes, the trustees must consciously apply their independent discretion in exercising their powers and discharging their obligations as trustees.  This Court confirmed that trustees could take the wishes into account (in other words, they were entitled to) but were not required to do so.”

With respect to costs, the Court of Appeal considered that the appeal was hostile or “self-interested” litigation (essentially being beneficiary against beneficiary notwithstanding that the application for directions was made by the trustee, Public Trust) and therefore came under Re Buckton category (3), meaning that the losing party pays. 

As the Kain beneficiaries had been successful in respect of one of the High Court directions appealed, the Kain beneficiaries were entitled to 30% of their actual reasonable costs from the trusts’ assets with the balance being meet personally. The other group of beneficiaries (the Hutton beneficiaries) were entitled to 70% of their actual costs, from the trusts.

Public Trust, who brought the directions application was held to have acted reasonably throughout, despite criticism by some beneficiaries and was held entitled to its costs from the trust fund. 

References:

  • Public Trust v Kain [2021] NZHC 1000
  • Kain v Public Trust [2021] NZCA 685
  • Kain v Public Trust (Costs) [2022] NZCA 239
  • Chambers v S R Hamilton Corporate Trustee Limited [2017] NZCA 131

Discussion

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Categories

Archives

%d bloggers like this: