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Beddoe Order, Beneficiaries, Corporate trustee, Costs, Directions, Trustees, Trusts, Trusts Act 2019

Blessing to Benjamin

The background to FFP Trustee (NZ) Limited v Peng is complicated. There are two applications before the courts, on relating to a restructuring proposal and the other relating to forfeiture of certain trust assets and directions regarding service.

By way of background:

TFFP sought leave to commence the current application by way of originating application. As noted at [18]:

As Woolford J noted at [21] “… An originating application is the most efficient and expeditious procedure for these proceedings. I am therefore of the view that it is in the interests of justice to permit these proceedings to be commenced by way of originating applications.”

FFP also sought strict confidentiality orders.

The relevant law is set out at [27] to [29] as follows:

Relevantly in FFP there had been no waiver of privilege and the affidavits filed were done so on the basis that they would be kept confidential. Further the affidavits contained commercially sensitive information as well as information required to be kept confidential at the direction of the United States, Swiss and Malaysian governments pursuant to confidentiality obligations under mutual legal assistance treaties.

FFP also sought directions regarding restructuring 31 trusts (the Low Trust Structure) pursuant to section 133 of the Trusts Act 2019:

In essence what was sought was a terminalisation, rationalisation and consolidation.

Each of the trusts was fully discretionary and the trustees had wide powers including dispositive powers.

Relevantly a significant proportion of the various trusts’ assets are either restrained, frozen, or
subject to outstanding forfeiture applications. Consequently, a number of the trusts are redundant and/or hold assets that require ongoing maintenance and administration to prevent their depreciation. The cost issue was important as FFP has limited funds available to administer the trusts.

As set out at [43]:

FPP was also alive to potential third-party claims and as noted at [44]:

As a practical consideration, an approach that would not require the blessing of the court (at least in part) was also referenced by way of counterfactual:

This was referred to by way of a “cross check” to provide comfort to the court.

Another matter before the court was directions for service of notice of the forfeiture application, which in some part clearly sets out the complicated mix of obligations incumbent on the trustees:

The approach taken in this regard was practical and the proposed time-frame for an interested party to file a response was 60 days, based on on section 136 of the Trusts Act. In this respect it was recorded that section 136 of the Trusts Act is essentially a codification of Benjamin orders where the court can approve distributions where beneficiaries cannot be traced. See further at Back to Benjamin. As stated in FFP, while this is not the exact situation facing FFP, the terms of section 136 “… are useful as a statutory analogue as to the time period for reasonable notice to potential claimants to a beneficial interest in the assets of a trust.”

Finally, and unsurprisingly FFP sough a prospective costs order and protection from any costs the trusts might be required to meet. At [70] Woolford J referred to McLaughlin v McLaughlin and observing as noted by Thomas J:

The court can make a prospective costs order pursuant to its inherent jurisdiction (confirmed in McLaughlin v McLaughlin). However, before any such order can be made, the nature of the proceedings must be determined.

The above reflecting the Buckton and Alsop categories. The proceedings FFP is contemplating are largely in the first category and the orders sought were made.

The facts of FFP are complicated. However, the judgment warrants careful reading as it provides good guidance regarding the provisions of the Trusts Act and the reality of trustee appointments and decision making.

References:

  • FFP Trustee (NZ) Limited v Peng [2021] NZHC 3507
  • Trusts Act 2019, s 79, 125, 133, 134, 136
  • Re Triple A Trustees Limited NZHC [2019] 1336
  • Triple A Trustees Limited NZHC [2020] 1341
  • Lynton Tucker Lewin on Trusts (19th ed, Sweet and Maxwell, London, 2014) at 26-031
  • Guardian Trust and Executors Company of New Zealand Ltd v Public Trustee of New Zealand [1942] AC 115 (PC) at 127
  • Finers v Miro [1991] 1 WLR 35 (CA)
  • S and S Limited v XYZ Limited [2016] NZHC 26
  • Re Benjamin [1902] 1 Ch 723
  • In Re MF Global UK Ltd (in special administration) (No 3) [2013] EWHC 1655, [2013] 1 WLR 3874 (Ch) at 3881
  • In Re Gess [1942] Ch 37
  • Re Honoris Trust [2017] NZHC 2957, [2018] 3 NZLR 160
  • McLaughlin v McLaughlin [2018] NZHC 3198
  • In Re Buckton [1907] 2 Ch 406
  • Alsop Wilkinson v Neary [1996] 1 WLR 1220 (Ch

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