Re Borthwick relates to an application by trustees to enter into a settlement agreement and to make the necessary variations of trust to effect the agreement. The background of the matter features a trust restructure that was challenged by a disaffected beneficiary. The application before the court calls upon the court’s supervisory capacity pursuant to section 124 of the Trusts Act. The relevant principles in this regard are set out at [12]: as follows:
Section 122 has the effect of expanding and encapsulating the rule in Saunders v Vautier. However, it is not always enough to seek a variation of trust, regardless of how willing the beneficiaries might be. Where the “plan” has a transactional aspect, prudent trustees will seek directions to “bless” the trustees’ decision, notwithstanding the fact that the proposed course of action is something that the trustees “have resolved and which is within their power”.
The court can bless a decision where the court, if asked, might have made a different decision. This is because, as noted in Re Honris Trust at [56] to [58]:
“… the Court’s role is to ensure that the trustees can properly form the view that they have reached. It is not the Court’s role to say how it would have exercised the discretion.”
Notably, in Re Borthwick, the Court took account of the impact of the court’s assistance to ensure the resolution of family matters in a time and cost effective manner. The calculations were not arithmetic but rather focused on the wider family and related considerations.
References:
- Re Borthwick [2023] NZHC 3685
- Saunders v Vautier (1841) 41 ER 282
- Public Trustee v Cooper [2001] WTLR 901 (Ch) at 922-944
- Re Honoris Trust [2017] NZHC 2957,
- Talijancich v Talijancich [2021] NZHC 753
- Gavin v Gavin [2021] NZHC 550
- Trusts Act 2019, ss 122, 124, 133
- High Court Rules
Matters of Trust 
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