Termination consistent with settlor wishes

The High Court decision in Re Neal Grenville Johnson Trust (the Trust) reflects a practical approach to the termination of a trust where the trustee has no discretion to distribute capital and there is no power to bring forward the vesting day, which is still 32 years away.

The terms of the Trust provided that on the vesting day the Trust fund was to be divided into two equal portions, one portion for the settlor’s son’s children and remoter issue with power reserved to the settlor’s son to appoint this portion amongst his children; and the other for the settlor’s daughter on the same terms.

The son executed a deed appointed his adult children to receive as tenants in common in equal shares; the daughter nominated a trust that included her children and grandchildren as beneficiaries with a direction not to benefit other beneficiaries (including herself).

The default beneficiaries are the settlor’s cousin’s children and remoter issue.

After all of the Trust’s adult discretionary beneficiaries consented to the Trust being terminated, and the sole trustee confirmed that there was no opposition to the Trust being terminated, the Settlor’s children sought orders:

• granting leave to commence the application as an originating application
• under section 124 of the Trusts Act approving the termination of the trust on behalf of minor or future beneficiaries
• under section 125(1) of the Trust Act waiving the requirement that the contingent capital beneficiaries consent to the termination of the Trust, and
• that the costs of bringing the application be paid from the Trust.

With respect to the contingent beneficiaries, as set out at [24] and [25]:

[24] The contingent beneficiaries are extremely unlikely to benefit from the trust. Their contingent interest would only become an actual interest in the unlikely event that all current 17 discretionary beneficiaries pass away before the vesting date in
2058. Unless that were to come to pass, the contingent beneficiaries will have no interest or entitlement whatsoever. Given that there are 11 discretionary beneficiaries (the settlor’s great-grandchildren) who will be aged between 37 and 51 in 2058, the interest of the contingent beneficiaries is so remote as to be almost theoretical.

[25] Given that the settler’s family has no contact with this part of the family and given how remote and how contingent their rights are, I am satisfied that it would be onerous to require service of the application on them, and that it is appropriate to waive
the need for their consent to termination to be obtained.

In determining whether to give approval on behalf of the minor discretionary beneficiaries, matters that were taken into account included:

• the cost of maintaining the Trust. As noted at [26] the ” … Trustee’s charges for managing the trust each year range from $10,000 to $25,000. The financial statements of the trust for the year ending 31 March 2025 show that the income earned by the trust was $100,769 and the expenses of the trust were $49,927.”
• the Trust will not vest for a further 32 years
• there is no ability to pay capital before the Trust vests
• the Settlor’s children who are in their 80s prefer that their respective children and grandchildren can benefit now
• before his death the settlor was exploring options as to how the trust could be wound up
• the unlikelihood of the applicant discretionary beneficiaries having further children

MacGillivray J was satisfied that there was no material detriment to the minor discretionary beneficiaries if the Trust was terminated noting at [29] that “… At present they stand to receive little or no benefit from the trust for the next 32 years. As matters stand, the income of the trust will continue to be diminished by management fees. I consider that the termination of the trust and the passing of the benefit of the trust [in the manner proposed} is in the best interests of the minor beneficiaries. The termination of the trust will enable the capital of the trust to be used for the benefit of the applicants’ children who will be able to use it for the benefit of their own children.”

Vicki Ammundsen is presenting a webinar on Winding up Trusts with Court’s assistance on 19 August 2026.

References:

• Re Neal Grenville Johnson Trust [2026] NZHC 2150