Application for variation of the WA Stevenson Memorial Trust [2012] NZHC 3132 (22 November 2012)

Last Updated: 30 November 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-5093 [2012] NZHC 3132

UNDER The Trustee Act 1956

IN THE MATTER OF a variation of trust

BETWEEN GORDON JAMES LUKE, MARK KENNEDY STEVENSON, JOCELYN ELIZABETH MOORE, JAMES ROSS STEVENSON, BARRIE MACKECHNIE BROWN AND ADRIAN BRENT ORR AS TRUSTEES OF THE WA STEVENSON MEMORIAL TRUST

Applicants

Hearing: 22 November 2012

Counsel: I Denton and J McGuigan for Applicants

A Barker for infant beneficiaries

Judgment: 22 November 2012

_{JUDGMENT OF BREWER J}

SOLICITORS

Wilson Harle (Auckland) for Applicants

COUNSEL

_{Andrew Barker (Auckland) for infant beneficiaries}

Application for variation OF THE WA STEVENSON MEMORIAL TRUST HC AK CIV-2012-404-5093 [22

November 2012]

[1] The trustees of the WA Stevenson Memorial Trust (“the Trust”) seek the approval of this Court to vary the terms of the Trust’s Deed.

[2] The Trust was established by the Trust Deed on 3 June 2009. The beneficiaries of the Trust include members of the Stevenson families descended from William Stevenson.

[3] The Trust owns, in the broad sense of that word, a large high country farm called Lochinver situated on State Highway 5 in the Napier-Taupo region. That is a significant asset of the Trust. Other assets of the Trust include the companies in the Stevenson group of companies.

[4] Lochinver has particular family relevance to the Stevensons. It had particular relevance for the settlors of the Trust, three Stevenson brothers, and as a result the Trust contains a number of provisions aimed at preserving Lochinver as an asset of the Trust.

[5] The problem for the trustees is that those provisions are limiting the ability of the trustees to deal in an effective commercial way with the overall assets of the Trust. In particular, the trustees would like to be able to sell parts of Lochinver to raise the capital required to develop Lochinver to its commercial potential. Essentially, the variations sought would remove any of the limitations which are in the Trust Deed regarding disposal of Lochinver or any part of it.

[6] The beneficiaries of the Trust include the lineal descendents of William Stevenson, as I have just said. All of the adult beneficiaries have consented to the changes being made as sought. Importantly, the two surviving settlors have filed documents giving their support to the changes and explaining why it was that the restrictions on disposing of Lochinver were included in the Trust Deed.

[7] Mr Andrew Barker was appointed by the Court on 21 September 2011 to represent the infant and unborn beneficiaries of the Trust. The primary purpose of his appointment is to assist the Court in considering the exercise of its powers under

s 64A of the Trustee Act 1956 to approve any variation or revocation of a Trust on behalf of beneficiaries that lack capacity. He supports the application.

[8] I regard my task as being to consider two main issues. The first I will call the commercial interests of the Trust and its beneficiaries. The second I will call the family heritage issue.

[9] So far as the commercial interests are concerned, the proposed variations give me no difficulty at all. The proposed variations do not seek to remove assets from the Trust, nor to alter existing beneficial interests. Their sole purpose is to improve the financial performance of the Trust by removing an unnecessarily limiting factor on the powers of the trustees. As matters stand, the continuation of Lochinver as an asset of the Trust would require subsidisation from the Stevenson group of companies. That is plainly undesirable from a commercial standpoint.

[10] So far as the family heritage interests of the beneficiaries are concerned, I pay particular regard to the creation by the Trust Deed of a Family Council. The Family Council represents the interests of the beneficiaries to the trustees. It is elected from the adult beneficiaries and it appoints three of the at present six trustees. As Mr Barker points out in his report, in the unlikely event that the independent trustees wished to act contrary to the wishes of the family trustees, they would not be able to obtain a majority on the current number of trustees. In any event, any substantial transaction, as it is defined in the Deed, would still require the express support of the Family Council.

[11] I have no doubt that the Court has the power to make the variations sought. This is notwithstanding that the settlors originally intended that Lochinver be protected by the restricting provisions of the Deed. The classic decision of Saunders v Vautier[1] provides that beneficiaries who are sui juris and together absolutely entitled to the Trust property, are in turn entitled to vary and revoke a Trust if they all agree. This is the case even if that would be in defiance of the intention of the settlor or settlors.

[12] As Winkelmann J said recently in Ewington v Schulz,[2] the Court’s discretion in this area is very wide and is to be exercised in the interests of the person on whose behalf it is asked to consent. The Court should ask if that person would have approved the variation if of full capacity and fully advised.

[13] Insofar as beneficiaries are adults, they have all consented. Insofar as they are not adults, I am persuaded by Mr Barker’s report that these variations are in their interests. The whole point is that the beneficiaries are entitled to be considered for payments throughout their lives and as the beneficiaries grow in number the maintenance of those payments at realistic levels must be dependent upon the ability of the trustees to manage the assets of the Trust in a proper and commercial manner. For reasons of confidentiality, I will not quote the figures involved. I will simply comment that the overall assets available to the trustees are considerable and there is considerable force in the argument that they need to be managed in accordance with proper commercial principle.

[14] The application is granted accordingly.

[15] There is already a direction of Associate Judge RM Bell that the file not be accessed without the permission of a Judge. I simply repeat that direction here so that it is not lost sight of. Any application for access to the file is to be made on notice to the parties. I make this direction simply because the materials on the file

_{contain confidential commercial and personal information.}

Brewer J

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[1] Saunders v Vautier [1841] EngR 629; (1841) 4 Beav 115 [1835-42] All ER Rep 58.

[2] Ewington v Schulz HC Auckland CIV-2008-404-6596, 5 May 2009