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High Court of New Zealand Decisions |
Last Updated: 19 August 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-1227 [2016] NZHC 1626
BETWEEN
|
ALEXANDER JAMES DAVIS AND
BRUCE CYRIL MCNIECE AS TRUSTEES OF THE REX WHITE FAMILY TRUST
Applicants
|
AND
|
MINNIE BEATRICE WHITE Respondent
|
Hearing:
|
23, 24 May 2016
|
Appearances:
|
K F Gould for Applicants
D M OʼNeil for Respondent
|
Judgment:
|
18 July 2016
|
JUDGMENT OF PAUL DAVISON J
This judgment was delivered by me on 18 July 2016 at 4.15 pm pursuant to r
11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
B C McNiece, Auckland
Browne Linkenbagh Legal Services, New South Wales, Australia
DAVIS AND ANOR v MINNIE BEATRICE WHITE [2016] NZHC 1626 [18 July 2016]
Introduction
[1] This is an application to the Court for directions pursuant to s 66
of the Trustee Act 1956 by which the applicants, as
trustees of the Rex White
Family Trust (the RWFT), seek an order that they may exercise their absolute and
uncontrolled discretion
as trustees to pay the whole of the RWFT fund to a
charity, namely Freemasons New Zealand.
[2] The respondent, Mrs White, is the wife of the late Rex White. She
is opposed to the making of the orders sought and claims
that she is in fact the
primary beneficiary, and thus entitled to the trust capital. She seeks an order
that she is to receive the
entire trust fund.
[3] While both the applicants and the respondent agree that the
RWFT was validly created and subsists, nevertheless the
deed by which the late
Rex White established the trust in 1992 has for some time been lost. Apart from
an unexecuted draft copy
of the RWFT deed (the draft deed), there is no other
written record of the terms of the executed deed of trust. As a consequence,
the trustees are unable to refer to the executed deed (the RWFT deed) in order
to determine the relevant terms, and specifically,
the provisions of the trust
as regards beneficiaries and the ultimate beneficiary.
[4] Accordingly, the real and more fundamental issue that I must decide
arising from this application is whether the RWFT presently
exists as a valid
and subsisting trust, or whether by reason of the loss of the RWFT deed and an
absence of other reliable evidence
of its terms, it fails for
uncertainty.
Background
[5] Rex White and Mrs White met in 1962 when he was working as a radio officer with the Union Steamship Company. Mrs White was in New Zealand on a working holiday at the time. In 1963, they moved to Australia where they lived together in a de facto marriage relationship. They were married in Australia on 12
January 1984, and thereafter continued to live together there until Rex White
died on
23 November 2001.
[6] Although Rex White had a son, Christopher, from a prior marriage,
he and
Mrs White did not themselves have any children together.
[7] Mrs White is now 88 years old and continues to reside in
Australia.
Rex White’s will
[8] Rex White made a will which was executed and dated 2 August 1991.
His will was prepared by the applicant, Mr Bruce Cyril
McNiece (Mr McNiece),
when he was then in legal practice with the firm Buddle Findlay.
[9] In his will, Rex White appointed Mr McNiece as his sole
executor and trustee, and he bequeathed the whole of his
residuary estate to
Mrs White, with the provision that should she predecease him, the estate
would go to his son, Christopher.1
[10] Rex White was a Freemason, and by his will, he directed that he be buried under the Masonic rite. At the time he was engaged by Rex White to prepare his will, Mr McNiece was also a Freemason.2 The second applicant and co-trustee, Mr Alexander James Davis (Mr Davis), was and is also a Freemason. Their common membership of the Freemasons is relevant to the applicants’ explanation for holding
the capital of the RWFT for subsequent distribution to Freemasons New
Zealand,
1 Two copies of this will were produced to the Court, one of which had a deletion of the provision directing that Christopher should inherit his father’s residuary estate in the event that Mrs White predeceased her husband. The deletion appears to have been initialled by Rex White. Mr McNiece’s evidence was that he had reviewed the grant of probate prior to attending Court to give evidence, and his recollection was that the will attached to the grant of probate did not have the deletion of the words which provided for Christopher to become the beneficiary in the event that Mrs White predeceased her husband. Nothing decided by this judgment turns on this discrepancy between the two versions of Rex White’s will, although the fact that he appears to have himself modified the provision regarding Christopher, I consider to be of some relevance to the issue of the reliability of the draft deed as representing what he eventually executed as the RWFT deed, as it is an indication of the likelihood that Rex White would have similarly reviewed the draft deed before the RWFT deed was finalised.
2 I am informed by means of a Memorandum filed by counsel for the applicants following the hearing, that Mr McNiece was a member of the Freemasons between 1988 to 1995.
and to their application for an order that they may exercise an absolute
discretion to do so.
The Rex White Family Trust (RWFT)
[11] In 1992, Rex White instructed Mr McNiece to prepare a deed of family
trust, and at the same time, a deed of acknowledgment
of debt.
[12] At that time, Rex White’s mother had recently died and, as a
beneficiary of her estate, he had received the proceeds
from the sale of her
home. It appears that he wished to put the money from his mother’s estate
into a trust to be formed and
to be named the Rex White Family
Trust.
[13] Acting on Rex White’s instructions, Mr McNiece prepared a
draft deed of trust (the draft deed) and deed of acknowledgement
of
debt.
[14] By letter dated 1 May 1992, Mr McNiece sent both documents to Rex
White in Australia, together with instructions as to the
execution of the deed
of acknowledgement of debt.3
[15] While it is not clear from the evidence whether the deed of
acknowledgement of debt was in fact ever executed by Rex White,
it is apparent
from the document itself that, before being sent to Rex White, it had been
executed by both Mr McNiece and Mr Davis
as trustees of the RWFT.
[16] Importantly, the deed of acknowledgment of debt records a debt by the trustees of the RWFT to Rex White in the sum of $142,000, being the money that he had obtained from his late mother’s estate and which he had or was intending to advance to the applicants as trustees of the RWFT on terms requiring them to repay
the debt upon demand.
3 The deed of acknowledgement of debt produced in evidence was located by Mrs White amongst her husband’s papers shortly following his death in November 2001. It was found together with a copy of the draft deed and a letter from Mr McNiece addressed to Rex White dated 1 May
1992, which referred to enclosing a deed of trust, and deed of acknowledgement of debt, and which contained instruction as to the need for the deed of acknowledgement of debt to be executed by Rex White and witnessed.
[17] Rex White did not tell Mrs White of his intention to establish a
family trust, and consequently, she had no knowledge of
it whatsoever until
after Rex’s death in November 2001, some nine years later, when she was
informed by Mr McNiece of the existence
of the RWFT.
The administration of the trust following Rex White’s death in
November 2001
[18] Over the years following Rex White’s death, Mr
McNiece, apparently without reference to a copy of the RWFT
deed, continued to
administer the RWFT and manage its investments in mortgages made through
his firm’s solicitor’s
nominee company,4 and applied
the income from the trust capital by making distributions to Mrs
White.
[19] As already noted, Mrs White knew nothing of the existence of the
RWFT until she received Mr McNiece’s letter dated
4 December 2001. In
this letter, Mr McNiece enclosed a copy of Rex White’s will and asked her
to provide him with details
of her income other than the Australian
government pension she was receiving, advising her not to include any monies
that
she would receive from the RWFT.
[20] In subsequent correspondence, Mr McNiece advised Mrs White that he
was in the process of obtaining probate of Rex White’s
will in New
Zealand, saying that he would arrange for a legal colleague of his in Sydney, Mr
Paul Ward-Harvey (Mr Ward-Harvey), to
attend upon her to swear her affidavit in
support of the application for the grant of probate.
[21] Mr McNiece said that Mr Ward-Harvey would also advise him as to any
legal requirements relating to Mrs White’s Australian
government pension
so that he could then maximise the benefits that Mrs White would obtain from the
RWFT.
[22] Mr McNiece informed Mr Ward-Harvey that the RWFT had
approximately
$206,000 and that Rex White’s estate held $71,000. He said that the
combined
income from the trust and the estate would be approximately $20,775
gross per
4 B.C. McNiece Solicitors Nominee Company Ltd.
annum, and Mrs White should anticipate receiving approximately
$12,000 per annum from the trust. He also said that there
would be funds
available to her from the trust to enable her to purchase a new car. Mr
Ward-Harvey passed this information on to
Mrs White.
[23] Mrs White also met with Mr Ward-Harvey in October
2002, and subsequently by letter dated 15 October 2002,
Mr Ward-Harvey
reported to Mr McNiece that he had seen her, and by reference to documentation
provided by Mr McNiece, explained and
made it clear to her that she was the sole
beneficiary of the New Zealand assets.
[24] Mr Ward-Harvey informed Mr McNiece that apart from asking for some
money initially, Mrs White’s instructions were that
she did not wish to
realise or change the arrangements as regards the New Zealand assets at all, and
that she simply asked that she
receive quarterly payments of income.
[25] With his letter, Mr Ward-Harvey enclosed some papers he had been
given by Mrs White in response to Mr McNiece’s request
that she look for a
copy of the RWFT deed amongst Rex White’s papers, commenting that the
documents appeared to relate to the
trust but did not include a copy of the RWFT
deed. Significantly, Mr McNiece did not respond to Mr Ward-Harvey to take issue
with
or correct him as regards the information he had given to Mrs White to the
effect that she was the sole beneficiary of the New Zealand
assets.
[26] Then on 5 November 2002, Mr McNiece wrote directly to Mrs White to report on progress with Rex White’s estate. In this letter, he confirmed having attended to all matters necessary for the administration of Rex White’s estate and reported that all of Rex White’s assets had been transferred into her name. He advised that he had transferred AUD$21,000 to her account, and that each quarter thereafter, he would forward the interest earned by the trust and the estate to her Australian bank account. He explained that in order to keep within the qualifying criteria for her Australian pension with regard to both capital and income, he proposed retaining the trust monies in the trust, while Rex White’s estate money
would be transferred into her name by way of the distribution of the estate.
In his letter, Mr McNiece said:
As Mr Ward-Harvey has explained to you all of the assets in the trust
and the estate are effectively yours. You should give some
consideration as to what you wish to happen to those assets on your death by
making a will and could I suggest
that you either contact me or Mr Ward-Harvey
in that regard. (emphasis added)
[27] This advice by Mr McNiece to Mrs White – that all of the assets in the trust and the estate were “effectively yours” – demonstrates that Mr McNiece was at that time proceeding upon the clear understanding and belief that Mrs White was the sole beneficiary of the RWFT, and that accordingly, she was entitled to receive all of the income derived from the trust assets as well as being the beneficial owner of the trust capital. In my view, there can be no other satisfactory explanation for Mr McNiece advising her to give consideration to making her own will, and what she wished to happen to those assets on her death. Mr McNiece’s understanding to that effect is consistent with what Mr Ward-Harvey had also explained to Mrs White in October
2002, and his understanding was necessarily based on what he had been told by
Mr
McNiece.
[28] On 18 November 2002, Mr Ward-Harvey made a
contemporaneous handwritten note of a telephone conversation he
had with Mr
McNiece that day. He wrote his note on a copy of Mr McNiece’s letter to
Mrs White of 5 November 2002. Mr Ward-Harvey
wrote:
P W-H spoke to Mr McNiece on 18/11.
Estate money $55,000 to be transferred into trust to = $235,000
approx
Income tax will be paid at trust rates on income from the trust
quarterly payments to BW will be post tax and free of tax in NZ &
Australia quarterly instalments will probably vary but average
$2,800 per
qtr.
[29] From Mr Ward-Harvey’s file note of the conversation with Mr McNiece, it is clear that, consistent with the advice he had earlier given to Mrs White, the assets of the trust and her husband’s estate were “effectively” hers. Mr McNiece was himself proceeding on the basis that all of the assets of the RWFT were being held for her,
and that being the case, it was convenient and appropriate to amalgamate the
balance of the money to which she was entitled from Rex
White’s estate by
paying it into the trust to be administered as a composite sum.
Thereafter, the income from the
approximate total of $235,000 would incur
income tax at the trust rate, and the net income would be paid to Mrs White on a
tax-paid
basis.
[30] On the basis of what she was told and advised about all
of the assets belonging to her, Mrs White agreed that
the sum of $55,000
(being the sum that she would otherwise receive from her husband’s
estate) could be transferred to
the RWFT to be managed and administered
together with the other trust monies.
[31] Mr McNiece thereupon proceeded to administer the RWFT in the manner
described above, namely, by arranging to pay the net
tax paid income derived
from investment of the trust funds to Mrs White by way of quarterly
distributions to her Australian bank
account.
[32] As well as distributing tax-paid income, Mr McNiece, as
trustee of the RWFT, also made several capital distributions
to Mrs White upon
request. For example in January 2013, Mrs White telephoned Mr McNiece and
asked him to arrange for the trust
to meet the cost of her surgical expenses,
and in July 2013, he transferred the sum of NZ$34,000 to her to meet those
expenses.
A new attitude by the trustees and a new interpretation of the terms of
the executed deed emerges
[33] On 13 December 2011, Mrs White telephoned Mr McNiece to request a
distribution of money to pay for an overseas holiday.
She said in her evidence
that she explained to Mr McNiece she was suffering from macular degeneration,
and wished to travel and enjoy
an overseas trip before her eyesight
deteriorated. She told Mr McNiece that she wished to use some of the money to
pay for a friend
of hers to accompany and assist her.
[34] Mrs White said in evidence that when she mentioned that she was suffering from macular degeneration, Mr McNiece’s response was to say “who told you that?”
She said that up until then, Mr McNiece had always been very polite in his
dealings with her and had never spoken to her in that manner
before.
[35] She said that Mr McNiece adopted a different attitude towards her
from that time, and although he subsequently provided
the funds for the
cost of her hip replacement in 2013 when she initially asked in January 2013,
he said that the funds were
unavailable at that time but could become available
in June later that year.
[36] Mr McNiece said in his evidence that he remembered the telephone
call from Mrs White when she wanted money for an overseas
trip. He said that he
understood that she was also wanting money to pay for her niece to accompany her
on the trip. He said that
he had discussed her request with Mr Davis, and they
decided to refuse to pay for Mrs White’s niece’s fare because it
would have been contrary to Rex White’s wishes as he had not wanted any of
Mrs White’s family members to benefit from
the trust monies.
[37] Mr McNiece said in evidence under cross-examination that at the
time, he had in fact doubted the accuracy of Mrs White’s
claim to be
suffering from macular degeneration, thinking that it was merely a means of the
nieces manipulating matters and wanting
to utilise some of the trust funds for
their own purposes.
[38] Mrs White was also cross-examined regarding her request for funds,
and said that at no time had she referred to any of her
nieces when speaking to
Mr McNiece. She had only ever referred to a friend of hers whom she wished to
accompany her.
[39] Whatever be the correct position, having seen and heard both of them give evidence before me and be cross-examined, I am satisfied that Mrs White’s evidence that Mr McNiece’s attitude towards her changed and hardened at this time, is an accurate and reliable description of what had happened. Such a change of attitude is consistent with Mr McNiece conferring with Mr Davis and then deciding that Rex White’s wishes, as expressed to Mr Davis before the establishment of the RWFT, were relevant to and should inform their decisions as trustees as to application and distribution of the trust money and particularly, the trust capital.
[40] In June 2014, Mrs White consulted a firm of solicitors in New South
Wales about her estate planning, and on 2 June 2014,
Mr Darryl Browne of Browne
Linkenbagh wrote to Mr McNiece to request a copy of the RWFT deed and other
information regarding the
income and capital beneficiaries of the trust. Mr
Browne advised that Mrs White would prefer the RWFT to be finalised with the
funds
paid to her, saying:
In this context I would appreciate an indication of your position with a
vesting of the trust fund at this point and payment thereout
to Beatrice as sole
capital beneficiary.
[41] Mr McNiece replied to Mr Browne by letter dated 1 July 2014,
advising that the RWFT deed had been lost. He said that Mrs
White was merely a
discretionary beneficiary and not a final beneficiary, and as such, she was not
entitled to any capital of the
trust (although some capital had previously been
distributed to her to pay some medical expenses).
[42] He explained that there was power under the general provisions of
the RWFT
deed to make a capital distribution to “various charities”. Mr
McNiece wrote:
The writer has conferred with his co-trustee and re-established that
it was the settlors (sic) intention that Beatrice was not to receive any capital
of the trust as he did not want monies to eventually
go to Mrs White’s
family but he did wish her to receive the income from the capital. Upon Mrs
White’s death it was
the settlors (sic) intention that the monies
be distributed amongst various charities and there is provision in the
trust deed for that to be done. The settlor also had a son whom he also did not
wish to benefit from
any capital distribution of the trust. (emphasis
added)
[43] It is noteworthy that in this letter, Mr McNiece referred
to the settlor’s intention that the trust monies
be distributed amongst
“various charities”. Mr McNiece was cross-examined on this point
and it was suggested to him
that by referring to “various charities”
in his letter, he had been seeking to conceal from Mr Browne and Mrs White,
whom
the ultimate and final beneficiary of the trust was intended to be.
[44] I consider Mr McNiece’s response in which he explained that at the time of his letter dated 1 July 2014, the trustees had not yet made a decision to make a distribution to Freemasons New Zealand, to be unsatisfactory and implausible. His
use of the words “various charities” is a clear indication that
he was intending to obscure the intention on the part
of the trustees to apply
the trust monies by way of a distribution to Freemasons New Zealand, and that
the decision to do so had
recently arisen from his conferring with Mr Davis
which had “re-established ... the settlors (sic)
intention”.
[45] In a later letter to Mr Browne dated 24 September 2014, Mr McNiece enclosed a legal opinion he had obtained from counsel Mr Kevin Gould, dated 7 July
2014. In it Mr Gould expressed his view as to whether the applicant
trustees had power to distribute the whole of the trust fund
to the Masonic
Lodge “as nominated by Mr White/Mr Ellis”. The reference by
Mr Gould to “Mr White/Mr Ellis” is an indication of some uncertainty
on the part of Mr McNiece in terms
of his instructions as to who the settlor of
the RWFT actually was.
[46] Mr Gould’s opinion, which was forwarded to Mr Browne,
was the first mention of Freemasons New Zealand as
a potential beneficiary of
the RWFT, and the first indication that the trustees, rather than holding the
trust assets for distribution
amongst “various charities”, were
proceeding upon the basis of holding the trust funds for subsequent distribution
to
the Masonic Lodge. It was also the first indication that the trustees were
operating on the basis that Rex White’s wish was
that the Masonic Lodge
should be the final beneficiary of the trust rather than Mrs White.
[47] Having regard to the significant change of position adopted by the
applicants in 2014, it is of note that this only arose
after Mrs White, through
her solicitors, had requested all of the trust money, which included her own
estate funds, be paid to her.
[48] As regards the trustees’ “re-establishment” of what Rex White’s intention was when establishing the RWFT, it is relevant to note Mr Davis’s evidence as to the source of his knowledge of Rex White’s wish to leave his money to Freemasons New Zealand. Mr Davis said in evidence that on two occasions, he had been told by Rex White that unless his wife needed his money, he wanted it to go to Freemasons New Zealand. Mr Davis said these conversations occurred in 1986 and 1989. Of course, at that time, the RWFT did not exist, and Rex White was yet to make his will.
[49] When he eventually did make his will in August 1991, he left all of
his estate to his wife, with the provision that, should
she predecease him, his
estate would pass to his son Christopher. Contrary to what Mr Davis said he was
told by Rex White, Rex White
in fact made no reference whatsoever in his will to
Freemasons New Zealand and no provision for that organisation to benefit from
his estate.
[50] Furthermore, I note that in describing the events surrounding the
meeting at Mr McNiece’s office at which the RWFT
deed was executed in
1992, Mr Davis said that he did not recall Rex White mentioning the Freemasons
on that occasion in any way.
[51] Thus it would appear that any reconsideration or re-establishment of what Rex White’s wishes or intentions were as regards the RWFT could not possibly have been based upon anything he said at the time that the RWFT deed was executed in
1992. His only statements as described by Mr Davis had been made well prior
to the establishment of the RWFT and, in the meantime,
he had made his will on
terms which are demonstrably inconsistent with any earlier
statements.
[52] Accordingly, I am of the view that there could never have been any
proper foundation for the position adopted by the applicants
in 2014, when they
claimed to be acting in accordance with Rex White’s intentions to benefit
the Freemasons New Zealand.
[53] What is clear, however, from the emergence of this new attitude on the part of the applicants is that they and in particular, Mr McNiece, were relying on the wording of the draft deed as accurately and reliably containing the terms of the RWFT deed that they were responsible for. Of course, in the absence of the RWFT deed, there was no other document to which the applicants could refer as a source of the requisite information necessary to inform their decisions as trustees. In this regard, I note that in the course of his evidence Mr McNiece confirmed that he was basing his understanding and knowledge of the terms of the RWFT deed and the identity of the beneficiaries solely on the contents of the draft deed. He claims no independent recollection of the contents of the RWFT deed, other than what he deduced from the contents and provisions of the draft deed.
[54] If the draft deed is be considered as substantially embodying the
same terms as were included in the RWFT deed, then
the absence of any
reference to Freemasons New Zealand as a discretionary or primary beneficiary,
is an indication that any
reliance upon the draft deed cannot provide any
certainty as to the objects of the trust.
The executed RWFT deed
[55] As I have noted, the deed by which Rex White established the RWFT
has been misplaced and lost. From the following evidence
and the events
described therein, I am satisfied that a deed creating the RWFT was in fact
executed in 1992.
Execution of the RWFT deed
[56] Mr Davis was, together with Mr McNiece, named in the draft deed and in the deed of acknowledgement of debt, as a trustee of the RWFT.5 He gave evidence by way of affidavit and was cross-examined before me. He described attending a meeting at Mr McNiece’s office in 1992, which he attended together with Rex White, for the purpose of executing a deed to establish the RWFT. Mr Graeme Ellis (Mr Ellis), who is named as the settlor in the draft deed, was not present at this
meeting.
[57] Mr Davis said that he saw the final version of the deed for the
first time at the meeting, and had not previously seen a
copy of it. He said
that he had only read it over very quickly and briefly in order to satisfy
himself that it was the deed he was
expecting to sign. He explained that he had
relied on Mr McNiece to have prepared the deed correctly, and said that he
cannot recall
there being any detailed discussion at the meeting regarding the
contents of the RWFT deed.
[58] He also said that he has not since been given a copy of the RWFT
deed, and had never had a copy of it.
5 Mr Davis had known Rex White for some 15 years and after meeting him, had discovered that they were in fact related. Mr Davis is, as I have noted earlier, a member of the Freemasons in New Zealand, and he and Mr White attended meetings of the Freemasons together.
[59] Mr Davis said that since the RWFT was established, he has relied on
Mr McNiece to administer and manage the trust and to
involve him as necessary,
which he did.
[60] Mr Davis said that Mr McNiece routinely used him as Rex
White’s agent in New Zealand during Rex White’s life,
and that he
had continued this role after Rex White’s death. As trustee, Mr Davis
explained that he had executed written
investment authorities as and when
required by Mr McNiece, and that Mr McNiece had provided him with copies of
documents relating
to investments made by the trust, but that he had never seen
the RWFT deed since its execution.
Efforts at locating and obtaining the (lost) deed
[61] Mr McNiece gave evidence by way of two affidavits and was
cross-examined before me.
[62] He explained that when the RWFT deed was executed in 1992, as well
as filing a copy of the deed with the Inland Revenue Department
(the IRD),6
he had placed a copy on his file to refer to as required.
[63] He said that over the years, he created further volumes of the RWFT
file and is currently up to file number 4. He said file
number 1 was destroyed
some seven years after he had put it into storage when it had ceased to be
current, and he had opened another
file. He further explained that although
his usual practice is to review files before they are destroyed, he sometimes
delegates
this function to his staff and, as a consequence, the number 1 file
had been destroyed.
[64] He said the first time he had realised that he no longer held the RWFT deed or any copy of it was shortly after Rex White’s death in 2001. By that time, the trust had been in existence for nine years, and that apart from filing annual tax returns on
behalf of the trust in respect of income derived from mortgage
investments, there
6 He forwarded an original executed counterpart to the order to obtain a tax number, which was later allocated as “IRD 59-288-288”. Mr McNiece also explained that each year following the establishment of the trust, he has filed tax returns with the IRD for and on behalf of the trust.
would appear to have been little or no need for Mr McNiece to refer to the
deed either as to trustee powers or the provisions detailing
and defining the
beneficiaries.
[65] As consequence of the destruction of file number 1, all or any file
notes and copies of correspondence relating to communications
to or from
Rex White regarding the formation of the RWFT that might inform the issues
before the Court on this application no
longer exist.
[66] Soon after Rex White’s death, Mr McNiece wrote to Mrs White by
letter dated 21 February 2002, in which he enquired
whether she had found a copy
of the RWFT deed amongst her husband’s effects. She had
not.7
[67] In an attempt to locate a copy, Mr McNiece wrote to the IRD on 4
June 2014 requesting a copy of the RWFT deed that he had
earlier filed. The IRD
responded in writing advising that it does not hold a copy of it.
Finding/conclusion
[68] From this history of events, I am satisfied that a deed of trust was
executed in
19928 creating and establishing the RWFT.
[69] The real issue, then, is whether the Court can be satisfied that the
RWFT still subsists.
[70] In order for a valid trust to be created and exist, three
certainties must be present and satisfied.9 They are:
(a) Certainty of intention:10 a court cannot hold that a
trust exists unless it is satisfied that there was an intention to create the
trust.
7 But she did find a copy of the draft deed, the deed of acknowledgment of debt and Mr
McNiece’s letter dated 1 May 1992.
8 The date upon which the trust was created cannot be determined or ascertained with the result that the vesting date of the trust cannot be ascertained with certainty.
9 In addition to the three certainties, the law requires that he objects of the trust must be lawful and any formalities required by law for constituting the trust must have been complied with. There is no issue with this point.
10 See Re Reynolds; Official Assignee v Wilson [2008] 3 NZLR 45, [2008] NZCA 122.
(b) Certainty of subject matter: the property of a trust must be
clearly ascertainable. The subject matter of a trust must be in existence when
the trust is declared.
(c) Certainty of objects: the identity of beneficiaries of the trust must be certain. At the least, there must be specified criteria that enable the trustees to say whether a particular person is or is not a beneficiary (category certainty). In the case of a discretionary trust what is required is conceptual certainty, that is a sufficient degree of precision to enable the limits of the class to be ascertained. Evidential uncertainty does not mean that the necessary subject matter certainly
does not exist.11
[71] The essence of this case turns on the certainty of objects. If
there is any uncertainty in this respect, the trust fails
and those persons to
whom the property is given in trust will hold it on a resulting
trust.
Does the RWFT currently possess the three certainties enabling the
trustees to discharge their obligations?
[72] In the present case, as I have already said, I consider that it is
more likely that Rex White, for the reasons I shall outline
below, was the
settlor of the RWFT and not Mr Ellis. Furthermore, I am satisfied that Rex
White intended to create a trust to be
called the Rex White Family Trust when he
instructed Mr McNiece in 1992 to prepare a deed, and I am also satisfied that a
deed was
executed and the intention was therefore put into effect.
[73] I am similarly satisfied as to the subject matter of the RWFT. Rex White transferred approximately $142,000 to the applicants at about the time that the RWFT deed was executed. The applicants thereupon received and have since held that money together with any accumulated income upon trust as trustees of the
RWFT, and initially at least, upon the terms set out in the draft
deed.
11 Proprietors of Wahatu Inc v Attorney-General [2012] NZHC 1461 at [219].
[74] It is the third certainty that calls for close examination by reason
of the background and circumstances of this present
application.
The certainty of objects
[75] Here, with the RWFT deed no longer available by virtue of it being
lost, the parties rely upon the draft deed as sufficiently
evidencing the
requisite certainty of objects. The applicants also rely upon the evidence of
Mr Davis, to the effect that Rex White
clearly informed him on two occasions of
his wish and intention that the ultimate beneficiary of the trust should be
Freemasons New
Zealand. Mr McNiece also refers in his affidavit evidence to
having been told by Rex White of his wish to see the trust capital
be
distributed to Freemasons New Zealand, but unlike Mr Davis, he cannot identify a
particular occasion when he was informed of this,
and it appears that he is
relying on what Mr Davis has said he was told by Rex White, rather than any
direct conversation he himself
had with him.
[76] Mr O’Neill for the respondent refers to two Australian cases
dealing with situations of lost trust deeds. In Porlock Pty Ltd,
12 the plaintiff trustee applied to the Court for directions
under s 63 of the Trustee Act 1925 seeking judicial advice because the trust
deed could not be located. The Supreme Court of New South Wales found that it
has no
power to actually recreate a trust deed, explaining:13
We are not in the same situation as one is when there is a lost will. What
the court is doing is advising the trustee as to whether
it would be justified
in dealing with the trust property in the way in which it proposes. It is clear
that the trustee recognises
that it does not hold the trust property
beneficially.
[77] In that case, there was secondary evidence available from a retired
accountant who had had direct involvement in the administration
of the trust, in
the course of which he had written a letter detailing the operative provision of
the trust which specified how the
income and capital was to be distributed. His
letter contained the following paragraph:
The Trust Deed provides that the income derived by the trust is to be paid to
James D B Carr during his life and further provides
that after the death of
James D B Carr the property is to be held as to both capital and income
for
12 Re Porlock Pty Ltd [2015] NSWSC 1243.
13 At [2].
all and/or any of his children living at his death or attaining the age of 21
and if more than one in equal shares as tenants in common.
[78] The accountant had sworn an affidavit in the proceeding confirming
his belief that his letter accurately set out both a list
of the assets and the
terms of trust, and further having regard to the terms of his letter, his belief
that he had referred to and
quoted from the actual trust deed when writing his
summary of the operative terms of the trust.
[79] The accountant also deposed to the trust deed having been stored at
his office up until his retirement some years earlier,
and to the steps taken to
undertake a thorough search to locate the deed or a copy of the deed, without
success.
[80] The Court concluded that the evidence of the accountant,
particularly that contained in his letter, was the “best evidence”
as to what the terms of the deed were, and found that the trustees would be
justified in acting upon the letter with the observation
that, if at some time
in the future the deed did happen to turn up and was found to contain provisions
inconsistent with the accountant’s
letter, the trustees would nevertheless
have the protection that the management and disposition of the trust fund was in
accordance
with the Court’s advice.
[81] The second case involving a lost trust deed to which Mr O’Neill refers is D R McKendry Nomimees Pty Ltd,14 where the Supreme Court of Victoria dealt with an application for a declaration in connection with a deed creating a family trust which could not be found. The applicant sought a declaration that the missing deed which established the McKendry Family Trust was in the form of a pro forma set of trust deed documents customarily used by the solicitor who had drafted the McKendry Family Trust deed and who deposed to having used that documentation, and which he said named Mr McKendry’s two sons as the beneficiaries. The solicitor also
deposed to having procured registration of a trustee company as the corporate
trustee for the trust.
[82] In delivering the judgment of the Court, Digby J noted that where an
original document constituting a trust has been lost
or destroyed, proof of the
contents of the
14 D R McKendry Nominees Pty Ltd [2015] VSC 560.
document may be given by secondary evidence.15 However, there
must be clear and convincing proof not only of the existence of the document but
also of its contents. In considering
the availability of secondary evidence,
Digby J said:
[8] The plaintiff submits, and I accept, that in considering the
probative value of evidence about the contents of a missing
trust deed the court
would usually give greater weight to the evidence from a lawyer, who was the
author hereof [sic], than evidence
from a lay person were such evidence to be
called.
[83] The Court considered detailed evidence as to the inquiries which had
been made in an endeavour to locate a copy of the missing
deed, and then
referred to what it described as “cogent evidence” that had been
filed as to the settling of the trust
and the terms of the trust deed as given
by the solicitor responsible for receiving Mr McKendry’s instructions,
drafting the
deed, and attending to incorporation of the corporate trustee.
Digby J concluded that from the evidence that there was:16
a more than sufficient basis to conclude that the McKendry Family Trust
executed in 1980 was in the form of [the pro forma draft]
to Mr
O’Connor’s affidavit of 14 August 2015.
Further, I consider that there is significant supporting evidence for the
existence and due execution of the Trust Deed. That further
evidence, in my
view, establishes that since the Trust was settled, certain persons, including
the Trustee, the beneficiaries and
advisers to the Trust have acted in a way
consistent with the due establishment of the Trust.
[84] Having considered what it described as “persuasive evidence as
to the terms and execution of the missing trustee”,
Digby J proceeded to
make the declaration sought.
[85] These two Australian cases illustrate the point that a lost trust deed does not necessarily prevent an applicant from obtaining either judicial advice or a declaration that the trust nevertheless subsists. However, in both those cases, there was clear and convincing evidence both as to the formation and existence of the trusts and as to their essential and requisite terms. In Porlock, that clear and convincing proof came from the accountant’s letter setting out the essential terms of the deed, and in
McKendry, the proof was provided by the solicitor who had taken
instructions and
15 Referring to Maks v Maks (1986) 6 NSWLR 34.
16 At [26] – [27].
preparing the deed and who was able to satisfy the Court that the form of the
pro forma documentation presented to the Court was the
form and content of the
missing deed. The solicitor was also able to confirm the instructions of the
settlor and the identity of
the beneficiaries as Mr McKendry’s two
sons.
[86] Unlike the abovementioned cases, here Mr McNiece - as
solicitor who attended upon Rex White, took his instructions
and
prepared the deed that established the RWFT - is unable to provide any
contemporary documentation or notes that would reliably
establish the details of
his instructions and the terms of the trust deed that he then prepared for Rex
White. He has no file or
file notes as they have been destroyed or lost, and
has no memory or recollection of the terms and contents of the RWFT deed, beyond
what is contained in the draft deed.
[87] The best and indeed only written material that can be found is the
draft deed that was sent by Mr McNiece to Mr White in
May 1992. However, that
draft deed, as I will explain, is riddled with errors and contains several
extraneous and irrelevant provisions
that would unlikely have been overlooked
and approved by Rex White in a final and executed deed. In any event, the
errors and deficiencies
of the draft deed are of such significance as to make it
impossible for the Court to be satisfied and certain as to the actual terms
of
the RWFT.
The draft deed examined
[88] In his evidence, Mr McNiece explained that in preparing the draft
deed, he used a template from an earlier deed of family
trust he had prepared
and used for another client. He accepts that in the course of preparing the
draft deed for Mr White, he overlooked
a number of errors it contained, and that
some parts of the deed related to another of his clients and was of no relevance
whatsoever
to Rex White’s family trust. Mr McNiece described Rex White as
being quite particular, and said that he expected that
Rex would have
located the errors and would have required them to be corrected before the
final deed was executed.
[89] If Rex White did require the various errors and other inappropriate contents of the draft deed to be corrected and changed, it follows that the final executed form of the trust deed would have been significantly different to the draft deed. That
inevitable conclusion, on its own, is detrimental to the parties’
contention that there is a valid and subsisting trust in existence
in
circumstances where the Court is being asked to treat the draft deed (at least
in material respects) as accurately reflecting
the provisions of the RWFT
deed.
[90] Put simply, if the draft deed does not represent the terms of the
missing and executed deed, then the Court has no reliable
basis upon which to
determine whether there is certainty as to the objects of the trust. Returning
to the contents of the draft
deed, the errors and misdescriptions contained in
it are in my view extensive, and such that the Court can have no confidence or
certainty as to the actual terms of the executed deed, and particularly, the
terms identifying the beneficiaries and the ultimate
beneficiary or
beneficiaries. That being the case, the RWFT does not have the essential
certainty of objects that it must exhibit
in order to remain valid, and it will
fail. I now set out and describe the errors and deficiencies of the draft
deed.
Erroneous and irrelevant provisions in the draft deed
[91] The draft deed contains provisions stipulating the interpretation to be applied to a number of specified terms including the term “discretionary beneficiaries”. It provides:
“di scr et ionar y bene fi ci ari es” means: (a) REX
WHITE
(b) The children of the Whites;
(c) the spouses of any of the children of the Whites; (d) grandchildren born before the date of distribution;
(e) the spouses of any of the grandchildren born before the date of
distribution; and
(f) any charitable objects which the Trustees may in their
absolute discretion select. In the exercise of this discretion
the Trustees may
have regard to, but shall not be bound by, the wishes of the Settlor as
expressed to them in writing from time to
time.
(g) The wife of REX WHITE
“c hil d” and “chil dr en” shall include any adopted child or children.
“gr andc hi l dr en” means the grandchildren of the
Scotts.
“t he Whit es” means “ REX WHIT E”
and MINNIE BEATRICE WHITE
the “Mini mum Nu mber of Tr ust ees” shall be two
(2).
[92] First, the Whites did not themselves have any children. Mrs White
was 64 years old at the time the draft deed was prepared
in May 1993, and as she
has explained in her evidence, in the course of their relationship and marriage,
she was unable to conceive
and the couple had no intention of adopting any
children. Consequently, reference in the draft deed to “The children of
the
Whites”, as the discretionary beneficiaries, was wholly inappropriate
and irrelevant to their situation.
[93] Similarly, the inclusion within the discretionary beneficiaries of
“the spouses of any children of the Whites”
was also erroneous and
irrelevant as the Whites had no children who would have spouses.
[94] Furthermore, the inclusion within the discretionary beneficiaries of
grandchildren, and any spouses of grandchildren of the
Whites, was also
erroneous and irrelevant to the Whites.
[95] A further error appears in the definition of the term
“grandchildren”, which is defined as meaning the
“grandchildren
of the Scotts”. The Scott family were an entirely
unrelated party, but were also clients of Mr McNiece.
Discrepancies between the draft deed and the executed deed (the terms of
the latter being unknown)
(a) The settlor – Mr Ellis or Rex White?
[96] The list of discretionary beneficiaries also includes “any charitable objects which the Trustees in their absolute discretion select”, with provision for the trustees to have regard to, but not be bound by, the wishes of the settlor expressed to them in writing from time to time. This too is problematic, as the settlor named in the draft deed was not Rex White, but Mr Ellis, a solicitor then in legal practice in Auckland. Mr McNiece gave evidence that he had a practice when drafting trusts not to make a
person who was going to derive a benefit from the trust, either the settlor
or trustee of the trust. For that reason, he says he
had named Mr Ellis as the
settlor of the trust.
[97] However, if Mr Ellis was in fact intended and named as the settlor,
it makes no sense to make provision for the trustees
to have regard to his
wishes as to the selection of charitable objects. It is unlikely that a
professional and wholly independent
settlor, whose only role is to fulfil a
formal legal requirement in order to establish the trust, would have any
continuing role,
let alone any need to express written wishes as to which
charitable objects should be selected by the trustees to receive distributions
from the trust. Such a provision is however consistent with Rex White being
intended and named as the settlor, and being directly
involved in the business
of the trust on a continuing basis and himself being a beneficiary.
[98] More significantly, in dealings and correspondence following the
formation of the RWFT, Mr McNiece specifically referred
to Rex White as being
the settlor of the trust.
[99] In the letter dated 1 July 2014, Mr McNiece wrote to Mrs
White’s solicitors Browne Linkenbagh, and referred to the
“settlors
[sic] intention” in terms that was a clear reference to Rex White. By
2014, Mr McNiece was well aware that
the RWFT deed was lost, and while he was
obviously relying on the terms of the draft deed, in which Mr Ellis was named as
the settlor,
as evidencing the terms of the trust that he and Mr Davis were
administering, it is inconceivable that he would have referred to
Rex White as
being the settlor, unless that was what he understood to be the correct
position.
[100] Having considered this evidence, and notwithstanding Mr Ellis being named as settlor in the draft deed, I am not satisfied by Mr McNiece’s evidence that Mr Ellis was in fact named as the settlor in the RWFT deed. The fact that the trustees themselves proceeded upon the footing that Rex White was the settlor is evidenced by Mr McNiece stating in his correspondence that he and his co-trustee were mindful of Rex White’s intentions as settlor as to whether or not Mrs White should receive any capital of the trust because Rex did not want any trust money to eventually pass to Mrs White’s family. Obviously, such an approach is consistent with a belief that
Rex White was the settlor, and Mr McNiece particularly as drafter of the
executed
RWFT deed, could be expected to know who the settlor was.
[101] At the very least, the actions of Mr McNiece describing Rex White as
the settlor casts doubt as to who the actual settlor
named in the executed deed
was, with the consequence that the Court cannot be at all sure or certain as to
who was in fact named
as settlor in the executed deed.
[102] Accordingly, I consider that the naming of Mr Ellis as settlor in the
draft deed is an inconsistency between the draft deed
and the executed deed, and
I consider that this is another aspect of the draft deed that I cannot
confidently treat as accurately
reflecting the terms of the RWFT
deed.
(b) Rex White’s son, Christopher – was he included and named
as a beneficiary in the RWFT deed?
[103] Another inconsistency between the draft deed and the terms of the
RWFT deed relates to Rex White’s son, Christopher.
In Mr McNiece’s
letter of 1 May 1993 to Rex White, with which he enclosed a copy of a deed of
trust, he said:
I note your instructions that your son is not to be a Beneficiary under the
Trust. I have still included him as a discretionary beneficiary
but naturally no
money will be paid to him unless you so authorise. I think that it is better to
have him in there as a discretionary
beneficiary.
[104] However, the draft deed contains no mention of Christopher. Mr
McNiece explained in evidence that he may have based his comments
about having
included Christopher as a discretionary beneficiary, on an assumption that he
was included by virtue of the reference
to “The Children of the
Whites” within the discretionary beneficiaries.
[105] However, the term “The Whites” was defined in the draft
deed as meaning “Rex White and Minnie Beatrice White”,
and
obviously, Mr McNiece knew that Christopher was not a child of the
Whites.
[106] Here too, I cannot accept Mr McNiece’s evidence and
explanation. I find that
the absence of any reference to Christopher in the draft deed is yet another indication
that the draft deed does not accurately reflect the contents of the executed
RWFT
deed.
(c) Was a primary beneficiary named in the RWFT – and if so,
who?
[107] The draft deed provides for distribution of capital to
the “primary beneficiary”. Paragraph 4
of the draft deed
provides:
4. CAPITAL
At any time before the date of distribution the Trustees may in their
absolute and uncontrolled discretion pay or apply the whole
or any part of the
Trust Fund for or towards the personal support, benefit, maintenance, education
or advancement in life of any
one or more of the discretionary beneficiaries to
the exclusion of any one or more of them in the absolute discretion of the
Trustees
and upon the date of distribution the Trustees will pay the balance of
the Trust Fund then remaining to the primary beneficiary. (emphasis
added)
[108] The fact that paragraph 4 of the draft deed makes provision for a
primary beneficiary is a clear signal that such a primary
beneficiary was
intended to be specified and identified in the deed. However the draft deed
contains no mention of who the primary
beneficiary is.
[109] The naming of a primary beneficiary is a significant feature of a
trust by identifying with certainty the person to whom the
trustees are to pay
any remaining trust capital upon the vesting and date of distribution of the
trust. The omission of any reference
to the identity of the primary beneficiary
in the draft deed is a very significant error and omission that directly informs
the issue
as to the existence of the certainty of objects of the RWFT.
Without a named primary beneficiary, the trustees are quite unable
to apply
paragraph 4 of the draft deed, and there can be no certainty as to whether the
settlor intended Mrs White, the Freemasons
New Zealand, or any other person or
organisation as the primary beneficiary of the trust.
[110] Mr McNiece explains the failure of the draft deed to specify the primary beneficiary as an error in drafting the document. If so, it would have been a startling omission. It is inconceivable that the omission of such a key and fundamental provision of the RWFT, would have escaped the attention of both Rex White and Mr McNiece when reviewing the draft deed prior to execution of the final version.
[111] But irrespective of the reason for the omission, it leaves a large
gap that cannot be filled by means of speculation
and guesswork as to
who the settlor intended as the primary beneficiary. For the reasons already
expressed above, I consider
that the power given to the trustees in the
draft deed to include any charitable objects as discretionary beneficiaries,
does not provide the requisite certainty that would authorise and enable the
trustees to pay the capital of the RWFT to Freemasons
New Zealand.
The inconsistencies of the trustees in their explanations and descriptions of the
RWFT and its objects
[112] To summarise, the parties and in particular, the applicants, have not
and cannot satisfy the Court as to what the terms of
the RWFT deed are. Mr
McNiece’s explanation as to his understanding and belief as to the
terms of the trust and
contents of the executed deed falls well short of
proving the essential terms of the trust necessary to establish the requisite
and
essential certainty as to the objects of the RWFT. Mr McNiece’s
statements and conduct as regards the RWFT and its terms, particularly
as
regards the objects and beneficiaries of the trust has been inconsistent, and
I regret to say that I find his evidence
on these issues to be
unreliable.
[113] As previously noted, at an early stage following Rex White’s
death in November 2001, Mr McNiece advised Mrs White that
she was the sole
beneficiary of the assets held in the trust, informing her that “all of
the assets in the trust and the estate
are effectively yours”. He
provided information to the same effect to the Australian solicitor, Mr
Ward-Harvey, and also
made it clear to Mrs White that she was the sole
beneficiary by various means of the New Zealand assets.
[114] However, as also noted earlier, in 2014, Mr McNiece and his fellow trustee, Mr Davis, took an entirely different approach, with Mr McNiece advising Mrs White through her Australian solicitors that she was not the sole beneficiary and that the trust capital was to be distributed amongst, first various charities, and then the later stage advice that it was intended to be distributed to “The Masonic Lodge”. This contradictory position adopted by Mr McNiece and Mr Davis as trustees, in my
view, clearly demonstrates that there can be no certainty as to what the
settlor’s
actual intentions were as set out in the RWFT deed.
[115] It is again inconceivable that Mr McNiece, who drafted the deed,
would have advised both Mr Ward-Harvey and Mrs White in 2002
that she was the
sole beneficiary of the New Zealand assets, if that information was inconsistent
with his then actual knowledge
and belief that Rex White had provided in the
deed that the ultimate beneficiary of the trust was Freemasons New
Zealand
or the Masonic Lodge.
[116] Although that fundamental change of position by Mr McNiece is of
itself sufficient to demonstrate that the present situation
provides no
certainty as to the objects of the RWFT, there are other aspects of his conduct
and evidence that render his, and thereby
the applicants’, contention as
regards the settlor’s intentions and the ultimate beneficiary of the
trust, questionable
and thereby lacking the cogency and reliability that the
Court would require before accepting his evidence and the applicants’
position.
[117] Mr McNiece, in my view, misinformed Mrs White’s solicitors,
Browne Linkenbagh, when writing to Mr Brown on 1 July 2014
and stating that it
was the settlor’s intention that upon Mrs White’s death, “the
moneys be distributed amongst
various charities and there is provision in the
trust deed for that to be done”. If, as Mr McNiece and Mr Davis claim,
the
settlor’s intention was in fact to ultimately benefit Freemasons New
Zealand, then advising Mrs White’s solicitors
that the
settlor’s intention was that money be distributed amongst “various
charities” obfuscated the true position.
[118] Mr McNiece also sought in the course of his evidence to resile
from a statement he made in his second sworn affidavit
filed with the Court in
which he stated:
Additionally, I have made payments to the respondent by way of capital
distributions from the Rex White Family Trust as follows;
(a) 5 November 2002 $23,975.46. (b) 17 March 2003 $50,000.
(c) 10 July 2013 $34,000.
[119] Mr McNiece in his evidence regarding the sum of $55,600 advanced to
the RWFT by Mrs White, acknowledged that sum had been
due and owing by the trust
to her but claimed that the capital distributions that he referred to had
included, and thereby repaid,
that debt owing to her.
[120] Again, I consider that explanation to be implausible as at no time when those capital distributions were made to Mrs White, was there any mention made by Mr McNiece that the money being paid to her was in repayment of the debt owed to her. I am satisfied that these capital distributions were just that; distributions of capital from the RWFT and that there remains a debt owing by the trust to Mrs White of
$55,600 together with any interest accumulated from the investment of those
funds.
[121] As noted earlier, Mr McNiece also adopted an inconsistent
position on different occasions as to who the settlor
of the RWFT was. In
correspondence to Browne Linkenbagh on 1 July 2014, he referred to the settlor
in terms that made it clear
he was referring to Rex White. However, in his
evidence before me, he asserted that Mr Ellis was the settlor and that Mr Ellis
had been used as the settlor in accordance with Mr McNiece’s practice at
the time not to have a person who was going to derive
a benefit from the trust
as the settlor. Again, those two positions are obviously inconsistent. For the
reasons set out above,
I consider it more likely that Rex White was the actual
settlor of the RWFT, although that conclusion cannot be said to be
certain.
[122] Mr McNiece also advanced what I considered to be an implausible explanation for the absence of any reference to Mr White’s son, Christopher, in the draft deed. Mr McNiece suggested in evidence that although he had advised Rex White in his letter of 1 May 1992 that he had left Christopher in as a discretionary beneficiary, he may not have in fact named Christopher in the RWFT deed because of an assumption that he was included within and covered by the reference to children of the Whites as being discretionary beneficiaries of the trust. That suggestion is again implausible as the children of the Whites was limited by the terms of the deed to the children of Rex and Beatrice White and, as the draftsman of
the deed, Mr McNiece, must have appreciated that Christopher would not fall
within the scope of that defined description.
[123] The applicants apply for an order that the trustees may exercise
their absolute and uncontrolled discretion to pay the whole
of the trust fund to
the charity the Freemasons New Zealand. In these circumstances, it is relevant
to note that both Mr Davis and
Mr McNiece have a connection with the Freemasons.
Rex White was a member of the Freemasons in Australia, and Mr Davis has
confirmed
that he is a member of the Freemasons in New Zealand. Mr McNiece was
formerly a member of the Freemasons in New Zealand between
1988 and
1995.
[124] However, when opening the applicants’ case, Mr Gould stated
that while Mr Davis was a Freemason, Mr McNiece was
not. When he
gave evidence, Mr McNiece was asked whether he was a member of the Freemasons
and his answer was that he was
not. The inference which was obviously sought to
be drawn was that he was not himself involved with the Freemasons, and
consequently,
his actions as trustee and his evidence for the applicants
should be viewed as entirely independent of the Freemasons.
However, after
Mr McNiece had concluded his evidence, the issue was raised with counsel as to
whether he had ever been a member
of the Freemasons and, as a result, the Court
was informed that Mr McNiece had previously been a member. The applicants
subsequently
filed a memorandum with the Court in which it was confirmed that Mr
McNiece had been a member of the Freemasons’ Panmure Lodge
from 1988 to
1995.
[125] Mr McNiece’s initial position that he was not a member of the
Freemasons, without adding a qualification that he had
previously been a member,
was in my view misleading. If not taken further, it would have left the
impression that he was to be regarded
as entirely unconnected with the
Freemasons and that his decision as trustee to elect Freemasons New Zealand as
the ultimate beneficiary
of the trust fund, should be viewed in that light. This
is a further aspect of his evidence that I find unsatisfactory.
[126] Although Mr McNiece deposed in his affidavit that it had always been the advice of Mr Davis “and indeed Mr White whilst he was alive, to both Mr Davis and
myself, that Mr White wished to benefit the Society of Freemasons (Freemasons
New Zealand) and not his widow...”, there
is no written note,
instruction or document that records that being Rex White’s
intention.
[127] Mr McNiece accepted when cross-examined that the draft deed contained
no reference to Freemasons New Zealand and, consequently,
apart from the
evidence of Mr Davis and Mr McNiece as to Rex White’s expressed intention
that Freemasons New Zealand should
benefit from the RWFT, there is no other
evidence that would support that contention. As I have already noted, Rex
White’s
statements to that effect to Mr Davis were made well before the
execution of Rex White’s will or the execution of the deed
establishing
the RWFT. So those statements to Mr Davis, which were not made at the time of
the establishment of the RWFT, in my
view do not provide any reliable evidence
or support as to what Rex White’s intentions were regarding the ultimate
application
of the monies.
[128] In contrast to the evidence of Mr McNiece, I found the evidence of Mrs White to be forthright, uncomplicated and entirely reliable and credible. She explained how she had been given the clear understanding from her dealings with Mr McNiece and Mr Ward-Harvey that she was the sole beneficiary and owner of the assets held in both the trust and the estate, and that she maintained that belief and understanding throughout the course of numerous dealings with Mr McNiece between November 2001 to 2014. It was only when she approached Mr McNiece in
2013, seeking funding to pay for an overseas trip and in respect of which she
wished funding to pay for a friend to accompany her,
that she encountered a
marked change of attitude from Mr McNiece and his fellow trustee.
Conclusion
[129] It is clear that Rex White did establish the RWFT in 1992, and that there was an RWFT deed evidencing the trust which was registered with the IRD. However, the trustees have been shown to have acted inconsistently and they are unable to demonstrate by reference to either documentation or cogent and reliable evidence,
what the objects of the trust that they are trustees of were or are. As a
consequence, I find that there is no certainty of the requisite
objects of the
RWFT, and in the absence of that essential certainty, I find that the RWFT has
failed by reason of uncertainty.
[130] As a consequence, the applicants do not have the responsibility or
possess the power as trustees to retain and manage the
trust funds which, in the
absence of the existence a valid and effective trust, reverts to the estate of
Rex White, to which Mrs
White is entitled as the sole beneficiary of his
estate.
[131] Having regard to my finding that the trust has failed, it is strictly
unnecessary for me to determine Mrs White’s entitlement
to the sum of
$55,600, being the amount she advanced to the RWFT in or about November 2002, as
those funds are presently indivisibly
held as part of the RWFT trust monies, all
of which she is entitled to receive. However, in the event that it is or becomes
relevant,
I find that the RWFT remains indebted to Mrs White in the sum of
$55,600 in respect of her loan advanced, and that sum together with
any accrued
or accumulated interest thereon is due and payable to her from the fund
representing the corpus of the RWFT.
[132] The result of the Court’s finding is that the applicants do not
have any power or authority to use or apply the funds
that they held as trustees
of the RWFT for any purpose other than repaying and transferring the funds
through the executor of the
Rex White estate and thereby on to Mrs White. The
applicants are not authorised or empowered to use or apply any of the funds for
or towards the payment of costs, expenses or legal fees without prior approval
of the Court.
[133] The applicants have failed in their application, and the respondent Mrs White, is entitled to costs. However, I reserve the question of costs and direct that the parties file memoranda on costs within 14 days from the date of delivery of this
judgment.
Paul Davison J
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URL: http://www.nzlii.org/nz/cases/NZHC/2016/1626.html