CLEMENT v LUCAS [2017] NZHC 3278

CLEMENT v LUCAS [2017] NZHC 3278

The Court set aside the trustees' initial decision to sell the trust properties and their in‑principle decision to distribute sale proceeds equally because the trustees failed to take into account relevant considerations central to the trust's purposes—specifically the settlors' intention to 'even the ledger' between beneficiaries and pre‑trust distributions—and that failure occurred before and independent of legal advice the trustees later obtained; the matter is remitted to the trustees to reconsider disposition having regard to settlors' purposes and pre‑trust distributions; the Court declined to make a final distribution order or to grant the trustees' counterclaim authorising sale...

Citation
[2017] NZHC 3278
Parties
Plaintiff (beneficiary of the Clement Family Trust and Administrator of the Estate of Nola Valerie Clement): Keith Trevor Clement; First Defendant (trustee of the Clement Family Trust): Colin James Lucas; First Defendant (trustee of the Clement Family Trust): Samuel M W Bassett; Second Defendant (beneficiary of the Clement Family Trust and Administrator of the Estate of Nola Valerie Clement): Brian Campbell Clement; Third Defendant (beneficiary of the Clement Family Trust and Administrator of the Estate of Nola Valerie Clement): Derene Wendy Clement
Court
High Court
Jurisdiction
New Zealand
Judgment Date
21 December 2017
Procedural Posture
Trusts Application (trustees Act Disputes: Exercise of Trustee Discretion; Distribution of Trust Assets; Challenge Under S68 Trustees Act 1956) / High Court Hearing and Judgment (final Determination on Challenge and Directions)
Outcome
Initial trustee decisions to sell the trust properties and to distribute net proceeds equally are set aside; trustees ordered to reconsider disposition of trust assets having regard to the trust's purposes and the settlors' intentions (including pre‑trust distributions); leave granted to seek further directions;...
Legal Topics
Removal/replacement of Trustees, Distribution of Trust Assets, Memoranda of Wishes, Judicial Review of Trustee Discretion, Hastings‑bass / Pitt V Holt Doctrine, Application of Trustees Act S64 and S68
Trusts Equity Estate Administration Civil Procedure Removal/replacement of Trustees Distribution of Trust Assets Memoranda of Wishes Judicial Review of Trustee Discretion +2 more

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Parties

Keith Trevor Clement

Plaintiff (beneficiary of the Clement Family Trust and Administrator of the Estate of Nola Valerie Clement)

Colin James Lucas

First Defendant (trustee of the Clement Family Trust)

Samuel M W Bassett

First Defendant (trustee of the Clement Family Trust)

Brian Campbell Clement

Second Defendant (beneficiary of the Clement Family Trust and Administrator of the Estate of Nola Valerie Clement)

Derene Wendy Clement

Third Defendant (beneficiary of the Clement Family Trust and Administrator of the Estate of Nola Valerie Clement)

Procedural Posture

Trusts Application (trustees Act Disputes: Exercise of Trustee Discretion; Distribution of Trust Assets; Challenge Under S68 Trustees Act 1956) / High Court Hearing and Judgment (final Determination on Challenge and Directions)

Legal Issues

  1. 1 Whether trustees failed to consider relevant considerations including settlors' intentions and pre‑trust distributions when deciding to sell trust property and propose equal distribution of proceeds
  2. 2 Whether that failure rendered the trustees' decisions voidable or liable to be set aside under principles in Pitt v Holt/Abacus Trust and related authorities
  3. 3 Whether the court should exercise its discretion to set aside the trustees' decisions and/or make orders directing disposition of trust assets or authorising sale under s64 Trustees Act

Ratio Decidendi

The Court set aside the trustees' initial decision to sell the trust properties and their in‑principle decision to distribute sale proceeds equally because the trustees failed to take into account relevant considerations central to the trust's purposes—specifically the settlors' intention to 'even the ledger' between beneficiaries and pre‑trust distributions—and that failure occurred before and independent of legal advice the trustees later obtained; the matter is remitted to the trustees to reconsider disposition having regard to settlors' purposes and pre‑trust distributions; the Court declined to make a final distribution order or to grant the trustees' counterclaim authorising sale...

Court Disposition

Initial trustee decisions to sell the trust properties and to distribute net proceeds equally are set aside; trustees ordered to reconsider disposition of trust assets having regard to the trust's purposes and the settlors' intentions (including pre‑trust distributions); leave granted to seek further directions;...

Orders

  • The Trustees' decision to sell the Trust assets and their decision in principle to distribute the net proceeds of sale equally among the three Final beneficiaries is set aside
  • The Trustees are to reconsider their decision on the disposal of the Trust assets having regard to the purposes of the Trust and the intentions of the Settlors as explained in the judgment