GOUGH v STRAHL [2013] NZHC 3184

GOUGH v STRAHL [2013] NZHC 3184

A beneficiary holding a vested one quarter share in the O T Gough Family Trust is prima facie entitled to distribution of that share; neither the contingent liability under the 1999 Deed nor ongoing family conflict constituted 'special circumstances' or sufficient prejudice to refuse distribution of the beneficiary's share in specie; issues about the identity of Harcourt's beneficiary interest assigned to Gabriel Investments Limited are adjourned; retiring trustees may receive customary indemnities absent good reason to deny them.

Citation
[2013] NZHC 3184
Parties
Plaintiff (civ 2012 485 1574); Defendant (civ 2012 485 2027): Harcourt David Gough; Defendant (civ 2012 485 1574 & CIV 2012 485 2027): John Russell Strahl; Plaintiff (civ 2012 485 2027); Defendant (civ 2012 485 1574): Avenal Beryl Elizabeth McKinnon
Court
High Court
Jurisdiction
New Zealand
Judgment Date
29 November 2013
Procedural Posture
Civil Trust and Succession Dispute Involving Private Company Shares / Interim Judgment (directions Reserved)
Outcome
Interim judgment: Avenal entitled to distribution of her one quarter beneficial share; trustee to implement distribution subject to arrangements to address contingent liabilities; trustee directions on appointments granted; Harcourt/GIL issue adjourned; retiring trustees may receive indemnities; costs reserved.
Legal Topics
Saunders V Vautier / Termination of Trust, Distribution of Trust Assets in Specie, Interpretation of Trust Deed (date of Distribution), Appointment of Trustees Under Trust Deed, Trustee Indemnity and Retirement, Controlling Shareholdings and Prejudice
Trusts Succession Company Law Equity Saunders V Vautier / Termination of Trust Distribution of Trust Assets in Specie Interpretation of Trust Deed (date of Distribution) Appointment of Trustees Under Trust Deed +2 more

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Parties

Harcourt David Gough

Plaintiff (civ 2012 485 1574); Defendant (civ 2012 485 2027)

John Russell Strahl

Defendant (civ 2012 485 1574 & CIV 2012 485 2027)

Avenal Beryl Elizabeth McKinnon

Plaintiff (civ 2012 485 2027); Defendant (civ 2012 485 1574)

Procedural Posture

Civil Trust and Succession Dispute Involving Private Company Shares / Interim Judgment (directions Reserved)

Legal Issues

  1. 1 Whether beneficiary Avenal is entitled to immediate transfer of her one quarter beneficial interest in the O T Gough Family Trust
  2. 2 Whether the Trust Deed's 'date of distribution' has occurred (construction issue)
  3. 3 Whether 'very special circumstances' or risk of prejudice justify refusing an in specie transfer of private company shares

Ratio Decidendi

A beneficiary holding a vested one quarter share in the O T Gough Family Trust is prima facie entitled to distribution of that share; neither the contingent liability under the 1999 Deed nor ongoing family conflict constituted 'special circumstances' or sufficient prejudice to refuse distribution of the beneficiary's share in specie; issues about the identity of Harcourt's beneficiary interest assigned to Gabriel Investments Limited are adjourned; retiring trustees may receive customary indemnities absent good reason to deny them.

Court Disposition

Interim judgment: Avenal entitled to distribution of her one quarter beneficial share; trustee to implement distribution subject to arrangements to address contingent liabilities; trustee directions on appointments granted; Harcourt/GIL issue adjourned; retiring trustees may receive indemnities; costs reserved.

Orders

  • Avenal B E McKinnon is entitled to have her one quarter beneficial interest in the capital of the O T Gough Family Trust distributed to her pursuant to the principles discussed (right to distribution under Saunders v Vautier)
  • Distribution to proceed subject to addressing the contingent liability under cl 16 of the 1999 Deed by agreement between the trustee and Avenal (including but not limited to indemnity arrangements or valuation adjustments); the precise method is left to Mr Strahl as trustee and the parties, with liberty to seek...