BANKOFF V BUSS AND LAFRENIERE HC WHA CIV-2008-488-685

BANKOFF V BUSS AND LAFRENIERE HC WHA CIV-2008-488-685 21 December 2010IN THE HIGH COURT OF NEW ZEALANDWHANGAREI REGISTRYCIV-2008-488-685BETWEEN AMY ELIZABETH BANKOFF ASGUARDIAN AD LITEM FOR WILLIAMBANKOFF-BUSSPlaintiffAND SHIRLEY DIANE BUSS AND DONNALAFRENIERE, EXECUTRICES ANDTRUSTEES OF THE ESTATE OF THELATE WAYNE WILLIAM BUSSDefendantHearing: 7 December 2010Counsel: R Harte for the PlaintiffW K Willoughby for the DefendantJudgment: 21 December 2010 11:00:00JUDGMENT OF WOODHOUSE JThis judgment was delivered by me on 21 December 2010 at 11:00 a.m. pursuant to r 11.5 of the High Court Rules 1985.Registrar/Deputy RegistrarSolicitors: Mr R Harte, Solicitor, WhangareiMr S O Spicer (plaintiff‟s instructing solicitor) , Webb Ross, Solicitors, WhangareiMr W K Willoughby, Hesketh Henry, Solicitors, Auckland[1] William Bankoff-Buss is aged 5. He is the son of the plaintiff, Ms AmyBankoff. William‟s father is Mr Wayne Buss. Mr Buss died before William‟s birth.[2] No provision was made for William in his father‟s will. William, through his mother as litigation guardian, brought three claims. There was a claim under the Family Protection Act 1955 against the executors of the estate of Wayne Buss. There was a second claim relating to interpretation of part of the deed creating the Buss Revocable Trust, which trust is the residuary beneficiary of the will. There is a third claim relating to the application of Californian law.[3] The defendants are executors of Mr Buss‟ will and trustees of the WayneBuss Trust.1 They are Mr Buss‟ sisters and therefore William‟s aunts.[4] The proceedings were commenced in 2006. Substantial steps had been taken by the parties when a settlement conference was convened in San Francisco on 11 October 2010. This resulted in settlement recorded in a written "SettlementAgreement". The matter has been referred to the Court for approval of the terms of settlement and, if approved, for the settling of the terms of a trust deed for the benefitof William. The Court‟s approval is required as a term of the Settlement Agreement. It is also required in accordance with New Zealand law and in particular pursuant to the Minors Contracts Act 1969. The Settlement Agreement provides that New Zealand law shall govern the interpretation and enforcement of it.[5] The parties, subject to the Court‟s approval, have agreed on the terms of thetrust deed, apart from two points of difference.[6] The first point of difference concerns the definition of the "Vesting Day". Onthe Vesting Day, if he has survived, William will be entitled to assume responsibility for the operation of the trust and the trust fund can be vested absolutely in him.1 This is the name of the trust referred to in the Settlement Agreement discussed at [4] of thisjudgment. The distinction between the Buss Revocable Trust referred to in the plaintiff‟s claims and the Wayne Buss Trust is not material to this judgment.[7] The plaintiff proposes that the Vesting Day be defined as the earlier of the day on which William attains the age of 30 or the day on which he dies. Thedefendants consider that the first part of the definition should be the day on whichWilliam attains the age of 25.[8] In considerable measure counsel for the parties left determination of this question to the judgment of the Court. There is no evidence that William has any physical or mental incapacity. The evidence is, in essence, that he is a normal 5 year old boy. In my judgment the appropriate age is 25. It is on average an age of reasonable maturity. It is an age when a person, on average, should be capable oftaking control of his or her own financial affairs. Section 12 of the Minors‟Contracts Act 1969 provides, in effect, that in the absence of any provision or Court orders to the contrary, a sum held in trust for a minor is to be paid to the minor upon his or her attaining the age of 18 years or earlier marrying. A person in New Zealand can execute a will and marry at 18, or earlier with Court approval. Other significant events can or do happen, by law, at 18 years of age. Seven years beyond that age is a reasonable period of time.[9] I consequently direct that the deed contain the following provision, all of which I understand to have been agreed other than the precise age:„Vesting Day‟ means the earlier of:(a) The day on which William attains the age of 25; or(b) The day on which William dies,Provided that the Trustees may with the written consent of William once he has attained the age of 20 years, amend the Vesting Day to any date from the day on which William attains the age of 20 years to the date the Trust Period ends.[10] The second question concerns disposition of the trust fund if William dies before reaching the age of 25 and is not survived by children of his own. Thedefendants submit that this is a question to be dealt with as one relating toappropriate terms of the trust deed for approval by the Court. The defendants furthersubmit that in these circumstances the trust fund should be held in trust, and in effectdevolve upon, the trustees of the Buss Revocable Trust2 and any other person nominated by William by deed after William attains the age of 20 years.[11] The defendants submit that, if William dies without issue before age 25, itwould be appropriate for the balance of the trust fund to pass to the trustees of theBuss Revocable Trust because it is the residuary beneficiary pursuant to the will ofWayne Buss. If the fund passes to the Buss Revocable Trust it will then bedistributed in accordance with that trust equally between the survivors of WayneBuss‟ two sisters, his mother and his one other child, now an adult. Mr Willoughbysubmitted that this would be in accordance with the provisions of the FamilyProtection Act which are designed to provide maintenance and support for, amongstothers, children of deceased people who have failed, for whatever reason, to makeadequate provision. Mr Willoughby submitted reasonably enough that, if Williamdies before he attains the age of 25 years, whatever remains in the trust fund at thatdate will no longer be necessary for his maintenance and support. He submitted that,subject to provision for any children of William who may survive him, it would beappropriate in terms of the primary objectives of the Family Protection Act, coupledwith the intentions of Wayne Buss as made clear by his will, that the balance of thetrust fund be disposed of in accordance with the will. In terms of the draft provisionpresented by Mr Willoughby this would also be subject to disposition to any personnominated by William by deed made on or after the age of 20.[12] For William, Mr Harte submitted, firstly, that it is not open to the defendantsto raise this point because it is contrary to the terms of the Settlement Agreement.Clause 3 d., so far as material, provides as follows:Payment To Trust For The Benefit Of William. Conditional on Court approval of this Settlement Agreement with regard to William‟s claims, theExecutors agree to pay NZ$780,000 and to distribute the real property located at 262 Ngunguru Road, Glenbervie, free and clear of any GST tax attributable to this distribution, to the trustee(s) ("William‟s Trustee(s)"), of a trust for the benefit of William ("William‟s Trust") using standard discretionary trust terms, the trustees to be Amy Bankoff, Mary Bankoff, and an attorney from Webb Ross, the other terms of which shall be subject to approval by the Court. 2 In the body of the submissions for the defendants the reference is to the Buss Revocable Trust as theresiduary beneficiary of the will of Wayne Buss. However, in a draft clause redefining "DiscretionaryBeneficiaries", the reference is to the Wayne Buss Trust. Because of the decision I have reached onthis point this difference does not give rise to any relevant issue.[13] In my judgment the agreement reached by the parties recorded in clause 3 d., with the provisions I have quoted read as they must be in the context of the Settlement Agreement as a whole, preclude the defendants from seeking theprovision that is now sought. The provision made in the Settlement Agreement is anabsolute transfer for a single beneficiary, William. The provision sought by thedefendants would amount to an alteration of the terms of a settlement alreadyreached. The terms of settlement cannot be altered at the behest of one party. ThisCourt is required to approve the terms and conditions of the settlement in theinterests of William, but that is not a means by which the provision sought by thedefendants can be introduced into the trust deed.[14] For these reasons I do not accept the submissions of the defendants.[15] The relevant provision in the trust deed proposed for the plaintiff is as follows:„Discretionary Beneficiaries‟ means:a William andb any child or children of William andc if William has died without issue then it means the beneficiaries of his estate either pursuant to his last will or if he has died intestate then the beneficiaries of his estate in accordance with the intestacy rules in the Administration Act 1969 andd any other person nominated by William by deed after William reaches the age of 20 yearsThe contentious part of this provision, so far as the defendants are concerned, isparagraph c. The defendants‟ proposal was to replace this with the provision infavour of the trustees of the Buss Revocable Trust (or the Wayne Buss Trust). Iconsider that the provision as drafted by the plaintiff‟s solicitors, set out above, isentirely appropriate given my conclusion as to the effect of the SettlementAgreement.Result[16] This Court approves the terms and conditions of the Settlement Agreement dated October 11, 2010, a copy of which is "Annexure A" to the affidavit of Stewart Owen Spicer sworn on 1 December 2010.[17] Except to the extent provided in this judgment, the terms of the deed of trustfor the William Buss Trust, as contained in "Annexure B" to the affidavit of Stewart Owen Spicer, are approved.________________________________ Peter Woodhouse J