MCLAREN v MCLAREN [2017] NZHC 161

MCLAREN v MCLAREN [2017] NZHC 161

The appointor in this factual matrix owed a limited set of fiduciary obligations (to act in good faith, with diligence, and to avoid improper, irrelevant or irrational considerations) when removing beneficiaries; Bruce breached those duties by removing his parents as discretionary beneficiaries, so the parents must be reinstated; the appointments of additional trustees were properly made and will not be set aside; other remedies sought were dismissed.

Citation
[2017] NZHC 161
Parties
Plaintiff (trustee and Beneficiary of the BDM Trust); First Defendant (trustee of the BDM Trust): David Muir McLaren; Plaintiff (trustee and Beneficiary of the BDM Trust); First Defendant (trustee of the BDM Trust): Lenore Mary McLaren; First Defendant (trustee of the BDM Trust); Second Defendant (appointor of the BDM Trust): Bruce Muir McLaren; First Defendant (trustee of the BDM Trust): Mark Philip Brown; First Defendant (trustee of the BDM Trust): Timothy Howard Alexander Spear; First Defendant (trustee of the BDM Trust): Buxton Nominees 2015 Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
15 February 2017
Procedural Posture
Trust Dispute Under the Trustee Act 1956 Concerning a Family Discretionary Inter Vivos Trust (bdm Trust) / High Court Judgment (reserved Judgment Delivered 15 February 2017)
Outcome
Third cause of action (challenge to removal of parents as beneficiaries) upheld in part; parents reinstated as beneficiaries of the BDM Trust. All other causes of action dismissed. No orders interfering with the appointment of the new trustees.
Legal Topics
Appointor Powers, Fiduciary Duties, Discretionary Beneficiaries, Removal and Appointment of Trustees, Setting Aside Trust, Trustee Act S51, Trust Governance, Costs
Trusts Equity Family Law Property Law Civil Procedure Appointor Powers Fiduciary Duties Discretionary Beneficiaries +5 more

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Parties

David Muir McLaren

Plaintiff (trustee and Beneficiary of the BDM Trust); First Defendant (trustee of the BDM Trust)

Lenore Mary McLaren

Plaintiff (trustee and Beneficiary of the BDM Trust); First Defendant (trustee of the BDM Trust)

Bruce Muir McLaren

First Defendant (trustee of the BDM Trust); Second Defendant (appointor of the BDM Trust)

Mark Philip Brown

First Defendant (trustee of the BDM Trust)

Timothy Howard Alexander Spear

First Defendant (trustee of the BDM Trust)

Buxton Nominees 2015 Limited

First Defendant (trustee of the BDM Trust)

Procedural Posture

Trust Dispute Under the Trustee Act 1956 Concerning a Family Discretionary Inter Vivos Trust (bdm Trust) / High Court Judgment (reserved Judgment Delivered 15 February 2017)

Legal Issues

  1. 1 Whether an appointor owes fiduciary obligations to beneficiaries when exercising a power to remove beneficiaries
  2. 2 Whether the exercise by the appointor of the power to remove the parents as beneficiaries breached any fiduciary duties
  3. 3 Whether appointment of additional trustees by the appointor was valid

Ratio Decidendi

The appointor in this factual matrix owed a limited set of fiduciary obligations (to act in good faith, with diligence, and to avoid improper, irrelevant or irrational considerations) when removing beneficiaries; Bruce breached those duties by removing his parents as discretionary beneficiaries, so the parents must be reinstated; the appointments of additional trustees were properly made and will not be set aside; other remedies sought were dismissed.

Court Disposition

Third cause of action (challenge to removal of parents as beneficiaries) upheld in part; parents reinstated as beneficiaries of the BDM Trust. All other causes of action dismissed. No orders interfering with the appointment of the new trustees.

Orders

  • David Muir McLaren and Lenore Mary McLaren are reinstated as discretionary beneficiaries of the BDM Trust.
  • No order is made to set aside or reverse the appointments of Timothy Howard Alexander Spear and Buxton Nominees 2015 Limited as trustees; those appointments stand.