DARYN TURVEY v DAVID VANCE [2022] NZHC 1167

DARYN TURVEY v DAVID VANCE [2022] NZHC 1167 [3 June 2022]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2021-485-586[2022] NZHC 1167UNDER the Trusts Act 2019IN THE MATTER OF the F B Turvey Family Trust and theP Turvey Family TrustBETWEEN DARYN TURVEYApplicantAND DAVID VANCERespondentCIV-2022-485-041UNDER the Trusts Act 2019IN THE MATTER OF an application for the directions in respectof the FB Turvey Family Trust and the PTurvey Family TrustBETWEEN DAVID VANCEApplicantAND PATRICIA TURVEY, DARYN TURVEY,GLENN TURVEY and MICHELEHALCROWRespondentsHearing: 16 May 2022Appearances: Applicant in proceeding 586 D Turvey in PersonJ P Bell-Connell for Mr Vance the Applicant in proceeding 41G J Woollaston for Interested Party Patricia TurveyJudgment: 3 June 2022JUDGMENT OF GENDALL JSolicitors:Dentons Kensington Swan, WellingtonDewhirst Law, Palmerston NorthTable of ContentsIntroduction [1]Background facts [6]The 2020 Judgment [15]The present applications [19]"Blessing" application [22]Preliminary issue — rectification of an error in documents executed by thesettlors 12Mr Vance's proposed distribution 14Adjustments to distributions to each beneficiary 17Patricia's $200,000 adjustment for failure to maintain the Property 18Patricia's failure to pay rates on the Property 20Patricia's and Glenn's use of the time share 20Patricia's receipt of rental income 20Daryn's maintenance of and improvements to the Property 22Daryn's allegations of abuse 23Daryn's loan of $65,050 to the trusts relating to the mortgage over the property 24Daryn Turvey — a notional settlor? 26Conclusion [102]Daryn's s 126 Applicaton 29Costs 29Introduction[1] These proceedings involve the Turvey family, members of whom have beenengaged in bitter and acrimonious litigation over some time. This judgment relates totwo applications:(a) The first is an application in proceeding CIV-2022-485-000041(proceeding 41) by David Vance (Mr Vance) under s 133 of theTrusts Act 2019 (the Act) brought by him as the recently court-appointed trustee of two Turvey family trusts (the Trusts) which forsome time have held family assets. Under this application, Mr Vanceseeks a "blessing" for his proposed distribution of those remaining trustassets. This application, for the purposes of making that distribution,also includes a further application to rectify an earlier error indocuments executed by the settlors of the Trusts.(b) The second is an application in proceeding CIV-2021-405-586(proceeding 586) bought by the applicant, Daryn Turvey (Daryn),pursuant to s 126 of the Act. This application seeks an order thatMr Vance make final distributions from the Trusts equally to namedbeneficiaries being Daryn, his brother and sister (with several minorexceptions), in accordance with what he says were earlier orders madeby this Court on 16 September 2020.[2] The earlier 16 September 2020 orders were contained in a reserved judgmentof Dobson J (the 2020 Judgment) which followed a strongly contested proceedinginvolving Daryn and his mother, Patricia Turvey (Patricia).1 This proceeding relatedin part to the Trusts which are the subject of the present proceeding.[3] In that judgment, Dobson J, noted that intra-family divisions involving theTurvey family and in particular Patricia and Daryn were such that their claims were"diametrically opposed".2 Dobson J noted in particular:1 Turvey v Turvey [2020] NZHC 2403 [2020 Judgment].2 At [2].[7] Regrettably, these two proceedings are only a part of wider litigiousstrategies that have arisen out of divisions within the Turvey family [8] In their respective affidavits, [Patricia] and Daryn make extensiveallegations of wrongdoing against the other [26] There has been a long-standing and irreparable breakdown in theworking relationship between [Patricia] and Daryn in their capacity as trusteesof the mirror trusts [31] I do not consider these competing criticisms raised by each of thetrustees [Patricia and Daryn] against the other can possibly be resolveddefinitively in favour of one or other of them to an extent that would justifyone of them remaining as a trustee of the mirror trusts, subsequent to theexclusion of the other. Governance of the mirror trusts requires that they beput in the hands of a competent trustee entirely independent of both factions,with clear directions to resolve the future of the only asset, and receive anoutcome. This seems likely to involve the winding up of the trusts anddistributions by the trustee in proportions reasonably decided by it, reflectingthe terms of the trust deeds and conduct relevant to the value of the asset.[4] As a result, Dobson J made orders which began the process for Mr Vance to beappointed as trustee of the Trusts and the winding up of those trusts. The winding upproposals are the subject of the present s 133 application before this court.[5] Dobson J no doubt made those various orders relating to the Trusts in the hopethey would achieve some resolution of the long and bitter fight between the Turveyfamily members. Regrettably, that has not proved to be the case. Instead it has resultedin the present applications.Background facts[6] The Trusts in this proceeding are known as the FB Turvey Family Trust andthe P Turvey Family Trust. These are mirror trusts formed in May 1989 at theinstigation of Patricia and her late husband Frances Bernard Turvey (Frank). Patriciaand Frank have three children, Daryn, Glenn Turvey (Glenn),3 and Michele Halcrow(Michele).43 The third named respondent in proceeding 41.4 The fourth named respondent in proceeding 41.[7] So far as the Trusts are concerned, Frank was the settlor (but not a beneficiary)of the FB Turvey Family Trust and Patricia was one of the beneficiaries of this trust.The second trust, the P Turvey Family Trust, mirrored this — Patricia was the settlor(but not a beneficiary) of this trust and Frank was one of its beneficiaries. Importantly,neither Frank nor Patricia was a beneficiary of the specific trust of which they werethe settlor. Other beneficiaries of each trust included Frank and Patricia's children andgrandchildren.[8] The sole relevant remaining asset of the Trusts represents the proceeds of saleof a property at 227 Marine Drive, Lowry Bay, Wellington (the Property) which hadbeen owned by the Trusts until its recent sale at a price of $1,410,000. Formerly, thiswas the family home of Frank and Patricia.[9] It does not appear that any formal memorandum of Frank or Patricia as to theirwishes as settlors of the Trusts, or any similar document, is in existence. As I havenoted, Frank and Patricia initially were trustees of their respective trusts. FollowingFrank's death late in 2007, Daryn was appointed a co-trustee of the Trusts alongsidePatricia.[10] By at least the time of Frank's death in 2007, relationships between membersof the Turvey family began to break down. It appears that since that time, sadly theyhave continued to deteriorate. Daryn with his family was apparently living withPatricia at the Property for a period until in 2012, Patricia obtained from the FamilyCourt an occupation order pursuant to which she was entitled to occupy the Propertyto the exclusion of Daryn.[11] It seems Patricia later vacated the Property in 2018. It was tenanted from thatpoint onwards until August 2021.[12] As I have noted, Frank and Patricia set up the Trusts as mirror trusts inMay 1989. So far as some discussion of their general purposes in setting up the Trustsis concerned, Daryn and Patricia, the essential protagonists in this litigation, generallyhave differing views:(a) Daryn's view is that the Trusts were established to provide for the threechildren (Daryn, Glenn and Michele) alone, with all assets ultimatelyto pass to them as primary beneficiaries. Although Daryn does appearto acknowledge that his mother Patricia as one of the settlors intendedto live in the Property for a time, he maintains it was not intended thatshe or Frank would benefit in any other way, including on the windingup of the Trusts themselves.(b) In contrast, Patricia's view is that the Trusts were intended to benefit allthe named beneficiaries, but in particular to provide for she and Frankduring their individual lives, even though they may not reside at theProperty.[13] Without question it appears that relationships between members of the Turveyfamily remain bitter and extremely fractious.[14] It appears from all the evidence that Mr Vance, as the trustee faced with thisdifficult situation, has made considerable efforts to his credit to reach a fair andreasonable solution for winding up the Trusts. This has met however with strongopposition from both Daryn and Patricia particularly. Hence Mr Vance's s 133application. In all the circumstances here in my view there is no question but that it isproperly brought.The 2020 Judgment[15] Relevant proceedings relating to present matters were bought by Patriciaagainst Daryn in this Court. These, as I note, produced the 2020 Judgment. In thoseproceedings Patricia had sought:(a) orders removing Daryn as trustee and executor of Frank's estate andappointing her to that position; and(b) orders removing Daryn at the time as a co-trustee (with her) of theTrusts.[16] Dobson J in the 2020 judgment refused to remove Daryn as trustee andexecutor of Frank's estate, but he did go on to replace both Patricia and Daryn astrustees of the Trusts.5 I have outlined his explanation for removing them both astrustees at [3] above.[17] As a replacement, ultimately this Court at Daryn's suggestion appointedMr Vance as the sole trustee of the Trusts.[18] In that judgment, Dobson J went on to make additional orders setting out stepsfor the new trustee to take regarding the Property as principal asset of the Trusts, itssale and distribution of the proceeds. These orders relevantly provided that:6(c) the property at 227 Marine Drive, Lowry Bay is to be transferred intothe name of the new trustee;(d) the new trustee is to determine whether the property should berenovated prior to being marketed and is authorised to secureborrowings against the property for that purpose and proceed with itssale;(e) the new trustee is to review the management of the trusts by thecurrent trustees and form a view on any potential claims against thetrustees for actions by them or on their behalf that have adverselyaffected the value of the trust property, or any letting of the propertythat has resulted in income being earned that has not been committedto maintaining the property or paying outgoings on it;(f) in the event that the new trustee concludes that there has been suchconduct adversely affecting the value of the trust property, or incomenot accounted for, then the new trustee is to take that matter or thosematters into account in arriving at its decision on distribution, asprovided for in (g) below;(g) once the net proceeds of sale are ascertained, the new trustee is todetermine the respective entitlements of the beneficiaries to portionsof that amount, in terms of the trust deeds, and in that analysis thetrustee is to have regard to the amounts quantified as the responsibilityof any trustee or beneficiary under (f) above;(h) there is no order as to costs.5 2020 Judgment, above n 1, at [32].6 At [42].The present applications[19] Before me all parties accepted that the present applications under s 133 ands 126 of the Act are usefully heard together.[20] Daryn's s 126 application (filed on 19 October 2021) sought orders requiringMr Vance to "comply with Court orders dated 16 September 2020 and makedistributions equally to the beneficiaries described in the trust deed" subject to certainadjustments which were not particularised.[21] Mr Vance's s 133 "blessing" application (filed early in 2022) followed this. Itis appropriate to consider this application first, as in effect it addresses matters to beconsidered under the s 126 application."Blessing" application[22] Sections 133 and 134 of the Act provide that;133 Trustee may apply to Court for directions(1) A trustee may apply to the Court for directions about—(a) the trust property; or(b) the exercise of any power or performance of any function by thetrustee.(2) The application must be served, in accordance with the rules of court,on each person interested in the application or any of them as the courtthinks fit.(3) On an application under this section, the court may give any directionit thinks fit.(4) This section does not restrict the availability of alternativeproceedings within the court's jurisdiction, including a declarationinterpreting the terms of the trust.134 Protection of trustee while acting under direction of Court(1) A trustee acting under any direction of the court must be treated ashaving discharged the trustee's duties as a trustee in relation to thedirection, even though the order giving the direction is later declaredinvalid, overruled, set aside, or found to be otherwise ineffective.(2) However, subsection (1) does not indemnify a trustee for any act donein accordance with the direction of the court if the trustee has acted inbad faith in—(a) getting the direction; or(b) acquiescing in the court making the order or giving the direction.[23] New Zealand courts have recently clarified the jurisdiction available in relationto applications by trustees for directions.7 In Public Trustee v Cooper, Hart J adoptedthe fourfold analysis of trustee direction jurisdiction set out by Robert Walker J (as hethen was) in an unreported decision.8 Lord Walker (as he is now known) describedfour types of applications for directions, summarised as follows:(a) First, an application by trustees for guidance as to whether a proposedaction was within their powers. This will ultimately be a question ofinterpretation of the trust instrument or a statute or both.(b) Second, an application for directions on whether a specific proposedaction is a proper exercise of a power. In these situations, the trusteesare essentially seeking the "blessing" of the Court for an action thatthey have resolved is within their powers but is particularlymomentous. In a case like that, there is no general surrender ofdiscretion.(c) Third, an application by trustees where they surrender their discretionto the Court, and there is good reason for the Court to intervene such asthe trustees being deadlocked, or the trustees being disabled by aconflict of interest.(d) Fourth, an application where the trustees have taken action that is beingchallenged as outside their powers or an improper exercise of theirpowers.7 Chambers v S R Hamilton Corporate Trustee Ltd [2017] NZCA 131, [2017] NZAR 882 at [32];and New Zealand Māori Council v Foulkes [2014] NZHC 1777, [2015] NZAR 1441 at [46].8 Public Trustee v Cooper [2001] WTLR 901 (Ch D) at 922–924.[24] Turning now to the proper approach of the Court to "blessing" applications likethe present, generally these fall within category 2 above. The judgment inPublic Trustee v Cooper provided a three-step framework for determining"category 2" applications (commonly referred to as "blessing" or "sanction"applications) as follows:9(a) First, has the trustee in fact formed the opinion which the Court is askedto bless?(b) Second, is the opinion formed one at which a reasonable body oftrustees, properly instructed as to the proper meaning of any relevantprovisions of the trust deed, could properly have arrived?(c) Third, is the opinion vitiated by any conflict of interest under whichany of the trustees might have been labouring?[25] New Zealand courts have adopted this framework in a number of cases, andthis Court has confirmed without question its jurisdiction to consider and make"blessing" directions in proceedings like the present.10 Further guiding principles havebeen identified in other overseas jurisdictions, experienced in "blessing" applications,which also apply here:(a) The Court is not a rubber stamp and it must be satisfied that the trusteesare indeed justified in proceeding in accordance with their decision.But the Court should not place insurmountable hurdles in the way oftrustees.11(b) The Court may disagree with a trustee's decision, but if it is within therange of reasonable decisions the trustee could make, the Court shouldnot hesitate to bless it.129 At 925, as summarised by Fitzgerald J in Re Honoris Trust [2017] NZHC 2957, [2018] 3 NZLR160 at [56].10 Re Honoris Trust, above n 9; Miller v Cregten [2020] NZHC 1262; and Church Property Trusteesv Carrell [2021] NZHC 1130.11 Cotton v Brudenell-Bruce [2014] EWCA Civ 1312 at [86].12 Re F [2013] GLR 388 (CA) at [11].(c) The lengths to which the Court must go in examining the process bywhich the trustee arrived at the decision must depend upon theparticular decision. In some cases, the decision may be a difficult anddoubtful one, requiring fine judgment in the face of competingconsiderations, in others it may be obvious.13(d) Deciding whether the decision is one at which a reasonable trusteeproperly could have arrived requires "scrupulous consideration of theevidence" but does not "require second guessing or a line by line microanalysis" by the Court.14(e) The Court will sometimes engage in a dialogue with the trustees as aresult of which the trustee's decision is modified; but, properlyanalysed, that is no more than a process by which the Court identifiesthe circumstances in which it will be satisfied that the proposed exerciseof the power is within the proper range of such an exercise.15[26] One caveat is required in the present case. The authors of Garrow and KellyLaw of Trusts and Trustees in summarising the principles applying to s 133applications outline this as follows:16(k) On a directions application the Court will not approve a capitaldistribution, which is clearly contrary to the provisions of the empoweringdocument.Preliminary issue — rectification of an error in documents executed by thesettlors[27] A preliminary and fundamental issue raised by Mr Vance in his applicationhere arises from documents entered into by Frank and Patricia in 2001. I turn toaddress this preliminary issue first.13 Kay v HSBC International Trustee Ltd [2015] JCA 109.14 Cotton v Brudenell-Bruce, above n 11, at [12]; and A (As Trustee of the Trust) v R1 Royal Courtof Guernsey 25/2016, 22 April 2016 at [22].15 Re F, above n 12, at [11].16 Chris Kelly and Greg Kelly Garrow and Kelly Law of Trusts and Trustees (8th ed, LexisNexis,Wellington, 2022) at [24.49].[28] On the face of it, these documents may disqualify Patricia from benefittingfrom the FB Turvey Family Trust of which she is a beneficiary. As outlined above,she is not entitled to benefit from the P Turvey Family Trust as she is the settlor of thistrust and not a named beneficiary. The overall consequence of all this might precludePatricia here from receiving any distribution from either of the Trusts.[29] On 16 February 2001, Frank and Patricia each entered into Deeds ofAcknowledgement of Debt relating to debts of $16,000 they said were owedrespectively by the P Turvey Family Trust to Frank and the FB Turvey Family Trustto Patricia. At the same time, each of them entered into Deeds of Gift forgiving all ofthese debts.[30] In a normal situation that might be of little consequence. But in the presentcase the trust deeds for each of the Trusts contained what must be seen as somewhatunusual provisions, particularly at cl 1.1(D)(iii), expressly excluding from the classdefinition of "Discretionary Beneficiaries" anyone who is a "notional settlor".17[31] Both trust deeds went on to define the concept of a "notional settlor" asfollows:18 if at any time the Trustees shall accept an addition or accretion to the capitalof the Trust Fund from any person other than the settlor, and that transactionconstituted in whole or in part a gift in terms of the Estate and Gift Duties Act1968, then for the purposes of this Deed that donor shall thenceforth bedeemed to be a "notional settlor."[32] It appears that due to the Deeds of Gift for $16,000 which Frank and Patriciarespectively entered into on 16 February 2001, Frank became a "notional settlor" ofthe P Turvey Family Trust and Patricia became a "notional settlor" of the FB TurveyFamily Trust.[33] Under the terms of the trust deeds this would at first glance preclude Patriciafrom receiving any distribution at all from either trust. In his evidence before meMr Vance advised that he had concluded that the documents in question (the Deeds of17 Also excluded from this definition are a range of other people, including the actual settlor of therespective trusts.18 At cl 1.3(b).Acknowledgement of Debt and Gift) were incorrectly drafted. In his view, theintention was for Patricia to forgive a loan to the P Turvey Family Trust and for Frankto forgive a loan to the FB Turvey Family Trust. This did not occur under either deed.[34] Patricia, in her evidence, records that it was not her or Frank's intention todisqualify themselves from benefitting from the other's trust, and in signing thesedeeds they had only intended to increase the capital of their respective trusts. Patriciasupports Mr Vance's approach for rectification of these documents as a result. As Iunderstand it, neither Daryn, Michele nor Glenn has either opposed the rectificationor provided any evidence or submissions relating to it.[35] This Court has jurisdiction to rectify a wide range of documents in line withthe true intention of the parties objectively established.19 In all the circumstances hereI am satisfied Frank and Patricia as settlors made a common mistake such that the highevidential threshold for rectification is met. In my view, rectification is required hereto counteract "the inherent probability that the written instrument truly represents theparties' intention".20[36] Mr Vance's rectification application succeeds. The rectification order soughthere is made.[37] I note there is a further similar issue in this respect regarding Daryn's position,which I address below.Mr Vance's proposed distribution[38] The final distribution of the Trust's assets which Mr Vance proposes, and forwhich he seeks this Court's direction under s 133, effectively involves twodistributions:(a) Distribution 1, which deals with the majority of the funds of the Trusts,amounting to almost $1.2 million dollars;19 See for an early example Scott v Frank F Scott (London) Ltd [1940] Ch 794 (CA).20 Thomas Bates and Son Ltd v Wyndham's (Lingerie) Ltd [1981] 1 All ER 1077 (CA) at 1090.(b) Distribution 2, which deals with the balance of the trust funds (if any)which I understand amount to something in the region of about$100,000.[39] Mr Vance deposed it would be unlikely any of the Distribution 2 monies wouldbe available for the beneficiaries, as it had been earmarked for outstanding liabilitiesof the Trusts. As matters proceeded before me it appeared likely this would be thecase. This left for principal consideration here the almost $1.2 million majority of thetrust funds addressed under Distribution 1.[40] Turning to this, the net result of Mr Vance's approach under Distribution 1 wasthat payments by way of distributions would be made to Patricia and each of her threechildren (as the immediate next generation beneficiaries) as follows:(a) Patricia — $461,135.20(b) Daryn — $290,654.93(c) Glenn — $222,604.93(d) Michele — $225,604.93[41] In proposing a distribution along these lines, Mr Vance acknowledged first thatthe class of Discretionary Beneficiaries under the Trusts was indeed wider thanPatricia, Daryn, Michele and Glenn. It also included members of their immediatefamilies, such as Patricia and Frank's grandchildren along with others. He notedhowever that cl 3(c) of each of the trust deeds conferred a complete discretion on thetrustee and permitted Mr Vance here to include or exclude other parties from anydistribution as he saw fit. Mr Vance says his view was that only those immediatefamily members listed as Primary Beneficiaries in the trust deeds (being essentiallyFrank and Patricia and their children) ought to benefit from the winding up of eachtrust. This he said was consistent with the overarching intention Frank and Patriciahad that on a final distribution the trust funds would be split between those childrenonly, or, if they were deceased, to their respective children.[42] Next, Mr Vance turned to the issue of whether equal distributions between thebeneficiaries should be engaged here. This was notwithstanding the fact that equalitywas not specifically required as payments at this time were discretionary distributionsmade before the respective Dates of Distribution under the trust deeds.[43] On this aspect, Mr Vance further commented that in the 2020 Judgment,Dobson J specifically stated that distributions made by the new trustee were to be "inproportions reasonably decided by [him]".21[44] As I have noted, Daryn's proposed approach was simply for equal distributionsto be made to the beneficiaries in question from each of the two trusts. Mr Vanceconcluded, however, that to do this would not be consistent with the original spirit andintent of Frank and Patricia in settling the mirror trusts (as Patricia would receivenothing from the P Turvey Family Trust and only a one quarter share from the FBTurvey Family Trust). This would result, he said, in an inequitable outcome for her.[45] Instead, Mr Vance determined that all of the funds attributed to theFB Turvey Family Trust should be distributed to Patricia (subject to adjustments Ioutline below).22 Overall, to avoid what Mr Vance saw as a real inequity relating toPatricia, and something certainly not intended by Patricia and Frank when they settledthe Trusts, he reached the conclusion that it would be more appropriate that he exercisehis discretion to:(a) distribute all funds attributable to the FB Turvey Family Trust toPatricia as a named discretionary beneficiary of that trust (subject toadjustments I will outline below); and21 2020 Judgment, above n 1, at [31].22 Given that Patricia is not a beneficiary nor entitled to benefit from the P Turvey Family Trust, ifthe assets of the FB Turvey Family Trust were to be distributed equally then she would receiveonly 25 per cent of those funds. The result would be that Patricia would receive a potential grossdistribution of only about $150,000 as part of this Distribution 1 and from this, because ofproposed adjustments Mr Vance intends to make to Patricia's distribution (which total$215,679.60). Patricia would receive nothing by way of distribution and in fact she would owe adebt to the Trusts of some $65,679.60. This Mr Vance felt would account for what he saw asPatricia's failures as a trustee but would fail to account for her reasonable expectation that shewould benefit from occupation of the Property which was essentially the family home during herlifetime, with something similar to a life interest in that Property.(b) distribute the funds attributed to the P Turvey Family Trust to Daryn,Michele and Glenn in equal shares (again, subject to some adjustmentsI outline below).[46] In my view, that approach taken by Mr Vance broadly speaking is justified onthe evidence before the Court, it is a reasonable one, and it achieves a sensible andappropriate outcome in all the circumstances here. It is accordingly one which theCourt should "bless".Adjustments to distributions to each beneficiary[47] In his proposed Distribution 1, Mr Vance intends to make a number ofadjustments to the amounts payable to some of the discretionary beneficiaries. Heoutlines these as follows:(a) Patricia's distribution is to be reduced by $200,000 to recognise herfailure to maintain the Property/account for rental income that shereceived;(b) Patricia's distribution is to be reduced by $12,679.60 to recognise herfailure to pay rates on the Property;(c) Patricia's and Glenn's distributions are each to be reduced by $3,000 torecognise their exclusive use of a time share owned by the Trusts; and(d) Daryn's distribution is to be increased by $65,050 to recognise a loanhe made to the Trusts in 2002 not yet repaid.[48] Before I turn to deal with each of these proposed adjustments, it is useful tonote too that in his final decision on Distribution 1 payments to the discretionarybeneficiaries, Mr Vance declined to make any adjustments for the following matters:(a) Patricia's specific receipt of rental income from time to time relating tothe Property;(b) Daryn's alleged maintenance carried out on and improvements to theProperty; and(c) Daryn's allegations of physical, mental and emotional abuse by Patriciaand Glenn against him, his family and Frank.[49] I now turn to consider each of these adjustments in turn.Patricia's $200,000 adjustment for failure to maintain the Property[50] The $200,000 adjustment to Patricia's share Mr Vance proposes is in my viewspecifically in line with comments made by Dobson J in the 2020 Judgment where hisHonour directly contemplated adjustments being made for conduct that"adversely affected the value of the trust property".23[51] Mr Vance contends there is no real dispute here that the Property was notadequately maintained and by mid-2021 it was in a state of significant disrepair asevidenced by a 9 May 2021 builder's report which he had obtained. Neither, he says,can it be questioned that this lack of maintenance indeed contributed significantly tothe lower price for which the Property was sold.[52] On this last aspect, there is before the Court a market valuation report dated6 September 2021 from Truebridge Partners, registered valuers. This indicated theProperty if sold at the time "as is" might have a value of $1.7 million, whereas, if itwas sold with timely maintenance undertaken, its sale value was assessed at $1.9million.[53] The difference of $200,000 represented by this lack of maintenance issueMr Vance contends is clearly due to Patricia's actions here. He maintains too he wasentitled to rely on the expertise of these registered valuers to identify the extent of thismaintenance adjustment at $200,000.23 2020 Judgment, above n 1, at [42].[54] Patricia denies she was responsible for maintaining the Property at all. This,she says, is because maintenance costs were not specifically provided for in theOccupation Order made in her favour by the Family Court pursuant to which sheoccupied the Property between 2012 and 2018. She maintains that, as the extent ofher rights and obligations attaching to her use and occupation of the home weredefined in this Occupation Order, effectively an estoppel arises with respect to what isnow the proposed attribution of such maintenance costs to her. Her contention is thatshe was entitled to use and deal with the Property throughout as she thought fit, andin any event, at a bare minimum, that consideration is relevant to her estoppel claimand ought to have been taken into account by Mr Vance in challenging the $200,000adjustment from her entitlement.[55] So far as Daryn's position is concerned, he agrees that Patricia was responsiblefor maintaining the Property as Mr Vance says because the maintenance obligationarose from her position as a trustee of the Trusts. He suggests however that the adverseeffect on the value of the Property ought to be quantified at a far higher figure ofbetween $300,000 and $500,000, as opposed to the figure Mr Vance settled upon of$200,000. As I understand his argument, Daryn refers to the Truebridge Partners 6September 2021 valuation at either $1.7 million with the Property sold as is, or $1.9million, with maintenance repairs undertaken. Daryn points out the Property wasfinally sold for approximately $1.4 million, which he suggests bears out his figures.[56] I do not accept this argument. Taking into account the builder's report and theTruebridge Partners valuation, both of which he obtained, I am satisfied Mr Vance wasentitled in relying on these to reach his conclusion that the expert valuer's differenceof $200,000 alone should represent the quantum of the adjustment to Patricia'sdistribution. Accordingly, I reject Daryn's claim as to a higher adjustment than the$200,000 figure proposed here.[57] In my view, this amount is further supported by evidence before the Court asto Patricia's receipt of certain amounts of rental income from the Property (and theapparent obfuscation over the whereabouts of other amounts), some of which shouldhave been applied towards maintenance required during the term of the tenancy. As Isee it, these aspects override any possible argument which might assist Patricia'sposition here. I conclude that this $200,000 adjustment to Patricia's position here is adecision Mr Vance has taken which on the evidence is one a reasonable trustee couldproperly have arrived at. Certainly, it is within the "range of reasonable decisions" atrustee could make.Patricia's failure to pay rates on the Property[58] Mr Vance has calculated outstanding unpaid rates on Patricia's part at a figureof $12,679.60. As specifically recorded in the Occupation Order in her favour, Patriciahad an obligation to pay rates for the Property. Mr Vance understands there is no realdispute as to this liability deduction to be made on Patricia's share.[59] I agree. The $12,679.60 adjustment is to be made.Patricia's and Glenn's use of the time share[60] Mr Vance also proposes to make an adjustment to recognise Patricia's andGlenn's exclusive use of a time share owned by the Trusts in Hobsonville, Auckland,from about 2014. Daryn says that Patricia and Glenn had exclusive rights to its useand he was excluded from any possible use. It seems information regarding the timeshare also may not have been fully provided here. In any case, the adjustment whichMr Vance proposes for this time share use is quantified at $3,000 which Patriciaaccepts is a relatively modest amount.[61] In all, I am satisfied a $3,000 adjustment by way of deduction from theirrespective entitlements is appropriate to recognise this benefit accruing to each ofPatricia and Glenn.Patricia's receipt of rental income[62] As I understand it, Patricia's occupation of the Property ended in around 2018when she vacated it. All parties agree the Property was tenanted for various periodsfrom that time. Between around November 2018 and July 2019, rental for the Propertywas paid to a property management company. This company paid expenses relating tothe Property and then made payments to Patricia for rates and insurance. The balanceof the funds, totalling some $10,800 as I understand it, has now been transferred toMr Vance and forms part of the trust funds available for distribution. Patricia has notaccounted for the payments she received from the property management company. Inaddition, between approximately August 2019 and August 2021, it seems rent for theproperty was paid directly to Patricia and she has not accounted to the Trusts for thesefunds.[63] Daryn's position is that deductions clearly ought to be made from Patricia'sdistribution to reflect rental income obtained by her. He suggests this amounts tosomething approximating $150,000.[64] In the 2020 Judgment the new trustee was not directed to "make" an adjustmentfor rental income received. Instead the new trustee was required to "take that matter into account".24 Mr Vance says he has done so. From the evidence before theCourt, I am satisfied this is the case. Mr Vance's conclusion as I understand it wasthat the most appropriate outcome here was not to make any adjustment for rentalincome received by Patricia largely because the intention of she and Frank when theTrusts were established was that either of them would have the right to the use of theProperty for the rest of their lives as their original family home. Broadly speaking asI understand the position, Daryn generally accepts this to be the case. Accordingly,Mr Vance appears to take the view that, as it was always open to Patricia to choose toreside elsewhere and to rent out the Property, she was entitled to receive the rentalincome from the Trusts which she did. This, he noted, was akin to the rights ofsomeone with a life interest in the Property. In my view, this approach is one areasonable trustee might adopt in all the circumstances prevailing here.[65] Mr Vance's view from the evidence seems to be that although this jointintention existed that Patricia should receive the rental income, this did not absolveher from her obligation to maintain the Property which she failed to do. Overall, incarrying out his general balancing act between all the parties here, as I understand it,Mr Vance took the view that the $200,000 maintenance adjustment was broadlyappropriate to cover both aspects.24 At [42].[66] In this respect another minor issue arose. It is not disputed between the partiesthat in addition to failing to pay certain rates for the Property, Patricia also let theinsurance cover over the house and improvements lapse. This was again in breach ofher obligations as a trustee and also failed to comply with the requirements of theOccupation Order in her favour. Nevertheless, Mr Vance, in my view quite properly,concluded for his calculations that this failure to pay insurance premiums as it turnedout did not have any bearing on the value of the Property as no events occurred thatwould have given risen to a claim had a policy been in place. The position obviouslywould have been different if any such event had occurred.Daryn's maintenance of and improvements to the Property[67] Daryn contends that he ought to be compensated for what he claims to bemaintenance of and improvements to the Property that he said he carried out at varioustimes. From the evidence before the Court, it does seem that both Patricia and Glennhave agreed that Daryn did carry out at least some work at the Property, but they sayit was poorly completed and some required remediation by external contractors.Indeed, they both contend that, if anything, work Daryn carried out largely diminishedthe value of the Property itself.[68] Evidence before the Court from Mr Vance details correspondence he had withDaryn relating to these claims. It includes requests for information detailing thesealleged contributions towards maintenance of the Property. Mr Vance maintains hemade it clear he was prepared to make adjustments to Daryn's distribution based ondocumentary evidence recording the costs incurred and the basis on which that workhad taken place.[69] In response, Daryn it seems has filed some documents recording a number ofwhat he contends are maintenance tasks he undertook on the Property. Mr Vanceresponds however that the only supporting evidence Daryn has provided is a series ofreceipts from Resene Paints Ltd and it is not clear whether these receipts in fact relateto the Property itself.[70] Mr Vance says he has considered whether he might entertain a guess as to thevalue of work at the Property undertaken by Daryn but does not consider there issufficient material before him to enable him to do this. It is Mr Vance's furtherposition that, in any event, he cannot be satisfied that, even if Daryn did complete themaintenance work he says he has done, this was undertaken with the intention of beingreimbursed for it, rather than simply as a gratuitous act or simple performance of whatmight be seen as a "family chore".[71] Furthermore, Daryn has been unable to produce any evidence over the courseof these proceedings that might properly serve as a basis to challenge the decisionMr Vance has carefully reached here.[72] I conclude that, as Daryn has been unable to put before this Court anything ofsubstance to truly challenge Mr Vance's rejection of his maintenance andimprovement claim, there is no alternative but for this Court to accept Mr Vance'sdecision here.Daryn's allegations of abuse[73] Daryn also claims that abuse by Patricia and Glenn against him and his familyhas taken place in a number of instances. It does appear that some of these allegationsare supported in affidavit evidence before the Court from his sister Michele. All,however, are denied by Patricia.[74] Daryn maintains he ought to receive an additional $300,000 from the Trusts torecognise this abuse. It is Mr Vance's understanding that Daryn says this $300,000should be deducted prior to any division of the trust funds between the beneficiaries,as opposed to being treated as an adjustment to the distributions to be made to Patriciaand Glenn.[75] In response to these contentions, Mr Vance's position appears to be that:(a) Daryn's allegations have not been substantiated to the point whereMr Vance would consider it appropriate to make any adjustment toreflect them; and(b) In any event, conduct of this nature (even if proven, which is not thecase here) would not normally be a matter that would warrant anyadjustment to proposed distributions. Mr Vance notes that neither theallegations nor any supporting evidence were put to him at any timeprior to his making and communicating to the parties his proposeddistribution decision.[76] I am satisfied here that Mr Vance's approach on this aspect is an appropriateone. His decision to make no adjustment in Daryn's favour for the broadlyunsupported abuse allegations Daryn advances is a reasonable one in my view andunobjectionable in all the circumstances here.Daryn's loan of $65,050 to the trusts relating to the mortgage over the property[77] Daryn, apparently supported by Michele, also claims that in 2002 he personallymade a part payment towards the Trusts' mortgage over the Property for $65,000 (plusa $50 payment fee), which was intended to be a loan and not a gift to the Trusts. Darynsays this principal sum ought to be repaid to him as part of his distribution here.[78] In late October 2021, Daryn filed proceedings in the District Court againstMr Vance as trustee of the Trusts seeking repayment of the $65,050. Thoseproceedings I am told have now been discontinued on the basis the issue will be dealtwith in the context of the present application.[79] However, prior to October 2021, Daryn it seems had not taken any enforcementaction with respect to repayment of the amount he now alleges is owing. In the DistrictCourt proceedings, Mr Vance pleaded a limitation defence, and his position remainsthat any legal claim in respect of the loan is time-barred. Mr Vance argues howeverthat this does not prevent him from taking the "loan" into account in his calculationsfor present purposes.[80] Patricia in response disputes that any amount of the $65,050 should be repaid.She argues the original payment from Daryn was in fact a gift. Alternatively, if this isnot the case, then later it became a "gift" because repayment was not demanded, andit became statute-barred. Accordingly, she maintains that Daryn has inadvertentlybecome a notional settlor of the Trusts and therefore, in terms of the strict requirementsoutlined in the respective trusts deeds, he is prevented now from benefitting personallyfrom the Trusts.[81] Mr Vance disagrees with these objections advanced for Patricia because:(a) there is no real dispute that the $65,050 payment was in fact made byDaryn to the mortgagee, Guardian Assurance Ltd, and the Trusts clearlybenefitted from it;(b) there is no documentation indicating that Daryn forgave the payment(in stark contrast to the Deeds of Forgiveness of Debt entered into byFrank and Patricia discussed earlier) or that Daryn intended thepayment to be anything other than a loan; and(c) it is highly unlikely Daryn had intended to gift this relatively large sumto the Trusts because the result of doing so would be to disqualify himfrom benefitting from either Trust as a "notional settlor".[82] It is for these reasons that Mr Vance in his calculations deducted the $65,050from the total funds available prior to any distribution being made and proposed toadd this amount to Daryn's distribution at the outset.[83] In my view, there can be no doubt from the point of view of principle andfairness here that Mr Vance's proposal to increase Daryn's distribution by the $65,050amount recognised as a loan to the Trusts is unobjectionable and appropriate.Mr Vance has obviously taken advice and considered the issue carefully.[84] However, I turn to consider whether this payment at some time comprised a"gift" from Daryn and therefore he is to be regarded as a "notional settlor" of bothtrusts and consequently disqualified as a beneficiary.Daryn Turvey — a notional settlor?[85] Patricia argues that due to his $65,050 assistance to them, Daryn is a "notionalsettlor" of each of the Trusts and accordingly in terms of the exclusionary provisionsin both Deeds of Trust is "specifically excluded from being a discretionarybeneficiary". If Daryn is so characterised as a "notional beneficiary", any proposeddistribution to him personally directly conflicts with Mr Vance's obligations as trusteeunder s 24 of the Act, namely that "[a] trustee must act in accordance with the termsof the trust". It arguably follows from Patricia's contention that any proposal topersonally benefit Daryn here must be unsustainable in terms of the contractualprovisions of the relevant trust deeds which it infringes.[86] It appears to be common ground that the payments of $65,050 in question weremade by Daryn over a period of months in 2002 in reduction of the Trusts' mortgageindebtedness, and that Daryn took no real steps to seek repayment of the sum prior toOctober 2021. Both Patricia and Mr Vance have taken the position that any legal claimfrom Daryn with respect to the loan has long been time barred.[87] In this case the $65,050 loan must be seen as a bare advance repayable upondemand, with time running from the date of the advance.25 In my view all the evidenceclearly supports this. A six-year limitation period defence to any repayment claimtherefore applies pursuant to s 4 of the former Limitation Act 1950 or s 11 of theLimitation Act 2010.[88] There is no evidence before the Court that Daryn made any demand of thetrustees for repayment of the loan before October 2021. Issues as to a possiblereadvancement of the loan from time to time to re-engage a new six-year limitationperiod thereafter fall away.[89] In the trust deeds the definition of "notional settlor" is clear. As noted, cl 1.3(b)of the deeds clearly provides that "an addition or accretion to the Capital of the 'TrustFund'" that derives from a beneficiary and "that constituted in whole or in part a gift25 DFC New Zealand Limited v McKenzie HC Christchurch CP 177-92, 14 September 1992; andReynolds (as liquidator of James Development Ltd (in liq)) v Calvert [2015] NZHC 400.in terms of the Estate and Gift Duties Act 1968" will deem that beneficiary"thenceforth a 'Notional Settlor'".[90] Given the significant effluxion of time since the $65,050 loan was made byDaryn, an available limitation defence is clearly arguable against any recovery actionfor the loan. Arguably, therefore, under the Limitation Act a deemed release/surrenderand therefore gift of the debt in terms of the Estate and Gift Duties Act 1968 occurredby the end of 2008 and Daryn may accordingly be excluded as a "notional settlor"from being a beneficiary.[91] If on an annual or some other periodic basis a notional demand for repaymentof the debt and a re-advance of it had occurred on Daryn's behalf, the debt might notbe time-barred now and no question of Daryn being regarded as a "notional settlor"may arise. This, however, is not in line with the evidence which is before the Court.[92] Another opposing argument possibly exists here. This concerns a possiblesuggestion that Daryn's loan has always remained a loan notwithstanding theLimitation Act defences. This is because the time limits in that Act merely providedefences to a cause of action brought to recover a debt. The limitation defences needto be advanced by a debtor so as to effectively "park" a creditor's cause of action, butarguably the "loan" still remains. In this case, however, Mr Vance has indeed raisedthe limitation defence.[93] Daryn might also argue that he was not aware of the "notional settlor" anddeeming provision in the trust deeds and therefore he should not be bound by these.However, this is also not borne out on the evidence.[94] Finally, Daryn might further argue that to relinquish his "entitlement" underthe Trusts as a beneficiary, full knowledge of the true position is required, and that hasnot happened in this case. Again, I am satisfied the evidence is not sufficient to supportthis argument for Daryn.2626 I leave aside further possible arguments (not available on the facts before me) that all this mightcreate an incentive for other beneficiaries to "trick" a co-beneficiary like Daryn into making a"gift" to a trust simply to disqualify them as a "notional settlor"[95] Overall, I note again Mr Vance's own position here that the $60,050 debt didbecome subject to the limitation defence. Thus, notionally at least, it might be saidthat as a Trustee he has "accepted an addition or accretion" to the capital of the Trusts'funds such that Daryn could be deemed a "notional settlor" and disqualified as abeneficiary under the rather unusual provisions in the trust deeds to this effect.[96] Although that position is not entirely clear here, it is one that in my view thisCourt must recognise. I emphasise that point, noting also that any s 133 applicationby trustees for guidance or directions must always relate to proposed action withintheir powers.[97] There is, however, another way, as I see it, to achieve a fair and equitableoutcome in this case, which all parties here seemed to accept was the ultimate goal.This is for Daryn's share in the distribution to pass to his children in trust upon theirrespectively reaching the age of 18 years, in terms of the provisions in the Trusts Act2019.[98] Accordingly, I conclude, taking what might be regarded as a precautionaryapproach here, that the position with respect to Daryn's $290,654.93 entitlement underthe Distribution 1 resolution that Mr Vance has reached must alter. Daryn'sentitlement, which on a quantum basis I find unobjectionable, needs to pass to hisdaughters as members of his family, who themselves are discretionary beneficiaries ofthe Trusts.[99] I raised this aspect in discussions at the conclusion of the 16 May 2022 hearingwith all counsel and Daryn, and it appeared to be broadly accepted that at worst,Daryn's entitlement here would pass to his children (grandchildren of Patricia andFrank) as named discretionary beneficiaries under the Trusts. Daryn informed me hisonly two children are his daughters Zara Turvey and Jorja Turvey who are presentlyrespectively aged 16 and 13.[100] Mr Bell-Connell, for Mr Vance, confirmed that Mr Vance took the position thatit was in order for him as suggested to make a substitution of appropriate beneficiariesif required. That too seemed to be accepted by counsel for Patricia and by Daryn.[101] I have concluded therefore that Daryn's overall entitlement in terms of thedistributions proposed is to be paid in this case to a trust to be established for thebenefit of his daughters Zara and Jorja equally upon their respectively attaining theage of 18 yearsConclusion[102] For all the reasons I have outlined above, the s 133 application from Mr Vanceis granted with the amendment I note at [101] above.[103] An order is now made in terms of Mr Vance's s 133 application dated17 December 2021, with the amendment that the entitlement of Daryn is now to passto trustees of a new trust to be formed for the benefit of his children Zara and Jorjaequally upon their respectively attaining the age of 18 years.[104] A further order is made granting leave to the parties to return to the Court on48 hours' notice if any further directions are required first, as to implementation of theorders made herein and/or secondly, as to the identity of the trustees and the terms ofthe Trust to be formed for Zara Turvey and Jorja Turvey as noted at [103] herein.Daryn's s 126 Applicaton[105] This effectively disposes of Daryn's application under s 126 of the Act, whichis effectively dismissed. The test to be applied under this section, as to whether thiswas a decision reasonably open to Mr Vance as Trustee, exercises the same touchstone.Costs[106] As to costs, they are reserved. The parties are urged to liaise with a view toagreeing costs if they are in issue, failing which counsel and the parties may filememoranda (sequentially) on the question of costs which are to be referred to me.(These are to be a maximum of five pages). I will decide the question of costs basedupon the material then before the Court.[107] At this point, I simply comment that Mr Vance's costs should in any event atleast be met from the Trusts, given that his s 133 application in my view was properlybrought and has effectively succeeded.Gendall J