Morris presents at Legalwise conference on farm succession and family trusts

On 22 June 2022, Sally Morris and Georgia Angus presented a Legalwise seminar “Avoiding disputes down the road: update on recent case law”. The seminar was part of the Legalwise conference on farm succession and family trusts. Sally and Georgia's seminar focussed on two recent trends in farming disputes, being proceedings involving memoranda of wishes and claims under s 182 of the Family Proceedings Act 1980.

Sally spoke about the Supreme Court case Preston v Preston [2021] NZSC 154. This decision provides important guidance on the application of s 182 of the Family Proceedings Act 1980 to trusts settled before or during a marriage, known as nuptial settlements, where the spouses later separate. The Supreme Court confirmed the purpose of s 182 is to remedy the consequences of the failure of the premise – a continuing marriage – on which the nuptial settlement is made. Importantly, the Court did not consider the circumstances of the case, being a short marriage with no children of the marriage, had any bearing on whether the court should exercise its discretion.

Sally also discussed the Court of Appeal decision Booth v Booth [2020] NZCA 451. In this case, the appellant claimed there was a post-nuptial settlement in which her former father-in-law effectively made $1.57 million available to her and her husband. The alleged "settlement" was a loan by the husband's parents to a company incorporated by the appellant and the husband. The appellant argued that part of the nuptial settlement was the forgiveness of that loan. Both the High Court and Court of Appeal agreed that there was no nuptial settlement as the loan arrangement did not involve the settlement of property on anyone and there was no connection or proximity between the settlement and the marriage.

Georgia spoke about the recent High Court decision Easton v The New Zealand Guardian Trust Company Limited (No 3) [2021] NZHC 2084. This case concerned a breach of trust claim involving an allegation that the trustee failed to take the settlor's wishes into account. The Court confirmed that trustees are not obliged to take wishes into account. In any event, the Court considered that the wishes had been taken into account but the terms of the trust deed and other relevant factors meant that the decision made by the trustee (to sell the family farm to a third party rather than the plaintiff) was one reasonably open to it.  

Georgia also discussed the Court of Appeal decision Kain v Public Trust [2021] NZCA 685. In Kain v Public Trust the Court underlined the importance of memoranda of wishes provided by trustee. The Court observed that trustees are entitled to take these documents into account but only to the extent that they are not inconsistent with the terms and purposes of the trust. In respect of later memoranda of wishes that are inconsistent with earlier wishes, the Court confirmed that the trustees can consider the most recent wishes as overriding earlier wishes if the trustee assesses that they should have this effect.

If you would like advice on how these cases may impact your situation, please contact Morris.

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