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Jew v Wetherell [2021] NZHC 1657 (6 July 2021)

Last Updated: 25 August 2021

JUDGMENT OF JAGOSE J

[Admissibility of evidence]

This judgment was delivered by me on 6 July 2021 at 9.00am.

Pursuant to Rule 11.5 of the High Court Rules.

.............................. Registrar/Deputy Registrar

JEW v WETHERELL [2021] NZHC 1657 [6 July 2021]

• [1] This proceeding relates to the Jew Family Trust, settled for the benefit of Terence Francis Jew’s spouse (now deceased), children and grandchildren (and for charitable purposes). Prior disputes between the parties were resolved in terms of a Deed of Settlement dated 13 August 2019 for sale of trust property and distribution of proceeds, thereafter to wind up the trust. The sale process has foundered.

Pleadings

• [2] The plaintiffs — being one of the trustees, Christopher Jew, and his children

— now seek removal of the other two trustees, David Wetherell and Patricia Jew. Together with their children, the defendants in turn seek Christopher Jew’s removal as trustee, and effectively directions for continuing the sale process.

• [3] The plaintiffs plead David and Patricia “each have since the execution of the Deed of Settlement manifested hostility and antipathy towards the plaintiffs such that they cannot consider the plaintiffs’ interests impartially or even handedly”. The defendants deny the allegation, saying:

... allegations of hostility and antipathy were raised in [a prior proceeding between the parties] and settled, if and to the extent such allegations remain relevant ... [Christopher] is unfit to act as a trustee.”

Strike out

• [4] The defendants particularise the last contention by reference to 15 allegations, all but one expressly (and the one at least inferentially) raised in the prior proceeding. The plaintiffs seek to strike out the particulars as an abuse of process,¹ being inadmissible in terms of s 7 of the Evidence Act 2006, and excluded by the principle in Henderson v Henderson.²

• [5] For the defendants, Bob Hollyman QC responds the particulars plainly are relevant to the matters in dispute, and the plaintiffs have not relied on the settlement agreement as a bar to determination of those issues. Moreover, in reliance on Marathon Asset Management LLP v Seddon, he argues settlement does not prevent

¹ High Court Rules 2016, r 15.1.

² Henderson v Henderson [1843] EngR 917; (1843) 3 Hare 100 (Ch) at 115.

a party “from thereafter relying on factual allegations which formed part of that claim in support or defence of some other claim”.³ For the plaintiffs, Michael Fisher replies Marathon is to be understood as addressing a partial settlement (although, more correctly, it is to be understood as addressing the subject of settlement as “a question of contractual construction”)⁴.

Discussion

• [6] The settlement deed here resolves “fully and finally” all disputes between the parties concerning in particular “the assets and future” of the trust, including:

... any and all claims arising directly or indirectly from the Disputes and Proceedings, whether known or unknown, howsoever arising between any of the parties including all issue[s] as to costs.

The agreement deals distinctly with other disputes “the parties may have against” identified parties (emphasis added). Given the absence of pleading or argument to the contrary, I construe the provision as applying only to those matters then at issue.⁵

• [7] Self-evidently, none of those matters was the present applications for the trustees’ removals; neither could they have been, given the applications spring from post-settlement steps. The matters now at issue were not previously “the subject of litigation in, and of adjudication by, a Court of competent jurisdiction” (or thus settled)⁶ to attract Henderson v Henderson immunity from being ‘twice-vexed’.

• [8] Instead the issue now is if “it is expedient to appoint a new trustee or new trustees, and it is ... inexpedient, difficult, or impracticable so to do without the assistance of the court”.⁷ My consequent power is to “[appoint] a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees”.⁸

³ Marathon Asset Management LLP v Seddon [2016] EWHC 2615 (Comm) at [15]; endorsed in Mount Wellington Mine Ltd v Renewable Energy Co-operative [2021] EWHC 1486 (Ch) at [64]. Similarly Ovlas Trading SA v Strand (London) Ltd [2009] EWCA Civ 250 at [28].

⁴ Comberg v Vivopower International Services Ltd [2020] EWHC 2438 (QB) at [211]–[212], citing

Marathon Asset Management LLP, above n 3.

⁵ But a broader construction is available: Bank of Credit and Commerce International SA (in liq) v Ali (No 1) [2001] UKHL 8, [2002] 1 AC 251 at [27].

⁶ Commissioner of Inland Revenue v Bhanabhai [2006] NZCA 368; [2007] 2 NZLR 478 (CA) at [61].

⁷ Trustee Act 1956, s 51(1).

⁸ Section 51(1).

‘Substitution’ necessarily infers a power of removal, which I have in my inherent jurisdiction in any event.⁹ I am to exercise my power by reference to what is:¹⁰

... conducive to, or fit or proper or suitable having regard to, ‘the interests of the beneficiaries, to the security of the trust property and to an efficient and satisfactory execution of the trusts and a faithful and sound exercise of the powers conferred upon the trustee’.

‘Expediency’ “imports considerations of suitability, practicality and efficiency”.¹¹

• [9] In all of that, it is artificial to disregard material facts as may have pre-dated the settlement agreement. They cannot be thought resolved one way or the other, or to be removed from subsequent consideration, by the settlement agreement (although express drafting may have achieved that). Christopher’s alleged conduct is relevant to my ‘expediency’ assessment, especially of trustees’ administration and management in the suitable, practical and efficient interests of beneficiaries, execution of the trusts and exercise of trustee powers.

Result

• [10] The plaintiffs’ application to strike out the particulars at paragraph 13(c)(i)–

(xv) of the defendants amended defence and counterclaim dated 12 May 2020 is dismissed.

—Jagose J

Counsel/Solicitors:

M J Fisher, Barrister, Auckland R J Hollyman QC, Auckland

A J Steel, Barrister, Auckland

Claymore Partners Limited, Auckland Lodder Law, Auckland

⁹ Green v Green [2015] NZHC 1218, (2015) 4 NZTR 25-017 at [598] and [600].

¹⁰ Re Roberts (1983) 70 FLR 158 at 162 cited in Re C P Clifton Children’s Trust (2004) 1 NZTR 14-018 at [33].

¹¹ Peng v Rothschild Trust (Schweiz) AG [2017] NZHC 25, (2017) 4 NZTR 27-001 at [38].