Sixteen years after Mark Payne died in a Taranaki quad bike accident, distant relatives tried without success to claim a share of his estate arguing they were wrongly cut out of a deal involving his family trust as estate beneficiary.
At the time of his death, Mark owned an Oakura dairy farm milking 120 cows. With him on the farm was his de facto spouse of some six months, Sheree McNeill and her two children from a previous relationship. Mark’s will left all personal belongings to Sheree as his ‘spouse’ and the farm to his MA Payne Family Trust. Named as Trust beneficiaries are Mark and his children, with other blood relatives as discretionary beneficiaries. The High Court was told when setting up the Trust, Mark indicated Trust funds should be used primarily to support any spouse and children, failing that his parents Bernard and Nancy. Mark had no children at his death.
On Mark’s death, the farm now owned by the MA Payne Family Trust was transferred to a new trust: the Bernard and Nancy Family Trust, naming Mark’s parents together with Sheree and her children as beneficiaries. This was achieved with a Family Court consent order engineered as part of a Family Protection Act claim, with the agreement of lawyers acting separately for Sheree and Mark's parents.
Sixteen years later, some of Mark’s cousins learnt they were discretionary beneficiaries of the original MA Payne Family Trust. Trust assets, now held by the Bernard and Nancy Trust were valued at some two million dollars in 2018. The cousins sued, seeking to overturn the earlier Family Court order and demanding compensation from lawyers who acted. As discretionary beneficiaries of the MA Payne Trust, they should have been given notice of the proposed deal, they said.
Justice Ellis ruled there were sufficient grounds for making the Family Court order. Trustees of the MA Payne Trust were under no obligation to give notice to distant relatives; they had no direct interest in Trust assets, only the right to such assets the trustees may choose to transfer to them. In any event, lawyers could have achieved the same result by resettling the Payne Trust assets on a new trust like the Bernard and Nancy Trust without notice to discretionary beneficiaries, she said.
MA Payne Family Trust v. Maloney-Coles –High Court (30.5.19)
19.104