In financial difficulty and bankrupt with trustees of a family trust refusing to help, Pauline Harrison challenged actions taken by trustees brother Graeme and sister-in-law Adrienne who set up for their own benefit a Waiheke property owned by the trust. The High Court ruled the Waiheke deal invalid, but dismissed Pauline’s claim they be sent to jail for fraud.
The Valerie Geard Trust was established in 2005 by terminally ill Valerie Geard, five months before her death. The Trust’s primary asset was a property in Auckland suburb Mt Albert. She named her siblings as discretionary beneficiaries; her brother Graeme and his wife Adrienne as trustees. She expressed the wish that her brother Malcolm be treated as primary beneficiary during his lifetime. He died in November 2007, following an accident.
The High Court was told Graeme and Adrienne sold Mt Albert during Malcom’s lifetime, using the proceeds to have the Trust complete purchase of a home of Malcolm’s choosing at Causeway Road on Waiheke Island. On Malcolm’s death, Graeme and Adrienne as trustees of the Valerie Geard Trust transferred Causeway Road to a new trust, the Valerie Geard Waiheke Trust giving themselves rights of occupation for life. In a 2015 ruling, the High Court ruled the Causeway Road transfer to Valerie Geard Waiheke Trust invalid; the property remained an asset of the original Valerie Geard Trust. Adrienne was not a beneficiary of the original Trust and it was a breach of trust for the trustees to engineer a transaction giving themselves a personal benefit not authorised by the Trust.
Following the 2015 ruling, Pauline took legal action claiming the original Valerie Geard Trust had now terminated; she was entitled to a share of Trust assets, she said. Pauline also sued her brother and sister-in-law for their actions as trustees, demanding ‘punitive ‘damages of $100,000 and asking the High Court to fine them $25,000 for contempt and to jail them. In a 2019 court ruling, the High Court blocked for five years any further litigation by Pauline over operation of both the original Valerie Geard Trust and the subsequent invalid Waiheke Trust; multiple proceedings brought by Pauline were vexatious the court ruled, re-arguing what had been decided in 2015.
Pauline’s claim for $100,000 damages against brother Graeme and sister-in-law Adrienne was left open, subject to her putting up $20,000 security for their legal costs within a month.
Harrison v. Harrison – High Court (24.11.15 & 19.11.20)
20.181