Placing south Canterbury farming assets into a family trust complicated a relationship property split after 44 years marriage. Brian Stratford alleges the trust was structured by wife Lynn to give her extra leverage in negotiations; she says her primary control of trust responsibilities was necessary because of Brian’s mental illness.
The High Court recommended Lynn resign as trustee but did not order her removal. There was no evidence that her actions as trustee were putting trust assets at risk.
Family dynamics were coloured by the fact Brian has a bipolar disorder exhibited by occasional manic episodes. The High Court was told that shareholding of their four farming companies was transferred to a newly formed family trust in 2015. At this point the two had separated. Both were named as trustees, but Lynn was given sole power to remove and appoint trustees. This power was exercised five years later to remove Brian as trustee and some months later to appoint David Vance as an independent trustee. Trust shareholding was used to remove Brian as director of the farming companies. In July 2020, Lynn applied for a protection order against Brian; in April 2021, he was trespassed from parts of the farming business.
Brian asked the High Court to remove Lynn’s controlling interest over the trust and also to remove her as director of their farming companies. Her control of the trust was hampering agreement over a split of relationship assets, he claimed. He disagreed with farming management decisions being made and concerned that he was now excluded from management of farms he helped establish.
Removal of Lynn as trustee does not turn on whether their relationship has broken down, but whether proper administration of the trust has been seriously affected, Justice Eaton ruled. Changing trustees would not resolve their underlying dispute over division of relationship property; this is not the trustees’ role, he said.
Lynn remains as a trustee. She agreed not to exercise her power to appoint or remove further trustees until a full court hearing about their dispute and further agreed not to spend any trust money other than on routine trust expenses.
Stratford v. Stratford – High Court (22.06.22)
22.109