Having a life interest in his parents Northland farm following their death, John Schepens treated the property as his own with scant regard for the ultimate beneficiaries: his three nieces. The High Court appointed a firm of Whangarei solicitors to take over control of the farm.
The High Court was told of the Schepens family’s pioneering efforts across several generations breaking in difficult land at Waimatenui, near Waipoua forest. Back in 1974, John Schepens was gifted part of his parents’ property to farm on his own account.
After both his parents died, John’s sister and her children contested terms of their parent’s wills in a Family Protection Act claim. They received increased bequests.
John (and a second trustee) were left in control of his parents’ remaining farm, held in trust: for John as life tenant and should he die before his sister she would have possession as life tenant; and on the death of them both, full ownership would pass to his sister’s four daughters.
He operated his own farm and his parents’ farm, now held in trust, as one farming unit. They are adjacent to each other.
Evidence was given that John did not seek or follow advice from successive trustees appointed to act as a second trustee of his parents’ testamentary trust. These trustees allowed John to act unilaterally. The farm had been family property. Not being immediate family, it was difficult for them to intervene without John’s acquiescence.
The court was told of John taking a hostile attitude toward estate beneficiaries, claiming that his sister did not have any life interest as successor to himself and further claiming that he held the ‘trump card’ and could dissolve the trust at any time. None of this was correct.
In August 2022, John was convicted of charges under the National Animal Identification and Tracing Act for failing to register some 500 cattle. A year earlier he had received a written warning from Primary Industries under the Animal Welfare Act.
Three of his nieces, as final beneficiaries of the estate, became concerned. The estate farm had become rundown; fencing not maintained, fertiliser not applied. Stock had been sold and grazing rights granted. John owed the Trust nearly $360,000; primarily proceeds from selling stock, money which John retained and recorded as a debt he owed the Trust.
The Justice Andrew ruled it was inappropriate for John to remain as trustee. There was a conflict between his personal interests and his duties as trustee. He was removed, replaced by a trustee company controlled by a firm of Whangarei solicitors. The current second trustee was also removed, with his agreement.
Justice Andrew indicated the new trustees should be looking to recapitalise the Trust in order to put the farm back into proper working order by recovering the $360,000 debt owed by John.
The court was told John is now aged 68 and has retired from farming. Justice Andrew expressed the hope that the new trustees and the nieces as trust beneficiaries would continue to recognise John’s long attachment to the family farm as they proceed to regularise farming operations.
Gamble v. Schepens – High Court (13.11.23)
24.010