The Court of Appeal has ruled that the trustee eviction decision concerning the Wellsford home failed to weigh the settlor’s expressed wishes, effectively stripping the son of the residence his mother intended for him.

Background and high court actions

Naomi Cooke died in March 2017, leaving a will that named her children Brian Cooke and Anne in het Panhuis as executors and trustees of two testamentary trusts tied to properties in Orewa and Wellsford.

The Orewa deed required a sale, with proceeds split equally. Brian moved into the house after his mother’s death and refused to leave when the property was to be sold.

In response, Anne sought a high court order to remove both siblings from their fiduciary roles. Justice Woolford dismissed them and installed the New Zealand Guardian Trust Co Ltd, later known as Perpetual Trust Ltd and trading as Perpetual Guardian, as independent administrator.

The court also ordered Brian to vacate Orewa, which he did. Perpetual Guardian then commissioned methamphetamine testing, carried out decontamination, and sold the Orewa house to a private buyer who had approached them unsolicited.

Subsequently, Brian relocated to the Wellsford property, where he held a life interest subject to conditions and the trustee’s residual discretion to sell.

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Dispute over the Wellsford eviction

Perpetual Guardian concluded that Brian was not fulfilling his obligations as a life tenant and moved to evict him, also applying to the high court for directions under section 133 of the Trusts Act 2019 to permit a sale.

The son counter‑claimed, alleging a breach of trust and seeking damages for the alleged wrongful eviction and for an alleged undervalue sale of the Orewa home.

The high court upheld many of his points but denied damages, finding no proven loss. It did, however, allow him to re‑occupy the Wellsford house under specific conditions and rejected Perpetual Guardian’s claim for reimbursement of most costs under its trustee indemnity.

Perpetual Guardian appealed, arguing that the lower court had applied an overly strict standard when reviewing its discretionary choices and had overstepped the traditional non‑intervention principle that limits judicial scrutiny of trustees’ judgments.

In assessing the appeal, the court examined the statutory framework, notably the duties outlined in section 29 of the Trusts Act and the equitable principles from the older Trustee Act. It affirmed that a court’s role is supervisory, intervening only if a trustee acts ultra vires, in bad faith, on irrelevant considerations, or reaches a decision that is perverse or irrational.

The appellate judges applied a two‑step test for inadequate deliberation: first, whether the trustee breached the duty to consider relevant factors; second, whether that breach materially affected the outcome.

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While the court found that the methamphetamine testing and decontamination of the Orewa property were proper exercises of discretion, it concluded that the decision to evict the son from the Wellsford home ignored two key considerations: the settlor’s clear intent to provide a lifelong residence for her son and the existence of reasonable alternatives to a forced sale.

In other words, the trustee’s focus on procedural compliance eclipsed the substantive purpose of the arrangement, a misstep that the appellate panel said could not be ignored.

Comparing this case to earlier New Zealand rulings on trustee discretion, the judges noted that courts have historically been reluctant to substitute their own judgment for that of a fiduciary unless the trust’s core purpose is jeopardized. Here, the core purpose—securing a home for the son—was at stake, making the oversight more than a technical error.

The appeal was allowed in part. The court ordered that the costs and expenses incurred in connection with the eviction and the related high‑court proceedings be borne by Perpetual Trust Ltd. It also affirmed the earlier directive that the son may continue to occupy the Wellsford property, subject to the conditions previously set.

Other matters addressed in the judgment included a dismissed strike‑out application by the son, limited permission for both parties to introduce additional evidence on appeal, and specific orders regarding the trustee’s reimbursement claims.