A J and E K Wallace Family Trust

[2020] NZHC 1522

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-922

[2020] NZHC 1522

UNDER

the Trustee Act 1956

IN THE MATTER

AND

of the A J and E K Wallace Family Trust

IN THE MATTER

of an application by Anne Woolerton and Leslie George Miller as trustees of the A J and E K Wallace Family Trust for orders under the Trustee Act 1956

Applicants

Hearing:	On the papers
Counsel:	J F Cookson for the Applicants
Judgment:	1 July 2020

JUDGMENT OF GAULT J

This judgment was delivered by me on 1 July 2020 at 2:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

Solicitors:

Ms J A Woolerton and Ms J F Cookson, Webster Malcolm Law, Warkworth

RE A J AND E J WALLACE FAMILY TRUST [2020] NZHC 1522 [1 July 2020]

[1]    The applicants are the recently appointed trustees of the AJ and EK Wallace Family Trust (the Trust). They apply without notice for permission to commence their proceeding by way of originating application and for directions as to service. The application is accompanied by affidavits and Ms Cookson’s memorandum of counsel in support. The substantive proceeding seeks an order vesting trust property in the applicants as the new trustees of the Trust.

Background

[2]    The Trust was settled by deed on 5 May 1997. The settlors were Allan John Wallace and Ethel Kathleen Wallace. Robert Allan Wallace was the sole original trustee. He died on 9 March 2020. The applicants are the executors named in his last will dated 11 November 2019 of which probate was granted on 20 May 2020. The applicants are both solicitors. By deed dated 12 June 2020 the applicants appointed themselves as trustees of the Trust, pursuant to s 43 of the Trustee Act 1956 which allows personal representatives of the last surviving trustee to appoint a person or persons to be a trustee.

[3]The Trust deed provides as follows:

1.THE trustee shall stand possessed of the trust property to hold the same UPON TRUST in accordance with the provisions of Clause 2 hereof until the death of the survivor ETHEL KATHLEEN WALLACE, JOAN ROSEMARY WALLACE and PATRICIA MARGARET WALLACE and thereafter TO HOLD the trust property UPON TRUST for the said ROBERT ALLAN WALLACE for his own use and benefit absolutely PROVIDED HOWEVER that if the said ROBERT ALLAN WALLACE does not survive both the said ETHEL KATHLEEN WALLACE and PATRICIA MARGARET WALLACE leaving issue who shall survive the said ETHEL KATHLEEN WALLACE and PATRICIA MARGARET WALLACE then such issue shall take and if more than one in equal share the interest which the said ROBERT ALLAN WALLACE would have taken had he survived both the said ETHEL KATHLEEN WALLACE and PATRICIA MARGARET WALLACE and attained a vested interest.

2.THE trustee is hereby directed and empowered to permit ETHEL KATHLEEN WALLACE, JOAN ROSEMARY WALLACE and/or PATRICIA MARGARET WALLACE to have the use occupation and enjoyment of the trust property for so long as they or the survivor of them shall choose to reside therein subject to those residing in the trust property paying all rates taxes and other outgoings thereon and keeping the said residence in a good and habitable state of repair fair

wear and tear and damage by fire flood earthquake and other inevitable accident excepted and in the event of both of them or the survivor of them no longer wishing to reside in the trust property I EMPOWER AND DIRECT my trustee to purchase or erect another residence either alone or as tenants in common with the said JOAN ROSEMARY WALLACE to be held on the same trusts for sale and erection or repurchase as are herein declared in respect of the original resident AND I DIRECT that if the said ETHEL KATHLEEN WALLACE, JOAN ROSEMARY WALLACE and PATRICIA

MARGARET WALLACE or the survivor of them no longer wish to reside in the trust property or any other residence substituted therefor then the proceeds of sale shall be invested and the income received from such investment applied for the benefit of ETHEL KATHLEEN WALLACE during her lifetime and after her death for the benefit of PATRICIA MARGARET WALLACE.

[4]    Using first names for convenience, Ethel was the mother of Robert, Patricia and Joan. Ethel and Patricia are both dead but Joan is alive. Patricia did not leave any children. Robert had three children – Joanna Christine Knee, Andrew Robert Wallace, and Steven James Wallace.

[5]    The Court’s assistance is required to make a vesting order under s 52 of the Trustee Act 1956 transferring the Trust property to the new trustees (the applicants). As trustee, Robert owned a half share of a property at 433 Pah Hill Road (the Pah Hill Road property).1 The other half is owned by Joan. There is an unconditional agreement for the sale and purchase of the Pah Hill Road property dated 25 February 2020, which was signed by Robert before he died. It is important for an order vesting in the applicants the half share of the property currently registered in Robert’s name. As Robert was the sole trustee, a transmission cannot be completed to the remaining trustees. As new trustees, the applicants can sign the necessary Landonline forms as transferee but cannot sign them as transferor. Ms Cookson submits this is similar to the situation where an enduring power of attorney cannot be used for trust property.

[6]    Robert was Joan’s attorney under an Enduring Power of Attorney in relation to the Pah Hill Road property as Joan has Parkinson’s disease, schizophrenia and ischaemic heart disease. In 2015, Joan was assessed by a psychiatrist as lacking mental capacity. However, on 17 March 2020 Joan was assessed by her general medical practitioner who confirmed she does not lack the capacity needed to manage

1      Record of title NA33C/1445.

her own affairs in relation to property. When she spoke with a solicitor, Joan confirmed she wishes to sell the Pah Hill Road property as she now permanently resides in a rest home and consents to the orders sought. Joan appeared to understand what she was signing and its implications. This is consistent with her general practitioner’s observation that she fully understands and comprehends, and is able to communicate.

Leave to commence by originating application

[7]    This proceeding is not a kind that can be commenced by way of originating application as of right pursuant to rr 19.2 to 19.4 of the High Court Rules 2016. However, under r 19.5 of the Rules, the Court may, in the interests of justice, permit any proceeding not mentioned in rr 19.2 to 19.4 to be commenced by originating application. It is now well-established that applications of this type may be commenced by way of originating application.2

[8]    Here, there are no factual disputes and the orders sought are administrative. There is no opposing party and the orders sought will not alter the rights or entitlements of any beneficiaries under the Trust. Accordingly, leave is granted for the use of the originating application procedure.

Dispensing with service

[9]    The applicants seek orders dispensing with service on the beneficiaries. Joan has given her consent to the orders sought. Robert’s children are also beneficiaries, but I agree with Ms Cookson that the orders sought are of an administrative nature and do not prejudice anyone nor affect the beneficiaries’ rights or entitlements under the Trust. The vesting of the property in the new trustees is a procedural matter made more important by the fact the property is subject to an unconditional sale and purchase agreement and the orders are required for the sale to be settled. The trustees remain bound to act in the best interest of the beneficiaries.

2      Godfrey v McCormick [2017] NZHC 420, [2017] 3 NZLR 198; Dick v Dick [2019] NZHC 2607 at [10]; Baker v Baker [2019] NZHC 2426 at [10]; and Stevens v Stevens [2019] NZHC 2269 at [8].

[10]It is appropriate to dispense with service on the beneficiaries.

Should the trust property be vested in the applicants?

[11]   It is appropriate to deal with the substantive application for vesting orders on the papers now, given they relate to a procedural, non-contentious matter. The vesting order pursuant to s 52 of the Trustee Act 1956 is needed to allow the current trustees to deal with the Trust’s half share in the Pah Hill Road property, particularly given the sale of the Pah Hill Road property needs to be settled.

[12]   It is appropriate for an order to be made vesting the Trust’s half share in the Pah  Hill  Road  property  in  the  names  of  the  applicants  as  the  new  trustees.  As indicated, the trustees remain bound to act in the best interest of the beneficiaries.

Orders

[13]I make the following orders:

(a)the applicants are granted leave to commence this proceeding by way of originating application;

(b)dispensing with service of the proceedings on the beneficiaries of the Trust; and

(c)vesting the half share of the property owned at 433 Pah Hill Road, Wharehine, Auckland (record of title NA33C/1445) registered in the name of Robert Allan Wallace, in Jacqueline Anne Woolerton and Leslie George Miller jointly as the new trustees of the Trust.

Gault J