Anderson Lloyd Trustee Company Limited v Howles

[2020] NZHC 234

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2020-412-000001

[2020] NZHC 234

UNDER

the Court’s Inherent Jurisdiction and

Sections 51 and 52 of the Trustee Act 1956

IN THE MATTER

of an application to appoint a new trustee in substitution for an existing trustee and to vest property in the new trustee

BETWEEN

ANDERSON LLOYD TRUSTEE COMPANY LIMITED

Applicant

AND

GLORIA MARGARET HOWLES

Respondent

Hearing:	Determined on the papers
Counsel:	F B Barton and H M Scott for Applicant
Judgment:	21 February 2020

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 21 February 2020 at 10.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

ANDERSON LLOYD TRUSTEE COMPANY LTD v HOWLES [2020] NZHC 234 [21 February 2020]

The application

[1]                 The applicant is a trustee of the Gloria Howles Family Trust (the Trust). The other trustee suffers from dementia and is unable to perform her duties. The applicant applies for orders to appoint new trustees in substitution for that trustee and for the vesting of trust property consequent upon those appointments.

Background

[2]                 On 10 December 1999, Gloria Margaret Howles (Gloria) settled the Trust. Gloria and the applicant are presently the trustees of the Trust. The beneficiaries of the Trust were Gloria, her son, Paul Daniel Nevin, her grandchildren, the wife for the time-being of her son and one Carolyn Sykes. Gloria has no grandchildren. Carolyn Sykes was removed as a beneficiary of the Trust on 3 April 2000. Paul Nevin is married to Huguette Simard.

[3]                 The only asset of the Trust is a debt of $256,000 owed by Gloria to the Trust and recorded in a Deed of Acknowledgement of Debt dated 7 September 2005. The Trust has no liabilities.

[4]                 The debt arises from a transaction in 2005 when Gloria purchased a unit located at 218 Brooklands Village, Mosgiel. The $256,000 was advanced to enable Gloria to purchase a right to occupy Unit 218, Brooklands Village, Mosgiel. Brooklands Village is owned and operated by Pembrey Investments Limited. The unit was not purchased in the name of the Trust as this was not permitted. Gloria’s interest was registered on the Record of Title by way of registered lease

[5]                 For some time now Gloria has been suffering from Alzheimer’s Disease and has not been capable of making decisions about her property finances, health or welfare. In 2018, Gloria underwent several needs assessments at the request of the Brooklands Village and was deemed incapacitated. She was moved to Birchleigh Residential Care Centre.

[6]                 Pembrey Investments Ltd has now terminated Gloria’s lease. Settlement of the surrender of the lease was on 20 December 2019. A sum of slightly more than

$176,000 was paid and is being held in trust by the law firm, Anderson Lloyd. This money is required to repay Gloria’s debt to the Trust. This will satisfy in part the debt and from a practical perspective is relevant to Gloria’s eligibility for care subsidies. For the Trust to receive the payment and record partial repayment of the debt Gloria needs to be removed as a trustee and new trustees appointed.

[7]                 There is before the Court medical evidence from Dr Ben Hayward who has provided a certificate dated 10 September 2019 which confirms:

(a)Gloria is 94 years old;

(b)Gloria is suffering from Alzheimer’s Disease and progressive permanent severe cognitive impairment which includes severe short-term memory impairment;

(c)Gloria is not capable of understanding and performing the role of a trustee of a family trust; and

(d)Gloria would not understand the nature of this application and would probably feel anxious and confused if someone were to attempt to explain it to her.

[8]                 The proposed new trustees, Carolyn Mary Anthony and Darryl Anthony Monaghan, are Gloria’s niece and nephew respectively from her first marriage. There is evidence from Gloria’s long-time solicitor that they are appropriate new trustees because:

(a)they can carry out the role of a trustee;

(b)they have good relationships with the beneficiaries of the Trust;

(c)they would not prefer the interests of one beneficiary more than another;

(d)they would promote and not impede the execution of the Trust; and

(e)there is no conflict between their interests and their duties as trustees.

[9]                 Gloria’s son and his wife have consented to the application. Other than Gloria they are the only beneficiaries of the Trust.

[10]The proposed new trustees also consent to the application.

The orders sought

[11]The applicant has applied for orders:

(a)for leave to bring this proceeding by way of originating application;

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

(c)dispensing with the appointment of a litigation guardian to represent Gloria under r 4.30 of the High Court Rules 2016;

(d)removing Gloria as a trustee;

(e)appointing Carolyn Mary Anthony and Darryl Anthony Monaghan as replacement trustees of the Trust; and

(f)vesting the Trust property in the applicant and the replacement trustees.

Administrative matters

Originating application

[12]             It is established practice that applications which do not raise difficult issues, are unopposed and do not require particularised pleadings or interlocutory steps may be suitable to be commenced by way of originating application. This is such a proceeding and I grant leave to make application in that way.

Litigation guardian

[13]             The applicant seeks an order that the requirement that Gloria has a litigation guardian be dispensed with. Gloria is an incapacitated person for the purposes of the

proceedings and r 4.29 High Court Rules. I have set out the evidence concerning Gloria’s condition.

[14]             Given Gloria’s incapacitated status r 4.30 requires her to have a litigation guardian unless the Court otherwise orders. It is appropriate that I make such an order. The application relates to a routine matter and arises only because of Gloria’s dementia. Gloria’s interests as a beneficiary of the Trust are not affected. All that is occurring is Gloria is being removed as a trustee which is a position of responsibility that she is incapable of fulfilling. Furthermore, the appointment of a litigation guardian will serve no purpose as Gloria will not be able to provide any instructions or understand any advice that she might be given. In these circumstances an order dispensing with the requirement of a litigation guardian is appropriate and I so order.

Service

[15]             The applicant seeks an order that service on the beneficiaries be dispensed with. All the beneficiaries apart from Gloria have consented to the application. I consider an order dispensing with service upon Gloria is appropriate given her incapacitated status. There will be an order dispensing with service on the beneficiaries.

Removal of Gloria as a trustee

[16]             The Court has the power to make an order appointing new trustees either in substitution for or in addition to any existing trustee or trustees under s 51 of the Trustee Act 1956. Section s 51(1) provides that the Court may appoint a new trustee where it is “expedient” to do so and it is “inexpedient, difficult or impractical” to do so without the assistance of the Court. The Court may also remove and appoint trustees using its inherent jurisdiction.1 The inherent jurisdiction to remove trustees is ancillary to the principal duty of the Court to see that trusts are properly executed, and the Court’s primary concern is for the welfare of the beneficiaries.

1      For the relevant principles upon which the Court acts see Attorney General v Ngati Karewa & Ngati Rahinga Trust (2001) 1 NZTR 11-012 (HC) at [65], Anderson v Anderson [2013] NZHC 1767, (2013) 3 NZTR 23-008 at [75] – [84] and Clarke v Karaitiana [2011] NZCA 154, (2011) NZTR 21-034 at [38].

[17]             Gloria is unable to carry out her role as trustee. It is necessary to relieve her of her responsibilities so that the Trust can be properly administered. Gloria’s removal will relieve her of the burden of the trusteeship and promote the efficient administration of the affairs of the Trust for her benefit. These factors make it expedient for the Court to act under s 51.

[18]             Section 51 does not authorise an order merely removing a trustee. The Court’s power under the section is limited to appointing a new trustee or trustees in substitution for or in addition to any existing trustee. In this case the trust deed of the Trust requires that the number of trustees must not fall below two.

[19]             It is proposed that the Court appoint Carolyn Mary Anthony and Darryl Anthony Monaghan as replacement trustees. The evidence satisfies me that they are appropriate persons to be appointed as trustees and that they consent to their appointments. I am satisfied they do not have any interests in opposition to those of the beneficiaries and they will act diligently in the execution of the Trust.

Vesting order

[20]             The application seeks a vesting order under s 52 of the Trustee Act 1956. Section 52 is inapplicable as it relates to vesting orders of land. The debt owed by Gloria is a thing in action and the Court has the power to make a vesting order in respect of it under s 59 of the Trustee Act. It is appropriate to make such an order.

Result

[21]There will be orders as follows:

1.This application will be dealt with as an originating application.

2.Service of the application is dispensed with.

3.The requirement for the appointment of a litigation guardian to represent Gloria Margaret Howles in this proceeding is dispensed with.

4.Under s 51 of the Trustee Act 1956 Gloria Margaret Howles is removed as a trustee of the Gloria Howles Family Trust and Carolyn Mary

Anthony and Darryl Anthony Monaghan are appointed in substitution as trustees of the Trust.

5.Under s 59 of the Trustee Act 1956 the debt owed by Gloria Margaret Howles to the Gloria Howles Family Trust shall vest in the applicant and the replacement trustees.

[22]No order for costs was sought or is made.

O G Paulsen Associate Judge

Solicitors:

Anderson Lloyd, Dunedin