Ballantyne v Geary

[2019] NZHC 3493

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2019-412-000135

[2019] NZHC 3493

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 replacement

trustee in substitution for an existing trustee and to vest property in the new trustee, dispense with service and dispense with

litigation guardian

BETWEEN

SUSAN MARGARET BALLANTYNE and JEFFREY MARK GEARY

Applicants

AND

WILLIAM NGATAHU GEARY

Respondent

Hearing:	Determined on the Papers
Counsel:	B Rooney for Applicants
Judgment:	20 December 2019

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 20 December 2019 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:

Race Douglas Burke, Dunedin

BALLANTYNE v GEARY [2019] NZHC 3493 [20 December 2019]

Introduction

[1]The applicants seek orders:

(a)that this proceeding be commenced by way of originating application;

(b)dispensing with service of the proceedings on any other party;

(c)dispensing with the appointment of a litigation guardian for the respondent William Ngatahu Geary (William);

(d)removing William as a trustee of the Geary Family Trust;

(e)appointing Allan John Geary (Allan) as a replacement trustee of the Trust;

(f)vesting the Trust property in the applicants and the replacement trustee, Allan, as trustees of the Trust.

Background

[2]        The Trust was created by a Deed of Trust dated 22 December 1995 appointing the applicants and William as trustees. The primary beneficiaries of the Trust are William and his wife Noelene Geary (Noelene). The beneficiaries of the Trust are further defined to include the child or children, grandchild or grandchildren of the primary beneficiaries and any wife, husband, widow or widower of the primary beneficiaries, the children or the grandchildren. Pursuant to cl 14 of the Trust Deed, William and Noelene are granted the power of appointment of new trustees during their lifetime. Under cl 14.2 the number of trustees is to be no fewer than three.

[3]The Trust property includes:

(a)a property at 17 Scobie Road, Dunedin as contained in Record of Title OT401/190;

(b)shares with Fisher & Paykel Healthcare;

(c)a Westpac Active Series investment portfolio; and

(d)cash held with Westpac New Zealand Ltd.

[4]There are no Trust liabilities.

[5]        William is suffering from Alzheimers disease. He no longer has the capacity to exercise his duties as trustee. Although Noelene has full capacity the power of appointment of new trustees cannot be exercised severally. For that reason, the assistance of the court is sought to remove William as a trustee and to appoint Allan in his place as replacement trustee and to vest the Trust property at Scobie Road in Allan and the continuing trustees.

[6]        There is evidence before the court confirming that William suffers from Alzheimers disease with severe cognitive impairment and that:

(a)he is unable to safely manage his own care;

(b)he wholly lacks competence to manage affairs or property;

(c)he is incapable of understanding or carrying out the duties of being a trustee;

(d)there is no prospect of his regaining capacity; and

(e)with respect to court proceedings:

(i)he would not understand the nature or purpose of the documents if they were served on him;

(ii)if required to attend proceedings he would not understand them, or any advice given; and

(iii)his participation would likely cause distress and agitation to him.

Originating application

[7]        This application does not raise difficult issues and does not require particularised pleadings or interlocutory steps. It is suitable to be commenced by way of originating application. I grant leave to make application in that way.

Litigation guardian

[8]        William is an incapacitated person for the purposes of the proceeding and given his incapacitated state, r 4.30 High Court Rules 2016 requires him to have a litigation guardian unless the court orders otherwise. This application relates to a routine matter and arises for the sole reason of William’s disability and his interests are not affected. He is to be removed and replaced as a trustee in circumstances where he has no ability to capably fulfil his responsibilities. I am satisfied that he would have no arguable grounds to oppose the orders sought and would not be able to give instructions or understand any explanation of the nature of the proceeding. The appointment of a litigation guardian would be an empty charade.

Service

[9]        Service on William would serve no purpose. The other primary beneficiary, Noelene, and the children of William and Noelene are aware of the application and support the application.1 This is an administrative matter that does not affect the interests of any beneficiary. I dispense with service.

Removal of trustee

[10]      The court has power, both under s 51 of the Trustee Act 1956 and under its inherent jurisdiction, to remove and replace a trustee.2 It is well-established that under s 51 the court may not remove a trustee without appointing a replacement. I am satisfied that William is unable to carry out his duties as trustee. I have no reason to believe that Allan is not a suitable appointee. Decisions will need to be made for the administration of the Trust for the benefit of the beneficiaries and it is desirable that the Trust and its assets be placed in the hands of competent trustees. Accordingly,

1      Para 18 of Counsel’s memorandum.

2      Clarke v Karatiana [2011] NZCA 154.

there will be an order removing William as a trustee and appointing Allan as a replacement trustee.

Vesting order

[11]      Under s 52 of the Trustee Act the court has the power to make vesting orders in respect of land. Section 52(1)(b)(i) is applicable in this case. Given the need to ensure that the trustees can deal with the Trust property in accordance with their duties, I am satisfied that the vesting order sought is appropriate.

Result

[12]There will be orders in terms of the draft that has been filed.

[13]I reserve leave to apply should that be necessary.

[14]      I acknowledge the high quality of the submissions of counsel to which justice is not done by the brevity of this judgment.

O G Paulsen Associate Judge