Boston Trustees 3131 Limited v Chapman - [2019] NZHC 1801

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1491

[2019] NZHC 1801

UNDER the Trustees Act 29156

BETWEEN

BOSTON TRUSTEES 3131 LIMITED

Applicant

AND

ETHNE WINIFRED CHAPMAN AND BOSTON TRUSTEES 3131 LIMITED as

former Trustees of Ecko Trust Respondents

Hearing: On the papers

Counsel:

P B Friedlander for the Applicant

Judgment:

29 July 2019

JUDGMENT OF GORDON J

This judgment was delivered by me on 29 July 2019 at 4.30 pm, pursuant to
r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors: Freidlander & Co Ltd, Auckland Counsel: S Hamilton, Auckland

BOSTON TRUSTEES 3131 LIMITED v CHAPMAN [2019] NZHC 1801 [29 July 2019]

[1] The applicant, Boston Trustees 3131 Ltd (Boston Trustees), as a trustee of the Ecko Trust (the trust), seeks an order under s 52(1)(b)(i) of the Trustee Act 1956 (the Act) vesting the mortgage over a property currently registered in the names of Ethne Winifred Chapman (Mrs Chapman) and Boston Trustees (the mortgage) in the sole name of Boston Trustees.

[2] Boston Trustees also seeks associated orders permitting commencement of this proceeding by originating application and dispensing with service of this proceeding on Mrs Chapman. The application is supported by an affidavit of Alan Tong, chartered accountant, and Patrick Graham, medical practitioner.

Background

[3] The trust was constituted by Deed of 13 May 1996. When the trust was first constituted, the trustees were Mrs Chapman and her solicitor, Mr Freidlander. Mrs Chapman is the primary beneficiary of the trust.

[4] On 14 February 2013, Mr Freidlander resigned as a trustee and Boston Trustees was appointed as a trustee. Boston Trustees is a professional trustee company. Mr Tong is the sole director of Boston Trustees. From 14 February 2013 until 16 May 2019, Mrs Chapman and Boston Trustees continued as the trustees of the trust. Mr Tong says that unfortunately from about 2017 onwards it became clear that Mrs Chapman no longer had the mental capacity to discharge her responsibilities and perform her role as a trustee. However, as the trust did not enter into any transactions or conduct any business between 2017 and the present time, Mrs Chapman remained as a trustee. But, Mr Tong says that was “in name only” as Mrs Chapman was not required to do anything or to exercise any powers or discretions.

[5] Mr Tong says that once it became clear that the trust would need to make the present application for a vesting order, it was decided that Mrs Chapman should be removed as a trustee. On 16 May 1996, Mrs Chapman had executed an enduring power of attorney in respect of property rights in favour of her son, Peter Chapman. On 16 July 2019, Mr Chapman, as attorney for his mother and as appointor under the trust by virtue of that attorneyship, signed a deed whereby Mrs Chapman was removed as a trustee.

[6] The result is that Boston Trustees is now the sole trustee. This is permissible…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Boston Trustees 3131 Limited v Chapman and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2019] NZHC 1801
Decision Date: 29 July 2019

CaseChat Overview and Summary

Boston Trustees 3131 Limited, a trustee of the Ecko Trust, applied for an order vesting the mortgage over a property in its sole name, as it was registered in the names of Ethne Winifred Chapman and Boston Trustees. The application was supported by an affidavit from Alan Tong, the sole director of Boston Trustees, and Patrick Graham, a medical practitioner. The trust, constituted by a deed on 13 May 1996, was initially managed by Mrs Chapman and her solicitor, Mr Freidlander. Mr Freidlander resigned on 14 February 2013, and Boston Trustees was appointed as a trustee. However, from 2017 onwards, it became apparent that Mrs Chapman no longer had the mental capacity to discharge her responsibilities, although she remained a trustee "in name only". To facilitate the vesting order, it was decided that Mrs Chapman should be removed as a trustee, which occurred on 16 May 2019. The trust holds a mortgage over a property at 13B Corinth Street, Remuera, Auckland, which arose in 2009 when the trust loaned $470,000 to the Chapman Family Trust, secured by a mortgage. The Chapman Family Trust has repaid all but $270,000 of the loan, which will be repaid from the settlement proceeds. To allow the agreement for sale and purchase to settle as scheduled on 23 August 2019, the trust must discharge its mortgage. As Mrs Chapman has now resigned as a trustee, the mortgage is still legally registered in her and Boston Trustees' names. The application is therefore made to the Court to vest the mortgage solely in the name of Boston Trustees so it can discharge the mortgage on repayment of the final $270,000, and allow the agreement for sale and purchase to settle as scheduled on 23 August 2019.

The court granted permission for the proceedings to commence by way of originating application, as it was appropriate that the proceeding proceed by way of originating application. The court also granted orders dispensing with service of the proceedings on Mrs Chapman, as she lacked mental capacity, and the orders would not be detrimental to her. The court then considered the vesting order. Section 52(1) of the Act permitted the vesting of land or interest therein in any such person and any such manner and for any such estate or interest as the Court may direct. In all the circumstances, the court considered that a vesting order, as sought, should be made. The court ordered that the applicant may commence this proceeding by way of a without notice originating application, service of the proceeding on Ethne Winifred Chapman is dispensed with, and the mortgage over the property at 13B Corinth Street, Remuera, Auckland, being instrument 8335715.2 currently registered in the names of Ethne Winifred Chapman and Boston Trustees 3131 Ltd is vested in the sole name of Boston Trustees 3131 Ltd.

Orders