Cade v Cade

[2016] NZHC 1624

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

CIV-2016-425-000069 [2016] NZHC 1624

UNDER

the Trustee Act 1956

IN THE MATTER

of the A E Cade Family Trust

BETWEEN

MICHAEL GRANT CADE AND ANOTHER

Plaintiffs

AND

ALEXANDER EDWARD CADE Defendant

Hearing:	On the papers
Appearances:	S Donaldson for Plaintiffs
Judgment:	18 July 2016

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

as to vesting orders and service

Introduction

[1]      The plaintiffs, Michael Cade and Paul Cade, as current trustees of the A E Cade Family Trust (the Trust) seek an order, along with various other administrative orders, vesting the following trust properties currently held by the defendant, Alexander Cade (Mr Cade):

(a)      a residential property at 254 North Road, Invercargill, CT SL97/277, Lot 1, Deposit Plan 1193, Southland District; and

(b)a   residential    property    at    2   Mincher    Road,   Queenstown,   CT OT2D/692, Lot 27 Deposit Plan 10575, Otago District.

CADE v CADE [2016] NZHC 1624 [18 July 2016]

[2]      These orders are sought because Mr Cade, in whose name the properties are currently jointly registered, has been removed as a trustee because he was mentally incapable of exercising his powers and duties.

Background

[3]      On 21 April 1999 Mr Cade settled the Trust.  Mr Cade and his wife, Diane Cade (Mrs Cade), were named as trustees.   The named “discretionary capital beneficiaries” were the sons of Mr Cade, Paul and Michael, and the named “discretionary income beneficiaries” were Mr and Mrs Cade, Paul and Michael and any child or remoter issue of any of the “discretionary capital beneficiaries”.

[4]      Mr  and  Mrs  Cade  remain  married.    Sadly,  however,  Mr  Cade  has  been diagnosed with Progressive Alzheimer’s Dementia.   He is currently living at the dementia wing of Rowena Jackson Retirement Village.   Dr Matthew Sloane, the general  practitioner  to  Mr  Cade,  has  provided  an  affidavit  as  to  Mr  Cade’s incapacity.

[5]      Because Mr Cade no longer had mental capacity to carry out his obligations as a trustee he was removed from the role pursuant to s 43 of the Trustee Act 1956 (the Act).  A deed of retirement of trustee and appointment of new trustee dated 18

April 2016 was entered into retiring Mr Cade as a trustee of the Trust.  By that same deed Paul and Michael were made trustees of the Trust.

[6]      The deed vested the trust property in the new trustees, it is not possible to vest land in this way.  In order for the land to be vested in the plaintiffs, they required a vesting order under s 52 of the Act.

[7]      Before turning to the matter of the vesting orders themselves, however, there are some administrative matters I must first deal with.

Administrative matters

[8]      The  plaintiffs  have  commenced  this  proceeding  under  pt  18  High  Court

Rules.   Rule 18.4  provides  that  to  commence  a proceeding  under this  part  the

plaintiffs must file a statement of claim accompanied by an application for directions as to service and representation under r 18.7.  This application must be supported by the necessary information to enable the court to decide what persons are interested in or may be adversely impacted by the relief sought along with a memorandum of counsel stating why the directions are sought.1

[9]      The plaintiffs have sought the following orders in their application:

(a)      that evidence be made by way of affidavit and the proceeding be dealt with on the papers;

(b)      the requirement of a litigation guardian is dispensed with:2 and

(c)      service of the proceeding be dispensed with. [10]       I deal with each of these in turn.

Mode of evidence and proceeding

[11]     The plaintiffs have sought an order that evidence be made by way of affidavit and that the proceeding be dealt with on the papers.   Given the nature of these proceedings and the findings I make below, I consider that such an order is appropriate.

Order dispensing with requirement for litigation guardian

[12]     The plaintiffs have sought an order that the requirement that Mr Cade has a litigation guardian is dispensed with.   Implicit in this is that Mr Cade is an incapacitated person for the purposes of the proceedings.   Rule 4.29 High Court Rules provides as follows:

incapacitated person means a person who by reason of physical, intellectual, or mental impairment, whether temporary or permanent, is—

(a)       not capable of understanding the issues on which his or her decision would be required as a litigant conducting proceedings; or

1      High Court Rules, r 18.7(3) and (5).

2      Implicit in this is that Mr Cade is incapacitated in terms of r 4.29.

(b)      unable to give sufficient instructions to issue, defend, or compromise proceedings

[13]     Dr  Matthew  Sloane,  a  registered  doctor  who  has  treated  Mr  Cade  since

31 March 2010, provided evidence on the matter.  He deposes that Mr Cade: (a)      has Progressive Alzheimer’s Dementia;

(b)has impaired cognitive function, a loss of independence and a need for specialised care;

(c)      has no ability to understand matters of a financial, legal or proprietary nature; and

(d)      has no understanding of the consequences of his decisions.

[14]     Dr Sloane further deposes that Mr Cade’s condition will continue indefinitely

and is and has been progressive.

[15]     Given  the  length  of  time  Dr  Sloane  has  been  treating  Mr  Cade,  since

31 March 2010, I am satisfied that he was in a position where he would have had all the necessary information to reach the conclusions he has deposed to in his affidavit. I am therefore confident that Mr Cade is an incapacitated person as defined in r 4.29.

[16]     That said, best practice is to provide evidence of a specific assessment with a copy of an assessment report annexed as an exhibit.   However, Given Mr Cade’s incapacitated status, r 4.30 requires him to have a litigation guardian unless the court orders otherwise.  The plaintiffs have sought an order that Mr Cade does not require a litigation guardian.  The primary ground put forward in support is that Mr Cade’s interests are not affected by a vesting order being granted.  Mr Cade will remain a discretionary beneficiary of the Trust.  All that is occurring is that trust property is being vested in the new trustees so they can properly fulfil their duties.

[17]     Counsel has submitted that the facts in  this case are similar to  those  in Docherty  v  Docherty.3      In  that  case  the  plaintiffs  also  sought  a  vesting  order following the removal of the defendant as a trustee.  The evidence established that the defendant was an incapacitated person under the High Court Rules.  In deciding that a litigation guardian was not necessary, Associate Judge Bell concluded:

[27]      While recognising that the  Court should  be  cautious  in  ordering otherwise under r 4.30, I accept that this is one of those cases where the Court should do so. On its substantive merits the plaintiffs have a very straightforward case. I find on the basis of the evidence of Dr Boyd that Mr Docherty is quite incapable of acting as a trustee. Any suggestion that he could somehow perform some useful purpose by remaining as trustee can be dismissed out of hand. Given his inability to act as a trustee, the proper response is that he cease to be a trustee. This is an entirely appropriate case for removal.

[28]      Mr Riechelmann, the potential litigation guardian, accepts that there could not be a sensible basis for contending that Mr Docherty could remain as trustee. Once it is accepted that Mr Docherty was properly removed as trustee then the vesting order follows as night follows day. There cannot be any sensible basis for an argument that even though he has been removed as trustee, he should still be shown as a registered proprietor of trust assets.

[18]     I accept counsel’s submission that a very similar set of facts arise here.  In a situation where the appropriate procedures have been followed to remove a person as a trustee for want of capacity, and the appropriate evidence is before the court demonstrating as such, and the proceeding at hand is simply one to vest any remaining trust property in the new trustees, I can see no reason why a litigation guardian would be required.   I acknowledge that caution is required when making such an order but once someone is properly removed as a trustee of a trust, it follows as a matter of course that any trust property should be vested in the replacement trustees.

[19]     Mrs Cade exercised the power granted to her by s 43(1) of the Act. A deed of retirement  of trustee was  executed on  18 April  2016,  which  I have before me, retiring Mr Cade as a trustee of the Trust.  Paul and Michael were made new trustees. On   that   information   I   find   that   there   can   be   no   sensible   argument   that,

notwithstanding Mr Cade’s proper removal as a trustee, he should remain the legal

3      Docherty v Docherty [2013] NZHC 1885.

owner of the trust properties.  In those circumstances an order dispensing with the requirement of a litigation guardian is appropriate.

Service be dispensed

[20]     The  plaintiffs  have  requested  that  service  on  the  defendant  and  the beneficiaries of the Trust be dispensed with in this case.  Given my findings that Mr Cade is an incapacitated person and that no litigation guardian need be appointed, I consider an order dispensing with service is appropriate.  Also, given the nature of the proceedings and the facts that the two children of Mr Cade who are beneficiaries of the Trust are the plaintiffs in this case, and that their children who are also beneficiaries live with them, I consider that an order dispensing with service on the beneficiaries is also appropriate.

Vesting orders

[21]     Section 52(1)(b)(i) of the Act provides the Court with the power to vest land in any such person that it may direct where a trustee entitled to or possessed of any land or interest therein, either solely or jointly with any other person, is under a disability.

[22]     Mr Cade is possessed of an interest in two properties belonging to the Trust. He has,  however,  been  removed from  his position as a trustee.   His  two sons, Michael and Paul, are his replacement trustees.  Given the need to ensure the current trustees can deal with the properties in accordance with their duties, I am satisfied that the vesting orders sought are appropriate.   Orders will be made vesting Mr Cade’s share in the properties in the current trustees of the Trust.

Orders

[23]     I direct that:

(a)      evidence may be made by way of affidavit and the proceeding be dealt with on the papers;

(b)Alexander Edward Cade is an incapacitated person for the purpose of the proceedings pursuant to r 4.29;

(c)      Alexander Edward Cade does not require a litigation guardian; (d)     service is dispensed with; and

(e)      Alexander  Edward  Cade’s  interest  in  the  following  properties  is vested  in  Diana  Margaret  Cade,  Michael  Grant  Cade  and  Paul Gregory Cade:

(i)       254 North Road, Waikiwi, Invercargill, Lot 1, Deposited Plan

1193, comprised and described in certificate of title SL97/299;

(ii)2 Mincher Road, Queenstown, described as Lot 27, Deposited Plan 10575, comprised and described in certificate of title OT2D/692.

………………………………………….

Associate Judge Osborne

Solicitors:

Hewat Galt, Invercargill