Cambridge Trustees Limited v Brandon

[2017] NZHC 1280

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2017-409-000219 [2017] NZHC 1280

BETWEEN

CAMBRIDGE TRUSTEES LIMITED

Applicant

AND

PHILLIP BERNERD BRANDON Respondent

Hearing:	12 June 2017
Appearances:	A N Riches for Applicant No Appearance for Respondent
Judgment:	13 June 2017

JUDGMENT OF GENDALL

CAMBRIDGE TRUSTEES LIMITED v BRANDON [2017] NZHC 1280 [13 June 2017]

[1]      On 7 April 2017 the applicant Cambridge Trustees Limited filed in this Court an originating application seeking an order discharging it as a trustee of the Brandon Trust   (the   Trust).      The   application   was   supported   by   an   affidavit   of David Millar Lang (Mr Lang), a director of the applicant company, sworn 31 March

2017.

[2]      The Brandon Trust was formed pursuant to a Deed of Trust dated 20 February

2007.      The   present   trustees   of   the   Brandon   Trust   are   the   respondent, Phillip Bernerd Brandon  (Mr  Brandon),  and  the  applicant.    The  trust  owns  a residential property at Woolston Christchurch, which I am told is mortgage-free but at present it is vacant and untenanted.  According to the affidavit of Mr Lang, the Trust  has  not  been  able  to  maintain  payments  for  rates  on  this  property.    The applicant as a registered owner of the property has an obvious concern that it may well be liable here for any rates arrears.

[3]      In this regard, the Trust Deed does include an indemnity from the Trust property for debts incurred by the Trustee, but I understand the Trust has no income or assets other than the Woolston property.

[4]      Notwithstanding this, Mr Lang as a director of the applicant has deposed that he has emailed and endeavoured to make contact with the respondent for some time over these and other issues related to the Trust.   Recently too he has sought for Mr Brandon to sign a Deed of Retirement but this has met with no response.

[5]      As a result, the applicant now seeks orders discharging it as a trustee of the

Trust pursuant to s 46 of the Trustee Act 1956.

[6]      The  respondent  Mr  Brandon,  as  I understand  it,  now  resides  in  Cyprus. Pursuant to an order for substituted service made by this Court on 18 May 2017, service of the documents in this proceeding were ordered to be served on him by email to his email address and also by posting the documents to his post office box address in Cyprus.

[7]      This has occurred.  An affidavit of service has been filed in this proceeding confirming that service happened on 19 May 2017, over three weeks ago.

[8]      No opposition to the present application has been filed by the respondent nor, as I understand it, has any communication been received from him.

[9]      The present application, as I have noted, is brought in terms of s 46 Trustee

Act 1956 which relevantly provides:

46       Discharge of trustee with assistance of court or Registrar

(1)       Where any trustee is desirous of being discharged from his trust he shall be entitled to retire therefrom on passing his accounts before the Registrar, and giving notice of his retirement to his co-trustees (if any), and to such other person (if any) as is empowered to appoint new trustees.

(2)       If such co-trustees, or such other person as aforesaid empowered to appoint new trustees, or any of them, refuse or neglect to appoint a new trustee or to consent to such appointment in place of the trustee so retiring, or if the retiring trustee is the sole trustee having power to appoint a new trustee, but the exercise of that power is impracticable or difficult without the assistance of the Court, it shall be lawful for the retiring trustee to apply to the Court for the appointment of a new trustee in his place.

(3)       The  Court   may,   upon   any  such   application,   make   an   order appointing some proper person as trustee in place of the trustee so desirous of being discharged from his trust, and direct any accounts and inquiries to be made, and make an order discharging the trustee from the trust and from all liability in respect thereof, and may make such order as to costs or otherwise as it thinks fit, and may exercise any of the powers contained in Part 5; and the person who upon the making of the order becomes trustee shall have the same rights and powers as he would have had if appointed by judgment in an action duly instituted.

(4)       If the Court, on an application under subsection (2) by a trustee other than a supervisor, appoints Public Trust as the replacement trustee, Public Trust must accept the appointment.

(5)       In  subsection  (4),  supervisor  means  a  person  appointed  as  a supervisor within the meaning of section 6(1) of the Financial Markets Conduct Ct 2013.

[10]     The present application effectively is one seeking an order that the applicant be discharged as a trustee of the Trust and that the respondent remain as the sole existing trustee.

[11]     The stated grounds on which this order is sought are:

(a)       The applicant is a professional trustee wishing to resign as trustee.

(b)      The Trust’s assets have been insufficient to maintain payments for

rates on the Trust property.

(c)      The respondent trustee has not replied to correspondence requesting he consent to the applicant resigning as trustee by way of a Deed of Retirement as well as documents to transfer title to the trust property.

(d)Despite being given the opportunity to co-operate the respondent has not done so.

(e)       No  opposition  to  the  present  application  pursuant  to  s  46  of  the

Trustees Act 1956 was anticipated (nor indeed has any been filed).

[12]     Mr Lang’s affidavit in support of this application in my view supports these grounds  advanced.    In  the  current  situation  it  seems  clear  that  the  respondent Mr Brandon, who was one of the settlors and founding trustees of the Trust, has not assisted  the applicant  as  his  co-trustee regarding the property and  rates  arrears. Despite significant efforts to contact Mr Brandon made by the applicant, it seems he has simply not responded.  And, no opposition to the present application has been filed as I have noted.

[13]     Under these circumstances the applicant has found itself unable to receive instructions or consultation and in a difficult position.   As a result, as a purely professional trustee company, it seeks to retire and be discharged as a trustee of the Trust.

[14]     In  all  these  circumstances  I  am  satisfied  that  it  is  appropriate  for  the assistance of the Court sought here to be provided, and for an order to be made in terms of s 46(3) Trustee Act 1956.

[15]     Clearly here, both the co-trustee Mr Brandon and both he as a settlor of the Trust, and Katherine Emsley-Brandon the other settlor, (both of whom have the power under the Trust Deed to appoint new trustees) have neglected to consent to the applicant’s retirement as a trustee or indeed to consider appointment of a new replacement trustee in terms of s 46(2) Trustee Act 1956.

[16]     To provide some possible continuity for the Trust, given what appears to be an absence of the co-trustee Mr Brandon taking any interest in its affairs or the Trust property, it is my view it is necessary here to appoint the Public Trustee as a new trustee henceforth, in place of the applicant as retiring trustee.  This appointment is one to be made in terms of s 46(2) and (4) Trustee Act 1956.

Result

[17]     For all the reasons I have outlined above, the present application before the

Court succeeds. The following orders are now made:

(a)      An  order  is  made  discharging  the  applicant  Cambridge  Trustees Limited as trustee of the Brandon Trust (and from all liability as a trustee from the effective date of this discharge), conditional upon first, it passing its accounts for the Trust before the Registrar of this Court and secondly, it giving notice of its retirement to the respondent and to the other settlor of the Trust, Katherine Emsley-Brandon, at the substituted service address.

(b)The Public Trustee is appointed a new replacement trustee for the applicant, such appointment to commence when the conditions specified in para [17](a) above are satisfied.

(c)      Leave is reserved for any party to approach the Court further for any appropriate vesting orders that  may be required  in  relation  to  the property of the Trust.

Costs

[18]     In its present application, the applicant also seeks costs with respect to this proceeding.  Whether a retiring trustee is entitled to its own costs in a proceeding such  as  this  depends  on  the  circumstances  of  the  case  –  Attorney-General  v Murdoch.1   As a general rule, a trustee is not to be deprived of its costs in a similar situation to this unless it has acted unreasonably.

[19]     In my view, the applicant has acted properly in this matter.  It is entitled to an award of costs on this proceeding.  Costs are now ordered on a category 2B basis together with disbursements as approved by the Registrar, to be paid by the Trust/respondent to the applicant.

...................................................

Gendall J

Solicitors: Saunders & Co

Copy to Respondent

1      Attorney-General v Murdoch (1856) 2 K and J 571 at 573.