Clark and Gauld as Trustees of the Angletree Trust

[2012] NZHC 426

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2011-404-5445 [2012] NZHC 426

UNDER  Section 52 of the Trustee Act 1956

IN THE MATTER OF     an application to vest trust property in respect of the Angletree Trust

BETWEEN  REWA STANLEY CLARK AND BRIAN JAMES GAULD AS TRUSTEES OF THE ANGLETREE TRUST

Applicants

Hearing:         14 March 2012

Counsel:         M Casey QC for applicants

D K Wilson for Mr and Mrs Wayman

Judgment:      16 March 2012

JUDGMENT OF ALLAN J

In accordance with r 11.5 I direct that the Registrar endorse this judgment with the delivery time of 4 pm on Friday 16 March 2012

Solicitors/Counsel :

P Miller, Auckland  [email protected]

Matthew Casey QC Auckland  [email protected]

D K Wilson Auckland  [email protected]

TRUSTEES OF THE ANGLETREE TRUST HC AK CIV 2011-404-5445 [16 March 2012]

Introduction

[1]      This is an application to vest a property at 87 Triangle Road, Massey, in the applicants as trustees of the Angletree Trust.   There is no respondent in a formal sense;  however Mr Wayman was directed to be served, and Mr Wilson appeared at the hearing to acknowledge service and to indicate Mr Wayman’s position.  He was however, without any formal instructions, for the reasons set out below. The Court is grateful for his assistance.

Background

[2]      The  trustees  of  the Angletree  Trust  are  the  registered  proprietors  of  the property at 87 Triangle Road, Massey, which is the family home of the settlor of the trust, Mr Rewa Stanley Clark.   The trust was established by a deed of trust dated

26 July 2004. The original trustees of the trust were Mr Clark and Angletree Ltd (the company).   The company was formed by Mr N J Wayman, who was Mr Clark’s accountant.  Mr Wayman was its sole shareholder and director.

[3]      The deed of trust empowers Mr Clark to remove and appoint trustees during his lifetime.   Mr Clark wished to refinance the property.   For that purpose, he required the co-operation of Mr Wayman in his capacity as the sole director of the company.  Mr Wayman declined to co-operate.  He claimed that interests associated with Mr Clark (but not the trust or the company), owed him fees for accounting services which were in dispute.  Mr Wayman declined to take any step at the request of Mr Clark in respect of the proposed refinancing until he had been paid what he considered to be owing.

[4]      Mr Clark accordingly removed the company as a trustee of the trust by deed dated 4 October 2010.  Mr Gauld was appointed in its stead.

[5]      Subsequently,  through  his  solicitor,  Mr  Clark  sought  to  obtain  from Mr Wayman a transfer of the shares in the company, together with Mr Wayman’s resignation as a director.  But there was no response to his solicitor’s letter.

[6]      On 8 June 2011 the company was struck off the Companies Register for failing to file an annual return.  However, the company remains on the title to the Triangle Road property.   In order to reflect the change in trustees of the trust, the company ought to execute a transfer of its interest into the names of the present trustees, but it cannot do so because it has been dissolved.

Application for vesting order

[7]      Section 47 of the Trustee Act 1956 (the Act), provides that where a new trustee is appointed, the trust property shall vest in the new and continuing trustees “…without any conveyance or assignment”.  However, the practice of the Registrar General of Land is to require either a transfer, signed by the outgoing trustee, or alternatively a vesting order.

[8]      The applicants accordingly invoke s 52(1)(b) of the Act, which provides that the Court may make an order vesting land in any person where a corporate trustee in respect of that land has been dissolved.  That is the position here.  I am satisfied that the provisions of s 52(2) apply. That subsection states:

Where any such order is consequential on the appointment of a trustee, the land or interest therein shall be vested for such estate as the Court may direct in the persons who on the appointment are the trustees.

[9]      In the circumstances outlined above, the applicants have established their entitlement to relief.  There will therefore be an order pursuant to s 52 of the Act, vesting in Rewa Stanley Clark and Brian James Gauld the land situated in the land registration district of North Auckland, comprising 1646 sq metres more or less, being lot 2 on deposited plan 421418, and being all the land comprised and described in unique identifier 481967, subject to such mortgage and other interests as are noted on the register.

Costs

[10]     The applicants seek an order directing that Mr Wayman pay the costs of the proceeding. They say that had he co-operated, as he should, in the orderly transfer of

the trust property, the present application would have been unnecessary.   The company was under Mr Wayman’s control at all times.  His refusal to co-operate in Mr Clark’s refinancing activities, resulting in avoidable legal costs, amounted to a plain breach of trust, Mr Casey submits.   Mr Wayman has simply permitted his dispute with other interests associated with Mr Clark to conflict with his duties as a director of a trustee.

[11]     Mr Casey advises the Court that if the company had still been in existence, it would have been named as a party in the proceeding and costs would have been sought against it.  However, because Mr Wayman has permitted the company to be dissolved in consequence of his  default as the only director and  shareholder, it should fall to him to pay the costs personally.

[12]     Mr Wilson advises the Court that at some relatively recent time (he cannot say precisely when), Mr Wayman has become mentally incapacitated.  That is why Mr Wilson is without formal instructions.  Mr Wayman is entitled to some sympathy, but of course, his declining health has prevented the applicants from endeavouring to secure the desired outcome without resort to the Court.

[13]     The order sought by the applicants is relatively modest.  They ask for costs on  a  category 1  band A basis,  together  with  all  reasonable  disbursements.   As Mr Casey submits, all matters relating to costs are in the discretion of the Court.[1]

The jurisdiction of the Court to award costs against a non-party was discussed in detail by the Privy Council in Dymocks Francise Systems (NSW) Pty Ltd v Todd (No.2).[2]   Before an order against a non-party can be contemplated, the Court must be satisfied that the applicant has incurred costs by reason of an act or omission of the non-party.

[1] High Court Rule 14.1.

[2] Dymocks Francise Systems (NSW) Pty Ltd v Todd (No.2) [2004] UKPC 39 [2005] 1 NZLR 145.

[14]     Here, I accept that Mr Wayman ought to have co-operated with Mr Clark by executing  such  documents  as  were  necessary  to  enable  the  refinancing  of  the Triangle Road property to occur.  In his capacity as the sole director of the company,

he was obliged to take such steps as were necessary to ensure that the company

fulfilled its obligations as a trustee.   Plainly those obligations extended to the facilitation of the refinancing of the trust property.  By permitting a dispute over fees owed by entities other than the trust to intrude into his relationship with Mr Clark, Mr Wayman breached the obligations resting upon him as the person in sole control of a company which had trustee obligations.  It makes no difference, in my view, that in more recent times Mr Wayman was incapable of making good his default by reason of his deteriorating mental health.

[15]     In Dymocks, the Privy Council observed that costs orders against non-parties could be regarded as exceptional, but that simply means that proceedings in which such  orders  are  made  will  be  outside  the  ordinary run  of  cases.    The  ultimate question is whether, in all the circumstances it is just to make an order.[3]

[3] Dymocks at [25].

[16]     Had  Mr  Wayman  complied,  in  his  capacity  as  the  sole  director  of  the company, with his obligations, then the present application would have been wholly unnecessary.  In those circumstances, I am satisfied it is appropriate to make an order in the relatively modest terms sought by the applicants.

[17]     Accordingly,  there will  be an  order directing  Mr Wayman to  pay to  the applicants the costs of this proceeding calculated on a category 1 band A basis, together with reasonable disbursements to be fixed by the Registrar.

C J Allan J