Client Trustee Services Limited v Khodaverdi

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2022-412-92

[2023] NZHC 2884

IN THE MATTER OF The L K Family Trust

AND

IN THE MATTER OF

The Trusts Act 2019

AND

UNDER

Part 19 of the High Court Rules 2016

BETWEEN

CLIENT TRUSTEE SERVICES LIMITED

Applicant

AND

LAURA MICHELLE KHODAVERDI

Respondent

Hearing: On the papers

Judgment:

13 October 2023

JUDGMENT OF HARLAND J

Application for variation to orders

Introduction

[1] On 7 July 2023, Gendall J made orders to remove Client Trustee Services Limited (CTSL) as trustee of the LK Family Trust and appoint the Public Trust in its place.1

[2] Counsel for the Public Trust filed a memorandum on 6 October 2023 requesting a variation to the orders to allow for the sealing of an order to enable the

1 Client Trustee Services Ltd v Khodaverdi [2023] NZHC 1772.

CLIENT TRUSTEE SERVICES LTD v KHODAVERDI [2023] NZHC 2884 [13 October 2023]

transfer of the property at 45 Hunt Street, Dunedin (the Property) into the name of the Public Trust as replacement trustee. This is because counsel noted:

(a) the Trust was referred to as “the L K Family Trust”, instead of the “L K Trust”; and

(b) the orders do not mention the vesting of the Property in the Public Trust as the replacement trustee pursuant to s 116 of the Trusts Act 2019 (the Trusts Act).

[3] As a result of s 116(5) of the Trusts Act, the provisions of s 116(2)(b) operate as a matter of law which means that the order made by Gendall J, to replace the co- trustee with the Public Trust, automatically vests the property in the Public Trust without the need for any conveyance, transfer or assignment, subject to any liabilities attaching to the property.

[4] I queried therefore whether a variation to the order was required and the Public Trust, in a speedy memorandum in response, has advised that, although sharing this view, the requested variation to the order is to satisfy Land Information New Zealand (LINZ) requirements to enable transfer of the land title. This is because the order must specifically identify the property by title identifier and, as counsel correctly notes, LINZ has no knowledge of what specific property is held by the trust and LINZ does not register the names of trusts on land titles. The order would therefore serve to link the property to the trust.

[5] I am satisfied that it is appropriate to make both of the variations sought; the first under r 11.10 of the High Court Rules 2016 and the second to provide for clarity needed for the purposes of LINZ.

[6]I accordingly vary the judgment of Gendall J of 7 August 2023 by:

(a) amending the references in his judgment to the LK Family Trust to the LK Trust; and

(b) as well as ordering under s 114 of the Trusts Act the replacement of the co-trustee with the Public Trust, specifying an order under s 116 of the

Trust Act that the property at 45 Hunt Street, Dunedin (Title Identifier OT201/253) is vested in the Public Trust as a co-trustee of the LK Trust.

[7]I approve the draft orders dated 7 July 2023 for sealing.

Harland J

CaseChat Overview and Summary

In the High Court of New Zealand, Client Trustee Services Limited sought to vary orders previously made by Gendall J, which removed CTSL as trustee of the LK Family Trust and appointed the Public Trust in its place. The application sought clarifications in the original orders to facilitate the transfer of a property to the Public Trust, as it was noted that the Trust was referred to as "the L K Family Trust" instead of "the L K Trust". Additionally, the orders did not mention the vesting of the property in the Public Trust as replacement trustee, which is mandated by s 116 of the Trusts Act 2019. The Court needed to determine whether the variations sought were necessary to meet legal and administrative requirements, particularly those of Land Information New Zealand.

The legal issues before Harland J were whether the variations to the orders were necessary to correct the reference to the Trust's name and to specify the vesting of the property in the Public Trust as required by the Trusts Act. The Court considered the effect of s 116(5) of the Trusts Act, which automatically vests property in the replacement trustee, and whether the variations were needed to satisfy Land Information New Zealand's requirements for the transfer of land title. Harland J found that while the automatic vesting under the Trusts Act rendered the property transfer to the Public Trust legally effective, the variations were necessary to satisfy LINZ's requirements for recording the transfer.

Harland J concluded that the variations were appropriate to ensure both legal compliance and administrative accuracy. The Court varied the previous orders to amend the reference to the Trust's name and to include a specific order for the vesting of the property in the Public Trust, as required by s 116 of the Trusts Act. This variation was intended to meet the needs of LINZ for the transfer of land title. Harland J approved the draft orders for sealing, thereby facilitating the transfer of the property to the Public Trust.

The Court's final order was to amend the references in the original judgment and to specify the vesting of the property in the Public Trust, thereby allowing the transfer of the property at 45 Hunt Street, Dunedin, to proceed as required.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

IN THE MATTER OF	The L K Family Trust
AND IN THE MATTER OF	The Trusts Act 2019
AND UNDER	Part 19 of the High Court Rules 2016
BETWEEN	CLIENT TRUSTEE SERVICES LIMITED Applicant
AND	LAURA MICHELLE KHODAVERDI Respondent