Coleman

[2021] NZHC 143

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE

CIV-2020-454-47

[2021] NZHC 143

IN THE MATTER

of the Trustee Act 1956

AND

IN THE MATTER

of an application for a Vesting Order of Land pursuant to s 52 of the Trustees Act 1956

BY

FRANCIS DAVID COLEMAN

Defendant

On the papers:
Counsel:	N Jessen and A Sinclair for Applicant
Judgment:	12 February 2021

JUDGMENT OF GRICE J (INTERIM)

[1]    This is an application by Mr Coleman (Dave) as sole trustee of the estate of Okeroa Tumataroa for an order vesting property at 272 Awamate Road Wairoa 4193, in Guy Tumataroa as to a one-third share and Dave a two-third share.1

[2]    In simple terms, the current registered owner of the property is Dave as executor of the estate of Okeroa Tumataroa. Okeroa’s wife Ani and their children, who had taken the property under Mr Tumataroa’s will, passed away without the proper transfer of the property to the relevant beneficiaries under their wills or intestacies.

1      The property is 13.9617 hectares, Lot 2 on Deposited Plan 8981, Record of Title HBC 1/1270.

RE COLEMAN [2021] NZHC 143 [12 February 2021]

[3]    This application is made under s 52(1)(h) of the Trustee Act 1956 (the Act) on the basis that it is expedient to make the orders vesting the land in the present beneficiaries who have an entitlement to  the  land  by  virtue  of  succession.  Section 52(1)(h) provides:

(h)where land or any interest therein is vested in a trustee whether by    way of mortgage or otherwise, and it appears to the court to be expedient—

the court may make an order (in this Act called a vesting order) vesting the land or interest therein in any such person in any such manner and for any such estate or interest as the court may direct, or releasing or disposing of the contingent right to such person as the court may direct.

[4]    The background is complicated. Counsel for the applicant filed with his submissions a wiring diagram that I attach as Appendix A. This shows the familial relationships and the devolution of the ownership of the property from its original owner, Okeroa Tumataroa (Okeroa), down to the applicant as to two-thirds share and to Guy, the son of Okeroa, as to a one-third share. Essentially Dave is the widower of Shona Coleman the daughter of Okeroa Tumataroa. Okeroa left a quarter share in his property under his will to Shona. Okeroa  also  left  a quarter share to  his  widow Ani Tumataroa, a quarter share to his son John Tumataroa, and a quarter share to Guy Tumataroa. When Ani passed in 1994, a half share went under the provisions of the Administration Act 1969 following her intestacy to her children: Shona, John and Guy. John passed in  2013  and  left  his  share  in  the  property  to  Dave  and  Shona Coleman, effectively a sixth share each. Shona died in 2018 and under her will her entire estate including the interests in the property went to Dave. Therefore, a two-thirds share in the property has devolved to Dave. Guy has retained his one quarter share and obtained a further twelfth share from his mother. Guy therefore now has a one-third share.

[5]    The interests in the property were never transferred to Okeroa’s beneficiaries. The property has remained in Dave’s name, the sole executor and trustee of Okeroa’s will. Dave outlined the reasons for the lack of distribution as follows:

[12]As will be evident from the fact that the Record of Title to the Property has remained in my name as Executor of Okeroa’s Estate (contrary to usual practice) the various transfers of the Property into different beneficial ownership outlined in paragraphs 5, 8, 10 and 11 of this

Affidavit never took place and I am able to offer some explanation of this as follows:-

a.Ani had suffered severe mental health difficulties during her life and after Okeroa’s death wished very strongly to remain living at the Property although a lack of income made it difficult to support the costs of maintaining the Property. Initially Shona and I met the costs but finally these costs proved too much and the Property was leased (excluding the are Ani was living in) to Hawkes Bay Farmers later brought out by Cedenco. Given that Ani remained living in the Property very little had changed from a practical perspective and updating the title to the Property was one of those things that naturally took a back seat to other matters.

b.At this time the Property was held by Okeroa’s Estate on a leasehold interest from what was then the Māori Affairs Department. The rates, insurance and rental payments in relation to the lease from the Māori Affairs Department and the costs of certain improvements to the Property were paid from the income generated by the Property from the lease to Hawkes Bay Farmers with any excess funds being placed in a dedicated bank account. All arrangements in relation to the Property were made by me as Executor of Okeroa’s Estate and as I was able to make arrangements in my role as Executor there was no pressing need to transfer the Property to the ownership of Ani, John, Shona and Guy as per Okeroa’s Will.

c.In addition, John, Shona and Guy were content for their mother Ani to occupy the Property for as long as she wished and as it seemed unlikely that Ani would engage in the process required to transfer beneficial ownership of the Property, matters were left as they were until Ani’s death.

d.After Ani’s death I made plans to finalise the Estate, however without prior consultation Guy moved onto the Property and occupied the house that Ani had been living in. Shona and John for family reasons did not wish to disturb Guy’s occupation of the Property and he was allowed to live there on a rent free basis, an arrangement which continues until this day. The various expenses in relation to the Property have been met over the years through the income generated by the part of the Property which has been leased to a third party.

e.Approximately ten years ago an opportunity arose for the leasehold interest in the Property to be purchased and merged into the freehold interest. The purchase price of the leasehold interest in the Property was met from a combination of funds saved from income generated by the Property and also a contribution from myself and Shona, the intention being that Shona and I would be reimbursed for our contribution from the income generated by the Property in the future.

f.When John passed away in addition to his funds and property in New Zealand he left Shona and I the sum of $60,000.

Although we had not discussed the matter with John we understood his sum to be are imbursement for the funds paid by us to purchase the leasehold interest in the Property.

g.After John’s death, and up until her own death in 2018, Shona did not have the heart to disturb her brother Guy’s occupation of the Property and so the majority of the Property has remained leased to a third party with the house and curtilage on the Property being occupied by Guy. The Registered Ownership of the Property has remained in my name as Trustee of Okeroa’s Estate.

h.Following Shona’s death it is my wish to finally discharge my responsibilities as Trustee of Okeroa’s Estate and to this end I have reached agreement with Guy with regard to the future of the Property. In particular I am pursuing the subdivision of the Property into a “house block” and a “remainder block” and it is my intention to gift a one-sixth share in the Property to Guy so that Guy and I would each own a one-half share in the Property which I believe would more truly reflect Okeroa’s wishes for the Property.

i.It has been agreed with Guy that following completion of the subdivision he will take ownership of the house block and the remainder block will be sold on the open market to the intent that the value of the house block owned by Guy would be set off against the amount received for the remainder block and the remaining sale proceeds would be divided equally between Guy and I as the owners of a one-half share of the Property each.

j.In order to continue to take the matter forward by completing the subdivision of the Property which will allow the transfer of the house block to Guy and the sale of the remainder block on the open market it is necessary that the title to the Property is vested to the rightful beneficial owners, being myself and Guy.

k.Given the current circumstances of this matter, that is that all parties apart from myself and Guy are now deceased. Also that it has been some 36 years since the death of Okeora and the initial registration of the title to the Property in my name as Executor of Okeroa’s Estate. It is considered that a Vesting Order under section 52 of the Trustee Act 1956 should be sought on the grounds of expediency. Without the Vesting Order it would be a very arduous and lengthy if not impossible process to comply with Land Information New Zealand requirements to allow the Record of Title to the Property to reflect the beneficial ownership of myself and Guy.

[6]    The property at the time of Okeroa’s death on 14 August 1984 was a leasehold interest from the Department of Māori Affairs (now Te Puni Kōkiri). The transmission

of the leasehold interest in the property to Dave in his capacity as executor was registered on 30 August 1985.

[7]    As I noted Ani then died intestate on 12 February 1994. Letters of administration were granted on 30 March 1994. Under the Administration Act, Ani’s estate was divided equally among her children Shona, John and Guy. At that point Shona, John and Guy were each entitled to a third of the interest in the property.

[8]    In 2010, using funds generated from the use of the property and some funds saved by Dave and Shona, the freehold of the property was purchased from the Department of Māori Affairs. A transmission of the freehold interest in the property to Dave as executor was registered on 29 April 2010.

[9]    John passed away on 9 August 2013 in Australia. John’s will divided his  New Zealand property, including his one-third share of the interest in the property, equally between Dave and Shona. The beneficial entitlement and the fee simple interest in the property then was held by Shona as to a one-half share, Guy a one-third share and Dave a one-sixth share.

[10]   Shona passed away on 31 August 2018. Under her will she left her entire estate to Dave. Therefore, the beneficial entitlements, as I have outlined above, ended up divided between Dave as to a two-third share and Guy with a one-third share.

Legal position

[11]   I have set out the text of s 52(1)(h) of the Act above. I am satisfied that the land has vested in Dave as a trustee. Therefore, the issue becomes “whether it appears to the Court to be expedient” to make a vesting order vesting the land or interest in the property in the manner sought by the applicant.

Expediency

[12]   Counsel for the applicant made submissions on this matter. He pointed to Yang v Stafford where Venning  J discussed the meaning of “expedient” in  the context of  s 52(1)(h) commenting that:2

… “Before the Court can consider the exercise of the discretion it must be satisfied that it is expedient to do so. The Oxford Dictionary defines “expedient” as, inter alia:

conducive to advantage in general, or to a definite purpose, fit, proper, or suitable to the circumstances of the case.

And:

“Something that helps forward, or that conduces to an object, a means to an end.”

[13]   Venning J noted the Court must consider “whether it is expedient for the benefit of the trust”.3

[14]   The documentation relating to the various wills, probates and grants of intestacy of Ani and the three children, who predeceased Guy, have been annexed to the affidavit of Dave. Guy Tumataroa has consented to the vesting order and its terms.

[15]   The applicant submits that only two beneficiaries now exist, Guy and Dave. He says the interests of both beneficiaries would be served by having the property vested in them and that they would then be able to deal with the property or dispose of it as they thought fit. The applicant says the intention of the testator was that the property be transferred to his beneficiaries for them to deal with. That is also relevant to ascertaining what orders would be beneficial for the trust.

[16]   The applicant accepts that there are other options available for the applicant to obtain the ultimate vesting of the property as sought in this application. The applicant has outlined the requirements of the Land Registrar to enable completion of a series of transfers of the property down to Dave and Guy in the usual manner through the Land Registry system.

2      Yang v Stafford HC Auckland CIV-2003-404-006815, 17 August 2004 at [32]

3 At [33].

[17]   The applicant says while transfers of the title through the Land Registry is technically possible, it would be very difficult in practical terms. In an e-Dealing containing an instrument for the transfer of title from Dave as executor to Dave and Guy in the shares for which the vesting order is sought could be lodged and Land Information New Zealand would rely on the instrument to transfer the title.

[18]   The applicant points out that, when lodging an e-Dealing containing an instrument for a transfer of title, the lawyer or conveyancer performing that e-Dealing must certify:

… that [they] have the authority to act for the transfer and that the party has the legal capacity to authorise me to lodge this instrument.

[19]   The applicant says without this certification the e-Dealing would not be accepted by the Land Registry.

[20]   The applicant says that Dave is not in a position to authorise the lodgement of such an instrument therefore that certification could not be lawfully given. His legal rights as the registered proprietor of the property are derived from his role as executor of the estate of Okeroa Tumataroa. The estate of a deceased person vests in the administrator of that estate and the administrator holds that estate according to the trusts and dispositions of the relevant will.4 Therefore the applicant submits that Dave’s legal capacity extends only to his abilities as executor to deal with the property and the estate according to the trusts and dispositions of Okeroa’s will.

[21]   Okeroa’s will provided that a quarter interest in the property be transferred into each of his widow Ani, and children Shona, John and Guy. Therefore, according to the dispositions of the will, Dave had the legal capacity to authorise transfers to those beneficiaries only. As the first three of those beneficiaries have passed away, such transfers need to be made to the executors of their respected estates.

[22]   The applicant says theoretically it would be possible for Dave to transfer the interests in the property according to the provisions of Okeroa’s will to Guy and then the other beneficiaries’ executors, however those executors would then need to transfer

4      Administration Act 1969, ss 24-25.

the interests of the property to their relevant estates’ beneficiaries until the interests in the property were devolved and distributed finally to Dave and Guy as to a two-third share and one-third share respectively.

[23]   The applicant is concerned that the transfers would be so complicated and difficult as to be impractical. For instance:

(a)The letters of administration for Ani’s estate were issued to Shona, who has now also passed away. The executor’s estate has passed to the deceased’s executors, but administrator status did not. New Zealand letters of administration would need to be applied for and granted before a transfer could be completed.

(b)John passed away and probate of his will was granted in Australia. Probate would need to be resealed in New Zealand as a preliminary step to executing a transfer. John’s executors also reside in Australia necessitating transfer of interest in the property to overseas residents as executors. Then those executors must transfer those interests on.

[24]   The applicant says the Land Registrar routinely accepts Court orders vesting properly identified land as sufficient proof of ownership to record appropriate changes to title under s 89 of the Land Transfer Act 2017.5 It is for those reasons that the applicant says the making of vesting order in this matter would be expedient for the benefit of the estate and needed to finally fulfil Okeroa’s (and his deceased beneficiaries’) wishes.

[25]   The applicant pointed to the paucity of case law on s 52(1)(h). In Martin v West,6 the Court made a vesting order in respect of a property under that section to give effect to a will 15 years after the testator passed away. The defendant was a trustee of his father’s estate. The father’s will gifted shares in a property among his three children, including the defendant. Following the defendant’s personal

5      That point was made by Toogood J in Re Mead [2019] NZHC 497 at [13]; Wells v Young [2019] NZHC 561 at [12]; and Fletcher v Fletcher [2019] NZHC 511 at [12].

6      Martin v West HC Whanganui M27/99, 8 February 2000, upheld on appeal in West v Martin 2001 NZAR 49 (CA).

bankruptcy, the Official Assignee sold the defendant’s share in the block of land to the other two children. They then sought an order from the Court under s 52(1)(h) for the land to vest in them as to a half each. The defendant’s siblings sought the order as he refused to cooperate with the transfer as trustee of the estate. The Court made an order s 52(1)(h), observing that there was clear evidence that the plaintiffs were each entitled to a one-half share of the property.7

[26]   The applicant also pointed to Re Fabish¸ where the Court stated it was expedient to order under s 52(1)(h) the vesting of a property in the current trustees of the Tariki Hall Trust.8 The title to that property was still in the name of the original trustees who had passed away several years earlier.

[27]   Section 52(1)(h) has also been effective in cases where transfer of title cannot occur as the trustee owners of the properties in question refuse to agree to the transfer, despite being legally obliged to do so.9

[28]   The applicant submits that Guy is the only other interested party in relation to his matter and Guy has completed a written notice of consent to the orders sought.

[29]   For completeness I note that Dave is pursuing the subdivision of the property into a “house block” and a “remainder block” and it was his intention to gift a one-sixth share in the property to Guy so that Guy and Dave could each own a one half share in the property. Dave believes this would more truly reflect Okeroa’s wishes for the property. Dave has agreed with Guy that following completion of the subdivision Guy will take over ownership of the house block. The remainder block will be sold on the open market with the intention that the value of the house block owned by Guy would be set off against the amount received for the remainder block. The remaining sale proceeds would be divided equally between Guy and Dave as owners of a one-half share in the property.

7      Martin v West, above n 6, at [17].

8      Re Fabish [2017] NZHC 2850.

9      Beaven v Rea [2016] NZHC 518; Re Ferguson [2014] NZHC 2343; and Re Jeffrey [2018] NZHC 1326.

[30]   However, nothing can be done with the property until the vesting has been completed. The applicant points out that it has been 36 years since the death of Okeroa and the initial transfer of the property into Dave’s name as executor of Okeroa’s estate. All other beneficiaries apart from Guy and Dave have all passed away.

[31]   I am satisfied that it is expedient for the following reasons that the vesting orders be made in terms of the application:

(a)The practical difficulties and costs of obtaining the transfers required to achieve the ultimate vesting would be considerable.

(b)Thirty-six years have elapsed since Okeroa died.

(c)Dealings with the property are not possible until the property is transferred into the names of Dave and Guy in the appropriate shares.

(d)Both Dave and Guy the ultimate beneficiaries agree to the vesting.

(e)I am satisfied that the chain of succession leads to the applicant and Guy as the present beneficiaries of the property.

[32]I make the orders accordingly.

Grice J

Appendix A