Cross v Grimstone

[2019] NZHC 2296

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2019-419-219

[2019] NZHC 2296

UNDER

the Trustee Act 1956 and Part 19 of the High Court Rules

IN THE MATTER

of an application for orders under s 52 of the Act

BETWEEN

LIAN MAREE CROSS, JOHN EDWARD BUTLER and O'SHEAS TRUSTEES

LIMITED as Trustees of the PN Grimstone Family Trust
Applicants

AND

ROBIN PHILOMENA ELIZABETH GRIMSTONE

Respondent

Hearing:	On the papers
Counsel:	DL Harvey for applicants
Judgment:	13 September 2019

JUDGMENT OF FITZGERALD J

[As to without notice application seeking directions and originating application for vesting orders]

This judgment was delivered by me on 13 September 2019 at 11 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           O'Sheas, Hamilton

Cross v Grimstone [2019] NZHC 2296 [13 September 2019]

Introduction

[1]    The applicants are the current trustees of the RPE Grimstone Trust (Trust). The respondent (Mrs Grimstone) is the settlor of the Trust. The Trust owns a half-share in a family home (Property).

[2]    In more recent times, Mrs Grimstone has been diagnosed with moderately severe dementia. A Health Practitioner’s Certificate of Mental Incapacity to this effect was completed on 18 September 2018. The doctor providing the certificate is of the opinion that Mrs Grimstone will not recover from her current condition.

[3]    The applicants, as the current trustees of the Trust, apply without notice for orders that:

(a)leave be granted to commence these proceedings by originating application under Part 19 of the High Court Rules;

(b)service on Mrs Grimstone is dispensed with, together with the need to appoint a litigation guardian on her behalf;

(c)service of the beneficiaries of the Trust is also dispensed with; and

(d)the substantive s 52 Trustee Act 1956 (Act) matter be dealt with on the papers.

[4]    As to that last order, the applicants have also filed an originating application without notice for a vesting order, vesting a half-share in the Property in the applicants pursuant to s 52 of the Act. This will result in the Property being in the names of the current trustees, and thus able to be dealt with by them in accordance with their roles and duties as trustees.

[5]    All beneficiaries of the Trust (other than Mrs Grimstone herself, and the first- named applicant) have consented to the orders being made.1

1      There is no express definition of or listing of “beneficiaries” in the Trust Deed. However, the trustees have the discretion to make distributions to the Settlor’s “husband” and “children”. Those persons may therefore appropriately be considered the (discretionary) beneficiaries of the Trust.

Factual background – more detail

[6]    The original trustees of the Trust were Mrs Grimstone and her husband Paul Nelson  Grimstone   (Mr Grimstone)   and   a   Mr Bruce   Anthony   Stewart.   On 22 December 2004, O'Sheas Trustees Ltd replaced Mr Stewart as a trustee.

[7]    Mr Grimstone died in June this year. A copy of his Death Certificate has been produced in evidence.

[8]    Pursuant to the terms of the Trust Deed, Mrs Grimstone (as Settlor) held the power to appoint new trustees. In a subsequent deed dated 8 June 2007 (Appointer Deed), Mrs Grimstone stipulated that as soon as there was “no person to exercise the powers contained in cl 36 of the Trust Deed” (which concerns the removal of trustees), certain persons, in order of priority, would become the new appointer for the purposes of the Trust Deed:

(a)First, Mr Grimstone, followed by, on the later of Mrs Grimstone’s death or the date on which Mr Grimstone died or lost his mental capacity;

(b)Ms Cross, being Mrs Grimstone’s daughter (i.e. the first-named applicant) and John Butler being Mrs Grimstone’s brother (the second- named applicant).

[9]    While it is the case that Mrs Grimstone is still alive, it is plain, given her mental health condition since at least September 2018, that since that time, she has been unable to fulfil her role as either trustee or appointer under the Trust Deed. I am accordingly satisfied that pursuant to the Appointer Deed, from at least September 2018, the role of appointer vested in Mr Grimstone. And, after his death, the role of appointer devolved to the first and second-named applicants.

[10]   Pursuant to the power of appointment contained in the Trust Deed, by deed dated 8 August 2019, the first and second-named applicants removed Mrs Grimstone as trustee and appointed themselves as trustees (in accordance with cls 35 and 36 of the Trust Deed respectively). That has resulted in the three-named applicants being the present trustees of the Trust.

[11]   As noted, the applicants now seek a vesting order to transfer the half-share of the Property into the present trustees’ names. As will be appreciated, a Court order is required to effect this, given Mrs Grimstone’s lack of capacity and thus inability to appreciate and execute the required documentation.

[12]   The beneficiaries of the Trust are Mrs Grimstone, the first-named applicant and Mrs Grimstone’s other two children (Shane and Patrick). Written consent from each of Shane and Patrick to the orders sought being made has been filed with the applications. They note they were advised to seek independent legal advice and have elected to waive that right.

Dealing with the matter on the papers

[13]   Given the nature of the orders sought, that the substantive relief sought can be considered mechanical in nature, and that other than the applicants, Mrs Grimstone and the beneficiaries (who have filed consent), no other parties would appear to have any interest in the substantive proceeding, I am satisfied it is appropriate to deal with the applications on the papers.2 Such applications are routinely dealt with by this Court in this way.

Interlocutory application seeking directions

[14]   I am similarly satisfied that the orders set out at [1](a) to (c) above are appropriately made.

[15]   Orders granting leave to commence proceedings of this nature by originating application are routinely made. The expediency envisaged under the originating application procedure is entirely suited to a case of this type.

[16]   I am also satisfied that orders dispensing with service on Mrs Grimstone and the need to appoint a litigation guardian are appropriate. Given Mrs Grimstone’s current mental health, service on her would serve no useful purpose, and indeed could cause unnecessary stress and concern. For the same reason, and consistent with other

2      I did, however, hold a brief telephone conference with counsel for the applicants to clarify some matters prior to finalising this judgment.

High Court authorities, I am also satisfied that no useful purpose would be served in appointing a litigation guardian to represent Mrs Grimstone in these proceedings.3 This is particularly so given the substantive relief sought, namely a vesting order, is mechanical in nature and does not affect Mrs Grimstone’s current position as a beneficiary under the Trust. No doubt the continuing trustees are fully aware of and will comply with their duties as trustees, and will take into account what will no doubt be the needs of Mrs Grimstone going forward, as a particularly vulnerable beneficiary.

[17]   In addition, given the nature of the substantive relief sought, and the formal written consent provided by each of the beneficiaries, I am satisfied service is not required on them.

[18]   There are accordingly orders made in accordance with paragraphs 1(a) to (d) of the interlocutory application without notice seeking directions dated 20 August 2019.

Originating application for a vesting order

[19]Section 52 of the Act relevantly provides as follows:

52       Vesting orders of land

(1)Subject to the provisions of subsections (2) and (3), in any of the following cases, namely—

…

(b)where a trustee entitled to or possessed of any land or interest therein, whether by way of mortgage or otherwise, or entitled to a contingent right therein, either solely or jointly with any other person—

(i)is under disability; or

…

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.

3      See, for example, McKean v McKean [2017] NZHC 2212; Docherty v Docherty [2013] NZHC 1885; Grazier v Grazier [2014] NZHC 3058; and Strang v Strang [2016] NZHC 2203.

…

(3) Where any such order relates to a trustee entitled or formerly entitled jointly with another person, and that trustee is under disability or out of the jurisdiction of the court or cannot be found, or (being a corporation) has ceased to carry on business or is in liquidation or has been dissolved, the land, interest, or right shall be vested in the other person who remains entitled, either alone or with any other person that the court may appoint.

[20]   The Court has jurisdiction to make the vesting order sought and has made such orders in similar circumstances in other cases.4

[21]   I  am  satisfied  it  is  also  appropriate  to  make  the  order  in  this  case.  Mrs Grimstone has been removed as trustee, given her current medical condition. The continuing trustees plainly need to be able to hold and deal with Trust property in order to carry out their duties. It follows that it is necessary for the Trust’s ownership of the half-share in the Property to be formally recorded in their names.

[22]   There are accordingly orders in terms the draft orders filed with the originating application.

[23]I make no order as to costs.

Fitzgerald J

4      See, for example, McKean v McKean, above n 3; Docherty v Docherty, above n 3; and Re Delaney

[2017] NZHC 2276.