Dawson v Paul - [2014] NZHC 15

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-4970 [2014] NZHC 15

BETWEEN SUZETTE MAREE DAWSON, SHANE PAUL AND WILSON McKAY TRUSTEE COMPANY LIMITED AS TRUSTEE OF THE PAUL FAMILY TRUST
Plaintiffs

ANDSHANE PAUL Defendant

Hearing: 22 January 2014

Appearances: L Kearns for the Plaintiffs
No appearance by or on behalf of the Defendant

Judgment: 24 January 2014

RESERVED JUDGMENT OF BROWN J

This judgment was delivered by me on 24 January 2014 at 3 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors: Wilson McKay, Remuera, Auckland
Counsel: L Kearns, Auckland

DAWSON v PAUL [2014] NZHC 15 [24 January 2014]

Introduction

[1] The defendant is a trustee of The Paul Family Trust (“the Trust”), a trust which was settled on 23 June 2010 and which is the registered proprietor of a property situated at 5 Beeche Place, Birkdale, Auckland.

[2] The other trustees are Ms Dawson and Wilson McKay Trustee Company (P176098) Limited. The Preferred Beneficiaries are the defendant, Ms Dawson and their children and future grandchildren. There are also Discretionary Beneficiaries.

[3] The defendant was adjudicated bankrupt on 15 March 2013. Save for one abusive email which he sent, the defendant has had no communication with his former partner, Ms Dawson, or with their two children since approximately December 2012.

[4] The proceeding and in particular the interlocutory application dated

12 December 2013 seek orders pursuant to s 51(2)(d) of the Trustee Act 1956 removing the defendant as a trustee of the Trust and appointing Maureen Margaret Dawson of Auckland, Marketing Executive, as a substituted trustee.

Relevant history

[5] The defendant and Ms Dawson commenced a de facto relationship in early

2005. Their relationship produced two children, a daughter born on 3 December

2005 and a son born on 29 August 2010.

[6] For a number of years the couple lived in rental accommodation saving money towards their acquisition of a home. In June 2010 they purchased as a family home the property at 5 Beeche Place, Birkdale for the sum of $465,000. A loan advance was obtained from Kiwibank Limited in the sum of $372,000.

[7] The acquisition of the property by the Trust is explained by Ms Dawson in paragraph 6 of her affidavit of 21 November 2013:

... Because at that stage I was not earning, a decision was made that the property would be purchased in the defendant’s sole name and a mortgage was also raised in his sole name. Almost immediately thereafter the property

was transferred into The Paul Family Trust of which the defendant and I and the Wilson McKay Trustee Company Ltd are the trustees ... The loan was initially approved one month prior to settlement of the purchase. By the time of the settlement, the trust had been established and the trust acquired the property. The loan however remained in the defendant’s sole name but guaranteed by the trustees. ...

[8] The affidavit of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] NZHC 15
Decision Date: 24 January 2014

CaseChat Overview and Summary

Dawson v Paul was a case heard in the High Court of New Zealand in Auckland. The plaintiffs were Suzette Maree Dawson, Shane Paul, and Wilson McKay Trustee Company Limited as the trustee of the Paul Family Trust. The defendant was Shane Paul, a trustee of the Paul Family Trust, which held property in Birkdale, Auckland. The plaintiffs sought to remove Shane Paul from his position as trustee and replace him with Maureen Margaret Dawson due to his bankruptcy and lack of communication. Shane Paul had been adjudicated bankrupt and had severed ties with Suzette Maree Dawson, his former partner and co-trustee, and their two children. The plaintiffs argued that Shane Paul's position as a trustee was no longer tenable due to his bankruptcy and failure to fulfill his duties.

The legal issues the court had to decide were whether the court had jurisdiction to remove a bankrupt trustee without notice and whether the circumstances warranted removing Shane Paul from his position as trustee and appointing Maureen Margaret Dawson as a substitute trustee. The court considered its inherent jurisdiction to supervise trusts for the welfare of beneficiaries and the statutory provision in the Trustee Act 1956 that allows for the removal of a bankrupt trustee. The court also considered the precedent set in previous cases that removal of a bankrupt trustee is almost automatic.

The court ruled that the circumstances warranted proceeding on the interlocutory application rather than requiring the matter to proceed to a substantive hearing. The court found that it was imperative to resolve matters relating to ownership of the Birkdale property, which was currently the family home of Suzette Maree Dawson and the two children. The court also found that Shane Paul had taken no steps to discharge his duties as a trustee for at least a year, had significant financial liabilities, and had chosen not to communicate with the other trustees. Consequently, the court ordered the removal of Shane Paul as a trustee of the Trust and appointed Maureen Margaret Dawson as a trustee in his place.

In conclusion, the High Court of New Zealand ruled in favor of the plaintiffs, removing Shane Paul as a trustee of the Paul Family Trust and appointing Maureen Margaret Dawson as a substitute trustee due to his bankruptcy and failure to fulfill his duties. The court's decision was based on its inherent jurisdiction to supervise trusts for the welfare of beneficiaries and the statutory provision in the Trustee Act 1956 that allows for the removal of a bankrupt trustee. The court also considered the precedent set in previous cases that removal of a bankrupt trustee is almost automatic. The court's decision aimed to protect the interests of the beneficiaries and ensure the proper management of the Trust.

Orders