Espie v Espie - [2016] NZHC 2045

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV-2015-442-45 [2016] NZHC 2045

IN THE MATTER OF the Trustee Act 1956

BETWEEN

ROBIN GREY ESPIE Plaintiff

AND

PETER ROSS ESPIE First Defendant

ALEXANDER JAMES JEREMY GLASGOW

Second Defendant

Hearing: 26 August 2016

Counsel:

A G Stallard for plaintiff
No appearance for first defendant
No appearance for second defendant (attendance excused)

Judgment:

31 August 2016

RESERVED JUDGMENT OF CULL J

Introduction

[1] The first defendant is a trustee of the Espie Family Trust (the Trust), which was settled on 1 November 1999 and which is the registered proprietor of a property situated at 4 Rotoiti Street, St Arnaud, Tasman District (the bach).

[2] The other trustee is Mr Glasgow, a solicitor and independent trustee. The discretionary beneficiaries are the plaintiff, his three adult children and the first defendant.

[3] An issue has arisen between the plaintiff and the first defendant as to the future administration of the bach. The bach is in a state of significant disrepair, there

ESPIE v ESPIE [2016] NZHC 2045 [31 August 2016]

are outstanding arrears of rates and insurance premia, and the insurance policy has lapsed.

[4] The proceedings filed on 24 August 2015 seek orders pursuant to s 51(2)(a) of the Trustee Act 1956 (the Act) removing the first defendant as a trustee of the Trust and an order pursuant to s 51(2) of the Act that the plaintiff be appointed as a substituted trustee.

[5] The first defendant was served with the proceedings on 10 September 2015 and he has taken no steps.

Relevant history

[6] At the date of settlement of the Trust on 1 November 1999, there were three trustees of the Trust. They were Mrs Jean Espie, now deceased, her son (the first defendant), and Mr Glasgow, a solicitor.

[7] The appointors in terms of the deed of trust were the three trustees acting jointly. The discretionary beneficiaries under the deed of trust were Mrs Jean Espie and her two sons (the plaintiff and the first defendant), together with their children. The plaintiff is the brother of the first defendant and a beneficiary of the Trust. He is also the father of three of the discretionary beneficiaries of the Trust.

[8] The only asset of the Trust is the bach, being the former family bach, which was left in the Trust for the benefit of the family. Being the only asset of the Trust, there was no additional fund to carry out maintenance and repairs, or pay rates and insurance.

[9] On the death of Mrs Espie, the first defendant became responsible for maintaining the bach and paying outgoings out of his own funds. The first defendant lives in Dunedin and the plaintiff lives in Auckland. The bach was not occupied, nor was it tenanted to generate income. There was evidence provided by way of email dated 2 March 2015 that the first defendant had communicated with his fellow trustee, Mr Glasgow, advising that he had visited the property and undertaken…

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: [2016] NZHC 2045
Decision Date: 31 August 2016

CaseChat Overview and Summary

The High Court of New Zealand was asked to decide whether the first defendant should be removed as a trustee of the Espie Family Trust and if the plaintiff should be appointed as a substitute trustee. The first defendant was a trustee of the Trust, which owned a property in St Arnaud, Tasman District. The plaintiff, the first defendant's brother, was also a beneficiary of the Trust. The bach, the Trust's only asset, was in significant disrepair, and there were outstanding rates and insurance payments. The plaintiff sought the removal of the first defendant as a trustee and his own appointment as a trustee.

The legal issues before the court were whether the first defendant's inaction and lack of communication with the co-trustee and the plaintiff amounted to misconduct under s 51(2)(a) of the Trustee Act 1956 and whether the court had the jurisdiction to remove a trustee and appoint a substitute trustee. The court also needed to determine if there was a breach of trust due to the lack of agreement between the trustees, resulting in dysfunction, and if the first defendant breached the trust by inaction.

The court found that the first defendant had taken no steps in his position as co-trustee to discharge his duties as a trustee. The first defendant had failed to engage and/or respond appropriately to his co-trustee's requests to undertake steps in relation to the Trust asset and consequently was not an appropriate person to remain as a trustee of the Trust. The court also found that the first defendant had been served with court proceedings to remove him as a trustee but had failed to take any steps and refrained from making any communication with either his co-trustee or the plaintiff. The court concluded that there was an urgent need to deal with the asset of the Trust to preserve the maximum return to the beneficiaries. Therefore, the court removed the first defendant as a trustee and appointed the plaintiff as a trustee in his place.

The court ordered the removal of the first defendant as a trustee of the Trust and appointed the plaintiff as a trustee in his place. Leave was reserved to apply in the event that any consequential direction was required. The plaintiff did not pursue any application for costs in these circumstances.

Orders