Gibbons v Alington

[2023] NZHC 483

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2023-485-100

[2023] NZHC 483

BETWEEN

HARRY HAWTIN GIBBONS AND CATHERINE BEATRICE ALINGTON

First Applicants

PERPETUAL TRUST LIMITED

Second Applicant

AND

WILLIAM HILDEBRAND ALINGTON

Respondent

Hearing:	On the papers
Appearances:	A R Davie for the applicants
Judgment:	13 March 2023

JUDGMENT OF COOKE J

(Vesting property in new trustees)

[1]    By interlocutory application without notice dated 27 February 2023 the applicants seek directions that these proceedings be brought under Part 19 of the High Court Rules 2016, and that the application be brought without notice to any other person.

[2]    In addition the proposed originating application has been provided in which the applicants seek orders that they be appointed as trustees of the WH & MH Alington Family Trust (the Trust) in substitution for existing trustee, William Hildebrand Alington, and that the property at 30 Friend Street, Karori be vested in the first and second applicants. They also seek orders dispensing with service on the respondents and beneficiaries of the Trust, together with any other orders necessary or desirable for the proper administration of the Trust.

GIBBONS v ALINGTON [2023] NZHC 483 [13 March 2023]

[3]    The applications are supported by an affidavits from each of the first applicants both sworn 20 February, together with a memorandum of counsel.

[4]    The documents were referred to me as Duty Judge. By minute dated 3 March 2023 I directed that information be provided on the stance of Giles Arlington. He is the son of William Arlington, and holds his power of  attorney.  An affidavit dated   7 March 2023 outlining his support for the applications was filed as a consequence.

[5]    Having considered what has been filed I consider that the matters can appropriately be dealt with on the papers. The matters should proceed under Part 19, and there is no need for the applications to be served on any other parties. The orders, the application and proposed draft application can be granted. These are my reasons.

The facts

[6]    The facts are a little complicated as a number of steps were taken in the administration of this Trust in an imperfect, or imprecise way. But notwithstanding that complexity this is a straightforward matter where orders from the Court are appropriate to regularise the proper administration of the Trust.

[7]    The Trust was settled in 1986 with William Alington, Margaret Alington and Shirley Murray as the original trustees. The Trust Deed required there to be a minimum of two trustees.

[8]    The first applicants are the daughter of William and Margaret Alington, and Mr Gibbons, a long-standing friend of her father of some 22 years. Both were apparently appointed as replacement trustees in the circumstances referred to below, and both are willing to continue in that role. Margaret Alington passed away in 2022, and Shirley Murray also passed away in 2020. The point of the applications is to ensure that all of the applicants are validly appointed as trustees, and that the Trust’s principal asset, the property in Karori — is vested in the applicants.

[9]    By Deed dated 21 November 2011 Margaret and Shirley retired, and Harry Gibbons (one of the first applicants) and Margaret Johnston appointed trustees. There

is some doubt whether the wording of the Deed was sufficient to achieve these things, although the better view may be that it was.

[10]   Then on 18 March 2016 the second applicant, Perpetual Trust Ltd (or more specifically its predecessor in title) was appointed as a custodian trustee in accordance with the Trust Deed permitting a custodian trustee to be appointed.

[11]   Then on 21 June 2017 Margaret Johnston sought to retire as a trustee to be replaced by Catherine Alington (the other first applicant). So at that point all the applicants were purportedly appointed as trustees/custodian trustees, although some doubt existed in relation to the wording and effect of the deeds executed to do so.

[12]   Finally it has transpired that William Alington no longer has the mental capacity to act as a trustee. Margaret Alington has explained in her affidavit that her father no longer has capacity, and she attaches the certification from a medical practitioner in that regard. Giles Arlington holds William’s power of attorney, and in his affidavit he also explains that his father no longer has mental capacity and that he has been acting under the power of attorney. He supports the applications.

Assessment

[13]   As an initial point, I accept the submissions advanced in support of the application that orders appointing, or confirming the appointment of replacement trustees are to be made under the Trustee Act 1956, rather than the Trusts Act 2019. Part 1, sch 1 of the Trusts Act 2019 sets out transitional provisions, and it provides that the divesting and vesting of trust property is to be completed under the 1956 Act when a trustee resigns or has been removed before commencement, and the divesting and vesting of trust property has not taken effect. Here trustees had resigned/replaced before commencement of the 2019 Act, but steps had not been appropriately taken to vest the property in new trustees. Adopting a purposive application the matters are to be finalised under the provisions of the 1956 Act.

[14]   There can be some confusion, or technical uncertainty, about the applications of ss 51 and 52 of the Trustee Act 1956 to certain fact scenarios, but that does not prevent the Court making orders in the appropriate cases, if necessary under the inherent jurisdiction of the Court.1

[15]   The substantive orders sought are under ss 51 and 52. The relevant sections provide:

51Power of court to appoint new trustees

(1)The court may, whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient, difficult, or impracticable so to do without the assistance of the court, make an order appointing a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee.

(2)In particular and without prejudice to the generality of the foregoing provision, the court may make an order appointing a new trustee in substitution for a trustee who—

…

(c) is a mentally disordered person within the meaning  of  the Mental Health (Compulsory Assessment and Treatment) Act 1992, or whose estate or any part thereof is subject to a property order made under the Protection of Personal and Property Rights Act 1988; or

…

52Vesting orders of land

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

(a)where the court appoints or has appointed a trustee of any land or interest therein, or where a trustee of any land or interest therein has been appointed out of court under any statutory or express power:

(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

…

1      Bamford v Ives [2020] NZHC 994.

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.

(2)Where any such order is consequential on the appointment of a trustee, the land or interest therein shall be vested for such estate as the Court may direct in the persons who on the appointment are the trustees.

…

[16]   The Court has regularly exercised these powers, including in a situation where a trustee has dementia even when interpretation issues in relation to the appropriate approach have been identified.2 The power in s 52 can be utilised when a former trustee is no longer capable but remains on the title. For example it has been used in the case of an incapacitated trustee where the holder of an enduring power of attorney is not able to execute transfers.3 It has also been exercised when powers of an appointment under the Trust Deed do not address the situation.4 Ultimately the issue for the Court is whether replacing or appointing trustees, and ordering the changes to the certificate of title, is appropriate in the circumstances of the case.

[17]   I accept that orders under these provisions should be made in the present case. There have been attempts at resignation and replacement which for technical reasons may not have been effective, and it is appropriate for the Court to make orders under s 51 confirming the appointment of the first applicants as trustees, the second applicant as custodian trustee. In any event it is appropriate to now vest the Trust property in the persons who were intended to be the replacement trustees under s 52. This involves orders vesting the property at 30 Friend Street, Karori in the first and second applicants.

2      See, for example, Parsonage v Parsonage [2020] NZHC 454 at [18]; Riley v Jeffries [2020] NZHC 2008.

3      Godfrey v McCormick [2017] NZHC 420, [2017] 3 NZLR 198; Locker v Browning [2018] NZHC 1127.

4      Public Trust v Daken [2017] NZHC 1285.

[18]   For these reasons I make the order sought. Leave is reserved to address any residual technical matters, including in relation to the form of the orders required. If such leave is exercised the matter can be referred to me to be determined on the papers.

Cooke J

Solicitors:
Treadwells, Wellington for the Applicants