Gray v Heighway - [2020] NZHC 473

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-15

[2020] NZHC 473

UNDER Sections 51, 52 and 64A of the Trustees Act 1956

IN THE MATTER

of substitution of a trustee and variation of Trust Deed

BETWEEN

JOHN ANDREW GRAY

Applicant

AND

SELWYN CLIVE HEIGHWAY

Respondent

Hearing: On the papers

Appearances:

SPH Elliott for the Applicant

G D Stringer for the Final Beneficiaries

Judgment:

11 March 2020

JUDGMENT OF GAULT J

This judgment was delivered by me on 11 March 2020 at 2:30 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar

……………………………………

Solicitors / Counsel:
Mr SPH Elliott, Barrister, Auckland
Mr H Gladwell (applicant’s instructing solicitor), Insight Legal, Warkworth

GRAY v HEIGHWAY [2020] NZHC 473 [11 March 2020]

[1] This is an originating application for the appointment and removal of trustees, a consequential vesting order and variation of a trust deed, pursuant to ss 51, 52 and 64A of the Trustee Act 1956 (the Act).

[2] The applicant, John Gray, is a trustee of the Heighway Family Trust (the Trust). The respondent, Selwyn Heighway, is the settlor of the Trust and also a trustee. Mr Heighway is elderly and his mental health is said to have deteriorated to the point that he is no longer able to fulfil his obligations as trustee. Accordingly, Mr Gray seeks orders from the Court for the replacement of Mr Heighway as trustee, for vesting of the main asset of the Trust, a small rural property in Warkworth,1 in the continuing trustees and for a variation of the power of appointment in the Trust deed.

Background

[3] The Trust was settled by Mr Heighway on 3 May 2001. The trustees of the Trust were, and remain, Mr Heighway and Mr Gray. In that capacity, they are the registered proprietors of the Warkworth property.

[4] Mr Heighway is 75 years old. Dr Wood, a consultant geriatrician, reviewed Mr Heighway on 26 November 2018 and diagnosed him with dementia. Dr Wood was of the opinion that Mr Heighway lacked the capacity needed to understand and manage the financial affairs of the Trust, despite retaining “some capacity in terms of the overall intent of the trust”. Mr Elliott has advised that Mr Heighway is now in a dementia facility at Warkworth Hospital and his power of attorney in respect of property is operative.

[5] Under cl 17 of the Trust deed, only the settlor (Mr Heighway) has the power to appoint and remove trustees. However, he now lacks the capacity to exercise that power. Accordingly, Mr Gray says the assistance of the Court is required to replace Mr Heighway as a trustee. Mr Gray proposes that Samuel Bassett, a chartered accountant in Auckland, be appointed in substitution. Mr Bassett is a director of Moore Markhams Auckland and has consented to be appointed as a trustee.

1 Identifier NA105A/390 (North Auckland Registry) being Lot 2 Deposited Plan 171889 and Lot 1 Deposited Plan 78109.

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.

Continue reading Gray v Heighway

Details

AGLC: Gray v Heighway [2020] NZHC 473
Case: [2020] NZHC 473
Decision Date: 11 March 2020

CaseChat Overview and Summary

This is an originating application for the appointment and removal of trustees, a consequential vesting order and variation of a trust deed, pursuant to ss 51, 52 and 64A of the Trustee Act 1956. The applicant, John Gray, is a trustee of the Heighway Family Trust. The respondent, Selwyn Heighway, is the settlor of the Trust and also a trustee. Mr Heighway is elderly and his mental health is said to have deteriorated to the point that he is no longer able to fulfil his obligations as trustee. Accordingly, Mr Gray seeks orders from the Court for the replacement of Mr Heighway as trustee, for vesting of the main asset of the Trust, a small rural property in Warkworth, in the continuing trustees and for a variation of the power of appointment in the Trust deed. The legal issues the Court was required to decide were whether the Court could order the removal of Mr Heighway as a trustee, whether the Court could vest the Trust property in the remaining trustees, and whether the Court could vary the Trust deed. The Court's reasoning and outcome was that the Court could order the removal of Mr Heighway as a trustee, could vest the Trust property in the remaining trustees, and could vary the Trust deed. The Court found that Mr Heighway had the sole power to appoint and remove trustees under cl 17 of the Trust deed and now lacked the capacity to exercise that power. The Court found that it was appropriate to appoint Mr Bassett as trustee in substitution for Mr Heighway. The Court found that it was appropriate to make a consequential vesting order in relation to the property. The Court found that it was appropriate to vary cl 17 of the Trust deed.

Orders