Grazier v Grazier

[2014] NZHC 3058

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IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2014-409-000820 [2014] NZHC 3058

UNDER

Section 52 of the Trustee Act 1956

AND

UNDER

Part 18 of the High Court Rules

BETWEEN

KAY LAUREL GRAZIER and MICHAEL STEWART GRAZIER and HOWARD JAMES GRAZIER AS TRUSTEES OF THE SG & KC GRAZIER FAMILY TRUST

Plaintiffs

AND

STEWART GOULD GRAZIER Defendant

Hearing	3 December 2014
Appearances:	S M J Hosegood for Plaintiffs No appearance for Defendant
Judgment:	3 December 2014

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

as to vesting of Trust land

Introduction

[1]      Stewart Grazier has been a trustee of the SG & KL Grazier Family Trust (the

Trust)  since it was settled by Mr Grazier and his wife, Kay Grazier on 17 September

2004.  Sadly, Mr Grazier was diagnosed with Alzheimer’s in 2009.  His condition

has deteriorated.

GRAZIER v GRAZIER [2014] NZHC 3058 [3 December 2014]

[2]      By s 43(1) Trustee Act 1956, it is provided that where a trustee is incapable of or unfit to act as a trustee:

the person nominated for the purpose of appointing new trustees by the instrument (if any) creating the trust, or if there is no such person or no such person able and willing to act, then the surviving or continuing trustees for the time being … may by deed appoint a person or persons … to be a trustee or trustees in the place of the appointment of the first-mentioned trustee.

(emphasis added)

[3]      Pursuant to that provision, Mrs Grazier and Michael Grazier, (one of Mr and Mrs Grazier’s sons), as the continuing trustees in whom power of appointment now vests, have by deed appointed Howard Grazier to be a trustee in the place of Mr Grazier.

Joinder

[4]      This proceeding was initially issued by Mrs Grazier.  After issue the deed I have referred to at [3] was enacted.  On Ms Hosegood’s application, I have today made an order joining Howard Grazier as plaintiff.  I dispense with the requirement to file amended pleadings.

The orders sought

[5]      Mrs Grazier and Michael Grazier   have filed an application for summary judgment seeking an order vesting a house owned by the Trust (the trust property) in the continuing and new trustees, Mrs Grazier, and Michael and Howard Grazier.

[6]      The plaintiffs also applied to the Court for an order dispensing with service of the documents.   The matter is urgent because the trustees have entered into an agreement for sale and purchase of the Trust property with an extended settlement date of 5 December 2014.   To enable the sale to take place and settlement occur, the current trustees need a vesting order.

The application to dispense with service

[7]      An order to dispense with service may be made under r 6.8(c) High Court Rules.  That provision applies to identified circumstances in which the document has already come to the knowledge of the person to be served or it cannot be served.

[8]      The issue in this case is not whether service can be effected on Mr Grazier or whether he has been otherwise notified of the proceeding, but rather the negative and meaningless effects of such service upon him.

[9]      In relation to Mr Grazier’s condition, the applicants rely on the affidavit of Dr Michael Tarry dated 10 November 2014.  Dr Tarry is the General Practitioner who has attended  upon Mr Grazier, his last visit being on  31 October 2014 for the purpose of a routine review of Mr Grazier’s physical and mental state.   Dr Tarry deposes that Mr Grazier suffers from Alzheimer’s, having been diagnosed with the condition in 2009.  He identifies a loss of ability on the part of Mr Grazier to manage bills and accounts from 2012.   He records that Mr Grazier now lives in a secure dementia care unit.

[10]     He makes the following additional comments in relation to Mr Grazier’s

condition:

(a)       Mr Grazier lacks the competence to manage his affairs in relation to property.

(b)      Mr Grazier is not competent to manage property in relation to a

Trust.

(c)       Mr  Grazier  is  unable  to  communicate  his  decisions  relating  to property.

(d)       Mr Grazier’s condition is such that it may render him susceptible to undue influence in the management of property affairs in general, including trust property.

(e)       Mr Grazier will not recover competence to manage his own affairs. (f)      It is difficult to state precisely Mr Grazier’s degree of understanding

of  these  proceedings  and  contents  of  related  documents  without

actually confronting him with them, but my professional assessment would be his understanding of them would be significantly less than

that which would be expected of someone who was not judged to have cognitive impairment.

(g)       I suspect Mr Grazier  would  get distressed if he was  notified  of property dealings without understanding the reason for this. Distressed   would   be   indicated   by   that   when   presented   with knowledge that the family home is to be sold he would be expected to not understand the reason for this; ask repetitive questions, responding to answers by stating that he does not understand why this  is  happening.     He  has  lacked  insight  into  his  cognitive impairment since the time of diagnosis.   His distress would be shortlived though as he would soon forget the initial discussion.

(h)       Mr Grazier is only partially capable of understanding the nature of the proceedings surrounding property sale.  While he may grasp that the family home is to be sold, the rational reasoning for its sale would be beyond his understanding.

[11]     There is also an affidavit from Michael Grazier.  The affidavit states that the sale of the trust property has been discussed with Mr Grazier on several occasions but he has no recollection of such conversations and has difficulty processing the reasons for the sale.  Michael Grazier goes on to state:

10.      In my experience:

(a)       my  father  would  be  incapable  of  interpreting  the  sale documents or any documents relating to this proceeding in a manner which you would expect of an adult;

(b)       in respect of the sale of the Trust Property, this would need to be reintroduced to him again and such background information  would  likely  be  lost  by  the  time  he  had completed reading the documents relating to the sale;

(c)       my father would likely become very confused and distressed if he was served with the documents relating to these proceedings. This is because:

(i)        he does not appear to have the ability to put a current situation into context or to follow a logical argument in respect of the house needing to be sold; and

(ii)      when last in paid employment, my father’s work involved acting as an expert witness in respect of coroner’s   enquiries   relating   to   motor   vehicle incidents resulting in death.  I believe he found this work and the court process traumatic.   This court process  may  resurface  incomplete  memories  from his past and add to his confusion and distress.

[12]     I have had regard to the entirety of the evidence filed, with particular reliance upon Dr Tarry’s evidence.   It satisfies me that Mr Grazier’s condition is such that while Mr Grazier might have a modest understanding of the concept of litigation concerning the property sale, he would not be able to rationally understand the reason a sale is needed or to meaningfully participate in the decision-making of trustees.

[13]     I also take into account that, in Dr Tarry’s judgement, Mr Grazier would suffer some distress (albeit shortlived) if served with legal proceedings.

[14]     I  accept  Ms  Hosegood’s  submission  that  a  similar  issue  in  relation  to dispensing  with  service  was  dealt  with  by Associate  Judge  Bell  in  Docherty  v Docherty.1  In that case, as in the present, competent trustees applied for orders vesting trust assets in them when their co-trustee suffered from dementia and lacked ability to understand and make decisions.  Before making an order vesting the assets of the Trust in the plaintiffs, Associate Judge Bell dispensed with service of the proceeding upon Mr Docherty as it would serve no useful purpose.2

[15]     The Associate Judge did not refer to the source of jurisdiction to dispense with service.  I infer that his Honour was relying upon the inherent jurisdiction of the Court to regulate the process and proceedings of the Court.3   I proceed on that basis.

[16]     An order will be made dispensing with service.

A vesting order

[17]     The Court, under s 52(1)(a) Trustee Act 1956, may vest land in trustees where they have been validly appointed as trustees.

[18]     The property owned by the trustees is the former home of Mr and  Mrs

Grazier.  Both Mr and Mrs Grazier now live in rest homes in Ashburton.  The current trustees need the property to be vested in them in order to be able to sell it.

1      Docherty v Docherty [2013] NZHC 1885.

2 At [33].

3      See IH Jacob “The Inherent Jurisdiction of the Court” (1970) Current Legal Problems 23 at 32 –

40.

[19]     The sale is a decision for the trustees.  Mr and Mrs Grazier remain interim beneficiaries of the Trust but that does not affect the right of the trustees to realise or otherwise deal with the Trust assets in accordance with the Trust deed.

[20]     It follows that Mr Grazier would have no arguable defence to the summary judgment application for a vesting order.

[21]     Such an order will be made.

Costs

[22]     The trustees have their right under the trust deed to reimbursement of their proper expenses incurred in this proceeding so an order for costs to be recovered from the Trust is not required.

Orders

[23]     I order:

(a)      Service of this proceeding on Stewart Gould Grazier is dispensed with.

(b)The property at 51 Cambridge Street, Hampstead, Ashburton, being a fee simple estate of 733 square metres more or less and being Lot 16 on Deposited Plan 641 described in Certificate of Title CB 714/61 is vested in Kay Laurel Grazier, Michael Stewart Grazier and Howard James Grazier.

(c)       There is no order as to costs.

Solicitors:

Treadwells, Wellington

Associate Judge Osborne