Highley v Highley

[2016] NZHC 1580

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-001429 [2016] NZHC 1580

UNDER	Section 52 of the Trustee Act 1956
BETWEEN	JILILAN ANN HIGHLEY, CICERO TRUSTEE SERVICES LIMITED AND KAREN MARY BIRD AS TRUSTEES OF THE LONG RIDGES TRUST Applicants
AND	ROY KENNETH HIGHLEY Respondent

Hearing:	On the papers
Appearances:	N L Penman-Chambers for applicants
Judgment:	13 July 2016

JUDGMENT OF PALMER J

This judgment is delivered by me on 13 July 2016 at 9.30 am pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

Solicitors:

Hesketh Henry, Auckland (Applicants)

HIGHLEY v HIGHLEY [2016] NZHC 1580 [13 July 2016]

Summary

[1]      I grant orders sought by the trustees of the Long Ridges Trust consequent upon the severe dementia of one of the former trustees.

Background

[2]      Ms Jillian Ann Highley is a trustee of the Long Ridges Trust, along with

Cicero Trustee Services Ltd (Cicero Trustees).

[3]      Her husband, Mr Roy Kenneth Highley, was replaced as a trustee because he is suffering from severe dementia and does not have capacity to continue in that role. The replacement, by the Highleys’ daughter Karen Mary Bird, was effected by way of a Deed of Replacement of Trustee dated 22 May 2016.

[4]      However, the realty interests of the Trust continue to be held by Ms Highley, Cicero Trustees and Mr Highley.  Mr Highley does not have the capacity to authorise transfer of those interests.

Applications

[5]      The current trustees, Ms Highley, Cicero Trustees and Ms Bird, apply for several orders:

(a)       An order vesting the Trust’s realty interests in them under s 52(1)(b)(i)

of the Trustee Act 1956.

(b)An order amending clause 14.1 of the power of appointment and removal of trustees in the deed of trust of 20 May 1994, under the court’s inherent power to vary terms of trusts, so that the power of appointment and removal may be exercised by Ms Highley independent of Mr Highley.

(c)      An order that this proceeding may be commenced by originating application under r 19.5 of the High Court Rules.

[6]      The applications are supported by affidavits by:

(a)      Ms Highley dated 4 May 2016 who supports the applications and notes that the primary beneficiaries of the trust are Ms Bird, Joanne Highley and Catherine Highley-Bartlett, who all consent to the orders sought.

(b)      Ms Bird dated 22 May 2016 who supports the applications.

(c)      Ms Mary Simpson, a director of Cicero Trustees, dated 15 June 2016, who supports the applications and exhibits copies of separate consents of the primary beneficiaries.

(d)Dr Andrew Webster, dated 1 June 2016, who confirms Mr Highley has severe  dementia  which  is  permanent  and  will  slowly  progress. Dr Webster says Mr Highley lacks the capacity to manage his own personal and property affairs and is medically unfit to understand and enter into  legal  documents  relating  to  the trust  or  to  exercise  his powers as trustee.

[7]      Similar orders were made by Gendall and Mallon JJ in similar cases.1

[8]      The applications, dated 17 and 21 June 2016, were filed in the High Court on

21 June 2016 and referred to me as duty judge on 23 June 2016.

Vesting Realty

[9]      The Trust’s realty interests are in:

(a)       3 Veronica Close, Red Beach 0932;

(b)      17 Whangaumu Street, Tutukaka, 0173;

[10]     Ms Highley has been advised that LINZ does not accept authority from an attorney appointed under an enduring power of attorney when realty was held by a person in a trustee capacity even though they have been removed as trustee.

[11]     I am satisfied that the conditions for vesting the Trust’s realty interests in the applicants under s 52(1)(b)(i) of the Trustee Act 1956 are satisfied.   Mr Highley possesses land, jointly with others.   He became entitled to that possession as a trustee.  He is now under a disability.

Amending Trust Deed

[12]     I am  also  satisfied  that  the order  amending  cl  14.1  of  the trust  deed  is appropriate (correcting an archaic legalism in the use of “said”).   In vesting the power of appointment solely in Ms Highley it is consistent with the intention of Mr and  Ms  Highley  as  settlors  since  the  original  clause  14.1  vested  power  of appointment in the survivor of them.

[13]     The text of the new provision will be:

14.1      The power of appointment of New Trustees is initially vested in

Jillian Ann Highley

14.1.AThe person having the power to appoint a new Trustee may appoint by deed or by will another person or persons to replace him or her. If made by will, the appointment will come into effect on the death of the will-maker.   If made by deed, the appointment will come into effect on the date or future event specified in the deed.  The appointment may be revoked at any time before it takes effect.

14.1.BWhenever two or more persons together hold the power to appoint a new Trustee, they must act jointly and unanimously.

14.1.CIf a person holding the power to appoint a new Trustee dies and has not been replaced under clause 14.1.A he or she will be replaced by:

(1)      the administrator or the executor or trustee for the time being of his or her will; or

(2)      if there is no such administrator, executor or trustee, then by a  person  or  persons  agreed  on  by  all  of  the  primary

beneficiaries who are then living and have the capacity to make such decision.

14.1.DIf at any time a person holding the power to appoint a new Trustee does not have the legal capacity to exercise the power under this clause as determined by a registered medical practitioner and has not been replaced under clause 14.1.A, he or she will be replaced during such time by:

(1)      the  persons  appointed  as  attorney  of  that  person  by  an enduring power of attorney in relation to property under the Protection  of  Personal  and  Property  Rights  Act  1988, whether or not that appointment has become effective; or

(2)      if there is no such person, then by a person or persons agreed on by all of the Primary Beneficiaries who are then living and have the capacity to make such decision.

Commencing by Originating Application

[14]     I am satisfied that it is appropriate that this proceeding may be commenced by an originating application.   That course was followed in relation to similar applications in McPherson v McPherson and Re Trustees Executors Ltd.2

Service

[15]     I am satisfied that service of this proceeding on Mr Highley would serve no useful purpose and would put the Trust to unnecessary expense.     Neither do I consider it desirable to appoint a litigation guardian for Mr Highley.

Decision

[16]     Accordingly, I grant the orders sought as noted in paragraphs [5] and [13]. [17]       No order has been sought regarding costs and I make none.

Palmer J