Hunt v Moran

[2018] NZHC 3108

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WAIHARAKEKE ROHE

CIV-2018-406-40

[2018] NZHC 3108

UNDER

the Trustee Act 1956

IN THE MATTER

of a Trust Deed dated 29 September 2005 creating the trust known as the Patricia Moran Trust

IN THE MATTER

of an application under sections 52 and 66 of the Trustee Act 1956 for orders in respect of that Trust

BETWEEN

JOANNE ROBYN HUNT

Applicant

AND

PATRICIA ANNE MORAN

First Respondent

AND

JOANNE ROBYN HUNT, JONEL MAREE CLEMETT AND REBECCA ANNE HUNT

Second Respondents

Hearing:	On the papers
Counsel:	M Hardy-Jones for Applicant
Judgment:	29 November 2018

JUDGMENT OF CLARK J

Introduction

[1]                  In this proceeding Joanne Hunt applies without notice for orders pursuant to  s 52 of the Trustee Act 1956 vesting 34 Magnolia Drive (Lot 2 DP  33203)  in Joanne Hunt, Jonel Clemett and Rebecca Hunt as trustees of the Patricia Moran Trust. Joanne Hunt also applies to commence the proceeding by way of originating application on a without notice basis.

HUNT v MORAN [2018] NZHC 3108 [29 November 2018]

[2]                  The settlor and retired trustee of the Trust, Patricia Moran, lacks capacity. She is eighty-one years old and suffers from dementia. She has been removed as a trustee. The property at Magnolia Drive has been marketed for sale and an offer has been made to purchase the property. The Trustees cannot settle the transaction as the title remains in the name of the original trustees, including Patricia Moran.

Background

[3]                  The Trust was settled by Deed executed on 29 September 2005 by the trustees Joanne Hunt, her sister Jonel Clemett, and Ms Moran. The beneficiaries of the Trust are the three original trustees and Joanne’s three children.

[4]                  After a fall resulting in a fractured pelvis in late 2017 Ms Moran’s cognitive function declined rapidly.   A letter dated 22 April 2018 from Dr Rhonda Turner,  Ms Moran’s general practitioner, confirms Ms Moran is no longer capable of manging her affairs. Ms Moran has dementia with confusion, dysphasia, decreased memory and concentration. She has decreased judgment and does not have the ability to make decisions regarding her property.

[5]                  Joanne and Jonel signed a deed of discharge  and appointment of trustee on   7 November 2018. Exercising their powers under cl 13 of the Trust deed and s 43 of the Trustee Act, Ms Moran was discharged as a trustee and Rebecca Hunt, Joanne’s eldest daughter, was appointed as a new trustee.

[6]                  The Trust’s significant asset is the property at Magnolia Drive. The property is empty. The property has been marketed and an agreement for sale and purchase of the property has been entered into for a purchase price of $681,000, the higher of two offers. The trustees wish to sell the property to provide for Ms Moran’s care. The sale and purchase agreement is expressed to be conditional upon the trustees receiving an order from the High Court vesting the property in the remaining, and newly appointed, trustees.

[7]                  As Ms Moran lacks capacity to sign the sale and purchase agreement or transfer the property to the purchasers, the remaining trustees, together with the newly

appointed trustee seek an order vesting the property in them which will then allow the Trust to execute a transfer of the property to the purchasers on the settlement date.

Leave to commence by way of originating application

[8]                  Originating applications are governed by pt 19 of the High Court Rules. The Trustee Act is not one of the enactments under which an originating application for a vesting order is made mandatory.1 The court, however, may permit a proceeding to be commenced by originating application where it is in the interests of justice to do so.2

[9]                  In Jones v H W Broe Ltd, McGechan J considered an application for leave to use the originating application procedure on a without notice basis:3

The … originating application procedure was designed as a genuine exception, and as an expedient for cases where there was in reality no opposing party, avoiding clumsy and unnecessary use of a full statement of claim and notice of proceeding. It was not intended for routine use in cases where there was another likely party with contrary interests.

[10]              In this case, I consider it is appropriate to proceed by way of originating application. The application is uncontentious. All beneficiaries approve the proposal and the proceeding, as being in the interests of Ms Moran who is no longer able to represent her own interests. The purpose of the sale of the property is to acquire funds which will be applied to Ms Moran’s care. The procedural requirements governing the commencement of a proceeding by originating application are all satisfied.

[11]              The substantive application has been filed without notice. Rule 7.23 applies, with all necessary modifications, to proceedings commenced by originating application.4 Rule 7.23 provides:

7.23     Application without notice

(1)A person who wants to make an application to the court and have the application determined without any other party having been served (in these rules referred to as an application without notice) must use form G 32.

1      High Court Rules, r 19.2.

2      Rule 19.5(1).

3      Jones v H W Broe Ltd (1989) 5 PRNZ 206 (HC) at 207.

4      High Court Rules, r 19.10(e).

(2)An application without notice may be made only—

(a)on 1 or more of the following grounds:

(i)that requiring the applicant to proceed on notice would cause undue delay or prejudice to the applicant:

(ii)that the application affects only the applicant:

(iii)that the application relates to a routine matter:

(iv)that an enactment expressly permits the application to be made without serving notice of the application:

(v)that the interests of justice require the application to be determined without serving notice of the application; and

(b)if the applicant has made all reasonable inquiries and taken all reasonable steps to ensure that the application and supporting documents contain all material that is relevant to the application, including any defence that might be relied on by any other party and any facts that would support the position of any other party.

(3)An applicant who makes an application without notice must, if the application is of a kind that is likely to be contested if it were made on notice, file a memorandum with the application that sets out—

(a)the background to the proceeding (including the material facts that relate to the proceeding); and

(b)the grounds on which each order is sought; and

(c)an explanation of the grounds on which each order is sought without notice; and

(d)all information known to the applicant that is relevant to the application, including any known grounds of opposition or defence that any other party might rely on, or any facts that would support opposition to the application or defence of the proceeding by any other party.

(4)Failure to disclose all relevant matters to the court or to comply with subclause (3) may result in the court—

(a)dismissing the application; or

(b)if 1 or more orders have been made by the court in reliance on the application, rescinding those orders.

(5)This rule does not apply to an application for a grant of letters of administration without notice

[12]              In this case the application to proceed by way or originating application is filed without notice for the same reasons as the substantive application. Essentially, the basis is to expedite the process so the opportunity to accept the offer is not lost.

[13]              For the same reasons as I consider it appropriate that the proceeding be commenced by way of originating application, I accept it is in the interests of justice for the application to be made without notice.   The proceeding is uncontentious.   Ms Moran has progressive dementia and is unable to participate in the proceedings. The application is made in the appropriate form.

[14]              There are no discretionary beneficiaries. But for Ms Moran, all beneficiaries consent to the application which is made in Ms Moran’s interest. There are no other persons who should be served as persons who are “interested in, or may be adversely affected by, the relief sought”.5

Litigation guardian

[15]              Though not referred to by the parties, I note for completeness r 4.30 requires an incapacitated person to be represented by a litigation guardian unless the court otherwise orders. In Docherty v Docherty Associate Judge Bell considered, on facts similar to this case, a litigation guardian was unnecessary.6 Judge Bell observed the respondent had been properly removed as a trustee on the basis of medical evidence that he was quite incapable of acting as a trustee. It was appropriate a vesting order followed. There was no sensible basis for an argument that, even though the respondent was removed as a trustee, he should still be shown as a registered proprietor of trust assets.7

[16]              Similar considerations apply here. The relief the applicants seek is strictly limited to the vesting orders and does not otherwise impact Ms Moran. Appointing a litigation guardian is inappropriate in the context of this application.

5      Rule 18.7(3).

6      Docherty v Docherty [2013] NZHC 1885.

7 At [28].

Trustee Act application

[17]              Under s 52(1)(b)(i) of the Trustee Act the Court may vest land in trustees where a trustee entitled to, or possessed of, any land either solely or jointly with another person, is under a disability. On the basis of the medical assessment by Ms Moran’s doctor (to the effect Ms Moran is no longer capable of managing her affairs) I am satisfied Ms Moran is under a disability in terms of s 52. I am further satisfied it is appropriate to make an order vesting the property in the trustees of the Trust. Because of her loss of capacity Ms Moran has been removed as a trustee through the mechanisms provided for in the Trustee Act. The trustees are able to accept the offer to purchase the Trust property but are unable to settle the transaction while the title remains in the name of the original trustees including Patricia Moran. The vesting of the property in the current trustees will ensure it can be sold which, as the trustees state, is their desire and duty.

Orders

[18]I make the following orders:

(a)The property at 34 Magnolia Drive, Blenheim (Lot 2 DP 33203) is vested in the following persons as trustees of the Patricia Moran trust:

Joanne Robyn Hunt Jonel Maree Clemett Rebecca Anne Hunt

(b)It is in the interests of justice for the proceeding to be commenced by originating application and permission is accordingly granted.

(c)The application is appropriately made without notice.

Karen Clark J

Solicitors:

Hardy-Jones Clark, Blenheim for Applicant