Judena Family Trust

[2020] NZHC 2119

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2020-419-203

[2020] NZHC 2119

UNDER

the Trustee Act 1956

UNDER

Part 19 of the High Court Rules

IN THE MATTER

AND

of THE JUDENA FAMILY TRUST

IN THE MATTER

of an application by DARRELL BRYCE HOLLINSHEAD and STEVEN BRUCE

THOMPSON as trustees of the JUDENA FAMILY TRUST for vesting orders Applicants

Hearing:	On the papers
Counsel:	M Phillipps for the Applicants
Judgment:	21 August 2020

JUDGMENT OF GORDON J

This judgment was delivered by me on 21 August 2020 at 10 am, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:           Vicki Ammundsen Trust Law Ltd, Auckland

Re THE JUDENA FAMILY TRUST [2020] NZHC 2119 [21 August 2020]

Introduction

[1]                The applicants, Darrell Hollinshead (Darrell) and Steven Thompson, as trustees of the Judena Family Trust (the trust) seek an order under s 52 of the Trustee Act 1956 (the Act) vesting two properties owned by the trust in them as continuing trustees.

[2]                They also seek associated orders permitting commencement of this proceeding by way of originating application and dispensing with service of this proceeding.

Background

[3]                   Darrell is the settlor and a trustee of the trust settled by a deed dated 31 August 2006 (the trust deed). The other two trustees named in the trust deed are Darrell’s father,  Peter  Hollinshead  (Peter)  and  a  long-standing  friend  of  Darrell’s,  Steven Thompson.

[4]                Peter was removed as a trustee of the trust by a deed dated 28 July 2020 pursuant  to  powers in  the trust  deed.  This  followed an assessment of  Peter by   Dr Joshua Perrett, on 15 July 2020. Dr Perrett’s opinion is that Peter is not competent to manage affairs in relation to property or finances. This mental incapacity is due to dementia which is likely to continue indefinitely.

[5]                The trust is the owner of two properties at 4 Pokuru Road and 16 Pokuru Road, Te Awamutu (the trust properties). The trust properties remain registered in the names of the three original trustees.

[6]                The applicants wish to transfer the trust properties to themselves as continuing trustees of the trust. As a result of his incapacity, Peter is unable to effect a transfer and the applicants therefore seek orders vesting the two properties in their names.

[7]The trust deed provides that the minimum number of trustees is two.

[8]                The trustees have entered into an agreement for sale and purchase of the property at 16 Pokuru Road, Te Awamutu. The settlement date was scheduled for

22 July 2020. The applicants require the order so they can transfer the title to the purchasers and settle the sale.

[9]                Before turning to the matter of the vesting order, there are prior matters I need to address.

Should permission be granted to commence the proceeding by way of originating application?

[10]            This proceeding is not of a kind that can be commenced by way of originating application as of right, pursuant to rr 19.2–19.4 of the High Court Rules 2016. However, the Court may, in the interests of justice, permit any proceeding not mentioned in rr 19.2–19.4 to be commenced by originating application. The Court’s permission may be sought without notice.1

[11]            In Jones v HW Broe Ltd,2 McGechan J considered an application for leave to use the originating application procedure on an ex parte basis, discussing the rationale underlying r 19.5 as follows: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.

[12]            I am satisfied on the affidavit evidence filed that it is appropriate that this proceeding proceed by way of originating application.4

Should orders dispensing with service of the proceeding on Peter and the beneficiaries of the trust be made?

[13]            First, as to Peter, I am satisfied that service on him should be dispensed with. His mental capacity is such that he would not be able to rationally understand the nature or purpose of the proceeding or to meaningfully participate in the proceeding.

1      High Court Rules 2016, r 19.5.

2      Jones v H W Broe Ltd (1989) 5 PRNZ 206 (HC).

3      At 207. These comments were made in the context of an earlier version of the High Court Rules (rr 239 and 485D). The comments remain applicable.

4      See, for example, Re Hamertons Trustee Services Ltd [2018] NZHC 2720; Macpherson v Macpherson [2018] NZHC 240; and McKean v McKean [2017] NZHC 2212.

In reaching that conclusion I have applied the test adopted in a number of similar cases, namely that service on Peter would serve no useful purpose.5

[14]            As to service on the beneficiaries, the only final beneficiaries of the trust are Darrell, who is one of the applicants and his son, Brad Hollinshead. In his affidavit Darrell deposes that Brad is currently living in Perth, Australia. He says he can be hard to get hold of. Brad has not returned telephone calls from the trust’s lawyers.

[15]            The orders sought do not change the beneficiaries’ rights in respect of the removal that has already occurred and do not otherwise affect the beneficiaries’ rights. The continuing trustees will continue to administer the trust and the position of the beneficiaries will be unaffected by the vesting order sought. I am therefore satisfied there is no need for the application to be served on the beneficiaries of the trust.

Should the trust property be vested in the applicants as the continuing trustees?

[16]            The applicants bring this proceeding under s 52 of the Trustee Act 1956 which provides that the Court may make an order vesting land or an interest in land in any person in circumstances where a trustee lacks full mental capacity or where it appears to the Court to be expedient.

[17]            As a result of his lack of capacity to act as a trustee, Peter has been removed as a trustee. I am satisfied on the evidence that the order sought under s 52 of the Act vesting the trust properties in the applicants as continuing trustees should be made.

[18]            There is a mortgage with the Bank of New Zealand (BNZ) secured over the trust properties. BNZ has advised that it will consent to the trust properties vesting in the continuing trustees subject to the existing mortgage.

5      Docherty v Docherty [2013] NZHC 1885, Grazier v Grazier [2014] NZHC 3058 at [14], McKean v McKean, above n 4, at [12] as cited in Re Hamertons Trustee Services Ltd, above n 4, at [7].

Orders

[19]I order that:

(a)The applicants may commence this proceeding by way of a without notice originating application;

(b)Service on and representation of Peter Graham Hollinshead be dispensed with; and

(c)Service on the beneficiaries of The Judena Family Trust be dispensed with.

[20]I make the further following orders:

(a)Vesting the right, title and interest of Peter Graham Hollinshead, Darrell Bryce Hollinshead and Steven Bruce Thompson in the properties at 4 Pokuru Road, Te Awamutu as described in Identifier 277560, South Auckland being Lot 2  Deposited  Plan  368330  and 16 Pokuru Road, Te Awamutu as described in Identifier 277559, South Auckland being Lot 1 Deposited Plan 368330 in Darrell Bryce Hollinshead and Steven Bruce Thompson as trustees of The Judea Family Trust;

(b)Authorising the Registrar General of the Land (Land Information New Zealand) to record the transfer of the properties to the applicants as registered proprietors to give effect to the above vesting order; and

(c)That the costs of this application be met from the funds or assets of The Judena Family Trust.

Gordon J