Kominik Family Trust

[2024] NZHC 1028

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-189

[2024] NZHC 1028

IN THE MATTER

of the KOMINIK FAMILY TRUST

UNDER

Part 19 of the High Court Rules 2016

AND UNDER

the Trusts Act 2019 and under the inherent jurisdiction of the High Court to supervise the administration of trusts

ANNA HELEN KOMINIK, JANE KOMINIK AND DAVID RICHARD CUNLIFFE

Applicants

Teleconference:	30 April 2024
Counsel:	G F Kelly for Applicants
Judgment:	30 April 2024

JUDGMENT OF McHERRON J

[1]                The applicants are the trustees of the Kominik Family Trust (the Trust). They apply:

(a)for permission to bring this proceeding as an originating application;

(b)for leave to apply on a without notice basis;

(c)for orders that certain items of trust property be vested in them as trustees, following the death of the Trust’s sole trustee and the appointment of the applicants as the new trustees in her will.

RE KOMINIK FAMILY TRUST [2024] NZHC 1028 [30 April 2024]

[2]                I thank counsel for providing a comprehensive and thorough memorandum, with relevant documentation provided by way of affidavit.

Background

[3]                The Trust was settled by Madeleine Anna Kominik (Madeleine) by deed dated 1 December 2010. The original trustees of the Trust were Madeleine and Advisory Trustees 010 Ltd, a solicitor’s trustee company.

[4]                The beneficiaries of the Trust  are  named  as  Madeleine,  her  daughter  Anna Kominik (Anna), and Anna’s children. Anna and her children are the final beneficiaries who will benefit on vesting day.

[5]                The Trust deed was varied on 14 April 2021, to make it clear that Madeleine had the power to appoint new trustees and to remove existing trustees during her lifetime, to be exercised by her by deed or by will.

[6]                The Trust deed was varied again on 21 November 2022 to provide, among other things, that one trustee could act as sole trustee of the Trust.

[7]                The following day, Advisory Trustees 010 Ltd retired as trustee, by deed dated 22 November 2022. The effect of its retirement left Madeleine as the sole trustee until her death on 27 December 2023.

[8]                Anna deposes that, as the estate is modest, a grant of probate in Madeleine’s estate is not required.1

[9]                Madeleine’s final will dated 19 December 2023 appointed the applicants Anna, Madeleine’s sister Jane Kominik (Jane), and Anna’s partner David Cunliffe as trustees of the Trust. In the present application, they seek the Court’s assistance to transfer various Trust property into their names as trustees.

1      Administration Act 1969, s 65; Administration (Prescribed Amounts) Regulations 2009, reg 4.

Why is the Court’s involvement required?

[10]            The reason why the Court’s involvement is considered necessary is explained in:

(a)Anna’s affidavit; and

(b)an affidavit from Carolynn McLaughlin, a legal executive employed by the applicants’ solicitors.

[11]            The applicants submit that a Court order is the most practicable way of transferring the title to the Trust’s half share in a property in Hill Street, Wellington and its full share in a property in Pitarua Street, Wellington, from Madeleine’s name as sole trustee into the names of the trustees who were appointed in her will.

[12]            Ms McLaughlin deposes that ordinarily, when a person dies, a transmission is registered to either:

(a)the surviving owner registered on the title (which is usually the case with property owned by trustees of a trust, or property owned by a couple as joint tenants); or

(b)their executor (which is usually the case with property owned personally).

[13]            In the present case, however, because Madeleine was the sole trustee of the Trust, it was not clear to Ms McLaughlin whether the process under ss 116 and 117 of the Trusts Act 2019 was available. Those sections provide:

Divesting and vesting of trust property

116Divesting and vesting of trust property on change of trustees

(1)This section applies if—

(a)a new trustee of a trust is appointed; or

(b)a trustee of a trust retires or is removed.

(2)The execution of the document of appointment, removal, or discharge—

(a)divests the trust property from the persons who were the trustees immediately before the document was executed; and

(b)vests the property in the persons who become and are the trustees as joint tenants without any conveyance, transfer, or assignment (butsubject to any liabilities attaching to the property).

(3)This section does not affect any lien to which a trustee may otherwise be entitled.

(4)Subsection (2) is subject to section 117.

(5)In this section and in section 117, a court order appointing a trustee or removing a trustee without replacement—

(a)is a document of appointment, removal, or discharge (unless the court otherwise orders); and

(b)is, for the purposes of section 89 of the Land Transfer Act 2017, a vesting order vesting the trust property in the persons who become and are the trustees (unless the court otherwise orders).

117Requirements to notify, register, or record divesting and vesting of trust property

(1)If, or to the extent that, the divesting and vesting of trust property must be notified, registered, or recorded under the requirements of another Act,—

(a)the divesting and vesting are subject to the requirements and do not take effect until the requirements are satisfied; and

(b)the execution of the document of appointment, removal, or discharge vests in the persons who become and are the trustees a right to call for the transfer of the trust property; and

(c)a copy of that document or those documents and a statutory declaration by a continuing or new trustee of the trust that each relevant document was validly executed are sufficient proof of a right claimed under paragraph (b).

(2)Subsection (1)(c) does not apply where the document is a court order, and a copy of the order is sufficient proof of a right claimed under subsection (1)(b).

[14]            Toitū Te Whenua |  Land  Information  New Zealand  (LINZ)  advised Ms McLaughlin that the properties would first need to be transmitted into the name of

Madeleine’s executors, before they could be transferred to the trustees appointed in Madeleine’s will.

[15]            The applicants submit that adopting the approach advised by LINZ would be inappropriate because the property is Trust property rather than Madeleine’s personal property. Anna is concerned that:

(a)if the titles of the properties are transferred to Madeleine’s executor and then to the trustees, it might give rise to the suggestion that the properties were owned by Madeleine personally; and

(b)that this might lessen the protections afforded by the trust structure.

[16]            As the trustees are now in the process of listing one of the properties for sale, they need title to be in their names in order to progress the sale.

[17]            Under s 52 of the Trustee Act 1956, the High Court had a broad power to make orders vesting trust property. There is no direct equivalent to this provision in the Trusts Act 2019. Instead, Parliament has enacted the narrower but simpler procedure in ss 116 and 117.

[18]            However, the applicants and their advisors are unsure whether the new simplified process applies to the present case. They say there may be a lacuna in the Trusts Act. The applicants submit that this is not a case where, in terms of s 116, Madeleine had retired or had been removed as a trustee. Rather, the usual principle applies on the death of a sole or last surviving trustee that trust property devolves to the trustee’s personal representative.2

[19]            Moreover, LINZ has advised that the intermediate step of registering a transmission to Madeleine’s executors, and then transferring the property to the trustees appointed in Madeleine’s will, would be required in respect of the properties in Pitarua Street and Hill Street.

2      Administration Act 1969, s 24(1); Paul Matthews and others Underhill and Hayton: Law Relating to Trusts and Trustees (20th ed, LexisNexis, London, 2022) at [73.5].

[20]            Accordingly, the applicants submit that they require orders in respect of the two properties to be made under the Court’s inherent jurisdiction to supervise the administration of trusts.3

[21]            As the trustees resolved to make the application in relation to the two residential properties, it seemed to them sensible to ask the Court to vest the Trust’s shares and bank accounts in the names of the trustees as well.

Assessment

[22]               The language of ss 116 and 117 does not expressly refer to the death of a trustee. However, I consider those provisions nevertheless comfortably apply to the present facts.

[23]            The word “execution” ss 116(2) and 117(1)(b), in the context of a will, means the action of carrying the will into effect.4 The action carrying Madeleine’s will into effect was her death. When the will came into effect, the applicants were appointed as trustees of the Trust. At that point of “execution” vested in the applicants as trustees “a right to call for the transfer of the trust property”, to the extent that the divesting and vesting of trust property must be notified, registered, or recorded under the requirements of another Act.5

[24]            Therefore, I am not satisfied that a transmission to Madeleine’s executor is required before a transfer of the property to the applicants as trustees can be registered. To insist on transmission to Madeleine’s executor, as LINZ has done, would incorrectly recognise the property as devolving to Madeleine’s estate when, by operation of her will and the immediate appointment of new trustees, the property has never so devolved.

3      Section 8 of the Trusts Act 2019 provides that the inherent jurisdiction of a court to supervise and intervene in the administration of a trust is not affected by the Act, except to the extent that the Act provides otherwise. However, the Court must have regard to the purpose and the principles of the Act when exercising its inherent jurisdiction: s 8(2).

4      “Execution, N., Sense 1.a.” Oxford English Dictionary, Oxford UP, December 2023, Act 2019, s 117(b)

[25]            The Law Commission’s report recommended that the new Trusts Act should provide that a trustee should be divested of all trust property if validly removed from office, including through death. The Commission recommended Public Trust be authorised to issue a certificate of vesting, on application by the continuing trustees.6

[26]            However, rather than involving Public Trust, s 117 of the Trusts Act provides for a continuing or new trustee themselves to provide a statutory declaration that relevant documents are validly executed as sufficient proof of the right to call for the transfer of trust property.

[27]            I consider ss 116 and 117 are sufficiently broad to include the current situation where a sole trustee dies, but appoints new trustees in her will. Section 116(1)(a) clearly applies because new trustees have been appointed.

[28]            In her will, Madeleine appointed the applicants as trustees of the Trust. Their appointment took effect immediately upon her death. Madeleine’s executors (Anna and Jane) were ousted from any role under the Trust and before any Trust property could devolve to them.

[29]            The new trustees took office immediately upon Madeleine’s death. In these circumstances, any assumption that on Madeleine’s death as sole trustee the trust property would devolve to Madeleine’s personal representative is inapposite.

[30]            Rather, where a power of appointment of new trustees is exercised in a will to take effect on the trustee’s death, then the appointment of a replacement trustee or trustees will operate to oust the personal representative from the trust.7

[31]            It follows from my conclusion that s 116 of the Trusts Act applies that it is unnecessary to resort to the Court’s inherent jurisdiction, which is preserved under the Trusts Act. The applicants will still need to comply with the requirements of s 117,

6      Law Commission Review of the Law of Trusts – A Trusts Act for New Zealand (NZLC R130, 2013) at p 153.

7      Halsbury’s Laws  of  England,  (5th  ed,  2021)  Vol  103  Wills  and  Intestacy  at  [954]  citing  Re Routledge’s Trusts, Routledge v Saul [1909] 1 Ch 280; Halsbury’s Laws of England, (5th ed, 2019) Vol 98 Trusts and Powers at [954].

although under s 117(2) a copy of the Court’s order will be sufficient proof of the applicants’ right to call for the transfer of the Trust property under s 117(1)(b).

[32]I am satisfied that:

(a)this application can properly be dealt with without notice as a routine matter. Requiring the trustees to proceed on notice would cause them undue delay or prejudice, and the interests of justice justify the application to be determined without serving notice;8

(b)the originating application procedure is appropriate to be used here to secure the just, speedy and inexpensive determination of this proceeding;9

(c)the order is necessary to ensure the Trust property is recognised as having been properly vested in the names of the new trustees.

Result

[33]The application for a vesting order is granted. I make orders:

(a)declaring that, in accordance with ss 116(1)(a) and (2) of the Trusts Act, the items of Trust property listed at paragraph 12 of Anna’s affidavit have been divested from Madeleine upon her death and have vested in the applicants as trustees of the Trust;

(b)the applicants are entitled to call for the transfer of trust property to which s 117 applies, under s 117(1)(b) of the Trusts Act;

(c)that the costs of and incidental to this application be paid from the Trust.

8      High Court Rules 2016, r 7.46.

9      See, for example, Re Bleeker [2023] NZHC 3511 at [12]–[13] and Smith v Smith [2022] NZHC 2349 at [1]–[4].

[34]Leave to apply in respect of the orders to be sealed is granted to the applicants.

McHerron J

Solicitors:
Greg Kelly Trust Law, Wellington for Applicants