Lean v Lean

[2017] NZHC 2742

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

I TE KŌTI MATUA O AOTEAROA TE PAPAIŌEA ROHE

CIV-2017-454-73 [2017] NZHC 2742

BETWEEN

MARTIN DUDLEY LEAN

TARARUA TRUSTEES LIMITED Plaintiffs

AND

CHARLOTTE JUNE LEAN Defendant

on the papers
Counsel:	M M Bourke for the Plaintiffs
Judgment:	9 November 2017

JUDGMENT OF ASSOCIATE JUDGE SMITH

[1]      Martin  Lean  and  Tararua Trustees  Ltd  (the  plaintiffs)  are  the  continuing trustees of the Pamir Family Trust (the Trust).  The plaintiffs apply under s 52 of the Trustee Act 1956 (the Act) for an order vesting certain land of the Trust in the plaintiffs as continuing trustees.  They also seek an order dispensing with service of the proceeding on the named defendant Mrs Charlotte Lean (Mrs Lean).  They invite the Court to make the orders under s 52 of the Act on the papers.

[2]      The plaintiffs and Mrs Lean are the registered proprietors of the land owned by the Trust at 39 Gordon Street, Woodville, being Lots 6, 7 and 8 on Deposited Plan

489 (the land in Certificates of Title HBA4/109, HBE3/898 and HBA4/110) and Lot

1 on Deposited Plan 27740 (the land in Certificate of Title HBW4/744) (together

“the land”).

LEAN & TARARUA TRUSTEES LIMITED v LEAN [2017] NZHC 2742 [9 November 2017]

[3]      The defendant is a registered proprietor of the land with the plaintiffs because of her former position as a trustee of the Trust.  Unfortunately she now suffers from dementia.  By deed of retirement dated 25 September 2017, signed by her attorneys on her behalf, Mrs Lean was removed as a trustee of the Trust.

Background

[4]      The Trust was constituted by deed dated 27 July 2001 (the deed).  Mrs Lean was the settlor.

[5]      In the deed, the powers of removal and retirement of trustees are set out in cls

11(d) and 11(e):

(d)       The Power of Removal of Trustees shall vest in Charlotte June Lean during  her  lifetime  and  after  her  death  or  in  the  event  of  her  mental incapacity as defined in the Property of Personal and Property Rights Act

1988 the power of removal shall vest in such person appointed by Will or

Deed of Nomination by the Settlor or failing such appointment then such

persons as appointed by the executor or trustee of the Settlor’s Will.

(e)       If any of the Trustees shall at any time desire to withdraw and be discharged from the trusts of this Deed he or she may do so by notice in writing signed by himself or herself and given to the Settlor and after the death of the Settlor to the remaining Trustees or Trustee who shall thereupon give notice of such resignation to the person or persons other than the Settlor then having the power to appoint additional Trustees and upon giving such notice of the resignation the Trustee so doing shall cease to be a Trustee of this  Trust  to  all  intends  and  purposes  except  as  to  the  acts  and  deeds necessary for the proper vesting of the trust property in the continuing or new Trustees or Trustee or otherwise as the case may require which acts and deeds done shall be done and executed at the expense of the Trust Fund.

[6]      In the schedule of trustees’ powers it is noted:

3. At any time and for any period any trustee or all of them may appoint another person to act as his her or their attorney anywhere in the world for all or any of the purposes of the trust.

[7]      Martin Lean, one of the plaintiffs, is Mrs Lean’s son.   He, along with his sister Sharon Brown, were appointed Mrs Lean’s attorneys for general and property purposes on 26 March 2001.  The power of attorney form provided that the authority given would not be revoked if Mrs Lean became mentally incapable.

[8]      Mrs Lean’s mental health has deteriorated since 2011.  Mrs Lean’s dementia has been confirmed by her medical practitioner.  In a report dated 8 September 2017, Dr John Bourke stated:

It is my opinion that Mrs Charlotte Lean has moderate-severe dementia and lacks totally competence to manage her affairs in relation to property and her welfare.  She would be unable to neither understand nor recall information in regard to her property matters and in my view may need to be removed as a Trustee on the basis of her severe dementia.  She would be very distressed and incapable of understanding any court proceedings in relation to this matter.  The decline in her cognition has been well documented from 2011 and there is no prospect of recovery.

[9]      On 25 September 2017 a deed of retirement of trustee was entered between Mrs Lean as settlor of the Trust and the plaintiffs as the continuing trustees. Relevantly, cls 1 and 2 provided:

1.   Removal of the Settlor as a Trustee

In exercise of the powers vested in the Settlor under [the deed] and all statutory or other powers and authorities the Settlor by her attorneys is removed as a Trustee of the Trust. The settlor is discharged from the trusts of the Trust.

2.   Vesting of Trust Property

The Settlor by her attorneys declares that all the real and personal property now vested in the Settlor and the Continuing Trustees shall, from the date of this Deed, vest in the Continuing Trustees alone upon the trusts and subject to the powers and conditions expressed and implied in [the deed].

[10]     The deed of retirement was signed by Martin Lean and Sharon Brown on behalf of Mrs Lean.

[11]     The plaintiffs now seek orders under s 52 of the Act vesting the land in themselves as the continuing trustees, so that the land can be sold and funds directed to Mrs Lean’s care.

Vesting Orders

[12]     Section 52 of the Act materially provides:

52 Vesting orders of land

(1) Subject to the provisions of subsections (2) and (3), in any of the following cases, namely –

…

(b)       where  a  trustee  entitled  to  or  possessed  of  any  land  or interest  therein,  whether  by  way  of  mortgage  or  otherwise,  or entitled to a contingent right therein, either solely or jointly with any other person –

(i)       is under disability, or

…

the court may make an order (in this Act called a vesting order) vesting the land or interest therein in any such person in any such manner and for any such estate or interest as the court may direct, or releasing or disposing of the contingent right to such person as the court may direct.

…

(3) Where  any  such  order  relates  to  a  trustee  entitled  or  formerly entitled  jointly  with  another  person,  and  that  trustee  is  under disability or out of the jurisdiction of the court or cannot be found, or (being a corporation) has ceased to carry on business or is in liquidation or has been dissolved, the land, interest, or right shall be vested in the other person who remains entitled, either alone or with any other person that the court may appoint.

[13]     I am satisfied from the material before the Court that Mrs Lean is under a disability for the purposes of s 52(1)(b)(i) of the Act.  The current trustees must be able to deal with the property in accordance with their powers and duties, and to that end I am satisfied that the vesting orders sought are appropriate.

Application to dispense with service

[14]     An order dispensing with service on Mrs Lean may be made under r 6.8 of the High Court Rules 2016.   The direction is sought on the basis that Mrs Lean wholly lacks mental capacity to understand the proceeding, and the proceeding may cause her distress.  Mrs Lean’s attorneys were parties to the deed of retirement, and are aware of the proceeding, and the substantive order sought is both designed to implement the deed of retirement and uncontroversial.

[15]    In McPherson v McPherson, a case which was also concerned with an application under s 52 of the Act, Gendall J dispensed with service where, given the

defendant’s dementia, His Honour was satisfied the defendant was entirely unable to participate in any decision-making regarding the trust, and that service of the proceeding on her would be “pointless”.1

[16]     I am satisfied the same reasoning applies in the present case.  The medical evidence is that Mrs Lean would not be able to understand the Court proceeding, and that the proceeding may cause her distress.   Leave to dispense with service of the application and supporting material on Mrs Lean is granted.

[17]     I am also satisfied that there is no need to serve the proceeding on any other party.  The property of the Trust must be vested in the trustees of the Trust, and the orders sought will simply give effect to the deed of retirement.  The interests of the beneficiaries will not be affected.

Orders

[18]     I make the following orders:

(a)       dispensing with service of this proceeding on Mrs Lean; and

(b)      vesting the land in the current trustees of the Trust, namely Martin

Dudley Lean and Tararua Trustees Ltd.

Associate Judge Smith

Solicitors:

Innes Dean Tararua Law, Palmerston North for the Plaintiffs

1      McPherson v McPherson [2016] NZHC 332 at [13] – [16].