Lee

[2019] NZHC 3367

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-002603

[2019] NZHC 3367

UNDER

Part 19 High Court Rules and the Trustee Act 1956

IN THE MATTER

of an application seeking vesting orders in respect of trust property

BETWEEN

DAVID LEE

ALYSON CLEGG BROWN DIANE HUNT

STEPHEN DEREK WINTERBOTTOM

Applicants

Hearing:	On the papers
Counsel:	L C Black for applicants
Judgment:	17 December 2019

JUDGMENT OF KATZ J

This judgment was delivered by me on17 December 2019 at 3:00pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors:           Kidd Black Law, Auckland

LEE & ORS [2019] NZHC 3367 [17 December 2019]

Introduction

[1]    The applicants, David Lee, Alyson Brown, Diane Hunt and Stephen Winterbottom, are trustees of the D & R Winterbottom Family Trust (“the Trust”). The applicants seek orders vesting the title of a trust property (“the property”) in their names as the current trustees of the Trust. In essence, they seek to remove the names of former trustees from the property title.

Background

[2]    The Trust was constituted by way of deed dated 8 September 1995, of which Derek Winterbottom (“Derek”) and Rita Winterbottom (“Rita”) were the settlors. The original trustees of the Trust were Derek, Rita, David Lee and Pauline Lee. Pauline has since retired as a trustee of the Trust

[3]    The discretionary beneficiaries under the Trust Deed were Derek and Rita, their children and grandchildren, any spouse, widow or widower of any child of Derek and Rita, and any entity determined by the trustees.

[4]    On 21 July 2019, Rita died. Rita left her power of appointment to her sons Robert and Stephen and appointed them trustees of the Trust. Robert has since renounced his appointment as trustee as he resides in Australia. He however retains the power of appointment of trustees vested in him by Rita’s will. On 31 October 2019, Robert and Stephen exercised their powers of appointment to appoint their sisters Alyson and Diane as additional trustees of the Trust.

[5]    Derek now suffers from severe dementia and resides in a secure dementia unit. On 29 October 2019, he was diagnosed as having lost capacity. On 15 November 2019, Stephen exercised his power of appointment to remove Derek as a trustee. The trustees of the Trust are therefore now Stephen, Alyson, Diane and David.

[6]    The trustees purchased a property in Mt Maunganui, on 7 May 1998. The property is the only remaining asset of the Trust. The registered owners of the property are Derek, Rita, David Lee and Pauline Lee.

[7]    The property was the home of Derek and Rita prior to Rita’s death and Derek’s admission to a dementia care facility. The property is now vacant and the trustees consider that it is in the best interests of all the beneficiaries that it is sold. The applicants therefore seek:

(a)an order dispensing with service on the discretionary beneficiaries of the Trust; and

(b)a vesting order in respect of the property.

Should orders dispensing with service of the proceedings on the discretionary beneficiaries be made?

[8]    As noted, the beneficiaries of the Trust Deed were Derek, Rita, their children and grandchildren, any spouse, widow or widower of any child of Derek and Rita, and any entity determined by the trustees. The trustees have not determined that any entity is a discretionary beneficiary of the Trust.

[9]    I am satisfied that there is no need for the application to be served on the beneficiaries of the Trust. Each beneficiary has given their consent to the Court in relation to the proceeding. In any event, the orders sought are purely administrative in nature. They do not involve the appointment of a new trustee. Rather, the existing trustees will simply continue to administer the Trust. The rights of the beneficiaries under the Trust Deed will not be affected.

[10]   For completeness, having considered the medical evidence relating to Derek’s capacity I am also satisfied that service on Derek should be dispensed with. Derek’s mental incapacity is such that he would not be able to rationally understand the nature or purpose of the proceedings, or to meaningfully participate in them.1 As has been found in a number of similar cases, service on Derek would serve “no useful purpose”.2

1      Re Hetrick [2017] NZHC 472, (2017) 4 NZTR 27-006 at [6].

2      Docherty v Docherty [2013] NZHC 1885, cited with approval in Grazier v Grazier [2014] NZHC 3058 at [14]; and McKean v McKean [2017] NZHC 2212, (2017) 4 NZTR 27-019 at [12].

Should the Trust’s property be vested in the trustees?

[11]   Section 52(1) of the Trustee Act 1956 permits the vesting of land or interest therein in any such person in any such manner and for any such estate or interest as the court may direct. Section 52(1)(b)(i) permits this where a trustee entitled to or possessed of land, either solely or jointly with another person, is under disability.3

[12]   Given Derek’s mental condition he has already been removed as a trustee. As explained above Rita died in 2019 and Pauline Lee has retired as a trustees. Accordingly, it is appropriate to now make orders vesting the relevant trust property in the remaining trustees. No beneficiaries’ rights will be affected by doing so.

Orders

[13]I make the following orders:

(a)service of the proceeding on the discretionary beneficiaries of the D & R Winterbottom Family Trust is not required; and

(b)vesting the land contained in record of title SA45D/334, currently registered in the names of Derek Winterbottom, Rita Winterbottom, Pauline Lee and David Lee, in the names of the current trustees, Alyson Clegg Brown, Diane Hunt, Stephen Derek Winterbottom and David Lee.

Katz J

3      Trustee Act 1956, s 2(2) provides that “[f]or the purposes of this Act a person shall be deemed to be under a disability while he is not of full age or full mental capacity.”