Lewis v Lewis

[2021] NZHC 585

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV 2021-485-129

[2021] NZHC 585

UNDER

Part 19 of the High Court Rules 2016

IN THE MATTER OF

an application under section 52 of the Trustee Act 1956

BETWEEN

ROHAN MURRAY LEWIS, AIDAN CAMPBELL JORDAN-LEWIS and MACALISTER MAZENGARB TRUST

COMPANY (2014) LIMITED as trustees of the CAMROC LEWIS TRUST
Applicant

AND

LYNDSAY ELEANOR LEWIS

Respondent

On the papers
Judgment:	22 March 2021

JUDGMENT OF ISAC J

Introduction

[1]This is an application to vest a property owned by a trust into its three trustees.

[2]        The application is brought by way of originating application without notice to the respondent, Mrs Lewis, and arises because while Mrs Lewis has been replaced as a trustee of the relevant trust, at the time of her retirement the property was not conveyed into the name of her replacement trustee.

Background

[3]The applicants are the current trustees of the Camroc Lewis Trust (the Trust).

LEWIS, and ORS v LEWIS [2021] NZHC 585 [22 March 2021]

[4]        The respondent, Mrs Lewis, is a former trustee of the Trust. She was removed as a trustee on 13 November 2020 due to incapacity and was replaced at the same time by one of her sons, Mr Aidan Jordan-Lewis.1

[5]        The Trust owns the property at 5 Gurkha Crescent, Khandallah.2 The applicants as current trustees wish to sell the property and have entered into a sale and purchase agreement to do so. Settlement is due to take place on 30 March 2021 or  10 working days after the title to the property is “updated” (whichever is the earlier). It is as a result of the sale and purchase agreement that the trustees discovered     Mrs Lewis’ name remains on the title to the property.

[6]        Mrs Lewis was a trustee of the Trust from its settlement in March 2000 up to her retirement last year.   The Trust was created as an orthodox family trust for     Mrs Lewis and her late husband, as well as for the benefit of her two sons, Rohan and Aidan, who are two of the three applicant trustees.

Leave to use the originating application process and without notice?

[7]        The application is brought as an originating application but not as of right under rr 19.2 and 19.3.

[8]        High Court rule 19.5 permits the Court to authorise use of the originating application procedure where to do so is in the interests of justice. The interests of justice include securing the just, speedy and inexpensive determination of proceedings.3

1      A deed of removal and appointment of trustee of the Camroc Lewis Trust had the effect of removing Mrs Lewis as a trustee and appointing her son in her place. The deed of removal is not signed by Mrs Lewis who at the time lacked capacity and was, by virtue of clause 7.1 of the Trust Deed for the Camroc Lewis Trust, the only person who held the power under the Trust Deed to appoint new trustees. Counsel for the applicants, following a minute of 9 March, helpfully advised that Ms Lewis’ removal and replacement was exercised pursuant to s 43(1)(f) of  the Trustee  Act 1956. Having reviewed that provision I accept that the continuing trustees at the time were able to exercise the power of removal and replacement.

2      The application indicates the property at 5 Gurkha Crescent, Khandallah, is that described  as Lot 11 Deposited Plan 26892.

3      Solar Bright Limited v Martin [2019] NZHC 300 at [18] and [26].

[9]        The procedure is appropriate where it is not necessary or in the interests of justice for there to be the usual particularised pleadings, or interlocutory steps such as discovery, for the proper determination of the issues.

[10]      Having reviewed the affidavit of Mr Allen in support of the application and helpful memoranda of counsel for the applicants, I am satisfied that this is not a case where the exchange of statements of claim and defence are needed to define the issues. No interlocutory procedure such as discovery could possibly be required. The application is straightforward and, given Mrs Lewis’ situation, will not be opposed by her.

[11]      The evidence makes clear that Mrs Lewis lacks mental capacity in relation to both decisions concerning property, and her personal care and welfare. Dr Anne-Marie Cullen of the Khandallah Medical Centre, Mrs Lewis’ doctor, certified on 1 October 2020 that Mrs Lewis lacked capacity to make decisions about her own affairs in terms of the Protection of Personal and Property Rights Act 1988. This conclusion is said to be based on both Dr Cullen’s own observations and awareness of Mrs Lewis’ medical history as her patient, and also the assessment of a neurologist, Dr Evan Joliffe.

[12]      Turning to the question of service, given Mrs Lewis’ incapacity it would be inappropriate to direct personal service upon her. I had, by minute dated 19 March 2021, nevertheless indicated service on any personal representative appointed to Mrs Lewis’ interest under the Protection of Personal and Property Rights Act 1988 would be appropriate. The applicants by the counsel have since confirmed that one of the applicants, Rohan Lewis, is Ms Lewis’ attorney and, accordingly, he is aware of the application in his capacity as attorney.

[13]      The application for leave to proceed without notice by way of originating application is therefore granted.

Should there be an order vesting the property in the name of the new trustee?

[14]      The Trusts Act 2019 came into force on 30 January 2021 and greatly simplified the process of divesting and vesting trust property in the trustees of a trust.

[15]      Under s 116 of the Act, divesting and vesting of trust property no longer requires steps to complete transfer of legal title from one trustee to another. That section provides:

116     Divesting 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 (but subject to any liabilities attaching to the property).

[16]      Under this process the applicants would have been able to notify the Registrar-General of Lands of the transfer under s 117 of the Act and there would be no need for the intervention of the Court.

[17]      But there is a difficulty. The transitional provisions in Schedule 1 of the new Act apply where a trustee has resigned or been removed before the commencement date of the new Act but the divesting and vesting of the trust property has not been completed. That happens to be the case here, where Mrs Lewis  retired  in  November 2020, two and a half months before the Act came into force on 30 January 2021, but title to the property remained in her name.

[18]      As a result, clause 11(2) of schedule 1 of the new Act governs the present application. It provides:

(2) The divesting and vesting of trust property, and the satisfaction of any requirements to which the divesting and vesting are subject, must be completed as if this Act had not commenced.

(emphasis added).

[19]      As a result, the trustees are unable to rely on the new Act and are obliged to seek a vesting order as though s 52 of the Trustee Act 1956 remained in force. Section 52(1)(b) of that Act provides:

(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.

[20]      Counsel for the applicants submits that an order under s 52(1)(b) of the Trustee Act is appropriate here because Mrs Lewis is mentally incapacitated but remains on the title of the property. She has ceased to be a trustee of the trust and has been replaced by her son. The order is necessary to ensure the trust property is properly vested in the names of the trustees of the trust for the time being.

[21]      Given the circumstances of this case I have no hesitation making the order. Mrs Lewis is not in a position to make decisions concerning the disposition of land which is Trust property. She remains on the title to the property but has ceased to be a trustee with no interest in the property other than as a beneficiary. And because she now lacks capacity, she is unable to consent to a transfer or undertake those steps necessary to permit a voluntary transfer of title to the new trustee.

Result

[22]      The application for a vesting order is granted. There shall be an order pursuant to cl 11(2) of sch 1 of the Trusts Act 2019 and s 52(1)(b) of the Trustee Act 1952 vesting title to the property in the name of the applicants.

[23]Leave is reserved to apply for further directions if necessary.

[24]Given the circumstances of the case, there will be no order as to costs.

Isac J

Solicitors:

Macalister Mazengarb, Wellington Port Nicholson Chambers, Wellington