MacKenzie v MacKenzie

[2020] NZHC 2607

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2020-404-000626

[2020] NZHC 2607

UNDER

the Trustee Act 1956

IN THE MATTER OF

The Whites Trust

BETWEEN

REBECCA MARY MACKENZIE, CAITLIN STUART MACKENZIE,

DOMINIQUE DULCINA MACKENZIE and SOPHIE SUBRITZKY MACKENZIE

(all being beneficiaries of The Whites Trust) Plaintiffs

AND

BEVERLY ANN MACKENZIE and

DULCINA IDA SUBRITZKY (as trustees of The Whites Trust)
First Defendants

AND

KIRK TYSON WHITE

Second Defendant

Hearing:

30 September 2020

Appearances:

D J Jenkin for the Plaintiffs

No appearance for the Defendants

Judgment:

5 October 2020

Reissued:

7 October 2020

JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 05 October 2020 at 4.00pm and

re-delivered by me on 07 October 2020 in accordance with High Court Rules 2016, r 11.10

…………………………

Registrar/Deputy Registrar

MACKENZIE v MACKENZIE [2020] NZHC 2607 [5 October 2020]

Introduction

[1]    The plaintiffs are the sole beneficiaries of the Whites Trust. The Whites Trust owns a property in Whitford, Auckland. The registered owners of the property include persons who have retired as trustees. One of the retired trustees has refused to co- operate in a transfer of the property to the current trustees. The plaintiffs seek a Court order vesting the property in the current trustees.

Factual narrative

[2]    Margaret Didovich settled the Whites Trust by a Deed of Trust dated 3 August 2004. The initial trustees were Ms Didovich, Kirk White (the second defendant), and Vlatkovich & McGowan Trustee Co Ltd. Under the Deed of Trust Ms Didovich had the power to appoint new trustees.

[3]    In August 2004, soon after Ms Didovich settled the Whites Trust, a transfer of a property at Whites Road, Whitford, Auckland was executed in favour of the initial trustees. The transfer was registered on 3 September 2004 under the (then) Land Transfer Act 1952 (LTA 1952).

[4]    In July 2016 Mr White and Vlatkovich & McGowan Trustee Co Limited retired as trustees of the Whites Trust, and Ms Didovich exercised her power of appointment to appoint Beverly MacKenzie and Dulcina Subritzky (the first defendants) as new trustees.  Thereafter  the  trustees   of   the  Whites  Trust   were   Ms   Didovich,   Ms MacKenzie, and Ms Subritzky.

[5]    The retirement and appointment were recorded in, and occurred under, a Deed of Retirement and Appointment. All the initial trustees and new trustees were parties to that Deed.

[6]Clause 5 of that Deed made provision for the vesting of trust property. In cl

5.1 the parties declared that all trust property would vest in the continuing trustee (Ms Didovich) and the new trustees (Ms MacKenzie and Ms Subritzky). Such a declaration was, under s 47 of the Trustee Act 1956, effective to vest most of the trust

property in those trustees, without the need for any additional conveyance or assignment from the retiring trustees.

[7]    But s 47 is subject to exceptions. Among other things, it did not apply to land under the LTA 1952. This meant that the Whites Road property did not, as a result of cl 5.1 alone, vest in Ms Didovich, Ms MacKenzie and Ms Subritzky. A transfer executed by the retiring trustees would have to be registered in their favour under the LTA 1952 (or, now, the LTA 2017).

[8]This was anticipated by cl 5.2, which provides:

The parties agree to do all acts and things necessary to transfer any of the Trust’s assets that do not vest in the Continuing Trustee and the New Trustees under section 47 of the Trustee Act 1956 to the Continuing Trustee and the New Trustee.

[9]    Ms Didovich died in May 2017. Since then Ms MacKenzie and Ms Subritzky have been the  only  trustees  of  the  Whites  Trust.  They  are  also  executors  of  Ms Didovich’s estate.

[10]   The Whites Road property remains registered in the names of the initial trustees of the Whites Trust: Ms Didovich, Mr White, and Vlatkovich & McGowan Trustee Co Ltd. Ms Didovich’s executors and Vlatkovich & McGowan Trustee Co Ltd are willing to have the property transferred to the current trustees. But Mr White has refused to sign a transfer instrument or otherwise co-operate in a transfer.

[11]   Given Mr White’s refusal, the plaintiffs come to Court seeking an order that the Whites Road property vest in the current trustees. The vesting order is sought under s 52 of the Trustee Act.

Response of other parties to plaintiffs’ claim for a vesting order

[12]   The first defendants, Ms MacKenzie and Ms Subritzky (the current trustees of the Whites Trust, and also the executors of Ms Didovich’s estate), support and consent to the making of the vesting order. They have asked Mr White to sign the necessary documents to effect a transfer. Given that the proposed transfer would be to the first

defendants as current trustees, they could have commenced a proceeding seeking a vesting order. But the plaintiff beneficiaries have preferred to bring the proceeding.

[13]   Mr White has, as noted, refused to sign a transfer instrument. In February 2020 the plaintiffs’ solicitor, Ms Evans, wrote to Mr White’s solicitor asking Mr White to co-operate, failing which the plaintiffs would apply to this Court for a vesting order. Ms Evans copied the letter to Mr McLean, who was Mr White’s counsel in a related proceeding. Mr McLean replied by letter in March 2020. He set out Mr White’s reasons for his refusal to sign a transfer instrument. Mr McLean said that if the plaintiffs regarded the Whites Road property as trust property “I invite them to make an appropriate application.”

[14]   The plaintiffs did not accept Mr White’s reasons for refusing to sign a transfer instrument for the Whites Road property. They started this proceeding. Mr White has not taken any steps in response. So, despite his having explained through Mr McLean why he was not signing a transfer instrument, he has not formally opposed the plaintiffs’ claim for a vesting order.

[15]    The other retired trustee, Vlatkovich & McGowan Trustee Co Ltd, which remains a registered owner of the Whites Road property, was served with the plaintiffs’ claim. It has always been willing to sign the required documents to transfer the Whites Road property to the current trustees. A memorandum was filed on its behalf consenting to the vesting order.

[16]   The Whites Road property is subject to a mortgage in favour of the ASB Bank. The bank does not oppose the making of a vesting order, provided its position as mortgagee is not prejudiced. Its position will not be prejudiced, because the plaintiffs propose that the vesting order be conditional upon a discharge of the mortgage being registered at the same time the vesting order is lodged for registration.

[17]   Because there was no defence or other opposition to the plaintiffs’ claim, the proceeding was the subject of a formal proof hearing. Evidence was provided by a formal statement1 and affidavit from by Caitlin MacKenzie (one of the plaintiffs) and

1      This was made during the COVID—19 lockdown.

an affidavit from Ms Evans. The factual narrative that I have set out above is based on these.

Basis of application

[18]   The plaintiffs seek a vesting order under s 52 of the Trustee Act. This empowers the Court to make vesting orders in favour of trustees in various circumstances. One is where a trustee of any land has been appointed under any express power: s 52(1)(a). Another is where land is vested in a trustee, and it appears to the Court to be expedient to make a vesting order: s 52(1)(h). I accept that the Court has jurisdiction under s 52 to make the order.

[19]   The plaintiffs have standing to apply for a vesting order, as beneficiaries, under s 67 of the Trustee Act.

The vesting order should be made

[20]   Mr Jenkin appeared for the plaintiffs at the hearing. He took me through the relevant documents and the governing provisions of the Trustee Act. Having heard from Mr Jenkin, and read the evidence that has been produced, I have no doubt that the vesting order should be made. Mr White retired as a trustee. In doing so, he undertook to do all things necessary to transfer any of the trust’s assets to Ms Didovich and the new trustees. He has refused to do so. I cannot see any legal justification for his refusal. The reasons that he gave for his refusal (through Mr McLean) have no merit. Mr White has not taken any steps to oppose the plaintiffs’ claim in this proceeding.

Costs

[21]   The plaintiffs seek an award of costs from the second defendant. The plaintiffs have succeeded and are entitled to costs.

[22]   Mr Jenkin provided a schedule of costs and disbursements with his written submissions. I approve this, subject to the following:

(a)Items 24 and 33 do not apply. Items 30 and 32 apply in their stead.

(b)The copying charges have allowed an excessive amount per page. This calculation should be checked.

Result

[23]I order that:

(a)Under s 52 of the Trustee Act 1956 a vesting order is made for the property comprised and described in record of title NA92B/149, being all the land comprised and described in Lot 3 Deposited Plan 154379 (being 2.1795 ha more or less) and a half share of the land comprised and described in Lot 4 Deposited Plan 154379 (being 2719 m2 more or less), to be vested in the first defendants, namely Beverley Ann MacKenzie of Auckland, teacher aide and Dulcina Ida Subritzky of Auckland, retired.

(b)The above vesting order is made on the condition that at the time it is lodged for registration with the Registrar of Lands it is accompanied by a discharge of mortgage presented for registration in respect of Mortgage No M6137653.4 in favour of the ASB Bank Ltd over the property in record of title NA92B/149.

[24]I also order that Mr White pay costs to the plaintiffs, as indicated in [22] above.

Campbell J

Solicitors/Counsel:

D J Jenkin, Barrister, Auckland R G Evans, Barrister, Auckland

P M Molloy, Solicitors, Auckland Vlatkovich & McGowan Limited, Auckland Copy:

Lauren Priest, Legal Counsel, ASB Bank Limited, Auckland