Macleod, ex parte Scott Family Trust

[2020] NZHC 2420

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2020-412-80

[2020] NZHC 2420

UNDER

the Trustee Act 1956

IN THE MATTER

of an application to vest trust property in the current trustees of the Scott Family Trust

BETWEEN

KAREN YVONNE MACLEOD and MICHELLE MARION ALEXANDER

Plaintiffs

Hearing:	Determined on the papers
Counsel:	H T Alloo and L A Andersen QC for Plaintiffs
Judgment:	17 September 2020

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 17 September 2020 at 4.00pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 17 September 2020

MACLEOD ex parte Scott Family Trust [2020] NZHC [2420] [17 September 2020]

[1]    The plaintiffs are the present trustees of the Scott Family Trust (the Trust) which was settled on 8 August 2006.

[2]    The Trust was settled by Adam Scott (Adam) and Patricia Scott (Patricia) who were the parents of the plaintiffs, Karen Macleod (Karen) and Michelle Alexander (Michelle).

[3]    The original trustees were Adam and Patricia and Linda Patricia Scott (Linda), who is the sister of the plaintiffs. Both Adam and Patricia have died.

[4]    The plaintiffs explain that as a result of Linda unfortunately losing capacity, she has been removed as a trustee of the Trust. While the medical certificate produced is from November 2019, its terms mean Linda’s capacity will not have improved.

[5]    The Trust Deed, dated 8 August 2006, contained at cl 17.1 the following power:

17.1 Settlor’s powers of appointment and removal: Each Settlor shall have the powers, exercisable from time to time, to appoint one Trustee and to remove every Trustee appointed by that Settlor. For the purposes of this clause Adam Lauriston Scott shall be deemed to have appointed himself and Patricia Lorraine Scott shall be deemed to have appointed herself.

[6]    Under cl 17.3 of the Trust Deed, the powers of appointment and removal held by a Settlor shall, from the date of the Settlor’s death, be exercisable by their legal representatives.

[7]    The legal representatives of both Adam and Patricia, by Deed exercising the power in cl 17.1 purported to remove Linda as trustee due to her lack of capacity. Also pursuant to the powers created by the Trust Deed, they appointed Karen and Michelle as replacement trustees.

[8]    I am not convinced that the power of appointment and removal of trustees in cl 17.1 permitted the steps taken by the executors of the estates of Adam and Patricia. The power in cl 17.1 that each estate could exercise, was the power to remove every trustee appointed by that Settlor. Clause 17.1 does not create a general power to

remove trustees. Linda was not appointed as trustee by the Settlor but was one of the trustees who, at the time of settlement, agreed to accept the role of trustee.

[9]    If I am correct in that, then to regularise the position  I make an  order  under s 51 of the Trustee Act 1956 (the Act) removing Linda Patricia Scott as trustee and appointing the applicants, Karen Yvonne Macleod and Michelle Marion Alexander, in her place. Section 51 permits the Court to remove a trustee and appoint replacements when “… it is found inexpedient, difficult or impracticable so to do without the assistance of the Court.”

[10]   In the present circumstances, assuming I am correct as to the meaning of     cl 17.1, it would have been impossible to remove Linda and replace her as trustee without the intervention of the Courts.

[11]   With the removal of Linda as the surviving trustee, the present trustees need to seek a vesting order under s 52 of the Act, to enable the registration of the transfer of the property from the original trustees as named on the title of the Trust property at  3 Kilburn Avenue, Mosgiel to the present trustees.

[12]   To give effect to the vesting order and to deal with issues as to service and representation, the following procedural issues arise:

(1)leave to bring this application by way of originating application.

(2)Whether Linda should be represented by a litigation guardian and whether she or any other person should be served with the proceedings.

Use of originating application procedure

[13]   Applications for vesting orders such as these are now routinely made by way of originating application. Vesting order applications have been characterised as administrative in nature and that is often the case. In straightforward uncontested applications, such as this, it is appropriate that a cost efficient and practical procedure be adopted, and leave is granted for the originating application procedure to be used.

Litigation guardian

[14]   As Linda is incapacitated, r 4.30 of the High Court Rules 2016, requires her to have a litigation guardian unless the Court decides otherwise. I am satisfied in this case that it is unnecessary to appoint a litigation guardian. Such would serve no real purpose given the administrative nature of this application.

[15]   Accordingly, there is an order dispensing with the appointment of a litigation guardian.

Service

[16]   Similarly, there is no need for any party to be served. The application is necessary to allow the Trust to function. Accordingly, there is an order dispensing with the need for the application to be served.

[17]   The final beneficiaries in the Trust are the children of Adam and Patricia, that is, the applicants and Linda. There are other discretionary beneficiaries but their interests are not adversely affected by the orders sought.

Vesting order

[18]   As I have said, the substantive order sought is a vesting order in respect of the property at 3 Kilburn Avenue, Mosgiel. I am satisfied that a vesting order is appropriate. The order is necessary to allow the continuing trustees to carry out their duties.

[19]Accordingly, there is an order:

(a)Vesting the property at 3 Kilburn Avenue, Mosgiel being an estate stratum in freehold, Unit 15 Deposited Plan 22559, contained in Identifier OT14D/1053, Otago Land Registration District in the names of Karen Yvonne Macleod and Michelle Marion Alexander jointly, such stratum in freehold estate being subject to:

(b)6988955.4 Encumbrance to Chatsford Management Ltd; and

(c)7678628.1 Notice of the registration of Chatsford – The Lifestyle Choice as a Retirement Village Subject to section 22 of the Retirement Villages Act 2003.

[20]   There is one final procedural step that needs to be taken before the order can be sealed. The originating application contains a truncated form of the certificate required to accompany an application that is without notice. The full certificate requires counsel to certify that they have made all reasonable enquiries and all reasonable steps have been made or taken to  ensure that  the  application  contains all relevant information, including any opposition or defence that might be relied upon by any other party or any facts that could support the position of any other party.

[21]   I have no doubt that counsels’ truncated certificate was intended to capture the terms of the full certificate, but the full certificate is a significant matter and upon a full certificate being provided by way of memorandum, orders may be sealed.

Associate Judge Lester

Solicitors:
Albert Alloo & Sons, Dunedin

Copy to counsel:
L A Andersen QC, Barrister, Dunedin