Macpherson v Macpherson

[2018] NZHC 240

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2018-404-122 [2018] NZHC 240

BETWEEN

ANTHONY JAMES MACPHERSON,

DAVID GRANT MACPHERSON and JAN MACPHERSON as trustees of the Peter & Joan Macpherson Trust

Applicant

AND

PETER WILLIAM EDGAR MACPHERSON

Respondent

Hearing:	(on the papers)
Appearances:	P McKendrick and K Kommu for Applicant No appearance by, or on behalf of Respondent
Judgment:	26 February 2018

JUDGMENT OF VAN BOHEMEN J

This judgment was delivered by me on 26 February 2018 at 2.15pm pursuant to

Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

Glaister Ennor, Auckland

MACPHERSON v MACPHERSON [2018] NZHC 240 [26 February 2018]

Introduction

[1]      The applicants seek the removal of their father as trustee of the family trust that their parents established in July 1994 on the grounds their father has dementia and is unable to discharge his responsibilities as trustee.  They also seek an order vesting a trust-owned property in Devonport in the applicants. There is some urgency because that property is being put up for sale by auction on 28 February 2018 and the trustees are concerned that uncertainty about the power to dispose of the property may affect the price obtained at auction.

[2]      The applicants brought this application by way of an originating application dated 26 January 2018. In doing so, they also sought orders regarding the bringing of the proceeding by way of originating application and representation and directions as to service. Those orders and directions were made by Palmer J on 26 January 2018.

[3]      Among the directions made by Palmer J was that the Originating Application could be heard on the papers.

Background

[4]      The following account is drawn from:

(a)       The Originating Application dated 26 January 2018;

(b)      The affidavit of David Grant Macpherson, affirmed on 22 January

2018, and its supporting exhibits;

(c)       The affidavit of Doctor Richard Ashby Barber sworn on 7 February

2018; and

(d)      The Memorandum of Counsel for the applicants dated 19 February

2018.

[5]      The Peter and Joan Macpherson Trust (Trust) was settled by Trust Deed dated

4 July 1994. The settlors were Peter William Edgar Macpherson (Peter Macpherson)

and Joan Mary Macpherson (Joan Macpherson).

[6]      Under the Trust Deed:

(a)       The original trustees were Peter and Joan Macpherson, who were husband and wife, and the Public Trustee;

(b)      The discretionary beneficiaries of the Trust include:1

(i)       Any spouse of the Settlors;

(ii)The  Settlors’ children:  Jan  Macpherson  (Jan),  David  Grant Macpherson (David), Anthony James Macpherson (Tony), and Peter Ratu Macpherson (Peter Ratu) who were also the “Final Beneficiaries”.

(iii)     Any child or issue of the Final Beneficiaries.

(c)       The power to appoint new trustees vested jointly in Peter and Joan

Macpherson or in any surviving Appointer by deed (Clause 5.1).

[7]      On 5 November 2007, Joan Macpherson died.

[8]      On  15  November  2011,  Peter  Macpherson,  as  the  surviving Appointer, appointed Jan, David, Tony, and Peter Ratu as additional trustees. As a consequence, the power to appoint additional trustees in clause 5.1 of the Trust Deed vested jointly in them as well as in Peter Macpherson.

[9]      In or about July 2014, Peter Macpherson was admitted to a care facility at

Beachhaven Hospital.  At that time, the Mental Health Services for Older Adults of the Waitemata District Health Board assessed him as:

1      The definition of “the Discretionary Beneficiaries” also includes certain companies and trustees and any person appointed by the Trustees. These are not relevant to this application.

An 88 year old man, looking younger than stated age with significant dementia, memory and functional abilities, presenting as a risk to self and others through misrepresentation and inability of staff to manage his level of need.

[10]     On 14 November 2017, Peter Ratu died.   At the time, he was living at a property owned by the Trust at 30A Vauxhall Road, Devonport, Auckland (Vauxhall Road property).

[11]     Jan, David, and Tony (the applicants) as the remaining trustees wish to sell the Vauxhall Road property which is currently unoccupied. However, Peter Macpherson is unable to take part in decisions of the trustees about the Vauxhall Road property because he does not have mental capacity to make decisions.

[12]     In a letter dated 15 December 2017, Dr R Barber, Medical Officer at the

Beachhaven Hospital, stated:

Mr Macpherson is unable to manage and is wholly incapable of understanding any decisions, or the consequences of those decisions, related to his property, finances or legal matters.

Dr Barber also stated in that letter that Mr Macpherson has an irreversible condition which has deteriorated over the years.

[13]     In  his  affidavit  sworn  on  7  February  2018,  Dr  Barber  confirms  these assessments and says:

(a)      Mr Macpherson continues to suffer from dementia and his condition has worsened since his admission to the hospital in July 2014;

(b)      Mr Macpherson has an irreversible and permanent condition;

(c)      As a result of Mr Macpherson’s severe dementia, he is unable to manage and is incapable of understanding any decisions, or the consequences of those decisions, relating to his property, finances or any other legal matters.

[14]     By originating application dated 26 January 2018, the applicants seek orders:

(a)      Removing or replacing Peter Macpherson as trustee; or

(b)If removing Peter Macpherson alone is not possible, removing all trustees and reappointing the applicants as trustees; and

(c)      Vesting the Devonport property in the applicants.

Discussion

[15]     The applicants rely on the Court’s inherent jurisdiction for the removal of Peter Macpherson.  If the Court does not consider it has that jurisdiction or is unwilling to exercised it, they ask the Court to exercise its powers under s 51 of the Trustee Act

1956 to appoint new trustees.

[16]     I am satisfied the Court’s inherent jurisdiction includes the power to remove trustees. As stated by Lang J in Kite v Hodge:2

[40]     The Court has an inherent supervisory jurisdiction to ensure that the terms of a trust are carried out. This is derived from the Court’s powers in equity to supervise trusts for the welfare of beneficiaries and exists in parallel to the power under s 51 of the Trustee Act 1956. This permits the Court to make an order removing trustees when it is necessary to take that step in order to protect the interests of beneficiaries.

[17]     Russ v Russ3  and McKean v McKean4  are other cases where the Court has recognised the right to remove trustees pursuant to its inherent jurisdiction.

[18]     It is clear from the affidavit of Dr Barber that Peter Macpherson is unable to carry out his responsibilities as trustee under the Trust Deed. This means he is unable to participate in decisions regarding the disposition of the Trust’s property, which is not in the best interests of the beneficiaries.  Importantly, the trustees are unable to

appoint new trustees because the power of appointment under clause 5.1 of the Trust

2      Kite v Hodge [2014] NZHC 3025.

3      Russ v Russ [2016] NZHC 2169.

4      McKean v McKean [2017] NZHC 2212.

Deed vests jointly in all trustees.   I consider it is appropriate, therefore, that Peter

Macpherson is removed as a trustee of the Trust.

[19]     Peter Macpherson’s status as a named discretionary beneficiary under the Trust Deed will not be affected by his removal as trustee, so his personal interests in the Trust will not be prejudiced. Nor will his removal as a trustee breach any requirements as to the number of required trustees under the trust deed. To the contrary, it will allow the trustees to administer the Trust and its property in the best interests of the beneficiaries.

[20]     Appointment of the applicants as the only trustees is also consistent with Peter Macpherson’s will dated 15 November 2011, a copy of which is at Exhibit H to David’s affidavit of 22 January 2018.  Under clause 6 of the will, the applicants are nominated as the persons to exercise the power of appointment and removal of trustees under the Trust.

[21]     As I am satisfied that it is proper to exercise this Court’s inherent jurisdiction to remove Peter Macpherson as a trustee of the Trust, I do not need to consider the alternative request for an order under s 51 of the Trustee Act 1956.

Vesting order

[22]     The applicants also seek an order that the Vauxhall Road Property be vested in the applicants pursuant to s 52 of the Trustee Act 1956.

[23]     Section 52(1)(b)(i) empowers the Court to vest land in any such person as the Court may direct where a trustee entitled to or possessed of any land or interest therein, either solely or jointly with any other person, is “under disability”.   It has been recognised in a number of cases that “under disability” includes situations where a trustee lacks mental capacity due to dementia, for example: Russ v Russ,5 McKean v

McKean,6 Docherty v Docherty.7

5      Russ v Russ [2016] NZHC 2169.

6      McKean v McKean [2017] NZHC 2212.

7      Docherty v Docherty [2013] NZHC 1885.

[24]    Together with the applicants, Peter Macpherson is one of the registered proprietors of the Vauxhall Road Property, as trustees of the Trust. For the purposes of s 52(1)(b)(i), Peter Macpherson is under a mental disability by reason of his dementia. It is appropriate that the Vauxhall Road Property be vested in the applicants to ensure that they can deal with the Vauxhall Road Property in accordance with their duty to administer the Trust in the best interests of the beneficiaries. Accordingly, the vesting order sought is appropriate.

Orders

[25]     I make the following orders:

(a)       Peter  Macpherson  is  removed  as  a  trustee  of  the  Peter  and  Joan

Macpherson Trust;

(b)      The property at  30A Vauxhall  Road,  Devonport, Auckland (Lot  2

Deposited Plan 82901, Identifier NA43D/850) is vested in the name of the applicants.

van Bohemen J