Martin v Oates

[2019] NZHC 356

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2019-470-13

[2019] NZHC 356

IN THE MATTER

of the Trustee Act 1956, sections 51 and 52

AND

IN THE MATTER

of the OATES FAMILY TRUST

BETWEEN

LUKE STEEL MARTIN, ROBERT PARKINSON and CARL WILLIAM OATES

Applicants

AND

JEANETTE MARY OATES

Respondent

On the papers
Appearances:	KJ Catran for the Applicants
Judgment:	6 March 2019

JUDGMENT OF TOOGOOD J

This judgment was delivered by me on 6 March 2019 at 5.00 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

MARTIN & ORS v OATES [2019] NZHC 356 [6 March 2019]

Introduction

[1]                  Luke Steele Martin, Robert Parkinson and Carl William Oates (collectively, the applicants) and the respondent, Jeanette Mary Oates (“Mary”), are the trustees of the Oates Family Trust (“the Trust”), established by deed dated 9 March 2010. In that capacity they are the registered proprietors of a residential property in Point Chevalier, Auckland; namely, the land contained in CFR Identifier NA88A/327 North Auckland, being Flat 2 on Deposited Plan 147913 (“the Land”). It is valued at $1.2 million. The other primary asset of the Trust is a portfolio of shares managed by Craigs Investment Partners and valued at approximately $10.2 million.

[2]                  Mary is aged 88. Dr Andrew Coster, who is said by Mary’s husband Carl to have been her doctor for many years, says that Mary suffers from severe memory impairment and that she does not have the mental capacity to act in the capacity of a trustee of the Trust. Dr Coster’s report is undated but I infer that it is recent and that the doctor’s opinion is current.

[3]                  The applicants seek orders removing Mary as a trustee of the Trust and vesting the Trust property in the remaining trustees. To facilitate the making of the substantive orders, the plaintiffs seek leave to commence the proceeding by way of an originating application and an associated order that service of the proceedings on Mary be dispensed with.

Application for leave to commence the proceeding by originating application and directions as to service

[4]                  This is not the type of proceeding that can be commenced by way of originating application as of right pursuant to rr 19.2 to 19.4 of the High Court Rules 2016. However, the Court may, in the interests of justice, permit any proceeding not mentioned in rules 19.2 to 19.4 to be commenced by originating application. Such permission may be sought without notice.1 The applicants seek leave to bring this proceeding as an originating application under Part 19 of the High Court Rules 2016, and they have asked that the application be determined on the papers without service on Mary or any other person.

1      High Court Rules 2016, r 19.5.

[5]The discretionary beneficiaries of the Trust are:

(a)Carl and Mary;

(b)Mary’s son Shaun James McHugh, who is aged 64;

(c)Shaun’s sons Morgan Jack McHugh, aged 22, and Ryan James McHugh, aged 24;

(d)any not-for-profit organisation whose funds are applied to charitable, civic, philanthropic or similar purposes; and

(e)any other beneficiary appointed by the settlors by deed. There is none in that category.

[6]                  Shaun, Morgan and Ryan consent to the making of the orders sought and do not require service. There is no point in serving the proceeding on Mary. Moreover, because the proceeding does not involve any disputed questions of fact and there is no opposing party, it is not necessary in the interests of justice for there to be a particularised pleading or to follow the usual interlocutory steps involved in a civil proceeding.

[7]                  I am satisfied, therefore, that it is appropriate that this proceeding proceed by way of originating application and that service of the proceeding be dispensed with.2

Background

[8]                  Carl and Mary were the settlors of the Trust. Clause 17.1 of the deed provides that each of the settlors has the power to appoint trustees and to remove every trustee appointed by the settlor. They are deemed by the clause to have appointed themselves as trustees. It follows that only Mary has the power under the deed to remove herself as a trustee. The plaintiffs ask the Court to intervene.

2      See McKean v McKean [2017] NZHC 2212, (2017) 4 NZTR 27-019 at [10]; Re Hetrick [2017]

NZHC 472, (2017) 4 NZTR 27-006 at [5] and [6].

Removal of a trustee without substitution

[9]                  No authority is cited for the removal of Mary as trustee by order of the Court in the present circumstances. There is authority for removal in s 51(1) of the Trustee Act 1956 which provides:

The Court may, whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient, difficult, or impracticable so to do without the assistance of the Court, make an order appointing a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee.

[10]              I am satisfied that, given Mary’s incapacity, the assistance of the Court to remove her is expedient but, since the other trustees remain competent to administer the Trust’s affairs, and there is no requirement in the trust deed for more than three trustees, the appointment of a new trustee is not sought. It follows that the power of removal in s 51(1) cannot apply.3 However, the Court may exercise its inherent jurisdiction to order the removal of a trustee without substitution.4 This jurisdiction is ancillary to the Court’s principal duty to see that a trust is properly executed.5 The use of the power to remove is appropriate in this case.

Vesting of property

[11]              Section 52(1)(b)(i) of the Trustee Act permits the vesting of land or interest therein, in any such person or any such manner as the Court may direct, where a trustee entitled to or possessed of land, either solely or jointly with another person, is under disability. Section 2(2) of the Act provides that “a person shall be deemed to be under a disability while he [or she] is not of … full mental capacity”.

[12]              With the removal of Mary as a trustee, the Trust assets (including the Land and the shares) will remain in the ownership of the remaining trustees. No order of the Court is required for that purpose. An order vesting the Land in the current trustees is expedient, however, because Land Information New Zealand will not recognise their ownership of the Land without it.

3      Anderson v Anderson [2013] NZHC 1767, (2013) 3 NZTR 23-008.

4      Wallace v Naknok [2012] NZHC 382, (2012) 3 NZTR 22-005 at [7].

5      Hunter v Hunter [1938] NZLR 520 (CA) at 529; cited with approval in Powell v Powell [2015] NZCA 133, (2015) 4 NZTR 25-020 at [47].

Direction to Registrar-General of Lands to record change of ownership

[13]              The relief sought includes an order directing the Registrar-General of Lands to record the change of ownership brought about by the making of the vesting order sought. The Registrar-General has not been served with the proceeding and the Court would not issue such a direction without notice. But, in any event, such an order is not necessary to achieve the plaintiffs’ purposes. The Court is aware that the Registrar- General routinely accepts Court orders vesting properly identified land in trustees as sufficient proof of ownership to record appropriate changes to certificates of title. Indeed, many applications are made to this Court because the Registrar-General has required trustees in similar circumstances to apply for an order. I decline that relief.

Findings and orders

[14]I am satisfied on the affidavit evidence filed that:

(a)Mary no longer has the capacity to fulfil her duties as registered proprietor or to facilitate the transfer of the title in the Land to the current trustees.

(b)Mary should be removed as a trustee.

(c)The Land should be vested in the remaining trustees under s 52 of the Trustee Act.

[15]Accordingly, I order:

(a)The proceeding may be commenced by originating application under Part 19 of the High Court Rules 2016 and service of the proceeding on any person shall be dispensed with.

(b)Jeanette Mary Oates is removed as a trustee of the Oates Family Trust.

(c)Under s 52(1)(h) of the Trustee Act 1956, the  land  contained  in  CFR Identifier NA88A/327 North Auckland, being Flat 2 on Deposited Plan 147913, shall be vested in Luke Steele Martin, Robert Parkinson

and Carl William Oates and held by them as trustees of the Oates Family Trust.

...................................................

Toogood J