McAtamney v Allen

[2020] NZHC 1777

IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY

I TE KŌTI MATUA O AOTEAROA TE TIHI-O-MARU ROHE

CI2020-476-000007

[2020] NZHC 1777

UNDER

the Trustee Act 1956

BETWEEN

FRANCIS STEVENS McATAMNEY

First Plaintiff

JOHN DUNCAN McFARLANE
Second Plaintiff

ANNE-MARIE ALLEN
Third Plaintiff

AND

ANNE-MARIE ALLEN

First Defendant

JONATHAN CHRISTOPHER ALLEN
Second Defendant

NATALIE ANNE MARGARET ALLEN
Third Defendant

STEPHEN FRANCIS McATAMNEY
Fourth Defendant

DANIEL FRANCIS McATAMNEY
Fifth Defendant

ANTHONY JOSHUA McATAMNEY
Sixth Defendant

MATTHEW STEPHEN McATAMNEY
Seventh Defendant

PAULINE MARGARET McATAMNEY

Eighth Defendant

ELIZABTH MARY McATAMNEY
Ninth Defendant

REBECCA MARGARET McATAMNEY

Tenth Defendant

SAMUEL ROBERT JOHNSON

Eleventh Defendant

BRIDGET ELIZABETH JOHNSON
Twelfth Defendant

CAROLYN TERESA AGNES McATAMNEY-RASCH

Thirteenth Defendant

SAVANNAH JESSICA McATAMNEY- RASCH

Fourteenth Defendant

ZETTLIN OLLIE FRANCIS McATAMNEY-RASCH

Fifteenth Defendant

Hearing:

21 July 2020

Counsel:

M J Wallace for Plaintiffs

Appearance of First, Second, Third, Fourth, Fifth, Sixth and Seventh Defendants excused.

Eighth Defendant in person

S J Jamieson for the Ninth, Tenth, Eleventh and Twelfth Defendants

Appearance of Thirteenth, Fourteenth and Fifteenth Defendants excused

Judgment:

22 July 2020

JUDGMENT OF DOOGUE J

This judgment was delivered by Justice Doogue on 22 July 2020 at 11.00 am

pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar Date:

Solicitors:

Gresson Dorman & Co, Timaru

Maciaszek Brown Law, Christchurch

McATAMNEY & ORS v ALLEN & ORS [2020] NZHC 1777 [22 July 2020]

Introduction

[1]    The Waimarie Second Family Trust (the trust) was established by the first plaintiff, Francis Stevens McAtamney (Frank) by trust deed dated 17 September 1997.

[2]    Pursuant to that deed, the statutory power of appointment of new trustees was vested in Frank.

[3]    Both Frank and his late wife, Margaret McAtamney (Margaret) executed deeds on   27   March   2000   and   30    December    2009    purporting    to    appoint  John Duncan McFarlane and Anne-Marie Allen respectively as additional trustees.

[4]    As a result of legal advice received, the three plaintiff trustees are in doubt as to whether the power of appointment of trustees was validly exercised, since the power was granted only to Frank and yet the deeds purport to have been exercised by both Frank and  Margaret.  The  plaintiffs  seek  orders  declaring  the  validity  of  the  two appointments.

[5]    All persons having an interest in the proceeding have received notice, and none seek to oppose  the  making  of  the  declarations  sought.  Frank’s  daughter,  Pauline Margaret McAtamney, appeared in person to recite grievances she holds concerning the administration of the trust. However, she confirmed that she accepted it had always been Frank’s intention to validly appoint Mr McFarlane and Ms Allen as additional trustees.

Background

[6]Frank is the settlor and one of the original trustees of the trust.

[7]    Pursuant to the provisions of the trust deed, in particular cl 9, the statutory power of appointment of new trustees is vested in Frank during his lifetime, and upon his death that power of appointment is vested in his executors. Frank’s deceased wife Margaret was the only other trustee appointed by the trust deed. Clause 9 of the trust deed provides:

(i)The statutory power of appointment of new Trustees shall be vested in the said FRANCIS STEVENS McATAMNEY and upon his/her/their death this power of appointment shall be vested in his/her/their respective executors.

(ii)There shall be a minimum of two Trustees. In the event of there being only one Trustee, then all discretionary powers and authorities vested in the Trustee shall be suspended pending the legal appointment of one or more additional Trustee. In the event of the death or incapacity of one Trustee, a sole Trustee shall be prohibited from exercising any discretionary power in favour of himself or herself as the case may be.

[8]    In early 2000, Frank and Margaret decided that it would be wise to appoint an additional trustee to the trust, and they instructed their solicitor at that time to prepare the necessary deed recording such appointment. By deed dated 27 March 2000, Frank and Margaret purported to appoint (in their capacity as the continuing trustees of the trust) their accountant, Mr McFarlane, to be an additional trustee of the trust.

[9]    In late 2009, Frank and Margaret decided that a further trustee should be appointed to the trust, and they instructed their solicitor at that time to prepare the necessary deed recording the appointment. By deed dated 30  December  2009, Frank and Margaret purported to appoint (in their capacity as the continuing trustees of the trust) their eldest child, Ms Allen, to be an additional trustee of the trust.

[10]Margaret died on 19 June 2011.

[11]   Frank has now received legal advice that those deeds of appointment may be invalid, because according to the trust deed the appointment in both cases should have been exercised solely by Frank as the person having the statutory power of appointment pursuant to the trust deed, rather than by Frank and Margaret together.

[12]   By way of affidavit dated 29 November 2019, Frank confirmed that it has always been his intention to appoint Mr McFarlane and Ms Allen as additional trustees of the trust. That is what he was in fact doing when he signed the two deeds of appointment with Margaret.

The law

[13]   The Declaratory Judgments Act 1908 (the Act) provides for the making of declarations in a wide variety of circumstances, including in relation to the validity of a deed. Section 3 of the Act provides:

3Declaratory orders on originating summons

Where any person has done or desires to do any act the validity, legality, or effect of which depends on the construction or validity of any statute, or any regulation made by the Governor-General in Council under statutory authority, or any bylaw made by a local authority, or any deed, will, or document of title, or any agreement made or evidenced by writing, or any memorandum or articles of association of any company or body corporate, or any instrument prescribing the powers of any company or body corporate; or

Where any person claims to have acquired any right under any such statute, regulation, bylaw, deed, will, document of title, agreement, memorandum, articles, or instrument, or to be in any other manner interested in the construction or validity thereof,—

such person may apply to the High Court by originating summons for a declaratory order determining any question as to the construction or validity of such statute, regulation, bylaw, deed, will, document of title, agreement, memorandum, articles, or instrument, or of any part thereof.

[14]Section 4 provides:

4Effect of declaratory orders

Any declaration so made on any such originating summons shall have the same effect as the like declaration in a judgment in an action, and shall be binding on the person making the application and on all persons on whom the summons has been served, and on all other persons who would have been bound by the said declaration if the proceedings wherein the declaration is made had been an action.

[15]   Section 10 of the Act provides that the jurisdiction granted under the Act is discretionary:

10 Jurisdiction discretionary

The jurisdiction hereby conferred upon the High Court to give or make a declaratory judgment or order shall be discretionary, and the said Court may, on any grounds which it deems sufficient, refuse to give or make any such judgment or order.

Analysis

[16]   It is clear from the deed of appointment and from Frank’s affidavit that he did indeed intend to exercise the power of appointment that was vested in him pursuant to the trust deed. While Margaret also purported to exercise that power, her exercise was ineffective as she did not have the power to do so.

[17]   I conclude that the ineffective purported exercise of the power by Margaret had no effect on the actual exercise of the power by Frank.

[18]   In these circumstances, the declarations as to the validity of the appointments of Mr McFarlane and Ms Allen are entirely appropriate.

Orders

[19]   After reading the statement of claim and the affidavit of Francis Stevens McAtamney sworn 29 November 2019, and after hearing M J Wallace (counsel for the plaintiffs) and S J Jamieson (counsel for the ninth, tenth, eleventh and twelfth defendants), this Court declares:

(a)John Duncan McFarlane of Timaru,  chartered  accountant,  was  on 27 March 2000 validly appointed a trustee of the Waimarie Second Family Trust, a trust established by deed on 17 September 1997.

(b)Anne-Marie Allen of Ashburton, farmer, was on 30 December 2009 validly appointed a trustee of the Waimarie Second Family Trust, a trust established by deed on 17 September 1997.

[20]   The costs of the plaintiffs in bringing this proceeding shall be paid from the trust funds of the Waimarie Second Family Trust.

Doogue J