McNeill v Agar

[2020] NZHC 607

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2019-454-58

[2020] NZHC 607

BETWEEN

CHRISTINA MCNEILL AND CHRISTINA MCNEILL TRUSTEE SERVICES LTD
Applicant

AND

STEPHEN AGAR

Respondent

Hearing:	9 March 2020
Appearances:	G Woollaston for Plaintiff No appearance for Defendant
Judgment:	9 March 2020

JUDGMENT OF GRICE J

[1]    This is an application for orders to vest a property pursuant to s 52 of the Trustee Act 1956 in the applicant solely.1 Mr Agar, the respondent, was previously a trustee of the relevant trust. He was married to Ms McNeill but they separated in April 2017. They were involved in Family Court litigation from November 2017.

[2]    Mr Agar was removed as a trustee from the trust with effect from 28 August 2017. In his place Christina McNeill Trustee Services Ltd was appointed. This was achieved by Ms McNeill exercising her rights as settlor under the trust deed to remove him. Mr Agar has refused to signed the conveyancing documents required to transfer ownership of a house at 14 Sheffield Street, Palmerston North (the trust property) which is an asset of the trust to the present trustees.

1      This decision was delivered orally on 9 March 2020. The written form has been edited and footnoted before distribution.

CHRISTINA MCNEILL AND CHRISTINA MCNEILL TRUSTEE SERVICES LTD v STEPHEN AGAR [2020] NZHC 607 [9 March 2020]

[3]    Since then the division of the relationship property between Ms McNeill and Mr Agar has been dealt with in the Family Court.

[4]    The applicants now seek orders vesting the trust property in the names of the present trustees.

[5]    Mr Agar has not been found to enable service on him in the ordinary course. Apparently he lives a transient lifestyle. Ms McNeill through her counsel today indicated that while Mr Agar had been living in a facility in Marton he had left there about a month ago. He has not been in touch with her.

[6]    Orders for substituted service were made and effected by an advertisement in the Wanganui Chronicle in September 2019. The time provided for Mr Agar to file a notice of opposition expired without any sign of him. Ms McNeill now wishes to proceed by of formal proof today.

[7]    Mr Agar did appear at the  Family Court  relationship  property hearing  on 10 May 2019. Although he had earlier taken steps in the proceedings the Judge noted in his decision that the parties had formed a relationship in November 2010 and married in May 2011 separating six years later in April 2017.2

[8]    The property at 14 Sheffield Street is owned by Ms McNeill’s family trust. That trust was established in May 2005 by Ms McNeill. The trust property was bought by the trust on 20 April 2006. It was debt free due to Ms McNeill having applied the life insurance proceeds paid to her following the death of her first husband in December 2003.

[9]    The Family Court judgment shows that the business dealings entered into between the parties had become complicated. There were a number of companies involved running various enterprises which were established during the relationship. The Judge narrated the details of the various property purchases by the trust which secured and guaranteed loans financing these enterprises. The Judge also set out details of the financial difficulties in which the trust and the parties found themselves

2      Christina Noeline McNeill v Stephen George Agar [2019] NZFC 3951.

at the date of separation. The Judge did not deal with the property at 14 Sheffield Street (the trust property) as he said it was owned by the trust and separate property. He did however note that there were a number of assets which were vested in       Ms McNeill or various companies which in general terms had negative equity. Much of the debt was secured over the trust property.

[10]   Ms McNeill since then has taken steps to improve her financial position. In January this year she consolidated the trust debt using the security of the various properties owned by the trust at $642,798.

[11]   The house at 14 Sheffield Street is worth approximately $585,000. This is an estimate based on a valuation as at September 2018 and allows for an increase in value over the last two years.

[12]   Ms McNeill has indicated that the net worth of the trust at the present time taking into account the properties it owns and its indebtedness is somewhere in the vicinity of $800,000. Ms McNeill is presently arranging to refinance the TSB loans which are secured over the trust property. She has indicated she is prepared to provide a personal indemnity for any indebtedness that will be a personal liability for Mr Agar due to his guarantees and personal obligations under the loan documents to the TSB. The trust has also offered to provide a written indemnity.

[13]   In addition, once the TSB loans are refinanced the personal obligations to the TSB while remaining extant in terms of any run over liability will effectively have been repaid. Ms McNeill indicated that the the ANZ would refinance but because of the ownership and the vesting problems concerning the Trust property the draw down on the new securities cannot occur as the title to Sheffield remains in Mr Agar’s name and he will not cooperate.

[14]   Mr Woollaston suggested a mechanics to facilitate the refinancing using the trustee company that is a trustee of the McNeill Family Trust to facilitate the drawdown of the new loan. One of the directors of that company is a partner in a local accounting firm, Mrs O’Fee, of Onla Accounting in Palmerston North.

[15]   In terms of s 52 of the Trustee Act 1956 I may make vesting orders of land where a trustee is entitled to an interest in the land and cannot be found.3 In addition, where expedient the Court may make an order vesting land which is vested in a trustee in such person as the Court may direct.4

[16]   I am satisfied Mr Agar was a trustee of the McNeill Family Trust which owns the property at 14 Sheffield Street in Palmerston North. He has since been removed as trustee and the existing trustees are the applicants. Mr Agar has refused to sign the conveyancing documents required to transfer the property into the present trustees’ names. This is causing difficulties on a number of fronts in particular for the refinancing of the property which is required for business reasons.

[17]   In those circumstances I consider it expedient that the Court make an order confirming the vesting the property in the present trustees and directing the transfer of the trustee property to the existing trustees, the applicants.

[18]   However, as there are substantial debts secured over the property for which Mr Agar will be personally liable it is also appropriate that indemnities be extended to Mr Agar for that indebtedness. To that end Mr Woollaston for Ms McNeill has indicated undertakings will be available for the indebtedness to TSB without any conditions attached from both Ms McNeill personally and from the trust.

[19]   Accordingly, I make orders continuing the vesting of the property at 14 Sheffield Street, Palmerston North in the name of the present trustees, (the applicants to this application). In addition, the trustee company is directed to undertake the steps required to effect the transfer of the property into the applicants’ names5 and secondly to facilitate the repayment of the TSB indebtedness secured over the property in which Mr Agar is personally responsible. This order will not issue until the two indemnities referred to above have been signed appropriately and lodged in this court.

3      Trustee Act 1956, s 52(1)(b)(iii).

4      Trustee Act 1956, s 52(1)(h).

5      Pursuant to s 58 of the Trustee Act.

Costs

[20]   Mr Woollaston applies for costs against Mr Agar on a 2B basis. He has indicated that his actual costs would amount to approximately $4,000 together with

$1,500 worth of disbursements including the setting down fee. Mr Woollaston advances the argument that this is not the usual run of the mill trust reorganisation application which has become about because a trustee has been incapacitated or cannot be found. In those cases generally the trust bears the cost. This reflects the usual position that trustees are indemnified from the trust assets for matters relating to the trust.

[21]   In this case Mr Woollaston said it is not a case of Mr Agar just going missing, but that he has actively refused to participate and to complete the conveyancing forms even when an offer was made to pay for his legal advice.

[22]   I am of the view that in this case there must be some award of costs to reflect the extra cost brought about by Mr Agar. However, Mr Agar has not had the opportunity to make any response to the allegations of wilful obstruction. However, it is clear that he has, to a large extent, precipitated this application by not cooperating.

[23]   In those circumstances and given the usual position is that a trustee is indemnified from the assets of the trust for any costs which he is put to in relation to trust administration I consider a small award of costs is appropriate. The transfer sought is trust administration which has become more expensive because of Mr Agar’s non-co-operation.

[24]   In those circumstances I consider a contribution to costs by Mr Agar is appropriate given that the actual costs are about $5,500 I consider a contribution of

$2,000 is appropriate in the circumstances. Order accordingly.

Grice J

Solicitors:

Dewhirst Law, Palmerston North