McPherson v McPherson

[2016] NZHC 332

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2016-412-000023 [2016] NZHC 332

BETWEEN

PETER BOYD MCPHERSON,

FAIRFIELD TRUSTEES LIMITED, NEWTONMORE TRUSTEE LIMITED Plaintiffs

AND

GWENETH MAY MCPHERSON Defendant

Hearing:	(Dealt with on the papers)
Counsel:	D Sim for plaintiffs
Judgment:	2 March 2016

JUDGMENT OF GENDALL J

MCPHERSON v MCPHERSON [2016] NZHC 332 [2 March 2016]

[1]      This judgment relates to an application filed without notice on 24 February

2016 for:

(a)      a vesting order under s 52 Trustee Act 1956; and

(b)leave to commence this proceeding by way of originating application and dispensing with service on and representation of the defendant.

Background

[2]      A  trust  known  as  the  Newtonmore  Trust  was  established  by  deed  on

25 January 2001.  The firstnamed plaintiffs, Peter Boyd McPherson (Mr McPherson) and Fairfield Trustees Limited, are the current trustees of the Trust, along with the defendant.  The defendant, Gweneth May McPherson (Mrs McPherson) has been a trustee of the Newtonmore Trust since it was originally settled.

[3]      The  defendant  (Mrs  McPherson)  recently  has  suffered  increasingly  poor health and on 24 September 2015 she was declared by her medical practitioner to be no longer capable of making decisions in relation to her own health, safety and wellbeing.

[4]      On that aspect, in a report dated 9 February 2016 Mrs McPherson’s doctor, Dr Fons Captijn, who has known and been the defendant’s general practitioner for a little over two and a half years stated:

I have seen her (Mrs McPherson) decline in this period, caused by Alzheimer’s-type  dementia,  which  has  gotten  to  the  stage  where  her cognitive function is very low, unable to write her own name, take care of her normal day to day cares or hold a conversation.  She is in no way able to make considered rational decisions because of this.

[5]      Two things are clear from this.   The first is that the defendant who had developed dementia has found this condition worsened and, as a result, she is no longer  able  to  understand  issues  on  which  any decision  might  be  based  or the consequences of any decisions she might make.  In addition, and secondly, it is clear that she will not recover from this present state of health.

[6]      In the deed establishing the Newtonmore Trust, the power of appointment of new trustees was initially given to the firstnamed plaintiff, Mr McPherson.  In this regard paragraph 8 of the Trust Deed states:

8.        Power of Appointment of New Trustees

8.1The power of appointing any new trustee or trustees shall be vested in and exercisable by the said PETER BOYD McPHERSON and on his death such power shall be vested in and exercisable by the said GWENETH MAY MCPHERSON.

8.2On  the  death  of  the  said  GWENETH  MAY  MCPHERSON  the trustees at that time or any time thereafter shall be entitled to appoint such further trustee or trustees as they deem appropriate.

[7]      It seems that no other clause in the Trust Deed deals with issues such as the mental incompetence of a trustee or a person who has the power of appointment.

[8]      Section 43(1) Trustee Act 1956 provides that where a trustee is unfit to act in that capacity or is incapable of so acting:

…

the person nominated for the purpose of appointing new trustees by the instrument (if any) creating the trust, or if there is no such person or no such person able and willing to act, then the surviving or continuing trustees for the time being…may by deed appoint a person or persons…to be a trustee or trustees in the place of the first-mentioned trustee.

[9]      Section 53 of the Trustee Act 1946 also relevantly states:

52       Vesting orders of land

(1)       Subject to the provisions of subsections (2) and (3), in any of the following cases, namely—

(a)      …

(b)       where  a  trustee  entitled  to  or  possessed  of  any  land  or interest therein, whether by way of mortgage or otherwise, or  entitled  to  a  contingent  right  therein,  either  solely  or jointly with any other person—

(i)       is under disability; or

…

the court may make an order (in this Act called a vesting order) vesting the land or interest therein in any such person

in any such manner and for any such estate or interest as the court may direct, or releasing or disposing of the contingent right to such person as the court may direct.

(2)      …

(3)       Where any such order relates to a trustee entitled or formerly entitled jointly with another person, and that trustee is under disability or out of the jurisdiction of the court or cannot be found, or (being a corporation) has ceased to carry on business or is in liquidation or has been dissolved, the land, interest, or right shall be vested in the other person who remains entitled, either alone or with any other person that the court may appoint.

[10]     Pursuant to s 43(1) Trustee Act 1956, on 12 February 2016 the plaintiffs, Mr McPherson (as settlor and continuing trustee of the Trust), Fairfield Trustees Limited  (as  a  continuing  trustee)  and  Newtonmore  Trustee  Limited  (as  a  new trustee), entered into a deed whereby the defendant Mrs McPherson was removed as a trustee and she was replaced by Newtonmore Trustee Limited.  This was effected on the basis that the defendant Mrs McPherson’s medical condition rendered her unfit to act as a trustee.  And the power to appoint the new replacement trustee was exercised by Mr McPherson in terms of clause 8.1 of the Trust Deed.

[11]     The plaintiffs now as the continuing and newly appointed trustees of the Newtonmore Trust seek orders under s 52(1)(a) Trustee Act 1956 to vest a number of properties owned by the Trust (set out in the schedule to this judgment) in the plaintiffs.

[12]     As I have noted above, the plaintiffs also seek order from this Court granting leave to commence this proceeding by way of an originating application, dispensing with service of the application on the defendant or any other person, and directing that Mrs McPherson need not be represented here.

The application to dispense with service

[13]     An order to dispense with service may be made under r 6.8(c) High Court Rules.  The issue in this case, however, is not whether service can be effected on the defendant Mrs McPherson or whether she may have been otherwise notified of this proceeding, but rather it is that service here would be entirely meaningless given her

deteriorating health condition noted above.   As a result of that condition, and the evidence of this before the Court, I am satisfied that Mrs McPherson is entirely unable to participate in any decision-making regarding the Trust and service of these proceedings on her would be pointless.

[14]     So far as service on any other parties is concerned, this brings into play the position of the beneficiaries of the trust.  A change of trustees here, as I see it, is necessary, given the unfortunate medical condition under which Mrs McPherson now suffers and the position of the beneficiaries under the Trust will be entirely unaffected by the necessary change in trustees which is to occur.

[15]     In Wethey v Wethey1  Nation J considered a similar issue in circumstances where an original trustee had been incapacitated by Alzheimer’s disease and the continuing trustees sought vesting orders following his removal and replacement as a trustee.  In that case, Nation J dispensed with service on a particular beneficiary who, unlike the beneficiaries in this case, had expressed vehement opposition to the appointment of new trustees and that he sought to be appointed in lieu of one of the new trustees.

[16]     Under all the circumstances prevailing in the present case, I am satisfied that neither the defendant Mrs McPherson, nor any of the beneficiaries, nor any other person needs to be given notice of this particular proceeding.  Leave to dispense with service   of   the   application   and   supporting   material   on   both   the   defendant Mrs McPherson and on any other person is granted.

[17]     Further, I am satisfied that leave to commence this proceeding by way of originating application is appropriate here and the leave sought in that regard is now granted.

Representation

[18]     I am further satisfied that although she is clearly an incapacitated person, no directions  need  to  be  made  with  regard  to  representation  of  the  defendant

1      Wethey v Wethey [2015] NZHC 493.

Mrs McPherson in terms of r 4.30 High Court Rules.  The report from her medical practitioner, Dr Captijn, is clear and firmly indicates that even if someone were appointed to represent the defendant here, she would be unlikely to understand either the nature of that advice or the purpose of these proceedings.

Vesting orders

[19]     Turning now to the issue of vesting orders here, under s 52(1) Trustee Act the

Court may vest land in trustees where they have been validly appointed as such.

[20]     And, on this I am satisfied from all the material which is before the Court that the defendant, Mrs McPherson, is under a disability for the purposes of s 52(1)(b)(i) of the Trustee Act 1956.   I am also satisfied that the proposed new trustee, Newtonmore Trustee Limited, is an appropriate entity to be appointed as a new trustee to replace the defendant, Mrs McPherson, and has been validly appointed.

[21]     Given the need to recognise, first, that the defendant, Mrs McPherson, is properly removed as a trustee of the trust, being unfit to act or incapable of so acting because of her medical condition, and secondly, the proper appointment of the additional new trustee, Newtonmore Trustee Limited, and thirdly, to ensure trustees can deal with the property in accordance with the Trust Deed, I am satisfied the vesting orders sought in this application are appropriate here.

[22]     Orders to effect this will follow.

Costs

[23]     The parties have not sought costs.  I make no order.

Orders

[24]     Given that the present application succeeds, I now direct:

(a)       Service  of  this  proceeding  on  the  defendant  Mrs  McPherson  is dispensed with.

(b)Service of this proceeding is not required to be made on any other person.

(c)      Leave to commence this proceeding by way of originating application is granted.

(d)No direction is required with regard to the representation of the defendant, Mrs McPherson, here and, in accordance with r 4.30(1) High Court Rules, Mrs McPherson does not require a litigation guardian for this proceeding.

(e)      An order is now made vesting the properties outlined in the Schedule to this judgment in the plaintiffs, Peter Boyd McPherson, Fairfield Trustees Limited, and Newtonmore Trustee Limited.

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

Gendall J

Solicitors:

Downie Stewart, Dunedin

Schedule of Properties

(i)       5 York Street, Tapanui (Section 12 Block VIII Town of Tapanui, Identifier

OT414/6);

(ii)      3 York Street, Tapanui (Section 11 Block VIII Town of Tapanui, Identifier

OT391/141);

(iii)     31  Boundary  Street,  Tapanui  (Lot  1  Deposited  Plan  19193,  Identifier

OT10B/109);

(iv)     29  Boundary  Street,  Tapanui  (Lot  2  Deposited  Plan  19193,  Identifier

OT10B/110);

(v)      27  Boundary  Street,  Tapanui  (Lot  3  Deposited  Plan  19193,  Identifier

OT10B/111);

(vi)     25  Boundary  Street,  Tapanui  (Lot  4  Deposited  Plan  19193,  Identifier

OT10B/112;

(vii)     52   Sussex   Street,   Tapanui   (Lot   1   Deposited   Plan   11303,   Identifier

OT2D/699);

(viii)    53B Northumberland Street, Tapanui (Lot 2 Deposited Plan 11931, Identifier

OT4C/870.