Mills v PML Trustees Limited
[2020] NZHC 1219
•4 June 2020
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2020-485-50
[2020] NZHC 1219
UNDER the Trustee Act 1956 IN THE MATTER OF
the BL Mills Family Trust
BETWEEN
KARYN LEIGH MILLS
Plaintiff
AND
PML TRUSTEES LIMITED
Defendant
Hearing: 3 June 2020 Counsel:
G W D Manktelow for Plaintiff P V May for Defendant
Judgment:
4 June 2020
JUDGMENT OF CHURCHMAN J
Background
[1] By amended statement of claim filed on 5 May 2020, the plaintiff (Karyn) sought orders pursuant to ss 43 and 51 of the Trustee Act 1956 (the Act) removing the defendant as trustees of the BL Mills Family Trust (the Trust) and appointing Trafalgar Trustee Corporation Limited (the trust company of John Anthony Langford, Lawyer) in its place.
[2] The plaintiff and her brother, Dean Brent Mills (Dean), are the only children of the late Bruce Leonard Mills (Bruce) and his wife Lorraine Ivy Mills (Ivy). Bruce and Ivy are both deceased. By deed of trust dated 31 October 1985, Bruce created the Trust.
MILLS v PML TRUSTEES LIMITED [2020] NZHC 1219 [4 June 2020]
[3] Bruce predeceased Ivy and Ivy exercised a power of appointment of new trustees to be vested in the administrator of her estate.
[4] Ivy is believed to have died on 3 April 2016. The administrators of Ivy’s estate are Karyn and Dean.
[5] From copies of emails attached to Karyn’s affidavit dated 2 April 2019, it is clear that the relationship between Karyn and Paul May (the solicitor who operated the defendant PML Trustees Limited) had broken down. There is nothing to indicate that this was in any way the fault of Mr May.
[6] Karyn arranged for a deed to be prepared which provided for the defendant to retire as trustee and for Trafalgar Trustee Corporation Limited to be appointed in its place. The deed was executed by Mr May on behalf of himself (as retiring appointor) and the defendant. Dean refused to execute the deed necessitating this application to the Court.
The proceedings
[7] The proceedings have been served on Dean and the defendant. As the principal beneficiaries of the Trust are Karyn and Dean, and they are able to represent the interest of their children who are also beneficiaries, the children were not separately served.
[8] Although Dean has not filed a statement of defence or notice of opposition to the application, on 26 May 2020 he emailed the Registrar with an email which claimed that the plaintiff had stolen money from Ivy’s cheque account. The residue of Ivy’s estate went to the Trust. Attached to the email was a copy of a cheque on the account of L I Mills dated 11 February 2016 (about six weeks before her death). The cheque was a payment to Michael Bott, Barrister in the sum of $5,000). There was no indication that Ivy had ever needed the services of Mr Bott and it remains a mystery as to why she would have written a cheque to him. Mr Manktelow had no instructions in respect of that matter.
The law
[9] The Act regulates trusts. Section 43 addresses the circumstances where an existing trustee may be removed or appointed. Section 51 specifically confers upon the Court a power to appoint new trustees where it is expedient to do so.
[10] It is clear that for good reasons, the defendant wishes to cease as trustee in the estate. It is also clear that without Dean’s consent, the trustees cannot appoint a replacement trustee. Given the wish of the present trustee to retire, and the breakdown in the relationship between the plaintiff and defendant, it is appropriate that the plaintiff should be permitted to retire and the proposed new trustee appointed.
[11] However, in addition to the powers given to the Court by the Act, the Court also has a supervisory jurisdiction in relation to trusts. The Court is concerned that, if all that happens is the replacement of one independent trustee with another, that the apparent issues of conflict between Karyn and Dean will continue unabated. That will inevitably result in the matter returning to Court and the likely depletion of the Trust’s assets by involvement in litigation.
[12] I raised with Mr Manktelow the prospect that the Court would appoint Trafalgar Trustee Corporation Limited as the new trustee on the basis that Mr Langford be required to investigate whether the sum of $5,000 was legitimately paid to Michael Bott on Ivy’s behalf or whether it should be treated as if it had been paid on Karyn’s behalf and her share in the residue of the estate adjusted accordingly. I also raised with Mr Manktelow the possibility that the proposed new trustee be appointed on the basis that they sell the assets of the Trust, pay the Trust’s debts, wind the Trust up and distribute the residue to Karyn and Dean equally.
[13] Mr Manktelow did not object to orders of this nature although he made it clear that he had no instructions to consent to them.
[14] Mr May appeared on behalf of the defendant to assist in these proceedings. He confirmed that the defendant wished to retire as trustee and had no objection to the appointment of the proposed trustee, or to any of the conditions raised by the Court.
Outcome
[15]I make the following orders:
(a)the defendant is permitted to retire as trustee of the Trust with the defendant (and Mr May) having full indemnity for all acts done as trustee other than for loss caused by deliberate wrongdoing;
(b)Trafalgar Trustee Corporation Limited is appointed as trustee of the Trust in replacement for the defendant;
(c)Mr Langford, on behalf of the Trafalgar Trustee Corporation Limited is to investigate whether the $5,000 paid to Mr Bott referred to in [8] and
[12] above was a legitimate payment made by Ivy, or whether it is a payment that should have fallen into the residue of Ivy’s estate and have been paid to the Trust. If Mr Langford concludes that the payment was not legitimately and freely made by Ivy, then he is to determine what sum, if any, by way of adjustment, needs to be made to payments of the residue of the Trust to Karyn and Dean;
(d)the assets of the Trust are to be sold;
(e)after payment of the Trust’s debts, including the professional fees of the new trustee, the net residue is to be distributed equally to Karyn and Dean (subject to the adjustment referred to in (c) above);
(f)either Karyn or Dean are at liberty to request that they take, as part of their share in the residue of the assets of a trust, assets owned by the Trust. Any such assets are to be valued by a valuer appointed by Mr Langford; and
(g)leave is reserved to Mr Langford to return to the Court for further directions arising out of this order.
Costs
[16]Mr Manktelow sought payment of Karyn’s costs from the Trust in the sum of
$21,693. He annexed to a memorandum two bills of costs addressed to Karyn; one dated 27 October 2019 in the sum of $9,200, and the other dated 3 June 2020 in the sum of $12,493.
[17] He submitted that in accordance with scale 2B, costs of $16,013 would be payable. However, that calculation is based on the assumption that there was a full half-day defended hearing requiring appropriate preparation. Given that this matter was dealt with effectively on a formal proof basis in less than three-quarters of an hour, I do not accept that scale 2B costs are appropriate.
[18] I am not satisfied that all of the work referred to in the two accounts submitted by Mr Manktelow relates strictly to these proceedings, nor that it is appropriate that the Trust meet all of those costs. It is appropriate that the Trust make a contribution to Mr Manktelow’s costs and I fix that at $12,000 plus GST together with disbursements in the additional sum of $1,568 being an adjustment to scale 2B costs to reflect the fact that the matter was able to be resolved by way of formal proof. The balance of Mr Manktelow’s costs are payable by Karyn.
[19] Mr May attended at Court to represent the defendant and made helpful submissions. It is appropriate that the Trust make a contribution to his costs in the sum of $1,000 plus GST, and I so direct.
Churchman J
Solicitors:
G W D Manktelow, Barrister & Solicitor, Lower Hutt for Plaintiff Paul May Law, Lower Hutt for Defendant
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