Mt Eden Trust Company Limited v Gomes

[2019] NZHC 1719

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1295

[2019] NZHC 1719

UNDER

the Trustee Act 1956

IN THE MATTER

of an application under sections 51 and 52 of the Trustee Act 1956 to appoint and replace

trustees of the P & J Gomes Family Trust and for vesting orders of land

BETWEEN

MT EDEN TRUST COMPANY LIMITED

Applicant

AND

JEANETTE CHRISTINA GOMES

Respondent

Hearing:

On the papers

Appearances:

K Kommu for the Applicant

No appearance by or on behalf of the Respondent

Judgment:

22 July 2019

JUDGMENT OF GORDON J

This judgment was delivered by me on 22 July 2019 at 12.30 pm, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:           Glaister Ennor, Auckland

MT EDEN TRUST CO LTD v GOMES [2019] NZHC 1719 [22 July 2019]

[1]                 The applicant, Mt  Eden Trust  Co Ltd,  one  of  the  current  trustees  of  the P & J Gomes Family Trust (the Trust), has filed an originating application dated 1 July 2019 (the application) seeking orders removing the respondent, Jeanette Gomes, as a trustee of the Trust and replacing her with Christina Gomes (the new trustee) as a trustee of the Trust. The applicant also seeks an order vesting a residential property in Palmerston North in the applicant and the new trustee as trustees of the Trust.

[2]                 The application was supported by an affidavit of Virginia Gomes, the sole director and shareholder of the applicant, sworn 21 June 2019, together with a memorandum of counsel for the applicant dated 1 July 2019.

[3]                 On 11 July 2019, Woolford J made directions in relation to an ex parte application by the applicant also dated 1 July 2019 as follows: permitting the applicant to commence its proceeding by way of originating application; dispensing with the requirement for the respondent to be represented by a litigation guardian in the application; dispensing with service of the application on the respondent, the beneficiaries of the Trust, and any other party; and directing that the Auckland Registry of the High Court is the proper registry for the filing of the application.

Background

[4]                 Mrs Gomes1 settled the Trust with her late husband, Pierre Jean Gomes, in or about May 2006. Mrs Gomes has three children with Pierre: Virginia, Danielle and Christina, who is the proposed new trustee.

[5]                 The Deed of Trust is dated 5 May 2006. The discretionary beneficiaries of the Trust are the “principal beneficiaries” (Mr and Mrs Gomes); the children and grandchildren of Mr and Mrs Gomes, being the “final beneficiaries”; the children of any of the final beneficiaries and others. (It is not necessary to mention those others for present purposes).

[6]                 Mr Gomes passed away on 11 June 2006. Under his will, Virginia was nominated to hold Mr Gomes’ power of appointment and removal of trustees of the

1      Because of the common surname I will refer to the respondent as Mrs Gomes and her three daughters by their Christian names.

Trust. However, that power of appointment and removal did not extend to removing the respondent as a trustee.

[7]                 On 20 July 2006, John Nicholas Lennart, was appointed as a new trustee in addition to the applicant and Mrs Gomes. Mr Lennart passed away in 2009. This resulted in the applicant and Mrs Gomes being the remaining trustees of the Trust. This remains the case.

[8]                 The trustees of the Trust are the registered proprietors on the title of a property at 415 Albert Street, Hokowhitu, Palmerston North (the Trust property). This was Mrs Gomes’ home. However, Mrs Gomes is now in a rest home and the property is unoccupied.

[9]                 Virginia’s affidavit, as well as deposing as to the matters I have referred to above, says that, in about December 2018, her mother was assessed to be mentally incapacitated. Annexed to her affidavit are two documents from a Dr Jonathan Kok, a Geriatrics Advanced Trainee Registrar to a Dr John Bourke, Consultant Geriatrician, at the Palmerston North Hospital.

[10]              Dr Kok has since sworn an affidavit dated 9 July 2019. He deposes that he has assessed Mrs Gomes on a number of occasions from 8 March 2018 to 23 January 2019. Dr Kok annexes to his affidavit his report dated 6 December 2018 which he prepared following his assessment of Mrs Gomes at the Elder Health Unit at the Palmerston North Hospital. In summary the report notes:

(a)Mrs Gomes was affected by significant cognitive impairment and presented as very frail;

(b)The time was fast approaching that Mrs Gomes required 24-hour supervision to ensure that her health and welfare needs were being adequately met;

(c)Her pattern of cognitive impairment reflected her issues with insight with a score of 3 out of 5 and very poor short-term memory and orientation with a combined score of 4 out of 10;

(d)He contacted Mrs Gomes’ daughter, Danielle, who held her Enduring Power of Attorney (“EPOA”) for Health and Welfare, and discussed his assessment of Mrs Gomes’ deterioration, frailty and vulnerability;

(e)He came to the conclusion that her EPOA for health and welfare should be enacted; and

(f)Mrs Gomes was to be assessed by Supportlinks for placement in aged residential care.

[11]              Dr Kok annexes a second document, a health practitioners Certificate of Mental Incapacity for Enduring Power of Attorney in relation to personal care and welfare dated 12 December 2018. Dr Kok noted in that certificate that:

(a)Mrs Gomes lacked the capacity to understand the nature of decisions about how and in what form her ongoing care needs will be met;

(b)Mrs Gomes lacked the insight into her decision making processes, in particular with reference to her health and welfare needs;

(c)Mrs Gomes’ mental incapacity is due to a health condition that will continue indefinitely; and

(d)The reasons for his opinion was Mrs Gomes’ cognitive impairment from dementia that impacts significantly on her short-term memory and decision-making processes.

[12]              Dr Kok concludes that Mrs Gomes is an incapacitated person as a result of suffering from dementia, which will likely continue indefinitely and is likely to be progressive.

[13]              The applicant therefore brings this application to remove Mrs Gomes as a trustee of the Trust and to appoint Christina, the new trustee in substitution. The vesting order sought is a necessary consequential order.

Discussion

Removal and replacement of trustee

[14]              The applicant relies on both s 51 of the Trustee Act 1956 and this Court’s inherent jurisdiction to appoint and replace a trustee.

[15]              I am satisfied the Court’s inherent jurisdiction includes the power to remove trustees. In Macpherson v Macpherson,2 van Bohemen J was similarly satisfied of this, referring to the earlier decision of Kite v Hodge, where Lang J said:3

[40] I now turn to the question of the removal and appointment of trustees. The Court has an inherent supervisory jurisdiction to ensure that the terms of a trust are carried out. This is derived from the Court’s powers in equity to supervise trusts for the welfare of beneficiaries and exists in parallel to the power under s 51 of the Trustee Act 1956.⁴ This permits the Court to make an order removing trustees when it is necessary to take that step in order to protect the interests of beneficiaries.

[16]              I am satisfied from the evidence of Dr Kok that Mrs Gomes is unable to carry out her responsibilities as a trustee under the Trust Deed. She is not able to participate in decisions regarding the disposition of the Trust’s property in the best interests of the beneficiaries.

[17]              I consider it is appropriate, therefore, that Mrs Gomes is removed as a trustee of the Trust. Her removal as a trustee will not affect her status as a named beneficiary under the Trust.

2      Macpherson v Macpherson [2018] NZHC 240 at [16].

3      Kite v Hodge [2014] NZHC 3025. See also Russ v Russ [2016] NZHC 2169; and McKean v McKean [2017] NZHC 2212.

4      Morris v Sumpter HC Auckland CIV-2004-404-3060, 6 April 2005 at [52]; and Miller v Cameron

(1936) 54 CLR 572 (HCA) at 580.

[18]              As I am satisfied that it is proper to exercise the Court’s inherent jurisdiction to remove Mrs Gomes as a trustee of the Trust, I do not need to consider the alternative request for an order under s 51 of the Trustee Act 1956.

[19]              I now turn to the issue of a replacement trustee. It is clear from Virginia’s evidence that the trustees are unable to appoint a new trustee because of the way in which the power of appointment is expressed. Section 51 of the Act applies. The proposed new trustee is Christina. She has sworn an affidavit dated 12 July 2019 consenting to replacing Mrs Gomes as a trustee of the Trust. She says that she understands that it will be her duty to act in the best interests of the beneficiaries of the Trust. Christina also consents to the Trust property being vested in her name as a trustee of the Trust (if she were to be appointed).

[20]              I am satisfied that Christina should be appointed as a replacement trustee for her mother, Mrs Gomes.

Vesting order

[21]              The applicant seeks an order that the property at 415 Albert Street, Hokowhitu, Palmerston North be vested in the applicant and the new trustee pursuant to s 52 of the Trustee Act 1956.

[22]              That section permits the vesting of land or interest therein in any such person, in such manner and for any such estate or interest  as  the  Court  may  direct.  Section 52(1)(b)(i) permits this where a trustee, who was entitled to or possessed of land, either solely or jointly with another person, is under disability.5

[23]              As noted above, Mrs Gomes now lives in a rest home and the applicant submits that it is in the best interests of the beneficiaries of the Trust for it to be sold.

[24]              In order for the property to be sold, the trustees of the Trust need to act unanimously which cannot occur due to Mrs Gomes’ mental incapacity. As

5      Trustee Act 1956, s 2(2) provides that “For the purposes of this Act a person shall be deemed to be under a disability while he is not of full age or full mental capacity.”.

Mrs Gomes is registered on the title of the Trust property, it is not possible for the applicant to deal with the Trust property in any sale.

[25]              I consider it is appropriate that the Trust property be vested in the applicant and the new trustee to ensure they can deal with it in accordance with their duty to administer the Trust in the best interests of the beneficiaries. Accordingly, the vesting order sought is appropriate.

Orders

[26]I make the following orders:

(a)The respondent, Jeanette Christina Gomes, is removed as a trustee of the P & J Gomes Family Trust;

(b)Christina  Melody  Gomes  is  appointed  as  a  new  trustee  of  the    P & J Gomes Family Trust; and

(c)The property located at 415 Albert Street, Hokowhitu, Palmerston North (Lot 1 Deposited Plan 77603, Identifier WN43D/613) is vested in the applicant, Mt Eden Trust Company Ltd, and the new trustee, Christina Melody Gomes, as trustees of the P & J Gomes Family Trust.

Gordon J