Newton v Newton

[2020] NZHC 2888

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2020-409-000347

[2020] NZHC 2888

UNDER

the Trustee Act 1956

IN THE MATTER

of the MT and MA Newton Family Trust

BETWEEN

MARY ANN NEWTON, HAMISH TAZEWELL NEWTON, LOUISE JANE MACKLOW and SAMUEL TAZEWELL NEWTON

Applicants

AND

MICHAEL TAZEWELL NEWTON as

former trustee of the MT and MA Newton Family Trust

Respondent

Hearing:	Determined on the papers
Counsel:	A M McCormick for Applicants
Judgment:	4 November 2020

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 4 November 2020 at 11.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

NEWTON v NEWTON [2020] NZHC 2888 [4 November 2020]

The application

[1]                 There is before me an amended application concerning the MT and MA Newton Family Trust (the Trust). The applicants are seeking orders for:

(a)the removal of Michael Tazewell Newton (Michael) as a trustee of the Trust by reason of his incapacity;

(b)the appointment of the applicants, Hamish Tazewell Newton (Hamish), Louise Jane Macklow (Louise) and Samuel Tazewell Newton (Samuel) as trustees to act in that capacity along with Mary Ann Newton (Mary) as a continuing trustee; and

(c)vesting a property at 19 Te Haunui Lane, Pegasus, being Lot 99 Deposited Plan 453895, Record of Title 582545, presently held by Michael and Mary as trustees of the Trust into the names of the applicants.

[2]                 The applicants also apply on a without notice basis for orders of a procedural nature that:

(a)they be granted leave to bring this proceeding under Part 19 High Court Rules 2016;

(b)dispensing with service on Michael and any other person.

[3]                 Despite seeking orders affecting Michael, the intituling of this proceeding as filed did not name him in any capacity. I have amended the intituling to comply with the requirements of the High Court Rules 2016.

Background

[4]                 Mary and Michael were married in July 1974. Hamish, Louise and Sam are their adult children.

[5]                 The Trust was established by Deed of Trust dated 5 April 1997. Michael was the settlor. Michael, Mary and their solicitor, John Joseph Brandts-Giesen were appointed trustees. John Brandts-Giesen retired as a trustee on 31 March 2017 and no person was appointed to replace him at that time.

[6]                 The beneficiaries of the Trust are Michael, Mary, their children and grandchildren, any spouse of their children or grandchildren and such other persons as might be appointed by deed.

[7]                 Clause 4 of the Deed of Trust is an abstruse provision. It provides that Michael during his lifetime or until his earlier incapacity has the power to remove and appoint trustees. After Michael’s death such power is exercisable by the survivor of the trustees for the time being (or the personal representatives of the last surviving trustee). The clause does not provide for the removal and appointment of trustees while Michael is living but lacking capacity.

[8]                 Michael has suffered from ill-health. He was diagnosed with prostate cancer in 2012 and with dementia in 2016. On 27 January 2020, he was assessed by Dr Owen Millar as lacking capacity to make decisions about his own personal care and welfare and in respect of property matters. Enduring Powers of Attorney granted by Michael were activated accordingly.

[9]                 On 15 April 2020, concerned about Michael’s ill health and his inability to perform his duties as trustee, Mary purported to execute a Deed under cl 4 removing Michael as a trustee and appointing Hamish, Louise and Samuel to replace him.

[10]            After this application was filed, I raised several issues with counsel. Most relevantly for present purposes:

(a)I raised concern about the operation of cl 4 and whether Mary had the power to remove Michael and appoint new trustees;

(b)I required further evidence concerning Michael’s mental incapacity; and

(c)I required evidence as to the suitability of Hamish, Louise and Samuel for appointment as trustees.

[11]            As a result, an amended application has been filed. I have received substantive affidavits concerning Michael’s mental capacity and as to the suitability of Hamish, Louise and Samuel for appointment as trustees.

[12]            I am satisfied it is appropriate to make the orders sought for the reasons that follow.

Use of originating application procedure

[13]            Leave is required for this proceeding to be commenced by way of originating application.1 Applications for the removal of a trustee who no longer has mental capacity and for vesting orders are now routinely made by way of originating application. In straightforward, uncontested applications that is appropriate. This is such a case and leave is granted for the originating application procedure under Part 19 High Court Rules to be used.

Litigation guardian and service

[14]            I am satisfied Michel is an incapacitated person. The High Court Rules require him to have a litigation guardian unless the Court directs otherwise. 2 I am satisfied that it is unnecessary to appoint a litigation guardian and waive that requirement. This application does not affect the interests of anyone other than Michael and then only to release him from the burden of obligations he plainly cannot fulfil. Given the evidence as to Michael’s incapacity and the nature of the orders sought, the appointment of a litigation guardian to represent him would serve no real purpose.

[15]            I am also satisfied there is no need for Michael or any other person to be served with the application. The orders sought do not change the beneficiaries’ rights or affect

1      High Court Rules 2016, r 19.5.

2      Rule 4.30.

obligations owed by the trustees for the time being to the beneficiaries. I dispense with service on any person.

Removal of Michael as a trustee and appointment of applicants

[16]            I am not satisfied that Mary had the power to remove Michael as a trustee under cl 4 of the Deed of Trust. The matter should be put beyond doubt. The Court has power, both under s 51 of the Trustee Act 1956 and in its inherent jurisdiction, to remove and replace trustees.

[17]            Section 51(1) provides the Court may appoint a new trustee when it is “expedient” to do so, and it is found “inexpedient, difficult or impracticable so to do without the assistance of the court.” The Court may make an order appointing a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees.

[18]            It is expedient to remove Michael as a trustee as he is incapable of performing his duties and there is a need to replace him in the interests of the beneficiaries.

[19]               I am satisfied that it is appropriate that Hamish, Louise and Samuel be appointed as trustees to assist Mary in the administration of the Trust. They are logical choices to replace Michael being his immediate family members. They have positive relationships with each other. I am satisfied that they are fit and proper persons to act as trustees and will act in the best interests of the beneficiaries.

Vesting order

[20]            Section 52(1)(b)(i) of the Trustee Act 1956 provides the Court with the power to vest land in such persons that it may direct where a trustee entitled to or possessed of any land or interest therein, either solely or jointly with any other person, is under a disability.

[21]            Once it is accepted that Michael is to be removed as a trustee and Hamish, Louise and Samuel appointed to replace him and act alongside Mary in that capacity,

it must follow that the vesting order sought is necessary to allow the trustees to carry out their duties.

Result

[22]I make orders as follows:

(a)this proceeding may be commenced by originating application under Part 19 High Court Rules 2016;

(b)service of the proceeding on Michael Tazewell Newton and any other person is dispensed with;

(c)the appointment of a litigation guardian in respect of Michael Tazewell Newton is dispensed with;

(d)under s 51 of the Trustee Act 1956, Michael Tazewell Newton is removed as a trustee of the MT and MA Newton Family Trust and Hamish Tazewell Newton, Louise Jane Macklow and Samuel Tazewell Newton are appointed as trustees of the Trust in substitution for Michael Tazewell Newton to act in that capacity along with the continuing trustee Mary Ann Newton; and

(e)under s 52 of the Trustee Act 1956, there shall be an order vesting the property at 19 Te Haunui Lane, Pegasus, being Lot 99 Deposited Plan 453895, Record of Title 582545, presently held by Michael Tazewell Newton and Mary Ann Newton, into the names of Mary Ann Newton, Hamish Tazewell Newton, Louise Jane Manklow and Samuel Tazewell Newton as trustees of the MT and MA Newton Family Trust.

[23]There shall be no order as to costs.

[24]            I reserve leave to seek further directions as may be required to give effect to these orders.

O G Paulsen Associate Judge

Solicitors:
Brandts-Giesen McCormick, Rangiora