Pagel Family Home Trust

[2021] NZHC 3142

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2021-412-110

[2021] NZHC 3142

UNDER

the Trustee Act 1956

IN THE MATTER

of an application for the replacement and appointment of trustees and to vest trust property in THE PAGEL FAMILY HOME TRUST

BETWEEN

CASTLE TRUSTEES LIMITED and DOUGLAS GEORGE PAGEL

Applicants

Hearing:	(Determined on the Papers)
Counsel:	A J Douglass for the Applicants
Judgment:	19 November 2021

JUDGMENT OF ASSOCIATE JUDGE LESTER

RE THE PAGEL FAMILY HOME TRUST [2021] NZHC 3142 [19 November 2021]

[1]The applicants seek the following orders:

(a)granting leave to bring this application by way of originating application;

(b)dispensing with the appointment of a litigation guardian for Robert Gordon Pagel;

(c)dispensing with service of the application;

(d)removing  Robert  Gordon   Pagel   and   Heritage   Trustee   Company Limited as trustees of the Pagel Family Home Trust (the Trust) and appointing Castle Trustees Limited, one of the applicants, as a trustee of the Trust with the continuing trustee Douglas Gordon Pagel; and

(e)vesting the property at 31 Cannington Road, Dunedin in the applicants, Castle Trustees Limited and Douglas George Pagel, jointly.

[2]        Applications for the removal of trustees on the grounds of incapacity and for the vesting of the Trust property in new trustees were relatively common prior to the introduction of the Trusts Act 2019.

[3]        Counsel for the applicants, Ms Douglass, has identified that by virtue of cl 11 of the transitional provisions in pt 1 of sch of the Trusts Act 2019, the present application needs to be considered under the Trustee Act 1956 as  Mr Robert  Gordon Pagel (Gordon) resigned as a trustee on 20 July 2019 and the property was not vested in the new trustees at that time. I thank counsel for her comprehensive memorandum in support of the application and in particular, the clarity around the application of the transitional provisions of the new Act. Counsel seeks that this application be dealt with on a without notice basis and I consider that appropriate.

Background

[4]        Gordon and Maisie Pagel established the Pagel Family Home Trust (the Trust) on 1 April 1999. They were the original trustees along with Heritage Trustee Company Ltd (Heritage). On the same day the trustees purchased from Gordon and Maisie their family home which they had owned since 1987.

[5]        The family home at 31 Cannington Road, Maori Hill, Dunedin, Title OT189/194 (the Property) remains in the Trust and is its only asset.

[6]Heritage is now known as Certane (NZ) Limited (Certane).

[7]        In October 2019, Heritage wanted to resign as a trustee. In July 2020, it was replaced as trustee by Castle Trustees Limited (Castle) which remains a trustee and is one of the applicants along with Douglas George Pagel (Doug), one of the children of Gordon and Maisie.

[8]        Maisie lost capacity to act as trustee, which was confirmed by a medical assessment in early 2019. In August 2019, she was removed as a trustee of the Trust and was replaced by Doug as trustee.

[9]        Gordon resigned as a trustee and appointor of the Trust on 20 July 2020 and Doug replaced him as appointor. However, Gordon was assessed as lacking mental capacity only four days after resigning and, accordingly, the present trustees are concerned as to the validity of his resignation. As Castle were also appointed in July 2020, the trustees are similarly concerned as to Gordon’s ability to appoint Castle as trustee at that time – hence the order sought at para [1](d) above.

[10]      Certane has provided a letter consenting to the vesting of the property in the new trustees and confirming its position that it does not wish to continue as a trustee.

[11]      The applicants have contacted Maisie and Gordon’s children, who are beneficiaries under the Trust, and they have provided their consent to this application. The class of beneficiaries is wider than only Maisie and Gordon’s children, but the reality is regularising the status of the trustees does not of itself impact on the

beneficiaries. If there are grandchildren of Gordon and Maisie then I would not see any point in them being served in any event.

[12]      Accordingly, this application is aimed at confirming the status of the trustees and vesting the Trust property in them.

[13]      I am satisfied this is an appropriate case to be dealt with by way of originating application. The originating application procedure was routinely used for such applications under the 1956 Act, and this application is no different.

[14]      I am also satisfied that there is no point in the appointment of a litigation guardian for Gordon or service of the proceedings on him. The applicants have obtained updated medical evidence that confirms which Maisie and Gordon’s mental capacity has not improved. Service on Gordon would only be likely to distress him.

[15]      As to the dispensing of service generally, given Certane consents to the application, as do Gordon and Maisie’s children, and given what I have said about there being no point serving grandchildren, if such exist, I am satisfied that this application need not be served.

[16]      Orders are sought removing Gordon and Heritage as trustees of the Trust essentially on an  avoidance of doubt  basis.  This  is because,  as  I have  said,  on  20 July 2020 when Gordon resigned and removed Heritage as trustees, there must be a question mark over his capacity given he was assessed as lacking capacity only four days later. I am satisfied this order is appropriate.

[17]      Clearly Heritage wished to resign and be replaced as trustee of the Trust and that remains its position to this day (as Certane). Given Gordon’s lack of capacity if he did not validly resign, he would be unable to fulfil his role as trustee and would have to be removed to permit the Trust to operate. It follows that it is appropriate to confirm the appointment of the replacement trustees, Douglas Gordon Pagel and Castle Trustees Ltd. Similarly, a vesting order is necessary to give effect to the confirmation of the appointment of the new trustees.

[18] Accordingly, in all the circumstances, the orders sought as set out at [1] above are appropriate, and I order accordingly.

Costs

[19]There is no order as to costs.

Associate Judge Lester

Solicitors:

Home Transfer Centre Property Lawyers, Dunedin

Copy to counsel:
A J Douglass, Barrister, Dunedin