Parsonage v Parsonage
[2020] NZHC 454
•10 March 2020
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2020-409-000101
[2020] NZHC 454
UNDER Part 19 of the High Court Rules and Section 52 of the Trustee Act 1956 IN THE MATTER
of the Parsonage Family Trust
BETWEEN
BERNARD FRANCIS PARSONAGE and
ANDREA MARY PARSONAGE as trustees of the Parsonage Family Trust
Applicants
AND
MARY PARSONAGE
Respondent
Hearing: Determined on the papers Counsel:
M K Crimp for Applicants
Judgment:
10 March 2020
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 10 March 2020 at 11.30 am pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:
PARSONAGE v PARSONAGE [2020] NZHC 454 [10 March 2020]
Background
[1] On 4 April 2002, Mary Parsonage (Mary) settled the Parsonage Family Trust appointing herself and Bernard Francis Parsonage (Bernard) trustees. Bernard is the only child of Mary and her late husband Thomas Bernard Parsonage and he is the final beneficiary of the Trust. No discretionary beneficiaries have been appointed pursuant to the trust deed and Mary is not a beneficiary.
[2] Mary lacks capacity to carry out her role as a trustee. On 24 February 2020, Bernard purported to exercise a power under the trust deed to remove Mary as a trustee and to appoint in her place, Andrea Mary Parsonage (Andrea). Andrea is Bernard’s wife.
[3] The trust assets include a property at 336 Lyttelton Street, Spreydon, Christchurch. The Lyttelton Street property was damaged by earthquake and cannot be repaired or used as a rental. Bernard and Andrea wish to sell the property but cannot do so whilst Mary is registered on the title as a trustee. They therefore apply for an order vesting title in the Lyttelton Street property in their names as trustees. In addition, they have applied for associated orders for leave to commence the proceeding by way of originating application, that service of the proceeding on Mary be dispensed with, and that no litigation guardian be appointed to represent Mary.
[4] I am satisfied Mary suffers from dementia and is not capable of making decisions concerning her obligations as a trustee. Mary has been living at the Hoon Hay Resthome where she has had specialist dementia care since 15 July 2019. In addition to Bernard’s evidence there are two certificates from medical practitioners confirming Mary has a diagnosis of dementia and she lacks capacity to sign legal documents or make decisions in relation to her welfare or property.
Procedural requirements
[5] This proceeding is not one that can be commenced by originating application as of right. The court may, in the interests of justice, permit proceedings not mentioned
in rr 19.2 – 19.4 High Court Rules to be commenced by originating application. Such permission may be sought without notice.1
[6] This is an application which does not raise difficult issues, is unopposed and does not require particularised pleadings. There will be no interlocutory applications. It is suitable to be commenced by originating application and I grant leave accordingly.
Litigation guardian
[7] Mary is an incapacitated person for the purposes of r 4.29 High Court Rules. Given her status, r 4.30 requires Mary to have a litigation guardian unless the court otherwise orders. It is appropriate that I make such an order. The application relates to an administrative matter and arises only because of Mary’s illness. She has no interest as a beneficiary of the Trust and all that is occurring here is that she is being relieved of duties she is plainly incapable of fulfilling. I am satisfied that she would not be able to provide any meaningful instructions or understand advice that she would receive if a litigation guardian was appointed.
Service of proceedings
[8] I am also satisfied that there is no need for this application to be served on Mary. There are no other beneficiaries of the Trust, other than Bernard himself, who has any interest in the matter. There will be no requirement for service of the application on Mary or any other person.
The removal of Mary as a trustee
[9] This application, entirely straight-forward in all other respects, raises one interesting issue. After reading the application I issued a minute to counsel referring her to the decisions of Nation J in Re Godfrey Family Trust,2 and Re Hetrick.3
[10] In Re Godfrey Family Trust, the applicants applied for an order vesting title of a property held under the Godfrey Family Trust in themselves, Mr Godfrey having
1 High Court Rules 2016, r 19.5.
2 Re Godfrey Family Trust [2017] 3 NZLR 198.
3 Re Hetrick [2017] NZHC 472.
purported to exercise his powers under an Enduring Power of Attorney for Mrs Godfrey to retire her as a trustee. The applicants were the two remaining trustees. Nation J held that an Enduring Power of Attorney made under Part 9 of the Protection of Personal and Property Rights Act 1988 did not extend to an attorney the power to act for a trustee in relation to trust property. He held the correct approach would have been for an application to have been made to the court for an order removing Mrs Godfrey as being unable to fulfil her duties as a trustee. As the interests of the beneficiaries were clearly met by rapid retirement of the trustee, Nation J amended the application accordingly and removed Mrs Godfrey as a trustee.
[11] In Re Hetrick, Mr and Mrs Marshall settled a trust appointing themselves and Mr Hetrick as trustees. Mr Marshall died, and Mrs Marshall lacked capacity to carry out her role as a trustee. Mr Hetrick initiated proceedings to have title to property subject to the trust vested in him. The trust deed, however, required there be at least two trustees. It was argued there was no need to appoint an additional trustee because Mr and Mrs Marshall’s daughter held an Enduring Power of Attorney in relation to property for her mother and would be able to appoint a trustee to replace her mother. Nation J referred to his decision in Re Godfrey Family Trust4 and said at [14]:5
For this reason and reasons discussed in [Re Godfrey Family Trust], the PPPR Act must be read as not extending to an attorney the power to act for a person in relation to their power of appointment of new trustees under a trust deed. This power cannot be considered as a personal property right of the person who has granted the EPA because associated with the power are the fiduciary duties owed to the beneficiaries.
[12] Here, Bernard purported to exercise the power to remove Mary as a trustee and appoint Andrea as a replacement trustee under cls 20(a) and (b) of the trust deed which provide:
20.
(a) THE power to appoint new Trustees shall be vested in Mary Parsonage during her lifetime and after her death the remaining trustees of this trust PROVIDED HOWEVER should the said Mary Parsonage be absent from New Zealand or incapable through sickness or otherwise of exercising the power then the person or persons holding his enduring power of attorney shall be vested with the power.
4 Re Godfrey Family Trust, above n 2.
5 Re Hetrick, above n 3.
(b)Mary Parsonage or the persons empowered under the previous sub- clause are further empowered:
(i)To appoint an additional trustee
(ii)To appoint a retired or retiring trustee or any other person as advisory trustee
(iii)To appoint a new trustee outside the jurisdiction of the New Zealand Court
(iv)To remove any trustee or advisory trustee from all or any of the trusts hereof without assigning any reason therefore.
[13] In response to my minute, Ms Crimp has filed submissions in relation to Re Godfrey Family Trust and Re Hetrick. She does not take issue with the legal principles enunciated in those cases, but says they are distinguishable on the facts because here Bernard was not acting pursuant to powers contained in the Enduring Power of Attorney that he holds for Mary, but pursuant to the power conferred upon him by the terms of the trust deed. She replaced reliance also on s 43 of the Trustee Act 1956 which states at s 43(f):
Where a trustee (whether original or substituted, and whether appointed by the court or otherwise) –
…
(f) is incapable of so acting; …
the person nominated for the purpose of appointing new trustees by the instrument (if any) creating the trust … may by deed appoint a person or persons (whether or not being the person or persons exercising the power) to be a trustee or trustees in the place of the first-mentioned trustee.
[14] Ms Crimp also argues that Mary is incapable of acting as a trustee due to her dementia and this is a circumstance contemplated by the trust deed which expressly nominates the person who is her attorney as holding the power of appointment. On this view cl 20(a) does not extend or grant Bernard any additional powers under the Enduring Power of Attorney. It merely identifies him as the person who is vested with the power of appointment, just as effectively as if he had been named in person. Ms Crimp concludes:
Accordingly, this application is not concerned with an attorney exercising personal property rights under an EPA. It relates to powers vested in Mr Parsonage pursuant to and exercisable under the Deed and in accordance with the Act. The current application [is] distinguishable from the cases of Re
Godfrey Family Trust and Re Hetrick. Mary Parsonage has been validly removed as trustee and Andrea Parsonage appointed in her place.
[15] I have two reservations about Ms Crimp’s submission. First, the evidence is that Bernard and Andrea are together Mary’s property attorneys under an Enduring Power of Attorney dated 26 August 2016 but only Bernard purported to exercise the power to remove Mary as a trustee and appoint Andrea as a replacement trustee. He did so on the basis that he and Andrea had several authority to act under Mary’s Enduring Power of Attorney. It cannot be the case, therefore, that Bernard was not acting pursuant to powers contained in the Enduring Power of Attorney as Ms Crimp submits. Second, cl 20(a) confers the power of appointment upon “the person or persons holding [her] Enduring Power of Attorney” but does not specify whether that is a person holding an Enduring Power of Attorney in respect of personal care and welfare or in respect of property affairs or both.6 The meaning of the clause is therefore uncertain.
[16] Ms Crimp submitted that if I am not satisfied that Bernard had validly exercised the power to remove Mary the approach taken by Nation J in Re Godfrey Family Trust and Re Hetrick should be adopted. There, having determined that the applicants did not have the requisite power to remove trustees, Nation J amended each application and made orders accordingly.
[17] Here, I consider there is uncertainty around the meaning of cls 20(a) and (b) and the validity of the steps taken to remove Mary as a trustee and appoint Andrea as a replacement trustee. However, Mary is plainly incapable of exercising her functions as a trustee and the orders sought are necessary to enable the proper administration of the Trust. I am also satisfied that it is appropriate to appoint Andrea as a trustee in Mary’s place. Given the conclusions I have reached, I propose to make amendments to the application as sought.
[18] In removing Mary as a trustee and appointing Andrea as a replacement trustee the court may act under section 51 of the Trustee Act 1956 or pursuant to its inherent powers. In this case s 51(1) applies and it states that:
6 Protection of Personal and Property Rights Act 1988, s 93A.
The court may, whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient, difficult, or impracticable so to do without the assistance of the court, make an order appointing a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee.
[19] The court’s power to make a vesting order in this case is conferred by s 52(1)(b)(i) of the Trustee Act 1956 which provides that the court may vest land in a trustee 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. Section 52(3) clarifies that in a scenario of joint entitlement, the land, interest or right shall be vested in the other person who remains entitled, either alone or with any person the court appoints.
Orders
[20]I make the following orders:
(a)I grant leave to bring this proceeding by way of originating application.
(b)Service of the proceeding on Mary Parsonage is dispensed with.
(c)I dispense with the appointment of a litigation guardian in respect of Mary Parsonage.
(d)Mary Parsonage is removed as a trustee of the Parsonage Family Trust and Andrea Mary Parsonage is appointed as a trustee of the Parsonage Family Trust in her place.
(e)The property at 336 Lyttelton Street, Spreydon, Christchurch (being 627 square metres more or less Lot 3, Deposited Plan 8394 and comprised and described in the Freehold Register under identifier CB1D/235) vests in Bernard Francis Parsonage and Andrea Mary Parsonage as the continuing trustees of the Parsonage Family Trust.
(f)The costs of and incidental to the bringing of this proceeding are to be met from the resources of the Parsonage Family Trust.
[21] I reserve leave to counsel to further apply if any matters are arising from this judgment.
O G Paulsen
Associate Judge
Solicitors:
Harmans Lawyers, Christchurch.