Pene v Tata

[2019] NZHC 669

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-822

[2019] NZHC 669

IN THE MATTER

of the Trustee Act 1956

BETWEEN

SUSANNE HARIATA PENE

Applicant

AND

PHILIP NGAWAKA TATA

Respondent

Hearing:

2 April 2019

Appearances:

J C LaHatte for the Applicant

No appearance by or on behalf of the Respondent P M Webb for the Independent Trustee

Judgment:

2 April 2019

ORAL JUDGMENT OF GORDON J

Solicitors:           Ord Legal, Wellington

Kemps Weir Lawyers Ltd, Auckland Denham Bramwell, Auckland

PENE v TATA [2019] NZHC 669 [2 April 2019]

Introduction

[1]    This is an application by Brett Abraham, independent trustee of the Tata Family Trust. Mr Abraham is one of three trustees (new trustees) appointed by order of this Court on 5 March 2018.

[2]    The application seeks the removal of the three new trustees and the appointment of a corporate trustee, as sole trustee, in their place.

[3]    Miriam Matrix, one of the two other new trustees, consents to the orders being made.

[4]    The third new trustee, Arepa Tata (Arepa),1 has not taken any steps in relation to this application. It is his conduct, which I will refer to below, which has necessitated the application.

Background

[5]    The Tata Family Trust was settled on 4 November 2002. Following the death of the settlors, Mr and Mrs Tata Senior, disputes arose among the beneficiaries as to the administration of the Trust. The only asset of the Trust is the property at 5 Sutton Avenue, Mangere East, Auckland (the Trust property). The proceeding which resulted in the Court orders on 5 March 2018 was initiated by an application which sought to resolve the impasse that had arisen.

[6]    A consent memorandum (undated but filed for a court event on 21 December 2017) sought resolution of the matter by providing for an identified family member from each side of the family to be appointed along with an independent trustee and that thereafter the respondent, Philip Tata, would retire as trustee. At  that  time Philip was the only surviving trustee. The original trustees were Mr and Mrs Tata Senior and Philip.

1      I will use Arepa Tata’s Christian name to avoid any risk of confusion with Philip Tata who will also be mentioned in the judgment.

[7]    On 5 March 2018, Downs J made orders in terms of the consent memorandum I have referred to. That memorandum provided for Ms Matrix and Arepa to be appointed along with an independent trustee. Mr Abraham was subsequently appointed as the independent trustee.

[8]    The consent memorandum and thus the order made on 5 March 2018 provides for precise and specific steps to be taken by the trustees to arrange the sale of the Trust property, pay the proper costs that had been incurred and thereafter to distribute the net proceeds to the beneficiaries of the Trust.

[9]    In  his  affidavit  sworn  15  March  2019  in  support  of  the  application,   Mr Abraham deposes that Arepa has not engaged with the steps necessary to advance the orders made by the Court. On 15 June 2018, Mr Abraham wrote to Arepa setting out matters in relation to Mr Abraham’s appointment.

[10]   In order for the new trustees to be able to sell the Trust property, the lending arrangements with Westpac Bank had to be restructured and for that purpose, Arepa was required to attend the bank to establish his identity.  On 11  July 2018,  Mr Abraham wrote to Arepa asking that he attend to this.

[11]   On 11 September 2018, Mr Abraham received an email from Young Hunter, solicitors, on behalf of Arepa. The email confirmed that, as at that date, Arepa had taken no steps to do the things he needed to do to advance the orders made by the Court.

[12]   On 27 September 2018, Mr Abraham received an email from Ms Matrix, forwarding to him an email from Westpac noting that the loan on the Trust property was in arrears and that it was Arepa’s failure to take the steps required that was causing the difficulty.

[13]   On 23 October 2018, Mr Abraham received advice from Westpac that Arepa had finally attended the branch and the necessary documents could be issued by the bank. Mr Abraham then prepared the documentation necessary to advance the matter and emailed it to Arepa on 13 November 2018. By December 2018, Mr Abraham had

still not heard back from Arepa and had therefore been unable to advance the sale process in accordance with the Court orders.

[14]   Of significant concern to Mr Abraham was that it had proven to be impossible to arrange insurance on the Trust property when creditors of the Trust were complaining about not being paid. Mr Abraham communicated this information to the lawyers for the original parties to the proceeding, Susanne Pene and Philip.

[15]   Mr Abraham discussed with them that a way to resolve the problems caused by the on-going delays by Arepa, would be for the orders appointing the new trustees to be varied to appoint a corporate trustee in their place.

[16]   These discussions resulted in a consent memorandum signed by counsel for the original applicant (Ms Pene) and respondent (Philip) and the independent trustee which agreed that the order now sought would be the most efficient and least costly way to proceed so as to wind up the family trust.

[17]   The memorandum records that, in anticipation of the order being made, a corporate trustee has been incorporated under the name BRBA Trustees No 27 Ltd. The corporate trustee has two directors being Mr Abraham and Sarah Vyle, both partners in Denham Bramwell, lawyers.

[18]   The Deed of Trust of the Tata Family Trust (trust deed) provides that the approval of the appointors, being the deceased settlors, is required for the appointment of a corporate trustee. In the event of the appointors’ death and in default of a specific delegation of the power of appointment, the power passes to the administrator or trustee of the estate. Mr Abraham deposes that he has made all reasonable inquiries and so far as he is able to do so, he has established that no delegation of the power of appointment was ever made by the settlors and neither probate nor letters of administration have been issued in respect of their estate. Mr Abraham therefore believes and deposes that it is open to the Court to exercise its powers under s 48 of the Trustee Act 1956 (the Act) and in its inherent jurisdiction to supervise the Trust to appoint a corporate trustee in the circumstances.

[19]   Mr Abraham deposes as to two matters giving rise to urgency. First the mortgage is in arrears and Westpac Bank has advised that unless it can see there is a likelihood the Trust property will be sold in the short-term, it will proceed with a mortgagee sale. Mr Abraham is of the view that such a step would inevitably be to the detriment  of  the  beneficiaries.   An   email   from   Westpac   Bank   annexed   to Mr Abraham’s affidavit states that the bank will allow up to 5 April 2019 for the necessary appointment to be made so as to allow for the trustee to market the property.

[20]   The second matter I have already mentioned. There is no insurance on the property. Mr Abraham understands that there are squatters occupying the Trust property. This situation is clearly a risk to the property in the absence of insurance which has not been possible because the trustees have not been able to agree to take any steps and in any event, there is no income available to the trustees.

Service on Mr Tata

[21]   The matter was originally called on 28 February 2019. The Court directed that a formal application be filed. An application, dated 15 March 2019, was duly filed together with Mr Abraham’s affidavit to which I have already referred. Also filed on that date was an interlocutory application without notice for directions. Lang J, as Duty Judge, directed that the application for variation be served on Arepa and the matter be called again in the Duty Judge list on 25 March 2019.

[22]   There is an affidavit of service, sworn 21 March 2019, deposing that Arepa was served with the interlocutory application for variation to orders, the interlocutory application without notice for directions, the affidavit of Mr Abraham, a memorandum of counsel for the independent trustee, and the minute of Lang J. The process server states that he served the documents personally on Arepa who refused to confirm his email address (the process server had been able to contact Arepa by calling him on his mobile phone number. That number is recorded in the process server’s affidavit).

[23]   When the matter was called again on 25 March 2019 before me as Duty Judge, Mr Tata had taken no steps. The Court was able to accommodate an urgent fixture for today,  having regard to the bank’s indication that it would give Mr Abraham until  5 April 2019 before taking any steps to proceed to a mortgagee sale. I abridged the

time for Mr Tata  to file an opposition to 28 March 2019 and set a hearing date for    2 April 2019. I directed that Ms Matrix should confirm her position on the application by way of an affidavit and that that affidavit and my minute of the conference on    25 March 2019 be served on Arepa. I also directed that failure by Arepa to take steps would not prevent the hearing proceeding, provided that Ms Matrix had filed an affidavit recording her consent. Such an affidavit has now been filed.

[24]   Counsel for Mr Abraham has filed an affidavit from a process server who attempted to serve the documents as I had directed on Arepa.

[25]   On 26 March 2019, the process server telephoned the mobile number on which Arepa had previously been contacted in order to arrange service. The process server left a voicemail message asking for Arepa to contact him as he had some court documents that he needed to serve on him urgently. The process server received a call back just under half an hour later from Arepa. The process server explained he had court documents that needed to be served urgently. Arepa told the process server that he was heading out to work. The process server asked if he could come out to him and serve the documents. Arepa said “No” and that he would be in touch once he had completed his job. The process server sent Arepa a text following that phone discussion confirming what had been discussed and asking Arepa to contact him when he was free to meet up.

[26]   The process server tried calling Arepa around two and a half hours later. There was no answer to the call. The process server did not send a text message at that point.

[27]   The process server sent a text message two hours after that, asking if they could meet up. He did not receive a response.

[28]   The process server received no response as at the date of swearing his affidavit of service namely, 28 March 2019. He deposes as to his belief that Arepa is evading service. There was also evidence from a legal assistant employed in the firm of Denham Bramwell. She deposes as to a final attempt to bring the documents to Arepa’s attention by email (albeit that this was not a means directed by the Court for

service). Mr Webb has advised me from the bar this morning that he has had no contact from Arepa to date in relation to this application.

[29]   I am satisfied that Arepa is refusing to cooperate with service and that his lack of steps in the proceeding following service of the application on him is part of the same pattern of obstruction referred to by Mr Abraham in his affidavit. It further frustrates the orders made by this Court on 5 March 2018.

[30]   I therefore proceed in the absence of Arepa. It is difficult to see what useful opposition he could offer in any event.   The appointment of the new trustees on      5 March 2018 was solely to enable the Trust property to be sold. Arepa’s conduct has frustrated that purpose. Removal of the new trustees and appointment of the replacement corporate trustee is sought so as to achieve the same purpose.

Discussion

[31]   The Court has jurisdiction to deal with the application under s 51(1) of the Act which provides:

51       Power of court to appoint new trustees

(1)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.

[32]   One of the situations in which the power under s 51 may be exercised is where a trustee refuses to act in a reasonable and cooperative manner with other trustees.

Similarly, where a trustee has refused to carry out the trust.2

[33]   The Act provides for the appointment of a corporate trustee in s 48(1) which provides:

48       Corporations acting as trustees

(1)Any trustee corporation may be appointed and may lawfully act as the sole trustee in respect of any trust, notwithstanding that the instrument creating the trust may provide for or direct the appointment of 2 or

2      Foote v Foote [2013] NZHC 2590 at [16].

more trustees. Nothing in this subsection shall prevent any other corporation from acting as a trustee in accordance with any authority vested in it in that behalf, whether by its memorandum of association or otherwise:

provided that no corporation shall administer the estate of any deceased person unless expressly authorised to do so by any Act.

[34]   The section further provides that a corporate trustee may not be appointed where it is prohibited in the deed of the trust subject to the application. That provision does not apply in this case because the trust deed contemplates that the trustee may be a corporation provided it has two directors, which is the position in this case.

[35]   I am satisfied that Arepa’s failure to cooperate in the conduct of the trust justifies the making of the order sought. I therefore make the following orders:

(a)Removing Arepa Tata, Miriam Paiatehau Matrix and Brett Rodney Bramwell Abraham as trustees of the Tata Family Trust; and

(b)Appointing BRBA Trustees No 27 Limited as trustee of the Tata Family Trust.

Vesting order

[36]   Section 52 of the Act provides that the Court has power to vest land in certain circumstances. In particular, s 52(1)(a) applies where the Court has appointed a trustee of land or any interest therein.

[37]   In this case, the application as filed on behalf of Mr Abraham does not seek a vesting order. However, I have removed the new trustees and appointed BRBA Trustees No 27 Ltd a replacement trustee. It follows from that, in order to give effect to the Trust, the Court must vest the property in the replacement trustee and this morning Mr Webb has made an oral application to that effect.

[38]   I therefore make an order that the interest of the Tata Family Trust in the following property, 5 Sutton Avenue, Mangere East, Auckland (CT NA1804/90) now vests in the sole name of BRBA Trustees No 27 Ltd.

Other conditions

[39]   For the avoidance of doubt, all other conditions as contained in the consent memorandum and confirmed by the order of Downs J on 5 March 2018, are to remain (with any necessary modifications arising out of my orders).

Costs

[40]The applicant does not seek costs.

Gordon J