Polson McMillan Trustee Company no.1 Limited v Lumsden
[2020] NZHC 1095
•22 May 2020
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CIV-2019-412-000107
[2020] NZHC 1095
UNDER the Trustee Act 1956 and Part 19 of the High Court Rules 2016 IN THE MATTER
of an application under sections 51 and 52 of the Trustee Act 1956 to remove and appoint trustees and for a vesting order of land
BETWEEN
POLSON McMILLAN TRUSTEE
COMPANY NO. 1 LIMITED as trustee of the LESLIE LUMSDEN FAMILY TRUST
Applicant
AND
LESLIE JOAN LUMSDEN
Respondent
Hearing: Determined on the papers Counsel:
S Milne for Applicant
Judgment:
22 May 2020
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 22 May 2020 at 3.30 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
POLSON McMILLAN TRUSTEE COMPANY NO. 1 LTD as trustee of the LESLIE LUMSDEN FAMILY TRUST v LUMSDEN [2020] NZHC 1095 [22 May 2020]
Background
[1] By Deed of Trust dated 3 June 2004, June Elizabeth McBride settled the Leslie Lumsden Family Trust (the Trust) appointing Leslie Joan Lumsden (Leslie) and Cook Allan Gibson Trustee Company Ltd as trustees. The beneficiaries of the Trust are Leslie, her children and grandchildren.
[2] By clauses 13 and 14 of the Deed of Trust, the power to remove trustees and appoint new trustees vested in Leslie during her lifetime and the number of trustees was not to fall below two.
[3] On 28 January 2012, Cook Allan Gibson Trustee Company Ltd retired as a trustee and the applicant, Polson McMillan Trustee Company No. 1 Ltd, was appointed as a trustee in substitution.
[4] Leslie now lacks capacity to carry-on her role as a trustee. Dr Marie McLaughlin of Dunedin, a specialist geriatrician, has made an affidavit stating she has assessed Leslie on a number of occasions since August 2019. Leslie has suffered from a range of physical and mental ailments. Relevantly, Dr McLaughlin summarises her conclusions as follows:
In my opinion, since at least August 2019 Leslie has lacked the mental capacity to make decisions about her care and welfare and her personal property matters. This would definitely include, but would not be limited to, a lack of mental capacity to carry out her duties as a Trustee or to sign any legal documents.
Leslie’s mental capacity is due to a health condition that is likely to continue indefinitely and in my opinion Leslie’s mental capacity has steadily deteriorated since August 2019.
[5] The Trust asset is a property at 211 Gordon Road, Mosgiel. This was Leslie’s home. It is valued at around $400,000 and there are no liabilities secured against the property. Leslie now resides permanently at Mossbrae Residential Home and Hospital, Mosgiel and the Gordon Road property is vacant. The Gordon Road property needs to be sold but this cannot be done while Leslie is registered on the title as a trustee.
Against that background, the applicant has applied for orders:
(a)granting leave to commence this proceeding by originating application under pt 19 of the High Court Rules 2016;
(b)dispensing with the appointment of a litigation guardian for Leslie under r 4.30 High Court Rules 2016;
(c)dispensing with service of this application upon Leslie;
(d)removing Leslie as a trustee of the Trust and appointing Sonya Lee Rowley and Christopher Peter Lumsden, both children of Leslie, as trustees of the Trust in substitution for Leslie under s 51 of the Trustee Act 1956; and
(e)vesting the property at 211 Gordon Road, Mosgiel in the applicant and the new trustees under s 52 of the Trustee Act 1956.
Part 19 procedure
[7] This proceeding is not one that can be commenced by originating application as of right pursuant to rr 19.2 – 19.4 of the High Court Rules. The court may, in the interests of justice, permit any proceeding not mentioned in rr 19.2 – 19.4 to be commenced by originating application.
[8] It has been recognised in a large number of decisions of the court that in a case like this, where there is in reality no opposing party and no need for detailed pleadings or interlocutory steps, the originating application procedure is appropriate. Permission to bring a proceeding under pt 19 by way of originating application may be sought without notice.1 It is appropriate to grant leave to bring this proceeding by way of originating application and I so order.2
1 High Court Rules 2016, r 19.5(2).
2 Hayes v Hayes [2020] NZHC 569.
Litigation guardian and service
[9] I am satisfied that Leslie is an incapacitated person for the purposes of r 4.29 High Court Rules 2016. Given her status, r 4.30 requires she have a litigation guardian unless the court otherwise orders.3 It is appropriate that I make such an order. This application relates to an administrative matter and does not affect Leslie’s interests other than as a trustee (a function she cannot perform). Based on the evidence of Dr McLaughlin, I am satisfied that service upon Leslie would serve no purpose.
[10] I also dispense with service upon the beneficiaries of the Trust. The orders sought do not change any of the beneficiaries’ rights and do not affect the obligations owed by the trustees to the beneficiaries. They do not affect the beneficiaries’ entitlements with respect to the Trust or its assets either. In addition, all of Leslie’s children consent to the application.
The removal of Leslie as a trustee
[11] The court has power, both under s 51 of the Trustee Act 1956 and in its inherent jurisdiction, to remove and replace trustees. Section 51(1) provides that the court may appoint a new trustee when it is “expedient” to do so and it is found “inexpedient, difficult or impracticable to do so 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.
[12] I am satisfied that Leslie is unable to carry out her duties as a trustee and that she should be removed as a trustee. Because Leslie has the power under the Trust Deed to remove and appoint trustees, it is necessary for the court to provide assistance to achieve this. Decisions need to be made in respect to the administration of the Trust for the benefit of the beneficiaries. Leslie’s removal as a trustee will relieve her of the burden of her trusteeship and promote the efficient administration of the Trust.
[13] Under s 51, the court may not remove a trustee without appointing a replacement trustee. Here, it is intended to appoint two new trustees in substitution
3 Rule 4.30.
for Leslie. The proposed new trustees are children of Leslie and her third child consents to the application. Clearly, the new trustees will be familiar with Leslie’s affairs and there is the added comfort of the applicant being an independent professional trustee.
[14] There shall be an order removing Leslie as a trustee and appointing Sonya Lee Rowley and Christopher Peter Lumsden as replacement trustees.
Vesting order
[15] Section 52(1)(b)(i) of the Trustee Act 1956 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. Given the need to ensure that the Gordon Road property can be dealt with in accordance with the Trust Deed for the benefit of the beneficiaries the making of a vesting order is appropriate.
Result
[16]There shall be orders as follows:
(a)Pursuant to r 19.5(1) of the High Court Rules 2016, this application will be dealt with as an originating application under pt 19 of the High Court Rules 2016.
(b)The requirement for the appointment of a litigation guardian to represent Leslie Joan Lumsden is dispensed with under r 4.36 High Court Rules 2016.
(c)Service of the application on the respondent and any other person is dispensed with.
(d)Under s 51 of the Trustee Act 1956, Leslie Joan Lumsden is removed as a trustee of the Leslie Lumsden Family Trust and Sonya Lee Rowley of Tauranga, Office Manager and Christopher Peter Lumsden of Albert
Town, Manager are appointed in substitution as trustees of the Leslie Lumsden Family Trust.
(e)Under s 52 of the Trustee Act 1956, the property at 211 Gordon Road, Mosgiel (being 776 square metres more or less, Lot 1 Deposited Plan 17631 and comprised in the Freehold Register under identifier OT9C/1282) shall vest in the applicant and Sonya Lee Rowley of Tauranga, Office Manager and Christopher Peter Lumsden of Albert Town, Manager as trustees of the Leslie Lumsden Family Trust.
[17]No order for costs is made.
[18] I reserve leave for the applicant to further apply in respect of any matters arising from this judgment.
O G Paulsen Associate Judge
Solicitors:
McMillan & Co, Dunedin
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