Public Trust v Burfitt

[2020] NZHC 3399

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2020-409-610

[2020] NZHC 3399

UNDER

the Trustee Act 1956

BETWEEN

PUBLIC TRUST as trustee of the BURFITT FAMILY TRUST

Applicant

AND

MARGARET ANN BURFITT

Respondent

Hearing:

On the papers

Counsel:

A K Habershorn for Applicant

No appearance by or for Respondent

Judgment:

17 December 2020

JUDGMENT OF MANDER J

This judgment was delivered by me on 17 December 2020 at 4 pm pursuant to Rule 11.5 of the High Court Rules 2016

Registrar/Deputy Registrar Date:     .

PUBLIC TRUST v BURFITT [2020] NZHC 3399 [17 December 2020]

[1]    The Public Trust makes application for a vesting order and accompanying directions as to service and procedure in respect of a property owned by the Burfitt Family Trust (the Trust).

Background

[2]    The Trust was established by deed dated 15 April 2004 (the trust deed). The trustees were Albert Thomas Burfitt (Albert), Margaret Ann Burfitt (Margaret) and Public Trust. Albert died on 2 March 2007. Margaret is no longer mentally competent. A medical certificate confirmed that Margaret is no longer mentally capable. She is unable to manage her own finances or make decisions regarding her personal care and welfare. Under the deed Margaret ceases to have the power to appoint and remove trustees as a result of her mental incapacity. Margaret is also incapable of carrying out her office as trustee or completing transmission documents or documents to transfer property owned by the Trust to the continuing trustee.

[3]    Under the deed the remaining trustee, Public Trust, has the power to remove Margaret as trustee due to her mental incapacity. She was removed as a trustee by way of a deed dated 1 December 2020. This left Public Trust as the sole trustee.

[4]    The main asset of the Trust is a property at 4A Stanbury Avenue, Somerfield, Christchurch (the property). The Public Trust is considering options regarding the sale of the property. However, it is not possible to progress any sale of the property while Albert and Margaret remain named on the title to the property. Margaret is no longer competent to give authority for the transmission to the remaining trustee, or transferral or removal of her name from the title to the property. Notwithstanding Public Trust having Margaret’s enduring power of attorney for property, it is not able to authorise the transmission or removal of Margaret’s name from the title, despite Albert and Margaret having ceased to be trustees of the Trust.

[5]    The beneficiary of the Trust is Albert and Margaret’s daughter, Margaret Ann Tania Burfitt (Tania). Margaret’s personal care and welfare enduring power of attorney is Tania. She has consented to vest the title in the name of the Public Trust in her role as attorney and as the beneficiary of the Trust.

Procedural matters

[6]    Before considering the substantive application there are a number of procedural matters that need to be addressed. The without notice interlocutory application for directions as to service and procedure seeks the following orders:

(a)that these proceedings be commenced by originating application and be otherwise conducted in accordance with pt 18 of the High Court Rules 2016 (the Rules);

(b)dispensing with service on Margaret and the beneficiary of the Trust;

(c)dispensing with the requirement for a litigation guardian to be appointed for Margaret; and

(d)that the proceedings be determined on the papers.

Proceeding by way of originating application under pt 19

[7]    Applications under the Trustee Act are normally brought under pt 18 of the Rules pursuant to r 18.1(b)(xiii). However, under r 19.5 the Court may permit an application to proceed under pt 19 if this is in the interests of justice.1 It is common for applications under ss 51 and 52 of the Trustee Act to proceed by way of originating application and is now considered routine.2

[8]    In this matter the issues are well defined and there are no factual issues in dispute. The primary application is relatively straightforward, there are no procedural issues and no disputed questions of fact or cross-claims. In the circumstances, I accept it is appropriate that leave be granted to commence the application for a vesting order by originating application pursuant to r 19.5 and an order to that effect is made accordingly.

1      Public Trust v Kain [2018] NZHC 1547, (2018) 4 NZTR 9168-012 at [21].

2      Wellwood v Wellwood [2019] NZHC 801 at [8]; and Re MacLeod [2020] NZHC 2420 at [13].

Service of proceedings on the respondent and beneficiary

[9]    Margaret lacks the capacity to understand the nature and purpose of the proceedings, and I accept service on her would serve no useful purpose. Margaret’s attorney under her enduring power of attorney for property is Public Trust and it is obviously aware of and consents to the application. Tania, who holds Margaret’s enduring power of attorney for personal care and welfare, has consented to the application.

[10]   I am satisfied the application for the vesting order is for the purpose of enabling the Trust to continue operating and is an administrative step that will not adversely impact on any beneficiaries of the Trust, there being only one adult beneficiary, Tania, who has consented to the application. Public Trust will continue as the sole trustee. For these reasons an order is made dispensing with service on Margaret and Tania pursuant to r 7.43A.

Dispensing with the requirement for a litigation guardian

[11]   Because of Margaret’s incapacitated status the Rules require her to have a litigation guardian unless the Court orders otherwise.3 Public Trust applies to dispense with this requirement. It submits that the application relates to an administrative matter to enable the Trust to continue operating and arises only because of Margaret’s illness. Granting a vesting order will result in the Trust property being solely vested in Public Trust as the continuing trustee in order to allow it to fulfil its duties as a trustee.

[12]   I accept that the relief sought is limited to the vesting order and does not otherwise impact on Margaret’s interests. Such a course has been adopted in a number of similar cases and in the circumstances there are no discernible reasons why Margaret, having been removed as a trustee, she should remain on the title as a registered proprietor of a trust asset.4 There will be an order dispensing with the appointment of a litigation guardian.

3      High Court Rules 2016, r 4.30.

4      Strang v Strang [2016] NZHC 2203; and Webb Farry Trustee Services Ltd v Pringle [2020] NZHC 256 at [13].

Consideration on the papers

[13]   The Court has a discretion under r 7.46 to order the application for a vesting order to be determined on the papers. Public Trust advises that all information known to it has been disclosed to the Court. All interested parties support the application being made and have consented to it. The application is of a procedural nature and is not opposed. In those circumstances an order is made that the matter is to be dealt with on the papers.

Application for vesting order

[14]The substantive application seeks orders:

(a)removing the names of Albert Thomas Burfitt and Margaret Ann Burfitt from the title to the property of 4A Stanbury Avenue, Somerfield, Christchurch, Record of Title CB32A/494, with the legal description Lot 1 Deposited Plan 12834; and

(b)vesting the title in the name of Public Trust.

[15]   The legal interest in the property passed by survivorship to the two remaining trustees, Margaret and Public Trust, on Albert’s death. Following his death and the removal of Margaret as a trustee it has become necessary for the assets of the Trust to vest in Public Trust as the remaining sole trustee. Margaret is incapable of signing transmission or transferred documents. The Court is therefore asked to exercise its power to vest Trust assets under s 52(1) of the Trustee Act 1956 to Public Trust.

[16]   This Court, relevantly, has an explicit statutory jurisdiction to vest land; first, where a trustee has been appointed out of court pursuant to an express power, as is the case here where Margaret has been removed as a trustee under a power in the deed;5 second, where a trustee is under a disability, as is the case with Margaret;6 and, third,

5      Trustee Act 1956, s 52(1)(a).

6      Section 52(1)(b)(i).

where land is vested in a trustee and it appears to the Court to be expedient.7 In this case land vested in Margaret and Public Trust on Albert’s death.

[17]   This Court confirmed in Godfrey v McCormick the holder of an enduring power of attorney is not able to execute authority and instruction forms required by Land Information New Zealand and the Registrar-General of Land on behalf of an incapacitated trustee, and that there will be a need for the Court to exercise its powers under s 52 of the Act in such situations.8 This Court has previously found that the corollary of its acceptance that a trustee has been validly removed, is that the new or continuing trustees should be able to deal with the trust property and that a vesting order will therefore be appropriate.9 There have been a number of cases where the Court has made vesting orders in circumstances such as these.10

[18]   I have read the affidavit of Ms Elizabeth Wood, who is a senior trustee at Public Trust, deposing to the circumstances that give rise to this application and the memorandum of counsel filed in support. I am satisfied that Margaret has properly been removed as a trustee and that it is appropriate that the property vest in Public Trust as the remaining trustee of the Trust. I am also satisfied that it is appropriate for the application to be made without notice to any party, as that would cause unnecessary and undue delay or prejudice, and that the grounds for the making of a vesting order have been established. The Court therefore exercises its powers under s 52(1) of the Act to vest the land with Record of Title CB32A/494 with the legal description Lot 1 Deposited Plan 12834 in the name of Public Trust as the trustee of the Trust.

Orders

[19]The following interlocutory orders are made:

(a)These proceedings are to be commenced by originating application and otherwise conducted in accordance with pt 18 of the Rules;

7      Section 52(1)(h).

8      Godfrey v McCormick [2017] NZHC 420, [2017] 3 NZLR 198.

9      Re Geddes [2020] NZHC 1640 at [13].

10     Public Trust v Daken [2017] NZHC 1285; Godfrey v McCormick, above n 8; Gardner v Gardner

[2020] NZHC 2091.

(b)Service on Margaret Ann Burfitt and the beneficiary of the trust, Margaret Ann Tania Burfitt, is dispensed with;

(c)The requirement for a litigation guardian to be appointed for Margaret Ann Burfitt is dispensed with; and

(d)The proceedings are to be determined on the papers.

[20]On the substantive application the following orders are made:

(a)The names of Albert Thomas Burfitt and Margaret Ann Burfitt are removed from the title to the property at 4A Stanbury Avenue, Somerfield, Christchurch, Record of Title CB32A/494 with the legal description Lot 1 Deposited Plan 12834; and

(b)Title is to vest in the name of Public Trust as trustee of the Burfitt Family Trust.

Solicitors:
April Kehi Habershorn, Christchurch for Applicant