Public Trust v Daken

[2017] NZHC 1285

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV-2017-442-000026 [2017] NZHC 1285

UNDER	Section 52 of the Trustee Act 1956
BETWEEN	PUBLIC TRUST Applicant
AND	MALCOLM ERWIN DAKEN Respondent

Hearing:	(On the papers)
Judgment:	13 June 2017

JUDGMENT OF FAIRE J

[1]      The Public Trust as the sole remaining trustee of the Daken Family Trust applies for orders:

(a)       Removing the name of Malcolm Erwin Daken from the title to the property at 2 Fearon Street, Motueka (Identifier NL 1D/542);

(b)       Vesting the title in the name of Public Trust alone; and

(c)       Vesting Malcolm Daken’s powers as Protector in the trustee(s) of the

Daken Family Trust.

[2]      This application is made by originating application and in reliance on s 52 of the Trustee Act 1956.

[3]      The background is set out in the affidavit of Rachael Louise Suffolk dated

5 April 2017 and provides the following summary:

PUBLIC TRUST v DAKEN [2017] NZHC 1285 [13 June 2017]

(a)       The Daken Family Trust was established by deed dated 25 August

2014.

(b)One of the trustees, Malcolm Erwin Daken (“Malcolm”), is no longer competent to continue in that role and no longer has the power to appoint and remove trustees of the trust.

(c)       Malcolm’s  incapacity  is  confirmed  by  a  medical  certificate  from

Dr M J Hudson, dated 30 January 2016.

(d)The other trustee the Public Trust wishes to sell the house property, which is the principal asset of the trust, as Malcolm has moved into more suitable accommodation.

(e)      The sale cannot be completed without both removal of Malcolm as a trustee and vesting of the land title in the name of the Public Trust.

(f)      A deed has been signed removing Malcolm as trustee and leaving Public Trust as sole trustee of the trust.   The trust deed permits a trustee corporation to act as sole trustee.

(g)Malcolm has no spouse, children or grandchildren.  The beneficiaries of the trust are two adult nieces and an adult nephew.  Two of these beneficiaries have consented to the application and the third has been notified of the proceedings by the Public Trust but has failed to respond to a number of letters.

[4]      Simon France J dealt with the applicant’s application without notice for directions as to the conduct of the proceeding and as to service and ordered as follows:1

The  proceedings  may  be  commenced  by  originating  application  and otherwise conducted in accordance with Part 18 of the Rules.

The respondent, Malcolm Erwin Daken, need not be served.

Ms Juliet Burton, being a beneficiary who has not consented, is to be served with the proceedings, together with a copy of this Minute.   This Minute advises Ms Burton that the matter will be dealt with on the papers three weeks after she is served with the proceedings if a notice of opposition is not filed.

An affidavit of service is to be filed.

The Registry is to refer the file to a duty Judge three weeks after the service date  advised  in  the  affidavit  of  service  (if  nothing  is  received  from Ms Burton).

[5]      An affidavit of service of the documents has been filed confirming service on Ms Julia Burton on 20 May 2017.   She has taken no steps in this proceeding. Because Malcolm has been removed as a trustee, the applicant now invites the Court to exercise its jurisdiction to vest trust assets in the current trustee in reliance on s 52(1) of the Trustee Act 1956.  Section 52(1)(a) applies where a trustee has been appointed out of Court under an express power.   In this case Malcolm has been removed as trustee under an express power in the trust deed.   Section 52(1)(b) applies  where  a trustee  is  under a disability.    In  this  case Malcolm  is  under a disability.  Accordingly, the Court has power to make a vesting order under s 52 in both cases.

[6]      In Godfrey v McCormick,2 the Court confirmed that the holder of an enduring power of attorney is not able to execute authority and instruction forms on behalf of an incapacitated trustee.  The Court confirmed that what is required is for the Court, if it considers appropriate, to exercise its power under s 52 of the Trustee Act 1956.

[7]      Mr Kelly, in his helpful memorandum submitted that it is necessary to cover Malcolm’s powers as Protector.  Under cl 3.2 of the trust deed Malcolm has power to appoint and remove trustees of the trust and also to appoint and remove advisory trustees.    Malcolm,  because of his  lack  of capacity is  unable to  exercise  those powers.  Mr Kelly submits that the matter cannot appropriately be addressed under s

43 of the Trustee Act 1956.  He submitted that it may be expedient or desirable for new or additional trustees to be appointed or for an advisory trustee to be appointed in the future.  It cannot be done pursuant to s 43.  He submitted if the powers under cl 3.2 of the trust deed are vested in the trustees of the trust from time to time these

things however can be done.   The Public Trust invites the Court pursuant to its inherent jurisdiction to order that the Protector’s powers in cl 3.2 of the trust deed be vested in the trustees of the trust from time to time.

[8]      Mr Kelly submitted that this affects no real change to the settlor’s ability to appoint a Protector by will.  That is because Malcolm’s current will does not appoint a replacement Protector and as he has lost capacity he cannot execute another will appointing a replacement Protector.  Mr Kelly referred to Lance v Lance.3    In that case the trust deed provided that the settlor’s powers vested in his personal representative  following  his  death.    The  Court  consequently  ordered  that  these powers only vest in the trustee of the trust during his lifetime.  As the Daken Family trust deed does not provide that the Protector’s powers will vest in this manner on

Malcolm’s death, Mr Kelly submitted that it is appropriate that these powers are vested in the trustee of the trust without such limitation.  He referred to a number of decisions where orders vesting the powers to appoint new trustees were made.4

[9]      I have already referred to the fact that Simon France J dispensed with service understandably on Malcolm.   Malcolm’s attorney under his enduring power of attorney for the property is the Public Trust.  He seeks the orders in this proceeding and consents to them.  Malcolm’s attorney under his enduring power of attorney for personal care and welfare is his brother-in-law, James Fry.  He has consented to the orders sought in this application.

[10]     There are three adult beneficiaries of the Daken Family Trust and as I have mentioned, two have consented to the application. The third has been served and has no taken no steps.

[11]     Mr Kelly referred to cases where the Court has made vesting orders in similar circumstances to that which exist in this case.5     In those cases orders were made

3      Lance v Lance [2014] NZHC 2846.

4      Re The C P Clifton Children’s Trust HC Auckland CIV-2004-404-4185, 5 November 2004;

Davidson v Israel [2012] NZHC 631; Mudgway v Slack HC Auckland CIV-2010-404-2058,

26 July 2010.

5      Godfrey v McCormick , above n 2; Pye v Pye [2017] NZHC 17 and Strang v Strang [2016] NZHC 2203.

dispensing with service on the incapacitated trustee and vesting orders were made on the papers.

[12]     I am therefore satisfied that orders in terms of the originating application as moved are appropriate and I so order.

[13]     I assume no order for costs is required but if I am wrong in that respect I

reserve costs.

J A Faire J

Solicitors:

Greg Kelly Law Limited, Wellington for Applicant