Riley v Jeffries

[2020] NZHC 2008

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2020-441-57

[2020] NZHC 2008

UNDER

the Trustee Act 1956

IN THE MATTER

of a certain Deed of Trust dated 27 May 1999 between COLLEEN JEFFRIES as

Settlor and KIRK ROBERT DOYLE as First Trustee and JEREMY FRANCIS GRESSON as Second Trustee (the Trust Deed) establishing the Colleen Jeffries Family Trust (the Trust)

AND IN THE MATTER

of an application for the removal of existing trustee and appointment of new trustee of the Trust

AND IN THE MATTER

of an application to vary the terms of the Trust Deed to vest the power of appointment and removal of trustees in the Trustees for

the time being of the Trust

AND IN THE MATTER

upon the making of an Order to remove and appoint a new trustee, of an application to vest any land held by the Trust in the trustees of the Trust

BETWEEN

COLETTE ISOBEL RILEY

Applicant

AND

COLLEEN JEFFRIES

First Respondent

COLLEEN JEFFRIES AND JUSTINE ENID OWEN

Second Respondent

Hearing:	On the papers
Appearances:	C D Bennett for the Applicant
Judgment:	10 August 2020

RILEY v JEFFRIES [2020] NZHC 2008 [10 August 2020]

JUDGMENT OF COOKE J

[1]By applications dated 5 August 2020 the applicant seeks orders:

(a)For leave that these proceedings be commenced by originating application.

(b)Dispensing with service on any other parties.

(c)Dispensing on the requirement to appoint a litigation guardian.

(d)Removing the first respondent, Colleen Jeffries as a trustee of the Colleen Jeffries Family Trust pursuant to s 51 of the Trustee Act 1956.

(e)Vesting the property at 4a Mackenzie Avenue, Marewa, Napier in Colette Isobel Riley and Justine Enid Owen as trustees of the Colleen Jeffries Family Trust.

[2]                 The applications are supported by affidavits from the applicant, Colette Riley sworn 5 August 2020 and her sister Justine Owen sworn 27 July 2020.

The circumstances

[3]                 The Colleen Jeffries Family Trust was settled by Mrs Jeffries on 27 May 1999 with herself and two others as trustees. Over time trustees have retired and been replaced under the Deed, with the current trustees being Mrs Jeffries and Justine Owen.

[4]                 Mrs Jeffries had four children, the applicant (Ms Riley), Ms Owen, Ms Andree Dick and Mr Martin Dick. In her affidavit Ms Riley explains that Mrs Jeffries now has dementia and has lost capacity to manage her personal and property matters. This is confirmed in Ms Owen’s affidavit. Consents to the orders from the other children, and also to Mrs Jeffries former husband, Mr Murray Jeffries have been provided.

[5]                 The primary asset of the Trust is the property referred to above, and Ms Riley explains that Mrs Jeffries is now in residential care. Ms Owen explains that it is now appropriate to sell the house.

Orders to be made

[6]                 The applications for proceedings of this kind to be commenced by originating application, and without service or the appointment of a litigation guardian are routine, and I give those directions in the present case. I am also satisfied on the evidence that has been referred that there is no need to serve or give notice to any other person. The primary beneficiaries of the Trust have all given their consent to the application. The grandchildren who are also beneficiaries of the Trust have not done so, but I am satisfied given the evidence provided there is no need to involve them in this matter.

[7]                 The substantive orders sought are under ss 51 and 52 of the Trustee Act 1956. Section 51 provides:

51Power 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.

(2)In particular and without prejudice to the generality of the foregoing provision, the court may make an order appointing a new trustee in substitution for a trustee who—

…

(c) is a mentally disordered person within the meaning  of  the Mental Health (Compulsory Assessment and Treatment) Act 1992, or whose estate or any part thereof is subject to a property order made under the Protection of Personal and Property Rights Act 1988; or

…

[8]                 There may be an argument that given the terms of s 51(2)(c) the Court should not use its powers under s 51(1) to replace an apparently incapacitated trustee as this situation is specifically contemplated by s 51(2)(c). But s 51(2) is “without prejudice to the generality of the foregoing provision”, and s 51(1) allows the Court to act under that section if it thinks it appropriate. The Court has regularly exercised this power in

a situation where a trustee has dementia, even when interpretation issues in relation to the appropriate approach have been identified.1

[9]Section 52(1)(b) of the Trustee Act 1956 provides:

52Vesting orders of land

(1)Subject to the provisions of subsections (2) and (3), in any of the following cases, namely—

…

(b)      where a trustee entitled to or possessed of any land or interest therein, whether by way of mortgage or otherwise, or entitled to a contingent right therein, either solely or jointly with any other person—

(i)is under disability;

…

the court may make an order (in this Act called a vesting order) vesting the land or interest therein in any such person in any such manner and for any such estate or interest as the court may direct, or releasing or disposing of the contingent right to such person as the court may direct.

[10]             This power can be utilised when a former trustee is no longer capable but remains on the title. For example it has been used in the case of an incapacitated trustee where the holder of an enduring power of attorney is not able to execute transfers.2 It has also been exercised when powers of an appointment under the Trust Deed do not address the situation.3 Ultimately the issue for the Court is whether ordering the changes to the certificate of title is appropriate in the circumstances of the case.

[11]             Ms Riley explains that her mother suffers from dementia and has lost the capacity to manage her personal or property matters. This is confirmed by Ms Owen. Ms Riley has provided a report from a Dr Terence de Silva dated 23 July 2020. He explains that he has been providing GP services to Mrs Jeffries retirement village and has looked after her since 26 June 2019. He explains he reassessed Mrs Jeffries on 23 July 2020 and that she remains mentally incapable as she lacks the capacity to make

1      See, for example, Parsonage v Parsonage [2020] NZHC 454 at [18].

2      Godfrey v McCormick [2017] NZHC 420; Locker v Browning [2018] NZHC 1127.

3      Public Trust v Daken [2017] NZHC 1285.

a decision about personal welfare and property or finances due to her dementia. He also says that this mental capacity is likely to continue indefinitely. I am satisfied based on this evidence that it is appropriate to act under the provisions of ss 51 and 52 identified above.

[12]             It is usual with applications of this kind for the order under s 52 to be expressed in terms of the specific title reference for the property. The details of the property I have been provided with referred to in [1](e) above do not do that. I make the order under s 52 on the basis that the Registrar may seal orders by reference to the specific references to the legal title that are necessary to effect a transfer, provided that the Registrar is satisfied that that reference corresponds to the address to the property referred to in paragraph [1](e) above.

[13]             The application also seeks an order varying the Trust Deed to create a replacement clause in the following terms:

15.1 The power of removal of Trustees and the appointment  of  new Trustees is vested in such of the Trustees as shall be living and not be under a disability or prevented from acting in their capacity as Trustees by any means.

[14]             This order is sought under s 64A of the Trustee Act 1956. The affidavits refer to this being sought to avoid the need for an application of this kind being made to the Court in the future.

[15]             I am not prepared to make that order. It seems to me most unlikely that the family will get themselves into a position in the future where a remaining trustee suffers from dementia to the point where they are no longer able to step aside as a trustee and execute any transfers. That is particularly so in relation to the present Trust. It would only be appropriate for the Court to make orders of the current kind when they are necessary. I am also conscious that the Trustee Act 1956 will soon be repealed. I have simply made the orders that are appropriate in the current circumstances.

Cooke J