Rush v Rush

[2019] NZHC 3240

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2019-412-000105

[2019] NZHC 3240

UNDER

the Court’s Inherent Jurisdiction and Sections 51 and 52 of the Trustee Act 1956

IN THE MATTER

of an application to remove a trustee,

appointing a replacement trustee and to vest land in the continuing trustees

BETWEEN

FAY ELLEN RUSH as trustee of the Fay & Len Rush Family Trust

Applicant

AND

LEONARD GEORGE RUSH

Respondent

Hearing:	Determined on the Papers
Counsel:	F Barton and H Scott for Applicant
Judgment:	10 December 2019

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 10 December 2019 at 10.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:

Anderson Lloyd, Dunedin

RUSH v RUSH [2019] NZHC 3240 [10 December 2019]

Background

[1]                 This is an example of what has become a common application for the removal of a trustee of a family trust who is suffering from dementia, the appointment of a new trustee and a vesting order of trust property in the continuing and new trustee.

[2]                 The case concerns the Fay & Len Rush Family Trust (the Trust). On 1 July 1990, Leonard George Rush (Len) and Fay Ellen Rush (Fay) settled the Trust. Len and Fay, along with Geoffrey Thomas (a Dunedin solicitor), were the original trustees. The beneficiaries of the Trust are Len and Fay, their children and grandchildren.

[3]                 Geoffrey Thomas resigned as a trustee some time ago and Len and Fay have continued as trustees.

[4]                 The Trust Deed provides that Fay and Len may jointly exercise the power to appoint and discharge trustees but that the number of trustees shall not be reduced below two.

[5]                 Len and Fay (as trustees) hold a property at 8 Reid Avenue, Mosgiel which is described in Certificate of Title OT370476. The property, until recently, has been Len’s and Fay’s home.

[6]                 Len suffers from dementia and no longer has capacity to make decisions about his health, welfare, property and finances. Len and Fay moved to the Brooklands Life Care Retirement Village at Mosgiel in August 2019.

[7]                 Fay has brought this proceeding to remove Len as a trustee and appoint Lynda Joy Willsman (Lynda) as a replacement trustee. Lynda is a daughter of Len and Fay. Fay also seeks an order vesting the Trust property in herself and Lynda as the new and continuing trustees of the Trust.

[8]                 It is submitted that the orders sought are necessary to allow the efficient administration of the Trust and the exercise of powers conferred on the trustees. The intention is to sell the Reid Avenue property and make funds available for Len’s residential and personal care.

[9]                 Following a request by me, Counsel filed a memorandum advising that Len and Fay have two children, namely Lynda and Debra Leigh Butterick (Debra). Debra has given her consent to this application.

The applications

[10]Fay has applied for orders:

(a)for leave to bring this proceeding by way of originating application;

(b)dispensing with service of the application on Len and the beneficiaries of the Trust;

(c)dispensing with the appointment of a litigation guardian to represent Len under r 4.30 of the High Court Rules 2016;

(d)removing Len as a trustee; and

(e)vesting the Trust property in Fay and Lynda.

Administrative matters

Originating application

[11]            It is now established practice that applications of this type, which do not raise difficult issues, are unopposed and do not require particularised pleadings or interlocutory steps, are suitable to be commenced by way of originating application. I grant leave to make application in that way.

Litigation guardian

[12]            Fay seeks an order that the requirement that Len have a litigation guardian is dispensed with. For reasons that follow, Len is an incapacitated person for the purposes of the proceedings.1

1      High Court Rules 2016, r 4.29.

[13]               There is evidence concerning Len’s mental condition in the affidavit of Lynda and  in  the  medical  certificate  of  Dr  Alan  Mawhinney.   Len  has  been  under   Dr Mawhinney’s care  since  he  moved  to  Brooklands  Retirement  Village  and  Dr Mawhinney confirms:

(a)his qualifications as a medical practitioner and that his scope of practise includes assessment of cognitive capacity;

(b)Len suffers from dementia;

(c)Len has impaired cognitive function;

(d)there is no prospect that Len will regain his former mental capacity;

(e)Len is not capable of making decisions concerning his health, welfare or property;

(f)Len would not understand this proceeding and would likely react with confusion and anxiety if notified and required to participate; and

(g)Len would be unable to understand any advice given by a solicitor in relation to the proceeding, the purpose of the proceeding or foresee any consequence of any order that is made.

[14]            I am satisfied that Dr Mawhinney is in a position where he would have had all the necessary information to reach the conclusions he has made concerning Len’s condition and capacity.

[15]            Given Len’s incapacitated status, r 4.30 requires him to have a litigation guardian unless the court orders otherwise. Fay has sought an order that Len does not require a litigation guardian. The grounds put forward in support are that the application relates to a routine matter and arises for the sole reason of Len’s dementia and Len’s interests are not affected. All that is occurring is that Len is being removed as a trustee, which is a position and responsibility he is incapable of fulfilling.

[16]I accept those submissions and I take guidance from Docherty v Docherty2 and

Cade v Cade.3

[17]            On the information before me I can see no sensible basis upon which it can be argued that Len should remain as a trustee. Len’s interests are not otherwise being affected by the application. He will remain a beneficiary of the Trust. The purpose of the application is to provide funds for his care. Furthermore, the appointment of a litigation guardian will serve no purpose as Len will not be able to provide any instructions nor understand any advice that he might be given. In those circumstances an order dispensing with the requirement of a litigation guardian is appropriate.

Service

[18]            Fay seeks an order that service upon Len and the beneficiaries be dispensed with. Given my findings that Len is an incapacitated person and that no litigation guardian need be appointed, I consider an order dispensing with service upon him is appropriate.

[19]            Also, given the nature of the proceedings, and the facts that Fay is the applicant, the two children of Fay and Len consent to this application, and that their children are the only other beneficiaries, I consider that an order dispensing with service on the beneficiaries is also appropriate.

Removal of Len as trustee

[20]            I am satisfied that Len is unable to carry out his role as a trustee. It is appropriate in those circumstances to make an order removing him as a trustee. The court has the power to make such an order under s 51 of the Trustee Act 1956. The court also inherent power to remove a trustee.4

[21]            Len’s removal will relieve him of the burden of the trusteeship and promote the efficient administration of the affairs of the Trust.

2      Docherty v Docherty [2013] NZHC 1885.

3      Cade v Cade [2016] NZHC 1624.

4      Anderson v Anderson [2013] NZHC 1767.

Appointment of Lynda as trustee

[22]            Under s 51 the court may appoint a new trustee either in substitution for or in addition to an existing trustee. In this case, upon Len’s removal there is a need to appoint an additional trustee as the Trust Deed requires that the trustees must not be reduced below two.

[23]            Fay applies to appoint Lynda as a trustee in substitution for Len. Lynda has filed an affidavit confirming that she:

(a)can carry out the role of a trustee;

(b)has a good relationship with all beneficiaries of the Trust;

(c)will not promote the interests of any one or more beneficiaries of the Trust over the others; and

(d)would promote the execution of the Trust.

[24]            There is nothing to suggest that Lynda is not an appropriate person to be appointed as a trustee. Debra consents to her appointment. It is appropriate in those circumstances that Lynda be appointed as a trustee.

Vesting order

[25]            Under s 52 of the Trustee Act 1956, the court has the power to make vesting orders of land. Two provisions are relevant here. Section 52(1)(a) provides the court with power to make a vesting order where the court has appointed a trustee of any land. Section 52(1)(b)(i) provides the court with the power to make a vesting order in any such person that it may direct 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.

[26]            Having removed Len as a trustee and appointed Lynda to replace him, and given the need to ensure Fay and Lynda are able to deal with the Reid Avenue property in accordance with their duties as trustees, I am satisfied that the vesting order sought is appropriate.

Result

[27]There will therefore be orders that:

(a)the application be dealt with as an originating application;

(b)service of the application is dispensed with;

(c)I dispense with the appointment of a litigation guardian to represent Leonard George Rush;

(d)Leonard George Rush is removed as a trustee of the Fay & Len Rush Family Trust;

(e)Lynda Joy Willsman is appointed as a trustee of the Fay & Len Rush Family Trust in substitution for Leonard George Rush;

(f)the residential property at 8 Reid Avenue, Mosgiel described in Certificate of Title OT370476 registered in the names of Fay Ellen Rush and Leonard George Rush be registered in Fay Ellen Rush and Lynda Joy Willsman as trustees of the Fay & Len Rush Family Trust.

[28]No order for costs was sought or is made.

[29]            I reserve leave to Fay and Lynda to apply for any further directions that may be required to give effect to these orders.

O G Paulsen Associate Judge