Summerlee v Pool
[2019] NZHC 387
•8 March 2019
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2018-409-151
[2019] NZHC 387
IN THE MATTER of an application pursuant to the Court’s inherent jurisdiction BETWEEN
RICHARD BENJAMIN SUMMERLEE, ALEXANDER JAMES SUMMERLEE and SARAH ELIZABETH SUMMERLEE as
beneficiares of the Donald Pool Trust Plaintiffs
AND
ANTHONY JOHN POOL, RICHARD BENJAMIN SUMMERLEE and
ALEXANDER JAMES SUMMERLEE as
trustees of the Donald Pool Trust Defendants
Hearing: 4 March 2019 Appearances:
A Riches for Plaintiff A J Pool in person
Judgment:
8 March 2019
JUDGMENT OF ASSOCIATE JUDGE LESTER
[1] The three plaintiffs, as the beneficiaries of the Donald Pool Summerlee Children’s Trust (“the Trust”), apply for summary judgment in this proceeding which seeks an order removing Anthony John Pool as trustee of the Trust.
[2] Including Mr Pool, there are three trustees of the Trust, all of whom are named as defendants. The other two trustees are also beneficiaries of the Trust and are named as plaintiffs. They consent to the order for removal and for the vesting of the property owned by the Trust including a home at 17 Patten Street, Avonside, Christchurch being
RICHARD BENJAMIN SUMMERLEE v POOL & ORS [2019] NZHC 387 [8 March 2019].
Lot 3, Deposit Plan 12599, Canterbury Land Registration District, Certificate of Title CB10K/1111, in themselves as remaining trustees (“the Patten St property”). In the alternative, they seek appointment of Perpetual Guardian as a replacement trustee for Mr Pool.
[3] Late on the afternoon of 1 March 2019, Mr Pool sought an adjournment on medical grounds. The hearing of this matter had previously been adjourned on medical grounds as well. I declined the application for an adjournment and advised that reasons would follow. Mr Pool on 1 March 2019 produced a medical statement from a Dr Gamble dated 28 February 2019 which records that:
Tony is unfit to work as he is recovering from an illness. This illness has caused significant fatigue such that he feels unable to represent himself and requires an extension to enable him to find a lawyer to represent him.
[4] This is not a medical certificate that Mr Pool was unable, due to medical grounds, to represent himself.
[5] Mr Pool filed a statement of defence on 27 June 2018. This proceeding had its first call on 30 August 2018. The proceeding was then adjourned a number of times before being set down for a fixture on 4 March 2019. The hearing date was allocated to in part take into account the timeframe in a medical certificate dated 30 October 2018 where the medical practitioner said it may take several weeks or even months before Mr Pool was able to attend Court.
[6] As it happens, Mr Pool did attend Court on 4 March 2019. He renewed his application for an adjournment on medical grounds, and the application was again declined. Mr Pool remained in the Court and presented argument throughout the hearing which lasted approximately one hour fifteen minutes.
[7] While Mr Pool had not filed a notice of opposition or an affidavit in opposition to the summary judgment, he had filed a statement of defence and an application for a permanent stay, which I have treated as in substance setting out his opposition. Accordingly, the matter proceeded for hearing on 4 March 2019.
The creation of the Trust
[8] Mr Pool is a grandson of the late Donald Pool (“the deceased”) and the plaintiff beneficiaries are the great grandchildren of the deceased.
[9] The deceased’s Will, which was admitted to probate on 1 November 2002, provided at cl 4(b)(iv) that the residue having been divided into four parts, one part was to be held:
… for such of the children of my granddaughter MARGOT ELIZABETH SUMMLERLEE as are living at my death and if more than one in equal share per capita.
[10] The above provision was subject to amendment in a Third Codicil to the Will which was also admitted to probate, with the Codicil providing:
1. In respect of Item 4 (b) (iv), as to the remaining one (1) of such parts for the children of my granddaughter MARGOT ELIZABETH SUMMLERLEE, I express the wish that a legally binding Trust be created.
(a)I appoint my grandson ANTHONY JOHN POOL to be a Trustee and my grandson DAVID ALAN GEORGE POOL to be a Trustee.
(b)As to the capital of the Trust the Trustees shall stand possessed of the Trust Funds until the 1st Day of August 2020 (“the date of distribution”).
(c)As to the income of the Trust, to accumulate and thereafter treat it as capital.
[11] As will be seen from para 1(a) of the Third Codicil, Mr Pool was named as a trustee of the Trust from the outset along with David Alan George Pool. David Alan George Pool stood down as a trustee with the two other defendants becoming trustees pursuant to a Deed of Retirement and Appointment of New Trustees dated 25 April 2012 (“the Deed”).
[12] The Will provided for the Trust to vest in the beneficiaries on 1 August 2020, the youngest beneficiary’s 25th birthday. The beneficiaries have invoked the rule in Saunders v Vautier1 to bring forward the vesting date and terminate the Trust on the
1 Saunders v Vautier (1841) 4 Beav 115; 49 ER 282.
grounds that they are sui juris and collectively hold an absolute vested interest in the Trust property.
[13] The Patten St property was tenanted to third parties from approximately May 2013, but the plaintiffs say it has been occupied by Mr Pool since approximately 12 December 2015. While Mr Pool has alleged that the Patten St property is untenantable, and I infer that such may be because of earthquake damage although that is not clear, he is occupying the Patten St property and does not appear to be paying rent or recognising any liability in that regard.
[14] On 22 December 2017, the beneficiaries’ solicitor wrote to Mr Pool referring to and explaining the rule in Saunders v Vautier and seeking his confirmation by 15 January 2018 that he would execute the necessary documents to complete the transfer of the Patten St property to the beneficiaries. The letter concluded by saying that in the absence of co-operation, proceedings would follow, and the letter would be referred to for costs purposes.
[15] In an email of 27 March 2018, Mr Pool emailed the beneficiaries’ solicitor, referring to the Estate of the deceased having received independent legal advice in relation to the rule in Saunders v Vautier that the rule was currently good law. He then says:
Please send me the necessary legal document in relation to Saunders v Vautier Application for the High Court for my agreement. I will arrange signature from my co- Executive Trustee.
[16] Mr Pool then makes reference to what he calls the “lack of legitimacy of the “Donald Pool Summerlee Children’s Trust”.” This seems to be based on his assertion that there is no Trust Deed relating to the Trust. He asserts: “… the legal entity that this matter relates to is the Estate of Donald Pool.” This is an issue that I will return to.
Saunders v Vautier
[17] Mr Riches, counsel for the plaintiffs, submissions refer to a recent explanation of the rule in Gough v Strahl as follows:2
Under that rule, if there is only one beneficiary of a trust (or if there are several beneficiaries all of full age and capacity and of one mind and having a vested interest in the trust property) they may bring the trust to an end by directing the trustees to transfer the trust property to that beneficiary or beneficiaries, despite any directions to the contrary in the trust document.
[18] The rule applies even when the date for distribution has not yet arrived as is the case under the Trust referred to in the Third Codicil.
[19] I accept Mr Riches’ summary of the rule that there are three elements for the plaintiffs to satisfy in order for the rule to apply, being:
(i)the plaintiffs are the only beneficiaries of the fixed trust established by the Will;
(ii)the plaintiffs have all attained the age of majority and have full capacity; and
(iii)The plaintiffs have given notice of termination of the Trust which was given on 22 December 2017.
[20] The evidence is that the three beneficiaries are the only children of Margot Elizabeth Summerlee. Indeed, Mr Pool does not say otherwise, nor does he dispute that the beneficiaries have attained the age of majority and have full capacity. Nor does he dispute having received notice of termination; again he confirmed in the email referred to that he had taken advice as to the effect of Saunders v Vautier and appeared willing to comply with the direction albeit that he referred to the Estate rather than the Trust.
2 Gough v Strahl [2013] NZHC 3184, (2013) 3 NZTR 23-019 at [19].
The Trust
[21] There is in my opinion, ample evidence that the defendant trustees have accepted the Trust obligations created by the Third Codicil. Mr Pool emphasised that the Third Codicil expressed a wish that a legally binding trust be created and he advised there is no trust deed for the Trust.
[22] The Certificate of Title to the Patten St property shows the three defendants as registered proprietors. The Certificate of Title is not held in the name of the executors of the Estate of Donald Pool.
[23] Rental from the Patten St property was paid into a bank account with the name “Donald Pool Summerlee Children’s Trust”. Mr Pool is a signatory to that account and so was either involved in the account being opened in the name of the Trust or agreed to become a signatory of the account so named.
[24] Mr Pool has provided the Court with a copy of the Deed. The Deed was signed by Mr Pool on 3 May 2012. It records the retirement as trustee of David Alan George Pool who was the other original trustee named in the Third Codicil, showing that both Mr Pool and David Pool saw themselves as having accepted the Trust obligations the deceased wished them to accept as stated in the Codicil.
[25]The essence of Mr Pool’s argument is the assertion that:
The three Executor/Trustees did not create a legally binding Trust as expressed as a wish by the Testator, Donald Pool of New Plymouth. There is no Trust Deed for the so called “Donald Pool Summerlee Children’s Trust” and therefore there is no such Trust.
[26] This is a theme running through Mr Pool’s defence. He says repeatedly that there is no “entity known as the Donald Pool Trust”.
[27] This in my view is a mistaken placing of emphasis on the way the statement of claim has been framed.
[28]The statement of claim begins:
The plaintiffs are the only beneficiaries of a testamentary trust (“Donald Pool Trust”)…
[29] The use of the shorthand label “Donald Pool Trust” in the statement of claim may have caused confusion given that the Trust name adopted in the Deed and on the bank statements is the “Donald Pool Summerlee Children’s Trust”. However, it is clear from reading the statement of claim and the affidavit in support as a whole that it is the Donald Pool Summerlee Children’s Trust that is referred to in the proceedings.
[30] That the trustees accepted the obligation to hold the one-quarter share of the residence on trust, referred to in the Third Codicil, is sufficient for there to be a trust. Whether the Codicil expressed a wish that the property be held on trust or not is not the issue. The testator’s intention to establish a trust is clear and the trustees as named in the Codicil accepted that role and held the property as trustees until the makeup of the trustees was altered by the Deed.
[31] I find that the Trust was created and that the defendants are the trustees of the Trust. Given Mr Pool does not dispute that the plaintiffs are entitled to invoke the rule in Saunders v Vautier, I find that he does not have a defence to the plaintiffs’ claim and summary judgment is appropriate.
Grounds for Mr Pool’s removal
[32] The order sought in the statement of claim is that the Patten St property and other property be vested in the second and third named defendants as trustees.
[33] The practical point is that as the beneficiaries are entitled to deal with the Trust property as they see fit, they are able to control how the Patten St property is held.
[34] It is also clear the relationship between Mr Pool and the second and third named defendants has broken down. The rates on the Patten St property are apparently not being paid. The Trust’s bank account has been frozen because of disagreements between the parties. There is an issue as to the basis upon which Mr Pool occupies the property without paying any rent, and there may well be unresolved earthquake/EQC issues.
[35] Mr Pool asserted during the hearing that he was on the title in his capacity not as a trustee of the Trust, but as trustee of another trust called the “R G P Family Trust”. He said the R G P Family Trust was the source of $30,000 contributed to the purchase price of the Patten St property. It is common ground that $30,000 was contributed to the purchase of the Patten St property with the affidavit in support stating:
[Mr Pool] advanced $30,000 of his own funds so that the trust could purchase Patten St without having to sell other investment assets which were not ready to be realised. This was intended to reflect 25% of the purchase.
[36] The difficulty for the Court in relation to this claim by Mr Pool is that there is no affidavit evidence from him in relation to the R G P Family Trust. Mr Pool was directed to file any affidavit evidence by 21 December 2018.
[37] The resolution of Mr Pool’s claims about the R G P Family Trust and the other issues between the parties is outside the scope of this proceeding. As the beneficiaries have an interest in restricting Mr Pool’s interest (or the interest of the R G P Family Trust if established) to being an advance, Mr Riches accepted that it would be appropriate for an independent trustee, Perpetual Guardian, to be appointed in place of Mr Pool.
[38] It was common ground at the hearing that the appointment of Perpetual Guardian was entirely without prejudice to the parties’ respective claims. Mr Pool will be able to refer the new trustee to any material that he says supports his position and how that is investigated is a matter for the new trustee. Similarly, issues relating to whether Mr Pool will have to account for an occupation rent will also need to be addressed. Mr Pool maintained at the hearing that he considered that the property was untenantable and was only occupying it to keep the property secure. Again, this is not a matter for me to resolve.
[39] Accordingly, on the basis that the plaintiff beneficiaries have exercised their right under Saunders v Vautier to call for the distribution of the Trust there is an order removing Anthony John Pool as trustee of the Donald Pool Summerlee Children’s Trust and appointing The New Zealand Guardian Trust Company Ltd as replacement trustee and vesting all the trust property in the new and continuing trustees, in
particular the property with the Identifier CB10K/1111. Mr Pool did not consent to this order but took a measure of comfort from there being an independent trustee.
Costs
[40] As noted at the outset, the beneficiaries gave notice that they had exercised their right under Saunders v Vautier in December 2017 and by the end of March 2018 Mr Pool received advice to the effect that the rule was valid. Mr Pool, from before the issuing of proceedings, did not accept the legitimacy of the Trust. I have confirmed the existence of the Trust. Mr Pool’s position led to these proceedings being necessary.
[41] There is an order that Anthony John Pool is to pay to the plaintiffs’ costs on a 2B basis together with disbursements as fixed by the Registrar. This is a personal costs order against Mr Pool for which he is not entitled to be indemnified by the Trust. Mr Riches for the plaintiffs is to prepare a schedule of the costs sought and to serve that on Mr Pool who shall have five working days to take issue with the schedule. If Mr Pool does not accept the costs schedule he is to file a short explanation on the matters he disputes within the time frame given. Mr Riches is then to reply within a further five working days. I record that Mr Riches has agreed not to claim costs for any hearing or call that could not proceed due to Mr Pool providing a medical certificate accepted by the Court.
Associate Judge Lester
Solicitors:
Saunders & Co., Christchurch A J Pool in person defendant
Addendum
Mr Pool in a letter to the Court dated 5 March 2019, sought to informally put material before the Court. Mr Riches opposed that material being read. The material comes
too late and is not produced in an affidavit – it will not be read. Again, Mr Pool can put such material to the independent trustee. Mr Pool also says in his letter that he was unable to deal with costs which he describes as a “new matter” and says he was “caught unaware”. With his request for an adjournment declined, all issues in the claim including costs were before the Court. The issue of costs was raised by Mr Riches in his letter of 22 December 2017. Mr Riches’ submissions for the hearing concluded with a reference to costs being sought. Costs were sought in the statement of claim and in the application for summary judgment in the ordinary way. I consider adequate notice was given that costs would be sought at the hearing. What amounts to an application for an extension of time to make submissions in respect of costs is declined.
6