Sunde v Sunde

[2019] NZHC 325

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-321

[2019] NZHC 325

UNDER

section 52 of the Trustee Act 1956

BETWEEN

ROY MELVIN SUNDE, KEVIN PAUL SUNDE AND MARINA ANNE SUNDE as

trustees of the MM Sunde Family Trust Applicants

AND

LEO ZANE SUNDE AND VERA ZORA

MARY GIBSON as removed trustees of the MM Sunde Family Trust

Respondents

Hearing:	On the papers
Counsel:	A J Sherlock and A Eager for the Applicants
Judgment:	4 March 2019

JUDGMENT OF GORDON J

This judgment was delivered by me  on 4 March 2019 at 11.30 am, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:           Hesketh Henry, Auckland

SUNDE v SUNDE [2019] NZHC 325 [4 March 2019]

Introduction

[1]                 The applicants, Roy Sunde (Roy), Kevin Sunde (Kevin) and Marina Sunde (Marina), as trustees of the MM Sunde Family Trust (the trust), seek an order under  s 52(1)(b)(i) of the Trustee Act 1956 (the Act) vesting the realty assets of the trust in them as continuing trustees.

[2]                 They also seek associated orders permitting commencement of this proceeding by way of originating application and dispensing with service of this proceeding.

Background

[3]                 The trust was established by Deed of Trust (dated 27 April 1999). The original trustees were four siblings being the respondents, Leo Sunde (Leo) and Vera Gibson (Vera), together with Roy Milan Sunde (Roy Snr) and Zita Sunde (Zita).

[4]                 The only one of the siblings to have children was Roy Snr who was the father of Roy, Kevin and Marina.

[5]                 Both Roy Snr and Zita are now deceased. Roy Snr died on 27 August 2005. After his death, Kevin and Roy were appointed by Deed of Appointment of New Trustees (dated 22 February 2006) to replace Roy Snr to act with the then continuing trustees.

[6]                 Zita died on 18 December 2013. Marina was appointed to replace Zita as trustee by Deed of Appointment of New Trustee (dated 31 March 2014). Accordingly, as at that date, the trustees were Leo, Vera, Kevin, Roy and Marina.

[7]                 All of the trustees held the power of appointment under the Trust Deed. By Deed of Removal (dated 12 November 2018), Leo and Vera were removed as trustees. They were both removed on the basis that they each suffer from dementia and lack the ability to understand and make decisions.

[8]                 Leo and Vera, as previous trustees of the trust, are registered on the titles of properties owned by the trust.

[9]                 Roy, Kevin and Marina, as continuing trustees, seek an order vesting the trust’s realty in them pursuant to s 52(1)(b)(i) of the Act on the basis that Leo and Vera do not have the capacity to authorise the transfer of the trust’s realty to the continuing trustees.

[10]             Before turning to the matter of the vesting order there are prior matters I need to address.

Should permission be granted to commence the proceedings by way of originating application?

[11]             This proceeding is not of a kind that can be commenced by way of originating application as of right, pursuant to rr 19.2–19.4 of the High Court Rules 2016. However, the Court may, in the interests of justice, permit any proceeding not mentioned in rr 19.2–19.4 to be commenced by originating application. The Court’s permission may be sought without notice.1

[12]             In Jones v HW Broe Ltd,2 McGechan J considered an application for leave to use the originating application procedure on an ex parte basis, discussing the rationale underlying r 19.5 as follows:3

The … originating application procedure was designed as a genuine exception, and as an expedient for cases where there was in reality no opposing party, avoiding clumsy and unnecessary use of a full statement of claim and notice of proceeding. It was not intended for routine use in cases where there was another likely party with contrary interests.

[13]             I am satisfied that it is appropriate that this proceeding proceed by way of originating application.4

1      High Court Rules 2016, r 19.5.

2      Jones v H W Broe Ltd (1989) 5 PRNZ 206 (HC).

3      At 207. These comments were made in the context of an earlier version of the High Court Rules (rr 239 and 485D). The comments remain applicable.

4      See, for example, Re Hamertons Trustee Services Ltd [2018] NZHC 2720; Macpherson v Macpherson [2018] NZHC 240; and McKean v McKean [2017] NZHC 2212.

Should orders dispensing with service of the proceedings on Leo and Vera and the beneficiaries of the trust be made?

[14]             Dr Alexander Srzich has made an affirmation (dated 7 February 2019) to which his report of 3 September 2018 regarding Leo and his report of 6 October 2018 regarding Vera are annexed.

[15]             Dr Srzich is a registered medical practitioner practising as a psychiatrist. He is a member of the Faculty of Psychiatry of Old Age and has a Certificate of Advanced Training in Psychiatry of Old Age from the Faculty. The scope of his practice includes the assessment of capacity.

[16]             First, in relation to Leo, aged 91, Dr Srzich’s report concludes with the following:

With regards to your specific questions, in my opinion, Leo lacks mental capacity to continue as a trustee of the two family Trusts, voluntarily retire as a trustee and transfer property consequent on retiring, continue as an appointer, and renounce his power of appointment. Leo does not understand the basic issues at hand, including roles of the different parties in a trust. Even when these roles are explained he is not able to retain this information sufficiently to manipulate it and formulate a rational decision. Although he has knowledge of some Trust related facts and issues, such as the total value of the Trusts and the current dispute, his lack of knowledge in other areas and lack of awareness of his cognitive difficulties mean that he cannot use his knowledge to formulate sound decisions.

Leo’s lack of mental capacity in these areas is due to a dementia, which is most probably due to cerebrovascular disease. This dementia will not reverse and may progress. As a result his mental capacity will not return.

[17]             Dr Srzich’s opinion in relation to Vera, aged 93, is similar (but excluding any knowledge of any trust-related facts and issues). He then concludes:

Based on her presentation and history, Vera’s lack of mental capacity in these domains [mental capacity to act as a trustee, retire and transfer property] is due to a dementia that is of moderate severity. I have not been provided with any documents relating to previous assessments of the dementia and so the exact cause of her dementia is unclear, although the most likely cause is mixed Alzheimer’s/cerebrovascular disease. This dementia will not reverse and may progress. As a result her mental capacity in the domains assessed will not return.

[18]             Having considered the evidence relating to the capacity of both Leo and Vera, I am satisfied that service on both of them should be dispensed with. The mental

capacity of each of them is such that they would not be able to rationally understand the nature or purpose of the proceedings or to meaningfully participate in them.5

[19]             In reaching that conclusion, I have applied the test adopted in a number of similar cases, namely that service on Leo and Vera would serve “no useful purpose”.6

[20]             I am also satisfied that there is no need for the application to be served on the beneficiaries of the trust. The continuing trustees will continue to administer the trust and the position of the beneficiaries will be unaffected by the vesting order sought.

Should the trust property be vested in Roy, Kevin and Marina as the continuing trustees?

[21]             Section 52(1) of the Act permits the vesting of land or interest therein in any such person, in any such manner and for any such estate or interest as the Court may direct. Section 52(1)(b)(i) permits this where a trustee who is entitled to or possessed of land, either solely or jointly with another person, is under disability.7

[22]             As a result of the lack of capacity to act as a trustee on the part of both Leo and Vera, they were removed as trustees by Deed of Removal of Trustees of the trust (dated 12 November 2018). Pursuant to that same deed, the equitable interest in the realty interests of the trust passed to the continuing trustees.

[23]             In all the circumstances, and as equitable title to the property has passed to the current trustees, it is appropriate for legal title to also pass. I am satisfied that on the evidence, neither Leo nor Vera has the capacity to authorise the transfer of the trust property to the continuing trustees and accordingly I consider that a vesting order, as sought, should be made.

5      See Re Hetrick [2017] NZHC 472, (2017) 4 NZTR 27-006 at [6] as cited in Re Hamertons Trustee Services Ltd, above n 4, at [7].

6      Docherty v Docherty [2013] NZHC 1885, Grazier v Grazier [2014] NZHC 3058 at [14], McKean v McKean, above n 4, at [12] as cited in Re Hamertons Trustee Services Ltd, above n 4, at [7].

7      Trustee Act 1956, s 2(2) provides that “For the purposes of this Act a person shall be deemed to be under a disability while he is not of full age or full mental capacity”.

Orders

[24]I order that:

(a)The applicants may commence this proceeding by way of a without notice originating application;

(b)Service of the proceedings on Leo Zane Sunde, Vera Zora Mary Gibson and the beneficiaries of the MM Sunde Family Trust is not required; and

(c)The interest of the MM Sunde Family Trust in the following properties:

(i)273 Dominion Road, Mt Eden (certificate of title 86155);

(ii)192-196 Jervois Road, Herne Bay (certificates of title NA137/209 and NA130/21);

(iii)198-202    Jervois    Road,   Herne    Bay    (certificate    of   title NA144/32);

(iv)74-76    Ponsonby   Road,   Grey    Lynn   (certificate    of   title NA48/142);

(v)78-86 Ponsonby Road, Ponsonby (certificates of title NA89/158 and NA67/172);

(vi)169 Ponsonby Road, Ponsonby (certificate of title NA642/185);

(vii)264-272 Ponsonby Road, Ponsonby (certificate of title NA395/3);

(viii)1 Tole Street, Ponsonby (certificate of title NA750/304);

(ix)9/5 Williamson Avenue, Grey Lynn  (certificates of title NA91D/667, NA91D/688 and NA86/106);

(x)11 Williamson Avenue, Grey Lynn (certificate of title NA87/267);

(xi)1 Montrose Terrace, Mairangi Bay (certificate of title NA943/104);

currently registered in the names of Kevin Paul Sunde, Leo Zane Sunde, Roy Melvin Sunde, Vera Zora Mary Gibson and Marina Anne Sunde, now vests in Kevin Paul Sunde, Roy Melvin Sunde and Marina Anne Sunde.

Gordon J