Webb Farry Trustee Services Limited Pringle
[2020] NZHC 256
•25 February 2020
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE
CIV-2020-412-000005
[2020] NZHC 256
UNDER the Trustee Act 1956 IN THE MATTER
of an application for vesting orders in respect of the Pringle Family Trust
BETWEEN
WEBB FARRY TRUSTEE SERVICES LIMITED
Applicant
AND
EARLE DAVID PRINGLE
Respondent
Hearing: Determined on the papers Counsel:
L Jensen-McCloy and K Jarvis for Applicant
Judgment:
25 February 2020
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 25 February 2020 at 11.00 am pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
WEBB FARRY TRUSTEE SERVICES LITD v PRINGLE [2020] NZHC 256 [25 February 2020]
The application
[1] The applicant, Webb Farry Trustee Services Ltd, is one of two trustees of the Pringle Family Trust (the Trust). The other trustee is the respondent (Mr Pringle) who suffers from dementia and is unable to perform his duties. The applicant seeks orders removing Mr Pringle as a trustee and vesting title in the property of the Trust in it as the sole continuing trustee. In addition, the applicant is seeking associated orders for leave to commence the proceeding by way of originating application, that service of the proceeding be dispensed with, and that no litigation guardian be appointed to represent Mr Pringle.
Background
[2] Mr Pringle settled the Trust by deed dated 18 April 2007. Mr Pringle is the settlor and appointer of the Trust as well as being one of the trustees. The other trustee is the applicant.
[3] The beneficiaries of the Trust are Mr Pringle and his children. Mr Pringle has three children, all of whom have made affidavits consenting to the application.
[4] The only asset of the Trust is a property at 1 Duthie Street, Milton contained in Record of Title OT7B/1458 (Duthie Street).
[5] Mr Pringle suffers from severe dementia and he is not capable of making decisions about his property, finances, health or welfare. In October 2016, he was assessed over a two-week period in the Psycho-geriatric Ward of Dunedin Hospital and diagnosed with dementia. His family was advised that he needed dementia-level rest home care. In November 2016, he moved to Ashlea Grove Rest Home in Milton.
[6] There is before the Court medical evidence from Mr Pringle’s general practitioner, Dr Jane Gardner of Milton, certifying that he is mentally incapable of managing his property and personal care. There is also evidence from one of Mr Pringle’s sons stating that Mr Pringle has no comprehension or memory and is unable to communicate in any meaningful way and has no interest in doing so.
[7] This application arises because since Mr Pringle went into Ashlea Grove the Duthie Street property has been unoccupied and is deteriorating. There are no funds for its maintenance. It is in the interests of the beneficiaries that the property be sold and the proceeds of sale invested. This is not possible as Mr Pringle is a registered owner in his capacity as trustee.
[8] The Trust Deed vests the power to remove and appoint trustees in Mr Pringle, but he is in no position to exercise that power. While s 43 of the Trustee Act 1956 provides a mechanism for trustees to be removed and replaced by a substitute trustee or trustees, there is no suitable person available or willing to be appointed as a trustee. This has forced the applicant to seek the Court’s assistance to remove Mr Pringle as a trustee in the exercise of its inherent jurisdiction.
The orders sought
[9]The applicant has applied for orders:
(a)for leave to bring this proceeding by way of originating application;
(b)dispensing with service of the application on Mr Pringle and the beneficiaries;
(c)dispensing with the appointment of a litigation guardian to represent Mr Pringle under r 4.30 of the High Court Rules 2016;
(d)removing Mr Pringle as a trustee; and
(e)vesting Duthie Street in the applicant.
Administrative matters
[10] This proceeding is not of a kind that can be commenced by way of originating application as of right.1 However the Court may, in the interests of justice, permit any
1 High Court Rules 2016, rr 19.2 – 19.4.
proceeding not mentioned in rr 19.2 – 19.4 High Court Rules to be commenced by way of originating application. Such permission may be sought without notice.2
[11] This is an application which does not raise difficult issues, is unopposed and does not require particularised pleadings. There will be no interlocutory applications. It is suitable in these circumstances to be commenced by way of originating application. I grant leave to make the application in that way accordingly.3
Litigation guardian
[12] The applicant seeks an order that the requirement that Mr Pringle have a litigation guardian be dispensed with. Mr Pringle is an incapacitated person for the purposes of r 4.92 High Court Rules. I have set out earlier the evidence concerning his condition.
[13] Given Mr Pringle’s incapacitated status, r 4.30 requires him to have a litigation guardian unless the Court otherwise orders. It is appropriate that I make such an order. The application relates to an administrative matter and arises only because of Mr Pringle’s illness. His interests as a beneficiary are not affected. I am satisfied that those interests will be protected by the continuing trustee. All that is occurring here is that Mr Pringle is being relieved of duties that he is incapable of fulfilling due to his illness. Furthermore, I am satisfied that Mr Pringle would not be able to provide any instructions or understand any advice that he might receive from a litigation guardian. It is appropriate that an order be made dispensing with the requirement that a litigation guardian be appointed and I so order.
Service
[14] The applicant seeks an order that service on the beneficiaries be dispensed with. All the beneficiaries apart from Mr Pringle have consented to the application. Given his illness, no purpose would be served in requiring service upon Mr Pringle. As noted, the orders sought are purely administrative in nature. They do not involve
2 High Court Rules 2016, r 19.5.
3 See McKean v McKean [2017] NZHC 2212, (2017) 4 NZTR 27-019 at [10]; Re Hetrick [2017]
NZHC 472, (2017) 4 NZTR 27-006 at [5].
the appointment of a new trustee. Rather, the existing trustee will simply continue to administer the Trust. The rights of the beneficiaries will not be affected.
Removal of Mr Pringle as a trustee
[15] The Court has the power to make an order appointing new trustees either in substitution for or in addition to any existing trustee or trustees under s 51 of the Trustee Act 1956. However, s 51 does not authorise an order merely removing a trustee. The Court’s power is limited to appointing a new trustee or trustees in substitution for or in addition to any existing trustee. In this case the application does not seek the appointment of any new trustee/s.
[16] In addition to its powers under s 51, the Court has the power to remove and appoint trustees under its inherent jurisdiction. The inherent jurisdiction to remove trustees is ancillary to the Court’s principal duty to see that trusts are properly executed and the Court’s primary concern is the welfare of the beneficiaries.
[17] The Trust Deed anticipates that there will be two trustees at all times except where there is a corporate trustee. Clause 5.2 (which is incorrectly numbered and should be cl 5.4) of the Trust Deed states:
If an incorporated company is appointed to be a trustee that company may be the sole trustee.
[18] In most cases it would be considered desirable that there be more than one trustee. However, in this case the evidence is that there are no persons suitable or willing to accept appointment. None of the beneficiaries are prepared to accept appointment. This is because there is conflict between two of Mr Pringle’s children which is not conducive to the orderly administration of the Trust. The third of Mr Pringle’s children considers that if appointed she would be unable to carry out her duties as trustee as a result of being drawn into conflict between her brothers. Consideration has been given to the appointment of another corporate trustee, but I accept this is not justified given the cost involved. The applicant is a trustee company of a long-established legal firm at Dunedin and has been involved in the administration of the Trust as a trustee since it was settled in April 2007. The beneficiaries are all in agreement that it should continue and it is consulting with the beneficiaries to ensure
the proper investment of Trust funds upon the sale of Duthie Street for the benefit of the beneficiaries. In those circumstances it is appropriate in the exercise of the Court’s inherent jurisdiction to simply remove Mr Pringle as a trustee without also ordering substitution of a new trustee.
[19] Mr Pringle is unable to act as a trustee given his mental condition. No beneficiaries’ rights will be affected by doing so. I accordingly make an order for the removal of Mr Pringle as a trustee.
Vesting orders
[20] The Court has the power to make a vesting order under s 52 of the Trustee Act 1956 and having removed Mr Pringle as a trustee it must follow that it is appropriate to make an order vesting Duthie Street in the applicant as the sole continuing trustee. I so order.
Result
[21]I order that:
(a)Leave is granted to bring this proceeding by way of originating application.
(b)Service of the proceeding on the beneficiaries and Earl David Pringle is dispensed with. Earl David Pringle is removed as a trustee of the Pringle Family Trust (constituted by Deed dated 18 April 2017).
(c)The interest of the Pringle Family Trust in the property at 1 Duthie Street, Milton (Record of Title OT7B/1458 currently registered in the names of Webb Farry Trustee Services Ltd and Earl David Pringle) now vests in Webb Farry Trustee Services Ltd as continuing trustee.
(d)The costs of and incidental to bringing this proceeding are to be met from the resources of the Trust.
[22]I reserve leave to the applicant to further apply.
O G Paulsen Associate Judge
Solicitors:
Webb Farry Lawyers, Dunedin