Wedding v Askew
[2019] NZHC 3147
•2 December 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-1753
[2019] NZHC 3147
UNDER The Trustee Act 1956 and Part 18 of the High Court Rules IN THE MATTER
Of an application for a vesting order under s 52 of the Trustee Act 1956 in relation to the Askew Family Trust, formed by a Deed of Trust dated 24 June 2005
BETWEEN
SUZANNE PATRICIA WEDDING AND RAEWYN GRIFFITHS
Plaintiffs
AND
DAVID JOHN ASKEW
Defendant
Hearing: On the papers Counsel:
M E Casey QC for Plaintiffs
Judgment:
2 December 2019
JUDGMENT OF PAUL DAVISON J
This judgment was delivered by me on 2 December 2019 at 3:00 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Martelli McKegg, Auckland
WEDDING AND GRIFFITHS v ASKEW [2019] NZHC 3147 [2 December 2019]
[1] The plaintiffs, Suzanne Patricia Wedding (Mrs Wedding) and Raewyn Griffiths apply for a vesting order pursuant to s 52 of the Trustee Act 1956 in relation to the residential property at 31 Seaforth Avenue, Mangere Bridge (Seaforth Avenue), which is held by the plaintiffs and the defendant, David John Askew (Mr Askew), as trustees of the Askew Family Trust (the Trust) which was established on 24 June 2005.
[2] The plaintiffs have commenced the proceeding under Part 18 of the High Court Rules1 seeking an order vesting the property in their names, together with the costs of and incidental to their application. The proceedings were served on the defendant on Tuesday, 24 September 2019, as evidenced by an affidavit of service sworn by Frederick Potts on 27 September 2019. The defendant has taken no steps in the proceeding and as 25 working days have passed since he was served, pursuant to rule 15.9(2) the plaintiffs request that the proceeding be listed for formal proof and dealt with on the papers, which include a substantive affidavit by Mrs Wedding setting out the history of the Trust and the defendants’ involvement in the Trust as a trustee and his bankruptcy.
[3] When the Trust was established by deed on 24 June 2005, the plaintiffs and the defendant were named as the three trustees. Soon after the Trust was established the Seaforth Avenue property was transferred by Ms Wedding and the defendant to the Trust, the transfer being noted on the Computer Freehold Register as having been effected on 13 July 2005.
[4] Mrs Wedding explains in her affidavit that contemporaneously with the transfer of Seaforth Avenue to the Trust, the Trust signed an acknowledgement of debt in favour of herself and the defendant for the agreed value of the property. It was intended that the debt would be reduced by means of a series of deeds of forgiveness of debt.
[5] Mrs Wedding explains in her affidavit that she and the defendant separated in November 2005, leaving her and her daughters residing in the property.
[6] On 14 June 2011 the defendant was adjudicated bankrupt. Annexed to Mrs Wedding’s affidavit is the New Zealand Gazette (issue number 86), dated 23 June 2011 formally notifying the defendant’s adjudication of bankruptcy on that date.
1 High Court rule 18.1(b)(viii).
[7] The defendant’s adjudication as a bankrupt engaged paragraph 24.1 and 24.2 of the deed which provides:
24.Disqualification of trustee or appointer
24.1Disqualification: When any trustee or any person holding a power of appointment and/or nomination under or derived through this deed:
(a)By any appointment or order made by a competent authority or by the operation of law has property beneficially owned by that trustee or other person removed from the personal effective control of that trustee or other person; or
(b)By any appointment or order made by a competent authority or by the operation of law has any aspect of the day to day care and wellbeing of that trustee or other person come under the control or the responsibility of another person; or from that time that trustee shall cease to be a trustee and that trustee and that other person shall not be capable of exercising any power or discretion whatever under this deed.
24.2No reinstatement: Any change in any order or circumstances which has disqualified any Trustee or other person under this clause shall not result in the removal of such disqualification and the reinstatement of the person concerned.
[8] Following the defendant’s bankruptcy the Official Assignee sought to recover the defendant’s interest as an unpaid creditor of the Trust. At that time a sum of
$218,000 was owed by the Trust to the defendant which represented his half share of the outstanding balance of the debt owed by the Trust following the transfer of Seaforth Avenue to the Trust.
[9] The Official Assignee and Mrs Wedding thereafter negotiated a resolution of the Official Assignee’s claim which required Mrs Wedding to apply her share of funds received from the liquidation of Group Four Limited, which company owned a unit in the Heritage Hotel subject to a mortgage to Westpac Bank. The shares in Group Four Limited were held by Mrs Wedding and the defendant.
[10] Mrs Wedding has exhibited to her affidavit correspondence between her solicitors and the Insolvency and Trustee Service of the Ministry of Business Innovation and Employment representing the defendant’s bankrupt estate. This correspondence establishes that on 26 July 2017 the Official Assignee confirmed settlement of the claim against the Trust for the defendant’s entitlement as a creditor of the Trust. In an email from the Insolvency and Trustee Service, dated 26 July 2017,
the senior solicitor for the Service wrote to Mrs Wedding’s solicitors, saying “I confirm that the debt that the trustees of the Askew Family Trust owed to David Askew is now settled”.
[11] Mrs Wedding states in her affidavit that at various times since her separation from the defendant, he told her that he did not want and would not claim any interest in Seaforth Avenue. She states that in 2017 the defendant agreed with her to transfer the property from his name but then failed to execute documentation to effect the transfer. She states that in early 2019 she advised the defendant that she wished to arrange for the Trust to sell the property, asking him to agree. However, he declined, indicating that he expected to receive a share of the sale proceeds if the property were to be sold.
[12] Mrs Wedding further states that while the defendant remains a beneficiary of the Trust, by reason of his bankruptcy he is no longer able to remain a trustee.
[13] On 30 July 2019 the Trust’s solicitors wrote to the defendant requesting him to sign documents necessary to effect a transfer of the property into the names of the plaintiffs. Enclosed with the letter were transfer documents with a request that they be executed and returned as soon as possible. Mrs Wedding states that the plaintiffs’ solicitors have received no reply from the defendant to their letter of 30 July 2019.
Discussion and decision
[14] The effect of the defendant’s bankruptcy on 14 June 2011 disqualified him from continuing as a trustee of the Trust. Pursuant to paragraph 24.1 upon being adjudicated bankrupt the defendant ceased to be a trustee of the Trust and was not capable of exercising any power or discretion whatsoever as a trustee or otherwise under the deed of trust.
[15]Section 52 of the Trustee Act 1956 relevantly provides:
Vesting 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; or
…
(g)where a trustee jointly or solely entitled to or possessed of any interest in land, or entitled to a contingent right therein, has been required, by or on behalf of a person entitled to require a conveyance of the land or interest or a release of the right, to convey the land or interest or to release the right, and has wilfully refused or neglected to convey the land or interest or release the right for 28 days after the date of the requirement:
…
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.
(2)Where any such order is consequential on the appointment of a trustee, the land or interest therein shall be vested for such estate as the court may direct in the persons who on the appointment are the trustees.
(3)Where any such order relates to a trustee entitled or formerly entitled jointly with another person, and that trustee is under disability or out of the jurisdiction of the court or cannot be found, or (being a corporation) has ceased to carry on business or is in liquidation or has been dissolved, the land, interest, or right shall be vested in the other person who remains entitled, either alone or with any other person that the court may appoint.
[16] I am satisfied that the defendant’s adjudication as a bankrupt disqualified him from continuing to hold office as a trustee of the Trust and as such meant that he was under a disability in terms of s 52(1)(b)(i) and 52(3). As paragraph 24.2 of the trust deed makes clear, any change in any order or circumstances which has disqualified any trustee shall not result in the removal of such disqualification or the reinstatement of that person as a trustee.
[17] The defendant has failed to cooperate by executing a transfer as requested by the plaintiffs notwithstanding that he has ceased to be a trustee of the Trust.
[18] In the circumstances I am satisfied that it is appropriate to make a vesting order vesting the Seaforth Avenue property in the names of the plaintiffs as trustees of the Trust.
[19]Accordingly I make the following orders:
(1)Pursuant to s 52 of the Trustee Act 1956 I make an order vesting all that parcel of land containing 657m2 more or less being lot two on Deposited Plan 112340 and being all the land comprised and described in Record of Title NA63A/1080 (North Auckland Registry) in the names of Suzanne Patricia Wedding and Raewyn Griffiths.
Costs
I make an order directing that the defendant pay to the plaintiffs the costs and disbursements of this proceeding in the sum $4,464.50 made up as follows:
Commencement of proceeding (1.6 x $1480) 2,368.00
Application for directions (0.3 x $1480) 444.00
Obtaining judgment without appearance (0.3 x $1480) 444.00
Sealing judgment (0.2 x $1480) 296.00
Disbursements
Filing fee on initiating document 540.00
Filing fee on application for directions 200.00
Service fee 172.50
Total costs and disbursements
3,552.00
912.50
$4,464.50
Paul Davison J
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