Whyte

[2020] NZHC 2922

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-002027

[2020] NZHC 2922

UNDER

The Trustee Act 1956 and Part 19 of the High Court Rules 2019

IN THE MATTER OF

an Application under s 51 and 52 of the Trustee Act to remove and appoint trustees and for a Vesting Order

BETWEEN

ROBERT BRUCE WHYTE

Applicant

Hearing:	On the papers
Counsel:	A P Miller for the Applicant
Judgment:	6 November 2020

JUDGMENT OF MUIR J

This judgment was delivered by me on 6 November 2020 at 3.00 pm, Pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:…………………………

Solicitors:

Lovegroves Lawyers, Auckland

RE WHYTE [2020] NZHC 2922 [6 November 2020]

Introduction

[1]The applicant, Robert Bruce Whyte (Robert), seeks orders:

(a)Granting leave pursuant to r 19.5 of the High Court Rules 2016 for these proceedings to be commenced by originating application.

(b)Dispensing with service of the application on James Bruce Whyte (James).

(c)Dispensing with the requirement for appointment of a litigation guardian for James.

(d)Removing James as a trustee of the Whyte–Galvan Family Trust (the Trust).

(e)Appointing Bruce Peter Jackson (Mr Jackson) of Auckland, chartered accountant, as a trustee of the Trust.

(f)Vesting title in a property at 2/8 Galvan Avenue, Pakuranga, Auckland being the land described in Identifier NA41C/320 in the names of Robert and Mr Jackson as trustees of the Trust.

Background

[2]        Robert is the sole surviving child of James and Anne Merle Whyte (Anne). His sister, Jennifer Alexandra Whyte (Jennifer), died between 2 March 2020 and 18 March 2020 (subject to Coroner’s findings). Anne died on 29 November 2002. James survives but is now 94 and cognitively disabled.

[3]        The Trust was formed by Declaration of Trust on 19 October 1994. Its purpose was essentially to provide a home for Jennifer who had a number of disabilities. The Trust subsequently acquired a property at 2/8 Galvan Avenue, Pakuranga where she lived until her death.

[4]        The Trust Declaration provided that, as from the period of distribution, the trustees would hold the trust fund to pay capital or income as the trustees determined for the benefit and maintenance of Jennifer until she died and thereafter any income was to be paid to Robert until he died with final subsequent distribution to the grandchildren of James and Anne. Jennifer did not have any children. Robert has two children, both of full age and capacity and who consent to the present applications. There are no other grandchildren.

[5]        The original trustees were James and Anne. Subsequent to Anne’s death the power of appointment of new trustees rested with James alone. The relevant clause also provided that Mr Jackson, James’ long term accountant, and Mr Graeme Neil Smith, his solicitor, were to become the trustees on the death of James and Anne. Their status was therefore that of the default trustees. In November 2005 the default trustees changed to Mr Donald Miles McIntosh and Robert.

[6]        In February 2011 a further Deed of Appointment provided for Jennifer to act as an additional default trustee and in October 2014 Mr Paul Joseph Wilson assumed the same role.

[7]        On 13 October 2020 Mr Wilson and Mr McIntosh both retired and Mr Jackson resumed trusteeship. The relevant Deed acknowledges that James has lost capacity to act as trustee and provides in cl 8:

The parties acknowledge that this Deed is subject to and conditional upon the High Court making Orders for the removal of James Bruce Whyte and for the appointment of Bruce Peter Jackson as a New Trustee.

[8]        Counsel advises that this clause was included at the behest of Mr McIntosh, mindful of the fact that, without an order of the Court, the appointment of any new trustee might be subject to challenge given the power of appointment arguably rests only with the incapacitated James at this stage.

The Galvan Avenue property

[9]        This property has a current QV of $815,000. The property is in disrepair and significant work is required to make it tenantable, particularly in light of current legislation.

[10]      The property continues to attract liabilities in the form of rates and insurance premiums. To date, the applicant has assumed responsibility for putting the property in a habitable condition.

[11]      Despite Anne’s death and James’ incapacity, the property remains registered in their names.

James’ health

[12]      I have been provided with medical certificates from Dr Denis Lee dated 21 June 2016 and from Dr Roderick Mulgan dated 8 September 2020. James currently resides in the private hospital area of the Grace Joel Village in St Heliers. He is unable to manage his own health and daily needs. He is described as “a frail man with short term memory loss and limited cognitive ability”. His deterioration is permanent. In Dr Mulgan’s opinion he does not have the ability to carry out the functions of a trustee. The earlier opinion of Dr Lee is to similar effect.

Proposed new trustee

[13]      Mr Jackson has been James’ accountant for decades and holds power of attorney for him. As indicated above, he is a former default trustee of the Trust.

[14]      The proposed addition of Mr Jackson as a new independent trustee provides further confidence in the appropriateness of the proposed orders.

Originating application

[15]      The proceeding is not one that can be commenced by originating application as of right pursuant to rr 19.2 – 19.4 of the High Court Rules. In the interests of justice, this Court may, however, permit any proceeding which is not so identified to be

commenced in that way. Permission to bring a proceeding under Part 19 may be sought without notice.1 I am satisfied that this is an appropriate case for the procedure. It has long been recognised that in respect of proceedings where there is in reality no opposing party and no need for detailed pleadings or interlocutory steps, the originating application procedure is particularly apposite.

[16]      I am further satisfied that service on James is appropriately dispensed with. I accept he would be unable to understand the purpose or effect of the proceedings. As an incapacitated person for the purposes of r 4.29 of the High Court Rules, ordinarily a litigation guardian would be appointed for him. However, I am satisfied in terms of r 4.30 that no such order is necessary or appropriate. The application does not affect James’ interests other than as trustee (a function he can no longer perform).

[17]      I also dispense with service on the beneficiaries of the Trust. The orders do not change any of the beneficiaries’ rights or affect the obligations owed by the trustees to the beneficiaries, nor do they affect the beneficiaries’ entitlements with respect to the Trust or its assets. I note in addition that both grandchildren consent.

Removal of James as a trustee

[18]      Under s 51 of the Trustee Act and in its inherent jurisdiction, the Court has the power to remove and replace trustees. Section 51(1) provides that the Court may appoint a new trustee when “it is expedient to [do so] and it is found inexpedient, difficult, or impracticable to do so without the assistance of the court”. The Court may make an order appointing a new trustee or trustees either in substitution for or in addition to the existing trustee or trustees.

[19]      I am satisfied that James is unable to carry out his duties as trustee and that he should be removed. Because the existing power to remove and appoint trustees is vested in him, it is necessary for the Court to provide its assistance to achieve this outcome. I am satisfied that his removal as a trustee both relieves him of a burden he is now unable to discharge and promotes the efficient administration of the Trust.2

1      Hayes v Hayes [2020] NZHC 569.

2      I note there is no application to remove him as ‘appointer’. In view of his deterioration and, presumably, limited life expectancy, I anticipate that this issue is largely academic. I have not

[20]      The terms of the application seek the appointment of Mr Jackson in substitution for James. No order is sought in respect of Robert, who became a default trustee in 2005. Because the terms of the Trust Deed provide that the role of default trustees applies only after the death of both James and Anne, I intend, albeit out of an abundance of caution, to similarly confirm the applicant’s position by order of this Court. By doing so, I remove any argument around his entitlement to act as trustee despite the fact James remains alive.

Vesting order

[21]Section 52 of the Trustee Act 1956 permits the Court to make vesting orders:

(1)Subject to the provisions of subsections (2) and (3) of this section, in any of the following cases, namely—

(a)where the court appoints or has appointed a trustee of any land or interest therein, or where a trustee of any land or interest therein has been appointed out of court under any statutory or express power:

(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

(ii)is out of the jurisdiction of the Court; or

(iii)cannot be found; or

(iv)being a corporation, has ceased to carry on business or is in liquidation or has been dissolved:

(c)where it is uncertain who was the survivor of 2 or more trustees jointly entitled to or possessed of any interest in land:

(d)where it is uncertain whether the last trustee known to have been entitled to or possessed of any interest in land is alive or dead:

(e)where there is no personal representative of a deceased trustee who was entitled to or possessed of any interest in land, or where it is uncertain who is the personal representative of a deceased trustee who was entitled to or possessed of any interest in land:

been addressed on whether the Court has jurisdiction to remove him from the role and what considerations might be engaged.

(f)where a deceased person was entitled to or possessed of any interest in land and his personal representative is under disability:

(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:

(h)where land or any interest therein is vested in a trustee whether by way of mortgage or otherwise, and it appears to the court to be expedient—

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.

[22]      Section 52(1)(b)(i) is directly apposite. Under s 2 a person is deemed to be under a disability when they do not have full mental capacity. I am satisfied that James’ incapacity prevents him from executing the documents necessary to achieve the transfer of properties or otherwise meaningfully participate in the Trust’s affairs.

[23]      Vesting orders are both necessary and appropriate to bring the identity of the current trustees into conformity with the registered position.

Result

[24]I make orders:

(a)Removing James Bruce Whyte as a trustee of the Whyte-Galvan Family Trust.

(b)Appointing Bruce Peter Jackson of Auckland, chartered accountant, as a trustee of the Whyte-Galvan Family Trust.

(c)To the extent his current status is arguably that of default trustee only, appointing Robert Bruce Whyte, of Auckland, retired, as a trustee of the Whyte-Galvan Family Trust.

(d)Vesting title to the property 2/8 Galvan Avenue, Pakuranga Auckland, being the land described in Identifier NA41C/320 in the names of Robert Bruce Whyte and Bruce Peter Jackson as trustees of the Whyte- Galvan Family Trust.

Costs

[25]No order as to costs arises on the application.

Muir J