Winwood v Winwood

[2015] NZHC 946

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

CIV-2015-425-000037 [2015] NZHC 946

UNDER	an application for a vesting order
BETWEEN	RALPH GILBERT WINWOOD, ALAN RAYMOND MACDONALD AND GAYNOR CAROLE KERR AS TRUSTEES OF THE WINGILL TRUST Plaintiff
AND	MARGARET WINIFRED WINWOOD Defendant

(Determined on the papers)
Appearances:	RJB Bannerman for the Plaintiffs
Judgment:	6 May 2015

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

as to vesting of trust property

Introduction

[1]      The defendant, Margaret Winwood, has been a trustee of the Wingill Trust

(the Trust) since Neil Pritchard settled it by deed of trust (the Trust deed) on 23 June

1997. In 2009, Mrs Winwood suffered a brain haemorrhage which left her permanently mentally incapacitated. For this reason, the Trust has been unable to function, as the trustees must act unanimously.

[2]      Clause 13 of the Trust deed vests jointly in Mrs Winwood and her husband, Ralph Winwood (the Appointors), the power to remove any trustee without being obliged  to  give  reasons  and  the  power  to  appoint  new  trustees.  Due  to  Mrs Winwood’s mental incapacity, the Appointors have been unable to exercise their

joint power of appointment and removal of trustees.

WINWOOD v WINWOOD [2015] NZHC 946 [6 May 2015]

[3]      Section 43(1) Trustee Act 1956 provides that where a trustee is unfit to act as a trustee, or incapable of so acting:

… the person nominated for the purpose of appointing new trustees by the instrument (if any) creating the trust, or if there is no such person or no such person able and willing to act, then the surviving or continuing trustees for the time being … may by deed appoint a person or persons … to be a trustee or trustees in the place of the appointment of the first-mentioned trustee.

[4]      Pursuant to that provision, Mr Winwood and Alan Macdonald, as continuing trustees of the Trust, removed Mrs Winwood as a trustee and replaced her with her daughter, Gaynor Kerr. This was effected by deed dated 12 January 2015, on the basis that Mrs Winwood’s medical condition rendered her unfit to act as a trustee.

The orders sought

[5]      The plaintiffs are the continuing and newly appointed trustees of the Trust. They seek orders under s 52(1)(a) Trustee Act to vest the property owned by the Trust (the Trust property) in the plaintiffs as current trustees.

[6]      The plaintiffs also seek directions as to service, including orders dispensing with service of the proceedings on Mrs Winwood or any other person. Further, the plaintiffs seek an order that no directions be made with regard to Mrs Winwood’s representation.

The application to dispense with service

On Mrs Winwood

[7]      An order to dispense with service may be made under r 6.8(c) High Court Rules. That provision applies to circumstances in which the document has already come to the knowledge of the person to be served or it cannot be served.

[8]      As I noted in similarly sombre circumstances in Grazier v Grazier, the issue in this case is not whether service can be effected on Mrs Winwood or whether she

has been otherwise notified of the proceeding, “but rather the negative and meaningless effects of such service” upon her.1

[9]      In relation to Mrs Winwood’s condition, the plaintiffs rely on the affidavit of her husband.  Mr Winwood deposes that, as a result of his wife’s medical condition, she is unable to participate in any decision making regarding the Trust.

[10]     Annexure “B” of Mr Winwood’s supporting affidavit is a report of Dr Glenys Weir (in application for property and welfare orders), dated 27 November 2014.  Dr Weir  has  been  Mrs Winwood’s  general  practitioner  for  over  20  years.  Her  last examination occurred on 26 November 2014. Dr Weir deposes that Mrs Winwood suffers from severe dementia and cerebrovascular disease. A severe stroke in 2010 caused  weakness  on  one  side  of  the  body  and  significant  loss  of  cognitive functioning. Dr Weir deposes that Mrs Winwood lacks competence to manage her own affairs in relation to property, and lacks capacity to understand the nature and foresee the consequences of decisions relating to her own personal care and welfare. In both instances, this incapacity is total. Mrs Winwood is wholly unable to communicate her own decisions relating to property or welfare.

[11]     Dr Weir further states that Mrs Winwood is totally dependent on fulltime care, and has recently been reassessed as requiring maximum dementia care. According  to  Dr  Weir,  it  is  not  possible  that  Mrs  Winwood  might  recover competence. Dr Weir assessed Mrs Winwood as being unable to participate in these proceedings, and recommended the appointment of a welfare guardian in relation to decisions relating to personal health and business affairs. She also recommended the appointment of a property manager in respect of the Trust.

[12]     Mr Winwood adds that his wife is currently receiving full-time care in a residential home and hospital facility. Her children are managing her affairs pursuant to an enduring power of attorney for property under the Protection of Personal and Property Rights Act 1988, dated 26 July 2006. In reliance upon Dr Weir’s report and

the level of his wife’s incapacity, Mr Winwood’s affidavit concludes with his belief

1      Grazier v Grazier [2014] NZHC 3058 at [8].

that Mrs Winwood would be unable to understand the nature of these proceedings and that serving proceedings on her would serve no useful purpose.

[13]     I am satisfied, having regard to the affidavit evidence of Mr Winwood and to Dr Weir’s report that Mrs Winwood’s condition is such that she would not be able to rationally understand the nature or purpose of these proceedings or to meaningfully participate in the decision-making of trustees.

[14]     Just as Associate Judge Bell concluded in Docherty v Docherty, this is an appropriate case for service to be dispensed with, as it would serve “no useful purpose.”2 In reliance upon the inherent jurisdiction of the Court to regulate its own process and proceedings, an order will be made dispensing with service.3

On third parties

[15]     Mrs   Winwood’s   three   children   are   all   either   final   or   discretionary beneficiaries of the Trust. One daughter, Gaynor Kerr, has notice of this proceeding as the newly appointed trustee of the Trust. Mrs Winwood’s son, Barry Winwood, may be presumed to have knowledge of this application, as he is exercising enduring powers of attorney in relation to her property alongside Gaynor Kerr.

[16]     The issue for me to resolve is whether another of Mrs Winwood’s daughters, Janis Double, should be issued with the proceedings as a person who is “interested in, or may be adversely affected by, the relief sought by the plaintiffs”.4 Janis Double is not mentioned in Mr Winwood’s affidavit in support, except insofar as she is listed as a discretionary beneficiary in the Trust deed.5

[17]     In Wethey v Wethey, Nation J considered the same issue in circumstances

where an original trustee had been incapacitated by Alzheimer’s disease, and the continuing trustees sought vesting orders following his removal and replacement as a

2      Docherty v Docherty [2013] NZHC 1885 at [33]; cited with approval in Grazier v Grazier

[2014] NZHC 3058 at [14].

3      See IH Jacob “The Inherent Jurisdiction of the Court” (1970) Current Legal Problems 23 at 32

— 40.

4      High Court Rules, r 18.7.

5      Affidavit of Ralph Gilbert Winwood, Annexure “A”, Deed of Trust, cl 1(g)(ix).

trustee.6  Nation J dispensed with service on a beneficiary residing in the United States who had vehemently opposed the appointment of new trustees and sought to be appointed in lieu of one of the new trustees. His Honour held:7

On the information that has been made available to the Court I am satisfied that the beneficiaries of the Trust are not, as beneficiaries, parties who are interested in, or who may be adversely affected by the relief sought by the plaintiffs.  The  orders  sought  merely  give  effect  to  the  appointments  of trustees which have already been made. The information available does not suggest there is likely to be any challenge to those appointments or that such a challenge would be successful. The vesting of title in the presently appointed trustees will not change any of the beneficiaries' rights in respect of the appointments which have already been made. Nor will the vesting orders  sought  affect  the  obligations  which  the  trustees  have  to  all beneficiaries or the rights or entitlements which beneficiaries have in respect of the trustees or Trust property.

[18]     On that basis, I do not consider Janis Double needs to be given notice of the proceedings.

[19]     Service of the proceedings is not required to be made on any other person.

Representation

[20]     I am further satisfied that no directions need to be made with regard to representation  of the defendant.8   Dr Weir’s  report  clearly indicates  that,  were a solicitor appointed to represent Mrs Winwood, she would be unlikely to understand either the nature of that advice or the purpose of these proceedings.

Vesting orders

[21]     Under s 52(1)(a) Trustee Act, the Court may vest land in trustees where they have been validly appointed as such.

[22]     The continuing trustees are registered as proprietors of a 1457 m2 property at

4 Denton Street, Gore – Lot 1 Deposited Plan 5289, contained in Certificate of Title

SL198/116  (the  Property).  Given  the  need  to  recognise  the  appointment  of  the

6      Wethey v Wethey [2015] NZHC 493.

7 At [19].

8      High Court Rules, r 4.30.

current trustees and to ensure the trustees can deal with the Property in accordance with the Trust deed, the vesting orders sought are appropriate. Such orders will be made.

Costs

[23]     The parties have not sought costs. I make no order.

Orders

[24]     I direct:

(a)      Service  of  this  proceeding  on  Margaret  Winifred  Winwood  is dispensed with.

(b)Service of the proceedings is not required to be made on any other person.

(c)      In accordance with r 4.30(1) High Court Rules, Mrs Winwood does not require a litigation guardian for this proceeding.

(d)The property at 4 Denton Street, Gore – Lot 1 Deposited Plan 5289, contained  in  Certificate  of  Title  SL198/116  –  is  vested  in  Ralph Gilbert  Winwood,  Alan  Raymond  Macdonald  and  Gaynor  Carole Kerr.

(e)       There is no order as to costs.

Associate Judge Osborne

Solicitors:

Bannermans Lawyers, Gore