MARTIN & ORS v OATES [2019] NZHC 356

MARTIN & ORS v OATES [2019] NZHC 356 [6 March 2019]IN THE HIGH COURT OF NEW ZEALANDTAURANGA REGISTRYI TE KŌTI MATUA O AOTEAROATAURANGA MOANA ROHECIV-2019-470-13[2019] NZHC 356IN THE MATTER of the Trustee Act 1956, sections 51 and 52ANDIN THE MATTER of the OATES FAMILY TRUSTBETWEEN LUKE STEEL MARTIN, ROBERTPARKINSON and CARL WILLIAMOATESApplicantsAND JEANETTE MARY OATESRespondentOn the papersAppearances: KJ Catran for the ApplicantsJudgment: 6 March 2019JUDGMENT OF TOOGOOD JThis judgment was delivered by me on 6 March 2019 at 5.00 pmPursuant to Rule 11.5 High Court RulesRegistrar/Deputy RegistrarIntroduction[1] Luke Steele Martin, Robert Parkinson and Carl William Oates (collectively,the applicants) and the respondent, Jeanette Mary Oates ("Mary"), are the trustees ofthe Oates Family Trust ("the Trust"), established by deed dated 9 March 2010. In thatcapacity they are the registered proprietors of a residential property in Point Chevalier,Auckland; namely, the land contained in CFR Identifier NA88A/327 North Auckland,being Flat 2 on Deposited Plan 147913 ("the Land"). It is valued at $1.2 million. Theother primary asset of the Trust is a portfolio of shares managed by Craigs InvestmentPartners and valued at approximately $10.2 million.[2] Mary is aged 88. Dr Andrew Coster, who is said by Mary's husband Carl tohave been her doctor for many years, says that Mary suffers from severe memoryimpairment and that she does not have the mental capacity to act in the capacity of atrustee of the Trust. Dr Coster's report is undated but I infer that it is recent and thatthe doctor's opinion is current.[3] The applicants seek orders removing Mary as a trustee of the Trust and vestingthe Trust property in the remaining trustees. To facilitate the making of the substantiveorders, the plaintiffs seek leave to commence the proceeding by way of an originatingapplication and an associated order that service of the proceedings on Mary bedispensed with.Application for leave to commence the proceeding by originating application anddirections as to service[4] This is not the type of proceeding that can be commenced by way of originatingapplication as of right pursuant to rr 19.2 to 19.4 of the High Court Rules 2016.However, the Court may, in the interests of justice, permit any proceeding notmentioned in rules 19.2 to 19.4 to be commenced by originating application. Suchpermission may be sought without notice.1 The applicants seek leave to bring thisproceeding as an originating application under Part 19 of the High Court Rules 2016,and they have asked that the application be determined on the papers without serviceon Mary or any other person.1 High Court Rules 2016, r 19.5.[5] The discretionary beneficiaries of the Trust are:(a) Carl and Mary;(b) Mary's son Shaun James McHugh, who is aged 64;(c) Shaun's sons Morgan Jack McHugh, aged 22, and Ryan JamesMcHugh, aged 24;(d) any not-for-profit organisation whose funds are applied to charitable,civic, philanthropic or similar purposes; and(e) any other beneficiary appointed by the settlors by deed. There is nonein that category.[6] Shaun, Morgan and Ryan consent to the making of the orders sought and donot require service. There is no point in serving the proceeding on Mary. Moreover,because the proceeding does not involve any disputed questions of fact and there is noopposing party, it is not necessary in the interests of justice for there to be aparticularised pleading or to follow the usual interlocutory steps involved in a civilproceeding.[7] I am satisfied, therefore, that it is appropriate that this proceeding proceed byway of originating application and that service of the proceeding be dispensed with.2Background[8] Carl and Mary were the settlors of the Trust. Clause 17.1 of the deed providesthat each of the settlors has the power to appoint trustees and to remove every trusteeappointed by the settlor. They are deemed by the clause to have appointed themselvesas trustees. It follows that only Mary has the power under the deed to remove herselfas a trustee. The plaintiffs ask the Court to intervene.2 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] and [6].Removal of a trustee without substitution[9] No authority is cited for the removal of Mary as trustee by order of the Courtin the present circumstances. There is authority for removal in s 51(1) of the TrusteeAct 1956 which provides:The Court may, whenever it is expedient to appoint a new trustee or newtrustees, and it is found inexpedient, difficult, or impracticable so to dowithout the assistance of the Court, make an order appointing a new trustee ornew trustees, either in substitution for or in addition to any existing trustee ortrustees, or although there is no existing trustee.[10] I am satisfied that, given Mary's incapacity, the assistance of the Court toremove her is expedient but, since the other trustees remain competent to administerthe Trust's affairs, and there is no requirement in the trust deed for more than threetrustees, the appointment of a new trustee is not sought. It follows that the power ofremoval in s 51(1) cannot apply.3 However, the Court may exercise its inherentjurisdiction to order the removal of a trustee without substitution.4 This jurisdiction isancillary to the Court's principal duty to see that a trust is properly executed.5 The useof the power to remove is appropriate in this case.Vesting of property[11] Section 52(1)(b)(i) of the Trustee Act permits the vesting of land or interesttherein, in any such person or any such manner as the Court may direct, where a trusteeentitled to or possessed of land, either solely or jointly with another person, is underdisability. Section 2(2) of the Act provides that "a person shall be deemed to be undera disability while he [or she] is not of full mental capacity".[12] With the removal of Mary as a trustee, the Trust assets (including the Land andthe shares) will remain in the ownership of the remaining trustees. No order of theCourt is required for that purpose. An order vesting the Land in the current trustees isexpedient, however, because Land Information New Zealand will not recognise theirownership of the Land without it.3 Anderson v Anderson [2013] NZHC 1767, (2013) 3 NZTR 23-008.4 Wallace v Naknok [2012] NZHC 382, (2012) 3 NZTR 22-005 at [7].5 Hunter v Hunter [1938] NZLR 520 (CA) at 529; cited with approval in Powell v Powell [2015]NZCA 133, (2015) 4 NZTR 25-020 at [47].Direction to Registrar-General of Lands to record change of ownership[13] The relief sought includes an order directing the Registrar-General of Lands torecord the change of ownership brought about by the making of the vesting ordersought. The Registrar-General has not been served with the proceeding and the Courtwould not issue such a direction without notice. But, in any event, such an order isnot necessary to achieve the plaintiffs' purposes. The Court is aware that the Registrar-General routinely accepts Court orders vesting properly identified land in trustees assufficient proof of ownership to record appropriate changes to certificates of title.Indeed, many applications are made to this Court because the Registrar-General hasrequired trustees in similar circumstances to apply for an order. I decline that relief.Findings and orders[14] I am satisfied on the affidavit evidence filed that:(a) Mary no longer has the capacity to fulfil her duties as registeredproprietor or to facilitate the transfer of the title in the Land to thecurrent trustees.(b) Mary should be removed as a trustee.(c) The Land should be vested in the remaining trustees under s 52 of theTrustee Act.[15] Accordingly, I order:(a) The proceeding may be commenced by originating application underPart 19 of the High Court Rules 2016 and service of the proceeding onany person shall be dispensed with.(b) Jeanette Mary Oates is removed as a trustee of the Oates Family Trust.(c) Under s 52(1)(h) of the Trustee Act 1956, the land contained inCFR Identifier NA88A/327 North Auckland, being Flat 2 on DepositedPlan 147913, shall be vested in Luke Steele Martin, Robert Parkinsonand Carl William Oates and held by them as trustees of the OatesFamily Trust....................................................Toogood J