SAVAGE v PAUL [2020] NZHC 364

SAVAGE v PAUL [2020] NZHC 364 [3 March 2020]IN THE HIGH COURT OF NEW ZEALANDROTORUA REGISTRYI TE KŌTI MATUA O AOTEAROATE ROTORUA-NUI-A-KAHUMATAMOMOE ROHECIV 2019-463-000100[2020] NZHC 364IN THE MATER OF an application under Part 19 of the HighCourt Rules and the Trustee Act 1956BETWEEN MOLLY TE AUE SAVAGE, TRACEYWALTERS and DANIELLA TEREU asTrustees of the NEREHANA WHANAUTRUSTApplicantsAND LEONARD GERRADE PAULFirst RespondentAND BEVERLEY MARINA PAULSecond RespondentHearing: In Chambers(on the papers)Counsel: N N Geiger for the ApplicantsJudgment: 4 March 2020JUDGMENT OF GWYN JThis judgment was delivered by me on 04 March 2020 at 3.00pmPursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors:D G Law, AucklandProcedural history[1] The history of this matter is comprehensively set out in the Minute ofFitzgerald J dated 24 October 2019 and I do not repeat it here.[2] When the matter came before her, Fitzgerald J was not prepared to determinethe application for leave to commence the proceeding by way of an originatingapplication under Part 19 of the High Court Rules 2016 on a without notice basis. HerHonour directed that it should proceed on notice and made directions for service.[3] Subsequently Associate Judge Andrew was satisfied that appropriate service ofthe proceedings had been effected. He granted leave to apply for orders as sought inthe substantive application by way of originating application under r 19.5 of the HighCourt Rules.1 The Judge referred the question of the substantive relief sought to aJudge of the High Court for determination, expressing doubt as to whether, as anAssociate Judge, he had jurisdiction to grant the substantive relief.Orders sought[4] I have considered the substantive application on the papers. The applicationseeks orders:(a) for the removal of Beverley Marina Paul as a trustee of the NerehanaWhanau Trust (NWT);(b) for the appointment of Gary Tuteiti Paul as a new trustee of the NWTunder s 51 of the Trustee Act 1956;(c) vesting the land described in Certificate of Title SA35A/506 (theproperty) in the applicants, namely Molly Te Aue Savage, TraceyWalters, Daniella Tereu and Gary Tuteiti Paul, as joint tenants;21 Minute of Associate Judge PJ Andrew, 20 February 2020.2 The original application sought that the land be vested in the applicants as tenants in common.After I had considered the application counsel for the applicants advised this was an error and thatthe application should have sought that the property be vested in the applicants as joint tenantsand sought to amend the application accordingly. I allowed the amendment pursuant to r 1.9 ofthe High Court Rules.(d) any ancillary orders necessary to vest the property in the current andnewly appointed trustees of the NWT; and(e) that the costs of and incidental to these proceedings be met by thetrustees of the NWT.[5] In addition to the Originating Application and the Memorandum of Counsel inSupport, I have before me the following affidavits in support of the application:(a) Affidavit of Tracey Walters. Ms Walters is one of the trustees of theNWT and the second named applicant. Her affidavit is given on behalfof all the trustee applicants.(b) Affidavit of Gary Tuteiti Paul, one of the final beneficiaries under theNWT and the proposed new trustee.(c) Affidavit of Peter Joffre Paul, one of the final beneficiaries under theNWT.(d) Affidavit of Tewhata Nelson Paul, one of the final beneficiaries underthe NWT.(e) Affidavit of Andrew William Paul, one of the preferred beneficiariesunder the NWT and the proposed purchaser of the property.[6] Ms Walters' affidavit sets out the history of the matter. All of the otherdeponents give their support for the orders sought.[7] The applicants, together with the second respondent, Beverley, are the currenttrustees of the NWT. The second respondent, Leonard, is Beverley's son.Background[8] Ms Tracey Walters' affidavit contains a comprehensive background to theNWT and the acquisition and subsequent holding of the property. As the affidavit setsout, it was originally intended that the trustees of the NWT would purchase theproperty. It was the place where they had all grown up and they wanted to own it, forsentimental reasons.[9] At that stage (in 2011) none of the trustees was in a position to obtain a loan topurchase the property. Leonard was earning a high wage at the time and was in aposition to qualify for a loan. Accordingly it was decided that Leonard would proccedto obtain a bank loan and purchase the property.[10] On 11 May 2011 a Deed of Trust (the Property Deed) was entered into betweenLeonard as the Trustee and the NWT trustees as beneficiaries. The key provisions ofthe Property Deed were:(a) Leonard was to hold the property on trust for the preferred and finalbeneficiaries of the NWT;(b) the property was to be registered in Leonard's name;(c) until the property was transferred to the NWT trustees, Leonard was todeal with the property as the trustees required;(d) the NWT trustees were to provide the funds for the purchase of theproperty and for all outgoings on the property;(e) nothing in the Property Deed entitled Leonard to beneficial ownershipof the property; and(f) Leonard was to transfer the property, at the cost of the trustees, as andwhen the trustees requested him to do so.[11] The intention of the trustees was that after two years they would be in a positionto transfer the registered ownership of the property back to the NWT and then sell itto either Andrew or Beverley Paul and continue to assist family members to own theirown homes.[12] On or about 20 May 2011 Kiwibank Limited granted mortgage finance toLeonard and the property was purchased and registered in his name.[13] There was a tenancy agreement put in place for the property, between Andrewand Beverley on the one hand and the trustees on the other. Under the agreementAndrew and Beverley shared equally the rent and any expenses associated with theproperty, with the rent payable to the NWT. The NWT made the mortgage payments.[14] In or about January 2012 Beverley stopped paying her share of the rent andother payments and left the property. Her whereabouts was not known. Andrewcontinued making all of the payments by himself.[15] Attempts to contact Beverley to discuss the rent arrears led to a hui on 25 June2012, with Beverley, Andrew, Tracey and three kaumātua. No resolution was reachedat the meeting and Tracey has not seen Beverley since. She does not know where shelives.[16] On 1 March 2017 the trustees placed a caveat on the title of the property toprotect the NWT's interests.[17] On 26 August 2017 another hui was called by Beverley and Leonard, butneither attended. At the hui the trustees resolved to reduce the number of trustees ofthe NWT from seven to four. The other trustees wanted Beverley to resign, becauseshe was not active as a trustee and they did not know her whereabouts. A letter ofresignation was prepared for her, but because the trustees do not know how to contacther, she has not received or signed it. As a consequence Beverley remains a signatoryon the NWT's bank account with Kiwibank.[18] Andrew and his wife are now living at the property and the trustees want tosell it to Andrew. Andrew confirms that he has lived at the property for the entire timethe NWT has had the property in a trust.[19] Leonard has never lived at the property and has never contributed to themortgage or other payments associated with the property. He did take out a $5,000loan, secured on the property, which he has not repaid.[20] On 9 July 2019 Leonard wrote to the trustees, saying he wanted to negotiatean "exit plan" and agree a payment to him for establishing the loan to buy the property.[21] On 1 August 2018 the NWT's lawyers wrote to Leonard enclosing a Notice ofInstructions (pursuant to cls 2.3 and 8 of the Property Deed) and an agreement for saleand purchase of the property between Leonard and Andrew, with the proceeds of thesale to be payable to the NWT.[22] Subsequently Tracey personally delivered the Notice of Instructions and aResolution of the Trustees, which recorded their intention to transfer the property toAndrew for $130,000, to Leonard's last-known address.[23] The NWT trustees have been unable to locate Beverley or Leonard. Traceystates that Leonard appears to be on the run from the Police. It seems that he has giventhe property as his bail address.3[24] On 16 October 2019 Leonard and Beverley both turned up at the property andconfronted Andrew and his wife. Beverley caused some damage to the property. ThePolice dealt with the matter.[25] Other than her appearance at the property on 16 October 2019, the trusteeshave not seen Beverley and do not know her location. She has had no involvementwith the NWT since 2012.Outcome[26] It is clear from the background set out above that at the time of purchase of theproperty it was intended by all parties, including Leonard and Beverley, that theproperty would be beneficially owned by the trustees of the NWT and that Leonard3 Andrew confirms that is his understanding in his affidavit.would have no beneficial interest in it. The subsequent conduct of the parties (otherthan Leonard unilaterally securing a $5,000 loan against the property and giving theproperty as his bail address) is entirely consistent with that intention.[27] It is also clear that Beverley has not been available or willing to carry out herduties as trustee of the NWT since 2012.[28] The factual basis on which the application has been made has not been disputedby Beverley, the trustee whose removal is sought, or by Leonard, despite (substituted)service having occurred.Removal and appointment of trustee[29] I have concluded that it is appropriate to exercise the Court's power under s 51of the Trustee Act 1956 (the Act). The circumstances of this case come within s 51(1)in that it is expedient to appoint a new trustee, and it is inexpedient, difficult orimpracticable for the trustees to do so without the assistance of the Court, and to makean order appointing a new trustee in substitution.4 Although the situation in this caseis not captured by any of s 51(2)(a)–(e), those specific grounds do not limit thegenerality of the Court's discretion under s 51(1).5Vesting order[30] As to the order sought under s 52 vesting the property in the applicants, this isa case that comes within s 52(1)(h) of the Act, being a case "where land or any interesttherein is vested in a trustee whether by way of mortgage or otherwise, and it appearsto the Court to be expedient" to make an order vesting the land or interest in any suchperson in any such manner and for any such estate or interest as the Court may direct.6Orders[31] I grant the following orders:4 "Expedient" sets a lower threshold than "necessary": R v Leitch [1998] 1 NZLR 420 (CA), at 428–429.5 See Chris Kelly and Greg Kelly Garrow and Kelly Law of Trusts and Trustees (7th ed, LexisNexis,Wellington 2013) at [16.98].6 See Hood v Burnes (HC Hamilton CP 53/00, 12 December 2000).(a) Beverley Marina Paul is removed as a trustee of the Nerehana WhanauTrust;(b) Gary Tuteiti Paul is appointed as a new trustee in substitution;(c) the land described in Certificate of Title SA35A/506 is vested in theapplicants, namely Molly Te Aue Savage, Tracey Walters, DaniellaTereu and Gary Tuteiti Paul as joint tenants;(d) the costs of and incidental to these proceedings are to be met by thetrustees of the Nerehana Whanau Trust.[32] The trustees, being the current and newly appointed trustees of the NerehanaWhanau Trust, have leave to return to this Court to seek ancillary orders if any arenecessary to vest the property in the Nerehana Whanau Trust.______________________Gwyn J