DEMPSEY v DEMPSEY [2020] NZHC 2251

DEMPSEY v DEMPSEY [2020] NZHC 2251 [1 September 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2020-404-001416[2020] NZHC 2251UNDER Part 19 of the High Court Rules and theTrustee Act 1956IN THE MATTER of the DEMPSEY FAMILY TRUSTBETWEEN MARY LYNNE DEMPSEY and SARAHJANINE KATZApplicantsAND EDWIN FRANCIS DEMPSEYRespondentHearing: On the papersJudgment: 1 September 2020JUDGMENT OF VENNING JThis judgment was delivered by me on 1 September 2020 at 9.00 am, pursuant to Rule 11.5 of theHigh Court Rules.Registrar/Deputy RegistrarDateSolicitors: Simpson Western, AucklandIntroduction[1] The Dempsey Family Trust (the Trust) was settled by Edwin Francis Dempsey(Ted) and Mary Lynne Dempsey (Lynne) in 2011. The original trustees were Ted,Lynne and their daughter Sarah Janine Katz (Sarah).[2] The applicants are the current trustees of the Trust. They have made thefollowing applications:(a) a without notice interlocutory application seeking:(i) permission of the Court to commence a proceeding by way ofan originating application under Part 19 of the High CourtRules; and(ii) an order dispensing with service of the originating applicationon Ted;(b) a substantive originating application seeking a vesting order pursuantto s 52(1)(b)(i) of the Trustee Act 1956, vesting property registered inthe names of the applicants and the respondent as trustees of theDempsey Family Trust in the applicants as remaining trustees,following the removal of Ted as a trustee.Background[3] The settlors' intention in establishing the Trust was to provide for both of themduring their life and three of their five children after their deaths. The principalbeneficiaries of the Trust are Ted, Lynne, and three of their children, Geoff,Christopher, and Tim. Their needs are greater than Ted and Lynne's other twochildren, Simon and Sarah. Tim's two children are also beneficiaries. Neither Geoffnor Christopher have children.[4] The principal property of the Trust is a property at Kawau Island currently inthe name of Ted, Lynne and Sarah as trustees. In addition the Trust has investmentsheld through the Milford Unit Trust PIE Funds. It owes a debt to Christopher, whichis recorded by an acknowledgement of debt.[5] Unfortunately Ted's health has deteriorated to the point where he has lostmental capacity. He was assessed by Dr Alexander Joseph Srzich on 18 February2020. Dr Srzich concluded that Ted was mentally incapable because he was notwholly competent to manage his own affairs in relation to his property. Ted suffersfrom a dementia, most likely a combination of Alzheimers disease and cerebrovasculardisease. He is now severely cognitively impaired. His condition will not reverse andhis cognition will not improve. Ted is currently in a secure dementia unit.[6] Prior to the deterioration in his health Ted appointed Sarah as his attorneypursuant to an enduring power of attorney in relation to property dated 1 November2017.[7] Following Dr Srzich's assessment, Sarah removed Ted as trustee of the Trustby deed dated 27 February 2020 in reliance on cl 16.3(b)(i) of the Trust Deed whichprovides that if a settlor is unable to act their power of removal is exercisable by theirattorney.[8] Ted and Lynne formerly lived at the Kawau Island property. Lynne has movedto Auckland to be closer to Ted and other family members. Simon and Tim haveagreed to purchase the Kawau Island property (above CV) to help finance the purchaseof a property at Mission Bay for Lynne to live in and in order to keep the Kawau Islandproperty within the family. Lynne and Sarah, the remaining trustees, would like tosettle the sale of the Kawau property and the purchase of the Mission Bay property on11 September 2020 if possible. The orders are sought to facilitate that.Permission to commence the application pursuant to Part 19[9] An application for an order pursuant to s 52(1)(b)(i) of the Trustee Act 1956 isnot referred to in rr 19.2, 19.3 or 19.4 as an application that can be brought pursuantto Part 19 of the High Court Rules. However, r 19.5(1) enables the Court to permitany proceeding to be commenced by an originating application under Part 19 in theinterests of justice. The permission may be sought without notice.1[10] The Court accepts that permission should be granted to commence theoriginating application under Part 19 as the application can properly be decided on theaffidavit evidence and it is in the interests of justice for permission to be granted.2[11] The Court also accepts it is appropriate to make an order dispensing withservice of the originating application on Ted. It is apparent from the report of DrSrzich that service would serve no purpose given his advanced dementia and lack ofmental capacity. Rather, service would likely confuse and upset him should thedocuments be served on him.[12] Nor is it necessary to serve the other beneficiaries or appoint counsel torepresent their interests. The orders do not change any of the beneficiaries' rights. Itis unnecessary to serve them.3 The Court also notes that Lynne has deposed that allthe children are aware of the circumstances giving rise to the current application andare supportive. On the information before the Court the sale of the Kawau Islandproperty is appropriate. The orders will facilitate the exchange of one real estate assetfor another.The vesting order[13] Section 52(1) of the Trustee Act 1956 permits the Court to make an ordervesting land or interest therein in any such person in any such manner and for any suchestate or interest as the Court may direct. One pre-requisite is where a trustee who ispossessed of any land or interest therein, either solely or jointly with any other person,is under a disability. In the present case although Ted is no longer a trustee, he remainsrecorded on the title to the Kawau property in his capacity as trustee.4 It is appropriateto make the substantive order sought.1 High Court Rule 19.5(2).2 Re Mead [2019] NZHC 497.3 Jones v Jones [2019] NZHC 3402 at [8]; and Smith v Walsh [2019] NZHC 3476 at [12].4 Trustee Act 1956, s 2(2) provides that: "For the purposes of this Act a person shall be deemed tobe under a disability while he is not of full age or full mental capacity".Result[14] The Court makes the following orders:(a) an order granting permission, pursuant to Rule 19.5 of the High CourtRules, to commence the originating application pursuant to Part 19 ofthe High Court Rules;(b) an order dispensing with service on the respondent, or on any otherparty;(c) an order pursuant to s 52(1)(b)(i) of the Trustee Act 1956 vesting theland situated at 8 Elizabeth Point Road, Kawau Island as described inthe application, in the names of Mary Lynne Dempsey and Sarah JanineKatz.__________________________Venning J