RUSH v RUSH [2019] NZHC 3240

RUSH v RUSH [2019] NZHC 3240 [10 December 2019]IN THE HIGH COURT OF NEW ZEALANDDUNEDIN REGISTRYI TE KŌTI MATUA O AOTEAROAŌTEPOTI ROHECIV-2019-412-000105[2019] NZHC 3240UNDER the Court's Inherent Jurisdiction andSections 51 and 52 of the Trustee Act 1956IN THE MATTER of an application to remove a trustee,appointing a replacement trustee and to vestland in the continuing trusteesBETWEEN FAY ELLEN RUSH as trustee of the Fay &Len Rush Family TrustApplicantAND LEONARD GEORGE RUSHRespondentHearing: Determined on the PapersCounsel: F Barton and H Scott for ApplicantJudgment: 10 December 2019JUDGMENT OF ASSOCIATE JUDGE PAULSENThis judgment was delivered by me on 10 December 2019 at 10.00 ampursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors:Anderson Lloyd, DunedinBackground[1] This is an example of what has become a common application for the removalof a trustee of a family trust who is suffering from dementia, the appointment of a newtrustee and a vesting order of trust property in the continuing and new trustee.[2] The case concerns the Fay & Len Rush Family Trust (the Trust). On 1 July1990, Leonard George Rush (Len) and Fay Ellen Rush (Fay) settled the Trust. Lenand Fay, along with Geoffrey Thomas (a Dunedin solicitor), were the original trustees.The beneficiaries of the Trust are Len and Fay, their children and grandchildren.[3] Geoffrey Thomas resigned as a trustee some time ago and Len and Fay havecontinued as trustees.[4] The Trust Deed provides that Fay and Len may jointly exercise the power toappoint and discharge trustees but that the number of trustees shall not be reducedbelow two.[5] Len and Fay (as trustees) hold a property at 8 Reid Avenue, Mosgiel which isdescribed in Certificate of Title OT370476. The property, until recently, has beenLen's and Fay's home.[6] Len suffers from dementia and no longer has capacity to make decisions abouthis health, welfare, property and finances. Len and Fay moved to the Brooklands LifeCare Retirement Village at Mosgiel in August 2019.[7] Fay has brought this proceeding to remove Len as a trustee and appoint LyndaJoy Willsman (Lynda) as a replacement trustee. Lynda is a daughter of Len and Fay.Fay also seeks an order vesting the Trust property in herself and Lynda as the new andcontinuing trustees of the Trust.[8] It is submitted that the orders sought are necessary to allow the efficientadministration of the Trust and the exercise of powers conferred on the trustees. Theintention is to sell the Reid Avenue property and make funds available for Len'sresidential and personal care.[9] Following a request by me, Counsel filed a memorandum advising that Lenand Fay have two children, namely Lynda and Debra Leigh Butterick (Debra). Debrahas given her consent to this application.The applications[10] Fay has applied for orders:(a) for leave to bring this proceeding by way of originating application;(b) dispensing with service of the application on Len and the beneficiariesof the Trust;(c) dispensing with the appointment of a litigation guardian to represent Lenunder r 4.30 of the High Court Rules 2016;(d) removing Len as a trustee; and(e) vesting the Trust property in Fay and Lynda.Administrative mattersOriginating application[11] It is now established practice that applications of this type, which do not raisedifficult issues, are unopposed and do not require particularised pleadings orinterlocutory steps, are suitable to be commenced by way of originating application. Igrant leave to make application in that way.Litigation guardian[12] Fay seeks an order that the requirement that Len have a litigation guardian isdispensed with. For reasons that follow, Len is an incapacitated person for thepurposes of the proceedings.11 High Court Rules 2016, r 4.29.[13] There is evidence concerning Len's mental condition in the affidavit of Lyndaand in the medical certificate of Dr Alan Mawhinney. Len has been underDr Mawhinney's care since he moved to Brooklands Retirement Village andDr Mawhinney confirms:(a) his qualifications as a medical practitioner and that his scope of practiseincludes assessment of cognitive capacity;(b) Len suffers from dementia;(c) Len has impaired cognitive function;(d) there is no prospect that Len will regain his former mental capacity;(e) Len is not capable of making decisions concerning his health, welfareor property;(f) Len would not understand this proceeding and would likely react withconfusion and anxiety if notified and required to participate; and(g) Len would be unable to understand any advice given by a solicitor inrelation to the proceeding, the purpose of the proceeding or foresee anyconsequence of any order that is made.[14] I am satisfied that Dr Mawhinney is in a position where he would have had allthe necessary information to reach the conclusions he has made concerning Len'scondition and capacity.[15] Given Len's incapacitated status, r 4.30 requires him to have a litigationguardian unless the court orders otherwise. Fay has sought an order that Len does notrequire a litigation guardian. The grounds put forward in support are that theapplication relates to a routine matter and arises for the sole reason of Len's dementiaand Len's interests are not affected. All that is occurring is that Len is being removedas a trustee, which is a position and responsibility he is incapable of fulfilling.[16] I accept those submissions and I take guidance from Docherty v Docherty2 andCade v Cade.3[17] On the information before me I can see no sensible basis upon which it can beargued that Len should remain as a trustee. Len's interests are not otherwise beingaffected by the application. He will remain a beneficiary of the Trust. The purpose ofthe application is to provide funds for his care. Furthermore, the appointment of alitigation guardian will serve no purpose as Len will not be able to provide anyinstructions nor understand any advice that he might be given. In those circumstancesan order dispensing with the requirement of a litigation guardian is appropriate.Service[18] Fay seeks an order that service upon Len and the beneficiaries be dispensedwith. Given my findings that Len is an incapacitated person and that no litigationguardian need be appointed, I consider an order dispensing with service upon him isappropriate.[19] Also, given the nature of the proceedings, and the facts that Fay is the applicant,the two children of Fay and Len consent to this application, and that their children arethe only other beneficiaries, I consider that an order dispensing with service on thebeneficiaries is also appropriate.Removal of Len as trustee[20] I am satisfied that Len is unable to carry out his role as a trustee. It isappropriate in those circumstances to make an order removing him as a trustee. Thecourt has the power to make such an order under s 51 of the Trustee Act 1956. Thecourt also inherent power to remove a trustee.4[21] Len's removal will relieve him of the burden of the trusteeship and promotethe efficient administration of the affairs of the Trust.2 Docherty v Docherty [2013] NZHC 1885.3 Cade v Cade [2016] NZHC 1624.4 Anderson v Anderson [2013] NZHC 1767.Appointment of Lynda as trustee[22] Under s 51 the court may appoint a new trustee either in substitution for or inaddition to an existing trustee. In this case, upon Len's removal there is a need toappoint an additional trustee as the Trust Deed requires that the trustees must not bereduced below two.[23] Fay applies to appoint Lynda as a trustee in substitution for Len. Lynda hasfiled an affidavit confirming that she:(a) can carry out the role of a trustee;(b) has a good relationship with all beneficiaries of the Trust;(c) will not promote the interests of any one or more beneficiaries of theTrust over the others; and(d) would promote the execution of the Trust.[24] There is nothing to suggest that Lynda is not an appropriate person to beappointed as a trustee. Debra consents to her appointment. It is appropriate in thosecircumstances that Lynda be appointed as a trustee.Vesting order[25] Under s 52 of the Trustee Act 1956, the court has the power to make vestingorders of land. Two provisions are relevant here. Section 52(1)(a) provides the courtwith power to make a vesting order where the court has appointed a trustee of anyland. Section 52(1)(b)(i) provides the court with the power to make a vesting order inany such person that it may direct where a trustee entitled to or possessed of any landor interest therein, either solely or jointly with any other person, is under a disability.[26] Having removed Len as a trustee and appointed Lynda to replace him, andgiven the need to ensure Fay and Lynda are able to deal with the Reid Avenue propertyin accordance with their duties as trustees, I am satisfied that the vesting order soughtis appropriate.Result[27] There will therefore be orders that:(a) the application be dealt with as an originating application;(b) service of the application is dispensed with;(c) I dispense with the appointment of a litigation guardian to representLeonard George Rush;(d) Leonard George Rush is removed as a trustee of the Fay & Len RushFamily Trust;(e) Lynda Joy Willsman is appointed as a trustee of the Fay & Len RushFamily Trust in substitution for Leonard George Rush;(f) the residential property at 8 Reid Avenue, Mosgiel described inCertificate of Title OT370476 registered in the names of Fay Ellen Rushand Leonard George Rush be registered in Fay Ellen Rush and LyndaJoy Willsman as trustees of the Fay & Len Rush Family Trust.[28] No order for costs was sought or is made.[29] I reserve leave to Fay and Lynda to apply for any further directions that maybe required to give effect to these orders._______________________O G PaulsenAssociate Judge