POLSON McMILLAN TRUSTEE COMPANY NO. 1 LTD as trustee of the LESLIE LUMSDEN FAMILY TRUST v LUMSDEN [2020] NZHC 1095

POLSON McMILLAN TRUSTEE COMPANY NO. 1 LTD as trustee of the LESLIE LUMSDEN FAMILYTRUST v LUMSDEN [2020] NZHC 1095 [22 May 2020]IN THE HIGH COURT OF NEW ZEALANDDUNEDIN REGISTRYI TE KŌTI MATUA O AOTEAROAŌTEPOTI ROHECIV-2019-412-000107[2020] NZHC 1095UNDER the Trustee Act 1956 and Part 19 of the HighCourt Rules 2016IN THE MATTER of an application under sections 51 and 52 ofthe Trustee Act 1956 to remove and appointtrustees and for a vesting order of landBETWEEN POLSON McMILLAN TRUSTEECOMPANY NO. 1 LIMITED as trustee ofthe LESLIE LUMSDEN FAMILY TRUSTApplicantAND LESLIE JOAN LUMSDENRespondentHearing: Determined on the papersCounsel: S Milne for ApplicantJudgment: 22 May 2020JUDGMENT OF ASSOCIATE JUDGE PAULSENThis judgment was delivered by me on 22 May 2020 at 3.30 pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Background[1] By Deed of Trust dated 3 June 2004, June Elizabeth McBride settled the LeslieLumsden Family Trust (the Trust) appointing Leslie Joan Lumsden (Leslie) and CookAllan Gibson Trustee Company Ltd as trustees. The beneficiaries of the Trust areLeslie, her children and grandchildren.[2] By clauses 13 and 14 of the Deed of Trust, the power to remove trustees andappoint new trustees vested in Leslie during her lifetime and the number of trusteeswas not to fall below two.[3] On 28 January 2012, Cook Allan Gibson Trustee Company Ltd retired as atrustee and the applicant, Polson McMillan Trustee Company No. 1 Ltd, wasappointed as a trustee in substitution.[4] Leslie now lacks capacity to carry-on her role as a trustee. Dr MarieMcLaughlin of Dunedin, a specialist geriatrician, has made an affidavit stating she hasassessed Leslie on a number of occasions since August 2019. Leslie has suffered froma range of physical and mental ailments. Relevantly, Dr McLaughlin summarises herconclusions as follows:In my opinion, since at least August 2019 Leslie has lacked the mentalcapacity to make decisions about her care and welfare and her personalproperty matters. This would definitely include, but would not be limited to,a lack of mental capacity to carry out her duties as a Trustee or to sign anylegal documents.Leslie's mental capacity is due to a health condition that is likely to continueindefinitely and in my opinion Leslie's mental capacity has steadilydeteriorated since August 2019.[5] The Trust asset is a property at 211 Gordon Road, Mosgiel. This was Leslie'shome. It is valued at around $400,000 and there are no liabilities secured against theproperty. Leslie now resides permanently at Mossbrae Residential Home andHospital, Mosgiel and the Gordon Road property is vacant. The Gordon Roadproperty needs to be sold but this cannot be done while Leslie is registered on the titleas a trustee.[6] Against that background, the applicant has applied for orders:(a) granting leave to commence this proceeding by originating applicationunder pt 19 of the High Court Rules 2016;(b) dispensing with the appointment of a litigation guardian for Leslieunder r 4.30 High Court Rules 2016;(c) dispensing with service of this application upon Leslie;(d) removing Leslie as a trustee of the Trust and appointing Sonya LeeRowley and Christopher Peter Lumsden, both children of Leslie, astrustees of the Trust in substitution for Leslie under s 51 of the TrusteeAct 1956; and(e) vesting the property at 211 Gordon Road, Mosgiel in the applicant andthe new trustees under s 52 of the Trustee Act 1956.Part 19 procedure[7] This proceeding is not one that can be commenced by originating applicationas of right pursuant to rr 19.2 – 19.4 of the High Court Rules. The court may, in theinterests of justice, permit any proceeding not mentioned in rr 19.2 – 19.4 to becommenced by originating application.[8] It has been recognised in a large number of decisions of the court that in a caselike this, where there is in reality no opposing party and no need for detailed pleadingsor interlocutory steps, the originating application procedure is appropriate. Permissionto bring a proceeding under pt 19 by way of originating application may be soughtwithout notice.1 It is appropriate to grant leave to bring this proceeding by way oforiginating application and I so order.21 High Court Rules 2016, r 19.5(2).2 Hayes v Hayes [2020] NZHC 569.Litigation guardian and service[9] I am satisfied that Leslie is an incapacitated person for the purposes of r 4.29High Court Rules 2016. Given her status, r 4.30 requires she have a litigation guardianunless the court otherwise orders.3 It is appropriate that I make such an order. Thisapplication relates to an administrative matter and does not affect Leslie's interestsother than as a trustee (a function she cannot perform). Based on the evidence ofDr McLaughlin, I am satisfied that service upon Leslie would serve no purpose.[10] I also dispense with service upon the beneficiaries of the Trust. The orderssought do not change any of the beneficiaries' rights and do not affect the obligationsowed by the trustees to the beneficiaries. They do not affect the beneficiaries'entitlements with respect to the Trust or its assets either. In addition, all of Leslie'schildren consent to the application.The removal of Leslie as a trustee[11] The court has power, both under s 51 of the Trustee Act 1956 and in its inherentjurisdiction, to remove and replace trustees. Section 51(1) provides that the court mayappoint a new trustee when it is "expedient" to do so and it is found "inexpedient,difficult or impracticable to do so without the assistance of the court." The court maymake an order appointing a new trustee or new trustees, either in substitution for or inaddition to any existing trustee or trustees.[12] I am satisfied that Leslie is unable to carry out her duties as a trustee and thatshe should be removed as a trustee. Because Leslie has the power under the TrustDeed to remove and appoint trustees, it is necessary for the court to provide assistanceto achieve this. Decisions need to be made in respect to the administration of the Trustfor the benefit of the beneficiaries. Leslie's removal as a trustee will relieve her of theburden of her trusteeship and promote the efficient administration of the Trust.[13] Under s 51, the court may not remove a trustee without appointing areplacement trustee. Here, it is intended to appoint two new trustees in substitution3 Rule 4.30.for Leslie. The proposed new trustees are children of Leslie and her third childconsents to the application. Clearly, the new trustees will be familiar with Leslie'saffairs and there is the added comfort of the applicant being an independentprofessional trustee.[14] There shall be an order removing Leslie as a trustee and appointing Sonya LeeRowley and Christopher Peter Lumsden as replacement trustees.Vesting order[15] Section 52(1)(b)(i) of the Trustee Act 1956 provides that the court may vestland in a trustee where a trustee entitled to or possessed of any land or interest therein,either solely or jointly with any other person, is under a disability. Section 52(3)clarifies that in a scenario of joint entitlement, the land, interest or right shall be vestedin the other person who remains entitled, either alone or with any person the courtappoints. Given the need to ensure that the Gordon Road property can be dealt within accordance with the Trust Deed for the benefit of the beneficiaries the making of avesting order is appropriate.Result[16] There shall be orders as follows:(a) Pursuant to r 19.5(1) of the High Court Rules 2016, this application willbe dealt with as an originating application under pt 19 of the High CourtRules 2016.(b) The requirement for the appointment of a litigation guardian to representLeslie Joan Lumsden is dispensed with under r 4.36 High Court Rules2016.(c) Service of the application on the respondent and any other person isdispensed with.(d) Under s 51 of the Trustee Act 1956, Leslie Joan Lumsden is removed asa trustee of the Leslie Lumsden Family Trust and Sonya Lee Rowley ofTauranga, Office Manager and Christopher Peter Lumsden of AlbertTown, Manager are appointed in substitution as trustees of the LeslieLumsden Family Trust.(e) Under s 52 of the Trustee Act 1956, the property at 211 Gordon Road,Mosgiel (being 776 square metres more or less, Lot 1 Deposited Plan17631 and comprised in the Freehold Register under identifierOT9C/1282) shall vest in the applicant and Sonya Lee Rowley ofTauranga, Office Manager and Christopher Peter Lumsden of AlbertTown, Manager as trustees of the Leslie Lumsden Family Trust.[17] No order for costs is made.[18] I reserve leave for the applicant to further apply in respect of any mattersarising from this judgment._______________________O G PaulsenAssociate JudgeSolicitors:McMillan & Co, Dunedin