Cunningham v Cunningham [2016] NZHC 1075 (23 May 2016)

High Court of New Zealand

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Cunningham v Cunningham [2016] NZHC 1075 (23 May 2016)

Last Updated: 18 July 2016

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2016-412-000059 [2016] NZHC 1075

UNDER	the Trustee Act 1956
IN THE MATTER	of an application for an Order vesting property in the trustees
BETWEEN	ROSALIE CUNNINGHAM AND OTHERS Applicants
AND	NOEL WILLIAM CUNNINGHAM Respondent

	(Determined on the papers)
Appearances:	R Richard for the Applicants
Judgment:	23 May 2016

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

_{as to vesting orders and service}

Introduction

[1] The applicants, (Rosalie Cunningham, John McGrory and Joseph Anthony Dougherty), as current trustees of the Cunningham Family Trust (the Trust), seek an order vesting in them title to a property of the Trust in Dunedin (the property). They also seek orders that service of the application be dispensed with. These orders are sought because Mr Cunningham, a retired trustee of the Trust and in whose name the property is currently jointly registered, is mentally incapable of exercising his powers and duties as a trustee.

_Background

CUNNINGHAM v CUNNINGHAM [2016] NZHC 1075 [23 May 2016]

[2] Mr and Mrs Cunningham married in 1962. They settled the Trust pursuant to a deed of trust dated 17 April 2000. They were, along with John McGrory, appointed as trustees of the Trust.

[3] Sadly, Mr Cunningham began showing signs of dementia and was admitted to Yvette Williams Retirement Home on 24 June 2015. Dr Frances Matthews, Mr Cunningham’s general practitioner, assessed his dementia as severe. He requires 24- hour care and help with most activities. In Dr Matthews’ opinion, Mr Cunningham is mentally unfit to carry out the duties associated with being a trustee. Ms Elizabeth Langer, a psycho-geriatrics nurse practitioner also assessed Mr Cunningham as unfit to carry out his trustee duties due to his dementia. Both Dr Matthews and Ms Langer signed certificates of incapacity saying as much.

[4] Because of Mr Cunningham’s incapacity, Mrs Cunningham and Mr McGrory signed a deed of appointment and retirement of trustees on 5 May 2016, exercising their powers under s 43 Trustee Act 1956 to retire Mr Cunningham from his position as trustee and replace him with Mrs Cunningham’s son-in-law, Joseph Anthony Dougherty.

[5] The Trust presently has only one asset, a residential property in Dunedin. Mrs Cunningham currently remains living at the property. Mr Cunningham remains as one of the registered proprietors on the certificate of title.

[6] The current trustees now wish to sell the property with the view to purchasing a more manageable property. To that end, Mrs Cunningham and Mr McGrory have entered into an agreement for sale and purchase of the property. The agreement is expressed to be “subject to the vendors making application to the High Court (at their sole cost in all respects) for the removal of Noel William Cunningham as a Trustee of the Vendor Trust”.

[7] In order for the applicants to deal with the property, they require a vesting order under s 52 Trustee Act 1956, transferring the title into their names. As Mr Cunningham has been assessed as incapable of acting as trustee, and has in fact been

removed as a trustee, the current trustees ask the Court to exercise its power under s 52 Trustee Act.

[8] Before dealing with the vesting order itself, there is a matter of leave to commence by way of originating application which has not been expressly sought, but which I must first address.

Leave to commence by way of originating application

Originating application

[9] Rules 19.2 to 19.4 High Court Rules deals with proceedings which can be commenced by way of originating application. The current application is not among them. The applicants are therefore not entitled to commence this proceeding by originating application as of right. However, the Court may, in the interests of

justice, permit such a proceeding to be commenced by originating application.¹ As I

have mentioned, leave was not sought, however, given the circumstances of the application and in the interests of expediency, I will go on to consider whether leave should be granted.

[10] In Jones v H W Broe Ltd, McGechan J considered an application for leave to use the originating application procedure on an ex parte basis.² Without explicitly parsing “the interests of justice”, his Honour discussed the rationale underlying r 19.5 as follows:³

The ... originating application procedure was designed as a genuine exception, and as an expedient for cases where there was in reality no opposing party, avoiding clumsy and unnecessary use of a full statement of claim and notice of proceeding. It was not intended for routine use in cases where there was another likely party with contrary interests.

[11] A full statement of claim and notice of application would be unnecessary in this case. The interests of justice support the granting of leave. This will not

¹ _{High Court Rules, r 19.5(1).}

² _{Jones v H W Broe Ltd (1989) 5 PRNZ 206 (HC).}

³ At 207. I note that McGechan J’s comments were made in the context of an earlier version of the High Court Rules, referring to rr 239 and 458D. His Honour’s observations remain pertinent, however, to the present iteration of the Rules. As with its precursor, the safeguard of r 19.5 “was not intended to make the exception the rule”.

prejudice any parties with divergent interests. This application merits the expediency afforded by the r 19.5 exception.

Service

[12] Having regard to the supporting evidence of Dr Matthews and Ms Langer, I am satisfied that this is an appropriate case for service to be dispensed with. Mr Cunningham’s dementia is such that he would not be able to rationally understand the nature or purpose of the proceedings or to meaningfully participate in them.

[13] Associate Judge Bell concluded in Docherty v Docherty that service would serve “no useful purpose.”⁴ I too am of that opinion in this case. In reliance upon the inherent jurisdiction of the Court to regulate its own process and proceedings, an order will be made dispensing with service.⁵

[14] I also conclude that there are no other persons who should be issued with the proceedings as persons who are “interested in, or may be adversely affected by, the relief sought” by the applicants.⁶ In Wethey v Wethey, Nation J considered this issue in circumstances where an original trustee had been incapacitated by Alzheimer’s, and the continuing trustees sought vesting orders following his removal and replacement as a trustee.⁷ Nation J dispensed with service on a beneficiary residing in the United States who had vehemently opposed the appointment of new trustees and sought to be appointed in lieu of one of the new trustees. His Honour held:⁸

The orders sought merely give effect to the appointments of trustees which have already been made. The information available does not suggest there is likely to be any challenge to those appointments or that such a challenge would be successful. The vesting of title in the presently appointed trustees will not change any of the beneficiaries' rights in respect of the appointments which have already been made. Nor will the vesting orders sought affect the obligations which the trustees have to all beneficiaries or the rights or entitlements which beneficiaries have in respect of the trustees or Trust property.

⁴ Docherty v Docherty [2013] NZHC 1885 at [33]; cited with approval in Grazier v Grazier

_{[2014] NZHC 3058 at [14].}

⁵ See IH Jacob “The Inherent Jurisdiction of the Court” (1970) Current Legal Problems 23 at 32

_{— 40.}

⁶ _{High Court Rules, r 18.7(3).}

⁷ _{Wethey v Wethey [2015] NZHC 493.}

⁸ At [19].

[15] There is no evidence before me as to whether the discretionary beneficiaries consent to the order. However, given that the current application is for an administrative step enabling the Trust to continue operating, this step does not in itself adversely impact upon the beneficiaries of the Trust. Similar to the finding in Wethey v Wethey, I am satisfied that there is no need to serve the beneficiaries of the Trust or any other person. This matter may be dealt with on a without notice basis.

[16] I am also satisfied that this application and the relief sought can be dealt with on the basis of the papers before the Court.

Vesting orders

[17] Under s 52(1)(b)(i) of the Trustee Act, the Court may vest land in trustees 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 such a scenario of joint entitlement, the land, interest or right shall be vested in the other person who remains entitled, either alone or with any other person the Court appoints.

[18] Two of the applicants, Mrs Cunningham and Mr McGrory, are registered as proprietors of the property alongside Mr Cunningham. The application is properly supported by evidence. Given the need to ensure the current trustees may deal with the property in accordance with the trust deed, I am satisfied that the vesting order sought is appropriate. Such an order will be made.

Costs

[19] The applicants have not sought costs. I make no order.

Orders

[20] I direct:

(a) The applicants may commence this proceeding by way of a without notice originating application.

(b) Service of this proceeding is dispensed with.

(c) The property at 29 Esplanade, Warrington, Dunedin – Part Allotment

6, Deposited Plan 139, contained in Certificate of Title OT177/266 – is vested in Rosalie Cunningham, John McGrory and Joseph Anthony Dougherty.

(d) There is no order as to costs.

Associate Judge Osborne

Solicitors:

Wilkinson Rodgers Lawyers, Dunedin