Eggers v Eggers [2019] NZHC 2732 (25 October 2019)

Last Updated: 1 November 2019

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2019-485-583 [2019] NZHC 2732

UNDER	the Trustee Act 1956
IN THE MATTER	of an application pursuant to s 52 of the Act
BETWEEN	DAVID DONALD EGGERS, WAYNE ERIC AUSTIN, KATE LOUISE HOGG, ELIZABETH SARAH SUDFELDT, MATTHEW DAVID EGGERS Applicants
AND	ROSEMARY EGGERS Respondent

Hearing:	On the papers
Counsel:	G F Kelly and K H Lawrence for the Applicants
Judgment:	25 October 2019

JUDGMENT OF DOOGUE J

[1] This judgment relates to an application filed without notice on 10 October 2019 for:

(a) leave to commence this proceeding by way of originating application;

(b) dispensing with service on the respondent, Rosemary Eggers;

(c) dispensing with service on the discretionary beneficiaries of the DR- KEM Eggers Family Trust; and

DAVID DONALD EGGERS AND ORS v ROSEMARY EGGERS [2019] NZHC 2732 [25 October 2019]

(d) proceeding without appointment of a litigation guardian for Rosemary Eggers.

[2] The applicants also seek orders:

(a) vesting trust property in them under s 52 of the Trustee Act 1956 (the Act); and

(b) removing the powers under the trust deed given to the named protectors from those named protectors, and transferring them to the trustees from time to time of the DR-KEM Eggers Family Trust.

Background

[3] A trust known as the DR-KEM Eggers Family Trust (the Trust) was established by deed on 1 March 2004. David Donald Eggers and Wayne Eric Austin, two of the applicants in this proceeding, were appointed as trustees of the Trust along with Rosemary Eggers.

[4] Rosemary Eggers sadly suffers from dementia and was declared by her medical practitioner to lack the competence to act as a trustee of the Trust or to make decisions about property or financial matters.

[5] Thus, Rosemary Eggers is no longer able to understand factors and circumstances on which any decision might be made, or the consequences of any decisions she might make. It is evident she will not recover from this disability.

[6] Section 43(1) of the Act provides that where a trustee is unfit to act in that capacity or is incapable of so acting:

...the person nominated for the purpose of appointing new trustees by the instrument (if any) creating the trust, or if there is no such person or no such person able and willing to act, then the surviving or continuing trustees for the time being, or the personal representatives of the last surviving or continuing trustee, may by deed appoint a person or persons (whether or not being the person or persons exercising the power) to be a trustee or trustees in the place of the first-mentioned trustee.

[7] A deed dated 7 October 2019 has been signed pursuant to s 43 of the Act appointing Kate Louise Hogg, Elizabeth Sarah Sudfeldt and Matthew David Eggers (the children of David Donald Eggers and Rosemary Eggers) to be trustees of the Trust and to act with the continuing trustees, David Donald Eggers and Wayne Eric Austin. This was effected on the basis that Rosemary Eggers’ medical condition rendered her unfit to act as a trustee and by virtue of cl 8 of the Trust deed, which provides the protectors (as that term is defined in the Trust deed) the power to appoint and remove trustees.

[8] The power given by cl 8 is “to be held jointly”. The clause sets out who holds the power if one of the protectors has died but is silent as to the position when one of the protectors has lost capacity and can no longer act. Since the power is held jointly, if one of the protectors cannot act then a joint decision by the protectors becomes impossible.

[9] Therefore, the procedure in cls 8 and 9 of the Trust deed cannot be followed. As nobody was capable of exercising the power to appoint and remove trustees under the Trust deed, that power was vested in the trustees from time to time pursuant to s 43 of the Act.

[10] Following the removal or replacement of a trustee, it is necessary for the assets of the Trust to vest in the new or continuing trustees.

[11] The applicants now, as the continuing and newly-appointed trustees of the Trust, seek orders under s 52(1)(a) of the Act for the Trust’s assets to be vested in them.

Relevant law

[12] Section 52 of the Act provides:

52 Vesting orders of land

(1) Subject to the provisions of subsections (2) and (3), in any of the following cases, namely—

(a) where the court appoints or has appointed a trustee of any land or interest therein, or where a trustee of any land or interest

therein has been appointed out of court under any statutory or express power:

(b) where a trustee entitled to or possessed of any land or interest therein, whether by way of mortgage or otherwise, or entitled to a contingent right therein, either solely or jointly with any other person—

(i) is under disability; or

(ii) is out of the jurisdiction of the court; or

(iii) cannot be found; or

(iv) being a corporation, has ceased to carry on business or is in liquidation or has been dissolved:

(c) where it is uncertain who was the survivor of 2 or more trustees jointly entitled to or possessed of any interest in land:

(d) where it is uncertain whether the last trustee known to have been entitled to or possessed of any interest in land is alive or dead:

(e) where there is no personal representative of a deceased trustee who was entitled to or possessed of any interest in land, or where it is uncertain who is the personal representative of a deceased trustee who was entitled to or possessed of any interest in land:

(f) where a deceased person was entitled to or possessed of any interest in land and his personal representative is under disability:

(g) where a trustee jointly or solely entitled to or possessed of any interest in land, or entitled to a contingent right therein, has been required, by or on behalf of a person entitled to require a conveyance of the land or interest or a release of the right, to convey the land or interest or to release the right, and has wilfully refused or neglected to convey the land or interest or release the right for 28 days after the date of the requirement:

(h) where land or any interest therein is vested in a trustee whether by way of mortgage or otherwise, and it appears to the court to be expedient—

the court may make an order (in this Act called a vesting order) vesting the land or interest therein in any such person in any such manner and for any such estate or interest as the court may direct, or releasing or disposing of the contingent right to such person as the court may direct.

(2) Where any such order is consequential on the appointment of a trustee, the land or interest therein shall be vested for such estate as the court may direct in the persons who on the appointment are the trustees.
(3) Where any such order relates to a trustee entitled or formerly entitled jointly with another person, and that trustee is under disability or out of the jurisdiction of the court or cannot be found, or (being a corporation) has ceased to carry on business or is in liquidation or has been dissolved, the land, interest, or right shall be vested in the other person who remains entitled, either alone or with any other person that the court may appoint.

[13] Sections 52(1)(a) and (b)(i) both engage the Court’s jurisdiction as follows:

(a) Section 52(1)(a) applies where a trustee has been appointed out of court under a statutory or express power; in this case, Rosemary Eggers has been replaced as a trustee by deed pursuant to the power in s 43 of the Act.

(b) Section 52(1)(b) applies where a trustee is under a disability. In this case, Rosemary Eggers suffers from an irreversible mental disability.

[14] The Court therefore has power to make a vesting order under s 52 of the Act, vesting title of any trust property jointly in the names of the applicants as trustees of the Trust. The applicants seek such an order in respect of a property at 4 Halswater Drive, Churton Park, Wellington (identifier WN8D/1039).

[15] This case raises another issue, being the identity of the protectors of the Trust. At present and as long as the protectors’ powers are vested jointly in David Donald Eggers and Rosemary Eggers, they cannot be exercised. This means that a trustee cannot be removed without being replaced (under s 43 of the Act), nor can advisory trustees be appointed. Furthermore, the variation power under cl 7(d) of the Trust deed cannot be exercised as it requires the protectors’ consent.

[16] The Trust deed provides at cl 8 that after the death of either protector, their powers will be held by their personal representatives. Rosemary Eggers’ attorney under an enduring power of attorney, dated 21 June 2016, is David Donald Eggers. He is also the executor of her most recent will.
[17] I conclude that to obviate current and future administrative complexities and impediments, the best course is to remove the powers of the protector from the named protectors and to vest those powers in the trustees from time to time of the Trust.

[18] The trustees include David Donald Eggers, his children and a non-beneficiary trustee (Wayne Eric Austin). Clause 9(d) of the Trust deed requires that a non- beneficiary trustee act as trustee at all times — affording the necessary safeguards for Rosemary Eggers and David Donald Eggers’ interests under the Trust.

Procedure

[19] The applicants seek leave to commence this proceeding by way of originating application pursuant to r 19.5 of the High Court Rules 2016 (the Rules). While this is not a matter which may be commenced by originating application as of right, I am satisfied the procedure is appropriate where there is no known opposition to the application. I therefore grant leave to commence this proceeding by way of originating application.

Service of proceedings

[20] An order to dispense with service may be made under r 6.8 of the Rules. The issue in this case is not whether service can be effected on Rosemary Eggers or whether she may have been otherwise notified of this proceeding, but rather it is that service here could be entirely meaningless given her mental disability. As a result of the condition and the evidence of this before the Court, I am satisfied that Rosemary Eggers is entirely unable to participate in any decision-making regarding the Trust and service of these proceedings on her would be futile.

[21] So far as service on any other parties is concerned, this brings into play the position of the beneficiaries of the Trust. There are a number of secondary discretionary beneficiaries of the Trust. However, these are all beneficiaries defined by their relationship to the primary beneficiaries, David Donald Eggers and Rosemary Eggers. The secondary discretionary beneficiaries are their children, who have all consented to and are applicants in this litigation, and their more remote family members. I consider that the beneficiaries’ interests are represented to the extent
necessary, by virtue of the applicants’ involvement in this proceeding. Service on any of the wider beneficiary group would serve no useful purpose.

[22] Leave to dispense with service of the application and supporting material on Rosemary Eggers and on any other person is granted.

Representation

[23] I am further satisfied that although Rosemary Eggers is clearly an incapacitated person, no directions need to be made with regard to her representation in terms of r 4.30 of the Rules. The medical evidence is clear and firmly indicates that even if someone were appointed to represent Rosemary Eggers, she would be unlikely to understand either the nature of the advice or the purpose of the proceedings.

Orders

[24] I make the following orders:

(a) The applicants are granted leave to commence proceedings by way of originating application.

(b) Service of this proceeding on Rosemary Eggers is dispensed with.

(c) Service of this proceeding is not required to be made on any other person.

(d) No direction is required with regard to the representation of Rosemary Eggers and in accordance with r 4.30 of the Rules, Rosemary Eggers does not require a litigation guardian for this proceeding.

(e) A vesting order is made under s 52 of the Act.

(f) The name of Rosemary Eggers is removed from the title of the property at 4 Halswater Drive, Churton Park, Wellington (identifier WN8D/1039) and is replaced with the names of Kate Louise Hogg, Elizabeth Sarah Sudfeldt and Matthew David Eggers.
(g) The title of that property is now vested in the joint names of the applicants, being David Donald Eggers, Wayne Eric Austin, Kate Louise Hogg, Elizabeth Sarah Sudfeldt and Matthew David Eggers.

(h) The powers given to the named protectors under the terms of the Trust deed dated 1 March 2004 are now removed from those protectors and transferred to the trustees from time to time of the Trust.

[25] I make no order as to costs.

Doogue J

Solicitors:

Greg Kelly Law, Wellington