Deborah Phillis Docherty, Robert Dudley Berry and Brent Pascoe v John Lewis Docherty

JurisdictionNew Zealand
CourtHigh Court
JudgeBell,Associate Judge
Judgment Date26 July 2013
Neutral Citation[2013] NZHC 1885
Docket NumberCIV 2012-404-2454

[2013] NZHC 1885

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

Judges:

Associate Judge Bell

CIV 2012-404-2454

UNDER THE TRUSTEE ACT 1956, Section 52

BETWEEN
Deborah Phillis Docherty, Robert Dudley Berry and Brent Pascoe
Plaintiffs
and
John Lewis Docherty
Defendant
Appearances:

N Penman-Chambers for plaintiff

Application the continuing trustees of a trust, for orders vesting trust assets in them under s52 Trustee Act 1956 (Vesting orders of land) following removal of the defendant as a trustee — defendant removed as trustee as he was incapacitated due to dementia — trustees also applied to dispense with the appointment of a litigation guardian for the defendant under r4.30 High Court Rules (“HCR”) (Incapacitated person to be represented by litigation guardian) — whether the defendant was an incapacitated person under r4.29 HCR — whether a litigation guardian should be appointed.

The issues were: whether J was an incapacitated person under r4.29 HCR (incapacitated person defined); and whether J ought to have a litigation guardian under r4.30 HCR;

Held: The evidence showed that J suffered from dementia and his condition was progressively deteriorating. J had dramatic deterioration in his memory domain and found it very difficult to grasp even simple concepts; he required an escort when in public as his behaviour was at times inappropriate. J was assessed as not having capacity to sign an enduring power of attorney and was not capable of understanding the issues in which his decision would be required as a litigant in the proceeding. He was unable to give sufficient instructions to issue, defend or compromise the proceeding and therefore, was therefore incapacitated under r4.29 HCR.

Under r4.30 HCR, the court could order that an incapacitated person need not have a litigation guardian. R was available as a litigation guardian and was awaiting the appointment as J's welfare guardian and property manager. However, he supported the current application by the new trustees. He did not consider that any useful purpose would be served by his being appointed as a litigation guardian for the J in respect of the present proceeding.

While recognising that the Court should be cautious in ordering otherwise under r4.30, this was one of those cases where the Court should do so. On its substantive merits the plaintiffs had a very straightforward case. J was quite incapable of acting as a trustee. Given his inability to act as a trustee, it was entirely appropriate of J to be removed as a trustee. Further, R accepted that there was no sensible basis for allowing J to remain as a trustee. Once it was accepted that J was properly removed as trustee then the vesting order followed as night followed day. There could not be any sensible basis for an argument that even though he had been removed as trustee, he should still be shown as a registered proprietor of trust assets..

The relief the plaintiffs sought was strictly limited to the vesting orders and did not otherwise impact on the interests of J. Given the extent of J's incapacity, it was clear that a litigation guardian could not serve any useful purpose by trying to obtain some form of instructions from him while trying to explain to him the purpose of the proceeding. In short, appointing a litigation guardian would be an empty charade.

Order under r4.30 HCR that J not have a litigation guardian for the proceeding. Order vesting the assets of the LLM Family Trust in the plaintiffs.

JUDGMENT OF ASSOCIATE JUDGE Bell

Bell

This judgment was delivered by me on Friday 26 July 2013 at 4.45 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

1

This is a proceeding under the Trustee Act 1956, s 52, which allows the Court to make vesting orders of land, including when a trustee has been appointed out of court under a statutory or express power.

2

I deal with this matter as it is within the chambers jurisdiction of an Associate Judge under r 2.1(1) of the High Court Rules.

3

The plaintiffs seek an order vesting trust assets in them under s 52 following the removal of the defendant as a trustee of the LLM Family Trust. The assets to be vested include a residential property at 11C Atkin Avenue, Mission Bay, Auckland and an undivided one-fifth share of a residential property at 9A Atkin Avenue.

4

The LLM Family Trust was established under a deed of 18 October 2001. The settlors are John Lewis Docherty and his wife Deborah Phyllis Docherty. The original trustees were John Lewis Docherty, Deborah Phyllis Docherty and Robert Dudley Berry.

5

Mr and Mrs Docherty are married, but have separated. They are both discretionary beneficiaries of the trust.

6

Clause 12.1 of the trust deed confers a power of appointment of new trustees as follows:

12
    Appointment of Trustees The power of appointment of new trustees shall be vested in (a) jointly JOHN LEWIS DOCHERTY and DEBORAH PHYLLIS DOCHERTY during their joint lives; (b) after the death of either, jointly in the survivor and any person or persons nominated by the Will of the deceased spouse for that purpose; (c) after the death of the survivor, jointly and any person or persons nominated by the will of JOHN LEWIS DOCHERTY for that purpose and any person or persons nominated by the will of DEBORAH PHYLLIS DOCHERTY for that purpose.
7

By deed dated 26 April 2013, Mrs Docherty and Mr Berry, as continuing trustees, removed Mr Docherty as trustee and appointed Brent Pascoe in his place. The deed records that Mrs Docherty and Mr Berry were exercising the power available to them under s 43(1) of the Trustee Act 1956. Section 43 relevantly says:

43
    Power of appointing new trustees (1) Where a trustee (whether original or substituted, and whether appointed by the Court or otherwise)– … (e) Is unfit to act therein; or (f) Is incapable of so acting; or (g) Being a corporation, has ceased to carry on business, is in liquidation, or is dissolved, then– 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. …
8

The power of appointment under s 43 allows a trustee appointed under that provision to be in place of an earlier trustee — that is, it includes a power of removal.

9

The new trustees seek vesting orders consequential on Mr Docherty's removal as a trustee.

10

Mrs Docherty's and Mr Berry's reason for removing Mr Docherty as trustee and for replacing him with Mr Pascoe is that Mr Docherty has frontal temporal lobe type dementia and lacks the ability to understand and make decisions.

11

As well as filing a statement of claim under Part 18 of the High Court Rules, the trustees applied for directions dispensing with service of the proceeding, directing that the proceeding be dealt with on the papers and directing that evidence be by way of affidavit.

12

I issued a minute on 20 May 2013. I was not satisfied with the evidence as to Mr Docherty's mental...

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