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

• Jurisdiction: New Zealand
• Judge: Bell
• Judgment Date: 26 July 2013
• Neutral Citation: [2013] NZHC 1885
• Docket Number: CIV 2012-404-2454
• Court: High Court
• Date: 26 July 2013

UNDER THE TRUSTEE ACT 1956, Section 52

BETWEEN

Deborah Phillis Docherty, Robert Dudley Berry and Brent Pascoe

Plaintiffs

and

John Lewis Docherty

Defendant

[2013] NZHC 1885

Judges:

Associate Judge Bell

CIV 2012-404-2454

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

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.

Appearances:

N Penman-Chambers for plaintiff

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 incapacity. It did not satisfy the requirements of r 9.43 and was not admissible under s 26 of the Evidence Act 2006.

13 The plaintiffs have now filed two further affidavits. The first is by Dr Boyd, a consultant psychiatrist and psychogeriatrician. That affidavit addresses Mr Docherty's cognitive capacity. The second is by Mr Riechelmann, a friend of Mr Docherty, who has recently agreed to be appointed as Mr Docherty's welfare guardian and manager under the Protection of Personal Property Rights Act 1988. An application has been made to the Family Court for his appointment, but as yet no decision has been made on that application.

Is Mr Docherty an incapacitated person under r 4.29?

14 Rule 4.29 defines an incapacitated person:

For the purposes of these rules,–

incapacitated person means a person who by reason of physical, intellectual, or mental impairment, whether temporary or permanent, is–

• (a) not capable of understanding the issues on which his or her decision would be required as a litigant conducting proceedings; or

• (b) unable to give sufficient instructions to issue, defend, or compromise proceedings

15 Dr Boyd's evidence is that Mr Docherty is 58 years old. He was first diagnosed with frontotemporal dementia in 2009. The diagnosis was confirmed by a CT scan. It was also confirmed by formal cognitive assessments by a psychologist in February 2010. Dr Boyd has seen Mr Docherty regularly since 2011. He has difficulty with speaking. There has been a progressive deterioration in Mr Docherty's condition. There has been a dramatic deterioration in his memory domain. Mr Docherty finds it very difficult to grasp even simple concepts. He requires an escort when in public as his behaviour is at times inappropriate.

16 In May 2012, Mr Docherty was assessed as not having capacity to sign an enduring power of attorney. Dr Boyd says:

He was unable to understand the...