Erenstrom v Erenstrom

[2019] NZHC 3155

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2046

[2019] NZHC 3155

IN THE MATTER

Of an originating application pursuant to the

High Court Rules part 19 and the Trustee Act 1956

AND

BETWEEN

KAREN ELIZABETH ERENSTROM and
TAMMY CLARKE McLEOD (as director of DAVENPORTS HARBOUR TRUSTEE (2012) NO. 4 LIMITED)

Applicants

AND

ATHOL JOHN BISHOP ERENSTROM

Respondent

Hearing:	On the papers
Judgment:	2 December 2019

JUDGMENT OF KATZ J

This judgment was delivered by me on 2 December 2019 at 4:00pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors:           Tammy McLeod, Auckland Counsel: C O’Donnell, Auckland

ERENSTROM v ERENSTROM [2019] NZHC 3155 [2 December 2019]

Introduction

[1]                  Tammy McLeod (as director of the trustee company Davenports Harbour Trustee 2012 No. 4 Limited) (“Davenports”) and Karen Erenstrom are the trustees of the Paddington No.1 Trust (“the Trust”). They seek orders vesting the title of a trust property (“the property”) in their names as the current trustees of the Trust. In essence, they seek to remove the name of a former trustee (who is now incapacitated) from the property title.

Background

[2]                  The Trust was constituted by way of deed dated 28 June 2000, of which Athol Erenstrom (“Mr Erenstrom”) is the settlor. When the Trust was established there were two trustees, Mr Erenstrom and Mr Dallow (a solicitor). Mr Dallow subsequently retired as a trustee  and  Davenports  was  appointed  by  deed  dated  15 November 2012. Karen Erenstrom (Mr Erenstrom’s daughter) was appointed as an additional trustee by deed dated 14 December 2015.

[3]                  The assets of the Trust include the property (in  which  Mr Erenstrom  and  his wife currently reside). The primary beneficiaries of the Trust are the settlor’s children (who are the final beneficiaries); the settlor; and the settlor’s spouse (Pamela Erenstrom); and any children of the settlor’s children.

[4]                  On or about 6 June 2019 Mr Erenstrom was diagnosed as having lost capacity. By way of deed of removal dated 9 September 2019 he was removed as a trustee of the Trust. Mr Erenstrom, however, remains on the certificate of title of the property, which gives rise to the present application. The applicants seek:

(a)an order dispensing with service on Mr Erenstrom; and

(b)a vesting order in respect of the property.

Should orders dispensing with service of the proceedings on Mr Erenstrom be made?

[5]                  Having considered the medical evidence relating to Mr Erenstrom’s capacity I am satisfied that service on Mr Erenstrom should be dispensed with. Mr Erenstrom’s

mental incapacity is such that he would not be able to rationally understand the nature or purpose of the proceedings, or to meaningfully participate in them.1 As has been found in a number of similar cases, service on Mr Erenstrom would serve “no useful purpose”.2

[6]                  I am also satisfied that there is no need for the application to be served on the beneficiaries of the Trust. The orders sought are purely administrative in nature. They do not involve the appointment of a new trustee. Rather, the existing trustees will simply continue to administer the Trust. The rights of the beneficiaries under the Trust Deed will not be affected.

Should the Trust’s property be vested in the trustees?

[7]                  Section 52(1) of the Trustee Act 1956 permits the vesting of land or interest therein in any such person in any such manner and for any such estate or interest as the court may direct. Section 52(1)(b)(i) permits this where a trustee entitled to or possessed of land, either solely or jointly with another person, is under disability.3

[8]                  Given Mr Erenstrom’s mental condition he has already been removed as a trustee. Accordingly, it is appropriate to now make orders vesting the relevant trust property in the remaining trustees. No beneficiaries’ rights will be affected by doing so.

Orders

[9]I make the following orders:

(a)service of the proceeding on Athol John Bishop Erenstrom and the beneficiaries of the Paddington No. 1 Trust is not required; and

1      Re Hetrick [2017] NZHC 472, (2017) 4 NZTR 27-006 at [6].

2      Docherty v Docherty [2013] NZHC 1885, cited with approval in Grazier v Grazier [2014] NZHC 3058 at [14]; and McKean v McKean [2017] NZHC 2212, (2017) 4 NZTR 27-019 at [12].

3      Trustee Act 1956, s 2(2) provides that “[f]or the purposes of this Act a person shall be deemed to be under a disability while he is not of full age or full mental capacity.”

(b)vesting the land contained in certificate of title NA117D/123, North Auckland Registry,  currently  registered  in  the  names  of  Athol John Bishop Erenstrom, Karen Elizabeth Erenstrom, and Davenports Harbour Trustee (2012) No. 4 Limited as to a half share, in the names of the current trustees, Karen Elizabeth Erenstrom and Davenports Harbour Trustee (2012) No.4 Limited.

Katz J