Trustee Act 1956 s 43 – Trusts Act 2019 s 112 – originating application by trustee to address concerns about validity of certain trustee appointments and retirements – applicable principles – terms of the trust deed – power of appointment – “diminishing capacity” – timing of transactions – statutory framework – whether sole trustee allowed – litigation guardian – policy – precedent – certain orders sought by trustee are granted and the specified transactions are confirmed as valid

Re Hayward Trustee Services Limited [2022] NZHC 2217 (Dunningham J) (on the papers)

A family trust (T) was settled for H and his family by H’s father – H held the power of appointment and removal of trustees. H was subsequently diagnosed with dementia and removed himself as trustee.

T’s main asset was a significant farming operation and H had to retire from farming. These events meant various trust-related transactions were necessary/ undertaken and the sale of farmland was anticipated. At that point, T had a sole trustee (HTS) and HTS sought legal advice as to the validity of its position.

HTS then filed an originating application seeking orders confirming the validity of certain previous trustee appointments and retirements, and to therefore ensure it was appropriate for HTS to act as trustee going forward.

Applicable principles – procedure – extensive discussion of the interplay between the now repealed Trustee Act 1956 the Trusts Act 2019 and the terms of the trust deed, particularly in relation to whether a sole trustee could be appointed, and the mechanisms by which trustees could be appointed, removed or retired – analysis of the scope of the orders sought by HTS – consideration of the reasons why H stopped being a trustee and the relevance of his capacity issues – discussion of policy factors relating to the appointment of a litigation guardian for H – reference to precedent and to academic commentary, including the appropriateness of the appointment of a sole trustee

Held: certain of the orders sought by HTS are granted [others are deemed unnecessary] and HTS is confirmed as the validly appointed sole trustee.

Sacha Jugum is a senior solicitor at Brookfields and editor of The Bulletin.