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Removal of trustees, Trustee Act, Trustee liability, Trustee retirement, Trustees, Trusts

Clearing the decks

Walker v Walker is one of many cases that finds itself before the courts requiring assistance with the appointment, retirement or removal of trustees as a result of trustee incapacity. However, one aspect of the case that warrants further interest is the “possibility that former trustees have technically remained trustees because they were not properly replaced” as noted at [15].

As noted at [2] and [3]:

“[2] The Trust was settled in December 1987. Mr Walker held the power
of appointment of trustees as a personal power under the Trust Deed. Mr Walker in exercising that power, appointed himself as a trustee in 1995 in place of one of the original trustees who wished to retire.

[3] There were two subsequent deeds of retirement and appointment of trustee; one dated 18 April 2000 (the 2000 Deed) and the other dated 27 January 2016 (the 2016 Deed). However, an issue has arisen between the applicant and WWL Trustees Services 123 Ltd (WWL), the trustee company of the Christchurch law firm Weston Ward & Lascelles, as to the validity of those two later deeds. WWL was apparently appointed a trustee by the 2016 Deed. The issue arises because of concern that the 2000 and 2016 Deeds could be read as referring to the power held by Mr Walker personally being held by him qua trustee. I do not need to determine that issue of construction, but in relation to the 2016 Deed, I can see arguments either way. The 2016 Deed, when it refers to the power to appointment being vested in the Continuing Trustee (a defined term relating to Mr Walker), could arguably be using the reference to “Continuing Trustee” simply as a label for Mr Walker, rather than intending to mean that the power of appointment was vested in him qua trustee.”

The matter was dealt with pragmatically by Associate Judge Lester who made the appropriate orders under s 51 of the Trustee Act and then noted at [16] that “Having “cleared the decks” in terms of those who are arguably existing trustees, it is now necessary to appoint replacement trustees.”

The decision warrants consideration due to the pragmatic approach taken to an exercise that could have properly required significant review of all decisions made over a significant period, in line with the approach taken in Jasmine v Wells.

The decision highlights the need for careful review of powers, and how the exercise of these is to be recorded before these are exercised.

References:

  • Walker v Walker [2020] NZHC 1443
  • Trustee Act 1956, s 51
  • Jasmine Trustees Ltd v Wells & Hind [2017] EWHC 38 (Ch), [2007] 3 WLR 810

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