Evidence of authority for e-dealing: trusts and trustees

Practitioners acting for trusts in the context of e-dealing transactions sometimes encounter difficulties obtaining the requisite authority from an outgoing trustee. It is important to recognise that the usual conveyancing requirements apply in these circumstances – there are no easy shortcuts. In the absence of a suitable power of attorney or relevant Court order, all trustees who are registered as landowners on the title must be directly involved in authorising the transaction (except, of course, in the case of a transmission by survivorship).

Accordingly, where land is held by the registered landowners upon trust, and a trustee retires, is removed or a new trustee is appointed, any required change in the legal ownership must be dealt with by registering a transfer from all the existing registered landowners to the new or continuing trustees. The supporting authority and instruction (A&I) forms must be signed by all of those parties.

A trust deed providing for the retirement, removal or appointment of a trustee cannot be relied upon in lieu of a properly signed A&I form. In addition, such a deed cannot operate to vest Land Transfer Act 1952 land in the new or continuing trustees, and therefore does not provide proper authority or evidence to support the registration of a transmission.

The provisions that govern the vesting of trust property in new or continuing trustees are set out in s47 of the Trustee Act 1956. On the plain wording of that section, it is clear that it does not apply to land under the Land Transfer Act. Subsections (1) and (2) of s47 expressly contemplate that a deed appointing a new trustee or removing an existing one can only operate to vest land in new or continuing trustees where the land concerned “is not under the Land Transfer Act 1952 ...”.

Therefore, it necessarily follows that if the land is subject to the Land Transfer Act, the vesting provisions of s47 do not apply.

The following commentary in FM Brookfield, Goodall and Brookfield’s Law and Practice of Conveyancing with Precedents (4th ed, 1980, Butterworths, Wellington) 91, para 4.3, also supports the view that s47 does not apply to Land Transfer land:

“As to land subject to the trust and under the Land Transfer Act a vesting declaration will be inoperative, nor will the declaration vest (i) mortgages whether over Land Transfer land or Deeds land; ...”

A similar observation is made in Julie Maxton, Nevill’s Law of Trusts, Wills and Administration in New Zealand (8th ed, 1985, Butterworths, Wellington) at page 141:

“The Trustee Act 1956, s47 authorises the vesting of property in new or continuing trustees by means of a declaration contained in the deed of appointment of new trustees or deed of retirement of trustees, or even without such a declaration where the deed is made after the commencement of the Act. It is effective to pass all sorts of property with the exception of the following:

(a) ...

(b) Land under the Land Transfer Act 1952.”

The same text provides some useful commentary on the role of the Court in regard to the vesting of trust property, in the event that a properly authorised transfer cannot be obtained. The following is an extract from the relevant passage on page 142:

“A vesting order is a convenient, and often the only way of getting the legal estate in property into the name of the proper person. A vesting order in respect of land under the Land Transfer Act 1952 once made and registered is just as effective in passing the legal estate as any of the ordinary methods of transfer of property.”

Information provided by Land Information New Zealand, December 2010.