Ainger v Dewe HC Christchurch CIV 2010-409-570

[2010] NZHC 1124

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2010-409-000570

UNDER  the Trustee Act 1956

IN THE MATTER OF     the Estate of COLLEEN ELIZABETH DEWE

BETWEEN  WARWICK JOHN AINGER AND RICHARD THOMAS KEITH BURTT Plaintiffs

ANDIAN LESLIE DEWE Defendant

Hearing:         28 June 2010

Counsel:         R S Brown for Plaintiffs

Judgment:      28 June 2010

ORAL JUDGMENT OF PANCKHURST J

[1]      This is an application by the trustees of the Estate of Colleen Dewe by which they seek orders approving distribution accounts and authorising payment of the share of one of the residuary beneficiaries to the Public Trustee of Christchurch if the need to do so arises.   In order to appreciate the need for orders to this effect it is necessary to explain something of the background to the matter.

[2]      The deceased died on 22 May 1993 leaving a will dated 20 November 1989. The will provided for a significant number of bequests of both money and chattels to various persons.  In addition it created life interests in favour of a male friend of the testator and in favour of her sister-in-law, Mrs Lillian Dewe.

[3]      Relevantly for present purposes it is the second life interest which is of moment since the deceased’s sister-in-law outlived her and became the recipient of the Estate income until she (Mrs Lillian Dewe) died on 21 April 2008.  At that point the trustees were required to distribute the capital of the Estate to three nephews and

a niece of the deceased being Cameron, Ian and Donald Dewe and their sister Sheryl

Smith.   These, of course, were the children of Mrs Lillian Dewe and her husband who was the testator’s brother.

[4]      It was at this point that problems arose.   Mr Ian Dewe proved difficult in relation to solving issues which required resolution in order to enable the final distribution to occur.  He, I note, was resident in his late mother’s home at 12 Arnold Street, Sumner.  His residence of that property has apparently occasioned difficulties in relation to the administration of his mother’s Estate.  With reference to his quarter capital share in his aunt’s estate Mr Dewe also caused difficulties, including his refusal to accept an interim distribution of $50,000 when such payment was made to the four beneficiaries in early September 2009.

[5]      In addition, he would not sign an authority confirming accounts which had been prepared to 31 March 2009 and which were to be used as the basis for the final distribution of Colleen Dewe’s Estate.  Nor would he release the trustees in relation to the winding-up of the Estate.

[6]      Mr  Richard  Burtt,  who  is  the solicitor  trustee,  had  attended  an  informal mediation on 23 September 2009 which was convened in an endeavour to resolve the difficulties in relation to both estates.  Although on the day of the meeting it seemed that a deed of settlement would be able to be drawn and signed by the beneficiaries of both estates, this did not prove to be the case when Mr Ian Dewe, a day or so later, indicated that he was not in a “mental state” to agree to anything and that he had not been competent at the time of the mediation either.

[7]      He  also,  at  that  stage,  resiled  from  an  authority  which  he  had  signed approving the distribution accounts and releasing the trustees from any further liability in relation to the Estate.  It was these events which prompted the issue of this proceeding in March of this year after the trustees had warned Mr Dewe that they would have no other option if he was not prepared to cooperate.

[8]      In the proceeding three orders were sought, namely:

(i)     an order approving the distribution accounts prepared by Ainger

Tomlin, Chartered Accountants, dated 31st day of March 2009;

(ii)  an order that distribution may be effected to the capital beneficiaries  of  the  estate  of  the  deceased  in  terms  of  the accounts prepared dated 31st day of March 2009;

(iii)an  order  that  the  entitlement  and/or  share  of  IAN  LESLIE DEWE  in  the  estate  of  the  deceased  be  paid  to  the  Public Trustee at Christchurch and be held by the Public Trustee at Christchurch pending further order of the Court.

[9]      Mr Dewe, having been served with the proceeding, has taken no steps to defend it.  Accordingly the matter was set down for a formal proof hearing today. The matter was first called at 10 am when I raised with Mr Brown concerns that the affidavit evidence did not respond directly to such concerns as Mr Dewe had raised in relation to the accounts.  In the event it was resolved that the best course was to adjourn the proceeding so that Mr Warwick Ainger, a retired chartered accountant and Mr Burtt’s co-trustee, could give brief evidence in response to the issues raised by Mr Dewe concerning the accounts.   I have this afternoon heard evidence from Mr Ainger.   In the result I am in no doubt that it is appropriate to approve the accounts  dated  31  March  2009  as  appropriate  for  the  purposes  of the  intended distribution.

[10]     Mr Dewe raised two matters pertaining to these accounts.  The first was why, between March 2008 and March 2009 the amount held in the trust account of the Estate’s  solicitors  had  escalated  from  $1170  to  $705,949.    The  answer  to  this concern is simple.  Following the death of Mrs Lillian Dewe (the life tenant) on 21

April 2008 the assets of the Estate had been realised and converted to cash which was then retained in Meares Williams’ trust account.   Hence there was nothing untoward in relation to this concern raised by Mr Dewe.

[11]     The second matter he raised was why the rental figure in the accounts did not equate with a rental figure shown in a tax return.  Mr Ainger has also explained this aspect.  As I have already noted, Mrs Lillian Dewe received the income of the Estate during her life interest and the accounts show her receipt of a sum of $1717 as received from the Estate in the year to 31 March 2009.  By contrast, she had been receiving an amount of over $20,000 per annum by way of income from the Estate in previous years.  This much reduced figure of course reflects the fact that she only lived  for  about  three  weeks  into  the  2008-09  financial  year  and,  moreover,

Mr Ainger explained that the $1717 figure was arrived at in order to produce a nil balance in Mrs Dewe’s beneficiary account.  Hence, again, there is nothing strange in relation to this aspect.

[12]     Although not raised by Mr Dewe, I note that the accounts showed the capital value of the Estate to March 2008 as $891,263, whereas the total value to March

2009 was $705,949, a decrease of some $185,000.   Again this change has been explained.  The deceased’s home at 10 Arnold Street, Sumner was sold during the course of the financial year and in the event realised rather less than its rateable value  which had  been  used  in  the  accounts  as  its  valuation  figure.    Mr Ainger produced a copy of the settlement statement which, after sales expenses were deducted, showed the amount realised from the property and confirmed that the property had sold for almost $200,000 less than the figure it had previously been given in the accounts.

[13]     In light of these explanations I am in no doubt that the accounts are entirely regular and that they provide a proper basis for the distribution of the Estate to the capital beneficiaries.   Accordingly I make an order approving the distribution accounts prepared by Mr Ainger and dated 31 March 2009.

[14]     The next order sought is one that distribution may be effected to the capital beneficiaries in terms of these accounts and a further order in relation to the entitlement of Mr Ian Dewe that his share may be paid to the Public Trustee at Christchurch and held by the Public Trustee pending further order of this Court.  The reason for this prayer in the statement of claim is explained in Mr Burtt’s affidavit. He pointed particularly to the complications which occurred in September 2009 when it seemed that Mr Dewe had approved the financial statements and was to become a participant in the deed of settlement to be concluded with his siblings, but then had second thoughts and resiled from both initiatives.

[15]     Following these events he was sent an interim distribution cheque of $50,000 but returned it to the solicitors who had no option but to retain it in their trust account despite a similar payment having been made to the other three beneficiaries.

In short, Mr Burtt fears that a similar outcome is likely to occur in relation to the final distribution cheque.

[16]     In these circumstances I am prepared to make an order for final distribution to all capital beneficiaries in terms of the accounts which, incidentally, will require updating  to  bring  to  account  interest  which  has  accrued  since  March  2009. However, in relation to the payment of Mr Ian Dewe’s share, I consider that the appropriate course is one which I have discussed with counsel and with Mr Burtt. Instead of the order sought I make the following order that Mr Dewe’s share in the Estate is to be paid direct to him upon provision by him of his bank account details within seven working days of advice from Mr Burtt to supply those particulars.  In the event that bank account details are not supplied within seven working days, Mr Dewe’s share may be paid to the Public Trustee at Christchurch to be held pending further order of the Court.

[17]     Obviously it is in Mr Dewe’s best interests that he provides the banking details as inevitably payment of his share to the Public Trustee will only occasion further loss to him through increased administration expenses which will inevitably accrue.

[18]     The third order sought in the statement of claim is one that the share of Ian Dewe be reduced on account of the costs incurred in relation to this proceeding.  An order to this effect is entirely appropriate.  I make such an order that the costs of this proceeding are to be met and deducted from the share of Mr Ian Dewe who has occasioned the need for the present application to the Court.  However, I consider that the costs should be approved by me and to that end a draft bill of costs is to be filed for approval under cover of a letter from counsel.

[19]     I also reserve leave for the trustees to revert to the Court in the event of further unforeseen difficulties arising.

Solicitors:

Meares Williams, PO Box 660, Christchurch for Plaintiffs

Defendant - Mr Ian Leslie Dewe, 12 Arnold Street, Sumner, Christchurch.