Allen v Morgan

[2015] NZHC 1139

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-3234 [2015] NZHC 1139

IN THE MATTER OF	the estate of ANN LANGDON MORGAN
BETWEEN	ELISABETH ALLEN Plaintiff
AND	STEPHEN ALAN MORGAN Defendant

Hearing:	20 May 2015
Appearances:	N Tetzlaff for Applicant
Judgment:	26 May 2015

JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie

On 26 May 2015 at 3.00pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date………………………………

Counsel:

Gaze Burt, North Shore City

ALLEN v MORGAN [2015] NZHC 1139 [26 May 2015]

Introduction

[1]      The plaintiff, Ms Allen, seeks orders discharging the defendant, Stephen Alan Morgan (“Stephen”) as executor and trustee of the estate of Ann Langdon Morgan, and appointing Jennifer Leslie Goldsmith as an additional administrator of the estate in his stead.

[2]      The application was made by way of originating application.

[3]      On 18 December 2014, orders were made appointing a Mr Anton Heyns as litigation guardian for Stephen, and directing service on a Mr James Morgan, a Mr Anthony Morgan and a Ms Alana Thomlinson.  There are affidavits of service on the Court file.

[4]      Neither Stephen, nor any of the other parties served, has taken any steps in this matter. Accordingly the plaintiff seeks to proceed by way of formal proof.

Background

[5]      The late Mrs Morgan died on 28 January 2011.  She left a will dated 29 July

2003.  She appointed her sister, Ms Allen and her son Stephen, to be the executors and trustees of her will.  The beneficiaries are her three children, Stephen, Anthony Morgan, and Alana Thomlinson, and her grandson, James Morgan.

[6]      The  deceased’s  estate  comprises  a  house  in  Torbay,  Auckland.    As  at December 2013 it was valued at $685,000.  Further, there is cash in an ASB bank account in the names of the two executors.  There is approximately $56,000 held in that account.

[7]      At the time of her death, the late Mrs Morgan was acting as guardian of her grandson, James Morgan.   He was living with her at the property in Torbay. Following Mrs Morgan’s death, Stephen became James’ guardian.   An agreement was made between the beneficiaries that Stephen would continue to  live at the Torbay property and that the property would not be sold until James had finished his

schooling.  Stephen would not be required to pay rent during this time, but he was to pay all costs associated with the house and was to attend to minor maintenance.

[8]      Shortly after his mother’s death, Stephen lost his job, and in the months following, it appears that he suffered from depression.  He neglected to keep to the agreement.  He did not pay the costs associated with the house; he did not attend to minor maintenance.

[9]      James Morgan finished his schooling at the end of 2013 and consideration was then given to selling the house.  It was proposed that Stephen would buy out the other beneficiaries.  However that proved to be impracticable.

[10]     In October 2014 Stephen was admitted to the intensive care unit at North Shore Hospital.  He had had a cardiac arrest.  It appeared from blood tests that he had been consuming amphetamines.  He was on life support for several days.  The medical registrar at the time recorded that Stephen had suffered significant hypoxic chemical multi organ injury, including hypoxic brain injury which left him requiring cognitive rehabilitation.  There has been some improvement in Stephen’s condition in more recent times.  He was initially in a rehabilitation facility but was allowed to leave that facility on 19 December 2014.  The responsible authorities considered that he was safe to live in the Torbay property and to look after himself.  He has gone back to the property in Torbay.  He does not however pay bills, or attend to minor maintenance.   Stephen still lacks decision-making capabilities.   He becomes tired and restless quickly, and he can be uncooperative and aggressive.   He does not comprehend his position and he gets agitated readily.

[11]     Ms Allen deposes that it has been difficult at times to arrange meetings with Stephen over estate matters, that he frequently does not answer his phone or open the door, that he does not open mail and that he ignores accounts which are due for payment.

[12]     The solicitor handling the estate found it increasingly difficult to deal with Stephen.  She advised that she was not prepared to continue acting for the executors and requested that they should find a new solicitor to handle the estate.

[13]     Ms Allen as executor of the estate, and Ms Thomlinson, personally, have been attending to the payment of those household bills that have had to be paid.

[14]     Mr Heyns, as litigation guardian, has advised the Court that Stephen neither opposes nor consents to the orders sought.

[15]     A Ms Jennifer Goldsmith has agreed to act as executor in Stephen’s stead. She is the late Mrs Morgan’s and Ms Allen’s niece.   She is Stephen’s first cousin. She has had a long standing association with the Morgan family.  She is a registered nurse and has over the previous 30 years, held positions of responsibility on boards of trustees, parent teacher associations and the like.  She has deposed that she is of good repute and that she will act in a fair and impartial manner.  She has sworn an affidavit confirming that she will faithfully administer the estate, and will, if required by the Court, file in the Court and verify by affidavit an inventory of the estate and an account of all dealings with the deceased’s estate.

Administration Act

[16]     Relevantly s 21 of the Administration Act 1969 provides as follows:

21 Discharge or removal of administrator

(1)       Where   an   administrator   …   becomes   incapable   of   acting   as administrator or unfit to so act, or where it becomes expedient to discharge or remove an administrator, the court may discharge or remove that administrator, and may if it thinks fit appoint any person to be administrator in his or her place, on such terms and conditions in all respects as the court thinks fit.

(2)       The administrator so removed or discharged shall, from the date of that order, cease to be liable for acts and things done after that date.

(3)       Upon any administrator being discharged or removed as aforesaid (whether or not any other administrator is appointed) all the estate and  rights  of  the  previous  administrator  or  administrators  which were vested in him or her or them as such shall become and be vested in the continuing administrator or administrators (including any administrator appointed under subsection (1)) who shall have the same powers, authorities, discretions, and duties, and may in all respects act, as if he or she or they had been originally appointed as the administrator or administrators.

…

[17]     The  word  “expedient”  used  in  this  section  imports  considerations  of suitability,  practicality  and  efficiency.1      In  any  given  case  the  question  will  be whether the removal of an executor or administrator is a suitable, practical and efficient means of advancing the interests of the estate and its beneficiaries.2

[18]     The Court also has an inherent jurisdiction to remove trustees and to appoint new trustees.  This is ancillary to the Court’s overriding concern to see that trusts are properly executed.3

Analysis

[19]     I  am  satisfied  that  it  is  appropriate  in  this  case,  in  the  exercise  of  my

discretion, to order Stephen’s removal as an executor of his late mother’s will.

[20]    It is clear from the affidavits filed that Stephen has suffered significant impairment to his cognitive faculties.   He is no longer capable of properly administering the estate, and of carrying out his deceased mother’s wishes.   His removal is a suitable, practical and efficient means of advancing the interests of the estate, and of all its beneficiaries, including Stephen himself.

[21]     I am also satisfied that it is appropriate to appoint Ms Goldsmith to be an executor of the estate in Stephen’s stead.  The deceased wanted two executors.  It is appropriate to honour that wish.  Although there is no present indication of dissent by any beneficiary, the appointment of an additional executor will also help insulate Ms Allen from any criticism that could otherwise be levelled at her in the future.  Ms Goldsmith is appropriately qualified, both by association with the family, and otherwise, to hold the position as executor, and I am satisfied that she will, together with Ms Allen, get on and administer the estate as required by law.

[22]     It is appropriate to impose the following conditions:

1      Crick v McIlraith [2012] NZHC 1290 at [18].

2      At [18]; Hinde v Cranwell [2012] NZHC 63 at [21]-[27].

3      Crick v McIlraith, above n 1, at [10]-[16].

(a)       Ms Goldsmith, together with her co-executor Ms Allen, is to file a full

inventory of the deceased’s estate if called upon to do so by the Court.

(b)Ms Goldsmith, together with her co-executor Ms Allen, is also to file a true and perfect account of the deceased’s estate if called upon by the Court, showing inter alia the dates and particulars of all receipts and disbursements, and showing which of the receipts and disbursements  are  in  her  and  Ms Allen’s  opinion,  on  account  of

capital, and which are on account of income.

Costs

[23]     It is not appropriate to order costs against Stephen, and I note that no order was sought in this regard by Mr Tetzlaff.  It is however appropriate to direct that Ms Allen is entitled to recover her reasonable costs and disbursements incidental to this

application out of the estate, and I so order.

Wylie J