Baker v Storm

[2018] NZHC 742

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-485-600824

[2018] NZHC 742

IN THE ESTATE OF

ALLAN ROY BAKER,

of Auckland, retired, deceased

BETWEEN

LEE ANN STORM

Applicant

Hearing:	On the papers
Counsel:	B R B Abraham for Applicant
Judgment:	20 April 2018

JUDGMENT OF WHATA J

This judgment was delivered by me on 20 April 2018 at 3.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: ………………………….

Solicitors:           Denham Bramwell, Manukau

LEE ANN STORM [2018] NZHC 742 [20 April 2018]

[1]    I have before me an application by Lee-Ann Storm, the daughter of Allan Roy Baker, seeking the grant of letters of administration in relation to his estate. Allan died intestate. An issue has arisen as to whether Mr Baker’s surviving spouse, Eileen Baker, enjoys priority for the purposes of the grant of administration, or whether she has lost priority because she and Allan separated in 2003. They signed a separation agreement which records the following:

7.3The provisions of this agreement are in full and final settlement of all questions concerning all of the joint or separate property owned by Eileen or Allan or both of them and neither of them shall have any claim against the other in relation to such property whether under the Property (Relationships) Act 1976 or under any other statute or at common law.

7.4This agreement shall be binding on the parties in all circumstances including bankruptcy, the taking of property and execution by creditors, separation, whether on one or more occasions, reconciliation, marriage, or death of one or both parties.

[2]    Priority on intestacy is subject to r 27.35 of the High Court Rules 2016. It states:

27.35   Order of priority for grant in case of intestacy

(1)If a person has died wholly intestate, the right to apply for letters of administration of that person's estate is determined in accordance with the order of priority set out in subclause (3).

(2)        Subclause (1) is subject to section 6 of the Administration Act 1969.

(3)The order referred to in subclause (1) is as follows:

(a)the first in priority is persons having a beneficial interest in the estate, according to the order of priority set out in subclause (4):

…

(4)Persons having a beneficial interest in the estate are entitled to a grant of administration in the following order of priority:

(a)        the surviving spouse or civil union partner or de facto partner entitled to succeed on the intestacy, if paragraph (b) does not apply and his or her beneficial interest in the estate is not affected, —

(i)in the case of a surviving spouse, by section 12(2) of the Matrimonial Proceedings Act 1963 (as applied by section 191(3) of the Family Proceedings Act 1980); or

(ii)in the case of a surviving spouse or a surviving civil union partner, by section 26(1) of the Family Proceedings Act 1980; or

(iii)in the case of a surviving de facto partner, by section 77B of the Administration Act 1969; or

(iv)in every case, by the choice of option A under section 61 of the Property (Relationships) Act 1976:

(b)in a case of the kind referred to in section 77C of the Administration Act 1969 (succession on intestacy if intestate dies leaving a spouse or a civil union partner and 1 or more de facto partners, or 2 or more de facto partners), a surviving spouse, surviving civil union partner, or surviving de facto partner entitled to succeed on the intestacy, if his or her beneficial interest in the estate is not affected in any of the ways stated in paragraph (a)(i) to (iv):

(c)        the children of the deceased (including any persons entitled by virtue of the Legitimation Act 1939 or the Status of Children Act 1969) or, failing them, the issue of a child who has died during the lifetime of the deceased:

[…]

(emphasis added)

[3]    Section 6 of the Administration Act 1969 states:

6        Discretion of court as to person to whom administration is granted

(1)In granting letters of administration with or without a will annexed, or an order to administer with or without a will annexed, in respect of the estate of any deceased person or any part thereof, the court shall have regard to the rights of all persons interested in the estate of the deceased person or the proceeds of sale thereof, and, in particular, administration with a will annexed may be granted to a devisee or legatee; and any such administration may be limited in any way the court thinks fit:

provided that, subject to the provisions of subsection (2), where the deceased died wholly intestate as to his or her estate, administration shall be granted to some 1 or more persons beneficially interested in the estate of the deceased, if they make an application for the purpose.

(2)        Where by reason of the insolvency of the estate or other special circumstances the court thinks it necessary or expedient to do so, it may—

(a)grant administration to such person or persons as it thinks expedient notwithstanding that some other person is appointed an executor or that, apart from this subsection, some other person would by law be entitled to a grant of administration:

(b)grant probate to 1 or more of the executors appointed by a will, notwithstanding that some other person or persons may also be appointed as an executor or executors.

(3)A grant may be made under subsection (2) notwithstanding that any person excluded from the grant would be competent to take it.

(4)Before determining to exclude from any such grant any person who, apart from this section, would by law be entitled to, or be included in, the grant, and wishes to have, or to be so included in, the grant, the court shall have regard to his or her competency and solvency, his or her ability effectively to administer the estate, the rights of all persons interested in the estate, and any changes in circumstances between the making of the will (if any) and the time when the court is asked to make the grant.

[…]

(emphasis added)

[4]    Relevantly to the present case, s 26 of the Family Proceedings Act 1980 provides that a separation order extinguishes any interest a partner would otherwise have in the estate of their spouse:

26 Effect of separation order on property rights

(1)If, while a separation order is in force, either spouse or civil union partner dies intestate as to any property, that property shall devolve as if the survivor had predeceased the intestate.

(2)Notwithstanding subsection (1),—

(a)in any case to which that subsection applies the High Court, on the application of the survivor made within the time specified in the Family Protection Act 1955 in relation to applications under that Act, may, at its discretion, order that such provision as the court thinks fit shall be made for the

survivor out of the estate of the deceased spouse or civil union partner; and

(b)the provisions of that Act, as far as they are applicable and with the necessary modifications, shall apply with respect to every application under this subsection.

[5]    Section 77A of the Administration Act confirms that this provision overrules the distribution which would occur under s 77, which otherwise confers priority of distribution to surviving spouses on intestacy. The Administration Act is, however, silent on the effect of separation agreements.

[6]    As can be seen, the scheme of the High Court Rules and the Administration Act presume that surviving spouses will have priority subject to specified exceptions. Relevantly in this case, the specified exception is where a formal separation order has been made by the Family Court. A general discretion at s 6 to grant letters of administration on a different basis is, however, preserved by r 27.35(2). As the highlighted portions of s 6 above illustrate, this Court may grant administration to such person or persons as it thinks expedient notwithstanding that some other person is appointed an executor or that, apart from this subsection, some other person would by law be entitled to a grant of administration.

[7]    The application of r 27.35 was considered by Panckhurst J in Re Murray Robert Trotter.1 In that case there were competing claims to the administration of the estate by a brother and the surviving spouse. A similar separation agreement clause was in play in that case, namely cl 6.2, which stated:

This agreement shall be binding on the parties in all circumstances including, bankruptcy, the taking [of] property in execution by creditors, separation (on one or more occasions), reconciliations, dissolution of the marriage or the death of one or both parties.

[8]    Panckhurst J concluded that this separation agreement did not displace the priority afforded by r 27.35 to the spouse in that case. The Judge noted:

[9]Sub-clause (4)(a), however, is subject to four exceptions by which a surviving spouse or partner may be prevented from obtaining letters of administration. Relevant in the case of a surviving spouse is the existence of a separation order, but

1      Re Murray Robert Trotter CIV-2009-409-002584, 10 May 2010.

Murray and Christine Trotter separated by mutual agreement rather than by order of the Family Court. Christine Trotter was not affected by any of the other exceptions.

[10]But did she still have “a beneficial interest in the estate” given the separation, and more particularly, the matrimonial property agreement? Section 77C of the Administration Act governs succession on an intestacy where the deceased dies leaving a wife, civil union partner and one or more de facto partners. In that event a sole surviving wife or partner takes the entire estate (s 77C(2)(a)), or in the event that there are two or more qualifying claimants the estate is distributed in equal shares (s 77C(2)(b)). Hence, Christine Trotter as surviving wife has a beneficial interest in the estate, regardless of the matrimonial property settlement (and absent the existence of a separation order).

[9]                  By parity of reasoning, Eileen continues to enjoy a beneficial interest for the purpose of administration of the estate pursuant to s 77. Panckhurst J does not, however, refer to r 27.35(2) which makes sub-cl (1) and therefore sub-cl (3) subject to s 6 of the Administration Act.

[10]              In my view, it is both necessary and expedient in the present case to grant the letters of administration to Lee-Ann because:

(a)The estate is modest;

(b)Unlike the circumstances in Trotter, Eileen has expressed no interest in the administration of the estate;

(c)Lee-Ann has a clear and legitimate interest in the estate; and

(d)Lee-Ann has otherwise satisfied the formalities for the grant of administration.

[11]              I acknowledge that Eileen has not been served with the application for administration. But I see nothing in this. First, Eileen’s apparent failure to take any steps to secure administration is indicative of a lack of interest, reflecting no doubt her separation from the deceased in 2003. Second, the grant of administration does not absolve Lee-Ann of her duty to secure distribution in accordance with s 77 of the

Administration Act which (without finally determining the matter) continues to afford some priority to Eileen in terms of distribution.

[12]              There shall be an order granting letters of administration to Lee-Ann accordingly.