Bell v Bell
[2016] NZHC 1589
•13 July 2016
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
CIV-2016-470-062 [2016] NZHC 1589
UNDER the Trustee Act 1956 IN THE MATTER
of an application to remove a trustee
BETWEEN
SHIRLEY VINER BELL Applicant
AND
MAXINE WENDY BELL Respondent
Hearing: 12 July 2016 Appearances:
J Hakaria for the Applicant
No appearance by the RespondentJudgment:
13 July 2016
JUDGMENT OF THOMAS J
This judgment was delivered by me on 13 July 2016 at 4pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
Solicitors:
Sharp Tudhope, Tauranga.
BELL v BELL [2016] NZHC 1589 [13 July 2016]
Introduction
[1] The applicant, Mrs Shirley Bell, seeks orders removing her daughter, the respondent, Maxine Bell, as a trustee of the estate of Donovan Bell, her late husband. The application is unopposed, and the matter therefore proceeds by way of formal proof.1
[2] Mr Bell passed away on 4 April 2009, and his half share in the family property located in Tauranga (the house) passed to the estate. Pursuant to his will, Mrs Bell, the respondent, and Linda Williamson (another daughter of Donovan and Shirley Bell) were appointed as trustees and executors. Mrs Bell says that the respondent is estranged from the other trustees and refuses to engage in decision- making, particularly with regard to the house, which Mrs Bell now wishes to sell.
[3] Mrs Bell seeks the removal of the respondent, and says that it is unnecessary to substitute a new trustee. In the alternative, she seeks that the respondent be replaced with Adrienne Chalada, another of her daughters.
Factual background
[4] As the respondent has not taken any part in the proceedings, the only evidence is contained in the affidavits of Ms Williamson and Mrs Bell.
[5] The affidavits record that Mr and Mrs Bell had four children: the respondent, Ms Williamson, Adrienne Chalada and Suzanne Hamson. It is likely that Ms Williamson and the respondent were chosen as executors because they were the two children living in New Zealand at the time.
[6] Mr and Mrs Bell owned the house as tenants in common in equal shares. Mr Bell’s will provides that his interest in the house is left to the trustees on trust on the basis that Mrs Bell can live in it as her personal residence so long as she wishes free of charge but paying all rates and outgoings and keeping it in repair. At the
request of Mrs Bell, the trustees can sell the house and buy another one, including an
1 High Court Rules, r 15.9.
interest in a retirement village and the provisions of the trust apply to any such new property. When the trust ends, the house, or any new property, will form part of the residuary estate, the income from which is paid to Mrs Bell during her lifetime and then divided between the children equally. The will specifically provides that the proper maintenance of Mrs Bell is to take preference over the interests of the residuary beneficiaries.
[7] Mrs Bell has had health issues, and the house has steep stairs. Around September 2015, she had several falls there. Her doctors recommended moving into more suitable accommodation and Mrs Bell decided to move into a retirement village in Tauranga. In October 2015, she secured an apartment in a retirement village, conditional on being able to sell the house. Mrs Bell obtained a valuation of the house and says it was only then that she became aware that the house was held as tenants in common and the respondent’s involvement in the sale was required.
[8] In October 2015, the respondent came to visit Mrs Bell, and said that she did not approve of selling the house, and tried to encourage her to consider other retirement village options.
[9] Since then, there appears to have been no direct contact between Mrs Bell and the respondent. Due to the uncertainty about obtaining the respondent’s consent to sell the house, Mrs Bell rearranged her finances in order to buy an apartment in a retirement village. She moved there in February 2016. She is paying a weekly fee for the retirement village apartment, as well as maintenance, rates and insurance on the house.
[10] The evidence reveals that the respondent’s relationship with her mother and sisters has become increasingly difficult over the last few years. Specifically, Mrs Bell considers that the respondent appears to “reject” them as family, and that at times she seems willing to have contact but then refuses to have anything to do with them. An incident in 2012, when the respondent came to the house and apparently verbally abused Mrs Bell, led to Mrs Bell and Ms Williamson meeting with an Elder Abuse and Neglection Prevention Co-ordinator to discuss what to do. After another incident of alleged abuse, the Elder Abuse and Neglection Prevention Co-Ordinator
wrote a letter to the respondent setting out the family’s concerns and asking that she
not continue in her stressful behaviour.
[11] The evidence of Mrs Bell and Ms Williamson details the respondent’s aggressive and erratic behaviour in her interactions with them. In 2009 the respondent was unwilling to sign documents when they visited the estate’s lawyers to fulfil their duties as executors and trustees. It was difficult to contact the respondent and she was irrational about the legal matters involved. By
16 December 2009, the administration of the estate had been concluded but neither Mrs Bell, Ms Williamson nor the lawyers could persuade the respondent to sign the deed of arrangement or any other forms.
[12] Ms Williamson says that she attempted to explain to the respondent Mrs Bell’s health issues and the benefits of selling the house and her moving to the retirement village between October 2015 and February 2016, but that the respondent was abusive and unwilling to consider signing any documents. She records a number of specific interactions with the respondent, including an incident when the respondent expressed views indicating her unhappiness with the decision to sell the house and some anger toward her family. She appeared not to consider her mother’s health issues particularly serious, was worried about the expense of the retirement village and concerned about being involved in legal issues, including harbouring some suspicion about the validity of various documents.
[13] Attempts to have others discuss the issues with the respondent have been unsuccessful.
[14] The behaviour described is erratic and unusual. The family is, understandably, concerned. I am satisfied that there are valid reasons to doubt the respondent’s capacity to discharge her duties as a trustee.
[15] Neither Ms Williamson nor Mrs Bell considers there is any need to appoint a new trustee because the respondent’s removal will allow the efficient administration of the trust, and the estate’s only asset is the house, which will be sold immediately.
However, they propose Mrs Adrienne Chalada as a replacement trustee if needed. She has confirmed her willingness to so act.
Law
[16] Section 51 of the Trustee Act 1956 provides for the court to appoint new trustees in substitute for an existing trustee:
(1) The court may, whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient, difficult, or impracticable so to do without the assistance of the court, make an order appointing a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee.
(2) In particular and without prejudice to the generality of the foregoing provision, the court may make an order appointing a new trustee in substitution for a trustee who—
(a) has been held by the court to have misconducted himself in the administration of the trust; or
…
(4) Nothing in this section shall give power to appoint an executor or administrator.
[17] The Court also has an inherent jurisdiction to remove trustees as part of its general jurisdiction to supervise the administration of trusts.
[18] When exercising its jurisdiction to remove trustees or executors the Court is guided by the welfare of the beneficiaries. The Privy Council stated in Letterstedt v Broers:2
In exercising so delicate a jurisdiction as that of removing trustees, their Lordships do not venture to lay down any general rule beyond the very broad principle above enunciated, that their main guide must be the welfare of the beneficiaries. Probably it is not possible to lay down any more definite rule in a matter so essentially dependent on details often of great nicety. But they proceed to look carefully into the circumstances of the case.
[19] In Crick v McIlraith, the Court held that the term “expedient” imported
considerations of suitability, practicality and efficiency rather than necessity.3 Within
2 Letterstedt v Broers (1884) 9 App Cas 371 (PC) at 387.
the context of s 21 Administration Act 1969, which contains the same test of expediency, the overarching question is whether the removal of an executor or administrator will be a suitable, practical and efficient means of advancing the interests of the estate and its beneficiaries.4 Due respect must be given to the wishes and autonomy of the testator.5 It is established that mere incompatibility between trustees and beneficiaries is not enough to warrant removal: “any incompatibility
must be at such a level that the proper administration of the trust is seriously adversely affected and it has become difficult for a trustee to act in the interests of the beneficiary.”6
[20] Warning of the seriousness of removing an executor or trustee, Panckhurst J
in Coote v Warren said the following: 7
[12] That said, the authorities in this context stress that the removal of executors, or trustees, is not to be undertaken lightly. Where possible, the wishes of the testator should be honoured. The Court’s jurisdiction to intervene reflects its duty to ensure that estates are properly administered and trusts properly executed. The welfare of the beneficiaries, what will best safeguard their interests, is the yardstick to be applied. As a consequence, the jurisdiction is fact dependent and involves a large element of discretion. The circumstances of individual cases will necessarily be determinative of their outcome.
Analysis
[21] I am satisfied by the evidence that the respondent has not properly applied herself to her duties as trustee. Although some of the evidence could possibly be generously interpreted as showing her considering her role as trustee and attempting to take her time in evaluating whether the proposed options are in the best interests of the beneficiaries, other of her communications with both Mrs Bell and Ms Williamson indicate a complete breakdown in the relationship between them.
[22] Many of her communications are entirely incoherent in their objections to the proposal to sell the house. Further, they indicate an intractable dislike and distrust of
3 Crick v McIlraith [2012] NZHC 1290 at [18]
4 At [18].
5 At [19].
6 Kain v Hutton [2007] NZCA 199, [2007] 3 NZLR 349 at [267]; recently cited with approval in
Powell v Powell [2015] NZCA 133, [2015] NZAR 1886 at [50].
7 Coote v Warren [2013] NZHC 3210.
Mrs Bell. The terms of Donovan Bell’s will clearly indicate that Mrs Bell’s needs are to be given priority, and that the house may be sold or otherwise used to assist her in getting into a rest home. From the evidence, it is plain that the respondent’s attitude toward her mother and family make it unlikely there would be any circumstance in which she would consent to the sale in order to provide any benefit to her mother. It is an “ineradicable suspicion” which is detrimental to the effective
administration of the Trust.8
[23] Although it appears that the respondent did, in the end, sign a number of documents relating to completing administration of Mr Bell’s estate, her interactions and relationship with the legal system are clearly fraught. This also makes it difficult for her to engage in her role as trustee in a proper manner.
[24] I am satisfied that, in order to ensure the proper execution of the trust and to safeguard the welfare of the beneficiaries, the respondent should be removed as trustee.
Should a substitute trustee be appointed?
[25] Once administration has been completed, the executor functions under the estate are at an end.9 At that stage, there is a transition to the office of trustee. The administration of Mr Bell’s estate has concluded. The applicant seeks only orders under the Trustee Act.
[26] Section 51 of the Trustee Act is premised on substituting one trustee for another. There does not appear to be any ability under that section to remove the respondent as trustee without replacing her. This is different from s 21 of the Administration Act whereby “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”.
[27] Although the applicant submits that, in the exercise of the Court’s inherent
jurisdiction, it would be open to the Court not to appoint a replacement trustee, given
8 Crick v Wallace [2015] NZHC 2260 at [48].
9 Re Eagle (deceased) HC Auckland M721/97, 21 November 1997 at 5; Wright v Wright [2016] NZHC 270 at [9].
the wording of s 51 and the wishes of the testator as to the number of trustees, it is appropriate to appoint a replacement trustee.
Result
[28] For the reasons given, I make an order removing the respondent as a trustee under s 51 of the Trustee Act, and replacing her with Adrienne Chalada.
[29] At the applicant’s request, there is no order as to costs.
Thomas J
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