Bolton v Bolton
[2021] NZHC 2692
•8 October 2021
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2021-470-000052
[2021] NZHC 2692
UNDER the Administration Act 1969 IN THE MATTER
of the ESTATE OF REGINALD WILLIAM
BOLTON of Tauranga, Deceased
AND IN THE MATTER
of the ESTATE OF WENDY ROBIN
DIANA BOLTON of Tauranga, Deceased
BETWEEN
ELWOOD ALAN ROBERT BOLTON
First Applicant
RAQUEL SAPPHO KYLAH GYPSY TANIA MILLER
Second Applicant
AND
JOHN GRAHAM KENNETH BOLTON as
administrator of the estates of Reginald William Bolton and Wendy Robin Diana Bolton
Respondent
Hearing: 6 October 2021 Appearances:
John Delaney for the Applicants No appearance for the Respondent
Judgment:
8 October 2021
JUDGMENT OF MOORE J
[Formal proof]
This judgment was delivered by me on 8 October 2021 at 4:30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar / Deputy Registrar Date:
BOLTON & ANOR v BOLTON [2021] NZHC 2692 [8 October 2021]
Introduction
[1] The first and second applicants apply for orders under s 21 of the Administration Act 1969 (“the Act”) removing the respondent, as administrator of the estates of Reginald William Bolton and Wendy Robyn Diana Bolton. They also apply for the appointment of Perpetual Trust Ltd in his place.
[2] The respondent was served on 18 June 2021. On 28 June 2021 he attended the first call and was granted an extension of time to file a notice of opposition and affidavit in support. Those documents were ordered to be filed by 16 July 2021. On the date they were due the respondent requested a further extension of time. The orders were extended. The notice of opposition and affidavit were to be filed by 6 August 2021. Neither was filed.
[3]Accordingly, the applicants sought to prove their claim by formal proof.
[4] On 11 August 2021 Associate Judge Gardiner directed the formal proof hearing and made timetabling directions for the filing of submissions and authorities. On the same day the Registry advised the parties, including the respondent of the fixture date. The respondent was directed that if he wished to oppose the applications, he would need to apply to the Court for leave. He has not done so.
[5] The hearing before me proceeded on 6 October 2021. There was no appearance by the respondent. I am more than satisfied he has had ample opportunity to oppose the orders being sought but has taken no effective steps to do so.
Background
[6] Reginald William Bolton (“Reg”) died in 1975. He had three children; Elwood Alan Robert Bolton (“Alan”) (the first applicant), John Graham Kenneth Bolton (“Ken”) (the respondent) and Wendy Robin Diana Bolton (“Wendy”).
[7] Wendy died in 1990. Her only child, Raquel Sappho Kylah Gypsy Tania Miller (“Rachel”), is the second applicant.
[8] Ken has been the administrator of Reg and Wendy’s estates since at least 8 April 1993.
[9] Alan, Ken and Wendy were the beneficiaries of Reg’s estate. Rachel is the sole beneficiary of Wendy’s estate.
[10]Reg’s estate comprises of the following assets:
(a)a residential property at 264 Bellevue Road, Tauranga;
(b)a bare section at 264A Bellevue Road, Tauranga; and
(c)a residential property at 84 Sutherland Road, Tauranga.
[11] Counsel for the applicants has provided a chronological table of events which I gratefully adopt and reproduce in full below:
Date Event 27.02.75 Reg Bolton Will - appoints Wendy as executor. 27.03.75 Reg dies. 25.05.76 Probate granted to Wendy. 08.12.86 Alan purchases 84 Sutherland Road, Tauranga for $85,000 from Reg's estate. 13.06.90 Wendy dies intestate. Rachel was 16 at the time. 13.09.91 Letters of administration granted to Ken for Wendy's estate. Ken appointed Rachel's guardian. 08.04.93 Letters of administration granted to Ken for administration of Reg's estate. 28.01.94 Ken registered on 84 Sutherland Road title as administrator. 17.01.95 Ken registered on Bellevue Road title as administrator. 22.05.00 Ken transfers 84 Sutherland Road to Minka Company of which he is sole director and shareholder. 04.03.03 Ken registered as mortgagee on title to 84 Sutherland Road. 14.04.14 Ken borrows $250,000 from ASB and grants them a mortgage over Bellevue Road.
Date Event 14.04.14 Uses ASB money to purchase 33 Landview Road, Tauranga for Gordon Stacey. 07.05.17 Bellevue Road titles corrected to record Ken as administrator. 08.04.19 Notification of rates arrears on Bellevue Road from [Tauranga City Council]. 01.11.19 Notification of rates arrears on 84 Sutherland Road from [Tauranga City Council]. 24.07.20 Legal action threatened by ASB against Ken for mortgage arrears. 15.10.20 Property Law Act notice served on Ken threatening mortgagee sale.
(references omitted)
Legal principles
[12] Section 21 of the Act governs the Court’s jurisdiction in removing and replacing executors. It relevantly provides:
“21 Discharge or removal of administrator
(1) Where an administrator is absent from New Zealand for 12 months without leaving a lawful attorney, or desires to be discharged from the office of administrator, or 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.”
[13] Before an executor may be removed, one of the grounds set out under s 21(1) must be met. The submitted grounds for removal are that Ken is unfit to act, and that it would be expedient to remove him.
[14] In Ward v Ward1 this Court found the administrator unfit to act because he had, among other things, attempted to purchase a property owned by the trust for himself at less than market value, obstructed the sale of the same property by rejecting reasonable offers, failed to take steps to ensure the estates he had charge over were
1 Ward v Ward HC Wellington CIV-2010-485-695, 4 November 2010.
properly administered, issued unexplained cash cheques drawn against the estate and refused without reason to accept proposals to resolve the administration of the estates.2
[15] On the question of expediency, the Court of Appeal3 has traversed the guiding principles, and endorsed Heath J’s approach in Farquhar v Nunns:4
“(a)The starting point is the Courts duty to see estates properly administered and trusts properly executed.
(b)This jurisdiction involves a large discretion which is heavily fact- dependent.
(c)The wishes of the testator/settlor (evidenced by the appointment of a particular executor or trustee) are to be given consideration, but ultimately the question is as to what is expedient in the interests of the beneficiaries.
(d)Expedience is a lower threshold than necessity, and imports considerations of suitability, practicality and efficiency. Misconduct, breach of trust, dishonesty, or unfitness need not be established.
(e)Hostility as between administrators/trustees and beneficiaries is not of itself a reason for removal, but hostility will assume relevance if and when it risks prejudicing the interests of the beneficiaries.
(f)The principles for the exercise of the Courts discretion are the same, whether an application is made pursuant to s 51 of the 1956 Act or s 21 of the 1969 Act.”
(footnotes omitted)
[16] The touchstone for removal of an administrator is an assessment of what is “expedient”.5 The Court in Crick v McIlraith opined that the term “imports
2 At [9] and [20].
3 Frickleton v Frickleton [2016] NZCA 408, [2017] 2 NZLR 154 at [29] and Tod v Tod [2015] NZCA 501, [2017] 2 NZLR 145 at [22].
4 Farquhar v Nunns [2013] NZHC 1670 at [13], relying on Crick v McIlraith [2012] NZHC 1290 at [16].
5 At [36].
considerations of suitability, practicality and efficiency”.6 In Farquhar Heath J considered that in the context of estate administration:7
“…the “overarching question” is: “will removal of the administrator be a suitable, practical and efficient means of advancing the interests of the estate and its beneficiaries”.”
Discussion
[17] Having reviewed the uncontradicted evidence advanced in support of Alan and Rachel’s claim, I am well satisfied an order to remove Ken as administrator meets the s 21 test. My reasons follow.
[18] First, in relation to 264 Bellevue Road, Ken held that property as an administrator of Reg’s estate. He used the property as security for a loan from ASB bank to pay a personal debt. He failed to service that loan. This led to ASB serving a notice under the Property Law Act 2007 requiring payment and threatening a mortgagee sale if the funds were not paid. At no time did Ken consult with or obtain the consent of the other beneficiaries. In fact, they had no knowledge of the encumbrance or the threatened actions of ASB. Plainly, a mortgagee sale would risk a sale at below market value.
[19] Secondly, in 1986 the beneficiaries agreed that the estate would sell 84 Sutherland Road to Alan for $85,000. However, the property was never transferred into Alan’s name. In 1993 Ken promised to transfer it into Alan’s name. He failed to do so. Instead, he transferred the property to Minka Company Ltd, of which Ken was the sole director and shareholder. Ken then registered a mortgage in his name over the property. As with 264 Bellevue Road, Ken never disclosed this loan to the other beneficiaries. He never consulted with them nor did he ever attempt to secure their consent. In fact, his actions in relation to 84 Sutherland Road were in complete conflict with what the beneficiaries had expressly agreed.
6 At [36], referring to Crick v McIlraith above n 4, at [18].
7 Farquhar v Nunns above n 4, at [36], referencing O’Leary J in Re Estate of Roberts (1983) 20 NTR 13 (SC NT) at 17, who defined expedience using the Oxford English Dictionary definition “conductive to advantage in general, or to a definite purpose; fit, proper, or suitable in the circumstances of the case”.
[20] Thirdly, as Ken was the registered owner of both 264 Bellevue Road and 84 Sutherland Road, the Tauranga City Council (“the Council”) sent Ken rates invoices. He failed to pay them. As a consequence, he exposed both properties to the risk of a rateable sale. The Council threatened Ken with a forced, rateable sale of 84 Sutherland Road. It was only through Alan’s active intervention that a settlement was brokered with the Council, under which Alan paid the full amount of the arrears, which exceeded $5,000, and the penalties were waived. Furthermore, this is not a case where Ken’s failure to meet the rates was due to his own impecuniosity. The evidence is that over some time Alan had been paying Ken on account of the rates, but Ken had not applied those sums for that purpose.
[21] Fourth, Ken’s personal position and evident self-interest prevents him from administering the estate by selling its properties. He is living at 264 Bellevue Road and has done on a rent-free basis since 1986. There is an obvious failure to pay outgoings as evidenced by the Council’s action against him for unpaid rates. It is clear that Ken’s personal interests are in direct conflict with the interests of the other beneficiaries.
[22] Fifth, Ken has wholly failed to administer Reg’s estate in a timely, efficient and orderly manner over the past 28 years. This has undoubtedly deprived the other beneficiaries of the benefits due to them under their parents’ estates.
[23] Sixth, Ken’s removal would not be contrary to the wishes of either Reg or Wendy. Ken was granted letters of administration for both estates when Wendy died. His appointment was not something Reg nor Wendy had contemplated. In fact, Wendy’s estate’s sole beneficiary was Rachel; Ken was only appointed administrator because Rachel was underage when her mother died. She is now 49 and it is she, with her other uncle, who now seeks Ken’s removal.
[24] Finally, I am of the general view that the administration of the estate cannot progress efficiently while Ken remains as the administrator. As will be clear from my reasons, I am of the view that the evidence reveals not only that Ken’s interests as beneficiary and administrator are demonstrably and seriously conflicted, but that he
has also administered the estate in a fashion which is, at best, negligent and, at worst, arguably fraudulent.
[25] This most unfortunate situation will now require actions on the part of any replacement administrator/s to redress it and to preserve and protect the estate. The steps to do so will likely include commencing negotiations with ASB in relation to 264 Bellevue Road as to how that property might avoid a mortgagee sale. Further, the ownership of 84 Sutherland Road needs to be resolved.
[26] For these reasons I am easily satisfied it is expedient that this Court make an order for Ken’s removal and I so order.
[27] Neither Alan nor Rachel wish to be appointed administrator in Ken’s stead; rather they sensibly seek the appointment of an independent trustee so that the estate may be administered efficiently, fairly and without conflict. I agree that such an appointment is in the best interests of the beneficiaries.
Vesting orders
[28] In the course of the hearing Mr Delaney orally applied for orders that the titles of the three properties be vested in Perpetual Trust Ltd under s 89 of the Land Transfer Act 2017. I consider this to be an appropriate and expedient course of action.
[29] Accordingly, I make orders in those terms in relation to the three properties being:
(a)264 Bellevue Road, Tauranga, being an estate in fee simple of 2.0178 hectares, described as Lot 3, Deposited Plan S.16897, identifier SA16C/1370;
(b)264A Bellevue Road, Tauranga, being an estate in fee simple of 1,112 sqm described as Lot 2, Deposited Plan 4033, identifier SA16C/1371; and
(c)84 Sutherland Road, Tauranga, being an estate in fee simple of 1,694 sqm described as Lot 3, Deposited Plan 5061, identifier SA54A/689.
Result
[30]Under s 21 of the Act I order:
(a)that John Graham Kenneth Bolton be removed as administrator for the estates of Reginald William Bolton and Wendy Robin Diana Bolton; and
(b)that Perpetual Trust Ltd be appointed as sole administrator in his place.
Costs
[31] As I understood him, Mr Delaney initially submitted that indemnity costs should be awarded against Ken given the unusual circumstances of this case and in recognition that the need to make the present application arises directly from the actions of the respondent. However, Mr Delaney did not press for such orders and, instead, agreed that costs calculated on a 2B basis would be a simpler and more expeditious course. I agree. I direct Mr Delaney to file his memorandum as to costs no later than 5:00 pm on Tuesday, 9 November 2021.
Moore J
Solicitors:
Mr Delaney, Tauranga
Copy to:
The Respondent
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