Brown v Perpetual Trust Limited
[2022] NZHC 1726
•20 July 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-2366
[2022] NZHC 1726
UNDER Part 18 of the High Court Rules and the
inherent jurisdiction of the High Court to supervise trusts
IN THE MATTER OF
a breach of trust
BETWEEN
TIGER ALEXANDER BROWN
Plaintiff
AND
PERPETUAL TRUST LIMITED
as administrator of the Estate of ALEXANDER GAVIN BROWN
Defendant
Hearing: 13 June 2022 Appearances:
Mark Sandelin for the Plaintiff
NL Walker and BHS Walley for the Defendant
Judgment:
20 July 2022
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
This judgment was delivered by me on 20 July 2022 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
………………………….
Registrar/Deputy Registrar
Solicitors:
Morris Legal (Georgia Angus/Sally Morris), Auckland, for the Plaintiff
Russell McVeagh (NL Walker/BHS Walley), Wellington, for the Defendant
Counsel:
Mark Sandelin, Mills Lane Chambers, Auckland, for the Plaintiff
TIGER ALEXANDER BROWN v PERPETUAL TRUST LIMITED [2022] NZHC 1726 [20 July 2022]
Introduction
[1] The plaintiff, Tiger Brown, is the son of the deceased Alexander Brown.1 At the time of Alexander’s death, there were four residential properties (the Properties) in respect of which Alexander had executed declarations of bare trust in favour of Tiger.
[2] On Alexander’s death, the defendant, Perpetual Trust Ltd (Perpetual) was appointed as administrator of his estate. Consequently, it is the current trustee of the bare trusts. It has signalled its view that the Properties are held on bare trust for Tiger but has declined to transfer the Properties to him. Tiger claims against Perpetual for transfer of the Properties, alleging breach of trust.
[3] The relevant background is that Alexander’s widow (who is also Tiger’s mother), Ms Rong Kang (Ms Kang) has brought an application for recall of letters of administration and grant of probate. Pending determination of that application, Perpetual seeks a temporary stay of Tiger’s claim, and a stay of Tiger’s concurrent application for summary judgment.
Background
[4] Alexander appeared to have died intestate. On 16 March 2021, Perpetual was granted letters of administration for Alexander’s estate.
[5]The beneficiaries of Alexander’s estate are his:
(a)widow, Ms Kang; and
(b)children, Gavin Brown, Julia Dobson, Natalie Brown and Tiger.
1 Given the commonality of surnames, I will refer to the Browns by their given names throughout this judgment.
[6] Before applying for letters of administration, Perpetual attempted to locate Alexander’s will. It asked the beneficiaries for any information that would assist. Only Gavin responded, confirming he was not aware of any will.
[7] Once Perpetual was granted letters of administration, it began to investigate the estate’s assets. On 6 April 2021, it wrote to the beneficiaries seeking information about the assets. Tiger responded several weeks later, disputing the Properties formed part of Alexander’s estate. Tiger and Perpetual continued to exchange letters over the ensuing months, with Tiger stating he would commence proceedings if the Properties were not transferred to him.
[8] On 17 September 2021, Perpetual advised Tiger its provisional view was that the Properties were likely held on bare trust for him. It said it expected to make a decision on 28 September 2021 and that Tiger’s foreshadowed litigation was unnecessary. Tiger said he would give Perpetual until 5 pm on that date, and that he would file proceedings if confirmation was not given by then.
[9] On 24 September 2021, Perpetual wrote to all beneficiaries stating its view that the Properties were held on bare trust for Tiger and that it intended to transfer legal ownership of all Properties to him. Ms Kang sought further time to respond. With this development, Perpetual informed Tiger on 28 September 2021 that it would be inappropriate to transfer him the Properties on that day.
[10] On 30 September 2021, Ms Kang’s solicitors wrote to Perpetual, informing it that Alexander’s will had been found in Hong Kong. The will named Ms Kang as executor of Alexander’s estate. Ms Kang’s solicitors advised that she intended to apply for probate and requested Perpetual take no further steps in respect of the estate.
[11] Perpetual wrote to the beneficiaries, advising them of this development and stating it would not take further steps to transfer the Properties to Tiger. Pending determination of who should be the permanent executor or administrator of the estate, Perpetual says it has sought to preserve the estate’s position.
[12] On 30 November 2021, Tiger filed a claim against Perpetual, alleging breach of trust. He has applied for summary judgment in respect of that claim, seeking that the Properties be transferred to him. Perpetual now applies to stay proceedings until a permanent executor or administrator is appointed.
[13] Meanwhile, Ms Kang has sought probate of Alexander’s will and recall of letters of administration. The Court has ordered by consent that she file an application for probate in solemn form by 14 June 2022 and Ms Kang has filed that application in the High Court in Wellington dated 13 June 2022 (CIV-2022-485-316). Perpetual has prepared and executed a conditional consent to the recall of the letters of administration. The consent is conditional on the recall of the letters of administration being ordered on the date probate is granted to Ms Kang.
[14] As well as the application for grant of probate and recall of letters of administration, there are five further related proceedings:
(a)An application by Ms Kang in the Family Court to determine relationship property of Alexander. Ms Kang’s affidavit of assets and liabilities in support of this application includes the Properties (Ms Kang’s PRA claim).
(b)A claim by Natalie seeking to recover $67 million from the Maungaiti Commercial Trust, a trust settled by Alexander. A hearing is set down for 14 July 2022 to determine whether this claim should be consolidated with Ms Kang’s PRA claim.
(c)A claim by Ms Kang in the Family Court in which she has obtained a declaration of marriage, enabling her to make a claim under s 182 of the Family Proceedings Act 1980 in respect of trusts settled by Alexander.
(d)A claim by Gavin in the Family Court for provision under the Family Protection Act 1955. Gavin’s affidavit in support of the application lists
the Properties. The claim has been adjourned pending determination of related proceedings (Gavin’s FPA claim).
(e)A claim by Perpetual (initiated before the will was located in the Hong Kong Court) to determine the ownership of around $200 million worth of depository instruments in Astron Corp Ltd. Perpetual has sought a stay of that proceeding pending determination of the administration/probate issues in New Zealand. The defendant in that proceeding is Kobe Investments Ltd, a company wholly owned by Tiger. Kobe Investments Ltd disputes the claim and has moved to strike it out.
Perpetual’s application for stay of proceeding
[15]Perpetual seeks orders:2
(a)that this proceeding is stayed pending the determination of the extant application for recall of letters of administration and for grant of probate (CIV-2021-485-603131) or the conclusion of any other Court process that determines who should be the administrator or executor of the estate of Alexander Gavin Brown;
(b)costs; and
(c)any other orders the Court sees fit.
[16]The grounds on which the orders are sought are:3
(a)The applicant was granted letters of administration on 16 March 2021 and has since been the administrator of the estate of Alexander Gavin Brown (“deceased”) (“estate”), of which the respondent (who is the plaintiff in these proceedings, Tiger Alexander Brown) is a beneficiary.
(b)The applicant has been taking steps to determine the estate’s assets since its appointment as administrator. The estate is highly complex, potentially having assets with a value exceeding NZD $200 million, including the valuable properties (likely in excess of NZD $10 million) the subject of the plaintiff’s claim in these proceedings. The
2 Application for stay of proceeding dated 18 March 2022 at [1].
3 At [2].
estate is a party to several other ongoing proceedings, which are (as relevant) detailed below.
(c)The applicant was informed on 30 September 2021 that the deceased’s last will and testament (“Will”) had been found in Hong Kong, naming Kang Rong (the deceased’s widow, and the mother of Tiger Brown) as executor of the estate, notwithstanding the earlier (unsuccessful) efforts to locate a will of the deceased.
(d)The applicant was also informed on 30 September 2021 that [Rong Kang] intended to apply for a grant of probate in accordance with the Will in the High Court.
(e)Since notification of the matters in paragraphs (c) and (d), the applicant has been administering the estate effectively on an interim basis, seeking to preserve the estate’s position pending determination of who will be executor or administrator of the estate on a permanent basis.
(f)The applicant was not provided with a copy of [Rong Kang’s] application for recall of letters of administration and for grant of probate until 11 March 2022. That application was filed on 12 December 2021 and has been allocated the file number CIV-2021- 485-603131.
(g)It appears inevitable that [Rong Kang’s] application for recall of letters of administration and for grant of probate will be contested by beneficiaries of the estate, given:
(i)that filing has triggered two caveats lodged (presumably, by separate beneficiaries) against the estate, lodged on 6 October and 16 December 2021, respectively; and
(ii)a claim in the High Court with file number CIV-2022-404-08 has been filed by Gavin Brown (the deceased’s son, from a previous marriage) seeking an injunction preventing [Rong Kang] from applying for a grant of probate and an order that the applicant proceed to seek appointment as administrator.
(h)It would be prejudicial to the applicant (and potentially the beneficiaries of the estate) and/or an abuse of process for this proceeding to be heard and determined before an order from the Court as to who will be the executor or administrator of the estate on a permanent basis.
(i)The permanent executor or administrator will be able to make a final decision on whether the properties should be transferred to the plaintiff, thereby potentially avoiding the need for these proceedings.
(j)It would also be prejudicial to the applicant (and potentially the beneficiaries of the estate) and/or an abuse of process for this proceeding to be heard and determined prior to probate issues being resolved, because the properties the subject matter of these proceedings are included in two other proceedings:
(i)a claim in the Family Court (with no file number allocated yet) under the Family Protection Act 1955 by Gavin William Brown for such provision from the estate that the Court sees fit, which names the four properties that are the subject of this proceeding; and
(ii)an application initially filed in the Family Court with file number FAM-2021-004-001075 by [Rong Kang] under the Property (Relationships) Act 1976 (under which she has chosen option A) to determine the relationship property of the deceased, which, depending on the whether the four properties are held on bare trust, may include such properties (this application has recently been transferred to the High Court).
(k)There can be no prejudice to the respondent and he would not be deprived of access to the Court because the applicant seeks only a temporary stay pending resolution of the extant probate proceedings.
(l)Considerations of cost, convenience and the overall interests of justice support the granting of a stay of proceedings. There is a real risk of unfairness or oppression to the applicant and the estate if these proceedings are not stayed.
Affidavit of Mr David Boyce dated 18 March 2022
[17] Mr David Boyce, branch manager of Perpetual’s Christchurch branch, has made two affidavits in support of Perpetual’s stay application. In the first, dated 18 March 2022, he deposes Perpetual was granted letters of administration on 16 March 2021, as it was then understood that Alexander had died intestate. He says Perpetual made extensive efforts to locate a will, including by requesting information from the beneficiaries. Only Gavin responded to these requests, stating he was unaware of any will.4
[18] Mr Boyce deposes that Tiger informed Perpetual on 27 April 2021 that he did not consider the Properties formed part of Alexander’s estate. He says Perpetual subsequently was able to form the view that the Properties were likely held on bare trust for Tiger, subject to further information from the beneficiaries. Solicitors for Ms Kang later informed Mr Boyce that Alexander’s will had been located in Hong Kong, and that it named Ms Kang as executor. The solicitors requested Perpetual not take further steps in respect of the estate. Perpetual agreed.5
4 Affidavit of David Ronald Boyce dated 18 March 2022 at [4]–[6].
5 At [8]–[10].
[19] Thereafter, Mr Boyce says, he considered Perpetual’s role as administrator to effectively be limited to preserving the estate’s position. He says Perpetual takes no view on who should be the proper administrator of the estate and it will abide the Court’s decision on that matter. To that end, it has consented to the recall of letters of administration on the basis that such an order is only made on the date on which probate is granted to Ms Kang.6
[20] Mr Boyce notes the family is in a number of disputes about assets that may or may not form part of Alexander’s estate. He says there is also a dispute about who should oversee the estate, and that the former cannot be resolved without resolution of the latter. On those grounds, Mr Boyce says he does not consider it appropriate for Perpetual to dispose of estate assets while the issue of administration and probate is outstanding. Any disposition now would be inconsistent with Perpetual’s obligation to preserve the estate’s position and act in its best interests.7
Affidavit of Mr Boyce dated 1 June 2022
[21] In his second affidavit, dated 1 June 2022, Mr Boyce deposes that Ms Kang (as at that date) had not yet filed an application for probate in solemn form. Notwithstanding that, he says progress has been made towards resolution of the future of the administration of the estate (either by the appointment of a judge to case manage the various proceedings or the filing of an application in solemn form).8 As noted at
[13] above, the Court has since ordered Ms Kang to file application for probate in solemn form by 14 June 2022 and Ms Kang has filed that application dated 13 June 2022 in the Wellington High Court.
[22] Mr Boyce deposes further that given developments in related proceedings, and that a solemn form application for probate is anticipated, Perpetual’s solicitors wrote to Tiger’s solicitors enquiring whether Tiger would still like to proceed with the hearing of the present interlocutory matters. Tiger’s solicitors responded that it intended to proceed unless Perpetual had changed its position on the transfer of the Properties. Mr Boyce says Perpetual’s position is unchanged, and that it considers it
6 At [11]–[15].
7 At [19]–[20].
8 Affidavit of David Ronald Boyce dated 1 June 2022 at [4]–[11].
has conducted itself appropriately in the context of a complex and potentially high value estate.9
Tiger’s notice of opposition to application for stay of proceeding
[23] Tiger opposes Perpetual’s application to stay the proceeding.10 The grounds of opposition are:11
(a)The application for recall of letters of administration and for the grant of probate (CIV-2021-485-603131) has no relevance to this proceeding.
(b)The four New Zealand residential properties that are the subject matter of this proceeding do not form part of the estate of Alexander Gavin Brown as they are held on bare trust for the plaintiff.
(c)The identity of the administrator of the estate has no bearing on which assets form party of the estate or whether the properties must be transferred to the plaintiff pursuant to the declarations of bare trust.
(d)In any event, both the defendant and [Rong Kang], who is the applicant in proceeding CIV-2021-485-603131, have accepted that the properties are held on bare trust for the plaintiff and should be transferred to him.
(e)No prejudice will be caused to the defendant nor the beneficiaries of the estate by the determination of the application for summary judgment:
(i)If the Court determines that the properties do not form part of the estate, the properties will have no relevance to Gavin Brown’s claim under the Family Protection Act 1955 (FAM- 2022-004-000196).
(ii)[Rong Kang’s] application under the Property (Relationships) Act 1976 (FAM-2021-004-001075) does not affect the plaintiff’s title to the properties. Further, the determination of this proceeding will not prejudice any claim by [Rong Kang] to the properties.
(f)It will not be an abuse of process for this proceeding to be heard and determined prior to the determination of proceeding CIV-2021-485- 603131 or the other claims relating to the estate. The issue to be determined in this proceeding is not the subject of other proceedings before another court nor are the parties to this proceeding parties to a duplicate proceeding.
9 At [13]–[14].
10 Notice of opposition to application for stay of proceeding dated 1 April 2022 at [1]–[2].
11 At [3].
(g)There is no risk of unfairness or oppression to the defendant if the proceedings are allowed to continue.
(h)Considerations of cost, inconvenience and the interests of justice do not weigh in favour of staying the plaintiff’s claim.
(i)The granting of a stay will be oppressive and cause undue delay to the plaintiff. It is in the interests of justice that the plaintiff’s application for summary judgment is determined as efficiently as possible.
Tiger’s affidavit dated 30 November 2021
[24] Tiger has not made an affidavit specifically in support of his opposition to Perpetual’s stay application. However, he made an affidavit dated 30 November 2021 in support of his application for summary judgment, the contents of which are relevant to the stay application.12
[25] Tiger deposes that Perpetual holds the Properties on bare trust for him. He says he has claimed against Perpetual in his capacity as sole beneficiary of the bare trusts, his cause of action being an alleged breach of Perpetual’s trustee duties.13
[26] Tiger deposes that on 17 July 2017, Alexander executed four declarations of bare trust, one in relation to each of the Properties. He says four deeds of instruction were concurrently executed, along with authority and instruction forms and land transfer tax statements in relation to each of the Properties. He says the only reason the Properties were not able to be transferred at that time was that Alexander did not have an IRD number.14
[27] Tiger says he has been meeting the outgoings on the Properties since around 2017, and that he has been receiving rental income from two of the Properties in recent years. He says that on 20 December 2019, Gavin lodged caveats on the titles of the Properties. The caveats were discovered when Tiger’s lawyers ran title searches for the Properties. Tiger says that on 18 June 2021, his lawyers invited Gavin to withdraw the caveats. Gavin declined to do so, indicating he was “not prepared to accept” at
12 Affidavit of Tiger Alexander Brown in support of interlocutory application on notice by plaintiff for summary judgment against defendant dated 30 November 2021.
13 At [4]–[8].
14 At [15]–[19].
that stage that the Properties did not form part of Alexander’s estate. Tiger successfully applied to lapse the caveats.15
[28] Tiger deposes that Perpetual wrote to him on 27 April 2021, advising that the Properties were not part of the estate and were instead held on bare trust for him. On 24 September 2021, Perpetual notified him it had formed the view that the declarations of trust were valid and binding. He says Perpetual said it intended to transfer the Properties to him after checking with the other beneficiaries whether they had any relevant information.16
[29] After Alexander’s will was discovered in Hong Kong, Tiger says, Perpetual advised the beneficiaries it could no longer continue fully to act in the role of administrator. Subsequently, his lawyers wrote to Perpetual’s lawyers making further requests for transfer of the Properties and stating Tiger would file proceedings to enforce the bare trusts if the Properties were not transferred. Perpetual continued to decline to transfer the Properties for so long as the probate issue remained.17
[30] Tiger says it is unclear why Perpetual refuses to transfer the Properties when it has already accepted they are held on bare trust, do not form part of Alexander’s estate and should be transferred to him. He says there is no basis for Perpetual’s continued delay, given Ms Kang (as the likely incoming executor) has already confirmed the Properties should be transferred. The delay has been prejudicial to his position, and he needs to sell at least one of the properties to fund the legal fees that he and Kobe Investments Ltd are incurring. He is unable to secure lending against the properties and is missing out on investment opportunities as a result.18
[31] Concluding, Tiger says Perpetual is the trustee of the bare trusts. The declarations of trust are explicit that the Properties are to be transferred to him at his request. He says that over the last five months he has made seven requests for the Properties to be transferred, but Perpetual has continually refused to do so.
15 At [20]–[26].
16 At [30]–[35].
17 At [36]–[46].
18 At [47]–[49].
He requests the Court’s assistance in enforcing the bare trusts so that the Properties are transferred to him.19
Perpetual’s submissions
[32] Mr Nathaniel Walker, for Perpetual, submits there is a real risk of unfairness or oppression to Perpetual and Alexander’s estate if the proceedings are not temporarily stayed. There would be prejudice and delay, if not abuse of process, if the proceeding were to progress before the proper executor or administrator of the estate is determined, and with the Properties included as the subject matter of two separate proceedings. As well, a temporary stay would not deprive Tiger of access to the Court.
The Court should exercise its discretion to grant stay accordingly.20
[33] Mr Walker submits it would be prejudicial to hear this proceeding before the issue of permanent administration of Alexander’s estate is determined. If Ms Kang succeeds in obtaining probate and recall of the letters of administration, Perpetual will no longer have legal title to the Properties, let alone the power to determine whether they are part of Alexander’s estate or to transfer them to Tiger. For so long as Perpetual’s capacity as administrator is in question, it is inappropriate for it to determine or distribute estate assets. It is questionable whether it is even in Perpetual’s power presently to do so. Once a permanent administrator or executor is appointed, it will be in a position finally to decide the ownership of the Properties, and to transfer them to Tiger as appropriate.21
[34] Further, Mr Walker says it is relevant that the Properties have been included in two proceedings separate from the present proceeding (Ms Kang’s PRA claim and Gavin’s FPA claim). If a stay of the present proceeding is not granted, Perpetual is at risk of a claim by the estate’s beneficiaries for breach of its duties as administrator in transferring the properties; those beneficiaries may be prejudiced in pursuing their own proceedings; and there would be an abuse of process in that ownership of the
19 At [50].
20 Defendant’s submissions in support of application for stay of proceedings dated 1 June 2022 at [3.4].
21 At [4.1]–[4.8].
Properties would be determined in multiple proceedings. In those circumstances, it would be premature for Perpetual to transfer the Properties to Tiger.22
[35] Mr Walker submits Tiger would not be prejudiced by the stay. The stay would not deprive Tiger of his right of access to the courts. Perpetual is not refusing to transfer the Properties to Tiger; rather, it is waiting for a determination that it is empowered to do so and that this is the correct legal outcome. Upon determination of the probate issue, the proper administrator or executor of the estate will be able to determine the issue of the Properties’ ownership.23
[36] Mr Walker says Perpetual seeks costs to recognise that Tiger’s litigation is unnecessary, and that Perpetual has been acting consistently with its obligations to preserve the position of the estate pending determination of the probate issue. Perpetual’s concerns as to the progression of the present proceeding are appropriate.24
Tiger’s submissions
[37] Mr Mark Sandelin, for Tiger, submits it would not be prejudicial to determine these proceedings before a permanent administrator is appointed. He says the identity of the administrator is irrelevant to the beneficial ownership of the Properties — whether the Properties form part of the estate is not a matter for the executor’s discretion. He says both Perpetual and Ms Kang have confirmed the bare trusts are valid. While Perpetual holds legal title to the Properties by virtue of being administrator, it holds those titles in its capacity as trustee of the bare trusts. There can be no prejudice to the executor or administrator if this proceeding is determined.25
[38] Mr Sandelin submits there is no question Perpetual has power to transfer the Properties at this stage. It remains the administrator of the estate. In any event, if Perpetual is concerned about its power to transfer the Properties, the Court can simply vest the Properties in Tiger.26 There is no risk Perpetual will be exposed to a claim by
22 At [4.9]–[4.15].
23 At [4.16]–[4.19].
24 At [5.1].
25 Synopsis of argument for the plaintiff in response to defendant’s submissions in support of application for stay of proceedings dated 7 June 2022 at [25]–[30].
26 At [31]–[33].
a beneficiary if it transfers the Properties — any transfer would take place pursuant to a court order. And there is no potential prejudice to the other beneficiaries. Despite having had ample opportunity, none have challenged the declarations of bare trust.27
[39] Further, Mr Sandelin submits, the other proceedings in which the Properties are involved do not challenge the validity of the declarations of bare trust. He says Tiger’s claim should not be stayed simply on the premise that a third party may, at some future time, change its position regarding the validity of the declarations of trust or the beneficial ownership of the Properties.28
[40] In Mr Sandelin’s submission, Tiger has not brought double proceedings. He has not initiated proceedings in any other court to determine the beneficial ownership of the Properties and has not been joined to the other proceedings on which Perpetual relies in its application for stay. The transfer of the Properties is a discrete issue that will be more efficiently and rapidly determined in this Court, without duplication of costs.29
[41] Mr Sandelin submits that granting Perpetual’s sought stay would be prejudicial to Tiger. Tiger has no present ability to access the equity in the Properties, and his inability to pay his legal costs is prejudicial to his position in the numerous related proceedings presently on foot.30
[42] Summarising, Mr Sandelin submits there are no grounds for the stay of proceeding. Perpetual’s application is predicated on theoretical future possibilities, and the identity of the administrator has no impact on whether the Properties are held on trust for Tiger. Swift resolution of this matter will assist in advancing all matters involving Alexander’s estate towards conclusion — considerations of cost, convenience and the interests of justice do not weigh in favour of stay.31
27 At [34]–[36].
28 At [37]–[46].
29 At [47]–[53], citing So v Shi [2022] NZHC 214.
30 At [54]–[55].
31 At [56]–[58].
Legal principles
Rule 15.1 of the High Court Rules 2016 provides:
15.1 Dismissing or staying all or party of proceeding
(1)The court may strike out all or part of a pleading if it—
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b)is likely to cause prejudice or delay; or
(c)is frivolous or vexatious; or
(d)is otherwise an abuse of the process of the court.
(2)If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.
(3)Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.
(4)This rule does not affect the court’s inherent jurisdiction.
[44] The principles relating to stay are well-known. Under r 15.1(3) and the Court’s inherent jurisdiction, the Court may stay a proceeding. Its discretion will be informed by the considerations in r 15.1(1).32
[45] In determining whether to stay a proceeding, the Court will have regard to overall costs, convenience, and the interests of justice. Sensible case management is one reason favouring stay.33 Overlapping proceedings causing inefficiencies or amounting to an abuse of process may also warrant the grant of stay.34 But stay should only be exercised in “rare and compelling circumstances”, where there is a “real risk of unfairness or oppression to the defendant if the proceedings were allowed to continue”. The onus is on the applicant to establish such circumstances.35
32 Danone Asia Pacific Holdings Pte Ltd v Fonterra Co-Operative Group Ltd [2014] NZHC 1681 at [34]. See also Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53 at [89].
33 Kidd v Registrar-General of Land [2021] NZHC 1747 at [8]. See also Danone Asia Pacific Holdings Pte Ltd v Fonterra Co-Operative Group Ltd, above n 32, at [33] and [54].
34 Yeoman v Public Trust Ltd [2011] NZFLR 753 (HC) at [76]–[80]; and Zhou v Yue [2019] NZHC 2167 at [80]–[84].
35 Danone Asia Pacific Holdings Pte Ltd v Fonterra Co-Operative Group Ltd, above n 32, at [55].
Analysis
[46]Questions to be answered in determining this proceeding are:
(a)Does Perpetual have power to transfer the Properties pending resolution of the issues of the permanent executor/administrator of the estate?
(b)Could the transfer of the Properties prior to determination of the permanent executor/administrator cause prejudice to Perpetual and/or the beneficiaries of the estate, or amount to an abuse of process? In particular, if the stay is not granted, will it cause prejudice, and/or amount to an abuse of process because the Properties are included in two other extant proceedings filed by other beneficiaries of the estate?
(c)What is the prejudice to Tiger if the stay if granted?
(d)Do the overall considerations of cost, convenience and the interests of justice weigh in favour of granting the stay?
I will consider each of these questions in turn.
Does Perpetual have power to transfer the Properties pending resolution of the issue of the permanent executor/administrator of the estate?
[47] Mr Walker asserts that there is a real question as to whether Perpetual has the power to transfer the Properties at this stage. He submits that as there are extant legal proceedings regarding recall of letters of administration and a new application for a grant of probate under the will, Perpetual’s position is analogous to that of an administrator under an order nisi, or a temporary administrator under s 17 of the Administration Act 1969. Such administrators have limited powers and do not have power of distribution of estate assets. He relies on the decision in Jurisich v Harris.36
[48] Mr Sandelin, on the other hand, submits that the situation is distinguishable from Jurisich v Harris. In that case, an order nisi had been granted and the powers of
36 Jurisich v Harris [2016] NZHC 525, [2016] NZAR 754 at [25] and [37]–[39].
the interim administrator were clearly limited. Mr Sandelin also points to correspondence by Perpetual and by its solicitors, confirming that until the letters of administration are recalled and probate granted, Perpetual remains the legal administrators of the estate.37
[49] I prefer the view put forward by Mr Sandelin that Perpetual does remain the legal administrator of the estate until such time as recall of the letters of administration and grant of probate, and accordingly has the power to transfer the Properties. Even if this conclusion is not correct, I also accept Mr Sandelin’s point that following the outcome of the summary judgment application, if Tiger is successful, the Court could order vesting of the Properties in Tiger, thereby avoiding the need for Perpetual to undertake any transfer in its capacity as administrator and bare trustee.
[50] However, while Perpetual may have the legal power as current administrator of the estate to transfer the Properties, in my view it has correctly taken the position that, given its status as administrator is yet to be determined, its situation is analogous to a temporary administrator and it is premature for it to dispose of estate assets which are the subject of other extant proceedings. Consistent with this position, it has undertaken to Ms Kang’s solicitors not to take any further steps in respect of the estate. This weighs in favour of granting the stay.
Could the transfer of the Properties prior to determination of the permanent executor/administrator cause prejudice to Perpetual and/or the beneficiaries of the estate, or amount to an abuse of process? In particular, if the stay is not granted will it cause prejudice and/or amount to an abuse of process because the Properties are included in two extant proceedings filed by the other beneficiaries of the estate?
[51] Mr Walker submits that while Perpetual had reached a preliminary view that the trust deeds in favour of Tiger appeared valid, it had not yet reached a final view It now cannot do so until the issue of the permanent executor/administrator is resolved. He submits that Perpetual’s goal is to preserve the position of the estate pending that determination.
37 Submissions for the plaintiff in response to the defendant’s submissions in support of application for a stay of proceedings, above n 25, at [32].
[52] Mr Walker submits that there is a risk, if the proceedings are not stayed, Perpetual will be exposed to a potential claim by beneficiaries for its failure to meet its duties and obligations as an administrator. He submits that in particular Perpetual would be forced to distribute assets despite the uncertainties relating to its status as administrator and the assets being included in two other extant proceedings, as discussed below. He submits that such a distribution would also be contrary to Perpetual’s assurance to the beneficiaries that it would not take any steps in the administration of the estate while the question of the permanent executor/administrator is outstanding. This assurance was given at the request of the named executor in the will, Ms Kang.
[53] Mr Walker submits the stay should be granted as the Properties are included in two extant proceedings involving the estate -—Ms Kang’s PRA claim and Gavin’s FPA claim. He submits that if the stay is not granted there is a risk that:
(a)Perpetual will be prejudiced by being exposed to the risk of a claim by the other beneficiaries for breach of its duties as administrator in transferring the Properties;
(b)the beneficiaries bringing those other proceedings will be prejudiced because the Properties are no longer part of the estate if their claims are successful; and/or
(c)there would be an abuse of process of the Court whereby ownership of the Properties is determined in multiple proceedings.
[54] Mr Walker submits it is not yet clear whether ownership of the Properties will be disputed or resolved in Ms Kang’s PRA claim or Gavin’s FPA claim, as these claims are both at an early stage.
[55] Mr Walker acknowledges that the plaintiff has not filed double proceedings in multiple courts. In that respect, the decision of Kidd v Registrar-General of Land38 can be distinguished as in that case a dispute surrounding the ownership of farm
38 Kidd v Registrar-General of Land, above n 33, at [13]–[14].
property led to multiple proceedings in the Māori Land Court and the High Court. However, as submitted by Mr Sandelin, in that case the proceedings were dealing with “essentially the same issues” between parties.39
[56] However, Mr Walker does rely on the decision in Zhang v Deng,40 for authority for the proposition that while two sets of proceedings may be separate, they may also be “sufficiently connected so that it would be unrealistic to divorce them to determine them in tandem without reference to each other”. He submits this is the case in relation to these proceedings, Ms Kang’s PRA claim and Gavin’s FPA claim. Accordingly, a stay should be granted.
[57] Mr Sandelin, on the other hand, submits that in the proceedings brought by Ms Kang and the proceedings brought by Gavin, no challenge has been made to the declarations of trust on which Tiger relies for his claim to ownership of the Properties. In relation to Gavin’s FPA claim, Mr Sandelin in his submissions41 extracts paragraphs from Gavin’s affidavits suggesting that nowhere does Gavin challenge the validity of the bare trust. He asserts that Gavin has recognised that the determination of these proceedings to determine ownership of the Properties is necessary before the extent of the assets of the estate can be assessed for the purposes of Gavin’s FPA claim.
[58] In my view, there is a possibility that, as part of Gavin’s FPA claim, there could be a challenge to the ownership of the Properties. Gavin did lodge caveats, although he allowed them to lapse. There is, in my view, a risk of prejudice to Perpetual and the other beneficiaries of the estate that the Properties are removed from the estate before the issue of the permanent executor/administrator is determined and the permanent executor/administrator makes a final decision regarding whether the bare trusts are valid.
[59] In relation to Ms Kang’s PRA claim, Mr Sandelin has pointed to the fact that Ms Kang has not challenged the validity of the declarations of bare trust and indeed the letter from Ms Kang’s solicitors, dated 5 November 2021, advised that Ms Kang
39 At [10].
40 Zhang v Deng [2019] NZHC 2531 at [53].
41 Submissions for the plaintiff in response to the defendant’s submissions in support of application for a stay of proceedings, above n 25, at [40]–[43].
agrees the Properties are held on bare trust for the plaintiff and should be transferred to him.
[60] However, against this, the Properties are included in Ms Kang’s PRA claim, which again is at an early stage. It is conceivable that the bare trusts may ultimately be challenged as part of that claim, with consequent prejudice to Perpetual and beneficiaries of the estate if the Properties were transferred to Tiger and removed from the estate.
[61] Mr Sandelin relies on the decision in So v Shi.42 He argues that this decision can be applied by analogy to the present proceedings, and so I deal with it in some detail. In that case, the plaintiff (Mr So) sought summary judgment against his son and daughter-in-law, claiming they held certain shares on bare trust for him. The son and daughter-in-law had separated and the issue of ownership of the shares was also raised in the contest of a Property (Relationships) Act 1976 dispute between the son and daughter-in-law in the Family Court.
[62] The daughter-in-law opposed the summary judgment application on the basis that she disputed the validity of the bare trustee. She sought a strike-out or stay of Mr So’s claim on the basis that the Family Court was already seized of the dispute over the ownership of the shares and the proceeding was consequently an abuse of process. Davison J declined to grant the stay.
[63] Mr Sandelin points out that, unlike the present case, the stay was declined notwithstanding there was a dispute as to the validity of the trust deed; the proceedings in the Family Court also directly involved the issue of Mr So’s beneficial ownership of the shares; Mr So was joined as a respondent to the proceedings in the Family Court which had been filed before the commencement of the High Court proceeding; and he had filed an affidavit in that proceeding setting out his claim to the beneficial ownership of the shares.
42 So v Shi [2022] NZHC 214.
[64] Mr Sandelin submits that Davison J in that decision declined to grant the stay for the following reasons, which Mr Sandelin submits are applicable to the present case:
(a)The plaintiff had not initiated proceedings in the Family Court. The plaintiff was only a third party not directly involved in the Family Court proceedings and had not commenced the High Court proceedings seeking determination of the issues he had already sought to have determined in the Family Court. Mr Sandelin submits that similarly Tiger has not initiated the proceedings in any other court to determine the beneficial ownership of the Properties and, as in So v Shi, Tiger is a third party not directly involved in the Family Court proceeding and did not commence these proceedings seeking determination of issues he had already sought to be determined in the Family Court proceedings.
(b)Although Mr So had filed a lengthy affidavit in the Family Court proceedings setting out the basis for his claim to beneficial ownership of the shares, by doing so he did not seek relief from that Court by way of ownership. He sought recognition of his beneficial ownership rather than determining legal ownership. Mr Sandelin submits that similarly Tiger has not been joined to the proceedings relied upon by Perpetual and has not filed any documents in those proceedings.
(c)Davison J found that the resolution of the Mr So’s claim to beneficial ownership of the shares could be determined more rapidly and efficiently in the context of the High Court proceedings. Mr So’s claim involved a discrete legal issue and, as he was the third party to the Family Court dispute, there was no compelling reasons why his claim should be determined by the same Court that would determine the relationship property dispute. Mr Sandelin submits that in the present case the matters relied on by Perpetual are not ready for a hearing. He says, analogous with Mr So, that the dispute around the Properties is a discrete legal issue that would be more efficiently and rapidly
determined by this Court, and there will be no duplication of costs as this proceeding is ready to be determined now.
[65] Mr Walker sought to distinguish So v Shi on the basis that it did not involve a challenge to the status of the administrator but only a challenge to the status of the bare trust. As I understand Mr Walker’s argument in the present case, as the stay sought is only pending resolution of the issue of permanent executor/administrator and not until resolution of Ms Kang’s PRA claim and the resolution of Gavin’s FPA claim, this makes So v Shi less applicable to the present case. If the stay was sought until resolution of Ms Kang’s PRA claim and Gavin’s FPA claim, then delay, as was a factor in So v Shi, is less applicable and does not weigh in favour of declining the stay to the extent it might have.
[66] My overall conclusion on this issue is that there is risk of prejudice to Perpetual and the beneficiaries of the estate if Perpetual is obliged to transfer the Properties prior to resolution of the permanent executor/administrator. The two extant proceedings presently do not include challenges to the bare trusts relied on by Tiger for his claim to the Properties but the proceedings could evolve to include those challenges. As in the Zhang v Deng decision, the proceedings are “sufficiently connected” that there is a risk that ownership of the Properties could be at issue in multiple proceedings.
What is the prejudice to Tiger if the stay is granted?
[67] Mr Sandelin submits that a stay will be a prejudicial to Tiger. He submits that Tiger has no present ability to access the equity in the Properties, for example to raise mortgages to fund other investments or costs, including legal costs. Mr Sandelin submits that similarly Tiger’s company, Kobe Investments Ltd, is currently subject to undertakings preventing the company and Tiger from dealing with the depository instruments that are in issue in the Hong Kong proceedings. He submits the ability of Tiger to pay his legal costs is prejudicial to his position in the numerous proceedings currently on foot.
[68] Mr Walker submits that the prejudice which Tiger may suffer is not substantial. He submits staying the proceeding does not deprive Tiger of his right of access to the Courts (being a factor which weighed in favour of granting the stay in the Danone
decision) but is only a temporary stay of the proceedings until the permanent executor/administrator is resolved.
[69] My conclusion on this point is that prejudice to Tiger is not substantial as the stay is only until the issue of the permanent executor/administrator is determined, and accordingly does not weigh significantly against granting the stay.
Do the overall considerations of cost, convenience and the interests of justice weigh in favour of granting the stay
[70] In my view, these considerations weigh in favour of granting the stay. I base this on the conclusions I have reached at [50], [66] and [69].
Result
[71]I make the following orders:
(a)This proceeding is stayed pending determination of the extant application for recall of letters of administration and for grant of probate (CIV-2021-485-603131) or the conclusion of any other Court process that determines who should be the administrator or executor of the estate of Alexander Gavin Brown.
(b)Costs are awarded to Perpetual on a 2B basis.
…………………………….. Associate Judge Taylor
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