Casse v Shih

[2024] NZHC 1410

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2023-404-1912

[2024] NZHC 1410

UNDER

Part 19 of the High Court Rules 2016 and ss 6(2) and 19 of the Administration Act 1969

IN THE MATTER OF

The Estate of Yu-Huan Shih

BETWEEN

MELODY HSUAN-CHU CASSE and SHEU-HARN CRYSTAL LIN

Applicants

AND

CHIEN-NAN SHIH

Respondent

Hearing:	15 February 2024
Appearances:	A McDonald for the applicants D Oh for the respondent
Judgment:	31 May 2024

JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 31 May 2024 at 12.30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

CASSE and LIN v SHIH [2024] NZHC 1410 [31 May 2024]

[1]    The applicants, Melody Hsuan Casse (Melody) and Sheu-Harn Crystal Lin (Crystal), are the only grandchildren of the late Yu-Huan Shih (Mrs Shih). Mrs Shih died on 19 March 2021.

[2]    Mrs Shih had two children. One was the applicants’ late mother, Sheree Pi-Wu Lin (Sheree). Sheree died in 2011. The other is the respondent, Chien Nan Shih (Jason), the applicants’ uncle.

[3]    Jason is the  sole executor and  beneficiary  of  Mrs Shih’s last will, which    is dated 15 May 2018 (2018 Will). The applicants consider that Jason exerted undue influence over Mrs Shih to execute the 2018 Will. They contend that an earlier will (under which they are beneficiaries) is valid. In case they are wrong, and the 2018 Will is valid, the applicants intend to make a claim against Mrs Shih’s estate under the Family Protection Act 1955 (the FPA).

[4]    There is only a very modest amount in Mrs Shih’s estate. This means that the applicants will enjoy no material benefit from proving the earlier will or from an FPA claim.  The applicants  believe that the modest size of Mrs Shih’s  estate is a result  of Jason receiving assets from the estate in the years preceding Mrs Shih’s death. They consider that various transactions between Mrs Shih and Jason should be investigated and, if warranted, a proceeding should be brought by the estate to recover assets that will augment the estate. To  that end,  the  applicants commenced  this proceeding,  in which they apply for orders granting them administration of Mrs Shih’s estate. Jason opposes the application.

The applicants’ underlying case and Jason’s response

[5]    Following their grandmother’s death, the applicants wanted to understand the terms of Mrs Shih’s last will. They expected provision to have been made for them given that their mother, Sheree, had predeceased Mrs Shih.

[6]    The applicants say that their efforts to understand the terms of Mrs Shih’s last will were stonewalled by Jason, and that this led to them filing, in April 2022, a pre- commencement discovery application. An order for pre-commencement discovery was ultimately made by consent.

[7]    From discovery the applicants learned that  Mrs  Shih had made four wills,   in 2006, 2012, 2013 and 2018. Executors named in the wills included Michael Chieng (a friend of Mrs Shih and a member of her church), Robin Lin (the applicants’ father) and Jason. The wills dealt with three properties that Mrs Shih owned at various times: a property in Memorial Avenue, Mount Roskill, and two properties in Mount Roskill Road, Mount Roskill. Those properties were left to different beneficiaries in different wills. The wills also differed as to cash gifts and as to who benefited from any residue.

[8]The terms of the four wills are summarised in the following table:

2006 Will	2012 Will	2013 Will	2018 Will
Executors	Mr Chieng and Sheree	Mr Lin and Mr Chieng	Mr Chieng	Jason
Memorial Ave	Jason	Jason and his wife	Jason and his wife	Jason
Mount Roskill Road 1	Sheree	Crystal and Melody	Jason	Jason
Mount Roskill Road 2	Jason	Jason	Jason	(Sold in 2017)
Cash gift	$20,000 to Church of Christ New Zealand $350,000 to Sheree $350,000 to Jason $100,000 to Melody $50,000 to Crystal	$20,000 to Church of Christ New Zealand	$20,000 to Church of Christ New Zealand
Residue	Half to Jason Half to Sheree	Half to Jason Half to Crystal and Melody	Half to Jason Half to Crystal and Melody	Jason

[9]    Mrs Shih executed the 2018 Will on 15 May 2018. Mrs Shih and Jason signed or executed several other documents at the same time:

(a)They signed sale and purchase agreements under which Mrs Shih sold to Jason the two properties that she still  owned (and which she was  to leave to Jason under the 2018 Will), namely the Memorial Avenue property and one of the Mount Roskill Road properties. The prices were $930,000 and $680,000 respectively and the settlement date for each purchase was 16 May 2018 (the following day).

(b)They executed a deed in which Mrs Shih agreed to transfer the two properties without receiving any payment from Jason, Jason acknowledged a debt to Mrs Shih for the purchase prices (totalling

$1,610,000), and Mrs Shih forgave that debt.

(c)Mrs Shih executed enduring powers of attorney in which she appointed Jason her attorney for property and for care and welfare. The power of attorney for property came into effect immediately.

[10]   The applicants say that the discovery shows that on the day Mrs Shih appointed Jason as her power of attorney, she had funds of approximately $1.159 million in her bank accounts, most on term deposits. By the time of Mr Shih’s death in March 2021, only $38,433.93 was left in her accounts. The applicants say that, in summary, when Mrs Shih executed the 2018 Will she had two real properties and funds of approximately $1.159 million, but by the time of her death she had no real property and bank funds of only about $40,000.

[11]   Jason has brought a separate proceeding seeking probate of Mrs Shih’s 2018 Will. In that proceeding, the applicants claim that Mrs Shih made her 2013 and 2018 Wills under Jason’s undue influence. They seek probate of Mrs Shih’s 2012 Will. They have also indicated that, if the 2018 Will is found to be Mrs Shih’s last valid will, they will bring a claim against Mrs Shih’s estate under the FPA.

[12]   The 2012 Will makes significant bequests to the applicants, namely the Mount Roskill Road property and half the residue. However, there will be no material benefit to the applicants in obtaining probate of that will (or in bringing an FPA claim) if Mrs Shih’s estate remains as it currently is, with no real property and bank funds of

only about $40,000. For this reason, the applicants have brought the present proceeding seeking orders granting them administration of Mrs Shih’s estate. If granted administration, the applicants say they will investigate the circumstances     in which the real property was transferred to Jason in 2018 and in which the bank funds diminished after Jason was given power of attorney. Depending on the outcome of those investigations they may then bring a proceeding to bring back into Mrs Shih’s estate the property that was divested from her estate after 15 May 2018.

[13]   The applicants gave notice to Jason on 27 July 2023 that they intended to apply to this Court to be appointed administrators of Mrs Shih’s estate. By that time (more than two years after Mrs Shih’s death) Jason had not brought any proceeding seeking probate of Mrs Shih’s  2018 Will.   Jason brought his probate proceeding only on    25 August 2023.

[14]   The applicants have, in their affidavits in support, provided details of what they say was Jason’s undue influence over Mrs Shih  and of his plan to divest her estate  of assets so that there was no point in the applicants contesting the 2018 Will or making an FPA claim. It is clear from the affidavits that there are long-running and deep-seated grievances held by the applicants (and their father) against Jason. It is equally clear from Jason’s response that he has serious grievances of his own against the applicants (and their father). It is not necessary to traverse any of these grievances in this judgment.

[15]   Jason’s response does not dispute that Mrs Shih made the various wills in the terms outlined above. But Jason says he did not unduly influence Mrs Shih in the making of the 2013 and 2018 Wills. He provides evidence of Mrs Shih’s mental competence during 2018. Jason does not dispute that the other documents were executed by him and Mrs Shih on 15 May 2018, does not dispute that Mrs Shih had two properties and funds of approximately $1.159 million when she executed her 2018 Will, and accepts that by the time of her death three years later her estate consisted  of bank funds of only about $40,000. His affidavit does not engage directly with the applicants’ case that the diminution in Mrs Shih’s assets between 15 May 2018 and her death warrant investigation and a possible proceeding. Jason sees that as a matter to address in the probate proceeding that he has brought.

The basis of the application

[16]   The applicants seek the orders granting them administration of Mrs Shih’s estate under s 6(2) or s 19 of the Administration Act 1969. Relevantly, ss 6 and 19 provide:

6Discretion 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.

19       Proceedings where executor neglects to prove will

(1)In any case where any executor named in a will neglects or refuses to prove the will, or to renounce probate thereof, within 3 months from the death of the testator, the court may, upon the application of any other executor or executors or of any person interested in the estate or of Public Trust or of the Māori Trustee or of any creditor of the testator, grant an order nisi calling upon the executor who so neglects or refuses to show cause why probate of the will should not be granted to that executor alone or with any other executor or executors or, in the alternative, why administration should not be granted to the applicant or some other person.

(2)Upon proof (whether by affidavit or otherwise) of service of the order, or upon the court dispensing with service of the order, if the executor who is so called upon does not appear or upon cause being shown, the court may make such order for the administration of the estate, and as to costs, as appears just.

Legal principles

[17]   The Court of Appeal has said, in the related context of an application under   s 21 of the Administration Act for the discharge or removal of an administrator, that:1

(a)The starting point is the Court’s duty to see estates properly administered.

(b)The jurisdiction involves a large discretion which is heavily fact- dependent.

(c)The wishes of the testator (evidenced by the appointment of a particular executor) are to be given consideration, but ultimately the question    is 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.

(e)Hostility as between administrators and beneficiaries is not of itself    a reason for removal, but hostility will assume relevance if it risks prejudicing the interests of the beneficiaries.

1      Tod v Tod [2015] NZCA 501, [2017] 2 NZLR 145 at [22], adopting the approach set out in

Farquhar v Nunns [2013] NZHC 1670 at [13].

[18]   This Court has held that this approach is also generally applicable to applications under s 6(2) for the grant of administration to someone other than the named executor.2 The parties were content that I should take the same approach here, and I do so.

[19]   The parties did not address me on the principles applying to applications under s 19 of the Administration Act. On the view that I take of the application, it is not necessary for me to address s 19 further.

Should the applicants be granted administration of Mrs Shih’s estate?

[20]   Ms Oh, counsel for Jason, submitted that there was an overarching reason, even before one took into account the factors generally applied under s 6(2), that the application should fail. This was that the application was brought on the basis that Jason had not taken any steps to administer Mrs Shih’s estate and that the appointment of the applicants as administrators was therefore necessary to give them the means  to address their concerns about the 2018 Will. Ms Oh said that Jason had since taken steps to administer the estate by bringing his probate proceeding and that the probate proceeding would provide a vehicle for the applicants to ventilate their concerns about the 2018 Will.

[21]   I do not accept that submission. First, the applicants’ application was not brought solely on the basis of Jason’s inaction in respect of the estate. That was but one ground which the applicants said favoured a grant of administration to them. Jason’s inaction (until this proceeding was brought) remains relevant to whether there should be such a grant. Secondly, Ms Oh’s submission assumes that the applicants’ only concern is as to the validity of the 2018 Will. Ms Oh is correct that that concern can be (and should be3) ventilated in the probate proceeding. But the applicants’ other concern (and perhaps the more important one) is that Mrs Shih’s estate was depleted. That is not something that can be ventilated in the probate proceeding.

2      Harvey v Harvey [2021] NZHC 1771 at [39]–[40]; Kang v Perpetual Trust Ltd [2023] NZHC 1501 at [12]–[15].

3      Ms McDonald, for the applicants, accepted at the hearing that the probate proceeding was the proper vehicle for determining which of Mrs Shih’s wills is valid.

[22]   I now turn to consider the s 6(2) factors. The starting point is the Court’s duty to see estates properly administered. Administration of Mrs Shih’s estate involves obtaining probate of her last valid will, identifying and realising the assets  that are or should be in her estate, and distributing those assets in accordance with her will. The last step will not be difficult. In respect of the other two:

(a)Jason was very slow to bring his probate proceeding. He explained his delay by saying that the applicants had lodged a caveat against Mrs Shih’s estate in April 2021, made their pre-commencement discovery application in April 2022, and that settlement offers were exchanged after the discovery application, but no agreement was reached. These matters do not justify his delay. The caveat did not prevent him from applying for probate. Nor did the discovery application. It may have been reasonable to delay any probate proceeding while negotiations were on foot, but only for a short time. Jason took two and a half years to apply for probate. This does not give me much confidence that Jason will properly attend to administration of Mrs Shih’s estate.

(b)Identifying the assets currently in the estate is a straightforward matter. Identifying and realising the assets that should be in her estate is more complex. It potentially involves clawing back assets from Jason into the estate. Jason will not take steps in respect of that. The applicants will.

[23]This factor therefore clearly favours the applicants.

[24]   The wishes of Mrs Shih have to be given consideration. Mrs Shih chose Jason as her executor in the 2018 Will. The weight of this is diminished by the validity of the 2018 Will still being in issue. On the other hand, in none of the four wills that Mrs Shih made did she choose the applicants as executors. Overall, this factor favours Jason.

[25]   Notwithstanding Mrs Shih’s wishes, the ultimate question is what is expedient in the interests of the beneficiaries. The identity of the beneficiaries depends on which of Mrs Shih’s wills is found to be valid. In any event, what counts is the interests

of the beneficiaries in their capacity as beneficiaries. An interest that a beneficiary might have in a different capacity – such as Jason’s interest in not having to return funds to the estate – is irrelevant.   Plainly, it is in the interests of the beneficiaries   as beneficiaries to have transactions investigated to see whether the estate can be augmented by recoveries from Jason.

[26]   Ms Oh submitted that the applicants’ desire to investigate whether Jason had wrongfully taken assets from Mrs Shih did not mean it was expedient to grant them administration of her estate. She said that the applicants did not have to be appointed administrators in order to investigate possible removal of assets. She also said that the applicants could advance this issue in the probate proceeding. She therefore submitted it was not expedient to appoint the applicants as administrators.

[27]   I do not accept that submission. It is true that the applicants can investigate their concerns to some extent without being administrators. They have already done that by analysing the documents they obtained through the pre-commencement discovery. But there are some investigatory steps that they will be able to take (or be able to take easily) only if they are administrators, such as obtaining information from Mrs Shih’s bank that is confidential to the estate. And Ms Oh was unable to explain the basis on which the applicants could, in the probate proceeding, make claims on behalf of the estate against Jason.

[28]   Ms Oh also submitted that it was not expedient to grant administration to the applicants because they have indicated an intention to bring an FPA claim. She said that if the applicants were appointed administrators they would be in a position of irreconcilable conflict because of the contemplated FPA proceeding. I consider that Ms McDonald, counsel for the applicants, was correct that the possibility of any such conflict can be managed if and when it arises (which it will not necessarily do).4

[29]   The final factor that I consider relevant is the hostility between the applicants and Jason. The hostility goes both ways. Accordingly, it would be preferable if neither the applicants nor Jason were granted administration of Mrs Shih’s estate. However, there is no independent person willing to act as administrator. It was common ground

4      Toogood J took such an approach in Jackson v Jackson [2016] NZHC 1723 at [12].

at the hearing that there would be no point in inviting a professional trustee to act    as administrator, as there were insufficient funds in the estate for that purpose. Someone has to be administrator, and in this case it will be someone who has a hostility towards a beneficiary of the estate.

[30]   Overall, the factors I have canvassed favour granting administration to the applicants. Standing back, the overriding factor in this application is that from the time that Mrs Shih  made the 2018 Will  she effectively  gifted two real  properties  to Jason and over the following three years, during which time Jason held a power  of attorney, Mrs Shih’s bank funds diminished by over $1 million. Jason has chosen not to explain these occurrences at this point. They deserve further investigation and possibly action. If Jason is appointed administrator, he will not take those steps. If the applicants are appointed, they will.

[31]I will therefore grant administration to the applicants.

Costs

[32]   Each side said the other was taking a position that lacked merit and that there should accordingly be an increased award of costs. Both sides were wrong. There is no basis for an uplift. The applicants are to have costs, but on a 2B basis.

Result

[33]   I make an order granting administration of the estate of Mrs Shih to the applicants.

[34]   Jason is to pay the applicants’ costs on a 2B basis together with their reasonable disbursements.

Campbell J