Coote v Warren

[2013] NZHC 3210

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2005-488-000022 [2013] NZHC 3210

IN THE ESTATE OF         TERENCE MIGHT COOTE of

Whangarei, Retired

Deceased

BETWEEN  JAMES TERENCE COOTE Applicant

ANDDIANNA MIGHT WARREN AND JULIE BLANCHE COOTE

Respondents

Hearing:                   28 November 2013

Counsel:                  A Gilchrist for Applicant

A J Robinson for Repondents

Judgment                 3 December 2013

JUDGMENT OF PANCKHURST J

Introduction

[1]      The late Mr Terence Coote died on 24 December 2004, his wife having pre- deceased him.  He left a will dated 7 October 2004.  Probate of that will was granted to his three children who are the parties in this proceeding.  They were appointed as the executors  and  trustees  of  their  father’s  estate.   They are  also  the  residuary beneficiaries of the estate in equal shares.

[2]      In  July  2013  James  Coote  (James)  applied  to  remove  his  sisters  as administrators of the estate, or in the alternative for an order appointing the Public

Trust as executor of the estate.

COOTE v WARREN AND ANOR [2013] NZHC 3210 [3 December 2013]

[3]      Dianna Warren (Dianna) and Julie Coote (Julie) opposed the application and sought, instead, that there be no removals or, alternatively, that their brother James be removed leaving them to complete administration of the estate.

[4]      At a case management hearing on 23 August 2013, Heath J set the originating application down for hearing at Auckland in the Duty Judge list.  He also made a timetable for the exchange of submissions.  On 22 November 2013 the respondents sought  an  adjournment  of  the  hearing  after  the  filing  of  a  new  proceeding  on

11 November 2013 in which they claim that James was guilty of equitable fraud in relation  to  the  administration  of  the  estate.     Counsel  for  Dianna  and  Julie, Mr Robinson, contended in seeking the adjournment that the appropriate course was to hear both the originating application and the new proceeding together, not hear the removal application first.  Heath J declined the adjournment application.

[5]      Administration of the estate is advanced.  Various assets have been realised and legacies paid.  The estate included farmland, the last of which was a block at Pataua North, near Whangarei.  The siblings agreed to a subdivision of the block into three  lots  each  with  a  beach  frontage.    A deed  of  arrangement  was  signed  in February 2012 to give effect to the subdivision.  It included a term that at the time of the final wash-up a sum of $142,500 would be paid to James Coote “to equalise the distribution”. At this time it seems the administrators/beneficiaries were on the brink of finalising the estate administration.

[6]      However,  Dianna  and  Julie  became  aware  that  their  brother  intended  to establish a public camping ground on his lot in the subdivision.  They were unaware of this at the time the deed was signed.  Their concern is that development of the land for this purpose will detrimentally affect the value of their lots.  They maintain that James acted unconscionably in not revealing his development plans before the deed was signed.   This, as I understand it, is the basis of the further proceeding issued last month (although I have not seen the statement of claim).

[7]      Prior to the issue of that proceeding various other points of dispute had arisen in  relation  to  the  administration.    I  shall  itemise  these  shortly.    An  impasse

developed.  Despite some initiatives to find a way forward, no accommodation was reached and administration of the estate was at a standstill.

The competing contentions

[8]      James abandoned his claim seeking removal of his sisters as administrators. He accepted that, if there was to be a removal, it should be of all three siblings, with the Public Trust appointed to finalise the administration of the estate.

[9]      Dianna and Julie contended that there was no need for the removal of anyone. The siblings have been able to successfully distribute their mother’s estate and the larger part of their father’s estate.   They considered the better course was to consolidate the present application for removal and the recently filed proceeding alleging equitable fraud against James, so that both may be determined together and with the benefit of cross-examination.   In the meantime the present administrators should remain in place pending the outcome of that substantive hearing.   In the alternative, and if anybody was to be removed, Dianna and Julie considered that James should either stand down or be removed by the Court.

The test for removal

[10]     Section 21 of the Administration Act 1969 provides that “... 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 place, on such terms and conditions in all respects as the Court thinks fit”.  There is a parallel provision for the removal of trustees in s 51 of the Trustee Act 1956.  This is of some relevance, since it may be that the three siblings have assumed the role of trustees responsible for perfecting the trust in relation to the residue.  However, this matters not, because the test in s 51 is essentially the same as that in s 21.

[11]     The term expedient means something less than necessary, rather that removal is a suitable, practical and efficient step to take in order to advance the interests of the estate and its beneficiaries. As to this see the discussion in Crick v McIlraith.1

[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 Courts 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 dependant and involves a large element of discretion.   The circumstances of individual cases will necessarily be determinative of their outcome.

[13]     In the course of counsel submissions there was some dialogue concerning the possible course of events in this case.  I indicated a preference for the view that an independent  external  executor/trustee should  be  appointed,  if  the  Court  were  to intervene. The background, including the further proceeding alleging equitable fraud against James indicated to me that a fresh start may well be preferable.

[14]     A short adjournment was taken during which Mr Robinson took instructions. He then advised me that his clients would not oppose the appointment of the Public Trust if I contemplated taking that course.  Following this indication there was no need for further argument concerning the substantive outcome, but I did hear submissions concerning costs.  I shall return to that aspect shortly.

Analysis

[15]     In light of developments at the hearing I can express my conclusions quite briefly.

[16]     The  affidavit  evidence  established  the  existence  of  various  points  of difference between the parties. These included in no particular order:

1      Crick v McIlraith [2012] NZHC 1290 Osborne AJ at [17]-[18].

(a)       the proper treatment of a fee incurred in obtaining taxation advice

($8,647), and of roading costs ($12,338);

(b)whether an amount for administration services ($25,025) was properly charged to the estate;

(c)       whether chattels had been divided or otherwise brought to account, including a tractor, a ride-on mower and a washing machine; and

(d)whether agreement could be reached concerning a final distribution of estate funds (over $200,000) between the parties.

In addition, the new proceeding raises important new issues requiring resolution, including  potentially  the  validity  of  the  deed  of  arrangement  concluded  in February 2012.

[17]     Deliberately, I do not intend to venture into these matters of dispute.   For present purposes I think it is the fact of these differences that is important.  I am also satisfied that administration of the estate has been stalled for many months.   The extent and nature of the matters in dispute, in my view, shows that it is expedient to remove the present executors/trustees and appoint the Public Trust at Whangarei to complete the administration of the estate.

[18]     I commend the parties for their acceptance of this option, albeit that this only occurred with some prompting and in the course of the hearing.  There is dignity in achieving a mutually accepted resolution, as opposed to one imposed on the parties by a Court, particularly in family matters of this kind.

Costs

[19]     Mr Gilchrist sought costs.   He submitted that, despite the final outcome, James incurred significant costs in assuming this initiative to resolve the administration impasse and facilitate the appointment of a new executor/trustee. Mr Robinson, on the other hand, submitted that in light of the final resolution, costs should lie where they fall.

[20]     I am satisfied that an award of costs is justified.  An application for removal was necessary in the circumstances of this case.  It was opposed, although ultimately common ground was found.  I consider that the appropriate course is for costs to be quantified and fixed at this point, but that their payment should occur in the context of the final wash-up of the estate.

[21]     To that end I direct that a memorandum in support of costs may be filed within 10 working days, and that the respondents should have seven workings days within which to respond.

Solicitors:

A J Gilchrist, Auckland

Eastland Legal, Gisborne