Courteney v Courteney - [2015] NZHC 2563

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2013-485-5912 [2015] NZHC 2563

UNDER the Family Protection Act 1955

IN THE MATTER

of the estate of JOAN AYLEEN COURTENEY

BETWEEN

STEVEN COURTENEY First Plaintiff

KLAUDIA ARIANE COURTENEY Second Plaintiff

AND

STUART COURTENEY Defendant

Hearing: 12 October 2015

Counsel:

P W Michalik for Plaintiffs
No appearance for Defendant

Judgment:

20 October 2015

JUDGMENT OF CLIFFORD J

Background

[1] This is a family protection claim by the plaintiffs, a son and granddaughter of the deceased. The defendant, the other son, is the executor and sole beneficiary under the will.

[2] The plaintiffs say that, in leaving her entire estate to the defendant, Mrs Courteney failed to discharge her moral obligations. They say an earlier will,

COURTENEY v COURTENEY [2015] NZHC 2563 [20 October 2015]

which divided her estate more or less equally between her two sons, would have done so.1

[3] The plaintiffs’ substantive claim is yet to be heard.

[4] Facing difficulties with discovery and other matters, the plaintiffs applied for an order recalling probate and appointing an independent executor, Mr Lance Pratley, a solicitor of Wellington, in place of the defendant. The background to that application is fully explained in a Minute of MacKenzie J (who, before his retirement, was dealing with this matter) of 16 April 2015:

[1] … At the hearing this morning, I had an exchange with counsel about the issues between the parties which have led to this application being brought, to seek to identify the best way forward for the litigation.

[2] The essence of the issue before the Court at this stage is how best to achieve an “equality of arms” between the plaintiffs and the defendant, given the superior position of the defendant which derives from his possession of material and information in his capacity as an executor.

[3] The defendant has two distinct and separate roles in these proceedings. The first is his role as executor. In that role, he owes a duty of even-handedness between the plaintiffs, as claimants against the estate, and the beneficiaries under the estate.2 Aspects of that duty are given statutory expression in s 11A of the Family Protection Act 1955. The duty is wider than that. The second is his role as beneficiary. In that capacity, the defendant is able to take a partisan stand supporting the dispositions in the will.

[4] That dual role of the defendant creates a conflict of interest. The defendant has filed an affidavit sworn on 13 March 2015 in which he says that on balance, he does not consider he has a conflict of interest. That is wrong. He does. The conflict is, as a matter of law, inherent in the dual role.

[5] The dual role of the defendant as both executor and beneficiary, and the conflict of interest which that necessarily involves, make it highly desirable that the defendant should have had separate legal advice in relation to each of those capacities. To date, his solicitors have been…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Courteney v Courteney

Details

AGLC: Courteney v Courteney [2015] NZHC 2563
Case: [2015] NZHC 2563
Decision Date: 20 October 2015

CaseChat Overview and Summary

The plaintiffs in the case, Steven Courteney and Klaudia Ariane Courteney, are seeking to have the executor of their mother's estate, Stuart Courteney, removed from his role due to concerns over his ability to act impartially. The dispute revolves around the interpretation of the Family Protection Act 1955 and the moral obligations of the deceased towards her children. The plaintiffs argue that their mother failed to discharge her moral obligations by leaving her entire estate to Stuart, while an earlier will would have divided the estate more equally between the two sons. The substantive claim is yet to be heard.

The legal issues before the court were whether the defendant's dual role as both executor and sole beneficiary of the estate created a conflict of interest, and whether the defendant had properly discharged his duty of even-handedness as executor. The court found that the defendant's dual role did indeed create a conflict of interest, and that he had failed to discharge his duty of even-handedness as executor. The court was satisfied that the appointment of an independent executor and trustee in place of the defendant was the appropriate course of action to ensure that the plaintiffs' claims could be fairly heard.

The court found that the defendant had not obtained separate legal advice for his role as executor, despite the clear conflict of interest in his dual role. The court was also concerned about the defendant's failure to provide information to the plaintiffs in a timely manner, and his persistent attempts to inflate the value of the estate. The court noted that the defendant had made an out-of-court settlement offer to the plaintiffs in 2014, which was not accepted. The court found that the appointment of a new executor and trustee was necessary to ensure that the plaintiffs' claims could be heard fairly, and that the costs of this appointment would be payable from the estate.

The court ordered that probate of the deceased's will be recalled and that Mr Lance Pratley, a solicitor, be appointed as trustee and executor in place of the defendant. The court also ordered that the costs of this application be paid by the defendant. The plaintiffs' application for costs against the defendant on this application was deferred until the determination of the substantive claim.

Orders