Craven-Carden v Kan

[2024] NZHC 3549

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-135

[2024] NZHC 3549

UNDER

Section 21 of the Administration Act 1969 and Section 3 and 4 of the Family Protetion Act 1955

IN THE MATTER

of an application to remove and replace the administrator in the Estate of Gregory Nigel Carden

BETWEEN

OLIVIA MEI CRAVEN-CARDEN, MAXWELL TIARE CRAVEN-CARDEN AND ADAMINA ELIZABETH NGAIRE CARDEN

Plaintiffs

AND

MARILYN JANE KAN

Defendant

Hearing:	30 October 2024
Appearances:	M Freeman for Plaintiffs P D Barrett for Defendant
Judgment:	25 November 2024

JUDGMENT OF BOLDT J

Introduction

[1]    On 24 August 2022, Gregory Carden (Greg) died unexpectedly while on holiday in Cambodia.1 He left no will. His children and his de facto partner are now locked in a dispute about his estate.

1      Because of the overlap in the last names of the parties, I will refer to all parties by their preferred first names.

CRAVEN-CARDEN v MARILYN JANE KAN [2024] NZHC 3549 [25 November 2024]

[2]    Greg’s three oldest children — Ms Olivia Craven-Carden, Mr Maxwell Craven-Carden, and Ms Adamina Carden — are the plaintiffs, while the defendant is Ms Marilyn Kan. Marilyn was Greg’s de facto partner of at least 15 years, and they have one child together. She has two other children from a previous relationship; Greg considered them his stepchildren.

[3]    In March 2023, Marilyn applied for letters of administration. She advised the Court that, to the best of her knowledge, the gross value of Greg’s estate did not exceed

$130,000. Marilyn was granted letters of administration on 11 July 2023.

[4]    Marilyn’s valuation of Greg’s estate came as a surprise to the plaintiffs. They believe Greg’s net wealth to have been considerably greater. In late 2022, through their solicitors, they inquired about Greg’s assets and liabilities, together with the details of any jointly owned assets which constituted relationship property. Marilyn did not respond. Their solicitors wrote again in November 2023 setting out a series of specific concerns. They signalled the possibility of an application for Marilyn’s removal as administrator if she did not reply. Marilyn’s lawyers provided a holding response in December 2023, but did not write again.

[5]    In February 2024 the plaintiffs brought the present proceedings. In its first iteration the plaintiffs sought Marilyn’s removal as administrator under s 21 of the Administration Act 1969. In July 2024, they amended their pleading to add an application under the Family Protection Act 1955, though that claim cannot be advanced until the identity of the administrator is settled.

[6]    In an affidavit dated 8 April 2024, Marilyn recorded her consent to an order removing her as administrator, and advised that the only matter of contention was the identity of her replacement. Marilyn said she was concerned the plaintiffs’ nominee may  be  conflicted.   In   a  Minute  dated   24 May 2024,   Radich  J   suggested   Mr Frank Gradwell of Brandons as an alternative. All parties signalled their agreement, and the plaintiffs drew up an order for sealing.

[7]    That should have been the end of the matter, but then Marilyn changed her mind. She now opposes the appointment of a new administrator, and argues it would

not be expedient to remove her. She has filed a substantial body of evidence which seeks to persuade me Greg’s estate really was as modest as she indicated when she sought appointment more than 18 months ago.

[8]    Marilyn argues Mr Gradwell’s appointment would be the thin end of a large wedge. It is clear the plaintiffs believe Mr Gradwell may uncover additional assets, or conclude that assets Marilyn considers her separate property should be treated as relationship property. Depending on the nature and value of those assets, the plaintiffs may seek an order under s 88(2) of the Property (Relationships) Act 1976, and then advance their Family Protection Act claim.

[9]    Mr Barrett, for Marilyn, acknowledged that for the better part of two years her attitude towards Greg’s oldest children could fairly be described as hostile. He also accepted that her conduct, at least until recently, has fallen short of the standards of neutrality and impartiality expected of an administrator. Nonetheless, he sought to persuade me that the information she has now filed comprehensively answers the plaintiffs’ concerns, and that there is no need for her removal.

Background

[10]   As noted, Greg and Marilyn were in a relationship for between 15 and 20 years. One measure of how polarised the parties’ positions have become is that they do not agree even on the straightforward question of when the relationship began.2

[11]   Greg and Marilyn owned a number of properties, both separately and together. In addition, for much of their relationship they were each 50 per cent shareholders in a company called Bricks and Mortar Holdings Ltd (Bricks and Mortar), which acquired four properties between 2007 and 2021.

[12]   For reasons I discuss in more detail below, it is unnecessary to traverse in detail the (fairly complex) web of property transactions Greg and Marilyn were involved in.

2      The plaintiffs contend the relationship started a few years earlier than Marilyn acknowledges. The commencement of the relationship may prove important, as Marilyn contends that at least one of the properties in issue was acquired before she and Greg became a couple. Marilyn and Greg’s son was born in 2003, but she maintains they did not commence their de facto relationship until 2006.

It is sufficient for the plaintiffs to establish there are aspects of Greg’s estate about which they have legitimate and presently unresolved concerns.

[13]   The plaintiffs point to the fact that between them Greg, Marilyn and their associated entities owned at least eight properties during their relationship. The evidence indicates that four were owned by Bricks and Mortar:

(a)61 Croyden St, Karori, a leasehold property Greg and Marilyn purchased  in  2017.  It was transferred to Bricks and Mortar for

$975,000 in January 2021.

(b)16 Ranelagh St, Karori. That property was purchased by Marilyn in 2005, transferred to Bricks and Mortar in 2007, and sold in 2017.

(c)78 Maryhill Terrace, Dunedin. That property was purchased by Bricks and Mortar in 2007, and sold in 2017.

(d)Unit 4, 268 Oriental Bay, Wellington. Bricks and Mortar purchased that property in 2007.

[14]   Marilyn incorporated a company called MuzzyM Ltd in 2005, and established a trust called the MuzzyM Family Trust (the Trust). MuzzyM Ltd owns two Dunedin properties. Marilyn says MuzzyM Ltd is her separate property. In 2010 the Trust acquired the title to 18 Ranelagh St, where Greg and Marilyn lived, and which had been Marilyn’s home since 1995.3

[15]   In 2020, Greg transferred his Bricks and Mortar shares to Marilyn, and stepped down as a director. In 2022, around a month before Greg’s death, Marilyn transferred all but one of the Bricks and Mortar shares to her children. Marilyn says that in 2020, at the time Greg transferred his shares, the net value of Bricks and Mortar was nil, and that Greg wanted to divest himself of responsibility for the company’s debts. She

3      Marilyn says the property was meant to have been transferred to the Trust in 2007; nothing turns on that.

described the transfer of Bricks and Mortar shares to her children as succession planning.

[16]   In January 2021 Bricks and Mortar and MuzzyM Ltd entered into a total of six loan agreements. The loans were each secured by mortgages over the other company’s properties and by properties owned by the Trust. They were also guaranteed by Greg and Marilyn personally, as well as by the Trust. The plaintiffs say it is reasonable for them to ask the administrator to untangle Greg and Marilyn’s respective interests in their corporate entities, and to ascertain where, regardless of legal ownership, the beneficial interests in the properties lay.

[17]   Marilyn’s principal answer is that the properties she currently owns or controls are heavily mortgaged, and that their value only slightly exceeds Bricks and Mortar’s debt. She says the MuzzyM Ltd properties have always been her separate property. She says she came into the relationship with several properties, and that Greg entered it with nothing. He was never a beneficiary of the Trust.

[18]   Another concern arose. Greg’s sister, Ms Deborah Craven-Carden, attested that Marilyn told her Greg had prepared a draft will. Deborah quoted a contemporaneous message she sent her son, which read:

Marilyn and I just had a long conversation. It included a discussion on Greg’s will. The only copy she can find was made early in their relationship, with the Public Trust. I am appointed as his executor. I will decide on whether or not to accept the role after the funeral, in discussion with the beneficiaries – Marilyn and his four children.

[19]   Deborah said Marilyn told her that 90 per cent of Greg’s estate would be left to his four children, and that Marilyn herself would get 10 per cent. Deborah said Marilyn described the will as a draft, and it appears, if it existed, that it was never executed. Nonetheless, in light of s 14 of the Wills Act 2007, the possible existence of a draft will may be relevant to the administration of the estate. Notably, neither of Marilyn’s affidavits contested Deborah’s account.

[20]   Mr Freeman, for the plaintiffs, identified a number of unanswered questions. Perhaps the most pointed concerned 61 Croyden St. The sale and purchase agreement showed that Bricks and Mortar, by then owned entirely by Marilyn, purchased the

Croyden St property from Greg and Marilyn for $975,000. The evidence does not disclose what became of Greg’s share of the money.

[21]   Mr Barrett points to Marilyn’s affidavit and says the proceeds were swallowed by debt, but the plaintiffs say they are entitled to have that assertion verified independently. Mr Freeman notes that Marilyn’s case is entirely dependent upon her account of the couple’s mutual holdings being accepted. A new administrator will have the power to verify that account and report to the plaintiffs as potential beneficiaries.

Hostility

[22]   Maxwell’s affidavit explains his attempts to get to the bottom of the estate after his father’s death. He tried talking to Marilyn about the estate and requested certain chattels, but says Marilyn would shut down, become defensive or flatly refuse his requests. Maxwell said he received no information from Marilyn about the property or the administration of the estate.

[23]   Mr Barrett acknowledges Marilyn should have been more forthcoming with information when the plaintiffs sought it, but contends she has now supplied sufficient information to reassure the plaintiffs (and, failing that, the Court) that her estimate of the size of Greg’s estate was accurate. In light of that, she says there is no reason to remove her as administrator.

Legal principles

[24]Section 21 of the Administration Act 1969 relevantly provides:

21       Discharge or removal of administrator

(1) … 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.

[25]   It is settled law that applications for removal are governed by the following principles:4

(a)The starting point is the Court’s 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.

[26]   The consequences of removal are also relevant. It will not be expedient to remove an administrator if the party seeking removal would have no viable claim against the estate.5 For example, in Smith v Velekof, Cooke J dismissed an application to remove the deceased’s de facto partner because the Property (Relationships) Act proceedings the deceased’s children contemplated would have been time-barred. The estate had been distributed, and s 90(4) of the Act provided the Court could not grant an extension. Cooke J held that in those circumstances there was no point removing the administrator. 6

[27]   It is common ground that the most important qualities required of an executor or administrator are impartiality and neutrality. An administrator must discharge her duties in a manner that is fair both to the beneficiaries and to any potential beneficiaries. As Faire J noted in Nawisielski v Nawisielski:7

[19] … A personal representative’s duty is to be even handed between all the beneficiaries. That includes, at least, persons entitled or potentially entitled as statutory beneficiaries under the Family Protection Act 1955 of whose claims the personal representative is aware.

4      Farqhuar v Nunns [2013] NZHC 1670 at [13] affirmed in Tod v Tod [2015] NZCA 501 at [22].

5      See Partridge v Partridge [2024] NZHC 702 at [43].

6      Smith v Velekof [2022] NZHC 386 at [19].

7      Nawisielski v Nawisielski [2014] NZHC 1547 citing Irvine v Public Trustee [1989] 1 NZLR 67 (CA). Footnotes omitted.

[28]   It follows that where a person has a potential claim against an estate, it is incumbent upon the administrator to respond to any reasonable requests for information. Unreasonable requests need not be met, but there was nothing unreasonable about the information the plaintiffs sought in this case.

[29]   A conflict of interest does not, of itself, disqualify an administrator. It is common for beneficiaries to act as executors or administrators, and most are scrupulously fair. Similarly, as Heath J recognised in Farqhuar v Nunns, hostility on its own will not be sufficient.8 But in this case the plaintiffs say they may, depending on the information uncovered by the new administrator, have a tenable claim against the estate. In light of that, they say Marilyn’s palpable hostility to their prospective claims, together with her obvious conflict of interest, makes removal expedient.

Discussion

[30]   In this case, as in Smith v Velekof, the plaintiffs hope they may be able to seek an order under s 88(2) of the Property (Relationships) Act assigning Greg’s share of the couple’s relationship property to the estate. If successful, it may then be open to them to pursue their claim under the Family Protection Act.

[31]   It is far from uncommon for a prospective claim under the Property (Relationships) Act to underpin an application for removal. For example, in Nawisielski v Nawisielski, Faire J made a s 21 order in similar circumstances. After surveying similar cases,9 Faire J considered it appropriate to appoint an independent executor to assure an impartial and fairhanded approach to the proposed proceedings.10

[32]   Mr Freeman advised that Greg’s estate has not yet been finally distributed, meaning the outer time limit in s 90(4) of the Property (Relationships) Act, which proved fatal to the application in Smith v Velekof, has not been reached. Mr Barrett did not suggest otherwise, submitting only that full disclosure has now been made, and

8      Farqhuar v Nunns, above n 4, at [13].

9      See Teariki v O’Reilly [1992] NZFLR (HC); and Estate of Farnsworth v Farnsworth HC Auckland M1767/97, 12 January 1999.

10     Nawisielski v Nawisielski, above n 7, at [25].

that Marilyn’s evidence conclusively demonstrates that none of the property in question is relationship property.

[33]   I am satisfied it is reasonable for the plaintiffs to ask an independent administrator to verify Marilyn’s account of the couple’s finances. As Mr Freeman notes, most of the assets acquired during Marilyn and Greg’s relationship are now solely held by Marilyn. While there may be a good explanation, the plaintiffs are entitled to understand how that came about. Greg and Marilyn were an apparently affluent couple with multiple properties. The plaintiffs were entitled to be surprised that after such a long relationship Greg’s net worth was so modest.

[34]   Among other things, the plaintiffs are within their rights to query Marilyn’s assertion that Greg’s Bricks and Mortar shares were worthless when he signed them away. It is also reasonable for them to query whether his share of the Croyden St sale proceeds were swallowed by debt, and whether the MuzzyM Ltd properties are properly characterised as separate property, given both Greg and Bricks and Mortar were responsible for securing its debts.

[35]   Other areas of obvious uncertainty arise, including whether Greg may have left a draft will. It is part of the job of a genuinely impartial administrator to get to the bottom of those matters. The plaintiffs’ reasonably-held concerns about the estate, together with Marilyn’s conflict of interest and palpable hostility towards them, amply justify an order for removal.

[36]   Mr Barrett criticises the plaintiffs’ claims as speculative and based on guesswork. It is not open to him to do so while simultaneously acknowledging that Marilyn ignored their requests for information for nearly two years. If she had responded openly, and was able to verify the transactions and debts on which she now relies, that may have put the plaintiffs’ questions about Greg’s estate to rest. It is understandable that Marilyn’s refusal to engage, together with the antagonism she has shown, has served only to heighten the plaintiffs’ suspicions.

[37]   Marilyn contends that if Mr Gradwell is appointed then Greg’s modest estate will be depleted further by unnecessary investigative work. I do not accept that

submission. Marilyn has, in the process of assembling evidence to oppose the present application, brought together much of the information Mr Gradwell will wish to review. If Mr Gradwell confirms Marilyn’s analysis it is unlikely his engagement will prove lengthy or expensive, especially by comparison with the litigation in which the parties are currently embroiled. Marilyn’s repudiation of the agreement she and the plaintiffs reached earlier in the year has made the dispute far more protracted and expensive than it needed to be. Against that background her concerns about depletion of Greg’s estate are unconvincing.

[38]   Similarly, I do not accept Mr Barrett’s submission that the plaintiffs’ prospective applications under the Property (Relationships) Act and the Family Protection Act have insufficient prospect of success. It is much too early to reach that conclusion. Mr Gradwell may agree that all relevant assets were Marilyn’s separate property, but, as already noted, it is reasonable for the plaintiffs to ask him to review her assessment.

[39]   As to the Family Protection Act3, while the plaintiffs have not sought to show financial hardship, they are still amply entitled to explore a claim. Greg (apparently) died intestate and made no provision for his adult children. Mr Gradwell’s inquiries may satisfy the plaintiffs that a meaningful award is unlikely, but it is too early to dismiss their claim as untenable.11

Conclusion

[40]   I am comfortably satisfied it is expedient to make an order removing Marilyn as administrator of Greg’s estate, and to appoint Mr Gradwell as her replacement. Marilyn acknowledges she has shown hostility to the plaintiffs and their prospective claims. There is a clear conflict between her private interests and her role as administrator. I agree the plaintiffs’ questions are reasonable, and that it is too early to dismiss their prospects of success in the downstream proceedings they contemplate.

11     See Family Protection Act 1955, s 4, and Little v Angus [1981] 1 NZLR 126 (CA) at 127.

Costs

[41]   The parties asked me to reserve the question of costs. My order effectively reinstates the agreement the parties reached around eight months ago. I issued a Minute on 5 August 2024 noting Marilyn’s decision to repudiate that agreement, and observing that if their s 21 application was successful the plaintiffs may have a good case for increased or even indemnity costs.

[42]   While Marilyn has now supplied more information about the estate then she had when that agreement was struck, I remain of the view the plaintiffs are entitled to a substantial award. I encourage the parties to reach agreement among themselves, but if they are unable to do so the plaintiffs may file a memorandum seeking costs within 15 working days of the delivery of this judgment; Marilyn will have a further 10 working days to respond.

Result

[43]    I grant the plaintiffs’ application. Under s 21(1) of the Administration Act, I make an order removing the defendant, Marilyn Jane Kan, as administrator of Gregory Nigel Carden’s estate. I appoint Francis George Gradwell in her place.

[44]Costs are reserved.

Boldt J

Solicitors:

Thomas Dewar Sziranyi Letts, Lower Hutt for Plaintiffs J B Morrison, Wellington for Defendant