Elishua v Freeland
[2019] NZHC 398
•11 March 2019
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2018-485-000150
[2019] NZHC 398
UNDER Part 19 of the High Court Rules UNDER
Section 44 of the Administration Act 1969
UNDER
Sections 83A and 83B of the Trustee Act 1956
IN THE MATTER OF
the estate of ISLE GOLDSTEIN
BETWEEN
HUE ELISHUA
Applicant
AND
GORDON JEFFREY FREELAND
First Respondent
THE TRUSTEES FOR THE GOLDSTEIN FAMILY TRUST (NO. 1)
Second Respondent
THE TRUSTEES FOR THE RATNAM FAMILY TRUST (NO. 1)
Third Respondent
Hearing: 8 March 2019 Counsel:
D E McLay for Applicant
K H Lawrence for First Respondent
No appearance for Second and Third RespondentsJudgment:
11 March 2019
JUDGMENT OF COLLINS J
ELISHUA v FREELAND [2019] NZHC 398 [11 March 2019]
Introduction
[1] Hue Elishua is the sole surviving grandson of Ilse Goldstein, who died on 22 October 2009. Mr Elishua was one of three residuary beneficiaries under the will. Probate was granted on 3 March 2010, and the estate was finally distributed by the end of 2013. Mr Elishua now seeks leave to apply out of time for various orders, including an order under s 44 of the Administration Act 1969 that the administrator of the estate provide “a true and perfect inventory and account of the estate of the deceased”.
[2] Mr Freeland, who was the executor of Mrs Goldstein’s estate, opposes the application for leave on the basis that he has already provided all the relevant information to Mr Elishua. Mr Freeland also claims that Mr Elishua is pursuing this application as a “personal vendetta” rather than because of any legitimate desire for information.
Background
[3] Mr Elishua was born Hugh Ratnam. He is the son of Carol and Kelvin Ratnam. In 2008, Mr Elishua moved to Australia and in 2015 he changed his name to Hue Elishua.
[4] When Mrs Goldstein died in 2009, she left a will dated 8 November 2005. The key provisions of that will were:
(1)Mr Freeland was appointed as the executor of the estate.
(2)Any debts owed by the Goldstein Family Trust and the Ratnam Family Trust were forgiven.
(3)$50,000 was gifted to the Goldstein Family Trust.
(4)Mr Freeland was to distribute personal chattels at his discretion, and in accordance with any instructions left by Mrs Goldstein.
(5)The residue of the estate was spilt into three equal portions to the Goldstein Family Trust, the Ratnam Family Trust and Mr Elishua (when he turned 21).
[5] Both the family trusts were established by Mrs Goldstein during her lifetime. Mr Elishua is a discretionary and final beneficiary of both trusts. The other main discretionary beneficiaries of the Goldstein Family Trust are Michael Goldstein, Mr Elishua’s uncle, and his partner. The other main discretionary beneficiaries of the Ratnam Family Trust are Mr Elishua’s parents. Mrs Goldstein left a memorandum of wishes in relation to the Goldstein Family Trust in which she explained that Michael Goldstein and his partner were to receive the benefit of the trust during their lifetime, and Mr Elishua was to receive the remainder after their deaths.
[6] The total value of the estate after expenses was $167,669. This meant that Mr Elishua was entitled to $39,223 as his portion of the residue. The financial records of the estate record that Mr Elishua was paid $41,023, more than his entitlement under the will. There was also an overpayment to the Ratnam Family Trust that was later adjusted with the Goldstein Family Trust, which was initially underpaid. Mr Elishua was not affected by this.
[7]Mr Elishua disputes receiving $41,023. He claims to have received just
$28,397.48 but provides no independent evidence to support this claim. It now appears that the money received by Mr Elishua was AUD 28,397.48. Thus, it is possible, the discrepancy between Mr Freeland’s records and Mr Elishua’s evidence can be explained by currency exchange rates and bank fees.
[8] Mr Freeland refers in his affidavit to the “long history of complaints” by Mr Elishua regarding the estate of Mrs Goldstein. Mr Freeland’s recollection is that Mr Elishua has instructed eight different lawyers on various occasions.
[9] The previous complaints include one to the New Zealand Law Society alleging theft and fraud by Mr Freeland. The basis of the allegation was that a licence to occupy an apartment was registered in the name of Mrs Goldstein at the time of her death but was not treated as part of her estate. A Wellington Standards Committee dismissed the
complaint against Mr Freeland, explaining that Mrs Goldstein had sold the property to the Goldstein Family Trust in 2004, and that the debt had been forgiven under the will. The title had yet to be transferred, but the property did not form part of the estate.
[10] Mr Elishua also argued before the Standards Committee that his mother had “stolen” his grandmother’s jewellery. The Standards Committee explained that Mr Freeland had a discretion to distribute personal chattels. Mr Freeland explains that he divided the jewellery between Mrs Goldstein’s two children, including Mr Elishua’s mother. The Standards Committee noted that Mr Elishua “was mistaken in his understanding of the will and his entitlements”.
[11] Other actions taken by Mr Elishua include sending abusive emails referring to his parents and Mr Freeland as “scum”, wishing that Mr Freeland’s “family members drop dead” and that Mr Freeland’s “teeth rot in [his] gums”, and saying he would “rip [his mother] to pieces by the law and will spit on her grave”. Mr Elishua’s partner has also left negative reviews on Google about Mr Freeland’s practice and the practice of his solicitors, which refer to them as “corrupt”. Finally, Mr Elishua claims to have made a complaint to the New Zealand Police alleging fraud against Mr Freeland.
The application
[12]There are five parts to the originating application:
1.That pursuant to Rules 19.5 and 27.32(1) of the High Court Rules, the applicant seeks leave to apply by way of originating application as he is out of time, for an Order that the administrator of the Estate of the Late Ilse Goldstein provide a true and perfect inventory and account of the estate.
2.That pursuant to section 49(1) and (2) of the Administration Act 1969, that the administrator file the following documents,
a.an accurate inventory of the estate; and
b.an account of the estate that—
i.is accurate; and
ii.states the dates and details of all receipts and disbursements; and
iii.states which of the receipts and disbursements were on capital account and which were on revenue account; [and]
iv.any memorandum of wishes by the deceased.
3.In the alternative, pursuant to section 83B of the Trustee Act 1956, or section 83A if such trusts are administered by a trustee corporation, that,
a.the condition and accounts of The Goldstein Family Trust [No 1] Trust; and
b.the condition and accounts of the Ratnam Family Trust [No 1],
be considered by the Court exercising its supervisory jurisdiction pursuant to section 68 of the Trustee Act 1956 to review the act or omission or decision or to give directions to produce same to the respondents, and that the trusts be investigated and audited by such solicitor or such qualified statutory accountant as may be agreed on between the applicant beneficiary and the trustees, or, in default of any such agreement, by a solicitor or a qualified statutory accountant appointed by the Public Trust.
4.In the alternative, an Order for discovery of the documents referred to above be made pursuant to Rule 8.20 of the High Court Rules.
5.In the alternative, that an order be made for relief claimed upon the equitable jurisdiction of the Court.
[13] It is accepted the application for leave to apply out of time applies to the proposed application under s 49(1) and (2) of the Administration Act, the application for discovery and, in part, to the claim for equitable relief. Thus, the application under s 83B of the Trustee Act 1956 is not affected by the application that I am required to consider.
[14] Since this application was served on Mr Freeland, he has voluntarily provided the following documents to Mr Elishua:
(1)the financial statements for the estate, which among other things show the distributions to Mr Elishua;
(2)the deeds of sale and purchase for the apartment that was the subject of the Law Society complaint;
(3)a copy of the handwritten ledger for Mr Freeland’s trust account, which also shows the payments made to Mr Elishua;
(4)the trust deeds for the Goldstein Family Trust and the Ratnam Family Trust;
(5)Mrs Goldstein’s memorandum of wishes in relation to the Goldstein Family Trust;
(6)the financial statements for the Goldstein Family Trust; and
(7)a statutory declaration of the assets of the Ratnam Family Trust.
[15] In addition to disputing the amount he has received, Mr Elishua claims that the estate expenses were excessive. As Mr Freeland explains however, those expenses which amounted to $31,087, included overseas pension repayments and funeral costs. He says that he no longer has all the documentation relating to the estate of Mrs Goldstein, this matter being closed for over a half a decade, and that it would be “difficult and onerous” to locate the receipts for the estate expenses. Mr Elishua also claims the estate administration fees, which amounted to $3,713, were excessive.
Relevant legislative provisions
[16]Section 44 of the Administration Act provides:
44 Administrator may be required to exhibit inventory
Every administrator shall, when required by the court so to do, exhibit on oath in the court a true and perfect inventory and account of the estate of the deceased; and the court shall have power as heretofore to require administrators to bring in inventories.
[17]Rule 27.32(2) of the High Court Rules 2016 provides:
27.32 Inventory and account filed by administrator
…
(2)The applicant must—
(a)make the application within 3 years after the date of the grant appointing the administrator; and
(b)serve the administrator with notice of the application.
…
[18]Rule 1.19 of the High Court Rules provides:
1.19 Extending and shortening time
(1)The court may, in its discretion, extend or shorten the time appointed by these rules, or fixed by any order, for doing any act or taking any proceeding or any step in a proceeding, on such terms (if any) as the court thinks just.
(2)The court may order an extension of time although the application for the extension is not made until after the expiration of the time appointed or fixed.
[19] The discretion to order an extension of time under r 1.19 “is a wide one and involves a balancing of the competing interests to determine where the overall justice lies”.1 In this case that largely depends on whether it is fair and reasonable for Mr Elishua to be able to pursue his application under s 44 of the Administration Act.
[20] Section 44 is designed to ensure the proper administration of estates and by implication requires administrators to maintain proper estate accounts.2 The section is not designed as “a vehicle for challenging the actions of the executors”.3 At common law, beneficiaries do not have a right to access all trust documents and information.4 Equally, under s 44, there are limits to what information the Court will
1 Strathboss Kiwifruit Ltd v Attorney-General [2017] NZHC 2200 at [10].
2 Apatu v Apatu HC Napier CIV-2007-441-515, 10 May 2011 at [140].
3 Jay v Gilbert [2015] NZHC 1791 at [6].
4 See Schmidt v Rosewood Trust Ltd [2003] UKPC 26, [2003] 2 AC 709 at [67]; and Foreman v Kingstone [2004] 1 NZLR 841 (HC).
order administrators to provide. The extent of information it is necessary to provide will depend on the circumstances of the particular estate, including its size.5
Analysis
[21] Mr Elishua claims that he has not received his full entitlement from the estate. As I have already noted, there is likely a logical explanation for the discrepancy between Mr Freeland’s record and Mr Elishua’s claim. In any event, if Mr Elishua has received less than $39,223 he should have supported his claim with records from his bank or other independent source. It is not sufficient for him to make accusations without supporting evidence.
[22] Mr McLay, who has only recently been instructed by Mr Elishua’s solicitors, professionally raised three issues about the administration of the estate that he said justified further inquiry and investigation under s 44 of the Administration Act. Those three matters concern:
(1)Payments for $5,062.50, $2,988 and $3,500 in June 2010 that appear to relate to painting, cleaning and re-carpeting the apartment where I understand Ms Goldstein lived prior to her death.
(2)A dispute about the way certain deposits were treated in draft accounts for the estate.
(3)Distributions from the Goldstein Family Trust to Carol Ratnam, who is not named as a beneficiary of that Trust.
[23] I am satisfied that there was nothing in any of those matters that justifies leave being granted to pursue an application under s 44 of the Administration Act. There is also nothing in Mr Elishua’s claim that the estate expenses and administration fees were excessive. My reasons for this are:
(1)The estate was small and has been distributed.
5 See Apatu v Apatu, above n 2, at [135] and [151].
(2)The payments I have referred to at [22](1) are small and probably able to be easily explained without the need for a formal process under s 44 of the Administration Act.
(3)The disparities between the draft accounts have been explained by Mr Freeland in his affidavit of 4 March 2019.
(4)Mr Freeland has provided a reasonable explanation for the quantum of the estate expenses, and there is nothing objectionable about the quantum of the estate administration fees.
(5)Distributions by the Goldstein Family Trust are not covered by the application before me.
[24] Mr Freeland has already provided all the other relevant information to Mr Elishua or his solicitors. In those circumstances, there would be no use in making an order under s 44. For that reason, the balance of interests suggests that overall justice would not be done by granting an extension of time under r 1.19. Accordingly, I decline to do so.
[25] For the same reasons, no order should be made for discovery in the terms sought by Mr Elishua.
[26] That just leaves Mr Elishua’s alternative claim under s 83B of the Trustee Act for an audit of the accounts of the Goldstein Family Trust and the Ratnam Family Trust, and his claim for unspecified equitable relief. Various information relating to those trusts has already been provided to Mr Elishua. On 3 July 2018, Thomas J ordered Mr Elishua to replead by 13 August 2018 in light of the information that had been provided. No amended pleadings have been filed. If Mr Elishua still wishes to pursue his claim against the Goldstein Family Trust and the Ratnam Family Trust, he must amend his pleadings by 3.00 pm on 29 March 2019.
Result
[27] The application for an extension of time is dismissed. As a consequence, the first, second and fourth limbs of the originating application are struck out.
[28] Mr Elishua is to file an amended pleading by 3.00 pm on 29 March 2019, if he wishes to progress his remaining claims.
Costs
[29] I am satisfied Mr Elishua’s application for costs must be dismissed. Mr McLay advised that there may be some legal aid issues relating to costs. I will refrain from making any further costs orders until the proceeding is concluded.
D B Collins J
Solicitors:
John Dean Law Office, Wellington for Applicant Greg Kelly Law Limited, Wellington for Respondent
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