Eriksen v Lemoto

[2022] NZHC 256

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2021-485-734

[2022] NZHC 256

UNDER

Sections 21 and 44 of the Administration Act 1969

IN THE MATTER

of an application to remove an executor from office and ancillary orders

BETWEEN

KAREN ANN ERIKSEN

Applicant

AND

ZEEPRA ERNA LEMOTO

Respondent

Hearing:	On the papers
Appearances:	B J J Sheehan for the Applicant
Judgment:	23 February 2022

JUDGMENT OF COOKE J

[1]    By notice originating application dated 3  December  2021  the  applicant,  Ms Karen Eriksen applies for an order removing the respondent Ms Zeepra Lemoto (her half-sister) as administrator of the estate of Ms Ann Kidd (their mother) and replacing her with Perpetual Trust Ltd. The application is supported by an affidavit from Ms Eriksen. Leave has been granted for the proceedings to be brought by way of originating application.

[2]    The proceedings were first addressed by Edwards J on 8 December 2021. At that stage the Court gave directions that the applicant’s siblings, who are the other primary beneficiaries of the estate, be served with the proceedings.

ERIKSEN v LEMOTO [2022] NZHC 256 [23 February 2022]

[3]    In addition by interlocutory application without notice dated 17 December the applicant applies for orders for substituted service. This further application is supported by Ms Erikson’s affidavit, and three further affidavits from staff from the applicant’s solicitors who describe the attempts to make contact with the respondent. It is also supported by an affidavit from a process server who describes his attempts to serve the application on the respondent, including an occasion where a person who he believed to be the respondent refused to take the document he was seeking to serve. He indicates that he left documents at her feet and told her that she had been served. This occurred at the property which I further describe below on 17 December 2021.

[4]    The proceedings were further called before me in the Judge’s Chambers List on 25 January 2022. At that stage it was noted that the respondent had not taken any steps. I directed that the matter be adjourned to see if any opposition would be filed. I also directed that the applicant provide the Court with updating information as to the stance of the applicant’s siblings on the application. If no opposition was filed I indicated I would determine the matter on the papers.

[5]    By memorandum dated 27 January 2022 counsel for the applicant has provided information that satisfies me that each of the siblings do not object to the application.

[6]    On the basis of the evidence filed in relation to the application for substituted service I accept that such orders are appropriate and I make them as sought in the application. The applicant has made concerted efforts to formally serve the application, the respondent has avoided service, and I am satisfied that she can be treated as being on notice that proceedings have been commenced and efforts have been made to give her notice of it.

Relevant circumstances

[7]    Ms Kidd died on 11 December 2018. She had six children although the respondent is only a half sister of the others. There are eight grandchildren. Ms Kidd died without making a will. An agreement was reached that the respondent would be the administrator of her estate with letters of administration being granted in August 2019. The assets of the estate were modest, involving some funds in bank accounts of an unknown extent and a residential property in Lower Hutt.

[8]    I accept the evidence filed on behalf of the applicant that there has been no proper administration of the estate since the letters of administration were granted in August 2019. The applicant describes a number of issues in her affidavit. By way of summary:

(a)The respondent has not been in any form of communication with the beneficiaries of the estate despite significant efforts being made by the applicant to engage in communication with her.

(b)It does not appear that the property in Lower Hutt is occupied. The applicant explains the visits she has made to seek to work that out. That is further confirmed by affidavits filed by staff at the applicant’s solicitors.

(c)The applicant has provided evidence, which I accept, that the condition of the property has deteriorated greatly. It is unoccupied, holes have appeared in the carpet, the majority of furniture has disappeared and the property is not being properly looked after.

(d)It would appear from enquiries made by the applicant that the property is uninsured and the rates do not appear to have been fully paid.

(e)No steps have been taken to distribute any of the financial assets of the estate, or to identify their extent. Efforts have been made to obtain information through solicitors that were at one point instructed by the respondent, but no information has been forthcoming.

Approach to application

[9]    The application for removal of the respondent is addressed in accordance with s 21 of the Administration Act 1969.

[10]   The proper approach was outlined by the Court of Appeal in Tod v Tod1 and Frickleton v Frickleton.2 Both decisions adopt the approach set out by Heath J in Farquhar v Nunns who said:3

(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.

(f)The principles for the exercise of the Court’s discretion are the same, whether an application is made pursuant to s 51 of the 1956 Act or s 21 of the 1969 Act.

[11]The interests of the beneficiaries must always be the ultimate focus.4

Application in the present case

[12]   I am satisfied that the orders sought by the applicant are appropriate here. The respondent appears to have taken no meaningful steps to properly administer the estate, its primary asset is in a deteriorated state, attempts to communicate with the administrator have failed, and the other affected beneficiaries do not oppose the application. This is a modest sized estate, and steps should now be taken by an independent trustee to properly realise assets and attend to the appropriate distributions.

1      Tod v Tod [2015] NZCA 501, [2017] 2 NZLR 145.

2      Frickleton v Frickleton [2016] NZCA 408, [2017] 2 NZLR 154.

3      Farquhar v Nunns [2013] NZHC 1670 at [13] (footnotes omitted).

4      Frickleton v Frickleton, above n 2, at [33].

[13]   I accordingly make the orders removing and replacing the administrator as sought in the application.

[14]   The applicant also seeks an order requiring the respondent to provide an accurate inventory and account of the estate on oath. Given the lack of any meaningful communication with her I have doubts that such an order would be complied with, or that any information obtained would provide meaningful assistance. For the moment, therefore, I do not make such an order. But my decision not to do so is without prejudice to any further application that may be made by the new administrator if the new administrator thought such an order would be of real utility.

[15]   I also agree that the applicant should be costs on a 2B basis, to be fixed by the Registrar, and that costs should be awarded against the respondent personally and are not payable out of the assets of the estate.

Cooke J

Solicitors:
ARL Lawyers, Lower Hutt for the Applicant