Estate of HR
[2016] NZHC 95
•5 February 2016
ORDER PROHIBITING PUBLICATION OF THE NAMES OF THE APPLICANT, BENEFICIARIES AND PROPOSED REPLACEMENT EXECUTOR. SEE PARAGRAPH [25].
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-003067 [2016] NZHC 95
UNDER
IN THE MATTER OF
AND
IN THE MATTER OF
Section 21 of the Administration Act 1969
the Estate of HR, late of Auckland,
New Zealand, Retired Baker (Deceased)
an application by JM of Auckland, Retired Solicitor, for an Order for Discharge of Executor and for Appointment of a further person to be Executor in his place
Applicant
Hearing: [On the Papers] Counsel:
P A Fuscic for the Applicant
Judgment:
5 February 2016
JUDGMENT OF EDWARDS J
This judgment was delivered by Justice Edwards on 5 February 2016 at 4.30 pm, pursuant to
r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Solicitors: McVeagh Fleming, Auckland
ESTATE OF HR (Deceased) [2016] NZHC 95 [5 February 2016]
[1] The applicant (Mr M) is the current executor of the estate of HR and trustee of his will. He is retiring and wishes for Mr S to replace him as executor and trustee. He seeks leave to bring an application under s 21 of the Administration Act 1969 by way of originating application for that purpose.
[2] There are seven beneficiaries of the estate who are the children of Mr R. Mr M seeks an order appointing a litigation guardian for one of those beneficiaries, Mr JR. Mr JR is 70 years old. He has been diagnosed with paranoid schizophrenia. There is concern that he could be vulnerable to abuse and exploitation if he is made aware of the financial details of the Trust in the course of the proceedings.
[3] Directions as to service, orders suppressing the name of Mr JR and all evidence concerning his personal circumstances, and an order prohibiting search of the Court file are also sought.
Leave to commence proceedings by way of originating application
[4] The originating application procedure is designed to provide a speedy and cost-effective mechanism for the resolution of certain statutory applications. The Court may permit any proceeding not specifically listed in rr 19.2 to 19.4 to be commenced by originating application.
[5] The application to replace the executor of the estate is straightforward and will be uncontested. With the exception of Mr JR, all other beneficiaries of the estate have provided consent to the orders replacing Mr M with Mr S.
[6] I am satisfied that the application is suitable for the originating application procedure and leave is granted accordingly.
[7] Rule 4.35 permits the Court to appoint a litigation guardian if satisfied that the person for whom a litigation guardian is to be appointed is an incapacitated person. An “incapacitated person” is defined in r 4.29 to mean:
4.29 Incapacitated person, litigation guardian, and minor defined
For the purposes of these rules,—
incapacitated person means a person who by reason of physical, intellectual, or mental impairment, whether temporary or permanent, is—
(a) not capable of understanding the issues on which his or her decision would be required as a litigant conducting proceedings; or
(b) unable to give sufficient instructions to issue, defend, or compromise proceedings.
[8] Principles relevant to the appointment of a litigation guardian were summarised by the Court of Appeal in Corbett v Patterson as follows:1
[43] We have drawn on the comments of Debelle J as well as the Mental Capacity Act (UK) and case law in that jurisdiction to suggest a number of relevant considerations. They include:
(a) The burden of proof is on the party asserting incapacity, on the balance of probabilities standard.
(b) The inquiry should focus on the subject party's role in the specific litigation at issue. The complexity of the litigation will be relevant to the assessment.
(c) The inquiry is not concerned with the sanity of the subject party. Nor is it concerned with the capacity of the subject party to make other legally effective decisions such as the making of a contract or will. The general approach is that capacity is to be judged in relation to the decision or activity in question and not globally. Evidence of the capacity to make decisions which have legal consequences and to conduct ordinary day to day affairs will be relevant but must be weighed with such other evidence as is adduced.
(d) Something more is required than the mental competence to understand in broad terms what is involved in the decision to prosecute, defend or compromise the proceedings. The person must be able to understand the nature of the
1 Corbett v Patterson [2014] NZCA 274, [2014] 3 NZLR 318 at [43].
litigation, its purpose, its possible outcomes, and its risks, including the prospect of an adverse costs award.
(e) The fact that the subject party is vulnerable to exploitation or prone to rash or irresponsible decisions may be relevant but it does not necessarily follow that the party is unable to understand the issues or to give sufficient instructions.
(f) When assessing the capacity to give instructions to counsel, the test is whether the subject party is capable of understanding the issues on which his or her consent or decision is likely to be necessary, with the assistance of such proper explanation from legal advisers and experts in other disciplines as the case may require
(footnotes omitted)
[9] Ms K is Mr JR’s sister and has sworn an affidavit in support of the application. She has been overseeing her brother’s care for the past 20 years, manages his financial affairs, and holds a power of attorney for him. She expresses a concern that due to mental illness and lifestyle choices, her brother is regularly exposed to risky situations. He has a history of being the victim of assaults, theft, damage to property and coercion by people wishing to extract money from him. She says that if the financial details of the Trust were given to her brother, she has no doubt that he would give those papers to all and sundry and that could place him in a life-threatening situation.
[10] Dr Duncan is a psychiatrist who also swore an affidavit in support. He examined Mr JR in September 2015. In his opinion, Mr JR lacks the capacity to foresee the consequences of decisions in respect of matters relating to his personal care and welfare, and he lacks the capacity to manage his own affairs in relation to property. Dr Duncan states that Mr JR may be able to understand the purpose and consequence of the present application if a solicitor were appointed to explain it to him but the information provided could expose Mr JR to undue influence. Dr Duncan expressly asked Mr JR about his knowledge of the Family Trust that provides him with financial support. Mr JR volunteered that he was vulnerable to being taken advantage of and that he was agreeable for his sister to be managing his finances and that he did not need to know the details of the Trust finances.
[11] I am satisfied that, by virtue of his mental illness, Mr JR meets the definition of an incapacitated person. The lack of capacity to foresee the consequences of his decisions and to manage his own affairs casts doubt on his ability to understand the nature of the litigation, its purpose, its possible outcomes, and its risks. I am therefore satisfied that the appointment of a litigation guardian is warranted in this case.
[12] Ms Davis is a Wellington solicitor. She has provided a consent to act as litigation guardian. I consider her appointment to be appropriate in all the circumstances and I intend to make an order appointing her litigation guardian for Mr JR.
Service
[13] Orders as to service are sought:
(a) Directing service on Ms Davis;
(b)Dispensing with service of the application to appoint a litigation guardian on Mr JR; and
(c) Dispensing with service of the originating application on the other beneficiaries.
[14] I am satisfied that the risks posed to Mr JR’s safety should he be served with Court papers justifies the orders sought in (a) and (b) above. Those orders will be made accordingly.
[15] The orders dispensing with service on the other beneficiaries are sought on the basis that they have all received the originating application and supporting affidavits and have provided affidavits of consent to the substantive orders sought.
[16] I agree that service of a further copy of the originating application may be dispensed with in those circumstances. However, I consider the beneficiaries should receive a copy of this judgment and I intend to direct that the applicant serve a copy of the judgment on each beneficiary as soon as reasonably practicable after its release.
Suppression
[17] Orders are sought prohibiting publication of the name of Mr JR and all evidence concerning his personal circumstances or characteristics including physical and mental health, lifestyle and interest in the estate, and prohibiting search of the Court file, at least in relation to these details. The grounds advanced in support of the appointment of a litigation guardian are advanced in support of these orders also.
[18] The Court has inherent jurisdiction to suppress names and identifying details of parties in civil proceedings. The Court is required to balance the public interest in proceedings taking place in public against the effect on the party seeking suppression. Something more than the litigant’s preference for anonymity is
required.2
[19] By virtue of his mental illness, Mr JR is a vulnerable person and suppression is sought to protect him from potential abuse and exploitation. The proceeding is one involving a private family trust which is likely to be determined on the papers. In the particular circumstances of this case, I accept that the protection of Mr JR outweighs the public interest in proceedings being held in public.
[20] I consider the balance between the private and public interests in this case can be struck by orders that initials be used for the parties to the proceeding so as to
prevent identification of the individuals involved.
2 Y v Attorney General [2015] NZHC 844 at [21].
[21] Counsel’s submissions on this proposal, including any particular aspects of this judgment that may need to be suppressed in addition, are sought. Those submissions should be filed on or before 12.00 pm on Friday, 19 February 2016. In the interim, I intend to direct that this judgment be released only to the applicant and the beneficiaries of the Estate (other than JR).
[22] It is premature to make an order prohibiting search of the Court file at this stage. An application to search the Court file may be determined on the merits if and when such an application is made.
Result
[23] I make the following orders:
(a) The applicant is granted leave to commence by way of originating application a proceeding for an order under s 21 of the Administration Act 1969.
(b)Ms Wendy Davis, solicitor of Wellington, is appointed litigation guardian for Mr JR of Wellington and her costs are to be paid from the estate.
(c) Service of the application to appoint a litigation guardian on Mr JR is dispensed with.
(d)The applicant is to serve documents filed in this proceeding, and the originating application referred to in (a) above, on Ms Wendy Davis;
(e) Service of the originating application referred to in (a) above on the beneficiaries of the Estate of HR is dispensed with, but the applicant shall serve a copy of this judgment on those beneficiaries as soon as reasonably practicable after it is released.
(f) Any further submissions in response to the proposal in [21] above shall be filed on or before 12.00 pm on Friday, 19 February 2016.
(g)This judgment is to be delivered to the applicant and the beneficiaries of the Estate (other than Mr JR) only pending receipt of the further submissions referred to in (f) above.
Postscript
[24] Having provided the parties with the opportunity referred to in [21] above, I received a memorandum from the applicant’s counsel recording agreement with my proposal, and requesting that the name of the proposed executor be anonymised also.
[25] I make an order anonymising the names of the applicant, the beneficiaries and the proposed replacement executor. The existing orders restricting release and
publication of the judgment are lifted.
Edwards J
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