Estate of Kho
[2024] NZHC 2262
•12 August 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2023-404-001654
[2024] NZHC 2262
UNDER the Wills Act 2007 IN THE MATTER OF
the Estate of CHIAW PENG KHO
BY
WEI CHEN (aka ALEX CHAN)
Applicant
CIV 2023-404-002775 UNDER
Section 5 of the Administration Act 1969 and r 27.6 of the High Court Rules
IN THE MATTER OF
the Estate of CHIAW PENG KHO
BETWEEN
BEE LENG KHO
Plaintiff
AND
WEI CHEN (aka ALEX CHEN)
Defendant
Hearing: 31 July 2024 Appearances:
PJK Spring and W M van Roosmalen for the Applicant/Defendant P F Dalkie and D Watson for the Plaintiff/Respondent
Judgment:
12 August 2024
JUDGMENT OF TAHANA J
Solicitors:
This judgment was delivered by me on 12 August 2024 at 4.30pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Churton Hart & Divers, Auckland Keegan Alexander, Auckland
The Estate of KHO [2024] NZHC 2262 [12 August 2024]
Introduction
[1]Mr Wei Chen (also known as Alex Chan) applies for:
(a)orders appointing him temporary administrator of the estate of Chiaw Peng Kho (Peng) under s 7 of the Administration Act 1969; and
(b)an award of security for costs against Bee Leng Kho (Bee Leng), the plaintiff in proceeding CIV-2023-404-002775, under r 5.45 of the High Court Rules 2016.
[2]To avoid confusion given the same family name, I will refer to given names.
[3] I need to determine whether Mr Chen should be appointed as temporary administrator in circumstances where there is a dispute between him and Peng’s siblings as to the validity of the will. I must also determine whether an award for security for costs should be made against Bee Leng (Peng’s sister), who resides in Malaysia.
[4]Before considering those issues, I briefly set out the relevant background.
Background
[5] Peng sadly passed away on 3 September 2022. He had ten siblings and was survived by seven siblings (including Bee Leng) who all reside in Malaysia. Peng owned a home in Westmere, Auckland and had funds deposited in bank accounts in New Zealand and Malaysia.
[6] Peng prepared a will using a standard form purchased from a stationary shop. There are two versions of the will both dated 21 October 2009. One records Peng’s sister, Suan Hui Kho (who did not survive him), as executor and trustee. The other records Mr Chen as executor and trustee if Peng is not survived by Suan Hui Kho. Neither version gives any direction as to the distribution of Peng’s residuary estate.
[7] Mr Chen lived with Peng as a student in 2003 to 2004 and continued to have contact with Peng after he moved out. Mr Chen alleges that he was like a son to Peng.
Bee Leng and her siblings say that Peng never referred to Mr Chen as a son and Mr Chen is motivated by his own interests and desire to own Peng’s home.
[8] After Peng’s death, Mr Chen lodged a caveat against the title of the Westmere property. Then on 19 July 2023, he applied to correct the will under s 31 of the Wills Act 2007 to record that he is the beneficiary of Peng’s residuary estate and to validate the will under s 14 of that Act (CIV-2023-404-1654). Peng’s siblings are respondents in that proceeding.
[9] On 15 November 2023, Bee Leng filed a claim against Mr Chen (CIV-2023- 404-2775). Bee Leng seeks orders for the grant of letters of administration on intestacy or, in the alternative, orders correcting the will under s 31 of the Wills Act so that the estate is distributed to Peng’s siblings (or to their children if any sibling does not survive him).
[10] On 14 December 2023, the two proceedings (CIV-2023-404-1654 and CIV- 2023-404-2775) were consolidated.
[11]I now consider whether Mr Chen should be appointed temporary administrator.
Appointment of temporary administrator
[12] The parties agree that a temporary administrator should be appointed but disagree as to who this should be.
[13] The court may grant administration of an estate to a temporary administrator where there are legal proceedings touching on the validity of the will of the deceased.1 In Re Amundson, the Court considered the following should be established before appointing a temporary administrator:2
(a)there must be legal proceedings touching on the validity of the will or the grant of administration.
1 Administration Act 1969, s 7.
2 Re Amundson [2015] NZHC 1271 at [12].
(b)it must be necessary to preserve and manage the assets of the estate pending resolution of the proceedings; and
(c)the proposed appointee must be suitably qualified to perform the tasks and must have sworn to faithfully administer the estate.
[14] These proceedings touch on the validity of the will so the first requirement is clearly met.
[15] The largest asset of the estate is the Westmere home, which needs to be insured and maintained. It is currently rented to tenants so there is also rental income. I am satisfied that appointment of a temporary administrator is necessary to preserve and manage the assets of the estate.
[16] The only issue is whether Mr Chen is suitably qualified to be appointed administrator. The respondents challenge Mr Chen’s credibility arguing that he has manufactured the closeness of his relationship to Peng and has sought out evidence to corroborate his claim. Mr Chen contests the respondents’ assertions and relies on the evidence of two independent persons who depose as to Peng’s alleged testamentary intentions.
[17] Mr Spring for Mr Chen argued that there is no reason why Mr Chen should not be appointed temporary administrator in circumstances where he was nominated by Peng to be executor and he has managed the estate well to date. Further, Mr Spring argued that the estimated fees to be charged by Perpetual Guardian, a provider of trustee services, will exceed the rental income from the house and would require that it be sold.
[18] Mr Chen provided evidence that he had located bank statements for five bank accounts held in the name of Peng with total funds of $66,633.04.3 At the hearing, Mr Dalkie for Bee Leng sought to produce a document listing 13 bank accounts in New Zealand and one bank account in Malaysia. Mr Spring objected to the admissibility of that document. After the hearing, the respondents filed an affidavit
3 As at 14 January 2022, 7 October 2022, 27 May 2022 and 23 August 2023.
from Ms Vanya Jones, a legal executive, annexing a statement of assets she had prepared based on bank statements provided by banks after enquiries were made by the respondents’ solicitors. That statement indicates that Peng’s New Zealand bank accounts have total funds, as at 23 April 2024, of $907,215.07. Mr Chen has indicated that he will abide the Court’s decision as to the admissibility of Ms Jones’ affidavit.
[19] Ms Jones’ affidavit is clearly relevant to the issues I need to determine and is admissible. It assists in determining the estate’s assets and is relevant to Mr Chen’s argument that the estate cannot afford the fees of Perpetual Guardian. The further evidence indicates that there are sufficient funds to cover any fees to be charged by Perpetual Guardian. It also indicates that Mr Chen is not aware of the full extent of the estate’s assets.
[20] In Laery v Grout, Woolford J considered that apart from the issue of costs, the appearance of independence is equally important.4 In circumstances where the respondents challenge the credibility of Mr Chen and the evidence indicates that he is not aware of the full extent of the estate’s funds, it is appropriate that an independent administrator is appointed.
[21] Perpetual Guardian has provided a letter indicating consent to act as temporary administrator and it is appropriate that it be so appointed. I turn now to consider the application for an award of security for costs.
Security for costs
[22]Rule 5.45(1) and (2) of the High Court Rules 2016 provides:
5.45 Order for security of costs
(1)Subclause (2) applies if a Judge is satisfied, on the application of a defendant,—
(a)that a plaintiff—
(i)is resident out of New Zealand; or
(ii)is a corporation incorporated outside New Zealand; or
4 Laery v Grout [2014] NZHC 1881 at [18].
(iii)is a subsidiary (within the meaning of section 5 of the Companies Act 1993) of a corporation incorporated outside New Zealand; or
(b)that there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the plaintiff’s proceeding.
(2)A Judge may, if the Judge thinks it is just in all the circumstances, order the giving of security for costs.
…
Applications for security for costs are to be approached in three stages:5
(a)the first question is whether the threshold test in r 5.45(1) is met;
(b)if the threshold is met, then whether it is just in all the circumstances to make an order for security for costs; and
(c)if the Court so concludes, then the third question is the nature of the order that should be made.
Threshold in r 5.45
[24] Bee Leng lives in Malaysia so there is no question that the first threshold test is met.
[25] Given the threshold is met, the next issue is whether it is just in all the circumstances to make an order for security for costs.
Is it just in all the circumstances to make an order for security for costs?
[26] Bee Leng has filed an affidavit indicating that she is 65 years old and receiving a pension and a monthly income from private tuition. She also owns a home. She says that she and her siblings are able to contribute to any adverse costs order but if she is required to put up a lump sum as security, she will have to sell her property.
5 Jindal v Kamal [2023] NZHC 2820 at [9] citing Busch v Zion Wildlife Gardens Ltd (in rec and liq) [2012] NZHC 17.
[27] In Ball v Saint this Court accepted that it has jurisdiction to award security for costs against a defendant in respect of counterclaims in a probate dispute.6 The Court noted that assessing the merits of the security for costs application requires the Court to balance the interests of the parties and to assess, as far as possible, the merits of the underlying (counter) claim.7
[28] In assessing whether security for costs should be awarded, the Court should consider the substantive position being taken by the party resisting probate, rather than whether that party is nominally a plaintiff or a defendant.8 The fact that the first defendant’s affirmative defences and counterclaims are based on the same factual allegations may be relevant to whether a Court should order security for costs.9
[29] An award for security for costs was not made in Ball v Saint because the Court did not consider it appropriate to consider the merits of the claim part way through the trial.10 Ball v Saint does not therefore assist in identifying the type of circumstances in which a Court may be willing to award security for costs in a probate dispute. It does however, refer to a decision of the New South Wales Supreme Court in Re Estate Condon; Battenberg v Phillips, a probate case in which Lindsay J awarded security for costs.11
[30] In Re Estate Condon, the Court noted that orders for security for costs in probate proceedings are uncommon and authority on the topic is scant.12 That suggests that they are rarely awarded. The Court considered that there were general factors peculiar to probate proceedings to be considered as follows.
[31] First, the purpose of probate proceedings is relevant. That purpose is generally to advance the due and proper administration of the deceased’s estate, having regard to any duly expressed testamentary intentions of the deceased and the respective interests of parties beneficially entitled to the estate.13 The task of the Court is to
6 Ball v Saint [2022] NZHC 3607.
7 Ball v Saint, above n 6, at [20] citing Ambrose v Pickard [2009] NZCA 502 at [32].
8 Ball v Saint, above n 6, at [17].
9 At [17].
10 At [28].
11 Re Estate Condon; Battenberg v Phillips [2017] NSWSC 1813 [Re Estate Condon].
12 Re Estate Condon, above n 8, at [60].
13 At [88].
generally carry out a testator’s testamentary intentions and to see that the beneficiaries get what is due to them.14
[32] Second, there is a special public interest element in probate proceedings which is relevant to the issue of costs:15
[4] It is well established that the principles applicable to the awarding of costs in probate litigation differ from those applicable to ordinary civil suits where the principle that costs follow the event usually means that the losing party pays the winning party’s costs.
[5] The reason for the difference is that in a probate suit the Court is concerned to give effect to the last will of a free and capable testator or testatrix. There is a public interest in keeping faith with the wishes of a capable will-maker that requires an investigation into the validity of the propounded wills. A grant of probate in solemn form operates in rem, that is, it binds the world, or at least those affected persons who have notice of the proceedings. Irrespective of what the parties might want, the Court will not pronounce against a will unless there is material to satisfy it that the deceased did not have capacity, or that there is some other reason why the will is invalid. There is, therefore, a public interest in the incurring of some level of costs in cases where there is genuine doubt about the validity of a will.
[33] The Court in Re Estate Condon noted that if an order for the payment of costs out of the estate can fairly be anticipated (because the cause of the litigation is plainly the fault of the deceased) or if the plaintiff has an interest in the estate whatever the outcome of the proceedings, there may be no necessity, or utility in, an order for security.16 Lindsay J referred to the principles enunciated in Mitchell v Gard as to when an order that costs be borne by the estate would be made:17
The basis of all rule on this subject should rest upon the degree of blame to be imputed to the respective parties; and the question, who shall bear the costs? will be answered with this other question, whose fault was it that they were incurred? If fault lies at the door of the testator, his testamentary papers being surrounded with confusion or uncertainty in law or fact, it is just that the costs of ascertaining his will should be defrayed by his estate.
[34] Here, the proceedings arise because of the form of the will. That is of the deceased’s doing. Blame cannot be attributed to Bee Leng or her siblings who have an interest in any intestacy by reason of s 77 of the Administration Act. If Mr Chen’s
14 At [88].
15 At [91] citing Gray v Hart; Estate of Harris (No.2) [2012] NSWSC 1562 at [4]–[5].
16 At [94].
17 At [101] citing Mitchell v Gard (1863) 3 Sw & Tr 275.
claim fails, it will be necessary to determine how the estate will be distributed so it is appropriate that his siblings be heard.
[35] The Court in Re Estate Condon acknowledged that if all persons with an interest in an estate are joined in probate proceedings, questions about security of costs may begin to approximate such questions as encountered in ordinary civil proceedings
— but for the possibility that, in the ordinary course of probate practice, an order for costs might not be made against an unsuccessful party.18 The Court noted that in practice, in most cases, that possibility turns on:19
(a)whether responsibility for the proceedings can fairly be laid at the feet of the deceased (eg, because of the form of a will) rather than in attribution of fault to one or more parties;
(b)whether the circumstances in which a testamentary instrument was created was such as to invite an investigation by the Court; and
(c)whether participants in the proceedings have acted reasonably.
[36] This is clearly a case where the responsibility for the proceedings can fairly be laid at the feet of Peng. The circumstances in which the will was created clearly invites an investigation by the Court and that requires that all evidence be available to the Court as to the circumstances in which the will and any alleged testamentary intentions of Peng were made.
[37] In Re Estate Condon, the deceased died leaving a will signed in 2016 which made no provision for the plaintiff. The plaintiff was a nephew of the deceased and was seeking to rely on an irrevocable agreement signed in 2006 by the deceased and her sister-in-law, the adoptive mother of the plaintiff. The plaintiff sought a declaration that he was entitled to 18.75 per cent of the net estate of the deceased. The Court noted that the plaintiff was a plaintiff in substance because he was seeking to establish his own interest in the 2006 document. The plaintiff also challenged the
18 Re Estate Condon, above n 8, at [96].
19 At [97].
validity of the 2016 will. The circumstances of that case indicate that the plaintiff was seeking to rely on an interest arising under a separate and unrelated document. In those circumstances, the Court was satisfied that it should award security for costs because the plaintiff resided in the United Kingdom.
[38] I turn now to consider the nature of Bee Leng’s claim and whether, given the nature and merits of that claim, the interests of justice support an award of security for costs.
[39] Bee Leng’s claim turns on her interest under s 77 of the Administration Act and the testamentary intentions of Peng.
[40] I agree with Mr Spring’s submission that there are issues with the form of the claim in that it defines the will relied on by Mr Chen as “doctored”. The claim should be repleaded to either plead facts in support of an allegation of doctoring or to remove the reference to “doctored” in the definition. That issue, however, does not establish that the claim is weak or without merit. Nor, does it establish that the claim is separate to Mr Chen’s claim. Both claims turn on the circumstances surrounding execution of Peng’s will.
[41] The success of Bee Leng’s claim depends on the failure of Mr Chen’s claim. The expert handwriting evidence supports Peng having written Mr Chen’s name as the executor and trustee of his estate if he is not survived by his sister. Mr Chen then relies on the affidavit evidence of Monica Austin, the Justice of the Peace who witnessed the will, and Peter Lee, Peng’s friend. Ms Austin says that Peng intended that his estate go to Mr Chen if his sister did not survive him. Mr Lee deposes that in 2012, Peng told him that if anything happened to his sister, he intended his property to go to Mr Chen.
[42] Mr Chen relies on Re Estate of Chiang where the Court was satisfied that the failure to specify the beneficiary of the residuary estate was an oversight in circumstances where the will-maker had told a witness her intention.20 That application was uncontested.
20 Re estate of Chiang [2014] NZHC 6 at [3].
[43] The circumstances here are similar in that Mr Chen relies on the evidence of Ms Austin and Mr Lee. Evidence as to Mr Chen’s relationship with Peng is irrelevant to whether Peng expressed his testamentary intentions to Ms Austin and Mr Lee. On the face of it, Mr Chen’s claim appears strong.
[44] Bee Leng’s claim challenges the credibility of Mr Chen and in turn the motives of those witnesses who have filed evidence in support of his claim. There is evidence that Mr Chen has sought to provide gifts in the hope of obtaining helpful evidence. There is also evidence that Mr Chen’s relationship with Peng may not have been as close as he asserts.
[45] In support of Bee Leng’s claim, there is evidence that Peng intended that his estate be left to his family (affidavit of Suan Bee Kho) and evidence that it is inconceivable that Peng would leave his estate to Mr Chen as a person from mainland China.
[46] Overall, the strength of Bee Leng’s claim will turn on the credibility of the witnesses called by Mr Chen. Issues of credibility can only be determined at trial so I cannot determine, at this stage, that Bee Leng’s claim is weak.
[47] There is a public interest in determining Peng’s testamentary intentions and the Court having all relevant evidence as to his conduct and likely intentions. The proceedings arise because of the conduct of Peng. This is a case where costs would ordinarily be borne by the estate (subject to the conduct of the parties during the course of the proceedings). Bee Leng is not seeking to establish an independent interest under another document but has interests under the Administration Act. The circumstances are not the same as in Re Estate Condon. Further, Bee Leng’s evidence is that she is retired and she would be required to sell her home to be able to meet any award for security for costs. It would not be in the interests of justice to stay her claim or the respondents’ defence to Mr Chen’s claim if Bee Leng is unable to provide security for costs.
[48] In all the circumstances I do not consider that it is in the interests of justice to award security for costs against Bee Leng.
Result
[49]For the reasons above, the application for security for costs is dismissed.
[50]I make the following orders:
(a)appointing Perpetual Guardian as the temporary administrator of Peng’s estate, subject to the immediate control of the court and acting under its direction until Perpetual Guardian is discharged or removed under s 21 of the Administration Act 1969;
(b)that the temporary administrator, Perpetual Guardian is to have all the rights and powers of a general administrator, other than the right of distributing the balance of the deceased’s estate remaining after payment of debts, funeral and testamentary expenses, duties and fees;
(c)authorising payment to the temporary administrator, Perpetual Guardian, in accordance with its usual charge out rates; and
(d)directing the temporary administrator, Perpetual Guardian, be served with all documents in the proceedings.
Costs
[51] The respondents have been successful in opposing the applications. My preliminary view is that costs should be fixed on a 2B basis. If counsel accept this preliminary view, they are invited to agree costs. If they are unable to do so, then I direct as follows:
(a)any application for costs is to be advanced by way of memorandum, to be filed and served within 10 working days of the date of this judgment;
(b)any response to the application for costs is to be advanced by way of memorandum, to be filed and served within a further 10 working days; and
(c)memoranda are not to exceed three pages.
[52] I will then deal with the issue of costs and disbursements on the papers unless I require the assistance of counsel.
Tahana J
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