Estate of Mendoza

[2024] NZHC 1393

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2022-485-618637

[2024] NZHC 1393

IN THE MATTER

of the Estate of Mary Ruth Mendoza

BETWEEN

ROBYN JUNE COLLARD and GRAEME ROBERT MENDOZA

Applicants

AND

KEVIN JOHN MENDOZA

Respondent

Hearing:

28 May 2024

Appearances:

A Gilchrist for the applicants

No appearance by the respondent

Judgment:

29 May 2024

JUDGMENT OF ROBINSON J

[Application for removal of administrator]

Solicitors/Counsel:

David Rice & Associates, Auckland A Gilchrist, Auckland

Copy to:
The respondent

RE ESTATE OF MARY RUTH MENDOZA [2024] NZHC 1393 [29 May 2024]

Introduction

[1]    Mary Ruth Mendoza died on 22 July 2020. Three of her five children survived her: Robyn June Collard (Robyn); Graeme Robert Mendoza (Graeme) and Kevin John Mendoza (Kevin). Robyn, Graeme and Kevin all live in Australia, as did Ms Mendoza at the time of her death.

[2]    Ms Mendoza’s last will is dated 28 August 2002 (will). On 10 January 2023 this Court granted probate of Ms Mendoza’s Estate (Estate). In her will Ms Mendoza appointed Kevin and Dennis Lionel Mendoza (Dennis) (or the survivor of them) to be the executors and trustees of her Estate. Dennis predeceased Ms Mendoza. Therefore Kevin was appointed the sole executor of her will when the Court granted probate.

[3]    Kevin has taken no steps to administer the Estate. Robyn and Graeme apply for orders removing Kevin and appointing them as administrators of the Estate. Alternatively, they apply for orders removing Kevin and appointing an independent administrator.

Procedural background

[4]    Kevin lives in Western Australia. The applicants’ solicitor had previously engaged with Kevin’s Australian solicitors in relation to the granting of probate to Kevin. However, their more recent attempts to correspond with Kevin and his Australian solicitors have been unsuccessful. I describe those attempts in more detail below.

[5]    On 28 February 2024 Churchman J made an order for substituted service on Kevin.1 This order required service on Kevin of documents in these proceedings to be effected by emailing the documents to him and his Australian solicitors at the addresses from which they had previously corresponded with the applicants’ solicitors.

[6]    I have seen an affidavit of service from Francis Hugh Stott and I am satisfied that service of these proceedings on Kevin has occurred in accordance with

1      Collard v Mendoza [2024] NZHC 346.

Churchman J’s orders. Kevin has taken no steps to oppose the application which therefore proceeds by way of formal proof.

Factual background

[7]    Robyn and Graeme have each filed an affidavit in support of their application. I am satisfied from those affidavits that the relevant factual background is as follows.

[8]    Ms Mendoza had five children, two of whom predeceased her. As noted, her surviving children are Kevin (aged 71), Robyn (aged 69) and Graeme (aged 65).

[9]    Ms Mendoza lived and owned a property in Papakura, Auckland, but in 2006 she moved to the Gold Coast  in  Queensland,  Australia  to  be  close  to  Robyn.  Ms Mendoza initially rented out her Papakura property, but this was subsequently sold. The sale proceeds remain in her solicitor’s trust account.

[10]   There is no particular dispute between them, but Robyn and Graeme are estranged from their brother Kevin. Robyn explains that at the time of their mother’s death they had not heard from him for 17 years.

[11]   In her affidavit Robyn explains that, in 2021, she contracted Ms Mendoza’s solicitors in Auckland who were able to locate a copy of her will. Through family contacts the applicants determined that Kevin was living in Western Australia. The Estate’s solicitors prepared the documents required for Kevin to apply for probate and sent them to Kevin’s nominated solicitors in Western Australia. The signed documentation was returned to the Estate’s solicitors approximately three months later. Probate was granted to Kevin on 10 January 2023.

[12]   On 10 May 2023 the Estate’s solicitors wrote to Kevin’s Australian solicitors, copying in Kevin by email. The letter enclosed the Probate Order, and provided advice about the realisation and administration of the Estate.

[13]   The Estate’s solicitors received no response from Kevin or his solicitors. The Estate’s  solicitors sent further correspondence on 19 July 2023, 1 August 2023 and  3 August 2023. But still there has been no response.

[14]   As noted above, Kevin has also been served with this proceeding, but he has taken no steps in relation to it. A file note of the Estate’s solicitor’s discussion with Kevin on 22 January 2024 was attached to his affidavit in support of Robyn and Graeme’s application for substituted service. This indicates that Kevin is aware of this application and the reasons for it, yet he has not taken any steps to administer the Estate or in relation to this application.

The Estate

[15]   Robyn deposes that the Estate is worth approximately $634,000. It comprises funds held in the Estate’s solicitor’s trust account (being the balance of the proceeds of sale of Ms Mendoza’s house), and investments and term deposits with ANZ Bank and Heartland Bank. The Estate’s solicitors have published a Notice to Creditors under s 79 of the Trusts Act 2019 to which no response has been received.

[16]The executor’s outstanding obligations include:

(a)closing on ANZ Bank and Heartland Bank accounts;

(b)paying legacies;

(c)finalising any outstanding tax matters in New Zealand and Australia and paying any tax which might be due;

(d)paying final legal costs; and

(e)distributing the Estate.

Legal principles

[17]Section 21(1) of the Administration Act 1969 provides:

Where an administrator is absent from New Zealand for 12 months without leaving a lawful attorney or desires to be discharged from the office of administrator, or becomes incapable of acting as administrator or unfit to so act, or where it becomes expedient to discharge or remove an administrator, the Court may discharge or remove the 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.

(emphasis added)

[18]Section 112 of the Trusts Act 2019 provides:

Court may make order for removal

Whenever it is necessary or desirable to remove a trustee and it is difficult or impracticable to do so without the assistance of the court, the court may make an order removing a trustee.

[19]   In Tod v Tod2 the Court of Appeal endorsed the following statement of principles set out by Heath J in Farquhar v Nunns3 concerning the removal of administrators and trustees: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.

Analysis

[20]   I am satisfied that it is in the best interests of the beneficiaries of Ms Mendoza’s Estate, and therefore expedient, that Kevin be removed as an executor and trustee of the Estate. I acknowledge that in 2010 it was Ms Mendoza’s wish that Kevin be the sole executor and trustee of her Estate in the event that Dennis predeceased her and, with the assistance of the Estate’s solicitors, Kevin did sign and return documents

2      Tod v Tod [2015] NZCA 501, [2017] 2 NZLR 145 (CA) at [22].

3      Farquhar v Nunns [2013] NZHC 1670.

4      At [13] (footnotes omitted).

required to obtain probate. However, since then he has done nothing to administer the relatively straightforward Estate and neither he nor his solicitors have replied to correspondence from the Estate’s solicitors. As a result, the Estate’s tax affairs have not been finalised, any outstanding debts have not been paid, and distributions have not been made to the Estate’s beneficiaries.

[21]   For whatever reason Kevin is simply not doing what he is required to do. I am satisfied that it is appropriate to remove and replace him.

[22]   I accept the submission of Mr Gilchrist for the applicants that in light of the relatively modest and simply Estate it is more appropriate to appoint Robyn and Graeme as administrators, rather than an independent and professional administrator. The appointment of a professional administrator would add a layer of cost that in my view is unnecessary in the circumstances. There is no particular animosity between Robyn and Graeme (on one hand) and Kevin. Their frustration and this application, arises simply out of frustration at his inaction. The Estate is well-advised and I have no doubt that Robyn and Graeme will be well-placed to administer the Estate appropriately.

Costs

[23]Robyn and Graeme seek costs.

[24]   I accept Mr Gilchrist’s submission on their behalf that it would be inappropriate simply to order that costs be paid out of the Estate. The effect of such an order would be that Robyn and Graeme would ultimately pay 2/3 of their costs, and Kevin would pay 1/3. That would not be an appropriate outcome in the circumstances.

[25]   I accept Mr Gilchrist’s submission that costs on a 2B basis are appropriate, save for the steps described at item 22, 24 and 25 of the third schedule to the High Court Rules 2016. The application was brought as an interlocutory application in the probate file, but in substance itwas more akin to an originating application. I therefore award the applicants costs on a 2C basis for each of those steps, as set out and calculated in the schedule to Mr Gilchrist’s written submissions.

Result

[26]The respondent is removed as the administrator of Ms Mendoza’s Estate.

[27]The applicants are appointed as the administrators of Ms Mendoza’s Estate.

[28] The respondent is to pay the applicants’ costs and disbursements. Costs are to be calculated on a 2B/2C basis, as described at [25] above.

Robinson J