Hennessy v Hennessy

[2021] NZHC 1198

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2019-454-000043

[2021] NZHC 1198

IN THE MATTER

of the estate of Edward Brendon Hennessy

UNDER

the Administration Act 1969

BETWEEN

SHARON BRIDGET RAUKURA HENNESSY

Plaintiff

AND

ALBERT KEVIN TAMA HENNESSY

Defendant

Hearing:

8 March 2021

Supplementary submissions 24 May 2021

Appearances:

D I Sheppard for Plaintiff

Judgment:

27 May 2021

JUDGMENT OF COOKE J

[1]                 By a statement of claim dated 5 July 2019 the plaintiff seeks orders under s 21 of the Administration Act 1969 that her brother, the defendant be removed as a trustee and executor of the estate of their father leaving her as sole trustee and executor.

Background

[2]                 Proceedings were originally commenced by way of a without notice application for leave that they be permitted to be commenced by originating application under Part 19 of the High Court Rules 2016. That leave was declined on the basis that the affidavits that had been filed demonstrated that the matters were contested, there was a degree of hostility and that there was accordingly a need for the more extensive procedures involved in resolving disputes of that kind.1

1      Hennessy v Hennessy [2018] NZHC 3119.

HENNESSY v HENNESSY [2021] NZHC 1198 [27 May 2021]

[3]                 That has led to the commencement of these separate proceedings by way of statement of claim. The orders sought by the plaintiff are not opposed by the defendant, however. The matter has proceeded before me by way of formal proof. With hindsight, proceedings under Part 19 may have been satisfactory with the matter determined on the papers. But the lack of opposition to the orders was not apparent at the time of the application was first made to the Court as the defendant had not been served. This may have been a situation where an application for leave under r 19.5 could have been included in an originating application that was served on the defendant, together with consents from the affected beneficiaries which would have allowed what became to be an unopposed matter to be determined on the papers.

[4]                 This proceeding has now been commenced as an ordinary proceeding by way of statement of claim. Strictly speaking the proper alternative to a Part 19 proceedings was a proceeding under Part 8, Rule 18.1 provides that proceedings under that Part include “the determination of questions that arises in the administration of an estate or trust …”.2 Proceedings under that Part are also commenced by statement of claim, but they are required to be commenced by applications for directions as to service and representation.3 Part 18 involves a more streamlined procedure than an ordinary proceeding.

[5]                 It is important not to get too distracted by procedural niceties, however. There are now less stark differences between the different Parts of the rules.4 The Rules must be interpreted and applied with the objective of securing the just, speedy, and inexpensive determination of proceedings under r 1.2. The present application is unopposed. The only issue is that whilst the defendant has been served the other beneficiaries of the estate have not been. This would likely have been a matter considered under an application for directions as to service under Part 18. After discussing the position with Mr Sheppard I directed that further information be filed to confirm the consent to the beneficiaries to the orders sought, and I adjourned the formal proof hearing for that purpose. It took longer for the additional information to

2      High Court Rules r 18.1(a)(ix).

3      High Court Rules r 18.4(1).

4      See, Clarkson v Clarkson [2020] NZHC 2211, (2020) 5 NZTR 30-016 at [9]-[16].

be provided than anticipated, but it has now been provided in Mr Sheppard’s memorandum dated 24 May 2021. In particular:

(a)the plaintiff’s sister, Ms Eileen Hennessy swore an affidavit in support of the originating application that was first filed stating that she supports this application;

(b)their other brother, Mr Edward Hennessy has consented to the orders sought in the statement of claim; and

(c)the only other beneficiary is Mr Brendon Hennessy (Ropiha) and he has also signed a consent to the orders sought.

[6]                 These are the other beneficiaries, and accordingly the only other persons interested.

The Application

[7]Section 21 of the Administration At 1969 provides:

21       Discharge or removal of administrator

(1)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 that administrator, and may if it thinks fit appoint any person to be administrator in his or her place, on such terms and conditions in all respects as the court thinks fit.

(2)The administrator so removed or discharged shall, from the date of that order, cease to be liable for acts and things done after that date.

(3)Upon any administrator being discharged or removed as aforesaid (whether or not any other administrator is appointed) all the estate and rights of the previous administrator or administrators which were vested in him or her or them as such shall become and be vested in the continuing administrator or administrators (including any administrator appointed under subsection (1)) who shall have the same powers, authorities, discretions, and duties, and may in all respects act, as if he or she or they had been originally appointed as the administrator or administrators.

(4)This section shall, with all necessary modifications, extend to the case where an administrator dies, and the powers and authorities hereby conferred may be exercised and shall take effect accordingly.

(5)Nothing in this section shall restrict section 8.

[8]                 The proper approach to the application of s 21 has been addressed by the Court of Appeal in Tod v Tod5 and Frickleton v Frickleton.6 Both decisions adopt the approach set out by Heath J in Farquhar v Nunns by reference to the following factors:7

(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.

[9]                 The testator’s selection of the executor is important,8 but the interests of the beneficiaries must always be the focus.9

Application in the present case

[10]              The circumstances of the present case are set out in the statement of claim and the affidavit of the plaintiff sworn on 10 December 2020 in support.

[11]              The estate of the parties’ father was to be divided into five equal shares in accordance with his Will dated 13 December 2016, with one share to each of the

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

6      Frickleton v Frickleton [2016] NZCA 408.

7      Farquha v Nunns [2013] NZHC 1670 at [13] (footnotes omitted).

8      Tod v Tod, above n 5, at [27](a); Frickleton v Frickleton, above n 6, at [31]; Crick v McIlraith

[2012] NZHC 1290 at [19]–[20].

9      Frickleton v Frickleton, above n 6, at [33].

siblings and Brendon. The principal asset of the estate was a property in Levin. The two trustees and executors were the plaintiff and defendant.

[12]              It is apparent that the defendant did not agree with his father’s wishes and has declined to administer the estate in its terms. The plaintiff’s affidavit evidences communications showing animosity by him towards his three siblings, and that he did not want them to receive anything.

[13]The relevant property was sold in 2018. The net proceed in the amount of

$319,109.71 have been held in the estate solicitor’s trust account since that time. The estate’s solicitors have been ready, willing and able to distribute the estate in accordance with the will but the defendant declines to co-operate.

[14]              It is clear from those communications that the defendant contends there are certain financial obligations that he says must be addressed by his siblings before the estate is distributed. It is also apparent from the tone of the communications that there is a degree of personal animosity involved.

[15]              It is of course appropriate for an executor to consider any issues arising from suggested liabilities or assets of the estate. But here the defendant has simply made arguments and then insisted that no distributions take place. He has taken no steps to address the matters that he has raised. He has been served with these proceedings and has taken no steps. The funds have been held in limbo as a consequence. This is not in the best interests of the beneficiaries. It also involves the defendant not carrying out his duties as executor, and it fails to give effect to the intentions of the testator.

[16]              In those circumstances it seems to me that the orders sought in the statement of claim are in order.

Costs

[17]              Mr Sheppard sought costs on a 2B basis of this proceeding. Costs were sought in the statement of claim which was served on the defendant. I accept that costs should be awarded but it seems to me that an allowance for all relevant steps under 2B would involve an award that is too high. I allow 1.6 days under step 1, 1 day under step 30,

and then .4 days for the hearing and the preparation for it. That is a total allowance under category 2 of three days, plus reasonable disbursements (such as filing fees) to be fixed by the Registrar.

[18]              Mr Sheppard also sought an order that the amount so ordered in costs be able to be deducted from the defendant’s share of the estate in the administration of the estate. I do not think there is jurisdiction for the Court to make that order. In his supplementary submissions Mr Sheppard indicated he could find no previous case where such orders had been made, but referred to s 81(2) of the Trusts Act 2019 and s 38(2) of the Trustee Act 1956. But these provisions are directed to costs incurred by the trustee, and not costs award against a beneficiary in the trustee’s favour. The defendant’s liability under the costs award can be addressed by the plaintiff in her capacity as administrator. I proceed on the assumption that the plaintiff’s legal costs are being met out of the estate.

Cooke J

Solicitors:
Fitzherbert Rowe Lawyers, Palmerston North for Plaintiff