J v T
[2017] NZHC 3089
•12 December 2017
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2017-419-176 [2017] NZHC 3089
BETWEEN J AND M
Applicants
AND
T Respondent
Hearing: 22 November 2017 Counsel:
K F Shaw for Applicants
K I Bond for RespondentJudgment:
12 December 2017
[REDACTED] JUDGMENT OF WHATA J
This judgment was delivered by me on 12 December 2017 at 4.00 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date: ………………………….
Solicitors: Harkness Henry, Hamilton
Whitfield Braun, Hamilton
J AND M v T [2017] NZHC 3089 [12 December 2017]
[1] Nearly 18 months after probate and the executors remain unable appoint a solicitor for the estate. They now seek to remove one another. New executors are needed. There shall be orders removing the current executors and appointing the Public Trust.
[2] My reasons follow.
Background
[3] JG died on 23 June 2016. Probate was granted on 19 July 2016. His will identified his three children (J, M and T) as the executors and beneficiaries of his estate. JG left a surviving spouse, PG, who is the other beneficiary named in the will. The will is a standard version of its kind. The estate includes JG’s interest in a unit title, being [redacted] (the Unit).
[4] Complicating matters only slightly, JG and PG entered into a contracting out agreement dated 26 February 2004 dealing with, among other things, the purchase by
PG of a half-share of the Unit, for $100,000. The agreement also sets out a process to be followed, in the event of death of one of the spouses, by the surviving spouse in dealing with the Unit. One of those options is to purchase the deceased’s share in the Unit. There is also a deed of acknowledgement of debt, dated 6 July 2005, wherein JG is recorded as having advanced to PG the sum of $300,000.
Executors in conflict
[5] From the early days of the executorship, J and M were keen to expedite the distribution of the estate and to settle matters with PG. Both sides agree PG expressed interest early on in purchasing JG’s share in the Unit. T, however, was concerned about the effect any agreement reached with PG might have on the residual estate. Her position was recorded in a five page closely scripted letter to J and M. The strength of T’s convictions, and her views more generally, were also conveyed in an email to J and M, dated 8 August 2016, in response to a letter received from PG’s lawyers, McBreens: [redacted]
[6] T was also concerned about the then estate lawyer’s apparent conflict of interest and agitated for his and the firm’s removal. J, however, wanted them to stay. M, it appears, supported J. T sent a lengthy letter to J and M on the subject on
10 August 2016, which she proposed to send to the estate lawyers, Allen Needham & Co Ltd. J’s frustration on this issue is revealed in a note to M regarding the letter. He said:
Should we send this just to shut [T] up?
[7] Ultimately T’s position was vindicated. Allen Needham & Co Ltd stood down. Unfortunately, this meant a new solicitor for the estate was needed. This did not go well. Gawith Burridge initially agreed to act for the estate. A letter from T to Mr Burridge, however, triggered a request from Gawith Burridge that they receive their instructions exclusively from one executor. T also separately wrote at this time to the former estate lawyers raising issues with the steps that they had taken or not taken in relation to the Unit owned by the estate. This upset J, who sent an email to T on 11
October 2016 expressing that he was appalled at the tone of her letter. Within this email J states the following:
So this is what we’re going to do. Each and every;
1. Day that you delay [M’s] appointment as representative.
2. Time that you act without prior agreement between us.
3.Time you write rude and insulting emails or correspondence to professionals, or anyone else purportedly on our behalf.
4. Contact [PG] without prior discussion.
5.Time that you compromise the ability to properly discuss and decide on the course of action required as executors.
I promise to delay any release of any funds or any distribution from the estate to beneficiaries by 10 days per event. Starting now.
[8] Unsurprisingly this promised course of action did little to appease matters, T
responding on 11 October 2016:
In response to your letter, I would like to say that it seems you are overreaching your legal parameters. Issuing threats, using coercion and colluding with our sister puts her and yourself in an inadvisable vulnerable position legally.
[9] In an attempt, it appears, to find a way forward, J prepared a draft code of conduct on 14 October 2016 dealing with correspondence between them, timeliness of decisions, a process for liaising with a professional and how their liaison would deal with the professional. To the extent the code of conduct was implemented, it did not remedy the difficulties between them. On 27 October 2016, T wrote to J and M that she was not going to meet with them and stated:
You will be notified in writing of the outcomes of the legal advice that I will receive.
[10] At about this time, Gawith Burridge also declined to act as solicitors for the estate because of the inability of the executors to give clear instructions. It was not until the end of November that the three executors managed to identify another solicitor that might act for the estate. But that lawyer also withdrew in January 2017 because “there is a degree of conflict between the Executors of such apparent magnitude that it will make the matter incredibly difficult to manage and excessively time consuming”. There was then a dispute as to their fee issued to T alone, which triggered further acrimony between the executors.
[11] Now, almost 18 months after probate, the estate still remains lawyer-less and no progress has been made on the administration of the estate.
The evidence
[12] Detailed affidavit evidence was provided by the parties on what transpired. For example, T’s affidavit was 121 pages in length with single spacing. While T was responding in part to irrelevant evidence given by J, the affidavit was manifestly excessive, a point which Mr Bond readily conceded.1
[13] In any event, the evidence simply provides different perspectives about the causes of the breakdown in the administration of the estate. I have endeavoured to capture the essence of it above. It is largely based on the chronology of events provided by Mr Bond and not challenged by Ms Shaw. The chronology provided a fair reflection of the unfolding events based on the correspondence between the parties.
The competing positions
[14] Ms Shaw for J and M submits T is unsuitable to act as an executor and should be removed; that she needlessly over complicates matters and offers legal and strategic advice well outside her expertise. They say this has caused and continues to cause unnecessary delay in the distribution of the estate. [redacted]
[15] T responds that she has responsibly raised legitimate matters of concern in the best interests of the estate. Conversely, she says J and M have taken, in short, a patronising view of her abilities and contribution and rather than accommodate her concerns seek to bully her into submission. This is said to be illustrated by J’s threat to delay distribution if she did not accede to his requests.2 She says J and M therefore should be removed.
Legal frame
[16] Section 21 of the Administration Act 1969 provides for the removal of administrators:
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.
…
[17] In frame for present purposes is removal on the grounds of expediency. It is common ground that the principles to be applied were set out in Tod v Tod3 and Frickleton v Frickleton,4 namely:5
(a) The starting point is the Court’s duty to see the estates properly administered.
(b)This jurisdiction involves a large discretion which is heavily fact- dependant.
(c) The wishes of the testator are to be given consideration, but ultimately the question is what is expedient in the interest 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 the administrators/trustees and the 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.
Assessment
[18] The executors cannot work together. They come at the problems facing the estate from different ends of the spectrum. J and M have a relatively benign view of
PG’s interests and are keen to settle matters with her. They also have a dim view of their sister.6 They are frustrated by T’s “unwarranted complications and stalling tactics”, her “preconceived opinions of the process and what needs to be done” and her stubbornness about PG. Conversely, T is clearly worried that any agreement with
PG exposes the estate to a potential claim and prefers a strategy that best avoids this
3 Tod v Tod [2017] NZCA 501, [2017] 2 NZLR 145.
4 Frickleton v Frickleton [2016] NZCA 408, [2017] 2 NZLR 154.
5 At [22] and [29] respectively, citing Farquhar v Nunns [2013] NZHC 1670 at [13], per Heath J.
6 This is shown by J’s lengthy recount of what he considers are T’s failings. I do not propose to recount them. They fall well short of establishing she is unfit to act as an executor.
potential. She wants independent advice about this and simply refuses to move until she has it.
[19] I empathise with both perspectives. T’s attention to detail is matched only by her verbosity and corresponding stubbornness. Her apparently trenchant position in relation to PG, a beneficiary, is also a concern. But her position is not entirely unreasonable. A cautious approach is not, by itself, a reason to remove an executor. Having said that, the behaviour of all the executors, including the making of threats to get action (by J and to a lesser extent M)7 and/or refusal to engage unless on a very particular basis (by T), has led to inordinate delay in achieving the simplest of tasks, including the appointment of a lawyer for estate. It is clear to me that the level of incompatibility between the executors is at such a level that the proper administration of the will is seriously adversely affected.8 It cannot continue like this and I see no prospect of this changing while all three executors remain. It is plainly expedient to change the current executorship; the only issue is how.
[20] All parties seek to be retained as executors as they say this best accords with
JG’s wishes. Plainly that is correct and is a strong factor to be considered.9 But retaining just one or two of the executors does not meet JG’s wishes any more than removing all three. His desire was to have all three of his children have a say in the administration of his estate.
[21] T also proposes that she be appointed with an independent solicitor. She says this will achieve the best balance of JG’s wishes. But the same could be said for J and M. It is simply an invitation to pick a winner, where all three executors have failed to perform the basic tasks required of them.
Outcome
[22] I have come to the view therefore that nearly 18 months of stalling and ineffective administration is enough. The Public Trust should be appointed to
7 I note there is evidence that J withdrew the threat noted at [7] at a meeting between the executors.
This was minuted, but the minute was subsequently challenged by T as inaccurate. Nevertheless, it is clear that the “threat” was at least moderated reasonably soon after it was made.
8 See the test laid out for trustees in Kain v Hutton [2007] NZCA 199, [2007] 3 NZLR 349 at [267].
9 See Frickleton v Frickleton [2016] NZCA 408, [2017] 2 NZLR 154 at [31].
administer what is a relatively small and uncomplicated estate. Both parties agreed that if I adopted this course, reasonable costs on the applications should be paid out of the estate. I make that order accordingly. If the quantum cannot be agreed with the Public Trust, then the parties have leave to revert to the Court for assistance.
Suppression
[23] I indicated to the parties at the conclusion of the hearing that some of the exchanges and comments made in evidence are personal, familial matters and need to be understood as such. I have proceeded on that basis. I also consider that anonymisation of the judgment, together with suppression of parts of the evidence, may be appropriate. I wish to afford the parties an opportunity to submit on this.
[24] Accordingly, this judgment will not be published until I have resolved that aspect. The parties will have five working days to seek such suppression orders as they consider are appropriate.
Addendum
[25] Further to my judgment of 12 December 2017 and following receipt of memoranda from counsel as to suppression, I have resolved to do the following:
(a) To anonymise the judgment;
(b) To restrict access to the judgment without the permission of a High
Court Judge;
(c) To redact, for the purposes of publication only, the sentences at paras
[3], [5] and [14].
[26] My reasons are as follows. First, the matters in issue involved deeply personal inter-family disputes for which there is little, if any, public interest. Second, I accept that anonymization will mitigate the intrusion into the privacy of the parties while still protecting the public interest in open justice.
[27] The deletion of the passages at paras [3], [5] and [14] is necessary to maintain the integrity and confidentiality of the engagement between the executors as they affect the estate. While the matter was not argued at length before me, it is at least arguable that there is an implied duty of confidence as between executors when exercising and performing their duties, in order to maintain the integrity of the decision-making process. Such an implied duty of confidence also assists the decision-making process insofar as executors can engage in robust discussion without undue fear of publication of what they say. In the present context, the publication of those utterances was necessary in order to resolve the application. It is largely of historical significance only.
[28] For the foregoing reasons, I make the suppression orders as identified at para
[23] accordingly.
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