Johnston-O'Loughlin v Johnston

[2025] NZHC 276

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-000783

[2025] NZHC 276

UNDER THE

Administration Act 1969 and the Property Law Act 2007

IN THE MATTER OF

Estate of Heather Joy Johnston

BETWEEN

DESTINEE-JOY JOHNSTON- O’LOUGHLIN

Applicant

AND

CUSHLA-JOY JOHNSTON

Respondent

Hearing:	4 February 2025
Appearances:	A T Davis for the Applicant Respondent in Person
Judgment:	25 February 2025

JUDGMENT OF POWELL J

This judgment was delivered by me on 25 February 2025 at 12.00 pm.

Pursuant to R 11.5 of the High Court Rules.

…………………..

Registrar/Deputy Registrar

DESTINEE-JOY JOHNSTON-O’LOUGHLIN v CUSHLA-JOY JOHNSTON [2025] NZHC 276 [25 February 2025]

[1]                 Destinee-Joy Johnston-O’Loughlin (“Destinee-Joy”) has applied under s 21 of the Administration Act 1969 (“the Act”) for the removal of Cushla-Joy Johnston (“Cushla-Joy”) as an administrator of the estate of Heather Joy Johnston (“Mrs Johnston”).

[2]                 As Cushla-Joy took no formal steps to file any evidence or submissions in opposition to the application in accordance with the directions of Campbell J dated 17 October 2024, the hearing of the application proceeded by way of formal proof. Despite this, as Cushla-Joy was present, she was allowed to address the Court at the hearing.

Background

[3]                 Mrs Johnston died in February 2023. Destinee-Joy and Cushla-Joy are the sole beneficiaries of Mrs Johnston’s estate. The principal asset of the estate is Mrs Johnston’s home in Papakura (the Property).

[4]                 Destinee-Joy and Cushla-Joy have been the administrators of Mrs Johnston’s will since August 2023, after the original executor named in Mrs Johnston’s will renounced probate.

[5]                 Since Mrs Johnston’s death, Cushla-Joy has been residing at the Property without payment of rent, initially in the house located on the Property, and after this was severely damaged by fire at the end of October 2024, in a granny-flat at the rear of the Property.

The application

[6]                 Destinee-Joy’s position is that it is necessary to sell the Property in order to pay the debts of the estate (primarily legal costs incurred by Mrs Johnston totalling some $34,000). She notes that Cushla-Joy has been given time to see if she could buy out Destinee-Joy’s share of the Property but has not done so. Likewise, although a sale order was made by consent in August 2024, Cushla-Joy unilaterally pulled out of an agreement for the sale and purchase of the Property shortly before it was due to go unconditional, and has subsequently refused to commit to a later offer.

[7]                 Destinee-Joy also has concerns about the ability of Cushla-Joy to meet the outgoings of the Property while she remains in possession. Of particular concern was Cushla-Joy’s cancellation of the insurance policy which would have had a significant impact on the value of the estate had Destinee-Joy not realised that insurance had been cancelled and stepped in and arranged insurance herself.

The position of Cushla-Joy

[8]                 Cushla-Joy advised at the hearing that she accepts that the Property must be sold. She advised that she had been looking after the Property and paying rates regularly and wanted to obtain the best price. She stated that she pulled out of the agreement for sale and purchase because the price was insufficient given the government valuation of the Property, and only cancelled the insurance because she was unable to afford it and pay the rates at the same time.

Legal principles

[9]                 An administrator may be removed from that role pursuant to s 21 of the Administration Act 1969 (the Act). Section 21(1) provides as follows:

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.

[10]             In Frickleton v Frickleton, the Court of Appeal confirmed the principles that should guide a Court in dealing with an application under s 21 of the Act to remove an administrator:1

(1)The starting point is the Court’s duty to see estates properly administered and trusts properly executed.

1      Frickleton v Frickleton [2016] NZCA 408, [2017] 2 NZLR 154 at [29]; citing Tod v Tod [2015] NZCA 501 at [22] and Farquhar v Nunns [2013] NZHC 1670 at [13] (footnotes omitted).

(2)This jurisdiction involves a large discretion which is heavily fact- dependent.

(3)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.

(4)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.

(5)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.

[11]The Court of Appeal also referred to Crick v McIlraith where the Judge said:2

In relation to any application for any removal the Court must retain due respect for the wishes and indeed the autonomy of a testatrix.

The testator’s selection of executor should not lightly be set aside.

[12]             The Court went on to say however that the interests of beneficiaries must always be the focus, citing the Privy Council in Letterstedt v Broers:3

If [the Court is] satisfied that the continuance of the trustee would prevent the trusts being properly executed, the trustee might be removed. It must always be borne in mind, that trustees exist for the benefit of those to whom the creator of the trust has given the trust estate.

[13]The Court next referred to its earlier decision in Kain v Hutton as follows:4

… mere incompatibility between trustees and beneficiaries is not enough… Any incompatibility must be at such a level that the proper administration of the trust is seriously adversely affected and it has become difficult for a trustee to act in the interests of the beneficiary.

[14]             Finally, I note the comment by Heath J in Farquhar v Nunns that the issues raised must be considered in a macroscopic and not microscopic fashion.5

2      Crick v McIlraith [2012] NZHC 1290 at [19]–[20].

3      Frickleton v Frickleton, above n 1, at [33] citing Letterstedt v Broers (1884) 9 App Cas 371 (PC) at 386 per Lord Blackburn.

4      Frickleton v Frickleton, above n 1, at [35]; citing Kain v Hutton [2007] NZCA 199, [2007] 3 NZLR 349 at [267].

5      Farquhar v Nunns, above n 1, at [31]; citing Hunter v Hunter [1938] NZLR 520 (CA) at 528, adopting Great Western Railway Co v Owners of SS “Mostyn” [1928] AC 57 (HL) at 62.

Discussion

[15]             There is no doubt on the evidence before me, affidavits provided by Destinee- Joy and the accompanying exhibits, that Destinee-Joy and Cushla-Joy have a particularly fraught personal relationship. Based on the correspondence I have seen as well as the actions of Cushla-Joy, first committing to an agreement for sale and purchase and then pulling out, as well as her failure to maintain insurance of the Property without advising Destinee-Joy of that fact, I cannot place any weight on the assurances given informally in Court by Cushla-Joy that there is any prospect that she will take appropriate steps to enable the Property to be sold and the estate administered without further issue.

[16]             I am also conscious of the significant time that has now elapsed since the application was filed and the fact that no progress has been made in administering the estate in the interim.

[17]             Taken together, I am satisfied that if Cushla-Joy remains as an administrator it will prevent the estate being properly administered for the benefit of both beneficiaries and creditors. I am therefore satisfied it is expedient for Cushla-Joy to be removed as an administrator leaving Destinee-Joy as the sole administrator of the estate.

Decision

[18]             I make an order removing the respondent, Cushla-Joy Johnston as an administrator of the estate of her mother Heather Joy Johnston. Leave is reserved for Destinee-Joy Johnston-O’Loughlin to return to the Court for further orders should these be necessary to effect a sale of the property.

[19]             My preliminary view is that Destinee-Joy is entitled to costs on the application. Should costs be sought, a memorandum on behalf of Destinee-Joy is to be filed within four weeks of the date of this judgment. Cushla-Joy will then have two weeks to respond, following which I will determine costs on the papers.

Powell J