Kennedy v Kennedy
[2017] NZHC 168
•16 February 2017
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CIV-2016-412-000127 [2017] NZHC 168
UNDER the Administration Act 1969/Trustee Act
1956
AND
IN THE MATTER
of an application for appointment of a new trustee
BETWEEN
R J KENNEDY Plaintiff
AND
I J KENNEDY Defendant
Hearing: 3 February 2017 Appearances:
R J B Fowler QC for Plaintiff
L A Andersen for DefendantJudgment:
16 February 2017
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
on cross-application for summary judgment
Introduction
[1] A mature stepson (Mr Kennedy) sues his elderly stepmother (Mrs Kennedy). Upon the recent death of Mr Kennedy’s father (Mrs Kennedy’s husband), all Mr Kennedy’s property interests passed by survivorship to Mrs Kennedy. It is the hope of Mr Kennedy that, if the relief he seeks is granted, steps will be taken by a new estate trustee to bring a relationship property claim against Mrs Kennedy so as to establish a fund within the estate. Mr Kennedy would then bring a family protection
claim.
R J KENNEDY v I J KENNEDY [2017] NZHC 168 [16 February 2017]
The thrust of the interlocutory applications
[2] Mr Kennedy and Mrs Kennedy pursue cross-applications for summary judgment. Mr Kennedy says that his case for having an independent trustee appointed is so strong that an appointment must be made. Mrs Kennedy on the other hand asserts that Mr Kennedy’s ultimate goal of obtaining relief under the Family Protection Act 1955 is so weak that he is not entitled to have an administrator appointed to consider and possibly begin what would ultimately be a fruitless legal exercise.
The substantive proceeding
[3] Mr Kennedy commenced this proceeding with a statement of claim by which he sought an order removing Mrs Kennedy as the executor/trustee of the estate. The relief was misconceived as Mrs Kennedy had not been appointed administrator or applied for probate.
[4] Mrs Kennedy filed a defence which took that point.
[5] Mr Kennedy subsequently filed an amended statement of claim. He now seeks an order granting administration of the estate to someone other than Mrs Kennedy. In his amended statement of claim he did not identify his proposed administrator.
[6] Mr Kennedy wishes to pursue an amended application for summary judgment based on his amended statement of claim. Mr Fowler QC, appearing for Mr Kennedy, accepted that Mr Kennedy, by reason of the now different claim, requires the leave of the Court to pursue summary judgment in relation to the amended claim.1
[7] Mrs Kennedy does not oppose the grant of leave as she wishes to have both
Mr Kennedy’s application and her cross-application heard and disposed of at the same time. Leave will accordingly be granted to Mr Kennedy.
1 Rule 12.4(2) High Court Rules applying.
Mr Kennedy’s intended route to ultimate relief explained
The family history
[8] The material features of the family history are not in dispute. The parties have filed affidavits as to these matters. Materially:
(a) Mrs Kennedy and her late husband each had one previous marriage and children by those marriages;
(b) Mr Kennedy is the child of his father’s first marriage;
(c) Mrs Kennedy has four children (and grandchildren) of her first marriage;
(d)Mrs Kennedy and her late husband were happily married for over 37 years; and
(e) Mrs Kennedy’s husband had a very close relationship with her
children and treated them as his own children.
Financial provision for Mr Kennedy
[9] Mr Kennedy’s father gave him $20,000 shortly after marrying Mrs Kennedy. Mr Kennedy used the $20,000 to buy flats in South Road, Dunedin, and a truck business. Mr Kennedy sold up in Dunedin when he was 27 years of age. He moved to Wellington where he bought a supermarket. Mrs Kennedy describes him as now “a very wealthy man”. Mr Kennedy has not deposed otherwise.
Financial provision for Mrs Kennedy’s children
[10] Mrs Kennedy deposes that no money has been given to any of her four children.
The assets of Mrs Kennedy and her late husband
[11] Mrs Kennedy deposes that the only assets owned by her late husband at the time of his death were jointly owned with Mrs Kennedy being:
(a) their home in Larnach Road, Dunedin;
(b) KiwiBank accounts totalling $53,697.24; (c) chattels; and
(d) two motor-vehicles being a 1993 Honda Civic and a 2001 Toyota
Corolla.
[12] Mrs Kennedy deposes that were Mr Kennedy to obtain a share in the Larnach
Road house, she would have to sell her home.
Mrs Kennedy’s personal circumstances
[13] A general practitioner’s certificate as to Mrs Kennedy’s health was exhibited. Dr Tree Cocks stated that Mrs Kennedy was (in April 2016) physically and emotionally exhausted after caring for her late husband in the last years of his life. She stated that Mrs Kennedy has “multiple medical problems” and that her health has been adversely affected.
The mutual wills
[14] Mrs Kennedy and her late husband executed mutual wills. By their wills they declared that they had agreed on the provisions in their wills. Each expressly promised not to revoke the will in such a way as to depart from their agreement. In the event of non-survivorship, each gave three specific gifts (paintings to Mr Kennedy; wall unit and contents to one of Mrs Kennedy’s sons; an E-type Jaguar to one of Mrs Kennedy’s grandsons). The wills then vested the residue in Mr Kennedy and his four step-siblings (if surviving) in equal shares.
Mr Kennedy’s envisaged steps to relief
[15] There are a number of steps in the process which Mr Kennedy intends to pursue:
(a) The Court would first (in this proceeding) appoint an administrator under s 6(2) Administration Act 1969;
(b)Mr Kennedy would ask the administrator to pursue on behalf of the estate an order under s 25 Property (Relationships) Act 1976;
(c) The respective shares of each spouse in relationship property would thereupon be determined and divided;
(d)Mr Kennedy would then commence a family protection claim against the estate for further provision;
[16] Mr Fowler, in the course of his submissions and at my request, explained the particular family protection relief Mr Kennedy would pursue if each of the earlier steps in his proposed process are fulfilled. Mr Fowler stated that Mr Kennedy abides by the equal (one-fifth) sharing of residue but would pursue a fixing of his 20 per cent share in residue at current values. The share would not be required to be realised until Mrs Kennedy passes away but Mrs Kennedy would not be free to deplete it. The consequence is that any resort which Mrs Kennedy hereafter has to capital would be at the expense of her children, with the value of Mr Kennedy’s share not reducing (unless there is a falling value of an asset such as the home).
[17] Neither party has sought to quantify the likely financial benefit to Mr Kennedy should the value of his 20 per cent share be fixed now and unavailable for depletion by Mrs Kennedy. If one assumes a $300,000 value for the house, one might anticipate that each of the beneficiaries’ 20 per cent shares might, if paid out today, be worth $80,000. In theory at least, the extent of subsequent depletion by Mrs Kennedy could fall in the range of $0 to $80,000.
[18] In the way the submissions were initially presented for the parties it appeared to be common ground between counsel that at the second step (the request to the administrator to pursue a relationship property claim) the administrator would first need to make an application under s 88(2) Property (Relationships) Act to bring a claim for determination and division under s 25(1)(b) Property (Relationships) Act. Mr Fowler accordingly developed submissions as to Mr Kennedy having a credible family protection claim which would meet the “serious injustice” threshold under s
25(1)(b). Below I come to examine whether Mr Kennedy has met the threshold test.2 But I must also examine an alternative submission developed by Mr Fowler namely that the administrator would be able to proceed with a relationship property claim as of right under s 25(3) of the Act (rather than relying on s 25(1)(b)).3
The consent of the proposed administrator
[19] Mr Kennedy has very recently filed a consent of Lloyd Collins, a solicitor of Lower Hutt, to appointment as administrator of the estate. No evidence has been provided in relation to Mr Collins or any understanding he has of the estate or of the tasks he might become involved in. For Mrs Kennedy, Mr Andersen in his written submissions observed that the will does not contain a charging clause, with the consequence that Mr Collins, if appointed, would not have a right to charge for services. This submission led Mr Fowler to advise the Court, from the bar, that Mr Kennedy undertakes to indemnify Mr Collins for the costs and disbursements (including legal fees and any adverse costs awards) which Mr Collins may incur as administrator.
An adjournment application
[20] In the course of his oral submissions, Mr Fowler emphasised that the proceeding before the Court relates only to Mr Kennedy’s envisaged first step, namely the appointment of an administrator. He submitted that the synopsis filed by Mr Andersen and Mrs Kennedy’s financial evidence involved a jump to detailed consideration of the potential family protection claim. He submitted that such
detailed consideration was inappropriate on the present application.
2 Below at [37] – [42].
3 Below at [43] – [55].
[21] I indicated to Mr Fowler that on my appreciation of the proceeding the viability of Mr Kennedy’s proposed family protection claim requires consideration by the Court now. The financial evidence is relevant to that consideration.
[22] Faced with this indication from the Court, Mr Fowler requested a brief adjournment in order to take instructions. Upon resumption of the hearing, Mr Fowler made an oral application for adjournment for the purpose of providing further affidavit evidence. He stated the further affidavit evidence would relate to:
(a) Mr Kennedy’s financial position;
(b) The history of provision received by him; and
(c) The contribution made by Mr Kennedy’s mother to his parents’ assets.
[23] I declined the application for adjournment, indicating that my reasons would be incorporated within this judgment.
[24] I declined the adjournment application having regard to the interlocutory nature of the summary judgment process, the relevant issues raised on the pleadings and evidence filed to date, and the clear signalling by Mrs Kennedy through her evidence and Mr Andersen’s synopsis that her opposition and her own application relied in part on the financial evidence she had provided, leading to Mr Andersen’s submission that Mr Kennedy will not in any event have a significant family protection claim.
[25] Mrs Kennedy’s affidavit, setting out the financial evidence on which she relied, was filed in mid-November 2016. Mr Kennedy’s second affidavit was finalised in December 2016 and filed in mid-January 2017. On 15 December 2016, the cross-applications were set down for hearing on 3 February 2017.
[26] It would be inappropriate to adjourn the cross-applications to a later date with leave to file further evidence. The particular evidence which Mr Kennedy would seek to adduce was evidence which was appropriately to be produced in support of Mr Kennedy’s application and not strictly in reply. As Mr Kennedy apparently
decided not to seek to file reply evidence on such financial matters before the 3
February 2017 hearing, it was inappropriate to effectively allow him to seek to patch up an omission in the evidence on the interlocutory application. As it is, the Court was not given a draft of anything Mr Kennedy might say to correct or clarify the financial evidence given by Mrs Kennedy. It may well be that the overall financial picture would have remained substantially the same.
The tests in relation to summary judgment
[27] Counsel did not address me in any detail as to the tests to be applied on either plaintiff’s summary judgment or defendant’s summary judgment. Both are well settled, with case law elaborating upon the basis tests under rr 12.2(1) and 12.2(2) High Court Rules respectively. For Mr Kennedy to succeed he must satisfy me that Mrs Kennedy has no defence to the claim to have an administrator of the estate appointed. For her part, Mrs Kennedy must satisfy me that Mr Kennedy’s sole cause of action cannot succeed.
Discussion – points of defence
The proposed administrator
[28] Mr Andersen first notes that there is no application for the appointment of Mr Collins as administrator before the Court (he not having been identified in the amended statement of claim). Nor has evidence been given of the matters relating to him to which I have referred at [19].
[29] Mr Andersen submits that Mr Kennedy cannot succeed as plaintiff on the summary judgment application because he has not filed the affidavit required under r 12.4(5) High Court Rules. In particular, Mr Kennedy’s affidavit does not (and could not because of the absence of detail in the statement of claim) depose that Mrs Kennedy has no defence in relation to the appointment of Mr Collins in particular.
[30] While I regard the point raised by Mr Andersen as a material flaw in Mr
Kennedy’s application, I have reached the view that Mr Kennedy’s application must
fail and that Mrs Kennedy’s application must succeed for other reasons. Therefore I
will leave this first ground of opposition to one side.
Jurisdiction to appoint an administrator
[31] Mr Andersen submits that the amended statement of claim, invoking s 6(2) of the Administration Act, cannot provide a jurisdictional basis for Mr Kennedy’s application. Mr Andersen refers to s 6(2) of the Act as being “a catch-all provision” which applies when there is an insolvency or other special circumstances which lead the Court to consider it expedient to appoint an administrator. Mr Andersen submits that it is s 19 of the Act which must be invoked when the request for appointment comes about through the neglect or refusal of the executor named in a will to approve the will. He submits that when Parliament has provided in s 19 a procedure applicable to the present situation (in which the named executor/trustee has not applied for probate), the failure to apply for probate cannot amount to a “special circumstance” such as opens up the s 6 jurisdiction.
[32] Mr Andersen did not refer me to any authority establishing the proposition that the “catch-all provision” cannot be invoked in circumstances such as the present. I recognise that there might be unsatisfactory consequences if particular applications for the appointment of administrator potentially have to be decided by reference to two different tests (under separate provisions). But, as I have come to the view that Mr Kennedy can succeed under neither provision. I will consider the application by reference to both provisions.
An application under s 6 Administration Act
[33] To succeed in his summary judgment application, Mr Kennedy has to establish that the Court must inevitably consider it necessary or expedient to appoint an administrator. For Mrs Kennedy to succeed on her summary judgment application, Mr Andersen must persuade me that the Court could not conclude that such appointment is either necessary or expedient.
[34] This consideration requires the Court to move forward to the later stages of the process on which Mr Kennedy wishes to embark. The most convenient point of
the process to consider first is the end point, namely Mr Kennedy’s family protection
claim.
[35] Mr Fowler did not present written submissions on the prospects of Mr
Kennedy’s success in a family protection claim.
[36] Mr Andersen, on the other hand, presented succinct written submissions to which I consider there is no answer. I adopt them verbatim:
(a) The Plaintiff is a wealthy man who was given his start in life by the deceased and would have difficulty establishing a claim even if there was no competing claim by the widow;4
(b) The deceased’s primary obligation is towards his widow and the only assets owned by them both at the time of the death are those she could reasonably be expected to require for the balance of her life;
(c) In Law of Family Protection and Testamentary Promises,5 5 factors are identified as being relevant in relation to second marriages at paragraph 8.7. The factor that is most relevant to this claim is:
(e) Where the estate is modest, the primary moral obligation owed to the second wife may mean that it is not possible to make any immediate provision for the children of the first marriage and the “clean break” principle that the Courts often favour may have to be weighed to the need to provide adequately for the second wife.
(d) The bringing of a successful PRA claim would exhaust the
$22,528.67 cash resources of the estate and would require the mortgage or sale of the family home irrespective of the success of
any Family Protection claim by the Plaintiff.
The threshold under s 88(2) Property (Relationships) Act 1976
[37] The second step to be taken in Mr Kennedy’s proposed process (if pursuing an order under s 25(1)(b) Property (Relationships) Act) would be that the administrator pursues leave under s 88(2) of the Act to apply for such an order. Section 88(2) of the Act provides:
The personal representative of the deceased spouse or partner may, with the leave of the court, apply for an order under section 25(1)(a). The court may grant leave only if it is satisfied that refusing leave would cause serious injustice.
4 Williams v Aucutt [2000] NZLR 479 (CA).
5 Bill Patterson, Law of Family Protection and Testamentary Promises (4th ed, LexisNexis, Wellington, 2013) at [8.7].
[38] Mr Fowler, in his written submissions, did not identify the “serious injustice” which Mr Kennedy must establish as a necessary part of his proposed process. In his opening oral submissions, Mr Fowler submitted that the “serious injustice” threshold is met by Mr Kennedy’s possessing a “credible claim”. He submitted that the credible claim arises on the evidence (not through a financial need but) through a moral need for recognition. With reference to the decision in Williams v Aucutt, Mr Fowler submitted that all Mr Kennedy needs to point to (to establish a “credible claim”) is that he is the only child of his father and that he was completely omitted
from his father’s will provision.6
[39] In his written submissions, Mr Andersen referred to the Court of Appeal’s discussion of the correct approach to the term “serious injustice” in Public Trust v Whyman.7 In Whyman, William Young J (delivering the judgment of the Court) rejected the test of “intolerable injustice” identified in an earlier case. Rather, the Court of Appeal’s approach requires that:
(a) the “serious injustice” test is applied directly, with no need for a gloss
on the words chosen by Parliament;8
(b)it is relevant when establishing “serious injustice” that potential claimants for family protection would have a substantial claim under the Family Protection Act 1955;9 and
(c) it is relevant to consider whether there is evidence of the deceased’s structuring of affairs so as to avoid fulfilling what would otherwise have been the deceased’s moral duty.10
[40] Heath J, when subsequently applying Whyman, observed in Public Trust v
Relph:11
6 Williams v Aucutt, above n 4.
7 Public Trust v Whyman [2005] 2 NZLR 696 (CA). The Supreme Court subsequently granted leave to appeal from the Court of Appeal judgment (Whyman v Public Trust [2005] NZSC 12)
but a substantive Supreme Court judgment did not follow.
8 At [47].
9 At [49]; see also at [16] – “if there is such a credible claim, being one which we think should be
brought, there can be no objection to the appointment of the Public Trust”.
10 At [50].
Perhaps the essence of the Court of Appeal’s decision is captured in the notion that leave should not be granted unless some “serious injustice” was likely to flow from a potential plaintiff being prevented from bringing substantive proceedings.
[41] Subject to the observation that Heath J’s reference to “substantive proceedings” in the terms used in Whyman might have appeared as “substantial claim” or “credible claim which the Court thinks should be brought”, it is those concepts which this Court is required to apply.
An alternative to the “serious injustice” threshold
[42] In his oral submissions in reply, Mr Fowler put and developed a new proposition that Mr Kennedy need not satisfy the “serious injustice” threshold. Mr Fowler referred to the orders which an administrator might seek under s 25 Property (Relationships) Act. The section provides:
25 When court may make orders
(1) On an application under section 23, the court may—
(a) make any order it considers just—
(i) determining the respective shares of each spouse or partner in the relationship property or any part of that property; or
(ii) dividing the relationship property or any part of that property between the spouses or partners:
(b) make any other order that it is empowered to make by any provision of this Act.
(2) The court may not make an order under subsection (1) unless it is satisfied,—
(a) in the case of a marriage or civil union,—
(i) that the spouses or civil union partners are living apart (whether or not they have continued to live in the same residence) or are separated; or
(ii) that the marriage or civil union has been dissolved;
or
11 Public Trust v Relph [2009] 2 NZLR 819 at [39].
(b) in the case of a de facto relationship, that the de facto partners no longer have a de facto relationship with each other; or
(c) that one spouse or partner is endangering the relationship property or seriously diminishing its value, by gross mismanagement or by wilful or reckless dissipation of property or earnings; or
(d) that either spouse or partner is an undischarged bankrupt.
(3) Regardless of subsection (2), the court may at any time make any order or declaration relating to the status, ownership, vesting, or possession of any specific property as it considers just.
…
[43] Mr Fowler submitted:
(a) the administrator might apply under s 25(3) for an order or declaration as to the ownership and vesting of specific property;
(b)this is an alternative to an application under s 25(1) for a determination of shares and a division of property; and
(c) as the “serious injustice” threshold (under s 88(2)) applies only to leave in relation to a s 25(1)(a)) application, the administrator would not be required to meet the “special leave” threshold for a s 25(3) application. Instead he could proceed as of right.
[44] Mr Fowler observed that in Whyman the Court of Appeal considered the arguments on the basis that leave would be required by the administrator in that case. In doing so the Court reserved the question of whether the administrator would need to pursue a s 25(1)(a) order when an application under s 25(3) might be available.
[45] It was unhelpful to the Court that this line of argument was first identified in Mr Fowler’s oral reply. The application of the “serious injustice” threshold, as applied in Whyman, had formed a part of Mr Andersen’s written synopsis filed in advance of the hearing. Mr Fowler had not signalled an intention to take issue with it in his initial submissions at the hearing or referred in his list of authorities to the statutory provisions and dicta to which he then took the Court.
[46] The suggestion that the administrator might pursue the previously unsignalled route of a s 25(3) application therefore arose in the course of the hearing as a proposition novel to both Mr Andersen and the Court. Mr Andersen might reasonably have requested an adjournment to research the point and to present supplementary submissions. In the event, having reserved this judgment, I have now had the opportunity to consider further Mr Fowler’s submissions, particularly in the light of a more detailed consideration of the Court of Appeal’s observations in Whyman.
[47] The starting point lies in the Court of Appeal’s judgment in Whyman, on part of which Mr Fowler relied:
[21] So, pausing at this point, the Public Trust, if appointed as the administrator of the estate of the late Mr Russell, could make applications under s 25(1)(a) and (b) and under s 25(3), but could only apply under s
25(1)(a) with the leave of the Court under s 88(2). The purpose and effect of this restriction are not clear to us. On a perhaps literal construction, s 25(3)
would permit the making of orders declaring that any property now owned by Ms Whyman had the status of relationship property and vesting that
property in her and the Public Trust in such shares as might be appropriate. If so, the refusal of leave under s 88(2) might be of no practical significance, cf
the comments in Fisher on Matrimonial and Relationship Property at
[17.33]. We note, however, that in Kinniburgh v Williams [2004] 2 NZLR
132 at [59] Heath J took a different view of what could be obtained under s
25(1)(b) and (3). In light of that, and given the way the case was argued, we are content to put this question to one side and decide the case on the basis that leave would be required under s 88(2) if any meaningful relief is to be obtained against the estate of the late Mr Russell.
[48] The Court of Appeal therefore put to one side the question Mr Fowler raises in this case. Nevertheless, on an initial reading of the judgment, the Court might be taken to have lent some support to Mr Fowler’s submission by the recognition that the availability of alternative routes (under either ss 25(1)(a) and (b) or under s
25(3)) is supported by “a perhaps literal construction”.12
[49] The passage in Fisher on Matrimonial and Relationship Property cited by the
Court of Appeal in Whyman contains the observation that there seems to be “a
12 Some commentaries appear to infer that the Court of Appeal in Whyman held that an administrator may make an application for division of property without leave (leave having to be based on proof of “serious injustice”) by utilising s 25(3) Property (Relationships) Act instead of s 25(1): see Nicola Peart (ed) Brookers Family Law – Family Property (looseleaf ed, Thomson Reuters), at [PR 88.03(2)] and Family Law Service (looseleaf ed, LexisNexis) at [7.432]. The Court of Appeal judgment does not determine the question – rather it was “put to one side”.
curious inconsistency between provision in s 88(1) and (2) on the one hand and s 88(3) on the other”.13 The authors of Fisher suggest that applications should be made under ss (3) where it is unclear whether the “serious injustice” threshold under s 88(2) can be satisfied.14
[50] To be contrasted with the Fisher commentary, as the Court of Appeal observed in Whyman, is the judgment of Heath J in Re Williams.15 In that case, all but $8,000 of the property of the deceased (Mr Williams) had passed to his widow by survivorship. Mr Williams’ daughter by a previous marriage (Mrs Kinniburgh) commenced a family protection claim. At the same time, a personal representative of the deceased made an application under s 88(2) Administration Act for leave to
make an application under s 25 Property (Relationships) Act. Heath J had to consider under which limb of s 25 Property (Relationships) Act the personal representative might pursue a claim. His Honour found:
[59] In this particular case an application under s25(1)(b) or s25(3) of the
1976 Act would not have met the needs of Mrs Kinniburgh. There is no particular order which could be made under the Act which would have assisted Mrs Kinniburgh, apart from an order determining the respective shares of each spouse in the relationship property or an order dividing that property between them. An order under s25(3) declaring ownership rights would not have been sufficient to alter the status of the jointly owned property. And, while the Court has certain powers under s83 of the 1976 Act, those powers cannot be exercised other than in the course of proceedings under the 1976 Act.
[51] I was not referred to any subsequent decision, other than that in Whyman, in which this passage in Re Williams has been considered. While law digests have noted that the Court of Appeal in Whyman did not follow Re Williams, that observation does not apply to this specific issue (which the Court of Appeal expressly left to one side) but rather to Heath J’s approach to the meaning of “serious injustice”.
[52] For my part, I respectfully adopt the reasoning and conclusion of Heath J at paragraph [59] of Re Williams. The consequence is that, as a matter of law, the
13 Robert Fisher, Fisher on Matrimonial and Relationship Property (looseleaf ed, LexisNexis) at
[17.33].
14 At [17.33].
15 Re Williams [2004] 2 NZLR 132.
administrator (in order to have property restored to the estate of Mr Kennedy Senior) would need to pursue orders under s 25(1) Property (Relationships) Act. Therefore he would require leave under s 88(2) of the Act.
[53] This approach was adopted in circumstances with some similarity to the present in Horne v Public Trust,16 in the judgments of the Family Court and (on appeal) the High Court.17 The deceased (Mr Webster) and his widow were married (the second marriage for each) for 27 years before Mr Webster died. Mr Webster left his half share in the couple’s home to his wife. His estate was modest. Mr Webster’s
adult children applied for leave under s 88(2) as a springboard to a s 25(1)(a) application and family protection claims. In dismissing the s 88 application, the Family Court judge applied the “serious injustice” threshold as identified in Whyman. On appeal, Ronald Young J framed the application in terms of whether the applicant “has a reasonably arguable family protection claim”.18 His Honour concluded that Mr Webster’s adult children’s proposed family protection claim had little or no chance of success.19 Breach of moral duty would not be established, by reason of the modest size of the estate and Mr Webster’s primary obligation to his wife. His Honour observed:20
… any restriction on [Mrs Webster’s] use of the capital represented in the house will … have a significant effect on her life and choices.
[54] Ronald Young J upheld the Family Court Judge’s conclusion that “serious injustice” under s 88 was not established. His Honour also found that, even had he been satisfied as to “serious injustice”, the family protection claim would have rendered only “a very modest increase” of provision.21 His Honour would not have
exercised his discretion in favour of any further provision.22
16 Horne v Public Trust FC Nelson FAM-2008-042-993, 23 December 2009.
17 Horne v Public Trust HC Nelson CIV-2010-442-44, 4 May 2010.
18 Horne v Public Trust, above n 17, at [24].
19 At [28].
20 At [39]; see also [32].
21 At [41].
22 At [41].
Application of the s 88(2) Property (Relationships) Act test
[55] On the evidence filed, it is clear that an administrator of Mr Kennedy’s estate would not be able to satisfy the “serious injustice” threshold. The facts of this case are far removed from those in Whyman. They are much closer to those in Horne. Rather than running from their moral duties, the couple in this case embraced their moral duties to one another and nevertheless still had regard to their sense of moral obligation to their children and step-children. If Mr Kennedy has any claim at all in relation to his father’s estate, it is of the very weakest kind.
[56] The various steps required in the process proposed by Mr Kennedy will have substantial financial implications, which may lead to a significant injustice. A financial burden would fall on other parties in opposing Mr Kennedy or any administrator appointed and might not ultimately be compensated by a recovery of indemnity costs.
[57] Given these circumstances, Mr Kennedy cannot demonstrate that there are “special circumstances” which make it necessary or expedient that an administrator be appointed under s 6(2) of the Administration Act. Such an appointment is not “necessary”. In considering the term “expedient”, I adopt what I said in Crick v McIlraith:23
The term “expedient” imports considerations of suitability, practicality, and
efficiency.
For the reasons I have already identified, the appointment of an administrator for the purpose of pursuing Mr Kennedy’s proposed process would be neither suitable nor efficient. It also appears to me that it would have an element of impracticality, having regard to the absence of a charging clause in the deceased’s Will and a need for the administrator to call on an indemnity from Mr Kennedy.
[58] Mr Kennedy cannot succeed on his application under s 6(2) of the Act.
23 Crick v McIlraith [2012] NZHC 1290 at [18]; approved by the Court of Appeal in Frickleton v
Frickleton [2016] NZCA 408 at [30].
An application under s 19 Administration Act
[59] Were the application to have been made under s 19 of the Act, there is a similar exercise to be undertaken by the Court, based on a balancing of interests. Such a balancing exercise was undertaken by Lang J in Reece v Reece.24 His Honour there observed in relation to Mr Reece’s application to have a Mr Scotter appointed as administrator of the estate of his late mother:25
In my view it is completely unrealistic for the estate to go to the expense of engaging Mr Scotter to investigate this issue when the potential return to the estate, and Peter, is so insignificant. The reality here is that the investigation that Peter wants Mr Scotter to undertake will be a barren exercise.
The Court accordingly dismissed Mr Reece’s application notwithstanding that he had
“established grounds for the issue to be considered further”.26
[60] The approach in Reece v Reece, involving as it does a consideration of whether a proposed course of litigation would be fruitful or barren, directly parallels the examination of the likely, ultimate outcome which is undertaken by the courts when asked to grant leave under s 88(2) Property (Relationships) Act. As I have noted, the Court of Appeal in Whyman had regard to the merits of any ultimate family protection claim. Of Whyman and other cases, the authors of Brookers
Family Law observe:27
In order to determine whether to grant leave, the Court must consider the merits of the case, because it is only in the context of the merits that serious injustice can be determined.28
[61] Even where the grounds for an appointment of an administrator may exist, the Court retains a discretion under s 19 of the Act. Just as the Court found in Reece v Reece that the discretion should not be exercised in favour of the application, the Court must in this case use its discretion to decline any application under s 19 of the
Act.
24 Reece v Reece HC Auckland, CIV-2010-404-8071, 22 June 2011.
25 At [25].
26 At [26].
27 Brookers Family Law, above n 12, at 88.06.
28 In addition to Whyman, the authors refer to: Yeoh v Xu HC Auckland M1252-02, 3 December
2003; D v C FC Waitakere FAM-2006-090-2333, 4 September 2008; Public Trust v Relph, above n 11.
Conclusion
[62] Mr Kennedy has failed to establish an entitlement to summary judgment on his application. Rather, Mrs Kennedy has established that Mr Kennedy’s cause of action is entirely without prospect of success.
[63] Mrs Kennedy is entitled to judgment on her application.
Costs
[64] I heard from counsel as to costs.
[65] It was accepted that, in the event of this finding, costs would generally follow the event on a 2B basis, together with disbursements. Mr Fowler submitted that Mr Kennedy might properly receive some relief from the normal incidence of costs in relation to his amendment of his claim and his amended summary judgment application. Mr Fowler reasoned that the exhibited correspondence points to a reasonable understanding on the part of Mr Kennedy that Mrs Kennedy had assumed the role of personal representative of the estate. I did not find it appropriate to alter what would otherwise be the usual costs award for each step taken by Mrs Kennedy in the litigation. Mr Kennedy’s initial approach may have proceeded on a genuine misunderstanding but, as between the parties, he should be accountable for the litigation costs in the normal way.
Orders
[66] I order:
(a) The plaintiff has leave to pursue a summary judgment application in relation to his amended statement of claim;
(b) The plaintiff’s summary judgment application is dismissed;
(c) There is judgment in the proceeding for the defendant;
(d) The plaintiff shall pay to the defendant her costs in the proceeding on
a 2B basis together with disbursements to be fixed by the Registrar.
Solicitors:
Sharon Stark Lont, Dunedin
Counsel: L A Andersen, Dunedin
Paul May Law, Lower Hutt
Counsel: R J B Fowler, QC, Wellington
Associate Judge Osborne
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