King v MacDonald HC Auckland M1884-Sd01

[2002] NZHC 55

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY M1884-SD01

BETWEEN MIHITERIA CHERIE KING
Applicant

AND BARRY SAMUEL MacDONALD as Executor of the estate of PHILLIP LLANI EVANS
Respondent

Hearing: 8 February 2002

Counsel: G Cole for the Applicant
R A Hacking for the Respondent
D M Carden for H MacDonald

Judgment: 8 February 2002

ORAL JUDGMENT OF PATERSON J

Solicitors:
King Alofivae Malosi, 15 Osterley Way, Manukau
Shieff Angland, Box 2180, Auckland
Maze & Associates, P O Box 7010, Nelson

[1] In the statement of claim filed in the substantive proceeding, Mrs King, the mother of the deceased Phillip Evans, seeks orders recalling the probate granted in Mr Evans’ estate and appointing Ms King to be the executor of the estate. I am advised from the Bar that these proceedings will be amended and will seek to have an additional trustee appointed as the administrator of the estate. Further, Mrs King is no longer prepared to accept appointment.

[2] The interlocutory application now before the Court seeks orders that the respondent, Mr MacDonald, the executor of Mr Evans’ estate, deposit the probate order with this Court until such time as the substantive claim is determined and that a temporary administrator in Mr Evans’ estate be appointed pending the determination of the substantive claim. In submissions, Ms Cole noted that Mrs King would be agreeable to Mr MacDonald being appointed as temporary administrator but with limited powers for the purposes of preserving the estate, such as bringing in assets, paying any necessary outgoings and debts and generally dealing with administrative matters and with no power to sell assets or distribute the estate.

[3] For the purposes of this application I will assume that Mrs King has standing to bring the application. This is on the basis that she will be a beneficiary in an intestacy if the present two beneficiaries under Mr Evans’ will fail to attain their majority. If standing is an issue, it can be determined at the substantive hearing.

Jurisdiction

[4] Under s 650 of the High Court Rules, this Court may recall probate on an uncontested interlocutory application. In all other cases, to recall a grant of administration requires a proceeding to be brought in the normal manner. A recall of probate is the appropriate proceeding if a change in the administrator is sought. Grants are not lightly recalled. Because of the urgency of this matter, I have not had time to consider whether r 650 can in fact be utilised if there is no intention that Mr MacDonald should be replaced, but that he should instead have a co-administrator. There is power under the Trustee Act for this Court to appoint additional trustees but whether that would be the appropriate course, I make no comment.

[5] Mrs King relies upon s 7 of the Administration Act 1969 which gives this Court. when any legal proceeding for recall is pending, the power to grant administration of the estate to a temporary administrator. Such an administrator has the rights and powers of a general administrator other than the right of distributing the balance of the estate remaining after payment of debts, funeral and testamentary expenses, duties and fees. The temporary administrator is subject to the immediate control of this Court and under its direction.

Background

[6] Mr Evans, a civil engineer, died in Thailand on 9 October 2001. His last will and testament was made on 4 May 1990. At that time he was married to Mr MacDonald’s sister but that marriage has since dissolved.

[7] Under the terms of his will, Mr MacDonald, his former brother-in-law, was appointed executor and guardian of his infant children. The whole of his estate is to be divided equally amongst such of his children as shall survive him and attain their legal majority. He is survived by two daughters now aged 16 and 13 years respectively. One of those daughters lives with her mother and the other with Mr Evans’ brother.

Grounds for Application

[8] The substantive grounds for the original application are a change in circumstances between the time Mr Evans made his will in 1990 and his death in October 2001. These circumstances are summarised as follows:

(a) The increase in value of his estate. His estate is substantial but the evidence does not indicate the value of the increase;

(b) Mrs King has in her control or possession property belonging to the estate;

(c) At the time the will was executed, Mr Evans was married to Mr MacDonald’s sister;

(d) Mr Evans and his then wife separated in 1997 and all matrimonial property was divided. They subsequently divorced prior to Mr Evans’ death;

(e) The situation that existed between Mr Evans and his former wife was one of acrimony and the appointment of her brother as sole executor provides no safeguards to ensure the estate will be administered for the benefit of the beneficiaries;

(f) The state of hostility that existed between Mr Evans and his former wife impacted negatively on the relationship between Mr MacDonald’s family and Mr Evans and therefore, Mr MacDonald’s ability to effectively administer the estate is compromised.

[9] In my view, many of those circumstances are neutral or innocuous, although Ms Cole relies on the cumulative effect of them. As I detect Mrs King’s concern, it is that Ms MacDonald, the former wife and mother of the two beneficiaries, may adversely influence her brother. A reading of the affidavits filed by both Ms MacDonald and Mr MacDonald cannot lead to this inference although I accept that it is difficult to finally determine these matters on affidavit evidence. It is noted, however, that it is accepted by counsel for Mrs King that apart from the fear of influence by Mr MacDonald, Mr MacDonald is accepted as a suitable person to be an administrator and trustee. This is obviously evidenced by the current suggestion that he be a co-trustee.

Decision

[10] Having considered the circumstances and the evidence, I am not prepared to make an order appointing a temporary administrator. There are several reasons for this:

(a) As noted, it is not suggested that Mr MacDonald is not a suitable person to be a trustee. Indeed, his qualifications would suggest that he is a capable and competent business person, and that he has the qualifications to discharge his obligations as a trustee. Nor am I satisfied on the evidence that he will not act responsibly;

(b) On my view of the circumstances, there is certainly a suspicion that the application may have been motivated by irrelevant considerations. This of course cannot be determined until the substantive hearing;

(c) A consideration of the evidence currently before the Court does not suggest that Mrs King has a strong case. She has not, in my view, raised any grounds that would lead the Court to the view that there are special circumstances which would require either the removal of Mr MacDonald or the appointment of a temporary administrator. Indeed, it is noted that it is evidently not now intended to seek his removal.

(d) English authority was relied upon which would suggest that normally in such circumstances an interim administrator should be appointed. The underlying reason for this is that where there is a bona fide suit pending, the Court will appoint a receiver quite irrespective of the condition of the estate on the ground that while the suit is pending, there is no-one legally entitled to receive or to hold assets or give discharges. That is not the case here. Mr MacDonald has been appointed executor and trustee by an order of this Court and is legally entitled to receive and hold the assets of the estate and to give discharges to creditors. It will be clear from this judgment that Mr MacDonald has that power.

(e) There is no evidence before the Court to suggest that an interim appointment is necessary to “preserve assets.” This was one of the grounds upon which the application was made. Indeed, the opposite appears to be the case. Mr MacDonald should have his position confirmed, at least in the interim, so that he can get in funds held in Mrs King’s solicitors’ trust account and a death certificate issued in Thailand. These are necessary for the administration of the estate and should be made available to him forthwith.

(f) The evidence suggests that steps should be taken immediately to secure the estate. There are mortgage commitments on valuable properties. Mr MacDonald has made various inquiries and because of the steps already taken, he is in a position to do this.

(g) It was suggested on the basis of hearsay evidence that one of the daughters is concerned that Mr MacDonald may sell a property in Thailand. Even if weight is given to this evidence, it is noted that the same daughter in an email to Mr MacDonald noted that she really wanted him to be the executor of the will and while she understood that someone on the other side of the family should also be a co-executor, this would cost money which she would like to avoid if necessary. There is nothing before me which would suggest that if Mr MacDonald remains in his position, he will not act responsibly in the interim.

(h) A matter which may also be relevant is that the acceptance by Mrs King of a continuing role for Mr MacDonald would cast doubts on the need to appoint an interim trustee or perhaps even the right to do so as Mr MacDonald would no doubt remain a trustee pending the substantive hearing. Usually, an interim appointment would only be made when there is no trustee or a trustee is removed.

(i) Finally, I am satisfied after talking to counsel that the substantive hearing can be brought to an early conclusion. The timetable which I will shortly make should enable the substantive hearing to be disposed of within the next three to four months.

[11] For the above reasons the application is declined.

Timetable

[12] The substantive hearing should be resolved without delay. The following timetable orders are made:

(a) Mrs King will within the next 14 days file and serve an amended statement of claim, any further affidavits in support of the claim and provide to Mr MacDonald documents and information that she has relating to Mr Evans’ estate and its assets;

(b) Mr MacDonald, and if thought appropriate, Mrs MacDonald who by an order has been served in these proceedings, will have a further 14 days to file a statement of defence and any further affidavits which they may wish to file in response to the plaintiff’s affidavits;

(c) A one day fixture for the substantive hearing will be given on the first available date after 22 March 2002.

[13] If any party wishes to cross-examine a deponent, notice can be given in accordance with the provisions of the High Court Rules.

Costs

[14] Both Mr MacDonald and Ms MacDonald seek costs. In my view, particularly because of the change of emphasis, this is an appropriate case for costs on a Category 2B basis. Normally, I would make an award in favour of both Mr MacDonald and Ms MacDonald. However, having indicated my views, I will reserve costs to be determined by the trial Judge in case the position at the substantive hearing is such that costs would not be appropriate.