Laery v Grout

[2014] NZHC 1881

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-485-002817 [2014] NZHC 1881

IN THE MATTER OF

RENA FRANCES MANSON, deceased

UNDER

The Wills Act 2007, the Law Reform (Testamentary Promises) Act 1949 and Part 18 of the High Court Rules

BETWEEN

DESMOND PHILLIP LAERY & SIMON CHARLES DAVID WEIL

Applicants

AND

JENNIFER KAY GROUT First Respondent

SARAH KAY GROUT Second Respondent

MARJORY HAMLIN (also known as

Marjory Vinet) Third Respondent

Hearing:	30 July 2014
Appearances:	S Clapham for Plaintiffs V Bruton for First Respondent S Jefferson QC for Second Respondent D Watson for Third Respondent
Judgment:	30 July 2014
Reasons:	11 August 2014

JUDGMENT OF WOOLFORD J

[Re Appointment of Temporary Administrator]

This judgment was delivered by me on Monday, 11 August 2014 at 12.00 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

LAERY & Anor v GROUT & Ors [2014] NZHC 1881 [30 July 2014]

Introduction

[1]     This is an application by the first respondent to appoint a temporary administrator for the estate of the late Rena Frances Manson (the deceased).   The plaintiffs (Desmond Phillip Leary and Simon David Charles Weil) are the named executors under a will executed by the deceased on 22 May 2007 (the 2007 will). Shortly before her death in October 2013, the deceased gave instructions for a new will.  She died prior to executing that will.  The plaintiffs seek a declaration, under s 14  of  the  Wills  Act  2007  (the  Act),  validating  a  2013  document  containing instructed changes to the 2007 will (the 2013 document) as the valid will of the deceased.

[2]      The first respondent (Jennifer Kay Grout) opposes the application.  She is the primary beneficiary under the 2007 will and her view is that the 2007 will is the valid will of the deceased.  She has also counter-claimed, seeking an interpretation of a clause in the 2007 will, rectification of the 2007 will, and, in the event that the

2013 document is validated under s 14 of the Act, a claim under the Law Reform

(Testamentary Promises) Act 1949.

Temporary Administrator

[3]      The  first  respondent  now  makes  an  application  for  an  order  appointing Mr William   Malcolm   Patterson   of   Auckland,   Solicitor,   as   the   temporary administrator of the deceased’s estate under s 7 of the Administration Act 1969, subject to the immediate control of the Court and acting under its direction until he is discharged or removed under s 21.

[4]      The  grounds  on  which  the  order  is  sought  is  that  there  are  now  legal proceedings touching the validity of the will of the deceased and it is therefore necessary for an independent temporary administrator to be appointed.  Mr Patterson is an expert in estate administration and consents to his appointment.   The first respondent submits that the plaintiffs should not be appointed as temporary administrators as they are not independent and have various conflicts of interest, including the fact that Mr Laery’s wife and children are named as beneficiaries in the estate.

[5]      The plaintiffs oppose the application for an order appointing Mr Patterson as temporary administrator.   They have filed a cross-application for a grant of administration of Ms Manson’s estate to themselves, as temporary administrators. The plaintiffs seek appointment on the basis that they are the long-term financial and legal advisors to the deceased and are familiar with her estate.   Accordingly, if granted temporary administration they could speedily and inexpensively attend to getting in the estate assets and disposing of them as required in order to pay the estate’s debts.   They also submit that the appointment of Mr Patterson will add further and unnecessary costs to the estate.

[6]      Mr  Jefferson  QC,  on  behalf  of  the  second  respondent,  supports  the application  by  the  first  respondent  for  the  appointment  of  Mr Patterson  as  a temporary administrator.   Ms Watson, on behalf of the third respondent, took a neutral stance and indicated that she would not take an active role, having filed a notice of appearance for ancillary purposes although in earlier correspondence she had supported the appointment of the plaintiffs as temporary administrators.

[7]      After hearing from counsel on 30 July 2014 at the end of the duty Judge list, I gave judgment granting the first respondent’s application for the appointment of Mr Patterson as a temporary administrator and dismissing the plaintiffs’ application for the appointment of themselves as temporary administrators.  I indicated that my reasons would follow. These are my reasons.

The law

[8]      Section 7 of the Administration Act 1969 provides the Court with a broad discretion to appoint a temporary administrator.  It states:

7        Administration pending legal proceedings

(1)       Where any legal proceedings touching the validity of the will of a deceased person, or for obtaining, recalling, or revoking any grant of administration, are pending, the Court may grant administration of the estate of the deceased to a temporary administrator, who shall, until he is discharged or removed under section  21 of this Act, have all 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, and every such temporary administrator shall be subject to the immediate control of the Court and act under its direction.

(2)       The  Court  may,  out  of  the  estate  of  the  deceased,  grant  to  a temporary   administrator   appointed   under   this   section   such reasonable remuneration as the Court thinks fit.

[9]      There is very little case law on the principles to be applied in terms of s 7. The cases cited are all fact specific.1

First respondent’s submissions

[10]     The first respondent has sworn a substantial affidavit.   On the basis of the factual matters set out in the affidavit, counsel for the first respondent submits that:

(a)       the plaintiffs are hostile towards her;

(b)Mr Laery has acted in the face of a conflict of interest with regard to the powers of attorney purportedly given to Mr Laery and his wife, which were revoked by the deceased by notice dated 10 September

2013, a month or so before her death;

(c)      Mr Laery’s wife and their children are purported beneficiaries of the document sought to be validated as a will in these proceedings;

(d)the 2007 will was drawn by Mr Weil.   It is unclear and requires interpretation, ratification or correction;

(e)      Mr  Weil  may  be  the  subject  of  a  negligence  claim  by  the  first respondent in relation to the 2007 will; and/or

(f)       the  plaintiffs  failed  to   act  in  accordance  with  the  deceased’s

instructions and have breached their duties to her by:

1      Re Griffin [1925] P38; King v MacDonald (2002) 16 PRNZ 180 (HC); Creser v Creser HC Wellington CIV-2003-485-893, 2 September 2003.

(i)not considering or acting upon her instructions set out in a letter dated 10 September 2013 that she did not want her home sold and in which she revoked the powers of attorney; or

(ii)      Ignoring correspondence from the first respondent dated 10

September 2013 stating that the deceased did not want her home sold and that other investments were available to pay rest home fees and advising the plaintiffs that the deceased had revoked the powers of attorney.

Plaintiffs’ submissions

[11]     Mr Laery and Mr Weil have also sworn affidavits in which they reply to each of the allegations made by the first respondent.  Counsel for the plaintiff submits that there are three main reasons why they should be appointed temporary administrators of the deceased’s estate:

(a)      The plaintiffs’ appointment is the most cost effective and efficient course.   They have a high degree of familiarity with the deceased’s affairs.   Mr Laery has  provided accounting and tax advice to the deceased since April 1996 and has assisted with the management and administration   of   her   financial   affairs.   He   was   appointed   the deceased’s attorney in relation to her property by an enduring power of attorney dated 9 June 2006.  Mr Weil was the deceased’s solicitor for approximately the last 14 years of her life.

(b)There is no evidence that the plaintiffs would not act responsibly and both are appropriately qualified.  Mr Laery is a chartered accountant whose has been in practice since 1997 and Mr Weil is a solicitor experienced  in  estate  administration,  being  a  partner  at  Morrison Kent.  Both have taken their professional obligations as the deceased’s accountant and solicitor seriously and in consultation with each other.

(c)      There is no scope for any presumed bias to become an issue because the powers of temporary administrators do not extend to distributing

the balance of the estate remaining after payment of debts, funeral and testamentary expenses, duties and fees.

[12]     Mr Weil states that when he received advice from the first respondent a month  or  so  before  her  death,  that  she  had  revoked  the  powers  of  attorney to Mr Laery  and  his  wife,  Mr  Weil  was  concerned  that  his  role  as  solicitor  had apparently been terminated.  He accordingly attended on the deceased accompanied by the nurse manager from the home in which the deceased resided.  He confirmed that the deceased wished Mr Weil to be her solicitor and that Mr Laery was to continue to have a power of attorney for her property.  Finally, counsel submits that even if there was evidence of bias (which the plaintiffs strongly deny), there is no way that such bias could impact on the distribution of the estate because temporary administrators do not have the power to distribute the estate.  Their powers are quite limited in that regard.

Discussion

[13]     Although counsel for the plaintiffs submitted that the appointment of the plaintiffs as temporary administrators  was  the  most  cost  efficient  course,  I was attracted by Mr Jefferson’s submission that, even without considering the merits of the objections by the first respondent, where there is controversy there is cost.

[14]     As an example, the plaintiffs and the first respondent have been unable to agree on the scope of discovery to be provided by the plaintiffs in the substantive proceedings.  Counsel for the first respondent sought informal discovery in part to minimise costs.  Mr Weil’s firm responded on the basis that matters should take their normal course, and that the scope of discovery should be considered in the First Case Management Conference and, inferentially, that formal orders would be required from the Court.

[15]     If Mr Patterson is appointed temporary administrator, privilege in the files of Mr Weil’s firm will vest in him, pursuant to s 66 of the Evidence Act 2006.  As an independent  administrator,  Mr  Patterson  will  then  be  in  a  position  to  reassess whether or not there are grounds for resisting an informal discovery process.

[16]     As to the costs involved in realising the assets of the estate and paying its debts, I do not envisage that there would be significant cost savings if the plaintiffs were appointed temporary administrators.  Mr Weil annexes a statement of the estate assets and liabilities as at 30 June 2014, prepared by Mr Leary, as an exhibit to his affidavit sworn on 10 July 2014.  No further investigations as to the estate’s assets and liabilities would appear to be necessary.  The plaintiffs’ costs from the date of death charged to the estate already total $31,692.35.

[17]     I am of the view that the costs involved in realising the assets of the estate and paying its debts will therefore be similar, whoever is appointed temporary administrator.  However, there is, in my view, real potential for further costs to be incurred if the first respondent objects to actions undertaken by the plaintiffs as temporary administrators, given the level of distrust  felt by the first respondent towards the plaintiffs.

[18]     Apart  from  the  issue  of  costs,  I am  of  the  view  that  the  appearance  of independence is equally important.   In their original application for an order validating the 2013 document as the valid will of the deceased, the plaintiffs did not make any mention of a letter addressed from Mr Weil to the solicitors acting for the first respondent, dated 11 September 2013, in which Mr Weil referred to an authority to uplift in favour of the first respondent’s firm from the deceased.  Mr Weil stated in that letter:

We are concerned as to the legitimacy of the authority given a number of factors including

(1)       Conflict of interest;

(2)       Undue influence and/or duress; (3)          Capacity;

(4)       Absence of independent legal advice.

In the circumstances, neither the purported revocation of power of attorney nor the purported authority to uplift can be recognised as being valid.  We also give notice that any replacement enduring powers of attorney that may purportedly have been granted are also not recognised as valid and any action by the purported attorney thereunder would be ultra vires.

[19]     The application to validate the 2013 document presumes that the deceased had the capacity to make a valid will, notwithstanding Mr Weil’s advice a month earlier that he was concerned as to the legitimacy of the authority given to the solicitors acting for the first respondent, on the basis of, amongst other things, the capacity of the deceased to do so.  Notwithstanding Mr Weil’s subsequent affidavit in reply to that of the first respondent in which he stated that he was satisfied that the deceased had sufficient capacity to instruct him to make changes to the 2007 will a month later and just the day before she died, it would have been preferable for the full circumstances to be disclosed when the proceedings were first filed.

[20]     The first respondent also records in her affidavit, sworn 8 July 2014, that she was told by the deceased a month or so before her death that Mr Laery wanted the money and that Mr Laery’s wife was never on her side and that Mr Weil only did what they told him.   Whatever the truth of the matter, once such allegations are made, it is important that all family members and beneficiaries see and understand that the estate is being administered independently and impartially.  I emphasise that in making that comment, I do not purport to make any determination as to the factual allegations of any party.

[21]     It is also important to note that it is not just the first respondent who would be disadvantaged if the 2013 document is validated as the will of the deceased. According to Mr Weil, the deceased gave him instructions to change a number of bequests, including deleting a bequest to her friend, Catherine Keirnan, in the sum of

$10,000  and  changing  a  bequest  to  the  Meadowbank  Community  Centre  from

$10,000 to $2,000.   The bequests to Mr Leary’s wife and their children were apparently to remain.   In those circumstances, the appearance of independence is vital  for  the  confidence  of  family members  and  beneficiaries  in  the  process  of administration of the deceased’s estate, even if it is initially just realising the assets of the estate and paying its debts.

[22]     It was for these reasons that I made the following orders:

(a)       Appointing William Malcolm Patterson, of Auckland, solicitor, as the

temporary  administrator  of  the  deceased’s  estate,  subject  to  the

immediate control of the Court and acting under its direction until he is discharged or removed under s 21 of the Administration Act 1969.

(b)That the temporary administrator, William Malcolm Patterson is to have all the rights and powers of a general administrator, other than the right of distributing the balance of the deceased’s estate remaining after payment of debts, funerals and testamentary expenses, duties and fees;

(c)       Authorising   payment    to    the   temporary    administrator,    William

Malcolm Patterson, in accordance with his usual charge out rate.

(d)Directing the temporary administrator, William Malcolm Patterson, be served with all documents in the proceedings.

Woolford J