Lang v Williams

[2012] NZHC 958

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-404-2120 [2012] NZHC 958

BETWEEN  BEVERLEY MARGARET LANG Plaintiff

ANDELVIE CHRISTINE WILLIAMS Defendant

Hearing:         7 May 2012

Appearances: R J Connell for plaintiff

H L Sumich and D J Jenkins for defendant

Judgment:      8 May 2012

JUDGMENT OF GILBERT J

This judgment was delivered by me on 8 May 2012 at 4.30 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………….

Counsel:            H L Sumich, Auckland: [email protected]

Solicitors:           Connell & Connell, Auckland:  [email protected]

LANG V WILLIAMS HC AK CIV 2012-404-2120 [8 May 2012]

Introduction

[1]      This is an application for a freezing order or, alternatively, a preservation order, in respect of part of the proceeds of sale of a house.

Background

[2]      The plaintiff, Mrs Lang, and the defendant, Mrs Williams, are beneficiaries of their mother’s estate, as are their sister, Mrs Green, and brother, Mr Sallen.  Their mother, Mrs Sallen, died on 7 September 2011, aged 94.  Under her last will dated

11 August 2011, Mrs Sallen gave all of her personal chattels to Mrs Williams.  The residue of her estate was to be divided among her children in the following shares:

40  per  cent  to  each  of  Mrs Williams  and  Mrs  Lang,  and  10  per  cent  each  to Mrs Green and Mr Sallen.  Mrs Williams was appointed under the will as the sole trustee and executrix.  Probate was granted in respect of the will on 13 October 2011.

[3]      The principal asset of the estate was an interest in a property in Ranfurly Road, Epsom, which had been the family home for over 50 years.   Mrs Sallen became the sole registered proprietor of the property in February 2000, following her husband’s death.

[4]      In  April  2005,  Mrs Sallen  transferred  a  half  interest  in  the  property  to Mrs Williams.  Mrs Williams’ sisters did not discover this until after their mother’s death.   The circumstances surrounding the transfer lie at the heart of the present dispute.   Mrs Lang and Mrs Green are concerned that Mrs Williams may have exercised undue influence over Mrs Sallen in procuring the transfer and may not have provided adequate consideration for it.  They believe that the estate may have a claim against her.   Mrs Williams disputes this.   She says that the arrangements between her and her mother were documented with independent legal advice, were based on an independent valuation of the property and were properly implemented.

[5]      It is not necessary for me to set out in detail the parties’ respective positions relating  to  the  transfer.    A  short  summary  will  suffice  for  present  purposes. Mrs Williams states that when her father died, Mrs Sallen wished to remain living in

the home.  She had no savings and was dependent on her pension.  The house needed renovation so that Mrs Sallen could continue to live there.  Mrs Williams agreed to purchase a half share at valuation with all but $27,000 of the purchase price being used  to  fund  the  required  renovations.    The  balance  of  $27,000  was  gifted  by Mrs Sallen to Mrs Williams.  The arrangements were recorded in an agreement dated

1 July 2003 and in a subsequent property agreement dated 6 April 2005.

[6]      Mrs Lang disputes that the agreed price was paid.  She also says that some of the improvements were for Mrs Williams’ benefit as half owner and did not assist Mrs Sallen.  Mrs Lang is also concerned about a reverse annuity mortgage granted to Sentinel Custodians Limited in April 2009.   She believes that some or all of the funds advanced by Sentinel were used by Mrs Williams for her own purposes.

[7]      The  Epsom  property  has  now  been  sold.    The  sale  was  arranged  by Mrs Williams in her capacity as a half owner of the property and, as to the other half, in her separate capacity as sole executrix of her mother’s estate.   After the sale agreement was signed, Mrs Lang lodged a caveat against the title to the property claiming an interest in the land.  The caveat was withdrawn to enable settlement to proceed  in  return  for  an  undertaking  from  Mrs Williams’ solicitors  to  hold  the estate’s  half  of  the  net  sale  proceeds  in  a  trust  account  pending  resolution  of Mrs Lang’s  claim  or court  order.   The undertaking provides  some  protection  to Mrs Lang because, on the face of it, Mrs Williams is entitled to 40 per cent of those proceeds under the will.

The Court proceedings

[8]      Mrs Lang is not satisfied that her position is adequately protected by this undertaking.  She also considers that it is not appropriate for Mrs Williams to remain as the sole executrix given the conflict of interest if the estate has a claim against her. Accordingly, Mrs Lang commenced the present proceeding seeking an order under s 21 of the Administration Act 1969 removing Mrs Williams as sole executrix and replacing her with an independent administrator.  She also applied without notice for an interim order under r 32 of the High Court Rules freezing the sum of $150,000, being part of the proceeds of the sale of Mrs Williams’ half share of the property.  To

put this into perspective, I note that the property sold for $1.3 million.  After sale costs, agents’ fees and repayment of the Sentinel mortgage, Mrs Lang calculates that a half share of the net proceeds would be approximately $575,000.

[9]      Mrs Lang has also filed proceedings in the Family Court under the Family

Protection Act 1955 and under the Law Reform (Testamentary Promises) Act 1949.

[10]     Venning J declined to make any order without notice.[1]   The proceedings have now been served on Mrs Lang.  Mrs Green is also aware of the proceedings and has filed an affidavit in support of Mrs Lang’s application.  Mr Sallen has not yet been served.

[1] Minute of Venning J dated 20 April 2012.

[11]     The  application  was  amended  without  objection  at  the  hearing  so  that

Mrs Williams now seeks an order in the following terms:

Not attempt to put [the Defendant’s] half share of the funds from the sale of

45  Ranfurly  Road  beyond  the  jurisdiction  including  by  sending  them overseas or gifting them or otherwise disposing of them other than toward the purchase of a home in [the Defendant’s] name or use them in normal living expenses including payment of any legal costs that she has incurred.

Freezing order

Good arguable case?

[12]     Any  applicant  for  a  freezing  order  must  first  satisfy  the  court  that  the applicant has a good arguable case against the defendant.  Mr Connell, for Mrs Lang, accepts this.   He also accepts that Mrs Lang has not yet made any claim against Mrs Williams and he was not sure what claim she would be able to make against her.

[13]     However,  Mr  Connell  submitted  that  Mrs  Lang  has  good  reason  to  be concerned about the transfer of the half interest in the property to Mrs Williams.  He submitted that an independent person should be appointed to administer the estate so that the circumstances of the transfer can be fully investigated and a claim pursued,

if appropriate.

[14]     While I can understand Mrs Lang’s concerns and her reasons for seeking a replacement administrator, that application is not before me for determination at this stage and it is neither necessary nor appropriate for me to express any views as to whether it will ultimately succeed.   The important point for the purposes of the present application is that there is currently no claim against Mrs Williams seeking proprietary relief in respect of the proceeds of sale of her half of the property. Indeed, there is no monetary claim against Mrs Williams of any kind.  This is fatal to Mrs Lang’s application for a freezing order over the proceeds over Mrs Williams’ assets.

[15]     Although  the  lack  of  an  arguable  case  is  sufficient  to  dispose  of  the application for a freezing order, I now consider whether any real risk of dissipation of assets has been shown.

Risk of dissipation?

[16]     Mr Connell recognises that a freezing order may not be made unless there is a real risk of assets being dissipated.  The amended application does not specifically refer to any risk of dissipation.  However, the affidavits of Mrs Lang and a solicitor, Peter Ellis, are relied on in support of the application.

[17]     In  her  affidavit,  Mrs Lang  states  that  Mrs  Williams  has  a  foreign  bank account with HSBC.  She says that she is concerned that Mrs Williams could use that account to transfer funds overseas.  She points out that Mrs Williams has a son living in the United Kingdom.  She also says that Mrs Williams is a very secretive person and that for six years, between 1998 and 2004, no one knew where she lived.

[18]     Mr Ellis is a solicitor who has acted for Mrs Green and her late husband for many years.  He has also acted for Mrs Williams.  He states that he has had difficulty dealing with Mrs Williams over financial matters and has no confidence that she will carry out her duties as executrix of the estate impartially, conscientiously and promptly.   He offers the opinion that Mrs Williams has a conflict of interest and should be removed as executrix.

[19]     Mr Ellis’ evidence does not assist me in dealing with the present application and, in my view, it ought not to have been filed.

[20]     Mrs Williams has filed an affidavit deposing that she will not remove the net proceeds of sale of her half of the property from New Zealand.  She says that she does not have a foreign bank account.  Her HSBC account is with a New Zealand branch and holds monies in New Zealand dollars.  She acknowledges that she has a son living in the United Kingdom but she points out that her daughter lives in Auckland with her two grandchildren.  Mrs Williams says that she presently has no home and intends to buy a property using the sale proceeds.  She says that she had to delay her search for a property when the caveat was lodged.  She is concerned that the market has risen in the meantime and that she has missed purchase opportunities. She does not want to be delayed further in purchasing a new home.

[21]     I am not persuaded that Mrs Lang has demonstrated that there is a real risk that Mrs Williams will dissipate her assets.   Having a son living in the United Kingdom falls well short of establishing such a risk. There is no other evidence from which I could conclude that there is a risk that Mrs Williams will remove her assets beyond the jurisdiction.  She has stated on oath that she will not do so and I have no reason to disbelieve her.  I am therefore not satisfied that a real risk of dissipation has been demonstrated.

Conclusion

[22]     Mrs Lang has not made any claim against Mrs Williams in respect of her share of the proceeds of sale of the property or any other monetary claim.  Mrs Lang has not shown that she has a good arguable claim against Mrs Williams.  Mr Connell is not even sure what claim could be brought.  Further, Mrs Lang has failed to prove that there is a real risk that Mrs Williams will dissipate her assets unless an order is made. The application for an interim freezing order must therefore be declined.

Preservation order

[23]     In my view, the application for a preservation order is misconceived.   It is clear that a preservation order is not appropriate unless proprietary relief is sought in the substantive proceeding in relation to the property or fund, the subject of the order.[2]   As noted, the substantive proceeding seeks an order replacing Mrs Williams with an alternative administrator.  Mrs Lang has not claimed that she is entitled to the proceeds of sale of the property, being the funds she seeks to have preserved.  For this  reason,  the  alternative  application  for  a  preservation  order  must  also  be dismissed.

[2] Investors Protection Co Ltd v Ray Courtney Architects Ltd (1993) 7 PRNZ 1 (CA).

Result

[24]     The plaintiff’s application is dismissed.

[25]     The defendant is entitled to costs calculated on a 2B basis.

[26]     I direct the Registrar to allocate a first case management conference before an

Associate Judge so that timetable directions can be made for the disposal of the substantive claim.

M A Gilbert J