Leeming v Leeming
[2023] NZHC 85
•3 February 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-001325
[2023] NZHC 85
UNDER Trusts Act 2019 IN THE MATTER OF
An application by the applicant for specific distribution from the estate of BARBARA ROSEMARY LEEMING
BETWEEN
DEAN EDWARD LEEMING
Applicant
AND
GARY SHELDON LEEMING and BRETT
RODERICK LEEMING as beneficiaries of the estate of BARBARA ROSEMARY
LEEMING
Respondents
Hearing: 8 December 2022 Appearances:
D A Wood and N M Rathod for Applicant P McKendrick for Respondents
A J Bell and J Thwaite for Gary and Brett Leeming (personal capacity)
D A Watson for Tony Leeming (Interested Party) R Rao for Todd Leeming and Claudia Hegley
Judgment:
3 February 2023
JUDGMENT OF ANDREW J
This judgment was delivered by Justice Andrew on 3 February 2023 at 3.00 pm
pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar
Date………………………..
LEEMING v LEEMING [2023] NZHC 85 [3 February 2023]
Introduction
[1]Dean Leeming is one of four brothers.1 He seeks an interim distribution of
$750,000 from the estate of his late mother, Mrs Barbara Leeming.2 The estate comprises cash funds of $9.3m.
[2] In Barbara’s will of May 1990 there are three beneficiaries. They are three of the four brothers, namely Dean, Brett and Gary. The fourth brother, Tony, was excluded. Barbara’s estate is subject to competing claims under the Family Protection Act 1955,3 including claims from Tony and Tony’s children (i.e. two of Barbara’s grandchildren). There is also a claim against Barbara’s estate under the FPA by the estate of Thomas Leeming, the now deceased husband of Barbara.
[3] There are also related proceedings in this Court brought by Gary and Brett against their brother, Dean, who is the executor of the estate of their father, Thomas. In those proceedings, Gary and Brett seek to set aside the last will of Thomas, pleading lack of testamentary capacity and/or undue influence by Dean.
[4] Dean seeks an interim distribution as a residual beneficiary of Barbara’s estate for two principal reasons:
(a)To enable him to defend the undue influence proceedings brought against him; and
(b)To make funds available to him to meet his immediate needs.
[5] Dean says that he was the principal caregiver for his parents before they passed away and as a result has very limited financial means of support.
[6]The issues I must determine are as follows:
(a)Is there a proper basis for an interim distribution?
(b)If so, what is the appropriate quantum, and should the other two beneficiaries also receive a distribution for the same amount?
1 For ease of reference, I shall refer to the parties by their first names.
2 Barbara.
3 FPA.
Factual background
[7] Barbara passed away on 13 August 2019. She left a will dated 28 May 1990. On 13 September 2019, probate of that will was granted to Gary and Brett as executors of her estate.
[8] The reasons for the exclusion of the eldest brother, Tony, from Barbara’s estate is at issue. Gary and Brett understand that Tony was excluded because he received in excess of $700,000 from Barbara’s parents, Herbert and Alice Somers.
[9]Under her will, Barbara also made no provision for her husband, Thomas.
[10] Thomas owned two properties as joint tenants with Barbara: 20 Essex Road, Mount Eden and 21 Sandown Road, Rothesay Bay.4 They have a combined CV of
$4,700,000. In the normal course Thomas was set to take these properties by way of survivorship.
[11] On 25 November 2019, Thomas elected option A under s 61 of the Property (Relationships) Act 1976 rather than option B. In January 2020, Thomas made an application to the Family Court for division of relationship property (option A), together with an application under the FPA for further provision from Barbara’s estate. The decision to elect option A was later claimed to be made in error.
[12] On 27 February 2020, Tony filed an application for orders under the FPA over both his parents’ estates. Tony’s children, Todd Leeming and Claudia Hegley, filed further applications for orders under the FPA over both their grandparents’ estates.
[13] Thomas passed away on 28 December 2020, leaving a will dated 17 October 2019. On 21 October 2020 probate was granted with Dean appointed as the trustee and executor of the estate, as well as the sole beneficiary. Thomas’ estate remains comprised of the Essex and Sandown properties.
[14] On 22 February 2021, counsel for Thomas’ estate (through Dean as the executor) applied to the Court to have the incorrect election set aside. On 6 August 2021, her Honour Judge Manuel allowed for the election to be set aside.
4 The Essex and Sandown properties.
[15] The total value of both Barbara and Thomas’ estates is approximately $13m. That includes the Essex and Sandown properties, together with cash funds held on behalf of Barbara’s estate.
[16]The legal proceedings in respect of both estates can be summarised as follows.
Barbara’s estate
(a)An FPA claim by Barbara’s excluded son, Tony;
(b)An FPA claim by Barbara’s grandchildren, Todd and Claudia;
(c)An FPA claim by the estate of Thomas;
[17] These proceedings have been transferred to this Court and are yet to be determined.
The estate of Thomas
(a)A claim under the FPA by Gary and Brett in their personal capacities;
(b)An FPA claim by Tony;
(c)An FPA claim by Todd and Claudia;
(d)A claim by Gary and Brett seeking to set aside the last will of Thomas, pleading lack of testamentary capacity and/or undue influence. The defendant is Dean, as sole executor.
[18] These proceedings have been transferred to this Court and are yet to be determined.5
[19] In September 2021, there was an unsuccessful judicial settlement conference before her Honour Judge von Keisenberg in the Family Court prior to the transfer of the various proceedings to this Court.
[20] Prior to the FPA claims made against Barbara’s estate, which then froze further distributions, the respondents as executors had:
5 The undue influence proceedings were commenced in this Court.
(a)Advanced $6,000 each as an interim distribution to Dean, Brett and Gary;
(b)Advanced as a loan to the estate of Thomas the sum of $68,550.95.
[21] On 6 September 2021, the solicitors for the respondents (as executors) sent a letter to all beneficiaries and claimants of the estate of Barbara which:
(a)proposed the sale of the three properties owned by the estate;
(b)proposed that once the properties were sold and the net proceeds of the sales received, that 50 per cent of the cash assets held “be made available for distribution as per the will of the late Barbara Leeming, namely one third to Brett Leeming, one third to Gary Leeming, and one third to Dean Leeming”;
(c)sought consent of all beneficiaries and claimants on the estate to avoid “the need for court orders (order would be made under s 133 of the [Trusts] Act if required)”;
(d)invited Dean as the executor of Thomas’ estate to consider selling the properties at Sandown Road and Essex Road.
[22] On 8 December 2021, counsel for Tony refused consent “unless there was also a distribution to him”. On 9 December 2021, Todd and Claudia also declined to consent.
[23] It had been the intention of the respondents as executors, having not secured the consent of all beneficiaries and claimants, to make application under s 133 of the Trusts Act 2019 for the Court’s approval of the proposed interim distribution. That foreshadowed application was overtaken by the application in the present case.
[24] The last of the settlements of the properties in Barbara’s estate have now occurred, with the funds being held totalling $9,206,815.20.
Relevant legal principles
[25] The Court has an inherent jurisdiction to sanction interim distribution of an estate to a beneficiary of a will, even though the beneficiary does not possess a beneficial interest in the property of the estate until administration is complete and the executor moves into the role of trustee.6 The jurisdiction includes the power to order an interim distribution from the residue of the estate, despite the fact that administration is yet to be completed, and as a consequence, before the residue has been finally ascertained.7
[26] The relevant principles that apply when a court is considering whether to make an interim distribution are:8
(a)Whether the estate is sufficiently large that the interim distribution will not impinge on the ability of the estate to meet claims against the estate and likely costs, without prejudicing the beneficiaries and/or claimants of the estate;
(b)Whether an interim distribution is justified on the basis that the beneficiary will likely receive the amount of the distribution or more once the estate is administered;
(c)The hardship to the beneficiary resulting from the delay in receipt of the distribution, including hardship caused by having to fund litigation before the estate is finalised.
Position of the other parties
[27] The respondents, Gary and Brett, in their executor capacity, stand neutral on the application. With the estate frozen until final resolution of the FPA claims, the executors need the blessing of the Court to make an interim distribution, and accordingly, are not able to consent. They have acted in accordance with their duties
6 Burgess v Monk [2017] NZHC 2424 at [67]; see also Dawson v Snedden [2019] NZHC 736 at [46]. Under s 8 of the Trusts Act 2019 the inherent jurisdiction of the court is not affected except to the extent that the Act provides otherwise.
7 Dawson v Snedden, above n 6, at [45].
8 At [61]–[64].
by putting all relevant and contradicting matters before the Court. That is the basis and extent of their opposition.
[28] In their capacity as beneficiaries, Brett and Gary abide the Court’s decision on the basis that if I were to make orders for Dean to receive a specific distribution, then they should also receive a distribution for the same amount.
[29] Todd Leeming and Claudia Hegley, Tony Leeming’s children, abide the Court’s decision. Tony, an interested party, also abides the decision of the Court. I note that he disputes Dean’s claims on some family background issues. However, I agree with Ms Watson that these particular allegations have no bearing on the matters I must decide in the present proceeding.
Analysis and decision
Issue (a) – Legitimate basis for the interim distribution?
[30] I am satisfied that there is a proper basis to make an interim distribution order. The issue of quantum is a separate matter which I address below.
[31] The estate is obviously a large one and an interim distribution, even in the amount sought by Dean, will not impinge on the ability of the estate to meet competing claims and likely costs under the FPA. An interim distribution at this stage would not prejudice the beneficiaries and/or claimants of the estate.
[32] It is also clear that Dean, as a beneficiary, will likely receive a substantial amount by way of distribution once the estate is administered.
[33] I note that the estate has already made an interim distribution to the three beneficiaries, Dean, Brett and Gary. It also proposed in December 2021 that once the various properties have been sold and the net proceeds of sale received, that 50 per cent of the cash assets held would be distributed to Brett, Gary and Dean (one third each). The executors were obviously satisfied, and in my view rightly so, that the balance of the estate was sufficient to meet any of the competing claims under the FPA.
[34] I further find that Dean’s personal circumstances, including his limited financial means of support and the need to defend the undue influence proceedings brought against him, support the making of the interim distribution order sought. A decision by the executors to make a further distribution, and in a sum substantially in excess of the previous interim distribution of $6,000, would in my view be a justified and lawful one.
[35] Under Barbara’s will Gary, Brett and Dean are of course the three beneficiaries. I find that it is critical that any interim distribution should also be made to both Brett and Gary and in the same amount. As Heath J held in Burgess v Monk,9 executors owe a duty to beneficiaries to be even-handed in their approach to the administration of an estate. No reasonable trustee in this case would make a distribution to one beneficiary that would disadvantage other beneficiaries in respect of litigation regarding the estate and/or related litigation involving Thomas’ estate. I note that Dean does not oppose a distribution being made to the other beneficiaries, namely his brothers Gary and Brett.
Issue (b) – Quantum of distribution
[36] I find that the quantum of distribution sought, namely $750,000, is too high. I am concerned that an interim distribution of that amount creates a real risk that the substantial litigation already before the Court will become more prolonged, hard- fought and unresolved. The parties are fortunate that the estate at issue is a substantial one (and so too is Thomas’ estate) and there are obviously compelling reasons why the parties should reach a settlement. Some of the affidavits filed in this proceeding are of an unnecessary aggressive nature and acrimonious family litigation of this kind is not to be encouraged.
[37] The personal circumstances of Dean and the other parties do not support an order in the sum of $750,000.
[38] I find that there should be an interim distribution in favour of Dean, Brett and Gary, with each to receive $350,000 from the estate. That figure will provide reasonable financial support to Dean and give him a reasonable opportunity to advance his defence of the undue influence proceeding. It also addresses, to some extent, my
9 Burgess v Monk, above n 6, at [69].
concern that funds of the estate should not be dissipated in unnecessary and destructive family litigation.
Result
[39]I grant Dean’s application for an interim distribution from the estate.
[40] I order that the executors are to make an interim distribution of $350,000 to each of the three beneficiaries of Barbara’s estate, namely Dean, Gary and Brett Leeming.
[41] As to costs, I am of the preliminary view that the costs of all parties in relation to this proceeding should be paid out of the estate and on a 2B basis. In making that indication, I assume that the costs of Tony and his children, Todd and Claudia, will be of a modest nature. If agreement cannot be reached on costs, then memoranda, no more than three pages, are to be filed and served within 21 working days.
Andrew J
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