PAUL WILLIAM WALLACE AND SAMUEL CHRISTOPHER WALLACE

[2024] NZHC 2629

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-485-602266

[2024] NZHC 2629

BETWEEN

PAUL WILLIAM WALLACE

Applicant

AND

SAMUEL CHRISTOPHER WALLACE

Respondent

Hearing:	10 September 2024
Appearances:	S C Munro for applicant Respondent in person
Judgment:	12 September 2024

JUDGMENT OF JOHNSTONE J

(removal of administrator)

This judgment was delivered by me on 12 September 2024 at 3 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Galbraiths Lawyers Ltd, Auckland

ESTATE OF ERIC WALLACE [2024] NZHC 2629 [12 September 2024]

[1]    Eric William Wallace owned a property in Red Beach jointly with his son, Paul William Wallace, as tenants in common. Eric owned a 25/37th share, Paul a 12/37th share.

[2]    Eric died on 4 June 2021. He had a will, but the executors named in his will died either before him, or before obtaining a grant of administration.

[3]    Paul and his brother — Eric’s other son, Samuel Christopher Wallace — could not agree on the appointment of an administrator. Paul commenced proceedings seeking his own appointment. Sam opposed. They then agreed that the Court should appoint Sam as administrator, on terms requiring him to market the Red Beach property, and to sell it to the highest bidder.

[4]The Court made orders accordingly. However, the property has not been sold.

[5]By application dated 10 April 2024, Paul seeks orders:

(a)removing Sam as administrator, and appointing Paul in his place; and

(b)that within 21 days of the orders, Sam vacate the Red Beach property (Red Beach).

[6]Sam opposes Paul’s application.

The Court’s power to remove an administrator

[7]    The Court’s power to remove an administrator is set out in s 21(1) of the Administration Act 1969 as follows:

21     Discharge or removal of administrator

(1) Where an administrator is absent from New Zealand for 12 months without leaving a lawful attorney, or desires to be discharged from the office of administrator, or becomes incapable of acting as administrator or unfit to so act, or where it becomes expedient to discharge or remove an administrator, the Court may discharge or remove that administrator, and may if it thinks fit appoint any person to be administrator in his or her place, on such terms and conditions in all respects as the Court thinks fit.

[8]In Farquhar v Nunns, Heath J set out the applicable principles, as follows:1

(a)The starting point is the Court’s duty to see estates properly administered and trusts properly executed.

(b)This jurisdiction involves a large discretion which is heavily fact- dependent.

(c)The wishes of the testator/settlor (evidenced by the appointment of a particular executor or trustee) are to be given consideration, but ultimately the question is as to what is expedient in the interests of the beneficiaries.

(d)Expedience is a lower threshold than necessity, and imports considerations of suitability, practicality and efficiency. Misconduct, breach of trust, dishonesty, or unfitness need not be established.

(e)Hostility as between administrators/trustees and beneficiaries is not of itself a reason for removal, but hostility will assume relevance if and when it risks prejudicing the interests of the beneficiaries.

…

[9]    I must consider whether it has become expedient to remove Sam as administrator, and if so, whether Paul should be appointed in his place.

Context

Red Beach

[10]   In 2007, Eric and his wife, Meryl Doreen Wallace (Paul and Sam’s mother) were living in Whangārei. They wished to purchase Red Beach, a two-bedroom unit in a development where Meryl’s sister was living.

[11]   Eric and Meryl, and Paul, purchased Red Beach  together  for  $370,000.  Eric and Meryl contributed $250,000 from the sale of their Whangārei property, taking a 25/37th share. Paul contributed $120,000, the balance of the purchase price, taking the remaining 12/37th share. Interests in those respective shares as tenants in common

1      Farquhar v Nunns [2013] NZHC 1670 at [13] (footnotes omitted), cited with approval in Tod v Tod [2015] NZCA 501; [2017] 2 NZLR 145 at [22] ; and Frickleton v Frickleton [2016] NZCA 408; [2017] 2 NZLR 154 at [29] .

were registered on Red Beach’s title. Meryl’s registered interest passed to Eric by way of survivorship after her death in 2009.

[12]   In December 2020, Eric borrowed $58,350 from Heartland Bank. The loan was secured by reverse mortgage against both tenancies in common in Red Beach. It became repayable upon Eric’s death in June 2021.

The administration to date

[13]   In June 2023, Paul applied to this Court for an order that Go Legal, solicitors of Ōrewa, produce the original of Eric’s will. The order was required as both Paul and Sam had asserted an entitlement to the original.

[14]   Sam opposed the application, asserting that he would be a more natural choice as administrator, having held an enduring power of attorney for Eric while the latter was alive, and that Paul was unsuitable. His assertion that Paul was unsuitable related to dealings within the family when Eric and Meryl were alive, before their move to Red Beach.

[15]   In response, Paul filed an affidavit rejecting Sam’s allegations of improper conduct, but also noting that he would agree to Sam being appointed as administrator if “strict conditions” were imposed which required the latter to sell Red Beach, using the proceeds to pay all estate debts, and to have the balance held independently pending agreement on its disposition.

[16]   This is the basis on which, on 22 August 2023, Gault J made consent orders that:

(a)a caveat against administration that had been lodged on Sam’s behalf be discharged;

(b)Go Legal produce the original will;

(c)letters of administration be granted to Sam;

(d)Sam list for sale Red Beach, with a recognised local real estate agency, accepting the highest offer produced from a four-week sales campaign, or the highest offer produced from a further six-week sales campaign if the first offer should “fall over for any reason”, instructing an independent law firm to hold the net sale proceeds pending agreement or Court order; and

(e)leave be reserved to apply for further or supplementary orders as required.

[17]   An indication of the lack of trust residing in the relationship between Paul and Sam, as at August 2023, is that these orders were supplemented by a further order, that “neither [Sam] nor [Paul] shall act in a manner intended to, or which has the effect of undermining, delaying or otherwise frustrating the intention of these orders…”.

[18]As indicated above, Red Beach has not been sold.

Sam’s position

[19]Sam’s notice of opposition asserts that:

(a)He has “more than sufficiently” complied with the Court’s orders for the sale of Red Beach. But, in contrast, Paul has contradicted the orders by obstructing and delaying the sales process, causing substantial financial damage to their father’s estate.

(b)Paul knows most claims in his application are false or misleading.

(c)Accordingly, Paul should not be made the estate’s administrator.

[20]   Sam developed this opposition when appearing on his own behalf at the hearing of Paul’s application before me on 10 September 2024, including by referring to a set of documents produced with the consent (given expressly for the sake of expediency) of Paul’s counsel.

[21]   Sam added that he believes the property has not yet sold because of its poor condition. He favours a proposal he has received from a “licensed building practitioner”, for Red Beach to be renovated and then sold, with the builder being paid after sale. He referred to one advantage of this proposal being that it provides for the builder to pay Red Beach’s occupant — himself — relocation costs, observing that “without that it would be very difficult for the sale to proceed”. Paul has rejected the renovation proposal.

Is it expedient to remove Sam as administrator?

[22]Clearly, in my view, it is expedient to remove Sam as administrator.

[23]   First, he has not sufficiently complied with the Court’s orders for sale. The clear intent of the orders was that Red Beach should be sold. That intent has not been met.

[24]   I do not accept Sam’s assertion that the orders were confusing or ambiguous. They called for a four-week sales campaign, and required Sam to accept the highest offer carrying a settlement date of 42 days or less, with conditions for satisfaction within 21 days. No clear evidence was filed on whether a simple purchase offer, capable of acceptance so as to form a binding agreement for sale and purchase, has been received. Sam submitted that there was at least one such offer, but that it was too low to be acceptable. If correct, Sam’s submission implies that he chose to breach the Court’s orders rather than accept the offer. In any event, it is likely that a four-week sales campaign, intended genuinely to generate a purchase offer, would have done so, even in the difficult housing market of late 2023. Any such offer should have been accepted. If any difficulty of interpretation or application of the orders arose, Sam had leave to apply to the Court for clarification. He did not do so.

[25]   In this regard, I do not overlook the email of a real estate agent which Sam produced with Mr Munro’s consent, asserting that she worked at Ray White Avondale at the time, and that Ray White Manly did not undertake a real estate agent’s listing of Red Beach due to the complexity of the Court’s order. I simply disagree with the agent’s opinion, and give it no weight. That the Court’s orders were clear enough is

confirmed by Sam’s evidence that a local real estate agency, Harcourts Cooper & Co, accepted his listing.

[26]   Nor do I accept Sam’s assertion that open homes were not conducted, and a “for sale” sign was not posted, at Red Beach because of the excessive inquisitiveness of neighbours who would likely interfere with his privacy as the occupant. I consider his reticence in this respect more likely due to reluctance to achieve a sale.

[27]   Second, Paul has not contradicted the Court’s orders, whether by obstructing or delaying the sales process, or otherwise. I do not accept Sam’s assertion that unpaid body corporate fees have significantly impeded any sale. The evidence is that the relevant body corporate provided a certificate quantifying those fees for the purpose of facilitating sale, and refrained from suing for unpaid fees in contemplation of that sale. Sam, as executor, and Paul, as registered owner of his 12/37th share, are now judgment debtors in respect of a Disputes Tribunal judgment relating to the unpaid fees. And that debt increases as it continues not to be paid. But the sale of Red Beach, despite the debt, is eminently achievable on the basis of a conveyancing solicitor’s undertaking to pay the debt from purchase monies. I do not consider it unreasonable of Paul to have declined personally to pay the body corporate’s fees while Sam has not achieved the sale of Red Beach and continues to reside there.

[28]   Third, it is not necessary that I should conduct a more searching analysis of the various factual claims and counterclaims as to the brothers’ conduct both in respect of the Red Beach sale and previously.

[29]   Sam has had an extended period in which to administer Red Beach’s sale. He has not been successful. My broad impression is that, while he continues to reside there, he is disinclined to sell. He faces an intractable conflict of interest as administrator.

[30]   On the other hand, it is clear Paul wishes to realise his 12/37th interest in  Red Beach, and to embark following the sale of Red Beach upon the necessary determination of amounts owing as between the brothers and their father’s estate. He is appropriately motivated, given his direct interest in Red Beach and his indirect

interest as beneficiary of the estate, to achieve the best reasonably achievable price. And his position is not compromised by occupancy.

[31]   I do not consider Sam’s non-specific allegations of Paul’s unsatisfactory conduct in family matters to justify this Court holding any concern about him acting properly as administrator, let alone to disqualify him from appointment.

Sam’s occupancy at Red Beach

[32]   Paul’s application seeks an order that Sam vacate Red Beach within 21 days of Sam’s removal and Paul’s appointment as administrator. Neither party made submissions on this topic.

[33]   I accept that it would be reasonable for Paul as administrator to require Sam to cease occupying Red Beach so that it can be marketed effectively for sale. Sam has deposed by affidavit that he has alternative accommodation available near Auckland City, but that Red Beach continues to house “family heirlooms”.

[34]   I am content to direct that Sam must vacate the Red Beach, but intend to allow him more time to do so. I consider this order necessary in the reasonable administration of the estate.

Result

[35]   Pursuant to s 21 of the Administration Act 1969, I remove Sam as administrator of his father’s estate, and appoint Paul in his place.

[36]   Sam must vacate and not re-occupy Red Beach by no later than 4 pm on     23 October 2024.

[37]   I heard from the parties on costs. Mr Munro, counsel for Paul, accepted that costs categorisation 1A should apply. Sam submitted that, even if he were unsuccessful, he should not be required to pay costs. But he did not give any reason for the usual rule, that the unsuccessful party should pay costs to the successful party, not to be applied.

[38]   Sam must pay Paul the costs of this application, assessed by the Registrar according to the scale for interlocutory applications and 1A categorisation.

[39]   Paul is reserved leave to apply further, should he require additional direction from the Court in the administration of Eric’s estate.

Johnstone J