Pitt v Estate of Mead
[2020] NZHC 2425
•18 September 2020
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2020-470-47
[2020] NZHC 2425
UNDER Trustee Act 1956, s 51 and Part 19 of the High Court Rules 2016 IN THE MATTER
of an application for an order that a trustee is removed from the estate of GORDON CHARLES MEAD and for the appointment of a further person to be trustee in her place
BETWEEN
JUNE PATRICIA PITT
Applicant
Judgment:
(On the papers)
18 September 2020
JUDGMENT OF BREWER J
This judgment was delivered by me on 18 September 2020 at 10:00 am pursuant to Rule 11.5 High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Mackenzie Elvin Law, Tauranga
PITT v ESTATE OF MEAD [2020] NZHC 2425 [18 September 2020]
Introduction
[1] The applicant seeks an order pursuant to s 51 of the Trustee Act 1956 removing Ms June Carol Kira as a trustee of the estate of Gordon Charles Mead and for an order appointing Brooke Natalie Powell in her place.
[2] Mr Mead died on or about 29 December 2007. Probate of his Will was obtained on 10 September 2008. His executors, Ms Kira and Ms June Patricia Pitt, were appointed as the administrators of Mr Mead’s estate.
[3] Ms Kira and Ms Pitt have administered the estate. They now hold as trustees the residue of the estate in which Ms Kira might or might not have a continuing life interest.
[4] Clause 3.2(iv) of Mr Mead’s Will provides for the termination of Ms Kira’s life interest and the distribution of the residue:
Once my partner JUNE has died or remarried or entered into a de facto relationship then any such property (or the net proceeds of sale if applicable) shall be divided equally between such of my children as shall survive me and if more than one equally …
[5] The residue of the estate is about $105,000. It is held in the applicant’s solicitors’ trust account.
[6] As I will come to, Ms Kira has lost touch with Ms Pitt. She has said she no longer wishes to be involved with the estate and does not want to maintain her life interest in the residue. The current application was served on Ms Kira by way of substituted service, as ordered by Associate Judge Andrew.1 Ms Kira has taken no steps.
[7] The intention of the applicant and Ms Powell, if she is appointed trustee, is to treat Ms Kira’s life interest as ended by repudiation and to distribute the residue to the residuary beneficiaries.
1 Pitt v Estate of Mead HC Tauranga CIV-2020-470-47, 23 June 2020 (Minute).
[8]There are two issues:
(a)Should Ms Kira be removed as a trustee because she is no longer prepared to discharge her duties as trustee?
(b)If so, how should the court regard the stated intention of the applicant and Ms Powell to distribute the residue?
Should Ms Kira be removed as a trustee?
[9]The evidential basis for the application is contained in four affidavits.
[10] The affidavit of Ms Pitt as applicant was sworn on 17 March 2020. Much of the content of Ms Pitt’s affidavit sets out her understanding of what she has been told by others. The most relevant aspect of Ms Pitt’s affidavit is her statements that she has had very little contact with Ms Kira, does not have a close relationship with her and it has not been possible for Ms Pitt to contact Ms Kira.
[11] The affidavit of Ms Powell was affirmed on 22 May 2020. Ms Powell is a daughter of Mr Mead and is, therefore, a residuary beneficiary under Mr Mead’s will. She deposes:
6.If the Court orders the removal of Ms Kira as Trustee of Gordon’s Estate, I consent to my appointment as replacement trustee to allow the residue of the Estate, being the funds held in the trust account of Mackenzie Elvin Law, to be distributed to the residue (sic) beneficiaries of the Estate. This will ensure finality is brought to Gordon’s Estate in accordance with his final wishes.
[12] The affidavit of Lynette Hooper was sworn on 27 February 2020. Ms Hooper is a registered legal executive employed by the solicitors for Mr Mead’s estate. Ms Hooper deposes that on 27 March 2018 she sent a letter to Ms Kira in which, based on a prior telephone conversation she had had with Ms Kira, she said:
We understand that you would like to relinquish your role as Trustee of the estate. As we now have contact details for the daughters we request your consent to retiring as trustee in favour of two of the daughters.
We believe that the daughters would then distribute the estate in accordance with the Will. This would mean that you would surrender your life interest in
the estate residue and as such you would need to obtain independent legal advice on this matter.
[13] The letter went on to request Ms Kira to sign and return a copy of the letter by way of confirmation. Ms Hooper explained that once consents had been received from all parties the “necessary documentation” would be prepared:
The document will include your agreement to the surrender of your life interest in the estate and as noted above will require you to seek independent legal advice.
[14]Ms Hooper deposes:
7.I received a phone call from Ms Kira shortly after sending this letter. She informed me that she agreed to retire as Trustee of Mr Mead’s Estate and surrender her life interest in the property … She said that she was moving to Australia and that she would send the signed letter confirming her agreement to the details contained in the letter. She did not give her address and/or contact details for future correspondence but that she would contact me when she was settled. No correspondence was received from Ms Kira.
[15] Ms Hooper heard nothing further from Ms Kira. She wrote again on 3 May 2018 asking for the return of the copy of the earlier letter as confirmation of Ms Kira’s agreement with its contents. However, Ms Kira did not reply.
[16] On 14 July 2019, an email was sent to Ms Kira’s daughter, Ms Alison Kira- Waterman. The email contained the following paragraph:
We are having some trouble contacting your mother, June Kira. We understand that she is an Executor of the Estate and had a life interest in the property that has since been sold. We also understand that she has expressed, prior to us losing contact with her, that she no longer wants anything to do with the Estate, however this was never formalised. Without getting in contact with her to discuss this, and without her formally renouncing her interest, the funds in the Estate cannot be distributed and the matter cannot progress.
[17] Ms Kira-Waterman replied by email on 9 August 2019 saying she was unable to help as she has had little contact with her mother.
[18] Ms Hooper attempted to contact Ms Kira via Facebook on 15 July 2019, without result.
[19] The affidavit of Graeme William Elvin was sworn on 11 March 2020. Mr Elvin is a partner in the firm of solicitors acting for Mr Mead’s estate. Mr Elvin sets out the history of the administration of Mr Mead’s estate culminating with the sale of its major asset, a house property, and the distribution to Ms Kira of her share of the sale proceeds on 16 August 2016. Mr Elvin deposes:
17.Ms Kira wished to move to Auckland to be with family. She advised me at that time that she no longer wanted anything to do with the Estate and the rest of the funds.
[20] Against this background, and with Ms Kira having taken no steps to oppose the application, I will grant the application to remove Ms Kira as a trustee. It is clear that Ms Kira no longer wishes to discharge her obligations as trustee. Whether Ms Kira should be replaced by Ms Powell depends on the resolution of the next issue.
What is the relevance of the intention to distribute the residue?
[21] In my Minute of 31 July 2020, I invited further submissions from the applicant on this issue. By memorandum dated 15 September 2020, counsel for the applicant submits:
21. Any risks associated with the final distribution of the Estate without formal renouncement from Ms Kira, or order from the Court, will be borne with the Trustees and Beneficiaries of the Estate. It will be a matter for the Trustees and Beneficiaries to take legal advice to consider the risks that any final distribution carries and to consider the merits of entering into any documentation necessary to protect, or acknowledge, Ms Kira’s Life Interest in the Estate.
[22] I think it is trite that the court will not exercise its power to replace a trustee in the knowledge that the trustees then constituted will act improperly in breach of their trust.
[23] If I considered that such would occur if I were to appoint Ms Powell as trustee in the place of Ms Kira then I would decline to do so. I would, instead, appoint an independent trustee.
[24] In my view, while the evidence is heavily suggestive of a repudiation by Ms Kira of her life interest (assuming that the life interest is still in effect), it is not
conclusive on that point. Ms Kira did not return a signed copy of Ms Hooper’s letter of 27 March 2018 which she was asked to do to confirm her position.
[25] However, trustees have to form their own views on how to properly discharge their trusts. If the residue of the estate were to be distributed to the residuary beneficiaries because the trustees believed that Ms Kira had repudiated her life interest (assuming it continues) then that would not be a deliberate breach of trust. Of course, the trustees would risk having to defend their actions if Ms Kira were to reappear and claim she was still entitled to the benefit of her life interest. In this regard I accept the submission of counsel quoted at [21].
[26] Ms Pitt and Ms Powell have discharged their duty to be candid with the court about their intention to distribute the residue if Ms Powell replaces Ms Kira as a trustee. I am satisfied that given the relatively modest amount of the residue and the desirability of avoiding a continuing paralysis of the trust, it is appropriate for the court to appoint Ms Powell in place of Ms Kira.
Decision
[27] I grant the application for an order that Ms Kira be removed as a trustee of the estate of Gordon Charles Mead. I make an order accordingly.
[28] I make a further order appointing Brooke Natalie Powell as trustee in the place of Ms Kira.
Brewer J
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