Smith v Povey
[2020] NZHC 805
•24 April 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-2249
[2020] NZHC 805
UNDER Section 21 of the Administration Act 1969 IN THE MATTER
of an application to remove an administrator under the Court’s inherent jurisdiction
IN THE MATTER
of the Estate of Ethel Moudale Uluakiahoia (also known as Ethel Moudale Wade and
Ethel Moudale Povey)
BETWEEN
ROSIE SMITH and MARLENA SINAI KAU SOMA
Plaintiffs
AND
HELEN TUPOU POVEY
Defendant
Hearing: On the papers Counsel:
R V Sami for the Plaintiffs
No appearance by or on behalf of the Defendant
Judgment:
24 April 2020
JUDGMENT OF GORDON J
This judgment was delivered by me on 24 April 2020 at 1 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors: Murdoch Price Ltd, Botany, Auckland Copy to: The Defendant
SMITH v POVEY [2020] NZHC 805 [24 April 2020]
Introduction
[1] The plaintiffs, Rosie Smith and Marlena Sinai Kau Soma and the defendant, Helen Tupou Povey, are the administrators of their mother’s estate (the estate). Ms Smith and Ms Soma apply for an order under s 21 of the Administration Act 1969 (the Act) removing Ms Povey as administrator and for an order for vacant possession of a residential property to enable the sale of the property.
[2] Ethel Moudale Uluakiahoia died without a will in Auckland on or about 5 January 1989, leaving 10 adult children as at that date (the siblings).1 She was a widow at the time of her death.
[3] Administration of the estate was granted to Ms Smith, Ms Soma and Ms Povey on 1 May 2008.
[4] In addition to the three administrators, the deceased’s living adult children are Bronwyn Trautvetter, Kingi Povey, Gary Steven Povey, Mary Bodija, Mardi Roberts and Vesinia Karaitiana. They were all served with the proceedings and have taken no steps.
[5] Ms Povey, acting on her own behalf, filed an affidavit on 26 November 2019 but did not file a statement of defence within the extended period granted to her. The claim was therefore set down for hearing by way of formal proof. With the consent of Mr Sami, counsel for Ms Smith and Ms Soma, I considered the application on the papers.
The estate
[6] The only asset of the estate is a residential property at 9 Pamir Road, Papatoetoe, Auckland (CT NA21A/1219) (the property). The property is mortgage free.
1 One of the deceased’s children, Thomas Povey, died on 23 October 1998.
[7] An on-line valuation report annexed to Ms Smith’s affidavit sworn 9 September 2019 provides an estimated selling range of $669,760 to $786,240 for the property. The capital value as at 1 July 2017 was $750,000.
[8] It is apparent from the certificate of title for the property that there is a statutory land charge registered against the title pursuant to s 125 of the Social Security Act 1964 which was registered on 27 May 1983. Ms Smith says any debt owing to the Government under that charge would be repaid on sale of the property.2 Ms Smith says she is not aware of any other estate debt.
Background
[9] After Mrs Uluakiahoia’s death, one of the sisters, Mary Bodija, became the carer for two children that her mother had taken in prior to her death. It was agreed at that time by the siblings that Ms Bodija would live in the property provided she paid all the outgoings. In around 1999 Ms Bodija moved out and her son moved into the property. He did not pay any rent or contribute towards the maintenance and upkeep of the property during his occupancy. The siblings had a family meeting in 2007 and they agreed that Ms Bodija’s son needed to clean the property and move out in order for it to be rented out or sold.
[10] The property was then rented for a period after 2007 before Ms Povey moved in. The date that Ms Povey moved in is not clear. In 2010 there was a fire in the property and Ms Povey’s son died in that fire. The siblings agreed that Ms Povey should have the opportunity to grieve and also to remain living at the property at that time.
[11] In 2013, the siblings agreed to sell the house and distribute the proceeds. Ms Smith says that a solicitor, Mary Hackshaw (who had acted in the administration application in 2008) was instructed to give the administrators directions regarding the sale of the property. However matters were not advanced at that time and Ms Hackshaw ceased practicing.
2 In his submissions Mr Sami, for Ms Smith and Ms Soma, said that the Ministry of Social Development has confirmed that the major repairs advance secured by the statutory land charge has been repaid in full. (But that is not stated in Ms Smith’s evidence).
[12] Ms Smith says that in 2014 another law firm, Frost & Sutcliffe Lawyers (now Matson Sutcliffe Lawyers) was instructed to represent the estate to facilitate and guide the parties in selling the property.
[13] Ms Povey then asked to buy the property. The other siblings agreed to this request.
[14] On 18 February 2015, Frost & Sutcliffe Lawyers received correspondence and then an agreement for sale and purchase for the property from Ms Povey’s lawyer at Swayne McDonald Lawyers. Mr Sutcliffe wrote to Ms Povey’s lawyer raising conflict of interest issues and proposed that Ms Povey attend their offices to address the conflict. Ms Povey’s lawyer at Swayne McDonald Lawyers agreed to separate Ms Povey’s role as administrator and proposed purchaser to ensure that the administration of the estate was attended to prudently.
[15] On or about 13 August 2015, Mr Sutcliffe emailed Ms Smith to say that no further updates had been received from Ms Povey or Swayne McDonald Lawyers. Ms Povey did not follow through with the offer to purchase the property.
[16] On or about 18 October 2018, Mr Sutcliffe organised a meeting of the three administrators at his office. Notice of the meeting was given to Ms Povey and family members confirmed that she was aware of the proposed meeting. However, she did not attend.
[17] In late 2018, Ms Povey advised that she could not buy the property, but she has not signed any paperwork, such as a real estate listing agreement, to enable the sales process to begin. She continues to live in the property.
[18] Ms Smith, with whom Ms Soma agrees, says that she believes the only way Ms Povey will co-operate in winding up the estate is if she is ordered to do so by the Court.
[19] Although the claim is proceeding as a formal proof, I refer to the affidavit of Ms Povey. She says:
It is unfortunate it has come to this but given these circumstances I am OK with moving out and prepare [sic] the (estate) for sale. But I think I need to stay on administration given the authenticity of Rosie’s part views.
The statutory test
[20] The proceeding is brought under s 21 of the Act. That section relevantly provides:
21 Discharge or removal of administrator
(1)… where it become 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.
(2)The administrator so removed or discharged shall, from the date of that order, cease to be liable for acts and things done after that date.
(3)Upon any administrator being discharged or removed as aforesaid (whether or not any other administrator is appointed) all the estate and rights of the previous administrator or administrators which were vested in him or her or them as such shall become and be vested in the continuing administrator or administrators (including any administrator appointed under subsection (1)) who shall have the same powers, authorities, discretions, and duties, and may in all respects act, as if he or she or they had been originally appointed as the administrator or administrators.
…
[21]In Tod v Tod,3 the Court of Appeal, commenting on s 21, said:
[22] In his judgment in Farquhar v Nunns, Heath J set out the principles counsel for the plaintiff submitted applied in that case. We consider those principles have equal application here:
(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.
3 Tod v Tod [2015] NZCA 501, [2017] 2 NZLR 145.
(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.
…
(citation omitted)
[22] In Farquhar v Nunns,4 Heath J summarised the relevant principles in relation to both s 21 of the Act and s 51 of the Trustee Act 1956. The summary included the following:
[31] The circumstances in which a Court will remove an administrator or a trustee, under the statutory provisions in issue, were explained by Myers CJ, delivering the principal judgment of the Court of Appeal in Hunter v Hunter. The issues raised must be considered in a “macroscopic and not microscopic fashion”. The removal jurisdiction is ancillary to the Court’s principal duty to see that a trust is properly executed.
…
[36] The touchstone for removal of both an administrator and a trustee is an assessment of what is “expedient”. In Crick, Judge Osborne opined that the term “imparts considerations of suitability, practicality and efficiency”; thus, in the context of estate administration the “overarching question” is: “will removal of the administrator be a suitable, practical and efficient means of advancing the interests of the estate and of its beneficiaries”.
(citations omitted)
[23] Removal is likely to be expedient if the executors (or administrators) are unable to work together.5
Discussion
[24] The issue for this Court is, on the evidence, whether removal of Ms Povey as an administrator would be a suitable, practicable and efficient means of advancing the interests of the estate and of its beneficiaries.
4 Farquhar v Nunns [2013] NZHC 1670.
5 Hinde v Cranwell [2012] NZHC 63 at [28].
I consider the evidence satisfies the test of “expedient”:
(a)The siblings agreed in 2013 to sell the property;
(b)There has been delay since that time occasioned by Ms Povey indicating she wished to buy the property and her siblings giving her the opportunity to do so. Her agreement for sale and purchase was provided to the solicitors representing the estate in February 2015. But it was not until 2018 Ms Povey advised she was not in a position to buy the property (Ms Povey acknowledges this);
(c)Since that time Ms Povey has taken no steps to enable the sales process to begin;
(d)Ms Povey says in her affidavit that as part of her plan to buy the property she advanced some money to some of her siblings. Ms Povey says she sent some emails earlier in 2019 saying that she needed a guarantee that she would get her money back “then we’ll sell house”. This is not a reason for delaying the sale of the property. This statement suggests that Ms Povey may not in fact be as willing as she purports to be in her statement that she is “OK” with preparing the house for sale; and
(e)It is apparent from the evidence of Ms Smith and the affidavit of Ms Povey that there is a level of disagreement between them over a number of issues relating to the property. It is not possible to resolve these disagreements on affidavit evidence. However, it is clear Ms Smith and Ms Soma have been unable to work effectively with Ms Povey to wind up the Estate.
[26] I am satisfied that Ms Povey’s lack of action has delayed the administration of the estate. I also accept that this lack of action has the potential to diminish the value of the estate as, critically, the property is uninsured.
[27] The result of Ms Povey’s removal as an administrator will be that Ms Smith and Ms Soma remain as administrators. There is no suggestion that an independent administrator be appointed either additionally or in place of Ms Smith and Ms Povey. Although both have a financial interest as beneficiaries of their mother’s estate, all indications are that the estate will be divided into 10 equal parts with nine of the siblings sharing equally and the tenth portion to go to the estate of the deceased sibling, Thomas Povey.6
Should an order for vacant possession be made?
[28]The Laws of New Zealand state:7
Upon death, all real estate to which the deceased was entitled devolves from time to time, on their personal administrator. Immediately upon a grant of administration of the estate of any deceased person, all the estate then unadministered of that person, whether held by them beneficially, or held by them in trust, is to vest in the administrator to whom administration is granted. However, nothing is to affect the earlier vesting in an executor by operation of law.
[29] With Ms Povey being removed as an administrator, the property will vest in Ms Smith and Ms Soma as continuing administrators. On behalf of the estate, they will have the right to exclude all other persons from possession.8 An order for vacant possession can therefore be made unless Ms Povey can demonstrate a legal entitlement to continue to occupy the property.
[30] It is clear from her affidavit, Ms Povey does not seek to advance any such entitlement. I have already referred to her statement that she is “OK with moving out”.
[31] I will therefore make an order for vacant possession. There are, however, practicalities involved as the order will require Ms Povey to vacate the property and move into new accommodation. Mr Sami submits that an appropriate period would be 30 days. However I take into account the current position under New Zealand’s 4-level alert system under the Covid-19 pandemic restrictions. As at the date of this
6 Section 77, Administration Act 1969.
7 William M Patterson Laws of New Zealand Administration of Estate Vol I (online ed) at [283].
8 Jensen v Jensen [2019] NZHC 329 at [26] referring to Hinde McMorland & Sim Land Law in New Zealand (online looseleaf ed, LexisNexus) at [3.008].
judgment, New Zealand is still under Alert Level 4 and will move to Level 3 next Tuesday, 21 April 2020. It is not clear whether Ms Povey would be able to take steps to move from the property under Alert Level 3.
[32] So as not to delay the sale of the property any longer than necessary, but taking into account the matters I have just mentioned, the vacant possession order will take effect 30 days from the date of the New Zealand Government moving to Alert Level 2. In the absence of agreement by Ms Smith and Ms Soma, on behalf of the estate, to an extension, Ms Povey (and any others living with her) must vacate the property on or before the end of the 30 day period. I will also make provision to enable the parties to apply to the Court for the date to be amended in the event that activities permitted at that time would not allow Ms Povey to find alternative accommodation and vacate the property and the parties cannot agree on an amended date for vacant possession.
Insurance
[33] Given the concern expressed by Ms Smith and Ms Soma as to the lack of insurance on the property, they should take steps to arrange the necessary insurance cover as soon as possible.
Result
[34] I make the following orders, as sought in the submissions on behalf of Ms Smith and Ms Soma:
(a)Ms Povey is removed as administrator of the estate;
(b)Ms Smith and Ms Soma remain as administrators of the estate and are authorised:
(i)To take vacant possession of the property within 30 days of the date the New Zealand Government moves to Alert Level 2;
(ii)To attend to any immediate repairs required, marketing and sale of the property; and
(iii)To execute any documentation for the purposes of carrying out
(ii) above.
[35] The parties have leave to apply to the Court for the date in [34](b)(i) to be amended if the Covid-19 pandemic restrictions change in a way not presently envisaged and if, in those circumstances, the parties cannot agree on an amended date for vacant possession.
Costs
[36] Ms Smith and Ms Soma also seek an order that costs and disbursements for this proceeding “be paid out of the estate (and/or out of the defendant’s share)”.
[37] Costs are awarded as a consequence of the outcome of proceedings and also as a reflection of a party’s conduct in the proceeding as opposed to a party’s conduct before proceedings are commenced. Apart from filing an affidavit, Ms Povey has not participated in the proceedings. Mr Sami has not advanced any basis for the alternative order sought, that costs should come out of Ms Povey’s share.
[38] The proceedings were brought in order to enable the estate to be administered. I therefore accept that it is appropriate for the estate to bear the costs. I make an order that costs and disbursements for the proceeding are to be paid out of the estate.
Gordon J
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