Stanwick v Bostock
[2024] NZCA 253
•21 June 2024 at 10 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA611/2023 [2024] NZCA 253 |
| BETWEEN | TIMOTHY EARL SWANWICK |
| AND | EDWARD ANTHONY BOSTOCK AS SOLE EXECUTOR AND TRUSTEE OF THE ESTATE OF KENNETH EARL SWANWICK (DECEASED) |
| AND | EDWARD ANTHONY BOSTOCK AS SOLE EXECUTOR AND TRUSTEE OF THE ESTATE OF BETTY REID SWANWICK (DECEASED) |
| Hearing: | 20 May 2024 |
Court: | Collins, Churchman and Osborne JJ |
Counsel: | S J Webster for Plaintiff |
Judgment: | 21 June 2024 at 10 am |
JUDGMENT OF THE COURT
A The appellant’s application for leave to amend his grounds of appeal is declined.
BThe appeal is dismissed.
C The appellant must pay to respondents and interested parties respectively costs for a standard appeal on a band A basis and usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Osborne J)
Introduction
The appellant, Timothy Swanwick (Tim),[1] wished to pursue a testamentary promises claim against the estate of his late father, Kenneth Swanwick (Mr Swanwick), and late mother, Betty Swanwick (Mrs Swanwick).
[1]In this judgment, first names are used for some family members to avoid confusion. This is consistent with the approach taken in the judgment under appeal: Swanwick v Bostock [2023] NZHC 1600 [High Court judgment].
To pursue the claim against Mr Swanwick’s estate, Tim required an order pursuant to s 6 of the Law Reform (Testamentary Promises) Act 1949 (the Act), because he had not commenced a proceeding under the Act within 12 months of the grant of probate in relation to Mr Swanwick’s last will. Tim’s application to commence his proceeding out of time was dismissed by Associate Judge Johnston (the Judgment).[2]
[2]High Court judgment, above n 1, at [61].
Tim appeals the Judgment.
General background
Until Mr Swanwick’s death
Mr and Mrs Swanwick lived at Taradale, near Napier.
There are four surviving children of their marriage, namely Tim and his three sisters, Caryl, Angela and Judith. Tim’s sisters are interested parties in this proceeding.
Mr and Mrs Swanwick owned, in half shares, several properties, including a 227‑hectare farm at Maraetotara (Farm Property). The Farm Property comprised two parcels of land purchased by Mr and Mrs Swanwick in 1992 and 1999. Mr and Mrs Swanwick farmed in (an undocumented) partnership.
Tim asserts that Mr Swanwick told him if he worked on and developed the Farm Property, it “would be his” when Mr and Mrs Swanwick died.
Mr Swanwick died on 28 August 2008. Probate in relation to his will was granted on 26 September 2008.
Mr Swanwick’s will
By his last will dated 20 September 2006, Mr Swanwick left his half share of the Farm Property in equal shares to his four children. Mr Swanwick appointed Mrs Swanwick and their lawyer, Malcolm Walker, as his executors and trustees. Mrs Swanwick was left a life interest in the couple’s house property.
Mr Swanwick, by his will, instructed his trustees, after payment of his debts and other expenses, to stand possessed of the residue of his estate upon six trusts. First was a trust to pay the net annual income arising from residue to Mrs Swanwick (which was attended to in her lifetime). One of the other trusts was to hold Mr Swanwick’s half share in the Farm Property in equal shares for his children “contingent upon them forming a GST registered entity”.
After Mr Swanwick’s death
Mr Swanwick’s will was not provided or explained to his children in the following years. Tim deposed that he was not given a copy of the will until Mrs Swanwick died in 2021.
Shares held by Mr and Mrs Swanwick were held in their joint names with the consequence that Mrs Swanwick took those shares by survivorship, outside the administration of Mr Swanwick’s estate.
Tim continued to work on the Farm Property and to manage it. He stated he was advised by Mr Walker and Mrs Swanwick to maintain the status quo and that Mrs Swanwick told him that “everything remains the same”.
As a result of Mr Walker’s retirement from practice, a deed was executed on 1 June 2021 by which Mr Walker retired as a trustee and Mr Bostock was appointed in his place as an executor and trustee of Mr Swanwick’s estate.
Mrs Swanwick died on 30 June 2021. Probate in relation to her will was granted on 15 September 2021. Mr Bostock became the sole personal representative in relation to Mrs Swanwick’s will as a result of Tim and Judith (who were also named as her executors and trustees) renouncing their executorships and trusteeships.
By her last will, dated 13 July 2020, Mrs Swanwick left her half share in the Farm Property to her four children in equal shares. This was a change from the consistent provision in her six previous wills (dated 2006 to 2016) by which she left her half share in the Farm Property to Tim alone. Tim is separately pursuing a testamentary promises claim, within time, against Mrs Swanwick’s estate.
The administration of Mr Swanwick’s estate
Following Mr Swanwick’s death, Mrs Swanwick and Mr Walker had Mr Swanwick’s half share in the Farm Property and in the couple’s other properties transmitted into their names on 6 November 2008. On 30 March 2009, Mr Walker’s legal executive reported to the estate accountant as to the completion of the transmissions and recorded: “[i]t is our intention to write to Mrs Swanwick soon regarding the completion of our part of the estate administration”.
On 21 March 2011, Mr Walker’s firm raised an invoice for estate administration. This was the first and only invoice issued for administration. The attendances identified included obtaining information regarding estate assets and liabilities, obtaining probate, the transmission of the property half shares to the executors, “providing information to accountant regarding completion of taxation requirements”, and “distribution of estate assets as agreed”.
Until Mrs Swanwick’s death, the farming operation was continued on the basis that Mrs Swanwick was farming in partnership with Mr Swanwick’s estate. The partnership was registered for GST. Financial statements were prepared and filed annually. Tax was accounted for.
Tim’s application under s 6 of the Act
Tim stated he learned of the contents of Mr Swanwick’s will after Mrs Swanwick’s death. In August 2022, he commenced a testamentary promises claim against Mrs Swanwick’s estate and filed his application in relation to Mr Swanwick’s estate under s 6 of the Act.
Section 6 of the Act
Section 6 of the Act imposes a time limit for the commencement of proceedings to enforce a claim under the Act. The time limit is 12 months after representation is taken out. The time limit is subject to a proviso whereby the court may extend the time for commencing an action for a further period if the application for extension is made before the final distribution of the estate.
In full, s 6 of the Act provides:[3]
Limitation of actions
No action to enforce a claim under this Act shall be maintainable unless the action is commenced within 12 months after the personal representative of the deceased took out representation:
provided that the time for commencing an action may be extended for a further period by the court or a Judge, after hearing such of the parties affected as the court or Judge thinks necessary, and this power shall extend to cases where the time for commencing an action has already expired, including cases where it expired before the commencement of this proviso; but in all such cases the application for extension shall be made before the final distribution of the estate of the deceased, and no distribution of any part of the estate made before the administrator receives notice that the application for extension has been made to the court, and after every notice (if any) of an intention to make an application under this Act has lapsed in accordance with subsection (6) of section 30A of the Administration Act 1952, as inserted by section 2 of the Administration Amendment Act 1960, shall be disturbed by reason of the application for extension, or of an order made on that application, or of any action or order that is consequential thereon.
[3]Emphasis added.
The working of the “final distribution” aspect of the proviso to s 6 was explained by this Court in Sullivan v Brett, particularly in the judgments of Somers and Barker JJ.[4] The Judges’ reasoning was accurately summarised in the headnote to the report of the decision:[5]
The proviso to s 6 of the … Act … provides that an application for an extension of time to bring proceedings “shall be made before the final distribution of the estate of the deceased”. There is a “final distribution” of assets still in the hands of the executor, if, at the date the application is filed, he has ceased to hold the assets in his capacity as executor and holds them as trustee for the beneficiary. This transition from executor to trustee occurs when the executor has indicated that he does not require particular property for the purposes of administration and that it may pass to the beneficiary. The issue is not what the executor believes or intends. It is what the facts demonstrate. An assent may be express or it may arise by implication. An executor may indicate an assent over realty as well as personal estate. Where the executor has given no formal assent, the circumstances are considered to see whether an inference of assent can be drawn. In the case of residue that will usually depend on whether all claims against the estate for debts, legacies, testamentary and administration expenses have been paid. For it is not until that stage has been reached that the existence and nature of the residue can be ascertained.
[4]Sullivan v Brett [1981] 2 NZLR 202 (CA). McMullin J concurred with the judgments of Somers and Barker JJ: at 203.
[5]At 202.
Whether final distribution has occurred is always a question of fact. In Sullivan v Brett, Somers J noted:[6]
The words “the final distribution of the estate of the deceased” refer to the point of time at which the administrator having completed the administration of the estate becomes a trustee for the beneficiaries of those assets not already distributed … So much is not in doubt.
The Judgment: final distribution
The test applied
[6]At 206, referring to Lilley v Public Trustee [1978] 2 NZLR 605 (CA); aff’d Lilley v Public Trustee [1981] 1 NZLR 41 (PC) at 43. See also Lai v Huang [2017] NZCA 499 at [31].
The Associate Judge recorded counsel were on common ground as to the test involved in determining whether an estate has been distributed.[7] The Judge referred particularly to passages in the judgment of Somers J in Sullivan v Brett and also to principles identified by the High Court in Re Eagle (deceased).[8]The Judge accepted (as advanced by Mr Webster) that, for Tim’s extension application to succeed, the Court must be convinced that material steps in the administration of Mr Swanwick’s estate still remained when Tim made his s 6 application and that Mr Bostock was not already holding the estate assets in a trusteeship capacity.[9]
The finding of final distribution
[7]High Court judgment, above n 1, at [21]–[22].
[8]Re Eagle (deceased) HC Auckland M721/97, 21 November 1997.
[9]High Court judgment, above n 1, at [24].
The Associate Judge concluded such steps as remained to be taken in relation to Mr Swanwick’s estate were not necessarily the obligations of Mr Swanwick’s personal representatives qua executors, as opposed to those of his personal representatives qua trustees.[10] He found, having regard to the passage of time between Mr Swanwick’s death in August 2008 and the commencement of Tim’s proceeding in August 2022, and having regard to Mrs Swanwick’s death in June 2021, Mr Swanwick’s personal representatives had concluded their role as executors and had for some time been treating Mr Swanwick’s half share in the farming business as forming part of the capital of the will trust under Mr Swanwick’s will.[11] The Judge was not persuaded that Mr Swanwick’s residuary estate had not been ascertained — Mr Swanwick’s estate had been distributed, even though much of it remained held by Mr Bostock in his capacity as trustee of Mr Swanwick’s will trust.[12]
[10]At [29].
[11]At [29].
[12]At [30].
In reaching these conclusions, the Associate Judge rejected five bases upon which Mr Webster, for Tim, submitted the estate had not been finally distributed.
Issue 1: the continued operation of the farming partnership
As noted above, the farming partnership formerly conducted by Mr and Mrs Swanwick had continued to operate after Mr Swanwick’s death. It had met its tax obligations, had incurred the usual obligations to employees, creditors and the like, and had generally continued to function as a going concern. Mr Webster nevertheless submitted that issues remained in relation to the operation of the business, including whether the partnership was dissolved on the death of Mr or Mrs Swanwick.
The Associate Judge found the fundamental issue remained whether the executors had effectively transferred their interests in the half shares of the farming business to themselves as trustees.[13] Having regard to the evidence, the Associate Judge found they had.
Issue 2: the residuary estate “held for unascertained beneficiaries”
[13]At [29].
Mr Webster referred to the condition in Mr Swanwick’s will, noted above at [10], whereby Mr Swanwick’s half share in the Farm Property was held in trust in equal shares for the children “contingent upon them forming a GST registered entity”.
Mr Webster submitted this contingency meant the residuary estate was held for “unascertained beneficiaries”.[14]
[14]At [31].
The Associate Judge found there was nothing in this point, as the children of Mr and Mrs Swanwick had been ascertained as the beneficiaries. The Judge recognised there was a contingency but viewed that as irrelevant to the capacity in which Mr Bostock was holding the children’s interests in the Farm Property for them.[15]
Issue 3: registration of the properties in the names of Mr Walker and Mrs Swanwick
[15]At [33].
Mr Webster submitted the executorship of Mr Swanwick’s estate could not have concluded because properties remained registered in the names of Mrs Swanwick’s original personal representatives and had not been transferred into the name of Mr Bostock as their successor.[16]
[16]At [34].
The Associate Judge found it could not be questioned that Mr Bostock had been the equitable owner of the legal interest in the various properties since his appointment.[17] The fact Mr Bostock did not appear on the register as proprietor did not mean there had not been a final distribution as between Mr Swanwick’s personal representatives qua executors and those individuals qua trustees — registration was irrelevant to the question of whether the estate had been distributed.[18]
Issues 4 and 5: Tim’s other contentions
[17]At [35].
[18]At [36].
In the High Court, Tim advanced two further matters as indicating the estate had not been finally distributed. One related to a provision in Mr Swanwick’s will for the establishment of a fund to provide for the payment of Mrs Swanwick’s annuity. The Associate Judge understood that Tim was not pursuing this point.[19] The other related to two parcels of shares of which Mr Swanwick had been a co‑owner. The Associate Judge found against this argument.[20] Tim does not appeal those two findings.
First ground of appeal : the continued operation of the farming partnership
Appellant submissions
[19]At [39].
[20]At [42]–[43].
Mr Webster submitted the Associate Judge erred in finding Mr Swanwick’s residuary estate had been ascertained and finally distributed when there remained steps that had to be taken in relation to the farming partnership. Mr Webster submitted these were material steps of administration.
Mr Webster submitted it was unclear on what basis the farming partnership had continued after Mr Swanwick’s death. He submitted, in any event, the partnership requires formal dissolution in accordance with the provisions of the Partnership Law Act 2019.[21] Upon dissolution, the affairs of the partnership will need to be wound up. Mr Webster referred to matters such as the payment of current liabilities, repayment of loans, reconciliation of current accounts, completion of tax obligations, accounting to the grandchildren for their testamentary shares in livestock, division of any profits and interest, and preparation of a final statement of account and filing of final tax returns.
[21]Partnership Law Act 2019, pt 4 sub-pt 2.
Mr Webster submitted the fundamental error in the Judgment lies in the Associate Judge’s failure to mention or analyse a series of “factually relevant cases” and to apply them on the facts of the present case. Mr Webster referred to four cases in which the Court of Appeal and/or the High Court found the respective estates had not been finally distributed. He submitted those cases involved identical or strikingly similar scenarios to the present case. The decisions identified by Mr Webster were:
(a)Sullivan v Brett, where the executor held realty and furniture and there were liabilities yet to be met;[22]
(b)Davidson v Clark, where it was conceded the estate had not been finally distributed primarily for the reason that the estate’s tax accounts had not been finalised and outstanding accounts had not been settled;[23]
(c)Jurkovich v Fortune, where this Court, allowing an appeal, held the testator’s “back block” of land and shares in a private farming company (which itself held land) had not vested in the residuary beneficiaries as they formed part of an unascertained residue, with the possibility that, following sale of the company’s land, questions might arise as to company taxation and as to the winding up of the company;[24] and
(d)Lamb v Lamb, where the executors retained as the corpus of the estate a mortgage and deposits which could not be distributed until the certain claims against the estate had been decided by the Court.[25]
[22]Sullivan v Brett, above n 4.
[23]Davidson v Clark (2008) 27 FRNZ 45 (HC) at [17].
[24]Jurkovich v Fortune [1988] 2 NZLR 442 (CA) at 443.
[25]Lamb v Lamb [1976] 1 NZLR 501 (SC) at 503.
Mr Webster also referred to Baldock v Hawkins, where the Family Court applied the de minimis rule to find the estate had been finally distributed notwithstanding an unpaid estate debt of $26.50, with the implication that the Court would have found there had not been a final distribution had the debt in question been more than minimal.[26]
Submissions for the first respondent and interested parties
[26]Baldock v Hawkins [2019] NZFC 9832 at [99]–[101].
Mr Fanning, for Mr Bostock, supported the Judgment for the reasons set out in the Judgment. For authority as to Mr Swanwick’s trustees being entitled to carry on the farming partnership with Mrs Swanwick, Mr Fanning referred to the High Court decision in McKeown v Small.[27]
[27]McKeown v Small [2015] NZHC 1043.
For the interested parties, Mr Gray adopted Mr Fanning’s submissions. He referred also to Fowler v New Zealand Insurance Company Limited (Fowler).[28] There the Supreme Court rejected a submission that the carrying on of a farming partnership between a life tenant and the deceased’s executor/trustee necessarily resulted in the latter’s executorial duties not being completed — the residue of the deceased’s estate had been ascertained in relation to her share in the farming partnership.[29]
Discussion: final distribution/ascertainment of the residue
[28]Fowler v New Zealand Insurance Company Limited [1962] NZLR 947 (SC) [Fowler].
[29]At 952.
Whether Mr Wallace and Mrs Swanwick had fully performed their duties as executors in relation to the residue and were holding the assets of Mrs Swanwick’s estate as trustees only is primarily a question of fact. Adopting the question identified by Hutchison ACJ in Gudgeon v Public Trustee, we ask whether “the administration of Mrs Swanwick’s estate reached a point of ripeness at which you can infer that the residuary estate had been ascertained?”[30]
[30]Gudgeon v Public Trustee [1960] NZLR 233 (SC) at 237.
We do not consider the cases relied on by Mr Webster for their factual situations present strikingly similar, let alone identical, scenarios to the present case. We explain:
(a)In Sullivan v Brett, the executor was required to hold realty and furniture from which to cover existing and expectant liabilities of the executor. As a result, the residue was not ascertained at the relevant date and no inference as to final distribution was available.[31]
(b)In Davidson v Clark, the estate had an unmet final tax account and other accounts including costs of litigation that precluded (absent the consent of all beneficiaries) the final distribution of the residuary estate at the relevant date.[32]
(c)In Jurkovich v Fortune, there remained for the executors at the relevant date unresolved issues as to whether the estate had a potential tax liability arising from the sale of land owned by a company, the shares in which formed part of the deceased’s estate.[33] The deceased was not involved in a partnership.
(d)In Lamb v Lamb, the Court took account of the fact the plaintiff had (within time) given notice of his intention to take proceedings. Consequently, upon the issuing of those proceedings, the final distribution of the estate was necessarily subjected to the order of the Court. The fact the mortgage and deposits, which formed the corpus of the estate, remained in the names of the executors (identified by the Court) was consistent with the executors not having effected final distribution.[34]
[31]Sullivan v Brett, above n 4, per McMullen J at 203, Somers J at 209 and Barker J at 212–213.
[32]Davidson v Clark, above n Error! Bookmark not defined., at [57].
[33]Jurkovich v Fortune, above n Error! Bookmark not defined., per Somers J at 448–449 and Gallen J at 452–453.
[34]Lamb v Lamb, above n Error! Bookmark not defined., at 503.
The outcomes in these various cases reflect how fact‑specific questions relating to final distribution are. We accept Mr Gray’s submission that the factual circumstances in Fowler, discussed above at [41], are more analogous to the present case. In Fowler, the life tenant and executor were carrying on a previously established farming partnership. McArthur J, in determining the residue had been ascertained, observed there was no reason in principle why the residue of the deceased’s estate could not be ascertained as comprising (as to part thereof) the deceased’s share in the farming partnership.[35]
Discussion: the conduct of the executorship
[35]Fowler, above n 28, at 952.
Mrs Swanwick and Mr Walker, in the initial period after Mr Swanwick’s death in 2008, attended to the usual duties of executors and by their March 2011 invoice (above at [17]), accounted for the matters they had attended to. The invoice, with its detailed identification of administration steps, reflects the administrators’ having dealt with assets and liabilities, taxation requirements and “distribution of estate assets as agreed”. The fact there were no subsequent invoices relating to the administration strongly suggests the administration had been completed.
In accordance with their power under the business continuation provision in Mr Swanwick’s will, Mrs Swanwick and Mr Walker, through that initial period and afterwards, carried on the farming business that Mr Swanwick before his death had operated in partnership with Mrs Swanwick.
Discussion: the conduct of the trusteeship
There is no evidence of any unusual or difficult assets or liabilities held by the partners that called for further action by Mrs Swanwick and Mr Walker in their executorship capacities. The assets being utilised by the partnership and comprising Mr Swanwick’s will trusts were clearly identified and held and were required to be held during Mrs Swanwick’s lifetime. The operation of the partnership was such that it met its liabilities as they arose. The fact the partnership would need to be dissolved upon Mrs Swanwick’s death was a matter properly to be attended to by the partners — in the case of Mr Swanwick’s estate, by his trustee.
In short, the continued operation of family partnership did not preclude the occurrence of final distribution of the estate.
Second ground of appeal: the residuary estate “held for unascertained beneficiaries”
Appellant submissions
Mr Webster submitted, as he had in the High Court, that the beneficiaries of Mr Swanwick’s provision relating to the Farm Property had not been ascertained because, for those beneficiaries to take their share, they first had to form a GST registered entity. Mr Webster referred to a passage in Davidson v Clark relating to a retirement property, referred to as the “Onaero property”.[36] The Onaero property, owned by the deceased, transferred by his executors to the four defendants as residuary beneficiaries.[37]
[36]Davidson v Clark, above n Error! Bookmark not defined..
[37]At [12].
The principal issue for the Court was whether the Onaero property had thereby been distributed before the application for extension under s 6 of the Act was made.[38] The final, and more fundamental, issue was whether the executors had authority under the deceased’s will or at law to have the equitable estate in the Onaero property vested in the names of the four beneficiaries.[39]
[38]At [22].
[39]At [42].
On a review of the deceased’s will and the general position at law, Venning J, in the passage relied on by Mr Webster, concluded:
[56] It follows that there was no power in the will to appropriate the property and vest it in specie as the executors sought to do in this case. They are not able to exercise their power at common law without the consent of all beneficiaries, which they failed to obtain, and nor are they able to rely on the statutory power of apportionment in the Trustee Act as they did not give notice to the beneficiaries.
[57] It follows that the action of the executors in executing the transfer of the Onaero property to the four beneficiaries in equal shares was an invalid act. It [cannot] be a valid assent for the purposes of distribution. The result is that the Onaero property was not distributed by that act or by the presentation of the transfer to the Registrar (in electronic form) in reliance upon that act.
Discussion
We adopt the Associate Judge’s conclusion that, for the purposes of determining whether there had been final distribution, it is immaterial the will trust in relation to Mr Swanwick’s half share in the Farm Property in favour of the surviving children was “contingent upon them forming a GST registered entity”.
The finding in Davidson v Clark — that the Onaero property had not been distributed through the executor’s act of transferring the property to the four beneficiaries in equal shares — turned on the executors’ having no power to vest the Onaero property in specie in the beneficiaries.[40] Here, Mr Swanwick’s will specifically provides for Mr Swanwick’s half share in the Farm Property to be vested in his surviving children as tenants‑in‑common in equal shares.
[40]At [56]–[57].
Furthermore, contrary to Mr Webster’s submission, the beneficiaries of Mr Swanwick’s will trust were not “unascertained beneficiaries” by reason of the contingency. The interest of the four children was an interest in the remainder.[41] In the highly improbable event any of the four children saw fit not to form a GST registered entity in order to take their share in the Farm Property, the final provision in Mr Swanwick’s will in relation to residue identifies that any such undisposed of residue is held in trust in equal shares for the surviving children. Accordingly, at the relevant date it was clear what property was held in trust and who were beneficially entitled.
Third ground of appeal: registration was not completed
Appellant submissions
[41]D W McMorland and others Hinde McMorland and Sim Land Law in New Zealand (online ed, LexisNexis) at [5.008]. See also Rutherford v Rutherford [2015] NZHC 878, [2015] NZHC 878 at [34].
Mr Webster in his written synopsis, submitted as he had in the High Court that the registration of the Farm Property into Mr Bostock’s name, as the substituted executor and trustee, was a step in the administration of Mr Swanwick’s estate that still required completion at the relevant date.
In his oral submissions at the hearing, Mr Webster recognised the fact that a transmission into Mr Bostock’s name had not yet occurred could not, on its own, definitively indicate final distribution had yet to occur. By reference to the application of the de minimis rule in Baldock v Hawkins,[42] Mr Webster suggested the fact that transmission had yet to occur would appropriately be viewed, if it was the only factual matter relied on, as not indicating there had yet to be a final distribution. He asked this Court to view the non-transmission as having “relevance in the total mix”.
Submissions for the first respondent and interested parties
[42]Baldock v Hawkins, above n 26.
Mr Fanning, for Mr Bostock, observed, if it is found Mr Swanwick’s estate had been finally distributed by 2011, then the appointment 10 years later of Mr Bostock and what was or was not done by way of transmission is irrelevant.
For the interested parties, Mr Gray made a complementary submission. He noted Mrs Swanwick and Mr Walker had in 2008 arranged the transmission of Mrs Swanwick’s half share in the Farm Property into their names. They then got in the estate. Mr Gray referred to Jurkovich v Fortune as recognising that situation as being one in which relevant assets (in that case the “back block” and private company shares) were no longer held by the executors as executors but instead as trustees.[43]
Discussion
[43]Jurkovich v Fortune, above n Error! Bookmark not defined., at 445 per Somers J.
The fact there had not been a transmission of title in the Farm Property from Mrs Swanwick and Mr Walker to Mr Bostock by the relevant date does not affect the trusteeship that already existed in relation to Mr Swanwick’s half share in the Farm Property when (on 1 June 2021) Mr Bostock was by deed appointed as trustee of Mr Swanwick’s estate. For the reasons we have identified, the previous executors had become trustees for the residuary beneficiaries by 2011 at the latest. Attending to the formalities relating to title was a formalising process that Mr Bostock as trustee may attend to either in the context of the transfer to the beneficiaries, or before if he prefers.
Fourth ground of appeal: how the executors treated Mr Swanwick’s half share in the farming business
Appellant submissions
Mr Webster referred to the Associate Judge’s findings in relation to final distribution, as summarised at [26] above. Mr Webster referred to the Judge’s observation that Mr Swanwick’s personal representatives had “for some time been treating his half share in the farming business as forming part of the capital of the will trust”.[44]
[44]High Court judgment, above n 1, at [29].
Mr Webster submitted this aspect of the Associate Judge’s findings constituted an error of law because it indicated the Associate Judge was in part relying on a belief of Mr Bostock that there had been a final distribution of Mr Swanwick’s estate. Mr Bostock had provided affidavit evidence as to his understanding of the farming arrangements that had existed over the years and his reasons for believing the estate had been finally distributed. In Mr Webster’s submission, it is apparent the Associate Judge was influenced by what Mr Bostock said he believed had occurred.
Mr Webster referred to the observation of Somers J in this Court in Sullivan v Brett that “[t]he issue is not what the executor believes or intends to be the case” but “is what the facts demonstrate”.[45]
Discussion
[45]Sullivan v Brett, above n 4, at 207 per Somers J.
We do not read the Associate Judge’s reference to the way in which Mr Swanwick’s personal representatives had been treating Mr Swanwick’s half share in the farming business as reliant on the evidence Mr Bostock gave as to how he had viewed matters. The references to Mr Swanwick’s “personal representatives” (in plural) and their treatment of the half share “for some time” appears plainly to refer to the period in which Mrs Swanwick and Mr Walker were Mr Swanwick’s executors and trustees. Any views expressed by Mr Bostock as to his beliefs do not inform the way in which his predecessors treated Mr Swanwick’s half share.
It is clear in our view the Associate Judge reached his conclusion in relation to final distribution by reference to “what the facts demonstrate”, a decision which we uphold for the reasons set out above at [35].
Alternative ground of appeal: errors in the exercise of the s 6 discretion
The Associate Judge’s conclusion
By reason of the Associate Judge’s conclusion that Mr Swanwick’s estate had been finally distributed by the relevant date, the High Court had no jurisdiction to exercise the discretion contained under the proviso to s 6 of the Act.[46]
[46]High Court judgment, above n 1, at [44]–[45].
The Judge, nevertheless, and appropriately against the possibility that his conclusion were to be found wrong, briefly considered the exercise of discretion. He concluded for stated reasons that, had he concluded Mr Swanwick’s estate had not been finally distributed, he would not have exercised the discretion in favour of permitting Tim to proceed with his claim out of time.[47]
Appeal grounds and proposed amendment
[47]At [46].
Tim’s alternative grounds of appeal identified alleged errors in the reasons the Associate Judge set out relating to the exercise of the discretion. The basis of this aspect of the appeal was that the Associate Judge applied the tests or “requirements” identified for the exercise of the discretion in this Court’s decisions in Sullivan v Brett and Bearman v Hardie Boys.[48]
[48]Sullivan v Brett, above n 4; and Bearman v Hardie Boys [1973] 2 NZLR 204 (CA).
After the timetabled exchange of appeal submissions was complete, Tim applied for leave to amend his grounds of appeal to include a further ground of appeal. The proposed ground was that the Associate Judge erred in law in adopting the three‑pronged test set out in Bearman v Hardie Boys and applied in Sullivan v Brett, when s 6 of the Act requires only that the relevant estate, at the time of the application, has not been finally distributed.
The Court made directions for this application and the substantive grounds of appeal to be considered at the appeal hearing itself.
It was common ground between counsel that issues relating to the exercise of the discretion would be rendered moot in the event this Court upheld the Associate Judge’s conclusion that Mr Swanwick’s estate had been fully distributed by the relevant date.
Outcome
Given our above findings, the appeal grounds and proposed supplementary appeal ground in relation to the exercise of the discretion under s 6 has been rendered moot. The application for leave to amend the grounds of appeal will be therefore refused.
Outcome
The appellant’s application for leave to amend his grounds of appeal is declined.
The appeal is dismissed.
The appellant must pay to the respondents and the interested parties respectively costs for a standard appeal on a band A basis and usual disbursements.
Solicitors:
Webster Inc, Napier for Appellant
Bramwell Bate, Hastings for Respondent
Sainsbury, Logan & Williams, Napier for Interested Parties
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