Stephenson v Mason

[2019] NZHC 1548

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-2464

[2019] NZHC 1548

UNDER

the Administration Act 1969

IN THE MATTER

of an application for removal of

administrator in the Estate of MARGARET MARY CONSTANCE MASON

BETWEEN

BRONWEN MARY STEPHENSON

Applicant

AND

JAMES WYNNE MASON

Respondent

On the papers

Formal proof

Appearances:

D-M Cross for Applicant

No appearance by or on behalf of Defendant

Judgment:

3 July 2019

JUDGMENT OF TOOGOOD J

This judgment was delivered by me on 3 July 2019 at 4.30 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

STEPHENSON v MASON [2019] NZHC 1548 [3 July 2019]

Introduction

[1]        Margaret  Mason  died  on  30 August 2017,   leaving   a   last   will   dated 25 February 2010. Probate in common form was granted on 22 November 2017.

[2]        Margaret appointed her daughter Bronwen Stephenson, her grandson Andrew Stephenson, and her son James Mason as administrators. The will provided that, after payment of funeral debts, testamentary expenses and all duties, the trustees were to divide the residue between Bronwen and James equally as the beneficiaries.

[3]        Bronwen says the relationship between James and the other administrators has broken down to such an extent that little progress has been made in the administration of the estate and she seeks an order under s 21 of the Administration Act 1969 for removal of James as an administrator of their mother’s estate on the grounds that it has become expedient to do so.

The evidence

[4]        The evidence adduced by the applicant establishes that the estate’s major asset is an apartment valued at between $1.3 and $2.2 million, depending on the extent of remedial work undertaken prior to sale: Unit GB and AU2,8 of 7 The Promenade, Takapuna (The Rocks apartment). There are also funds currently held in the trust account of the estate’s solicitors, O’Brien Ward, on behalf of the estate, but the estate has liabilities for body corporate special levies.

[5]        It is also established on the evidence that other assets of the estate may exist but have been unable to be ascertained because of James’s uncooperative attitude and behaviour. It is alleged that James has placed himself into a position of conflict in terms of his obligations as a trustee by:

(a)occupying The Rocks apartment, failing to pay rent and failing to keep it in a reasonable state of repair;

(b)refusing to provide information about the existence and whereabouts of the assets of the estate to an extent that it has not been possible to ascertain the full extent of the assets and liabilities; and that he

(c)may have taken, misused and diminished assets of the estate, including share portfolios, bank account deposits, credit facilities and insurance monies, as well as misusing the apartment itself and its contents.

[6]        Bronwen complains that her brother’s behaviour has been such as to make it impossible for Andrew and her to have any dealings with him. She does not feel comfortable or safe speaking with James directly, including by correspondence, and it has not been possible for the estate’s solicitors to have any productive dealings with James whose whereabouts are now unknown. The last correspondence from James included a note that he no longer wished to be an executor and would like instead to sue the estate’s solicitors, Bronwen and Andrew as “a defrauded beneficiary”.

The legal principles

[7]Section 21 of the Administration Act 1969 provides, so far as is relevant:

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.

(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.

….

[8]        I apply the principles set out by Heath J in Farquhar v Nunns,1 adopting the submissions of counsel:

(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)Expediency 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 between administrators or trustees and beneficiaries is not of itself a reason for removal, but hostility will be relevant if and when it risks prejudicing the interests of the beneficiaries.

(f)The principles for the exercise of the Court’s discretion are the same, whether an application is made pursuant to s 51 of the 1956 Act or s 21 of the 1969 Act.

[9]        These principles were approved by the Court of Appeal in Tod v Tod2 and in Frickleton v Frickleton.3 It is clear from those authorities and the cases cited in them that, while the courts will not readily replace an executor chosen by a deceased, the interests of the beneficiaries are always the primary focus. It is not sufficient merely

1      Farquhar v Nunns [2013] NZHC 1670 at [13].

2      Tod v Tod [2015] NZCA 501, [2017] 2 NZLR 145 at [22].

3      Frickleton v Frickleton [2016] NZCA 408, [2017] 2 NZLR 154 at [29].

that there exists incompatability between trustees and beneficiaries; the threshold test is that the proper administration of the estate trust is seriously adversely affected and it has become difficult for the trustee or trustees to act in the interests of any beneficiary.4

Discussion

[10]      I accept that the propositions submitted by Ms Cross in support of the application reflect the authorities. Counsel argues that the Court may make the orders sought in this case if it is satisfied that:

(a)James has materially failed to discharge his duties over a significant period of time,5 regardless of whether that is because he is unable or unwilling to do so.6

(b)James is no longer capable of properly administering the estate and carrying out his mother’s wishes.7

(c)Proper execution of the terms of the will is at risk.8

(d)Due to disagreements between Bronwen, Andrew and James, the estate administration cannot be progressed in the way that is required. Due to ill feeling, it has become impossible for the administrators to cooperate or work constructively over important decisions that have to be made by the trustees for the benefit of the beneficiaries.9

(e)The assets of the estate are likely to be eroded further if James remains as administrator.10

4      Kain v Hutton [2007] NZCA 199, [2007] 2 NZLR 349 at [267].

5      Anderson v Ed Johnston & Co Trustees [2018] NZHC 1122 at [33].

6      Armstrong v Keenan [2018] NZHC 1196 at [34].

7      Allen v Morgan [2015] NZHC 1139 at [20]; Holmes v Holmes [2015] NZHC 2576 at [17];

Nawisielski v Nawisielski [2014] NZHC 1547 at [21].

8      Farquhar v Nunns at [38].

9      Armstrong v Keenan at [20] and [65].

10     Armstrong v Keenan at [65].

[11]      I am satisfied on the evidence that the Court’s intervention is expedient because of the complete breakdown in the relationship between the trustees. Moreover, I am satisfied that James has abandoned his responsibilities as trustee and that, on the uncontested evidence before the Court, it has been established on the balance of probabilities that he has acted in breach of his duties as a trustee.

[12]      I accept also on the evidence that there is no need to appoint a substitute administrator upon James’s removal. Nothing in the evidence suggests that Bronwen and Andrew are not capable of carrying out the terms of the will in the interests of all beneficiaries, including James.

Orders

[13]I make the following orders:

(a)James Wynn Mason is removed as administrator of the estate of Margaret Mary Constance Mason; and

(b)The costs of the proceeding shall be paid out of the estate.

[14]I take responsibility for, and regret, the delay in issuing this judgment.

.................................................

Toogood J