Stewart v Wheeler

[2023] NZHC 192

IN THE HIGH COURT OF NEW ZEALAND MASTERTON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKAORIORI ROHE

CIV-2022-435-12

[2023] NZHC 192

UNDER

the Administration Act 1969 and the Trusts Act 2019

IN THE MATTER

of the Estate of Sandra Elizabeth Catherine Stewart

BETWEEN

THOMAS ROSS STEWART

Plaintiff

AND

BRONWYN VANESSA WHEELER in her

capacity as executrix and trustee of the

Estate of Sandra Elizabeth Catherine Stewart Defendant

Hearing:	1 February 2023
Appearances:	C D Batt for Plaintiff Defendant in person
Judgment:	15 February 2023

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

Introduction and background

[1]Sandra Stewart died on 9 November 2020.

[2]        The plaintiff, Thomas Stewart, is Mrs Stewart’s widower. The defendant, Bronwyn Wheeler, was Mrs Stewart’s younger sister.

[3]        A matter of a week or so before her death, Mrs Stewart made a will. She appointed her solicitors, Webb Farry, Dunedin, and the defendant as her executors and

STEWART v WHEELER [2023] NZHC 192 [15 February 2023]

trustees (or personal representatives). Unusually, the terms of the appointment refer to “the Partners at the date of my death in the firm of Webb Farry”.

[4]        Probate of Mrs Stewart’s will was not applied for until mid-July 2021. In the interim, the partners in Webb Farry had disclaimed appointment, and the application was made by the defendant alone. This Court granted probate to the defendant in an order dated 22 September 2021.

[5]        In her will Mrs Stewart left her personal and household effects to the plaintiff. She made a specific gift of a Holden motorcar to the defendant. There is an issue relating to this gift to which it will be necessary to return. She directed her personal representatives to arrange for the installation of a memorial park bench at St Kilda, Dunedin in memory of her parents, her daughter Amanda (all three of whom had predeceased her) and herself. The balance of her estate Mrs Stewart left to her personal representatives upon trust to pay her debts and funeral and estate administration costs, and then to divide the residue between the plaintiff as to 50 per cent, the defendant as to 30 per cent, her son, Alan Robinson, as to 10 per cent and Capital & Coast District Health Board as to 10 per cent.

[6]        Although there are no estate accounts before the Court — which in itself is germane to one of the issue in the case — it is common ground that the principal asset of the estate is Mrs Stewart’s half interest in a residential property in Lawrence, Otago which the plaintiff and she owned as tenants in common in equal shares.

[7]        Since the grant of probate the defendant has been responsible for administering the estate. Some steps have certainly been taken in that regard, but, close to 18 months on, the process is far from complete. In particular, the Lawrence property is not yet on the market.

[8]        The plaintiff commenced this proceeding on 29 August 2022. His principal contention is that the defendant has not discharged, and is incapable of discharging, her responsibilities as Mrs Stewart’s personal representative, and that the Court should make an order pursuant to s 112 of the Trusts Act 2019 removing her and appointing a new personal representative. Initially, he proposed that he be appointed. By the time

of the hearing he had stepped back from that position and was proposing the appointment of Mr Tom Mahony, a principal in the Wellington firm of solicitors practising as Mahony Horner.

[9]        The plaintiff seeks summary judgment for such an order. This is unusual because applications under s 112 call for an exercise by the Court of a broad discretion which is not the type of case which ordinarily lends itself to summary judgment applications. That said, there is no reason in principle why they cannot be dealt with by way of summary judgment, though this raises an issue as to what exactly the applicant in such a case must demonstrate in order to succeed.

[10]      The defendant opposes the application for summary judgment. At this stage, I do no more than acknowledge that the defendant feels a strong sense of obligation to see the administration of her older sister’s will through to its conclusion which is greatly to her credit.

Summary judgment

[11]Summary judgment is provided for in pt 12 of the High Court Rules 2016.

[12]      The leading authority is Krukziener v Hanover Finance Ltd where the Court of Appeal, referring to applications by plaintiffs for summary judgment, said:1

[26]      The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3. The court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as, for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at

341. In the end the court’s assessment of the evidence is a matter of judgment. The court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corporation Ltd v Patel (1987) 1 PRNZ 84 (CA).

1      Krukziener v Hanover Finance Ltd [2008] NZCA 187 at [26]–[27].

[27]      Under r 141A of the High Court Rules the defendant need not file a statement of defence. The onus remains on the plaintiff, and summary judgment will be denied if on the hearing of the application it appears that there is an issue worthy of trial.

[13]      Thus, in the end, in an application by a plaintiff, the Court must be satisfied that the plaintiff can demonstrate that there is no arguable defence, and therefore no issue worthy of trial.

[14]      In a case such as this where a plaintiff is asking the Court to exercise a discretion, in order to succeed the plaintiff will, it appears to me, need to establish that there is no reasonable basis for an argument that the Court should not exercise its discretion in the way sought in the application.

Evidence

[15]      Between them the parties have put before the Court a considerable amount of narrative affidavit evidence and contemporaneous material. The Court has before it the plaintiff’s primary affidavit dated 19 August 2023; the defendant’s primary affidavit dated 20 October 2022; the defendant’s further affidavits dated 31 October 2022 and 29 November 2022; the defendant’s husband’s supporting affidavit dated 29 November 2022; and the plaintiff’s affidavit in reply dated 14 December 2022.

[16]      In broad terms, the picture that emerges from that material is of escalating mutual hostility as between the defendant in her capacity as Mrs Stewart’s personal representative and the plaintiff resulting in a stalemate in the administration of the estate.

[17]      Much of the evidence, and aspects of the argument, focussed on issues that are irrelevant to the disposal of the application before the Court.

[18]      The most obvious example is a dispute about the state of the plaintiff’s marriage to Mrs Stewart in the years leading up to her death. The plaintiff’s evidence is that whilst the marriage may have been subject to the usual ebbs and flows of most relationships, they remained a married couple right up until Mrs Stewart’s death. The defendant on the other hand asserts that the marriage had soured beyond repair some

time before Mrs Stewart’s death, that, in part at least, this was because of the plaintiff’s behaviour towards Mrs Stewart so that, by the time of Mrs Stewart’s death, the parties had separated. Those assertions appear to be based for the most part on hearsay evidence such as observations contained in records made by third parties.

[19]      This type of factual issue is the very antithesis of one that it would be appropriate for the Court to determine on untested affidavit evidence, and there is no prospect of this Court resolving it in the context of a summary judgment application. However, that, in my assessment, should not prevent the Court from dealing with the plaintiff’s application, because the precise state of the marriage is neither here nor there. It is common ground that Mrs Stewart had capacity. It is common ground that she made her will in the terms she did. It is common ground that the defendant applied for and obtained probate which is an authority from the Court to administer the will, and therefore that the defendant was and is obliged to do so in accordance with the terms of the same. Nor does there appear to be an issue as to the proper interpretation of the will.   It follows  that, whatever the state  of the marriage  as at the date of   Mrs Stewart’s death, the Court must proceed on the basis that she intended to benefit him in her will in the terms already described.

[20]      In case it be thought that I have ignored them, I add that I regard the indications from the defendant and Mr Robinson in the contemporaneous correspondence to the effect that they propose to challenge aspects of Mrs Stewart’s will as irrelevant. Quite apart from anything else, no proceedings have been issued and the defendant and   Mr Robinson are now out of time to do so without leave.

Principles relating to removal of executors and trustees

[21]      In her written submissions Ms Batt referred to the recent High Court judgment of Smith v Smith,2 which she submitted correctly identified the broad principles involved.

[22]Ms Batt summarised those principles as follows:

2      Smith v Smith [2021] NZHC 1042.

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

(b)The 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/trustee) are to be given consideration, but ultimately the question is as to what is expedient in the interests of 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 prejudice in the interests of the beneficiaries.

[23]      In relation to the Court’s duty to ensure that estates and trusts are managed appropriately, Ms Batt submitted that this estate is straightforward in the senses both that Mrs Stewart’s will is clear and that the estate assets are readily identifiable. The defendant did not contend otherwise. Ms Batt submitted that the straightforward nature of this estate served to highlight that progress had been “unsatisfactory during Ms Wheeler’s period of executorship, and … her removal is justified to ensure the estate is properly managed going forward”.

[24]      Whilst it is true that this is not a complex estate in any sense, whether or not the defendant’s executorship to date is open to criticism needs to be considered carefully, as it is a serious step for the Court to remove a personal representative.

[25]      Turning to the Court’s discretion, Ms Batt submitted that five factors demonstrated that this should be exercised in favour of the defendant’s removal:

(i)Failed to distribute the assets;

(ii)Failed to report;

(iii)Delayed administration;

(iv)Breached the duty of impartiality; and

(v)Mismanaged the estate.

[26]      Insofar as the failure to distribute assets is concerned, Ms Batt focussed primarily on the way in which the defendant has gone about making arrangements for the sale of the Lawrence property.

[27]      As the property was owned by the plaintiff and Mrs Stewart as tenants in common in equal shares as at the date of the latter’s death, the plaintiff has remained a half owner of the house throughout and, once arrangements had been made for the transmission of Mrs Stewart’s half  share  to  the  defendant  in  her  capacity  as  Mrs Stewart’s personal representative, the plaintiff and the defendant became tenants in common in equal shares (legally only in the case of the defendant). It follows that they needed to act jointly in relation to the sale of the property. My review of the contemporaneous correspondence suggests that the defendant has never appreciated the position in those terms. She seems from the outset to have proceeded on the basis that, as her older sister’s personal representative, she was entitled to deal with the house as if she was the sole owner.

[28]      So for example, the defendant has made decisions about which real estate agents should be involved and how the property should be presented without involving the plaintiff. She is apparently in business as a property “stager”, and has gone ahead and “staged” the property for sale without consulting the plaintiff, and charged the estate for this. Then, when the plaintiff raised concerns, the defendant effectively demanded that he sign documentation for sale and purchase of the property which would have given her complete responsibility for the exercise, including, for example, as to the terms on which the property might be sold.

[29]      There is perhaps an indication in the evidence as to how the defendant came to view it as appropriate to deal with matters in this way.

[30]      In paragraph 24 of her affidavit  the  defendant  explained  her  view  that  Mrs Stewart had not meant to leave half of the residue of her estate to the plaintiff:

24. Mr Stewart does own one half of 23 Thurso St but any reference to Sandra leaving him half of her share is an error and not true. Shortly before her death she changed the title to tenants in common to avoid survivorship, she was apart from him for the last two or so years of her life and did not want him at her funeral, in fact he was not

informed of her death until 9 days after by her lawyers in accordance with the strict instructions she left. No reasonable person could possibly  imagine  a  scenario   where   Sandra   willingly   leaves  Mr Stewart half her Estate particularly with the amount of violence he inflicted on her as evidenced by the medical records. Sandra was not aware of the superannuation and if she had been her will would have been different again.

(Emphasis added.)

[31]      If, as seems likely, that has been the defendant’s attitude throughout, then it is not difficult to see how that may have influenced her view as to who should take responsibility for the sale of the house.

[32]      Indeed, since this proceeding was commenced, the defendant has commenced her own proceeding under CIV-2022-485-756 in which she is seeking a mandatory injunction requiring the plaintiff to sign the contract of engagement with the real estate agents she wishes to engage.

[33]That proceeding is currently on hold pending the outcome of this application.

[34]      In fairness, I should add that during the course of the hearing I took the defendant to the passage in her affidavit quoted above, and asked her if she acknowledged that the plaintiff was not only a half owner of the property but also entitled to half of the residue of the estate. She acknowledged that that was the case, even although other aspects of her submissions suggested that she was not necessarily prepared to accept that the plaintiff and she needed to agree on arrangements for the sale of the house.

[35]      The view I have reached is that the defendant has, from the outset, failed to appreciate the nature of her responsibility and failed to acknowledge the plaintiff’s entitlement as both a half owner of the principal asset of the estate and the primary beneficiary of the residual estate.

[36]      Ms Batt contended that the defendant had not fulfilled her responsibility to report to the beneficiaries.

[37]      Executors and trustees are obliged to provide core information to beneficiaries as to the administration of estates and trusts.

[38]      This brings me back to the point made earlier that there are no estate accounts in evidence. One of the most basic responsibilities of an executor and trustee of an estate is to produce a set of estate accounts. Conventionally, the trustee and executor will arrange for the solicitors acting for the estate (or accountants engaged by them, if the estate is a complicated one) to produce draft accounts at an early stage that are then updated as matters progress to ensure that all concerned are properly informed.

[39]      It is a matter of concern that at no stage have estate accounts — draft or otherwise — been prepared and distributed.

[40]      Again, this tends to suggest that the defendant does not have a full appreciation of her responsibilities.

[41]      That is evident from an exchange of correspondence between the plaintiff’s solicitors and the defendant in October 2022. In that exchange the plaintiff’s solicitors sought basic estate information. The defendant responded in terms that involved using her control of that information as a negotiating tool. In effect, she said that she would provide such information if and when the plaintiff signed the listing agreement referred to earlier.

[42]      Ms Batt submitted next that there has been unacceptable delay by the defendant in administering the estate.

[43]      As to the period between Mrs Stewart’s death in November 2020 and the grant of probate in September 2021, as Ms Batt submitted, there is a clash in the correspondence with the defendant blaming any delay on the  estate  solicitors,  Webb Parry.

[44]      Reviewing the correspondence, it is quite clear that delays arose as a result of failure on the part of Webb Parry and the defendant to see eye-to-eye as to the administration of the estate.

[45]      In the end, as already mentioned, Webb Parry withdrew, which was probably the wise course for them to have taken.

[46]      Webb Parry nevertheless assisted the defendant to make her application for probate.

[47]      It is not entirely unusual for parties to disagree as to how an estate administration should be approached. It is probably unusual that they should do so for a full year and bring the administration of the estate to a grinding halt. Be that as it may, I am not prepared to reach any adverse views in relation to this period of delay. It is simply a matter of the personal representatives appointed by Mrs Stewart having conflicting views.

[48]      What is more difficult to explain is the delay from the grant of probate in September 2021 to date — close to 18 months.

[49]      Although, as already indicated, during that time, some steps have been taken, the principal asset of the estate remains unsold. The reason for that could scarcely be clearer. While the defendant contends otherwise, her failure to appreciate the plaintiff’s entitlement to have a full say in the process has certainly been at the heart of the problem.

[50]      As I have already indicated it seems clear that this attitude on the defendant’s part is driven by her view that Mrs Stewart’s will does not properly reflect her intentions, or that the plaintiff is not deserving of half the residue of the estate.

[51]      I do not need to determine whether or not the defendant has consciously delayed the estate administration. It is enough that the period of delay since the grant of probate is substantial, and that the defendant can point to no evidence showing that there is a reasonable justification for it.

[52]      The defendant’s delay is the more troubling when one considers the evidence that the plaintiff has been carrying the holding costs on the property, paying the

mortgage, rates, insurance and so forth and receiving no contribution to any of these from the estate.

[53]      Ms Batt submitted that the defendant has acted partially throughout, favouring herself as against the plaintiff, and is effectively incapable of doing otherwise.

[54]Three aspects of the evidence are relied on in this regard.

[55]      First, it seems that the defendant and her husband have stayed in the property on various occasions. I do not infer much from this. The defendant lives in the Wairarapa and has had to travel to Otago in the course of her role as executrix and trustee. For her to have stayed in the property hardly seems to amount to an abuse of her position.

[56]      The second example relates back to the Holden vehicle which was referred to at the outset. There is virtually no evidence as to who acquired the Holden vehicle in the first place. However, it seems likely that it was a family chattel under the Property (Relationships) Act 1976 and thereby one that as at the date of Mrs Stewart’s death was owned jointly by Mr Stewart and Mrs Stewart. If that is correct, then the vehicle was not an asset that Mrs Stewart was entitled  to  give to  the defendant  inter vivos or in her will at least without the plaintiff’s agreement. Despite the issue of the status of the Holden vehicle being at large from an early stage, the defendant has seen fit to sell the same and refused to acknowledge any obligation to account for the proceeds of sale.

[57]      The third and final example concerns the defendant deciding unilaterally to stage the property for sale and charge the estate.

[58]      I have already reached the view that the defendant has no real appreciation of the nature of her role, and it appears to me that she has acted in a way that at least raises a serious question as to her impartiality.

[59]      Ms Batt drew the threads of her argument as to the exercise of the discretion together by submitting that the factors already canvassed established that the estate had been mismanaged. I agree.

[60]      That brings me back to the issue of hostility between the parties. This is not, in and of itself, necessarily a reason for removal. However, where that hostility is getting in the way of the proper administration of the estate, thus risking prejudice to the beneficiaries, it may be an influential factor.

[61]      In relation to this I accept that there is a severe level of hostility here and that the relationship between the defendant as the execution and trustee and the plaintiff as the primary beneficiary of the residual estate has irredeemably broken down.

[62]      In the broadest sense that seems to be a factor which weighs against the defendant’s continuation in her current role.

[63]      In relation to the importance of paying respect to the wishes of the testatrix, whilst that is an important consideration, it is secondary to the proper administration of the estate. In this case, the testatrix’s wishes had already been thwarted. She appointed the partners of Webb Parry and the defendant as her personal representatives. I infer that she was looking for a balance of professional and family input. That has not transpired. Accordingly, it seems to me that this is a less important consideration in this case than it might be in others.

[64]      In the end, the view I have reached is that this is a case in which it would be expedient and in the interests of justice to make an order removing the defendant as the executrix and trustee of the estate. In doing so, I acknowledge again that the defendant feels a strong sense of responsibility to see the administration of the estate to a conclusion. However, it does not appear that it is in the interests of the estate and the beneficiaries (including the defendant herself) that she continue to shoulder that burden. Framing my conclusion in the terms required in a summary judgment application, the plaintiff has satisfied me that there is no arguable basis upon which the defendant could invite the Court to exercise its discretion against her removal. The considerations that have most influenced me in reaching the conclusion are:

(a)the delay in the administration of the late Mrs Stewart’s estate since the defendant obtained an order granting her probate in relation to the same;

(b)the apparent inability of the defendant to appreciate the nature of her fiduciary obligation to administer the estate in the interests of the beneficiaries;

(c)the seeming inability of the defendant to act impartially;

(d)the inability of the defendant to recognise the plaintiff’s entitlement, as a half owner, to be involved in the sale of the Lawrence property;

(e)the high level of hostility between the defendant and the plaintiff which makes it hard to imagine that there will be any improvement in the situation in the future.

[65]      That leaves only the question of who the appointee should be. As already said, the plaintiff originally proposed himself, but has since reached the view that his appointment  would  be  inappropriate.  I  agree.   He  has  proposed  Mr  Mahony. Mr Mahony has sworn an affidavit indicating that he would accept appointment and setting out his background and experience.

[66]      Mr Mahony is well qualified as an experienced estate lawyer to assume responsibility for the administration of this estate, and the defendant did not suggest otherwise.

[67]      During the course of the hearing the defendant made it clear to me that she was not prepared to accept that Mr Mahony would be a suitable appointee. However, the only reason advanced by her was that Mr Mahony was being proposed by the plaintiff.

[68]      The defendant’s attitude to that is understandable in the circumstances, and I have considered whether the Court should direct the Registrar to identify a suitable appointee. However, in the end, I have concluded that that is unnecessary. The mere fact that Mr Mahony is being put forward by the plaintiff is not in my view reason to

decline to appoint him. I am satisfied that Mr Mahony will act independently and impartially as between all beneficiaries, as of course he will be bound to do.

[69]      I make an order for summary judgment in the terms set out in the prayer for relief in the plaintiff’s statement of claim.

[70]      As to costs, my preliminary view is that the proper course is to order that the parties’ costs be paid out of the estate. Such an order will of course apply differently as between the parties because the plaintiff is represented by solicitors and counsel whereas the defendant is acting for herself meaning that she can only claim out-of-pocket expenses. However, I have not heard from the parties as to costs, and therefore reserve these. If they cannot be resolved by agreement — as I would expect

— then the parties may file and serve memoranda in the usual way.

Associate Judge Johnston

Solicitors:

Batt Law, Masterton for Plaintiff