Sunde v Sunde

[2019] NZHC 3056

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-000768

[2019] NZHC 3056

BETWEEN

ROY MELVIN SUNDE

First Plaintiff

MARINA ANNE SUNDE
Second Plaintiff

ANNE VERA SUNDE
Third Plaintiff

ROY MELVIN SUNDE as executor of the estate of LEO ZANE SUNDE
Fourth Plaintiff

AND

LEO ZANE SUNDE, ANNE VERA SUNDE, ROY MELVIN SUNDE, KEVIN PAUL SUNDE and MARINA ANNE

SUNDE as trustees of the LEROY TRUST Defendants

Hearing:

12 November 2019

Further submissions received 13 and 15 November 2019

Appearances:

J Cundy for R Sunde First Plaintiff

P Moodley for R Sunde as Executor of the Estate of Leo Sunde (Fourth Plaintiff)
J R Wain for K Sunde, Fourth named Defendant

Judgment:

22 November 2019

JUDGMENT (NO 2) OF ASSOCIATE JUDGE P J ANDREW

SUNDE & ORS v SUNDE & ORS [2019] NZHC 3056 [22 November 2019]

Introduction

[1]        This is a summary judgment proceeding which was adjourned pursuant to my judgment of 29 October 2018 (Judgment No 1).1

[2]The critical issue to determine is:

(a)Whether summary judgment should now be entered in favour of the estate of Leo Sunde (the fourth plaintiff) against the trustees of the Leroy Trust (the defendants); or

(b)Whether the summary judgment application should be further adjourned pending Kevin Sunde’s (one of the named trustees) application to the Family Court under s 103 of the Protection of Personal and Property Rights Act 1998 (PPPRA).

[3]Kevin is the only trustee who has opposed Leo’s claim.

Background

[4]        In Judgment No 1, I concluded that Leo, as plaintiff, had established that Kevin, as defendant, had no defence to the application for summary judgment. However, in the exercise of my discretion, I determined that the summary judgment proceedings should be adjourned to enable:

(a)Kevin to pursue his s 103 PPPRA claim challenging Roy Sunde’s (the first plaintiff and executor of Leo’s estate) exercise of his power of attorney for Leo; and

(b)To give the Sunde family an opportunity to meet and mediate with a view to trying to resolve the key outstanding issues between them.

[5]Since my judgment of 29 October 2018:

1      Sunde v Sunde [2018] NZHC 2788.

(a)The parties have attempted, unsuccessfully, to mediate and resolve the dispute.

(b)Leo has passed away (21 May 2019).

(c)Kevin’s application before the Family Court under s 103 of the PPPRA remains unresolved.

(d)Probate of Leo’s will has been granted and Roy, as executor, is obliged under the will to make demand for the debt owing by the Leroy Trust.

(e)Kevin had initially lodged a caveat against Leo’s estate but failed to demonstrate good cause as to why Roy’s application for an order nisi for the grant of probate should not be granted. There thus remains no valid challenge to the will.

Order for substitution of fourth plaintiff

[6]        By consent, I order, pursuant to rr 4.50 and 4.52 of the High Court Rules 2016 that Roy Melvin Sunde, as executor of the estate of Leo Sunde, becomes the fourth plaintiff in substitution for Leo Sunde, who has passed away.

Analysis and decision

[7]        Kevin advances three reasons for a further adjournment of the summary judgment application:

(a)Kevin’s Family Court application should be determined before summary judgment is entered in favour of the estate;

(b)Roy, as executor, needs to make a separate demand for payment of the debt before summary judgment can be entered; and

(c)Summary judgment should not be entered because the Leroy Trust will soon be able to pay its debt to the estate and judgment is simply not necessary.

[8]I address each in turn.

Kevin’s Family Court application

[9]        There is obvious force and merit to the submission of Mr Cundy, for Roy, that Kevin’s challenge in the Family Court proceeding is confined to the decision made on 13 March 2018 by Roy, as Leo’s attorney, to seek payment of the principal and interest owing to Leo by the Leroy Trust and that those proceedings will not determine whether the Leroy Trust is liable to pay interest pursuant to the interest demands made by Leo, or on his behalf, in each of the 2016, 2017, 2018 and 2019 years. On the face of the application to the Family Court, Kevin has not sought review of those interest demands. Likewise, there is no challenge to Leo’s capacity.

[10]      Mr Wain, for Kevin, contends that the demand at issue in the Family Court comprises both principal and interest and he relies upon the specific detail of the letter of demand dated 13 March 2018.

[11]      It may be that the application to the Family Court needs to be amended to make clear the scope of the challenge to the decisions made by Roy as attorney. However, even if I were to accept that the Family Court challenge might determine that the demand for both principal and interest (at least some of it) was in breach of the PPPRA, I do not regard that as a basis for any further adjournment of these proceedings.

[12]      Even if the Family Court decided that the decision made on 13 March 2019 was contrary to Leo’s interests and made for the attorney’s own benefit, the estate would be entitled to enforce its rights under the Deed of Acknowledgement of Debt and the interest demands. Indeed, under the terms of the will, Roy, as executor, is required to seek repayment of the trust’s debt to Leo’s estate, and Kevin, despite having had the opportunity to challenge the will, ultimately did not do so.

[13]      In any event, the Leroy Trust and the parties all appear to have access to substantial funds and if, as a result of a successful application by Kevin to the Family Court, some adjustment was required, it appears that that outcome could be accommodated without any real difficulty.

The need to make a separate demand

[14]      I reject the submission of Mr Wain that the estate is only entitled to judgment against the trust if Roy, as executor, makes a further demand for repayment of the debt.

[15]      Roy, as executor, has demanded repayment by adopting and pursuing Leo’s claim in this proceeding. I find that it is no defence to the executor’s claim for the trustees to now say that there has been no demand for repayment. This proceeding is a demand. Furthermore, in any event, as Mr Cundy submitted, Roy, as executor, has ratified the prior actions of Leo’s attorney in making the demand for repayment and issuing the proceeding.2 An executor is able to ratify the actions taken by the deceased’s agent prior to the grant of probate.3

The financial position of the Leroy Trust

[16]      Mr Wain contended that the relevance of the recent transactions involving sales of trust property is that it demonstrates that the trust now has sufficient monies to satisfy a simple demand from the executor for payment of the principal sum to Leo’s estate. The “consequence of that position” is, so it is contended, that a further adjournment to allow Kevin’s Family Court application to proceed would not unduly prejudice the estate. It is said that the principal sum is available to Leo’s estate upon demand by the executor under cl 3.1 of Leo’s will.

[17]      I have some difficulty in understanding that submission, but in any event I do not see the utility in requiring, outside of these proceedings, a fresh and formal demand by Roy, as executor, upon the trust and for payment of the principal. That is no defence or reason why judgment should not be entered – and issues regarding the ability of the Leroy Trust to satisfy its debts are matters between the trustees.

2      Peter Watts and FMB Reynolds (eds) Bowstead and Reynolds on Agency (21st ed, Sweet & Maxwell, London, 2018) at [2-054]: “Every unauthorised act, whether lawful or unlawful, which is capable of being done by means of an agent (except an act which is in its inception void) is capable of ratification by the person in whose name or on whose behalf it was purportedly done.”

3      At [2-088(4)].

Conclusion

[18]      In viewing all matters in the round, I conclude that summary judgment should now be entered. In Judgment No 1, I did of course conclude that Leo, as plaintiff, had established that the defendant, Kevin, had no defence to his application for summary judgment. And, in exercising my discretion to adjourn the proceedings, I extended some indulgence to Kevin, recognising not only that he should be given a chance to pursue his s 103 PPPRA claim, but also (and this should not be overlooked) to give the Sunde family an opportunity to meet and to mediate.

[19]      The opportunity to mediate was taken up but regrettably was not successful. It now falls away as a reason to grant a further adjournment and, for reasons given above, I do not now see the s 103 PPPRA application as a reason for declining to enter summary judgment.

[20]      I also note that this litigation has now been going on for some time, including an unsuccessful appeal by Kevin to the Court of Appeal on the question of costs. As I see matters, there is a need for finality.

Result

[21]      I find there is no basis for a further adjournment of these proceedings and that summary judgment should now be entered in favour of the fourth plaintiff, Roy Sunde, as executor for the estate of Leo Sunde.

[22]      I enter summary judgment in favour of the fourth plaintiff, Roy Sunde, as executor for the estate of Leo Sunde, and against the defendants (the trustees of the Leroy Trust) in the sum of $3,021,012 being:

(a)principal of $2,360,173; and

(b)interest of $165,212.11 for each  of  the  12-month  periods  ending  15 February  2016,  15  February   2017,   15   February   2018   and 15 February 2019 (being total interest of $660,848.44).4

4      This is based on the joint memorandum of counsel dated 27 September 2019.

[23]      As to the question of costs in relation to these proceedings, I am of the preliminary view that there should be no costs in relation to the first judgment (both parties had a measure of success) but in relation to this second judgment, that Kevin should pay costs on a 2B basis to Roy, as executor, and that such costs should be paid by Kevin personally and not be drawn down on the trust funds.5 If the parties cannot agree on costs, then memoranda are to be filed within 14 days.

Associate Judge P J Andrew

5      Sunde v Sunde [2019] NZCA 552.