Tata v Abrams
[2022] NZHC 1554
•1 July 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2021-404-1850
[2022] NZHC 1554
UNDER Part 18 of the High Court Rules 2016 and the Trusts Act 2019 IN THE MATTER
of the Estate of Violet Aotearoa Te Waipounamu Tata
BETWEEN
REGINALD RAURETI TATA
Plaintiff
AND
DONNA DOREEN MATEKINO ABRAMS
Defendant
Hearing: 16 March 2022 Appearances:
S E Wroe for Plaintiff
C Smith for Defendant in her Personal Capacity
D Horton for Defendant in her capacity as administator of estateJudgment:
1 July 2022
JUDGMENT OF DUFFY J
This judgment was delivered by me on 1 July 2022 at 4.00 pm pursuant to
Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Solicitors/Counsel:
Mac & Co, Auckland
Rhonda Evans, Avondale Turner Hopkins, Auckland S Wroe, Auckland
A R Gilchrist, Auckland C G Smith, Auckland
TATA v ABRAMS [2022] NZHC 1554 [1 July 2022]
[1] This matter concerns the estate of the late Ms Violet Aotearoa Te Waiponamu Tata (Ms Tata). Mr Tata, the plaintiff, and Ms Abrams, the defendant, are siblings and children of Ms Tata. They are both beneficiaries of the estate. Ms Abrams is the sole administrator and trustee.
[2]Mr Tata makes an interlocutory application1 to the Court for orders that:
(a)Ms Abrams, be removed as administrator and trustee of Ms Tata’s estate;
(b)Mr Tata be appointed as administrator and trustee of Ms Tata’s estate; and
(c)Costs relating to this application be payable by Ms Abrams from her share of the estate.
Background
[3] By will dated 30 September 2005 Ms Tata appointed two of her daughters as administrators: being Ms Abrams and Judy Kaka. Ms Tata died on 19 March 2008. Probate was granted to Ms Kaka and Ms Abrams on 24 April 2008. Ms Abrams and Ms Kaka were jointly responsible for managing the estate from their mother’s death in 2008 until 2016 when Ms Kaka died. Since 2016, Ms Abrams has been the sole administrator.
[4] The estate’s only asset is a residential property at 41 Golf Road, New Lynn (the Golf Road property).
[5] In her will Ms Tata left her disabled son Tony Tata a life interest the Golf Road property. He died in August 2019. Later in August 2019 there was a meeting of whānau to discuss what should happen to the property. Some wanted it sold, others wanted it to stay in the family and provide a home for family members in need. For a
1 The application is made in reliance on r 7.19 of the High Court Rules 2016; ss 112 and 119 of the Trusts Act 2019; Nyhoff v Atkins [2021] NZHC 2238; and Taylor (as trustees of the Taylor Family Trust) v Taylor [2021] NZHC 992.
time one of Ms Tata’s granddaughters occupied the property and there is a dispute over whether she should have paid rent or not.
[6] In September 2019 Ms Abrams and Mr Tata met with real estate agents who advised the property could fetch between $1,000,000 and $1,050,000. In October 2019 Mr Tata obtained legal advice. In April 2020 the deceased’s granddaughter Bridget Ahern offered to buy the property for $1 million.
[7] On 31 November 2020 Ms Abrams entered in a sale and purchase agreement to sell the property to her son Joseph George for the sum of $760,000. The sale proceeded. Mr George borrowed funds secured by mortgage registered against the Golf Road property.
[8] The substantive proceeding is brought by Mr Tata against Ms Abrams. It seeks a review of this sale of the Golf Road property to Mr George.2 Mr Tata alleges that the property was sold at a price significantly below market value. Mr Tata also brings a second cause of action against Ms Abrams for breach of fiduciary duty. The substantive proceeding is yet to be heard and no trial date has been allocated.
[9] The law firm that currently holds the estate’s funds, David Dominic Rice, sought to interplead under Rule 4.58 of the High Court Rules 2016, for a direction as to where it should pay the funds, and full indemnity recovery of its costs. That matter was heard on 10 March 2022.
Law
[10]Section 21(1) of the Administration Act 1969 provides:
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 plaintiff seeks review of the sale under ss 126 and 127 of the Trusts Act 2019.
[11] There is a parallel power to remove trustees in s 112 of the Trusts Act 2019 if it is necessary to desirable to do so. Under the Trusts Act 2019 there is consideration as to whether the trustee has failed, or is failing, in their duties. Similar considerations apply under the Administration Act 1969 which considers whether the estate is being properly administered. Both parties agree that there is no real difference between “desirable” and “expedient” for the purposes of the plaintiff’s application.
[12] The general principles applicable to this application were set out by the Court of Appeal in Tod v Tod:3
(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 or 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)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 or 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.
Plaintiff’s submissions
[13] Mr Tata submits that it is expedient for Ms Abrams to be removed as the administrator while the substantive proceedings are underway and investigations
3 Tod v Tod [2017] NZCA 501, [2017] 2 NZLR 145 at [22].
completed. He submits that it is not appropriate for Ms Abrams to remain administrator given her conflict of interest, namely that the subject of review in the substantive proceeding, the property, is owned by her son, Mr George. There is a suggestion she may have a partial interest in the property.
[14] Mr Tata submits that there are reasonable grounds to believe that Ms Abrams has not acted in the best interests of the beneficiaries as the main asset of the estate, the Golf Road property, has been sold to Ms Abram’s son, Mr George, for significant under-value. He says Ms Abrams did not inform or consult all of the beneficiaries prior to her decision to sell the property to her son. Additionally he says Ms Abrams did not inform or consult all of the beneficiaries prior to her decision to gift $300,000 to her son. Ms Abrams relies on a decision she says was reached at a meeting on 14 August 2019. Mr Tata contends this meeting was not attended by all beneficiaries.
[15] Further, Mr Tata contends Ms Abrams did not seek legal advice in relation to her role as administrator and relied on an online search. When she did obtain legal advice from Mike Lucas Law, she was advised to arrange for a Deed of Family Arrangement in relation to the sale of the property to Mr George. However, she did not follow that advice and no Deed of Family Arrangement was made prior to the sale. Ms Abrams reports that on receiving correspondence from Mr Tata’s lawyer she felt compelled to expedite the sale, rather than conversing with Mr Tata’s lawyer or instructing Mike Lucas Law to do so. Mr Tata says this conduct means that Ms Abrams has not been properly administering the estate.
[16] Mr Tata has further concerns that Ms Abrams has not responded promptly or at all to queries raised by him in his capacity as a concerned beneficiary and has not taken adequate steps to engage solicitors to act in the best interests of the estate. Mr Tata also points to Ms Abrams allegedly failing follow through with her stated intention of having a family meeting in 2020 and failing to appoint a replacement for Ms Kaka when she died in 2016, despite Ms Christina Tai offering to take on the role. Ms Tai remains willing to be an administrator.
[17] Mr Tata alleges that Ms Abram’s ability to properly administer the estate may be affected by her stroke. Ms Abrams has self-reported memory problems.
[18] Mr Tata submits that although the expressed views of the other beneficiaries may not amount to hostility, there is mistrust and concern among the Tata and Tai families. He submits that while he does not have to prove misconduct or breach of trust, there is a prima facie case that this has occurred. Mr Tata advises he has the support of many of the other beneficiaries in his application to replace Ms Abrams, as well as on the substantive proceeding, and claims Ms Abrams has support from only one beneficiary, Mr Fred Tai. Mr Tai has been receiving rental income without keeping proper records, therefore it is in his interest for Ms Abrams to remain administrator.
[19] Mr Tata submits the following in support of his application to appoint himself as trustee and administrator in place of Ms Abrams:
(a)Mr Tata has the support and confidence of a significant number of the beneficiaries;
(b)Mr Tata will ensure that the estate has solicitors appointed to represent it in the substantive proceedings to review the sale of the property to Ms Abram’s son, Mr George; and
(c)Mr Tata will act transparently, fairly and in the best interests of all beneficiaries.
[20] Mr Tata has proposed taking on the role of administrator under the guidance of a lawyer. He has also considered the possibility of appointing a solicitor as independent trustee in order to allay Ms Abram’s concerns that Mr Tata intends to take on the role only to advance his own interests. However he contends that he is advancing his own interests regarding the review of the sale of the property only insofar as he believes the property should be sold at market value in order to maximise the return to all beneficiaries, rather than preferring Ms Abram’s family.
[21] Finally Mr Tata says that it was not his mother’s intention that Ms Abrams have sole responsibility for administration of her estate. Ms Tata wanted a representative from each side of the family (Tata and Tai) as administrators.
Defendant’s submissions
[22] Ms Abrams submits that she should not be removed as administrator of the estate. It is not expedient for the defendant to be removed as administrator and be replaced with the plaintiff, or anyone else. The estate is being properly administered, and no prejudice will be caused to the beneficiaries by the defendant remaining as administrator.
[23]Ms Abrams emphasises the Court of Appeal’s comment in Tod v Tod that:4
the mere existence of a conflict of interest does not mean it will be expedient to remove an executor – the conflict must actually prejudice the beneficiaries’ welfare or undermine the executor’s ability to perform his or her duties as administrator.
[24] Ms Abrams says she has appropriately managed any conflict of interest in this matter by ensuring she is separately represented in her two capacities. She further refers to Howarth v Howarth in which Associate Judge Smith declined to remove the defendant as executor on application for summary judgment as there were conflicts of evidence on important matters of fact that needed to be addressed at trial.5
[25] Ms Abrams submits that Mr Tata’s application to remove her as administrator is premature because it predominantly rests on his view that Ms Abrams has breached her duties in selling the property to her son at below market value, and that she is therefore unsuitable to remain as administrator. It also relies on other allegations which involve contested evidence. Whether he is correct about the breaches or not will only be decided at trial. In Howarth Associate Judge Smith also commented that consideration of whether any conflict of interest or hostility between parties risked prejudicing the plaintiff’s interests was a matter better assessed at trial when all the evidence is before the Court and the Judge is able to assess the level of hostility between parties, and any related prejudice.
[26] Notwithstanding the above submission, Ms Abrams responds to Mr Tata’s contentions as follows:
4 Tod v Tod [2017] NZCA 501, [2017] 2 NZLR 145 at [27(c)].
5 Howarth v Howarth [2019] NZHC 898.
[27] Notes from a family meeting held on 22 October 2018 refer to the property as a papakāinga. Papakāinga denotes that the property was, and is, seen as a special place where whānau can meet, and those who need to can stay, rather than there being emphasis on maintaining the property to a high standard. Ms Abrams does not accept that the property actually generated an income from tenants. According to Mr Tata, the “going rate” was $125 per week. However, it is not clear whether this was in fact paid on a regular basis. There appears to have been general acceptance that all beneficiaries, and in particular, whānau tenants, were responsible for maintaining the property. Further, the nature of the property explains why none of the beneficiaries took the defendant “to task” about an account of rent paid, maintenance expenditure, or the state of the property.
[28] After Mr Anthony Tata died, Ms Abrams called a meeting, the purpose of which was to attempt to reach consensus about whether to sell the property or not. A transcript from the meeting shows that it was decided that the “living siblings”, that is, Ms Tata’s children (except for Mr Mervyn James Tata), should be entitled to vote on and decide whether the property should be sold. Mr Tata is a living sibling. The living siblings decided in favour of selling the property. It was also agreed that the ability to purchase the property should first be offered to whānau members, and that whānau members would not be expected to pay full market value. Ms Abrams submits that Mr Tata was instrumental in this decision-making process, and that all attendees, including Mr Tata, agreed that only the living siblings should make the decision, not all beneficiaries of the estate. Further, if Ms Abrams subsequently committed a breach of trust in selling the property to Mr George (a matter which will not be known until the substantive hearing), she submits that this was in part at Mr Tata’s and various other beneficiaries’ instigation.
[29] Mr Tata twice offered to purchase the property for $750,000, in approximately August and September 2019. Ms Abrams submits that she tried multiple times to contact Mr Tata, as did Mr Frederick Tata, but neither could reach him. Mr Tata admits that he did not return Mr Frederick Tata’s calls. Ms Abrams submits that had the property been sold to Mr Tata, the present proceedings would not exist.
[30] Mr George purchased the property for $760,000. The sale and purchase agreement is dated 31 November 2021. The capital value of the property at the time of sale was $1,050,000. Ms Abrams submits that in selling the property to her son she was doing what the living siblings had decided at the 14 August 2019 meeting, and therefore there was no need for further consultation.
[31] Ms Abrams contends that Mr Tata’s submission that the money paid by Mr George to purchase the property included a $300,000 gift from the estate to Mr George is incorrect. There was in fact no gift. Mr George’s mortgage broker required gifting documentation for the purposes of lending. Ms Abrams acknowledges that this will likely require investigation in the substantive hearing. However, for the purposes of this interlocutory application the suggestion that she sought to gift her son $300,000 from the estate is strenuously denied. Further, the balance of estate funds held by David Rice & Associates confirms that there was no gift.
[32] Ms Abrams submits that rather than not following legal advice to enter into a Deed of Family Arrangement, she did not see the need to enter into a Deed of Family Arrangement because she was doing what she believed was agreed to at the 14 August 2019 meeting.
[33] Ms Abrams does not accept that there remains many things to be done for the proper administration of the estate, as Mr Tata alleges. With the exception of potentially collecting outstanding rent from Christina Tai, Ms Abrams is not aware of anything else that is required to be done regarding the estate until after the substantive proceedings have been decided. Ms Tai accepts that she has been asked to pay rent and has not done so. Ms Abrams submits that any evidence given by Ms Tai be disregarded on the grounds that she does not have the requisite clean hands to be heard in a court of equity.
[34] Ms Abrams denies any assertions that she has failed in her duties, not responded promptly to Mr Tata’s enquires, or failed to take steps to engage a solicitor. She disputes the plaintiff’s submission that he has support of eight of the 13 shares of the estate (including his own). Further, there is no undue or overt hostility between Ms Abrams and the beneficiaries.
[35] Ms Abrams submits that her suffering a stroke is not a ground for removal and incapacity does not form part of Mr Tata’s case against Ms Abrams. Any inference that Ms Abrams is not “up to the task” should be disregarded.
[36] Ms Abrams emphasises that her late mother desired that Ms Abrams take on the role as administrator. Ms Abrams also submits that it is inappropriate to remove her when the administration of the estate is almost complete, referring to obiter in Kellerman v Kellerman Thornton.6
[37] In relation to Mr Tata’s application to have himself appointed, Ms Abrams is concerned that Mr Tata has an ulterior motive. She says his main objective in issuing the substantive proceedings is to try and get a greater share of the estate for himself. If he had managed to buy the property, he obviously would not have an issue. For this reason Ms Abrams opposes Mr Tata being appointed administrator. She also opposes an independent trustee being appointed as administrator.
Discussion
[38] It is clear from the above outline of the parties’ arguments that these are fact specific and much is disputed. Mr Tata contends, inter alia, that Ms Abrams cannot perform as administrator of the estate given the allegations he makes against her in this proceeding. On one view her actions in selling the Golf Road property to her son at an alleged undervalue may well be a breach of trust and of the fiduciary duty she owes to the beneficiaries of the estate. Put shortly Mr Tata contends that as a result of her actions Ms Abrams is conflicted. However, whether she is conflicted in this way depends very much on whether Mr Tata can prove the allegations he makes against Ms Abrams. That is something that cannot be decided until the substantive hearing of this proceeding.
[39] Ms Abrams contends that her actions were taken to achieve the preservation of the Golf Road property as papakāinga. In this regard she contends she has been balancing her obligations as administrator with a desire on the part of the affected whānau to see the Golf Road property continue to be used as papakāinga for the benefit
6 Kellerman v Kellerman Thornton [2020] NZHC 2297.
of the whānau, particularly those in need. If Ms Abrams has done no more than attempt to achieve an outcome consistent with Māori perceptions and wishes of how a whānau should interact within the context of Pākehā law, as it relates to the administration of estates, this may go some way to explain actions that otherwise suggest a breach of trust and a breach of fiduciary duty. For example she says she sold the Golf Road property to her son because she was advised should could not sell it to herself and she was looking or a way to keep the property within the whānau. Whether these arguments are accepted must also wait until a decision on the substantive hearing.
[40] Accordingly, whether Ms Abrams should be removed as administrator at an interim stage in this proceeding is not clear cut. The context is riddled with factual disputes which cannot be determined in an interlocutory application.
[41] Nevertheless, I accept that the allegations and the fact Ms Abrams is a defendant in this proceeding may at times make it difficult for her to carry out the role of sole administrator of the estate. The difficulty is mainly because as sole administrator she cannot on particular occasions when a conflict becomes evident disqualify herself as administrator because there is no-one else who can perform this role.
[42] Further, Mr Tata’s suggestion that he should be appointed administrator also carries potential conflict of interest issues. Mr Tata is the plaintiff in this proceeding. There is the potential for conflict of interest if he is appointed administrator. For example, he may then for his own purpose seek to join the estate as plaintiff in the claims be brings against Ms Abrams.
[43] Ms Abrams has sought to manage the potential conflict of interest by using two sets of lawyers, one for her as administrator and the other as adviser to her in her personal capacity. However, lawyers cannot stop a client from acting in a conflicted way. I do not consider that this stratagem works either for Ms Abrams or for Mr Tata were he to adopt it as a remedy for dealing with potential conflicts of interest.
[44] One way forward is to leave Ms Abrams as administrator and to appoint two additional administrators: one being Mr Tata and the other being Christina Tai.
[45] First, the presence of several administrators is consistent with the deceased will maker’s wishes. Second, on occasions where the involvement of both Ms Abrams and Mr Tata as plaintiff and defendant in this proceeding does not create a conflict of interest each will be able to participate with Ms Tai in exercising the role of administrator. When conflicts do arise each can disqualify him or herself from acting as an administrator, which will then leave the decision making role to Ms Tai.
[46] Ms Tai is a member of the whānau who was prepared to act as administrator before. I consider it better for this whānau if a member of the whānau who is not actively engaged in this proceeding is also appointed administrator. The alternative would be a person independent of the whānau and no such person has been identified. It may be that some respected person from the hapū could be appointed administrator. Alternatively it could be a lawyer familiar with Māori custom as well as Pākehā law. However, it is for the parties and other beneficiaries to identify such a person for the Court.
[47] If the arrangement of three administrators proves unworkable the Court will then have to look at appointing someone independent to act as administrator.
Result
[48] The application for an order removing Ms Abrams as administrator and trustee is declined.
[49] Reginald Tata and Christina Tai are appointed as administrators and trustees of the estate in addition to Ms Abrams.
[50] Each of the opposing parties has enjoyed a measure of success. Leave is reserved to the parties to file memoranda on costs should they wish to do so. The alternative is for costs to be reserved until the substantive hearing of the proceeding, at which time the Court will be better placed to determine whether costs should be borne by the parties in their personal capacities or be paid from the estate.
Duffy J
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