Tod v Tod
[2015] NZCA 501
•17 November 2015 at 3.30 pm
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| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA204/2015 [2015] NZCA 501 |
| BETWEEN | JULIA ORETI TOD, ALISTAIR MICHAEL TOD, MARK ALEXANDER TOD AND MATTHEW JOHN TOD |
| AND | SHEILA HOLMS TOD SUED AS EXECUTOR AND TRUSTEE OF THE WILL OF THE LATE ALEXANDER MICHAEL TOD |
| Court: | Wild, Winkelmann and Kós JJ |
Counsel: | G L Harrison for Appellants |
Judgment: (On the papers) | 17 November 2015 at 3.30 pm |
JUDGMENT OF THE COURT
AThe application, treated as one under r 35(6)(d) of the Court of Appeal (Civil) Rules 2005 for an order deferring the date by which security for costs must be paid, and under r 43(3) for an extension of time, is declined.
BThe appellants are to pay the respondent’s costs as for an application for leave to appeal on a band A basis with usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Wild J)
Introduction
This judgment deals with an interlocutory application filed by the appellants on 5 August 2015. That application sought orders:
(1)extending the time for fixing the security for costs in respect of this appeal to 21 August 2015;
(2)then fixing security for costs, now, at $5,880.00;
(3)fixing a date by which security is to be paid[.]
In fact, on the day the appeal was filed, 21 April 2015, security for costs was fixed by the Court at $5,880. Counsel for the appellants was advised of that by letter dated 28 April.
Counsel for the appellants, Mr Harrison, candidly accepts the error in relation to security for costs was his.
With counsel’s agreement, we are treating the appellants’ application of 5 August as one made under r 35(6)(d) of the Court of Appeal (Civil) Rules 2005, for an order deferring the date by which security for costs must be paid, and also as an application under r 43(3) for an extension of time for the appellants to apply for the allocation of a hearing date and to file the case on appeal.
In agreeing to the application being treated in the manner just set out, Ms Fisher QC makes it clear the respondent is not abandoning the following point Ms Fisher made in a memorandum she filed on 24 August in opposition to the appellants’ 5 August application:
9.If the appellants are seeking an order under rule 35(6)(d) deferring the date by which security must be paid then the application must fail because, pursuant to rule 35(7)(a), such application must be filed and served within 20 working days of the notice of appeal being filed. That time has long since expired. If the appellants are seeking an extension of time for the filing of an application for the allocation of a hearing date then the respondent opposes this for the reasons set out below.
Chronology
Treated in the manner just outlined, the events relevant to the appellants’ application are these:
| Date (2015) | Event |
| 21 April | Appeal filed. It is against a judgment delivered by Brown J in the High Court at Tauranga on 23 March 2015, following a hearing on 31 October 2014 with further written submissions in the interim.[1] |
| 28 April | Appellants’ counsel advised security had been fixed at $5,880 and must be given within 20 working days of the filing of the notice on appeal. |
| 20 July | Appellants apply for a (half-day) fixture and file their case on appeal. |
| 21 July | Court acknowledges receipt of application for a fixture and the fixture fee (of $2,700). |
| 27 July | Court advises appellants their appeal: a) cannot be progressed until security for costs is paid, and the Court therefore ought not to have accepted the application for a fixture on 21 July. b) was deemed abandoned under r 43(1) as of 22 July. If appellants wish to pursue appeal they need to seek an extension of time pursuant to r 43(3). |
| 5 August | Appellants file interlocutory application seeking the orders as to security for costs set out in [1] above. |
| 24 August | Counsel for respondent files memorandum pointing out that security has not been paid. If the application is treated as one under r 35(6)(d) then it is well out of time. If it is treated as an application under r 43(3) for an extension of time to apply for the allocation of a hearing date, then it should not be granted if well‑established principles are applied. In particular, the respondent opposes the application on the bases: (a) no adequate explanation has been provided for the appellants’ non-compliance with the rules of this Court; (b) she is prejudiced by the delay; and (c) the appeal has such little prospect of success that it should not be allowed to continue. |
| 2 September | In submissions filed by counsel for the appellants, counsel: · accepts the error in relation to security for costs was his; · takes issue with the assertion by counsel for the respondent that the proposed appeal lacks merit. |
[1]Tod v Tod [2015] NZHC 528, [2015] 3 NZLR 397.
Decision
Treating the application as one under r 35(6)(d)
If the application is treated as one under this rule, the appellants needed to make it to the Registrar (as opposed to the Court) within 20 working days after they filed their notice of appeal on 21 April. That is, they needed to make it by 19 May. The application was not made until 5 August — some 11 weeks out of time. Given that the explanation for this unfortunate delay is oversight on the part of appellants’ counsel, and given also counsel’s assurance that security will be paid within three working days of the application being granted, we would be prepared to extend time for the application under r 35(6)(d) and fix a new date by which security must be paid.
However, the appellants also require an extension of time under r 43(3) and we turn now to this.
Treating the application as one under r 43(3)
As this Court has routinely made clear, once r 43 is triggered an appellant is no longer able to appeal as of right but requires a favourable exercise of discretion by the Court.[2] Factors relevant to the exercise of that discretion include the reason why the appeal has not been prosecuted in a timely way and the merits of the proposed appeal.[3] After all, it is pointless to extend time for an appeal that is hopeless or is not at least “genuinely arguable”.
[2]For example, see Schmidt v Ebada Property Investments Ltd [2012] NZCA 452 at [7]; and Russell v Commissioner of Inland Revenue (2006) 22 NZTC 19,807 (CA) at [10].
[3]Court of Appeal (Civil) Rules 2005, r 43(2); Henderson v Official Assignee [2015] NZCA 104.
We have already explained the reasons why the appellants now need an extension of time. It is not their fault, but results from error on the part of their counsel. The Court is invariably reluctant to allow that situation to stand in the way of their bringing an otherwise meritorious appeal. It is only payment of security for costs to which they have not attended. They have filed the case on appeal and applied for a fixture. Further, the appeal is against a judgment delivered in March this year, so the overall delay in progressing the appeal is not great. Factoring in all these things, we do not consider the delay and the reasons for it should disqualify the appellants, if their appeal is meritorious.
The starting point in considering the merits of this appeal is the family situation that was before Brown J in the High Court, and the application with which the Judge was dealing.
The late Alexander Tod (Alec) had been happily married to the respondent Sheila Tod (Sheila) for 18 years before Alec died on 1 August 2013. Between them they had six children from previous marriages: Alec four; Sheila two.
Ten years before Alec died he and Sheila entered into an agreement under s 21 of the Property (Relationships) Act 1976 (the PRA). In evidence Sheila said this was Alec’s idea. The effect of the agreement and the new wills Alec and Sheila made contemporaneously was:
The estate of each partner was available to the surviving partner for his or her lifetime, both as to the income it earned and to the use of as much of the capital as was needed to maintain for the surviving partner the standard of living both partners had enjoyed during their joint lifetimes.
Upon the death of the surviving partner the remaining capital is to be distributed equally to the parties’ six children, with substitution.
A month before he died, Alec made a codicil appointing Sheila as his sole executrix and trustee.
The parties’ chief asset was a residential property at Athenree, which they had owned as joint tenants. This passed to Sheila by survivorship.
Alec’s four children were not happy with these provisions. They commenced a claim under the Family Protection Act 1955 in the Waihi Family Court. With a view to “retrieving” for Alec’s estate as much as they could for their family protection claim, the appellants applied to the High Court for an order under s 21 of the Administration Act 1969 removing Sheila as executrix of Alec’s estate and appointing the Public Trustee administrator in her stead. The plaintiffs’ (present appellants’) aim was then to have the new administrator apply for an order setting aside the agreement Alec and Sheila had made under s 21 of the PRA in 2006.
For reasons he explained in detail in his judgment, Brown J concluded that:[4]
[49] … a personal representative’s right to apply for an order under s 25(1)(a) [of the PRA] does not extend to include an entitlement to challenge a s 21 agreement. …
[4]Tod v Tod, above n 1.
In case that conclusion should be erroneous, the Judge then considered whether an alternative administrator should be appointed under s 21 of the Administration Act. The Judge pointed out that, because of the s 21 PRA agreement, s 78(1)(c) of the PRA gives priority to Sheila’s entitlement. Thus the plaintiffs’ wish was really to have a new administrator appointed to challenge the s 21 agreement. The Judge continued:
[51] … That would involve establishing the state of serious injustice which s 21J(1) requires. That is a more substantial threshold than the “serious injustice” threshold in s 88(2) as interpreted by the Court of Appeal in Whyman.[5]
[52] Having regard to the circumstances and terms of the agreement between Alec and Sheila and the terms of their wills, including the provision for the plaintiffs to participate in both estates in due course, I agree with Ms Fisher that realistically there is little prospect of a successful challenge to the s 21 agreement. Indeed I consider that the setting aside of the agreement would amount to a serious injustice to Sheila. Consequently I am not satisfied even on the Whyman approach that refusing leave under s 88(2) would cause serious injustice to the plaintiffs.
[53] In those circumstances I do not consider that it is expedient to remove Sheila as executrix and to visit potentially extensive litigation on this family. The application is declined accordingly. However, as Sheila proposed and in order to provide some comfort for the plaintiffs as to the maintenance of the capital of the estate, I make an order that John Healy be appointed as an additional administrator.
[5]Public Trust v Whyman [2005] 2 NZLR 696, [2005] NZFLR 433 (CA) (footnote added; original footnotes omitted).
In a memorandum she filed for the respondent on 3 September, Ms Fisher said this:
2.… there are two issues that arise in relation to the merit or otherwise of the proposed appeal:
(a)Whether the Judge was right to find that a personal representative does not have the right to challenge a s 21 agreement in light of s 87 of the Property (Relationships) Act 1976, and
(b)Whether his Honour was right to find that it would not be expedient to remove Mrs Tod as executor and replace her with the Public Trust.
3.The respondent accepts that the appeal against the decision on the jurisdiction point is not hopeless. The absence of merit relates to the second ground of appeal, which has no reasonable prospect of success … and which therefore militates against an extension of time being granted.
Ms Fisher’s concession in respect of issue (a) is a proper one. In his submissions filed on 2 September, Mr Harrison made the point that the judgment of Brown J under appeal, to counsel’s research, is the first time an administrator’s power to apply to set aside a s 21 PRA agreement has been considered by the High Court. Mr Harrison advised that he had been contacted by Mr Farmer QC, who was acting on a similar application, inquiring whether or not this appeal was proceeding. Mr Harrison’s point was that, if not in this appeal then in the case Mr Farmer is handling, that issue is likely to come to this Court.
We take a different view on the other issue — removal of Mrs Tod as executor. Section 21 of the Administration Act 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 place, on such terms and conditions in all respects as the court thinks fit.
…
In his judgment in Farquhar v Nunns, Heath J set out the principles counsel for the plaintiff submitted applied in that case.[6] We consider those principles have equal application here:[7]
(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)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 prejudicing the interests of the beneficiaries.
…
[6]Farquhar v Nunns [2013] NZHC 1670.
[7]At [13] (footnotes omitted).
There are numerous cases under s 21, including a number where the Court has removed an executor whose duty as executor conflicted with an interest as a substantial beneficiary. One example is Nawisielski v Nawisielski.[8] There, the defendant executrix had been left the whole of the deceased’s estate. In addition she had received, by survivorship, real property with a value of over $4 million. The plaintiff was the deceased’s son. He wanted an appropriately appointed executor to apply, pursuant to s 88(2) of the PRA, to bring a claim, in reliance on s 81 of that Act, pursuant to s 25(1) of the Act. As the Judge explained:[9]
The plaintiff’s intention is that if his father’s estate can be expanded that will provide a better basis for [the claim he had brought under] s 4 of the Family Protection Act 1955 …
[8]Nawisielski v Nawisielski [2014] NZHC 1547.
[9]At [13].
In those circumstances, Faire J took the view that the executrix would not bring the “impartial approach” and “even-handedness” an executor/trustee must apply to the interests of all beneficiaries of the estate.[10] Accordingly, he ordered the removal of the defendant as trustee and appointed a new one in her place.
[10]At [24].
The circumstances in Nawisielski obviously differ significantly from those here, and also from those considered by Heath J in Farquhar v Nunns.[11] Ms Farquhar had been married to the deceased for about nine years, until his death. She had received nothing of substance from his estate, which had a value of about $1.7 million. As a preliminary application in a proceeding in which she sought relief under the Family Protection Act and the Law Reform (Testamentary Promises) Act 1949, Ms Farquhar sought the removal of the two daughters the testator had appointed as his executors and trustees.
[11]Farquhar v Nunns, above n 6.
By his will, the executor had released Ms Farquhar from some debts she owed him and given her a right to occupy the former family home for a year. But the residue of the estate had gone to the two executor daughters. Heath J dismissed Ms Farquhar’s application to remove the two daughters as executors. The Judge said:
[38] I must respect the deceased’s choice of executors and trustees. His decision demonstrates that he trusted his daughters to fulfil the duties and functions cast on them by law. In that context, there is nothing in the evidence to suggest any misconduct on the part of either Ms Nunns or Ms Clarke, in their administration of the estate. It is clear that their task has been difficult. Yet, they appear to have undertaken it competently. Proper execution of the terms of the Will is not at risk.
Turning to the present application, we consider these are the important factors:
(a)The contractual and testamentary arrangements Sheila is administering are those instigated by Alec. The courts will not readily replace an executor selected by a deceased to manage his or her estate.[12]
(b)As Sheila pointed out in her evidence, the equal distribution of the joint estates to each of the parties’ six children favours Alec’s four children, at the expense of Sheila’s two daughters. This factor distinguishes the present case from Nawisielski v Nawisielski.
(c)Sheila’s attitude, if known, to the possibility of her being asked to apply to set aside the agreement made under s 21 of the PRA does not emerge from Brown J’s judgment. But there was nothing before Brown J to suggest Sheila had acted, or was acting, in other than an entirely proper and sensitive manner. 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.[13] There is no evidence of prejudice in this case.
[12]Farquhar v Nunns, above n 6; Hinde v Cranwell [2012] NZHC 63 at [27]; Crick v McIlraith [2012] NZHC 1290 at [19].
[13]Hunter v Hunter [1938] NZLR 520 (CA) at 530–531.
Weighing up those factors, we are firmly of the view that the appeal has no realistic prospect of success on issue (b). Thus, an extension of time to pursue issue (b) should not be granted. That remains the case, notwithstanding that Ms Fisher concedes the jurisdiction issue, issue (a), is reasonably arguable.
Result
For those reasons, the application, treated as one for an extension of time under r 35(6)(d) of the Court of Appeal (Civil) Rules for an order deferring the date by which security for costs must be paid, and under r 43(3) for an extension of time, is dismissed.
The appellants must pay the respondent’s costs as for an application for leave to appeal on a band A basis with usual disbursements. As this matter has been dealt with on the papers, that costs order does not include step 5 in Schedule 2, the allocation for an appearance at the hearing of a defended application.
Solicitors:
A P Frankovich, Auckland for Appellants
Harmos Horton Lusk, Auckland for Respondent
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