Van Goch v Van Goch
[2018] NZHC 2335
•6 September 2018
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2017-404-001946
[2018] NZHC 2335
BETWEEN SANDRA PETRONELLA VAN GOCH
Plaintiff
AND
JOHANNES MARINUS VAN GOCH as
executor of the estate of Maria Martina van Goch
First Defendant
HELEN WILHELMINA CATHERINA VAN
GOCH as executor of the estate of Maria Martina van Goch
Second Defendant
SANDRA PETRONELLA VAN GOCH as
executor of the estate of Maria Martina van Goch
Third Defendant
CHARLES GRAHAM MILLER
Fourth Defendant
Hearing: 16 April 2018 Appearances:
Sandra Grant and Stephen Laing for the Plaintiff and Third Defendant
Terrence Stapleton QC for the First and Second Defendant Bradley Cuff and Ryan Thompson for the Fourth Defendant
Judgment:
6 September 2018
JUDGMENT OF MOORE J
This judgment was delivered by me on 6 September 2018 at 11:00 am pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar Date:
VAN GOCH v VAN GOCH & ORS [2018] NZHC 2335 [6 September 2018]
Introduction
[1] This proceeding concerns the estate of Maria van Goch (“Maria”), who died in September 2016. It is worth at least $8 million. The plaintiff, Sandra van Goch (“Sandra”), the first defendant Johannes van Goch (“John”), and the second defendant Helen van Goch (“Helen”) are the three children of Maria, and the executors of her estate.1
[2] In the substantive proceeding, Sandra has applied for orders under the Family Protection Act 1955, the Law Reform (Testamentary Promises) Act 1949 and the Wills Act 2007. She asserts her mother was in cognitive decline and physically impaired at the time she signed her Will in 2012. She says that as a result her mother’s Will does not reflect her true testamentary intentions.
[3] According to John and Helen, Sandra only brought these proceedings after a protracted period during which she refused to co-operate with her fellow executors and made unreasonable demands of her siblings and the estate solicitor, who is the fourth defendant Charles Miller. He is a partner in the law firm known as Bell & Graham and currently represents the three executors. He opposes Sandra’s claim and denies her assertions regarding Maria’s testamentary capacity. John and Helen also oppose Sandra’s claim.
[4] In late 2016, Mr Miller discussed John and Helen’s concerns with a barrister, Murray McKechnie. This was almost a year before Sandra commenced her proceedings, on 23 August 2017. Mr McKechnie gave advice to Mr Miller between November 2016 and August 2017, and in May 2017 was instructed to act. Mr McKechnie prepared John and Helen’s statement of defence which was filed on 2 October 2017. He now represents the executors in the proceeding brought by Sandra.
1 Sandra is also the third defendant in this proceeding, in her capacity as executor.
This application
[5] This judgment resolves a number of interlocutory applications brought by the siblings. John and Helen apply for the removal of Sandra as an estate executrix on the basis that:
(a)by issuing her proceedings, Sandra has placed herself in a disqualifying position of conflict of interest; and/or
(b)events since Maria’s death further justify Sandra’s removal.
[6]Meanwhile, Sandra seeks orders:
(a)removing Mr Miller as solicitor for the estate on two bases; first that he will be a critical witness in Sandra’s proceedings and secondly he had a duty to cease acting when the executors were in dispute and could not give him unanimous instructions;
(b)directing Mr McKechnie to cease acting for John and Helen; he having previously acted for all three executors; and
(c)requiring Mr Miller to supply a copy of the estate file to Sandra.
[7] It is necessary to first set out the background to the present proceeding in some detail. I shall then address the issues in the same order as set out above.
Background2
[8] Maria and her husband, Johannes van Goch (“Johannes Snr”), were farmers in the South Waikato. The farm property covers 81 ha and is valued at approximately
$7,000,000 (“Tirau Farm”). It is the major asset in Maria’s estate, and was previously half owned by Maria and Johannes Snr in equal shares. In the years prior to Johannes Snr’s death, John ran the farming business. In addition to the Tirau Farm, Maria and Johannes Snr together owned a holiday home at Mt Maunganui, valued at between
2 The following is, except where noted, uncontentious background to the facts and issues in dispute.
$1,500,000 and $2,000,000. Their shared estate also includes various personal chattels which have not yet been valued.
[9] Johannes Snr died on 4 October 2011. Maria and John were appointed executors of his estate. Under his will, Maria received a life interest in the income of his estate. Following her death, the residual estate was to be divided equally between the three children. Sandra does not challenge Johannes Snr’s will.
[10] Maria’s final Will was made on 16 January 2012. In preparing it Mr Miller took instructions from Maria and witnessed her signature.
[11] On 20 November 2012 Maria was diagnosed with Alzheimer’s disease. Subsequently, all three children were made attorneys for Maria’s property, health and welfare. A key issue in dispute in the substantive proceeding is whether Maria was operating under any impairment at the time the Will was prepared and she executed it.
[12] Maria died on 8 September 2016. Almost immediately conflict and acrimony soured the relationship between her three children.
The contentious background
[13] Mr Miller says he was advised of Maria’s death the day she died. He sent the executors a letter the following day for the purpose of scheduling a meeting to discuss their legal obligations as executors. Bell & Graham is based in Matamata. John and Helen live near. Sandra is based in Auckland.
[14] A meeting with Mr Miller was scheduled for 25 November 2016. In advance Mr Miller requested specific personal details from each of the executors for the purpose of preparing the necessary probate documents. He also says that prior to the meeting he sent the executors his terms of engagement. Sandra says she did not agree to Mr Miller’s appointment. She also claims she never received any terms of engagement until 30 June 2017, some nine months after Mr Miller’s appointment.
[15] It was proposed that the probate documents would be signed at the 25 November 2016 meeting. However, Sandra did not provide the requested
information and refused to sign the documents. She told John and Helen that she would do so once they gave her a key to access Maria’s house. They said they would, but had not done so by the time of the meeting. Sandra says that at this meeting she raised her concerns about past issues with her parents’ farming accounts, and payments they had made to John. She also asked that the accounts be audited.
[16] Sandra claims that two days later, on 27 November 2016, Mr Miller instructed Mr McKechnie to advise the executors on how they should proceed given his concern that Sandra was unreasonably delaying signing the probate documents. She says she was not consulted over this; that Mr Miller and Mr McKechnie continued to communicate at least 10 times over the year in relation to his instructions from the executors.
[17] Mr McKechnie says he was phoned on 1 December 2016 by Mr Miller. They must have discussed Maria’s estate and Sandra’s perceived unreasonableness, because he replied by email the next day commenting it seemed Sandra was being entirely unreasonable and that there was no valid ground to oppose the grant of probate. He also suggested that Sandra be put on notice, and that if Sandra’s obduracy continued John and Helen could seek Sandra’s removal as an executor. They discussed matters again on 5 and 6 December 2016, but there was no further update from Mr Miller until 20 April 2017.
[18] In the intervening period, Mr Miller continued to work towards obtaining a grant of probate. The affidavit to lead grant of probate was executed by John and Helen on 12 December 2016. Sandra did not execute it until 23 January 2017. She says she was not able to attend Bell & Graham’s offices prior to Christmas. She thus signed the documents the day their offices reopened in the new year. Probate was then granted on 24 February 2017.
[19] On 7 March 2017 Mr Miller sought photo identification from Sandra, John and Helen to facilitate closure of the estate’s bank accounts, and to ensure that the ongoing expenses of the estate were met and creditors’ fees were avoided. A reminder was sent to Helen and Sandra on 16 March 2017. Further reminders were sent to Sandra, including one on 6 April 2017. On 11 April 2017 Sandra advised that she required the
audit of the farming accounts before further steps were taken, including providing the photo identification.
[20] Mr Miller responded by letter on 12 April 2017, again requesting the photo identification. He said:
“5.We have requested you to comply with your responsibility as a trustee in the timely administration of the Estate, which includes providing your photo ID to facilitate closure of bank accounts so that the estate has funds to meet any ongoing expenses such as the farm property at Tirau and the unit at the Reef Complex at Marine Parade, Mount Maunganui. In respect of the later (sic) we are told that there is likely to be a special levy issued by the Body Corporate for leaks in the building, which will have to be met by all members of the Body Corporate.
6.On 6 April 2017 we reminded you that in your Affidavit dated 23 January 2017 you swore on oath an Affidavit, which relevantly stated in paragraph 6 “We will faithfully execute the will of which probate is granted in accordance with the law.” This means proceeding promptly with the estate administration.
7.We note on 11 April 2017 you stated that you would not proceed with your obligations as a trustee in administering your mother’s estate until there was an audit undertaken of transactions in the past involving your mother’s or both your parents’ assets. In our submission, this is not a valid bar to your obligation to undertake timeously your obligations as a trustee along with your siblings in administering your mother’s estate. However, your siblings have agreed that an audit can occur as stated but on the basis that they approve the Auditor and that the estate administration proceeds without delay and is not conditional on the completion of the audit.
8.Given the above we have been instructed by your co-trustees to present you with an ultimatum, that if you do not provide a certified copy of your photo ID to us to facilitate progress with the estate administration and such continues for seven (7) days from the date hereof then your co-trustees will instruct us to apply to the High Court to have you removed as a trustee, in which event on that occurring, they would proceed to administer your mother’s estate without your involvement.
9.We advise accordingly and as stated in our telephone call today, you can seek independent legal advice from a Lawyer of your choice relative to this situation.”
[21] Sandra responded on 20 April 2017. She advised that she did not wish to delay the administration of her mother’s estate, but that she was in possession of financial records which evidenced transactions she believed needed to be properly addressed before any estate assets were distributed. She proposed a meeting between the
executors, and also requested financial information from the accountancy firm of Candy Gillespie which had undertaken the accounts work for John, Maria and Johannes Snr. Alan Candy of Candy Gillespie had sent John details about a loan from Maria and Johannes Snr to him on 7 December 2016, which Sandra says was not sent to her for a further five months. Sandra says that on 18 April 2017 Mr Candy told her that he would send her the last five years general ledgers and trial balances. She claims he did not do so.
[22] Mr Miller responded on 21 April 2017, advising that a date of 25 April 2017 had been set for a meeting between the relevant parties. He advised Sandra that his firm had been instructed by John and Helen that they would give her “one final opportunity to meet with them”, with Mr Miller and Mr Candy present.
[23] The meeting scheduled for 25 April 2017 went ahead as planned. Mr Candy and John acknowledged John had received a loan of approximately $200,000 from his parents. They added it had been repaid in 1995 together with $44,000 in interest. The current position was that he no longer owed any debt to his parents. Sandra provided no photo identification. She said she did not have her driver’s licence with her.
[24] Sandra provided a copy of her expired passport on 26 April 2017.3 Mr Miller responded the following day explaining that the expired passport was unacceptable:
“We conferred with your co-trustees John and Helen in your mother’s estate and they have instructed us to advise that if we have not received a certified true copy of both sides of your driver’s licence by 2:00 pm today we are to instruct Mr Murray McKechnie, Barrister, Rotorua to file and (sic) application in the High Court at Rotorua to have you removed as a trustee for failure to undertake your legal obligations as a trustee to administer the estate.”
[25] Mr Miller also unsuccessfully attempted to telephone Sandra that morning. On 20 April 2017, he had contacted Mr McKechnie to update him on developments. Mr McKechnie reiterated his advice of 2 December 2016. Mr Miller called Mr McKechnie again on 27 April 2017 to advise him he may be instructed in accordance with the email Mr Miller had sent to Sandra earlier that day.
3 The passport had expired three years earlier on 13 April 2014.
[26] Mr Miller and Mr McKechnie remained in touch through early May. In an email sent on 3 May 2017 Mr McKechnie described Sandra as “plainly being obstructive”. He commented that having received the file he had formed the view that “nowhere in the paperwork is there any record of what it is that she says has somehow been unlawful or disadvantaged her.”
[27] A brief respite arrived the same day. Sandra provided acceptable photo identification to Mr Miller, and a letter was forwarded to Westpac Bank seeking closure of the accounts. Mr Miller advised Mr McKechnie of this on 4 May 2017. He also advised that John and Helen had agreed to the appointment of an accountant to review the financial records with the assistance of Mr Candy. However, he added:
“We don’t doubt that there will be endless problems with Sandra throughout the estate administration and it may be inevitable that an application to the High Court occurs.”
[28] He also provided Mr McKechnie with information sought by him in his email of 3 May 2017. He concluded:
“We suggest that we defer the application to the Court pending receipt of funds from Westpac and a family conference at which you and Mr Candy would be invited to attend along with the writer.”
[29] These events caused delays in accessing the estate’s funds. As a consequence, John paid the ongoing expenses in order to avoid a claim by creditors for associated fees by 17 June 2017. These totalled $486,631.19. It was proposed that reimbursement from the estate would commence in late June. On 28 June 2017 Sandra told Mr Miller not to make these payments to John. She required any repayment be preceded by an historical audit of the financial transactions between John and his parents.
[30] Mr Miller discussed this with Mr McKechnie the same day, and after discussions with John and Helen, responded the following afternoon. That response by email included the following:
“5. We have been instructed by John and Helen to pay the accounts incurred by the estate immediately. Clearly some of these accounts would incur penalties if not paid i.e. Inland Revenue payment of
$30,000. Your co-trustees give you notice that any penalties incurred
as a result of your uncooperative attitude will be your responsibility and not theirs or the estate’s.
6.John and Helen have also instructed us to reimburse John for the accounts he has paid on behalf of the estate as audited by Candy Gillespie from the date of your mother’s death and we advise that we are proceeding on the basis of your co-trustees’ instructions to do this immediately.
…
9.Your cooperation from now on is sought by your co-trustees and us for the timely and efficient administration of your late mother’s estate and your co-trustees have instructed us to advise you that given your past attitude of delay, obstruction and prevarication, if such continues they will be constrained to make an application to the High Court to have you removed. A Barrister has been engaged should such become necessary.
10.If you wish you can call an urgent meeting of the trustees at our offices to discuss any perceived ongoing issues you have. If you require such please contact us to discuss a suitable date and time urgently.
11.Clearly if you have any ongoing issues or concerns we have already advised you that you should seek independent legal advice. However, be assured that your co-trustees are not prepared to put up with any further procrastination and delay in the administration of the estate.”
[31] Attached to this email was the letter of engagement which Mr Miller says he sent to Sandra, John and Helen on 8 September 2016. Sandra claims this was the first time she received it.
[32] Mr Miller authorised repayment following approval from John and Helen. He explained his decision in the following way:
“I believe acting as instructed by the plaintiff in this instance would have been nonsensical when considering the significant sum of money John volunteered to cover the Estate’s accounts.”
[33] On 4 July 2017 Sandra again asked Mr Candy to provide her with financial information. The same day she asked Mr Miller to send her all his correspondence between Helen, Westpac and Mr McKechnie.
[34] On 24 July 2017 Mr Miller answered with a lengthy email sent to Sandra. He observed that John and Helen continued to be frustrated by their sister’s inaction, which was stalling the timely administration of the estate. He outlined the basic
responsibilities of executors and in particular that their decisions should be unanimous. He catalogued the various occasions he claimed she had obstructed their ability to carry out their responsibilities, including delaying the signing of outstanding documentation. He went on:
“We have told you on numerous occasions that if you felt that you were unjustly treated by your parents, either during their lifetimes or pursuant to the provisions in their Wills then you should have sought independent legal advice, but it appears you have not done so and conversely have stalled and frustrated the estate administration resulting in substantial additional cost and wasted time for all involved.
…
You make regular unreasonable demands of your co-trustees, whereas you expect your co-trustees and our firm to pander to all your whims, whilst you do nothing to expedite the estate administration. In this regard we note that we asked you to provide us with three dates when you would be available to meet at our offices with your co-trustees to discuss ongoing matters to progress the estate administration. You have simply failed to respond to that request. …
Regrettably, we have to say that your co-trustees have advised that if you continue to disregard your obligations as a trustee by failing to return documents expeditiously and meet appropriate timetables and provide date and times that you can meet with your co-trustees to determine important matters in the estate then your co-trustees have instructed us again to warn you that they will be constrained to make an application to the High Court to have you removed as a trustee. The whole sorry history of the delay and procrastination would be provided to the High Court as evidence of your failure to comply with your legal obligations as a trustee.”
[35] The email concluded with a list of instructions received from John and Helen, which largely recited the above. In closing, Mr Miller referred to Sandra’s “paranoia” which “unjustifiably frustrated the timely and effective administration and has incurred substantial costs, which up until this time has been shared by your innocent co-trustees”.
[36] On 4 August 2017 Mr Miller sent a further email to Sandra. He reminded her of the need to sign and return outstanding documentation, being a Fonterra Shakemilker Agreement and a Bonus Bonds form. Mr Miller stated he had been instructed by John and Helen to demand that Sandra provide the signed documentation. He also repeated his request for her to provide three alternative dates
and times for a further meeting with the co-trustees and a valuer from Dunbar Sloane, who would value Maria’s chattels. He went on:
“Your co-trustees have instructed us to inform you that if you have not complied with the above detailed requests within 7 days of the date of this email letter to you then they intend instructing a Barrister to apply to the High Court to have you removed as a trustee on the grounds that you are hindering the timely and effective administration of the estate without any valid justification.
Your co-trustees further instruct us to advise that if you do provide the documentation within the time provided above that thereafter you must cooperate fully with them in the efficient and timely administration of your mother’s estate.”
[37] Sandra filed the present proceedings on 23 August 2017. On 19 September 2017, through her solicitors, she asked Mr Miller to resign saying she did not have faith in his ability to act as solicitor for the executors with the requisite independence and even-handedness. She asked for a copy of the estate file. Her solicitors requested Mr Candy to provide the financial records for the farming business. Sandra also personally followed up that request. Two further requests were made in late September and early October 2017.
[38] Meanwhile, a formal response to Sandra’s solicitors’ letter of 19 September 2017 was made. On 25 September 2017 Bell & Graham declined to cease to act. They advised there was no risk the firm could not act impartially:
“The only time when we accepted the views of John and Helen was when they became frustrated at their sister’s lack of action in not providing a valid reason for failure to execute documents for obtaining Probate. The only distribution that has been made in the estate in the refund of John van Goch for all the payments he had made to cover estate expenses before we could receive probate and close accounts. If that action had not been taken the estate would have been sued by numerous suppliers of goods and services in respect of the maintenance of estate assets.”
[39] This letter went on to state that John and Helen were by that time represented by solicitors in Rotorua, and Mr McKechnie had been instructed to act in the High Court proceedings. They advised it was Mr McKechnie’s view that Bell & Graham should continue to act as the estate’s solicitors.
[40] On 24 November 2017 John and Helen applied for Sandra’s removal as executor. On 21 December 2017 Sandra applied for removal of Mr Miller as estate solicitor and Mr McKechnie as counsel.
Developments at the hearing
The fifth volume of evidence
[41] Along with a synopsis filed on 11 April 2018, counsel for Mr Miller filed and served a bundle of relevant documents, entitled “Volume 5”. At the hearing Ms Grant, for Sandra, objected to its inclusion in the file on the basis the latter three documents have not been put into evidence by affidavit. The fourth, the Minute of Associate Judge Doogue, is already on file and before the Court.
[42] As I indicated at the hearing, I do not see the need to remove the volume from the record. The material it contains is only peripherally relevant to the matters I must resolve, and has not caused me to depart from the conclusion I would otherwise reach.
The removal of all executors and further submissions
[43] Much of the hearing’s time was dedicated to Ms Grant’s submission that in the event I considered Sandra should be removed as an executor, the appropriate order was to replace all executors with an independent executor.
[44] For the first and second defendants Mr Stapleton QC’s position was that I did not have jurisdiction to make such an order, and even if I did I should decline to exercise my discretion due to procedural unfairness to John and Helen. He submitted I should resolve the application to remove Sandra first, and make timetabling directions for an application to be brought by Sandra seeking to remove her siblings.
[45] Ms Grant’s response was that the Court’s discretion under s 21 was sufficiently broad for me to order the removal of all executors without a formal application, and that it was desirable in the efficient resolution and timely administration of the estate that all issues be dealt with together.
[46] In a Minute of 17 May 2018 I called for further submissions directed to who should be appointed in the event I was to decide to remove all executors. I have now had the benefit of considering those helpful submissions in determining this issue and I thank counsel for their assistance.
Should Sandra, and her siblings, be removed as executors?
[47] John and Helen argue Sandra has placed herself in a disqualifying position by challenging her mother’s Will, and that her conduct since Maria’s death is such that her removal is expedient.
[48] Sandra opposes this application, but submits that in the event the Court finds the current situation unworkable, the appropriate course would be to remove all the executors and replace them with an independent administrator.
Legal principles
[49] The parties are agreed on the principles which govern the present application. Section 21 of the Administration Act 1969 (“the Act”) governs the Court’s jurisdiction to remove and replace executors.4 Relevantly s 21(1) provides:
“21 Discharge or removal of administrator
(1) Where an administrator … 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.”
[50] Before removal of an executor, one of the grounds listed in s 21(1) must be met. The ground of removal at issue here is expediency. The guiding principles have
4 There is an equivalent jurisdiction under s 51 of the Trustee Act 1956, except under that provision there is no power to merely remove a trustee.
been well-traversed in recent appellant authority.5 In both cases the Court of Appeal endorsed Heath J’s distillation of the principles in Farquhar v Nunns:6
“(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.
(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.”
[51] The testatrix’s selection of executors should not be set aside lightly although the interests of the beneficiaries must always be in focus.7
Should Sandra be removed?
[52] It is plain that the current arrangements are not working. At present the estate is not being administrated in a fashion which serves the interests of the beneficiaries. Neither is it being managed efficiently. The extent of inter-sibling infighting raises legitimate concerns as to how practical the arrangements are given the unreasonable delay and prejudice to the interests of the beneficiaries.
[53] That is not to say that the positions of Sandra on the one hand, and John and Helen on the other, are entirely unreasonable. John and Helen wish to see their
5 See Tod v Tod [2015] NZCA 501, [2017] 2 NZLR 145 at [22], and Frickleton v Frickleton [2016] NZCA 408, [2017] 2 NZLR 154 at [29].
6 Farquhar v Nunns [2013] NZHC 1670 at [13] (footnotes omitted). In turn, Heath J’s summary drew heavily on Associate Judge Osborne’s distillation in Crick v McIlraith [2012] NZHC 1290 at [16].
7 Frickleton v Frickleton, above n 5, at [31]-[33].
mother’s estate administered in a timely and proper manner. Sandra has concerns, no doubt sincerely held, over the financial benefits each sibling received from their parents over the course of their lives. Regrettably her response to this perceived unfairness has been to stall the administration of the estate. On the evidence before me it is difficult not to conclude that this has been a deliberate tactic on Sandra’s part. John and Helen have responded by making decisions between themselves to the exclusion of Sandra. They have also privately discussed matters with the estate solicitor. It is likely this conduct has elevated the levels of mistrust and conflict between the parties. In particular, since their first meeting as executors John and Helen, to the exclusion of Sandra, have discussed Sandra’s obstruction with Mr Miller including options for her removal. They appear to have given little weight to her concerns.
[54] In this regard I see the facts as comparable to those in J v T, where Whata J found the behaviour of the executors had led to inordinate delay in achieving the simplest of tasks, including the appointment of a lawyer for the estate. He concluded:8
“It is clear to me that the level of incompatibility between the executors is at such a level that the proper administration of the will is seriously adversely affected. It cannot continue like this and I see no prospect of this changing while all three executors remain. It is plainly expedient to change the current executorship; the only issue is how.”
[55] Likewise I have no doubt that the facts before me call for the exercise of my discretion under s 21 of the Act. The only remaining question is how I should exercise my discretion.
[56] Sandra’s removal is all but inevitable. As well as an operating cause of the delay and inability to progress the administration of the estate, there is an apparent conflict of interest between her duty as executor to administer the estate in accordance with the probate granted on 24 February 2017, and her interest in pursuing various causes of action against the estate. While not inherently disqualifying, her actions justify the concerns around her ability to discharge her obligations as executor while also suing the estate.
8 J v T [2017] NZHC 3089 at [19] (footnotes omitted).
Should John and Helen be removed?
[57] I have considered Mr Stapleton’s submission that I have neither the statutory nor the inherent jurisdiction to remove all executors without an application being made to the Court. I agree that the Court, while having an inherent jurisdiction to remove trustees, has no equivalent jurisdiction in respect of administrators or executors. This point was made by Ashley J in the Supreme Court of Victoria in Monty Financial Services Ltd v Delmo.9
[58] However I disagree with Mr Stapleton that I have no power to order the removal of all executors. On its terms s 21 does not require an application before the Court may consider the discharge or removal of an administrator. This may be made at the Court’s discretion and “on such terms and conditions in all respects as the Court thinks fit”. As has been observed numerous times, s 21 grants a wide discretion to ensure that estates are properly administered and the interests of the beneficiaries are served. That includes, in the appropriate factual circumstances, the ability to order removal of all executors.
[59] Ashley J reached the same conclusion in respect of the Australian equivalent of s 21, the purpose of which was “that the jurisdiction of the court to remove trustees should be given to the court with respect to executors and administrators”.10 As he emphasised, the New Zealand and Victorian provisions are closely related and based on each other. Section 21 does not represent a radical departure from that position.11 Rather, and like its antipodean predecessors, it replicates the features of the Court’s inherent jurisdiction over the removal of trustees in respect of administrators.
[60] I also consider to the extent there may be some procedural unfairness to John and Helen, who have not had the benefit of responding to a formal application for their removal, that has largely been remedied by my call for further submissions, and if necessary evidence. Moreover, I consider the interests of the beneficiaries and the obligation to ensure the estate is properly administrated are paramount.
9 Monty Financial Services Ltd v Delmo [1996] 1 VR 65 (VSC).
10 At 77.
11 (5 August 1969) 362 NZPD 1727.
[61] On the material before me there is little to suggest Maria wished for anything other than all three of her children to act as executors. Her wish for equal treatment of her children is also reflected in her intended distributions to each child. As such, having already determined that Sandra should be removed the wishes of Maria are not decisive.
[62] While much of the delay in administering the estate has been caused by Sandra’s conduct, I do not consider her removal as an executor will remedy the issues that have arisen. In particular I am concerned by John and Helen’s resolve to take matters into their own hands, unilaterally make decisions about the estate, and discuss Sandra’s possible removal from as early as November 2016. It is apparent they have little respect for Sandra’s position. Rightly or wrongly, their refusals along with Mr Candy and Mr Miller to provide Sandra with estate information has simply served to further aggravate the growing sense of mistrust evident between the siblings.
[63] In that context they have lost the appearance of impartiality.12 Given the need to consider both the interests of all beneficiaries13 and the efficient completion of administration, I have real concerns that the present problems will continue if John and Helen remain as executors. Every decision taken by them in that capacity will be viewed by Sandra with inevitable suspicion and mistrust. The present level of inter- sibling acrimony is such that the only effective solution is to order the removal of all three executors and replace them with a suitably qualified and patently impartial and independent executor.14 This result would serve the best interests of all beneficiaries and will facilitate the efficient and timely completion of administration, and secure impartiality in any decision-making. In short, the hostility between the siblings which has been so antithetical to progress is best managed through the appointment of an independent administrator.
[64] I have concluded the best way forward is to adopt the draft directions proposed by Mr Stapleton. These involve directing the Registrar to liaise with the President of
12 Hinde v Cranwell [2012] NZHC 63 at [28](c).
13 See Nawisielski v Nawisielski [2014] NZHC 1547 at [19], and Irvine v Public Trustee [1989] 1 NZLR 67 (CA).
14 See, for example, Crick v Wallace [2015] NZHC 2260.
the Waikato-Bay of Plenty branch of the New Zealand Law Society, who I ask to nominate a suitable legal practitioner:
(a)who is entirely independent of the van Goch family;
(b)who has at least 15 years’ professional legal experience in relation to the administration of estates where the principal asset is an operating farm;
(c)whose offices are reasonably and sufficiently proximate to the Tirau farm; and
(d)who is readily available to ensure that the administration of the estate is completed promptly and efficiently in accordance with all relevant requirements and distribute the estate to the beneficiaries as soon as practicable after the final determination of the substantive proceedings.
[65] However, contrary to Mr Stapleton’s proposal, the appointee will be the sole executor. He or she will be entitled to charge a reasonable hourly rate plus GST for their services as administrator of the estate, including recovering reasonable disbursements.
[66] I consider this course will be the most likely to secure a suitably qualified executor who as well as being neutral, possesses the required expertise to manage the farm and undertake a proper assessment of the appropriate steps which need to be taken to administer the estate.
Should Mr Miller be removed as solicitor for the estate?
[67] I have asked for a suitably qualified legal practitioner to be appointed as the new executor for the estate. The practitioner appointed may decide there is now no longer a need to retain a separate solicitor to act for the estate. If that course is adopted, the application to remove Mr Miller will be rendered otiose.
[68] A further possibility is that the new executor will abide the decision of the Court in Sandra’s substantive proceedings. If that is the case, concerns around the likelihood of Mr Miller giving evidence may resolve themselves.15 As it is, John and Helen have appointed independent counsel to represent them in those proceedings.
[69] Accordingly, I consider the best course is to reserve this aspect of the applications until a new executor has been appointed and decisions have been made about whether to appoint a new solicitor for the estate, and whether to defend Sandra’s proceedings. If concerns remain after those steps have been taken, this application should be referred back to me for reconsideration.
Should Mr McKechnie be debarred as counsel?
Legal principles
[70] The Court of Appeal in Accent Management Ltd v Commissioner of Inland Revenue set out the principles governing debarring counsel or solicitors from acting:16
“The Court has jurisdiction to debar counsel or solicitors from acting where that is necessary in order for justice to be done or to be seen to be done. Removal will usually be ordered where counsel will not be able to comply with his or her duties to the Court: where there is a conflict of interest, or where there is a real risk that a client will not be represented with objectivity. The threshold for removal is a high one, requiring something extraordinary. The Court should guard against allowing removal applications to be used as a tactical weapon to disadvantage the opposing party.
Lawyers’ professional obligations, as set out in the LCA and Client Care Rules, may be relevant to a court’s decision whether to debar counsel. The Client Care Rules set out a number of rules dealing with independence in litigation, which reflect the obligation on lawyers to be independent in providing regulated services to clients in s 4(b) of the LCA. Chapter 5 sets out rules emerging from a lawyer’s obligation to “be independent and free from compromising influences or loyalties when providing services to” clients. Dr Muir referred especially to chapter 13 of the Rules, which begins:
Lawyers as officers of court
13The overriding duty of a lawyer acting in litigation is to the court concerned. Subject to this, the lawyer has a duty to act in the best interests of his or her client without regard for the personal interests of the lawyer.”
15 See Talbot v Talbot [2016] NZHC 759.
16 Accent Management Ltd v Commissioner of Inland Revenue [2013] NZCA 155, [2013] 3 NZLR 374 at [32]-[33] (footnotes omitted).
[71] There is also the obligation at r 6.1 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008:
“6.1 A lawyer must not act for more than 1 client on a matter in any circumstances where there is a more than negligible risk that the lawyer may be unable to discharge the obligations owed to 1 or more of the clients.
6.1.1Subject to the above, a lawyer may act for more than 1 party in respect of the same transaction or matter where the prior informed consent of all parties concerned is obtained.
6.1.2Despite rule 6.1.1, if a lawyer is acting for more than 1 client in respect of a matter and it becomes apparent that the lawyer will no longer be able to discharge the obligations owed to all of the clients for whom the lawyer acts, the lawyer must immediately inform each of the clients of this fact and terminate the retainers with all of the clients.”
[72] Ms Grant submits Mr McKechnie’s position as counsel for John and Helen is unsustainable because he was previously engaged to act for Sandra in her capacity as executor for the estate. She submits he was paid for his work by the estate, and that in the course of these instructions he obtained confidential information, which he has used, either consciously or subconsciously, in preparing his application to have Sandra removed as an executor. Accordingly, she submits his impartiality and independence has been compromised.
[73] Mr Stapleton’s position is that no aspect of the background before the Court discloses extraordinary circumstances of the kind required for counsel to be debarred from acting.
[74] Mr McKechnie has made an affidavit in which he deposes to all his correspondence with Mr Miller and with John and Helen following his engagement. As he acknowledges, he has an overriding duty to the Court, and without more than mere speculation there may be further undisclosed correspondence, it is not appropriate to question his fidelity to the Court. Moreover, the Court has not had the benefit of seeing Mr McKechnie’s evidence tested by cross-examination. In those circumstances I am satisfied it is appropriate to proceed on the basis that what Mr McKechnie has deposed to is true and can see no reason why the Court should look behind his evidence.
[75] Having carefully reviewed the evidence I am easily satisfied that the high threshold for debarring counsel has not been met. The correspondence before the Court does not disclose extraordinary circumstances sufficient to necessitate Mr McKechnie’s removal. While he first gave advice to Mr Miller on 1 December 2016, his involvement to May 2017 was relatively limited and amounted to the provision of advice to Mr Miller. During this time he was not acting, as Ms Grant suggests, for Sandra in her capacity as executor. While Bell & Graham charged the estate for Mr Miller’s correspondence with Mr McKechnie, there is nothing to suggest Mr McKechnie was retained by the executors at any point. I also accept that to the extent any estate information was provided to Mr McKechnie before he was personally engaged by John and Helen, he did not rely on it in preparing any material on their behalf in these proceedings. Finally, I agree with Mr Stapleton that it is doubtful Mr McKechnie will be able to give evidence relevant to any of the matters in the substantive proceedings.
[76] The application to remove Mr McKechnie as counsel for John and Helen is dismissed.
Should I order disclosure of the estate file?
[77] Sandra seeks disclosure of the entirety of the estate file, arguing the present point she has only received parts of it. Mr Cuff, for Mr Miller, acknowledges Mr Miller has not provided the whole file to her, but does not consider he should while there is an extant application to remove her as executor.
[78] While executors are entitled as of right to the estate file, given my order for removal as executor Sandra may no longer rely on this entitlement. Access to the material parts of the estate file will nevertheless be disclosed during the discovery processes in the pre-trial phases of the proceedings.
Orders
[79] I exercise my discretion to order the removal of all executors under s 21 of the Administration Act 1969.
[80] I direct the Registrar to liaise with the President of the Waikato-Bay of Plenty branch of the New Zealand Law Society, to nominate a suitable legal practitioner possessing each and all of the attributes noted below to accept appointment as administrator of the estate of the late Maria van Goch:
(a)the appointee must be entirely independent of the van Goch family and have had no prior connection with them;
(b)the appointee must have at least 15 years’ professional legal experience in relation to the administration of estates in which the principal asset is an operating farm;
(c)the location of the appointee’s offices must be reasonably and sufficiently proximate to the Tirau farm;
(d)the appointee is entitled to charge their usual hourly rate plus GST for their services as administrator of the estate, as well as reasonable disbursements; and
(e)the appointee must have ready capacity to ensure that the administration of the estate is completed promptly and efficiently in accordance with all relevant requirements and distribute the estate to the beneficiaries as soon as practicable after the final determination of the substantive proceedings.
[81] The application to remove the fourth defendant as estate solicitor is adjourned until a new executor has been appointed and decisions have been made about whether to appoint a new solicitor for the estate, and whether to defend the plaintiff’s proceedings. If concerns remain after those steps have been taken this application should be referred to me for reconsideration.
[82] The application to remove Mr McKechnie as counsel for the first and second defendants is dismissed.
[83]The application for disclosure of the estate file to the plaintiff is dismissed.
Moore J
Solicitors/Counsel:
Ms Grant, Auckland Mr Laing, Auckland
Mr Stapleton QC, Wellington
DLA Piper New Zealand, Auckland
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