Ward v Ward HC Wellington CIV 2010-485-695
[2010] NZHC 2015
•4 November 2010
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV 2010-485-695
CIV 2009-485-1945
UNDER the Administration Act 1969
IN THE MATTER OF the estate of Adelaide Naina Ward of
Wellington, deceased
AND
IN THE MATTER OF the estate of Robert Charles Ward of
Wellington, deceased
BETWEEN JOHN WARD Plaintiff
ANDCHRISTOPHER NOEL WARD Defendant
Hearing: 1 November 2010
Counsel: K E Stirling for Plaintiff
Defendant in Person
Judgment: 4 November 2010
JUDGMENT OF RONALD YOUNG J
Introduction and Background
[1] Robert Charles Ward died in December 1999 and his wife Adelaide Naina Ward died in March 2004. Mr John Ward and Mr Christopher Ward are co-executors and trustees of their parents’ estates together with Mr Paul Surridge who is an executor in their father’s estate only. The beneficiaries of Mr Ward’s
estate are the deceased’s six sons and five grandchildren as follows:
JOHN WARD V CHRISTOPHER NOEL WARD HC WN CIV 2010-485-695 4 November 2010
a) John Ward and his daughter Rachel Ward;
b) Christopher Ward and his sons Bradley and Mitchell Ward;
c) Warren Ward (who died in 2001) and his children Lacey and
Kevin Ward;
d) Lindsay Ward;
e) Rex Ward who died on 20 February 2010; and f) Murray Ward.
[2] The entitlements of Christopher, Lindsay, Rex and Murray were held on trust. The trustees are authorised to purchase or provide housing for these children. As to the residue this is to be distributed, at the trustees discretion, to those named as beneficiaries. The trustees may retain any part of the residue of the estate for ten years from death without being liable for waste or loss. That period has now expired (31 December 2009).
[3] The beneficiaries of Mrs Ward’s estate are her daughter, Margaret and her six sons. The entitlements of Rex, Murray and Lindsay are held on trust. When the trust ends the beneficiaries’ entitlement is to be divided equally between John and Christopher.
[4] In these proceedings Mr John Ward seeks an order pursuant to s 21 of the Administration Act 1969 declaring Christopher Ward to be unfit to act as an executor in both estates and his removal. Mr Christopher Ward opposes this removal and has filed a counterclaim that I declare Mr John Ward unfit to act as an executor of both estates and remove him as an executor and trustee.
[5] Mr R C Ward owned a shoe factory with his brother, Frederick. As well as the factory they owned property in Wellington. The partnership assets have been sold and Mr Ward’s estate has received its share of the sale of the assets. There have been partial distributions to the beneficiaries in the will. The remaining assets now
consist of two properties at 263 and 265 Mansfield Street worth about $600,000, shares in Tag Pacific Limited and money with Westpac.
[6] As to the A N Ward estate the main asset is a residential property at
27 Tio Tio Road, Strathmore worth about $550,000. Mrs Ward’s will provides that the property should be sold and the proceeds divided amongst her daughter and six sons. The will allows the entitlements of Rex, Murray and Lindsay to be applied to the purchase and maintenance of a residence for one or more of them as the trustees agree.
[7] The A N Ward estate had no liquid funds. The R C Ward estate has lent the A N Ward estate money to cover funeral costs, loans to The National Bank and expenses of running the property at 27 Tio Tio Road.
The plaintiff’s case
[8] Section 21 of the Administration Act 1969 provides as follows:
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.
(2)The administrator so removed or discharged shall, from the date of that order, cease to be liable for acts and things done after that date.
(3)Upon any administrator being discharged or removed as aforesaid (whether or not any other administrator is appointed) all the estate and rights of the previous administrator or administrators which were vested in him or them as such shall become and be vested in the continuing administrator or administrators (including any administrator appointed under subsection (1) of this section) who shall have the same powers, authorities, discretions, and duties, and may in all respects act, as if he or they had been originally appointed as the administrator or administrators.
(4) This section shall, with all necessary modifications, extend to the case where an administrator dies, and the powers and authorities hereby conferred may be exercised and shall take effect accordingly.
(5) Nothing in this section shall restrict section 8 of this Act.
[9] The plaintiff’s allegations against the defendant include the following:
a) that Mr Christopher Ward has tried to purchase the Tio Tio Road residence for himself at less than current market value and without disclosing he is the purchaser;
b)that he has obstructed the sale of the Tio Tio property by rejecting reasonable offers from third persons;
c) that he has suggested that Murray and Lindsay’s portions of the A N Ward estate be deferred in the interim without interest to advantage himself;
d)that he has failed to take any real steps to ensure the two estates are properly administered;
e) that he has refused without reason to accept proposals put forward by
Mr John Ward to resolve the administration of the estates;
f) that he has issued cheques from estate funds purporting to be final distributions which were not; and
g) that he has issued unexplained cash cheques drawn against the
R C Ward estate without authority.
[10] Mr John Ward has filed five affidavits detailing the circumstances of his application and an affidavit from Ms Bawden, a Wellington real estate agent relating to the sale of Tio Tio Road.
[11] Mr Christopher Ward has filed two statements of counterclaim seeking to remove Mr John Ward as a trustee. The most recent was filed in August 2010 (I note after the setting down date and filed without leave). Mr Christopher Ward’s allegations with respect to Mr John Ward are:
a) that he engaged in stand over tactics;
b) he was trying to control the estate for his own benefit;
c)
d)
he improperly used Warren Ward’s children’s portion of the estate;
he failed to look after the needs of Warren, Lindsay, Rex and Murray
in his decision making; e)
he was not interested in selling the estate assets and distributing the estate;
f)
he failed to properly account for estate funds and failed to properly keep estate banking records.
[12]
At
the hearing Mr John Ward had given notice that he wished to
cross-examine Mr Christopher Ward. No other notice for cross-examination was given. Mr Christopher Ward therefore was cross-examined by counsel and I asked a number of questions myself.
[13] Christopher Ward’s affidavits were all very short. They contained little material that responded to the extensive affidavits and documentary evidence produced by John Ward. Christopher’s affidavits contained no factual material to support his allegations against John.
[14] At the end of the hearing I advised counsel that I would take the unusual step of making orders immediately and in due course (as I now do) give my reasons for my decision. I ordered Mr Christopher Ward be forthwith removed as an executor and trustee of the estates of Robert Ward and Adelaide Ward. Secondly, that the Public Trustee in its professional capacity be appointed a trustee in the estates of Robert Ward and Adelaide Ward. I refused to make any order removing Mr John Ward as a trustee.
[15] I advised Mr Christopher Ward and Mr John Ward that I had made those orders immediately because of my serious concern about the conduct of Mr Christopher Ward whom I considered, in terms of s 21, was unfit to act as an administrator and where it was expedient to remove him.
Assessment of Evidence and Discussion
General observations
[16] Having had the opportunity of considering Mr Christopher Ward’s affidavits, the affidavits of Mr John Ward, the common bundle together with Mr Christopher Ward’s cross-examination I am satisfied that the allegations made by Mr John Ward of Mr Christopher Ward’s conduct are essentially true. I am satisfied that Mr Christopher Ward’s actions entitled me to remove him as an executor and trustee based on the grounds identified in [9].
[17] Further, having had the chance of seeing Mr Christopher Ward give evidence I am satisfied that he was not a reliable witness. He was often confused and uncertain when he gave evidence about dates and events. Further, on a number of occasions his responses in cross-examination were less than truthful. He was neither a reliable or credible witness. Having heard his evidence and considered the other evidence presented I consider Mr Christopher Ward’s continuing presence as an
executor and trustee will be a major impediment to having these two estates properly administered.
[18] I am satisfied Mr Christopher Ward has little or no appreciation or understanding of the obligations of an executor and trustee. His evidence made it clear that he was determined to follow his own view of how things should be done irrespective of whether they are according to law or indeed according to his obligations. Mr Christopher Ward believes that his view of the rightness or otherwise of his actions are what is important rather than the proper legal advice. He has refused to obtain legal or indeed any professional advice about his role as an executor and trustee of the estate.
[19] I am convinced having heard his evidence that he has not been truthful about a series of conversations and circumstances which I will detail in this judgment.
[20] Finally, there is evidence to support the proposition that Mr Christopher Ward has attempted to advantage himself in the way in which he has attempted to administer his parents’ estates. I am satisfied that each of the allegations in [9] have been made out and that they justify a conclusion Mr Christopher Ward is unfit to act as an administrator and that it is expedient to discharge him.
[21] Christopher Ward has until the last two years or so been resident in Perth. Since his father’s and then his mother’s death he has travelled to Wellington from time to time. Finally about two years ago he shifted to Wellington although he says he considers his residence to still be in Perth.
[22] As to Mr Ward’s estate significant progress was made in collecting and selling the estate assets through until late 2002. Mr R C Ward was in partnership with his brother who had died in 1998. Eventually the R C Ward estate purchased a half share of the properties at 263 and 265 Mansfield Street from the proceeds of the sale of some partnership assets. Those properties had originally been owned by the partnership and so the R C Ward estate already owned a half share. The purpose of the purchase of these houses was to provide housing for Lindsay, Rex and Murray.
After the sale of the partnership properties and the winding up of the partnership business partial distributions were made to the beneficiaries named in the will.
[23] By the time these proceedings were issued the assets of the R C Ward estate consisted of the two properties at Mansfield Street with a valuation of about
$609,000, the Tag shares and dividends, funds held by Westpac Bank (about
$10,000) and a debt owed by Mrs Ward’s estate of some $45,000.
[24] There were also funds held to Rex, Lindsay and Murray’s credit being respectively $114,000, $153,000 and $114,000. $107,000 was held by the trustees to be distributed at their discretion amongst the beneficiaries. Finally there was another term deposit account of some $11,000.
[25] Mrs Ward’s estate consists of the property at 27 Tio Tio Road less the debt owed to the R C Ward estate.
[26] In 2004 the solicitors acting on behalf of the A N Ward estate (Hayman Lawyers) sent a letter to both executors reporting on the estate. Inevitably it involved discussion regarding the R C Ward estate. A number of suggestions were made as to how best to give effect to the testators’ wishes while progressing the administration of the estates. Mr Christopher Ward did not reply to these proposals.
[27] In 2005 Mr John Ward again consulted Hayman Lawyers about issues relating to Mrs Ward’s estate. A question had arisen as to whether an individual trustee could buy any estate property (R C or A N Ward). Hayman advised both Christopher and John that this could not be done other than by the consent of the Court, or pursuant to an expressed power in the trust instrument, or with the agreement of all beneficiaries. They did not recommend any purchase without the consent of the Court.
[28] In 2005 a valuation of $480,000 for the Tio Tio Road house was obtained. At about the same time the two Mansfield Street properties were valued at a total of
$609,000. The valuations were obtained to see if R C Ward’s estate could purchase a share in the Tio Tio property from Mrs Ward’s estate. Such a purchase was to
enable sufficient money to pay out the interests of the non-dependent children but still provide a home for the dependent adult children. Mr John Ward’s evidence was that he made such a proposal to Mr Christopher Ward who refused to agree.
[29] Mr Christopher Ward said that between 2005 and the issue of the first set of proceedings in 2009 he had been working on getting the house at Tio Tio Road ready for sale. However he claimed that his brother John Ward refused to sell the property. His evidence was the first occasion on which he had made these claims.
[30] Mr Christopher Ward said that about this time he had obtained several offers to buy both Mansfield Street and Tio Tio Road. However, in evidence he accepted that the offers he had received for the properties were well below the market value. For example the best offer for the 263/265 Mansfield Street properties was $515,000, almost $100,000 below the valuations obtained.
[31] I am satisfied that Mr Christopher Ward made no real efforts to sell either the Mansfield Street or Tio Tio Road properties from 2005. While he may have consulted a real estate agent at this time he did not instruct them to sell.
[32] I am also satisfied that his brother John and Hayman Lawyers put a sensible proposal to him which would have assisted in the administration of both estates. Mr Christopher Ward did not respond to the proposal.
[33] In 2008 further efforts were made by Mr John Ward to sell the properties. Once again proposals were put by or on behalf of Mr John Ward to Mr Christopher Ward. Mr Christopher Ward’s evidence was that he was not prepared to consider these offers because he would not agree with anything his brother John Ward proposed. He said that his refusal to acknowledge any of the offers from his brother was because in 2005 his brother had suggested some form of unlawfulness or illegality with respect to the estate that Christopher had rejected. He claimed that his brother John had told him that between the sale process of all of the houses and the purchase of the Tio Tio Road property that he “was going to be a bit naughty and doctor figures and the both of us would be winners”.
[34] Christopher Ward accepted that he had not told anyone about this fraud at the time. He had not complained to the police. He accepted he was recounting a proposal by his brother to defraud the estate. He agreed that he had not then made any application to have his brother John removed as a trustee and executor. He had not told the beneficiaries or the estates’ solicitors. He said that he determined that the proper action was that he would not agree to anything that his brother John suggested in the future.
[35] I reject Christopher Ward’s claim that John Ward attempted to fraudulently benefit from their parents’ estate at the expense of his brothers. I did not find Mr Christopher Ward an honest and straightforward witness. I do not believe his evidence here. I do not believe that his brother John somehow suggested lining both their pockets at the expense of their siblings. I find it incredible to suggest, faced with his claim of a serious attempt to defraud his brothers, Christopher said nothing. I consider that Mr Christopher Ward has invented this conversation to excuse his inaction with respect to his brother John’s various proposals to progress these estates.
[36] In mid 2008 Hayman Lawyers sent a further letter to Christopher Ward in an attempt to try and advance the estates’ administration. There was no response by Christopher Ward.
[37] Hayman wrote again to Christopher and John Ward in 2008. By that stage they had a valuation of the Tio Tio Road property. They suggested alternatives as to how the estates might be usefully dealt with. In July 2008 Hayman sent an email to Christopher Ward indicating they had John’s agreement to a particular approach but had not heard from Christopher. By late July Christopher had called Hayman and said he would reflect on the matters raised and respond but indicated he was not keen on the proposal.
[38] Despite that Christopher did not further respond. On 9 October Hayman sent an email to Christopher saying they did not really understand what his objections were. They repeated the proposal and asked if he could let them know why he would not give his consent to the proposal. Mr John Ward advised Christopher that
unless there was some coherent reply from him he would make an application to the Court to have Christopher removed as a trustee. Once again, regretfully, there was no response. If Christopher’s claim of fraud by John was true this was the ideal chance to raise his concern with the estate solicitors. He said nothing.
[39] In about 2008 Christopher Ward travelled from Perth to live in Wellington. He began living at the Tio Tio Road house. Shortly afterwards he sent a cheque for
$40,938 to the Public Trust. He accompanied it with a letter saying the $40,000 payment was a final payment by the Robert Charles Ward estate to the Warren Ward estate (his deceased brother) which the Public Trust administered. The Public Trust replied shortly afterwards to Mr John Ward advising that this could not be a final payment from the Robert Charles Ward estate given the estate still had two properties in Wellington to be sold.
[40] Similarly Mr Christopher Ward sent a cheque for $10,795 to Lacey Ward also purporting to be a final distribution with respect to the Robert Charles Ward estate. For the same reasons this could not have been a final distribution.
[41] Mr Christopher Ward was confronted with this correspondence and his actions in cross-examination. He was asked why he had sent the money to the Public Trust and to the beneficiary with a note saying it was a final distribution when it could not possibly have been one. He could not identify why he had done so.
[42] At about this time some of the grandchild beneficiaries in the estate emailed Mr Christopher Ward asking what was happening with the estate and why he had not properly attended to it. Mr Ward did not respond to them.
[43] In early 2010 it was agreed that the property at Tio Tio Road had to be sold. By this stage Mr Christopher Ward had solicitors acting for him. On his behalf, on
25 March 2010, they wrote to Hayman agreeing that a real estate agency should be invited to prepare an appraisal for the property with a view to listing it for sale. The appraisal was undertaken and showed a market price of about $620,000 with a price range in the area of between $600,000 and $700,000.
[44] The appraisal, which is dated 1 April 2010, was sent by the real estate agent to Christopher Ward. On 2 April Mr Christopher Ward sent an email to his brother John saying there had been a private offer for Tio Tio Road of $500,000 which was unconditional with a deposit of $50,000. He said:
The offer price is the same as the value Joy Baker from Remax put on the property a month back.
[45] This email was in conflict with the real estate agency information about the value of the property. The real estate agent had assessed the market price as
$620,000 and said the sale price could be between $600,000 and $700,000. It is uncertain whether Christopher Ward knew that valuation when he sent his email of
2 April but it seems probable. However within a day or two of 1 April there could have been no doubt that he knew it. His solicitors were sent a letter on 6 April by Hayman Lawyers pointing out the valuation and observing the email claim of an offer for $500,000 (by Christopher) did not meet any of the preconditions that an executor might expect before a sale could be agreed to. It was over $100,000 less than the market value and, in any event, no contract had ever been seen.
[46] Christopher Ward’s evidence was that shortly afterward that purchaser had disappeared because he could not get the bridging finance. I note however Christopher Ward claimed that in all respects the contract was unconditional. In any event at that stage Christopher Ward said he had a second offer. As it turned out the second offer was in fact an offer by him to personally purchase the property at
$500,000.
[47] It was difficult to understand Christopher’s explanation for making this offer. As I understand his evidence he seemed to suggest that by making this offer somehow he was helping the market for the property. It was difficult to understand this rationale. It made no sense. As I told Mr Ward when he gave evidence it looked like he was trying to buy the property at a gross undervalue. In any event nothing came of these so-called offers as they were understandably rejected by John Ward.
[48] By mid 2010 as a result of marketing the property further written offers, one for $550,000 and one for $560,000 were made. Although both were conditional the
condition for one was no more than a check on the title and with regard to the second offer this became ultimately unconditional. Through his solicitors, Mr Ward then made an offer of $500,000 to personally purchase the property. He claimed this was the equivalent of the other offers.
[49] As John Ward said the executors could not possibly accept Christopher Ward’s offer. Even accounting for the land agent’s commissions it was less than the best offer. Mr Christopher Ward, however, refused to sign the contracts for the sale and purchase of the property at $550,000 or $560,000. The two offers, therefore, lapsed. The evidence from the real estate agent Ms Bawden highlights Christopher’s obstructive behaviour regarding the sale of the house.
[50] By July 2010 Christopher Ward was still trying to buy the property and made a further offer of $534,532 through his solicitors. The letter containing the offer said:
We also understand as an aside from the purchase of the property that John and Chris have agreed in a telephone conversation that payments of Murray and Lindsay’s portions of the estate will be deferred for the interim without interest.
[51] Mr John Ward said he had agreed to no such thing. And in any event it would be improper for the executors to reach any agreement which compromised other beneficiaries’ rights. The purpose of the suggestion by Christopher was to advantage his circumstances, so that he could more easily afford the purchase of the Tio Tio Road property, to the detriment of his brothers.
[52] There were no proper reasons why Mr Christopher Ward refused to sign the unconditional contract on the property for $560,000. His failure to do so has meant the property was not able to be sold at this price. This was a serious failure to act in the interests of the estate and the beneficiaries.
[53] Mr Christopher Ward wrote out two cash cheques with regard to his father’s estate, one for $8,000 (in December 2009) and one for $900 (in November 2009). His co trustee Mr John Ward did not authorise these payments. Christopher Ward said that the $8,000 was to be used to help his brothers. He opened a bank account
in his own name with ANZ and deposited $5,000. With the remaining $3,000 he said he bought his brothers clothes and groceries. It was completely inappropriate and wrong for Christopher Ward to take money from his father’s estate and pay part of it into a bank account over which only he had control. It emphasises Christopher’s view of the estate. If he thinks he should do something and he considers it is the right thing to do then he does it irrespective of whether it is within his powers as executor and trustee.
[54] In his evidence Christopher illustrated a lack of understanding of the obligations of an executor and trustee of an estate. He has his own idiosyncratic views as to what was right and wrong. He has rejected legal advice or refused to obtain it. He has focussed on buying the Tio Tio Road property himself to the disadvantage of the estate and the beneficiaries. The property has not been able to be sold because he has unreasonably refused to co-operate in its sale.
Conclusion
[55] This evidence illustrates that Christopher has tried to purchase the Tio Tio Road house at an under value; obstructed the legitimate sale of the house; suggested an arrangement with the estates which would improperly advantage himself; issued cheques from estate funds wrongly purporting to be final distributions; issued and wrongly dealt with cash cheques from the R C Ward estate; failed to progress and refused to assist in the progress of the administration of these estates.
[56] These conclusions amply illustrate Christopher Ward is not fit to be an administrator of these two estates and that it is expedient to discharge him to ensure the administration of these estates can now be advanced.
Mr John Ward application for removal
[57] Mr Christopher Ward has made a number of allegations regarding
Mr John Ward’s honesty. The allegations simply remain that, no more than
allegations. There is not one iota of evidence that Mr John Ward has done anything improper with respect to this estate. The only criticism that could be possibly levelled at him is that he should have made this application earlier so that the impasse that has stricken these estates over the last few years could have been more speedily resolved. Beyond that it is clear that he has taken proper legal advice. He has complied with the legal advice and the legal advice has invariably been sensible and accurate. There are, as I have said, therefore, no grounds upon which the application to remove him should properly be granted.
[58] Regretfully what should have been a relatively simple and straightforward administration has turned into something of a nightmare for the beneficiaries in this estate. To reassure them that everything is being done that should be done in a proper way I have decided that I should make an order appointing the Public Trustee as a further executor and trustee in this estate. This will take part of the burden off Mr John Ward and assure those who are worried about the estate that everything is being done in a professional and accountable way.
Costs
[59] Mr John Ward’s costs should be paid by the estates for these proceedings. If the estates/Mr John Ward seek costs against Christopher Ward they should file a
memorandum within 14 days and Christopher Ward in response 14 days after that.
Ronald Young J
Solicitors:
K E Stirling, Hayman Lawyers, PO Box 204, Wellington, email: k[email protected]
C N Ward, 27 Tio Tio Road, Miramar, Wellington
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