Watson v Watson

[2020] NZHC 2252

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2007-442-374

[2020] NZHC 2252

UNDER

Sections 43 and 51 of the Trustee Act 1956

IN THE MATTER

of appointing a new trustee

BETWEEN

KAREN RUBY WATSON

Applicant

AND

ERIC JOHN WATSON AND WILLIAM GERALD GIBSON

Respondents

Hearing:	On the papers
Appearances:	P J Bellamy for the Applicant
Judgment:	1 September 2020

JUDGMENT OF COOKE J

[1]By application dated 20 August 2020 the applicant seeks orders:

(a)Removing Eric John Watson and William Gerald Gibson as trustees of the will of Brian Clark Watson; and

(b)Appointing Karen Ruby Watson as sole trustee in their place.

[2]                 The application is supported by a memorandum of counsel and an affidavit of Karen Ruby Watson dated 13 August 2020. It has been referred to me in my capacity as Duty Judge.

[3]                 As an initial point, I note that it is usually appropriate for the application to include applications for leave that the proceeding be commenced by originating

WATSON v WATSON [2020] NZHC 2252 [1 September 2020]

application under r 19.5 of the High Court Rules 2016, and that there be directions that the application does not need to be served on any other person. I duly give those directions in the present case on the basis that those orders are routine and that reasonable attempts to serve the respondents have been taken.1

Background

[4]                 Mrs Watson explains that she is the widow of Brian Clark Watson who died on 26 March 2007. Under Mr Watson’s will probate was granted on 25 September 2007. Mr Eric Watson, who is a high profile businessman, and Mr William Gibson who Mrs Watson says worked for Mr Eric Watson, were appointed the executors. Brian was Eric’s father.

[5]                 The terms of the will are straightforward. The Trustees were to pay the debts and funeral expenses, administration expenses and then  transfer  the  residue  to  Mrs Watson. The key asset is the home in which Mr and Mrs Watson lived in Nelson. Mrs Watson now needs to sell the home so that she can move into a Retirement Village.

[6]                 Despite extensive steps taken by Mrs Watson and her solicitor, neither Mr Eric Watson nor Mr William Gibson have been able to be located. There is evidence that at least Mr Eric Watson has received a letter sent by courier asking him to attend to the steps necessary so that Mrs Watson can move into her retirement home, but no steps have been taken. This most unfortunate state of affairs has led to Mrs Watson making this application. As she said in her affidavit:

I found having to initiate this proceeding stressful. I would really like this over and done with. Until I [commenced] the process of selling the house, I had no idea that the transfer into my name had not taken place.

Assessment

[7]                 The application is made in reliance on ss 43(1)(b) and (d) and 51(1) of the Trustee Act 1956.

1      See, for example, Re Gordon [2020] NZHC 1981.

[8]                 Section 43 cannot apply in the present case. That is because this section operates when there is a power of appointment, for example in a trust deed, which can be exercised to replace trustees. That is not the situation here. Mrs Watson is not exercising a power of appointment. Section 51 can apply, however.2 Section 51 provides:

51       Power of court to appoint new trustees

(1)The court may,  whenever it is expedient to appoint a new trustee or   new trustees, and it is found inexpedient, difficult, or impracticable so to do without the assistance of the court, make an order appointing a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee.

[9]                 There is, however, also another, more specific power. Section 21 of the Administration Act 1969 provides:

21       Discharge or removal of administrator

(1) Where an administrator is absent from New Zealand for 12 months without leaving a lawful attorney, or desires to be discharged from the office of administrator, or becomes incapable of acting as administrator or unfit to so act, or where it becomes expedient to discharge or remove an administrator, the court may discharge or remove that administrator, and may if it thinks fit appoint any person to be administrator in his or her place, on such terms and conditions in all respects as the court thinks fit.

…

[10]             The proper approach to the application of s 21 at has been addressed by the Court of Appeal in Tod v Tod3 and Frickleton v Frickleton.4 Both decisions adopt the approach set out by Heath J in Farquhar v Nunns by reference to the following factors:5

(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

2      The application incorrectly referred to s 50(1), but I assume that that is a typographical error.

3      Tod v Tod [2015] NZCA 501, [2017] 2 NZLR 145.

4      Frickleton v Frickleton [2016] NZCA 408.

5      Farquhar v Nunns [2013] NZHC 1670 at [13] (footnotes omitted).

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.

[11]             The testator’s selection of the executor is important,6 but the interests of the beneficiaries must always be the focus.7

[12]             It seems to me to be more appropriate to proceed under this provision, which is more specific to estates, following the approach identified by the Court of Appeal.

[13]             I have no hesitation in making the requested orders under s 21(1). The assets of the estate are limited to the house. It is apparent that Messrs Watson and Gibson have not acted in accordance with their duties. They did not take all the required steps to administer the estate. They have also now been absent from New Zealand for more than 12 months without appointing attorneys. It may well be that they are presently distracted by more pressing matters at the moment, but this is having a distressing impact on the applicant.

[14]             Accordingly I make orders removing Eric John Watson and William Gerald Gibson as executors of the will of Brian Clark Watson, and I appoint Karen Ruby Watson as sole executor in their place.

[15]             Given that the orders I have made are under a different provision from that applied for I reserve leave to apply to vary or supplement the above orders. Any such application should be referred to me.

Cooke J

6      Tod v Tod, above n 3, at [27](a); Frickleton v Frickleton, above n 4, at [31]; Crick v McIlraith

[2012] NZHC 1290 at [19]–[20].

7      Frickleton v Frickleton, above n 4, at [33].