Wellwood v Wellwood

[2019] NZHC 801

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2018-485-606488

[2019] NZHC 801

UNDER

the Trustee Act 1956 and the Administration Act 1969

IN THE MATTER

of the Estate of Roderick Arthur Wellwood

BETWEEN

ROBYN MARIA WELLWOOD, ELINORE LISA MARTEL AND ANNA KATRINA ASHTON

Plaintiffs

AND

MICHAEL WELLWOOD

Defendant

Hearing:	14 March 2019
Appearances:	G W D Manktelow for the Plaintiffs C J Tennet for the Defendant
Judgment:	12 April 2019

JUDGMENT OF COOKE J

[1]    The plaintiffs are the daughters of Roderick Arthur Wellwood who died at Waipawa on 7 March 2018. Mr Wellwood’s will dated 1 February 2013 appointed the defendant, his son, as sole executor. This proceeding involves an application by the plaintiffs for an order under s 21 of the Administration Act 1969 removing the defendant as the executor. The defendant is currently serving a prison sentence in Napier. He is also a discharged bankrupt. There are various other factors mentioned in the evidence that has been filed said to justify his removal. The application was opposed.

WELLWOOD v WELLWOOD [2019] NZHC 801 [12 April 2019]

[2]    The plaintiffs earlier pursued an interlocutory application that Ms Wendy Dewes, a solicitor based in Lower Hutt, be appointed as temporary administrator. That application was called in the Judge’s Chambers List on 13 August 2018 and was granted on an unopposed basis. The defendant complains that he was not given satisfactory notice of that application in order that he could oppose it.

[3]    The substantive application was heard by me on 14 March 2019. At the conclusion of the argument I made the following orders:

(a)Under s 21 of the Administration Act 1969 that Mr Michael Wellwood is removed as executor.

(b)The application is otherwise adjourned for 10 working days to allow the parties to discuss and potentially agree on an independent solicitor to act as the sole executor. The parties are to advise the court by filing memoranda immediately after the 10 days whether agreement has been reached.

(c)If agreement is not reached the Court will invite the President of the Law Society to make a recommendation as to the identity of a sole executor of the estate.

(d)In meantime the appointment of Ms Wendy Dewes the interim administrator is to continue.

[4] I indicated at that time that I would subsequently deliver reasons for my judgment, and that this may occur after the step set out at [3](b) above. These are my reasons. I also make further orders resulting from what has since occurred, which I outline below.

Relevant principles

[5]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 or her 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 her or them as such shall become and be vested in the continuing administrator or administrators (including any administrator appointed under subsection (1)) who shall have the same powers, authorities, discretions, and duties, and may in all respects act, as if he or she 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.

[6]    Reference has also been made to s 51 of the Trustee Act 1956, although s 21 of the Administration Act more squarely addresses the current situation.

[7]    In Tod v Tod, the Court of Appeal approved the approach taken by the High Court in Farquhar v Nunns to an application under s 21 in the following terms:1

[22]      In his judgment in Farquhar v Nunns, Heath J set out the principles counsel for the plaintiff submitted applied in that case. We consider those principles have equal application here:

(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

1      Tod v Tod [2015] NZCA 501, [2017] 2 NZLR 145 at [22] (footnotes omitted); and Farquhar v Nunns [2013] NZHC 1670 at [13].

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.

Application to this case

[8]    The relevant evidence here came before the Court in affidavit form. As far as I can tell, no order has been made that the proceedings be dealt with as an originating application under pt 19 of the High Court Rules 2016, as is normal for proceedings involving the removal or replacement of trustees. But the Court has given directions for the filing of affidavit evidence. For completeness, and in accordance with r 19.5, I direct that this proceeding has been treated as an originating application.

[9]    As indicated in Farquhar v Nunns, the jurisdiction exercised by the Court is heavily fact dependent.2 A number of affidavits have been filed from Elinore Lisa Martel, Robyn Wellwood, Royce Colin Ashton, Anna Katrina Ashton and Matthew Bevan Martel for the plaintiffs, and from Michael Justin Wellwood and Sally Patricia Moss for the defendant.

[10]   I address the considerations that I regard as relevant in light of the evidence filed and the submissions made. In my view there are three interrelated factors of significance.

Defendant’s imprisonment

[11]   First, as indicated, the starting point is the Court’s duty to see that the estate is properly administered. In that context, Mr Manktelow for the plaintiffs relied on the fact that the defendant was convicted and sentenced of serious offending in 2015 and is serving a prison sentence, and that he is a discharged bankrupt. In response,

2      Farquhar v Nunns, above n 1, at [13](b).

Mr Tennet for the defendant argued that the offending for which the defendant has been imprisoned does not involve dishonesty, and that he is still able to perform his duties as executor.

[12]   The fact that an executor is serving a term of imprisonment, or is a discharged bankrupt, does not in itself disqualify them from performing their duties as executor. Indeed, I have recently ordered that a serving prisoner and a discharged bankrupt be the two executors of an estate, removing the other executors.3 But the fact that the defendant is serving a term of imprisonment is relevant to whether he should continue in the role as executor. The fact that he is in prison will inhibit his ability to perform his functions — he will not be able to freely visit places or attend meetings. Such imprisonment may also be of concern for the beneficiaries, or other persons, on the basis that the executor cannot be trusted to perform his duties responsibly given that he has engaged in serious offending. In other words, it gives rise to legitimate issues of concern, albeit by itself it may not necessarily mean that the defendant should be removed from his role.

Testator’s wishes

[13]   The wishes of the testator are to be given consideration. Here the defendant was identified as the executor in Mr Wellwood’s will. However, following the defendant’s conviction and imprisonment Mr Wellwood  signed a document dated    8 February 2018 reading as follows:

To whom it may concern

I wish Rosalind Phillips to administer my estate should I die. My will is held by Gardner Knoblock Napier. I have a small insurance life cover at Sovereign insurance worth about $7000. Arrange the sale of my assets through Mark Johnstone. Perhaps Rupert Ryan could assist this process in selling livestock, which is at Puketapu (14 cows with calves at foot), and Waipapa (5 rising 2 yr Hereford heifers, 5 rising 3 yr in calf heifers, 1 Hereford bull, 2 cows with calves at foot, 3 sundry 18 mth heifers).

I have shares in AMP, as has Elisabeth (which are in the process of being transferred to me). I also have Farmlands shares.

I wish to buried at Puketapu with Elisabeth.

3      Wilkins v Wilkins [2019] NZHC 458. That application was unopposed, however.

[14]   This document does not comply with the formalities to be a codicil to his will. But it nevertheless operates to qualify the suggestion that Mr Wellwood wanted the defendant to be  the  executor,  particularly  as  it  was  signed  the  month  before  Mr Wellwood’s death.

[15]   It has also emerged that the defendant had himself apparently resigned from his role as executor in light of his father’s views. The following handwritten document was provided to the  Court  in  the  second  affidavit  of  Robyn  Wellwood  sworn  13 December 2018:

To whom it may concern

I am the executor of my father, Roderick Wellwood’s will. Due to my incarceration it would be very difficult to perform my duties.

With this in mind and in line with my fathers wishes, I transfer my responsibilities to Ros Philips and appoint her the executor of Dad’s will in my place with the support of Rupert Ryan and Mark Johnson.

This is supported by a letter penned by Dad when in hospital in Auckland.

Michael Justin Wellwood

[16]   The  document  is  signed  and  dated  10 March  2018,  three   days  after   Mr Wellwood’s  death.   In  a  subsequent  affidavit  from  the  defendant  sworn    26 February 2019, he explains that he did sign the resignation documents but that no further action was taken following advice from the solicitors acting for the estate that the cost of transferring executorship would be counter-productive and that he could continue to act as executor from prison.

[17]   The position is further complicated by the fact that it is accepted by all parties that the proposed replacement executor mentioned in both document, Ms Phillips, does not wish to be the executor of Mr Wellwood’s estate. Accordingly, there is no suggestion that she should be appointed executor by the Court.

[18]   In light of the late emergence of the resignation document, ss 11 and 12 of the Administration Act also potentially become relevant:

11Cesser of right of executor to prove

(1)     Where a person appointed executor by a will—

…

(c) renounces probate of the will,—

his rights in respect of the executorship shall wholly cease, and the representation to the testator and the administration of the testator’s estate shall devolve and be committed as if that person had not been appointed executor.

…

12Withdrawal of renunciation

(1) Notwithstanding anything to the contrary in section 11, an executor who has renounced probate (whether before or after the commencement of this Act) may be permitted by the court to withdraw the renunciation and prove the will.

…

[19]Mr Manktelow duly argued that s 11 applies.

[20]   I do not place much significance on the defendant’s suggestion in response that Mr Wellwood signed the document on 8 February 2018 under duress.

[21]   Whilst the document signed by the defendant on 10 March 2018 appears to be a formal renunciation by the defendant of his role as executor, that was only so in favour of Ms Phillips. Given that she did not take over, and does not want to take over, I see greater force in Mr Tennet’s submission that the apparent renunciation has not been effective. For this reason, I conclude that there has not been an effective renunciation under s 11.

[22]   But what this document does recognise is the legitimacy of the concern relating to the defendant’s ability to effectively perform the role as executor from prison, and that Mr Wellwood did not wish his son to remain as executor because of this. So it is relevant to the overall assessment.

Animosity between the parties

[23]   The final factor is that there is what appears to be a significant degree of animosity between the parties, with allegations being made by them against each other.

[24]   The defendant was convicted and imprisoned for sexual offending. In their affidavits, the plaintiffs make reference to conduct of an inappropriate kind occurring in their own past with the defendant. This suggests a lack of trust of the defendant. For his part, the defendant makes allegations in relation to pressurising conduct by the plaintiffs, including allegations in relation to the property that is to be administered by the executor. There are also allegations by the plaintiffs of a conflict of interest in relation to the position of the defendant and Sally Moss, the defendant’s partner.

[25]   Unfortunately the allegations have continued in this proceeding itself. The plaintiffs make allegations against the defendant in relation to his non-disclosure of the document in which he appeared to resign as executor, and the defendant makes allegations in relation to the circumstances under which the plaintiffs obtained an order appointing Ms Dewes as interim administrator.

Conclusion

[26]   I do not intend to traverse all the allegations I have just referred to, let alone make any findings about each of them. What they demonstrate, however, is that given the animosity, and the other circumstances I have addressed, it is no longer appropriate for the defendant to remain the sole executor of the estate. For the same reason, it would not be appropriate for any of the plaintiffs to occupy that position. The position has been reached where it is necessary for there to be an independent solicitor appointed to act as the executor to ensure that the appropriate steps in the administration of the estate are taken, and that all those who benefit from the estate can know that this role is being undertaken on an impartial and professional basis.

[27]   Mr Tennet argued that parties in the position of the plaintiffs should not be able to manufacture the removal of an executor by simply claiming that there was a dispute between them and the executor. The Court would no doubt be conscious of that possibility, but I do not think it arises here. It is clear that there are deep-seated grievances going both ways in this case. And the reality is that the defendant is a serving prisoner, and there are signed documents from the testator and the defendant himself recognising the implications of that for his ability to be the executor.

[28]   In a sense, the parties have themselves recognised the situation. The plaintiffs seek continuation of the appointment of Ms Dewes as sole administrator on the basis that she is an independent and professional trustee. The defendant also recognises the position. He accepts that Mr Christopher O’Connor of Strachan O’Connor could be appointed co-executor along with the defendant. Mr Tennet argued that Mr O’Connor was preferable to Ms Dewes because of his lower charge-out rates. I accept that the cost to the estate is a relevant consideration. The main asset of the estate is a property with a rateable value of $395,000, in relation to which there appears to be an outstanding loan of about $80–85,000. There is also other less valuable property and liabilities.

[29] It was in these circumstances, however, that I made the orders referred to at [3] above, effectively determining that a sole independent solicitor needed to act as executor. I gave the period of time following the hearing to see if the parties could agree on the identity of that person.

Result

[30] Following the hearing, and the orders I made at [3] above, the parties had discussions to attempt to agree on an executor. They duly did so as I received an undated consent memorandum agreeing on the appointment of Kevin Robert Smith as executor, together with a consent by him to undertake that role dated 1 April 2019.

[31]   Given the background, I also think it appropriate that Mr Smith as the new executor provide a report to the Court outlining the steps that he takes as the executor. In the circumstances that report should be provided within a time that is reasonable for steps to be completed for the winding up and distribution of the estate.

[32]In those circumstances, I make the following orders:

(a)Appointing Kevin Robert Smith of Wellington, Solicitor as sole executor of the estate of Roderick Arthur Wellwood.

(b)Revoking the appointment of Wendy Dewes as interim administrator.

(c)Directing Mr Smith to file a report to the Court outlining the steps that have been taken for the administration of the estate by 4.00 pm Friday 12 July 2019. That report should be forwarded to me in the first instance.

(d)Reserving leave for the parties to apply for any consequential orders.

[33] I make the order referred to at [32](d) above as it is not unusual, for example, for there to be a need for vesting orders under s 52 of the Trustee Act 1956. Such application can be made by the filing of memoranda, which can be referred to me.

[34]   Both parties sought a costs award in relation to this proceeding. Both parties also sought a direction that their legal costs be met out of the assets of the estate. In the circumstances, I do not think it appropriate to make a costs award, but I am minded to agree that the reasonable legal costs of each of the parties should be met out of the assets of the estate. I direct the parties to file memoranda identifying what the legal costs are, following which I will determine the amount, or the proportion of the amount, that is to be met by the estate. Such memoranda are to be filed within 10 working days of release of this judgment.

Cooke J

Solicitors:

Guy Manktelow, Lower Hutt for Plaintiffs Maniapoto Law Ltd, Petone for Defendant