Win v Sinclair
[2024] NZHC 2039
•25 July 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-485-603053
[2024] NZHC 2039
IN THE MATTER of the estate of LINDSAY DAVID SINCLAIR BETWEEN
DONALD JAMES WIN and CHRISTINE JULIE HOEBERN
Applicants
AND
SHARON MARIE SINCLAIR
First Respondent
MAXWELL JOHN TILL
Second Respondent
Hearing: 17 July 2024 Appearances:
M J Matthew for Applicants
B Sheehan for First Respondent
Second Respondent will abide the Court’s decisionJudgment:
25 July 2024
JUDGMENT OF BLANCHARD J
This judgment was delivered by me on Thursday, 25 July 2024 at 12:15 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
Solicitors:Rennie Cox (M J Matthew), Auckland, for Applicants ARL Lawyers, Lower Hutt, for First Respondent
WIN v SINCLAIR [2024] NZHC 2039 [25 July 2024]
[1] The applicants have applied under s 19 of the Administration Act 1969 (the Act). The sole issue is whether the applicants should be appointed as administrators of the estate of Lindsay David Sinclair or, alternatively, whether an independent party (such as Trustees Executors Ltd) should be appointed.
Background
[2] The applicants are Mr Win, Mr Sinclair’s stepson, and Ms Hobern, Mr Sinclair’s close friend. The first respondent, Ms Sinclair, is Mr Sinclair’s daughter. The second respondent, Mr Till, was Mr Sinclair’s solicitor and friend. He retired on 31 March 2015.
[3] Mr Sinclair’s last will is dated 3 December 2014. He passed away on 25 February 2017. The will appointed the respondents as executors of his estate.
[4] Under the will, the net assets of the estate are to be distributed to Ms Sinclair, the applicants, and the deceased’s son, David Sinclair. Ms Sinclair is to receive 60 per cent of the estate, Mr Win is to receive 15 per cent, Ms Hobern is to receive 20 per cent, and David is to receive five per cent.
[5] On 28 February 2017, Mr Win lodged a caveat in relation to the estate. It was registered on 1 March 2017.
[6] On 3 March 2017, the respondents applied for probate as executors of the estate. Because of the caveat, the respondents were required to give Mr Win notice of the application for probate. From that time, no further steps were taken by the respondents to advance the application for probate.
[7] The lawyers for the applicants and Ms Sinclair exchanged correspondence regarding the estate. The correspondence reached an impasse. The applicants have made their application under s 19 of the Act to resolve this impasse.
[8] Ms Sinclair opposes the application because she is opposed to the applicants being appointed as administrators. She considers that an independent party should be appointed instead.
[9] Mr Till does not oppose the application. He filed an affidavit but did not seek to take part in the hearing and has advised that he will abide the decision of the Court.
Section 19 of the Act
[10]The relevant part of s 19 is subss (1) and (2), which read as follows:
19 Proceedings where executor neglects to prove will
(1)In any case where any executor named in a will neglects or refuses to prove the will, or to renounce probate thereof, within 3 months from the death of the testator, the court may, upon the application of any other executor or executors or of any person interested in the estate or of Public Trust or of the Māori Trustee or of any creditor of the testator, grant an order nisi calling upon the executor who so neglects or refuses to show cause why probate of the will should not be granted to that executor alone or with any other executor or executors or, in the alternative, why administration should not be granted to the applicant or some other person.
(2)Upon proof (whether by affidavit or otherwise) of service of the order, or upon the court dispensing with service of the order, if the executor who is so called upon does not appear or upon cause being shown, the court may make such order for the administration of the estate, and as to costs, as appears just.
…
[11] It will be seen that these provisions envisage a two-stage process. In the first stage an order nisi is made. In the second stage, which occurs after the order nisi has been served, the Court may make such order for the administration of the estate, and as to costs, as appears just.
[12] I pointed out to counsel during the hearing that a two-stage process has not been followed here. An order nisi has not been made and served, and yet the parties are inviting the Court to make final orders. However, counsel came to the hearing fully prepared to make arguments about final orders and adopting a two-stage process would just cause further delay and cost to the parties. Following discussion about this issue, counsel agreed that the Court can and should proceed to make final orders.
[13] Also relevant are rr 27.25 to 27.27 of the High Court Rules 2016. Under r 27.25(4), when s 19 applies, the Court may grant letters of administration with the will annexed to the person entitled to them according to the priority under r 27.26. The applicants are the persons having priority under r 27.26 after Ms Sinclair because
the value of their interests in the estate are second only to Ms Sinclair’s. Under r 27.27, the applicants were not required to give notice of their application to David because the value of their claim against the estate is greater than his and therefore they have a higher priority than him under r 27.26.
Allegation of misappropriation against Ms Sinclair
[14] Relevant to the application is an allegation made by the applicants that Ms Sinclair has misappropriated funds belonging to Mr Sinclair. They say that she misappropriated more than $310,000 from Mr Sinclair’s bank account from June 2015 to June 2016. They say that during this period, Mr Sinclair was suffering from a serious head injury following a car accident or was affected by dementia.
[15] Ms Sinclair rejects these allegations. She says that Mr Sinclair wanted her to have the funds and she was empowered to make the payments to herself by a power of attorney granted to her by Mr Sinclair.
Who should be appointed?
[16] There is no dispute that s 19 applies. As noted above, the only issue is who should be appointed as administrator.
[17] Ms Sinclair opposes the applicants being appointed because, she believes, they will not be able to act impartially. For this reason, she maintains that an independent party should be appointed.
[18] It is common ground that the administrators of the estate must be impartial.1 It is also clear that, even though the applicants have priority after Ms Sinclair under r 27.26, the Court can appoint someone other than the applicants as administrators if by reason of “special circumstances the court thinks it necessary or expedient to do so”.2
1 Trusts Act 2019, s 35; Re Stewart [2003] 1 NZLR 809 (HC) at [25]; and Sadler v Public Trust
[2009] NZCA 364, (2009) 28 FRNZ 474.
2 Administration Act 2019, s 6(2).
[19] Mr Sheehan submitted that there are two factors that suggest that the applicants are not impartial and therefore should not be appointed as the administrators. The first is that the applicants have said that they wish to pursue a claim against Ms Sinclair in relation to the alleged misappropriation. The second is that there is hostility between the parties.
[20] However, the mere fact that the applicants have said they intend making a claim against Ms Sinclair cannot on its own be sufficient to demonstrate they are not impartial and therefore they are barred from being administrators. Executors and administrators of estates are sometimes required to bring claims against beneficiaries. Clearly this, without more, does not provide a basis for suggesting that they are not impartial and therefore cannot continue in their position. Similarly, the fact that the applicants intend bringing a claim does not, without more, mean that the applicants are not impartial and should not be appointed as administrators.
[21] Mr Sheehan said that the applicants have essentially made an allegation of “theft” against Ms Sinclair. However, this is not how the applicants have characterised the claim against her.
[22] I agree with Mr Sheehan that it might be inappropriate for the applicants to be appointed as administrators if it was the case that there was evidence of personal hostility between them and Ms Sinclair.3 However, as Ms Matthew pointed out, there is no evidence of such hostility. There was no specific evidence that Mr Sheehan could point to as establishing hostility.
[23] The best Mr Sheehan could do was invite me to infer from the fact that no progress has been made in relation to the estate since 2017 that there must be hostility between the parties. However, there could well have been other explanations for the delay.
3 van Goch v van Goch [2018] NZHC 2335 at [63] and [64]; Public Trust v Lawrence [2022] NZHC 558 at [104] citing Hall v Radich-Chaytor [2020] NZHC 409 at [97].
[24] My impression from the evidence is that the main reason for the delay is inaction by the respondents. Mr Till’s affidavit suggests that Ms Sinclair’s lack of communication with the estate’s solicitors was the main reason for the lack of action.
[25] Mr Sheehan submitted that the caveat lodged by Mr Win prevented the respondents from being able to proceed with their application to obtain probate. However, the caveat in fact only required notice to be given to Mr Win. It did not prevent the respondents from proceeding with their application.
[26] My understanding is that two main factors prevented the applicants from bringing their application sooner. First, it took time to obtain information regarding Ms Sinclair’s alleged misappropriation.
[27] Second, time was lost due to unsuccessful negotiations with Mr Till and Ms Sinclair regarding the possibility of them renouncing their executorship. The applicants proposed that they renounce. An obstacle to this occurring was the parties agreeing on terms on which the beneficiaries of the estate would indemnify the respondents if they renounced. Correspondence was exchanged about this but ultimately the parties were unable to reach agreement.
[28] Ms Sinclair’s argument for an independent administrator also placed some reliance on the fact that her brother David only received a five per cent share of the estate. She says that David might make a claim against the estate under the Family Protection Act 1955. However, I do not see this as an issue. There is no evidence that David intends bringing a claim. Further, the applicants say that they understand that David was estranged from his father, but they have not met him. They have no relationship with him and say that, should he make a claim against the estate, they will consider and deal with it appropriately on the advice of their solicitors. I see no reason to doubt their evidence on this point.
[29] A point relied upon by the applicants in opposing the proposal that an independent party be appointed is the size of the estate. The applicants describe the estate as a modest one. It contains approximately $300,000. The applicants say that they and their solicitors have done a considerable amount of work to investigate the
allegations against Ms Sinclair. They are concerned that, if an independent administrator is appointed, the costs incurred by the estate will significantly increase, and the total cost incurred will be out of proportion with the value of the estate. In my view, this is a significant factor weighing against the appointment of an independent administrator.
[30] For these reasons, I conclude that the applicants should be appointed as the administrators. I order accordingly and grant letters of administration to the applicants with the will annexed.
Costs
[31] The applicants seek a costs order against Ms Sinclair. In my view, costs should follow the event. I order Ms Sinclair to pay costs on a 2B basis in relation to all steps taken by the applicants in the proceeding.
[32] The applicants also seek an order that the balance of their costs are paid from the estate. Subject to those costs being reasonable, I am satisfied that it is appropriate that they are paid from the estate. I order accordingly.
[33] Mr Sheehan submitted that, whatever the outcome of the application, Ms Sinclair’s costs should be paid from the estate. However, I am not persuaded that it is appropriate for Ms Sinclair’s costs to be paid from the estate when her opposition to the application has been unsuccessful and the application was required, in part, because of her conduct.
Blanchard J
0
3
1