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Last Updated: 1 February 2018
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IN THE COURT OF APPEAL OF NEW ZEALAND
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BETWEEN
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Appellant |
AND
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Respondent |
Hearing: |
4 August 2016 |
Court: |
Wild, Mallon and Williams JJ |
Counsel: |
RJB Fowler QC and M Freeman for Appellant
J R Grace for Respondent |
Judgment: |
JUDGMENT OF THE COURT
____________________________________________________________________
REASONS OF THE COURT
(Given by Wild J)
Introduction
[1] The appellant, Mark Frickleton (Mark), appeals the High Court’s refusal to remove his brother, Carl Frickleton (Carl), as the sole executor of the estate of their father (the Estate), the late Kalvyn William Frickleton (Mr Frickleton Senior).[1]
[2] Mark’s application of 22 May 2015 was made to the High Court under s 21 of the Administration Act 1969, which provides (and we set out only the relevant portion):
21 Discharge or removal of administrator
(1) ... 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.
...
[3] Mark had also applied, under s 51 of the Trustee Act 1956, for an order removing Carl as the trustee of the Frickleton Family Trust (the Trust), and appointment of the Public Trustee. The Trust was established by Mr Frickleton Senior in 1999. We will say more about it. Although Thomas J declined to remove Carl as trustee, she directed that an additional (independent and professional) trustee be appointed. That decision is not appealed.
Issues on appeal
[4] For Mark, Mr Fowler QC argues that Thomas J erred because the following three factors — at least in combination — made it expedient to remove Carl as executor:
- (a) Alienation of the Estate’s assets: In breach of his executorial duties, Carl transferred from the Estate to the Trust the remainder, once the Estate’s liabilities had been paid, of the $126,000 proceeds of the late Mr Frickleton Senior’s life insurance policies.[2]
- (b) Hostility or a lack of impartiality: Carl’s claim against Mark’s company, Stag Trading Ltd (Stag), to recover the debt Stag owes the Estate includes a claim for interest at a rate Mark alleges is punitive and exorbitant. In addition, Carl has amended that claim by adding a claim against Mark personally, including an allegation of fraud. The claim for interest and the added fraud claim against Mark demonstrate hostility by Carl toward Mark, inconsistent with the even-handed, objective approach required by an executor.
- (c) Judge unduly narrowed the test of expediency: Thomas J unduly focused on the merits of the debt claim Carl had brought against Stag. Expediency in terms of s 21 of the Administration Act demanded a wider view. In particular, the Judge did not adequately consider the fraud claim Carl had brought against Mark personally: that fraud claim was the nub of Mark’s concern.
Background
[5] Mr Frickleton Senior had four children: Carl, Mark, Reece and Dean (known as Jim). He died on 7 September 2009.
[6] Mr Frickleton Senior was a car dealer in Lower Hutt. His business, which he began in 1975, was called High Street Cars and operated from a yard at 5 High Street. In 1996 Mark joined his father in the business which they operated as a partnership.
[7] On 31 March 2004 the business was transferred to Mark’s company Stag. Mr Frickleton Senior lent the $213,932.90 book value of his one-half interest in the business back to Stag. The terms of that loan, in particular as to the rate of interest but also as to repayment, remain in dispute. None of the terms of the loan agreement was documented, or at least any written record has been lost. The same applies to any security for the loan. However, the loan appeared in Stag’s financial statements in each of the years ended 31 March 2004 to 2010. We revert to the disputed details of the loan in [18] to [20] below.
[8] When Mr Frickleton Senior settled the Trust in 1999, the initial trustees were Mr Frickleton Senior, his brother, Alan, and his solicitor, Mr Gartrell. Alan died some time before 2004 and the High Court removed Mr Gartrell as a trustee (and also as an executor of the Estate) on 23 March 2010. The beneficiaries of the Trust (all discretionary) are the four sons and their children (Mr Frickleton Senior’s grandchildren).
[9] Mr Frickleton Senior put most of his assets into the Trust. The Trust’s main assets are now two commercial properties, at 5 and 5A Rutherford St, Lower Hutt. Number 5 is leased to Stag for its car sales business. On 5A are constructed a number of separate units suitable for storage or commercial use.
[10] By his will, made in 1999, Mr Frickleton Senior appointed Alan and Mr Gartrell as his executors. Following Alan’s death, Mr Frickleton Senior made a codicil in 2004 appointing Carl as the replacement executor.
[11] The only significant asset of the Estate were the life insurance policies mentioned in [4](a) above.
[12] In June 2010 there was a meeting of the four brothers to discuss matters relating to the Estate. Subsequently Carl transferred the remainder of the proceeds of the insurance policy to the Trust. Carl, Reece and Jim have all deposed that all four brothers agreed to this transfer at the meeting. Mark now disputes this.
[13] Carl’s action in suing Stag to recover the debt it owes the Estate was prompted by actions taken by Mark. Following Mr Frickleton Senior’s death, his de facto partner, Ms W, had brought a proceeding against the Estate. Some of the convoluted history of this claim is recounted in a judgment given by Warwick Gendall J in the High Court at Wellington on 3 August 2009.[3] Gendall J was dealing with an appeal from a decision of Judge Grace in the Family Court at Lower Hutt.[4] Essentially, Gendall J allowed the appeal and:
- (a) ruled that the Family Court had lacked jurisdiction to declare the Trust a sham and, even if it had possessed jurisdiction, the evidence was insufficient to establish that the Trust was a sham;[5] and
- (b) remitted a number of issues back to the Family Court for rehearing and determination, including whether a constructive trust had arisen in favour of Ms W, the durations of the parties’ successive de facto relationships (there were a number of them between 1987 and 2005, with intervening breaks of varying lengths), and the quantum of any compensation should a constructive trust be established.
[14] Ms W then pursued her claim against the Estate. Carl described what then occurred in the following way:
In April 2013 Mark placed caveats over the Trust’s properties at 5 and 5A Rutherford Street, Lower Hutt. Mark claimed that he had been assigned a claim for a constructive trust arising from a de facto relationship that [Mr Frickleton Senior] had been in prior to 2004. Mark argued that the assigned claim was worth $400,000.00 and that it ought to be set-off from Stag’s debt. I was advised that Mark had no legal basis for registering the caveats. Rather than making applications to the High Court to remove the caveats, I dealt with the matter by negotiation. Mark has since agreed to remove the caveats on his own.
Thomas J recorded those events in her judgment.[6]
[15] Carl deposes that he tried unsuccessfully, for six months, to negotiate repayment of Stag’s debt to the Estate. The negotiations were conducted by his lawyer with Mark and Stag. On 16 December 2013 Carl’s counsel, Mr Grace, wrote to Mark’s solicitors indicating a willingness to consider any information relevant to the debt Stag owed the Estate. There was no reply.
[16] Mr Grace wrote again on 23 December 2013 requesting repayment (or a repayment proposal) by 13 January 2014, failing which enforcement action would be taken.
[17] Mark neither paid Stag’s debt nor made any repayment proposal.
[18] Carl, in his capacity as trustee and executor, filed a statement of claim against Stag in the High Court at Wellington on 24 January 2014. This pleaded the debt in the following way:
- BY an oral agreement dated 31 March 2004 [Mr Frickleton Senior] lent to [Stag] the sum of $213,932.90 upon the following conditions (“the loan”):
a. Interest would be paid at a rate of 10% per annum, compounding monthly;
b. The loan would be payable on demand.
The statement of claim sought judgment for $406,580.20 together with interest on that amount at 10 per cent per annum, compounding monthly, from 31 January 2014 to the date of judgment.
[19] Carl applied for summary judgment on 4 March 2014. The application was supported by two affidavits sworn by Mr Colin Chard. Mr Chard was a retired financial adviser who had known Mr Frickleton Senior for approximately 30 years, and who had also been close to Mr Frickleton Senior’s accountant, the late Mr Jon Paterson. Mr Chard’s evidence on the two disputed terms of the loan can be summarised as follows:
- (a) Interest rate: Mr Frickleton Senior’s family Trust was paying interest of over nine per cent per annum, compounding daily, on loans by the National Bank to the Trust. Mr Frickleton Senior insisted that Stag pay interest on the loan at a rate sufficient to offset the interest that was being charged to the Trust by the National Bank. He would not lend money to Stag if he could not offset the interest that he was paying.
- (b) Repayment: The loan was repayable upon a reasonable demand or request being given. Mr Frickleton Senior never expected that Stag would be able or willing to pay him the $213,932.90 plus interest as soon as he asked. The agreement was that he would give Stag a reasonable time for repayment.
[20] Carl’s application for summary judgment was dealt with in a judgment delivered by Associate Judge Smith in the High Court at Wellington on 1 May 2014.[7] The effect of this judgment can be summarised as follows:
- (a) The Associate Judge set out the evidence supporting Carl’s claim — that is, the evidence supporting the loan agreement and its terms.[8]
- (b) The judgment records that Stag’s notice of opposition stated there was “no loan or agreement to pay interest”, that the claim was statute barred, that Stag had rights of set-off and that Carl had agreed the Court needed to determine those rights of set-off.[9]
- (c) The Associate Judge was satisfied Stag had “not raised any real question for trial on the issue of whether or not Mr Frickleton [Senior] lent [Stag] $213,932.90 on 31 March 2004”.[10]
- (d) The Associate Judge was “not satisfied that [Carl] has shown that [Stag] has no arguable defence to the claim for interest”.[11]
- (e) The Associate Judge found that “[Carl] has failed to show that [Stag] has no arguable limitation defence”.[12]
[21] Accordingly, the Associate Judge dismissed the application for summary judgment, ordering Carl to pay Stag’s costs.[13]
[22] Mr Grace informed us that Mark has since abandoned any limitation defence to the Trust’s claim. Mr Fowler did not disagree.
[23] On 27 May 2015 — that is well after the delivery of Associate Judge Smith’s judgment — Carl filed a second amended statement of claim. This added a new cause of action against Mark personally, as second defendant. The relevant new pleading is:
- ON 31 March 2011 the Second Defendant transferred or authorised the transfer of the Plaintiff’s loan account, referred to in paragraphs 3 and 9 above (“the loan account”) into his own name and control whereby the loan account merged with the Second Defendant’s current account.
- THE Second Defendant transferred or authorised the transfer of the loan account without the Plaintiff’s consent, knowing that the loan account belonged to the Plaintiff. By doing so the Second Defendant:
a. Unjustly enriched himself at the Plaintiff’s expense;
c. Acquired the property in the loan account by fraud.
[24] Some explanation of the basis for that claim is required. Associate Judge Smith’s judgment contains detailed reasoning leading to his conclusion set out at [20](c) above. That reasoning included the fact that Stag’s financial statements for the years ended 31 March 2005 through to 31 March 2007 included, on the liabilities side of the balance sheet, a loan from K W Frickleton (we note that the statements actually record a loan until 2010). For example, the schedule of term loans in the 2007 accounts contained the following:
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2007
$ |
2006
$
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Loan – K W Frickleton – Security Security – First
Ranking Debenture
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Opening Balance
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244,933
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236,433
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Interest
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23,750
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23,500
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Less Payments
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17,500
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15,000
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Total outstanding
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251,183
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244,933
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[25] Stag’s 2008 and 2009 financial statements were prepared by a different accountant, Simple Accounting Services Ltd, and are indeed in a simpler format. But the balance sheet as at both 31 March 2008 and 2009 records, as a non-current liability, a loan of $230,345.
[26] In Stag’s financial statements for the year ended 31 March 2011, the accounting treatment of Stag’s loan from the Estate has been completely changed. By means of a journal entry on 18 January 2012, the accountant has debited Stag’s loan account $244,482.90 and credited Mark’s shareholder current account $230,345.30.[14] The effect of this was to convert, in Stag’s accounts, what had previously been a loan from the Estate to Stag into a debt owed by Stag to Mark. Consistent with this the narration to the journal entry reads “Remove loans as personal from family ...”.
[27] The new claim against Mark personally, set out in [23] above, was founded in breach of trust and fiduciary duty. The relief claimed was the same relief claimed against Stag (the principal of the debt plus compounding interest), but there was an additional claim for $50,000 exemplary damages.
[28] As already mentioned, Mark filed his statement of claim in the present proceeding seeking an order under s 21 of the Administration Act on 22 May 2015.
The law
[29] Late last year, in Tod v Tod, this Court endorsed the following statement, from the judgment of Heath J in Faruqhar v Nunns, of the principles that should guide a court in dealing with an application under s 21 to remove an administrator:[15]
- (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 factdependent.
- (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.
[30] Heath J’s summary in Farquhar v Nunns, in turn, drew heavily upon the excellent distillation of principles by Associate Judge Osborne in Crick v McIlraith.[16] The Crick summary was subsequently followed in at least seven other High Court decisions.[17]
[31] In Crick, Associate Judge Osborne also emphasised the importance of the testator or settlor’s selection of trustee. He stated: [18]
In relation to any application for any removal the Court must retain due respects for the wishes and indeed the autonomy of a testatrix. ...
The testator’s selection of executor should not lightly be set aside.
[32] This Court’s decision in Tod v Tod also endorsed those statements, the Court observing: “The courts will not readily replace an executor selected by a deceased to manage his or her estate.”[19]
[33] However, the interests of the beneficiaries must always be the focus. As it was put by the Privy Council over 100 years ago in Letterstedt v Broers,:[20]
... if [the Court is] satisfied that the continuance of the trustee would prevent the trusts being properly executed, the trustee might be removed. It must always be borne in mind that trustees exist for the benefit of those to whom the creator of the trust has given the trust estate.
[34] Thomas J, in the judgment under appeal, also referred to Lettersted v Broers, citing the following passage:[21]
In exercising so delicate a jurisdiction as that of removing trustees, their Lordships do not venture to lay down any general rule beyond the very broad principle above enunciated, that their main guide must be the welfare of the beneficiaries. Probably it is not possible to lay down any more definite rule in a matter so essentially dependent on details often of great nicety. But they proceed to look carefully into the circumstances of the case.
[35] In addition, Thomas J cited from this Court’s decision in Kain v Hutton:[22]
... mere incompatibility between trustees and beneficiaries is not enough ... Any incompatibility must be at such a level that the proper administration of the trust is seriously adversely affected and it has become difficult for a trustee to act in the interests of the beneficiary.
[36] Both Lettersted v Broers, an appeal from South Africa, and Kain v Hutton were more concerned with trustees, although in the first of those two cases with testamentary trustees. However, as Thomas J pointed out,[23] expedience is the touchstone of the Courts’ jurisdiction under both s 21 of the Administration Act and s 52 of the Trustee Act (Power of Court to appoint new trustees). Heath J made exactly that point in Farquhar v Nunns.[24]
First ground of appeal: Carl’s alienation of the Estate’s assets to the Trust
[37] So far as they take matters, we accept the two points Mr Fowler makes in his submissions. His first point is that the transfer of an asset from the Estate to the Trust prejudicially affected Mark because he has an “unqualified” entitlement to onequarter of the residue of the Estate, but is only a discretionary beneficiary of the Trust. The second point is that the transfer is not recorded in any written agreement between Carl and the beneficiaries of the Estate.
[38] But, for three reasons, we do not accept this first ground in itself justifies the Court removing Carl as executor, or is even a factor supporting removal. First, there are real difficulties with Mark’s allegation that he did not agree to the transfer. Carl, Reece and Jim have all deposed that he did, Reece and Jim specified this was at a meeting held at Mark’s car yard in June 2010. They say that Carl advised his three brothers at that meeting of the life insurance proceeds that the Estate had received, how he had used some of those proceeds to pay the Estate’s liabilities and of the amount of the balance remaining. The three brothers all say that it was then unanimously agreed that Carl should apply the balance for the use of the Trust.
[39] Mark’s different version of events is problematic. He accepts — or at least does not dispute — that the four brothers held frequent family meetings at which Carl reported orally on his administration of the Estate and management of the Trust. It is unlikely that receipt and disposal of the insurance proceeds would not have been discussed at one of these meetings. After all, the proceeds were substantial and represented the Estate’s major asset. Further, it appears Mark first objected to the transfer of the insurance proceeds to the Trust in the statement of claim he filed in this proceeding on 22 May 2015. In the affidavit Mark swore in this proceeding on 17 July 2015, he deposed he “was not even aware that [the transfer] had happened” until he read a previous affidavit of Carl’s (we assume this was an affidavit filed in the debt proceeding). Thus, it was at least four years after the meeting described in [38] above that Mark first objected to the transfer. He explains that by asserting that he was previously unaware of the transfer. For the reasons we have given, we consider that improbable.
[40] The second point is that the transfer, even if Mark did not agree to it or know about it, has not prejudiced him. The money was needed for maintenance work on the Trust’s properties. But for the transfer, Carl would have needed to call on the beneficiaries (the four Frickleton brothers) to put the Trust in funds to pay for this necessary work. A further point, assuming the insurance proceeds had remained in the Estate, is that Mark’s entitlement to his share of them was not unqualified as Mr Fowler asserts. Carl would be justified in not paying monies out to Mark before Stag had repaid its debt to the Estate and until Mark had accounted properly for the $143,000 advanced to him by the Trust to reimburse Mark for expenses he claimed he had paid on behalf of the Estate.
[41] Third is Mark’s complaint that Carl did not keep a written record of the beneficiaries’ agreement to the transfer of the insurance monies to the Trust. We have accepted Mr Fowler’s submission that this would have been good practice. However, this was an uncontentious agreement between four brothers who, at the time, were all on good terms. Oral agreements seemed to be the norm in Frickleton family dealing: a notable example is the loan agreement between Stag and Mr Frickleton Senior. It is significant that Mark has not provided documentation properly accounting for the $143,000 he claims to have spent discharging the Estate’s liabilities. This is the point we revert to at [55](c) below. Thomas J commented on the irony invol[25]d in this,25 and it does indeed appear to involve the pot calling the kettle black. This final point is also one raised directly for the first time on this appeal. It was not part of Mark’s argument before Thomas J in the High Court.
Second ground of appeal: hostility or a lack of impartiality
[42] Mr Fowler was careful to limit this ground to two points:
- (a) the fraud claim Carl has brought against Mark personally; and
- (b) the claim for interest at 10 per cent per annum, compounding monthly, which Mr Fowler categorised as “by any standard ... unusual and extremely aggressive”.
[43] Mr Fowler rightly eschewed any complaint against Carl for suing Stag to recover the debt the Estate alleges Stag owes it. We say “rightly” because there is plenty of authority — if any is needed — that an executor has a duty to take proper steps to recover debts due to the Estate. This Court’s decision in Spencer v Spencer is the leading New Zealand authority.[26] In Spencer this Court singled out Re Brogden; Billing v Brogden, and the leading English authority, citing from all three judgments of the English Court of Appeal.[27] In his judgment Lopes LJ agreed that a trustee is bound to make demand upon the debtor and, if necessary, issue a proceeding to recover the debt. His Lordship continued:[28]
I know of nothing which would excuse the neglect of such action on the part of a trustee, unless it be a well-founded belief that such action on his part would result in failure and be fruitless, the burden of proving the grounds of such well-founded belief lying on the trustee setting it up in his own exoneration. No consideration of delicacy, and no regard for the feelings of relatives or friends, will exonerate him from taking the course I have indicated.
(Our emphasis, given the family context here.)
[44] We deal first with the interest rate asserted by Carl. Mr Fowler’s complaint about this assumes interest at 10 per cent per annum, compounding monthly, was not the rate agreed as between Mr Frickleton Senior and Mark (or, more strictly, Mark’s company Stag). That is not a sound assumption for the purposes of this appeal.
[45] What was agreed will be a matter for evidence and determination by the Judge who decides the debt claim. It is not appropriate for this Court to go into the detail of that. However, as the interest rate claimed is said to evidence hostility, we draw attention to Mr Chard’s explanation of the reason why interest was agreed at 10 per cent per annum, compounding monthly. We also draw attention to the figures set out in [24] above. At the beginning of 2006 the balance of the loan is recorded as $236,433. The amount of interest charged for that year was $23,500. We calculate that to equate to a rate of just over 9.5 per cent per annum compounding monthly. The figure for 2007 likewise demonstrates interest being calculated at just over 9.3 per cent per annum compounding monthly. Thus, Stag’s own financial statements show it applying interest rates of around 10 per cent per annum compounding monthly to its debt to the Estate. The difference of 0.5 to 0.7 per cent may be attributable to rounding (all the figures are in whole numbers) or to the timing of any repayments (which, if made during the year, would have affected the amount by which the total debt increased each month).
[46] Mr Grace drew attention to the Estate’s offer to forego compounding interest and accept the rates of interest prescribed under s 87 of the Judicature Act 1908 if the various disputes between the Estate and Mark can be settled. This offer is contained in a letter Mr Grace sent Mark’s solicitors on 23 March 2015. The letter records that this offer involves the Estate “foregoing over $250,000 in interest ...”.
[47] We turn to the second aspect of this second ground of appeal: Carl’s fraud claim against Mark personally. Mr Fowler submitted that Thomas J had viewed Carl suing Mark for fraud as an issue “of some concern”. As Mr Grace pointed out, what the Judge actually said was this:[29]
[45] The second issue which is of some concern is the claim against Mark personally alleging fraud. This relates to the fact that, at some stage, it appeared that Mark transferred the debt to himself, that is, he placed himself in the position of creditor. Mr Freeman said this was simply an accounting error. That may be so, but Carl cannot be criticised for raising this issue.
[48] Our interpretation is that the Judge was expressing concern about the accounting adjustments described in [26] above. Absent a valid explanation for the adjustments, we share those concerns, in light of Associate Judge Smith’s decision that Stag did not have an arguable defence in respect of the loan by Mr Frickleton Senior of $213,932.90 on 31 March 2004.
[49] In the course of the hearing, we expressed concerns to Mr Grace about the fraud claim against Mark personally. We did that because it seems to us that the claim against Mark personally is wholly unnecessary. Whatever the explanation for the accounting adjustments in Stag’s financial statements for the year ended 31 March 2011, they cannot affect the agreement between Stag and Mr Frickleton Senior (now the Estate) as to the loan.
Third ground of appeal: undue narrowing by the Judge of the test of expediency
[50] The gist of this third ground is that Thomas J unduly narrowed the test of expediency to an assessment of the merits of the Estate’s claim against Mark. Mr Fowler based this claim on an analysis of seven paragraphs in Thomas J’s judgment under the heading “Hostility (trust and estate)”.[30] We need not set out these paragraphs. Having considered them carefully, we do not accept Mr Fowler’s criticism. The Judge noted that “Mark’s argument is primarily based on Carl bringing litigation against him, which he sees as inherently hostile”.[31] It was therefore appropriate for the Judge to consider whether Carl was justified in bringing the claim, and its merits. That is what she did, dismissing any suggestion that the claim was frivolous or vexatious and finding there was no evidence that Carl had acted unreasonably in bringing the claim. Thomas J also noted the concession by Mark’s then counsel, Mr Freeman, that the debt claim “would continue if Public Trust took over as executor.”[32]
[51] The Judge then went on to consider the impact of the litigation on the relationship between the four Frickleton brothers. In our view, she correctly applied the test: have matters reached a point that “is detrimental to the proper and efficient management of the Estate”?[33]
[52] Mr Fowler was critical of Thomas J for commenting “the relationship has not reached the point where the Estate ... is in any kind of ‘deadlock’”.[34] He submitted that the absence of a deadlock should not be determinative and certainly should not be the trigger point. We agree, but we do not interpret the judgment as saying that. Thomas J’s point was that Carl was still administering the Estate properly and effectively.
[53] This third ground, also, is not made out.
The three grounds of appeal in combination
[54] We have also considered whether the three grounds of appeal, when summed together, point to error on Thomas J’s part in declining to remove Carl as executor. In our view they do not. Each point lacks substance and, in combination, they still lack substance.
An overall resolution?
[55] Counsel informed us that the parties are taking their disputes to mediation on 30 August. That is heartening news. We are concerned that the costs of litigation will dissipate the Trust/Estate funds when a solution must be available and when a dispute of the present kind can be so destructive of family relationships. In that context we note:
- (a) The Associate Judge found there was no arguable defence in respect of the loan from Mr Frickleton Senior to Stag of $213,932.90 made on 31 March 2004.[35] Arguably, an issue estoppel operates against Stag as to the amount and date of the loan. Further, on 4 April 2013, Carl allowed Stag a set-off of $80,000 from the loan.[36] Certainly, the parties’ focus at mediation should be on the matters Associate Judge Smith found were open to argument: the interest rate and what was agreed as to repayment.[37]
- (b) The interest paid on the loan, as recorded in Stag’s financial statements up until they were changed in 2011, indicates the interest rate charged over a number of years before any dispute arose and therefore provides a starting point against which the parties can consider their respective positions.
- (c) We understand Mark to accept that $143,000 was advanced to him by the Estate. The Estate has asked Mark to account for these monies. In response, Mark has provided copies of his cheque butts. These butts show that between November 2009 and November 2010 Mark paid $127,043.42 on behalf of the Estate, comprising $67,444.85 in legal costs and fees (apparently relating to the Estate’s defence of Ms W’s claim), $57,119.90 in funeral expenses and $2,478.67 to Telecom. The Estate’s request for copies of the invoices relating to those payments is a reasonable one, assuming those invoices still exist. It is not clear to us whether Mark has accounted for the balance of $15,956.58 ($143,000 less $127,043.42) which he has had since the $143,000 was advanced to him on or about 28 June 2010.
[56] None of the three grounds of appeal has succeeded. Even taken in combination, they fail. The appeal is accordingly dismissed.
[57] The appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.
Solicitors:
Thomas Dewar Sziranyi Letts, Lower Hutt for Appellant
Simon Raizis Law,
Wellington for Respondent
[1] Frickleton v Frickleton [2016] NZHC 389.
[2] Nothing in the materials before this Court indicates what sum was transferred to the Trust.
[3] F v W HC Welllington CIV-2009-485-531, 3 August 2009.
[4] W v F FC Lower Hutt FAM-2005-032-87, 25 February 2009.
[5] F v W, above n 3, at [34] and [37].
[6] Frickleton v Frickleton, above n 1, at [11].
[7] Frickleton v Stag Trading Ltd [2014] NZHC 884.
[8] At [4]–[21].
[9] At [31].
[10] At [43].
[11] At [48].
[12] At [56].
[13] At [59].
[14] The difference of $14,137.60 was credited to “Loan 2 (901)” account.
[15] Tod v Tod [2015] NZCA 501 at [22], citing Farquhar v Nunns [2013] NZHC 1670 at [13] (footnotes omitted).
[16] Crick v McIlraith [2012] NZHC 1290 at [16].
[17] Harsant v Menzies [2012] NZHC 3390 at [57]; Bupa Care Services NZ Ltd v Gillibrand [2013] NZHC 2086, [2013] 3 NZLR 701 at [19]; Coote v Warren [2013] NZHC 3210 at [11]; Baird v Fisher [2014] NZHC 1347 at [6]; Allen v Morgan [2015] NZHC 1139 at [18]; Boyd v Connolly [2015] NZHC 2884; and Carter v Caldis [2015] NZHC 2996 at [54]. Another case, Nawisielski v Nawisielski [2014] NZHC 1547, does not refer to Crick v McIlraith but adopts largely the same principles from the other cases in this footnote.
[18] Crick v McIlraith, above n 16, at [19]–[20].
[19] Tod v Tod, above n 15, at [27(a)], citing Crick v McIlraith, above n 16, at [19]; Farquhar v Nunns, above n 15, at [13(c)]; and Hinde v Cranwell [2012] NZHC 63 at [27].
[20] Letterstedt v Broers (1884) 9 App Cas 371 (PC) at 386 per Lord Blackburn, delivering the Privy Council’s opinion. Cited with approval by this Court in Hunter v Hunter [1938] NZLR 520 (CA) at 529 and 530–531 per Myers CJ and at 552–553 per Callan J.
[21] Frickleton v Frickleton, above n 1, at [21], citing Letterstedt v Broers, above n 20, at 387.
[22] At [23], citing Kain v Hutton [2007] NZCA 199, [2007] 3 NZLR 349 at [267].
[23] At [20].
[24] Farquhar v Nunns, above n 15, at [13(f)].
[25] Frickleton v Frickleton, above n 1, at [57].
[26] Spencer v Spencer [2013] NZCA 449, [2014] 2 NZLR 190.
[27] At [57]–[59], citing Re Brogden; Billing v Brogden (1888) 38 Ch D 546 (CA).
[28] Re Brogden; Billing v Brogden, above n 27, at 574.
[29] Frickleton v Frickleton, above n 1.
[30] At [60]–[66].
[31] At [60].
[32] At [62]. Mark had sought the appointment of the Public Trustee as executor in Carl’s place.
[33] These are the words of Callan J in Hunter v Hunter, above n 20, at 553.
[34] Frickleton v Frickleton, above n 1, at [65].
[35] Frickleton v Stag Trading Ltd, above n 7, at [43].
[36] Paragraph 3 of Carl’s Statement of Claim and paragraph 4 of his Amended and Second Amended Statements of Claim.
[37] We have excluded limitation for the reason explained in [22] above.
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