Greig and McNicholas as Executors and Trustees of the Estate of Hartley v Lilian HC Whangarei CIV 2011-488-0068 [2011] NZHC 1633 (27 October 2011)

Last Updated: 23 November 2011

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

_{CIV 2011-488-0068}

UNDER the Trustee Act 1956 and the Companies

Act 1993

IN THE MATTER OF the Estate of SANDRA HARTLEY BETWEEN REUBEN HARTLEY GREIG AND

DAVID JOHN STEPHEN MCNICHOLAS

AS EXECUTORS AND TRUSTEES OF THE ESTATE OF SANDRA HARTLEY Plaintiffs

AND LILIAN Defendant

Hearing: 27 October 2011

Counsel: R C Mark for Plaintiffs

M B Dodds for Defendant

Judgment: 27 October 2011

_{(ORAL) JUDGMENT OF HEATH J}

Solicitors:

Richard Mark, PO Box 172, Kerikeri Amanda Kennedy, PO Box 702, Kerikeri Counsel:

_{M B Dodds, PO Box 199, Kerikeri}

HARTLEY GREIG V LILIAN HC WHA CIV 2011-488-0068 27 October 2011

[1] This proceeding concerns the estate of the late Sandra Hartley, who died on

10 April 2010. There are three executors and trustees. They are Mr Greig (the deceased’s son), Mr McNicholas (an independent trustee who currently resides in the United Kingdom) and Lilian[1] (with whom Ms Hartley was formerly in a de facto relationship. The named beneficiaries of the estate are Ms Hartley’s children, Mr Greig and his sister, Ms Fleur Greig.

[2] The present proceeding was brought by Mr Greig and Mr McNicholas with a view to removing Lilian as a trustee. Subsequently, the claim was amended to seek also her removal as an executor. Other relief sought includes a declaration in respect of the interpretation of a clause in a relationship property agreement into which Ms Hartley and Lilian entered on 23 September 2009, as well as an order appointing either Mr Greig or Mr McNicholas as a director of Hone Heke Lodge 2005 Ltd, a company formerly operated by both Ms Hartley and Lilian.

[3] On 11 April 2011, Associate Judge Bell directed that the trusteeship issue be determined before the others, as it goes to establishing the appropriate parties to the other claims.

[4] On 20 September the Associate Judge directed that a Family Court file be made available to this Court, so that the presiding Judge could ascertain the matters in dispute in each Court. The Judge recorded that it was desirable for this Court to determine whether issues as to interpretation of the relationship property agreement should be heard in this Court or in the Family Court. That issue was to be determined at today’s hearing, in conjunction with the question of trusteeship.

[5] The background to the latter direction of the Associate Judge is that Lilian has issued proceedings in the Family Court at Kaikohe in respect of the relationship property agreement. Those proceedings have been adjourned until 7 November

2011, to await determination of the present application to remove Lilian as a trustee

_{and executor.}

[6] At the commencement of today’s hearing I raised with counsel the possibility of streamlining the proceeding, with a view to having all material issues determined by the end of February 2012. My suggestion included the fixing of a judicial settlement conference for 24 November 2011, at which the parties would be able to discuss all issues in dispute and to reach agreement in a form that may not exactly conform with answers to specific legal questions on which either this Court or the Family Court may ultimately be asked to rule.

[7] If live issues remained, I proposed that they be determined at a hearing on 2

February 2012 in this Court, for that purpose. I suggested to counsel that their clients may wish to consider whether to consent to transfer of the Family Court proceedings to this Court, for determination contemporaneously.

[8] After taking instructions, counsel advised me that an application will be made for transfer on a consent basis. The presiding Judge in the Family Court, on 7

November 2011, should be in a position to make that order. To the extent that the Judge may have any concerns about the appropriateness of such an order, I express my view that it is preferable for all issues to be resolved together in one Court. While this Court may determine relationship property agreements if proceedings in the Family Court were transferred, there would be no ability for the Family Court to deal with all issues arising in this proceeding.

[9] Some discussion took place as to what mechanism should be put in place to hold the position, pending the settlement conference. The concerns revolved around the identity of the executors and trustees and the ability for a number of functions to be undertaken in the period preceding 24 November 2011.

[10] I am grateful to counsel and to their clients for their assiduous consideration of the points that arise and the consent arrangements put before the Court which I now confirm.

[11] All three executors and trustees will remain in office, pending any agreement reached at the settlement conference or otherwise the determination of any points remaining on 2 February 2012.

[12] The parties agree that the following steps may be taken before the settlement conference by the three executors and trustees.

[13] Payment of money will be achieved through instructions being given to the solicitors for the estate to make the appropriate payments out of estate funds.

[14] I record those matters that can be dealt with by the executors and trustees as follows:

(a) The estate’s share of a debt owed to Mary Hartley, namely a sum of

$50,000, shall be paid from funds held by the estate that are independent of the proceeds of a life insurance policy taken out with Asteron.

(b) The business known as “Rolling Cones”, an ice-cream business, shall be listed for sale with a real estate agency in the Bay of Island Realty, trading as The Professionals (Dennis Corbett) with a view to effecting a sale of that business as soon as possible.

(c) Once the ice-cream business has been sold, Lilian shall, from her 50% of the sale proceeds, forthwith pay her share of the debt owed to Mary Hartley, namely a sum of $50,000 plus any accrued interest.

(d) The sum of $50,000 shall be paid to Hone Heke Lodge 2005 Ltd from the Asteron policy proceeds. This is to be done with the intention that the shareholders of Hone Heke 2005 Ltd shall each receive from those funds the sum of $25,000 on account of moneys owing on respective current accounts to the shareholders by Hone Heke 2005 Ltd.

(e) On receipt of that sum each shareholder, namely Lilian and the executors and trustees of the estate, shall then deal with their respective receipts as follows:

(i) Lilian shall pay to the estate $25,000, being 50% of the debt that she owes to the estate and

(ii) The estate shall retain the sum of $25,000 for distribution to the beneficiaries (Mr Greig and his sister, Fleur) in equal shares. To facilitate that distribution, Lilian shall formally consent pursuant to s 71(2) of the Property (Relationships) Act

1976 to the interim distribution.

[15] If required by the beneficiaries, a further interim distribution of $25,000, namely $12,500 to each beneficiary, shall be made from the estate funds separate to those arising from the remaining proceeds of the Asteron policy. Lilian shall provide a formal consent under s 71(2) of the Property (Relationships) Act 1976 to any such payment.

[16] On receipt of evidence of the actual funeral expenses incurred (ideally invoices rendered in respect of the late Ms Hartley’s funeral) and upon satisfactory proof being given to the solicitors representing the estate, require that the funeral expenses that have already been paid by Mr Greig or his wife, shall be reimbursed.

[17] In all other respects the parties agree that no action will be taken by the executors and trustees that may prejudice any of the arguments to be advanced at the settlement conference, or any hearing on 2 February 2012.

[18] In relation to the settlement conference, I make the following directions:

(a) On or before 11 November 2011, counsel for the respective parties shall file a statement of issues to be addressed at the conference. If either party wishes an issue to be included in the list, it shall be included; though a notation may be added to identify any issues that the other party does not accept arise.

(b) On or before 11 November 2011, counsel for Mr Greig and Mr McNicholas shall file and serve a statement of position for the settlement conference and any “will say” statements that are required to supplement the affidavits filed in the proceeding to date.

(c) On or before 18 November 2011, counsel for Lilian shall file and serve a similar statement of position and any “will say” statements to supplement existing affidavits filed in the proceeding.

[19] The settlement conference is set down for 10am on 24 November 2011 before

Associate Judge Sargisson. One day is allocated.

[20] If settlement is not reached either in full or in part at the conference, counsel shall formulate, in conjunction with the Associate Judge, a list of issues to be resolved at the hearing on 2 February 2012. The Associate Judge may make any further procedural directions necessary to ensure that all evidence and submissions are before the Court on that day.

[21] I set the proceeding down for hearing at 10.30am on 2 February 2012 before me.

_{[22] All questions of costs are reserved.}

P R Heath J

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[1] Lilian is known by that name alone.