Nawisielski v Nawisielski [2014] NZHC 1547 (3 July 2014)

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IN THE MATTER	of an Application pursuant to section 51 of the Trustee Act 1956 for the removal of a Trustee and appointment of a new Trustee
BETWEEN	ANTHONY PAUL NAWISIELSKI Plaintiff
AND	MARIANNE DENISE NAWISIELSKI Defendant

Hearing:	1 July 2014
Counsel:	NW Woods for plaintiff JGA Day for defendant
_Judgment:	_{3 July 2014}

This judgment was delivered by me on 3 July 2014 at 3:30pm pursuant to Rule 11.5 of the High Court Rules.

[2] The deceased married the defendant on 29 June 1985. The deceased made a will on 27 July 2004. By that will he appointed the defendant his executrix. He gave the whole of his estate to the defendant. Probate in common form was then granted to the defendant, his executrix, by the High Court on 10 January 2014.

[3] The defendant has received certain items of property which were jointly owned by the deceased and herself by survivorship. She acknowledges that she

Property	Title	QV Capital Value $
1433 Bulls Road, Kerikeri	NA 1574/17	460,000
State Highway 10 Kerikeri (orchards)	NA 100C/150	550,000
1329 Bulls Road, Kerikeri (commercial building)	NA 37D/428	500,000
405 Kerikeri Inlet, Kerikeri	NA 61C/1152	980,000
Poplar Lane, Kerikeri	NA 131A/217	255,000
Poplar Lane, Kerikeri	NA 96B/487	570,000
17 Dorchester Place, Orewa	NA 130A/898	890,000
Total		$4,205,000

[4] The defendant says 17 Dorchester Place, Orewa was held on trust. It is not necessary for the purposes of this proceeding that I explore that further.

[5] The real property that I have referred to is said to have a total quotable value of approximately $4,205,000. The properties have not been separately valued for the purpose of this proceeding. Again, that is not critical for the purpose of disposing of this proceeding. It does give an indication, however, of the amount of jointly owned property at the time of the deceased’s death.

Assets	Value $
Campervan (1997 Mitsubishi Canter)	80,000 – 95,000
Boat (1999 Carey 42 foot)	200,000 – 260,000
Marina Berth	50,000 – 60,000
Ute (2003 Toyota Hilux)	1,367
Total	$330,000 - $416,367

[7] Once again, the precise value of these items is not critical for the purpose of this proceeding. I was advised from the bar that the boat, marina berth licence and the ute were owned by the deceased at the date of his death. The campervan, I was advised, was owned jointly by the deceased and the defendant and therefore passed to the defendant by survivorship.

[8] The plaintiff pleads, in paragraph 5 of his statement of claim, that the defendant has failed, or refused, or neglected, to call in relationship property of his late father’s estate for distribution. In the scheme of things, I do not regard this allegation as critical for the purpose of this proceeding.

[9] The plaintiff’s objective in this proceeding is clear. He desires that his

deceased father’s estate, through an appropriately appointed executor and trustee,

apply pursuant to s 88(2) of the Property (Relationships) Act 1976 to bring a claim in reliance on s 81 of the Property (Relationships) Act 1976 pursuant to s 25(1) of the Property (Relationships) Act 1976.

(2) The personal representative of the deceased spouse or partner may, with the leave of the Court, apply for an order under section

25(1)(a). The Court may grant leave only if it is satisfied that refusing leave would cause serious injustice.

81 Presumption that property of deceased spouse or partner is relationship property

(1) All the property that was owned by the deceased spouse or partner at his or her death is presumed, in the absence of evidence to the contrary, to be relationship property.

(2) A person who asserts that any property to which the presumption in subsection (1) applies is not relationship property has the burden of proving that assertion.

(i) determining the respective shares of each spouse or partner in the relationship property or any part of that property; or

(ii) dividing the relationship property or any part of that property between the spouses or partners:

(b) make any other order that it is empowered to make by any provision of this Act.

[13] The plaintiff ’s intention is that if his father’s estate can be expanded that will provide a better basis for a claim in reliance on s 4 of the Family Protection Act 1955 for his proper maintenance and support. Section 4(1) of the Family Protection Act

(1) If any person (referred to in this Act as the “deceased”) dies, whether testate or intestate, and in terms of his or her will or as a result of his or her intestacy adequate provision is not available from his or her estate for the proper maintenance and support of the persons by whom or on whose behalf application may be made under this Act, the Court may, at its discretion on application so made, order that any provision the Court thinks fit be made out of the deceased's estate for all or any of those persons.

I was advised from the bar that the plaintiff has filed a proceeding in the Family Court by the plaintiff seeking relief under the Family Protection Act 1955. Clearly, some further work will have to be done in relation to who the appropriate parties are for reasons which will become obvious with the conclusion of this judgment.

[14] This proceeding is the first step in the process that the plaintiff wishes to follow. He seeks, in this case, orders which remove the defendant as executrix and trustee and either appoint himself or some other person in place of the defendant.

[15] The plaintiff relies on two alternative grounds for the orders sought. In the first place, he relies on s 21 of the Administration Act 1969. Section 21(1) provides:

(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 place, on such terms and conditions in all respects as the Court thinks fit.

[16] In the alternative he says that if, and only if, administration may be completed and the defendant is therefore trustee (not executor) he seeks the removal of the defendant as trustee pursuant to ss 46 or 51 of the Trustee Act 1956 and the

substitution of a new trustee. He also refers to the court’s inherent jurisdiction to

[17] Unfortunately, the parties, although close to agreement on the central issue involved in the proceeding before me, have failed to agree. That position, I apprehend, comes about because:

(a) The plaintiff maintained, until today, his position that he is the deceased’s personal representative. Mr Wood confirmed, however, that that is no longer his position;

(b) The defendant, although she recognised that she was in a conflict of interest position having regard to the claims of her stepson, has taken no steps to resign her executorship and trusteeship. One can appreciate that if she were to renounce that might well cause a problem because it would leave open the way for some other person who is appropriately qualified under the Administration Act to apply. There is no guarantee, in that situation, that that person might not similarly be in a conflict of interest situation.

[18] I return to a consideration of s 21 of the Administration Act 1969. Referring

“Expedience” is a lower threshold than necessity, and imports considerations of suitability, practicality and efficiency. While relevant, misconduct, breach of trust, dishonesty or unfitness need not be established to obtain an order. Hostility is another factor, though it is usually something that arises as between administrators/trustees and beneficiaries.

[19] The court is conscious that it should not readily replace executors and administrators specifically identified by a deceased to manage his estate.²But, the priority for the court is the proper and efficient administration of the deceased’s

_{estate for the benefit of all beneficiaries.}³_{The jurisdiction to remove an executor
is}

¹_{Bupa Care Services NZ Ltd v Gillibrand [2013] NZHC
2086, [2013] 3 NZLR 701 at [7].}

fact dependent. It involves a large element of discretion.⁴A personal representative’s duty is to be even handed between all the beneficiaries. That includes, at least, persons entitled or potentially entitled as statutory beneficiaries under the Family Protection Act 1955 of whose claims the personal representative is aware.⁵

[20] In the present case it is important that I record that the only person capable of taking matrimonial/relationship property proceedings on behalf of the estate is the personal representative.⁶

[21] There have been a number of cases where an executor has been held to be in a conflicted position between his or her interest as executor and as surviving spouse. The conflict arises because it is really not possible for such a person to give impartial consideration to the relationship property issues. Mr Day referred to Teariki v O’Reilly.⁷The plaintiffs were the daughters of the late Mrs O’Reilly. The defendant was Mrs O’Reilly’s second husband. He was the sole beneficiary and executor of her will. The property also passed to him by survivorship. The daughters commenced proceedings under the Matrimonial Property Act 1963. Their intention

was clearly to enlarge their mother’s estate and then to make a claim under the Family Protection Act 1955. They, like the plaintiff in this proceeding however, had no standing to bring the matrimonial property proceedings as the cause of action vested in the personal representative. The plaintiffs therefore commenced proceedings to remove Mr O’Reilly as executor.

[22] The facts are strikingly similar to the situation which is before me. The comment of the then Chief Justice has a direct bearing on the unsuitability in these cases for persons in the position of the current plaintiff and the defendant to be appointed to a position where they can act as personal representative of the deceased.

It is clear then that the defendant in his capacity as trustee finds himself in a position of conflict, as between his own interests on the one hand and those of the plaintiffs as claimants against the late Mrs O'Reilly's estate on the other. That coupled with the hostility existing between himself and the plaintiffs provides the jurisdiction for the Court to act and sufficient reason to do so.

As filed the application sought an order appointing the plaintiffs themselves trustees of the estate; but this would place them in the same situation of conflict of interest as presently affects the defendant.

[23] The Court there considered the possibility of the appointment of the Public Trustee, but deferred making an appointment because there needed to be a precise agreement and acceptance of terms by the Public Trustee before an appointment could be made. Nevertheless, the case clearly illustrates the conflicted position that arises in persons in the position of the plaintiff and the defendant as they are in this case.

[24] In a similar situation Potter J observed in Estate of Farnsworth v Farnsworth that it was not for the court in this jurisdiction to determine whether a claim under the Matrimonial Property legislation against the widow would succeed ⁹The issue is whether the executor and trustee can bring to that decision an impartial approach which properly reflects the even-handedness which executor/trustee must apply to the interests of all beneficiaries in the estate. Her Honour went on to give guidance as to replacement trustees duties which:¹⁰

will be to consider whether a claim under the Act should be brought against Mrs Farnsworth [the widow]. In reaching that decision they should take such professional advice and such other steps as they may consider necessary or desirable, including an application to this Court for directions, in order that they may act even-handedly in the best interests of all the beneficiaries and claimants against the estate.

[25] In this case, a possibility was raised that perhaps the Public Trustee could be appointed for a limited purpose as personal representative. That was the approach taken in Re Williams by Frater J.¹¹I do not consider, in this case, that this appropriate. There will clearly have to be the application of estate assets when the

_{review is undertaken concerning proposed relationship property
proceedings and the}

prosecution of those proceedings. The better course, in my view, is that one executor/trustee be appointed so that that person has responsibility for all matters in the administration of the estate, including the obligations to those potential beneficiaries that have contingent statutory entitlement.

[26] Accordingly, I reach the view that the defendant should be removed as trustee and a replacement trustee/executor should be appointed. The plaintiff has advanced the Public Trust as the appropriate executor/trustee. The Public Trust is a Crown entity for the purposes of s 7 of the Crown Entities Act 2004, and is established by the Public Trust Act 2001. An affidavit has been filed by Mr IH Boyd-Bell, a trustee services manager employed by the Public Trust. He advises that the Public Trust consents to being appointed as trustee and executor of the estate of the deceased. He confirms that the Public Trust, if appointed, is aware of the responsibilities which such office imposes and which he records in paragraph 5 of his affidavit as follows:

(a) Taking all steps necessary to preserve and identify the value of the assets of the Estate including making any applications under the Land Transfer Act 1952 as appropriate;

(c) Applying to the Family Court under s88 (2) of the Property (Relationships) Act 1976 (PRA) for leave to file a claim as the Deceased’s personal representative under s25(1) of the Act;

(e) Following determination of the relationship property claim and of the Family Protection Act claim I have made, attending to distribution in accordance with the orders of the Courts(s).

Although it is not referred to in his affidavit, I have assumed that the Public Trust, as it usually does, would instruct counsel. I record that there appears to be a drafting error in (e) of paragraph 5 of the affidavit. The Public Trust on behalf of the estate would not make the Family Protection claim but would be the nominal defendant in such claim.

[27] Counsel for the defendant has arranged for an affidavit to be filed by a Whangarei practitioner, Mr MJ Badham. He confirms that he has never met either the plaintiff or the defendant and is independent of those persons. He is a partner in

the Whangarei law firm Thomson Wilson Law. He was admitted in 1981 and has been a partner in that firm since 1987. He advises that he specialises in commercial property, estates and trust law. His practice includes acting as executor or administrator of estate and administering trusts. He is regularly required to advise executors and administrators and trustee clients. His firm has a litigation team which is regularly involved with litigation concerning estates, trusts and relationship property matters. He records in his affidavit his understanding of the current position as follows:

5. I understand that the plaintiff seeks orders removing his step-mother as executrix (and or trustee) of the estate of his late father Richard Clement Nawisielski. I am aware that the plaintiff seek to be personally appointed as executor, or the appointment of such other person as the Court thinks fit.

6. I understand that the plaintiff has also filed an application under the Family Protection Act 1955 seeking further provision from his father’s estate.

7. I understand that the defendant received certain assets, including real estate, by way of survivorship. I understand the plaintiff wishes his father’s personal representative to seek leave to make application under the Property (Relationships) Act 1976 to determine the extent of relationship property and divide relationship property. I understand the rationale for these applications is to enlarge the deceased’s estate by dividing the assets received by survivorship to create a larger fund from which a successful claim by the plaintiff under the Family Protection Act 1955 could be met.

10. I consent to being appointed as substitute executor (and or trustee) of the estate if the Court so orders. I confirm that I will accept the appointment, together with all legal responsibilities and obligations associated with the appointment.

11. If I am appointed my first responsibility will be to review the estate and gain a full understanding of the persons involved and the extent of the property involved. I will then consider whether an application for leave to file a claim under the Property (Relationships) Act 1976 should be brought against the defendant. I will also be the nominal defendant in the plaintiff’s Family Protection Act 1955 claim. I will be required to distribute estate funds in accordance with any order from the Court or in accordance with a deed of family arrangement if the parties reach a settlement outside of Court.

[28] I have no doubt that the Public Trust Office and Mr Badham would equally carry out responsibilities that are required of them if the Court were to appoint either as executor and trustee in the deceased’s estate. In particular, I have no doubt that both would carry out their responsibility of acting in an even-handed way in respect of all beneficiaries, including those who have a contingent interest via statutory rights.

[29] The bulk of the estate appears to be in Northland with much of the real property being in Kerikeri. I am satisfied that Mr Badham has the necessary expertise personally to carry out the role of executor and trustee and with his partners in his law firm, would be able to make a proper and sound assessment as to the appropriate steps to be taken to ensure that the interests of all beneficiaries are appropriately attended to.

[30] I therefore have come to the conclusion that it is appropriate that the Court appoint Mr Badham as executor and trustee of the estate of the deceased in place of the defendant, who must be removed from that office.

(a) The defendant Marianne Denise Nawisielski be removed as executrix and trustee of the estate of Richard Clement Nawisielski; and that

(b) Michael Jeremy Badham of Whangarei, solicitor be appointed executor and trustee of the estate of Richard Clement Nawisielski.

[32] At the conclusion of counsel’s submissions I indicated to counsel that my preliminary view is that costs should be reserved in this case ideally to await the outcome of any further litigation that is embarked upon for the purposes of determining the entitlements of the actual beneficiary and the contingent beneficiaries. Not all of those proceedings, however, can be conducted in the High

Court, certainly at first instance. In some respects, until the true position of the estate is established, the estate’s ability to meet any order of costs is not known. Accordingly, I simply give the parties at this juncture an indication that costs are reserved but that leave is reserved to a party to seek an order for costs. To give the parties an indication as to what is appropriate, if any significant development might occur with a proceeding which is embarked upon with a view to bringing conclusion to the dispute between the plaintiff and the defendant, that might in itself be the justification for the costs being specially considered.

High Court of New Zealand Decisions

Nawisielski v Nawisielski [2014] NZHC 1547 (3 July 2014)