Estate of Ursula Muriel Emma Armstrong v Armstrong [2014] NZHC 558 (25 March 2014)

Last Updated: 3 April 2014

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2014-409-000151 [2014] NZHC 558

IN THE MATTER OF THE ESTATE OF URSULA MURIEL EMMA ARMSTRONG

BETWEEN PETER JAMES ARMSTRONG Applicant

Judgment: 25 March 2015

JUDGMENT OF GENDALL J (Dealt with on the papers)

Introduction

[1] Ursula Muriel Emma Armstrong (the deceased) died in Christchurch on

10 October 2008. Probate of her last will dated 31 May 2000 was granted by the High Court at Christchurch on 21 January 2009. The deceased’s sons Leonard Andrew Armstrong (Leonard), and Peter James Armstrong (Peter), were named as executors and administrators of the deceased’s estate in her will.

[2] Peter is the applicant in the present proceeding. Leonard apparently is unable to be located despite a number of efforts which have been made to find his whereabouts, all of which have failed. As a consequence the estate of the deceased cannot be administered.

[3] In addition, Leonard owes a significant debt to the deceased’s estate, he

having been the recipient of a loan of some $85,000 from his parents (now devolved to the deceased) for his purchase of a property at Woodend in 1999.

RE ESTATE ARMSTRONG [2014] NZHC 558 [25 March 2015]

[4] Although Leonard is also a beneficiary under the will of the deceased his debt owing to her estate it is said is likely to exceed any amount payable under the will.

[5] And in the meantime other beneficiaries under the deceased’s will are unable to take their proper share in terms of that will as, with the absence of Leonard, the will cannot be administered.

[6] Consequently the applicant Peter in this proceeding seeks an order removing Leonard as an executor and administrator under the deceased’s will so that this role can be held solely by Peter and administration of the estate can proceed.

Additional background

[7] Under her 31 May 2000 will, in addition to appointing Leonard and Peter as her executors and trustees, the deceased after payment of her debts and funeral expenses left her residuary estate to be divided equally amongst her children on their attaining the age of 25 years. At paragraph 4 of her will the deceased stated specifically:

4. As the major asset in my estate is the debt owed to me and my husband Willie Armstrong by my son Leonard Andrew Armstrong and Janine Elizabeth Kennard pursuant to a deed of acknowledgment of debt dated 27 August 1999 advanced to assist in the purchase of

25 Panckhurst Drive, Woodend, I direct that my trustees are not to require payment of the debt to my estate for a period of four years

from the date of my death.

[8] Given that the deceased died on 10 October 2008, that four year period has now elapsed.

[9] The deceased’s former husband, Willie Armstrong, died in September 2000,

some eight years before the date of her death.

[10] Prior to the date of her death, demands were made on her behalf of Leonard and his wife Janine Kennard for repayment of the $85,000, loan but these met with no response.

[11] Since at least 2005, Peter states that he and other members of the family have been quite unable to make any contact with Leonard. Apparently, he was no longer living at his previous Christchurch address having sold the Woodend property, there was talk of him shifting to Australia but he was unable to be located there, and he was unable to be contacted at the address given in the electoral role 5 Henley Green, Christchurch.

[12] From Peter’s affidavit dated 18 March 2014 filed in this proceeding it is clear that substantial efforts have been made to make contact with Leonard without success. In 2012 Peter contacted Leonard’s last known employer, First Direct Taxis, and was told that he had not worked there for a long time although an email address was given for Leonard. Communications from the estate’s solicitors to that email address produced no response, nor did telephone calls to a telephone number provided by a cousin of Leonard’s. In addition, correspondence was sent to Leonard at his last known Christchurch address, 5 Henley Green, but this also met with no response.

[13] Peter deposes that despite ongoing and major efforts on his part and on the part of the estate’s solicitors to make contact with his brother Leonard, he could not be successfully located.

[14] Peter suggests at paragraph 21 of his 18 March 2014 affidavit that:

21. ...So in summary, I have no idea if he (Leonard) is in New Zealand, but assume he does not want to be found so that he can avoid repaying the money he owes the estate. Even if he was located, these facts suggest to me he should not be administrating the estate.

22. To bring about a finalisation of estate matters, I need to take over the role of administrator myself. I accept that unless Leonard and his wife are located that the estate will not be able to enforce any demand for payment of monies owing by he and his wife, but the estate will be able to distribute some of the funds that it holds.

My decision

[15] What is clear from all of this is that little or no progress has been made in the administration of the deceased’s estate since probate was granted on 21 January 2009 over five years ago. Peter complains that matters have reached a point where it is

necessary for Leonard to be removed as a trustee and executor so that proper administration of the estate can be undertaken. As I understand the position there are certain funds held for the estate (other than Leonard’s debt) which would be able to be distributed at this point.

[16] The jurisdiction to remove an administrator is provided in s 21 Administration Act 1969. This section states:

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

[17] It will be apparent from the above that the Court in exercising the power of removal and appointment is able to do so on any terms and conditions thought fit.

[18] It is clear that an application for removal of an administrator may be made by the other executor or administrator, a beneficiary or next of kin or a creditor – Re Smith (Deceased).¹ Here, application is made by Peter who is the co-executor and administrator of the deceased’s estate.

[19] In this case in my view the real priority to be addressed by the Court must be the proper and efficient administration of the deceased’s estate for the benefit of all beneficiaries. This is overlaid in the circumstances prevailing here by the general duty of an executor or trustee to “act even-handedly in the best interests of all the beneficiaries and claimants against the estate” - Estate of Farnsworth v Farnsworth.²

[20] In the present case the evidence before the Court satisfies me that significant attempts have been made to contact Leonard over a number of years without success.

_{Leonard is likely to be aware of the death of his late mother and clearly he knows}

¹ _{Re Smith (Deceased) [1914] 33 NZLR 586.}

² Estate of Farnsworth v Farnsworth (HC) M1767/97 12 January 1999 at [20.

that he owes money to the estate. It is quite possible that he remains out of contact as Peter suggests in a deliberate effort to avoid repaying his debt to his late mother’s estate.

[21] It could be that in terms of s 21(1) Administration Act 1969 that Leonard may be absent from New Zealand and has been for some time. Nevertheless and leaving this on one side, I am satisfied under all the circumstances here that it is expedient to remove him as administrator of the deceased’s estate in order that administration can properly proceed.

[22] Although there is no evidence in this case of misconduct in office by

Leonard, the words of Stout CJ in Re Edward Watts³ are apposite:

... In In the Goods of Loveday (1900) p. 154, 156 Jeune, President of the Court, said: “the real object which the Court must always keep in view is the due and proper administration of the estate and the interests of parties beneficially entitled thereto: and I can see no good reason why the Court should not take fresh action in regard to an estate where it is made clear that its previous grant has turned out abortive or inefficient.

[23] As I see it that, is precisely the situation which has occurred here. The original grant of probate by this Court on 21 January 2009 has proved to be entirely abortive in light of the absence of Leonard. Nothing is able to happen whilst he remains an administrator of the estate and is completely out of contact.

[24] Although I must always be conscious that I should not readily replace executors and administrators specifically identified by a deceased to manage their estate, regrettably in a situation such as the present, for the reasons I have outlined above there is no choice as I see it but to have Leonard removed.

Orders

[25] Accordingly, an order is now made that Leonard Andrew Armstrong is removed as an executor and administrator of the will of the late Ursula Muriel Emma

_{Armstrong where probate of this will was granted by this Court on 21 January 2009.}

³ Re Edward Watts [1917] NZLR 791 at 792.

[26] For completeness, I note also that, under all the circumstances here a further order is now made that the present application for removal can appropriately be brought by means of the ex parte originating application process provided for under the High Court Rules.

Costs

[27] As to costs on this application, they are reserved. In the event that costs may be sought, then the parties are to bring an appropriate application within 15 working days of today.

...................................................

Gendall J

Solicitors:

John Hardie, Christchurch