McQuarrie v McQuarrie [2014] NZHC 643 (2 April 2014)

Last Updated: 16 April 2014

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2013-412-000495 [2014] NZHC 643

IN THE MATTER OF	an application for removal of executors
BETWEEN	KERRY MASON MCQUARRIE, TUHI MARAMA MOEKE AND TARI HAMIORA MOEKE Plaintiffs
AND	LARRY CLYDE MCQUARRIE First Defendant
AND	RANI NGARIMU MOEKE Second Defendant

Hearing:	1 April 2014
Appearances:	D W Sim for Plaintiffs No appearance for First Defendant D Tobin for Second Defendant
Judgment:	2 April 2014

_{JUDGMENT OF DUNNINGHAM J}

[1] This is an application for removal of executives and trustees of the estate of

Hamiaora Haereroa Moeke (Sam), who lived in Dunedin and who died on 28

September 2000. The application for removal is sought pursuant to the inherent jurisdiction of the High Court.

[2] When Sam died in September 2000, he left a will dated 6 April 2000. Probate of Sam’s will was granted in December 2000 to four of the five trustees, namely Kerry Mason McQuarrie (Kerry), Tuhi Marama Moeke (Tuhi), Larry Clyde McQuarrie (Larry), and Rani Ngarimu Moeke (Rani). Tari Hamiora Moeke (Tari)

_{was the fifth trustee.}

MCQUARRIE AND ORS v MCQUARRIE AND ANOR [2014] NZHC 643 [2 April 2014]

[3] Clause 5(b) of the will provided that after payment of debts, funeral and administration expenses, the balance of the residuary estate was to be held on trust for the trustees to apply the net annual income to any one or more of the following purposes:

• the personal, exclusive use and benefit of Sam’s wife;

• for the benefit of anyone of his children and stepchildren, their spouses and Sam’s grandchildren and step grandchildren, and

• for capital investment as the trustees thought fit.

[4] The main asset of the estate was the family home at 18 Middleton Road, Dunedin. Sam’s wife, Fay Beverley Moeke, continued to live in the family home with Tuhi and Tari who cared for their mother in the home.

[5] Clause 5(d) of the will provided that on the death of Sam’s wife, the trustees would hold the residuary estate on trust for such of Sam’s children and stepchildren as should survive him, and if more than one, in equal shares. Clause 5(d) of the will further provided that if such child or stepchild does not survive Sam or his wife, the children of any deceased child or stepchild should take the share which his or her parent would have taken if they had been alive at the relevant time.

[6] Sam had three children: Tari, Tuhi and Rani, and two stepchildren, Kerry and Larry. All of those children and stepchildren are alive at today’s date. Those children and stepchildren are the final residual beneficiaries of the testamentary trust by virtue of clause 5(d) of the will.

[7] Sam’s wife Fay died on 5 February 2011. At that point the main asset of Sam’s estate, the family home, could be realised and the assets distributed to the beneficiaries.

[8] Tari and Tuhi remained in the home for several months after the death of their mother. However, they moved out, although the date on which they did that is debated. The latest date given in affidavit evidence was in early August 2011. The property then sold in early 2012 for $185,000. The balance of the trust funds, as at

April 2012, after deducting the normal expenses of administering the estate, was

$171,436.43.

[9] On or about 27 April 2012, the estate solicitors, Wilkinson Adams, emailed the trustees advising that the balance of the trust fund was ready to be distributed to each of the five beneficiaries, giving them a one fifth share each, pursuant to clause

5(d) of the will.

[10] Tuhi and Tari responded promptly giving their approval to the distribution. Kerry responded very soon after on 30 April 2012, giving his approval to the distribution. Larry and Rani, however, did not agree. Larry emailed saying that he wished to take responsibility for the distribution of the estate fund and asked the lawyer to deposit that amount in Larry’s personal bank account. Rani too, said that there was a need to address some outstanding issues and variations before he was prepared to give his approval. He had various concerns, some of them related to personal effects belonging to his mother. The concerns about the personal effects were, however, subsequently resolved.

Larry’s complaints

[11] Larry raised a number of issues which concerned him. He wanted to be compensated for the fact that Tuhi and Tari had lived in the house for a period of time after his mother’s death. He also, in a letter of 10 May 2012, raised a proposal that the funds should be distributed to “the person who needs the most care”. That was understood by the family as meaning, that Larry believed he needed more care than the rest of them, and was potentially asking for assistance from the estate through a Family Protection Act claim.

[12] Larry also raised complaints about what he said were missing chattels. He also raised an allegation that Kerry had been operating his business from the Middleton Street house and should have been paying rent, although that was contested by Kerry. Larry also complained about the price the house had been sold for, suggesting that the price of $185,000 was too low and it should have been sold for around $230,000.

[13] Eventually, Larry threatened to take legal action against Kerry, Tari and Tuhi for various matters, including criminal assault, fraud, defamation, wilful malice, extortion and embezzlement. He said he would be seeking damages of $200,000. He also claimed certain other sums. He threatened that he would not pursue Court action if the estate lawyers paid the sum of $93,259.86 from the estate funds into his personal bank account and provided he received an acceptable letter of apology from Kerry, Tuhi and Tari.

[14] At that point, the three trustees who brought this action said that they felt they had no option but to instruct an independent solicitor to apply to the Court to have Larry and Rani removed as trustees, so that they could finally distribute the estate in accordance with Sam’s will.

[15] Before filing the application for removal, the independent solicitor, Michael Win from Rodgers Law, in a letter dated 27 September 2013, wrote to both Larry and Rani giving them another opportunity to consent to the distribution. The letter said “proceedings would be issued for their removal if they did not give their consent by

8 October 2013”.

[16] There was no reply from Rani. Larry did reply in a letter dated

12 November 2013. Larry basically rejected any idea that he would give his consent as trustee to the distribution of the estate and these proceedings were issued in November 2013.

[17] Since that date, Rani has sought legal advice and, on 17 January 2014, he has provided his written consent to the distribution of the estate. As a consequence of that, the plaintiffs now no longer seek the removal of Rani as a trustee, but are proceeding on that issue simply against Larry.

Jurisdiction to remove a trustee

[18] The jurisdiction of the Court to remove a trustee is well understood. One of the principle authorities on this issue is the decision in Letterstedt v Broers¹ which

has been cited in a number of subsequent New Zealand cases. In that case, it was said:²

But in cases of positive misconduct, Courts of equity have no difficulty in interposing to remove trustees who have abused their trust; it is not indeed every mistake or neglect of duty, or inaccuracy of conduct of trustees, which will induce Courts of Equity to adopt such a course. But the acts or omissions must be such as to endanger the trust property or to shew a want of honesty or a want of proper capacity to execute the duties, or a want of reasonable fidelity.

It seems to their Lordships that the jurisdiction which a Court of Equity has no difficulty in exercising under the circumstances indicated by Storey is merely ancillary to its principal duty, to see that the trusts are properly executed.

... if 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 the trustees exist for the benefit of those to whom the creator of the trust has given the trust estate.

[19] So it follows from that case that the Court’s principal duty is to see that trusts and estates are properly executed and the Court’s main guide is the welfare of the beneficiaries.

[20] In this case it is clear that Larry continues to resist the proper execution of the trust because he alleges improper handling of the trust assets by the other parties, and indicates that he has a claim to a greater share of the trust’s assets than the equal one fifth share, as determined by his stepfather’s will. He has failed to take the appropriate steps in those circumstances and resign as a trustee and pursue his claims in the appropriate forum.

[21] I am satisfied that in these circumstances the plaintiffs have established that it is appropriate that the first named defendant is removed as a trustee because of his ongoing refusal to allow the administration of the estate to proceed, and that is preventing the trust from being properly executed, and is causing needless cost and delay for all the beneficiaries of the estate.

Costs

[22] The remaining issue then, is the issue of costs. Rani has appeared at this hearing simply in respect of the issue of costs, and opposes costs being awarded against him as sought by the plaintiffs.

[23] His counsel points out that Rani was not the main protagonist in terms of the disputes there were between Larry and Kerry. He attempted at stages to find a resolution to the issues between the trustees and prompted mediation. He says most of the delays and arguments appear to be as a result of ongoing arguments between Larry and Kerry.

[24] I would have thought that when the letter came from independent solicitors in late 2013, giving him a deadline in which to provide his approval to distribution of the estate, or else proceedings would be issued, this would have brought the matter to a head. However, his counsel has urged upon me that for someone not familiar with legal proceedings, he may well not have understood the consequences of that, and that this may have simply been seen as another stage in the positioning and posturing of the divided parties of trustees.

[25] As soon as he was served with the proceedings he did indeed take legal advice and very quickly thereafter provided his approval to the distribution of the estate rather than remain as a hindrance to the administration of the estate.

[26] The issue for me is how that should sound in costs. The plaintiffs have sought 2B costs. In relation to Rani, they seek an award of costs only up to the point where he gave his consent. For Larry they seek an award of 2B costs for all steps which have had to be taken in the proceedings, including of course today’s hearing.

[27] I think some award of costs against Rani is required. It is important when people are written to by solicitors warning of the consequences of them not taking one or other course of action, that they do promptly take legal advice and confirm their position, one way or another. If that had been done promptly by Rani, then the consent which the trustees got in January, may well have been provided in a timely

way and it would only have been Larry who prompted the need for these proceedings to be issued.

[28] However, I accept his counsel’s submissions that he was not the primary problem, between the trustees. The primary difficulties were created by Larry and perhaps were heightened by tensions between Larry and Kerry. I do not need to resolve who is most at fault here, but I do accept that Rani was not the main protagonist or primary cause of the difficulties. For that reason, I am going to specify the amount of costs which Rani is responsible for. He is to be responsible for costs of $1,000. The balance of the costs which are calculated on a 2B scale of costs, are to be met by the first named defendant, Larry Clyde McQuarrie.

[29] Accordingly, I order that:

(a) Larry Clyde McQuarrie is removed as a trustee of the estate of

Hamiora Haereroa Moeke;

(b) costs of $1,000 are ordered as against Rani Ngarimu Moeke;

(c) 2B costs are ordered against Larry Clyde McQuarrie, less the $1,000 in costs which are to be met by Rani Ngarimu Moeke.

[30] For clarity, I also order that the executors and trustees are authorised to deduct the costs I have just awarded from the relevant share of that beneficiary.

Solicitors:

Downie Stewart, Dunedin

Rodgers Law, Dunedin