Estate of Eriwata [2022] NZHC 1546 (30 June 2022)

Last Updated: 2 September 2022

IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY I TE KŌTI MATUA O AOTEAROA NGĀMOTU ROHE

CIV-2021-443-50 [2022] NZHC 1546

UNDER	the Administration Act 1969
IN THE MATTER	of the Estate of MOANA JANE ERIWATA
BETWEEN	LOGAN ERIWATA SKELTON Plaintiff
AND	DONNA MARIA ERIWATA as Executor and Trustee of the Estate of MOANA JANE ERIWATA Defendant

Hearing:	28 June 2022
Counsel:	C A Silk for Plaintiff No appearance by defendant
Judgment:	30 June 2022

JUDGMENT OF ELLIS J

• [1] Moana Jane Eriwata (formerly Moana Jane Le Sueur) died in November 2013. Her Will (dated 9 June 1989) appointed her sister, Donna Eriwata, as Executor and Trustee of her Estate.

• [2] The Will provided that, after paying any debts that Moana had at the time of her death and her funeral and estate administration expenses, the Executor was to hold the residue on trust for Moana’s four children Logan (the plaintiff), Ben, Zac and Sheridan. Once each of them had attained the age of 20, the residue was to be divided equally between them. The youngest of the four, Sheridan, turned 20 on 21 January 2017.

ESTATE OF ERIWATA [2022] NZHC 1546 [30 June 2022]

• [3] The principal asset of the Estate is a property at 1-71 Browne Street, Waitara, which in July 2021 had a rating valuation of $230,000.¹ There may have been other assets such as a car and a life insurance policy.

• [4] The Browne Street property is now registered in Donna’s name, as Executor and Trustee. The Certificate of Title that was in evidence before me records a mortgage to TSB bank, registered on 5 May 2004 and there is concern (although no evidence) that the mortgage facility may have been increased by Donna Eriwata. On the title there is also a caveat by Asset Finance Limited dated 7 June 2012. I am told that Logan has also more recently lodged a caveat on the property as to his one-quarter share.

• [5] Over the last few years, the property has on occasion been rented out, including to Moana’s children, and I am told that Sheridan lives there presently and is paying rent to Donna Eriwata.

• [6] Donna has taken no apparent steps to distribute the Estate in the five years since Sheridan turned 20. Although, in response to requests from Logan’s lawyer, some information has been forthcoming, no clear set of accounts has been provided. Donna has now stopped communicating with, or responding to requests from, Mrs Silk.

• [7] In these proceedings, Logan makes claims for:

(a) Breach of fiduciary duty. The relief sought is an order to provide a full account, restoration to the Estate of any monies Donna has personally received and (potentially) damages.

(b) Donna’s removal as Executor and Trustee, on the grounds that she has failed to carry out her duties in the final distribution of the estate and

1. According to an email from Donna in December 2020, an appraisal was done of the property by two real estate agents at the end of 2018 (or possibly early 2019) who valued it at no more than

$100,000 ($120,000 after repairs). It was put on the market and an offer of $90,000 was received. Donna and her partner offered to pay $125,000 and a $1,000 deposit was paid.

failed to account to the beneficiaries, and the appointment of “an alternative, and completely independent, administrator to replace her”.

• [8] I am satisfied that Donna was served with the proceedings on 2 November 2021. She has, however, taken no steps. For that reason, the matter was set down for a formal proof hearing, by Gendall J on 4 April 2022. I note that Donna was copied into the email by which a formal proof hearing was sought. It was on that basis that the matter came before me this week. Donna did not appear.

• [9] Despite the fact that the statement of claim sought the appointment of a “completely independent” trustee and executor, it was proposed before me that the plaintiff (Logan) be appointed in Donna’s stead.

Discussion

• [10] It is plain to me that there is a problem here that requires the Court’s intervention. The estate should have been distributed by now and it has not been. There is no obvious reason for the delay.

• [11] The relevant statutory provisions governing removal and reappointment are s 21 of the Administration Act 1969 and ss 112 and 114 of the Trusts Act 2019. Section 21 relevantly provides:

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

• [12] And ss 112 and 114:

112 Court may make order for removal

Whenever it is necessary or desirable to remove a trustee and it is difficult or impracticable to do so without the assistance of the court, the court may make an order removing a trustee.

114 Court may appoint or replace trustee

(1) Whenever it is necessary or desirable to appoint a new trustee and it is difficult or impracticable to do so without the assistance of the court, the court may make an order appointing a new trustee.

(2) However, this section does not empower the court to appoint an executor or administrator.

• [13] Here I consider it is expedient, necessary and desirable to remove Donna as both Executor and Trustee. As noted earlier, Moana’s Estate has plainly still not been distributed some five years after Sheridan’s 20th birthday. The fact that she has chosen not to involve herself in these proceedings is, itself, telling. The information she has provided to Mrs Silk is partial, at best. As well, I note that Donna seems to have a degree of “form” here: in Barriball v Schimanski Judge Harvey (as he then was) found that her conduct as Trustee of the Otaraoa B2E Trust:²

... was well short of what owners might expect from those individuals in whom they repose their trust. It was as inappropriate as it was unacceptable conduct on the part of a trustee at several levels, as has been outlined.

• [14] He then concluded:

When taken together, all of the breaches of trust identified in this judgment would have made it untenable for Ms Eriwata to have remained a trustee. My conclusion is that, had she not resigned, Ms Eriwata would have been removed as a trustee for cause.

• [15] As discussed with counsel, however, I have some reservations about the proposal that Logan should be appointed instead. First, on the basis of the evidence filed about Logan’s siblings’ consent to the removal application, I am not satisfied that they are aware of the suggestion that it is Logan who would become the Executor and Trustee and that the Browne Street property would then be vested in his name alone. Secondly, I doubt that appointing him is likely to lead to the most expeditious resolution of this matter. Based on the material before me, relations between Logan and Donna are obviously fraught. On the basis of the evidence, it seems much more likely that she would co-operate with someone from outside the family, who was truly independent than that she would with Logan. Although Logan is understandably

² Barriball v Schimanski (2021) 431 Aotea MB 256, (431 AOT 256), A20170004496 at [44].

concerned that such an appointment will involve further expenditure by the Estate, my present view is that it is likely to be more cost-effective in the long run.

• [16] For those reasons, I am not prepared to appoint Logan to replace Donna. There is, accordingly, a need to identify an alternative suitable candidate. Time is needed to do that. So I therefore propose to follow the example of Associate Judge Johnston in Smith v Smith and issue this judgment as an interim judgment, and make the following directions:³

(a) Mrs Silk, in consultation with her client, is to identify an independent, suitably qualified person, who is willing to take appointment as Executor and Trustee of Moana Eriwata’s estate;

(b) Once that has occurred, she is to formally notify the Court (by way of memorandum marked for my attention) of:

(i) the identity of this person and his or her preparedness to accept appointment;

(ii) the terms upon which he or she proposes he should be appointed;

(iii) information as to his or her background and relevant experience.

• [17] On receipt of that material, and assuming that it is satisfactory, a final judgment will follow, removing Donna Eriwata as the Executor and Trustee of the estate of Moana Eriwata and making a replacement appointment.

• [18] I am not prepared to address the breach of fiduciary duty claim on a formal proof basis at this point in time. That needs to await the further information that should flow once a new Executor and Trustee is appointed.

³ Smith v Smith [2021] NZHC 1042.

• [19] In the circumstances outlined above, Logan would be entitled to 2B costs payable by Donna Eriwata personally. As it transpires, however, his actual costs are less than the 2B costs (which total $9,918.50) and so they are payable instead. I therefore make an order that Donna Eriwata is to pay to Logan Skelton costs in the sum of $4,091.37 plus GST and including the further costs of the hearing before me.

• [20] This judgment is not to be sealed until such time as that material is to hand and a minute has been issued directing the Registrar to permit sealing.

Rebecca Ellis J

Solicitors:

Legal Plus, New Plymouth for Plaintiff