Hepburn v Albert [2024] NZHC 3373 (13 November 2024)

Last Updated: 29 November 2024

IN THE HIGH COURT OF NEW ZEALAND GISBORNE REGISTRY I TE KŌTI MATUA O AOTEAROA TŪRANGANUI-A-KIWA ROHE

CIV-2024-416-000008 [2024] NZHC 3373

UNDER	Part 18 of the High Court Rules, s 21 Administration Act 1969
IN THE MATTER OF	removal of executor/trustee, appointment of independent executor
BETWEEN	CHRISTINE LUCY HEPBURN Plaintiff
AND	ANGELA JOY ALBERT Defendant

Hearing:	12 November 2024
Counsel:	P A Depledge for Plaintiff No appearance for Defendant
Judgment:	13 November 2024

JUDGMENT OF GRAU J

[Formal proof]

• [1] Robert Taane died on 23 September 2013. Robert’s daughters, Christine Hepburn and Angela Albert, are the named executors in Robert’s will (the Will). They are also the plaintiff and the defendant in this proceeding.

• [2] Christine, Angela, and their brother, Thomas, are the beneficiaries of Robert’s estate. Robert’s Will provided that his residuary estate was to be distributed to his children “as tenants in common in equal shares”.¹

1. In this decision I refer to the whānau members by their first names. I mean no disrespect; it is purely for ease of reference.

HEPBURN v ALBERT [2024] NZHC 3373 [13 November 2024]

• [3] Robert’s late wife, Marilyn Taane, died on 12 September 2016, ending her life interest in a property owned by the estate in Wairoa (the Property). Angela has been living at the property since that time.

• [4] Christine now asks the Court to remove her and Angela as executors and to appoint an independent administrator because the sisters are in dispute and are deadlocked. Angela is not paying rent and she will neither move nor buy out Christine and Thomas’ interests in the Wairoa Property. Christine and Thomas both want the Property sold and the proceeds distributed in accordance with their father’s Will.

• [5] Since Marilyn died, Christine has been in contact with Angela about the sale of the Property and the distribution of the residuary estate to the beneficiaries. Christine has indicated to Angela that she is welcome to purchase the Property from the estate. Angela, who wishes to stay at the Property, appears to believe that her status under the Will as a “tenant in common in equal shares” means that she has received her share of their late father’s Property as he requested in his Will, has the legal right to live in the Property, and cannot be evicted because her name is on the title.

• [6] I am satisfied that Angela was served with the proceedings and was aware of today’s hearing. She has however, taken no steps in this proceeding. Accordingly, this matter proceeds by way of formal proof, under r 15.9 of the High Court Rules 2016.

• [7] It is abundantly clear the Court’s intervention is required in this case. Eight years have passed since the death of Robert’s wife Marilyn and the ending of her life interest in the Property. The estate should have been distributed by now, but it has not, and cannot.

• [8] The statutory provision governing removal and reappointment of administrators is s 21 of the Administration Act 1969, which provides as follows:

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.

• [9] The following principles guide a court in dealing with an application under s 21 to remove an administrator:²

(a) The starting point is the Court’s duty to see estates properly administered and trusts properly executed.

(b) This jurisdiction involves a large discretion which is heavily fact- dependent.

(c) The wishes of the testator/settlor (evidenced by the appointment of a particular executor or trustee) are to be given consideration, but ultimately the question is as to what is expedient in the interests of the beneficiaries.

(d) Expedience is a lower threshold than necessity, and imports considerations of suitability, practicality and efficiency. Misconduct, breach of trust, dishonesty, or unfitness need not be established.

(e) Hostility as between administrators/trustees and beneficiaries is not of itself a reason for removal, but hostility will assume relevance if and when it risks prejudicing the interests of the beneficiaries.

• [10] The Court will not readily replace an executor selected to manage the deceased’s estate.³ However, the interests of the beneficiaries “must always be the focus”.⁴ Incompatibility between the executors must be at such a level that the proper administration of the estate is “seriously adversely affected” and it has become “difficult for [an executor] to act in the interests of a beneficiary”.⁵

• [11] The two executors in this case are at a deadlock. There can be no distribution to the beneficiaries until the estate property can be sold. Angela has a conflict of interest when she is occupying the Property without the consent of the other executor and she is preventing the distribution of the estate. Angela appears unable or unwilling to understand that her sister and brother are each entitled to a third share of the value

² Frickleton v Frickleton [2016] NZCA 408 at [29].

³ At [32].

⁴ At [33].

5. Kain v Hutton [2007] NZCA 199, [2007] 3 NZLR 349 at [267]; approved in the context of testamentary trustees and executors in Frickleton v Frickleton, above n 2, at [35].

of the Property. She is not entitled to remain living there rent free. As an administrator of the estate, Angela is breaching her obligation to the beneficiaries by doing so.

• [12] These circumstances make it appropriate that orders are made under s 21. The Property is not being administered in accordance with the terms of the Will because the three beneficiaries cannot receive their share of the estate’s residue.

• [13] I note that, in 2016, it appeared the parties had reached an agreement for Christine to sell her one-third interest in the Property to Angela, and for Thomas to then transfer his share to Angela as a gift. It is not clear to me why this agreement did not result in any action, but as matters now stand, the Property needs to be sold so that the estate can finally be distributed to the beneficiaries.

• [14] In my view, the best course is for an independent administrator to be appointed. Mr Depledge advised at the hearing that, although the Public Trust had previously consented to the appointment, they appear to have had a change of heart. He was confident, however, that he could convince them otherwise.

• [15] I therefore propose to follow the example of other cases that have dealt with similar issues.⁶ I will issue this judgment as an interim judgment and make the following directions:

(a) Mr Depledge is to identify an independent suitably qualified person who is willing to take appointment as executor of Robert Taane’s estate;

(b) once that person has been identified, Mr Depledge is to notify the Court forthwith (by way of memorandum, marked for my attention) of:

(i) the identity of the executor and their preparedness to accept appointment;

(ii) the proposed terms of appointment; and

⁶ For example, Smith v Smith [2021] NZHC 1042; and Skelton v Eriwata [2022] NZHC 1546.

(iii) if necessary, information as to the person’s background and relevant experience.

• [16] On receipt of that material, and on the assumption that it is satisfactory, I will issue a final decision removing Angela Albert and Christine Hepburn as executors of the estate of Robert Taane and appoint a replacement.

Costs

• [17] Christine seeks that Angela pay her legal costs, given the delay in the administration of the estate due to Angela’s unwillingness to engage. Christine is legally aided and would reimburse the payment of costs to the Legal Services Agency.

• [18] Costs are at the Court’s discretion and must be exercised in a principled way in accordance with pt 14 of the High Court Rules. The usual starting point is that the party who fails ought to pay scale costs to the party who succeeds.⁷ The position is different in estate litigation, however, where there is a longstanding practice of awarding costs out of an estate, and on a solicitor/client basis. The principles underlying this practice are that litigation that originates in the fault of the testator, where sufficient grounds exist for the opposing party to question either the execution of the will or capacity of the testator, or where issues of undue influence or fraud are raised, may mean costs are properly paid out of the estate. Otherwise, the general rule that costs should follow the event should prevail. ⁸

• [19] I do not consider this is a case where costs should be awarded out of the estate. It is a modest estate and Angela’s intransigence over many years has led to the inability to distribute it. In my view, it is appropriate that Angela should bear the costs of the proceeding that Christine has been required to bring to see the estate properly administered.

⁷ Mumby v Mumby [2016] NZHC 2836.

⁸ At [4].

• [20] Mr Depledge is to provide a schedule of costs at the time he files information about the identity of the independent administrator, and I will determine costs on the papers.

Grau J

cc: P A Depledge, Barrister, Hamilton