Tata v Abrams

• Jurisdiction: New Zealand
• Judge: Duffy J
• Judgment Date: 01 July 2022
• Neutral Citation: [2022] NZHC 1554
• Docket Number: CIV 2021-404-1850
• Court: High Court
• Year: 2022

UNDER Part 18 of the High Court Rules 2016 and the Trusts Act 2019

IN THE MATTER of the Estate of Violet Aotearoa Te Waipounamu Tata

Between

Reginald Raureti Tata

Plaintiff

and

Donna Doreen Matekino Abrams

Defendant

[2022] NZHC 1554

Duffy J

CIV 2021-404-1850

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

Family, Trusts — application to remove the defendant as administrator of their deceased's mother's estate — sale of property to a relative at an undervalue — conflict of interest — proper administration of the estate — Administration Act 1969 — Trusts Act 2019

Appearances:

S E Wroe for Plaintiff

C Smith for Defendant in her Personal Capacity

D Horton for Defendant in her capacity as administator of estate

JUDGMENT OF Duffy J

This judgment was delivered by me on 1 July 2022 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

1 This matter concerns the estate of the late Ms Violet Aotearoa Te Waiponamu Tata (Ms Tata). Mr Tata, the plaintiff, and Ms Abrams, the defendant, are siblings and children of Ms Tata. They are both beneficiaries of the estate. Ms Abrams is the sole administrator and trustee.

2 Mr Tata makes an interlocutory application 1 to the Court for orders that:

• (a) Ms Abrams, be removed as administrator and trustee of Ms Tata's estate;

• (b) Mr Tata be appointed as administrator and trustee of Ms Tata's estate; and

• (c) Costs relating to this application be payable by Ms Abrams from her share of the estate.

Background

3 By will dated 30 September 2005 Ms Tata appointed two of her daughters as administrators: being Ms Abrams and Judy Kaka. Ms Tata died on 19 March 2008. Probate was granted to Ms Kaka and Ms Abrams on 24 April 2008. Ms Abrams and Ms Kaka were jointly responsible for managing the estate from their mother's death in 2008 until 2016 when Ms Kaka died. Since 2016, Ms Abrams has been the sole administrator.

4 The estate's only asset is a residential property at 41 Golf Road, New Lynn (the Golf Road property).

5 In her will Ms Tata left her disabled son Tony Tata a life interest the Golf Road property. He died in August 2019. Later in August 2019 there was a meeting of whanau to discuss what should happen to the property. Some wanted it sold, others wanted it to stay in the family and provide a home for family members in need. For a

time one of Ms Tata's granddaughters occupied the property and there is a dispute over whether she should have paid rent or not

6 In September 2019 Ms Abrams and Mr Tata met with real estate agents who advised the property could fetch between $1,000,000 and $1,050,000. In October 2019 Mr Tata obtained legal advice. In April 2020 the deceased's granddaughter Bridget Ahern offered to buy the property for $1 million.

7 On 31 November 2020 Ms Abrams entered in a sale and purchase agreement to sell the property to her son Joseph George for the sum of $760,000. The sale proceeded. Mr George borrowed funds secured by mortgage registered against the Golf Road property.

8 The substantive proceeding is brought by Mr Tata against Ms Abrams. It seeks a review of this sale of the Golf Road property to Mr George. 2 Mr Tata alleges that the property was sold at a price significantly below market value. Mr Tata also brings a second cause of action against Ms Abrams for breach of fiduciary duty. The substantive proceeding is yet to be heard and no trial date has been allocated.

9 The law firm that currently holds the estate's funds, David Dominic Rice, sought to interplead under Rule 4.58 of the High Court Rules 2016, for a direction as to where it should pay the funds, and full indemnity recovery of its costs. That matter was heard on 10 March 2022.

Law

10 Section 21(1) of the Administration Act 1969 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.

11 There is a parallel power to remove trustees in s 112 of the Trusts Act 2019 if it is necessary to desirable to do so. Under the Trusts Act 2019 there is consideration as to whether the trustee has failed, or is failing, in their duties. Similar considerations apply under the Administration Act 1969 which considers whether the estate is being properly administered. Both parties agree that there is no real difference between “desirable” and “expedient” for the purposes of the plaintiff's application.

12 The general principles applicable to this application were set out by the Court of Appeal in Tod v Tod: 3

• (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 or 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 or 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.

Plaintiff's submissions

13 Mr Tata submits that it is expedient for Ms Abrams to be removed as the administrator while the substantive proceedings are underway and investigations

completed. He submits that it is not appropriate for Ms Abrams to remain administrator given her conflict of interest, namely that the subject of review in the substantive proceeding, the property, is owned by her son, Mr George. There is a suggestion she may have a partial interest in the property

14 Mr Tata submits that there are reasonable grounds to believe that Ms Abrams has not acted in the best interests of the beneficiaries as the main asset of the estate, the Golf Road property, has been sold to Ms Abram's son, Mr George, for significant under-value. He says Ms Abrams did not inform or consult all of the beneficiaries prior to her decision to sell the property to her son. Additionally he says Ms Abrams did not inform or consult all of the beneficiaries prior to her decision to gift $300,000 to her son. Ms Abrams relies on a decision she says was reached at a meeting on 14 August 2019. Mr Tata contends this meeting was not attended by all beneficiaries.

15 Further, Mr Tata contends Ms Abrams did not seek legal advice in relation to her role as administrator and relied on an online search. When she did obtain legal advice from Mike Lucas Law, she was advised to arrange for a Deed of Family Arrangement in relation to the sale of the property to Mr George. However, she did not follow that advice and no Deed of Family Arrangement was made prior to the sale. Ms Abrams reports that on receiving correspondence from Mr Tata's lawyer she felt compelled to expedite the sale, rather than conversing with Mr Tata's lawyer or instructing Mike Lucas Law to do so. Mr Tata says this conduct means that Ms Abrams has not been properly administering the estate.

16 Mr Tata has further concerns that Ms Abrams has not responded promptly or at all to queries raised by him in his capacity as a concerned beneficiary and has not taken adequate steps to engage solicitors to act in the best interests of the estate. Mr Tata also points to Ms Abrams allegedly failing follow through with her stated intention of having a family meeting in 2020 and failing to appoint a replacement for Ms Kaka when she died in 2016, despite Ms Christina Tai offering to take on the role. Ms Tai remains willing to be an administrator.

17 Mr Tata alleges that Ms Abram's ability to properly administer the estate may be affected by her stroke. Ms Abrams has self-reported memory problems.

18 Mr Tata submits that although the expressed views of the other beneficiaries may not amount to hostility, there is mistrust and concern among the Tata and Tai families. He submits that while he does not have to prove misconduct or breach of trust, there is a prima facie case that this has occurred. Mr Tata advises he has the support of many of the other beneficiaries in his application to replace Ms Abrams, as well as on the substantive proceeding, and claims Ms Abrams has support from only one beneficiary, Mr Fred Tai. Mr Tai has been receiving rental income without keeping proper records, therefore it is in his interest for Ms Abrams to remain administrator.

19 Mr Tata submits the following in support of his application to appoint himself as trustee and administrator in place of Ms Abrams:

• (a) Mr Tata has the support and confidence of a significant number of the beneficiaries;

• (b) Mr Tata will ensure that the estate has solicitors appointed to represent it in the substantive proceedings to review the sale of the property to Ms Abram's son, Mr George; and

• (c) Mr Tata will act transparently, fairly and in the best interests of all beneficiaries.

20 Mr Tata has proposed taking on the role of administrator under the guidance of a lawyer. He has also considered the possibility of appointing a solicitor as independent trustee in order to allay Ms Abram's concerns that Mr Tata intends to take on the role only to advance his own interests. However he contends that he is...