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Mokotupu v Rakei-Clark [2024] NZHC 2412 (27 August 2024)

Last Updated: 10 September 2024

JUDGMENT OF TAHANA J

This judgment was delivered by me on 27 August 2024 at 11.00am Pursuant to Rule 11.5 of the High Court Rules

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

Registrar/Deputy Registrar

Solicitors:

Wynyard Law Ltd, Taupō M B Beech, Tauranga Copy to the Defendant

MOKOTUPU v RAKEI-CLARK (The Estate of RONGO MAKI UPOKO) [2024] NZHC 2412 [27 August 2024]

Introduction

• [1] Ms Betty Mokotupu applies to remove her brother, Mr John Rakei-Clark, as co-executor and co-trustee of their mother’s estate under s 21 of the Administration Act 1969 (the Act). The claim has been listed for formal proof because Mr John Rakei- Clark’s statement of defence has been struck out.

• [2] The estate assets comprise funds held in the trust account of the estate’s solicitors and a half-share in a property at Firth Place, Rotorua (the Firth Pl property). Mr Rakei-Clark owns the other half-share of the Firth Pl property.

• [3] Ms Mokotupu also seeks vacant possession and orders for sale of the Firth Pl property. The Firth Pl property is currently registered in the name of Mr Rakei-Clark and the deceased, Ms Rongo Upoko.

• [4] I indicated at the hearing that in circumstances where the estate only owns a half-share in the Firth Pl property, the plaintiff must plead the legal basis for seeking sale as against Mr Rakei-Clark as the other co-owner (separate to his capacity as beneficiary under the estate). Currently the claim only seeks directions under s 21 of the Act and does not seek any orders under the Property Law Act 2007. Further, evidence is required as to the nature of the borrowings which are currently secured by way of mortgage to the Bank of New Zealand as registered on the title. It is unclear whether the borrowings were for the benefit of both co-owners or only Mr Rakei- Clark.

• [5] I appreciate that it is not in the interests of the beneficiaries for the estate to incur unnecessary costs, but the legal basis for possession and sale orders as against Mr Rakei-Clark as co-owner needs to be pleaded and there needs to be sufficient evidence to enable the Court to be satisfied that such orders are necessary. There is also the complication that there may be a tenant in the Firth Pl property. I therefore indicated to Mr Beech, counsel for Ms Mokotupu, that I will only determine the issue of removal of Mr Rakei-Clark as administrator and will provide further directions so that the issues of possession and sale can be determined separately.
• [6] Before considering whether Mr Rakei-Clark should be removed as administrator, I set out the relevant background.

Background

• [7] Ms Upoko executed a will dated 8 July 1998 appointing Ms Mokotupu and Mr Rakei-Clark as executors and trustees. Under the will, she bequeathed the whole of her estate to her trustees to hold upon the following trusts:

(a) To permit her husband Mataune Upoko to reside in the Tania Crescent property (the Tania Cres property) and to have the use and enjoyment of her share in the same during his lifetime.

(b) As to the residue and remainder of her estate, including her half-share in the Tania Cres property arising on the death of Mataune Upoko, to divide the same equally between all her children as tenants in common in equal shares.

• [8] Ms Upoko died on 6 October 2004. She has three biological children including the parties. This Court granted probate of the will on 23 May 2005.

Tania Crescent property

• [9] Mr Upoko died on 22 February 2011 and the Tania Cres property was sold on 1 December 2017. The estate received $103,340.96 from the sale for its half-share in that property. Those funds are held in the trust account of the estate’s solicitors pending joint instructions from the trustees for their release. Ms Mokotupu does not wish those funds to be distributed until the other issues regarding the estate have been resolved.

Firth Place property

• [10] The Firth Pl property appears to have been the family home with Mr Rakei- Clark becoming a co-owner with Ms Upoko in 2004 when monies were borrowed and secured by way of a mortgage to the Bank of New Zealand. Mr Rakei-Clark has lived in the Firth Pl property and was recently incarcerated. Mr Beech understands that

there is currently a tenant in the property although no tenancy agreement has been provided.

• [11] Mr Rakei-Clark has indicated a willingness to buy the estate’s half-share in the Firth Pl property but claims that the estate owes him for expenses incurred in relation to the property. He wants that issue resolved before agreeing to any sale. Ms Mokotupu disputes that the estate is responsible for any of the borrowings against the Firth Pl property or for any expenses claimed by Mr Rakei-Clark and wishes to proceed with a sale at market value.

Procedural history

• [12] The plaintiff filed a statement of claim on 23 November 2020. The defendant filed a statement of defence on 24 May 2021. The plaintiff has since filed an amended statement of claim dated 19 July 2023.

• [13] On 3 August 2023, Associate Judge Taylor made timetable directions requiring the defendant to file a statement of defence within 25 working days of being served with the amended statement of claim and to file supporting evidence within the same time period.¹

• [14] On 27 October 2023, Harvey J recorded that the defendant had not complied with the timetable directions. The plaintiff had applied for the defendant’s defence to be struck out, for orders removing him as co-executor/trustee and for orders for the vacant possession and sale of the Firth Pl property.²

• [15] Harvey J directed the defendant comply with Associate Judge Taylor’s directions or provide an explanation for his failure to do so by 3 November 2023, failing which the strike out application would be set down for hearing. The defendant did not comply with Harvey J’s directions.

1. Mokotupu v Rakei-Clark CIV-2020-463-84 HC Rotorua, 3 August 2023 (Minute of Associate Judge Taylor).

² 27 October 2023 (Minute of Harvey J).

• [16] On 14 November 2023, Downs J noted that Harvey J anticipated a final opportunity for the defendant to comply with Court orders and mount a defence to the plaintiff’s case and directed the Registrar to allocate a one-hour fixture or equivalent.³

• [17] The defendant did not comply with the directions to file a statement of defence and evidence. Instead, on 8 December 2023, the defendant filed a memorandum setting out steps that he considered should be taken for the sale of the Firth Pl property.

• [18] In place of a hearing to determine the application to strike out the defence, a fixture of the substantive application was set down for 26 August 2024.

• [19] By memorandum dated 12 August 2024, Mr Beech notified the Court that Mr Rakei-Clark had been sentenced to three and a half years’ imprisonment. The Registry arranged for a copy of Mr Beech’s memorandum to be provided to Mr Rakei- Clark and for him to participate in a teleconference. The prison authorities notified the Court that he had declined to do so.

• [20] On 20 August 2024, the Court struck out Mr Rakei-Clark’s defence and directed that the hearing proceed by way of formal proof.⁴

Relevant law

Formal proof

• [21] Rule 15.9 of the High Court Rules 2016 (HCR) provides for judgment by way of formal proof if the defendant does not file a statement of defence. Here, the defendant filed a statement of defence but it has been struck out and the Court has ordered that the claim proceed by way of formal proof.

• [22] Rule 15.9(4) requires that each cause of action be established “to a Judge’s satisfaction”. “Satisfaction” means the Judge makes up their mind — it does not import notions of the burden of proof and of setting a particular standard of proof.⁵

³ 14 November 2023 (Minute of Downs J).

⁴ 20 August 2024 (Minute of van Bohemen J).

⁵ R v Leitch [1998] 1 NZLR 420 (CA) at 428.

• [23] Duffy J has held that “the level at which a Judge is required to satisfy herself regarding the plaintiff’s evidence is much the same as it would be if the proceeding had gone to trial.”⁶

• [24] I must be satisfied that Ms Mokotupu’s evidence establishes the cause of action on which she relies, being removal of Mr Rakei-Clark under s 21 of the Act.⁷

Administration Act 1969

• [25] Section 21(1) of the Act prescribes when the court may remove an administrator, as follows:

(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.

• [26] An administrator may therefore be removed if they are incapable of acting, unfit to act or where it becomes expedient to remove them.

• [27] The Court of Appeal in Tod v Tod confirmed the principles in Farquhar v Nunns as applicable when determining whether to remove an administrator under s 21, as follows:⁸

(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.

⁶ Ferreira v Stockinger [2015] NZHC 2916, at [35].

⁷ High Court Rules 2016, r 15.9(4).

8. Tod v Tod [2015] NZCA 501, [2017] 2 NZLR 145 at [22] citing Farquhar v Nunns [2013] NZHC 1670 at [13].

(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.

Should Mr Rakei-Clark be removed as administrator of the estate?

• [28] I consider that Mr Rakei-Clark should be removed as administrator of the estate for the reasons below.

• [29] The starting point is the Court’s duty to see estates properly administered and trusts properly executed. The estate owns a half-share in the Firth Pl property and the trustees have a duty to administer that half-share in the interests of the beneficiaries.

• [30] The evidence indicates that there may be a tenant in the property and Mr Rakei- Clark is incarcerated so is incapable of administering the estate.

• [31] As to the state of the property, an appraisal dated 12 December 2021 values the Firth Pl property at $400,000 to $440,000 and the agent notes that the property is:

... in a disgusting state of repair. No spouting, walls cut out. Broken windows in each bedroom. A leaking roof and the toilet appears to have the foundations falling and the flooring is unlevel and looks to be movement in the floor.

• [32] The property is clearly in a state of disrepair and needs maintenance. Despite Mr Rakei-Clark living at the property he has failed to maintain the property.

• [33] There is a mortgage registered against the title of the Firth Pl property. Mr Rakei-Clark claims that the estate is liable for some of the borrowings and owes him for expenses incurred in relation to the property. The Court does not have sufficient evidence as to the current quantum of the outstanding borrowings or the alleged expenses so cannot determine the reasonableness of Mr Rakei-Clark’s claims. Ms Mokotupu has provided Mr Rakei-Clark with an opportunity to purchase the estate’s half share in the Firth Pl property but the evidence indicates that he is unlikely to be able to afford to do so. This is especially so now that he is incarcerated.
• [34] Expedience is a lower threshold than necessity, and imports considerations of suitability, practicality and efficiency. In circumstances where the property is in disrepair and Mr Rakei-Clark is not available to progress his obligations as executor and trustee, it is expedient that Mr Rakei-Clark be removed.

Result

• [35] For the reasons set out above, I order that:

(a) Mr Rakei-Clark is removed as trustee and executor of the estate of Rongo Upoko.

(b) Leave is granted to Ms Mokotupu to:

(i) amend the claim to plead the legal basis upon which the estate seeks orders for possession and/or sale of the Firth Pl property as against Mr Rakei-Clark as co-owner;

(ii) file evidence in support of any amended claim; and

(iii) seek further directions arising from the amended claim.

Tahana J